The appellants, former managerial employees of an insolvent corporation, obtained a judgment ordering the corporation to pay them over $300,000 in lieu of notice of dismissal.
They subsequently brought an action under s. 114(1) of the Canada Business Corporations Act seeking to hold the directors personally liable for these amounts.
The Supreme Court of Canada held that pay in lieu of notice does not constitute a debt for services performed for the corporation within the meaning of the Act.
Rather, it is a claim for damages arising from the employer's breach of the employment contract.
Consequently, the directors were not personally liable, and the appeal was dismissed.
