Ruling finds error in judge’s failure to deduct money earned in mitigation
The Ontario Court of Appeal has partly allowed an employer’s appeal to the limited extent of reducing the award of damages to a wrongfully dismissed employee upon determining that a judge erred by failing to deduct money earned in mitigation.
In Williamson v. Brandt Tractor Inc., 2026 ONCA 272, the respondent employee sought damages from the appellant employer based on wrongful dismissal.
On May 1, 2025, Justice R. Lee Akazaki of the Ontario Superior Court of Justice awarded the respondent damages for wrongful dismissal. The trial judge acknowledged that a customer had made a complaint regarding the respondent.
However, the judge determined that the appellant failed to establish a culminating incident to warrant dismissing the respondent based on his work history, without admissible evidence from the customer regarding what had happened.
The judge refused to deduct the respondent’s earnings during the notice period from the award of damages, as he had earned such money in a lower-paying or lower-ranking position.
On appeal, the appellant alleged that the trial judge erred in concluding that the appellant lacked just cause to dismiss the respondent and that the respondent mitigated properly.
The Court of Appeal for Ontario ruled that the trial judge should have deducted $32,881.43, the respondent’s earnings in his new job during the notice period, from the 17 months’ pay in lieu of notice awarded to him as damages.
The appeal court saw no authority supporting the position that a judge could not deduct earnings from an inferior position as mitigation.
The majority opinion in Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402, provided that the court would generally treat employment income earned during the notice period as mitigation of loss, subject to certain circumstances.
The appeal court noted that the judge relied on a passage in Brake’s concurring opinion, which did not state the law in Ontario.
Apart from reducing the damages awarded, the appeal court otherwise dismissed the appeal.
First, the appeal court deferred to the judge’s conclusion that the appellant lacked just cause to dismiss the respondent, as it saw no extricable legal error or palpable and overriding error in this conclusion.
The appeal court rejected the appellant’s argument that the judge misapplied the evidentiary threshold to establish the final incident as a culminating event that constituted just cause to dismiss the respondent.
Second, the appeal court disagreed with the appellant’s argument that the respondent failed to mitigate because he admitted that he did not seek a comparable sales job.
The appeal court held that the appellant failed to discharge its burden of establishing that the respondent would have secured a comparable position if he had taken reasonable steps.
The appeal court noted that the respondent’s decision not to pursue comparable employment did not relieve the appellant of its burden.
Lastly, the appeal court awarded the respondent, who largely succeeded on the appeal, all-inclusive costs of $15,000.
