by William R. Gale
There have been a number of decisions which have addressed the 2001 decision of the Supreme Court of Canada in McKinley v. BC Tel (2001), 200 D.I.R. (4 th) 385,  2 S.C.R. 161 [*001184165 – 55 pp.]. In that decision, the Supreme Court outlined that the appropriate approach for determining whether misconduct is sufficient to justify cause for dismissal was a contextual one. The court stated that it favoured [at para. 57]:
… an analytical framework that examines each case on its own particular facts and circumstances, and considers the nature and seriousness of the dishonesty in order to assess whether it is reconcilable with sustaining the employment relationship. Such an approach mitigates the possibility that an employee will be unduly punished by the strict application of an unequivocal rule that equates all forms of dishonest behaviour with just cause for dismissal. At the same time, it would properly emphasis that dishonesty going to the core of the employment relationship carries the potential to warrant dismissal for just cause.
In Geluch v. Rosedale Golf Assn. (2004), 131 A.C.W.S. (3d) 884 (Ont. S.C.J.) [*004180015 – 44p.], a recent decision of the Ontario Superior Court of Justice, Himel J. applied the requisite contextual approach against a backdrop of employer allegations of wrongdoing including:
- fiscal impropriety;
- abusive conduct towards staff; and
- Mr. Geluch’s relationship with members of the Board.
After reviewing the allegations and facts put forward by the employer against the context of the employee’s service record over his 12 years of employment as Rosedale’s General Manager, the court concluded that Rosedale had not satisfied its burden of proving just cause of dismissal.
The Rosedale Golf Club Assn. terminated Mr. Geluch for just cause shortly after a former female employee of the golf club spoke with two of the club’s Directors about certain incidents involving Mr. Geluch and his behaviour towards her. This employee advised the Directors that Mr. Geluch had been abusive, belittling and degrading and that she had left the employ of Rosedale for another golf club as a result of that abusive behaviour. She also told the Directors that Mr. Geluch had berated her in front of others and had actually poked his finger into her shoulder, an act she described as physically abusive.
Notwithstanding the seriousness of the allegations, the employer neither provided Mr. Geluch with the specifics of the allegations nor gave him an opportunity to provide his side of the story.
With respect to the allegations of fiscal impropriety, Rosedale investigated credit card statements, expenses and other financial items to determine if there had been some wrongdoing. Rosedale alleged that Mr. Geluch had instructed the club’s bookkeeper to write two cheques for $4000 each, payable to Mr. Geluch, as an advance payment to him on an $8,000 salary increase for the coming year. There was no withholding tax taken from the cheques and it was submitted that the cheques were written in amounts less than $5,000 in order to avoid the requirement of having a Director sign the cheques.
Rosedale also alleged that Mr. Geluch had taken wine and food from the club for his personal use. In addition, Rosedale alleged that a handyman, who did work for the club, had built certain items for Mr. Geluch personally.
In support of its allegations of abusive conduct towards staff, a second female employee came forward and advised that Mr. Geluch had made comments of a sexual nature to her that made her uncomfortable. A third employee provided evidence that Mr. Geluch had also berated her and brought her to tears. Rosedale also led evidence with respect to friction between Mr. Geluch and members of the Board.
Although Rosedale’s allegations were serous and some evidence was led supporting some level of less that proper fiscal management, the court concluded that the incidents brought forward, while reflecting at least errors in judgment by Mr. Geluch and less than proper fiscal management, were insufficient to support an allegation of cause for dismissal. To illustrate the contextual approach in action, one has only to view Himel J.’s statement regarding the advance of $8,000 [at para. 112].
Mr. Geluch was entitled to a salary increase of $8,000 paid over the course of the fiscal year. He was under financial pressure because his son was getting married. However, while he was not deceptive in his actions, the transaction was documented properly, and he paid income tax on the monies, cheque-splitting and salary advances were in violation of Rosedale’s policies. I accept that Mr. Geluch’s committed an error in judgment. Since it never happened before and did not happen again, I am of the view that his conduct merited condemnation, but did not constitute conduct that amounted to cause for immediate dismissal.
The trial judge went on to examine other examples of lax or loose fiscal impropriety involving personal expenses. Himel J. found, for example, that utilizing a business credit card for personal use may be a bad business practice and that numerous charges were not supported by receipts. However, despite this finding, she was unable to conclude that there was sufficiently serious breach to justify cause.
With respect to the allegations of theft, Himel J. held that the level of proof required of the party making those allegations is very high where serious allegations of potentially criminal behaviour are involved. On that basis, the court concluded that the defendant had not satisfied the high onus regarding the allegations of theft.
Significantly, with respect to its allegations of abusive conduct and sexual harassment, the trial judge held that [at para. 148]:
Rosedale did not follow its own sexual harassment policy for the conduct of an investigation. Applying the contextual approach, I am not satisfied that the defendant has met its burden to demonstrate that there was ongoing conduct amounting to abuse. This incidents were sporadic and did not amount to what would be considered systematic abuse of a nature that is described in the case law and would justify dismissal.
Clearly, failing to follow its own policies in investigating complaints was a very important factor in the judge’s mind.
Although there was some real evidence of some level of wrongdoing, the fact that Mr. Geluch had a long tenure of 12 years without any complaint or warning, the incidents complained of were sporadic and that Rosedale failed to follow its own investigation policy and did not provide Mr. Geluch with an opportunity to respond to the allegations which were being made, resulted in the court finding that just cause had not been established.
Consequently, the court awarded a reasonable period of notice of 15 months, which was increased by an additional two months because of the bad faith involved when the Board conveyed to the membership of the club that Rosedale had concerns about “former senior management” [at para. 188].
As such, this decision underscores the significant burden that employers must meet in proving an allegation of cause. If the employee has not been warned and provided with an opportunity to address the employer’s concerns, termination for cause will be exceedingly difficult.
This article is excerpted from The Employment Bulletin.
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