04 Mar Lifting a stay for wrongful dismissal damages, The Law Times (March 21, 2016, p. 7)
An order for the payment of money in lieu of notice is an order that creates a fixed debt obligation. A wrongfully dismissed employee who obtains a judgment requiring his ex-employer to pay damages may be unable to enforce it until appeal is determined. When a notice of appeal seeking to vary an award of wrongful dismissal damages is filed, it results in an automatic stay of the judgment. To lift a stay is a complex endeavour. A recent employment case in point is Antunes v. Limen Structures, 2016 ONCA 61 (“ONCA”), where the Ontario Court of Appeal was asked to lift a stay in respect of the wrongful dismissal damages. Having taken the contextual factors into account, the ONCA lifted the stay, while criticizing “scorched earth” trial and appeal tactics taken by the ex-employer.
In Antunes, John Antunes successfully sued Limen Structures Ltd. for wrongful dismissal. On June 2, 2015, he was awarded $104,228.54, which was equivalent to eight months’ salary for five months of employment, pre-judgment interest of $3,504.25, and $500,000 representing the value of his shares and costs in the amount of $37,500. In June 2015, Limen filed a notice of appeal asking the judgment to be varied by setting aside the award of damages for $500,000. Pursuant to Rule 63.01(1) of the Ontario Rules of Civil Procedure, the effect of the delivery of a notice of appeal is an automatic stay of the judgment pending appeal.
In response, Antunes brought a motion, under Rule 63.01(5) of the Rules, to lift the stay in respect of the wrongful dismissal damages, pre-judgment interest, and costs, because those awards were not appealed. In an attempt to defeat the motion, Limen filed a supplementary notice of appeal, challenging the awards that Antunes sought to enforce. Although the supplementary notice of appeal had been filed months after the original notice of appeal had been filed, Rule 61.08 of the Rules entitles an appellant to amend a notice of appeal without leave before the appeal is perfected.
At the lifting of a stay motion, Antunes successfully asserted that Limen’s supplementary notice of appeal had no merit and was served solely for the purpose of buttressing its claim to a stay as a way to stave off payment. Antunes had a legitimate concern that any delay in enforcing the judgment would make it more difficult to collect upon it, because Limen’s financial position continued to deteriorate and that it might be insolvent by the time the appeal was argued. The ONCA found Antunes’ fears not to be unreasonable, because there was Limen’s own evidence pointing towards insolvency.
The ONCA explained that the stay of execution imposed by Rule 63.01 intended to offer some protection to former employers against payments, which they might not eventually be obligated to make, thus putting it to the uncertainties of recovery. The discretion as to whether an order should be stayed pending appeal must be exercised to promote the overall interests of the administration of justice. This requires the ONCA to consider a number of contextual factors, such as: the grounds of appeal; the parties’ position at trial; what has happened since the trial; the general circumstances of the case, including the trial judge’s reasons; and the probable delay between trial and appeal that cannot be controlled by the parties.
The test for lifting a stay involves the balancing of three principal factors: (a) financial hardship to the respondent if the stay is not lifted; (b) the ability of the respondent to repay or provide security for the amount paid; and (c) the merits of appeal.
In respect of the first factor, the ONCA was satisfied that Antunes had made out a case for financial hardship, mainly because of his inability to secure permanent employment for 17 months following his dismissal, which caused him to incur extensive debt.
In respect of the second factor, the ONCA accepted Antunes’s admission that he does not have the ability to repay any substantial amount collected from Limen. In respect of the third factor, the merits of the appeal, the ONCA found them to be weak, which Limen implicitly acknowledged through its belated amendment of the notice of appeal. It further opined that Limen’s argument that the trial judge erred in law by awarding Antunes eight months’ pay in lieu of notice after a five-month service was not one of law but of the weight, which the trial judge accorded to the Bardal factors.
Having found that Antunes demonstrated financial hardship, the ONCA lifted the stay in respect of the award of wrongful dismissal damages, pre-judgment interests, and the costs. In the process, the ONCA criticized Limen for managing its affairs in such a way as to minimize its financial exposure to Antunes. The ONCA acknowledged that businesses can find themselves in financial difficulty for many reasons having nothing to do with the wrongful dismissal claim of a former employee; but in coming to its decision, it took a particular note of the “scorched earth” trial and appeal tactics by Limen.
Antunes illustrates that lifting of a stay motions are limited to cases of demonstrable and unusual hardship to ex-employees and where a reasonable measure of protection can be afforded to ex-employers. In most cases, the merits of the appeal will have a bearing upon success of the motion. If an appeal is devoid of merit and is perceived as a tactical manoeuvre to buy time to, for example, dissipate assets, the automatic stay may be lifted and ex-employer may be directed to pay money into court or its ex-employee’s counsel’s trust pending the disposition of the appeal.