Date: Wed, 29 Oct 2008 02:01

From: Kelvin Low

Subject: New SCC decision

Hi Jason,

I agree that your analysis provides a very comforting symmetry for employer-employee relationships. But I'm not sure that that's how the law of contract works. Perhaps employment contracts are different? I'm not too familiar with employment law.

The reason why Mr Correia cannot claim for mental distress is because it has nothing to do with the breach. The mental distress was the result of a wrong reason being given for dismissal but since no reason need be given, that is not a breach of contract. Mr Correia didn't suffer mental distress because the company didn't give the relevant notice. He would have suffered the same injury even if the company had given him notice and told him the reason they were giving notice. I'm not sure that there is any rule that limits the employee to a claim to lost wages (or difference in wages assuming he obtains alternative employment) where there is any other loss that he suffers which is attributable to the breach.

The reasoning of the trial judge in RBC seems to be that if the defendants had respected the notice period, the plaintiff would have been able to protect itself against competition after the notice period with the result that, whilst it would have lost some business, it would not have lost as much business as it in fact lost. That seems consistent with the law of contract generally. It may be that the appellate courts disagreed with the finding by the trial judge, i.e. they felt that the loss would have been suffered in any event. But it seems (to me at least) preferable to say so.

In any event, I agree that the reasoning of the majority is difficult to follow. They seemed to accept that, as against D, the above reasoning works but that as against the other employees, the loss cannot be claimed. At least Abella J was consistent in disallowing both claims. Though I'm not sure any fiduciary analysis is required for the proposition that an employee is not permitted to compete against his employer during employment and that the employment persists until legally terminated (which on the findings of the trial judge, did not happen until after the reasonable notice period had passed).

Cheers,
Kelvin

2008/10/28 Jason Neyers  

Another way to square it is to view the law as giving the employee an option: to either give notice or pay the lost profits suffered during the notice period. This is how the law related to the employer who dismisses is often described:  reasonable notice or lost salary (see the discussion of Wallace in Correia v Canac Kitchens).

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