Determining Wrongful Dismissal Damages in Fast-Track Litigation

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By Thomas A. Roper, Q.C.

Rules of court in most jurisdictions in Canada make provision for summary trials or fast-track litigation, trial processes that are particularly well-suited to wrongful dismissal litigation where only the amount of reasonable notice is in dispute. Summary trial ordinarily proceeds on the basis of a motion with supporting affidavits. Typically, a court will only consider a case appropriate for summary trial if the dispute on the facts can be resolved by the court without hearing viva voce evidence. Fast-track litigation is typically available where the claim is less than a maximum amount (in British Columbia, the amount is $100,000.00) and where the trial of the action can be completed within a few days.

A question arises in these expedited processes as to how damages should be assessed if the case comes before the court during the reasonable notice period. The plaintiff has a continuing obligation to take reasonable steps to mitigate his or her damages, which can only be determined at the end of the reasonable notice period. It is important to strike an appropriate balance between expediting litigation and preserving the right of the defendant to take advantage of all available defences.

A recent decision of the Ontario Superior Court of Justice provides an extensive review of the options available to a court in such a case: Markoulakis v. SNC-Lavalin Inc. [2015] O.J. No. 1924, a decision rendered on April 16, 2015. In that case, the plaintiff had been employed by the defendant for 40 years, and was dismissed from his employment due to a shortage of work. He was sixty-five years of age and held the position of a senior civil engineer. There was no issue of just cause for termination, so the plaintiff brought an application for summary judgment, claiming 30 months as the reasonable notice period.

The case came to trial 34 weeks after the plaintiff’s dismissal. The defendant took the position that although the case was appropriate for summary judgment, the motion should not have been brought until the end of the notice period being claimed by the plaintiff, and accordingly the motion should be adjourned. Otherwise, argued the defendant, any damage award would have the practical effect of removing the plaintiff’s obligation to mitigate.

In reviewing prior decisions, the court identified three approaches that had been taken in cases which had come to trial before the expiry of the period of reasonable notice:

  1. The “trust approach” where the plaintiff would account for any mitigation earnings during the period of reasonable notice with the ability of the parties to return to court in the event of disputes;
  2. The “partial summary judgment approach” where the parties return to court at the end of the notice period to determine the adequacy and/or success of the plaintiff’s mitigation efforts; and
  3. The “contingency approach” where damages are reduced by an allowance for the prospect that the plaintiff would become re-employed during the notice period.

The defendant argued that the trust approach provides little incentive for the plaintiff to mitigate, as anything earned would have to be paid to the defendant. It argued that fairness dictated that damages only be awarded at the end of the notice period claimed.

The court first made an assessment of the reasonable notice period, applying the factors set out in Bardal v. Globe & Mail Ltd., [1960] O.J. No. 149 and held that 27 months was the appropriate notice period. The court held that the defendant was therefore obligated to pay the plaintiff monthly compensation for the balance of the notice period while the plaintiff had the obligation to mitigate his damages. Any mitigation would be deducted from the monthly payments made by the defendant. If the defendant challenged the plaintiff’s mitigation efforts or the actual amount of earnings received, and refused to continue monthly payments, then the matter could be brought before the court either on a motion for summary judgment or by way of a trial on the issue. The court held that it was appropriate for the motions judge to remain seized of the case to determine any disputes about mitigation.

In a subsequent decision, [2015] O.J. No. 2615 issued on May 25, 2015, the motions judge considered submissions by both the plaintiff and the defendant on costs. The plaintiff had made a formal offer to settle, which he argued was lower than the trial judgment and he should thus be awarded indemnification of legal fees actually incurred. The defendant also made a formal offer to settle and argued that because no specific dollar amount was awarded in damages, and any mitigation earnings would be deducted, it was impossible to calculate the amount of the plaintiff’s award until the end of the reasonable notice period. The court accepted the defendant’s position and deferred the question of costs until there was agreement on the plaintiff’s mitigation efforts or until any dispute in that regard was settled by a further motion or at trial.

Where just cause is not in issue, most employers who do not provide working notice choose to provide salary and benefit continuation during the reasonable notice period with an offset in the event that the plaintiff succeeds in mitigating his or her losses. If the duration of the reasonable notice period is disputed and the matter comes before the court before the period ultimately determined by the court expires, this case provides guidance on the appropriate outcome: the plaintiff obtains judgment on the reasonable notice period while the final quantification of damages is deferred so as to preserve the defendant’s right to offset mitigation earnings or dispute the plaintiff’s mitigation efforts.

Thomas A. Roper, Q.C. is a founding partner of Roper Greyell LLP, a firm of 25 lawyers who practise exclusively in the areas of labour, employment and administrative law. He represents employers in the public and private sectors and professional associations. Tom can be reached by e-mail at troper@ropergreyell.com. For more information about his practice and Roper Greyell, please visit www.ropergreyell.com.

While every effort has been made to ensure accuracy in this article, you are urged to seek specific advice on matters of concern and not to rely solely on what is contained herein. The article is for general information purposes only and does not constitute legal advice.

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