Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20220920 DOCKET: C70110

Gillese, Huscroft and Sossin JJ.A.

BETWEEN

Pylyp (Phillip) Pavlov Plaintiff (Respondent)

and

The New Zealand and Australian Lamb Company Limited Defendant (Appellant)

Counsel: Greg McGinnis and Stephanie Ramsay, for the appellant Matthew Fisher and Kimberley Sebag, for the respondent

Heard: September 13, 2022

On appeal from the judgment of Justice Elizabeth M. Stewart of the Superior Court of Justice, dated November 5, 2021, with reasons reported at 2021 ONSC 7362, and the costs endorsement of January 4, 2022, with reasons reported at 2022 ONSC 68.

REASONS FOR DECISION

OVERVIEW

[1] This is an appeal from a trial judgment awarding damages in lieu of notice for termination from employment. The appellant submits that the trial judge erred in assessing the respondent’s reasonable notice period and entitlement to a bonus payment during the notice period. The appellant also submits that the trial judge erred in including disbursements from a mandatory mediation in her costs award to the respondent.

[2] For the reasons that follow, we dismiss the appeal.

BACKGROUND

[3] The respondent was the appellant’s Director of Marketing Communications and Public Relations. The appellant terminated his employment without cause on May 28, 2020. At that time, he was 47 years old and had been employed for just under three years. He was earning $131,943 per year plus benefits.

[4] The respondent was also eligible to receive an annual bonus of up to 15% of his base pay depending on company and individual performance, including a pro-rated amount in his first year. He received a variable bonus in each year of his employment prior to termination.

[5] Following his termination, the respondent applied for over 100 jobs and retained private career coaching services to assist him in his job search. Despite his efforts, he remained unemployed at the time of trial.

DECISION BELOW

[6] Following a Simplified Procedure trial, the trial judge awarded the respondent damages equivalent to 10 months’ notice, including amounts representing his annual bonus and benefits that he would have earned during his notice period.

[7] The trial judge accepted that the respondent was recruited to work for the appellant, left comparatively secure employment with an established large multi-national corporation, and was led to believe that the new position carried opportunity for greater responsibility, authority, and growth within the organization. She also accepted that while he was not a corporate officer or director, he held a comparatively senior and important position within the company.

[8] In assessing the appropriate length of notice, the trial judge referred to the non-exclusive factors set out in Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.): age, length of service, character of employment, and availability of similar employment. She noted that the latter factor may be affected by prevailing economic factors beyond the control of the parties, citing Paquette v. TeraGo Networks Inc., 2015 ONSC 4189 at para. 27, rev’d in part on other grounds, 2016 ONCA 618.

[9] On this point, the trial judge observed that at the time of the respondent’s dismissal in May 2020, the initial effects of the global COVID-19 pandemic were being experienced by various industries, including those associated with international importing and distribution. She found it was a reasonable inference to draw from the evidence and the timing of the respondent’s termination that the effects and uncertainties of the pandemic were obstacles to his efforts to obtain alternate employment, and that the appellant would, or should, have known of these obstacles at the time of termination.

[10] The respondent submitted that between 9 and 12 months’ notice was reasonable, while the appellant argued for between 3 and 5 months’ notice. The trial judge reasoned that although the respondent was employed for a comparatively short period of time, his position, duties, responsibility, age, and level of remuneration entitled him to a longer notice period than that submitted by the appellant. Furthermore, notice must be determined with reference to the prevailing economic uncertainties which had a negative impact on the respondent’s ability to secure similar alternative employment. In the result, she awarded 10 months’ notice.

[11] The trial judge also concluded that the respondent was entitled to amounts reflecting the value of his bonus and benefits he would have received during the notice period. She accepted that he would not have received a bonus for 2020 because only very senior employees received one, excluding those who were similarly situated to the respondent. However, he was still entitled to any bonus payment related to his remaining notice period, during the following fiscal year, on a pro-rata basis. The determination of his exact bonus and benefit entitlements was remitted to the parties.

[12] Finally, the trial judge found the respondent’s mitigation efforts were reasonable and declined to reduce his damages on this account.

[13] Subsequently, the parties agreed on the quantum of damages owing under the judgment after amounts already paid were deducted. The trial judge awarded costs to the plaintiff in the amount of $50,000 plus disbursements of $4,560.28, balancing the relatively straightforward nature of the action with the defendants’ rejection of several pre-trial offers that were less than the amount ultimately recovered.

ANALYSIS

[14] The appellant raised two main issues with respect to the trial judge’s decision on the merits. First, the appellant challenged the trial judge’s application of certain of the well-accepted factors from Bardal, such as the respondent’s remuneration, the character of the respondent’s position, and the availability of similar employment in the economic circumstances to the determination of notice in this case. Second, the appellant challenged the trial judge’s inclusion of the pro-rata entitlement to the bonus. The appellant also raised a third issue relating to the trial judge’s award of costs.

[15] At the close of the appellant’s oral submissions, we indicated to the parties that we would only need to hear from the respondent with respect to the costs issue.

[16] We see no merit in the appellant’s main arguments on appeal. The aspects of the trial judge’s decision challenged by the appellant were all findings of mixed fact and law entitled to deference. The appellant has raised no palpable or overriding error (or error of any kind) in relation to the trial judge’s analysis or conclusions.

[17] With respect to the costs issue, the appellant challenged only a portion of the $4560.28 in disbursements awarded by the trial judge as part of her costs award. The challenged portion related to the costs incurred by the respondent in retaining a mediator to conduct the mediation required under r. 24.1 of the Rules of Civil Procedure. The appellant argued that because the parties agreed to retain a mediator with experience in labour and employment disputes who was not a member of the roster of approved mediators and therefore incurred additional costs, those additional costs were voluntary expenditures which were not properly included in the trial judge’s cost award. This argument was also raised in the appellant’s submissions before the trial judge.

[18] On appeal, the appellant relied on Saltsov v. Rolnick, 2010 ONSC 6645 (Div. Ct.), at para. 9, in which the Divisional Court held that expenses relating to voluntary mediation were not properly part of a costs award. The respondent argued that Saltsov has no application in the context of mandatory mediation, irrespective of which mediator the parties may choose to retain. We agree. It was well within the discretion of the trial judge to approve the respondent’s disbursements in relation to mandatory mediation, and there is no basis for appellate intervention with this aspect of the costs award.

DISPOSITION

[19] The appeal on the merits is dismissed. Leave to appeal the costs order is granted, but the costs appeal is dismissed.

[20] The appellant shall pay costs of the appeal to the respondent in the amount of $24,000, all-inclusive.

“E.E. Gillese J.A.”

“Grant Huscroft J.A.”

“L. Sossin J.A.”