• Failure To Accommodate Disabilities Can Be Very Expensive
  • October 11, 2006 | Authors: Hugh J. D. McPhail; Glenn D. Tait
  • Law Firms: McLennan Ross LLP - Edmonton Office ; McLennan Ross LLP - Yellowknife Office
  • For many years, wrongful dismissal damages were understood to be largely limited to 24 months’ notice. That all changed with the Wallace decision (1997), when the Supreme Court of Canada ruled that "bad faith in the manner of discharge" would justify extending the "reasonable notice period" and therefore it could go beyond 24 months.

    In recent years, a new basis for damages, previously considered nearly unavailable, has come into play in some celebrated cases. Most celebrated of all was Keays v. Honda from Ontario, which was summarized in the appeal judgment:

    "Kevin Keays was terminated by Honda Canada Inc. (Honda) on March 29, 2000, after fourteen years of employment. He had developed Chronic Fatigue Syndrome (CFS) and had been directed by his employer to meet with its occupational medicine specialist, Dr. Brennan. He declined to do so without clarification from Honda as to the purpose of the meeting, the methodology to be used, and the parameters of Dr. Brennan's assessment. Honda refused to provide him with such clarification, and terminated him for disobeying its direction.

    "Keays sued for wrongful dismissal. After a twenty-nine day trial, McIsaac J. concluded that Keays had been terminated without just cause. The trial judge fixed fifteen months as the period of reasonable notice and added a further nine months for the manner of Keays' dismissal. In addition, he ordered $500,000 in punitive damages because he found that Honda's treatment of Keays constituted discrimination and harassment, was contrary to Ontario human rights legislation, and was both outrageous and high-handed. Finally, he awarded Keays costs on a substantial indemnity basis, together with a premium" [of 25% (for a total cost award of $610,000)].

    Last week, the Ontario Court of Appeal released the appeal judgment that employers had been anxiously waiting for. It upheld the decision in all respects except the majority (two of the three judges) reduced the punitive damage award to $100,000.

    Employers therefore should be aware that punitive damages can be obtained in wrongful dismissal cases and large sums awarded as punishment. It has been well-established that an "independently actionable wrong" is needed to justify punitive damages, but Keays concludes that a breach of human rights legislation is sufficient to fit this category. Keays could not have sued in the courts for "discrimination" under the human rights legislation, and if he had filed a human rights complaint the legislation would have limited him to damages of $25,000, but in the context of a wrongful dismissal suit he could, in the court's view, receive huge sums for punitive damages – damages that are primarily designed to punish the employer.

    The appellate court overturned some of the errors in fact made by the trial judge, which certainly make Honda's actions less serious than the trial judge said they were. In fact, at the end of the day, the majority listed the following facts as justifying the punitive damage award of $100,000:

    • Honda's intent to intimidate and eventually terminate the employee was for the purpose of depriving him of the accommodation he had earned.
    • Honda did not reveal the extremely damaging letter from Dr. Brennan until late in the trial.
    • Honda was aware of its obligation to accommodate and must have known it was wrong to terminate the accommodation without just cause and terminated the employee as an act of retaliation.
    • Honda knew that the employee valued his employment and that he was dependent upon it for disability benefits.
    • Honda knew that the employee was a victim of particular vulnerability because of his precarious medical condition.
    • Honda's refusal to deal with the employee's counsel who made a reasonable request to discuss accommodation of the employee's disability.
    If you were uncertain of the importance of making considerable effort to accommodate disabilities before, you should be in no doubt now that employers must work hard to accommodate any disabilities, or the damages against them could be considerable – one way or another.