COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Nardulli v. C-W Agencies Inc.,

2014 BCCA 31

Date: 20140128

Docket: CA040455

Between:

Vito Nardulli

Respondent

(Plaintiff)

And

C-W Agencies Inc.

Appellant

(Defendant)

Before:

The Honourable Madam Justice Saunders

The Honourable Madam Justice Kirkpatrick

The Honourable Mr. Justice Harris

On appeal from:  An
order of the Supreme Court of British Columbia,
dated November 13, 2012 (
Nardulli v. C-W Agencies Inc.
, 2012 BCSC 1686,
Vancouver Docket S090014).

Counsel for the Appellant and Respondent on cross-appeal:

D.P. Church, Q.C.

I. Schildt

Counsel for the Respondent and Appellant on cross-appeal:

G. Holeksa

R. Germann

Place and Date of Hearing:

Vancouver, British
  Columbia

November 19 and 20,
  2013

Place and Date of Judgment:

Vancouver, British
  Columbia

January 28, 2014

Written Reasons by:

The Honourable Madam Justice Kirkpatrick

Concurred in by:

The Honourable Madam Justice Saunders

The Honourable Mr. Justice Harris

Summary:

At
trial, the plaintiff claimed damages for wrongful dismissal and profit share
during his employment and in the notice period. The trial judge awarded him 21
months wages in lieu of notice and profit share for the period of his
employment. His claim to profit share in the notice period was dismissed as was
his claim to special costs.

Held:
appeal allowed in part; cross appeal dismissed. The judges finding that the
plaintiff was wrongfully dismissed and the award of 21 months wages was
upheld, as was the decision not to award special costs. However, the judge
erred in the award of profit share. The profit share plan was never
implemented. Although the plaintiff was eligible for a discretionary bonus, the
employer properly exercised its discretion in deciding not to pay an additional
bonus to the plaintiff.

Reasons
for Judgment of the Honourable Madam Justice Kirkpatrick:

[1]

Vito Nardulli was employed by C-W Agencies Inc. (C-W) from 1986 to
2008, except for a nine month period beginning in January 2006, when he was dismissed
for cause. He was rehired in October 2006. In September 2008, C-W informed
Nardulli that he was not entitled to payments under an alleged profit sharing
plan. Nardulli was asked to sign a release waiving any right to share in C-Ws
profits. Nardulli refused, sought legal advice and commenced an action against
C-W on January 2, 2009. In his statement of claim, Nardulli pleaded that at all
material times, it was a term of his contract of employment that he was
entitled to participate in a company profit sharing plan as an integral part of
his remuneration. He claimed it was a breach of his contract of employment to
refuse payment.

[2]

On January 22, 2009, C-W terminated Nardullis employment for cause.
Nardulli subsequently amended his claim to include damages for wrongful
dismissal.

[3]

Nardullis claims were tried in the Supreme Court over 37 days between
October 2010 and June 2011. The trial judge delivered very long reasons indexed
as 2012 BCSC 1686. The judge awarded Nardulli $262,500 in damages for wrongful
dismissal and $1,332,149 for profit sharing, $582,149 of which was to be
remitted to Canada Revenue Agency on account of tax, and $750,000 to be paid to
Nardulli.

[4]

The judge held that an additional sum of $895,000 paid to or on behalf
of Nardulli were gifts which were not, as C-W alleged, to be taken into account
in determining his profit share.

[5]

C-W appeals the order.

[6]

With respect to Nardullis profit share, C-W alleges the judge erred:
in deciding the issue of profit sharing on a legal basis that was not pleaded
or argued at trial; in finding that a bonus formed an integral part of
Nardullis compensation; and, having found that Nardulli was entitled to a
discretionary bonus, failing to consider whether C-W had reasonably exercised
its discretion to refrain from paying a bonus to Nardulli.

[7]

With respect to wrongful dismissal, C-W contends the judge erred in
concluding that the scope of Nardullis employment was unclear and by failing
to consider accumulated cause in finding whether or not Nardulli was wrongfully
dismissed.

[8]

Nardulli cross-appeals on the grounds that the judge erred in not
awarding him an amount for profit share during the notice period and in
refusing to award him his special costs.

Facts

[9]

The reasons for judgment fully set out the evidence. I need not repeat
it here. The essential facts relevant to the appeal are as follows.

[10]

C-Ws business is primarily the international marketing and resale of
lottery tickets purchased in Canada and elsewhere to purchasers outside of
Canada.

[11]

Randall Thiemer was, until his death in 2008, the sole shareholder and
director of C-W. Sometime in 2000 he announced his intention to implement an
employee profit sharing plan.

[12]

A draft profit sharing plan was prepared by C-Ws lawyers on or about
November 15, 2000. It was to be effective from September 1, 2000.

[13]

The profit sharing distributions under the draft plan required C-Ws
board of directors to determine the amount available for distribution, the
persons entitled to participate in the plan, and the number of units awarded to
each participant for the year.

[14]

The draft profit sharing plan stated that the distribution amount would
be 25% of available cash. The available cash was to be calculated based on the
total cash flow from operating activities for the year, less 2.5% of sales as a
reserve of working capital and fixed assets and 1.5% of sales as a reserve of
prepaid sales.

[15]

Profit sharing distributions were to be calculated using a specific
formula set out in clause 5.5 of the draft plan.

[16]

Under the draft plan, Nardulli was to receive two unit entitlements for
the year ending August 31, 2001.

[17]

A resolution approving the draft profit sharing plan by the C-W board of
directors, of which Thiemer was the then sole director, was never signed by
Thiemer.

[18]

Nardulli commenced employment with C-W in March 1986 and eventually
worked his way up to Vice-President Operations. Nardulli became drug dependent
and his work performance suffered. His employment was terminated for cause in
January 2006. He did not, at that time, claim entitlement to profit sharing.
When Nardulli was rehired in October 2006, he was reinstated with the same
benefits and annual salary of $150,000, effective from October 1, 2006.

[19]

At about the time Nardulli returned to work in October 2006, he told Thiemer
that he and his family had suffered financially following his dismissal. Thiemer
offered to purchase a house for Nardulli. Within weeks, Thiemer gave Nardulli $150,000
(for household furnishings and to pay for drug rehabilitation) and purchased a
home for him for a total of approximately $895,000. There is some evidence that
suggests Thiemer purchased the house for Nardulli rather than advancing him
cash as Thiemer was concerned Nardulli would use the money unwisely.

[20]

These payments, or the promise of them, coincided with Nardulli informing
Thiemer in mid-October 2006, that Michael McLoughlin, who was C-Ws CEO from
2004 (and who fired Nardulli in January 2006), was setting up a competing
business and was circulating unflattering photographs of Thiemer. Thiemer
immediately terminated McLoughlins employment.

[21]

In the years following the announcement of the profit sharing plan, some
employees had raised with Thiemer their wish to be paid profit share. Around the
same time that Thiemer paid $895,000 to Nardulli, he also paid sums to other
employees from his personal accounts, some of which were noted to be profit
draws:

a)

on October 11,
2006, Thiemer paid $250,000 to Nick Belmonte;

b)

on October 17,
2006, Thiemer paid $250,000 to Al DeJoseph;

c)

on October
17, 2006, Thiemer paid $500,000 to Frank Vogt;

d)

on October 18,
2006, Thiemer paid $300,000 to Marisol Malates;

e)

on October 22,
2006, Thiemer paid $400,000 to Ted Weir; and

f)   on November 23, 2006, he
paid a further $250,000 to Nick Belmonte.

[22]

These payments were in addition to two other payments that had been made
earlier in the year as a result of DeJoseph and Belmonte confronting Thiemer
about not receiving their profit share:

a)

on June 23,
2006, Thiemer paid $250,000 to Al DeJoseph; and

b)

on September 21,
2006, Thiemer paid $250,000 to Nick Belmonte.

The cheque request form for the payment to Belmonte
indicated that it was for an Advance on Profit Sharing.

[23]

The foregoing amounts paid by Thiemer to employees were less than, or
more than, or equal to the amount payable under the draft profit sharing plan.
However, it is clear, as the judge found, that the payments were not made in
accordance with the formula in the draft plan.

[24]

Thiemer died on August 21, 2008. Prior to his death, Thiemer retained Brian
Gardiner, a chartered accountant and certified fraud examiner, to undertake an
analysis of the amounts Thiemer had paid to various C-W employees in October
2006 so as to achieve parity among the employees.

[25]

A complicating feature in this trial was that Thiemer had died and there
was little evidence as to his intentions with respect to the profit sharing
plan.

[26]

Critical evidence of Thiemers intentions came from a recorded telephone
conversation in which Thiemer instructed Gardiner to undertake the analysis to
achieve parity in the amounts Thiemer had paid C-W employees from his
personal accounts in 2006. The telephone instructions made on August 21, 2007
were tape recorded by Gardiner and include the following:

Theres a lot of peoples pay that really dont have any
semblance to each other, uh
you know people and the profit sharing plan
which never worked out and I dont think ever will, but uh you know with
everybody thinking there were profit coming you know Im supposed to make it so
and I was doling out money, you know so, from my personal account to make it so
and so you know but I dont want it out of my personal account in the Caymans,
or out of my personal account in Canada and a I want it out of the company and
what I would like to do is do an audit and see who got what and how they, how
they you know, you know sort of parity if any ...

. . .

You know some people are under
balance, some people are way over balance on their profit draws and I just, I
just paid them out as for loans, personal loans and that sort of thing and I
just want to pacify them,
except as bonuses I guess
.

[Emphasis Added.]

[27]

Gardiner affirmed Thiemers view of the non-existence of the profit
sharing plan:

Q         Any discussions with Mr. Thiemer about
these payments to employees? All this work you had done?

A.         We talked about
the issue of the profit-sharing plan, and he told me that he had never
successfully completed the implementation of a public profit-sharing plan. He
told me that he understood it was his obligation to communicate to his senior
people that there wasnt one.

[28]

These instructions reflect the very unusual circumstances of this case.
It is plain that Thiemer, as the companys sole shareholder, treated C-W as his
own financial fiefdom. Thiemer was, in essence, C-W. He paid very significant
sums from his personal accounts in the expectation that they would eventually
be run through the company and he would be repaid the sums he had advanced on
behalf of the company.

[29]

After conducting the review, Gardiner prepared documents dated June 25
and 26, 2008 which identified payments to C-W employees as profit share/bonus.
The payments were confirmed by Thiemer initialling both documents. The document
dated June 26, 2008 included the following statement:

The payments in 2005 and 2006 noted above as #1-9 were each,
the net after tax amount of the profit share/bonus advanced to by Randy
[Thiemer] on behalf of C-W.

Accordingly C-W should be
declaring the payments at the grossed up amounts and remitting the taxes due.

[30]

The payment described as item #2 was the $150,000 payment to Nardulli on
October 11, 2006. The paragraph immediately following the list of payments
referred to the funds that had been advanced for the purchase of a house that
was registered in Nardullis name.

[31]

Following Thiemers death, Gardiner completed the task assigned to him
to even up the payments to C-W employees by way of a written schedule setting
out his recommendations to the board of directors for amounts he defined as discretionary
bonuses. The schedule was adopted by directors resolution on September 23,
2008. Nardulli was excluded from the schedule and therefore was not entitled to
further payment. A note to the schedule explains that in 2006 Thiemer had
provided Nardulli with $150,000 and funds to purchase a house. The note further
explains that Nardulli was fired for cause in 2006 and therefore ineligible for
profit sharing.

[32]

When Nardulli was advised that the payments made to him in 2006 would be
treated as bonuses, he told Gardiner he could not afford to pay tax on the
amounts he had received. Gardiner testified that because there was no profit
sharing plan, the parity issue had to be resolved through discretionary
bonuses, or, in Nardullis case, by characterizing the advances as gifts, so as
to allow Nardulli to avoid paying tax. Gardiner testified that in order for
Nardulli to avoid paying tax on these amounts, he decided to characterize the
payments to Nardulli as gifts unrelated to his employment with C-W.

[33]

On November 4, 2006, Nardulli demanded to be paid his alleged profit
share, a demand that astounded Gardiner since Nardulli had already received a
gift of $895,000. On November 26, 2008, Nardulli went on medical leave and
never returned to work. As noted, he commenced his action against C-W on
January 2, 2009 and was dismissed for cause on January 22, 2009.

Discretionary Bonus and Profit Sharing Issues

[34]

In her reasons, the judge summarized her factual findings with respect
to the profit share issue, albeit in the context of determining whether a bonus
would have formed part of Nardullis compensation during the notice period (at para. 555):

1.   Mr.
Thiemer promised profit sharing to the senior
management employees;

2.   A Profit
Sharing Plan was drafted but not formerly implemented by Mr. Thiemer;

3.   Mr. Nardulli
was to have been a participant in the Profit Share Plan;

4.   Mr. Thiemer
continued to promise profit sharing to various senior employees over the years
and, with other senior employees, expressly contracted on behalf of C-W to pay
profit sharing under the Profit Sharing Plan, even though the Plan was never
formerly implemented;

5.   Since
around 2000, the salaries of senior management were capped at $150,000, and
there were no salary increases in recognition of the fact that senior
management employees would receive profit sharing in lieu of any salary
increases;

6.   Mr. Thiemer
made payments to Mr. Belmonte as an advance on his profit sharing;

7.   Mr. Thiemer
acknowledged to Mr. Gardiner that although the Profit Sharing Plan never
worked out, everyone believed that they would be receiving profit sharing, and
he had to make it so and was doling out money...to make it so;

8.   Mr. Thiemer
asked Mr. Gardiner to determine what payments he had made from his
personal account as profit draws, and to even out the payments and arrange
for those payments to be made by C-W;

9.   Mr. Gardiner
based the calculation of the profit sharing payments in part on the terms of
the draft Profit Sharing Plan;

10. Mr. Gardiner
recognized that Mr. Thiemers house purchase for Mr. Nardulli and the
$150,000 occurred before Mr. Nardulli was rehired, and was a gift from Mr. Thiemer;
and

11. The house and the $150,000 was not an
advance on profit sharing, or otherwise related to Mr. Nardullis
employment.

[35]

The judge then stated:

[556]    Where the Court concludes that the bonus constituted
an integral part of the plaintiffs salary, and the process of determining the
bonus under the contract involves an element of discretion, the court will
proceed on the basis that this discretion must be exercised reasonably and in
accordance with objective criteria:
Ivanore v. Bastion Development Corp
.
(1993), 47 C.C.E.L. 74.

[557]    Mr. Gardiner described the payments he
determined as discretionary bonuses. However, the payments Mr. Thiemer
personally made were considered by him to be profit draws. I accept that they
were discretionary because there was no established formula; the discretion
must be exercised reasonably and objectively.

...

[560]    Furthermore, I do not think that C-W can argue that
the Profit Sharing Plan never existed, yet at the same time argue that under
the terms of the Plan Mr. Nardulli is not entitled to profit sharing
because he was terminated for cause. In any event, Mr. Nardulli may have
been terminated for cause in January 2006, but when he was rehired in October
2006 it was on terms that all of his benefits be reinstated, which would
include those under the Profit Sharing Plan or the profit draws Mr. Thiemer
knew that the senior management employees reasonably expected was an integral
part of their overall compensation.

C.        Disposition of
Profit Sharing Claim

[561]    I accept Mr. Nardullis argument that the
evidence supports a finding that C-W created a reasonable expectation of a
Profit Sharing Plan, and those expectations were crystallized into an
entitlement to receive payment when Mr. Thiemer paid advances on profit
sharing to senior management employees in 2006.

[562]    The Profit Sharing Plan document was drafted and finalized,
except for Mr. Thiemers signature. Mr. Thiemer then advised the
senior management that the Plan existed and that it was meant to provide
significant remuneration as a way to recognize the senior management employees
devotion to C-W over the years. It was also written into Mr. DeJosephs
contract when he was hired.

[563]    The oral representations made by Mr. Thiemer
were intended to have contractual force. He recognized that the employees
expected to receive profit sharing. Raises were not given and senior management
salaries were left at $150,000 in lieu of the intended profit share payments.
When employees confronted Mr. Thiemer about profit sharing or salary
increases, he did not deny the existence of profit sharing or try to back out
of his promise to pay profit sharing. In fact, he did the opposite.

[564]    Although Mr. Thiemer
paid several C-W employees substantial amounts that were to be advances on
the profit shares under the Plan, he does not appear to have followed a formula
or to have pegged the payments to anything in particular. However, there is no
evidence that he did not appreciate what he was doing.

[36]

Nardullis fundamental pleading was that C-Ws profit sharing plan was a
material term of his contract of employment. C-Ws defence, which the judge
appears to have accepted, was that C-W never implemented the profit sharing
plan.

[37]

The trial judge found that the payments made by Thiemer to Nardulli in
October and November 2006 were in the nature of a gift. The judge concluded
that the amounts paid to Nardulli were gifts unrelated to his employment with
C-W because they were offered at a time when he was not employed by C-W. On
that basis, she considered that the gifts should not have precluded Nardulli
from an award of profit share. In my opinion, that conclusion is incompatible
with the evidence that Nardulli was reinstated to his employment as of October
1, 2006, and the evidence that the payments were actually made after he
returned to work. It also ignores the June 2008 document initialled by Thiemer
that indicated the $150,000 payment to Nardulli was profit share/bonus.
Gardiner designated the $150,000 payment as a gift solely for the purpose of
allowing Nardulli to avoid paying tax on the amount. Furthermore, it ignores
the factual context in which the gifts were made − at a point in time
when Thiemer was rehiring Nardulli, a long-time employee whose re-employment
effectively meant he had never left the company.

[38]

The trial judge also found, incongruously, that although the profit sharing
plan was not implemented, Nardulli was nonetheless entitled to profit sharing
based on Thiemers oral representations which were intended to have
contractual force. She concluded that this created a reasonable expectation
of payment, which crystallized into an entitlement following the advances
on profit sharing paid to other employees in 2006.

[39]

The judge agreed with C-W, however, that Nardulli was not entitled to
any profit sharing payments in the notice period.

[40]

On appeal, C-Ws position with respect to the finding that Nardulli was
entitled to profit sharing was stated as follows:

(a)      Nardullis claim, as pleaded and argued at trial, was for
payment under a specific profit sharing plan. Having determined that no such
profit sharing plan was implemented, it was not open to the Court to grant an
award on the basis of a discretionary bonus;

(b)      to the extent it was open to the Trial Judge to make an
award on the basis of a discretionary bonus, she erred in doing so, as Nardulli
did not establish any contractual right to receive such a bonus; and

(c)      even
if Nardulli did establish a contractual right to receive a bonus, the bonus was
still discretionary in nature and C-W acted reasonably in concluding that
Nardulli was not entitled to any bonus payment.

[41]

C-Ws first position

that
it was not open to the judge to grant an award on the basis of a discretionary
bonus, since this was not pleaded

has
some force. However, I do not need to address it because, although I conclude
that Nardulli had some kind of entitlement as a result of the oral
representations made by Thiemer, in this case the discretion not to give him a
bonus over and above what he had already received was reasonably exercised.
Moreover, C-Ws submission that the award should not have been made on the
basis of discretionary bonus is somewhat anomalous because the
order
appealed from refers to Nardullis entitlement to profit sharing; it does not
refer to a discretionary bonus.

[42]

This anomaly may be explained by the fact that the judges reasons are
unclear as to the precise characterization of Nardullis entitlement. Doing the
best I can with the findings that are supported by the evidence, I conclude
that Nardulli was not entitled to profit sharing as contemplated by the draft
profit share plan. However, the evidence does support a finding that he was eligible
for a discretionary bonus that was aimed at achieving parity among the
employees of C-W. In my view, the critical question is whether C-W reasonably
exercised its discretion in refusing to pay Nardulli a discretionary bonus
because he had already received $895,000. I conclude C-W did reasonably
exercise its discretion.

[43]

My reasons for these conclusions follows.

[44]

Central to Nardullis argument as to profit sharing was that C-W created
a reasonable expectation of a profit sharing plan that crystalized when
other employees were paid amounts described as profit share, a submission the
judge accepted (at para. 561).

[45]

However, the proper legal question to be asked was not whether Nardulli
had a reasonable expectation of a profit sharing plan, but rather, whether C-W
was under a legal obligation to pay profit share. As stated in
Lavarack v.
Woods
, [1966] 3 A.E.R. at 690:

The general rule as
stated by Scrutton, L.J. in
Abrahams v. Herbert Reiach, Ltd.
, [1922] 1
K.B. 477, that in an action for breach of contract a defendant is not liable
for not doing that which he is not bound to do,  The law is concerned with
legal obligations only and the law of contract only with legal obligations
created by mutual agreement between contractors - not with the expectations,
however reasonable, of one contractor that the other will do something that he
has assumed no legal obligation to do.

[46]

Nardulli did not have a written employment contract. The essential terms
of his employment were recorded on the Employee Personnel Notification Form
submitted on October 17, 2006 which states reinstate all benefits and pay rate.
The fundamental issue before us is the nature of the benefits, if any, to
which Nardulli was entitled under his contract of employment. That
determination cannot rest, as the judge assumed, on payments made to other
employees because their contracts were as between them and C-W.

[47]

It is difficult to reconcile the judges finding at para. 555 that
the draft profit share plan was never formerly implemented (by which I
understand the judge to mean it was not implemented) with her finding at para. 562,
that Nardullis expectation of profit sharing crystallized into an entitlement
when Thiemer paid advances on profit sharing to senior management employees
in 2006.

[48]

There can be no question that Thiemer told his employees in 2000 that he
wanted them to share in the profits of the company they had helped to build.

[49]

There is also no doubt that Thiemer recognized that the formal profit
sharing plan had never worked out, but that he nonetheless wanted his
employees to be compensated for their part in the companys success. Indeed, in
some instances the payments made by Thiemer to others from his personal
accounts in October and November 2006 were noted as related to profit sharing.

[50]

Most significantly, as the judge acknowledged at para. 564 of her
reasons, Thiemers payments to other employees were not made in accordance with
the draft profit sharing plan, and were not pegged  to anything in particular.

[51]

Profit sharing plans, such as the draft plan in this case, typically
call for profit sharing to be paid on the basis of a formula that reflects the
profitability of the company. These have also been called formula bonuses:
Leduc
v. Canadian Erectors Inc.
(1996), 18 C.C.E.L. (2d) 216 at paras. 46−47
(Ont. Ct. Jus. Gen. Div.). If the profit sharing plan had in fact been
implemented, it would have created a contractual right to a non-discretionary
profit-sharing bonus.

[52]

On the other hand, non-formula bonuses, while they too may reflect the
success or profitability of the company, are awarded on a discretionary basis.
Such discretion may take into account a myriad of factors. However, they are
not paid on the basis of a formula.

[53]

The judge found that the payments made to the employees did not in fact
follow any formula. This, in and of itself, is compelling evidence that the
draft profit sharing plan was not implemented. In finding that there was no
formula, the judge was precluded from finding that the payments were made
pursuant to a non-discretionary, formula-based profit sharing plan.

[54]

In my opinion, the judges finding that he was entitled to profit
sharing as contemplated by the draft profit share plan cannot be sustained. The
finding does not give effect to the recorded evidence that Thiemer acknowledged
that the plan never worked out. The plan was, as the judge found, not
implemented. Neither Thiemer nor C-W, by course of conduct over eight years,
confirmed the existence of the plan (i.e., by making payments specifically in
accordance with the draft plan). Indeed, Nardulli never demanded payment of
profit share when he was dismissed in 2006. At the very most, the payments made
in 2006 were to pacify employees for the fact that the profit share plan had
never
been implemented.

[55]

That leaves to consider whether Thiemers oral representations and
conduct gave rise to a different kind of entitlement
such as a discretionary bonus.
For ease of
reference, the judges reasons on this point are repeated:

[556]    Where the Court concludes that the bonus constituted
an integral part of the plaintiffs salary, and the process of determining the
bonus under the contract involves an element of discretion, the court will
proceed on the basis that this discretion must be exercised reasonably and in
accordance with objective criteria:
Ivanore v. Bastion Development Corp
.
(1993), 47 C.C.E.L. 74.

[557]    Mr. Gardiner
described the payments he determined as discretionary bonuses. However, the
payments Mr. Thiemer personally made were considered by him to be profit
draws. I accept that they were discretionary because there was no established
formula; the discretion must be exercised reasonably and objectively.

[56]

I acknowledge that these paragraphs are inconsistent with the later
finding that Nardulli was entitled to profit sharing. I conclude the judge
either conflated entitlement to profit sharing under the draft plan with
entitlement to a bonus, or considered that the quantum of the bonus should
reflect what would have been paid under a notional profit share plan.

[57]

In any event, Nardulli had the burden of proving a legal entitlement to
a bonus. As I have observed, the proof necessary to establish entitlement to
any kind of bonus was made more difficult because Thiemers testimony was not
available. As well, interpreting entitlements based on an oral agreement has
additional challenges. As the Court remarked in
DeCotiis v. Viam Holdings Ltd
.,
2010 BCCA 368 at para. 21:

As G.H.L. Fridman notes in
The
Law of Contracts in Canada
(5th ed., 2006) [i]n the case of a completely
oral contract there is greater flexibility in the nature of the evidence that
is admissible to prove the contents of the contract and the meaning of the
language used by the parties. (At 440.) This flexibility follows intuitively
from the recognition that oral contracts must often be construed without the
key interpretive tool used to understand written contracts  the words of the
agreement.

[58]

To determine the nature of the obligation, if any, that arose from
Thiemers promises to pay profit share the court must apply an objective
standard in order to protect the reasonable expectations of the parties:
DeCotiis
at para. 22.

[59]

This question is typically asked in the context of whether an employee
is entitled to bonus payments during the notice period. In that context there is
no debate about the factors to be considered in determining whether a bonus
forms an integral part of the employees compensation. These factors look to the
employers course of conduct, and include:

(a)        whether a bonus was received in previous years;

(b)        whether
bonuses were required in order to remain competitive with other employers;

(c)        whether
bonuses were historically awarded and the employer had ever exercised his
discretion against the employee; and

(d)        whether
the bonus constituted a significant component of the employees overall
compensation.

Gillies v. Goldman Sachs Canada
Inc
., 2000 BCSC 355 at paras. 62−63, appeal allowed on other
grounds, 2001 BCCA 683.

[60]

Although
Gillies
deals with the question of whether a plaintiff
was entitled to bonuses that would have been earned during the notice period, I
consider those factors may also be usefully applied to the question of whether a
plaintiff was entitled to a bonus during the employment period. The factors
provide objective criteria by which to measure the reasonable expectations of
the parties.

[61]

There is no dispute that before October 2006, Nardulli had never been
paid anything resembling a profit share or bonus. C-W relied on the judges
conclusion that the payments Nardulli received in October and November 2006
were not bonus payments, but rather gifts and that, therefore, those payments
could not be classified as past bonus payments. However, with respect, the
judge overlooked the fact that the gifts were merely characterized as such by
Gardiner in order to allow Nardulli to avoid tax he would have had to pay had
they been declared bonuses. In substance, however, the payments were in the
nature of a bonus.

[62]

There is some evidence of a pattern of paying bonuses in the 2006
payments to other employees and the 2008 payments made to achieve parity. Those
payments were, as the judge acknowledged, not made on any objective basis and
were entirely arbitrary, a finding that refutes the existence of a profit
sharing plan, but supports a finding that a bonus was an integral part of the
employment contract.

[63]

There was no evidence that bonus payments were necessary for C-W to
remain competitive. Indeed, Nardullis annual salary of $150,000 seems to have
been generous compensation for the work he performed. However, C-W employees
salaries were capped at $150,000 and a bonus that recognized the profitability
of the company could validly be considered a significant component of
Nardullis overall compensation.

[64]

It is clear that, after Thiemers death, Gardiner, who had been
designated by Thiemer to determine a mechanism for achieving parity, concluded
the amounts to be paid were to be discretionary bonuses. This evidence, along
with the other factors, supports the existence of a discretionary bonus as a
term of employment. The judge alluded to this in her reasons and accepted that
the decision to pay discretionary bonuses had to be exercised reasonably and on
the basis of objective criteria (at para. 556):
Ivanore v. Bastion
Development Corp.
(1993), 47 C.C.E.L. 74 (B.C.S.C.). However, having stated
that the discretion had to be exercised reasonably, the judge did not address
the question of whether C-W had exercised its discretion reasonably.

[65]

The question then is whether C-W properly exercised its discretion in
declining to pay Nardulli an additional discretionary bonus.

[66]

As I have noted, the judge did not address this issue. Pursuant to
s. 9(1)(a) of the
Court of Appeal Act
, this Court may make any
order that could have been made by the trial judge. The evidence is sufficient
to allow us to determine the issue omitted by the judge. In my opinion, C-W
acted entirely reasonably when it took into account the amounts previously paid
to Nardulli. The objective criteria adopted in Gardiners recommendation was
the substantial gift Nardulli had received from Thiemer, which was given in
the context of an employment relationship, and which Thiemer apparently sought
to recover through the company. To conclude otherwise would reward Nardulli in a
way that was completely out of proportion to any of C-Ws other employees and
contrary to Thiemers express directions that he wanted there to be parity in
the payments he had made to employees in 2006.

[67]

It follows that I would allow the appeal from that part of the order
awarding Nardulli an amount for profit share. It also follows that I need not
address Nardullis cross-appeal that he was entitled to an amount for profit
sharing during the 21-month notice period.

Wrongful Dismissal

[68]

The trial judge reviewed in detail Nardullis employment history with
C-W from 1986 until his final termination in 2008, as well as what can only be
described as his unusual relationship with Thiemer. I say unusual because, as
the judge found, Thiemer tolerated much of Nardullis misconduct and was
evidently reluctant, likely because of their close personal relationship, to
fire him.

[69]

Nonetheless, Nardullis employment was terminated by McLoughlin, with
Thiemers approval, on January 16, 2006. The grounds for dismissal included
repeated absences from work; arriving late and leaving early; being unavailable
to meet with fellow managers and subordinates; sleeping in his office;
continued substance abuse; and finding that the performance of his duties as
the Manager of Operations was completely inadequate and unacceptable.

[70]

As noted, Nardulli was rehired on or about October 17, 2006 at his
former salary of $150,000, with benefits, reinstated effective October 1, 2006.
His employment record originally indicated that he was hired as VP
Operations, but Thiemer changed the designation to the lesser position of
Manager Operations.

[71]

The judge found that the scope of Nardullis duties on his return to
work was unclear and that he was effectively Thiemers personal assistant or
courier. This finding is contrary to Nardullis pleading in which he described
himself as an executive and claimed that he performed the duties of
Vice-President Operations for 15 years. It is also contrary to Nardullis
evidence that his duties upon returning to C-W remained the same as they had
been prior to his termination in January 2006. The evidence of C-W was to the
same effect. The judges erroneous finding is also at odds with the manner in
which she assessed the notice period. Contrary to her finding that Nardulli was
Thiemers courier, she assessed the notice period in part on the basis that
he held a senior management position with a supervisory role.

[72]

C-W appeals the finding that it did not have sufficient cause to dismiss
Nardulli. It bases this argument partly on the judges finding that Nardulli
essentially performed the duties of a courier and that this implicitly meant
that he was not fulfilling his duties as a manager. However, the judges
erroneous finding cannot be determinative of the issue of whether Nardulli was
performing his duties as manager of operations, nor the issue of whether his
misconduct warranted dismissal.

[73]

C-W alleged an array of grounds for just cause from the date of his
rehiring in 2006, including unauthorized absences; failing to fulfill job
responsibilities of a senior manager; bullying and harassing other employees;
failing to co-operate in a company-wide audit following the theft of equipment;
and viewing and storing pornographic material on C-Ws computer.

[74]

The judge reviewed in extensive detail the evidence of C-Ws allegations
and parties respective positions as to each of the alleged grounds of cause
(63 pages of the reasons were devoted to this review).

[75]

C-Ws fundamental argument is that the judge considered each of the
grounds of just cause in isolation and thereby failed to have due regard to the
cumulative effect of Nardullis misconduct: see
Atkinson v. Boyd, Phillips
& Co
. (1979), 9 B.C.L.R. 255 (C.A.), where this court allowed an appeal
on that basis.

[76]

I am not persuaded the judge failed to consider Nardullis pre-2006
misconduct or the alleged misconduct following his rehiring. A careful review
of her reasons show that while she did indeed consider each of the grounds of
alleged cause, she did so to determine the individual merit of each ground. As
I have said, she reviewed the evidence thoroughly and ultimately concluded that
the totality of the evidence did not support a finding of just cause (at para. 414).
That conclusion signifies that all of Nardullis alleged misconduct was taken
into account. These are findings of fact that deserve deference.

[77]

Furthermore, the judges findings in this respect rested in large
measure on the credibility of witnesses. It is well established that an
appellate court will not interfere with such findings absent palpable and
overriding error:
Lensen v. Lensen
, [1987] 2 S.C.R. 672. I am not
persuaded that the judge erred as alleged. She had ample opportunity to
consider Nardullis misconduct. She concluded it did not rise to the level of
just cause, a finding that was available on the evidence. In substance, C-Ws
arguments on appeal amount to an invitation for us to retry the case which is,
of course, not the appellate function. I would not accede to this ground of
appeal.

Special Costs

[78]

Nardulli cross-appealed, alleging the judge erred in failing to award
him special costs. His claim to special costs was based on the ground that C-W
had, as the judge noted in her reasons, filed voluminous material and "left
no stone unturned (at para. 5). The trial judge also issued separate
reasons on the matter of costs: 2013 BCSC 441.

[79]

We indicated at the hearing of the appeal that the appeal from the order
dismissing special costs could not succeed. The judge heard many days of
evidence and produced extensive reasons for judgment. She heard argument on the
costs issue but concluded this isnt a case, in my view, that merits an award
of special costs. It was a hard fought case, but did not exhibit conduct that
was scandalous or reprehensible.

[80]

It is settled law that costs awards are highly discretionary and deserve
appellate deference. An appellate court should set aside a costs award only if
the trial judge has made an error in principle or if the costs award is plainly
wrong:
Hamilton v. Open Window Bakery Ltd.
, 2004 SCC 9 at para. 27,
[2004] 1 S.C.R. 303. I am not persuaded the judge erred in principle or failed
to exercise her discretion.

[81]

I would not accede to the cross-appeal relating to the special costs
issue.

Summary

[82]

I would allow the appeal from the award in respect of profit sharing. I
would dismiss the appeal from the award with respect to damages for wrongful dismissal.
I would dismiss the cross-appeal in respect of the claim to special costs.

[83]

As success has been divided, I would order that each party bear their
own costs of the appeal. I would not disturb the award of trial costs.

The Honourable Madam Justice Kirkpatrick

I agree:

The
Honourable Madam Justice Saunders

I agree:

The Honourable Mr. Justice Harris


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Warner v. Cousins,

2014 BCCA 29

Date: 20140128

Docket: CA040476

Between:

Christel Lee
Warner

Appellant

(Plaintiff)

And

Stephen Ward
Cousins and
S.W. Cousins Construction Ltd.

Respondents

(Defendants)

Before:

The Honourable Madam Justice Saunders

The Honourable Madam Justice Levine

The Honourable Mr. Justice Willcock

On appeal from:  An
order of the Supreme Court of British Columbia,
dated November 22, 2012 (
Warner v. Cousins
, 2012 BCSC 1737,
Kamloops Registry No. 45079).

Counsel for the Appellant:

T.L. Robertson, Q.C.
W.S. Taylor
L.N. Martin

Counsel for the Respondent:

G. Ginter

Place and Date of Hearing:

Vancouver, British
  Columbia

September 30, 2013

Place and Date of Judgment:

Vancouver, British Columbia

January 28, 2014

Written Reasons by:

The Honourable Madam Justice Saunders

Concurred in by:

The Honourable Madam Justice Levine

The Honourable Mr. Justice Willcock

Summary:

The appellant appealed from
an award of damages in her personal injury action arising from a motor vehicle
collision. Liability was admitted. The judge stated that mitigation was
considered in assessing damages, but did not describe the scale by which
damages were affected or find the behaviour that amounted to a failure to
mitigate. She found as well that the plaintiff had no ambitions to upgrade
her occupational qualifications. Held: Appeal allowed and a new trial ordered.
The reasons for judgment fatally obscure the scale and basis of the damages
awarded, and the finding of no ambitions was based on assumptions not
supported by the evidence.

Reasons for Judgment of the Honourable
Madam Justice Saunders:

[1]

Ms. Warner suffered injuries to her lower and upper back, her
chest, her neck and her shoulders on January 13, 2009 when a truck driven
by the respondent Stephen Cousins collided with the vehicle she was driving, at
the intersection of 6
th
Avenue and Columbia St., Kamloops, British
Columbia. She commenced an action for damages for personal injury.

[2]

At trial, liability was admitted by Mr. Cousins; the contest
concerned the scale of damages. This depended upon the extent of the injuries
and their long-term effects upon Ms. Warner, both on her need for on-going
care and the limitations that the injuries may place upon her ability to earn
income. Madam Justice Hyslop did not accept Ms. Warners theory of the
scale of damages and, after a seven-day trial, awarded the following damages:

for non-pecuniary damages

$50,000.00

for past wage loss

$58,383.25

for loss of future earning capacity

$40,000.00

[3]

Ms. Warner appeals this award. She contends that errors of fact and
law have led to an award that is significantly lower than it should be. She asks
us to increase damages or, in the alternative, to order a new trial.

[4]

At the time of the accident in January 2009, Ms. Warner was 28
years old and employed by Royal Inland Hospital as a licensed practical nurse
assigned to a surgical ward. On the day of the accident, she was on sick leave
as a result of a snowboarding injury she suffered on December 30, 2008.
She anticipated that the injury would keep her from work for four to six weeks.
However she did not return to work until March 8, 2010, nearly 14 months after
the motor vehicle accident. She attributed the extended absence to the injuries
suffered in the automobile collision.

[5]

Ms. Warner testified that in March 2010, her employer allowed her a
graduated return to work but said she had difficulties assuming her duties on a
consistent basis because of the sequelae of the collision. She testified that employment
restructuring at the hospital and on-going difficulties from her accident injuries
caused her to transfer to a casual position as a licensed practical nurse, which
allowed her greater flexibility in the frequency of her shifts and the types of
work she preferred. Soon after her return to work in 2010, Ms. Warner became
pregnant. She began maternity leave in April 2011. Ms. Warner testified
that her injuries from the accident continued to cause her difficulties at work
up to the time of her maternity leave. The judge noted, however, evidence that
she applied for and was awarded a full-time relief position in March 2011, as
well as a full-time float position in July 2011. As I understand it, Ms. Warner
did not actually fill either of these positions, a result that is not unusual
in the dynamics of staffing the hospital.

[6]

Ms. Warner testified that the injuries suffered in the collision caused
debilitating headaches, social withdrawal, depression and anxiety which prevented
a return to work as a licensed practical nurse on a full-time basis. She also contended
at trial that the injuries prevented her from achieving her ultimate career
goal, that of becoming a registered nurse. Ms. Warner testified that her
scholastic ability would have allowed her to attain that goal, and she
explained that she had become a licensed practical nurse as a first concrete step
in nursing, one that enabled her to earn money before taking the longer, more
expensive, registered nurse program. She testified doing so would allow her a
second year placement in the registered nursing program, that is, she would
obtain some credit for her licensed practical nurse qualification.

[7]

In respect to household duties and other non-work activities,
Ms. Warner testified that for a period of time after the accident she was
unable to perform household activities and for these relied upon her partner.
She said she still had physical limitations that made certain aspects of caring
for her infant son difficult, and that she was unable to participate in many
activities she had enjoyed before the accident. She attributed a diminished
lifestyle to the ongoing effects from the accident.

[8]

The defendants vigorously contested the depth and cause of
Ms. Warners lasting complaints. They said that the physical injuries
suffered by Ms. Warner had resolved relatively quickly, and that she was
fit to work full-time when the return-to-work program at the hospital was
completed. They contested her stated ambition to become a registered nurse, and
disputed her assertions of debilitating migraine headaches caused by the
accident, saying such headaches were consistent with her pre-accident state of
health. They also disputed her alleged inability to engage in certain household
and physical activities, and said further that her claim lacked particulars
that would give it substance.

[9]

As is not uncommon in such cases, expert evidence was adduced from
doctors, a physiotherapist, a massage therapist, a rehabilitation specialist, a
vocational specialist and an economist.

[10]

The judge rejected much of the bases of Ms. Warners claim and
found Ms. Warner lacking in credibility in significant areas of her
testimony. The judge found:

1.       Ms. Warner
was not truthful or had overstated her evidence concerning migraine headaches;

2.       Ms. Warner
had suffered from migraine headaches since her teenage years;

3.       any
headaches Ms. Warner suffered as a result of the accident were cervicogenic
in nature and did not occur very often and if she did have migraine
headaches, they did not increase in frequency as a result of the accident;

4.       Ms. Warner
suffered moderate soft tissue injuries to her neck and shoulders, had some
headaches of a cervicogenic nature, and should have been able to go back to work
full-time when the return-to-work program ended;

5.       Ms. Warner
had no ambitions to become an RN; and

6.       There
was insufficient evidence to find that Ms. Warners day-to-day activities
and social life had been permanently impacted by the accident.

[11]

The judge summarized her conclusions on the injuries in assessing
non-pecuniary damages:

[245]    The injuries suffered by
the plaintiff in this motor vehicle accident consist of moderate soft tissue
damage to her neck and shoulders, a soft tissue contusion to the chest, and a
mild soft tissue injury to the lower back. The latter two resolved themselves
quickly.

[12]

In assessing loss of future earning capacity the judge said in respect
to Ms. Warners evidence she had wished to become a registered nurse:

[193]    If the plaintiff had any serious ambition to enter
the school of nursing, she would likely have made inquiries after the
completion of her LPN course and would have started to complete the
pre-requisites in order to fulfil her ambitions. Instead, she has asked the
court to believe that she started to fulfill this ambition while suffering from
injuries from the motor vehicle accident which she claims have left her
debilitated and unable to work. I do not accept this evidence. Rather, I find
that her online inquiries and enrolling in a biology course were calculated
acts intended to bolster her claim that the motor vehicle accident derailed her
plans to become a RN.

[194]    I find the plaintiff had
no ambitions to become a RN.

And in respect to Ms. Warners ability to work as a
licensed practical nurse she said:

[252]    I found that the
plaintiff was able to work full-time after completing the graduated
return-to-work program. I assess the plaintiffs loss of future earning
capacity as some loss of a capital asset. Therefore, as a result of the
injuries the plaintiff suffered, she may very well from time to time suffer a
future loss of income, despite being able to return to work as a LPN on a full
time basis.

[13]

The judge did not accept the claim for cost of future care. She said:

[257]    The only recommendations that were made for future
care were Botox treatments and perhaps over-the-counter medication and
counselling, the latter of which the plaintiff has resisted. Dr. Robinson gave
evidence as to the cost of Botox. I concluded that the plaintiffs migraine
headaches had not been exacerbated by the motor vehicle accident.

[258]    In order that there be
an award for cost of future care, there must be evidence of such. There is no
evidence here. Accordingly, I do not award anything for cost of future care.

[14]

The judge noted, further, that an argument was made to the effect
Ms. Warner had failed to mitigate her damages. On this, she said, in its
entirety:

[254]    The defendants claim that the plaintiff did not
mitigate her damages by failing and outright refusing to take counselling as
recommended by Drs. Anderson, Boyce, Craig and Lawrence.

[255]    In coming to the awards
given, I have considered any failure to mitigate.

Grounds
of Appeal

[15]

Ms. Warner contends that the judge made palpable and overriding errors
in determining her experience of migraine headaches, in finding that she should
have been able to work full-time after her graduated return to work program
concluded, and in finding that she had no ambitions to become a registered
nurse. She says these errors caused the judge to fail in her analysis and
findings of fact regarding Ms. Warners prognosis. This in turn, she says,
led the judge to assess inordinately low damages for non-pecuniary loss and
loss of earning capacity, and no damages for cost of future care.

[16]

Ms. Warner contends as well that the judge erred in law by failing
to consider material evidence and by failing to apply the correct legal
principles. For example, Ms. Warner complains that the judge referred to a
failure to mitigate without determining whether she had failed to mitigate or
indicating to what degree that factor affected the damages awarded. Last, Ms. Warner
contends that the judge held her to an unreasonably high standard of proof
which resulted in an unfair trial.

[17]

The respondents say that much of Ms. Warners appeal focuses upon
findings of fact that are based upon the judges assessment of credibility and
thus beyond our interference, or that are based upon evidence that was before
the judge and thus beyond our interference. They say the main hurdle Ms. Warner
faced was in persuading the judge that her symptoms not only did not resolve
but had become more debilitating, as she claimed. They say this enquiry put
Ms. Warners credibility to the test, required her to prove that her
ability to function in the work for which she was trained was now beyond her
because of the injuries suffered in the accident, and required her to establish
that other lines of work which she otherwise would have been willing and
capable of performing were not pursued because of those injuries. It is beyond
the role of this court, they say, for us to interfere with the judges
conclusions on these matters.

[18]

As to the scale of damages the respondents contend that the
non-pecuniary damages are within the range reflected in similar cases. They
deny any error of principle or law. Last, they submit that several of
Ms. Warners complaints concern matters on which no evidence was adduced,
or that otherwise simply were not proved.

Discussion

[19]

It is useful to remember, as our starting point on the appeal, that this
court may not interfere lightly with findings of fact. In
Lines v. Gordon
,
2009 BCCA 106, 306 D.L.R. (4
th
) 1, we summarized at para. 8 our
approach on questions of fact, drawn from a long line of cases leading to
Housen
v. Nikolaisen
, 2002 SCC 33, [2002] 2 S.C.R. 235:

Only where there is not a
proper evidentiary foundation for a finding of fact in the sense evidence has
been misapprehended or there is no evidentiary foundation for the finding (a
palpable error), and the error is material to the outcome (overriding), may
this Court interfere.

[20]

The same approach applies to questions of mixed fact and law, but as to
questions of law or principle, we look for correctness:
Housen v. Nikolaisen
.

[21]

The deference accorded the trial court on questions of fact carries over
to the assessment of damages, whether by a judge or a jury. That approach to
damages flows from their character; a damages assessment is by definition a
fact finding exercise. The deferential approach has long been recognized. The
famous statement of our role on assessment of damages in
Nance v. British
Columbia Electric Railway Company Ltd.
, [1951] A.C. 601 at 613-14, [1951] 3
D.L.R. 705 (P.C.), has equal force today:

Whether the
assessment of damages be by a judge or a jury, the appellate court is not
justified in substituting a figure of its own for that awarded below simply
because it would have awarded a different figure if it had tried the case at
first instance.  Even if the tribunal of first instance was a judge sitting
alone, then, before the appellate court can properly intervene, it must be
satisfied either that the judge, in assessing the damages, applied a wrong
principle of law (as by taking into account some irrelevant factor or leaving
out of account some relevant one); or, short of this, that the amount awarded
is either so inordinately  low or so inordinately high that it must be a wholly
erroneous estimate of the damage (
Flint v. Lovell
, [1935] 1 K.B. 354,
approved by the House of Lords in
Davies v. Powell Duffryn Associated
Collieries, Ld.
, [1942] A.C. 601).  The last named case further shows that
when on a proper direction the quantum is ascertained by a jury, the disparity
between the figure at which they have arrived and any figure at which they
could properly have arrived must, to justify correction by a court of appeal,
be even wider than when the figure has been assessed by a judge sitting alone.
The figure must be wholly out of all proportion (
per
Lord Wright,
Davies
v. Powell Duffryn Associated Collieries, Ld.
, at 616).

[22]

As in challenging findings of fact, Ms. Warner faces a high hurdle
in overcoming the judges view of her credibility, which is particularly within
the purview of the trial judge.

[23]

The classic approach to credibility found in this Provinces
jurisprudence, oft-quoted, was provided by Mr. Justice OHalloran in
Faryna
v. Chorny
, [1952] 2 D.L.R. 354, [1952] 4 W.W.R. 171 (B.C.C.A.) at 357.

In short, the real test of the truth of the story of a
witness in such a case must be its harmony with the preponderance of the
probabilities which a practical and informed person would readily recognize as
reasonable in that place and in those conditions.

The trial Judge ought to go
further and say that evidence of the witness he believes is in accordance with
the preponderance of probabilities in the case and, if his view is to command
confidence, also state his reasons for that conclusion.

[24]

Bearing these principles of deference and the practical considerations
spoken of in
Faryna v. Chorny
in mind, I turn to Ms. Warners
complaints as to the damages awarded. She challenges most particularly three
key conclusions of the judge, the issue of migraine headaches suffered by her,
her fitness to return to full-time work at the hospital at the conclusion of
the return to work program, and the judges conclusion that Ms. Warner
had no ambitions to become a RN. Her submissions on these matters engage the
judges conclusions on credibility and the absence of explanation in the
reasons for judgment for some of the findings, including as to the basis of the
sums awarded.

[25]

For the reasons that follow I respectively conclude that the order must
be set aside.

[26]

Although Ms. Warner raised several areas of complaint, I will
confine my discussion to three areas, the judges treatment of the mitigation
issue, the reasons advanced for finding that Ms. Warner had no ambition to
become a registered nurse, and the absence of an explanation for the bases of
the damages award.

[27]

I will start with what may appear as the tail-end aspect of the reasons
for judgment but which illustrates what I will term an opaqueness within them: the
view taken by the judge on mitigation of damages. The reasons for judgment
recite the defendants contention that Ms. Warners refusal to take
counselling recommended by four doctors, Drs. Anderson, Bryce, Craig and
Lawrence, demonstrated a failure on the part of Ms. Warner to mitigate her
loss. Earlier in the reasons the judge referred to the doctors recommendations
for counselling:

by Dr. Anderson, in 2010:

Dr. Anderson recommended counselling for
anxiety/distress;

by Dr. Bryce, assessment
in November 2009:

He also noted there was a significant psychological
component to her injuries, referring to her nightmares and sleep disturbance.
He recommended psychological counselling, as he believed this would give her
confidence with her expected normal functional and psychological outcome;

by Dr. Craig, assessment on
September 22, 2010:

He wondered whether there was any ongoing anxiety,
and was of the opinion that there should be further treatment and
investigation, including counselling; and

by Dr. Lawrence, psychological
assessment in April 2011:

Ms. Warner could benefit from mental health
treatment from a counsellor, psychologist, and/or psychiatrist with experience
with motor vehicle or work related injuries and chronic pain.

[28]

While it was certainly open to the judge to find that Ms. Warner
did not do all that she could have reasonably done to heal herself, and thus failed
to take reasonable steps to reduce her damages, on my reading the reasons for
judgment do not decide that issue. Further, even if one reads paras. 254 and 255
of the reasons replicated above as finding there was a failure on
Ms. Warners part to mitigate her damages, the effect of those paragraphs
is to obscure the scale of damages found by the judge and to avoid stating what
and when Ms. Warners omissions amounted to an unreasonable failure to
reduce her damages. In other words, those paragraphs do not demonstrate the
full scale of damages and the proportionate effect of the failure to mitigate. To
put it another way, one cannot say from the reasons for judgment whether the
various heads of damages awarded are 100%, 90%, 50% or even 10% of the damages
that would have been awarded absent the mitigation issue. Because the reasons
for judgment cloak the absolute amount of damages suffered by Ms. Warner,
both Ms. Warner and this court are left to wonder whether the judge
concluded, for example, that Ms. Warners injuries impaired her future
earnings and that she could have avoided most of the loss by participating in
counselling, or whether the loss is very near the amount that was assessed and
the failure to take counselling was found to have little impact on recoverable
damages. This obscurity impairs the reviewability of the order, and makes
difficult any appellate check on the scale of damages awarded. The same may be
said of the non-pecuniary damages awarded, and even the past wage loss claim,
as to which the timing of the recommendations for counselling would be
relevant.

[29]

It may be that this cloud over the damages analysis is fatal to the
order. In the words of Mr. Justice Hall in
Pett v. Pett
, 2009 BCCA 232, 93
B.C.L.R. (4
th
) 300 para. 17, there is very little by way of a
road map explaining the judges conclusions on quantum of damages, on the substance
of the failure to mitigate, or on the scale of the consequences of the failure
to mitigate.

[30]

Equally troublesome, in my view, is the judges treatment of
Ms. Warners professed ambition to become a registered nurse.

[31]

The law is clear in regards to assessment of damages for loss of future
earnings. If there is a real and substantial possibility of the future event
leading to an income loss, as contrasted with mere speculation, that
possibility must be taken into consideration in an assessment of damages:
Athey
v. Leonati
, [1996] 3 S.C.R. 458, at para. 27, 140 D.L.R. (4
th
)
235;
Smith v. Knudsen
, 2004 BCCA 613, 247 D.L.R. (4
th
) 256 at
para. 29;
Pett v. Pett
. Against this standard, the judges finding
that Ms. Warner had no ambitions to become a registered nurse is
significant to Ms. Warners claim in respect to lost future earning
capacity. The finding of no ambitions is tantamount to a finding that there
was no substantial possibility of Ms. Warners becoming a registered nurse,
and completely avoided discussion of how likely achievement of that goal was,
the effect of her injuries upon her ability to achieve it, and any other
contingencies that would bear upon that possibility, such as parenting demands.

[32]

The question, then, is whether the judge erred in her conclusion that
Ms. Warner had no ambition to become a registered nurse.

[33]

Acknowledging the deference we must accord to the judges assessment of
credibility of a witness, I respectively consider that the reasons given for
dismissing entirely the career ambition advanced by Ms. Warner rest upon overly
speculative assumptions by the judge. The judge gave two reasons for rejecting
Ms. Warners evidence: first, that had attainment of registered nurse
qualification been Ms. Warners ambition she would likely have made
inquiries after the completion of her LPN course, and, second, that if
Ms. Warner held that ambition she would have started to complete her
prerequisites in order to fulfill her ambitions. One could characterize these
two assumptions as the judge taking judicial notice of invariable behaviour of
a person in the witnesss position. With respect, I do not see either of these
propositions as self-evident, nor in my respectful view do they accord with the
practical circumstances of training in the world of nursing care.
Ms. Warner testified, and there is no reason to disbelieve, that licensed
practical nurses, if admitted to the nursing program, enter the second year,
filling spaces in the program vacated by first year nursing students who have
dropped out. In other words, there is a recognized path to upgrading from a
licensed practical nurse to a registered nurse. I would expect that the
experience of this nursing cross-over and of incremental acquisition of
vocational qualification is well known, if not to the world generally, to those
working side-by-side in health care facilities. Further, I respectfully suggest
that it is not in accord with the preponderance of probabilities that a
practical and informed person would consider investigating the details of a
training program as elemental to an intention to pursue the goal. At most the
absence of investigation establishes that the individual had not moved to an imminent
pursuit of the stated goal.

[34]

Nor, in my respectful view, does the fact that Ms. Warner had not
started any course prerequisite to the registered nursing program lead naturally
to an inference that she did not intend to pursue the program. That fact, on
its own, is equally consistent with her stated plan of working as a licensed
practical nurse for a period of time. The judge did not address that practical
aspect, alone or in the context of the relatively brief time  less than two
years  that she had held her licensed nursing qualification prior to the
accident. Nor, significantly, did the judge recognize that Ms. Warner had
demonstrated ambition to upgrade her qualifications in the past when she left
early childhood education in which she had a diploma, for the program that
qualified her as a licensed practical nurse.

[35]

Last, on the issue of upgrading, the judge found that the enquiries made
after the accident by Ms. Warner into the registered nursing program were
calculated acts to bolster her claim that the motor vehicle accident derailed
her plans to become a RN. At its heart, this is a finding of fraudulent
conduct. On my understanding of the two factors that based the judges
conclusion that Ms. Warner had no ambition to become a registered nurse,
it seems to me that this finding cannot be sustained.

[36]

It may be that even without the assumptions of behaviour of a person
wishing to upgrade a nursing qualification, Ms. Warner may not have established
a substantial possibility she would become a registered nurse. We do not know,
however, absent consideration of Ms. Warners evidence on this matter free
of unsupported assumptions such as are found in the reasons for judgment, how
that question would be resolved. Nor can we discern the impact of the speculation
on the assessment of credibility which founds other conclusions adverse to
Ms. Warner. I conclude that the judges treatment of the evidence relating
to Ms. Warners professed ambition to become a registered nurse seriously
undermines the judgment.

[37]

As a last matter, I would comment on the absence of explanation in the
reasons for judgment for the scale of the non-pecuniary damages and for the
damages for loss of future earning capacity. I have already addressed the
obscurity of these damages caused by the reference to mitigation. Assuming, for
the purposes of this discussion, that the amounts awarded are very near the
absolute loss that the trial judge found Ms. Warner suffered, there are no
findings by the judge on the degree or nature of the loss of enjoyment of life
and loss of amenities that might explain the not insignificant award for
non-pecuniary loss. Nor is there a reference point to explain the fashion in
which Ms. Warners capital asset has been impaired for purposes of the
assessment of future loss. Absent some explanation, even if brief, the case is
like
Pett v. Pett
, with very little of a roadmap.

[38]

I respectfully conclude from these three areas of concern that the order
of the judge must be set aside. While it is within our authority to substitute
an award of damages as was done in
Pett v. Pett,
the issues required to
be decided in this case do not lend themselves to that procedure. In my view
the case should be remitted to the trial court for a new trial.

[39]

I therefore would allow the appeal, set aside the order, and remit the
matter for a new trial. I would leave the issue of costs of the first trial to
be determined on the second trial.

The
Honourable Madam Justice Saunders

I AGREE:

The Honourable Madam Justice
Levine

I AGREE:

The Honourable Mr. Justice
Willcock