'It's more than just the normal distress [from dismissal], but it's not at the diagnosis level'
The Ontario Court of Appeal has upheld a wrongful dismissal award of 24 months’ notice and $50,000 in aggravated damages, even though there was no medical evidence of the worker’s mental distress.
The now-67-year-old worker was hired in 1987 to work in the maintenance department of Thunder Bay Electronics Limited (TBEL), a local television broadcast and multimedia company in Thunder Bay, Ont. At the same time, he was hired by Hill Street Financial services, a company that provided administrative and accounting services for TBEL. Hill Street owned the building and its president was also the vice-president and general manager of TBEL.
The worker’s job duties included moving heavy objects, demolition, waste removal, building maintenance, and climbing transmission towers to service and change equipment. He later became the building and vehicle maintenance supervisor.
Over the course of the worker’s employment, he suffered multiple workplace injuries that led to back and knee problems. In 2016, he went on medical leave.
Limited capabilities for employee
The worker had surgery on April 18, 2016. The post-surgery report indicated that it would be “routine” to return to full employment within eight to nine weeks after surgery, but steps were needed to maximize the worker’s “physical fitness, his work durability and the projection of long-term pain resolution.” The report did not clear the worker to return to same physical level of work.
The worker returned to work on June 13, 2016. However, two hours into his workday, management called him into a meeting and terminated his employment. They offered him a severance package of 16 months’ salary and asked him to sign a memorandum of settlement and release that would release TBEL and Hill Street from further claims.
The worker refused to sign the release and sued for wrongful dismissal, including aggravated or moral damages of $100,000 for infliction of mental distress.
TBEL’s general manager claimed that the termination was due to financial reasons, but he refused to produce financial statements supporting that position.
TBEL and Hill Street continued to pay the worker’s salary for 16 months. In November 2017, the worker moved to Toronto to work at his son’s residential renovation company, but he wasn’t able to do it because of his physical limitations.
Mental distress suffered by worker
The worker, his wife, and his son all testified that the worker suffered “back pain, knee pain, anxiety, depression, fear, mental distress, confused emotions, anger, disturbed sleep, worry, frustration, helplessness, and defeat” since his termination. They also claimed that he was “unable to perform any meaningful physical labour” during the reasonable notice period to mitigate his losses.
The trial judge found that the worker’s job made “significant physical demands” on him and involved “a broad range of skilled tasks.” Based on the nature of the employment and 29 years of service, the judge determined that the worker was entitled to 24 months’ reasonable notice.
The trial judge also accepted the worker’s evidence that he was physically unable to perform comparable employment.
This is one of the first times a court has accepted non-medical evidence from non-expert witnesses to substantiate a physical inability to work during the notice period, according to Chantel Goldsmith, a partner at Samfiru Tumarkin in Toronto and Ottawa.
“Normally, what we've seen in the past is medical evidence, supported through an expert medical witness, would have to demonstrate physical incapacity of being able to work,” she says. “However, the trial judge accepted the oral evidence of the employee, his wife, and his son instead and found that to be enough evidence to support that he was physically incapable of mitigating the damages during the notice period.”
Bad-faith termination by employer
The trial judge dismissed the worker’s claim for mental distress damages because the worker didn’t provide any medical or psychological evidence proving that he suffered significant mental distress from his dismissal.
However, the trial judge found that the manner of the worker’s dismissal was “the antithesis of an employer’s duty” to “refrain from engaging in conduct that is unfair or in bad faith.” As a result, TBEL and Hill Street were ordered to pay the worker $50,000 in “aggravated/moral damages.”
The two companies appealed the decision, submitting that the trial judge erred in finding that the worker was unable to mitigate his losses, he was entitled to aggravated damages, and both companies were liable as employers.
The companies argued that there was a “complete absence of any medical evidence” that the worker couldn’t work during the notice period and the surgeon’s report indicated that he could perform some work.
The companies also argued that the absence of medical evidence applied to the worker’s mental distress. Aggravated damages require proof of mental distress and hurt feelings beyond what is normal from dismissal, they said.
Finally, the companies argued that TBEL was the worker’s employer when he was terminated, not Hill Street.
Proof of failure to mitigate
The Court of Appeal disagreed with all of the companies’ arguments. The worker had a duty to take reasonable steps to mitigate his damages by searching for comparable alternate employment during the reasonable notice period, but the burden of proof that the worker didn’t do so was on the employers, said the court.
It was clear that the worker made limited attempts to find alternate employment, but it was reasonable for the trial judge to accept that this was because of the worker’s age and injury history, the court said. This was supported by the fact that the worker tried to work for his son’s business and was unable to, said the appeal court, adding that it was open to the trial judge to accept the evidence of the worker and his family to establish his inability to work at a comparable job.
The appeal court noted that the post-surgery report indicated that the worker’s physical fitness, work durability, and long-term pain resolution were uncertain. This wasn’t a clearance to return to comparable physical work, the court said.
“It's the employer’s obligation to prove that the employee failed to mitigate during the notice period,” says Goldsmith. “The employee demonstrated through his own evidence that he was physically incapable of working and the employer [wasn’t able to counter that].”
The Court of Appeal also found that it was reasonable for the trial judge to determine that employer’s conduct breached its duty of good faith during the termination process and the duty of honest performance in the employment contract.
Spectrum of mental distress
Although the worker didn’t have medical evidence of a diagnosed mental condition, he and his family described his mental suffering in their evidence. Mental distress doesn’t only include diagnosable psychological conditions, but also other conditions in a spectrum, said the court.
This appears to be a new test for aggravated damages for mental distress stemming from a bad-faith dismissal, says Goldsmith.
“The courts are saying, essentially, that there's a spectrum - there's the normal mental distress as a result of termination and there’s the extreme end of the spectrum where there's a diagnosed medical condition related to the dismissal,” she says. “And in between, there's this category where it's more than just the normal distress that someone would experience, but it's not at the diagnosis level - the courts said in this case that the worker was in that middle range, but there's still an opportunity to award damages.”
“It’s still a big award - $50,000 is a pretty substantial award for aggravated damages,” adds Goldsmith.
The court found that it was open to the trial judge to find that the worker suffered harm beyond the normal distress that comes from dismissal, given that the manner of dismissal was in bad faith, and declined to alter the aggravated damages award.
“The judge changed the test, essentially, so in the absence of a diagnosed condition, the test is if the employer’s conduct breached their duty of honest performance,” says Goldsmith. “And if it did, whether the employee suffered harm beyond the normal harm that arises from the termination of employment as a result of the breach.”
As for the joint and several liability of TBEL and Hill Street, there was no doubt that the two companies both employed the worker, said the court. The employer representative was an executive for both companies and the worker was hired by both. In addition, the settlement and release named both companies as “the employer.”
The Court of Appeal dismissed the companies’ appeal and upheld the 24-month notice award and the $50,000 aggravated damages award.
“The court realizes that there's going to be a certain amount of mental distress associated with a termination, but if it's beyond the normal level of harm that arises in termination, the court will consider if aggravated damages are appropriate along with the employer’s breach of their duty of honest performance,” she adds. “Those things have to go hand-in-hand in order for an employee to be awarded aggravated damages for mental distress, and it doesn't require the employee to have a diagnosed condition.”
