Large punitive damage award reduced by $100,000

$550,000 punitive damage award — one of the largest in a wrongful dismissal case — called 'irrational and excessive' by Ontario Court of Appeal
|employmentlawtoday.com|Last Updated: 01/13/2014

The Ontario Court of Appeal has reduced one fo the largest awards of punitive damages in a Canadian wrongful dismissal case, but the employer — who accused an employee of theft — is still on the hook for $450,000.

After the amalgamation of two townships in 1998, John Pate agreed to accept a demotion from chief building official to building inspector in the newly amalgamated Galway-Cavendish Township. Pate was later accused of stealing building fees and the township went to the police. Pate was charged but acquitted after it turned out the township had withheld evidence that exonerated him.

Pate filed for wrongful dismissal and the township insisted Pate had engaged in serious misconduct, though it didn't dispute that he was terminated for just cause. Pate won the case and the township was ordered to pay 12 months’ pay in lieu of notice, plus $7,500 in legal fees for the criminal trial. A further $75,000 of "aggravated and general damages" was awarded to compensate Pate for the emotional distress and other intangible losses he suffered due to the township’s unnecessary actions in aggravating the issues involved. Additionally, punitive damages of $25,000 were awarded as a sanction against the township, primarily as a result of the withholding of evidence.

The Ontario Court of Appeal sent the case back for reconsideration and the the trial court found the township had never apologized or accepted responsibility for its “offensive” and “morally repugnant” conduct. It increased the original award to $550,000, one of the largest awards of punitive damages in a wrongful dismissal lawsuit.

Another appeal put the case before the Court of Appeal again, which agreed the award should be "towards the high end of the spectrum" for punitive damages awards, but found the increased award to be "irrational and excessive," paritcularly given the amount of other compensation Pate received.

"The task of a trial judge in quantifying a punitive damages award is not an easy one," said the Court of Appeal. "It must be guided, however, by the Supreme Court’s repeated cautions to avoid 'double-compensation' and that court’s clear warning that, in most cases, a moderate award will generally suffice to adequately punish a defendant for its misconduct."

The Court of Appeal found that a lower amount of punitive damages "would satisfy the requisite objectives of retribution, deterrence and denunciation" and reduced the punitive damages coming to Pate to $450,000.

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