Ontario Court of Appeal notes contract signed, timesheets submitted, salary given

The Ontario Court of Appeal has confirmed an employment relationship between an animation corporation and a gaming studio head, given that the latter had signed an employment agreement, received a salary and benefits, and had income tax deducted at source.

The case was Clark v. Walker, 2026 ONCA 634. With gaming engine technology, the appellant D. Clark developed a unique process to make two-dimensional images seem three-dimensional for possible commercial use.

Mr. Clark’s studio, the appellant Moonray Studios Inc., did not satisfy the eligibility criteria for a government research grant.

Parties’ agreement

Thus, Mr. Clark turned to the respondent Yowza Animation Corp., which complied with the government funding requirements. The respondent H. Walker served as Yowza’s chief executive officer.

Mr. Clark and Moonray’s employees signed employment contracts with Yowza, though working at Moonray’s studio in Hamilton. Pursuant to the parties’ agreement:

• The appellants developed the technology, branded as “Toonlight”
• Yowza received the grant funds, which were used to work on Toonlight, make samples for sales pitches, and pay Mr. Clark and Moonray’s employees
• The respondents used their existing goodwill to market Toonlight to potential clients

Ultimately, the parties’ efforts resulted in a contract with Cake Entertainment to use Toonlight in developing a Netflix animated television series based...

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