Ontario Superior Court of Justice
Court File No.: CV-16-566054
Date: 2025-05-13
BETWEEN:
2252230 Ontario Inc. and Gloria Rajkumar
Plaintiffs
— AND —
Roger Rameshwar Rajkumar
Defendant
— AND BETWEEN —
Rita Josomatee Rajkumar and 1526381 Ontario Inc.
Plaintiffs by Counterclaim
— AND —
Gloria Rajkumar, Superior Independent Medical Assessment Centre Ltd., and Simac Canada Inc.
Defendants to the Counterclaim
Appearances:
- M. Gosia Bawolska and Maneka Kaur, for the Plaintiffs
- Roger Rameshwar Rajkumar, self-represented
- Michael Simaan, for the Plaintiffs by Counterclaim
- M. Gosia Bawolska and Maneka Kaur, for the Defendants to the Counterclaim
Heard: February 3, 2025
Released: May 13, 2025
Judge: Rohit Parghi
Reasons for Judgment
Introduction
[1] Gloria Rajkumar and her brother Roger Rajkumar came to Canada from Guyana in the early 1980s. Roger arrived first, with his wife, Rita Rajkumar. He set up an import-export business called Explorer Marketing & Distributing Inc. (“Explorer”). When Gloria arrived, she lived with Roger and Rita before moving out on her own. In 2001, she started a business called Superior Independent Medical Assessment Centre Ltd. (“Simac”). Roger and Rita helped Gloria with logistics and invoicing, respectively, for Simac, in return for shares in the company. Rita, through her holding company, 1526381 Ontario Inc. (“152”), began working as a bookkeeper for Simac.
[2] In the years that followed, the relationship between Gloria and Roger deteriorated. They were estranged for some years, and then reconciled. Soon afterward, the events at issue in this proceeding took place.
[3] The main action before me alleges that Roger is personally liable for damage to an undeveloped commercial property on McNicoll Avenue in Scarborough, approximately 4.74 acres in size (the “Property”). The Property was owned by a family trust created by Gloria, 2252230 Ontario Inc. (“225”). It was leased to Explorer. The damage to the Property resulted from a venture that Explorer entered into with Transportr Inc. (“Transportr”), whereby Transportr would pay Explorer to be able to bring dirt, or fill, onto the Property, reprocess it, and haul it away for sale. Over time, thousands of truckloads of fill were brought to the Property. But the fill was not reprocessed and removed quickly enough. Up to 121,968 cubic metres of fill are estimated to have accumulated. As the fill built up, it damaged the Property. It also seeped onto surrounding sidewalks and properties, including ecologically sensitive areas, resulting in investigations by the City of Toronto and the Ministry of the Environment and Climate Change, as it was then called (the “Ministry”).
[4] Gloria and 225 have sued a number of parties, including Transportr, its owner Argeris (Jerry) Maheras, Explorer, Roger, and Rita, for negligence, breach of contract, and fraudulent and/or negligent misrepresentation. Roger is the only remaining defendant: Rita was released from the action around the time of examinations for discovery, and the remaining defendants other than Roger settled the action more recently. 225 and Gloria now claim that Roger ought to be found personally liable, in his capacity as director of Explorer. Damages are resolved as against Roger, and the only issue is liability.
[5] For the reasons below, I do not find Roger personally liable. I dismiss the action against him.
[6] The counterclaim before me alleges constructive dismissal. At the time the dispute between Roger and Gloria over the damage to the Property came to a head, Rita was working as a bookkeeper for Simac and for a second company that Gloria had established in March 2006 called Simac Canada Inc. (“Simac Canada”). In November 2016, Simac and Simac Canada significantly scaled back Rita’s hours of work and compensation. Rita and 152 say that this was a constructive dismissal.
[7] For the reasons below, I grant the counterclaim. I find that Rita, through 152, was constructively dismissed and is entitled to $108,175.00 in damages, based on a reasonable notice period of 18 months.
The Main Action
Factual Background
[8] In 2012, Gloria purchased the Property. Roger, a licensed real estate broker, acted as her agent on the purchase.
[9] Gloria then established 225, a family trust, to hold the Property. She is the trustee of 225 and its beneficiaries are her son and mother. The Property was the main asset held by 225. Although Gloria planned to build on the Property, she never did.
[10] In 2015, Gloria asked Roger to list the Property for sale. He suggested that the Property be graded and backfilled to look more level, to make it more attractive to prospective buyers. Gloria agreed. The grading work was done in May and June 2015 by Transportr. The work was supervised by Roger, on behalf of Explorer. When the work was completed, the Property was listed for sale.
[11] Roger proposed to Gloria that Explorer lease the Property while it was on the market so that it could be used for a business venture between Explorer and Transportr. Through this venture, Transportr would bring in fill, or dirt, to the Property, refine and reprocess it on the Property, and then haul it away so that it could be sold as topsoil to landscaping companies. Gloria testified that she was open to the idea because it would enable her to earn some extra income while the Property was not being used.
[12] On July 31, 2015, 225 and Explorer entered into a 12-month lease in respect of the Property. Gloria and Roger negotiated and signed the lease on behalf of 225 and Explorer respectively. The lease identified the “use” of the premises – defined to mean the entire acreage of the Property – as “the sale of topsoil, sand and other general landscaping materials”. The lease required Explorer to pay $2,260.00 per month in rent. It obligated Explorer to indemnify 225 from all liabilities and claims that “may arise or relate to the Tenants [sic] business operation”. It also provided that Explorer “assumes the risks of its own operations and those of its agents” and independent contractors and was “to maintain and repair the land” throughout the term of the lease, “at its sole cost and expense”.
[13] Explorer, in turn, entered into an agreement with Transportr in respect of the fill reprocessing operation.
[14] Almost immediately, Jerry and Roger began discussing the possibility of Jerry purchasing the Property and the two of them developing it, severing it, and selling it for a profit. Jerry texted Roger to ask if Roger felt that $2.8 million was a “possibility for purchase price” for the Property. Roger agreed that he would “certainly push for this possibility” with Gloria. Jerry wrote, “Could be great upside if we run [reprocessing] operation and at same time work on severance of property into 4 lots. Would easily get $1M per acre based on lack of supply for smaller properties.”
[15] Problems with the soil reprocessing venture arose within a month of its starting. Roger testified that as the fill started coming in, it began piling up, and was not graded and reprocessed quickly enough. On August 26, 2015, Roger sent Jerry a text stating, “I find it very disturbing that the site is not being graded but that approximately 400 more truckloads [of fill] were brought in without my approval and permission. I’m very disappointed in the way this is being handled. We need to talk urgently.”
[16] By October 2015, the Ministry had started receiving complaints about runoff from the large pile of fill on the Property. Ministry representatives went to the Property and saw what they described as 50 feet-high piles of dirt extending over a couple of acres and sediment washing out from the Property. They began corresponding with Roger, then with Roger and Jerry, requiring them to take remediation measures. Roger did not tell Gloria about his dealings with the Ministry, and she only learned about the Ministry’s involvement when she spoke directly with the Ministry a year later, in October 2016.
[17] Roger became increasingly frustrated by Jerry’s failure to pay him under the reprocessing agreement. He had begun asking Jerry to settle up his accounts with him in August 2015. In October 2015, Jerry sent Roger a cheque that bounced. Jerry texted Roger that he wanted to post-date his cheques, explaining that he had to “give terms to some of” the companies he was dealing with to get their business. Roger responded that Jerry had not been “candid” and had engaged in “deception and stories”. He followed up with Jerry several times. They scheduled meetings, some of which Jerry cancelled. In December 2015, two more cheques bounced. In January 2016, Roger threatened legal action. In March 2016, Roger again threatened to sue Jerry and to call the police. Roger testified that he did not follow through on the threat: he was hoping Jerry would pay what he owed and that they could keep the relationship and business going.
[18] In March 2016, his conflict with Roger ongoing, Jerry suggested to Roger via text that it might be better if Jerry were to simply “deal with the property owner going forward.” Jerry asked more than once for Gloria’s contact information. Roger declined to provide it, saying that Jerry should first pay him what he was owed and that Gloria “knows all the details”.
[19] Later that month, Gloria was served with a Statement of Lien, which indicated that a lien of $25,000.00 had been placed on the Property due to a failure to pay for equipment rental. Gloria’s evidence was that she took the Statement of Lien to Roger and asked him what it was about. He told her it was “‘not a big deal’” and he would have it taken care of.
[20] Roger raised the issue with Jerry via text. Jerry reiterated his intention to deal with Gloria directly. Roger asked Jerry if that was a threat and said he was going to get the police involved. He told Jerry that Gloria “knows all the details and she’s waiting for you with her lawyers.” Soon afterward, Roger stopped the delivery of all fill onto the Property and told Jerry that no trucks would be allowed in until Jerry had paid him in full. He criticized Jerry for “sending material to the site when you haven’t paid rent and invoices for months. Consider all operations stopped until this is resolved.” Roger stopped paying rent because no more business was coming in.
[21] In April 2016, the Ministry told Roger and Jerry that officials had attended the Property and found a soil spill. The soil barriers were in disrepair, soil was migrating off of the Property and beyond the fence line, and the silt fencing and other fencing was damaged. The Ministry indicated that a seasonal wetland area near the Property may have been impacted by the spill. It said that these offsite impacts had to be remediated and soil containment barriers restored and improved. It demanded a written remedial plan.
[22] That same month, Jerry prepared an offer to purchase the Property, in consultation with Roger, who then presented the offer to Gloria. Gloria had a “[l]uke warm reaction,” as Roger described it to Jerry in a text. Roger told Jerry that Gloria had “promised to take the time to review and let” Roger know.
[23] In May 2016, Gloria was served with a Statement of Claim in an action commenced by a trucking company against 225, Transportr, and others for unpaid trucking services. The services related to the transport of fill onto the Property. Gloria testified that she was unaware of what the action was about at the time. She gave the Statement of Claim to Roger because he had taken care of the Statement of Lien she had received in March. He told her he would take care of it.
[24] On May 8, 2016, at Roger’s request, Gloria sent Roger an email, the subject line of which was “Notice to vacate”. The email stated, “Roger, after repeated warnings for you to reduce the amount of soil at” the Property, “you leave me no option but to ask you to vacate the premises within 14 days from today. You have missed the last rent payment and violated our agreement. I’m therefore demanding that you and your partners comply with this order or I’m commencing a lawsuit to force this compliance.”
[25] In September 2016, the Ministry told Roger that the remediation measures taken to address the migration of fill off of the Property were inadequate: material was spilling into the surrounding natural environment, contrary to the Environmental Protection Act, RSO 1990, c E.19, and additional measures were required to be implemented by the “owner” of the Property.
[26] Gloria was first contacted by the Ministry in October 2016. She testified that this was when she first learned about the fill issues on the Property – a claim that Roger denies. Gloria’s evidence was that the Ministry told her that dirt and material were spilling from the Property into the Rouge River behind the Property, and onto the main road in front of it, and that they were concerned it was not being properly cleaned up.
[27] Gloria testified that after she spoke with the Ministry, she called Roger, who told her she needed to take a lawyer with her to the Property and “‘handle’” it. He told her about there being a lot of fill on the land. He said he would help her because he had all the information. She did not know what was going on and they argued.
[28] Gloria and her lawyer met the Ministry representative on the Property. Her evidence, which Roger disputes, was that that was the first time she had visited the Property since purchasing it in 2012. She saw runoff from the Property on the road and sidewalk and very close to the river. There was “lots of impact” and “destruction” of the road and sidewalk. The fence was breached. Nothing was keeping the fill from getting out. What she saw led her to have an anxiety attack and a “feeling of devastation”. She was “in shock” and needed to excuse herself to go and sit down.
[29] Gloria testified that she “had no idea where to start” in addressing the issue and was “shocked” and “devastated” to learn that it would likely cost in the millions to remove the fill. She asked Roger to meet her in the hope that he would help her. He came to the meeting with a batch of documents and told her about Jerry bringing fill onto the land and not taking it away. She got angry and asked him how he could “help someone to destroy the land”. He said he could help her, but if she did not want his help there was nothing he could do; she had the resources and was dealing with it, and he was going on vacation.
[30] Later, Roger emailed Gloria, “I will do everything I can but I don’t have the resources that it will require. I’m not going to mortgage my house or bring my family into this. This matter needs urgent attention and I believe we can see it through with cooperation.” He suggested that she get legal advice and sue Explorer and Transportr. He testified that when he sent this email, he was acting in good faith and trying to work with her to resolve the issue.
[31] Gloria began to communicate directly with the Ministry. She testified that she reassured them that she would do everything she could to address the issue. The matter took time to resolve. In December 2017, the Ministry provided her with a draft compliance order, which it ultimately did not issue because Gloria was able to implement a remediation plan to the Ministry’s satisfaction.
[32] In early 2021, 225 sold the Property at a price that reflected a discount of $3.3 million on what would have been the purchase price in the absence of the fill.
The Claim against Roger
[33] 225 and Gloria commenced this action alleging negligence, breach of contract, and fraudulent and/or negligent misrepresentation against various defendants. Although they also pleaded breach of fiduciary duty, they did not advance that claim at trial. By the time of trial, the only remaining defendant was Roger.
[34] 225 and Gloria state that Roger is a “bad actor” and should be held personally liable. They say he knew or should have known that dumping the fill onto the Property would destroy the land, render it unusable, and damage its market value. He used Explorer as an “instrument to intentionally and illegally convert the Property into a dump site” while protecting himself from personal liability. As the controlling mind of Explorer, he signed a lease with terms that he knew Explorer could not fulfill, and, on his direction, Explorer acted negligently, in violation of the terms of its lease with 225, and in bad faith.
Credibility
[35] There are certain factual issues on which Roger’s and Gloria’s evidence differ. Where that is the case, I prefer Roger’s evidence over Gloria’s. This is because I have concerns about Gloria’s credibility as a witness.
[36] Gloria’s evidence on whether and when she saw the Property during the time frame at issue illustrates these credibility issues. She testified that Roger never gave her any reason to believe that there were issues on the Property. She therefore never needed to visit the Property after purchasing it. The only time she saw the Property was when she visited it with the Ministry representative and her lawyer in October 2016, at which time she was so “shocked” by what she was seeing for the first time that she had an anxiety attack.
[37] The documentary record contradicts Gloria’s evidence. The contemporaneous notes taken by the Ministry representative who spoke with Gloria by phone indicate that on October 25, 2016, just before she visited the Property, Gloria told the Ministry that she had seen the Property the previous Sunday, and also about a year before that.
[38] When questioned about this apparent discrepancy, Gloria’s evidence was evasive and inconsistent. She first said that she did not recall if she told the Ministry that she had seen the Property about a year earlier. She then questioned whether the notes being put to her were in fact about the Ministry’s discussion with her, even though the accompanying title in the notes made clear that they were. She then suggested that if she told the Ministry she was there over a year ago, this could have meant “many” years ago. She offered no explanation for the suggestion in the notes that she saw the Property on the Sunday immediately before her call with the Ministry.
[39] One of the factors I may consider in assessing witness credibility is whether there is independent evidence to contradict a witness’ evidence (Christakos v. De Caires, 2016 ONSC 702, at para. 10). In my view, the Ministry representative’s contemporaneous notes form independent evidence that squarely contradicts Gloria’s evidence and calls into question Gloria’s credibility. Gloria’s responses when the notes were put to her further undermine her credibility.
[40] Additionally, as I discuss below, Gloria’s claim that Roger did not tell her that excessive fill was accumulating on the Property, and that she only learned about the problem when she visited the Property with the Ministry representative in October 2016, is not credible.
[41] Other credibility issues arise from Gloria’s testimony regarding the counterclaim. Although I discuss these separately below, they also inform my assessment of her credibility in respect of the main action.
The Law
[42] Gloria and 225 claim that Roger, in his capacity as director of Explorer, should be found personally liable for negligence, breach of contract, and fraudulent and/or negligent misrepresentation in connection with the damage to the Property caused by the accumulation of fill.
[43] It is well-established that the courts will pierce the corporate veil and impose personal liability only where the corporation is “completely dominated and controlled and being used as a shield for fraudulent or improper conduct” (Transamerica Life Insurance Co of Canada v. Canada Life Assurance Co, (1996), 28 O.R. (3d) 423 (Gen. Div.), aff’d [1997] O.J. No. 3754 (C.A.), at pp. 433-434).
[44] The Court of Appeal for Ontario has held that the “fraudulent or improper conduct” requirement is met where a corporation is incorporated for an illegal, fraudulent, or improper purpose, or where “those in control of the corporation expressly direct a wrongful thing to be done” (642947 Ontario Ltd. v. Fleischer (2001), 56 OR (3d) 417 (C.A.), at para. 68, citing Clarkson Co. v. Zhelka (1967), 2 O.R. 565 (H.C.), at p. 578).
[45] Piercing the corporate veil is an extraordinary remedy. It calls on the court “to disregard the separate legal personality of a corporation, a fundamental principle of corporate law” that “cannot be lightly set aside” (Fleischer, at paras. 67, 69). It is warranted “[o]nly [in] exceptional cases” in which maintaining the corporate veil “would be flagrantly opposed to justice” (Fleischer, at paras. 67, 69; see also Kosmopoulos v. Constitution Insurance Co., [1987] 1 S.C.R. 2, at p. 10).
[46] Because this remedy is so extraordinary, only certain types of conduct will give rise to personal liability. An ordinary breach of contract is generally not sufficient, even where the corporation’s director or officer decides, in that capacity, that the corporation should breach the contract (FNF Enterprises Inc. v. Wag and Train Inc., 2023 ONCA 92, 165 OR (3d) 401, at para. 24). As this court recently held in Bayer Inc. v. Biskaly, 2021 ONSC 714, at paras. 22-23 :
A corporation only operates through the actions of its individual officers, directors and/or employees. As held by the Court of Appeal in Normart Management Ltd. v. Westhill Re-Development Co., absent allegations of fraud, deceit, dishonesty or want of authority on the part of officers, directors or employees of a corporation, those individuals will be protected from personal liability unless a pleading properly sets out the actions or omissions of the individuals (a) to be themselves tortious, or (b) exhibit a separate identity of interest from that of the corporation so as to make the impugned act or conduct their own. Simply put, there must be some activity that takes the individuals out of their role of directing minds of a corporation.
In the absence of a factual underpinning to support allegations that individuals acted outside their capacity as officers, directors or employees of a corporation, those individuals cannot be held personally liable for the actions of corporations they can control, direct or work for at the relevant time. That factual underpinning must relate to the actions or omissions of an individual that fall outside of his/her authority, exhibit a separate identity of interest, or were independently tortious and actionable.
Analysis
[47] Applying this test here, I conclude that there is no basis on which to find Roger personally liable for any of Explorer’s wrongdoing. In making this finding, I consider each of the allegations advanced against Roger at trial. Many of these claims are not made out on the facts. None of the claims warrant a finding of personal liability.
[48] Gloria and 225 appear to take the position that Roger is personally liable because he was Explorer’s sole operating mind, and Explorer engaged in wrongdoing. As a matter of law, this is not correct. Such an approach would entirely eviscerate the separate legal personality of a corporation that has only one director. As the jurisprudence makes clear, only certain types of conduct may give rise to a finding of personal liability. I am not persuaded, based on the record before me, that Roger engaged in any such conduct. Gloria’s claim must therefore fail.
Roger’s alleged misrepresentation of his intended use of the Property
[49] Gloria and 225 assert that Roger intentionally or negligently misrepresented to them his intended use of the Property. They further assert that he knew or ought to have known that those misrepresentations would induce 225 to enter into the lease. In their submission, he should therefore be found personally liable.
[50] I am unable to agree. The lease expressly provided that the Property would be used for “the sale of topsoil, sand and other general landscaping materials”. Gloria’s pleadings and testimony also made clear that she understood the Property would be used for soil reprocessing.
[51] Perhaps the misrepresentation to which Gloria refers is that, according to her testimony, she and Roger both intended for 225 to lease Explorer only a small portion of the Property – no more than a quarter acre – for the reprocessing venture. However, Roger nonetheless used the entire Property.
[52] I do not accept this claim. The lease provided that the entire acreage of the Property was being leased to Explorer and would be used for the reprocessing. Moreover, Roger denies that there was any intention to limit him to using only a portion of the Property. For the reasons discussed above, where his evidence differs from Gloria’s, I prefer his.
[53] I accordingly find that there was no misrepresentation by Roger regarding the portion of the Property to be used for the reprocessing venture, or the proposed use of the Property generally.
Roger’s alleged wrongdoing in obtaining inadequate insurance for the Property
[54] Gloria and 225 allege that, before entering into the reprocessing venture, Roger took out insurance coverage for the Property that was inadequate, because it covered only personal injuries on the Property and not damage to the Property itself. They say that this warrants imposing personal liability on him.
[55] I do not accept this claim.
[56] Gloria approved of the insurance coverage that Roger obtained. It is therefore unclear on what basis she claims that what he did reflected negligence, recklessness, or bad faith.
[57] Roger testified that damage to the Property was not something he thought about when taking out insurance, because he expected the project to unfold smoothly. I accept this evidence. Indeed, Gloria testified that she approved of the insurance coverage Roger obtained for much the same reason: she did not anticipate that the Property would end up getting damaged in the way it did.
[58] At most, Roger’s insurance coverage decision reflects bad judgment. But Gloria and 225 fail to persuade me that the decision meets the legal test for imposing personal liability on Roger. They have not shown that the decision demonstrated fraud, deceit, or dishonesty; that the decision was in itself tortious or actionable; that Roger lacked authority as a director to make the decision; or that the decision exhibited a separate identity of interest on Roger’s part from that of the corporation, so as to make the decision Roger’s own. To the contrary, the record demonstrates that Roger had reasons for obtaining the coverage he did and that Gloria was well aware of (and vetted) Roger’s decision. I am also satisfied that Roger made the decision within his authority as director of Explorer; he obtained the insurance coverage on behalf of Explorer to carry out Explorer’s obligations under the lease and in anticipation of Explorer’s soil refining operation with Transportr.
[59] I therefore am unable to find that Roger’s decision in respect of insurance coverage for the Property warrants piercing the corporate veil.
Roger’s alleged wrongdoing in allowing fill to accumulate
[60] Gloria and 225 claim that Roger recklessly, intentionally, and/or negligently permitted the fill to be “dumped” onto the Property, to accumulate, and to migrate onto neighbouring lands. This damaged the Property, violated municipal and provincial laws, and breached the obligation under the lease to maintain and repair the Property. He should therefore be found personally liable.
[61] This claim has several elements.
[62] First, Gloria and 225 fault Roger for embarking on the reprocessing venture with Transportr, given that he had no experience in commercial landscaping or the transport or storage of fill.
[63] In my view, while it is true that Roger lacked such experience, there is no basis on which to conclude that his decision on behalf of Explorer to enter into the venture was reckless, tortious, or otherwise actionable. Roger’s evidence was that Transportr presented itself professionally and had all the right equipment and permits to do the reprocessing work. He had worked previously with Transportr on the regrading project on the Property, with success. He therefore thought it reasonable and appropriate to enter into the venture with Transportr and had no reason to anticipate that things would go sideways. His testimony on these points was not successfully challenged on cross-examination and I accept it.
[64] Nor did Roger’s decision to enter into the reprocessing venture meet the other indicia for imposing personal liability. His decision did not entail any fraud, dishonesty, or deceit; as discussed above, Gloria was well aware of the pending soil reprocessing operation and Roger’s proposed use of the Property to carry out the operation. Nor have Gloria and 225 persuaded me that the decision took Roger out of his role of the directing mind of Explorer. To the contrary, he made the decision in his capacity as, and within his authority as, director, and pursuant to a lease agreement he signed within his authority as director.
[65] Gloria and 225 also claim that Roger supervised the project poorly. They note that Roger only ever drove by the Property while the project was ongoing, but never actually went in.
[66] In my view, nothing turns on this. Whatever approach Roger took to supervising the project, he realized in August 2015, a month after the project started, that fill was accumulating, and he texted Jerry promptly to tell him to do something about it.
[67] Gloria and 225 further state that Roger’s response to the accumulation of fill was ineffective. They claim that, while Roger did text Jerry in August 2015 to raise concerns about fill accumulation, there is no evidence that he ever followed up with Jerry about the issue in writing. Most of his subsequent texts to Jerry were concerned with Jerry’s failure to pay him, not with Jerry’s failure to remove the fill.
[68] I agree with this characterization of the communications between Roger and Jerry. I also observe that some effort was eventually made to have fill removed from the Property, but it was too little and too late, and it is not clear how much Roger had to do with that effort.
[69] Nonetheless, I am not persuaded that Roger’s role in the build-up of fill renders this an “exceptional case” that warrants piercing the corporate veil. Explorer may well have been negligent. It may well have breached its obligation under the lease “to maintain and repair the land”. But whatever Roger did or did not do in permitting or responding to the fill build-up – placing too much faith in Jerry, not following up aggressively enough when Jerry proved unresponsive, and the like – did not entail any dishonesty, deceit, or fraud. It was not tortious, actionable, or particularly reckless. And it was done (or not done) within the scope of his authority as director of Explorer. Indeed, all of Roger’s dealings with Jerry and Transportr took place within his authority as director. Nothing about his conduct or inaction reveals a separate identity of interest on his part from that of Explorer. Gloria and 225 fail to persuade me otherwise.
Roger’s alleged concealing of the fill issues from Gloria
[70] Gloria and 225 also state that Roger concealed from Gloria the fact that fill was accumulating and the Property was being damaged. As a consequence, she did not know the reprocessing venture was going poorly until October 2016, when she spoke with the Ministry and then visited the Property. They say that this deceit on the part of Roger warrants piercing the corporate veil.
[71] I do not accept the claim that Roger concealed the fill build-up from Gloria. It is undermined by Gloria’s own evidence that, on May 8, 2016, Roger told her that Jerry was not refining or doing anything with the fill, and that she should therefore terminate the lease. She said to him, “‘Okay, what do you want me to write?’” and he “pretty much dictated” to her the email, discussed above, in which she instructed him to vacate the Property because he had not listened to her “repeated warnings … to reduce the amount of soil at” the Property.
[72] I find that Gloria was put on notice of the fill problems on May 8, 2016 when she had the discussion and sent the email. I make this finding based on the plain language of the email and the circumstances in which, on her own evidence, Roger asked her to send the email. When she sent the email, she understood that excessive fill was accumulating on the Property, so much so that Roger wanted her help in inducing Jerry’s cooperation in removing the fill. I do not accept that Gloria did not understand the email to mean that fill was piling up. The express language of the email is clear on this point. Nor do I accept that Gloria sent the email without discussing with Roger the apparent need to “reduce the amount of soil at” the Property. In my view, she would have sent the email only if she understood its contents and its context.
[73] My finding is reinforced by Gloria’s evidence that, from the very beginning, she had some trepidation about what Roger planned to do on the Property. She testified that when 225 entered into the lease with Explorer, she was “hoping” Roger was “being honest about his intent for the use of the land” and “hoping everything was going well”. Given these misgivings, it is implausible to suggest, as she does, that she would have sent the May 8, 2016 email simply on Roger’s request and without asking and learning about the need “to reduce the amount of soil at” the Property.
[74] For his part, Roger testified that when he and Gloria met on May 8, 2016, he told her about the extent of the problem with fill accumulating on the Property. They agreed together that she would send the email to him, and he in turn would send it to Jerry. This was “one of the strategies” that they were trying to use to get Jerry to remove the fill.
[75] I accept Roger’s evidence and find that, in the May 8, 2016 discussion leading to the email, he discussed the fill problem with Gloria. She would not have sent the email to him had he not done so.
[76] I therefore do not give effect to the argument that Roger engaged in deceit or a cover-up of what was happening on the Property such that it is appropriate to pierce the corporate veil.
Roger’s alleged “plotting” with Jerry to sell the Property at a profit
[77] Gloria and 225 further claim that Roger and Jerry “plotted” together for Roger to persuade Gloria to sell the Property to Jerry, so that Jerry and Roger could then develop the Property together, sever it into multiple lots, and sell it for a significant profit.
[78] The record does show that, soon after they began the reprocessing venture together, Jerry and Roger began discussing such a prospect. Jerry told Roger that severing the Property into four lots could help them “easily get $1M per acre”. In April 2016, Jerry submitted an offer to purchase the Property, which Roger relayed to Gloria, and Gloria rejected.
[79] The parties construe Roger’s and Jerry’s discussions differently. Gloria called them an effort to extract value from the Property and not share it with her. She testified that it was improper for Roger to have “plotted” with Jerry in this way. Roger disagreed. He testified that idea of developing and selling the Property was Jerry’s, and that he never agreed to partner with Jerry to carry it out. When Roger presented Jerry’s offer to Gloria, he told her that, based on the market, it was not a bad offer, but did not try to sell her on the offer; it was her decision to make. She told him she wanted a higher offer. Nothing more happened.
[80] Gloria and 225 have not persuaded me on this point. I accept Roger’s evidence that developing, dividing, and selling the Property at a profit was not his idea, that he presented Jerry’s offer to Gloria with his honest assessment that it was “not a bad offer,” and that he left it to her to make the decision. None of this supports a finding of fraud, deceit, or other wrongdoing supportive of piercing the corporate veil. In any event, the record is clear that nothing further took place after Gloria rejected the offer. Even if there was some nefarious plan afoot, as Gloria alleges, it did not get off the ground.
Conclusion on the claim for personal liability
[81] For the reasons above, I conclude that there is no basis on which to impose personal liability on Roger. I therefore dismiss the main action.
Roger’s alleged avoidance of corporate liability
[82] Separately, Gloria and 225 suggest that Roger is trying to sidestep corporate liability on behalf of Explorer by stripping Explorer of its cash and wrapping it up as a corporation. This allegation is not pleaded, and I am not persuaded that it is appropriately raised before me. In any event, based on the record before me, it has no merit. Gloria and 225 provided no actual evidence of any stripping of assets or efforts to wrap up the company. Roger denied that he has deliberately stripped Explorer of its assets. He also testified that, although he had previously wanted to wrap up Explorer because it was long dormant and costing money to keep open, he has not done so and will not do so before a decision is made in this action.
[83] In these circumstances, I do not give effect to this complaint.
[84] I now turn to consider the counterclaim commenced by Roger’s wife, Rita, and her holding company, 152, against Gloria, Simac, and Simac Canada.
The Counterclaim
Factual Background
[85] Rita Rajkumar is now 66 years old. She began working as a bookkeeper at Simac in October 2001, the year the company was founded. Rita incorporated a holding company, 152, through which Simac paid her.
[86] The original two-year agreement that Rita (through 152) and Simac entered into when Rita began is not in the record, but the parties agree that it was identical in substance to the renewed agreement they entered into in February 2005, which provided as follows:
a. Rita would be paid $80,000.00 per year, based on her provision of 48 weeks of work at 40 hours per week;
b. Rita would be paid bi-weekly;
c. Rita would receive a car allowance of $600.00 per month;
d. Rita would “be expected to be available to provide” professional services 48 weeks in each year and would not be paid for any period in which services were not provided;
e. Rita was required to “provide at least one month’s notice of any anticipated time period when” services would not be provided; and
f. Rita would “not withhold” services “for more than two consecutive weeks at any time” and any additional period in which services would not be performed “must be agreed upon between the parties in advance” and would be unpaid.
[87] In March 2006, Gloria incorporated a new company, Simac Canada. She continued to share ownership of Simac with Roger and Rita, but in her view, Roger was not bringing in work or contributing to Simac. She therefore set up Simac Canada to house any new business that she was going to bring in. Roger did not feel that it was appropriate for Gloria to do this; he felt she was stealing corporate opportunities by taking business away from Simac. He and Gloria feuded, and eventually negotiated for Gloria to buy out his shares of Simac for $150,000.00. Rita and Gloria remained as Simac’s only shareholders.
[88] In February 2007, Rita began providing bookkeeping services to Simac Canada, in addition to Simac. This was formalized through a contract entered into by Rita (through 152) with both Simac and Simac Canada. The contract provided that Rita would be paid $80,000.00 by Simac and $20,000.00 by Simac Canada. The car allowance and other terms of the earlier contracts with Simac remained unchanged.
[89] It is uncontested that, throughout her time working for Simac and Simac Canada, Rita received the same standard benefits package that other staff received. She received bonuses when other staff did. She received performance reviews from Gloria, as other staff did. She was entitled to a paid lunch hour, like other staff were. Indeed, Gloria agreed with the suggestion that someone from the outside world would look at Rita’s working arrangements and think that Rita worked there and “operated like everyone else” there.
[90] It is also uncontested that Rita was provided with an office, a computer, a desk, a phone, and all other equipment that she required to perform her work. All she had to provide were her skills. Nor did she work anywhere else: Gloria’s own evidence was that Rita was with Simac and Simac Canada Monday to Friday, 9 to 5.
[91] In January 2009, Gloria offered to purchase Rita’s shares in Simac for $75,000.00, half of what she had paid Roger for his shares. Gloria testified that she offered Rita a smaller sum than she had offered Roger because Rita was being “compensated significantly” for her work as bookkeeper. In her view, Rita’s shares were therefore worth less. Additionally, Rita was not “performing in a way” that brought in revenue. Rita counter-offered at $100,000.00 and she and Gloria agreed to that amount.
[92] The only subsequent documentation of Rita’s arrangement with the companies consists of an email dated January 26, 2009 from Gloria to Rita, outlining aspects of Rita’s arrangement. It provided that her annual salary remained at $100,000.00. Her car allowance went down from $600 to $500 per month. Everything else remained the same.
[93] On November 17, 2016, Simac, Simac Canada, and Rita (through 152) entered into an agreement that significantly reduced Rita’s hours and compensation. Pursuant to this agreement, Rita was to come to work only two days a week, preferably on Tuesdays and Thursdays, for a total of 16 hours per week. She would be compensated based on an hourly rate of $30 and would no longer be entitled to participate in a group health care plan. The agreement was to come into effect four days later, on November 21, 2016.
[94] It is this agreement that gives rise to Rita’s constructive dismissal claim. Rita and 152 allege that this was not a true “agreement,” and that in fact it was a unilateral change to working conditions imposed on Rita by Simac and Simac Canada.
[95] Gloria and Rita described the circumstances surrounding the November 2016 agreement very differently.
[96] Gloria testified that the decision to scale back Rita’s working hours and compensation was strictly a business decision. The business was “not doing well” and had experienced “quite a reduction in revenue”. Rita “was aware” of this issue because she handled the books. On many days she would come in and there was not much to be done. As such, the decision was made to reduce the number of days and hours Rita needed to work. Gloria and Rita had a discussion, and then Gloria sent the agreement to her. Rita brought the agreement back a few days later and signed it in front of Gloria. Rita was “disappointed but understood the volume was not there”. Other people were being let go around this time and Rita “understood” that.
[97] Rita told a very different story. She testified that on November 17, 2016, Gloria came into her office and asked to speak with her. Gloria was upset. She told Rita about what had happened to the Property and “what Jerry and Roger had done”. Gloria asked Rita if she would provide Gloria with a cheque for $50,000.00 to assist her with a legal claim that she wished to commence against Jerry and Roger. Rita understood the $50,000.00 to be a lawyer’s retainer fee. Rita was “shocked,” but agreed to go to the bank. While she was at the bank, she began to have second thoughts. She asked herself, “‘Why am I doing this?’” She observed that the dispute between Jerry and Roger had no relation to her work at Simac and Simac Canada. She did not feel responsible for any transactions between Roger and Jerry involving the land. She did not see why she should provide the money to Gloria. She went back to the office and told Gloria that she would not provide her with the cheque.
[98] Rita testified that approximately half an hour or an hour later, Gloria called Rita back to the boardroom, presented her with the agreement, and told her that the agreement reflected what she had decided to do. Gloria told Rita that she was “‘collateral damage’”. She “threatened” to walk Rita to the door and “embarrass” her if she did not sign the agreement then and there. Rita signed it. She was “in shock” and “speechless” and did not know what to do. She knew that Gloria was upset. She worried about Gloria embarrassing her by walking her to the door. She decided it was best to just sign the agreement.
[99] In accordance with the agreement’s instructions, Rita reported for work the following Tuesday. When asked why, she testified that she needed the money, and at her age was concerned about finding gainful employment elsewhere. She looked for other work, and started working at another company on May 19, 2017, about six months later, in addition to working her 16 hours a week for Simac and Simac Canada.
[100] On May 23, 2018, Simac Canada terminated its contract with Rita (through 152), effective immediately.
The Constructive Dismissal Claim
[101] Rita and 152 allege that the November 2016 agreement amounted to constructive dismissal. Gloria, Simac, and Simac Canada defend this claim on the basis that Rita was an independent contractor, not their employee. The primary basis for this position is that their existing agreement provided that the relationship between Rita and the two companies was an independent contractor relationship and not an employment relationship.
[102] Although the independent contractor defence is the only one pleaded, Gloria, Simac, and Simac Canada nonetheless attempted to advance another defence at trial: that Rita was terminated for cause due to a breach of trust, because Gloria could no longer trust Rita given her dispute with Roger. Gloria offered evidence that, in her view, since Rita and Roger were married, Rita “must have known something” about the problems with fill accumulation and did not bring those problems to Gloria’s attention. Gloria testified that Rita was “submissive to Roger, if he pressured her, who knows what would happen. I couldn’t take that chance.” Rita was, in her assessment, “compromised”. Gloria’s counsel also tried to advance this position in cross-examination, suggesting that Rita knew “exactly what Roger was doing” on the Property.
[103] This effort to advance an entirely different basis for Rita’s termination was improper. It is settled law that the pleadings must govern the trial process (Rodaro v. Royal Bank of Canada (2002), 59 O.R. (3d) 74 (C.A.), at para. 60). The defence of termination for cause was not pleaded. An earlier version of the Statement of Defence to Counterclaim alleged that Rita was “dismissed for cause due to aiding and abetting Roger in his betrayal of Gloria and destruction of Gloria’s land”. However, that defence was abandoned in subsequent versions of the pleading. It should not have been advanced at trial.
[104] In any event, the defence is without merit. Rita testified that she did not know about the reprocessing venture. Her evidence was, in my assessment, entirely credible and was not shaken on cross-examination. Indeed, Gloria acknowledged that she had no evidence that Rita had anything to do with Roger’s dealings with the Property. Gloria also conceded that she had no knowledge that Rita ever misused her signing authority as bookkeeper or otherwise betrayed Gloria’s trust.
Credibility
[105] As detailed above, Gloria and Rita dispute the circumstances surrounding the November 2016 agreement that forms the basis of the constructive dismissal counterclaim. I prefer Rita’s evidence on this issue, for the following reasons.
[106] First, Rita’s evidence was, in its own right, compelling and credible. She did not overstate matters. She was candid and forthright. She acknowledged, for example, that she initially went to the bank to take out the $50,000.00 Gloria had asked her for, before she thought about it further and changed her mind.
[107] Second, Gloria did not challenge Rita’s evidence about the circumstances surrounding the November 16, 2016 agreement. Rita was not cross-examined at all on her evidence on this issue. Gloria was recalled to give additional evidence after Rita testified. Notably, her recall testimony did not dispute or challenge the version of events that Rita had just presented.
[108] Third, I may consider a witness’ relationship to or hostility with a party when assessing their credibility (Prodigy Graphics Group Inc. v. Fitz-Andrews, 2000 CarswellOnt 1178 (S.C.), at para. 46). In my assessment, it is clear that Gloria bears strong feelings toward Rita as a consequence of what she views as Rita’s betrayal. She was firmly of the view that Rita must have known that Roger was damaging the Property, and kept that information from her. Gloria made this claim repeatedly at trial, even though she readily conceded she had no proof to back it up. I find that her animus towards Rita undermines the credibility of her evidence about her dealings with Rita.
[109] Fourth, as I discuss further below, Gloria’s evidence at trial as to whether Simac terminated employees other than Rita around November 2016 is simply not credible.
[110] Finally, as discussed above, other credibility concerns arise from Gloria’s testimony in the main action. Those concerns also inform my assessment of her credibility in the counterclaim.
Legal Issues
[111] The issues before me are:
a. Whether Rita (through 152) was an employee of Simac and Simac Canada;
b. If she was an employee, whether the November 2016 agreement constituted a constructive dismissal of her employment;
c. If she was constructively dismissed, what reasonable notice period she was entitled to; and
d. What damages, if any, she is entitled to.
Whether Rita was an employee of Simac and Simac Canada
[112] I find that Rita (through 152) was an employee of Simac and Simac Canada and not an independent contractor.
[113] The agreement between Rita and the two companies purported to characterize the relationship as an independent contractor relationship; however, that characterization does not carry the day. To the contrary, it is settled law that, even in the face of an independent contractor provision like the one here, whether a particular relationship is an employment relationship turns on the criteria established by the Supreme Court in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59. Those criteria, which are not exhaustive, are (Sagaz Industries, at para. 47):
a. The level of control that the employer has over the worker’s activities;
b. Whether the worker provides their own equipment;
c. Whether the worker hires their own helpers;
d. The degree of financial risk taken on by the worker;
e. The degree of responsibility for investment and management held by the worker; and
f. The worker’s opportunity for profit in the performance of their task.
[114] In Straus Estate v. Decaire, 2012 ONCA 918, the Court of Appeal applied these criteria to determine that an employment relationship existed, even though the agreement purported to characterize it as an independent contractor relationship (at paras. 54-55). Simply put, the way in which the parties characterize the relationship carries no weight: what matters is how the Sagaz Industries criteria describe the relationship.
[115] Applying those criteria here, it is clear that Rita was an employee and not an independent contractor:
a. Simac and Simac Canada had complete control over Rita’s activities: they set her hours of work at 40 per week, required her to obtain approval for her vacation, and allowed her to only take a certain amount of vacation.
b. Rita did not provide any of her own equipment. Simac and/or Simac Canada provided it all, including her office space, computer, and other supplies. Rita provided her skills, and nothing else.
c. Rita did not hire anyone to assist her in performing her duties.
d. Rita did not take any financial risk. She was paid every two weeks, just as the other staff were.
e. Rita did not invest in Simac or Simac Canada in the sense of working without being certain if she would get paid. She simply worked and got paid every two weeks, as the other staff did.
f. Rita did not have the opportunity for profit. She was paid a set salary, which remained steady over many years. Her only opportunity to earn more was through the employee bonus, which was given to all the workers.
[116] None of these facts are in dispute before me. Indeed, Gloria confirmed many of these facts in her testimony. In my view, these facts make it clear that Rita was an employee.
[117] Gloria, Simac and Simac Canada claim that 152’s financial statements claim expenses for advertising and paying Rita’s children to work for 152, and that these expense claims preclude a finding that Rita was an employee. They were unable to identify any judicial support for the proposition that information on a financial statement is relevant to the determination of whether an employment relationship exists. Nor does this proposition make sense in light of the legal principles clearly enunciated in Sagaz Industries. I am unable to accept it.
Whether Rita was constructively dismissed
[118] I find that Rita was constructively dismissed on November 17, 2016.
[119] It is well-established that if “an employer’s conduct evinces an intention no longer to be bound by the employment contract,” the employee may either accept the employer’s conduct or the changes the employer has made, or treat the conduct or changes as a repudiation of the contract by the employer and sue for wrongful dismissal (Farber v. Royal Trust Co., [1997] 1 SCR 846, at paras. 33-34; Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10, [2015] 1 SCR 500, at paras. 30, 35). In such cases, the employer’s actions are considered constructive dismissal because the employee has not been formally dismissed. An employee who is constructively dismissed is entitled to damages in lieu of reasonable notice of termination.
[120] In assessing whether an employer’s conduct evinces the necessary intention to not be bound by the contract, the court may consider whether there has been a breach of an express or implied contractual term. The breach must be sufficiently serious in nature and the term that is breached must be an essential one. Examples may include a unilateral and substantial change to an employee’s compensation, work assignments, or place of work (Potter, at paras. 32, 35). The court may also consider whether the employer’s conduct more generally shows that the employer intended not to be bound by the contract, for instance by making continued employment intolerable (Potter, at para. 33).
[121] I find that the November 2016 agreement presented to Rita amounted to constructive dismissal. The agreement unilaterally and materially changed Rita’s working conditions, including her compensation and work hours, from full-time employment at $100,000.00 per year (plus a car allowance, bonuses, and participation in a group health plan) to working 16 hours a week for $30 per hour (and no car allowance, bonuses, or group health benefits). These are essential terms of her employment contract. The changes made to them were serious in nature. In my view, a reasonable person in Rita’s situation would have felt that the essential terms of the contract were being substantially changed (Farber, at para. 26; Potter, at para. 39). I accept Rita’s evidence that she felt she had no choice but to sign the agreement, given the circumstances in which it was presented to her and Gloria’s threat to escort her out of the premises if she did not sign.
[122] I reject outright the claim that Gloria, Simac, and Simac Canada scaled back Rita’s hours simply because they could no longer afford her. There is no documentary evidence in support of this claim. Indeed, Gloria was asked at her examination for discovery to provide annual reports and financial statements for Simac for the 2014-2017 period. She took the request under advisement and never provided a response. In her recall testimony, Gloria offered evidence that Simac had taken out two loans due to its financial issues and that Rita would know about those loans given her role as bookkeeper. Again, no documentary evidence was tendered in support of this late-in-the-day assertion. I am not persuaded.
[123] I likewise reject the claim that Rita was not the only employee to be let go around the time of the November 2016 agreement. Gloria’s evidence on this point is simply not credible. In her direct evidence, she testified that she also had to let other workers go around this time frame. On cross-examination, she said she did not recall if she had to let others go. At her examination for discovery, her evidence was that just Rita, and no one else, was released from the company at the time. I find Gloria’s trial testimony on this important issue to lack credibility. I do not accept it.
What reasonable notice period Rita was entitled to
[124] At the time Rita was constructively dismissed in November 2016, she had been with one or both companies for over 15 years. She was 57 or 58 years old. She was dismissed without notice and received no statutory entitlements under the Employment Standards Act, 2000, S.O. 2000, c. 41.
[125] Her position is that she was entitled to 18 months of reasonable notice. I agree.
[126] In determining the reasonable notice period under the common law, I am to rely on the factors set forth by this court in Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.), at p. 145. These factors consist of the character of the employment, the length of service, the age of the employee, and the availability of similar employment, having regard to the experience, training, and qualifications of the dismissed employee (at p. 145, cited with approval in Honda v. Keays, 2008 SCC 39, [2008] 2 SCR 362, at para. 28).
[127] Applying these criteria here, I find as follows:
a. Rita worked as the companies’ bookkeeper, and functionally was their chief accountant.
b. At the time Rita was dismissed, she had been with Simac for over 15 years (from October 2001 to November 2016) and with Simac Canada for ten of those years (from the time it was created in 2006 to November 2016).
c. Rita was 57 or 58 years old when she was dismissed.
d. The duration of time for which she worked at Simac and Simac Canada suggests that her experience and training is at least partly specific to those companies and less broadly applicable. Indeed, as discussed below, Gloria, Simac, and Simac Canada argued before me that Rita was “overpaid” for her role, a fact that would make it harder for her to get equivalent employment elsewhere.
[128] I am of the view that an 18-month notice period is appropriate. I place particular emphasis on Rita’s age and duration of service, along with the responsibilities she took on for the companies. In my view, Peterko v. Centric Health Corporation, 2019 ONSC 1068, serves as a helpful benchmark, given its similarities on the facts. The plaintiff in that case was 53 years old (3-4 years younger than Rita) and had 17 years or service (two years more than Rita). The court, citing the Bardal factors, granted 18 months of reasonable notice. It noted that older age supports a longer notice period, especially for a long-term employee (Peterko, at para. 45). Rita, like the plaintiff in Peterko, was trained to do work largely geared towards Simac’s and Simac Canada’s needs. That makes it harder to get employment elsewhere and argues in favour of a longer notice period.
[129] Gloria, Simac, and Simac Canada offered no persuasive argument that Peterko is not factually analogous to this case. Nor did they refer me to any cases that they say more accurately articulate a proper notice period for Rita.
[130] They suggest that if Rita was an employee, she is only entitled to the 6-month notice period contemplated in the February 2007 agreement between 152 and the companies.
[131] This is incorrect as a matter of law. The February 2007 agreement provided that Rita was not entitled to even the minimum statutory benefits under the Employment Standards Act, 2000 upon termination. This illegality renders the termination provisions in the agreement void and unenforceable and requires me to look to the common law in determining Rita’s reasonable notice period (Waksdale v. Swegon North America Inc., 2020 ONCA 391).
[132] Finally, I note that Simac and Simac Canada terminated Rita’s part-time employment on May 23, 2018, exactly 18 months after constructively dismissing her. Rita suggests that Gloria waited until 18 months had passed so that she could get “credit” for the $40,752 that she paid Rita during that period. I make no finding as to whether this was the intention, but I certainly agree that this was the effect. I also note that Simac and Simac Canada did not pay Rita her minimum notice entitlement under the Employment Standards Act, 2000. These are both aggravating factors. Had Rita asked for an extended notice period based on these factors, she may well have been entitled to it. In any event, these considerations underscore my view that 18 months is an appropriate notice period in the circumstances.
The damages to which Rita is entitled
[133] Rita is entitled to receive her salary and car allowance for the reasonable notice period of 18 months. Her base salary at the time she was constructively dismissed was $100,000.00. She also earned $6,000.00 per year by way of car allowance. Taken together, these amounts, over the 18-month notice period, work out to $159,000.00.
[134] Rita is also entitled to damages for her loss of benefits. There is fairly little information before me about her benefits, beyond Gloria’s evidence that Rita and other staff were on a “pretty good” standard health and dental plan. Where there is no specific detail on employment benefits, the courts have estimated benefits to be worth 10% of an employee’s base salary, particularly in the absence of evidence from the defendant on the cost of maintaining the plaintiff’s group benefits coverage (Galea v. Wal-Mart Canada Corp., 2017 ONSC 245, 44 CCEL (4th) 251, at para. 168; Camaganacan v. St. Joseph’s Printing Ltd., 2010 ONSC 5184, at para. 23; De Castro v. Arista Homes Limited, 2024 ONSC 1035, at para. 38). For Rita, this amount is $10,000.00 per year, or $15,000.00 for the 18-month notice period.
[135] Together, her salary, car allowance, and benefits are worth $116,000.00 per year, or $174,000.00 for the 18-month notice period.
[136] After Rita was dismissed, she was unemployed (other than working her reduced hours for Simac and Simac Canada) for some months until she began working part-time for a new employer. During the 18-month notice period, Rita earned $25,062.50 from her new employer and $40,762.50 from Simac Canada. These amounts, totalling $65,825.00, reflect Rita’s mitigation of her damages and are to be deducted from her damages award.
[137] Deducting this mitigation amount of $65,825.00 from the $174,000.00 owed to Rita, I find that she should be awarded $108,175.00 for the 18-month notice period of November 22, 2016 to May 22, 2018, plus pre-judgment interest from the date of the November 2016 agreement until now.
[138] Gloria, Simac and Simac Canada make a number of arguments on the issue of damages that I briefly address.
[139] First, they claim that Rita’s position was special and based on her status as Gloria’s sister-in-law, and that she was paid excessively for her work. They suggest that any payments made to her in lieu of reasonable notice should therefore not be calculated based on her allegedly inflated income.
[140] I do not agree. There is no evidence before me to support the claim that Rita was paid more than market rate for a bookkeeper of her seniority and expertise. Nor is there jurisprudential support for the rather bold claim that I must satisfy myself that an employee is being paid at market rates in order to be entitled to damages based on their pay. In any event, even if Gloria were being overpaid, this would only underscore her entitlement to a generous notice period, as it would make clear that it would be hard for her to obtain a similar position elsewhere after dismissal.
[141] Second, Gloria, Simac and Simac Canada claim that, when determining the wage that should form the basis of my damages assessment, I should look at the net earnings that Rita paid to herself from 152, rather than the gross amounts paid to 152 by Simac and Simac Canada.
[142] I disagree. There is no case law to support this proposition. Nor do I see any logic to the suggestion that someone who chooses to work through a holding company is entitled to less upon dismissal simply because of how they have chosen to structure their work arrangements.
[143] Finally, Gloria, Simac and Simac Canada appear to advance an argument that Rita failed to mitigate her damages upon dismissal. This claim is not pleaded. In any event, the claim is without merit. No evidence was provided in its support. Rita’s evidence was that she obtained new employment within months of her constructive dismissal. I have factored this into the calculation of damages.
Order Granted
[144] I order the following:
a. The title of proceedings is amended to refer to Simac by its corrected name, Superior Independent Medical Assessment Centre Ltd. The word “Medical” was inadvertently omitted in the title of proceedings. The parties do not oppose my correcting the error now by way of amendment.
b. The action against Roger Rajkumar is dismissed.
c. The counterclaim against Gloria Rajkumar, Superior Independent Medical Assessment Centre Ltd., and Simac Canada Inc. is granted, in the amount of $108,175.00, plus pre-judgment interest from November 17, 2016 to the date of these Reasons.
[145] The parties are to work together to resolve costs. If they are unable to do so within 30 days, they are to contact my judicial assistant and I will convene a case conference.
Rohit Parghi
Released: May 13, 2025