Evans v. Teamsters Local Union No. 31, (2008) 374 N.R. 1 (SCC)

• Judge: McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deschamps, Abella and Rothstein, JJ.
• Court: Supreme Court (Canada)
• Case Date: January 29, 2008
• Jurisdiction: Canada (Federal)
• Citations: (2008), 374 N.R. 1 (SCC);2008 SCC 20;[2008] SCJ No 20 (QL);[2008] 1 SCR 661;AZ-50488252;65 CCEL (3d) 1;292 DLR (4th) 577;[2008] ACS no 20;253 BCAC 1;374 NR 1

Evans v. Teamsters Union (2008), 374 N.R. 1 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2008] N.R. TBEd. MY.001

Donald Norman Evans (appellant) v. Teamsters Local Union No. 31 (respondent)

(31733; 2008 SCC 20; 2008 CSC 20)

Indexed As: Evans v. Teamsters Local Union No. 31

Supreme Court of Canada

McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deschamps, Abella and Rothstein, JJ.

May 1, 2008.

Summary:

The plaintiff was employed for over 23 years as a business agent for a union. He was dismissed when a new union executive took office. He sued the union for damages for wrongful dismissal.

The Yukon Territory Supreme Court, in a decision reported [2005] Yukon Cases (S.C.) 71, allowed the action, holding that the plaintiff was entitled to damages calculated on the basis of a notice period of 22 months. The union appealed, the only issue being whether the plaintiff's damage award should be reduced or eliminated because of his failure to mitigate his damages by accepting a new offer of employment with the same employer.

The Yukon Court of Appeal, in a decision reported (2006), 231 B.C.A.C. 19; 381 W.A.C. 19, allowed the appeal and set aside the award in its entirety. The plaintiff appealed.

The Supreme Court of Canada, Abella, J., dissenting, dismissed the appeal. The court held that both constructively dismissed and wrongfully dismissed employees could be required to mitigate their damages by returning to work for the dismissing employer as in this case. However the court stated that dismissed employees would only be required to do so under certain conditions (see paragraph 30). The court held that the reasonableness of an employee's decision not to mitigate was to be assessed on an objective standard.

Damages - Topic 6753

Contracts - Employment relationship or contract - Breach by employer - Mitigation by employee - [See all Master and Servant - Topic 8064 ].

Master and Servant - Topic 8064

Dismissal without cause - Damages - Mitigation - The plaintiff was employed for over 23 years as a business agent for a union - He was dismissed when a new union executive took office - He sued the union for damages for wrongful dismissal - The trial judge allowed the action holding that the plaintiff was wrongfully dismissed and entitled to damages calculated on the basis of a notice period of 22 months - The union appealed, the only issue being whether the plaintiff's damage award should be reduced or eliminated because of his failure to mitigate his damages by accepting a new offer of the same employment from the union for a 24 month period - The Yukon Court of Appeal allowed the appeal and set aside the award in its entirety, holding that the evidence did not support the conclusion that the plaintiff's circumstances viewed objectively, justified his refusal to resume employment with the union - The plaintiff failed to act reasonably with respect to the job offer made to him by the union and that constituted a failure to mitigate his damages - The plaintiff appealed - The Supreme Court of Canada dismissed the appeal - The court held that it was not objectively unreasonable for the plaintiff in this case to return to work to mitigate his damages - See paragraphs 34 to 50.

Master and Servant - Topic 8064

Dismissal without cause - Damages - Mitigation - The Supreme Court of Canada stated that "given that both wrongful dismissal and constructive dismissal are characterized by employer-imposed termination of the employment contract (without cause), there is no principled reason to distinguish between them when evaluating the need to mitigate. Although it may be true that in some instances the relationship between the employee and the employer will be less damaged where constructive rather than wrongful dismissal has occurred, it is impossible to say with certainty that this will always be the case. Accordingly, this relationship is best considered on a case-by-case basis when the reasonableness of the employee's mitigation efforts is being evaluated, and not as a basis for creating a different approach for each type of dismissal. In my [i.e., Bastarache, J.'s] view, the courts have correctly determined that in some circumstances it will be necessary for a dismissed employee to mitigate his or her damages by returning to work for the same employer. Assuming there are no barriers to re-employment (potential barriers to be discussed below) [see paragraph 30], requiring an employee to mitigate by taking temporary work with the dismissing employer is consistent with the notion that damages are meant to compensate for lack of notice, and not to penalize the employer for the dismissal itself. The notice period is meant to provide employees with sufficient opportunity to seek new employment and arrange their personal affairs, and employers who provide sufficient working notice are not required to pay an employee just because they have chosen to terminate the contract. Where notice is not given, the employer is required to pay damages in lieu of notice, but that requirement is subject to the employee making a reasonable effort to mitigate the damages by seeking an alternate source of income." - See paragraphs 27 and 28.

Master and Servant - Topic 8064

Dismissal without cause - Damages - Mitigation - The Supreme Court of Canada held that there were circumstances where it would be necessary for a dismissed employee to mitigate his or her damages by returning to work for the same employer assuming there were no barriers to re-employment - Where the employer offered an employee a chance to mitigate damages by returning to work for him or her, the central issue would be whether a reasonable person would accept such an opportunity - Factors to be considered included those in Cox v. Robertson (BCCA, 1999), such as the history and nature of the employment, whether or not the employee had commenced litigation, and whether the offer of re-employment was made while the employee was still working for the employer or only after he or she had already left - Those elements underlined the importance of a multi-factored and contextual analysis with the critical element at the forefront of the inquiry into what was reasonable being that an employee "not [be] obliged to mitigate by working in an atmosphere of hostility, embarrassment or humiliation" - "Thus, although an objective standard must be used to evaluate whether a reasonable person in the employee's position would have accepted the employer's offer ..., it is extremely important that the non-tangible elements of the situation - including work atmosphere, stigma and loss of dignity, as well as nature and conditions of employment, the tangible elements - be included in the evaluation" - See paragraph 30.

Master and Servant - Topic 8064

Dismissal without cause - Damages - Mitigation - The Supreme Court of Canada held that there were circumstances where it would be necessary for a dismissed employee to mitigate his or her damages by returning to work for the same employer assuming there were no barriers to re-employment - Where the employer offered an employee a chance to mitigate damages by returning to work for him or her, the central issue would be whether a reasonable person would accept such an opportunity - Notwithstanding that an objective standard applied, it was extremely important that the non-tangible elements of the situation, including work atmosphere, stigma and loss of dignity, as well as nature and conditions of employment, the tangible elements, be included in the evaluation - The court noted that "the nature of this inquiry increases the likelihood that individuals who are dismissed as a result of a change to their position (motivated, for example, by legitimate business needs rather than by concerns about performance) will be required to mitigate by returning to the same employer more often than those employees who are terminated for some other reason. This is not, however, because these individuals have been constructively dismissed rather than wrongfully dismissed, but rather because the circumstances surrounding the termination of their contract may be far less personal than when dismissal relates more directly to the individuals themselves. This point is illustrated by Michaud in which a bank executive was constructively dismissed as a result of an organizational restructuring. The evidence showed that the bank offered the employee another executive position and was anxious to have him continue working for them. Importantly, there was no evidence that the relationship between the employee and the bank was acrimonious or that he would suffer any humiliation or loss of dignity by returning to work while he looked for new employment. As a result, mitigation was required." - See paragraph 31.

Master and Servant - Topic 8064

Dismissal without cause - Damages - Mitigation - The Supreme Court of Canada, per Bastarache, J., opined that he did not "believe that damages awarded by lengthening the notice period because of bad faith conduct in the manner of dismissal (Wallace v. United Grain Growers Ltd. [SCC 1997]) ... should ever be subject to mitigation. These damages, though expressed in terms of an extension to the 'notice period', are in fact awarded as a result of the manner in which the employee is terminated and not in recognition of the fact that he or she is entitled to an opportunity to arrange his or her affairs prior to losing all employment income. As a result, the employee's ability to replace the lost income through mitigation is irrelevant, as this does not alter the suffering caused by the means of dismissal. In my view, Wallace damages ought therefore to be completely exempt from the need to mitigate." - See paragraph 32.

Cases Noticed:

Cox v. Robertson (1999), 131 B.C.A.C. 257; 214 W.A.C. 257; 69 B.C.L.R.(3d) 65; 1999 BCCA 640, refd to. [paras. 18, 84].

Michaud v. RBC Dominion Securities Inc., [2003] C.L.L.C. ¶210-015; 178 B.C.A.C. 317; 292 W.A.C. 317; 2002 BCCA 630, refd to. [para. 18].

Christianson v. North Hill News Inc. (1993), 145 A.R. 58; 55 W.A.C. 58; 106 D.L.R.(4th) 747 (C.A.), refd to. [paras. 24, 103].

Farquhar v. Butler Brothers Supplies Ltd., [1988] 3 W.W.R. 347; 23 B.C.L.R.(2d) 89 (C.A.), refd to. [paras. 24, 84].

Farber v. Compagnie Trust Royal, [1997] 1 S.C.R. 846; 210 N.R. 161, refd to. [para. 26].

Michaels et al. v. Red Deer College, [1976] 2 S.C.R. 324; 5 N.R. 99, refd to. [paras. 30, 98].

Mifsud v. MacMillan Bathurst Inc. (1989), 35 O.A.C. 356; 70 O.R.(2d) 701 (C.A.), refd to. [para. 30].

Reibl v. Hughes, [1980] 2 S.C.R. 880; 33 N.R. 361, refd to. [paras. 30, 110].

Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701; 219 N.R. 161; 123 Man.R.(2d) 1; 159 W.A.C. 1, refd to. [paras. 32, 93].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [paras. 35, 115].

Lefebvre v. HOJ Industries Ltd.; Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986; 136 N.R. 40; 53 O.A.C. 200, refd to. [para. 93].

Wells v. Newfoundland and Board of Commissioners of Public Utilities (Nfld.), [1999] 3 S.C.R. 199; 245 N.R. 275; 180 Nfld. & P.E.I.R. 269; 548 A.P.R. 269, refd to. [para. 97].

Darbishire v. Warran, [1963] 1 W.L.R. 1067, refd to. [para. 97].

Cemco Electrical Manufacturing Co. v. Van Snellenberg, [1947] S.C.R. 121, refd to. [para. 98].

Smith v. Aker Kvaerner Canada Inc. et al., [2005] B.C.T.C. 117; 2005 BCSC 117, refd to. [para. 103].

De Francesco v. Barnum (1890), 45 Ch. D. 430, refd to. [para. 108].

Hollis v. Dow Corning Corp. et al., [1995] 4 S.C.R. 634; 190 N.R. 241; 67 B.C.A.C. 1; 111 W.A.C. 1, refd to. [para. 110].

Forshaw v. Aluminex Extrusions Ltd. (1989), 39 B.C.L.R.(2d) 140 (C.A.), refd to. [para. 111].

Stein Estate v. Ship Kathy K, [1976] 2 S.C.R. 802; 6 N.R. 359, refd to. [para. 115].

Authors and Works Noticed:

Cheshire, Geoffrey Chevalier, and Fifoot, Cecil Herbert Stuart, The Law of Contract (8th Ed. 1972), p. 599 [para. 99].

England, Geoffrey, Recent Developments in the Law of the Employment Contract: Continuing Tension Between the Rights Paradigm and the Efficiency Paradigm (1994-95), 20 Queen's L.J. 557, pp. 530 [para. 106]; 599 [para. 95].

Fudge, Judy, The Limits of Good Faith in the Contract of Employment: From Addis to Vorvis to Wallace and Back Again? (2007), 32 Queen's L.J. 529, p. 530 [para. 93].

Harris, David, Wrongful Dismissal (2005 Looseleaf Update, Release 8), vol. 2, p. 4-292.3 [para. 107].

Waddams, Stephen M., The Law of Damages (2004 Looseleaf Update, Release 13), paras. 15.70 [para. 97]; 15.140 [para. 99].

Counsel:

Eugene Meehan, Q.C., and Marie-France Major, for the appellant;

Leo B. McGrady, Q.C., and Christopher J. Foy, for the respondent.

Solicitors of Record:

Macdonald & Company, Whitehorse, Yukon, for the appellant;

McGrady & Company, Vancouver, British Columbia, for the respondent.

This appeal was heard on January 29, 2008, before McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deschamps, Abella and Rothstein, JJ., of the Supreme Court of Canada. The judgment of the Supreme Court of Canada was delivered in both official languages on May 1, 2008, and the following opinions were filed:

Bastarache, J. (McLachlin, C.J.C., Binnie, LeBel, Deschamps and Rothstein, JJ., concurring) - see paragraphs 1 to 51;

Abella, J., dissenting - see paragraphs 52 to 140.