The New Brunswick Court of Queen's Bench (Trial Division) awarded $50,000 in punitive damages to a employee who was initially terminated without just cause but whose employer, after the fact, alleged that just cause was present. The case is Nuala MacDonald-RPublishoss v. Connect North America and the Court provided a brief summary of some background:
MacDonald’s employment was terminated in August-September 2007 after five and a half years of service. No cause for termination was initially alleged. Shortly after termination of her employment, MacDonald commenced this action for wrongful dismissal. Subsequent to the filing of the Notice of Action and Statement of Claim in this matter, Connect wrote to MacDonald by letter dated October 15, 2007 wherein it alleged cause for the first time. The letter stated that Connect had completed a review of her work and discovered that she had engaged in the unauthorized use of company funds. Connect therefore alleges that MacDonald’s employment was terminated for cause.
Following a detailed review of the evidence, the Court held that MacDonald "did not engage in the unauthorized use of funds belonging to Connect, nor did she misappropriate such funds, I find that there were no grounds upon which to base a dismissal for cause."
Having regard to this conclusion, the Court turned to decide on the period of reasonable notice. In doing so, the Court rejected any formulaic approach to notice determination (this is consistent with most decided cases and long standing principles of notice determination) and held that the "length of MacDonald’s employment, her age, experience, training and qualifications and the availability of similar employment, I find eight (8) months to be a reasonable period of notice."
The Court then asked itself whether Wallace damages should be awarded following the Supreme Court of Canada decision in Keays v. Honda Canada. The Court found that, while the conduct of the employer was In the present case, was "reprehensible and in breach of its duty of good faith", the plaintiff could not prove that she suffered damages. The Court commented that the plaintiff did "not seek counseling or medical treatment for the upset caused by the manner of her dismissal. As a result no medical or other evidence was offered to establish the extent of the injury or its causal connection to the impugned conduct of Connect."
However, the Court did award the plaintiff $50,000 in punitive damages. The Court put the test as follows:
The threshold issue is whether the defendant’s conduct is so outrageous that punitive damages are rationally required for the purposes of deterrence, denunciation and retribution. .... I find that the defendants’ conduct in concocting cause after-the-fact based on unfounded allegations of misappropriation of funds and knowingly communicating these unfounded allegations to the police is reprehensible and egregious. This is, in my view, one of the rare cases in which the defendant’s conduct is so egregious that punitive damages are required for the purposes of deterrence, denunciation and retribution. Of these purposes, deterrence is of paramount importance in this case. Employers must know that in dealing with employees at a time when they are most vulnerable they will not escape the consequences of brutish and reprehensible conduct. [Emphasis added]
In deciding on the amount of damages to award, the Court considered "the blameworthiness of the defendants’ conduct, the vulnerability of the plaintiff at the time of dismissal, the harm directed at the plaintiff, the need for deterrence, the fact that the defendants have escaped an award of bad faith damages, and the advantage the defendants sought by seeking to avoid damages for wrongful dismissal."
Although, as one would expect, punitive damages will be rarely awarded this case, and others, demonstrate that in an appropriate case, the court will not hesitate to award them. The case also follows Keays as relates to Wallace damages which, again, will be rarely awarded and require, among other things, proof of damages.
