Thursday, February 5, 2015

Arnone v. Best Theratronics: Ontario Court of Appeal Upholds Wrongful Dismissal Summary Judgment

A little over a year ago, the Supreme Court of Canada, in the Hryniak case, modified the test for summary judgment motions in Ontario.

Even before Hryniak, wrongful dismissal cases were often well-suited for summary judgment motions.  Since then, judges have repeatedly approved of the summary judgment mechanism for such cases.

Now, the Ontario Court of Appeal has weighed in, mostly upholding a summary judgment in the case of Arnone v. Best Theratronics:
Finally, while the appropriateness of bringing a summary judgment motion must be assessed in the particular circumstances of each case, a straight-forward claim for wrongful dismissal without cause, such as the present one, strikes me as the type of case usually amenable to a Rule 20 summary judgment motion.
The Facts

Mr. Arnone worked for Best for 31 years, and occupied a role with a managerial title.  He was dismissed on November 26, 2012, a mere 16.8 months away from the date he would have been entitled to a full unreduced defined benefit pension.  As well, Best's practice was to give retiring employees a retiring allowance of a week's pay per year of service, up to a maximum of 30 weeks.

Arnone sued, seeking 24 months' pay in lieu of notice, the full retiring allowance, and the lost value in his pension.

The employer argued that Arnone was merely a front-line supervisor, and not a manager, and that this issue required a trial.  For the purpose of the summary judgment motion, Arnone conceded the point, and agreed to have the notice period assessed on the basis of his duties being characterized as supervisory rather than managerial.

Accordingly, the motion judge granted the motion for summary judgment.  But in assessing damages, things got a little bit unusual.

The motion judge appeared to regard his role as determining one primary question:  Would the reasonable notice period extend 17 months or more, such that the employer should have 'bridged' the employee to retirement?  Clearly the notice period would be over 17 months...but what the judge did with that was strange.

Firstly, he concluded that the employer had no reasonable expectation that the employee would mitigate his losses, because he was so close to retirement anyways.  This is rather bizarre, and resulted in a windfall in this case as Mr. Arnone actually had made new employment earnings during the reasonable notice period.  Secondly, the judge concluded that Mr. Arnone had no entitlement to reasonable notice past the end of 16.8 months, because at that point he had recourse to a full unreduced pension.

So the judge awarded the equivalent of 16.8 months' pay in lieu of notice, plus $65,000 to offset the reduced value of the pension, plus 30 weeks' in respect of the "retiring allowance" he would have obtained upon retirement.  The judge further noted that, but for the 'bridging', he would have assessed the reasonable notice period at 22 months.

The employer appealed, and Arnone cross-appealed.

The employer argued that mitigation earnings should have been deducted from the judgment.  The plaintiff agreed that the failure to do so was an error in law, so the employer's appeal was allowed on that ground, with the judgment being varied accordingly.

However, Arnone - while agreeing that the 'bridging' approach was an error - argued that reducing the notice period from 22 months to 16.8 was inappropriate.  The Court of Appeal agreed, and increased the reasonable notice period to the full 22 months.

The employer continued to argue that the character of employment was an issue requiring a trial.  (This seems strange, given that it was conceded by the plaintiff.  It amounts to:  "Yes, the motion judge accepted that our version of the facts was accurate, but we still want to present them in a trial format anyways.")  The Court of Appeal agreed with the motion judge's treatment of the issue, distinguishing this case from the Thorne case relied upon by the employer.

As well, the employer challenged Arnone's entitlement to its customary retiring allowance, arguing that it's only available for 'retirement', not for restructuring dismissals.  However, without any policy making that distinction clear, the Court of Appeal regarded the retiring allowance as amounting to an implied term of the employment contract.

The employer also challenged the compensation for the lost value in Arnone's pension, but really, that's fairly straightforward law.  This is something for employers to pay attention to:  If the reasonable notice period crosses entitlement thresholds for defined benefit pensions, the costs of dismissal without notice can be severe.


There aren't really many surprises in the appellate decision.  The bridging approach was clearly problematic, both in reducing the notice period and in disregarding mitigation earnings, so the Court of Appeal's reversal of that is not particularly surprising.

Furthermore, the contention that this was a case requiring a trial, on all the facts, appears to have been a very long stretch, in light of the Hryniak decision.  I might be more interested in knowing what the result would have been had character of employment not been conceded.  Because frankly, between Hryniak and the Court of Appeal's view in Di Tomaso that character of employment is of "declining relative importance", my view is that it's a rare case that character of employment is an issue requiring a trial.  The employer relied on Thorne, which was a pre-Hryniak case from the Superior Court, and the Court of Appeal noted:
Also, the jurisprudence on the Bardal factors not only stresses that no one factor should be given disproportionate weight, but more recently indicates that the character of employment is a factor of declining importance in the Bardal analysis.
The quotation at the top, about straight-forward wrongful dismissal claims usually being amenable to summary judgment, immediately follows this point, strongly suggesting to me that sending a wrongful dismissal action to trial over a dispute as to character of employment will usually not be appropriate.

The retiring allowance issue is a little more interesting, though, as it's something on top of reasonable notice.  It makes sense that he would still be entitled to it.  Suppose that he was given 22 months' actual notice:  Even if one assumed that it was necessary for an employee to 'retire', what would have stopped him from doing so on the last day of the notice period, thus earning an additional 30 weeks' pay?  So yes, if the employer had complied with its obligation to give notice, then he would have gotten 22 months' notice plus an additional 30 weeks' pay.

I can't help but wonder if that's why the motion judge decided to 'bridge' to retirement in the way that he did, because he felt that 22 months plus 30 weeks was in some way double-recovery, but if one regards him as retiring when he's eligible, then 16.8 months plus 30 weeks seems like a far more palatable conclusion.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.

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