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CCCA_V3No3_Col-MillerThom-FIN.qxd:CCCA_V1No2_Col-LabrEmpl-V1.qxd 9/16/09 10:15 AM Page 40 Legal Update – Miller Thomson LLP The Death of the “Bump” Calculation of Wallace Damages in the Post-Keays Era. hile many employers have celebrated much altered. testified about the depression that had result- Wthe Supreme Court of Canada’s deci- Several cases after Keays illustrate the evi- ed from the plaintiff’s work conditions.The sion in Keays v.Honda [2008] 2 S.C.R.362,it dence now necessary to prove Wallace dam- court calculated Wallace damages like person- has led to a great deal of confusion regarding ages. In Smith v. Centra Windows Ltd. 2009 al injury damages, setting “pecuniary Wallace the calculation of Wallace damages. Prior to BCSC 606,the plaintiff alleged Wallace dam- damages” at $5,000 and “non-pecuniary the decision in Wallace v.United Grain Growers ages arising from his employer’s conduct, Wallace damages” at $12,000. Ltd [1997] 3 S.C.R.701,a plaintiff employee including unfounded allegations of cause and In Simmons v.Webb (2008), 54 B.L.R. (4th) had to prove the existence of an independent a company-wide email discussing the plain- 197 (Ont. S.C.J.), the plaintiff, a 20-year actionable wrong to receive compensatory tiff’s termination.The plaintiff had obtained employee,had debilitating arthritis.The com- damages. Wallace allowed courts to exercise counselling and was diagnosed with depres- pany dismissed him by letter and demanded their discretion in extending an employee’s sion“related to his loss of work.”Considered that he remove his belongings immediately. notice period if an employer was found to be in the context of pre-Keays jurisprudence, Medical evidence was led as to the depression untruthful,misleading or unduly insensitive in this may well have resulted in a significant and deterioration of the plaintiff’s health fol- the course of termination. “bump” in the notice period. The court lowing termination, yet there was also evi- In Keays, damages for conduct in the held, however, that there was insufficient dence of his plans to find work shortly after course of a dismissal were again significantly proof to establish that the manner of termi- termination.The court, with little reference altered.The court held that there was no jus- nation had caused mental distress, suggesting to evidence or authority, awarded Wallace tifiable distinction between “true aggravated that more testing was required. damages of $20,000. damages” from an independent actionable An even greater departure from the pre- While Keays states that an independent wrong and“moral damages”(or Wallace dam- Keays jurisprudence is Fox v. Silver Sage actionable wrong is not necessary to establish ages) from the manner of termination. Housing Corp. (2008), 319 Sask. R. 179 Wallace damages,the fact that Keays requires a Damages will only be available for conduct in (Q.B.). The court found that the defendant dismissed employee to prove a breach of the the course of termination “where the parties had “engaged in a phony budgeting process” duty of good faith that has caused “actual have contemplated at the time of the contract to “get rid of” the plaintiff. Citing Keays, damages”has resulted in an analysis much like that a breach in certain circumstances would however,the court noted the plaintiff had not any case alleging an independent tort. cause the plaintiff mental distress.” Damages shown he had undergone treatment for men- Employees alleging Wallace damages must may be founded on the breach of the employ- tal distress and held the plaintiff must prove have compelling medical evidence proving a er’s implied duty of good faith, but more “he suffered damages as a result of the man- causal link between mental distress and the importantly from the perspective of calculat- ner of his dismissal…[a]s bad as this employ- manner of termination that had resulted in ing damages, the court in Keays stated: er’s behaviour was towards [the Plaintiff], he quantifiable non-pecuniary damage. Until has not proven that the stress and depression jurisprudence on post-Keays damages is plen- …no extension of the notice period is to be he suffered is related to the manner in which tiful and patterns begin to emerge, venturing used to determine the proper amount to be he was treated.” into the courtroom to attempt to prove paid…if the employee can prove that the man- ner of dismissal caused mental distress that was One case considering the quantum of post- Wallace damages may be a “bumpy” ride. in the contemplation of the parties,those dam- Keays Wallace damages is Bru v. AGM ages will be awarded not through an arbitrary Enterprises Inc. 2008 BCSC 1680. Here, the Erin A.Viala is an associate in the Calgary office. extension of the notice period, but through employer attempted to characterize the plain- She is a commercial litigator specializing in labour an award that reflects actual damages. tiff’s frustration with her work environment as and employment law, commercial debt recovery and [Emphasis added] a resignation. The court held the employer insolvency and restructuring. Michael D. Aasen is Given that Keays has now mandated proof had acted unfairly and was insensitive to the a partner in the Calgary office. He is a commercial of “actual damages,” rather than an arbitrary plaintiff’s vulnerable emotional state. The litigator with a focus on employment law, oil and “bump” in this notice period, the evidence court required proof,however,of a true“psy- gas litigation and construction claims. (eviala@ required to establish Wallace damages is chological injury,”and the plaintiff’s physician millerthomson.com,maasen@millerthomson.com) 40 CCCA Canadian Corporate Counsel Association FALL 2009