Judge blasts county for firing worker

Firing designed to destroy personal, professional reputation and cause maximum damage, court figures out new way to calculate <i>Wallace</i> damages

A former non-profit housing manager was awarded $270,000, including $100,000 in punitive damages, for wrongful dismissal and the egregious way the termination was handled and his employer’s behaviour in the wake of the termination.

Justice Donald Ferguson of the Ontario Superior Court of Justice had harsh words for the County of Lennox and Addington and the way it handled an investigation into wrongdoing by William Downham. The case is remarkable on a number of fronts. First, it provides an extreme example of employer misbehaviour. And second, the court stepped outside the usual formula for calculating a Wallace bump, damages awarded for bad faith in the way the termination was handled.

Downham was first hired by the County of Prince Edward as an administrator in 1990. That municipality was consolidated with Lennox and Addington. After the consolidation he was named manager of the Ontario Works program, administered by the county. He was re-assigned to the position of manager, non-profit housing project, as the result of a downsizing of the administrative staff. The transfer was a lateral one and happened on Jan. 28, 2002.

Application for a housing unit

Overlapping this employment history is the story of Barry Holmes. Downham and his wife were both ordained ministers in the Salvation Army and had known Holmes years before in that capacity when they lived in Toronto.

Holmes, 66, was convicted in the Toronto area of several sex offences involving children. When Holmes was about to be released on parole, the Downhams agreed to be his support persons. This meant they had to supervise him in the community after his release. Part of this responsibility was to have Holmes live in their Picton, Ont., home.

He ended up staying longer than anticipated. He started living with them in June 2001 but by late fall they wanted him to leave and find his own place. Downham agreed to help him find a place to live. The timing between this decision and the change in his position to non-profit housing manager with the county was coincidental, the court said.

On Feb. 6, 2002, Downham went to Harmony Home in his role as county manager to deliver a cheque from the county’s treasurer. This money was part of the county’s funding of Harmony Home. While there, he saw a notice indicating there was a rent geared to income apartment available.

He phoned the property manager and arranged to pick up an application. He told the property manager it was for a person who lived with his family.

Holmes filled out an application for Harmony Home. Holmes wrote a letter briefly describing his criminal record and mentioning some of his parole restrictions. Downham did not prepare the application form and did not see the enclosed letter.

Part of the parole restrictions required that Holmes be accompanied by one of the Downhams if he left their home, except in certain circumstances. Downham’s wife could not go with him during normal business hours because of her job. So Downham went with him.

On Feb. 12 Downham and Holmes phoned the property manager at Harmony Home and asked if they could see the vacant unit. She agreed.

After touring the unit and building, they went back to her office. Holmes gave her his application and the letter. When she read the letter, she became concerned about the content.

Under Ontario law an applicant for a rent geared to income unit must be accepted if the tenant meets a few simple eligibility requirements relating to age, citizenship, financial status and the ability to live independently. Holmes met all these requirements.

The property manager did not want to rent the unit to Holmes. That’s when things started to snowball against Downham, ending in his termination. A lot of evidence and testimony was given during the three-week wrongful dismissal trial. It’s impossible to cover them all in this article but, in short, the county bungled the investigation and handled the termination in an extremely poor manner.

The court reserved some of its strongest criticism for Rick Williams, the county’s director of social services. Williams prepared a report to the county’s social services committee dated March 12, 2002. The court called the report a “troubling document.” It contained numerous errors, it said.

The termination

On March 14 Downham was given a termination letter. It accused him of trying to secure non-profit housing for a friend and of using his position to secure preferred treatment for Holmes.

Downham filed an appeal with the county of his dismissal in which he set out his version of the story. But no one bothered to investigate the discrepancies between what he had said and what had been alleged.

The termination had a devastating impact on Downham. On the way home he cried, had chest pains and could not comprehend how his employer could believe he acted unethically. The suspension letter made him feel like a criminal. He was publicly shunned. He had been previously elected governor of a Kiwanis district but the members would not talk to him after his termination.

An attempt at a fresh start

Downham volunteered to sit on the board of a non-profit housing agency, Quinte Isle, which operated under the supervision of the county. He was elected chair of the board at the first meeting he attended in September 2002. Within a month, Williams wrote the former chair. In the letter he said Downham had formerly been with the county and had started a wrongful dismissal action.

Downham had to go through the embarrassment of absenting himself from the discussion of the letter at the next board meeting. But, despite the warning from Williams, the board unanimously confirmed his appointment. The former chair wrote a stinging reply to Williams advising the board was happy with Downham.

Downham continued his job search. He delivered 500 application letters to prospective employers in nine provinces. During some job applications, he learned the employers had been informed of his problems at the county.

In October 2003 he was offered a position as the executive director of Big Brothers-Big Sisters in Quinte. It arranged some publicity of his appointment. Williams saw the article in the local newspaper. He went to the office of the executive-director of the United Way (which partly funds the agency) to to tell her about Downham’s dismissal in an effort to influence the hiring decision, the court said.

Downham was called before a board meeting where his dismissal was discussed. He was asked harsh questions. One board member raised the question of trusting someone who befriended a pedophile. Downham had been told the job would be a permanent position. Instead, in the wake of Williams visit to the United Way, Downham was offered the position on a one-year contract. He took the job but the contract was not renewed. He eventually stopped looking for a position in social services and began a career in real estate.

The court’s decision

The court said Downham was guilty of an error in judgment in going with Holmes to view the units in light of his position with the county. But it was hardly an error that justified dismissal.

Downham was not guilty of conflict of interest, as alleged by the county. He did not try to get Holmes special priority. He did not try to have his application for the housing unit accepted outside the rules. He did not try to bully anyone or use his position to further his personal interest. Legally, there was nothing Downham could do to influence anything because Harmony Home was obliged to accept Holmes since he met all of the requirements and there was no waiting list.

The court characterized the dismissal as “ironic” because Downham was essentially fired for doing what he was supposed to do. And he was dismissed by an employer that was required by law to ensure vulnerable people looking for a place to live were afforded access to housing provided by government for such people.

County ignored progressive discipline

The court ripped into the county for completely ignoring its progressive discipline scheme. The county’s policy manual stated that the objective of disciplinary action is to help an employee correct his unsatisfactory conduct or work performance in order to maintain employment with the county.

The court said the fact the county had a policy in place and then completely ignored it was an aggravating factor in this case. But Justice Ferguson was careful to say that all employers should be encouraged to create progressive discipline policies.

“I am not saying that employers who create such policies put themselves at greater risk by doing so,” he said. “I am saying that the conduct of the employer here is egregious because it relies on the rules in the policy about employee conduct to justify its actions but completely fails to follow the rules in the policy about the employer’s handling of such alleged conduct.”

The court said there was simply no evidence of wrongdoing by Downham outside of a single act of poor judgment. Downham should not have gone with Holmes to Harmony Home. But that hardly justified dismissal of a worker with an unblemished record of 12 years as a manager.

Extraordinary damages

The damages in this case are extraordinary. The first step for Justice Ferguson was to determine the reasonable notice period. Taking into account the usual factors for determining reasonable notice (age, years of service, character of employment, availability of similar employment) the court said 15 months.

It then turned its attention to Wallace damages for bad faith in the termination. The county had a duty to minimize the damage and dislocation (both economic and personal) that resulted from dismissal, the court said.

It said the report and the termination letter were intended by Williams to “maximize the personal and economic damages” to Downham. Further, the court said Williams intended to cause not only mental distress but social and economic damage as well.

“The conduct of Mr. Williams before and after termination leaves me with no alternative but to find that he intended the termination process and letter to destroy Mr. Downham personally and professionally,” said Justice Ferguson.

He outlined a long list of aggravating factors in this case and said the county was more concerned with minimizing political fallout and justifying Downham’s dismissal, the court said.

A unique Wallace calculation

In calculating Wallace damages, the court stepped outside the normal formula. Wallace damages are usually awarded through an extension of the notice period. For example, a judge might award 15 months’ reasonable notice and tack on four months’ Wallace damages for the manner in which the termination was handled.

But Justice Ferguson said this is not always a fair method.

“Simply adding, say, one month would result in giving a high-income employee more compensation for their suffering and humiliation than what one month’s salary would award a lower income employee,” he said. “That is not consistent with the awarding of damages for personal injury. It is the injury, not the status of the (worker), which is supposed to govern.”

Justice Ferguson said the loss should be assessed by assigning a monetary value before considering how many months’ salary should be awarded. For humiliation, embarrassment, loss of self-esteem and loss of enjoyment of social activities, the court awarded $50,000.

It then tacked on $20,000 for wrongful infliction of mental suffering.

It then tacked on another five months’ notice because the county created a stigma which prevented Downham from finding another job.

It then looked at the Big Brothers-Big Sisters job, which turned into a one-year contract after Williams intervened. On top of it not being a permanent position, the court said the interference led to a salary on the low end of the range. The salary range for the position was $40,000 to $51,000, and Downham was paid $41,000. The court said it was prepared to assume the salary would have been on the higher end of the scale ($50,000) if Williams had not interfered, so it awarded the difference ($9,000) in damages.

It then turned its attention to punitive damages. The damages outlined above were an assessment of the losses caused by the wrongful dismissal but did not address the aggravating factors, the court said. In this “extreme” case the employer intended to do harm, was reckless and showed an intentional lack of fairness. It said the conduct of the county’s senior management, particularly Williams, justified punitive damages. It awarded Downham $100,000.

“I have considered the cumulative total of all these separate awards. I find they do not exceed what would fairly compensate (Downham) and punish the employer’s conduct,” said Justice Ferguson.

As a further note, the judgment here is not yet final because the court is waiting for submissions on an amendment to the plaintiff’s statement of claim. But it’s a powerful lesson for employers of the pitfalls and the consequences of bungling a termination.

For more information see:

Downham v. Lennox & Addington (County), 2005 CarswellOnt 7034 (Ont. S.C.J.)

Online bonus

Even though a lot of space was dedicated to this case, there's even more to the story. Clilck here to view the additional material.

Latest stories