Krmpotic v Thunder Bay Electronics Limited, 2024 ONCA 332, is a unanimous decision from the Ontario Court of Appeal affirming a lower court award for aggravated damages based on the Plaintiff’s reaction to the manner of dismissal when his employer terminated his employment. The Court of Appeal made that finding despite a lack of medical evidence, or expert evidence, to identify a diagnosable psychological injury.
Facts
The background to the claim as described in the Court of Appeal’s decision is as follows:
- Krmpotic was a 29-year employee who had worked as the Building Maintenance Supervisor of the Defendant for approximately 27 of those years.
- The Plaintiff’s employment was terminated hours after he returned from a medical leave to recover from back surgery. The surgery had been necessary because of workplace injuries Mr. Krmpotic had suffered over the course of his employment.
- At the termination meeting Mr. Krmpotic was offered a severance package of 16 months’ salary and asked to sign a Memorandum of Settlement and Release. Mr. Krmpotic refused and commenced an action for wrongful dismissal.
- After losing his employment, Mr. Krmpotic suffered back pain, knee pain, anxiety, distress, confused emotions, anger, disturbed sleep, worry, frustration, helplessness, and defeat. Mr. Krmpotic lost at least one job opportunity because he could not meet its physical demands.
- The evidence in support of Mr. Krmpotic’s claimed health issues came from him, his wife, and his son.
- At trial, the trial judge dismissed Mr. Krmpotic’s claim for mental distress damages because he had not provided medical or psychological evidence confirming that the manner in which his employment was terminated resulted in mental distress. The trial judge accepted evidence of the claimed mental health concerns, but said that without further and better evidence he was unable to conclude those symptoms were not the result of Mr. Krmpotic’s physical disabilities as opposed to the manner of dismissal.
- The trial judge did award Mr. Krmpotic $50,000 for aggravated/moral damages because he found that the Defendant had terminated Mr. Krmpotic’s employment in a manner that was “the antithesis of an employer’s duty” to be candid, reasonable, honest and forthright.
Analysis / Conclusion
The key findings of the Court of Appeal are at paragraphs 33-35 of the decision:
[33] While the normal distress and hurt feelings resulting from dismissal are not compensable, aggravated damages are available where the employer engages in conduct that is unfair or amounts to bad faith during the dismissal process by being untruthful, misleading, or unduly insensitive, and the employee suffers damages as a consequence. As the trial judge noted, in Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419, 120 O.R. (3d) 481, at para. 66, this court confirmed that aggravated damages compensate an employee for the additional harm suffered because of the employer’s conduct.
[34] Mental distress is a broad concept. It includes a diagnosable psychological condition arising from the manner of dismissal but is not limited to that. There is a spectrum along which a person can suffer mental distress as a result of the manner of dismissal. At one end is the person who suffers the normal distress and hurt feelings resulting from dismissal, which are not compensable in damages. At the other end of the spectrum is the person who suffers from a diagnosable psychological condition as a result of the manner of dismissal. In between those two end points, there is a spectrum along which the manner of dismissal has caused mental distress that does not reach the level of a diagnosable psychological injury.
[35] In my view, on a full reading of his reasons, the trial judge approached the issue of mental distress in that fashion. The fact that Mr. Krmpotic had not established, through medical evidence, that he had suffered a diagnosable psychological injury, was not the end of a consideration of the issue of mental distress damages. As the trial judge correctly understood, he had to go further and determine whether (1) the appellants’ conduct, during the course of termination amounted to a breach of their duty of honest performance; and (2), if so, whether Mr. Krmpotic suffered harm – beyond the normal distress and hurt feelings arising from dismissal – as a result of that breach. The trial judge found in Mr. Krmpotic’s favour on both matters: the appellants had engaged in conduct that amounted to bad faith during the dismissal process; and Mr. Krmpotic suffered harm beyond the normal distress and hurt feelings that result from dismissal. These findings were fully open to the trial judge.
[emphasis added]
The Court of Appeal interpreted the trial judge’s reasons as clearly demonstrating that he had accepted that as a result of the manner of dismissal Mr. Krmpotic was plagued by anxiety, depression, fear, poor sleep, frustration, and feelings of helplessness – all of which were harm going beyond the normal distress and hurt feelings resulting from the dismissal itself. Those harms supported the trial judge’s award of $50,000 for aggravated/moral damages.
My Take
While the Ontario Court of Appeal allowed an award for enhanced damages in the absence of a diagnosable mental injury in this case, that has not been the approach typically taken in Alberta. A decision from the Ontario Court of Appeal is persuasive, but not binding, authority in Alberta and may mark a shift in the judiciary’s approach that will make it easier for dismissed employees to succeed in claims of additional damages for harm arising from the manner of their dismissal. Even though this decision opens the door to the possibility that an Alberta Court may award damages for mental distress in the absence of medical evidence, employees to continue to be prepared to provide medical evidence in support of any claimed mental distress arising from the manner of dismissal. Doing so will maximize the likelihood of a court accepting those claims.
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