When an employee termination is conducted, most employers focus on determining contractual severance entitlements and ensuring compliance with statutory requirements. In so doing, their aim is to limit any potential claims for wrongful dismissal. By contrast, less thought tends to be given to return of property. This is not an unreasonable state of affairs, as in most cases, return of property (whether it be employer-owned assets or employee personal effects) occurs with little fuss. But what happens when employers encounter intransigent former employees who refuse to return their property?

This was the very situation one Ottawa-based employer recently encountered. In a short decision from July 2024, Justice Kaufman ruled on a motion involving a former worker who refused to return two employer-owned vehicles after his employment had been terminated. 

The worker had been employed for 38 years by a small family-run business and most recently served as its General Manager. The employer was a corporation whose business involved providing transportation services to and from the Ottawa Airport. To help facilitate the employee’s duties, the employer provided him with company-owned vehicles and allowed use of the same for both work and personal reasons.

This situation persisted until July 20, 2023, at which time the worker was summarily dismissed after his employer uncovered (what it deemed to be) financial irregularities.

Post-dismissal vehicle recovery

Following the worker’s dismissal, a dispute arose as to what should happen with his two company-provided vehicles.

In response to the employer’s demands to return its property, the worker refused and asserted wrongful dismissal. In so doing, he made the following arguments in defence of his position: 1) the shareholder resolution which led to his dismissal was obtained under false pretenses; 2) a shareholder of the company (the worker’s mother) had stated she had no objection to the worker’s stepdaughter continuing to use an employer-owned vehicle on a go-forward basis; and 3) he should be entitled to use his company-issued vehicles for a reasonable period post-dismissal, as vehicle use was part of his regular compensation package.

Justice Kaufman dismissed all three of these arguments in short order. To that end, the Court noted:

1. the worker had not provided any evidence to substantiate his allegation of impropriety concerning the shareholder resolution which led to his dismissal;
2. the worker’s mother was no longer an active shareholder of the company, her unsworn letter provided to the Court was hearsay, and this letter only addressed use of one of the two vehicles in dispute; and
3. any claim of wrongful dismissal was premature, particularly as the worker had yet to even commence litigation in this regard.

Justice Kaufman also made the following insightful comments regarding an employer’s right to recover its property post-employment, even in situations where an employee has asserted wrongful dismissal: 

The defendant further asserts that his employment was wrongfully terminated and that he would be entitled to the benefit of these cars, which were benefits of his employment, during the period of reasonable notice. The defendant intends to commence an action for wrongful dismissal.

If the defendant is successful in his wrongful dismissal action, he may be compensated for the value of any employment benefits he would have enjoyed during the reasonable notice period, but he is not entitled to use the vehicles before proving his case for wrongful dismissal, let alone before commencing such an action. [emphasis added]

In the end, the worker was ordered to return both company-owned vehicles in his possession. He was also hit with a $10,000.00 costs award payable in favour of the employer.

Regarding costs, Justice Kaufman pointily observed that the worker had disregarded an earlier court-order that he return his two company-owned vehicles (which occurred in the context of an interlocutory injunction motion heard on December 6, 2023). This forced the employer to bring a separate, second, motion to recover its property pursuant to Rule 44 of the Rules of Civil Procedure. The Court was not impressed that such a second motion was required, and accordingly, issued a hefty costs award for what was otherwise a relatively straightforward matter.

Takeaway

Justice Kaufman’s decision is a sharp reminder that, regardless of any claims of wrongful dismissal that workers may have, employees are not presumptively entitled to ongoing possession and use of employer property post-dismissal. Instead, upon direction, former workers must return any and all employer property in their possession. This remains the case even if the worker may ultimately be able to prove a loss stemming from inability to use employer property once a claim for wrongful dismissal has been litigated. Employers are therefore in a strong position to recover property post-dismissal and should not hesitate to enforce their rights in this regard even when faced with recalcitrant employees.