Patterson v. The Bank of Nova Scotia Date:, 2011 BCPC 120

Citation: Patterson v. The Bank of Nova Scotia Date: 20110517 2011 BCPC 0120 File No: 9287 Registry: Port Coquitlam IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: MARILYN PATTERSON CLAIMANT AND: THE BANK OF NOVA SCOTIA DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE DYER Appearing as Agent for Counsel for the Claimant: N. Einarsson (agent for G. Laughlin) Counsel for the Defendant: No appearance Place of Hearing: Port Coquitlam , B.C.

Date of Hearing: May 17, 2011 Date of Judgment: May 17, 2011 [ 1 ] THE COURT: The claimant real estate agent and former employee of the defendant chartered bank sues for damages for wrongful dismissal which she alleges occurred on March 10th, 2008 when her employment as a customer service supervisor was terminated without either notice or payment in lieu of notice. [ 2 ] The defendant bank asserts that she refused to comply with a lawful order given to her in early March 2008 to either cease her work as a realtor or if not she would be dismissed.

She did refuse and was, the Bank asserts, then lawfully terminated summarily for just cause not requiring it to either give notice or pay any money in lieu of doing so. [ 3 ] I intend to briefly summarize the evidence, refer to the contract, and thence the relevant legal principles, and ultimately conclude as necessary with my findings on the two agreed upon issues in this case, namely, A. whether the Bank has just cause to terminate the claimant's employment and if not, B. what amount of damages is the claimant entitled to for failure to give reasonable notice of termination? The Evidence [ 4 ] Ms.

Patterson commenced employment with the Bank of Nova Scotia (hereinafter referred to as "the Bank") on February 17th, 1996. On January 30th, 2006, she was promoted to the position of customer service supervisor, and in November 2007 she was transferred to work as such at the Bank's branch in Pitt Meadows. In 2008, this branch's manager, Mr. Proulx, estimated the Bank had 60,000 to 70,000 employees in total. [ 5 ] Ms. Patterson said she supervised tellers in this position to ensure that they complied with Bank procedures.

At times she also dealt with members of the public, for example, in the face of a customer complaint or to assist a teller having a problem with a customer.

[ 6 ] She was not directly involved in the Bank's lending operations or really any of the Bank's functions or procedures related to loaning money to customers. Ms.

Patterson, and I expect other Bank employees, had some indirect sales responsibilities. [ 7 ] I find that because of the nature of her position and because from time to time she interacted with customers, the Bank expected her and she understood that part of her employment involved making efforts to assess whether there was a Bank service she could suggest and if the customer was interested, referring the customer to the appropriate person in the Branch.

No examples have been given in evidence however clearly sales initiatives could include new accounts, credit cards, bank debit cards and loans of various kinds, including a mortgage for a real estate transaction. [ 8 ] Ms. Patterson generally had a very positive employment history with the Bank prior to her termination. This is not in dispute. [ 9 ] Prior to March 2008 and while employed at the Bank, she also held other part-time employment operating a small business selling party candles.

No objection was raised to her doing so at the time. [ 10 ] She testified that prior to March 2008, other Pitt Meadows branch employees at the Bank also had second or other jobs while employed by the Bank, for example, working as waiters or waitresses and that this employment was never an issue with the Bank in any way. [ 11 ] It is unclear from her evidence if such employment was first cleared by the Bank before she did it or the other employees did it. [ 12 ] I observe the obvious that the business of the Bank neither directly or indirectly involved the sale of candles or serving in public food vending facilities and neither of these jobs have anything to do with the sale of real estate which function is very directly related to what all chartered banks do in a highly competitive business environment, namely, loan people money to buy real estate of various kinds. [ 13 ] Ms.

Patterson testified that her family was involved in the real estate development business. They owned a number of properties. She elected to become a licensed realtor in part with her family's encouragement so that she could obtain listings of these properties for sale and earn some commission as an agent.

Accordingly, having decided to become a real estate agent, in the fall of 2007 while being interviewed for the Pitt Meadows position, she advised the Bank that she was then studying to obtain her real estate licence. [ 14 ] Her evidence which is not really disputed by the Bank is that at the time she was not told that pursuing a real estate career was not permissible or somehow incompatible with the position she sought in the new branch as a customer service supervisor, which position she eventually transferred into in November 2007. [ 15 ] Ms.

Patterson completed her real estate courses by early 2008 while working full-time at the Bank and she later joined the local office of Prudential Realty. [ 16 ] Ms. Patterson testified she did not earn any commissions in 2008 with one exception: she did participate in the sale of certain properties owned by her family. She pursued her real estate activities in the evenings and on weekends while not working at the Bank.

There is no suggestion by the Bank that she in fact performed any of her functions as a real estate agent during her work hours. [ 17 ] It is not in my opinion a stretch to conceive that a successful or any real estate agent working full-time at a chartered bank could very easily be placed in a situation where he or she would be tempted to deal with her real estate customers' needs on Bank time.

In my view, the potential is clearly there, especially in buoyant markets. [ 18 ] Real estate transactions often require very instant responses from agents who want to preserve or obtain customers and meet their immediate needs. We live in an age of instant communication by email, text messaging and by cell phone oral messaging or talking.

Customers of all kinds expect prompt turnaround responses from those they hire to provide services to them and if they do not get such service, can and do move to other service providers who will provide services in this fashion. [ 19 ] I turn to the state of the claimant's employment contract with the Bank. [ 20 ] I find that part of the express terms of her contract, likely from the outset of her employment with the Bank, was a set of "Guidelines for Business Conduct". These Guidelines set out minimum measures of conduct for all Bank employees.

They state that each employee is responsible to ensure that they comply with the Guidelines at all times. Each employee is required to read the Guidelines every year and acknowledge in writing that they have done so. [ 21 ] Ms. Patterson testified that she had familiarized herself with these Guidelines. She did not recall if she in fact read them yearly but she agreed she was generally familiar with their content at all material times and certainly in early 2008 when she was both finishing her real estate course and obtaining employment with Prudential as an agent.

These Guidelines provide under the heading "Introduction" as follows at p. 1: Any breach of the Guidelines is a serious matter and can result in action up to and including termination of employment.

The Bank may be required to report certain types of breaches to regulatory authorities in which the case the employee may be subject to criminal or civil penalties. [ 22 ] The Bank's basic principles are set out at p. 2 in part as follows: You must follow the law wherever the Bank does business and avoid putting yourself or the Bank in a conflict of interest. [ 23 ] Such a conflict would include the employee putting herself in a position where her interest and the Bank's interest did, or in my view, could be in conflict. [ 24 ] I note that as well in these Guidelines the concept of a potential or perceived conflict of interest is also expressly set out.

At p. 4

of the Guidelines under the heading "Avoid putting yourself or the Bank in a conflict of interest" there is set out the following: If you cannot fully and objectively perform your duties and obligations in a particular situation because to do so would prevent you from fully and objectively performing your duties and obligations and another then you have a conflict of interest. Even if you do not have an actual conflict of interest, if other people think you do, they will still be concerned that you cannot act properly.

For this reason, it is almost as important to avoid the appearance of a conflict as it is to avoid an actual one. Being seen or thought to be in a conflict of interest can damage your reputation or the Bank's. If you find yourself in a conflict of interest or a situation where you believe that others might think you have one, you must immediately advise your manager so that action can be taken to resolve the situation.

Your manager who may consult a senior officer if necessary will decide if a conflict exists or if the appearance of a conflict would be damaging to the Bank's reputation. [ 25 ] Nonetheless, I think the only reasonable construction to be given to these Guidelines wherever this concept is referred to, namely, a conflict of interest, is to construe the noun "conflict" to include both actual and potential conflicts. Potential conflicts would include perceived conflicts by Bank customers or clients of the Bank employee. [ 26 ] I agree with counsel for the Bank's submission at para. 33 in

part conveying the sense that the Bank ought not to be required to await an actual or a real conflict of interest developing and possibly doing harm to its reputation before being in a position to deal with and discourage the employee's conduct giving rise to the conflict of interest in issue. In other words, it can act in a preventative proactive way as distinct from a reactive way once a conflict has actually occurred. [ 27 ] Mr. Proulx testified in answer to a question from the Court that the Bank's reputation in the marketplace or business world was very important to it.

He said banking was all about people's perception that it is trustworthy and operated with integrity. This I think is self-evident and obvious as well. [ 28 ] Anyone who has been following the news in the last several years will be aware that Canadian chartered banks pride themselves in their reputation for security and stability in the Canadian and world financial marketplaces. This reputation is what they sell to customers.

Clearly, it is valuable and one that the Guidelines are, on any reasonable construction, designed to protect. [ 29 ] At pp. 9 and 10 of the Guidelines, the following is set out: Outside Business Activities, Financial Interests or Employment You should not commence or continue a business which competes with the Bank or engage in any activity likely to compromise the position of the Bank. As well, do not conduct non-bank business on Bank time or use Bank equipment or facilities to conduct an outside business interest. This includes soliciting other employees to participate.

Neither you nor members of your household should have a financial interest in or with a customer or supplier of the Bank or any other entity having a close business relationship with the Bank if this would put you in a conflict of interest. While employment outside of Scotiabank working hours is not prohibited, this should only be engaged in if there will be no conflict of interest and if the employee's satisfactory performance of his or her job functions with the Bank will not be prejudiced in any way.

Before commencing or continuing an outside business interest, making or holding a financial interest in a Bank customer or supplier or other entity having a close business relationship with the Bank or committing to a job outside Bank working hours, discuss this with your manager to be sure these activities do not create a conflict. [ 30 ] At the same portion of the manual dealing with the above issues, there is a note that appears in the middle of the above text as follows: This policy does not apply to holdings in publicly-traded securities unless you have inside information. [ 31 ] At p. 31 of the Guidelines, "manager" is defined as branch manager (here Mr.

Proulx) or department manager or unit head. [ 32 ] As part of her new employment as a realtor, Ms. Patterson had some cards printed up and openly gave them out to certain colleagues in the Bank. The Bank's evidence in this case is that her work as a realtor first came to its attention on February 21st, 2007 as a result of Ms.

Patterson passing out her business cards to colleagues at work including tellers she supervised. [ 33 ] My common sense tells me this commonplace action could potentially serve at least two purposes: 1. if they wished to sell their own home, they could list it with the claimant or at least involve her in some fashion as a realtor; and 2. if they had a friend or even a bank customer who they knew wanted to sell their home, they could refer such a person for a similar purpose to the claimant.

There could well be other examples. [ 34 ] The Bank would not easily be able to control these types of communications and whether or not they occurred in Bank business hours. [ 35 ] It is not disputed that Ms. Patterson did not -- before seeking or accepting employment with Prudential -- go to her manager, Mr. Proulx, or anyone else and advise him that she wished to seek and obtain such employment, and having regard to the above Guideline at p. 10 discuss with him or anyone else whether or not from the Bank's perspective, this planned activity created a conflict whether real, potential or perceived.

It is clear to me had she done so, the Bank would not have approved of this outside employment. [ 36 ] Based on the evidence in this case I think it is also clear that the Bank would have conducted itself just as it did in the case at bar had it received prior notice of her intentions, namely, given the complainant various options for her continued employment including not working as a realtor and would have terminated her had she refused to do so.

[ 37 ] Mr. Laughlin, counsel for the claimant, says this in his written submission at para. 11: 11. The claimant stated that although she was familiar with the Guidelines for Business Conduct, she did not feel that her becoming a realtor was contrary to these Guidelines. She did not feel that by becoming a realtor she was in any way compromising her ability to perform her duties for the defendant Bank and was careful not to carry out realtor related tasks on the defendant's time.

She also did not feel that her real estate activities would be reasonably construed by third parties as placing her in a conflict of interest given that she had no involvement with the defendant Bank's lending operations. [ 38 ] This evidence is not in dispute. I do, however, observe that Ms.

Patterson was in no position to know what her clients, surely among the third parties referred to, would believe or understand about her role in the Bank and how it did or might impact their business relationship with her or the Bank. [ 39 ] It is obvious that the role of a realtor dealing often with huge transactions in monetary terms and often in a stress-filled environment where time often is contractually of the essence is far more complex than that of a candle vendor or restaurant server. [ 40 ] On February 15th, 2008 after the claimant became an active realtor and when she was just starting out, she testified that she was asked to meet with Mr.

Proulx in his office. She did so and he then said he had learned she was a real estate agent. He told her he was not sure but thought there could be a conflict in her doing so. He told her he would seek advice on this issue from higher up in the Bank and would get back to her. [ 41 ] Ms. Patterson said she then received a letter from him dated March 4th, 2008. This letter notes at p. 1 that Ms. Patterson in the February 15th meeting indicated she did not want to give up her part-time employment as a real estate agent. Ms. Patterson could not recall this when she testified in Court.

I accept that the letter is accurate on point. [ 42 ] The letter then after referring to the Bank's Guidelines for Business Conduct and specifically conflicts stated as follows: After consultation with the Bank's Compliance Department we have confirmed that the Bank has a policy whereby it is inappropriate for branch employees with direct or indirect sales responsibilities to hold outside employment as real estate agents. This policy was implemented after careful consideration and assessment of the risks and potential conflicts of interest associated with branch employees acting as real estate agents.

Due to the nature of your position as a customer service supervisor, you are considered to have indirect sales responsibilities given that your job involves among other things using your interactions with customers to determine potential sales opportunities and referring those customers to sales officers. Accordingly, we advise that you are currently not in compliance with the Bank's Guidelines for Business Conduct and immediate steps must be taken to resolve this. As such, we advise that in order to retain your employment with the Bank you must cease employment as a real estate agent.

In the event you choose to continue selling real estate, we regrettably advise you will not be able to continue in your current position with the Bank. Marilyn, please take the next few days to consider your options in this regard. We will meet again on March 7th, 2008 to discuss your decision. In the interim, if you have any questions or concerns, please do not hesitate to speak with me. [ 43 ] Ms. Patterson recalled there was a second meeting with Mr. Proulx on March 4th after she had received this letter.

She recalled he then told her it would be inappropriate for her to attempt to solicit real estate business from bank customers. This would be a conflict. One focus of the discussion was her possible use of confidential bank information concerning bank customers for her business purposes while working as a realtor. [ 44 ] As well, it was discussed that it could be a problem if she used bank facilities to do her real estate work. She understood following this meeting that the Bank's concern was not related to an actual conflict but more a perceived conflict. I understood this testimony to mean that Mr.

Proulx did not address an actual existing problem but rather potential or perceived problems that might arise if Ms. Patterson both worked in the Bank and as a realtor on a part-time basis. [ 45 ] Ms. Patterson testified that she told Mr. Proulx in this meeting that after 12 years of service with the Bank that she would never dream of abusing her powers as an employee. [ 46 ] In cross-examination, Mr. Proulx was asked: Q All right, and when Ms. -- Mrs. Patterson told you or let me put it this way -- do you recall her telling you that she would never let that happen?

Never let confusion wane in the mind of a real estate client or put herself forward as having any sort of inside pull with the Bank; do you recall her saying that? A Yes. [ 47 ] He said he had to give her a letter dated March 5th according to Ms. Patterson and that he had done so. This letter states as follows: Dear Marilyn, I reference our letter dated March 4th, 2008 and our meeting of yesterday wherein we discussed the fact that your outside activities acting as a real estate agent places you in a conflict of interest and immediate steps must be taken to resolve this matter.

This letter will serve to reiterate the options available to you. As discussed, in order to retain your customer service supervision position you are to required to cease employment as a real estate agent

and all real estate sales activities. Given your stated decision to continue with your real estate sales activities, in an effort to assist you in maintaining your employment with the Bank, we offered another alternative.

Specifically, we offered to grant you an unpaid leave of absence for a 60-day period so that you could seek out alternate positions within the Bank for which you are qualified and that would not be in conflict with your real estate sales activities, i.e. a non-branch environment provided that environment does not have any customer contact and/or mortgage authorization duties such as the central accounting unit. You declined this option and indicated that you are not interested in pursuing a position in a non-branch environment.

You have also advised that it is not your intent to resign your employment with the Bank. In

summary, you have advised that you intend to continue your real estate sales activities however you do not intend to resign your employment with the Bank. You have also declined the option of taking an unpaid leave of absence to pursue position opportunities for which you are qualified in a non-branch environment. Given this, and the fact that your outside interests have placed you in a conflict of interest, the Bank has no alternative but to end the employment relationship. In our letter of March 4th, 2008 we agreed to give you until March 7th, 2008 for further consideration of the options available to you.

This offer remains in effect. While you will not be required to attend work for the remainder of this week, you will continue to be paid up to and including March 7th, 2008. Please take this time to reconsider your options in this matter. [ 48 ] Ms. Patterson was given until March 7th, 2008 as the letter states to advise Mr.

Proulx if she was minded to take one of the two options that would allow her to continue employment with the Bank and if not, the Bank would proceed with their termination of her employment. [ 49 ] She testified she was not offered any job in the accounting area, clearly an area where she would not likely have access to bank customers, nor was she given any preference for employment in this area. She was merely told to look at bank job postings.

If she got one within 60 days, fine, if not, the Bank would consider that she had quit. [ 50 ] At this point, the claimant understood by reason of her conversations with her manager and the letters, that the Bank had three concerns over what might occur if she both continued working with it and as well worked as a real estate agent as follows: 1. she was in her current job in a position to have direct contact and did on occasion with customers and could solicit them; 2. she might use confidential customer information to her own benefit, for example, she might learn Customer X was shopping for a home and seek to solicit him as a real estate client; and 3. she might use the Bank premises for her real estate work.

She understood this was a lesser concern. [ 51 ] I am of the view that all three of these situations could give rise to a potential conflict of interest, at least between the Bank and Ms. Patterson and possibly between a customer and the Bank as well. [ 52 ] None of the three options in the Bank's March 5th letter were acceptable to Ms. Patterson who wanted to pursue a real estate career and at the same time work with the Bank. She so advised Mr. Proulx of this decision on or about March 5th and he apparently said if she persisted in this view, he would have to fire her. [ 53 ] Ms.

Patterson said her desire to continue in real estate was motivated by a desire to help her family out and if this career worked out, she would seek to work part-time with the Bank. This candid admission in itself seems to suggest early on she was contemplating putting her own business and career interests in priority to that of the Bank. [ 54 ] With some confusion on point in her evidence as to when she felt she had been fired, she seemed to conclude it was in the above telephone call with Mr. Proulx. In my view, nothing really turns on the precise date in March when she was in fact terminated.

Both parties agree it was between March 4th and 10th, 2008. [ 55 ] On March 10th, 2008, Mr. Proulx did a third letter to Ms. Patterson, stating in part as follows: Dear Marilyn, We reference recent discussions in our letters to you dated March 4 and 5, 2008 wherein we advised that your outside activity selling real estate places you in a conflict of interest and therefore in breach of the Bank's Guidelines for Business Conduct.

In view of your decision to continue acting as a real estate agent and not to avail yourself of the other options offered, we regret to advise that the Bank has no alternative but to end the employment relationship. As such, we advise that your employment is terminated effective March 10th, 2008. [ 56 ] It is common ground that Ms. Patterson was paid to March 10th, 2008 but received no money from the Bank thereafter including payment in lieu of notice. [ 57 ] In cross-examination, Ms.

Patterson admitted that in her role as a supervisor, she dealt with customers daily and had access to a customer information system containing facts with respect to customers on the Bank computer, including addresses, telephone numbers, mortgage information and account information. She could, for example, pull up their mortgage and see if it was in good standing. She was expected to make a number of referrals to customers seeking, for example, a new mortgage to the Bank's personal banking officers. Mr. Proulx called this a service goal that she and even tellers were given annually by the Bank.

[ 58 ] Ms. Patterson agreed one of her duties was a responsibility to enforce the Bank's Guidelines with the staff under her. She also agreed when shown the March 10th, 2008 letter she was terminated on this date as a Bank employee. She further agreed that it was her understanding that it was up to the branch manager pursuant to the Guidelines to determine if a conflict existed or not. [ 59 ] The manager, Mr. Proulx, testified at trial. He said one important aspect of the banking business was customers having confidence in the strength of the Bank.

One key area of this was the avoidance of real or perceived conflicts involving staff and I understood customers as well. [ 60 ] Mr. Proulx gave a number of examples of potential conflicts the Bank would want to avoid in having a real estate agent also working as a Bank employee. As a hypothetical, he said what if such an agent told a client needing a mortgage in a real estate transaction to go to her branch where she worked and indicated that she was sure the client could get the mortgage and in fact on application the customer is turned down. This he felt would place the Bank in a difficult position.

Another concern he expressed was a customer coming in to seek pre-approval for a mortgage for a purchase of real estate who had not yet seen a realtor and a realtor Bank employee would be in a position to attempt to solicit the business of such a Bank customer. [ 61 ] While Mr. Proulx did not so testify, it is clear that such a solicitation might well occur on bank time, especially if the employee perceived a need to "strike while the iron was hot" so to speak with the particular Bank customer. [ 62 ] Mr.

Proulx did say that he understood that in real estate, customers could call with questions at any hour of the day and that such persons expected top notch service from their realtors and quick replies having regard to the large commissions they typically paid on sales. I accept this evidence as both accurate and sensible. [ 63 ] Mr. Proulx agreed that when he interviewed Ms. Patterson for the supervisor's job in the fall of 2007, that she had told him she was working on courses to obtain her real estate agent's licence.

He understood if he hired her, this work would be done on her own time assuming she qualified for her licence. He did not recall she gave him a date when it would be completed. He said they did not discuss what she would do with the licence once she got it. [ 64 ] Other than the fact that Ms. Patterson had not told him that she was both licensed and employed as a real estate agent or sought his and the Bank's position on this outside employment first before taking it as she was required to do under the Bank Guidelines, Mr.

Proulx admitted in cross-examination that he was not aware of any problems in her performance while employed with the Bank and had no concerns that historically prior to her termination that she had somehow taken advantage of the Bank. [ 65 ] The Bank does not seek to base its

summary dismissal of Ms. Patterson on her admitted breach of the Guideline requirement that she first notify it and obtain its approval before taking outside employment. [ 66 ] On cross-examination, he said he had a concern that if she worked as a real estate agent she could refer a client, not a Bank customer, to the Bank for a mortgage, possibly indicate she knew the loans personnel and could get the loan approved. In the result, the customer who then commenced to deal with the Bank might perceive wrongly that Ms.

Patterson had some influence on the transaction and would get preferential treatment as she was as well a Bank employee. When she did not and would not, the customer could be confused as to in what capacity he or she was dealing with Ms. Patterson, either as a real estate agent or Bank employee. [ 67 ] Mr. Proulx said part of his concern was based on his understanding that a real estate agent has a duty, for example, to his or her customer (who could be a purchaser) to represent the customer to the best of his or her ability and act in the customer's best interests.

This duty or obligation could, he felt, come into conflict with the real estate agent's duty to the Bank as an employee and even the Bank's decision what it might or might not do with a customer. [ 68 ] He admitted as well that insofar as the Bank was concerned about conflicts of interest, Ms. Patterson's trust and integrity was not part of its concern or an issue. [ 69 ] Ms. Pullen, the Bank's manager of employee relations, also testified at trial for the Bank.

She recalled in one situation approximately two-and-a-half years prior to trial the Bank had learned that a part-time teller was also working as a licensed real estate agent and testified its response had been the same as in the case at bar, that the employee could not do both. The same advice was given to an employee in 2009 who expressed an interest in becoming a real estate agent. [ 70 ] Much of Ms. Pullen's evidence was similar to that given by Mr.

Proulx on the issue of the Bank's concerns over conflicts if employees (especially those with customer contact and some sales responsibility) were also allowed to work as real estate agents. This is not surprising because Mr. Proulx sought her advice as he dealt with Ms. Patterson from time to time and from mid-February 2008 until her termination in March of 2008. Position of the Claimant [ 71 ] The claimant bears the onus of proof in this case and I intend to deal with Mr.

Laughlin's submissions both on the law and evidence, however, it will be convenient as well to set out the Bank's position relating to some of his submissions as I go along. [ 72 ] Mr. Laughlin argues in part beginning at para. 36 of his written submission that it is open to the Bank to argue that Ms.

Patterson's refusal to abandon her real estate career when asked to do so by the Bank as a condition of her continued employment was itself a breach of a condition essential to her contract of service, namely, that she obey the orders of her employer. [ 73 ] He asserts this basic premise is set out in the case of Stein v. B.C. Housing Management Commission [1992] CanLII 4032 at p. 8, a judgment of our Court of Appeal given by Southin J.A. (as she then was) as follows at p. 44 of her reasons: I begin with the proposition that an employer has a right to determine how his business shall be conducted.

He may lay down any procedures he thinks advisable so long as they are neither contrary to law nor dishonest nor dangerous to the health of the employees and are within the ambit of the job for which any particular employee was hired. It is not for the employee nor for the court to consider the

wisdom of the procedures. The employer is the boss and it is an essential implied term of every employment contract that, subject to the limitations I have expressed, the employee must obey the orders given to him.

It is not an answer for the employee to say: "I know you have laid down a rule about this, that or the other, but I did not think that it was important so I ignored it." But it may be an answer, on the question of whether disobedience is repudiatory, that the employer so conducted himself that the reasonable man would conclude, and the employee did, in fact, conclude, that the employer considered the rule of little or no importance.

For instance, if an employer had a rule that equipment was to be covered at the end of the day and the rule was ignored by the employees to the knowledge of the employer, he could hardly come to work one morning and discharge the lot for failing to obey the rule. [ 74 ] Counsel for the Bank also relies on this authority followed by Mr. Justice Cohen in Eichenberger v. Health Consultants Ltd. , [1997] B.C.J.

No. 2682 and points out that Madam Justice Southin's concluding remarks in Stein , supra , at p. 50 are as follows: A judge sitting in his chambers may well consider that a procedure laid down for the operation of an enterprise is silly, time-consuming and generally useless, and he may be right. But it is not a judge's business to decide, when the question is obedience or disobedience to lawful orders, on the wisdom or lack of wisdom of those orders. [ 75 ] Mr. Laughlin argues and Ms.

Smele agrees that the test, or rule, if you will, as to when an employer may summarily dismiss an employee for just cause for disobedience to work rules is set out in Employment Law in Canada by Christie et al. (2nd) ed. at p. 637 as follows: Where the misconduct alleged to justify

summary dismissal takes the form of disobedience to work rules, the courts have taken an approach which is strongly reminiscent of the arbitral treatment of insubordination.

Thus, the courts have held that work rules alleged to have been violated must display the following eight characteristics in order to ground cause: 1. the rules must be made known to the employee; 2. the rules must have been consistently enforced; 3. the order in question must have been clearly communicated to the employee; 4. the order must be authorized in the sense of being within the scope of the worker's duties under the employment contract; 5. the employee must have been made aware unequivocally that dismissal is the penalty for disobedience; 6. the rules must be lawful and reasonable in context; 7. the employee must not have a reasonable excuse for disobedience; and 8. breach of the rules must be sufficiently serious to justify dismissal according to the common law standard of cause. [ 76 ] I intend to deal with the position of both parties with respect to these various rules and having done so in each case make my findings of fact. [ 77 ] Mr.

Laughlin argues that certain of these eight requirements were not met by the defendant Bank in its conflict rules and accordingly if there is a breach of same it cannot be the basis for a termination for just cause. [ 78 ] Mr. Laughlin argues that the first requirement is not met. The conflicts rule was not clearly articulated to the employee, Ms. Patterson. As evidence in support of this submission, he argues that when it became known to the Bank that she was working as a realtor neither her manager nor his supervisor could state with certainty that the rule had been breached.

The conflicts rule is ambiguous and any ambiguity must be resolved in favour of the claimant. As well, because the claimant was not aware of other Bank employees holding positions as realtors, she had no guidance to drawn on based on the experience of others at the time she elected to take the disputed employment. [ 79 ] The Bank says that its conflicts rule met all eight of the above criteria. [ 80 ] As to the first, the Bank says that Ms. Patterson was not only aware of it, but was obliged to read it, and she each year agreed to be bound by it.

When the Bank learned she had a job as a realtor, her manager told her in a letter that her employment was in breach of the Guidelines. [ 81 ] I agree with the Bank's position. I find that its rules on conflicts were made known to Ms. Patterson well in advance of her decision to become a realtor and to study for same. I also find that the Bank consistently applied its Guidelines dealing with conflicts and I accept that on two earlier occasions, as Ms.

Pullen testified, when the Bank learned that an employee had become or was considering becoming a realtor, it took steps to advise the employee that they could not do so and remain an employee of the Bank. There is no evidence the Bank ever allowed an employee knowingly to work as a realtor while still employed with it. [ 82 ] I do not find the Bank's Guidelines on point are ambiguous. In my view, it would be very difficult to set out a rule governing all possible conflicts in simple black and white terms. Possible or actual conflicts within a business setting are I think an extremely complex area.

One need only consider the multitude of rules that apply, for example, to lawyers to conclude that this is so. [ 83 ] It would be difficult if not impossible in my view for any employer to set out with precision by way of a list each and every business activity that either amounted to an actual or potential conflict of interest.

[ 84 ] Likewise, in my view it would be as challenging for a bank or any employer wishing to have an employee avoid conflicts to attempt to create a list of what jobs one could do and conversely which ones might give rise to an actual or potential conflict if done. This the Bank chose not to do. That much is clear. [ 85 ] What they did mandate in their employment contract with Ms.

Patterson was that in the event that she wished to commence an outside business interest or employment, she was obliged to first discuss the same with her manager to be sure the activities involved in the business or employment did not create a conflict (see p. 10 of the Guidelines). This Ms.

Patterson candidly admits she failed to do. [ 86 ] I find this procedure which the Bank required its employees to follow allowed for a reasonable case-by-case analysis by the Bank for each outside employment being considered up front before the same was taken and not after the fact as occurred here. [ 87 ] As to the claimant's submission that Ms.

Patterson had no knowledge that the Bank had earlier in time discouraged employees from working as realtors, the simple answer to this proposition is she did not comply with the notice requirement of the Guidelines (at p. 10 above) and ask if she could work as a realtor as well as a banker. Had she done so, I have no doubt she would have learned about the Bank's treatment of its staff in the two prior occasions referred to above. [ 88 ] I find Ms.

Patterson had no reasonable basis to believe either that the Bank policy was enforced inconsistently (and I find that it was not) or to believe that any secondary employment at all was permitted. Because she once sold candles in a Bank branch and knew of other employees who worked as servers did not reasonably allow her to make a quantum leap in my view that she could work with the Bank's blessing as a realtor in her off hours. [ 89 ] Mr. Laughlin submits on points 4 and 6 of the above Christie test if I may call it that, that the Bank's order that Ms.

Patterson give up her work as a realtor or leave the Bank was neither within the scope of her employment duties nor reasonable. [ 90 ] The Bank says in response that the Guidelines dealing in part with conflicts form part of the claimant's contract of employment and therefore abiding by the Guidelines form part of the scope of her contract. [ 91 ] I agree with this submission.

I find that the order to desist from working as a realtor was made with and within the authority of the contractual terms in her employment agreement and was nothing more than the employer Bank seeking to enforce the employee's adherence to the agreed upon contractual terms therein. [ 92 ] I find contrary to Mr. Laughlin's submission there is no need to read into the Bank's Guidelines for Business Conduct a prohibition on secondary employment as a realtor. This submission would suggest the only way for the Bank to preclude such employment would be to have a list or

schedule of jobs that its employees could not do. I have above rejected this approach as either reasonable or necessary. It would be unworkable and difficult I think to identify what duties were involved in various jobs and which of them did or might offend the Bank's concerns about actual or potential conflicts. [ 93 ] Mr. Laughlin appears to argue that the Bank's Guidelines or rule relating to outside employment are not reasonable. He says this in

part in paras. 42 and 43 of his helpful written submission: 42. To the extent that a prohibition on secondary employment as a realtor can be read in to the Guidelines for Business Conduct it is doubtful that such a prohibition would be reasonable. The defendant admitted that it has no concerns about the claimant carrying out real estate activities on Bank time. Further, the defendant was unable to articulate any concrete prejudice likely to be suffered by it as a result of the claimant's realtor position.

It is acknowledged that its internal system of lending approval would prevent any credit being granted without an underwriter's approval. It is further acknowledged that the claimant had no authority with respect to its lending operations. On cross-examination Mr. Proulx conceded that the defendant encouraged employees to refer business to it and to the extent that the claimant's real estate clients were induced to do business with the defendant by virtue of her association with it this would result in a benefit to the Bank. 43.

It is submitted that for a restriction on an employee's off-duty activities to be reasonable, the restriction must be logically connected to an identifiable prejudice to the employer's interests. Put another way, there must be an air of reality to the employer's concern and to the restriction. It is submitted that the defendant's prohibition on realtor work for employees with no lending or credit decision making authority or function does not meet this reasonability test. [ 94 ] Ms. Smele for the Bank responded on this same issue as follows in paras. 27 and 28 of her written submission: 27.

The sixth requirement is that the rules must be lawful and reasonable in context. The requirement in the Guidelines for Bank employees to avoid a conflict of interest is entirely reasonable. The Bank is an institution that has immense power in that it can grant or deny people financing. As such, the Bank is justified in ensuring that employees are free from even perceived conflicts of interest. The Guidelines specifically state that: "It is almost as important to avoid the appearance of a conflict as it is to avoid an actual one". 28.

The Bank is also justified in proactively combating potential conflicts that may arise. Even if Ms. Patterson would never deliberately use her position at the Bank for the benefit of her real estate business, conflicts could still arise accidentally. For instance, Ms. Patterson may not suggest that her employment relationship with the Bank allows her to obtain advantages on behalf of her real estate clients but a customer may nonetheless come to this conclusion if they fail to make a clear distinction in their mind between Ms. Patterson's job at the bank and her role as a real estate agent.

It is reasonable and prudent of the Bank to avoid the danger of a conflict of interest arising from Ms. Patterson's employment as a real estate agent. [ 95 ] In paras. 30 to 32 Ms. Smele argues in part as follows: 30. Although the rules of the Bank are objectively reasonable, we submit that the Court ought not to critique the rules too closely when determining reasonableness as an employer should be able to conduct its business as it sees fit.

Courts in British Columbia have taken the position that as long as the employer's rule is not unlawful, dishonest, or dangerous to the health and safety of the employees, it is not for the employee or the Court to question whether the employer's rules are reasonable.

31. In Eichenberger v. Health Consultants Ltd., [1997] B.C.J. No. 2682, the Court found that the employer had cause for terminationwhen the employee failed to attend a sales meeting in direct contravention of the employer's orders. Cohen J. cites the British ColumbiaCourt of Appeal in Stein v. B.C. Housing Management Commission (1992), (BC CA), 65 B.C.L.R. (2d) 181 whereat p. 185 [I have set out the quoted passage above and will not repeat it]. 32. Ms. Patterson was given a direct order to cease her employment as real estate agent because the Bank was of the view that it wasin contravention of the Guidelines.

It is not for Ms. Patterson to determine whether or not the Guidelines in this case, it is the prerogativeof the Bank to determine what constitutes a conflict of interest. [96] I accept the submissions made by the Bank on this latter point. I find that the Guidelines were known to Ms.

Patterson andreasonable and that the Bank's direction or order to her that she cease her employment as a realtor essentially so as to be in compliancewith her contract of employment was both within its authority as an employer to give and as well, a reasonable act and a lawful order thatit was entitled to give to her when it did and in the then circumstances. [97] It is clear that even potential conflicts of interest can give rise to

summary dismissal and I accept that as in Mr. Harris's textWrongful Dismissal, there is some legal authority that an inference of potential conflict of interest must have an air of reality to it (see,for example, p. 3-178.3). However, equally it is clear that an employer can set whatever lawful terms it wants in an employment contractand expect the employee will follow them. [98] I agree in this case it is for the Bank to both promulgate business guidelines that it feels are necessary to safeguard its business,include them in its employment contracts as occurred here, and expect employees to follow them.

It is as well part and parcel of itsduties as an employer to determine when an employee is not in compliance.

I agree it is the prerogative of the Bank to determine what itthinks is a conflict of interest and further as I have said above, it is not required to wait and see if, for example, a potential conflict turnsinto an actual conflict of interest and it suffers actual damages before addressing the situation. [99] It is to be remembered that one legal aspect of the employment relationship is the prospect that by reason of his or her acts, anemployee can in certain circumstances make his or her employer vicariously liable for any neglect or even the consequences of

an act ofdishonesty performed by the employee. This is especially so if from a customer or citizen's standpoint he or she is not clear in a giventransaction which "hat" the Bank employee is wearing to use the oft-quoted expression.

This confusion can, if it arises, give rise topotential financial liability on the part of the Bank. [100] Lawyers are often admonished not to become involved in business deals or investments with clients because there is a risk ifsome unforeseen problem arises between them that the client will not know or understand whether he was dealing with a fellow investorwhen the problem arose or his lawyer owing the client a duty to act in his best interests and give capable advice (see, for example, theCode of Professional Conduct, c. 7, "Outside Interests and the Practice of Law", Guiding Principle No. 4).

I do not for a moment suggestthat the ethical principles that lawyers are bound to adhere to should somehow govern Bank employees; I merely use this as an exampleof the type of risk to be concerned about. [101] It is clear from the evidence in this case that the Bank's reputation in the business community is very important to it. It is alsoclear to anyone who watches television or reads a daily newspaper that Canada's chartered banks are daily engaged in a hugelycompetitive environment as they seek to both maintain and increase their customer bases.

It cannot be in any bank's best interests in suchan environment to have employees who might even mistakenly do something in off-hours or while at work that could affect its reputationand worse still, make it potentially liable for some financial loss. [102] It is no answer to this obvious concern that clearly lies at least in part behind the Bank's conflicts policy relating to outsideemployment to require it to accept an assurance such as offered here by Ms. Patterson "I have and never would do anything improper". As I have said, there is not a shred of evidence to suggest that Ms.

Patterson is other than an honest and decent woman and that sheperformed her work while at the Bank properly at all times, however, for the vast majority of time only as a banker and not as a part-timerealtor. That is not the point. [103] In my view, the point is who can police or enforce the Guidelines forming part of Ms. Patterson's contract with lawful orders ordecisions? She or the Bank?

She seems to believe because she has never done anything dishonourable with the Bank while employedby it and asserts she would not in future, if she had been allowed to work as a banker and realtor, that this is sufficient assurance for thebank with respect to her outside employment. If this were so, in effect she is then policing or enforcing a rule and term of heremployment contract put in place I find to protect the Bank, both its reputation and its financial standing. This cannot be correct. [104] I find it is for the Bank to police and enforce the Guidelines including by making lawful orders.

It is for the Bank to determinewhat outside activity it will permit or not having regard to its own very real business interests. [105] The fact that the Bank could not or did not articulate any clear concrete prejudice likely to be suffered by it if Ms. Pattersonworked as a realtor is in my view not determinative of this case.

It need not do anything more than it has done in its letters to her andtestimony before me to define potential conflict situations. [106] There are potential conflicts that could arise, especially if a Bank employee working as a realtor for whatever reason was lessthan forthcoming, for example, a banker/realtor sells a house to client. Client needs a mortgage to complete the sale. The banker/realtorneeds the commission and needs the sale to complete to receive it. He or she tells the client what to tell the Bank when applying for amortgage. The Bank, in part relying on faulty information, grants a mortgage.

The purchaser defaults. The bank has to foreclose anddepending on the state of the real estate market and business cycle might or might not suffer a loss. Further examples were given by Mr.Proulx in his testimony which I will not repeat. [107] Other conflicts could involve a real estate purchaser client feeling because he or she was dealing with a banker/realtor, amortgage loan would be a certainty simply due to a misunderstanding of the scope of the banker/realtor's duties, obligations and internalclout with the Bank itself. The customer enters into a binding contract to purchase a home.

If the loan was later not granted and thepurchaser, for example, faced a specific performance action and potential loss of a large deposit, who might he or she seek to hold

responsible? Conclusion [ 108 ] I find that the refusal of Ms. Patterson to give up her real estate job after the same came to the attention of the Bank does amount in essence to a disobedience on her part of work rules, namely, a refusal to accept the Bank's reasonable and lawful order to comply with its Guidelines for Business Conduct relating to outside employment. [ 109 ] I find these rules wholly reasonable having regard to what the Bank did as a business, its customers and the job performed by Ms. Patterson which she wanted to keep as well as work as a realtor.

Her conduct in refusing to obey I find the lawful order of her employer and in refusing to accept her employer's reasonable construction of its own rules was in my view inconsistent with the fulfilment of the express terms of her own contract of employment. [ 110 ] The breach in this case is serious. In my view, the Bank was entitled by reason of the claimant's refusal to give up her realtor work to then dismiss her for cause which it did.

In the result, the claimant's action is dismissed. [ 111 ] Having come to this decision on the first issue, it is not necessary in my view to deal with the second issue B. above. [ 112 ] The defendant is entitled to costs under Rule 20(2) of the Rules of this Court and if it cannot agree on same with claimant's counsel and wishes to recover the same, the same are to be determined by the Registrar of this Court. (ORAL REASONS FOR JUDGMENT CONCLUDED)