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
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
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
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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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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