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

Ontario Court of Appeal provides an important lesson that overly aggressive tactics can cross the line to bad faith, and result in significant penalty.

Mr. Ruston was terminated from his employment with Keddco MFG (2011) in June 2015. Mr. Ruston was told that he was being terminated for cause and when he indicated that he would be hiring a lawyer, Keddco advised him that if he did so, they would bring a very expensive counter-claim against him. In response to Mr. Ruston's statement of claim seeking damages for wrongful dismissal, Keddco filed a statement of defense and counter-claim alleging cause and claiming damages of $1.7 million for unjust enrichment, breach of fiduciary duty and fraud, as well as $50,000 in punitive damages.

The trial judge found that Keddco had failed to prove any of their allegations and determined that Keddco's counter-claim had been a tactic to intimidate Mr. Ruston. Moreover, the trial judge concluded that Keddco had breached its obligation of good faith and fair dealing and awarded Mr. Ruston damages in lieu of reasonable notice based on a 19 month notice period, a bonus and benefits, punitive damages in the amount of $100,000, moral damages in the amount of $25,000, as well as costs in the amount of$546,684.73. Keddco appealed the decision arguing that the trial judge awarded excessive damages to Mr. Ruston.

The Ontario Court of Appeal reiterated that employers have an obligation of good faith and fair dealing in the manner of dismissal and that an employers' conduct both before and after termination may be relevant to the moral damage analysis if such conduct is a component of the manner of dismissal. The Court of Appeal held that not only was the manner of dismissal devastating, Keddco's conduct in threatening Mr. Ruston not to make a claim caused Mr. Ruston considerable stress.

The Court of Appeal discussed the importance of considering the overall damages award when selecting an appropriate quantum and stated that courts must be careful to avoid double compensation or double punishment. In this instance, however, the Court of Appeal did not agree that awarding both aggravated damages and punitive damages amounted to double recovery. The Court of Appeal stated that aggravated damages aim to compensate a plaintiff for heightened damages caused by the breach of the employer's duty of good faith and fair dealing in the manner of dismissal, while punitive damages seek to punish and denunciate inappropriate or unfair conduct.

Ultimately, the Court of Appeal held that Keddco's conduct rose to a level deserving of denunciation for all the reasons cited by the trial judge. The Court of Appeal upheld the award and dismissed the appeal awarding costs of $35,000 to Mr. Ruston, bringing the costs award against Keddco to almost $600,000.

Personally, I think the law is very effective, since this case favored the employee, it serve its rights and purpose. which is very helpful, this is an example of a good law, protecting employees from improper dismissal from their employer as well as giving just damages for the employees suffering.