June 11, 2015 By: Dana Du Perron
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With its decision in Hryniak v. Mauldin early last year, the Supreme Court of Canada set a new test for granting summary judgment. Many employment lawyers viewed this as a boon for wrongfully dismissed employees, as such cases are generally factually uncontentious and simply require a determination of the appropriate length of the notice period, making them perfectly poised for decision by way of summary judgment under the new test.

Yet the proliferation of motions for summary judgment that has ensued, coupled with an aging (and correspondingly more experienced) Canadian workforce, has given rise to another issue: when a summary judgment motion is brought before the notice period would have expired, how should the court determine the appropriate damages payable to the plaintiff, while still considering the plaintiff’s duty to mitigate?

There are a lot of legal concepts packed into the above hypothetical question. Fortunately, this issue was recently dealt with by the Superior Court of Justice in Markoulakis v. SNC-Lavalin Inc., in a decision that perfectly illustrates the challenge now faced by the court. The Plaintiff in that case was 66 years old and had accrued more than 40 years of service with the Defendant employer when his employment was terminated. The Defendant paid the Plaintiff an amount approximately equivalent to 34 weeks compensation, such that the Plaintiff had been paid approximately up to the time of the motion. The Plaintiff argued he was entitled to 30 months of notice, 6 months above the general 24-month “cap”, given what he claimed to be the extraordinary circumstances of his age, length of service, and the fact that he had spent his whole career with the Defendant. The Defendant objected, taking the position that the Plaintiff had failed to adequately search for another position, otherwise known as “mitigating” his losses.

The court was thus placed in a difficult position: if it found that Markoulakis was entitled to a lengthy common law notice period and awarded damages, the matter would be fully resolved more than one year before the notice period expired, such that Markoulakis would essentially be absolved of his duty to search for another position. The court held there was insufficient evidence to find that Markoulakis would not find another job during the notice period.

The court identified three different strategies previously applied by courts to deal with such circumstances:

  1. The Trust Approach: the Plaintiff must account for any mitigation earnings, and a procedure is designed for a potential return to Court in the event of a dispute;
  2. The Partial Summary Judgment Approach: the parties return at the end of the notice period to determine the adequacy and success of the Plaintiff's mitigation efforts;
  3. The Contingency Approach: the Plaintiff's damages are reduced by a contingency for re-employment.

The parties agreed that the contingency approach was not appropriate. The Plaintiff submitted the trust approach was appropriate, while the Defendant argued none of the above approaches were appropriate. Instead, they argued that the only fair manner of proceeding was to wait until the damages had crystallized at the end of the claimed notice period. Its basis for proceeding in such a way was that the trust approach would force the Defendant to return to court to recover an overpayment, and was thus inconsistent with the principles of judicial economy and fairness. Furthermore, the Defendant claimed the Plaintiff’s attitude about his mitigation efforts made it clear he would not try to mitigate his losses. Essentially, it would become a self-fulfilling prophecy: he did not believe he would find a new job, therefore, he would not find a new job.

The court first determined that the Plaintiff was entitled to a 27-month notice period, a significant finding on its own in that this case provides another example of extraordinary circumstances surpassing what is typically seen as being the 24-month “cap”. The court then decided that the Defendant would make monthly payments to the Plaintiff from which would be deducted any mitigation amounts. The court ultimately decided that if during the balance of the notice period (approximately 83 weeks) either the Defendant challenges the Plaintiff’s mitigation efforts or earnings, or the Defendant fails to make a required payment to the Plaintiff, the parties may return to court by way of a motion for summary judgment, or by way of a trial of an issue.

This decision resolved the issue in a way that preserves the efficiency of the summary judgment rule and the expediency it provides to employees, while maintaining the protections afforded at common law to employers.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2017 Nelligan O’Brien Payne LLP.

Service: Employment Law