Two recent Alberta decisions opine on the importance of Honda Canada Inc. v. Keays, 2008 SCC 39, not, this time, for the consideration of Wallace damages, as the case is commonly known for, but rather the distinction between compensatory and punitive damages and the need to guard against duplication.
Alberta's Court of Appeal recently released its decision in Pawlett v. Dominion Protection Services Ltd., 2008 ABCA 369. At trial it was found that Ms. Pawlett had been constructively dismissed from her employment due to sexual harassment she suffered at the hands of her supervisor.
The Court of Appeal was not critical of the trial decision on liability, however, it ultimately reduced the punitive damages award from $50,000.00 to $5,000.00. After noting that the trial judge did not have the benefit of the Honda Canada Inc. v. Keays decision, the Court of Appeal underscored that punitive damages should only be resorted to in exceptional cases, and must focus on the Defendant's misconduct, not the Plaintiff's loss (the purpose of general, compensatory damages). The Court of Appeal found that in setting Ms. Pawlett's general damages, the trial judge considered and condemned the conduct of her supervisor. Such condemnation was again, and more properly, included in the assessment of punitive damages. In essence the employer was made to pay twice for the reprehensible conduct of its employee, and the Court of Appeal reduced the punitive damages award accordingly.
In the Alberta Court of Queen's Bench decision Ahmad v. Athabasca Tribal Council Ltd., 2008 ABQB 699, a wrongful dismissal case, the trial judge also cautioned against the duplication of damages, citing Honda Canada Inc. v. Keays as instructive:
[...] 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.
Throughout 2008, we have witnessed a shift to increasingly "employer friendly" decisions. Here we have applications of the Honda Canada Inc. v. Keays, which should help to properly assess damages for conduct sufficiently egregious or outrageous to warrant an award of punitive damages, and help avoid duplications of damages assessed for excessive misconduct.