Employers Beware of Punitive Damage Claims

     Employers who believe that they are  immune from an award of punitive damages flowing from the dismissal of an employee should re-evaluate their practices in light of Pate Estate  v.  Galway-Cavendish and Harvey Townships, 2011 ONSC 6620.  In Pate Estate the trial judge's initial award of $25,000 for punitive was sent back for re-trial on the question of the quantum of the award and was increaased to $550,000 by the trial judge following the re-trial.  The conduct on the part of the employer which resulted in such an award is something all employers ought to take serious note of and avoid.  This post is concerned only with this aspect of this significant decision.

 Basic Facts:

      John Gordon Pate worked as the Chief Building Official for the Township of Galway and Cavendish for roughly 9 years.  He subsequently worked as a building inspector for the amalgamated Townhsip of Galway-Cavendish and Harvey for some three months before being summarily dismissed from his employment on March 26, 1999.

False allegation of
criminal conduct:

     The employer told Mr. Pate that discrepancies had been discovered with respect to permit fees that had been paid to him but not remitted to them.  Mr. Pate was not provided with particulars; nor was he given an opportunity to respond to the allegations.  Instead, Mr. Pate was told that the matter woudl not be reported to the police if he resigned immediately.  Mr. Pate did not resign, the matter was reported to the police and charges were laid.  Following a four-day criminal trial Mr. Pate was acquitted of all charges.

Key Facts:

Withholidng exculpatory

     Mr. Beaven, who was emplolyed by the employer, called the O.P.P.(Ontario Provincial Police) on April 14, 1999 and subsequently met with Officer Greg Stokes on April 19, 1999 and on April 20, 1999 Mr. Bevan provided Officer Stokes with statements he had prepared in relation to missing building permit fees.  At the criminal trial, evidence showed that Mr. Pate had in fact recorded receiving fees for one of the properrties under a name different from that of the property owner because he received the fees from the owner's son-in-law.  Mr. Pate had a note of this in a journal he kept.  However, Mr. Beaven seized the journal when Mr. Pate was terminated and did not forward it to the police.  Evidence led at the criminal trial also revealed that some of the property owners had in fact paid their fees at a satelite office operated by the employer prior to amalgamization and that many of the files for that office had been lost.  The employer was aware of these missing files but failed to inform the police of this crucial fact.  It also emerged during the criminal trial that in 1995 the employer had investigated one of the allegations and found no wrongdoing on the part of anyone.  This too was not revealed to the police.  Officer Stokes testified that had he known about the withheld information he would not have laid the charges.

Trial judge's rationale
for punitive damage award:

                         "I find that the actions of the Municipality in
                          withholding exculpatory evidence in this matter to
                          have been an arbitrary decision made by
                         one of its officers and which amounted to
                         reprehensible conduct.  Had the disclosure
                         been made, no criminal charges would have
                         been leveled against the Plaintiff in this matter. 
                         Such conduct, to this court, is a departure to
                         a marked degree from ordinary standards of
                        decent behaviour.  In ths case compensation
                        for wrongful dismissal does not answer the
                        fact that this Plaintiff's career as a municipal
                        official was destroyed as a result of the actions
                        of the Defendant.  The actions of the Defendant
                        were a contributing factor to the end of
                        the Plaintiff's marriage and perhaps even
                        to the business that he operated with his
                       spouse.  The Plaintiff suffered hummiliation in
                        the eyes of the public...." (supra at p.2)

Advice to employers:

     It does not pay to be arbitrary or high-handed in the manner of effecting a dismissal.  If you are going to assert cause you had better have the evidence to back it up.  Conducting any less than a fair and thorough investigation is always a bad idea - particularly when it is done by your employee(s).  Assisting the police in a criminal investigation is also not recommended.  If you as an employer are obligated by your rules or regualations to conduct an internal investigation before dismissal or calling in the police - it is not recommended that you state publicly that you discharged this duty when in fact you did not.  When it comes to avoiding punitive damage awards honesty and good faith is still the best policy. 

Note:  This piece is written for the sole purpose of drawing attention to an issue of public importance, namely, punitive damages and how employers can curb their conduct to avoid them.
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