Court File and Parties

COURT FILE NO.: CV-17-540-00 DATE: 2019 02 28 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Piotr Klimczewski, Plaintiff AND: Nytric Ltd., Defendant

BEFORE: Barnes J.

COUNSEL: Brandon O’Riordan, for the Plaintiff Peter Tuovi, for the Defendant

HEARD: March 5, 2018

Endorsement

Introduction

[1] Piotr Klimczewski seeks summary judgment in a wrongful dismissal action. He was terminated by his employer, the Defendant, Nytric Ltd. His salary was continued for 16 weeks and his benefits for eight weeks. It is not disputed that Mr. Klimczewski was terminated without just cause. He seeks 15 months’ payment in lieu of reasonable notice.

[2] I have previously determined that this is an appropriate case for summary judgment and, pursuant to additional powers in Rule 20.04(2.1), I heard viva voce evidence from Mr. Klimczewski on the issue of his efforts to mitigate damages in the unreported decision of Klimczewski v. Nytric Ltd (June 20, 2018), Brampton (Ont. S.C.).

Background Facts

[3] Mr. Klimczewski was employed by Nytric on September 8, 2005 as a Software Engineer. He began work on September 12, 2005. The letter is silent on the issue of notice of termination. On March 23, 2016, Nytric informed Mr. Klimczewski that he was terminated without cause. The effective date of the termination was July 15, 2016.

[4] At the time of his dismissal, Mr. Klimczewski was 61 years old. He had been employed by Nytric for 10 years. His base salary was $71,000 and he was enrolled in Nytric’s group benefits plan.

Issues

[5] The issues are:

1. what is the reasonable notice period?
2. has Mr. Klimczewski adequately mitigated his damages?
3. what is the appropriate quantum of damages?

Discussion and Analysis

1) What is the reasonable notice period?

[6] The reasonable notice period in this case is 12 months. In the absence of a contract with a definite period of employment, the law presumes an employment contract of indefinite duration. This contractual relationship fixes the employer with the obligation to provide reasonable notice of termination. When an employee is dismissed without reasonable notice, they are entitled to damages arising from the employer’s obligation to provide reasonable notice. The employee is obligated to take steps to mitigate their damages: Bardal v. Globe & Mail Ltd., 24 D.L.R. (2d) 140, at paras. 10-14.

[7] There is no fixed formula for determining reasonable notice. Courts have enunciated some guidelines to assist in this process. Each case must be determined on its own facts. The approach is described in Bardal at para. 21 as follows:

There can be no catalogue laid down as to what is reasonable notice in particular classes of case. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.

[8] Mr. Klimczewski submits that he is entitled to 15 months' notice based on: his age at termination (61 years); his position at termination (Senior Software Engineer); his period of service (10.5 years); and the unavailability of employment compatible with his skills.

[9] Nytric submits that, at the time of his termination, Mr. Klimczewski was employed as a Software Engineer not a Senior Software Engineer. Nytric terminated Mr. Klimczewski’s employment with the company because it was experiencing cash flow issues and had to cut costs.

[10] Nytric concedes that the termination was without cause but also submits that there were issues with Mr. Klimczewski’s performance. Other staff who were retained were considered “either more skilled, or more necessary to the needs of the company.” Nytric submits that applying the Bardal factors, the appropriate period of notice is 10 months.

[11] Nytric operates as a research, development and product commercialization firm. The company creates technologies necessary to transform innovative ideas into products for consumers.

[12] Mr. Klimczewski was hired as a Software Engineer. His job was to develop and design software necessary to enable Nytric to conduct its business.

[13] There is a dispute over whether, at the time of his termination, Mr. Klimczewski was a Software Engineer or a Senior Software Engineer. Neither the letter of employment nor the letter of termination refers to Mr. Klimczewski as a Senior Software Engineer. Mr. Klimczewski explained that a Software Engineer with 3 to 5 years’ experience is regarded as a Senior Software Engineer in the industry. Given the short period of time required to receive the label “Senior” and the fact that the label “Senior” is not necessarily related to quantum of remuneration in the industry, I conclude that whether Mr. Klimczewski was terminated in the capacity of a Software Engineer or a Senior Software Engineer is not germane to the reasonable notice analysis.

[14] Avanindra Vtukuri is the President of Nytric. According to Mr. Vtukuri, Mr. Klimczewski used the latest technologies based on desktop applications and internet applications to perform his duties at Nytric. He said Mr. Klimczewski had experience on “popular, relevant, core technologies for software development”. Just like other Software Engineers at Nytric, Mr. Klimczewski took regular continuing education courses and programs to improve his skills.

[15] Mr. Klimczewski’s resume describes his career profile as follows:

Detailed oriented programmer and architect with 20+ year's success devising innovative and tailored solutions to meet ever-changing business requirements with diverse industries. Advanced skills with leading edge programming tools complements by proven ability to assimilate and rapidly utilize emerging technologies. Solid mathematical knowledge with experience developing comprehensive algorithms and data processing logic.

[16] Mr. Klimczewski’s resume gives the impression of vast experience with a wide array of software, however, a closer examination of his actual experience in the context of the work performed for Nytric reveals a different story.

[17] Mr. Klimczewski has a master’s degree in Electronics/Telecommunication from the Polytechnic University of Gdansk, Poland. This post-secondary education did not shield him from the reality of his chosen profession, i.e. “keep up or be obsolete”.

[18] Mr. Klimczewski said ongoing continuing education by software engineers in his company was the norm. Mr. Klimczewski explained that he had to continually improve his expertise through on-the-job training with a particular software. He said software engineers did not update their skills by taking university courses, though such courses may be required for beginners. On-the-job training on a specific software was the norm in the software industry.

[19] Mr. Klimczewski developed expertise in the computer software language called Windows Presentation Foundation (WPF) after he was hired at Nytric. Nytric’s business was premised on using cutting edge technologies to convert innovative ideas of their customers into consumer-usable items. It is reasonable to conclude that software engineers at Nytric were required to evolve and keep abreast with new technologies.

[20] Mr. Klimczewski said that during his employment with Nytric, he relied exclusively on his knowledge of desktop-based technologies to carry out his duties. He said he has no expertise in the software technology currently taking over the software engineering industry, i.e. internet-based technologies. He referred to his involvement in internet-based technologies as marginal.

[21] I am satisfied that any internet-based technologies Mr. Klimczewski utilized were minimal. He became a specialist while working for Nytric. His expertise was in WPF. This is desk top application software technology. Nytric had some complaints about his performance. There is no indication that these performance issues were due to Mr. Klimczewski’s reliance on desktop application technologies instead of internet-based technologies. Neither is there any evidence of a necessity for Mr. Klimczewski, during his employment, to upgrade his skills in the internet-based technologies area. During his employment, neither Nytric nor Mr. Klimczewski had any issues with his area of specialization.

[22] Counsel have provided a number of cases for the court’s consideration, none of which relate to software engineers. Professions suggested as analogous are: Oil Fields Operator, Systems Analyst, Payroll specialist, Medical Doctor, Engineers, and Actuaries. The nature/character of employment, the length of service, age, experience, training and qualifications of the employees in these cases are different from those of Mr. Klimczewski. Each case turns on its own facts.

[23] At the time of termination, Mr. Klimczewski was 61 years old. He was employed in an industry characterized by rapidly changing technologies. His duties did not require him to develop skills in the rapidly advancing area of internet-based software technologies. He was a specialist in desktop application based software which was rapidly becoming outdated. Within this context, it is reasonable to expect a 61 year old software engineer to face significant difficulty in obtaining new employment as a software engineer. Under all these circumstances, the reasonable notice period is 12 months.

2) Has Mr. Klimczewski adequately mitigated his damages?

[24] Mr. Klimczewski has taken steps to adequately mitigate his damages. It is the duty of the Plaintiff (Mr. Klimczewski) to make all efforts as are reasonable in the circumstances to secure other employment: Gardner v. Rockwell International of Canada Ltd. (1976), 9 O.R. (2d) 105 (Ont. H.C.) at p. 107.

[25] The Respondent (Nytric) bears the onus to demonstrate that an employee has failed to make reasonable efforts to gain other employment and that other work could be found: Red Deer College v. Michaels, [1976] 2 S.C.R. 324. Mr. Klimczewski submits that the market share for his area of expertise has decreased. He cannot compete or apply for the more in-demand internet-based technologies.

[26] Mr. Klimczewski has applied to about 30 jobs and discussed approximately 150 potential jobs with recruiters. He has had six interviews. I am satisfied that since his termination, he has actively engaged in job searches. I do not accept Nytric's submissions that Mr. Klimczewski has expertise beyond desktop based application technologies and that he simply no longer wishes to learn new technologies.

[27] On the contrary, I am satisfied that after 10 years of specialization in the area of desktop-based application technologies, the decreasing demand for desktop application based technology expertise, and the employee's age of 61 years old, it is reasonable to conclude on a balance, that it will be difficult for the employee to learn new technologies in such an on the job driven training environment.

[28] At age 61, he will have to obtain employment from an employer willing to hire him despite his expertise in a technology with shrinking market value and to provide him with an opportunity to learn the internet-based technologies during the course of his new employment. I reach this conclusion based on the importance of on- the-job training in the software engineering industry.

[29] The negative impact of his chronological age combined with an expertise in technology facing a dwindling share of the market place cannot be ignored. Mr. Klimczewski has taken responsible steps to secure new employment. Nytric has failed to discharge its onus.

3) What is the appropriate quantum of damages?

[30] An action for wrongful dismissal is not based on the fact of the dismissal. It is based on the fact that the dismissal occurred without reasonable notice or payment in lieu of the notice. In calculating the quantum of damages, the court will determine the reasonable notice period, determine the amount of compensation lost during that period, and deduct any compensation the Plaintiff in minimizing her damages earned during that period: Johnson v W.L. Wardrop & Associates Ltd. (1982), 15 A.C.W.S (2d) 16 Man. Q.B at para. 15.

[31] There is a dispute over whether Mr. Klimczewski was entitled to benefits while employed by Nytric and whether these benefits should be included in the damages calculation.

[32] Nytric submits that the company's group benefit program was an optional program and entitlements are subject to restrictions imposed by the plan provider. Some elements of the company’s plan did not survive minimum Employment Standards Act, 2000, S.O. 2000, c. 41 minimum notice periods.

[33] Nytric's position is not supported by the evidence. In the Group Benefits Agreement dated January 13, 2016, Mr. Klimczewski acknowledges that the benefits available to him under the Nytric benefit program had been explained to him. There is an option to opt out of dental/extended health care benefits. Mr. Klimczewski did not opt out. The third of three paragraphs required Mr. Klimczewski to advise the plan administrator of any changes in his biographical information or that of his dependants. Nowhere in the Group Benefits Agreement is there any indication that participation in the Nytric benefits plan was optional. On the contrary, on reading the document in its entirety, it is clear that Mr. Klimczewski was covered by the Nytric benefits plan during the entire period of his employment.

[34] Nytric relies on a letter dated June 7, 2016 from Laura Cunningham of Nytric. This letter informs Mr. Klimczewski that he will be receiving the statutorily prescribed eight weeks of benefits. The letter also discusses the possibility of extending benefits beyond the statutory eight week period. The letter indicates that it was the intention of Nytric to restrict benefit coverage to eight weeks. It does not indicate that Mr. Klimczewski was not covered by Nytric’s group benefit during his employment. This does not support Nytric's position that Mr. Klimczewski was not entitled to participation in the group benefits plan. I am satisfied that he did not opt out of the benefits program and was entitled to the benefits during the notice periods.

[35] Despite his entitlement, Mr. Klimczewski incurred no expense recoverable under the benefit plan and did not incur any costs to replace the plan after his termination. Under such circumstances, should the quantum of his benefit entitlement be included in the damages calculations? One line of cases answer in the negative:

1. An employee is entitled to compensation if they have actually taken steps to replace the benefits: Porter v. Amok Ltd. (1986), 49 Sask. R. 18 (Q.B.);
2. There should be no award where the employee has suffered no damages as a result of not having the benefits and has taken no action to replace them: Martin v Midland Capital Inc. 41 A.C.W.S. (3d) 1160 at para. 21.
3. Any awards should be limited to the recovery of expenses the employee has incurred over the notice periods which are recoverable under the benefits plan: Cooke v. HTS Engineering Ltd. (2009), 79 C.C.E.L. (3d) 223 (Ont. S.C.).

[36] A second line of cases stands for the principle that even if an employee has suffered no losses during the notice period or incurred no expenses to replace their benefits during the notice period, the employee is still entitled to sue to receiver the cost of their replacement: Adjemian v. Brook Crompton North America (2008) 168 A.C.W.S. (3d) 68, at paras. 24 and 26; Boole v. Teron International Urban Development Corp., [1985] O.J. No.600 (Ont. H.C.), at para. 45; Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2015 ONSC 3408, varied in 2016 ONCA 520. I prefer this approach for the reasons articulated by Barr J. in Boole at para. 45 as follows:

45. Fringe benefits including sickness and accident insurance, were part of the compensation receivable by Mr. Boole for his services. Mr. Boole did not purchase equivalent coverage upon his dismissal, nor did he suffer illness or injury during the period of notice. The defendant therefore argues that Mr. Boole has sustained no damages. I do not think this is sound. As a result of his dismissal, Mr. Boole lost his salary and fringe benefits. He elected, in his then circumstances, not to replace this insurance. If, after dismissal, he had met with misfortune and incurred expense of the type covered by the insurance and if he had claimed this expense as part of his damages, I am sure that the employer would argue that Mr. Boole should have replaced the coverage and that, having failed to do so, he had assumed the risk. It seems to me that this item should be examined in light of the circumstances of September 30. After that date, Mr. Boole was without the sickness and accident coverage. To be restored financially to the position he would have been in but for the wrongful dismissal would have required replacement of his coverage. The costs of replacement is part of the damages suffered by Mr. Boole. To say that, in fact, he did not buy the coverage is akin to saying that a man whose car has been damaged by the negligence of another and has elected to have the car repaired, has suffered no damage. The cost of replacement coverage would have been $253.71 per month. I hold that this is properly a part of Mr. Boole's claim.

[37] As per the Ontario Court of Appeal: “it is settled law in Ontario that an employee who has been unlawfully dismissed may claim, in addition to lost salary, the pecuniary value of lost benefits flowing from such dismissal: Davidson v Allexlix Inc. 30 A.C.W.S.(3d) 843, para. 21.

[38] At the time of termination, Mr. Klimczewski earned $71,000 per annum. Upon termination, Nytric provided Mr. Klimczewski with 16 weeks of notice of termination and eight weeks of benefits continuance. Therefore, Mr. Klimczewski is entitled to damages calculated as follows.

(a) Base salary over 12 months: 5,916.67 /month x 12 = $71,000.04 plus benefits. (b) There is no evidence of the monetary value of the benefits. Mr. Klimczewski suggests that benefits be estimated at 10% of his base salary. Nytric disputed entitlement but did not dispute this suggestion. Therefore, benefits are estimated to be 10% of his base salary. Over the 12 month notice period this figure is: $7,100.00. (c) Less monies paid in lieu of reasonable notice (21,846.15). (d) Less benefits coverage over eight weeks ($1,092.31). (e) Total damages is $55,161.58 payable forthwith.

[39] Should the parties be unable to agree on costs, a three page costs outline shall be submitted in 20 days.

BARNES J. Date: February 28, 2019