On January 28, 2011, the Divisional Court (the “Court”) issued its ruling in Greater Toronto Airports Authority and PSAC, Local 004.
In 2004, the Greater Toronto Airports Authority (the “Employer”) discharged the grievor (the “Grievor”) for suspected sick leave abuse. The Public Service Alliance of Canada, Local 0004 (the “Union”) grieved her discharge, which was referred to Arbitrator Shime. The arbitration hearing was heard from August 2005 to June 2009.
In February 2010, the Arbitrator released his decision and concluded that the Grievor had been discharged without just cause. In so ruling, the Arbitrator awarded an unprecedented amount of damages, including compensation for past wage losses, compensation for future economic losses, fifty thousand dollars for extended pain and suffering in the Grievor’s knee and for mental distress, and fifty thousand dollars in punitive damages. The Employer applied to judicially review Arbitrator Shime’s decision.
The Court quashed the Arbitrator’s award of punitive damages finding that punitive damages should only be awarded in very rare cases and that punitive damages should not be awarded if all other remedies imposed were already sufficient. The Court also acknowledged the well-established law that an award for punitive damages must be based upon an “independent actionable wrong” which is separate and distinct from the employer’s discharge of an employee without just cause.
The Arbitrator based his award of punitive damages on the Employer’s purported breaches of various articles of the collective agreement, as well as its purported violation of the Employer’s implied obligation to exercise its rights reasonably and its duty to act in good faith. However, at the arbitration hearing, the Union had not relied on any of those alleged breaches as the basis for an “independent actionable wrong”. As such, the Court found that the Employer had been denied natural justice.
The Court also quashed the Arbitrator’s award of mental distress damages since these damages included an award for pain and suffering due to the alleged aggravation to the Grievor’s knee injury. The Court found that damages for pain and suffering were not in the reasonable contemplation of the parties at the time they entered into the collective agreement. Further, there was no evidence before the Arbitrator to support his conclusion that the Grievor’s knee injury was somehow aggravated as a result of her dismissal.
The Court remitted the issues of punitive and mental distress damages back to the Arbitrator.