The recent decision from Ontario’s Superior Court Justice (“SCJ”), in Griffon Integrated Security Technologies et al. v. Valley Associates Inc. et al., 2023 ONSC 2200 [Griffon] has brought with it some reasoning reminiscent of a slightly older time in Canadian employment law. Specifically, the reasoning in Griffon partially adopted the abandoned approach of extending reasonable notice periods to dismissed employees where the employer engaged in bad-faith behaviour within the termination process.
Wallace and Honda
Until 2008, the leading decision on bad-faith conduct in termination, and how said conduct affected a reasonable notice period, was the Supreme Court of Canada (“SCC”)’s decision in Wallace v. United Grain Growers Ltd., 1997 CanLII 332 (SCC), [1997] 3 S.C.R. 701 [“Wallace”]. In short, Wallace outlined that where an employer engaged in bad-faith conduct while terminating an employee, said employee would be entitled to an enhanced reasonable notice period. This principle has been colloquially dubbed the “Wally Bump Up.”
In 2008, the SCC, in Honda Canada Inc. v. Keays [Honda], 2008 SCC 39, entirely revamped the approach to awarding bad-faith termination damages within the context of wrongful dismissal cases. In Honda, the SCC created a new framework in which reasonable notice periods were no longer extended for bad-faith conduct by an employer. Instead, Honda outlined that where an employer engaged in bad-faith conduct during a termination, there would be a required assessment of potential separate aggravated and/or punitive damages to both compensate the employee and punish the employer if necessary. Since Honda, the Wally Bump Up was no longer good law.
Griffon
Despite the Wally Bump Up being bad law, the decision in Griffon seems to adopt the approach for extending reasonable notice periods from Wallace.
The key facts and outcomes of Griffon are summarized as follows:
- The terminated employee was a Vice President and General Manager with 12 years of service.
- The employee was terminated without cause and without notice while battling colon cancer.
- The employee sued the employer for wrongful dismissal.
- Throughout litigation, the employer took a “scorched earth defence”, aggressively pursuing after-acquired cause with no evidence to support same, and launched a meritless counterclaim.
- The employee was awarded 20-months of pay in lieu of reasonable notice and $75,000.00 in punitive damages.
The outcome of Griffon is not surprising as these cases are relatively common. However, what was surprising was Justice MacLeod’s reasoning at paragraph 17, which states as follows:
“[17] The plaintiff did not seek to prove aggravated or moral damages independent of the pay in lieu of notice. The brutality of the dismissal, however, can be considered in determining the notice period because the completely unfounded allegations of dishonesty would have rendered it far more difficult for the plaintiff to find alternative employment.”
This reasoning was also used in paragraph 15 to support a 20-month notice period. On the one hand, the court in Griffon is saying that bad-faith conduct can increase a notice period. This would be a classic example of the Wally Bump Up and is bad law. However, on the other hand, the court further justifies the extended notice period by stating that employment was rendered more difficult to find as the direct result of the bad-faith conduct. This subsequent reasoning would be more in line with the purpose of a reasonable notice period at law, but still uses bad law as its foundation.
Conclusion
Griffon does not overtly “bump up” the reasonable notice period by a specified number of months due to the bad-faith conduct of the employer. However, it does take such conduct into account when deciding that a lengthier notice period should be awarded. This reasoning would run contrary to the SCC’s guidance in Honda. This is especially interesting as punitive damages were also awarded in Griffon through a wholly separate analysis as required by Honda. This may have potentially led to a situation where the employee was rewarded twice for the bad-faith conduct of the employer without even seeking an award to compensate him for same.
This blog post was written by Filip Szadurski, a member of our Employment Law and Commercial Litigation teams. He can be reached at 613-369-0382 or at filip.szadurski@mannlawyers.com.
