Awards of punitive damages in Canadian employment law cases are not very common. Courts are usually circumspect in granting such damages. Two recent cases, however, have awarded substantial amounts of punitive damages - in excess of half a million dollars - to plaintiff employees. Most recently, a BC jury awarded $572,000 in punitive damages to a former employee. These cases provide a useful indicator of the circumstances and extent to which courts and juries, where applicable, may award punitive damages in the employment context.

$572,000 in Punitive Damages Awarded to Employee by Jury

In Higgenson v. Babine Forest Products Ltd.1, a wrongful dismissal suit, a BC jury awarded the plaintiff, a 34-year managerial employee, a global amount of approximately $809,000. This global amount consisted of approximately $572,000 in punitive damages and $236,000 in compensatory damages.

There are no reported reasons for the decision because the matter was tried by a jury. However, reports indicate that counsel for the employer argued that Mr. Higgenson was terminated by the employer in an attempt to avoid paying severance. Reports also indicate that employer’s counsel argued that the employer tried to make Mr. Higgenson’s job so impossible and unpleasant that he would quit and when that did not happen, the employer made allegations so that it could terminate Mr. Higgenson. The large award of punitive damages indicates that the jury apparently agreed with the employer’s arguments.

$550,000 in Punitive Damages Awarded to Employee by Judge

In Pate Estate v. Galway-Cavendish and Harvey (Townships)2, an Ontario judge, after being directed by the Ontario Court of Appeal to reassess an initial award of $25,000 for punitive damages to Mr. Pate, awarded $550,000 in punitive damages to the plaintiff.

Mr. Pate was employed as a building inspector from December 1998 to March 1999, at which time his employment was terminated by the defendant municipality employer without notice. Mr. Pate was advised that discrepancies had been uncovered with respect to permit fees; the employer alleged such fees were received by Mr. Pate and not forwarded to it. Subsequent to his termination, a criminal trial relating to those issues was heard and he was acquitted on all charges.

In awarding punitive damages, the trial judge condemned the defendant municipality’s conduct on a number of grounds. The Court found that one of the defendant’s officers withheld exculpatory evidence which, if disclosed, would have avoided criminal changes being leveled against Mr. Pate. The Court was also critical of unfounded claims in the employer’s statement of defense respecting the employee’s conduct. The Court noted that as a result of the employer’s behavior, Mr. Pate’s career as a municipal official was destroyed. The Court also found that the employer’s conduct contributed to the end of Mr. Pate’s marriage.

Judicial Punishment A Possibility in Right (Wrong) Circumstances

These case are striking examples of conduct that should not be engaged in or condoned by any employer. The punitive damage award in both Higgenson and Pate Estate eclipse prior awards in the employment context, and the global settlements or awards in many employment cases. They are clear warnings from the jury system and the courts that employers who engage in or permit highhanded, arbitrary or highly reprehensible conduct may be punished.

Employers should ensure that they have sufficient training and measures in place to ensure that managers and other employees do not engage in harmful conduct in their workplaces. While many employers have policies such as a Code of Conduct, prescribing appropriate workplace behaviours, employers may also find it worthwhile to take further precautionary measures to ensure that its employees and officers do not engage in such conduct. This may include appropriate training, and protocols for ensuring that human resources professionals, or internal or external counsel become involved in decisions involving the dismissal of employees. While employers may be held to be responsible in law for the actions of their employees and officers, adequate steps can help employers mitigate such risks.