COURT OF APPEAL FOR ONTARIO
CITATION: Hill v. 1359768 Ontario Inc. (B&B Towing), 2026 ONCA 577
DATE: 20260810
DOCKET: COA-24-CV-1297
Roberts, Favreau and Rahman JJ.A.
BETWEEN
Jack Hill
Plaintiff (Respondent)
and
1359768 Ontario Inc. o/a B&B Towing* and Kells Service Centre Inc. o/a Kells Towing and Recovery and 2608455 Ontario Inc. o/a Kells Towing & Blue Mountain Towing and 2466188 Ontario Inc. o/a Currie’s Towing & Storage
Defendants (Appellant*)
Howard Cohen and Avin Persad-Ford, for the appellant
Stan Fainzilberg and Teilen Celentano, for the respondent
Heard: December 16, 2025
On appeal from the order of Justice Mary E. Vallee of the Superior Court of Justice, dated October 31, 2024, with reasons at 2024 ONSC 5995.
I. Overview
[1] This appeal involves the issues of frustration and damages in the context of the contract of employment between the appellant and the respondent.[1]
[2] The trial judge found that the appellant, a towing services company, had constructively dismissed the respondent by demoting him from the managerial position of a road boss to a tow truck driver. She rejected the appellant’s argument that the employment agreement had been frustrated because of the respondent’s inability to perform the duties of the road boss position. She awarded damages for a 22-month notice period, which included the pecuniary value of the loss of the use of a company vehicle (a tow truck) and cellphone that were assigned to the respondent during his employment.
[3] The appellant does not dispute the trial judge’s finding that, if the employment contract was not frustrated, the respondent was constructively dismissed from his employment because of his demotion to tow truck driver. However, the appellant submits that the trial judge fell into analytical error with respect to the issue of frustration in that:
She failed to address what were the essential duties of the road boss position and whether there was no reasonable likelihood that the respondent could have discharged those essential duties within a reasonable time; and
She erred in her assessment as to whether the appellant could have reasonably accommodated the respondent in the essential duties of the road boss position because of his physical limitations and the appellant’s financial constraints.
[4] The appellant further challenges the trial judge’s assessment of damages. While not disputing the 22-month notice period or the other categories of damages awarded, the appellant argues that the trial judge erred by awarding damages related to the respondent’s loss of the use during the notice period of the company tow truck and cellphone assigned to the respondent to carry out his employment functions.[2]
[5] These reasons explain why I do not accept the appellant’s arguments that the trial judge’s assessment of the issue of frustration was a product of legal error. While her reasons are brief, she applied the correct analytical framework, and her factual findings are supported by the record.
[6] I do not reach the same conclusion with respect to the trial judge’s assessment of damages. I would set aside part of the trial judge’s award of damages and deduct the amounts awarded for the claimed lost use of the company tow truck and cellphone.
II. Factual Background
[7] The respondent had worked for the appellant, a towing services company, for about 17 years when he left the company near the end of February 2022, alleging that he had been constructively dismissed.
[8] At the beginning of 2022, the respondent was on long-term disability leave and had been since May 1, 2020, when the respondent underwent emergency surgery. On August 17, 2020, he began receiving long-term disability benefits from the appellant’s insurer. In a note dated February 10, 2021, a surgeon involved in the respondent’s care indicated that the respondent was recovering from surgery and, with respect to the respondent’s return-to-work plan, recommended modified duties based on restrictions of no heavy lifting (above 30-40 pounds), no overhead lifting, and no working at great heights where there may be a risk of falling. On July 27, 2021, the respondent’s physician, Dr. Langford, suggested that the respondent could do a trial return to work after his specialist appointment on August 31, 2021, if accommodations could be made. Restrictions of no lifting above 30 pounds were repeated. Dr. Langford also recommended that administrative work would be preferred and suggested a gradual increase in hours. Dr. Langford noted that the respondent’s headaches were worse with exertion. On December 21, 2021, Dr. Langford again suggested the respondent could return to work on a trial basis with the same restrictions, if accommodations could be made.
[9] During his absence, the respondent’s road boss responsibilities were assumed by the appellant’s principals, Sherry and Dwayne Baker. The respondent and the Bakers met on September 27, 2021, while the respondent was still off work, to discuss the respondent’s return to work. At that meeting, the Bakers advised the respondent that his road boss position had been eliminated because of financial constraints and that, when he returned, he would work as a tow truck driver at a lower rate of pay after an initial eight-week period at the road boss level of compensation. In his email dated December 31, 2021, the respondent acknowledged that the road boss position change had been communicated during the September 27, 2021 meeting.
[10] In a letter to the respondent dated January 3, 2022, the appellant confirmed that the road boss position would be eliminated and that the respondent could continue to work as a tow truck driver. The appellant again offered to continue the respondent’s compensation at the road boss position level for eight weeks. The respondent sent an email on January 4, 2022, asking that he be scheduled for work Monday to Friday. The respondent testified that he had also sent another email on January 4, 2022, indicating that he did not accept the demotion to tow truck driver, nor his reduction in pay, and considered it as a constructive dismissal. He further advised that he would be in for his scheduled shift on January 5, 2022 “to fulfill 8 weeks’ notice of demotion” (emphasis in original). Ms. Baker’s evidence was that she did not recall receiving that email.
[11] The respondent returned to work as a tow truck driver on January 5, 2022. The respondent subsequently provided the appellant with a doctor’s letter dated January 27, 2022, indicating that he could not work more than five hours a day, four days a week. He injured his back on February 17, 2022, when he pulled the cable on the tow truck’s winching apparatus that he was operating. He then provided another doctor’s note dated February 22, 2022, indicating that he could not work because he re-injured his back and that it was “unknown how long this patient will be off”.
[12] By email dated February 25, 2022, the respondent again advised that he was taking the position that he had been constructively dismissed. On March 1, 2022, Mr. Baker responded by email, indicating that he was treating the February 25, 2022 email as a resignation. The respondent never returned to work with the appellant.
[13] On March 3, 2022, the respondent commenced an action against the appellant and related corporate entities that he asserted were common employers. In his statement of claim, the respondent pleaded that the constructive termination of his employment contract occurred on February 24, 2022.
[14] On April 5, 2022, Canada Life, the respondent’s disability insurer, advised the respondent that his long-term disability benefits would cease on August 16, 2022. He obtained new, sedentary employment as a dispatcher at a lower salary in July 2022.
[15] In its amended statement of defence, the appellant asserted that the respondent had not been constructively dismissed and that the contract of employment had been frustrated by the respondent’s injuries that prevented him from carrying out the duties of the road boss position.
[16] The trial judge concluded that the respondent had been constructively dismissed by the appellant and rejected that the employment contract had been frustrated. However, she did not accept the respondent’s argument that the defendants were common employers. She assessed the reasonable notice period as 22 months. After deducting the respondent’s compensation received from his new employer, she awarded the respondent damages in the amount of $236,163.77. She also awarded the respondent costs of $84,750, consisting of $50,000 for fees and $25,000 for disbursements,[3] plus HST.
III. Analysis
a. Standard of review
[17] The standard of appellate review that applies to an employment contract frustration case is the well-established standard that applies in all appeals. For example, as stated by the Court of Appeal of Manitoba in Irvine v. Gauthier (Jim) Chevrolet Oldsmobile Cadillac Ltd., 2013 MBCA 93, 367 D.L.R. (4th) 436, at para. 42, leave to appeal refused, [2013] S.C.C.A. No. 488:
The identification and application of the correct legal principles is a question of law calling for the standard of review of correctness. Therefore, the failure to address a relevant legal principle is an error of law. In that situation, an appellate court must determine the issue based on, wherever possible, the findings of fact and credibility assessments of the trial judge, unless any of those findings cannot be sustained by the evidence. [Citations omitted.]
[18] The issue of whether the termination of the employment contract of a disabled employee is the product of a wrongful dismissal or the frustration of the employment contract depends on the facts of the case: Fraser v. UBS, 2011 ONSC 5448, 98 C.C.E.L. (3d) 326, at para. 12; Nason v. Thunder Bay Orthopaedic Inc., 2015 ONSC 8097 (“Nason (Ont. S.C.)”), at para. 180, aff’d 2017 ONCA 641, 44 C.C.E.L. (4th) 222 (“Nason (Ont. C.A.)”). The trial judge’s findings of fact, absent error in principle or palpable and overriding error, are therefore subject to appellate deference.
[19] As for the trial judge’s damages award, it is well-established that it is owed considerable appellate deference. Appellate interference is only warranted where the trial judge: 1) made an error of principle or law; 2) misapprehended the evidence; 3) erred in finding there to be evidence on which to base a conclusion; 4) failed to consider relevant factors; or 5) made a palpably incorrect or wholly erroneous assessment of the damages: Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2016 ONCA 520, 349 O.A.C. 360, at para. 33.
b. Issues
- First Issue: Did the trial judge err in finding that the employment contract was not frustrated?
i. Governing principles re frustration
[20] The doctrine of frustration is not controversial and was correctly described by the trial judge. “A contract is frustrated where, without default of either party, a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract”: Nagpal v. IBM Canada Ltd., 2021 ONCA 274, 71 C.C.E.L. (4th) 1, at para. 33; Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, [2001] 2 S.C.R. 943, at para. 53; and Aldergrove Duty Free Shop Ltd. v. MacCallum, 2024 BCCA 28, 492 D.L.R. (4th) 172, at paras. 27-30. The disruption must not be simply inconvenient, transitory or temporary: Aldergrove, at paras. 34-35. Rather, frustration will be established only when, at the time of frustration, there is no reasonable likelihood of the employee being able to return to work within a reasonable time: see Fraser, at para. 32; Nason (Ont. S.C.), at para. 180. The onus of establishing frustration is on the person alleging it, here, the appellant: Nason (Ont. C.A.), at para. 10; Irvine, at para. 55.
[21] Depending on the nature, seriousness and duration of an employee’s disability, an employment contract may be frustrated by the disability of an employee to perform the essential duties of the position. As the Supreme Court stated in Dartmouth Ferry Commission v. Marks (1904), 1904 CanLII 61 (SCC), 34 S.C.R. 366, at p. 380:
It seems clearly settled that under a contract to furnish the personal services of a particular person, there is an implied qualification that it is subject to such person being in health to perform the services when the time for their performance comes, and that the party so contracting is excused by the disability, without his fault, of the person who is to render the services. [Citations omitted.]
[22] The employer is under a duty to accommodate the employee's disability up to the point of undue hardship: Lemesani v. Lowerys Inc., 2017 ONSC 1808, at para. 186, aff’d 2018 ONCA 270. However, an employer is not required to amend the job description or delete a component that is significant in terms of time and responsibility: De Palma v. Canadian Federation of Independent Business, 2019 ONSC 7602, at para. 21, aff’d 2021 ONCA 406; McAlpine v. Econotech Services Ltd., 2004 BCCA 111, 25 B.C.L.R. (4th), at paras. 27-28.
[23] A contract may be frustrated, then, by a serious, lengthy and ongoing condition that cannot be accommodated by the employer without imposing hardship and that prevents the employee from carrying out the position’s essential duties within a reasonable time. However, a temporary sickness does not amount to frustration nor does an employee’s inability to perform minor parts of their position: Nagpal, at para. 33; Irvine, at para. 57; McLean v. City of Miramichi, 2011 NBCA 80, 377 N.B.R. (2d) 245, at para. 26; and Wightman Estate v. 2774046 Canada Inc., 2006 BCCA 424, 57 B.C.L.R. (4th) 79, at paras. 38-43. The question is whether the employer has proven that the employee’s sickness, injury or disability is so enduring as to defeat the object of the employment contract because the employee is unable to discharge the essential duties under the contract: Wightman Estate, at para. 21.
[24] Various factors informing the analysis as to whether an employment contract has been frustrated include the following list articulated by the Court of Appeal of Manitoba in Irvine, at para. 57:
Whether a contract has been frustrated due to illness depends on a number of factors including, the terms of the contract, how long the employee is likely to remain sick, the nature of the employment, the nature of the illness, the availability of sick leave and pay, the period of past employment and how long the employer should reasonably be expected to await the employee's return.
[25] The effect of frustration was recently described by this court in Croke v. VuPoint System Ltd., 2024 ONCA 354, 496 D.L.R. (4th) 484, at para. 69, leave to appeal refused, [2024] S.C.C.A. No. 290:
[F]rustration results in the immediate discharge of the obligations in the contract. There is no fixed legal requirement that an employee must necessarily be given advance notice that the employment relationship has been frustrated. There is similarly no invariable requirement that an employee must be given an opportunity to rectify their non-eligibility to work before terminating that employee based on frustration of contract. That said, ... depending on the particular circumstances, an employer who chooses not to do these things may be unable to establish that the supervening event radically altered the fundamental obligations of the contract.
ii. Principles applied
[26] The overarching issue on this appeal is the trial judge’s application of these governing principles, namely, whether she undertook the contextual analysis required by the facts of this case: Nagpal, at para. 34. Specifically, the necessary analysis required her to:
(i) Assess the nature of the respondent’s duties as road boss and whether he was incapable of performing the material aspects of his position at the time of the termination of his employment;
(ii) Consider whether the respondent could have returned to the road boss or comparable position within a reasonable time and with reasonable accommodation by the appellant save for undue financial hardship, as the appellant alleged; and
(iii) Determine whether the respondent’s injury was temporary or constituted a frustrating event at the time of the termination of his employment.
[27] In accordance with the governing principles that she recited, the trial judge’s analysis of the issue of frustration consists of the following paragraph:
[The respondent] was off work for 19 months, a relatively short period in comparison to the facts in the cases set out above. Even though he held a management position, there is no evidence that the business could not tolerate his absence in order to succeed. In fact, the opposite was true: [the appellant’s principals] assumed the road boss responsibilities. [The appellant] did not ask [the respondent]’s doctor whether he would likely be able to return to work in the foreseeable future. Unlike the facts in the cases set out above, [the respondent]’s doctors stated toward the end of 2021 that a trial return to work could be considered. [The respondent] returned to work in January 2022 and would have continued to work if his road boss position had been available. [The appellant] had accommodated his lifting restrictions when he returned to work in the fall of 2019. It could have done so in January 2022. Accordingly, I find that the contract was not frustrated.
[28] The appellant’s arguments essentially boil down to a challenge to the trial judge’s findings based on a suggestion that her reasons are insufficient to explain the path to her decision that the contract was not frustrated. I do not agree. The trial judge simply did not accept that the appellant had met its onus to prove that the contract of employment was frustrated because of the respondent’s incapacity.
[29] When the trial judge’s reasons are read contextually, in light of the record, including the parties’ submissions, as per Canada Forgings Inc v. Atomic Energy of Canada Limited., 2024 ONCA 677, at para. 22, leave to appeal refused, [2024] S.C.C.A. No. 493, the basis for her rejection of the appellant’s argument of frustration is very clear and unassailable. While concise, the trial judge’s reasons adequately respond to the components of the contextual analysis that I earlier outlined. I now turn to an examination of the trial judge’s reasons in light of those components.
a. Essential duties of the road boss position
[30] While the trial judge did not expressly set out a list of the essential duties of the road boss position, this did not constitute analytical error because there was little controversy about what those duties were.
[31] According to the respondent’s evidence on this point, which the appellant’s principal, Ms. Baker, agreed was largely accurate, those duties consisted of the following: managing from 15 to 27 tow truck drivers; arranging for the ordering of parts and maintenance of the vehicles; repairing the vehicles; addressing damage complaints; hiring and terminating employees; collecting documents and collections from the appellant’s tow truck drivers; various other clerical, scheduling, administrative, and managerial responsibilities; and to a lesser extent, driving tow trucks, short and long towing, winching of vehicles, customer interfacing, lock-out services, boosting services, and flat tire services.
[32] The only real point of dispute between the parties was whether the physical parts of those duties were essential duties of the road boss position: Ms. Baker’s evidence was that they were, but the respondent disagreed, testifying that they comprised “probably 10 percent” of the position’s duties. The trial judge’s reasons adequately deal with this issue.
[33] Implicit in the trial judge’s conclusion that the respondent returned to work in January 2022 and would have continued to work as a road boss had that position remained available is that she did not accept that the physical parts of the road boss job that engaged and exceeded the respondent’s limitations were essential duties that could not be accommodated and that the accommodated performance would render the position radically different from that which was contemplated by the employment contract. In the context of the record and the parties’ submissions, this was sufficient to dispose of the issue.
b. Reasonable accommodation was possible
[34] Turning to the issue of accommodation, the trial judge’s conclusion that the respondent’s limitations could have been accommodated is rooted in the record. The appellant had accommodated them in the past, and there was no evidence that they could not be accommodated in the same way. Indeed, as earlier mentioned, on the respondent’s return to work in January 2022, the appellant accommodated physical aspects of the tow truck position (which were, to a lesser extent, included in the road boss position) by installing a special winch. The appellant has not shown that it would suffer undue hardship in making that or any other accommodation. The only evidence about financial hardship was Ms. Baker’s evidence that the appellant could not afford to return the respondent to the road boss position. However, this argument is undercut by the appellant’s assertion in disputing the respondent’s claim of constructive dismissal that the respondent’s remuneration as a tow truck driver would have been essentially the same as a road boss.
c. The respondent’s limitations were found to be temporary at the termination of his employment
[35] The trial judge’s accepting that the respondent’s limitations were temporary was firmly supported by the evidentiary record. The respondent’s performance in January and February 2022 of the tow truck driver position, which demanded more physical exertion than the road boss position, demonstrates that there was no ongoing physical limitation that disabled the respondent from returning to work. Contrary to the appellant’s assertions, the appellant accommodated essential physical duties of the road boss position for the respondent by installing a special winch on the tow truck that he used during this return to work. Importantly, the reason for the respondent’s injury on February 17, 2022 was, as the respondent explained during his testimony, because the special winch installed for his accommodation malfunctioned: “[I]f the cable wasn’t crossed and it didn’t get stuck, I would have been able to do it.” The appellant did not establish that the respondent’s physical limitations caused the malfunctioning of the winch.
[36] Further, the medical evidence at trial did not support the appellant’s allegation of the respondent’s inability to return to the duties of his road boss position within a reasonable time. The trial judge’s reliance on the suggestion by the respondent’s doctors in 2021 that a trial return to work could be considered was not misplaced. Dr. Langford’s recommendation of a gradual transition to work, including, preferably, administrative functions, did not serve as an opinion that the respondent was permanently disabled from performing the essential duties of his road boss position. Indeed, there was no indication in any of the medical documentation produced at trial, including the forms and letters highlighted by the appellant on appeal, that the respondent could never return to work or could not perform the essential duties of his road boss position within a reasonable time.
[37] The appellant argues that the trial judge should have considered the post-termination evidence of the respondent’s ongoing limitations. First, the appellant highlights that the respondent received long-term disability benefits that did not end until August 16, 2022. The appellant submits that the respondent’s receipt of long-term disability benefits casts light on the nature and extent of the respondent’s ongoing issues in that the policy stipulated that he was only entitled to these benefits if he was disabled “under [his] own job or occupation”. The appellant also points to the respondent’s acceptance of a dispatcher position in July 2022 because of his ongoing limitations.
[38] I do not accept that the trial judge ignored relevant post-termination evidence that could have shed light on the nature and extent of the respondent’s physical limitations at the time of his employment termination. Not all post-termination evidence is relevant: only post-termination evidence that sheds light on the nature and extent of an employee’s disability at the time of termination is relevant: Nagpal, at paras. 35, 49; Ciszkowski v. Canac Kitchens, 2015 ONSC 73, 20 C.C.E.L. (4th) 171, at para. 156. That is not the case here. The post-termination evidence highlighted by the appellant does not affect the trial judge’s finding that the respondent’s limitations were temporary and could be accommodated on his return to work. Specifically, this evidence does not conclusively indicate that the respondent would be unable to return to work within a reasonable time and perform the essential duties of the road boss position.
d. Conclusion
[39] A review of the trial judge’s reasons indicates that she applied the required analytical and contextual framework, including factors from Irvine that apply here. As a result, I see no reversible error in the trial judge’s conclusion that the respondent would have been able to continue to work if his road boss position had been available and his lifting restrictions had been accommodated. There is no basis to interfere with her finding that the contract of employment was not frustrated. I would dismiss this ground of appeal.
- Second Issue: Did the trial judge err in awarding damages in relation to the loss of the use of the company tow truck and cellphone during the notice period?
[40] The appellant only takes issue with the trial judge’s damages award for the value of the tow truck and the cellphone belonging to the appellant that the respondent was permitted to use during his employment. This portion of the $236,163.77 damages award for the 22-month notice period amounts to $125,640, which is more than 50% of the damages award: $123,000 for the tow truck and $2,640 for the cellphone.
[41] I accept the appellant’s submissions that the trial judge erred in awarding damages to the respondent in relation to the company tow truck and cellphone. The trial judge did not provide any analysis as to why she awarded the value of the use of the company tow truck and cellphone but simply indicated that the respondent’s calculated damages included those amounts. She was required to explain how she concluded that the respondent had established that the claimed loss of the use of the company tow truck and cellphone amounted to the loss of employment benefits. Her failure to do so represents reversible error.
[42] Having conducted the analysis afresh, I am not persuaded that the respondent has proven his entitlement to damages for the loss of use of the company tow truck and cellphone. The respondent did not testify as to his personal use of these work tools, and the other evidence produced at trial did not support anything but merely incidental personal use by the respondent. Accordingly, I would deduct from the damages awarded to the respondent the amounts related to the company tow truck and cellphone. These amounts total $125,640.
i. Governing principles re: fringe benefits
[43] The trial judge correctly referenced the principle that a wrongfully dismissed employee is entitled to claim as damages the pecuniary value of all the compensation and benefits that would have been received during the period of reasonable notice: Davidson v. Allelix Inc. (1991), 1991 CanLII 7091 (ON CA), 7 O.R. (3d) 581 (C.A.) (“Davidson (Ont. C.A.)”), at p. 589, rev’g on other grounds [1987] O.J. No. 1350 (H.C.) (“Davidson (Ont. H.C.)”)[4]; Paquette v. TeraGo Networks Inc., 2016 ONCA 618, 352 O.A.C. 1, at para. 16.
[44] The onus is on the employee to establish the facts of damages and their amount on the evidence: Red Deer College v. Michaels, 1975 CanLII 15 (SCC), [1976] 2 S.C.R. 324, at p. 331. Damages in a wrongful dismissal action are not limited to compensation for salary and may include compensation for the value of fringe benefits to which an employee was entitled. The employee’s onus to establish damages therefore includes proving their entitlement to and the value of fringe benefits.
[45] A company car or cellphone may constitute a fringe benefit – for which a wrongfully dismissed employee will be compensated – if proven by an employee to confer a personal benefit as part of their contractual compensation: Peck v. Levesque Plywood Ltd. (1979), 1979 CanLII 2055 (ON CA), 27 O.R. (2d) 108 (C.A.), at p. 113, citing Lawson v. Dominion Securities Corp., [1977] O.J. No. 1609 (C.A.), at para. 14; Davidson (Ont. H.C.), at paras. 54, 57; Cormier v. 1772887 Ontario Limited (St. Joseph Communications), 2019 ONCA 965, 58 C.C.E.L. (4th) 177, at paras. 30-33, aff’g 2019 ONSC 587, 53 C.C.E.L. (4th) 60; Donovan v. Quincaillerie Richelieu LTD., 2021 NBQB 189, at para. 70, rev’d in part on other grounds 2022 NBCA 45, 472 D.L.R. (4th) 660; and Ellerbeck v. KVI Reconnect Ventures Inc., 2013 BCSC 1253, at para. 56.
[46] The question is whether the company car or cellphone provides a perquisite or personal benefit for which a wrongfully dismissed employee is entitled to be compensated or whether the company car and cellphone are employment tools, like any other tool supplied to an employee to do their job. If they are employment tools, there is no entitlement to compensation for use of a tool that is no longer being used for the benefit of the employer during the period of reasonable notice: Gazier v. Ciena Canada, ULC, 2024 ONSC 865, 92 C.C.E.L. (4th) 372, at paras. 54-55; Sanghvi v. Norvic Shipping North America, 2021 ONSC 1211, 70 C.C.E.L. (4th) 160, at para. 4; and Jardine v. Phoenix Petroleum Ltd., 2021 NBQB 213, at para. 25.
[47] As company cars and car allowances are commonly claimed as employment benefits, there is significant consideration of them in the case law and employment law texts. Whether an employee has established that a company car or car allowance is an employment benefit depends on whether it is to be used for business purposes and not personal use. Where there is evidence of personal use, as the Nova Scotia Court of Appeal stated in Silvester v. Lloyd’s Register North America Inc., 2004 NSCA 17, 221 N.S.R. (2d) 230, at para. 29, with reference to Ontario case law, “a reasonable approach ... would support recovery based upon a rough estimate of the employee’s actual personal use together with an amount in recognition of the benefit of the automobile’s availability for personal use”.
[48] As this court observed in Davidson (Ont. C.A.), at p. 585, a company car, to the extent of personal use, would be a taxable benefit. Although not dispositive of the issue, as noted in David Harris, Wrongful Dismissal (Toronto: Thomson Reuters Canada Limited., 2025) (loose-leaf updated 2025, release 11), at § 6:52, “[o]ne test that has been used to distinguish the use of a car for company purposes from the ‘perk’ of a car allowance for personal use is whether, and how, the employee reports it on his or her income tax return.” See also Rowley v. High Strength Plates & Profiles Inc., 2011 ONSC 6221, at paras. 44-50; Quesnelle v. Camus Hydronics Ltd., 2022 ONSC 6156, 85 C.C.E.L. (4th) 104, at paras. 106-12. Consistent with that point, in Underwood v. Western World Communications Corp., 9 C.C.E.L. (2d) 129 (B.C.S.C.), at para. 11, the court found that an employee, after termination, “cannot now seek to recover a benefit she never reported as such when she was employed”.
[49] An employee’s claim for the loss of use of a company car is only for the personal benefit that he lost during the notice period: see e.g., Martell v. Ewos Canada Ltd. and Statkorn Holdings ASA, 2005 BCCA 554, 218 B.C.A.C. 241, at para. 35; Dennis v. Barr et al., 2010 ONSC 4057, at paras. 24, 26. There is no entitlement where the company car was principally made available to the employee for use in association with his employment; incidental or negligible personal use does not ground entitlement: Hare v. Pender Distributors Ltd., [1982] S.J. 649 (Q.B.), at para. 12.
ii. Principles applied
a. Tow truck
[50] In my view, the evidence clearly establishes that the company tow truck was a work tool and that the respondent’s negligible personal use tolerated by the appellant does not support any award of damages.
[51] I start with the nature of the vehicle itself. The tow truck used by the respondent is clearly a work vehicle and not the kind of company car that provides an employment benefit. It is a very heavy, specialized vehicle akin to a school bus or a farm tractor, which certainly would not be included as a personal benefit to the employee using them at work.
[52] Just like the school bus and tractor examples, the respondent was required to use the tow truck in the exercise of his employment duties. The fact that the appellant tolerated the respondent’s use of the tow truck to go to and from work and run small errands at lunchtime from the office does not convert the tow truck into a company car or an employment benefit. As Ms. Baker explained, the tow truck was to be used by the respondent for employment: as a road boss and a tow truck driver, the respondent was required to attend calls on the way to and from the office.
[53] I also consider the value of the tow truck from a commonsense perspective. The $67,200 value of the annual tow truck lease, as assessed by the trial judge, is a disproportionate benefit when compared to the respondent’s annual base salary of $93,280.20. It defies belief that the tow truck was intended as a personal benefit. For example, I consider the following indicia that demonstrate the parties did not treat or consider the company tow truck as providing a fringe benefit to the respondent. While not automatically dispositive of the issue, these indicia point away from personal use:
(i) In his statement of claim, the respondent particularized his claim for other employment benefits, including the loss of the use of the cellphone. In contrast, the respondent did not plead that the tow truck was used for personal purposes, nor did he claim the loss of the use of the tow truck as an employment benefit.
(ii) Importantly, the T4 slips that the appellant issued and the respondent produced in these proceedings do not list the use of the tow truck as a personal employment benefit.
(iii) Similarly, there was no evidence that the respondent disclosed to the Canada Revenue Agency that he was using the tow truck for any personal use. If he were, he was required under the Income Tax Act, R.S.C. 1985, c.1, to make yearly disclosure of what would have been a taxable benefit. According to the damages awarded, this would have required the respondent to report and pay taxes on a yearly taxable benefit of about $60,000 per year.
(iv) There was no evidence that the respondent was using the tow truck as his primary personal car and did not have another car for his personal use.
(v) Relatedly, there was no evidence that he had leased a tow truck or any other car during the notice period as a replacement vehicle for the claimed lost benefit.
[54] As a result, I conclude that the respondent has not met his onus to prove that the tow truck was an employment benefit for which damages should have been awarded.
b. Cellphone
[55] As for the value of the cellphone, while the respondent did seek damages for the loss of “a company cell phone”, the evidence does not support the claim. The respondent baldly stated in his affidavit that the “work phone” was part of his compensation package; however, he did not provide evidence establishing that his personal use of the company cellphone amounted to an employment benefit. While similar to the tow truck, Ms. Baker testified that she did not object when the respondent refused to return the cellphone during his absence from work because it contained his doctors’ telephone numbers, her evidence was that the cellphone was to be used for business purposes. Consistent with this evidence, when the respondent returned to work in 2022 as a tow truck driver, the cellphone was replaced by a two-way radio phone
[56] The respondent’s reliance on Cormier for the proposition that any personal benefit from the use of a company asset makes the asset compensable is, with respect, misplaced. Loss of employment benefits must be proven on the facts of each case. Cormier does not stand for the general proposition that any personal benefit is automatically compensable; rather, it turned on its particular facts. In Cormier, the plaintiff employee received a cellphone allowance as part of her employment contract to reimburse her for “all expenses actually and properly incurred” in the performance of her services to the employer. On a motion for summary judgment, the motion judge awarded the plaintiff an amount to compensate her for the loss of her cellphone allowance over the notice period. The employer argued that no damages were owed for the use of the cellphone because the payments were intended as nothing more than reimbursement for business expenses, which were not being incurred during the notice period. This argument was rejected on the basis of this court’s deference to the motion judge’s interpretation of the employment contract and his factual finding that the plaintiff employee had personally benefitted from the use of the cellphone in that particular case.
[57] The respondent has not met his onus to prove the loss of an employment benefit with respect to the cellphone.
IV. Disposition
[58] I would allow the appeal in part and reduce the damages awarded to the respondent by the amount of $125,640, representing the amounts related to the company tow truck and cellphone. I would otherwise dismiss the appeal. The respondent’s cross-appeal is dismissed as abandoned.[5]
[59] With respect to the costs of the appeal, in accordance with the parties’ agreement,[6] the appellant shall pay the respondent the all-inclusive amount of $10,000.
[60] As for the trial costs, the parties agreed that the award of fees in the amount of $50,000 plus HST to the respondent would remain undisturbed but that the disbursements of $25,000 would be reduced to the corrected amount of $3,431.29.
Released: August 10, 2026 “L.B.R.”
“L.B. Roberts J.A.”
“I agree. L. Favreau J.A.”
“I agree. M. Rahman J.A.”
1Although the respondent had delivered a cross-appeal, he did not pursue it.
2As is noted at the end of these reasons, the parties settled the appellant’s ground of appeal that the trial judge erroneously stated that the award of disbursements of $25,000 was on consent. They agreed to reduce the disbursements to the corrected amount of $3,431.29.
3As earlier indicated, the parties are agreed that the $25,000 award was incorrect and that the disbursements should be awarded in the amount of $3,431.29.
4Though this court in Davidson (Ont. C.A.) allowed the appeal, concluding that the trial judge erred in dismissing the plaintiff’s action for constructive dismissal, it affirmed the methodology used by the trial judge in her alternative analysis regarding the appropriate damages award: at p. 591.
5The appellant claimed no costs for the respondent’s abandoned cross-appeal.
6At the conclusion of the appeal, the parties advised that they had agreed that if the respondent prevailed on the frustration issue and the appellant succeeded on the damages issues, the appellant would pay the respondent $10,000 for his appeal costs.