Court of Appeal Quashes a $1.6 Million Wrongful Dismissal Award

After a trial judge granted an award of $1.6 million, in addition to pay in lieu of notice, the Alberta Court of Appeal quashed the damage award, and leave to appeal was denied by the Supreme Court of Canada.

After five years as one of the top performers at the investment broker Merrill Lynch in Calgary, Mr. Soost was fired for cause in May 2001 after allegedly breaching the company’s rules and policies.

Soost’s clients were notified by way of letter that Soost was no longer with Merrill Lynch and that a new financial advisor could assist them. While Soost did find employment at another firm, he was unable to convince his clients to follow him because of the negative impression caused by his sudden exit from Merrill Lynch. Soost was unsuccessful in recruiting clients, and eventually left the industry in 2001. He then commenced a wrongful dismissal action against Merrill Lynch.

The trial judge found that none of Soost’s breaches of company rules or policies was sufficient to justify dismissal, and awarded 12 months’ pay in lieu of notice. In addition, the judge found that Merrill Lynch had acted in a manner that was both insensitive and unfair, finding that the termination had a significant effect on Soost’s reputation and his ability to both keep old clients and attract new ones. The judge awarded an additional $1.6 million to Soost on this basis.

On appeal, the Alberta Court of Appeal quashed the $1.6 million award for damages, explaining that the award was an attempt to compensate “for matters which the law does not recognize as compensable”. The Court explained that:

… Every employee can be dismissed at once with no notice and without any grounds. That will not be a breach of the employment contract, provided the employer gives pay in lieu of notice.


Therefore, in ordinary circumstances, damages because of dismissal with neither reasonable notice nor pay in lieu cannot exceed what pay in lieu would have been […] There is but one exception to that rule, which the Supreme Court of Canada has now clarified in Keays v. Honda [citation omitted].

Finding that the dismissal, even without cause, was not a wrong, the Court determined there could be no compensation beyond the pay in lieu of reasonable notice already awarded.

In Merrill Lynch, the Alberta Court of Appeal confirmed that it is only in rare circumstances that damages for wrongful dismissal will exceed the amount associated with the reasonable notice period. As stated by the Supreme Court in Keays v. Honda, “the unfairness or insensitivity must be in the methods used, not in the mere fact of dismissal” in determining whether additional damages may arise. Accordingly, compensation beyond payment in lieu of reasonable notice will not be warranted simply because the employee loses his or her job, but rather only where the method of termination gives rise to a loss by the employee.