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When are Punitive Damages Appropriate?

We have all heard wild stories of employers threatening to export a worker if “they don’t behave” or laying criminal charges in an effort to avoid a claim for wrongful dismissal or other damages.  These are urban legions;  certainly in this day and age employees have more protection?  I can only imagine that no one was more surprised then John Gordon Pate to find out his employer of almost ten years was Lucifer rather then the Township of Galway-Cavendish and Harvey. 

Never has a court been more correct in punishing an employers’ conduct then when awarding Mr. Pate $450,000.00 in punitive damages against the Township. 

John Pate worked as a Chief Building Official for theTownship of Galway-Cavendish and Harvey.  After almost ten years of employment he was summarily dismissed after being accused of theft.  The Township alleged there were discrepancies with building permit fees;  the implication was Mr. Pate stole the monies.  When Mr. Pate refused to resign from his employment the Township called the police and pressed them to prosecute Mr. Pate. 

During the investigation the employer withheld information in order to ensure charges would be brought against Mr. Pate.  The Township exerted pressure on those higher in command at the Ontario Provincial Police to press charges when the investigating officers were reluctant to move forward. Charges were laid and after a four day criminal trial Mr. Pate was acquitted. 

Largely because of the extensive media attention his case received, Mr. Pate never worked in the municipal field again.  The Township’s conduct had a devastating and permanent effect on his life.  His reputation was damaged; Mr. Pate’s marriage did not make it and the restaurant he owned suffered reduced patronage. Mr. Pate passed away in January 2011. 

Mr. Pate was awarded twelve months’ wages, four additional months’ wages ($23,413.00) for bad faith, and $450,000.00 punitive damages.  In determining damages the Townships’ conduct was found to be malicious and outrageous.  Punitive damages are imposed only if there is highhanded, arbitrary or highly reprehensible conduct that departs to a marked degree from the ordinary standards of decent behaviour. 

The Township’s conduct both during termination of Mr. Pate’s employment and after his acquittal from the criminal charges was particularly disturbing.  The Employer never apologized or accepted any responsibility for its conduct; nor did it accept responsibility for the impact its conduct had on Mr. Pate’s life.  The Trial Judge observed, “Indeed, viewed through the eyes of the average citizen, no doubt they would view the conduct of the municipality as offensive and morally repugnant”. 

Employers have an obligation to treat their workers with good faith and fair dealing.  Pate Estate v. Galway-Cavendish and Harvey Township is an unusual case.  The vast majority of organizations, when terminating an employees' employment, are focused on moving forward rather then retribution.  The Ontario Court of Appeal decision and damage award is a caution to those organizations who have no regard for the workers they employ.