Southey, J. of the Ontario Supreme Court allowed as a damage claim the sum of $320 which were the expenses incurred by the plaintiff in setting up his own consulting firm after dismissal. The court stated as follows: 1. This was referenced with approval in Leduc v Canadian Erectors:
In my judgment the plaintiff was under an obligation to take steps to mitigate his damages, and if those steps, even though reasonable, resulted in further loss to him, he is entitled to recovery: see McGregor on Damages, 13th ed. (1972), p. 273. ….
….As a result of the steps taken by the plaintiff, all of which seemed to me to be reasonable, to mitigate his loss upon the termination of his employment, the plaintiff sustained a loss in the operation of his newly-formed consultancy firm of $320.00. This loss includes nothing for remuneration to the plaintiff during the period, but rather was a loss in expenses incurred by him in setting up the company and promoting it. In my judgment the plaintiff was under an obligation to take steps to mitigate his damages, and if those steps, even though reasonable, resulted in further loss to him, he is entitled to recovery.
This issue was also reviewed with approval in the Ontario Court of Appeal decision in Gryba v Moneta Porcupine Mines by Finlayson JA, in dissent, although not on this issue:
It is now well established that an individual can properly start his or her own business in order to mitigate damages when dismissed from employment. Indeed, at least one court has held that an employer is liable for any loss incurred by a new business that is pursued in mitigation: McKee v. NCR Canada Ltd. reflex, (1986), 10 C.C.E.L. 128 (Ont. H.C.). In that case, Reid. J. held at p. 135 that it was reasonable for the plaintiff to have attempted to establish a business on his own and the defendant employer was held liable for the losses of the new business which fell within the notice period. Similarly, in Shiels v. Saskatchewan Government Insurance reflex, (1988), 20 C.C.E.L. 55 at 67 (Sask. Q.B.), Maclean J. held that the defendant corporation was liable for the start-up costs of the plaintiff’s business as the business was a proper form of mitigation.
In a 1986 Ontario High Court decision, Reid, J. held that it was reasonable for the plaintiff to have established his own business and further that the defendant was responsible for the losses it incurred in the notice period. 2
This principle was adopted by the Manitoba court in a 1994 decision in which the plaintiff was awarded a net business loss of $3,844 for 1992 and the sum of $6,205.69 for 1993. 3