In Ruston v. Keddco Mfg. (2011) Ltd., 2019 ONCA 125, the Ontario Court of Appeal affirmed that an employer’s improper conduct in the course of terminating an employee’s employment and during the course of the ensuing litigation warranted a $100,000 punitive damages award against the employer.

The Ontario Court of Appeal upheld the $604,627.09 in damages and the $546,684.73 in substantial indemnity costs awarded to the Plaintiff. In total, Keddco Mfg. (2011) Ltd. (“Keddco”) was ordered to pay the Plaintiff $1,151,311.82.

In support of the $100,000 punitive damages award, the Ontario Court of Appeal considered of the following to be relevant:

  1. During the termination meeting:
    • Keddco alleged fraud in terminating the Plaintiff’s employment for cause;
    • Keddco did not advise the Plaintiff of the particular allegations of fraud; and
    • Keddco attempted to intimidate the Plaintiff by threatening to counter-claim against the Plaintiff if the Plaintiff sued.
  2. In response to the Plaintiff’s Statement of Claim, Keddco filed a Statement of Defence and Counterclaim alleging $1.7 million in damages based on the allegations of fraud.
  3. Keddco chose not to call any witnesses at trial who could provide direct evidence to substantiate the allegations of fraud. In addition to the fraud allegations, Keddco alleged several others grounds for termination, all of which Keddco dropped at trial and for which Keddco provided no evidence.
  4. In the middle of trial, Keddco reduced its damages claim from $1.7 million to $1.00.
  5. The serious allegations against the Plaintiff were entirely unfounded.

Take-Away — A Helpful Reminder For Employers

Consult counsel before:

  1. deciding whether or not to terminate for cause; and
  2. threatening a counterclaim against an employee,

as both of the above courses of action can have significant consequences for an employer.