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 decision to cancel the
“accommodation” was a form of reprisal for Keays’ retaining legal counsel.
[34] The
Court of Appeal concluded that given the factual nature of determining whether
Honda acted in bad faith, Honda had to demonstrate that the trial judge
committed a palpable and overriding error. It concluded that Honda had failed
to demonstrate this and that the trial judge’s decision was sufficiently
supported in the evidence. I cannot agree with this conclusion. A proper
reading of the record shows that Honda’s conduct in dismissing Keays was in no
way an egregious display of bad faith justifying an award of damages for
conduct in dismissal.
[35] As
earlier mentioned, it is my view that the trial judge made a number of
significant overriding and palpable factual errors that relate directly to the
factual matrix that justified, according to him, an award of damages for manner
of dismissal (Wallace damages). For that reason alone, the decision
cannot stand. I will elaborate on this. I note, however, that this case sheds
light on the legal problems associated with the allocation of these damages. It
is therefore appropriate for this Court to reconsider the Wallace
approach and make some adjustments.
3.2.1 The
Factual Analysis
[36] None
of the four foundations accepted by the trial judge for his “Wallace
award” of damages is valid. I will examine them individually.
3.2.1.1 The
March 28 Letter
[37] In its
submissions to this Court, Honda points out that the trial judge had no basis
for concluding that the March 28 letter (set out in para. 6 above) was callous
and insensitive. In reviewing the facts and reading the letter, it is clear
that Honda was relying on expert advice and simply conveying the information
obtained from experts to Keays. The following two paragraphs were the most
“contentious” of the letter:
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.
.
. .
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.
[Emphasis added.]
[38] The
trial judge accepted Keays’ submission that Honda deliberately misrepresented
the positions of both physicians for the purpose of intimidation, excluding his
own doctors, and forcing him to meet with Dr. Brennan. The evidence contradicts
this finding.
[39] First,
Dr. Affoo concluded that Keays was able to work and should try to work as much
as possible. He communicated this information to Selby. Dr. Affoo’s testimony
is clear on this point:
Q. . . . did you have any conversation with anyone at Honda about Mr.
Keays?
A. Subsequently I reported back to Associate Services, Susan Selby,
as to our meeting. I explained to her that Mr. Keays had been diagnosed with a
diagnosis of chronic fatigue syndrome, as he assured me he had. We talked about
him missing a lot of time off work, and I explained to her that from Mr. Keays’
point of view he didn’t feel that ‑‑ he felt that, that he was
doing his best and that we could expect him to be off work as he has been in
the past.
Q. Any other conversation that you recall?
A. Probably within those terms.
Q. Do you recall if you made any suggestion as to whether or not Mr.
Keays’ condition, as you understood it, warranted absenteeism?
A. Well, I felt that he was coping quite well at
Honda. You know, I discussed ‑‑ I told her the fact that, that he
was at a desk and so on and so forth, and he seemed to be coping quite well at
his work place. I felt that, that in my experience with chronic fatigue one,
you know, one wants him to come to work, and, and we should try and get him to
work as, as, as much as we can. And certainly, I didn’t think he needed to be
off work the kind of pattern he had in the past. I felt that, you know, that he
could be off ‑‑ I felt that he probably would be off work maybe
three or four times a month, possibly, from his condition, but with a
regimented lifestyle, and you know, with the things that he’s being, that he’s
being treated with by his own physician, that he should be able to do well.
[Emphasis added.]
[40] Second,
Dr. Brennan communicated to Honda that he was unable to diagnose Keays
with CFS without meeting with him first. During his examination, Dr. Brennan
stated the following:
I did not accept the diagnosis of chronic fatigue
syndrome, largely because I didn’t feel that I had all the information.
[Emphasis added.]
There is nothing
misleading or false with Honda’s assertion that both doctors advised that they
could find no diagnosis that would bar Keays from working. Dr. Affoo clearly
stated that he thought it would be good for Keays to work, and Dr. Brennan
clearly could find no diagnosis of CFS without first meeting Keays. Honda was
simply relaying the information it received from its experts to Keays. Given
this evidence, I do not see how the trial judge could have concluded that Honda
was trying to intimidate Keays by twisting the positions of the physicians.
The physicians’ positions were clear, and Honda had no reason not to accept the
expert advice it was receiving. The trial judge made an overriding and palpable
error in faulting Honda for relying on the advice of its medical experts.
[41] The
trial judge stated, at para. 43 of his decision:
Although parts of the letter may have been accurate in isolation, when
considered in its entirety, it presented a “twisted” view of his condition.
[42] The
trial judge gave no reason to explain why, in its “entirety”, the letter
presents such a view. For a written document to have a certain flavour or
sense “in its entirety”, there must be indicators that create such a flavour
within that document. In this case, the letter contains no such clues. “[I]n
its entirety”, the March 28 letter simply conveyed to Keays that Honda wanted
him to meet with Dr. Brennan because their experts had advised them that his
condition did not preclude him from working. The whole context is one in which
Honda recognizes that Keays has a disability and that it has to be dealt with;
this is an important consideration in determining good faith on the part of
Honda.
3.2.1.2 No “Set‑Up”; No “Hardball”
[43] The
trial judge concluded, at para. 45 of his judgment, that Keays was being “set
up” for failure because Dr. Brennan had already made up his mind that his
condition was bogus. First, I think it is important to note that there is no
evidence that Dr. Brennan took on a “hardball” attitude. A careful analysis of
the record reveals that Dr. Brennan simply could not, with the information that
was provided to him, accept a diagnosis of CFS without first meeting Keays.
[44] The
trial judge stated, at para. 45, that a note written by Dr. Brennan to Honda on
December 3, 2000 reveals that Dr. Brennan “referenced the fact that the
diagnosis of CFS carries ‘considerable controversy’ and that ‘many physicians’
do not believe it should be taken as a ‘stand alone’ diagnosis” and that “[h]e
himself was of the view that it ‘may well be a bona fide medical condition’,
but only in certain ‘very limited circumstances’”. These assertions alone
should not lead one to believe that Dr. Brennan was taking a “hardball”
approach to workplace absences. But there is more that has to be taken into
account here. After stating that he believed that chronic fatigue syndrome is a
bona fide medical condition under very limited circumstances, he
continued to say:
Those circumstances are those as outlined by the Center for Disease
Control (CDC) in Atlanta. The CDC has developed some strict diagnostic criteria
for Chronic Fatigue Syndrome (CFS) to aid in its diagnosis and differentiation
from depression, fatigue of chronic illness, malingering, multiple rheumatic
diseases etc.
[45] Dr.
Brennan was thus simply espousing the prevalent approach adopted by the CDC. I
do not see how this can be qualified as “hardball”, as he was reiterating the
information at his disposal. However, even if one were to conclude that Dr.
Brennan was taking a somewhat “hardball” approach to workplace absences, Honda
cannot be faulted for accepting his expert advice unless a conspiracy exists.
As concluded by the Court of Appeal, there simply was no conspiracy to
terminate Keays. Rosenberg J.A. correctly stated at paras. 91 and 93 of his
reasons that:
There is no
evidence to support the finding of a protracted corporate conspiracy. The
appellant accommodated the respondent’s increasingly more serious disability
over several years. The fact that the company ran a lean operation in which it
was difficult to accommodate prolonged absences was not proof of a conspiracy.
.
. .
. . . there is no evidence to support this conspiracy to
interfere with the respondent’s relationship with his own physician. In fact,
the trial judge’s finding on this issue is inconsistent with his broad finding
that the appellant intended to dismiss the respondent. There would be no need
to “insinuate” Dr. Brennan into the relationship if the company’s intent all
along was to terminate the employment.
[46] As
such, it was not open to the Court of Appeal to accept the trial judge’s
finding that Keays was being set up when asked to meet with Dr. Brennan. Honda
was merely listening to expert advice that can hardly be qualified as
“hardball”. There is no rational way to justify the conclusion that the request
for a meeting between Keays and Dr. Brennan was not perfectly normal in the
circumstances.
3.2.1.3 No
Reprisal
[47] The
trial judge committed another overriding and palpable error in concluding that
Honda’s decision to cancel its accommodation was a form of reprisal for Keays’
decision to retain legal counsel. The decision to stop accepting doctors’
notes was not reprisal for Keays seeking legal counsel. Rather, as concluded
by Rosenberg J.A. in Court of Appeal, at para. 98, Honda was simply seeking to
confirm Keays’ disability. Here again, it is important to note that Honda does
not deny that there is a problem that has to be dealt with in a professional
and fair way. As earlier mentioned, the notes had changed in character and were
“cryptic” (para. 6 above). Moreover, as stated in para. 5 above, Shelby and
Magill met to address the deficiencies in Keays’ doctors notes and Keays’
absences well before Keays’ lawyer sent his letter.
3.2.1.4 Keays’
Condition Worsened
[48] The
trial judge committed an overriding and palpable error in considering Keays’
disability subsequent to termination; this was not compensable under the Wallace
umbrella because there was no evidence that the disability was caused by
the manner of termination.
3.2.2 The
Legal Analysis
[49] The
trial judge’s decision in this case highlights the problems we face in dealing
with damages for conduct in the context of termination of employment. In
particular, it raises questions about the propriety of damages for manner of
dismissal, whereby damages are awarded by extending the notice period (Wallace
damages). This re-evaluation is mandated particularly by this Court’s recent
decision in Fidler v. Sun Life Assurance Co. of Canada, [2006] 2 S.C.R.
3, 2006 SCC 30.
3.2.2.1 Current
State of the Law
[50] 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. Thus, if an employer fails to
provide reasonable notice of termination, the employee can bring an action for
breach of the implied term (Wallace, at para. 115). The general rule,
which stems from the British case of Addis v. Gramophone Co., [1909]
A.C. 488 (H.L.), is that damages allocated in such actions are confined to the
loss suffered as a result of the employer’s failure to give proper notice and
that no damages are available to the employee for the actual loss of his or her
job and/or pain and distress that may have been suffered as a consequence of
being terminated. This Court affirmed this rule in Peso Silver Mines Ltd.
(N.P.L.) v. Cropper, [1966] S.C.R. 673, at p. 684:
. . . the damages cannot be increased by reason of the circumstances of
dismissal whether in respect of the [employee’s] wounded feelings or the
prejudicial effect upon his reputation and chances of finding other employment.
[51] Later
in Vorvis v. Insurance Corp. of British Columbia, [1989] 1 S.C.R. 1085,
McIntyre J. stated at p. 1103:
. . . I would
conclude that while aggravated damages may be awarded in actions for breach of
contract in appropriate cases, this is not a case where they should be given.
The rule long established in the Addis and Peso Silver Mines cases
has generally been applied to deny such damages, and the employer/employee
relationship (in the absence of collective agreements which involve
consideration of the modern labour law régime) has always been one where either
party could terminate the contract of employment by due notice, and therefore
the only damage which could arise would result from a failure to give such
notice.
[52] The
Court in Vorvis nevertheless left open the possibility of allocating
aggravated damages in wrongful dismissal cases where the acts complained of
were also independently actionable. McIntyre J. stated at p. 1103:
I would not wish to be taken as saying that
aggravated damages could never be awarded in a case of wrongful dismissal,
particularly where the acts complained of were also independently actionable,
a factor not present here. [Emphasis added.]
[53] In Wallace,
Iacobucci J. endorsed a strict interpretation of the Vorvis “independently
actionable wrong” approach, rejecting both an implied contractual duty of good
faith and a tort of bad faith discharge. At para. 73, he said:
Relying upon the principles enunciated in Vorvis,
supra, the Court of Appeal held that any award of damages beyond
compensation for breach of contract for failure to give reasonable notice of
termination “must be founded on a separately actionable course of conduct” (p.
184). Although there has been criticism of Vorvis . . .
this is an accurate statement of the law. . . . An employment
contract is not one in which peace of mind is the very matter contracted for
(see e.g. Jarvis v. Swans Tours Ltd., [1973] 1 Q.B. 233 (C.A.)) and so, absent
an independently actionable wrong, the foreseeability of mental distress or the
fact that the parties contemplated its occurrence is of no consequence. . . .
[Emphasis added.]
[54] This
brings us to Fidler, where the Court, per McLachlin C.J. and
Abella J., concluded that it was no longer necessary that there be an
independent actionable wrong before damages for mental distress can be awarded
for breach of contract, whether or not it is a “peace of mind” contract. It
stated at para. 49:
We conclude that the “peace of mind” class of cases
should not be viewed as an exception to the general rule of the non‑availability
of damages for mental distress in contract law, but rather as an application of
the reasonable contemplation or foreseeability principle that applies generally
to determine the availability of damages for breach of contract.
This conclusion
was based on the principle, articulated in Hadley v. Baxendale (1854), 9
Ex. 341, 156 E.R. 145, that damages are recoverable for a contractual breach if
the damages are “such as may fairly and reasonably be considered either arising
naturally . . . from such breach of contract itself, or such as may
reasonably be supposed to have been in the contemplation of both parties” (p.
151). The court in Hadley explained the principle of reasonable
expectation as follows:
Now, if the special circumstances under which the contract was actually
made were communicated by the plaintiffs to the defendants, and thus known to
both parties, the damages resulting from the breach of such a contract, which
they would reasonably contemplate, would be the amount of injury which would
ordinarily follow from a breach of contract under these special circumstances
so known and communicated. But, on the other hand, if these special
circumstances were wholly unknown to the party breaking the contract, he, at
the most, could only be supposed to have had in his contemplation the amount of
injury which would arise generally, and in the great multitude of cases not
affected by any special circumstances, from such a breach of contract. [p. 151]
[55] Thus,
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 (Fidler, at para. 42; Vorvis, at
p. 1102). This principle was reaffirmed in para. 54 of Fidler, where the
Court recognized that the Hadley rule explains the extended notice
period in Wallace:
It follows that there is only one rule by which
compensatory damages for breach of contract should be assessed: the rule in Hadley
v. Baxendale. The Hadley test unites all forms of contractual
damages under a single principle. It explains why damages may be awarded where
an object of the contract is to secure a psychological benefit, just as they
may be awarded where an object of the contract is to secure a material one. It
also explains why an extended period of notice may have been awarded upon
wrongful dismissal in employment law: see Wallace v. United Grain Growers
Ltd., [1997] 3 S.C.R. 701. In all cases, these results are based on what
was in the reasonable contemplation of the parties at the time of contract
formation. [Emphasis deleted.]
[56] We
must therefore begin by asking what was contemplated by the parties at the time
of the formation of the contract, or, as stated in para. 44 of Fidler:
“[W]hat did the contract promise?” The contract of employment is, by its very
terms, subject to cancellation on notice or subject to payment of damages in
lieu of notice without regard to the ordinary psychological impact of that
decision. At the time the contract was formed, there would not ordinarily be
contemplation of psychological damage resulting from the dismissal since the
dismissal is a clear legal possibility. The normal distress and hurt feelings
resulting from dismissal are not compensable.
[57] Damages
resulting from the manner of dismissal must then be available only 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” (para. 98).
[58] The
application of Fidler makes it unnecessary to pursue an extended
analysis of the scope of any implied duty of good faith in an employment
contract. Fidler provides that “as long as the promise in relation to
state of mind is a part of the bargain in the reasonable contemplation of the
contracting parties, mental distress damages arising from its breach are
recoverable” (para. 48). In Wallace, the Court held employers “to an
obligation of good faith and fair dealing in the manner of dismissal” (para.
95) and created the expectation that, in the course of dismissal, employers
would be “candid, reasonable, honest and forthright with their employees”
(para. 98). At least since that time, then, there has been expectation by both
parties to the contract that employers will act in good faith in the manner of
dismissal. Failure to do so can lead to foreseeable, compensable damages. As
aforementioned, this Court recognized as much in Fidler itself, where we
noted that the principle in Hadley “explains why an extended period of
notice may have been awarded upon wrongful dismissal in employment law” (para.
54).
[59] To be
perfectly clear, I will conclude this analysis of our jurisprudence by saying
that there is no reason to retain the distinction between “true aggravated
damages” resulting from a separate cause of action and moral damages resulting
from conduct in the manner of termination. Damages attributable to conduct in
the manner of dismissal are always to be awarded under the Hadley principle.
Moreover, in cases where damages are awarded, no extension of the notice period
is to be used to determine the proper amount to be paid. The amount is to be
fixed according to the same principles and in the same way as in all other
cases dealing with moral damages. Thus, if the employee can prove that the
manner of dismissal caused mental distress that was in the contemplation of the
parties, those damages will be awarded not through an arbitrary extension of
the notice period, but through an award that reflects the actual damages.
Examples of conduct in dismissal resulting in compensable damages are attacking
the employee’s reputation by declarations made at the time of dismissal,
misrepresentation regarding the reason for the decision, or dismissal meant to
deprive the employee of a pension benefit or other right, permanent status for
instance (see also the examples in Wallace, at paras. 99‑100).
[60] In
light of the above discussion, the confusion between damages for conduct in
dismissal and punitive damages is unsurprising, given that both have to do with
conduct at the time of dismissal. It is important to emphasize here that the
fundamental nature of damages for conduct in dismissal must be retained. This
means that the award of damages for psychological injury in this context is
still intended to be compensatory. The Court must avoid the pitfall of double‑compensation
or double‑punishment that has been exemplified by this case.
3.2.2.2 Application of the Revised Test to This
Case
[61] I have
reviewed the major overriding and palpable errors which undermine the trial
judge’s finding that Honda acted in “bad faith” when terminating Keays. There
was, in my opinion, no such breach and no justification for an award of damages
for conduct in dismissal.
3.3 Punitive Damages
[62] In Vorvis,
McIntyre J., for the majority, held that punitive damages are recoverable
provided the defendant’s conduct said to give rise to the claim is itself “an
actionable wrong”. This position stood until 2002 when my colleague Binnie J.,
writing for the majority, dealt comprehensively with the issue of punitive
damages in the context of the Whiten case. He specified that an
“actionable wrong” within the Vorvis rule does not require an
independent tort and that a breach of the contractual duty of good faith can
qualify as an independent wrong. Binnie J. concluded, at para. 82, that “[a]n
independent actionable wrong is required, but it can be found in breach of a
distinct and separate contractual provision or other duty such as a fiduciary
obligation.” In the case at hand, the trial judge and the Court of Appeal
concluded that Honda’s “discriminatory conduct” amounted to an independent
actionable wrong for the purposes of allocating punitive damages. This being
said, there is no need to discuss the concept of “actionable wrong” here; this
was done in Whiten. What matters here is that there was no basis for the
judge’s decision on the facts. I will therefore examine the facts and
determine why punitive damages were not well justified according to the
criteria in Whiten. I will also discuss the need to avoid duplication in
damage awards. Damages for conduct in the manner of dismissal are compensatory;
punitive damages are restricted to advertent wrongful acts that are so
malicious and outrageous that they are deserving of punishment on their own.
This distinction must guide judges in their analysis.
[63] In
this case, the trial judge awarded punitive damages on the basis of
discriminatory conduct by Honda. Honda argues that discrimination is precluded
as an independent cause of action under Seneca College of Applied Arts
and Technology v. Bhadauria, [1981] 2 S.C.R. 181. In that case, this Court
clearly articulated that a plaintiff is precluded from pursuing a common law
remedy when human rights legislation contains a comprehensive enforcement
scheme for violations of its substantive terms. The reasoning behind this
conclusion is that the purpose of the Ontario Human Rights Code is to
remedy the effects of discrimination; if breaches to the Code were actionable
in common law courts, it would encourage litigants to use the Code for a
purpose the legislature did not intend — namely, to punish employers who
discriminate against their employees. Thus, a person who alleges a breach of
the provisions of the Code must seek a remedy within the statutory scheme set
out in the Code itself. Moreover, the recent amendments to the Code (which
would allow a plaintiff to advance a breach of the Code as a cause of action in
connection with another wrong) restrict monetary compensation to loss arising
out of the infringement, including any injuries to dignity, feelings and self‑respect.
In this respect, they confirm the Code’s remedial thrust.
[64] The
Court of Appeal, relying on McKinley, concluded that Bhadauria
only precludes a civil action based directly on a breach of the Code — but does
not preclude finding an independent actionable wrong for the purpose of
allocating punitive damages. It is my view that the Code provides a
comprehensive scheme for the treatment of claims of discrimination and Bhadauria
established that a breach of the Code cannot constitute an actionable wrong;
the legal requirement is not met.
[65] Keays
argued in cross‑appeal before this Court that the decision in Bhadauria
should be set aside and that a separate tort of discrimination should be
recognized. In Bhadauria, Laskin C.J., writing for the Court, held that
the plaintiff was precluded from pursuing a common law remedy because the
applicable human rights legislation (the Code) contained a comprehensive
enforcement scheme for violations of its substantive terms. The subtext of the Bhadauria
decision is a concern that the broad, unfettered tort of discrimination created
by the Court of Appeal would lead to indeterminate liability. Laskin C.J.
wrote, at p. 189:
It is one thing to apply a common law duty of care to standards of
behaviour under a statute; that is simply to apply the law of negligence in the
recognition of so‑called statutory torts. It is quite a different thing
to create by judicial fiat an obligation — one in no sense analogous to a duty
of care in the law of negligence — to confer an economic benefit upon certain
persons, with whom the alleged obligor has no connection . . . .
The concern that
a tort of discrimination does not contain an effective limiting device was
raised by interveners in this appeal. Moreover, as noted by the intervener
Manitoba Human Rights Commission, jurisdictions outside Ontario have human
rights legislation that vests jurisdiction exclusively with the
provincial/territorial human rights tribunal. Accordingly, the concern in Bhadauria
that recognition of a tort of discrimination would be inconsistent with
legislative intent is still real.
[66] The
Council of Canadians with Disabilities, another intervener, raised the concern
that recognition of a tort of discrimination may undermine the statutory regime
which, for many victims of discrimination, is a more accessible and effective
means by which to seek redress.
[67] This
said, there is no need to reconsider the position in Bhadauria in this
case and deal with Keays’ request for recognition of a distinct tort of
discrimination. There was no evidence of discrimination to support a claim
under s. 5 of the Ontario Human Rights Code, therefore no breach of
human rights legislation serving as an actionable wrong, as required by Goudge
J.A. Furthermore, there was no evidence of conduct meeting the strict
requirements in Whiten. The trial judge concluded that the accommodation
provided by admission to the disability program was itself discriminatory
because Keays “had to ‘earn’ each dispensation from being ‘coached’ for any
absences by presenting a ‘note’ from his doctor like some child who is
suspected of ‘playing hooky’ from school” (para. 53). The trial judge then
added that it made little sense to have a disability program and then deter its
use by asking for doctors’ notes. The association of coaching and the
requirement of notes made by the trial judge here is puzzling. The requirement
of notes was in effect part of the accommodation because it permitted absences
without the possibility of the same leading to disciplinary action for failing
to meet work requirements. There was no detriment in being part of the
disability program and being treated differently from persons with “mainstream
illnesses”. The differential treatment was meant to accommodate the particular
circumstances of persons with a particular type of disability and to provide a
benefit to them. It is indeed apparent from the record that the program was
designed to establish a continuous relation between management and treating
physicians and monitor absences in order to establish in particular an expected
rate of absences which would not give rise to disciplinary action. The
suggestion that the program itself was discriminatory is not supported by the
facts.
[68] Even
if I were to give deference to the trial judge on this issue, this Court has
stated that punitive damages should “receive the most careful consideration and
the discretion to award them should be most cautiously exercised” (Vorvis,
at pp. 1104-5). Courts should only resort to punitive damages in exceptional
cases (Whiten, at para. 69). The independent actionable wrong
requirement is but one of many factors that merit careful consideration by the
courts in allocating punitive damages. Another important thing to be considered
is that conduct meriting punitive damages awards must be “harsh, vindictive,
reprehensible and malicious”, as well as “extreme in its nature and such that
by any reasonable standard it is deserving of full condemnation and punishment”
(Vorvis, at p. 1108). The facts of this case demonstrate no such
conduct. Creating a disability program such as the one under review in this
case cannot be equated with a malicious intent to discriminate against persons
with a particular affliction.
[69] The
majority of the Court of Appeal upheld the award of punitive damages, but
reduced the quantum to $100,000. The findings supporting this decision are
demonstrably wrong and, in some cases, contradict the Court of Appeal’s own
findings. Before delving into the factual analysis, however, it is worth
mentioning that even if the facts had justified an award of punitive damages,
the lower courts should have been alert to the fact that compensatory damages
were already awarded, and that under the old test, they carried an element of
deterrence. This stems from the important principle that courts, when
allocating punitive damages, must focus on the defendant’s misconduct, not on
the plaintiff’s loss (Whiten, at para. 73). In this case, the same
conduct underlays the awards of damages for conduct in dismissal and punitive
damages. The lower courts erred by not questioning whether the allocation of
punitive damages was necessary for the purposes of denunciation, deterrence and
retribution, once the damages for conduct in dismissal were awarded. Be that as
it may, we now have a clearer foundation to distinguish between damages for
conduct in dismissal and punitive damages.
[70] As
earlier mentioned, there was considerable duplication in the award of damages
for conduct in dismissal and punitive damages in this case. The discussion of
punitive damages must nevertheless begin with a consideration of the conduct
attributed to Honda that justified the award.
[71] As
earlier mentioned, the main allegation was that Honda discriminated by
requiring Keays to bring in a doctor’s note to justify each absence when
employees with “mainstream illnesses” did not have to do so. The trial judge
also found that this requirement had the effect of lengthening absences,
ignoring the evidence of Ms. Selby who testified that Honda did not require the
employee to produce a doctor’s note as a precondition to returning to work. As
discussed earlier, employees outside the disability program did not require
notes for absences of less than five days but were subject to discipline for
excessive absences (A.R., at pp. 282-83), whereas employees in the program were
allowed regular absences without discipline beyond the usual attendance
requirement under a system of supervision based on regular contacts with
doctors. The object of the disability program is to maintain regular contact
with the family doctor in order to support treatment. It allows for
disability-related absences, a form of accommodation determined in consultation
with doctors. The program requires that medical notes be provided to establish
that absences are in fact related to the disability. There is no stereotyping
or arbitrariness here (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, at para. 49). In addition, I accept that the need to
monitor the absences of employees who are regularly absent from work is a bona
fide work requirement in light of the very nature of the employment
contract and responsibility of the employer for the management of its
workforce.
[72] The
trial judge also found the refusal to remove the “coaching” record from Keays’
file to be discriminatory, even if there was no evidence of any adverse
consequences to the existence of a coaching file. The evidence was that
coaching is not a disciplinary procedure and would simply permit entry into the
disability program allowing absences without disciplinary consequences (A.R.,
at pp. 306-14).
[73] The
trial judge also based his decision on harassment; he seemed to relate this
entirely to a suggestion made by Dr. Affoo that Keays consider taking a
position with a light physical component (para. 55). It is certainly difficult
to see a course of conduct in a single incident. Moreover, this was a single
suggestion made by an independent expert, never acted upon. I have already
dealt with this argument at para. 39 when discussing the damages for conduct in
dismissal.
[74] A
final basis for the finding that punitive damages were justified is that Honda
had “retaliated” against Keays. I have dealt with this at para. 47.
[75] The
Court of Appeal pointed to the finding that Honda knew that Keays valued his
employment and was dependent upon it for disability benefits. It is no doubt
true that Keays valued his job and that he was dependent upon that employment
for his disability benefits. However, knowledge of this cannot justify an award
of punitive damages. All employees value their jobs. What matters is Honda’s
conduct with regards to Keays’ need for medical attention and special
accommodation. In this respect, it was wrong to blame Honda for Keays’ loss of
disability benefits. London Life’s decision to cut off Keays’ long-term
disability benefits had nothing to do with Honda. It was therefore erroneous
to attribute the insurer’s decision to Honda and allow for punitive damages on
such grounds.
[76] The
Court of Appeal found that Honda knew Keays was particularly vulnerable because
of his medical condition. However, according to the Court of Appeal’s own
findings, Honda did not know about the seriousness or true nature of Keays’
medical condition because Keays would not facilitate an exchange of information
about it. Honda was sceptical about Keays’ disability and was taking steps to
confirm it. His medical file did not disclose a definitive diagnosis of CFS
and Keays refused to meet with Dr. Brennan despite repeated assurances that the
meeting was only a “get to know you” session, to be followed by contacts with
Keays’ personal physician.
[77] Finally,
the Court of Appeal pointed to Honda’s refusal to deal with Keays’ counsel.
There is no legal obligation on the part of any party to deal with an
employee’s counsel while he or she continues with his or her employer. Parties
are always entitled to deal with each other directly. What was egregious was
the fact that Honda told Keays that hiring outside counsel was a mistake and
that it would make things worse. This was surely a way of undermining the
advice of the lawyer. This conduct was ill-advised and unnecessarily harsh, but
it does not provide justification for an award of punitive damages.
[78] The
evidence and the Court of Appeal’s own findings lead me to conclude that
Honda’s conduct was not sufficiently egregious or outrageous to warrant an
award of punitive damages under the Whiten criteria. The Court of
Appeal’s award must thus be overturned.
4. The Cost Premium
[79] The
final issue that must be addressed relates to the cost premium. In Walker
v. Ritchie, [2006] 2 S.C.R. 428, 2006 SCC 45, this Court found that the
risk of non‑payment of lawyer’s fees is not a relevant factor under the
Ontario Rules of Civil Procedure (Rule 57.01). This decision, which was
released after the cost premium was awarded in this case, and Honda’s success
on this appeal are determinative. Thus, the cost premium should be set
aside.
5. Conclusion
[80] The
appeal is allowed in part and the cross-appeal is dismissed. The damages for
conduct in dismissal and punitive damages awards are set aside. Costs on this
appeal and cross-appeal are awarded to Honda. At other levels, costs should be
at a partial indemnity scale and the cost premium set aside.
The reasons of LeBel and Fish JJ. were delivered by
[81] LeBel J. (dissenting in part on the
appeal) — I have read the reasons of my colleague Justice Bastarache. I agree
with him that there was no basis for the claim for punitive damages and that it
overlaps with the award of what were formerly known as “Wallace
damages”. I also agree with him that there is a need to review the categories
of damages for dismissal. But any revision must reflect the view accepted by
this Court that the contract of employment is a good faith contract that is
informed by the values protected by and recognized in the human rights codes
and the Canadian Charter of Rights and Freedoms , particularly in respect
of discrimination. As the Court found in Wallace v. United Grain Growers
Ltd., [1997] 3 S.C.R. 701, the contract of employment often reflects
substantial power imbalances. As a result, it must be performed and terminated
in good faith, and fairly.
[82] With
respect, I believe that on the facts of this case, the award of additional
damages for manner of dismissal (formerly “Wallace damages”) should
stand. The trial judge committed no overriding errors in this respect ((2005),
40 C.C.E.L. (3d) 258). Although his review of the facts may not have been
flawless, there was a sufficient basis for the findings of bad faith and
discrimination in the manner in which the employment of the respondent, Kevin
Keays, was terminated by Honda.
[83] After
discussing this, I will add a few comments on this Court’s judgment in
Seneca College of Applied Arts and Technology v. Bhadauria, [1981] 2 S.C.R.
181, and on its impact on the development of the law of torts.
I. Appellate Review and the Findings of Bad
Faith
[84] This
Court’s jurisprudence has had a significant impact on the review of facts by
appellate courts. Indeed, the Court recognizes that it too is bound by the
principle of deference to the findings of a trier of fact (St-Jean v.
Mercier, [2002] 1 S.C.R. 491, 2002 SCC 15, at paras. 37 and 46, per Gonthier
J.). The trial in the Superior Court of Justice lasted 30 days. The trial
judge heard extensive, and often conflicting, evidence about which he made
numerous findings of fact. Despite some flaws in his review of the facts, his
findings of bad faith and discrimination had an adequate factual foundation.
Given the way the issues were addressed in this Court, I will discuss the
errors allegedly committed by the trial judge in some detail in order to show
that the factual foundation for those findings was adequate.
[85] I have
reviewed the errors identified by the majority of the Court of Appeal, as well
as those identified by Justice Bastarache to support his conclusion that Wallace,
or manner of dismissal, damages were not warranted in this case. In my
view, several of the findings the majority of the Court of Appeal identified as
errors were in fact supported by the evidence. The findings my colleague
identifies as errors are also, in my opinion, generally supported by the
evidence. I will review each alleged error in turn below.
[86] I
agree that the trial judge wrongly associated the termination of Mr. Keays’
long-term disability insurance with Honda. The majority of the Court of Appeal
properly rejected this finding, as there was no evidence that Honda was
involved in the cancellation or in Mr. Keays’ failed appeal. The majority of
the Court of Appeal also identified the following findings as errors:
1. The appellant’s misconduct was
“planned and deliberate and formed a protracted corporate conspiracy”. The
majority found that this was not supported by the evidence.
2. The appellant conspired to
interfere with the respondent’s relationship with his own physician. The
majority found that this contradicted the trial judge’s finding that the
appellant intended to dismiss the respondent. If it intended to dismiss him,
there was no need to introduce Dr. Brennan into the relationship between Mr.
Keays and his own physician.
3. The appellant benefited from its
misconduct because it rid itself of a “problem associate”. The majority could
find no evidence to support this conclusion.
4. The appellant’s in‑house
counsel breached the Rules of Professional Conduct of the Law Society of Upper
Canada. The majority concluded that at most the behaviour was technical
misconduct and that it provided no basis for increasing the punitive damages.
((2006), 82 O.R.
(3d) 161, at paras. 91, 93, 98, 100 and 101)
[87] In the
case of the first finding, it may be that the trial judge exaggerated the
extent of Honda’s misconduct. However, the evidence supports the trial judge’s
view that Honda was unfairly skeptical of Mr. Keays’ condition and was seeking
to justify its skepticism. It should be kept in mind that Honda’s intention in
seeking to justify its skepticism was clearly: (1) to preclude Mr. Keays from
using his condition to justify absences from work and thereby avoiding
disciplinary action; and/or (2) to justify the termination of Mr. Keays for any
continued absences. In either case, Honda’s conduct was to Mr. Keays’
detriment.
[88] The
second finding, that of interference with the respondent’s relationship with
his doctor, was also reasonable. As I will explain below with respect to
Dr. Brennan’s “hardball” approach, the gist of this approach was that Dr.
Brennan would be brought in to “second‑guess” the opinion of an
employee’s treating physician. Further, there was a clear conflict between Dr.
Brennan’s objective — to maximize employee productivity — and the objective of
an employee’s treating physician — to maximize the individual’s well‑being.
Such a conflict may not always play out. In this case, however, a high
potential for conflict arose out of the controversial nature of chronic fatigue
syndrome (“CFS”) and the difficulty of making a diagnosis.
[89] In my
view, it was fair for the trial judge to characterize Honda’s conduct as
interference with Mr. Keays’ relationship with his treating physician. Honda
did not accept the diagnosis and the assessments of Mr. Keays’ treating
physician. Yet, it gave no basis for its skepticism. The characterization of
the notes of Mr. Keays’ doctor as “cryptic” and as merely “parroting” his
complaints is unfair because of the self‑reporting nature of his condition.
As the trial judge pointed out, if Honda was skeptical, the first logical step
“was to determine if there had been, at any time, any form of legitimate
diagnosis for the claim of CFS” (para. 18).
[90] Further,
this finding does not contradict the trial judge’s conclusion that Honda had
intended to terminate Mr. Keays. I do not read the trial judge’s reasons as
suggesting that Honda intended to terminate Mr. Keays from the outset. Rather,
the trial judge refers to Honda’s intent to “deprive him of the accommodation
he had already earned” (para. 60). That was the primary objective. According to
the trial judge, Honda went about this by means of a course of conduct whose
purpose was to discourage absences (through intimidation and through the
requirement that he provide a doctor’s note before returning), and which
ultimately resulted in termination when Mr. Keays refused to go along. The
implication of the facts as found by the trial judge is that Honda wanted to
introduce Dr. Brennan into the process in order to legitimize its conduct.
Either Mr. Keays would meet with Dr. Brennan, who would justify Honda’s
skepticism and avert any further absences, or he would be fired for
insubordination (or for continued illegitimate absences) and any need to
accommodate him would disappear.
[91] I will
now turn to the third finding. If it is accepted that Honda intended to deprive
Mr. Keays of any accommodation, then Honda clearly succeeded in this objective
by terminating him. It is logical to assume that if Honda intended to deprive
him of accommodation, it would in some way benefit from doing so. The facts
include concerns about workplace morale and Mr. Keays’ ability to perform the
duties of his job in accordance with the requirements of Honda’s “lean” operation
policy. To the extent that Mr. Keays impeded efficiency goals, Honda clearly
benefited from his termination.
[92] As
regards the fourth finding, I agree after reviewing the record that the trial
judge mischaracterized the situation, at least according to the other two Honda
employees who testified (Susan Selby and Betty Magill). They stated that they
had met with Mr. Keays to discuss the proposed meeting with Dr. Brennan.
After Mr. Keays left the room, Ms. Selby and Ms. Magill were paged by Honda’s
in‑house counsel, who wanted to meet with them about an unrelated matter.
Counsel came to the room they were in, and Mr. Keays re-entered the room after
counsel had arrived. Some discussion about Mr. Keays’ situation ensued,
although it appears to have been minimal.
[93] In
summary, it is my view that the Court of Appeal correctly identified three
errors made by the trial judge: (1) his association of Honda with the
cancellation of Mr. Keays’ long‑term disability insurance; (2) his
conclusion, based on the date the insurance was terminated, that Honda’s course
of conduct had lasted five years; and (3) his characterization of the incident
involving Honda’s in‑house counsel as a breach of the Rules of
Professional Conduct. However, I disagree with the majority’s conclusions in
respect of the other alleged errors. These “errors” relate to some extent to
the error identified by Justice Bastarache regarding the March 28 letter, which
I will now discuss.
A. The March 28 Letter
[94] At
paras. 37‑42 of his reasons, Justice Bastarache explains his conclusion
that the trial judge erred in finding that Honda had deliberately
misrepresented the positions of Dr. Affoo and Dr. Brennan in its March 28
letter for the purpose of intimidation. He states, at para. 40, that there was
“nothing misleading” about the letter. He concludes, at para. 42, that the
“letter simply conveyed to Keays that Honda wanted him to meet with Dr. Brennan
because their experts had advised them that his condition did not preclude him
from working”.
[95] However,
there was evidence on which the trial judge could conclude that the letter was
misleading. The letter contained the following statement: “Both doctors advised
us that they could find no diagnosis indicating that you are disabled from
working.” The following comment was also made: “. . . we advised you that we
would no longer accept that you have a disability requiring you to be absent”.
Yet, as the trial judge pointed out, Dr. Brennan testified that he “never told
Honda that Mr. Keays did not have a disability, only that he was unable to
‘verify’ one” (para. 43). The trial judge also mentioned the testimony of Dr.
Affoo, who “agreed with the plaintiff’s suggestion that absences of four per
month was in the ‘ball‑park’ for an individual who suffered [from] CFS”
(para. 43). Moreover, it should be noted that although Dr. Affoo testified, on
the basis of his experience with other CFS patients, that four CFS-related
absences a month would not be unreasonable, he also said that he could not
recall precisely what he told Ms. Selby regarding the rate of absence that
could be expected from Mr. Keays. Dr. Affoo merely recalled confirming
that “he may be off due to his condition” (A.R., at p. 572).
[96] The
trial judge concluded that “the clear implication of this communication was
that his condition was ‘bogus’ and that he was able to attend work without
absences” (para. 43). While it is arguable whether the letter implied that Mr.
Keays’ condition was bogus, it clearly did imply that his condition did not
require him to miss work. I am unable to find any evidence that either doctor
advised Honda that he believed Mr. Keays’ condition was bogus or that Mr.
Keays was able to attend work without any CFS-related absences. To the contrary,
Dr. Affoo testified that he had informed Honda that some absences were to be
expected. It was therefore open to the trial judge to conclude that the letter
was a “misrepresentation of the medical information available to Honda at the
time” (para. 43).
B. Allegations of a “Set‑Up” and a
“Hardball” Approach
[97] At
paras. 43‑46, Justice Bastarache rejects the trial judge’s finding that
Mr. Keays was being “set up” by Honda when it insisted that he meet with
Dr. Brennan, as well as his finding that Dr. Brennan took a “hardball” approach
to workplace absences. My colleague’s bases for rejecting these findings are:
(1) that Dr. Brennan was merely relying on the criteria for diagnosing CFS
developed by the Center for Disease Control (“CDC”); and (2) that Honda cannot
be faulted for taking its expert’s advice unless a conspiracy existed (and none
did). Justice Bastarache concludes that Honda’s request that Mr. Keays meet
with Dr. Brennan was “perfectly normal in the circumstances”
(para. 46). After reviewing the record, in my opinion, the trial judge
could reasonably conclude that Dr. Brennan took a “hardball” approach and that
Mr. Keays was, at least to a certain extent, being “set up” for failure by
Honda’s request that he meet with Dr. Brennan.
[98] First,
I must point out that Justice Bastarache erroneously associates the trial
judge’s reference to Dr. Brennan’s “hardball” attitude with Dr. Brennan’s
approach to CFS. In refuting the trial judge’s view that Dr. Brennan took a
“hardball” approach, my colleague reviews Dr. Brennan’s opinion on CFS in
order to demonstrate that Dr. Brennan was “simply espousing the prevalent
approach adopted by the CDC” (para. 45). However, what the trial judge
actually stated was that “the record establishes beyond any debate that Dr.
Brennan is of the ‘hardball’approach to workplace absences associated with
illnesses or injuries” (para. 45 (emphasis added)). Dr. Brennan’s
opinion concerning CFS is a separate issue. Although Justice Bastarache makes
reference to Dr. Brennan’s “‘hardball’ approach to workplace absences” (at
paras. 44 and 45), his only discussion of that approach relates to Dr.
Brennan’s views on CFS.
[99] Several
excerpts from Dr. Brennan’s testimony are indicative of a “hardball” approach
toward absences, and toward accommodating disabilities generally. In
describing his approach to accommodation, Dr. Brennan stated that “the gold
standard for accommodating somebody, in fact, is to not to have to
accommodate them, meaning that their impairment is not of a nature that
would stop them from doing their regular work” (A.R., at p. 618 (emphasis
added)). He then went on to describe a process whereby disabled workers are
“matched” with duties they can perform despite their impairments. Later in his
testimony, Dr. Brennan acknowledged that some people have issues with an
“accommodation” that involves being moved to another job they view as less
“prestigious” (A.R., at p. 662). He added that this does not affect his
recommendation as to the appropriate “accommodation”, stating that: “. . . my
opinion is based on [a] medical approach or a functional approach. Prestige
isn’t a medical issue.”
[100]
These excerpts are troubling. The implication is that Dr. Brennan’s
objective is to recommend the “accommodation” that is best for Honda, not the
one that is best for the employee. Although he suggests that he is only giving
a “medical” opinion, his opinion is focussed on maximizing an employee’s
productivity for Honda in light of the employee’s condition. His goal is
clearly not to find ways for Honda to make it easier for the disabled employee
to do his or her current job. Certainly, disabilities may make it impossible
for individuals to continue in their current positions. But if accommodation is
truly a cooperative and collaborative process, it requires give and take on
both sides. Dr. Brennan’s approach suggests that rather than assisting disabled
employees to continue in their current roles, employers can simply place
disabled employees in other roles that do not require any true accommodation on
the employers’ part. This approach makes the disability the employee’s problem,
not a problem shared with the employer. This is of concern from an equality
perspective because it limits the employment options available to disabled
persons.
[101]
Generally, Dr. Brennan appeared to be of the view that only he can truly
ascertain whether an employee has an impairment. He showed skepticism toward
the opinions of other doctors and indicated that he would insist on meeting
with an employee no matter what was in the employee’s medical records, because
he needed to assess the person himself in order to assess the employee’s
“impairment” and determine the appropriate “accommodation”. As a doctor, he was
able to give a “medical” opinion both about what an individual was capable of
doing and about what would be “best” for the individual from a medical
perspective. This could easily lead to a situation in which Dr. Brennan’s
opinion conflicts with the opinion of the employee’s treating physician. His
objective is not to provide medical care for the individual employee but, as I
mentioned above, to maximize productivity. In my view, the above passages
provide ample support for the trial judge’s view that Dr. Brennan took a
“hardball” approach to absences, and to accommodation generally.
[102]
It was argued that regardless of Dr. Brennan’s approach, Honda cannot be
faulted for taking its expert’s advice unless a conspiracy existed. The
“advice” referred to is purportedly that Dr. Brennan needed to meet with Mr.
Keays face to face in order to accept the diagnosis of CFS. However, the trial
judge expressly rejected the argument that it was necessary for Dr. Brennan to
meet with Mr. Keays. This was a critical finding in the trial judge’s analysis
of the wrongful dismissal claim. The trial judge found that, given the numerous
references to CFS in Mr. Keays’ medical file as well as his lengthy period of
CFS-related disability, there was no need for Mr. Keays to meet with
Dr. Brennan “to resolve [his] attendance defaults” (para. 18).
[103]
Mr. Keays was concerned about meeting with Dr. Brennan because of his
previous experience with his insurer. The insurer had required him to meet with
its doctor for an assessment, after which his long-term disability insurance
was terminated even though his own physician was still of the view that he was
not able to return to work. Mr. Keays feared that a similar situation would
occur in which Dr. Brennan would not accept that he had to miss work due to his
CFS, and that this would have negative implications for his continued
employment at Honda. It appears that the trial judge referred to Dr. Brennan’s
“hardball” approach in order to validate Mr. Keays’ concern that Dr. Brennan
would not accept his need for CFS-related absences. There was some evidence
that Honda knew (and approved) of Dr. Brennan’s approach. Ms. Selby testified
that Dr. Brennan “had a very good reputation, from what I was told, in terms of
dealing with workplace absences and a fresh approach, fresh start” (A.R., at p.
449).
[104]
The trial judge’s main point appears to be that Honda was relying on
Dr. Brennan and his approach to “deal with” Mr. Keays and his absences. In
other words, Honda was relying on Dr. Brennan to legitimize its view that the
absences were not warranted. In light of the evidence, this conclusion was not
unreasonable.
[105]
In regard to the issue of whether Mr. Keays was being “set up”, Dr.
Brennan testified that he was asked by Susan Selby to review Mr. Keays’ file
and “provide an opinion as to whether there was a proven impairment and whether
he should be attending work” (A.R., at p. 624). This suggests that before
involving Dr. Brennan in the case, Honda already harboured suspicions
about the legitimacy of Mr. Keays’ condition. Further, Honda cancelled its
accommodation of Mr. Keays’ condition at the same time as it urged Mr. Keays
to meet with Dr. Brennan (the trial judge referred specifically to this fact at
para. 29). It was therefore not unreasonable for the trial judge to conclude
that the purpose of the meeting was to confirm Honda’s view that the absences
were not justified. I will discuss this further below with respect to reprisal.
[106]
Finally, although it was suggested that Dr. Brennan was consulted
in order to confirm the diagnosis of Mr. Keays’ condition, the testimony of Ms.
Magill and Ms. Selby is unclear in this regard. At several points, they
suggested that Dr. Brennan was consulted in order to obtain his opinion on
whether Mr. Keays was able to work on a more regular basis (i.e. without
CFS-related absences), not on whether Mr. Keays had a bona fide medical
condition. Ms. Magill testified that the purposes of having Mr. Keays meet with
Dr. Brennan were threefold: first, simply to review Mr. Keays’ medical file
with him in person and to discuss his condition, his symptoms and their impact
on his work; second, to develop a treatment plan that was to be coordinated
with Mr. Keays’ own physician; and third, to review and assess any restrictions
on Mr. Keays’ ability to work and to consider alternative roles for him at
Honda (A.R., at pp. 402-3). Ms. Magill stated that Dr. Brennan had
not reached a conclusion on Mr. Keays’ condition, but had simply reached one
about his ability to work (A.R., at p. 406).
[107]
Ms. Selby denied that one of the purposes of the meeting was to develop
a treatment plan for Mr. Keays that Dr. Brennan was to coordinate with Mr.
Keays’ physician (A.R., at p. 506). However, she did testify that one of the
purposes of the proposed meeting, in addition to sharing information, was to
see whether “there was something that Dr. Brennan could do to help support [Mr.
Keays] in the future” (A.R., at p. 457). Ms. Selby also testified that Mr.
Keays “didn’t have restrictions to assess” and therefore denied that one of the
purposes of the meeting was to assess any restrictions in order to consider an
alternative role for Mr. Keays at Honda (A.R., at p. 507).
[108]
Ms. Selby testified that she had originally spoken to Dr. Brennan
regarding Mr. Keays in order to get his opinion on whether it was “fair to
expect Kevin to provide regular attendance” (A.R., at p. 449). However,
Dr. Brennan testified that Ms. Selby had asked him to review Mr. Keays’
record in order to “provide an opinion as to whether there was a proven
impairment and whether he should be attending work” (A.R., at p. 624). Dr.
Brennan added that he had proposed to Ms. Selby that he meet with
Mr. Keays in order to go over his medical history (A.R., at pp. 667-68).
Both Ms. Magill and Ms. Selby stated that Mr. Keays was told that the
purpose of the meeting was to review his file and share information (A.R., at
pp. 341 and 503).
[109]
I raise the purpose of the meeting as a concern in relation to the
set-up issue, because the record shows an apparent lack of candour in what Mr.
Keays was told about the purpose of the meeting. The testimony of
Ms. Magill, Ms. Selby and Dr. Brennan is somewhat conflicting, so the
precise purpose of the meeting remains unclear. Dr. Brennan’s testimony
suggests that the meeting was held in response to Ms. Selby’s request to
verify whether there was a “proven impairment” and whether Mr. Keays’ absences
were justified. Yet, this does not seem to be what Mr. Keays was told.
Although Ms. Magill mentioned some other purposes, none of these were
communicated to Mr. Keays either. If there was a lack of candour, this might
support the trial judge’s view that Mr. Keays was being “set up.”
C. Reprisal
[110]
At para. 47, Justice Bastarache rejects the trial judge’s finding that
Honda had cancelled Mr. Keays’ accommodation as a reprisal for his having
retained legal counsel. Justice Bastarache suggests that “Honda was simply
seeking to confirm Keays’ disability”. He also notes that Mr. Keays’ superiors
had met to address the deficiencies in his doctors’ notes “well before Keays’
lawyer sent his letter”.
[111]
In my view, the timing of the cancellation and of the insistence that
Mr. Keays meet with Dr. Brennan is suspect. The letter from Mr. Keays’
counsel was dated March 16. In it, counsel requested that Mr. Keays be
exempted from providing a doctor’s note for each absence before returning to
work. This was a request for a more appropriate accommodation of Mr. Keays’
disability. Honda’s response to Mr. Keays’ request that he be exempted from
providing doctors’ notes was to preclude him from claiming any
disability‑related absences. It was at a meeting on March 21 that Honda
told Mr. Keays that it would no longer accept that he had a disability
requiring him to be absent and that he would have to meet with Dr. Brennan in
order to “manage” his condition.
[112]
I disagree that it was a palpable and overriding error for the trial
judge to conclude that the cancellation was, at least in part, a reprisal for
Mr. Keays’ attempt to assert his right to proper accommodation under the
Ontario Human Rights Code, R.S.O. 1990, c. H.19. Instead of considering
Mr. Keays’ position, Honda denied any need for his continued absences. I do not
see how this could be seen as an attempt by Honda “to confirm Keays’
disability”. Honda stated expressly in the March 28 letter that it no longer
accepted that he had a disability requiring absences. Further, even if Honda
was suspicious of Mr. Keays’ condition, the fact that such concerns had been
raised prior to the March 21 meeting does not, in my view, explain or
justify the unilateral cancellation, on such short notice, of the minimal
accommodation that had been provided.
D. Keays’ Worsened Condition
[113]
Justice Bastarache also rejects the trial judge’s consideration of Mr.
Keays’ worsened condition because he rejects the conclusion that Honda acted in
bad faith. As I explained above, I question the reasoning that leads him to
reject the trial judge’s findings of fact. In my view, the impugned findings of
fact were supported by the evidence. Given my view that Honda did act in bad
faith, Mr. Keays’ worsened condition following his termination is relevant to
the assessment of Wallace damages.
II. Reconsidering the Issue of Wallace
Damages
[114]
In his reasons, Justice Bastarache clarifies the proper approach to
assessing Wallace damages in a wrongful dismissal action. As I mentioned
above, his review is a necessary and welcome restatement of the law on damages
for wrongful dismissal. Justice Bastarache explains that Wallace
damages will be available where “the manner of dismissal caused mental distress
that was in the contemplation of the parties” (para. 59). But because this
Court held in Wallace that employers have an “obligation of good faith
and fair dealing” when dismissing employees “and created the expectation that,
in the course of dismissal, employers would be ‘candid, reasonable, honest and
forthright with their employees’” (para. 58), an employer’s failure to properly
discharge that obligation makes it foreseeable that a dismissal might cause
mental distress. A failure to show good faith may therefore justify an award of
compensatory damages. The instant case is a case in point.
[115]
There is ample evidence to support the trial judge’s conclusion that
Honda acted in bad faith. Several aspects of Honda’s conduct are particularly
persuasive in this regard. Most notable is the misleading nature of the March
28 letter, which indicated that, according to Dr. Affoo and Dr. Brennan, Mr.
Keays did not have a disability requiring him to be absent from work. The clear
implication was that Mr. Keays’ recent absences were unrelated to his
disability or, at the very least, that they were medically unnecessary. A
further implication, one that was expressly spelled out later in the letter,
was that any CFS-related absences from work by Mr. Keays in excess of the
normal allowances would result in disciplinary action. In other words, he was
no longer eligible to participate in the disability program. The justification
given for this decision was the opinion of Honda’s medical experts, yet neither
doctor had recommended that Mr. Keays be removed from the disability program,
nor had they claimed that any CFS-related absences were unjustified.
[116]
A further concern is the apparent lack of candour on Honda’s part in
regard to the purpose of the proposed meeting between Mr. Keays and Dr.
Brennan. Neither Ms. Magill nor Ms. Selby provided any justification for
their refusal to explain the purpose of the meeting to Mr. Keays other than to
say that the purpose had already been explained to him in person. Yet, as I
mentioned above, there was conflicting testimony about the purpose of this
meeting. Given the confusion among Honda’s own employees, it is understandable
that Mr. Keays was still unclear about the purpose and that he sought further
clarification. In addition, the failure to provide clarification in writing is
somewhat suspicious. Further, given that Mr. Keays was willing to meet with
Dr. Brennan if clarification was provided and that Mr. Keays’ refusal to
meet with Dr. Brennan without such clarification resulted in his
dismissal, the refusal to provide it seems unduly harsh.
[117]
The nature of the events leading up to Mr. Keays’ termination makes it
reasonable to conclude that the conduct of Honda surrounding his termination,
and not the fact of termination alone, led to his worsened state. Accordingly,
an award of damages can be justified in this case on the basis of Honda’s conduct
and of the harm Mr. Keays suffered as a result. Although, as Justice
Bastarache explains, Wallace damages are intended to be compensatory,
given the lack of evidence on the precise loss Mr. Keays suffered as a result
of Honda’s conduct, I would uphold the compensation the trial judge granted
over and above the 15-month notice period. The quantum of the damages appears
reasonable and would give Mr. Keays adequate compensation.
III. Bhadauria and Tort Law
[118]
I agree that it is not necessary to reconsider Bhadauria in the
present appeal. But in my opinion Laskin C.J. went further than was strictly
necessary in Bhadauria. The main thrust of the decision was that Ms.
Bhadauria did not have a legally protected interest at common law that had been
harmed by the defendant’s allegedly discriminatory conduct (pp. 191-92).
However, rather than stop there, Laskin C.J. went on to hold that the Ontario Human
Rights Code “foreclose[s] any civil action based directly upon a breach
thereof [and] also excludes any common law action based on an invocation of the
public policy expressed in the Code” (p. 195). These conclusions imply (and
have been interpreted to mean) that any allegations resembling the type of
conduct that is prohibited by the Code cannot be litigated at common law. The
Code covers a broad range of conduct in promoting the goal of equality. Yet the
conduct at issue in Bhadauria was limited to the facts of that case. It
would have been sufficient to simply conclude that the interest advanced by Ms.
Bhadauria was not protected at common law. It was not necessary for this Court
to preclude all common law actions based on all forms of discriminatory
conduct.
[119]
The development of tort law ought not to be frozen forever on the basis
of this obiter dictum. The legal landscape has changed. The strong
prohibitions of human rights codes and of the Charter have informed many
aspects of the development of the common law.
[120]
On the facts of this appeal, discrimination was a troubling aspect of the
decision to terminate Mr. Keays. The presence of this discrimination aspect
taints the process and has an impact on the issue of whether the employment
relationship was terminated in good faith. Justice Bastarache notes that Mr.
Keays suffered no detriment in being treated differently from employees with
“mainstream” illnesses, because the differential treatment was intended to
accommodate him and he is thus implicitly compared with that category of
employees (para. 67). However, Justice Bastarache does not inquire into whether
this method of accommodation was appropriate and whether it addressed the
difference of the employee, namely his particular disability.
[121]
The National ME/FM Action Network, an intervener in this appeal,
explained why the accommodation provided by Honda was not appropriate:
ME/CFS is as yet poorly understood. Those who suffer
from it may have highly variable symptoms. There is no laboratory test that can
be used to confirm a diagnosis. In this context, attributing undue significance
to matters such as doctors’ notes which are based upon the patient’s own
reporting of symptoms, the treating doctor’s lack of precision in forecasting
absences, and the inability of doctors employed or retained by an employer to
“verify” a diagnosis of CFS or to accept CFS as justifying absences, will
likely be inimical to the accommodation required under human rights codes.
[Factum, at para. 14]
Although I agree
with Justice Bastarache that employers are justified in monitoring the absences
of employees, particularly those who are regularly absent from work (at
para. 71), he did not consider whether Honda’s method of monitoring
absences was appropriate (i.e. non-discriminatory). Honda’s assertion that its
disability program and its treatment of Mr. Keays under that program were
non-discriminatory cannot simply be taken at face value.
[122]
Mr. Keays had requested to be exempted from the requirement to provide a
doctor’s note for each CFS-related absence. Honda refused to consider this
request, despite the assertion by Mr. Keays’ attorney that Mr. Keays was
concerned that the note requirement created a barrier to his speedy return to
work. Regardless of whether or not the notes created a barrier, it is clear
that Honda was skeptical of Mr. Keays’ condition because of the “cryptic”
nature of his doctors’ notes and because his absences had become more frequent
than originally predicted. Yet if variable self-reporting conditions are
characteristic of Mr. Keays’ disability, it is arguable that Honda acted in a
discriminatory manner in subjecting him to the kind of scrutiny he underwent
and, in fact, denying him accommodation for his disability.
[123]
While monitoring employee absences certainly remains a valid objective,
this can be done in a variety of ways. Requiring a doctor’s note for each
absence is only one alternative. Others include seeking semi-regular updates
from an employee’s physician regarding the nature of the condition and the
course of treatment, checking in with the employee directly, or requiring
doctors’ notes only when the number of absences exceeds the expected number
within a given time frame. Not all monitoring methods may be considered
non-discriminatory in every context. As stated by the Ontario Network of
Injured Workers’ Groups, another intervener in this appeal, “[i]ndividualized
accommodation is at the heart of the duty to accommodate and is instrumental in
creating a discrimination free workplace” (Factum, at para. 17). In my view,
the employer must, in monitoring absences, remain mindful of all the
circumstances, which include the nature of the employee’s condition. It should
not be assumed that all monitoring methods are acceptable and
non-discriminatory.
[124]
For these reasons, I would allow the appeal in part by setting aside the
award of punitive damages and the costs premium. The cross-appeal should be
dismissed. Given the outcome and the circumstances of the case, I would award
costs to the respondent.
Appeal allowed in part, LeBel
and Fish JJ. dissenting in
part. Cross‑appeal dismissed.
Solicitors for the appellant/respondent on cross‑appeal: Lerners,
Toronto.
Solicitors for the respondent/appellant on cross‑appeal: Scher
& De Angelis, Toronto.
Solicitor for the intervener the Canadian Human Rights
Commission: Canadian Human Rights Commission, Ottawa.
Solicitor for the intervener the Ontario Human Rights
Commission: Ontario Human Rights Commission, Toronto.
Solicitor for the intervener the Manitoba Human Rights
Commission: Manitoba Human Rights Commission, Winnipeg.
Solicitors for the intervener the Alliance of Manufacturers &
Exporters Canada: Baker & McKenzie, Toronto.
Solicitors for the intervener the Human Resources Professionals
Association of Ontario: Miller Thomson, Toronto.
Solicitors for the intervener the National ME/FM Action
Network: Paliare, Roland, Rosenberg, Rothstein, Toronto.
Solicitor for the intervener the Council of Canadians with
Disabilities: Community Legal Assistance Society, Vancouver.
Solicitor for the intervener the Women’s Legal Education and Action
Fund: Women’s Legal Education and Action Fund, Toronto.
Solicitor for the intervener the Ontario Network of Injured Workers’
Groups: ARCH Disability Law Centre, Toronto.