Court of Appeal for Ontario

Date: 2022-10-31 Docket: C69559

Before: van Rensburg, Pardu and Copeland JJ.A.

Between: Merida Lake, Plaintiff (Appellant)

And: La Presse (2018) Inc., Defendant (Respondent)

Counsel: Dorian Persaud and Morgan Rowe, for the appellant Sébastien Lorquet and Véronique Champoux, for the respondent

Heard: September 21, 2022

On appeal from the judgment of Justice Jasmine T. Akbarali of the Superior Court of Justice, dated May 21, 2021, with reasons reported at 2021 ONSC 3506.

van Rensburg J.A.:

A. Introduction

[1] This is an appeal of a summary judgment in a wrongful dismissal action. The motion judge awarded the appellant damages equivalent to six months’ reasonable notice after deducting two months for failure to mitigate and the compensation already paid by the respondent over the notice period. The only issue on appeal is whether the motion judge erred in reducing the appellant’s wrongful dismissal damages for failure to mitigate.

[2] For the reasons that follow, I agree that the motion judge erred in reducing the appellant’s damages for failure to mitigate. I would allow the appeal and base the appellant’s wrongful dismissal damages on a reasonable notice period of eight months, without the two-month reduction.

B. Facts

[3] The respondent is a daily online French language newspaper based in Montréal, Québec. The appellant was hired in August 2013 and worked for the respondent for five and a half years as General Manager. She was the most senior employee in the Toronto division, reporting to the Vice-President of Sales and Operations in Montreal. In this capacity she managed the sales team to generate advertising revenue in Toronto and English Canada. At one time, she had thirteen direct reports, and at the date of dismissal she had eight. The appellant’s compensation consisted of an annual base salary of $185,000, with a car allowance, annual bonus, pension, and other benefits. She was 52 years old at the date of her dismissal.

[4] The appellant’s employment was terminated after the respondent decided to close its Toronto office. She was notified on March 25, 2019, that her employment would end effective May 30, and she in fact stopped working for the respondent on April 30, 2019. After the termination of her employment, the appellant conducted a job search, but she remained unemployed at the date of the summary judgment motion, two years after her dismissal.

C. The Motion Judge’s Decision

[5] There was no dispute that the appellant’s employment was terminated without cause and that she was entitled to reasonable notice at common law. The main issues on the summary judgment motion were the period of reasonable notice, whether the appellant was entitled to compensation for loss of bonus over the reasonable notice period, and whether the appellant’s notice period should be reduced for failure to mitigate.

[6] In determining the reasonable notice period, the motion judge applied the factors outlined in Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.). After considering the appellant’s level of seniority (she held a position of some responsibility with the respondent but was not a key member of the management team), the duration of her employment, her age at the date of dismissal, and her work experience in management and sales, especially in the media industry, together with the case precedents submitted by the parties, the motion judge fixed the reasonable notice period at eight months. Applying the test in Paquette v. TeraGo Networks Inc., 2016 ONCA 618, 34 C.C.E.L. (4th) 26, to the evidence, the motion judge interpreted the respondent’s bonus plan and concluded that the appellant would have been entitled to an annual bonus of $39,065.

[7] On the question of mitigation, the motion judge recognized that the onus was on the respondent to establish that the appellant failed to mitigate and that there were two parts to the analysis: first, whether the appellant took reasonable steps, and second, if such steps had been taken that she would likely have obtained comparable employment. The motion judge concluded that the steps taken by the appellant to mitigate her damages were not reasonable in the following ways: (a) she waited too long before beginning her job search; (b) she “aimed too high” in applying for vice-president roles and she should have been applying for less senior roles if she continued to remain unemployed; and (c) she waited too long before applying for any jobs and she applied to very few jobs. The motion judge then stated at para. 69:

In these circumstances, I infer that, had the [appellant] expanded the parameters of her job search, searched earlier, and applied for more positions, her chances of obtaining a position would have improved significantly. Although there is no direct evidence in front of me of other positions that the [appellant] could have applied for, I find it is reasonable to assume that they existed. If vice-president roles were available, more junior roles were also available. The [appellant] chose unreasonably to limit her job search, which had a corresponding impact on her ability to find work.

The motion judge reduced the notice period of eight months by two months to account for the appellant’s failure to take reasonable steps to mitigate her damages.

[8] The motion judge granted judgment in favour of the appellant in the total sum of $97,491.87. This amount was comprised of damages for lost bonus for the period January 1-March 26, 2019 (while the appellant was still employed by the respondent), and damages for wrongful dismissal, based on six months of her compensation package, less $40,026.22, the amount she had already received from the respondent. The respondent was awarded partial indemnity costs on the basis that it had made an offer to settle the litigation early in the proceedings that exceeded the amount of the judgment.

D. Issues on Appeal

[9] The appellant asserts that the motion judge erred in both parts of the mitigation analysis. At the first stage of the analysis, the motion judge erred in concluding that the appellant had not taken reasonable steps to mitigate her damages. The appellant argues that: (i) the motion judge misapprehended the evidence when concluding that the appellant waited too long to begin her job search; (ii) the motion judge erred in principle by suggesting that the appellant should have eventually applied for lesser paying positions, and (iii) the motion judge made a palpable and overriding error by concluding that the appellant “aimed too high” and focused her job search on roles that represented a promotion over her prior role. At the second stage of the analysis, the motion judge erred by making an assumption in the absence of evidence and reducing the appellant’s damages without finding that the appellant would have found a comparable position if she had taken reasonable steps in mitigation.

E. Discussion

[10] I begin with a summary of the relevant legal principles respecting mitigation of damages for wrongful dismissal.

[11] The leading authority is Red Deer College v. Michaels, [1976] 2 S.C.R. 324. The duty to mitigate is based on the premise that the defendant is not responsible for losses that a plaintiff could reasonably have avoided. If it is the defendant’s position that the plaintiff could reasonably have avoided some part of the loss claimed, “it is for the defendant to carry the burden of that issue, subject to the defendant being content to allow the matter to be disposed of on the trial judge’s assessment of the plaintiff’s evidence on avoidable consequences”: at p. 331. The burden is on the defendant to show the plaintiff “either found, or, by the exercise of proper industry in the search, could have procured other employment of an approximately similar kind reasonably adapted to his abilities”: at p. 332. The burden is “by no means a light one, for this is a case where a party already in breach of contract demands positive action from one who is often innocent of blame”: at p. 332.

[12] While a terminated employee has a duty to take reasonable steps to mitigate, the onus is on the defendant to demonstrate that the plaintiff could reasonably have avoided a loss or that she acted unreasonably in failing to do so: Gryba v. Moneta Porcupine Mines Ltd. (2000), 5 C.C.E.L. (3d) 43 (Ont. C.A.), at para. 57. The defendant must prove: (1) that the plaintiff failed to take reasonable steps to mitigate her damages; and (2) that if she had done so she would have been expected to secure a comparable position reasonably adapted to her abilities: Link v. Venture Steel Inc., 2010 ONCA 144, 79 C.C.E.L. (3d) 201, at para. 73.

[13] The determination of whether a terminated employee took reasonable steps in mitigation, including whether the failure to mitigate caused any part of the loss, is largely a question of fact. Absent an error in principle or a palpable and overriding error, a decision respecting mitigation is entitled to deference: Humphrey v. Mene Inc., 2022 ONCA 531, at para. 53; McNevan v. AmeriCredit Corp., 2008 ONCA 846, 94 O.R. (3d) 458, at para. 67.

Issue One: Did the motion judge err in concluding that the appellant failed to take reasonable steps to mitigate her damages?

[14] The appellant argues that there were three errors in the first stage of the motion judge’s mitigation analysis. First, the motion judge erred in concluding that the appellant waited too long before beginning her job search. The appellant contends that the motion judge misapprehended the evidence when she concluded that she “did very little, if anything, in May 2019 to look for work”. Second, the motion judge erred in principle by faulting her for not applying for positions that paid less than the position from which she was dismissed. Third, the motion judge made a palpable and overriding error by concluding that the appellant “aimed too high” and focused her job search on roles that represented a promotion over her prior role. The appellant asserts that the motion judge placed too much emphasis on the title of the positions she applied for and ignored evidence that her job search focused on positions with comparable duties and remuneration.

[15] The respondent contends that the motion judge’s conclusion that the appellant failed to take reasonable steps in mitigation is entitled to deference. The motion judge was permitted to conclude that the appellant’s mitigation efforts were unreasonable, which was a decision she reached after conducting a global assessment of all of the evidence.

[16] I would not give effect to the appellant’s first argument. The motion judge did not err in concluding that the appellant unreasonably delayed the start of her job search.

[17] The motion judge considered the cross-examination evidence and concluded that the steps the appellant described having taken before June 3, 2019, were in fact steps that she took after that date. The motion judge explained her findings at para. 67 of her reasons, referencing the chart that the appellant referred to in answering questions about the timing of her efforts, and the notes the appellant relied on during her examination. The conclusion that the appellant did very little to look for work until after June 3 was open to the motion judge on the evidence.

[18] I do, however, agree that the motion judge made the two other errors identified by the appellant.

[19] The motion judge erred in principle when, at para. 65, she accepted that, in mitigation, after a reasonable period of attempting to find similar employment, a dismissed employee must begin searching for a lesser paying job (which was based on an obiter comment by a trial judge in Neilipovitz v. ICI Paints (Canada) Inc. (2002), 27 C.C.E.L. (3d) 256 (Ont. S.C.), at paras. 25-26), and then, at para. 68, she concluded that the appellant should have applied for a sales representative role if she continued to remain unemployed. The obligation of a terminated employee in mitigation is to seek “comparable employment”, which typically is employment that is comparable in status, hours and remuneration to the position held at the time of dismissal: Carter v. 1657593 Ontario Inc., 2015 ONCA 823, at para. 6. There was no obligation for the appellant, to seek out less remunerative work, including by working as a sales representative.

[20] When the respondent suggested to the appellant in cross-examination that she could have possibly applied for sales representative positions in Toronto that offered similar compensation, the appellant responded that her 25 years of experience made her over-qualified, and that, from her experience, such positions would lead to “a sizeable pay cut”. Since there was no evidence to the contrary, this was a complete answer to the respondent’s suggestion that the appellant had failed in her mitigation efforts by not applying for sales representative positions.

[21] The motion judge also made a palpable and overriding error when she concluded that the appellant aimed too high when she applied for vice-president positions and had focused her job search on roles that would represent a promotion over her prior role.

[22] The appellant’s evidence of the steps she took in mitigation was substantial. She detailed her efforts at searching for jobs on sites such as LinkedIn and other online job boards on an almost daily basis. She used search keywords relevant to the range of job titles she had identified as potentially comparable, and that were not limited to vice-president positions. She described her efforts at networking, including attending one-on-one meetings and conferences. She used the career transitioning services provided by the respondent, and then paid privately for additional coaching.

[23] The appellant deposed in her affidavit that in the course of her job search she had applied for 20 suitable positions. During her cross-examination, she was asked what she meant by “suitable positions”. She responded:

So suitable positions were positions that I would meet qualifications for. Just to let you know, my criteria, I guess, when looking for a job, is I wanted a senior role, so director of sales, head of sales, VP sales. I wanted it to be based in Toronto. I wanted it to be full-time and I think that’s probably it. I was not looking for a rep position. I wanted to manage people. That’s my expertise and skill. So when I say suitable, those are positions that would fit my criteria but also that I was qualified for as well too.

The appellant made clear that she applied to positions that matched her work experience and qualifications, rather than focusing on job titles. For example, she stated that some of the jobs she applied to have a “VP” title but had a job description equivalent to a director position – a position the appellant had occupied with various employers throughout her career. She later noted how, during her online job search, she used key words like “director of sales, head of sales, GM, VP”, and once again clarified that a job title like “VP” was not necessarily indicative of the position’s responsibilities.

[24] The motion judge rejected the appellant’s assertion that the positions she applied for might have had more senior titles, but the responsibilities were akin to ones she had experience with, after observing that there was no evidence of the job descriptions for these positions in the record. She stated that she had difficulty accepting that “nine advertised vice-president positions were in fact for jobs with duties generally executed by people who hold more junior titles”. Given this doubt, the motion judge concluded that the appellant focused her job search on roles that would represent a promotion over her prior role.

[25] In my view, the motion judge placed too much emphasis on the titles of some of the positions the appellant applied for, without giving proper consideration to the appellant’s evidence that the positions were similar to her prior work experience. Without evidence contradicting the appellant’s assertion that the vice-president roles had similar job responsibilities to her previous employment, the motion judge speculated, based on the title of the positions alone, that such positions were not comparable. This error influenced her determination that the appellant failed to take reasonable steps to mitigate her damages.

[26] The duty to “act reasonably” in seeking and accepting alternate employment is a “duty to take such steps as a reasonable person in the dismissed employee’s position would take in [her] own interests” and is “not an obligation owed by the dismissed employee to the former employer to act in the employer’s interests”: Forshaw v. Aluminex Extrusions Ltd. (1989), 39 B.C.L.R. (2d) 140 (C.A.), at pp. 143-44.

[27] The onus was on the respondent to prove the appellant’s failure to mitigate. Typically, in asserting that a terminated employee has failed to mitigate, the employer will lead evidence on this point, although the burden can be discharged by reference to the plaintiff’s own evidence: Red Deer College, at p. 331. In this case, the respondent offered no evidence to counter the appellant’s evidence that the vice-president positions had similar job responsibilities to her previous employment, and that opportunities in the industry at the time were limited.

[28] In the absence of affirmative evidence from the respondent, or any suggestion in cross-examination that the appellant failed to apply for an available position that was comparable in nature to her former position, the record did not support the motion judge’s conclusion that the appellant failed to make reasonable efforts to mitigate her damages.

Issue Two: Did the motion judge err in her assessment of whether the appellant would have found comparable employment if she had taken reasonable steps to mitigate?

[29] The appellant asserts that, at the second stage of the test for mitigation, the motion judge made an inference that was not supported by the evidence. The motion judge engaged in speculation when, after concluding that the appellant had not taken reasonable steps to mitigate her damages, she stated:

In these circumstances, I infer that, had the [appellant] expanded the parameters of her job search, searched earlier, and applied for more positions, her chances of obtaining a position would have improved significantly. Although there is no direct evidence in front of me of other positions that the [appellant] could have applied for, I find it is reasonable to assume that they existed. If vice-president roles were available, more junior roles were also available. The [appellant] chose unreasonably to limit her job search, which had a corresponding impact on her ability to find work.

[30] The respondent contends that it was open to the motion judge to draw an inference to satisfy the second part of the test on mitigation, and that the motion judge did not in fact speculate, but made a reasonable inference based on the evidence before her.

[31] I would give effect to this ground of appeal.

[32] The second part of the test on mitigation requires that the court be satisfied that, if reasonable steps had been taken, the terminated employee would likely have found a comparable position within the reasonable notice period. As Ferguson J. observed in Rowe v. General Electric Canada Inc. (1994), 8 C.C.E.L. (2d) 95 (Ont. Gen. Div.), at para. 14, “the breach of the plaintiff’s duty to mitigate will only be relevant if the breach is proved to be causative [of the plaintiff’s loss]”. In that case, as here, there was no evidence to support the conclusion that the terminated employee would likely have found comparable employment if reasonable and appropriate steps in mitigation had been taken.

[33] I agree with the respondent that, in an appropriate case, an employer could meet the second branch of the mitigation test by means of a reasonable inference from proven facts. In Parks v. Vancouver International Airport Authority, 2005 BCSC 1883, for example, the court reduced the plaintiff’s notice period from seven to five months where the plaintiff delayed the start of his job search by three months and, although the defendant did not put forward evidence of available positions, the plaintiff had readily found a comparable position less than two months after starting his job search. In this case, however, there was no evidence to support the inference that, if she had applied for other positions, the appellant would have found comparable employment. That conclusion was simply not available on this record.

[34] In any event, the inference drawn by the motion judge did not go so far as to meet the second stage of the mitigation test. Rather, she inferred that the appellant’s chances of obtaining a position would have improved significantly, and she concluded that, if vice-president roles were available, more junior roles were also available. Even if her reference to “more junior roles” is understood to mean comparable employment, the inference made by the motion judge extends only to the conclusion that such positions were available. The motion judge did not ask or answer the proper question at the second stage: whether the respondent had proven that, if reasonable steps in mitigation had been taken by the appellant, she would have found a comparable position during the reasonable notice period.

F. Conclusion and Disposition

[35] For these reasons I would allow the appeal, set aside the judgment under appeal, and replace it with a judgment that bases the damages for wrongful dismissal on eight months’ notice, without reduction for failure to mitigate, but including the reduction for the compensation paid by the respondent to the appellant over the notice period. I would award costs of the appeal to the appellant in the sum of $20,000, inclusive of HST and disbursements. If the parties are unable to agree on the disposition of the costs in the court below, they may provide written submissions within 30 days.

Released: October 31, 2022 “KMvR” “K. van Rensburg J.A.” “I agree. G. Pardu J.A.” “I agree. J. Copeland J.A.”