Those of us of a certain age will remember a sketch comedy television series originally inspired by Mad magazine that aired on Fox from 1995 to 2009 called “MADtv”. Among the recurring sketches on MADtv was a segment called “Lowered Expectations”, which spoofed dating videos.
The title “Lowered Expectations” poses a relevant employment law question: Does a dismissed employee have a legal duty to mitigate her damages by searching for a lesser paying job after a reasonable period of time has passed looking for a more comparable position?
Just as it is true that no one should have to lower their expectations in looking for love, in Lake v. La Presse, 2022 ONCA 742 (CanLII), the Court of Appeal for Ontario (van Rensburg, Pardu and Copeland JJ.A.) held that a motion judge had erred in principle when she accepted that, in mitigation, after a reasonable period of attempting to find similar employment, a dismissed employee must begin searching for a lesser paying job.
Sorry if you now have the theme song stuck in your head.
Overview
The case concerned the appeal of a summary judgment in a wrongful dismissal action. The motion judge, Justice Jasmine T. Akbarali of the Superior Court of Justice, awarded the appellant damages equivalent to six months’ reasonable notice after deducting two months for failure to mitigate and the compensation already paid by the respondent over the notice period. Justice Akbarali’s reasons for decision are reported at 2021 ONSC 3506.
The only issue on appeal was whether Justice Akbarali erred in reducing the appellant’s wrongful dismissal damages for failure to mitigate.
Facts
The appellant, Lake, was hired in August 2013 and worked for the respondent, La Presse, a daily online French language newspaper based in Montréal, for five and a half years as General Manager. Lake was the most senior employee in the Toronto division, reporting to the Vice-President of Sales and Operations in Montreal. In this capacity she managed the sales team to generate advertising revenue in Toronto and English Canada. At one time, she had thirteen direct reports, and at the date of dismissal she had eight. Lake’s compensation consisted of an annual base salary of $185,000, with a car allowance, annual bonus, pension, and other benefits. She was 52 years old at the date of her dismissal.
Lake’s employment was terminated after La Presse decided to close its Toronto office. She was notified on March 25, 2019, that her employment would end effective May 30, and she in fact stopped working on April 30, 2019. After the termination of her employment, Lake conducted a job search, but she remained unemployed at the date of the summary judgment motion, two years after her dismissal.
Decision of the Ontario Superior Court
There was no dispute that the appellant’s employment was terminated without cause and that she was entitled to reasonable notice at common law. The main issues on the summary judgment motion were the period of reasonable notice, whether the appellant was entitled to compensation for loss of bonus over the reasonable notice period, and whether the appellant’s notice period should be reduced for failure to mitigate.
On the question of mitigation, Justice Akbarali recognized that the onus was on La Presse to establish that Lake failed to mitigate and that there were two parts to the analysis: first, whether Lake took reasonable steps, and second, if such steps had been taken that she would likely have obtained comparable employment. Justice Akbarali concluded that the steps taken by Lake to mitigate her damages were not reasonable in the following ways: (a) she waited too long before beginning her job search; (b) she “aimed too high” in applying for vice-president roles and she should have been applying for less senior roles if she continued to remain unemployed; and (c) she waited too long before applying for any jobs and she applied to very few jobs. Justice Akbarali then stated at para. 69:
In these circumstances, I infer that, had the [appellant] expanded the parameters of her job search, searched earlier, and applied for more positions, her chances of obtaining a position would have improved significantly. Although there is no direct evidence in front of me of other positions that the [appellant] could have applied for, I find it is reasonable to assume that they existed. If vice-president roles were available, more junior roles were also available. The [appellant] chose unreasonably to limit her job search, which had a corresponding impact on her ability to find work.
Justice Akbarali reduced the notice period of eight months by two months to account for Lake’s failure to take reasonable steps to mitigate her damages.
Decision of the Court of Appeal for Ontario
Justice Katherine van Rensburg wrote the Court of Appeal’s reasons for allowing Lake’s appeal, writing:
[10] I begin with a summary of the relevant legal principles respecting mitigation of damages for wrongful dismissal.
[11] The leading authority is Red Deer College v. Michaels, [1976] 2 S.C.R. 324. The duty to mitigate is based on the premise that the defendant is not responsible for losses that a plaintiff could reasonably have avoided. 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”: at p. 331. The burden is on the defendant to show the plaintiff “either found, or, by the exercise of proper industry in the search, could have procured other employment of an approximately similar kind reasonably adapted to his abilities”: at p. 332. The burden is “by no means a light one, for this is a case where a party already in breach of contract demands positive action from one who is often innocent of blame”: at p. 332.
[12] While a terminated employee has a duty to take reasonable steps to mitigate, the onus is on the defendant to demonstrate that the plaintiff could reasonably have avoided a loss or that she acted unreasonably in failing to do so… The defendant must prove: (1) that the plaintiff failed to take reasonable steps to mitigate her damages; and (2) that if she had done so she would have been expected to secure a comparable position reasonably adapted to her abilities…
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[19] The motion judge erred in principle when, at para. 65, she accepted that, in mitigation, after a reasonable period of attempting to find similar employment, a dismissed employee must begin searching for a lesser paying job (which was based on an obiter comment by a trial judge in Neilipovitz v. ICI Paints (Canada) Inc. (2002), 27 C.C.E.L. (3d) 256 (Ont. S.C.), at paras. 25-26), and then, at para. 68, she concluded that the appellant should have applied for a sales representative role if she continued to remain unemployed. The obligation of a terminated employee in mitigation is to seek “comparable employment”, which typically is employment that is comparable in status, hours and remuneration to the position held at the time of dismissal: Carter v. 1657593 Ontario Inc., 2015 ONCA 823, at para. 6. There was no obligation for the appellant, to seek out less remunerative work, including by working as a sales representative.
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[21] The motion judge also made a palpable and overriding error when she concluded that the appellant aimed too high when she applied for vice-president positions and had focused her job search on roles that would represent a promotion over her prior role.
[22] The appellant’s evidence of the steps she took in mitigation was substantial…
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[25] In my view, the motion judge placed too much emphasis on the titles of some of the positions the appellant applied for, without giving proper consideration to the appellant’s evidence that the positions were similar to her prior work experience. Without evidence contradicting the appellant’s assertion that the vice-president roles had similar job responsibilities to her previous employment, the motion judge speculated, based on the title of the positions alone, that such positions were not comparable. This error influenced her determination that the appellant failed to take reasonable steps to mitigate her damages.
[26] The duty to “act reasonably” in seeking and accepting alternate employment is a “duty to take such steps as a reasonable person in the dismissed employee’s position would take in [her] own interests” and is “not an obligation owed by the dismissed employee to the former employer to act in the employer’s interests”…
[27] The onus was on the respondent to prove the appellant’s failure to mitigate. Typically, in asserting that a terminated employee has failed to mitigate, the employer will lead evidence on this point, although the burden can be discharged by reference to the plaintiff’s own evidence: Red Deer College, at p. 331. In this case, the respondent offered no evidence to counter the appellant’s evidence that the vice-president positions had similar job responsibilities to her previous employment, and that opportunities in the industry at the time were limited.
[28] In the absence of affirmative evidence from the respondent, or any suggestion in cross-examination that the appellant failed to apply for an available position that was comparable in nature to her former position, the record did not support the motion judge’s conclusion that the appellant failed to make reasonable efforts to mitigate her damages.
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[32] The second part of the test on mitigation requires that the court be satisfied that, if reasonable steps had been taken, the terminated employee would likely have found a comparable position within the reasonable notice period. As Ferguson J. observed in Rowe v. General Electric Canada Inc. … “the breach of the plaintiff’s duty to mitigate will only be relevant if the breach is proved to be causative [of the plaintiff’s loss]”. In that case, as here, there was no evidence to support the conclusion that the terminated employee would likely have found comparable employment if reasonable and appropriate steps in mitigation had been taken.
[33] I agree with the respondent that, in an appropriate case, an employer could meet the second branch of the mitigation test by means of a reasonable inference from proven facts. In Parks v. Vancouver International Airport Authority, 2005 BCSC 1883, for example, the court reduced the plaintiff’s notice period from seven to five months where the plaintiff delayed the start of his job search by three months and, although the defendant did not put forward evidence of available positions, the plaintiff had readily found a comparable position less than two months after starting his job search. In this case, however, there was no evidence to support the inference that, if she had applied for other positions, the appellant would have found comparable employment. That conclusion was simply not available on this record.
[34] In any event, the inference drawn by the motion judge did not go so far as to meet the second stage of the mitigation test. Rather, she inferred that the appellant’s chances of obtaining a position would have improved significantly, and she concluded that, if vice-president roles were available, more junior roles were also available. Even if her reference to “more junior roles” is understood to mean comparable employment, the inference made by the motion judge extends only to the conclusion that such positions were available. The motion judge did not ask or answer the proper question at the second stage: whether the respondent had proven that, if reasonable steps in mitigation had been taken by the appellant, she would have found a comparable position during the reasonable notice period.
Commentary
I will start with the observation that much of this decision is predictable and can be reasonably anticipated from recent decisions of the Court of Appeal.
For example, in Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402, about which I blogged in my post Court of Appeal Rules that Modest Earnings Earned during Notice Period Not to be Deducted from Wrongful Dismissal Damages, Ontario’s top court reviewed the law on the duty to mitigate and declined to deduct from an award of damages for wrongful dismissal an employee’s modest earnings earned to keep the lights on. In that case, Justice Kathryn N. Feldman in her concurring reasons for decision wrote that, “if [the dismissed employee] can only find a position that is not comparable in either salary or responsibility, she is entitled to turn it down, and if she does, the amount she could have earned is not deducted from her damages.” Adding, “where a wrongfully dismissed employee is effectively forced to accept a much inferior position because no comparable position is available, the amount she earns in that position is not mitigation of damages and need not be deducted from the amount the employer must pay.”
Two years later, in Dussault v. Imperial Oil Limited, 2019 ONCA 448, about which I blogged in the post Court of Appeal Confirms it Can be Reasonable to Refuse New Employment if New Position is Not Comparable to Position Lost, the Court of Appeal affirmed an earlier decision which held that it was reasonable for two long-service employees to reject an offer of continued employment, where such offer was on substantially different terms. Similar to what the court wrote in the Lake decision, in Dussault, the Court of Appeal held that, “Comparable employment” does not mean “any employment” but comprehends employment comparable to the dismissed employee’s employment with his or her former employer in status, hours and remuneration.
The Court of Appeal’s decision in Lake is therefore at least consistent with the court’s recent trajectory. Employees do not have to mitigate by taking the first job that comes along- they can wait until a reasonably comparable position becomes available. There is no time limit after which an employee must which an employee must temper her expectations and begin to look for “lower” positions- one is legally entitled to wait. Practical considerations are, of course, another matter.
The Court’s decision to place the burden of proof on employers to demonstrate that the dismissed employee has failed to mitigate his damages is also consistent with the legal maxim of semper necessitas probandi incumbit ei qui agit, which essentially means he who asserts must prove.
And so, it is difficult to challenge the legal correctness of the Court of Appeal’s decision in the Lake case.
And yet, one is struck by the question what is it, exactly, that employers are supposed to do to “prove” that (a) the dismissed employee has failed to use reasonable efforts to secure new employment; and (b) had the dismissed employee used more reasonable efforts she would have secured new employment sooner? To some degree, how else, other than by applying for the open positions can an employer advance cogent evidence of such points?
I suspect those questions are at least in part why the Ontario Court of Justice’s decision in Lewis v. Willis, 2022 ONCJ 421 about which I have also blogged today in my post Court Relies on Wage Surveys to Impute Income, attracted so much attention among the employment bar.
In Lewis, a family case, the court allowed evidence from wage surveys to be used to impute income to a parent in a parental support case. There is reason to believe, however, that such evidence may be relevant in wrongful dismissal cases for demonstrating the availability of similar employment and wage expectations for those positions. Maybe.
Takeaways for Employers
The takeaway for employers from this case is that if you’re defending a claim of wrongful dismissal, be prepared to demonstrate - through evidence - that other positions were out there for the employee. Moreover, don’t just gather information on the title of the position, etc., gather evidence on how the position accords with the dismissed employee’s skillset. If that advice sounds like too much work, or work that is disproportionate to the stakes of the case, then be prepared for the court to decline to deduct via much, if anything, for the dismissed employee’s failure to mitigate her damages.
Takeaways for Employees
The takeaway for dismissed employees is that one need not temper expectations simply to defeat an employer’s defence claim that you have failed to properly mitigate your damages. As the Lake case, and those before it demonstrate, courts are often reluctant to make deductions against an employee’s wrongful dismissal damages on the basis of a failure to mitigate. This observation is not to suggest that one can completely sit on her hands and expect the court to simply award full damages- but a demonstration of reasonable efforts is likely to be sufficient to rebut the employer’s claims.
Contact Me
Find yourself on the receiving end of a wrongful dismissal claim or termination notice? Looking for legal advice about what to do next? Call me. Email me. Do what works for you.
I can be reached by email at sbawden@kellysantini.com or by phone at 613.238.6321 x233.
Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP. For 2.5 years he was in-house legal counsel providing employment law advice to one of Canada’s largest corporations. He has also been a part-time professor at Algonquin College teaching Employment Law, Trial Advocacy for Paralegals, and Small Claims Court Practice.
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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.
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