Written by Michael J WeilerIt’s getting increasingly tougher to give a clear statement to clients about their legal rights and obligations. Take for example the issue of termination for cause for dishonest conduct. Up until 2001, BC counsel would generally advise their clients that dishonesty would always constitute cause for termination based on a leading Court of Appeal decision. The Supreme Court of Canada overruled that case and found that dishonesty will not always constitute cause—the court must apply a “contextual approach” to determine if dishonesty in any particular case constitutes cause.Up until this year, I would advise employer clients that in order to successfully argue a damage claim should be reduced because of mitigation, we would have to prove not only that the employee failed to take reasonable steps to find alternate employment but also that if reasonable steps had been taken, the employee would in fact have found such alternate employment. The onus on the employer to prove these two branches of the test was a very heavy one. Furthermore courts generally did not allow evidence of job opportunities in newspapers to prove a failure to mitigate.The law appears to have changed in the decision of Logan v Numbers Cabaret Ltd (Hamburger Mary’s) 2016 BCSC 1473.The two employees were long-service employees who were temporarily laid off while renovations were being done. That constituted a dismissal. They were awarded 14 months’ notice.The court however reduced their damage award significantly because the employees took no or at best minimal steps to find alternate employment. What is remarkable about the case is that the court held that the employer did not have to prove that if they had used reasonable efforts they would have found alternate employment. The court stated:[35] In these circumstances, I find that the plaintiffs have failed to discharge their duty to seek out alternate employment. They have not acted reasonably. Instead of continually and assiduously applying themselves to find employment, Mr. Logan and Ms. Bocking chose to reflect on their options, which included moving out of the province or pursuing education. I find that their efforts to look for work began only recently, in the spring of this year, and even so, those efforts have been so minimal that they cannot be said to meet their duty.[36] The plaintiffs argue that the onus rests squarely on Cabaret to demonstrate that had they been diligent in looking for work that they would have found suitable alternate employment. Otherwise, they submit that there can be no basis to reduce their award. They submit that the onus resting on Cabaret is a heavy one, and that Cabaret’s attempts to discharge it by attaching articles from a local newspaper reporting on the plethora of jobs for cooks and waitresses in Vancouver is inadmissible, and in any event, insufficient to discharge its onus. Therefore, the plaintiffs submit that Cabaret has failed to prove a failure to mitigate defence such that their entitlement to an award of 14 months cannot be reduced.[37] I agree with the plaintiffs’ characterization of the onus resting on Cabaret to prove a failure to mitigate defence is a “heavy one”: see, e.g., Smith at para. 32; Peterson v. Labatt Breweries of British Columbia (1996), 25 C.C.E.L. (2d) 241 (B.C.S.C.) at para. 10. Before consideration of that onus is engaged, however, the plaintiffs must nevertheless demonstrate that they have discharged their onus to look for work.[38] I find that Mr. Logan and Ms. Bocking deliberately chose not to discharge their duty to find suitable employment through constant and assiduous application to act in their own interest to maintain their income. They cannot now say to Cabaret that it must pay the full amount of the notice period. Their attempts do not constitute a bona fide effort to obtain alternate employment.[39] This is not a situation where the plaintiffs needed additional time beyond the fall of 2015 to recover from what Mr. Justice Burnyeat described in Smith at para. 35 as “the shock of having their employment terminated.” They appreciated by the summer of 2015 that they would not be returning to work any time soon. To the extent they needed time to recover from any shock or upset arising from their longstanding affiliation with the restaurant, it should not have extended beyond the commencement of this action on October 7, 2015. The plaintiffs do not have any reasonable excuse for delaying beyond that date to look for alternate employment: Stuart v. Navigata Communications Ltd., 2007 BCSC 463 at paras. 43, 52.[40] I disagree that the plaintiffs’ failure to discharge their duty is of no consequence unless and until Cabaret proves that suitable employment was to be found. As I read them, the cases cited by the parties that speak of the obligation of the employer to prove that employment was available in the context of the duty to mitigate defence involve circumstances where the discharged employee is being criticized by the employer in respect of his or her efforts to find work or rejecting offers of employment. In other words, the onus is on the former employer to prove that had the employee done more, they would have been successful in obtaining employment (see, e.g. Szczypiorkowski v. Coast Capital Savings CreditUnion, 2011 BCSC 1376 at paras. 90-91). In this case, the plaintiffs did nothing other than take a recent and cursory look for job opportunities. Cabaret has proven that if the plaintiffs had read the local newspaper, which they say they did to track the progress of renovations at the restaurant, they would have seen reports of an abundance of immediate job opportunities for cooks and waitresses in the lower mainland. That they continued to receive EI benefits beyond the date this action was commenced while at the same time representing to EI that they were actively looking for work speaks poorly of their credibility.[41] My approach is consistent with the analysis taken by Mr. Justice Wilson in Horn v. Ikon Office Solutions, Inc., 2002 BCSC 1658. In that case, Ikon, the former employer, pointed to evidence that the former employee “stood idly or unreasonably by” and did not take reasonable steps to avoid the “unreasonable accumulation of damages suffered as a result of the termination”. Wilson J. found the case to be “borderline”; he did not see the plaintiff in that case as acting unreasonably in seeking self-employment as an option. At the same time, Wilson J. rejected the employee’s submission that the employer Ikon must produce evidence to prove there was a job available that he “would most probably have obtained”: paras. 24 and 30.The court went on to note that on the evidence the employer had provided some evidence of the abundance of employment opportunities for cooks and waitresses. The court allowed evidence from newspapers and Statistics Canada to prove alternate positions were available.The court reduced the damage claim from 14 months to 7 months due to the failure to mitigate.

Written by Michael J WeilerThe most common question from clients with respect to terminations without cause and without notice in the absence of an enforceable agreement is “How Much Notice?” Courts will look at four key elements to determine how much is reasonable notice: age, length of service, position and the availability of similar employment having regard to the employee’s skills and qualifications. The court will often look at economic circumstances but will not give that factor undue weight.Contrary to popular belief there is no legal rule of thumb of “one month for each year of service”. The highest period of notice, subject to a few exceptions, is 24 months. Please bear in mind the fact that each case will be decided on its own facts and there is no litmus test. Further the amount of notice will not always define the amount of damages as the employee must mitigate her damages and must also prove her loss (e.g. lost benefits or bonuses). On the other hand, the employee may be awarded additional punitive, exemplary or aggravated damages.The following cases from this past year will give you some idea of the courts’ present thinking on the matter. A bit of good news for employers is found in Cabott v Urban Systems Ltd where the Court of Appeal reduced the amount of notice by 1/3 given the short period of service. These can be very important factors in each case especially dealing with senior executives whose compensation can often exceed $20,000 per month.CASEPOSITIONCOMPAGESERVICENOTICEO’Dea v Ricoh Canada Inc.salesman$103,00577 years9 monthsKeenan v Canac Kitchens [dependent contractors]husband and wife supervise and install kitchens as contractors$125,00063/6132/2526 monthsSaliken v Alpinemechanic5415 months6 monthsWaterman v Mining AssociationVP Env & Tech453 ½ yrs10 monthsCabott v Urban Systems Ltdregional planner/leader5314 months4 monthsPakozdi v B & Bbidder/estimator$125,0005513 months8 monthsCheong v Grand PacificDirector of Sales/Marketing$60,000+ bonus5913 yrs14 monthsLuchuk v StarbucksSr Regional Mgr–significant responsibilities$194,665+ bonus $85004818 years18 monthsSmith v Pacific Coast TerminalsManger/engineer$171,000+ 30% bonus4816 years19 monthsOzorio v Canadian Hearing SocietyReg Director/Sr Mgr$102,0006030 years24 monthsTCF Venture v MalonesCFO$100,000*?3.5 years9 monthsGust v Right of Way“jack of all trades” not certified tradesman$60,0003113 months2 monthsSchinnerl v KwantlenDirector programs$99,000489 years10 monthsBishop v RexelBuyer (clerical not specialized$52,0006127 years20 monthsPrice v #’d CompanyManager$77,000 + Commission4720 years20 months

Written by Michael J WeilerIn a wrongful dismissal action the amount of damages will be determined by the court on the basis of putting the employee “in the same position as he would have been if he had been given reasonable working notice.” In most cases the key compensation component is salary so that is easily determined. But in many cases employees are also paid bonuses. The question then becomes whether the employee is also entitled to a bonus during the notice period including a pro-rata bonus. Two recent Ontario court decisions demonstrate that the issues may not be all that straightforward.Paquette v TeraGo Betworks Inc.In Paquette v TeraGo Netorks Inc. the employee sued for wrongful dismissal and was awarded damages based on a 17 month notice period. He was entitled to a bonus but the bonus plan required that the employee be “actively employed” at the time of payout. The trial judge held that although the bonus was an integral part of his compensation Mr. Paquette was not entitled to a bonus payment during the notice period. The Court of Appeal reversed that decision.It held that first the bonus was an integral part of Mr. Paquette’s employment and compensation and therefore if he had been given 17 months working notice he would have received a bonus. The question was whether the bonus plan itself precluded him from being awarded damages for loss of the opportunity to earn the bonus. The court described the proper analysis as follows:Similarly, in the present case the appellant’s claim was not for the bonuses themselves, but for common law contract damages as compensation for the income (including bonus payments) he would have received had TeraGo not breached his employment contract by failing to give reasonable notice of termination.[24] The motion judge’s next error was in looking to the terms of the bonus plan, and its requirement of “active employment”, and then concluding that because that term was unambiguous, and the appellant could not meet the requirement, no amount for bonus would be included in his damages. The motion judge ought to have commenced his analysis from the premise that the appellant’s common law right to damages was based on his complete compensation package, including any bonus he would have received had his employment continued during the reasonable notice period and then examined whether the bonus plan specifically limited or restricted that right.The court stated the test here was not properly applied by the trial judge:A term that requires active employment when the bonus is paid, without more, is not sufficient to deprive an employee terminated without reasonable notice of a claim for compensation for the bonus he or she would have received during the notice period, as part of his or her wrongful dismissal damages.Mr. Paquette was therefore awarded a bonus payment for 2014 and compensation for the lost opportunity to earn a bonus in 2015 that would have been payable in 2016. The court relied on the average bonuses from the previous three years and awarded him $58,386.64 plus interest.Fraser v Canerector Inc.Mr. Fraser worked as a senior executive for the employer for 2.8 years when he was terminated without notice. He obtained alternate employment fairly quickly. He was awarded damages based on 4.5 months' notice. He participated in an executive bonus program each year earning $50,000 in his first year, then $75,000 and then $175,000 in his last full year of employment.The court held that Mr. Fraser was not entitled to any bonus for 2014 as the notice period expired in October 2014. The court stated:The question the court must ask when a bonus is claimed as part of compensation in a wrongful dismissal case is whether any identifiable amount of bonus is a contractual entitlement of the plaintiff. In this case, I cannot conclude that the plaintiff was entitled to any such amount. There is no formula that the court is in any position to apply, objectively or otherwise. Any amount or methodology posited by the plaintiff (or the court) would be as arbitrary and thus subject to the same criticism as the plaintiff makes regarding his exclusion from bonus awards in 2014.[58] I reach this conclusion both because the bonus plan in question implicitly required participants to be employees at the time the assessment process is undertaken after year-end and because the plan itself was fundamentally discretionary and subjective, lacking any formula which a court might objectively apply. For both reasons, there is no amount of bonus to which the plaintiff was contractually entitled as of June 10, 2014 when his employment was terminated or as of October 25, 2014 when his 4.5 months of reasonable notice would have expired.[59] The following considerations lead me to the conclusion that only employees who were still active, contributing employees after year-end had any rights to be considered for bonus:a. The plaintiff’s prior employment agreement expressly conditioned eligibility upon employment at the time of declaration of the bonus and the parties specifically negotiated Mr. Fraser’s starting time with the defendant in order to ensure he would be able to qualify for that bonus from his prior employer in a plan which was formula-driven – this may be relevant to the reasonable expectations of the parties as regards the requirements of the defendant’s discretionary bonus program without any prescribed formula, floor or ceiling;b. While the defendant had communicated no written bonus policy expressly excluding the eligibility of departing employees, the plaintiff was advised that his salary was reviewed annually in February and he was also aware that his contributions were reviewed and bonus amounts announced at the same time;c. The program was described (and understood by participants) as being discretionary, employing no fixed formula and based upon the subjective assessments of contribution by the owners (Mr. Hawkins and his daughter) which were communicated confidentially along with each award.LESSONS LEARNEDBonuses are often a large part of compensation and can be very useful tools in motivating employees to perform at the highest standards. But as can be seen from these cases care in drafting the bonus schemes and employment contracts is crucial to ensure the employer’s liability is limited during the notice period.

Written by Michael J WeilerHaving a written, enforceable contract is important as readers of my blog will know. Primarily because it can limit an employer’s liability for termination without cause by limiting the amount of notice the employee would be entitled at common law (see related blog on 2016 notice cases). But there are other important terms in a contract that should not be overlooked especially when employing a senior manager. In order to protect your business interests all contracts should spell out confidentiality and trade secret obligations. In certain cases employers may seek to further protect their business through restrictive covenants such as a non-competition clause or a non-solicitation clause. These provisions can prevent an employee from walking away with your customers and/or setting up shop next door to steal your business.Unfortunately for employers the courts have made it extremely difficult to enforce such clauses. They start from the premise that such clauses are illegal restraints of trade and place a heavy onus on employers to prove that the clauses in question were “reasonable” from a legal perspective and necessary to protect legitimate interests: see Shafron v KRG 2009 SCC 6.Every now and then a case comes along that provides a very thorough summary of the law in a particular area. One good example of this is seen in the recent decision in IRIS v Park.IRIS The Visual Group Western Canada Inc v ParkDr. Park was employed as an optometrist in Vernon BC. She signed an employment agreement with respect to her and her company that include a non-competition clause for a term of 3 years preventing her from competing within 5 km of the location she worked in Vernon. She also agreed not to solicit or entice away anyone “that is in the habit of dealing with [IRIS]” or from soliciting any employees of IRIS. Further the contract included a liquidated damage clause that quantified what damages are payable upon breach in the amount of $250,000. Dr. Park resigned and set up business within 5 km of her work location.The court provided a useful summary of the law “which will guide my analysis of enforceability of the non-competition clause” as follows:A restrictive covenant in a contract is what the common law refers to as a restraint of trade: Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6 at para. 15.A covenant in restraint of trade is enforceable only if it is reasonable between the parties and with reference to the public interest: Elsley et al. v.J.G. Collins Insurance Agencies Ltd., [1978] 2 S.C.R. 916 at 923.… in exceptional cases … the nature of the employment may justify a covenant prohibiting an employee not only from soliciting customers, but also from establishing his own business or working for others so as to be likely to appropriate the employer’s trade connection through his acquaintance with the employer’s customers: Elsley at 926.Whether a restriction is reasonably required for the protection of the covenantee can only be decided by considering the nature of the covenantee’s business and the nature and character of the employment: Elsley at 926.… despite the presumption that restrictive covenants are prima facie unenforceable, a reasonable covenant will be upheld: Shafron at para. 17.The interpretation of restrictive covenants requires the application of different rules depending on whether the covenants are found in commercial agreements or in contracts of employment. These rules will be more generous in the commercial context, but much stricter in the context of contracts of employment or service: Payette v. Guay Inc., 2013 SCC 45 at para. 2.… the legal framework applicable to contracts of employment takes account of the imbalance of power that generally characterizes an employer-employee relationship, and it is designed to protect employees. In relationships between vendors and purchasers in the commercial context, on the other hand, there is ordinarily – with some exceptions – no such imbalance: Payette at para. 3.As a general rule, according to Dickson J. in Elsley, at p. 925, the geographic coverage of the covenant and the period of time in which it is effective have been used to determine whether a restrictive covenant is reasonable. The extent of the activity sought to be prohibited is also relevant: Shafron at para. 26.The agreement sued upon is the employment agreement. It would be wrong, in my opinion, to test that agreement by the criteria applicable in the case of a vendor/purchaser agreement, or by some hybrid test. The restrictive covenant, if enforceable, must stand up to the more rigorous tests applied in an employer/employee context: Elsley at 925.However, for a determination of reasonableness to be made, the terms of the restrictive covenant must be unambiguous. The reasonableness of a covenant cannot be determined without first establishing the meaning of the covenant. The onus is on the party seeking to enforce the restrictive covenant to show the reasonableness of its terms: Shafron at para. 27.… if the covenant is ambiguous, in the sense that what is prohibited is not clear as to activity, time, or geography, it is not possible to demonstrate that it is reasonable: Shafron at para. 43.The court found that Dr Park was in an employment situation and not that of a medical practitioner with patients and thus it would analyze the clauses with “with closer scrutiny”.NON-COMPETITION CLAUSEThe court found the non-competition clause was unenforceable because its scope was too broad. While IRIS had a legitimate interest in its patients who required regular eye examinations and new prescription vision product, it did not have a reasonable interest in protecting its ability to sell nonprescription reading glasses or sunglasses to its patient base. That made the clause unreasonable and thus it was found to be unenforceable.This was enough to dispose of the claim but the court went on to comment on the geographic and temporal scope of the non-competition clause. The court found the 5 km radius and the 3-year term of the prohibition were reasonable based on the evidence.NON-SOLICITATIONAs noted the clause referred to clients and patients “in the habit” of dealing with IRIS. The court held that that meant repetition and further there was no evidence of which patients had “become habituated to the company’s offerings”. The clause, therefore, was “so vague as to make enforcement problematic”. Further the real issue was whether Dr. Park’s advertisements were a breach of the non-solicitation clause. The court held there was no breach because the ads did not solicit or endeavour to entice away any of IRIS’ patients.LIQUIDATED DAMAGES As a preliminary comment the court noted:But Dr. Park wisely does not argue that she should not be held to the terms of the damages clause based on her cavalier approach to the agreement. I say wisely because Dr. Park is a well-educated person who must take the consequences of signing an agreement without reading it through.This is an important judicial observation in my view that is often overlooked when an employer tries to hold an employee to the terms of the bargain.The legal issue here is whether the clause was a genuine pre-estimate of damages in the event of a breach, or a penalty which would not be enforceable.Again the court provides a useful summary of the law in this area:Justice Newbury in Maxam Opportunities Fund v. Greenscape Capital Group Inc., 2013 BCCA 460, set out the approach to resolving this issue:[53] This court has ruled that the following approach is to be taken to payments that are stipulated to be payable on a breach of contract:…where the issue is whether a contractual clause is for liquidated damages or is a penalty:(1) The question of “penalty” or “liquidated damages” is to be answered as at the date of the making of the agreement;(2) If the answer is “liquidated damages”, that is the end of the matter, but, if the answer is “penalty”; then,(3) There arises the next question: should relief be granted against the penalty?(4) The answer to that question depends upon whether to enforce the penalty would be unconscionable, and that unconscionability has to be determined at the date of the invocation of the clause.(5) Sec. 21 [now s. 24] of TheLaw and Equity Act only applies if and when stage 3 has been reached.[54] The Supreme Court of Canada in H.F. Clarke Limited v. Thermidaire Corp. Ltd., [1976] 1 SCR 319, affirmed at 338, that a “sum will be held to be a penalty if it is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach.”[55] Similarly, the Court of Appeal in Newman, Hill, Duncan & Lacoursiere v. Murray, 1987 Carswell BC 1103, cited Dunlop Pneumatic Tyre Co. Ltd. v. New Garage and Motor Co. Ltd., [1915] A.C. 79 (H.L.), for the following proposition, at para. 14:There is a presumption (but no more) that it is a penalty when ‘a single lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage.’[56] The court in Murray at para. 15 also cited with approval the following extract from McGregor on Damages, 14th edition, which is at para. 342 on page 247 of the text:The same sum cannot in the same agreement be treated as a penalty for some purposes and as liquidated damages for others, for if the same sum is extravagant and unconscionable in relation to one breach to which it applies it cannot be a genuine pre-estimate and the sum becomes branded as having a penal nature which it cannot lose in relation to other more serious breaches to which it also applied. It adds nothing to say that it would not have been a penalty as to the other breach or breaches or that it is the other breach or breaches that have in the event occurred.Applying these principles the court found the clause to be “extravagant and unconscionable” and therefore it was a penalty and not liquidated damages. It noted that it must still go on and determine whether it should grant relief against the penalty which hinges on a finding of whether the clause was unconscionable at the date of invocation. On this point the parties did not provide sufficient evidence on the question of relief against the penalty to decide the issue and thus the court declined to decide whether Dr. Park should be relieved from the penalty. (Bear in mind this issue was obiter because the non-competition clause was found to be unenforceable and therefore Dr. Park had not breached the covenant.)LESSONS LEARNED Here are some observations on this case.

1. Non-competition and non-solicitation provisions are not appropriate or necessary in many cases. In my view they should be used only when a good case can be made for the protection of the employer’s business.
2. The courts will bend over backwards to find the clauses unenforceable. Therefore if they are important to employers, they should spend sufficient time to analyze what they need. The clauses should be drafted with the narrowest provisions possible that will provide adequate protection. And of course they must be clear and unambiguous.
3. Clauses that are the product of negotiations will more likely be upheld in my view especially where the employee seeks or is offered time to seek legal advice.
4. Obtaining the evidence to prove a breach is critical. That includes ensuring that computer data is maintained and the employee’s access to the computer information is cut off as soon as possible upon termination. A strong computer policy should be in place.
5. Finally the fact that the clause might not ultimately be upheld in court should not necessarily preclude the insertion of such a provision in a contract so long as a reasonable argument can be made that it is enforceable. The reality is an employee may not want to engage in litigation where his/her exposure may be significant including legal fees.

Written by Michael J WeilerIt will come as no surprise that I remain interested in cases that deal with doing business with family and friends where the relationship breaks down and the parties end up in court. A recent decision of Madame Justice Burke reminds us just how far these disputes can go and how expensive they can be to the losing party.Michael Price (“MP”) was employed in Vancouver for 19 years by a # company (“481”) operating a hair loss clinic and sale of products and services to remediate hair loss. MP was a 20% shareholder. David Robson (“DR”) lived in Ontario and was a 74% shareholder. MP and DR were close friends but had a falling out. MP claimed he was constructively dismissed in June 2013. He sued 481, DR and his family members as well as a second # company, (“857”), which he alleged had improperly taken over the business of 481.The opening comments of Justice Burke set the stage:This high-conflict case arises out of the breakdown of a 20-year friendship and business relationship between Michael Price (“Mr. Price”) and Farrukh David Robson (“Mr. Robson”).[2] In addition to their business and personal relationships, both Mr. Price and Mr. Robson suffer from significant life‑altering illnesses. The emotion engendered as a result of these factors led to a difficult and “hotly disputed” trial; particularly the factual matrix. Both sides accused the other of lies and fabrications. Within this context, the factual reality must be distilled.DR had been very involved in the business of 481 but he was diagnosed with renal failure in the late 1990s and had been on regular dialysis since late 2007. In 2011 the relationship between MP and DR became strained, caused in part by allegations that DR had improperly used 481’s bank account rendering it almost insolvent, and there was a serious problem with the supply of a product. MP decided to sever his relationship with DR and made an offer to purchase DR’s shares and pay a small fee for use of the business name “Micron”. DR viewed the offer to purchase as a “terrible offer” and the accusations began to fly back and forth.On December 27th, 2012 MP was diagnosed with stage four colorectal cancer and began treatment. He had a 12-year-old son who was severely disabled causing his wife to work only part-time. The parties attempted to buy each other out but those discussions and emails became very acrimonious and accusatory. DR’s family became involved. DR implemented a new commission structure and made other changes that reduced MP’s compensation. They reduced and cancelled benefits when MP was most in need.During negotiations MP sent an email to DR in April 2013 stating in part:David,Your offer’s in the garbage where it belongs…..Although I’m not on dialysis life support, stage 4 metastatic cancer is in many ways a more serious life-threatening matter. My oncologist told me to reduce/eliminate my stress. I acknowledge that my disclosure of this to you could easily result in your becoming even more predatorial towards me, and this would tell me that you no longer care whether I live, or whether I die.MP underwent surgery on May 31st, 2013 and remained in hospital until June 8th, 2013. On June 10th, 2013 DR replaced MP with Mr Akhtar as manager of the clinic while MP was absent from work recovering from surgery. MP sued for constructive dismissal as well as a number of other claims. He sued not only 481 but also 857 and the personal defendants:In July 2013, the defendant 8577935 Canada Corporation (“857”) was incorporated. It is alleged that 481 has ceased doing business and its assets have been transferred to 857, a business run by the personal defendants or by some of them. This is alleged to have occurred without proper authority or justification.[10] It is also alleged the defendants discontinued payment of Mr. Price’s salary and benefits (including medical, dental, extended health benefits, and more) at a time when he was most in need. Accordingly, it is alleged the personal and corporate defendants engaged in conduct that amounts to bad faith and unfair dealing; and were deceitful, negligent, oppressive and unduly insensitive in the matter of Mr. Price’s discharge.[11] Mr. Price claims the personal defendants are the alter egos of the corporations and the corporate veil separating the corporations and the personal defendants should be pierced. Essentially, he claims the personal defendants gutted 481 and transferred its business and assets to 857, all in order to deprive him of an ability to recover on any judgment against 481 by hiding its assets in 857.The court found that DR was not a credible witness and preferred the evidence of MP to that of DR.The court held that MP was constructively dismissed. 481 and DR made many serious allegations of cause including misappropriation of funds which were found to be totally without merit:Overall, I conclude as was the case in MacDonald v. Newfoundland (Canada Games Park Commission), [1986] N.J. No. 335 (D.C.), the plethora of allegations against Mr. Price are an attempt to disguise the real reason why Mr. Price was fired. This was likely his discovery of financial improprieties. Mr. Robson sought to grasp at straws to establish some sort of grounds to justify Mr. Price’s dismissal. The evidence simply does not establish any of the accusations.Turning to the question of notice the court concluded that given MP’s age (47), years of service (20) and his senior management position reasonable notice was 20 months with damages calculated on MP’s monthly salary and commissions calculated at $6,480. It rejected the claim that MP had failed to mitigate his damages and awarded $24,145 with respect to expenses associated with mitigation.The court also awarded $50,000 for aggravated damages based in part on the unfounded allegations of dishonesty and the fact that DR knew of the seriousness of MP’s cancer and treatment despite his denials. The $50,000 is a substantial award for MP as it is likely tax-free. The court held however that punitive damages were not warranted although this was a close call. The Court stated:It is not without some hesitation that I do not find that punitive or exemplary damages are appropriate. An employer’s conduct must be extreme in order to attract punitive or exemplary damages: Kelly v. Norsemont Mining Inc., 2013 BCSC 147. Although Mr. Robson acted in a blameworthy manner, I do not classify his conduct as extreme due to the responsive nature of some of Mr. Price’s emails.These awards are very significant but what really caught my attention about this case is the fact that further damages were awarded against the individual defendants.First the court found that it could lift the corporate veil in this case to assess personal liability against DR and his family. 857 was found to have been set up to receive the assets of 481. DR used 481’s bank account as his personal account and as an account for other businesses, “essentially co-mingling funds and assets.” The revenues of 481 as well as its clientele and assets were transferred to 857 with the intention of removing them from MP’s reach which intentions were found to be “wrongful, or even fraudulent and is an additional reason to lift the veil here.” It found that 481, 857 and DR were all liable to pay those damages associated with the wrongful dismissal.MP alleged breach of fiduciary duties and civil conspiracy. The court found that the personal defendants were jointly and severally liable for the tort of civil conspiracy and awarded MP $100,000 in compensatory damages.MP’s claims for relief as a shareholder were dismissed as he had not brought a derivative action nor an oppression claim under the Corporations Act.Finally the court did not make a final order on costs. One would assume MP will seek Special Costs representing full indemnity for his legal fees—given the 31 days of trial one can assume those costs would in the lower to middle 6 figure range.LESSONS LEARNEDMy dad used to say be very careful when you do business with family and friends—at some point the two relationships may come in conflict and both will suffer. In this case MP and DR and their respective families were at one point “close friends”. Yet despite that friendship the bond that kept them together broke apart at a time in each of their lives that they suffered from serious illnesses. This is not the way their relationships, both business and personal, should have ended.

Written by Michael J WeilerJennifer Cottrill worked as a skincare therapist for 11 years. She was a single mom who was terminated when she was 32 years old.The Plaintiff signed an employment contract that limited her notice period to that under the Employment Standards Act, namely 8 weeks’ severance.The Defendant argued it had just cause to terminate Ms. Cottrill due to her incompetence. The court held that there was no just cause for termination. The employer unreasonably sought to hold the plaintiff to performance standards it had not previously required. It found the evidence of the employer to be vague allegations that the plaintiff was complacent and had a poor attitude. Among other things there had not been sufficient warnings or an explanation as to why her attitude was deficient.The employer argued that it had given 3 months’ notice but the court rejected that argument and held that notice was deficient as it was not unequivocal. However the court held that her damages were, in any event, limited to the employment contract, namely 8 weeks’ severance pay under the E. S. Act. The court rejected the plaintiff’s argument that the contract was signed after the plaintiff had started work and therefore failed for lack of legal consideration. The case provides a thorough examination of the law in this area of employment contracts.Finally the court awarded $15,000 for aggravated damages. The court found that the employer had terminated the employee unfairly. She had been given a warning letter and had been promised that if her employment improved in 2 of the 3 months she could retain her position. However, having done just that she was still terminated. The employer had breached its duty of good faith in the manner in which they dismissed the plaintiff. The termination and actions of the employer had a profound impact on the employee. The court held:[137] […] I am satisfied that the lack of good faith and unfairness exhibited by the company in the manner of dismissal caused emotional distress to the plaintiff that was well beyond the distress from the fact of the dismissal.Finally the court rejected the claim for punitive damages. It held that the conduct of the employer was not “harsh, vindictive, reprehensible and malicious”. Further there was no additional misconduct by the employer distinct from the misconduct that gave rise to the aggravated damage award.Although the plaintiff was partially successful one has to wonder if it was all worthwhile given the costs and stress of a 6-day trial and the public exposure of the workplace issues that led to her dismissal. At the same time the employer might have considered simply terminating her without cause in a fair manner and simply relied on the written contract.June 9, 2017Cottrill v. Utopia Day Spas and Salons Ltd. 2017 BCSC 704

Written by Michael J WeilerCary Feldstein was a talented software engineer who was given working notice of termination in 2012 by his then-employer MacDonald, Dettwiler (“MDA”). He had lots of opportunities to find alternate work as the judge found it was a “hot market” for software engineers although he only received two interviews despite sending out resumes to 20 prospective employers. Mr. Feldstein suffered from cystic fibrosis (“CF”), a chronic degenerative disease that primarily affects the lungs. Mr. Feldstein applied for and obtained employment with 364 Northern Development Corp (“364”). Mr. Feldstein claimed that he told the Chief Information Officer (“CIO”) in a private conversation during his second interview that he had CF and he was therefore concerned about LTD coverage. The CIO denied that Mr. Feldstein disclosed his CF and stated that Mr. Feldstein did not ask for a summary of the plan. Mr. Feldstein asked for a copy of the summary of the plan which subsequently was provided by the CIO.Mr. Feldstein alleged that the negligent representation was made in a subsequent telephone call on April 13 2012. Mr. Feldstein alleged that he asked the CIO about the restriction of LTD to $1,000 per month related to “Proof of Good Health”. He claimed he was told by the CIO that it related to the 3-month waiting period without illness which, if achieved, would have satisfied the “proof of good health” requirement. Mr. Feldstein said he took that statement to mean if he worked 3 months without illness he would then qualify for full LTD benefits of $4,677 per month and not be restricted to the $1,000. Of critical importance was the evidence of the CIO who denied making the impugned statement, denied he spoke about LTD with Mr. Feldstein and stated he never made any statement about “proof of good health”.Mr. Feldstein signed a written employment agreement that contained a clause stating he could participate in rights and benefits under the various programs including disability. It did NOT contain the caveat found in many precedents that all rights and obligations are governed by the terms of the policies. The employment agreement also contained an “Entire Agreement” clause that stated the contract superseded all prior communications, representations and understandings “with respect to the subject matter hereof”. Mr. Feldstein obtained legal advice before signing the employment agreement. He commenced work with 364 on April 30th, 2012.In May 2013 Mr. Feldstein suffered a severe decline in lung functioning related to his CS. He was given three months' working notice of termination in November 2013. He applied for and received LTD benefits in February 2014. However much to Mr. Feldstein’s surprise he was limited to $1,000 per month because he had not completed a medical questionnaire when he initially enrolled in the benefit plan. The questionnaire was required to establish “proof of good health”. In late November 2014 he underwent a successful double lung transplant and he was told by his doctors that he could seek alternate employment at the end of 2015.TRIAL JUDGEMr. Feldstein commenced an action for negligent misrepresentation. The trial judge accepted the evidence of Mr. Feldstein over that of the CIO, found that the impugned statement had been made, held that the impugned statement meant that Mr. Feldstein would satisfy the “proof of good health” condition and therefore he would be entitled to full LTD coverage if he worked 3 months without illness. She awarded damages based on 40 months of lost LTD benefits of $83,000 (based on the $3,083.43 he would have received under MDA’s benefits plan minus the monthly amount he was receiving in CPP benefits). She also awarded a further $10,000 for aggravated damages based on the mental distress suffered by Mr. Feldstein. She held that the contract did not preclude the tort claim for negligent misrepresentation. It appears that she did not consider the specific terms of the Entire Agreement clause. She also held that damages were reasonably foreseeable notwithstanding the 2-year delay.COURT OF APPEALThe Court of Appeal upheld the trial judge’s decision on the finding of negligent misrepresentation and the award of $83,000 damages. However it overturned the award for $10,000 for aggravated damages. As success was split it held each party must bear its own costs of the appeal.(a) Negligent MisrepresentationOn the key issue of negligent misrepresentation, both the BCCA at paragraph [29] and the trial judge at paragraph [65] analyzed and applied the criteria outlined by the Supreme Court of Canada in Queen v Cognos [1993] 1 S.C.R. 87. The criteria are:1) Is there a duty of care based on a “special relationship” between the representor and representee?2) Is the representation in question inaccurate, untrue, or misleading?3) Did the representor act negligently in making that representation?4) Did the representee rely, in a reasonable manner, on that representation?5) Did the representee incur damages as a result of that reliance?In her decision the trial judge followed by saying:[66] As the misrepresentation resulted in the parties entering into a contract, I must also consider whether any express terms of that contract operate so as to prevent the plaintiff from pursuing an action in tort: Cognos, at para. 39.It is important for employers to read the trial and court of appeal decisions in their entirety to get a full appreciation of the risks and the impact on your business practices in hiring employees especially those with disabilities. I will only summarize the key findings.The BCCA upheld the trial judge’s finding that there clearly was a duty of care where “an employer [is] making representations to a prospective employee in the course of pre‑employment discussions”.The BCCA upheld the trial judge’s finding that the impugned statement was inaccurate, untrue, or misleading even though it was merely implied. The trial judge held:[73] As held by Iacobucci J. in Cognos, an implied representation may properly give rise to an action for negligent misrepresentation. The plaintiff’s claim will not fail merely because it relies on an inference drawn from a representation made by the defendant. Rather, the question is whether a reasonable person in the circumstances of the plaintiff would have drawn that same inference (Cognos, at paras. 74-77). In much the same way, the court in Spinks found that the failure to divulge material information may in certain circumstances be equally as misleading as the provision of misinformation (para. 14).[74] In my view, it is more likely than not that a reasonable person in the circumstances of Mr. Feldstein would have believed, as a result of the impugned statement, that LTD benefits would be available upon completion of three months continuous work at 364, without the need for the completion of a medical questionnaire or exam.[75] I accept Mr. Feldstein’s evidence that Mr. Nizker made the impugned statement in response to the plaintiff’s inquiry about what “Proof of Good Health” meant in the context of the LTD plan. In that circumstance, the most prominent, likely, and reasonable inference to be drawn from the impugned statement is that LTD coverage is contingent merely upon completion of the three-month probationary period. It was misleading and inaccurate to represent the LTD eligibility requirements as was done in the impugned statement, particularly given the omission of additional, more stringent, criteria inconsistent with the thrust of Mr. Nizker’s representation.[76] I, therefore, conclude that the impugned statement was inaccurate, untrue, and misleading.The BCCA rejected 364’s argument that the statement was not inaccurate:[62] I would not give effect to these arguments. The impugned statement by Mr. Nizker was not true and accurate. He was asked what “proof of good health” meant in relation to LTD coverage. He responded that “proof of good health” was synonymous with the three-month waiting period that new employees had to complete before benefits came into effect. That is clearly inaccurate and misleading. “Proof of good health” had nothing to do with the three-month waiting period. It was a specific requirement for obtaining “approval” for full LTD coverage. The fact that Mr. Feldstein became eligible for some LTD coverage after three months of continuous work does not make the impugned statement true.In respect of the third criteria it held that the CIO’s conduct fell below the requisite standard of care. These findings are particularly important for HR managers to understand in the context of their obligations in the hiring process:[65] Appellate courts must accord great deference to a trial court’s negligence findings, absent an incorrect statement of the applicable legal standard: Housen v. Nikolaisen, 2002 SCC 33 at paras. 29-31. I see no reason to interfere with the judge’s finding on this point. The judge found that Mr. Nizker was aware of Mr. Feldstein’s cystic fibrosis condition. She found that Mr. Feldstein asked Mr. Nizker about employee benefits after the second interview on April 12, 2012, e-mailed Mr. Nizker later that day asking to be provided with a brochure detailing 364’s benefits plan so that he could compare it to his current plan at MDA, and then asked Mr. Nizker about “proof of good health” in relation to LTD coverage during their telephone conversation on April 13. It was open to the trial judge to come to these factual findings on the evidence before her. As I read the judge’s reasons at para. 79, she is referring to the “repeated inquiries” Mr. Feldstein made about employee benefits in general. But even if 364 is correct in its assertion that the trial judge erred in fact by proceeding on the footing that Mr. Feldstein made repeated inquiries in relation to his eligibility for LTD benefits, I would not be inclined to regard the error as “overriding”. Specifically, I am not persuaded that the factual error relied on by 364 could have had a material bearing on the judge’s resolution of this branch of the test.[66] Further, it was not disputed that Mr. Nizker was in charge of 364’s hiring process for software engineers during this time. He was the point of contact for potential employees seeking information about 364’s benefits package. As the trial judge found, Mr. Nizker took no steps to verify the accuracy of the information he provided to Mr. Feldstein regarding the LTD benefits that would be available to him if he accepted 364’s offer of employment, failed to accurately define what “proof of good health” meant in relation to Mr. Feldstein’s inquiry, and failed to mention or provide Mr. Feldstein with the medical questionnaire Sun Life required to approve him for LTD coverage in excess of $1,000 per month. Mr. Nizker’s duty of care with respect to representations made during pre-contractual negotiations included not only a duty to be honest in making those representations, but also to exercise reasonable care in ensuring that the representations made were accurate and not misleading. I think it clear that Mr. Nizker was operating under an honest but mistaken belief as to the circumstances that would trigger Mr. Feldstein’s entitlement to full LTD benefits. The representations Mr. Nizker made to Mr. Feldstein were, as the judge found, inaccurate and misleading. In all the circumstances, it was open to the judge to conclude that Mr. Nizker did not exercise reasonable care when he made the impugned statement. [emphasis added]It is interesting that the courts accepted that the CIO was under an honest but mistaken belief when he made the comments given the fact he denied the specific impugned comments had even been made.The BCCA upheld the trial judge’s decision that Mr. Feldstein reasonably relied on the representations. 364 made what I thought were fairly compelling arguments in this regard including:[67] 364 argues that Mr. Feldstein’s reliance on the impugned statement was not reasonable given that Mr. Nizker made it in response to an imprecise question and in the context of a brief phone call. 364 says that, having regard to the importance of the issue to Mr. Feldstein, it was unreasonable for him to rely on the impugned statement without further clarification or follow-up. 364 also submits that the judge erred in finding that it was reasonable for Mr. Feldstein to believe that Mr. Nizker could provide accurate information about employee benefits given than Mr. Nizker was the Chief Information Officer of a tech company who had no specialized knowledge of insurance benefits. Further, 364 says that Mr. Nizker did not have a financial interest in hiring Mr. Feldstein and did not make the impugned statement in the course of conducting 364’s business because 364 is not an insurance provider, nor does it sell disability insurance.However, the BCCA said that there was no error in the trial judge’s analysis or findings of fact.Finally the BCCA upheld the trial judge’s finding that Mr. Feldstein’s reliance resulted in damages that were foreseeable. For example, it held it was open to the trial judge to find that Mr. Feldstein would have obtained employment as a software engineer with benefits similar or better than he enjoyed at MDA especially given her finding that this was a “hot market” and Mr. Feldstein was an excellent and qualified employee. This is somewhat curious since Mr. Feldstein was only offered two interviews despite sending out resumes to 20 employers. Further the fact that the damages occurred two years after the misrepresentation was made did not mean the damages were not reasonably foreseeable. How long would a delay have to be to preclude a finding of liability? The BCCA leaves that question open noting that negligent misrepresentation claims in the context of pre-contractual discussions may involve “long-term detrimental reliance” and although “[t]ime may well be a factor when assessing reasonable foreseeability […] it is not determinative”. The question was whether 364 should have foreseen a “real risk”, and the BCCA accepted the trial judge’s conclusion that Mr. Nizker should have.The BCCA also upheld the trial judge’s conclusion that the Entire Agreement clause did not preclude the tort action for negligent misrepresentation. It appears from my reading of the trial judge’s decision that she did not consider this clause specifically. The BCCA held that while it is possible for an employer to exclude such liability, the language in 364’s contract did not do so:[57] As this Court noted in Taurus, determining whether parties to a contract have chosen to exclude tort liability through an entire agreement clause “is not easily answered” (at para. 58). The analysis is case-specific and courts have considered a number of factors, including: whether the representation at issue becomes an express term of the contract (Cognos); whether the parties to the contract are commercially sophisticated actors (Taurus); whether the contract is a standard form contract (Zippy Print); whether the defendant drew the plaintiff’s attention to the exclusion clause (Betker v. Williams, [1991] B.C.J. No. 3724 (C.A.)); and whether the misrepresentation was so substantive that it went to the plaintiff’s basic purpose for entering the contract (Betker).[58] The judge, who was clearly alive to the governing principles, found that the entire agreement clause did not exclude tort liability for Mr. Nizker’s misrepresentation because there was no express term in the contract which created a specific duty that was co-extensive with the duty of care created by Mr. Nizker’s misrepresentation. In other words, the subject matter of the impugned statement – how “proof of good health” was related to the eligibility requirements for full LTD coverage – did not become an express term of the contract. Section 4.02 of the contract merely confirmed that Mr. Feldstein would be entitled to participate in any benefits plan that was available to 364’s employees.(b) Aggravated DamagesThe BCCA overturned the award of $10,000 for aggravated damages. It noted the claim here was in tort not contract so the fact that Mr. Feldstein suffered mental distress did not mean he was entitled to aggravated damages:[88] While I have no doubt that Mr. Feldstein suffered mental distress due to the negligent misrepresentation, the judge did not find that any of 364’s representatives acted in a high-handed, dishonest or morally reprehensible way. Assuming, without deciding the issue, that an award of aggravated damages could be made in the context of a negligent misrepresentation case, I am nevertheless of the view that some form of offensive conduct by the defendant is a necessary prerequisite to the granting of such relief. In my respectful view, there is no basis in the factual findings made by the trial judge for an aggravated damages award. Accordingly, I would strike out that part of the award.TAKEAWAYSFor those readers who have made it this far I apologize for the length of this article. But the reasons of both the trial judge and the court of appeal are hard to summarize.This case raises serious issues for employers especially those who do not have expertise in hiring. Of great concern is the fact that the CIO denied the statements were made in the first place. In the absence of a written representation the issue of credibility is key. Here the trial was held over 3 years after the fact. There was nothing in writing that confirmed the statements made. In fact when Mr. Feldstein raised the issue of coverage with the CEO in October 2013 he wrote in an email that “I am worried that I somehow majorly messed up or I misunderstood the details of the plan and I’m ineligible for coverage”. However at trial he testified he meant to write “we somehow majorly messed up..” [emphasis added] His explanation at trial was that he was simply being “polite or diplomatic” as he wished to avoid an accusatory tone in dealing with the CEO. He made no reference to the alleged negligent misrepresentation which was critical to his claim. It is curious to me that Mr. Feldstein’s recollections were accepted over that of the CIO given what I would think is a very heavy onus on him to prove the statements. Further Mr. Feldstein signed a detailed employment contract with the advice of his lawyer yet he did not ask for clarification of what the requirements for LTD were. The CIO operated in the mind of the courts in an honest but mistaken belief so why was his evidence rejected? One can appreciate the dilemma employers face when employees make these claims many years after their hiring, especially in light of the Entire Contract clause.Further I simply do not understand the BCCA’s finding that the Entire Agreement clause did not preclude liability here. Granted the benefits clause may have been drafted more tightly (my standard agreement makes it clear that the terms and conditions of the benefits are governed by the policies in place and that the employer is not a self-insurer) but on the whole, it seems to me the parties did address this very claim in the Entire Agreement clause. It speaks of representations yet does not apply to these representations? It might have been interesting to hear what legal advice was given to Mr. Feldstein on this particular point assuming 364 could have successfully argued that privilege was waived.But the biggest concern I have with this decision is the potential liability an employer could have faced based solely on a vague comment in a one on one conversation many years prior. Mr. Feldstein was 37 years old. What if the negligent representation precluded him from full LTD benefits to age 65 and the damages were not capped at 40 months? Further if LTD benefits are paid for by the employee then they are paid tax-free thus potentially increasing damages (this latter point does not appear to have been considered by the court).What to do?First be very careful in what is said and done at the hiring stage. Do not make any representations on benefits and place the onus on the employee to make their own decisions in that regard. Perhaps make notes of these meetings and have two employees attend all interviews. And if in doubt send a self-serving email.Secondly tighten up the contractual language to specifically exclude any claims for negligent misrepresentations.Feldstein v. 364 Northern Development Corporation 2016 BCSC 108; 2017 BCCA 174

Written by Michael J Weiler

Small claims jurisdiction increases to $35,000 and smaller cases move to Civil Resolution Tribunal (CRT)

Important changes to the Small Claims court became effective June 1st, 2017.First the monetary jurisdiction of the Small Claims Court increases from $25,000 to $35,000. This change has been considered for a number of years and the government had originally considered a move to $50,000. Whether further increases to the monetary jurisdiction will be made remains to be seen. While the change seems fairly minor, the fact is employers may well find that they are subject to more litigation in wrongful dismissal and related actions. In many cases employees can claim aggravated or punitive damages related to their dismissal. Those damages will not normally be taxable thus increasing the value of the claim beyond $35,000.At the same time disputes involving up to $5,000 will be now be resolved through the new Civil Resolution Tribunal rather than the Provincial Court. The CRT is an online tribunal that will offer dispute resolution services.If you have any questions regarding these changes please consult the Provincial Court of British Columbia website. http://www.provincialcourt.bc.ca/types-of-cases/small-claims-matters

Written by Michael J WeilerThe Ontario Court of Appeal has upheld a trial judge’s award of $104,000 based on a notice period of 20 months for a long-serving McDonald’s restaurant manager.Esther Brake worked at various McDonald’s restaurants for more than 25 years. She joined the Defendant employer organization in Ottawa in 1999. She was terminated on August 2nd, 2012. At the time of hiring the employer gave her a letter confirming her service credit which stated, inter alia, that she was “…credited with 7 years of Full Time service as of 1999”.Ms. Brake was, it appears from the record, an excellent employee. However in the last few years of her employment she was given less favourable evaluations. She was transferred to a very poor performing store and then placed on a McDonald’s progressive discipline program known as GAP. The trial judge found that the GAP program was arbitrary and that McDonald’s had unfairly assessed Ms. Brake’s performance. McDonald’s claimed Ms. Brake had failed the GAP program and gave her a choice between a demotion to First Assistant or termination. Her salary would remain the same but her benefits would be “meaningful inferior”. She refused the demotion and sued for constructive dismissal. The trial judge was very critical of McDonald’s application of the GAP program to Ms. Brake. He held that any difficulties in Ms. Brake’s performance did not “amount to anything close to gross or serious incompetence and stressed that, by the end of the GAP program, Ms. Brake had met [McDonald’s] ‘new and improved’ standards” and that “she was trending upward at an extraordinary degree when the decision to demote her was put on the table.”The Court of Appeal upheld the trial judge’s decision that Ms. Brake had been constructively dismissed when McDonald’s offered her a non-supervisory position with inferior benefits. She did not accept the demotion. The case provides a very thorough examination of what constitutes a constructive dismissal and applies the analysis of the Supreme Court of Canada decision in the recent decision in Potter v New Brunswick Legal Aid. The Court of Appeal noted that if the employer was in fact arguing it had cause to dismiss Ms. Brake it did not have cause as the trial judge’s findings of fact were a complete answer to that assertion.The court also considered McDonald’s argument that Ms. Brake failed to mitigate by not accepting the demoted position. She would have had to work under a younger man whom she had trained and found that embarrassing and humiliating. The court found that a reasonable person in Ms. Brake’s position would not have been expected to have accepted the demotion to First Assistant.In terms of what was reasonable notice the court upheld the trial judge’s assessment that 20 months was reasonable. One key factor was Ms. Brake’s length of service. McDonald’s argued that its recognition of her prior service with other McDonald’s restaurants was limited to benefits. The court disagreed noting that although the letter of service credit referenced benefits it also suggested that service was to be recognized for all purposes. Simply put McDonald’s had not clearly limited the recognition of service as it now argued. Yet another example of an employer failing to “say what you mean and mean what you say”.Finally the case provides a lengthy discussion of mitigation. It concluded for example that EI payments are not to be deducted. It also held that income earned during the statutory notice period was not subject to mitigation and therefore any income she earned in that period was not to be deducted.What is most important about the decision on mitigation is how the court treated income earned by Ms. Brake during the 20 month notice period but outside the statutory notice period. The majority of the Court of Appeal held that since Ms. Brake had worked at Sobey’s to supplement her income while working at McDonald’s any income earned was not to be deducted. The majority left open for another day the question as to when “supplementary employment income rises to a level that it (or a portion of it) should be considered as a substitute for the amounts that would have been earned under the original contract” of employment and therefore should be deducted.What is very interesting is the concurring decision of Feldman J.A. He held that the income Ms. Brake earned in the cashier position at Home Depot was not to be deducted. He stated:It follows, in my view, that where a wrongfully dismissed employee is effectively forced to accept a much inferior position because no comparable position is available, the amount she earns in that position is not mitigation of damages and need not be deducted from the amount the employer must pay.This finding seems to me to be questionable and appears to run contrary to other authority. In my view while an employee may not have to accept the inferior position, when she does the earnings should be deducted.The Appeal was dismissed with costs assessed at $19,500 which might well have been less than her actual legal fees to defend the appeal.Brake v PJ-M2R Restaurant Inc., 2017 ONCA 402 (CannLII)