In a British Columbia Court of Appeal decision released in late April 2014, a trial judge's decision was set aside and a new trial ordered. The trial judge's decision in Ogden v. Canadian Imperial Bank of Commerce 2014 BCSC 285 (CanLII) provided the Court of Appeal with an opportunity to clarify the law of cumulative cause in Ogden v. Canadian Imperial Bank of Commerce 2015 BCCA 175. (CanLII) As always, we encourage readers to review the cases for more detail in the specific facts and areas of law covered by the courts. Our comments on the case follow.
The Employee, Gulyun Ogden, was a financial advisor who worked for CIBC from 2004 until her termination for cause in 2011. Her work portfolio consisted of others who, like her, emigrated from China. She was terminated "for cause" by CIBC in March 2011 after an investigation into a transaction that had occurred in September 2010. At that time, Ms. Ogden received a phone call from a client who wanted to wire $100,000 from China. Chinese law prohibits transfers of more than $50,000 out of China. The client asked Ms. Ogden if Ms. Ogden would take two $50,000 transfers and deposit them into two of Ms. Ogden's personal accounts. Ms. Ogden agreed to do this and transferred the funds to the client's Canadian account the next day. CIBC argued that this transaction was in violation of its Code of Conduct and relied upon previous discipline to establish that Ms. Ogden was aware of the Code of Conduct and other corporate policies.
CIBC discovered this transaction in October 2010 and immediately started an investigation. CIBC had previously identified work issues with Ms. Ogden.
- In September 2008, Ms. Ogden was investigated by corporate security and received a warning letter for renegotiating loan rates on personal lines of credit to a lower rate after the loan was funded. There were also concerns at this time about loan documentation. Ms. Ogden was issued a letter for these concerns on September 8, 2008.
- In January 2010, Ms. Ogden accepted clothing samples from a client who operated a clothing factory. These items were worth less than $40 each which was below the $150 limit imposed by corporate policy. Although not disciplined, CIBC felt that the investigation should have brought her attention to how seriously the bank considered its Code of Conduct.
- In August 2010, CIBC became aware of an incident in which Ms. Ogden approved a mortgage for her assistant. She received a "final warning" letter on September 27, 2010.
At trial, the court found that the prior incidents on Ms. Ogden's record all had reasonable explanations and either did not occur or did not justify discipline. As a result, the court said, only the wire transfer incident could form the basis for just cause.
What did the Court of Appeal say?
The Court of Appeal said the trial judge erred in considering cumulative cause because CIBC did not allege cumulative cause and relied on the two transfers of $50,000 into Ms. Ogden's personal account as just cause. The pleadings did not explicitly assert cumulative cause, but any ambiguity in CIBC's pleadings had been explained to the trial judge in clear language to the effect that the other incidents were relevant context to prove Ms. Ogden's awareness of the "importance of avoiding conflicts or potential conflicts of interest". The Court said:
In conclusion, I agree with CIBC that the judge misapprehended its legal argument and the evidence on this point. ... The question of whether a single incident of misconduct is grounds for dismissal is a contextual judgment. As outlined at paragraph 48 of McKinley, an employer may be justified in dismissing an employee for dishonesty if the behaviour in question: (a) violated an essential condition of the employment contract; (b) breached the faith inherent in the work relationship; or (c) was fundamentally or directly inconsistent with the employee's obligations to the employer ... The judge did not correctly apply McKinley in the context of Ms. Ogden's discipline history.
If the judge decided that, despite its protestations to the contrary, CIBC's evidence seemed to be one of cumulative cause, the judge should have identified the controversy and resolved it. It was an error to simply state CIBC's position as alleging cumulative cause, as he expressed it, as if it was the position CIBC advanced.
Because of this, the Court said that it was not possible to determine whether the trial judge would have reached the same conclusion had he correctly considered the evidence of the prior disciplinary matters for its purpose – to establish knowledge of policies and the importance that CIBC placed on adhering to those policies. A new trial on a new day will now determine whether there was just cause.
What does this mean for employers?
This case will be one to follow as it unfolds in a new trial. This decision will be useful for employers arguing just cause when there are other performance issues involved in the context of employment. The Court of Appeal has clarified that incidents of misconduct may be included in pleadings NOT to establish cumulative cause, but whether a single incident of misconduct is grounds for dismissal is a contextual determination.
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