Marshall v. Mercantile Exchange Corporation, 2024 CanLII 71128  (ONSC), is an action for wrongful dismissal where the employee claimed he could not mitigate his damages by seeking alternative employment indefinitely because of a mental health condition (i.e., stress and depression) allegedly arising out of his termination. He claimed a 26-month notice period. The employer sought an independent medical examination (IME) of the employee pursuant to s. 105 of the Courts of Justice Act and Rule 33 of the Rules of Civil Procedure. The Ontario Superior Court of Justice ordered the IME, holding that such an order is available “in the somewhat unusual circumstances” of a wrongful dismissal action where an employee argues they cannot mitigate because of the stress of termination 12 months following dismissal. 

Background

The employee was employed as a courier by the employer for 25 years. His annual salary was $52,000 and he was 58 years old at the time of his dismissal. The employer alleged it terminated the employee’s employment when he shut down its internal delivery department. The employee was provided 11 weeks’ working notice plus six months’ salary in lieu of notice. The employee claimed he was entitled to 26 months’ notice. In the nine months between his termination and the hearing date of the employer’s motion, the employee took no steps to find alternative employment. The employee claimed his inability to mitigate would continue indefinitely until his mental condition was cured, including up to the full 26 months’ notice claimed. 

The employer sought an IME of the employee pursuant to s. 105 of the Courts of Justice Act and Rule 33 of the Rules of Civil Procedure.

Employee’s Argument

The employee made the following arguments in defence of his claim that the court should not order an IME: 

• The cases the employer relied on in support of its request for an IME involved personal injury claims; 
• Since the employee’s mental health was not the basis for the damages he claimed and his duty to mitigate was ancillary to his claim for damages, the relationship between the employee’s medical condition and the proceeding was insufficient to warrant an IME;
• Courts have accepted that mental health issues after being dismissed from employment are a valid reason for not being able to mitigate; and
• Allowing IMEs in wrongful dismissal actions to assess an inability to mitigate for mental health reasons can become a weapon for employers.

Decision

The court emphasized that it was the employee’s choice to put his mental condition into question to a degree that went “well beyond the usual adjustment period that courts afford plaintiffs to overcome the shock of dismissal before being obliged to mitigate their damages.” It also stressed that the employee took the position relating to his inability to mitigate “in the context of relatively high employment and in the context of an income level which is not particularly high, and for which one might expect a significant number of jobs to exist.” The court noted that the precedents holding that mental health issues after dismissal were a valid reason for inability to mitigate did not engage with the question of whether it was appropriate to order an IME to assess that inability.

Pointing to a judicial precedent in which it was noted there was a lack of evidence at trial that the employee refused to submit to an examination or evaluation required or specified by the employer, the court concluded that that IMEs are available in wrongful dismissal actions in appropriate circumstances. It noted further that in the cases referred to by the employee where courts accepted that employees could not mitigate damages because of the stress of the termination, “[t]he longest time period in which mitigation was not required was 12 months.” Taking these factors into account, the court decided that if an employee argues they cannot mitigate because of the stress of termination after 12 months have passed from the date of their dismissal, they should be required to submit to an IME, as it would “be unfair to allow the [employee] to make that assertion without having it tested.” In further support of its finding, the court observed:

That strikes me as a fair balance between giving an employer the right to test allegations of inability to mitigate without allowing employers to abuse independent medical examinations as a tactic to dissuade plaintiffs from legitimately relying on medical issues that prevent them from mitigating damages.

Bottom Line for Employers

Mercantile Exchange puts employers on notice that if, in the context of a wrongful dismissal claim, an employee argues they cannot mitigate their damages because of a mental disorder caused by the stress of termination after 12 months have passed from the date of their dismissal, they may be entitled to seek an IME of the employee pursuant to s. 105 of the Courts of Justice Act and Rule 33 of the Rules of Civil Procedure. This is in contrast to the Court of Appeal of Ontario’s recent holding in Krmpotic v. Thunder Bay Electronics Limited, 2024 ONCA 332, discussed here, where the court found medical expert testimony is not required to show an employee is physically incapable of mitigating damages during the reasonable notice period.