



COURT OF APPEAL FOR ONTARIO

CITATION: Farwell v. Citair, Inc. (General Coach
    Canada), 2014 ONCA 177

DATE: 20140307

DOCKET: C56298

Doherty, Lauwers and Strathy JJ.A.

BETWEEN

Kenneth Farwell

Plaintiff (Respondent)

and

Citair, Inc. c.o.b. as General Coach Canada

Defendant (Appellant)

Robert J. Atkinson, for the appellant

Lianne Armstrong, for the respondent

Heard:  February 5, 2014

On appeal from the judgment of Justice Johanne N.
    Morissette of the Superior Court of Justice, dated October 23, 2012, with
    reasons reported at 2012 ONSC 6013.

Lauwers J.A.:

[1]

The trial judge found that the
    appellant, Citair, Inc., carrying on business as General Coach Canada, had
    wrongfully dismissed the respondent, Kenneth Farwell. She fixed the damages in
    lieu of notice at 24 months, and dismissed the appellants argument that Mr.
    Farwell had not mitigated his damages because he did not stay in the position
    offered to him of Purchasing Manager for the notice period. For the reasons set
    out below, I would dismiss the appeal.

Constructive
    Dismissal

[2]

The appellant argues that the
    trial judge made an error of mixed fact and law, and misapplied the principles
    of the law of constructive dismissal, when she found that the appellants
    transfer of the respondent from Operations Manager/Vice President of Operations
    to the position of Purchasing Manager was a fundamental change to the
    employment contract.

[3]

The trial judge applied the
    decision of the Supreme Court of Canada in
Farber v. Royal Trust Co.
,
    [1997] 1 S.C.R. 846. Gonthier J. approved, at para. 34, the following statement
    of the law taken from an article by
Justice
    N. W. Sherstobitoff of the Saskatchewan Court of Appeal
:

A constructive dismissal occurs when an employer makes a
    unilateral and fundamental change to a term or condition of an employment
    contract without providing reasonable notice of that change to the employee.
    Such action amounts to a repudiation of the contract of employment by the
    employer whether or not he intended to continue the employment relationship.
    Therefore, the employee can treat the contract as wrongfully terminated and
    resign which, in turn, gives rise to an obligation on the employers part to
    provide damages in lieu of reasonable notice.

[4]

The trial judges key findings on
    the evidence were the following:

In reorganizing, Kens role as VP Operations to Purchasing
    Manager involved a significant change in responsibilities and duties. It
    entailed a change in title to reflect his diminished role in the company
    resulting in a significant loss of status and prestige.  In that regard, the
    evidence of all witnesses, including that of Roger, acknowledged that Kens
    proposed new role would be of lesser status, even though Roger attempted to
    convince this Court that all his managers are of importance, it remains a fact
    that from an objective point of view, the Purchasing Manager does not have the
    same status or prestige as the Operations Manager to whom the Purchasing
    Manager reports to.

[5]

I would find that the trial judge
    did not err in concluding that Mr. Farwell was constructively dismissed. The
    decision is amply supported by the evidence and fits comfortably within the law
    as stated by the Supreme Court of Canada in
Farber
.

The Notice Period

[6]

The trial judge set the period of
    notice at 24 months. The appellant submits that a notice period two to four
    months shorter would have been more appropriate.

[7]

The trial judge applied the well-known
    principles for assessing the reasonableness of notice set out in
Bardal v.
    Globe & Mail Ltd
. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.J.), at p. 145.
    She stated:

As indicated in
Bardal v. The Globe & Mail Ltd
.,
    the reasonableness of the notice must be decided with reference to each
    particular case, having regard to the character of the employment, the length
    of service of the employee, the age of the employee and the availability of
    similar employment, having regard to the experience, training and
    qualifications of the employee.

[8]

The trial judge found the
    following facts:

Ken was 58 years of age in May 2009 and had been employed for
    38 years. He had a high level managerial employment and had been very dedicated
    to the company.

[9]

I would find that the trial judge
    did not err in her determination of the length of notice in these
    circumstances.

Mitigation

[10]

Mr. Farwell made efforts in a poor
    economy to find other employment but was not successful for many months.

[11]

The appellant argues that Mr.
    Farwell had a legal duty to mitigate his damages, and that he was obliged to
    accept the job of Purchasing Manager during the period of working notice; the
    salary and working conditions would have been almost the same as for his
    previous position, the only difference being a likely reduction in bonus. Giving
    effect to this argument would eliminate Mr. Farwells damages.

[12]

Bastarache J. set out the relevant
    law in
Evans

v. Teamsters Local Union No. 31
, 2008 SCC 20, [2008]
    1 S.C.R. 661, at para. 30:

This Court has held that the employer bears the onus of
    demonstrating both that an employee has failed to make reasonable efforts to
    find work and that work could have been found (
Red Deer College v. Michaels
,
    [1976] 2 S.C.R. 324).
Where the employer offers the employee a chance to
    mitigate damages by returning to work for him or her, the central issue is
    whether a reasonable person would accept such an opportunity.
In 1989, the
    Ontario Court of Appeal held that a reasonable person should be expected to do
    so "[w]here the salary offered is the same, where the working conditions
    are not substantially different or the work demeaning, and where the personal
    relationships involved are not acrimonious" (
Mifsud v. MacMillan
    Bathurst Inc.
(1989), 70 O.R. (2d) 701, at p. 710). [Emphasis added.]

[13]

The trial judge correctly noted
    that an employee cannot be obliged to mitigate by working in an atmosphere of
    hostility, embarrassment or humiliation.  She noted, again correctly, that she
    was obliged to assess, objectively, the work atmosphere, stigma and loss of
    dignity to be faced by Mr. Farwell in considering whether to continue his
    employment in an effort to mitigate his damages.

[14]

The trial judge found that obliging
    Mr. Farwell to accept the new position, which he had held years earlier, would
    be humiliating and embarrassing for him:

Further in this case, the fact that an employee previously
    subordinate to Ken, would be elevated to his position, and in Kens mind,
    having to now report to Wayne, even though Roger testified otherwise, would be
    humiliating and embarrassing given the prior roles and responsibilities within
    the company. For these reasons, I find that requiring Ken to return to the
    company in order to mitigate his losses would be unreasonable.

[15]

The appellant argues that the trial
    judges use of the words, in Kens mind, shows that, despite her correct
    self-instruction on the test, she actually took a subjective approach in her
    assessment. The appellant submits that the trial judge did not properly assess
    the circumstances under which Mr. Farwells employment would have continued. In
    assessing work atmosphere, stigma and loss of dignity for the purposes of
    mitigation, the trial judge made no mention of the positive elements in his
    relationship with his employer.

[16]

The appellant points to the
    consensus view of the witnesses that Mr. Farwell was an exemplary
    employee, and to the evidence that Mr. Farwell had previously excelled as
    Purchasing Manager. The employers view was that he was simply mismatched as
    Operations Manager. The appellant also relies on the evidence that Mr.
    Farwells superior repeatedly pressed him to remain with the company, and that
    Mr. Farwell enjoyed a good working relationship with his colleagues and
    commanded respect in the Purchasing Manager role.

[17]

The appellant adds that the
    evidence showed that the dismissal was motivated by economic considerations and
    not by any animus against Mr. Farwell. The appellant had recently adopted a new
    product focus in which Mr. Farwells immediate subordinate was the expert, and
    he was not; the restructuring of its management personnel was a consequence of
    its evolving business model in tough economic times and was not meant to
    stigmatize him.

[18]

The appellant argues that in
    circumstances such as these, where the employers restructuring serves a
    legitimate business interest and is not merely a pretext for terminating an
    employee, an employee like Mr. Farwell should be obliged, as part of his duty
    to mitigate, to return to work for the same employer, at least for the notice
    period, despite the constructive dismissal:
Evans
, at para. 31; and
Davies
    v. Fraser Collection Services Ltd.
, 2008 BCSC 942, 67 C.C.E.L. (3d) 191,
    at para. 43.

[19]

In my view, an employees
    obligation to mitigate by remaining with his or her employer for the period of
    working notice is an aspect of what the law recognizes as efficient breach. Courts
    ought not to discourage efficient breach: see e.g.
Bank of America Canada
    v. Mutual Trust Co.
, 2002 SCC 43, [2002] 2 S.C.R. 601, at para. 31. In
    proper circumstances, the principle of efficient breach can apply to employment
    contracts:
IBM Canada Limited v. Waterman
, 2013 SCC 70, [2013] S.C.J.
    No. 70, at para. 153, Rothstein J., dissenting.

[20]

There may well be merit in the
    appellants argument that the trial judge took a subjective approach in
    assessing work atmosphere, stigma and loss of dignity for the purposes of
    mitigation, rather than the required objective approach. There may also be
    merit in the argument that the circumstances here would support the imposition
    of an obligation on Mr. Farwell to mitigate by working through the notice
    period. But the appellant faces another obstacle, which, in my view, is
    insurmountable. To paraphrase
Evans
, the appellants mitigation argument
    presupposes that the employer has offered the employee a chance to mitigate
    damages by returning to work. To trigger this form of mitigation duty, the
    appellant was therefore obliged to offer Mr. Farwell the clear opportunity to
    work out the notice period
after
he refused to accept the position of Purchasing Manager and told the Appellant
    that he was treating the reorganization as constructive and wrongful dismissal.

[21]

There is no evidence that the appellant
    extended such an offer to Mr. Farwell. Accordingly, Mr. Farwell did not breach
    his mitigation obligation by not returning to work.

[22]

I would dismiss the appeal with costs
    fixed by agreement on a partial indemnity basis at $15,000.00 all inclusive.

Released:  March 7, 2014
    D.D.                            P. Lauwers J.A.

I
    agree Doherty J.A.

I
    agree G. Strathy J.A.


