Marshall v. Watson Wyatt & Co.

In this matter Ken was co-counsel representing the respondent employee in an appeal by her former employer to the Ontario Court of Appeal. Shirley Marshall was hired in December of 1994 by Watson Wyatt & Co., a human resources consulting firm. She was to head Watson’s organizational communications practice in Canada. Suddenly, a year later Ms. Marshall was fired with Watson alleging it had just cause. Ms. Marshall sued Watson for wrongful dismissal.

By the time this matter got to trial, Watson no longer disputed its liability to Ms. Marshall. A jury trial took place and she was awarded damages in the amount of $516,242.82 comprised of $143,165.82 in compensable revenue for the first stage of her employment, $298,049 on account of her dismissal, which included a bonus of $45,000, and $75,000 in punitive damages.

Watson appealed the trial decision to the Ontario Court of Appeal. The appeal consisted of six main submissions:

“1. The jury’s award of nine months’ notice was unreasonable.

2. The trial judge erred by refusing to permit Watson Wyatt to lead evidence to show that Ms. Marshall’s compensation did not include revenues generated by its Montreal office.

3. The jury’s finding that Ms. Marshall’s base salary for the year beginning July 1, 1996 was $225,000 contradicted the written terms of her employment contract.

4. The jury erred by awarding Ms. Marshall a $45,000 bonus after it had found that the bonus was not payable.

5. The jury’s award of a three month extension of the notice period based on Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701 (S.C.C.) should be set aside because of inadequate instructions to the jury and the lack of conduct justifying the extension.

6. The jury’s award of $75,000 in punitive damages should also be set aside because of inadequate instructions and a failure to meet the requirements for such an award.”

Watson was only successful in its appeal on the second and sixth submissions.

In considering the second submission, the Court found it had been unfair for Watson not be allowed to lead evidence with respect to Ms. Marshall’s compensation and the Montreal office:

“26 Watson Wyatt should have corrected its discovery answer in a subsequent letter to Ms. Marshall’s counsel. But fairness should have been the trial judge’s guide. Although the purposes of discoveries and pre-trials differ, in the light of what Ms. Marshall’s counsel knew, the trial judge’s ruling was fundamentally unfair to Watson Wyatt. Her ruling also ran counter to rule 1.04(1), which requires that all rules be “liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits”; and to rule 53.08(1)(d), which required the trial judge to permit the evidence to be led unless doing so would have prejudiced Ms. Marshall or unduly delayed the trial.”

As a result of the above, a new trial was ordered to determine whether Ms. Marshall was entitled to to the revenue generated from the Montreal office. The parties agreed that the amount at issue was $46,330.30.

In considering the sixth submission, the Court found that Ms. Marshall was not entitled to $75,000 in punitive damages. The jury had found that Watson’s conduct was “so highhanded or egregious as to merit an award of punitive damages”.

Watson appealed this finding by arguing (1) that the trial Judge’s instruction on punitive damages were inadequate and (2) that Ms. Marshall had no legal entitlement to punitive damages on the facts of her case.

The Court of Appeal ruled in favor of Watson on these two points:

“43 I agree with these submissions. The trial judge’s instructions were inadequate. And even if their inadequacy can be overlooked because Watson Wyatt did not object to them, I have concluded that Ms. Marshall is not entitled to punitive damages. I doubt Watson Wyatt committed an actionable wrong separate from its breach of the employment contract and even if it did, punitive damages would not serve any rational purpose in this case.”

Additionally, the Court also explained that punitive damages are not compensatory, that their purpose is to punish and deter unacceptable conduct, and that in Canada “they have rarely been awarded in breach of contract cases largely because the requirements to obtain them are appropriately onerous.”

As a result, the jury’s award for $75,000 in punitive damages was set aside.

The Court of Appeal next considered the costs of the appeal. Because Watson was partially successful, Ms. Marshall was ordered to pay one-third of Watson’s party and party costs of the appeal. This underscores some of the risk associated with costs at any hearing or appeal before the Court.

Ken was successful in preventing Watson from setting aside the majority of the issues that were determined in Ms. Marshall’s favor a trial. Importantly, the Ontario Court of Appeal upheld the bulk of the monetary award Ms. Marshall had won at trial only reducing her damages from $516,214.82 to $394,884.52.

This decisions shows that although a party may be successful at trial, the result is not certain until all rights to appeal have been completely exhausted. Also, the Court has jurisdiction to order a new trial on some or all of the issues already determined by a lower Court. This can significantly lengthen litigation and further increase costs. Appellate litigation is often very expensive and can have significant cost consequences for the losing party.

Full citations:
Marshall v. Watson Wyatt & Co., 2002 CarswellOnt 65, [2002] O.J. No. 84, 111 A.C.W.S. (3d) 75, 155 O.A.C. 103, 16 C.C.E.L. (3d) 162, 2002 C.L.L.C. 210-019, 209 D.L.R. (4th) 411, 57 O.R. (3d) 813
Marshall v. Watson Wyatt & Co., 2002 CarswellOnt 962, 112 A.C.W.S. (3d) 834