An ex-CEO froze $646K of her old employer's cash before any wrongful dismissal trial
A company thought paying an executive's severance in monthly installments would let it hold onto the cash while the two sides fought in court. A British Columbia judge saw it differently, and the money stays locked up.
The July 7, 2026, ruling, from Justice Matthews of the Supreme Court of British Columbia, refused Response Biomedical Corp.'s bid to unwind a prejudgment garnishing order its former chief executive had obtained for $646,418.86. The executive says she was fired without cause and without notice, and her contract promised 24 months of pay in lieu of notice. The company had paid her eight weeks.
A severance clause and a garnished account
Response Biomedical terminated the executive on January 3, 2025, according to the decision. Six days later it handed her a payment equal to eight weeks of pay in lieu of notice, which it said met its statutory obligation. Her lawyer pressed for the balance between that amount and the 24 months her contract promised. The company did not respond.
The contract provided for 24 months of base salary plus a prorated incentive payment as pay in lieu of notice, owed if Response Biomedical did not give her 24 months of written notice. In November 2025, about 10 months after the termination, she obtained a prejudgment garnishing order requiring $646,418.86 to be paid into court.
Response Biomedical applied to have that order set aside. It maintained the termination clause let it pay the severance in equal monthly installments across 24 months, so most of the money was not yet due when the order issued. Coming roughly 10 months after termination, the company argued, the order captured at least 14 payments that had not come due.
Is severance a debt or a damages claim?
That argument turned on a distinction: whether a contractual severance entitlement is a debt the employer already owes, or a claim for damages a court has yet to assess. A prejudgment garnishing order can attach only a debt that is fixed and calculable as arithmetic, not one whose value a court has still to decide.
Justice Matthews found the clause created a debt. There was no question, the decision reasoned, that 24 months of salary was owed if the executive had been dismissed without cause; the only real question was the period over which it could be paid, which was not a condition affecting whether the money was owed. Each of the 24 months, the judge concluded, was payable or accruing as of the termination date.
On that reasoning, the installment schedule made no difference to the garnishment. "I conclude that 24 months of pay in lieu of notice is a claim for a liquidated debt due and owing," Justice Matthews wrote. The judge also turned aside the company's argument that the executive had withheld material facts when she first sought the order without notice, finding her affidavit adequate.
Unproven allegations and an unresolved case
Much of Response Biomedical's case rests on allegations that have not been tested. The company argues the executive was dismissed for just cause, pointing to alleged conflict-of-interest and self-dealing activity with organizations it says were competitors, and alleging she was building her own coaching business in the year before she left. She does not deny dealings with outside organizations but disputes the company's characterization and denies they came at her employer's expense.
The company also alleges the severance clause is unenforceable, saying the executive improperly joined the board vote that approved her contract and its 24-month term, richer than the 12 months her predecessor received. It contends she could influence directors who reported to her and who would not, in its words, "vote against the boss." She counters that the compensation committee negotiated the package and that it later drew a 99.95 percent "say-on-pay" endorsement from shareholders.
Justice Matthews declined to weigh those competing claims, saying they could not be resolved on affidavit evidence without cross-examination. The decision noted the company had led no evidence from anyone who decided to fire the executive for cause, and none from the directors it says were swayed. "I am unable to accept Response Biomedical's assertions that its defences are strong," the judge wrote. With no trial date set and the timing of any resolution unknown, the application was dismissed and the money stays in court.
