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Employment - Disability. Hill v. 1359768 Ontario Inc. (B&B Towing)
In Hill v. 1359768 Ontario Inc. (B&B Towing) (Ont CA, 2026) the Ontario Court of Appeal partially allowed an employer's appeal, this where the "trial judge found that the appellant, a towing services company, had constructively dismissed the respondent by demoting him from the managerial position of a road boss to a tow truck driver".
Here the court considered the law of employment frustration, and it's common manifestation in the employee's disability:i. Governing principles re frustration
[20] The doctrine of frustration is not controversial and was correctly described by the trial judge. “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”: Nagpal v. IBM Canada Ltd., 2021 ONCA 274, 71 C.C.E.L. (4th) 1, at para. 33; Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, [2001] 2 S.C.R. 943, at para. 53; and Aldergrove Duty Free Shop Ltd. v. MacCallum, 2024 BCCA 28, 492 D.L.R. (4th) 172, at paras. 27-30. The disruption must not be simply inconvenient, transitory or temporary: Aldergrove, at paras. 34-35. Rather, frustration will be established only when, at the time of frustration, there is no reasonable likelihood of the employee being able to return to work within a reasonable time: see Fraser, at para. 32; Nason (Ont. S.C.), at para. 180. The onus of establishing frustration is on the person alleging it, here, the appellant: Nason (Ont. C.A.), at para. 10; Irvine, at para. 55.
[21] Depending on the nature, seriousness and duration of an employee’s disability, an employment contract may be frustrated by the disability of an employee to perform the essential duties of the position. As the Supreme Court stated in Dartmouth Ferry Commission v. Marks (1904), 1904 CanLII 61 (SCC), 34 S.C.R. 366, at p. 380:It seems clearly settled that under a contract to furnish the personal services of a particular person, there is an implied qualification that it is subject to such person being in health to perform the services when the time for their performance comes, and that the party so contracting is excused by the disability, without his fault, of the person who is to render the services. [Citations omitted.] [22] The employer is under a duty to accommodate the employee's disability up to the point of undue hardship: Lemesani v. Lowerys Inc., 2017 ONSC 1808, at para. 186, aff’d 2018 ONCA 270. However, an employer is not required to amend the job description or delete a component that is significant in terms of time and responsibility: De Palma v. Canadian Federation of Independent Business, 2019 ONSC 7602, at para. 21, aff’d 2021 ONCA 406; McAlpine v. Econotech Services Ltd., 2004 BCCA 111, 25 B.C.L.R. (4th), at paras. 27-28.
[23] A contract may be frustrated, then, by a serious, lengthy and ongoing condition that cannot be accommodated by the employer without imposing hardship and that prevents the employee from carrying out the position’s essential duties within a reasonable time. However, a temporary sickness does not amount to frustration nor does an employee’s inability to perform minor parts of their position: Nagpal, at para. 33; Irvine, at para. 57; McLean v. City of Miramichi, 2011 NBCA 80, 377 N.B.R. (2d) 245, at para. 26; and Wightman Estate v. 2774046 Canada Inc., 2006 BCCA 424, 57 B.C.L.R. (4th) 79, at paras. 38-43. The question is whether the employer has proven that the employee’s sickness, injury or disability is so enduring as to defeat the object of the employment contract because the employee is unable to discharge the essential duties under the contract: Wightman Estate, at para. 21.
[24] Various factors informing the analysis as to whether an employment contract has been frustrated include the following list articulated by the Court of Appeal of Manitoba in Irvine, at para. 57:Whether a contract has been frustrated due to illness depends on a number of factors including, the terms of the contract, how long the employee is likely to remain sick, the nature of the employment, the nature of the illness, the availability of sick leave and pay, the period of past employment and how long the employer should reasonably be expected to await the employee's return. [25] The effect of frustration was recently described by this court in Croke v. VuPoint System Ltd., 2024 ONCA 354, 496 D.L.R. (4th) 484, at para. 69, leave to appeal refused, [2024] S.C.C.A. No. 290:[F]rustration results in the immediate discharge of the obligations in the contract. There is no fixed legal requirement that an employee must necessarily be given advance notice that the employment relationship has been frustrated. There is similarly no invariable requirement that an employee must be given an opportunity to rectify their non-eligibility to work before terminating that employee based on frustration of contract. That said, ... depending on the particular circumstances, an employer who chooses not to do these things may be unable to establish that the supervening event radically altered the fundamental obligations of the contract.
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