Mitigation: Constructive Dismissal: Mifsud: Anecdotal Review

The cases distinguishing and applying Mifsud are fact driven. For this reason, they are set out in some detail below. These cases are offered by way of example and not necessarily of precedential value.

Stewart v MacBloedel

Soon after Mifsud was decided in November of 1989, British Columbia Supreme Court trial decision of Mr. Justice Harvey in Stewart v MacMillan Bloedel in June of 1991 followed. The plaintiff, employed in the position of Electrical Supervisor – Wood Mill was reassigned to the position of Electrical Project/Relief Supervisor, a position which he declined. The court does refer to Mifsud but not in the context of the mitigation obligation. It ignores it completely and refers only to the British Columbia Court of Appeal decision of Farquhar v Butler Brothers on the mitigation issue. The Court of Appeal agreed and did not revise the trial decision in any aspect. The plaintiff’s claim was successful.

Davidson v Allelix

In 1991, the Ontario Court of Appeal considered the case of Davidson v Allelix (1991) 7 OR (3d) 581, 39 CCEL 184. Dr. Davidson was employed specifically for the purposes of creating a manufacturing plant in Ontario. He was induced to resign from secure employment in the United States and move to Ontario. The alternative position offered to him was to be “relegated to a member of the research team”. The change was considered to be a fundamental breach of the employment contract. No mitigation obligation was imposed. The Court distinguished the application of Mifsud due to the contract and the fact that he had relocated at the instance of the employer to Ontario.

Why such facts would lead to such a distinction are not apparent.

Wilkinson v T. Eaton Company

This is a decision of the Alberta Queen’s Bench of Justice Dea in April of 1992. The plaintiff was employed for 43 years as a clerk typist. She was offered an alternate position as a sales clerk. She had occasionally helped out on the sales floor, but this was a function which she did not like and when asked to do so, usually helped in wrapping as opposed to direct sales. She was shy and did have good sales abilities.

In March of 1990, she was asked to do sales work during lunch periods, which she did try and reported to her manager the difficulties she had. Her manager was able to accommodate her but ultimately the dictate from senior management was that all clerks were to work only 18 hours a week in the office and the rest on the sales floor. She offered to work part time as 18 hours a week as a clerk which her immediate manager approved. After a short holiday she was instructed by a new manager who instructed her that she must work full time on the sales floor, apart from 3 days a month as a clerk typist.

As difficult as it may be to imagine litigating this case, Eaton’s indeed did do so. The plaintiff was 67 years of age and had worked for 43 years. The trial judge found a constructive dismissal, to which Eaton’s pleaded back a mitigation obligation. It would take a vivid imagination to contemplate more sympathetic facts.

This was the first occasion on which an Alberta court looked to the Mifsud mitigation issue. The court noted that the plaintiff had tried the job and felt unable to perform the necessary functions, and “to suggest that she mitigate her damages by undertaking to do what she has tried to do unsuccessfully to do is asking more than the law requires”.

 Zalusky v Nestle Canada

This Supreme Court of BC decision of December 1992 determined that there was no constructive dismissal on the facts and also stated, obiter, that had the court found otherwise, there would have been a mitigation obligation.

Interestingly, the court went on to say that “if it was clear no suitable employment existed and if the only way that an employee would be able to obtain an equivalent occupation would be to start his or her own company, I do not think that the employee should be forced to mitigate his or her damages by continuing with the employer. If there is no prospect that the employee will be able to find alternate employment, there is no point in delaying the employee in establishing his or her new business which will take some time to grow before it will represent an equivalent occupation”.

Cayen v Woodwards

This is a decision of the BC Court of Appeal in January of 1993, the reasons for which were written by Chief Justice Mceachern. This was an appeal from the trial decision of Mr. Justice J. J. Anderson who had found in favour of the plaintiff’s constructive dismissal claim in January of 1991.

Jacqueline Cayen was employed by the defendant from 1962 to 1971 when she resigned due to her husband’s move to eastern Canada. She was rehired in 1976. The company was divided into two main divisions, corporate which provided centralized services including buying, and operations which included retail sales.

Prior to her move to the east, the plaintiff was employed in operations and returned to operations when she came back to British Columbia. Her last position in operations was Sales Manager at the Kamloops store. In 1983 she was transferred and promoted to corporate as a buyer.

Issues arose with respect to her abilities as a buyer resulting in a formal performance improvement plan notice in August of 1987. The plaintiff disputed the merits of the decision to do so.

A new position was offered to Ms. Cayen in operations as a Zone Manager, which included responsibilities for ladies fashion, this being of note, as it had been an area in which she had been working as a buyer and had enjoyed. It was described as a lateral transfer without change in compensation. Zone Managers were at the second level of store management. At the relevant store, there were four to five of this genre, each with responsibility for several departments.

The court determined that the job functions of Zone Manager and senior buyer “are reasonably close” and “both are near the top of their respective divisions, each report to a senior officer who in turn reports to a different Vice President, and while the salary range for a buyer is higher, Ms. Cayen’s salary was unaffected by the transfer”.

Ms. Cayen refused the position, and as noted in the Court of Appeal decision, “she also declined the opportunity to take some time to reconsider her decision”.

The Court of Appeal reversed the trial finding of a constructive dismissal. The mitigation finding, clearly obiter, saw an obligation to accept the offer of the alternative position. It is not surprising to see such comments in obiter when no constructive dismissal has been found. This is a good example of why obiter dicta is just that.

Ashton v Perle

Mifsud was again considered by the Ontario Superior Court and distinguished in the March 1994 decision in Ashton v Perle Systems, authoured by Sheppard, J.

The court found that the case at bar was distinctive from Mifsud as the plaintiff had a written employment contract, Mifsud was not expressly dismissed, whereas the plaintiff was “or at least, thought he was”. Mifsud was offered alternate employment at a job he had done before. Like Davidson, Ashton was hired under the terms of a memorandum of agreement, which was the reason he came to Canada in the first place. The trial judge found this case closer to Davidson than Mifsud. The court in Ashton also stated as a factor that the defendant was not a large employer and concluded on the subject of the working relationship:

 “ I was left with the impression, as I have said, that Feeney would not have been at all unhappy to see Ashton out of Perle. In my view, on the facts in this case, it would have been patently unreasonable to have expected Ashton to accept TEST in mitigation of his damages. And as to Ashton’s obligation to mitigate by returning to work at Perle (U.K.), Ashton would have been happy to return to Perle (U.K.) but Feeney made it clear that there was nothing at Perle (U.K.) either and, as I have said, if Perle (Can.) wanted to maintain that position, management had an obligation to make that point clear to Ashton and pay for his return to England, which they did not do.”

The evidence of the working relationship was reflected in this passage:

…after Feeney asked him for his key and informed Ashton that he had called a mover to get a cost for moving Ashton back to England and had also called his landlord to see if Ashton’s lease could be terminated upon payment of three months’ rent. Might Ashton reasonably have assumed that he could have shown up for work after that interview? I think not. After Feeney’s interview with Ashton on October 17, 1991, even though Feeney never said that Ashton was dismissed, any reasonable person would have to conclude that he had been dismissed. No other reasonable inference could be drawn.

No mitigation obligation was found.

Wilding v Qwest

The BC Court of Appeal in May 1994 in Wilding v Qwest upheld the trial judge’s decision which had considered and distinguished Mifsud. Wilding had begun employment in January 1971 as a salesman for specialty food products to bars and cocktail lounges in BC and Alberta. In 1981 he became Sales Manager for BC and was later given the title of General Sales Manager. A great deal of his time was spent on the road. Management had expected Wilding would retire at age 65 come November of 1990, a view not shared by Wilding. He was then presented with a proposal for a position as a sales representative.

The letter given to Wilding gave 13 months working notice. It also alleged that his responsibilities were to remain unchanged. It also stated that Wilding had some 2 months prior said that he had intended to retire in November. The trial judge found that these two statements in the letter were not true. Wilding had in fact worked in Calgary three weeks a month as a temporary stop gap until a new salesman was hired. The letter had proposed he continue working three weeks a month in Calgary for the next 13 months and that he was not to resume his duties as General Sales Manager.

At trial, it was concluded that the loss of prestige and authority meant that there was no mitigation obligation. It also concluded that the basic relationship of trust, good faith and sincerity were gone. In addition, the proposal also meant a permanent change in Wilding’s home base. The Court of Appeal agreed.

Elderfield v Aetna

The BC Supreme Court considered this issue in its decision released in May of 1995 in Elderfield v Aetna. The plaintiff had been employed with the company in excess of 16 years. Shortly prior to her maternity leave period, she was told that her employment was to cease upon the completion of her leave due to the elimination of the three positions of Group Representative. She was then offered a severance payment of 20 weeks. Positions were exchanged between respective counsel.

One month prior to the end of the maternity leave period, the company withdrew its prior offers of settlement and offered alternate employment for a six month period in the position of Market Segmentation Analyst.

The defence was based on the offer of a short term alternate position, asserted to be a lateral position. The court found no obligation to accept this position, given that it was not put to her as a mitigation offer but rather she was instructed that should she fail to accept this position, the employer would deem her to have resigned. Also the fact that the company negotiated severance for seven months and made this position shortly prior to the end of the maternity leave was to end was seen as influential as to its lack of good faith.

The BC Court of Appeal agreed.

Greaves v Omers

Cumming, J. of the Ontario Supreme Court considered and applied the Mifsud reasoning in Greaves v Omers, a decision released in October of 1995 and hence denied the claim.  Greaves had been employed initially as a money manager in 1981. In April of 1992 he became  Vice-president, Equities and Investment Strategy.

He was then responsible for the hands-on management of internal equity funds, and supervised external equity funds or managed equity funds which was contracted out. Greaves had under his management or supervision about 50 per cent of OMERS’s total assets. He also had many other responsibilities, including assisting the senior vice-president, Investment Division, R.L. Sillcox, in setting investment strategy; deputizing for Mr. Sillcox in his absence and on request at meetings; ensuring that conflict of interest strategies were appropriate; developing and implementing corporate governance policies and playing a major role in the development underway by the Human Resources department in respect of a new incentive or bonus plan for key personnel in the Investment Division.

Greaves was well regarded by Omers. There were criticisms in terms of his interpersonal relationships as noted in his performance reviews, both by Mr. Sillcox and Mr. Maunder, the supervisor of Mr. Greaves when he was first hired.

Omers went through a major reorganization from May to October 1993. The end result was that Mr. Greaves’ overall responsibilities were reduced in that he was now focusing almost entirely upon the active management of the core Canadian equity fund of OMERS, which accounts for about 25 per cent of OMERS’s total assets. This was a principal task before the reorganization; however, he was doing this successfully before the reorganization and simultaneously performing many other important responsibilities.

The culminating event in the reorganization was the promotion of two previously junior  vice‑presidents to a position in the line relationship of the corporate hierarchy above Mr. Greaves. Prior to October 6, 1993, the five vice-presidents each reported directly to the senior vice-president for the Investment Division, Mr. Sillcox. From October 6, 1993, Mr. Greaves was to report to another vice-president, Mr. Henry Rachfalowski (now promoted to the same grade as Mr. Greaves, and receiving the same salary), rather than to Mr. Sillcox directly. From that time, only two vice-presidents, Mr. Rachfalowski and Mr. Dan Markovich, reported directly to Mr. Sillcox.

There was no loss in financial compensation. The trial judge agreed that he occupied a lesser position in the organization and that he had been constructively dismissed.

Although the trial judge was sympathetic to the humiliation and embarrassment felt by Greaves, he concluded that the company in good faith wanted him to remain and thought well of his fund management skills and hence determined “that there is a certain wear and tear that most people have to bear in employment settings, and the sensitivity on the part of Greaves should have been manageable by him.

Notwithstanding the “substantial demotion and a significant diminution of responsibilities”, the mitigation obligation on these facts ruled the day.

Lerch v Cableshare

Hockin, J. of the Ontario Court (General Division) in December of 1996 decided the matter of Lerch v Cableshare. Lerch was removed from his position of president and chief executive officer and was instead assigned the position of vice-president of finance and administration. The court concluded that “there was little or nothing for him to do”, had he continued. The only work which would have occupied his time was performed by a junior employee after his departure. His salary was not reduced. The court saw this as a significant demotion and he was left without any real managerial responsibility nor signing authority.

As to the mitigation issue and the Mifsud plea, the court found the offer of the alternate position disingenuous and done solely for the purposes of a defence to the litigation. The company had argued just cause for termination by which it asserted it could not trust the plaintiff which cast real doubt on the sincerity of the offer.

Hannigan v Ikon

In June of 1998, the BC Supreme Court in Hannigan v Ikon Office Solutions again considered and distinguished Mifsud.

Gord Hannigan was employed with Xerox as one of its top sales managers when he was offered and declined employment with Bendorf-Verster, an office equipment company purchased by Ikon in 1988, as group sales representative in the Vancouver area. Prime Copy, a small sales and service leasing company proposed an ownership/senior executive arrangement which he accepted effective December 1, 1988. He became General Manager of Prime Copy Vice-President of Pemberton Leasing. His income was tied to that of the President, allowing him 80% of the earnings of the President. He was also given escrowed shares.

On September 20, 1996 the plaintiff learned that Stoker, the President, intended to sell the two companies to Ikon. The sale concluded as a result of which Hannigan made over $1 million. He was told his position would remain the same.

On December 11, Hannigan was offered a position with Ikon as a business unit manager, reporting to the director of sales, with 9 to 12 sales representatives reporting to him. The offer was for one year, at a salary of $108,000 with bonus potential to $50,000 based on “quota attainment”. He had been promised and did not receive a job description and organization chart. There was no “manager’s plan” offered which is used to determine bonus quantification.

On December 16, Prime Copy staff received a memo from the President, advising that Hannigan had left Prime Copy to pursue other opportunities. This was written without consulting with Hannigan.

The Ikon President, Rogan, when asked again by Hannigan for the job description and organization chart, told Hannigan that he did not need them, and that he knew that this was a sales manager’s job. Hannigan refused the job.

There was little issue on the finding of constructive dismissal.

As to the mitigation argument, the court concluded that Hannigan was treated very poorly by Rogan and Stoker and it was evident that the relationship was frayed. It would have been humiliating for the plaintiff to consider a position which was similar to the one he was offered and refused in 1988.

Grace v Readers Digest

Grace v Reader’s Digest, was a June 1995 decision of Sharpe, J. of the Ontario Superior Court. Grace held the position of Western Sales Manager. He provided management functions for 50% of his time and also carried certain domestic accounts as a regular sales agent, yet he was also part of the management team in Toronto.

A new position was offered to him as business development manager. The decision had been made to remove his management responsibilities, but this was not communicated to the plaintiff. Grace accepted the position based on the premise that he was retaining his role on the management team and that his commissions were not adversely effected.

The trial judge found that the conduct of the company, in not advising Grace of its intent to remove him from management “bordered on deception”.

The court found a constructive dismissal. On the Mifsud submissions, the court concluded that Mifsud was not applicable as in this case, there was a clear demotion and in Mifsud, “the plaintiff was offered essentially a lateral transfer”, a conclusion which is not accurate, but makes the point nonetheless.

On these facts, there was a threat to the plaintiff’s compensation, in that there was an issue with his commission entitlements.

In addition, here there was the “humiliation of a demotion and the deterioration of relations with his co-workers”.

The court found in this case that the plaintiff acted reasonably by trying the position. He left only when it became clear that the position had changed in a fundamental way.

Also the fact that the company was not straightforward with the plaintiff affected his morale and hence Grace felt isolated and alienated.

Anderson v Tecsult

Anderson v Tecsult Eduplus, a September 1999 decision of the Nova Scotia Supreme Court confirmed that where the salary has been substantially downgraded, no mitigation will be required:

I think that is consistent with the remarks of Chief Justice Cowan  at p.335 of Gould v. Hermes Electronics Ltd. and with the cases reviewed by Cumming, J. starting at p.111 of Greaves v. Ontario Municipal Employees Retirement Board. 

In my opinion, a dismissed employee is not bound to mitigate her or his losses by accepting a new position with the same employer at a reduced salary, and, even if the salary were the same, the employee is not required to accept the position where acrimony in relationships with co-workers or superiors would make continuing with the same employer unreasonable.  Mr. Anderson made a very deliberate decision to accept the repudiation of his employment contract and to leave Eduplus.  He did so without haste, and only after requesting reconsideration and taking counsel.  It may be that the personal relationships were too acrimonious for him.  In any case, the new position carried a substantially reduced salary and a demotion from management to front-line worker.  The authorities make it clear that Mr. Anderson was not bound to accept such a position in order to mitigate his losses on being removed from his former position.

Monti v Hamilton-Wentworth

Monti v Hamilton-Wentworth is a May 1999 decision of the Ontario Supreme Court of Reilly, J. The plaintiff was a medical doctor, hired as a part-time psychiatrist at the Child and Adolescent Services Clinic, working 10 to 12 hours a week. Her hours were reduced to 7.5 per week in 1980. She was also encouraged to bill OHIP when possible. In October of 1995, her hours were reduced to 4 per week and also she was terminated as a part-time employee, hence eliminating vacation credits and other benefits, effective March 1996. The plaintiff was requested to discuss an ongoing relationship as an independent contractor on a fee-for-service basis. The Region did offer and did pay the ESA sums of 8 weeks’ notice plus 22 weeks’ severance. Her claim followed.

The court found, in this instance, that the working relationship between the plaintiff and her employer was so frayed that a continuing relationship was not possible. Given the existence of litigation, the court also found that it was difficult to maintain a relationship of “mutual understanding and respect” when one party is suing the other. The court noted specifically that the employer did not allow the plaintiff to continue on a fee-for-service basis without prejudice to her right to sue. The claim succeeded.

Malacek v Service

The Ontario Superior Court reviewed this issue again in October of 1999 in Malacek v Service Maintenance Inc. The plaintiff and the principals of the defendant were well known to one another. All three had worked together at International Tool in Windsor from 1974 until its closing in 1987. The principals of the defendant had started Service Mold in 1987 and again in 1995 started the defendant business.

The plaintiff worked at Service Mold as a toolmaker, overseeing 3 to 4 employees and also began at the defendant in January of 1995 as general manager. He ran the business and also worked as a toolmaker. He was paid an hourly wage of $26 plus a bonus based on a 3% percentage of gross profit up to $500,000 and 5% over this number. He was paid time and half for overtime and double time for statutory holidays. He was given benefits and an RRSP of $50 a month.

In 1995 he earned $104,000, of which $40,000 was overtime and in 1996 $143,000, of which $70,000 – $75,000 was overtime, including overtime and bonus. His bonus in 1995 was $9,926 and in 1996 $22,000.

In early 1997, he was told he was to lose his position as general manager due to interpersonal skills. He was told he would be replaced as general manager. His base rate of pay and benefits were unaltered. He would no longer be entitled to the bonus. He was offered a lump sum payment of $27,000, which was designed to compensate for the lost bonus, if he agreed to the new terms. This sum was $5,000 more than his 2006 bonus. He declined and sued.

He found new employment at Roman Tool where he remained employed for 15 to 18 months. In 1997 he earned $66,479 as new income. He did not work the same number of overtime hours as he had done with the defendant. The parties agreed that a notice period would be set at 16 months.

The trial judge agreed that there had been a constructive dismissal. The court also agreed that there was no need to stay in the demoted position to mitigate. “His position, prestige, responsibilities and compensation package were significantly reduced. He was, in effect, emasculated by the significant demotion. His remuneration was reduced by approximately 15%. It would have been difficult, in the small setting where he had been formerly in charge, for him to work for another general manager and continue to work side by side with his former employees. That situation would probably have led to difficulties with the other employees and acrimonious relationships. His working conditions would have been substantially different.” The claim succeeded.

Bowen v Ritchie

The Ontario Court of Appeal again examined Mifsud in a decision released in November of 1999, in Bowen v Ritchie Brothers. The trial decision of Zelinski, J. was made in May of 1997.

George Bowen began employment as a part-time employee in 1989. One year later he was made full-time as yard foreman for the defendant, a heavy equipment auctioneer. He was viewed favourably even being described by his boss an “outstanding employee”. The auction business grew. Bowen’s duties were split into two. Bowen was offered a position at the gatehouse of the company’s property. His salary was the same. He was told he could meet with the supervisor of another division of the company to discuss job possibilities.

Bowen declined the offer and sued. An award of 5 months’ notice was given at trial in the sum of $22,500. The employer appealed.

At trial, Zelinski, J offered these views of the mitigation obligation in the context of a constructive dismissal claim: (The trial decision is not reported. This excerpt is from the OCA decision – ed)

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.

The trial judge had expressed it quite right, but the Court of Appeal could not endorse a virtual blanket reversal of Mifsud. The Court did take issue with this passage, but nonetheless upheld the trial judgment, holding that the onus should not have been on the plaintiff to seek an unidentified new position within the other division of the company.

Lewington v Pemberton

Lewington v Pemberton Insurance, an October 2001 decision of the British Columbia Supreme Court of Cullen, J. concluded mitigation with the same employer would not be appropriate, given that the plaintiff would be dealing with the clients of the defendant while opening seeking employment in the same industry. Further, the course of dealings between the parties had demonstrated an inimical relationship.

Pauloski v Nascor

In February of 2002, the Alberta Queens Bench considered Mifsud in Pauloski v Nascor, a decision of Justice P. M. Clark. The court found that there was not a situation of mutual respect and understanding or a situation nor one where Nascor was unlikely to put the plaintiff’s interests in jeopardy. The plaintiff had lost faith in Nascor and its promises. Also the employer initially denied the plaintiff’s dismissal. The plaintiff’s counsel had sent a letter attaching a draft claim to which the employer replied by offering unspecified work on a date when no such work had been set up. Further the court determined that “Nascor engaged in bad faith conduct in the course of Pauloski’s dismissal, including its denial of its dismissal of him in a calculated effort to limit its liability for his wrongful dismissal”. In addition, the trial judge found that the company had provided specifics of the proposed job offer only after the plaintiff had filed his statement of claim.

Although not specifically noted in the rationale for not applying Mifsud, it is worthy of note that the initial defence asserted just cause for dismissal, a position which remained the plea from August 4, 1998 until December 10, 1999 when it was abandoned.

Hanni v Western Road Rail

Hanni v Western Road Rail System is March 2002 decision of Burnyeat, J. of the British Columbia Supreme Court. Hanni’s duties evolved over time until 1999 or 2000, she became the “Office Manager”.

On October 20, the company offered to Ms. Hanni the sum of $8,000 to leave her employ. She took some time off and returned to work on October 30. Her parking sign had been removed. She was given a performance warning letter, which also outlined new responsibilities. She was given a new starting time of 7:30 am which conflicted with her child care duties, as had been accommodated in the past. On November 1 she advised that she would not return to work. The company counsel encouraged her to return to work and also advised that the Office Manager position had been eliminated.

The court found that there was a constructive dismissal. The court found that there was no breach of the mitigation obligation, given the “atmosphere of hostility, embarrassment or humiliation”, referring to the 1988 British Columbia Court of Appeal decision in Farquhar v Butler Bros. Supplies. The court appeared to be dealing with both the period of October 30 to November 12, and beyond. The period to November 12 was working notice in which the duties were revised immediately, after which was the operative date of the new working hours.

Fraser v Klondike

The Yukon Supreme Court considered Mifsud in the 2002 decision in Fraser v Klondike Broadcasting, a decision of Mr. Justice Veale. Fraser was an on air radio host for the morning show and was offered a new position as host of the mid-day show. The trial judge agreed with the employer that this was not sufficient to create a fundamental breach and dismissed the claim for this reason. In obiter, the court stated that had the position been seen as a termination, there would have been no obligation to accept the new position as Fraser would have been “embarrassed or humiliated”.

Hilton v Norampac

The Ontario Court of Appeal again returned to the scene of the crime in its August 2003 decision of Hilton v Norampac. Michael Hilton had worked for the company for 15 years. He had been successively promoted from a unionized employee to a stock prep foreman and again to a tour foreman. He worked two weekends each month. In May of 2000, the company required persons occupying this position to be on-call every sixth weekend from 5 pm Friday to 6 am Monday. There was no additional remuneration for this additional requirement. The plaintiff declined this amendment, citing child care requirements due to his four young children and also because his wife had just begun a new job requiring her to work weekends. The company gave him a week to reconsider. Hilton wrote to the president advising as to his reasons, also noting that he had declined a promotion previously due to similar issues. He had also proposed being on-call during the week and being demoted to a union position, both of which alternatives were refused by the company.

The company terminated and the plaintiff, needless to say, sued.

Hilton succeeded at trial. The company sought review, one of which arguments was the Mifsud mitigation issue.

Interestingly, the Court of Appeal answered the appeal on the Mifsud issue as follows:

   Hilton did not have a similar obligation to accept the on‑call requirement.  As McKinlay J.A. pointed out at 710: “[T]here are many situations where the facts would substantiate a constructive dismissal but where it would be patently unreasonable to expect an employee to accept continuing employment with the same employer in mitigation of his damages.”  This is one of those situations.  The trial judge implicitly found that it would not have been reasonable to expect Hilton to comply with the on‑call requirement.  I therefore would not give effect to Norampac’s argument on mitigation. 

The facts are arguably close to Mifsud’s change in shifts and fairly modest job revisions. One might speculate the offer of the plaintiff to return to the unionized ranks was reflective of his good faith, but that was not specifically apparent from the reasons. The decision is reflective of the inherent distaste for the concept, this being the writer’s unsubstantiated speculation.

Chambers v Axia Netmedia

In January of 2004, the Nova Scotia Supreme Court released its decision in Chambers v Axia Netmedia. Chambers was employed by the defendant from 1987 to 1999 through a series of corporate revisions. He last held the position of Manager of Customer Service and Project Manager. The company had expressed to him certain performance issues. In June of 1999 he was placed on a probationary notice of 3 months’ duration. He was asked to and did not complete an action plan to establish sales targets.

In February of 2001, he was again threatened with termination or probation. On May 7, 2001 he was instructed that his salary had been eliminated and he was now on 100% commission. He replied to the effect that he did not accept the company’s right to do so, but he was prepared to try out the new compensation plan for a few months, or any other reasonable period. Shortly after this letter, the company rescinded the commission scheme and placed him on a probationary period of 12 months at his prior salary. He was instructed that failure to achieve goals would result in immediate termination and that presuming the successful completion of the probationary period, he would be on 100% commission.

Chambers asserted that the imposition of the probationary term was dismissal and sued successfully. The company relied on Mifsud. The court’s decision determined that the period of notice being set at 11 months, should be reduced by 3 months based on the failure to conduct a general job search properly, unrelated to the argument of this job with the defendant.

Murdock v 497213 Ontario

Justice Stinson of the Ontario Superior Court reviewed the mitigation obligation of a constructively dismissed employee, ironically without reference to Mifsud on this issue, in in Murdock v 497123 Ontario  in March of 2005. The court found that the circumstances under which the employer announced the plaintiff’s demotion from supervisor to teacher, in front of staff and parents was humiliating and embarrassing which affected her self-esteem and willingness to remain employed and hence rejected the mitigation submission.

Malloy v Vipond

This is a case of the New Brunswick Court of Queen’s Bench decided in April of 2005 by Mr. Justice Paul S. Creaghan. The plaintiff was hired by the defendant as licensed sprinkler installer in 1980. In 1986 he moved to the location in Moncton, New Brunswick. In 1998 he became service manager and became part of the management team. He was paid a base salary and bonuses based on profit sharing and was given a company vehicle.

In August of 2003, the position was eliminated. He was offered employment as a journeyman service technician or as a sprinkler installer, both functions which he had done prior to his promotion to service manager in 1988.

The court reviewed Mifsud and Farquhar, noted that here there was no acrimony or hostility and also stated that “the evidence would not show a basis for humiliation should the Plaintiff rejoin the union and work as a technician in the field” and noted that as a manager, the plaintiff did such work from time to time as required. It was expected that he would earn a similar if not greater income.

The trial judge referred to the issue of prejudice to justify the refusal:

[23]                  As Finch, J., as he then was, states in Campbell v. Merrill Lynch Canada Inc., [1992] Carswell BC 895 (B.C.S.C.) at par. 36:

            The question is whether continued employment with the defendant would have placed the plaintiff’s interests in such jeopardy as to justify [his] refusal of continued employment.

The court concluded that “with some hesitation”, there was prejudice and hence there was no mitigation obligation. The decision was motivated by (1) there was a clear shift to unionized work which involved different terms and a union contract, (2) the plaintiff was understandably hurt by the decision which made it difficult for him to continue the relationship in harmony, (3) the opportunities of finding a new employer would be adversely impacted, (4) the new job involved considerable out of town travel which was not conducive to a job search, (5) it would be hard to apply to a competitor while employed with the defendant, (6) there was not a circumstance of mutual understanding. It is to be noted that the plaintiff did find alternate employment three months following termination.

Carscallen v FRI

The late Justice Echlin noted that the application of Mifsud had, in cases since its making in 1989, become “dramatically limited” in the June 2005 decision of Carscallen v FRI.

Notably, in subsequent decisions, the application of the Mifsud rationale has been dramatically limited.  Where, as is the case here, the employee is presented with significantly changed working conditions, she will not be required to accept the altered position.  Similarly, the employee is not forced to work in a humiliating or demeaning atmosphere: see for example: Farquahar v. Butler Brothers Supplied Ltd., 1988 CanLII 185 (BC CA), [1988] 3 W.W.R. 347 (B.C.C.A.) at p. 352 and Armitron v. CFPL Broadcasting Ltd., [1991] O.J. No. 2068 (Q.L.) (Gen. Div.).

The trial decision was confirmed on appeal although it would appear that this specific issue was not the subject of review on appeal.

Wiens v DMVH

The Manitoba Court of Queen’s Bench considered the Mifsud argument in Wiens v DMVH, a decision made in November of 2005. A constructive dismissal was found with no obligation to mitigate in the demoted position in which her duties of supervision and hiring as restaurant supervisor to cashier/hostess had been removed in addition to a reduction of wages by 10%.

  I agree with the plaintiff that she acted reasonably in not accepting the alternate employment.  She was right to regard it as a demotion.  While it is true that many of the duties were the same, nevertheless the very important duties of supervision and hiring and dismissal which are at the core of a managerial position were removed;  as well, it was not simply a reduction of wages or salary, which might have been compensated for by a differential award, but the whole pattern of her employment stood to be changed from a certain and fixed work schedule to an uncertain and varied one.  The plaintiff indicated, and I accept, that she would have felt uncomfortable working with co-employees whom she had previously supervised and that she would not have been particularly happy in being placed in this position and, of course, the new work schedule had the potential to cause uncertainty and some disruption in her personal life.  In these circumstances, her decision to quit altogether was entirely understandable and reasonable;  it would have been equally reasonable for her to have continued in the employment if she had felt able to accept the altered conditions but she was not and she cannot be faulted for that.

Pathak v Jannock Steel

This is a decision of the Alberta Supreme Court decided in July of 1996 by Kenny, J. The case was an unsuccessful constructive dismissal claim. The plaintiff rose through the ranks to become a plant manager of a steel company. He was given a second plant to manage, the Marclin plant, a much more complicated business operation, which was removed 5 months later and then left with the first plant. A negotiated bonus particular to the second plant was also removed. His salary remained the same.

Although the mitigation issue was obiter, the trial judge found that there was no obligation upon the plaintiff to accept the position in mitigation. Although the relationship was not frayed, it “was souring”. After the plaintiff’s counsel had asserted constructive dismissal, employer counsel asserted that the failure of the plaintiff to return to work would expose him to liability. The plaintiff submitted a medical report which attested to the plaintiff’s depressive reaction prevented a return to such employment. In addition, the trial judge concluded that the loss of the bonus also mitigated against his return.

Dorion v Stewart, Weir

In October of 1996, the Alberta Court of Queen’s Bench decided the case of Dorion v Stewart, Weir Land Data, in which the plaintiff, a manual drafts person was requested to work shift work. The facts showed that the plaintiff had years previously asked for a transfer back to manual drafting to avoid the need to work shifts.

The court saw this as a constructive dismissal and also dismissed the employer’s assertion that mitigation was required. The reason given for declining the shift work requirement was child care.

Shymr v Lakeland

This is a decision of the Alberta Queen’s Bench decided in October of 1996. The plaintiff was employed in the position of assistant director of patient services. She was removed from this position and offered the position of nursing supervisor.

The court noted the decision of the Ontario Divisional Court in Wood v Canadian Marconi (1995) O.J. 624, 9 CCEL (2d) 174, which 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 court, nonetheless, found that the plaintiff should have accepted the alternate position given (1) the surplus of nurses, (2) no other alternative employers in Elk Lake, (3) her age, (4) revision of the job description to her satisfaction and (5) that the job was a promotion in terms of prestige and authority.

This decision was much closer to Lesiuk as the economic factors played an important role.

Cox v Robertson

The above is a November 1999 decision of the British Columbia Court of Appeal, reasons for which were delivered by Chief Justice McEachern. The appeal was initiated by the plaintiff from a Rule 18A judgment. The appeal succeeded unanimously.

The plaintiff was a 55 year old three day a week “chair-side” or “head to head” dental assistant for 18 years. She had been fired on months’ notice effective October 15, 1997 due to the stated decision to hire a full-time assistant.

Upon the completion of the month of working notice, on October 15, 1997, the plaintiff requested severance pay of 51 weeks and other minor claims, the reply to which was payment of the incidentals, the statutory severance plus a further month’s pay.

On December 8, 1997, the plaintiff sued. One month later, the employer offered to re-employ on the same terms and conditions, an offer which was declined.

The Court of Appeal reversed the motions judge on the main issue of mitigation. Three points noted were (1) the offer of continued employment was not made when the parties were still working together and (2) only after litigation had commenced and (3) expecting that the plaintiff would work so closely with the person who had been unfair to her, particularly after the defendant had not fairly replied to her initial severance request, was too much to ask.

Burns v Sobeys

This is a trial decision of the Nova Scotia Supreme Court released in December of 2007 written by Mr. Justice Gregory Warner. The plaintiff had worked for Sobeys for 17.5 years. Upon the termination of her position of Retail Technologist of the IT Department, she was offered a “testing” job until such time as a fellow employee, Ms. Peggy Leonard, was moved to head office in Stellarton. As the testing duties were said to occupy 50% of her time, the company advised it would find other defined and undetermined work to occupy her day.

The plaintiff, who had done the testing function on a few prior occasions, testified that this work was a clerical function and more menial than anything she had done previously, which evidence was accepted by the trial judge. The court also found that most of “Peggy Leonard’s desk” had been transferred to Stellarton all ready and hence the plaintiff had good cause to be skeptical. The judge also stated “notably there was never any description of what the remaining work that Ms. Burns was to perform would be”. The court also observed, that unlike prior corporate practice which allowed for a written job description to accompany a new position, on this occasion, there was none.

Adding to the mix was that Mr. Burns, the spouse of the plaintiff, had controversy with the decision maker of the company, which reasonably caused Ms. Burns to be uncertain and “on edge”.

The company also argued that the plaintiff’s conduct on the morning of November 27 was a quit. On that morning, she told the company that she was sick, was going home and that someone from personnel should call her. She also turned over her pass that day. The trial judge did not agree that this was a quit and even if so, it was a constructive termination.

More telling, however, was the judge’s conclusion that the company was overly eager to treat the events of that morning as a voluntary quit, which called into question its good faith and hence prejudiced its mitigation argument.

Ms. Burns, through counsel, wrote to the company on November 28 asking for a specific job description, and also to clarify the terms of employment (i.e. what is meant by ‘help finish your time at TRA’ ?), and to clarify the terms of severance referenced by the company in a meeting immediately prior to this letter. Two weeks later, on December 11, the company replied but did not reply to the questions posed.

A constructive dismissal was found. The trial judge cited with favour the passage from the late Justice Echlin’s decision in Carscallen. The court noted that the failure of the company to offer a substantive reply to the plaintiff’s reasoned issues by its December 11 letter foreclosed any mitigation argument. The judge noted that the loss of self-confidence and self-esteem impacted her general mitigation efforts.

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