The Lawyers Weekly - May 21, 2010

THE LAWYERS WEEKLY
May 21, 2010 | 9

How to win damages for bad faith conduct by employers

Employees must now prove actual losses

hile employers continue to
have a duty of good faith
toward employees in the manner
of dismissal, uncertainty remains
as to when an employee will be
awarded damages for a breach, and
what employees need to demonstrate
to be awarded damages. This uncer-
tainty is due to the seismic shift in
employment law created by the
Supreme Court of Canada in Honda
Canada v. Keays, [2008] S.C.J. No. 40, from which
the dust has not completely settled.

In Brien v. Niagara Motors Limited, [2009] O.J.

No. 5313, the Ontario Court of Appeal reviewed the duty of employers to act in good faith at the time of termination for an employee who alleged mental distress from her termination. The decision appears to confirm that bad faith conduct on its own will no longer be a sufficient basis to award damages.

The case involved the termination of a 23-year employee, Margaret Brien, from her job as office manager at the Niagara Motors car dealership. Her termination came as a complete surprise. Brien experienced tremendous shock when she was terminated, since she had never previously been disciplined and was not provided with warnings about her performance. At the time of termination, the dealership told Brien that her dismissal was the result of her position being eliminated. The dealership, however, had secretly advertised her position,

STEVE
LEVITT

New summary judgment rules benefit dismissed employees

STUART
RUDNER

and, to add insult to injury, required Brien to train her replacement after her dismissal.

In a classic example of an employer playing hardball that would have attracted Wallace damages prior to Keays, the dealership only alleged that Brien had performed her duties incompetently and unprofessionally after she commenced the court action. The employer also alleged that her misconduct provided just cause for her termination and thus they owed her no notice of termination. Finally, the employer refused to provide Brien with a letter of reference or to assist her in any way with her job search.

The trial judge concluded that there was no just cause for her termination. Rather, the trial judge found the employer was dishonest, misleading and insensitive during the termination, at a time when Brien was at her most vulnerable. The trial judge concluded that the employer acted in bad faith in the manner of Brien’s dismissal, and pursuant to Wallace principles, increased the award of 24 months pay in lieu of notice by two additional months.

On appeal, the Court of Appeal considered, in

See Brien Page 11

;

Bad faith conduct on its own will no longer be a sufficient basis to award damages.

;

SHANE OBRIEN / IS TOCKPHOTO. COM

Summary judgment motions will soon become far more common in wrongful dismissal claims. Plaintiffs and their counsel should consider using such motions to strategically litigate their claims, and employers and their counsel should be aware that they may not have the luxury of extended delays between dismissal and judgment.

Daniel Lublin wrote about this issue in The Lawyers Weekly a year ago, focussing on the Ontario Court of Appeal’s decision in Adjemian v. Brook Crompton North America, [2008] O.J. 5230. In that case, the plaintiff believed she had been wrongfully dismissed, commenced litigation and promptly brought a motion for summary judgment.

In response, the employer argued that issues of mitigation and the appropriate period of notice precluded summary judgment in routine wrongful dismissal cases. Justice Perell of the Ontario Superior Court disagreed, and the Ontario Court of Appeal confirmed the decision, granting the plaintiff summary judgment.

Lublin noted that Adjemian, like many plaintiffs, could not afford to wait months or years for judgment, all the while funding the litigation. In many cases, employers count on the costs and delays of litigation as deterrents to cause plaintiffs to either decide not to commence litigation at all, or settle for substantially less than they would receive if they proceeded to trial.

Since Adjemian, there have been significant changes to the Rules of Civil Procedure in Ontario that should allow for even more widespread use of motions for summary judgment. Under the old rules, a moving party had to show that there was “no genuine issue for trial” in order to obtain summary judgment. Judges hearing motions for summary judgment were precluded from weighing evidence or assessing credibility.