When to Fight and When to Fold: A Cautionary Tale for Employers That Defend a Wrongful Dismissal Claim on “Principle”
January 15, 2021
January 15, 2021
Previously printed in the LexisNexis Labour Notes Newsletter.
How do you convince a client that wants to defend a wrongful dismissal claim of the fact that its claim of just cause for termination is devoid of legal merit? You can start by showing it the reasons for decision in Hrynkiw v. Central City Brewers & Distillers Ltd., 2020 BCSC 1640, where the B.C. Supreme Court not only found in favour of the plaintiff but gave him everything he was asking for – including an order for costs.
The plaintiff, Daryl Hrynkiw, started working for Central City Brewers & Distillers (“Central City”) in March 2012 as a Controller. Less than one year later, Hrynkiw was promoted to the position of Chief Financial Officer. He remained in this position until he was dismissed for alleged just cause on July 6, 2018. Central City relied on the following allegations of improper conduct in terminating Hrynkiw’s employment: (i) falsifying records to increase his vacation entitlement and wrongfully taking unauthorized share bonus payments, both with the intention of misappropriating funds from the company; (ii) wilfully disobeying direct instructions given to him by his supervisor; and (iii) stealing his personnel file.
At trial, Central City failed to prove the above allegations and make out its case. The Court found there was no basis in fact for such allegations. “[I]nherently implausible”, “speculative and … [having] no basis in fact”, “defies belief” and “illogical and without support in the evidence” are just a few of the phrases that the Court used to describe the evidence of Central City’s founder, Chief Executive Officer and President, Darryll Frost, and the company’s theory of the case.
The Court went on to find Mr. Frost’s “adversarial and biased” investigation into “such baseless allegations of serious misconduct” amounted to a breach of the duty of good faith and fair dealing. The Court accepted Hrynkiw’s evidence that he suffered mental distress as a result of the manner of dismissal, and awarded him $35,000 in aggravated damages. In response to Central City’s suggestion that Hrynkiw’s mental condition was temporary, and therefore not compensable, the Court stated:
[A] claim for damages for mental distress does not require proof that a plaintiff has suffered a diagnosed mental disorder that is permanently disabling, nor does it even require medical evidence. What is required is evidence that the plaintiff has suffered serious and prolonged disruption as a result of the defendant’s breach of the duty of good faith that transcends ordinary emotional upset or distress. In my view, the evidence in this case meets that threshold.
While the Court rejected Hrynkiw’s claim for punitive damages, a careful review of its reasons indicates that it might further address Central City’s conduct during the trial, and by extension Mr. Frost’s conduct, through an award of special costs. The Court noted punitive damages are rarely awarded, particularly where other remedies are available:
The conditions for an award of punitive damages include that other remedies available to the plaintiff are insufficient to serve the objectives of deterrence, retribution and denunciation. Marchen [an earlier decision of the B.C. Court of Appeal] directs that, generally speaking, allegations of reprehensible conduct during the course of litigation should be addressed by way of an application for special costs rather than by way of an award of punitive damages.
Takeaway for Employers
In the end, Hrynkiw was awarded over $200,000 in damages plus costs. Leaving aside an employer’s ability to pay, this award serves as a good reminder to the employer community to carefully examine the evidence of just cause at the time of termination and the content of the termination letter. It also serves as a cautionary tale for employers that try and defend a wrongful dismissal claim on “principle”.
Jennifer Hogan is a lawyer with the Vancouver-based employment and labour law firm of Roper Greyell LLP and practises in all areas of employment, labour and workplace human rights law. Jennifer provides advice and representation on issues related to the maintenance and termination of the employment relationship, including performance management and post-termination obligations. She also has experience in resolving a wide range of collective agreement disputes, including contracting out, dismissal and disciplinary matters and job competition grievances. She can be reached at (604) 806-3828 or firstname.lastname@example.org.
For more information about Jennifer and the lawyers at Roper Greyell, please visit www.ropergreyell.com.
While every effort has been made to ensure accuracy in this article, you are urged to seek specific advice on matters of concern and not to rely solely on what is contained herein. The article is for general information purposes only and does not constitute legal advice.