It has been about eight years since the Supreme Court of Canada decision in Honda Canada v Keays, which dramatically altered the law with respect to damages relating to bad faith conduct in the course of dismissal. Is the topic still relevant? A recent Ontario decision confirms that it is.
The Damages Formerly Known as Wallace
As we all know, in the late 1990’s the Supreme Court of Canada held that employers had a duty to act in good faith in the course of terminating the employment relationship. In Wallace v. United Grain Growers, our High Court found that the employer had breached that duty, and the majority held that the remedy for such a breach would be to extend the applicable notice period. Over the following decade, claims for “Wallace damages” became commonplace, to say the least. Unfortunately, many courts seemed more than willing to oblige plaintiffs, finding bad faith in all sorts of circumstances that, while not demonstrative of perfect practice in the course of dismissal, hardly seemed to indicate conduct taken in bad faith.
The Court of Appeal in Alberta has just ruled that there was no basis to award "The Damages Formerly Known as Wallace" in Soost v. Merrill Lynch Canada Inc., dramatically reducing the value of the award.