SUDBURY -- An appeals court has upheld a $1.274 million award to the former owner of a North Bay funeral home after an agreement to sell the long-time family business turned sour.

In a ruling released Dec. 17, the Court of Appeal of Ontario backed an earlier decision, which said the new owner of the funeral home had to pay the former owner for not living up to the terms of the sale agreement.

The business was sold in 2012. It was founded by the grandfather of the former owner, inherited by his father and then the son took over in 1990. He ran it with his brother until 2012, when the brother could no longer continue working, and so decided to sell.

Under the sale agreement, the man was to continue as general manager for 10 years, as well as receive certain commissions and benefits.

"The agreement included a vehicle and fuel allowance and set out a commission payment system for prepaid funerals and prearranged funeral packages," said a transcript of the appeal hearing.

Turned sour

But the deal quickly turned sour. In 2013, the new owner directed an employee to track the amount of time the former owner spent at the business and began requiring him to submit timesheets. He also told him he could no longer drive the company vehicle for personal use.

When the new owner became concerned the former owner was throwing away funeral home files, he had all the locks changed. In fall 2013, the former owner went on medical leave, sending a note to the new owner to tell him it was a leave, and that he wasn't stepping down as general manager.

"On Oct. 14, 2013, the respondent went to the funeral home to attend the funeral of his cousin," the transcript said. "He testified that his desk had been moved to the kitchen in the basement of the funeral home and that his picture, which had hung on the wall by the front desk of the funeral home along with pictures of his brother, father, and grandfather, had been removed."

Later that month, the former owner sent the new owner an email requesting a meeting about commissions he said he was owed, deductions from his pay he said were a breach of contract, and other missing payments.

By April 2014, the new owner informed the former owner that he was considered on unsupported leave and if he didn't return, his benefits would be cut off.

"The respondent never returned to work," the transcript said. "There were no further communications between the parties until the respondent’s statement of claim was issued on Sept. 2, 2015."

Not following agreement

The former owner sued, claiming constructive dismissal. The trial judge ruled that the actions of the new owner indicated he was no longer following the terms of the sale agreement because he:

- improperly terminated the respondent’s use of his company vehicle;

- recruited a subordinate employee to track the respondent’s time at work, without notifying him;

- failed to pay the respondent commissions to which he was entitled;

- removed the respondent’s photograph from the funeral home; and,

- changed the locks to the funeral home without notice or explanation.

"He rejected the appellant’s argument that the respondent no longer wanted to continue to work because he regretted having sold the family business, finding that the respondent’s regret arose not simply from having sold the business but from having sold the business and the situation turning out as it had," the transcript said.

The trial judge awarded the former owner $900,000 in salary, $108,000 for vehicle expenses, $90,000 in benefits, $9,000 for a golf membership, and $167,173.83 in commissions.

The appeals judge upheld that ruling, rejecting arguments that the former owner had tacitly agreed to the new owner's actions and that he had waited too long to launch his lawsuit.

He also awarded the former owner $30,000 in court costs.

Read the full transcript here.