The vast majority of claims for punitive damages in wrongful dismissal cases in Canada are dismissed. However, those claims that do succeed have resulted in noticeably larger punitive damage awards in recent years. While still far below the multi-million dollar awards in the United States, there are now several decisions of the Ontario Court of Appeal and British Columbia Court of Appeal where the employee has been awarded six-figure punitive damage awards for particularly egregious acts of the employer. Juries have also shown a willingness to order employers to pay substantial punitive damage awards.
The largest punitive damage award in Ontario in the employment context is $450,000 in Pate Estate v. Galway-Cavendish and Harvey (Township),1 a 2013 decision of the Ontario Court of Appeal. The employee had worked for nearly 10 years for the Township when he was accused of several instances of theft related to missing building permit fees. He was advised that if he resigned the police would not be contacted. He refused, maintaining his innocence. The Township terminated his employment for cause. It turned over information to the police that resulted in the employee being charged, however, he was ultimately acquitted at the resulting criminal trial. A supervisor for the Township never informed the police that one of the instances of theft had already been investigated by the Township and no wrongdoing was found.
The Court listed the following factors that justified the award of punitive damages:
- damage to the employee’s reputation;
- the Township’s unfounded allegations of misconduct;
- the Township’s failure to provide the employee with particulars of the allegations or an opportunity to respond; and
- the ultimatum provided to the employee that the police would not be contacted if he resigned from his employment.
The plaintiff was awarded $50,000 in punitive damages in the 2016 decision Morison v Ergo-Industrial Seating Systems Inc.2 The employer had alleged cause when there was no reasonable basis. Instead, cause had been alleged by the employer for tactical and financial gain. The employer had also withheld payment of the amounts owing pursuant to the Employment Standards Act which had a significant financial impact on the plaintiff.
In 2015 in Gordon v Altus3 the Ontario Superior Court of Justice awarded $100,000 in punitive damages. The trial judge found that the employer “got mean and cheap” and had “put together a process to justify their actions after the fact” which included unfounded allegations and “puffing up complaints”. The unfounded allegations included conflict of interest and using derogatory and profane language.
Similarly, in 2014 in Kelly v. Norsemont Mining Inc.4 the British Columbia Superior Court awarded $100,000 in punitive damages after the employer refused to pay the employee his final month’s salary after termination because he hadn’t signed a release. It also withheld the employee’s personal belongings. The employer alleged incompetence and threatened the employee with time-consuming and expensive litigation (which happened).
In 2011 the Court of Appeal of Alberta in Elgert v. Home Hardware Stores Limited5 awarded $75,000 in punitive damages and $60,000 in defamation damages to a former employee who was falsely accused of sexual harassment and assault. The employer’s investigation had been biased and the outcome preordained. Its treatment of the employee was high-handed and vindictive. A jury had awarded $300,000 in punitive damages but the award was reduced to $75,000 on appeal.
In 2010 in Nuala MacDonald-Ross v. Connect North America6 the Court awarded $50,000 in punitive damages for conduct that the Court described as “reprehensible”. After the litigation commenced the employer made unfounded allegations that it had discovered that the employee had misappropriated company funds. The employer also filed a complaint with the police regarding the alleged theft.
In 2005 in Downham v Lennox and Addington (County)7 the plaintiff was also awarded $100,000 in punitive damages. The plaintiff occupied the position of Manager, Non-Profit Housing Project with the County. He was also the acquaintance of a convicted pedophile named Holmes. The plaintiff agreed to be Holmes support person upon his release from prison. Months after his release the Parole Board concluded that Holmes had breached certain parole conditions and imposed new parole conditions. The plaintiff gave Holmes an application for public housing and accompanied Holmes to meet with the manager. The manager knew that Holmes met criteria and that she could not legally refuse to rent to him. However, she did not want to rent the apartment to Holmes because he was a pedophile. The plaintiff was later advised that Holmes would not get the apartment and that his involvement in the matter was a conflict of interest. The plaintiff complied with a direction that he have nothing more to do with Holmes’ application.
The plaintiff was suspended and told to stay off county property and to have no communication with any county employee. A letter to the plaintiff indicated that he had placed himself in a conflict of interest and that he may have acted outside Standards of Conduct for County employees. After further investigation, he was terminated. The plaintiff experienced severe psychological distress as a result
At trial, the court found that the investigation process was mismanaged. The approval of the plaintiff’s termination based on a report which was fundamentally flawed and that contained false and unfounded information. The County’s assessment of the degree of conflict of interest grossly distorted. The plaintiff did not try to get Holmes special priority or to have Holmes’ application accepted outside the rules. The County had an obligation to accept Holmes since he met all eligibility requirements and there was no waiting list. The County’s conduct was considered to be egregious because it relied on rules in its policy about employee conduct to justify its actions but completely failed to follow the rules with regards to renting out public housing. In addition to the punitive damage award of $100,000, the plaintiff was awarded $25,000 in moral damages.
In 2012 two juries awarded dismissed employees with significant punitive damage awards.8 In 2012 a jury of the British Columbia Supreme Court in Higginson v Babine Forest Products Ltd. and Hampton Lumber Mills Inc.9 ordered the two defendant employers to pay $573,000.00 in punitive damages. The jury found that the two defendants had engaged in improper conduct in terminating the plaintiff’s employment. The plaintiff was a manager of the electrical department of a sawmill when he was terminated from his employment for just cause. He alleged that his dismissal occurred as a result of Hampton purchasing the Burns Lake sawmill from Babine. To avoid paying out termination packages to long service employees the companies followed a strategy of deliberately creating a hostile working environment in the hope the employees would quit. When the plaintiff did not quit the companies fabricated reasons to justify his dismissal for cause. The employer appealed the punitive damage award. The parties settled prior to the appeal being heard meaning we do not know what the employer ultimately paid the employee.
An Ontario jury in Boucher v Wal-mart Canada Corp. and Jason Pinnock10 awarded the former Walmart employee with over $1.4 million as a result of workplace harassment and assault. The plaintiff alleged that her manager harassed her for months. The harassment included making her count wood pallets in front of other employees to prove that she could count and calling her an idiot. The plaintiff also claimed that another employee punched her in the arm twice (that employee was dismissed by Walmart). The plaintiff resigned and took the position that she was constructive dismissed. Walmart paid her a severance package representing 32 weeks’ pay which was in excess of her entitlement pursuant to her employment contract. The Court of Appeal11 reduced the punitive damage award to $100,000 against Wal-Mart and $10,000 against the manager.
An older decision that resulted in a significant punitive damage award is the 1996 decision Mustaji v. Tjin12. In Mustagi, the British Columbia Court of Appeal upheld a punitive damage award of $175,000 to a foreign nanny. The plaintiff came to Canada as the defendants’ nanny. A contract was signed that outlined her duties and her wages for 40 hours a week. However, after arriving in Canada she was required to be the defendants’ live-in servant and nanny, seven days a week, 365 days a year. She was also not paid in accordance with the contract. She was denied basic freedoms such as the right to go out on her own or invite friends home.
The court found that the defendants had breached their fiduciary obligations to her their fiduciary obligations to her when they used their power over the plaintiff to promote their interests in the employment relationship in a manner that conflicted with their overriding duty not to take advantage of her vulnerability. The court concluded that the defendant’s conduct was reprehensible justifying an award of punitive damages.
The amount awarded in appellate decisions set out above contrast with older Court of Appeal decisions. For example, in Ribeiro v. Canadian Imperial Bank of Commerce 13 the court considered an employee who, after six years of service, was terminated from his employment for cause and had criminal charges laid against him for fraud. At trial, the court found that the bank had fabricated information to support its allegation of fraud. The Bank had also mistreated members of the plaintiff’s family who were also employed by the Bank. The trial judge awarded $10,000 in punitive damages. On appeal14 the Ontario Court of Appeal increased the punitive damage award to $50,000. To place the award in perspective, the Bank of Canada’s online inflation calculator states that $50,000 in 1992 would be the equivalent of $72,475 in 2015.
In 1994 the Ontario Court of Appeal in Francis v. Canadian Imperial Bank of Commerce15 increased the punitive damage award of the trial judge from $15,000 to $40,000. Punitive damages were awarded after the Bank found to have wrongly accused the plaintiff of participating in a pyramid scheme. The plaintiff was suspended and subsequently fired from his employment. His termination letter that stated he had allegedly contravening acceptable banking procedures and irregular lending practices. He was not given particulars of the allegations against him.
At trial, the court found that the report of the Bank’s investigator was biased and sloppy. The bank had accused the plaintiff of fraud which had devastated the plaintiff’s reputation without conducting a full investigation or providing the plaintiff with an opportunity to answer the allegations. Furthermore, the defence of just cause was not withdrawn until immediately before trial.
Other recent punitive damage awards in employment cases have been lower. In Mastrogiuseppe v. Bank of Nova Scotia, 2005 CanLII 4675716 the plaintiff had been dismissed for dishonesty. The Bank was not able to prove those allegations and the plaintiff was awarded wrongful dismissal and moral damages. Punitive damages were awarded in the amount of $25,000 because the Bank’s conduct found to be was oppressive and high-handed when it blacklisted the plaintiff’s relatives and in unlawfully and improperly deducted funds from the plaintiff’s account with another bank in respect of her outstanding loans from the Bank. On appeal, the Ontario Court of Appeal found that the award of $25,000 in punitive damages was the minimum amount capable of deterring and denouncing the Bank’s conduct.
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- Pate Estate v. Galway-Cavendish and Harvey (Township), 2013 ONCA 669 (CanLII);
- Morison v Ergo-Industrial Seating Systems Inc., 2016 ONSC 6725;
- Gordon v Altus, 2015 ONSC 5663;
- Kelly v. Norsemont Mining Inc., 2013 BCSC 147;
- Elgert v. Home Hardware Stores Limited, 2011 ABCA 112;
- Nuala MacDonald-Ross v. Connect North America, 2010 NBQB 250;
- Downham v. Lennox (County), 2005 CanLII 45197 (ONSC);
- Juries do not prepare written reasons for their decisions. The case summaries have been taken from secondary sources such as newspapers;
- Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419;
- Mustaji v. Tjin, 1996 CanLII 1907 (BCCA);
- Ribeiro v. Canadian Imperial Bank of Commerce, 1989 CanLII 4281 (ONSC);
- Ribeiro v. Canadian Imperial Bank of Commerce, 1992 CanLII 7447 (ONCA);
- Francis v. Canadian Imperial Bank of Commerce, 1994 CanLII 1578 (ONCA);
- Fastrogiuseppe v. Bank of Nova Scotia, 2005 CanLII 46757(ONSC), aff’d 2007 ONCA 726;