Lloyd’s Register of North America Inc v. Silvester

Lloyd’s Register of North America Inc v. Silvester Court Court of Appeal Date 2004-02-06 Citation 2004 NSCA 17 Docket CA 202692 Judge/Registrar/Adjudicator Bateman, Nancy J. (Honourable Justice) (CA); Freeman, Gerald B. (Honourable Justice) (CA); Fichaud, Joel E. (Honourable Justice) (CA) Document Type Decision Decision Content Nova Scotia Court of Appeal Citation: Lloyd’s Register of North America, Inc. v. Silvester, 2004 NSCA 17 Date: 20040206 Docket: CA 202692 Registry: Halifax Between: Lloyd’s Register of North America, Inc. Appellant v. Richard Silvester Respondent Judge: Bateman, Freeman and Fichaud, JJ.A. Appeal Heard: January 14, 2004, in Halifax, Nova Scotia Held: Appeal allowed in part per reasons for judgment of Bateman, J.A., Freeman and Fichaud, JJ.A. concurring. Counsel: James D. Youden, Andrew Montgomery and Donna Grill, for the Appellant David P.S. Farrar and Carrie Ricker, for the Respondent Reasons for judgment: [1] This is an appeal by the employer, Lloyd’s Register North America, Inc., from a judgment in a wrongful dismissal action (reported as Silvester v. Lloyd's Register North America Inc. (2003), 213 N.S.R. (2d) 374; N.S.J. No. 126 (Q.L.)). Lloyd’s says the judge erred in finding that the respondent, Richard Silvester, was wrongfully dismissed and, even if wrongfully dismissed, in the damages awarded. BACKGROUND: [2] Mr. Silvester commenced his employment with Lloyd’s in Montreal in March of 1981, initially, as a Temporary Engineer Surveyor. He became a permanent employee and in 1984 he was assigned to the Halifax office. In 1992 he achieved the designation of Ship Surveyor and was promoted to Senior Ship and Engineering Surveyor. In May, 1998 he was appointed Surveyor-in-Charge at Lloyd’s Halifax office. This was the position held by Mr. Silvester at the time of dismissal in September of 2000. His annual income was approximately $90,000. [3] In May, 2000, Mr. Silvester had been offered a permanent transfer to Lloyd’s in Houston, Texas to oversee the construction of an offshore oil rig. Negotiations took place between Lloyd’s and Mr. Silvester as to the terms of the transfer and the new position. Ultimately, Mr. Silvester declined the transfer for family reasons. Mr. Silvester is married with three school aged children. His wife is employed by Air Canada as a part-time agent at the Halifax International Airport. Their son, Derrick, suffers from AD/HD and, at the time of the proposed transfer, was a day student at King’s-Edgehill College School in Windsor, commuting from their home in Bedford. Derrick was enrolled at King’s-Edgehill on the advice of a psychiatrist whose opinion it was that the structured environment of that school would assist in the management of Derrick’s condition. It was Mr. Silvester’s wife’s income that was used to pay the substantial extra burden of the school fees. Mr. Silvester was reluctant to disrupt Derrick and was not satisfied that affordable, comparable schooling could be found in Houston. At the time, Lloyd’s appeared to accept and understand Mr. Silvester’s rationale for refusing the transfer. [4] On September 11, 2000, Michael Fegan, Lloyd’s Area Manager and Mr. Silvester’s immediate supervisor, informed Mr. Silvester that he was not "working out" in the role of Surveyor-in-Charge of the Halifax office. Mr. Silvester was told that he was to leave immediately for Miami to take on a temporary assignment of some urgency. Mr. Fegan further advised that Mr. Silvester’s salary would be cut commensurate with the reduced position. The demotion came as a surprise to Mr. Silvester. [5] The next day, Mr. Silvester advised Mr. Fegan, in writing, that if it was necessary for him to move into a lesser position, he would do so, provided he could stay in the Halifax office in order to avoid relocating his family. [6] Mr. Fegan responded, in writing, the next day, advising that Mr. Silvester could not continue with the Halifax office and that his position as Surveyor-in- Charge had been terminated. He reiterated that Mr. Silvester was required to travel to Miami three days later to take on a temporary position at reduced pay as a Senior Surveyor. Any future permanent position would only be available other than in Halifax. It would be up to the Miami Area manager as to whether Mr. Silvester would remain in Miami. [7] Mr. Silvester sought legal advice. On September 14 his counsel wrote to Mr. Fegan detailing the circumstances which led him to conclude that Mr. Silvester had been constructively dismissed and would, therefore, not be reporting to Miami. On October 5, 2000, Lloyd’s advised Mr. Silvester that his refusal to go to Miami was a breach of his employment contract. His employment was terminated with three months’ pay in lieu of notice. ISSUES: [8] Lloyd’s says that the judge erred in law and in fact: In finding the dismissal to be without cause; If the dismissal was wrongful, in fixing the length of the notice period; In finding that Lloyd’s acted in bad faith on the dismissal which called for an enhanced notice period; In the calculation of damages for the loss of pension benefits and the car allowance; In increasing the scale upon which costs were ordered and in granting solicitor-client costs for a part of the proceeding. STANDARD OF REVIEW: [9] An appellate court may not alter a damage award simply because it would have come to a different conclusion on the evidence. Only where there was no evidence upon which the trial judge could have reached his or her conclusion, or where the judge proceeded upon a mistaken or wrong principle, or where the result reached at the trial was wholly erroneous, may the appellate court intervene. (Woelk v. Halvorson, [1980] 2 S.C.R. 430 at 435). [10] Errors of law ought to be corrected on appeal but findings of fact and evidentiary conclusions drawn from such findings are viewed deferentially (Toneguzzo-Norvell (Guardian ad Litem of) v. Burnaby Hospital, [1994] 1 S.C.R. 114 at 121). A court of appeal must not interfere with a trial judge's conclusions on matters of fact, or mixed law and fact, unless there is palpable or overriding error, that is, if the judge has made a manifest error, has ignored conclusive or relevant evidence, has misunderstood the evidence, or has drawn erroneous conclusions from it. This principle applies with particular effect when findings of fact result from the trial judge's assessment of the credibility of witnesses. (Barakett v. Lévesque Beaubien Geoffrion Inc. (2001), 192 N.S.R. (2d) 114; N.S.J. No. 426 (Q.L.)(C.A.); Housen v Nikolaisen, [2002] 2 S.C.R. 235). [11] In Minott v. O'Shanter Development Co. Ltd. (1999), 42 O.R. (3d) 321, Laskin J.A., writing for the Court, expressed the standard of review on a wrongful dismissal action in this way at pp. 343 - 344: . . .Determining the period of reasonable notice is an art not a science. In each case trial judges must weigh and balance a catalogue of relevant factors. No two cases are identical; and, ordinarily, there is no one "right" figure for reasonable notice. Instead, most cases yield a range of reasonableness. Therefore, a trial judge's determination of the period of reasonable notice is entitled to deference from an appellate court. An appeal court is not justified in interfering unless the figure arrived at by the trial judge is outside an acceptable range or unless, in arriving at the figure, the trial judge erred in principle or made an unreasonable finding of fact: see Isaacs v. M.H.G. International Ltd. (1984), 45 O.R. (2d) 693, 7 D.L.R. (4th) 570 (C.A.). If the trial judge erred in principle, an appellate court may substitute its own figure. But it should do so sparingly if the trial judge's award is within an acceptable range despite the error in principle. (See also Gismondi v. Toronto (City) (2003), 226 D.L.R. (4th) 334; O.J. No. 1490 (Q.L.) (Ont. C.A.); application for leave to appeal to S.C.C. filed June 30, 2003; Marshall v. Watson Wyatt & Co. (2002), 57 O.R. (3d) 813) ANALYSIS: Cause [12] There is no merit to the appellant’s assertion that the judge erred in finding the dismissal to be without cause. In challenging this conclusion Lloyd’s is, effectively, seeking a retrial. The record fully supports the findings of the trial judge. Not only was it open to the judge, on the evidence, to find that the firing was without cause, it was the only reasonable conclusion on this evidence. Damages 1. Notice Period [13] Wrongful dismissals generally arise when employers, exercising their right to dismiss an employee, do not give the employee reasonable notice or payment in lieu of notice. As noted by Professor Lee Stuesser in his article “Wrongful Dismissal - Playing Hardball: Wallace v. United Grain Growers, (1997-1998) 25 Man. L.J. 547-565 , the "wrong" is not the dismissal; but the failure to provide notice. Damages are measured in terms of the reasonable period of notice. Recognizing that dismissal will always occasion some mental distress and personal anguish and that employers ought not to be found liable for exercising their right to dismiss any employee, historically, there was no recovery for other heads of damage which flow from the dismissal, such as mental distress. In Vorvis v. Insurance Corporation of British Columbia, [1989] 1 S.C.R. 1085 at 1100 - 1101McIntyre J. summarized the law in this way: . . . in a case of wrongful dismissal damages are limited to the earnings lost during the period of notice to which the employee is entitled and cannot include damages for the manner of dismissal, for injured feelings, or for loss sustained from the fact that the dismissal makes it more difficult for the plaintiff to obtain other employment. ... [14] The Supreme Court of Canada judgment in Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701, heralded a change in the law. The Court confirmed that any award of punitive or aggravated damages beyond compensation for breach of contract for failure to give reasonable notice of termination must be founded on a separate actionable course of conduct. The majority (McLachlin J., as she then was, dissenting), however, would allow the trial judge discretion to extend the period of reasonable notice on account of the wrongful actions of the employer in the manner of dismissal even where the conduct falls short of an independent actionable wrong. Should employers act in bad faith in the firing of employees then "such bad faith conduct in the manner of dismissal is another factor that is properly compensated for by an addition to the notice period" (Wallace at ¶ 88 per Iacobucci J.) The majority said: 95 The point at which the employment relationship ruptures is the time when the employee is most vulnerable and hence, most in need of protection. In recognition of this need, the law ought to encourage conduct that minimizes the damage and dislocation (both economic and personal) that result from dismissal. In Machtinger, supra, it was noted that the manner in which employment can be terminated is equally important to an individual's identity as the work itself (at p. 1002). By way of expanding upon this statement, I note that the loss of one's job is always a traumatic event. However, when termination is accompanied by acts of bad faith in the manner of discharge, the results can be especially devastating. In my opinion, to ensure that employees receive adequate protection, employers ought to be held to an obligation of good faith and fair dealing in the manner of dismissal, the breach of which will be compensated for by adding to the length of the notice period. . . . 98 The obligation of good faith and fair dealing is incapable of precise definition. However, at a minimum, I believe that in the course of dismissal employers ought to be candid, reasonable, honest and forthright with their employees and should refrain from engaging in conduct that is unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive. . . . . . . 101 . . . I note that, depending upon the circumstances of the individual case, not all acts of bad faith or unfair dealing will be equally injurious and thus, the amount by which the notice period is extended will vary. Furthermore, I do not intend to advocate anything akin to an automatic claim for damages under this heading in every case of dismissal. In each case, the trial judge must examine the nature of the bad faith conduct and its impact in the circumstances. (Emphasis added) [15] Significantly, recovery for injury arising from the bad faith dismissal is not dependent upon the employee demonstrating that the bad faith impaired his or her ability to find alternate employment. On this the majority said in Wallace: 102 The Court of Appeal in the instant case recognized the relevance of manner of dismissal in the determination of the appropriate period of reasonable notice. However, relying on Trask, supra, and Gillman v. Saan Stores Ltd. (1992), 45 C.C.E.L. 9 (Alta. Q.B.), the court found that this factor could only be considered "where it impacts on the future employment prospects of the dismissed employee" (p. 180). With respect, I believe that this is an overly restrictive view. In my opinion, the law must recognize a more expansive list of injuries which may flow from unfair treatment or bad faith in the manner of dismissal. 103 It has long been accepted that a dismissed employee is not entitled to compensation for injuries flowing from the fact of the dismissal itself: see e.g. Addis, supra. Thus, although the loss of a job is very often the cause of injured feelings and emotional upset, the law does not recognize these as compensable losses. However, where an employee can establish that an employer engaged in bad faith conduct or unfair dealing in the course of dismissal, injuries such as humiliation, embarrassment and damage to one's sense of self-worth and self-esteem might all be worthy of compensation depending upon the circumstances of the case. In these situations, compensation does not flow from the fact of dismissal itself, but rather from the manner in which the dismissal was effected by the employer. 104 Often the intangible injuries caused by bad faith conduct or unfair dealing on dismissal will lead to difficulties in finding alternative employment, a tangible loss which the Court of Appeal rightly recognized as warranting an addition to the notice period. It is likely that the more unfair or in bad faith the manner of dismissal is the more this will have an effect on the ability of the dismissed employee to find new employment. However, in my view the intangible injuries are sufficient to merit compensation in and of themselves. I recognize that bad faith conduct which affects employment prospects may be worthy of considerably more compensation than that which does not, but in both cases damage has resulted that should be compensable. (Emphasis added) [16] In support of this position the majority noted that in other areas of the law, damages are not limited to demonstrated pecuniary loss: 105 The availability of compensation for these types of injuries has been recognized in other areas of the law. In McCarey v. Associated Newspapers Ltd. (No.2), [1965] 2 Q.B. 86 (C.A.), Pearson L.J. examined the scope of recovery in an action for libel. At pp. 104-5 he stated: Compensatory damages, in a case in which they are at large, may include several different kinds of compensation to the injured plaintiff. They may include not only actual pecuniary loss and anticipated pecuniary loss or any social disadvantages which result, or may be thought likely to result, from the wrong which has been done. They may also include the natural injury to his feelings — the natural grief and distress which he may have felt at having been spoken of in defamatory terms, and if there has been any kind of high-handed, oppressive, insulting or contumelious behaviour by the defendant which increases the mental pain and suffering caused by the defamation and may constitute injury to the plaintiff's pride and self-confidence, those are proper elements to be taken into account in a case where the damages are at large. . . . 107 In my view, there is no valid reason why the scope of compensable injuries in defamation situations should not be equally recognized in the context of wrongful dismissal from employment. The law should be mindful of the acute vulnerability of terminated employees and ensure their protection by encouraging proper conduct and preventing all injurious losses which might flow from acts of bad faith or unfair dealing on dismissal, both tangible and intangible. I note that there may be those who would say that this approach imposes an onerous obligation on employers. I would respond simply by saying that I fail to see how it can be onerous to treat people fairly, reasonably, and decently at a time of trauma and despair. In my view, the reasonable person would expect such treatment. So should the law. (Emphasis added) [17] In McKinley v. BC Tel, [2001] 2 S.C.R. 161, commenting on Wallace, Iacobucci J. again writing, this time for the full court, said: 74 . . .Wallace also made clear that the extent by which a notice period should be extended for bad faith or unfair dealing in the conduct of a dismissal will depend, in each case, on the degree of injury that an employee sustains. While recognizing that tactics that affect the employee's ability to find new employment is particularly deserving of such a remedy and may merit more compensation, the majority also ruled that "intangible injuries", which give rise to emotional damage, also may suffice to attract an award in the form of an extended notice period (para. 104 [Wallace]). [18] It is clear from the above passages that the employee need not establish that the bad faith in the dismissal impaired his or her future employability, or that there be corroborative evidence of mental distress. The presence, however, of one or both of those factors will further increase the notice period. [19] Having found the dismissal to be without cause and Lloyd’s to have acted in bad faith, the trial judge fixed the total notice period at 30 months. The amount by which an otherwise appropriate notice period was increased on account of the bad faith was not specified by the judge, nor need it be (see Barakett v. Lévesque Beaubien Geoffrion Inc., supra at ¶ 51). [20] There is no formula for calculating the appropriate notice period. It has long been accepted that the exercise commences with a consideration of factors such as those articulated by McRuer C.J.O. in Bardal v. The Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. HC), at 145: There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant. [21] The record clearly supports the judge’s conclusion that Lloyd’s acted in bad faith in the manner in which it dismissed Mr. Silvester. The evidence, facts and chronology of the dismissal found in the judgment, relevant to this issue, include (paragraph references are to the Quicklaw version of the judgment): - Lloyd’s was aware that Mr. Silvester’s son who suffered from AD/HD, a disorder whose future course is not easily predicted, was sent to a private school in an attempt to improve his condition. It was Mr. Silvester’s wife’s income from part-time employment that met the additional expense of the private schooling. (¶ 13 and 15) - Lloyd’s accepted, without complaint, Mr. Silvester’s son’s situation as the reason he did not accept a transfer to Houston in June of 2000. (¶ 14) - Lloyd’s witnesses acknowledged that permanent transfers were usually discussed and negotiated over time. (¶ 12) - Although Lloyd’s says that Mr Silvester’s employment was terminated because of his failure to accept a temporary transfer, that is not what occurred at the time of termination. (¶ 16) - Mr. Silvester’s immediate supervisor, Michael Fegan, acknowledged that Mr. Silvester had "no inkling" that he was to be demoted. (¶ 20) - Mr. Silvester was "devastated" when told of his demotion. (¶ 20) - On September 12, 2000, Mr. Silvester advised Lloyd’s that he would accept the demotion but, due to his son’s condition, he needed to remain in the Halifax office as a surveyor. (¶ 21) - On September 13, 2000, Mr. Fegan told Mr. Silvester that he must report to Miami on September 18, 2000. (¶ 22) - On September 14, 2000, Mr. Silvester’s counsel wrote a detailed letter to Mr. Fegan advising of his opinion that Mr. Silvester had been constructively dismissed and requesting a severance package. Mr. Fegan ignored that letter. (¶ 23) - On October 3, 2000, Mr. Fegan wrote directly to Mr. Silvester, without acknowledging his counsel’s letter of September 14 and advised that Mr. Silvester was to report to the Miami office no later than October 9 or face termination. He advised that Lloyd’s had determined not to reduce his salary. (¶ 24) - On October 5 Mr. Fegan advised Mr. Silvester that he was dismissed on account of his refusal to accept the temporary transfer to Miami. (¶ 26) - Mr. Silvester’s refusal of the temporary transfer was not, in these circumstances, the reason for the dismissal. (¶ 28) - Mr. Silvester’s dismissal can only be characterized as a discipline transfer. (¶ 31) - Mr. Silvester’s demotion was without notice or warning in contravention of Lloyd’s own disciplinary policy. (¶ 29 and 30) - Mr. Fegan’s assurance that Mr. Silvester would be found a permanent position other than in Halifax coupled with his comment that the position would depend upon the evaluation by his Miami supervisor, provided Mr. Silvester with no confidence of ongoing employment with Lloyd’s. (¶ 30) - The only reason given to Mr. Silvester for his demotion came from Mr. Fegan who told him he "wasn't working out" in his position as Surveyor-in-Charge of the Halifax office. The phrase "wasn't working out" was not explained to Mr. Silvester. Lloyd’s did not allege in its pleadings that Mr. Silvester was incompetent. (¶ 32) - It is difficult to understand why Mr. Silvester was demoted and permanently transferred at all. All of his written performance appraisals indicated that he was doing well in his job, even exceptionally well in some areas. The only negative comments dealt with Mr. Silvester not doing his "book work" in a timely manner. (¶ 32) - Mr. Silvester had insufficient time to do his book work because as well as having to perform his administrative duties as Surveyor-in- Charge he was also working as a surveyor in what at the time was a very busy office. Both of his immediate supervisors agreed that such was the case. (¶ 32) - Mr. Silvester’s supervisor , Mr. Fegan, testified that he saw no reason for dismissal. (¶ 33) - Mr. Silvester’s past supervisor, Mr. Shaw, testified favourably about Mr. Silvester’s performance. (¶ 34) - Mr. Brock, the North American president of Lloyd’s, testified that when he agreed to the demotion and transfer, he was only acting on information provided by Mr. Fegan. Mr. Fegan indicated that he was doing only as he was told to do by Mr. Brock. Both attempted to distance themselves from responsibility for dismissing Mr. Silvester and each seemed to blame the other for it. (¶ 35) - Mr. Brock's actions regarding the dismissal were precipitous since he did not appear to have the answers to questions his superiors were asking as to why Mr. Silvester was dismissed. (¶ 36) - Some time after the initial meeting with Mr. Silvester but before the formal dismissal, Mr. Fegan altered minutes of a routine office management meeting held on August 31, 2000, with Mr. Silvester and the area's administrative officer. The alteration stated that certain criticisms of Mr. Silvester’s performance had been discussed at that meeting. This was a fabrication by Mr. Fegan. (¶ 41) - Shortly before trial Lloyd’s amended its defence to allege after- acquired cause for dismissal including allegations of fraud, misrepresentation and bad faith by Mr. Silvester. Not only was there no substance to the after-acquired causes that would justify the dismissal, all of the allegations were trivial and devised in an effort to bolster a weak defence against Mr. Silvester’s claim. The majority of the allegations were not after-acquired causes at all but had all been discussed with Mr. Silvester and dealt with during his employment. (¶ 44 to 46) - Lloyd’s suggested to Mr. Silvester’s new employer, Transport Canada, that he was biassed against Lloyd’s in performing his duties with his new employer which included examining and approving ship work being done by Lloyd’s. Although Transport Canada was satisfied that such was not the case, it nevertheless investigated Mr. Silvester’s conduct in his dealings with Lloyd’s causing him embarrassment and worry regarding the security of his new employment. This was shameful conduct by Lloyd’s. (¶ 52 and 79) - Allegations of cheating on expenses and misrepresentation contained in the statement of claim, whether or not they filtered through to Mr. Silvester’s new employer, were accusations with no substance contained in a document available to the public. (¶ 56) - In his new employment Mr. Silvester’s income, two years after dismissal, is $15,000.00 below his last income level with Lloyd’s. (¶ 57) - The misconduct of Lloyd’s was heartless, thoughtless, uncaring and deceitful followed by a conspiratorial cover-up by Messrs. Fegan and Brock to justify to Mr. Brock's superiors their own shortcomings in the manner in which they dismissed the plaintiff. (¶ 68 and 70) [22] It is clear that the trial judge viewed the dismissal not as a single event but a continuum of conduct by Lloyd’s running from mid-September through to early October. Additionally, the bad faith by Lloyd’s continued beyond that time while Mr. Silvester’s superiors at Lloyd’s worked to retrospectively manufacture a case for dismissal. Notwithstanding that no such case existed, Lloyd’s determined to play hard ball in the litigation of this matter, starkly reflected in the amendment of its defence to plead frivolous but damaging allegations of fraud and misconduct. Lloyd’s communication with Transport Canada, in April 2002, long after the dismissal, to advise Transport Canada of the pending litigation and to make a general, unsubstantiated allegation of conflict of interest on Mr. Silvester’s part was particularly egregious. [23] While findings of bad faith generally focus on the employer’s conduct at the point of dismissal, the employer’s post dismissal conduct can be considered in the context of bad faith (see Marshall v. Watson Wyatt & Co. Ltd., supra, at ¶ 40; Gismondi v. Toronto (City), supra at ¶23 and Wallace, supra, at ¶ 108 and 109). [24] It is important here to distinguish between the employer’s right to vigorously defend its case for cause and a situation where the employer advances spurious allegations of wrongful acts or incompetence, in an attempt to put pressure on the employee, referred to in Wallace as “playing hardball” (¶ 108). As commented by Esson J.A., writing for the court in Cassady v. Wyeth-Ayerst Canada Inc. (1998), 163 D.L.R. (4th) 1; B.C.J. No. 1876 (Q.L.)(C.A.): [41] One aspect of the defendant's conduct which is relied on by Mr. McAlpine as being more serious than the equivalent bad faith conduct in Wallace is the mater of the employer advancing and persisting in alleging cause for dismissal. In Wallace, that position was abandoned early in the trial, but in this case was maintained to the point of verdict. [42] Because the relief to a wrongfully dismissed employee has been confined by the Addis rule to compensation for the salary and benefits which should have been paid during the period of notice, it has long been open to employers to rely on unfounded allegations of cause without risk of penalty except in costs. . . . [25] In Cassady, the Court was satisfied that the allegations of misconduct were made by the employer bona fide and not in an attempt to gain unfair advantage over the employee. Not so here. The trial judge concluded that Lloyd’s, in launching and persisting in advancing through trial, the allegations of fraud, misconduct and misrepresentation coupled with the allegation of conflict of interest and the late amendment of the pleadings necessitating an adjournment of the trial dates revealed a campaign of intimidation reflective of bad faith. This finding was open to the judge on the evidence. [26] Lloyd’s says that any lengthening of the notice period on account of a bad faith dismissal must be based upon compensatory principles. Mr. Silvester did not offer evidence that the bad faith necessitated treatment for mental distress or negatively impacted his re-employment prospects, therefore, submits Lloyd’s, there was no basis upon which to compensate him through an extended notice period. At ¶ 15 above, I have referred to the passages from Wallace which reject this premise. Iacobucci J. refers to “intangible injuries” as “sufficient to warrant compensation in and of themselves” (Wallace, ¶ 104). Where bad faith is found, a certain level of injury (“such as humiliation, embarrassment and damage to one's sense of self-worth and self-esteem” (Wallace, ¶ 103)), which exceeds that which inevitably accompanies dismissal, can be inferred. If there is evidence of treatable psychological injury or impact on re-employment, even greater compensation may be appropriate. [27] In assessing the notice period here, it is helpful to review the facts in Wallace. Mr. Wallace, at 45 years of age, had been lured away from employment of 25 years with a competitor of United Grain Growers on the assurance of fair treatment and job security. His performance at the new company was outstanding. Fourteen years into his tenure, however, he was summarily dismissed. The company alleged dismissal for cause which allegation was abandoned just before trial. The termination of his employment and the allegation of cause created emotional difficulties for Mr. Wallace for which he sought psychiatric help. He was largely unsuccessful in finding alternate employment. At trial he was awarded damages based upon a 24 month notice period and $15,000 in punitive damages. This award was reduced on appeal to a reasonable notice period of 15 months. On further appeal, the Supreme Court of Canada, finding no error by the trial judge, restored his assessment of the 24 month notice period and affirmed the elimination of the punitive award. The Court described the 24 months’ notice, which included the enhancement for bad faith, as “at the high end of the scale” (at ¶ 109). [28] I am satisfied that, here, the trial judge did consider the appropriate factors in fixing the length of the notice period, including Mr. Silvester’s age (48) at the time of dismissal; the fact that he occupied the senior position in Lloyd’s Halifax office; that he had served with Lloyd’s for 19 years with positive performance reviews and ever increasing responsibilities; and that his new employment was at a substantially lower salary than he enjoyed at Lloyd’s. I am not persuaded that the judge erred in concluding that this was a bad faith dismissal and that such justified an increase in the notice period. However, the trial judge does not explain why the circumstances of Mr. Silvester’s dismissal would command a substantially longer combined notice period than that in Wallace. Nor did he cite authority which would support a 30 month notice period. Mr. Wallace had been enticed away from secure employment; was dismissed at an age when re-employment was not a likelihood; required psychiatric care; and the dismissal effectively ended his working career. I note that, in Wallace, the employer did abandon its allegation of cause before trial, while here, Lloyd’s doggedly pursued their unfounded allegations to the end. On the other hand, there was no evidence that, as a consequence of the bad faith, Mr. Silvester required psychiatric care or that his opportunity for re-employment was affected. I am not persuaded that Mr. Silvester’s dismissal warranted a notice period longer than that of Mr. Wallace. I would accept the judge’s conclusion that the collection of factors here, including the bad faith, puts this at the high end of the range. I am respectfully of the view that the notice period, at 30 months, is materially outside the acceptable range. While 24 months does not represent the absolute maximum notice period beyond which a court may not go, a period on notice above that “high end” of the range must be justified on the facts. The extremes of the range are not subject to inflationary increase, simply due to the passage of time. The effect of inflation is adequately addressed by increases in rates of income over time, not by an increase in the notice period Accordingly, I would allow the appeal to the extent of reducing the notice period to 24 months. 2. Car Allowance [29] There are two other areas of damage under appeal. Mr. Silvester enjoyed the benefit of personal use of a company car. As compensation for the loss of this benefit the judge awarded the full cost of a replacement vehicle for the notice period. In so doing he cited McNamara v. Alexander Centre Industries Ltd. (2000), 2 C.C.E.L. (3rd) 310 (Ont. Sup. Ct. J.), aff’d on appeal at (2001), 8 C.C.E.L. (3rd) 204, leave to appeal refused at [2001] S.C.C.A No. 339, which he, mistakenly, accepted as authority for Mr. Silvester’s position that full replacement cost was the appropriate award. In McNamara it appears that the employee was awarded something less than full replacement cost. While the law of recovery for this loss is far from clear, a reasonable approach, finding some support in the case law, would support recovery based upon a rough estimate of the employee’s actual personal use together with an amount in recognition of the benefit of the automobile’s availability for personal use (see for example, (Lefebvre v. Beaver Road Builders Ltd. (1993), 49 C.C.E.L. 207 (Ont. Gen. Div.) at 216; Bruce-Vaughan v. Dalmy's Canada Ltd. (1992), 40 C.C.E.L. 112 (B.C.S.C.); and Campbell v. Petro-Canada Inc. (1992), 44 C.C.E.L. 234 (Ont. Gen. Div.)). The parties here agreed that the cost of replacing the use of the vehicle was $685 monthly. The evidence as to the extent of the personal use was unclear. I would reduce the award under this head to half of the monthly vehicle replacement cost, rounded to $343 monthly for the (reduced) notice period. 3. Pension Benefit: [30] A further matter in question is the amount awarded by the judge for the lost pension benefit over the notice period. The evidence on this issue was confusing and not well developed. It came before the judge as a combination of vive voce evidence from Lloyd’s comptroller, Neil Mills, and written submissions following trial. [31] Mr. Silvester’s pension was a defined benefit plan. The amount of pension is a function of the plan's benefit formula which is based on length of service, ending salary, life expectancy, and an inflationary increase each year. Lloyd’s provided what purported to be estimates, month by month for 30 months, of the present value of how much additional pension benefit Mr. Silvester would have accrued over the notice period. This loss averaged $540 per month, expressed as a present value. [32] It was Mr. Silvester’s submission, accepted by the trial judge, that the appropriate figure for calculation of the monthly loss of benefit, was the “pension adjustment” amount of $9,704 which appeared on his T-4 slip. This amount, submitted Mr. Silvester, would convert to a monthly figure of $750 which more accurately represented his monthly loss over the notice period. [33] According to the evidence of Mr. Mills, the “pension adjustment” amount on the T-4 slip represents a figure used for the purpose of determining the employee’s RRSP contribution room. In a non-contributory plan, as was Lloyd’s, the figure is derived by applying a formula to the employee’s income. [34] Contributing to the confusion on this issue was the following exchange between the trial judge and Mr. Mills: THE COURT So it’s [the pension adjustment figure] roughly equivalent then to what you consider to be what the employee has put away or the benefits that the employee has had – non-taxable benefits the employee has had for the year. Is that – MR. MILLS Yeah. THE COURT I mean, in a rough calculation. It doesn’t mean – you have, as an expert, I’m sure, a very different explanation than I’m giving. MR. MILLS I think you’re generally accurate in what you’re saying there. I would think that the most accurate way to compute the benefit would be to bring it down to the present value. You look at what the benefits incur for that year, bring it to present value to get a dollar figure. But that’s not really what this calculation is doing. [35] It was Mr. Silvester’s submission that the monthly figure proposed by Lloyd’s represented the cost of the pension benefit to Lloyd’s but not the value lost to Mr. Silvester. Mr. Silvester’s position was that the T-4 figure represented the loss to him. [36] The decision on the pension benefits loss was brief. The judge said: [75] The plaintiff claims loss of pension benefits based on a monthly loss of $750.00. The defendant estimates the present value of the loss of pension benefits at $550.00 monthly. Mr. Youden points out that the defendant's pension plan is a defined benefit plan with no employee contributions. He says pension amounts are based on a preset formula, taking into account years of service, salary level and life expectancy at time of retirement using various actuarial assumptions. [76] Mr. Farrar, however, correctly points out that the defendant for its own tax purposes has claimed deductions based on a pension benefit of $750.00 monthly to the plaintiff. The defendant has also declared that amount for his own tax purposes based on information provided to him by the defendant. [77] Since the defendant's submitted value of the loss is based only on actuarial assumptions, I prefer to base the loss on what both parties declared to C.C.R.A. as being the monetary value of pension benefits for tax purposes. Thus the claim for loss of pension benefits shall be calculated on the basis of $750.00 monthly over the notice period. [37] The judge accepted Mr. Silvester’s theory of recovery. He was clearly not satisfied that Lloyd’s estimate of monthly value was representative of the loss to Mr. Silvester. Having regard to the confusing record before him on this issue, I am not persuaded that the judge clearly erred in fixing the loss at $750 monthly for the notice period. Costs at Trial: [38] The final issue on appeal is the costs awarded at trial. Lloyd’s submits that the judge erred in awarding increased party-and-party costs, and solicitor-and- client costs to Mr. Silvester. [39] Mr. Silvester’s actual solicitor-and-client costs for the litigation totalled $50,000 which the trial judge found to be reasonable in the circumstances. He fixed the "amount involved" for the purposes of calculating party-and-party costs at $90,000.00 which was the gross amount of damages awarded, including pre-judgment interest. The judge further held that the party-and-party costs of $6875, which would result from an application of Scale 3, would be “clearly inappropriate as a substantial contribution toward actual costs incurred”. He therefore awarded party-and-party costs under Scale 5 producing costs of $9,625.00. The judge said of this amount: [90] In doing so, I have also taken into consideration, the conduct of the defendant throughout the action and particularly at the outset of the dispute which, in my view, substantially contributed to the sizable legal bill with which the plaintiff is now faced. The manner of the dismissal of the plaintiff in the first instance required that the plaintiff seek immediate legal assistance. An attempt by plaintiff's counsel to settle, or at least an invitation to discuss the issue, was completely ignored by the defendant. This seemingly settled the tone of the dispute for the duration of the action. The length of the action was extended by the defendant's late amended defence leading to an adjournment and complete re-tooling for the trial which was postponed for approximately six months. [40] The judge also awarded solicitor-and-client costs for that portion of the proceeding attributable to the defence of the allegations of "after-acquired" cause. Acknowledging that solicitor-and-client costs will be awarded only in exceptional circumstances, the judge said: [91] ... Mr. Youden [counsel for Lloyd’s] submits that the defendant should be at liberty to conduct its case in a manner that provides every possible defence to the action. I agree, but where serious allegations are made involving the honesty and integrity of the plaintiff and are not subsequently supported by the evidence, then the defendant must face the consequences of its decision to conduct the defence in that manner. [41] The judge cited Murano v. Bank of Montreal (1995), 41 C.P.C. (3d) 143 (Ont Gen. Div.) affirmed on appeal at (1998), 41 O.R. (3d) 222; O.J. No. 2897 (Q.L.)(Ont. C.A.) in support of the award and referred, inter alia, to the following comments of Adams J.: Solicitor-and-client costs may be justified where a defendant, unjustly accuses a plaintiff of fraudulent and dishonest conduct, persists in those assertions through to and including trial without being able to substantiate them. It does not matter that the defendants based their beliefs on conclusions by other employees who were misinformed: Ribeiro, supra. [42] The award of solicitor-and-client costs in Murano was affirmed on appeal. There, Morden, A.C.J.O., writing for the court, set out the law at p. 243: The following statement of Blair J. in 131843 Canada Inc. v. Double "R" (Toronto) Ltd. (1992), 7 C.P.C. (3d) 15 (Ont. Gen. Div.) at p. 17, which the trial judge quoted, is an accurate statement of law which clearly supports the trial judge's conclusion on this issue: The real question at issue is whether the defendants, or some of them, should be awarded costs on a solicitor-and-client scale, as opposed to the normal party-and-party scale. The power to make such an award is clearly within the discretion of the court. It is equally clear, however, that such a power is only exercised in special and rare cases. See, for example, Foulis v. Robinson (1978), 8 C.P.C. 198, 21 O.R. (2d) 769, 92 D.L.R. (3d) 134 (C.A.) and S & A Strasser Ltd. v. Richmond Hill (Town), supra. Cases where allegations of fraud are made and found to be totally unfounded fall into this latter category. So, too, do cases involving "other allegations of improper conduct seriously prejudicial to the character or reputation of a party", which are found in the result to be totally unfounded: Re Bisyk (No. 2) (1980), 32 O.R. (2d) 281 (H.C.), per Robins J. at p. 287 [O.R.]. [43] The judge accepted Mr. Silvester’s submission that three of the five days of trial were attributable to defence of the allegations of fraud and dishonesty. These same allegations necessitated additional discoveries, delay and a court attendance on the application to amend. The attributable solicitor-client costs amounted to $17,404.20 inclusive of disbursements and GST. [44] Costs are in the discretion of the trial judge. The standard of review is a simple one. This Court will not interfere unless wrong principles of law have been applied or the decision is so clearly wrong as to amount to a manifest injustice. (Conrad (Guardian Ad Litem of) v. Snair (1996), 150 N.S.R. (2d) 214; N.S.J. No. 164 (Q.L.)(C.A.) at ¶ 5 per Flinn J.A.). [45] Lloyd’s submits that there is a double counting in the increase of the party- and-party costs to Scale 5 and the award of solicitor-and-client costs. The exchange between the judge and counsel at the hearing on the costs reveals that the judge was alive to the potential for double penalization. It was, in my view, open to the judge to determine, in his discretion, that the increase from Scale 3 to Scale 5 was warranted in relation to the two days of trial not subject to the solicitor-and- client costs award. Mr. Silvester’s fees in relation to that part of the action were substantial, even after deducting the indemnification of the solicitor-and-client award. The judge was in the best position, having presided over the trial, to assess the reasonableness of the party-and-party award taking into account the facts set out in Civil Procedure Rule 63.04. [46] I am satisfied that the costs award was a reasoned one falling within a proper exercise of the judge’s discretion. Notwithstanding that Lloyd’s has had some measure of success on appeal in reducing the notice period and on the issues of damages for the car allowance and loss of pension benefits, I would not disturb the award of costs at trial. For clarity, the costs awarded at trial need not be adjusted to account for the reduction in the amount involved on account of these changes to the damage award. COSTS ON THE APPEAL: [47] While Lloyd’s has had some success on certain issues on this appeal, I would order costs in favour of Mr. Silvester. Lloyd’s persisted, on appeal, in challenging the judge’s finding that the dismissal was unjust, maintained that its allegations of fraud and misconduct against Mr. Silvester had merit, and challenged, as well the finding of bad faith warranting Wallace damages. Lloyd’s unsuccessful submissions on those issues were extraordinarily lengthy, resulting in a more complex appeal than should have been the case. Counsel agreed that a reasonable award of costs on the appeal would be $8000 plus disbursements. I would award costs of the appeal in that amount to Mr. Silvester. Bateman, J.A. Concurred in: Freeman, J.A. Fichaud, J.A.