Boyce Estate v. 2113626 Ontario Inc., (Hampton Inn and Suites)

Executive Summary: Key Legal and Evidentiary Issues

• Whether 2113626 Ontario Inc. and 2170990 Ontario Inc. jointly met the “common employer” test and were both liable for Ms. Boyce’s wrongful dismissal
• Impact of the earlier uncontested $120,000 wrongful dismissal judgment against 2170990 Ontario Inc. on a subsequent claim against 2113626 Ontario Inc.
• Proper application of the doctrines of res judicata and abuse of process where related corporate entities are involved but only one was named in the initial action
• Degree of appellate deference owed to a motion judge’s factual findings and application of the common employer doctrine on a summary judgment record
• Fairness considerations when the closely connected roles of related corporations as employers were not easily discernable to the employee at the time of the first claim
• Appropriateness of awarding partial indemnity costs on appeal after the dismissal of the employer’s challenge to the summary judgment decision

Background and facts of the employment relationship

Elizabeth Boyce was hired in 2009 to work as a manager at the Hampton Inn and Suites hotel in Brantford, Ontario. Her written employment contract provided for a fixed term of three years, giving her a reasonable expectation of stable employment over that period. Despite this agreed term, her employment was terminated only five months after she began working. Following her dismissal, Ms. Boyce commenced a wrongful dismissal action against 2170990 Ontario Inc. (“217”), the company first identified as her employer. That action proceeded uncontested, and she obtained a judgment for $120,000 in wrongful dismissal damages based on the premature termination of her three-year fixed-term contract. When it subsequently became clear that 217 would not satisfy the judgment, Ms. Boyce turned her attention to other parties involved in the operation of the hotel. She started a second proceeding against 2113626 Ontario Inc. (“211”), which carried on business as Hampton Inn and Suites, as well as against an individual, Danny Bawa, alleging that they too were liable for wrongful dismissal. Before this second claim could be finally adjudicated, Ms. Boyce passed away, and her estate continued the litigation in her stead.

Summary judgment decision in the Superior Court

The matter proceeded before a motion judge in the Superior Court of Justice by way of a summary judgment motion. On that motion, the central issue was whether 211 and 217 should be treated as “common employers” of Ms. Boyce for the purposes of her wrongful dismissal claim. The motion judge carefully reviewed the record and found that both corporations were jointly involved in running the Hampton Inn and Suites hotel. Their operations and roles were closely tied, and the judge concluded that both companies shared a common intention to create an employment relationship with Ms. Boyce. On that basis, the motion judge held that 211 and 217 met the legal test for common employers and that 211 was jointly liable, along with 217, for Ms. Boyce’s wrongful dismissal. At the same time, the motion judge dismissed the claim against the individual defendant, Mr. Bawa, finding no basis to hold him personally liable for the dismissal.

Res judicata and abuse of process arguments at first instance

A significant part of 211’s defence at first instance revolved around procedural doctrines rather than the underlying employment facts. 211 argued that Ms. Boyce’s earlier uncontested judgment against 217, for the same wrongful dismissal and in the amount of $120,000, should prevent her (or her estate) from suing 211 in a later proceeding. Specifically, 211 relied on the doctrines of res judicata and abuse of process, submitting that Ms. Boyce was attempting to relitigate a matter that had already been determined and that this was unfair and abusive of the court’s processes. The motion judge rejected these procedural defences. He concluded that 211 had not been a party to the original action and thus had not suffered procedural unfairness by being required to respond to the later claim. He further noted that, in circumstances where two related corporations are closely tied and their respective roles and relationships as employers are not readily apparent to an employee, rigidly applying res judicata to bar a subsequent claim would risk injustice. The judge emphasized that the common employer doctrine exists precisely to avoid an artificial and unjust application of res judicata in such cases, where the employee could not reasonably be expected to identify all true employer entities at the outset.

Appeal to the Ontario Court of Appeal

211 appealed the summary judgment decision to the Court of Appeal for Ontario. On appeal, 211 challenged both the finding that it was a common employer with 217 and the rejection of its res judicata and abuse of process arguments. In essence, the appellant asked the Court of Appeal to reconsider and reweigh the evidence underlying the motion judge’s analysis of the common employer test and to substitute its own view of the factual record. The Court of Appeal held that the motion judge had correctly articulated the legal test for determining whether 211 and 217 were common employers. The judge’s factual findings—that both companies were jointly involved in running the hotel and that both shared a common intention to enter into an employment relationship with Ms. Boyce—were supported by the record. The appellate court noted that, absent an extricable error of law, it must defer to the motion judge’s factual determinations and his application of the law to those facts on a summary judgment motion. 211 was unable to identify any palpable and overriding error in the motion judge’s reasoning, and the Court of Appeal therefore declined to interfere with his conclusion that 211 and 217 were common employers and jointly liable.

Appellate treatment of res judicata and abuse of process

The Court of Appeal also addressed 211’s renewed reliance on res judicata and abuse of process. It agreed with the motion judge that 211 had not been a defendant in the original wrongful dismissal action commenced by Ms. Boyce against 217. Because 211 was not a party to that earlier proceeding, it suffered no unfairness in being required to respond to a later claim brought by Ms. Boyce’s estate. The court further endorsed the motion judge’s fairness analysis in the context of related corporate entities functioning as employers. Where two corporations such as 211 and 217 are closely tied and their relationship and roles are not easily discernable to the employee, it would be unfair to preclude that employee—or, as in this case, the employee’s estate—from later pursuing a claim against an additional entity once it becomes clear that the original defendant cannot satisfy the judgment. In this context, the Court of Appeal accepted the motion judge’s view that the common employer doctrine is meant to “negate an artificial and unjust application of the res judicata doctrine in circumstances like this.” By confirming that reasoning, the Court of Appeal clarified that res judicata and abuse of process should not be applied mechanistically to defeat legitimate efforts to enforce employment rights against all entities that in substance functioned as the employer.

Final disposition and outcome of the case

In the result, the Court of Appeal dismissed 211’s appeal in its entirety, thereby upholding the motion judge’s summary judgment decision. The finding that 211 and 217 were common employers of Ms. Boyce and jointly liable for her wrongful dismissal remains intact, as does the dismissal of the claim against Mr. Bawa. The earlier uncontested judgment in the amount of $120,000 against 217 for wrongful dismissal damages continues to stand, and, by virtue of the common employer ruling, 211 shares responsibility for satisfying that judgment. On the appeal, the court ordered that costs be paid to the successful party, the Estate of Elizabeth Boyce, in the agreed sum of $7,500 on a partial indemnity basis. Combining the first-instance wrongful dismissal judgment of $120,000 with the Court of Appeal’s costs award of $7,500, the decisions together result in a total of $127,500 in quantified monetary relief in favour of the estate, with any further costs at the trial level not ascertainable from the available decisions.