A dispute over allegedly “banked” wages has ended in a dismissed appeal, the awarding of punitive damages, and a clear warning to employers about the personal liability that can arise from informal payroll practices, particularly in closely held or family-run businesses.
The Ontario Court of Appeal rejected the position advanced by S.B. and Ba.B. that payments to two sons, D.B. and Br.B., were loans rather than earned but unpaid wages, ultimately finding the father was a common employer and personally liable for outstanding compensation, punitive damages and an elevated costs award.
According to the decision, D.B. and Br.B. began working for their father’s companies — a group that included Boemar Surface Systems Inc. — when each son turned 18. Although their father and mother, S.B., initially provided them with some cash to cover living expenses, D.B. and Br.B. said most of their earnings were “banked” by Ba.B. in what the family referred to as the “Boemar Bank.”
They testified that they understood this arrangement was intended to defer a portion of their wages, with a promise they would eventually be paid in full.
Loan or earnings payout?
Trouble arose when S.B. initiated legal action, alleging she had merely loaned the sons a significant sum — $100,000 — for a condominium purchase. D.B. and Br.B. asserted that this payment was not a loan at all, but rather a partial payout of their own earnings. They claimed that additional cheques from Ba.B. totalling $48,000 were also treated as deferred wages rather than loans.
In response, Ba.B. and his companies insisted the sums advanced were loans. They further sought damages against D.B. and Br.B. for alleged business disruption, breach of the “duty to be faithful to their employer,” and repayment of the money they had provided.
Trial decision
At trial, the judge sided with D.B. and Br.B. on all core issues, concluding they were credible when they said their father “banked” their earnings and did not pay them in full. The judge also pointed to the father’s failure to produce standard employment documentation, such as timesheets and pay records, as a serious deficiency that undermined his own credibility.
The decision notes that Ba.B. “was recorded on tape confirming the existence of the banked wages scheme,” leaving little doubt that these funds were not gifts or loans. The trial judge accepted the evidence that “other than payments made at Ba.B.’s discretion,” the sons’ compensation was deferred under their father’s control.
Father personally liable
In awarding unpaid wages, the judge found the father personally liable. Citing evidence that Ba.B. not only supervised and paid his sons but also took legal action in his own name to recover wages he alleged were loans, the court concluded he had effectively acted as a common employer. The father’s personal role in controlling hours, pay and record-keeping sealed the conclusion that D.B. and Br.B. reasonably believed he was a direct party to their employment contracts.
This finding was key to holding Ba.B. financially accountable for their unpaid wages, which amounted to $31,062.25 for Br.B. and $33,019.25 for D.B. for specific unpaid periods.
Punitive damages
The ruling also includes an award of $75,000 in punitive damages to each son, payable by both the father and one of his companies. In supporting these damages, the trial judge cited the framework in Boucher v. Wal-Mart Canada Corp. and concluded there was a separate actionable wrong in failing to comply with employment standards obligations.
The court described the father’s treatment of his employees — who were also his sons — as conduct that “qualifies as harsh, offensive, and reprehensible by any measure.” That harsh assessment was informed by evidence that the father manipulated his sons’ pay, did not provide proper documentation, and had not shown remorse or acknowledged wrongdoing.
In defending against these awards on appeal, the father and S.B. argued that the trial judge wrongly characterized the payments as banked wages, failed to follow the test for piercing the corporate veil, and set punitive damages far too high. The appellate court disagreed, affirming that the trial judge had properly anchored all findings in the evidence. It noted that inviting the court to reweigh the facts was inconsistent with its appellate role. Audio recordings provided by the sons underscored the deferred-pay scheme, while the father’s personal control over the wages and lack of formal payroll records supported the conclusion he had functioned as an employer in his own right.
Costs award
The father also objected to the significant costs award, issued on a substantial indemnity basis, on the grounds that high punitive damages already served a punitive function. Yet the court underscored that punitive damages and an elevated costs order serve different purposes.
Where punitive damages aim to denounce and deter egregious misconduct, costs are about compensating a successful party for the expense of litigation. In this case, the judge attributed the elevated costs primarily to the father’s refusal to disclose key documents and to dishonest conduct in the lead-up to, and during, the trial. Finding no error in that reasoning, the appellate court upheld both the costs order and the punitive damages award.
The dismissal of the father’s appeal reinforces that courts are willing to look beyond corporate entities and impose personal liability on individuals who exercise direct and pervasive control over employees. For HR professionals and employment lawyers, the decision highlights the importance of maintaining proper payroll records, providing transparent compensation structures, and respecting employees’ rights, even in family business contexts.
Despite arguments that a father-sons arrangement was merely an informal loan practice, the court determined that a consistent pattern of payments, a lack of documentation, and contradictory statements all pointed to a valid employment relationship.
For more information, see Beaumont v. Beaumont, 2025 ONCA 94 (CanLII).
