Superior Court of Justice

COURT FILE NO.: 02-CV-229593 CM3

DATE: 20140602

ONTARIO

BETWEEN:

CHRISTINA DIAMANTOPOULOS Plaintiff

– and –

KPMG LLP Defendant

COUNSEL: Nancy J. Tourgis, for the Plaintiff Valerie A.E. Dyer and Mary Paterson, for the Defendant

HEARD: May 21, 22, 23, 27, 28 and 30, June 3, 5, 6, 7, 10, 12, 13, 17, 19 and 20, 2013

STEWART J.

Nature of the Action

[1] Christina Diamantopoulos is an accountant. She has brought this action against her former employer, KPMG LLP.

[2] Diamantopoulos seeks damages for a variety of claims including wrongful dismissal, breach of contract, negligence and intentional infliction of mental distress. She also seeks aggravated and punitive damages from KPMG for its allegedly wrongful conduct.

[3] KPMG denies liability to Diamantopoulos on all bases advanced by her. KPMG admits that it terminated Diamantopoulos’s employment, but says that it treated her very fairly in so doing and provided her with a severance arrangement that was reasonable in all of the circumstances.

[4] KPMG does not attempt to argue that it had just cause for dismissal of Diamantopoulos without notice. However, KPMG does take the position that the circumstances which had arisen made a parting of ways between the parties necessary and desirable. KPMG also maintains that it acted fairly and with good faith toward Diamantopoulos throughout and that Diamantopoulos was given or offered reasonable pay in lieu of actual notice of termination of her employment.

Facts

[5] The significant majority of facts and the chronology of them are not in dispute.

[6] On July 4, 1989, Diamantopoulos began working with Thorne, Ernst & Whinney as an accountant at a starting salary of $32,000.

[7] Diamantopoulos initially worked out of Thorne, Ernst & Whinney’s Bloor and Avenue Road location in Toronto and then was transferred to their office at One Toronto Street. When Thorne Ernst & Whinney merged to become part of KPMG, Diamantopoulos continued to function as a staff accountant in the KPMG office at One Toronto Street.

[8] On September 6, 1991, Diamantopoulos left KPMG to work for a former partner of the firm. She rejoined KPMG’s One Toronto Street office on May 4, 1992, a few months following her departure.

[9] Diamantopoulos is not a Chartered Accountant and was never on track to become a partner at KPMG. She always functioned as an employed member of KPMG’s accounting staff.

[10] Diamantopoulos operated at One Toronto Street as part of the Independent Business Advisory Services Group. She worked principally with Debby Stern, a partner. Stern’s regular performance reviews of Diamantopoulos were consistently positive. No issues with respect to inter-personal relationships appear to have been raised

[11] In addition to receiving her regular salary and benefits at KPMG, Diamantopoulos elected to purchase an Optional Benefits Package offered to employees which included long-term disability benefits. She paid premiums for this optional long-term disability coverage from 1992 and following.

[12] While working at One Toronto Street, Diamantopoulos was approached by George Christopoulos, a chartered accountant who had joined KPMG. Christopoulos, like Diamantopoulos, was of Greek origin. He was understandably ambitious to develop business for the firm and to improve his value and chances of becoming a partner.

[13] Christopoulos invited Diamantopoulos to have lunch with him at a restaurant near One Toronto Street and travelled downtown for the purpose of meeting with her. Over lunch, Christopoulos suggested that Diamantopoulos join him in his efforts to develop new business for KPMG using their experience with, knowledge of and contracts within the Toronto Greek Community.

[14] Diamantopoulos’s husband was at the time a senior executive at the National Bank of Greece office in Toronto. Diamantopoulos had some concern that conflicts might arise were she to engage in business development initiatives that could involve customers of her husband’s employer. She was also very happy working with Stern.

[15] Diamantopoulos said that she would get back to Christopoulos with an answer, but never did. Christopoulos called Diamantopoulos to see if she would agree to team up with him, as he had suggested. Diamantopoulos declined his offer.

[16] In the fall of 1994, Diamantopoulos and Stern were transferred from One Toronto Street to the KPMG offices at 55 St. Clair Avenue West where Christopoulos was also working.

[17] While at the 55 St Clair Avenue West office, Diamantopoulos continued to receive positive performance reviews and regular salary increases. She carried on working almost exclusively for Stern and had little interaction with Christopoulos.

[18] Meanwhile, Christopoulos had managed to achieve success in developing business for KPMG. He had become active in a number of business organizations within the Toronto Greek Community, including the Hellenic Board of Trade.

[19] When Christopoulos asked Diamantopoulos for a list of members of the Greek community she knew who might be interested in receiving an invitation to a tax seminar in October 1993 that he and others were organizing to be hosted by KPMG for business development purposes, she declined to do so. In fact, neither she nor her husband attended this seminar although they were both invited. Indeed, Diamantopoulos appeared to have been affronted by what might be viewed by most business people as a very sensible and innocent request.

[20] Although Christopoulos could not recall a second lunch with Diamantopoulos after this tax seminar, or any request by him at that time that Diamantopoulos assist him by providing a list of potential business contacts within the Greek community, I am satisfied that this reaching out to her by him did occur. However, I see no impropriety in his taking this initiative with her in the interests of KPMG and his own to enhance his value to the firm. Diamantopoulos again declined to assist him.

[21] When Christopoulos suggested to Diamantopoulos that they might work together to approach a possible client for KPMG, she was very unenthusiastic and foresaw a possible conflict were they to do so. Although she was proven right about the potential conflict in that one instance, I do find it somewhat puzzling that she would characterize this and all of the other opportunities which were extended to her by Christopoulos as being unwelcome or inappropriate.

[22] Christopoulos also encouraged Diamantopoulos to join the Hellenic Board of Trade and to become more active within the organization. Although she did attend events very occasionally, Diamantopoulos did not take advantage of Christopoulos’ offer of support in connection with that organization.

[23] Diamantopoulos complained to John Matheson, the managing partner of the 55 St. Clair Avenue West office, about Christopoulos’ conduct. After this discussion, Christopoulos made no further efforts to engage Diamantopoulos in his business development activities.

[24] In October 1997, Diamantopoulos complained to Stern that Christopoulos had lunch with a business contact from the Greek community known to her. Stern told Christopoulos about these complaints and asked him to speak to Diamantopoulos. He left her a polite voice mail message which she did not return.

[25] Christopoulos was in the process of relocating to the KPMG offices at Commerce Court West. He returned to 55 St. Clair Avenue West to attend to some lingering work and wanted to follow up on Stern’s request to speak to Diamantopoulos.

[26] Christopoulos approached Diamantopoulos while at the office on October 10, 1997 to find out why she had told Stern that she was upset with him. Diamantopoulos came into the spare office that Christopoulos was using and spoke quite aggressively with him. Due to his level of unease with Diamantopoulos’ complaints about him, which both puzzled and concerned him, Christopoulos recorded this conversation without advising Diamantopoulos that he was doing so.

[27] During their conversation, Diamantopoulos spoke quite loudly and rudely to him and declared that she did not take “bullshit” from anyone. She was evidently upset that Christopoulos had met for lunch with one of her “contacts” in the Greek community. I conclude from the tenor of her upset that her main issue was her belief that Christopoulos was undercutting her in the Greek community and competing with her to her detriment.

[28] According to at least some KPMG witnesses, Diamantopoulos and Christopoulos were viewed as rivals. This was the case even though Christopoulos, on partner track or as a partner, was responsible for firm-building and business development activities while Diamantopoulos operated very efficiently and effectively in an essentially supportive role.

[29] During their conversation, Diamantopoulos spoke quite aggressively and rudely to Christopoulos who asked her repeatedly to lower her voice. Christopoulos ultimately had to ask her to leave his office, having achieved no resolution of the issue she seemed to have with him.

[30] In my view, the trial evidence discloses that much of the antipathy and personality clash was generated by Diamantopoulos’ uncooperative behavior toward Christopoulos. On those occasions when Christopoulos tried to engage Diamantopoulos in his business development efforts on behalf of KPMG or even to further her own career by suggesting she join the Hellenic Board of Trade or engage in other legitimate activities, instead of viewing such offers as being flattering opportunities, she perceived the initiatives to be offensive and threatening.

[31] Indeed, I find it to be somewhat surprising that the degree of lack of co-operation with an associate or partner of the firm demonstrated by Diamantopoulos would be so easily tolerated within KPMG. Diamantopoulos, however, was not on partner track and was fulfilling her duties as a staff accountant generally very well in a fairly large firm setting. Obviously KPMG was not insisting upon involvement in business development from support staff members.

[32] Christopoulos stated that Stern had offered to fire Diamantopoulos if he wanted her to, but Christopoulos chose not to push the matter. His notes indicate that he did believe that her rude behaviour toward him warranted a caution or warning, but none was given at that time. Chriostopoulos had transferred to Commerce Court West and had no further contact with Diamantopoulos.

[33] On July 10, 1998, Diamantopoulos discovered that a very disturbing message had been left on her office voicemail at 55 St. Clair Avenue West. The voice on the message is male and its contents would suggest that the caller knew Diamantopoulos and had some familiarity with her work. Because Diamantopoulos carried out her duties at 55 St. Clair Avenue West as well as at the premises of a variety of clients, this description would cover a very large number of possible suspects.

[34] The message was obscene, antagonistic and contained threats of bodily harm and death. Quite understandably, its contents were very upsetting to Diamantopoulos.

[35] The message was the subject of immediate and serious investigation by KPMG management. Security personnel were contacted and the police were involved. The culprit who left message was never identified or apprehended.

[36] After having received this threatening message, Diamantopoulos confided in and received support from Matheson who took immediate steps to call in office security and the police. She went on a planned vacation trip right after receiving the call and returned as planned. Diamantopoulos did not take any additional time off work and was able to continue to perform her work very well. She did not seek counselling, either privately or through the Employee Assistance Program available to all KPMG staff.

[37] Diamantopoulos did not suggest to anyone at KPMG at that time that she held any suspicion that Christopoulos or anyone else she could think of had left the message. No one else for whom the message was played could recognize the caller’s voice.

[38] Diamantopoulos testified that after the voice mail message incident she also began to receive “hang-up” calls at her home. Despite being made aware of this, her husband did not wish to change their unlisted home telephone number. Her husband (from whom Diamantopoulos is now separated) stated that a change of telephone number would cause inconvenience to him due to his position at the Bank.

[39] Although Diamantopoulos had been very upset by the voice mail message and hang-up calls, they did not appear to interfere with her work or behaviour insofar as anyone at KPMG could see. Diamantopoulos did not present then or earlier as a fragile personality. On the contrary, she presented herself and was viewed as being a very capable, competent and confident person who was well able to speak her mind.

[40] In 1998, KPMG had decided to close the St. Clair Avenue West office. Many people, including Stern, chose to relocate to the KPMG office in Aurora, Ontario. Because Diamantopoulos was unable to drive and did not want to commute as far as Aurora by public transit, she did not wish to follow Stern to Aurora.

[41] As a result, arrangements were made to transfer Diamantopoulos to the KPMG office at Commerce Court West in downtown Toronto. She was assigned to the Personal Advisory Services Group, part of the GTA Tax Group. She was slated to work for George Denier, a senior partner in the GTA Tax Group, who likewise agreed to be her principal supervisor. As mentioned above, Christopoulos had already been transferred earlier to Commerce Court West and Diamantopoulos was aware of that fact.

[42] In fact, Diamantopoulos testified that when she was leaving Matheson reminded her that Christopoulos worked at Commerce Court West and that she should “be careful”. Diamantopoulos appears to have chosen to interpret that alleged statement as meaning that Matheson felt that Christopoulos posed some kind of problem. She does not appear to have considered that the comment might equally be a caution to her as to her own behavior. Matheson has no memory of having made the remark to her.

[43] When Diamantopoulos arrived at Commerce Court West, she was located first in one and then another large window office close to Denier’s office. Denier testified that he had advised Diamantopoulos that this office arrangement was obviously temporary, as large windowed offices in a building in such prime downtown territory would rarely be assigned to staff. Diamantopoulos was later moved into an interior office on that same floor. Diamantopoulos did not raise any issue or concern about the safety of her new office location at that time.

[44] Because Diamantopoulos was working with members of the Tax Group at Commerce Court West, her internal designation was changed from Senior Staff Accountant to Technician. This was in keeping with the terminology used in the Tax Group at KPMG to describe all persons at her level performing her functions. There was no effect on or change to her salary, benefits, duties, business cards or reporting structure as a result of this internal administrative change in nomenclature.

[45] Although these developments were reasonable in the circumstances and not instituted to upset her, Diamantopoulos nevertheless viewed the changes in location of her office and her designation as being reflective of a lack of respect for and recognition of her status. She felt it was unfair that a few of the other staff members had what she perceived to be better offices at Commerce Court West and felt slighted as a result.

[46] Diamantopoulos raised her concerns with Denier who attempted to reassure her that she remained a highly valued member of the KPMG team and that she should not be overly-concerned with small insubstantial details.

[47] Diamantopoulos was also unhappy with the fact that she had been supplied with a low-tech telephone without a call display function. When she complained to Denier about this problem and told him that for reasons of personal safety she needed a call display function on her telephone, he made prompt arrangements for her to be supplied with one. Denier had been made aware of the July 10, 1998 voice mail message by Matheson and was properly sympathetic to Diamantopoulos’ sensitivity in this regard. However, he rightly considered the location of her office to be safe, secure and acceptably placed within the firm’s premises.

[48] Christopoulos had no involvement in any of the office assignments, title or telephone issues that appear to have bothered Diamantopoulos. Indeed, Christopoulos had no direct contact with Diamantopoulos in the Commerce Court West office nor did he attempt to have anything to do with her.

[49] In her evidence at trial, Diamantopoulos described two fleeting encounters with Christopoulos in public spaces within the KPMG office at Commerce Court West during which Christopoulos appeared to her to be red-faced and flustered. Accepting her description of his demeanour during such encounters, I consider that any demonstration by Christopoulos of some degree of fluster would be quite reasonable in light of their history.

[50] At some later point in the chronology, Diamantopoulos formed the belief as a result of these chance encounters that Christopoulos was behind the threatening voice mail message of July 10, 1998 and the hang-up calls at her home. However, she did not raise that theory or any suspicion with anyone at KPMG before or throughout the time she was at Commerce Court West.

[51] I find that there is no evidence to support Diamantopoulos’ belief that Christopoulos had anything to do with the threatening voice mail message or the hang-up calls experienced by Diamantopoulos. Indeed, Christopoulos expressed shock at her allegation when he only learned about it much later after Diamantopoulos had left KPMG. He unreservedly denies any involvement whatsoever in that despicable and criminal conduct.

[52] Despite her dissatisfaction with certain aspects of her perceived treatment by KPMG, Diamantopoulos functioned quite well in the functional aspects of her work at Commerce Court West. However, she did have certain encounters with KPMG mailroom personnel which prompted the delivery to her of a memo dated May 21, 1999 by Ray Grobowsky, Supervisor of the Mailroom:

From: Ray Grobowsky at TOR Office 05/21/99 12:11 PM To: Christina Diamantopoulos/TOR/KPMG/CA c.c. MarieTeng/TOR/KPMA/CA, Bill Lawlor/TOR/KPMG/CA Subject: Courier Taxi Services

Christina,

I have received a number of complaints from the mailroom staff in terms of how you deal with them when requesting service. I understand that you requested a Diamond Taxi chit from them yesterday although you are fully aware that all of the Tax people are to use Emerald Taxi and are to obtain chits through your own group. I understand that after being told this yet again you became quite belligerent insisting that Emerald Taxi does not go where you want to go. You were also in the mailroom again today expressing your view that this new system was stupid and apparently the language you used was inappropriate.

I will reiterate once again that the mailroom does not supply taxi chits to the Tax group and if you have issue with this you should discuss it with either myself or the Business Manager in your group.

This is only one of a number of instances where the mailroom staff have complained that you have been unreasonable and demanding. They have also asked you to speak with me if you have any difficulty with the procedures I have put in place. You have chosen not to do so but instead take issue directly with the staff who are following my direction.

Regardless of the way in which people sometimes treat the mailroom staff we always insist that they respond in a professional manner. That is a difficult principal to instil when a very small percentage of the people they must deal with do not act in a professional manner.

Other than dropping off or picking up courier packages there should be little need or you to be in the mailroom. I will continue to monitor the situation and only ask that you treat the mailroom staff as you would expect them to treat you.

If you have any issue in future with any of the mailroom procedures please speak to me directly.

Ray

[53] Diamantopoulos does not agree with any of the contents of this memo or accept the suggestion that her behavior or language have been in any way inappropriate. She used the term “bogus” to describe the criticism of her. When he learned of the memo, her husband expressed his concern that she was being “set up” for discipline or dismissal and urged her to leave. Soon thereafter, she consulted an employment lawyer as well as an Employee Assistance Program counsellor for advice. No one at KPMG was aware that she had taken these steps.

[54] Diamantopoulos also arranged for her husband to meet with John Matheson to discuss her dissatisfaction with features of her arrangements at Commerce Court West. Both Matheson and Diamantopoulos’ husband agreed that there was nothing that either of them could do.

[55] It is important to note that, at this time, Diamantopoulos and her husband were having marital issues and he was threatening to leave the marriage. Diamantopoulos did not share this information with Denier or any of her supervisors at KPMG.

[56] In August 1999, George Denier gave Diamantopoulos her regular performance review. During that meeting, Diamantopoulos again raised her complaints about how she felt she was being treated by KPMG. She admits telling Denier that KPMG “has no style, no class and it sucks”. Denier swore that she referred to the KPMG Board of Directors as “assholes” in this same meeting, a word Diamantopoulos denies using. No mention was made by her at this time to Denier of any concern about or suspicions of Christopoulos.

[57] Because he thought her work performance was very good, Denier rated Diamantopoulos as being “Above Expectations” within the KPKG rating system terminology. Although hers was undoubtedly a very good performance assessment, Diamantopoulos was unhappy and dissatisfied with it. She thought she deserved the very highest available performance rating of “Outstanding”.

[58] At Diamantopoulos’ insistence, Denier reluctantly agreed to note her concerns about how she felt she was being treated on her appraisal form, as follows:

Christina continues to provide good quality and high value work. It has, however, been a difficult year of transition. Christina has expressed her disappointment with her title having been changed and the office space allocated to her. More regard of individual staff feelings is required in her view.

[59] As of the fall of 1999, Diamantopoulos was earning approximately $50,000.00 per year plus benefits. As a non-partner staff accountant, she had reached the upper range of salary to be expected by someone in that position. However, Diamantopoulos also was entitled to be considered for a discretionary bonus which was keyed in part to the employee’s performance rating as well as group results (“T$P”).

[60] Bonus memos were to be distributed to staff on or about November 1, 1999. It was expected that Denier would personally give the bonus memo to Diamantopoulos. Because Denier was on holiday in China in early November, it fell to Christopoulos as Human Resources Partner to deliver Diamantopoulos’ bonus memo.

[61] By November 2 1999, Diamantopoulos had not yet received her bonus memo which would inform her whether she was receiving a bonus and how much it would be.

[62] Diamantopoulos took the unusual step of calling the GTA Managing Partner for KPMG, Paul Weiss, to inquire about the whereabouts of her bonus memo. She was asked to hold off until the end of the following day. The issue was promptly referred by Weiss to Geri Markvoort of the KPMG Human Resources Department who in turn called Christopoulos to ask him to deliver the bonus memo to Diamantopoulos.

[63] On the morning of November 4, 1999, Diamantopoulos called Markvoort’s secretary who told her that the memo should be with Christopoulos. Diamantopoulos then took it upon herself to go into Christopoulos’ office to demand the whereabouts of her bonus memo. Christopoulos tried to explain to Diamantopoulos that her bonus memo had been given to his secretary, Betty Serrao, for delivery to Diamantopoulos that same day.

[64] I note here that the bonus memos to employees did not enclose any cheques. They simply advised of the bonus category and amount and requested a decision as to the method by which the employee wished the bonus to be paid. In Diamantopoulos’ case, she was awarded a bonus toward the upper range of the available scale.

[65] It is admitted by Diamantopoulos that she was upset during her conversation with Christopoulos. She told him that he was “very unprofessional” and “should not be Human Resources partner” if he could not handle this simple responsibility competently.

[66] Christopoulos was insulted by her words and her aggressive tone. He told Diamantopoulos that although up until then he had tolerated her transfer to the Commerce Court West office, she should not “push it”. Diamantopoulos then asked him if that statement was a threat, and declared “I am not afraid of you, George”.

[67] I accept Christopoulos’ evidence that Diamantopoulos was aggressive and rude to him during this encounter, both in what she said and the way she said it. After Diamantopoulos left his office, Christopoulos called Markvoort and Denier to tell them that he had just experienced this unpleasant encounter with Diamantopoulos and to let them know that she likely would be speaking with them.

[68] Around this same time, Diamantopoulos called Markvoort and asked to meet with her. Their meeting took place on November 15, 1999.

[69] At this meeting, Diamantopoulos told Markvoort that she was mainly uncertain as to her future with the firm. She expressed her concerns about what she viewed as mixed messages that she was receiving. She wanted to know if she was still welcome at KPMG .

[70] Markvoort was aware of Diamantopoulos’ strong performance ratings in the past from Stern and most recently from Denier and assured her that she appeared to be doing very well. She did say that she would make further inquiries and make arrangements to meet again with Diamantopoulos to address her issues.

[71] Markvoort then spoke to both Denier and Matheson about Diamantopoulos. She was made aware of the voice mail message problem. She also spoke to Christopoulos and received follow-up memo from him which set out the history of the conflict between Diamantopoulos and him.

[72] In his memo, among other things, Christopoulos specifically described the November 4, 1999 encounter as follows:

Discussion November 4, 1999

• Given my previous dealings with her, my intent was to have George Denier give her the T$P letter when he returned Monday November 8, 1999. [On November 4, 1999 I still had Bob Bartlett’s letter too – I was waiting for him to return to the office].

• I had heard from you [Geri] at about 7:00 p.m. on November 3, 1999 that Christina had been calling Paul Weiss looking for her letter.

• I left the letter with Betty Serrao on the morning of November 4, 1999. Later, Betty advised that she put the letter in Christina’s mail slot.

• At about 10:30 a.m. Christina came to my door and asked if I had her T$P letter. I replied that I had given it to Betty to give to her.

• She asked why I could not give it t[o] her and why I did not give it to her on November 1, 1999 when I handed out 3 of the 6 T$P letters I had].

• I told her that it was my intent to have George Denier give it to her.

• She then repeatedly referred to me as “unprofessional” and in a very condescending way asked me “why I accepted the HR role” if I could not be professional.

• I told her to watch it and that I had tolerated her in CCW – I did not block her from coming to work with George Denier.

• She asked if this was a threat.

• She asked at least twice if I was afraid of her.

• Her tone was aggressive and rude and I reached for my phone and suggested that we speak to [Geri]. I wanted you to see first hand what I was experiencing. She said that she would speak to you herself.

• I called and left you a voice mail message indicating that she may call you.

• I left a detailed voice message for George Denier explaining that Christina had exploded at me.

[73] Christopoulos also attached a copy of the May 21, 1999 Ray Grobowsky memo. He recommended to Markvoort that Diamantopoulos be terminated from KPMG immediately.

[74] In his evidence at trial, Christopoulos confirmed his account of events as set out in his memo.

[75] After having obtained this information from others, Markvoort again conferred with Denier and a colleague in Human Resources to determine the appropriate course of action. They agreed that termination of employment was too extreme and not warranted in the circumstances. However, they also considered it necessary to impress upon Diamantopoulos that her behaviour was unacceptable and could not be permitted to continue.

[76] A meeting was convened and took place on November 19, 1999. It was attended by Diamantopoulos, Denier, and Markvoort.

[77] Markvoort made it clear to Diamantopoulos in that meeting that they were aware of the personal difficulties she had experienced and knew that she had had a difficult time. Nevertheless, this did not excuse rude and insolent behavior on her part.

[78] Diamantopoulos was told by Markvoort and Denier that her behaviour had been unacceptable and inappropriate and must not continue. Diamantopoulos was also told that it was expected of her to be more flexible as to the kind of work she was prepared to do and for whom.

[79] Markvoort told Diamantopoulos that a commitment to change was expected from her along with an expression of regret for past circumstances and, in particular, for the heated encounter with Christopoulos over her bonus memo. Despite the value of her work, Diamantopoulos could not expect to continue to work for KPMG without this commitment. She was told to take a few days off to consider her intentions with respect to these matters. They would meet again to discuss how to move forward.

[80] Diamantopoulos was not given any formal written reprimand. Markvoort told her she did not wish to reduce anything to writing as she considered this admonition to be informal and remedial only. She expected that Diamantopoulos would respond to this “word to the wise” positively and appropriately and the entire matter would be satisfactorily resolved.

[81] Unfortunately, Diamantopoulos did not respond in the way expected of her or as most reasonable employees would in those circumstances. Following the meeting, Diamantopoulos left the office in a state of near-collapse. She immediately went to see her family doctor, Dr. Georgina Savvidou, who provided her with a note to excuse her absence from work due to “medical illness”. It is at this visit that Diamantopoulos suggested to Dr. Savvidou for the first time that she thought she could identify the person responsible for the voice mail message and hang-up calls.

[82] Although Diamantopoulos was supposed to meet with Markvoort and Denier the following week to discuss the issues which had arisen and her proposed response, she never returned to the office.

[83] During the week following their meeting of November 19, 1999, both Markvoort and Denier followed up with Diamantopoulos by telephone and were advised that she was too ill to meet.

[84] In view of her illness, Diamantopoulos was provided with forms for her and her family doctor to fill in and submit to determine her entitlement to receive short-term disability (“STD”) benefits from KPMG. Dr. Savvidou submitted a completed form for this purpose indicating her diagnosis of adjustment disorder with depression and anxiety as related to extreme stress at work.

[85] Diamantopoulos was referred to a psychologist whom she saw for several visits, paid for as part of her benefits under the KPMG Employee Assistance Plan. When entitlement to those sessions ran out, she was referred to a psychiatrist, Dr. Sol Goldstein, for further assessment and treatment. Dr. Goldstein ultimately diagnosed her as suffering from a major depressive reaction.

[86] A rehabilitation counsellor was sent by Aetna, the administrator of KPMG’s STD benefit plan, to meet with Diamantopoulos in late December 1999. The counsellor confirmed that Diamantopoulos was unable to work at that time.

[87] The counsellor’s report, a copy of which was provided to Markvoort, referred to Diamantopoulos’s belief that Christopoulos had left the violent and threatening voicemail message and had made hang-up calls to her home. This was the first indication that anyone at KPMG was ever given that belief. The evidence at trial demonstrates that no one at KPMG who was made aware of that belief thought there was any merit to it. No disciplinary steps were taken against Christopoulos, nor were any charges laid.

[88] Diamantopoulos received STD payments from KPMG until March 17, 2000. These represented continuation without interruption of her full salary and benefits.

[89] As her STD was running out, Diamantopoulos applied for Long Term Disability (“LTD”) benefits with supporting opinions from Dr. Savvidou and Dr. Goldstein. An ongoing exchange between Diamantopoulos and Maritime Life with respect to her qualification for benefits ensued.

[90] Diamantopoulos appears to have conflated KPMG and Maritime Life in connection with responsibility for consideration of her eligibility for LTD benefits. KPMG was not involved in this determination of eligibility which was made solely by Maritime Life as the insurance provider and in light of the specific policy provisions that applied.

[91] Although STD benefits paid by KPMG ran out on March 17, 2000, Diamantopoulos continued to be paid her full regular salary and benefits by KPMG while her claim for LTD benefits was pursued with Maritime Life.

[92] Although medication had been recommended to Diamantopoulos by Dr. Goldstein to help treat her symptoms of depression and anxiety, she had refused to accept pharmaceutical therapy. Treatment was therefore limited to psychotherapy.

[93] Maritime Life arranged for Diamantopoulos to be examined by Dr. Allen Rosenbluth, a psychiatrist. The evaluation took place on May 1, 2000. Dr. Rosenbluth was of the opinion that Diamantopoulos had qualified for a diagnosis of moderately severe adjustment disorder with mixed anxiety and depressed mood in relation to the phone calls she received and her occupational problem. He felt there had been improvement in her condition and her adjustment disorder was slowly resolving. He considered she was well enough to return to work, but in a different office setting.

[94] From March 17, 2000 through to June 21, 2000 Diamantopoulos continued to receive her usual remuneration from KPMG although she had not returned to work. Her application for LTD benefits was pursued and ultimately denied because Maritime Life did not consider that the medical information available supported her claim.

[95] In mid-May 2000, Diamantopoulos discovered a lump in her breast. Biopsy revealed it was breast cancer.

[96] Diamantopoulos underwent surgery on June 14, 2000 followed chemotherapy for her disease. She did not communicate any information about this new health issue to Denier or Markvoort or anyone in authority at KPMG.

[97] Unsuccessful efforts had been made to have Diamantopoulos come in for a meeting at KPMG to discuss her intentions regarding her expected return to work during the spring of 1999. Finally, a letter dated June 21, 2000 was sent to Diamantopoulos which stated:

Dear Christina:

As you are aware, your claim for long term disability benefits through our insurance carrier, Maritime Life has now been denied for the second time.

Given the above, we requested your attendance at a meeting. You have advised us that you are not able to come to the office to meet us in person. Hence, we are sending you written notice that your services with KPMG LLP are no longer needed after today’s date.

Although your short term disability benefits cease effective March 17 we have continued you on paid leave pending the results of your Maritime Life claim for Long Term Disability.

Between now and August 16, 2000, you will continue to be paid your normal salary and be covered for all normal benefits with the exception of long-term disability.

On August 16, 2000, you will be paid any remaining vacation pay to which you may be entitled.

The Firm will also provide relocation counselling services for you. This offer has no cash value, and the cost will be paid directly by KPMG LLP. The services will be provided by Geller Shedletsky and Weiss and we urge you to take full advantage of them. The number to access these services is (416) 923-5555.

Severance Compensation Package

To assist you further, KPMG LLP is prepared to offer you an additional lump sum payment, equivalent to twelve weeks’ salary less statutory deductions, which will be provided to you upon you reading the Release at the end of this letter, signing in the space indicated, and returning this Release to me by no later than June 30, 2000.

In summary, if you accept this severance Compensation Package offer, you will have received the following:

Paid Leave Pending LTD Claim 13 weeks

Statutory Notice Period 8 weeks

Statutory Severance 8 weeks

Severance Compensation Package 8 weeks

Total 41 weeks

[98] In July, 2000 Diamantopoulos’ lawyer requested KPMG to suspend the termination pending a decision on application for benefits under the STD policy and under the LTD policy in view of Diamantopoulos’ cancer treatment. In accordance with this request and the requirements of the Employment Standards Act, KPMG changed the severance package offer to continue salary and all benefits for Diamantopoulos until the end of the qualifying period to allow her to make an LTD claim due to her breast cancer treatment.

[99] As a result of a report from her oncologist in August 2000, additional STD benefits based on the breast cancer diagnosis and treatment were paid to Diamantopoulos retroactively to June 1, 2000.

[100] Diamantopoulos made a new application for LTD benefits based on her breast cancer diagnosis which was approved by Maritime Life. LTD benefits commenced on September 28, 2000.

[101] As a result, Diamantopoulos continued to receive her full salary and benefits on an uninterrupted basis from KPMG from June 21, 2000 through to September 28, 2000.

[102] Diamantopoulos received LTD benefits from Maritime Life from September 28, 2000 until March 18, 2002 for disability due to her breast cancer diagnosis and treatment.

[103] Immediately after her LTD benefits ran out, Diamantopoulos started working for Stern, who had left KPMG to join another accounting firm. Diamantopoulos currently remains employed there as an accountant and by all accounts is doing well.

[104] Diamantopoulos continued to pursue her claim for LTD benefits from Maritime Life for the period from March 17, 2000 to September 27, 2000, a period during which I note that she was receiving full salary or STD benefits from KPMG. Her claim and all appeals in that regard were unsuccessful. It was the view of Maritime Life that under the terms of the policy of coverage there was insufficient medical evidence that Diamantopoulos was totally disabled from performing the essential duties of her occupation due to stress.

Issues:

A. To what reasonable notice is Diamantopoulos entitled?

B. Is KPMG liable to Diamantopoulos as a result of any of the causes of action or grounds she has advanced?

C. Should punitive or aggravated damages be awarded?

Issue A: To what reasonable notice is Diamantopoulos entitled?

[105] It is agreed that the effective date of notice of termination of Diamantopoulos’ employment is June 21, 2000.

[106] The approach to be taken and the factors relevant to determining the required length of notice of termination are well-established (see: Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140.

[107] Diamantopoulos was an employee of KPMG for approximately 10 years, working very productively as a senior staff accountant. She had direct contact with valued clients of the firm and operated with considerable independence, enjoying the confidence of the firm to do so. At the date of termination of her employment, she was 47 years old and earning a salary within the upper range of that available to someone performing her duties.

[108] In view of her age, years of experience, salary, duties and responsibilities, factors affecting re-employability and all other considerations relevant to the determination of reasonable notice, I find that Diamantopoulos was entitled to ten months’ notice of termination, or salary in lieu thereof.

[109] As noted, Diamantopoulos was kept on full salary and benefits by way of STD benefits for more than three months following the June 21, 2000 termination letter until her LTD benefits commenced. The entire handling of her dismissal was undertaken properly and in good faith.

[110] Although KPMG initially maintained the position that a deduction for STD benefits received prior to June 21, 2000 should be applied, that argument was withdrawn at trial.

[111] There is a remaining issue as to how the STD benefits received by Diamantopoulos from June 1 through September 28, 2000 should be treated and whether they should be deducted from any damages awarded. There is a further issue as to whether the LTD payments received from Maritime Life during the period of notice should also be deducted from any amount that is otherwise owing to her.

[112] The principles governing the determination of these issues are set out in the decision of the Supreme Court of Canada in Sylvester v. British Columbia, [1997] S.C.J. No. 58.

[113] According to the reasons for decision in Sylvester, whether disability payments received by an employee during the notice period from such a plan should be deducted from damages will depend on the intention of the parties and the terms of the employment contract.

[114] In this case, the record is somewhat sparse in terms of providing a clear indication of the intentions of the parties. There was no conversation between the parties about the subject. Nevertheless, the documentation and policy details available do provide guidance to permit a conclusion to be drawn as to how the intentions of the parties may be construed and the principles in Sylvester applied.

[115] The STD payments provided to Diamantopoulos as a benefit of her employment were made by KPMG directly by way of salary continuation despite the fact that she was not at the office working. The benefits policy materials available to Diamantopoulos describe STD as “salary continuance”. Diamantopoulos did not contribute directly to the cost of this benefit which was wholly absorbed by KPMG as a form of self-insurance. In my view, it is reasonable to conclude that the parties must have intended that such payments would count toward notice of termination in these circumstances. As a result, the STD benefits received by Diamantopoulos after June 21, 2000 should be deducted from any damages for wrongful dismissal.

[116] Conversely, the LTD payments Diamantopoulos began receiving on September 28, 2000 are more in the nature of private insurance payments. She had chosen the enhanced benefits program with KPMG (the Optional Long Term Benefit), and had made regular financial contributions toward its cost. Although the employee manual might seek to characterize LTD as an income replacement plan, the policy itself is careful to describe payments made thereunder as benefits, calculated as a percentage of earnings. The payments were made by Maritime Life directly to Diamantopoulos.

[117] The Maritime Life policy stipulates that the disability benefits are to be offset by any employment income received by the person receiving those benefits. This would be an issue solely between the insurer and the benefits recipient. This further supports a conclusion that these benefits are of a separate, private nature and not the subject of any agreement between the employer and employee such that they should be deducted from the notice period. Were that to be held to be the case, much clearer language indicating such intention would have to be contained in the employee manual and policy details.

[118] Accordingly, I consider that it was the intention of the parties to treat these LTD payments as disability benefits, not salary or income replacement per se. In my view, these payments are therefore not to be deducted from the damages to which she is otherwise entitled. This approach is consistent with Sylvester and with the decisions in Sills v. Children’s Aid Society of Belleville et al. (2001), 53 O.R. (3d) 577 (Ont. C.A.) and McNamara v. Alexander Centre Industries Ltd. (2001), 144 O.A.C. 376 (Ont. C.A.).

[119] Finally, in the circumstances of her breast cancer diagnosis there was no failure to mitigate damages during the applicable notice period on the part of Diamantopoulos. Conversely, there is no evidentiary or contractual basis for increasing her damages by including a component for vacation pay in these circumstances.

Issue B: Is KPMG liable to Diamantopoulos as a result of any of the causes of action or grounds she has advanced?

Breach of Contract

[120] Diamantopoulos blames all of her personal and health problems on KPMG, and complains that they “failed her”. She goes so far as to blame her breast cancer on KPMG.

[121] The evidence does not disclose any basis for any finding that a contractual breach has occurred. To the extent that Diamantopoulos is entitled to reasonable notice of termination as an implied term of her contract of employment, this issue has been fully addressed above.

[122] With respect to its treatment of Diamantopoulos, I find that the evidence demonstrates that KPMG dealt with Diamantopoulos from beginning to end in a professional and appropriate manner and in accordance with all reasonable terms of their contractual relationship, express or implied.

[123] In particular, reasonable steps were taken to provide Diamantopoulos with a safe work environment free of harassment. The investigation of events that led up to the November 19, 1999 meeting and the meeting itself were carried out properly and in accordance with what might reasonably be expected. None of Diamantopoulos’ health problems, including her breast cancer, were caused or contributed to by a contractual breach by KPMG. The expert evidence of Dr. Pritchard and Diamantopoulos’ own oncologist is categorical on this subject.

Negligence

[124] Even if it can be said that a duty of care was owed by KPMG to Diamantopoulos in these circumstances, there is no basis upon which to conclude that any such duty has been breached in any way.

[125] I do not consider that the evidence supports a conclusion that Christopoulos harassed Diamantopoulos. When she complained, her subjective beliefs were nevertheless dealt with responsibly and a practical solution was achieved. There was no allegation advanced that the offensive voice mail message could have been presented or was not adequately responded to.

[126] KPMG treated Diamantopoulos professionally and without negligence throughout her entire period of employment. Finally, any and all investigations of Diamantopoulos’ complaints were carried out in a reasonable manner, in good faith and without negligence, as were all of the steps leading up to the termination of her employment and following.

Intentional Infliction of Mental Distress

[127] In order to establish that KPMG has intentionally inflicted mental or emotional distress upon Diamantopoulos, Diamantopoulos must demonstrate that:

(a) KPMG’s conduct was flagrant and outrageous;

(b) KPMG’s conduct was calculated to harm her; and

(c) KPMG’s conduct caused her to suffer a visible and provable illness.

[128] In my opinion, the evidence does not satisfy this test.

[129] The evidence at trial supports the conclusion that Diamantopoulos was treated with courtesy, respect, fairness and sympathy throughout her employment at KPMG. KPMG’s conduct was not flagrant and outrageous in any way.

[130] KPMG’s conduct, including what was done and said at the November 19, 2000 meeting, was in no way calculated to harm her. In my view, the November 19, 2000 meeting was intended to be a humane and professional way to communicate a reasonable message to an employee who needed and deserved such admonition in order to keep her within the KPMG organization by modifying her inappropriate behavior.

[131] Although the psychiatric evidence establishes that Diamantopoulos suffered from a recognized illness, it is far from clear that this was caused by the conduct attributed to KPMG. Diamantopoulos’ subjective perceptions of Christopoulos’ behavior, her office assignment, her minor internal change of title and the principled and decent efforts of KPMG personnel to curb her conduct so that her position with KPMG might continue might well have contributed to part of her emotional upset. However, her problems began with the threatening voice mail message, something for which KPMG cannot be held responsible. Similarly, the disruption at home and in her marriage, matters over which KPMG had no control, likely contributed to her deteriorating state of mind.

[132] As already noted, the medical evidence was categorical that stress does not cause breast cancer. Unfortunately, Diamantopoulos continues, despite this opinion and the lack of any credible evidence to the contrary, to entertain the notion that a causal link exists between her experience at KPMG and her breast cancer diagnosis.

Issue C: Should punitive or aggravated damages be awarded?

Damages

[133] For reasons expressed above, there is no factual or legal basis to support an award of punitive or aggravated damages.

Conclusion

[134] Diamantopoulos is entitled to salary in lieu of ten months’ notice of termination of her employment from June 21, 2000. From that amount is should deducted all STD payments received by her from June 21 to September 28, 2000.

[135] If the parties have any difficulty in arriving at a calculation of any final amount owing, I may be spoken to.

[136] Otherwise, the remaining claims are dismissed.

Costs

[137] If the parties cannot agree on the subject of costs and interest, written submissions may be delivered on behalf of KPMG within 30 days of today’s date and by Diamantopoulos within 15 days thereafter.

STEWART J.

Released: June 2, 2014