2014 NBCA 53, 2014 NBCA 53

COURT OF APPEAL OF COUR D’APPEL DU NEW BRUNSWICK NOUVEAU-BRUNSWICK 138-13-CA THE GOVERNMENT OF NUNAVUT APPELLANT LE GOUVERNEMENT DU NUNAVUT APPELANT - and- - et - MARIE HUMPHREY SCHRAM RESPONDENT MARIE HUMPHREY SCHRAM INTIMÉE The Government of Nunavut v. Humphrey Schram,2014 NBCA 53 Le Gouvernement du Nunavut c.

Humphrey Schram,2014 NBCA 53 CORAM: The Honourable Chief Justice Drapeau The Honourable Justice Larlee The Honourable Justice Quigg CORAM : l’honorable juge en chef Drapeau l’honorable juge Larlee l’honorable juge Quigg Appeal from a decision of the Court of Queen’sBench: November 27, 2013 Appel d’une décision de la Cour du Banc de la Reine: le 27 novembre 2013 History of Case: Historique de la cause : Decision under appeal: 2013 NBQB 384 Décision frappée d’appel : 2013 NBQB 384 , 2013 NBBR 384 Preliminary or incidental proceedings: 2013 NBQB 190 Procédures préliminaires ou accessoires : 2013 NBBR 190 Appeal heard: May 22, 2014 Appel entendu : le 22 mai 2014 Judgment rendered: August 21, 2014 Jugement rendu : le 21 août 2014

Reasons for judgment by: The Honourable Justice Larlee Motifs de jugement : l’honorable juge Larlee Concurred in by: The Honourable Chief Justice Drapeau The Honourable Justice Quigg Souscrivent aux motifs : l’honorable juge en chef Drapeau l’honorable juge Quigg Counsel at hearing: For the appellant: Lucie LaBoissonnière and Dominique P. Fontaine For the respondent: James F. LeMesurier, Q.C. Avocats à l’audience : Pour l’appelant : Lucie LaBoissonnière et Dominique P. Fontaine Pour l’intimée : James F. LeMesurier, c.r.

THE COURT The appeal is allowed with respect to mitigation of damages; the cross-appeal is dismissed with costs to the appellant in the amount of $3,500. The judgment of the Court was delivered by LARLEE, J.A. [ 1 ] The Government of Nunavut (Nunavut) appeals from a decision of a judge of the Court of Queen’s Bench in which he granted

summary judgment (Rule 22 of the Rules of Court ) and an advance payment for special damages (Rule 47.03(3)) to the respondent, Marie Humphrey Schram, in an action for wrongful dismissal. The nub of the appeal is that in granting

summary judgment and ordering an advance payment, the motion judge precluded Nunavut from raising at trial the issue of mitigation of damages. Ms. Humphrey Schram cross-appeals the motion judge’s refusal to preclude Nunavut from exploring another issue relevant to the amount of damages, namely her inability to complete the term of her contract due to health problems. I. The Context

[ 2 ] In July 2007, Nunavut hired Ms. Humphrey Schram to work as a staffing consultant for a fixed term of three years, with an annual salary of $73,398. She commenced work in Iqaluit on August 20, 2007. Near the end of this term, Nunavut offered to extend her contract for three years (to August 20, 2013), which she accepted. On February 11, 2011, Nunavut terminated Ms. Humphrey Schram’s contract without cause, effective February 18, 2011. She was paid a lump sum in lieu of notice for a three-month period, plus pay for accumulated leave time, less statutory deductions, for a total of $23,526.75.

She returned to Saint John and has resided there ever since. When Nunavut terminated Ms. Humphrey Schram’s contract thirty months remained; as mentioned it would have expired August 20, 2013. [ 3 ] On April 15, 2013, Ms. Humphrey Schram filed a Statement of Claim against Nunavut for wrongful dismissal. Nunavut moved to set aside service outside of New Brunswick, but its motion was dismissed: Schram v. Nunavut , 2013 NBQB 190 , 406 N.B.R. (2d) 168 . On July 4, 2013, Ms. Humphrey Schram brought a motion for

summary judgment and an advance payment of special damages. At the hearing, held July 29, 2013, Nunavut admitted liability for the wrongful dismissal, but did not agree to the terms of the

summary judgment requested by Ms. Humphrey Schram, in oral argument: namely that Nunavut be precluded from raising at the trial the issue of mitigation of damages. It also opposed the advance payment. In the alternative, it asserted that the amount of the advance payment should approximate two to three months’ salary, which Ms. Humphrey Schram had already been paid. The motion judge granted

summary judgment on the terms proposed by Ms. Humphrey Schram and awarded an advance payment of $225,000, with costs of $3,500. II. Grounds of Appeal [ 4 ] Nunavut relies on three grounds of appeal, alleging the motion judge erred in law: 1. in exclusively qualifying mitigation in the employment context as a full defence applicable to [Nunavut’s] liability, as opposed to a defence that can reduce the amount of damages owed by [it] after liability was admitted; 2. in allowing [Ms. Humphrey Schram’s] motion for

summary judgment on the terms that [Nunavut] was precluded to assert, at the trial on damages, that [she] failed to mitigate her damages; and 3. […] in allowing an advance payment in the amount of $225,000. [ 5 ] In the cross-appeal, Ms. Humphrey Schram requests the motion decision be varied to order that the trial of the action proceed without reference to the issue of whether she would have terminated her employment of her own accord prior to the expiry of her term of employment with Nunavut.

She submits the motion judge erred in permitting Nunavut to raise this issue in defence of her claim in the absence of any reference thereto in the Statement of Defence. III. Standard of Review [ 6 ] The central issue in the appeal is whether the motion judge erred in law in removing from the litigation process the defence of failure to mitigate. The key issue in the cross-appeal is whether Nunavut can argue Ms. Humphrey Schram’s inability to complete the term of her contract.

The applicable standard of appellate review o n a pure question of law is that an appellate court is free to replace the opinion of the trial judge with its own; thus the standard is that of correctness: Housen v. Nickolaisen , 2002 SCC 33 , [2002] 2 S.C.R. 235 , at para. 8 . IV. Analysis and Decision [ 7 ] This Court, in its support of access to justice measures, has instructed lawyers and judges of the Court of Queen’s Bench to aggressively use Rule 22 for

summary judgment with a view to avoiding lengthy litigation, thus saving precious time and money. We cannot, therefore, fault the lawyer for Ms. Humphrey Schram, an experienced litigator, who filed the motion for

summary judgment seven days after the Statement of Defence was filed. Nor can we be critical of the motion judge, who not only outlined the recent jurisprudence of this Court on the subject, but has also applied it. For the reasons that follow, I am of the view the motion judge made no error in granting

summary judgment and ordering an advance payment for special damages. However, I am

also of the view he erred in not leaving the affirmative defence of failure to mitigate to the trial on the issue of damages. I would allowthe appeal for that purpose only, and I would dismiss the cross-appeal. [8] Before granting

summary judgment, the motion judge had to determine on the record beforehim that the outcome was a foregone conclusion: see Cannon v. Lange (1998), (NB CA), 203 N.B.R. (2d) 121,[1998] N.B.J. No. 313 (C.A.) (QL) and 059143 N.B. Inc., a body corporate v. 656340 N.B. Inc., a body corporate, 2014 NBCA 46,[2014] N.B.J. No. 197 (QL), at para 10. In Shareline Systems v. New Brunswick and New Brunswick Distance Education Network, 2001NBCA 29, 235 N.B.R. (2d) 162, Drapeau J.A. (as he then was) set out the correct approach to

summary judgment adjudications: The Cannon v. Lange decision settles some of the more contentious aspects of Rule 22. In particular, it clarifies the court’s role inadjudicating any application for

summary judgment and identifies the basis upon which such adjudication must be made. Whilereaffirming the view that

summary judgment should not be granted unless the moving party’s case is unanswerable, the Court in Cannonv. Lange underscored the need to protect innocent parties and the system against frivolous claims or defences. It went on to spotlightRule 22’s potentially helpful role in reaching that worthy objective. The Court also emphasized that a motion for

summary judgmentstands to be determined upon a consideration of both the pleadings and any admissible evidence adduced by the parties. [para. 17] [9] Further, as the motion judge noted (para. 20), in Morrow v. Aviva Canada Inc., 2004 NBCA100, 279 N.B.R. (2d) 77, Drapeau C.J.N.B., writing for the Court, confirmed the approach with respect to the evidence to be consideredon a motion for

summary judgment:

Summary judgment is appropriate whenever there is “no reason for doubt as to what the judgment of the court should be if the matterproceeds to trial”: Ripulone v. Pontecorvo (1989), (NB CA), 104 N.B.R. (2d) 56 at para. 13 (C.A.) and Cannon v.Lange et al. (1998), (NB CA), 203 N.B.R. (2d) 121 (C.A.). That pivotal question stands to be determined on thebasis of the issues as defined by the pleadings, any relevant admissions in the record and the admissible evidence.

Our Court hasrepeatedly endorsed that elementary proposition, which responding parties ignore at their peril. [para. 10] [10] More recently, in AMEC Americas Limited v. MacWilliams, 2012 NBCA 46, 388 N.B.R. (2d)254, the Court underscored the combined importance of Rules 22 and 47.03(3) as tools for jurists to provide access to justice to litigants: Experience teaches us there is a great deal of wisdom in the old adage: “Justice delayed is justice denied”. Over time, rules of procedurehave been crafted to speed up access to justice.

One of those is Rule 22 of the Rules of Court (“Summary Judgment”), which provides avehicle for early determination of liability. Another is Rule 47.03(3), which allows the court to direct an advance payment of specialdamages where liability has been established. Admittedly, the test for

summary judgment is stringent. Yet, one discerns a greaterawareness by the litigation bar of the benefits accruing from a skillful use of Rule 22 and a growing judicial openness toward

summaryjudgment and advance payments of special damages in favour of deserving claimants. These are indisputably welcome developments inthe pursuit of timely access to justice. [para. 1] [11] Thus Morrow confirms, and AMEC Americas Limited v. MacWilliams iterates, that onceliability is established, the court may direct an advance payment of special damages in wrongful dismissal actions. In Morrow, the Courtheld Rule 47.03(3) is not limited to actions for damages arising out of motor vehicle accidents.

Its scope of application extends to allactions where liability is established before damages are assessed (para. 23). Morrow also confirms that damages in lieu of reasonablenotice, at least those sustained prior to trial, are indeed special damages within the meaning of Rule 47.03(3) (para. 24). [12] In applying this jurisprudence regarding

summary judgment, the determination the motion judgehad to make on the record before him was perhaps the easiest part of the task. The outcome was a foregone conclusion: there was nodispute between the parties with respect to the applicable law, and it is undisputed that the relationship between the parties was formedby a fixed-term contract that was prematurely breached, without cause, by Nunavut. [13] The award of advance payment made by the motion judge in this case was not made with a linkto the duty to mitigate. Ms.

Humphrey Schram had calculated a preliminary amount of special damages of $250,000, which included hersalary for the balance of her contract and the Northern allowance, but which did not include an amount of special damages for loss ofCanada Pension Benefits and her superannuation pension contribution (which requires actuarial evidence to establish). The motion judgefixed an amount of $225,000 for the advance payment, which was less than the full amount claimed, but not unreasonable. I cannotdetect any error in the determination the motion judge made with respect to the amount of special damages Ms.

Humphrey Schram will,more likely than not, prove at trial. This ground of appeal is without merit.

[ 14 ] The issue here is not whether

summary judgment should have been granted; the problem arises as to its scope. This leads to the question of whether Nunavut came to court with fair notice of what Ms. Humphrey Schram was seeking.

Nunavut submits she only sought a declaratory judgment regarding the wrongful dismissal with an advance payment related to special damages, not a final answer to the question of defences, including mitigation of damages and that the wrongful termination may not have been the cause of all her loss (i.e. her health problems may have been at least partly to blame). [ 15 ] The importance of pleadings, which formally define the issues at play and the parties’ respective positions, cannot be overemphasized: Gay et al. v. Regional Health Authority 7 and Dr. Menon , 2014 NBCA 10 , [2014] N.B.J.

No. 117 (QL) , at para. 25 , citing Local 772 of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada v. The United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada and the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 325 and Hughes and Wood , 2013 NBCA 33 , 404 N.B.R. (2d) 332 ; New Brunswick Real Estate Association v. Estabrooks , 2014 NBCA 48 , [2014] N.B.J.

No. 186 (QL) , at paras. 52-53 . [ 16 ] Pleadings must contain some degree of specificity: Craig Manufacturing Ltd. v. Davidson , 2009 NBCA 42 , 345 N.B.R. (2d) 359 , at para. 14 ; McLaughlin v. Levesque , 2008 NBQB 329 , 337 N.B.R. (2d) 283 . To summarize: they essentially govern the issues between the parties, and are designed to avoid “trial by ambush”. Each party must provide his/her opponent a concise statement of the material facts (not the evidence) to prevent surprise at trial.

This exchange ensures that the parties know the case to be met. [ 17 ] To analyze the issue before us on the appeal, that being whether the motion judge erred by precluding Nunavut from asserting at the trial on damages that Ms. Humphrey Schram failed to mitigate her damages, it is necessary to examine the essential provisions of the Notice of Motion (the content of which is governed by Rule 37.03), which refer to specific paragraphs of the Amended Statement of Claim. [ 18 ] In paragraph 1 of the Notice of Motion Ms. Humphrey Schram seeks an order: Granting

summary judgment to the Plaintiff with respect to her claim for wrongful dismissal, as set forth in paragraph 16 of the Amended Statement of Claim herein, pursuant to Rules 22.01(1)(

b) and 22.04(1) of the Rules of Court ; Paragraph 16 of the Amended Statement of Claim reads as follows: The Plaintiff states that the termination of her employment was made without just cause, prior to the completion of the Extended Term of her employment, contrary to and in breach of the terms of her contract of employment. As a consequence, the Plaintiff has suffered loss and damage, including the salary and other benefits that she would have received for the balance of the term of her employment. [ 19 ] Paragraph 2 of the Notice of Motion requests an order: Directing that the trial of this action be limited to the amount(

s) claimed by the Plaintiff, as set forth in paragraph 17 of the Amended Statement of Claim herein, pursuant to Rule 22.04(2) of the Rules of Court ; [Emphasis added.] Paragraph 17 of the Amended Statement of Claim reads as follows: As a result of the foregoing, the Plaintiff claims against the Defendant;

a) a declaration that she was wrongfully dismissed by the Defendant, effective February 18, 2011 ;

b) special damages in an amount equivalent to the salary and benefits, (including Northern Allowance, Canada Pension Plan contributions, and superannuation pension contributions), that the Plaintiff would have received from February 18, 2011 to August 20, 2013 ;

c) general damages in respect to the Plaintiff’s emotional and mental distress, stress, anxiety, humiliation and embarrassment;

d) punitive damages;

e) pre and post-judgment interest;

f) costs on a solicitor-client basis; and

g) such other relief as this honourable Court may deem just. [Emphasis added.] [ 20 ] In my view, the motion judge misapprehended what was being sought in the Notice of Motion. Although the Notice of Motion is arguably ambiguous, it is open to the following

interpretation. The Notice of Motion, in paragraph 1, sought no more than a judgment declaring that Ms. Humphrey Schram had been wrongfully dismissed by Nunavut effective February 18, 2011 (which is what she claimed in para. 17(

a) of the Amended Statement of Claim), nothing else. That judgment opened the door to an advance payment under Rule 47. [ 21 ] That paragraph 1 of the Notice of Motion sought no more than that is evident from paragraph 2 of the Notice of Motion, which sought an order directing that the trial be limited to the determination of the amounts claimed in paragraph 17 of the Amended Statement of Claim.

The amounts claimed in paragraph 17 included, in subparagraph (b), “special damages in an amount equivalent to the salary and benefits […] from February 18, 2011 to August 20, 2013”. [ 22 ] On an examination of these pleadings, it is difficult to understand how one would discern that the motion amounted to a request for a declaration that the defence of failure to mitigate be eliminated. They clearly show Ms.

Humphrey Schram sought a declaratory judgment pursuant to Rule 22.01(1)(b) (the only defence is to the amount claimed), and a direction that the trial be limited (as indicated) to establish the damages pursuant to Rule 22.04(2) (where the plaintiff satisfies the court that the only defence is to the amount claimed, the court may direct a trial of that issue). Once liability was admitted in the Statement of Defence, it was common ground that the trial would be limited to the amounts of damages set out in paragraph 17 of the Amended Statement of Claim, including general and punitive damages.

Therefore, Nunavut did not go to the motion hearing fighting to preserve its defences: they were not in issue. [ 23 ] Failure to mitigate is an affirmative defence to part of Ms. Humphrey Schram’s claim. In the Statement of Defence, paragraph 7 reads as follows: The Defendant states that the Plaintiff has failed to mitigate her losses by failing to make reasonable efforts to find alternate employment following the end of her employment with the Defendant. [ 24 ] The pleading could not set out evidence; it had to be confined to material facts.

Requiring the employer to specify what efforts the employee has made, including what jobs have been sought, would be too onerous for the employer: it is asking too much. The relevant information regarding mitigation efforts is within the employee’s exclusive personal knowledge, making the exchange of Affidavits of Documents and an Examination for Discovery necessary. In my view, mitigation comes into play in the motion for an advance payment.

David Harris in Wrongful Dismissal , loose-leaf, (Toronto: Carswell, 1990), ch. 9 at 9-14.6(22), asks what are the parties’ obligations upon the premature termination of the employee without cause: The proper measure of damages for an employer’s breach of a fixed term contract is the compensation due to him or her for the entire unexpired term of the contract, less sums earned, or which could reasonably have been earned, by the employee in mitigation: Spark v.

Generex Pharmaceuticals Inc., (ON CA), 23 C.C.E.L. (3d) 49, 169 O.A.C. 182, 2003 CarswellOnt 603 (Ont. C.A.),affirming (1999), (ON SC), 48 C.C.E.L. (2d) 272, 1999 CarswellOnt 3893 (Ont. S.C.J.) leave to appeal refused(2003), 2012 ONSC 4467 , 295 O.A.C. 191 (note.) 328 N.R. 391 (note, 2003 CarswellOnt 4752 (S.C.C.).

This principle follows from the general rule stated infra by Professor Waddams in Law of Damages, 3rd ed. (Aurora: Canada Law Book Inc., 1997) at p. 318: The basic principle of compensation is that the plaintiff is entitled to be put, so far as money can do it, in the position that would havebeen occupied if the wrong had not been done. This principle in a case where the plaintiff is deprived of opportunities to render servicesand earn a reward suggests as a starting point the amount of the reward (wages, commission or price) that would have been earned.

Here, failure to mitigate was adequately pleaded; any more details would have gone beyond “material facts” and constituted “evidence”,which is not permitted under the Rules of Pleading. See also Brunswick News Inc. v. Sears, 2012 NBCA 32, 390 N.B.R. (2d) 167, wherethis Court stated: “The mitigation issue will be addressed at the hearing on the issue of damages” (para. 21). [25] Fraser v. Brookville Carriers Van LP Inc. (2007), (NB CA), 319 N.B.R.(2d) 297, [2007] N.B.J. No. 175 (C.A.) (QL), can be distinguished from the case at bar.

First of all, it was heard by a single judge of theCourt of Appeal on a leave application and therefore, while persuasive, has little precedential value. In the decision, mitigation wasclearly targeted for judicial adjudication. The proposition in Brookville, that once

summary judgment is granted the defence of failure tomitigate is no longer available and is no longer a triable issue, is obiter dicta, because the Court recognized that there was a completeanswer to the contention that the defence of mitigation was available (para. 14). The Notice of Motion as framed and argued sought therejection of the defence of failure to mitigate. Another distinguishing feature between this case and Brookville is that the plea of failure tomitigate was not accompanied by a concise statement of the material facts.

Here failure to mitigate was sufficiently pleaded. [26] Also in contrast with the case before us, in AMEC Americas Limited v. MacWilliams, the onlyproperly pleaded “defence” was that Mr. MacWilliams' claim was “wholly without merit” because he rejected AMEC's offers ofsettlement. Drapeau C.J.N.B. pointed out: “While it is true AMEC also alleges Mr. MacWilliams failed to mitigate his loss ‘by any othermeans’, this plea is meaningless, there being no ‘concise statement of the material facts on which [AMEC] relies for [its] defence’ (seeRule 27.06(1))” (para. 23). [27] Nowhere in the Notice of Motion did Ms.

Humphrey Schram ask the Court to eliminate all ofthe defences Nunavut pleaded. Ms. Humphrey Schram clearly sought a declaratory judgment of wrongful dismissal, and a direction thatthe trial be limited to the damages claimed in paragraph 17 of the Amended Statement of Claim. There would be no need for a trial if nodefences are allowed. One might ask why Ms. Humphrey Schram would have asked for an advance payment of special damages if therewere no defences available: she could have asked for the full amount of damages. In fact, Ms.

Humphrey Schram, at paragraph 32 of heraffidavit, acknowledged: “I know of no fact which would constitute a defence to my claim in this matter, except as to the amount which Ihave claimed from the Defendant”. [28] In a similar vein, the motion judge, in my opinion, correctly ruled that Nunavut is entitled topursue the issue of whether Ms. Humphrey Schram was unable to finish the term of her contract due to health problems. In an interestingtwist, after all that has been said about specificity of pleadings and our reliance on them, pursuant to Rule 22.05(1), where

summaryjudgment is granted in part only and a trial is necessary, the motion judge “may specify the material facts which are not in dispute andmay define the remaining issues where they are not sufficiently defined in the pleadings” (emphasis added). Nunavut is, therefore,entitled to disclosure of the relevant documents and to examine Ms. Humphrey Schram on the health issue. For that reason I woulddismiss the cross-appeal. V. Conclusion and Disposition [29] If the decision on the motion had been structured within the framework of the pleadings, themotion judge would not have been induced into error.

His order should have been responsive to the Notice of Motion pursuant to Rule22. I would modify the motion judge’s disposition set out in paragraph 34 of his decision to read as follows: Pursuant to Rules 22.01 and 22.04 of the Rules of Court, the Plaintiff shall have judgment against the Defendant with respect to her claimfor wrongful dismissal, as set out in paragraph 17 (

a) of the Amended Statement of Claim. The trial of this action shall proceed pursuant to the Rules of Court in relation to the determination of the Plaintiff’s damages as claimed

in paragraphs 17(

b) to (

d) of her Amended Statement of Claim. At that trial on damages, the specifically pleaded defence of failure to mitigate is preserved, as well as the issue of Ms. Humphrey Schram’s health. [ 30 ] I would, therefore, confirm the order for

summary judgment and the special damages award; allow the appeal with respect to mitigation of damages; dismiss the cross-appeal and award the appellant costs in the amount of $3,500. ___________________________________ M.E.L. LARLEE, J.A. WE CONCUR: __________________________________ J. ERNEST DRAPEAU, CHIEF JUSTICE OF NEW BRUNSWICK ___________________________________ KATHLEEN A. QUIGG, J.A.