Motta v Davis Wire Industries Ltd, 2019 ABQB 899

Court of Queen’s Bench of Alberta Citation: Motta v Davis Wire Industries Ltd, 2019 ABQB 899 Date: 20191126 Docket: 1501 05386 Registry: Calgary Between: Steven Owen Motta Plaintiff - and - Davis Wire Industries Ltd and Continental Steel Ltd Defendants _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice N.E. Devlin _______________________________________________________ [ 1 ] The plaintiff worked for the defendant companies from May 17, 1997 to May 17, 2013, when he was terminated, ostensibly for cause.

He sues his former employer for wrongful dismissal, seeking damages in lieu of lost wages, benefits and holiday entitlements. He also asks for a payout of unused vacation time he claims he was permitted to carry over for a number of years. The defendants answer this claim by asserting that the plaintiff was incompetent, misled them intentionally, behaved inappropriately, and was rightfully dismissed. The Parties

The defendants [ 2 ] Davis Wire Industries [“Davis”] and Continental Wire Cloth [“CWC”] are both corporations owned by David Lloyd [“Lloyd”]. Davis manufactures raw steel into metal wire. CWC manufactures metal wire into screens of various dimensions and specifications. The operations of the two companies are both based in Vancouver, British Columbia, where Lloyd has principally resided. The defendant Continental Steel is the parent company of CWC. [ 3 ] The defendants’ operations are heavily intertwined and many employees fulfil dual roles.

In Alberta, the two companies share premises in both Calgary and Edmonton. The Calgary facility is much larger, serving both as a distribution point for Davis products and a manufacturing location for wire screens under the auspices of CWC. At the times relevant to this action, the Edmonton location was principally a distribution point, but also had a limited manufacturing capacity for a small number of specialized screens. In particular, those known as “shale shakers” and “Rotex” screens are relevant to this case. [ 4 ] At certain points, the Edmonton operation was down to a single employee.

By contrast, Calgary had half a dozen or so office staff, along with a larger cadre of plant workers, together with those supporting them in a shipping/receiving capacity. The evidence demonstrated that there were a lot of close personal and family connections between the employees in the Calgary office. Friends, children, roommates, even ex-spouses, all came to work for the defendants through their connection to someone already employed there. This is neither surprising nor troubling per se .

The defendants paid rather low wages during robust economic times, undoubtedly making it difficult to attract highly qualified people. The extensive nepotism sometimes served the company well, but also caused problems when interpersonal difficulties arose between employees, or between the employer and someone who had other relatives in the workplace. The plaintiff [ 5 ] The plaintiff is a 67-year-old Calgary resident. In the 1970s, he took courses towards a business degree before working in the audit management field for many years. In the 1990s, he opened and operated a fast food franchise in Calgary.

After selling that business, he was looking for work and heard that the defendants might need someone. He initially joined the defendants as a truck driver but was made an outside salesman within the year. By all accounts he was proficient and respected in this role. In 2002, he became the territorial Sales Manager for Alberta for both Davis and CWC. In the fall of 2005, he was promoted again, this time to General Manager for CWC and Territorial Manager for Davis.

These positions made him responsible for all the day-to-day operations, sales, and business development of the Calgary and Edmonton locations. [ 6 ] Throughout the plaintiff’s time as a manager, Lloyd was his boss, though he also had a reporting relationship with Davis’ controller, Ian MacLean. The plaintiff described Lloyd’s involvement in the companies’ daily operations as that of an “absentee owner”. Lloyd had numerous business interests and relied on his employed professional managers to run them.

This meant that the plaintiff worked essentially unsupervised. [ 7 ] The scope of the plaintiff’s authority extended to hiring, firing, ordering of materials, setting of prices, management of sales relationships, and the overall financial and workplace well-being of the Alberta locations. Other Relevant Individuals [ 8 ] The following individuals figured prominently in the events and evidence. GG – a friend of the plaintiff for 30 years. He came to work for the defendants in 2007. He initially did inside sales, moving to outside sales in 2009. GG is the father of TG.

He had had a relationship with CR many decades ago, which begat TG. GG moved to Edmonton in January 2011 when two resignations left that location unstaffed. He remained there in a ‘temporary’ arrangement until being terminated, along with the plaintiff, in May 2013. CR – TG’s Mother and GG’s long-former partner. She came to work at the defendants’ operation in Calgary as an inside salesperson in 2010. TG – CR and GG’s adult son. He was hired in Calgary in 2010 and fired the same year for an incident, in the course of which he kicked out a window in the Calgary facility.

TG Has disabilities which impair his cognitive/executive function. He was re-hired by the plaintiff as casual labour in May 2011, to work alongside his father GG in Edmonton. He returned to Calgary in May 2013. The circumstances of his return are a key basis alleged as cause for dismissal. TG did not testify. CR testified that this was because TG had gotten a new job in the small B.C. community where he lives with CR. CH – worked for the defendants for most of the past 17 years in Calgary, latterly living in a mobile home on the Calgary site.

He was effectively the plant manager overseeing the production staff and shipping/receiving. He remains employed with the defendants. RS – worked as an inside sales person in Calgary from March 2008. She was CH’s common law partner. The fallout of their breakup in November 2011 led the Plaintiff to terminate her with notice. The plaintiff wrongfully alleged that RS misappropriated charitable funds. His failure to investigate and resolve that issue properly is alleged as an after-acquired ground for dismissal. RS has returned to work for the defendants on a casual basis. BS – plaintiff’s former common-law partner.

She was severely injured in the plaintiff’s 2008 motorcycle crash. The plaintiff is alleged to have had an inappropriate liaison with her in the office, which is alleged as an after-acquired ground for termination. SC – former mainstay of the Edmonton facility. SC worked for the defendants and its predecessors for decades. He was universally described as indispensable and all-knowing in regards to the Edmonton operations. He fell ill while on vacation in 2010, went on medical leave, and never returned.

JG – hired in Edmonton in late May 2012. He is not related to TG or GG. TM – hired in Edmonton in January 2013. The Termination [ 9 ] The plaintiff was terminated on May 17, 2013, by delivery of a letter from Lloyd (“the Termination Letter”). Simultaneously, Lloyd’s son attended in Edmonton to terminate a number of the employees there. The Termination Letter is a discursive recitation of the history of discontent between the parties from the defendants’ perspective. Read in the context of the evidence and the pleadings, however, a distinct series of specific grounds for dismissal emerge.

Grounds for dismissal [ 10 ] The Termination Letter and the defendants’ pleadings alleged multiple bases grounds for dismissal, namely that the plaintiff: I. wrote an inflammatory communication to Lloyd on May 13, 2014, that effectively destroyed the employer-employee relationship; II. mismanaged the Edmonton facility by: a. hiring and retaining unnecessary staff (two of whom were closely connected to the plaintiff); b. failing to train staff in Edmonton, despite repeated requests and promises to do so; c. failing to achieve any production in Edmonton; and d. permitting the Edmonton employees to do little or no work.

III. was insubordinate by transferring “TG” to the Calgary office and retaining him there, in direct contravention of Lloyd’s instructions. After-acquired cause [ 11 ] In the aftermath of the plaintiff’s dismissal, the defendants learned further facts which they argue buttress their cause for firing him. These facts include: IV. engaging, or appearing to engage in, sexual conduct in the office; and V. wrongfully asserting that an employee had stolen money raised by workers in the Calgary location for a charity.

Other Historical Grievances [ 12 ] The evidence at trial included a detailed recounting of the internecine machinations of, and mutual grievances between, staff members of the Calgary office spanning over a decade. This information was marginally useful in providing context as to the various witnesses’ interests and loyalties, but on the whole irrelevant. It does not inform the outcome of the case.

The Plaintiff’s Overall Position [ 13 ] The plaintiff testified that he dedicated his life to the well-being of the defendant companies, gave excessively of his own personal time and energy to their success, and at all times had nothing but their best interests at heart. He stated that his alleged insubordination was, at most, the product of a misunderstanding. He denied that his handling of the Edmonton office was anything but professional and successful. He vigorously disputed that he did anything improper in the office and stated that his handling of the charity monies issue was appropriate.

The Guiding Legal Principles [ 14 ] The onus lies with the employer to prove just cause for the termination on a balance of probabilities where the existence and end of an employment relationship are not in dispute: McKinley v BC Tel , 2001 SCC 38 at para 36 [ McKinley ]. That is the case here. McKinley also guides the essential test for wrongful dismissal. It establishes that for termination to be justified it must be contextually proportionate to grounds proven by the employer: ... underlying the approach I propose is the principle of proportionality.

An effective balance must be struck between the severity of an employee’s misconduct and the sanction imposed. McKinley at para 53 . [ 15 ] The practical application of this broad principle was helpfully analysed by Dario J. in Cicalese v Saipem Canada Inc , 2018 ABQB 835 at para 20 , where she held that:

In determining whether an alleged cause is just cause for termination of an employment contract, this Court has established the following principles: (

a) cause is “a question of fact that varies with the nature of the employer’s business and the employee's position of responsibility and trust”; (

b) the assessment of cause is objective, contextual, and proportionate; (

c) the assessment of cause entails three steps: i. determining the nature and extent of the alleged misconduct; ii. considering the surrounding circumstances, including the employment history, the employee's role and responsibilities, the type of business or activity, the policies and practices, and the level of trust reposed in the employee; and iii. determining if the response to the alleged misconduct is balanced, having regard to the facts; the question is whether the alleged misconduct is so incompatible with the fundamental terms of the employment relationship that it warrants dismissal. [ 16 ] A broad reading of the governing law makes it clear that employees cannot be easily or casually disposed of.

Firing someone is often a crushing blow to their self-worth and ability to support themselves and their family. Dismissal for cause must be proportionate to the employee’s wrongs, taken in the overall context of the employment relationship. Ground I: Mismanagement in Edmonton [ 17 ] The defendants claim that the plaintiff’s cumulative mismanagement of the Edmonton facility gave them grounds to terminate him without notice. Background [ 18 ] The grounds for termination under the head of cumulative incompetence stem primarily from events in the Edmonton branch from 2011-2013.

Problems began in early 2011, when SC took medical leave and ultimately retired for health reasons. During his initial absence, the other two remaining employees in Edmonton demanded substantial raises and quit when these were not forthcoming. Their departure left Edmonton completely unstaffed. [ 19 ] The plaintiff responded by sending GG north. Then, in May of 2011, the plaintiff re-hired TG to work alongside his father in Edmonton. He did so ostensibly because it was unsafe for GG to use a crane and forklift by himself.

TG was described as having a forklift operator’s certification. [ 20 ] GG and TG were paid living expenses from Monday to Friday while in Edmonton. The plaintiff testified that this amounted to some $28,000 per year for the two of them, over and above their salaries. In May 2012, JG was hired in Edmonton (no relation to TG or GG). A fourth man, TM, was brought on in January 2013.

No Production [ 21 ] The evidence, much of it uncontroversial, compels me to find as a fact that, from January 2001, to the date of the plaintiff’s firing, the Edmonton facility was idle, unproductive, over and inappropriately staffed, and in shocking physical disarray. All of this operated to the defendants’ financial detriment. Even the plaintiff had to acknowledge that, “there hadn’t been any production in Edmonton.

Basically, since the guys walked off the job....well over a year.” [ 22 ] From the time GG was sent to Edmonton, to the time of the plaintiff’s firing, there was virtually no production of any screens in Edmonton. In cross-examination, the plaintiff had to agree that, “there was absolutely nothing being done” in the manufacturing side of the business, a condition which had prevailed since SC’s departure. [ 23 ] The plaintiff’s acceptance of this fact at trial was the first time Lloyd fully appreciated that nothing had been made in the facility for almost two years.

Despite not knowing the magnitude of the failure, Lloyd had queried the plaintiff about productivity numerous times in the two years preceding his termination. The plaintiff responded by repeatedly promising that training would be provided, either by CH or himself, in order to get production back on stream. That training never happened. Consequently, the Edmonton facility was functionally idle for over two years. No training [ 24 ] The lack of production was intrinsically linked with the fact that TG, GG, M and TG were never properly trained on how to make screens.

The plaintiff claims that he both promised Lloyd that he would have CH go to Edmonton and provide training, and that he asked CH repeatedly to do so, from at least the fall of 2012 and on into 2013. He claimed that this never happened because CH was too sick from the complications of his alcoholism to carry out this work. [ 25 ] CH told a different story. He testified that the plaintiff never specifically asked him to go to Edmonton to train the up to three employees idling there. CH said that he would have happily gone.

He liked the idea of being in control and doing work that he was ideally suited for. [ 26 ] I believe CH. For all the reasons discussed below, he was the most credible witness in this trial. Moreover, the objective facts back his version. Shortly after the plaintiff’s firing, Lloyd’s new manager asked CH to go to Edmonton and put the shop in order. CH

went immediately, staying in Edmonton for four months. As photographs he provided attest, CH transformed that location into a proper, professional operation. Excessive staffing [ 27 ] The Edmonton location continued to operate as a distribution centre during this period, doing a modest amount of shipping and receiving in the course of reselling goods from the Vancouver and Calgary manufacturing centres. The plaintiff’s evidence was that this could have kept GG and TG busy.

The defendants’ evidence was that this volume of work would not have kept two men anywhere near fully engaged. [ 28 ] Based on all the evidence I heard, I find that there was insufficient work for two full-time employees in Edmonton, much less three or four, in the absence of running production. Improving the physical condition of the Edmonton location could have kept the men busy, but I find that they did little or nothing in this regard. Physical condition of the Edmonton facility [ 29 ] It was not in dispute that the Edmonton facility was in poor physical condition during this entire time.

Photos entered at trial showed it to be run down and disorganized. Much of the physical havoc was the result of flooding close to a decade earlier. This damage had never been repaired. The damage consisted largely of ceiling tiles and drywall deteriorating and falling to the floor. An upstairs living space was described as barely habitable and a washroom was shown to be in equally dismal condition. The space also appeared messy and unkept. [ 30 ] The plaintiff did not deny the dismissal physical condition of the Edmonton location.

Indeed, he even went so far as to describe the whole facility as “unsafe” and “disgusting” and lamented how long it had been thus. He blamed Lloyd for the persistence of this condition. [ 31 ] GG was held out as someone who had run a renovations company. The plaintiff said GG was tasked with completing repairs and renovations in the facility. The photographic evidence, and the information of those who attended there after the firing, shows that little or nothing of this sort was achieved. From a functional standpoint, the warehouse area was in disarray.

Inventory was piled/strewn across the large area, resulting in product being hidden in plain sight. [ 32 ] As mentioned above, CH spent a number of months in Edmonton after the plaintiff, GG, TG and TM were fired in May 2013. He produced a further series of photographs which showed the plant in renewed condition. The goods were stacked neatly and professionally. The working areas appeared clean and functional. In short, it looked like a proper business.

Even accepting that the photographs showing the “before” condition may have reflected damage and deterioration beyond that of which the plaintiff was aware, the transformation was dramatic. Loss of business [ 33 ] Potash producer Agrium was a customer of CWC, whose Edmonton plant manufactured “Rotex” screens for use in an application specific to Agrium’s operations. A series of purchase orders from Agrium entered at trial showed the value of these contracts.

The manufacture of Rotex screens required that an oval, nickel-plated grommet be rivetted around the edges of the screen. [ 34 ] In January 2012, the defendants learned that their existing Japanese supplier was no longer producing this part and, in August 2012, they ran out of grommets. The evidence demonstrated ineffectual attempts by the plaintiff to obtain more from a single alternate source. This process culminated in an angry email he sent to Japan, and an admission to an increasingly irritated Agrium of his inability to obtain the needed pieces. Eventually, Agrium took its business elsewhere.

That account has never returned. [ 35 ] From January of 2012, when the need for a new grommet supplier arose, to his firing in May 2013, the plaintiff never managed to source this component. When pressed on his failure to acquire such a basic item, the plaintiff stated that the inability to obtain the grommets was “no fault of mine” and that he “had no control” over the fact that the previous supplier stopped making the part, necessitating an alternate source.

Lloyd testified that, when he found out about the grommet debacle and the loss of Agrium’s business, after the plaintiff’s firing, he was able to locate an alternate supplier in the course of two phone calls. I accept Lloyd’s evidence on this point. For unknown reasons, the plaintiff’s default on this issue was not pleaded as a basis for his termination. Therefore, these facts only serve to provide context for the severity of the grounds related to staffing and failure to train. The plaintiff knew of the problems with Edmonton [ 36 ] The plaintiff knew something had to change in Edmonton.

He blamed the lack of production on broken machines, the fact he could not attract anyone to work for the wages he was offering, and an unwillingness of CH to go and train the employees he did hire. A repeated refrain in his evidence was that the situations obstructing successful operation were either “not my problem” or not his fault.

He blamed the defendants for not stepping in to solve these problems. [ 37 ] While the defendants’ communication and documentation practices were often poor to non-existent, a series of communications were led in evidence that demonstrated an awareness on the plaintiff’s part that both a serious problem existed in the Edmonton operation and that his employer was materially displeased about it.

For instance: a. as early as June 2011, a fax from Lloyd to the plaintiff (his preferred mode of communication) stated: “You annoyed me fairly thoroughly by telling me that the two G’s were kept busy maintaining forklift and crane.” This same fax concluded: “I don’t expect much but a surprise would be nice.” (Exhibit 32) b. in August 2012, a fax from Lloyd to the plaintiff referenced, “paying two people to do a miniscule amount of work in

Edmonton.” (Exhibit 9) c. in October 2012, Lloyd faxed the plaintiff: “is [CH] capable of going to Edmonton and training to present residence to hookscreens?

Are they capable (willing) to learn?” (Exhibit 33) d. in November 2012, the plaintiff wrote a memo to Lloyd which stated that: “I’ve talked to GG about cleaning up the secondwashroom in Edmonton and he informs me that they are working on that as well as cleaning up the middle bay.” The same memo alsostated that: “[CH] is capable of going to Edmonton & train the present residents to hook screens.” (Exhibit 35) e. by the end of April 29, 2013, Lloyd opened a fax to the plaintiff with the words: “What is going on in Edm. (or moreaccurately what is not going on) is not sane!” (Exhibit 15) [38] At points the plaintiff testified that he was unaware of any problems or dissatisfaction with his performance.

For instance, heclaimed that he had “no idea” what situation Lloyd was describing as “insane” in the April 29 fax, and denied, with unconvincing force,that this referred to the company paying four people to produce nothing. However, he had to acknowledge that, at some point, he becameaware of the issues and Lloyd’s displeasure with his performance. [39] The plaintiff’s position is that his acknowledgement that something, “had to change in Edmonton”, and his accompanyingcommitment to effect those changes, took place during a phone call of May 9, 2013. Ms.

Wong skillfully argued on his behalf that he hadno fair chance to implement his plan for improvement since he was fired less than a week later. Thus, she contended that his terminationcontravened the principal that an employee must have their defaults brought to their attention and be given a chance to remedy thembefore they are dismissed. Findings regarding management of the Edmonton facility [40] I find that the plaintiff’s management of Edmonton in the years preceding his dismissal was well below the standard expectedof a competent, senior manager.

There is no excuse or explanation for the situation that prevailed there, which Lloyd fairly described as“insane”. The plaintiff’s claim to helplessness over this state of affairs is belied by his failure to clearly (or at all) inform Lloyd andothers of the problems and their potential solutions. The law on termination for incompetence [41] The defendant places heavy reliance on the endorsement of Berger J.A. in Lowery v The City of Calgary, 2002 ABCA 237 atpara 3, where the Court considered the requirements before termination can be made for cumulative incompetence.

Summary dismissal for incompetence is justified by significant breach of contract on the part of an employee. Where the employeralleges cumulative cause for such dismissal, it must prove on the authority of Atkinson v Boyd, Phillips & Co Ltd (1979), (BC CA), 9 BCLR 255, with which we respectfully concur on this point, that: 1. The employee was given express and clear warnings about his performance. 2. The employee was given a reasonable opportunity to improve his performance after the warning was issued. 3. Notwithstanding the foregoing, the employee failed to improve his performance. 4.

The cumulative failings “would prejudice the proper conduct of the employer’s business”. [42] I find that the defendants had a basis to discipline or potentially dismiss the plaintiff for mismanagement. However, thedefendants did not act upon those grounds in a way that would have permitted

summary termination on May 17. Ms. Wong correctlyargues that the law in Alberta requires an employer to give specific warnings, together with a reasonable opportunity to improve, beforeterminating an employee for a cumulation of incompetence: Lowery at para 3. [43] Two facts undo the defendants’ position. First, their lack of proper communications and performance evaluations leaves themunable to show that a definitive warning and benchmarks of expectation relating to performance had been given. While I have found thatplaintiff knew of the problems and his employers’ dissatisfaction, the law requires more.

Specifically, Lloyd or his delegates had todirectly and clearly communicate to the plaintiff his list of alleged deficiencies and that state a failure to ameliorate them would result inhis dismissal. That was never done. [44] Second, Lloyd was prepared to give the plaintiff a chance to make a change, even as of May 9. His evidence, and the contextof the May 9 conversation, confirm this.

It was only after Lloyd learned of the plaintiff’s defiance viz-a-vis TG (discussed under GroundIII below) that he definitively lost all hope in their employment relationship. [45] I find that Lloyd was, in his own way, following what the law requires – namely giving an ultimatum and an opportunity. But-for the TG events, and the dishonesty related to them, Lloyd would only have been entitled to terminate the plaintiff after he haddemonstrated a final inability to rise to the task of managing Edmonton properly, after the May 9 phone call and the ensuing writtencommunications.

On the facts as I have found them, there is little reason to believe that things would have turned around. However, theplaintiff would have been entitled to a chance. The defendants’ unsatisfactory human resource practices disentitled them from firing theplaintiff for cumulative incompetence on May 17, 2013, irrespective of his performance. Ground II: The Plaintiff’s May 13 Memo to Lloyd Events leading up to the heated exchanges of early May 2013

[ 46 ] By the fall of 2012, Lloyd became more insistent that Edmonton had start producing goods. There was no progress and, during his Christmas visit to Calgary, Lloyd raised the issue with the plaintiff again. The plaintiff, in turn, repeated his promise to send CH to provide training during the impending January shut-down of the Calgary plant. That never happened. [ 47 ] Matters came to a head in April of 2013, when Lloyd sent a series of unhappy faxes to the plaintiff. These demanded for change and clarification as to what was actually being produced in Edmonton and how many people were employed there.

These faxes led to a telephone call between Lloyd and the plaintiff on May 9. The contents of that call were weakly related in the evidence, but it is clear that Lloyd demanded that Edmonton production be brought online, people trained, the workforce be right-sized, and the rampant practice of hiring friends and relatives be curtailed. [ 48 ] In respect of TG, Lloyd was insistent that, if he continued to be needed in Edmonton, he had to be regularized as a payroll- employee and could not continue as casual labour. That phone call was followed by a fax from Lloyd to the plaintiff the following Monday (Exhibit 16).

It is agreed that this fax was sent and received around noon, Monday, May 13, though it was written on, and dated, Friday, May 10. This communication emphatically re-iterated that no further hiring of friends of relatives was to take place and categorically precluded TG from working in Calgary alongside his mother and new roommate, who Lloyd understood to be TG’s girlfriend. [ 49 ] The plaintiff responded with a memo the same day, angrily denying that TG’s roommate was his girlfriend, and defending his performance.

The defendants allege that this memo was so insolent that it constitutes a basis for his dismissal in and of itself. [ 50 ] The memo begins inauspiciously with bolded, capitalized, enlarged text declaring that the young woman in question is not TG’s girlfriend. In modern parlance, the typography chosen by the plaintiff would be described as “shouty caps”.

The plaintiff went on to deny that he offered TG a job in Calgary, explaining that, “we might need him here temperately [sic] depending on how everything works out.” [ 51 ] In the balance of the missive, the plaintiff made a number of strong and intemperately worded statements regarding the “crap” and “childish games” that said were going on. He expressed his unwillingness to engage in them further.

It is unclear from the memo exactly what events the plaintiff was referring to but I infer, based on the trial evidence, that he meant the criticism of his management of the business in Alberta, and particularly regarding Edmonton. Plainly, the plaintiff felt his performance had been broadly and unfairly maligned, particularly by individuals he names in the memo and offers a defence of his loyalty and performance. [ 52 ] The plaintiff concluded by telling Lloyd that he could give him severance, together with his banked holidays, and dismiss him if he wished.

The defendants say that this letter was so insolent that it effectively ended the employment relationship. In particular, they point to the ‘dare-to-fire’ language as being a repudiation of the employment contract. The Law on termination for insolence [ 53 ] The guiding principle with regards to allegations of insolence is the contextual, proportionate approach dictated by McKinley : David Harris, Wrongful Dismissal (Toronto: Carswell, 1989) (loose-leaf revision 9, 2017) at §3.16 (a).

More specifically, the approach to insolence as grounds for dismissal was articulated by the New Brunswick Court of Appeal in Henry v Foxco Ltd , 2004 NBCA 822 at para 111 , where the majority of the Court stated: ... A single incident of insolence will justify

summary dismissal of an employee in one of three circumstances: (1) the employee and superior are no longer capable of maintaining a working relationship; (2) the incident undermined the supervisor’s credibility in the workplace and, relatively, his or her ability to supervise effectively; or (3) that because of the incident, the employer suffered a material financial loss, a loss of reputation or its business interests were seriously prejudiced. [ 54 ] Insolence towards the employer is thus treated similarly to insubordination, though it engages slightly different considerations.

Depending on the context and culture of the workplace, strong exchanges may be tolerable and unlikely to impair the employee’s ability to continue in the job. Also, unlike insubordination, which is self-evidently a transgression, insolence will come in as many flavours and potencies as there are people. Therefore, whereas no employee should have to be told that they need to follow the employer’s rules and directions, an employer may well have to caution an employee about their tone and give them a chance to recalibrate their communications to what is acceptable in the specific working environment.

Context and proportionality govern: Dawson v Bridge Brand Food Services Ltd , ABQB 15 at para 39; Henry v. Foxco Ltd , supra at para 119. Findings on the May 13 memo [ 55 ] While it was intemperate and unprofessional in parts, the May 13 memorandum does not by itself constitute a basis for dismissal. The plaintiff closed with a post-script that he would continue to complete his duties as agreed in the Thursday evening phone call, and spent much of the memo justifying his conduct and asserting dedication to the company. Equally, he does not insult, degrade, or demean his supervisor.

At its highest, this memo is a manifestation of the fragile and fraught nature of the employment relationship at that point in time. [ 56 ] Nothing in this document repudiates the plaintiff’s employment obligations, insults the employer in an irredeemable fashion, or makes it unrealistic for his employment to continue: see Bennett v Cunningham , 2011 ONSC 28 . Employees and employers enjoy a reasonable margin within which to express frustrations and speak bluntly, even harshly, about difficulties that arise in their workplace affairs.

While it is clear that many of the plaintiff’s co-workers, and indeed Lloyd himself, tired of the plaintiff’s tone, the May 13 memo was neither a repudiation of the working relationship nor a fracture that could not be overcome. [ 57 ] Equally, I do not find that the plaintiff constructively resigned through the use of “dare-to-fire” language. At its highest, the plaintiff’s words express his feelings that, if conflicting views about his performance were not resolved, the employment relationship should probably end.

This falls short of the kind of categorical ultimatums that constitute a basis for termination: see Larsen v Airarms Fasteners , [1999] BCJ No 883 (SC) . Therefore, I find that the May 13 memo does not provide grounds for dismissal per se , nor does it

contribute to cumulative grounds. [ 58 ] Importantly, however, this memo demonstrates that the plaintiff was keenly aware of a broadly expressed dissatisfaction with his performance. The contents of the May 13 memo, together with the evidence I heard touching upon it, lead me to find as a fact that the plaintiff knew that: (

i) Lloyd had lost all patience; (ii) was demanding active adherence to his directions; and (iii) and was dissatisfied enough with the plaintiff’s course of conduct that he might terminate him. In fact, events subsequent to this exchange led Lloyd to fire the plaintiff four days later. Ground III: Insubordination – Moving TG To Calgary [ 59 ] The Termination Letter singled-out the plaintiff’s moving TG to the Calgary location as

an act of intolerable insubordination justifying his dismissal. The defendants’ position is that the plaintiff had moved TG back into the Calgary operation against unequivocal instructions that he not do so, and that this open contempt for a recent, direct order justified his termination. Key events [ 60 ] Lloyd insisted in the May 9 phone call that TG could not continue as a casual employee, and had to be brought on payroll. Subsequent to that call, Lloyd learned that the plaintiff had directed the human resources administrator in Calgary to put TG on the Calgary payroll.

This information prompted Lloyd to send the May 13 fax discussed above (Exhibit 16). In it, Lloyd stated emphatically: “TG is not going to be employed in Calgary while his mother or girlfriend are! Not negotiable! Not sane either!” [Original emphasis] [ 61 ] By contrast, the plaintiff claims that all he did was implement Lloyd’s instructions from the May 9 call to end TG’s casual status.

Specifically, he says that he only instructed that TG be put on payroll in Calgary, not that he begins working there. [ 62 ] Therefore, the critical question is whether this was all a misunderstanding, or whether the plaintiff had actually directed TG’s permanent relocation to Calgary. The context [ 63 ] TG had a history with the company. He had first been hired in 2010, and was fired not long thereafter. Who fired him, where, and why, was the subject of conflicting evidence. What is not in dispute is that he had kicked out a window in the office either immediately before or after being fired.

This was a singular act of workplace violence which left a marked impression on every witness who experienced it. [ 64 ] The controversy regarding TG’s return to Calgary also arose in the context of the employer’s growing discontent with the problems posed by nepotistic hiring practices. TG’s mother and father both worked for the defendants in Calgary and both were close friends of the plaintiff. CH testified that TG had believed that these connections immunized him from having to work hard or take instructions during his first stint with the employer.

Undisputed evidence [ 65 ] There seems to be no dispute that TG came to work in Calgary every day of May 2013, up until his firing on May 23. This included both the days before and after Lloyd’s direction that he was not to be employed there. Indeed, for that period, from May 13-21, he punched a timecard in Calgary every day. The question is why TG was there. Plaintiff’s evidence [ 66 ] The plaintiff explained TG’s presence in Calgary on the basis that TG asked to go there at the beginning of May to move into a new residence with a woman by the name of Brandy.

On the plaintiff’s version, he told TG that he could go into the office and update the website while he was in town. He claimed this should only have taken the first week of May, after which TG would be back in Edmonton.

The plaintiff was adamant that, “that was the only reason he was in Calgary.” [ 67 ] When confronted with the reality of TG’s ongoing presence in Calgary, the plaintiff testified that TG’s stay may have been extended because CH asked if he could use him to fill a shortage in shipping and receiving. [ 68 ] The plaintiff admitted that CR had spoken to him about her concerns that it was not good for her son TG to be in Edmonton with GG, because of the latter’s drinking.

However, he denied that CR had asked him to move her son back to Calgary as a result of these concerns. [ 69 ] The plaintiff also defended his decision to bring TG on payroll at a much higher wage than he had been receiving as a casual employee on the basis that his new status would save the defendants the cost of paying TG’s housing and other expenses in Edmonton.

When asked where TG was supposed to live in Edmonton if his living costs there would no longer be covered, and he had just rented a new place in Calgary, the plaintiff emphatically answered, “not my problem.” CH’s evidence [ 70 ] CH testified that he did not request that TG work in Calgary in 2013. He did not recall who told him TG would be coming to shipping and receiving, but rather that TG just showed up there around May 6.

When asked what work TG did for him in May, CH answered that, “he [TG] did not do a lot down there”. [ 71 ] In his plainspoken manner, CH described his history with TG. and described him as, “not all there.” More importantly, he

testified that he was the one who had fired TG previously, for poor performance and attitude, and described how that had led TG to kick out a window. CR’s evidence [ 72 ] CR was called as a witness for the plaintiff. She agreed that TG has a health condition which impairs his abilities to some extent. She confirmed that TG did not understand how to do the work in the warehouse for CH and had become very frustrated by this in the lead-up to his firing. CR agreed she had a close friendship with the plaintiff in the workplace.

Despite this, she testified that she did not believe GG was drinking in Edmonton and had never asked the plaintiff to bring TG back to the Calgary office to get him away from that influence. GG’s evidence [ 73 ] GG did not have a good memory of the time surrounding the firings, and was unsure if TG even worked for the company when the plaintiff was fired. He was clear, however, that TG was in Calgary when the firings happened.

Specifically, he said he thought TG might have been, “gone a couple of months” before “all this came down.” Importantly, he testified that TG had had enough of Edmonton and did not like being there all the time. TG did not testify [ 74 ] TG was a key player in this case and had been on the witness list. However, he did not testify. His mother explained that this was because he had recently secured employment in their hometown in rural northern British Columbia. Given the centrality of his actions and what the plaintiff had instructed him to do, his absence left a significant evidentiary void a key area.

That said, I have not drawn any adverse inference from his failure to be called. The documents [ 75 ] Exhibit 28 is a set of handwritten notes prepared by the defendants’ payroll clerk in Calgary, incident to the plaintiff’s instruction that TG be put on payroll there. These notes appear to have been updated several times as she received further information, principally from the plaintiff. She then transmitted this information to Lloyd in a fax, which comprises the exhibit. This document records a query as to whether TG was to be on payroll in Calgary or Edmonton, with Edmonton ultimately being crossed out.

It indicates that his position was to be “Shipper” and indicates a start date of May 6, 2013. [ 76 ] This document is significant for its existence, and shows the payroll clerk’s state of mind based on the information and directions she received from the plaintiff about TG’s employment. This document shows that she understood the direction to be that TG was put on payroll in Calgary, because he was going to be working there.

While not tendered as a business record providing independent proof of its contents, this document’s existence inferentially supports the plaintiff having told staff members that TG was coming to work in Calgary. [ 77 ] The next and more significant document is TG’s timecard (Exhibit 17). It records him punching-in and punching-out every day from May 13 to 21, 2013. This document also contains a handwritten annotation by CH documenting his recollection of the events of May 2013.

I ruled that these annotations are not admissible for the truth of their contents, as they were made at the request of Lloyd in anticipation of this litigation, and thus classically not a business record. However, CH testified. He told the Court the same thing as is recorded in the notes. [ 78 ] As the plaintiff made no allegation of recent fabrication, the fact that CH wrote the same things down on the timecard in the fall of 2013 is of no evidentiary weight on either his credibility or the truth of those notes. The timecard does, however, speak to the question of what TG was actually doing in Calgary.

Punching the timecard is consistent with working in shipping/receiving. TG had worked there before and knew the procedure. The evidence is clear that only plant staff punched timecards. Front office personnel did not. Updating the website would be a front office task. There would have been no reason for TG to punch a timecard at all in May 2013 if all he was doing was sitting in the office for a few days and then returning to Edmonton.

Tellingly, TG did not punch the timecard during the period he was doing computer work. [ 79 ] The existence of the timecard supports the inference that TG was moved to Calgary and told to report for work in shipping/receiving. Something changed after May 10. Specifically, TG began to behave the way someone working in shipping/receiving would do: he began clocking-in and out. Since the plaintiff did not call TG, we are left only with his actions. Those actions speak definitively, and say that he thought he had a job in shipping/receiving in Calgary.

Findings on credibility regarding TG in Calgary [ 80 ] I believed CH and specifically accept the entirety of his evidence as true. For the following reasons, I prefer it wherever it conflicts with the evidence of the plaintiff or CR. [ 81 ] CH was forthright and guileless. His evidence came across as truthful and unadorned, both when I first heard it, and on close review. What he said, and how he said it, dispelled any concerns about his partiality.

He was an objective, believable witness. [ 82 ] I am mindful of the plaintiff’s submission that an inference can be drawn that CH is not objective and has motives to tailor his evidence against the plaintiff’s interests. CH’s life is heavily tied to his relationship with the employer, and it is undisputed that he once took a leave of absence on account of the plaintiff’s managerial style. However, despite Ms. Wong’s able argument, I do not draw that inference. [ 83 ] While CH does not care for the plaintiff, I find that his evidence was fair and balanced. He spoke fairly of the plaintiff’s

strong abilities as a salesperson and knowledge of product manufacture – facts borne out in the evidence. At the same time, CH criticisms of the plaintiff’s organizational skills and conduct with staff (“hollering at people”), were equally supported by the rest of the record. I found no bias in CH evidence. [ 84 ] CH was careful when he did not understand a question or did not remember an event.

For instance, he did not recall having written the annotations on TG’s timesheet, and did not try to fix a time frame to his conversations with the plaintiff about going to Edmonton, despite those facts being of particular importance to the defendants. He was also candid about his own alcohol dependency and the failings of his relationship. In short, his evidence was free of any self-interested ‘improvement’ or sculpting in either party’s favour or disadvantage. [ 85 ] By contrast, the plaintiff’s evidence as to why TG was in Calgary suffered from several frailties.

When first asked at trial whether TG’s mother (CR) had ever asked to have TG moved to Calgary because of GG’s drinking, he issued a flat denial. However, when confronted with his questioning evidence, he agreed that CR had told him that she did not like TG being in Edmonton for exactly this reason. He attempted to explain away the apparent tension between these answers with a very narrow focus on whether CR had specifically asked him to transfer TG to Calgary.

I found both the manner and substance of his answers in this area to be evasive. [ 86 ] The plaintiff’s evidence also shifted about how many times CR raised her concern about TG being around GG’s drinking in Edmonton. In evidence at trial the plaintiff was asked: Q: And how many times did she mention it? A: Only once that I am aware of. [ 87 ] He was then taken to his Questioning transcript, where he had said the following: Q: And in early 2013, did she tell you – [CR] tell you repeatedly that she was not happy with the situation in Edmonton. She didn’t like Trevor being there because Gary was drinking too much?

A: Yes, she had mentioned that. Q: How many times did she mention it? A: I can’t recollect. Q: More than once? A: Probably more than once . [emphasis added] [ 88 ] The plaintiff’s evidence at trial changed from that at questioning in a way that was both more definitive and helpful to his position. Confronted with this contradiction, he resorted to a disproportionately vigorous re-assertion that CR had not asked him to move TG to Calgary.

Having seen and heard his testimony, and having carefully reviewed it in the preparation of these reasons, I am left convinced that the plaintiff was crafting his evidence to deflect suspicion away from the logical conclusion that CR had in fact asked him to move TG back from Edmonton.

It makes no sense that CR would, “probably more than once” raise her unhappiness with TG being in Edmonton, to a boss she was had a close enough relationship with to accompany him on personal vacation travel, without broaching the sole logical solution – namely that the plaintiff should arrange for TG to come work at home in Calgary. [ 89 ] In a final marker of unreliability, the plaintiff’s evidence shifted on who had fired TG the first time around. On the first day of his evidence, the plaintiff testified unambiguously in-chief that he had fired TG because he had kicked out the window.

In cross- examination, it was put to him that it was CH who initially fired TG. In response, the plaintiff paused, struggled, and said: I know Trevor was fired for doing it. For kicking out the window. But now I’m trying to be told that CH fired him in his office and that’s why he kicked at the window. I can’t deny or confirm that . [emphasis added] [ 90 ] Beyond the contorted syntax of this answer, it is difficult to believe that the plaintiff genuinely did not remember the events of TG’s firing. This was something of a landmark event in the Calgary office and involved the son of his friends GG and CR.

His answer was also different than the one he had given on the same topic less than a day earlier. This shifting evidence buttresses my conclusion that the plaintiff was struggling to contrive a helpful version of events on this issue, as acknowledging that CH had fired TG would have created an obvious tension with the notion of CH asking TG to help out temporarily in May 2013. [ 91 ] By contrast, CH’s evidence that he wanted nothing to do with TG in May of 2013 is entirely consistent with previous events.

TG’s ineffectuality, coupled with his history of workplace violence in response to CH having fired him, make it improbable that CH would ask for TG to come help him out in Calgary, even temporarily. [ 92 ] CR’s evidence made the plaintiff’s position even less tenable. She was asked whether she had ever complained to anyone in the workplace about GG’s drinking. This simple question had to be repeated for her three times. She then denied ever having done so. Later in her evidence, she denied that she was aware of GG drinking at all while with the company.

Both of these answers contradicted the plaintiff’s version of what occurred. I find that this was a falsehood, offered to avoid making it look like there was a reason to get TG back from Edmonton. [ 93 ] CR also exaggerated her own role in the office, claiming she took “98%” of the inside sales orders, when several other people were fulfilling the same role as her. Even if she was a competent and dedicated employee (which the evidence supports), this was a needless and transparent exaggeration. Conversely, she portrayed CH as coming to work only “a couple times a week” because of his drinking.

Only when asked how CH was kept on with this level of performance did she acknowledge his unique utility to the company. I find that her account of CH was incompatible with the ascertainable facts of the case, and calculated to discredit him.

[ 94 ] Perhaps most problematically, CR’s initial testimony implied that TG actually had been working in Edmonton with GG when he was fired in May. She then claimed she could not recall where TG was working when he was fired. CR then reluctantly acknowledged that she did not think TG had ever returned to Edmonton. She followed this by saying that she could not remember if he continued to work in Calgary.

She then resorted to claiming that her health and memory were not good in order to explain her shifting evidence on whether her son was working alongside her in the days before he, his father, and her friend the plaintiff, were all suddenly fired. [ 95 ] These facts – particularly where TG was working – were personally crucial to CR as TG’s mother. Even six years after these events, TG continues to live at home with her, and she defended him as significantly handicapped when asked about his incident of violence in the office.

It is not believable that she has as detailed a memory as she claimed about other, older, events involving third parties in the workplace, but does not remember where TG was working when he was fired. [ 96 ] CR was also reluctant to acknowledge that warehouse staff, such as a shipper/receiver, would punch a timecard. A person in her position would know this and it was an uncontroversial fact. Her avoidance of this fact correlates to a desire to avoid supporting the idea that TG was working in Calgary. [ 97 ] Lastly, CR said that the website work was only supposed to take only a very short time.

I accept this evidence. However, that makes it even less logical that TG would continue to show up for work in Calgary almost three weeks into the month of May if he was only there temporarily regarding website updates. [ 98 ] I find that CR was very worried about giving any evidence that might support the idea that TG had been brought to work in Calgary by the plaintiff in May 2013. Her evidence was rather ductile, and I find that she tailored it to hep the plaintiff.

Consequently, she is not a credible witness. [ 99 ] GG’s evidence that TG was fed up with being in Edmonton, and had been gone from there for quite a while before the firings, seemed honestly given. It is consistent with the plaintiff having returned TG to permanent employment in Calgary. Findings of fact on TG’s employment in Calgary in May 2013 [ 100 ] I find that TG was put on the Calgary payroll by the plaintiff with the intention that he work there indefinitely. Moving TG to Calgary served a variety of purposes for the plaintiff.

It fulfilled TG’s desire to move home, assuaged his mother’s worries about what kind of influences he was experiencing in Edmonton, and began to address the needless over-staffing in Edmonton. Therefore, I find that once TG arrived at the Calgary office the first week of May 2013, there was no intention that he would return to Edmonton. [ 101 ] I find that the plaintiff initially seized upon Lloyd’s demand on May 9, that TG’s casual status cease, as an opportunity to formalize TG’s status in Calgary and give him a significant raise.

Concomitantly, TG giving up paid accommodation and board in Edmonton, in exchange for a $3.50/hour raise (or $131/week), does not make a shred of sense. It is improbable that TG could after to continue working in Edmonton on these terms. The plaintiff could not answer for the illogic of this situation. I find that this was because there was no answer.

I find that brining TG home permanently is the only intention consistent with the evidence. [ 102 ] Lloyd’s subsequent command that no relatives be hired into Calgary, and in particular his absolute decree that TG could not work there, became a serious problem for the plaintiff. As of May 13, he proscribed absolutely TG’s continued employment in Calgary. [ 103 ] Yet, I find that TG continued to work in Calgary until his firing on May 23. I find that this was because the plaintiff intentionally did nothing to respond to Lloyd’s direction.

For the four days between receiving the May 13 fax, and his own firing on May 17, the plaintiff brazenly ignored the clear and emphatic instruction from his employer. [ 104 ] I find that the plaintiff had told TG to report to CH in shipping/receiving in Calgary after he was done with the website, and did nothing to alter those instructions after being told in the strongest of terms that this could not continue.

I find that TG’s presence in Calgary after May 13 was the product of the plaintiff’s wilful design and disobedience. [ 105 ] I find that the plaintiff arranged this situation to begin with, and persisted with it when clearly prohibited from doing so. I find that he was insubordinate in the latter of these actions. The evidence leads me to the conclusion that the plaintiff had decided to put protecting TG’s employment ahead of his employers’ wishes, and indeed their best interests. [ 106 ] The consequent question is whether this insubordination was sufficient in type and severity to justify termination.

The law on termination for insubordination [ 107 ] Wilful disobedience can form a ground for

summary dismissal, as described in Heyes v First City Trust Co , (4 December 1987), Vancouver C812809 (Dec. 4, 1987) (BCSC): Wilful disobedience is, of course, a ground upon which an employer may dismiss without notice. In order to justify the dismissal on those grounds there is an onus on the defendant to establish that there were acts wilfully carried out by the employee in defiance of clear and unequivocal instructions of a superior or refusal to carry out policies or procedures well-known by the employee as being necessary in the fulfillment of the employer's objectives . [emphasis added] [ 108 ] In Echlin and Certosimo, Just Cause: The Law of

Summary Dismissal in Canada , (Aurora, Canada Law Book, 1998) (Looseleaf release 19) at 16:210, the authors set out the factors to determine whether an employee's disobedience amounts to just cause for

summary dismissal: 1. Whether the employee's act, conduct or omission was in defiance of a clear and unequivocal instruction or order of a superior; 2. Whether the employee refused to carry out the employer's policies or procedures;

3. Whether the employee's defiance or refusal was wilful (i.e. deliberate or intentional); 4. Whether the employer's instructions were clear and unequivocal; 5. Whether the employer's instructions, orders, policies or procedures were known to the employee; 6. Whether the employer's instructions, orders, policies or procedures were lawful and reasonable; 7. Whether the employer's instructions, orders, policies or procedures were necessary to the fulfillment of the employer's objectives orpertained to a matter of substance; and 8.

Whether the employee's single or isolated act of disobedience justified dismissal because it was of such a nature as to show, in effect,that the employee was repudiating the employment contract, or one of its essential terms. [109] These criteria were echoed by this Court in Amos v Alberta, (AB KB), [1995] AJ No 182 (QB) at para 51,where Veit J. considered when insubordination could constitute grounds for dismissal. She concluded that it: ...depends on a large mix of factors. It is not possible, from one fact alone, to conclude if insubordination in a particular situation canjustify

summary dismissal. Usually, one instance of insubordination will not be sufficient to summarily fire an employee.

However, oneincident of insubordination can be enough if: * the insubordination be grave; * it consists of wilful and deliberate disobedience of an order; * work rules were made known to the employee; * work rules were consistently enforced; * work rules were clearly communicated to the employee; * the work order was authorized, that is, that it came within the scope of the worker's duties; * the worker was made aware, unequivocally, that discipline is the penalty for disobedience; * the work order was lawful and reasonable in content; * the employee has no reasonable excuse for disobedience; * the breach be serious. [110] Both of these lists seek to articulate the factors which would make termination proportionate to the insubordination – exactlythe contextual inquiry mandated by McKinley.

Application of the law to the facts [111] The number of exclamation marks in the fax expressly prohibiting TG’s employment in Calgary left no doubt as to howimportant the employer believed this order to be. That prohibition was an integral part of the employer’s demand for a change to the longrunning problem of workplace conflicts arising because of nepotistic hiring. It was fundamental to how Lloyd wanted to structure hisoperation.

This was not a trifling or inconsequential matter. [112] While TG’s prohibited employment only continued for four days before the plaintiff was fired, I find that the plaintiff intendedthis arrangement to be enduring and intended to disobey his employer on this front on an ongoing basis. The fact that his insubordinationprevailed for only four days does not minimize its nature or scope. [113] The order not to hire TG in Calgary was lawful and reasonable. He had been recently fired for incompetence from that officeand had responded with

an act of violence. This was not an instruction confined to one employee, but rather one aimed at overallworkplace wellness. That elevated its importance and the plaintiff knew this. [114] The insubordination also came at a financial cost to the employer. TG was given a large raise in the course of being put onpayroll. However, he was neither wanted by, nor useful to, the person he was brought in to help. [115] The insubordination in this case was also total. This was not the shading of a rule.

The plaintiff flat-out refused to alter asituation he knew his employer found unacceptable. [116] A failure to bring circumstances into line with instructions on something ostensibly minor may not constitute cause fortermination. This circumstance, however, was part of a much larger picture.

In particular, I find that TG’s employment in Edmonton wasof little or no apparent value to the defendants from at least the time JG was brought on, and without a doubt after TM was also hired.The Calgary events for which the plaintiff was fired were a continuation of that pattern. [117] Insubordination by senior managers are also more serious in character. As the Court of Appeal held in Poliquin v DevonCanada Corp, 2009 ABCA 216 at para 37 [Poliquin], “[a]n employee is expected to provide loyal and faithful service to his or heremployer.

The intensity of that obligation increases with the degree of responsibility attached to the employee’s position”. Wilfuldisobedience at this level has a greater potential impact on operational integrity, risks setting a downward-example for other staff (seePoliquin at para 53), and is damaging to the entire enterprise.

[ 118 ] Disloyalty by an employee in this kind of position of power is also worse because it runs a greater chance of being undetected and unchecked Calgary and Edmonton were the Plaintiff’s fiefdom. He testified that he worked largely unsupervised. When a former employee was asked why she had not complained about untoward behaviour by the plaintiff, she replied, “complain to whom?” [ 119 ] Lastly, I have found that TG’s continued presence in Calgary was the product of the plaintiff’s wilful design. This was not a misunderstanding. This was not a miscommunication.

For his own reason, the plaintiff chose to disobey a direct order, on an issue of importance and irritation to his supervisor, to the company’s financial and operational disadvantage. [ 120 ] I find as a fact that the plaintiff knew that his disobedience could attract serious disciplinary consequences. Lloyd’s clarity and displeasure with the situation brooked no misunderstanding. Moreover, by May 13, the plaintiff knew that he was on thin ice and already testing Lloyd’s patience to its limits.

Running the business in accordance with the owner’s hyper-clearly expressed directions could neither have been seen as optional nor as without consequences for defiance. [ 121 ] Balancing the context, importance, and intentionality of the plaintiff’s disobedience against the consequences imposed for his failure to comply, I find that his termination was proportional and justified for the “TG reasons” alone.

The plaintiff’s previous dishonesty aggravated the insubordination [ 122 ] Two acts of material dishonesty, closely preceding moving TG to Calgary, aggravate the contextual severity of the plaintiff’s insubordination. While this dishonesty was not pled as a distinct ground for dismissal, I find that these false statements were intrinsically linked to the ultimate insubordination and form a relevant contextual factor in weighing whether the plaintiff’s termination was proportional: Poliquin at para 75 . [ 123 ] On April 25, 2013, Lloyd sent the plaintiff a fax asking a series of questions (Exhibit 13).

Two of the questions asked important questions about the situation in Edmonton. The first question posed to the plaintiff on April 25 was: “ Are any screens being hooked in Edmonton? ” Lloyd’s question stood in the context of repeated concerns as to whether the employees in Edmonton were actually doing any meaningful work. The plaintiff responded: “ Just shale shakers and Rotex .” [ 124 ] Taken literally, the plaintiff’s answer told his boss that two types of screens were being made in Edmonton. That was not true. In reality, no screens were being produced in Edmonton.

The plaintiff attempted to explain his answer by saying it meant that those two types of screens could hypothetically be produced in Edmonton, not that they were actively being produced. I do not believe his explanation. First of all, it conflicts with the direct simple words of the question and the answer. Second, the answer is materially misleading even through the plaintiff’s proposed lens. Rotex screens could not be made in Edmonton on April 25, 2013. The plaintiff’s failure to secure the necessary input parts (ie: grommets) made it impossible.

Thus, I find that the plaintiff willfully misled his employer on a material matter. I find that he did so because the impression of production was useful to justify TG and GG continuing to be paid for coming to work in Edmonton. [ 125 ] Lloyd’s second question asked: “ How many employees in Edmonton? ” The plaintiff responded: “ Two ”. This query offered even less ambiguity than the first. There were plainly four employees in Edmonton at the time. The plaintiff’s explanation that TG and GG would not be counted because they were temporary does not withstanding scrutiny.

He knew that Lloyd’s concern was, as it had been for years, whether sufficient work was being done to justify the number of people being paid in Edmonton. That was plain from the substance of this fax, and from virtually every communication the plaintiff had had with Lloyd about Edmonton in the preceding year. Therefore, I find that he wilfully misled his employer on this point as well. I find that this was a further manifestation of the plaintiff’s decision protect his friends’ child’s income stream at the expense of his duty of loyalty to the employer.

The law on dishonest statements connected with dismissal for cause [ 126 ] In McKinley , the Supreme Court laid out the approach to be taken for analysing whether acts of dishonesty are sufficient to provide cause for dismissal. The Court emphasized that the nature and seriousness of the dishonesty should be considered in the particular factual matrix of that employment situation: McKinley at para 57 .

Specifically, the Court instructed at para 48 that: …whether an employer is justified in dismissing an employee on the ground of dishonesty is a question that requires an assessment of the context of the alleged misconduct. More specifically, the test is whether the employee’s dishonesty gave rise to a breakdown in the employment relationship . This test can be expressed in different ways.

One could say, for example, the just cause for dismissal exists where the dishonesty violates an essential condition of the employment contract, breach is the faith inherent to the work relationship, or is fundamentally or directly inconsistent with the employee’s obligations to his employer. [emphasis added] [ 127 ] Applying these principles, I find that the plaintiff’s dishonest statements in the fax of April 25, 2013, “struck at the very heart of the employment relationship”: Fernandes v Peel Educational & Tutorial Services Ltd , 2016 ONCA 468 at para 126 .

Trust is vital to a viable employment relationship between a business owner and his or her key employees. An employer cannot reasonably be expected to continue giving a deceitful employee the keys to his business, whether physically or metaphorically, once a certain level of dishonesty is reached.

In this case, the dishonest statements: • came from a senior manager to the president of the company; • were made in the context of direct, clear, and unequivocal questions about the state of the business within the scope of the employee’s responsibility; • involved information the employee knew was important to the employer; • were made to conceal the employee’s incompetent performance of his duties, and failure to fulfill past commitments of performance;

• prevented the employer from knowing of a problem and taking steps to protect/improve its business position materially; and • were made to protect the employee’s personal interests where they conflicted with those of his employer. [ 128 ] The pragmatic and functional question is this: if a fair-minded employer in Lloyd’s position had walked into the Edmonton facility, moments after receiving the plaintiff’s response to his questions, and found four men doing very little, in a facility incapable of producing either shale shakers or Rotex screens, could his trust relationship with his manager have survived?

The answer is “no”. These falsehoods were told, in part, to cover-up the fact that there remained no economic basis for retaining TG in Edmonton, and showed that the plaintiff was protecting TG’s employment to the company’s detriment. This makes them part of the subsequent insubordinate course of conduct by which TG was to covertly maintained on payroll in Calgary, also to no benefit of the defendant companies.

The lies of April 23 aggravate the severity of the misconduct for which the plaintiff was fired. [ 129 ] The connection between the dishonesty and the insubordination in this case weighs on the scale of proportionality. It shows a pattern of favouring personal financial interests over the employer’s, and a pattern of seeking to conceal that conduct. This strengthens the conclusion that termination was proportional. [ 130 ] The disobedient continuation of TG’s employment in Calgary was not a single, isolated, brief event.

It was the culmination of sequence of events whereby the plaintiff put protection of TG’s income ahead of his employer’s interests, lied to shield those choices and, when his agenda finally ran out of runway, outright defied the clearest of instructions. By doing so he gave the employer just cause for dismissing him. No need for progressive discipline [ 131 ] I find that this is a case where the words of Doherty J.A. in Agostino v Gary Bean Securities Ltd , 2015 ONCA 49 at para 4 are apposite: There is no legal principle requiring progressive discipline in every case.

The trial judge considered whether progressive discipline was appropriate in these circumstances and determined that it was not given his conclusion that the appellant’s dishonesty went to the heart of the employment relationship (see paras. 86-91). We agree with his conclusion. [ 132 ] The plaintiff’s employment relationship was on life support even before his insubordination, and even before Lloyd knew of the dishonesty in the April 25 fax. The relationship was irredeemable after these acts and the plaintiff would have known that if he had honestly considered the circumstances.

Termination was, just, foreseeable and proportionate. Ground IV: Allegations of Inappropriate Conduct in the Workplace [ 133 ] The defendants pled two allegations of after-acquired cause, alleging that the plaintiff had engaged in inappropriate behaviour at work. The Plaintiff maintains that both of these allegations are false, scandalous and injurious to him, to an extent warranting aggravated and punitive damages. As the plaintiff’s lead-claim for wrongful dismissal has failed, it follows that he cannot receive further exemplary compensation.

These facets of the plaintiff’s case are addressed for the sake of completeness should my finding that termination was justified be in error. The Closed Door Lunch [ 134 ] In the wake of the plaintiff’s termination, long-time employees in Calgary reported an incident from early 2009 that had troubled them. The Plaintiff’s common law partner [“BS”] had called, asking whether his office had blinds on the windows that exposed it to the general office area and a lock on the door. She was told that it did. She arrived sometime thereafter, carrying lunch.

She entered the plaintiff’s office, closed the door and lowered the blinds. After a period of time, she and the plaintiff left the office and the premises together. A staff member noticed that the lunch had gone uneaten. [ 135 ] RS, the female employee who had taken the call from BS, and who sat directly outside the plaintiff’s door, testified about the event.

She said that she had gotten up and left the area after the blinds were drawn and the door closed because she, “didn’t want to hear it.” She further described how, upon the plaintiff’s return, he was engaged in conversation with a group of 4-5 employees who had all heard the gossip about the closed-door visit. GG, who was amongst the group, asked the plaintiff: “So, did you get lucky?” She said the plaintiff simply smirked in response, but said nothing.

She testified that she was left with distinct impression that sexual activity had occurred. [ 136 ] The plaintiff acknowledged that GG had made the “get lucky” comment and that he did not say anything to contradict the suggestion, but rather had laughed. He claimed no explanation was required because it was just a joke between friends. GG denied making the comment, but I am satisfied that the events took place as RS described. [ 137 ] The plaintiff called his former partner, with whom the liaison supposedly took place.

She acknowledged the basic factual surrounds of the event, but vehemently denied the suggestion that anything sexual had taken place. Findings about the Closed Door Lunch [ 138 ] I am not persuaded that anything inappropriate took place in the plaintiff’s office that day, over a decade ago. I accept BS’s evidence on this point. At the time, she was recovering from a severe head injury and remained in a neck brace. She still so disabled that she could not drive herself to appointments. These factors make the alleged liaison unlikely.

[ 139 ] That said, the entire episode was notably badly handled. The real issue is not so much whether the plaintiff had engaged in sexual activities in his office, but rather that he permitted a situation to prevail whereby his staff were left thinking he had. Permitting the impression to propagate that a manager engaged in that kind of behaviour, right in the midst of the workplace, during work hours, was a dismal managerial move. [ 140 ] However, this event does not constitute after-acquired cause for termination.

The plaintiff’s level of responsibility for this incident is diminished both by the fact that he neither made, nor knew about, BS’s gossip-starter phone call, and neither instigated nor invited GG’s ‘get lucky’ comment. Rather, his fault lay in not clearing the air after GG’s ‘joke’. Rather, it was the sort of single-instance bad judgment that would justify discipline and a warning that more of the same could lead to dismissal. [ 141 ] It is regrettable that the employer chose to advance this incident as an actual sexual encounter, rather than as a case of poor handling of an unfortunate series of events.

This necessitated the plaintiff calling BS, and generated more heat than light. Vacationing with CR [ 142 ] The plaintiff took trips to his recreational property with CR, and the rest of the staff knew about it. The defendants led evidence that he acted flirtatiously with her, and made suggestive comments about their relationship and his intentions.

Both the plaintiff and CR denied this latter allegation, but acknowledged a close friendship that included vacationing together. [ 143 ] Even if these events occurred as the defendant alleged, they would not constitute fireable misconduct, either in isolation or cumulatively. Again, the plaintiff unwisely permitted the impression of an uncomfortably close relationship with one of his employees to develop amongst his staff. This could properly have been the subject of disciplinary warnings and actions if an employee-management fraternization policy had existed.

However, no such policy existed, and no such warnings were ever given. Neither of these events caused major disruptions in the workplace nor constituted serious wrong doing per se. Company operations were not disrupted, no other employees felt compelled to inform Lloyd or leave their employment as a result. [ 144 ] While neither set of these events reflect well on the plaintiff’s judgment, I find that the defendant has not established after- acquired cause on these bases. [ 145 ] The latter set of allegations involving CR do, however, provide relevant context for the plaintiff’s favourable treatment of TG.

Whatever the nature of their relationship, the plaintiff was close to CR, and wanted to help her son. The closeness of this relationship explains the lengths he went to on TG’s behalf, to his own ultimate detriment. No Punitive or Aggravated Damages in any Event [ 146 ] The plaintiff claims enhanced damages on the basis of the defendants having advanced the personal and embarrassing grounds described above.

An award of punitive damages requires the Court to find malicious and high-handed conduct amounting to, “a breach of a distinct and separate contractual duty or other provision or other duty, such as a breach of a fiduciary obligation.” Elgert v Home Hardware Stores Limited , 2011 ABCA 112 at para 79 ; Whiten v Pilot Insurance Co , 2002 SCC 18 at paras 82-83 . [ 147 ] It is far from clear that pleading a defence could constitute this sort of wrong. In this case, I do not find that the allegations of workplace impropriety were factually unjustified.

Moreover, while the evidence leads me to conclude that the plaintiff did not engage in the most serious alleged conduct, I have concluded that his handling of both BS’s visit and his friendship with CR manifested poor judgment and management practices. Therefore, I find no basis for an award of punitive damages for these matters having been aired: Porta v Weyerhaeuser Canada Ltd , 2001 BCSC 1480 at para 145 . [ 148 ] Conceptually, leveling scandalous or embarrassing allegations in the context of a wrongful dismissal fits better under the umbrella of aggravated rater than punitive damages.

The Supreme Court has held the conduct of an employer surrounding dismissal may give rise aggravated damages where is “untruthful, misleading or unduly insensitive”: Keays v Honda Canada Inc , 2008 SCC 39 para 57 . The ambit of “conduct” in this context extends to: ...insincerely relating to others embarrassing or demeaning (but unfounded) reasons for the dismissal, when the employer does not honestly believe those grounds exist. Soost v Merrill Lynch Canada Inc v Soost , 2010 ABCA 251 at para 16 . [emphasis added] [ 149 ] An award of aggravated damages is heavily dependent upon a finding of bad faith conduct.

The mere fact that an employer fails to prove sensitive allegations does not necessarily give rise to aggravated damages: Elgert at paras 74-77 . In this case, the defendants had a sound basis to believe that inappropriate conduct that occurred. The fact that those circumstances were not found to rise to grounds for dismissal does not mean that the defendant acted in bad faith by bringing these events into the litigation. At its highest, the defendants’ invocation of these unsuccessful but somewhat salacious grounds may have been unnecessary.

It was not an independent compensable wrong or act of bad faith conduct. The plaintiff behaved poorly in respect of both of the circumstances which he sa

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