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ONCA Reaffirms Importance of Presumptive Standards in Reasonable Notice Cases

In a recent decision, released June 19, 2019, the Ontario Court of Appeal reversed a 2018 decision in which the Superior Court of Justice awarded a reasonable notice period of 30 months. In Dawe v. The Equitable Life Insurance Company of Canada, the Court of Appeal reduced the notice period to 24 months and reiterated that 24 months is the longest reasonable notice period that can be awarded, absent exceptional circumstances. This reverses a recent trend of courts awarding notice periods of more than two years.

A Closer Look at Dawe

The Superior Court decided the case on summary judgment, as the facts were not controversial. The plaintiff was terminated from the position of Senior Vice President at the age of 62, after working for the defendant for 37 years—his entire career. The trial judge did not look kindly on the circumstances of the dismissal, which was triggered by a minor dispute over the plaintiff’s purchase of promotional sporting event tickets. However, this factor did not influence the notice period. Ultimately, the trial judge held that 30 months was an appropriate notice period. Indeed, had the plaintiff asked for it, the trial judge was prepared to award 36 months.

The Ontario Court of Appeal reversed the trial decision and substituted a notice period of 24 months. In its reasons, the Court returned to the leading case of Lowndes v. Summit Ford Sales Ltd. Similarly to the plaintiff in Dawe, the plaintiff in Lowndes was terminated at age 59 after working for the defendant for 28 years and held a senior position at the time of termination. The trial court awarded a notice period of 30 months. The Court of Appeal reduced the notice period to 24 months, stating—

Although it is true that reasonable notice of employment termination must be determined on a case-specific basis and there is no absolute upper limit or ‘cap’ on what constitutes reasonable notice, generally only exceptional circumstances will support a base notice period in excess of 24 months: see Baranowski v. Binks Manufacturing Co., [2000] O.J. No. 49 (S.C.J.) at para. 277 and Rienzo v. Washington Mills Electro Minerals Corp., [2005] O.J. No. 5126 (C.A.).

The record in Lowndes failed to support a notice period exceeding 24 months.

In Dawe, Court of Appeal held that the trial judge had erred in relying on changes in “society’s attitude regarding retirement” to support a finding that the “presumptive standards” in Lowndes were not applicable. Instead, the Court of Appeal held that the trial judge should have applied the Lowndes line of authority and refrained from awarding more than 24 months absent exceptional circumstances.

On the facts of Dawe, there were no such exceptional circumstances. While the plaintiff’s age, length of service, and senior position warranted a substantial notice period, these factors were adequately accounted for with a notice period of 24 months.

Re-Establishing the Presumptive Standard

This case is significant because there has recently been a trend of trial decisions awarding more than 24 months’ notice.[1] This development has caused some commentators to speculate that the presumptive standard of 24 months is no longer applicable. The Ontario Court of Appeal has clarified that this is not the case. A reasonable notice period of more than 24 months should be awarded only where there are exceptional circumstances.

While the Court of Appeal provides relatively little guidance on what might constitute exceptional circumstances, it does provide some indication as to what circumstances would not be considered exceptional. The fact that the plaintiff was only a few years away from retirement age is not exceptional. Similarly, the fact that the plaintiff held a senior position and worked for the defendant for his entire career does not make the case exceptional.

The decision also implies that the defendant’s less than admirable conduct in dealing with the plaintiff should not give rise to an increased notice period. Instead, such conduct should be the subject of a separate claim for punitive or moral damages.

Predicting Legal Outcomes Using Previous Jurisprudence

The Court of Appeal’s decision in Dawe demonstrates the value of legal research tools that predict the outcome of cases based on the relevant factors identified in previous jurisprudence. Employment Foresight predicts the notice period that a court is likely to award based on factors such as the employee’s age, position, and length of service—among others. When making its predictions, Employment Foresight considers insights from all of the relevant case law.

On the facts of Dawe, Employment Foresight’s Reasonable Notice tool predicted a reasonable notice award in the range of 22-24 months, which is precisely what the Court of Appeal awarded.

[1] See for example: Dussault v. Imperial Oil Limited, 2018 ONSC 1168; Mikelsteins v. Morrison, 2018 ONSC 6952.

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