Company also on hook for 20 months’ pay for breach of contract
An Ontario company must pay a former executive more than $350,000 in breach-of-contract and punitive damages after it fired him without notice while he was being treated for cancer.
The worker, now 69 years old, served as the vice-president and general manager of Valley Associates and Valley Associates Global Security Corporation, a defence and security contractor in Ottawa, since 2007. His employment was under a written contract between the worker’s personal services corporation, called Griffon, and Valley Associates.
The personal services contract was initially for a two-year term, but once that period elapses, it continued as an indefinite-term employment contract with Valley Associates paying for the worker’s services through Griffon.
However, according to the worker, Valley Associates was frequently late in paying him his full entitlements under the contract, with the deficit ballooning to more than $225,000 at one point.
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Fired without cause or notice
In August 2018, the worker was diagnosed with colon cancer requiring surgery and chemical treatment. He continued to work for Valley Associates when he was able, but on Jan. 15, 2019, Valley Associates terminated his employment without cause or notice.
The worker sued for breach of contract and wrongful dismissal, claiming punitive damages, against Valley Associates and the individual who was the owner, director, and CEO of the corporations.
Valley Associates responded by launching a counterclaim for breach of contract, fraud, and defamation, and alleging that the worker was guilty of financial irregularities and after-acquired cause. As it turned out, the company had little evidence to support the counterclaim.
The court found that even though the worker was working under a personal services contract, it was essentially an employment contract. Additionally, once the initial two-year term lapsed, the contract was “a continuing contract of indeterminate duration,” said the court, noting that such a contract could only be terminated with reasonable notice.
An Ontario court awarded $55,000 on top of 22 months’ notice to a worker fired after she took medical leave for cancer treatment.
Difficult circumstances
The court also found that at the time of his termination, the worker was 65 years old, was undergoing cancer treatment, and was in a difficult financial consideration because Valley Associates had been underpaying him. His prospects of finding alternative employment were limited and the company made things worse by cutting of his medical benefits and accusing him of financial irregularities and fraud, which could be potentially damaging to his career, said the court.
The court determined that a senior executive such as the worker, with all the factors considered – including “the brutality of the dismissal” - was entitled to 20 months’ reasonable notice.
The court also considered the behaviour of Valley Associates in the termination and frivolous counterclaim to be deserving of additional denunciation and awarded $75,000 in punitive damages.
The court noted that it had been established in the jurisprudence that “the corporate veil may appropriately be pierced if an individual directs a wrongful act to be done and effectively uses a corporation simply as an alter ego.” The role that the owner of Valley Associates played in the treatment of the worker was significant enough to make him jointly and severally liable for the damages, said the court.
Valley Associates, Valley Associates Global Security Corporation, and the owner of the companies were ordered to pay the worker $290,932.40 for breach of contract, $75,000 in punitive damages, prejudgment interest, and substantial indemnity costs.
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