The respondent employee, who suffered from chronic fatigue syndrome, was terminated after refusing to meet with an occupational medicine specialist chosen by the appellant employer to assess his disability and accommodation needs.
The trial judge found the employee was wrongfully dismissed, awarded 15 months' notice, extended the notice period to 24 months for bad faith in the manner of dismissal (Wallace damages), and awarded $500,000 in punitive damages.
The Court of Appeal upheld the wrongful dismissal and Wallace damages, but reduced the punitive damages to $100,000.
The Supreme Court of Canada allowed the employer's appeal in part, upholding the 15-month notice period but setting aside the Wallace and punitive damages.
The Court held that damages for the manner of dismissal should be assessed under the Hadley v. Baxendale principle rather than by arbitrarily extending the notice period, and found no bad faith or independently actionable wrong to justify aggravated or punitive damages.
