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In the last half of 2012, two Canadian juries (in Higginson v. Babine Forest Products Ltd. and Boucher v. Walmart) have awarded over $500,000 each in punitive damages, the largest such awards arising from wrongful dismissal litigation in Canadian history.

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Typically, courts have been reluctant to make an order for punitive damages except in the most exceptional circumstances, namely those involving callous and high-handed behavior warranting deterrence. Even then, awards in wrongful dismissal cases rarely exceed $100,000 (on the high end). Often, awards of this nature surface in employment law cases involving a breach of fiduciary duty or breach of confidence, not those pertaining to wrongful dismissal.

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While Higginson has since been appealed and settled, and Walmart is in the process of being appealed, the message is still clear: if there is high-handed, malicious, arbitrary or highly reprehensible misconduct present in a wrongful dismissal case, employers will be made to pay, at least by a jury of their own peers.

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In Whiten v. Pilot Insurance Co. (2002), 209 D.L.R. (4th) 257, [2002] 1 S.C.R. 595, Binnie J., as he then was, discussed when an award of punitive damages would be appropriate [at para: 94]:

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To this end, not only should the pleadings of punitive damages be more rigorous in the future than in the past (see para. 87 above), but it would be helpful if the trial judge’s charge to the jury included words to convey an understanding of the following points, even at the risk of some repetition for emphasis. (1) Punitive damages are very much the exception rather than the rule, (2) imposed only if there has been high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour. (3) Where they are awarded, punitive damages should be assessed in an amount reasonably proportionate to such factors as the harm caused, the degree of the misconduct, the relative vulnerability of the plaintiff and any advantage or profit gained by the defendant, (4) having regard to any other fines or penalties suffered by the defendant for the misconduct in question. (5) Punitive damages are generally given only where the misconduct would otherwise be unpunished or where other penalties are or are likely to be inadequate to achieve the objectives of retribution, deterrence and denunciation. (6) Their purpose is not to compensate the plaintiff, but (7) to give a defendant his or her just desert (retribution), to deter the defendant and others from similar misconduct in the future (deterrence), and to mark the community’s collective condemnation (denunciation) of what has happened. (8) Punitive damages are awarded only where compensatory damages, which to some extent are punitive, are insufficient to accomplish these objectives, and (9) they are given in an amount that is no greater than necessary to rationally accomplish their purpose. (10) While normally the state would be the recipient of any fine or penalty for misconduct, the plaintiff will keep punitive damages as a “windfall” in addition to compensatory damages. (11) Judges and juries in our system have usually found that moderate awards of punitive damages, which inevitably carry a stigma in the broader community, are generally sufficient.

 

Higginson v. Babine Forest Products Ltd.

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In the recent unreported British Columbia Supreme Court decision in Higginson v. Babine Forest Products Ltd., a jury awarded Mr. Larry Higginson $573,000 in punitive damages on account of the circumstances surrounding his wrongful dismissal. Mr. Higginson, a 34 year employee, was allegedly terminated for cause after his employer failed to force him to resign by making the workplace intolerable; all in an effort to avoid affording him reasonable notice or pay in lieu thereof. Given Mr. Higginson’s years of service, among other factors, he had a substantial entitlement to notice or pay in lieu thereof, a liability his employer made a calculated attempt to avoid paying.

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The Prince George B.C. jury clearly viewed this conduct by his employer as malicious and worthy of condemnation through the awarding of extraordinary damages. When combined with the over $230,000 Mr. Higginson was afforded for Babine’s breach of contract, the total award in this case exceeds $800,000. In attempting to avoid what was likely a payment of only several hundred thousand dollars, Babine has likely cost itself upwards of a million dollars fighting this case after legal fees are factored in.

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The simple lesson for employers is that they should always attempt to negotiate a mutually agreeable severance package with long-term employees. These employees often have the greatest entitlements and most to lose by not suing. When you attempt to play games and avoid your obligations, it can often cost you far more than it initially would have if you just acted fairly and did not use litigation as a weapon.

 

Boucher v. Walmart

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In Boucher v. Walmart, an unreported Ontario decision, Ms. Meredith Boucher, an assistant manager and 10 year employee of Walmart, was awarded over $1 million in punitive damages by a jury after she was forced from her employment (a constructive dismissal) due to sustained bullying by her fellow co-workers. Her case marks the largest punitive damage award in Canadian wrongful dismissal litigation history.

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Ms. Boucher claimed that between May and November of 2009 her superiors, including her store manager, subjected her to verbal abuse and humiliation in the workplace, even punching her on occasion. Despite Ms. Boucher pleading with management for assistance, she was ultimately vilified and forced to leave the workplace. She claimed that she suffered a constructive dismissal, sexual harassment, discrimination, intentional infliction of mental suffering and assault.

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Ultimately, Ms. Boucher was deemed to have been constructively dismissed by a jury of her peers and Walmart was held liable for $1 million in punitive damages, $200,000 for intentional infliction of mental suffering and $10,000 for assault.

 

Further, Ms. Boucher’s former manager was personally held liable for $100,000 for intentional infliction of mental suffering and $150,000 in punitive damages. The jury did not, however, find any sexual harassment or discrimination present.

While this case is being appealed and will possibly be overturned due to the unprecedented quantum of punitive damages, it nevertheless reaffirms the notion that those subjected to a poisoned work environment may be entitled to extraordinary damages for the mistreatment they have suffered.

 

Conclusion

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In addition to those cases already discussed, in two recent non-jury cases, Vernon v. British Columbia (Housing & Social Development, Liquor Distribution Branch), 2012 C.L.L.C. 210-017, [2012] 7 W.W.R. 558 (B.C. S.C.), additional reasons [2012] 7 W.W.R. 630, 30 B.C.L.R. (5th) 414 (B.C. S.C.), and Pate v. Galway-Cavendish & Harvey (Township) (2011), 342 D.L.R. (4th) 632, 93 C.C.E.L. (3d) 57 (Ont. C.A.), leave to appeal refused 2012 CarswellOnt 4061, 2012 CarswellOnt 4060 (S.C.C.), the plaintiffs were awarded $50,000 and $550,00 in punitive damages, respectively. It is becoming quite apparent that Canadian courts are no longer shying away from awarding extraordinary remedies in the employment law context when high-handed and bad faith conduct exists.

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The manner in which employees are dealt with both during their employment and at the point of dismissal has an impact on the potential compensation and damages to which they may be entitled. These decisions all serve as a stark reminder of this fact.

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If employers operating within Canada fail to address poisoned work environments, fail to provide for a mechanism to deal with instances of bullying or simply treat their employees harshly, they may very well expose themselves to increased liability in the event of wrongful dismissal litigation.

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Concerns of harassment, discrimination and bullying all need to be addressed when they are brought to management’s attention and not simply swept under the rug. Proactive policies and procedure are essential in guarding against the exposure to additional liability for failing to ensure a safe working environment.

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Further, understanding the consequences of failing to afford long-term employees their accumulated rights and legal entitlements at the point of termination is also critical. Managing the risks associated with an aging workforce is fundamental to minimizing liability.

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Employers that attempt to play hard ball and deny individuals their most basic rights or that fail to protect their workforce are now being made to pay more than ever. In order to avoid placing yourself in a similar situation, it is important to remember to treat your workforce fairly and implement practices and procedures to proactively deal with workplace conflicts.

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If you are a victim of workplace injustice or have a workplace issue to discuss, call a Toronto employment lawyer, Toronto labour lawyer and Toronto human rights lawyer at Stitz Litigation. We are an employment and labour law firm in Toronto. Call for a free case assessment.

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