COURT OF APPEAL FOR ONTARIO

CITATION: Best Source Inc. v. International Industries
    Corporation, 2017 ONCA 411

DATE: 20170523

DOCKET: C62484

Strathy C.J.O., Cronk and Pepall JJ.A.

BETWEEN

Best Source Inc.

Plaintiff
(Appellant)

and

International Industries Corporation
and David Cloer

Defendants
(Respondents)

Ryan Wozniak and Carmine Scalzi, for the appellant

Michael F. Smith, for the respondents

Heard: May 11, 2017

On appeal from the order of Justice Robert F. Goldstein
    of the Superior Court of Justice, dated July 5, 2016.

REASONS FOR DECISION

[1]

The motion judge stayed this action for breach
    of contract because he found that the contract required disputes to be resolved
    by arbitration in South Carolina.

[2]

The central issue was whether the contractual
    rights and obligations assigned to the appellant were limited to those set out
    in a Joint Venture Marketing Agreement (JVMA), which said nothing about
    arbitration, or whether they included the terms of an International Sales
    Agency Agreement (ISAA), which contained the arbitration clause.

[3]

The background giving rise to this issue is, in
    brief, as follows. Headwaters Inc. (Headwaters) was the exclusive sales agent
    in Canada for the respondent International Industries Corporation (IIC) with
    respect to several products, including one called Mean Green. The respondent
    David Cloer is the principal of IIC.

[4]

Headwaters had two operative agreements with IIC
     the JVMA and the ISAA.

[5]

In February 2009, the appellant offered to
    purchase from Headwaters the exclusive right to sell Mean Green in Canada.
    Negotiations culminated in the execution of a letter agreement dated March 10,
    2009, whereby Headwaters, with IICs consent, assigned its rights and
    obligations with respect to Mean Green under the JVMA to the appellant.

[6]

The assignment agreement contemplated that the
    parties would negotiate an agency agreement and that
in
    the interim
and ultimately upon completion of a satisfactory agency
    agreement with IIC [the appellant]
will now stand in the
    position of [Headwaters] under the [JVMA] with respect to the Mean Green
    product only

[The appellant] will represent Mean
    Green products as sales agents for [IIC] being the vendor
 (emphasis
    added).

[7]

This agency agreement was never finalized, but
    the motion judge found that the parties conducted themselves as if the sales
    agency agreement were in place.

[8]

The issue before the motion judge was whether
    the contractual rights assigned to the appellant were limited to those set out
    in the JVMA, or whether they included those under the ISAA.

[9]

On the motion, and in this court, the appellant
    claimed that the only contract assigned to it was the JVMA. The appellants
    principal, Mr. Calabrese, said that he was unaware of the ISAA until after the
    litigation was commenced.

[10]

The determination of the issue before the motion
    judge called for an examination and assessment of the parties evidence given
    by way of affidavit and cross-examination, and in various documents and written
    communications.

[11]

In resolving the conflicting evidence, the
    motion judge found that, contrary to the appellants submission, the evidence
    supported the existence of the ISAA. Prior to the assignment, the ISAA was in
    force between Headwaters and IIC.

[12]

The motion judge rejected Mr. Calabreses
    evidence that he was unaware of the ISAA until the commencement of the
    litigation. He found as a fact that Mr. Calabrese was not only aware of the
    ISAA, but that he had received a copy of it. The motion judge noted that, while
    the assignment agreement was being negotiated, Mr. Calabreses lawyer advised Mr.
    Calabrese that he had spoken to Mr. Cloer, who told him that IIC had a written
    brokerage/sales agency agreement with Headwaters, covering a number of different
    products, and was prepared to consent to the assignment of the agreement with
    respect to Mean Green.

[13]

The motion judge also found that the reasonable
    interpretation of the assignment agreement was that the parties intended that
    the appellant would step into the shoes of Headwaters as IICs sales agent. In
    so doing, the appellant took on all the obligations of the ISAA, including the
    arbitration clause, and the parties conducted themselves in accordance with the
    ISAA.

[14]

Moreover, as the motion judge found, the JVMA,
    which the appellant claimed was the only contractual document, did not cover
    any of the usual mechanics of a sales agency agreement. Those were set out in
    the ISAA.

[15]

The appellant argues, however, that the
    assignment agreement makes no reference to the ISAA and only refers to the JVMA.

[16]

While that is true, the assignment agreement
    contemplated that pending the negotiation of an agency agreement, the appellant
    would stand in the position of Headwaters in relation to the Mean Green
    product. In order to stand in the position of Headwaters, the appellant
    required an assignment of the ISAA, which set out the essential business terms
    of the sales agency arrangement.

[17]

The appellant refers to a letter from IICs lawyer,
    written in response to a letter from the appellants lawyer protesting IICs
    decision not to renew the agreement. The lawyers letter made reference to the
    sales agency agreement with Headwaters and took the position that the agency agreement
    expired in 2010, and any rights inherent in the agency terminated with the
    lapse of the agreement.

[18]

While the motion judge did not address this
    issue directly, he found as a fact that the appellant and IIC conducted
    themselves as if the sales agreement were in place. The appellant operated
    under the sales agreement and had the benefit of it. The parties conduct did
    not constitute a waiver of the sales agreement or the arbitration clause in it.
    In our view, the lawyers letter does not undermine the motion judges
    conclusion that the ISAA was assigned to the appellant and that the parties
    acted in accordance with its terms.

[19]

The motion judges findings of fact are entitled
    to deference, as is his interpretation of the contractual documents, which is
    grounded in his appreciation of the factual matrix. Those findings support the
    conclusion that the bundle of rights possessed by Headwaters included those
    under both the JVMA and the ISAA, that both agreements were necessary to enable
    the appellant to act as the sales agent for Mean Green in Canada, and that
    both agreements were assigned to the appellant.

[20]

The appellant has demonstrated no palpable and
    overriding error in the motion judges assessment of the evidence. Nor has it
    demonstrated an extricable error of law in his interpretation of the
    agreements.

[21]

The appeal is dismissed, with costs to the
    respondents in the amount of $9,000, inclusive of disbursements and all
    applicable taxes.

G.R.
    Strathy C.J.O.

E.A.
    Cronk J.A.

S.E.
    Pepall J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402

DATE: 20170523

DOCKET: C61997

Feldman, Gillese and Pepall JJ.A.

BETWEEN

Esther Brake

Plaintiff (Respondent)

and

PJ-M2R Restaurant Inc.

Defendant (Appellant)

J.F. Lalonde, for the appellant

Miriam Vale Peters, for the respondent

Heard: February 1, 2017

On appeal from the judgment of Justice Kevin B. Phillips
    of the Superior Court of Justice, dated March 14, 2016, with reasons reported
    at 2016 ONSC 1795, 29 C.C.E.L. (4th) 192.

Gillese
    J.A.:

[1]

A long-serving McDonalds restaurant manager was
    dismissed from her position without notice or payment of her statutory
    entitlements under the
Employment Standards Act
, 2000
, S.O. 2000, c. 41 (the Act).

[2]

She successfully sued for wrongful dismissal.
    She was awarded damages representing 20 months compensation in lieu of notice,
    inclusive of statutory severance under the Act.

[3]

This appeal raises, among other things, several important
    questions about what income the employee received during the notice period must
    be deducted from the damages award.

OVERVIEW

[4]

Esther Brake (Ms. Brake or the Respondent)
    worked at various McDonalds restaurants for a total of more than 25 years.
    For a significant part of that time, she was employed on a full-time basis by
    PJ-M2R Restaurant Inc. (PJ-M2R or the Appellant).

[5]

PJ-M2R is a McDonalds franchise holding company
    that owns several McDonalds restaurants in the Ottawa area.  Perry McKenna and
    Jo-Ann McKenna own and operate PJ-M2R.

[6]

On August 2, 2012, Ms. Brake was working for
    PJ-M2R as a Restaurant Manager, a position that she had held for a number of
    years.  Mr. McKenna told Ms. Brake that she had to accept a demotion to First
    Assistant or she would be fired.  Ms. Brake refused to take the new position, as
    she felt that the position would be embarrassing and humiliating for her.  Her
    employment was then terminated.  At that time, Ms. Brake was 62 years of age.
    She is now 66.

[7]

Ms. Brake sued PJ-M2R for wrongful dismissal.
    PJ-M2R defended on the basis that she had failed to meet the requisite
    standards and, therefore, it had just cause to dismiss her.

[8]

The trial judge found that as of August 2, 2012,
    Ms. Brake had the equivalent of 20 years of employment with PJ-M2R.  He further
    found that she had been wrongfully dismissed and that an appropriate notice
    period was 20 months, inclusive of statutory severance as required by the Act.

[9]

By judgment dated March 14, 2016 (the
    Judgment), Ms. Brake was awarded $104,499.33, plus pre-judgment interest and
    costs.

[10]

PJ-M2R appeals.  Its position on appeal is that:
    Ms. Brake was not wrongfully terminated; Ms. Brakes refusal to accept the
    position as a First Assistant amounted to a failure to mitigate, thereby
    disentitling her to damages; the trial judge erred in setting a notice period
    of 20 months; and, the trial judge failed to properly account for income that
    Ms. Brake earned during the notice period.

[11]

For the reasons that follow, I would dismiss the
    appeal.

BACKGROUND

[12]

The following recitation of the facts draws
    heavily from the trial judges reasons, including his findings of fact at paras.
    4(a)  (v).

[13]

Ms. Brake started working at McDonalds
    restaurants in 1986 in Corner Brook, Newfoundland.  In 1999, she moved to
    Ottawa and began working for PJ-M2R in its McDonalds restaurants.

[14]

At the commencement of Ms. Brakes employment
    with PJ-M2R, she received a letter from Mr. McKenna (the Credit Letter) that
    reads as follows:

This letter is to confirm Esther Brake length
    of service credit.

Esther joined us in July of 1999. She worked
    for 13 years in Corner Brook prior to joining PJ-M2R Restaurants.  50% of her
    service time will be credited towards full time benefits.  This means that she
    will be credited with 7 years of Full Time service as of 1999.

Perry McKenna                                         Owner/Operator

[15]

From 1999 to 2004, Ms. Brake worked for PJ-M2R
    in a variety of capacities.  In 2004, she was promoted to the position of
    Restaurant Manager at one of PJ-M2Rs restaurants.  In 2008, she was
    transferred to manage PJ-M2Rs Kanata restaurant.  Her duties included managing
    another of PJ-M2Rs McDonalds restaurants that was located in a nearby
    Wal-Mart.  In November of 2011, Ms. Brake was assigned exclusively to the
    Wal-Mart location.

[16]

From 2000-2010, Ms. Brake received an overall
    rating of excellent or better in all of her annual evaluations.  In his
    reasons, the trial judge included many representative excerpts from Ms. Brakes
    various performance reviews over that period.  Some of those excerpts are set
    out below.

·

Esther you have excellent standards and make
    the effort to stay current in the operational aspect of the business.

·

Esther the last six months have not been easy
    due to the anticipated closure of Carling. We had limited resources to work
    with, which affected the results. During all of it you have stood like a rock
    persisting thru [sic] the obstacles.

·

Esther it has been a pleasure taking on a
    challenge like Kanata with you. Your focus is to continue to push and support
    the team.

·

Esther you have achieved excellent results by
    your hard work, high standards and commitment. You have always shown a passion
    and willingness to learn and continue your progress.

·

Esther you have achieved some excellent results
    in the P&Ls and sales increase overall in the year. Esther all of the
    above results highlights [sic] your management style: Involved, demanding and a
    doer.

·

Esther, it has been a true pleasure working
    with you this past year. You were able to achieve most of your goals and even
    surpassed some. Thank you for everything you do and have done to be
    successful.

·

Ms. Brake was rated, at the close of 2007, as an
    excellent performer who demonstrates each of the behaviours described in a
    generally effective manner all of the time.  She demonstrates high standards in
    her values and behaviours.

·

In 2008, a period when Ms. Brake managed the
    Kanata and Wal-Mart locations, she was rated as excellent in the various
    performance metrics, including Sales, Quality/Service/Cleanliness and People
    and Profit.  Her evaluation included the following comments: Congratulations
    on your outstanding Crew Commitment Survey result of 97%.  That was the best
    score ever achieved for my company.  I believe its a direct result of your
    influence on the management team and some of the key crew people.

[17]

In 2009, Ms. Brake was rated excellent but
    showed a minor decline in performance.  Mr. McKennas written comments were
    mixed.  They included a recommendation that Ms. Brake develop routines to
    improve follow-up but also a comment that her work ethics, high standards,
    pride, and job knowledge were exceptional.

[18]

In 2010, Ms. Brake was again given an overall
    excellent rating.  However, she was given a rating of satisfactory for the
    second half of that year.  Comments in her review for the first half of 2010
    include:

Esther, this is the best start to a new year
    Ive ever seen you put together.  You have the store running the best Ive
    seen.  Your CSO scores are below the national and regional average and way
    ahead of last year.  Also for the first time, both the McDonalds and PJ-M2R
    scorecards are outstanding.

[19]

CSO is a McDonalds restaurant measurement
    metric that stands for Customer Service Opportunities.  It is expressed as a
    percentage of visits that miss one or more of five critical drivers: quality,
    friendly, accurate, fast and clean.  The lower the CSO rating, the better the score.

[20]

In November 2011, Ms. Brake received her first truly
    negative performance review since her promotion to Restaurant Manager in 2004.
    The trial judge accepted her evidence that she was dumbfounded and
    shocked.  During the review, Mr. McKenna told Ms. Brake that she would be
    transferred to the Wal-Mart location.  At trial, Mr. McKenna explained that his
    decision to transfer her was an attempt to provide an opportunity for Ms. Brake
    to improve her performance.

[21]

The trial judge accepted Ms. Brakes evidence
    that the Wal-Mart location was more difficult to manage because there was high
    staff turnover and less staffing, which meant the manager on duty was expected
    to cook, serve customers, and keep the restaurant clean.

[22]

The Wal-Mart location had been trending badly since
    at least April 2011.  According to McDonalds corporate documentation, that
    location had failed 8 out of 12 customer service opportunities that year.  It
    ranked 1,410 out of 1,437 McDonalds restaurants in Canada.

[23]

Mr. McKenna knew the Wal-Mart location was
    struggling and that for Ms. Brake to succeed she would have to first turn that
    place around.

[24]

Ms. Brake moved to the Wal-Mart location around
    the end of November 2011.  She says it is undisputed that she worked 12-hour
    days, 7 days a week from November 2011 to April 2012 and never asked for
    overtime.

[25]

On April 16, 2012, Ms. Brake was summoned to a three-month
    review meeting.  She was rated as needs improvement and told that because of
    her performance, she would be placed in McDonalds progressive discipline
    program, known as the Goals Achievement Process (GAP).  The GAP document that
    she was given said that she had been placed in the program because her
    performance had declined to an unsatisfactory level.  The program gave Ms.
    Brake up to 90 days to achieve goals on which she and the Appellant were to agree.

[26]

The trial judge found that the GAP program was
    not implemented in accordance with its terms, either in letter or spirit.  He found
    that the thresholds that Ms. Brake was ordered to meet were arbitrary and
    unfair.  He gave, as an example, the Appellants use of the CSO scores.  For
    example, Ms. Brake was required to achieve a 0% CSO score at the Wal-Mart
    location at each of the 30, 60 and 90-day GAP evaluation periods.  The Wal-Mart
    location had historically trended at a 35% CSO score.

[27]

He also found that the GAP goals were
    objectively more difficult to meet than the standards set over the course of
    Ms. Brakes employment with the Appellant.

[28]

The trial judge gave other examples of the
    arbitrariness of the GAP process and the goals set for Ms. Brake.

[29]

On two of her three 90-day goals, Ms. Brake  had
    outstanding scores according to McDonalds own corporate standards, with a CSO
    of 0% and a QSC score of 90% or higher. She did not achieve the third goal, her
    labour goal, but missed it by a small margin. As with the CSO metric, a
    perfect labour score would be 0%.  Ms. Brakes goal was 19.6%, and her actual
    result was 22.7%.

[30]

According to the GAP protocol document, an
    employee who successfully completes the GAP process is to continue with his or
    her regular employment without additional supervision.

[31]

Nonetheless, on August 2, 2012, Mr. McKenna met
    with Ms. Brake and told her that she had failed the GAP program and that she
    had a choice between a demotion to First Assistant and termination.  The salary
    as a First Assistant would have been the same as that which she had been receiving
    as a Restaurant Manager but the benefits would have been meaningfully inferior.

[32]

Ms. Brake refused the demotion.  At trial, she explained
    that she was embarrassed and humiliated by the proposed demotion to First Assistant
    because she would be reporting to people whom she had trained and supervised,
    and those people were younger and less experienced than she was.  She left the
    meeting and never returned.

[33]

Shortly after the meeting, she received a letter
    from Mr. McKenna that gave her a final deadline of August 10, 2012, to accept
    the First Assistant position.  In the letter, Mr. McKenna stated that if she
    declined the offer or failed to answer, it would be taken as confirmation of her
    resignation.

[34]

Ms. Brake did not respond to that letter.  She began
    this proceeding soon afterwards, in November 2012.

[35]

The trial judge found that despite Ms. Brake
    having made reasonable best efforts to find comparable full-time work after her
    employment with PJ-M2R was terminated, she was unsuccessful in that regard.
    She had been able to find work only in positions that were substantially
    inferior to the managerial position that she had held with the Appellant.
    Details of the attempts she made to find work and the treatment of the income
    that she received during the notice period are set out below, in the analysis
    on Issue #5.

THE TRIAL DECISION

[36]

The trial judge began by making his findings of
    fact, summarized above.  He gave detailed reasons for his findings and included
    quotations from documents made at the relevant times.

[37]

He then set out the legal principles that govern
    employment contracts, constructive dismissal, and the determination of a reasonable
    notice period.

[38]

The trial judge found that, while probably not
    a perfect employee in every respect, Ms. Brake was an overall competent
    manager with a long track record of successful contribution at the standard
    expected of her position. The performance appraisals filed over a considerable
    timespan can lead to no other conclusion.

[39]

He said that there was some evidence that Ms.
    Brake had run into some difficulty in late 2011 and into 2012.  He noted that
    this period could not be looked at in isolation, given Ms. Brakes lengthy
    history of effective contribution to the Appellant. The trial judge concluded
    that the difficulties did not amount to anything close to gross or serious
    incompetence and stressed that, by the end of the GAP program, Ms. Brake had
    met the Appellants new and improved standards: She was trending upward at
    an extraordinary degree when the decision to demote her was put on the table.

[40]

He further found that, taken at their highest
    and in aggregate, the complaints about Ms. Brakes performance, as set out by
    the Appellant, did not amount to cause for dismissal:  There was far more right
    about her performance than wrong with it.

[41]

The trial judge also found that Ms. Brake had
    not been given a clear and reasonable opportunity to correct the issues that
    the Appellant had with her employment performance.  He noted that she had been
    transferred to a failing restaurant and was expected to turn it around and
    perform to standards that exceeded any that had been expected of her in the
    past.  He reiterated his findings that the GAP program, as implemented by the Appellant,
    was arbitrary and unfair and held Ms. Brake to goals that were more onerous
    than usual and in excess of those set by McDonalds generally.  He concluded
    that Ms. Brake had been set up to fail from the beginning of the GAP program,
    pointing out that, although Ms. Brake ultimately met the onerous goals set for
    her, that was not enough for the Appellant.  Instead, it told her that she
    could take a demotion to First Assistant or leave.

[42]

The trial judge found that the Appellant had
    made a substantial and fundamental change to Ms. Brakes employment contract
    and, in so doing, constructively dismissed her without cause.

[43]

The trial judge noted that Ms. Brake was 62
    years of age at the time she was constructively dismissed and that she had
    worked for McDonalds in some capacity for the majority of her working life.
    He found that she had effectively worked for the Appellant for 20 of those
    years.  He noted that she had little in the way of formal education and that
    she had risen to a management position through perseverance and hard work.  Despite
    Ms. Brakes reasonable best efforts, she had been unable to secure a reasonably
    comparable managerial position since her dismissal.

[44]

After considering Ms. Brakes age, the length
    and nature of her employment, the manner in which she had been dismissed, the
    low likelihood that she would ever again attain a similar managerial position,
    and the impact on her of being unjustly dismissed in the context of her
    character, reputation and circumstances, the trial judge found that a fair
    compensatory notice period was 20 months, inclusive of any statutory severance required
    by the Act.

[45]

He then awarded damages equivalent to her
    remuneration over a 20-month time period, without deduction for income she
    received during that period.  The 20 months of compensation amounted to
    $104,499.53.  It was based on an annual salary of $53,000, a $6,000 car
    allowance, $1,307.76 for a cell phone and $2,391.84 in miscellaneous health
    benefits.

THE ISSUES

[46]

PJ-M2R submits that the trial judge erred:

1.

by failing to give adequate reasons for his
    findings of fact and    credibility determinations;

2.

in finding that Ms. Brake had been
    constructively dismissed;

3.

by failing to find that Ms. Brakes decision to not
    accept the           offer of continued employment as a First Assistant
    amounted to          a failure to mitigate her damages, thus disentitling her
    to any                          damages;

4.

in setting the notice period at 20 months; and,

5.

in his treatment of mitigation during the notice
    period.

ANALYSIS

Issue #1      Adequacy of Reasons

[47]

The Appellant makes two different complaints on
    this ground of appeal.

[48]

First, the Appellant submits that the trial
    judges reasons for decision do not show the pathway taken through the
    conflicting evidence or provide an adequate explanation for the why of the
    result.

[49]

Second, the Appellant contends that the Respondents
    own evidence does not support the findings of fact made by the trial judge.  For
    example, the Appellant points to the trial judges acceptance of Ms. Brakes
    evidence that she was dumbfounded and shocked when she received a negative
    review in November of 2011.  How can that be, asks the Appellant, when Ms.
    Brake had signed and agreed with her numerous performance reviews in which her
    shortcomings had been pointed out?

[50]

I see nothing in this ground of appeal.  I will
    deal with each of the two complaints in turn.

[51]

The first complaint is that the trial judge gave
    inadequate reasons.  I do not agree.

[52]

Appellate intervention based on inadequacy of
    reasons is justifiable when the inadequacy prejudices the appellants exercise
    of his or her legal rights to an appeal or impedes or prevents an appellate
    court from understanding the basis of the trial decision:
Canadian
    Broadcasting Corp. Pension Plan (Trustee of) v. BF Realty Holdings Ltd.

(2002)
,
214 D.L.R. (4th) 121 (Ont. C.A.), at para.
    64.   Neither such difficulty exists in the present case.

[53]

The trial judge articulated the relevant legal
    principles.  He reviewed the evidence, made his findings, and indicated how he
    applied the legal principles in light of those findings.  The route by which he
    found that Ms. Brakes employment had been wrongfully terminated is abundantly
    clear.  So, too, is his reasoning on the other legal issues that he decided.
    There is no impediment either to the Appellants ability to mount its appeal or
    to this courts understanding of the basis for each decision that he reached.

[54]

The Appellants second complaint is essentially
    a quarrel with the trial judges findings of fact.  I see no palpable and
    overriding errors in the trial judges findings.  On the contrary, the record
    supports the findings made by the trial judge.

[55]

Take, for example, the Appellants complaint
    that the trial judge erred in accepting Ms. Brakes evidence that she was
    dumbfounded when she got a negative performance review in November of 2011.
    The trial judge was uniquely positioned to make such a finding.  He heard the
    parties and their witnesses and he had a full documentary record in front of
    him.  In Ms. Brakes performance reviews from 2000-2010, she had received an
    overall rating of excellent.  It will be recalled that Ms. Brakes review for
    the first half of 2010 included this comment:

Esther, this is the best start to a new year
    Ive ever seen you put together.  You have the store running the best Ive
    seen.  Your CSO scores are below the national and regional average and way
    ahead of last year  Also for the first time, both the McDonalds and PJ-M2R
    scorecards are outstanding.

[56]

It was within this context that the trial judge
    accepted Ms. Brakes evidence that she was dumbfounded when she was given her negative
    review in 2011.  Although Ms. Brake had received a Satisfactory review score
    for the second half of 2010, in light of her long streak of Excellent ratings
    on annual reviews, it was clearly open to the trial judge to accept Ms. Brakes
    testimony that she was shocked by her 2011 review.

[57]

Another example that the Appellant relies on for
    its contention that the trial judges presentation of the facts was unsupported
    by the evidence relates to Ms. Brakes part-time work for Sobeys.  I address
    that matter below as part of my analysis of Issue #5.

[58]

Accordingly, I would dismiss this ground of
    appeal.

Issue #2      The Constructive Dismissal Finding

[59]

The Appellant submits that the trial judge erred
    in finding that the Respondent had been constructively dismissed.  It contends
    that Ms. Brake knew what was expected of her and that she was struggling to
    achieve her goals.  It says that Ms. Brake was placed on GAP in an attempt to
    assist her in achieving her goals and that, over a 90-day period, rather than
    accept that GAP was to assist her, Ms. Brake adopted a negative attitude,
    failed to acknowledge her difficulties and became a detriment to herself.

[60]

While this is the Appellants view of how events
    unfolded and how it treated Ms. Brake, it does not accord with the trial
    judges findings of fact  findings which are fully supported on the record.

[61]

As the trial judge found, when the Appellant
    offered Ms. Brake the non-supervisory position as First Assistant, with
    meaningfully inferior benefits, it unilaterally made a substantial or
    fundamental change to her employment contract.  In so doing, it constructively
    dismissed her.

[62]

In reaching this conclusion, the trial judge
    relied on the Supreme Court of Canadas decision in
Farber v. Royal
    Trust Co.
, [1997] 1 S.C.R. 846.  At para. 36 of
Farber
,
    the Supreme Court explained that a demotion, which generally means less
    prestige and status, is a substantial change to the essential terms of an
    employment contract that warrants a finding that the employee has been
    constructively dismissed.

[63]

Although the trial judge did not refer to
Potter
    v. New Brunswick Legal Aid Services Commission
, 2015 SCC
    10, [2015] 1 S.C.R. 500, on the findings of the trial judge, there would be no
    change in result.

The
Potter
Test for Constructive Dismissal

[64]

The test that
Potter
establishes for constructive dismissal consists of two branches.
    Satisfaction of either branch is sufficient for a finding of constructive
    dismissal.

[65]

The first branch of the
Potter

test has two steps.  First, the court must determine
    objectively whether a breach has occurred.  To do so, the court must ascertain
    whether the employer has unilaterally changed the contract.  If an express or
    an implied term gives the employer the authority to make the change or if the
    employee consents or acquiesces in it, the change is not a unilateral act and
    will not constitute a breach.  To qualify as a breach, the change must also be
    detrimental to the employee.  Second, once it has been objectively established
    that a breach occurred, the court must ask whether a reasonable person in the
    same situation as the employee would have felt that the essential terms of the
    employment contract were being substantially changed (
Potter
, at paras. 37-39).

[66]

The second branch of the
Potter
test necessarily
    requires a different approach.  On this branch, constructive dismissal consists
    of conduct that, when viewed in light of all the circumstances, would lead a
    reasonable person to conclude that the employer no longer intended to be bound
    by the terms of the contract (
Potter
, at para.
    42).

Application
    of the
Potter
Test

[67]

In the present case, the first branch of the
Potter

test is the applicable one.  Its application leads to the
    conclusion that when the Appellant told Ms. Brake she could take the First
    Assistant position or her employment would be terminated, it constructively
    dismissed her.

[68]

On the first step in the first branch of the
Potter

test, the court must determine whether a breach occurred.
    On the findings of the trial judge, there can be no doubt that it did.  The
    demotion was unilateral  Ms. Brake did not consent or acquiesce to it and
    there was no suggestion that either an express or implied term in the
    employment contract authorized the change in position.  Further, the demotion
    would have been detrimental to Ms. Brake if for no other reason than that her
    benefits would have been meaningfully inferior.

[69]

On the second step, the court must ask whether a
    reasonable person in the same situation as Ms. Brake would have felt that the
    essential terms of the employment contract were being substantially changed.  In
    my view, it is self-evident that a reasonable person in Ms. Brakes situation
    would have felt that a demotion to First Assistant amounted to a change to the essential
    terms of her employment contract.

[70]

In sum, the Appellant unilaterally changed the
    employment contract to Ms. Brakes detriment when Mr. McKenna told Ms. Brake
    she had to take the demotion or her employment would be terminated.  In so
    doing, it constructively dismissed her.

[71]

I would conclude on this ground of appeal with a
    final comment.  At times it appeared that the Appellant was asserting that it
    had just cause to dismiss Ms. Brake.  If so, I would simply observe that the
    trial judges findings of fact are a complete answer to such an assertion.  As
    the trial judge explained, Ms. Brake had a lengthy history of effective
    contribution to PJ-M2R and her performance never fell to such a level that
    there was cause for dismissal.  On the record, he was fully justified in those
    findings.

Issue #3      Refusal to Accept Continued Employment

[72]

The appellant submits that if Ms. Brake was constructively
    dismissed, she was obliged to accept the demotion to First Assistant and by
    failing to do so, she breached her obligation to mitigate her damages and
    disentitled herself from receiving compensation.

[73]

I do not agree.

[74]

The law governing this issue, as enunciated in
Evans
    v. Teamsters
, Local 31
,
    2008 SCC 20, [2008] 1 S.C.R. 661, at para. 30, can be summarized as follows.
    Where an employer offers an employee a chance to mitigate damages by accepting
    a different position, the central issue is whether a reasonable person in the
    employees position would have accepted the offer.  This is an objective
    standard, on which the employer bears the burden of proof:
Evans
, at para. 35.  The employee is not obliged to mitigate by working
    in an atmosphere of hostility, embarrassment or humiliation.  The non-tangible
    elements of the situation, including work atmosphere, stigma and loss of
    dignity, as well as the tangible elements, such as the nature and conditions of
    employment, must be considered in determining whether the objective standard
    has been met.

[75]

The trial judge found that, in the
    circumstances, it would have been unreasonable to have expected Ms. Brake to
    accept the demotion and continue working for PJ-M2R.  He noted that he had
    heard from many witnesses and gotten a real sense of the culture at PJ-M2R and
    how Ms. Brake fit into it.  He described the evidence given by some witnesses
    on behalf of PJ-M2R as being downright insulting to Ms. Brake and her
    personality and abilities.  He concluded that it was perfectly
    understandable that Ms. Brake would have found working under a young man whom
    she had trained to be embarrassing or even humiliating.  He concluded that Ms.
    Brake could not have been expected to continue with PJ-M2R given the way they
    had treated her.

[76]

The trial judge effectively found that the
    objective standard had not been met  a reasonable person in Ms. Brakes
    position would not have been expected to have accepted the demotion to First Assistant.
    As a finding of mixed fact and law, it is subject to appellate intervention
    only if there is a palpable and overriding error:
Evans
, at para. 35.  The Appellant has not demonstrated any such
    error.

[77]

Accordingly, I would dismiss this ground of
    appeal.

Issue #4      The Notice Period

[78]

The Appellant says that, in any event, the trial
    judge erred in awarding Ms. Brake damages based on a notice period of 20
    months.  This submission is based largely on the Appellants position that Ms.
    Brake began working for PJ-M2R in July of 1999 and, while she had worked for
    McDonalds prior to 1999, that work was in no way connected to the Appellant.
    The Appellant says that it recognized Ms. Brakes prior service with other McDonalds
    restaurants only for the purposes of benefits.    Accordingly, the Appellant
    says, Ms. Brake worked for it only for approximately 13 years and an
    appropriate period of reasonable notice would be 8 to 10 months, inclusive of
    any statutory severance required by the Act and subject to mitigation.

[79]

I see nothing in this argument.

[80]

I begin with this important preliminary
    observation: the reasonable notice period for wrongful dismissal was not 20
    months in this case.  The 20-month period included Ms. Brakes entitlement to
    termination and severance pay under the Act.  The significance of this point
    will become evident when I deal with the question of what constitutes
    mitigation income in Issue #5.

[81]

There is no question that Ms. Brake worked for PJ-M2R
    for 13 years.  In finding that Ms. Brake had the equivalent of 20 years of
    service with PJ-M2R, the trial judge took into consideration the Credit Letter
    that Mr. McKenna sent to Ms. Brake when she began working for PJ-M2R.

[82]

For ease of reference, the Credit Letter is set
    out again now.

This letter is to confirm Esther Brake length
    of service credit.

Esther joined us in July of 1999. She worked
    for 13 years in Corner Brook prior to joining PJ-M2R Restaurants.  50% of her
    service time will be credited towards full time benefits.  This means that she
    will be credited with 7 years of Full Time service as of 1999.

Perry McKenna                                         Owner/Operator

[83]

The Appellant maintains that the Credit Letter
    was intended solely to credit Ms. Brake with service time for purposes of the
    calculation of benefits.  The trial judge interpreted the Credit Letter
    differently.  He found that, in recognition of Ms. Brakes work experience and
    the associated value that she brought to PJ-M2R, the Credit Letter was the
    Appellants acknowledgment that it credited her with having 7 years of
    full-time service with it.  The trial judge added the 7 years of credited
    service to Ms. Brakes 13 years of actual service and found that she had the
    equivalent of 20 years of service with PJ-M2R.

[84]

While the Credit Letter does include the sentence
    that 50% of her service time will be credited towards full time benefits, the
    first line of the Credit Letter indicates that its purpose is to confirm
    Esther Brake length of service credit.  Furthermore, the last sentence in the
    Credit Letter is unequivocal.  It states, This means that she [Esther Brake]
    will be credited with 7 years of Full Time service as of 1999.

[85]

Given the plain language in the Credit Letter
    and in light of the deference that this court owes to the trial judges interpretation
    of the Credit Letter, there is no basis to interfere with the trial judges finding
    that Ms. Brake had the equivalent of 20 years of employment with the Appellant.

[86]

A trial judges determination of the period of
    reasonable notice is entitled to considerable deference:
Minott v.
    OShanter Development Co.

(1999), 42 O.R. (3d) 321
    (C.A.), at pp. 343-344.  In finding that the period of reasonable notice was 20
    months (including her statutory entitlements under the Act), the trial judge
    took into account the well-established
Bardal
[1]
factors: the character of her employment, her length of service,
    her age, and the availability of similar employment in the light of her
    experience, training, and qualifications.  Moreover, in oral argument, counsel for
    PJ-M2R conceded that if the court were to find that Ms. Brake had 20 years of
    service as a restaurant manager, a notice period of 20 months would be within
    the acceptable range.

[87]

Accordingly, I would dismiss this ground of
    appeal.

Issue #5
Mitigation during the
    Notice Period

[88]

The Appellant submits that the trial judge erred
    in two ways in his treatment of mitigation during the notice period.

[89]

First, it says that the trial judge erred when
    he found that the Respondent had made reasonable efforts to mitigate her
    losses.  It points to the Respondents evidence at trial that she made one
    application for a job between August 10, 2012, and January 29, 2013 (when she
    was examined for discovery) and that she had not applied for any restaurant
    management positions.

[90]

Second, the Appellant argues that the trial
    judge erred in law in failing to deduct the income that Ms. Brake received
    during the notice period from the damages award.  In its factum, the Appellant represents
    Ms. Brakes income during the notice period as follows:

Sobeys,
    August    December 2012            $  9,208.88

Sobeys,
    January  December 2013             $19,566.58

Tim Hortons
      two months in 2013        $  2,701.00

EI benefits
    2013                                $  7,150.00

Sobeys,
    January  April 2014                      $  6,793.20

Home Depot,
    January  April 2014               $     600.00

1.       Reasonable
    Efforts to Mitigate

[91]

At para. 4(v) of his reasons, the trial judge gave
    this explanation for finding that Ms. Brake made reasonable efforts to mitigate:

(v)  Ms. Brake had long had another job at Sobeys
    as a cashier, a fact that was always known to the [Appellant]. After August
    2012 she increased her hours at Sobeys. In addition, Ms. Brake made other
    efforts to mitigate her damages. From October 2012 until mid-January 2013, she
    worked 30-36 hours per week at Tim Hortons. Her hourly wage was $11.25. I
    accept Ms. Brakes testimony that she attempted to start a babysitting service
    and cleaning service. She made phone calls, put up posters and posted an
    advertisement for both businesses on Kijiji. I further accept that by January
    2013, Ms. Brake realized that the businesses were not working and that she
    needed to find another source of income. Accordingly, she applied for several
    positions including as a McDonalds mystery shopper, store manager and front
    store supervisor at Shoppers Drug Mart, overnight supervisor at Home Depot,
    part-time cashier at IKEA, store manager at Marks Work Warehouse, supervisor
    at Costco, assistant store Manager at Loblaws, store manager at Dollarama and
    various other positions at Bed, Bath and Beyond, Swiss Chalet, LCBO and Target.
    Ms. Brake has not been offered a management position with any company since her
    termination. In March 2013, Ms. Brake accepted a position as a cashier at Home
    Depot. She works approximately 35-38 hours per week and earns a wage of $12.50
    per hour. She continues to work there to date.

[92]

I see no basis on which to interfere with the
    trial judges finding that the Respondent made reasonable efforts to mitigate.
    The record amply supports that finding, as the reasons in para. 4(v) readily
    demonstrate.

[93]

It is trite law that a trial judges factual findings
    are to be afforded deference and an appellate court is not to disturb them
    absent palpable and overriding error.  The Appellant does not argue that the
    trial judges finding is infected by a palpable and overriding error.  In
    effect, the Appellant is asking this court to retry the question of reasonable
    efforts.  That request ignores the standard of review to be applied to findings
    of fact.

[94]

There is no magic formula that an employee must
    follow when making reasonable efforts to obtain other employment and thereby
    mitigate his or her loss.  When an employer alleges that a former employee has
    not reasonably mitigated his or her losses, the question is whether [the
    employee] has stood idly or unreasonably by, or has tried without success to
    obtain other employment:
Michaels v. Red Deer College
, [1976] 2 S.C.R. 324, at p. 331.  A terminated employee is entitled
    to consider her own long-term interests, so she will not fail to mitigate
    merely because she chooses to take some career risks that might not minimize
    the compensation that her former employer will owe to her:
Peet v.
    Babcock & Wilcox Industries Ltd.

(2001), 53
    O.R. (3d) 321 (C.A.), at para. 8.  Thus, the fact that Ms. Brake did not apply
    for other restaurant management positions does not mean that she did not make
    reasonable efforts to mitigate.

2.       No
    Deductions from Income during the Notice Period

[95]

I turn now to the Appellants second argument in
    respect of mitigation, namely, that the trial judge erred because he failed to
    reduce the damages award by the amounts that Ms. Brake received during the
    notice period.

[96]

An employee who is dismissed without reasonable
    notice is entitled to damages for breach of contract based on the employment
    income the employee would have earned during the reasonable notice period, less
    any amounts received in mitigation of loss during the notice period:
Sylvester
    v. British Columbia
, [1997] 2 S.C.R. 315, at paras.
    14-17.

[97]

While this general statement of principle
    governs, I would not reduce the damages award by the amounts that Ms. Brake
    received during the notice period because, in my view, they are not amounts
    received in mitigation of loss.

[98]

The trial judge did not directly address the
    question of whether to deduct employment income received during the notice
    period from the damages award.  It may be, as the Respondent contends, that his
    reasons can be inferred from the last few sentences of para. 24, where the
    trial judge said:

I find that [Ms. Brakes] subsequent
    employment represents a reasonable effort on her part to mitigate her losses.  However,
    I also find that her ability to find employment does not take away from the
    loss she suffered from being dismissed without cause.  The cashier position she
    occupies now at Home Depot is so substantially inferior to the managerial
    position she held with the [Appellant] that the former does not diminish the
    loss of the latter.

[99]

To the extent that the trial judge was
    suggesting that the court did not need to consider whether income received from
    a job that was inferior to the one from which the employee was dismissed was
    mitigation income, I respectfully disagree. That approach does not accord with the
    principle that employment income earned during the notice period is generally to
    be treated as mitigation of loss.

[100]

Having said that, in my view, the income earned by Ms. Brake during
    the notice period need not be deducted from the damages award.  To explain why,
    I will consider:

a.     the
    Employment Income (EI) benefits that Ms. Brake received;

b.     Ms.
    Brakes employment income in the statutory entitlement period under the Act;
    and

c.     Ms.
    Brakes employment income in the balance of the 20-month notice period (the Balance
    of the Notice Period).

a. EI
    Benefits

[101]

In my view, the law is clear: EI benefits are not to be deducted
    from damages awarded for wrongful dismissal.  Accordingly, the damages award
    was not to be reduced by the $7,150 of EI benefits that Ms. Brake received in
    2013.

[102]

The Supreme Court addressed the deductibility of EI benefits from
    wrongful dismissal damages in
Jack Cewe Ltd. v. Jorgenson
, [1980] 1 S.C.R. 812.  In that case, Mr. Jorgenson successfully
    sued Jack Cewe Ltd. (the company) for wrongful dismissal.  The trial judge
    awarded damages equivalent to a years salary.  From that amount, the trial
    judge deducted, among other things, the EI benefits
[2]
that Mr. Jorgenson had
    received during the twelve-month notice period.  The British Columbia Court of
    Appeal held that the EI benefits should not be deducted.  The company appealed
    to the Supreme Court and argued that EI benefits should be deducted in
    proportion to the companys contribution. Its appeal was dismissed.

[103]

At p. 818 of
Cewe
, Pigeon J.,
    writing for the Court, stated that he found the companys position
    untenable.  He explained:

The payment of [EI] contributions by the
    employer was an obligation incurred by reason of [Mr. Jorgensons] employment,
    therefore, to the extent that the payment of those contributions resulted in
    the provision of [EI] benefits, these are a consequence of the contract of
    employment and, consequently, cannot be deducted from damages for wrongful
    dismissal.

[104]

This court expressed a similar view in
Peck
    v. Levesque Plywood Ltd.

(1979), 27 O.R. (2d)
    108.  In
Peck
, after awarding an employee damages for wrongful
    dismissal, the trial judge reduced the award by the amount of EI benefits that the
    employee received during the notice period.  This court allowed the employees
    cross-appeal, holding that the damages award should not be reduced by the
    amount of the EI benefits.

[105]

Justice Dubin (as he then was), writing for this court, thoroughly
    canvassed the jurisprudence from across Canada on the question of whether there
    should be a deduction of amounts received by way of EI from a damages award for
    wrongful dismissal. At p. 112 of
Peck
, he
    concluded that they are not to be deducted since the employer ought not to
    profit from the benefits payable to the employee.  He stated:

It is to be observed that as a result of the
    [employer] breaching its contract of employment with the [employee], the
    [employee] was required to use up at least part of his [EI] benefits.  It would
    be inconsistent to have that amount taken into account for the benefit of the
    employer who, by its breach of contract, compelled the employee to resort to
    his [EI] benefits.

[106]

Numerous lower court decisions in Ontario have followed these
    decisions and refused to deduct EI benefits from wrongful dismissal awards.
    See, for example,
Desforge v. ED Roofing Ltd.

(2008),
    69 C.C.E.L. (3d) 115 (Ont. S.C.), at paras. 70-73, and
Saladini v.
    Affinia Canada Corp.
,
2011 ONSC 79,

at para.
    47.

[107]

Therefore, in accordance with settled law, Ms. Brakes 2013 EI
    benefits were not received in mitigation of loss and are not deductible from
    the damages award.

b. Employment
    Income in the Statutory Entitlement Period

[108]

In this section of the analysis, I will begin by explaining why employment
    income earned during the statutory entitlement period is not subject to deduction
    as mitigation income.  Thereafter, I will consider Ms. Brakes statutory
    entitlement period and the burden of proof in respect of it.  I will conclude
    this section of the analysis by considering the income earned during the
    statutory entitlement period.

Employment Income in the Statutory Entitlement Period is not subject
    to Mitigation

[109]

When Ms. Brakes employment was wrongfully terminated, she was
    entitled to two types of compensation  termination and severance pay under the
    Act (statutory entitlements) and common law damages for wrongful dismissal.
    In her amended Statement of Claim, she claimed for both.  At para. 35 of the
    claim, she states that she had been paid no compensation in lieu of reasonable
    notice and none of the amounts required by the Act.

[110]

The trial judge was entitled to make a global award encompassing both
    Ms. Brakes statutory entitlements and her common law damages, provided that
    there was no double recovery:
Stevens v. Globe and Mail

(1996), 28 O.R. (3d) 481 (C.A.), at p. 493.  That is what the trial
    judge did in this case:  he awarded damages based on what Ms. Brakes
    remuneration would have been over a 20-month time period but made it clear that
    the damages award was inclusive of Ms. Brakes statutory entitlements.  Thus,
    as I indicated earlier, the damages award of 20 months was not solely
    compensation at common law for wrongful dismissal.  The 20-month damages award included
    Ms. Brakes statutory entitlements.

[111]

Statutory entitlements are not damages.  Ms. Brake was entitled to
    receive her statutory entitlements even if she secured a new full-time job the
    day after the Appellant terminated her employment.  Therefore, the income that
    Ms. Brake earned during her statutory entitlement period is not subject to
    deduction as mitigation income.  In reaching this view, I adopt the reasons of
    the Divisional Court in
Boland v. APV Canada Inc.
(2005), 250 D.L.R. (4th) 376.

[112]

In
Boland
, the employee received part of his statutory severance
    entitlement at the time that his employment was terminated.  He brought an
    action in which he sought damages for wrongful dismissal and to recover the
    balance of his statutory entitlements.  He then sought summary judgment for
    payment of the balance of his statutory entitlements on the basis that such an amount
    was not subject to mitigation.

[113]

The
    motion judge refused summary judgment because, among other things, he was of
    the view that entitlements under the Act were not enforceable by action but
    only through the administrative procedures in the Act.

[114]

The
    Divisional Court disagreed.  It allowed the appeal, set aside the order of the
    motion judge, and substituted an order granting summary judgment for the
    outstanding balance of the employees statutory entitlements.

[115]

Lane J., writing
    for the Divisional Court, addressed the question of whether, if an action is
    brought, statutory entitlements are subject to mitigation.  He concluded that
    they are not.

[116]

He noted that
    when such entitlements are obtained through the administrative route, they are
    not subject to mitigation (at para. 21).  He then summarized, at para. 22, the
    argument of the Director, who had intervened, as follows:

The [Act] benefits are minimum entitlements and may not be
    reduced whether sought in an action or by the administrative route.  The [Act]
    entitlements are not damages.  They are not linked to any actual loss suffered
    by the employee, but are payable in any event.  They are to be paid promptly,
    a legislative indication that the employer is not entitled to wait and see if
    the employee becomes re-employed.

[117]

At para. 23,
    Lane J. stated that he agreed with the Directors position and went on to
    further explain:

[Act] entitlements are not linked, as damages are, to the
    criteria established in
Bardal
such as the age of the employee, the
    likely length of time to find another position, the actual finding of another
    position etc. They are payable in any event. In my view, it is illogical to
    suppose that the Legislature intended that such payments would become damages
    if sought in an action, but not when sought administratively.
They are
    minimum sums to be paid by the employer and subjecting them to reduction by reason
    of sums received from others removes their character as minimum.
Their
    character as minimums was clearly recognized in
Machtinger
and in
Rizzo
    & Rizzo Shoes Ltd., Re
. [Citations omitted.]  [Emphasis added.]

[118]

For the reasons given by Lane J. in
Boland
, statutory
    entitlements are not subject to mitigation.  Therefore, any employment income
    that Ms. Brake earned during her statutory entitlement period is not deductible
    as mitigation income.

[119]

Since the employment income that Ms. Brake earned during her
    statutory entitlement period is not deductible from the damages award, the
    trial judge ought to have determined her statutory entitlement period and
    identified which items of employment income were attributable to that period
    and which were attributable to the Balance of the Notice Period.

Ms. Brakes Statutory Entitlement Period

[120]

Ms. Brakes statutory entitlement period would clearly cover the
    period from the date of her dismissal to the end of 2012 and some part of 2013.
    Unfortunately, the record does not permit this court to determine the precise
    number of weeks to which she was statutorily entitled.   Consequently, the
    court cannot determine when in 2013 the statutory entitlement period expired.

[121]

The trial judge recognized that Ms. Brake was entitled to benefits
    under the Act but made no determination of what they were.  He simply ordered
    that the damages award based on 20 months compensation included her
    entitlements under the Act.

[122]

The court explored the matter of statutory entitlements at the oral
    hearing of the appeal and asked the parties for further written submissions on
    the matter.  In her additional written submissions, counsel for Ms. Brake
    submitted that the Appellant had a separate, mandatory obligation to pay Ms.
    Brake her statutory entitlements of 34 weeks.  However, she did not indicate
    how she arrived at the figure of 34 weeks.  She asked this court to make an order
    requiring the Appellant to pay that amount in addition to the 20 months
    notice.  I return to that request below.

[123]

The Appellant, in its additional written submissions, said nothing
    about the Respondents assertion that her statutory entitlements were 34 weeks.
    Its position was that Ms. Brakes statutory entitlements were subsumed within
    the damages awarded by the trial judge.

The Burden of Proof

[124]

It is important to know the duration of the statutory entitlement
    period because, as I have already explained, employment income earned during that
    period need not be deducted as mitigation income.  In my view, where (as in
    this case) a blended damages award is made, it is for the employer to prove
    what employment income is attributable to the statutory entitlement period and
    what employment income is attributable to the Balance of the Notice Period.  I
    say this for the following reasons.

[125]

Once an employee has proven wrongful dismissal and has adduced
    evidence of his or her losses, the onus shifts to the employer to demonstrate
    that some or all of those losses were avoidable or avoided:
Red Deer
    College
, at p. 331.

[126]

The principle of avoidable loss is described as follows in Harvey
    McGregor,
McGregor on Damages
,

19th
    ed. (London: Thomson Reuters (Professional) UK Limited 2014), at p. 311:

Where it appears that steps have been taken by
    the claimant to avoid loss which are [sic] to be taken into account in
    assessing the damages, the onus is on the defendant to prove that,
and also
    how far
, loss has thereby been avoided. [Emphasis added.]

[127]

Accordingly, as the Appellant wished to have employment income that
    Ms. Brake received during the notice period treated as mitigation income, it
    was up to the Appellant to show what part of that income was properly
    attributable to the Balance of the Notice Period.

Employment Income in the Statutory Entitlement Period

[128]

As I have explained, employment income that Ms. Brake earned during
    the statutory entitlement period is not deductible from the damages award.  On
    that basis, I would exclude three amounts of income: (1) income from Sobeys for
    the period August to December 2012 ($9,208.88); (2) a portion of the total Sobeys
    income earned in 2013 ($19,566.48); and (3) income from Tim Hortons for two
    unidentified months in 2013 ($2,701.00).

[129]

The first item  Ms. Brakes income from Sobeys for the period
    August to December 2012  is not to be deducted because, although the precise
    duration of the statutory entitlement period is not known, it would not have
    been exhausted by the end of 2012.

[130]

The second item is Ms. Brakes income from Sobeys in 2013.  The
    record does not permit the court to determine the precise duration of Ms.
    Brakes statutory entitlement period nor does it permit the court to determine
    what part of the 2013 Sobeys income was received outside of that period.
    While those determinations should have been made at trial, in this case, it is
    of no moment as I would not treat any of the Sobeys income as mitigation
    income.  I explain how I reach that conclusion below.

[131]

As for the third item  the $2,701 that Ms. Brake earned from Tim
    Hortons during two months in 2013  I would not deduct it for this reason.
    There is no finding as to when in 2013 Ms. Brake earned that income.  Bearing
    in mind the Appellants onus to demonstrate what losses were avoided, I am not
    prepared to assume that the Tim Hortons income was earned outside of the
    statutory entitlement period.  Therefore, I would not deduct it.

c. Employment Income in the Balance of the Notice Period

[132]

The notice period of 20 months expired near the beginning of April
    2014.  During the Balance of the Notice Period, Ms. Brake received: (1) that
    part of the 2013 Sobeys income not attributable to the statutory entitlement
    period; (2) $6,793.20 from Sobeys for the period from January to April of 2014;
    and (3) $600 from Home Depot.

[133]

Before addressing whether the income that Ms. Brake earned during
    the Balance of the Notice Period must be deducted from the damages award, I
    will deal briefly with the Appellants complaint that the trial judge erred in
    his factual findings in respect of Ms. Brakes income from Sobeys.

Sobeys Income  a Factual Clarification

[134]

The Appellant points to the first sentence of para. 4(v) of the
    reasons (set out above at para. 91) and says that the trial judge erred in his
    findings of fact in that sentence. The Appellant says that: Ms. Brake had not
    long had another job at Sobeys; she made salads for Sobeys and did not act
    as a cashier; and Mr. McKenna discovered only in June of 2012 that Ms. Brake
    had also been working, on a part-time basis, for Sobeys.

[135]

I do not accept that the trial judge made the alleged factual
    errors.  On the record, those findings were available to him.

[136]

Ms. Brakes marriage failed after she relocated to Ottawa.  Her
    evidence at trial was that she worked part-time at Sobeys between 2002 and
    2004 because she wasnt earning enough money working for PJ-M2R to provide for
    herself and her son and to also pay for the costs of her divorce.  She
    testified that Mr. McKenna was aware that she was working at Sobeys but never
    said anything about it.

[137]

Ms. Brake also testified that because of her negative performance
    review in November of 2011, she lost her bonus and did not get an increase in
    salary.  In light of those losses, she told Mr. McKenna in January of 2012 that
    she would look for a part-time job and he said do whatever you want to do.
    When a friend approached Ms. Brake about working at Sobeys, she took the
    position because she believed her job with the Appellant was in jeopardy and
    she needed to have some money in the bank in case she got fired.

[138]

In light of Ms. Brakes testimony, while one might quarrel with
    exactly how the trial judge phrased the first sentence of para. 4(v), I see no
    palpable and overriding error in it.  The essential point to be taken from that
    sentence is that, while employed by the Appellant and to the Appellants
    knowledge, Ms. Brake supplemented her income by working part-time at Sobeys.

Deductibility of the Sobeys and Home Depot Income

[139]

In my view, it was open to the trial judge to
    make no deduction for the income that Ms. Brake earned from Sobeys and Home
    Depot during the Balance of the Notice Period.

[140]

In a wrongful dismissal action, an employer is
    generally entitled to a deduction for income earned by the dismissed employee from
    other sources during the common law notice period. However, as Rand J.
    explained in
Karas v. Rowlett
, [1944] S.C.R.
    1, at p. 8, for income earned by the plaintiff after a breach of contract to be
    deductible from damages, the performance in mitigation and that provided or
    contemplated under the original contract must be mutually exclusive, and the
    mitigation, in that sense, is a substitute for the other. Therefore, if an
    employee has committed herself to full-time employment with one employer, but
    her employment contract permits for simultaneous employment with another
    employer, and the first employer terminates her without notice, any income from
    the second employer that she could have earned while continuing with the first
    is not deductible from her damages: see S.M. Waddams,
The Law of
    Damages
, loose-leaf (Rel. Nov. 2016), 2d ed. (Toronto:
    Canada Law Book, 1991), at para. 15.780.

[141]

The Saskatchewan Court of Appeal applied this
    principle in
McIntosh v. Saskatchewan Water Corp.
(1989), 26 C.C.E.L. 196 (Sask. C.A.).

[142]

In
McIntosh
,
a resource economist was wrongfully dismissed from
    his position.  During the notice period, he taught an evening class in
    economics for which he was paid the sum of $3,674.  The trial judge did not
    deduct that sum from the damages award because Mr. McIntosh could have taught
    this evening course if he had remained in the respondents employ.

[143]

At pp. 201-202 of
McIntosh
,
the Saskatchewan Court of Appeal
    specifically ratified this aspect of the trial decision, stating that in light
    of the trial judges finding with respect to the teaching income, it would make
    no deduction for that income.

[144]

This principle applies in the present case.  As
    Ms. Brake had worked a second job with Sobeys while working full-time for the
    Appellant, her work for Sobeys and her work for the Appellant were not
    mutually exclusive.   Had Ms. Brake stayed in the Appellants employ, she could
    have continued to supplement her income through part-time work at Sobeys.  Therefore,
    I would not deduct the income that she received from Sobeys during the Balance
    of the Notice Period from the damages award.

[145]

Whether Ms. Brakes Sobeys income exceeded an
    amount that could reasonably be considered as supplementary and, therefore, not
    in substitution for her employment income was not argued.  On the facts of this
    case, the amounts received from Sobeys do not rise to such a level that her
    work at Sobeys can be seen as a substitute for her work at PJ-M2R.  I leave
    for another day the question as to when supplementary employment income rises
    to a level that it (or a portion of it) should be considered as a substitute
    for the amounts that would have been earned under the original contract and,
    accordingly, be treated as deductible mitigation income.

[146]

For these reasons, I would not deduct the sums that
    Ms. Brake earned from Sobeys during the Balance of the Notice Period.

[147]

The evidence regarding Ms. Brakes Home Depot
    income is unclear
[3]
.
    In these circumstances, I would refrain from deducting from the damages award the
    modest sum of $600 that Ms. Brake earned from Home Depot.

THE RESPONDENTS
    NEW SUBMISSION

[148]

As I have already mentioned, the court sought additional written
    submissions from the parties after the oral hearing of the appeal.  In Ms.
    Brakes additional submissions, she argued that the employees right to receive
    severance benefits under the Act is separate from the right to damages at
    common law.  Accordingly, she contended, the trial judge erred in combining the
    two amounts.  She asked that she be granted 34 weeks of severance pay in
    addition to compensation for 20 months notice at common law.

[149]

I reject this submission.

[150]

Where the employer dismisses the employee and fails to give the
    employee the benefits to which the employee is entitled under the Act, the
    employee may claim both those benefits and common law damages in a single civil
    action, so long as there is no double recovery.  This approach follows from
Stevens
.  See also
Boland
, at paras.
    11-17.

[151]

In this proceeding, Ms. Brake sought compensation for both common
    law damages and statutory entitlements.  The trial judge was entitled to make
    the damages award in the fashion that he did, namely, based on 20 months
    compensation in lieu of notice and inclusive of statutory benefits as required
    by the Act.

[152]

In any event, the Respondent did not bring a cross-appeal so it is
    not open to the court to consider increasing the damages award.

DISPOSITION

[153]

For these reasons, I would dismiss the appeal with costs to the Respondent
    fixed at $19,500, all inclusive.

Eileen
    E. Gillese J.A.

I
    agree. S.E. Pepall J.A.

Feldman J.A.
    (concurring):

[154]

I fully concur
    with the result reached by Gillese J.A., and with her excellent reasons.
    However, with respect to the income the respondent earns as a cashier at Home
    Depot, in my view, the trial judge was entitled to make the following finding:

The cashier position she occupies now at Home Depot is so
    substantially inferior to the managerial position she held with the Defendant
    that the former does not diminish the loss of the latter.

[155]

It was on that
    basis that the trial judge declined to deduct the Home Depot income that the
    respondent earned during the notice period from her damages for wrongful
    dismissal. I would uphold that decision.

[156]

The trial judge
    found that the respondent made reasonable best efforts to find a managerial
    position reasonably comparable to the one she held with the appellant. Having
    been unable to do so, the respondent accepted a non-managerial job as a cashier
    at a much lower salary, because she needed to earn money.

[157]

A wrongfully
    dismissed employee has a duty to try to mitigate her damages by making
    reasonable best efforts to obtain a position that is reasonably comparable in
    salary and responsibility to the one from which she was wrongfully dismissed.
    If she is able to secure such a position, her earnings are deducted from her
    damages as mitigation.
[4]
If she turns down such a position, or fails to make reasonable best efforts,
    then the amount she could have earned at a comparable position is similarly
    deducted from her damages, based on a failure to meet the duty to mitigate. But
    if she can only find a position that is not comparable in either salary or
    responsibility, she is entitled to turn it down, and if she does, the amount
    she could have earned is not deducted from her damages.

[158]

It follows, in
    my view, that where a wrongfully dismissed employee is effectively forced to
    accept a much inferior position because no comparable position is available,
    the amount she earns in that position is not mitigation of damages and need not
    be deducted from the amount the employer must pay.

[159]

It is always up
    to the trial judge to determine if the employee has met her duty to mitigate.
    When a wrongfully dismissed employee accepts new employment during the notice
    period, the question of whether or not to deduct those earnings depends on the
    trial judges assessment of mitigation. If the trial judge finds that the new
    job is comparable to the old one, the earnings should be deducted as mitigation
    of damages. If the trial judge finds that the new job is vastly inferior to the
    old one, such that the employee would not be in breach of the duty to mitigate
    if she turned it down, the earnings should not be deducted.

[160]

In other words,
    the trial judge decides whether a job that an employee takes or turns down,
    amounts to mitigation of damages. As my colleague states at para. 98, only
    monies that are received in mitigation of the loss are deducted from the
    damages award.

[161]

In this case,
    the employee was not an executive who could afford to live during the notice
    period without a salary. It was in her interest to try to obtain a comparable
    managerial position but she was not able to do so, and because she could not
    afford to earn nothing, she had to take the only job she could find. The trial
    judge determined that the job she found was in no way comparable to her
    managerial position with the appellant. As a result, it did not have the effect
    of mitigating the damages she suffered from her wrongful dismissal by the
    appellant employer and should not be deducted.

Released: K.F. May 23, 2017

K. Feldman J.A.

[1]

Bardal v. Globe and Mail Ltd.
(1960),
    24 D.L.R. (2d) 140 (Ont. H.C.), at p. 145.

[2]

At that time, such benefits were called unemployment insurance
    benefits.

[3]

See para. 4(v) of the trial reasons, the trial transcripts and
    the chart in the Appellants factum.

[4]
See, for example,
The Honourable Justice Randall Scott Echlin
    & Christine M. Thomlison,
For Better or For Worse: A Practical Guide to
    Canadian Employment Law
, 3rd ed. (Aurora, Ont.: Canada Law Book, 2011), at
    p. 257.


COURT OF APPEAL FOR ONTARIO

CITATION: Berman v. Berman, 2017 ONCA 447

DATE: 20170531

DOCKET: M47723 and M47795 (C62911)

Epstein J.A. (In Chambers)

BETWEEN

Yakov Eitan Berman

Appellant

and

Alissia
    Berman

Respondent

Kristy Maurina, for the appellant

Dani Frodis, for the respondent

Heard: May 3, 2017

On appeal from the judgment of Justice L.E. Fryer of the
    Superior Court of Justice, dated June 16, 2016, with reasons reported at 2016
    ONSC 6249.

REASONS FOR
    DECISION

[1]

There were two motions in front of me in this
    family law dispute. In the underlying appeal, the appellant/father seeks to
    vary the trial judges decision in relation to custody and access, equalization
    and child support, as well as costs. Against that background, the father moves
    for an order extending the time to perfect the appeal. At the same time, the respondent/mother
    seeks an order for security for costs for both the appeal and the unsecured costs
    awarded at trial.

[2]

For the reasons that follow, I grant
    the fathers motion and award an extension of time to perfect the appeal. I
    dismiss the mothers motion for security for costs.

Facts

[3]

The parties were married on July 31,
    2011. Their daughter Eliana was born in February 2013. They separated on
    December 20, 2013. The matrimonial home was sold in February 2014, and the
    proceeds placed in trust. In July 2014, Rogers J. ordered that Eliana would
    reside primarily with the mother, but that the father would have parenting time
    every Monday and Wednesday from 4 p.m. to 7 p.m., and every second weekend from
    Friday at 4 p.m. to Sunday at 5 p.m. This schedule remained in place until the
    trial

[4]

The mother is a dental hygienist. She
    left work briefly following the separation, but returned to working full time
    in October of 2014. For many years the father worked selling cars. During the
    marriage, the father left his position at a used car dealership, and decided to
    start a custom kitchen business. This business was not a success, and was wound
    up within a year. The father initially declined to return to work following the
    separation. Around October 2015, the father returned to selling cars, although the
    question of whether he was underemployed was a matter of dispute at trial.

Decision below

[5]

The trial judge first dealt with
    custody. The mother sought sole custody in her favour. The father initially
    sought joint custody, but changed his position to sole custody in his favour
    during the course of the trial. The trial judge held that joint custody would
    not be appropriate, as the parties lacked a significant history of effective
    cooperation. An order for sole custody was necessary to ensure that decisions
    could be made for Eliana in a timely and effective way. Based on the evidence
    she had heard, the trial judge determined that it was in Elianas best
    interests for the mother to have sole custody. The mother had shown herself to
    be, for the most part, child-focussed, and prepared to involve the father in
    the decision-making process.

[6]

The trial judge next turned to
    parenting time. The father sought shared parenting, while the mother proposed that
    Eliana reside in her primary care, with the fathers having weekly access. The
    trial judge noted that while the mother worked regular day-time hours, the
    father often had to work evenings and weekends. Eliana had been in the primary
    care of the mother since birth, and it was important for her to have stability
    and routine. Accordingly, a shared custody regime would not be in Elianas best
    interests at this time. The trial judge ordered Eliana to remain in the primary
    care of the mother, however with weekly overnight time with the father, as well
    as every second weekend.

[7]

The trial judge then dealt with child
    support. The father provided highly inconsistent evidence as to his income, and
    failed to produce timely disclosure, making it impossible to reach a
    determination of his income as required by the
Federal Child Support
    Guidelines
, S.O.R./97-175 (the
FCSG
). Accordingly, the trial judge
    was required to impute an appropriate income to the father, pursuant to s. 19
    of the
FCSG
. The father took the position that his annual income was
    $40,000, the amount by which he had been calculating his child support
    obligations since separation.

[8]

The trial judge held that this was a
    reasonable income for 2014, as had the father re-entered the car sales industry
    in that year he would have required time to re-build his sales. However, the
    father's position that he was still only capable of earning $40,000 was not
    reasonable. The father had a track record as a successful car salesman, earning
    more than $100,000 in some years. He should have obtained employment in the car
    sales field immediately after separation, rather than delaying. Accordingly,
    the trial judge imputed an income of $75,000 to the father for each year since
    2014. Pursuant to the
FCSG
, the father was ordered to pay $682 in
    monthly child support, and an additional $6,014 in arrears.

[9]

Finally the trial judge turned to
    property equalization. The father claimed a $120,000 interest on the date of
    marriage in the car dealership he worked for at that time. The trial judge
    found that the evidence only supported a $46,000 interest. The trial judge also
    found there to be no evidence to support the father's claim of having $50,000
    in cash at the date of marriage. He claimed to owe significant money to various
    friends at the date of marriage, but did not call these friends to testify. The
    evidence only supported the fathers having $25,000 in debt to his friends at
    the time of marriage. Accordingly, the mother was ordered to make an
    equalization payment of $44,569.26 to the father. The mother sought an unequal
    division of net family property, pursuant to s. 5(6) of the
Family Law Act
,
    R.S.O. 1990, c. F.3. However, these facts did not reach the extremely high bar
    of unconscionability required for such an order.

[10]

In a later costs decision, the trial
    judge awarded the mother costs of $132,000 plus HST. The Family Responsibility
    Office (FRO) was ordered to collect $30,000 plus HST, as an incident of child
    support. This cost award was stayed pending appeal.

Fathers motion

[11]

The trial judgment was released on June
    16, 2016. The father sought an extension of time in which to perfect the
    appeal. The delay was a modest one, and was explained by the fact that the
    issued and entered trial and cost orders had not yet been received from the
    trial court. It is clear that this motion should have gone on consent. In front
    of me, counsel for the mother agreed that there was no principled basis on
    which to oppose the motion. Accordingly, the extension of time is granted.

Mothers motion

[12]

The mother sought security for costs
    for the appeal in the amount of $30,000, as well as security for the trial
    costs in the amount of $30,841.35.

[13]

It is agreed by both parties that a
    significant portion of the $149,100 in costs awarded at trial (after HST) is
    already secured. The amount of $33,900 is enforceable through the FRO as an incident
    of child support. There is $46,443.97 belonging to the father remaining in
    trust from the sale of the matrimonial home. And the equalization payment
    ordered at trial remains outstanding and can be off-set. Accordingly, more than
    70 percent of the costs awarded at trial are secured.

[14]

The courts authority to order security
    for costs flows from r. 61.06 of the
Rules of Civil Procedure
, R.R.O.
    1990, Reg. 194. The mother relies on subsection (1)(a), which provides that:

(1) In an appeal where it appears that,

(a) there is good reason to believe that the
    appeal is frivolous and vexatious and that the appellant has insufficient
    assets in Ontario to pay the costs of the appeal;

a judge of the appellate court, on motion by the
    respondent, may make such order for security for costs of the proceeding and of
    the appeal as is just.

[15]

To award security for costs under r.
    61.06(1)(a), there must be good reason to believe both that the appeal is
    frivolous and vexatious, and that the appellant has insufficient assets in
    Ontario to pay the costs of the appeal.  However, even if I were to find that
    both requirements are satisfied, I retain the discretion to refuse to order
    security for costs. The overarching principle to be applied is the justness of
    the order sought:
Pickard v. London Police Services Board
, 2010
    ONCA 643, 268 O.A.C. 153 (in Chambers), at paras. 17-18.
The terms frivolous and vexatious were defined in
Pickard
,
    at para. 19. According to Watt J.A., a frivolous appeal is one readily
    recognizable as devoid of merit, as one having little prospect of successA
    vexatious appeal is one taken to annoy or embarrass the opposite party,
    sometimes fuelled by the hope of financial recovery to relieve the respondent's
    aggravation.

[16]

In my view, the father faces a steep uphill battle in this appeal. Especially
    on the equalization and child support grounds, much of what he challenges are
    factual findings or findings of mixed fact and law, which cannot be overturned
    absent palpable and overriding errors by the trial judge. However, I am not
    prepared to say that it appears that there is good reason to believe that the
    entirety of the appeal is frivolous and vexatious.

[17]

In addition, the record does not support a finding that there is good
    reason to believe that the father has insufficient assets in Ontario to pay
    the costs of the appeal.

[18]

The father, in his affidavit, swears that he has the ability to pay the
    costs of the appeal. The record supports this position. The trial judge imputed
    fathers income as being $75,000 a year. As the trial judge noted, at paras.
    105-106, [the father] has a track record as a successful car salesman earning
    in excess of $100,000 per year [the father] is currently employed in this
    field. He is in good health, and there was no evidence to suggest that he could
    not work full time and quickly return to his former level of income. I note
    that at this point in time the father has been back selling cars for several
    years.

[19]

I also note that payment of a percentage of the costs of the appeal can
    be secured through the Family Responsibility Office as an incident of child
    support, as occurred with the costs at trial.

[20]

An order for security for costs on appeal pursuant to r. 61.06(1)(a) is
    not a routine order. Discretion to make such an order exists only where the
    respondent (here, the mother) establishes both of the criteria set out in the
    rule. While this is a close call, I am not satisfied that either part of the
    test has been met. The mothers motion for security for costs is therefore dismissed.

Result

[21]

The fathers motion for an extension of
    time to perfect the appeal is granted. In the light of my conclusion that the
    father should not have been put to the expense of bringing a motion for an
    extension of time, I order the mother to pay the fathers costs of this motion
    in the amount of $1,000 including interest and HST.

[22]

The mothers motion for security for
    costs is dismissed. The mother is ordered to pay the fathers costs of the
    motion in the amount of $2,000 including interest and HST.