



COURT OF APPEAL FOR ONTARIO

CITATION: Holmes v. Hatch Ltd., 2017 ONCA 880

DATE: 20171120

DOCKET: C63444

Cronk, Huscroft and Nordheimer JJ.A.

BETWEEN

Paul Holmes

Plaintiff (Respondent)

and

Hatch Ltd.

Defendant (Appellant)

William D. Anderson, for the appellant

Andrew H. Monkhouse and Busayo Faderin, for the
    respondent

Heard: November 15, 2017

On appeal from the judgment of Justice A. Pollak of the
    Superior Court of Justice, dated November 10, 2016.

REASONS FOR DECISION

[1]

The appellant employer, Hatch Ltd (Hatch), appeals from a summary
    judgment awarding the respondent employee, Paul Holmes (Holmes), 18 months
    reasonable notice at common law for the termination of his employment, subject
    to his mitigation obligations and applicable statutory deductions.

[2]

The motion judges core finding, which anchored her decision to grant
    summary judgment in favour of Holmes, was that Hatch breached the termination
    clause contained in the written employment agreement between the parties,
    thereby repudiating, as a matter of law, the entire benefit of the employment
    agreement.  Specifically, the motion judge held, as a fact, that Hatch failed
    to consider Holmes years of service, position and age when fashioning his
    termination package, contrary to the express wording of the termination clause.

[3]

Hatch appeals from the summary judgment on several grounds.  In our
    view, it is unnecessary for the disposition of this appeal to address all the
    grounds raised.  We are satisfied, on this record, that the summary judgment
    must be set aside and the matter remitted to the Superior Court of Justice for
    a new hearing on Holmes summary judgment motion.  We reach this conclusion for
    the following reasons.

[4]

First, the motion judges finding of Hatchs breach of contract
    underpinned her entire decision.  She found, on the evidence before her, that the
    breach involved Hatchs failure to take account of some of the specific factors
    set out in the termination clause, as described above.  This failure, she held,
    was a fundamental breach of contract that, at law, constituted a repudiation by
    Hatch of the entire employment agreement.  As a result, the motion judge
    concluded, the contract was invalid and Holmes was entitled to common law
    damages based on reasonable notice of termination.

[5]

The difficulty with these holdings, however, is that Holmes did not plead
    this type of breach of contract by Hatch.  Nor did he allege in his pleading
    that Hatch repudiated the employment agreement on this basis.  Similarly, he did
    not advance these claims in his Notice of Motion or factum on the summary
    judgment motion.  It was only when the motion judge raised the notion of this
    type of breach during oral argument, and on her own motion, that the parties
    made oral and subsequent written submissions on this issue.

[6]

In these circumstances, Hatch was denied the opportunity to lead
    evidence on the precise breach allegation on which the motion judges decision
    ultimately turned.  Put somewhat differently, the motion judge decided the
    summary judgment motion on the basis of a legal theory of liability that was
    neither pleaded nor advanced by Holmes in support of his motion.  As a result,
    prior to oral argument of the motion, Hatch did not know the evidentiary burden
    that the motion judge ultimately held it had to meet.

[7]

The law assumes that the parties pleadings properly delineate all
    relevant claims in dispute and define the issues.  In
Rodaro v. Royal Bank
(2002), 59 O.R. (3d) 74 (C.A.), at para. 60, this court described the operative
    principle in this fashion:

It is fundamental to the litigation process that lawsuits be
    decided within the boundaries of the pleadings.  As Labrosse J.A. said in
460635
    Ontario Ltd. v. 1002953 Ontario Inc.
, [1999] O.J. No. 4071 (Ont. C.A.), at
    para. 9:

The parties to a legal suit are entitled to have a
    resolution of their differences on the basis of the issues joined in the
    pleadings.  A finding of liability and resulting damages against the defendant
    on a basis that was not pleaded in the statement of claim cannot stand.  It
    deprives the defendant of the opportunity to address that issue in the evidence
    at trial.

See also
A-C-H International Inc. v. Royal Bank
(2005), 197 O.A.C. 227;
Labatt Brewing Co. v. NHL Enterprises Canada L.P.
,
    2011 ONCA 511, 106 O.R. (3d) 677.

[8]

In fairness to the motion judge, the record confirms that, once the
    suggestion of this type of breach of the termination clause arose, the motion
    judge attempted to ensure fairness to the parties by inviting oral submissions
    on the issue during the hearing and in writing after the hearing.  Hatch was
    thus provided with some opportunity to address the new allegation against it in
    argument before the motion judge.

[9]

But, with respect, this did not meet the concern that the alleged breach
    had not been pleaded or raised by Holmes.  And it did not remedy the denial of
    the opportunity for Hatch to lead evidence responsive to the precise breach
    allegation belatedly raised against it.  Hearing fairness was therefore fatally
    compromised.

[10]

Second,
    because the motion judge concluded that Hatch had fundamentally breached and
    repudiated the employment agreement on this basis, thereby rendering it
    invalid, she did not address or rule on Holmes arguments concerning the
    enforceability of the employment agreement.  These included his contentions
    that the termination clause does not reflect a clear agreement to contract out
    of the common law or, in the alternative, that it is ambiguous on this issue, that
    the termination clause violates the provisions of the
Employment Standards
    Act, 2000
, S.O. 1990, c. 41, and that it was not supported by any valid
    consideration.  These issues, therefore, have yet to be determined.

[11]

For
    these reasons, the summary judgment cannot stand.

[12]

The
    appeal is allowed and the summary judgment is set aside.  The matter is
    remitted to the Superior Court of Justice for a new hearing of Holmes summary
    judgment motion, if he is so advised, before a different judge of that court.

[13]

Hatch
    is entitled to some costs of this appeal.  However, Hatch candidly acknowledges
    that it neither objected to the breach issue being raised by the motion judge
    or sought an adjournment for the purpose of filing additional, directly
    responsive materials.  In these particular and somewhat unusual circumstances,
    any award of costs of the appeal should be modest.  We fix those costs in the
    amount of $2,500, inclusive of disbursements and all applicable taxes.

E.A. Cronk J.A.

Grant Huscroft J.A.

I.V.B. Nordheimer J.A.


