Duty to Mitigate by Accepting the Alternative Position

Mifsud is a 1989 decision of the Ontario Court of Appeal which held that an employee who had been constructively dismissed was nonetheless under an obligation, in certain circumstances, to accept the demoted position to mitigate his claim. ² and as noted by the late Mr. Justice Echlin, an esteemed scholar and jurist of employment law, of the Ontario Superior Court, a case which has been “dramatically limited”.

Such a sentiment was also expressed in a 1998 Alberta decision ³. The trial judge in Turner, Justice J.S. Moore, quoted the reference below to offer his view of the likelihood of the parties working together after a dismissal, direct or otherwise as “extremely rare”, as was the conclusion in Kuz:

With the greatest of respect to the Ontario Court of Appeal [in Mifsud v. MacMillan Bathurst Inc], I have difficulty in seeing how an employer who has fired an employee, constructively or otherwise, can reasonably expect that employee to take another position within its organization for the appropriate notice period. It would, in my mind, be extremely rare that, upon termination, the parties can be expected to work in harmony thereafter. The question which comes to my mind in such a situation is: Why would the employer simply not give the employee working notice?

Zelinski, J. of the Ontario Superior Court in May of 1997 in Bowen v Ritchie came to the same conclusion. These precise words were not well received by the Court of Appeal, but nonetheless, they convey the inherent distaste for the concept:

In  my  view, fair-minded persons  might conclude   that  almost  any   situation where,   by   objective  standards,   an employer  makes a fundamental change  of an  employees’ employment, or changes  a  significant  term  of  that   employment thereby  meeting the standards necessary to  establish constructive dismissal, is such  as to reasonably create an  attack  upon  the  dignity and  stature  of  the employee and cause the employee to leave rather  than  accept the indignity  that  would  be  such in the future  relations between the employee and the supervisor,  and    having   the   situation   become intolerable.

Stacey Ball in his text on Canadian Employment Law in 2001 noted an identical view, also referenced in Turner:

Once an employee has left the employer it becomes even more difficult to envision situations where the employee must return to the employer, upon the employer’s request, in order to mitigate his or her damages.

David Harris’ textbook “Wrongful Dismissal” as referenced in the dissenting opinion in the Supreme Court of Canada decision in Evans, referenced subsequently, came to the same conclusion:

Surely the employee should not be kept on the employer’s strings, having to respond at the slightest whim of the same company that deliberately rejected him by the act of dismissal. [p. 4-292.2]

These are not voices in the wilderness. The Alberta Court of Appeal in its 1993 decision in Christianson v North Hill News stated that is no requirement for the plaintiff to return to the same employer in the case of a “significant demotion” or to go back to the employer who fired him, as “all that is trite law”:

Bearing in mind the fact that wrongful dismissal suits are suits for breach of contract, assessing their damages follows familiar principles. One of the most familiar is the defence that the plaintiff failed to mitigate his or her damages, and that was pleaded and argued here. The most important and undoubted qualification on that defence is this. The efforts of the plaintiff will not be nicely weighed, particularly with hindsight. All that the plaintiff need do is to make what at the time is an objectively reasonable decision; he or she need not make the best possible decision. In particular, the courts will not usually expect one faced with a breach of contract to take steps which are risky or unsavory. The onus of proof is on the defendant (says Michaels v. Red Deer College 1975 CanLII 15 (SCC), [1976] 2 S.C.R. 324) and so any gap in the evidence accrues to the plaintiff's benefit. In wrongful dismissal cases, the courts have extended that qualification a little further: the plaintiff need not mitigate damages by taking a significant demotion, or by going back to the employer who fired him or her. All that is trite law.

Justice Cullen of the British Columbia Supreme Court in Lewington v Pemberton, as late in the day as October of 2001, noted that the apparent incongruity in being required to accept a used car, when a new one had been ordered:

[55]   Although the concept of an employee remaining with an employer after having accepted an anticipatory repudiation of his contract, in order to mitigate his or her loss, seems incongruous with general contractual principles, it has found acceptance in Farquar v. Butler Brothers Supplies Limited supra, Lesuik v. British Columbia Forrest Products Ltd., Mifsud v. MacMillan Bathurst Inc.and Michaud v. RBC Dominion Securities Inc. 2001   In those cases, the common question is whether the environment of the workplace would accommodate the employee's "mitigation" in an atmosphere of "mutual understanding and respect" which will "roughly correspond with those cases where it is reasonable to expect the employment relationship to continue through a period of notice rather than to end with pay in lieu of notice." ⁴

Following Mifsud, the obligation to mitigate in a constructive dismissal has been declined in circumstances where there has been serious animosity, highhanded conduct resulting in a loss of confidence, a change in position which has caused humiliation, loss of prestige, or hostility and embarrassment, a frayed relationship, or a circumstance where one party may place the other’s interest in jeopardy. This sentence is to be read disjunctively.

The defence has failed where the plaintiff had tried and failed at the same job previously, the job was given as a “take it or you will be deemed to have resigned” proposition, just cause had been alleged by the employer to the effect that the plaintiff could not be trusted, new shift work interfered with child care requirements, there was litigation between the parties or the employee would be required to work side by side with his former subordinates in the demoted position. The exceptions have exceeded the applications by leaps and bounds; indeed, it is the exception which has become the rule.

The Ontario Court of Appeal, itself, distinguished Mifsud where the plaintiff had been hired under the terms of a written agreement and had been induced to move from the United States, and secondly where the employee asserted a new on-call requirement for every sixth weekend interfered with his child care requirements, the latter being as close on its facts to Mifsud as is imaginable.

One Ontario case chose to distinguish Mifsud as it was more like a “lateral transfer”. This was wrong, but one might only wish the case had been decided on that basis.

Mifsud has been applied where there has been mutual understanding and respect. Its application has been infrequent, and in fact the likelihood of its being demanded has been seen as “extremely rare”.

The decided cases have indeed illustrated a reluctance to apply the concept. Mifsud seemed to be limping on its last legs until its revival in the Evans decision, an equally controversial decision. The Mifsud principles apply equally now to a direct or constructive dismissal, with the same exceptions, still in play.

Evans was decided in the Supreme Court in 2008. As will be noted, it was an exceptional fact situation. Evans himself, shortly after his dismissal, had offered to return to his employment, an office in which the sole employees had been himself and his spouse, for a period of 12 months. The trial judge found that the likelihood of a comparable job in Whitehorse for Evans was zero and Evans had done nothing to convince the court otherwise, as he had conducted no search for alternate employment.

Like Mifsud, many courts have declined to apply the Evans concept, which is, one which is, it is submitted, founded on a principle which is equally counter-intuitive, namely, to expect a dismissed employee to return to the company’s employment.

It is, however, potentially a full defence and caution must be taken. As is discussed below, even a successful defence should not defeat the statutory payments, which particularly, in Ontario, may be significant. Equally, the failure to pay the statutory sum may be debated as a sign of bad faith, potentially impacting the harmony of a renewed relationship.

The following analysis attempts to review the case law in detail to provide an understanding of the issues confronting both parties in this unusual circumstance.

Mifsud is reviewed in greater detail here. Evans is similarly discussed in more detail here.