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Ontario Court of Appeal Upholds Damage Award of $60,000 for Bad Faith Termination Amidst Sexual Harassment Allegations

(the abbreviated version of this article originally appeared in the The Employment Bulletin, March 2017)

The Ontario Court of Appeal’s recent decision in Doyle v. Zochem Inc., 2017 ONCA 130, 2017 CarswellOnt 1733 (Ont. C.A.), has confirmed that an award of both moral and human rights based damages may be the consequence when sexual harassment and bad faith intersect at the time of dismissal. This is despite the conduct underpinning both extraordinary damage awards overlapping.

At trial, the judge ordered the appellant, Zochem, to pay $60,000 in moral damages for the breach of its implied contractual obligation of good faith in the manner of dismissal of its employee, Melissa Doyle.

In addition to awarding moral damages, the trial judge held that Doyle was entitled to damages equivalent to 10 months’ pay in lieu of notice of termination and $25,000 in damages for her sexual harassment claim under the Ontario Human Rights Code (the “Code”). These amounts were not appealed.

The overarching issue on appeal was whether the $60,000 moral damage award should be reduced on the basis that (1) the trial judge took into account some irrelevant factors in making a finding of bad faith/moral damages, and (2) the trial judge awarded damages for overlapping conduct for which a separate award under the Code was made.



Melissa Doyle was employed by Zochem for nine years prior to her dismissal. She was a plant supervisor and health and safety coordinator. Significantly, she was the only woman working in a Zochem’s zinc oxide plant.

In order to perform her job, Doyle was required to work in concert with the plant maintenance manager, Rogers. In so doing, Doyle would endure multiple acts of sexual harassment in her day-to-day interaction that included:

• he would stare at her breasts and purport to take a picture of them;

• he told her Philips (an independent contractor who had done work for the appellant and with whom Doyle had had a “romantic relationship”) had an “anaconda” in his pants and she should date him;

• he said the “girls”, referring to her breasts, looked “good”;

• he referred to their private parts as their “little friends”;

• he described “bunny ears”, meaning her feet up behind her ears (as a sexual position);

• he kept telling her she needed to get “laid”, or needed “a little pounding”, asking if she was “getting any”;

• he told her how another employee had “the best body”; and

• a particularly gross example of this “locker room talk” related to her request to have him make a forklift attachment. When she later saw him with something with a chain on it, which appeared to be what she had asked him to make, he told her in fact it was just a device that he was going to put her feet in to pull over her head so he could “get at her”. She said she felt like “a piece of meat”.

At a July 14, 2011 production meeting, during which Doyle raised legitimate safety concerns, Rogers and another co-worker, who were aware that Doyle was soon to be terminated, felt free to ignore the safety issues she raised and demeaned and belittled her in front of the others. She left the meeting in tears. Doyle, unaware that her superiors were going to terminate her and that the termination letter was already in the making, turned to them and made a complaint of sexual harassment. Zochem did a “cursory” investigation of the complaint and heard from Rogers, but did not give Doyle an opportunity to respond. Zochem was also aware that Doyle suffered from clinical depression for which she was being medicated.

Doyle was terminated without cause on July 19, 2011. The trial judge found that Doyle’s gender and her sexual harassment complaint were likely the most significant reasons for why she was terminated.


Moral Damages

The Supreme Court of Canada recognized that there is an obligation of good faith in the manner of dismissal of an employee, and moral damages are available where an employer engages in conduct that is “unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive.” The Court of Appeal in Doyle followed the Supreme Court’s direction that the question of moral damages is a fact-specific exercise. The Doyle case reminds us that it is not only conduct at the moment of termination but also conduct in the manner of dismissal that will factor into a determination. This case illustrates damages could be grounded in certain conduct including: instructing employees to “dig up dirt” on the performance of Doyle; telling Doyle that her job was not in jeopardy when, in fact, Zochem had already put the “wheels in motion” with respect to her termination; that an employee advised her superior about Doyle’s medical condition in breach of her privacy; and that Doyle’s keys were taken from her purse and her car was brought around at the time of termination.

The trial judge found that Zochem’s dealings with Doyle were “completely disingenuous” given she was assured that her job was not in jeopardy and that she would be given a chance to improve, when in fact the decision to terminate had already been made and the termination letter was probably already in the making.

After the termination decision had already been made, as found by the trial judge, the response to Doyle’s sexual harassment complaint was insensitive to the point of verging on cruel. Untruthful, misleading and unduly insensitive conduct of this nature will be considered in a determination of whether moral damages should be awarded, even when it is not a scenario where an employer has fired for cause.

Although the letter of termination presented with a full release contained a sentence suggesting that Doyle seek legal advice before accepting the benefits offered, she was also pressured to immediately sign the release without independent legal advice.

While these factors were regarded by the Court of Appeal as justifying the trial award even in the face of some irrelevant factors being considered, the court did shine some light on those actions that should not factor into such a determination. The trial judge commented that the dismissal arose, in part, because the company was getting ready to be sold; the General Manager did not select the “most logical choice for his successor”, a person who would not have terminated Doyle; Zochem terminated at least four key employees; and the company planned the dismissals of two employees well in advance. These business considerations do not form the basis of a moral damages award.


Human Rights Damages

The Ontario Court of Appeal specifically sought to further clarify the basis for awarding both moral damages and damages pursuant to the Code for overlapping conduct.

The Court of Appeal relied on its earlier decision in Boucher v. Wal-Mart Canada Corp. (2014), 374 D.L.R. (4th) 293, 120 O.R. (3d) 481 (Ont. C.A.), taking the position that where the awards in question vindicate different interests in law, there will be no overlap in the damages awarded although the same conduct is considered.

Neither of these decisions supports the proposition that damages under the Code should be deducted from moral damages.

What this jurisprudence illustrates is that when damages vindicate the same interests in law, the courts take care to avoid double recovery. Moral damages are awarded as a result of the manner of dismissal, where the employer engages in conduct during the course of dismissal that is unfair or is in bad faith and that causes mental distress: Keays v. Honda Canada Inc. (2008), 294 D.L.R. (4th) 577, [2008] 2 S.C.R. 362 (S.C.C.), at para. 57. As indicated in that decision at para. 56, the normal distress and hurt feelings resulting from dismissal are not compensable.

In contrast, Code damages are remedial, not punitive in nature, and compensate for the intrinsic value of the infringement of rights under the Code. Such damages are compensation for loss of the right to be free from discrimination and for the experience of victimization. The right to be free from sexual harassment in the workplace is contained in s. 7(2) of Part I of the Code under the heading “Freedom from Discrimination”, and the damages awarded under this provision serve the same purpose, namely, compensation for loss of the right to be free from discrimination and for the experience of victimization.


Lesson for Employers

This case serves as a harsh reminder for employers. They must discharge their duty of good faith in the manner of dismissal and properly investigate matters of sexual harassment. Otherwise, courts will find a way to compensate individuals to the greatest extent possible when conduct is so abhorrent that it crosses the boundary of various heads of damages.

If you have a workplace issue relating to harassment and discrimination, call a Toronto employment lawyer, Toronto labour lawyer and Toronto Human Rights lawyer at Stitz Litigation. Michael Stitz is an employment and labour lawyer in Toronto with over half a decade of winning experience. Call for a free case assessment.

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