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Employment - Damages (2). Lynch v. Avaya Canada Corporation
In Lynch v. Avaya Canada Corporation (Ont CA, 2023) the Court of Appeal considered a wrongful dismissal case, here addressing the notice period in light of the leading Bardal case:Period of reasonable notice
[7] Avaya alleges that the motion judge erred in fixing a notice period of 30 months because she wrongly held that the circumstances of this case placed it within the “exceptional circumstances” category of cases that this court has held justify a notice period in excess of 24 months: see Lowndes v. Summit Ford Sales Ltd. (2006), 2006 CanLII 14 (ON CA), 206 O.A.C. 55 (C.A.), at para. 11. Avaya placed particular emphasis on the fact that Mr. Lynch did not hold a management position in the company.
[8] We are not persuaded the motion judge made such an error.
[9] The common law principle that an employee dismissed without cause is entitled to reasonable notice is designed to afford an employee a reasonable period of time to search for and secure alternate employment: Stacey Ball, Canadian Employment Law (Toronto: Thomson Reuters, 2023), at §9.6; Howard Levitt, Law of Dismissal in Canada, 3d ed., (Toronto: Thomson Reuters, 2023), at §8.5. The Bardal approach to determining the reasonable period of notice to which a dismissed employee is entitled – an approach approved by the Supreme Court of Canada in Wallace v. United Grain Growers Ltd., 1997 CanLII 332 (SCC), [1997] 3 S.C.R. 701, at para. 81 – is premised on the principle that “there can be no catalogue laid down as to what is reasonable notice in particular classes of cases”: Bardal, at p. 145. Instead, the Bardal approach determines the applicable period of reasonable notice by employing a case-by-case consideration of a group of factors that has regard to the character of the employment, the length of service of the employee, the age of the employee, and the availability of similar employment “having regard to the experience, training and qualifications” of the employee: Bardal, at p. 145.
[10] In Lowndes, this court recognized that there is no absolute upper limit or “cap” on what constitutes reasonable notice, but it went on to state that “generally only exceptional circumstances will support a base notice period in excess of 24 months” for long-term employees in positions comparable to that held by the employee in that case, which appeared to be below the position of a senior executive: Lowndes, at paras. 11-15. See also Dawe v. The Equitable Life Insurance Company of Canada, 2019 ONCA 512, 435 D.L.R. (4th) 573, at paras. 31-33; Currie v. Nylene Canada Inc., 2022 ONCA 209, at paras. 11-13. . Milwid v. IBM Canada Ltd.
In Milwid v. IBM Canada Ltd. (Ont CA, 2023) the Court of Appeal considered a wrongful dismissal notice period issue, here regarding 'exceptional circumstances' which may merit a period of more than 24 months [Bardal]:B. NOTICE PERIOD
[3] The motion judge found that the respondent was entitled to 26 months’ reasonable notice, considering his “age, lengthy service, the exclusivity of his employment with the defendant, the character of his employment and specialized nature of his work.” An award over 24 months was found to be warranted because there were exceptional circumstances. It appears that, in finding exceptional circumstances, the motion judge relied on the respondent’s age, length of service with the same employer, managerial position, his compensation in an uncertain economy, and “the technical/skilled nature of his skills geared towards the defendant’s business.”
[4] The appellant submits, relying on Dawe v. The Equitable Life Insurance Company of Canada, 2019 ONCA 512, that the motion judge erred in basing her finding that there were exceptional circumstances that warrant a notice period in excess of 24 months on the factors set out in Bardal v. The Globe & Mail Ltd. (1960), 1960 CanLII 294 (ON SC), 24 D.L.R. (2d) 140 (Ont. H.C.). We do not accede to this submission. There is nothing impermissible in relying on the constellation of Bardal factors, along with other exceptional circumstances, to find that a notice period exceeds 24 months: Currie v. Nylene Canada Inc., 2022 ONCA 209.
[5] In this case – similar to the situation in Currie – the evidence established that the respondent’s skills were not transferrable because they related, almost exclusively, to the appellant’s products. This is an exceptional circumstance not covered by the Bardal factors, which could warrant a notice period exceeding 24 months. Therefore, we see no error in the motion judge’s decision to fix reasonable notice at 26 months.
[6] The appellant also submits that the motion judge erred in finding that an additional month of notice, bringing the total to 27 months’ notice, was appropriate to reflect the circumstances of the COVID-19 pandemic. This finding is entitled to deference by this court and was well supported by the evidence in this case. The pandemic was a truly exceptional circumstance, and the respondent lost his position right at the time the global economy was shutting down. There is no basis to interfere with the motion judge’s decision in this regard. . Oz Optics Limited v. Summers
In Oz Optics Limited v. Summers (Div Court, 2023) the Divisional Court considered common law wrongful dismissal notice periods [Bardal]:(ii) Common Law Notice
[32] Having found that the agreement was void and unenforceable, the trial judge went on to consider the common law notice to which the Respondent was entitled. In doing so, he balanced the oft cited factors from the leading case of Bardal v. The Globe and Mail Ltd, 1960 CanLII 294 (ON SC), [1960] O.J. No. 149 (“the Bardal factors”): the character of the employment, the employee’s age and length of service, the availability of similar employment having regard to the experience, training, and qualifications of the employee.
[33] I can find no palpable or overriding error in the trial judge’s application and balancing of the Bardal factors. There was unchallenged evidence that the Respondent was in a specialized senior technical position in the fibre optics industry, that he was 61 years old, that he remained unemployed at the time of trial, that relocating was not a practical option for him and that he was not bilingual. The Respondent did not have the benefit of career transition counselling or a reference letter from the Appellant. The fact that the Respondent did not request a reference letter was irrelevant: there is case law to support the premise that an employer’s failure to furnish a dismissed employee with a reference letter may be considered when assessing a notice period: see for example, Skowron v. ABC Technologies Inc., 2021 ONSC 3734, [2021] O.J. No. 2850, at para. 30. In any event, the trial judge’s weighing of the Appellant’s failure to provide career counselling and a notice letter fell under his discussion of mitigation (see paragraph 15 of his reasons), an issue that was unsuccessfully advanced by the Appellant and which was not raised on appeal before this court.
[34] The trial judge had before him a host of precedent cases provided by the parties. He did not err in law or in principle by failing to cite or rely on those cases. The trial judge properly conducted his assessment of the common law notice period as part of individualized and contextual exercise, invoking and applying the Bardal factors in a balanced and thoughtful fashion before arriving at an appropriate period of notice and awarding the damages in lieu of that notice. The trial judge’s determination of notice and the accompanying damages award were within the range of acceptable outcomes. This court owes deference to his findings and should not intervene in the absence of an error of law or in principle, or a misstatement of the relevant evidence. . Humphrey v. Mene Inc.
In Humphrey v. Mene Inc. (Ont CA, 2022) the Court of Appeal considered cross-appeals on a wrongful dismissal case, here on the issue of aggravated damages:[61] An award of aggravated damages can be made in wrongful dismissal cases where an employer engages in conduct that is “unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive”: Wallace v. United Grain Growers Ltd., 1997 CanLII 332 (SCC), [1997] 3 S.C.R. 701, at para. 98; Honda, at para. 57. Typically, as here, the assertion is that there was bad faith in the manner of dismissal. However, the “normal distress and hurt feelings resulting from dismissal are not compensable”: Honda, at para. 56. Assessing aggravated damages is “an imprecise, fact-specific exercise”, entitled to deference on appeal: Colistro v. Tbaytel, 2019 ONCA 197, 145 O.R. (3d) 538, at para. 60, leave to appeal refused, [2019] S.C.C.A. No. 173; Doyle v. Zochem Inc., 2017 ONCA 130, 2017 C.L.L.C. 210-030, at para. 14; and Strudwick, at para. 33. . Humphrey v. Mene Inc.
In Humphrey v. Mene Inc. (Ont CA, 2022) the Court of Appeal considered cross-appeals on a wrongful dismissal case, here on the issue of mitigation:[53] I begin with the observation that the burden is on a defendant to establish a failure to mitigate damages. The question is “whether [the employee] has stood idly or unreasonably by, or has tried without success to obtain other employment”: Red Deer College v. Michaels, 1975 CanLII 15 (SCC), [1976] 2 S.C.R. 324, at p. 331. Whether a terminated employee has failed to take reasonable steps to mitigate, and the effect of this failure on the quantum of damages, are typically questions of fact, subject to review for palpable and overriding error: Beatty v. Best Theratronics Ltd., 2015 ONCA 247, 27 C.C.E.L. (4th) 177, at para. 10, leave to appeal to S.C.C. refused, 36476 (October 8, 2015).
[54] Mene’s first argument is based on a false premise: that any mitigation delay, other than what is legitimately an “adjustment period”, should result in an automatic reduction in the notice period. There is no precise formula for determining the reasonableness of an employee’s mitigation efforts or the effect of any delay in mitigation on the employee’s damages. Here, the motion judge concluded that given the way Ms. Humphrey was treated, it was difficult to fault her for not starting her job search immediately, although waiting six months to send out applications was too long: at para. 163. The motion judge’s assessment of the reasonableness of Ms. Humphrey’s efforts, and the effect of Ms. Humphrey’s delay in applying for jobs on the damages to which she is entitled, reveals no error in principle or palpable and overriding error of fact. Although a reduction of only one month is very generous, the motion judge’s assessment of the appropriate reduction is entitled to deference.
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[57] With respect, the motion judge set the bar too high on the issue of mitigation in addressing this evidence. Comparable employment does not mean identical employment. It means “a comparable position reasonably adapted to [the plaintiff’s] abilities”: Link v. Venture Steel Inc., 2010 ONCA 144, 259 O.A.C. 199, at para. 73, leave to appeal to S.C.C. requested but appeal discontinued, 33690 (April 30, 2010); Dussault v. Imperial Oil Limited, 2019 ONCA 448, 2019 C.L.L.C. 210-053, at para. 5. It was sufficient for Mene to rely on evidence that Ms. Humphrey had been offered a senior management position with compensation that was comparable to or greater than what she earned at Mene. The motion judge erred in finding that “Mene has not provided the Court with persuasive evidence or analysis on whether this position was comparable”: at para. 165 . Humphrey v. Mene Inc.
In Humphrey v. Mene Inc. (Ont CA, 2022) the Court of Appeal considered cross-appeals on a wrongful dismissal case, here on the issue of the Bardal factors determining the length of termination notice:[32] This court recognizes the “fact-specific and contextual approach to the period of reasonable notice, limited by a range of reasonableness”: Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2016 ONCA 520, 349 O.A.C. 360, at para. 40. As Favreau J.A. recently noted, “[t]his court should not interfere lightly with a court’s determination of a common law notice period. Such a determination requires the court below to weigh multiple factors and assess the circumstances of each case on the basis of its unique circumstances”: Antchipalovskaia v. Guestlogix Inc., 2022 ONCA 454, at para. 56.
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[44] Mene submits that, in considering and applying the Bardal factors, the motion judge relied too heavily on Ms. Humphrey’s title as COO, and did not take into consideration her relatively short period of employment and young age at the time of her dismissal.
[45] I disagree. A fair reading of the motion judge’s reasons makes it clear that she considered all of the Bardal factors. As noted earlier, the question of the weight to be given to each factor was within her discretion, having regard to the particular circumstances of the case. The motion judge reviewed and applied the Bardal factors of age, length of service, character of employment, and availability of similar employment, having regard to the experience, training and qualifications of the employee: Bardal, at para. 21. She considered the authorities put forward by both parties and, after weighing all of the Bardal factors, she fixed the reasonable notice period at 12 months.
[46] Because no single Bardal factor should be given disproportionate weight or be treated as determinative, a short period of service will not always lead to a short period of notice: Honda Canada Inc. v. Keays, 2008 SCC 39, [2008] 2 S.C.R. 362, at para. 32; see also, for example, Sager v. TFI International Inc., 2020 ONSC 6608, 2021 C.L.L.C. 210-014 (two years and nine months of service, nine months’ notice); Sanghvi v. Norvic Shipping North America, 2020 ONSC 8068, 2021 C.L.L.C. 210-023 (three years and nine months of service, eight months’ notice); and Norgren v. Plasma Power LLC, 2018 ONSC 3186, 2018 C.L.L.C. 210-060 (23 months of service, 8 months’ notice).
[47] It would have been an error for the motion judge to overemphasize the short duration of Ms. Humphrey’s employment as a factor. See, for example, Love v. Acuity Investment Management Inc., 2011 ONCA 130, 277 O.A.C. 15, leave to appeal refused, [2011] S.C.C.A. No. 170, where this court concluded that the trial judge erred by overemphasizing the employee’s short length of service (2.53 years) and underemphasizing the character of his employment, where (as here) he reported directly to the CEO. The court substituted a notice period of nine months for the five months awarded at trial.
[48] It is important to keep in mind the object of fixing a reasonable notice period, which is to determine, in the particular circumstances of the case, how long it would reasonably take the terminated employee to find comparable employment: Lin v. Ontario Teachers’ Pension Plan Board, 2016 ONCA 619, 352 O.A.C. 10, at para. 54. In the present case, the motion judge also properly considered the circumstances of Ms. Humphrey’s termination as a factor affecting how long it might reasonably take her to find a new position. The motion judge observed that, having regard to the fact that Ms. Humphrey was terminated allegedly for cause six months after her promotion to COO, “it would be more difficult for [her] to have obtained comparable employment because she would have to explain to prospective employers why she was terminated so soon after her recent appointment”: at para. 147. This is a relevant factor: see, for example, Lin, at para. 53.
[49] In these circumstances, considering only certain factors (Ms. Humphrey’s age and length of service) might suggest that a notice period of 12 months was too high. The determination of reasonable notice, however, required an approach that considered all of the relevant circumstances as they would bear on Ms. Humphrey’s likely ability to find another comparable position. The determination of reasonable notice depends on the context and particular circumstances of the case. Mene has failed to demonstrate any legal error or error in principle in the motion judge’s approach, or any palpable and overriding error of fact that would justify interfering with her determination that 12 months was a suitable notice period. Nor am I persuaded that 12 months is entirely outside of an appropriate range in the circumstances of this case. As I will explain in the next section, however, I would reduce the damages to which Ms. Humphrey is entitled to the equivalent of six months’ compensation as a result of her failure to properly mitigate her damages. . Humphrey v. Mene Inc.
In (Ont CA, 2022) the Court of Appeal considered cross-appeals on a wrongful dismissal case, here on the issue of punitive damages:[79] Punitive damages in breach of contract or tort cases are exceptional: their purpose is to punish a defendant for conduct that is reprehensible, and a “marked departure from ordinary standards of decent behaviour”. Whereas damages for conduct in the manner of dismissal are compensatory, punitive damages are “restricted to advertent wrongful acts that are so malicious and outrageous that they are deserving of punishment on their own”: Honda, at para. 62. They should be awarded, in addition to the compensatory damages already awarded, when rationally required to punish a defendant to meet the objectives of retribution, deterrence and denunciation, in an amount no greater than necessary to satisfy these objectives: Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419, 120 O.R. (3d) 481, at para. 79.
[80] An appellate court may interfere with a trial court’s assessment of punitive damages where (1) there is an error of law; or (2) the amount is not rationally connected to the purposes for which the damages are awarded, namely prevention, deterrence (both specific and general), and denunciation: Bank of Montreal v. Marcotte, 2014 SCC 55, [2014] 2 S.C.R. 725, at para. 98. When the quantum of punitive damages awarded is challenged, the question on appeal is “whether a reasonable jury, properly instructed, could have concluded that an award in that amount, and no less, was rationally required to punish the defendant’s misconduct”: Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595, at paras. 107-108. As observed by this court in Pate Estate v. Galway-Cavendish and Harvey (Township), 2013 ONCA 669, 117 O.R. (3d) 481, at para. 202, this standard emphasizes an appellate court’s supervisory obligation to ensure that an award of punitive damages is “the product of reason and rationality”: Whiten, at para. 108.
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