Wronko v. Western Inventory Service Ltd.

91 O.R. (3d) 447

Court of Appeal for Ontario,

Winkler C.J.O., MacPherson and Rouleau JJ.A.

June 18, 2008

Employment -- Wrongful dismissal -- Damages -- Mitigation -- Employment contract providing for payment of lump sum to employee shortly after termination of employment -- That provision constituting waiver by employer of any obligation on part of employee to mitigate his damages. [page448]

After reasons for judgment in a wrongful dismissal action were released, the plaintiff made further submissions arguing that his damages award should not have been subject to the duty to mitigate.

Held, the plaintiff's submission should be accepted.

A provision in the employment contract for the payment of a lump sum shortly after termination of employment amounted to a waiver by the defendant of any obligation on the part of the plaintiff to mitigate.

RULING on a duty to mitigate.

Cases referred to Wronko v. Western Inventory Service Ltd. (2008), 90 O.R. (3d) 547, [2008] O.J. No. 1589, 292 D.L.R. (4th) 58, 273 O.A.C. 1, 65 C.C.E.L. (3d) 185, 2008 ONCA 327, 165 A.C.W.S. (3d) 855, 2008 CarswellOnt 2350

Michael W. Kerr and M. Christine O'Donohue, for applicant Darrell Wronko.

P. Christopher Lloyd, for respondent Western Inventory Services Ltd.

[1] BY THE COURT: -- Following the release of the reasons for judgment, Wronko v. Western Inventory Service Ltd. (2008), 90 O.R. (3d) 547, [2008] O.J. No. 1589, 2008 ONCA 327, counsel for the appellant requested an opportunity to make written submissions with respect to damages. Counsel for the respondent did not oppose the request and the court accepted further written submissions from both parties. In his further submissions, the appellant's position is that his damages award in the amount of $286,000 should not have been subject to the duty to mitigate.

[2] Neither side had dealt with the assessment of damages or mitigation in their written and oral argument on appeal. Mitigation was argued at trial, but the trial judge did not assess damages and did not deal with mitigation.

[3] The appellant now points to clause 2.4 in his employment contract, not previously drawn to the court's attention, which states:

2.4 Within one (1) pay period after the end of the month in which the effective date of termination occurs, or if the Employee should cease to perform his duties hereunder under any other circumstances, then within one (1) pay period after the end of the month in which such cessation occurs, the accountants of the Company for the time being shall report as to the amount of remuneration payable to the Employee as aforesaid, and the amount shown to be payable (taking into account any prior payments that have been made on account thereof) shall be paid within one (1) pay period of the making of the report.... A pay period is equivalent to two (2) weeks from the date of [the] last previous pay day.

[4] In the circumstances of the present case, this clause required the respondent to pay the appellant his severance payment of [page449] $286,000 by no later than October 31, 2004. By requiring the respondent to make a lump-sum payment shortly after termination, this term of the contract amounted to a waiver by the respondent of any obligation on the part of the appellant to mitigate.

[5] Accordingly, our judgment is amended to award the appellant damages equal to two years' salary of $286,000. We make no order as to costs in relation to the further submissions of counsel.

[6] We awarded the appellant his costs on a substantial indemnity basis both at trial and on appeal. Having reviewed the parties' costs submissions, we fix these costs in the amount of $50,000 at trial and $50,000 on appeal.

Order accordingly.