It’s settled: Medical evidence is not required for moral damages suffered by employees

It’s settled: Medical evidence is not required for moral damages suffered by employees
In employment law, moral damages are awarded to compensate an employee for the employer’s bad-faith manner of dismissal where it was reasonably foreseeable that such conduct would lead to the plaintiff’s mental distress. The question of whether a plaintiff is required to adduce medical evidence in order to obtain moral damages has plagued litigators in this area.
Canadian courts have rendered contradictory decisions, and counsel on both sides have been able to point to appellate authority that supports their clients’ position.

It is time for Canadian courts to put an end to this debate by following the Supreme Court of Canada’s lead in its recent decision, Saadati v. Moorhead, in which it pronounced the end to the requirement for medical evidence of a recognizable psychiatric illness to obtain damages for mental injury in the personal injury context. Applying this decision to the moral damages context would do away with an unnecessary and irrelevant requirement and give effect to the Supreme Court’s original direction to focus on the employer’s actions in a moral damages inquiry.

When the Supreme Court introduced damages for an employer’s bad-faith conduct in the manner of dismissal in a 1997 decision, Wallace v. United Grain Growers, it made clear that the purpose was to provide protection for employees:

“The point at which the employment relationship ruptures is the time when the employee is most vulnerable and hence, most in need of protection. . . the loss of one’s job is always a traumatic event. However, when termination is accompanied by acts of bad faith in the manner of discharge, the results can be equally devastating.”

Moreover, neither Wallace nor the 2008 decision Honda v. Keays (in which the Supreme Court recast the damages established in Wallace as moral damages, awarded as a lump sum rather than an extension of the notice period, where mental distress is reasonably foreseeable) stated that medical evidence is required in order to support an award of these damages.

Nonetheless, lower courts have muddied the waters by issuing contradictory decisions, sometimes awarding moral damages without medical evidence and other times stating that medical evidence is required. Even the Ontario Court Appeal has released contradictory decisions on this: In Slepenkova v. Ivanov, released in June 2009, it upheld an award of moral damages on the basis of a finding that the employer had acted in bad faith by sending a disparaging message about the terminated employee to other employees’ pagers, but in Brien v. Niagara Motors, released in November 2009, it overturned a moral damages award on the basis that the terminated employee had not sought any medical attention or professional assistance nor undergone any therapy for mental distress.

There are, of course, policy arguments on both sides of the debate. Natalie MacDonald’s argument against the requirement for medical evidence in her book, Extraordinary Damages in Canadian Employment Law, is that it off-loads the court’s fact-finding authority on to the medical profession, leading to “checkpoint medicals, where medical reports will be churned out based on the employee’s self-reporting of their condition.” She argues that this goes against the Supreme Court’s direction to focus on the employer’s conduct and ignores the fact that some employees will address their mental distress in other ways. On the other hand, proponents of the requirement argue that it provides an objective standard and prevents indeterminate liability.

Now, it appears that the Supreme Court’s decision in Saadati may put to rest any notion that medical evidence is required to obtain moral damages, given that the requirements to prove moral damages have always been a lesser standard than for tort. In the unanimous decision, the Supreme Court rejected the status quo requirement for a plaintiff to adduce medical evidence of a recognizable psychiatric illness in favour of a more pragmatic approach in upholding the trial judge’s award of damages for mental injury based solely upon the testimony of the plaintiff’s family and friends about the changes in the plaintiff’s personality.

Saadati is clear: “. . . while relevant expert evidence will often be helpful in determining whether the claimant has proven a mental injury, it is not a requirement as a matter of law.” In reaching this decision, the Supreme Court considered the same policy arguments that have been made in regard to the debate over medical evidence in a moral damages claim and wholly rejected those in favour of the requirement, highlighting that the need to adduce medical evidence, which was developed by the lower courts, imports an arbitrary and legally irrelevant classification scheme into the law.

Similarly, the introduction of a requirement for medical evidence in lower court decisions has mischaracterized the Supreme Court’s reasoning in establishing moral damages, and it needlessly complicated the matter by creating an arbitrary requirement for medical evidence that has no actual legal relevance to the issue of whether the plaintiff suffered mental distress as a result of the employer’s conduct. This can be reasonably established on the basis of the plaintiff’s own testimony or, as in Saadati, the testimony of the plaintiff’s family and friends who observed the impact on the plaintiff.

Our law should not arbitrarily impose a higher evidentiary requirement on someone whose mental distress was caused by their employer’s mistreatment of them than someone whose mental distress was caused by a motor vehicle accident or other tortious negligence, particularly given that the requirement to establish moral damages in contract is lower than for intentional infliction of mental suffering in tort. And, even in the context of intentional infliction of mental suffering, then-Justice Beverley McLaughlin (now chief justice) awarded damages for the tort in Rahemtulla v. Vanfed Credit Union “notwithstanding the absence of expert medical evidence.”

It is only a matter of time before the Supreme Court of Canada releases a decision similar to Saadati in the moral damages context. In the meantime, lower courts would be wise to carefully consider Saadati’s implications for moral damages.

Cody Yorke is an associate at Rudner MacDonald LLP, a boutique employment law firm in Toronto. She has particular experience with evidentiary issues in employment law litigation, as well as with moral damages. She can reached at [email protected].

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