Tuesday, 15 July 2014

After-Acquired Cause - Can evidence of serious misconduct obtained post-termination really help the employer's case?

Two recent decisions from British Columbia highlight the importance of employers conducting thorough workplace investigations when misconduct is suspected, and the value of evidence that may be acquired even after the decision to dismiss an employee has been made.  While it is always best for an employer to gather all of the relevant facts before terminating an employee, it's sometimes difficult to get all the evidence until after the worker has left the workplace.  In particular, data on an employee's corporate cell phone or computer can often provide surprising details of misconduct the employer would otherwise not learn.  It's for this reason that the courts will, in some circumstances, permit an employer to adduce this "after-acquired" evidence of wrongdoing to establish that the employee was dismissed for cause.

Such was the case in Van den Boogaard v. Vancouver Pile Driving Ltd., a decision recently released by the B.C. Court of Appeal.  The plaintiff, Kirk Van den Boogard, was a project manager for the employer, a marine general contractor which was involved in a dangerous and, therefore, safety-sensitive business.  In his role as project manager, the employee oversaw job sites and had particular responsibility for establishing and enforcing safety policies for the employer.  After just over one year of employment, the employee was terminated without cause and provided four weeks' pay in lieu of notice.  However, after he turned in his company cell phone, it was determined that he had used the device during working hours to solicit illegal drugs, including from one of his subordinates.  When Van den Boogard commenced an action for wrongful dismissal, the employer defended the claim on the basis of the after-acquired evidence of serious misconduct, which it asserted was just cause for dismissal.

At trial, the Judge agreed with Vancouver Pile Driving that the employee's conduct did amount to cause.  His actions were seriously incompatible with his duties and responsibilities for the employer, and in direct contravention of the core values statement of the employer, which he had helped to create.  In the result, the action was dismissed as the employer had cause for summary dismissal.

On appeal, the plaintiff argued that the trial judge failed to consider the context in which the conduct occurred, and that he made a palpable and overriding error in concluding that cause for dismissal existed in the circumstances where no actual safety issues had arisen because of his behaviour.  The Court of Appeal rejected these arguments, finding that the trial judge had considered all of the relevant circumstances, including the plaintiff's responsibility for workplace safety, and that the employer need not establish that any actual harm arose from the misconduct.  Moreover, the employer need not prove that it would have terminated the employee if it was aware of the conduct at the time; the test for cause is whether a reasonable employer would have objectively viewed the employee's actions as incompatible with continuing employment.  In the result, the appeal was dismissed.

The issue of after-acquired evidence of cause also arose in Campbell v. Harrigan Rentals and Equipment Ltd., a decision from the B.C. Supreme Court from late last year.  The plaintiff, Kenneth Campbell, was the financial controller for the company for over 14 years.  In the fall of 2011, he was given a company gas card to purchase fuel for his vehicle, which he used occasionally for company business.  Approximately one month later, the employer learned that the plaintiff had been using the gas card to buy gas for his wife's car, although the two were then separated.  When confronted, the plaintiff admitted he had done so, but argued that he had not received a raise in over 4 years by way of justification.  Shortly thereafter, the employer also learned that the plaintiff had made claims for health benefits on behalf of his wife.  The employer decided to terminate the plaintiff for cause, citing both issues.  After his termination, the employer also learned of serious accounting errors, an attempt to falsely inflate the company's inventory, and two unauthorized salary advances the plaintiff had taken prior to his dismissal.

At trial, the employer argued that the misuse of the gas card and health benefits, along with the after-acquired evidence, amounted to just cause for Campbell's termination. The trial judge was not satisfied that either the use of the gas card or the plaintiff's submission of his wife's health claims amounted to cause for termination, as there was some ambiguity surrounding both issues. However, with respect to those matters identified after he was dismissed, the Judge was of a different view.  The Judge weighted the evidence and determined that the plaintiff had taken the advances without approval, and that he had been involved in directing staff to inflate the company's inventory. The court found his behaviour to be abusive of his position and dishonest, and determined that these actions constituted just cause for dismissal, "notwithstanding that these were not the reasons given to the plaintiff at the time of his dismissal".  His wrongful dismissal claim was therefore dismissed.

Employers considering terminating an employee for cause should fully investigate the employee's behaviour, and closely scrutinize any matters that may reflect employee wrongdoing, even if they don't come to the employer's attention until after employment has already ended.  When the organization's property is returned, consider having it reviewed forensically as it may contain critical evidence.  Follow up with the terminated employee's successor to determine whether any other issues have come to light.  And as always, document any issues that are discovered after dismissal.  You never know when that evidence may come in handy.

Do you have questions about just cause or dismissal?  If you require assistance, don't hesitate to contact Lance Ceaser.


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