Canada: The Superior Court Of Quebec Grants Punitive Damages Of $300,000 In Constructive Dismissal Case

In Quebec, Section 1621 of the Civil Code of Quebec allows for punitive damages to be awarded where it is permitted by law and states a non-exhaustive list of criteria to be considered when evaluating the amount. More particularly, the amount of damages should not exceed what is sufficient for the purpose of prevention.

On November 3rd, 2011, the Superior Court of Quebec in Chalifour v. IBM Canada ltéegranted a former senior executive $35,000 for moral damages and $300,000 for punitive damages relating to intentional interference with his dignity and with his reputation in connection with his constructive dismissal. The amount awarded in this case is among one of the highest ever in the context of a dismissal in Canada.


In this case, the employee had worked for IBM since 1995 and held the position of "Senior Director" since 2004. In this role, the employee had between 100 to 250 people under his supervision, led a team of 15 executive project managers and managed an income portfolio of 400 million dollars per year.

In September 2006, the employer removed him from his position and demoted him following a misunderstanding during a business trip. Until then, the employer never mentioned any weaknesses in his performance nor the possibility of a change in assignment. Moreover, the employer even confirmed that the employee would hold the same position until the end of 2007. The employee refused the new position offered and soon after, was diagnosed with cancer.

During his sick leave, the employer decided to announce his replacement and transferred him to a newly created position. The employer also refused to disclose the salary related to this position. In addition, in this new position, the employee would no longer be responsible for an income portfolio and would only have two employees under his direct supervision. The employee refused this new position and filed a harassment complaint with the managing director of IBM, a complaint that was not investigated until a second letter was sent.

Following unsuccessful attempts of settling this matter, the employee received a letter from his employer confirming his voluntary resignation as a result of his refusal to return to work. The employee filed an action for constructive dismissal.

The Decision

Considering the substantial changes to the conditions of the employment agreement, the Superior Court of Quebec concluded that this was a situation of constructive dismissal. The date at which the employee was forced to hold the second position offered was the date the employee was dismissed.

Citing Standard Broadcasting Corporation Limited v. Stewart, the Superior Court granted the employee 24 months of indemnity in lieu of notice. In determining the indemnity, the court considered the employee's abandonment of his former company in 1995 to join IBM, the fact that a senior position cannot be easily found elsewhere and the absence of serious cause in the dismissal. Evidence also showed that despite the efforts to find a job in his field, the employee was forced to restart the company he had previously abandoned.

The court also granted an amount of $35,000 for moral damages for the humiliating, degrading and offensive nature of the dismissal, and for the prejudice caused by the employer who interfered with the employee's search for contracts for his company.

As for justifying the award for punitive damages, the Superior Court of Quebec found that the employer based itself on the employee's health, without medical evidence, to impose a position that was an insult to his dignity and his reputation. The Superior Court of Quebec reiterated the importance of the objective of deterrence in the awarding of punitive damages by referring to the criteria stated in Québec (Curateur public) v. Syndicat national des employés de l'hôpital St-Ferdinandand Béliveau St-Jacques v. Fédération des employées et employés de services publics inc. As a result, an amount of $300,000 was awarded for punitive damages because, in the opinion of the court, in order to have a real effect of deterrence, the amount of damages awarded must reflect the employer's ability to pay. Finally, considering the precarious situation that the employee would face if IBM were to appeal the decision, the court also granted partial provisional execution of the decision, notwithstanding an appeal, for an amount of $350,000.

Amount awarded for punitive damage

We would like to remind you that in , a case we addressed in July 2008, the Supreme Court of Canada refused all amounts requested for punitive damages by overturning a punitive damage award of $100,000 by the Ontario Court of Appeal following a controversial award of $500,000 in the first instance. Generally, the amounts awarded for punitive damages related to dismissals are less than $10,000.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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