Senior execs in Ontario alleging bad faith, mental distress and punitive damages
The Ontario Superior Court of Justice has ruled that two former senior executives of Nickel 28 Capital Corp. can rely on a contested “without prejudice” communication in their wrongful dismissal lawsuit, while striking out all claims against two company directors in their personal capacities.
In reasons released 5 December 2025, Justice Merritt held that Justin Cochrane, former president, and Conor Kearns, former chief financial officer and corporate secretary, may plead details of a November 2023 “best and final offer” and “proposed full and final settlement” from Nickel 28 as part of their allegations of bad faith, mental distress and punitive damages.
At the same time, the court concluded that claims against directors Edward Collery and Brett Richards disclosed no reasonable cause of action and could not be salvaged by amendment.
Execs sue for wrongful dismissal
Cochrane and Kearns are suing Nickel 28 Capital for wrongful dismissal, breach of contract and unjust enrichment. They allege they were terminated in May 2024 following a hostile takeover and proxy battle in which New York-based hedge fund Pelham Investment Partners LP gained significant influence over the board of the Toronto‑listed metals streaming and royalty company.
The plaintiffs, who describe themselves as founders and former senior executives of Nickel 28, say that under their leadership the company was extremely profitable. After Pelham’s campaign, Collery, described as Pelham’s directing mind, joined Nickel 28’s board, and Richards became chair of the compensation committee. On 14 August 2023, they and an associate replaced a majority of the board.
The new board reviewed historical executive compensation and, in December 2023, retained McCarthy Tétrault to investigate the plaintiffs’ conduct and performance. The investigation culminated in April 2024. Nickel 28 terminated both men for cause the following month, alleging improper expense claims, self‑dealing consulting contracts, IT mismanagement and insider trading.
Cochrane and Kearns deny all allegations and say the investigation was biased, procedurally unfair and undertaken in bad faith to avoid severance obligations and reduce incentive payouts.
Previously, the Superior Court of Justice (Ontario) issued a discovery ruling in Costa v Edward Jones Investments that compels extensive disclosure on recruitment practices, succession planning, harassment responses and HR qualifications at the firm.
Contested 'without prejudice' communication
Central to Nickel 28’s procedural motion was a set of paragraphs in each claim describing a November 2023 communication from Richards to Cochrane and Kearns, labelled “Private, Confidential and Without Prejudice” and described by the company as a settlement offer. The email, according to the pleadings, required each executive to immediately return unvested deferred compensation, accept material changes to core terms of their employment agreements that would significantly reduce severance in a change of control or no‑cause termination, and agree to future compensation levels to be informed by an independent compensation study that had not yet been disclosed.
Cochrane’s claim states there was nothing to “settle” at the time and characterises the correspondence as “not an offer at all, but a bad faith demand for the return of earned compensation.” Kearns pleads in similar terms.
Nickel 28 argued these were classic settlement communications protected by settlement privilege and should not appear in the pleadings. Justice Merritt accepted that the company had a “reasonable claim” to settlement privilege, noting the “best and final offer” language, references to “full and final settlement” and an expressed desire “to move forward together and constructively, leaving the past behind us – where it belongs.”
However, the Ontario Superior Court of Justice declined to strike the paragraphs. The court held that, on a Rule 25.11 motion to strike, the test is whether there is a triable issue as to whether the communication is relevant to bad faith, mental distress or punitive damages, rather than whether privilege will ultimately render it inadmissible at trial.
“The plaintiffs’ allegations of bad faith, mental distress and punitive damages raise triable issues,” said Justice Merritt. “There is an air of reality to the allegation that the defendants were attempting to push the plaintiffs out of the company in the context of the hostile takeover and other circumstances surrounding the investigation and termination of the plaintiffs’ employment, and the ‘Offer/Demand’ was one step in the orchestrated campaign to get rid of them, deny them compensation to which they were entitled, avoid paying severance, and cause them significant reputational harm.”
No personal claims against directors
Meanwhile, the Ontario Superior Court of Justice struck all claims against Collery and Richards personally under Rule 21.01(1)(b). The court held that the plaintiffs had not pleaded the elements required to pierce the corporate veil, such as that Nickel 28 was a sham, was incorporated for an improper purpose, or was completely dominated and controlled by the individual defendants. It also found no particularised allegations of separate tortious conduct by the directors, distinct from their roles within Nickel 28, that would support independent liability for inducing breach of contract or intentional interference with economic relations.
Justice Merritt refused leave to amend, finding there was nothing more the plaintiffs could plead, consistently with their existing narrative, to transform their wrongful dismissal and contract claims into viable personal claims against the directors.
The consolidated actions will now proceed solely against Nickel 28 Capital Corp.
Previously, a worker’s wrongful dismissal claim was dismissed after their fixed-term contract expired without renewal.
