Executive Summary: Key Legal and Evidentiary Issues

Defendant's failure to retain legal counsel and defend the action resulted in a default judgment, precluding the opportunity to raise potential defences regarding notice periods and contractual terms. Timing of the plaintiff's termination nine days before her first employment anniversary suggests intentional avoidance of statutory severance obligations under the Employment Standards Act. Calculation of reasonable notice under the Bardal criteria balanced the plaintiff's youth and short tenure against the nature of creative work, depressed post-pandemic employment market, and abrupt dismissal manner. Mitigation efforts by the plaintiff, including freelance work during unemployment, did not reduce damages as the work was not precluded by her employment agreement. Restrictive covenant in the employment agreement was signed only by the employee and not the employer, limiting its enforceability. Defendant's procedural misconduct and abuse of rights throughout litigation, including failure to meet court-ordered deadlines and attend scheduled conferences, warranted substantial indemnity costs.

Facts of the case

Yelyzaveta Shynkarova was hired by 2554318 Ontario Ltd., operating as Tax Mechanic, on February 15, 2022, as the manager of social media and internet content. The position involved creating marketing content for the defendant's online tax consultancy business. Ms. Shynkarova had previously performed similar freelance work for other clients, and her role required highly creative work and various applied skills. She initially managed video and internet content producers before transitioning to produce her own content.

During her employment, Ms. Shynkarova worked under the management of Fraser Simpson, the principal of the corporate defendant. The evidence established that Mr. Simpson micromanaged the plaintiff extensively, engaging in conduct that amounted to harassment, including making jokes about terminating her employment. However, since this matter involved a wrongful dismissal claim rather than constructive dismissal, this conduct was only relevant to understanding the context of her abrupt termination.

On February 6, 2023—nine days short of her one-year employment anniversary—Mr. Simpson dismissed Ms. Shynkarova by sending a message through a messaging application. The court inferred from this timing that the defendant deliberately terminated her employment to avoid paying an additional week of statutory severance pay under the Employment Standards Act, 2000, s. 57, which would have become payable after one year of employment.

Employment agreement and contractual terms

The employment agreement contained a restrictive covenant limiting the plaintiff's ability to work with competing tax consultancies. However, the agreement was signed only by the employee and not by the employer, which raised questions about its enforceability. Additionally, the agreement included provisions regarding the notice period required for termination. Despite these contractual terms, the defendant did not participate meaningfully in the litigation to assert any defences based on these provisions.

Procedural history and default judgment

The plaintiff issued her statement of claim in May 2023. When the defendant failed to file a defence, the defendant was noted in default. Following standard court procedures, the plaintiff served the defendant with materials required under Rule 19.05. The defendant responded by requesting a case conference, which was scheduled for May 31, 2024, before Justice Glustein. However, Mr. Simpson did not appear at the conference, instead informing the registrar that he was occupied with a business meeting.

At the conference, Justice Glustein directed the defendant to bring a motion to set aside the noting in default and for leave to allow Mr. Simpson to act on behalf of the company, with a deadline of April 30, 2025. The judge expressly warned that failure to bring such a motion could result in the defendant being precluded from raising any defence. The defendant did not bring the required motion.

When the case proceeded to trial on November 10, 2025, Mr. Simpson appeared without legal counsel and requested an adjournment, citing the volume of documents and his claim that he had been too busy to deliver a statement of defence or bring the necessary motions. Justice R. Lee Akazaki declined the adjournment, noting that Rule 15.01 required a corporation to be represented by a lawyer. Although Mr. Simpson claimed he had received leave to act in other litigation, no motion or evidence was before the court to grant such leave. The judge determined it would be profoundly unfair to the plaintiff—who had been waiting two years for her day in court—to grant a further adjournment given the defendant's repeated failures to comply with court orders and procedural requirements.

Calculation of reasonable notice and damages

In the absence of a statement of defence and evidence from the defendant, the court proceeded on the basis that the pleadings were deemed admitted. The court applied the Bardal v. Globe & Mail Ltd. criteria to determine the appropriate notice period. These factors include the character of employment, length of service, age of the employee, and availability of similar employment.

Several factors pointed to a lower notice period: the plaintiff's short tenure of one year and her age of 25 years. Conversely, other factors indicated a higher notice period: the specialized and creative nature of her work, the difficulty in obtaining comparable employment, the plaintiff's training and qualifications, and the depressed economic conditions of the immediate post-pandemic period. Counsel for the plaintiff argued she was entitled to 12 months' notice, but the court found no comparable case law supporting this position. The court noted that awarding 12 months' notice would result in a longer period than her actual term of employment, which would be inappropriate.

The court drew on the decision in Khan v. Fibre Glass-Evercoat Co., where a basic notice period of four months was awarded for a two-year employee, with additional time added for a restrictive covenant. While a restrictive covenant existed in this case, the plaintiff provided no evidence that she felt precluded from seeking employment with other tax consultancies because of it.

Balancing all the Bardal factors, the court determined that three months would be the appropriate base notice period. However, the court increased this to four months upon consideration of the defendant's calculated misconduct in terminating the plaintiff nine days before her first anniversary specifically to avoid statutory severance obligations. The court found that this conduct likely demoralized the plaintiff, impeding her job search by at least several weeks, and that a responsible employer would have provided a letter of reference and transitional support rather than withholding wages. Based on a $60,000 annual salary, four months' notice amounted to $20,000 in damages.

Mitigation and lost benefits

The court accepted that the plaintiff made appropriate efforts to mitigate her damages by seeking employment and performing freelance work following her termination. Since the freelance work was not of the kind precluded by her employment agreement, the court determined that no deduction should be made for mitigation income under the principles established in Brake v. PJ-M2R Restaurant Inc. However, the plaintiff's failure to obtain comparable employment demonstrated the absence of comparable employment opportunities under the Bardal analysis, rather than extending the notice period.

Regarding lost benefits during the notice period, the defendant did not participate in the litigation beyond requesting adjournments, and therefore provided no evidence regarding the value of benefits. Following established practice, the court awarded damages for lost benefits at 15%—higher than the typical 10% award—calculated at $3,000.00, reflecting the reality that basic benefits cost the same across the board and considering the plaintiff's precarious economic circumstances.

Outcome and monetary award

The court entered default judgment in favour of the plaintiff, Yelyzaveta Shynkarova, on November 10, 2025. The defendant was ordered to pay damages in the amount of $26,967.81, comprising $20,000 for the four-month notice period, $3,967.81 in withheld wages, and $3,000 in lost benefits. Additionally, the court awarded prejudgment interest in the amount of $3,589.01, calculated from February 6, 2023 (the date of termination) through November 10, 2025, at a rate of 4.8% per annum. The court also awarded costs on a substantial indemnity basis in the amount of $32,445.38, payable within 30 days, finding that the defendant's misconduct in requesting the reopening of pleadings and failing to follow through substantially delayed proceedings and unnecessarily increased the plaintiff's legal costs. Post-judgment interest continues to accrue at a rate of 4% per annum. The total monetary award in favour of the successful party, Ms. Shynkarova, amounts to $63,002.20, comprising damages, prejudgment interest, and costs, with ongoing post-judgment interest.