In Oostlander v. Cervus Equipment Corporation, 2023 ABCA 13, the Alberta Court of Appeal held that CERB payments are not deductible from wrongful dismissal damages for policy considerations.
The case is important because it reverses the prior Alberta law on this issue and it brings Alberta in line with the recent position of the British Columbia Court of Appeal and the Ontario Courts.
Facts
The following is a summary of the facts and issues on appeal:
- Oostlander was a heavy-duty mechanic with 36 years of service. Cervus initially provided Mr. Oostlander with 16 months’ working notice. Mr. Oostlander continued working for eight months after the effective date. Certus then terminated his employment with one month’s notice and attempted to rely on its previous working notice.
- After termination, Cervus offered Mr. Oostlander re-employment in Brooks, Alberta. Brooks was approximately 100 KM away from Bassano, Alberta, where Mr. Oostlander had worked and lived for most of his life.
- The Trial judge found that Mr. Oostlander had been wrongfully terminated and was entitled to 24 months’ reasonable notice (severance). The main issues on appeal were:
- Whether Mr. Oostlander had acted reasonably in his mitigation efforts despite turning down Cervus’ offer of re-employment; and
- Whether Mr. Oostlander’s CERB benefits should be deducted from his Wrongful dismissal damages.
Analysis / Conclusion
Mitigation Issue
The Alberta Court of Appeal upheld the lower Court decision on this issue. The ABCA found that Mr. Oostlander was not required to take a job that was 100 KM away from his former job in order to mitigate his damages. This was a major issue in the lower Court decision and in front of the ABCA, because if the plaintiff would have been obligated to take that job, he would have had little or no damages in the lawsuit.
CERB Benefits Issue
In the lower Court decision, the trial judge had concluded that CERB benefits should be deducted from the wrongful dismissal damages award. She focused her analysis on whether Mr. Oostlander would be obligated to repay CERB benefits to the Federal government. She noted that EI benefits are generally not deductible from damage awards because of an employee’s obligation of repayment. The Trial judge then reasoned that with no evidence indicating Mr. Ooslander would be required to repay the CERB benefits, she ought to assume that he would not be required to do so, and thus they should be deducted from the final damage award.
The Alberta Court of Appeal disagreed.
The ABCA considered the issue of CERB deductibility by looking at the “compensating advantage” analysis established by the Supreme Court of Canada in IBM Canada Limited v. Waterman, 2013 SCC 70. Based on Waterman, unless context warrants an exception, benefits are deductible where they result in compensating the plaintiff beyond their actual loss, and either:
- the plaintiff would not have received the benefit but for the defendant’s breach, or
- the benefit is intended to be an indemnity for the sort of loss resulting from the defendant’s breach.
The Alberta Court of Appeal went on to adopt the reasoning of a recent decision of the BC Court of Appeal which dealt with deductibility of CERB benefits: Yates v Langley Motor Sport Centre Ltd., 2022 BCCA 398. The BCCA in Yates held that CERB payments ought not to be deducted from wrongful dismissal damages. The BCCA found that CERB payments were intended to be “income support” for workers that had ceased working, thus qualifying as a compensating advantage under the Waterman test. However, policy considerations militated in favour of non-deductibility, reasoning in part that:
… it seems wrong for a defendant employer who has breached the employment contract with the plaintiff to enjoy, effectively, a windfall from an income support program designed to benefit workers impacted by the COVID-19 pandemic. If a windfall is to result, it seems to better reflect the intention of Parliament that it go to the worker.
The decision in Yates is based on the “well-recognized” exceptions discussed in Waterman, where a compensating advantage exists, but, based on “justice, reasonableness and public policy,” they should not be taken into account despite the plaintiff being better off economically. The Alberta Court of Appeal adopted the reasoning in Yates and overturned the trial decision, noting as follows:
…Ultimately, “what tips the balance against deductibility in [the BCCA’s] view are the policy considerations of the desirability of equal treatment of those in similar situations, the possibility of providing incentives for socially desirable conduct and the need for clear rules that are easy to apply” …
[…]
[22] We find the analysis of the British Columbia Court of Appeal on this issue compelling and would adopt it. On the facts of this case, it is questionable whether the CERB received by Oostlander is a compensating advantage as described in Waterman, given that, unlike the plaintiff in Yates, his dismissal was not connected to the COVID-19 pandemic. Quite apart from that issue, however, we conclude that broader policy considerations militate against the deductibility of CERB from damages for wrongful dismissal.
My Take
It is the Alberta Court of Appeal’s formal adoption of CERB-non-deductibility, bringing Alberta in line with the direction taken by British Columbia and Ontario. Prior to this decision of our ABCA, there were only a few decisions in Alberta on the subject, including the lower Oostlander decision, and to our knowledge there were no Alberta decisions adopting CERB non-deductibility until now.
The decision is grounded in the remedial purpose of the CERB Act and aligns with the well-known presumption that ambiguity favours the employee. If the ambiguity surrounding the repayment of CERB gives rise to a potential one-sided benefit in the context of wrongful dismissal damages, it seems sensible that the benefit should flow to the employee, not the employer.
One other thing I should note is that Bow River Law’s associate Amanda Jacinto was successful co-counsel on the Court of Queen’s Bench decision of Oostlander before she joined our firm, securing a notice period of 24 months and successfully arguing that the plaintiff was not required to accept a job which would have required him to move in order to mitigate his damages. We summarized that decision when it came out too, here.
Bow River Law provides these regular legal blog articles for the purposes of legal education and research for the public and the legal profession. These articles should be considered general information and not legal advice. If you have a legal problem, you should speak to a lawyer directly.
Michael Hernandez is an employment lawyer at Bow River Law. He is a knowledgeable and skilled lawyer, handling employment law, human rights (discrimination) and labour law matters. Bow River Law is based in Calgary but we are Alberta’s Workforce Lawyers.
