Thermal Energy Announces Dismissal of the Appeal Launched by Thomas Hinke

OTTAWA, Sept. 26, 2012 /CNW/ - Thermal Energy International Inc. (TSXV: TMG), a leading provider of custom energy and emission reduction technologies for energy intensive industries worldwide, today announced that the Court of Appeal for Ontario awarded the Company with a victory in its longstanding civil action with its former President, Thomas Hinke.  The Court unanimously dismissed Mr. Hinke's appeal from a recent summary judgment decision of the Ontario Superior Court (in its entirety) and ordered Mr. Hinke to pay the Company $8,000 towards its legal costs.

Background

In a statement of claim filed on October 25, 2005 Mr. Hinke alleges that, among other things:

		i)	Mr. Hinke was wrongfully dismissed from his employment;
		ii)	Amounts are owed to Mr. Hinke in respect of unpaid loans and advances; and,
		iii)	Further amounts are owed for among other things lost reputation and defamation, infliction of mental suffering, abuse of process and punitive and aggravated damages.

Total damages were claimed in the amount of approximately $4 million, plus an as yet undetermined value of share options, interest and legal costs. The Company filed a defense and counterclaim seeking damages from Mr. Hinke in the amount of $5 million which stem from alleged breaches of Mr. Hinke's fiduciary obligations to the Company, oppressive conduct toward the Company and its shareholders and negligence.

In May, 2010, Mr. Hinke brought a motion for summary judgment, seeking judgment on part of his claim. In the motion, Mr. Hinke sought the following damages:

		i)	$398,737 allegedly owing as a result of wrongful dismissal and calculated as 24 months of salary, commissions, and related benefits;
		ii)	$618,810 in alleged unpaid loans and advances; and
		iii)	$87,500 in stock options which are alleged to have vested.

The motion was heard on September 6 and 7, 2011 and on October 18, 2011 a decision was rendered. In its decision on the motion for summary judgment the court:

		i)	Allowed a claim for wrongful dismissal but assessed the damages for the plaintiff's wrongful dismissal not at 24 months but at the equivalent of 18 months of pay in lieu of notice of termination; declined to fix the amount of the damages, suggesting instead that the parties try to agree on the amount; stated that in the absence of the parties' agreement on the amount of damages, the quantification of damages is to be referred to a Master; stayed the execution of the partial summary judgment pending the determination of the outstanding claims at trial; and
		ii)	Dismissed the plaintiff's claim for alleged unpaid loans and advances of $618,810.

The court permitted the remainder of Mr. Hinke's and the Company's claims and counterclaims to proceed to trial. Mr. Hinke's remaining claims include, among other things, lost reputation and defamation, infliction of mental suffering, abuse of process and punitive and aggravated damages.

Mr. Hinke appealed this decision on the motion for summary judgment and, as noted above, on September 25, 2012 his appeal was dismissed and in addition the Court of Appeal ordered Mr. Hinke to pay the Company $8,000 towards its legal costs related to the appeal.

Given the court ordered stay on execution of the partial summary judgment (which stay was upheld on appeal), Mr. Hinke may not compel Thermal Energy to pay him damages (which damages have yet to be quantified) until the remaining issues have been determined or a court orders otherwise. Until the remaining issues are determined, it is unclear what the net balance payable between the parties will be and to which party it is to be paid. In its reasons for decision the court did not comment on the validity or likely outcome of any of these other matters.

The Company has made, and continues to make, attempts to settle this action on a reasonable basis including two attempts at mediation. Nonetheless, at this point the Company continues to believe that the $190,000 provision taken during the fiscal quarter ending November 30, 2009, remains a reasonable estimate of the possible net liabilities resulting from the claim and counter claim. However, if the remaining matters proceed to trial the outcome remains subject to the findings of the Court which may award an amount that is more or less than the Company's current estimate of potential net liabilities.

About Thermal Energy International Inc.

Thermal Energy International Inc. is an innovative cleantech company providing a variety of proprietary and proven energy efficiency, emission reduction, water efficiency, and bioenergy products and solutions to the industrial, commercial and institutional markets worldwide. Thermal Energy is also a fully accredited professional engineering firm, and can offer advanced process and application engineering services. By providing a unique mix of proprietary products together with process, energy, environmental, and financial expertise Thermal Energy is able to deliver significant financial and environmental benefits to its customers.

Thermal Energy's products include; GEM® - Steam traps and condensate return systems, FLU-ACE® - Direct contact condensing heat recovery, and Dry Rex^TM - Low temperature biomass drying systems. These award winning products are effective in a wide variety of industries and applications and have an excellent track record of longevity, proven reliability and performance providing significant energy savings, reduced GHG emissions, improved water efficiency, lower maintenance costs, improved product quality and increased production efficiency.

Thermal Energy International Inc. has offices in Ottawa, Canada as well as Bristol, UK, United States, Italy and China. To find out more about Thermal Energy International Inc. (TSX-V: TMG), visit our website at http://www.thermalenergy.com.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

 

SOURCE: Thermal Energy International Inc.

William Crossland
President and CEO
Thermal Energy International Inc.
613-723-6776
[email protected]

Babak Pedram
Investor Relations
The Equicom Group
416-815-0700 ext.264
[email protected]