



COURT OF APPEAL FOR ONTARIO

CITATION: Ruston v. Keddco MFG. (2011) Ltd., 2019 ONCA 125

DATE: 20190219

DOCKET: C65505 (M49619)

Pepall, Trotter and Harvison Young JJ.A.

BETWEEN

J.P. Ruston

Plaintiff (Respondent)

and

Keddco MFG. (2011) Ltd.

Defendant (Appellant)

Gerald Griffiths and Adam James, for the appellant

Andrew Monkhouse and Samantha Lucifora, for the
    respondent

Heard and released orally: February 7, 2019

On appeal from the judgment
    of Justice Victoria R. Chiappetta of the Superior Court of Justice, dated May
    16, 2018, with reasons reported at 2018 ONSC 2919.

REASONS FOR DECISION

Introduction

[1]

The respondent Scott Ruston was terminated from
    his employment with the appellant Keddco MFG in June 2015. At the time of his
    termination, he was told that he was being terminated for cause and that he had
    committed fraud. No specifics were given. When he indicated that he would be
    hiring a lawyer, the appellant advised him that if he did, it would
    counter-claim and that it would be very expensive. Roughly one month later, he
    filed a statement of claim seeking damages for wrongful dismissal. The
    defendant responded with a statement of defence and counter-claim in which it
    alleged cause and claimed damages of $1,700,000 million for unjust enrichment,
    breach of fiduciary duty and fraud, as well as $50,000 in punitive damages.

[2]

Mr. Ruston was 54 at the time of his termination. He had been hired as a
    sales representative in 2004 and had quickly moved up through the ranks. In
    2011, Keddco was acquired by Canerector Inc., a private company that buys and
    holds business interests focused in metal fabrication and industrial
    manufacturing. At that time, Mr. Ruston was promoted to president of Keddco and
    referred to as the division manager of Canerector. Apart from one brief period
    of employment, Mr. Ruston, who has a grade 12 education, has been unable to
    find re-employment.

The Trial Judges Decision

[3]

The trial judge presided over an 11 day trial. She found that the
    appellant had failed to prove cause against Mr. Ruston and found that the
    appellant had failed to prove any of its allegations against him. She also
    found that its counter-claim for damages in the amount of $1,700,000 had been a
    tactic to intimidate Mr. Ruston and that it had breached its obligation of good
    faith and fair dealing in the manner of Mr. Rustons dismissal. She dismissed
    the appellants counterclaim in its entirety and awarded Mr. Ruston significant
    damages, including: damages in lieu of reasonable notice based on a 19 month
    notice period, including bonus and benefits; punitive damages in the amount of
    $100,000; and moral damages in the amount of $25,000.

[4]

The appellant submits that the trial judge made reversible errors of law
    in awarding:

1.

Damages representing a 19 month notice period, which it asserts exceeds
    the applicable range;

2.

A bonus for the 2015 year;

3.

Aggravated/moral damages; and

4.

Punitive damages.

[5]

We do not find any merit to any of the appellants grounds of appeal.
    For the reasons that follow, we dismiss the appeal.

Analysis

[6]

As a general observation, we note that although the appellant states
    that it is not appealing any findings of fact or appealing the finding that
    there was no cause, it repeatedly relies on assertions of fact that are
    contrary to those found by the trial judge. For example, in arguing that the
    trial judge erred in awarding a bonus for the 2015 year, the appellant submits
    that Mr. Ruston would not have received a bonus had he stayed because no one
    did. However, for compelling reasons, the trial judge specifically rejected
    that evidence: see Reasons for Judgment, at paras. 125-126.

The 19 Month Notice Period

[7]

First, the appellant argues that the trial judge
    erred in principle by taking inappropriate factors into account and by awarding
    a notice period beyond the 15 to 17 month range.

[8]

We disagree. The trial judge gave careful and
    cogent reasons for her decision that a 19 month period was appropriate. While
    she found that the facts were similar to those in
Singer v.
    Nordstrong Equipment Limited
, 2018 ONCA 364, 47 C.C.E.L.
    (4th) 218 (in which the defendant employer was also owned by Canerector), she
    found that there were a few distinguishing factors that justified a notice
    period of 19 months rather than 17 months. These included the fact that the
    appellant here was 54 rather than 51 (as was Mr. Singer), her finding that he
    had family ties to a smaller area for the purposes of finding similar
    employment, that he was terminated for serious allegations of cause and that he
    was not provided with a letter of reference: Reasons for Judgment, at paras.
    104-105.

[9]

All of these factors affected the notice period
    because they made it less likely that Mr. Ruston would find employment which
    (with the exception of one short period) he has been unable to do. The trial judge
    applied the well-known considerations from
Bardal v. Globe &
    Mail
(1960), 24 D.L.R. (2d) 140 (Ont. H.C.J.), at p. 145
    to the facts of this case. The conclusion that the appropriate period in this
    case should be 19 months was open to her in the circumstances of this case as
    she found them. Moreover, there is nothing in
Singer
that supports the appellants submission that a 17 month notice
    period is an upper limit. We disagree with the appellants submission that the
    trial judges reasons for concluding that a 19 month notice period was
    appropriate were not supported by the evidence. Rather, the trial judges
    thorough reasons were well grounded in the evidence before her.

The 2015 Bonus

[10]

Second, the appellant argues that the trial
    judge erred in awarding a bonus for the 2015 year because the only evidence
    was that Mr. Ruston would not have been awarded a bonus [had he remained in the
    employ of the defendant] because there was no profit.

[11]

We disagree. The trial judge specifically found
    that she was left without any credible evidence on the treatment of Keddcos
    bonuses post termination: Reasons for Judgment, at para. 126. She also found
    that Mr. Ruston had received a bonus in every year of his employment that
    constituted a significant amount of his overall compensation: Reasons for Judgment,
    at para. 123. The trial judge gave detailed reasons for her conclusion on this
    basis, which was amply grounded in the record before her.

Aggravated/Moral Damages

[12]

Third, the appellant submits that the trial
    judge erred in awarding aggravated or moral damages as the evidence did not
    support that Mr. Ruston suffered a loss other than is to be expected in the
    case of a termination. We find no merit in this submission.

[13]

The trial judge reviewed the applicable case law:
    see Reasons for Judgment, at paras. 143-147, citing
Wallace v.
    United Corn Growers Ltd
., [1997] 3 S.C.R. 701, at para.
    95;
Honda v Keays
, 2008 SCC 39, 2 S.C.R. 39,
    at para. 60;
Doyle v Zochem
, 2017 ONCA 130, at
    para. 13. She noted correctly that employers have an obligation of good faith
    and fair dealing in the manner of dismissal and also that an employers pre and
    post termination conduct may be relevant to the moral damage analysis if such conduct
    is a component of the manner of dismissal: see Reasons for Judgment at para.
    145. She was alive to the essentially compensatory nature of aggravated
    damages. She itemized in detail the conduct that she found to warrant the award.

[14]

The evidentiary record provides ample support
    for the trial judges finding that the manner of dismissal warranted an award
    of aggravated damages. She found that the appellants conduct in threatening Mr.
    Ruston not to make a claim and in instituting the counter-claim was calculated
    to, and did, cause Mr. Ruston stress. She accepted Mr. Rustons evidence that
    the manner of dismissal was devastating and had caused him stress. In short, we
    see no error of law or principle, or palpable or overriding error of fact that would
    justify interfering with the trial judges award of $25,000 for aggravated
    damages.

Punitive Damages

[15]

Finally, the appellant submits that the trial
    judge erred in making a punitive damages award against it in the amount of
    $100,000. Relying on

Pate Estate v
    Galway-Cavendish and Harvey (Township)
, 2013 ONCA 669,
    368 D.L.R. (4th) 193, the appellant argues that the trial judge erred in
    failing to consider the punitive aspects of a substantial costs award and
    compensatory damages, and by awarding an amount that exceeds what is rationally
    required to punish the misconduct and achieve the accepted purposes of a
    punitive damages award.

[16]

We do not agree. The trial judge carefully
    reviewed all of the appropriate factors. She specifically referred to the
    emphasis in
Pate
, at para.
    228,
that the court must consider the overall
    damages award when selecting an appropriate punitive quantum and that it must
    be careful to avoid double compensation or double punishment: Reasons for
    Judgment, at para. 139.

[17]

In reaching her conclusion, the trial judge
    referred to the threat by the appellant during the termination meeting that if Mr.
    Ruston sued, the appellant would counter-claim  a threat which it carried out
    with its counter-claim alleging fraud. The trial judge also referred to the
    fact that the appellant had, on the seventh day of trial, reduced its damages
    claim from $1,700,000 to $1. The trial judge concluded that it did not appear
    as though the [appellant] had any intention of proving damages but rather was
    using the claim of $1,700,000 strategically to intimidate [Mr. Ruston]:
    Reasons for Judgment, at para. 142. These facts supported her finding of misconduct
    justifying a punitive damages award.

[18]

It does not follow from the fact that this is
    the same conduct which the trial judge referred to in making the aggravated
    damages award that an award of punitive damages amounted to either double
    recovery or double punishment. That is because aggravated damages aim to
    compensate a plaintiff for heightened damages caused by the breach of the
    employers duty of good faith and fair dealing in the manner of dismissal,
    while punitive damages seek to punish and denunciate inappropriate or unfair
    conduct. There can be no question that the appellants conduct, and
    particularly that of Ms. Hawkins, rose to the level of conduct deserving of
    denunciation for all the reasons cited by the trial judge. The trial judge was
    alive to the concerns about double compensation, and to the need to consider
    the entire compensatory package as a whole.

[19]

In short, the appellant has not shown any basis
    for this court to interfere with the punitive damages award. The trial judge
    applied the correct legal considerations to the evidence as she found it. She
    thoroughly reviewed and considered the evidence, and the record before her
    amply supports her conclusions.

Appeal from the Cost Award at Trial

[20]

The appellant seeks leave to appeal the costs award
    at trial, and submits that the award of $546,684.73 was unfair and
    unreasonable. It takes no issue with the fact that costs were awarded on a
    substantial indemnity basis given Mr. Rustons Rule 49 offer, but argue that a
    fair and reasonable award would not have exceeded the $200,000 to $230,000
    range. While we recognize that this costs award was unusually high, the
    appellant has not satisfied us that the costs award was not fair and reasonable
    in the circumstances of this case.

Disposition

[21]

For the foregoing reasons the appeal is
    dismissed. The motion for leave to appeal from the costs award is dismissed. Costs
    of the appeal in the amount of $35,000, inclusive of HST and disbursements, are
    awarded to Mr. Ruston.

S.E. Pepall J.A.
G.T. Trotter J.A.
A.
Harvison Young J.A.


