A View From In House: When Improperly Alleging Just Cause Has $2.6 Million Consequences

Toronto, ON – July 29, 2026 – A recent wrongful dismissal decision from the Ontario Superior Court of Justice is generating significant attention because of its exceptional damages award, exceeding $2.6 million. (Yes, you read that correctly).

In Silva v. Royal Bank of Canada, 2026 ONSC 3841, the court ordered the Royal Bank of Canada (“RBC” or “Bank”) to pay more than $2.6 million in damages – including $1.9 million for loss of earnings, $250,000 in punitive damages, and $150,000 in aggravated damages.

For my second installment of A View From In House, I will discuss this decision and some of the key lessons it offers employers.

The Facts

The Plaintiff was a 47-year-old financial planner with 12 years of service. She was among the Bank’s most successful financial planners and earned more than $235,000 annually.

RBC terminated the Plaintiff’s employment for cause alleging that she had:

1. forwarded confidential client and Bank information to her personal email account;
2. processed transactions for clients without proper authorization; and
3. advised clients to backdate trade documents.

As a financial planner, the Plaintiff was regulated by the Mutual Fund Dealers Association of Canada (“MFDA“) and was registered with the Ontario Securities Commission. Following the termination, RBC filed a Notice of Termination (“NOT“), a mandatory regulatory filing that became central to the court’s damages analysis.

The Court’s Decision

The court rejected the Bank’s just cause argument. In addressing the allegations, the court found that:

- the forwarding of confidential information to the Plaintiff’s personal email occurred on two occasions, for work-related purposes, and the information was subsequently deleted;
- the trades in question either complied with the Bank’s practices or, at minimum, did not constitute cause-worthy misconduct; and
- the Bank failed to establish that the Plaintiff breached any policy by having clients backdate documents.

The court focused its decision on the following points:

- Inadequate Investigation: A central theme of the decision was the inadequacy of the Bank’s investigation. The court stated that the investigation was not thorough, fair, or impartial, describing it as “more a form of ammunition gathering” (para 298). The court even stated that the Bank “went nuclear, ultimately looking for infractions and manufacturing violations where none existed” (para 347).
- Regulator Issued No Discipline: The MFDA conducted its own investigation and characterized the Plaintiff’s conduct as minor, issuing only a cautionary letter. The court held that this fact undermined the seriousness of the alleged misconduct.
- Employee Relations Advisor’s Dual Role: Shortly before the Bank conducted its investigation into the Plaintiff’s misconduct, the Plaintiff made a retaliation complaint against one of her managers. This complaint was investigated by the same Employee Relations Advisor that was advising the business on performance managing the Plaintiff. The court took issue with this “working of both sides”.

- Extraordinary Loss of Earning Capacity Award: The filing of the NOT, which identified the Plaintiff as having been dismissed for cause, hindered the Plaintiff’s ability to obtain comparable employment in the financial services industry. On this basis, the court awarded more than $1.9 million in loss of earning capacity for income the Plaintiff will lose until age 60—far exceeding typical wrongful dismissal damages over the reasonable notice period.
- Basis for Punitive Damages: The court stated that as one of Canada’s most revered and successful institutions, the Bank should be held to high standards. Accordingly, and due to the above factors, the court awarded an exceptional $250,000 in punitive damages.

While the court observed that the Bank could have simply terminated the Plaintiff without cause, the decision does not address the fact that the Bank is a federally regulated employer subject to the Canada Labour Code, under which employees (subject to certain exceptions) cannot be terminated without cause after 12 months of employment.

Key Lessons and Takeaways

Following this decision, employers should consider the following:

- Improper Cause Allegations can be Very Costly: The just cause standard sets a very high bar. This case demonstrates that unsuccessfully alleging cause can expose employers to substantial liability, particularly where the employee works in a regulated profession and termination-related reporting obligations may affect future employability.
- Ensure the Outcome is not Predetermined: Business leaders may have strong views about how an investigation should end. HR, legal, and other advisors play an important role in ensuring investigations remain impartial, open-minded, and focused on finding facts rather than confirming assumptions.
- Avoid “Advising on Both Sides” of the Employment Relationship: The court was particularly critical of the Employee Relations Advisor’s involvement in both the Plaintiff’s complaint and the Bank’s response to her performance concerns. Where competing complaints or investigations arise, consider whether a different investigator or advisor is required to maintain impartiality.
- Larger Employers May Face Greater Scrutiny: Although the size of an employer should not ordinarily be relevant, the judge specifically emphasized the Bank’s role as a large and sophisticated employer. These comments could make other large employers especially vulnerable to exceptional awards for damages in wrongful dismissal cases and a greater level of scrutiny.

Now more than ever, employers should consult experienced counsel before proceeding with a termination for cause. Protea LLP is available to help your organization navigate these challenging decisions.