Executive Summary: Key Legal and Evidentiary Issues

• Appellant Dale Babcock challenged the summary dismissal of his wrongful dismissal claim, arguing the Applications Judge misapplied the doctrine of horizontal stare decisis.
   
• Justice Jugnauth held that Belanger v Western Ventilation Products Ltd fell within the per incuriam exception because it failed to apply the Supreme Court's framework set out in Waterman v IBM Canada Ltd.
   
• Reasonable notice was set at 20 months based on the Appellant's age, 24 years of service, and specialized experience in a niche field.
   
• Breach of the employment contract was found to occur on December 15, 2021, the date employment actually ended, rather than the date notice was given.
   
• Deductibility of the Appellant's long-term disability benefits from any wrongful dismissal damages could not be resolved on the existing record because the disability policy itself was not before the Court.
   
• The matter was remitted to trial solely to assess damages, including whether the disability benefits are deductible.
   

Facts of the case

Dale Babcock worked for Thuro Inc. beginning in January 1998, spending approximately 24 years in operational roles connected to the company's sewer and water maintenance business. By late 2020, Thuro had become concerned about the effect of Babcock's rheumatoid arthritis on his ability to continue performing physically demanding field work, and it considered whether the employment relationship had become frustrated. It decided against that course and instead, by letter dated November 20, 2020, advised Babcock that his employment would terminate effective December 15, 2021 — approximately 13 months later. The letter offered an additional $10,000 in exchange for a signed release, which Babcock did not sign, and he did not receive that payment.

After the letter, Babcock continued working for Thuro. The company considered moving him into a less physically demanding, training-oriented role, but he did not fully transition into it. He remained actively employed until June 2021. On June 11, 2021, he began a medical leave due to his rheumatoid arthritis, receiving short-term disability benefits from June 19, 2021 to October 15, 2021, followed by long-term disability (LTD) benefits starting October 16, 2021 — benefits he apparently continues to receive. His employment ended on December 15, 2021, as previously scheduled. Babcock then sued for wrongful dismissal, arguing that 13 months of working notice was insufficient at common law.

The parties brought competing summary judgment applications. Thuro argued the case was governed by Belanger v Western Ventilation Products Ltd, 2019 ABQB 571, a decision it said established that an employee who becomes disabled during working notice suffers no compensable loss because he would only have received disability benefits during any additional notice period in any event. The Applications Judge agreed, held that horizontal stare decisis required him to follow Belanger, and granted summary dismissal of Babcock's claim while dismissing his cross-application for summary judgment. Babcock appealed, arguing the Applications Judge misapplied horizontal stare decisis, wrongly treated his disability benefits as defeating his claim, and should not have dismissed the action summarily.

Policy and legislative provisions at issue

The case turned substantially on the interpretation of Thuro's group disability plan, which was not itself placed into evidence. The record contained only a "Benefits Handbook" dated February 10, 2020 (summarizing a policy that came into force January 1, 2020) and correspondence dated November 2, 2021 from the benefits administrator to Babcock. That correspondence directed Babcock to the group policy and stated that benefits could be reduced by "Other Income," a category the letter left open-ended with the word "etc." A separate document called a "Claimant's Statement" described "salary continuance" as an employer's continuation of salary or wages during an employee's absence due to injury or sickness, but Justice Jugnauth found this did not establish whether "salary continuation" was a defined term under the actual policy or whether it would extend to wrongful dismissal damages. Without the policy itself, the Court could not determine whether it contained any repayment, reimbursement, subrogation, or offset provision that would apply if Babcock later received damages for the same period covered by his LTD benefits.

The appeal also engaged the framework from Waterman v IBM Canada Ltd, 2013 SCC 70, governing when a benefit received by a dismissed employee — including disability benefits — should be deducted from wrongful dismissal damages under the "private insurance exception," and Sylvester v British Columbia, [1997] 2 SCR 315, addressing the related but distinct question of whether employer-funded disability benefits are deductible from damages otherwise owed.

Reasoning and analysis

Justice Jugnauth first addressed whether horizontal stare decisis limited the scope of the appeal to whether the Applications Judge correctly followed Belanger. He concluded it did not: an appeal is concerned with the correctness of the result, not merely whether the lower decision-maker faithfully applied a prior coordinate decision. Applying the framework from R v Sullivan, 2022 SCC 19, and the three recognized exceptions to horizontal stare decisis from Re Hansard Spruce Mills, [1954] 4 DLR 590 (BCSC), Justice Jugnauth found that Belanger fell within the per incuriam exception because it failed to account for Waterman, which requires a separate inquiry into whether a benefit should be deducted from damages rather than treating receipt of the benefit as eliminating the existence of damages altogether. He held that Belanger conflated entitlement to damages with the distinct question of deductibility, and that this approach could not be reconciled with Sylvester, which established that an employee's inability to work during the notice period is irrelevant to the underlying legal entitlement to damages.

Turning to whether Thuro breached the employment contract, Justice Jugnauth applied the Bardal factors — age, length of service, character of employment, and availability of comparable employment — and found that Babcock's age (62 at the time notice was given, 63 when employment ended), his 24 years of service, his responsibilities beyond typical manual labour, and the difficulty of finding comparable specialized work during the COVID-19 pandemic all favoured an extended notice period. He concluded that 20 months, rather than the 13 months provided or the 24 months sought by Babcock, was reasonable.

On when the breach occurred, Justice Jugnauth rejected Babcock's argument that the breach occurred on November 20, 2020, the date notice was given. Relying on the anticipatory repudiation framework from Potter v New Brunswick Legal Aid Services Commission, 2015 SCC 10, he reasoned that because Babcock continued working and did not accept the anticipatory repudiation represented by the notice letter, the sufficiency of the notice could only be assessed once the employment relationship actually ended. The breach therefore occurred on December 15, 2021. He also rejected Thuro's frustration argument, finding no evidence that Babcock's condition made continued performance of the contract impossible, particularly since Thuro had considered and rejected frustration before providing notice, and Babcock had continued working for roughly seven months afterward.

On damages, Justice Jugnauth found the evidentiary record insufficient to determine whether Babcock's LTD benefits should be deducted from any damages award. Because the disability policy itself was not in evidence, he could not assess the nature and purpose of the benefit, whether Babcock had contributed to it, or whether the policy contained provisions addressing concurrent receipt of damages and disability payments — all matters material to the Waterman analysis. He held that this gap did not automatically favour either party, since the missing evidence prevented both a finding of deductibility and a finding against it.

Ruling and overall outcome

Justice Jugnauth allowed the appeal in part. The Applications Judge's order was vacated, and Thuro Inc. was found to have breached Babcock's employment contract by failing to provide reasonable notice of termination, with the appropriate notice period fixed at 20 months. However, the Court declined to grant summary judgment in Babcock's favour on damages, finding that the record — particularly the absence of the disability policy — did not permit a fair determination of whether his LTD benefits should be deducted from the damages owed. The matter was remitted to trial solely to assess damages, including that deductibility question. Babcock was found to be substantially successful on the appeal and was awarded costs, with the specific amount not yet determined; the decision set out a schedule for the parties to file written submissions on costs (Babcock within 30 days, Thuro's response within 15 days thereafter, each submission capped at three pages excluding authorities). No other monetary amount was awarded, ordered, or quantified in this decision.