Aleem Ghanny v. 498326 Ontario Limited, 2012 ONSC 3276

Aleem Ghanny v. 498326 Ontario Limited

COURT FILE NO.: CV-08-359788 DATE: 2012-06-15

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Aleem Ghanny, Plaintiff AND: 498326 Ontario Limited, Defendant

BEFORE: Justice E. P. Belobaba

COUNSEL: Charles Wagman for the Plaintiff Thomas Stefanik for the Defendant

HEARD: June 4 and 5, 2012

ENDORSEMENT

1You’ve been a valued employee for 18 years. One day you’re told that you position is being eliminated at the end of the month but that another job at a related company is available – the same kind of position with the same pay. You’re upset and not thinking clearly and you turn down the replacement job offer. You sue for wrongful dismissal. You eventually find other work but at a much lower position and salary. When the events are replayed at trial and are viewed more objectively, you realize that you should have taken the offered position, that in failing to do so you didn’t mitigate your losses and your action for wrongful dismissal will probably not succeed.

Background

2In June, 2008, Shahin Alizadeh, the owner of Downtown Toyota decided to streamline the management of the car dealership by reshuffling and eliminating some of the positions. He told Aleem Ghanny that his $80,000 job as Service Manager would end at the end of the month but he would be relocated to Downtown Suzuki, a recently acquired and related dealership, just a few blocks away, where he would continue as Parts and Service Manager with the same $80,000 compensation package. ¹

3Mr. Ghanny refused the position at Downtown Suzuki for two reasons: he thought his 18 years of service would not be recognized if he joined the Suzuki dealership and he was concerned that the future of this dealership was uncertain – Mr. Alizadeh told him that once the necessary building approvals were obtained the Suzuki location would be transformed into a Lexus dealership and if not, then the Suzuki dealership may be relocated or sold, or even closed, perhaps within 9 to 18 months.

4Mr. Alizadeh says that he really wanted Mr. Ghanny to accept the Suzuki position. He was an excellent employee and his help was needed at the Suzuki store. Alizadeh says he made it quite clear to Ghanny during their June meetings that although he would lose his years of seniority at Downtown Toyota, they would be transferred to Suzuki. He also reassured Ghanny that whatever the future of the Suzuki dealership, his job was not at risk.

5Mr. Ghanny rejected the offered position and brought this action for wrongful dismissal a month after his termination. He made reasonable efforts to find other work and within several months found a lower-level position, first with a Nissan dealership and then with a Mercedes Benz dealership where he continues to be employed as a Service Advisor earning about $60,000 a year.

6As things turned out, the Suzuki dealership was closed in 2010 and was transformed into a Hyundai dealership. The Lexus dealership was opened in 2011 at another nearby site. All the Suzuki employees who wanted to do so were absorbed by the Hyundai or Lexus dealerships.

7The defendant asks that the action be dismissed. The plaintiff failed to mitigate in not taking the Suzuki position, argues the defendant, and thus no damages should be awarded.

Analysis

8Mr. Ghanny was terminated with less than one month’s notice. By any measure, this was inadequate notice. The “three-month package” that Mr. Alizadeh “gratuitously” offered to Ghanny when the latter declined the Suzuki position was also grossly inadequate. Given Mr. Ghanny’s age (47 years old), his 18 years of service, 14 of which as Service Manager, and the difficulties of finding a similar position with similar pay in the summer and fall of 2008 as the financial crisis was taking hold, I would have awarded 14 months as reasonable notice.² In other words, had Mr. Ghanny prevailed, he would have recovered the equivalent of 14 months pay or about $93,650 minus his earnings at Nissan and Mercedes Benz over this time period which totalled about $57,615. Therefore, he would have netted about $36,035 in damages plus interest and costs.

9Mr. Ghanny’s action, however, cannot succeed on the facts herein.

10Even if the claim had been characterized as a constructive dismissal (because Mr. Ghanny was being transferred to another company with an arguably uncertain future, whose parts and service operation was smaller and where his years of seniority, he says, would not be recognized) the same legal principles would apply. Whether it was a wrongful or constructive dismissal, Mr. Ghanny was required to mitigate his damages while looking for another job. The obligation to mitigate may well include taking the job that is being offered by the dismissing employer.

11The Supreme Court of Canada’s decision in Evans³ speaks directly to the facts herein:

[I]n some circumstances it will be necessary for a dismissed employee to mitigate his or her damages by returning to work for the same employer ... requiring an employee to mitigate by taking temporary work with the dismissing employer is consistent with the notion that damages are meant to compensate for lack of notice, and not to penalize the employer for the dismissal itself. The notice period is meant to provide employees with sufficient opportunity to seek new employment and arrange their personal affairs, and employers who provide sufficient working notice are not required to pay an employee just because they have chosen to terminate the contract. Where notice is not given, the employer is required to pay damages in lieu of notice, but that requirement is subject to the employee making a reasonable effort to mitigate the damages by seeking an alternate source of income.⁴

12Where the employer offers the employee a chance to mitigate damages by returning to work for him or her, the central issue is whether a reasonable person would accept such an opportunity.⁵ The reasonableness of an employee's decision not to mitigate is assessed on an objective standard.⁶

13The Court of Appeal noted in Mifsud ⁷ that a reasonable person should be expected to take up a replacement job offered by his dismissing employer "[w]here the salary offered is the same, where the working conditions are not substantially different or the work demeaning, and where the personal relationships involved are not acrimonious."⁸

14The Supreme Court approved this statement of the law in Evans, and explained it further as follows:

The critical element is that an employee not [be] obliged to mitigate by working in an atmosphere of hostility, embarrassment or humiliation … and it is that factor which must be at the forefront of the inquiry into what is reasonable. Thus, although an objective standard must be used to evaluate whether a reasonable person in the employee's position would have accepted the employer's offer … it is extremely important that the non-tangible elements of the situation -- including work atmosphere, stigma and loss of dignity, as well as nature and conditions of employment, the tangible elements -- be included in the evaluation.⁹

15Returning to the facts herein, Mr. Ghanny’s refusal to accept the Downtown Suzuki position was unreasonable when viewed objectively. It was the same kind of job with the same pay. Ghanny acknowledged in his evidence that he knew he probably wouldn’t find another job as Service Manager that paid $80,000. The dismissing employer wanted him to accept the Suzuki position – he was a valued employee. There is no suggestion that the working conditions at Downtown Suzuki were demeaning or that Mr. Ghanny’s relationship with Mr. Alizadeh or indeed with anyone else had become difficult or acrimonious.

16The cases relied on by the plaintiff, Beggs¹⁰ and Renard,¹¹ are not helpful. This is was not a case like Beggs where the terms of the job offer were unclear and ambiguous; nor is it a case like Renard where there was a factual basis for the plaintiff’s fear of uncertainty, namely evidence that the employer was in financial difficulties and was having difficulty meeting its payroll and paying for work done.

17Here, Mr. Alizadeh told Mr. Ghanny that the Downtown Suzuki dealership was “underperforming” but reassured him that whatever its future (Lexus dealership, relocation, sale or closure) his job was not at risk. In any event, the dealership did not close for another twenty-two months (well outside any appropriate notice period) and the remaining Suzuki employees were absorbed into the Hyundai and Lexus dealerships.

18Mr. Ghanny testified that the main reason for refusing the Suzuki position was that his 18 years of seniority would not be recognized. According to Mr. Ghanny, Mr. Alizadeh made it clear to him that if he accepted the Suzuki position, he would have to “start fresh.” I have some difficulty accepting this evidence. Why would Mr. Alizadeh, who wanted Ghanny to accept the job at the Suzuki dealership and knew that the issue of seniority was extremely important to this valued employee, inject such a negative piece of information into the discussion in such an abrupt and inflexible manner? It may have happened this way but it doesn’t ring true.

19For my part, I prefer the evidence of Mr. Alizadeh – that he specifically told Mr. Ghanny that his years of seniority would be “transferred” over to Downtown Suzuki. I prefer this evidence because it is supported by Mr. Alizadeh’s more general and uncontroverted evidence at trial that his obligation as the “umbrella” employer to give proper notice based on years of service would not change if Mr. Ghanny was moved from the Toyota dealership to the Suzuki dealership. Mr. Alizadeh’s version of what was said strikes me as more credible.

20In any event, my preference as to who said what about the seniority issue is not determinative. Even if I had accepted Mr. Ghanny’s evidence that he would have to “start fresh” and would end up losing his 18 years of service, I would still have come to the same conclusion. Mr. Ghanny’s refusal of the replacement job offer at Downtown Suzuki – same position, same pay, no intangible reason not to take it - was objectively unreasonable. Even if the replacement job had only lasted nine months (before the Suzuki dealership was closed) that was still nine months of reasonably required mitigation. As it turned out, the Suzuki location remained open for 22 months before it was transformed into a Hyundai dealership.

21In short, I have no difficulty finding that Mr. Ghanny failed to mitigate his damages by turning down the position at Downtown Suzuki.

22For the sake of completeness, I should mention the following. In September, 2008, two and a half months after Mr.Ghanny left Downtown Toyota, his counsel received a letter from the defendant’s counsel offering again the Suzuki position and again confirming that Ghanny would receive the same pay and his years of seniority would be recognized and protected. Mr. Ghanny, through his counsel, agreed to accept the position but added three conditions: that Downtown Toyota guarantee his salary and benefits at Downtown Suzuki, address the issues of lost wages and legal costs incurred to date, and allow the plaintiff to continue his lawsuit.

23The defendant responded in the negative to these added conditions. Downtown Toyota would not guarantee Suzuki’s salary payments; it would not reimburse Mr. Ghanny for the two and a half months of lost wages and incurred legal costs; and it would certainly not agree to the continuation of the wrongful dismissal lawsuit if Ghanny accepted the Suzuki position.

24In my view, the September, 2008 renewal of the offer of a position at the Suzuki dealership provided Mr. Ghanny with a second opportunity to mitigate his losses. Acting reasonably, he should have accepted the offer and said nothing more.¹² He should not have added the guaranteed salary and lost wages conditions noted above. The employer was right to reject them. However, the third condition, the continuation of the lawsuit, was a legitimate entitlement and the former employer would have been wrong to insist otherwise. I add these comments so that Mr. Ghanny can understand what I would have said had the case turned only on the September correspondence.

25However, the case does not turn on the September correspondence. It turns on what was said and decided at the June meetings. And here, for the reasons already stated, Mr. Ghanny failed to mitigate his losses by refusing the ‘same job/same pay’ at the Suzuki dealership.

26Had he accepted the position at Downtown Suzuki he would not have suffered any losses flowing from his dismissal from Downtown Toyota. He is therefore not entitled to damages.

Disposition

27The action is dismissed.

28At the start of the trial I asked both sides to provide me with their costs estimates on a partial indemnity basis. The plaintiff said that if he was successful he would claim about $24,000; the defendant’s estimate was about $15,000. The defendant has prevailed and is entitled to costs. A costs award of $15,000 is obviously fair and reasonable.

29Assuming there were no offers to settle that should now be brought to my attention, costs are fixed at $15,000 all-inclusive, payable forthwith by Mr. Ghanny to 498326 Ontario Limited.

30I am grateful to counsel for their courtesy and assistance.

Belobaba J.

Footnotes

1. 1In June of 2008, Mr. Alizadeh and his partner owned two Toyota dealerships, Downtown Toyota and Toyota on Front, via numbered companies; and they had just purchased the Downtown Suzuki dealership via another numbered company – all under their control. Today they own seven car dealerships. The defendant numbered company owns the Downtown Toyota dealership.
2. 2Counsel for the defendant presented the results of a Wrongful Dismissal Database Search that showed an average notice period of 10.83 months (rounded to 11 months) for sales managers with equivalent years of service, age and compensation. However, given the difficult market conditions in 2008, particularly in the automotive market, I am satisfied that 14 months is the appropriate notice period. I have reviewed O’Sullivan v Cavalier Tool & Manufacturing Ltd., 2010 CarswellOnt 5014 (S.C.J.) [age 57, 12½ years of work, 18 months notice]; Mahesuram v Canac Kitchens, 2009 CarswellOnt 229 (S.C.J.) [age 59, 19 years of work, 18 months notice]; and Somir v Canac Kitchens, 2006 42369 (ON SC), 2006 CarswellOnt 8108 (S.C.J.) [age 45, 21 years of work, 16 months notice]. Here, the plaintiff was 47 years old, had worked for 18 years (4 years as a service advisor and 14 years as the Service Manager) and was losing his job just as the financial crisis was starting. A 14 month notice period, in my view, is reasonable.
3. 3Evans v Teamsters Local 31, 2008 SCC 20, [2008] 1 S.C.R. 661.
4. 4Ibid., at para. 28.
5. 5Ibid., at para. 30.
6. 6Ibid., at para. 32.
7. 7Mifsud v. MacMillan Bathurst Inc. (1989), 1989 260 (ON CA), 70 O.R. (2d) 701 (C.A.)
8. 8Ibid., at 710.
9. 9Evans, supra note 3, at para. 30.
10. 10Beggs v Westport Foods Ltd., (2011) 2011 BCCA 76, 14 B.C.L.R. (5th) 1 (B.C.C.A.)
11. 11Renard v. Facet Decision Systems Inc. [2011] B.C.W.L.D. 3859 (B.C.S.C.)
12. 12The lawsuit commenced at the end of July would continue – there was nothing in the second-time offer to indicate that the lawsuit had to be abandoned. Also, on the facts herein, the fact that the plaintiff had commenced an action did not relieve him of his duty to mitigate his losses and accept the offered position: Evans, supra, note 3 at para. 46.