Ontario Court Of Appeal Summaries (May 23 – 26, 2017)

Following are the summaries for this week's civil decisions of the Court of Appeal for Ontario.

In an important employment law decision in Brake v PJ-M2R Restaurant Inc., a majority of the Court clarified that while employment income earned during the notice period of a wrongful dismissal is generally treated as mitigation of loss, income earned during the notice period are not always deductable if they fall within one of the following three categories: First, EI benefits are not deducted. Second, statutory entitlements (under the ESA, for example) are not subject to mitigation. Third, where an employee commits to full-time employment, but the contract permits simultaneous alternate employment, and the first employer terminates her without notice, any income from the second employer that she could have earned while continuing with the first is not deductible. All of these reasons in the present case supported the trial judge's determination not to deduct from the plaintiff's damages aware her income derived from a much inferior job that she took after she was constructively dismissed.

The majority left open the question of when supplementary employment income and/or income obtained in the balance of the notice period 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, and, accordingly, be treated as deductible mitigation income.

Feldman, J.A., concurring in the result, went further, and held 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 in mitigation of damages and need not be deducted from the amount the employer must pay. This is because, at law, the employee is not obligated to accept the much inferior position in mitigation of damages.

In Gilmor v. Nottawasaga Valley Conservation Authority, the Court of Appeal applied Dunsmuir in concluding that the appropriate standard for review on an appeal from a decision of the Commissioner under the Conservation Authorities Act is reasonableness. In so doing, the Court overturned the Divisional Court and restored the Commissioner's decision not to permit construction of a building in a flood plain.

In Belanger v Sudbury (Regional Municipality), the Court reviewed the statutory defences to a municipality being found negligent under s.284(1) of the Municipal Act for failing to keep a roadway or highway in a reasonable state of repair. The damage award in that sad case of catastrophic injury was agreed at $12 million.

Other topics covered include the retroactivity/retrospectivity of municipal by-laws, contractual interpretation, repair and storage liens (no limitation period applicable to possessory liens), patent infringement, and leave to commence fourth party claims in the construction law context.

Table of Contents

Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402

Keywords: Employment Law, Wrongful Dismissal, Constructive Dismissal, Employment Standards Act, Notice, Statutory Entitlements, Damages, Mitigation

Gilmor v. Nottawasaga Valley Conservation Authority, 2017 ONCA 414

Keywords: Municipal Law, Administrative Law, Standard of Review, Correctness, Reasonableness, Dunsmuir v. New Brunswick

Belanger v Sudbury (Regional Municipality), 2017 ONCA 428

Keywords: Torts, Negligence, MVA, Contributory Negligence, , Municipal Liability, Highway Maintenance, Municipal Act, R.S.O. 1990, c. M.45, s. 284, Lloyd v. Bush, 2017 ONCA 252, , Frank v Central Elgin (Municipality), 2010 ONCA 574

Burlington (City) v Burlington Airpark Inc., 2017 ONCA 420

Keywords: Municipal Law, Statutory Interpretation, Retroactivity, Retrospectivity, Legislation Act, 2006, S.O. 2006, c.21, Sch. F., s.52, Municipal Act, 2001, S.O. 2001, c. 25, s.440

OrthoArm Incorporated v GAC International LLC, 2017 ONCA 418

Keywords: Intellectual Property, Patents, Infringement, Contracts, License, Costs, Rules of Civil Procedure, Rule 57.01

Eden Agency Inc. v. Palinkas, 2017 ONCA 421

Keywords: Contracts, Bailment, Repair and Storage Liens Act, R.S.O 1990, c. R.25, Limitation Periods, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.

TMS Lighting Ltd. V. KJS Transport Inc., 2017 ONCA 427

Keywords: Damages, Tort Damages, Evidence, Deference

56 King Inc. v. Aviva Canada Inc., 2017 ONCA 408

Key Words: Insurance Law, Appraisals, Insurance Act, s. 128

Bentivoglio v Groupe Brigil Construction, 2017 ONCA 413

Keywords: Civil Procedure, Construction Law, Third and Subsequent Party Claims, Leave to Commence, Nunc Pro Tunc, Construction Lien Act, s. 56

Allied Properties Reit v 1064249 Ontario Inc., 2017 ONCA 419

Keywords: Real Property, Municipal Law, Zoning, Legal Non-Conforming Use, Injunctions, Standard of Review

Best Source Inc. v. International Industries Corporation, 2017 ONCA 411

Keywords: Contracts, Assignment, Contractual Interpretation, Standard of Review

For Civil Endorsements, click here.

For Criminal and Ontario Review Board Decisions, click here.

Civil Decisions:

Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402

[Gillese, Pepall, and Feldman JJ.A.]

Counsel:

J.F. Lalonde, for the appellant

M.V. Peters, for the respondent

Keywords: Employment Law, Wrongful Dismissal, Constructive Dismissal, Payment In Lieu of Notice, Employment Standards Act, Statutory Entitlements, Damages, Mitigation, Michaels v. Red Deer College, [1976] 2 S.C.R. 324, Sylvester v. British Columbia, [1997] 2 S.C.R. 315, Jack Cewe Ltd. v. Jorgenson, [1980] 1 S.C.R. 812, Karas v. Rowlett, [1944] S.C.R. 1

Facts:

A long-serving McDonald's restaurant manager, Ms. Brake, who had received "excellent" performance reviews for over a decade, was dismissed from her position without notice or payment of her statutory entitlements. She successfully sued for wrongful dismissal and was awarded damages representing 20 months' compensation in lieu of notice, inclusive of statutory severance under the Employment Standards Act. The employer appealed.

Issues: Did the trial judge err:

(1) By failing to give adequate reasons for his findings of fact and credibility determinations?

(2) In finding that Ms. Brake had been constructively dismissed?

(3) By failing to find that Ms. Brake's decision to not accept the offer of continued employment as a First Assistant amounted to a failure to mitigate her damages, thus disentitling her to any damages?

(4) In setting the notice period at 20 months?

(5) In his treatment of mitigation during the notice period?

Holding:

Appeal dismissed.

Reasoning:

(1) No. The trial judge articulated the relevant legal principle, reviewed the evidence, made his findings, and indicated how he applied the legal principles in light of those findings. The trial judge did not make a palpable and overriding error in his findings. Accordingly, the first ground of appeal was dismissed.

(2) No. When the appellant offered Ms. Brake the non-supervisory position of First Assistant, with "meaningfully inferior benefits," or to face termination, it unilaterally made a substantial or fundamental change to her employment contract, and in so doing, it constructively dismissed her.

(3) No. A reasonable person in Ms. Brake's position would not have been expected to accept the demotion to First Assistant. Since there was no palpable and overriding error in the finding of law and fact, the third ground of appeal was dismissed.

(4) No. The trial judge based the reasonable notice period of 20 months on the Bardal factors. The trial judge added seven years of full-time service at a previous McDonald's franchise with the thirteen years of actual service with PJ-M2R. The trial judge's finding in this regard was owed considerable deference.

(5) No. First, there is no "magic formula" that an employee must follow when making reasonable efforts to obtain other employment and thereby mitigate her loss. When an employer alleges that a former employee has not reasonably mitigated his or her losses, "the question is whether [the employee] has stood idly or unreasonably by, or has tried without success to obtain other employment:" Michaels v. Red Deer College, [1976] 2 S.C.R. 324, at p. 331. The fact that Ms. Brake did not apply for other restaurant management positions does not mean that she did not make reasonable efforts to mitigate, as she was entitled to consider her long-term interests.

Second, the trial judge did not err when he did not reduce the damages award by the amounts that Ms. Brake received during the notice period, or the "amounts received in mitigation of loss."

The controlling rule here is that an employee who is dismissed without reasonable notice is entitled to damages for breach of contract based on the employment income the employee would have earned during the reasonable notice period, less any amounts received in mitigation of loss during the notice period: Sylvester v. British Columbia, [1997] 2 S.C.R. 315, at paras. 14-17.

Gillese J.A. (Pepall J.A. concurring) disagreed with the trial judge's interpretation of analyzing loss mitigation, stating that the court does need to consider whether income received from a job that was inferior to the one from which the employee was dismissed was mitigation income.

The controlling general principle here is that employment income earned during the notice period is generally to be treated as mitigation of loss. The income earned by Ms. Brake during the notice period need not be deducted from the damages award for the following three reasons:

(a) Employment Income benefits are not to be deducted from damages awarded for wrongful dismissal. Jack Cewe Ltd. v. Jorgenson, [1980] 1 S.C.R. 812, at p. 818.

(b) Statutory entitlements are not subject to mitigation. Any employment income earned during a statutory entitlement period is not deductible as mitigation income. This is because the Employment Standards Act benefits are minimum entitlements and may not be reduced...