COURT OF APPEAL FOR ONTARIO

CITATION: Antunes v. Limen Structures Ltd., 2016 ONCA 61

DATE: 20160120

DOCKET: M45653 (C60563)

Lauwers J.A. (In Chambers)

BETWEEN

John Antunes

Respondent/Moving Party

and

Limen Structures Ltd.

Appellant/Respondent Party

Jamie J. VanWiechen, for the moving party

Arnold B. Schwisberg, for the responding party

Heard: January 13, 2015

ENDORSEMENT

[1] Mr. Antunes successfully sued Limen Structures Ltd. for wrongful dismissal. Justice C. Brown rendered judgment on June 2, 2015 awarding him wrongful dismissal damages in the amount of $105,228.54, plus pre-judgment interest of $3,504.25 and costs in the amount of $37,500, for reasons reported at 2015 ONSC 2163.

[2] The trial judge found Mr. Antunes was entitled under his employment contract to 5% of the Limen Structures’ shares, and awarded “other damages” in the amount of $500,000, representing the value of the shares.

[3] On June 8, 2015, the appellant filed a notice of appeal asking the judgment to be varied by setting aside the award of damages for $500,000, but did not appeal the award of wrongful dismissal damages, pre-judgment interest or costs. The effect of the notice of appeal was an automatic stay of the judgment pending appeal under rule 63.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[4] Mr. Antunes brought this notice of motion, dated October 5, 2015, under rule 63.01(5) of the Rules of Civil Procedure to lift the stay in respect of the wrongful dismissal damages, pre-judgment interest and the costs award, since these were not appealed.

[5] In response, Limen Structures filed a “supplementary notice of appeal” challenging the amount of wrongful dismissal damages awarded by the trial judge, which was equivalent to eight months’ salary. Although the supplementary notice of appeal would have been months out of time if it had been the original notice of appeal, rule 68.08 entitles an appellant to amend a notice of appeal without leave before leave is perfected.

[6] Mr. Antunes argues that the court should exercise its discretion under rule 63.01(5) to lift the stay in respect of the wrongful dismissal damages, interest and costs despite the supplementary notice of appeal, which he argues has no merit and was served solely for the purposes of buttressing Limen Structures’ claim to a stay as a way to stave off payment.

[7] Mr. Antunes notes that the financial condition of the company has deteriorated and continues to deteriorate. He worries that by the time the appeal is argued the company will be insolvent and its assets dissipated to the principals of Limen Structures and related entities.

[8] In his affidavit, Mr. Antunes advises that his counsel has told him that the appellant’s counsel “has stated on several occasions that the Appellant does not have the financial ability to pay the judgment herein.” Mr. Antunes then states “I am extremely concerned that any delay in my ability to enforce the Judgment will make it more difficult to collect the amount owed pursuant to the Judgment.”

[9] This is not an unreasonable fear, considering the appellant’s own evidence. The appellant filed the affidavit of Verne Pritchard, Controller and Chief Financial Officer of the Limen Group of Companies which includes Limen Structures. This affidavit discloses that before the pretrial in this action, counsel for Limen Structures provided counsel for Mr. Antunes financial statements as of August 31, 2013, showing an operating loss in excess of $5 million, and an accumulated deficit of $2.9 million and secured loans to related parties of greater than $3.4 million. Mr. Pritchard adds that on March 12, 2015, before the trial of this action, the lawyer for Limen Structures’ secured creditors provided counsel for Mr. Antunes with a statement regarding the claimed indebtedness, a Personal Property Security Act Report, and a copy of the creditors’ notice of intention to enforce under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3. The appellant’s counsel asserted in argument that Limen Structures is insolvent.

[10] Moreover, Mr. Antunes doubts the honesty of Limen Structures and its principals, and relies on the trial judge’s findings, at para. 66: “Based on all of the evidence before me, I am satisfied that the defendant failed to act honestly in its contractual performance vis-à-vis the plaintiff, both in negotiations entering into the contract of employment and at the time of termination.”

The Test for Lifting a Stay

[11] I accept that the stay of execution imposed by rule 63.01 is intended to offer some protection to an appellant against payments which it might not eventually be obligated to make, thus putting it to the uncertainties of recovery. In Stein v. Sandwich West (Township) (1994), 1994 CanLII 10599 (ON CA), 16 O.R. (3d) 321 (C.A.), at pp. 322-3, Carthy J.A. observed:

If I make an order in this case, there will be a risk to the appellants and the only measure of that risk likes in an assessment of the merits of the appeal on liability. It is not necessary to find the appeal frivolous if I can be satisfied that on the basis of what is presented to me, at this stage of the proceedings, the chances of success are so modest that they are overwhelmed by the hardship to the applicants.

[12] Justice Carthy found “nothing in the wording of rule 63.01(3) [now rule 63.01(5)] to prevent the exercise of the court’s discretion under any circumstances, including where the risk is imposed on the appellants.”

[13] These cases require the court to consider a number of contextual factors, including: the grounds of appeal; the parties’ position at trial; what has happened since the trial; the general circumstances of the case, including the trial judge’s reasons; and the probable delay between trial and appeal that cannot be controlled by the parties, as noted in Todd Archibald, Gordon Killeen & James C. Morton, Ontario Superior Court Practice, 2015 (Markham, Ont.: LexisNexis, 2014), at p. 1740.

[14] This court described the test for lifting the stay in SA Horeca Financial Services v. Light, 2014 ONCA 811 (per Weiler J.A. (In Chambers)), at para. 13:

Rule 63.01(5) gives an appellate court judge discretion to lift a stay imposed by rule 63.01(1) “on such terms as are just.” In considering whether to lift a stay, the court should have regard to three principal factors: i) financial hardship to the respondent if the stay is not lifted; ii) the ability of the respondent to repay or provide security for the amount paid; and iii) the merits of the appeal.

[15] In Keays v. Honda Canada Inc., 2007 ONCA 564, Armstrong J.A. (In Chambers) considered lifting the stay in a wrongful dismissal action pending appeal to the Supreme Court of Canada. He partially lifted the stay on the basis that the respondent had made out a significant case for financial hardship if the stay were not lifted. He recognized that it was very unlikely that the respondent would be able to repay or provide security for any amount paid to him.

[16] While Armstrong J.A. expressed difficulty in assessing the merits of the appeal in Keays, because he was not provided with a list of the grounds, he noted, at para. 23, that the decision on liability for wrongful dismissal “is based on findings of fact made by the trial judge which were subject to appellate review on the basis of palpable and overriding error – a very difficult standard to meet.”

[17] In Keays, Armstrong J.A. lifted the stay to the extent of $60,000 while the appeal proceeded in the Supreme Court of Canada. (I note in passing that Armstrong J.A.’s assessment was vindicated when the Supreme Court allowed Honda’s appeal, but only in relation to the damages award for the conduct of the dismissal and the award of punitive damages. The wrongful dismissal damages were upheld: Keays v. Honda Canada Inc., 2008 SCC 39, [2008] 2 S.C.R. 362.)

The Test Applied

[18] I now consider the elements in the test for lifting a stay, applied to the wrongful dismissal aspect of the judgment.

[19] The supplementary notice of appeal sets out the following grounds:

(1) The trial judge expressly found that the Plaintiff failed to prove that he was induced from secure long-term employment as he had claimed. Therefore, the finding that in law the Plaintiff was entitled to pay in lieu of notice at the top end of the scale for an employee of a five month short-service period, was made in error.

(2) Although the Plaintiff was found to have had no evidence explaining his inconsistent testimony about the duration of the computer virus that affected his ability to prove mitigation, no weight was given to these inconsistencies, causing a palpable error in fact and law, which was ignored in the judgment, in favour of the applicable period for pay in lieu of notice without due consideration of the failure of the plaintiff to prove any mitigation.

[20] The contextual factors must be taken into account. I observe that Mr. Antunes testified and was found by the trial judge to be credible. By contrast, the appellant called no evidence at trial. The trial judge was critical of the appellant’s failure to call the president, Tony Lima, with whom Mr. Antunes negotiated the employment contract. As a consequence, she accepted Mr. Antunes’ version of the events on which Mr. Antunes was extensively cross-examined.

[21] On the issue of hardship, Mr. Antunes states in his affidavit that he was unable to secure employment from the date of termination on November 9, 2012 and until March 2014. That employment terminated in August 2015 and Mr. Antunes says that he has since only found short-term consulting work and no permanent opportunity. Mr. Antunes notes that “throughout the 17 months without employment, I had to support my wife and two kids, and pay the legal bills for the within action. This caused me a great deal of financial stress and hardship, and required me to incur extensive debts.” I see no reason to doubt this evidence.

[22] Mr. Antunes’ factum admits that he “likely does not have the ability to repay any substantial amount collected from the Appellant.” His counsel undertakes as an alternative to outright payment to Mr. Antunes, “to hold and trust any proceeds realized from lifting the stay pending the appeal’s outcome” on his behalf.

[23] At all times, Limen Structures has asserted its inability to pay. The appellant has managed its affairs in such a way as to minimize its financial exposure to Mr. Antunes. I accept that businesses can find themselves in financial difficulty for many reasons having nothing to do with the wrongful dismissal claim of a former employee. But I take into account the “scorched earth” trial and appeal tactics taken by the appellant.

[24] With respect to the merits of the wrongful dismissal appeal, the first ground alleges that the trial judge erred in law in finding that the respondent was entitled to pay in lieu of notice at the top end of the scale for an employee of a five month short-service period. The trial judge’s error, says the appellant, was in failing to take into account her finding that Mr. Antunes failed to prove that he was recruited away from secure long-term employment by Limen Structures.

[25] To the contrary, in applying the Bardal factors (derived from Bardal v. Globe & Mail Ltd. (1960), 1960 CanLII 294 (ON SC), 24 D.L.R (2d) 140, at p. 145), the trial judge referred to and rejected Mr. Antunes’ inducement argument, at paras. 79-80:

I do not find that the plaintiff was induced to leave other secure, long-term employment. I do find, however, that there was a breach of the duty to contract in good faith, and that misrepresentations were made in the context of employment negotiations with the plaintiff.

Taking into account the Bardal factors as set out above, I find that the plaintiff would have been entitled to a reasonable notice period of eight months. In so finding, and while cognizant of his short tenure with the defendant, I have also considered his senior position, his supervisory duties, his age and the availability of similar employment, as well as the defendant's misrepresentations and the defendant corporation's failure to abide by the rules of contractual conduct as set out in Bhasin v. Hrynew.

[26] The appellant’s challenge is not therefore one of law, but of the weight that the trial judge accorded to the Bardal factors. To succeed on this ground, the appellant must demonstrate that the trial judge made a palpable and overriding error.

[27] With respect to the second ground in the supplementary notice of appeal, concerning mitigation, contrary to the appellant’s assertion, the trial judge accepted Mr. Antunes’ evidence regarding his mitigation efforts. She accepted his explanation that the virus that destroyed his computer hard drive including any records did so in January 2013, and that he had mistakenly said it happened in January 2014.

[28] All of these findings can only be displaced if it is ultimately found that the trial judge made a palpable and overriding error. As Armstrong J.A. noted in Keays, this is a “very difficult standard to meet”.

Disposition

[29] The merits of the wrongful dismissal appeal are weak, as the appellant implicitly acknowledged by only belatedly amending its notice of appeal to add the wrongful dismissal appeal in response to this motion. Mr. Antunes has demonstrated financial hardship. While he might not be able to repay any amounts paid to him by the appellant, the interests of justice in the case favour the exercise of my discretion. I do not require his counsel to maintain any payment in trust for Mr. Antunes.

[30] In the result, pursuant to 63.01(5) of the Rules of Civil Procedure, I lift the stay in respect of the award of wrongful dismissal damages, pre-judgment interest and the costs. The costs of this motion are reserved to the panel hearing the appeal.

“P. Lauwers J.A.”