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COURT AWARDS PUNITIVE DAMAGES FOR BAD FAITH TREATMENT

A woman we will call Michelle managed a beauty parlour in a nursing home for seventeen and a half years.  In November of 1997 she fell and hurt herself in the parking lot of the beauty salon.  She missed a few days work but was soon back at work on light duties.  A week after the light duties had begun, Michelle received a letter of lay off which told her that her position was being eliminated as a result of financial cutbacks.  The letter did not provide an actual date for her termination but told her that her termination date would be decided within the next few weeks.
 
The next day, Michelle went off work on her doctor's orders and remained off work until early February of 1998. 
 
A week after Michelle went off work, an occupational health nurse working for the employer called her urging her to return to work on modified duties and questioning her about her ability to return to work.
 
A few weeks later, the employer advised Michelle's doctor that Michelle had to return to work so that she could be terminated.  A week after that the employer sent Michelle a letter telling her that it had been in touch with her doctor and her doctor had approved her return to work.  That was a lie.  The doctor had in fact told the employer that Michelle was totally disabled.  The employer told Michelle that if she did not come back to work immediately it would be viewed as a work refusal.
 
In mid-January of 1998, Michelle's lawyer wrote a letter to the employer asking it to direct all communications to him because dealing directly with the employer was causing Michelle considerable stress and anxiety.  Notwithstanding this letter, the employer kept phoning Michelle to try to get her to come back to work. 
 
When Michelle returned to work in early February, a meeting with the employer was immediately arranged.  Michelle wanted a friend to accompany her but the friend was told to leave.  Four management employees met with Michelle for over two hours.  They wanted to talk about termination.  Michelle said she was in no condition to discuss that issue and really wanted to discuss the modified duties she could do on returning to work.  One of the employer representatives implied that in some way Michelle=s conduct might cause harm to the residents of the nursing home where Michelle managed the beauty shop.
 
About a month after she had returned to work, on March 11th, Michelle was given a letter telling her that her employment was terminated on March 31st.  When Michelle sued for wrongful dismissal, her doctor gave evidence at the trial that the employer's treatment of Michelle caused her emotional upset and increased her blood pressure.  He indicated that as a result of the treatment Michelle=s blood pressure increased and her symptoms of diabetes also increased.  The trial judge found that Michelle had suffered a loss of self esteem and distress which caused her to be disabled for months after being terminated.
 
 
The trial judge found that even though the letter from November telling her she was going to be laid off for economic reasons did not tell her when the lay off was, it was effective notice of her termination.  This finding was contrary to most case law which indicates that for a notice of termination to be effective, it must give a precise date of termination.  When this case was appealed to the Ontario Court of Appeal, that court found that the trial judge had made an error in finding that there was an effective notice of termination in November.  The Court of Appeal said the effective notice of termination was on March 11th when Michelle was told a precise date for termination.
 
But what the Court of Appeal giveth it can taketh away.  The trial judge had found that Michelle was entitled to eighteen months notice of her termination.  The Court of Appeal decided that the appropriate notice for Michelle was twelve months.  While the Court of Appeal had found that Michelle was not given effective notice of termination until March 11th, it held that the fact that Michelle knew over three months before that date that her job was going to end in the near future was relevant in awarding her reasonable notice.  Theoretically she could have started looking for work then, which is part of what reasonable notice is supposed to give you a chance to do. It found that as a result of Michelle having a good idea that her job was coming to an end, her reasonable notice period should be twelve months instead of eighteen.
 
At first glance, it might seem like the Court of Appeal took six months of notice away from Michelle.  In fact, it only took away two and a half months notice.  Because the Court of Appeal found March 11th to be the effective date of termination, their twelve-month notice period started on March 11th as opposed to the trial judge=s eighteen-month notice period which started the year before at the end of November.  The difference is three and a half months. 
 
If you are wondering what the Court of Appeal was doing and hoping there is logic hidden somewhere in the decision, all this writer can say is that I share your wonder and your hope.  Perhaps it is my own limitations but the Court of Appeal's logic seems somewhat circuitous to me. All the court ended up really doing was reducing Michelle's reasonable notice period from eighteen months to fifteen and a half. It might make the law less mystical for all of us if they had just said they thought the 18 months the trial judge awarded was two and a half months too long.
 
The trial judge awarded Michelle $15,000 in damages for mental distress as it found that the employer's treatment of Michelle was flagrant and outrageous, was calculated to produce harm and resulted in real harm to Michelle.  The Court of Appeal agreed with the trial judge.  It should be noted that awards for damages for mental distress are rare in Canadian employment law.  One must be able to convince a  judge that the employer not only acted outrageously, but knew that harm would result from the behaviour and proceeded with the behaviour in any case.
 

In addition to awarding Michelle damages for the mental distress caused to her by the employer's behaviour the court awarded $5,000 in punitive damages.  Punitive damages are usually awarded to punish a defendant and to deter them from ever engaging in such bad behaviour again.  The Court of Appeal decided that this award of punitive damages was not appropriate.  Basically, it thought that the twelve months pay in lieu of  notice and $15,000 in mental distress damages was a high enough bill to deter the employer from treating any other employees the way Michelle was treated.
 
As published in the Hamilton Spectator, December 2, 2002
 
 
 
Ed Canning
Ed Canning
P: 905.572.5809
ecanning@rossmcbride.com