Court File and Parties
CITATION: Transport Training Centres of Canada v. Wilson, 2010 ONSC 2099
COURT FILE NO.: 07-DV-1307
ONTARIO
SUPERIOR COURT OF JUSTICE
(Divisional Court)
BETWEEN:
Transport Training Centres of Canada Appellant
– and –
Delores Wilson Respondent
COUNSEL:
Daniel C. Sirois, for the Appellant
Richard Bourdeau, for the Respondent
HEARD: March 18, 2010.
REASONS FOR JUDGMENT
Ratushny J.
[1] The appellant is the respondent’s former employer. The appellant appeals the Small Claims Court decision of Deputy Justice R. Houlahan dated April 26, 2007 (the “trial decision”), awarding the respondent general damages for mental distress in connection with the termination of her employment and an amount for costs. The respondent had been employed for 16 months.
[2] At trial the respondent, represented by an agent, claimed general damages of $1,000 for undue mental distress caused by the termination and punitive damages of $7,000.
[3] The trial judge found the appellant had dismissed the respondent without cause but with appropriate pay in lieu of notice. While he concluded that the appellant’s conduct in discharging her “could not have been more insensitive” and had been “arbitrary and high-handed”, he dismissed her claim for punitive damages on the basis that the appellant’s conduct had not met the test for an award of punitive damages. He awarded the respondent $7,000 in general damages for undue mental distress instead of her claimed amount of $1,000, amended her statement of claim accordingly and fixed her costs at $1,500.
[4] The appellant appeals the trial decision on grounds of errors in law.
[5] The first ground of appeal is with respect to the awarding of general damages for undue mental distress. The appellant says the trial evidence established that the respondent was asking only for compensation in respect of the fact of termination and not the manner of termination. As such, it submits, there is no legal basis for an award of damages beyond compensation for breach of contract for failure to give reasonable notice of termination, being the pay in lieu of notice amount, because there has been no “separately actionable course of conduct” (Wallace v. United Grain Growers Ltd (c.o.b. Public Press), [1997] S.C.J. No. 94, at para. 73).
[6] The appellant succeeds on this ground of appeal. As stated in Wallace, at para. 103,
It has long been accepted that a dismissed employee is not entitled to compensation for injuries flowing from the fact of the dismissal itself...Thus, although the loss of a job is very often the cause of injured feelings and emotional upset, the law does not recognize these as compensable losses.
[7] In Honda Canada Inc. v. Keays, 2008 SCC 39, at paras. 56 and 57, the Court stated,
The contract of employment is, by its very terms, subject to cancellation on notice or subject to payment of damages in lieu of notice without regard to the ordinary psychological impact of that decision. At the time the contract was formed, there would not ordinarily be contemplation of psychological damage resulting from the dismissal since the dismissal is a clear legal possibility. The normal distress and hurt feelings resulting from dismissal are not compensable.
Damages resulting from the manner of dismissal must then be available only if they result from the circumstances described in Wallace, namely where the employer engages in conduct during the course of dismissal that is “unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive” (Wallace, at para. 98).
[8] The evidence before the trial judge did not establish and neither did he find that the appellant’s conduct during the course of dismissal was unfair or in bad faith. The evidence, instead, told of the stress and financial hardships caused by the fact of the dismissal itself, rather than its manner.
[9] I conclude that the trial judge erred in awarding damages for undue mental distress without there being evidence of conduct by the appellant that was compensable. As stated in Keays at para. 56 as quoted above, the normal distress and hurt feelings resulting from dismissal are not compensable. As this was the purpose of the award of general damages of $7,000, it amounted to an error in law.
[10] The appeal is, therefore, allowed on this ground. The award of $7,000 for general damages for undue mental distress is set aside.
[11] The appellant’s second ground of appeal is based on the trial judge’s initiative, without request from the respondent, to amend her statement of claim to increase the amount claimed for general damages from $1,000 to $7,000. Because of the finding that any amount of general damages for undue mental distress was unsupported by the evidence, it is not necessary to consider this ground of appeal, other than to comment that this certainly created unfairness for the appellant at trial by shifting the ground of the case to meet with no opportunity for the appellant to make submissions regarding an amount that was seven times greater than the respondent had claimed. The appellant refers to Rule 25.06(9) of the Rules of Civil Procedure by way of illustration of this principle and I agree.
[12] The appellant’s third ground of appeal is with respect to the costs award of $1,500, as being an amount that is contrary to Rule 19 of the Rules of Small Claims Court, R.R.O. 1990, Reg. 194 and s. 29 of the Courts of Justice Act, R.S.O. 1990 c. C.43. The respondent argues that the trial judge was simply exercising his discretion in the awarding of costs as he was entitled to do.
[13] Rule 19.04(2) of the Small Claims Court Rules states,
In the case of a student-at-law or an agent, the representation fee shall not exceed half of the maximum costs that may be awarded under section 29 of the Courts of Justice Act, O. Reg. 78/06, s. 39
[14] S. 29 of the Courts of Justice Act states,
An award of costs in the Small Claims Court, other than disbursements, shall not exceed 15 per cent of the amount claimed or the value of the property sought to be recovered unless the court considers it necessary in the interests of justice to penalize a party or a party’s representative for unreasonable behaviour in the proceeding.
[15] In Bird v. Ireland (2005), 205 O.A.C. 1 (O.S.C.D.C.), at para. 41, Clark J. said the following in considering the interaction of Rule 19.04 and s. 29,
It is clear that the power to award costs conferred by Rule 19 is limited by s. 29 of the CJA…In my view, section 29 was intended by the legislature to limit the power of the Small Claims Court to award costs, not to increase it. The purpose of s. 29, it seems to me, is to keep costs awards in proportion to the amounts recovered. If it had been the intention of the legislature to simply impose a general rule whereby costs awards were to be 15% of the amount sued for, R. 19.04 would be superfluous. The Deputy Judge, however, used s. 29 to increase the amount of costs he could award and in so doing ignored Rule 19.04. With respect, he erred in this approach.
[16] I agree with these comments. If the appellant had not been successful on this appeal, the costs at trial should have been fixed at 15% of $7,000, an amount of $1,050 divided by 2, for a total costs amount of $525, which is substantially less than that awarded.
[17] Furthermore, both Rule 19.04(2) and s. 29 are mandatory by virtue of their use of the word “shall” and while the matter of costs is always subject to the trial judge’s discretion, these provisions are not able to be ignored as it appears they have been in the present case. Neither do I understand from my review of the trial transcript that there was any evidence of “unreasonable behaviour in the proceeding” as stated in s. 29, such that the trial judge may have considered it necessary in the interests of justice to penalize the appellant by exceeding the statutory maximum amount.
[18] The appeal is, therefore, also allowed on this ground and I set aside the costs award of $1,500 as exceeding the trial judge’s discretion under Rule 19.04(2) and s. 29.
[19] It is for these reasons that the appeal is allowed. The award by the trial judge of general damages, costs, and pre and post-judgment interest is set aside. The appellant is to receive its costs at trial and on this appeal.
[20] Unless the parties are able to agree on the quantum of costs at trial and on this appeal, brief written submissions (a maximum of 3 pages for each party exclusive of attachments) are to be submitted to me before April 30, 2010.
The Hon. Madam Justice L.D. Ratushny
Released: April 13, 2010
CITATION: Transport Training Centres of Canada v. Wilson, 2010 ONSC 2099
COURT FILE NO.: 07-DV-1307
ONTARIO
SUPERIOR COURT OF JUSTICE
(Divisional Court)
BETWEEN:
TRANSPORT TRAINING CENTRES OF CANADA Appellant
-and-
DELORES WILSON Respondent
REASONS FOR JUDGMENT
Ratushny J.
Released: April 13, 2010