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Background and parties
This case, Deacon v. Bank of Nova Scotia, 2026 ONSC 1793, arises from a proposed employment class action brought in the Ontario Superior Court of Justice. The plaintiffs, Nathalie Deacon (a current Home Financing Advisor) and Gail Ouellette (a retired Home Financing Advisor), sue the Bank of Nova Scotia (Scotiabank) on behalf of a proposed class of commission-based Home Financing Advisors (HFAs). They seek certification of a class proceeding under Ontario’s Class Proceedings Act, 1992 (CPA), alleging that Scotiabank failed to properly provide and disclose vacation pay and statutory holiday pay as required by the Canada Labour Code (CLC) over a lengthy period beginning in 2009. The motion was heard by Justice Leiper, who was asked both to rule on the admissibility of parts of the plaintiffs’ expert report and to decide whether the action should be certified as a class proceeding.
Facts and compensation structure
Scotiabank’s HFAs sell mortgages and related insurance products and are paid entirely by commissions and bonuses. They do not receive a base salary and therefore rely on vacation and statutory holiday pay being added to their commissions to compensate for reduced income when they take time off. The plaintiffs allege that Scotiabank told HFAs that it was paying vacation and statutory holiday pay but in reality “reverse engineered” their commissions: it started with a total commission figure and then internally carved out amounts it labelled as vacation and holiday pay, without clearly disclosing this methodology. According to the plaintiffs, this meant that what looked like “vacation pay commission” and “stat. hol. pay commission” on paystubs was not extra money paid on top of commissions; instead, it was a reallocation of the same overall compensation pool. They say this practice left them effectively without true paid vacation or holiday pay and resulted in lower overall earnings than they were entitled to under the CLC.
Alleged defects in disclosure and pay documents
A major focus of the motion is Scotiabank’s communication of its pay structure through three key types of documents: earnings statements (paystubs), commission statements, and annual Compensation Guides. On paystubs, the HFAs saw line items for “Vacation Pay Commission” and “Stat. Hol. Pay Commission,” as well as separate entries such as “Comm.- Insurance sales” and “Comm-Sales Pay” for mortgage commissions. Justice Leiper notes that Scotiabank calculated total commissions using commission rates and then subtracted the CLC vacation and holiday percentages from that total to allocate amounts to vacation and holiday pay. In effect, the figure shown as “Comm” on the paystub functioned as the “base” commission to which vacation and holiday percentages were then added back to reach what the bank characterized as “Total Commission.” Yet terms such as “base commission” and “total commission” never appeared on the paystubs themselves, creating potential confusion.
Commission statements added another layer of complexity. Before 2017, these statements did not separately identify vacation or holiday pay; HFAs saw only a total commission amount. After 2017, the commission statements started using “Gross” and “Net” commission, while the paystubs continued using different labels, such as “Comm.” The court found that reading the commission statements together with paystubs required HFAs to make assumptions about what was included or excluded in each figure.
The Compensation Guides also contributed to the alleged confusion. In the 2009 Guide, a prominent flowchart of “Total Rewards” visually depicted cash compensation in one box and showed vacation and statutory holiday pay in a separate box to the side, suggesting these were distinct entitlements. Elsewhere in the same Guide, however, yellow boxes describing commissions and bonuses were marked with asterisks and a small-font footnote stating that they “include vacation and statutory holiday pay,” with cross-reference to a later page. The court found that this reduced prominence and inconsistent presentation could reasonably lead HFAs to miss or misinterpret how their entitlements were being treated. In addition, an “illustrative” payout grid in the appendix to the Compensation Guides showed “base commission” in one column and “Total Commission or Bonus Paid” in the rightmost column, with vacation and holiday pay percentages embedded between – but this grid had to be read from right to left to see how those amounts were derived, and the same terminology did not appear in the actual paystubs or commission statements.
Legal framework under the Canada Labour Code
The CLC sets out minimum employment standards for federally regulated employers, including Scotiabank. It requires employers to provide annual paid vacation and statutory holiday pay, with vacation pay calculated as a percentage (4%, 6%, or 8%, depending on years of service) of “wages,” which expressly include commission income. Prior case law, particularly Kinch v. Dufferin Communications Inc., held that an employer can embed vacation pay in commission payments only if two conditions are met: the employee must be aware of their CLC vacation entitlements, and they must receive a benefit at least equal to those entitlements. In Kinch and similar decisions such as Cunningham v. RBC Dominion Securities and Singh v. RBC Insurance Agency, courts scrutinized whether employers adequately disclosed all-inclusive commission models and whether their documents clearly showed that CLC entitlements were being honoured.
In this case, the plaintiffs rely on that jurisprudence to argue that Scotiabank’s mixed terminology and diagrams failed to clearly convey that vacation and holiday pay were being included in commissions, and that the bank in some instances used gross-up factors or calculations that did not align with the CLC or its own payout grid. While Scotiabank insisted that its documentation, when read carefully, consistently disclosed an inclusive pay model, the judge found at the certification stage that there was at least “some basis in fact” to support a common issue about whether the bank’s disclosure met the Kinch standard.
Claims and causes of action
The plaintiffs plead several overlapping causes of action. First, they allege breach of contract, asserting that Scotiabank’s failure to properly pay and disclose vacation and statutory holiday pay contravened their employment agreements and the bank’s obligation to comply with the CLC. They also assert that the underpayment of vacation and holiday pay undermined their pensionable “salary” under the Scotiabank Pension Plan, thereby reducing their retirement benefits.
Second, they advance a negligence claim, alleging that Scotiabank, as employer, owed a duty of care to take reasonable steps to ensure HFAs received all statutory entitlements under the CLC. Relying on previous class actions such as Fulawka v. Bank of Nova Scotia, they argue that an employer–employee relationship can ground a duty of care for economic loss where the duty is informed by employment standards legislation.
Third, they allege breach of trust, arguing that CLC vacation and holiday pay must be held in a trust or trust-like arrangement for employees until paid, drawing on decisions such as Latham v. Brown & Morrissey Trucking and Kinch. Although the CLC does not contain an explicit trust provision (unlike some provincial statutes), the plaintiffs say its protective purpose supports viewing unpaid vacation pay as held in trust.
Fourth, they claim unjust enrichment, contending that Scotiabank was enriched by retaining money that should have been paid as separate vacation and holiday pay, that HFAs suffered a corresponding deprivation, and that there is no juristic reason for Scotiabank to retain that enrichment in light of the CLC. The court found at the pleading stage that these claims are not “doomed to fail” and may proceed alongside breach of contract, consistent with more recent case law.
Pension plan implications
A discrete part of the case concerns the Scotiabank Pension Plan. Since November 1, 2009, HFAs have participated in one of three pension arrangements (defined benefit, hybrid, or defined contribution) depending on their hire dates. The plan determines “Salary” based on the member’s “annual rate of compensation” derived from their compensation plan earnings over a three-year period, with salary figures drawn from Scotiabank’s employment records. The plaintiffs say that because Scotiabank treated vacation and statutory holiday pay as embedded within commissions rather than as separate amounts, the “compensation plan earnings” used for pension calculations understated HFAs’ true earnings and thereby delivered reduced pensions to those who retired. Scotiabank argued that pension benefits are matters of contract independent of the CLC and that it had already taken steps to adjust its pension calculations retroactively. Justice Leiper nonetheless found that whether pension benefits were under-calculated can be addressed as a common issue that is logically downstream of any finding on CLC compliance.
Expert evidence and limits on opinion
An important preliminary issue was the admissibility of portions of the expert report prepared by Mr. de Gray, a business valuation and damages expert retained by the plaintiffs. His mandate was to describe a methodology for quantifying any financial loss suffered by the proposed class and to identify additional data needed to perform a full damages analysis. However, one section of the report (paragraph 4.13 and related Appendix A) went beyond methodology to offer interpretive comments on Scotiabank’s pay records, including statements that the presentation of commissions on certain documents was inconsistent with the CLC formulas, that gross-up factors changed inconsistently with the bank’s own defence, and that amounts designated as vacation and holiday pay appeared to be “reverse engineered” by reallocating total commissions.
On cross-examination, de Gray conceded that interpreting the CLC, the pleadings, and the parties’ contracts is ultimately for the court. Justice Leiper held that these contested passages amounted to opinion evidence outside de Gray’s expertise and mandate and that they risked becoming an advocacy platform for the plaintiffs’ theory of liability. As a result, the court struck the specified opinion passages and the calculations supporting them, while accepting the balance of the report as a proper description of a damages methodology capable of being applied later if liability is found.
Prior ESDC complaints and collateral attack concerns
Before this lawsuit, a group of approximately 20 HFAs had filed complaints with Employment and Social Development Canada (ESDC) under the CLC, challenging Scotiabank’s vacation and holiday pay calculations. ESDC ultimately ruled in the bank’s favour, finding no contravention of the relevant CLC provisions. Scotiabank argued that this civil action was an improper attempt to relitigate or indirectly appeal the ESDC findings and was akin to a collateral attack on an administrative decision.
Justice Leiper rejected this position at the certification stage. The representative plaintiffs were not among those who complained to ESDC, the bank had not properly pleaded issue estoppel or collateral attack, and the class action encompasses a broader time period, legal causes of action, and remedies than the ESDC process permits. The judge emphasized that relying on ESDC’s findings now to defeat common issues would amount to an impermissible merits assessment, which is reserved for trial. Scotiabank remains free to rely on the ESDC determinations as part of its defence at a later stage.
Common issues and class definition
The plaintiffs proposed a class of “all individuals employed by Scotiabank as Home Financing Advisors at any time between November 1, 2009 and the date of certification,” excluding class members in a separate case (Ngan v. Bank of Nova Scotia). With approximately 2,629 current and former HFAs in this group, Scotiabank did not dispute that the proposed class was objectively defined and satisfied the CPA’s requirement for an identifiable class.
On common issues, the court confirmed that certification is not a merits test and that the plaintiffs need only show a “some basis in fact” that the claims raise issues common to the class. Justice Leiper identified several key common issues for trial, including whether the CLC required Scotiabank to provide vacation and statutory holiday pay in addition to other compensation; whether the bank is liable in breach of contract, negligence, unjust enrichment, or breach of trust for failing to provide those entitlements; whether it breached the Pension Plan in relation to pension calculations; whether class members are entitled to various categories of damages or restitution; and whether certain claims are timely by virtue of CLC limitation rules. A further common issue asks whether, if liability is found, the class’s loss can be determined on an aggregate basis.
In addressing aggregate damages, the court drew on Supreme Court authority holding that the question of whether aggregate assessment is appropriate can itself be certified as a common issue, with the ultimate decision left to the trial judge once liability is established. Since Scotiabank’s payroll and pension records contain the essential data about commissions, vacation and holiday pay, and tenure, the judge found that an aggregate methodology could reasonably be applied if required.
Preferability of a class proceeding
The “preferability” test under the CPA, now reinforced by section 5(1.1), required the court to determine whether a class proceeding is superior to reasonably available alternatives such as ESDC complaints, individual actions, or other remedial schemes, and whether common questions predominate over individual ones. Scotiabank argued that individual HFAs could pursue simplified individual civil claims or rely on the CLC complaint process, and that the trial would become bogged down in case-by-case evidence about each HFA’s understanding of the pay documents.
Justice Leiper concluded that the central liability issues focus on Scotiabank’s conduct, documentation, and compliance with the CLC, not on each individual HFA’s subjective confusion. The adequacy of disclosure and lawfulness of the bank’s compensation model can be determined once for all class members, with individual differences addressed later only if necessary for quantifying any remaining issues. The judge also emphasized access-to-justice concerns: employees may be reluctant to complain individually against a powerful employer for fear of professional repercussions, and the sheer size of the proposed class could overwhelm the ESDC process if pursued one by one. Citing prior case law involving Scotiabank itself, the court found that a class proceeding offers both anonymity and judicial oversight that better protect vulnerable employees. On that basis, the action was held to be a fair, efficient, and manageable procedure that clearly met the statutory preferability criteria.
Representative plaintiffs and litigation plan
Finally, the court considered whether the proposed representative plaintiffs—Deacon and Ouellette—could fairly and adequately represent the class. Both filed affidavits confirming their understanding of the issues and their responsibilities, and both have direct experience as HFAs within the class period (one still employed, one retired). They have retained experienced class counsel and filed a litigation plan outlining the steps to manage the proceeding. The court was satisfied that they have no conflict with other class members and are appropriate representatives.
Outcome and absence of monetary award
In conclusion, Justice Leiper held that all criteria for certification under section 5(1) of the Class Proceedings Act, 1992, were met. The court struck specific opinion portions of the plaintiffs’ expert report that strayed beyond a proper damages methodology but accepted the underlying approach to quantifying loss if liability is ultimately found. The action was certified as a class proceeding, with Deacon and Ouellette appointed as representative plaintiffs, and a schedule of common issues was attached to the reasons. The judgment did not determine whether Scotiabank actually violated the Canada Labour Code or the Pension Plan, nor did it assess any damages, restitution, disgorgement, or punitive awards. Issues of costs were left open, with the court inviting brief written submissions if the parties could not reach agreement. At this certification stage, the successful party is the plaintiffs, who obtained the order they sought, but no monetary damages, costs, or other financial amounts were awarded in their favour, and the total amount (if any) that may eventually be ordered cannot yet be determined from this decision.
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Superior Court of Justice - OntarioCase Number
CV-23-00702820-00CPPractice Area
Class actionsAmount
Not specified/UnspecifiedWinner
PlaintiffTrial Start Date