Law Times

Law Times • OcTOber 2, 2017 Page 7 www.lawtimesnews.com Without prejudice offers in wrongful dismissals BY NIKOLAY Y. CHSHERBININ C ommunications toward settle- ment are generally privileged. A privilege is necessary to encour- age full and frank discussion with a view to coming to a resolution on the matter. Where an offer to settle is made without prejudice, the fact of its existence should not generally be pleaded. There are, inevitably, exceptions. In Ramos v. Hewlett-Packard, the court had to de- termine whether an offer to settle that the employer pleaded in its statement of de- fence was made with or without prejudice. It concluded that the offer was made with- out prejudice and struck all references to it from the pleading, because it was irrelevant to the matters at issue in the litigation. In Ramos, Hewlett-Packard provided Maria Thereza Ramos with a letter that advised her that, as of Aug. 1, 2016, she would be transitioned into the company's workforce reduction program and her employment would be terminated on a without-cause basis on Sept. 23, 2016. The letter also included a severance package, which Ramos did not accept. She sued HP for a wrongful dismissal. In its statement of defence, HP plead- ed the particulars of the offer, its dollar amount and Ramos' rejection of it. Ramos moved to strike out these references on the basis that HP's offer was made "without prejudice." In response, HP asserted that it was a "with prejudice" offer to Ms. Ramos' legal entitlements, because the letter was not labelled "without prejudice." The use of the phrase "without preju- dice" is commonly under- stood to mean that, if there is no settlement, the party making the offer is free to as- sert all its rights, unaffected by anything stated or done in the negotiations. However, the absence of the phrase as part of correspondence does not mean that there is no in- tention of confidentiality. In Sable Offshore Energy Inc. v. Ameron International Corp., [2013], the Supreme Court of Canada reminded that what matters instead of that phrase is the intent of the parties to settle the mat- ter. The intention may be implicit in the circumstances or could be inferred in the absence of anything to suggest otherwise, and accordingly, the words "without prej- udice" would be superf luous. The rule excluding evidence of over- tures to settlement is a rule of evidence, not a rule of pleading. The distinction between facts and evidence is clear: Ma- terial facts in a pleading are the relevant facts that a party intends to prove at trial; evidence is the means by which a party ac- tually proves those facts. However, in the employment law context, some facts are material, because they prove other facts or because they are material to conclusion about an employer's motive and intention. For example, an employee is entitled to plead that their mental distress was exac- erbated by a settlement offer. The wrongful dismissal jurisprudence contemplates three exceptions to the general rule prohibiting references to "without preju- dice" settlement offers: Just cause exception: Where an employer has pleaded that an employee was dismissed for cause, the em- ployee would be permitted to plead (in reply) that prior to the commencement of litiga- tion, the employer offered an additional payment in lieu of notice, thereby waiving the cause upon which it relied to justify the dismissal. Mental distress exception: It arises in the context of a claim for mental distress. However, whether a settlement offer will be relevant — because it might be evidence tending toward the exacerbation of the employee's mental distress — will depend on the facts of the case. Punitive damages exception: Where the employee has advanced a claim for punitive damages, the employer could be permitted to plead a settlement offer as a response to the employee's allegation that it had shown callous disregard for the em- ployee's rights and feelings in terminating their employment and in discussing their entitlement to compensation. In Ramos, the court found that the pleadings did not raise any of the above ex- ceptions. Specifically, Ramos did not claim for moral or punitive damages and HP did not assert just cause. Arguably, the court could have ended its inquiry there. How- ever, it went on to examine the contents of the letter and the final release. The court found that because both documents, inter alia, required Ramos to keep their terms confidential, the offer was made with an implied intention that it would not be dis- closed to a court. Consequently, the court struck out references to the settlement offer from HP's statement of defence. Ramos serves as a timely reminder that offers to settle that often populate termi- nation letters are considered to be an in- tegral part of the process of negotiating a compromise, as they open the door to the actual negotiation. Such letters do not have to contain the words "without prejudice" or an actual settlement offer in order to invoke the privilege. Communications in pursuit of early settlements give rise to a presumption of inadmissibility, which may be displaced through one of the above- referenced exceptions or the existence of a compelling public interest in disclosure. Ramos also reaffirms that unjustified disclosure of the offer to settle in order to establish that the employer offered the employee a reasonable severance pack- age would be struck from the statement defence as being irrelevant to the matters at issue in litigation. What constitutes rea- sonable notice is an issue for the trial judge to determine, not the employer. LT uNikolay Chsherbinin is an employment and immigration lawyer and author of The Law of Inducement in Canadian Employment Law. He can be reached at 416-907-2587 or by visiting nclaw.ca. Broken system needs an overhaul BY MURRAY MALTZ B ringing paralegals into a broken court sys- tem is not the solution to providing efficient, cost-effective access to the legal system. The court system is complicated and arduous. There are too many rules, steps and delays, leading litigants to feel they are simply involved in a jumble of procedures without dealing with the substance of the problem. How do we fix a family law system that is fail- ing the public? The family law bar felt that the sensitive nature of family law cried out for its own rules. But I believe more rules lead to more procedure and, hence, more costs. The idea behind the Family Law Rules was that, despite being in litigious surroundings, somehow case and settlement conferences were going to resolve matters in a friendlier fashion. It failed to recognize litigants in- volved in court actions, especially family matters, are often hostile and aggressive toward each other, and all the case and settlement conferences in the world are not going to change that. Ultimately, money or anger wane, and most matters do settle. The question that persists is how can a litigant achieve more of their de- sired results in a system fraught with too many rules and procedures. There are many issues. For one, clients are rarely ready to settle the issues at case conference. The parties are fresh in the litigation, disclosure may not be com- plete and parties don't have enough information. These conferences have to become more effective. In order to achieve this, I suggest that an Affidavit of Document or Certificate of Disclosure be mandatory within 30 days from the close of pleadings, accompa- nied with complete disclosure. After the 30 days, the other party has 10 days to provide a request for infor- mation, to be answered within 30 days, including an affidavit explaining best efforts made if disclosure is not complete. In my opinion, a case conference should not be heard until the above is complete, except in rare cases. This will permit all participants to have a ful- some case conference on issues of equalization and support and judges to make substantive orders and provide direction. Precious court time should not be used to deal with something as simple as financial dis- closure. Judges have to start sanctioning clients who do not provide meaningful disclosure and be ready to discuss financial issues, such as sale of property, at case conference. Disclosure motions should be rare and proper readiness the norm. Here's another idea. Custody and access issues are more difficult — can a judge not make an order for ac- cess after hearing both sides and concluding there is enough evidence before him at case conference? The litigants can put forward their positions, affidavits are rarely cross-examined and if the judge feels there is no danger to the child, why not make a temporary order right there? The formality of a motion is not always needed, and if we wish to maintain the time-honoured tradition of sworn affidavits, certainly the contents of the conference can be sworn. Both the judiciary and le- gal community are comforted by a formal motion and sworn affidavit where in many cases there is no danger to the child — just two stubborn people who cannot agree on access. We need to change how we think in order to speed the process. Parenting plans and complete offers for custody and access should be mandatory and updated just like the Net Family Property Statement and Financial State- ment. We are in an age where children have access to a great deal of information and are heard more than any other generation. They have laptops, smartphones and the internet. Children are unwittingly part of litigation no matter what age. Parties that are in court are usually incapable of keeping their children out of the litigation whether deliberately or not. Despite this fact, we are still grappling with whether children should be seen but not heard. There is an elaborate system of children's lawyers to investigate families that is no less intrusive and stressful than a judge directly speaking to a child. The problem is they often take an enormous amount of time causing frustration to the parties. Why should a 12-year-old not have a right to be heard in court by a judge without lawyers present and no parents? As well, the concept of case management should be expanded. Why can a judge not hear both a conference and motion? Would the cumulative knowledge of the case not be beneficial to both the judge and the par- ties? I suggest knowing the background and the vari- ous previous orders would move the case along with greater efficiency. A telephone conference with a judge on an issue addressed in court weeks earlier would help promote settlement without the need for costly formal procedure. Management requires a case to move along in a timely and cost-efficient manner with deadlines strictly adhered to. Supreme Court of Canada Justice Andromache Karakatsanis said it best in the case of Hryniak v. Mauldin. Hers are bold words, yet we are still not lis- tening. "Ensuring access to justice is the greatest challenge to the rule of law in Canada today. Trials have become increasingly expensive and protracted. Most Can- adians cannot afford to sue when they are wronged or defend themselves when they are sued, and cannot af- ford to go to trial," says the ruling. "Without an effect- ive and accessible means of enforcing rights the rule of law is threatened." The rules are in place to obtain speedy, cost-efficient justice. It is clear that conventional use of the rules is not working — it's time to be unconventional as pro- cedure has got in the way of substance. The attorney general needs to take bold steps to fix the system and lawyers and judges need to change the way we think. Adding more representation to a broken system is not going to fix the problem. LT uMurray Maltz is a Toronto-based family law lawyer who has been practising for more than 30 years. He can be reached at 416-398-6900 or lawmaltz@on.aibn.com. u SPEAKER'S CORNER COMMENT Labour Pains Nikolay Y. Chsherbinin

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