Written by Michael J Weiler

Total Cost to Employer Nears $1 Million

Melissa Doyle worked for 9 years for the defendant Zochem Inc.  She was sexually harassed by the plant maintenance manager whom the defendant considered to be irreplaceable. She was terminated and brought an action for wrongful dismissal and damages for sexual harassment under the Ontario Human Rights Code.  The trial judge awarded damages for wrongful dismissal of 10 months compensation, $25,000 for damages for sexual harassment under the Code and $60,000 in moral damages for the breach of its implied contractual obligation of good faith in the manner of dismissal. It was this latter finding that was the focus of the appeal.

After considering the examples of sexual harassment the Court noted (at paras. 9 and 10):

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.

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.

The Court noted the evidence of the impact of the dismissal on Doyle (at para. 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.

The trial judge awarded $60,000 in “moral damages” based on a number of factors. The Court of Appeal upheld this very significant award.

The Court of Appeal provided a useful summary of the law in respect of moral damages (at paras. 12 and 13):

Beginning with Wallace v. United Grain Growers Ltd., 1997 CanLII 332 (SCC), [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 (CanLII), [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.

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), 2003 CanLII 52143 (ON CA), 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.

The question of moral damages is an exercise of determining and weighing the specific facts. In this case, the trial judge considered both relevant and irrelevant matters. In commenting on this the Court of Appeal stated (at paras. 14 and 15):

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.

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.

The decision recounts in detail the misconduct of Zochem in dealing with Doyle. The misconduct was extreme and therefore the case should be used cautiously as a precedent. But the award represents a high-water mark in awarding moral damages. Given the fact that such damages are likely not taxable in the hands of the plaintiff, the value of the award was double that of an ordinary damage award for pay in lieu of notice. This is, therefore, a greater incentive for employees to pursue these claims in court.

The total damage award, which included $25,000 damages under the Human Rights Code and damages in lieu of notice of $55,000, was $150,000.

But the damage award was only part of the bad news for Zochem. The cost awards of the trial judge and the Court of Appeal were just under $500,000.

The trial judge awarded costs to the Plaintiff but retired before he could address the cost issue. A subsequent judge heard argument and awarded Doyle significant costs for the 28-day trial. The trial was characterized as follows (in paras. 7 and 30 of the trial decision):

The trial took 28 days.  It is obvious from Belleghem, J.’s reasons that the trial was hard and bitterly fought. He characterized Zochem’s approach to terminating Doyle, expressed through its employee, Wrench, as hardball and callous.  It appears that Zochem maintained that approach during the trial. Zochem certainly maintained that approach in the costs argument before me.  …

For the reasons that follow, Doyle is entitled to her partial indemnity costs, throughout. I fix her partial indemnity fees at $322,829.98, HST on those fees at $41,967.90, and disbursements at $47,786.45.  In addition, I award Doyle a further $12,000, all-inclusive, for the May 12, 2016 appointment to settle Belleghem, J.’s order, and for appearing before me to argue costs. I also deny Wrench her costs.

The Court of Appeal took the unusual step of awarding Doyle almost full indemnity for costs in excess of $40,000.

Therefore the total cost to Zochem of this one dismissal, taking into account its own legal fees, approached $1 million.

Doyle v Zochem Inc., 2017 ONCA 130