New Trial for Manager Terminated Over Misuse of Company Property

In Roe v British Columbia Ferry Services Ltd., a British Columbia trial judge made too many assumptions and not enough findings of fact when he decided that an employee’s dishonest conduct was “trifling,” “relatively minor” and not sufficient to justify termination. The Court of Appeal ordered a new trial for the employee after finding that the trial judge made a “palpable and overriding error” due to his failure to undertake an objective contextual analysis, as required for cases of alleged just cause.

Facts of the case

Gregory Roe was the manager of the Duke Point ferry terminal from November 15, 2007. His responsibilities included the management and oversight of the terminal operations and staff; the safety and security of all customers and staff; supervision of employees; overseeing special projects, teamwork and communications; and daily revenue reconciliations that included ensuring the accuracy of the revenue reports prepared by the ticket agents and the accountability of all cash.

BC Ferry Services terminated Roe’s employment without notice for cause on March 1, 2012, after an internal investigation concluded that Roe had, on more than one occasion, knowingly given complimentary food and beverage vouchers (worth about $200) to his daughter’s sports teams without prior authorization, contrary to the employer’s policy.

The policy required prior authorization by a regional manager and later by the marketing department. There was also a company Code of Business Conduct and Ethics, and Roe clearly acted contrary to this code.

The investigator’s report found that termination for cause was appropriate because Roe was in a position of authority and he had done this more than once, even though he knew his actions were wrong and understood the purpose of the vouchers. Since he stole from the company, he breached the employer’s trust.

In response, Roe began a wrongful dismissal action on July 4, 2012. He argued there was no cause for the termination, and for this reason, he was entitled to damages in lieu of reasonable notice for breach of his employment agreement. He argued that he did not knowingly breach the company policy and that the procedure for distributing complimentary vouchers was unclear. According to Roe, he simply failed to comply with an ambiguous policy; at worst, his actions were merely inadvertent.

According to the employer, Roe’s misconduct was “dishonest,” given that he knowingly misappropriated company property, to his own financial and reputational benefit. The employer argued that his dishonest actions irrevocably breached the requirements of good faith and trust that formed the basis of their employment relationship.

The trial judge declined to deal with the parties’ differing stories of Roe’s misconduct. Rather, the trial judge assumed for the purposes of analysis that the employer 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 Roe’s actions bordered on “trifling”; the extent of Roe’s gain—in money and prestige—was very slight and Roe took “no steps to deceive or cover his tracks.” In the view of the trial judge, Roe’s conduct could not, objectively speaking, amount to just cause warranting a summary dismissal.

Having found that Roe was dismissed without just cause, and since there was no breakdown of the employment relationship, a lesser sanction than dismissal was appropriate.

As a result, the court awarded damages of $67,663.60 for 10 months’ salary (10 months after his dismissal, Roe secured alternate employment of a managerial nature at a comparable salary) along with benefits, interest and costs.

The employer appealed the decision to the Court of Appeal, arguing that the trial judge erred in finding that the employer did not have just cause to dismiss Roe and awarding 10 months of notice for 4.5 years of service.

Appeal decision

The Court of Appeal allowed the appeal, concluding that the trial judge erred in his categorization of Roe’s misconduct. The Court found that there was a disconnect between the trial judge’s assumption of taking the employer’s case of just cause as true, and his account of that misconduct as “bordering on trifling” and “relatively minor.” This disconnect undermined the trial judge’s conclusion that, objectively viewed by a reasonable employer, Roe’s conduct did not undermine the good faith and trust obligations in the employment relationship.

The Court of Appeal found that the trial judge minimized the employee’s misconduct by fixating on the minor value of the vouchers and failing to consider Roe’s misconduct in its entirety, and in context. For example, the trial judge should have considered Roe’s employment agreement, his elevated position of trust and responsibility as a senior manager, the employer’s policies on the vouchers, including the requirement in the Code of Conduct “to act in an honest and ethical manner at all times”. In addition, the judge’s statement that Roe did not actively attempt to conceal his misconduct was contradicted by the fact that Roe used out-of-date vouchers, which could not be traced back to him. The trial judge failed to conduct a complete analysis of the facts and the evidence to substantiate his assumptions and categorization of the misconduct as insignificant.

The failure to apply a truly contextual approach, mandated by leading case law, and the failure to consider the evidence of concealment were, according to the Court of Appeal, “palpable and overriding errors.”

Since 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. As a result, it set aside the judgment and ordered a new trial.

What can we take from this case?

When an employee with substantial authority breaches a company policy, the act itself may be more important than the effect, particularly if the act is sufficient to irreparably damage the employment relationship.

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.

It remains to be seen what a new trial will determine, but employers can take heart that their policies do have force and those policies can set a high standard for conduct, particularly with respect to managers.