Lachapelle v. St. Laurent Automotive Group Inc., 2025 ONSC 1956 (released on March 31) was heard over five days earlier this year. It appears to have been a fierce battle between the parties in which they raised a range of legal issues arising from an interesting set of facts. In addition, Justice Roger’s subsequent costs award, Lachapelle v. St. Laurent Automotive Group Inc., 2025 ONSC 2879 (released May 14), provides useful guidance on managing settlement negotiation and pre-trial conduct, particularly in the context of Simplified Procedure and Rule 49 cost consequences.
Background
The Plaintiff, an auto-technician, was employed by the auto dealership Defendant for a total of just under six years. His employment occurred in two parts: i) approximately 4.5 years, from September 2013 to April 2018, when he voluntarily resigned, and ii) approximately 14 months from February 2019 to March 2020, when he was temporarily laid off in the early days of COVID-19 shut downs.
Decision on the Merits
Issue 1: Date of Dismissal
The Court held that the Plaintiff was constructively dismissed when he was temporarily laid off, along with the other technicians, in March 2020 in response to the COVID-19 pandemic. There was no express or implied term in the Plaintiff’s contract permitting layoff, and he had not consented to be laid off. The Court noted that the Defendant, as an essential service, was permitted to remain open and therefore the decision to close operations temporarily, while understandable in the circumstances, was ultimately a choice. The Court rejected the Defendant’s force majeure argument finding that while the pandemic presented hardship and inconvenience, it did not amount to a radical change in contractual obligations or force majeure.
Unusually for a case involving a pandemic layoff, the Defendant later expressly dismissed the Plaintiff in writing in May 2020.
Issue 2: Reasonable Notice
The Plaintiff’s claimed 12 months’ notice based on almost six years of service, arguing that this was warranted primarily on account of inducement and COVID-19 conditions. The Defendant, on the other hand, argued that notice should be confined to three weeks - 1.33 months, based only on the Plaintiff’s most recent 14 months of employment.
Inducement
The Plaintiff claimed that he was induced to return to the Defendant's employ in 2019, and this was admitted by the Defendant. But, while the parties agreed there was inducement, they disagreed on its extent and effect.
The Court found that the Defendant “actively pursued” the Plaintiff via text phone calls and text messages; assured him of good quality, paying work; and offered higher pay, a signing bonus, and enhanced benefits and vacation.
The Defendant characterized the inducement as “minimal” and argued that it should have little impact on notice. The Court disagreed, finding that the Defendant “aggressively pursued” the Plaintiff and that the inducement was “more than “modest”.” In reaching its conclusion, the Court noted that not all inducement carries the same weight, and the significance will vary with the circumstances of each case.
Employment Break
Of particular interest was the Court’s treatment of the Plaintiff’s nine-month employment break. The written re-employment contract between the Plaintiff and Defendant was silent on how this break would affect termination entitlements. Justice Roger held that, in the absence of an express contractual provision, the issue was to be determined by the circumstances, including the parties’ conduct at the point of rehire.
The parties, prior to signing the 2019 re-employment contract, discussed at length enhanced pay and increased vacation and benefits, but they did not turn their minds to the issue of the impact of the Plaintiff’s prior employment on termination. The Court placed significant weight on the Defendant’s repeated statement, both oral and written, that the Plaintiff was to be treated “as though he had never left”, as far as his benefits were concerned, and was “returning to us.” It concluded that despite the nine-month interruption, the Plaintiff should be given “some credit” for his past service.
Availability of Employment & COVID-19
The Court noted that the Plaintiff was a “valued mechanic” and held a “very in-demand position” with “ample opportunities” in the labour market. He earned $100,000 per year with the Defendant. However, his “employment was terminated at the onset of the COVID-19 pandemic with its economic slowdown and uncertainties”. The judge was prepared to give some credit to the Plaintiff for the pandemic’s “effects on the availability of employment, particularly early in the pandemic”. Earlier, the Court noted that, despite efforts, the Plaintiff remained unemployed from March until December 2020 when he accepted a lower paying. non-comparable job. He later re-employed as a mechanic with a previous employer in June 2021.
Reasonable Notice
Justice Roger assessed reasonable notice at seven months. In reaching this conclusion, His Honour noted that the cases submitted by the parties suggested five to six months’ for the full six years of employment and two months for just his second tenure of 14 months.
Issue 3: Mitigation
The Court held that the Plaintiff was only required to accept “comparable employment” to mitigate his damages and that the burden rested squarely on the Defendant to prove that the Plaintiff failed to do so. It found that the alternate employment that the Defendant offered to the Plaintiff (and other technicians) in early April did not qualify as comparable employment. This is because the Defendant's proposed “team pooled system” was a fundamental change to the Plaintiff’s compensation structure and it would have resulted in a reduction in income.
Issue 4: Calculation of Salary, Benefits, Vacation and Bonuses
The parties were unable to agree on the calculation of the Plaintiff's salary, benefits, vacation entitlement and bonuses, leading to an unnecessary dispute, which Justice Roger commented upon in his later costs endorsement referred to below.
Issue 5: Entitlement to Bad Faith, Aggravated, and Punitive Damages
The Plaintiff’s claim for $100,000.00 in aggravated, exemplary, bad-faith, and/or punitive damages was dismissed. In reaching this conclusion, Justice Roger noted that the Plaintiff had not been targeted; that any errors in the issue of his lay-off letter and ROE were simply administrative related to the pandemic; and, that the Defendant’s reactions to the pandemic were well intentioned and fair. It had sought to balance the financial viability of its operations with the economic interests of the technicians.
Conclusion
The Plaintiff was awarded seven months of common-law reasonable notice in the amount of $65,610.02, calculated on his annual, base salary of $112,474.32, less statutory minimums already paid, plus benefits valued at $6,561.00 (7/12 of 10% of his annual salary).
Costs Decision
In a separate endorsement, Justice Roger fixed costs at $62,699.16, representing the maximum under Rule 76.12.1 of the Rules of Civil Procedure ($50,000 + HST), plus $6,199.16 in disbursements. Notably, this amount roughly equals the Plaintiff’s damages award.
In reaching this conclusion His Honour noted that the case was of moderate complexity, involving multiple issues. He also took the opportunity to seemingly scold the Defendant on its unreasonable settlement posture. This included:
- refusing to admit that the Plaintiff had been constructively dismissed when that was beyond dispute;
- making a settlement offer of only $4,000.00;
- rejecting the Plaintiffs’ two reasonable offers ($60,000 + $15,000 for legal fees, and, later, $40,000 all-inclusive), both of which were exceeded at trial, triggering costs consequences under Rule 49.10 ; and,
- withholding documents and making misleading statements.
Justice Roger remarked that the cap on costs imposed by Rule. 76.12.1 limited the Court’s ability to award costs as a deterrent, suggesting that, if it were not for the cap, the costs award would have been even higher given the Defendant’s “hard-line” litigation approach.
About the Author
Suzanne Lopez Allicock practices employment law at RV Law LLP, where she represents both employees and employers. She can be contacted at suzanne@rvlaw.ca, (416) 364-5200 x. 227, or on LinkedIn.
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