On August 10, 2026, the Ontario Court of Appeal released Hill v. 1359768 Ontario Inc. (B&B Towing), 2026 ONCA 577, clarifying the analytical framework for frustration of employment contracts in the context of employee disability, and providing important guidance on when company vehicles and cellphones constitute compensable employment benefits upon wrongful dismissal.

Quick Hits

• In Hill v. 1359768 Ontario Inc. (B&B Towing) (2026 ONCA 577), the Ontario Court of Appeal unanimously held that a trial judge did not err in finding that an employment contract was not frustrated where an employee’s physical limitations were temporary, could be accommodated, and did not prevent the employee from performing the essential duties of his position within a reasonable time.
• However, the court allowed the appeal in part on the issue of damages, holding that the trial judge erred in awarding more than $125,000 in damages for the loss of use of a company tow truck and cellphone that were work tools rather than personal employment benefits.

The decision reinforces the high threshold employers must meet to establish frustration and provides a practical framework for distinguishing compensable fringe benefits from mere employment tools in damages assessments.

The Facts

Jack Hill worked for B&B Towing for approximately seventeen years as its “road boss,” managing fifteen to twenty-seven drivers, ordering parts, maintaining vehicles, handling complaints, hiring and discharging...

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