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Punishing your Boss with Punitive Damages

07 Mar 2016

Losing one’s job can be devastating and seeking to punish your employer for it may seem like the right thing to do. However, a lawsuit is intended to bring about "compensatory" results – to put one in the position they would have been but for the wrong committed by way a monetary award. The only way to "punish" the employer, in a civil lawsuit, is to get the court to order the wrongdoer to pay more as punishment. This is known as "punitive damages." 

Punitive damages are awarded against parties in order to deter certain conduct that courts finds egregious or outrageous. As such, they hold a crucial place in the Canadian legal system as they enable our courts to go beyond regular awards of damages stemming from a case and to effectively "punish" defendants for bad behaviour. However, such awards require a delicate balancing act, as they must remain anchored in both the conduct of the parties and the resulting harm suffered.

Gordon v Altus, 2015 ONSC 5663 (CanLII) is a case that dealt with an alleged wrongful termination of an employee. Alan Gordon ("Gordon"), the plaintiff, was hired by Altus Group Limited ("Altus"), the defendant, after Gordon’s company sold its assets to Altus on November 1, 2008. The term of employment was to last three years, with an option to renew. "The employment contract provided for the parties terminating the contract with payout provisions if not for cause."

In March 2010, Altus fired Gordon alleging that he was a very unpleasant person to work with, that he spoke of senior management in crude and obscene terms, that he had been involved in a lending transaction that was a direct conflict of interest and resulted in the decreased performance of Altus, and that he maintained a known fraudster as an employee. However, Gordon alleged that his termination by Altus was "without any compensation or notice and without any justifiable cause."

When the Court examined witness testimony it concluded that although Gordon may have been profane there was no evidence of direct insubordination. Furthermore, in terms of the alleged conflict of interest, Gordon’s reaction was to speak to the proper channels in order to gain approval for the aforementioned lending transaction. The Court was satisfied that the allegations by Altus were just "another example of Altus puffing up complaints to justify its peremptory dismissal of Mr. Gordon."

Therefore, the Court held that Gordon was wrongfully terminated. To support its decision the Court looked to the employee handbook provided by Altus to illustrate that in accordance with its own principles the defendant should have used a progressive discipline approach with Gordon. Despite witness testimony that the method was not commonly used on managerial staff, the Court held that it should be used as per the handbook, and failure to use it worked against Altus’ favour.

Punitive Damages

After the determination that Altus had wrongfully terminated Gordon, the Court went on to explain that the conduct of Altus was outrageous because Altus got "mean and cheap" in trying to get rid of an employee in an underhanded way. A chief motivation for the outrage the Court held is that Altus’ behaviour was geared towards their bottom line; they were money driven and dishonest in their journey.

Generally, when a court considers punitive damages there must be an "independent actionable wrong". The Court, with reference to Whiten v. Pilot Insurance Co., 2002 Carswell Ont 537, explained that an actionable wrong is "a breach of a distinct and separate contractual provision or other duty such as a fiduciary duty." The Court determined that the dismissal of Gordon amounted to an actionable wrong and as such punitive damages were due. The court set the punitive damages at $100,000 considering the "outrageous" behaviour of the defendant in dismissing Gordon and trying to hold him to their non-compete clause. "Altus conducted itself so as to beat down the employee".

Boucher v. Wal-Mart

Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419 (CanLII) was a 2014 decision of the Ontario Court of Appeal which also dealt with punitive damages in an employment case involving harassment and intimidation of an employee. In the Court of Appeal’s decision, Laskin J.A. reduced the punitive damages awarded at trial by a significant amount. Although keeping some awards the same, the Court reduced punitive damages against an individual defendant from $150,000.00 to $10,000.00 and punitive damages against Wal-Mart from $1,000,000.00 to $100,000.00, stating that "those amounts are all that is rationally required to punish Pinnock and Wal-Mart and to denounce and deter their conduct."

When contrasted against Gordon v Altus it becomes clear that in Gordon v. Altus the Court failed to consider the limitation that deterrence places on punitive damage awards. However, it is crucial to distinguish the two cases in that the punitive award that was lowered to $10,000.00 was an award against an individual, not the corporation, and that the award against Wal-Mart was initially ten times higher than the award provided for in Gordon v. Altus. Furthermore, the circumstances of Boucher are such that the plaintiff was already being awarded large sums against several defendants. As such, the concern shifted to consider the total amount of money that the plaintiff would be receiving, and it is in light of that fact that the court felt it was right to limit the damages to their desired effect of deterrence. The operating principle therein being a balance between the deterrence and denouncement of the conduct by the defendants and the corresponding enrichment of the plaintiff.

Our Thoughts

Whether you are an employee facing dismissal, constructive or otherwise, or an employer contemplating dismissal, the affect of a potential award for punitive damages must be considered from the outset. Punitive damages are a tool that, although intended to be used as a deterrent, can result in sizeable awards depending on an individual judge’s/jury’s understanding of the facts. As such, it is crucial to consult an experienced employment law professional in order to analyze the facts at hand and to provide you with the strategy that is right for you.

Each case brings with it unique circumstances and unique individuals, your best asset is experience and cutting edge legal expertise, this is why Zeilikman Law is the right choice for the right outcome. Serving Toronto and the Greater Toronto Area, including Richmond Hill, Vaughan, Markham, Oak Ridges, Aurora, Newmarket and Woodbridge, we invite you to give us a call if anything of the above relates to your circumstances.

The above article is for general information purposes only and does not constitute legal advice. If you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere.