Ontario court awards total damages of $30,000 – plus costs of $32,000
Exclusive to Canadian HR Reporter from Rudner Law.
As we previously outlined, the case of Westgate v Stockbox Kitchens Inc. demonstrates why it is important for the employer to attend a hearing at the Ontario Labour Relations Board.
In Westgate, the board proceeded with the hearing in the absence of the employer and decided in favour of the employee.
What about when the employer fails to participate in civil litigation? It may come as no surprise to learn that the court will proceed in their absence.
A recent case in Ontario demonstrates how an undefended matter will proceed, the multiple chances that a defendant will be given to participate in the process, and the impact that a party’s misconduct can have on an award of costs.
Employee sues for wrongful dismissal
The individual worked for the employer from Feb. 15, 2022 to Feb. 6, 2023, approximately a week short of a full year. The court would later note that this appeared to be an attempt by the employer to avoid having to pay her additional entitlements under the Employment Standards Act, 2000.
The plaintiff claimed that the principal of the employer, Fraser Simpson, micromanaged her to the point of harassment. After terminating her employment via text message, the employer also withheld the employee’s final wages, in the amount of $3,967.
The ex-employee sued for wrongful dismissal. The employer did not file a statement of defence and was noted in default. The employer received the court’s standard materials regarding a default judgment, including how to have the default set aside. The employer did not follow this procedure and instead requested a case conference, which took place on May 31, 2024.
No representative of the employer attended. Simpson advised the Registrar that he was in a business meeting and was too busy to attend. The case conference judge’s endorsement directed the employer to bring a motion to set aside the noting in default, and for an order to permit Simpson to act on behalf of the employer by no later than April 30, 2025. This endorsement also advised the employer that failure to do so could result in it being prevented from raising any defence.
The employer did none of what was instructed and over a year passed between the court’s endorsement and the trial. The employer’s participation in the litigation process was limited to what the court described as “abusive communications with counsel”.
Notice period of 4 months
Simson attended the hearing and requested an adjournment, citing the volume of documents in the case and that he had been “too busy” to deliver a statement of defence or to bring the motions (to set aside the default and to be permitted to represent the defendant) that the case conference judge had instructed the employer to bring.
The court rejected the employer’s request and the trial proceeded. The ex-employee had sued for a 12-month notice period, and was initially awarded a notice period of three months.
The court then reviewed the employer’s behaviour at the time of dismissal and afterwards and its impact on the ex-employee’s ability to find another job. This included dismissing her immediately before the one-year work anniversary, the refusal to pay the employee's final paycheque, and not providing the employee with a reference letter.
The court found that these actions had a negative effect on the employee's ability to find employment, and increased the notice period by one month.
In the decision, Shynkarova v. 2554318 Ontario Ltd. O/a Tax Mechanic, the court awarded the ex-employee a total of $26,967 plus $3,589 in pre-judgment interest.
The vourt then turned to costs. It found that the employer’s conduct in requesting the reopening of pleadings but still failing to participate had unnecessarily delayed the proceedings and increased the ex-employee’s costs. The court described the employer as having “exercised and abused its procedural rights at the expense of the plaintiff” and ordered it to pay the ex-employee’s costs on a substantial indemnity basis. The court ordered an award of $32,445 in costs — significantly above the total award of damages.
‘Abuse of procedural rights’
The employer had little to no potential to defend the wrongful dismissal claim in this matter. There did not appear to be an employment agreement between the parties and there was no assertion of cause at the time of dismissal, so the ex-employee was entitled to reasonable notice on dismissal.
This was not necessarily fatal to the employer’s position: it could have focused on the ex-employee’s mitigation efforts and asserted that these were insufficient. This could have led to a lower notice period.
Instead, in the court’s words, the employer “exercised and abused its procedural rights”. Not only did this not have an impact on the ex-employee’s notice period, it had a seriously detrimental effect on the award of costs levied against the employer.
There are ways to defend a poor position: the employer’s actions in this matter demonstrated the way not to do this.
Geoffrey Lowe is an associate lawyer at Rudner Law in Toronto. He can be reached at (416) 864-8500 or [email protected].
