ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 50737/08 (St. Catharines)
DATE: 2012/07/24

BETWEEN:

Earl Chevalier

Bradley J. Troup and Gillian Fahy , for the Plaintiff

Plaintiff

• and -

Active Tire & Auto Centre Inc.

Orlando M. Rosa, for the Defendant

Defendant

HEARD: June 18, 19, 20, 21 & 22 , 2012

REASONS FOR JUDGMENT

I. Introduction

[ 1 ] Active Tire & Auto Centre Inc. operates a chain of over 70 franchised and corporate-owned automotive service centres in Ontario, under the trade name Active Green + Ross. Earl Chevalier was employed by Active Tire and a predecessor business for 33 years, and was a service centre manager for 18 years. He was 55 years old when his employment with Active Tire ended in October 2008.

[ 2 ] Mr. Chevalier became an employee of Active Tire in March 2007 following Active Tire’s acquisition of 28 service centres from Speedy Muffler, including six locations in the Niagara region. Prior to the acquisition, Mr. Chevalier had been the manager of a Speedy service centre in Niagara Falls. Like other Speedy employees who joined Active Tire after the acquisition, Mr. Chevalier entered in to a written employment agreement with Active Tire. One of the terms of the employment agreement required Mr. Chevalier to fully comply with and implement Active Tire’s operating procedures set out in its “Steps to Success” manual. The agreement also stated that Mr. Chevalier’s duties, responsibilities, reporting relationships and the location of his employment could be changed unilaterally by Active Tire.

[ 3 ] The terms of Mr. Chevalier’s employment agreement were supplemented by an email to all Speedy managers and staff from Peter Steele, General Manager of Active Tire, as well as a memorandum from Ralph Chiodo, Active Tire’s President. As agreed by the parties, those additional documents form part of Mr. Chevalier’s employment agreement. Mr. Chiodo’s memorandum provided that for employees joining Active Tire, years of service with Speedy counted as years of service with Active Tire. The memorandum also stated that should a change in an employee’s work location be required, “then this change will not require you to travel further than 50 kilometres from your home, or the current distance from your home to work should this be greater than 50 kilometres.”

[ 4 ] Mr. Chevalier worked for Active Tire from the time fo the Speedy acquisition in March 2007 until the end of October 2008. He was manager of Active Tire’s Niagara Falls location until November 2007, and again worked at the Niagara Falls location as one of two managers from August 2008 until his departure from the company. In the intervening time (as set out in more detail later), he worked at two other locations in the Niagara region and also worked in Toronto for approximately two and a half months, at Active Tire’s head office and at its Queensway location. While working in Toronto, Mr. Chevalier commuted each work day from his home in Niagara Falls, travelling on company time and at company expense.

[ 5 ] On October 28, 2008, Mr. Chevalier was notified in writing by Mr. Steele that he was being laid off from Active Tire’s Niagara Falls service centre as of the end of that month. Mr. Chevalier commenced this action for wrongful dismissal two weeks later on November 13, 2008. A few days later, Mr. Steele wrote to Mr. Chevalier calling him back to work at the Niagara Falls location, stating that he had acted under the mistaken belief that Active Tire could lay off Mr. Chevalier. In subsequent correspondence, Active Tire’s counsel confirmed Active Tire’s willingness to continue Mr. Chevalier’s employment and conveyed Active Tire’s apology for its mistake in laying him off. Mr. Chevalier’s counsel confirmed that Mr. Chevalier would not be returning to work, and would be continuing this litigation.

[ 6 ] At the time Mr. Chevalier left Active Tire, his annual salary was $45,912, or $3,826 per month. He was also entitled to health care benefits, the premium cost to Active Tire being $180.61 per month. Therefore, as agreed by the parties, his total monthly remuneration was $4,006.61.

[ 7 ] After leaving Active Tire on October 31, 2008, Mr. Chevalier was unemployed for 17 months. In April 2010, he was hired by a competitor of Active Tire in a similar position paying remuneration equivalent to what he was receiving at Active Tire.

[ 8 ] Mr. Chevalier’s position was that he was constructively dismissed when he was laid off by Active Tire in October 2008. According to Mr. Chevalier, he was entitled to 24 months notice of termination commencing November 1, 2008. The amount of his claim for damages in lieu of notice was $64,105.76, the equivalent of 16 months remuneration with Active Tire. This calculation took into account the fact that Mr. Chevalier received his regular salary and benefits from Active Tire for one month after termination and that he received equivalent remuneration from his subsequent employer for the final seven months of the notice period.

[ 9 ] Mr. Chevalier also claimed an additional $30,000 for moral damages, based on the Active Tire’s conduct toward him leading to his dismissal. According to Mr Chevalier, Active Tire had been unfairly critical of his work, had treated him in a demeaning fashion and had ignored his contractual rights by requiring him to work in Toronto more the 50 kilometres from home.

[ 10 ] Active Tire did not dispute that Mr. Chevalier was constructively dismissed when he was laid off. According to Active Tire, he would be entitled to notice of termination in the range of 18 to 24 months, arguing for the lower end of the range. As well, Active Tire did not dispute Mr. Chevalier’s method of calculating damages in lieu of notice, should the Court determine that such an award would be warranted. However, Active Tire took the position that Mr. Chevalier was not entitled to any damages in lieu of notice because he failed to mitigate his damages, in two ways. First, he failed to return to work at Active Tire when called back in November 2008. Alternatively, he failed to diligently look for suitable work from another employer in the period following his departure from Active Tire. Active Tire also denied that there was anything in its conduct toward Mr. Chevalier that would justify an award of moral damages.

[ 11 ] The issues to be determined are therefore as follows:

1. Notice period: What was the required period of notice of termination?

2. Mitigation – resumption of employment: Did Mr. Chevalier fail to mitigate his damages by refusing to resume his employment with Active Tire?

3. Mitigation – search for alternative employment: Did Mr. Chevalier fail to mitigate his damages by not diligently seeking alternative employment?

4. Moral damages: Did Active Tire’s manner of conduct in terminating Mr. Chevalier justify awarding moral damages?

[ 12 ] I will deal with each of these issues in turn.

II. Notice Period

[ 13 ] Consistent with case law cited by Mr. Chevalier’s counsel, the parties agreed that Mr. Chevalier was constructively dismissed by Active Tire as of October 31, 2008 when Active Tire laid him off. By doing so, Active Tire breached the implied term in Mr. Chevalier’s employment contract that required Active Tire to give him reasonable notice of termination.

[ 14 ] In order to determine whether Mr. Chevalier is entitled to damages in lieu of notice of termination, the first step is to determine the required period of notice in this case. Considering the factors referred to in Bardal v. Globe & Mail Ltd. , I agree with Mr. Chevalier’s position that the required period of notice in this case was 24 months.

[ 15 ] At the time Mr. Chevalier left Active Tire’s employ in October 2008, Mr. Chevalier was 55 years old. He had been employed by Active Tire and Speedy for a total of 33 years, and there is no dispute that his years of service with Speedy counted as years of service with Active Tire. He had been manager of various service centres for 18 years, a position that put him in charge of the location in which he worked, with power to hire and fire staff and accountability for the financial performance of that location.

[ 16 ] Active Tire conceded that the notice period for termination of Mr. Chevalier was in the range of 18 to 24 months, but argued that the required notice should be set at the lower end of the range. I disagree, given Mr. Chevalier’s age, position and long history with his employer. As well, although unnecessary to do so in this case, I would also be entitled to take into account the difficult economic conditions at the relevant time, which could reasonably have been expected to have a negative impact on the availability of alternative employment for someone of Mr. Chevalier’s age and background.

[ 17 ] In any case, even if I accepted Active Tire’s position that the required notice period for Mr. Chevalier was at the low end of the 18 to 24 month range, it would not affect the calculation of damages in this case. As previously noted, Mr. Chevalier conceded that in calculating damages in lieu of notice, it would be appropriate to deduct compensation that he received from Active Tire during November 2008 as well as equivalent compensation that he received from a subsequent employer commencing in April 2010. Therefore, assuming Mr. Chevalier is correct that there should be no further reduction for failure to mitigate, the amount of his damages in lieu of notice would be equivalent to 16 months compensation, no matter what I found the appropriate notice period to be within the 18 to 24 month range conceded by Active Tire.

III. Mitigation – resumption of employment

(a) Legal principles

[ 18 ] According to Active Tire, Mr. Chevalier was not entitled to any damages in lieu of notice because he failed to return to work at Active Tire when called back in November 2008. The legal analysis to determine whether this position is correct involves the application of basic principles of contract law relating to mitigation of damages.

[ 19 ] Where an employee has been wrongfully terminated, the employee must take reasonable steps to mitigate his or her damages as a matter of contract law. Any benefit derived from complying with this duty must be deducted from damages awarded in lieu of reasonable notice. The onus is on the employee to establish the amount of his or her loss on the balance of probabilities. However, if the employer takes the position that the employee could reasonably have avoided part of the loss claimed by obtaining other suitable employment available to the employee, the employer has the burden of proof on that issue.

[ 20 ] In support of its position that Mr. Chevalier was required to return to work for Active Tire when called back, Active Tire relied on the decision of the Supreme Court of Canada in Evans v. Teamsters Local Union No. 31 . In that case, the court held that in appropriate circumstances, a dismissed employee would be required to return to work for the same employer in order to mitigate the employee’s damages.

Where 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. In 1989, the Ontario Court of Appeal held that a reasonable person should be expected to do so "[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" ( Mifsud v. MacMillan Bathurst Inc. (1989), 1989 260 (ON CA) , 70 O.R. (2d) 701 , at p. 710) . In Cox , the British Columbia Court of Appeal held that other relevant factors include the history and nature of the employment, whether or not the employee has commenced litigation, and whether the offer of re-employment was made while the employee was still working for the employer or only after he or she had already left (paras. 12-18). In my view, the foregoing elements all underline the importance of a multi-factored and contextual analysis. The critical element is that an employee "not [be] obliged to mitigate by working in an atmosphere of hostility, embarrassment or humiliation" (Farquhar, at p. 94), and it is that factor which must be at the forefront of the inquiry into what is reasonable.

[ 21 ] Mr. Chevalier’s position was that the duty to mitigate did not require him to return to work for Active Tire after he was laid off in October 2008. According to Mr. Chevalier, from as early as June or July 2007, Active Ross management personnel had engaged in conduct intended to “make his life miserable” in order to cause him to leave Active Tire’s employ. The conduct alleged by Mr. Chevalier included unfair criticism of his work, treating him in a demeaning fashion and ignoring his contractual rights by requiring him to work in Toronto more the 50 kilometres from home. According to Mr. Chevalier, by returning to work for Active Tire, he would have been obliged to work “in an atmosphere of hostility, embarrassment or humiliation”, and he was accordingly not required to return.

[ 22 ] In order to consider the validity of Mr. Chevalier’s position, it would be helpful to consider the evidentiary basis for it in more detail.

(b) The evidence

[23] … (text continues exactly as in the source)

[64] For the reasons above, Mr. Chevalier’s action is dismissed.

[65] On the question of costs, unless otherwise agreed between the parties as to timing, the Defendant shall serve and file brief written submissions (not to exceed three pages) together with a bill of costs within 21 days. The Plaintiff will have an opportunity to respond with brief written submissions within 14 days of receipt of the Defendant’s submissions. The Defendant will have an opportunity to reply with brief written submissions within seven days of receipt of the Plaintiff’s response. Should counsel for both parties prefer to make oral submissions, they should speak to the Trial Coordinator to arrange a date.

The Honourable Mr. Justice R.A. Lococo

Released: July 24, 2012