Be Reasonable When It Comes to Reasonable Notice: Kotecha v. Affinia Canada ULC, 2014 ONCA 411

July 2014

Article by: Sarah Dickson

Previously printed in the CCH’s Focus on Canadian Employment and Equality Rights Newsletter.

Facts

For 20 years, Niranjan Kotecha worked as a machine operator for Affinia Canada ULC, an auto parts manufacturer. In 2011, he was dismissed on a “without cause” basis and provided with 11 weeks of notice. Mr. Kotecha was 70 years old at the time of trial.

In the two-year period between his dismissal and the trial, Mr. Kotecha applied to 225 companies to work as a machine operator or in any position, called nine potential employers, and consulted on four occasions with an employment agency. He was not offered a single interview.

Trial

Mr. Kotecha brought an action for wrongful dismissal and also applied for summary judgment. Because Affinia admitted that Mr. Kotecha was dismissed without cause, the only issues before the motions court were the appropriate notice period and quantum of damages. Affinia failed to submit any material on the merits of Mr. Kotecha’s claim.

In assessing the notice period, the motions judge looked to Di Tomas v. Crown Metal Packaging Canada LP, [2010] O.J. No. 4679 (“Di Tomas”). The plaintiff in that case was a 62 year old mechanic and press maintainer with 33 years of service, and was held to be entitled to 22 months of notice. Relying on the factual similarities with Di Tomas, the judge awarded Mr. Kotecha 22 months of notice on top of the notice which he had already been provided, for a grand total in excess of 24 months.

The motions judge also subsequently awarded costs against Affinia on a “substantial indemnity” basis, relying on a rule in Ontario’s rules of civil procedure which applies where a party has acted unreasonably in responding to a motion for summary judgment.

Appeal

On appeal, Affinia argued that the motion judge erred by failing to consider the case of Sharma v. Affinia Canada ULC (“Sharma”), an unreported case which the appellant alleged had nearly identical facts. In Sharma, the employee was 60 year old, had 16 years of service and was awarded 13 months of notice.

The Ontario Court of Appeal disagreed with Affinia that the facts of Sharma were sufficiently similar so as to require the motions court to “blindly” follow the decision (at para. 7). The Court also stated:

Notwithstanding the foregoing, the court should strive to ensure that notice periods, which are inherently individual, are consistent with the case law. That was not done in this case.

In our view, the notice period in this case, totalling 24 and one-half months, is excessive and there are no exceptional circumstances that would justify this award. However, we do not accept the appellant’s position that a 13-month notice period is appropriate.

Having regard to the fact that the respondent is older than Ms. Sharma, that he has no realistic possibility of obtaining similar employment and that he had a longer tenure of service than Ms. Sharma, but considerably less than the plaintiff in Di Tomaso v. Crown Metal Manufacturing Packaging Canada LP, 2010 O.J. No. 4414, we conclude that an appropriate notice period is 18 months. From this notice period, the 11 weeks working notice must be deducted.

[At paras. 8 to 10.]

Despite partially allowing the appeal, the Court of Appeal only awarded the appellant nominal costs of $2,500. This was because the appropriate notice period was still “far in excess of the position maintained by the appellant” (at para. 12). In addition, the Court refused to overturn the motion judge’s award of substantial indemnity costs. This was in spite of an offer to settle from Affinia which was higher than the final damages received by Mr. Kotecha.

Lessons for Employers

The reduction of a substantial notice period award is of course good news for employers. In addition, there are valuable lessons to be learned from this case:

  • As always, when dismissing an employee on a “without cause“ basis, if you want to avoid a long and expensive court process, offer a reasonable notice period which properly reflects the character of employment, length of service, age of the employee and availability of other similar employment.
  • Defend your reasonable position! The employer in this case failed to adduce the necessary evidence at trial and then stubbornly maintained a lowball position on appeal. This strategy came back to haunt the company in the form of an award of substantial indemnity costs as well as an award of nominal costs following the appeal.