Western Magnesium Corporation (WMC) has been ordered to pay $2 million USD in severance pay to a former employee who sued the company for wrongful termination. Additional damages for unpaid salaries, legal fees, and stock options were also awarded — bringing the total to more than $2.7 million USD.
The plaintiff, JS, argued that WMC terminated his written employment agreement without just cause, resulting in non-payment of salary, reimbursement of expenses, and severance pay.
The key facts of the case were not disputed, including the existence of a valid employment contract and its termination. The primary point of contention was whether JS had resigned or was terminated, the Supreme Court of British Columbia said.
If proven that he was terminated, JS would be entitled to $2 million in severance pay, as specified in his employment contract. WMC did not appear in court despite being duly served.
Summary trial
The court determined this case was suitable for a summary trial, noting that the amount of damages — while significant — was calculable.
“There is some urgency and significant prejudice to the plaintiff should this matter be delayed. (JS) is 75 years old. The defendants have consistently attempted to delay proceedings,” the court said. “They have sued the plaintiff twice in the United States, causing him to incur significant legal fees to have the actions dismissed.”
JS also expressed concern about the defendant’s ability to pay, as they have failed to pay him what they agree is owed.
What happened
In building his case for constructive dismissal, JS cited a range of evidence. First, he noted that the WMC altered the terms of his employment without any prior consultation.
Additionally, communication between him and the defendants was severed. The plaintiff also pointed out that new staff were hired by the defendants, effectively taking over the roles and responsibilities that he had previously performed.
He further claimed that he was not compensated for his work. Lastly, WMC added another layer of complexity by voting him in as a director, an action taken without advising him and following his exclusion from his original employment.
In assessing the evidence, the court determined JS had been constructively dismissed — terminated by the defendant without just cause and without notice, thereby ruling that the dismissal was wrongful.
The court noted that given his age, JS would have difficulty finding another job — particularly at the same level of compensation.
“The plaintiff’s field of expertise is specialized and unique. The defendant profited from the plaintiff’s knowledge and expertise. In fact, they still use the technology he developed,” the court said.
“The manner in which the defendant has treated the plaintiff in shutting him out and then suing him twice without merit has impacted him both financially and emotionally. It is an unfortunate end to his exemplary career.”
The court settled on seven months’ notice — or one month per year of service — at $25,000 USD per month for a total of $175,000 USD.
Damages
The judge also awarded additional damages (all in USD), including:
- $374,729.17 for “dumped remuneration”
- $54,000 for unpaid salary over three months, $3,360 for additional unpaid salary, and $181,688.13 for unpaid salary adjustments and tax liability.
- delivery of 2% of WMC’s total number of common shares (nearly 5.3 million shares) and options for rights to purchase 300,000 common shares to the plaintiff.
- $83,530.50 for legal fees incurred by the plaintiff in defending actions brought against him in the U.S. by WMC.
Special costs were awarded to the plaintiff as well, due to the defendant’s failure to appear in court and for drawing out the legal proceedings, thus increasing the plaintiff’s costs. The judge noted that WMC’s actions in the matter were deserving of these special costs.
It also ordered the following injunction sought by JS: “The defendants and any other person or legal entity with notice of this order must not transfer, assign, hypothecate, discharge, grant, create, or permit to be created any charge or security interest, encumbrance, or lien, or claim in respect of the sum of the above funds and damages payable to the plaintiff other than as permitted by this order and in execution of this order.”
For more information, see Sever v Western Magnesium Corporation, 2023 BCSC 1833 (CanLII)
