Court File and Parties
COURT FILE NO.: CV-16-558337 DATE: 20170223 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Larry Patterson, Plaintiff AND: IBM Canada Limited, Defendant
BEFORE: S.F. Dunphy J.
COUNSEL: David Ertl, for the Plaintiff John MacDonald and Sarah McLeod, for the Defendant
HEARD: February 22, 2017
Endorsement
[1] The sole issue in this summary judgment motion in a wrongful dismissal case is that of damages. The defendant does not contest that this is an appropriate case to be resolved by way of summary judgment.
[2] The plaintiff was terminated from his employment without cause at the age of 67 years after approximately 22 years of service. The defendant concedes that reasonable notice in the range of 18 months (subject to a contingency discount) would be appropriate; the plaintiff claims that 20-24 months without a discount is required. There are no aggravating circumstances arising from the circumstances of termination and the plaintiff’s re-employment prospects - at least with a job similar to the one he has left – are slim despite reasonably zealous efforts over the past eleven months.
[3] In Hyrniak v. Mauldin, 2014 SCC 7, the Supreme Court of Canada called for a culture shift on the part of the civil litigation bench and bar in order to ensure real access to justice that is efficient and proportional. In many cases, a full trial is not the most efficient or effective way to do justice between the parties and offers what can be little more than a Pyrrhic victory if the costs of litigation approach or even surpass the likely amounts at issue or if one or the other party falls by the boards from economic exhaustion.
[4] Wrongful dismissal cases lend themselves particularly well to resolution through summary judgment proceedings. Cause is seldom at issue and the criteria to assess damages typically involve few disputed facts. The difference between the low and high end of likely damages is seldom as great as the costs of finding the answer following a full trial with all the trimmings. In my view, the practice of resolving wrongful dismissal damages cases in a co-operatively managed summary judgment proceeding is to be strongly encouraged: Arnone v. Best Theratronics Ltd., 2015 ONCA 63, Fraser v. Canerector Inc., 2015 ONSC 2138.
[5] I concur with the parties that this is an appropriate case for summary judgment and, in that connection, that it is in the interest of justice that I employ the tools placed at my disposition by Rule 20.04(2.1) of the Rules of Civil Procedure to make the necessary findings of fact to resolve any triable issues. It would not be in the interest of justice to require the parties to submit to the delay and expense of a full trial to resolve the small number of factual issues separating them.
[6] For the reasons that follow, I have decided to fix reasonable notice in this case at eighteen months including a contingency discount for potential future earnings during the remainder of the notice period. I have allowed the plaintiff’s claim to the value of a 6% pension contribution but disallowed his claim for an incentive bonus and supplementary health benefits.
Factual overview
[7] The plaintiff’s employment with IBM was terminated effective June 24, 2016 after approximately 22 years of service. He was 67 years old at the time of termination. His last position was as a “Band 6 IT Specialist” for which position he received an annual salary of $62,388 per year plus various benefits described below.
[8] The plaintiff was given working notice of his termination on March 31, 2016 effective June 24, 2016. His employment was terminated for economic reasons. The defendant has not claimed cause for termination. There is no evidence of any misconduct by the defendant in relation to the termination that might be an aggravating circumstance.
[9] At the time of the termination of his employment, the plaintiff participated in a bonus incentive program known as “Growth Driven Profit-Sharing” or “GDP”. Under that program, he received a bonus of $1,000 in 2013, $0.00 in 2014 and $1,035 in 2015. The plaintiff advances a damages claim for GDP bonus for the 2016 year. He was a member of IBM”s defined contribution pension plan for which his employer contributed 6% of pensionable earnings each year. The plaintiff claims the value of those contributions for the notice period. Finally, he received supplementary health benefits under a flexible benefits program that permitted him to elect which supplementary benefits he desired. The plaintiff claims the value of such benefits but has provided no evidence either of their value or of expenses incurred by him or reasonably expected to be incurred by him to replace such benefits or in consequence of their termination.
[10] As of the termination of his employment, Mr. Patterson became eligible to participate in IBM’s Post-Retirement Benefits plan. It is not clear whether Mr. Patterson has in fact applied to receive those benefits, but there is no question that he is entitled to do so if he chooses. The Post-Retirement Benefits plan that he is entitled to participate in provides him with catastrophic insurance coverage and an account that may be used to pay for certain supplementary health and dental expenses. There is no evidence that Mr. Patterson has incurred any expenses since the time of termination of his employment which were formerly covered by his supplementary benefit plan.
[11] The plaintiff has received severance pay of $26,566.90 in satisfaction of all of his statutory entitlements. There is no evidence before me that any further amount is owing to him under the Employment Standards Act, 2000, S.O. 2000, c. 41.
[12] IBM provided Mr. Patterson with access to six months of employment counselling services on a gratuitous basis. Mr. Patterson availed himself of these services and attended a number of courses offered.
[13] Mr. Patterson received notice of termination of his employment less than a year ago, and has been off work for more than seven months. He has not been idle in his attempts to arrange alternative employment thus far. He has availed himself of the above-mentioned job counselling services offered by IBM. He has applied to more than 150 positions on-line although none have resulted in a call-back. He has sought to use his network of contacts to find leads. While professing not to be discouraged, Mr. Patterson was quite frank in his assessment of his job prospects. He described these as being quite low. Although employed as an “IT Specialist” by IBM, he described his training and experience as being quite narrowly focused, lacking both the currency and breadth of experience that he finds the marketplace currently demands.
Issues to be decided
[14] The following issues have been raised for decision by me by the parties:
a. What is the period of reasonable notice for termination of the plaintiff’s contract of employment? b. What are the damages payable in lieu of such notice in light of the terms of the defendant’s bonus program, the plaintiff’s claim to the value of benefits programs post-termination and the value of contributions to the defined contribution pension plan? c. How should the issue of future mitigation be recognized in the calculation of damages given the period of reasonable notice has not yet expired?
Analysis and discussion
(a) What is the period of reasonable notice for termination of the plaintiff’s contract of employment?
[15] Both parties agree that I am to apply the well-known principles described by McRuer C.J.H.C. in Bardal v. Globe & Mail Ltd., (1960) 24 D.L.R. (2d) 140 to determine the notice period applicable in this case. These principles are of course guidelines and it would be an error to attempt to apply them mechanically or to attribute undue importance to one criterion over another.
[16] As desirable a legal value as certainty may be, this is one area of the law where certainty can only be guaranteed with a detailed written contract. The common law, for its part, must satisfy itself with applying identified broad principles to the facts of each case and seeking to do so as consistently and objectively as is reasonably possible. In the fifty-six years since Bardal, few would describe the resulting body of jurisprudence as being entirely consistent, but the jurisprudence does reveal ranges of outcomes within which the peculiar circumstances of each case may move the outcome one way or the other.
[17] I shall therefore examine the evidence in light of the Bardal principles being (i) character of the plaintiff’s employment, (ii) the length of service, (iii) the age of the plaintiff and (iv) the availability of similar employment having regard to the experience, training and qualifications of the plaintiff. I shall also consider whether there are any other factors to be reviewed.
(i) Character of employment
[18] Mr. Patterson was employed in a non-managerial role. His duties were to provide technical support for various internal training programs offered by IBM to its employees. His internal IBM job classification was “Band 6” out of at least 10 Bands (it is not clear whether the “C” suite are so-classified). His income was comparatively modest and there were at all events numerous other levels of employment at IBM both above and below Mr. Patterson.
[19] Consideration of this criterion would thus tend to steer consideration away from the upper ranges of notice, although this is clearly but one criterion of many and the weight to be afforded it will vary from case to case.
[20] I am also mindful of the fact that “character of employment” is a criterion that is often of limited value in the modern context. This is a point that our Court of Appeal has recently emphasized in cases such as Di Tomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469. It bears in my view only some weight in a case such as this. It may be that this particular criterion is fast becoming a vestige of a by-gone era. It is certainly difficult to defend on a principled basis. However the near universal application of Bardal over the last fifty-six years is such that I must leave the consideration of that issue to a higher court on another day. It is not of any great weight in this case and I shall leave it at that.
(ii) Length of service
[21] Mr. Patterson had been employed for a few days under 22 years when he received his working notice of termination and for a couple of months beyond 22 years when his employment ended. At that level of seniority, a few months either way ought to make no material difference in the appreciation of what constitutes reasonable notice and I make no such fine distinctions. Whether I consider his service to be just under 22 years (at the time of notice) or just over 22 years (at the time of termination), he was long-serving. Length of service is clearly a major factor to be weighed in assessing reasonable notice and 22 years (plus or minus an immaterial amount of time) is entitled to considerable weight and tends to steer towards the upper range.
(iii) Age
[22] Mr. Patterson was 67 years of age at the time of the termination of his employment. He therefore began work at IBM at the age of 45. I can take it from his current age that he may find it more difficult than a younger man to find a new position. While Mr. Patterson has evinced no desire to retire at this time, prospective employers may reasonably expect that he is closer to doing so than a younger candidate applying for the same job. All things being equal, Mr. Patterson’s age would tend to argue for a longer rather than a shorter notice period.
(iv) Availability of similar employment
[23] The plaintiff’s affidavit on the motion for summary judgment was not challenged. He described his job prospects in terms of finding similar employment as being vanishingly slim. He has found that the market requires a skill-set that the relatively narrow focus of his duties at IBM has not equipped him with. His educational background – a 1976 Bachelor of Science in Chemistry – is of no direct application to the IT field in which he has been working. His summary of the problem after several months of fruitless attempts to find work was “I found that I lack the skills and experience necessary to compete in today’s job market”.
[24] We are less than a year from the time when Mr. Patterson first received notice of the termination of his employment. At least some of the time since the end of his active employment has been taken in attending various job-counselling courses offered by IBM. It is difficult to predict the future with any certainty at the best of times – in this case, we are truly looking through a glass darkly. I can only do the best that I can do with the clay that I have. I find Mr. Patterson’s prospects of finding a similar job within the next period of months to be quite low. If his own assessment of his prospects is accurate – that he lacks the skills and experience necessary – it may well be that he will soon have to broaden his search to areas of employment more suited to the skills and experience he does have even if the jobs he might have to consider are not necessarily comparable to the post he occupied at IBM. I can see no reason to believe that Mr. Patterson will be anything less than diligent in formulating his plan of attack going forward. However, realism requires me to conclude that his prospects are not good. This too argues for something relatively longer in the way of notice.
(v) Other criteria
[25] Are there other factors to take into account? Mr. Patterson mentions the failure of IBM to provide him with a reference letter. It seems to me that Mr. Patterson would be better positioned to make that complaint if he had asked for one. They did given him a standard-form “employment letter” that mentions his years of service. I know of no law that requires an employer to do more. However, there is no evidence this employer has been asked and declined to do more.
(vi) Case law and application of Bardal principles
[26] I turn now to the case law cited by the parties and the task of applying the Bardal principles to this case. The plaintiff provided me with a weighty tome of cases suggesting a range hovering around 20-24 months notice would be appropriate. The defendant, for its part, produced a similar volume of cases that cleaved more closely to the suggested range of 16-18 months.
[27] In Quinn v. IBM Canada Ltd. (unreported, CV-16-552858 released November 28, 2016), Myers J. awarded a 55 year old “Band 7” IBM employee 20 months of notice. Mr. Quinn had worked his entire working life at IBM with more than 35 years of service. In Waterman v. IBM Canada Ltd., 2010 BCSC 376; (affirmed 2013 SCC 70), another “Band 7” IBM employee terminated at age 65 with 40 years of service was also awarded 20 months of notice. In Liboiron v. IBM Canada Ltd., 2015 BCSC 1523 a 57 year old Band 6 IBM employee with 32 years’ service was awarded 20 months. In Lee v. IBM Canada Limited (unreported, CV-15-532014 released February 4, 2016) a 62 year old part-time employee with 40 years of service was awarded a notice period of 21 months. The “Band” of this employee does not appear in the decision but her full-time equivalent income would suggest that it was at a similar level (i.e. Band 6 or Band 7).
[28] These four cases were relied upon by both parties with differing emphasis. They are useful comparators here not simply because they all involve the same employer. However, the IBM internal employee classification system in “bands” referred to by three of them provides at least a superficial basis of comparison of the character of the employment within the same organization. Two were one band higher while one was also in Band 6 (the fourth likely being in that same range). Importantly, the employees in question were all quite long-serving, in the upper age range and each was described as having quite challenging job prospects going forward. Three of these cases awarded 20 months of notice while one awarded 21 months of notice. These four employees had considerably more years of service to their credit than Mr. Patterson.
[29] Every case turns on its facts and no two cases are exactly alike. That being said, these four cases are the most similar to the facts before me of any of the cases presented to me by the parties and recommend themselves to me for that reason.
[30] I also think that the case of Kotecha v. Affinia Canada ULC, 2014 ONCA 411 is an instructive one. In Kotecha, the Court of Appeal reduced an initial award of 24.5 months of reasonable notice to 18 months for a 70 year old employee with 20 years of service and limited job prospects. The Court also cited the need for consistency in approach.
[31] While I would be disinclined to descend into hair splitting on the weight to be afforded length of service when dealing with long serving employees, there is a nevertheless a quantitative and qualitative difference to be made in terms of reasonable expectations between an employee with 30-40 years’ service as was the case in Quinn, Waterman, Lee and Liboiron on the one hand and an employee in Mr. Patterson’s situation with only 22 years’ service on the other. They are all long service cases, but some recognition of those additional years of service is called for. These cases imply a range of reasonable notice for Mr. Patterson that ought to be somewhat lower than the 20 and 21 month range used in those cases. The Court of Appeal decision in Kotecha also points towards a range closer to 18 months on these facts and urges me strive to be consistent with precedent in the ranges considered.
[32] The determination of reasonable notice is never going to be an exact science. It is clear to me that a figure of 18 months is comfortably within the appropriate range. As is discussed below, I have arrived at this figure in part by considering what discount ought to be applied to reflect potential future earnings of the plaintiff during what remains of the notice period.
[33] Having regard to the facts considered by me, I therefore find the appropriate period of reasonable notice in this case to be 18 months (or $93,582). This amount should be reduced by the amount of working notice given (12 weeks or $14,347.56) and by the payment in lieu of notice already made by the defendant ($26,566.90).
(b) What are the damages payable in lieu of such notice in light of the terms of the defendant’s bonus program, the plaintiff’s claim to the value of benefits programs post-termination and the value of contributions to the defined contribution pension plan?
[34] The plaintiff claims as damages an unspecified credit for supplementary health benefits as well as credit for loss of benefits under the GDP bonus program. Neither claim was supported with sufficient evidence in my view. The plaintiff has claimed as damages loss of the employer’s contributions of 6% to a defined contribution pension plan that would have been made had he remained employed during the notice period. This claim appears to me to be well-founded.
[35] In the case of the GDP bonus program, the plaintiff’s own history suggests a high level of variability in terms of award levels ($1,000 - $0.00 - $1,035). Myers J, considered the same program in Quinn and found it to be too subjective and contingent to be considered a benefit that could be considered to accrue with reasonable certainty during the notice period. As well, there is no evidence that the plaintiff has incurred any damages attributable to loss of supplementary health benefit. Finally, the plaintiff has available to him the defendant’s retirement health plan that he appears not to have attempted to join.
[36] I can find no damages attributable to the loss of bonus or the loss of supplementary benefits during the period of reasonable notice.
[37] I find however that the plaintiff is entitled to the employer contributions to his defined contribution pension plan (6% of earnings or $5,614.92) that would have been made during the period of reasonable notice. The amount was fixed and certain and subject to no discretion. Had the plaintiff remained employed throughout the notice period, this benefit would have been paid to him. It must therefore be accounted for in calculating damages for failure to grant that reasonable notice.
(c) How should the issue of future mitigation be recognized in the calculation of damages given the period of reasonable notice has not yet expired?
[38] This motion for summary judgment was heard on February 22, 2017 – just over eight months since the plaintiff’s employment was terminated and about eleven months since he was notified of the defendant’s plans. The plaintiff continues to search for employment as an IT Specialist but claims to be underqualified and thus without much in the way of prospects of being successful.
[39] IBM suggests that I should discount any award of damages to reflect the probability that the plaintiff may obtain employment during what remains of the reasonable notice period I have found. The defendant suggests a discount of 10% to be applied to the remainder of the notice period (7 months). That would amount to about $3,639 based on his monthly earnings of $5,199.
[40] It is only relatively recently we have managed to get to the point of being able to render a decision on wrongful dismissal damages while the period of reasonable notice is still running. The practice in such cases is divided. Some judges have opted to apply the “trust and accounting” approach and require the plaintiff to account to the defendant for future income if any earned during the notice period: Drysdale v. Panasonic Canada Inc., 2015 ONSC 6878. Others have reasoned that future employment income damages are like any other contingent future damages and can be calculated with appropriate discounts for contingencies if necessary: Peticca v Oracle Canada, 2015 ONSC 2584.
[41] I don’t think there is any hard and fast rule requiring me to adopt either approach and I may look at both for guidance on how best to achieve justice between the parties on the facts of this case.
[42] Of the two approaches, the discounted approach appears to me to be the most consistent with general principles of calculating damages. It is also an approach that commends itself on other grounds. A “once and for all” calculation removes the incentive, even if only subconsciously, for the plaintiff to be lukewarm in his search for a new position if all income earned would have to be remitted immediately to a former employer. Society and the parties are all unquestionably better off if the plaintiff is able to resume productive, taxpaying work as soon as possible. A discounted approach also avoids the possibility of future legal entanglements between the parties.
[43] In the present case, the notice period found by me has seven months to run. I have found it preferable in this case to fold into my consideration of the reasonable notice period the additional consideration of a minor discount for potential future earnings over the seven months or so I have found remain to be run in the notice period. Given the plaintiff’s poor prospects, the amount would at all events be quite minor relative to the total award and it seemed to me to be preferable to arrive at a global damages award rather than attempt to parse it artificially. I have thus applied the discounted approach but chosen not to break it out in a separate calculation here.
Disposition
[44] In conclusion, I find that the plaintiff is entitled to judgment as follows:
a. Reasonable Notice: 18 months or $93,582, plus b. DC Pension Contribution: 6% or $5,614.92, less c. 12 weeks working notice: $14,347.56, less d. Pay in lieu of notice: $26,566.90, e. Total: $58,282.46
[45] The foregoing is of course subject to statutory deductions and is “E & O E” as far as the math is concerned. If there are any such errors, I shall correct them before judgment is taken out providing the parties advise me.
[46] There remains of course the matter of costs. It is evident to me that this case has been conducted in a cost-efficient manner all things considered. Both sides have done a commendable job of presenting their best case and this is clearly an area where reasonable people can disagree on the correct outcome. I am optimistic that the parties will be able to apply themselves to resolving the matter of costs without my intervention. However, if a ruling is required, I would request the defendant to circulate an outline of costs and written submissions of three to five pages in length within two weeks. The plaintiff shall have a further two weeks to reply (same size limits). Any offers to settle may be appended but cases need not be attached. The defendant should collect the submissions of both parties and submit them to my assistant electronically. If extensions of time are needed, I need not be consulted if the parties are in agreement.
S.F. Dunphy, J. Date: February 23, 2017