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Background and employment relationship
Mr. Mitchell Cross worked for Cooling Tower Maintenance Inc. for approximately 26.5 years, from February 2, 1997, until his termination without cause on August 22, 2023. He held a senior role and claimed to have made significant operational contributions to the company, asserting that he did not receive adequate notice of dismissal. In response to the termination, Cooling Tower offered a severance package. Mr. Cross retained counsel, rejected the initial offer and countered. These negotiations resulted in a formal Settlement Agreement on October 3, 2023, resolving his wrongful dismissal claim on agreed terms rather than through continued litigation.
The settlement agreement and its key terms
The Settlement Agreement provided that Cooling Tower would make salary continuation and related payments to Mr. Cross for up to 24 months, or until he secured new employment, whichever came first. Those payments included an annual base salary of $183,303.51, an annual bonus of $40,000, deferred profit-sharing contributions of $4,000 per year, plus cash in lieu of group benefits ($3,884.20 annually) and vehicle benefits ($3,586.32 annually. The parties agreed that Mr. Cross’s minimum Employment Standards Act entitlements totaled $148,067.48, and the settlement went beyond that baseline. A central feature of the Agreement was a mitigation mechanism: Mr. Cross was required to “immediately advise” Cooling Tower if he obtained new employment or became self-employed during the salary continuation period. If that occurred, the salary continuation would end and Cooling Tower would pay a lump sum equal to 50% of the remaining settlement payments outstanding. The Agreement also contained a specific repayment clause (paragraph 4 on page three). If Mr. Cross failed to notify Cooling Tower upon obtaining new employment or self-employment, Cooling Tower would be “entitled to be reimbursed…for any monies it has paid…subsequent to his commencing such employment, or from the date of receipt of income from such self-employment.” The Agreement further required Mr. Cross to release any further claims against Cooling Tower, maintain confidentiality, refrain from disparagement, and remain available to indemnify Cooling Tower regarding statutory remittances. These continuing obligations were fundamental to the employer’s commercial benefit from the bargain.
Mr. Cross’s re-employment and non-disclosure
Before December 21, 2023, Mr. Cross received an offer of employment from Evaporative Tower Services, a company in the same industry. The offer contemplated a start date of February 19, 2024 and required acceptance by December 21, 2023. Mr. Cross ultimately began working for Evaporative Tower Services on February 19, 2024, and provided an executed employment contract dated February 20, 2024. There was no direct evidence of the precise date he verbally accepted the job. Despite the clear contractual requirement, he did not immediately advise Cooling Tower that he had commenced this new role. As a result, Cooling Tower continued making payments to him under the Settlement Agreement for several months after he started earning income from his new job. Between February 19 and June 10, 2024, Mr. Cross received $45,825.27 from Cooling Tower, over and above his new employment income.
Cooling Tower’s response and the emergence of the dispute
Cooling Tower discovered or suspected that Mr. Cross had become re-employed and, through counsel, wrote to his lawyer on June 10, 2024. The letter alleged a breach of the Settlement Agreement due to non-disclosure of the new job, demanded repayment of all payments made since February 19, 2024, and asserted that Mr. Cross had breached a fiduciary duty by joining a competitor. Notably, the letter did not explicitly state that Cooling Tower considered the entire Settlement Agreement repudiated. Cooling Tower also ceased all further payments as of June 10, 2024. On June 18, 2024, counsel for Mr. Cross responded with an unexecuted copy of the new employment contract and related financial documentation. The letter acknowledged that Mr. Cross had “overlooked” his disclosure obligation and proposed that any overpayments be set off against the 50% lump sum which, under the Agreement, would otherwise be owing upon re-employment.
Competing legal proceedings and financial positions
On July 5, 2024, Mr. Cross issued a Statement of Claim seeking to enforce the Settlement Agreement. He claimed $115,387 in damages, plus prejudgment interest and costs, calculated as follows: as of February 19, 2024, the 50% lump sum under the Agreement was $161,212.87; from this amount he subtracted the $45,825.87 he had already received in the post-re-employment period, resulting in a net figure of approximately $115,837 said to be owed. Cooling Tower responded with a Statement of Defence and Counterclaim on August 8, 2024. It took the position that Mr. Cross’s failure to disclose his new employment for several months amounted to a repudiation of the Settlement Agreement, disentitling him to any further payments, including the 50% lump sum. On that footing, it argued that it only ever owed him his minimum employment standards entitlement of $148,067.48, while it had in fact paid him $190,261.35 in total, producing an alleged overpayment of $42,193.87. In the alternative, Cooling Tower pleaded unjust enrichment in respect of the funds paid since February 19, 2024, and also alleged that Mr. Cross had breached duties of good faith, loyalty and confidentiality by going to a direct competitor. It sought repayment of the alleged overpayment (later quantified as $45,825.87 on unjust enrichment grounds), plus $50,000 in punitive and/or aggravated damages and substantial indemnity costs.
Positions of the parties on repudiation and breach
Mr. Cross argued that his non-disclosure, while a breach, was not fundamental. He maintained that it was an honest, non-malicious oversight that did not undermine the entire foundation of the bargain. He emphasized that he continued to perform all other obligations: he gave a full and final release, maintained confidentiality, refrained from disparaging Cooling Tower, and remained willing to indemnify in respect of tax and statutory issues. He contended that Cooling Tower suffered no real loss from the delay because the Agreement already contemplated a repayment mechanism for overpayments, and he proposed a straightforward accounting: repay or set off the overpayments and then receive the agreed 50% lump sum. Cooling Tower, by contrast, characterized the months-long failure to disclose as a pattern of conduct demonstrating an intention not to be bound by the Agreement as a whole. It urged the Court to infer that Mr. Cross had executed his new employment contract before December 21, 2023 and knowingly continued to collect settlement payments into mid-2024. On that basis, it submitted that the non-disclosure was repudiatory, relieving it of any obligation to pay the lump sum and entitling it to restitutionary recovery of the amounts paid after re-employment.
Legal framework for repudiation and summary judgment
The Court reviewed established principles on repudiation and contract termination. It noted that it is “rare for conduct subsequent to a settlement agreement to amount to repudiation,” and that repudiation is an exceptional remedy reserved for circumstances where the very foundation of the contract is undermined and the non-breaching party is deprived of substantially the whole benefit of the bargain. The onus lies on the party alleging repudiation, and courts are slow to infer repudiation, particularly where the other party continues to express an intention to honour the agreement. The judge applied the five-factor test from Stayside Corporation Inc. v. Cyndric Group Inc. for determining whether a breach is fundamental, focusing on the ratio of obligations performed to obligations breached, the seriousness and consequences of the breach, the likelihood of repetition, and the relationship of the breached term to the contract as a whole. Procedurally, both sides brought summary judgment motions, recognizing that there were no material facts in dispute and that the issues could be decided on a paper record. The Court invoked its enhanced powers under Rule 20.04(2.1) to weigh evidence, assess credibility and draw inferences where necessary.
Findings on Mr. Cross’s conduct and breach
On the evidence, the Court rejected Mr. Cross’s explanation that he simply forgot to inform Cooling Tower of his new employment. Given his seniority, his business acumen and the fact that he was receiving both a new salary and ongoing settlement payments for four months, the judge found it “defies logic and common sense” that the omission was inadvertent. Relying on the Rule 20 powers, the Court concluded that the failure to disclose was intentional, not accidental. However, the judge stressed that intentional breach, without more, does not necessarily equate to repudiation. While the Court viewed Mr. Cross’s conduct as serious and not trivial, it did not meet the high threshold of being malicious, oppressive or high-handed such as to justify punitive damages. The question remained whether this intentional non-disclosure deprived Cooling Tower of substantially the whole benefit of the Settlement Agreement.
Analysis of repudiation and the effect of the repayment clause
Turning to the Stayside factors, the Court found that Mr. Cross breached only one term of the Settlement Agreement: the obligation to promptly notify of new employment. In contrast, he fully performed other key promises—most importantly, his full and final release of wrongful dismissal claims, his confidentiality obligations and his undertaking not to denigrate Cooling Tower. These terms were central to the employer’s interest in achieving finality and protecting its reputation and information. Cooling Tower continued to enjoy the critical benefit of avoiding a wrongful dismissal lawsuit; the current proceeding was confined to enforcing the settlement itself, not reviving the original dismissal dispute or seeking additional damages. The judge also emphasized the language of paragraph 4 of the Agreement, which expressly addressed the consequence of a failure to disclose new employment: Cooling Tower would be “entitled to be reimbursed” for any monies paid after re-employment. The clause did not say that non-disclosure would cause the Agreement to be void or repudiated, nor did it state that Mr. Cross would lose his entitlement to the 50% lump sum. In the Court’s view, this wording showed that the parties had specifically contemplated the risk of non-disclosure and had chosen a limited contractual remedy—repayment of overpayments—rather than automatic forfeiture of the broader benefits. Considering the ratio between the single breached term and the many terms properly performed, the limited and correctable financial impact of the breach (which the repayment clause directly addressed), the lack of evidence that the breach would be ongoing or repeated once discovered, and the preservation of the Agreement’s core benefit (final resolution of the wrongful dismissal claim), the Court held that Cooling Tower had not met its onus to prove repudiation. The employer had not been deprived of substantially the whole benefit of the contract and could not unilaterally treat the Settlement Agreement as at an end.
Breach of the agreement by both parties and resulting obligations
While repudiation was rejected, the Court did find that both parties had breached aspects of the Settlement Agreement. Mr. Cross materially breached the agreement by intentionally failing to inform Cooling Tower when he obtained new employment. Under paragraph 4 of the Agreement, that breach triggered his obligation to reimburse the employer for all settlement monies paid to him from the start of his new employment on February 19, 2024, until payments ceased. As Mr. Cross admitted receiving $45,825.87 in that period, the Court fixed the repayment amount at $45,825.27 (rounding and minor discrepancies were clarified in the record) plus prejudgment interest under the Courts of Justice Act. Cooling Tower, for its part, breached the Settlement Agreement by refusing to pay the 50% lump sum once Mr. Cross became re-employed. The judge noted that the Agreement expressly provided for that lump sum upon re-employment and that paragraph 4 did not extinguish this entitlement; it only addressed reimbursement of overlapping payments. The salary continuation was correctly halted upon re-employment, but the refusal to pay the lump sum was not supported by the contractual language and therefore constituted a breach.
Disposition of the summary judgment motions and counterclaim
In light of these findings, the Court granted summary judgment in favour of Mr. Cross on his main claim to enforce the Settlement Agreement. Cooling Tower was ordered to pay him $161,212.87, representing the 50% lump sum owed under the settlement, together with prejudgment interest calculated in accordance with the Courts of Justice Act. Simultaneously, the Court granted judgment in favour of Cooling Tower on the limited issue of repayment under paragraph 4, directing that Mr. Cross must repay $45,825.27, plus prejudgment interest, for the payments he received after beginning his new job. The Court rejected Cooling Tower’s additional claims in its Counterclaim. It found no evidentiary basis to support allegations that Mr. Cross owed and breached heightened duties of loyalty, fidelity or confidentiality, nor was there a sufficient record to justify punitive or aggravated damages. Given the requirement on a summary judgment motion for each party to “put their best foot forward,” the absence of supporting evidence meant there was no genuine issue requiring a trial on those heads of claim. The $50,000 claim for aggravated and/or punitive damages was therefore dismissed.
Costs and overall outcome
On costs, the judge observed that both parties enjoyed partial success: Mr. Cross obtained judgment for a significant lump sum, while Cooling Tower secured an order for repayment of post-re-employment overpayments. The Court expressed an inclination not to award costs to either side, in part because of Mr. Cross’s intentional non-disclosure. However, a final costs order was not made in the reasons. Instead, both parties were invited to file brief written submissions on costs by January 5, 2026, so the ultimate figure for costs—if any—remained undetermined at the time of judgment. In net financial terms, before interest and any future costs ruling, the decision strongly favoured Mr. Cross. Cooling Tower was ordered to pay him $161,212.87, while he was ordered to repay $45,825.27, leaving a net monetary outcome of $115,387.60 in his favour, exclusive of prejudgment interest on each component and any later costs award. As a result, the successful party is Mr. Cross, with a total net monetary award of $115,387.60 plus prejudgment interest, while the precise amount of costs, if any, has not yet been determined.
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Plaintiff
Defendant
Court
Superior Court of Justice - OntarioCase Number
CV-24-3042Practice Area
Labour & Employment LawAmount
$ 115,388Winner
PlaintiffTrial Start Date