The Ontario Court of Appeal recently upheld the trial judgment in King v. 1416088 Ontario Ltd. (King), a case we previously blogged about here. In King, Justice Mew of the Superior Court held that a number of related corporate defendants were jointly and severally liable to the plaintiff for reasonable notice of termination and pension benefits, despite the fact that the plaintiff had not technically been employed by a number of such defendants.
The plaintiff, Mr. King, had worked for over 38 years as a bookkeeper for a number of entities in the liquidation and auctioneering industry under the trade name, "Danbury." Such entities were owned and/or operated by the same family and at times he provided services to multiple Danbury entities concurrently. After his then employer (Danbury Industrial) ceased to carry on business in 2011 and failed to provide Mr. King with any severance payments or benefits, Mr. King commenced a wrongful dismissal action against a number of Danbury entities, including an entity that had commenced operations following his termination (DSL Commercial). In particular, Mr. King claimed pay in lieu of reasonable notice of termination at common law as well as pension benefits pursuant to a 1981 retirement agreement, relying on an argument that all of the Danbury entities were common and related employers.
Justice Mew ultimately agreed, holding the Danbury corporate defendants jointly and severally liable for a 24 month common law notice entitlement as well as pension benefits pursuant to the retirement agreement. With respect to DSL Commercial, the corporate defendant that commenced operations following Mr. King's termination, Justice Mew's common and related employer ruling was based in part on a finding that such entity used the same premises and supplies as Danbury Industrial, and that Mr. King had assisted in a number of preparatory tasks needed for the DSL Commercial to commence business.
Although the Danbury defendants challenged the ruling, the Court of Appeal (the Court) had no problem quickly disposing of such appeal. The Court unanimously agreed with Justice Mew's application of the principles from the landmark case, Downtown Eatery (1993). In particular, such case stands for the notion that, "as long as there exists a sufficient degree of relationship between different legal entities who apparently compete for the role of employer, there is no reason in law or in equity why they ought not all to be regarded as one for the purpose of determining liability for obligations owed to those employees who, in effect, have served all without regard for any precise notion of to whom they were bound in contract." With respect to DSL Commercial, the Court was persuaded by Justice Mew's finding that Mr. King had in fact performed services on behalf of DSL Commercial, albeit such entity had not yet commenced formal operations.
Our views:
The Court of Appeal's unanimous endorsement of Justice Mew's decision demonstrates that the courts are more than willing to "pierce" the corporate veil and hold multiple related companies jointly and severally liable for employment-related obligations in certain circumstances. In cases like King, where a plaintiff has long-standing service, this willingness may be particularly heightened.
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