Unjust Dismissal Under Canada Labour Code

Legal Costs in Unjust Dismissal

The Federal Court of Appeal considered a judicial review application in which the employee had been awarded partial indemnity costs. She sought, on review, full indemnity costs. The Court of Appeal agreed with the initial award, agreeing that the concept of proportionality should lead to the costs award not exceeding the amounts in issue. She recovered $68,340, contrasted with the claim of $87,376. This Court stated that a comparison of the two sums “speaks to the relevance” of this principle.

The Federal Court of Appeal reviewed the award made of solicitor-client costs in a 2001 decision. 1 The adjudicator had found that the Bank was without cause to terminate and further that the conduct of the Bank was callous and cruel. This conduct was found to have existed in pre-litigation matters and during the hearing itself. The Bank lost its first review on this issue and was met with a similar costs order in that decision. The Bank argued before the Court of Appeal, in which it challenged both costs orders that such a scale of costs should be made only based on conduct in the litigation itself.

The Court of Appeal disagreed that this was the law.

It noted that allegations of improper conduct were made against Roberts in an attempt to justify its prior decision to terminate the employee and that such allegations were baseless. This conduct, the Court of Appeal noted, would suffice in itself to allow for such an award. This included serious allegations of dishonesty. The same decision noted that another reason for such an award was to save harmless an innocent litigant.

To add extra salt to the wound, full costs were also ordered on the unsuccessful appeal.

This being said, an adjudicator allowed the remedy of full indemnity legal costs in a recent decision. 2 No reasons were given for the costs award. The employer had been invited to make submissions on this discrete issue and did not do so.

On first review in Federal Court, the costs award was found to have been counter to the general rule that substantial indemnity costs should be awarded only where there has been “reprehensible, scandalous or outrageous conduct by the employer”, and that do make such an order, the adjudicator must provide reasons for doing so. 3 This decision noted the inconsistency between the denial of aggravated and punitive damages, yet awarding substantial indemnity costs, on the theory that the same standard of unfairness would apply in each instance.

The Federal Court of Appeal reviewed the development of the law on this subject, that is, the award of full costs and concluded that the law does not require a finding of egregious behaviour as its underpinning. 4 This was a purposive approach. The Court noted that unionized workers are fully subsidized by the union for similar grievances. There was a strong social impetus to provide the solitary worker similar protections. Further the inequality of the power imbalance supported this position:

In the case at bar, the appellant was of limited means, earning just under $40,000.00 per year when employed by the respondent. In addition, she was a single parent. Given the amount of damages awarded in the instant case, which were limited to out-of-pocket losses for a relatively short period and a modest amount of severance pay, it is entirely possible that the fees charged by the appellant’s counsel might have been close to or perhaps even exceeded the amount of damages awarded. Were this the case, the appellant would have been worse off for pursuing the complaint than she would have been had she not filed a complaint. Such a result would be the antithesis of a remedial order and defeat the purpose of the unjust dismissal provisions in the Code.

[101] On the other side of the ledger, the appellant was faced with a large respondent, with substantial resources and the ability to pay experienced labour counsel, who mounted a lengthy case over several days of hearing and through lengthy written submissions.

[102] In the circumstances, I believe that it was reasonably open to the Adjudicator to have awarded the appellant substantial indemnity costs. Anything less may well have led to a denial of any real remedy. There is ample authority from other adjudicators to support the award, and it is allowable under the jurisprudence from this Court. Moreover, the award is in keeping with the purpose behind the unjust dismissal provisions in the Code.

The costs decision was restored.

No Costs Where No Unjust Dismissal

The view generally taken is that the Board has authority only where there has been a finding of unjust dismissal, as the statute specifically states. A cost order this cannot be made against a successful employer. 5