Wednesday, July 2, 2014

Polzin v. Energy Limousine: Precisely why dismissed employees NEED legal advice

There's a recent case out of the Small Claims Court, decided by Deputy Judge Winny, in Polzin v. Energy Limousine Inc.

It's a classic case of an employee who failed to obtain legal advice at the outset, and may have seriously compromised her own entitlements as a result.

Ms. Polzin worked as a limousine driver for just over 5 years before she was dismissed.  She raised a number of issues, including claims for unpaid wages, unpaid vacation pay, and an alleged misappropriation of her tips that were paid by credit card throughout her employment.

The biggest problem for most of her claims was that she had already made a complaint to the Ministry of Labour, resulting in an order to pay vacation pay and statutory termination pay.  To the extent that her claims at the Small Claims Court overlapped with what she had sought through the Ministry's process, those claims were barred.  She didn't actually claim wrongful dismissal at the Small Claims Court, but - depending on the language in her contract and her mitigation efforts - it's quite plausible that she could have been entitled to significantly more pay in lieu of notice than the termination pay order she obtained through the Ministry.  But once you've sought termination pay from the Ministry, you can't sue in wrongful dismissal.

There are cases where it is appropriate to go the Ministry.  But it is really important that you talk to a lawyer about it first, because you could be compromising substantive rights when doing so.

Limitations Act and Unpaid Wages

She ended up succeeding in the Small Claims Court for unpaid tips, but only for the latter part of her employment - everything more than two years prior to the issuance of her claim was found to be barred by the Limitations Act.  (It's probably a correct conclusion, but you might recall the case of Benson v. Bird Mechanical, which at least opens the door to a counter-argument.)

Personal Liability

There were no lawyers representing the parties, and this issue apparently wasn't dealt with in the trial, but Polzin also sued her boss, Keith Hebebrand.  Deputy Judge Winny's analysis of the point is very interesting - it's relatively unusual to disregard the corporate veil in employment law cases (though corporate directors do have certain personal liability exposure), but the Deputy Judge looked at the fact that the corporation "is effectively a one-man entity" and determined that Mr. Hebebrand had personally converted to his own use the funds owed to Ms. Polzin.

He notes that this finding could also have been supported by a finding of theft or breach of trust.  That is something I find very interesting - what's unique about this case is the fact that it could be characterized as theft or breach of trust, with the employer receiving monies intended for the driver.  But without those elements, we're left simply with the fact that the employer 'owed money', and the corporation's directing mind opted not to pay.  If you don't need the elements of the breach of trust or conversion (i.e. of taking funds that actually earmarked for somebody else), then I'm not sure how you'd distinguish the actual basis for this finding of personal liability from any other case where the principal of a closely-held corporation paid himself first instead of the corporation's other debtors.  (Of course, there are other potential analyses to apply in such a case, such as personal liability of directors or fraudulent conveyances, but those aren't invoked in this decision.)


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.

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