Summary
In Handy v. M&C Investments Incorporated, 2026 ONSC 648 (“M&C Investments”), the Court ordered the plaintiff to produce a better affidavit of documents, finding that the mitigation documents originally produced were insufficient. The Court emphasized the importance of full disclosure and that mitigation is an important issue in many, if not all, wrongful dismissal claims.
This is an issue which comes up frequently in employment litigation. Following the cessation of employment, employees have a duty to mitigate their losses by making reasonable efforts to find similar alternate employment. Employers bear the burden of proof in arguing that a former employee has failed to meet this obligation and largely rely upon proper disclosure in meeting this high bar.
This decision should provide support for employers on the important issue of insisting upon adequate disclosure of mitigation documentation at the early stages of the litigation process.
The Facts
A former employee commenced an action for wrongful dismissal under the simplified procedure, which is designed to be a more streamlined, and therefore less costly process, for resolving certain civil claims. The central dispute relates to the nature of the termination and the enforceability of the termination clause in the employment agreement, as well as the quantum of any damages owing. A determination of such damages would necessarily include a review of what steps, if any, the plaintiff took to mitigate his alleged losses.
The decision in M&C Investments deals specifically with a motion brought by the defendant seeking an order requiring the plaintiff to produce a better affidavit of documents on the basis that the plaintiff failed to produce all arguably relevant documents relating to his mitigation efforts and income during the claimed notice period as required by the Rules of Civil Procedure.
As an initial step in the litigation process, parties are required to exchange an affidavit of documents containing disclosure of all relevant documentation in their possession. The plaintiff first provided an affidavit of documents containing no evidence of mitigation at all. After the defendant pushed back on this lack of disclosure, the plaintiff served a supplementary affidavit of documents which contained only a sheet of paper with a brief application log listing six jobs to which the plaintiff stated he applied to following his termination.
The defendant once again pushed back on the insufficient disclosure and took the position that they would not proceed to the next stage of litigation, being examinations for discovery, without receiving proper documentation as required by the Rules. The plaintiff took the position that any further documents could be sought at the examinations for discovery by way of undertaking in which the party being examined undertakes to provide requested information or documentation not included in the affidavit of documents.
The plaintiff then provided a third affidavit of documents which attached only a resume the plaintiff was purportedly using in his job search efforts. Approximately a week later, the plaintiff advised that he had obtained employment with a new employer without any further documentation relating to the application for that position or the details of that employment.
When further dispute arose respecting the parties proceeding to examinations for discovery, the defendant was granted leave to bring a motion seeking the production of a better affidavit of documents. Three days before the motion was heard, the plaintiff provided employment pay statements in relation to his new employment.
The Decision
The Court held that an order requiring the plaintiff to produce and serve a better affidavit of documents was warranted. As a starting point, the Court noted that parties to litigation have a duty to produce all relevant documents. The Court then went on to set out the relevant test for the production of a better affidavit of documents, which requires the moving party to prove that the subject documents exist on a balance of probabilities.
The Court noted that mitigation is an important issue in most wrongful dismissal cases, stating at paragraph 21:
[21] There is no question that mitigation is a live issue in this case, as it is in many, if not all, wrongful termination cases. The Plaintiff, in his book of authorities, provided two cases which speak to the test to be applied when the issue is raised. The burden lies with the employer to prove the mitigation efforts were unreasonable. They must do so by proving that the employee failed to take reasonable steps and that if those steps were taken the employee would have been expected to secure a comparable position reasonably adapted to their abilities…
The Court went on to state that it was satisfied the defendant had met the test for requiring production of a further and better affidavit of documents, stating at paragraph 24:
[24] … The trickle of disclosure of documents relating to mitigation, only in response to the Defendant’s repeated requests, those new EI documents, and the fact that the Plaintiff has obtained new employment but has produced no records with respect to same, collectively satisfy me that the Plaintiff has not, to date, conducted a diligent or comprehensive search for relevant documents or “arguably relevant documents” as he agreed to in the discovery plan.
The Court noted that the plaintiff had provided no explanation as to why the documents had not been produced in any of the three affidavits of documents provided prior to the motion. The Court did not accept that this could be addressed through the examination for discovery process, particularly under the simplified procedure which has abridged maximum examination times of up to three hours per party, compared to seven hours in a civil proceeding not brought under the simplified procedure.
Takeaways
This decision highlights the importance of mitigation documentation in wrongful dismissal claims. Employees bringing such claims are required to produce all documents relevant to their efforts to mitigate damages, which may include job advertisements and applications, correspondence, resumes, employment contracts, and any evidence of income earned during the claimed notice period such as pay records from a new employer.
Through this decision, the Court has affirmed that incremental or a “trickle” of disclosure, as occurred in this case, can lead to court orders compelling a further and better affidavit of documents. Given that forcing a party to bring a motion to obtain this production can have cost consequences, this should send a clear signal to employees to provide documentation in a timely and proper manner.
For employers, this reinforces the need to actively request and review mitigation evidence early in the litigation process to ensure that all relevant materials have been produced, particularly evidence of post-termination employment income.
While employees have a duty to mitigate, it is a challenge for employers to both assess and challenge the adequacy of mitigation efforts. Adequate disclosure of mitigation records is therefore vital to ensure that an employee is held accountable for making reasonable attempts to mitigate their damages. In practice, the courts hold employers to a high standard in attempting to demonstrate a failure to mitigate as it is often unclear what exactly constitutes “reasonable” mitigation efforts.
Nonetheless, the duty to mitigate remains an important consideration in wrongful dismissal litigation. If an employee does mitigate their damages, this can drastically reduce liability as an employer is only liable for damages that the employee could not reasonably avoid. The decision in M&C Investments reaffirms that the courts still recognize the importance of mitigation in this regard.
Need More Information?
For more information or assistance with labour and employment matters, contact Ryan Parry at rparry@filionlaw.com or your regular lawyer at the firm.