Clarke v. Syncrude Canada Ltd., 2013 ABQB 252

Court of Queen ’ s Bench of Alberta Citation: Clarke v. Syncrude Canada Ltd., 2013 ABQB 252 Date: 20130502 Docket: 0601 06205 Registry: Calgary Between: John A. Clarke Plaintiff - and - Syncrude Canada Ltd. Defendant Editorial Notice: On behalf of the Government of Alberta identifying information has been removed from this unofficial electronic version of the judgment. _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice A.D.

Macleod _______________________________________________________ [ 1 ] After undergoing a formal investigation conducted by members of the Human Resources Department of Syncrude and undergoing a termination hearing, presided over by his supervisor, the Plaintiff John Clarke was summarily terminated for “cause” by the Defendant Syncrude Canada Ltd. on May 16, 2005. The Plaintiff brings this action claiming damages and alleging that he was dealt with unfairly. He says that he should not have been terminated without notice. He further claims that he was wrongfully deprived of

bonus and stock option payments for 2004, and retiree status. He claims extra damages above and beyond that which he lost by the failure of the Defendant to give adequate notice. He claims this because in his view he was dealt with egregiously and without regard to due process. The result of this was to severely damage his reputation and to terminate a very promising career while he was still only 55 years of age. Background [ 2 ] Syncrude Canada Ltd. is a major corporation which in many respects pioneered the exploitation of the prolific oil sands in northern Alberta outside Fort McMurray.

Its shareholders include major players in the conventional oil and gas industry. [ 3 ] For twenty-one and a half years Mr. Clarke worked for Syncrude in various capacities as a Chartered Accountant commencing in 1983 and rising to the position of Treasurer by 1995. [ 4 ] When the responsibilities of the Treasurer and the Comptroller were merged he became the Assistant Comptroller in 2003 reporting to the Comptroller, Gary Brennan. [ 5 ] It is common ground that Mr. Clarke was a good employee performing at a high level. His particular expertise was in managing the large pension funds for Syncrude personnel.

He achieved a high level of seniority within the company and had every expectation that he would one day become the Comptroller. As an executive he became eligible as a member of the private payroll group to incentives, bonuses and stock options based upon the company’s performance. Over the relevant period he had enjoyed rewarding remuneration for his efforts. [ 6 ] During the course of his career with Syncrude he supervised many employees and was a beneficiary of the many courses sponsored by Syncrude and others.

He was very familiar with corporate policies dealing with the treatment of employees and external contacts. He participated actively in outside activities with the Boy Scouts, Junior Achievement, and the Alberta Teachers Retirement Fund.

He was active in the Chartered Accountant Institutes and in 1998 he was the recipient of the prestigious designation “Fellow Chartered Accountant”. [ 7 ] As the senior executive in charge of pensions and retirement benefits he was a regular invitee to Client Partnership Council meetings sponsored by Sun Life Financial which was Syncrude’s record keeper and an advisor with respect to its pension fund. The Client Partnership Council sessions were good opportunities for those like Mr. Clarke to meet with his peers with other major Sun Life clients and with senior executives of Sun Life.

It usually involved a social evening of drinks and dinner followed by a day of meetings hosted and chaired by Sun Life Financial executives. [ 8 ] Mr. Clarke attended such a meeting in Toronto on the evening of November 15 and Tuesday, November 16, 2004. Complaints about Mr. Clarke’s behaviour were reported to Mr. Brennan on April 1, 2005 following which Mr. Clarke was subjected to the investigation and termination hearing referred to above. It is these events which were largely the subject matter of the trial before me. In addition to Mr.

Clarke I heard from 9 employees or former employees of Sun Life as well as 8 employees or former employees of Syncrude. There was an Agreed Statement of Facts and many Exhibits which in large part focussed on the investigation, the termination hearing and their consequences. The Meetings In Toronto [ 9 ] Mr. Clarke flew to Toronto on November 15, 2004. His flight left Edmonton at 9:00 am. Mr. Clarke testified that he has a fear of flying which often results in his having a drink or two on a flight to calm his nerves. Mr.

Clarke claims that this fear is notorious but none of the other witnesses who testified were aware of it. Mr. Clarke does not recall if he had anything to drink on the plane but given that many who witnessed his behaviour that evening testified that he was louder than usual I think it is likely that he did consume alcohol during the flight. [ 10 ] One of the troubling aspects of Mr. Clarke’s participation in the Client Partnership Council meetings is his almost complete lack of recall as to the events of the evening of November 15 th and the following day. This troubled the investigators and the

management at Syncrude and I must say, it troubled me. Of those who testified from Syncrude or Sun Life, and this included many witnesses who had known Mr. Clarke for many years, none suggested that Mr. Clarke had a past problem with alcohol. Nor did Mr. Clarke, and he has not sought treatment for any alcohol abuse before, then, or since. Nor did Mr. Clarke or anyone who witnessed his behaviour suggest that he was inebriated other than the fact that he was loud and acting apparently out of character. No one who testified could recall a similar display in the past from Mr. Clarke.

Only one of the witnesses testified about one incident before the infamous evening which described an inappropriate comment by Mr. Clarke, but only mildly so. [ 11 ] When he arrived at his hotel there were a number of other participants in the meetings checking in at the same time. The participants included clients and Sun Life personnel from across the country. [ 12 ] One of those was LS who worked in Sun Life Financial’s Calgary office. Mr. Clarke appeared jovial and kissed her hand. At trial she said that she could feel his tongue on her hand.

That particular aspect was not included in her report to Sun Life or in her subsequent statement. Mr. Clarke has no recollection. This incident played no role in the conclusion of the investigation by Syncrude nor in the decision to terminate Mr. Clarke. [ 13 ] Social events that evening took place in downtown Toronto at a restaurant where they made a room available for the reception and dinner which followed an hour of drinks. Upon arrival at the reception Mr. Clarke does recall that he enjoyed the hospitality of his host and had more than one martini.

I am sure he had several. [ 14 ] The cocktail reception was designed as a meet and mingle event with all of the Sun Life and client personnel arranged in standing groups. During the latter part of the cocktail hour Rick Headrick, one of the Sun Life executives, observed Mr. Clarke slapping or grabbing Lori Bak’s (now Lori Landry) backside. Ms. Bak jumped and turned red. Mr. Clarke laughed. Mr. Headrick was shocked and somewhat appalled. Ms. Bak could not say whether it was a grab or a slap but she was humiliated. Nadia Darwash also witnessed it. A number of people are reported to have seen Mr.

Clarke continue to drink through the dinner hour. I am sure that he did because he continued to act in an inappropriate manner. He was seated at a table with Randy Colwell who was a Sun Life executive from the Calgary office and who was the direct interface with Mr. Clarke involving Syncrude’s dealings with Sun Life Financial. Also at the table next to Mr. Clarke was Liz Pecile. Mr. Clarke is reported to have made a racial remark at the table but no one who testified could remember precisely what was said. At one point he leaned over to Ms.

Pecile and grabbed her knee under the table which caused her to feel very uncomfortable. She immediately excused herself and went to the washroom and telephoned her children. She felt violated and while she did return she did not eat her dinner. She thought Mr. Clarke was drunk and loud and she thought he consistently intruded on her “space”. Again Mr. Clarke does not recall much at all. Under all the circumstances, I think it is fair to say that Mr. Clarke did grab her knee, made a number of inappropriate comments, and behaved in general like an obnoxious boor. [ 15 ] Mr. Colwell testified that he found Mr.

Clarke’s behaviour somewhat embarrassing and others at the table appeared uncomfortable and were trying to ignore Mr. Clarke. Ms. Pecile kept rolling her eyes and was clearly put off by Mr. Clarke’s flirtatious behaviour. At least one of the comments that Mr. Colwell heard was both inappropriate and obscene. Again Mr. Clarke can only state that he has no memory of this and it is out of character for him to behave this way. It was reported that Shirley Powell, one of the persons seated at Mr. Clarke’s table and a representative of FedEx, was offended by a derogatory remark against Asians uttered by Mr. Clarke.

Another client complained that Mr. Clarke had said he wanted to see her in a “tee shirt and thong”. [ 16 ] Near the end of the meal Lucille Eaton, a Sun Life employee, went over to say good night to Mr. Clarke and he pulled her onto his lap. While she was taken aback and felt that his conduct was inappropriate Ms. Eaton did not feel threatened. Mr. Colwell witnessed this event and Ms. Eaton was slightly “ticked” that he did not intervene on her behalf. [ 17 ] Following the dinner Mr. Clarke and Mr. Colwell and some others from Sun Life including LS went upstairs to a bar where Mr.

Clarke continued to gather steam. He was heard asking two of the Sun Life employees to guess the size of the bartender’s “tits”. They were appalled. Mr. Clarke does not recall and I am urged to find that he did not use the word “tits” but the word “breasts”. Nothing turns on that. He made a number of derogatory comments about Sun Life personnel and at one point said to Ms. Smith “you and [LS]and Trish do it for me physically but not intellectually.” [ 18 ] During the cab ride back to the hotel Mr. Clarke was seated between Ms. LS and Trish Colley in the back seat and Mr. Colwell was in front. Mr.

Clarke put his arm around Ms. LS and held her close. She tried to shrug him off but he then put his hand on her right thigh and up under her skirt. He pulled her closer and squeezed his hand which by this time was just below her underwear on her right thigh. She tried to push him away and said “stop it” on more than one occasion. Ms. Colley apparently called upon Mr. Clarke to

“leave her alone” following which he stopped with a laugh. Ms. LS was visibly upset by this event when she testified, notwithstanding that it occurred some 8 years ago. She said that she received a bruise on her leg. She felt violated and angry. She told her husband, who was equally angry. This whole event was made more awkward when subsequently, because of Mr. Colwell’s impending sabbatical, Ms. LS became the major Sun Life interface with Syncrude in Calgary. [ 19 ] Immediately after the cab ride Ms. LS informed Randy Colwell as to what occurred. She suggested that he stick with Mr.

Clarke, as he was now following Ms. Colley, who was walking toward her car to go home. Mr. Colwell caught up with them and invited Mr. Clarke to have a beer at Gretzky’s Bar which was close by. Mr. Colwell and Mr. Clarke went off to Gretzky’s for a beer, and while the level of conversation did not improve much, nothing really turns on what happened there. [ 20 ] The next day Mr. Clarke showed up late for the business meeting. There was a complaint that he was rude to another Sun Life client. Nothing much turns on that either. [ 21 ] I have not captured all of the allegations nor repeated all of the evidence.

But I think the above account captures the essence of the evening as it relates to Mr. Clarke’s activities. Mr. Clarke’s remarkable lack of recollection may well be related to his earnest wish that the evening had never happened. The Syncrude investigators, while surprised, indicated that Mr. Clarke was apparently sincere and consistent in his lack of recollection. Similarly I have no basis upon which to say that his memory loss is feigned. I am certain that Mr. Clarke earnestly hoped that those who witnessed his behaviour would forget about the evening as well. Alas, that was not to be.

The Aftermath [ 22 ] In the months that followed the November 2004 Client Partnership Council meeting, Mr. Clarke’s behaviour was addressed only on an informal level. Mary DePaoli, a senior officer at Sun Life, took formal action in late March 2005 when she learned the full extent of the night’s events. She was especially horrified by the alleged events in the cab. [ 23 ] Ms. DePaoli contacted Mr. Brennan in early April 2005 regarding Mr. Clarke’s behaviour and Sun Life’s desire to have Mr. Clarke removed as Syncrude’s point of contact with Sun Life. Mr. Brennan passed these allegations on to Mr.

Clarke and initiated a formal disciplinary investigation. Mr. Clarke responded both verbally and in written form to the allegations. The investigation continued. Sun Life employees were interviewed by Sun Life, while Mr. Clarke was interviewed by the Syncrude investigators. On May 16, 2005 Mr. Clarke reviewed the final investigative report, a termination hearing was held, and Mr. Clarke was dismissed for cause. [ 24 ] On May 19, 2005 Mr. Clarke appealed the investigation and his termination. Mr.

Clarke alleged that more information would have been obtained had Syncrude investigators interviewed Sun Life officials. Mr. Clarke did not provide any evidence that this would have produced a different result. Both the investigation and his termination were upheld. [ 25 ] As a result of his dismissal Mr. Clarke commenced the present action. Issues [ 26 ] There are three main issues in this action: 1) did Syncrude have just cause to summarily dismiss Mr. Clarke? 2) was Syncrude’s conduct towards Mr. Clarke actionable? and, 3) which entitlements were due to Mr. Clarke upon termination?

[ 27 ] Specifically, these issues raise the following questions: 1) was Mr. Clarke’s misconduct serious enough to justify dismissal for cause? 2) should Mr. Clarke have been allowed to retire? 3) did denying Mr. Clarke access to the full witness statements made by Sun Life employees deprive him of procedural fairness? 4) did the termination hearing and appeal process deprive Mr. Clarke of procedural fairness? 5) was Mr. Clarke entitled to his bonus payments? 6) was Mr. Clarke entitled to his unvested phantom stock options? and, 7) when was the appropriate valuation date for Mr. Clarke’s phantom stock options?

The nature of Mr. Clarke ’s misconduct [ 28 ] Mr. Clarke’s conduct constituted just cause for

summary dismissal. [ 29 ] Mr. Clarke suggested that in a case of alleged sexual misconduct amounting to just cause for

summary dismissal the burden of proof is raised from the normal civil standard of a balance of probabilities. However, the case law confirms the normal civil standard applies: Hodgins v St John Council for Alberta , 2007 ABQB 275 at para 37 , [2008] 424 AR 1. While not all the allegations were completely confirmed at trial, I find that Mr. Clarke’s behaviour was egregious. The incident in the cab is critical. The question of bruising to Ms. LS’s leg is uncorroborated and unconfirmed. However, I am convinced on a balance of probabilities that Mr. Clarke made an unwanted sexual advance. This invasion of Ms.

LS’s personal space effectively amounted to a sexual assault. [ 30 ] Sexual harassment is defined at paragraph 90 of Foerderer v Nova Chemicals Corp , 2007 ABQB 349 , [2008] 418 AR 64 (footnotes excluded): [A]n abuse of economic and sexual power. Any sexually oriented practice that endangers an individual’s continued employment, negatively affects their work performance, or undermines their sense of personal dignity is sexual harassment.

Sexual harassment includes a broad array of activity, ranging from the telling of sexually abusive jokes or the use of other sexually charged language, the unwelcome display of pornography, to sexual touching. [ 31 ] As the above quote suggests, misconduct lies along a spectrum ranging from less serious to more serious. Paragraph 51 of Hodgins reads: In assessing the seriousness of a particular instance of sexual harassment, it is necessary to develop a context.

Clearly there is a scale or continuum of seriousness from the relative innocuous joke with a sexual connotation through groping and other conduct which is unmistakably sexual to acts of sexual violence. It seems to me that where impugned conduct falls on that continuum, would depend upon the circumstances in which the acts occurred or the words were spoken, the intent of the offender, the reaction of the victim, and the reaction of others who have seen or heard the offending behaviour.

[ 32 ] Finally, the Nova Chemicals case provides a good

summary of the factors a trial judge may hold in contemplation when considering how to characterize an incident of sexual harassment at paragraph 91: (

i) the nature and degree of the conduct; (ii) whether the offending employee was told the impugned conduct was unwelcome or offensive; (iii) continuation of the unwelcome or offensive behaviour after being advised that it was unwelcome; (iv) the nature of the employment relationship between the offending employee and victim, particularly if the offending employee was in a position of authority over the victim; (

v) the nature of the employment relationship between the offending employee and employer, including their length of service and position, and whether there were implied or express terms of the employment contract which gave rise to additional obligations on the employer’s part, such as warnings or the opportunity to respond; (vi) whether any warnings had been given that the misconduct was inappropriate and that dismissal was a possible consequence of further similar misconduct; (vii) the existence of a formal and known sexual harassment policy that was enforced by the employer; and (viii) condonation of the behaviour by the employer. [ 33 ] The materials provided by counsel for Mr.

Clarke include cases where a single incident of sexual touching was determined to be of a milder nature: Quirola v Xerox Canada Inc, [1996] 16 CCEL (2d) 235, CLLC 210 -019 (Ont Ct J (Gen Div)); and Tse v Trow Consulting Engineers Ltd , [1995] 14 CCEL (2d) 132 (Ont Ct J (Gen Div)). [ 34 ] It is worth noting that each of these cases had mitigating factors, including: the lack of a superior/subordinate relationship, lack of feeling physical danger, and a failure by the employer to communicate a policy of zero tolerance toward sexual harassment. [ 35 ] The cases provided by Syncrude ( Nova Chemicals , and van Woerkens v Marriott Hotels of Canada Ltd , 2009 BCSC 73 , [2009] 71 CCEL (3d) 87) certainly provide evidence of a trend towards a decreasing tolerance for sexual harassment.

In contrast to Quirola and Tse , paragraph 162 of Nova Chemicals states: Sexual harassment involving a non-consensual physical component is at the most serious end of the spectrum. Since such conduct is a criminal act and an employer is not obliged to warn employees not to commit criminal acts, one transgression can warrant

summary dismissal. [ 36 ] Overall, I characterize Mr. Clarke’s behaviour as being on the serious end of the spectrum. Mitigating factors include: lack of a management/hierarchical relationship, a single out-of-character evening, and the verbal nature of much of the misconduct. However, the aggravating factors are substantial: decreasing tolerance for sexual harassment in the workplace due to the standardization and proliferation of employer zero tolerance sexual harassment policies over time, a position of seniority within Syncrude, a customer relationship, and no condonation by Syncrude. Most aggravating of all are the incidents of sexual touching, especially in the cab.

[37] The corollaries of a spectrum of less serious to more serious sexual harassment are the concepts of “progressive discipline”and proportionality: Hodgins at para 49. Under these principles an employer is under a duty to discipline less serious misconduct withless serious punishment. The most serious punishment is dismissal. Repeated instances of less serious behaviour can progressivelyamount to a level warranting dismissal. However, a single serious event can be sufficient to justify immediate

summary dismissal:Gonsalves v Catholic Church Extension Society of Canada, (ON CA), [1998] 164 DLR (4th) 339 at para 15, [1999]39 CCEL (2d) 104 (Ont CA). I find the serious misconduct in Mr. Clarke’s case falls within the

summary dismissal category. Procedural fairness and bad faith [38] Cases of wrongful dismissal are matters of private law which do not attract the requirement of a judicial review-styleprocedural fairness analysis as found in public law. This was confirmed in Leach v Canadian Blood Services, 2001 ABQB 54, [2001]284 AR 1, at paragraph 143: This arises from the older, common law rule that natural justice does not apply to ordinary employment (master-servant) situations.However, this older rule was confirmed in Knight v. Indian Head School Division No. 19, (SCC), [1990] 1 S.C.R. 653;106 N.R. 17; 83 Sask.

R. 81; [1990] 3 W.W.R. 289; 69 D.L.R. (4th) 489; 43 Admin. L.R. 157; 30 C.C.E.L. 237; 90 C.L.L.C. 14,010 atp.501, where L’Heureux-Dubé, J. adopted Lord Reid's threefold classification of employment relationships, found in the classic case ofRidge v. Baldwin, [1963] 2 All E.R. 66 (H.L.), which reiterated that in only the latter two categories of employment (i.e., “at pleasure”and “office holder”) is there a requirement of procedural fairness.

In the first category (i.e., common law “master-servant”), the employerdoes not have an obligation to act fairly, when deciding to dismiss an employee. [39] Further, procedural deficiencies do not preclude an affirmative finding that cause existed. As explained at paragraph 149 ofvan Woerkens: [F]laws in the defendant’s investigation, although troubling, do not render invalid the defendant’s decision to terminate the plaintiff’semployment for cause.

At common law, where the relationship between the parties is governed by a contract of employment, theemployer is under no legal duty to provide a fair hearing to an employee before terminating the employment contract. [40] However, an employer risks a claim of bad faith and damages if it ignores considerations of fairness.

As Bastarache J. statedin Honda Canada Inc v Keays, 2008 SCC 39 at para 57, [2008] 2 SCR 362: Damages resulting from the manner of dismissal must then be available only if they result from the circumstances described in Wallace[v United Grain Growers Ltd, (SCC), [1997] 3 SCR 701, [1998] 152 DLR (4th) 1)], namely where the employerengages in conduct during the course of dismissal that is “unfair or is in bad faith by being, for example, untruthful, misleading or undulyinsensitive” (para. 98). Syncrude’s statements to Mr. Clarke regarding the option of retirement [41] In the period after Mr.

Clarke’s misconduct, but before the investigation began, Mr. Clarke contractually qualified forretirement. Initially Syncrude urged Mr. Clarke not to retire. Later Mr. Clarke was told that it didn’t matter if he retired; certain benefitscould be lost as result of the investigation into his misconduct. On this basis Mr. Clarke chose not to retire and allow the investigationprocess to reach its conclusion. A claim of bad faith may be made out if Syncrude misled Mr. Clarke in this regard. [42] I find that Mr. Clarke has failed to make out this claim. [43] Syncrude was correct in saying Mr.

Clarke could not use retirement as a way of preempting the consequences of theinvestigation into his misconduct. Mr. Clarke’s contractual qualification to be treated as retired was preempted by his misconduct and theright of Syncrude to bring their contractual relationship to an end. To find otherwise would be to grant a misbehaving employee a blankcheque as long as they retired prior to an employer determining the existence of just cause. This is a legal outcome which the authorities

do not support. [ 44 ] Syncrude treated Mr. Clarke as a retiree in certain respects but not in others. They were entitled to do so. Mr. Clarke was entitled to his full pension. However, Syncrude was not legally obligated to treat Mr. Clarke as voluntarily retired in relation to all his compensation. At the end of the day Mr.

Clarke did not retire and could not retire because he was terminated for cause. [ 45 ] Effectively, just cause constitutes a repudiation of the employment contract. “With just cause, an employee is dismissed without notice; with just cause, the employer is entitled to consider the employment relationship at an end, without further obligations”: Randall Echlin and Matthew Certosimo, Just Cause: The Law of

Summary Dismissal in Canada , looseleaf (Aurora, Ont: Canada Law Book, 2011) at 1-1. [ 46 ] An employer is granted a reasonable time after becoming aware of the misconduct to consider and accept this repudiation. After the passage of a reasonable amount of time the employer will be deemed to have condoned the employee’s misconduct and is precluded from exercising this option at a later time: Echlin and Certissimo at 2-4. [ 47 ] While there was some delay between Mr. Clarke’s misconduct and his termination, this was attributable to Sun Life not reporting the incidents to Syncrude until April 2005.

Once Syncrude learned of the allegations against Mr. Clarke, they acted swiftly in initiating an investigation and making a determination on dismissal. Syncrude did not condone Mr. Clarke’s behaviour. [ 48 ] An employee may wish to end the employment contract by retiring or quitting before the employer’s decision to accept or reject an employee’s repudiation.

However, since it was the employee’s misconduct that triggered a repudiation and end to the contract, the guilty party is precluded from adducing an alternative ground for ending the contract - such as quitting or retiring - prior to the innocent party’s decision on the original repudiation. If an employee does retire or quit, an employer may still have the legal grounds to consider the employee summarily dismissed for just cause regardless of this choice. [ 49 ] Mr.

Clarke provided the case of De Groot v Tecumseh (Town) , 2010 ONSC 5748 at paras 20-21 , to support the proposition that an employment contract, and therefore the right to preempt dismissal by retirement, remains in effect until the expiry of the notice of termination period. [ 50 ] De Groot is distinguishable from the present case in that it involved a notice of termination period during which the employment contract was still intact. In a case of just cause and

summary dismissal the contract has been repudiated and is no longer intact. The right to retire has been lost. Paragraph 25 of De Groot makes this abundantly clear (emphasis added): The plaintiff's rights [to exercise his right to retire] under the contract cannot be terminated by an employer exercising its lawful rights so long as the contract remains in existence and the plaintiff has not repudiated the contract. Denying Mr. Clarke access to the full witness statements made by Sun Life employees [ 51 ] Mr.

Clarke alleges that Syncrude’s failure to afford him with the full content of the witness statements obtained in the course of its investigation amounted to bad faith dealing. [ 52 ] I find that this claim is not actionable. [ 53 ] Obviously, the employee is entitled to know the case he has to meet: Stone v SDS Kerr Beavers Dental, A Division of Syborn Canada Ltd , [2008] CLLC 210-009 at para 121 (Ont Sup Ct). However, an employer is not under any specific obligation to provide an employee subject to dismissal proceedings with copies in full of the statements made against him.

Providing the substance of the complaints is sufficient to allow an employee to know the allegations made against the employee and provide a complete response: Kinch v A [...] Ltd , 1998 ABQB 171 at para 56 .

[54] A more direct statement on the matter, not provided by either of the parties, comes from Masters v Ontario (1994), (ON SC), 18 OR (3d) 551 (Ont Ct J (Gen Div)(Div Ct)).

There, Adams J. made favourable reference to the Englishconsideration of the question of the need to disclose witness statements in full at page 588: Rejecting a very similar argument where reputations were at stake in an investigatory context, Lord Denning in [Re Pergamon Press Ltd,[1971] Ch 388, [1970] 3 All ER 535 (CA)] at pp. 399-400 stated: Seeing that their work and their report may lead to such consequences, I am clearly of the opinion that the inspectors must act fairly.

Thisis a duty which rests on them, as on many other bodies, even though they are not judicial, nor quasi-judicial, but only administrative: seeReg. v. Gaming Board for Great Britain, ex parte Benaim and Khaida [1970] 2 Q.B. 417. The inspectors can obtain information in anyway they think best, but before they condemn or criticize a man, they must give him a fair opportunity for correcting or contradictingwhat is said against him. They need not quote

chapter and verse. An outline of the charge will usually suffice. [55] Here, Mr. Clarke was provided with an outline of the allegations made against him through his communications and contactwith Syncrude’s investigators. While these statements were not provided in full, I find they were provided in sufficient detail to allow forMr. Clarke to respond. Termination hearing and appeal process [56] Mr. Clarke argued both the termination hearing and appeal process imposed unfair reverse-onus burdens. Specifically, thetermination hearing required Mr. Clarke to show why the results of the investigation were incorrect.

On appeal, Mr. Clarke was requiredto provide evidence suggesting a different investigative outcome was possible. [57] I find that this treatment of Mr. Clarke is not actionable. [58] Private employment dismissal proceedings are not a court of law. A reverse-onus situation does not necessarily or absolutelyfrustrate the opportunity to know and respond to allegations. I find that Mr. Clarke was given ample opportunity to respond during theinitial termination investigation, at the termination hearing, and on appeal. Mr. Clarke was free to provide any relevant evidence at everystage of this process. Mr.

Clarke’s lack of memory about the events in question is unfortunate. However, this does not diminish theevidence gathered by Syncrude’s investigators. Mr. Clarke’s bonus payments [59] Mr. Clarke was contractually precluded from receiving his bonus payments. [60] I include under the term “bonus payments” Mr. Clarke’s bonus award and merit increase, gainshare payments, and hisparticipation in the Syncrude Higher Education Assistance Plan. As contractually-controlled and discretionary payments, Syncrudeoperated within its legal rights when it denied Mr.

Clarke these payments on his termination. [61] As stated above, just cause effectively constitutes a repudiation of the employment contract. Nevertheless, an employeeremains entitled to at least all “wages commensurate with the amount of satisfactory service he or she provided over the pay period”:Geoffrey England, Roderick Wood, and Innis Christie, Employment Law in Canada, looseleaf (Markham, Ont: LexisNexis, 2005) atpara 15.95. [62] Mr. Clarke was entitled to his salary in return for work performed in the period in between the repudiatory misconduct and histermination.

Syncrude paid this salary but it denied Mr. Clarke’s bonus payments on the basis that they were discretionary andcontingent upon performance compliant with Syncrude’s sexual harassment policy.

[63] Counsel for Mr. Clarke provided the case of Hansen v Altus Energy Services Partnership, 2010 ABQB 820 at para 30, [2011]38 Alta LR (5th) 256, to advance the principle that a bonus scheme may become non-discretionary, if integral to an employee’s wage orsalary structure. Hansen is distinguishable in that it involved a situation of assessing damages over an entitled notice period. No suchnotice period entitlement is applicable here. [64] Conduct giving rise to

summary dismissal may justify denying a discretionary performance-based bonus payment. In Simpsonv Consumers’ Association of Canada, (ON CA), [2002] 57 OR (3d) 351 at para 95, 209 DLR (4th) 214 (Ont CA), anemployee was awarded his bonus payment for the year prior to misconduct amounting to just cause, but denied payment for the year inwhich the misconduct occurred. That is the situation here. [65] I take it as an implied term of any performance-based bonus scheme that the discretion to deny payment includes the groundof an employee’s repudiation of the employment contract.

Syncrude identified the statement, “[a]wards will not be granted to belowstandard performers” from its Senior Management Performance Award Plan Text as proof that Mr. Clarke’s bonus award and meritincrease were explicitly intended to be discretionary and that Mr. Clarke ought to have known this. I am also satisfied that in the modernworkplace below standard performance includes non-compliance with company sexual harassment policies rising to the level of justcause. [66] The policy governing Mr.

Clarke’s gainshare payments states that “terminated employees [including company initiatedterminations for cause] will not be eligible to receive gainshare... payments made after the date of termination”. As Mr. Clarke falls intothe category of “company initiated terminations for cause” he was not entitled to the gainshare payments that would have been made tohim as a retiree. [67] Employees terminated for cause are not included in the list of eligible employees under the Syncrude Higher EducationAwards Program Guidelines. Accordingly, Mr.

Clarke’s child was no longer eligible to receive payments under this plan when Mr.Clarke was terminated for cause. Mr. Clarke’s unvested phantom stock options [68] Mr. Clarke is not entitled to his unvested phantom stock options. [69] These payment were not unconditional grants; they were governed by the applicable plan text. Under the plan text, Mr.Clarke’s unvested options were cancelled in the event of involuntary termination. [70] Vesting arrangements may be set by contract. Syncrude argued the phantom stock options were governed by the contractualterms found in annual phantom stock options plan texts.

These plan texts purported to govern both vested and unvested rights. [71] Mr. Clarke argued his phantom stock options were governed, not by any contractual text, but by the unwritten understandingthat these benefits had been granted to Clarke independently of any contingencies in the employment relationship. [72] Syncrude provided the Hansen case as an example of clear and unambiguous language in a stock option agreement deprivinga dismissed employee of the benefit of stock options: at paras 65-66. Mr.

Clarke provided the case of Hibberd v HurricaneHydrocarbons Ltd, 2006 ABQB 707, [2007] 407 AR 1, for a different purpose, but it too constitutes an example of a clear andunambiguous written term of an option agreement governing over an oral understanding: at para 56. Critically, in both cases theapplicability of the written text to the stock options had been factually determined. [73] Here, I find Mr. Clarke knew or ought to have known his phantom stock options were intended to be governed by theapplicable plan text.

Each letter accompanying the granting of phantom stock options included reference to an external handbookregarding the mechanics and administration of the options. I conclude that the phantom stock option grants were not stand-alonedocuments. In the circumstances, the accompanying letters were an important part of the contract between the parties.

[74] It is unreasonable that a sophisticated corporation like Syncrude intended their unilateral offer of phantom stock options to begoverned as a stand-alone document under an unwritten understanding of how they were to function. Further, Mr. Clarke, while not alawyer himself, was also a sophisticated contracting party. It was reasonable to expect Mr. Clarke to make reference to all the externaldocuments and assistance necessary to fully understand the terms of the phantom stock options.

The letter accompanying each grantspecifically and clearly called for such external reference. [75] I agree with Syncrude that since the 2004 change in the plan text was not properly communicated to Mr. Clarke, the languageof the 2002 plan text should govern. Under the 2002 version, in the case of involuntary termination, vested options were to be granted,while unvested options were to be cancelled. Therefore Mr. Clarke is entitled to his vested options, but not entitled to his unvestedoptions. The appropriate valuation date for Mr. Clarke’s vested phantom stock options [76] Mr.

Clarke was deprived of having his vested phantom stock options valued on the appropriate date. [77] The appropriate valuation date was in July 2005 in accordance with Syncrude’s valuation procedure. As previouslyestablished, the 2002 plan text governs. This document states that in a case of involuntary termination: Syncrude will exercise the vested options at the next valuation date for the benefit of the option holder.

Under the heading “Exercise of phantom stock options” the 2002 plan text states: Employees have a ten business day period beginning on the date the valuation information is provided in which to exercise theirphantom options each quarter. The valuation information will be communicated to employees as soon as possible after the valuation date. [78] Syncrude argued that the “next valuation date” included the entire ten day period during which an option holder may exercisetheir options. Mr. Clarke was terminated on May 16, 2005, a date during which a quarterly 10-day exercise period was open.

Under thisinterpretation, the correct valuation date was May 2, 2005, the date corresponding with the May quarterly exercise period. [79] Mr. Clarke argued “valuation date” referred to the one calendar day on which the value of exercisable phantom stock optionswas determined. Since Mr. Clarke was terminated after the May 2, 2005 valuation date had passed, the next appropriate date was theupcoming July quarterly valuation date, regardless of any open exercisable period. [80] The plain language of the 2002 plan text establishes the exercise period and the valuation date as two distinct and separateconcepts.

The terms “exercise period”, “valuation date”, and “involuntary termination” are not defined, but their meanings are easilyascertainable. If Syncrude wished to pay out involuntarily terminated option holders during the next or currently open exercise periodthey could have plainly said so in the plan text. [81] I accept that the 2002 plan text grants Syncrude the ability to make final determinations regarding the

interpretation of itsplan. However, this does not displace general principles established at law applicable to stock options and bonus entitlements.

Theseprinciples include giving an employee the benefit of any ambiguity in contractual terms, since it was the employer who drafted theagreement: Taggart v Canada Life Assurance Co, (ON SC), [2005] 45 CCPB 138 at para 40, 39 CCEL (3d) 48 (OntSup Ct), aff’d [2006] 50 CCPB 163, CLLC 210-007(Ont CA). [82] Additionally, the 2002 plan text states vested options will be exercised “for the benefit of the option holder.” This languageaffirms that the option holder’s best interests should be held in contemplation by Syncrude when determining the appropriate valuationdate.

[ 83 ] If there was some confusion around the correct valuation date, Syncrude should have provided their employee, Mr. Clarke, with the benefit of the doubt and held Mr. Clarke’s best interests in contemplation. This meant giving Mr. Clarke a choice between valuation dates if there was any ambiguity over the appropriate date. [ 84 ] In any event, I find that Mr. Clarke is entitled to the July valuation date. Disposition [ 85 ] Mr. Clarke’s claim of wrongful dismissal is dismissed. [ 86 ] Mr.

Clarke’s claim for entitlements due upon termination is dismissed except to the extent that his vested phantom stock options were undervalued. Syncrude is ordered to pay Mr. Clarke the difference in value between the payout of his phantom stock options on the May valuation date and the July valuation date with interest as prescribed by the Judgment Interest Act , RSA 2000, c J-1. [ 87 ] The parties may speak to costs. Heard on the 15, 16, 18, 19, 22, 23, 24, 25, 26, 29, 30 and 31 st days of October and the 1, 5, 6 and 7 th days of November, 2012. Dated at the City of Calgary, Alberta this 2 nd day of May, 2013.

A.D. Macleod J.C.Q.B.A. Appearances: Laurie M. Robson / Sharon E. Borgland Borden Ladner Gervais LLP for the Plaintiff Barbara B. Johnston / Taylor Armfield Fraser Milner Casgrain LLP for the Defendant