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Employment - Frustration

. Croke v. VuPoint System Ltd.

In Croke v. VuPoint System Ltd. (Ont CA, 2024) the Ontario Court of Appeal dismissed an employee's wrongful dismissal action against their employer, here where the major subcontractor of their employer adopted a mandatory COVID vaccination policy which made it effectively impossible for them to work. The employer refused to reveal their vaccination status, and was consequently fired:
[15] The motion judge considered the requirements of frustration set out by the Supreme Court of Canada in Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, [2001] 2 S.C.R. 943, at paras. 53 and 55. She then compared this case to Fraser Health Authority v. Hospital Employees’ Union (Tracy London Termination), 2022 CanLII 91089 (B.C.L.A.), in which an employment contract was found by an arbitrator to have been frustrated because of the employee’s non-compliance with a COVID-19 vaccination policy her employer was required to enforce. Like the arbitrator in Fraser Health Authority, the motion judge also compared the appellant’s situation to cases where an employee’s contract is frustrated because of a statutory or legal change that renders them unqualified for their job and therefore unable to work: see e.g., Cowie v. Great Blue Heron Charity Casino, 2011 ONSC 6357 (Div. Ct.).

....

[21] The test for frustration in contract law is well settled. As the Supreme Court of Canada stated in Naylor, at para. 53, “[f]rustration occurs when a situation has arisen for which the parties made no provision in the contract and performance of the contract becomes ‘a thing radically different from that which was undertaken by the contract.’”

[22] A party alleging frustration must therefore establish that there was a “supervening event” that: (i) radically altered the contractual obligations; (ii) was not foreseeable and for which the contract does not contemplate; and (iii) has not been caused by the parties.

....

[27] The motion judge relied on Fraser Health Authority, which she found to be analogous to this case. In Fraser Health Authority, an employee was terminated after she refused to become vaccinated to comply with a government order requiring all health care workers to be fully vaccinated in order to continue working. The Union filed a grievance maintaining there was no just and reasonable cause for the termination.

[28] The arbitrator applied the doctrine of frustration to find that the termination was justified. However, the arbitrator’s analysis focused on the reasonable foreseeability that there would be a change in circumstance, either through the removal of the vaccination requirement or a change in the employee’s position on vaccination. She did not consider the voluntariness of the employee’s conduct in the context of the frustration analysis.

[29] The motion judge, in applying Fraser Health Authority, similarly did not specifically address whether the appellant’s voluntary choice to remain unvaccinated prevented the doctrine of frustration from being brought into play. However, in my view, it did not.

[30] This is not a case where the conduct of the appellant in fact frustrated the employment contract. Rather, I accept, as did the motion judge, that the Bell Policy was the supervening event which frustrated the contract.

[31] The letter informing VuPoint of the Bell Policy, dated September 8, 2021, reproduced above, stated: “Bell requires that all personnel who work at or visit any Bell location or interact in-person with Bell customers be fully vaccinated by September 20, 2021.”

[32] The Bell letter regarding this Policy made no reference to the conduct of employees, nor was the conduct of individual employees relevant for the application of the Bell Policy. Under the Bell Policy, it did not matter whether a person conducting field service work for Bell chose not to get vaccinated, could not obtain vaccinations in their region or could not get vaccinated due to medical or religious factors. The effect of the Bell Policy, from VuPoint’s position, was akin to that of a new regulatory requirement: absent vaccination, VuPoint’s employees were ineligible to work on Bell projects, which was nearly all of VuPoint’s work.

[33] By analogy, consider the situation that would arise if an employee who is required to drive a truck suddenly had to obtain a new class of driver’s license due to a change in the licensing scheme, or if a technician working in law enforcement settings had to obtain a new form of security clearance in the wake of national security threats. As a result of these changes, the truck driver or law enforcement officer would no longer be eligible to continue the work for which they were hired unless they obtained the new licence or clearance.

[34] Whether an employee affected by such a supervening event can or will seek once again to become qualified (or, in this case, vaccinated), is not relevant to a threshold determination of whether the doctrine of frustration is applicable, although, as discussed below, it may be relevant to the other branches of the legal test. This is because it is not the employee’s choice or conduct that renders them unable to work but, rather, the introduction of the new requirement that they do not satisfy. In other words, it is the new requirement that is the supervening event. The analysis therefore proceeds to determine whether that requirement was foreseeable or contemplated in the contract, and whether it radically alters the contractual obligations.

[35] In oral submissions, counsel for VuPoint conceded the appellant may not have been terminated if he had indicated he wished to become vaccinated, but needed more time. The evidence before the motion judge also indicated that the appellant’s termination may have been revoked had he responded that he intended to become vaccinated. VuPoint’s openness to allowing the appellant to rectify his ineligibility to continue to perform services for Bell does not lead to a finding that the frustration of the employment contract in this case was self-induced.

[36] Rather, the possibility or likelihood that an employee could rectify the disruption to an employment contract caused by a supervening event is relevant to the requirement that, in order for frustration to apply, the supervening event must result in “a radical change to the fundamental obligations of the contract.” This may, in turn, be affected by either the duration of the supervening event or the duration of the effect that event has on the specific employment relationship.

[37] In other words, if there was evidence that the Bell Policy was a temporary, emergency measure to be of short duration, or if there was evidence that the appellant intended to become vaccinated but could not do so before the Bell Policy came into effect, the fundamental obligations in the employment contract may not have been found to have been “radically altered” by the Bell Policy.

[38] However, that was clearly not the case here. The motion judge found that the appellant had not advised VuPoint that he intended to become vaccinated, despite his awareness that termination could result from non-compliance with the Policy, as discussed below. Furthermore, VuPoint had no knowledge of the timeline of the Bell Policy and there was no evidence in the record that the vaccination requirement would be simply a temporary or short-lived measure. Moreover, in the circumstances here, I do not think it is realistic to have expected VuPoint to have “bargained with Bell Canada for more discretion over matters of health and safety”, as the appellant argues. The Bell Policy was plainly motivated by a reasonable concern relating to the COVID-19 pandemic and that its customers may not want unvaccinated installation technicians entering their homes.

[39] In short, the key point is that the reason for the appellant’s termination was not any choice he made with respect to his vaccination status, nor could the conduct of the appellant or the respondent alter the Bell Policy. As the motion judge stated:
I find that there was no default in the employment agreement by either Mr. Croke or VuPoint. VuPoint was required, by contract, to comply with Bell’s policies. The fact that the Plaintiff could have chosen to be vaccinated does not mean that he was in default as the circumstance which caused the frustration was the result of a decision by Bell, not the Plaintiff or the Defendant. VuPoint also had no control or knowledge over the timeline of Bell’s Policy and was given no indication that the policy was implemented as a temporary measure. [Emphasis added.]
[40] Once the Bell Policy is recognized as the supervening event, the applicability of the doctrine of frustration turns on (i) whether, in light of Bell’s Policy, performance of the employment contract had become something radically different than what the parties had contracted for, given that the appellant was no longer qualified to undertake the work for which he was hired, and (ii) whether that change was foreseeable when the contract was formed. I turn to these questions below.

[41] As for the first ground of appeal, based on the analysis above, I would conclude frustration was available to the motion judge, irrespective of the appellant’s conduct.
. Nagpal v. IBM Canada Ltd.

In Nagpal v. IBM Canada Ltd. (Ont CA, 2021) the Court of Appeal considers the relationship between frustration of an employment contract and the employee's illness:
[33] A contract is frustrated where, without default of either party, a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract: Duong v. Linmar Corp, 2010 ONSC 3159, 82 C.C.E.L. (3d) 84, at paras. 33-36, aff’d 2011 ONCA 38 and Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, [2001] 2 S.C.R. 943 at 967-968.

[34] The determination of whether a temporary incapacity to work constitutes frustration is also contextual. Illness alone is not a frustrating event and one must look at the length of the illness in relation to the duration of the employment contract: Duong, at para. 35; Antonacci v. Great Atlantic & Pacific Company of Canada Ltd. (1998), 1998 CanLII 14734 (ON SC), 35 C.C.E.L. (2d) 1 (Ont. C.J.), at para. 37, aff’d 2000 CanLII 5496 (ON CA), 128 O.A.C. 236 (C.A.), at paras. 9-11.

[35] Evidence that relates to the post-termination nature and extent of an employee’s disability is permitted only if that evidence sheds light on the nature and extent of the employee’s disability at the time of the employee’s dismissal: Ciszkowski v. Canac Kitchens, 2015 ONSC 73, 20 C.C.E.L. (4th) 171, at para 156.

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Last modified: 22-05-24
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