Law Times

Page 12 NOVeMBeR 16, 2015 • LaW TIMeS www.lawtimesnews.com Summary judgment adds wrinkle to mitigation issues Courts differ on how to handle employee duty when motion heard early on BY MICHAEL McKIERNAN For Law Times mployment lawyers' en- thusiastic embrace of sum- mary judgment is fuelling a judicial scrap over the best way to handle a terminated employee's duty to mitigate when the motion gets a hearing before the end of the notice period. A spate of decisions this year has revealed differing approaches among the province's Superior Court judges, and employment lawyer Andrew Monkhouse says more of them will have to take a stance in the future as he expects the previously rare issue to arise more and more frequently thanks to a combination of reduced mo- tion backlogs and an increasingly experienced workforce. "In Toronto, the scheduling court will not book a motion more than 100 days in advance," says Monkhouse, the principal at Toronto's Monkhouse Law PC who represented the plaintiff in one of the recently decided cases. "We took 6-1/2 months to get from the dismissal to a hearing, but it's quite possible to have even shorter gaps. Before, you could agree to a hearing in two years when a lot of notice periods would already be complete." In April, Justice Andra Pollak surveyed the options for judges facing mitigation issues during an incomplete notice period. Writ- ing her decision in Markoulakis v. SNC-Lavalin Inc., Pollak identi- fied three strategies previously ap- plied in Ontario cases: 1. The trust and accounting approach in which the plaintiff must account for any mitiga- tion earnings with a return to court necessary in the event of a dispute. 2. The partial summary judg- ment approach in which the parties return to court at the end of the notice period to determine the adequacy and success of the plaintiff 's miti- gation efforts. 3. The contingency approach in which the court reduces the plaintiff 's damages by a con- tingency for re-employment during the notice period. The 66-year-old plaintiff in Markoulakis had spent 40 years of service with the de- fendants and had received an eight-month payout covering the period roughly up until the hearing of his summary judgment motion. Pollak de- termined his reasonable notice period to be 27 months, leaving a year and a half of the notice period to run. The defendant objected to the use of the trust approach to resolve the mitigation issue, arguing it would be unfair as it would force it to recover any overpayment through further litigation or negotiations. SNC- Lavalin also argued that paying the damages in full might act as a disincentive for Markoulakis to find a new job, a particular concern for the company as he had already indicated his belief he wouldn't be able to get one. Pollak ultimately plumped for the partial summary judgment option, ruling that the defendant should continue to dole out its agreed monthly compensation to the plaintiff for the rest of the no- tice period subject to his obliga- tion to mitigate his damages. In the event of a dispute, she direct- ed the parties to return to court for a further summary judgment motion or trial. "This determination with respect to the amount of notice period is the best way to ensure a fair and expeditious resolu- tion of the dispute between the parties. The employee's right to a determination of the ap- propriate period of reasonable notice has been satisfied and the employer's right to challenge the employee's mitigation efforts has been preserved. As the par- ties know what their obligations are, the likelihood of the need for further court proceedings is minimized," Pollak concluded. However, just two months later in a decision that referenced Markoulakis, Pollak's Superior Court colleague, Justice Paul Per- ell, forcefully rejected the partial summary judgment approach as "cynical, patronizing, unfair, impractical, and expensive" in the case of Paquette v. TeraGo Networks Inc. The 49-year-old plain- tiff in Paquette had spent 14 years in upper middle man- agement with the defendant before his dismissal. Perell found he was due 17 months of reasonable notice and that he had made reasonable ef- forts to mitigate his losses in the seven months between his termination and the sum- mary judgment hearing. The judge ordered the defendant to pay Paquette $160,000, less taxes, to cover his salary and lost benefits for 17 months. Paquette could spend the funds as he wished, Perell ruled, but he must ac- count for any earnings during the remainder of the notice period with a constructive trust in favour of the defen- dant placed over those funds. "It is cynical to assume that with many years of future em- ployment both possible and needed, that he will sit on his hands and wait out the reason- able notice period rather than getting on with his career. If he earns mitigatory income, he will have to simply account for it or be liable for breach of trust," Perell concluded in the June 29 decision. Monkhouse, who acted for Paquette, says it was disappoint- ing the defendants withdrew their initial move to appeal Per- ell's decision as he would have liked the opportunity to get some clarity on the issue from the Court of Appeal for On- tario. He says both defendants and plaintiffs appear to have re- jected the contingency approach but he notes many dismissed employees favour trust and ac- counting because they worry about the prospect of extra liti- gation under the partial sum- mary judgment approach. "They want to have their legal fees determined at the time when the decision is made about their entitlement. You can envision cases where you get partial sum- mary judgment , but then there is a continued fight between legal counsel over mitigation efforts," he says. "Maybe one month you applied to 60 jobs and the next month it went down to 30, and the employer claims it's a failure to mitigate and starts withhold- ing payments." On Sept. 15, Justice Kenneth Hood added another decision on the issue in which he sided with Perell against the partial summary judgment approach in Zoldowksi v. Strongco Corp. "The plaintiff has to date taken diligent steps to mitigate. She is young and has many years of employment ahead of her. It is to her benefit to find future em- ployment as soon as she can. The award of 14 months is now 50% complete and there is not a sub- stantial notice period left. The expense of a partial summary judgment process outweighs the amount at issue. In the circum- stances of this case, I prefer the decision of Justice Perell." Dana Du Perron, an employ- ment lawyer with Ottawa's Nel- ligan O'Brien Payne LLP, says Hood's analysis raises the pos- sibility that both the partial sum- mary judgment and trust and ac- counting approaches could oper- ate side by side in the future. "It will be interesting to see if courts decide that different fact scenarios call for different ap- proaches," she says. Whatever direction the case law heads in the future, Du Per- ron says it's good the mitigation issues haven't put lawyers or judges off summary judgment as a tool for resolving litigation. "This area tends to be par- ticularly well suited to summary judgment as there's generally not a lot of facts in dispute. Often, it's just a question of what the ap- propriate notice period should be. The most important thing is that courts are at least willing to decide things with more or less finality and allow people to move on with their lives." LT FOCUS REACH ONE OF THE LARGEST LEGAL AND BUSINESS MARKETS IN CANADA! AVAILABLE ONLINE AND IN PRINT 8JUINPSFUIBOQBHFWJFXTBOEVOJRVF WJTJUPSTNPOUIMZDBOBEJBOMBXMJTUDPNDBQUVSFTZPVSNBSLFU FOR MORE INFORMATION CONTACT Colleen Austin T: 416.649.9327 | E: colleen.austin@thomsonreuters.com www.canadianlawlist.com Get noticed by the lawyers, judges, corporate counsel, finance professionals and other blue chip cilents and prospects who find the contacts they need for Canadian legal expertise at canadianlawlist.com with an annual Gold or Silver Enhanced listing package. ENCHANCE YOUR LISTING TODAY! Untitled-2 1 2015-10-28 8:14 AM Many plaintiffs favour the trust and accounting approach because they worry about the prospect of extra litigation under partial summary judgment, says Andrew Monkhouse. E Promote your law firm by ordering reprints of articles from the voice of the profession — Law Times! Reprints are great for: Been in Law Times Been in Law Times Want a record of it • Firm promotional material • Use on your web site • Training and education • Suitable for framing $200–$250/reprint We provide a colour PDF and unlimited reproduction rights. For more information or to order reprints, please e-mail Gail Cohen at: gail.cohen@thomsonreuters.com

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