Wallace v. United Grain Growers Ltd., (1997) 219 N.R. 161 (SCC)

• Judge: Cory, McLachlin, Iacobucci and Major, JJ.
• Court: Supreme Court (Canada)
• Case Date: May 22, 1997
• Jurisdiction: Canada (Federal)
• Citations: (1997), 219 N.R. 161 (SCC);1997 CanLII 332 (SCC);152 DLR (4th) 1;[1999] 4 WWR 86;219 NR 161;3 CBR (4th) 1;[1997] CarswellMan 455;AZ-97111106;JE 97-2111;[1997] SCJ No 94 (QL);123 Man R (2d) 1;159 WAC 1;[1997] ACS no 94

Wallace v. United Grain Growers Ltd. (1997), 219 N.R. 161 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp Cite: [1997] N.R. TBEd. OC.019

Jack Wallace (appellant) v. United Grain Growers Limited (respondent)

(24986)

Indexed As: Wallace v. United Grain Growers Ltd.

Supreme Court of Canada

Lamer, C.J.C., La Forest, L'Heureux-Dubé, Sopinka, Gonthier

Cory, McLachlin, Iacobucci and Major, JJ.

October 30, 1997.

Summary:

Wallace sued his former employer for wrongful dismissal without disclosing in the statement of claim that he was bankrupt. After the trial commenced, the employer alleged that it learned of the bankruptcy and moved to amend the statement of defence to raise the bankruptcy.

The Manitoba Court of Queen's Bench, in a decision reported at 82 Man.R.(2d) 253, allowed the amendment. Wallace appealed. The employer moved for a stay of the appeal until the conclusion of the action.

The Manitoba Court of Appeal, in a de­cision reported at 85 Man.R.(2d) 40; 41 W.A.C. 40, allowed the employer's motion.

The Manitoba Court of Queen's Bench, in a decision reported at 87 Man.R.(2d) 161, awarded the employee 24 months' salary in lieu of notice and damages for mental dis­tress. Wallace appealed the finding respect­ing the effect of his bankruptcy. The employer cross-appealed the award of 24 months' salary in lieu of notice.

The Manitoba Court of Appeal, in a de­cision reported at 102 Man.R.(2d) 161; 93 W.A.C. 161, allowed Wallace's appeal, holding that Wallace was entitled to bring the action. The court allowed the employer's cross-appeal, holding that Wallace was entitled to 15 months' salary in lieu of notice. Wallace appealed the reduction of the notice period. The employer cross-appealed the finding that Wallace's action was not precluded by the bankruptcy.

The Supreme Court of Canada, McLachlin, La Forest and L'Heureux-Dubé, JJ., dis­senting in part, allowed the appeal in part and dismissed the cross-appeal.

Bankruptcy - Topic 440.5

Property of bankrupt - Damages for lost wages - A bankrupt sued for wrongful dismissal - The employer applied to strike out the claim - The trial judge held that the claim for lost wages was a nullity where the claim had vested in the trustee in bank­ruptcy - The appellate court held that the claim for wrongful dismissal was the bank­rupt's property and thus, under the control of the trustee - However, the bankrupt had a right of action in the absence of interven­tion by the trustee - The Supreme Court of Canada held that the bankrupt had a right of action - Damages for wrongful dismissal were "salary, wages or other remuneration" under s. 68 of the Bankruptcy and Insol­vency Act and were not property divisible among creditors - The right to sue for the damages did not vest in the trustee - See paragraphs 38 to 71.

Damages - Topic 911

Aggravation - In contract - Aggravated damages - Wrongful dismissal - [See both Master and Servant - Topic 8063 ].

Damages - Topic 1326

Exemplary or punitive damages - Wrongful dismissal - [See Master and Servant - Topic 7712 ].

Damages - Topic 6703

Contracts - Employment relationship or contract - General principles - Wrongful dismissal - An employee was summarily dismissed after 14 years' exemplary em­ployment - He sued his employer for dam­ages for wrongful dismissal, aggravated damages for mental distress, punitive damages and special damages - The Supreme Court of Canada held that the employee was entitled to 24 months' salary in lieu of reasonable notice - Although the employee was unable to sue in either tort or contract for bad faith discharge, the bad faith manner of dismissal increased the period of reasonable notice - The court declined to award punitive damages in the absence of vindictive or reprehensible conduct - The court did not award dam­ages for mental distress, where the em­ployer's conduct did not amount to an actionable wrong - See paragraphs 72 to 110.

Master and Servant - Topic 1151

Contract of hiring (employment contract) - Implied terms - General - An employee was summarily dismissed after 14 years' exemplary employment - He sued his employer for wrongful dismissal - He submitted that he could sue in either tort or contract for "bad faith discharge", claiming that the employment contract required that the employee would not be fired except for cause or legitimate business reasons - The Supreme Court of Canada held that the employee was unable to sue in either tort or contract for bad faith discharge - The court declined to find that there was an implied term of the employment contract requiring good faith reasons for dismissal - Also, Canadian courts have not recognized the tort of breach of a good faith and fair dealing obligation with regard to dismissals - See paragraphs 75 to 78.

Master and Servant - Topic 1200

Contract of hiring (employment contract) - Duration of contract - Indefinite term - After working for a printing company for 14 years, a star salesman was summarily dismissed - He sought damages for the unexpired term of a fixed term contract, basing his claim on prehiring discussions - He alleged that he was guaranteed em­ployment until retirement after he expressed his dissatisfaction with his cur­rent employer's treatment and his need, at age 45, for a guarantee of security - Indefi­nite term employment was the company's policy - The trial judge and the appeal court rejected the salesman's claim that he had a fixed term contract - The Supreme Court of Canada declined to interfere with the conclusion - See paragraph 72.

Master and Servant - Topic 7504

Dismissal of employees - Nature and rights of employment - [See Master and Ser­vant - Topic 1151 ].

Master and Servant - Topic 7712

Dismissal of employees - Damages for wrongful dismissal - Punitive or vindictive damages - A salesman was summarily dismissed after 14 years' exemplary em­ployment with UGG - His reputation in the trade was ruined by UGG's allegations of just cause and continued harassment - He sued UGG for wrongful dismissal and sought, inter alia, punitive damages - The trial judge did not find UGG's conduct sufficiently reprehensible to warrant puni­tive damages - The Manitoba Court of Appeal concurred - The Supreme Court of Canada agreed that there was no reason to award punitive damages - See paragraph 79.

Master and Servant - Topic 8000

Dismissal without cause - Notice of dis­missal - Reasonable notice - What consti­tutes - The 59 year old top salesman with a printing company (UGG) was summarily dismissed after 14 years with the company - He sought damages for wrongful dis­missal - UGG alleged just cause and con­tinued the allegations and harassment until the opening day of trial - Despite his efforts, the salesman had difficulty finding work because UGG's actions ruined his reputation in the trade - Eventually, he found part-time work - The trial judge stated that an award at the top of the scale was warranted and awarded the salesman 24 months' salary in lieu of notice - The Manitoba Court of Appeal reduced the award to 15 months - The Supreme Court of Canada restored the trial judge's award of 24 months' salary in lieu of notice - See paragraphs 80 to 109.

Master and Servant - Topic 8003

Dismissal without cause - Notice of dis­missal - Reasonable notice - Considerations affecting - The Supreme Court of Canada discussed the factors to be considered in determining reasonable notice in cases of wrongful dismissal - See paragraphs 81 to 109.

Master and Servant - Topic 8003

Dismissal without cause - Notice of dis­missal - Reasonable notice - Considerations affecting - The 59 year old top salesman with a printing company (UGG) was sum­marily dismissed after 14 years with the company - He sought damages for wrong­ful dismissal - The Supreme Court of Canada stated that inducements to leave previously secure employment are properly included among considerations which tend to lengthen the amount of notice for wrongful dismissal - See paragraphs 83 to 87 - Bad faith conduct in the manner of dismissal is a factor that can be compen­sated for by an addition to the notice period - See paragraphs 88 to 109.

Master and Servant - Topic 8063

Dismissal without cause - Damages - Mental distress - The Supreme Court of Canada stated 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" - See paragraph 74.

Master and Servant - Topic 8063

Dismissal without cause - Damages - Mental distress - A salesman was sum­marily dismissed after 14 years' exemplary employment with a printing company (UGG) - He sought damages, inter alia, for mental distress - UGG did not withdraw its allegations of just cause until the opening day of trial - The salesman's reputation in the trade was damaged, he had difficulty finding work and he suffered from severe depression - UGG submitted that his de­pression was caused by his financial worries and personal bankruptcy predating the dismissal - The trial judge held UGG liable for damages for mental distress under both contract and tort - The Mani­toba Court of Appeal held that there was insufficient evidence to support a finding that UGG's actions constituted a separate actionable wrong in tort or contract - The Supreme Court of Canada affirmed the decision of the appeal court - See para­graphs 73 to 74.

Practice - Topic 224

Persons who can sue and be sued - In­dividuals and corporations - Status or standing - Bankrupts - [See Bankruptcy - Topic 440.5 ].

Cases Noticed:

Vorvis v. Insurance Corp. of British Columbia, [1989] 1 S.C.R. 1085; 94 N.R. 321; 58 D.L.R.(4th) 193; [1989] 4 W.W.R. 218; 36 B.C.L.R.(2d) 273; 90 C.L.L.C. 14,035; 25 C.C.E.L. 81, refd to. [para. 16].

Pilon v. Peugeot Canada Ltd. (1980), 114 D.L.R.(3d) 378 (Ont. H.C.), refd to. [para. 16].

Vorvis v. Insurance Corp. of British Columbia (1984), 9 D.L.R.(4th) 40 (B.C.C.A.), refd to. [paras. 17, 119].

Cohen v. Mitchell (1890), 25 Q.B.D. 262 (C.A.), refd to. [para. 23].

Holley v. Gifford Smith Ltd. and Marshall Children's Foundation (1986), 14 O.A.C. 65; 59 C.B.R.(N.S.) 17 (C.A.), refd to. [paras. 38, 150].

Ranch des Prairies Ltée (Prairie Ranch Bank) and Denis v. Bank of Montreal et al. (1988), 53 Man.R.(2d) 308 (C.A.), refd to. [para. 41].

Pascoe, Re, [1944] 1 Ch. 219 (C.A.), refd to. [para. 49].

Wyssling (Trustee of) v. Latreille Estate (1990), 78 C.B.R.(N.S.) 114 (Ont. H.C.), refd to. [para. 51].

McNamara v. Pagecorp. Inc. (1989), 76 C.B.R.(N.S.) 97 (Ont. C.A.), refd to. [para. 54].

Brisson v. Long et al., [1992] 5 W.W.R. 185; 131 A.R. 99; 25 W.A.C. 99 (C.A.), refd to. [para. 56].

Neilson v. Vancouver Hockey Club Ltd., [1988] 4 W.W.R. 410 (B.C.C.A.), leave to appeal refused [1988] 2 S.C.R. viii; 92 N.R. 240, refd to. [para. 62].

Bailey v. Thurston & Co., [1903] 1 K.B. 137 (C.A.), refd to. [para. 64].

Lough v. Digital Equipment of Canada Ltd. (1986), 57 O.R.(2d) 456 (H.C.), refd to. [para. 64].

Sylvester v. British Columbia, [1997] 2 S.C.R. 315; 212 N.R. 51; 91 B.C.A.C. 124; 148 W.A.C. 124, refd to. [para. 66].

Ali, Re (1987), 62 C.B.R.(N.S.) 64 (Ont. S.C.), refd to. [para. 67].

Giroux, Re (1983), 45 C.B.R.(N.S.) 245 (Ont. S.C.), refd to. [para. 67].

Greening, Re (1989), 95 N.B.R.(2d) 386; 241 A.P.R. 386; 73 C.B.R.(N.S.) 24 (Q.B.), refd to. [para. 67].

Marzetti v. Marzetti (Bankrupt), [1994] 2 S.C.R. 765; 169 N.R. 161; 155 A.R. 340; 73 W.A.C. 340, refd to. [para. 67].

Jarvis v. Swan Tours Ltd., [1973] 1 Q.B. 233 (C.A.), refd to. [para. 73].

Farber v. Compagnie Trust Royal, [1997] 1 S.C.R. 846; 210 N.R. 161, refd to. [para. 75].

Bardal v. Globe & Mail Ltd., [1960] 24 D.L.R.(2d) 140 (H.C.), refd to. [paras. 81, 116].

Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986; 136 N.R. 40; 53 O.A.C. 200; 91 D.L.R.(4th) 491, refd to. [paras. 82, 116].

Gillespie v. Bulkley Valley Forest Indus­tries Ltd., [1975] 1 W.W.R. 607 (B.C.C.A.), refd to. [para. 82].

Corbin v. Standard Life Assurance Co. et al. (1995), 167 N.B.R.(2d) 355; 427 A.P.R. 355; 15 C.C.E.L.(2d) 71 (C.A.), refd to. [paras. 82, 97].

Bishop v. Carleton Co-operative Ltd. (1996), 176 N.B.R.(2d) 206; 447 A.P.R. 206; 21 C.C.E.L.(2d) 1 (C.A.), refd to. [para. 82].

Jackson v. Makeup Lab Inc. (1989), 27 C.C.E.L. 317 (Ont. H.C.), refd to. [para. 83].

Murphy v. Rolland Inc. (1991), 39 C.C.E.L. 86 (Ont. Gen. Div.), refd to. [para. 83].

Craig v. Interland Window Manufacturing Ltd. (1993), 47 C.C.E.L. 57 (B.C.S.C.), refd to. [para. 83].

Makhija v. Lakefield Research of Canada Ltd. (1983), 14 C.C.E.L. 131 (Ont. H.C.), affd. (1986), 14 C.C.E.L. xxxi (Ont. C.A.), refd to. [para. 84].

Mutch v. Norman Wade Co. (1987), 17 B.C.L.R.(2d) 185 (S.C.), refd to. [para. 84].

Robertson v. Weavexx Corp. (1997), 86 B.C.A.C. 206; 142 W.A.C. 206; 25 C.C.E.L.(2d) 264 (C.A.), refd to. [para. 84].

Lojstrup v. British Columbia Buildings Corp. (1989), 34 B.C.L.R.(2d) 357 (C.A.), refd to. [para. 89].

Addis v. Gramophone Co., [1909] A.C. 488, refd to. [paras. 89, 124].

Peso Silver Mines Ltd. v. Cropper, [1966] S.C.R. 673, affing. (1965), 56 D.L.R.(2d) 117 (B.C.C.A.), refd to. [paras. 89, 124].

Ansari v. British Columbia Hydro and Power Authority (1986), 2 B.C.L.R.(2d) 33 (S.C.), refd to. [para. 89].

Wadden v. Guaranty Trust Co. of Canada, [1987] 2 W.W.R. 739; 76 A.R. 138 (Q.B.), refd to. [para. 89].

Davidson v. Slaight Communications Inc., [1989] 1 S.C.R. 1038; 93 N.R. 183; 59 D.L.R.(4th) 416; 26 C.C.E.L. 85; 89 C.L.L.C. 14,031; 40 C.R.R. 100, refd to. [para. 92].

Reference Re Compulsory Arbitration, [1987] 1 S.C.R. 313; 74 N.R. 99; 78 A.R. 1; 38 D.L.R.(4th) 161, refd to. [para. 93].

Reference Re Public Service Employee Relations Act (Alta.) - see Reference Re Compulsory Arbitration.

Eyers v. City Buick Pontiac Cadillac Ltd. (1984), 6 C.C.E.L. 234 (Ont. H.C.), revd. in part (1986), 13 O.A.C. 66 (C.A.), refd to. [para. 97].

Jivrag v. Calgary (City) and Calgary Parking Authority (1986), 71 A.R. 87; 13 C.C.E.L. 120 (Q.B.), revd. in part (1987), 18 C.C.E.L. xiii (Alta. C.A.), refd to. [para. 97].

Hudson v. Giant Yellowknife Mines Ltd. (1992), 44 C.C.E.L. 109 (N.W.T.S.C.), refd to. [para. 97].

Hall v. Giant Yellowknife Mines Ltd. (1992), 44 C.C.E.L. 101 (N.W.T.S.C.), refd to. [para. 97].

Trask v. Terra Nova Motors Ltd. (1995), 127 Nfld. & P.E.I.R. 310; 396 A.P.R. 310; 9 C.C.E.L.(2d) 157 (Nfld. C.A.), refd to. [para. 97].

MacDonald v. Royal Canadian Legion (1995), 142 N.S.R.(2d) 174; 407 A.P.R. 174; 12 C.C.E.L.(2d) 211 (S.C.), refd to. [para. 97].

Dunning v. Royal Bank (1996), 23 C.C.E.L.(2d) 71 (Ont. Gen. Div.), refd to. [para. 97].

Deildal v. Tod Mountain Development Ltd. (1997), 91 B.C.A.C. 214; 148 W.A.C. 214 (C.A.), refd to. [paras. 97, 139].

Gillman v. Saan Stores Ltd. (1992), 132 A.R. 144; 45 C.C.E.L. 9 (Q.B.), refd to. [para. 102].

McCarey v. Associated Newspapers Ltd., [1965] 2 Q.B. 86 (C.A.), refd to. [para. 105].

Barltrop v. Canadian Broadcasting Corp. (1978), 25 N.S.R.(2d) 637; 36 A.P.R. 637 (C.A.), leave to appeal refused [1978] 1 S.C.R. vi; 23 N.R. 447; 28 N.S.R.(2d) 89; 43 A.P.R. 89, refd to. [para. 106].

Stumpf et al. v. Globe Holdings Ltd., Treleaven and Malone (1982), 45 A.R. 298; 22 Alta. L.R.(2d) 55 (Q.B.), refd to. [para. 106].

Brown v. Waterloo Regional Board of Commissioners of Police (1983), 43 O.R.(2d) 113 (C.A.), affing. in part (1982), 37 O.R.(2d) 277 (H.C.), refd to. [para. 121].

Canadian Pacific Hotels v. Bank of Montreal, [1987] 1 S.C.R. 711; 77 N.R. 161; 21 O.A.C. 321, refd to. [para. 137].

Whelan v. Waitaki Meats Ltd., [1991] 2 N.Z.L.R. 74 (H.C.), refd to. [para. 140].

Ogilvy & Mather (New Zealand) Ltd. v. Turner, [1994] 1 N.Z.L.R. 641 (C.A.), refd to. [para. 140].

Carrick v. Cooper Canada Ltd. (1983), 2 C.C.E.L. 87 (Ont. H.C.), refd to. [para. 141].

Bernardin v. Alitalia Air Lines (1993), 50 C.C.E.L. 156 (Que. S.C.), refd to. [para. 141].

Cohnstaedt v. University of Regina, [1989] 1 S.C.R. 1011; 93 N.R. 169; 75 Sask.R. 211, refd to. [para. 141].

Greenberg v. Montreal Trust Co., Meffert and Melfi (1985), 9 O.A.C. 69; 50 O.R. 755 (C.A.), leave to appeal refused [1985] 2 S.C.R. ix; 64 N.R. 156; 14 O.A.C. 240, refd to. [para. 141].

Truckers Garage Inc. v. Krell (1993), 68 O.A.C. 106; 3 C.C.E.L.(2d) 157 (C.A.), refd to. [para. 141].

London Life Insurance Ltd. v. Doyle (1985), 23 D.L.R.(4th) 443 (B.C.C.A.), leave to appeal refused [1986] 1 S.C.R. x; 64 N.R. 318, refd to. [para. 141].

Shiloff v. Canada (1994), 83 F.T.R. 244; 6 C.C.E.L.(2d) 177 (T.D.), refd to. [para. 141].

Houle v. Banque Nationale du Canada, [1990] 3 S.C.R. 122; 114 N.R. 161; 35 Q.A.C. 161, refd to. [para. 145].

Watkins v. Olafson et al., [1989] 2 S.C.R. 750; 100 N.R. 161; 61 Man.R.(2d) 81; 61 D.L.R.(4th) 577; [1989] 6 W.W.R. 481; 39 B.C.L.R.(2d) 294; 50 C.C.L.T. 101, refd to. [para. 146].

R. v. Salituro, [1991] 3 S.C.R. 654; 131 N.R. 161; 50 O.A.C. 125; 68 C.C.C.(3d) 289, refd to. [para. 146].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 2, sect. 67(1)(c), sect. 67(1)(d) [paras. 11, 40]; sect. 68(1) [paras. 11, 60]; sect. 71(2) [para. 42]; sect. 99(1) [paras. 11, 46].

Authors and Works Noticed:

Belobaba, Edward P., Good Faith in Canadian Contract Law, Commercial Law: Recent Developments and Emerging Trends (1985), generally [para. 145].

Christie, Innis, England, Geoffrey, and Cotter, Brent, Employment Law in Canada (2nd. Ed. 1993), pp. 416 [para. 141]; 609 [para. 115]; 611 [paras. 117, 128, 131]; 612 to 620 [para. 128]; 623 [para. 83]; 749, 750 [para. 73].

Davies, Paul, and Freedland, Mark, Kahn-Freund's Labour and the Law (3rd Ed. 1983), p. 18 [para. 92].

England, Geoffrey, Recent Developments in the Law of the Employment Contract: Continuing Tension Between the Rights Paradigm and the Efficiency Paradigm (1995), 20 Queen's L.J. 557, generally [para. 144].

Harris, David, Wrongful Dismissal (1989) (1997 Looseleaf Update - Release 4), p. 3-10 [para. 65].

O'Byrne, Shannon Kathleen, Good Faith in Contractual Performance: Recent De­velopments (1995), 74 Can. Bar Rev. 70, generally [para. 145].

Reiter, B.J., Good Faith in Contracts (1983), 17 Valparaiso U.L. Rev. 208, generally [para. 145].

Schai, Randall B., Aggravated Damages and the Employment Contract (1991), 55 Sask.L. Rev. 345, pp. 346 [para. 94]; 349 [para. 143]; 355 [para. 73]; 363 [para. 143].

Swan, John, Extended Damages and Vorvis v. Insurance Corp. of British Columbia (1990), 16 Can. Bus. L.J. 213, generally [para. 73].

Swinton, Katherine, Contract Law and the Employment Relationship: The Proper Forum for Reform, Studies in Contract Law (1980), p. 363 [para. 91].

Waddams, S.M., The Law of Damages (3rd Ed. 1997), p. 483 [para. 79].

Counsel:

Stacey Reginald Ball and George J. Orle, Q.C., for the appellant;

John M. Scurfield, Q.C., and Richard W. Schwartz, for the respondent.

Solicitors of Record:

Riley, Orle, Giesbrecht, Born, Winnipeg, Manitoba, for the appellant;

Wolch, Pinx, Tapper, Scurfield, Winnipeg, Manitoba, for the respondent.

This appeal was heard on May 22, 1997, before Lamer, La Forest, L'Heureux-Dubé, Sopinka, Gonthier, Cory, McLachlin and Major, JJ., of the Supreme Court of Canada. On October 30, 1997, the decision of the court was delivered in both official lan­guages and the following opinions were filed:

Iacobucci, J. (Lamer, C.J.C., Sopinka, Gonthier, Cory and Major, JJ., con­curring) - see paragraphs 1 to 110;

McLachlin, J., dissenting in part (La Forest and L'Heureux-Dubé, JJ., con­curring) - see paragraphs 111 to 151.