Michael Proulx, Fern Schnabel, Jean Bailly, José Codron, Jean-Pierre Rioux and Jean Luc Roy (the employees) were all employed by Sahelian Goldfields Inc. The employees provided their services at the corporation’s mine in West Africa.
Each employee signed a contract with Sahelian, which contained clauses dealing with remuneration and expenses. The clause on expenses provided the corporation would reimburse the employees for “all reasonable and out-of-pocket expenses incurred... in connection with carrying out these duties” when employees were required to travel to various destinations in North America, Europe and Africa.
Unfortunately, Sahelian was failing financially. The employees ceased working for Sahelian when it failed to pay their salaries, vacation pay and incurred expenses such as air fare and food and lodging while at the mine site carrying out their employment duties.
As a result the employees brought an action against Sahelian and its directors to recover their unpaid wages, vacation pay and expenses. The claim was brought under section 131 of the Ontario Business Corporations Act (OBCA), which makes directors of a corporation liable to the employees of the corporation “for all debts not exceeding six months’ wages that become payable while they are directors for services performed for the corporation.”
The directors had disputed their liability for the unpaid expenses on the ground that expenses do not constitute wages within the meaning of section 131 of the OBCA. The motions judge rejected this argument and awarded a partial summary judgment against the directors for vacation pay and unpaid expenses.
The directors appealed the judgment only with respect to the unpaid expenses to the Ontario Court of Appeal. Before the Court of Appeal, the directors maintained their argument that they were not liable to pay the employees’ unpaid expenses on the ground that the expenses do not constitute wages within the meaning of section 131 of the OBCA.
The Court of Appeal did not accept the directors’ interpretation of the provision in the OBCA. In the Court’s view, the issue was not whether the employees’ claim for the unpaid expenses constitutes a claim for wages but rather whether their claim for unpaid expenses constitutes a debt for services which they performed for the corporation. There was no need to determine whether “wages” as referred to in section 131 can include expenses incurred by an employee on behalf of his or her employer.
The reference in the legislation to wages simply sets the maximum amount for which a director may be held liable. Liability will be imposed where the debts are for “services performed for the corporation.” For this reason, it was not necessary for the Court to consider the directors’ argument as to whether the expenses claimed by the employees were “properly to be regarded as wages.”
All that had to be decided was whether the expenses they incurred constituted a debt owed to them for services that they had performed for the corporation.
On the evidence, there was no doubt in the Court’s mind that the expenses claimed by the employees resulted from the performance of their individual employment contracts. The appeal was therefore dismissed.
For more information:
• Proulx v. Sahelian Goldfields Inc., Ontario Court of Appeal, Docket No. CA C35066, Apr. 12/01.
Each employee signed a contract with Sahelian, which contained clauses dealing with remuneration and expenses. The clause on expenses provided the corporation would reimburse the employees for “all reasonable and out-of-pocket expenses incurred... in connection with carrying out these duties” when employees were required to travel to various destinations in North America, Europe and Africa.
Unfortunately, Sahelian was failing financially. The employees ceased working for Sahelian when it failed to pay their salaries, vacation pay and incurred expenses such as air fare and food and lodging while at the mine site carrying out their employment duties.
As a result the employees brought an action against Sahelian and its directors to recover their unpaid wages, vacation pay and expenses. The claim was brought under section 131 of the Ontario Business Corporations Act (OBCA), which makes directors of a corporation liable to the employees of the corporation “for all debts not exceeding six months’ wages that become payable while they are directors for services performed for the corporation.”
The directors had disputed their liability for the unpaid expenses on the ground that expenses do not constitute wages within the meaning of section 131 of the OBCA. The motions judge rejected this argument and awarded a partial summary judgment against the directors for vacation pay and unpaid expenses.
The directors appealed the judgment only with respect to the unpaid expenses to the Ontario Court of Appeal. Before the Court of Appeal, the directors maintained their argument that they were not liable to pay the employees’ unpaid expenses on the ground that the expenses do not constitute wages within the meaning of section 131 of the OBCA.
The Court of Appeal did not accept the directors’ interpretation of the provision in the OBCA. In the Court’s view, the issue was not whether the employees’ claim for the unpaid expenses constitutes a claim for wages but rather whether their claim for unpaid expenses constitutes a debt for services which they performed for the corporation. There was no need to determine whether “wages” as referred to in section 131 can include expenses incurred by an employee on behalf of his or her employer.
The reference in the legislation to wages simply sets the maximum amount for which a director may be held liable. Liability will be imposed where the debts are for “services performed for the corporation.” For this reason, it was not necessary for the Court to consider the directors’ argument as to whether the expenses claimed by the employees were “properly to be regarded as wages.”
All that had to be decided was whether the expenses they incurred constituted a debt owed to them for services that they had performed for the corporation.
On the evidence, there was no doubt in the Court’s mind that the expenses claimed by the employees resulted from the performance of their individual employment contracts. The appeal was therefore dismissed.
For more information:
• Proulx v. Sahelian Goldfields Inc., Ontario Court of Appeal, Docket No. CA C35066, Apr. 12/01.
