‘Attempt to silence’: Ontario court takes dim view of employer’s $150 million wrongful dismissal counterclaim
If you’re presented with a wrongful dismissal or constructive dismissal claim as an employer, there are several reasonable tactics to consider.
You could weigh the pros and cons of fighting it out and offer to settle.
You could engage a third-party mediator, sit down at a table together and come to a mutually agreeable compromise.
Or, you can dig your heels in — firm in your belief that your case will stand up to a court’s scrutiny — and see it through to the bitter end.
An Ontario employer recently went with what was behind door number four: Immediately file a counterclaim against the worker for $150 million. While I’m no employment lawyer, I can safely offer this pearl of wisdom: Don’t choose door number four.
Ontario’s Court of Appeal recently tossed out said counterclaim, which was filed by Callidus Capital Corporation against a vice-president who sued the company for constructive dismissal after he quit. The VP in this case decided to retire after some health concerns surfaced and he became concerned about the direction the company was taking.
He gave 18 months’ notice of his intention to retire but ended up walking away four months’ early — citing an April 2016 incident where a senior executive physically assaulted his boss in front of him and ongoing verbal abuse and criticism.
Just 15 days after he filed his lawsuit, Callidus — a lender to distressed businesses in Canada and the United States — issued its $150 million counterclaim. It said the VP breached his fiduciary duties related to three borrower clients.
The appeal court didn’t mince words about the true intent of the move by Callidus.
“When the context is scrutinized, what is ‘really going on’ with the counterclaim is an attempt to silence a former employee seeking recovery in his wrongful dismissal claim and create a chilling effect for other employees,” it said.
It went on, noting there was “no underpinning” given for the $150 million figure.
“The claim is based on bald allegations with no itemization or explanation of loss suffered,” it said. “It is based on events that Callidus had known about for years and never mentioned before. Only when the allegations of a toxic work environment were made public by the appellant was there a claim made.”
It also pointed to the fact the counterclaim was launched more than five years ago, and the company had not taken “steps to advance its merits.” On March 31, 2022, a proposed amendment to reduce the claim to $3 million was delivered — but again there was no itemization to justify even that lower amount.
We will file this case under “cautionary tale.” While it may be tempting to use aggressive tactics against a worker who is suing you for wrongful dismissal, filing a counterclaim for a ridiculous sum is not the answer and is very unlikely to find a favourable ear with the court.
Instead, consider the options behind door numbers one, two and three — settling, mediation or rationally making your case in court.
For more information, see Boyer v. Callidus Capital Corporation, 2023 ONCA 233 (CanLII)
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