In Koshman v Controlex Corporation, 2023 ONSC 7045, Nelligan Law lawyers Tracy Lyle and Rhian Foley successfully represented engineer Martin Koshman against his former employer, Controlex Corporation (“Controlex”), in a wrongful dismissal action.
After hearing the evidence, the Court awarded Mr. Koshman 24 months’ notice ($471,461.68), $50,000 in aggravated damages, $50,000 in punitive damages, and $192,112.19 in legal costs.
This case represents another example where an employer’s actions during the termination of a long-serving employee crossed the acceptable threshold and veered into reprehensible and disrespectful conduct attracting the condemnation of the Court and resulting in serious financial repercussions for the employer.
Facts:
This action proceeded on a default basis after Controlex failed to attend the commencement of trial on December 4, 2023.
Having served as the Vice President of Controlex for over 18 and a half years, Mr. Koshman enjoyed significant authority and autonomy in his role.
Unfortunately, the sudden passing of Controlex’s founder, Peter Dent, led to Mrs. Susan Dent (his wife) assuming control over the business without prior substantial involvement.
On her assumption of the position, Mrs. Dent advised Mr. Koshman that she would be running the business and have sole signing authority. She also visited clients and made “bizarre and defamatory statements about Mr. Koshman, including that he was ‘a nobody’ and was ‘no good’ and not to speak to him and to deal only with her. She suggested it was possible her husband had been murdered and Mr. Koshman may have been involved, that he had been taking kickbacks, and that she had fired him.”
Before he was officially terminated, Mrs. Dent offered Mr. Koshman’s job to one of his direct reports, and Mr. Koshman found out about his impending termination from office staff.
Finally, on September 11, 2020, Mr. Koshman was summarily dismissed. He received a letter by courier advising him of his termination with no explanation. He was given eight weeks of base salary but was not paid the $151,506.89 owed in vacation pay.
Wrongful Termination and Common Law Notice:
Mr. Koshman was forced to start a legal action to obtain his termination and vacation pay entitlements. In response, Controlex took an aggressive defense and counterclaimed against him, alleging just cause and breach of fiduciary duty. In addition, Controlex sought recovery of the eight weeks statutory pay.
Concluding that Controlex’s position was entirely without merit, Justice Hackland determined Mr. Koshman’s termination to be without cause and set the period of common law notice to 24 months.
When considering the Bardal factors (factors used to determine the length of common law notice), the Court highlighted Mr. Koshman’s responsibilities as Vice President, his age, his 18 and a half years of tenure, his contribution to the corporation’s growth, and the obstruction to his re-employment opportunities due to defamatory allegations and the baseless counterclaim for breach of fiduciary duty as reasons why the notice period was set in the upper range.
Mitigation:
Despite earning $8,842 from multiple part-time assignments, the Court did not deduct these earnings from Mr. Koshman’s award.
Aggravated Damages:
Mr. Koshman was awarded $50,000 in aggravated damages for the manner of his dismissal.
The Court, with little difficulty, found that the defendant exhibited bad faith towards Mr. Koshman through the conduct of Mrs. Dent leading up to and carrying out the dismissal.
Instead of taking the appropriate steps to terminate his employment, Mrs. Dent “set out to destroy his reputation”. Mrs. Dent’s behaviour during proceedings was also scrutinised, with the Court noting that she advanced “groundless allegations of breach of fiduciary duty, retained and then ended her relationship with four different law firms and ultimately abandoned the defense of this proceeding.”
Punitive Damages:
Mr. Koshman was awarded $50,000 in punitive damages as the Court deemed Mrs. Dent to have exhibited a marked departure from ordinary standards of decent behaviour.
The award of punitive damages in this case follows recent trends in Ontario where courts are willing to grant further damages in wrongful dismissal actions, especially where the employer launches meritless counterclaims.
Conclusion
This judgment not only secured justice for Mr. Koshman but also set a further precedent to hold employers accountable for their unfair and malicious treatment of employees during termination. Such cases may deter employers from taking advantage of the power imbalance that exists between employee and employer, especially during termination.
The award of aggravated and punitive damages in this case exemplifies the low tolerance that courts have when it comes to the mistreatment of employees by their employers during the termination process.
Nelligan Law continues to advocate effectively for the rights of employees at every stage of the employment journey. If you are an employee who believes that they have been wrongfully dismissed without a fair severance package, are considering signing a new employment contract, or have any employment law related questions, do not hesitate to reach out to our Employment Law Group.
Nelligan Law is grateful for the contribution of Nicholas Przulj, Articling Student, in writing this blog post.
