



COURT OF APPEAL FOR ONTARIO

CITATION: Filice v. Complex Services Inc., 2018 ONCA 625

DATE: 20180710

DOCKET: C62310

Simmons, Roberts and Nordheimer JJ.A.

BETWEEN

Antonio Filice

Plaintiff (Respondent)

and

Complex Services Inc.

Defendant (Appellant)

Frank Cesario, for the appellant

Margaret A. Hoy, for the respondent

Heard: January 19, 2018

On appeal from the judgment of Justice Antonio Skarica of
    the Superior Court of Justice, sitting without a jury, dated May 17, 2016 with
    reasons reported at 2016 ONSC 3256.

Nordheimer J.A.:

[1]

Complex Services Inc. appeals from the judgment of Skarica J. dated May
    17, 2016 that awarded the plaintiff damages for constructive dismissal in the
    amount of $75,723.64, punitive damages of $100,000, and costs of $82,600.

[2]

In my view, the trial judge erred in two significant respects.  First,
    by holding, in effect, that the reasonable notice period arising from the
    respondents constructive dismissal was 17 months.  Second, by concluding that
    punitive damages were appropriate in this case. I would therefore allow the
    appeal for the reasons that follow.

Background

[3]

The appellant is under contract with the Ontario Lottery and Gaming
    Corporation to operate Casino Niagara and Fallsview Casino, both of which are
    located in the Niagara Falls area (collectively, the Casino).  The respondent
    was employed as a Security Shift Supervisor by the appellant at the Casino.  The
    respondent had been employed since April 1999.

[4]

The Alcohol and Gaming Commission of Ontario (AGCO) is the government
    body responsible for the licensing of gaming employees and the enforcement of
    gaming legislation, including the
Gaming Control Act, 1992
, S.O. 1992,
    c. 24. The AGCO reports to the Ministry of the Attorney General and serves as
    an oversight regulatory body to ensure the proper security and integrity of
    gaming in Ontario, and that operations are conducted in the best interests of
    the public.

[5]

The AGCO operates several units, including a Licensing and Registration
    Unit, which processes gaming licenses and registrations; an Audit and
    Compliance Unit, which has offices within the Casino and conducts audits,
    inspections, and compliance reviews; and an Enforcement Unit, which has offices
    within the Casino and is staffed with Ontario Provincial Police (OPP) officers.

[6]

The Casino maintains a Security Department.  Among other things, the
    Security Department is responsible for managing the Casino's lost and found
    processes, which include the collection of property and money from the Casino's
    facilities.

[7]

All employees in the Casino's Security Department are required to
    maintain a valid gaming registration issued by the AGCO. This requirement is
    mandated under the
Gaming Control Act
and is a condition of
    employment.  Without a valid gaming registration, an individual is prohibited
    by law from working anywhere in the Casino's Security Department.

[8]

On December 17, 2007, the Casino's Director of Security, Mr. Richard
    Paris, was advised that the AGCO Compliance Unit had performed a routine audit
    of the Casino's lost and found logs from September to December 2007.  The AGCO
    audit identified several discrepancies, and those discrepancies corresponded
    with entries that the respondent had made.  The AGCO directed the Casino to
    conduct its own audit. Consequently, Mr. Paris directed members of the Security
    Department management to conduct an audit of lost and found records for 2007.

[9]

On December 18, 2007, Mr. Paris was contacted by the AGCO Enforcement
    Unit regarding the Compliance Unit's audit and the Security Department's review
    of lost and found records.  Mr. Paris updated the AGCO on the review.

[10]

The
    AGCO Enforcement Unit, through its OPP staff officers, asked to interview the
    respondent on December 19, 2007 regarding the results of the audits conducted
    to date.  Mr. Paris escorted the respondent to the meeting with the OPP
    officers.  Mr. Paris then left.  On the way to the meeting, the respondent
    asked Mr. Paris what the meeting was about.  Mr. Paris said that he did not
    know.

[11]

At
    the conclusion of the meeting, the OPP officers escorted the respondent back to
    Mr. Paris's office.  The officers advised Mr. Paris that the respondent was
    under investigation for theft in the workplace, that the investigation was
    ongoing, and that no charges had yet been laid.  Upon receiving this
    information from the officers, Mr. Paris advised the respondent that he was
    being placed on an investigative suspension, pursuant to Casino policies,
    effective immediately.  The respondent was escorted from the premises and
    prohibited from returning.  From that point forward, the respondent was
    suspended without pay.

[12]

The
    Casino maintains an Associate Handbook Security Edition (the Handbook).  The
    Handbook provides:

Investigative Suspension may be used as part of the coaching
    and counselling process to verify allegations of misconduct.  During an
    investigation, the Associate may be prohibited from working.  If a decision is
    made to separate the Associates employment, he or she may not be reimbursed
    for time spent on Investigative Suspension.

The appellant has a discipline policy to the same
    effect.

[13]

On
    December 31, 2007, the Casino provided the AGCO and the OPP with the audit
    report prepared by the Casino's Internal Audit Department detailing its review
    into found money discrepancies (the "Audit Report").  The Audit
    Report identified a number of weaknesses in the lost and found procedures, and
    identified recommendations to be implemented to address them.  During the first
    two weeks of January 2008, the Casino continued to provide documents requested
    by the OPP for the ongoing criminal investigation.

[14]

On
    January 21, 2008, the OPP charged the respondent with four counts of theft
    under $5,000 and one count of breach of trust.  Also on that date, the AGCO
    suspended the respondents gaming registration.  As a result, the respondent
    was precluded from performing his duties as a Security Supervisor for the
    Casino, and the Casino was precluded from using the services of the respondent
    as a Security Supervisor:
Gaming Control Act
, ss. 5(1)(a) and 5(4)(b).

[15]

On
    March 7, 2008, Mr. Paris wrote to the respondent on behalf of the appellant. 
    He told the respondent that the workplace investigation of the Casino was
    separate and apart from the criminal proceedings.  Mr. Paris also stated that,
    although the workplace investigation was ongoing, it would be deferred until
    the AGCO and criminal matters were concluded.  To this end, the letter
    suggested that it would be in the interests of all parties to defer the
    respondent's interview with the Casino's Corporate Investigator until the AGCO
    and criminal matters were concluded.  The respondent did not respond to that
    letter.

[16]

The
    respondent had a hearing scheduled for May 13, 2008 before the AGCO to appeal
    the suspension of his registration.  However, that hearing was adjourned
    indefinitely at the respondents request.  The respondent advised AGCO that he
    would like to deal with his criminal charges before he dealt with the suspension
    of his registration.

[17]

On
    November 3, 2008, three of the five criminal charges were withdrawn.  On
    February 7, 2009, the remaining two criminal charges against the respondent were
    dismissed.  The dismissal of the charges appears to have happened after an
    adverse ruling was made by the trial judge regarding the Crowns ability to
    rely on certain business records.  The Crown then chose not to call any further
    evidence and the charges were dismissed.

[18]

While
    the respondent's criminal matter was concluded, his gaming registration
    remained suspended by the AGCO.  On May 12, 2009, prior to an appeal on the
    AGCO suspension being heard, the respondent directed his legal counsel to
    voluntarily surrender his gaming registration to the AGCO. On May 15, 2009, the
    AGCO cancelled the respondent's gaming registration.  As a result, he was
    precluded from reapplying for another registration for at least two years.

[19]

On
    May 29, 2009, Mr. Paris wrote to the respondent and advised him that, in light
    of the requirement that the respondent maintain a valid gaming registration,
    his employment was at an end since he had surrendered his gaming registration.

[20]

In
    November 2009, the respondent commenced the underlying action against the
    appellant.  He claimed wrongful dismissal, false arrest, malicious prosecution,
    breach of the
Charter of Rights and Freedoms
, negligence, and
    intentional infliction of mental suffering.

[21]

On
    December 20, 2011, the Casino brought a motion for summary judgment seeking the
    dismissal of the respondents claims.  That motion was adjourned to permit the
    respondent to bring a motion to amend the statement of claim to claim
    constructive dismissal.  On March 12, 2012, the respondent issued an amended
    statement of claim stating that he was constructively dismissed, effective
    December 19, 2007, when he was placed on a leave of absence without pay.

[22]

The
    appellants motion for summary judgment was then heard.  In a decision dated
    October 24, 2012, Henderson J. granted partial summary judgment.
[1]
He dismissed the claims for false arrest, malicious prosecution, breach of the
Charter
,
    negligence, and intentional infliction of mental suffering but ordered the
    claim of constructive dismissal to proceed to trial.  In his reasons, the
    motion judge made the following findings:

(i)

AGCO and the OPP are both statutory bodies that operated independently
    of the appellant;

(ii)

there was no evidence that any representative of the appellant ever
    accused the respondent of theft; and

(iii)

there was no flagrant or outrageous conduct by the appellant in relation
    to the respondent.

[23]

The
    constructive dismissal claim proceeded to trial in May 2016 over seven days.
    The respondent called seven witnesses in addition to giving evidence himself.
    The appellant called only Mr. Paris. Neither party called any witnesses from
    the OPP or the AGCO who were involved in their respective investigations of the
    respondent.

[24]

On
    May 17, 2016, the last day of the trial, Skarica J. released his written
    reasons for judgment comprising 76 pages.  He found in favour of the
    respondent.  He awarded damages of $75,723.64 for constructive dismissal,
    punitive damages of $100,000, and costs.  The compensatory damages were
    calculated as the amount of pay that had been withheld from the respondent
    during his suspension that spanned approximately 17 months.

Analysis

Standard of review

[25]

The
    Supreme Court set out the guiding principles on the standard of review for
    appeals from judicial decisions in
Housen v. Nikolaisen
, 2002 SCC 33,
    [2002] 2 S.C.R. 325.  Questions of law are reviewable for correctness, and
    questions of fact or questions of mixed fact and law are reviewable for
    palpable and overriding error, unless there is an extricable question of law:
Housen
,
    at paras. 8, 10, and 36.  The identification of the correct legal standard is
    an extricable question of law, but the application of a legal standard to a set
    of facts is a question of mixed fact and law:
Housen
, at paras. 27 and
    31.  I address the standard of review applicable to each issue below.

Constructive dismissal

[26]

I
    begin my analysis, as the trial judge also correctly did, with the decision in
Potter
    v. New Brunswick Legal Aid Services Commission
, 2015 SCC 10, [2015] 1
    S.C.R. 500.  In that decision, at paras. 32-46, Wagner J. set out the test for
    constructive dismissal.  The test involves two branches.  The first branch of
    the test applies where there has been a single act by the employer that may
    constitute a breach of the contract of employment.  The second branch applies
    where there has been a continuing course of conduct by the employer that may,
    collectively, give rise to a finding that the contract of employment has been
    breached.  It is the first branch of the test for constructive dismissal that
    is engaged here.

[27]

The
    first branch of the test for constructive dismissal requires a review of the
    specific terms of the contract of employment.  It involves two steps that must
    be considered independently of each other:
Potter
, at para. 38.  The
    first step is to identify an express or implied contractual term that has been
    breached.  The second step is to then determine if the breach is sufficiently
    serious to constitute constructive dismissal. The first step is assessed on an
    objective basis, whereas the second step is analyzed on a modified objective
    standard of a reasonable employee in similar circumstances:
Chapman v. GPM
    Investment Management
, 2017 ONCA 227, at paras. 16-17.

[28]

In
    this case, the respondent was suspended without pay.  That would normally
    involve a breach of the contract of employment unless it was an express or
    implied term of the contract that the employer could suspend an employee without
    pay.  The trial judge did not make any express finding on this first
    requirement.  However, the trial judge did say, at para. 260 of his reasons,
    that the appellants policy and procedure appears to give the power to the
    defendant to suspend without pay during an investigation.

[29]

I
    note that both the Handbook and the appellants discipline policy expressly
    provide that the respondent could be suspended. However, such a suspension was
    not automatic. Rather, it was to be imposed at the discretion of the appellant. 
    In the same vein, the power to impose a suspension without pay was also left in
    the hands of the appellant.

[30]

The
    burden of establishing constructive dismissal lies on the employee.  However,
    where an administrative suspension is involved, the burden shifts to the
    employer to show that the suspension is justified:
Potter
, at para.
    41.  A number of factors are to be considered in determining whether a
    suspension is justified, some of which were outlined in
Cabiakman v.
    Industrial Alliance Life Insurance Co
.
, 2004 SCC 55, [2004] 3
    S.C.R. 195, at para. 65 where LeBel and Fish JJ. said:

For example, the courts may consider the following factors:
    whether there is a sufficient connection between the act with which the
    employee is charged and the kind of employment the employee holds; the actual
    nature of the charges; whether there are reasonable grounds for believing that
    maintaining the employment relationship, even temporarily, would be prejudicial
    to the business or to the employer's reputation; and whether there are
    immediate and significant adverse effects that cannot practically be
    counteracted by other measures (such as assigning the employee to another
    position).

[31]

In
    my view, the evidence demonstrates that the suspension was clearly justified in
    this case.  The respondent was a Security Supervisor with the appellant. 
    Information came to the appellants attention that the respondent was possibly
    involved in theft from the Casinos lost and found facilities.  In these circumstances,
    and given the regulated nature of the appellants operations, it was entirely
    reasonable for the appellant to suspend the respondent pending a determination
    of the validity of the concerns respecting the asserted misconduct.  Indeed,
    given the nature of the allegations, it would have been irresponsible of the
    appellant not to have done so.  Whether the appellant was justified in suspending
    the appellant without pay, however, is a separate issue that I will come to
    later.

[32]

I
    pause at this point to take issue with certain findings made by the trial
    judge.  The trial judge found, at para. 261, that:

Mr. Paris told the police only half the story. Mr. Paris told
    the police that the Lost and Found records showed discrepancies which
    implicated Mr. Filice. He did not tell police that he was aware of numerous
    issues both regarding the record keeping and procedures and laxity of enforcement
    of those procedures

And at para. 262 that there were serious defects in
    the procedures and record keeping that Mr. Paris was aware of and did not
    disclose to the police.

[33]

First,
    the finding that Mr. Paris told the police about the discrepancies, and that
    they implicated the respondent, is simply wrong. It was not Mr. Paris who
    identified the possible problem with the respondent.  To the contrary, it was
    officials from the AGCOs Compliance Unit who first identified the problem and
    the respondents apparent connection to it.  In addition, it was the AGCOs
    Enforcement Unit, which is staffed by OPP officers, that first contacted Mr.
    Paris on December 18, 2007.  Indeed, Mr. Pariss uncontested evidence was that
    Sergeant Taylor of the OPP called him to discuss the audit issues  not the
    other way around.

[34]

Second,
    the finding that Mr. Paris did not disclose accounting control defects to the
    police is also wrong. Mr. Paris gave evidence that, not only had he discussed
    flaws in the appellants lost and found procedures with the OPP, but that the
    AGCO Compliance Unit was provided with a copy of the appellants Audit Report. 
    The Audit Report clearly outlines problems with those procedures.  Moreover,
    Mr. Paris was specifically cross-examined on this point and his answers were
    consistent and unshaken from his evidence in-chief.

[35]

As
    will become apparent, these erroneous findings infected the trial judges
    entire analysis, leading him to believe that Mr. Paris was not a credible
    witness. As a result, the trial judge inferred that the appellant acted in an ulterior
    and unfair manner by attempting to hide other causes of the discrepancies in
    the lost and found records from the OPP.

[36]

Further
    on this point, no one from the OPP who was involved in the investigation was
    called as a witness at trial.  There was no basis, consequently, for the trial
    judge to make factual findings about what the OPP knew, or did not know,
    regarding its investigation into the respondent.  In fact, given the close
    proximity of the AGCO Compliance Units and Enforcement Units operations
    stationed inside the Casinos and the fact that the Enforcement Unit is staffed
    with OPP officers, it might have been a reasonable inference to conclude that
    the OPP officers knew what the AGCO in-casino units knew.  In any event, it was
    unfair of the trial judge to make adverse findings regarding the appellants
    involvement with the OPPs investigation in the absence of that evidence.

[37]

Given
    the content of the appellants policies and Handbook, which the parties seem to
    have treated as forming part of the contract of employment, the appellant had
    the contractual right to suspend the respondent.  However, absent express
    language in the employment contract stipulating that any suspension would be
    without pay, the burden rests on the appellant to establish that a suspension
    without pay was justified.  If the appellant cannot justify a suspension
    without pay, then taking that step amounts to a unilateral change in the
    employment relationship that constitutes a breach of the contract of
    employment.

[38]

In
    this case, as the appellants policies make clear, whether the suspension is
    with or without pay is a matter for the appellant to determine in its
    discretion.  In making that determination, the appellant must establish that it
    acted reasonably.  See, for example, the discussions regarding the exercise of
    a contractual discretionary power in
Greenberg v. Meffert
(1985), 18
    D.L.R. (4th) 548, at p. 554 (Ont. C.A.), [1985] O.J. No. 2539, at para. 18;
Marshall
    v. Bernard Place Corp
.
(2002), 58 O.R. (3d) 97 (C.A.), [2002] O.J.
    No. 463; and
Willowbrook Nurseries Inc. v. Royal Bank of Canada
, 2017
    ONCA 974, at para. 40.  In this case, however, it does not appear that the
    appellant turned its mind to whether the appellants suspension should be with
    or without pay.  Rather, the appellant appears to have treated the suspension
    without pay as being automatic.

[39]

There
    may be situations where an employer would be fully entitled to suspend an
    employee without pay given the nature of the allegations made.  However, those
    situations must be viewed as exceptional, and in any case, it still falls to
    the employer to justify that decision as a reasonable one.  As LeBel and Fish
    JJ. said in
Cabiakman
,

at para. 60:

However, it would seem to be appropriate to note that, as a
    rule, the power to suspend for administrative reasons
does not entail
,
    as a corollary, the right to suspend the payment of salary. The employer cannot
    unilaterally, and without further cause, avoid the obligation to pay the
    employee's salary if it denies the employee an opportunity to perform the work.

[Original emphasis.]

[40]

In
    this case, at least at the very early stage of the investigation, it is
    difficult to see how the appellant could reasonably have concluded that a
    suspension without pay was warranted.  The OPP investigation was ongoing.  It
    was not then clear whether criminal charges would be laid.  The appellant did
    not have any other information to suggest that a suspension without pay was
    justified.  Indeed, the appellant knew that there were flaws generally in their
    lost and found procedures that went beyond the respondents activities.  While
    there might have been a point later in time when the suspension of the
    respondent without pay could have been justified, depending how matters
    unfolded, there was an insufficient foundation for a suspension without pay on
    December 19, when the respondent was told he was suspended and escorted out of
    the premises.  In my view, when the appellant suspended the respondent without
    pay on December 19, it made a unilateral change to the employment relationship
    and breached the implied term of the employment contract that the power to
    suspend without pay would not be exercised unreasonably.

[41]

That
    conclusion then leads to the second step of the first branch of the
Potter
analysis, which requires the court to determine whether the suspension could
    reasonably be perceived as having
substantially changed the essential terms
    of the contract
 (emphasis in original):
Potter
, at para. 45.  As
    I alluded to above, this second step is assessed from the perspective of a
    similarly situated reasonable employee. Part of the consideration is whether
    the suspension had a minimal impact on the employee.

[42]

I
    believe it would be beyond reasonable debate, whether from the viewpoint of a
    reasonable employee or otherwise, that suspending an employee without pay would
    have an impact on the employee that would be more than minimal.  Accepting that
    the appellant had a legitimate business interest in suspending the respondent,
    given his position and the nature of the allegations, the substantial impact of
    suspending the respondent without pay rendered the suspension a breach of the
    contract of employment that amounts to a constructive dismissal under the
Potter
test.

Compensatory damages

[43]

Notwithstanding
    that there are certain unique circumstances of this case, having concluded that
    the respondent was constructively dismissed, it still remains to be determined
    what damages flow from the breach itself.  Unfortunately, the trial judge
    failed to undertake a proper damages assessment.  Rather, he simply treated the
    entire period that the respondent was suspended as being the appropriate notice
    period for which he was to be compensated.  As
Potter
again makes
    clear, damages for constructive dismissal are the same as they are for wrongful
    dismissal.  The appropriate notice period has to be determined and damages
    awarded in lieu of that notice period.  In this case, 17 months would have been
    an inordinately lengthy notice period for someone in the respondents position
    with his length of service.

[44]

The respondents length of service was approximately 8 years and 8
    months, based on a start date of April 1999 and a termination date of December
    19, 2007 when he was constructively dismissed.

He
    was almost 50 years old at the time of his dismissal and he was earning
    approximately $50,000.  I also note that it took the appellant seven months to
    find other employment. Applying the factors from
Bardal v. Globe & Mail
    Ltd.
(1960), 24 D.L.R. (2d) 140 (Ont. H.C.), I find that reasonable notice
    in this case is seven months.

[45]

I
    pause at this juncture to address one unique aspect of this case. Approximately
    a month after he was suspended, the respondents gaming registration was
    suspended by the AGCO.  It is not disputed that, in order to fulfill his duties
    as a Security Supervisor, the respondent was required by law to have a gaming
    registration.  Two consequences, that arise from that fact, require mention.

[46]

First,
    there is the appellants submission that the suspension of the respondents
    gaming registration limits any claim for damages arising from his dismissal to
    the one month before his gaming registration was suspended.

[47]

The
    general rule for the assessment of damages is that they are assessed as of the
    date of the breach.  While there are exceptions to that general rule, where
    fairness requires an exception, those exceptions do not easily apply:
Rougemount
    Capital Inc. v. Computer Associates International Inc.
, 2016 ONCA 847, 410
    D.L.R. (4th) 509, at paras. 45 & 50.

[48]

I
    do not see that fairness requires an exception in this case.  As I have already
    said, the appellant appears to have treated the suspension without pay as being
    automatic.  It ought not to have treated the respondent in that fashion.  Consequently,
    if fairness has a role to play, it argues in favour of the respondent being
    entitled to his appropriate measure of damages in light of the appellants
    breach of the employment contract and not in allowing the appellant to rely on
    a subsequent event that happens to enure to its benefit.  I should note, on
    this point, that the appellant did not allege that, if a dismissal should be
    found, the contract of employment became frustrated as a result of the
    suspension of the respondents gaming registration, or that the suspension of
    the respondents gaming registration constituted an inability to mitigate, or
    any other like reason.  Consequently, I do not need to address whether those
    issues might have led to a different damages assessment.

[49]

Second,
    there is the respondents submission that the appellant had an obligation to
    offer the respondent another job, within its organization, that did not require
    the respondent to have a gaming registration.  I reject that submission for a
    number of reasons.

[50]

One
    is that the respondent was unable to point to any authority that stands for the
    proposition that an employer has an obligation to relocate an employee to
    another position, in these circumstances. The respondent was not employed by
    the appellant under a collective bargaining agreement subject to a labour law
    scheme. In fact, holding that the appellant had a duty to offer alternative
    employment would be contrary to the fundamental principles of individual
    agency, freedom of contract, and tantamount to binding the parties to a
    specific performance obligation for employment which has long been rejected by
    the common law, except perhaps in the rarest of circumstances, none of which
    are present here. See, for example,
Lumley v. Wagner
(1852), 64 E.R.
    1209 (E.W.H.C. (Ch));
Labelle v. Ottawa Real Estate Board
, 1977
    CarswellOnt 1079 (H.C.J.), at para. 50;
Gillespie v. Overs
, 1987
    CarswellOnt 3404 (H.C.J.), at para. 170;
Quirola v. Xerox Canada Inc.
,
    1996 CarswellOnt 1692 (Gen. Div.), at para. 33;
Clitheroe v. Hydro One Inc.
,
    2002 CarswellOnt 3919 (S.C.J.), at paras. 11-18;
McDonald v. Anishinabek
    Police Service
(2006), 279 D.L.R. (4th) 460 (Ont. Div. Ct.), [2006] O.J.
    No. 4210, at para. 77; and
Evans v. Teamsters
, Local 31
, 2008
    SCC 20, [2008] 1 S.C.R. 661, at para. 108
per
Abella J. dissenting.

[51]

Another
    is that the respondent never asked the appellant to find him a different
    position.

[52]

Yet
    another is that the respondent also never demonstrated that he was willing to
    accept some other position.  To the contrary, it would seem that he would not
    have been willing to accept another position given his evidence at trial, to
    which the trial judge referred in his reasons at para. 19, that the respondent felt
    that he could not return to the Casino due to the humiliation and embarrassment
    of his being escorted out of the Casino in front of numerous employees and his
    subsequent charge of theft.

[53]

There
    are two other issues that require mention in relation to the question of
    damages.  One is condonation, that is, that the respondent condoned the
    appellants actions and thus cannot complain about the actions that the
    appellant took.  It is true that the respondent does not appear to have made
    any objection to the appellants suspension of his employment without pay.  If
    an employee consents to, or acquiesces in, a change of the terms of employment,
    the change is not a unilateral act and will not constitute a breach:
Potter
at para. 37.  However, the simple fact is that condonation is a defence and it was
    not pleaded as a defence in this case.  Without that pleading, in my view, it
    is not open to the appellant to raise that issue for the first time on appeal
    as impacting the assessment of damages.

[54]

The
    other is the suggestion that the respondents claim is statute-barred because
    it was advanced more than two years after the act of dismissal. The dismissal
    occurred on December 19, 2007.  This action was commenced in November, 2009. I
    cannot tell the exact date because the formal issued statement of claim is not
    in the appeal book.  The action as originally constituted claimed wrongful
    dismissal but not constructive dismissal.  The statement of claim was amended on
    March 12, 2012, apparently by way of a motion, to add a claim for constructive
    dismissal.

[55]

There
    is no information in the record whether the issue of the limitations period was
    argued when the respondent sought leave to amend his statement of claim.  That
    is where it ought to have been argued but I have to assume it was not. If so,
    it is, in my view, again too late to raise the issue in this court.  However,
    even if it were open to the appellant to raise the issue now, I would not give
    effect to it.  The appellant was on notice of the respondents essential claim,
    that is, that his dismissal was improper.  Whether the claim is styled as
    wrongful dismissal or constructive dismissal, the appellant was fully aware of
    the nature of the claim it was facing within the two year limitation period.

Punitive damages

[56]

I
    now turn to the trial judges award of punitive damages.  An appellate court
    has a much broader scope for review on an appeal from an award of punitive
    damages.  As Cory J. said in
Hill v. Church of Scientology of Toronto
,
    [1995] 2 S.C.R. 1130 at para. 197:

Unlike compensatory damages, punitive damages are not at large.
    Consequently, courts have a much greater scope and discretion on appeal. The
    appellate review should be based upon the court's estimation as to whether the
    punitive damages serve a rational purpose. In other words, was the misconduct
    of the defendant so outrageous that punitive damages were rationally required
    to act as deterrence?

[57]

Punitive
    damages are only to be awarded where compensatory damages are inadequate to
    accomplish the objectives of retribution, deterrence, and condemnation:
Pate
    Estate v. Galway-Cavendish (Township)
,
2013 ONCA 669, 117 O.R. (3d)
    481, at para. 211; and
Rutman v. Rabinowitz
, 2018 ONCA 80, at paras.
    94-97
per curiam
.  Further, an award of punitive damages is
    exceptional.  As Binnie J. said in
Whiten v. Pilot Insurance Co
., 2002
    SCC 18, [2002] 1 S.C.R. 595, at para. 36:

Punitive damages are awarded against a defendant in exceptional
    cases for malicious, oppressive and high-handed misconduct that offends the
    court's sense of decency.

[Citation omitted.]

[58]

In
    this case, the trial judge simply stated (at para. 276):

In my opinion, the compensatory award in addition to any costs
    award does not rationally meet the objectives of retribution, deterrence and
    denunciation.

[59]

The
    trial judge did not engage in any analysis of why the compensatory award that
    he decided on was inadequate to achieve those objectives.  In failing to do so,
    he committed an error in principle. The fact remains that, insofar as the
    appellant was not justified in suspending the respondent without pay, it will
    pay for that error through the award of compensatory damages.  On this point,
    it must not be forgotten that compensatory damages have a punitive element to
    them.  As Binnie J. also said in
Whiten
, at para. 123:

Compensatory damages also punish. In many cases they will be
    all the punishment required. To the extent a defendant has suffered other
    retribution, denunciation or deterrence, either civil or criminal, for the
    misconduct in question, the need for
additional
punishment in the case
    before the court is lessened and may be eliminated.

[Original emphasis.].

[60]

This
    same point was made in
Pate Estate

where Cronk J.A. said, at
    para. 214:

It is therefore incumbent on trial judges, when considering
    whether to award punitive damages and quantifying those damages where such an
    award is justified, to have regard to the punitive components of the
    compensation otherwise awarded to the plaintiff and the penalties otherwise
    imposed on the defendant. This did not occur in this case.

[61]

On
    that basis alone, the award of punitive damages must be set aside.  Given that
    conclusion, it is unnecessary for me to address the other errors that the
    appellant submits the trial judge made in his punitive damages assessment.  In
    not addressing those points, however, I should not be taken as otherwise
    agreeing with the trial judges reasons for his award of punitive damages.

Conclusion

[62]

I
    would allow the appeal and set aside the trial judgment, including the damages
    awards.  In its place, I would grant judgment to the respondent solely for
    compensatory damages for seven months lost wages.  I assume that the parties
    will be able to agree on the amount.

[63]

While
    the appellant enjoyed a measure of success on this appeal, it was not entirely
    successful.  Consequently, I would fix the costs of the appeal at $10,000,
    payable by the respondent to the appellant.

[64]

If
    the parties cannot agree on the issue of the costs of the trial, they may make written
    submissions.  The appellant shall have 15 days from the date of these reasons
    to file its written submissions and the respondent shall have 10 days thereafter
    to respond. No reply submissions are to be filed. The submissions are not to
    exceed five pages.

Released: JS July 10, 2018

I.V.B. Nordheimer J.A.

I agree. Janet Simmons J.A.

I agree. L.B. Roberts J.A.





[1]

Filice v Complex Services
, 2012
    ONSC 6058


