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Punitive Damages Are Alive And Well

The big money in employment–related litigation seems to be found in claims which support awards of punitive and aggravated damages. It appears that employers are willing to provide ample testing grounds for these damages claims.
Only a couple of weeks ago, I wrote about the Supreme Court of Canada reining in a punitive damages award against Honda Canada Inc. In that case, a lower Ontario Court had set a precedent by issuing one of the richest ever wrongful dismissal awards in Canadian history. 
Keays had been a long-term employee at Honda’s Ontario production facility. He was found to be a dedicated and conscientious employee who had made his employment at Honda his life’s work. He had, however, experienced ongoing health problems which resulted in a medical leave and the collection of disability benefits.
After a couple of years, the disability benefits were abruptly terminated and his benefits appeal was dismissed despite his physician’s diagnosis of chronic fatigue syndrome. Forced to return to work, the employee experienced a pattern of increasing absences. The lower court judge found that, upon his return, Honda “hounded” the employee over his rate of absences.
The total damages awarded, $650,000, included punitive damages of $500,000. The lower court judge referred to Honda’s conduct as a “protracted corporate conspiracy” of harassment, discrimination, and bad faith. 
At the first level of appeal, the Ontario Court of Appeal reduced the punitive damages award from $500,000 to $100,000. The case was appealed to the Supreme Court of Canada which, in its decision, eliminated the punitive damages award altogether, stating that Honda’s “conduct in dismissing Keays was in no way an egregious display of bad faith justifying” such an award of damages. 
Now, another recent decision out of Ontario, involving a claim of malicious prosecution against the employer, has resulted in total damages exceeding $2 million (of which $688,000 were of the punitive and aggravated variety).
McNeil was an employee of Brewers Retail Inc. in Niagara Falls. He was fired after covert video surveillance equipment collected evidence of him taking money from the store’s cash register on two occasions. 
Brewers Retail handed the tapes over to the police and McNeil was subsequently charged with, and convicted of, theft. The conviction was followed quickly by the termination of McNeil’s employment.
As a result of the criminal charges, McNeil became the subject of media attention. Newspaper articles reported that he was involved in a fraudulent scheme. There were also local radio and television reports containing news of McNeil’s arrest and of the charges against him.
The employer’s video tapes had also, however, contained evidence of McNeil having replaced the money in the register (for both instances, McNeil had a good explanation of why he had replaced money taken from the till). The police, however, were never told about nor shown this exculpatory evidence.
The employer was later demonstrated to have known from the outset about the video evidence revealing McNeil’s innocence. It took almost three years for the criminal convictions to be overturned. McNeil later commenced a civil action against Brewers Retail for malicious prosecution.
The Ontario Court of Appeal reviewed the award of damages given at trial. It stated that the aggravated and punitive damages awarded to McNeil reflected the jury’s sense of outrage at the employer’s conduct and the enormity of the harm McNeil had suffered. It also observed that the jury viewed Brewers Retail as a calculating and insensitive company prepared to see an innocent man convicted of a crime it knew he did not commit.
The Court found that the police and the Crown were wholly reliant on the evidence put forward by Brewers Retail and that the employer had actively and deliberately misled them. There was strong evidence that Brewers Retail deliberately withheld information when it went to the police with information about the alleged theft by McNeil.
The Court went on to state that the duplicity and deception carried on by Brewers Retail was not limited to a one time act of folly. It carried on the charade of McNeil’s alleged guilt for the better part of thirteen years until the truth was demonstrated.
In the course of its conduct, the Court said Brewers Retail robbed McNeil of his reputation, his employment, his dignity, and his self-respect. He was publicly proclaimed as a thief and, in addition to losing his job, was forced to rely on employment insurance, to sell his home, and to endure the anguish, stress, and uncertainty of a thirteen year ordeal.
It seems that some employers are all too willing to provide employees with fertile grounds for lawsuits claiming punitive and aggravated damages. This is one award which seems very unlikely to be overturned by the Supreme Court of Canada.
Robert Smithson is a partner at Pushor Mitchell LLP in Kelowna practicing exclusively in the area of labour and employment law. For more information about his practice, log on to