Global Award vs. Aggravated Punitive Damage

In Café La Foret Ltd. v. Cho, 2023 BCCA 354, the British Columbia Court of Appeal addresses whether a global award may be made for aggravated and punitive damages. The Court of Appeal found that aggravated and punitive damages should not be presented as global awards, but instead separated into distinct categories of analysis that serve the specific purposes of each head of damage.

Background

SC worked at Café La Foret as head baker from December 1, 2017, to November 30, 2018 and again from April 1, 2019 to November 9, 2020. He was 60 years old when he was dismissed. NL worked alongside SC at Café La Foret as an assistant baker from April 1, 2019, until November 9, 2020. NL was about 30 years old at the time and reported directly to him.  

On November 9, 2020, SC and NL were assigned to work together from 12:00pm until 6:00pm. Based on CCTV footage of the kitchen, the trial judge found that SC had touched NL on two occasions without her consent. Firstly, a brief light tap on her shoulder, followed by a brief open hand pat to her upper back. This was in the context of SC telling NL about a massage he had received the day before. The second incident occurred when SC lightly tapped NL in the buttock area while discussing his lower back pain.

NL reported the incidents to a fellow employee who in turn informed the general manager, Dong-Hyuk Kwak. Mr. Kwak met with both parties to determine what had happened.

On November 13, after an investigation, Mr. Kwak contacted the corporate secretary for Café La Foret, a former lawyer, who prepared an apology letter in the form of an affidavit based on information provided to him by Mr. Kwak. Mr. Kawk sent the affidavit to SC on November 15, asking for his signature or face termination. SC did not sign the affidavit. Café La Foret subsequently terminated SC’s employment. 

The Trial Decision

At trial, Café La Foret advanced three grounds to justify SC’s termination. First, his sexual harassment of NL. Second, his supposed dishonesty during the investigation of the harassment allegations by refusing to sign the affidavit. Finally, his unwillingness to apologize and show contrition or remorse.

The trial judge found that only the first ground was made out. By briefly touching NL on the shoulder, upper back and buttocks, SC had committed sexual harassment.   

The trial judge then turned to the question of whether the sexual harassment was sufficient to justify dismissal. Despite the proven misconduct, SC’s actions were not sufficient to justify termination; specifically, the trial judge found that this was not a situation where the misconduct was irreconcilable with sustaining the employment relationship. The decision not to terminate SC following the completion of its investigation of NL’s allegations reflected the employer’s view that the employment relationship had not irretrievably broken down. By maintaining that SC could keep his job if he provided the affidavit admitting his guilt, the employer did not consider his misconduct against NL to be sufficiently serious to justify termination. 

The trial judge then turned to the affidavit. It was found that it was reasonable in the circumstances that SC did not sign the affidavit. The wording of the affidavit made SC out as a sexual offender and it was designed to be used for legal purposes rather than to repair the relationship between SC and NL, or SC and the employer. Significantly, NL expressed that she intended to go to the police and the affidavit was intended to elicit a confession of misconduct for the purposes of criminal prosecution. The trial judge found that the employer effectively forced SC to choose between incriminating himself and facing possible criminal charges as a result, or keeping his job.

Having found that SC was wrongfully dismissed, the judge awarded him damages in lieu of notice in the amount of $15,600, representing an award of $26,000 for five months’ notice reduced by two months’ notice to account for SC’s failure to mitigate.

The trial judge also awarded SC $25,000 in aggravated and punitive damages for the manner of the termination:

[175]   The circumstances of this case support an award for aggravated and punitive damages. For example:

  1. The Employer refused to issue a ROE to SC until he had signed a self-incriminating affidavit.
  2. The Employer knew the Affidavit would place SC in legal jeopardy but tried to exert pressure on him to sign it to SC’s detriment.
  3. The Employer’s offer for SC to retain his employment if he signed the Affidavit was disingenuous, and the Employer knew it would be impossible for SC to do his job with the restrictions placed on him.

[176]   SC testified that the Affidavit that the Employer required him to sign made him out to be a sexual offender. He testified that this destroyed his self respect, made him feel betrayed, and caused him depression and insomnia. I agree that the language used in the Affidavit, as well as the requirement that he not have any contact with former, current, or prospective female staff, made it appear as if he was a dangerous sexual offender from whom all female staff must be protected. There was no factual or legal basis for the Employer to impose such a requirement on SC.

Court of Appeal

Café La Foret appealed the decision of the trial judge on four grounds:

  1. Finding that SC was not dishonest;
  2. Failing to cumulatively consider SC’s misconduct in assessing whether there was cause for dismissal;
  3. Considering irrelevant factors in assessing the nature and extent of the sexual harassment; and 
  4. Making a global award for $25,000 for aggravated and punitive damages.

The Court of Appeal rejected the first three grounds of appeal but varied the trial judge’s order to read “aggravated damages in the amount of $25,000”.

Take Away: Aggravated v. Punitive Damages

On appeal, Café La Foret argued that it was an error for the judge to make a global award rather than discrete awards for each of the aggravated and punitive heads of damages. The Court of Appeal agreed, stating that aggravated and punitive damages are distinct remedies that have different objects and require different analyses. 

A judge must first determine compensatory damages, including aggravated damages, and then turn to the question of whether punitive damages are necessary because the total of the compensatory awards is not yet sufficient to achieve the goals of denunciation, deterrence and retribution. It is also essential to make discrete awards because these damages are subject to a differing standard of review. Aggravated damages are subject to a reasonableness standard of review, while punitive damages are reviewed on a rationality standard, which is far less deferential.

The key takeaway for counsel from this case is that aggravated and punitive damages should not be presented as global awards, but instead separated into distinct categories of analysis that serve the specific purposes of each head of damage.

This article was originally published in Law 360 Canada on December 8, 2023.

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