Apr 11, 2022  By John Hyde

Damages awarded against employer who conducted “amateurish”  workplace investigation

In a recent decision, Melanie McGraw (the “plaintiff”) was dismissed from her employment with the Township of Southgate (the “defendant”) , based upon unfounded, sexist allegations and gender-based discrimination. Justice Chown of the Ontario Superior Court of Justice found the defendant’s conduct “discriminatory and reprehensible,” and awarded damages to the plaintiff equalling approximately $190,000. In addition, the Court awarded the plaintiff 6 months of pay in lieu of reasonable notice of termination.


In McGraw v. Southgate (Township), the plaintiff was an administrative assistant and a volunteer fire captain with the Dundalk Fire Department (“DFD”). The DFD is operated by the Township of Southgate.

On February 7, 2019, Ms. McGraw’s employment was terminated on a without cause basis, from both positions, because she was the subject of several workplace “rumours”. Some of these rumours were that Ms. McGraw:

  • sent nude photos of herself to several male firefighters;
  • had several affairs with several male firefighters;
  • was excessively text messaging a male firefighter;
  • caused other firefighters to quit their jobs;
  • caused morale problems in the workplace;
  • offered to give passing grades to male firefighters if they engaged in sexual relations with her;
  • helped a firefighter cheat on a test; and
  • was the subject of rumours from other fire departments outside the DFD.

David Milliner, Chief Administrative Officer at the Township of Southgate, was assigned to conduct an internal workplace investigation on behalf of the municipality. The Court noted significant flaws in Mr. Milliner’s investigation, namely that his investigation relied upon tremendous amounts of hearsay evidence; it did not include any discussion or interview with the plaintiff; the majority of the witnesses did not provide first-hand evidence that they received or even saw the nude photos of the plaintiff; and, there were evidentiary references in Mr. Milliner’s investigation report that he – when asked by the Court – could not produce as evidence.

Due to an “amateurish” investigation, the employee was found to have been wrongfully terminated

Ms. McGraw claimed damages under five headings: (i) reasonable notice; (ii) moral damages; (iii) human rights damages; (iv) defamation; and (v) punitive damages.

Reasonable Notice

The Bardal factors continue to set forth the proper test for the determination of “reasonable notice” of termination. These factors, which the courts have used to assess reasonable notice when terminating an employee, include age, length of service, position, responsibility of that position (or rather, “character of employment”), salary, economic climate, and availability of similar employment.

Based on these factors, Justice Chown awarded the plaintiff six months’ pay in lieu of reasonable notice.

Moral Damages

Moral damages are available where the employer engages in conduct during the course of dismissing an employee that is unfair, or is in “bad faith” by being, for example, untruthful, misleading or unduly insensitive.

It cannot be said that the employer in this case was untruthful or misleading to Ms. McGraw given that she was provided with no reasons for her termination. Nonetheless, the defendant engaged in conduct “during the course of dismissal” that was unfair and in bad faith.

The Court noted that the unfairness to Ms. McGraw was exceptional. The Court found that the investigation conducted by Mr. Milliner was “amateurish … he conflated gossip with facts. Without justification, he accepted the allegations and … failed to recognize the patent gender-based discrimination directed at Ms. McGraw.” Further, Ms. McGraw was not given an opportunity to respond to the allegations, which is a key component to procedural fairness during an investigation process.

The Court awarded Ms. McGraw the amount of $75,000 for moral damages.

Human Rights Damages

Under s. 5 of the Ontario Human Rights Code, "Every person has a right to equal treatment with respect to employment without discrimination because of . . . sex," and "Every person who is an employee has a right to freedom from harassment in the workplace by the employer or agent of the employer or by another employee because of . . . sex."

The Court found that the justifications offered by the employer for dismissing the plaintiff (i.e., morale and turnover problems) did not justify Ms. McGraw’s termination within the framework of the exemptions available under human rights statutes. Moreover, the justifications offered by the employer were in fact, discriminatory. For example, the Court noted that the embellishment or fabrication involved in re-telling the “sex for grades” allegation is borne of gender-based stereotypes and discrimination.

The Court assessed the damages arising out of the gender-based discrimination at $35,000.


The Court stated that there were several comments that Mr. Milliner made about Ms. McGraw to the Township of Southgate that were defamatory in nature, such as the plaintiff engaging in inappropriate behaviour and sending inappropriate pictures of herself to other firefighters, amongst many other disparaging comments.

The Court determined that Mr. Milliner’s defamatory conduct warranted an award of $20,000 to the plaintiff.

Punitive Damages

To obtain an award for punitive damages, the plaintiff must prove that the employer’s conduct was reprehensible and was a departure from ordinary standards of decent behaviour.

The Court concluded that the employer’s discriminatory conduct was reprehensible and was a serious departure from ordinary standards of decent behaviour for a municipality and its Chief Administrative Officer. The Court noted that “the behaviour [of the defendants’] calls to mind a different era. It has long been recognized that this type of behaviour has no place in the workplace. Male-dominated workplaces, in particular, must be mindful to avoid gender-based discrimination.

The Court decided to award the plaintiff $60,000 in punitive damages.

The Bottom Line

This is an important decision for employers, as it illustrates the specific need to select an investigator who is competent, neutral, and has the appropriate experience to conduct complex and technical investigations. Conducting a biased and flawed investigation could create unnecessary and preventable liabilities for the employer, and could prove to be costly, as evidenced in the McGraw v. Southgate (Township) decision.

Employers must consider whether to engage an internal or external investigator. Depending on the nature of the allegations, it may seem appropriate for the employer to conduct the investigation internally, however there are risks that the internal investigator lacks the ability to remain impartial, in addition to the skills and training required to deal with complex factual and legal issues.

At Hyde HR Law, we offer expert services in conducting third-party impartial investigations, in addition to advising employers on how to navigate the internal investigation process. Please do not hesitate to contact us.

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