Uncategorized – Page 7 – Barry Fisher's Employment Law Blog

ONCA Makes Rulings About Post Dismissal Bonus Entitlements :

In Celestini v. Shoplogix Inc., 2023 ONCA 131 Justice Zarnett made the following rulings about the Plaintiff’s entitlement to a bonus payment over the 18 month notice period :

1. The clauses in the bonus agreements repeatably used the words ” employment terminates ” and ” termination of employment ” . The Defendant said that means if we we terminate your employment on March 1st then that ends your bonus entitlement. However the Court of Appeal goes right back to their 1999 decision in Veer v Dover ( and quoted in the SCC in Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26) when it says :

” Yet, it bears repeating that, for the purpose of calculating wrongful dismissal damages, the employment contract is not treated as “terminated” until after the reasonable notice period expires. So, even if the clause had expressly referred to an unlawful termination, in my view, this too would not unambiguously alter the employee’s common law entitlement.”

In other words, when a bonus plan says termination it must mean a lawful termination and a lawful termination only takes place at the END, not the BEGINNING, of the reasonable notice period.

2) As there was no evidence as to what the bonus would have been had the Plaintiff been able to work out his notice period, the judges’ use of a three year average was a proper method of calculating the bonus over the notice period. Had there been actual evidence of what the bonus would have been, the result would likely be different.

3) The time period between the end of the last bonus period and the termination is what I call the ” stub bonus “. If the bonus year ended on December 31 2020 and the person is terminated on March 31, 2021 then he is entitled to a bonus both for the stub period and the reasonable notice period. Lawyers sometimes miss this issue as they tend to focus on notice period payment and forget about the stub period. In this case the Plaintiff was paid about $50,000 for the stub period which the trial judge deducted from the wrongful dismissal damages. The Court of Appeal corrected that mistake and said that the amount properly allocated to the stub period ( about $37,000 based on the three year average ) was not to be counted as a payment towards the damage award.

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You Don’t Get Two Kicks on the Same Facts Says the HRTO:

In Almseideen v. McKesson Canada, 2023 HRTO 255 , Adjudicator Cherniak had a situation where an applicant had filed a HRTO complaint claiming that he was terminated in breach of the Code and also filed a civil wrongful dismissal action which claimed wrongful dismissal damages due to the the failure to receive proper notice .

The Tribunal noted that the civil action did not contain any allegations of a Code violation, although they could have added such a claim to the civil action but choose not to do so .

This is what the Adjudicator said :

17] The Tribunal addressed the application of subsection 34(11) of the Code in Zheng v. G4S Secure Solutions (Canada) Ltd., 2019 HRTO 407 (affirmed by 2022 ONSC 93, leave to appeal to the Court of Appeal refused). In that case, the Tribunal found that although the applicant removed any mention of Code-based allegations from their civil claim, the allegations set out in the application and the civil claim were virtually identical in their substance. The Tribunal then dismissed the application for that reason. As the Divisional Court stated at paragraph 37:

This is not a question of shaping the civil action so as to avoid reference to the allegation of discrimination. The facts are the same. A self-represented party would not be aware of our courts’ general antipathy to a multiplicity of proceedings. Having decided to go to court, relying on the same impugned actions as those alleged to have been discriminatory in a complaint to the Human Rights Tribunal of Ontario means that the Court is in a position to deal with the matter fully, including any allegation of discrimination. In short, you do not get two kicks at the same set of facts.

My Comments :

This should put an end to at the plaintiff practice of starting a clean wrongful dismissal action and also bringing a HRTO application claiming that there was discrimination at play. This tactic was developed for several reasons.

First it forced the Defendant to fight in two places which would increase their sunk legal costs in so far as there is no costs awards at the HRTO.

Secondly if the Plaintiff lost the civil action they could still try the Tribunal route, again with no risk of an adverse cost award.

This tactic was intended to put extra pressure on the Defendant to settle .

I suspect one of the reasons for the Tribunal decision is to try to lessen their outrageous backlog.

A more recent decision of the HRTO confirmed the same position. See Koufis v. James Campbell Inc. o/a McDonald’s Restaurant, 2023 HRTO 475 (CanLII)

Quere: If the civil courts can easily handle Code based cases, then why do we even need the HRTO?

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Two Cases Award Modest Damages for Manner of Dismissal :

In Teljeur v Aurora Hotel Group , 2023 ONSC 1324, Justice Mckelvey awarded moral damages of $15,000 to a dismissed GM of a resort for the following reasons:

They did not pay him his ESA minimums within the 7 days set out in the ESA.
They promised him 8 weeks severance but then paid only the ESA minimums of 2 weeks.
The Plaintiff repeatably asked for a termination letter in writing ( as required by the ESA ) but the defendant failed to do so .
The Defendants acknowledged at the termination meeting that the plaintiff was owed over $16,000 in expenses but failed to pay it, even as of the time of trial. This constituted 23% of the plaintiffs annual income.

In Starling v Independent Living Resource Centre of Calgary, 2023 ABPC 31, Judge Argento of the Provincial Court awarded $2,000 as aggravated damages for the following reasons

• The Defendant terminated the Plaintiff while she was on sick leave and without having received any updated medical evidence indicating she was well enough to return to work.

• The Defendant made no effort to call the Plaintiff to check on her health before it threatened to terminate, and eventually terminated, her employment.

• The Defendant initially told the Plaintiff that she could not come to the office while on sick leave and that she would need medical clearance to return to work. On September 26, the Defendant indicated, for the first time and without warning, that her employment could be terminated.

• On September 26, the Defendant also advised the Plaintiff she would be dismissed for cause if she did not provide further information in two days. The two-day deadline was inadequate given the absence of any prior warning. It was also unreasonable to expect the Plaintiff to be able to obtain updated medical information in that time frame.

• The Defendant advised the Plaintiff she had no sick leave or vacation days left even though Mr. Hagel’s May 3 email stated otherwise. The Defendant did not check its files properly and failed to identify Mr. Hagel’s earlier email before placing the Plaintiff on unpaid, rather than paid, sick leave.

My Comments :

Courts seem to be increasingly willing to punish employers who do not conduct terminations in a sensitive and reasonable manner.

Playing hardball with a Plaintiff at their time of extreme vulnerability can be a costly affair.

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Zero Mitigation Efforts Reduces Notice Period by 20%

In Zoehner v. Algo Communication Products Ltd.,2023 BCSC 224
Justice Verhoevan had this to say about a 63 year old employee ( and part owner of a family business ) regarding his mitigation efforts :1) He found that the employee had done nothing to find a comparable job as he was in full retirement mode.

2) However as the law also requires the defendant to show that if he had looked for a job he likely would have found one within the notice period, the Court found that the likelihood of this happening was basically zero for the following reasons :

[113] However, there was little likelihood that the plaintiff could have actually found reasonable alternative employment. As he noted, he was on the brink of retirement, and his professional skills were of limited scope, in that he had worked for a single employer for his entire career.

[114] An employee who has devoted a large part of his working life to one employer and whose knowledge and experience is tailored to the needs of that employer may be less marketable as an employee and may have more difficulty in obtaining alternative employment: Carey v. F. Drexel Co., [1974] 4 W.W.R. 492, 1974 CanLII 733 (B.C.S.C.).

[115] The plaintiff had health issues which limited his employability. He suffers from chronic low back pain with sciatica, caused by compressed discs in his lower back. He has limited tolerance for standing and walking. He is scheduled for vascular surgery. He takes medication, gabapentin, for his medical conditions. The medication causes fatigue and affects his mental alertness.

[116] It is quite unlikely that any employer would hire the plaintiff for a senior executive position paying anything like the salary he previously earned. Such jobs generally involve highly specialized services, with heavy demands and responsibilities. An older employee on the brink of retirement with significant health issues is not likely to obtain such employment.

Why then did the Judge reduce the notice period by 20%?

[117] However, given his retirement plans, it would have been reasonable for him to seek work at a lower salary, perhaps for a limited term. He might have been able to obtain some reasonable work, perhaps similar to the consulting work that he did, that might have brought in at least some income.

My Comments:

This is a BC case. In Ontario the law of mitigation is different on two points.

First, the employee is only obligated to look for comparable employment. They are never required to look for or accept lesser employment.

Second, even if they accept employment of a much lesser salary, that minimal income will not count as mitigation income that reduces the damage claim.

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Judgement = $35,743. Cost Award = $25,000

In Summers v. OZ Optics Limited, 2023 ONSC 723 Justice Hackland determined that the Plaintiff had beat their Rule 49 offer and was entitled to substantial indemnity cots for the bulk of the time .

Th judge made the following interesting comments about why he thought the Defendant’s actions increased the costs:

(b) Refusal to admit anything that should have been admitted – Rule 57.01(1)(g). The Respondent flatly refused and continues to refuse to acknowledge the application of the Court of Appeal judgement in Waksdale v. Swegon North America Inc. 2020 ONCA 391 (and subsequent appellate and trial decisions discussed in the court’s reasons herein), to the issue of the validity of the termination clause in its employment agreement. The Respondent continues to insist its’termination clause is valid and enforceable.

(c) Unnecessarily lengthening the duration of the proceedings – Rule 57.01(1)(e) and any step in the proceeding that was improper, vexatious or unnecessary – Rule 57.01(1)(f). The Respondent’s argument that the Applicant had failed to mitigate his damages by taking reasonable steps to secure new employment, an issue on which the Respondent had the burden of proof, was raised gratuitously and without any evidentiary basis. This was in the face of the Respondent doing nothing to assist the Applicant’s re-employment efforts-no letter of reference, no career transition counselling, and a summary dismissal in front of other employees. Then mitigation issue served to unnecessarily lengthen and complicate the proceedings and led to the Respondent improperly late serving affidavits on this issue, after the cross-examinations had
concluded.

My Comments;

1. Don’t make stupid legal arguments.

2. Don’t attack the Plaintiff’s mitigation efforts if the Defendant has done zilch to help him get a new job or taken active steps to impair it.

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Q: Want to Schedule a Motion for Summary Judgement in Toronto? A: You Will Get a Date 12 Months From Now :

I just heard from a very reliable source that he finally got a date for a summary judgement motion ( after a failed CPC attendance and 2 Case Conferences) and that date is in early 2024.

A system that was supposed to simplify and speed up straight forward cases has simply failed.

There are two simple solutions to this problem:

1. Take your mandatory mediation seriously. It is definitely your best opportunity to settle the case early and at less cost. I did a study a few years ago and found that of cases that did not settle at mediation, 95% of these cases eventually settled. So, when your mediation seems to be failing and you think, well we are going to a trial, remember that there is a 95% likelihood that it will not go to trial and will settle at some other time. In that case, why not try a little harder to get a deal at the mediation.

2. Use Mediation/ Arbitration ( MedArb) instead of litigation. Why keep using a failed litigation system? It is usually ( not always ) in the interests of both parties to get a resolution quickly and at the least cost. Med/Arb can be a useful alternative for the following reasons :

a) You get to choose your own judge.
b) You can contract out of the right to appeal.
c) You set the schedule, not some court clerk or judge.
d) The mediation will have a much higher likelihood of achieving a settlement.
e) Procedural matters and case management issues can be resolved promptly with a joint phone call or a ZOOM meeting.
f) Although you have to pay the Arbitrator’s fees, the actual hearing, if there is one, is usually much shorter than a trial. Moreover, the parties can agree that the winner pays the whole cost of the Arbitrator.

If you like to book either a mediation or an arbitration, go to my calendar at www.barryfisher.ca or call me at 416 999 3785.

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.

Foe a copy of this case, email me at barry@barryfisher.ca

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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 trial 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.

If you like a copy of this case, email me at barry@barryfisher.ca

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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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