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$450,000.00 Punitive Damage Award – A Cautionary Tale for Employers

After a winding ride through our court system the case of Pate v. Galway-Cavendish has most recently received attention from our Court of Appeal which has awarded $450,000.00 for punitive damages to the dismissed employee’s estate.

Background

Mr. Pate was the Chief Building Official for the Township of Galeway-Cavendish for ten years.   The Township believed there were discrepancies surrounding Mr. Pate’s building fee permits though he was not provided with the particulars of the allegations.  Instead, the Township informed him that if he resigned they would not contact the police.  Mr. Pate refused to co-operate by resigning and the Township terminated Mr. Pate’s employment alleging cause.  The Township turned over some information to the police, criminal charges were laid and a criminal trial ultimately ensued which was reported on extensively by the media.  Mr. Pate was ultimately acquitted.  Following his acquittal Mr. Pate brought an action against the Township for wrongful dismissal, malicious prosecution and reputational injuries and sought special damages for his defence costs along with punitive and aggravated damages.  

At the civil trial it was discovered that the Township had withheld pertinent information from police that would have exonerated Mr. Pate and the judge made findings that the Township’s misconduct was of a sustained nature that had a profound impact on Mr. Pate.   Ultimately, Mr. Pate was awarded nearly $280,000.00, an amount that excluded the amount paid by the Township for the wrongful dismissal settlement.  As part of the award $25,000.00 was attributable to punitive damages and the trial judge commented that he would have ordered more but was bound by the principles of proportionality. 

The judgment with respect to malicious prosecution and the punitive damage award was appealed and eventually went through two re-trials before resulting in a $550,000.00 punitive damage award that was brought to the Ontario Court of Appeal.

The Court of Appeal and Punitive Damages

The majority of the court of appeal found that the trial judge did not consider in his reasons the other damages which Mr. Pate was already awarded as a result of the first trial.   As such, the majority reduced the award to $450,000.00 stating that it “amply denounces the Township’s conduct and achieves the additional objectives of retribution and deterrence”.  Interestingly, the minority of the court would have upheld the trial judge’s award of $550,000.00.

Significant points for Employer’s

• The majority of the court made comment that compensatory damages also have a punitive element.This is a new and confusing statement that could impact the quantum of future awards. 
• Employers ought to complete impartial investigations prior to dismissing an employee with cause or insisting that charges be laid by police. 
• When conducting an investigation it is always advisable to give the employee an opportunity to put forward his or her side of the story.
• It is important to be aware of any legal obligations you may have to provide police with all relevant information not protected by confidentiality and/or privilege.
• The majority decision to adjust the award from $550,000 to $450,000 appears to be inconsistent with the past practice of leaving alone awards that appear to be in the appropriate range.As such, this decision may improve the ability of litigants to have awards modified on appeal.  
• Significant damages can arise where an employer does not act in an impartial manner during an investigation and/or termination.

Please consider consulting the lawyers at CCP when conducting a workplace investigation, dealing with law enforcement and conducting a termination.   CCP will continue to monitor this case as one of the parties may seek leave to appeal to the Supreme Court of Canada.