Tag: punitive damages

Categories
Wrongful Dismissal/Termination

Employer Loses Appeal After Court Finds Its Counter-Claim Was Intended to Intimidate Employee

Black and white chess pieces on a chess board

A recent Ontario Court of Appeal upheld a wrongful dismissal claim in which the trial judge had awarded the employee punitive and moral damages and costs after the finding that the employer had counter-claimed in an attempt to intimidate the employee.

What Happened?

The employee was terminated from his employment in June 2015. At that time, the employee was 54 years old. He had been hired as a sales representative by the employer in 2004 and was promoted over time, eventually becoming president and division manager.

At the time of his termination, he was told that he was being terminated for cause and that he had committed fraud, but no specifics were given.

When he indicated that he would be hiring a lawyer, the employer told him that if he did, it would counter-claim and that it would be very expensive.

About a month later, the employee filed a statement of claim seeking damages for wrongful dismissal. The employer responded with a statement of defence and counter-claim which alleged cause and claimed damages of $1.7 million for unjust enrichment, breach of fiduciary duty and fraud, as well as $50,000 in punitive damages.

Lower Court Decision

After an 11 day trial, the trial judge found that the employer had failed to prove cause against the employee and had failed to prove any of its allegations against him.

The trial judge also found that the employer’s counter-claim for damages in the amount of $1.7 million had been a tactic to intimidate the employee and that it had breached its obligation of good faith and fair dealing in the manner of his dismissal.

As a result, the judge dismissed the employer’s counterclaim in its entirety and awarded the employee significant damages, including: damages in lieu of reasonable notice based on a 19 month notice period, including bonus and benefits; punitive damages in the amount of $100,000; and moral damages in the amount of $25,000.

In total, the employee’s award amounted to $604,627. In addition, the trial judge ordered costs against the employer in the amount of $546,684 to indemnify the employee for his costs in the action.

The employer appealed the trial judge’s trial awards, alleging reversible errors in law.

The Appeal Decision

The Court of Appeal rejected the employer’s arguments regarding the 19 month notice period award and the bonus award. On both issues, the court found that the trial judge had considered the evidence and the awards were appropriate.

The court also rejected the employer’s submission that the trial judge erred in awarding aggravated and moral damages because the evidentiary record provided ample support for the trial judge’s finding that the manner of dismissal warranted an award of aggravated damages. The trial judge had found that the employer’s conduct in threatening the employee to not make a claim was calculated to cause the employee stress. The manner of dismissal was devastating and had caused him stress. The court therefore found no error of law or principle or palpable or overriding error of fact that would justify interfering with the trial judge’s award of $25,000 for aggravated damages.

The court then addressed the employer’s submission that the trial judge erred in making a punitive damages award against it in the amount of $100,000. The employer argued that the judge erred in failing to consider the punitive aspects of a substantial costs award and compensatory damages, and in awarding an amount exceeding what is rationally required to punish the misconduct and to achieve the accepted purposes of a punitive damages award.

The court rejected the employer’s argument. It found that the trial judge had carefully reviewed all of the appropriate factors, including the fact that a 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 court stated that, in reaching her conclusion, the trial judge had referred to the threat by the employer during the termination meeting that if the employee sued, the employer would counter-claim – a threat which it carried out with its counter-claim alleging fraud. The trial judge had also referenced the fact that the employer had, on the seventh day of trial, reduced its damages claim from $1.7 million to $1 dollar, which led the trial judge to conclude that “it did not appear as though the [employer] had any intention of proving damages but rather was using the claim of $1,700,000 strategically to intimidate [the employee]”. These facts supported her finding of misconduct justifying a punitive damages award.

The court concluded by stating:

“There can be no question that the employer’s conduct […] rose to the level of conduct deserving of denunciation for all the reasons cited by the trial judge. The trial judge was alive to the concerns about double compensation, and to the need to consider the entire compensatory package as a whole.”

As a result, the court found that the employer has not shown any basis for this court to interfere with the punitive damages award.

Finally, the court rejected the employer’s leave to appeal the costs award of $546,684, which it argued was unfair and unreasonable. While the court recognized that the costs award was unusually high, it was not satisfied that it was unfair or unreasonable in the circumstances of this case.

The appeal was dismissed and the court awarded the employee costs of the appeal in the amount of $35,000.

Get Advice

If you have questions about unfair practices in the workplace, wrongful dismissal, or any other employment matter, contact the Mississauga employment lawyers at Campbell Bader LLP. We regularly advise both employers and employees on a wide range of issues that arise at work. Contact us online or by phone at 905-828-2247 to schedule a consultation.

 

Categories
Wrongful Dismissal/Termination

Employee Wins Defamation Suit Against Former Employer for Making False Statements About Her Work Performance

What happens if you find out your former employer is spreading misinformation about you? Earlier this year, an Ontario court had to decide on this exact issue and made a rare award of both punitive and defamation damages against a former employer.

The Facts

The employer carries on business as a full-service, fully registered investment firm. The employee in this case had worked for the employer as a securities trader. She joined the firm in 2008 and signed an employment agreement that set out the terms of her employment.

Part of her contract of employment required her to maintain a certain amount of money in a reserve account to absorb losses which commonly occur in trading. During a meeting on April 2, 2009, the employer asked her to increase her contribution to the reserve above what she believed her contract had set out. The employee said she would have to think about it.

The employment relationship ended the next day. The employee claims she was constructively dismissed and resigned by delivering a letter to this effect shortly before noon on April 3, 2009. The employer claims it terminated her employment for cause and delivered a letter to this effect late in the day on April 3, 2009.

In addition, on April 4, 2009, the employer filed a Notice of Termination on the National Research Database maintained by its regulator, the Investment Industry Regulatory Organization of Canada (“IIROC”).  The notice stated that the employee was terminated for cause for failing to follow trading policies and engaging in unauthorized trading.

The Issues

The employer commenced an action claiming that the employee owed monies arising out of losses she incurred as a trader. The employee counterclaimed for damages for constructive dismissal and defamation.

The Decision

First, the court had to decide whether the employee was constructive dismissed or whether she was terminated for cause. After reviewing the contents of the contract, the court found that the increase to the reserve amount requested by the employer was not in accordance with the terms of the employee’s contract. The court found that her failure to pay the sums demanded did not constitute grounds to terminate her employment for cause and amounted to constructive dismissal. Constructive dismissal occurs where an employer makes a unilateral and fundamental change to a term or condition of an employment contract without providing reasonable notice.

The court awarded the employee just over $60,000 in pay in lieu of notice, representing six months of income and vacation pay.

The court then turned to the question of defamation. The employee was claiming $25,000 for damages for defamation arising out of the notice that the employer provided to IIROC concerning her departure. The employer denied that the notice was defamatory and asserted the defence of justification; in other words, it asserted that the statements were true. In the alternative, it argued that, if the statements were defamatory and untrue, the defence of qualified privilege applied.

The court began by stating that a “statement is defamatory if it tends to lower the reputation of a claimant in the eyes of a reasonable person” and that it is “defamatory to suggest that a person has been guilty of dishonest or disreputable conduct in a profession or calling.” Based on the evidence, the court found that the information included in the notice was defamatory.

The court then considered the employer’s first defence of justification. It stated that this defence is established if the statement made is substantially true. Additionally, the statement must be substantially true at the time that it is published. The court rejected this defence. It found that the employer failed to produce any documents to support its allegation of unauthorized trading.

Finally, the court considered the employer’s defence of qualified privilege. The court explained that this defence provides that, in some circumstances, the maker of a statement should have immunity from defamation and that qualified privilege arises where the maker of the statement has an interest in making the statement and those to whom the statement is made have an interest in receiving it.

While the court accepted the fact that the employer had an obligation to inform IIROC of the reasons for the employee’s departure, it noted that the defence of qualified privilege requires that the statements made are reasonably appropriate to the circumstances and that they are made honestly and in good faith. It found that the employer was “either being untruthful in its filing or was reckless with regard to the truth when making the filing.” As a result, the court rejected the defence and awarded the employee $25,000 for defamation damages.

In addition, the court considered whether the employee was entitled to punitive damages. The court stated that punitive damages are intended to punish the wrongful actor, not to compensate the complainant. In this case, it found that punitive damages should be awarded for several reasons, including deterrence, finding that “[this] is a case of indefensible, reprehensible conduct steadfastly maintained for eight and a half years.”

The court made an additional award of $25,000 in punitive damages.

Get Advice

 If you have questions about unfair practices in the workplace, wrongful dismissal, or any other employment matter, contact the Mississauga employment lawyers at Campbell Bader LLP. We regularly advise both employers and employees on a wide range of issues that arise at work. Contact us online or by phone at 905 828 2247 to schedule a consultation.