Competing Interests

A cornerstone issue centres on the question of what is often the contrary interests of the two parties. Where the principled issues between the two differ, to whom is the fundamental duty owed?

This issue was considered in the British Columbia Court of Appeal decision in Forshaw v Aluminex Extrusions, a decision rendered in August of 1989. The plaintiff, at trial, was awarded damages based on a 14 month notice period, based on his annual salary of $68,000.

One month after his dismissal he was offered and declined a new position from a principal of a proposed company intent on competing with his past employer at a salary of $40,000 plus an undefined commission. The plaintiff testified that he did so, without entering into any discussion as to what commission he was to receive. The plaintiff thought the new business unlikely to succeed. As the business was a start-up, there was expected to be a period before any sales were made.

A month later, the plaintiff commenced his own business. The trial judge found no requirement to accept the offer of new employment, a decision from which the appeal was brought.

The court upheld the trial judge and in so doing, described the duty to mitigate as one which is to consider the plaintiff’s own ambitions and interests and not those of the defaulting party:

That "duty"—to take reasonable steps to obtain equivalent employment elsewhere and to accept such employment if available—is not an obligation owed by the dismissed employee to the former employer to act in the employer's interests. It would indeed be strange that such a duty would arise where an employer has breached his contractual obligation to his employee, having in mind that no duty to seek other employment lies on an employee who receives proper notice.

The duty to "act reasonably", in seeking and accepting alternate employment, cannot be a duty to take such steps as will reduce the claim against the defaulting former employer, but must be a duty to take such steps as a reasonable person in the dismissed employee's position would take in his own interests—to maintain his income and his position in his industry, trade or profession. The question whether or not the employee has acted reasonably must be judged in relation to his own position, and not in relation to that of the employer who has wrongfully dismissed him. The former employer cannot have any right to expect that the former employee will accept lower-paying alternate employment with doubtful prospects, and then sue for the difference between what he makes in that work and what he would have made had he received the notice to which he was entitled.

This is an important concept and one which has often been forgotten.

This view was repeated, without reference to the above decision, in Peet v Babcock & Wilson, an Ontario Court of Appeal released in April of 2001.

On termination, the plaintiff elected to commence his own business as a consultant. The court concluded that “the fact that the early years of the respondent’s self-employment did not live up to his expectations does not mean that this was an unreasonable attempt at mitigation”.

More importantly, the appellate court decision, written by Finlayson. J.A., stated that the employee has a right to focus on his long term career aspirations and need not focus simply on the immediate short term results to pacify the plea of the employer on the need to show immediately mitigated results.

  The respondent’s establishment of a new consulting business was clearly a means of mitigation.  The fact that the early years of the respondent’s self-employment did not live up to his monetary expectations does not mean that this was an unreasonable attempt at mitigation.  An employee who has been terminated is entitled to consider his or her own long-term interests when seeking another way of earning a living. The respondent’s efforts at mitigation cannot be classified as unreasonable simply because his actions did not neglect all other interests while focussing exclusively on his short-term obligation to mitigate damages for the sake of his former employer.

This case is discussed subsequently on the subject of self-employment.

This issue was considered again by the Ontario Court of Appeal in 2017. This Court repeated the same theme:

A terminated employee does not fail to mitigate merely because he chooses to take some career risks that might not minimize the compensation that his former employer will owe to him: Peet, at para. 8;

These cases should be considered landmark statements of law.

Big Picture Review

The Ontario Court of Appeal in 2015 ¹ noted that the analysis should be one to consider the entirety of the job search, not simply an arithmetical count of the number of job applications. The employer's onus is one to show that the plaintiff failed to take reasonable steps to find a comparable position reasonably adapted to his abilities"

Twofold Onus

The Supreme Court of Canada confirmed that the onus is a double one in May of 2008 in Evans v Teamsters. In this decision the Court again made it clear that the employer’s obligation is not only to prove a failure to mitigate, but also to show that had reasonable steps been taken, the plaintiff likely would have obtained alternate income.

The dissent also restated this principle.

This principle is well known and was also recited by the trial judge, Gower, J. in Evans, a point which was not questioned on appeal:

But the onus here is on the Defendant to prove not only the failure in fact, but that had the Plaintiff taken reasonable steps to mitigate, he would have been likely to obtain comparable alternative employment: see Munana v. MacMillan Bloedel Ltd. (1977) 2 A.C.W.S. 364.  I do not think the Defendant satisfied the burden on the latter point…..

“The onus to prove failure to mitigate rests with the defendant.  To succeed, it must prove both that the plaintiff failed to make reasonable efforts to find work, and that, had he done so, he likely would have found replacement work: England, Christie, and Christie.

The Second Test Tested

The onus is indeed twofold. The issue may then become what evidence is required by the defence to establish success on the second prong of the onus. Must it show a specific opportunity or would it suffice to show a general propensity of available positions?

This issue was addressed by the B.C. Supreme Court in its 1997 decision. ² In this instance, the defence provided no evidence of specific job openings. This was not fatal to the employer’s plea on this issue:

I do not conclude that the mitigation defense must necessarily fail in its entirety. It is still open to the employer to lead evidence in support of its defense that had the plaintiff taken reasonable steps to mitigate he would have been likely to obtain comparable alternative employment. In such a case the task of the court will be to assess the steps taken by the plaintiff to mitigate and to weigh the likelihood that such steps would have led to comparable alternative employment. In my view the result should then be considered as one of the factors in determining an appropriate notice period.

This question was again reviewed by the B.C. Court of Appeal in 2016. ³ The statement which follows is obiter as the Court did not apply this test, but it is nonetheless instructive:

I agree with Sierra that it will not always be necessary for an employer to prove that other work was available to an employee in order to prove a failure to mitigate. An employee’s failure to search for work can provide some evidence of a failure to mitigate (Parks v. Vancouver International Airport Authority, 2005 BCSC 1883; Borsato v. Atwater Insurance Agency Ltd., 2008 BCSC 724). However, this is not such a case.

This was also the conclusion of the B.C. Supreme Court in a 2012 decision: ⁴

The employer can meet the onus by providing evidence of the availability of actual alternative employment or evidence that, had the employee taken reasonable steps to mitigate, he would have been likely to obtain comparable alternative employment: Carlysle-Smith v. Dennison Dodge Chrysler Ltd. (1997), 1997 CanLII 972 (BC SC), 33 C.C.E.L. (2d) 280 (B.C.S.C.) at paras. 37-38. However, the employer is not required to show that a “specific” job was available, in the sense that a specific company had offered the employee employment: Stuart v. Navigata Communications Ltd., 2007 BCSC 463 at para. 50.

The Ontario Court of Appeal considered this issue in a case in which it set aside the decision of the trial judge who had found a failure to mitigate on a summary judgment motion. ⁵ This court concluded that this second test must show evidence that had reasonable steps been taken, it would have been likely a comparable position would have followed.

The court did accept the employer's submission that an employer may meet this test by means of a reasonable inference on the evidence, that is, it is not necessary to show a specific offer from a defined employer would have been made.

Comparable Employment

The plaintiff’s obligation is one to search for comparable employment. Notably, the Ontario Court of Appeal set aside the trial judge’s decision that the plaintiff was required to consider other less remunerative work following a period of unsuccessful job search. ⁶

Affirmative Evidence

Accordingly, the failure to lead evidence to pass the second branch of the test will be fatal to the employer’s plea, as was confirmed by Justice Lafreniere in Brien v Niagara Motors, a decision of the Ontario Superior Court in August of 2008, a decision which provides an excellent review of the authorities on this subject. ⁷

Standard Not Perfection

As was noted in the above decision, the standard of mitigation is reasonableness and not perfection. The plaintiff must make objectively reasonable decisions, not the best possible decision.

The Ontario Divisional Court in Wood v Canadian Marconi (1995) O.J. 624, 9 CCEL (2d) 174, stated that the reasonableness of the plaintiff’s decision should not be judged too harshly, as it is the defendant who is in breach:

In determining whether a plaintiff has mitigated his or her damages, the reasonableness of the plaintiff's decision is not to be judged too rigorously for it is the defendant's breach that gives rise to the plaintiff's duty to mitigate, and it lies ill in the mouth of the contract-breaker to criticize the making of a difficult decision necessitated by his own breach. Kamlee Construction Ltd. v. Oakville (Town) (1960), 26 D.L.R. (2d) 166 (S.C.C.).

The same view is expressed by the Ontario Superior Court in Leduc v Canadian Erectors, a 1996 decision:

(59) In an era when the competition for jobs, in almost all segments of the economy, is ferocious, I would not be inclined to fault the plaintiff for doing anything that might reasonably be viewed as an attempt to improve his competitive position in the marketplace. I agree with the decision of the Alberta Court of Appeal in Christianson v. North Hill News Inc., 1993 ABCA 232 (CanLII), (1993), 106 D.L.R. (4th) 747, at p. 750, where the court stated:

The efforts of the plaintiff [to mitigate] 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. The onus of proof [as to whether the efforts to mitigate were reasonable] is on the defendant.

Reference Letter

Justice Lafrieniere in Brien v Niagara, supra, noted that the failure of the employer to provide a reference letter would also be a factor to be considered where the defendant makes this assertion.

The same issue was also considered in the October 2011 decision of the BC Superior Court in Szczypiorowksi v Coast Capital Savings Credit Union in which the trial judge noted that the employer’s plea of a defence of mitigation was found unacceptable given its decision not to provide a reference letter.  This was the same conclusion reached by the same court in Liboiron v IBM in 2015.

Time to Adjust

The decision in Brien v Niagara, supra, also noted that courts have implicitly and directly acknowledged that most employees need a certain time period after termination to adjust to the new facts of life before a job search may commence in earnest.

The British Columbia Supreme Court in February of 2008 came to the same conclusion in Hart v EM Plastic & Electric Products, stating that it is fair to expect that a dismissed employee may need an immediate time period to adjust to his new circumstance and adapt before it may be expected that he should commence a job search. This could be “some weeks or even months”.

The same view was taken by the BC Supreme Court in Smith v Aker, a January 2005 decision in which the trial judge stated:

[34]   The Defendants submit that Mr. Smith should not have taken his summer vacation as well as an additional 4 or 5 weeks before starting to look for new employment and that, as a result, the notice period available to the Plaintiff should be reduced by two months.

[35]   I reject that submission. First, there is no evidence the Plaintiff missed any employment opportunities as a result of this extended holiday.  Second, I am satisfied that it is not necessarily a failure to mitigate where a finding could be made that a plaintiff has not immediately commenced a job search.  I am satisfied that any employee should be given a reasonable period of time to get over the shock of having their employment terminated, to organize their thoughts as to how best to go about obtaining new employment, and to undertake the necessary research and preparation of résumés so that they are in a position to compete for available positions.

This sentiment was also expressed by the Alberta Queen’s Bench in its July 2008 decision in Robinson v Team Cooperheat-MQS Canada:

[118]         Any employee should be given a reasonable period of time to get over the shock of having their employment terminated, to organize their thoughts as to how best to go about obtaining new employment, and to undertake the necessary research and preparation of resumes so that they are in a position to compete for available positions.

[119]         It is reasonable to assume that the day after an employee has gone through the trauma of being fired that he or she must immediately seek alternate employment to avoid the criticism that they are not mitigating their damages. It is appropriate for a reasonable period of adjustment and recovery to be available to an employee whose employment has been terminated: Ata v. Carter Pontiac Buick Ltd., supra at para. 46.

[120]         A terminated employee has the right to some “recovery time” due to the emotional impact of losing one’s job. [The Plaintiff] should not be expected to immediately begin a search for a new job. The case law generally allows a two to three month period before a job search has to begin in earnest, depending of course, upon what the evidence is as to emotional impact the loss of the job had on the particular employee: Chand v. Craftsman Collision Ltd., [2007] B.C.J. No. 115 (Prov. Ct.) at para. 4.

This concept has been well established. The same conclusion was reached in 2009 by the Alberta Queen’s Bench in Johnson v Top-Co in which a four month period of inactivity was seen as reasonable due to physical and emotional issues suffering following termination. To the same end, see the 2015 decision of Liboiron v IBM.

Contextual

The court will consider each fact situation to assess the standard of reasonableness. Family considerations and similar factors will be weighed.

The plaintiff ⁸ limited his job search to the Castlegar area, a small town in British Columbia. He did so as his wife was employed in the same town, she was about to go on maternity leave with their first child and was required to remain locally to exercise her maternity leave benefits. No failure to mitigate was found.

In a 2015 decision in Alberta, the plaintiff was offered and refused a position from a home builder in Calgary, in the same industry as his prior employer. He did so as he believed that the new company was in financial difficulties. The trial judge did not penalize him for this. He viewed the plaintiff’s life situation, as a person over 50 years of age with family considerations: ⁹

At that station in life, a careful evaluation of employment opportunities is justifiable when making decisions as to which type of employment a person should accept or decline: see, Stanley v Advertising Directory Solutions Inc, 2014 BCSC 376 at para 64; and Lyle v Aluminex Extrusions Ltd, 1996 CarswellBC 213 at paras 14-15, 17 CCEL (2d) 320, where courts have recognized the factor and category of “older employee,” particularly those over 50 years of age. As such, in my view, it was not unreasonable for Mr. Cunningham to have refused this Westview job offer: see, Comdisco Canada at paras 5-6.

Employer's Evidence

The late Justice Echlin of the Ontario Superior Court commented on the defence of failure to mitigate as, in effect, a lost cause, barring solid evidence to the contrary, and certainly so, where the employer has failed to show positive assistance to the plaintiff in his job search. The court stated as follows in Tong v Home Depot, decided in April of 2004:

[22]           It is generally unwise for employers to persist in challenging a plaintiff's job search efforts where no concrete evidence exists to show the inadequacy of same.  This is particularly the case where serious allegations of wrongdoing are combined with a failure by the employer to provide job search assistance, relocation counselling, or any other support towards the securing of alternate employment.

 Educational or Vocational Programs

The cases allowing a plaintiff the right to retrain or upgrade their qualifications have, by and large, been accepted where it has been demonstrated that such is a reasonable course of conduct. The analysis, as is the case for many issues on this subject, contextual.

In one 1994 B.C. case the plaintiff, dismissed after seven years of employment, chose to enroll in a 6 month real estate course during a period of a difficult economy. This was found to have been acceptable. ¹⁰

To the same end was a 1997 B.C. decision which did not fault the plaintiff for choosing to enroll in a four month course provided by the Canada Employment Centre to improve upon her job prospects. ¹¹

The same conclusion was reached in a 2003 B.C. case in which the plaintiff did not actively seek a comparable position immediately following termination, but rather chose to enroll in a program provided by W.C.B. that was oriented to training. ¹². The court stated that such efforts were “in the nature of longer term efforts toward mitigation” and that there would be no offset.

A contrary view was taken by the same court in a 2006 decision in which the plaintiff entered a 48 week course to help her establish her own daycare business. The court found this to be a failure to mitigate, given that she had not taken any preliminary steps to find new employment. ¹³

The Manitoba Q.B. found that the plaintiff failed to mitigate when she enrolled in a university program. The plaintiff had prior to termination taken similar courses, none of which resulted in her graduation. She offered no evidence as to how this step may have enhanced her employment possibilities. She also did not complete this program. ¹⁴

The B.C. Supreme Court in its 2013 decision did not fault the plaintiff for commencing a course to reinstate her nursing licence, intended to buttress her intent to open her own business. She had done so in month 12 of the 16 month notice period. ¹⁵. The court noted that there was no evidence as to the availability of other employment opportunities, had she not chosen this path. The plaintiff testified that she remained looking for alternative employment while enrolled in this course. The court stated:

Viewed through the lens of the principles articulated by the Court of Appeal in Forshaw, it is my view that Ms. Haff has not failed to act reasonably in relation to her own position. As I noted earlier, no evidence was led about alternative positions that would have been available to Ms. Haff. On this point, I note the decision of Madam Justice Martinson in Stuart  where she found that while a former employer need not prove that a specific job was available to the plaintiff in the form of an actual job offer, it is required to show that specific opportunities were available such that, had the plaintiff attempted to mitigate, she would likely have found alternative employment. Valeant has failed to satisfy that burden.

A more dramatic fact situation was before the B.C. Supreme Court in 2016. ¹⁶ Within the notice period, the plaintiff obtained an offer new employment with Douglas College which she declined. Instead she chose to work part-time and complete her doctoral program. Prior to her termination, she had been provided with a leave period to study for the same program. The court found that while the plaintiff may certainly consider her long term interests, this was simply a march too far.