COURT OF APPEAL FOR BRITISH COLUMBIA
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Citation: |
Cottrill v. Utopia Day Spas and Salons Ltd., |
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2018 BCCA 383 |
Date: 20181017
Docket: CA44471
Between:
Jennifer Cottrill
Respondent
And
Utopia Day Spas and Salons Ltd.
Appellant
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Before: |
The Honourable Mr. Justice Goepel The Honourable Mr. Justice Savage The Honourable Madam Justice Fisher |
On appeal from: An order of the Supreme Court of British Columbia, dated May 1, 2017 (Cottrill v. Utopia Day Spas and Salons Ltd., 2017 BCSC 704, Vancouver Docket S156415).
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Counsel for the Appellant: |
R. Mahil |
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Counsel for the Respondent: |
R.B. Johnson |
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Place and Date of Hearing: |
Vancouver, British Columbia September 27, 2018 |
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Place and Date of Judgment: |
Vancouver, British Columbia October 17, 2018 |
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Written Reasons by: |
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The Honourable Mr. Justice Goepel |
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Concurred in by: |
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The Honourable Mr. Justice Savage The Honourable Madam Justice Fisher |
Summary:
The respondent was an employee of the appellant for approximately 11 years and was terminated in June 2015. The respondent brought an action for wrongful dismissal, and also claimed aggravated damages and punitive damages. The trial judge found the respondent was wrongfully dismissed, and awarded $15,000 in aggravated damages. The appellant appeals the aggravated damage award. Held: appeal allowed. An employee must provide an evidentiary foundation establishing that the manner of dismissal caused them mental distress beyond that which accompanies any termination. The trial judge erred in principle in awarding aggravated damages for mental distress when there was no evidence that the manner of dismissal caused the respondent mental distress beyond that caused by the dismissal itself.
Reasons for Judgment of the Honourable Mr. Justice Goepel:
[1] The respondent, Jennifer Cottrill, sought damages for wrongful dismissal against her employer, the appellant Utopia Day Spas and Salons Ltd. (the “Company”). The trial judge in reasons indexed at 2017 BCSC 704, found that Ms. Cottrill had been wrongfully dismissed and she was entitled pursuant to her contract of employment to eight weeks severance pay. In addition, because of the manner of dismissal, she awarded Ms. Cottrill $15,000 in aggravated damages.
[2] On the appeal the Company challenges the award of aggravated damages. It submits that the trial judge erred in law or in principle in awarding aggravated damages in the absence of any evidence of actual harm.
[3] For the reasons that follow I would allow the appeal and set aside the aggravated damage award.
[4] The Company hired Ms. Cottrill as a skincare therapist in May 2004. In January 2015, the Company became concerned with her job performance. On March 13, 2015, two members of senior management met with Ms. Cottrill to discuss their concerns. In the meeting Ms. Cottrill was given a letter advising of her performance deficiencies. The letter stated that she had three months to improve or she would be terminated from employment on June 12, 2015. Ms. Cottrill testified that she cried throughout the entire March meeting and had to go home early as she was so upset.
[5] On June 12, 2015 representatives of the Company met with Ms. Cottrill and advised her that she was terminated from her employment. She was not paid any severance. Ms. Cottrill testified she went “numb” during the meeting and could not take anything in.
[6] At trial, the Company argued that Ms. Cottrill was terminated for cause because of her failure to meet performance standards. The trial judge, after an exhaustive review of the evidence, did not agree. In that regard, she said:
[96] While the company was entitled to consider its bottom line and to reduce its compliment of employees, if it intends to allege cause it was incumbent on the company to fairly assess the employee’s competence and to determine whether, given the nature and circumstances of the performance issues identified, dismissal is a just and proportionate response.
[97] As noted, I conclude that the company has not established that it had cause to dismiss the plaintiff from her employment. The employer unreasonably sought to hold the plaintiff to performance standards which it had not previously required of her and failed to provide her with a fair and reasonable assessment of her performance. I do not accept the company’s assertion that it can rely on vague allegations that the plaintiff was complacent and had a poor attitude in the face of the evidence that she met the performance criteria, markedly increased her sales and services, and provided excellent guest care. I also do not accept that failing to meet the sales target by $122 is “significant” given the extent to which she improved her sales. In my view, the company gave no meaningful attention to the improvement they said they were looking for. The company also did not provide the plaintiff with an explanation as to why her attitude was deficient or why it believed it had cause for her termination. The plaintiff did not have a reasonable opportunity to respond to the conclusions reached by the company before it dismissed her. In sum, the company has not shown that there was “serious or gross incompetence” such that it could be said that the plaintiff repudiated the contract.
[7] The trial judge then went on to consider the question of notice. She found that the notice was governed by the written contract of employment that the parties had entered into in 2004. Pursuant to that contract, if the employee was dismissed without cause, severance was to be determined pursuant to the provisions of the Employment Standards Act, R.S.B.C. 1996, c. 113 with the result the respondent was entitled to eight weeks severance pay.
[8] The trial judge next turned to the question of aggravated and punitive damages. She correctly noted that while both heads of damages were grounded in the conduct of the employer during the termination, the distinction between the two awards was important. An award of aggravated damages seeks to compensate a plaintiff for actual damages suffered resulting from the manner of dismissal, while an award of punitive damages is directed at punishing an employer for its conduct.
[9] The trial judge quoted at length from the decision in Honda Canada Inc. v. Keays, 2008 SCC 39, in which the Supreme Court of Canada clarified the law concerning bad faith damages in the employment context. The trial judge found that the Company was in breach of its duty of good faith in the manner in which they dismissed the respondent. The trial judge held that the manner of dismissal clearly had a profound effect on the plaintiff. In this regard, she said:
[137] The events clearly had a profound effect on the plaintiff. Not only was she lulled into believing that her performance would be fairly considered, as she testified, she cried through the entire March meeting and had to go home early she was so upset and, at the June meeting, she “went numb” and could not take anything in. In the face of the dismissal for cause, she came to believe she needed to retrain for a different career. I am satisfied that the lack of good faith and unfairness exhibited by the company in the manner of dismissal caused emotional distress to the plaintiff that was well beyond the distress from the fact of the dismissal.
[10] The trial judge then turned to the question of quantum. After reviewing several authorities including Kong v. Vancouver Chinese Baptist Church, 2015 BCSC 1328, Vernon v. British Columbia (Housing & Social Development, Liquor Distribution Branch), 2012 BCSC 133 and Ram v. The Michael Lacombe Group Inc., 2017 BCSC 212, she awarded $15,000 in aggravated damages.
[11] The trial judge rejected the claim for punitive damages. In this regard, she said:
[144] While I found that the company was in breach of their obligation to act in good faith during the manner of dismissal, I do not consider the conduct to rise to the level of “harsh, vindictive, reprehensible and malicious”. I also find that there is no additional conduct on the part of the company that is distinct from the conduct that forms the basis of the claim for aggravated damages. The award for aggravated damages in this case adequately achieves the objective of retribution, deterrence and denunciation: Vernon at para 383.
[12] The sole ground of appeal is that the trial judge erred in awarding aggravated damages in the absence of any evidence that Ms. Cottrill suffered any actual harm as a result of the manner of her dismissal. The Company submits the degree of mental suffering caused by the dismissal was not sufficient to warrant compensation.
[13] Ms. Cottrill submits that the appellant is attempting to re-litigate and rely on arguments properly rejected by the trial judge. She submits there is a sufficient evidentiary foundation for the award of aggravated damages.
[14] “It has long been accepted that a dismissed employee is not entitled to compensation for injuries flowing from the fact of the dismissal itself”: Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701 at para. 103. While the loss of a job is very often the cause of injured feelings and emotional upset, the “normal distress and hurt feelings resulting from dismissal are not compensable”: Honda at para. 56.
[15] Ms. Cottrill argued that unfairness in the manner of dismissal was sufficient in itself to ground an award for aggravated damages. The authorities do not support that proposition. An award of aggravated damages resulting from the manner of dismissal requires: (a) a finding that an employer engaged in conduct during the course of dismissal that was unfair or in bad faith, and (b) a finding that the manner of dismissal caused the employee mental distress: Honda at para. 59.
[16] In Lau v. Royal Bank of Canada, 2017 BCCA 253, a decision that was handed down after the reasons in this case were released, this Court re-iterated that there must be an evidentiary foundation for an award for mental distress:
[49] On the other hand, damages for mental distress beyond the ordinary upset that accompanied termination of employment cannot be evidenced simply from the demeanor of the plaintiff in the witness stand. There must be an evidentiary foundation for such an award (see Mustapha at para. 9). That evidentiary foundation may be testimony demonstrating a "serious and prolonged disruption that transcended ordinary emotional upset or distress" (Saadati at para. 40).
[50] As noted in Mustapha:
9 This said, psychological disturbance that rises to the level of personal injury must be distinguished from psychological upset. Personal injury at law connotes serious trauma or illness: see Hinz v. Berry, [1970] 2 Q.B. 40 (C.A.), at p. 42; Page v. Smith, at p. 189; Linden and Feldthusen, at pp. 425-27. The law does not recognize upset, disgust, anxiety, agitation or other mental states that fall short of injury. I would not purport to define compensable injury exhaustively, except to say that it must be serious and prolonged and rise above the ordinary annoyances, anxieties and fears that people living in society routinely, if sometimes reluctantly, accept. The need to accept such upsets rather than seek redress in tort is what I take the Court of Appeal to be expressing in its quote from Vanek v. Great Atlantic & Pacific Co. of Canada (1999), 48 O.R. (3d) 228 (C.A.): "Life goes on" (para. 60). Quite simply, minor and transient upsets do not constitute personal injury, and hence do not amount to damage.
[Emphasis in original.]
[17] In Lau, this Court overturned the trial judge’s aggravated damage award on the basis that the plaintiff had not established any actual harm resulting from the manner of dismissal:
[57] Mr. Lau felt lost because the "decision was not one that I expected". The decision was "that I would be terminated". Mr. Lau relies on the "horrible feeling" and feeling "lost" as grounding an award for aggravated damages. In my view, it is not open to the court to award damages for the normal distress and bad feelings resulting from the loss of employment.
[18] In this case, as in Lau, there was no evidence from the plaintiff or from family members, friends or third parties concerning the impact of the termination on Ms. Cottrill and her mental state. Although not required, there was no expert evidence, medical or otherwise. The only evidence of mental distress is that Ms. Cottrill cried during the March meeting, following which she had to go home early because she was so upset, and that at the June meeting, she went numb and could not take anything in. The evidence of Ms. Cottrill’s reactions at the two meetings at its highest establishes a transient upset. It falls well short of the legal standard that requires a serious and prolonged disruption that transcends ordinary emotional upset or distress.
[19] Given the lack of an evidentiary basis for the finding of mental distress caused by the manner of dismissal, it was an error in principle for the trial judge to make an award of aggravated damages. I would allow the appeal and set aside the aggravated damage award.
“The Honourable Mr. Justice Goepel”
I AGREE:
“The Honourable Mr. Justice Savage”
I AGREE:
“The Honourable Madam Justice Fisher”