Punitive damages and Wallace bump

Keays had worked for Honda Canada from 1986 to 1998. He was terminated from his position there because, after much attempted reconciliation with Honda regarding his illness, he refused to meet with a company doctor when Honda would not disclose the purpose or parameters of the meeting. Keays brought a wrongful dismissal suit against Honda Canada in regards to his termination.

Shortly after Keays began working for Honda in 1986 he became ill and as a result of his illness he began to experience absences from work. The illness, which was not diagnosed until 1997, was chronic fatigue syndrome. Aside from these problematic absences Keays was described as an excellent employee and moved up within the company. In 1996, Keays illness worsened and he was unable to continue to work for a period of almost 2 years. In late 1998 Keays disability coverage was terminated, thereby requiring Keays to return to full time work with Honda. Keays and his doctor, Dr. Morris, did not feel he was ready to return to full time work and shortly after he did return to work, he began to again experienced absences.

When those absences began to exceed his doctors predictions, Honda requested he meet with the company physician. Keays complied and met with this doctor whom he said threatened to move him back to the production line if his attendance did not improve. As a result of these perceived threats Keays contacted counsel to attempt to negotiate and reconcile with Honda. Honda would not respond to any attempted contact by Keays' counsel and soon thereafter required Keays to see a different company doctor, Dr. Brennan. In this request, Honda falsely indicated that their physicians did not believe his illness required the number of absences he was taking. Keays asked for clarification as to the purposes and the parameters of the meeting with Dr. Brennan, but Honda refused to give further information and stated that if he refused to attend the meeting with Dr. Brennan Keays would be terminated.

Keays was terminated the following day for insubordination in failing to meet with Dr. Brennan. After this dismissal he suffered from post-traumatic stress disorder and qualified for CPP disability pension.

McIsaac J. was highly critical of Honda's conduct in relation to Keays. It was found that Honda's reaction to Keays alleged insubordination was unreasonable and consequently it was held that Keays was entitled to a 15-month notice period. In addition, an extension to the notice period of 9 months was granted for "Wallace Damages" because Honda acted in bad faith while handling Keays dismissal.

In addition to the extension of the notice period granted under "Wallace damages", the Court considered punitive damages. McIsaac J. found that punitive damages should only be granted in exceptional circumstances where there is an independent actionable wrong and where the conduct is so reprehensible that it merits punishment.

Independent actionable wrongs of harassment and discrimination were determined to have occurred through Honda's dealings with Keays. It was also found that Honda terminated Keays employment for the purpose of avoiding their obligation to accommodate his disability. McIsaac held that "an award of punitive damages is a "rational" and necessary response to Honda's outrageous mistreatment of their long-term employee."

As a consequence for the above findings an award of $500 000 in punitive damages was granted in addition to the extended notice period of 24 months granted for wrongful dismissal and for the manner in which Honda dismissed Keays.

This case reflects an unprecedented award for punitive damages within an employment law context; however, an appeal in this matter is expected and we will watch with interest.

Keays v Honda Canada Inc., [2005] O.J. No. 1145