THE EMPLOYERS' EDGE
Ontario Court of Appeal Upholds Summary Judgment Motion to Stay Payment of Wrongful Dismissal Damages
In the recent decision of Hinke v. Thermal Energy International Inc., 2012 ONCA 635 (2012 ONCA 635 (CanLII)) Ontario’s Court of Appeal reiterated the state of the law that a stay of an order for damages should be granted where there is a counterclaim, unless that counterclaim is without merit.
Thomas Hinke was the former President of Thermal Energy International Inc., a company providing custom energy and emission reduction technologies for energy intensive industries. He was terminated in 2005, and the parties settled a number of residual disputes by way of four separate agreements. One of those agreements stipulated that Thermal Energy International Inc. would enter into a new employment agreement with Mr. Hinke. There was no dispute that the company breached this agreement, and Mr. Hinke made a claim for damages for wrongful dismissal, repayment of debts and expenses, and payment pursuant to a convertible debenture issued to him. Thermal Energy International filed a counterclaim against Mr. Hinke for damages based on alleged oppression, breach of fiduciary duty, and negligence.
At trial, Mr. Hinke brought a motion for summary judgment, in part, on his claim of wrongful dismissal. The Court at that stage found that the company had wrongfully dismissed Mr. Hinke, and ordered it to pay an amount equal to 18 months’ pay in lieu of notice. However, the Court also granted the company’s request to stay the enforcement of that order pending a determination of the remaining issues, including the counterclaim since the issues still to be resolved arose from the same business relationship as the wrongful dismissal dispute.
Mr. Hinke appealed the Court’s decision on the motion to the Ontario Court of Appeal.
In response to Mr. Hinke’s argument that the lower Court erred in staying the order to pay wrongful dismissal damages, the Court of Appeal emphasized that a stay of this kind should be granted unless the counterclaim is without merit. In this capacity, it was significant that Mr. Hinke did not seek dismissal of the counterclaim. The Court inferred that even he did not consider it to be without merit, and therefore dismissed the appeal and ordered Mr. Hinke to pay $8,000 in costs to the company.
By staying the order to pay, the Court could determine the remaining issues in dispute, determine what other liability each party might hold to the other, and calculate a final net balance of money owing between the parties and make a conclusive order for payment on that figure.
This outcome is relevant to employers because it is another strong endorsement of the general rule that an order to pay damages for wrongful dismissal should be stayed if there is an outstanding counterclaim against the plaintiff, so long as that counterclaim is not without merit.
The rules and legal principles concerning civil litigation in the employment context can be rather complex, and the experienced counsel at CCPartners are able to give our clients the strategic advice necessary to protect their interests.
Please Note: This blog has been prepared as an informational service for our clients and other interested parties. It is not intended to constitute legal advice, a complete statement of the law or opinion on any subject. Although we endeavour to ensure the accuracy of the content, no one should act upon the information provided without a thorough examination of the law after the facts of a specific situation are fully considered.