Law Times

June 5, 2017

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Court rules former employee can keep income BY ALEX ROBINSON Law Times T he Ontario Court of Ap- peal has declined to de- duct income earned from a wrongfully dismissed employee's damages in a decision lawyers say shows courts are go- ing to take a nuanced approach to mitigation going forward. In Brake v. PJ-M2R Restau- rant Inc., the Court of Appeal determined that the damages of a wrongfully dismissed long-time McDonald's employee should not be lessened by income she earned from other employers during a no- tice period. Lawyers say the decision means employers will not be able to as- sume that income gained by the employee during this period will automatically be deducted. "Typically, when a damages award comes down, the employer says we deduct all income earned post-termination, but now judges are going to have to look closely at the type of job that people take," says Miriam Vale Peters, the law- yer representing the former em- ployee, Esther Brake. The employee was awarded more than $104,000 in damages for a 20-month notice period af- ter a trial judge determined she had been wrongfully dismissed by PJ-M2R, a McDonald's fran- chise holding company that owns restaurants in Ottawa. She had worked as a manger at a couple of the restaurants until she was ter- minated in 2012. Once a judge finds an employee has been wrongfully dismissed, employers have generally been en- titled to subtract any income the former employee gained during the notice period from a new em- ployer that mitigated their loss. The judge, however, declined to deduct income Brake had earned during that time and the employer appealed that decision. The Court of Appeal upheld those damages, saying they were not "amounts re- ceived in mitigation of loss." LAW AND ORDER TORIES? Crime barely mentioned at convention P6 FOCUS ON Mobile technology P8 See Duty, page 5 PM #40762529 $5.00 • Vol. 28, No.19 June 5, 2017 L AW TIMES C O V E R I N G O N T A R I O ' S L E G A L S C E N E • W W W . L A W T I M E S N E W S . C O M NEW TECH FOR LSUC Discipline procedures to go entirely paperless? P4 BY ALEX ROBINSON Law Times L awyers say a recent Divi- sional Court decision will reinforce shareholders' rights to call special meet- ings. In Koh v. Ellipsiz Communi- cations Ltd., the court overturned an application judge's decision to grant an exception to the board of directors of a company, which would have stopped a shareholder from requisitioning a meeting. The court found that in order to provide this exception, the board of directors must clearly prove that enforcing a personal claim or grievance was the primary pur- pose of the requisition. "It affirms the basic princi- ples of a shareholder democracy," Geoff Moysa, the lawyer who rep- resented the shareholder, says of the decision. "It's the shareholders that ul- timately own the company and will make these decisions." Lawyers say the decision sets a high threshold that directors must meet to receive the exception, mak- ing it harder for them to decline a requisition request based on the personal grievance exception. The decision was also the first by an appellate court to acknowl- edge the right of shareholders to requisition a meeting as a "funda- mental right," lawyers say. Derek Bell, a partner with DLA Piper (Canada), who was not involved in the case, says the decision ref lects a concern about board entrenchment and how di- rectors may use a part of the On- tario Business Corporations Act, known as the personal grievance exception, to prevent shareholders from removing them. Under the act, all shareholders who hold at least five per cent of the company's stock have a right to req- uisition the board of directors to call a meeting unless one of three excep- tions applies. One of those excep- tions is when it "clearly appears that the primary purpose of the propos- al is to enforce a personal claim or redress a personal grievance against the corporation or its directors, of- ficers or security holders." Bell says that directors could adopt a loose interpretation of the exception in order to stif le share- holders meetings that could oust them. "The real concern about this See This, page 5 Derek Bell says a recent Divisional Court decision reflects a concern about board entrenchment and how directors may use the personal grievance exception to prevent shareholders from removing them. Photo: Robin Kuniski Shareholders have right to call meeting Frank Portman says employers looking to offset damages in a wrongful dismissal case will need to go beyond simply proving an employee earned an income during the notice period. THE MOST COMPLETE DIRECTORY OF ONTARIO LAWYERS, LAW FIRMS, JUDGES AND COURTS ONTARIO LAWYER'S PHONE BOOK 2017 NEW EDITION Perfectbound Published December each year On subscription $82.50 One time purchase $86 L7796-5932 Multiple copy discounts available Plus applicable taxes and shipping & handling. (prices subject to change without notice) With more than 1,400 pages of essential legal references, Ontario Lawyer's Phone Book is your best connection to legal services in Ontario. ORDER YOUR COPY TODAY! 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