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Just Cause or Just a Headache?

The Ontario Superior Court of Justice awarded Alan Gordon (“Alan”) $100,000 in punitive damages due to the outrageous conduct of the defendant employer, Altus Group Limited (“Altus”), when they fired him. The trial judge’s finding rested in large part due to Altus’ unsubstantiated allegations that Alan was fired for just cause when in fact they fired him because of a legal dispute and simply wanted to avoid paying severance.

Facts

Alan Gordon was hired by Altus after selling his business to Altus on November 1, 2008, with the final sale price of the business was to be adjusted by February 2010 depending on the performance of the business after closing.

As the date for the adjustment approached, Altus notified Alan that the purchase price was being reduced due to the poorer than expected performance of the company. According to the trial judge, the reduction was in the millions. In response, Alan activated an arbitration process to dispute the adjustment. Shortly after the arbitration was initiated, Altus fired both Alan and his wife, Ann Gordon. Altus claimed that they had just cause to fire Alan for the following reasons:

  1. Alan referred to senior company personnel in a derogatory manner;
  2. Alan swore considerably which made working with him impossible;
  3. Alan mislead Altus about a conflict of interest; and
  4. Alan employed Lisa Robbins against company policy despite knowing that she had a criminal conviction.

The trial judge found that Altus fired Alan because he wanted to dispute the price adjustment, and they conjured up reasons for doing so to hide their real intentions.

Despite the numerous witnesses who testified that Alan used profane language at work and undermined his superiors, there was no documentary evidence suggesting that this was the case. Specifically, there were no written warnings, reprimands or any notes of Alan actually using profane language or speaking inappropriately about his superiors. The trial judge found it unlikely that Altus would have done nothing to address Alan’s conduct by way of reprimand if it had in fact been so disruptive. Further, none of the witnesses who testified that Alan was abrasive could give even one date on which Alan used profane language. This led the trial judge to conclude that the witnesses were exaggerating Alan’s use of profane language.

Regarding the Lisa Robbins issue, the trial judge found that the complaint about Ms. Robbins was a “red herring” because she resigned within 3 weeks of commencement of work and there was no evidence that Altus suffered any harm as a result of her involvement with the company. Further, there was insufficient evidence that Alan was aware of her criminal conviction.

Finally, Alan addressed the conflict of interest properly by disclosing it to his manager, Michael Barker, who cleared it provided that Alan did not involve himself in the transaction.

As a result, the trial judge found that Altus did not have just cause to dismiss Alan summarily, and Alan was therefore wrongfully dismissed. Altus was ordered to pay Alan the equivalent of almost 12 months’ salary in lieu of notice, which amounted to $168,000. In addition, the trial judge ordered Altus to pay $100,000 in punitive damages for their harsh treatment of Alan.

The trial judge’s reasoning in this respect is worth reproducing:

“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 to 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.”

Our Thoughts

In the world of employment law, punitive damages are a way for courts to sanction egregious behaviour by employers, rather than to rectify a loss or to assist with any kind of emotional or mental damages an employee may have suffered at the hands of the employer. Punitive damages are purely there to punish the employer and to send a message to other employers that such conduct will not be tolerated by courts. The message from this case is clear: fabricating reasons to fire an employee for just cause in order to avoid paying termination pay is grounds for substantial punitive damages.
 
See: Gordon v Altus, 2015 ONSC 5663

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.