Where a case proceeds by way of a motion for summary judgment, a decision will be handed down quickly, often during the period of reasonable notice. The court, in such a case, will be called upon to determine how to deal with the damages owed to the employee given that he or she is under a continuing obligation to mitigate by making reasonable efforts to secure other employment. Courts have developed a couple of approaches.
The first case is Markoulakis v Snc-lavalin Inc. 2015 ONSC 1081 (CanLII). Ed Markoulakis (“Markoulakis”) was employed by Snc-lavalin as a Senior Civil Engineer earning $129,272 annually. He was 65 years of age and had worked for Snc-lavalin for 40 years, when he was dismissed without just cause. It appears that Snc-lavalin continued Markoulakis’ salary for approximately 34 weeks, until the hearing of the motion (about 8 months after the termination).
Markoulakis sued for wrongful dismissal and claimed that he was entitled to common law reasonable notice or compensation in lieu of 30 months.
The defendant argued the motion should not have been brought until the end of the notice period being claimed by Markoulakis. It therefore argued that the motion should be adjourned until the end of the notice period to avoid an unfair resolution of this dispute. The unfairness arose, so the employer argued, by over-compensating the plaintiff given the ongoing duty to mitigate. As the court put it:
How does the Defendant, who has the burden of proving a failure to mitigate damages, ensure that the Plaintiff does so during the unexpired period of reasonable notice?
The court relied on Bullen v. Protor & Redern Ltd. 1996 CanLII 8135 (ON SC) where the court held that “the damages for wrongful dismissal are assessable at the date of termination subject only to the duty to mitigate.” In other words, it is possible to determine the notional period of reasonable notice at the time of termination, but the damages are affected by mitigation.
The Court in Markoulakis held that:
While the evidence shows that the chances of re-employment for the Plaintiff are low, it does not establish that re-employment during the notice period is not possible. I do not find there is a proper evidentiary base on which to make the finding that the Plaintiff will not be able to find a job during the balance of the notice period.
The jurisprudence establishes that there are three strategies for dealing with damages before the expiry of the period of reasonable notice period:
- The Trust Approach: the Plaintiff must account for any mitigation earnings during the period of reasonable notice and a procedure is designed for a return to Court in the event of disputes (Correa v. Dow Jones Markets Canada Inc. (1997), 1997 CanLII 12268 (ON SC); Camaganacan v. St. Joseph’s Printing Ltd., 2010 ONSC 5184 (CanLII); Bullen v. Protor & Redfern Ltd., 1996 CanLII 8135 (ON SC); Chen v. Purdue Pharma Inc., 2015 ONSC 1967 (CanLII));
- The Partial Summary Judgment Approach: the parties return at the end of the notice period to determine the adequacy and success of the Plaintiff's mitigation efforts (Russo v. Kerr Bros. Ltd., 2010 ONSC 6053 (CanLII),);
- The Contingency Approach: the Plaintiff's damages are reduced by a contingency for re-employment. (Neither party supports this approach and there was no evidence upon which to find the appropriate contingency rate.)
The court determined that the appropriate period of reasonable notice having regard to the Bardal factors was 27 months. The court went on to determine how this should be paid and decided that:
It follows that the Defendant has the obligation to the Plaintiff to pay the agreed upon compensation monthly for the balance of such notice period. This obligation of the Defendant to pay is subject to the Plaintiff's obligation to mitigate his damages and to a deduction in the monthly payments by the Defendant for any earnings from employment or a business. If during the balance of the notice period, the Defendant challenges the mitigation efforts or earnings of the Plaintiff and does not make such payments to the Plaintiff, the parties may deal with this dispute either on a motion for summary judgment, or by way of a trial of an issue.
The court reasoned that this was the appropriate way to proceed in this case as it responded to the employee’s right to a determination of the appropriate period of reasonable notice while preserving the employer’s right to challenge the employee’s mitigation efforts and providing a process for dealing with any disputes by returning to court.
Justice Pollak in Markoulakis appeared to favour the partial summary judgment approach while imposing certain obligations on the parties to police the mitigation issue during the period of reasonable notice with the option of returning to the court if there were issues or disagreements.
The court considered the issue even more in Zoldowski v Strongco Corporation 2015 ONSC 5485 (CanLII) Jennifer Zoldowski (“Zoldowski”) was dismissed without just cause by Strongco. She brought a motion for summary judgment seeking to fix the appropriate notice period. The other issue for consideration was how to deal with the duty to mitigate as the motion was heard before the expiration of any reasonable notice period the court might award.
Zoldowski started employment with Strongco on January 27, 1998. She held a number of different positions with Strongco. Most recently, she performed the duties of Parts Administrator earning an annual base salary of $47,998.17. Zoldowski’s employment was terminated on February 12, 2015, without cause. She was 39 years old and had been employed for 17 years.
The employer provided Zoldowski with her minimum entitlement under the ESA. Although Zoldowski applied for numerous jobs throughout the GTA since her termination, her efforts were not successful. She has had one job interview which did not result in an offer. She had sought job counselling, created profiles on a variety of online job search sites looking for work and had applied to an employment agency. She had not found replacement employment at the time of the motion.
Considering the Bardal factors, the court determined that the period of reasonable notice was 14 months. The court considered mitigation and stated:
If an employment matter proceeds to trial, normally the trial decision is long after the notice period awarded, so that the plaintiff’s mitigation efforts can be tested at trial. Here, the notice period extends beyond today’s date. This is apparently becoming a more common issue due to the increase in summary judgment motions for cases such as this, arising from the culture shift brought on by Hryniak v. Mauldin, 2014 SCC 7(CanLII), 1 S.C.R. 87.
In this case, the employee argued in favour of the Trust Approach while the employer maintained that the Partial Summary Judgment Approach was most appropriate.
The court considered the competing arguments in favour of the different approaches and, ultimately, accepted that the Trust Approach was most appropriate. It put its decision as follows:
The plaintiff must account to the defendant for any mitigatory earnings for the balance of the notice period ordered. She is to do so at the end of the 14 month notice period and will reimburse the defendant any such amount received. There is a court imposed constructive trust upon those earnings in favour of the defendant.
The court in Correa v. Dow Jones Markets Canada Inc. , 35 O.R. (3d) 126 (Gen. Div.) described the trust as follows:
In other words, the plaintiff will receive a lump sum now, equal to 18 months' salary, but he will be under an obligation to pay any proceeds received from new employment to the defendant during the 18-month notice period. I appreciate that following this procedure may be more disadvantageous from a tax perspective than payment and receipt of periodic payments. However, to use the words of McLachlin J. in Watkins v. Olafson, supra, quoted above, the imposition on the plaintiff of that sensible solution is "best left to be undertaken by the legislature."
These recent cases highlight that summary judgment is an appropriate means of adjudicating many employment law cases even where the period of reasonable notice has not expired at the time the motion is heard. The court will develop a process where issues relating to mitigation can be addressed either by the parties themselves or by returning to court.