Law Times

Law Times • may 12, 2014 Page 7 www.lawtimesnews.com COMMENT Rule 51.06(2): An antidote to lengthy, expensive trials? By anna WonG For Law Times s Supreme Court Chief Justice Beverley McLachlin and former Ontario chief justice Warren Winkler have famously lamented, the costs of going to trial pose a great disincentive to access to justice for many civil litigants. According to the 2013 Canadian Lawyer legal fees survey, the cost of taking a civil action through to a two-day trial in Ontario ranges from $15,831 to $47,977 with a seven-day trial ranging from a staggering $61,152 to $163,830. ere is no sign of trial costs alleviating as 41 per cent of the law firms surveyed planned to raise fees. With trial costs ballooning, some people have tout- ed dispositive motions as providing an opportunity for speedier and more cost-effective resolutions. Such alternatives include Rule 21 motions to strike, Rule 20 summary judgment motions, and the lesser-known and deployed Rule 51.06 motions. Rule 51.06(2) of the Rules of Civil Procedure provides that a party may move for full or partial judgment based on admissions made in a pleading or in response to a re- quest to admit. It states: "Where an admission of the truth of a fact or the authenticity of a document is made by a party in a pleading or is made or deemed to be made by a party in response to a request to admit, any party may make a motion in the same proceeding to a judge for such order as the party may be entitled to on the admission without waiting for the determination of any question between the parties, and the judge may make such order as is just." e court will deem a party to have made an ad- mission when there is no response to a request to admit within 20 days of service or the response fails to observe the requirements set out in Rule 51.03(3). A review of the jurisprudence suggests the courts do not readily grant motions under Rule 51.06(2), a fact that partly explains its infrequent use. e court will scrutinize the admissions relied on and satisfy it- self that there are no serious questions of fact or law outstanding before granting such a motion. In 8150184 Canada Corp. v. Rotisseries, Justice Graeme Mew recapped the principles applicable on a Rule 51.06(2) motion: • e admission must be clear and definite. • e admission must be of such facts as to show the party is clearly entitled to the order asked for. • e rule does not apply where there is any serious question of law to argue. • e rule does not apply where there is a serious ques- tion of fact outstanding. • e motion is based on admissions and proof of facts is not permitted. e court should grant the motion only on a clear case and be careful not to take away the right to trial on viva voce evidence. To succeed, the moving party must show there is a clear admission on the face of which it is impossible for the defendants to succeed. e plaintiff in Rotisseries moved for judgment under Rule 51.06 at the start of the trial based on the defendants' lack of response, and thus, deemed admis- sion, to a request to admit. e action arose from a franchise agreement that did not comply with the Ar- thur Wishart Act. e contentious issue was damages. e plaintiff served a broad request to admit touching on the franchise fee and other expenses incurred by the plaintiff, damages for misrepresentation, and the defen- dants' breach of the duty of fair dealing. Mew awarded the plaintiff damages quantified in the request to admit and corroborated by appropriate documentation. ere was no award for loss of profits and other amounts addressed by the request to admit that were merely estimates. As well, Mew declined to order damages for breach of the duty of fair dealing. In his view, "evaluation of such dam- ages should be based on an evidentiary record developed through trial or (if applicable) some other more summary form of evidentiary hearing." As Mew alluded, a party can use Rule 51.06 in conjunction with or followed by a Rule 20 motion to obtain summary determination. For example, in a motor vehicle case, if the defendant admits to liabil- ity and certain losses claimed but not others, the plaintiff can obtain an order on the admissions on a Rule 51.06(2) motion and have the other issues summarily dealt with on a Rule 20 basis or at a shortened trial. Given the top court's liberal interpretation of Rule 20 in Hryniak v. Mauldin, it appears there is little difference between pursuing, together with a Rule 51.06 motion, a summary judgment motion and a trial. Many litigators may choose the former route over the latter for the simple fact that they have more experience with and are more comfortable with motions than trials. ere is a differ- ence, however, that becomes very apparent when the un- successful party has to determine where to go to appeal. When the court grants a summary judgment mo- tion, the judgment is final and the appeal is to the Court of Appeal. When it dismisses the motion, the order is generally interlocutory as there must still be a trial; accordingly, the appeal is to the Divisional Court with leave. Even if motions judges make factual find- ings and legal determinations in the course of the rea- sons for dismissing the Rule 20 motion, unless they explicitly say so in the formal order, their conclusions do not give rise to a plea of res judicata in subsequent proceedings. By contrast, findings of fact and conclu- sions of law made at trial have a binding effect. Given the long wait times for summary judgment motion dates, litigants may be better off to pursue a shorter trial after narrowing the issues in dispute or, as in Rotisseries, set the action down for trial and move under Rule 51.06 at the beginning of the trial. The prospect of an impending trial date is often the best catalyst to get the parties to seriously consider settling. As Winkler once said, "real trial dates lead to settlements." LT uAnna Wong practises civil and commercial litigation at Landy Marr Kats LLP in Toronto. The firm represented the plaintiff in Rotisseries. u SPEAKER'S CORNER Appeal court clarifies duty to mitigate in constructive dismissals constructive dismissal occurs when an employer unilaterally makes a substantial change to the essential term of an employment contract, thereby giving an employee a right to treat the contract as being at an end and resign. In constructive dismissal actions, employees may not be able to recover dam- ages if they fail to take reasonable steps to mitigate avoidable economic losses. is so- called duty to mitigate takes on many forms, ranging from an employee's obligation to look for comparable employment to return- ing to work for the former employer during the period of working notice. In Farwell v. Citair Inc. (General Coach Canada), the Ontario Court of Appeal dealt with the latter scenario. It had to decide whether an employee is under an obliga- tion to mitigate by returning to work for his employer when it made such an offer before and not aer he asserted constructive dis- missal. e court clarified this type of miti- gation duty would only apply when an em- ployer offers an employee an opportunity to work out the notice period aer the worker has asserted constructive dismissal. In Farwell, Citair, as a result of a legitimate restructuring, decided to transfer its vice president of operations, Ken Farwell, into a purchasing manager role he had held years earlier. e restructuring was in response to economic considerations and not due to animus against Farwell. At the time, Farwell was 58 years old and had worked there for 38 years. e proposed reorganization of his role entailed a change in title to reflect his di- minished role at the company that resulted in a significant loss of status. Farwell rejected the proposed change and assert- ed constructive dismissal. At trial, the judge agreed the employer had constructively dis- missed Farwell and awarded him 24 months of salary in lieu of rea- sonable notice. In addition, the judge found that obliging Farwell to accept a new position would be humiliating and embarrassing for him and, therefore, it would be unreasonable to require him to return to the company. e employer appealed. It argued Farwell had a legal duty to mitigate his damages by accepting the purchasing manager position during the period of working notice, especially since his salary and working conditions would have remained almost the same with the only dif- ference being a likely reduction in bonus. In addition, it argued that where the employer's restructuring serves a legitimate business interest and isn't merely a pretext for dis- missing someone, an employee like Farwell should, as part of the duty to mitigate, have to return to work, at least for the notice pe- riod, despite the constructive dismissal. In support of its argument, the employ- er relied on the Supreme Court of Canada decision in Evans v. Teamsters Local Union No. 31. at case provided employers with a basis on which to demand that an em- ployee return to work for the balance of the period of notice even aer they have summarily ended the employment rela- tionship without reasonable notice. Nota- bly, Evans was a wrongful and not a con- structive dismissal case. I pause to remind readers that there's a fundamental dif- ference between wrongful and constructive dismissals. In the former, the employee has no say in the employer's decision to end the employment relation- ship. In the latter, it's the employ- ee who is taking the initiative to end the employment relation- ship by virtue of a decision to act upon a fundamental breach of the employment contract. Consequently, these two fun- damentally different situations shouldn't be treated the same in terms of the duty of an employee to mitigate the damages and, in particular, the obligation to return to work for the former employer. In dismissing the employer's mitigation argument, Justice Peter Lauwers noted "the appellant's argument presupposes that the employer has offered the employee a chance to mitigate damages by returning to work." However, there was no evidence the em- ployer had extended such an offer to Farwell aer he asserted constructive dismissal. is distinguishes Farwell from Evans, where the employer made an offer of re-employment following the employee's wrongful dismissal. To clarify his interesting and, arguably, novel legal point, Lauwers went on to ex- plain: "To trigger this form of mitigation duty, the applicant was therefore obliged to offer Mr. Farwell the clear opportunity to work out the notice period aer he refused to accept the position of purchasing man- ager and told the appellant that he was treat- ing the reorganization as constructive and wrongful dismissal." Ultimately, Lauwers found Farwell hadn't breached his mitiga- tion duty by not returning to work during the period of working notice. e appeal court's position makes perfect legal sense because any dialogue with a view to modifying Farwell's employment contract prior to his dismissal, either wrongfully or constructively, amounted to nothing more than a renegotiation of his existing employ- ment contract, an event that doesn't trigger the duty to mitigate. Once Farwell had re- fused to accept the transfer to the purchas- ing manager role, the employer had a choice. It could have dismissed Farwell but imme- diately demanded his return to work in the purchasing manager role as part of his duty to mitigate. Farwell's failure to comply may have been fatal for his damages claim. Lawyers can now cite Farwell for the proposition that in the context of construc- tive dismissals, an employee's obligation to mitigate by returning to work for the former employer during the period of working no- tice will only apply if the employer makes an offer of re-employment — in either the previous or a modified role — aer the em- ployee has asserted constructive dismissal. So when facing an employee's assertion of constructive dismissal, prudent employ- ers must formally restate their offer of re- employment in order to avoid the legally narrow and costly mitigation trap. LT uNikolay Chsherbinin is an employment lawyer at Chsherbinin Litigation and author of The Law of Inducement in Canadian Employment Law. He can be reached at 416- 907-2587, nc@nclaw.ca or nclaw.ca. A Labour Pains Nikolay Chsherbinin A

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