Can a Nonunion Employer Install Secret Video Cameras to Watch Employees?

Last December, the Ontario Superior Court issued an interesting decision that I am just now getting round to posting.
The case is Colwell v. Cornerstone.  The facts are straightforward.  The employer installed a secret video camera in the office of one of its employees, and when the employee learned it was there, she quit and sued for constructive dismissal.  The difficulty she faced was that there is no privacy legislation in Ontario and the courts have been slow to recognize a common law, implied right to privacy at work.  So on what basis can she ground a constructive dismissal case.
She could have argued that the camera violated her trust and made the working conditions intolerable.  In Shah v. Xerox, the Ontario Court of Appeal ruled that a constructive dismissal can occur even when the employer has not breached any term of the contract, as long as the employer’s conduct has made the work environment intolerable for the employee.   In fact, the employee does make this claim, arguing that she could not remain any longer because the employer’s behaviour had irreperably destroyed her trust in the employer.  The Court agrees with this sentiment when it finds that the employee was not required to continue to work for the employer as part of her duty to mitigate (as per the  Evans v. Teamsters decision).
However, the Court does not rely on the Shah decision, and never mentions it.  Instead, the court finds that the employer had breached  an implied term of the employment contract: “that each party would treat the other in good faith and fairly, throughout the existence  of the contract, as well as during termination”. Installing a secret camera, with no apparent reason, is a fundamental breach of that term.  The court could have simply applied the more broadly accepted implied duty to treat employees with decency, civility, respect, and dignity and skirted the controversy about whether there is an implied duty og good faith dealing (I have written about that latter term before).  In any event, the result appears to be same:  the implied duty of good faith incorporates a limited right to privacy into the employment relationship, although the court is pretty clear that the outcome might have been different if the employer could have pointed to some valid business reason why the camera was necessary.  In the result, the judge orders reasonable notice damages.
The court then gets confused about  the question of aggravated damages. It refuses to order those damages because “the law of invasion of privacy is still developing”.  This is odd, given that the court did not rely on any law of “invasion of privacy”; it found a breach of an implied term of good faith dealing.  Damages for that breach, if any, are presumably recoverable.  One reason this case confuses me is the court’s comments about aggravated damages. The court states: “Aggravated and/or punitive damages are only awarded based on the ‘manner’ in which the dismissal was conducted.  At least the surveillance in this case was an act performed ‘during’ employment rather than forming only a part of the constructive dismissal”.
That’s right. The employer breached a term of the contract during the term of employment by secretly installing cameras. The evidence indicated that, as a result of that breach, the employee required medical assistance for stress and was prescribed sedatives.  I’d have thought the court could have ordered damages in that case for breach of the term preventing a camera from being installed.  Contracts 101.
But, in any event, the case is interesting for its finding that nonunion employers are restricted in their right to install cameras in the workplace, a restriction unionized employers have had to deal with for years pursuant to labour arbitration law.