In Giduturi v LG Electronics Canada Inc., ( No citation yet) Justice Dineen had a situation where the Plaintiff made three valid Rule 49 offers , all of which the Defendant rejected.
The Judge then awarded the Plaintiff 12 months notice ( $45,000) and substantial costs of $45,000 plus HST and disbursements, which came to $54,687.
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In Giacomodonato v. PearTree Securities Inc., 2023 ONSC 5628, Justice Centra issued a costs decision after the Plaintiff was awarded $718,103.
The Judge was quite upset that the Defendant brought a bogus counterclaim which they abandoned on day 3 of the trial : This is what he said :
[28] Fifth, this is an appropriate case to award costs to discourage frivolous and strategic claims. In my view, PearTree’s counterclaim, including its claim for punitive damages, was obviously meritless. Employers who owe money to employees should be discouraged from engaging in tactical litigation designed to discourage employees from pursuing their rights and entitlements.
[33] Having presided over this ten-day trial, however, certain things are crystal clear to me. PearTree invited this litigation. PearTree conducted this litigation in an unforgiving, scorched earth, and bare-knuckle manner. It missed no opportunity to malign Mr. Donato. PearTree’s decision to pursue a counterclaim and punitive damages of so little merit leaves me to infer that those claims were advanced only for tactical reasons and in an attempt to dissuade Mr. Donato from pursuing the money PearTree owed to him. PearTree’s attempt to now claim that this action “was an unexceptional employment action” is entirely inconsistent with its own approach to this litigation. In my view, and in light of the choices it made in the conduct of this litigation, it should have reasonably expected to face a costs order of this magnitude.
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In Lynch v. Avaya Canada Corporation, 2023 ONCA 696, the Court held that exceptional circumstances involving a 64 year old Professional Engineer with 38.5 years service entitled him to a 30 month notice period.
Even though the trial judge did not set out these exceptional circumstances, the Court of Appeal did so themselves, as can be seen in the following extract:
[13] Although the motion judge in the present case did not craft her reasons in that fashion, it is possible to discern the “exceptional circumstances” factors she relied on by comparing her listed factors with those this court in Currie held justified an award in excess of 24 months. Those factors were: (i) Mr. Lynch specialised in the design of software to control unique hardware manufactured by Avaya at its Belleville facility; (ii) it was uncontested that Mr. Lynch’s job was unique and specialized, and that his skills were tailored to and limited by his very specific workplace experience at Avaya; (iii) during his lengthy employment of 38.5 years, Mr. Lynch developed one or two patents each year for his employer; (iv) Avaya identified Mr. Lynch as a “key performer” in one of his last performance reviews; and (v) although similar and comparable employment would be available in cities such as Ottawa or Toronto, such jobs would be scarce in Belleville where Mr. Lynch – who was approaching his 64th birthday – had lived throughout his employment.
My Comments :
How could it possibly be relevant to determining the notice period that :
a) Mr. Lynch developed one or two patents each year for his employer;
b) Avaya identified Mr. Lynch as a “key performer” in one of his last performance reviews.
So, if he did not develop any patents, would his notice period would be less?
So, if he was not a key performer, would his notice period would be less?
Since when is how good an employee is at their job been a factor in determining notice? Logically a lousy employee should have a harder time getting a job than a key performer.
In my respected opinion, this case sets the law of reasonable notice back to being a crap shoot rather than a somewhat predictable outcome that lawyers can have confidence in when advising clients.
First of all, any concept of a notice cap seems to be out the window.
Second, by looking at a never ending list of factors and considering previously irrelevant factors, this simply makes the determination of reasonable notice more uncertain. This will cause confusion and uncertainity among both dismissed employees and their former employers, which in turn will lead to more litigation.
As a mediator, that’s good news for me .
As a keen observer of employment terminations for over 40 years, it stinks.
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In Milwid v. IBM Canada Ltd., 2023 ONCA 702 the Court upheld this notice period above the usual cap of 24 months as they found that the following were exceptional circumstances .
[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.
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In Breen v Foremost Industries Ltd, 2023 ABKB 552, Justice Yamauchi found that the former President of a mutual fund company committed many breaches of his fiduciary and other duties.
In addition to ordering the Plaintiff to repay $480,000 USD that he wrongfully had paid to him by third parties, the Judge also awarded the Defendant $50,000 in punitive damages.
This is what the Judge said :
[546] Mr. Breen held the highest management position in the Foremost Group, being its President and Chief Executive Officer. All employees were answerable to him, and he had significant power to manage and control the Foremost Group’s operations. He authorized, approved, and directed expenditures. He was aware of all projects being undertaken by the Foremost Group. He was answerable only to the Fund Board, and he was to keep JP and Mr. May advised of the goings-on of various projects. The Foremost Group was vulnerable in the sense that Mr. Breen was in control of day-to-day operations, and the Fund Board could not possibly keep track of those operations, except as may be reported by Mr. Breen.
[547] In this capacity, Mr. Breen arranged for payments to himself and others of monies to which they were not entitled. This Court found that he received the various gifts from Mr. Chernyk through embezzlement, misappropriation, or defalcation while he was acting in a fiduciary capacity in relation to the Foremost Group. It also found that he was aware of or was reckless concerning certain payments that found their way into the pockets of Mr. Chernyk or Mr. Varianos through the fraudulent agent fees.
[548] This Court has awarded compensatory damages in respect of those amounts. However, that is not sufficient to express this Court’s disapprobation for the breaches of Mr. Breen’s statutory, contractual, and fiduciary duties. His actions offend this Court’s sense of decency. To meet the objectives of general and specific deterrence, as well as this Court’s denunciation of Mr. Breen’s shameful conduct, it awards punitive damages in the Foremost Group’s favour.
[549] Were this case based only on the currency hedge issue, this Court likely would not have awarded punitive damages. However, the most offensive aspect of this case involves Mr. Breen’s taking of funds from the Foremost Group through his arrangements with Mr. Chernyk in the form of the commissions. As well, he knew, or ought to have known, that the agent payments to Mr. Chernyk’s alter egos were fraudulent. These payments were not “accidents.” They were planned and deliberate. Mr. Breen knew that what he was doing was wrong, yet he persisted. He also used his best efforts to cover-up what he had done by resisting the Foremost Group’s efforts to obtain documentation to prove the unlawful takings through the refusal to comply with undertakings and resisting the Cyprus action.
[550] The Foremost Group seeks punitive damages in the amount of $50,000. Given the position that Mr. Breen held and the way in which he conducted himself,this Court might have been inclined to award a much higher amount, had the Foremost Group asked for it. However, the amount it claims certainly falls within the range of amounts that this Court can award. It makes such an award.
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In Scott v. Fresh Tracks (Canada) Inc., 2023 BCSC 1724 ( Master Bilawich) both the parties and defence counsel were based in BC but Plaintiff’s counsel was based in Toronto. Defence counsel wanted to exam the Plaintiff in person in BC while Plaintiffs’ counsel wanted to do it on ZOOM, just like it had been done when the Defendant was examined.
The Master looked the the following issues :
1. The extra cost of having Plaintiff counsel attend in person.
2. The extra cost of hiring a local agent.
3. The success of virtual proceedings since COVID.
4. The fact that there is no longer a health reason for virtual proceedings.
5. The possibility of cheating.
6. The assessment of credibility.
In the end the Master ordered the examination to proceed on ZOOM.
[46] I am satisfied that a virtual examination is appropriate, as this will allow the plaintiff to avoid substantial out of pocket expenses which he would have to incur if there is an in person examination. The defendant has not persuaded me that a virtual examination of the plaintiff would be materially less effective than an in-person examination, or otherwise prejudice its ability to defend this action. I exercise my discretion to direct that the plaintiff be examined for discovery virtually (by Zoom or other mutually agreeable videoconferencing service), on a mutually convenient date to be agreed between counsel.
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In Maalouf v. Bayer Inc., 2023 ONSC 4875, Associate Justice Robinson allowed the Defendants questions on discovery regarding various aspects of the Plaintiffs’ attitude towards vaccinations.
The Plaintiff was terminated for just cause for refusing to follow the Defendants’ COVID vaccination policy.
She agreed to answer the question as to whether she received a COVID vaccination after her termination, as the Defendant had pled that her refusal to vaccinate would amount to a failure to mitigate her damages.
She refused however to answer any questions about whether she had received other vaccinations prior to or since termination.
The Court allowed these questions as set out below.:
[9] Ms. Maalouf has agreed to answer whether she has received a COVID-19 vaccination since termination. Only the questions on other vaccinations remain in dispute. I am satisfied that whether Ms. Maalouf has received other vaccinations both prior to and since termination is relevant to Bayer Inc.’s pleading that she did not have a reasonable basis for declining
vaccination. I accept Bayer Inc.’s argument that Ms. Maalouf’s motives in breaching the company’s vaccination policies are not clearly irrelevant. Notably, although an older case, as held in Doyle v. London Life Ins. Co., 1985 CanLII 301 (BC CA), at para. 28, motive is sometimes plainly relevant in cases where the court assesses dismissal for an employee’s knowing breach of a company policy. As MacDonald J.A. put it, “A corrupt motive may well tip the scales against an employee. A pure motive ought to be weighed in [the employee’s] favour.”
My Comments :
It is not set out in the decision whether the plaintiff was pleading that she had a reasonable basis for not following the policy. In fact, the Plaintiff argued that since the policy had no exemption for reasonable belief, what difference does it make what her reasons were for refusing?
Moreover asking her about non Covid vaccinations would seem to be an unnecessary intrusion into her personal medical history. Remember she did agree to answer whether she got the COVID vaccination after termination, as this would clearly affect her ability to mitigate her damages. Why would it matter if she never got the flu shot?
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In Saarinen v Rogers Communications ( 2023 ONSC 4328 ) Associate Justice Frank dealt with a refusal motion in which the defendant refused to answer the following question :
Question: To produce the termination packages of all employees (names of said employees may be redacted to only provide first initials) who had more than 25 years of service and were terminated without cause by the Defendant during the period of January, 2017 to December, 2019.
This is what the Court ruled:
[10] It is well-established that in determining the common law entitlement of a dismissed employee, the Court applies the Bardal factors on a case-by-case basis. Thus, a termination package offered to an employee or termination packages offered to other employees would ordinarily not be relevant to the determination of the applicable reasonable notice period for the plaintiff under the common law, which is based on the Bardal factors. As a result, if the plaintiff’s claim were based solely on a common law entitlement, the requested information and documents would not be relevant.
[11] However, in the circumstances of this action, the plaintiff asserts a claim that goes beyond the common law notice entitlement. Specifically, in the amended statement of claim, including paragraphs 12, 18 and 31, the plaintiff alleges that she was wrongfully dismissed and that, based on the implied terms of her employment contract and the defendant’s policies and/or practices in place, she was entitled to a termination package that included 24 months compensation with no mitigation requirements. The defendant consented to the amendments tonthe statement of claim that include these pleadings and joined issue with the plaintiff on this point. For example, at paragraph 22 of the amended statement of defence, the defendant deniesthe implied term alleged by the plaintiff that she was entitled to 24 months compensation andbthat she had no duty to mitigate.
[12] In light of the pleadings in this action, the disputed questions are relevant. If the court finds that there was no just cause for the plaintiff’s dismissal, the termination packages provided to similarly situated employees and the defendant’s policy and/or practice determining termination packages will be relevant to the determination of the plaintiff’s damages. As there is no evidence that the requested information and documentation would offend the principles of proportionality, the questions should be answered, subject to any privilege considerations, as outlined below.
My Comments:
I am not sure why the Plaintiff would plead that it was a term of her employment that she was entitled to the notice period that the employer normally gave to its employees. In my limited 43 years of experience I have rarely seen an employer termination policy which is better than the common law reasonable notice.
I think that this decision is fundamentally flawed as the assessment as to what is reasonable notice is that of the Court alone and should not be influenced in any way by what the past practice of the employer. In most situations of mass layoffs the overwhelming majority of terminated employees take whatever offer the employer makes. Does this mean that an employer can now lead evidence that since 75% of its employees took the employers’ crappy first offer, that is all this particular employee should get ?
Many years ago some courts initially accepted the concept of ” baseball justice ” which meant that the Court would assess whether the employers offer or payment of notice was within the range of reasonable notice. This approach was soundly rejected by the Court of Appeal which reiterated the principle that the determination of reasonable notice was to be determined by the Court and not to simply judge the reasonableness of the employer’s offers.
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Ever since Howard Levitt’s article came out a week ago I have been swamped with enquiries from employment law lawyers on this issue .
I would like to state the following:
1. I AM NOT A TAX LAWYER. I thought I wanted to be when I articled at Stikeman Elliot but they convinced me I was not cut out for it .
2. The source material on this issue is next to impossible for the average non tax lawyer to understand.
3. I have relied on learned blogs from other people who actually can talk tax ( which is not English )
4. The first thing I learnt is that before you even get into this issue , you have to determine if this is an ” Avoidance Transaction” which is defined as” a transaction if it may reasonably be considered that one of the main purposes of the transaction, or of a series of transactions of which the transaction is a part, is to obtain a tax benefit.”
So is the main purpose of a wrongful dismissal action to obtain a tax benefit ?
Answer: NO. The main purpose of a wrongful dismissal action is to move money from the employer’s pocket to the ex employees’ pocket.
It looks like the purpose of this section of the ITA to to catch those transactions which have no real commercial value other than the tax benefit. In other words, absent the tax benefit, would anyone reasonably go through with this transaction ?
Clearly wrongful dismissal actions would and have existed regardless of the use of general damages. Therefore obtaining a tax benefit by using general damages may not always be in strict compliance with the ITA, but it does not appear to be an Avoidance Transaction that is required to be reported.
Remember, I am not a tax lawyer. This could be wrong.
I welcome any comments or new material on this important issue.
In Tan v Storstac ( no citation provided ) Justice Dinnen had a situation where the Plaintiff received a judgement for $35,886 which was considerably better than the Plaintiff’s Rule 49 offer of $23,000 made back in March of 2021.
The Judge then awarded costs of $35,000.
Lets do some math :
If they accepted the Plaintiff’s Rule 49 offer it would have cost them only $23,000 plus their own costs to date, say $5,000 for a total of $28,000
Instead they will have to pay :
$35,886 for the claim
$35,000 for the costs award
$23,761 for their own lawyer
Total : $94,647
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