A former vice-president at a defence and security contractor has been awarded nearly $400,000, including $75,000 in punitive damages, after he was fired while battling colon cancer.
The Ontario Superior Court of Justice was also critical of the company’s “scorched earth” defence strategy, which included accusing him of financial irregularities and launching a counterclaim for breach of contract, fraud and defamation.
Background
RS was employed as the vice-president and general manager of Valley Associates and subsequently Valley Associates Global Security for more than 12 years.
Originally, it was pursuant to a written contract between Valley and RS’s personal services corporation. At the end of a two-year term, the contract continued as an indefinite term employment contract, the court said.
RS said Valley was frequently late in paying him, and at one point he was owed more than $225,000. In August 2018, he was diagnosed with colon cancer and had to undergo surgery and chemotherapy. He continued to “discharge his responsibilities to the extent he was able to do so,” the court said.
On Jan. 25, 2019, Valley terminated his employment without cause and without notice while he was between chemotherapy treatments.
The ‘scorched earth’ defence
The court took a dim view of Valley’s “scorched earth” strategy.
“It is apparent from the discoveries and from the subsequent conduct of the defendants in the litigation that there was never any substance to the counterclaim and no basis to any defence,” it said. “There are no documented performance issues, no warnings and no termination event.”
The court had “no difficulty” in concluding that, despite the use of a personal services corporation, the contract between the parties was “in pith and substance an employment contract.”
Further, once the initial two-year term of the written contract expired, it was clear the contract to provide services was a continuing contract of indeterminate duration. And it said there was no cause for dismissal.
Notice period
RS sought 20 months’ notice. He was 65 at the time of termination, was undergoing cancer treatment and — to the knowledge of Valley — in a difficult financial situation because it had been unable or unwilling to pay him accrued bonuses and commission. His prospects of finding similar or alternate employment were limited, and there was no evidence he was planning to imminently retire.
Valley compounded the harm by cutting off his benefits and accusing him of financial irregularities and fraud, the court said. It settled on 20 months’ notice as a reasonable figure.
Punitive damages
The court noted that punitive damages are an “extraordinary” remedy and are not routinely awarded.
“Punitive damages can be awarded when the behaviour of the defendant is such that it shocks the conscience of the court and the amounts already awarded for compensatory damages and costs will be insufficient to denounce that conduct,” it said.
It noted that it had already awarded reasonable notice at the high end of the scale, and costs on a substantial indemnity scale of $30,000. Nevertheless, it tacked on $75,000 noting “the behaviour of the defendants in this case is deserving” of condemndation.
Total damages
In summary, the court awarded:
- Damages for breach of contract in the amount of $290,932.40
- Prejudgment interest on the above amount fixed at $12,000.00
- Substantial indemnity costs fixed at $30,000.00 inclusive of HST and disbursements in the amount of $4,570.66.
- Punitive damages fixed at $75,000.00
- Post judgment interest on these amounts pursuant to s. 129 of the Courts of Justice Act.
Note: There are some aspects of this case related to bankruptcy and a stay of proceedings that are not covered in this article. For more information, see the original decision.
For more information, see Griffon Integrated Security Technologies et al. v. Valley Associates Inc. et al., 2023 ONSC 2200 (CanLII)
