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Employer Jailed for “Defiant Disobedience” of Arbitrator
September 28, 2006

A hotel owner who ignored three arbitral awards has been sentenced to jail time and heavy fines for contempt of court.

In 2004, an arbitrator found that an Ontario hotel breached its collective agreement when it stopped paying group insurance premiums, dental payments and union dues on behalf of employees. The arbitrator ordered the employer to make the overdue payments and to refrain from further violations. The employer refused to comply with the order, prompting additional union grievances. Similar orders were made in two subsequent arbitral awards. The orders were then filed as judgments in the Ontario Superior Court. The employer ignored the court orders. The union eventually initiated contempt proceedings against the hotel, the company that owns it and the company’s president.

The Court found all three defendants guilty of contempt of court. It rejected the president’s argument that he could not be found in contempt because he did not personally have a contract with the union or personal obligations under the arbitral awards or court orders. The president was held entirely responsible as the directing mind of the company for ensuring the hotel’s compliance with the awards and court orders. In the Court’s view, allowing the president to escape responsibility by hiding behind a corporate veil would have made “a mockery and abuse of process of the court”.

The president and the company were fined a total of $25,000 for which they were jointly and severally liable. In addition, the president was sentenced to thirty days in jail. The union was also awarded $15,000 for its legal costs.

(Click here for copy of judgment)