2015 QCCA 2014, 2015 QCCA 2014

Azeff c. Marchés mondiaux CIBC inc. 2015 QCCA 2014 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-024540-148 (500-17-078195-131) DATE: December 3, 2015 CORAM: THE HONOURABLE NICHOLAS KASIRER, J.A. DOMINIQUE BÉLANGER, J.A. MARK SCHRAGER, J.A. PAUL AZEFF KORIN BOBROW APPELLANTS – Impleaded parties v. MARCHÉS MONDIAUX CIBC INC.

RESPONDENT – Plaintiff and COMMISSION DES RELATIONS DU TRAVAIL IMPLEADED PARTY – Defendant JUDGMENT [ 1 ] This is an appeal from a judgment rendered on June 3, 2014 by the Superior Court, District of Montreal (the Honourable Justice Hélène Le Bel), sitting in judicial review of a decision of the Commission des relations du travail of June 19, 2013. [ 2 ] For the reasons of Justice Schrager, with which Justices Kasirer and Bélanger agree, THE COURT : [ 3 ] GRANTS the motion to adduce new evidence; [ 4 ] ALLOWS the appeal; [ 5 ] SETS aside the judgment of the Superior Court; [ 6 ] DISMISSES the motion for judicial review; [ 7 ] RETURNS the matter to the Commission des relations du travail to be dealt with by Pierre Flageole, administrative judge, or another available administrative judge of the said Commission for the sole purpose of reopening the hearing to consider the following new evidence and such other evidence or matter arising therefrom or related thereto so as to reconsider the dismissal of Appellants:

i) Reasons and Decision of the Ontario Securities Commission dated March 24, 2015 in the matter of Paul Azeff, Korin Bobrow, Mitchell Finkelstein, Howard Jeffrey Miller and Man Kin Cheng (a.k.a. Francis Cheng); ii) Decision of the Ontario Securities Commission dated August 24, 2015, in the aforementioned matter; iii) Extract of transcripts of the testimony of Appellants in the foregoing matter filed in support of Respondent’s motion before this Court dated September 15, 2015; [ 8 ] THE WHOLE without costs. NICHOLAS KASIRER, J.A. DOMINIQUE BÉLANGER, J.A. MARK SCHRAGER, J.A.

Mtre Sébastien Dubois GREENSPOON BELLEMARE For Appellants Mtre François Fontaine Mtre Éric Lallier NORTON ROSE FULBRIGHT For Respondent Date of hearing: September 29, 2015 REASONS OF SCHRAGER, J.A. [ 9 ] This is an appeal from a judgment rendered on June 3, 2014 by the Superior Court, District of Montreal (the Honourable Justice Hélène Le Bel), sitting in judicial review of a decision of the Commission des relations du travail (“CRT”). [1] [ 10 ] The Judgment granted the motion in judicial review and quashed the decision of the CRT of June 19, 2013. [2] The latter had granted Appellants recourse under An Act Respecting Labour Standards , [3] declaring that their dismissal by Respondent was without just and sufficient cause and reserved jurisdiction to adjudicate on the remedies arising from such wrongful dismissal. [ 11 ] Appellants were employed by Respondent as investment advisors since 2001.

As of September 2010, the aggregate value of their accounts was approximately $200 million. [ 12 ] In August 2009, Respondent was informed by the Ontario Securities Commission (“OSC”) that it was investigating Appellants for allegedly trading and recommending that clients trade certain shares based on insider information obtained between 2004 and 2007. Respondent cooperated with the OSC by copying the hard drives of Appellants’ computers and also by providing documentation to the OSC. In February 2010, Appellants answered the OSC’s questions during a deposition and provided the documentation requested of them.

Their employer, the Respondent, was supportive, even paying their legal fees. [ 13 ] On October 4, 2010, Respondent’s chief compliance officer, Mr. William Lyons, interviewed Appellant Azeff. Unbeknownst to the latter, Mr. Lyons was in possession of the contents of Mr. Azeff’s computer and various documents pertinent to the OSC’s concerns. Mr.

Lyons concluded at that time that, though the trading in one stock (Masonite) was suspicious, the evidence of insider trading was inconclusive. [ 14 ] On November 11, 2010, the OSC filed a formal complaint against Appellants and several other individuals alleging an insider trading scheme whereby between 2004 and 2007, one Mitchell Finkelstein, a Toronto corporate lawyer, communicated confidential information from the files of clients of his law firm concerning pending transactions involving public companies. These transactions would affect the price of the shares.

The information allowed Appellants to profit by trading for their own account and purchasing shares for clients so that Appellants benefitted from the commissions earned. The volume of stock purchased was considerable. On November 12, 2010, faced with these grave allegations of the OSC, Respondent suspended Appellants and appointed Mr. Paul Steep, a Toronto securities lawyer, to investigate and opine as to whether Appellants had breached any “securities laws or CIBC policies”. [ 15 ] Mr. Steep interviewed the Appellants on November 25, 2010.

His report delivered to Respondent on December 1, 2010, was a key piece of evidence before the CRT. He found Appellants’ conduct to be “highly suspicious” but he was unable to “conclude with certainty that Appellants breached insider trading and tipping provisions of the Securities Act ”. However, Mr. Steep did say that Appellants “likely breached several CIBC policies and in our view, lacked all credibility when explaining those breaches”. The policy breaches invoked by Mr.

Steep will be outlined below. [ 16 ] Two days following the Steep report, Appellants were fired “for cause” by Respondent, though no reasons were given to them. Indeed, it was not until April 3, 2012 that written reasons for the dismissal were communicated to Appellants. [ 17 ] Appellants contested their dismissal on February 16, 2011 by filing complaints pursuant to

Section 124 of An Act Respecting Labour Standards . [4] [ 18 ] The hearing commenced before the Commissaire du travail on June 11, 2012 and lasted fifteen days, including three days of argument. An enormous documentary record was created and several witnesses were heard, including Appellants and Mr. Steep. [ 19 ] The Decision includes the following extract from Respondent’s letter of April 3, 2012 (which oddly was not filed in the record before this Court): It is CIBC World Markets inc.’s (« CIBC WM ») position that both Mr. Azeff and Mr.

Bobrow did not have an adequate and reasonable basis for making representations to clients, and in particular did not maintain a complete reasonable basis file. In failing to have an adequate and reasonable basis for making representations to clients and in the absence of a reasonable basis file , both Mr. Azeff and Mr. Bobrow were in contravention of

Section 2.3.6 (“Know your Securities”) of the CIBC Wood Gundy Advising and Trading Policy. It is also CIBC WM’s position that both Mr. Azeff and Mr. Bobrow failed to adhere to the Minimum Standards provided at

Section 2.3.7 of the CIBC Wood Gundy Advising and Trading Policy by failing to properly inform themselves before making a recommendation not

covered by CIBC WG Research. Further, it is CIBC WM’s position that both Mr. Azeff and Mr. Bobrow failed to retain records by not retaining their reasonable basis file for seven (7) years, contrary to

Section 2.3.10 of the CIBC Wood Gundy Advising and Trading Policy. CIBC further contends that both Mr. Azeff and Mr. Bobrow traded in their own personal accounts in advance of very active client solicitation, the whole contrary to

Section 3.1.6 (« Client Priority Rule ») of the CIBC Wood Gundy Advising and Trading Policy. CIBC WM will also show that Mr. Azeff's and Mr. Bobrow's explanations given during the investigation carried out by CIBC World Markets inc. lacked credibility , were frequently contradictory, appeared rehearsed, sometimes illogical and untruthful. [Emphasis in original] [ 20 ] The source of these recriminations appears to be Mr.

Steep’s report, which was also filed in evidence before the CRT and which was not communicated to Appellants prior to the CRT proceedings. [ 21 ] The CRT decided, after a detailed review of the evidence, that the grounds for dismissal based on the alleged failure to comply with CIBC policies had not been made out by Respondent. The Superior Court judge did not impugn the reasonableness of this part of the Decision. [ 22 ] However, the judge ruled otherwise regarding the last paragraph of the reasons for dismissal – i.e. that Appellants’ explanations given to Mr. Steep lacked credibility.

In the opinion of the judge, the Decision holding that this ground had not been established was unreasonable. [ 23 ] The CRT undertook a detailed examination of each recrimination of Respondent based on observations or conclusions drawn by Mr. Steep.

Respondent underscored its submission by stating that Appellants had ample opportunity to explain and set the record straight during the hearing before the CRT, which they failed to do. [ 24 ] As stated above, the judge concluded that the initial ground for dismissal, consisting of a litany of alleged transgressions by Appellants of CIBC policies, had not been established and that the conclusion of the CRT in such regard was reasonable. [ 25 ] The judge analyzed each factual element examined by the CRT regarding the second ground to arrive at the conclusion that the Decision was unreasonable and that Appellants did not have the necessary credibility to continue their employment with Respondent.

The judge observed that the administrative judge erred by deciding not whether Appellants lacked the credibility to continue their employment, but rather whether Appellants were credible witnesses before the CRT. The judge continued on to examine in detail the specific instances reviewed by the administrative judge as follows:

i) The judge observed that the administrative judge was simply wrong to conclude that it had not been demonstrated that Appellant Azeff had lied about his relationship with Mr. Finkelstein. The issue was whether the employer could have an unfavourable impression of Appellant Azeff’s credibility from his manner of describing his relationship with Mr.

Finkelstein, which description the judge characterized as lacking in transparency. ii) The judge analyzed the proof to conclude that the administrative judge misconstrued the evidence to decide that Appellants’ explanation of the massive purchase of Masonite stock was adequate. iii) The judge criticized the administrative judge’s acceptance of Appellants’ explanation of their requests for research materials after the Masonite stock purchase.

Appellants stated that they had requested the information as part of their ongoing due diligence obligations in maintaining proper research on the stock once purchased and that they were not merely “papering” their file to justify the purchases after the fact. iv) The judge questioned the absence of adequate explanations during the testimony of Appellant Bobrow for an email exchange with a client regarding the purchase of Masonite stock.

v) The judge criticized the administrative judge for not addressing the behaviour of Appellants during their interview with Mr.

Steep as reported by the latter who concluded that: In the absence of a compelling explanation as to why they were suddenly recommending Masonite to their clients on November 19, 2004, their conduct is highly suspicious and incompatible with the standards required of advisors who engage in trading and make investment recommendations to CIBC Clients. [ 26 ] It should be added that the judge did not discuss a significant element of Appellants’ strategy to purchase Masonite stock proffered by the Appellants and accepted by the administrative judge – i.e. that the construction prospects following the destruction wreaked during the 2004 hurricane season would be stellar for Masonite’s business. [ 27 ] Despite the foregoing, the judge decided that the allegations of the OSC were sufficiently serious such that the absence of a cogent explanation (even if not proven to be untruthful) justified the employer in dismissing the Appellants because they lacked the necessary credibility to carry out their duties.

Their positions dictated that they maintain a high standard of integrity and honesty such that if the employer was given serious reasons to doubt the Appellants’ probity then dismissal was justified. [ 28 ] Given the foregoing analysis, the judge concluded that the administrative judge examined the credibility of Appellants as witnesses before him rather than their credibility to continue as investment advisors in the employ of Respondent. As such, the judge concluded that the Decision was unreasonable as not falling within the possible outcomes of the enquiry. Consequently, the judge quashed the Decision.

[ 29 ] The OSC commenced hearings on the complaint against Appellants after the Decision was issued. These proceedings were still ongoing at the date of the Judgment. On March 24, 2015, the OSC issued its decision finding, inter alia , that Appellants, together with others, had engaged in insider trading regarding the stock of Masonite (and another company referred to as Dynatec) by acting on confidential information and tips communicated to them by the lawyer Mr. Finkelstein.

Regarding the similar accusation with respect to the Placer Dome shares, the explanation of Appellants was accepted and the allegation dismissed by the OSC. [ 30 ] The OSC issued its decision sentencing the Appellants on August 24, 2015. [ 31 ] Both of these OSC decisions are under appeal. [ 32 ] Respondent seeks by way of motion before us to adduce both decisions of the OSC and extracts of Appellants’ testimony before the OSC as new evidence pursuant to

Article 509 C.C.P . I will deal with the new evidence at the conclusion of these reasons rather than immediately, for reasons that will become evident. [ 33 ] On the issues in appeal other than the new evidence, there is no debate that the standard applicable to this judicial review is that of reasonableness and that as a general premise, since the issues were largely factual, a reviewing court should hesitate to intervene. [5] All of this is correctly stated by the judge: [41] Il s'agit ici d'une décision de la Commission des relations du travail et de la décision d'un juge administratif sur deux plaintes de congédiement injuste déposées par deux employés en vertu de la

Loi sur les normes du travail . Ni la compétence de la Commission, ni la recevabilité du recours ne sont contestées. [42] Les décisions de la Commission sont protégées par une clause privative dite « complète » et il est manifeste qu'il s'agit d'une matière qui relève tout particulièrement de la compétence de la Commission et de son expertise.

Il s'agit donc d'une décision qui mérite déférence et la norme de contrôle applicable est celle de la raisonnabilité telle que définie dans Dunsmuir c Nouveau-Brunswick et la jurisprudence subséquente. [43] À première vue, la décision du juge administratif semble fondée sur son analyse de la preuve et son appréciation de la crédibilité des témoins qu'il a entendus. Il retient le témoignage des plaignants plutôt que les prétentions de l'employeur ou de ses témoins et il accueille les plaintes. [44] Il s'agit d'un cas où normalement, la Cour supérieure ne devrait pas intervenir.

Toutefois, dans le présent cas, le Tribunal croit qu'il est approprié et nécessaire de le faire. Pour expliquer cette conclusion, il faut distinguer les deux volets de la décision. [References omitted] [ 34 ] The judge continued on to examine in detail the treatment by the administrative judge of the two grounds of dismissal.

Such an examination is open to the reviewing judge. [6] A palpable error of fact can be grounds for a reviewing court to intervene on the basis of reasonableness. [7] However, the Decision should be approached as a whole [8] “without a line-by-line treasure hunt for error”. [9] [ 35 ] The judge found that regarding the first ground of dismissal (that Appellants had failed to respect CIBC policies) the Decision was reasonable.

However, on the ground that Appellants had lost the necessary credibility required to continue their employment, the judge found that the CRT’s dismissal of this ground was unreasonable as not forming a possible outcome given the evidence submitted; the judge of the Superior Court reviewed the evidence and came to a conclusion different from that of the CRT. [ 36 ] The judge concluded that the administrative judge misunderstood the credibility ground of dismissal as meaning that the Appellants were not credible witnesses at the hearing: [62] (…), mais il traite le dossier comme si la seule question qui lui était soumise était celle d'apprécier la crédibilité des mis en cause lors de leur témoignage devant lui. [ 37 ] The judge based this observation on paragraph 146 of the Decision : [146] Il appartenait à l'employeur de faire la démonstration que les plaignants avaient menti devant la Commission.

Il n'y est pas parvenu. La Commission n'a aucune raison de ne pas croire les plaignants lorsqu'ils expliquent leur compréhension des règles de l'employeur et lorsqu'ils témoignent de la manière dont ils s'y sont conformés. [ 38 ] Thus, the judge concluded that the administrative judge focused on the wrong issue. [ 39 ] The judge cites paragraph 146 out of context, thereby distorting the meaning of the Decision.

The second ground of dismissal (the loss of credibility) was stated by the Commissaire as follows: [101] En quelque sorte, l'employeur présente ce motif de congédiement comme étant indépendant de celui du non-respect des politiques, un motif autonome et suffisant en soi. [102] Dans le plan d'argumentation qu'il a déposé à la Commission, l'employeur décrit comme suit les éléments sur lesquels il s'appuie pour conclure au manque de crédibilité des plaignants : Les réponses évasives et contradictoires de Paul Azeff relativement à sa relation avec (nom omis); L'absence d'explications claires et satisfaisantes des plaignants relativement aux achats massifs du

titre Masonite le 19 novembre 2004; L'absence d'explications satisfaisantes pour expliquer les nombreuses demandes documentaires postérieures au début des achats du

titre Masonite le 19 novembre 2004;

Les explications diffuses et contradictoires des plaignants relativement à l'importance de la « Golding cross » et de la saison des ouragans pour justifier leur achat massif d'actions du

titre de Masonite; Les explications évasives, incomplètes et incompatibles de Korin Bobrow relativement à son échange de courriels avec (nom omis). Le comportement général des Plaignants lors des entrevues réalisées par Paul Steep. (Reproduit tel quel) (Les noms des tiers ont été omis) This ground of dismissal originates in comments found in Mr. Steep’s report regarding the explanations given to him by Appellants following the OSC accusations prior to their dismissal. However, the grounds of dismissal were only communicated to Appellants in April 2012.

Here is what the administrative judge said: [143] Dans son rapport, M e Steep reconnaît que les plaignants ont bien collaboré pendant son enquête. Il ajoute cependant que les deux manquent de crédibilité. [144] La Commission est d’avis que l’employeur n’a pas fait la démonstration de cet état de fait [loss of credibility]. Au contraire, ce qui ressort de l’ensemble de la preuve, c’est que les plaignants n’ont pas été traités de façon équitable dans ce processus d’enquête. On les a convoqués avec un préavis très court. On les a privés du procureur qui les représentait depuis le début de l’année 2010.

On ne leur a pas remis à l’avance les documents sur lesquels on voulait les interroger. Ils n’ont pas eu accès à leur bureau, leurs dossiers et leur ordinateur. Et, il faut se rappeler qu’on les interrogeait sur des faits remontant à plusieurs années. [145] La Commission a lu avec une très grande attention le rapport de Me Steep. Elle n’y a rien trouvé qui puisse être convainquant quant à l’absence de crédibilité des plaignants. Elle y a par ailleurs trouvé un certain nombre d’hypothèses émises par Me Steep et que ce dernier semble préférer aux explications des plaignants.

Ces hypothèses ne suffisent pas à démontrer, toutes circonstances étant pesées, que l’employeur a fait la preuve que les plaignants n’ont pas été « honnêtes » au cours de l’entrevue du 25 novembre 2010. La crédibilité des témoins à l’audience [146] Il appartenait à l’employeur de faire la démonstration que les plaignants avaient menti devant la Commission. Il n’y est pas parvenu.

La Commission n’a aucune raison de ne pas croire les plaignants lorsqu’ils expliquent leur compréhension des règles de l’employeur et lorsqu’ils témoignent de la manière dont ils s’y sont conformés. [Emphasis added] [ 40 ] The purpose of the reference in paragraph 146 to credibility of the Appellants is simply to state that the administrative judge accepted their testimony regarding their conduct and practices which were in accordance with CIBC policy.

Paragraph 146 of the Decision quoted above is also a reply to an argument of the Respondent recorded in the Decision as follows: [103] L’employeur ajoutera que le comportement des plaignants au cours de l’audience devant la Commission est demeuré le même que celui dont ils ont fait montre devant Me Steep, de sorte que si les plaignants peuvent prétendre avoir été traités injustement par Me Steep, l’audition devant la Commission leur a donné tout le loisir de présenter des explications satisfaisantes, ce qu’ils n’ont pas fait. [ 41 ] Accordingly, in my view, the judge misread or misunderstood the Commissaire who appeared to have properly grasped the issue of dismissal for loss of credibility and was not unreasonable in his treatment of it.

Perhaps he could have been clearer in differentiating credibility during the hearing before him and loss of credibility as a ground of dismissal but the Decision was still a reasonable one. [ 42 ] In addition of the foregoing position, the judge also reviewed in detail the factual analysis of the administrative judge on the issue of Appellants’ loss of credibility, the main thrust of which is outlined above in these reasons and which I address now as follows:

i) even though the judge conceded (as the Commissaire observed) that Appellant Azeff did not hide his relationship with Mr. Finkelstein, the judge felt that the answers given to Mr. Steep lacked transparency justifying the employer to lose faith in Mr. Azeff’s credibility. We must remember that this was based (at least in part) not on a transcript of Mr. Azeff’s interview with Mr. Steep, but rather on Mr. Steep’s report. The Commissaire actually heard Appellant Azeff and found that there was no attempt to hide his relationship with Mr.

Finkelstein even if the testimony was rapid fire and at times difficult to understand because of poor articulation. ii) The dating of the documentary evidence, which exhibited the conjuncture of the 50 and 200 day weighted averages of the trading prices of Masonite stock (the “golden cross”), is not clear on the record. This was one of the reasons given by Appellants for the purchase of Masonite stock. I do not see in the judge’s observations the demonstration of such a blatant misunderstanding of the proof by the administrative judge to justify concluding that the Decision was unreasonable.

The judge analyzed Appellant Azeff’s testimony before the CRT and drew a fine distinction between the golden cross being a significant consideration in the decision to purchase

Masonite stock versus the deciding element. The situation is similar regarding the purchases of Placer Dome stock. This level of analysis goes beyond a reasonableness inquiry in my opinion. iii) The dates on some backup research papers and specifically a certain Bloomberg report of November 19, 2004 were questioned. However, this could be the date the document was printed and not its creation.

The report in question referred to analyst’s recommendations dated October 20 and 21, 2004, so that the report could reasonably have existed and been to Appellants’ knowledge prior to the purchase of the stock in question making the employer’s suspicions unfounded. iv) Appellant Bobrow’s explanations at the CRT hearing regarding an email exchange with a certain client were examined by the judge, who not only found the answers of Mr. Bobrow wanting, but the fact that the administrative judge drew no conclusion, unreasonable.

The exchange was nebulous as far as demonstrating a lack of credibility on the part of Bobrow to perform his duties.

v) The judge devoted her largest critique to the administrative judge’s treatment of the behaviour of Appellants during the interview with Mr. Steep. The judge criticized the minimal weight accorded by the administrative judge to Mr. Steep’s assessment of Appellants’ credibility. The Commissaire found that the hypotheses put forward by Mr. Steep did not constitute evidence upon which a conclusion of the Appellants dishonesty could be based. This finding was made on a review of the evidence presented. It was not unreasonable in my view.

The judge’s re-examination of both the evidence and the credibility of Appellants at the CRT hearing, summarized above, went beyond an examination based on reasonableness. No important proof was omitted by the administrative judge. Certain factual conclusions were drawn and weight given to elements of evidence.

The judge even concluded that the Decision was well written, [10] but in the judge’s view the Commissaire treated the case as a commonplace dismissal of a low ranking employee. [11] According to the judge, the Decision fails to focus on the importance of integrity and honesty required of an investment advisor managing accounts valued in the hundreds of millions of dollars: [88] (…) ils doivent le faire en se conformant aux lois et à la réglementation qui s'appliquent à l'industrie dans laquelle ils œuvrent. [89] Le contrat d'emploi qui est intervenu entre les plaignants et leur employeur stipule que l'intégrité et l'honnêteté sont des éléments essentiels de leur fonction. [90] Il s'agit de professionnels qui sont très autonomes dans l'exercice de leurs fonctions.

Par ailleurs, ils doivent être accrédités et ils sont tenus de respecter les règles applicables à leur profession.

Ils doivent sans doute se conformer aux règles de leur employeur, mais aussi aux normes et aux règles qui s'appliquent à leur profession, ce qui inclut les règles d’éthique. [91] L'enquête faite par Me Steep n'est pas sans importance, mais la Commission n'avait pas à décider si Me Steep avait raison de conclure que les plaignants n'étaient pas crédibles ou s’ils avaient menti à la Commission, mais bien si CIBC/Wood Gundy avait démontré qu'elle avait raison de conclure que les plaignants n'avaient plus la crédibilité requise pour occuper leur emploi et, le cas échéant, s'il s'agissait là d'une cause juste et suffisante de congédiement. [92] Or, il est établi que le 11 novembre 2010, après enquête, la Ontario Securities Commission a émis un Amended Statement of Allegations dans lequel les plaignants et d'autres personnes sont accusés d'avoir enfreint les règles sur les délits d'initiés.

Il s'agit là de règles importantes mises en place pour protéger l'ordre public et les consommateurs et pour assurer le bon fonctionnement du marché des valeurs mobilières. Et ce document est, le juge administratif l'admet, « franchement dévastateur » pour Azeff et Bobrow et pour les autres personnes en cause. [93] C'est là un événement lourd de conséquences. L’ Ontario Securities Commission est le pendant ontarien de l' Autorité des Marchés financiers au Québec. C'est l'organisme qui est chargé de réglementer et de superviser le marché des valeurs mobilières en Ontario.

Le fait que, après enquête, l'OSC porte des accusations très circonstanciées et très détaillées, ne prouve pas la culpabilité des plaignants, bien sûr. Azeff et Bobrow bénéficient de la présomption d'innocence, comme toute personne qui est accusée. [94] Toutefois, ces allégations remettent sérieusement en question le professionnalisme et l'intégrité des personnes inculpées.

Dès lors, il devenait tout à fait raisonnable et même approprié pour CIBC/Wood Gundy de se poser des questions et d'en poser aux mis en cause. [Reference omitted] [ 43 ] Unfortunately, in my view, the judge fell prey to the manner in which CIBC dealt with the matter. As Mr. Steep pointed out in his report in December 2010, Appellants’ behaviour was suspicious, but there was no proof specifically of the insider trading. Contrary to Mr. Steep’s allegation, the CRT concluded after a detailed review of the evidence that the accusations of failure to respect CIBC policy were unfounded.

As well, there was no proof from any source extraneous to CIBC (such as industry colleagues, fund managers or clients) to demonstrate the alleged lack of credibility. Thus, by definition this lack of credibility was the subjective view of the employer based, as the judge pointed out, on the OSC accusations. The manner in which CIBC proceeded (i.e. by appointing Mr.

Steep to “investigate”) succeeded in strategically reversing the onus to oblige Appellants to demonstrate to their employer that the concerns were unfounded during an interview not conducted in a fair manner as the Commissaire observed. [12] As all concede (including the CRT and the judge), the employer had the burden to demonstrate just and sufficient cause to terminate the employment. By requiring that Appellants explain and questioning the probity of the explanations, the employer found a cause (lack of credibility) to dismiss the Appellants.

This contorts reality and the legal burden which is the employer’s to satisfy. [ 44 ] The alleged loss of credibility as stated above stems from the conclusions of Mr. Steep in his report. It will be remembered that Mr. Steep concluded that Appellants had breached numerous CIBC policies. Based on these policy breaches (e.g. failure to document purchase decisions with adequate research), he concluded that Appellants’ explanations for their purchases were untruthful. This mutated into the loss of credibility ground for dismissal invoked by Respondent in its letter of April 3, 2012 quoted above.

However, this ground necessary flows from the failure to respect CIBC policy, which ground was not maintained by the CRT and this finding was not questioned by the judge. In my mind, in the specific factual circumstances of this case the two grounds are intimately linked so that once the Decision on the first ground (non-respect of policy) was maintained, the conclusion of the judge on the second ground (loss of

credibility) no longer had any objective foundation. The judge’s analysis therefore went beyond a reasonableness inquiry. [ 45 ] Moreover, this lack of credibility observed by Mr. Steep, occurred after the Appellants had already been suspended as a result of the ongoing investigation of the OSC culminating in the charges filed in November 2010. Accordingly, the Appellants’ loss of credibility was in effect based on the OSC accusations or Mr. Steep’s lack of satisfaction with Appellants’ explanations.

This contradicts the presumption of innocence from which Appellants benefited as the judge herself confirmed. [13] [ 46 ] The verbal awkwardness of the Appellants during the Steep interview or even rambling testimony given by them at the CRT hearings does not constitute grounds for dismissal. Yet, by characterizing the Decision as unreasonable that is what the judge has done. The administrative judge on the other hand found that the hypotheses put forward by Mr.

Steep in his report to rebut the explanations given by Appellants for the trades in question, were not proved and hence insufficient to justify the loss of credibility. This assessment, being essentially one of fact, was the Commissaire’s to make, which is what he did on a detailed examination of the evidence. The judge substituted her opinion for that of the administrative judge, which would justify our intervention. [ 47 ] The requirement of the highest levels of integrity and honesty in a position such as that occupied by Appellants and as indicated by the trial judge is of the utmost importance.

However, dismissal for failure to live up to that standard cannot be based on the mere subjective belief of the employer.

More precisely, it cannot be based on suspicion arising from poor answers to inquiries seeking justifications from alleged misconduct particularly when the objective recriminations (failure to respect CIBC policy) are held as unproven by a competent tribunal (the CRT). [ 48 ] As a final word on this matter of lack of credibility as a ground for dismissal, I do not disagree with the judge that the utmost integrity and honesty are important requirements for positions such as those formerly held by Appellants.

However, the subjective loss of faith by the employer in the credibility of the employee without proof of objective facts does not constitute sufficient cause. This so- called lack of credibility is tantamount to what has been termed “loss of trust” by the employer in the employee. It is a ground to terminate the contract of employment, but it is not just and sufficient cause to terminate the contract without notice or the monetary equivalent of such notice. In such regard, this Court has recently stated that: [14] [77] La notion de « motif sérieux » qui se trouve à l’

article 2094 C.c.Q. s’applique à tous les salariés, quel que soit leur rang hiérarchique. Le motif sérieux ou la cause juste et suffisante pouvant justifier un congédiement sans délai-congé est un manquement grave et répété du salarié d’assumer ses obligations, lequel est déterminé en tenant compte des circonstances propres à chaque cas. [78] La perte de confiance ne peut constituer, à elle seule, sans la preuve d’un manquement grave et répété, une « cause juste et suffisante » justifiant un congédiement sans indemnité, au sens de l’

article 2094 C.c.Q. [79] Je conviens que la rupture du lien de confiance envers un haut dirigeant peut être l'occasion de son congédiement. Cela n’a rien de surprenant, d’autant qu’en droit québécois, la résiliation unilatérale d’un contrat de travail à durée indéterminée est admise, même s’il n’existe aucun motif justifiant pareil congédiement. Toutefois, en un tel cas, l’employeur demeure tenu de verser une indemnité tenant lieu du délai-congé. [ 49 ] Without belabouring the point, an employee who steals from his employer could be dismissed for cause.

First and foremost, the theft must be proven. [15] However, if the employer only suspected the employee of theft without proof and was not satisfied with the employee’s explanation, this is not just and sufficient cause for dismissal.

Such subjective loss of trust arising from dishonesty that was only suspected could lead to dismissal, but adequate notice or indemnity in lieu of notice would be required to terminate the employment. [ 50 ] I will now deal with the motion to adduce the new evidence which, as stated above, includes the decision of the OSC finding that Appellants had indeed engaged in insider trading. [ 51 ] Regarding the new evidence,

article 509 C.C.P. provides as follows:

509. (…) In exceptional circumstances, the Court may, if the interests of justice so require, allow a party to adduce, in such manner as the Court directs, indispensable new evidence. Applications under this

article are presented by motion, and the procedure is the same as in first instance, in the absence of rules of practice to the contrary. During the hearing of such an application, any party may submit relevant evidence, and the judge or the Court, as the case may be, may return the case to the court of first instance so that further proof relating to the application may be made. (…) 509. […] La Cour peut, si l'intérêt de la justice le requiert, permettre à une partie, en des circonstances exceptionnelles, de présenter, selon le mode qu'elle indique, une preuve nouvelle indispensable.

L'une ou l'autre de ces demandes est soulevée par requête et la procédure est la même qu'en première instance, à moins de règles de pratique contraires. Lors de l'audition d'une telle demande, toute

partie peut présenter une preuve appropriée et, le cas échéant, le juge ou la Cour, selon le cas, peut renvoyer la cause devant le tribunal de première instance pour qu'il y soit fait quelque preuve s'y rapportant. […] [ 52 ] The jurisprudence of this Court has established that the applicable criteria for consideration of an application under

Article 509 C.C.P. are: - the evidence must be new; - the evidence must be indispensable; - the circumstances must be exceptional; - the pursuit of justice must require that the proof be adduced. [16] [ 53 ] In principle, the Court of Appeal should evaluate the facts on the basis of the evidence submitted to the lower court. [17] Facts uncovered after a dismissal unknown to the employer at the time of the dismissal can be introduced before the court of first instance hearing the wrongful dismissal case. [18] As such, the Commissaire correctly observed in the Decision that if the offences alleged by the OSC had been proved before him, the dismissals would have been confirmed. [19] That being said, in appeal, the situation is generally otherwise.

The mission of a court of appeal is to correct errors of the lower courts. [20] The appeal process is not an exercise in updating the record of the court of first instance. [21] If it were, disputes would escape being resolved with finality. There is however a distinction to be made between situations where the new evidence consists of facts occurring after the hearing and judgment in first instance and facts which occurred before the hearing but which were unknown to the parties or as is the case here, suspected but the hard evidence had not come to light.

Thus, by way of example, where products allegedly suffering from latent defects were returned after judgment, the new proof was not allowed in appeal to confirm an expert’s opinion given in first instance. [22] [ 54 ] The OSC’s decisions are definitely new evidence. Counsel for Respondent stated during oral argument before us, that the evidence is not indispensable in the sense that it is not, strictly speaking, proof of the two grounds of dismissal. However, the new evidence is proof of a finding of insider trading by a competent tribunal.

Moreover, the facts of insider trading found by the OSC are facts which occurred before the Decision and before the hearing before the CRT. Indeed, the Commissaire observed: [65] La Commission rappelle que l'employeur ne plaide pas que le congédiement est justifié par les infractions qui sont reprochées aux plaignants dans le « Amended Statement of allegations of staff of the Ontario Securities Commission ». Il est évident que si ces infractions avaient été prouvées par l'employeur, la Commission aurait, sans hésitation, maintenu les congédiements.

Mais ce n'est pas le cas . [Emphasis added] Had the OSC decision been rendered prior to the CRT hearing, the insider trading could have been added as a ground of dismissal. The CRT would then have been correct to consider such new ground of dismissal and permit the production into evidence of the decision of the OSC.

The evidence is in this sense indispensable to a proper disposition of the ultimate issue before the CRT, namely whether the dismissal was for just and sufficient cause. [ 55 ] As to the other governing criteria, no one could contest that the circumstances of this case are exceptional and that the pursuit of the truth and thus, the ends of justice, require the filing of the new evidence. The Supreme Court stated some years ago, that “under a

modern concept of the administration of justice, it is inconceivable that it should not be considered a duty to make use of [the] powers” to allow new evidence in highly exceptional circumstances. [23] Consequently, I propose that the motion to adduce new evidence be granted. The findings of the OSC regarding the insider trading are compelling. The OSC decision on sentence and the extracts of testimony follow as ancillary and part of the complete picture, which should also be adduced into evidence.

I am cognizant that an appeal of the decision of the OSC is pending but that is an additional factual element to be dealt with by the CRT as the trier of fact. There may be others.

As such, the case should be returned to the same Commissaire at the CRT so that the new evidence and any other relevant evidence be considered in determining whether the cause for Appellants’ dismissal is just and sufficient. [ 56 ] The CRT has the power to “review or revoke any decision if a new fact is discovered which, had it been known in time, could have warranted a different decision”. [24] Furthermore, the CRT can “supply any procedure consistent” with the foregoing power which must include the ability to reopen the hearing. [25] These powers provide the jurisdiction of the CRT required to consider the matter anew, as I propose, without our Court setting aside the Decision. [ 57 ] Accordingly, I would propose that the Judgment be set aside and that the motion for judicial review be dismissed.

Furthermore and regarding the new evidence, the matter should be returned to the CRT for a re-hearing in order that it may decide to “review or revoke” the Decision and consider the new evidence and any other evidence or matter arising from it so as to reconsider the dismissal of Appellants in light thereof. It is possible that there is evidence other than or in addition to the OSC decisions and extracts of testimony produced by Respondent before this Court, which may be relevant to this exercise. In such case, any of the parties should be allowed to adduce such additional evidence before the CRT.

The fact of the appeal of the OSC decision is one example, which would meet this requirement. There may be others of which I am unaware. [ 58 ] Thus, I would grant the appeal for the purpose of setting aside the Judgment of the Superior Court but given the new evidence, I would add that the matter be returned to the CRT to be dealt with by the same Commissaire, if possible. No costs will be awarded given the particular circumstances of the disposition of the appeal. MARK SCHRAGER, J.A.