B.C. COURT OF APPEAL REMINDS US OF EMPLOYER’S DUTY OF GOOD FAITH AND FAIR DEALING
About two years ago, in 2019, in Ruston v Keddco MFG (2011) Ltd., 2019 ONCA 125, the Ontario Court of Appeal ruled that the employer’s counterclaim for damages had been a tactic to intimidate the terminated employee, and that it had breached its obligation of good faith and fair dealing in the manner of termination. The Court noted that an employer’s pre and post-termination conduct are relevant for the assessment of aggravated and punitive damages for bad faith conduct. As such, the Court awarded the Plaintiff $25,000 for aggravated/moral damages and $100,000 for punitive damages.
In May 2021, the BC Court of Appeal Case in Ojanen v Acumen Law Corporation, 2021 BCCA 189, also awarded significant damages against an employer.
This case involved an articling student who was terminated for alleged cause. The allegations against the articling student were, among other things, theft, dishonesty, deceitful conduct.
At the trial, the trial judge reviewed the allegations of misconduct and ruled that the allegations, viewed individually or collectively, did not amount to just cause. From the trial judge’s perspective, most of the allegations were condoned by the employer. Although the articling student was guilty of a serious error in judgment, it did not amount to a fundamental breach of the employment agreement.
The trial judge also found that the employer’s conduct was unfair and unduly insensitive and caused serious and prolonged emotional distress that was well outside the norm for dismissed employees. Among other things, the trial judge considered that the employer did not objectively investigate the situation but jumped to a conclusion; that the employer filed a claim against the articling student with unwarranted accusations that were based on unfounded suspicions; and that, as a result of the employer’s termination, lawsuit and complaint to the Law Society, the employee was not able to work in the legal profession for approximately 3 years.
The trial judge awarded $18,934 for breach of the employment agreement and $50,000 in aggravated damages.
However, it did not end here. On Appeal, the BC Court of Appeal considered whether the employer’s conduct caused the articling student’s loss of opportunity to become a lawyer and warranted punitive damages. In its decision, the Court of Appeal ruled that it would have been within the parties’ reasonable contemplation when they entered the agreement that the articling student would lose the opportunity to become a lawyer if the agreement was wrongfully terminated, and the damages awarded by the trial judge were not sufficient to achieve the goals of denunciation, deterrence and retribution in light of the employer’s highly reprehensible misconduct. In the result, the Court of Appeal increased the general damages by $100,000 and added $25,000 in punitive damages.
Author: Justin Kwon