Canada: The Duty To Accommodate & Frustration Of Contract: Summary Judgement Can Be An Effective Strategy For Employers

In Katz et al. v. Clarke, 2019 ONSC 2188, the Ontario Superior Court of Justice (Divisional Court) recently held that a motion judge erred in law in the application of the legal principles concerning frustration of contract and an employer's duty to accommodate. In this case, the Divisional Court found that the contract of employment was frustrated and the employer's duty to accommodate was not triggered, and the Court reiterated some guidance on these principles:

  1. The duty to accommodate is not triggered when an employee simply wishes to return to work. The employee must also provide evidence of his or her ability to return to work (including any disability-related needs or restrictions).
  2. An employer's duty to accommodate ends where the employee is no longer able to fulfil the basic obligations associated with the employment relationship for the foreseeable future. The doctrine of frustration of contract applies in such circumstances.

In Katz, the Divisional Court set aside the motion judge's order and granted the appellant employer's summary judgment motion, dismissing the respondent employee's action – confirming that in circumstances where (as in this case) there is no dispute as to the underlying facts, summary judgment can be an appropriate and effective way to determine an issue of frustration of contract.

All medical information confirmed that the employee was unable to do his job for the foreseeable future

The key facts in this case were undisputed:

  • The employee had been on medical leave for approximately five years (since 2008), and had been approved for short term and long term disability benefits by the employer's benefits provider.
  • In early 2013, the benefits provider informed the employer that, based on the available medical information, the employee was unable to perform his job for the foreseeable future. There was no dispute between the parties that the employee's medical and benefit claims documentation indicated that he was totally disabled. In fact, the employee acknowledged that as of June 2013 his view was that he could not perform any work.
  • On July 1, 2013, the employer wrote to the employee and communicated, among other things, the following:

    • based on his prolonged absence and the medical information received to date, the employer believed the employee was incapable of performing his job, and there was no reasonable expectation that he would return in the foreseeable future;
    • his employment had therefore been frustrated; and
    • his employment would cease in 6 months, effective December 31, 2013.
  • Months later, the employee's counsel communicated the employee was "working very hard to get well" in order to return to his position. However, despite the employer's multiple subsequent requests for updated medical information, nothing further was provided.

The motion judge concluded that the employee's express wish to return to work triggered the duty to accommodate

Following the termination of his employment, the employee brought an action seeking human rights damages (lost wages + $25,000), damages as compensation in lieu of reasonable notice ($75,000) and moral damages on the basis of alleged bad faith conduct in the manner of termination ($25,000). The employer then moved for summary judgement on the basis that the employment contract had been frustrated as a result of the employee's five-year absence and the lack of any reasonable prospect of his return to work.

The motion judge concluded that even when considering the undisputed medical evidence that the employee was totally disabled, and the employee's continued failure to provide updated medical information (despite the employer's multiple requests over a period of several months prior to termination for documents – and which, if received, could have triggered a duty to accommodate):

  • "[it was] arguable here that the [employer's] failure to spend the time and effort to explore with the [employee] how his desire to return to work could be accommodated resulted in a 'rush to judgment' that breached [the Human Rights Code]"; and
  • "[t]he record before me indicated an almost complete lack of personal contact between the defendant employer and their long term managerial employee. There appears to be no offer of rehabilitation help or any discussion with the employee plaintiff as to what his goals were. The employer is the one in the best position to know how an employee can best be accommodated in their operation. Use of crutches, walker or even a wheelchair all would seem reasonable areas of discussion that could have been initiated by this employer..."

Thus, whether the employer fulfilled its duty to accommodate given the employee's "express desire to return to work" was enough in the motion judge's view to give rise to a genuine issue requiring a trial.

Appeal to Divisional Court

The central issues on appeal were as follows: (1) whether the motion judge erred in his application of the law of frustration of contract to the factual record; and (2) whether the motion judge erred in assessing the legal requirements and evidentiary record on accommodation by finding that the employee's "stated desire to return to work" (without anything else) was enough to give rise to a genuine issue requiring a trial regarding the employer's duty to accommodate the employee's disability.

The Divisional Court made the following findings:

  1. The doctrine of frustration of contract applies where there is evidence that the employee is totally disabled.
  2. An employer's duty to accommodate is only triggered when an employee informs an employer not only of his wish to return to work but also provides evidence of his or her ability to return to work including any disability-related needs that would allow him or her to do so. In this case, such information was not provided.
  3. An employer's duty to accommodate ends where the employee is no longer able to fulfil the basic obligations associated with the employment relationship for the foreseeable future, as it is "inherently impossible" to accommodate an employee who is unable to work.
  4. In this case, the employer's duty to accommodate the employee had ended. The employer had no duty to contact the employee while he was off work so long as the medical documentation provided to the employer indicated that the employee was unable to return to work. Any such communications on possible accommodation "would have been entirely futile on the evidence before the Court and, arguably, inappropriate". In any event, the employer did contact the employee through his counsel on multiple occasions in 2013 prior to terminating his employment and requested documentation or information that, if delivered, could have triggered a duty to accommodate. The employee did not reply and never did provide any such information. In these circumstances, the employer was entitled to treat the employment relationship as ended.

The Divisional Court held that the motion judge erred in law in the application of the legal principles regarding frustration of contract and the duty to accommodate, and set aside the motion judge's order and granted the appellant employer's summary judgment motion, dismissing the respondent employee's action.

Summary judgment can be an appropriate and effective way to determine an issue of frustration of contract

According to the Divisional Court, the employer's duty to accommodate was not triggered – as the employee was no longer able to perform his job for the foreseeable future. In these circumstances, the employer was permitted to declare that the employment contract had been frustrated. This reasoning provides some helpful guidance for employers facing similar situations, and confirms that in such cases, where there are no factual disputes, summary judgment can be an appropriate and effective way to determine an issue of frustration of contract.

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