Court of Appeal for Ontario

Date: 2019-05-29 Docket: C65184 Judges: Brown, Roberts and Zarnett JJ.A.

Between

Donald Dussault and Maryann Pugliese Plaintiffs (Respondents/Appellants by Cross-Appeal)

and

Imperial Oil Limited Defendant (Appellant/Respondent by Cross-Appeal)

Counsel

Richard J. Nixon and Brendan Clancy, for the appellant

David E. Greenwood and Simon Reis, for the respondents

Heard: April 25, 2019

On appeal from the orders of Justice Lise Favreau of the Superior Court of Justice, dated February 20, 2018, with reasons reported at 2018 ONSC 1168, and dated July 13, 2018, with reasons reported at 2018 ONSC 4345.

Reasons for Decision

Appeal

[1] The appellant employer appeals and the respondent employees cross-appeal from the motion judge's orders awarding wrongful dismissal damages to the respondents. The appellant dismissed the respondents from their employment, without cause, following the sale of part of its retail business to Mac's Convenience Stores Inc.

[2] At the conclusion of the hearing, we dismissed the appeal with reasons to follow and reserved our decision on the cross-appeal. As indicated below, the cross-appeal is allowed. These are our reasons for our disposition of both.

Mitigation of Damages

[3] The appellant's principal submission is that the motion judge erred in failing to find that the respondents had not mitigated their damages by accepting comparable employment with Mac's. In its factum, the appellant also argues that the motion judge erred further in awarding as damages the value of substantially the same benefits that the respondents continued to receive under their pensions.

[4] We do not accept these submissions.

[5] We start with the following well-established principles: to mitigate any damages arising from dismissal, an employee must make reasonable efforts to seek comparable employment; and it remains the employer's burden to prove the employee's failure to do so: see Red Deer College v. Michaels, [1976] 2 SCR 324. "Comparable employment" does not mean "any employment" but comprehends employment comparable to the dismissed employee's employment with his or her former employer in status, hours and remuneration: Carter v. 1657593 Ontario Inc., 2015 ONCA 823, at para. 6.

[6] We see no error in the motion judge's detailed conclusions that the employment offered by Mac's was not comparable and that the respondents acted reasonably in refusing it. On the face of Mac's offers, the proposed employment would have resulted in an immediate, substantial decrease in benefits and, after 18 months, a material drop in base salary.

[7] The appellant's argument that its proposed lump sum payments to the respondents would have made up any difference in benefits rings hollow given its refusal to disclose those amounts without the respondents first having accepted Mac's offers and signed a release in favour of the appellant. Moreover, Mac's offers required the respondents to waive their years of service and their entitlements to common law notice and to termination and severance pay under the Employment Standards Act, 2000, S.O. 2000, c. 41, based on those years of service.

[8] The determination of whether the respondents had mitigated their damages by accepting comparable employment is a fact-driven inquiry. The motion judge's findings stand firmly rooted in the evidence and are entitled to deference on appeal. We agree with her conclusion that the appellant did not discharge its burden to prove the respondents had failed to mitigate their damages.

Duplication of Benefits Compensation

[9] Turning next to the issue of duplication of benefits compensation, we are not persuaded that the motion judge erred in determining the respondents were entitled to damages representing the value of their employment benefits.

[10] As the motion judge noted, wrongfully dismissed employees are entitled to damages for the employment benefits they would have received as part of their employment compensation: Paquette v. TeraGo Networks Inc., 2016 ONCA 618, at para. 16.

[11] The motion judge correctly determined that the respondents' benefits under their retirement pensions formed part of their retirement savings earned through their years of service and were not an indemnity for lost employment compensation: Waterman v. IBM Canada Ltd., 2013 SCC 70, at para. 77. As a result, we agree with the motion judge's conclusion that any benefits to which the respondents were entitled as part of their retirement pension plan should not be viewed as employment compensation for lost employment benefits and therefore should not be deducted from the damages awarded for lost employment compensation.

Cross-Appeal

[12] The respondents submit that the motion judge erred in awarding damages for the appellant's annual contributions to their Savings Plan based on 3% rather than 6% of their base salaries. The appellant maintains that there was no error in the motion judge's fact-based finding that the respondents were only entitled to receive compensation for the 3% contribution that the appellant was obligated to make at the time of the termination of their employment because of the respondents' historical designations under the Plan.

[13] In order to put these submissions into proper context, it is useful to set out the relevant provisions of the Savings Plan in issue and the respondents' rights and designations under that Plan.

Savings Plan Provisions and Respondents' Rights

[14] During their employment, the respondents' employment benefits compensation included the appellant's annual contributions to their Savings Plan. Depending on the respondents' elections, the appellant would contribute between 0 to 6% of their annual base salaries to their Savings Plan to match the aggregate amount contributed by the employee to the Plan. As members of the appellant's "Heritage Plan", the respondents could make a yearly election to participate in the Retirement Income Option of their pension plan which would affect the appellant's percentage contributions to their Savings Plan and supplementary pensions.

[15] In the course of their employment, the respondents elected to participate in the Retirement Income Option of their pension plan, which meant that the appellant contributed 3% of their base salaries to their Savings Plan and another 3% to their supplementary pensions. This election was still in place at the time of the termination of their employment.

[16] Following the termination of their employment in October 2016, but during the respondents' 26-month notice period, the appellant instigated amendments to the Savings Plan effective January 1, 2017. For the purpose of the cross-appeal, the relevant amendments were that the appellant's percentage contribution to the Savings Plan would decrease to 1% for those employees who elected to participate in the Retirement Income Option of the appellant's pension plan. Employees were required to make an election as to their plan option in the fall of 2016.

[17] The motion judge, at para. 50 of her damages decision, determined that given their dismissal from employment, the respondents did not have an opportunity to re-elect to leave the Retirement Income Option. The respondents point to the fact that their pensions were fully funded at this time and that any reasonable employee would have elected to leave the Retirement Income Option to maximize their Savings Plan. However, she determined that the appellant's contribution would not have exceeded 3%.

[18] In our view, the motion judge erred in her interpretation of the Savings Plan. The 2017 amendments clearly provide that if an employee opted out of the Retirement Income Option, the appellant's contribution would be 6% to the Savings Plan, assuming the aggregate amount the employee had contributed was also 6% of their earnings, which was the case for both respondents. Given the motion judge's finding that the respondents were entitled to the compensation that they would have received had they remained employed, she should have awarded damages for lost Savings Plan benefits in the amount of 6% of their base salaries for the period of reasonable notice, less the amounts already paid by the appellant for the 8 weeks of statutory notice due to the respondents.

Disposition

[19] We dismiss the appeal and allow the cross-appeal. We order that the appellant pay the respondents the respective amounts of 6% of their base salaries for the period of reasonable notice, less the amounts already paid by the appellant for the 8 weeks of statutory notice.

[20] As agreed, the respondents are entitled to their partial indemnity costs of the appeal and cross-appeal in the amount of $22,000, inclusive of disbursements and applicable taxes.

"David Brown J.A."

"L.B. Roberts J.A."

"B. Zarnett J.A."