Honda v. Keays (2008)

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This case involved a claim by a disabled employee that he was wrongfully dismissed from his employment by Honda Canada. LEAF intervened in the case to address the issue of discrimination and harassment in the workplace. In particular, LEAF argued that the Supreme Court should recognize an implied obligation of employers in all employment contracts not to discriminate.

The trial court in Honda v. Keays held that Keays had been wrongfully terminated from his employment and awarded 15 months’ pay in lieu of notice. In addition, the trial court extended the notice period to 24 months’ on the basis of “egregious bad faith displayed by Honda in the manner of this termination and the medical consequences flowing therefrom”. Perhaps most importantly, the trial court also awarded Keays punitive damages in the amount of $500,000 to punish Honda for the discrimination and harassment suffered by Keays. The trial judge held that although he had no jurisdiction to consider whether Keays has suffered a violation of his rights under the Ontario Human Rights Code, such complaints could constitute “independent actionable wrongs” to justify an award of punitive damages. The Ontario Court of Appeal upheld these awards, but reduced the punitive damages to $100,000.

On appeal to the Supreme Court of Canada, the extended notice period and punitive damages awards were overturned and the law with respect to damages for mental distress for the manner of dismissal (Wallace damages) was clarified. The Supreme Court of Canada did not recognize discrimination as an independent actionable wrong for which punitive damages are available at common law. In dissent, Justice LeBel noted that the Charter and human rights principles should inform this type of civil action and it is “not necessary for this Court to preclude all common law actions based on all forms of discriminatory conduct”. LEAF agrees with this statement.

The Supreme Court did affirm employers’ obligations to conduct dismissals in a manner characterized by good faith and fair dealing and employers’ liability for mental distress damages in cases where the termination is not conducted in this manner.

It is noted that in Ontario, effective June 30, 2008, s.46.1 of the Ontario Human Rights Code gives the courts in Ontario jurisdiction to award damages for discrimination in the context of a civil action such as for wrongful dismissal. Contravention of a statutory human right under the Code, however, is still not an independently actionable wrong.

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