Background
In 2009, Elizabeth Boyce was hired as a manager at the Hampton Inn and Suites in Brantford, Ontario under a three-year contract. Her employment was terminated just five months into her tenure. She brought a wrongful dismissal claim against 2170990 Ontario Inc. (“217”), one of two corporate entities connected to the hotel, and obtained an uncontested judgment of $120,000. When it became clear that 217 could not satisfy that judgment, Ms. Boyce commenced a second action against 2113626 Ontario Inc. (“211”) — the other corporate entity operating the hotel — and against an individual, Danny Bawa. Ms. Boyce passed away before the matter was resolved, and her estate continued the litigation.
On a motion for summary judgment, Justice Spurgeon of the Superior Court of Justice found that 211 and 217 were common employers and granted judgment against 211. The claim against Danny Bawa was dismissed. The motion judge determined that the two companies were jointly involved in running the hotel and shared a common intention to create an employment relationship with Ms. Boyce. He also rejected 211’s argument that the doctrines of res judicata and abuse of process barred the estate from pursuing this second action.
211 appealed, arguing that the motion judge erred in applying the common employer test and in declining to apply res judicata and abuse of process to preclude the estate’s claim.
The Court’s Holding
The Court of Appeal dismissed the appeal in its entirety. The court found that the motion judge had correctly articulated and applied the common employer test, making findings of fact — specifically that both 211 and 217 were jointly involved in hotel operations and shared a common intention to employ Ms. Boyce — that were well supported by the record. The appellate court declined to reweigh the evidence, noting that absent a palpable and overriding error or an extricable error of law, deference was owed to the motion judge’s factual findings and his application of the legal test to those facts. No such errors were identified.
On the res judicata and abuse of process arguments, the court agreed with the motion judge that these doctrines should not bar the estate’s claim against 211. Because 211 was not a party to the initial action against 217, it suffered no unfairness in being required to defend the second action. The court further endorsed the motion judge’s reasoning that, where two closely tied corporate entities’ respective roles are not easily discernible, it would be unjust to foreclose a claim against the second entity once it becomes apparent the first cannot satisfy a judgment. The common employer doctrine exists precisely to prevent such an artificial and unjust outcome.
Costs of $7,500 (all-inclusive, partial indemnity) were awarded to the respondent estate, as agreed between the parties.
Key Takeaways
- A plaintiff who obtains an unsatisfied judgment against one corporate entity may pursue a second action against a related common employer without being barred by res judicata or abuse of process, particularly where the two entities’ roles were not easily distinguishable at the outset.
- The common employer doctrine can override what would otherwise be an artificial application of res judicata, ensuring that closely connected corporate entities cannot use procedural doctrines to evade employment liability.
- Appellate courts owe significant deference to a motion judge’s findings of fact and application of the common employer test; an appeal will not succeed merely by inviting reweighing of the evidence.
- A common employer finding requires both joint involvement in the business operation and a common intention to create an employment relationship with the claimant.
Why It Matters
This decision reinforces the protective purpose of the common employer doctrine in Canadian employment law. Where a business is operated through multiple corporate vehicles — a common structuring choice — employees should not be left without recourse simply because the entity named in an initial claim is judgment-proof. The court’s willingness to allow the estate to pursue 211 after 217 failed to pay signals that Ontario courts will look through corporate structures to ensure that the economic reality of the employment relationship governs liability.
For employers, the case is a reminder that related corporate entities involved in jointly managing a workforce may be held jointly liable for wrongful dismissal damages. For plaintiff-side practitioners, it confirms that a prior unsatisfied judgment against one common employer does not close the door to a subsequent action against another, and that res judicata arguments will carry limited weight in this context where the second defendant was not party to the first proceeding.