The Ontario Superior Court of Justice Takes Liberties with a Termination Provision

I noticed this article by Adrian D. Jakibchuk of the Toronto law firm Cassels Brock. It’s about the decision by Madam Justice Michelle O’Bonsawin of the Ontario Superior Court of Justice in Bergeron v. Movati Athletic (Group) Inc., 2018 ONSC 885. I’ll explain why I think it was mistaken.

Bergeron was a short-term employee of a Movati Athletic (Group) Inc. (Movati). Their dispute was about whether Movati could pay Bergeron severance and benefits under the Employment Standards Act (ESA) or whether under common law Movati was entitled to reasonable notice, which would have resulted in a more generous payout.

Here’s what the court said:

In my view, with regards to Ms. Bergeron’s Employment Agreement, there was not a high degree of clarity in her termination clause. … Ms. Bergeron’s termination clause did not contain any explanation or warning sign and it said nothing more than Movati will obey the ESA.

[T]he wording of the termination clause must be clear to rebut the presumption of reasonable notice. The wording in Ms. Bergeron’s termination clause was unclear. The evidence does not support that she knew at the beginning of her employment with Movati what her entitlement would be at the end of her employment. The wording of the termination clause was ambiguous … must be resolved in Ms. Bergeron’s favour.

Adrian notes as follows:

[T]he Court went out of its way to explain what Movati could have done to ensure that the provision ousted Ms. Bergeron’s common law notice entitlement and restricted it to ESA minimums. In the Court’s view, all that was missing was the insertion of a couple of “only”s.

Here’s the termination provision in Bergeron’s contract, with the two instances of only added by the court shown in bold and in brackets:

Movati Athletic Inc. may terminate your employment without cause at any time during the term of your employment upon providing you with notice or pay in lieu of notice, and severance, if applicable, [only] pursuant to the Employment Standards Act, 2000 and subject to the continuation of your group benefits coverage, if applicable, [only] for the minimum period required by the Employment Standards Act, 2000, as amended from time to time.

But the termination provision isn’t ambiguous. To demonstrate that, let’s consider an entirely different provision, one establishing jurisdiction (I took it from one of my confidentiality agreements):

If either party brings against the other party any proceeding arising out of this agreement or arising out of disclosure or use of Confidential Information, that party may bring that proceeding [only] in the United States District Court for the Southern District of New York or in any state court of the State of New York.

No reasonable person would argue that without the only this provision is ambiguous. Instead, it establishes nonexclusive jurisdiction: although a party may bring commence proceedings in New York, it may instead decide to bring proceedings elsewhere. Adding only turns the provision into one providing for exclusive jurisdiction, making New York the only jurisdiction for bringing a dispute.

Presence or absence of only in the termination provision in Bergeron’s contract has the same implications. A reasonable reader would realize that Movati could pay Bergeron according to the ESA. Furthermore, adding only would have been odd, in that it would have suggested that Movati would have been in breach by paying more than required under the ESA. The provision could have been structured to say that Movati wasn’t required to pay more than what it was required to pay under the ESA, but I don’t see how that would have made things any clearer for Bergeron.

This decision has two implications. First, I can understand a judge’s wanting to give an employee the benefit of the doubt. But in this case, there was no doubt. By holding for Bergeron, Justice O’Bonsawin did violence to the contract.

And second, this opinion serves as another reminder that the best defense against a judge inclined to take semantic liberties with a contract is litigators who have access to specialized expertise and so are able to push back. See this article for more about that.

Anyone think I’m missing something?

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.