Directors of a corporation cannot invoke the business judgment rule to justify decisions that violate a unanimous shareholders’ agreement, the Ontario Divisional Court held recently.

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In March of 2006, the Ontario Superior Court of Justice awarded Kevin Keays a record $500,000 in punitive damages, in addition to 24 months pay in lieu of notice, after Honda terminated Keays’ employment for frequent work absences due to chronic fatigue syndrome. On September 29, 2006, the Ontario Court of Appeal held that the punitive damages awarded by the Superior Court should be dramatically reduced from $500,000 to $100,000. The Court of Appeal otherwise dismissed Honda’s appeal of the Superior Court decision and, in doing so, rejected Honda’s allegations of bias against the trial judge.

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In its January 10, 2006 decision in Egan v. Alcatel, the Ontario Court of Appeal awarded damages for both lost salary and lost disability benefits to an employee who became disabled three months after she was dismissed. In doing so, Ontario’s top court made it clear that an employer is obliged, not only to continue the salary paid to a dismissed employee during an appropriate notice period, but also to continue all employee benefits, including short and long-term disability benefits.

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A discharged employee cannot recover damages for loss of disability benefits in addition to damages for wrongful dismissal, the Ontario Court of Appeal held in a decision issued on January 10, 2006. Awarding such damages would constitute double recovery, the court said.

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