About a year ago, we reported on Pate v. Galway-Cavendish (Township) in which the employer had terminated a building inspector for discrepancies in remitting permit fees that had been paid to the inspector. The employer pressed for criminal charges to be laid against the inspector and withheld exculpatory evidence from the police.

The employee was later acquitted of the criminal charges and sued for wrongful dismissal and malicious prosecution. The trial judge awarded, among other things, $25,000 in punitive damages. Pate then successfully appealed from that award, with the Court of Appeal for Ontario finding that a new trial on the issue of punitive damages was required because the trial judge had not sufficiently explained the award, especially in light of a finding of significant misconduct by the employer that lasted over a lengthy period and had a devastating impact on the inspector’s life.

Upon reconsideration of the issue, and review of the applicable case law, Justice Gonsolus of the Superior Court concluded:

Given my findings of significant misconduct on the part of the defendant municipality; the fact that such misconduct lasted over approximately a ten year period; the municipality’s actions in this case and in the criminal proceedings that had a devastating impact on the appellant’s life, including his employability, his marriage, and the fact that these were intentional and foreseeable actions undertaken by the municipality, I have reconsidered the case law with the guidance of the appeal court and now fix punitive damages in the amount of $550,000.

Punitive damages of this magnitude no doubt constitute an exceptional award, to reflect the most egregious of circumstances. However, they do stand as a reminder to employers to act with the utmost care in cases of dismissal, especially when considering pursuing criminal charges related to perceived misconduct by the employee.

For the full text of the decision on damages see: Pate Estate v. Galway-Cavendish and Harvey (Townships), 2011 ONSC 6620