Audit, Compliance and Risk Blog

Ontario Court of Appeal Punishes Directors For Breaching Fiduciary Duties

Posted by Jon Elliott on Mon, Mar 28, 2022

In December, the Ontario Court of Appeal reviewed a case involving two disputing factions in a 5-member partnership (Extreme Venture Partners Fund I LP v. Varma).1  The two partners who managed the activities decided that their efforts were being undervalued by the other 3, and responded by starting competing businesses, diverting resources from the original entity, and hiding these activities. The other 3 partners eventually found out and sued them for breaches of their fiduciary duties. The trial court found against the wrongdoers, and on appeal the Court of Appeal actually increased their punishment.

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Tags: Labour & Employment, Canada, Directors Liability, Ontario Court

“Bad Faith” Termination Yields Bad Consequences for the Employer

Posted by Jon Elliott on Mon, Jan 10, 2022

In October, the Ontario Superior Court of Justice granted summary judgment to an ex-employee suing her ex-employer for wrongful dismissal, aggravated damages for mental distress and punitive damages. In this case, Humphrey v. Menē, Inc., the Court found that the employer’s “bad faith” termination had invalidated the termination clause in the parties’ employment contract, and then rejected the employer’s change in argument from a termination for cause to termination without cause, and awarded 11 months’ wages at the salary of $90,000, aggravated damages of $50,000 due to mental distress, and $25,000 in punitive damages for 2.7 years of service.

Remembering that summary judgment is only available when the court decides there’s no genuine issue of fact that would justify a trial, this represents an extreme outcome. However, it still should remind employers to tread carefully when moving to terminate an employee.


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Tags: Labour & Employment, Canada, Ontario Superior Court of Justice

Ontario Reviews When Directors May Be Liable Across Common Employers

Posted by Jon Elliott on Tue, Sep 07, 2021

In June, the Ontario Court of Appeal issued a decision addressing two issues that should interest corporate directors – certainly in the province, and probably throughout Canada. The case is O’Reilly v. ClearMRI Solutions Ltd., and the issues it addresses are:

  • when might two companies be considered “common employers” of a single individual employee, sharing responsibilities for compliance with applicable labour laws; and

  • when might corporate directors, including directors of “common employers,” become personally liable for their company’s non-compliance with those laws.

The rest of this note discusses these issues, and the O’Reilly case decision.


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Tags: Labour & Employment, Canada, Directors Liability, Ontario Court

Preventing Work-related Heat Illness

Posted by Jon Elliott on Tue, Jun 29, 2021

Summer has arrived, bringing record-breaking heat to parts of North America. It's time to remember that outdoor work in the summer sun can lead to heat illness, as can indoor work in spaces that aren’t sufficiently insulated or cooled.

In the United States, the federal Occupational Safety and Health Administration (OSHA) and most state OSH programs provide guidance to employers and their workers. California's Division of Occupational Safety and Health (Cal/OSHA) administers detailed regulatory requirements for outdoor first promulgated in 2005, and Washington has enforced state-level rules since 2007. Canadian occupational health and safety agencies also recognize “thermal stress” as a workplace hazard, with attention to both heat and cold. California has been working on standards for indoor workplaces since 2017.

If you have outdoor workers in California you must comply with the following requirements, while if you're anywhere else you should at least consider them. 

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Tags: EPA, CalEPA, Canada, Heat Wave, Heat

Another Encouragement for Canadian Directors to Consider Non-shareholder Interests

Posted by Jon Elliott on Wed, May 19, 2021

Whose interests should corporate directors consider when running their companies? At least since 2008. The prevailing view in Canada is that while directors must consider shareholders’ interests, they may also consider the interests of other stakeholders. For example, in 2008, the Supreme Court of Canada decided the case BCE Inc. v. 1976 Debentureholders, allowing but not requiring consideration of debenture holders. Recently this permission has been shading toward an expectation.

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Tags: Labour & Employment, CBCA, Canada, Directors Liability