Kevin Keays was employed with Honda Canada Inc. (“Honda”) for 14 years. Mr. Keays developed Chronic Fatigue Syndrome (“CFS”) and initially took a disability leave in October 1996, returning in December 1998. After the long-term disability insurer denied further compensation, Mr. Keays returned to work notwithstanding his protests and that of his doctors that he remained disabled. After his return, and as a result of the CFS, Mr. Keays had to take a number of days off work, which became a contentious issue between Honda and Mr. Keays.

Although there is no dispute that Honda initially accommodated Mr. Keays’ absences, Honda later asked Mr. Keays to provide a medical note for each absence. This caused friction between the parties. In March 2000, Honda also “coached” Mr. Keays, a form of discipline which Mr. Keays disagreed with. In early 2000, Mr. Keays asked Honda to remove the “coaching” from his record and to remove the requirement that he provide a medical note for each absence. Honda denied this request. Mr. Keays then hired a lawyer to deal with the issue. In response, Honda asked Mr. Keays to meet with an occupational medicine specialist. The pretext for this meeting was based on Honda’s position that “we no longer accept that you have a disability requiring you to be absent… In order for Dr. Brennen to get to know you and understand completely your condition, we advised that we would arrange for Dr. Brennen to meet with you”.

Mr. Keays advised, through his lawyer, that he would not meet with Dr. Brennen unless the purpose and parameters of the assessment were clarified. Honda responded by terminating Mr. Keays for insubordination.

The trial Court held that the termination was without cause and awarded:
(i) Notice of 15 months;
(ii) Bad faith damages of 9 months; and
(iii) Punitive damages of $500,000.00.

Just Cause
The Court of Appeal confirmed that cause can be based on “disobedience”. However, as a condition of proving this defence, the Employer must show that the request which was the subject of the disobedient conduct was reasonable. The Court found that the request that Mr. Keays meet with Dr. Brennen without it first clarifying the purpose of the meeting was unreasonable. Therefore, no cause was substantiated. The Court went on to say that even if the order was reasonable, that the penalty had to be proportionate to the misconduct and termination would not have been warranted in any event. The Court stated:

An Employer’s response to employee’s misconduct must reflect the principle of proportionality …. In a broad sense, the question is whether the employee’s misconduct is irreconcilable with continued employment.

Notice/Bad Faith
The Court of Appeal upheld the award of 15 months notice and 9 months for bad faith. The Court specifically referred to the following conduct in respect of the award of bad faith:
(i) Honda’s position that Mr. Keays was not suffering from a disability;
(ii) Honda playing hardball with respect to workplace absences;
(iii) Honda’s failure to accommodate Mr. Keays’ disability.

Punitive Damages
All three members of the Court of Appeal agreed that punitive charges were warranted. However, only one Judge agreed that the trial Judge’s award of $500,000.00 was appropriate. The majority awarded $100,000.00 for punitive damages. The basis of the award was Honda’s failure to accommodate Mr. Keays’ disability, which is a breach of the Ontario Human Rights Code, and therefore an “independent actionable wrong”. The Court stated that in order for punitive damages to be awarded in a wrongful dismissal matter, the conduct must be harsh, malicious and vindictive, and constitute an independent actionable wrong. In this case, a violation of the Human Rights Code was found to be ‘an independent actionable wrong”.

From a legal perspective, this decision is important for two reasons:

(i) It has set a ceiling of $100,000.00 for punitive damages, except perhaps in the most egregious of cases;
(ii) That punitive damages can be awarded in wrongful dismissal cases where there is egregious conduct and where there is an “independent actionable wrong”.

As always, if you have any issues relating to employment law, please seek the advice of a lawyer.