Class Notes (838,375)
Canada (510,867)
B LAW402 (43)

Wallace v. United Grain Growers.doc

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Business Law
B LAW402
Elaine Geddes

Wallace v. United Grain Growers Ltd. 1997 Supreme Court of Canada In 1972 a printing company wholly owned by the respondent decided to update its operations and seek a larger volume of commercial printing work. The appellant, W, met L, the marketing manager of the company's publishing and printing divisions, to discuss the possibility of employment. W had the type of experience L sought, having worked approximately 25 years for a competitor that used a particular type of press. W explained to L that as he was 45 years of age, if he were to leave his current employer he would require a guarantee of job security. He also sought several assurances from L regarding fair treatment and remuneration. He received such assurances and was told by L that if he performed as expected, he could continue to work for the company until retirement. W was hired and enjoyed great success at the company; he was the top salesperson for each of the years he spent in its employ. In 1986 he was summarily discharged without explanation. W issued a statement of claim alleging wrongful dismissal. In its statement of defence, the respondent alleged that W had been dismissed for cause. This allegation was maintained until the trial commenced. The termination of W's employment and the allegations of cause created emotional difficulties for him and he was forced to seek psychiatric help. His attempts to find similar employment were largely unsuccessful. Prior to his dismissal, W made a voluntary assignment into personal bankruptcy, and remained an undischarged bankrupt when he commenced his action against the respondent. Trial judge awarded a 24 month notice period and $10,000 in aggravated damages. Court of Appeal reduced notice to 15 months and overturned aggravated damages award. IACOBUCCI J. Damages for Mental Distress Relying upon the principles enunciated in Vorvis, supra, the Court of Appeal held that any award of damages beyond compensation for breach of contract for failure to give reasonable notice of termination "must be founded on a separately actionable course of conduct". There was insufficient evidence to support a finding that the actions of UGG constituted a separate actionable wrong either in tort or in contract. I note, however, that in circumstances where the manner of dismissal has caused mental distress but falls short of an independent actionable wrong, the employee is not without recourse. Rather, the trial judge has discretion in these circumstances to extend the period of reasonable notice to which an employee is entitled. Thus, although recovery for mental distress might not be available under a separate head of damages, the possibility of recovery still remains. I will be returning to this point in my discussion of reasonable notice below. Bad Faith Discharge The law has long recognized the mutual right of both employers and employees to terminate an employment contract at any time provided there are no express provisions to the contrary. In Farber v. Royal Trust Co., [1997] 1 S.C.R. 846, Gonthier J., speaking for the Court, summarized the general contractual principles applicable to contracts of employment as follows, at p. 858: In the context of an indeterminate employment contract, one party can resiliate the contract unilaterally. The resiliation is considered a dismissal if it originates with the employer and a resignation if it originates with the employee. If an employer dismisses an employee without cause, the employer must give the employee reasonable notice that the contract is about to be terminated or compensation in lieu thereof. A requirement of "good faith" reasons for dismissal would, in effect, contravene these principles and deprive employers of the ability to determine the composition of their workforce. In the context of the accepted theories on the employment relationship, such a law would, in my opinion, be overly intrusive and inconsistent with established principles of employment law, and more appropriately, should be left to legislative enactment rather than judicial pronouncement. The appellant is unable to sue in either tort or contract for "bad faith discharge". However, I will be returning to the subject of good faith and fair dealing in my discussion of reasonable notice below. Punitive Damages Punitive damages are an exception to the general rule that damages are meant to compensate the plaintiff. The purpose of such an award is the punishment of the defendant. UGG did not engage in sufficiently "harsh, vindictive, reprehensible and malicious" conduct to merit condemnation by such an award. There is no foundation for an award of punitive damages. Reasonable Notice In determining what constitutes reasonable notice of termination, the courts have generally applied the principles articulated by McRuer C.J.H.C. in Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.), at p. 145: There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant. Applying these factors in the instant case, I concur with the trial judge's finding that in light of the appellant's advanced age, his 14-year tenure as the company's top salesman and his limited prospects for re-employment, a lengthy period of notice is warranted. I note, however, that Bardal, supra, does not state, nor has it been interpreted to imply, that the factors it enumerated were exhaustive. Canadian courts have added several additional factors to the Bardal list. The application of these factors to the assessment of a dismissed employee's notice period will depend upon the particular circumstances of the case. One such factor that has often been considered is whether the dismissed employee had been induced to leave previous secure employment. Many courts have sought to compensate the reliance and expectation interests of terminated employees by increasing the period of reasonable notice where the employer has induced the employee to "quit a secure, well-paying job . . . on the strength of promises of career advancement and greater responsibility, security and compensation with the new organization". In my opinion, such inducements are properly included among the considerations which tend to lengthen the amount of notice required. There is a need to safeguard the employee's reliance and expectation interests in inducement situations. I note, however, that not all inducements will carry equal weight when determining the appropriate period of notice. The significance of the inducement in question will vary with the circumstances
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