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Unfounded claims for “Wallace” damages may result in sanctions
May 31, 2005

In the Supreme Court of Canada’s 1997 decision in Wallace v. United Grain Growers, the Court held that employers owe employees a duty of good faith and fair dealing in the manner of their dismissal from employment. The decision permits courts to increase the notice period of dismissed employees who are treated in a “high-handed” manner by their employers.

A recent decision of the Ontario Superior Court of Justice indicates that routine claims for “Wallace damages” that are not justified by the facts should be discouraged. The Court concluded that such claims seriously impede the potential resolution of disputes which could otherwise be settled prior to trial. In addition, the assertion of specious Wallace claims wastes valuable court time, increases the costs of all parties and generally drives the parties apart.

The Court cautioned that sanctions for such claims could include a reduction of either the costs awarded to a party or the amount of damages awarded for such dismissal claims.

Yanez v. Canac Kitchens, 2004 CanLII 48176 (Ont S.C.)