Aggravated or moral damages in wrongful dismissal

Capital Pontiac Buick Cadillac GMC Ltd v Coppola, 2013 SKCA 80 deals with the difficult question of Keays damages in wrongful dismissal. The decision is very helpful and worth reading in full:

(b)   Did the trial judge err in awarding $20,000 in aggravated damages?

[25]   I start by settling on a label for these types of damages. The appropriate label is "moral damages" as this is the label implicitly adopted by the Supreme Court of Canada in Keays (at para. 59): [3]

… [T]here is no reason to retain the distinction between "true aggravated damages" resulting from a separate cause of action and moral damages resulting from conduct in the manner of termination. Damages attributable to conduct in the manner of dismissal are always to be awarded under the Hadley principle. Moreover, in cases where damages are awarded, no extension of the notice period is to be used to determine the proper amount to be paid.  The amount is to be fixed according to the same principles and in the same way as in all other cases dealing with moral damages.

[26]   Moral damages are generally aggravating in nature and, therefore, appear to take the place of or, more properly, are the same as aggravated damages in the context of wrongful dismissal cases. In Keays, Bastarache J. noted (at paras. 54-60) that what constitutes moral damages is informed by the Supreme Court of Canada's previous decision in Wallace [Wallace v. United Grain Growers Ltd., 1997 CanLII 332 (SCC), [1997] 3 S.C.R. 701] and that moral damages flow from the principle first articulated in Hadley v. Baxendale(1854), 156 E.R. 145, 9 Ex. 341 (being that damages for breach of contract are compensable when such damages are in the reasonable contemplation of the parties at the time the contract was entered into, thus making them reasonably foreseeable in the event of a breach). Damages for hurt feelings or for the normal feelings that accompany a dismissal are not compensable (Keays at para. 59).

[27]   In the employment context then, moral damages are available whenever the employer breaches the duty of good faith and fair dealing it owes to its employee in the dismissal of its employee (see Wallace, at para. 95).[4] The duty requires employers to be "[c]andid, reasonable, honest, and forthright…" and further requires employers to "[r]efrain from engaging in conduct that is unfair or is in bad faith by being, for example, untruthful, misleading, or unduly insensitive" when dismissing an employee (Wallace, at para. 98). If an employer should run afoul of these requirements, moral damages will likely follow.

[28]   Here, there can be little dispute that the appellant breached its Wallaceduty to the respondent through its actions in the manner of his dismissal. The appellant's reasons for dismissing the respondent were not truthful and were followed by the very serious allegation that the respondent had been dismissed for fraud, which allegation was not supported by the evidence. The appellant maintained that serious allegation until examinations for discovery had taken place following which it dropped the fraud allegation but maintained the allegation of just cause for the respondent's dismissal. In addition, although the appellant says knowledge of the allegation was restricted to senior management, a low-level employee of the appellant had been made aware of it and had perpetuated the unfounded allegation to a potential business partner of the respondent. Allegations and actions similar to these have attracted Wallacedamages in prior cases (see: Wallace, at para. 99, citing Trask v. Terra Nova Motors Ltd. 1995 CanLII 9836 (NL CA), (1995), 127 Nfld. & P.E.I.R. 310 (Nfld. C.A.), and Jivrag v. City of Calgary 1986 CanLII 1701 (AB QB), (1986), 45 Alta. L.R. (2d) 343 (Q.B.)).

[29]   I would, however, pause here to address an evidentiary issue arising in this case, that being whether a plaintiff must adduce medical evidence to prove mental distress. There is conflicting authority on this point. On one hand, some courts have refused to award moral damages in the absence of medical evidence.[5] On the other hand, some courts have awarded damages notwithstanding the absence of formal medical evidence.[6] Regardless, while evidence such as expert medical reports and itemized expense receipts would be of considerable assistance to a court in determining the quantum of moral damages, it is sensible to hold that medical evidence is not strictly necessary to prove the existence of mental distress provided there is an adequate factual basis to support an award of moral damages based on the employer's conduct (see: Keays, at para. 90, per LeBel J. (Fish J. concurring)). Therefore, even though the respondent failed to adduce any specific medical reports or the like with respect to the mental distress that he says he has suffered due to the manner of his dismissal, this does not mean the trial judge was incorrect or erred in concluding that such damages had been established based on other evidence which led to findings of fact which were sufficient to underpin his claim to moral damages. Moreover, the respondent and the respondent's wife, who is a psychiatric nurse, did testify to the existence of some mental distress.