Honda Canada Inc. v. Keays

Honda Canada Inc. v. Keays
Collection
Supreme Court Judgments
Date
2008-06-27
Neutral citation
2008 SCC 39
Report
[2008] 2 SCR 362
Case number
31739
Judges
McLachlin, Beverley; Bastarache, Michel; Binnie, William Ian Corneil; LeBel, Louis; Deschamps, Marie; Fish, Morris J.; Abella, Rosalie Silberman; Charron, Louise; Rothstein, Marshall
On appeal from
Ontario
Subjects
Civil procedure
Labour law
Torts
Notes
SCC Case Information: 31739
Decision Content
SUPREME COURT OF CANADA
Citation: Honda Canada Inc. v. Keays,
[2008] 2 S.C.R. 362, 2008 SCC 39
Date: 20080627
Docket: 31739
Between:
Honda Canada Inc. operating as Honda of Canada Mfg.
Appellant / Respondent on cross‑appeal
and
Kevin Keays
Respondent / Appellant on cross‑appeal
‑ and ‑
Canadian Human Rights Commission,
Ontario Human Rights Commission,
Manitoba Human Rights Commission,
Alliance of Manufacturers & Exporters Canada,
Human Resources Professionals Association of Ontario,
National ME/FM Action Network,
Council of Canadians with Disabilities,
Women’s Legal Education and Action Fund and
Ontario Network of Injured Workers’ Groups
Interveners
Coram: McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein JJ.
Reasons for Judgment:
(paras. 1 to 80)
Reasons Dissenting in Part :
(paras. 81 to 124)
Bastarache J. (McLachlin C.J. and Binnie, Deschamps, Abella, Charron and Rothstein JJ. concurring)
LeBel J. (Fish J. concurring)
______________________________
Honda Canada Inc. v. Keays, [2008] 2 S.C.R. 362, 2008 SCC 39
Honda Canada Inc., operating
as Honda of Canada Mfg. Appellant/Respondent on cross‑appeal
v.
Kevin Keays Respondent/Appellant on cross‑appeal
and
Canadian Human Rights Commission, Ontario Human Rights
Commission, Manitoba Human Rights Commission, Alliance
of Manufacturers & Exporters Canada, Human Resources
Professionals Association of Ontario, National ME/FM Action
Network, Council of Canadians with Disabilities, Women’s
Legal Education and Action Fund and Ontario Network of
Injured Workers’ Groups Interveners
Indexed as: Honda Canada Inc. v. Keays
Neutral citation: 2008 SCC 39.
File No.: 31739.
2008: February 20; 2008: June 27.
Present: McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein JJ.
on appeal from the court of appeal for ontario
Employment law — Wrongful dismissal — Notice period — Employee terminated after 14 years of employment — Factors determining reasonable notice of termination of employment — Whether employee’s position in company hierarchy relevant factor — Whether 15‑month notice period reasonable.
Damages — Aggravated damages — Punitive damages — Wrongful dismissal — Employee diagnosed with chronic fatigue syndrome — Employer concerned about employee’s numerous absences and about his doctor’s notes to cover absences, which provided only limited information — Employee dismissed after refusing to meet with employer’s doctor — Circumstances in which aggravated damages resulting from manner of dismissal should be awarded — Whether employee entitled to aggravated and punitive damages.
Civil procedure — Costs — Costs premium — Whether costs premium should be awarded — Whether costs should be awarded on substantial indemnity scale.
K had worked 11 years for the same employer, first on an assembly line and later in data entry, when, in 1997, he was diagnosed with chronic fatigue syndrome. He ceased work and received disability benefits until 1998, when his employer’s insurer discontinued his benefits. K returned to work and was placed in a disability program that allows employees to take absences from work if they provide doctor’s notes confirming that their absences are related to their disability. K’s employer became concerned about the frequency of his absences. Moreover, the notes K offered to explain his absences changed in tone, leaving the employer to believe that the doctor did not independently evaluate whether he missed work due to disability. As such, the employer asked K to meet Dr. B, an occupational medical specialist, in order to determine how K’s disability could be accommodated. On the advice of his counsel, K refused to meet B without explanation of the purpose, methodology and parameters of the consultation. On March 28, 2000, the employer gave K a letter stating that it supported K’s full return to work but that K’s employment would be terminated if he refused to meet B. When K remained unwilling to meet B, the employer terminated K’s employment.
K sued for wrongful dismissal. The trial judge found that K was entitled to a notice period of 15 months. He held that the employer had committed acts of discrimination, harassment and misconduct against K. He increased the notice period to 24 months to award additional damages dependent on the manner of dismissal. He also awarded punitive damages against the employer in the amount of $500,000, a costs premium, and costs on a substantial indemnity scale. The Court of Appeal reduced the costs premium and, in a majority decision, reduced the punitive damages award to $100,000. The Court of Appeal otherwise upheld the trial judge’s decision.
Held (LeBel and Fish JJ. dissenting in part on the appeal): The appeal should be allowed in part and the cross‑appeal should be dismissed. The award of aggravated damages for manner of dismissal and the award of punitive damages should be set aside. The cost premium should be set aside and costs should be adjusted to reflect an award on the regular scale in the lower courts. Costs are awarded to the employer at the Supreme Court level.
Per McLachlin C.J. and Bastarache, Binnie, Deschamps, Abella, Charron and Rothstein JJ.: K was wrongfully dismissed and the award of damages reflecting the need for 15 months’ notice should be maintained. In determining what constitutes reasonable notice of termination, courts should consider the character of the lost employment, the employee’s length of service, the age of the employee, and the availability of similar employment having regard to the experience, training and qualifications of the employee. These factors can only be applied on a case‑by‑case basis and no one factor should be given disproportionate weight. No presumptions about the role that an employee’s managerial level plays should be adopted in determining reasonable notice. The trial judge erred in alluding to the employer’s flat management structure rather than examining K’s actual functions; however, on the facts of this case there is no basis to interfere with the assessment of 15 months’ notice. [2] [25] [28‑30] [32]
An action for wrongful dismissal is based on an implied obligation in the employment contract to give reasonable notice of an intention to terminate the relationship in the absence of just cause. Generally, damages are not available for the actual loss of a job or for pain and distress suffered as a consequence of being terminated. However, in cases where parties have contemplated at the time of the contract that a breach in certain circumstances would cause the plaintiff mental distress, the plaintiff is entitled to recover. This is consistent with the view expressed in Fidler that all compensatory damages for breach of contract are assessed under one rule, i.e., what was in the reasonable contemplation of the parties (Hadley v. Baxendale). In the employment law context, damages resulting from the manner of dismissal will be available if they result from the circumstances described in Wallace, namely where the employer engages in conduct during the course of dismissal that is “unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive”. These damages should be awarded through an award that reflects actual damages rather than by extending the notice period. [50] [55] [57] [59]
Aggravated damages should not have been awarded in this case. The employer’s conduct in dismissing K was in no way an egregious display of bad faith justifying an award of damages for conduct in dismissal. On this issue, the trial judge made overriding and palpable errors of fact. The employer’s March 28 letter to K did not misrepresent the positions of its doctors and it should not have been faulted for relying on the advice of its medical experts. There is no evidence that B took a “hardball” attitude towards workplace absences or that K was being set up when asked to meet B. The employer’s request for a meeting between K and B was normal in the circumstances. The employer’s decision to stop accepting doctor’s notes was not reprisal for K’s decision to retain legal counsel. Rather, the employer was simply seeking to confirm K’s disability. Lastly, there is no evidence that K’s disability subsequent to termination was caused by the manner of termination. [34‑35] [38] [40] [43] [46‑48]
Similarly, punitive damages should not have been awarded. Punitive damages are restricted to advertent wrongful acts that are so malicious and outrageous that they are deserving of punishment on their own. The facts of this case demonstrate no such conduct. Courts should only resort to punitive damages in exceptional cases and the employer’s conduct here was not sufficiently egregious or outrageous to warrant such damages. Even if the facts had justified an award of punitive damages, both the trial judge and the Court of Appeal should have been alert to the fact that the compensatory damages already awarded carried, under the old test, an element of deterrence and they should have questioned whether punitive damages were necessary. This failure resulted in considerable and unnecessary duplication in the award of damages. [61‑62] [68-70]
Both the trial judge and the Court of Appeal also erred in concluding that the employer’s “discriminatory conduct” amounted to an independent actionable wrong for the purposes of allocating punitive damages. The Ontario Human Rights Code provides a comprehensive scheme for the treatment of claims of discrimination. A breach of the Code cannot constitute an actionable wrong; therefore the legal requirement for the common law remedy of punitive damages is not met. Since there is no evidence of discrimination to support a claim of discrimination under the Code and no breach of human rights legislation serves as an actionable wrong, there is no need to deal with K’s request for recognition of a distinct tort of discrimination. [62] [64] [67]
Per LeBel and Fish JJ. (dissenting in part on the appeal): The award of additional damages for the manner of the dismissal should stand. No overriding errors were committed by the trial judge in this respect and there is a sufficient foundation for findings of bad faith and discrimination. The punitive damages award, however, had no foundation and overlapped with the damages for manner of dismissal, and should be set aside. The costs premium also should be set aside. While a restatement of the law in respect of damages for wrongful dismissal is necessary, any reform must reflect that a contract of employment is a good faith contract informed by the values protected by the human rights codes and the Canadian Charter of Rights and Freedoms , particularly in respect of discrimination. As such, it must be executed and terminated with good faith and fairness. [81‑82] [114] [124]
The evidence supports the trial judge’s findings that the employer was unfairly skeptical and sought to justify K’s termination or to preclude him from being absent from work without discipline in reliance on his condition. It was fair to characterize the employer’s conduct as interference with K’s relationship with his treating physician. B was brought in to second‑guess the opinion of K’s physician and to legitimize efforts to eliminate the need for accommodation. The employer did benefit from K’s termination to the extent that he impeded efficiency goals and affected workplace morale. The employer’s letter of March 28 was misleading and did misrepresent the opinions of its doctors. B did practise a hardball approach in general toward absences and accommodating disabilities and it was not unreasonable to conclude that K was being set‑up for failure by the request that he meet with B. Nor was it a palpable and overriding error to conclude that the employer cancelled K’s accommodation as reprisal for asserting his right to proper accommodation through legal counsel. [87‑91] [94‑95] [99] [112]
Additional or Wallace type damages should be available where the manner of dismissal causes mental distress that was in the contemplation of the parties. There is an obligation of good faith and fair dealing on the part of employers in dismissing employees. There is ample evidence here that the employer acted in bad faith and this is a case where the employer’s failure to properly discharge its obligation made it foreseeable that K’s dismissal would cause mental distress. Most notably, the letter of March 28 mischaracterized the opinions of the employer’s doctors by implying that they did not believe that K’s absences were medically necessary yet neither doctor recommended that K be removed from the disability program or claimed that any absences related to chronic fatigue syndrome are unjustified. A further concern is the employer’s lack of candour and its own uncertainty with respect to the purpose of K’s meeting with B. Its refusal to provide written clarification of the purpose is suspicious. Finally, it is reasonable to conclude that the employer’s conduct and not the mere fact of K’s termination alone, led to K’s worsened state after he was terminated. However, given the lack of evidence on the precise loss K suffered as a result of the employer’s misconduct, the compensation the trial judge granted over and above the 15‑month notice period appears reasonable and should be maintained. [114‑117]
The development of tort law is informed by the prohibitions of human rights codes and the Charter . Discrimination was a troubling aspect of the decision to terminate K and this impacts on the good faith of the termination. While monitoring employee absences is a valid objective, there was no assessment in this case of whether the employer’s method of accommodation and of monitoring K’s absences addressed K’s particular disability. If variable, self‑reporting conditions characterize the very nature of K’s disability, then it is arguable that the employer acted in a discriminatory manner in subjecting K to the kind of scrutiny that occurred, denying him accommodation for his disability. [119‑123]
Cases Cited
By Bastarache J.
Considered: Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701; explained: Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140; applied: Whiten v. Pilot Insurance Co., [2002] 1 S.C.R. 595, 2002 SCC 18; Walker v. Ritchie, [2006] 2 S.C.R. 428, 2006 SCC 45; referred to: McKinley v. BC Tel, [2001] 2 S.C.R. 161, 2001 SCC 38; Minott v. O’Shanter Development Co. (1999), 168 D.L.R. (4th) 270; Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986; Bramble v. Medis Health and Pharmaceutical Services Inc. (1999), 214 N.B.R. (2d) 111; Byers v. Prince George (City) Downtown Parking Commission (1998), 53 B.C.L.R. (3d) 345; Fidler v. Sun Life Assurance Co. of Canada, [2006] 2 S.C.R. 3, 2006 SCC 30; Addis v. Gramophone Co., [1909] A.C. 488; Peso Silver Mines Ltd. (N.P.L.) v. Cropper, [1966] S.C.R. 673; Vorvis v. Insurance Corp. of British Columbia, [1989] 1 S.C.R. 1085; Hadley v. Baxendale (1854), 9 Ex. 341, 156 E.R. 145; Seneca College of Applied Arts and Technology v. Bhadauria, [1981] 2 S.C.R. 181; McGill University Health Centre (Montreal General Hospital) v. Syndicat des employés de l’Hôpital général de Montréal, [2007] 1 S.C.R. 161, 2007 SCC 4.
By LeBel J. (dissenting in part on the appeal)
Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701; Seneca College of Applied Arts and Technology v. Bhadauria, [1981] 2 S.C.R. 181; St‑Jean v. Mercier, [2002] 1 S.C.R. 491, 2002 SCC 15.
Statutes and Regulations Cited
Canadian Charter of Rights and Freedoms .
Human Rights Code, R.S.O. 1990, c. H.19, s. 5.
APPEAL and CROSS‑APPEAL from a judgment of the Ontario Court of Appeal (Rosenberg, Goudge and Feldman JJ.A.) (2006), 82 O.R. (3d) 161, 274 D.L.R. (4th) 107, 216 O.A.C. 3, 52 C.C.E.L. (3d) 165, [2006] C.L.L.C. ¶230‑030, [2006] O.J. No. 3891 (QL), 2006 CarswellOnt 5885, reversing in part a decision of McIsaac J. (2005), 40 C.C.E.L. (3d) 258, [2005] C.L.L.C. ¶230‑013, [2005] O.J. No. 1145 (QL), 2005 CarswellOnt 1131. Appeal allowed in part, LeBel and Fish JJ. dissenting in part. Cross‑appeal dismissed.
Earl A. Cherniak, Q.C., Jasmine T. Akbarali and Roslynn J. Kogan, for the appellant/respondent on cross‑appeal.
Hugh R. Scher, for the respondent/appellant on cross‑appeal.
Philippe Dufresne, for the intervener the Canadian Human Rights Commission.
Anthony D. Griffin, for the intervener the Ontario Human Rights Commission.
Sarah Lugtig, for the intervener the Manitoba Human Rights Commission.
George Avraam and Mark Mendl, for the intervener the Alliance of Manufacturers & Exporters Canada.
Stuart E. Rudner and Stephen Rotstein, for the intervener the Human Resources Professionals Association of Ontario.
Chris G. Paliare and Andrew K. Lokan, for the intervener the National ME/FM Action Network.
Frances M. Kelly and Gwen Brodsky, for the intervener the Council of Canadians with Disabilities.
Susan Ursel and Kim Bernhardt, for the intervener the Women’s Legal Education and Action Fund.
Debra M. McAllister and Ivana Petricone, for the intervener the Ontario Network of Injured Workers’ Groups.
The judgment of McLachlin C.J. and Bastarache, Binnie, Deschamps, Abella, Charron and Rothstein JJ. was delivered by
Bastarache J. —
1. Overview
[1] On March 29, 2000, after 14 years of employment, the respondent, Kevin Keays, was terminated from his employment at Honda Canada Inc. (“Honda”). Keays sued for wrongful dismissal. The trial judge found that Keays was entitled to a notice period of 15 months. He then considered additional damages dependent on the manner of dismissal (the so‑called “Wallace damages”) and increased the notice period to 24 months. In addition, the trial judge awarded punitive damages against Honda in the amount of $500,000, plus costs on a substantial indemnity scale with a 25 percent premium. The Court of Appeal unanimously upheld the finding of wrongful termination as well as the regular damages and the damages for manner of dismissal (Wallace damages). It also ordered that the costs premium be reduced. A majority (Goudge J.A. dissenting) ordered that the quantum of punitive damages be reduced from $500,000 to $100,000.
[2] I would allow the appeal in part. The regular damages award should be maintained. The Court of Appeal erred however in maintaining the damages for manner of dismissal (Wallace damages) and simply reducing the quantum of punitive damages. These awards, as well as the costs premium, must thus be set aside. I would deny the cross‑appeal dealing with the reduction of the award of punitive damages.
[3] Keays started working for Honda in 1986, first on the assembly line and later in data entry. In 1997, his diagnosis of chronic fatigue syndrome (“CFS”) was confirmed by a doctor from the Sleep Disorder Clinic in Toronto, Dr. Moldofsky. He ceased work and received disability insurance benefits through an independent insurance provider, London Life Insurance Co., until 1998 when his benefits were discontinued based on the insurer’s evaluation that Keays could return to work full‑time. Keays’ appeal to the insurer on this evaluation was denied. Honda had no part in the decision to terminate Keays’ benefits.
[4] Although London Life’s decision was based on medical opinion that Keays could return to work without restrictions, Keays continued to absent himself. He was placed in the Honda Disability Program, which permits disabled employees to take absences without the invocation of Honda’s attendance policy by confirming that the absence from work is related to the disability. However, Keays missed more work than his diagnosing physician, Dr. Morris, had predicted, and the notes he offered to explain his absences changed in tone leaving the employer to believe that the doctor did not independently evaluate whether he missed work due to disability.
[5] In late 1999, Honda’s administrative coordinator, Susan Selby arranged for Keays to see Dr. Lester Affoo, an independent physician hired by Honda, because of the increasing frequency of absences. In January and February 2000, Keays again experienced increased absences (14 days in total). This prompted Betty Magill, Keays’ manager, to raise the issue with Selby. They met on March 3 and decided to ask Keays to meet with Dr. Brennan, an occupational medicine specialist, in order to determine how his disability could be accommodated. After this meeting, but before Honda had a chance to meet with Keays, Keays decided to retain counsel to attempt to mediate his concern that he would ultimately be terminated. On March 17, Honda received a letter from Keays’ counsel outlining his concerns and offering to work towards a resolution. Honda did not respond.
[6] On March 21, Magill and Selby met with Keays to explain their concerns about the deficiencies in the doctors’ notes, described as “cryptic” by Dr. Reinders, and asked him to meet with Dr. Brennan to determine what could be done to support him at his work. They also discussed the letter they had received from Keays’ lawyer a few days earlier and explained that they had not responded to the lawyer because they had a practice of dealing with associates directly, not with third party advocates. At this meeting, Keays agreed to meet with Dr. Brennan. However, the next day he told Honda that, on the advice of counsel, he would not meet with Dr. Brennan without explanation of the purpose, methodology and parameters of the consultation. Keays did not come to work for a week following this incident. Upon his return to work, on March 28, 2000, Selby gave Keays a letter (“March 28 letter”) which I think it is useful to reproduce in its entirety:
As you know, Betty Magill and I met with you on March 21, 2000, to discuss your current employment situation at Honda. After you left the meeting, you returned for some clarification and we had another detailed discussion.
The following is a summary of the matters we discussed:
1. You were told that we have been reviewing your absenteeism as well as the doctor’s notes that you had been providing to cover those absences. We discussed your situation with Dr. Affoo who is familiar with your case. In addition, we had Dr. Brennan (a new physician) review your complete medical file. Both doctors advised us that they could find no diagnosis indicating that you are disabled from working.
2. The doctor’s notes that you have been providing to cover your absences have provided limited information. The notes were merely repeating what you were telling the doctor. There was no independent diagnosis or prognosis.
3. It was our intention to meet with you following the March break, to discuss our expectations. Before we had a chance to do so, we received a letter from your lawyer dated March 17, 2000. In that letter, your lawyer was asking that you no longer be required to bring notes to support your absences.
4. When we met on March 21, 2000, we advised you that we would no longer accept that you have a disability requiring you to be absent. Dr. Brennan and Dr. Affoo both believe that you should be attending work on a regular basis. In order for Dr. Brennan to get to know you and understand completely your condition, we advised that we would arrange for Dr. Brennan to meet with you. The plan was that Dr. Brennan would then communicate directly with your doctor to effectively manage your condition.
5. Before the meeting ended, you were agreeable to meeting with Dr. Brennan and I was to proceed to schedule the appointment.
The next day (March 22, 2000), you submitted a letter declining to meet with Dr. Brennan. You requested clarification on the “purpose, the methodology and the parameters of the assessment.” Since that date, you have called in sick with return to work date unknown. You returned to work today.
Our position remains as we explained it to you on March 21, 2000. Kevin, we do not accept the need for your recent absence nor do we intend to elaborate further on the purpose of your meeting with Dr. Brennan. This was all explained to you carefully on March 21, 2000. Our position remains the same. We expect you to meet with Dr. Brennan and, we expect you to come to work.
Kevin, we sincerely hope that you will co‑operate with our efforts. As you have admitted, your condition has not improved over the past three years and you would do anything to get better and come to work on a regular basis. We are committed to supporting you in a full return to work. We sincerely hope that you will co‑operate with us.
Kevin, you must understand that the current situation is unacceptable. If you do not agree to meet with Dr. Brennan, we will have no alternative but to terminate your employment.
[7] Later the same day, Selby telephoned Keays to urge him to reread the letter and re‑consider. Keays remained unwilling to meet Dr. Brennan. In accordance with its warning, Honda terminated his employment.
2. Decisions Below
2.1 Ontario Superior Court of Justice (2005), 40 C.C.E.L. (3d) 258
[8] McIsaac J. concluded that Honda bore the burden to show just cause for termination and that it had failed to carry that burden. McIsaac J. found that Honda’s direction to meet with Dr. Brennan was not reasonable under the circumstances, and that Keays had a reasonable excuse for resisting that direction. The termination was not proportional to his refusal. The trial judge then concluded that Keays was entitled to 15 months’ notice based on the principles of Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.J.). Moreover, McIsaac J. decided that, given the “egregious bad faith displayed by Honda in the manner of this termination and the medical consequences flowing therefrom”, that notice period should be extended to 24 months (para. 48). Since he had increased the notice period, McIsaac J. did not consider it appropriate to offer Keays an additional award on the basis of intentional infliction of nervous shock/emotional distress.
[9] McIsaac J. determined that the court was without jurisdiction to consider a tort based on whether Honda breached his rights under the Ontario Human Rights Code, R.S.O. 1990, c. H.19. He accepted, however, that such complaints could constitute “independent actionable wrongs” such as to trigger an award of punitive damages, assuming they also merit punishment (para. 50).
[10] McIsaac J. denied Keays’ claim for compensation based on “lost” disability benefits that would have been available from the insurer based on his total disability caused by the wrongful termination. Such relief was unavailable, the trial judge explained, because Keays did not plead aggravated damages. I take it that the trial judge meant by this that Keays had not argued that there was an independent cause of action to support his further claim for true aggravated damages as defined in Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701.
[11] McIsaac J. noted that punitive damages are exceptional but he had “no difficulty in finding that the plaintiff has proved that Honda committed a litany of acts of discrimination and harassment in relation to his attempts to resolve his accommodation difficulties” (para. 57). McIsaac J. attributed to Honda a “conspiracy to insinuate Dr. Brennan into the plaintiff’s long‑established medical relationship with his own doctors and, hopefully, to exclude them from any participation in advocating for his patient’s rights” (para. 60). In light of all the circumstances, the trial judge awarded $500,000 in punitive damages.
[12] McIsaac J. awarded costs to Keays on a substantial indemnity basis adding a 25 percent premium which together totalled $610,000.
2.2 Ontario Court of Appeal (Rosenberg and Feldman JJ.A., and Goudge J.A. (dissenting in part)) (2006), 82 O.R. (3d) 161
[13] The Ontario Court of Appeal dismissed the appeal. Goudge J.A., writing for the court, except with respect to the quantum of punitive damages, noted that heavily fact‑laden conclusions by the trial judge were entitled to substantial deference. In particular, Goudge J.A. perceived no reason to interfere with the trial judge’s conclusions that the order to see Dr. Brennan was unreasonable, that Keays had a reasonable excuse for not complying with the order, and that the dismissal of Keays was a disproportionate response to his alleged insubordination and therefore was done without just cause. Goudge J.A. also upheld the trial judge’s conclusions regarding the appropriate notice period required.
[14] Goudge J.A. wrote for the court regarding the availability of punitive damages. He cited McKinley v. BC Tel, [2001] 2 S.C.R. 161, 2001 SCC 38, for the proposition that acts of discrimination in breach of human rights legislation may serve as a separate actionable wrong so as to give rise to a punitive damages award in a wrongful dismissal case. Goudge J.A. rejected Honda’s argument that the Ontario Human Rights Code offers a complete remedial scheme that permits punitive damages only in the event of prosecution with the written consent of the Attorney General and only to a maximum fine of $25,000. Goudge J.A. thus upheld the trial judge’s finding of an independent actionable wrong. Given Honda’s conduct, an award of punitive damages was a rational response on the part of the trial judge.
[15] With respect to the quantum of punitive damages, Goudge J.A. wrote for himself alone. He noted that an appellate court should review the quantum awarded by asking whether the amount was rationally required in all the circumstances to punish the defendant’s misconduct. Goudge J.A. concluded that $500,000 in punitive damages did not exceed what was rationally required to punish Honda.
[16] Once again writing for the court, Goudge J.A. discussed Honda’s argument that the trial judge created a reasonable apprehension of bias, requiring a new trial. He acknowledged that the trial judge used “several colourful metaphors” but rejected allegations that this reflected a want of fairness or impartiality (para. 75).
[17] With regard to costs, Goudge J.A. noted that he would reduce the premium to $77,500 from $155,000. He dismissed the cross‑appeal.
[18] Rosenberg J.A. wrote for the majority on the question of the quantum of punitive damages, which he reduced to $100,000. He did so because he believed that the trial judge had relied on findings of fact not supported by the evidence and because the award failed to accord with the fundamental principle of proportionality. In particular, Rosenberg J.A. found no evidence of a protracted corporate conspiracy. The trial judge also referred to “five years” of outrageous conduct whereas the case involved a mere seven‑month period. According to Rosenberg J.A., a punitive damage award on the scale imposed by the trial judge in this case could be justified only by extraordinary circumstances. He used Whiten v. Pilot Insurance Co., [2002] 1 S.C.R. 595, 2002 SCC 18, as a comparison and noted (at para. 110) that a comment from that case regarding the fact that “it takes a large whack to wake up a wealthy and powerful defendant to its responsibilities” had been taken by the trial judge out of context. Bearing in mind the trial judge’s findings that were supported by the evidence, and especially evidence pointing to conduct by Honda suggesting planned and deliberate attempts to intimidate and then dismiss a vulnerable employee, Rosenberg J.A. concluded that an award in excess of those awarded in other wrongful dismissal cases was appropriate. He saw an award of no more than $100,000 as justified. He reduced the punitive damages award accordingly. In all other respects, Rosenberg J.A. concurred with Goudge J.A.
3. Analysis
[19] This appeal raises a number of important issues related to the proper allocation of damages in wrongful dismissal cases. Before assessing the validity of the separate heads of damages awarded by the trial judge and the Court of Appeal, it is essential to point out, as will be later demonstrated, that the trial judge made a number of palpable and overriding errors, some of which are mentioned by Rosenberg J.A. Two errors in particular have, in my view, coloured the trial judge’s judgment, making other findings and inferences suspect. The trial judge first found that Honda’s “misconduct” was “planned and deliberate and formed a protracted corporate conspiracy” (para. 60). As concluded by the Court of Appeal, and as will be further discussed below, there is simply no evidence to support the trial judge’s allegation of a conspiracy. Secondly, the trial judge insisted that the “outrageous conduct” had continued for five years when in fact the problem period was no more than seven months. He therefore was considering the wrong period when dealing with Honda’s conduct; this error was seemingly attributable to the fact that he considered the cancellation of Keays’ long-term benefits by London Life to be a relevant factor in assessing the conduct of Honda, while all evidence points to the fact that the decision was entirely independent of Honda.
[20] The remaining analysis will reveal more palpable and overriding errors of fact. However, the above examples alone would suffice to question carefully the factual basis for the trial judge’s conclusions. I am therefore compelled to review the record in some detail in my analysis.
[21] Beyond creating the need to address the many overriding and palpable errors of the trial judge, this appeal presents the Court with the opportunity to clarify and redefine some aspects of the law of damages in the context of employment.
[22] First, I would like to clarify what factors should be considered when allocating compensatory damages in lieu of notice for wrongful dismissal.
[23] Second, a review of the basis for and calculation of damages for conduct in dismissal must be undertaken.
[24] Third, in considering the allocation of punitive damages in this case, I conclude that it is not necessary to reconsider whether breaches of the Ontario Human Rights Code are independent actionable wrongs for the purposes of punitive damages. I will however discuss the need to avoid overlap of damages for conduct in dismissal and punitive damage awards.
3.1 General Damages: The 15-Month Notice Period
[25] After finding that Keays had been wrongfully dismissed, the trial judge determined that he was entitled to an award of damages reflecting the need for 15 months’ notice. In doing so, he followed Bardal and Minott v. O’Shanter Development Co. (1999), 168 D.L.R. (4th) 270 (Ont. C.A.), at p. 293, wherein it was held that an appropriate notice period is to be determined in consideration of factors including, but not limited to, the character of the employment, length of service, the age of the employee and the availability of other employment. In arriving at 15 months, McIsaac J. pointed to: Honda’s “flat” (i.e., egalitarian) management structure as limiting the effect of Keays’ lower position in Honda’s hierarchy; the fact that Keays had specialized training to compensate for his lack of formal education; his long service; and the lack of comparable employment in Alliston. The Court of Appeal agreed with this assessment.
[26] On appeal before this Court, Honda did not contest the finding of wrongful dismissal. However, Honda argued that the 15-month notice period allocated by the trial judge was excessive because he failed to conduct a proper analysis of Keays’ job functions. Specifically, Honda claimed that an analysis of Keays’ job functions shows that his responsibilities were minimal and that he spent a large percentage of his time on data entry. According to Honda, in view of Keays’ 14 years of service, his little formal education and the character of his employment, 8 to 10 months would have been appropriate. The fact that Keays’ had no management function was crucial.
[27] It is true that Honda’s “flat management structure” did not truly illuminate the character of Keays’ employment and that this label should not matter: what matters is experience, qualifications and other factors mentioned in Bardal.
[28] In determining what constitutes reasonable notice of termination, the courts have generally applied the principles articulated by McRuer C.J.H.C. in Bardal, at p. 145:
There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.
[29] These four factors were adopted by this Court in Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986. They can only be determined on a case-by-case basis.
[30] It is true that there has been some suggestion that a person’s position in the hierarchy should be irrelevant to assessing damages for wrongful dismissal (see Bramble v. Medis Health and Pharmaceutical Services Inc. (1999), 214 N.B.R. (2d) 111 (C.A.), and Byers v. Prince George (City) Downtown Parking Commission (1998), 53 B.C.L.R. (3d) 345 (C.A.). The traditional assumptions about the relevance of a person’s position in the hierarchy was not directly challenged in this case. It will therefore suffice to say here that Honda’s management structure has no part to play in determining reasonable notice in this case. The “flat management structure” said nothing of Keays’ employment. It does not describe the responsibilities and skills of that worker, nor the character of the lost employment. The particular circumstances of the individual should be the concern of the courts in determining the appropriate period of reasonable notice. Traditional presumptions about the role that managerial level plays in reasonable notice can always be rebutted by evidence.
[31] This position is consistent with the original formulation of the Bardal test where McRuer C.J.H.C. stated:
There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. [Emphasis added; p. 145.]
[32] No one Bardal factor should be given disproportionate weight. In the present case, the trial judge erred in applying one of the factors, alluding to the flat management structure, rather than examining the actual functions of Keays. Despite this error, the 15-month notice period is entitled to deference since, on the entirety of the circumstances here, there is no basis to interfere with the conclusions of the trial judge. Keays was one of the first employees hired at Honda’s plant. He spent his entire adult working life with Honda. He did not have any formal education and suffered from an illness which greatly incapacitated him. All these factors will substantially reduce his chances of re‑employment and justify an assessment of 15 months’ notice.
3.2 Damages for Conduct in Dismissal
[33] In applying Wallace, the trial judge concluded that Honda’s manner of dismissing Keays was an egregious display of bad faith that warranted an extension of the notice period to 24 months. He made the following findings of fact in support of his award:
· In the letter dated March 28, Honda deliberately misrepresented the views of its doctors.
· Keays was being “set up” when asked to see Dr. Brennan.
· Keays’ condition worsened after the dismissal: he became depressed, developed an adjustment disorder for 3‑4 months, and has been unable to work since then.
· Honda’s decisi