In order to receive an award of wrongful dismissal damages, a dismissed employee must prove that he or she suffered damages as a result of his or her dismissal from employment. While that statement of law may seem simple and straightforward, it was the primary reason the Ontario Divisional Court set aside a $21,475 Small Claims judgment in a recent decision: Garcia v. 1162540 Ontario Inc., 2013 ONSC 6574 (CanLII)
Facts
The case involved the appeal of a Small Claims decision. Under Ontario law, appeals from the Small Claims Court lie to the Divisional Court, a type of appeal court where judges of the Ontario Superior Court of Justice preside.
In deciding the case, the Honourable Justice Wilton- Siegel was required to look at whether the plaintiff, who was the dismissed employee, was entitled to wrongful dismissal damages on the facts as entered into evidence at trial.
The plaintiff did not testify at his trial as to what happened to him after he was terminated. At trial and on the appeal he took the position that there is an automatic entitlement to pay in lieu of notice for the notice period as found by the court.
Decision
In overturning the Deputy Judge’s decision, Justice Wilton-Siegel relied upon the seminal statement of wrongful dismissal damages from the Supreme Court of Canada’s decision in Michaels v. Red Deer College, [1976] 2 SCR 324:
In the ordinary course of litigation respecting wrongful dismissal, a plaintiff, in offering proof of damages, would lead evidence respecting the loss he claims to have suffered by reason of the dismissal. He may have obtained other employment at a lesser or greater remuneration than before and this fact would have a bearing on his damages. He may not have obtained other employment, and the question whether he has stood idly or unreasonably by, or has tried without success to obtain other employment would be part of the case on damages. If it is the defendant's position that the plaintiff could reasonably have avoided some part of the loss claimed, it is for the defendant to carry the burden of that issue, subject to the defendant being content to allow the matter to be disposed of on the trial judge's assessment of the plaintiff's evidence on avoidable consequences.
Based on that statement of law, Justice Wilton-Siegel noted:
From this passage, the following is clear. First, the plaintiff must demonstrate that he suffered damages in the form of a loss of income. Second, if the plaintiff has established damages, the defendant has the onus of demonstrating a failure to mitigate. Third, if the defendant asserts a mitigation defence, the plaintiff has no legal onus to demonstrate mitigation but, in most circumstances, self-interest would dictate that a plaintiff adduce such evidence.
In the present case, the plaintiff failed at the first stage. He failed to demonstrate damages in the form of a loss of income. This is not the same as saying the plaintiff failed to mitigate. That is a conclusion reached if and when evidence pertaining to a mitigation defence is adduced. The problem in the present case is simply that the plaintiff never testified that he was unemployed for any period of time after his dismissal… On the evidence, it is just as probable that he replaced his lost income with income from a new job as that he incurred lost income because he was unemployed. Accordingly, the Deputy Judge had no basis for finding that the plaintiff suffered any loss as a result of the wrongful termination.
Accordingly, Justice Wilton-Siegel set aside the wrongful dismissal award and dismissed the plaintiff’s case.
Commentary
This case is interesting for two reasons: (1) it calls into question why the plaintiff was not at least awarded his statutory termination pay and (2) it demonstrates that in trials nothing is a given.
As an individual that teaches trial advocacy, I try and stress to my students that liability does not automatically result in damages. A plaintiff must ‘touch all the bases.’ If the plaintiff fails to demonstrate that he or she has suffered any damages as a result of the defendant’s liability, then the plaintiff’s case fails.
With the exception of the payment of the plaintiff’s statutory termination pay (i.e. those amounts prescribed by the Employment Standards Act, 2000) I believe Justice Wilton- Siegel got the decision on this point correct.
Takeaways for Employees
The takeaway for employees from this case is that simply because you have been fired does not automatically mean that you have a case for wrongful dismissal. While often you will be expected to “mitigate your damages” (as explained here: Explaining One’s Duty to Mitigate,) that is not always the case: Fixing the Duty to Mitigate.
Therefore, being taking any decisions about one’s case, it is likely prudent to seek professional legal advice. The professional, experienced and cost-effective employment lawyers for employees at Ottawa's Kelly Santini LLP would be happy to be of service to you. To reach the author of this blog, Sean Bawden, email sbawden@kellysantin i.com or call 613.238.6321 x260.
Takeaways for Employers
The takeaway for employers is that if you have dismissed an employee and he or she is claiming wrongful dismissal damages, it will always make sense to ask that employee whether he or she has found new employment. If the employee fails to answer, then the court will likely draw an adverse influence from that silence. If you know he or she has found new employment, then you can rely upon that to lessen the amount of money you will have to pay the dismissed employee.
For assistance with wrongful claims, the professional, experienced and cost-effective employment lawyers for employers at Ottawa's Kelly Santini LLP would be happy to be of service to your business or organization. To reach the author of this blog, Sean Bawden, email sbawden@kellysantin i.com or call 613.238.6321 x260.
--As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation and it is always prudent to seek professional legal advice before taking any decisions on one’s own case.
Sean Bawden, publisher of the law blog for the suddenly unemployed, can be reached by email at sbawden@kellysantin i.com or by phone at 613.238.6321.
Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP, and part-time professor at Algonquin College teaching Trial Advocacy for Paralegals and Small Claims Court Practice. He is a trustee of the County of Carleton Law Association.
This is helpful for those people that experiencing a wrong dismissal. Thanks for posting this.
ReplyDeleteInteresting case, Sean. I just came across it for its citation in the recent Kimball summary judgment motion.
ReplyDeleteI'm not sure I agree with you that Justice Wilton-Siegel got this one right. I've appeared before him, and I can tell you that he's a very bright and detail-oriented judge, but I think he conflated the assessment of damages with mitigation deductions.
If you prove that you were dismissed without notice, that you were entitled to reasonable notice, and what you would have received over the reasonable notice period, you've proven your lost income - those are your damages. (It has been, at times, controversial as to whether or not wrongful dismissal damages are 'special' or 'general' - technically 'special', it seems, but the proof of loss is satisfied via the Bardal analysis.) If you find new income afterward - even immediately afterward - those mitigation earnings would be deducted from the assessed damages.
Thus, the correct approach is to assess damages, as at the time of breach, based on the premise that the employee worked through the entire notice period. (The SCC said this pretty expressly in Sylvester, but it's also consistent with the ONCA's approach to pre-judgment interest in Stevens v. Globe & Mail, among others.) That simply can't integrate an 'avoided losses' analysis, nor should it. Once you've assessed damages, you look at deductions from those damages such as mitigation earnings, failure to mitigate, or deductible amounts otherwise paid such as LTD (sometimes) or statutory notice/severance.
This analysis is also fully necessary to ground summary judgment motions prior to the end of the notice period, such as Bernier v. Nygard - if the assessment of damages itself required proof of the absence of income through the relevant time period, you couldn't be assessed damages for a period that hadn't already passed.
Dennis:
DeleteI was tempted to disagree with you until you mentioned "you couldn't be assessed damages for a period that hadn't already passed." Of course, it is not uncommon for judges in employment law cases to do that, and then impose a trust with respect to any yet unpaid damages to account for potential mitigation income.
However, even in those cases, should not the employee have to at least confirm that s/he has not worked since being terminated, thereby suffering a loss?
It's probably prudent to do, from a practical perspective (though I can see why one might not where failure to mitigate hasn't been pleaded, in which case even impressment with a trust would be unnecessary), but I'm not sure I can see any basis for saying it's *required*, as an essential element of the cause of action, if future damages are nonetheless capable of being quantified without it.
DeleteReasonable notice is altogether based on the presumption that it will take time to find replacement employment. And, in broad strokes, it's a very fair presumption - I've never seen a case where a dismissed employee suffered *no* loss. (Yes, I've seen a small handful with re-employment during the statutory notice period, but the framework for that is that there's still a compensable loss on the breach of contract, which is fully offset by the statutory payment.) While I doubt it's technically correct to say that a plaintiff needs to lead evidence of time spent out-of-work, I'm particularly troubled by a wrongfully dismissed Small Claims Court plaintiff getting denied judgment on the basis of such a minor and likely technical failure.