Law Times

Page 2 November 18, 2013 Law Times • NEWS Case 'clearest out there' on punitive damages' BY YAMRI TADDESE Law Times I n a decision one lawyer says is the "clearest out there" on determining punitive damages, the Ontario Court of Appeal has reduced the amount a municipality must pay in a long-running case involving wrongful dismissal and malicious prosecution. In Pate Estate v. GalwayCavendish and Harvey (Township), justices Eleanore Cronk and David Doherty found the trial judge's $550,000 award for punitive damages was in addition to the punitive elements in other aspects of the case. The township fired John Pate in 1999 and falsely accused him of theft. Pate has since died, but the litigation continued on behalf of his estate and children. To avoid "double compensation," the appeal court judges decided to reduce the punitive damages to $450,000, an amount they said was more appropriate as other awards have already punished the employer. "The task of a trial judge in quantifying a punitive damages award is not an easy one. It is far from an exact science," Cronk wrote on behalf of the majority. "It must be guided, however, by the Supreme Court's repeated cautions to avoid 'double-compensation' and that court's clear warning that, in most cases, a moderate award will generally suffice to adequately punish a defendant for its misconduct." She added: "In my view, the trial judge erred by failing to consider whether, in light of the total compensation and costs otherwise awarded to Mr. Pate, a lower quantum of punitive damages would satisfy the requisite objectives of retribution, deterrence, and denunciation. By failing to undertake this essential inquiry, the trial judge erred in principle." In this case, the trial judge had awarded substantial indemnity costs to the Pate estate as well as a premium and aggravated damages. All of these awards have a punitive element to them, according to Cronk and Doherty, who said "the trial judge does not advert to these damages or their significance when attempting to quantify a rational and proportionate punitive damages award." The majority's decision differed from that of Justice Peter Lauwers, who said the $550,000 award was on the mark. "I see no reason to make 'You have to take into account the whole picture of other damages when assessing punitive damages,' says George Avraam. an adjustment to reduce the punitive damages award in some way to account for the costs award, for the following reasons," he said, noting that "the costs award should stand independently as something uniquely within the trial judge's discretion. "Costs are not usually an element that the trier of fact would take into account in fixing punitive damages." The case is the "clearest out there" on how you do punitive damage assessments, says lawyer George Avraam, who represented the township at the appeal stage. "I think she's bang on," he says about Cronk's analysis. "In my view, she got the law absolutely correct. You have to take into account the whole picture of other damages when assessing punitive damages." Natalie MacDonald, a founding partner of employment boutique Rudner MacDonald LLP, says Cronk was aligning herself with the Supreme Court's position on punitive damages but suggests the analysis should have left out the issue of costs and premiums. Even though the costs awards to the Pate estate were on a substantial indemnity basis, "I don't believe the cost award adequately compensated him for his legal costs," notes MacDonald. "I'm concerned by the fact that [Cronk] took into consideration the cost award and the premium cost award given that Pate had probably paid more than that for legal fees to fight the township over a sustained period of time and likely, in my view, those legal fees did not fully compensate him for what he was in fact paying out of pocket," she says. While reading Cronk's reasons, litigator Ben Hanuka says he thought she would significantly lower the punitive damages award. "I was thinking she's go- ing to slash this totally. But she ends up at $450,000, so after all that she only deducts $100,000. That's not too bad," says Hanuka, who says it's important to note that Cronk applied her principle with caution in this case. "I just think that counsel and trial judges should make sure that they apply this principle softly, carefully, and not aggressively," he says. Jeffrey Ayotte, who represented the Pate estate, agrees with Hanuka's observation. He notes he read Cronk's reasons "with increasing amount of dread" as he expected she would reduce the $550,000 award considerably. Although he would have preferred to see Lauwers' reasons prevail, Ayotte says he respects the analysis that went into the final decision. According to Lauwers, the township deserved to be on the hook for every dime of the punitive damages in part because of how it had conducted itself. Lauwers pointed out the trial judge noted there was no evidence before him to suggest the municipality apologized "or in any way accepted responsibility for the conduct of its municipal officer, nor has it in any way accepted responsibility for the result of these actions." LT LEXPERT® LEGAL EDUCATION SEMINARS FALL 2013 SCHEDULE WEBCAST OPTION AVAILABLE FOR EACH COURSE! THE 6th ANNUAL ADVERTISING AND MARKETING LAW FORUM December 10, 2013, Toronto, Ontario ANTI-BRIBERY AND CORRUPTION COMPLIANCE: COPING WITH THE ONSLAUGHT December 9, 2013, Calgary, Alberta December 12, 2013, Toronto, Ontario CLOUD COMPUTING: A PRACTICAL APPROACH November 28, 2013, Toronto, Ontario CONDUCTING EFFECTIVE WORKPLACE INVESTIGATIONS: WHEN IGNORANCE ISN'T BLISS CORPORATE GOVERNANCE 2013: MEETING SHAREHOLDER EXPECTATIONS December 3, 2013, Toronto, Ontario December 5, 2013, Calgary, Alberta DEALING WITH THE LEASE: LEGAL PRINCIPLES & LITIGATION PERILS! November 21, 2013, Toronto, Ontario EMERGING TRENDS AND BEST PRACTICES IN INFORMATION TECHNOLOGY SOURCING November 28, 2013, Toronto, Ontario December 10, 2013, Toronto, Ontario For more information or to register for these seminars, please visit www.lexpert.ca/events www.lawtimesnews.com INFORMATION PRIVACY AND DATA PROTECTION: TECHNOLOGY, SECURITY AND CORPORATE ACCOUNTABILITY IN TODAY'S MARKETPLACE December 9, 2013, Toronto, Ontario THE LIFE CYCLE OF PHARMACEUTICALS: ADDING VALUE AT EACH STAGE December 2, 2013, Toronto, Ontario

• Cover