Canada: B.C. Court Of Appeal Finds Just Cause To Terminate Manager Over Misuse Of Company Property

In Roe v. British Columbia Ferry Services Ltd., the British Columbia Court of Appeal allowed the appeal of a wrongful dismissal case on the basis that the trial judge erred in characterizing the dishonest conduct of an employee as merely trifling and insignificant. In doing so, the Court of Appeal reinforces the objective, contextual analysis required for cases where just cause is alleged.

The plaintiff, Gregory Roe, was a terminal manager for B.C. Ferries, a senior management position. B.C. Ferries dismissed him without notice, alleging just cause following an internal investigation where it concluded that Mr. Roe had, on more than one occasion, knowingly given complimentary food and beverage vouchers to his daughter's volleyball team without authorization from his superiors, contrary to B.C. Ferries' policy.

Mr. Roe sued B.C. Ferries for wrongful dismissal. At trial, the plaintiff and B.C. Ferries led conflicting evidence regarding the nature of Mr. Roe's misconduct as grounds for just cause. Among other things, B.C. Ferries argued that Mr. Roe was dishonest when he knowingly misappropriated company property for his own financial and reputational benefit. This was particularly egregious as Mr. Roe was a senior manager in an elevated position of trust and responsibility within the organization. As a result of Mr. Roe's misconduct, B.C. Ferries argued that Mr. Roe breached the good faith and trust foundations of the employment relationship, justifying summary dismissal.

Mr. Roe saw things differently. He argued that his actions were a result of inadvertence and his misunderstanding of an ambiguous policy on distributing the complimentary vouchers. He denied knowingly breaching this policy. He maintained that while the policy did at one point require prior approval from his supervisor, this policy was changed to allow managers to use their discretion and submit for approval retroactively. Therefore, Mr. Roe submitted, the misconduct was not a basis on which the employer could justify summary dismissal.

The trial judge declined to resolve this conflict and declined to make any findings of fact with respect to the parties' differing versions of Mr. Roe's misconduct. Rather, the judge assumed for the purposes of analysis that B.C. Ferries was "able to prove its allegations of a knowing breach of company policy and misuse of company property," and that "the defendant's version is true." Despite his assumption, the judge found that Mr. Roe's actions bordered on "trifling:" the extent of Mr. Roe's gain—in money and prestige—was very slight and Mr. Roe took "no steps to deceive or cover his tracks." In the view of the trial judge, Mr. Roe's conduct could not, objectively speaking, amount to just cause. Having found that the Mr. Roe was dismissed without just cause, the judge awarded him damages.

The Court of Appeal allowed the appeal, concluding that the trial judge erred in his characterization of Mr. Roe's assumed misconduct. The court found that there was a disconnect between the trial judge's assumption of taking the employer's case of just cause at its highest and as true, and his characterization of that misconduct as "bordering on trifling" and "relatively minor." This disconnect between factual assumptions and the analysis of those facts undermined the trial judge's conclusion that, objectively viewed by a reasonable employer, the plaintiff's conduct could not rise to the level of undermining the good faith and trust obligations in an employment relationship.

The Court of Appeal found that the judge minimized the assumed misconduct. In particular, the judge appears to have fixated on the minor value of the vouchers and failed to have considered Mr. Roe's misconduct in the entire context, including, for example, Mr. Roe's employment agreement, his elevated position of trust and responsibility as a senior manager, and the B.C. Ferries' policies on the vouchers. In addition, the judge's statement that Mr. Roe did not actively attempt to conceal his misconduct was belied by the fact that Mr. Roe used out-of-date vouchers, which could not be traced back to him. Despite the judge's stated assumptions about taking the employer's case for just cause as true, the judge failed to consider all of the factual assumptions and selectively analyzed the facts to support his characterization of the misconduct as insignificant. The failure to apply a truly contextual approach and the failure to consider the evidence of concealment were, according to the Court of Appeal, palpable and overriding errors.

Because the trial judge failed to make factual findings and instead made only assumptions, the Court of Appeal could not weigh the evidence and substitute a finding of just cause. In the result, it ordered a new trial.

The decision of the Court of Appeal reinforces the need for trial judges to undertake a careful factual analysis of the circumstances of a summary dismissal. In other words, it must be an objective analysis, taking in all of the circumstances that inform whether the employer was justified in concluding that the employment relationship was, at the time of dismissal, irrevocably broken. Trial judges must take the employer's full case for just cause, not just bits and pieces, and then consider whether summary dismissal was justified. For this reason, employers may take some comfort from the Court of Appeal's analysis and emphasis on the objective nature of the just cause test.

The decision is also an important reminder that, while all of the facts must be considered in context, the misuse of company property, like the free food vouchers, can be a serious breach of trust by an employee, even if the value of the property in question is not significant.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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