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Court of Appeal: Motions Judge was Right to Stay Wrongful Dismissal Judgment Pending Employer’s Counterclaim


In Hinke v. Thermal Energy International Inc., 2012 ONCA 635, a senior dismissed employee claimed, in addition to other relief, damages for wrongful dismissal, repayment of debts and expenses, and payment pursuant to a convertible debenture issued to him. His former employer  counterclaimed for damages based on alleged oppression, breach of fiduciary duty, and negligence.

The employee moved for summary judgment. The motions judge allowed the motion in part by ordering that the employer pay 18 months’ pay in lieu of notice as damages for wrongful dismissal. However, he dismissed the employee’s claims for repayment of debts and expenses and the debenture.

The motions judge also ordered the balance of the claims, including those advanced in the employer’s counterclaim, to proceed to trial. At the same time, he granted the employer’s request that the enforcement of the employee’s judgment for wrongful dismissal be stayed pending the determination of the action.

The employee appealed, submitting that the motions judge erred by not addressing: (1) the merits of the counterclaim to determine if there was a serious issue to be tried; (2) whether the employer would suffer irreparable harm if the stay were refused; and (3) which party would suffer the greater harm from the refusal or granting of the stay.

The Court of Appeal for Ontario reaffirmed that a stay should be granted in such circumstances unless the counterclaim is without merit. It was significant that the employee did not seek dismissal of the counterclaim, from which the court could infer that the employee considered the counterclaim as having sufficient merit so as to raise a genuine issue requiring a trial.

Noting that granting a stay is a discretionary remedy, the Court of Appeal refused to interfere with the exercise of that discretion by the motions judge since it was not clearly wrong or involving an error in law.

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