Saturday, 24 October 2015

Court Awards $100,000 in Punitive Damages after Employer gets "Mean and Cheap" on Dismissal

There is a cliché that crime does not pay. In the world of employment law, the most heinous crime that an employer can commit is to allege just cause for dismissal where none in warranted.

In the case of Gordon v Altus, 2015 ONSC 5663 (CanLII), the Honourable Justice Bruce A. Glass threw the proverbial book at an employer – awarding the dismissed employee $100,000 in punitive damages in addition to $168,845.00 in wrongful dismissal damages – after the employer elected to get, as Justice Glass put it, “mean and cheap” by conjuring up a cause for firing in order to save money.

Facts

The case concerned Mr. Alan Gordon, who sued for damages for being allegedly wrongfully dismissed from his employment with the Defendant, Altus Group.

Mr. Gordon was not a typical employee. On November 1, 2008, Mr. Gordon’s company sold assets of a business to the Defendant corporation and Mr. Gordon was hired to continue with the Defendant in a written contract of employment. The sale transaction was valued at several million dollars. Some of the sale proceeds were linked to the performance of the business after the closing with an adjustment to be made in the purchase & sale price by February 2010.

By the end of March 2010, the Defendant alleged that Mr. Gordon was not producing effectively and was a very unpleasant person to the point that continued working relationships could not be maintained. The Defendant claimed that Mr. Gordon talked of senior personnel in the company in very derogatory terms and that he swore considerably to the point that it made working with him unbearable. Later, the Defendant claimed that Mr. Gordon did not disclose lending money to a company with which the Defendant was doing business thereby making Mr. Gordon guilty of a conflict of interest to the harm of the Defendant. The Defendant took the position that Alan Gordon continued to employ someone even though she had been charged with fraud and that he misled the Defendant about the fraud charges. At the end of March 2010, Altus fired both Alan Gordon and Ann Gordon. They had arrived at work. Ann Gordon was escorted to a room and basically given her walking papers followed by a severance pay arrangement to which there was no complaint.

Mr. Gordon was fired without any compensation or notice. The employer alleged just cause for dismissal. Mr. Gordon sued.

Decision

Without summarizing the evidence, it is easy to see that Justice Glass did not accept the employer’s position of having just cause for dismissal. In dismissing such claims Justice Glass wrote this:

It appears that upon the Plaintiff giving notice for arbitration, Altus wanted to end the employment contract without paying out the contracted severance funds. In other words, they decided to be cheap and then conjured up a cause for firing in order to save money. I point out that arbitration does not appear to have been anticipated to be a short-termed process here because when this trial commenced, the arbitration was still in process. It appears to me that Altus did not want to have a disgruntled employee in the person of Alan Gordon working with them for an extended period of time. So, Altus fired him allegedly for cause.

On the issue of punitive damages, Justice Glass wrote the following:

[39] The conduct of the Defendant corporation is outrageous because Altus got mean and cheap in trying to get rid of an employee as they approached arbitration for the determination of any adjustment in the asset purchase agreement price. They had a contracted process in place and chose to park it with an unfounded allegation to fire him. Altus paid Alan Gordon no money. Further, Altus expected Alan Gordon to act within the contract terms in not competing with Altus. In effect, he got nothing and was expected not to work within a competitive field to that of Altus. That appears to me to amount to Altus wanting to have its cake and to eat it. Now, there is no free lunch in this world and Altus cannot expect to have one.

[40] Punitive damages may be considered if there is an independent actionable wrong on the part of Altus. Whiten v. Pilot Insurance Co., 2002 CarswellOnt 537 held for such consideration. At paragraph 82, the SCC noted that an actionable wrong can be established with a breach of a distinct and separate contractual provision or other duty such as a fiduciary duty.

[41] I accept the submission of the Plaintiff that in the case of Alan Gordon the independent wrong is the termination of Alan Gordon when his company, now named 3GS, gave notice to pursue arbitration under the asset purchase agreement. Altus failed to perform honestly the employment contract with Alan Gordon.

[42] Punitive damages will be set at $100,000 because that sum of money notes the harsh treatment to Alan Gordon over an extended period of time as a means of sanctioning Altus for its terrible conduct.

Commentary

One has to admit, a reading of Justice Glass’ decision leaves this employment lawyer a little wanting. The decision has very little by way of legal analysis.

For example, while the Whiten v. Pilot Insurance Co. decision is regarded as a leading decision on the issue of punitive damages, the case concerned an insurance dispute. The Supreme Court of Canada’s decision in Honda Canada Inc. v. Keays, [2008] 2 SCR 362, which was an employment case specifically considering in which cases punitive damages are to be awarded, likely would have been a better starting point for any legal analysis on whether punitive damages ought to be awarded. Moreover, the Court of Appeal for Ontario has very recently looked at the issue of punitive damages in the employment law context in two cases, Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419 (CanLII), considered by this blog in the post Wal-Mart Rolls Back Award of Punitive Damages and Pate Estate v. Galway-Cavendish and Harvey (Township), 2013 ONCA 669, considered by this blog in the post Wrongful Dismissal Damages Carry Punitive Elements: ONCA. Neither of those cases is mentioned by Justice Glass.

Justice Glass’ failure to mention any of Keays, Boucher, or Pate Estate is not simply a matter of this employment lawyer ‘nerding out’ over what he knows, it is grounds to question the correctness of His Honour’s decision. The test for awarding punitive damages is high. As the Supreme Court of Canada has repeatedly observed, punitive damages are to be reserved for truly outrageous conduct where the other remedies that the defendant must bear will fall short of an adequate punishment.

Were punitive damages warranted in this case? First, it is important to note that I have not had the benefit of the full record of evidence. Second, it is clear from Justice Glass’ reasons for decision that the employer’s positions were dismissively bogus. To that end, the awarding of punitive damages for the employer’s “cheap and mean” conduct may have been warranted.

However, one cannot help but consider the amount awarded for wrongful dismissal damages. That amount, taken together with what the Court of Appeal for Ontario said in Pate Estate, i.e. that “[such] compensatory damages also had a punitive element”, required the court, I would respectfully submit, to perform a greater analysis of whether punitive damages were truly warranted, and if so why the amount of $100,000 was appropriate.

My observation is that courts are becoming more liberal in awarding punitive damages; especially at the lower levels. As was noted by this blog, recently the Ontario Small Claims Court awarded $5,000 in punitive damages to an employee dismissed after returning from maternity leave. See: Ontario Small Claims Court Awards Human Rights and Punitive Damages after New Mom Constructively Dismissed. Such a movement begs the question: Are judges, who are instructed to award such damages in only the most reprehensible of cases, losing sight of the purpose and intent of punitive damages or is employer conduct getting that much worse that the need for such damages is actually growing?

My sense is that a growing sense of entitlement amongst workers is fueling this phenomenon. The rise in such a feeling, coupled with a sense of immunity from wrongdoing amongst employers, fostered by the courts’ decisions in such cases as Piresferreira v. Ayotte, 2010 ONCA 384, about which this author has frequently railed, has likely produced a bit of a ‘perfect storm’ in terms of litigation. Judges, hamstrung by decisions such as Piresferreira do appear more willing to turn the punitive damages remedy in order to express their disapproval with what they perceive as bad behaviour. Is the tide turning back in favour of workers? A decision from the Court of Appeal for Ontario on this case would certainly go a long way towards taking the temperature of Ontario’s appellate court.

Takeaways for Employees with Labour Pains

The takeaway for employees with labour pains is that there appears to be a shift towards greater judicial willingness to award more than just “reasonable notice” for wrongful dismissal. While this author has expressed caution with respect to such an approach for years, certain recent decisions, including that of Gordon v Altus are perhaps signalling a greater willingness amongst the bench to award more.

Nonetheless anyone reading this blog would be prudent to observe that no two cases are the same and that the smallest of variables can send a case in an opposite direction. Just because one judge believes that punitive damages are warranted does not necessarily mean that the next judge will agree.

As such, the key takeaway for employees who believe that they have been wrongfully dismissed is to seek professional, experienced legal advice.

If you are a worker in Ontario and are looking for advice on whether you may have a case for wrongful dismissal, the professional, experienced and cost-effective employment lawyers for employees at Ottawa's Kelly Santini LLP would be happy to be of service to you.

Takeaways for Employers with Labour Pains

For employers, the takeaway is clear: Do not allege just cause for dismissal unless you are absolutely positive that the same will stand up. As this case demonstrates, judges appear willing to punish those employers who choose to get “mean and cheap” with their employees.

The same is not to say that just cause is dead or the employers do not have any rights. What it means is that employers must be cautious and smart about when to make such allegations as ‘getting it wrong’ can demonstrably be very, very expensive.

If you are an employer in Ontario and are looking for experienced, pragmatic, and honest legal advice with respect to your workplace issues, the professional, experienced and cost-effective employment lawyers for employers at Ottawa's Kelly Santini LLP would be happy to be of service to your business or organization.

Contact Me

To reach the author of this blog, Sean Bawden, email sbawden@kellysantini.com or call 613.238.6321 x260. You may also use the contact box at the top of this page.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

Sean Bawden, publisher of Labour Pains, can be reached by email at sbawden@kellysantini.com or by phone at 613.238.6321.

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP. He is also a part-time professor at Algonquin College teaching Trial Advocacy for Paralegals and Small Claims Court Practice.



2 comments:

  1. The assertion of cause where none exists is a very serious matter.
    An employee fired for cause who conceals this fact commits a civil wrong
    and an employer may rescind an offer based on this omission and may even
    seek damages. On this line of thinking it makes sense to relax or expand
    the circumstances where punitive damages may be awarded in such cases.

    ReplyDelete
  2. Indeed in this case it is very clear that the reason of dismissal really was saving money. How could they ever think to get away with this. Strange wordr though from a judge saying "he got mean and cheap".

    ReplyDelete