Digital Brain
digital brain
digital brain

BC Court of Appeal Confirms Dismissed Employees Do Not Require Expert Evidence to Prove Compensable Mental Injury

June 2017 Employment and Labour Bulletin 3 minute read

An award of aggravated damages based on mental distress to a dismissed employee in Lau v Royal Bank of Canada [1] presented the British Columbia Court of Appeal with its first opportunity to apply the Supreme Court of Canada’s decision in Saadati v Moorhead [2].

In a previous bulletin, we discussed the 2017 Supreme Court of Canada decision in Saadati v Moorhead. In Saadati, the Supreme Court of Canada ruled in the context of a tort claim that a finding of legally compensable mental injury does not need to be supported by expert evidence demonstrating a medically recognized psychiatric injury. Foreshadowing the British Columbia Court of Appeal’s decision in Lau v Royal Bank of Canada, we predicted that Saadati would have implications for employees looking to claim damages for mental injury against their employers.

Background

Mr. Lau worked as an account manager and sold mutual funds at a bank. His employer terminated him on the grounds that he falsified bank records and lied during the course of an internal investigation into a client complaint. At trial, the judge found that the investigation into Mr. Lau’s misconduct was flawed and he had been wrongfully dismissed. Mr. Lau was awarded damages in lieu of nine months’ notice.

The judge further awarded aggravated damages in the amount of $30,000 based on mental distress arising from the manner of his dismissal. The award of aggravated damages was based on the judge’s impression that Mr. Lau’s “slow, quiet and monotone manner in which he testified” meant he was depressed. There was no evidence from family members, friends, or third parties concerning Mr. Lau’s mental state and no expert evidence, medical or otherwise.

The employer appealed only the award of aggravated damages.

British Columbia Court of Appeal

On appeal, the trial judge’s award of aggravated damages was overturned.

First, the Court of Appeal found that there had been no bad faith or unfairness in the manner of Mr. Lau’s dismissal. After an investigative process, Mr. Lau was advised of the reasons for his termination in writing at an in-person interview. He was not harassed, scolded, or otherwise mistreated. There was no suggestion of any ulterior motive.

Second, the Court of Appeal overturned the trial judge’s award of aggravated damages for mental distress. While the employer argued on appeal that there must be medical evidence of a psychological condition to substantiate an award of aggravated damages for mental distress, this was rejected by the Court of Appeal. Citing Saadati, the Court of Appeal held that expert evidence proving a recognized psychiatric illness is not required to show compensable mental injury. The Court of Appeal also confirmed that the test for mental distress, in principle, is the same in both contract and in tort.

However, in Mr. Lau’s case the Court of Appeal held that there was insufficient evidence to support a finding of compensable mental injury. The trial judge had concluded that Mr. Lau was depressed because of the slow, quiet and monotone manner in which he testified. There was no third party evidence concerning the impact of the dismissal on Mr. Lau and his mental state. A finding of compensable mental injury cannot be based solely on the demeanor of a plaintiff at trial. There must be an evidentiary foundation for such an award. That evidentiary foundation may be testimony demonstrating a serious and prolonged disruption that transcends ordinary emotional upset or distress.

As Mr. Lau presented no such evidence, the Court of Appeal set aside the award for aggravated damages.

Takeaways

The Court of Appeal’s decision in Lau confirms that the principles from Saadati regarding mental injury claims apply in the employment context. Although Saadati and Lau make clear that professional expert evidence is not required to support a finding of compensable mental injury, a plaintiff will not succeed in the absence of some reliable evidence for such a finding. Employers worried that Saadati unduly expands their liability for claims of mental distress will welcome the decision in Lau as it reaffirms that courts will not award damages for the normal distress and bad feelings resulting from the loss of employment.

by Melanie Harmer, Natalie Cuthill and Colin Cheng, Temporary Articled Student

[1] 2017 BCCA 253, overturning 2015 BCSC 1639.
[2] 2017 SCC 28.

A Cautionary Note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2017

Insights (5 Posts)

Featured Insight

Corporate Counsel Webinar | Beyond the Basics: Tools and Strategies to Create a More Inclusive Legal Work Environment

Join our guest speaker, Jodie Glean-Mitchell, Executive Director of Equity, Diversity and Inclusion, from the University of Toronto as we invite participants to dive deeper into the intricacies of intersectional identities and experiences with (micro)aggressions and their implications for the legal work environment.

Details
Tuesday, December 13, 2022
Featured Insight

The Exclusion of Intrusion Upon Seclusion: Ontario Court of Appeal definitively determines that “Database Defendants” cannot be held liable for intrusions committed by third-party hackers

The Court of Appeal for Ontario released a trio of decisions that materially impact the viability of class actions following a data breach.

Read More
Dec 1, 2022
Featured Insight

20 More Years of Copyright Protection Starting December 30, 2022

The extension of general copyright protections from 50 years to 70 years after the life of the author shall come into force on December 30, 2022.

Read More
Nov 30, 2022
Featured Insight

Canada Embraces the Indo-Pacific: New Canadian Strategy Expands Opportunities for Two-way Trade and Investment

Canada announces new Indo-Pacific Strategy, applies to join Indo-Pacific Economic Framework, and what it all means for Canadian businesses.

Read More
Nov 30, 2022
Featured Insight

Reporting Issuers Need to be Factual and Balanced, Striving for Accurate and Comprehensive ESG reporting

The CSA cautions issuers against overly promotional "greenwashing" language in continuous disclosure in its biennial report - Staff Notice 51-364.

Read More
Nov 30, 2022