Honda v Keays 2008

Facts

Keays had been employed with Honda for 14 years, most recently in a data entry position, when he was diagnosed with chronic fatigue syndrome in 1997. He received disability benefits until 1998 when the disability insurer denied further benefits. The employer had no role in this event. Keays unsuccessfully appealed the denial of disability entitlement.

Keays then returned to work. He was then placed into a disability program which, subject to physician’s confirmation that absences related to the disability, allowed medical leaves. Honda became curious as to the frequency of such leaves. Honda questioned the content of supporting medical notes and requested Keays to meet its occupational medical specialist, to determine in what manner Keays’ disability may be accommodated.

Keays sought legal counsel. Prior to the request for Keays to attend for the IME, Keays’ counsel had written to the company to seek resolution of his circumstance. On legal advice, Keays refused to attend this appointment without in advance receiving an explanation of the purpose, methodology and parameters of this review. Honda wrote advising that it supported the employees return to work but failing his attendance with the medical reviewer, he would be terminated. Keays persisted on his terms and he was terminated.

One would not expect these facts, which appear benign, would give rise to such a dramatic allegations of bad faith and unfair conduct on the part of the employer. In fact, the claim for wrongful dismissal would appear to be a fragile one in this context.

Trial

At trial, Keays was successful in his wrongful dismissal claim. The trial judge set the notice period at 15 months. In accordance with the law in Wallace, he found unfair conduct at the time of termination and increased the award to 24 months. He also found the conduct of Honda sufficient to attract punitive damages, which he set at $500,000. Full costs were also allowed. A further tort claim for the intentional infliction of mental suffering failed as the trial judge viewed the incremental notice period as adequate compensation.

Keays had also alleged that there was a tort claim based on the theory that Honda had violated his rights under the Ontario Human Rights Code. The trial judge saw himself without the jurisdiction to do so, but did state that such a complaint could be an “independent actionable wrong” to give rise to a punitive damage claim.

Keays also sued for the loss of disability benefits allegedly caused by his termination. The trial judge determined that such relief required a plea of aggravated damages, which was not present. ¹

To support the award of punitive damages, McIsaac, J., the trial judge, noted he had:

 “no difficulty in finding that the plaintiff has proved that Honda committed a litany of acts of discrimination and harassment in relation to his attempts to resolve his accommodation difficulties” (para. 57).

And that there was a “conspiracy to insinuate Dr. Brennan into the plaintiff’s long‑established medical relationship with his own doctors and, hopefully, to exclude them from any participation in advocating for his patient’s rights” (para. 60).

The Court of Appeal

On appeal, the trial award of punitive damages was reduced to $100,000, albeit with one dissent. It also lowered the scale of costs. The finding of punitive damages, not the quantum, was however, unanimous. The majority found these facts supportive of the liability of Honda in punitive damages:

1. The appellant's intent to intimidate and eventually terminate the respondent was for the purpose of depriving him of the accommodation he had earned.
2. The appellant did not reveal the extremely damaging letter from Dr. Brennan until late in the trial.
3. The appellant was aware of its obligation to accommodate and must have known it was wrong to terminate the accommodation without just cause and terminate him as an act of retaliation.
4. The appellant knew that the respondent valued his employment and that he was dependent upon it for disability benefits.
5. The appellant knew that the respondent was a victim of particular vulnerability because of his precarious medical condition.
6. Honda's refusal to deal with the respondent's counsel who made a reasonable request to discuss accommodation of the respondent's disability.

The Supreme Court

Trial Judge Findings of Fact Reversed

This Court found the trial judge had made fundamental errors of fact, an unusual conclusion for an appellate court in a trial decision review. These had been collectively used by the trial judge to support the finding a breach of the duty of fairness. Each was found to have been unsupported by the evidence:

The March 28 Letter Honda to Keays

The SCC found that this letter was prepared by Honda, based on expert advice and was but only providing this information to Keays. The letter contained these statements:

You were told that we have been reviewing your absenteeism as well as the doctor’s notes that you had been providing to cover those absences. We discussed your situation with Dr. Affoo who is familiar with your case. In addition, we had Dr. Brennan (a new physician) review your complete medical file. Both doctors advised us that they could find no diagnosis indicating that you are disabled from working.

When we met on March 21, 2000, we advised you that we would no longer accept that you have a disability requiring you to be absent. Dr. Brennan and Dr. Affoo both believe that you should be attending work on a regular basis. In order for Dr. Brennan to get to know you and understand completely your condition, we advised that we would arrange for Dr. Brennan to meet with you. The plan was that Dr. Brennan would then communicate directly with your doctor to effectively manage your condition. ²

The trial judge had accepted Keays’ submission that Honda deliberately misrepresented the positions of both physicians for the purpose of intimidation, excluding his own doctors, and forcing him to meet with Dr. Brennan. The Court found that the evidence was otherwise:

The March 28 letter simply conveyed to Keays that Honda wanted him to meet with Dr. Brennan because their experts had advised them that his condition did not preclude him from working. The whole context is one in which Honda recognizes that Keays has a disability and that it has to be dealt with; this is an important consideration in determining good faith on the part of Honda.

Hardball

The trial judge found that Keays was being “set up” for failure to attend the IME. The Supreme Court again disagreed.

 Reprisal

The trial court found that the decision to refuse Keays’ medical notes was an act of reprisal due to Keays decision to retain legal counsel. Again, the Supreme Court disagreed.

 Worsening Medical Condition

The Supreme Court again disagreed with the conclusion that Keays’ medical condition deteriorated due to the manner of termination. This was found so be the trial judge to allow for the Wallace extension.

Aggravated Damages

The majority decision referenced its earlier reasons in Fidler and determined again that an independent actionable wrong was no longer required. If it is reasonable to see that the parties have contemplated when the contract was formed, that a breach in “certain circumstances” would give rise to mental distress, such should be compensable. Such a context would be that referenced in Wallace, namely, conduct which is “unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive” (para. 98). This is reviewed above.

The Court then discarded the notion of extending the notice period as the means of compensation, determining that the assessment of aggravated damages will follow in the normal course based on the evidence before the trial judge.

As to the impact of these words on the immediate case, the Court found no conduct of bad faith and hence no award of damages was allowed.

Punitive Damages

The Supreme court did reference its prior decision in Whiten, noting that a breach of the duty of good faith may qualify as the independent wrongdoing to support a punitive damage award. It did add that aggravated damages are compensatory whereas punitive damages are not:

punitive damages are restricted to advertent wrongful acts that are so malicious and outrageous that they are deserving of punishment on their own. This distinction must guide judges in their analysis.

In the case before it, the Court found no factual basis for such an award. It also determined that it was improper to allege a human rights violation as the basis for such a claim, as had been done, as the correct remedy was to pursue a human rights complaint under the Human Rights Code. This statute had been amended prior to this decision to allow for such civil proceedings and hence, at least for Ontario residents, this aspect was academic.

The end result was that the incremental damages for wrongful dismissal and punitive damages were set aside.

The decision did set new law but for the plaintiff, it ironically did very little. He did not sue his disability insurer and his claim in the proceeding for disability benefits failed.