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Parkdale Community Legal Services Interveners

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Parkdale Community Legal Services Interveners SCC Court File No.: 38252 IN THE SUPREME COURT OF CANADA (ON APPEAL FROM THE NOVA SCOTIA COURT OF APPEAL) B E T W E E N: DAVID MATTHEWS APPELLANT (Respondent) and OCEAN NUTRITION CANADA LIMITED RESPONDENT (Appellant) and CANADIAN ASSOCIATION FOR NON-ORGANIZED EMPLOYEES, DON VALLEY COMMUNITY LEGAL SERVICES, LAW STUDENTS LEGAL ADVICE PROGRAM, CANADIAN ASSOCIATION OF COUNSEL TO EMPLOYERS AND PARKDALE COMMUNITY LEGAL SERVICES INTERVENERS FACTUM OF THE INTERVENER, PARKDALE COMMUNITY LEGAL SERVICES (Pursuant to Rule 42 of the Rules of the Supreme Court of Canada) PARKDALE COMMUNITY LEGAL NELLIGAN O’BRIEN PAYNE LLP SERVICES 300-50 O’Connor Street 1266 Queen Street West Ottawa, ON K2P 6L2 Toronto, ON M6K 1L3 John No Christopher Rootham Andrew Montague-Reinholdt Phone: (416) 531-2411, ext. 227 Fax: (416) 531-0885 Tel: 613-231-8311 / 613-231-8244 Email: [email protected] Fax: 613-788-3667 / 613-788-2369 Counsel for the Intervener, Parkdale Email: [email protected] Community Legal Services [email protected] Counsel for the Intervener, Parkdale Community Legal Services LEVITT LLP SUPREME ADVOCACY LLP 130 Adelaide Street West 340 Gilmour Street Suite 801 Suite 100 Toronto, ON M5H 3P5 Ottawa, ON K2P 0R3 Howard Levitt Eugene Meehan, Q.C. Allyson Lee Marie-France Major Tel: 416-594-3900 Tel: 613-695-8855 Fax: 416-597-3396 Fax: 613-695-8580 Email: [email protected] Email: [email protected] [email protected] [email protected] Counsel for the Appellant Ottawa Agent for the Appellant BARTEAUX DURNFORD DENTONS CANADA LLP Labour & Employment Lawyers 1420-99 Bank Street Suite L107 - 1701 Hollis Street Ottawa, ON K1P 1H4 Halifax, NS B3J 3M8 David R. Elliott Nancy F. Barteaux, Q.C. Corey A. Villeneuve (Law Clerk) Tel: 902-444-3492 Tel: 613-783-9699 Fax: 902-377-2234 Fax: 613-783-9690 Email: [email protected] Email: [email protected] Counsel for the Respondent Ottawa Agent for the Respondent BALL PROFESSIONAL CORPORATION MICHAEL J. SOBKIN 82 Scollard Street 331 Somerset Street West Toronto, ON M5R 1G2 Ottawa, ON K2P 0J8 Stacey Reginald Ball Michael J. Sobkin Tel: 416-921-7997 ext. 225 Tel: 613-282-1712 Fax: 416-640-1756 Fax: 613-288-2896 Email: [email protected] Email: [email protected] Counsel for the Intervener, Canadian Ottawa Agents to Counsel for the Association for the Non-Organized Employees Intervener, Canadian Association for the Non-Organized Employees MONKHOUSE LAW SUPREME LAW GROUP 220 Bay Street, Suite 900 900-275 Slater Street Toronto, ON M5J 2W4 Ottawa, ON K1P 5H9 Andrew Monkhouse Moira Dillon Alexandra Monkhouse Tel: 613-691-1224 Tel: 416-907-9249 Fax; 613-691-1338 Fax: 888-501-7235 Email: [email protected] Email: [email protected] Ottawa Agents to Counsel for the Counsel for the Intervener, Don Valley Intervener, Don Valley Community Legal Community Legal Services Services TEVLIN GLEADLE CURTIS SUPREME ADVOCACY LLP 700-1006 Beach Avenue 340 Gilmour Street Vancouver, B.C. V6E 1T7 Suite 100 Ottawa, ON K2P 0R3 Martin Sheard Eugene Meehan, Q.C. Marie-France Major Tel: 601-648-2966 Fax: 604-648-2967 Tel: 613-695-8855 Email: [email protected] Fax: 613-695-8580 Email: [email protected] Counsel for the Interveners, Law Students [email protected] Legal Advice Program Ottawa Agent for the Intervener, Law Students Legal Advice Program MCCARTHY TETRAULT LLP GOWLING WLG (CANADA) LLP Toronto Dominion Tower, Suite 5300 160 Elgin Street, Suite 2600 Toronto, ON M5K 1E6 Ottawa, ON K1P 1C3 Tim Lawson Jeffrey W. Beedell Brandon Kain Adam Goldenberg Tel: 613-786-0171 Fax: 613-788-3587 Tel: 416-601-8220 Email: [email protected] Fax: 416-868-0673 Email: [email protected] Ottawa Agent for the Counsel for the Intervener, Canadian Association of Counsel for the Intervener, Canadian Counsel to Employers Association of Counsel to Employers i TABLE OF CONTENTS Overview .........................................................................................................................................1 The Duty of Good Faith Permeates throughout the Employment Contract.....................................2 1. Limiting the duty to the manner of dismissal lags behind international treatment .............2 (a) United Kingdom.............................................................................................................2 (b) Australia ........................................................................................................................ 3 (c) New Zealand ..................................................................................................................4 2. Limiting the duty of good faith to the manner of dismissal creates dissonance between constructive and actual dismissals ......................................................................................4 3. The “manner of dismissal” requirement creates confusion and unpredictability ...............6 The Proper Analytical Framework for Remedies in Bad Faith Cases .................................7 (a) Reasonable notice principles...................................................................................8 (b) Damages for a breach of the duty of good faith ......................................................9 Summary of PCLS’s Position ........................................................................................................10 1 Overview 1. For over twenty years, this Court has recognized a duty of good faith and fair dealing “in the manner of dismissal”. Courts initially treated a breach of this duty as a factor to assess the length of reasonable notice,1 but for the past decade a breach of this duty has led to direct compensation when it has caused mental distress or other tangible forms of loss.2 The duty, however, remained limited to conduct in the “manner of dismissal.” 2. The Intervenor, Parkdale Community Legal Services (“PCLS”), submits that this restrictive approach to the duty of good faith is no longer appropriate in the employment context. Rather, the time has come for this Court to recognize that the duty of good faith permeates throughout the entire employment relationship. 3. The Appellant has examined this point through the lens of this Court’s decision in Bhasin v Hrynew and the organizing principle of good faith in contractual performance.3 To that point, PCLS adds three more: i. A duty of good faith throughout the employment relationship is consistent with international treatment of the duty of good faith in Employment Law; ii. Extending the duty of good faith throughout the employment relationship creates consistency between constructive dismissal and standard dismissal cases; and iii. Extending the duty of good faith throughout the employment relationship eliminates confusion over the time-period covered by the “manner of dismissal”. 4. In short, a duty of good faith throughout the employment relationship properly recognizes that an employee’s vulnerability exists throughout the employment relationship and not solely at the moment of dismissal. 1 Wallace v. United Grain Growers [1997] 3 SCR 701. 2 Honda v Keays, 2008 SCC 39. 3 Bhasin v Hrynew, 2014 SCC 71. 2 5. PCLS will also address the proper analytical framework for damages for a breach of the duty of good faith and its interaction with damages for wrongful dismissal. In this case, the Nova Scotia Court of Appeal (both the majority and dissent) conflates two distinct legal concepts in its analysis of whether Matthews is entitled to his long term incentive and short term incentive plans (“LTIP/STIP”) post termination: damages for wrongful dismissal and the duty of good faith contractual performance. These are distinct causes of action that courts must assess separately. PCLS provides a framework for doing so. The Duty of Good Faith Permeates throughout the Employment Contract 1) Limiting the duty to the manner of dismissal lags behind international treatment 6. In Bhasin, this Court traced the origins of the doctrine of contractual good faith and how other jurisdictions have dealt with the obligation of good faith.4 A similar analysis of good faith in employment in the United Kingdom, Australia, and New Zealand demonstrates two things: i. All three jurisdictions impose some form of good faith requirement in employment; and ii. The duty is not confined to the manner of dismissal. a) United Kingdom 7. The UK House of Lords (as it then was) has recognized an obligation of good faith to reflect the inequality of bargaining power between the employer and employee in the employment contract.5 This is expressed as an implied contractual term of “mutual trust and confidence”, and it reflects the unique aspects of the employment contract.6 The 4 Bhasin, supra note 3 at paras 48-58. 5 Malik v Bank of Credit and Commerce International SA, [1998] AC 20. 6 Douglas Brodie, “Fair Dealing and the World of Work” Industrial Law Journal, Vol. 43, No. 1, March 2014. 3 implied term of mutual trust and confidence is a concept meant to protect employees from exploitation, given their vulnerability in the employment relationship.7 8. The obligation of good faith is only applicable to the employment contract during performance of the contract. It is meant to govern the long-term relational contract to discourage opportunistic behaviour by either party.8 However, an employee cannot seek common-law damages for bad faith “in the manner of dismissal” because such a right “cannot satisfactorily co-exist with the statutory right not to be unfairly
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