Can a worker based outside Canada sue for wrongful dismissal in Ontario?

The Ontario Superior Court assesses whether a wrongful dismissal case can be heard in Ontario when the employee is now based in New York.

19 Feb. 2014

Sullivan v. Four Seasons Hotel Limited, a motion before the Ontario Superior Court of Justice, dealt with the issue of appropriate jurisdiction for a wrongful dismissal case when issues in the employment relationship are grounded in two different locations.

Facts

Ms. Sullivan was the Director of Sales for Four Seasons Hotels in Toronto from 2002 until 2007 when she applied for and accepted employment with Nevis Resort in New York, another hospitality operation that uses the Four Seasons trademark. Ms. Sullivan worked out of the New York Office as the Director of Sales for Nevis and remained there from July 30, 2007 until she was terminated September 29, 2011. Ms. Sullivan brought a wrongful dismissal action in Ontario as employees dismissed without cause in Ontario are entitled to wrongful dismissal damages whereas in New York that is not the case as employees are employed "at will" and can be dismissed without notice. Four Seasons brought a motion to dismiss the action on the basis that the court lacked jurisdiction, or alternatively, even if they had jurisdiction they should decline to exercise it based on the principle of forum non conveniens*.

*Forum Non Conveniens is a principle whereby courts may refuse to take jurisdiction over matters where there is a more appropriate forum available to the parties.

Decision

The court applied the test in Club Resorts Ltd. V. Van Breda in determining whether there was a "real and substantial" connection that would allow them to legitimately assume jurisdiction. In determining a real and substantial connection the court considered the following non-exhaustive factors which could entitle it to assume jurisdiction:

whether the defendant is domiciled or resident in the province;
whether the defendant carries on business in the province;
whether the tort was committed in the province; and
whether a contract connected with the dispute was made in the province.

The court ultimately found that factors one (i) and two (ii) were met and that the any additional factors did not change the finding that the court had jurisdiction. As such, the court went on to determine whether they should exercise jurisdiction or decline it on the forum non conveniens principle. For the court to decline jurisdiction the employer must convince the court by use the following factors that there is a forum better situated to deal fairly and efficiently with the litigation:

the location where the contract in dispute was signed;
applicable law of the contract;
the location of witnesses, especially key witnesses;
the location where the bulk of the evidence will come from;
the jurisdiction in which the factual matters arose;
the residence or places of business of the parties; and,
the loss of a legitimate judicial advantage.

The court applied a non mechanical and non mathematical approach yet evaluated all of these factors in order. The following was determined:

The original contract of employment and the transfer contract were signed in Ontario;
The law governing the contract of employment could not be determined and remained in dispute.Though the initial contract was clearly governed in Ontario it could not be determined if the transfer contract was meant to be executed in New York and governed by New York law or an extension of the employment contract in Ontario;
The location of witnesses strongly favoured New York as the main witnesses that would speak to the claims of discrimination and mistreatment all worked in New York;
Similarly, most of the evidence would have been in New York as most of the evidence would come from testimony of witnesses in that area;
The factual matters at the centre of the dispute also arose in New York as the factual issues surrounding the employees performance arose between herself and her direct supervisor in New York;
The residence or place of business could not be decided in favour of one party or another as it was determined that the places of business include at minimum both New York and Ontario while the employee currently lives outside of both jurisdictions in Alberta; and,
The employee placed significant weight on this factor as she pointed to the significant differences in employment law between the two jurisdictions, specifically the inability to seek payment in lieu of notice for termination.While Four Seasons agreed that the notice remedy would be lost in the United States they submitted that all of the employee's discrimination and tortuous claims are recognized in New York and could still be pursued.The court only made comment that "judicial advantage... should not weigh too heavily in the forum non conviens analysis".

Ultimately after balancing all of the factors the court found that while they had jurisdiction to hear the matter New York was the more appropriate forum, granted the motion and permanently stayed the Plaintiffs action in Ontario.

Lesson for Employers

Employers must be aware that a number of legal issues may arise where employees transfer including, but not limited to, the possibility of continued liability for the transferred individual in this province. Further, is should be noted that Ontario will often be the forum chosen by a disgruntled employee with a choice as we offer significant remedies like payment in lieu of notice which other jurisdictions do not. As such Ontario employers should do their best to make matters clear at the outset of a transfer and avoid these costly motions which have no guarantee of success. Specifically, employers should consider drafting original employment contracts and transfer agreements which specify the jurisdiction and governing law of the contract as well as any notice entitlements, if any, upon transfer.

-Paul Macchione

For more information visit ccpartners.ca.