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New Brunswick Court of Appeal rejects claim for unjust enrichment in ordinary wrongful dismissal action

Clarence Bennett and Lara Greenough

In ExxonMobil Business Support Centre Canada ULC v Birmingham, the New Brunswick Court of Appeal considered the equitable remedy of unjust enrichment in the context of an ordinary wrongful dismissal claim. Ultimately, the Court found unjust enrichment cannot be a remedial source in such a claim. In its analysis, the Court confirmed a number of principles respecting notice and damages in wrongful dismissal claims, which are beneficial to employers.

Facts

Mr. Birmingham was employed by ExxonMobil for 14 years. At the time his employment was terminated he worked in their facilities management division. As part of a global restructuring of its operations, Exxon announced in the summer of 2016 that it was outsourcing its management division to a new company: CBRE.

Mr. Birmingham was advised his employment with Exxon would terminate but he would be offered continuing employment with CBRE at the same salary with other benefits and incentives – he was told that continued employment with Exxon in another role was not an option. Mr. Birmingham accepted the new position with CBRE in September of 2016; his employment with Exxon terminated at the end of 2016, and he began with CBRE January 1, 2017.

As of January 1, 2017, Mr. Birmingham was therefore working for a new employer but doing the same job at the same salary with slightly different benefits.

Exxon offered Mr. Birmingham a severance package to address possible loss of benefits during an 11 month notice period in exchange for a release. Mr. Birmingham declined the package and sued Exxon for wrongful dismissal.

In the end, the trial judge found that the 11 months advanced by Exxon was the appropriate notice period and there were no grounds for an award of aggravated or punitive damages against Exxon. Despite this, the trial judge awarded $50,000 to Mr. Birmingham for unfairness in the termination process and/or unjust enrichment that flowed to Exxon as a consequence of the restructuring. He also declined to deduct the retention bonus paid to Mr. Birmingham during the notice period as mitigation income. Exxon appealed the trial judge’s decision.

Court of Appeal’s analysis and decision

On appeal, the Court of Appeal overturned the trial judge’s decision and found that Mr. Birmingham was entitled to damages for breach of contract (reduced by the retention bonus paid during the notice period, which was mitigation income), being pay in lieu of notice in the amount of $5,000 – there was no entitlement to damages for unfairness or unjust enrichment. The amount awarded was less than the amount rejected by Mr. Birmingham on termination. The Court made the following conclusions in its analysis, which are helpful for employers:

  • When an employee is terminated without cause, absent human rights considerations, the reasons for termination are irrelevant;
  • An employee is not entitled to damages for loss of employment simply because it is “unfair” – absent bad faith or other extenuating circumstances, all that an employee is entitled to receive when terminated is reasonable notice of dismissal;
  • There is no basis in law for an employee to contend they have a reasonable expectation to compete for another job with an employer when their employment is terminated;
  • The right to terminate with notice is not modified where the termination of an employee results in a benefit to an employer or there are other job opportunities available with the employer;
  • If claiming aggravated damages, the onus is on the employee to establish injuries do not flow from dismissal itself but from the manner of the dismissal; and
  • The amount of severance offered to another employee is completely irrelevant and cannot be used as a basis for calculating an award of damages.

With respect to Mr. Birmingham’s claim for unjust enrichment specifically, the Court concluded:

  • Birmingham’s claim was governed by the terms of his employment contract with Exxon – the contract governing the restructuring which precipitated the termination, the terms and the negotiation of those terms, were irrelevant to Mr. Birmingham’s claim for wrongful dismissal;
  • Birmingham’s “work” was not a “benefit” transferred from Mr. Birmingham to Exxon, nor was there a corresponding deprivation as is required by the doctrine of unjust enrichment. Mr. Birmingham’s alleged losses were incurred because his contract of employment with Exxon ended; and
  • Finally, Mr. Birmingham’s work was always governed by an employment contract (with Exxon or with CBRE) which is a clear “juristic reason” negating any otherwise provable claim of unjust enrichment.

In short, the Court of Appeal has confirmed that the doctrine of unjust enrichment does not apply in an ordinary wrongful dismissal claim.

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