Since the Supreme Court of Canada’s decision of Honda v. Keays in 2008, there have been various court decisions regarding aggravated and punitive damages which have left employers, employees and the Employment Law community unsure as to when such damages may be awarded and in what amounts.
However, these turbulent times may soon be behind us due to a recent decision by the Alberta Court of Appeal in Elgert v. Home Hardware Stores Ltd.
Background
Daniel Elgert worked for Home Hardware for seventeen years as a supervisor. One of the co-workers he supervised was his boss’s daughter, Christa Bernier. Elgert received numerous complaints about Bernier’s performance and addressed the matter by relocating her in the workplace.
Shortly after this relocation, Bernier informed her father that Elgert had made a physical advance towards her four months prior. Additionally, Diane Stengle, a friend and co-worker of Bernier’s, informed other co-workers that Elgert had made similar advances on her.
As a result of these complaints, an investigation was conducted by Don Kirck, a long time friend of the Bernier family who worked at Home Hardware’s head office and who had little experience in conducting investigations. At the conclusion of his investigation, Kirck met with Elgert and suspended him from his employment informing him that he had been accused of sexual harassment but did not provide any particulars.
Following his suspension, Home Hardware requested a meeting with Elgert to discuss the allegations. Elgert expressed that he wanted his legal counsel present at the meeting, however this request was denied, resulting in Elgert not attending the meeting and his counsel writing a letter to Home Hardware denying the allegations.
Less than a week later, Home Hardware terminated Elgert’s employment for cause. In response, Elgert brought an action for wrongful dismissal and defamation.
Queen’s Bench Decision
At trial, the Alberta Court of Queen’s Bench found that Elgert’s termination for cause was without merit awarding 24 months’ salary in lieu of notice. Additionally, it was concluded that Home Hardware’s investigation was conducted in a manner worthy of aggravated damages in the amount of $200,000.00 and that Home Hardware’s conduct towards Elgert was harsh, vindictive, reprehensible, malicious and extreme and awarded $300,000.00 for punitive damages.
Court of Appeal’s Decision – Removing and Reducing Awards
The Appeal Court determined that “the trial judge’s reasons on aggravated damages did not refer to evidence of actual damage”, but rather “his reasons noted that Elgert experienced ‘intangible benefits’ from his employment and that the loss of his position would be ‘embarrassing, humiliating and traumatic’, and would impose financial hardships on him”. The Appeal Court noted that since “aggravated damages are recoverable for breach of contract if such damages were contemplated by the parties at the time they formed the contract”, none of the points noted in the trial judge’s decision fit this requirement. Rather, they were found to be effects that many employees would experience from simply being terminated.
As for punitive damages, the Appeal Court established that Home Hardware’s actions were worthy of punitive damages, however the $300,000.00 awarded was found to be “inordinately high and unnecessary”, resulting in the award being reduced to $75,000.00.
Points to Note
The initial awarding of both aggravated and punitive damages by the lower court followed by the reduction and removal of such awards by the Appeal Court is surprisingly similar to the judicial path that the Honda decision experienced, perhaps illustrating that confusion still exists in Employment Law when it comes to matters worthy of either aggravated or punitive damages.
With such a large reduction in the award of punitive damages and the removal of the award of aggravated damages altogether, an appeal may be made by Elgert for the matter to be heard by the Supreme Court of Canada, and if so, this may provide the opportunity for further light to be shed on this difficult area, and perhaps allowing employers and employees to have more certainty in knowing when such damages may be awarded.
For the full decision please see Elgert v. Home Hardware Stores Ltd.
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Related Employment Law Articles
- “Wallace Damages Still Kicking Around” (Originally published in Canadian Employment Law Today, August 26, 2009)
- “Supreme Court of Canada: the Honda and Keays decision!” (Published in Markham Business Magazine.)
- “Scrapped damages in Keays Good News for Employers” (Originally published in Canadian Employment Law Today, July 16, 2008)
- “Honda and Keays: Surprise Decision Brings Surprise Results” (Published in Law Times Vol. 19, No. 23 July )14/21, 2008
- “Honda – Hooked Again?” (Published in Markham Business Magazine.)
- “Protect Human Rights Through Courts: Keays” (Originally published in Canadian Employment Law Today, March 12, 2008)
- “Honda at the Supremes – A New Tort of Discrimination?” (Published in Canadian Employment Law Today Issue No. 505 – March 12, 2008)
- “Honda on the Hook…” (Published in Markham Business Magazine)