As previously described, the basis for this
unusually high punitive damages award was the employer's
intentional and high-handed conduct which, according to the trial
judge had a "devastating impact on the employee's life,
including his future employment prospects and broken
marriage". Specifically, the employer accused the employee of
misconduct, including theft, which was not sufficiently supported
by the evidence. The employer also selectively turned information
over to police to support a criminal charge without providing the
police with all of the relevant information in its possession.
At trial, in addition to punitive damages, the employee was
awarded "Wallace damages", special damages, general and
aggravated damages, as well as prejudgment interests and costs on a
substantial indemnity basis. The employer only appealed the
punitive damages award.
A majority of the Court of Appeal held that the trial judge
"erred by failing to consider whether, in light of the total
compensation and costs otherwise awarded to Mr. Pate, a lower
quantum of punitive damages would satisfy the requisite objectives
of retribution, deterrence and denunciation" and further
stated that the punitive damages award was "irrational and
excessive". Accordingly, the Court of Appeal reduced the
punitive damages award from $550,000 to $450,000. The Court did not
explain its rationale for the $100,000 reduction.
In his lengthy dissent, Lauwers J.A., agreed that the punitive
element of other damage awards should be taken into account in
fixing an amount for punitive damages, but he found that there was
no reason to doubt that the trial judge had done so.
Both the majority and the dissent agreed that a $550,000
punitive damages award was at the high end of the spectrum.
Notwithstanding the reduction to the punitive damages award,
this case still gives employers a reason to be cautious when
alleging that an employee has engaged in misconduct akin to fraud
sufficient to warrant termination of the employee's employment
for cause. Prior to doing so, employers should undertake a thorough
investigation of all relevant facts and allow the employee an
opportunity to respond to alleged misconduct prior to terminating
the employee for cause.
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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Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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