Saturday, 9 July 2016

Doubling Down Damages – The Ontario Court of Appeal Sends Strong Message to Discriminatory Employers

What is the penalty for embarking on a “campaign of abuse”, intentionally designed to force a disabled employee to quit her job? In a June 2016 decision from the Court of Appeal for Ontario, Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2016 ONCA 520 (CanLII), Ontario’s highest court awarded nearly a quarter million dollars plus costs following the wrongful dismissal of a long-term employee who has harassed and belittled by her employer after losing her hearing.

Facts

Case summary prepared by Kelly Santini LLP summer student, Kate Agyemang.

The Plaintiff, Ms. Vicky Strudwick, was employed in a data entry and staff recruitment capacity with the Defendant, Applied Consumer, a focus group recruitment firm. The Plaintiff worked for the Defendant for 14 years before she became losing her hearing to a viral infection in 2010. Despite her efforts to seek appropriate workplace accommodation, which included trying to have the Canadian Hearing Society do an onsite private assessment, the Defendant refused to adequately accommodate her, or even set up a system wherein a co-worker would inform the Plaintiff of a fire alarm. The record showed the Defendant in fact took active steps to make the workplace more difficult for her, which the Court described as a “campaign of abuse” against the Plaintiff that was designed to force her resignation. For example, her employer would purposely give Ms. Strudwick instructions in a manner that prevented her from lip reading, and then call her “stupid” for not understanding the instructions. The Defendant would also advise co-workers not to talk to her and instructed other office workers to telephone Ms. Strudwick so she would miss the call, providing her superiors with yet another opportunity to ridicule her. Even basic requests, like being able to rotate her desk so she could see people approaching her, were refused. The Defendant’s reprehensible behaviour included routinely allowing the Plaintiff’s superiors to publicly belittle, harass, and humiliate her. In May of 2011, following a toastmasters meeting, in which she helped select the topics discussed, but did not present, she was again publicly degraded by her superiors. The next day, the Plaintiff was suddenly terminated for alleged insubordination at that meeting.

She brought an action for wrongful dismissal, but the Defendant did not let up. They delayed her outstanding pay and listed her as dismissed for wilful misconduct with Employment Service of Canada, thereby delaying her employment insurance payments. She eventually found very sporadic work, but as a result of the manner in the Defendant treated her, she was diagnosed with adjustment disorder with depressed mood. As a result, in order cope, she had to pay for her own extensive cognitive behavioural therapy.

The Defendant did not defend the action and was noted in default. After an unsuccessful attempt to have the noting in default set aside, a hearing took place to assess damages. The motion judge, the Honourable Mr. Justice Grant R. Dow, considered the Plaintiff’s uncontradicted evidence and submissions of counsel for both parties. After finding the Defendant’s conduct to be above and beyond that of unfair treatment, the motion judge held that the Defendant’s refusal to accommodate this employee was utterly “horrendous”. The Plaintiff was awarded multiple heads of damages including: $49,907.05 in wrongful dismissal damages as payment in lieu of notice; $20,000.00, for violations of the Human Rights Code; $18,984.00 for intentional infliction of mental distress; and $15,000.00 for punitive damages. This amounted to $113,782.79 of damages, including pre-judgment interest, plus $40,000 in costs. The Defendant never made a single payment.

Ms. Strudwick appealed the damages assessment, arguing that given her employer’s egregious conduct, the motion judge erred by assessing damages that were simply too low. She also sought leave to appeal the motion judge’s costs award. Applied Consumer did not challenge the damage awards but cross-appealed to seek a reduction of the costs award to $20,000.

Decision

Making a strong statement about the intolerable and unacceptable nature of discriminatory conduct, the Court of Appeal for Ontario allowed the appeal and increased the awarded damages to the aggregate sum of $246,049.92, more than doubling the initial award. The Court denied leave to either party on the costs issue.

The two issues on appeal were:

1) whether Ms. Strudwick was able to seek more damages that she initially claimed; and

2) whether the trial judge erred in his assessment of damages.

The Pleadings Issue

The Court of Appeal explained that in Burkhardt v Beder, [1963] SCR 86 and Whiten v Pilot Insurance, 2002 SCC 18, the Supreme Court of Canada made it clear that a judgment cannot be given for an amount greater than that claimed, unless the claim is amended. On appeal Ms. Strudwick was now seeking over one million dollars of damages, but sought only $240,000 in her initial claim, plus the loss of collateral benefits. There had been no attempt to amend her claim, which her lawyer suggested was due to the fact they did not wish to open the pleadings in case the employer would try to defend. The Court found it had no jurisdiction to exceed the $240,000 plus the unquantified amount to compensate Ms. Strudwick for the benefits she lost during the period of reasonable notice.

Damages for Wrongful Dismissal: 24 Months

With respect to damages for wrongful dismissal, Ms. Strudwick argued her dismissal sentenced her to chronic unemployment and sought pay in lieu of notice to age 65 – or for 125 months. By awarding Ms. Strudwick 20 months for pay in lieu of reasonable notice, plus 4 months for Wallace factors, the Court noted the motion judge had correctly considered the Bardal factors. Further, while there is no cap on reasonable notice, the motion judge was also correct that only exceptional cases will merit an award of more 24 months of reasonable notice. Finally, the Court of Appeal affirmed the purpose of these damages is to give the employee what she needs to support herself until she should be able to secure – not until retirement. As such, while the trial judge did err in awarding “Wallace” damages as opposed to actual damages as required by Keays, as there was no challenge to this additional four months of reasonable notice, the 24 months would not be interfered with. The additional damages for loss collateral benefits were not challenged.

Damages for Human Rights Violations: $40,000

With respect to the Defendant’s breaches of the Human Rights Code, the motion judge identified a range of awards between $2,000 and $30,000, before awarding Ms. Strudwick $20,000 for the unconscionable conduct of her employer.

On appeal, Ms. Strudwick argued that this $20,000 was too low considering her particular vulnerability and the seriousness of their bad faith treatment. The Court of Appeal found the trial judge erred in two respects: i) by failing to consider the impact of the discrimination on Ms. Strudwick; and ii) failing to consider the abuse was more than failing to accommodate her, but was actually designed to increase the difficulties she was experiencing at work. The unconscionable conduct went on for months as Ms. Strudwick was afraid to come forward for fear of losing her job. This harm was exacerbated by the fact she was a widow, who had recently acquired a serious disability late in life, and had no other source of income. Further, the abuse she suffered left her immediately isolated and stigmatised, which subsequently lead to depression, anxiety, and an adjustment disorder. The effect of Applied Consumer’s victimization of Ms. Strudwick was both profound and prolonged, making the effects of the discrimination particularly severe.

Further, the Court of Appeal held that Applied Consumer was vicariously liable for the harassment under section 46.3(1) of the Code. The Court explained that while a corporation cannot be held vicariously liable for the acts of its employees, when it comes to harassment, the failure of management to deal with the harassment creates a poisoned work environment, a violation for which the corporation can be held vicariously liable. (See paragraph 68 of the Court of Appeal’s reasons for decision.) Additionally, where the individual responsible for the harassment is a directing mind of the corporation, the corporation can also be held liable for the individual acts of harassment. For Ms. Strudwick, not only did a managing employee participate in the harassment, he failed to address the harassment perpetrated by other employees. The result was a highly poisoned work environment. As such, the Court was obliged to interfere, and awarded $40,000 in damages.

Damages for Intentional Infliction of Mental Distress: $35,294

The Court of Appeal also found that the motion judged had erred when he awarded too little for the Defendant’s intentional infliction of mental distress. First, the increased costs of therapy for Ms. Strudwick’s permanent deafness were not considered. While the cost of the cognitive behavioural therapy itself was awarded, the costs of having a sign-language interpreter present were not. Further, non-pecuniary losses should also have been considered for her pain and suffering. As a result, $35,294 was awarded.

Aggravated Damages: $70,000

The Court of Appeal rejected the notion there was a complete overlap between the Wallace factors and aggravated damages as suggested by the motion judge. The Court of Appeal for Ontario held in the case of Boucher v Wal-Mart Canada Corp, 2014 ONCA 419 (CanLII), (see my summary of such case in the post Wal-Mart Rolls Back Award of Punitive Damages) that aggravated damages are compensatory and meant to address the “additional harm suffered because of the way the contract was breached”. The focus is thus on the unfair or bad faith conduct of the employer. For Ms. Strudwick, like the plaintiff in Boucher, the abuse was purposeful, profound, and had a serious impact on the complainant. The Court of Appeal thus awarded Ms. Strudwick $70,000 for aggravated damages, from which the $8,400.18 initially awarded for the “Wallace” factor would be deducted to prevent overlap. (Under the framework established by the Supreme Court of Canada in 2008 in Honda v Keayes, a “Wallace” extension should never have been awarded.)

Punitive Damages: $55,000

Finally, the Court of Appeal agreed punitive damages were warranted, but needed to be increased to deter this type of unacceptable behaviour. The $15,000 initially awarded was the result of the motion judge erroneously considering the employer’s lack of profit from or concealment of their abuse as a mitigating factor, and overemphasized the damages’ impact on the company. As such, the Court of Appeal found $15,000 did not go far enough to accomplish retribution, and awarded Ms. Strudwick $55,000 in punitive damages.

Final Result

The total damages were thus $247,850.79, which were reduced to $240,000 to account for limits imposed by the Statement of Claim.

Commentary

What is somewhat surprising about the Court of Appeal’s decision is that while it did increase the total damages award quite significantly from what the motion judge had awarded, the total amount awarded was still quite modest in the grand scheme of things. Given the court’s willingness to first assess damages and then reduce the amount on account of the pleadings issue, there is no reason why the Court of Appeal could not have assessed damages much higher.

Of all the heads of damages assessed, the amount awarded for breaches of the Human Rights Code is the most important. Since the expansion of the Code to allow plaintiffs to ‘piggy-back’ claims for breaches of the Human Rights Code to their civil lawsuits very few cases have actually gone to decision. (See e.g. Ontario Superior Court Awards Human Rights Damages concerning the case of Wilson v. Solis Mexican Foods Inc., 2013 ONSC 5799.) As of writing this post in July 2016, this is first case of which I am aware where the Court of Appeal has assessed such damages.

In increasing the award to $40,000, the Court of Appeal made reference to several decisions of the Human Rights Tribunal of Ontario where similar damages were awarded. Omitted from such discussion, however, was the case of O.P.T. v. Presteve Foods Ltd., 2015 HRTO 675 (CanLII), summarized by this blog in the post HRTO Awards $150,000 to Temporary Foreign Worker following Sexual Assault by Employer, in which, as the blog post title suggest, the HRTO awarded $150,000 in damages to an employee who was discriminated against by her employer because of her nationality.

The $40,000 award thus appears to reflect the previous ‘high score’, which is generally viewed to be the award in Lane v. ADGA Group Consultants Inc. (2008), 91 O.R. (3d) 649 (ON SCDC), where the Ontario Divisional Court upheld the HRTO’s award of $35,000 to a complainant who was dismissed ten days after he started work when he revealed that he had bipolar disorder and started exhibiting pre-manic symptoms, plus $10,000 in damages for mental anguish.

What the decision reveals is that when it comes to awarding damages for breaches of the Human Rights Code, Ontario’s civil courts will continue to take their lead from the Human Rights Tribunal.

The balance of the decision is well-reasoned and, contrary to my assessment of the Court of Appeal’s decision in Oudin v. Centre Francophone de Toronto, 2016 ONCA 514, see The ONCA’s Decision in Oudin v. CFT Leaves One 'Wundering' – Is Wunderman Dead?, well-articulated. The Court of Appeal in this case invested a considerable degree of effort to explain why it was awarding the amounts it was awarding, including citing the applicable law and previous, relevant decisions. This decision serves as a useful users’ guide to the assessment of damages for bad behaviour in employment.

Takeaways for Employees with Labour Pains

In an interview with the Toronto Star, (see Mississauga company fined $266,000 for ‘campaign of abuse’ against deaf worker), Ms. Strudwick commented that, the decision “doesn’t put this to rest… I have to continue to live through this ordeal.” Adding, “It was a nightmare, that part of my life, to wake up and dread going to work. But it’s a job, so you put up with it.”

Such words demonstrate the challenges and limitations of the civil justice system. A quarter million dollars is undeniably a considerable amount of money, but given the option of the money (which followed a considerable legal battle), and not being treated as she was, I would wager that Ms. Strudwick would have declined the money.

Nonetheless, ACCE did not give Ms. Strudwick the choice. Rather, it chose to intentionally mock her, humiliate her, and embark on a “campaign of abuse”. Given those circumstances, Ms. Strudwick was forced to assert her rights. It is not easy to be a plaintiff.

What the decision shows is that Ontario’s courts will not condone bad behaviour by employers, especially against society’s most vulnerable. The Boucher decision reflects a similar sentiment.

If you are a worker in Ontario and you are suffering intentional workplace abuse, designed to force you out of employment, it’s time to speak with an experienced employment lawyer. 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

It should go without say, but the takeaway for employers from this case is do not be awful to your employees. As counsel to several businesses of all shapes and sizes I appreciate that dealing with requests for accommodation can be frustrating and challenging. Some requests will be unreasonable, but many will not be. Certainly a hearing impaired employee asking that she be advised if the building is on fire is something that can, and most obviously should, be accommodated.

If you are an employer and one of your employees is asking for accommodation of a disability, speak with an experienced employment lawyer before you do anything else. There are limits on how far an employer must go, but there are other obligations on employers of which it would be very prudent to be aware. As the Strudwick case clearly demonstrates getting it wrong can be very, very costly.

If you are an employer and find yourself in such a situation, contact the professional, experienced and cost-effective employment lawyers for employers at Ottawa's Kelly Santini LLP; we 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.

Sean P. Bawden is a partner with Kelly Santini LLP, located in Ottawa, Ontario, Canada. He practices in the areas of employment law and civil litigation. He has also taught Trial Advocacy for Paralegals and Small Claims Court Practice at Algonquin College in Ottawa.

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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.

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