Court File and Parties
COURT FILE NO.: CV-16-562723 DATE: 20180713 ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N :
DONALD DUSSAULT AND MARYANN PUGLIESE Plaintiffs – and – IMPERIAL OIL LIMITED Defendant
Counsel: David Greenwood for the Plaintiffs (Moving Parties) Richard J. Nixon for the Defendant (Responding Party)
HEARD: May 28, 2018 with additional written submissions received on June 11 and 21, 2018
REASONS FOR DECISION ON DAMAGES AND COSTS
FAVREAU J. :
Background
[1] On February 20, 2018, I released a decision, reported at 2018 ONSC 1168, granting summary judgment to the plaintiffs in this wrongful dismissal action. In my decision, I found that both plaintiffs were entitled to 26 months’ notice.
[2] At the conclusion of my decision, I indicated that I was not confident that I had sufficient information to calculate the plaintiffs' damages, and I invited the parties to attempt to reach agreement on the quantum of damages, failing which I would decide the issue. As the parties were not able to reach agreement, I received written submissions and then heard arguments on damages on May 28, 2018.
[3] While there is much common ground between the parties, there are four issues that remain to be decided:
a. Whether the plaintiffs are entitled to receive amounts equivalent to the pension contributions that Imperial would have made to the plaintiffs' pensions during the 26 month period;
b. Whether amounts should be deducted from the plaintiffs' damages to account for the increase in the commuted value of their pensions;
c. The amount the plaintiffs are entitled to receive in respect of Imperial's contribution to the Imperial Oil Savings Plan (the "Savings Plan"); and
d. What, if any, amounts the plaintiffs should receive as compensation for their loss of benefits.
[4] Set out below is my decision on these issues, and my findings in respect of the plaintiffs' entitlement to damages.
The parties' calculation of damages
[5] Mr. Dussault's base salary was $190,000 per year. As found in my February 20, 2018 decision, Mr. Dussault was given notice of his termination on September 2, 2016 and his termination took effect on October 31, 2016. Mr. Dussault was paid $30,744.66 during this 59 day period, and after his termination he received statutory severance pay of $94,800.00.
[6] Mr. Dussault claims that the amounts owing to him are as follows:
a. Base salary: $286,555.34 [1]
b. Savings Plan contributions: $22,881.32
c. Pension contributions: $53,688.00
d. Loss of benefits: $38,135.53
Total: $401,260.19
[7] Ms. Pugliese's base salary was $156.700 per year. She was given notice of termination on August 12, 2016, and her termination took effect on October 31, 2016. Ms. Pugliese was paid $34,345.20 during this 80 day period and she received statutory severance pay of $78,100.00.
[8] Ms. Pugliese claims the following amounts are owed to her:
a. Base salary: $227,071.45 [2]
b. Savings Plan contributions: $18,310.29
c. Pension contributions: $53,688.00
d. Loss of benefits: $30,517.15
Total: $329,586.89
[9] Imperial agrees with the calculation of the base salary owing to the plaintiffs. However, Imperial disagrees with the calculation of the Savings Plan, takes the position that no amounts should be paid for pension contributions or loss of benefits, and that amounts should be deducted to reflect the increase in value of the plaintiffs' pensions that has resulted from their termination.
[10] On this basis, Imperial would calculate Mr. Dussault's damages as follows:
a. Base Salary: $286,555.34
b. Savings Plan: $4,438.00
c. Pension plan: ($189.117.00)
d. Employment benefits: $0
Total: $101,876.34
[11] Imperial calculates Ms. Pugliese's damages as follows:
a. Base Salary: $227,071.45
b. Savings Plan: $3,656.28
c. Pension plan: ($108,610.00)
d. Employment benefits: $0
Total: $122,117.73
General legal principles applicable to damages in wrongful dismissal cases
[12] The plaintiffs and the defendant agree that the general principles applicable to quantifying damages in wrongful dismissal cases are those set out in the following paragraph from the Court of Appeal's decision in Paquette v. TeraGo Networks Inc., 2016 ONCA 618, at para. 16:
The basic principle in awarding damages for wrongful dismissal is that the terminated employee is entitled to compensation for all losses arising from the employer's breach of contract in failing to give proper notice. The damages award should place the employee in the same financial position he or she would have been in had such notice been given: Sylvester v. British Columbia, [1997] 2 S.C.R. 315, at para. 1. In other words, in determining damages for wrongful dismissal, the court will typically include all of the compensation and benefits that the employee would have earned during the notice period: Davidson v. Allelix Inc. (1991), 7 O.R. (3d) 581 (C.A.), at para. 21.
The parties' positions on the pension issues
[13] The treatment of the plaintiffs' pension is the most contentious issue between the parties and has significant financial consequences. The plaintiffs' pension is a defined benefit plan. Following their termination, the plaintiffs both started receiving pension benefits on November 1, 2016. As part of the evidence on the motion, Imperial put forward an expert report that concludes that the commuted value of the plaintiffs' pensions is higher as a result of their termination than it would have been 26 months following their termination dates. The plaintiffs did not file any responding expert evidence on this issue.
[14] The plaintiffs and Imperial take diametrically opposed views of how the plaintiffs' pensions should affect their entitlement to damages.
[15] The plaintiffs argue that their damages should include an amount that reflects the contribution Imperial would have made to their pensions during the 26 month notice period. They have calculated that amount as $55,000 each, based on their T4s for the year 2015.
[16] Imperial disagrees that the plaintiffs are entitled to any amount that reflects the contribution that Imperial would have made to their pensions during the 26 month notice period. Imperial argues that this is a defined benefit plan and that the plaintiffs have suffered no pension losses as a result of their termination. In fact, Imperial argues that any damages awarded to the plaintiffs should include a deduction for the increase in the value of the plaintiffs' pension that resulted from their termination.
[17] In addressing the parties' respective positions, I will deal first with Imperial's submission that an amount should be deducted from the plaintiffs' damages, because doing so allows me to review the general principles applicable to the treatment of pensions in the calculation of damages in wrongful dismissal cases. I will then consider the plaintiffs' position that they should receive an amount equivalent to the contribution Imperial would have made to their pensions during the notice period.
Whether any amount should be deducted to reflect the pension value increase
[18] Imperial relies on the Court of Appeal for Ontario's decision in Peet v. Babcock & Wilcox Industries, [2001] O.J. No. 1129 (C.A.), to argue that the increase in the value of the plaintiffs' pension should be deducted from their damages. In Peet, at paras. 29 and 30, the Court described the method to be used for calculating pension losses in the context of a wrongful dismissal case:
29 The formula for calculating pension loss that has been recognized by authority is the commuted value methodology. This method determines the present value of the difference between the value of the pension at the time of termination and the value at the time when the employee could have been lawfully terminated: King v. Gulf Canada Ltd., [1989] O.J. No. 130 (Ont. Dist. Crt.), aff'd. by Court of Appeal at (1992), 60 O.A.C. 139, application for leave to appeal to Supreme Court of Canada dismissed at [1993] S.C.C.A. No. 70.
30 Accordingly, the first step in employing this methodology requires a determination of the commuted value of the pension at the time of termination and at the end of the reasonable notice period. The present value of the difference between these two figures represents the pension loss suffered…
[19] In accordance with this authority, as referred to above, Imperial obtained an expert report from a pension expert, Jill Wagman, who calculated the value of the plaintiffs' pensions. In both cases, Ms. Wagman's opinion is that the commuted value of their pensions is higher as a result of their terminations.
[20] With respect to Mr. Dussault's pension, Ms. Wagman's calculations are as follows:
a. The commuted value of Mr. Dussault's pension on October 31, 2016, was $2,528,751;
b. The commuted value of his pension on October 31, 2018, would have been $2,433,423, if he had remained actively employed at Imperial up to that date;
c. The present value of the difference between the commuted value of Mr Dussault's pension on (i) October 31, 2016 and (ii) October 31, 2018 is $189,117.
[21] With respect to Ms. Pugliese, Ms. Wagman made the following findings:
a. The commuted value of Ms. Pugliese's pension on October 31, 2016, was $2,159,456;
b. The commuted value of her pension on October 31, 2018, would have been $2,133,701, if she had remained actively employed at Imperial up to that date; and
c. The present value of the difference between the commuted value of Ms. Pugliese's pension on (i) October 31, 2016 and (ii) October 31, 2018 is $108,610.
[22] On the basis of these findings, Imperial argues that the difference in the value of the plaintiffs' pensions between October 31, 2016 and October 31, 2018, should be deducted from their damages. Notably, Imperial has not produced any case in which this approach was followed. Rather, Imperial relies on the general principle in Paquette to the effect that a wrongfully dismissed employee should be placed in the same position she would have been in if she had not been dismissed during the notice period, arguing that the corollary is that the plaintiffs should not be placed in a better position than they would have been if they had not been dismissed. Imperial argues that the logical extension of the calculation methodology set out in Peet is that increases in value should be deducted from the plaintiffs' damages.
[23] The plaintiffs have not produced a responding expert report, and they do not dispute Ms. Wagman's findings. Instead, they argue that the Supreme Court of Canada's decision in IBM Canada Limited v. Waterman, [2013] 3 S.C.R. 985, 2013 SCC 70, is determinative of the issue of whether the increase in value of the pension attributable to the plaintiffs' termination should be deducted from their damages.
[24] In IBM Canada Limited, as in this case, the plaintiff started receiving pension benefits immediately following his termination. The issue before the Supreme Court was whether the pension benefits received during the notice period should be deducted from the amounts owed to the plaintiff by the employer. The majority of the Supreme Court found that the benefits are not to be deducted. Writing for the majority, Cromwell J., at paras. 2 to 4, held that there are exceptions to the principle that former employees should be placed in the same position they would be in if their employment had not been wrongfully terminated:
2 The question looks straightforward enough at first glance. The general rule is that contract damages should place the plaintiff in the economic position that he or she would have been in had the defendant performed the contract. IBM's obligation was to give Mr. Waterman reasonable notice of dismissal or pay in lieu of it. Had it given him reasonable working notice, he would have received only his regular salary and benefits during the period of notice. As it is, he in effect has received both his regular salary and his pension for that period. It therefore seems clear, under the general rule of contract damages, that the pension benefits should be deducted. Otherwise, Mr. Waterman is in a better economic position than he would have been in had there been no breach of contract.
3 On closer study, however, the question raised on appeal is not as simple as that. The case in fact raises one of the most difficult topics in the law of damages, namely when a "collateral benefit" or a "compensating advantage" received by a plaintiff should reduce the damages otherwise payable by a defendant. The law has long recognized that applying the general rule of damages strictly and inflexibly sometimes leads to unsatisfactory results. The question is how to identify the situations in which that is the case.
[25] In addressing this issue, Cromwell J. had regard to the types of insurance benefits that are not typically deducted from a damages award, and the principles used to distinguish such benefits from amounts that are deducted. Ultimately, at para. 76, he formulated the following guidelines for determining whether amounts should be deducted or not:
76 From this review of the authorities, I reach these conclusions:
(a) There is no single marker to sort which benefits fall within the private insurance exception.
(b) One widely accepted factor relates to the nature and purpose of the benefit. The more closely the benefit is, in nature and purpose, an indemnity against the type of loss caused by the defendant's breach, the stronger the case for deduction. The converse is also true.
(c) Whether the plaintiff has contributed to the benefit remains a relevant consideration, although the basis for this is debatable.
(d) In general, a benefit will not be deducted if it is not an indemnity for the loss caused by the breach and the plaintiff has contributed in order to obtain entitlement to it.
(e) There is room in the analysis of the deduction issue for broader policy considerations such as the desirability of equal treatment of those in similar situations, the possibility of providing incentives for socially desirable conduct, and the need for clear rules that are easy to apply.
[26] Ultimately, Cromwell J. applied these principles to pension benefits received during a notice period, and found, at para. 77, that they should not be deducted from the plaintiff's damages in that case:
77 Where would these factors lead us in this case? In my view, they clearly support not deducting the retirement pension benefits from wrongful dismissal damages. The retirement pension is not an indemnity for wage loss, but rather a form of retirement savings. While the employer made all of the contributions to fund the plan, Mr. Waterman earned his entitlement to benefits through his years of service. As the plan states, its primary purpose is "to provide periodic pension payments to eligible employees ... after retirement ... in respect of their service as employees": art. 1.01, A.R., at p. 117. Thus, it seems to me that this case falls into the category of cases in which the insurance exception has always been applied: the benefit is not an indemnity and the employee contributed to the benefit…
[27] Imperial argues that the Supreme Court's decision in IBM Canada Limited has no application in this case because that case dealt with the deduction of pension benefits whereas in this case Imperial is seeking the deduction of the increase in the commuted value of the plaintiffs' pension.
[28] In my view, there are significant flaws in this argument.
[29] First, there is no principled reason for this distinction. In IBM Canada Limited, the rationale for not deducting pension benefits was in part that entitlement to a pension is not meant to be an indemnity against the type of income loss caused by an employer's wrongful termination. Rather, a pension is a form of retirement savings that employees earn through their years of service. The same rationale applies whether Imperial's focus is on the pension benefits received by the plaintiffs or the increase in the value of their pensions. In either case, their pensions are not meant to protect them against the loss of employment, but rather are a benefit they have earned for their years of service.
[30] Second, the reason why the commuted value of the plaintiffs' pension was higher on October 31, 2016 than it would have been on October 31, 2018 if they had continued to work until that date is because they started receiving benefits sooner. In other words, their pension has more value because they are expected to derive more money from their pensions than they would have if they stopped working on October 31, 2018. Viewed from this perspective, there is in fact no rational difference between seeking to claw back the benefits paid out during the notice period and seeking to deduct the increase in value resulting from the termination.
[31] Third, contrary to Imperial's submissions, the Court of Appeal's decision in Peet does not support its position that an increase in the commuted value of a pension should be deducted from the plaintiffs' losses. This precise issue was considered by Forestell J. in Doran v. Ontario Power Generation Inc., [2007] O.J. No. 4476 (Sup. Ct.), at paras. 86-87, where she considered whether the decision in Peet would support such a deduction:
86 In Peet v. Babcock & Wilcox Industries Ltd., the Court of Appeal for Ontario held that pension payments received during the notice period should be taken into account in assessing the value of the pension between the actual date of termination and the date on which the employment could have been terminated with proper notice. In that case, as in this case, the employee was in a better overall position as a result of the early payment of pension benefits. The Court in Peet concluded that no damages should be awarded for pension loss. The Court did not deduct from the damages as a result of the value of the benefits. OPG argued that the issue of deduction from damages was not argued in Peet and that it is open to me to deduct from damages in this case. I do not agree. The Court in Peet was faced with the exact situation as arises in the case before me. The Court clearly set out the steps for calculating pension loss and the manner in which pension payments are to be considered:
... [T]he first step in employing this methodology requires a determination of the commuted value of the pension at the time of termination and at the end of the reasonable notice period. The present value of the difference between these two figures represents the pension loss suffered. Once the pension loss has been calculated using this methodology, it would be inappropriate to then deduct pension payments from lost salary by taking into account pension payments received during the notice period. However, this does not lead to the conclusion that pension payments made during the notice period should not initially be taken into account when determining the commuted value of the pension at the time of termination. [emphasis added]
In cases such as the one at bar, where there is actuarial evidence that pension payments made during the notice period enhance the overall value of the pension fund, such evidence must factor into the calculation of whether a pension loss has occurred at all. That is, when making use of the commuted value methodology to calculate the difference between the value of the pension at the time of termination and at the end of the notice period, it would be wrong to disregard pension payments made during the notice period that may serve to alter the net difference. This is especially true if the earlier commencement of pension payments serves to put the employee in an overall better position that had the pension commenced after the notice period, effectively eliminating any pension loss ... Taking into account notice period pension payments when calculating whether a pension loss has occurred is not the same as considering such payments as having been received in mitigation of salary loss.
I am bound by Peet and conclude that it would be wrong to award damages for pension loss where Mr. Doran is in a better overall position based on the commuted value of the pension payments. In Peet, although the plaintiff was in a better position, the difference was not deducted from the damages for severance.
87 As a result, I conclude that Mr. Doran suffered no pension loss. I further conclude that no amount should be deducted from the damages owing to Mr. Doran to reflect the enhancement in value…
[32] I agree with this conclusion and find that it applies in this case. Accordingly, I reject Imperial's argument that there should be a deduction to the plaintiffs' damages to reflect the increase in the commuted value of their pensions.
Whether the plaintiffs are entitled to the contributions Imperial would have made to their pensions during the notice period
[33] Rejecting Imperial's argument on the effect of the increased value of the plaintiffs' pensions does not mean that I accept the plaintiffs' position that they should be entitled to payment of the pension contributions Imperial would have made during the notice period.
[34] The plaintiffs' position is that their damage awards should each include $53,688.00 to reflect the contributions Imperial would have made to their pensions during the notice period. They seek this amount on the basis that the T4 statements issued by Imperial for 2015 showed that Imperial's contribution to their pensions for that year was $24,770 in both cases, calculating that an equivalent contribution over a 26 month period would amount to $53,688.00.
[35] Imperial argues that it should not be required to pay these amounts because the plaintiffs have not suffered a pension loss. Imperial also argues that the plaintiffs' pension plan is a defined benefit plan. Imperial's obligation is to ensure that the plan is sufficiently funded to pay the benefits to which the plaintiffs are entitled rather than making a specific contribution each year. Imperial says that the T4s represent a notional amount, but do not reflect Imperial's actual contribution to the plaintiffs' pension plan in any given year.
[36] In support of their position on this issue, the plaintiffs argue that Imperial should not be allowed to benefit from its wrongdoing. They rely on Paquette, and argue that they are entitled to all losses arising from Imperial's wrongful termination during the notice period. They also rely on a decision of the Alberta Court of Queen's Bench in Deputat v. Edmonton School District No. 7, 2006 ABQB 549, at paras. 103-104, wherein the Court held that there is "no universally accepted method of calculating pension loss in wrongful dismissal cases" and that "some Courts have simply awarded the amount the employer would have contributed during the notice period".
[37] Notably, as referred to above, in Peet, at para. 29, the Court of Appeal for Ontario held that the "formula for calculating pension loss that has been recognized by authority is the commuted value methodology".
[38] The other flaw in the plaintiffs' argument is that there is no evidence that they have suffered any pension loss. On the contrary, as reviewed above, the only evidence on this point comes from Imperial's expert demonstrating that the commuted value of the plaintiffs' pensions has increased as a result of the termination.
[39] While the Court of Appeal's decision in Peet does not support Imperial's argument that pension value increases should be deducted from the plaintiffs' damages, as held at para. 33 of that decision, it also does not support the plaintiffs’ argument that they should receive compensation for amounts Imperial would have contributed to their pension during the notice period in circumstances such as here where the value of their pension has increased as a result of the termination:
[33] Therefore, I conclude that when assessing the difference in the value of the pension between the actual date of termination and the date on which the employment could have been terminated after proper notice, a court must take into account pension payments received during the notice period. Such payments influence whether a pension loss has occurred in the first place and must be given proper consideration. If, based on the early commencement of pension benefits, an employee's overall pension package is better off than it would have been had the employee completed a longer term of employment, awarding damages under the guise of pension loss would serve to put the employee in a more favourable position under the employment contract than had he not been terminated. To award damages in such a case would undermine the fundamental principle of compensation recognized in wrongful dismissal cases, that a wronged employee is only entitled to be put in as good a position as he would have been in if there had been proper notice: Michaels v. Red Deer College, [1976] 2 S.C.R. 324, 57 D.L.R. (3d) 386 at pp. 330-31 S.C.R., p. 390 D.L.R. [emphasis added]
[40] In my view, the same principle applies in this case. Given that the plaintiffs have not suffered any pension loss, awarding amounts that Imperial would have contributed to their pension during the notice period would put them in a better position than if their employment had not been terminated, which runs contrary to the principles in Paquette.
[41] Accordingly, I reject the plaintiffs' argument that they should be awarded an amount to reflect Imperial's contribution to their pension plan during the notice period.
The amount the plaintiffs are entitled to receive in respect of the Savings Plan
[42] During the term of their employment, the plaintiffs participated in a Savings Plan set up by Imperial.
[43] The plaintiffs claim that Imperial's annual contributions to the Savings Plan was 6% of their salaries, and that they are entitled to payment of this amount during the notice period. Mr. Dussault seeks $22,881.32 and Ms. Pugliese seeks $18,310.29.
[44] Imperial does not dispute that the plaintiffs are entitled to some amount in relation to the Savings Plan, but disputes the calculation.
[45] Under the Savings Plan, as it existed when the plaintiffs were employed by Imperial, if an eligible Imperial employee contributed a specified percentage of his or her salary to the Savings Plan, Imperial would match that contribution up to 6%. As part of the plan, employees could opt to split their own savings contributions between the Savings Plan and a Retirement Income Option which has the effect of giving them a supplementary pension. In circumstances where employees chose to split their own contributions between the Savings Plan and the Retirement Income Option, Imperial would match the Savings Plan portion of the employee’s contribution up to 3% and would make necessary contributions to the Retirement Income Option.
[46] Imperial asserts that both plaintiffs chose to participate in the Retirement Income Option of their pension plan, which in both cases means that Imperial contributed 3% to their Savings Plan and contributed to their supplementary pensions. As of January 1, 2017, Imperial modified its contribution to its employees' Savings Plans to 1% in circumstances where employees had chosen to participate in the Retirement Income Option.
[47] Imperial argues that the plaintiffs are not entitled to compensation for the portion of Imperial's contribution that was directed to the supplementary pension plan because the plaintiffs have not suffered any pension loss. On this basis, Imperial argues that it is only obligated to compensate the plaintiffs for the contributions it would have made to the Savings Plan and not for any contributions it would have made to the Retirement Income Option. Imperial takes the position that the plaintiffs are entitled to 3% of their base salary in November and December, 2016, and, given the changes implemented on January 1, 2017, 1% between January 2017 and October 2018. In Mr. Dussault's case, this amounts to $4,438.00 and, in Ms. Pugliese's case, this amount to $3656.28.
[48] There are therefore two differences between the parties on the issue of the Savings Plan contribution. The first issue is whether the fact that part of Imperial's contribution went to a supplementary pension plan is relevant in calculating the plaintiffs’ Savings Plan losses, and the second issue is whether the change effected to the program in January 2017 should be reflected in the calculation.
[49] On the first issue, I agree with Imperial. This issue again engages consideration of the plaintiffs' pensions. Given that Imperial matched the plaintiffs' contribution to the Retirement Income Option by supplementing the plaintiffs' pension, the issue is whether the plaintiffs have suffered a loss to their supplementary pensions. The plaintiffs have not produced any evidence on this point. In contrast, Imperial's expert report includes consideration of the impact of termination on the plaintiffs' regular pensions and their supplementary pensions. The report does not identify a loss in this respect, and as referred to above, globally, identifies a gain. Accordingly, the plaintiffs have not identified any loss suffered as a result of the discontinuance of Imperial's contribution to the Retirement Income Option during the notice period and I see no basis for awarding damages in this respect.
[50] On the second issue, I agree with the plaintiffs. The documents provided by Imperial in support of the position that the Savings Plan changed on January 1, 2017, make clear that it would have been open to the plaintiffs to choose to withdraw from the Retirement Income Option rather than reduce Imperial's contribution to their Savings Plan to 1%. Given the termination, the plaintiffs did not have a chance to exercise this option. In my view, acceding to Imperial's argument would amount to imposing a choice on the plaintiffs that they did not have an opportunity to make. Accordingly, I find that the plaintiffs should be entitled to 3% throughout the notice period.
[51] Based on my finding that the plaintiffs are entitled to 3% throughout the notice period, I find that Mr. Dussault is entitled to $11,440.66 and Ms. Pugliese is entitled to $9,155.15, representing half of the amount they had each sought which had been based on a 6% contribution.
Whether the plaintiffs are entitled to any amount for the loss of benefits
[52] In their written submissions on damages, the plaintiffs took the position that they were entitled to 10% of their base salary as damages for their loss of benefits. In support of this argument they rely on case law where the courts have attributed a percentage to the value of benefits without providing a rationale for the specific percentage chosen: Toole v. Acres Inc., [2007] O.J. No. 1337 (Sup. Ct.), at para. 40, where the Court fixed the value of benefits at 5% of the employee's gross salary; and Geluch v. Rosedale Golf Assn., Ltd., [2004] O.J. No. 2740 (Sup. Ct.), at para. 206, where the Court fixed the value of benefits at 15% of the employee's salary.
[53] In response, in its written submissions, Imperial argued that there was no evidence in support of the 10% put forward by the plaintiffs, and that they should accordingly not receive any damages in relation to the loss of benefits. Imperial also argued that the plaintiffs had not suffered any damages because they continued to be entitled to receive various benefits when they started receiving pension payments.
[54] At the hearing of the argument on this issue, the plaintiffs' counsel pointed out that Imperial's own evidence on the motion for summary judgment contained the following chart setting out the value of the plaintiffs’ benefits as a percentage of their annual base salaries:
Disability - STD 2.8% Disability - LTD 0.6% Group Life Insurance & AD&D Insurance 0.5% Critical Illness 0.0% Health Plan 2.2% Dental Plan 1.7% Total 7.8%
[55] In argument, counsel for the plaintiffs asserted that his clients would be prepared to accept 8% of their base salary as compensation for the loss in benefits. He argued that the amount should be a bit higher than 7.8% to reflect the fact that some of the benefits received by the plaintiffs during the course of their employment such as fitness club memberships and higher education allowances were not reflected in the chart. Based on this submission, Mr. Dussault seeks $30,509.00 and Ms. Pugliese seeks $24,414.00.
[56] At the hearing, counsel for Imperial took issue with this submission, arguing that he and his client had not had an opportunity to consider this argument because it was not aware that the plaintiffs now relied on Imperial's evidence of the value of the benefits. On that basis, I gave Imperial an opportunity to make brief written submissions following argument on the discrete issue of what, if anything, I should make of the evidence the plaintiffs now rely on in support of their claim for damages attributable to the loss of benefits.
[57] In its submissions, Imperial did not dispute the accuracy of the evidence it had put forward with respect to the value of the plaintiffs' benefits nor did it dispute the submission made by counsel for the plaintiffs that the value of the benefits was a bit higher than 7.8% because the items listed in Imperial's chart was not comprehensive. Rather, Imperial renewed its argument that no amount should be paid to the plaintiffs as compensation for their lost benefits because they are currently receiving benefits as part of their retirement package. In advancing this argument, Imperial argues that, unlike pension payments, the benefits are “completely discretionary” and not made pursuant to any legal obligation on Imperial's part. This blunt statement is unsupported by any evidence or legal authority.
[58] In my view, the principles applicable to the issue of whether the increase in the value of the plaintiffs' pension should be deducted from their losses apply to the issue of benefits. As reviewed above, in IBM Canada Limited, the Supreme Court held that pension payments are not compensation for lost employment and should therefore not factor into the calculation of a dismissed employee's losses. Similarly, in my view, any benefits employees may be entitled to as part of their retirement or pension plan should not be viewed as compensation for lost employment.
[59] The case law is clear that wrongfully dismissed employees are entitled to compensation for their lost benefits: Paquette, para. 16. Accordingly, in my view, in this case the plaintiffs are entitled compensation for the loss in benefits regardless of what they are receiving now as part of their retirement package.
[60] I also note that Imperial argues that the benefits the plaintiffs now receive are “substantially similar” to those they received during their employment. However, Imperial has not provided any evidence that allows me to compare the value of the plaintiffs’ benefits while employed to the value of their benefits since retirement. In my view, even if I had accepted Imperial’s argument that I should take account of the benefits the plaintiffs are currently entitled to, the evidentiary record would not allow me to make a finding that the plaintiffs have suffered no loss of benefits.
[61] In terms of quantum, I accept the plaintiffs' submission that 8% of the plaintiffs' base salary is a reasonable amount, given Imperial's own evidence that the benefits listed in its chart amount to 7.8% of the plaintiffs’ base salary and the plaintiffs' evidence that the listed benefits do not represent a comprehensive list of all the benefits they received as employees.
[62] Accordingly, I find that Mr. Dussault is entitled to $30,509.00 and Ms. Pugliese is entitled to $24,414.00 as compensation for their loss of benefits.
Summary of damages
[63] Based on the findings above, I find that Mr. Dussault is entitled to the following damages:
a. Base salary: $286,555.34
b. Savings Plan: $11,440.66
c. Pension contributions: $0
d. Loss of benefits: $30,509.00
Total: $328,505.00
[64] I also find that Ms. Pugliese is entitled to the following damages:
a. Base salary: $227,071.45
b. Savings Plan: $9,155.15
c. Pension contributions: $0
d. Loss of benefits: $24,414.00
Total: $260,640.60
Costs
[65] At the conclusion of the hearing on damages, at the request of counsel for the plaintiffs, a schedule was set for the exchange of cost submissions, so as to enable me to include my decision on costs with my decision on damages.
[66] The plaintiffs seek costs in the amount of $83,449.38 on a partial indemnity basis, submitting that this amount is reasonable given the relative complexity of the issues in the case.
[67] Imperial argues that the issue of costs is premature on the basis that, at the time submissions on damages were made, the parties did not yet know the outcome of the damages portion of the motion. Alternatively, Imperial submits that the amount sought by the plaintiffs is excessive in a number of respects, and, anticipating that the plaintiffs would not receive the full amount of damages claimed, argue that costs should reflect that the plaintiffs have been awarded significantly less than the amounts they were seeking in their claim.
[68] On the issue of prematurity, at the conclusion of the argument on damages, as indicated above, counsel for the plaintiffs asked that I decide the issue of costs as part of my decision on damages. Counsel for Imperial did not object to this suggestion. In any event, Rule 57.01(6) of the Rules of Civil Procedure provides that the parties are to have costs outlines available at the end of a hearing and Rule 57.01(7) provides that the Court is to adopt the simplest, least expensive and most expeditious method to address the costs of a proceeding. There is nothing unusual about this case, and no reason why the parties could not make submissions in anticipation of possible outcomes, which is in fact what Imperial did in this case.
[69] On the issue of quantum, the starting point is to consider the factors set out in Rule 57.01(1) of the Rules of Civil Procedure, including the amount claimed, the complexity of the procedure, the importance of the issues and the results achieved. The Court is also to consider the principles established by the Court of Appeal in Boucher v. Public Accountants Council (Ontario) (2009), 100 O.R. (3d) 66 (C.A.), 2009 ONCA 722, including that the objective of fixing costs is to set an amount that is fair and reasonable in the circumstances of the case.
[70] As held by D.M. Brown J., as he then was, in 3574423 Canada Inc. v. Baton Rouge Restaurants Inc., 2012 ONSC 296 (Sup. Ct.), at para. 11:
In reviewing a claim for costs after a trial a court need not undertake a line by line analysis of the hours claimed, nor should a court second-guess the amount claimed unless it is clearly excessive or overreaching. A trial judge must consider what is reasonable in the circumstances and, after taking into account all of the relevant factors, should award costs in a more global fashion.
[71] In this case, the issues on both liability and damages were important to the parties, as evidenced by the effort put into the written and oral submissions on both sides. There was some complexity to the issues, especially in relation to Imperial's argument that the plaintiffs had an obligation to mitigate their damages by accepting employment offered by the buyer of Imperial’s retail business and in relation to Imperial's argument that damages should be reduced to reflect the increase in the commuted value of the plaintiffs' pensions. While the plaintiffs were not entirely successful on the issue of damages, their success was significant and the outcome was not dramatically different from the amounts they were seeking.
[72] I also note that, while Imperial argues that the costs sought by the plaintiffs are excessive, Imperial has not provided a cost outline or dockets for its time on the motion. However, in its submissions on costs, Imperial argues that if it is substantially successful on the damages portion of the argument, it should be entitled to costs of $50,766.53. Under the circumstances, it is unreasonable for Imperial to argue that the costs sought by the plaintiffs in the amount of $83,449.38 for both parts of the motion are unreasonable.
[73] Having said that, I agree with one aspect of Imperial's argument. The plaintiffs have calculated their partial indemnity costs as 66% of their full indemnity costs. Recent case law from the Court of Appeal supports Imperial's submission that partial indemnity costs are generally in the range of 55% to 60% of full indemnity costs: Inter-Leasing Inc. v. Ontario (Minister of Revenue), 2014 ONCA 683, at para. 5; and Bain v. UBS Securities Canada Inc., 2018 ONCA 190, at paras. 30-33.
[74] On this basis, I am reducing the costs sought by the plaintiffs to $75,000, inclusive of disbursements and HST.
Conclusion
[75] For the reasons set out above, I find that Mr. Dussault is entitled to $328,505.00 in damages plus pre-judgment interest, Ms. Pugliese is entitled to $260,640.60 in damages plus pre-judgment interest, and the plaintiffs are entitled to their costs in the amount of $75,000.
FAVREAU J.
RELEASED: July 13, 2018
COURT FILE NO.: CV-16-562723 DATE: 20180713 ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N :
DONALD DUSSAULT AND MARYANN PUGLIESE Plaintiffs – and – IMPERIAL OIL LIMITED Defendant
REASONS FOR DECISION ON DAMAGES AND COSTS
FAVREAU J. RELEASED: July 13, 2018
[1] Which represents 26 months of base salary in the amount of $412,100.00, minus the amount of $30,744.66 which he was paid between September 2 and October 31, 2016, and minus the amount of $94,800.00 which he received as severance pay.
[2] Which represents 26 months of base salary in the amount of $339,516.65, minus the amount of $34,345.20 which she was paid between August 13 and October 31, 2016, and minus the amount of $78,100.00 which she received as severance pay.