Friday, June 27, 2008

Honda and Keays: Supreme Court of Canada Rules for Honda, Punitive Damages Awards Set Aside

The Supreme Court of Canada has today released its long-awaited decision in Honda and Keays.

By a 7-2 majority, the court ruled in favour of the employer, Honda. The trial court's award of punitive damages against Honda in the sum of $500,000, subsequently reduced to $100,000.00 by the Ontario Court of Appeal, has been set aside.

We'll have more on this decision later. In the meanwhile, this excerpt from the Court's headnote summary sets out the Court's conclusions quite succinctly:

Aggravated damages should not have been awarded in this case. The employer’s conduct in dismissing K was in no way an egregious display of bad faith justifying an award of damages for conduct in dismissal. On this issue, the trial judge made overriding and palpable errors of fact. The employer’s March 28 letter to K did not misrepresent the positions of its doctors and it should not have been faulted for relying on the advice of its medical experts. There is no evidence that B took a “hard‑ball” attitude towards workplace absences or that K was being set up when asked to meet B. The employer’s request for a meeting between K and B was normal in the circumstances. The employer’s decision to stop accepting doctor’s notes was not reprisal for K’s decision to retain legal counsel. Rather, the employer was simply seeking to confirm K’s disability. Lastly, there is no evidence that K’s disability subsequent to termination was caused by the manner of termination. [34‑35] [38] [40] [43] [46‑48]

Similarly, punitive damages should not have been awarded. Punitive damages are restricted to advertent wrongful acts that are so malicious and outrageous that they are deserving of punishment on their own. The facts of this case demonstrate no such conduct. Courts should only resort to punitive damages in exceptional cases and the employer’s conduct here was not sufficiently egregious or outrageous to warrant such damages. Even if the facts had justified an award of punitive damages, both the trial judge and the Court of Appeal should have been alert to the fact that the compensatory damages already awarded carried, under the old test, an element of deterrence and they should have questioned whether punitive damages were necessary. This failure resulted in considerable and unnecessary duplication in the award of damages. [61‑62] [70]

Both the trial judge and the Court of Appeal also erred in concluding that the employer’s “discriminatory conduct” amounted to an independent actionable wrong for the purposes of allocating punitive damages. The Ontario Human Rights Code provides a comprehensive scheme for the treatment of claims of discrimination. A breach of the Code cannot constitute an actionable wrong; therefore the legal requirement for the common law remedy of punitive damages is not met. Since there is no evidence of discrimination to support a claim of discrimination under the Code and no breach of human rights legislation serves as an actionable wrong, there is no need to deal with K’s request for recognition of a distinct tort of discrimination. [55] [57] [60]

The full text of the Court's decision: Honda Canada Inc. v. Keays, 2008 SCC 39 (CanLII)

For additional background, our previous articles on this important case are compiled here.

More reading:

- Garry J. Wise, Toronto

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