Alberta Court of Appeal Follows BCCA by Confirming CERB Not Deductible from Wrongful Dismissal Damages:

In Oostlander v Cervus Equipment Corporation, 2023 ABCA 13 the Court overturned the trial judge’s decision to deduct CERB payments from the wrongful dismissal damages. The Alberta court followed the BCCA decision in Yates v Langley Motor Sport ( 2022 BCCA 398) .

There are now two Court of Appeal decisions confirming this principle and no appeal decisions that go the other way.

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Court Denies Winning Plaintiff Costs Where Judgement was $16,000:

In Chin v. Beauty Express Canada Inc., 2023 ONSC 56, Justice Morgan had awarded the plaintiff $16,000 which represented 7.5 months notice.

When it came to assess costs, the Defendant had made a Rule 49 offer for $10,000. The Plaintiff apparently made no Rule 49 offer.

The plaintiff claimed that her substantial indemnity costs were $54,777.

Much of the trail time was taken up with claims by the Plaintiff of moral damages, all of which were denied .

In deciding to award no costs, the is what the judge said :

“[7] That said, the trial can be objectively characterized as an unfortunate waste of the parties’ resources. Taking into account the pre-trial, trial preparation, and trial time and resources they each invested into the matter, the quantity of damages is far outweighed by the legal fees. And that is to say nothing of the court time consumed by what turned out to be a rather small claim.

[8] Although Plaintiff’s counsel makes an argument about the importance of the case to the Plaintiff, and I have no doubt that it was indeed important to her, this size case is precisely what Small Claims Court is for. Pursing a claim in that court does not diminish its importance, but it does provide a more streamlined procedure appropriate to the monetary value of the case to the parties. Importantly, it also frees up Superior Court of Justice resources for claims that other courts cannot handle, making for a more efficient administration of justice.

But for the Plaintiff’s rather large overreach, the entire litigation would have been far more expeditiously and inexpensively pursued in Small Claims Court.”

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Court Upholds Minutes of Settlement Calling for Increased Payment Upon Default:

In 1504641 Ontario Inc. v. 2225902 Ontario Inc., 2022 ONCA 175
the Court was faced with an issue involving the enforcement of Minutes of Settlement .

The MOS had a clause which said that the defendants was to pay $40,000 in four equal instalments and, if they defaulted on any payment, they consented to a default judgement in the sum of $120,000 less any payments made.

Surprise, the defendants paid only $30,000 and the Plaintiff’s moved for judgement on the remaining $90,000.

The MOS was enforced, despite the Defendants argument that the payment was a penalty. This is what they said.:

[12]     The appellants also argue that the $90,000 award amounts to a penalty. We do not accept that argument. The parties entered into Minutes of Settlement as a compromise to avoid a trial. As part of that compromise, the respondents agreed to reduce their claim to finally resolve the matter without additional costs if the reduced amount was paid in a timely way. In these circumstances, the amount required to be paid under the consent to judgment in the event that all of the instalment payments were not made is not a penalty.
amount was a penalty

My Comments :

This is a common settlement structure where the defendant needs time to pay. It creates a great incentive to honour a MOS. I am pleased that the Court upheld the deal because to do otherwise would eat away at the vital importance of enforcing settlements.

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Plaintiff Awarded $50,000 for Breach of Duty of Good Faith and $100,000 Punitive Damages for Litigation Conduct:

In Chu v China Southern Airlines ( 2023 BCSC 21) Justice Verhoeven awarded 20 months notice to a Marketing and Business Development Manager who had 8 + years service.

However the interesting part of this case is that the judge also awarded $50,000 damages for the breach of the duty of good faith in relation to the actions of the employer surrounding the termination and an additional $100,000 punitive damages for the litigation conduct of the Defendant.

Regarding the bad faith damages the Court listed these reasons

[149]   I summarize the particulars of the employer’s breach as follows:

1.   The plaintiff’s dismissal on February 1, 2019, was the culmination of a process commencing in January 2018 with the replacement of CSA’s former GM with its new GM, Ms. Zhang. The new GM and the former GM were very hostile to each other. It seems clear that the new GM, Ms. Zhang, associated the plaintiff with the former GM. As of February 2018, the employer, acting through Ms. Zhang, secretly wanted and intended to terminate the plaintiff’s employment. It sought to do so without giving reasonable notice or paying severance in lieu thereof. The employer could have simply informed the plaintiff that changes to its management structure meant that his position was redundant. It could have terminated the plaintiff’s employment at that time. Instead, the employer was duplicitous and unfair in its dealings with the plaintiff. It demoted the plaintiff to entry-level, front-line services positions, substantially reduced his pay, and began taking steps to manufacture cause for dismissal or to induce the plaintiff to resign.

2.   To that end, the plaintiff was unfairly disciplined and threatened with termination on multiple occasions. The employer began unfairly criticizing the plaintiff’s work, inventing failings, and creating an unfair, self-serving and inaccurate disciplinary record, in support of eventual allegations of cause for dismissal. The plaintiff previously had an impeccable record of service.

3.   The unfair discipline was carried out in humiliating and embarrassing ways, including public reprimands, yelling at the plaintiff, on one occasion throwing an item at him (the computer mouse), and requiring him to attend meetings where his faults and failures were enumerated.

4.   The plaintiff was compelled to sign letters of reprimand that he did not agree with—specifically, a letter dated February 22, 2018, and another undated letter that followed.

5.   Given his age, experience, and former position as Marketing and Business Development Manager, the plaintiff’s reassignments without consultation to entry-level positions in the customer service and airport station positions were humiliating.

6.   The plaintiff was assigned to work at the airport terminal when the employer knew or ought to have known he could not possibly do the work to its satisfaction. He was set up for failure. The employer’s treatment of the plaintiff in relation to this position was cruel and insensitive.

7.   After unilaterally assigning the plaintiff to work at the airport, the employer purported to impose a probation condition upon his employment in January 2019, based upon the fact that he was in a new position.

8.   The employer concocted a memorandum falsely stating that the plaintiff stated he would voluntarily resign if his performance did not improve.

9.   While the plaintiff was continuing to make sincere efforts to live up to the employer’s unreasonable demands, it terminated his employment. It did so before providing the additional training and further testing it had promised.

10. The plaintiff was an exceptionally vulnerable employee, as the employer must have understood. He was 68 years of age, with limited work opportunities. He accepted humiliating demotions, a substantial loss of pay, and endured multiple episodes of insulting and unfair discipline, in a desperate effort to retain any job with CSA. The plaintiff was made to suffer pointlessly, since CSA wanted to terminate his employment all along.

11. In its termination letter, the employer alleged dishonesty, by falsely stating that the employee was guilty of “time theft”.

12. For no discernible reason, CSA refused to provide the plaintiff with a record of employment (“ROE”), contrary to its legal obligations as an employer and despite numerous requests. The failure to provide the plaintiff with a ROE delayed access to employment insurance by about two-and-a-half months.

13. The employer made numerous, very serious, and false allegations in the RTCC, a publicly available document. The allegations included dishonesty, fraud, theft, conspiracy, sexual harassment, and profound denigration and disparagement of the plaintiff’s work record. These false, insulting allegations constituted a wholesale attack on the plaintiff’s conduct, his character, his years of service, his value as an employee, and his worth as a person. They would have been predictably harmful to the plaintiff.

In relation to the punitive damages for litigation conduct, the Court said a s follows

[169]   In particular, CSA’s bad faith conduct in the litigation included:

1.   Making numerous serious and false allegations in the RTCC. The defendant would have known that these allegations would damage the plaintiff’s chances of obtaining reasonable alternative employment. The employer did not cite these allegations in its termination letter to the plaintiff. This shows that after termination, the employer made a deliberate decision to respond to his legal claim with vicious, vindictive, and unfounded allegations that it knew or ought to have known could not be supported.

2.   To take just one example of the defendant making allegations that it knew it could not support, in its RTCC the defendant emphatically denied that the plaintiff was in fact a management employee who held the title of Marketing and Business Development Manager, or something similar. The plaintiff has adduced several letters he wrote on behalf of CSA utilizing that title, including, even, the letter to Toronto International Airport seeking authorizations for Jocelyn Zhang. The plaintiff does not have access to the defendant’s files, but the defendant’s files would be replete with such documents. Indeed, the defendant relies on minutes of a meeting dated March 9, 2018, attached to the affidavit of Danny Chen, which identifies the plaintiff as the “former Marketing Department Manager”. The former GM would surely have confirmed that these allegations were false.

3.   CSA required the plaintiff to bring multiple pre-trial applications to enforce compliance with its obligations as a litigant. Examples are as follows:

a.   After making a number of unsuccessful demands, the plaintiff was forced to file an application for an order compelling CSA to produce a list of documents on December 16, 2020, more than one year after CSA filed its RTCC on November 1, 2019. The next day, December 17, 2020, CSA filed a notice of intention to act in person, and requested a delay in the proceedings so that it could retain new counsel. CSA continues to be self-represented. On January 8, 2021, Master Elwood ordered CSA to provide a list of documents by January 15, 2021, and ordered costs in the plaintiff’s favour.

b.   The defendant failed to provide the documents listed on its list of documents, thus requiring the plaintiff to bring another application to compel production. On June 17, 2021, Master Cameron ordered CSA to provide the documents listed on its list by June 24, 2021, and ordered costs in any event of the cause to the plaintiff.

c.   CSA was consistently uncooperative in making arrangements for the plaintiff to examine CSA’s representative for discovery. The plaintiff nominated the local GM, Jocelyn Zhang, to be examined for discovery. CSA would not confirm her attendance at the examination. In the circumstances, she was a logical choice to be examined. It would be reasonable to expect that her testimony would have been damaging to the defendant’s case. Without prior notice to plaintiff’s counsel, CSA presented a different and uninformed representative for examination.

d.   On March 8, 2021, the plaintiff filed a notice of trial confirming a three-day trial to be heard, commencing February 23, 2022. At the trial management conference before Justice Skolrood on January 12, 2022, the court adjourned the trial due to the number of witnesses listed on CSA’s trial brief. The court ordered that new trial dates would be peremptory on CSA, and ordered to CSA comply with the plaintiff’s document discovery requests and to produce outlines of anticipated evidence for its witnesses. Lump sum costs were awarded to the plaintiff, payable forthwith. Subsequently, a five-day trial was scheduled for February 13 to 17, 2023. The defendant thus caused a substantial delay in the proceedings.

e.   CSA did not pay the costs award made by Skolrood J. and did not otherwise comply with the court order. On April 29, 2022, Master Vos made a further order compelling compliance with Skolrood J.’s order, including the costs award and made a further costs award in the plaintiff’s favour.

f.     One of the plaintiff’s document demands was for disciplinary records for Kitty Chen. This was a logical request in view of CSA’s allegations that the plaintiff and Kitty Chen were co-conspirators in defrauding CSA, and CSA’s notable efforts to create a documentary record relating to discipline of the plaintiff. Although Ms. Chen remains a CSA employee, employed in Guangzhou, China, CSA refused to disclose disciplinary records for her. After being ordered to produce the records by Master Vos on April 14, 2022, CSA asserted that there were no documents relating to the discipline of Ms. Chen, but stated in its written response “Kitty received multiple verbal warning[s] after she was transferred back to China”. It is very difficult to accept that Ms. Chen was in fact disciplined, but there are no records of any kind.

 

My Comments:

The Judge noted that the Defendant fired their lawyers early on and then represented itself through non-legally trained local employees. I am not sure that this could have happened in Ontario as Rule 15.01(2) of the Rules of Civil Procedure states:

” A party to a proceeding that is a corporation shall be represented by a lawyer, except with leave of the court.”

This is just another example of how dangerous it is for employers to take ridiculous and extreme positions in employment cases. This is even more important where the traditional notice claim is modest and thus the monetary award for the failure to provide reasonable notice is also modest.

Court will usually find a way to punish bad behaviour .

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Supervisor Punching Employee in the Genitals Costs Employer $285,000:

In Osmani v. Universal Structural Restorations Ltd., 2022 ONSC 6979 Justice Di Luca , after a 12 day trial, awarded huge damages to a general labourer with only 14 months service.

The facts are horrendous. Hired as a Temporary Foreign Worker, the Court found that the following things were done to him.

1) His supervisor punched him in the testicles in front of co-workers. This resulted in the loss of one testicle.

2) After falling from a ladder at work, the Defendant interfered with his WSIB claim.

3) His supervisor referred to him as a” fucking Albanian”.

4) His supervised threatened to report him to the the Immigration authorities and get him deported.

5) When he told his supervisor that the injury to his testicle was affecting his marital relations, the supervisor said ” I can help, bring by your wife’.

He was awarded the following damages:

1. Four months notice for wrongful dismissal.

2. $100,000 for the tort of battery with general and aggravated damages.

3. $25,000 for punitive damages against the supervisor personally.

4. $10,000 for the tort of assault.

5. $50,000 for human rights damages

6. $5,794 in unpaid wages.
7. $75,000 for moral damages
8. $25,000 for punitive damages

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“Amount Equal to 12 Months Salary” Includes Bonus Says ONCA:

In Nader v. University Health Network, 2022 ONCA 856, the Court of Appeal had a termination clause which entitled the employee to
an amount equal to 12 months salary in the event of termination by UHN without just cause.

The Plaintiff was terminated without just cause but the trial judge held that this did not include the bonus, even though historically the Plaintiff had received a bonus.

The Court of Appeal had this to say :

[4] However, we are satisfied that the motion judge erred in denying the appellant the performance-based bonus payable under the Employment Agreement. The Employment Agreement clearly provided for a discretionary annual performance-based bonus of up to 25% of the appellant’s annual base salary. The motion judge found that there was a dearth of evidence concerning the bonus – no evidence as to the appellant’s performance and whether he would have been eligible for 25% or some lesser amount. This finding overlooks evidence in the record establishing that the appellant was paid bonuses of approximately 25% for 2018 and 2019, and slightly less on a pro-rated basis for 2020, up to the termination of his employment. The Employment Agreement provided for payment “of an amount equal to 12 months salary” in the event of termination by UHN without just cause. “Salary” was undefined. The appellant’s uncontroverted evidence was that the bonus was a substantial and integral part of his overall compensation. The motion judge found that the appellant’s health care spending account, an amount required to be under the Employment Agreement in addition to “base salary”, was owing as part of the appellant’s compensation on termination. That finding was not appealed.

[5] Like the health care spending account, the bonus is properly
considered part of the compensation owed on termination. Termination deprived the appellant of the opportunity to earn the bonus for the year ahead and in our view it is reasonable to infer that he would have earned it. The respondent offered no basis for finding otherwise.

My Comments :

The term used in the agreement was ” salary”. If the agreement had said ” base salary only” the outcome may have been different. However one must be careful when using that language because under the ESA both termination and severance pay are based on regular wages which can include bonus payments. Therefore if you had a clause which provided the correct number of weeks pay to be in compliance with the ESA but limited it to base pay only then you could be in violation of the ESA as it did not include the bonus amount in the calculation.

Nobody said that employment law was easy.

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Secret Recording By Employee Not Just Cause in Certain Circumstances:

In Rooney v GSL Chevrolet Cadillac ( 2022 ABKB 813 ) Justice Feasby had situation where an employee who believed that he was being subject to unfair disciplinary suspensions decided to secretly record conversations with his supervisor.

The Court noted that generally speaking:

” Recording conversations in the workplace will often cause irreparable damage to the relationship of trust between employee and employer and be just cause for termination.”

However in this case, the actions of the employee did not constitute just cause for two reasons:

1) The employer did not have an express policy prohibiting such conduct that was brought to the attention of the employee, and

2) ” [91] Perhaps a more significant difference from Shalagin is that by the time of the first recording by Mr. Rooney, the employer-employee relationship was already frayed by tensions between Mr. Rooney and his supervisors, Mr. Rooney had an emerging appreciation that there. had been a fundamental change in his terms of employment, and a suspension without pay had been imposed on Mr. Rooney without any basis in the terms of employment. Mr. Rooney resorted to what, in ordinary times, is rightly viewed as an unethical tactic to deal with what the arbitrator described in British Columbia Government and Service Employees’ Union as a “relationship power imbalance.” Mr. Rooney’s actions in recording conversations with his supervisors were justified because GSL exerted its power over Mr. Rooney by imposing unilateral changes on his employment terms and disciplined him contrary to his terms of employment.

My Comments :

This case seems to say that if the Court finds that you did not have a valid reason to secretly record your employer or co-worker, then you can be fired for just cause but if you had a good reason then it is not just cause.

This creates a real problem for the Plaintiff’s lawyer. Your client tells you they have a secret recording of a conversation with the boss which is relevant to the lawsuit. You listen to it and determine that although it is relevant, it probably not that helpful to your case. However, you must include this document in your clients’ Affidavit of Documents as it is relevant, but to do so you run the real risk that the employer will now allege after acquired just cause.

Possible solution: Settle the case before you have to file your Affidavit of Documents.

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Court Criticizes Employers’ Failure to Assist Employee’s Job Search:

In Summers v. Oz Optics Limited, 2022 ONSC 6225, Justice Hackland awarded 6 months notice to a 61 year old draftsperson with only 3.5 years service.

The defendant argued that there was was a failure to mitigate. They relied on the fact that he had not applied to a number of jobs that were only presented to him at the trial.

The Judge was not impressed. The judge commented on the Defendants’ tactic as follows:

“On the other hand, the record does make clear, as
noted previously, that the Respondent has been of no assistance to the Applicant in his reemployment efforts.”

“As there is anissue concerning an alleged failure to mitigate, discussed below, I would note that the employer seems to have done nothing to assist the Applicant in transitioning to new employment. In particular, he was terminated summarily and escorted off the premises in front of other employees. This did not allow the Applicant an opportunity two preplan his job search or to investigate alternative employment in advance of termination. The employer has not provided a letter of reference nor was any assistance offered by way of career transition counseling. The employer has not offered to waive the non-solicitation provision in the employment agreement.”

My Comments:

In my mediations I sometimes find that the employers who do the most to criticize the Plaintiff’s job search efforts do the least to help the Plaintiff find a new job.

The best way for an employer to lessen the cost of termination is to help the Plaintiff get a job. These are some of the things that will impress a court that the employer is a mensch and not a jerk:

1) Don’t allege just cause solely as a litigation tactic .

2) Provide as positive a letter of reference as you can at the time of termination.

3) Provide appropriate relocation counselling without having it tied to a release.

4) Pay out the ESA minimums immediately.

5) Send job leads to the plaintiff in a timely fashion, not just at the trial .

6) I admit this somewhat controversial, but consider paying out what you think is reasonable notice without a release, or better still keep the employee on salary continuance for what you think is reasonable notice.

7) Waive or at least limit any non compete or non solicit agreements.

8) Handle the termination itself in a way that shows respect and an understanding about how devastated the employee feels. Do you really have to take his cell phone that day ?

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Municipal Supervisor Using City Washing Facilities to Wash His Own Truck Not Just Cause :

In  Stevens v. Port Coquitlam (City), 2022 BCSC 2090 Justice Elwood had a situation where a supervisory employee of 7 years ( most of which was in the union) was terminated because he used a municipal facility to wash his own truck, contrary to city policies.

He did not deny this use and acknowledged that he was wrong.

The major issue was whether or not this incident was sufficient cause so that discharge was an appropriate remedy. This is what the Judge said :

[87] However, I find that the City had other sanctions available that could have achieved its legitimate objectives. The City could have suspended Mr. Stevens without pay. It could have required him to attend remedial training. The City also could have convened an employee meeting and used this incident to emphasize the importance of the policy on the use of municipal equipment, even in less serious cases than the copper thefts. It could have required Mr. Stevens to lead the meeting. 

[88] The 2020 Incident reflected poorly on Mr. Stevens’ management skills. However, I am not persuaded the employment relationship was damaged beyond repair. Mr. Stevens was relatively new to management. He needed coaching in the leadership aspects of his position. There is no evidence that he was uncoachable in this regard. Even with a second breach of policy, I am not persuaded his behaviour could not be corrected with a clear warning and
appropriate discipline. 

[89] In short, I find that summary dismissal was not a proportionate response to the misconduct. A reasonable employer informed of the relevant circumstances would not conclude that the employment relationship was damaged beyond repair. 

My Comment:

In my mediations I sometimes find that Plaintiff’s counsel try to defend the indefensible when it comes to their clients’ obvious misconduct. They try to deny clear facts or shift blame to others. This feeds into the employers’ view ( and the Courts’ view) that the employee is beyond rehabilitation if he will not even admit his actions were wrong.

This case shows that it is smarter to simply argue that the punishment does not fit the crime. Taking a company pencil home is not the same as stealing a company truck. There is little reason that an employer cannot issue a short disciplinary suspension for misconduct. Denying or reducing a discretionary bonus may also be a a lesser penalty for misconduct.

Judges and arbitrators seem to love expressions of true remorse made before the dismissal .

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BC Court of Appeal Rules That CERB is NOT Deductible from Wrongful Dismissal Damages :

In Yates v Langley Motor Sport Centre Ltd ( 2022 BCCA 398) Justice Bauman finally definitively answered the issue of whether or not CERB payments received by a terminated employee are deductible from wrongful dismissal damages that cover the same time period .

The answer was NO, they are not deductible and thus the windfall goes to the benefit of the employee, not the employer.

The analysis was largely based on social policy. The concluding words say it all:

“Whether the payments are in the end to be repayable by the plaintiff is of no concern to the defendant employer. It is a matter between the plaintiff and the authorities administering the plan .”

This is the first appellate decision on this issue, and as this is a federal law, it is my understanding that all lower courts in Canada are obligated to follow it.

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