1. Go towww.canlii.org and search "Wallace v. United Grain Growers ltd" https://canlii.ca/t/1pfl8 (or see below)
2. Review the case
3. Using the following questions as your guideline, summarize your understanding of this prima facie case and its importance to employment contract law:
   1. Who are the stakeholders?
   2. What are the main issues for each stakeholder?
   3. What are the key legal issues based on Canadian employment laws?
   4. Which issues do you think became the central focus of the court case?
   5. Are damages for mental distress available to a former employee because of termination?
   6. Can the calculation of reasonable notice be extended as a direct result of the employer's conduct during termination?
   7. What do you think was the outcome or ruling in this court case?
   8. What legal precedents do you think were set because of this case?
   9. Offer your perspective on the importance of this case on common law of employment.

File No. CI 86-01-15299 (Winnipeg Centre)

COURT OF QUEEN'S BENCH OF MANITOBA

BETWEEN:

JACK WALLACE,

Plaintiff,

- and -

UNITED GRAIN GROWERS LIMITED carrying on business under the firm name and style of PUBLIC PRESS,

Defendant.

COUNSEL:

Plaintiff:

William P. Riley, Q.C. George J. Orle, Q.C. Sylvia Guertin, Q.C.

Defendant:

Robert F. Peters Robert Sokalski Robert A. Watchman

Judgment delivered: July 7, 1993.

LOCKWOOD. J.

The plaintiff claims damages for wrongful dismissal. In particular, he claims loss of income, including salary and commissions which he would have earned during the unexpired term of a fixed-term contract, or alternatively, would have earned under a period of reasonable notice. He also claims damages for mental distress or aggravated damages, punitive or exemplary damages and special damages.

On the opening day of the trial, December 12, 1988, the defendant withdrew its defence of dismissal for cause.

The defendant denies the claim for damages based on a fixed-term contract and raises the Limitation of Actions Act, R.S.M. 1987, c. L150, as a

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defence to the claim in tort for injury to the person, in this case mental distress, pleaded in the re-amended statement of claim.

Pursuant to an interlocutory motion made by the defendant, I made an order on October 20, 1992, granting the defendant leave to amend the statement of defence by adding paragraph 17:

"As of October 23, 1986, the plaintiff was an undischarged bankrupt, and he had this status from on or about September 26, 1985, until on or about December 29, 1988."

I also made an order striking out the statement of claim to the extent that relief was claimed which was vested in the plaintiff's trustee in bankruptcy, and in particular, those portions of the claim for relief which went beyond the claims for personal injury.

As directed by the Manitoba Court of Appeal, I shall assess damages as though that order had not been made, leaving it to the appeal stage to decide whether or not the order was justified.

SPECIAL DAMAGES

It is agreed that:

1. the plaintiff's annual income at the time of dismissal was $78,859.13 and that he was six years from 65, the age of retirement. Interest is to be added;

2. the claims under para. 4(c)(i) to (vi), inclusive, and paras. 13 and 14 of the Re-amended Statement of Claim are $191.66 per month, beginning September 1, 1986. Interest is to be added;

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3. the plaintiff was owed $3,346.13 in commissions. It was owing to him from July 1, 1987, and paid on December 13, 1991. Interest is to be added for the period during which it was unpaid;

4. the plaintiff is entitled to payment for earned or unpaid holidays as follows:

1 week earned in 1984 (1/52 x 1984 income $73,918) = $1,421.15

4 weeks earned in 1985 (4/52 x 1985 income $78,859.00) = 6,066.04

2.6 weeks earned in 1986 (2.6/52 x 1986 income $78,859.00) = 3,942.93

Interest is to be added from the end of the year following the year in which the vacation was earned. For example, the monies due for vacation earned in 1984 would be due by December 31, 1985;

5. claim is made for $13,443.10, with interest to the date of payment, for a salaried staff retiring allowance, in the event that there was a fixed-term contract. The claim is based on a letter dated January 24, 1986, raising the plaintiff's basic monthly salary to $3,152.00, and a letter dated August 8, 1986, establishing the salary for benefit purposes at $40,000.00 annually;

SUMMARY OF FACTS

The plaintiff will be 66 on September 10, 1993. Around 1947 he started work as an apprentice journeyman compositor with a printing company called Stovel. In 1953 he completed his apprenticeship when Stovel merged with another printing company and became known as Stovel Advocate. In 1957 Lawson Graphics, a national company in the printing trade, bought Stovel Advocate.

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Around 1960 the plaintiff went into sales. In the years 1966 to 1969, inclusive, he won first prize each year in national championships held across Canada and the United States. In 1970 he became Lawson's top salesman and kept that position until he left in 1972. By that time he had been employed by Lawson and its predecessor companies for a continuous period of 25 years. In late 1969 the company had bought a web press, the first in Winnipeg. It gave the salesmen greater opportunities. It speeded up the process of multicolour printing and was capable of producing catalogues in greater volume.

Towards the end of his career with Lawson he had a dispute with the company about an account he had obtained in Toronto to produce the Bulova Watch catalogue. The company would only pay him a finder's fee, rather than the commission to which he was entitled as a commissioned salesman. The commission would have been much more than the finders fee. In the second year, when he again obtained the account, the company wanted to increase the finder's fee and take the account away from him.

In 1971 Mr. Don Logan became the marketing manager of the publishing and printing divisions of Public Press. Mr. Jack Kyle, the general manager of Public Press, was his immediate superior. Kyle's immediate superior was Mr. Runciman, the President of United Grain Growers ('UGG").

Public Press, although a separate corporation from UGG, was a wholly-owned subsidiary of UGG in the early and mid-1970's. In the late 1970's the two companies merged, and Public Press was operated as a division of UGG. In 1991 the printing division of Public Press was sold by UGG.

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In early 1972 the commercial printing operation at Public Press had declined almost to the point of disappearance. Public Press was mainly printing magazines which it sent to various interested agricultural groups. Only 2% of its production was commercial printing. A decision was taken by UGG that rather than get out of the printing business they would up-date the printing plant to print their own magazines and seek a large volume of commercial printing work to make the operation profitable. The value of outside commercial printing at the time was some $200,000.00. Logan was given the task by the board of UGG to increase the volume to a value of $3,000,000.00. He recruited two additional salesmen to add to his existing staff of two. His evidence was that the key to achieving the greater volume was to hire someone with an existing record of sales on the web press. It involved a very special kind of printing, and his existing staff were more involved with a slower printing process. They had no aptitude for selling the volume of printing produced by the web press.

In April 1972 the plaintiff telephoned and then met Logan to discuss the possibility of employment. In June 1972 the plaintiff went to work for the defendant as a salesman; about 90% of his clients followed him.

From the time the plaintiff joined the defendant until he left in 1986 he was its top salesman. By 1976 the defendant was doing well and so was the plaintiff.

The general manger of UGG, Mr. G. W. Moore, sent the plaintiff a letter dated August 6, 1985, congratulating him on a record year of sales, establishing a new plateau. The letter continues:

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"This accomplishment during challenging economic times in the economy represents an excellent concerted effort on your part.

Again, congratulations on a job well done."

On February 1, 1986, Mr. Leonard Domerecki became the new sales manager of Public Press, and on February 15, 1986, Mr. Jim Kirch became its new general manager.

On February 18, 1986, the plaintiff and Domerecki met to discuss areas of concern to the plaintiff. In particular, they discussed a change in the compensation package for salesmen proposed by the defendant. The sales compensation plan was to take effect on August 1, 1986, the beginning of a new fiscal year. Further discussions took place in the intervening months. A final discussion was held on July 14, 1986. The compensation plan was to be signed by August 6, 1986. The plaintiff did not sign it. He was advised on August 7, 1986, that he would be employed and compensated on the terms set forth in the new agreement which applied to every sales representative employed by the defendant.

On August 20, 1986, the plaintiff met Domerecki to discuss the plaintiff's budget for sales and how he planned to achieve it in the fiscal year 1986-87. The plaintiff was concerned about para. 13 of the sales compensation plan dealing with the annual budget which was reviewed quarterly.

Para. 13 of the plan reads:

"The sales representative will be expected to meet the standards of "the business plan and the budgets as agreed to by the company and the sales representative. Should the sales representative fail to meet budget, then they will leave themselves subject to disciplinary action which may or may not include termination of employment."

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His concern was that his employment would be at risk if his production did not meet budget for any given quarterly period because sales could be higher or lower than budget in any given period. He told Domerecki that, on his interpretation of the plan, he could be dismissed even if he sold, overall, three times the amount that other salesmen sold. Domerecki told him that the clause was not meant to get him. The plaintiff replied that he still could not sign something which would authorize the company to dismiss him in_ the hypothetical situation that he put to Domerecki. At an earlier meeting he and another person had been told that they were expected to sign the document, but that they did not have to sign it.

At a meeting with Domerecki on the morning of August 22, 1986, the two had an altercation about a storage charge of $300.00 incurred by a client, Busy Bee, because the plaintiff had removed the charge from the quotation when submitting it to the client. The plaintiff told Domerecki that if he was concerned about it he would pay the money. The plaintiff then received a copy of a memorandum from Domerecki to Mr. Christie, their chief accountant, asking him to deduct the storage charge. Later on that morning, the plaintiff was asked to go to the boardroom where, in front of a witness, Domerecki told the plaintiff that he was no longer an employee of the company and to leave the building. He was not prepared to tell the plaintiff why. Only the day before Domerecki had shaken his hand and complimented the plaintiff on how well he was going to do in the coming year. Within the previous day or two Moore had told him to keep up the good work.

By letter of August 29, 1986, Domerecki advised the plaintiff that the main reason for his being terminated was due to inability to perform satisfactorily the duties of his position. In the defendant's record of the action

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taken the reason for the discharge was stated as, "Terminated for failure to operate and carry out responsibilities of his position".

The statement of claim was issued on October 23, 1986. In the statement of defence filed on December 17, 1986, the defendant maintained that the employment was terminated for reasonable and just cause. On the first day of the trial, December 12, 1988, the defendant withdrew that defence.

Domerecki testified that he was instructed by the general manager of Public Press, Kirch, to fire the plaintiff on the spot. He disagreed and said, "We don't have any reason to. If you are talking about this one instance, then that to me is not a reason to fire someone." The "one instance" he was talking about was the $300.00 storage charge that the plaintiff had undertaken to pay himself. He was then instructed by Kirch to go through the plaintiff's files and to take out anything that he felt "was of a derogatory nature to Mr. Wallace whether it be in his actions or his carrying on his duties or anything else related to his performance".

When the plaintiff was dismissed he had been employed with Public Press for 14 years. He was 59 years old.

FIXED-TERM CONTRACT

The plea under this head is that the employment would continue until the employee retired, subject only to termination for just cause.

This part of the claim is based mainly on a two-hour discussion in City Park with Logan which led to the plaintiff's employment with Public Press. At that time the plaintiff was 45 years old. His evidence was that he told Logan that at his age he would have to have a guarantee of security. That would be

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his main reason for making a move. By security he meant that he would expect to work until 65 or even longer. After 65 he would expect to carry on with a few major accounts. He told Logan that he was making good money at Lawson. He had a pension and the best of medical benefits. He worked on a strictly commission basis. The defendant only had a salary arrangement. Logan assured him that he would implement a commission basis for him. He discussed with Logan the case of a Mr. Michael Smando who had been dismissed from Lawson some six to eight months previously, in his view unjustly. It was very important to the plaintiff to know that he would be treated fairly by the defendant. He was told that what had happened at Lawson would never happen at Public Press. The plaintiff discussed the Bulova Watch account with Logan. He wanted assurance that accounts he had acquired would remain his accounts. He received such assurance. He told Logan that he was separated from his first wife and had established a relationship with his present wife. He felt telling him was the fair and right thing to do. Logan described the defendant's benefit package. It was much better than the one at Lawson. Logan told the plaintiff that he was interested in hiring him. The plaintiff tried to resolve the problem with the Bulova account, but was unable to do so. He then gave Lawson his notice and joined the defendant on June 6, 1972.

Logan testified that the plaintiff was very preoccupied about not endangering his secure employment at Lawson. That is why they met in City Park. He felt that at his age he had to be careful, but at the same time the plaintiff was exceedingly worried about the treatment that he was receiving and about the treatment others had received at Lawson. He had performed exceedingly well and was widely known to be their star salesman. He referred

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to the Bulova Watch account problem. Logan told the plaintiff that that sort of thing would never happen at Public Press or UGG. The plaintiff told him about the treatment of Smando. He was in charge of the renovation of a building in which the new web press was to be installed. When the job was just about done, the general contractor told him that he was going to throw out a black and white television set and asked him if he would like to have it. He accepted the offer. Because of this the general manager dismissed him. The plaintiff wanted assurance that people were not treated that way at Public Press. Logan told him that it had never happened and did not think it ever would. He subsequently hired Smando as a purchasing agent.

On the subject of remuneration, Logan told the plaintiff that he would be fairly treated at Public Press and that as long as he kept his hand out of the till there was no reason why he could not retire from Public Press. He mentioned two salesmen who were not particularly useful because they found it difficult to change to new practices. However, they had no thought of releasing them. They worked through to retirement. The plaintiff was looking for a job for the rest of his days. Logan told him that, if he performed as expected, he could be assured of a job. Logan talked to Kyle, the general manager, who agreed that there was no reason why the plaintiff should not be able to work until retirement if he worked well. The retirement age was 65. According to Logan, the plaintiff was hired on the terms Logan had outlined.

On June 8, 1972, Logan wrote to the plaintiff as follows:

"June 8, 1972

Mr. Jack Wallace

1007 - 234 Ronald Street

WINNIPEG, Manitoba R3J 3J4

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Dear Jack:

This letter is to confirm our conversation yesterday.

You will join Public Press June 22 as a Printing Sales Representative. Your basic drawing against commission will be $800.00 a month and you will receive a $90.00 a month car allowance. As I believe I mentioned, you will receive five cents a mile for out of town mileage only over and above the basic $90.00 allowance.

Rather than fix your rates of commissions at the moment, I will go into this in more depth and we will arrive at an arrangement mutually satisfactory in due course. I greatly appreciate the confidence you have that we will treat you fairly on this point, and you may be sure that events will justify this. I would not like to lock you into an arrangement now that might not work in your interest over the long haul.

As you know, I'm very enthusiastic about your coming with us. Congratulations, Jack, and my sincere best wishes for a long and happy association at Public Press. I look forward to seeing you tomorrow and will have your samples and estimate prepared for you. In the meantime, let me know if anything needs clarification.

Yours truly,

Don Logan

Director of Marketing"

Logan worked out and put into effect an improved remuneration programme in 1973 or 1974 which he said was designed to reward a man like the plaintiff. Logan left Public Press in 1975 to start his own business.

Mr. Raymond Cousineau joined UGG in 1967 as the personnel manager. His evidence was that in 1972 he was responsible for setting the employment policies for UGG and for Public Press. He communicated these policies to the management of Public Press which was required to run its

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employment matters in accordance with those policies. The manager of Public Press was responsible for handling its day-to-day employment matters.

Cousineau testified that in 1972 no employees of the defendant were hired with terms or conditions of employment that would guarantee their employment until they retired. If someone had wanted to change this policy, they would have had to do so by writing to the general manager of UGG, the president of UGG, or Cousineau himself. They were the only ones who could make a change to the employment policies of the two companies. The plaintiff did not seek such a change in 1972. He said that no contract of employment with UGG or Public Press included a term or condition that employment would continue until the employee retired, subject only to termination for just cause, or a term or condition that the company would treat the employee fairly, with due care and concern, in a civilized manner, and in good faith.

Counsel for the plaintiff emphasized the assurance of Logan that the kind of unfair treatment he was getting at Lawson would not happen to him at Public Press and that there was no reason why he could not retire from Public Press. He noted the testimony of Logan as to what he had said to and about the plaintiff:

"Jack, there is no earthly reason why you can't have a job for the rest of your days. If you perform like you say you're going to perform and like I believe you're going to perform ... And I might add like he did perform ... that he could be assured that he had a job. There was no way Public Press or UGG would release a man with no cause when he was performing properly."

Counsel submitted that that was the agreement for a fixed-term contract. The terms of the contract were that Logan agreed that the plaintiff could work at Public Press until his retirement age, provided he continued to

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perform adequately as a salesman. There was a promise that he would not be let go without real cause. There was a breach of that agreement.

Counsel referred to Logan's evidence that he told the general manager of Public Press, Kyle, of the plaintiff's concern about tenure and that Kyle agreed that he had no problem with tenure at Public Press if the plaintiff performed and that there was no reason why he should not retire from Public Press if he worked out. It was Logan's evidence that it was standard practice at Public Press to have an employment application form completed by a prospective new employee, but that this was not a standard deal. Counsel submitted that it was a mandate of the board of UGG to up-grade the staff of Public Press with the advent of the new equipment and that that mandate was given to Logan to carry out. It was Domerecki's evidence that they had no reason to fire the plaintiff and that the reason given for his dismissal was not true. Domerecki knew that it was not true and so did Kirch.

In my view, the making of a fixed-term contract, whilst not inconceivable, would happen rarely, if at all. A skilled employee may wish to better himself by moving to other employment. A company may wish to rid itself of an employee either for cause or without cause. In the latter event, it would have to compensate the former employee. In the present case, with 20 years still to go before retirement at 65, it is unlikely that either side would have wanted to limit itself to a fixed-term contract. I agree with counsel for the defendant that such a contract would be so special in nature that it would have to be worded in very explicit terms. He submitted that, even if the evidence of the plaintiff and Logan about the meeting in the park, given 20 years after the event, were accepted, it would not in itself be sufficient to warrant a finding that a fixed-term contract had been negotiated. Within a day or so of the event, what

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had been negotiated was expressed in writing by Logan. That letter dealt exclusively with compensation, which was uppermost in the plaintiff's mind when the discussions took place. The letter invited the plaintiff to reply to the letter and deal with any matter not dealt with to his satisfaction. He did not reply.

Counsel submitted that the plaintiff's position is inconsistent with the defendant's employment policy:

"It is the Company's intent to provide continuous employment to all employees. However, conditions may arise which necessitate the termination of an employee or a decrease in the working force. When a termination of employment, other than discharge for cause has been initiated by the Company, specific notice must be given and a payment will be made to the employee which will assist in making an adjustment until other employment is found."

I agree with counsel for the defendant.

I find that there was no fixed-term contract. I accept Cousineau's evidence that a change in the policy of the company would require the approval either of himself or a higher authority, namely, the general manager or president of UGG.

REASONABLE NOTICE

The leading case on wrongful dismissal is Vorvis v. I.C.B.C. (1989), 1989 CanLII 93 (SCC), 58 D.L.R.(4th) 193 (S.C.C.). At pp. 199-200, McIntyre J. states:

"The law has long been settled that in assessing damages for wrongful dismissal the principal consideration is the notice given for the dismissal. A contract of employment does not in law have an indefinite existence. It may be terminated by either employer or employee and no wrong in law is done by the termination itself. An employee who is dismissed is entitled to the notice agreed upon in the employment contract or, where no notice period is specified in the contract, to reasonable notice. He is entitled in the alternative in the absence of due notice to payment of remuneration for the notice period. .."

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Factors to be considered in determining reasonable notice include the length of service, the age of the employee, the nature of his employment, the history of the relationship, the plaintiff's qualifications, and the availability of similar employment. The plaintiff is under a duty to take reasonable steps to mitigate his loss.

The plaintiff started looking for employment shortly after his dismissal. He sent out the first letter with a resum attached on October 28, 1986, one month after receiving the letter of September 29, 1986, from the defendant alleging cause for dismissal. He sent out three applications that year, two of them to the same company; five in 1987, one of them to Lawson Graphics in Toronto; one in 1988 to United Grain Growers; four in 1989. He received four replies, all of them polite but negative. This perhaps is not surprising in view of the evidence that word had got around in the trade that the plaintiff must have done something reprehensible to have been dismissed by the defendant. As it was, in the absence of other employment, he helped his eldest son who worked for a competitor of Public Press to get clients from the defendant. He continued to do so throughout 1987. At some point in 1988 he obtained part-time work.

In the above circumstances, I find that the plaintiff did what he reasonably could do to mitigate his damages.

Taking the above factors into account, and particularly the fact that the peremptory dismissal and the subsequent actions of the defendant made other employment in his field virtually unavailable, I conclude that an award at the top of the scale in such cases is warranted. I, therefore, fix 24 months as the period of reasonable notice. Since the plaintiff's annual income at the time of

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dismissal was $78,859.13, I assess his damages under this head at $157,718.26.

MENTAL DISTRESS

The claims for mental distress were made both in contract and in tort.

Claim in Contract

The claim under this head is for damages for breach of the employment contract, including damages for mental distress, loss of reputation and prestige, and punitive damages.

The issue in Vorvis was whether punitive damages or aggravated damages could be awarded by the court in an action for wrongful dismissal and whether the circumstances of the case would merit such an award. McIntyre J. reviews the authorities on pp. 200-204. He states that a consideration of this topic starts with Addis v. Gramophone Co. Ltd., [1909] A.C. 488 (H.L.) and concludes that aggravated damages could be awarded in actions for breach of contract in appropriate cases.

At p. 204 he states:

.. There is English authority for the proposition that the Addis case will not bar a claim for general damages for mental distress in an action for a breach of contract: see Jarvis v. Swans Tours Lat., supra; Cox v. Philips Industries Ltd., supra; Heywood v., Wellers (a firm), [1976] 1 All E.R. 300 (C.A.). These cases stand for the proposition that in some contracts the parties may well have contemplated at the time of the contract that a breach in certain circumstances would cause a plaintiff mental distress. This line of authority was followed by Linden J. in Brown y. Waterloo Regional Board of Com'rs of Police (1982), 1982 CanLII 1939 (ON SC), 136 D.L.R.(3d) 49, 37 O.R.(2d) 277, 17 B.L.R. 299 (Ont.H.C.). In the Court of Appeal in that case, per Weatherston J.A. writing for the court, 1983 CanLII 1697 (ON CA), 150 D.L.R.(3d) 729, 43 O.R.(2d) 113, 23 B.L.R. 41,

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the award of damages for mental distress was disallowed, but it may be said that the' power of the court to award damages upon that basis in an appropriate case was implicitly accepted."

After referring to other Canadian cases which follow that line of authority, he states at pp. 204-205:

"From the foregoing authorities, I would conclude that while aggravated damages may be awarded in actions for breach of contract in appropriate cases, this is not a case where they should be given. The rule long established in the Addis and Peso Silver Mines, cases has generally been applied to deny such damages, and the employer/employee relationship (in the absence of collective agreements which involve consideration of the modern labour law regime) has always been one where either party could terminate a contract of employment by due notice, and therefore the only damage which could arise would result from a failure to give such notice.

I would not wish to be taken as saying that aggravated damages could never be awarded in a case of wrongful dismissal, particularly where the acts complained of are also independently actionable, a factor not present here. As noted by Hinkson J.A. in the Court of Appeal at p. 46:

'It was not suggested by the plaintiff that Reid's actions in the months prior to his termination constituted a breach of contract. Upon the basis of the reasoning in the Brown case, Reid's conduct was not a separate head of damages in the claim for breach of contract.'

In her dissenting judgment, Wilson J. said that she disagreed with her colleague's view, "that conduct advanced in support of a claim for damages for mental suffering must constitute a separate actionable wrong from the breach itself".

The question in this case is whether the conduct of the defendant constituted a separate actionable wrong.

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The plaintiff relied on Pilon v. Peugeot Canada Ltd. (1980), 1980 CanLII 1631 (ON SC), 114 D.L.R.(3d) 378. In that case there was a claim for mental distress for breach of contract on the part of Peugeot when it terminated the employment of Pilon. The trial judge, Galligan J. is reported as saying that he was satisfied that the termination of the plaintiff's long-term employment caused the plaintiff serious mental distress and that the method of terminating his employment aggravated that distress. He reviews the authorities, beginning with Addis, and accepts the principle of law stated by Borins J. in Newell et al. v. Canadian Pacific Airlines, LW, (1976), 1976 CanLII 820 (ON SC), 14 O.R.(2d) 752 at p. 767, 74 D.L.R.(3d) 574 at. p. 583 (at p. 382 Pilon). In the Newell case, Borins J. states that the plaintiff may recover damages in a proper case "where in the contemplation of the parties vexation, frustration and distress are likely to result and do in fact result from a breach of contract". Galligan J. then considers what must have been within the contemplation of the parties and concludes at p. 383:

" .. In my opinion, it cannot fail to have been in the contemplation of the defendant that if it suddenly, without warning, unlawfully discharged a man whom it had led to believe was secure in his job for his working life, there would be the gravest likelihood that such a man would suffer vexation, frustration, distress and anxiety."

It is clear from the evidence of Logan that there was a special relationship between the parties in this case. The defendant wanted a man with the skills of the plaintiff and to get him was prepared to accommodate his demands, particularly with respect to compensation. The plaintiff was also assured that if he did no wrong he could expect to continue to work for the defendant until retirement. I have found that there was no fixed-term contract. However, there was, in the assurance given to him, a guarantee of security, provided he gave the defendant no cause to dismiss him. He was dismissed without cause, and that fact was only admitted belatedly.

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I find that, as in Elm, it must have been in the contemplation of the defendant that if the plaintiff, having been given such a guarantee, was unjustifiably dismissed without warning, he would probably suffer mental distress. I find it to have been an implied term of the contract of employment.

The dismissal would constitute a separate actionable wrong.

Claim in Tort

The claim under this head is for damages for negligence, including punitive damages or, alternatively, aggravated damages for wilful or negligent infliction of harassment and oppression on the plaintiff.

This claim is made on the basis of what Anderson J.A. says in the British Columbia Court of Appeal in Vorvis, (1984), 1984 CanLII 489 (BC CA), 9 D.L.R.(4th) 40, at p. 54:

"If the pleadings of the appellant had included a claim for breach of an implied term of the contract of employment, not to be subject to harassment or oppression, the appellant might have succeeded in obtaining damages for mental distress. In the alternative, if proceedings had been brought in tort, the appellant might have succeeded."

And at p. 55:

"In summary, in an action for wrongful dismissal, the plaintiff may include a claim for breach of an implied term of employment not to harass, oppress or inflict injury on an employee. The plaintiff may also include a claim in tort for wilful or negligent infliction of mental suffering or for harassment..."

It is because of that statement that the present claim in tort was made in the re-amended statement of claim.

The plaintiff relies on Rahemtulla v. Vanfed Credit Union, 1984 CanLII 689 (BC SC), [1984] 3 W.W.R. 296 (B.C.S.C.). In that case, the plaintiff was a teller with a credit union. She was dismissed after being wrongfully accused of theft. During the trial an

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amendment to the pleadings was permitted to enable a claim for damages for mental distress to be made in tort. She was unable to recover damages for mental distress in contract because her distress did not flow from the failure to give adequate notice. She did recover damages for wilful infliction of mental distress because she was dismissed for alleged theft without being given an opportunity to defend herself or clear her name. The court found that the defendant's conduct was flagrant and outrageous and calculated to produce an effect of the kind which was produced and that it did cause actual harm, a visible and provable illness.

The plaintiff's evidence was that upon being told that he had been dismissed he was bewildered and devastated. Only the day before, Domerecki had shaken his hand and said how well he was going to do in the coming year. The day before that the general manager, Gerry Moore, told him to keep up the good work. By the time that he received the letter from Domerecki of August 29, 1986, he had consulted counsel who sent a letter to Domerecki dated September 8, 1986, in which she expressed the opinion that the plaintiff had been dismissed without adequate notice and referred to the matter of the outstanding monies in lieu of vacation, commissions payable on sales and other various matters. When the reply to that letter was received in a letter dated September 29, 1986, referring to the cause of his termination, he again was devastated and felt sick. It seemed that his life was over. His job was almost the most important thing in his life. He had suicidal thoughts. When his wife suggested that he see a doctor he treated her unfairly. They had had a wonderful relationship. He could not understand why she stayed with him. He was afraid a doctor might confirm that he was "nutsTM. He was unable to control himself. This existed until he saw his doctor in 1988. When he testified on

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May 4, 1992, he said that he still had many problems and that was why he continued to see the psychiatrist. Except for his eldest son, he did not tell his children about his situation because he was ashamed and embarrassed.

The evidence of the plaintiff's wife was that he looked in shock when he got home on the day of his dismissal. After that day he behaved as though he would be recalled. When he received the letter of August 29, 1986, he became angry. His behaviour worsened after receiving the letter of September 29, 1986. He was really upset and angered by what was said about him. He became less concerned about his appearance. He was very irritable. In her view, he should have been able to put it behind him and get on with his life, but because of his erratic behaviour she tried to convince him to see a doctor. He rejected that advice. He came from a family that did not go to doctors. His wife thought that during the time of her association with him he had been to a doctor one other time because of lung congestion. He was angry all the time, to such an extent that they could not have people over to the house. After December 1988 his behaviour deteriorated. He had been applying for jobs by sending out resums and in most cases not getting replies He seemed to be losing his self-esteem and was lacking confidence in himself. He had told his eldest boy, who was in the printing trade, about his dismissal. Word got around, and it was rumoured in the trade that he had been involved in some wrongdoing. He had difficulty concentrating on anything other than his obsession with the case. Eventually she insisted that he see a doctor. He had a recurrence of lung congestion, and for a time his blood pressure was so high that he had to see the doctor twice a week. She testified that her relationship with the plaintiff had been deteriorating for six years. She said that in 1988 he started saying that he was worthless and that they would all be better off if he

[Page 22]

was not around. She thought that even though he had been under doctor's care he was just one step away from suicide. She thought he could do it. Before his dismissal the plaintiff handled his day-to-day work with care. He was outgoing and friendly. She had probably never seen him angry. He had a great ability to concentrate. He met the needs of his clients, and some of them became personal friends. Her evidence was not challenged by cross-examination, and I accept it in its entirety.

Unlike the plaintiff in Rahemtulla, the plaintiff in the present case did not suffer an immediate acute reaction to what had happened, presumably because of his hope of getting his job back. He was referred to Dr. Milanese, a psychiatrist, but that was not until February 1989. It seems that he had originally been referred to another doctor for psychiatric treatment in November 1988. It was the evidence of Milanese that he saw the plaintiff to assess him for depression to see whether he could be treated. He found that he could and began treatment in the same month. Shortly afterwards, the treatment was interrupted because the plaintiff no longer wished to receive treatment. After approximately two months he came back. In his report of December 19, 1989, Milanese said that in the past two years the plaintiff had developed hypertension which had been partially responsive to treatment. However, of more significance, his mental health had deteriorated since the dismissal.

What was not disclosed to Milanese, or indeed to the court until the fall of 1992, after Milanese gave his first testimony on May 7, 1992, was that the plaintiff had been an undischarged bankrupt from September 26, 1985, until he was granted an absolute order of discharge on December 21, 1988.

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In cross-examination on May 7, 1992, Milanese admitted that a severe financial problem that could lead a person to assign himself into bankruptcy could also cause a depression. He denied that it could cause the depression that he was referring to. In his testimony of April 30, 1993, fully apprised by now of the bankruptcy proceedings and related matters, when asked whether that would change his opinion, Milanese replied that it would not. He even went so far as to say that when the plaintiff did file for bankruptcy. He felt a sense of relief in being able to move on with his life. Milanese agreed that stress was an important factor in depression and that in psychiatric medicine there was a lower level of certainty than in other areas of medicine as to what precisely causes mental problems such as depression. He agreed that, according to the Holmes and Ray Scale, which rates the impact of stress factors on mental health, being fired at work has a stress value of 47, bankruptcy a mean value of 39, a major change in one's financial state 38, and foreclosure on a mortgage or a loan 30. He also agreed that such events had a cumulative effect and that the more of such events there are within a certain time period, such as one year, the more profound their effect. Milanese had relied upon facts provided to him by the plaintiff, which did not include the bankruptcy proceedings. Milanese agreed that the plaintiff, as a proud person, would suffer anxiety and stress by keeping inside of him all the facts about his business losses, his bankruptcy, and his gambling. Milanese testified on May 7, 1992, that when he first saw the plaintiff in February 1989 he could not have participated in a job interview because he was too depressed and too anxious, with an impaired ability to concentrate and to follow, at times, basic trains of thought. He felt that the plaintiff would have been ready to start trying to participate in a job interview approximately a year later.

[Page 24]

Milanese admitted that after the bankruptcy documents were filed as an exhibit and he had had the opportunity to review them he had discussions with the plaintiff and his counsel about such matters before he returned to give evidence on April 13, 1993. Notwithstanding those facts, Milanese still maintained, on his second appearance, that the plaintiff's stress was caused solely by the dismissal.

Counsel for the plaintiff submitted that all of the plaintiff's financial problems came to a head when he declared personal bankruptcy on September 26, 1985. At that time he was the top salesman in the company, and his financial problems did not cause a depression at that time. If they were to cause a depression, there is no reason why they would have caused a depression after 1986 rather than before. In 1974 he made an assignment of wages pursuant to a judgment made against him. In 1984 and 1985, continuing to the time of the bankruptcy, garnishing orders were made against him as a judgment debtor with respect to several judgments. Third party notices were issued in 1984 to his employer by Revenue Canada. Counsel submitted that there was a culmination of his financial difficulties in 1984 and 1985, but no evidence that they caused him depression. His wife's evidence was that until 1986 he had no problem getting along with his clients. There was uncontradicted evidence that those financial problems played no part in his mental health or stability at any time. It was the evidence of Milanese that to assess a stress factor one must look at the individual. The financial problems were there before 1986 and did not cause a depression because the plaintiff did not find them stressful.

Counsel for the defendant submitted that, in view of the admissions made by Milanese about other causal factors of stress and the facts

[Page 25]

which eventually emerged with the production of the bankruptcy file, I should not accept the conclusion arrived at by Milanese that the plaintiff's stress was caused solely by the dismissal. He submitted that because of the plaintiff's failure to disclose all his other problems to his psychiatrist, I should attach little, if any, weight to the only report he filed, that of December 19, 1989. He submitted that in assessing the weight to be given to expert evidence the court must look at the sufficiency and the quality of the information received by the expert. He cited the statement of Sopinka J. in A. v. Lavallee, 1990 CanLII 95 (SCC), [1990] 1 S.C.R. 852, at p. 900:

"Where, however, the information upon which an expert forms his or her opinion comes from the mouth of a party to the litigation, or from any other source that is inherently suspect, a court ought to require independent proof of that information. The lack of such proof will, consistent with Abbey, have a direct effect on the weight to be given to the opinion, perhaps to the vanishing point..."

I note that the statement continues with the following words:

"... But it must be recognized that it will only be very rarely that an expert's opinion is entirely based upon such information, with no independent proof of any of it. Where an expert's opinion is based in part upon suspect information and in part upon either admitted facts or facts sought to be proved, the matter is purely one of weight. In this respect, I agree with the statement of Wilson J. at p. 896, as applied to circumstances such as those in the present case:

:.. as long as there is some admissible evidence to establish the foundation for the expert's opinion, the trial judge cannot subsequently instruct the jury to completely ignore the testimony. The judge must, or course, warn the jury that the more the expert relies on facts not proved in evidence the less weight the jury may attribute to the opinion.'"

In view of the admissions made by Milanese about other causal factors of stress and the facts which eventually emerged with the production of the bankruptcy file, I do not accept the conclusion arrived at by Milanese that the

[Page 26]

plaintiff's stress was caused solely by the dismissal.. However, in spite of the plaintiff's failure to disclose his financial problems to Milanese, there is the uncontradicted evidence of the plaintiffs wife which to a large extent supports his opinion that the dismissal and subsequent events shattered the plaintiff's sense of worth, with the result of multiple symptoms of anxiety and depression, that the plaintiff suffered a severe psychological blow to this identity and sense of being, and that he had suffered marked, and possible permanent, psychological trauma.

I accept the fact that until the plaintiff was dismissed the bankruptcy and related financial problems did not affect his performance at work. That being the case, I find that, whilst the bankruptcy proceedings must have caused the plaintiff an increasing degree of stress, the major component in his depression was the dismissal itself.

I turn now to the part of the claim relating to the allegation of wilful or negligent infliction of harassment on the plaintiff.

Domerecki gave evidence of the instructions he was given by Kirch in dealing with the plaintiff. He and Kirch drafted a letter to be sent to the plaintiff. He testified:

"Q Were there other instructions that he gave you?

A Basically to make sure that everything that we did have was in order and that what we could use in any litigation was there and that we were to just make sure everything was in the box, that we were going to play hardball with him, that we were going to make sure that we have all the information that we require."

[Page 27]

The submission of counsel for the plaintiff was that the kind of hardball that they played can be seen in the pleadings where it is stated, in para. 8 of the statement of defence:

"The grounds for termination were insubordination, failure to safeguard confidential information, exceeding his authority, hindering customer relations, incompetence to perform duties, conduct injurious to the defendant and conflict of interest."

And, at para. 10 of the statement of defence:

"That while the grounds for termination set out in paragraph 8 "herein did exist, the defendant, after pre-trial discoveries, withdrew its allegation that such grounds were cause for termination in the circumstances."

Counsel for the plaintiff submitted that they went looking for trumped up reasons, rather than treating the plaintiff fairly. He submitted that the plaintiff was met with a statement of defence which was based on the premise that there was cause when the defendant knew there was no cause. It was a continuation of hardball tactics. Counsel referred to the evidence of Prof. Terrill Hercus who testified as to the kinds of things the company would normally do to help a dismissed employee and the fact that if it is not done internally, then the normal practice is to consult people who do that kind of thing for a living. In his report, he said:

"If an employee was terminated without any reason being given, without any notice provided, without any assistance being offered, without any exploration of alternative situations in the company while receiving positive feedback about his job performance in the way of sales results and commissions, then the predictable consequence would be 'mental anguish and trauma'."

Counsel submitted that, on the basis of his evidence, the mental anguish would be foreseeable.

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Counsel referred to the examinations for discovery of the plaintiff in 1987 and 1988, at which time the allegations in para. 8 of the statement of defence were explored. The plaintiff denied those allegations, and he had never received any written or verbal notice of them. Counsel submitted that such allegations, repeated in the pleadings and discoveries, were part and parcel of the mental distress caused to the defendant. They continued until the day that the trial began, December 12, 1988. In his evidence, the plaintiff, commenting on the repetition of the allegations at discovery, answered:

"It seemed like they were trying to totally destroy me. That it was just unbelievable that they would keep this up when they knew, they had to know, it wasn't true."

Counsel submitted that such behaviour should lead to compensation for mental distress by way of aggravated damages and should probably lead to punitive or exemplary damages.

I agree with counsel for the plaintiff that such behaviour should certainly lead to compensation for mental distress by way of aggravated damages. I note that despite the withdrawal of the plea of just cause, the defendant, to the end, maintained, in a written submission, the position that "reasons did exist for Public Press to be dissatisfied with Mr. Wallace's performance as an employee".

I do not agree. I accept the evidence of Domerecki and, in particular, his testimony that the defendant did not have any reason to dismiss the plaintiff and that the reason given in his letter of August 29, 1986, was not true.

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The claim in tort, in part, was inspired by what was said by Anderson J.A. in Vorvis. The majority in the Supreme Court of Canada made no comment on his statement. It could well be implied, therefore, that such a claim might qualify as a separate actionable wrong from the breach itself, given the proper circumstances. In my view, such circumstances exist in this case.

I find that it was reasonably foreseeable that mental distress would result from the manner in which the dismissal was handled and also by the decision to play hardball with the plaintiff. That decision resulted in the defendant maintaining the plea of just cause for some two years and four months, during which time the plaintiff undoubtedly suffered further mental distress. There was, consequently, a negligent breach of the duty of care warranting compensation by way of aggravated damages.

I have already dealt with the issue of mitigation under the head of reasonable notice. The comments I made on that issue are equally applicable under the present head.

Awards for aggravated damages resulting from mental distress in such cases have tended to be, on average, fairly modest. However, this is an unusual case in which the mental distress was caused not only by the nature of the dismissal, but also by the subsequent harassment of the plaintiff. The position taken by the defendant to maintain the plea of just cause in itself undoubtedly must have aggravated the initial distress resulting from his dismissal.

In these circumstances, and having found that the defendant is liable both in contract and in tort, I fix the award under this head at $15,000.00.

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LIMITATION OF ACTIONS

In the statement of defence to the re-amended statement of claim, the defendant pleads that any allegation of injury to the person not contained in the original statement of claim that did not arise within two years of the amendment and re-amendment of the statement of claim is barred by s. 2 of the Limitation of Actions Act, (above). Section 2(1)(e) of the Aa provides:

"The following actions shall be commenced within and not after the times respectively hereinafter mentioned:

....

(e) actions for ... injuries to the person, whether caused by misfeasance or non-feasance, and whether the action be founded on a tort or on a breach of contract or on any breach of duty, within two years after the cause of action arose;"

The plaintiff was dismissed on August 22, 1986. The statement of claim was issued on October 23, 1986. It was amended on December 12, 1988, some two years and four months after the dismissal. It was re-amended in December 1991, more than five years after the dismissal. In para. 6 of the original statement of claim, there was an allegation that the defendant was under a duty of care to bring about the termination in such a way so as to avoid mental anguish and suffering and loss of reputation.

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Paragraph 6 became para. 7 in the re-amended statement of claim. In this paragraph the plea is that the defendant was under a contractual obligation, or alternatively, owed a duty of care to the plaintiff to bring about any termination of the contract of employment without cause in such a way as to avoid exposing the plaintiff to mental anguish and suffering and loss of reputation.

It was stated by counsel for the plaintiff that the amendments were made so as to leave the reader in no doubt that the plaintiff's claim for mental distress was founded in contract and/or in tort and that the continued assertion of unjustified allegations of cause from August 22, 1986 to December 12, 1988, was a relevant issue because they caused damage to the plaintiff. The amendments were made on December 12, 1988, because of what Anderson J.A. said in the British Columbia Court of Appeal in Vorvis, about making a claim in tort in an action for wrongful dismissal.

The position of the plaintiff is that harassment and oppression were a continuing tort which took place after the termination of the employment and that in para. 6 of the original statement of claim the reference to the duty of care included the contractual obligation, as well as that in tort. Counsel submitted that the duty of care was there before the amendment was made.

The position of the defendant is that the amendments were made beyond the limitation period, and the plaintiff did not apply for a waiver or extension of that period.

I accept the plaintiff's submission that in para. 6 of the original statement of claim the plea of a duty of care was sufficient to support the present claim and that the re-amendment was made after the Vorvis decision so as to make that absolutely clear.

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PUNITIVE DAMAGES,

In the present case there are claims for punitive damages in para. 16(b) of the re-amended statement of claim:

"Damages for breach of the employment contract, including damages for mental distress, loss of reputation and prestige and punitive damages"

And in para. 16(e):

"Damages for negligence including punitive damages, or, alternatively, aggravated damages for wilfull (sic) or negligent infliction of harassment and oppression on the Plaintiff"

The claims are summarized in paras. 10 and 11 of the re-amended statement of claim:

"10. By conducting itself as aforesaid, the Defendant has acted:

(a) Arbitrarily, arrogantly and contemptibly;

(b) wantonly, unreasonably and in plain disregard of the rights and interests of the Plaintiff and the Plaintiff is entitled to punitive damages.

11. Further, or in the alternative, commencing on August 22, 1986 the Defendant has been guilty of improper, insulting and callous conduct which constitutes wilfull (sic) or negligent infliction of harassment and oppression on the Plaintiff."

It is clear from Vorvis, that an award of punitive damages would be very rare in breach of contract cases and that the kind of conduct which might lead to an award would have to be of a "harsh, vindictive, reprehensible and malicious nature". The conduct would have to be so extreme "that by any reasonable standard it is deserving of full condemnation and punishment".

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At p. 208 of Vorvis, McIntyre J. illustrates that view by citing Clement J.A. in Paragon Properties Ltd. v. Magna Envestments Ltd. (1972), 1972 ALTASCAD 8 (CanLII), 24 D.L.R.(3d) 156, at p. 167:

"...The basis of such an award is actionable injury to the plaintiff done in such a manner that it offends the ordinary standards of morality or decent conduct in the community in such marked degree that censure by way of damages is, in the opinion of the Court, warranted..."

And, at pp. 208-209 of Vorvis:

"In other cases the same principles have been expressed: see Warner v. Arsenault (1982), 53 N.S.R.(2d) 146 (N.S.S.C.A.D.) where Pace J.A., speaking for the court, made the following statements in respect of the circumstances which will permit the awarding of punitive damages, at p. 152:

"Exemplary or punitive damages may be awarded where the defendant's conduct is such as to merit punishment. This maybe exemplified by malice, fraud or cruelty as well as other abusive and insolent acts towards the victim...'"

In Meyer v. Gordon (1981), 17 C.C.L.T. 1 (B.C.S.C.), Legg J. says at p. 53:

"I am unable to find in the defendant's conduct that character of high-handedness, maliciousness, contempt of the plaintiff's rights or that disregard of every principle of decency which is the foundation of an award of exemplary and punitive damages."

I do not consider the allegations in paras. 10 and 11 of the re-amended statement of claim, as they relate to punitive damages, taken in the context of this case, sufficient to constitute an actionable wrong or to be of such an extreme nature as to warrant condemnation by an award of such damages either in contract or tort.

I note that the claim under para. 16(e), the claim in tort, seeks punitive damages or aggravated damages in the alternative. Since I have

[Page 34]

already made an award of aggravated damages, the claim for punitive damages under that head would seem to be precluded by the very wording of the claim.

In brief, I do not find that the conduct of the defendant, in playing the so-called hardball, was sufficiently reprehensible to warrant an award of punitive damages, and I decline to do so.

The plaintiff will have judgment for:

1. Items 2 to 4, inclusive, of the agreed special damages;

2. Damages for wrongful dismissal $157,718.26

3. Aggravated damages 15,000.00

4. Prejudgment interest in accordance with the provisions of the Queen's Bench Act, S.M. 1988-89, c. 4, Cap. C280 under item 1 and compensation for loss of opportunity to invest the sums under items 2 and 3, at 3% per annum as provided by the same Ant.

The amounts are to be calculated by counsel. If they cannot agree, they may speak to me. Counsel may also speak to costs.