The issue generally of frustration is reviewed here.

Doctrine of Frustration due to Vaccine Refusal

A recent decision found in favour of the employer's argument.

The facts before the Ontario court in Croke v VuPoint Systems, a decision released in February of 2023, were as follows:

1. The Plaintiff employee worked as an installer for the defendant. The company’s sole client was Bell Canada. Bell required that all contractors be vaccinated.
2. In response to this, the employer formed its own vaccine policy which mandated vaccination, failing which the employee would be assigned no work.
3. The Plaintiff refused and was then terminated.

The Court found that these facts allowed a successful defence based on the frustration argument. The reasoning was as follows:

1. The pandemic was an unforeseen event;
2. The need for vaccination was due to the actions of the third party;
3. Due to the Plaintiff’s refusal, he was incapable of performing the essential duties of the position.

The claim was hence dismissed.

There may be arguments as to the propriety of this plea as the Plaintiff could have readily avoided the issue by voluntarily being vaccinated. This would be a difference without a consequence as on either reasoning, the case would be dismissed.

This decision was upheld on appeal by the Ontario Court of Appeal in May of 2024.

On the issue of the voluntary conduct of the plaintiff as a factor in assessing this defence, the plaintiff had argued on appeal that this should deny the doctrine. In that event, the case would be based on the test of just cause to terminate as opposed to frustration. The motion decision did not address this submission.

The Court of Appeal dismissed this argument as it determined the supervening event was the policy imposed by Bell to all suppliers that vaccination must be effected:

Whether an employee affected by such a supervening event can or will seek once again to become qualified (or, in this case, vaccinated), is not relevant to a threshold determination of whether the doctrine of frustration is applicable, although, as discussed below, it may be relevant to the other branches of the legal test. This is because it is not the employee’s choice or conduct that renders them unable to work but, rather, the introduction of the new requirement that they do not satisfy. In other words, it is the new requirement that is the supervening event. The analysis therefore proceeds to determine whether that requirement was foreseeable or contemplated in the contract, and whether it radically alters the contractual obligations.

 

COVID Impact on the Business

The employer travel agency submitted that the defence of frustration should deny liability in a 2021 decision. ¹ Significantly the court distinguished the common law test from the statutory defence.

The court also noted that there is a substantive difference between the ability to perform, as contrasted with the "nature of the obligation itself". The consumer demand for travel may have abated, the court stated, but this was not a permanent event. The decision to terminate was one which was chosen to weather the storm and was could not amount to the frustration of the contrac

A further case reviewed the employer's plea in a fact situation in which the defendant did not re-open his restaurant due to Covid issues. ² The B.C. Supreme Court found that the decision to remain closed was based not on his "ability to perform", but rather a choice not to do so. The defence failed.

A similar submission was made in a B.C. case which came before the B.C. Court of Appeal in January of 2024. The employer, as the name suggests, was in the business of selling merchandise to persons traveling between Canada and the United States. The business was closed temporarily due to the decision made to prohibit all such travel to all non-essential travelers due to the COVID-19 pandemic. The closure was for 20 months. ³

The plaintiff had been employed as a sales clerk since 2010. She was 78 years old on termination. She was paid no severance on termination.

The fundamental issue raised by the defence of frustration was whether the unexpected supervening event made the performance of the employment relationship one which was radically different from the original agreement.

The Court of Appeal noted:

Consequently, it is not enough for a party claiming frustration to show that complying with their contractual obligations will result in “… hardship, onerousness, inconvenience, or material loss …”: Blackmore Management Inc. v. Carmanah Management Corporation, 2022 BCCA 117 at para. 60. Instead, to avail themselves of this defence, the claimant must prove that “… the thing undertaken would, if performed [in the new and changed circumstances], be a different thing from that contracted for”: Kiewit at 368, quoting from Fareham at 729. The alleged frustration “… must go to the root of the agreement and be entirely beyond what was contemplated by the parties …”: Blackmore Management Inc. at para. 60, citing KBK at para. 21.

The appellate court agreed with the initial motions decision. Business life would have been more difficult, yes, but the fundamental contractual obligations remained in place:

[59]      Ultimately, however, the judge found that while these factual features affected the appellant’s ability to live up to the contractual obligations contemplated by its employment agreement with the respondent, they did not affect the nature of those obligations.