Court of Appeal for Ontario
Date: February 15, 2017 Docket: C62270
Justices: Weiler, Pepall and Trotter JJ.A.
Between
Melissa Doyle Plaintiff (Respondent)
and
Zochem Inc., Horsehead Corporation, Horsehead Holding Corporation, and Stephanie Wrench Defendants (Appellants)
Counsel
Martin A. Smith and Rachel C. Leck, for the appellants
Angela Assuras, for the respondent
Heard: January 13, 2017
On appeal from: the judgment of Justice John R. Belleghem of the Superior Court of Justice, dated May 16, 2016.
Weiler J.A.
A. Overview
[1] The trial judge ordered the appellant, Zochem, to pay $60,000 in moral damages for the breach of its implied contractual obligation of good faith in the manner of dismissal of its employee, the respondent, Doyle. The overarching issue on this appeal is whether those damages should be reduced.
[2] In addition to awarding moral damages, the trial judge held that Doyle was entitled to general damages of ten months' salary in lieu of notice of termination and $25,000 damages for her sexual harassment claim under the Human Rights Code, R.S.O. 1990, c. H.19 (the Code). These amounts were not appealed.
[3] Zochem accepts the trial judge's findings of fact. However, it contends that the trial judge erred in law in the amount he awarded for moral damages because he considered pre and post termination conduct that was irrelevant to the manner of termination, as well as factors that did not breach Zochem's obligation of good faith in dismissing Doyle. In addition, Zochem submits that the award of moral damages overlaps and duplicates the award for Doyle's sexual harassment claim under the Code. As a result of these alleged errors, Zochem submits that the award for moral damages should be reduced to $20,000.
[4] At the conclusion of the appellant's oral argument, the panel held that the award of moral damages should not be reduced and dismissed the appeal with reasons to follow. We then heard submissions on costs.
[5] These are the reasons for dismissing the appeal. In brief compass, while some of the factors the trial judge considered could not form part of a claim for moral damages, based on the relevant factors he did consider, the amount awarded is justified and in harmony with recent jurisprudence. The award of damages for sexual harassment under the Human Rights Code is not "double counting" because the award serves a different purpose than the award of moral damages and the same conduct may ground separate awards.
[6] The factual background and reasons for these conclusions are set out below.
B. Factual Background
[7] For nine years, Doyle worked for the respondent, Zochem, a company with about 50 employees that produces zinc oxide. In the period leading up to Doyle's termination, the plant where she worked was being prepared for sale. Doyle was the plant supervisor and health and safety coordinator, and had a total of 20 years' experience supervising employees. She was the only woman working in the plant. Wrench, the assistant general manager, worked in the office. Doyle was 44 when she was terminated and 48 at the time of trial.
[8] In order to perform her job, Doyle needed the cooperation of Rogers, the plant maintenance manager. Zochem considered him to be irreplaceable. Rogers sexually harassed Doyle. At para. 68 of his reasons, the trial judge listed "just a few" of the examples of this harassment:
- He would stare at her breasts and purport to take a picture of them;
- He told her Philips [an independent contractor who had done work for the appellant and with whom Doyle had had a 'romantic relationship'] had an "anaconda" in his pants and she should date him;
- He said the "girls", referring to her breasts, looked "good";
- He referred to their private parts as their "little friends";
- He described "bunny ears", meaning her feet up behind her ears (as a sexual position);
- He kept telling her she needed to get "laid", or needed "a little pounding", asking if she was "getting any";
- He told her how another employee had "the best body";
- A particularly gross example of this "locker room talk" related to her request to have him make a forklift attachment. When she later saw him with something with a chain on it, which appeared to be what she had asked him to make, he told her in fact it was just a device that he was going to put her feet in to pull over her head so he could "get at her". She said she felt like "a piece of meat".
[9] At a July 14, 2011 production meeting, during which Doyle raised legitimate safety concerns, Rogers and another co-worker, who were aware that Doyle was to be terminated, felt free to ignore the safety issues she raised and demeaned and belittled her in front of the others. She left the meeting in tears. Doyle, unaware that Wrench was going to terminate her and that the termination letter was already in the making, turned to Wrench and made a complaint of sexual harassment. Wrench did a "cursory" investigation of the complaint and heard from Rogers, but did not give Doyle an opportunity to respond. Wrench knew that Doyle suffered from clinical depression for which she was being medicated.
[10] Doyle was terminated without cause on July 19, 2011. The trial judge found that Doyle's gender and her sexual harassment complaint were likely the most significant reasons for why she was terminated.
[11] There was considerable evidence about the impact of the dismissal upon Doyle. She felt betrayed, abused, sad and upset. She was placed upon medication for anxiety as she had been shaking constantly. She had migraines, chest pains and sleep disturbances. A doctor at the Centre for Addiction and Mental Health ("CAMH") recommended she be admitted to CAMH. Doyle declined but was placed under the care of a psychiatrist. She had significant sleep issues, including nightmares about Rogers' harassment, and the workplace meeting of July 14. She was diagnosed as having a major depressive disorder, with anxiety.
C. The Law
[12] Beginning with Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701, at para. 95, the Supreme Court of Canada recognized that there is an obligation of good faith in the manner of dismissal of an employee and, at paras. 88 and 98, specified that damages are available where an employer engages in conduct that is "unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive." Initially the award, now known as moral damages, involved compensation through an addition to the period of notice. However, in Keays v. Honda Canada Inc., 2008 SCC 39, [2008] 2 S.C.R. 362, at para. 59, the Court essentially did away with the distinction between aggravated damages and moral damages and held that these damages should be recognized through a fixed monetary award rather than through an extension of the notice period: see S.R. Ball, Canadian Employment Law, loose-leaf (2016), vol. 2 (Toronto: Thomson Reuters Canada Ltd., 2007), at § 22: 20.19 (1.1), p. 22-59 and § 22:20.19 (1.2), p. 22-60.
[13] The factors relevant to an award of moral damages are not limited to the examples in Honda, at para. 59 and Wallace, at paras. 98, 101. Nor, is the time frame limited to the moment of dismissal. Pre and post termination conduct may be considered in an award for moral damages, so long as it is "a component of the manner of dismissal": Gismondi v. Toronto (City), 64 O.R. (3d) 688 (C.A.), at para. 23, leave to appeal to S.C.C. refused [2003] S.C.C.A. No. 312; Ball, at § 22:20.19(1.1), p. 22-50.
D. Factors Considered in Award of Moral Damages
[14] The question of moral damages is a fact specific exercise. At the outset of the appeal and during oral argument, although arguing that the trial judge considered irrelevant factors, Zochem conceded that an award of moral damages could be grounded on certain factors relied upon by the trial judge, namely, that employees had been instructed by Wrench to "dig up dirt" on the performance of Doyle; that Doyle was told her job was not in jeopardy when, in fact, Wrench had already put the "wheels in motion" with respect to her termination; that an employee advised Wrench about Doyle's medical condition in breach of her privacy; and that Doyle's keys were taken from her purse and her car was brought around.
[15] In my view, although the trial judge considered both factors that were relevant and irrelevant to an award of moral damages, the award was nonetheless justified.
[16] As found by the trial judge at para. 13, Wrench "mangled the termination process". Among other things, Wrench recruited employees to "dig up dirt" to discredit Doyle in order to justify her termination and created performance reviews to bootstrap the pre-existing determination to terminate Doyle. Ultimately, cause was not pursued. The trial judge found that Wrench's dealings with Doyle were "completely disingenuous". Wrench assured Doyle that her job was not in jeopardy when in fact the decision to terminate had already been made and the termination letter was probably already in the making.
[17] After the termination decision had already been made, as found by the trial judge, Wrench's response to Doyle's sexual harassment complaint was insensitive to the point of verging on cruel.
[18] The termination was cold and brusque. Moreover, in spite of being told a few days earlier that her job was not in jeopardy, on July 19, Wrench took Doyle to the board office. On the way, Wrench said to Doyle, "We don't need you here anymore, and wish you all the best on your further endeavours." She then turned Doyle over to Cheryl Lang, a third-party Human Resources consultant, to do the actual termination. At some point during the meeting with Lang, Lang told Doyle that she was being irresponsible because Rogers' reputation was on the line, the inference being that she should abandon her claim of sexual harassment against Rogers. The trial judge observed at para. 248:
This was like rubbing salt into a wound for Doyle. She was being asked to sign off any rights she may have had arising out of her years of harassment, and at the same time, if she chose to do so, add to her pain by doing something to reinstate the reputation of her harasser.
[19] As the appellant acknowledges, when Doyle was terminated, her car was brought around without her permission. Her car keys had been taken from her purse in order to do so.
[20] Although the letter of termination presented with a full release contained a sentence suggesting that Doyle seek legal advice before accepting the benefits offered, she was pressured to immediately sign the release without it. In addition, as stated by the trial judge at para. 249:
Numerous other relatively minor defects in the termination process were touched on by plaintiff's counsel. The record of employment was not provided. The pension entitlement was at least a year late. ESA severance was referred to in the termination letter, but not provided until later. Although Doyle's pay was usually simply deposited to her account, the deposit was cancelled, and Lang was instructed to get a signed release in exchange for the cheques, rather than simply having the money deposited in the account. When it was deposited, the ESA severance was missing for a couple of weeks. There was never any lucid explanation to Doyle about how her various financial claims were being calculated, and Zochem's rationale for their calculations. Wrench was focused entirely on getting Doyle terminated, and getting a release from her, in order to fulfill Humphries expectation, just as she had done with Chesiuk. The defects in the termination process constituted a model of ineptitude.
[21] Zochem submits that the trial judge's criticism of it for its failure to provide some form of "progressive discipline" before terminating Doyle violates a fundamental principle of employment law that an employer is not obligated to provide progressive discipline leading up to an employee's dismissal if it is not alleging "just cause". In support of its position, Zochem relies on McNevan v. AmeriCredit Corp., 2008 ONCA 846, 94 O.R. (3d) 458, at paras. 41, 43, 50, in which Epstein J.A., on behalf of the majority, held that failure to warn about dissatisfaction in job performance is not a relevant consideration when determining moral damages:
…McNevan's contract of employment contained no implied term to provide feedback - positive or negative - to an employee, as a necessary precursor to dismissal without just cause… AmeriCredit does not allege that McNevan was dismissed for cause.
[22] Doyle points out that, at para. 55 of her reasons, Epstein J.A. observed " On its own, that failure [to warn the employee] cannot amount to bad faith" (emphasis added). As well, at para. 61, Epstein J.A. commented that when considering alleged bad faith, the employer's conduct should be "considered as a whole" along with its overall impact on the employee.
[23] As mentioned, the question of moral damages is a fact specific exercise. A significant distinguishing factor that was not present in McNevan, is that, in this case, there is evidence of untruthful, misleading or unduly insensitive conduct. In the context of this case, the trial judge found at para. 231 of his reasons that Wrench held out to Doyle a promise that she would be given a chance to "improve" and also told her that her job was not in jeopardy even though the decision to terminate her had already been made. In these circumstances, it was open to the trial judge to consider the appellant's conduct in this regard.
[24] I also note that Elgert v. Home Hardware Stores Ltd., 2010 ABQB 65, 486 A.R. 188, at para. 40, cited by the appellant, refers with approval to the decision in Peoples v. Ontario (Ministry of Training, Colleges and Universities), 2008 Carswell Ont. 7706 (Ont. S.C.), at paras. 16-21, a case in which staff were critical of the plaintiff's management style. The Ministry commissioned an investigation, but it failed to review with the plaintiff the result or to give her an opportunity to respond before dismissing her. It was held that dismissal without giving the plaintiff an opportunity to respond, to take training to improve her skills, and the Ministry's failure to engage in progressive discipline were factors that entitled the plaintiff to moral damages.
[25] Therefore, the trial judge's consideration of Zochem's misrepresentation, that Doyle's job was secure and that she would be given a chance to improve, coupled with Zochem's sudden termination of Doyle and the further representation that her services were no longer needed, were not improper considerations in the context of this case.
[26] The appellant further submits that the trial judge's consideration of the meeting on July 14, 2011 and the subsequent sexual harassment investigation were unrelated to the manner of termination, in part, because the decision to terminate Doyle had already been made. I would reject this submission. This court's decision in Gismondi holds that it is not just conduct at the moment of termination that may be considered, but conduct that is a component of the manner of dismissal.
[27] Given that the decision to dismiss had already been made, Wrench's cursory investigation and attendant dismissal of Doyle's complaint of sexual harassment are proper considerations respecting moral damages. The trigger for that complaint and investigation was the July 14 meeting. Furthermore, at para. 278 of his reasons, the trial judge accepted Doyle's evidence that she became disabled and unable to perform the major duties of her job following the July 14, 2011 meeting. Thus the July 14, 2011 meeting also served as the trigger for Doyle's short term disability claim which was wrongfully denied.
[28] Despite a letter from Zochem's own doctor that Doyle would qualify for short term disability benefits of six months, Wrench, acting as the self-appointed claims adjudicator for Zochem's self-funded benefits, denied them.
[29] The appellant submits that the denial of short term disability benefits, while temporally related, is arguably a distinct decision made outside the manner of termination. In any event, Zochem submits that even if it was proper to include it within the framework of moral damages, at most, a nominal amount is warranted for two reasons. The first is that Doyle did not meet the test for an award for mental distress in that she suffered no specific or additional mental distress arising from the denial. Alternatively, Zochem submits that the financial consequences of the refusal to pay were negligible. She was able to return to work in six months. Further, the Supreme Court of Canada held in Sylvester v. British Columbia, [1997] 2 S.C.R. 315, at para. 2 that an employee's short term disability payments received during the notice period should be deducted from damages awarded for wrongful dismissal.
[30] I would reject Zochem's arguments. The employer's denial of short term disability benefits without adequate evidence has been considered a breach of the good faith obligation: Youkhanna v. Spinal's Steel Workers Co. (2001), 15 C.C.E.L. (3d) 99 (Ont. S.C.) per MacFarland J. as she then was.
[31] Zochem accepts the trial judge's findings. The trial judge found, at para. 253 of his reasons, that Zochem's conduct in refusing short term disability benefits added to the breach of its obligation of good faith and perpetuated its tunnel vision approach to getting rid of Doyle. An excerpt from Doyle's psychiatrist's opinion is quoted by the trial judge in para. 92 of his reasons, to the effect that when an occupational problem is part of the constellation of factors, a circular situation can lead to delayed improvement. Re-engaging in a gradual return to work was a necessary part of Doyle's rehabilitation and treatment but the combination of the denial of short term disability benefits and Zochem's termination of Doyle made accommodation impossible.
[32] Zochem's argument that the financial consequences were negligible ignores the timing of the payments. Short term disability benefits would have started right away and would have been for the full amount of Doyle's salary for six months. Although Doyle was dismissed in July, 2011, she did not receive the ten months' salary payment in lieu of reasonable notice until after the trial judge made his award and gave his reasons in May 2016.
[33] The trial judge found, at para 95 of his reasons, that Doyle could not keep up her mortgage payments and lost her home. She moved in with her mother, sleeping on the couch, and borrowed money from friends and her grandmother. Her credit cards went into default. She stored her furniture and, in addition to those charges, was constantly getting calls from collection agencies. The denial of Doyle's short term disability benefits contributed to these losses.
[34] Zochem's argument respecting short term disability benefits is unsupported in law and on the facts.
[35] I acknowledge that, as Zochem submits, the trial judge referenced some considerations that were irrelevant to an assessment of moral damages. I will give a few examples. The trial judge commented that the dismissal arose, in part, because the company was getting ready to be sold; the General Manager did not select the "most logical choice for his successor", a person who would not have terminated Doyle; Zochem terminated at least four key employees; and the appellant planned the dismissals of two employees well in advance. These business considerations could not form the basis of a moral damages award. Although Doyle submits that the trial judge referred to this evidence to put the more important facts into perspective, it is not apparent from the reasons that was what he was doing.
[36] The appellant also points to aspects of the termination meeting of which the trial judge was critical and submits that what took place is standard practice in employment law and not bad faith. An example is the trial judge's criticism that payment of damages in lieu of notice was conditional upon the signing of a full release of all claims.
[37] The trial judge found at para. 171 of his reasons that Doyle was not given an appropriate explanation of the release or sufficient time to consider it. Nor, despite her repeated requests, was Doyle given an explanation as to how the single figure mentioned was calculated.
[38] In Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2016 ONCA 520, 34 C.C.E.L. (4th) 235, at para 101, Epstein J.A. awarded Strudwick aggravated damages for conduct that included:
Paperwork [which] had been prepared by the company that was designed to deprive her of various legal rights. When she would not sign, she was not given money the company then owed her. She was further humiliated by having to gather her belongings and leave under the stare of her co-workers.
[39] Strudwick illustrates that, while some conduct during a dismissal meeting viewed in isolation would not constitute bad faith, the same conduct when part of a course of conduct on the part of an employer that inflicts mental distress on an employee may legitimately inform the result. Zochem is attempting to parse too narrowly what is and is not a component of the manner of dismissal and to have this court look at various aspects of its conduct in isolation instead of considering it in context and as a whole.
[40] It is trite law that a trial judge's reasons must be read as a whole and in context: see R. v. M. (R.E.), 2008 SCC 51, [2008] 3 S.C.R. 3, at para. 16. When that is done in this case, the trial judge's conclusion at para. 184 that Zochem's letter of termination, coupled with the circumstances surrounding the termination process itself, echoed the "hard line" tone taken by Wrench throughout her dealings with Doyle, is amply supported.
[41] The more serious aspects of Zochem's conduct were appropriately considered by the trial judge. His assessment of moral damages is not diminished by the lesser irrelevant considerations he did take into account. The assessment of damages "… is not the equivalent of a mathematical equation in which an error in a sub-calculation produces an error in the outcome": Pate Estate v. Galway-Cavendish and Harvey (Township), 2013 ONCA 669, 368 D.L.R. (4th) 193, at para. 82, per Lauwers J.A. in dissent but not with respect to this comment.
[42] Zochem's argument that the quantum of moral damages ought to be reduced on the basis that the trial judge took into account irrelevant considerations is dismissed.
E. Awarding Both Moral Damages, Taking into Consideration Sexual Harassment, and Human Rights Code Damages for Infringing Doyle's Right to Freedom from Harassment Was Not Double Recovery
[43] Zochem submits that the $20,000 award of Code damages ought to be deducted from the $60,000 award of moral damages because the same conduct underlies both awards. With respect to both awards the trial judge commented that the investigation of harassment was too short, was unreasonable, was not impartial, and ignored advice to deal with the sexual harassment complaint before proceeding with termination. The "tip line" set up by the employer to deal with sexual harassment was inadequate as it did not provide anonymity to Doyle. The employer failed to implement compliance procedures required by law to address sexual harassment in the workplace.
[44] I would reject this submission. While there is an overlap of conduct, the conduct relating to the award of moral damages and that relating to Code damages for sexual harassment is not identical. An example of bad faith conduct meriting moral damages given in Honda, at para. 59 is attacking an employee's reputation. Zochem submits that it did not engage in an attack on Doyle's reputation at the time of dismissal. However, telling Doyle during the termination meeting that she was being "irresponsible" towards Rogers and that his reputation was on the line was in effect an attack on Doyle's reputation for veracity. This comment would be a consideration in the award of damages for bad faith in the manner of termination, but not for sexual harassment.
[45] More importantly, the two judgments on which Zochem relies in support of its submission have no application to Code damages. In the first, Honda, at para. 60, the Supreme Court held that the award of moral damages duplicated the punitive damages, and that "[t]he Court must avoid the pitfall of double-compensation or double-punishment that has been exemplified in this case." In the second, Strudwick, at para. 104, Wallace damages were deducted from aggravated damages to avoid overlap.
[46] Neither of these decisions supports the submission that damages under the Code should be deducted from moral damages. In fact, in Strudwick, a separate award for Code damages was not deducted from either moral damages or aggravated damages.
[47] What this jurisprudence does illustrate is that when damages vindicate the same interests in law, the courts take care to avoid double-recovery. Moral damages are awarded as a result of the manner of dismissal, where the employer engages in conduct during the course of dismissal that is unfair or is in bad faith, that caused mental distress: Honda, at para. 57. As indicated in that decision at para. 56, the normal distress and hurt feelings resulting from dismissal are not compensable.
[48] In contrast, Code damages are remedial, not punitive in nature, and compensate for the intrinsic value of the infringement of rights under the Code. Such damages are compensation for loss of the right to be free from discrimination and the experience of victimization: see the decision of Ferrier J. on behalf of the Ontario Divisional Court in Lane v. ADGA Group Consultants Inc. (2008), 91 O.R. (3d) 649, at para. 148 (involving discrimination in the workplace and termination due to the employee's bi-polar disorder), cited with approval in Strudwick, at paras. 57-60 (involving discrimination in the workplace and termination due to sudden loss of hearing). The right to be free from sexual harassment in the workplace is contained in s. 7(2) of Part I of the Code under the heading, "Freedom from Discrimination" and the damages awarded under this provision serve the same purpose, namely, compensation for loss of the right to be free from discrimination and the experience of victimization.
[49] Where, as here, the awards in question vindicate different interests in law, there will be no overlap in the damages awarded although the same conduct is considered: Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419, 120 O.R. (3d) 481, at para. 70.
[50] Given that the awards in question vindicate different interests in law, the trial judge did not err in awarding both Code damages and moral damages.
F. The Quantum of Moral Damages Should Not Be Reduced
[51] Zochem submits that the quantum of damages ought to be reduced to $20,000.
[52] I have already rejected the bases for Zochem's submissions that the award should be reduced.
[53] In this case, the $60,000 awarded by the trial judge for moral damages is not so inordinately high as to warrant appellate intervention having regard to the conduct and the corresponding awards of damages in the jurisprudence – for example, an award of $200,000 for aggravated damages in Boucher, at paras. 72, 76, 77; $70,000 for aggravated damages in Strudwick, at para. 104; and $75,000 for aggravated damages and $25,000 in Wallace damages in Pate Estate.
[54] For these reasons the appeal was dismissed.
G. Costs
[55] Doyle served an offer to settle the appeal on Zochem. She offered to settle the appeal on the basis that if the offer was accepted prior to June 24, 2016 the appeal would be dismissed without costs. If accepted after that date, costs were to be paid on a full indemnity scale. The offer was open for acceptance until one minute after commencement of the appeal. Based on her offer, Doyle seeks full indemnity costs of $43,600 plus disbursements and HST as well as the costs of a motion reserved to the panel hearing the appeal.
[56] This court is not bound to give effect to rule 49 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Furthermore, while an offer to settle does not have to contain a compromise, the fact that it does not is a factor to consider. For these reasons, I would not award full indemnity costs.
[57] I would, however, award costs on a substantial indemnity scale of $40,000 including the costs of the motion, plus HST of $69.99 and disbursements of $538.40 on the basis that Zochem's conduct in pursuing this appeal was a continuation of its oppressive conduct towards Doyle.
Released: February 15, 2017
"K.M. Weiler J.A."
"I agree S.E. Pepall J.A."
"I agree G.T. Trotter J.A."
