Executive Summary: Key Legal and Evidentiary Issues

• Shawn Pringle appealed a stay of his wrongful dismissal action against Zenova Group PLC and Zenova Ltd.
   
• The central dispute concerned whether Pringle was an employee or an independent contractor under the Employment Standards Act, 2000.
   
• Zenova relied on a forum selection clause in the parties' agreement to argue that only English courts had jurisdiction.
   
• Applying the Belton factors, the motion judge had conflated Pringle's status as a Zenova founder and shareholder with his role as a service provider.
   
• Ontario's Court of Appeal found this conflation amounted to an extricable error of law requiring a fresh analysis.
   
• Questions of jurisdiction simpliciter and forum non conveniens also arose once the forum selection clause was found to be void.
   

Facts of the case

Shawn Pringle co-founded a fire safety products venture in 2018 with Tony Crawley and Graeme Sargent, working unpaid for several years while developing flame-resistant paints and fluids. The business was incorporated in England and Wales as Zenova Ltd., and in 2021 a public company, Zenova Group PLC, was formed to attract investment. Through his corporation, 1291207 B.C. Ltd., Pringle held slightly more than 10% of Zenova Ltd.'s shares, which converted into shares in the new public company.

To show investors it had an employee base and management team, Zenova's board asked Pringle to sign a formal contract. He was offered a choice between employee and independent contractor status and, for tax reasons, chose the latter. In May 2021, Pringle entered into a "Product Development Consultant Contract for Services" with Zenova Ltd. (which also governed his relationship with Zenova Group PLC), earning £80,000 annually as Director of Product Development. He began full-time work in July 2021, having relocated from British Columbia to Ontario before starting.

In September 2022, Zenova terminated the agreement for alleged cause, claiming Pringle had provided services to other businesses without devoting his full attention to Zenova. Pringle then sued in Ontario for breach of contract and wrongful dismissal. Zenova brought a motion to permanently stay the action, arguing that the agreement's forum selection clause required the dispute to be litigated in England.

Policy and legislative provisions at issue

The agreement contained a choice-of-law and forum selection clause (clause 22.1) designating England and Wales as the exclusive jurisdiction for all disputes. Pringle argued this clause was void under section 5 of the ESA, which prohibits contracting out of employment standards, because it stripped him of his right under section 96 to file a complaint with the Ministry of Labour — a right available only to employees, not independent contractors.

Whether the ESA applied turned on whether Pringle was an "employee" under section 1 of the Act, which includes anyone performing work or supplying services for wages. The motion judge and the Court of Appeal both applied the five-factor test from Belton v. Liberty Insurance Co. of Canada, examining exclusivity of service, control, investment in tools, risk of loss or expectation of profit, and integration into the employer's business — with the ultimate question being "whose business was it?"

Reasoning and analysis

The motion judge had concluded Pringle was an independent contractor, reasoning that his status as a founder and shareholder gave him an indirect expectation of profit and integrated him into "his own" venture. The Court of Appeal held this reasoning improperly conflated Pringle's shareholder status with his role in providing services, noting that shareholders — even major ones — can still be employees, and that dual status is well established in law.

Reassessing the Belton factors, the Court found Pringle was contractually required to devote his full time to Zenova and could be directed to work additional hours as needed, supporting exclusivity. Although Zenova took a largely hands-off approach in practice, the agreement gave it substantial control over when and where Pringle worked, including vacation approval and relocation terms. Pringle's only investment in equipment was a modest office rent contribution, with Zenova covering his laptop. He bore no business risk and had no ability to increase his earnings by adjusting how the work was performed — his only "profit" was indirect, through his shares, which the Court found irrelevant to this factor. Finally, indicators such as his title, Zenova email and business cards, and the designation of his office as Zenova's "Canada Office" showed he was integrated into Zenova's organization rather than operating his own business.

The Court also held that the agreement's stated intention that it was not an employment contract deserved little weight, since the true substance of the relationship — not the parties' label — governs the analysis, particularly where a board member testified that the label used did not matter to Zenova.

Ruling and overall outcome

The Court of Appeal allowed Pringle's appeal, holding that he was Zenova's employee for ESA purposes and that the forum selection clause was therefore void. It further found that Ontario courts had jurisdiction over the dispute, since Pringle performed his services and experienced the alleged breach in Ontario, and that Zenova had not shown England was a clearly more convenient forum. The stay of proceedings was set aside, allowing Pringle's action to continue in Ontario, with Zenova ordered to file a statement of defence within 30 days. The Court reversed the costs award below and ordered Zenova to pay Pringle $12,000 (inclusive of disbursements and HST) for the costs of the motion, plus a further $14,900 for the costs of the appeal.