Wrongfully Dismissed Employee Entitled to Compensatory, Aggravated Special Damages for Employer’s Breach of Duty of Good Faith: Ogden v. Canadian Imperial Bank of Commerce
Previously printed in the CCH’s Focus on Canadian Employment and Equality Rights Newsletter.
This case involved an employee who was dismissed from employment when she allegedly contravened the employer’s Code of Conduct and Conflict of Interest Policy. The B.C. Supreme Court determined that the plaintiff was dismissed without cause, and found the employer liable for compensatory, aggravated and special damages based on a breach of the duty of good faith.
Ms. Ogden moved to Canada from China in 2000. She obtained her Bachelor of Commerce and Certified General Accountant, Level 2 and Certified Financial Planner designations. In 2004, she obtained employment with the employer as a personal banker and, in 2006, was promoted to the position of financial advisor. Between 2006 and 2011, Ms. Ogden built an impressive portfolio of clients. She was regarded as an exemplary employee and, at the time of her dismissal, the value of her portfolio was over $230 million dollars.
Ms. Ogden was dismissed following an incident involving wire transfers: she accepted two wire transfers in the middle of the night from third parties in China into her personal account. She then directed that these funds be immediately transferred to another client. Ms. Ogden argued that the incident did not constitute just cause, as it was a judgment call made urgently when faced with a difficult situation; her client’s real estate deal was about to collapse if she did not take this measure.
Further, Ms. Ogden did not perceive her actions to be in violation of the Code of Conduct.
B.C. Supreme Court’s Analysis
Cumulative Cause Argument Rejected
At trial, the employer argued that there was cumulative cause and alleged that prior incidents in combination with the wire transfer amounted to cause.
The Court rejected the employer’s “cumulative cause” argument, as the employee was given the final warning letter for prior incidents after the wire transfer incident. The Court stated:
In order for an employer to be able to rely on a final warning letter as part of an allegation of cumulative cause, the alleged “final warning” must necessarily precede the ultimate and final act of misconduct.
In this case, Ms. Ogden was given her final warning letter for the Mortgage Incident on September 27, 2010. This was 18 days after the wire transfer took place on September 9, 2010.
On a cumulative cause analysis, Ms. Ogden is entitled to time to improve her performance after the issuance of a final warning. The fact that there was no misconduct since Ms. Ogden’s final warning is fatal to CIBC’s argument that Ms. Ogden was dismissed on the basis of cumulative cause.
Accordingly, the Court’s analysis with respect to cause focused solely on the wire transfer incident.
No Just Cause
Assessing the wire transfer incident, the Court found that there was no clear prohibition in the employer’s Code of Conduct against Ms. Ogden’s conduct. In addition, the Court was critical of the employer’s lack of training with respect to the Code of Conduct and Conflict of Interest Policy.
Because there was no clear rule, the Court assessed the unique circumstances of the incident and whether Ms. Ogden’s exercise of judgment constituted such a violation of trust that the ongoing employment relationship was rendered impossible. In the result, the Court determined it was not. The employer’s decision to end Ms. Ogden’s career was disproportionately severe for her error in judgment.
Aggravated Damages for Employer Bad Faith
In addition to finding that Ms. Ogden was wrongfully dismissed, the Court found that she was entitled to aggravated damages for mental distress on account of the employer’s bad faith.
The Court was highly critical of the employer’s investigation into the alleged misconduct and found that the employer forged ahead with the termination of employment based on incomplete and inaccurate information. Further, the Court determined that the employer had previously suspected that Ms. Ogden was thinking of quitting and used the wire transfer incident as an opportunity to “push out a top performer” but still “retain that top performer’s portfolio”.
Conclusions and Take-Away
In summary, the Court found that the employer had dismissed the plaintiff without cause. The employer was liable for compensatory damages, aggravated damages as well as special damages. The precise amount of damages and costs was left to be assessed at a later date.
Although the employer’s conduct was determined to be in bad faith, this case provides important reminders even to employers acting with the best of intentions to:
- conduct all investigations thoroughly and completely.
- ensure codes of conduct and similar policies are clear, unambiguous and consistently enforced. This will be important should the employer wish to rely on a violation of the policy to uphold discipline or dismissal.
- give employees clear and express warnings about performance issues as and when they arise, and the opportunity to improve performance after the warning is issued. This will be a prerequisite for any claim of cumulative cause.