Civil Decisions
Ruston v Keddco MFG (2011) Ltd, 2019 ONCA 125
[Pepall, Trotter and Harvison Young JJ.A.]
Counsel:
G. Griffiths and A. James, for the appellant
A. Monkhouse and S. Lucifora, for the respondent
Keywords: Employment Law, Wrongful Dismissal, Notice Period, Aggravated Damages, Punitive Damages, Singer v Nordstrong Equipment Limited, 2018 ONCA 364, Bardal v Globe & Mail (1960), 24 DLR (2d) 140 (HC), Wallace v United Corn Growers Ltd, [1997] 3 SCR 701, Honda v Keays, 2008 SCC 39, Doyle v Zochem, 2017 ONCA 130, Pate Estate v Galway-Cavendish and Harvey (Township), 2013 ONCA 669
Facts:
The respondent was 54 when he was terminated in 2015. He was hired as a sales representative in 2004 and was promoted to president in 2011. At the termination meeting, the respondent was told that he was being terminated for cause and that he had committed fraud without specifics provided. When the respondent advised the appellant that he would be retaining a lawyer, the appellant advised him that if he did, it would counterclaim and that it would be very expensive. When the respondent filed his claim for wrongful dismissal, the defendant responded with a counterclaim in which it alleged cause and claimed $1.7 million in damages.
After an eleven-day trial, the trial judge found that the appellant had failed to prove cause or any of its allegations. She found that the counterclaim for $1.7 million in damages was an intimidation tactic and that the appellant had breached its obligation of good faith and fair dealing in the manner of the respondent’s dismissal. The trial judge dismissed the appellant’s counterclaim and awarded the respondent significant damages, including: (1) damages in lieu of reasonable notice based on a 19 month notice period; (2) bonus and benefits; (3) aggravated and moral damages in the amount of $25,000; and (4) punitive damages in the amount of $100,000.
Issues:
(1) Did the trial judge err in awarding:
(a) Damages in lieu of reasonable notice based on a 19 month notice period?
(b) A bonus for the 2015 year?
(c) Aggravated/moral damages?
(d) Punitive damages?
Holding:
Appeal dismissed.
Reasoning:
(1) No, the trial judge did not err in awarding the respondent significant damages.
(a) The trial judge found that several factors justified a notice period of 19 months, which included that the respondent: (i) was 54; (ii) had family ties to a smaller area for the purposes of finding similar employment; (iii) was terminated for serious allegations of cause; and (iv) was not provided with a reference letter. These factors affected the notice period because they made it less likely that the respondent would find employment which he was unable to do.
(b) The trial judge specifically found that she did not have any credible evidence with respect to the appellant’s post-termination bonus practices. She also found that the respondent had received a bonus in every year of his employment that constituted a significant amount of his overall compensation.
(c) The trial judge correctly noted that employers have an obligation of good faith and fair dealing in the manner of dismissal and also that an employers’ pre- and post-termination conduct may be relevant to the moral damage analysis if such conduct is a component of the manner of dismissal. She was alive to the essentially compensatory nature of aggravated damages and itemized in detail the conduct that she found to warrant the award. The evidentiary record provided ample support for the trial judge’s finding that the manner of dismissal warranted an award of aggravated damages. She found that the appellants conduct in threatening the respondent not to make a claim and in instituting the counterclaim was calculated to, and did, cause the respondent stress. She accepted the respondent’s evidence that the manner of dismissal was devastating and had caused him stress. There was no error of law or principle or palpable or overriding error of fact that would justify interfering with the award of $25,000.
(d) The trial judge carefully reviewed all of the appropriate factors, including that the court “must consider the overall damages award when selecting an appropriate punitive quantum” and that it must be careful to avoid double compensation or double punishment. The trial judge referred to the counterclaim threat by the appellant during the termination meeting–a threat which the appellant carried out. The trial judge also referred to the fact that the appellant had, on the seventh day of trial, reduced its damages claim from $1.7 million to $1.00. The trial judge concluded that the appellant used the claim of $1.7 million to intimidate the respondent. These facts supported her finding of misconduct justifying a punitive damages award.
It does not follow from the fact that this is the same conduct which the trial judge referred to in making the aggravated damages award that an award of punitive damages amounted to either double recovery or double punishment. That is because aggravated damages aim to compensate a plaintiff for heightened damages caused by the breach of the employer’s duty of good faith and fair dealing in the manner of dismissal, while punitive damages seek to punish and denunciate inappropriate or unfair conduct. There can be no question that the appellant’s conduct rose to the level of conduct deserving of denunciation for the reasons provided by the trial judge. Accordingly, there was no basis to interfere with the punitive damages award of $100,000.
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