Canada: Punitive And Aggravated Damages – Exceptional But Necessary Remedies

Last Updated: September 24 2018
Article by Ania Werbeniuk

Ruston v Keddco Mfg. (2011) Ltd., 2018 ONSC 2919

Although traditionally, punitive and aggravated damages were deemed as exceptional remedies, the Courts have turned to these remedies to assist employees where the employer's actions may be deemed as high-handed and spurious.


An employee  named J. P. Ruston (Ruston) was promoted to company president at Keddco Manufacturing Limited (Keddco), a manufacturer and distributor  of oil and petrochemical industry products within North America. Sometime thereafter, issues were raised about Keddco's annual underperformance. Despite those concerns, Ruston continued to receive bonuses and no complaints with respect to his performance were discussed.

However, eventually concerns with Ruston's performance started to be raised by Keddco's CEO. Ruston was asked to take time off work, and later he received an alert that his e-mail account was disabled. He also received a request from the CEO to attend a meeting and return the company-issued keys, laptop and cell phone, all of which he complied with. That evening, the CEO sent an email to Ruston further advising him of her concerns and concluding with "I'd like us to work together".

During a meeting the next day, Ruston was told that he was being dismissed for cause because he had committed fraud. Ruston claimed that he did not know what the CEO was referring to and that he would be contacting his lawyer. In response, the CEO indicated that it would be a very expensive process for Ruston. At that point he was dismissed without notice and was provided with a letter of termination; however it did not provide any further details as to the reasons for his dismissal. He only learned of reasons for his termination when he received a Statement of Defence and Counterclaim from Keddco.

At the time of his dismissal Ruston was 54 years old, had a Grade 12 education, and was earning $278,476.08 per year, plus bonuses. Following his dismissal, he was unable to find permanent employment from the time of his dismissal to the time of trial.

As a result, Ruston sued Keddco for wrongful dismissal and claimed punitive and aggravated damages. Keddco counterclaimed alleging unjust enrichment, breach of fiduciary duty and civil fraud.

At Trial:

At trial the CEO stated that upon confronting Ruston about the company's performance she found Ruston to be evasive and untruthful and became concerned about his work performance regarding inventory orders. She stated that after she spoke to other employees about his performance, she believed that Ruston made misrepresentations, manipulated financial statements, inappropriately realized a profit, negligently purchased excess inventory and created a toxic work environment and therefore needed immediate dismissal.

Rule of Law:

The Court emphasized that an employee's dishonesty will be considered as just cause for summary dismissal only where it is fundamentally and directly inconsistent with the employee's obligation to his or her employer. The Court then applied a three-part test to decide if Keddco had just cause to dismiss Ruston, which was comprised of: 1) determining the nature, extent and seriousness of misconduct; 2) considering surrounding circumstances; and 3) determining whether dismissal is warranted in light of 1) and 2).

Next, the Court considered the law with respect to the appropriate notice period owed to an employee who is dismissed without just cause and calculation of damages.

More specifically, the Court summarized the law with respect to punitive damages. It concluded that punitive damages are meant to punish the wrongs inflicted on the claimant and will be awarded in exceptional cases where the misconduct is malicious, oppressive or high-handed. The Court indicated that actions which are meant to threated or intimidate someone fall into this category of misconduct.  

Further, the Court reiterated that aggravated damages may be awarded to compensate the employee where an employer has breached its duty of good faith and fair dealing or has conducted itself in a manner that is untruthful, misleading and insensitive, i.e. causing an employee mental distress beyond the normal distress and hurt feelings that accompany dismissal. Further, the Court emphasized that to show mental distress, medical evidence will not be required.

Court's Findings and Decision:

The Court found Ruston to be a credible witness while the CEO was not. The Court concluded that the allegations of fraud and negligence were not supported by the facts before the Court, and furthermore, Keddco dropped several of its claims against Ruston at or just before trial. For example, the fact that Ruston was offered a bonus that year and continued to work without any issues being raised with him until just prior to the dismissal was inconsistent with the stated reasons for his termination. Further, the alleged inventory issues were largely dealt with prior to his dismissal and the email from the CEO indicated the CEO's open attitude to finding a resolution and continuing to work together. Therefore, any allegations of cause for dismissal were without merit. Considering all the facts, the Court found that Ruston was wrongfully dismissed, that he was threatened and intimidated, and that Keddco used an unsupported after-the-fact justification to fire him.


As a result, the Court dismissed Keddco's counterclaim and awarded approximately $600,000 in damages to Ruston, which included damages in lieu of 19-month notice period ($233,857.81 for lost base salary plus $194,320 for lost bonus and $51,449.15 for benefits), punitive damages ($100,000), and aggravated damages ($25,000).

Lessons from the Court:

In its analysis, the Ontario Court considers a variety of prior Court decisions that have deliberated on punitive and aggravated damages. Although most of these cases were from Ontario, the principles are similarly applicable to Alberta. For example, recent cases from Alberta such as Beaudoin v Agriculture Financial Services Corporation, 2018 ABQB 627 and Dragos v Hunterwood Technologies Ltd., 2018 ABPC 40, have considered these types of damages in the employment context but did not award them. However, this decision and others indicate that in cases where an employer relies on exaggerated or unjustified claims of employee  misconduct, it remains open to the Court to assess significant damage awards that far exceed the normal damages for without-cause dismissals. It remains important for employers to objectively consider the individual facts of the employee it is assessing, and to consider those facts in the context of the law and the available evidence to support its conclusion on dismissal. As this case demonstrates, employers that fail to do so can not only be subjected to higher damage awards, but also a public discussion about their human resources cultures that can drive away desirable employees.  

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions