As gratifying as it may momentarily seem, throwing mud on
one's opponent in the hopes some of it will stick rarely is a
successful strategy. There is no substitute for a meticulous
When Marc Levy became chief executive of Norsemont Mining in
2004, it was an inactive Vancouver-based mining and development
company. Hoping to revive the business, Levy hired James Kelly, a
55-year-old experienced broker, as vice-president of finance and
director of communications to assist in raising capital.
Within short order, Kelly and Levy were on a collision course.
Kelly believed that, to build investor confidence and attract
capital, it was critical to cultivate personal relationships with
brokers and provide complete disclosure about the business. Levy,
however, believed aggressively selling stock was the route to
driving up the share price.
To carry out his strategy, Levy hired Aly Mawji as a director.
Although the 25-year-old had limited experience in the
industry, he came with a list of thousands of names of
potential investors. Norsemont also hired 24-year-old Dennis
Menadic to make high volume cold calls to those potential
Kelly made no secret of his concern Mawji was teaching Menadic
how to inappropriately manipulate Norsemont's stock.
Indifferent to Kelly's advice that the behaviour of these two
ran afoul of provincial securities law, Levy instead directed
Menadic to spy on Kelly and report back his activities. Not
surprisingly, Menadic reinforced Levy's belief Kelly was
When tensions between Mawji, Kelly and Levy reached a boiling
point, Kelly was summoned to a three-hour meeting with Levy and
Mawji, where he was accused of throwing up roadblocks for the
directors' plans. This session was followed by an email from
Mawji ordering Kelly to deliver up a spreadsheet of the brokers he
was contacting and identifying his prospects on a daily basis.
Kelly was now to report to Mawji instead of Levy.
Kelly responded with a lengthy letter, in which he referred to
privacy legislation as a legal impediment to the collection and
sharing of information on potential clients. Asserting the company
owed him money under his contract, and he suggested he would get a
lawyer and sue in Small Claims Court. The threat of litigation
triggered a swift response. Levy fired him.
Norsemont responded to Kelly's wrongful dismissal action
with numerous defences, insubordination, incompetence,
misrepresentation of credentials on hiring, and public criticisms
of management. One month of wages was withheld. Levy threatened
Kelly with financial ruin if he continued with his lawsuit.
But Kelly persist and after seven years and a 33-day trial, was
vindicated. Madame Justice Lauri Ann Fenlon of the B.C. Supreme
Court found no evidence to support these allegations. Outraged by
Norsemont's behaviour in maintaining its unfounded
allegations and in attempting to intimidate Kelly, the judge
awarded a record $100,000 in punitive damages and his legal costs,
in addition to the relatively nominal value of his contract,
amounting to 30 days salary.
This decision should give employers pause on how they manage
terminations and assert cause. The following measures should be
taken to minimize such risks:
Identify the motive Often an employee who does
not fit the corporate culture becomes a lightning rod for the
organization's failings. But poor fit is not just cause.
Assess the evidence Either you have evidence of
wrongdoing or you do not. Avoid the temptation of levelling
allegations based on suspicion or dislike rather than hard
Constantly re-evaluate What initially appears
to be a strong defence may not hold up under scrutiny. At the
examinations for discovery, Levy could not point to any evidence of
public criticisms of Norsemont yet maintained that allegation right
through to trial. Had the allegations been withdrawn, the outcome
would likely have been different.
Avoid spiteful behaviour Following his
dismissal, Norsemont withheld Kelly's final month's salary
in an effort to obtain a release. In addition, when Kelly was
struggling for a living following his dismissal, Levy threatened to
ensure that Kelly's appearances on a radio program would not be
repeated. These post termination behaviours were cited by the judge
as further grounds supporting the punitive damages award.
Do the math Vengeance comes at a price. Had
Norsemont simply terminated Kelly without cause, based on the terms
of the court, paid out his accrued salary and 30 days notice, it
could have avoided an expensive lawsuit and the accompanying
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Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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