The British Columbia Court of Appeal judgment in the case of Davidson v. Tahtsa Timber Ltd. in November 2010 serves as a reminder that dismissed employees have a duty to mitigate damages by finding alternative employment. It also reminded employers that if they are found to have failed to provide reasonable notice, despite the employee having fully mitigated his or her loss, in certain circumstances nominal damages may be awarded to the employee, along with costs.

The facts in Davidson were as follows:

  1. The employee began working for the employer in 1993 as a logging truck driver.
  2. In 2004, the employee took on additional duties as a low-bed truck driver.
  3. The availability of the low-bed driver work varied from season to season
  4. On July 11, 2005, the employer summarily dismissed the employee, relying on the ground that he allegedly drove a truck into a wall of the repair shop and then denied having done so.

After a seven-day trial in BC Supreme Court, a judge found that the employee did not commit a misconduct that undermined the integrity of the employment relationship.

The judge concluded that the employee, Davidson, was entitled to reasonable notice of his dismissal. He fixed the notice period at 10 months. In assessing Davidson’s expected income during the notice period, the judge referred to his income tax returns for 2005 and 2006 and also considered his income at the time of termination. He concluded that although Davidson had been wrongfully dismissed, he had more than fully mitigated his loss of earnings during the notice period. The claim for compensation against the employer was dismissed entirely.

On appeal, Davidson’s principal contention was that the trial judge had improperly assessed the notice period damages by referencing the average of the employee’s previous two years’ earnings; in those years the employee was primarily employed only as a logging truck driver, not also as a low-bed driver. Davidson argued that it was fundamentally unfair - given that he had proven that he had been wrongfully dismissed - that his action was dismissed without costs as a result of him having fully mitigated his loss. He argued that he should be entitled to nominal damages and costs at the very least.

The Court of Appeal concluded that where an assessment of damages is to be made in a wrongful dismissal context, the standard of salary should be based on the income of the employee at the date of termination; it should not be an average of the prior years. The court found that the trial judge had not erred in his determination of the notice period income or in his finding that the appellant earned more in mitigation income than he would have earned had he continued his employment with the employer.

The court then addressed the issue of nominal damages. It considered whether the trial judge had erred in dismissing the appellant’s claim for failure to establish damages by reason of his successful mitigation and notwithstanding the employer’s proven wrongful act. No error was found.

The court went on to consider the definition of nominal damages as “a trivial sum of money awarded to a litigant who has established a cause of action but has not established that he is entitled to compensatory damages”. It considered that, at common law, the only effective judicial remedy for the breach of an obligation was an award of damages.

The court held that if the claim was actionable and the plaintiff had not suffered any loss, he may still be entitled to an award of nominal damages, a token sum which may vary in size to reflect the fact that the contract had been breached and the plaintiff had proven a cause of action existed.

Finally, the court considered whether or not the award of nominal damages justified an award of costs in favour of the plaintiff. Costs are always at the discretion of the court. It held that a plaintiff who recovers nominal damages should not necessarily be regarded in the ordinary sense of the word as the “successful” plaintiff. In this case, the appellant employee had proven his cause of action - namely that he had been wrongfully dismissed by the employer and was entitled to reasonable notice of that dismissal. The court held that the appellant was entitled to costs given the award of nominal damages. He was awarded no costs for the appeal itself.

This case reminds us that:

  1. An employee has a duty to mitigate damages by making reasonable efforts to find alternative employment after being dismissed.
  2. Where an employee does mitigate their damages completely, he or she will not typically be entitled to an award of damages.
  3. Having successfully proven a cause of action and an entitlement to reasonable notice itself, the court may make an award of nominal damages to reflect that fact.
  4. Such an award may form the basis for an award of costs in favour of the employee, even if they are not entitled to any actual damages.