11 Day Trial Awards Plaintiff’s Costs of $546,684:

In what what must be one of the largest award of costs in a wrongful dismissal actions Justice Chiappetta in Ruston v Keddco ( 2018 ONSC 5022) awarded the plaintiff full indemnity costs of this extraordinary amount. The trial judgement was for $604,627, of which $125,000 was for extraordinary damages.

This was the Judges reasoning :

(1) The costs requested are proportionate to the result. $700,000 was in dispute for the plaintiff’s claim plus $1,750,000 in the conter-claim. Out of a total of $2,450,000 in dispute, the plaintiff was successful on $2,354,628.00, calculated as the amount won, plus the entire value of the conter-claim which was dismissed in its entirely.

(2) The defendant pursued unfounded allegations of fraud. This was a matter of utmost importance to the plaintiff. Both his financial and professional future were at risk if the allegations were proven in court.

(3) It was the defendant’s conduct that contributed to the plaintiff’s costs. The plaintiff’s costs can be said to be what a reasonable party would expect to spend upon pursuing litigation against a party who engaged in conduct like that of the defendant. The defendant refused to admit facts but failed to contest them at trial. The defendant only provided relevant financial documents after the plaintiff brought a motion. The defendant provided will say statements 14 days in advance of the trial and not 30 days in advance as ordered. The defendant relied on only 45 of the 163 documents it produced on the first day of trial. The defendant caused an adjournment of the first trial less than six weeks before the date scheduled due to the introduction of a 25 person witness list. This led to a one year delay, double preparation and the requirement to have a second pre-trial. The defendant called only two fact witnesses at trial. By this conduct, the defendant caused the plaintiff to incur far greater costs than expected, substantially increasing the costs of trial preparation and the length of trial.

(4) The counter-claim rendered this action much more complex than a simple case of wrongful dismissal. Because of the fraud accusations the plaintiff had to hire an expert witness costing approximately $30,000. 

(5) The defendant threatened the plaintiff with expensive litigation if he pursued his wrongful dismissal matter and then proceeded to follow through on the threat. The plaintiff would have been denied access to justice had his lawyers not agreed to defer their fees. The plaintiff survived financially by relying on his RRSP’s, selling his house below market value and breaking his car lease.

(6) The use of two counsel at trial was reasonable for this case, considering the complexity of the counter-claim and the serious consequences to the plaintiff if he was unsuccessful in defending the counter-claim. Having adjudicated the trial, I observed that the work done during the trial by both counsel was different.

(7) The amounts claimed by the plaintiff to prepare the trial record were reasonable as the plaintiff had to determine if it was appropriate to set the matter down for trial. This requires a detailed documentary review to ensure full disclosure and that there will be no need for further motions.

(8) Having reviewed the costs outline submitted by the plaintiff, I have concluded that the time spent for various steps in the litigation is reasonable. It cannot be compared to the costs outline submitted by the defendant which is not certified. Further, my observation at trial was that plaintiff’s counsel was well prepared for trial while the defendant’s counsel was comparatively unprepared in that he arrived late or not at all in one instance, could not advise the court of the sequence and timing of his witnesses, failed to effectively use his book of documents and delivered materials at the last minute. The plaintiff’s costs outline is reflected of more time spent than the defendant in preparing for trial. This difference was demonstrated at trial to the detriment of the defendant’s counsel.

(9) The plaintiff was awarded both punitive and moral damages. The costs awarded herein are done so to indemnify the plaintiff, as the successful litigant, for the costs of litigation. Any references to the defendant’s conduct are meant to explain why the plaintiff’s costs are higher than one would reasonably expect from litigating a simple claim for wrongful dismissal and in no way reflect an overlap of the punitive or moral damages awarded.

That is what happens when the Judge hates what your client and/or lawyer has done.

Compare that with Justice Arrell in Wickens v Chambers Insurance Professionals ( 2018 ONSC 2412). In a three day wrongful dismissal trial in which the judge commented on the co-operation of counsel and their conduct of the trial in a ” most efficient manner ” he awarded the winning defendant costs of only $18,000.

Acting like a jerk cost the loser in Keddco the sum of $49,698 per day of trial.

Acting like a mensch cost the loser in Wickens only $6,000 per day of trial

Plaintiff’s counsel in Rushton  was Andrew Monkhouse and Samantha Lucifora of Monkhouse Law.

Once Resignation Accepted by Employer , Employee Cannot Resile :

In English v Manulife Financial Corp ( 2018 ONSC 5135 ) Edwards J. had a situation where an employee gave her employer 4 months notice of her resignation because she did not want to be involved in an upcoming computer conversion that was planned. The Employer accepted her resignation and started to make plans to redistribute her work. About a month later the employer changed their mind and cancelled the computer conversion. Since this was the basis for the employees’ decision to resign, upon hearing this news, she told her employer that she was withdrawing her resignation notice. The employer waited about a month later to say that they were not accepting her withdrawal and said that she would be expected to leave on the date she originally set.

The Court held that where a resignation is clear and unequivocal , as soon as it is accepted by the employer, then it cannot be withdrawn. Only where the employer has not accepted the resignation and has not detrimentally changed their position ( for example by hiring a replacement ) can the employee withdraw the resignation. In simple contract terms, the resignation is offered and then  accepted and thus a contract is formed.

Quere: Where the entire basis of the plaintiff’s resignation was the upcoming computer conversion, which was then cancelled by the employer, can it truly be said that her resignation was unequivocal ?

Would it not be fairer to say that her resignation was conditional on the computer conversion going ahead, and when that precondition changed , she was free to withdraw her resignation ?

What if the situation was reversed. The Employer announces a layoff four months in the future and then a month later changes their mind and cancels the layoff . If an employee tried to say that the layoff could not be cancelled and demanded their full common law notice, surely the employer would argue that if the employee refused to work after the original layoff date that action would constitute either a quit or at least  a complete failure to mitigate their damages.

I guess what is good for the goose is not always good for the gander.

 

Employer Responsible for Extra Income Tax Burden of Dismissed Employee:

In Schram v Govt of Nunavut, ( 2018 CarswellNB 280) the NB Court of Appeal had a situation where the plaintiff was employed in Nunavut on a fixed term contract. She was terminated before the end of the term and returned to New Brunswick, her home. Once she won her case in the NB courts, she was awarded a retiring allowance of $213,000.

As she was now a resident of NB, she paid tax at the NB rate which is higher than the tax she would have paid if she was permitted to work out her fixed term contract and pay rates applicable to Nunavut residents.

The CA awarded her additional compensation equal to the difference between the higher NB tax rate and the lower Nunavut rate.

This was done on the principle that she should be put into the same economic position as had the breach of contract not occurred.

 

Employer Can’t Require Employee to Sign Release In Order to Receive Contractual Severance:

In Tong v Synerion North America ( 2017 CanLII 145091) Prattas D.J. had a situation where the employment contract called for 6 weeks pay for this 3 year employee but because the employee refused to sign a release, the employer only paid 3 weeks, contrary to its own contract.

The judge had found that the contract was illegal  as it violated the ESA ( no termination pay for under 1 year service and no benefits ) so reasonable notice was the only option but still the judge mentioned three times in the judgement this action by the employer as one of the grounds to find that 6 months was proper notice.

Quere: Does this mean that anytime an employer does not pay out what their own contract requires that they later on cannot seek to limit  their liability  to the contract? If the contract provides for only the ESA amount on termination but the employer pays zero because they allege cause but fail, does this mean that the employee gets reasonable notice ?

Doctrine of Frustration Doesn’t Apply to Unjust Dismissal under Canada Labour Code :

In Lewis v Whiteline Trucking ( 2018 CanLi 72555 ) Adjudicator Pallard had a situation where the employers’ new insurance company would not cover the plaintiff in the company insurance program. As this made it impossible for the plaintiff to drive, his employment was terminated as the contract was frustrated.

However the Adjudicator ruled that the common law doctrine of frustration did not apply under the unjust dismissal section of the Code as ” just cause” must be based on culpable conduct by the employee. As there was no evidence of this in the hearing the discharge was found to be unjust. Mr Lewis was awarded his Code severance pay .

Quere, what if he was uninsurable because of something he did while not at work, like being convicted of impaired driving ? Does this make his uninsurability culpable ?

Mitigation Income = 37% of Previous Income Not Deducted from Damages:

In Mackenzie v 1785863 Ont Lt ( 2018 ONSC 3442) Pierce J determined that 65 year old General Manager with 5 years service making $65k was entitled to 9 months reasonable notice .

In that notice period the Plaintiff had first earned $2,000/ month and then $1500 / month in mitigation income in a very much reduced job.

Applying the OCA decision in Brake v PJ-M2R Restaurant , as the Plaintiff  could not have been required to take these jobs as mitigation, the fact that he chose to do so means that the income does not count as mitigation income so as to reduce his notice damages. In the original Brake decision the mitigation income was a mere pittance, about $300. Here the mitigation income was 37% of his old income and it too was ignored.

What is the cutoff  before  mitigation income is counted ? Stay tuned for further cases to answer this vexing question.

    OCA Says Future Bonus Payments Are Not Wages:

    In Bois v MD Services ( 2017 ONCA 857) the Ontario Court of Appeal reviewed the situation where an employee resigned after the end of the calendar year in which the bonus was based upon but before the payment date had occurred.

    The relevant clause in the bonus plan reads as follows:

    In any given year, you must be a permanent employee of the CMAH Group of Companies on December 31 of the year for which the incentive is paid and continue to be so employed on the payment date(s) to receive a payment. Any employee who is no longer employed with the organization or has given notice of termination prior to the payout date will not be eligible to receive a payment.

    The Plaintiff’s argument was as follows:

    The appellant submits the motion judge erred in her interpretation of ss. 11(5) and 13 of the ESA, which state:

    11(5) If an employee’s employment ends, the employer shall pay any wages to which the employee is entitled to the employee not later than the later of,

    (a) seven days after the employment ends; and

    (b) the day that would have been the employee’s next pay day.

    13(1) An employer shall not withhold wages payable to an employee, make a deduction from an employee’s wages or cause the employee to return his or her wages to the employer unless authorized to do so under this section.

    [10]      The appellant contends that where a bonus has been awarded for a year, but at the time of the employee’s resignation future bonus installments remain to be paid-out, s. 11(5) of the ESA effectively operates to accelerate the employer’s obligation to pay-out future installments, notwithstanding language in an incentive plan requiring the employee to be actively employed at the date of any future pay-outs. To the extent that the terms of the VIPs sought to disentitle the appellant to the future installments, they were void as they contravened s. 13(1) of the ESA.

    The Court however found under the language of the plan, the bonus payments were not ones that the Plaintiff was ” entitled to” as the Court held that:

    It was open to the parties to agree how and when any bonus was declared, earned, accrued and would be payable: Kielb v. National Money Mart Company, 2017 ONCA 356 (CanLII), at para. 12.

    By the terms of the VIPs, the appellant was not entitled to the three bonus installments whose pay-out dates fell well after the date of his resignation. While those three installments would constitute wages payable upon each of the future pay-out dates, they were not “wages to which the appellant [was] entitled” when he resigned and his employment ended. Accordingly, we see no basis to interfere with the motion judge’s conclusion that where, as in circumstances such as those of the present case, the entitlement to an incentive plan payment does not arise until after an employee’s resignation or the expiration of the reasonable period of notice of termination, a plan’s requirement that the employee be actively employed at the time of a future pay-out does not contravene s. 11(5)of the ESA.

    [17]      Nor does such an active employment provision contravene s. 13(1) of the ESA, as the future pay-outs do not constitute “wages payable to an employee” at the time of his resignation.

    I have trouble with this decision for a number of reasons:

    The Court said that the parties can decide when a bonus would be earned. Since the definition of “wages” in section 1 of the ESA includes bonuses as wages, according to this decision, the parties can define for themselves when a wage is earned, even if their private definition differs from the common  use of the same word in a statute.

    Imagine that the parties had an agreement which said as follows:

    Your wage will be $5,000 per month, payable on the last day of each calendar month. However you are only entitled to that payment  if  you are actively employed on the last day of that month. Therefore if you die, resign, or are terminated for wilful misconduct before the last day of the month, you will not receive $5,000 for that month. If you are not employed as of the end of the month, instead of receiving $5,000 for the month, you will only receive the minimum wage as prescribed by the Employment Standards Act of Ontario, which is currently $14.00 per hour.

    According to the OCA, this clause would  be enforceable as the parties get to decide under what conditions the employee is entitled to his or her wages.

    I believe that the Court failed to appreciate that there  is a fundamental difference between when you earn an entitlement and when that entitlement is payable.

    Having earned the entitlement by performing all that is required of you, you may agree to defer being able to demand that payment until a later date. For instance, many commission plans say that your commission is earned on orders shipped in one month and payable on the 25th of the month following. If you quit work on the 2nd day of the month, you would have earned the commission but you could not legally enforce that entitlement until the 25th of that month.

    If  I bought a car from you today for $20,000 and agreed to make payment for it in 30 days, it would  be commonly understood that as of today I owe you $20,000 but that do not have to pay you until 30 days hence.

    Why doesn’t the same logic apply to the wage /  bonus  issue?

     

     

     

     

    Staying on LTD after Termination Can Be Evidence of Frustration :

    In Roskaft v RONA ( 2018 ONSC 2934) Pollak J. had a situation where 10 year employee went on STD and then LTD in 2012. In 2014, the Insurer found that the employee was permanently disabled from performing both his own and any occupation.  One year later, the employer reviewed the file and concluded that the contract had become frustrated, terminated him and paid him his ESA minimums.

    The plaintiff sued for wrongful dismissal but even at the time of the trial in 2018 he was still on LTD and had never taken the position that he was able to return to work. He had been disabled at that time for 6 years.

    The Court decided that an employer could rely on post termination evidence of frustration not in their possession at the time of the termination as long as it related to the nature and extent of the employees’ condition  at the time of termination.

    This evidence can support a finding that at the time of termination there was no reasonable likelihood that the employee could return to work within a reasonable time.

    Driver Banished by Customer = Lack of Work under CLC :

    In Merz v TST Trucking Ltd ( YM2707-10977) CLC Adjudicator Lederman had a situation where a driver was assigned a route serving Purolator, an important client of TST. As a result of an apparent incident between Mr. Mertz and some Purolator employees, Purolator told TST that would no longer let Mertz come on their property. TST then terminated Mertz.

    The Adjudicator found that whether or not Purolator was right or wrong in their assessment of Mertz’s actions, the banishment effectively ” precluded him from continuing in his job function ” and that this constituted a lack of work, therefore the adjudicator had no jurisdiction under the Unjust Dismissal section of the Canada Labour Code. The Adjudicator noted that the employer had no other routes available.

    It is unclear if the employer had no other vacant routes available or had no other routes at all. If for instance TST could have moved another of its drivers onto the Purolator route and had Mertz drive that other route, then there would have been no lack of work.

    If Mertz could have simply switched routes, then this case stands for the troubling proposition that even an unreasonable action by the employers’ client can lead to the dismissal of the employee.

     

    Frustration Does not Apply When Employer Refuses To Let Employee Perform Other Jobs:

    In Complex Services v Milloy ( 2018 ONSC 3590) Justice Conway, on appeal, had the following situation:

      Ms. Milloy worked for Complex at its Niagara casino for 10 years, initially as a hostess and later as a table games dealer. In February 2007, at the request of her doctor, Ms. Milloy was placed on modified duties due to a work-related repetitive injury to her right shoulder. She had surgery in July 2007 and returned to work. By April 2008 her doctor told her that her injury was permanent and she could no longer work as a table games dealer.
    3      Ms. Milloy was given modified duties in various departments at the casino for another two years. During this time, Complex told her to seek alternate employment within the casino that was not a table games dealer position. Ms. Milloy applied for 16 to 22 jobs at the casino, including positions that she had previously held and for which she had received excellent reviews. However, her applications resulted in three interviews and no job offers.
    4  On June 3, 2010, Complex terminated Ms. Milloy on the basis of frustration of contract. Ms. Milloy sued for wrongful dismissal.
    The Employer took the position that the plaintiff’s employment was frustrated because she could not perform any job at the casino. However as noted above, the reason she did not obtain an accomodated position is because the employer chose someone else for a position which the plaintiff presumably was both qualified for and capable of doing. The Court assumed that the reason the Employer did this was because the other person may have been more qualified than the plaintiff.
    The trial judge called this ” self induced frustration”, presumably because it was the Employers’ actions which prevented the plaintiff  from finding an alternative position within her medical restrictions.
    The trial judgement was upheld and it was found that the plaintiff  had been wrongfully dismissed.
    Lets us assume that the Employer truly believed that the person they hired to do the job was superior to the plaintiff but that the plaintiff did still meet the qualifications of the job.
    Under normal circumstances, in a non- union environment the Employer is free to hire the best candidate .
    However, as this was a situation involving the placement of a disabled employee through the process of accommodation, does not the Ontario  Human Rights Code require accommodation to the point of undue hardship?
    Surely it is not an undue hardship for an employer to place a qualified disabled employee into a vacant  position ahead of a superior non-disabled candidate.
    It does not appear that this was argued at the trial. If this had been framed as a human rights violation   as well as a wrongful dismissal action then the possible award could have been much higher. In fact it could have involved an order to reinstate the employee as well as monetary damages.