Wallace v United Grain Growers Ltd | |
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Hearing: 22 May 1997 Judgment: 30 October 1997 | |
Full case name | Jack Wallace v United Grain Growers Limited |
Citations | 1997 CanLII 332 (SCC), [1997] 3 SCR 701 |
Docket No. | 24986 |
Prior history | APPEAL and CROSS‑APPEAL from Wallace v. United Grain Growers Ltd., 1995 CanLII 6262 (8 September 1995), Court of Appeal (Manitoba,Canada), allowing the appeal and cross‑appeal from Wallace v. United Grain Growers Ltd., 1993 CanLII 4411 (7 July 1993), Court of Queen's Bench (Manitoba,Canada) |
Ruling | Appeal allowed in part, La Forest, L'Heureux‑Dubé and McLachlin JJ. dissenting in part. Cross‑appeal dismissed. |
Holding | |
An undischarged bankrupt has capacity to sue for wrongful dismissal, as such damages constitute wages that are exempt from vesting in a trustee in bankruptcy under the Bankruptcy Act. Bad faith conduct in the manner of dismissal is another factor that is properly compensated for by an addition to what may be considered reasonable notice. | |
Court membership | |
Chief Justice: Antonio Lamer Puisne Justices: Gérard La Forest, Claire L'Heureux-Dubé, John Sopinka, Charles Gonthier, Peter Cory, Beverley McLachlin, Frank Iacobucci, John C. Major | |
Reasons given | |
Majority | Iacobucci J, joined by Lamer CJ and Sopinka, Gonthier, Cory and Major JJ |
Concur/dissent | McLachlin J, joined by La Forest and L'Heureux-Dubé JJ |
Laws applied | |
Bankruptcy Act | |
Superseded by | |
Honda Canada Inc v Keays |
Wallace v United Grain Growers Ltd, 1997 CanLII 332 , [1997] 3 SCR 701 is a leading decision of the Supreme Court of Canada in the area of Canadian employment law, particularly in determining damages arising from claims concerning wrongful dismissal.
In 1972, Public Press (a subsidiary of United Grain Growers) [lower-alpha 1] expanded its activities in commercial printing through acquisition of a web press, and hired Wallace, who had experience in selling such products. As Wallace was 46, he sought and received assurances that he would be treated fairly and have a guarantee of security in employment until at least his 65th birthday.
Wallace was the company's top salesperson throughout his employment, which was terminated in 1986 without explanation. In a letter issued after termination, UGG claimed that "the main reason for his termination was his inability to perform his duties satisfactorily." [1] The termination and allegation caused great emotional distress for Wallace, and he was unable to find similar employment elsewhere. Prior to his termination, Wallace had filed for bankruptcy in 1985, from which he was discharged in 1988.
He sued UGG for wrongful dismissal, claiming:
In its defense, UGG asserted:
At the initial hearing, Lockwood J held that, as Wallace was an undischarged bankrupt, he had no capacity to commence an action on his own. [2] His appeal to the Manitoba Court of Appeal was stayed pending completion of the trial, [3] which was resumed subject to the outcome of the appeal on the bankruptcy issue. [4]
In his resulting judgment, Lockwood J found that, subject to the above:
Accordingly, he awarded damages of $157,700 for wrongful dismissal and $15,000 as aggravated damages for mental distress.
The Court allowed an appeal and cross-appeal. In his ruling Scott CJM held that:
Wallace appealed the ruling to the Supreme Court of Canada as to whether: [18]
UGG cross-appealed as to whether an undischarged bankrupt had capacity to sue in this matter. [19]
In a 6–3 decision, the appeal was allowed. The Court unanimously dismissed the cross-appeal.
In contrast to the facts in Cohen, Wallace did not become involved in any good-faith transactions for value with a third party after his assignment in bankruptcy. [lower-alpha 4] Iacobucci J described damages arising from wrongful dismissal as forming part of the wages exemption under the Bankruptcy Act, stating:
65. As I see the matter, the underlying nature of the damages awarded in a wrongful dismissal action is clearly akin to the "wages" referred to in s. 68(1). In the absence of just cause, an employer remains free to dismiss an employee at any time provided that reasonable notice of the termination is given. In providing the employee with reasonable notice, the employer has two options: either to require the employee to continue working for the duration of that period or to give the employee pay in lieu of notice.... There can be no doubt that if the employer opted to require the employee to continue working during the notice period, his or her earnings during this time would constitute wages or salary under s. 68(1) of the Act. The only difference between these earnings and pay in lieu of notice is that the employee receives a lump sum payment instead of having that sum spread out over the course of the notice period. The nature of those funds remains the same and thus s. 68(1) will also apply in these circumstances.
In the appeal, Iacobucci J declared:
In expanding on the last point, he stated:
98. The obligation of good faith and fair dealing is incapable of precise definition. However, at a minimum, I believe that in the course of dismissal employers ought to be candid, reasonable, honest and forthright with their employees and should refrain from engaging in conduct that is unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive....
While agreeing with the majority in most respects, McLachlin J (as she then was) differed on two points:
As a result, in addition to restoring damages for reasonable notice to 24 months, she would have also restored the award for aggravated damages. She explained her reasoning thus:
119. I prefer the second approach for the following reasons. First, this solution seems to me more consistent with the nature of the action for wrongful dismissal. Second, this approach, unlike the alternative, honours the principle that damages must be grounded in a cause of action. Third, this approach seems to me more consistent with the authorities, notably Vorvis v. Insurance Corporation of British Columbia... Fourth, this approach will better aid certainty and predictability in the law governing damages for termination of employment. Finally, there are other equally effective ways to remedy wrongs related to the manner of dismissal which do not affect the prospect of finding replacement work.
The increase in reasonable notice that was suggested by the SCC came to be known as the "Wallace bump," [27] and claims that included it became so frequent that the courts began to criticize the practice. [27] It was subsequently restricted by the Court in Honda Canada Inc. v. Keays [lower-alpha 5] to the following circumstances: [28]
Most lawyers consider Wallace not to be dead, but to have evolved, [29] and others point out that Keays damages may result in higher monetary awards in certain circumstances. [30]
Subsequent jurisprudence has identified several key areas where an employer's conduct will constitute bad faith that will attract Wallace damages: [31]
A tort, in common law jurisdiction, is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. It can include intentional infliction of emotional distress, negligence, financial losses, injuries, invasion of privacy, and many other things.
In employment law, constructive dismissal, also called constructive discharge or constructive termination, occurs when an employee resigns as a result of the employer creating a hostile work environment. Since the resignation was not truly voluntary, it is, in effect, a termination. For example, when an employer places extraordinary and unreasonable work demands on an employee to obtain their resignation, this can constitute a constructive dismissal.
In U.S. labor law, at-will employment is an employer's ability to dismiss an employee for any reason, and without warning, as long as the reason is not illegal. When an employee is acknowledged as being hired "at will," courts deny the employee any claim for loss resulting from the dismissal. The rule is justified by its proponents on the basis that an employee may be similarly entitled to leave his or her job without reason or warning. The practice is seen as unjust by those who view the employment relationship as characterized by inequality of bargaining power.
In United Kingdom law, the concept of wrongful dismissal refers exclusively to dismissal contrary to the contract of employment, which effectively means premature termination, either due to insufficient notice or lack of grounds. Although wrongful dismissal is usually associated with lack of notice sometimes it can also be caused by arbitrary dismissal where no notice was required but certain grounds were specified in the contract as being the only ones available but none existed.
Unfair dismissal in the United Kingdom is the part of UK labour law that requires fair, just and reasonable treatment by employers in cases where a person's job could be terminated. The Employment Rights Act 1996 regulates this by saying that employees are entitled to a fair reason before being dismissed, based on their capability to do the job, their conduct, whether their position is economically redundant, on grounds of a statute, or some other substantial reason. It is automatically unfair for an employer to dismiss an employee, regardless of length of service, for becoming pregnant, or for having previously asserted certain specified employment rights. Otherwise, an employee must have worked for two years. This means an employer only terminates an employee's job lawfully if the employer follows a fair procedure, acts reasonably and has a fair reason.
A severance package is pay and benefits that employees may be entitled to receive when they leave employment at a company unwillfully. In addition to their remaining regular pay, it may include some of the following:
A letter of recommendation or recommendation letter, also known as a letter of reference, reference letter or simply reference, is a document in which the writer assesses the qualities, characteristics, and capabilities of the person being recommended in terms of that individual's ability to perform a particular task or function. Letters of recommendation are typically related to employment, admission to institutions of higher education, or scholarship eligibility. Recommendation letters are usually specifically requested to be written about someone, and are therefore addressed to a particular requester, although they may also be issued to the person being recommended without specifying an addressee.
The Employment Rights Act 1996 is a United Kingdom Act of Parliament passed by the Conservative government to codify existing law on individual rights in UK labour law.
Addis v Gramophone Co Ltd [1909] AC 488 is an old English contract law and UK labour law case, which used to restrict damages for non-pecuniary losses for breach of contract.
Johnson v Unisys Limited [2001] UKHL 13 is a leading UK labour law case on the measure of damages for unfair dismissal and the nature of the contract of employment.
In labour law, unfair dismissal is an act of employment termination made without good reason or contrary to the country's specific legislation.
Eastwood v Magnox Electric plc [2004] UKHL 35 is a UK labour law case concerning damages for wrongful dismissal, which were held to not be limited if a breach of contract occurs during the performance of the contract, rather than at the point of termination.
Honda Canada Inc v Keays, 2008 SCC 39, [2008] 2 SCR 362 is a leading case of the Supreme Court of Canada that has had significant impact in Canadian employment law, in that:
In law, wrongful dismissal, also called wrongful termination or wrongful discharge, is a situation in which an employee's contract of employment has been terminated by the employer, where the termination breaches one or more terms of the contract of employment, or a statute provision or rule in employment law. Laws governing wrongful dismissal vary according to the terms of the employment contract, as well as under the laws and public policies of the jurisdiction.
Reda v Flag Ltd [2002] UKPC 38 is a case from Bermuda law, advised upon by the Privy Council, that is relevant for UK labour law and UK company law concerning the dismissal of a director.
Whelan v Waitaki Meats Ltd (1990) ERNZ Sel Co 960; [1991] 2 NZLR 74 is a cited case in New Zealand distinguishing that Addis v Gramophone Co Ltd prohibition of the awarding of damages for distress only applies to commercial contracts, and not to employment contracts.
Bhasin v Hrynew, 2014 SCC 71 is a leading Canadian contract law case, concerning good faith as a basic organizing principle in contractual relations in Canada's common law jurisdictions.
Société Générale, London Branch v Geys [2012] UKSC 63 is a UK labour law case, concerning wrongful dismissal.
Edwards v Chesterfield Royal Hospital NHS Foundation Trust and Botham v Ministry of Defence[2011] UKSC 58 is a UK labour law case, concerning wrongful dismissal.
Commonwealth Bank of Australia v Barker is a leading Australian judgment of the High Court which unanimously and firmly rejected the proposition that contracts of employment in Australia should contain an implied term of mutual trust and confidence.