[1]               The Plaintiff, Dr. Adrienne Halupa, brings this motion seeking default judgment against the Defendants.  Dr. Halupa was wrongfully terminated by the Defendants and seeks lost wages, pay in lieu of notice upon termination, and vacation pay.  She also seeks damages for bad faith conduct in the manner of dismissal and punitive damages.

[2]               The Defendant, SAGEmedica Inc. (“SAGE Medica”) is a corporation incorporated under the Ontario Business Corporations Act, R.S.O. 1990, c. B. 16 (“OBCA”).  The Defendant, SAGE Renegade Inc. (“SAGE Renegade”) is a corporation incorporated under the Canada Business Corporations Act, R.S.C. 1985, c. C-44 (“CBCA”).  The Defendant, Paul Borlinha is the sole director of both corporations.  Dr. Halupa claims that she was employed and wrongfully terminated by the two corporate Defendants as common employers.  She further claims that the Defendant, Mr. Borlinha is personally liable to her pursuant to the statutory oppression remedies in the OBCA and CBCA.

[3]               The Defendants were noted in default and have received notice of this motion.  The Defendant, Mr. Borlinha was served personally with the Statement of Claim on behalf of all three Defendants on May 14, 2019.  No Statements of Defence were filed and the Defendants were noted in default.  Following an endorsement by Copeland, J. dated July 24, 2019, on September 24, 2019, the Plaintiff served the Defendants with the materials for this motion by providing a copy personally to Mr. Borlinha on behalf of all three Defendants.  The Defendants have not provided any responding materials.

[4]               Pursuant to r. 19.02 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, a defendant who has been noted in default is deemed to admit the truth of all allegations of fact made in the Statement of Claim.  However, when seeking default judgment under r. 19.05 for unliquidated damages, the Plaintiff must adduce evidence to support her claim for damages. In this case, the Plaintiff, Dr. Halupa, has filed an affidavit in support of her claims.  On the basis of the facts in the Statement of Claim and the evidence Dr. Halupa filed, she was treated very poorly by the Defendants. I conclude that she is entitled to damages for wrongful dismissal, unpaid wages, aggravated damages, and punitive damages. I also conclude that Mr. Borlinha is personally liable to her and I award the damages jointly and severally against all Defendants.

[5]               Dr. Halupa began working at SAGE Medica on March 20, 2014. She holds a PhD in Cell and Molecular Biology and Medical Biophysics from the University of Toronto. SAGE Medica is a medical communications agency, providing services to healthcare and pharmaceutical customers.  At SAGE Medica, Dr. Halupa provided medical communications services to the corporation’s customers.  By October 2017, she was the head of the medical writing department at SAGE Medica and supervised a team of up to 12 medical writers.

[6]               In or about April 2018, Mr. Borlinha incorporated SAGE Renegade Inc. and began redirecting SAGE Medica’s business to this new corporation. SAGE Renegade was presented to customers as an “internal expansion” and “rebranding” of SAGE Medica’s healthcare business.

[7]               Dr. Halupa’s duties and terms of employment did not change after the incorporation of SAGE Renegade. Everything remained the same from her perspective. She continued to use the same employer-provided laptop and continued to receive salary payments from SAGE Medica. Then, in November 2018, she began to receive salary payments from SAGE Renegade.

[8]               On February 1, 2019, Mr. Borlinha wrote to Dr. Halupa on behalf of SAGE Medica to advise that effective February 15, 2019, her annual salary of $102,000 would be reduced to $88,000 and her position would be “adapted” to “4 days per week or 80% capacity.”  Mr. Borlinha advised that this arrangement would remain in effect until April 30, 2019 “in hopes that SAGE can bring you up to 100% capacity.” He advised that they would review the arrangement again in one month.

[9]               However, Dr. Halupa then was not paid at all on her next pay date, February 15, 2019. This was in keeping with the pattern during her final year of work when she often would be paid many days late (ranging from nine to 56 days late). Instead, Mr. Borlinha subsequently provided her with a Record of Employment, which indicated her termination date from SAGE Medica as February 15, 2019.

[10]           Mr. Borlinha then provided Dr. Halupa with an invoice for services that she supposedly was to provide to SAGE Renegade for the period February 16, 2019 to April 15, 2019.  In other words, Mr. Borlinha purported to recharacterize Dr. Halupa’s employment as an independent contractor relationship. All her duties and conditions of employment remained the same.

[11]           Then on April 10, 2019, Mr. Borlinha advised Dr. Halupa that April 15, 2019 would be her last day of work. She did not receive any formal termination letter. She also did not receive any notice or pay in lieu of notice of her termination, either at the time of receiving the ROE, or on April 15, 2019.

[12]           Dr. Halupa advises that as of the date of her affidavit, June 25, 2019, she had not yet found new employment. She states that due to the specialized nature of her work, combined with her seniority, managerial and administrative responsibilities, there are few comparable opportunities in her industry. She claims damages for wrongful dismissal, including unpaid wages and vacation pay. She also claims aggravated damages of $75,000 and punitive damages of $75,000.

[13]           The issues for me to determine are:

[14]           I do not have any hesitation in finding on the facts pleaded and evidence before me that SAGE Medica and SAGE Renegade are common employers to Dr. Halupa.  In Downtown Eatery (1993) Ltd. v. Ontario (2001), 54 O.R. (3d) 161 (C.A.), 2001 CanLII 8538, the Court of Appeal emphasized that complex corporate structures could not be used to work an injustice against employees, stating at para. 36:

[15]           More recently, in Talbot v. Nourse et al., 2018 ONSC 1061, Koehnen, J. explained that the common employer doctrine protects employees whose relationship with the employer is characterized as a consulting arrangement.  He stated, at para. 73:

[16]           The key consideration for determining whether two entities are common employers is whether there is a sufficient degree of relationship between the entities. As stated in Downtown Eatery: “The essence of that relationship will be the element of common control.”

[17]           In this case, the two corporations are controlled by the same individual. The facts pleaded and evidence filed are that SAGE Renegade continued the same business as SAGE Medica, with the same customers and employees. As set out above, the change to SAGE Renegade was represented to its customers as “rebranding” SAGE Medica’s business. Dr. Halupa was paid by both companies at various times for the same duties. From her perspective, her job remained the same.  Her evidence also is that the two companies intermingled all aspects of their operations including suppliers and funds and they operated at the same business address. The two businesses were under common control and they were in a common employer relationship to Dr. Halupa.

[18]           In spite of the ROE completed by Mr. Borlinha and the attempts to re-characterize Dr. Halupa’s employment as a consulting relationship, I accept that Dr. Halupa remained an employee of the Defendant companies until April 15, 2019. Her role and duties remained the same. She was paid throughout by a company controlled by the same person. Accordingly, Dr. Halupa’s reasonable notice period should be measured from April 15, 2019.

[19]           I also accept that the appropriate salary for calculating reasonable notice is $102,000.  The Defendants unilaterally changed Dr. Halupa’s salary in February 2019 but then failed to pay her in any event. She has pleaded and her evidence is that she did not work less during the period from February to April 2019, even though Mr. Borlinha attempted to reduce her salary during this period.

[20]           The Plaintiff relies on the factor outlined in Bardal v. Globe & Mail Ltd., (1960), 1960 CanLII 294 (ON SC), 24 D.L.R. (2d) 140 (Ont. H.C.), at p. 145 to submit that the appropriate notice period in this case is ten months.  She emphasizes in particular her age of 45, her seniority, her specialized duties, and what she says is the scarce availability of similar employment.

[21]           I have reviewed the cases the Plaintiff suggests are comparable. Each case turns on its own particular facts. However, I note that in most of the cases cited by the Plaintiff, the employee was older than her, in some cases in their late fifties: See, for example, Schultz v.  Canada Lands Company CLC Limited, 2019 ONSC 2124, at paras. 59-60; Chambers v. Global Traffic Technologies Canada Inc., 2018 ONSC 2000, at paras 59-61.  In addition, in Schultz, where the court awarded a notice period of twelve months, it was important that at the time of trial, the employee already had been unemployed for 15 months.  In Andros v. Colliers Macaulay Nicolls Inc., 2018 ONSC 1256, the employee’s tenure was two years longer than that of Dr. Halupa and he was the same age (45 years).  However, I accept the Plaintiff’s argument that the employee in Andros was in a career that likely would allow him to more easily find suitable employment.

[22]           Taking into account the factors outlined by the Plaintiff, I consider eight months to be an appropriate notice period in this case. Dr. Halupa is highly-educated and in a specialized field. On the other hand, her length of service was not overly long, her position was not at the highest level of management and her age and education bode well for her ability to find a new position.

[23]           In calculating the amounts owed to Dr. Halupa over the eight-month notice period, I accept that Dr. Halupa also is entitled to pay in lieu of benefits. In the absence of other evidence, courts in wrongful dismissal cases frequently estimate the value of benefits as 10% of base salary: See, for example, Bassanese v. German Canadian News Company Limited et al., 2019 ONSC 1343, at para. 47, citing Camaganacan v. St. Joseph Printing Ltd., 2010 ONSC 5184, at para. 23. I accept this estimate for the purposes of this case. Therefore, Dr. Halupa’s salary and benefits over the notice period of eight months calculate to the following:

[24]           Dr. Halupa also is owed unpaid wages during the period February 15, 2019 to April 15, 2019. The total outstanding wages are $16,636.84.

[25]           Pursuant to s. 35.2 the Employment Standards Act, 2000, S.O. 2000 c. 41 (“ESA”), Dr. Halupa also is entitled to vacation pay at 6% of wages.  Pursuant to s. 1 of the ESA, “wages” means any payment required to be made by an employer to an employee under the ESA, including, in this case, termination pay of five weeks pursuant to ss. 57 and 61 of the ESA. Accordingly, Dr. Halupa is entitled to vacation pay in the amount of $102,000 * 5/52 * 0.06 = $588.46.

[26]           I also accept that Dr. Halupa is entitled to both aggravated damages and punitive damages in the circumstances of this case.

[27]           Aggravated damages for bad faith conduct in the manner of dismissal are available where the employer engages in conduct that is “unfair or is in bad faith by being, for example, untruthful, misleading, or unduly insensitive”: Galea v. Wal-Mart, 2017 ONSC 245, at para. 222, citing Keays v. Honda Canada Inc., 2008 SCC 39.

[28]           Here, the Defendants treated Dr. Halupa in an unduly insensitive manner in a myriad of ways leading up to her termination. These include:

[29]           In addition, Dr. Halupa has pleaded and provided evidence that during the period leading up to her termination, Mr. Borlinha reassured her that they were working towards rehabilitating the business and that she was an integral part of the rebranded organization. He regularly intimated that her job was secure and that she was “lucky” to have been “chosen” to continue in the SAGE Renegade era of the business.

[30]           Dr. Halupa reports that she felt betrayed and manipulated by this conduct and the way she was treated more generally. She says she has struggled with nightmares, anxiety and depression. Expert medical evidence is not required to substantiate the harm suffered as a result of an employer’s bad faith conduct. Courts can rely on the plaintiff’s own subjective evidence: Galea, at para. 270; Ruston v. Kedco, 2018 ONSC 2919, at para. 148.

[31]           Punitive damages are intended to punish the defendant’s behaviour and deter similar misconduct.  They are not intended to compensate the plaintiff and should only be awarded in exceptional cases: Ruston, at para. 136; McIntyre v. Grigg (2006), 2006 CanLII 37326 (ON CA), 83 O.R. (3d) 161 (C.A.), at para. 59.  As set out by the Court of Appeal, “[t]he type of conduct required to attract punitive damages has been described in many ways, such as: malicious, oppressive, arbitrary and high-handed that offends the court’s sense of decency”: McIntyre, at para. 60. In order to award punitive damages in a contract dispute, such as a wrongful dismissal, an independent, actionable wrong is required. A breach of the duty of good faith constitutes such an independent actionable wrong: Galea, at para. 282, quoting Whiten v. Pilot Insurance Company, 2002 SCC 18.

[32]           Punitive damages must observe the proportionality principle by remaining rationally connected to the underlying goals of retribution, denunciation and deterrence. In the wrongful dismissal context, it is also necessary to assess the degree of vulnerability of the plaintiff, as well as the harm or potential harm directed to her: Ruston, at paras. 137-138; Galea, at para. 293.

[33]           In this case, the Defendants’ conduct was high-handed and deserving of denunciation. I rely, in particular, on the fact that the Defendants unilaterally filed a false or deceptive ROE for their own ends, failed to pay wages contrary to ss. 11 and 13 of the ESA, and failed to provide any written notice of termination or termination pay contrary to ss. 54 and 61 of the ESA. These latter violations are flagrant breaches of the minimum statutory employment standards in this province.

[34]           In terms of quantum, the Plaintiff seeks $75,000 each for aggravated and punitive damages. The Plaintiff compares her situation to the Galea case. In that case, the plaintiff was awarded aggravated damages of $250,000 and punitive damages of $500,000. She also cites Johnston v. The Corporation of the Municipality of Arran-Elderslie, 2018 ONSC 7616, in which the court awarded aggravated damages of $100,000 and punitive damages of $200,000 and Ruston, in which the court awarded aggravated damages of $25,000 and punitive damages of $100,000.

[35]           The Defendants received notice of this motion and did not file any responding materials. I accept on the facts pleaded and evidence before me that they acted in a high-handed, misleading and unduly insensitive manner. Dr. Halupa is entitled to damages for the manner in which she was treated.  It also is appropriate separately to award punitive damages to communicate denunciation of the Defendants’ conduct.

[36]           The aggravated and punitive damages in this case should not, in my view, be as high as those in the cases cited by the Plaintiff. In Galea, the plaintiff was a somewhat longer-serving employee. Her treatment was more egregious.  For example, Wal-Mart announced that she was reassigned to a less senior position in front of five or six hundred people. Also, she had an expectation of continuing success at Wal-Mart. The trial judge stated that she was “enjoying a stellar career at Wal-Mart” and “[t]here was nowhere to go but higher”: Galea, at para. 241. In addition, the trial judge concluded that Wal-Mart behaved badly in the conduct of the litigation. Here, while recognizing that she was treated inappropriately, Dr. Halupa would not have had the same expectations as the plaintiff in Galea. It would have been clear to her that the SAGE business was struggling. In addition, while the Defendants have been unresponsive in this litigation, they have not used inappropriate tactics.

[37]           In Johnston, in which the plaintiff was an employee of a municipality, the plaintiff’s situation was more dire than that of Dr. Halupa. The trial judge found that the plaintiff was subject to repeated media coverage, which caused him much embarrassment and humiliation. The trial judge also concluded that as a result of the defendant’s conduct, the plaintiff’s career had “never recovered” and that his marriage had ended due in part to the events leading up to his dismissal: Johnston, at para. 158.

[38]           Finally, in Ruston, the employee was longer-serving (14 years) and the president of the employer company. The trial judge described the employee’s situation as follows: “He was blind-sided and devastated when, without warning or explanation, his livelihood and his future were taken from him with serious but unfounded allegations of fraud”: Ruston, at para. 6.

[39]           Punitive damages also do not need to be as high in this case as those in the cases cited by the Plaintiff. Unlike a defendant such as, for example, Wal-Mart (the defendant in the Galea case), the Defendants in this case appear to have a struggling business. A significantly lower award will impact them and have a deterring effect.

[40]           Balancing all of the factors, I conclude that aggravated damages of $30,000 are appropriate in this case. I further award punitive damages in the amount of $25,000.

[41]           Dr. Halupa submits that Mr. Borlinha should be personally liable for the damages awarded. Specifically, she submits that the court’s award should be made payable by all three Defendants jointly and severally.

[42]           The oppression remedies in the OBCA and CBCA authorize the court to make orders to rectify the matters complained of where there is corporate conduct “that is oppressive or unfairly prejudicial to” or “that unfairly disregards the interests” of “any… creditor” of the corporation: OBCA, s. 248; CBCA, s. 241.  In addition, s. 238 of the CBCA defines “complainant” for the purposes of this section to include “any other person who, in the discretion of a court, is a proper person to make an application under this Part.”  Section 245 of the OBCA has substantively the same definition of “complainant.”

[43]           In my view, Dr. Halupa is entitled to a remedy against Mr. Borlinha personally under these provisions.  Although not every wrongfully dismissed employee is considered an appropriate creditor for the purposes of this section, courts have recognized employees as proper creditors or complainants where the oppressive conduct is initiated after dismissal “to disappoint the reasonable expectations of the employee who has become or will become a creditor of the corporation”: Brigaitis v. IQT. Ltd. c.o.b. as IQT Solutions, 2014 ONSC 7, at para.94.

[44]           In Downtown Eatery, for example, the Court of Appeal found the defendant employers engaged in a corporate reorganization just before the wrongful dismissal trial.  Although the reorganization was not taken with the intention of depriving the dismissed employee of the ability to recover any damages, the effect was unfairly prejudicial to the employee, as a person who stood to obtain judgment. The Court of Appeal ordered damages against the two directors.

[45]           El Ashiri v. Pembroke Residence Ltd., 2015 ONSC 1172 is closer to the current case. There, the oppressive conduct was initiated during employment rather than after termination. The two plaintiff employees were constructively dismissed due to failure to pay their wages over extended periods of time.  The defendant director was the only officer and director of and had total control over the defendant companies. He “did not have the decency to let them know of his financial circumstances” and, not unlike the current case, he “put them off and/or persuaded them to remain working, on false promises”: El Ashiri, at para. 22.

[46]           The court concluded that the plaintiffs were entitled to damages against the defendant director pursuant to the OBCA oppression remedy. Its reasoning included that the plaintiffs’ expectations of payment were “eminently reasonable.” In addition, the individual defendant was the sole controlling officer and director of the corporations and he benefitted directly or indirectly from the labours of the plaintiffs: El Ashiri, at para. 23.

[47]           With respect to the application of the oppression remedy to Dr. Halupa’s circumstances, as in El Ashiri, her expectations of being paid for the work she had done was “eminently reasonable.” To the extent of her unpaid wages at least, she was a creditor of the Defendant corporations at the time of her termination. Although the Defendants did not reorganize the corporations to her detriment post-termination, it appears they did attempt to restructure her working relationship with them in order to minimize her rights, including, for example, to reasonable notice on termination. Dr. Halupa had a reasonable expectation that her position would not be unilaterally restructured to defeat her legal rights. In my view, this conduct is sufficient to qualify as oppressive conduct that unfairly disregarded her interests.

[48]           I must still consider whether Mr. Borlinha should face personal liability for this oppressive conduct. In arriving at its conclusion regarding the director’s personal liability, El Ashiri relied on Budd v. Gentra Inc., 1998 CanLII 5811 (ON CA), [1998] O.J. No. 3109 (C.A.). The test for a director’s personal liability in Budd was endorsed and further explained more recently by the Supreme Court of Canada in Wilson v. Alharayeri, [2017] SCC 39. Specifically, as set out by the Supreme Court, the courts take a two-pronged approach to personal liability. First the oppressive conduct must be properly attributable to the director because he or she is implicated in the oppression. In this case, as the sole director of both Defendant companies, there is no question that Mr. Borlinha was implicated in the conduct at issue.

[49]           The second prong of the test requires that the imposition of personal liability be fit in all the circumstances. In considering whether the oppression remedy is fit in all the circumstances, the court should, among other things, look at indicia of fairness. While not a closed list, the Supreme Court describes some of the indicia of fairness as follows (referencing M. Koehnen, Oppression and Related Remedies, Toronto: Thomson/Carswell, 2004):

[50]           Here, Dr. Halupa has not pleaded that Mr. Borlinha acted in bad faith, although the recharacterization of Dr. Halupa’s position does suggest an intent to defeat or minimize her legal rights. However, the Statement of Claim pleads, and the Defendants are deemed to admit, that Mr. Borlinha engaged in conduct from which he derived a personal benefit as follows:

[51]           There is also some evidence that the Defendants have continued in operation, which suggests that they could have, but chose not to, meet their obligations to Dr. Halupa. For example, Dr. Halupa filed evidence of a SAGE Renegade job posting for a “medical writer” (similar to Dr. Haulpa’s function) in June 2019. Overall, as in El Ashiri, these are closely-held companies with a single controlling director. According to the Statement of Claim, this director, Mr. Borlinha, benefited personally from the mistreatment of Dr. Halupa. I conclude that, in these circumstances, it is fair and appropriate to impose personal liability on Mr. Borlinha.

[52]           If I am wrong in this conclusion, I note that under s. 131 of the OBCA and s. 119 of the CBCA, directors of a corporation are jointly and severally liable to employees for certain debts. Pursuant to s. 131 of the OBCA, directors are personally liable for “all debts not exceeding six months’ wages that become payable while they are directors for services performed for the corporation.” Pursuant to this provision, in the alternative, I would find Mr. Borlinha jointly and severally liable for the amounts owed to Dr. Halupa for services performed – that is, for the unpaid wages in the amount of $16,636.84.

[53]           The Plaintiff submits a costs outline seeking a total costs award including disbursements of $8,250.32.  Pursuant to s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C-43, costs are in the discretion of the court. I have considered the factors set out in r. 57.01 of the Rules of Civil Procedure, including, in particular, the principle of indemnity and the amount of costs an unsuccessful party could reasonably expect to pay. In addition, I note that the Plaintiff submitted a r. 49 offer in which she offered to settle her claim in return for a total payment of $78,602.68, an amount substantially less than I have awarded in this case.  In view of all the factors, I consider the costs sought by the Plaintiff to be appropriate. I order the Defendants to pay costs to the Plaintiff in the amount of $8,250.32.

[54]           The motion is allowed and judgment on the action is granted in favour of the Plaintiff. The Defendants are liable to the Plaintiff jointly and severally for the total amount of $147,399.30 made up of:

[55]           The Defendants also are jointly and severally liable to the Plaintiff for costs in the amount of $8,250.32.

[56]           The Plaintiff is entitled to pre-judgment and post-judgment interest.

[57]           The Plaintiff may prepare an order reflecting these terms and submit it to my judicial assistant, Anna Maria Tiberio at annamaria.tiberio@ontario.ca.  I further direct that after the Plaintiff receives a signed order, she shall serve a copy of the order and of these reasons on the Defendants.