British Columbia, Canada Court Awards Employee Aggravated Damages After Employer Makes Unfounded Allegations after Commencement of Litigation

In a successful wrongful dismissal claim for $18,647, the Supreme Court of British Columbia in Austin v Kitsumkalum First Nation, 2020 BCSC 2298, awarded the employee an additional $15,000 for aggravated damages because the employer engaged in conduct during the dismissal that was unfair and in bad faith, and caused the employee mental distress.   


The employee began working at Kitsumkalum First Nation (Employer) in 2005 as a teacher and was promoted to principal in 2017.  At the end of 2018, the employee wrote to the Employer stating that she wanted to end her employment on November 30, 2019; she would continue as principal until June 30, 2019, and remain for the first three months of the next school year to facilitate a smooth transition to a new principal.  The Employer did not respond to the employee’s letter until April 2019 when it informed the employee that her employment would be terminated June 30, 2019. 

In her wrongful dismissal claim, the employee sought damages for the loss of her employment from June 30, 2019 until November 30, 2019, plus five months’ loss of benefits, less mitigation, for a total of $18,647.  She also made a claim for punitive and aggravated damages. 

In its statement of defence, the Employer alleged for the first time that there was cause to dismiss the employee for the following reasons:

  • Upon receiving a grant that authorized the use of capital costs for “small repairs or renovations to support the participation of persons with disabilities,” $4,600 of repairs were done in the employee’s home to create an art studio for a youth initiative program. 
  • Items owned by the Employer were retained by the employee.
  • The employee acted dishonestly and disreputably and committed theft or fraud when she made claims for inappropriate expenses or expenditures. 
  • In her role as principal, the employee conducted herself disruptively and combatively. 


The court held that it was unsatisfied that on a balance of probabilities the Employer showed there was cause to dismiss, concluded that the employee was wrongfully dismissed, and awarded her $18,647. The court also awarded the employee $15,000 in aggravated damages. 

In its reasons, the court referred to the Employer’s cause allegations as “a desperate attempt by a defendant to retroactively create some cause” after the commencement of litigation.   It noted:

  • The employer knew about the renovations, expenses and expenditures, reimbursed them, and tacitly approved them;  
  • There was no formal written policy about incurring expenditures and reimbursement, or any suggestion prior to the litigation that the employee had done anything inappropriate; 
  • The Employer also expressed no concern about any disruptive behaviour by the employee until the litigation began; and 
  • While there was a bona fide dispute about two items in the employee’s possession, once the dispute was resolved, the employee returned the items to the Employer.

The court declined to make a punitive damage award to the employee stating that she failed to meet the high standard required, i.e., she did not show that in the conduct of the litigation she was treated by her former employer in an exceedingly difficult and disreputable manner.  

The court did, however, make an aggravated damage award to the employee in the amount of $15,000, noting that such an award requires findings that:

  • The employer engaged in conduct during the course of the dismissal that was unfair and in bad faith; and
  • The manner of dismissal caused the employee mental distress.

The court found unfair and bad-faith conduct during the course of the dismissal because the unfounded allegations raised in the Employer’s statement of defence could reasonably be interpreted as suggesting that the employee engaged in criminal behaviour, theft, dishonesty, and fraud.  It found the manner of dismissal caused the employee mental distress based on her affidavit and examination for discovery. She noted that because she lived in a small community, everyone knew she was dismissed.  Furthermore, the employee referenced feeling embarrassed, humiliated, shocked, emotionally distressed, anxious and stressed; her difficulty sleeping; and the worsening of her overall mood and disposition.  Notably, in assessing her aggravated damages at $15,000, the court made a point of emphasizing that the employee’s wrongful dismissal claim was modest. 

Bottom Line for Employers

Kitsumkalum puts employers on notice that if they retroactively make unfounded allegations of cause after the commencement of litigation, including allegations that could reasonably be interpreted as suggesting that an employee engaged in criminal behaviour, theft, dishonesty, or fraud, they risk an aggravated damage award being made against them.  Notably, the court in Kitsumkalum implied that its aggravated damage award was modest because the employee’s wrongful dismissal claim was modest. Accordingly, employers faced with significant wrongful dismissal claims may risk more significant liability for aggravated damages if they engage in such conduct.    

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.