Termination without cause results in award of $181,358 and personal liability for Director

In the recent decision of Churchill v. Aero Auction Sales Inc., 2019 ONSC 4766, the Ontario Superior Court of Justice provided default judgement in favour of a former employee and oppression results for personal liability of the defendant.

Alissa Churchill worked for her former employer, Aero Auction Sales Inc., from July 2009 to March 12, 2016. Michael Duns is the sole director of Aero Auction Sales Inc. Churchill and Duns were involved in a common law relationship which lasted from 2009 to November 26, 2015 and the couple have three children together.

After their separation, Churchill and Duns’ working relationship became hostile. Churchill’s terms and conditions of employment also changed significantly after their separation and prior to her being terminated. Churchill was removed as the company’s Vice-President, her duties and access to the company’s finances were removed or significantly altered and she was asked to return company property. On March 12, 2016, Churchill sent Duns an email asking if her employment with Aero Auction Sales Inc. was terminated and Duns replied that she was “considered having quit”. Churchill was not provided with any notice or pay in lieu of notice, any unpaid wages and any accrued unpaid vacation pay. As of March 9, 2016, Churchill was a creditor of Aero Auction Sales Inc. and the assets of Aero Auction Sales Inc. were transferred to a new company and Aero Auction Sales Inc. ceased to operate.

As a result, Churchill brought a default judgement motion for unpaid wages and vacation pay, damages for wrongful dismissal and aggravated and punitive damages. The company or Duns did not defend the action.

The Court noted that the issues on the default judgement motion are whether personal liability against Duns is an appropriate remedy and whether there are enough facts and evidence to support a claim for personal liability against Duns and if so, what are the appropriate measure of damages for wrongful dismissal in this case.

In applying the legal principles set out in Wilson v. Alharayeri, the Court held that Duns acted oppressively when it transferred Aero Auction Sales Inc. to another company for the purpose of avoiding paying Churchill any payments. The Court also held that as sole director of the company, Duns was held personally liable for the oppressive action identified and for acting in bad faith and with personal animosity against Churchill to punish Churchill and gain leverage over their family law dispute.

As such and relying on the factors in Bardal v. The Globe and Mail, among other decisions, the Court awarded Churchill:

• $2,582 for unpaid wages;
• $13,776 for unpaid accrued vacation pay;
• $90,000 for pay in lieu of reasonable notice;
• $75,000 for aggravated damages; and
• $11,741 as partial indemnity legal costs.

Takeaway for Employers

While this case was undefended and the facts of this case are unique, this case illustrates that the liability for employers in wrongful dismissal claims can be much greater than a claim for unpaid wages and vacation pay.