Employer’s bad Faith Smear Campaign of Dismissed Employee Proves Costly

Koshman v. Controlex Corporation, 2023 ONSC 7045 was a wrongful dismissal action which proceeded on a default basis. The Ontario Superior Court awarded a terminated employee over $570,000, including $100,000 in aggravated and punitive damages, after finding that the employer attempted to destroy the employee’s reputation.

The plaintiff, Martin Koshman (“Koshman”), was employed with the defendant, Controlex for over 18 and a half years. At the time of his termination, Koshman, a 69-year-old, was the vice president of the company and earning an annual income of approximately $228,000, plus benefits and a car allowance.

As an engineer by trade, Koshman directed the operational and property development management of the business. Although Koshman had a great deal of autonomy and independence in his business decisions, he reported to Controlex president and founder, Peter Dent.

In 2020, Peter Dent suddenly passed away. Immediately following Peter Dent’s death, his wife, Susan Dent, who did not have previous direct involvement in the company, took over the business affairs and immediately took away Koshman’s signing authority. Susan Dent had no email, rarely attended the workplace and refused to return any communications from Koshman, making his job nearly impossible to carry out.

In the 8 weeks following Peter Dent’s death, Koshman learned from various clients that Susan Dent had been making “bizarre and defamatory statements” about him. Of the comments, Susan Dent had been said to say that her husband was murdered and Koshman was involved. She also claimed that Koshman took kickbacks and made claims which would put his professionalism and character into question. Further, prior to providing Koshman with any notice of his termination, Susan Dent told clients that Koshman was fired, and offered his position to one of his subordinates.

Koshman’s termination later followed when he received a notice via courier. The notice provided no cause for the termination, failed to pay the minimum statutory notice entitlements for someone with his extended years of service, and failed to pay any accrued vacation entitlements.

Given that there was no employment contract, the Court held that Koshman was entitled to a common law notice of 24 months amounting to approximately $470,000, which includes loss of salary, benefits and car allowance.

Koshman also sought aggravated and punitive damages. In their analysis for aggravated damages the Court concluded that Susan Dent acted in bad faith by taking away Koshman’s signing authority; criticizing his character and honesty to clients; failing to meet with him; sending his termination by courier; failing to initially pay ESA entitlements; repeatedly stating that he was accepting bribes; and suggesting that he murdered her husband.

As such, the Court awarded the plaintiff $50,000 in aggravated damages.  For the same reasons, the court also awarded the plaintiff $50,000 in punitive damages.

This matter serves as a reminder to employers of the importance of acting in good faith when terminating employees. Employers who make false accusations, defame or treat employees in bad faith, may face substantial legal consequences, including additional hefty damages and costs.