Simpson v. Consumers' Association of Canada et al.

[Indexed as: Simpson v. Consumers' Association of Canada]

57 O.R. (3d) 351

[2001] O.J. No. 5058

Docket Nos. C31917 and C31918

Court of Appeal for Ontario

Catzman, Feldman and MacPherson JJ.A.

December 21, 2001

• Application for leave to appeal to the Supreme Court of Canada was dismissed with costs August 15, 2002 (Bastarache, Arbour and LeBel JJ.). S.C.C. File No. 29081. S.C.C. Bulletin, 2002, p. 1148.

Employment -- Wrongful dismissal -- Cause for dismissal -- Sexual harassment -- Plaintiff dismissed from position as executive director of association for sexually harassing female employees -- Trial judge accepted that accused had engaged in sexual conversation and behaviour but found that conduct occurred outside workplace and was consensual among friends -- Conduct occurred in work-related contexts such as business trips -- Fact that incidents occurred after official business of meetings did not mean that they were outside workplace and therefore outside employment context -- Trial judge failing to take disparity in power into account in finding that conduct was consensual among friends -- Trial judge erring in suggesting that plaintiff should not be held accountable because employer had no sexual harassment policy in place -- Plaintiff could have implemented such policy and should not benefit from its absence -- Impugned incidents amounted to cause for dismissal.

The plaintiff was dismissed from his position as executive director of the appellant association for sexually harassing female employees. Six incidents in particular were significant: (1) SR, a 22-year-old woman whom the plaintiff hired as his secretary/executive assistant, claimed that the plaintiff told her that opportunities could arise for her if she had a sexual relationship with him. She refused, and he became unpleasant and sarcastic towards her. She resigned; (2) T was employed by the defendant as legal counsel. She claimed that she and another man had a drink with the plaintiff following a business meeting outside the office and that the plaintiff tricked her into going to a strip club and engaged her in a sexual discussion. During a business trip to Montreal, the plaintiff engaged in sexual conversations which were unwelcome to T.; (3) The plaintiff had an affair with his secretary, JR, which was obvious to everyone in the office. JR eventually resigned when the relationship cooled; (4) The plaint iff invited JR, T and a male contract employee to his cottage to discuss business matters. After they discussed business, the plaintiff and JR went skinny-dipping; (5) While attending a board meeting in Quebec City, the plaintiff undressed and entered a hot tub in front of other employees. JR was bare-breasted in the hot tub; and (6) In a hospitality suite in Banff, the plaintiff grabbed the buttocks of G, the defendant's in-house bookkeeper. The incident was observed by H, the executive assistant who was hired to replace JR. H complained about the incident to other staff members. The plaintiff apologized to G. He later fired H.

The plaintiff brought an action for damages for wrongful dismissal. The action was allowed. The trial judge found that six particular incidents involving female employees did take place, but was of the view that they occurred outside the workplace. He disbelieved SR's version of the first incident, despite the fact that no questions were asked of SR on her version of events in cross-examination by counsel for the plaintiff, but accepted that the plaintiff was "'testing the waters' with this young woman and that she ultimately rejected his advances". He also disbelieved T's version of the second incidents. While accepting that the incidents occurred, he found that T and the plaintiff were close friends and that T had not been offended by the plaintiff's conduct at the time. As that and other impugned conduct was consensual among friends, it was not employment-related. He found it to be significant that the workplace did not have a sexual harassment policy, and found that it was a working environment where th e prevailing culture tolerated the sexual conduct described. He found that the plaintiff's conduct towards female employees was unrelated to other events, such as their resignations, their discomfort in the workplace, or the discomfort of others. He concluded that the defendant did not have just cause for dismissal. He awarded the plaintiff damages based on 12 months' notice, plus a further six months' notice for bad faith. The defendant appealed.

Held, the appeal should be allowed.

The trial judge made numerous errors of fact and law. He erred in finding that the plaintiff's sexual conduct occurred outside the workplace. Three of the incidents took place at CAC meetings or retreats held at hotels. These were clearly business meetings, but included a social component. That the incidents occurred after the official business of the meetings and, for example, in a hospitality suite, did not mean that they were outside the workplace and therefore outside the employment context. The meetings were perceived by the staff as job related. They occurred in the context of the work environment. The same analysis applied to the incident at the cottage. The staff attended there because the plaintiff was on vacation and his input was needed on issues that had arisen in his absence. Following the work, the staff were invited to stay for recreation. It was hardly a situation where the guests could control the actions of the host, their boss. Although parts of the plaintiff's affair with JR took place o utside the office, the plaintiff himself understood that the staff all knew about it. It would be artificial and contrary to the purpose of controlling sexual harassment in the workplace to say that after-hours interaction between a supervisor and other employees cannot constitute the workplace for the purpose of the application of the law regarding employment-related sexual harassment. The determination of whether, in any particular case, activity that occurs after hours or outside the confines of the business establishment can be the subject of complaint will be a question of fact. In this case, the trial judge erred by making an overall finding without considering the individual circumstances of each incident.

The trial judge erred in excusing some of the plaintiff's conduct as "consensual conduct among friends". It was an error for the trial judge to ignore the supervisory role of the plaintiff and to treat him as one of the employees. Because of the power imbalance in an employee's relationship with a supervisor, and the perceived consequences of objecting to a supervisor's behaviour, particularly where the behaviour is not directed specifically at that employee, an employee may go along with the conduct. In these circumstances, the employee will be effectively consenting to unwelcome conduct because she feels restrained from objecting. The trial judge was not prepared to give any credence to a workplace reality that it is difficult for staff to disapprove of the conduct of a superior without feeling that their jobs may thereby be in jeopardy. He failed to consider whether the reason T felt that she was obliged to go along with the plaintiff's behaviour was to ensure that she retained her job, which she needed, and to be part of the plaintiff's "inner circle" of the staff.

The incident with SR was one of the most serious and classic examples of sexual harassment. The trial judge effectively found that the plaintiff propositioned her. He made no comment on the fact that SR's evidence went completely unchallenged on cross-examination. He failed to treat the incident and its consequences as a most serious occurrence of sexual harassment by the plaintiff. Where a supervisor in a position of authority offers advancement in employment in exchange for sexual favours, this conduct represents the clearest abuse of power. It is also a breach of duty to the employer, who is obliged to offer advancement fairly and equally on the basis of merit.

The trial judge erred by suggesting that the plaintiff should not be held accountable for any prevailing sexual culture at the CAC, or that he should not be held accountable because there was no sexual harassment policy in place. Given that he was the executive director in charge of staff, he could have implemented a policy of this kind, and should not benefit from its absence.

The plaintiff used his position to engage in a course of sexually harassing conduct towards female employees. Two employees resigned and two were terminated by the plaintiff. When viewed objectively and in its totality, the plaintiff's conduct as found by the trial judge was not conduct that could be accepted or condoned by an employer, and warranted dismissal.

The plaintiff was given a fair opportunity to respond to the allegations. He was not fired without a hearing. His conduct over four years as supervisor was such that the defendant could not leave him in place to continue to run its small office. He had lost the confidence of the female staff.

APPEAL from judgment of C. McKinnon J. (1999), 1999 14880 (ON SC), 41 C.C.E.L. (2d) 179 for the plaintiff in a wrongful dismissal action.

Gonsalves v. Catholic Church Extension Society of Canada (1998), 1998 7152 (ON CA), 164 D.L.R. (4th) 339, 39 C.C.E.L. (2d) 104, 98 C.L.L.C. 210-032 (Ont. C.A.), revg (1996), 1996 8136 (ON SC), 20 C.C.E.L. (2d) 106, 96 C.L.L.C. 210-038 (Ont. Gen. Div.); Tellier v. Bank of Montreal (1987), 17 C.C.E.L. 1 (Ont. Dist. Ct.), consd Other cases referred to Bannister v. General Motors of Canada Ltd. (1998), 1998 7151 (ON CA), 40 O.R. (3d) 577, 40 O.R. (3d) 591 (Fr.), 164 D.L.R. (4th) 325, 39 C.C.E.L. (2d) 91, 98 C.L.L.C. 210-031 (C.A.), revg (1994), 1994 7390 (ON SC), 8 C.C.E.L. (2d) 281, 95 C.L.L.C. 210-017 (Ont. Gen. Div.); Bell Canada v. Olympia & York Developments Ltd. (1994), 1994 239 (ON CA), 17 O.R. (3d) 135, 111 D.L.R. (4th) 589, 26 C.P.C. (3d) 368 (C.A.); Janzen v. Platy Enterprises Ltd., 1989 97 (SCC), [1989] 1 S.C.R. 1252, 58 Man. R. (2d) 1, 59 D.L.R. (4th) 352, 95 N.R. 81, [1989] 4 W.W.R. 39, 47 C.R.R. 274, 25 C.C.E.L. 1, 89 C.L.L.C. 17,011 (sub nom. Janzen v. Pharos Restaurant); Smith v. Kamloops & District Elizabeth Fry Society (1996), 1996 2897 (BC CA), 25 B.C.L.R. (3d) 24, 136 D.L.R. (4th) 644, [1997] 1 W.W.R. 405, 20 C.C.E.L. (2d) 303 (B.C.C.A.), affg (1995), 9 C.C.E.L. (2d) 306 (B.C.S.C.) Authorities referred to Aggarwal, A.P., Sexual Harassment in the Workplace (Toronto: Butterworths, 1987) Aggarwal, A.P., Sexual Harassment in the Workplace, 2nd ed. (Toronto: Butterworths, 1992) MacKinnon, C., Sexual Harassment of Working Women: A Case of Sex Discrimination (New Haven: Yale University Press, 1979)

David W. Scott, Q.C., and Peter Annis, for appellant Consumers' Association of Canada. Deborah Berlach and Heleni Maroudas, for appellants M. Lister, R.D. Todd and T. Dearness. Peter Engelmann and Robert Monti, for respondent.

The judgment of the court was delivered by

FELDMAN J.A.: --

Overview

[1] The respondent was dismissed from his position as executive director of the appellant association in January 1993. The issue on the appeal is whether there was just cause for dismissal based on several incidents of conduct which the appellants say amounted to sexual harassment of female employees and created a sexually infused office environment.

[2] The trial judge minimized the nature of the respondent's conduct and found that the appellant did not have just cause for dismissal. He awarded the respondent damages in lieu of notice based on 12 months' notice plus a further six months' notice for bad faith. He also found the appellant Todd jointly and severally liable with the association for inducing breach of contract. Although he did not find the appellants Lister and Dearness liable for inducing breach of contract, he denied them their costs of the action.

[3] I disagree with the conclusion reached by the trial judge that the respondent's conduct did not warrant dismissal. For the reasons which follow, I would allow the appeal.

[4] The trial judge's reasons span 128 pages. He chronicles the respondent's history as executive director of the CAC [Consumers' Association of Canada], focusing on his relations with the female employees with whom his conduct is impugned, his job performance, including his accomplishments for the CAC, as well as his ongoing dispute regarding his remuneration package. The trial judge was favourably impressed by the respondent. The trial judge viewed the CAC's position as overreaching and lacking credibility. His impressions of the personalities involved influenced his assessment of the seriousness of the incidents which formed the basis for the respondent's dismissal.

[5] The basis for the appeal is that the respondent's behaviour created a workplace which was infected by sexual harassment, and that, as the chief executive of the employer, his conduct required the employer to terminate his employment. The trial judge effectively acknowledged the situation but dismissed all of the incidents as either occurring outside the workplace or as consensual conduct. The appellant submits that the trial judge erred in characterizing the location of the incidents as outside the workplace, as many occurred at work- related conferences and meetings, and that he erred in law when characterizing the incidents as consensual when they occurred between the boss and his employees.

[6] When faced with conflicting versions of events, the trial judge consistently made factual findings in accordance with the respondent's position. While the appellants challenge many of these findings and also allege misapprehension of the evidence, this case turns on six relationships or events between the respondent and his female staff, as they were found by the trial judge to have occurred. It is my conclusion that, viewed objectively and in its totality, the conduct of the respondent as revealed in these incidents constitutes sexual harassment warranting dismissal.

Facts

[7] The CAC was a national organization, structured as a not- for-profit corporation under the laws of Canada. It performed two roles: consumer representation and the publication of a consumer magazine. The magazine was published by Canadian Consumer Inc., a wholly-owned subsidiary of CAC. Both corporations were governed by volunteer boards of directors. In 1988, both the association and the magazine were in financial difficulties and required a government bail-out ($1.68 million), which was made conditional on a restructuring of operations and procedures.

[8] David Simpson was hired as Executive Director to begin in January 1989. He was married and about 40 years of age. The trial judge described his responsibilities upon hiring as follows [at p. 187 C.C.E.L.]:

As Executive Director, Mr. Simpson was accountable to the Executive Committee, reporting through the President. He was placed on probation for 6 months. Financial control and day to day management of the CAC would be returned to the Executive Director's office. A mission statement accompanied the letter of employment. It set out the Executive Director's mission as being: to build a strong independent Association to represent and inform consumers and to advocate action on their behalf; to manage the affairs of the CAC in a sound and fiscally responsible manner; to build with the Board and the membership the credibility of the Association; to restore and build staff morale; to strengthen the professional image of the office and staff and develop the skills and abilities of staff; to develop a sound financial base for the Association and to establish a good working relationship with CCI, the magazine.

[9] The volunteer structure of the CAC consisted of a national board of directors with an executive who met numerous times during the year as well as communicating regularly through telephone conference and fax. The Executive Director attended all meetings of the board and the executive committee as well as the annual general meeting of members, and it was his office and staff who organized all of these meetings. Attending meetings, which were held all over Canada, was considered a benefit for the volunteers.

(a) The six impugned situations

(1) Sandy Reiter

[10] Shortly after taking office, Mr. Simpson hired Ms. Reiter as his executive secretary/executive assistant on a one- year contract. She was 22 years of age at the time.

[11] In March 1989, at a three-day meeting of the board of directors in Fort Qu'Appelle, Saskatchewan, Ms. Reiter took minutes of a discussion about GST. She obtained assistance after the meeting from others in organizing and editing the minutes, as she had taken down too much detail. Following the meeting, Mr. Simpson became critical of her performance and of her inability to take proper minutes. She eventually resigned from the CAC a few months later.

[12] One evening while at Fort Qu'Appelle, the staff went out to a bar. Most people there were much older than Ms. Reiter. She left the staff table and began dancing with someone her age. A few hours later, Mr. Simpson told her their group was leaving and insisted that she leave with them, although she said she could take a cab later.

[13] Ms. Reiter's and Mr. Simpson's versions of subsequent events differed. The trial judge described both versions. She said that once back at the hotel, Mr. Simpson reassured her that he just wanted to ensure that she was not left in a dangerous situation. He then said: "I could easily sleep with you." She told him she did not sleep with married men. He then said: "I wasn't asking you to." She was in shock and worried during the night. On the plane ride home, her seat was beside his. He suggested to her that if they had a "personal relationship", then "opportunities could arise" for her, that he could "make things happen" and "get me a window office". When they stopped in Toronto before their connecting flight to Ottawa, he suggested they go to a bar on the airport strip, which offer she declined.

[14] The trial judge summarized her evidence that, subsequently, their working relationship deteriorated, and she eventually gave her notice. In her evidence, she said that after the trip she intensely disliked Mr. Simpson and avoided him at all cost. He was unpleasant and sarcastic to her. She was trying to make the decision whether to give her notice because she felt that she should not have to leave her job when she had done nothing wrong. When she did decide to leave, she called Ruth Robinson, the president of CAC, and told her the story. She also called the Ontario Human Rights Commission but was discouraged from complaining.

[15] The trial judge described Mr. Simpson's version that he was concerned for Ms. Reiter's safety and therefore asked her to return to the hotel with the rest of the staff. He said that Ms. Reiter had touched him in a sexually suggestive manner at the bar, and that back at the hotel she initiated a conversation about problems with her ex-husband and men in general. He suggested to her that she should consider having a relationship with an older man. The next day he realized she may have misunderstood the remark and spoke to her to clarify any misunderstanding. He denied propositioning Ms. Reiter during the plane ride, but acknowledged that he did invite her to go to a bar on the airport strip while in Toronto.

[16] He said that the minutes she took at the meeting were unfocused and that she had not understood the nuances of the discussion about GST. He lost confidence in her ability to do the job. She eventually resigned. He then received a call from Ruth Robinson who confronted him with Ms. Reiter's allegations about what occurred at Fort Qu'Appelle. He said he explained his version to her and later to Marilyn Lister, the incoming president, and that any concerns about his conduct had been effectively condoned.

[17] Ruth Robinson was not called as a witness at the trial. Marilyn Lister denied any knowledge of the Sandy Reiter incident until several years later and denied that she met with Mr. Simpson at the time. She was disbelieved. No questions were asked of Ms. Reiter on her version of events in cross- examination by counsel for Mr. Simpson. The only cross- examination of Ms. Reiter was a couple of questions about the circumstances surrounding the swearing of an affidavit for a summary judgment motion in the action.

[18] The trial judge made the following findings [at pp. 190-91 C.C.E.L.] at the conclusion of his review of the evidence regarding Sandy Reiter:

At the time of these events, Sandy Reiter was a young woman who was out of town enjoying a bit of an adventure and intent on partying that particular evening. Mr. Simpson acted appropriately in insuring that she came back to the hotel with the rest of the staff when she herself wanted to stay and party on. As to the conversation which took place later in the evening, given that all the parties were drinking I accept that some misunderstanding occurred that required clarification the following day. I accept that David Simpson did clarify his comments to Sandy Reiter the next day.

With respect to what was discussed on the flight home, I think it is reasonable to conclude that David Simpson was "testing the waters" with this young woman and that she ultimately rejected his advances, including rejecting the invitation to go for drinks on the airport strip in Toronto. To that extent, I accept her evidence. I also find that David Simpson accepted her rebuff and did not in any way press the issue further.

I also find as a fact that Ms. Reiter, because of her relative youth, was not fully capable of fulfilling the job of executive secretary in such a dynamic and critical time in the life of the CAC. I accept that one of the main functions of the executive secretary is to properly capture the nuances of what is discussed at the many meetings of the Board of Directors and the executive committee and to generate appropriate Minutes. I do not accept that David Simpson became critical of her performance because of any rebuff of his interest in her sexually, but rather due to the growing recognition that she was incapable of doing the job. Simply stated, at 22 years of age Ms. Reiter lacked the life experience and maturity to adequately fulfil the demands of the position of executive secretary in an organization subject to the intense stresses facing the CAC in early 1989.

(Emphasis added)

(2) Rosalie Daly Todd

[19] Ms. Todd was hired as legal counsel in July 1990. Her responsibilities included regulatory work with the C.R.T.C., assisting in parliamentary presentations [and] performing in- house counsel work, including advising the Executive Director, senior staff, the executive committee and the Board.

[20] Ms. Todd and Mr. Simpson were approximately the same age. She was married but separated from her husband in September 1990. Mr. Simpson's version of events, which was accepted by the trial judge, was that she confided in him about her problems with her husband, including their sex life, and that he would offer his views from the male perspective. He said that they were comfortable discussing intimate subjects together and that they discussed their sex lives "in full and frank detail". He described this relationship in the context of the staff relationship generally: he said that staff would go out to restaurants for lunch and dinner, that on Friday evenings they would go to a pub, and that from time to time, he and Ms. Todd would go out alone.

[21] He described an incident in the fall of 1990 where he, Ms. Todd and Mr. Denton from the Cable Television Association met, then went to a restaurant for a beer. After Mr. Denton left, at Ms. Todd's suggestion they went next door to the Barbarella's Strip Club for another beer as she had never been to a strip club and wanted to see table dancing. He paid a stripper to table dance for them. They stayed for 45 minutes to an hour. Ms. Todd enjoyed it.

[22] Ms. Todd's version was that up to the Barbarella incident, she and Mr. Simpson had not had any of the intimate discussions that he described, and that she had been tricked into attending the strip club following their drink with Mr. Denton. She did not tell Mr. Simpson she wanted to leave the club because she was questioning what would happen to her job at CAC, which she wanted to keep. At the Barbarella, Mr. Simpson began to talk about his wife having a lesbian experience. Ms. Todd thought about resigning, then decided instead to avoid being alone with him again. She said that she was embarrassed by sexual discussion, which was confirmed by Joanne Roy who said that they teased Ms. Todd about her discomfort with the subject.

[23] The trial judge believed Mr. Simpson and rejected Ms. Todd's evidence. He specifically found that "Ms. Todd and Mr. Simpson were much closer friends than Ms. Todd testified."

[24] As a result of an incident involving one of the association's volunteers at the 1990 annual meeting in Montreal, Mr. Simpson was charged with assault. The trial proceedings were in Montreal and eventually the charge was dismissed. Ms. Todd travelled to Montreal with Mr. Simpson to attend the trial. She testified that she did so in order to be prepared for media interest as Mr. Simpson was a nationally known figure as spokesperson for the CAC. She said that during the trip, Mr. Simpson talked about his relationship with a prostitute during his college days and she asked him not to talk about the subject. She said that he called her in the hotel room and asked her to turn on a T.V. station which was showing a sexual threesome. She said that this sexual conversation was the second one after Barbarella's and that it was not consensual. Mr. Simpson said, in contrast, that it was Ms. Todd who called him about the T.V. program, and that they had numerous, intimate, consensual sexual conversations over a three-year period. The trial judge accepted Mr. Simpson's version and rejected Ms. Todd's evidence.

(3) Joanne Roy

[25] Nancy Enright was hired to replace Sandy Reiter in early summer 1989. Joanne Roy was hired as a secretary in May 1990, initially to assist Nancy Enright who had a heavy workload and who was doing an excellent job. Tension developed between Ms. Enright and Ms. Roy. Ms. Enright asked Mr. Simpson to get involved. As a result, however, Ms. Roy took on added responsibilities and Ms. Enright became more upset. Eventually, Ms. Roy replaced Ms. Enright as executive secretary. Ms. Enright described how, in November 1990, Mr. Simpson told her she was overqualified for the job and should think about going elsewhere. She declined, saying that if anyone should leave it should be Ms. Roy, who was junior to her in seniority. He responded that she was no longer required and offered her a substantial severance package.

[26] It turned out that Mr. Simpson later had an affair with Ms. Roy during the spring and summer of 1991. The trial judge noted [at p. 209 C.C.E.L.] that:

There can be little doubt that Joanne Roy was ideally suited to the job of executive secretary to David Simpson; so ideally suited, in fact, that Joanne Roy and David Simpson had a brief affair during the spring and summer of 1991.

[27] The trial judge accepted the evidence that the affair was known in the office and obvious to everyone. He noted that David Simpson testified that he did not attempt to hide his attraction to Joanne Roy, that the staff was very small, that he assumed that everyone knew, and that "he believed that things could be kept on a professional basis as far as the work of the CAC was concerned."

[28] In her evidence, Ms. Roy described how the affair started from going out to lunch, out for drinks and spending a lot of time together at work and outside work. She also described why she ultimately resigned from the CAC. She said things had become uncomfortable, Mr. Simpson's mood had changed which made things difficult, he was unrealistic in his demands, and she was no longer enjoying her job. In his evidence, Mr. Simpson acknowledged that by the end of the affair, their working relationship had been affected.

[29] Ms. Roy first tried to resign in March 1992. She had accepted a second job at Revenue Canada which would have required her to leave work at CAC at 4:30 p.m. When David Simpson objected to this, she resigned. He then gave her a performance bonus of $2,000. She agreed to stay, but eventually left that summer.

[30] The trial judge rejected the defence suggestion that Mr. Simpson unilaterally raised Ms. Roy's salary because he remained interested in her sexually. He concluded that because she was so competent, her loss to the organization would have been very significant, particularly at that time, and accordingly, Mr. Simpson's decision to give her a bonus was appropriate.

(4) The cottage incident

[31] Mr. Simpson had a cottage in the Gatineau area. According to him, he made it known to his associates at the office that he enjoyed skinny dipping there. In July 1991, he was at his cottage on vacation and invited Ms. Roy, Ms. Todd and Mr. Jury, a contract employee, to come to the cottage to discuss some current business matters. After they met about business, everyone was invited to swim. Mr. Simpson and Ms. Roy skinny-dipped. Ms. Todd denied observing this, but the trial judge disbelieved her. After the swim, they had lunch, spent the afternoon, then had a barbecue dinner. They decided to spend the night. Ms. Roy slept with Mr. Simpson downstairs, while Ms. Todd and Mr. Jury slept separately upstairs. Again, Ms. Todd denied knowing what was going on between Mr. Simpson and Ms. Roy until August, but she was disbelieved.

[32] The trial judge concluded that this incident demonstrated that the four people were close friends who were very comfortable with each other, and that the nude swimming did not shock anyone, but was viewed by all as quite natural.

(5) The hot tub incident

[33] A board meeting was held in Quebec City in June 1992. There was a hospitality suite at the hotel. The room assigned to Ms. Roy and Ms. Todd had a large hot tub in it. At about 1:30 a.m., Mr. Simpson, Ms. Todd, Ms. Roy, Mr. Jury and another male staff member had drinks in the hospitality suite, then at Ms. Roy's invitation, they went into the hot tub. There was a suggestion in the evidence that there had been some sexual interplay between Mr. Simpson and Ms. Roy before they went into the tub. Ms. Roy was bare-breasted in the tub and Mr. Simpson took off all his clothes and went in naked. When he emerged, he wrapped himself in a towel and went back downstairs to the bar where three volunteers observed him.

[34] Mr. Simpson's view was that as this was, in effect, a private party among friends, there was no problem with him going in naked or with Ms. Roy being partially undressed. He said that no one was shocked or offended.

[35] The trial judge said that he was basing his conclusions about the incident on the evidence of Ms. Roy, who confirmed that no one complained, and that the group were "more or less" friends who spent time together.

(6) The Julie Glascott incident observed by Heidi Hutchings

[36] This was a sexual touching incident that occurred at the annual general meeting of the CAC, held in Banff in October 1992. Mr. Simpson had a history with Julie Glascott, the in- house bookkeeper for the CAC, which formed part of the complaints about him. She was responsible for paying the corporate MasterCard bill. Apparently, the card was rejected once when he was paying for dinner at the National Arts Centre for a group of prominent people, and he was embarrassed. At a subsequent staff meeting, Mr. Simpson told Julie Glascott that the alleged assault charges he was facing would become real ones with her if she did not pay the account quickly. At another staff meeting, he said to her: "Down girl down." [See Note 1 at end of document]

[37] When considering this conduct by Mr. Simpson toward Ms. Glascott, the trial judge accepted the evidence of Mr. Jury, a friend of David Simpson and contract consultant to the CAC, that Julie Glascott "often took well-intentioned comments personally and emotionally". The trial judge concluded that these matters were trivial and unworthy of serious consideration.

[38] The Banff incident occurred in the hospitality suite around 11 p.m. The trial judge first explained that Mr. Simpson had taken some muscle relaxants that had been prescribed for him, and had also been drinking vodka. He concluded that "combining them [the muscle relaxants] with the vodka proved unfortunate". The incident involved both Julie Glascott, the in-house bookkeeper for the CAC, and Heidi Hutchings, the executive assistant who had been hired in August 1992 to replace Joanne Roy. There were 80 to 100 volunteers in the hospitality suite at the time. Mr. Simpson entered the galley kitchen where Julie Glascott was talking to one of the volunteers about her height and bent over to take off her shoes. Mr. Simpson squeezed her buttock while she was bending over. Heidi Hutchings observed what happened and said to him: "I saw that." Heidi Hutchings had been warned by another staff member when she was hired that she should not bend down in front of David Simpson or she would be subjected to a crude comme nt. After observing what David Simpson did to Julie Glascott, she immediately left and complained to another staff member.

[39] Mr. Simpson's version was not explicitly rejected by the trial judge, but it clearly was not accepted by him either, as it differed from the facts as the trial judge found them. The trial judge said that Mr. Simpson testified that he was pinched on the buttock while leaning over the fridge to look for some white wine. He turned around and saw Julie Glascott with a mischievous look on her face, causing him to conclude that she had pinched him. As she was leaning over to remove her shoe, he reached to the upper part of the back of her thigh to slap her out of her shoe. As she appeared shocked, he realized she had not pinched him and he apologized right away. Julie Glascott did not recall an immediate apology but said it could have happened.

[40] Back in Ottawa following the conference, there was gossip about three incidents that had occurred at Banff including the one just described. David Simpson again apologized to Julie Glascott who accepted his apology. However, Heidi Hutchings remained concerned and spoke to several other staff as well as to Marilyn Lister about it. Ms. Todd also spoke to Ms. Lister suggesting there should be a sexual harassment policy for the CAC. As a result, Ms. Lister called Mr. Simpson about implementing a sexual harassment policy. Nothing was done.

(b) Events leading up to Mr. Simpson's dismissal

[41] Mr. Simpson's salary and bonus had been an ongoing issue of contention for a couple of years by this time. He had received favourable performance reviews and wanted to receive his performance increase, reimbursement for the legal fees he incurred for the defence of the assault charge, as well as extra pay for overseeing the CCI magazine side of the CAC operation. Deloitte Touche had prepared a report which dealt with financial matters including recommendations regarding staff remuneration together with a salary grid. In October 1992, Marilyn Lister was provided with calculations to demonstrate that Mr. Simpson was not being paid in accordance with the report. As a result, cheques were drawn, signed by Marilyn Lister and delivered to him to bring his salary up to $98,187 plus $400 per month car allowance for the period from January to September 1992. There was also a cheque for $5,000 that Mrs. Lister said was a partial payment of his 1991 bonus, and which he claimed was partial reimbursement for the $10,000 in legal fees in respect of the defence of his assault charge. The trial judge agreed with Mr. Simpson. He also noted that the evening Marilyn Lister signed the cheques, she learned for the first time that David Simpson had had an affair with Joanne Roy. The trial judge concluded that Marilyn Lister proceeded with the cheques in order not to lose Mr. Simpson as executive director and that her knowledge of the affair had no impact on her decision.

[42] Executive meetings were scheduled for November 17 and 18, 1992 in Ottawa. By that time there were two major issues of concern: a serious cash flow problem and ongoing talk about various incidents of a sexual nature involving Mr. Simpson and female employees. Heidi Hutchings was talking to everyone about what Mr. Simpson did to Julie Glascott in Banff, about his affair with Joanne Roy, and about an incident which had occurred when Mr. Simpson invited Heidi Hutchings to lunch in September 1992, at the Ritz Restaurant in Ottawa. They had not been getting along well in their working relationship. She testified that at lunch he talked about her office behaviour and told her to "[s]hut the fuck up and only talk when asked", adding that "[n]o one is interested in your opinion". Mr. Simpson denied using the "f" word but agreed that he did criticize her performance as she described. Heidi Hutchings was also talking about another incident at Banff where a volunteer grabbed at the crotch of another staff member.

[43] By November 17, Heidi Hutchings was also accusing David Simpson of stealing her personnel file and showing up drunk at work following the successful conclusion of his assault trial. She told Marilyn Lister that she was afraid of him and concerned for her job. At some point, Marilyn Lister also learned that he was "parading around naked" in the hospitality suite at the Quebec City meeting.

[44] A meeting had been scheduled on November 18, 1992 for David Simpson and the executive committee to discuss his compensation. However, the meeting was used to confront him with allegations regarding the sexual incidents as well as his abusive attitude and language with female staff and some volunteers. He responded to the allegations denying some and citing stress as the cause for others. The trial judge concluded that no independent investigation was offered, that the meeting was successful and that the committee expected staff relations to improve as a result.

[45] Following the meeting, three letters were written to David Simpson on November 29, one of which dealt with his remuneration issues. In addition to setting his salary at a reduced figure, he was given a one-time bonus of $5,000 for the period ending March 31, 1992 for overseeing the restructuring of CCI, his auto allowance was cancelled together with accumulated vacation and sick leave time, his performance-based increase was deferred because of the issues discussed at the November 18 meeting, and he was told that his ongoing CCI liaison duties were part of his job and not subject to further remuneration. The trial judge concluded that this letter constituted constructive dismissal.

[46] Mr. Simpson took the same view and sent a lawyer's letter dated December 10, stating that he had been constructively dismissed and gave 12 months' notice. On December 17, Mr. Simpson terminated Heidi Hutchings at the end of her probation period, but gave her six weeks salary in lieu of notice. The trial judge concluded that Mr. Simpson was within his rights to do this as Heidi Hutchings was unfaithful to him, and was causing a lot of trouble for him and for the organization by going over his head and creating an intolerable atmosphere.

[47] Also in early December, Ms. Todd approached Marilyn Lister and told her about all of the incidents in which she was involved and how distressed she was with Mr. Simpson's behaviour. Another meeting was scheduled with David Simpson for early January to resolve the issues involving him and the CAC.

[48] Following the January meeting, and based on the recommendation of Marilyn Lister, the executive committee decided to terminate Mr. Simpson's employment for cause. The letter to him stated: "Your conduct over the past months, including your dealings with the female staff members, has left us with no other option but to terminate you for cause." He was unsuccessful in obtaining employment thereafter. The trial judge also concluded that David Simpson did not tell people he had been terminated for sexual harassment and that Marilyn Lister must have been the "conduit" for that information.

The Trial Judge's Conclusions on Sexual Harassment

[49] In his discussion of the law of sexual harassment in the workplace, the trial judge noted that the CAC had no sexual harassment policy and viewed the respondent's conduct in that context. He summarized his findings and conclusion that David Simpson's conduct did not justify dismissal in the following paragraphs [at pp. 254-56 C.C.E.L.]:

[S]exual harassment policies are now the norm in larger modern day workplaces, rather than the exception. Insuring the existence of workplaces free of sexual harassment involves an educational approach. In many cases, the prevailing culture of the workplace must be changed. This cannot be accomplished overnight. Attempting to cleanse the workplace through summary firings will likely result in an undesirable effect on the general morale of the workplace.

Wise employers know that it is the workplace that spawns most human relationships, sexual and otherwise. Innocent flirtation, open communication and friendly interaction between the sexes must be tolerated. The constant challenge to informed employers is to identify the appropriate balance. A properly communicated sexual harassment policy, inaugurated with appropriate education, can purify the coarsest of workplaces, given sufficient time. Employees who know that a fair and enforceable sexual harassment policy exists in their workplace will have no fear in coming forward to complain in appropriate circumstances; sexual harassers will know that their conduct will be scrutinized and dealt with seriously.

In the case at bar, no sexual harassment policy existed at CAC. The events in question occurred almost a decade ago, just prior to the heightened consciousness concerning the issue of sexual harassment, and the development of written policies to deal with the issue. The CAC was a small workplace. I have attempted to describe its atmosphere during the course of these reasons. With respect to the allegations against the plaintiff, I have attempted to place them in context and have described in detail what occurred. This exercise is important because in matters of sexual harassment, any assessment of human conduct which purports to be fair and impartial must respect the context of the disputed events.

David Simpson was a skilled, intelligent, dynamic and highly effective Executive Director. But he was a man not without faults. He had a very healthy ego. He could be annoyingly selfish. He enjoyed partying with his staff, perhaps unwisely. He could be coarse in language. He had a strong libido. He enjoyed swimming "au naturel", a product of his cottage life. He was liberal in his views, particularly in the realm of sexuality, and probably communicated this fact too readily with those he chose to trust.

Notwithstanding these faults, I find that without exception, all of the incidents involving so-called sexual harassment in this case occurred outside the workplace. There has not been one incident of alleged sexually harassing behaviour that occurred in the workplace that was the subject of any evidence at trial. The closest one could view the facts as constituting workplace related conduct would be the incident in the hospitality suite during the Banff annual general meeting, involving the inappropriate touching of Julie Glascott. The incident was brief, and forgiven by Ms. Glascott. Mr. Simpson fully appreciated the seriousness of the incident. He apologized. His apology was accepted and, indeed, Ms. Glascott herself was very upset when others used the incident for their own purposes without her knowledge and consent.

All other incidents, including the intimate sexual discussions with Rosalie Daly Todd, the attendance with her at Barbarellas strip club, the adulterous relationship with Joanne Roy, the swimming in the nude at Lac Pemichangan at Mr. Simpson's cottage, and the Roman Tub incident at Quebec City, constituted consensual conduct among friends.

For unstated reasons, Rosalie Daly Todd chose to misrepresent these incidents to Marilyn Lister. One may assume she chose to do this for personal gain. The true reason is irrelevant. As in so many cases, there remains a lingering mystery as to Ms. Todd's innermost thoughts about David Simpson. All the court can do is attempt to determine the truth upon the available evidence. It is never a happy occasion to disbelieve a witness. However, with the reluctance that inevitably arises from the onerous task of choosing whom to believe, I have concluded, with regret, but without reservation, that Ms. Todd cannot be believed on numerous crucial matters pertaining to the salient facts of this case. In so concluding, I am painfully aware of Ms. Todd's position as a member of the Bar of Ontario.

Given the evidence at trial, one inescapable conclusion remains. Had the defendants invested the time and resources to conduct an independent third party investigation into Ms. Todd's allegations against Mr. Simpson, the present, highly protracted, and unfortunately very expensive litigation might have been avoided.

With respect to the allegations concerning oppressive behaviour with staff on the part of David Simpson, I have reviewed at length in these reasons the allegations in that regard and have no difficulty in concluding that the incidents do not warrant dismissal, if indeed they warrant complaint or comment at all.

I have found that the allegations with respect to the resignations of Sandy Reiter and Joanne Roy, and the termination of Nancy Enright and of Heidi Hutchings are unrelated to sexual harassment or mismanagement.

In effect, the defendants have failed to demonstrate, on a balance of probabilities, that David Simpson's conduct justified termination.

[50] The trial judge viewed the conduct of the respondent as inoffensive on several grounds:

-- All of the impugned conduct occurred outside the workplace, if it did not occur at the office itself.

-- Some of the impugned conduct was consensual among friends, and therefore not employment-related.

-- In the case of Julie Glascott, Mr. Simpson apologized and the conduct was forgiven.

-- The workplace did not have a sexual harassment policy and was a working environment where the prevailing culture tolerated the sexual conduct described and a sexually charged atmosphere.

-- The respondent's conduct toward female employees was unrelated to other events, such as their resignations, their discomfort in the workplace, or the discomfort of others.

The Primary Issue

[51] In oral argument, although the appellant asked the court to consider misapprehension of the evidence by the trial judge and challenged many of his findings and conclusions on that basis, counsel framed the essential issue for the court as: do the six situations described, and which were found by the trial judge to have occurred, amount to just cause for dismissal of the respondent as constituting sexual harassment of employees by a senior executive?

(a) Legal framework

[52] In Janzen v. Platy Enterprises Ltd., 1989 97 (SCC), [1989] 1 S.C.R. 1252, 59 D.L.R. (4th) 352, the Supreme Court of Canada reviewed and adopted a number of definitions of sexual harassment in the work place. Quoting from Aggarwal, Sexual Harassment in the Workplace (Toronto: Butterworths, 1987) at p. 1, Dickson C.J.C., at p. 1280 S.C.R., approved the following descriptions of sexual harassment: "any sexually-oriented practice that endangers an individual's continued employment, negatively affects his/her work performance, or undermines his/her sense of personal dignity".

Sexual harassment is a complex issue involving men and women, their perceptions and behaviour, and the social norms of the society. Sexual harassment is not confined to any one level, class, or profession. It can happen to executives as well as factory workers. It occurs not only in the workplace and in the classroom, but even in parliamentary chambers and churches. Sexual harassment may be an expression of power or desire or both. Whether it is from supervisors, co-workers, or customers, sexual harassment is an attempt to assert power over another person.

[53] After reviewing descriptions by legal writers as well as those contained in human rights legislation, Dickson C.J.C., at p. 1284 S.C.R., summarized his own definition which he characterized as non-exhaustive:

Without seeking to provide an exhaustive definition of the term, I am of the view that sexual harassment in the workplace may be broadly defined as unwelcome conduct of a sexual nature that detrimentally affects the work environment or leads to adverse job-related consequences for the victims of the harassment. It is, as Adjudicator Shime observed in Bell v. Ladas [(1980), 1 C.H.R.R. D 155], and as has been widely accepted by other adjudicators and academic commentators, an abuse of power. When sexual harassment occurs in the workplace, it is an abuse of both economic and sexual power. Sexual harassment is a demeaning practice, one that constitutes a profound affront to the dignity of the employees forced to endure it. By requiring an employee to contend with unwelcome sexual actions or explicit sexual demands, sexual harassment in the workplace attacks the dignity and self-respect of the victim both as an employee and as a human being.

[54] A recent case from this court considered the obligations of a person who operates in a supervisory role for an employer. In Bannister v. General Motors of Canada Ltd. (1998), 1998 7151 (ON CA), 40 O.R. (3d) 577, 164 D.L.R. (4th) 325, the court overruled the trial judge's finding that the alleged conduct of the supervisor did not amount to sexual harassment justifying dismissal. One of the errors of the trial judge was that he overlooked the respondent's role as a supervisor and therefore the agent of the company, and that, in that role, he could not be permitted to set an example as a sexual predator of young females. Carthy J.A. also held that "wearing persistence" by the harasser of the individual victims is not a necessary constituent of sexual harassment in the context of termination. On the facts, he concluded at p. 589 O.R. that:

Here, the conduct, even if not repeated in identical form with individual complainants, was, according to the complainants, pervasive in the department and, moreover, was the conduct of the supervisor directed to female subordinates generally and repeatedly. This could be a far greater concern to an employer than if the conduct was confined to one employee and was persistent. In the latter case, the problem might be able to be isolated and controlled and termination avoided.

(b) Analysis

[55] The trial judge placed much emphasis on his finding of Mr. Simpson as a credible witness with an excellent memory, in contrast to his finding that the women who complained about him were exaggerating or lying, at least about their own reactions to his conduct; that is, they did not object to his conduct at the time, but did at trial. As a consequence, the trial judge saw the respondent as a victim of unjustified and exaggerated complaints by the female employees and volunteers of the association, and consequently viewed the respondent's sexual conduct toward and with the female employees as benign and not warranting either dismissal or even complaint.

[56] Because he took this approach to the evidence, the trial judge failed to consider objectively Mr. Simpson's admitted conduct toward female employees, in the context of assessing whether that conduct can be considered acceptable for the executive director in charge of all staff in an organization. As a result, the trial judge made errors of fact and law:

(1) in his finding that the respondent's sexual conduct occurred outside the workplace;

(2) in implicitly concluding with respect to the respondent's conduct which he found to be consensual and among friends, that the conduct was not "unwelcome", and that in the context of the respondent's supervisory role, it was not inappropriate;

(3) in implicitly rejecting most of the evidence of Sandy Reiter as to what occurred at the conference at Fort Qu'Appelle, when her evidence went unchallenged by cross- examination and when he accepted small but significant parts of her evidence which were denied by the respondent;

(4) in failing to find that any sexual harassment which existed in the "culture" of the CAC workplace was created by the respondent himself, and in exonerating the respondent's conduct on the basis that the CAC had no sexual harassment policy in place during the relevant period;

(5) in finding that because the respondent apologized to Julie Glascott, the incident was closed, when the respondent did not admit the true facts of what occurred and when the incident took place in public, was observed by Heidi Hutchings, and was viewed with great concern by her and others;

(6) in concluding that the respondent's conduct was unrelated to the resignations of Sandy Reiter or Joanne Roy, or the terminations of Nancy Enright and Heidi Hutchings, and in failing to recognize that the respondent's conduct created an atmosphere where the careers of female employees were, or were perceived to be, dependent on his sexual interaction either with them, or with other female employees;

(7) in concluding that the respondent's admitted conduct toward female employees as described, was acceptable for the executive director in charge of all staff in the organization, and that it did not warrant dismissal.

(1) Definition of the "workplace"

[57] The trial judge did not clarify any definition of the workplace for the purpose of his conclusion. In fact, three of the incidents -- Sandy Reiter, Julie Glascott, and the hot tub -- took place at CAC meetings or retreats held at hotels. These were clearly business meetings, but included a social component. That the incidents occurred after the official business of the meetings, and, for example, in a hospitality suite, does not mean that they are outside the workplace and therefore outside the employment context. In Smith v. Kamloops & District Elizabeth Fry Society (1996), 1996 2897 (BC CA), 136 D.L.R. (4th) 644 at p. 654, 25 B.C.L.R. (3d) 24, the British Columbia Court of Appeal held that "[a]n employee's conduct outside the workplace which is likely to be prejudicial to the business of the employer can constitute grounds for summary dismissal." In Tellier v. Bank of Montreal (1987), 17 C.C.E.L. 1 (Ont. Dist. Ct.), one of the key events constituting sexual harassment occurred at a cocktail party held by a company that was doing business with the bank.

[58] These CAC meetings, including the social aspects, were perceived by the staff as job related. The people invited were either employees or volunteers of the association, attending a function paid for by the association. In the cases of Sandy Reiter and Julie Glascott, the women were strictly employees of the association and not friends of the respondent. Although these incidents did not take place within the physical confines of the office, they occurred in the context of the work environment.

[59] The same analysis applies to the incident at the cottage. The staff attended there because the respondent was on vacation and his input was needed on issues that had arisen in his absence. Following the work, the staff were invited to stay for recreation. It was hardly a situation where the guests could control the actions of the host, their boss.

[60] Although parts of the respondent's sexual affair with Joanne Roy took place outside the office, the respondent himself understood that the staff all knew about it. He had considerable interaction with Ms. Roy in the office. One of Nancy Enright's complaints was that Mr. Simpson passed by her desk, literally, in order to deliver work that she perceived should have been hers to Ms. Roy, and to converse at length with her. In fact, their relationship began from lunches, dinners, and Friday evening drinking following work. The activities involving Ms. Todd followed the same pattern. It was following a business meeting with a cable television representative that Mr. Simpson took her to a strip club and engaged a table dancer.

[61] It would be artificial and contrary to the purpose of controlling sexual harassment in the workplace to say that after-work interaction between a supervisor and other employees cannot constitute the workplace for the purpose of the application of the law regarding employment-related sexual harassment. The determination of whether, in any particular case, activity that occurs after hours or outside the confines of the business establishment can be the subject of complaint will be a question of fact. In this case, the trial judge erred by making an overall finding without considering the individual circumstances of each incident.

(2) "Consensual" v. "unwelcome" conduct

[62] The trial judge excuses as "consensual conduct among friends", Mr. Simpson's intimate sexual discussions with Rosalie Todd; his attendance with her at Barbarella's Strip Club; in swimming nude with staff at the cottage; and going into the hot tub nude with staff at the Quebec City meeting. Although this finding of consensual conduct was disputed by Ms. Todd, accepting the trial judge's finding that she did consent to Mr. Simpson's conduct, does not answer the issue of whether that conduct was nevertheless unwelcome, and whether, in any event, it was acceptable conduct by the executive director of a small, public organization, when viewed in the context of all of the other conduct.

[63] The appellant submits that by discussing with Ms. Todd the intimate personal details of his sex life, by taking her to a strip club and paying a table dancer to dance for them and by being nude in her presence, Mr. Simpson engaged in a course of conduct which was inconsistent with professionalism in their relationship, and which set the scene for problems. I agree with that submission. The trial judge's view was that "innocent flirtation, open communication and friendly interaction between the sexes must be tolerated" by employers in the workplace, because "it is the workplace that spawns most human relationships, sexual and otherwise." In the context of this case, it is difficult to see the social benefit in Mr. Simpson's workplace providing fertile territory for him to develop sexual liaisons with his staff, or to use them as sexual confidantes. Furthermore, the trial judge does not address the fact that Mr. Simpson was the supervisor of all of the staff, including Ms. Todd. As Carthy J.A. stated in Bannister v. General Motors, it is an error for the trial judge to ignore the supervisory role of the respondent and to treat him as one of the employees.

[64] Mr. Simpson may well have viewed all of his conduct as consensual and therefore as welcome. The trial judge did not address the distinction. Because of the power imbalance in an employee's relationship with a supervisor, and the perceived consequences to objecting to a supervisor's behaviour, particularly when the behaviour is not directed specifically at that employee (for example, making comments to or touching another employee, being nude in front of a group of people), an employee may go along with the conduct. In those circumstances, the employee will be effectively consenting to unwelcome conduct because she feels constrained from objecting.

[65] Ms. Todd testified that she felt pressured and obliged to participate, as the respondent was her boss. Although her version was rejected by the trial judge, eventually, when Mr. Simpson's other sexually inappropriate conduct became a matter of open concern, Ms. Todd then felt able to come forward and join in the complaints. The trial judge was not prepared to give any credence to a workplace reality that it is difficult for staff to disapprove of the conduct of a superior without feeling that their jobs may thereby be in jeopardy. In this case, he failed to properly consider whether the reason Ms. Todd felt that she was obliged to go along with Mr. Simpson's behaviour was to ensure that she retained her job, which she needed, and to be part of Mr. Simpson's "inner circle" of the staff. The trial judge expressed puzzlement at why this "intimate friend" turned on Mr. Simpson, saying he assumed personal gain was the motive. However, the trial judge then referred to Ms. Todd's innermost thoughts about Mr. Simpson as a mystery, suggesting by innuendo a number of possible feelings she may have had about him. This musing by the trial judge suggests another reason why Mr. Simpson's conduct in encouraging an overly familiar, sexually-infused relationship with employees who reported to him, was inappropriate and inconsistent with his role as a supervisor. It suggests the potential for abuse of the power relationship inherent in their employment statuses, and the use of emotional manipulation to insinuate, for example, that an employment relationship might develop into a romantic one.

[66] Furthermore, as a supervisor, the respondent had obligations to his employer. Again as Carthy J.A. said in Bannister at p. 587 O.R.: "management ha[s] two positive duties: first, to members of the workforce who are entitled to protection from offensive conduct, and second, to the corporation, to protect it against civil suits at the hands of individual complainants." It is the job of senior employees to ensure that the employer's duties to its workforce and to its shareholders, in this case, effectively the public, are carried out so that the employer is protected. If the supervisor creates the problem, he is in breach of that duty.

(3) Sandy Reiter

[67] Sandy Reiter gave evidence that the appellant not only propositioned her while away on CAC business at a meeting, but also offered her advancement and favourable treatment in her employment if she would engage in a personal relationship with him. The trial judge found that whatever occurred had been effectively condoned by the CAC by both Ruth Robinson and Marilyn Lister. However, conduct which was not admitted could not have been condoned.

[68] This incident with Sandy Reiter was one of the most serious and classic examples of sexual harassment. She was a young secretary he hired for himself. He was married and almost twice her age. He offered her advancement in exchange for sexual favours. She rejected his advances and was immediately put into a compromised position with respect to her position. She felt uncomfortable with him from that point forward and he thereafter criticized her work performance at the conference and was sarcastic and unpleasant to her. Eventually, she was effectively forced to resign.

[69] In Janzen v. Platy Enterprises Ltd., one of the definitions adopted by Chief Justice Dickson at p. 1280 S.C.R. is suggested by Professor MacKinnon in Sexual Harassment of Working Women: A Case of Sex Discrimination (New Haven: Yale University Press, 1979) at p. 1: "the unwanted imposition of sexual requirements in the context of a relationship of unequal power."

[70] By accepting that the respondent was "testing the waters" with Ms. Reiter, the trial judge effectively found that he propositioned her. The trial judge articulated no basis on which he limited his acceptance of any part of her evidence. As noted, her evidence went completely unchallenged by any cross- examination, a point on which the trial judge made no comment. Given his positive finding about part of her evidence of what occurred on the plane, he ignored the rest of her evidence and thereby failed to treat the incident and its consequences as a most serious occurrence of sexual harassment by the respondent. Where a supervisor in a position of authority offers advancement in employment in exchange for sexual favours, this conduct represents the clearest abuse of power. It is also a breach of duty both to the employee and to the employer, who is obliged to offer advancement fairly and equally on the basis of merit.

(4) Sexual culture and no sexual harassment policy

[71] There was no finding that any culture of sexual discussion, sexual harassment, or a sexually charged atmosphere existed in the CAC office prior to Mr. Simpson becoming executive director in January 1989. In the mission statement which formed part of Mr. Simpson's employment terms with respect to staff, he was to address the problems of low morale and lack of professionalism. Instead, it appears from the evidence and from the findings of the trial judge that it was Mr. Simpson himself who introduced a sexual atmosphere or culture into the workplace and the working relationship of the staff, at least with himself. It was only two months after he commenced his duties that he propositioned Sandy Reiter. He attended a strip club where he hired a table dancer with Rosalie Daly Todd, and engaged in intimate sexual discussions with her. He carried on an open sexual affair with his secretary. He made it known that he swam nude at his cottage, then invited staff there for work related activities on the basis t hat they all knew of his habit to swim nude there. He entered the hot tub naked with staff at a CAC conference, and allowed his secretary to be topless there. He also encouraged open sexual pinching in public at the hospitality suite in Banff -- he testified that it was because he believed that Julie Glascott had pinched him, that he reciprocated to her.

[72] In the face of this preponderance of evidence, the trial judge erred by suggesting that Mr. Simpson should not be held accountable for any prevailing sexual culture at the CAC, or that he should not be held accountable because there was no sexual harassment policy in place there. Given that he was the executive director in charge of staff, he could have implemented such a policy, and should not benefit from its absence. As noted earlier, following the Julie Glascott incident, Ms. Lister called Mr. Simpson about implementing a sexual harassment policy. No action was taken.

(5) Seriousness of the incident with Julie Glascott

[73] The trial judge minimized and discounted the respondent's conduct with Julie Glascott where he pinched her on the buttock in public. The trial judge viewed the appellant's apology as ending the matter, although he agreed that it was a serious matter and the respondent knew it was. Had this been a one-time incident, the trial judge may have been entitled to view it in that context. However, it was not a one-time transgression, but rather, as it turned out, the straw that broke the camel's back. Heidi Hutchings had been warned about David Simpson making crude comments. She then observed the incident with Julie Glascott. As a result, she began talking to all the women at the CAC about Mr. Simpson's behaviour and soon everyone was talking about it. Heidi Hutchings became concerned for her job. That concern turned out to be well-founded. Although the trial judge described the situation as rumour "burning out of control," the impugned conduct was all substantiated as having occurred.

[74] Rather than create an atmosphere of professionalism where staff morale was high, the respondent's attitude and conduct had done the opposite. Morale was low, the office was infused with gossip and concern about the respondent as a result of conduct perceived as inappropriate and demeaning to women by those at whom it was directed.

(6) Impact of Mr. Simpson's sexual conduct on the careers of female employees

[75] Sandy Reiter and Joanne Roy each resigned from the CAC. Nancy Enright and Heidi Hutchings were terminated by the respondent.

[76] In the case of Sandy Reiter, the trial judge accepted Mr. Simpson's assertion that he became critical of her performance only because of the "growing recognition that she was incapable of doing the job" and not because of her rebuff of his sexual advances. Although Mr. Simpson may well have believed this himself, understandably, Ms. Reiter developed an antipathy to the respondent and found the situation intolerable. The respondent did not fire her, but made her position more difficult by criticizing her. Eventually, she resigned. The situation was so serious that she approached the Ontario Human Rights Commission about complaining, and did complain to the volunteer president of the CAC.

[77] Joanne Roy also resigned. Some insight into how their intimate relationship affected their professional relationship can be gleaned from an affidavit Mr. Simpson swore for a summary judgment motion, which affidavit became part of the evidence at trial. He said:

While we were maintaining a good working relationship together, we were both getting more drawn to each other and enjoyed our social times together which would culminate in some form of sexual involvement.

Then:

After my interest in Roy waned, she began a work-to-rule schedule and I had to supervise her more closely to ensure that her work got done. Her performance fell off dramatically. This was understandable in the short-term and I made allowances for that. She told me she was going to leave, but I thought she could still play a valuable role if she chose to. I gave her plenty of latitude, but in no way ever pressured her to keep the relationship going.

[78] It is clear from this evidence that the respondent himself recognized that the break-up of their personal relationship inevitably affected their working relationship. Ultimately, it was Ms. Roy who lost her employment.

[79] Nancy Enright was forced out by the respondent. She perceived the respondent's favouritism for Ms. Roy over herself. Had there been no personal relationship between the respondent and Ms. Roy, it would be fair to conclude, as did the trial judge, that Ms. Enright was not a suitable employee and deserved to be terminated. However, because of the respondent's relationship with Joanne Roy, the perception of unfair treatment becomes and remains an issue.

[80] Finally, the respondent terminated Heidi Hutchings on December 17, after he had taken the position with the CAC that he had been constructively dismissed. As the trial judge said, she was "making a great deal of trouble for him" at the time. The trial judge blamed her for the situation, viewing her conduct as both unfaithful and as creating an intolerable atmosphere for their employment relationship. Whatever the personality issues may have been between them, it is clear that Heidi Hutchings' employment status was affected by the respondent's sexually harassing conduct toward female staff. It appears that she was expected to be loyal to him, rather than raise her legitimate concerns with other staff and with management.

[81] These four examples demonstrate how the respondent's sexual conduct either with them (in the case of Sandy Reiter and Joanne Roy) or with others (in the cases of Nancy Enright and Heidi Hutchings) affected their careers at the CAC. In Sexual Harassment in the Workplace, 2nd ed. (Toronto: Butterworths, 1992), Aggarwal notes at p. 112 that an employer may be liable to those employees who are consequently disadvantaged when another employee receives job benefits for consenting to a supervisor's request for sexual favours. In this way, it is not only those in the workplace who are the direct victims of sexual harassment who may have a complaint about the conduct of a harassing supervisor. Others may be affected by receiving less favourable treatment, but also in other ways such as by enduring an unwelcome sexually charged atmosphere associated with the workplace, or risking the consequences of complaining about the situation.

[82] Recognition of the full consequences to female staff of a supervisor's sexual conduct is consistent with the concepts articulated by Carthy J.A. in Bannister, that a workplace supervisor is not in the same position as other employees in respect of improper conduct, and that a supervisor must carry out management's duties to its workers and to the organization to protect both from sexual harassment claims -- not be the cause of them.

(7) The six incidents amounted to just cause for dismissal

[83] The respondent used his position as executive director of the CAC to engage in a course of sexually harassing conduct towards the female employees. Taken together, the six impugned incidents and the fallout from them, instead of creating an atmosphere of high morale and professionalism among the staff, created a workplace which, by November 17, 1992 was, as the trial judge characterized it "abuzz with unrestrained gossip" and which reflected "a mood of near hysteria". The respondent's conduct consisted of several incidents and ongoing situations, which although not repeated conduct with one person, amounted to a pattern of sexually harassing conduct. Secondly, because the respondent was the executive director of the Association and the supervisor to whom the employees reported, his obligation to the Association was to ensure that sexual harassment did not occur, and to set the standard of a workplace which protected both the employees and his employer from complaints of offensive conduct. Both these factors were recognized in Bannister at p. 589 O.R. as important considerations that will justify termination.

[84] The trial judge made findings that confirmed that each of the six impugned incidents or situations occurred. He erred by excusing each of them as either outside the workplace, consensual, de minimis, or forgiven. The trial judge described Mr. Simpson's conduct as a manifestation of his faults. As in Bannister, he did not recognize the significance of the conduct for a supervisor. He also focused on his perception of misrepresentations of the incidents by the appellants' witnesses, mostly in terms of their reactions to Mr. Simpson's conduct. By doing so, he failed to consider the totality of the conduct, and to view it objectively. When viewed objectively and in its totality, the respondent's conduct as found by the trial judge was not conduct that could be accepted or condoned by an employer, and warranted dismissal. The view of the court in Bannister at p. 590 O.R. is similarly apposite in this case: ". . . it is hard to imagine an alternative to termination which would n ot perpetuate the harassment which management was obliged to eliminate."

Other Issues

(a) Did the appellant provide the respondent with fair process?

[85] The trial judge found that at the November meeting, the appellant did not offer the respondent the opportunity of an independent investigation, and that it was essentially agreed that Mr. Simpson would improve his behaviour with staff thereafter. Three follow-up letters were sent to him. One summarized the discussion with respect to his behaviour and read:

Dear David, This is to confirm our discussion with you on Wednesday, November 18 regarding our concerns with what we perceive to be a lapse in your professional conduct with volunteers and staff in your capacity as Executive Director. We are concerned that there have been instances of inappropriate conduct with volunteers, verbal abuse of volunteers and staff members, and inappropriate touching of a staff member. We appreciate that your job is subject to a variety of stressors. Nonetheless, in a diverse public organization such as ours, we cannot tolerate such unprofessional conduct on your part and will take disciplinary steps in the event of evidence of such conduct in the future.

Sincerely, Marilyn Lister, President

(Emphasis added in the trial judgment)

[86] Following the meeting, by letter of December 10, the respondent claimed that he had been constructively dismissed because of the position the CAC took with respect to his compensation, and he gave the CAC 12 months' notice. On December 9, Ms. Todd told Marilyn Lister about her unhappiness with David Simpson based on the Barbarella Strip Club incident, his sexual discussions on the trip to Montreal, his affair with Joanne Roy, the hot tub incident, the "down counsel down" comment, as well as other incidents where she felt demeaned by him in the workplace. On December 17, the respondent terminated Heidi Hutchings, who immediately called Marilyn Lister, and at her request, reduced her complaints to writing. The trial judge concluded that Marilyn Lister was busy building a case against Mr. Simpson to justify dismissal, and that the decision had been made before the meeting on January 12, 1993.

[87] At that meeting, all of the events (other than Sandy Reiter) were discussed and the respondent gave his explanation for each. The trial judge makes no specific findings as to what he said, but I conclude that his responses were similar to those he made at trial which have been discussed above. He either acknowledged the conduct and justified it, he acknowledged it and gave stress or his personality as the reason, he did not acknowledge the true facts (as in the Julie Glascott incident), or he said that everyone knew about it and accepted it.

[88] The next day, the executive committee decided to terminate the respondent and sent the following letter:

Further to our meeting yesterday, which took place in the offices of Tony Tattersfield, the executive has now had a chance to consider your explanations for the various incidents discussed and to decide on the appropriate action to take.

I regret to inform you that the decision has been taken to terminate your employment as Executive Director of the Association effective immediately. Your conduct over the past months, including your dealings with the female staff members, has left us with no other option but to terminate you for cause.

[89] The trial judge concluded that the only new information of any relevance after the November meeting came from Ms. Todd, and that had the new information been scrutinized by an independent third party, the litigation may have been avoided.

[90] I do not agree with this conclusion. The respondent had a fair opportunity to respond to the allegations. This was a situation where the CAC had no choice but to terminate Mr. Simpson's employment as the executive director. In Tellier v. Bank of Montreal, Mr. Tellier held a senior management position with the bank and had an unblemished 18-year career. His employment was terminated for sexual harassment of another employee consisting of four incidents where he touched her improperly. The bank investigated the incidents and determined that they occurred. The bank met with Mr. Tellier to give him an opportunity to respond. He acknowledged that he might have "patted people around the bum", but denied any intention of harassment. The court found at p. 12 C.C.E.L. that Mr. Tellier was given a fair hearing, but that he could have been terminated regardless of explanations:

The Bank of Montreal had no other reasonable alternative under the circumstances but to terminate the employment of Mr. Tellier, considering especially the senior position he held. The bank obviously had a heavy responsibility to protect its employees. If the bank did not take positive action against Mr. Tellier, it could leave itself open to a charge under the Canadian Human Rights Act, S.C. 1976-77, c. 33.

[91] Similarly in Gonsalves v. Catholic Church Extension Society of Canada (1998), 1998 7152 (ON CA), 164 D.L.R. (4th) 339, 39 C.C.E.L. (2d) 104 (Ont. C.A.), Mr. Gonsalves was a long-term supervisory employee who was accused by a female employee of several inappropriate sexual comments and two incidents of improper touching. When he was confronted, nothing had occurred for seven months. He denied the allegations. The court concluded that this was a case where a warning as an alternative to dismissal was inappropriate, in part because of the seriousness of the misconduct, together with the fact that the respondent denied it. The court held that in these circumstances, the employer could not leave the supervisor in place.

[92] Although the facts of this case are different from those in Tellier and Gonsalves, the principle is applicable. Mr. Simpson was not fired without a hearing. His conduct over four years as supervisor was such that the CAC could not leave him in place to continue to run its small office. He had lost the confidence of the female staff. A third party investigation into Ms. Todd's allegations concerning Mr. Simpson was not necessary or practical given that the core of the dispute between their competing versions was the issue of Ms. Todd's consent. With respect to every incident raised in the January meeting other than that involving Ms. Glascott, the respondent's position was consistently one of justification, not acknowledgement. As this court wrote at p. 346 D.L.R. in Gonsalves, "[w]ithout some acknowledgement of fault and steps taken to reassure staff", the employer "could not responsibly have left this small group of female employees in [his] charge, subject only to a warning". With respect to the Sandy Reiter incident, he denied that he had propositioned her when he was confronted about her allegations in 1989 by the president of the CAC. This does not appear to have been conduct relied on by the appellant at the time of termination, but was relied on at trial and adds to the justification for dismissal, based on the facts as they were found by the trial judge. As this court reiterated at p. 588 O.R. of Bannister, "[j]ustification for dismissal can be shown by proof of facts ascertained subsequent to the termination."

(b) Inducing breach of contract by Ms. Todd

[93] The trial judge found that Ms. Todd intentionally and wrongfully interfered with the respondent's contract with the appellant by providing misinformation to Marilyn Lister about her relationship with the respondent. As I have concluded that the appellant was entitled to terminate the employment of the respondent for cause, there was no breach by the CAC and therefore no legal basis for any remedy against Ms. Todd.

(c) Entitlement of the respondent to payments in respect of the pre-termination period

[94] The trial judge awarded the respondent certain sums in respect of his 1991 and 1992 remuneration which he held the CAC was obliged but failed to pay. These amounts consisted of $10,000 per year for 1991 and 1992 to compensate him for not receiving a bonus in those years in spite of his positive performance appraisals; $8,582 for unused vacation and sick leave; $5,000 representing the balance of the amount to be reimbursed for the legal fees the respondent incurred defending his assault charge; and $37,500 in respect of management fees for his services in managing the CCI magazine operation. The CAC disputes all but the vacation pay and sick leave benefits and says that the trial judge misapprehended the evidence in finding that these amounts were owed to the respondent by the CAC.

[95] With respect to the respondent's entitlement to bonuses, the trial judge found that for 1991 and 1992 the executive committee did not deal with the issue of awarding the respondent performance bonuses in accordance with the recommendations of the 1989 Deloitte Touche Report. Page 29 of the report (at para. 8) contemplates a bonus of up to 10 to 15 per cent of base salary for the executive director for exceptional performance. A second report prepared in 1991 to clarify how the executive director was to move through the salary grid did not eliminate the possibility of the award of the bonus. The CAC submits in its factum that the trial judge misapprehended the evidence and the reports in finding that annual bonuses were required. I do not agree. In my view, it was open to the trial judge to find that performance bonuses were contemplated by the reports. A review of the evidence shows that based on his positive evaluation in March 1990, the executive committee awarded the respondent a $10,000 bonus for h is performance in his first year (1989-1990), in accordance with the one-time bonus provision in his contract. Following a positive evaluation in February 1991, the executive committee awarded him a $10,000 bonus for his performance in his second year (1990-1991). In spite of a positive evaluation in the much-delayed review of September 1992, the respondent was not awarded a similar bonus for his third year (1991-1992). I see no reason to disturb the finding of the trial judge that Mr. Simpson was entitled to this bonus in the amount of $10,000. However, the trial judge also awarded the respondent a bonus of $10,000 for his fourth year (1992-1993). I can find no basis for doing so given the circumstances that had developed in the fall of 1992 and the concerns of the executive committee over his conduct and performance that led to his dismissal. Accordingly, I would uphold only the finding that the respondent is entitled to an unpaid performance bonus for 1991.

[96] With respect to compensation for the legal fees, there was conflicting evidence and confusion on the part of Marilyn Lister surrounding the purpose of the $5,000 cheque. The trial judge concluded, in part because there were no deductions from the amount, that the $5,000 was partial compensation for the respondent's legal fees. The appellant submits that even if the cheque did represent partial compensation for the legal fees, there was no finding that the CAC had agreed to pay the balance. I agree with that submission and note that the statement of claim makes no claim for that amount or for the balance of legal fees.

[97] In respect of the CCI management fees, these were claimed in the statement of claim against CCI and not CAC. However, as CCI was bankrupt, an amendment was sought during argument at the trial to assert the claim as against CAC and that amendment was granted. The trial judge found that the evidence supported the respondent's claim that his employer, CAC, had agreed to compensate him for his extra duties operating CCI, so that the amendment of the pleadings at trial was made to accord with the evidence.

[98] Mr. Simpson's entitlement to this further compensation was a matter of dispute. In its letter of November 29, 1992, the CAC took the position that the CCI duties were part of the respondent's CAC responsibilities. However, the trial judge found that at the board meeting in June 1992, there was agreement among Marilyn Lister, Tony Dearness and the respondent that he would be paid a reasonable amount for his CCI services. The minutes read: "Further discussions will be required to formalize the relationship of the Executive Director vis a vis the CCI in terms of compensation and his role with the CCI board." The trial judge found that the figure of $25,000 per annum was discussed, and considered this to be reasonable. In my view, there was evidence to support these findings.

[99] I would therefore uphold the findings of the trial judge that the respondent is entitled to be paid the sum of $10,000 in respect of the unpaid performance bonus for 1991, $37,500 for 18 months compensation for services to CCI, and $8,582 in respect of unused vacation and sick leave.

(d) Costs to Marilyn Lister and Tony Dearness

[100] The trial judge dismissed the respondent's actions against Marilyn Lister and Tony Dearness for inducing breach of contract, but denied them their costs on the basis that it was not unreasonable to add them as personal parties to the action, and because as they had the same lawyer as Ms. Todd, no extra costs were incurred.

[101] Although a trial judge has a broad discretion with respect to costs, it is only in special circumstances that a successful party will be denied costs: Bell Canada v. Olympia & York Developments Ltd. (1994), 1994 239 (ON CA), 17 O.R. (3d) 135, 111 D.L.R. (4th) 589 at p. 596 (C.A.). In this case, two of the three individuals represented by the same counsel were successful in their defence. Different material issues were raised with respect to each of the three individuals. There were separate findings in relation to each of them. Additional work was clearly required by counsel in this case to properly defend each party represented. Furthermore, this is not a case where the same counsel acted for a large corporate party together with an employee or director. In this case, counsel acted for three individuals, while the Association was separately represented. In my view, no basis was shown on which the trial judge would be entitled to deny the successful parties their costs. I would therefore grant leave to appeal the order denying costs to Marilyn Lister and Tony Dearness and dismiss the actions against them with costs.

Result

[102] I would allow the appeals by the appellants CAC and Ms. Todd from the findings of wrongful dismissal and inducing breach of contract. I would dismiss the respondent's action against Ms. Todd with costs.

[103] I would dismiss the appeal of CAC with respect to $56,082 of back pay awarded by the trial judge, plus pre- judgment interest on that amount. Because the respondent was partially successful against the CAC, subject to any relevant offers to settle, I would award the respondent 50 per cent of his costs of the trial.

[104] I would grant leave to appeal and allow the appeal of the appellants Lister and Dearness in respect of the denial of costs of the trial and grant them their costs of the trial.

[105] I would grant the appellants Todd, Lister and Dearness their costs of the appeal.

[106] As the CAC achieved substantial success on the appeal, I would award it 75 per cent of its costs of the appeal.

Appeal allowed.

Notes

Note 1: He had made a similar remark to Ms. Todd at a meeting where he said to her: "Down counsel down." David Simpson justified this conduct in his testimony, and the trial judge concluded that it was not worthy of any criticism.