TORONTO – A company that fired a senior employee for alleged fraud and then tried to scare him into going along with the dismissal will have to pay him hefty damages as well as an unusually high amount for his legal costs, Ontario’s top court ruled on Tuesday.
In its decision, the Ontario Court of Appeal said it found no reason to interfere with a lower court ruling in favour of Scott Ruston, former president of Keddco Manufacturing.
“Although the appellant states that it is not appealing any findings of fact or appealing the finding that there was no cause, it repeatedly relies on assertions of fact that are contrary to those found by the trial judge,” the Appeal Court said. “The trial judge’s thorough reasons were well grounded in the evidence before her.”
Keddco, which had been operating as a division of Canerector Inc. since 2011, fired Ruston in June 2015 from his position as president. Keddco, a company headquartered in Sarnia, Ont., supplies components to the oil and petrochemical industry. Ruston had worked there for 11 years.
According to court records, the daughter of the owner of Canerector, Amanda Hawkins, decided to axe Ruston for cause on the grounds he had perpetrated fraud, but gave no specifics. When Ruston, then 54, said he would hire a lawyer to fight the termination, the company warned him his approach would be very expensive.
Indeed, when Ruston sued a month later seeking damages for wrongful dismissal, Keddco responded with a countersuit: The company alleged cause and sought damages of $1.7 million for unjust enrichment, breach of fiduciary duty and fraud, as well as another $50,000 in punitive damages.
After an 11-day trial in Toronto, Superior Court Justice Victoria Chiappetta in May 2018 found the company had no good reason to fire Ruston and had failed to show he had committed any fraud. Chiappetta found the company had failed to act fairly and in good faith, and that it’s $1.7 million counter-claim had been a “tactic to intimidate” Ruston.
As a result, Chiappetta awarded Ruston almost $234,000 for 19 months pay in lieu of notice as well as moral, punitive and other damages worth more than $350,000. She also awarded him a further $546,500 for his legal costs.
Keddco appealed the various amounts as excessive.
For example, in fighting the aggravated and punitive damages award, the company argued the “evidence did not support that Mr. Ruston suffered a loss other than is to be expected in the case of a termination.”
The upper court emphatically rejected all the company’s arguments. Among other things, the higher court noted Ruston had been fired over “serious allegations,” that Keddco had refused to provide him with a letter of reference, and that he had difficulty finding work because of his age and where he lived.
“All of these factors affected the notice period because they made it less likely that Mr. Ruston would find employment,” the Appeal Court said. “Employers have an obligation of good faith and fair dealing in the manner of dismissal.”
On the issue of legal costs, the Appeal Court agreed the half-million-dollar award was “unusually high,” but called it fair and reasonable given the circumstances. It also ordered the company to pay Ruston a further $35,000 for the costs of the appeal.
“This decision is a reminder to companies of their obligation to be candid and honest with employees, particularly during and after termination, a vulnerable time,” Samantha Lucifora, one of Ruston’s lawyers, said after last year’s trial decision.