2015 ONSC 1172
**COURT FILE NOS.:**CV-12-110411-SR
CV-12-110412-SR
DATE: 20150223
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MOHAMED EL ASHIRI
Plaintiff
– and –
PEMBROKE RESIDENCE LTD., CANUCK RESORTS INC. and MUNIRA DEWJI AS ESTATE TRUSEE FOR THE ESTATE OF MEHBOOB DEWJI
Defendants
AND BETWEEN:
HESHAM MOHAMED ALI
Plaintiff
- and –
PEMBROKE RESIDENCE LTD., CANUCK RESORTS INC. and MUNIRA DEWJI AS ESTATE TRUSEE FOR THE ESTATE OF MEHBOOB DEWJI
Defendants
Allan Rasheed Mohammed, for the Plaintiff
No one appearing for the Defendants
Allan Rasheed Mohammed, for the Plaintiff
No one appearing for the Defendants
HEARD: February 19, 2015
RULING ON MOTIONS FOR SUMMARY JUDGMENT
Boswell J.
Overview
[1] The plaintiffs were both former employees of the defendants. They worked as hotel managers at the Red Carpet Inn & Suites in Niagara Falls, which was owned by Canuck Resorts Inc., and the Downtowner Inn in Toronto, which was owned by Pembroke Residence Inc. They were hired by, and received their instructions from the defendant, Mehboob Dewji, who was the sole director and officer of the two corporate defendants. Mr. Dewji held himself out as the director of the “Dewji Group of Hotels”.
[2] The plaintiffs were both constructively dismissed, by virtue of the failure on the part of the employer to pay their wages over extended periods of time. They each sued the defendants for back wages and other relief. Mr. Dewji died in May 2013 and the plaintiffs each obtained an order to continue their actions against his wife, as trustee of his estate.
[3] The plaintiffs move for summary judgment on their claims. The motions were not defended. They seek an assessment of their losses of wages and related expenses, as well as punitive damages and an order that Mr. Dewji be personally responsible for their losses.
The Legal Framework
[4] The motions are brought under Rule 20 of the Rules of Civil Procedure. Rule 20.04(2)(a) directs the court to grant summary judgment if satisfied that “there is no genuine issue requiring a trial with respect to a claim or defence."
[5] Recently, in Hryniak v. Mauldin, 2014 SCC 7 (“Hryniak”), the Supreme Court ruled on the summary judgment scheme in the Ontario Rules. They effectively ruled that a culture shift was needed in the manner in which civil claims are dealt with and that Rule 20 – the summary judgment scheme – has a central role to play in that culture shift. In particular, the powers of the court to deal with claims in a summary way are underscored and enlarged.
[6] A motions judge has broad powers when considering a summary judgment motion. Rule 20.04 (2.1) permits the motions judge to weigh the evidence, evaluate the credibility of a deponent, and draw any reasonable inference from the evidence.
[7] When assessing a summary judgment motion, the motions judge is directed by the Supreme Court to approach the matter of whether a genuine issue for trial exists, as follows:
There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result. (Hryniak, para. 49).
[8] In the case at bar, the defendants did not file any materials in response to the plaintiffs’ motions. There has long been a recognized requirement that each party put its “best foot forward” on a motion for summary judgment: see for instance, Larman v. Mount Sinai Hospital 2014 ONCA 923. Here, there is no evidence from the defendants on the central (or any) elements of the plaintiffs’ claims. On the other hand, the plaintiffs have provided fulsome – and compelling – evidence in connection with each aspect of their claims. In the circumstances, there is no issue, in my view, that requires a trial. This is essentially an assessment of damages on the basis of the evidence filed by each of the plaintiffs.
Liability
[9] Both plaintiffs have satisfied me that they worked for both corporate defendants. Each spent time working at the Red Carpet Inn & Suites and the Downtowner Inn. Mr. El Ashiri had only an oral employment contract, which he made with Mr. Dewji, and which was not specific about which corporate defendant he was technically employed by. Mr. Ali had a written employment contract with Pembroke Residence Inc. Pembroke is the owner of the Downtowner Inn, but Mr. Ali spent the vast majority of his time working in the Red Carpet Inn in Niagara Falls.
[10] I find that Mr. Dewji used the two corporate defendants interchangeably. I find that, as he outwardly represented, he treated his hotels as one entity – the “Dewji Group of Hotels” - and that both corporate defendants have liability to the plaintiffs for unpaid wages and related expenses.
[11] The more significant issue is whether Mr. Dewji (or more properly his estate) has personal liability. I find that he does.
[12] The assertion that Mr. Dewji has personal liability is founded in the oppression remedy provisions of the Ontario Business Corporations Act (the “OBCA”), R.S.O. 1990, c. B.16, specifically, s. 248.
[13] Section 248(2) provides as follows:
248 (2) Where, upon an application under subsection (1), the court is satisfied that in respect of a corporation or any of its affiliates,
(a) any act or omission of the corporation or any of its affiliates effects or threatens to effect a result;
(b) the business or affairs of the corporation or any of its affiliates are, have been or are threatened to be carried on or conducted in a manner; or
(c) the powers of the directors of the corporation or any of its affiliates are, have been or are threatened to be exercised in a manner,
that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of any security holder, creditor, director or officer of the corporation, the court may make an order to rectify the matters complained of.
[14] A “complainant” for the purposes of s. 248 includes any person that the court considers to be a proper person to make an application under this section. This includes creditors of the corporation: Peoples Department Stores Inc. (Trustee of) v. Wise, 2004 SCC 68.
[15] I am satisfied that the plaintiffs are creditors of the defendant corporations and that they are proper complainants within the meaning of s. 248 of the OBCA.
[16] Section 248(3) provides for the remedies that the court may impose, in its discretion, should it find that the powers of the directors of the corporation have been exercised in an oppressive fashion. Those powers include ordering compensation to the aggrieved complainant.
[17] The oppression remedy is an equitable remedy. It gives the court a broad discretion to enforce what is right and what is just and fair. To determine what is just and reasonable in the context of a particular factual matrix, the court must determine what the reasonable expectations of the claimant were and whether the conduct of the corporation (or the directors of the corporation) violated those reasonable expectations by conduct that was oppressive, or unfairly prejudicial, or which disregarded the interests of the complainant. See BCE v. 1976 Debentureholders, 2008 SCC 69, paras. 58 – 68.
[18] Where the court finds that there has been oppressive conduct on the part of the directors of the corporation, one of the remedial tools available to the court to effect a just and equitable result, is a finding that the directors are personally liable for the claim: see SCI Systems Inc. v. Gornitzki Thompson & Little Co., 1997 12435 (S.C.J.); Sidaplex-Plastic Suppliers Inc. v. Elta Group Inc., 1998 5847 (C.A.).
[19] In Budd v. Gentra Inc. 1998 5811 (ON CA), [1998] O.J. No. 3109 (C.A.), Doherty. J.A. confirmed that the court has broad discretion to fashion a remedy that “is fit” under the oppression remedy section. A fit remedy may include a monetary judgment against a director of the corporation. He described, generally, the circumstances in which a remedy may lie against a corporate director personally as follows:
To maintain an action for a monetary order against a director or officer personally, a plaintiff must plead facts which would justify that kind of order. The plaintiff must allege a basis upon which it would be "fit" to order rectification of the oppression by requiring the directors or officers to reach into their own pockets to compensate aggrieved persons. The case law provides examples of various situations in which personal orders are appropriate. These include cases in which it is alleged that the directors or officers personally benefitted from the oppressive conduct, or furthered their control over the company through the oppressive conduct. Oppression applications involving closely held corporations where a director or officer has virtually total control over the corporation provide another example of a situation in which a director or officer may be held personally liable to rectify corporate oppression. (para. 52).
[20] In this case, the corporate defendants are closely held. Indeed, Mr. Dewji is the only officer and director and had total control over the companies.
[21] This is not a case where the plaintiffs were hired, had a long history with the defendants and where the defendants ran into financial difficultly, leaving the plaintiffs as creditors. Mr. Dewji hired the plaintiffs and put them to work in responsible positions in his hotels and never, from the “get go” paid them what they were due. He must have known when he hired them that he was not in a position, financially, to pay them what they were due. They provided their labour and services in good faith and in return were treated callously and as though they were his personal servants.
[22] Mr. Dewji did not have the decency to let the plaintiffs know of his financial circumstances and repeatedly put them off and/or persuaded them to remain working, on false promises. Mr. Dewji made cash payments to preferred creditors, while leaving the plaintiffs high and dry.
[23] I am satisfied, on the basis of the affidavits filed by the plaintiffs, that Mr. Dewji operated his hotels – and treated the staff - in a manner that was oppressive to the plaintiffs. They are proper complainants within the meaning of s. 248 of the OBCA. Their expectations of payment for services rendered were eminently reasonable. I am satisfied that Mr. Dewji’s conduct, as the sole director and officer of the defendant corporations, was oppressive, high-handed, callous and unfairly prejudicial to the rights and interests of the plaintiffs. He was the sole controlling director and officer of the corporations. He benefitted, whether directly or indirectly from the labours of the plaintiffs. Their labour and efforts enabled the hotels to remain open and viable.
[24] The damages I will now assess, are assessed as against all defendants jointly and severally.
The Damages
[25] Each of the plaintiffs is due basic wages, statutory holiday pay, vacation pay and termination pay. In Mr. El Ashiri’s case, he is due overtime pay as well. Mr. Ali has not claimed overtime pay, but he has claimed special expenses payable in accordance with his written employment contract. Each has also claimed punitive damages, which I will assess below.
[26] I will review the claims of each of the plaintiffs individually, beginning with Mr. El Ashiri.
Damages of Mr. El Ashiri
[27] I assess Mr. El Ashiri’s damages as follows:
(a) Unpaid wages, based on his base salary of $35,000 per year, I fix at $8,275.04;
(b) Overtime pay, I fix at $8,660.75. I have based this figure on Mr. El Ashiri’s salary of $35,000 per annum, which is $673.08 per week, or $16.83 per hour over a 40 hour week. I accept his evidence that he worked 343 overtime hours and those are payable, under s. 22 of the Employment Standards Act, 2000, S.O. 2000, C.41, at a rate of 1.5 times his normal hourly rate, or $25.25 per hour;
(c) Statutory holiday pay I fix at $201.96;
(d) Vacation pay I fix at 2% of Mr. El Ashiri’s earnings. His total earnings, including overtime, were $23,875.07. Vacation pay is $477.50;
(e) Termination pay I fix at two months’ salary, which I believe to be fair and reasonable taking into account the plaintiff’s age, the significant responsibilities of his employment, the representations made to him by the employer and the manner in which he was constructively terminated. Two months’ salary is $5,833.33;
(f) In total, subject to the claim for punitive damages, I fix Mr. El Ashiri’s claims at $23,898.58.
[28] I will go on to assess Mr. Ali’s damages before I turn to the question of punitive damages.
Damages of Mr. Ali
[29] I assess Mr. Ali’s damages as follows:
(a) Unpaid wages, based on his base salary of $50,000 per year, I fix at $21,061.50;
(b) Statutory holiday pay I fix at $576.92;
(c) Vacation pay I fix at $2,538.47. Mr. Ali was, by contract, entitled to four weeks paid vacation per year. He received none. I pro-rated his vacation time over the number of months he actually worked, such that, in my view, he is owed 2.64 weeks of holiday pay, or $2,538.47;
(d) Mr. Ali was entitled, under contract, to reimbursement for work-related expenses, including travel and phone. I am satisfied that Mr. Ali has made out such expenses in the amount of $1,375 (travel) and $640 (phone);
(e) In addition, Mr. Ali was to be provided with a health plan. It appears the defendants breached that provision and he incurred medical expenses of $925.00 which I allow;
(f) Mr. Ali was, by contract, entitled to 60 days’ notice of termination. In lieu, I order two months’ salary, or $8,333.33;
(g) In total, subject to the claim for punitive damages, I fix Mr. Ali’s claims at $35,450.45.
Punitive Damages
[30] Each plaintiff seeks punitive damages of $10,000 for the reasons set out in their affidavits, and which I have more or less canvassed in relation to the claim against Mr. Dewji personally.
[31] Punitive damages are an extraordinary remedy. The Supreme Court has held that they should receive “the most careful consideration” and their award “should be most cautiously exercised”. Further, “conduct meriting punitive damages awards must be "harsh, vindictive, reprehensible and malicious", as well as "extreme in its nature and such that by any reasonable standard it is deserving of full condemnation and punishment": Honda Canada Inc. v. Keays, 2008 SCC 39, [2008] S.C.J. No. 40, at para. 68.
[32] I am not satisfied, on the facts of this case – leaving aside for the moment whether there is an independent actionable wrong present here apart from the breach of contract – that the conduct complained of meets the high threshold of harsh, vindictive, reprehensible and malicious. It is high-handed and very poor conduct indeed, as I have expressed above. But in view of the damage awards which will make the plaintiffs whole, I am not satisfied, on the material in the record, that punitive damages are warranted.
Conclusion
[33] In the result, Mr. El Ashiri’s damages are fixed at $23,898.58. Mr. Ali’s damages are fixed at $35,450.45.
[34] Each plaintiff has sought costs and each has filed a Costs Outline. I fix costs on a partial indemnity basis payable to each plaintiff in the sum of $12,000 all inclusive.
Boswell J.
Released: February 23, 2015