Employers have reason to worry about a recent decision from the Court of Appeal for Ontario which allowed an employer to sue an employee in Ontario even though the employee had few connections with the province.
Employees will likely be allowed to sue their employer in Ontario even though they are employed abroad and have very few ties with the province. The Court of Appeal in Dundee Precious Metals Inc et al v Marsland et al, 2011 ONCA 594 determined that coming to Ontario for meetings a few times a year was enough to expose an employee to lawsuits in the province.
Dundee wanted to sue its former Chief Operating Officer, Laurence Marsland, for breach of fiduciary duties in an Ontario Court. The law of Ontario governed the employment contract. But Marsland, an Australian national, never lived in Ontario, was posted in Bulgaria, and was assigned to run a mining project in Serbia.
Dundee was allowed to sue Marsland in Ontario because the Court of Appeal felt there was a significant (if mostly virtual) connection between Marsland and Ontario:
- He participated in Dundee’s business for several years
- He attended board meetings in Toronto four or five times a year
- He attended senior management meetings there at least once a year.
- He participated in video conference calls once a week originating in Toronto
- He had daily telephone conversations with Dundee’s president who lived in Toronto.
Originally, Dundee was not allowed to sue Marsland in Ontario because a motions judge found that the connection between Dundee and Ontario was weak and that there was essentially no relationship between Dundee’s lawsuit and Ontario.
The Ontario Court of Appeal disagreed. There was a strong connection between the lawsuit and Ontario because Dundee was a public company in Ontario, the damages occurred in Ontario, and the laws of Ontario determined Marsland’s responsibilities as COO.
So, the Court of Appeal has paved the way for employees to sue their employer in Ontario even though they may have very few connections with the province. Employees may be motivated to sue in Ontario for various reasons. For instance, an American citizen working for a Canadian company in the United States might try to benefit from more a more employee-friendly Canadian labour and employment climate by suing in Ontario.
To escape such liability from distant employees, employers should be diligent in drafting employment contracts. In Marsland’s case, one of the determinative factors was that the contract of employment was governed by the laws of Ontario. Thus, employers should include two important clauses in their employment contracts: one that clearly sets out the law governing the contract, and another that determines which Courts will have jurisdiction to hear and decide any disputes that could arise.