ONTARIO SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 64824/10SR
DATE: 2013-11-25

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

KEN WILKES

Plaintiff

– and –

DEEP FOUNDATIONS CONTRACTORS INC.

Defendant

Paul McKeever, for the Plaintiff

Thomas A. Stefanik, for the Defendant

HEARD: November 21, 22/ 2013

Justice B. Glass

Reasons for Judgment in Action for Wrongful Dismissal and Counterclaim by Defendant for Conversion and Misuse of Confidential Information

[1] On July 29, 2006 the Plaintiff commenced employment with the Defendant for a four-year term whereby termination could be made at the end of four years with nine months compensation in lieu of notice. His remuneration was $91,000 per year.

[2] On November 30, 2009, the Defendant terminated the employment of the Plaintiff without notice and then changed the termination to be for cause.

[3] On November 7, 2013, the Defendant amended its statement of defence and added a counterclaim justifying dismissal for cause based on the Plaintiff selling a policy manual of the Defendant to other businesses and claiming general and punitive damages.

Issues

[4] What were the terms of the employment contract?

[5] Did the Defendant know of the side business of the Plaintiff when it hired him?

[6] Did the Plaintiff continue to work outside his employment contract after being told that such conduct was not acceptable at a meeting of July 30, 2009?

[7] Was the manual a template created by the Plaintiff prior to employment?

[8] Was the Plaintiff to continue to own the policy manual template?

[9] Did the Plaintiff sell a manual template belonging to the Defendant or did he sell his own manual template?

[10] Was the Plaintiff terminated without cause?

[11] What damages has the Plaintiff encountered?

[12] If the counterclaim succeeds, what damages would the Defendant be entitled to receive?

Analysis

[13] There appears little doubt that the Plaintiff commenced a four-year employment contract and that he was to be paid 9 months compensation if he were terminated prior to the expiry of four years. That was to be in lieu of notice from the Defendant to the Plaintiff.

[14] Again, the termination occurred on November 30, 2009 without notice at first instance and then was changed to a dismissal for cause without compensation.

[15] The Defendant was 65 years of age at the time of termination.

[16] The original statement of defence alleged that the Plaintiff profited personally by providing products and/or services to clients of the Defendant without the knowledge of the Defendant and/or contrary to repeated warnings that he was not permitted to do so.

[17] The Plaintiff disputes the position of the Defendant.

[18] The Defendant amended its statement of defence to include a counterclaim for damages because Mr. Wilkes sold a policy manual to Rockwood General Contractors Limited, that the Plaintiff profited personally from this sale and that this manual was the property of Deep Foundations Contracting Inc. and that the Plaintiff continued with outside consulting work beyond July 30, 2009.

[19] The Defendant claimed that the Rockwood policy manual was prepared while Mr. Wilkes was an employee and that he had no right to sell it. He breached his obligation to Deep Foundations Contracting Inc. not to misuse confidential information of the Defendant. The Defendant claimed that the Plaintiff did so deliberately and surreptitiously. He did so without asking the Defendant for its consent to convert the document for his own use.

[20] Deep Foundations Contracting Inc. in the amended statement of defence stated that the conduct of Mr. Wilkes in doing a manual for health and safety for Rockwood was cause to dismiss him without any entitlement to notice of termination or pay in lieu of such.

The Conduct of the Plaintiff

[21] I do not find that the Plaintiff breached his employment contract. There was no limitation on him doing work outside the parameters of the Deep Foundations Contracting Inc. employment. He had been doing such work, i.e. preparing manuals for health and safety, for other businesses prior to commencing work with the Defendant. He had his own template from which he made adjustments for health and safety manuals. Any manual he made for other businesses was his property. There was no property interest in the template owned by Deep Foundations Contracting Inc.

[22] It is apparent that the parties had not given any thought to any template that Mr. Wilkes had prior to working for Deep Foundations Contracting Inc. becoming the property of the Defendant. The only manual that could have become the property of Deep Foundations Contracting Inc. was the one specifically created for it.

[23] I find that Mr. Wilkes did not take confidential information from Deep Foundations Contracting Inc. and disseminate it to any other business.

[24] There was a reference to attending a work site in Sarnia without approval. Mr. Starke as president of Deep Foundations Contracting Inc. did not handle the day-to-day work assignments. Mr. Wilkes testified that he had been given approval to attend the site. To conclude that the trip to Sarnia was a major breach of employment is an extreme exaggeration that would have no foundation for dismissal alone.

[25] Mr. Wilkes had been asked by Mr. Montgomery, an engineer with the Defendant, for help in accepting a job offer from another business because he was not sure how to do so. This was done as a favour to Mr. Montgomery who worked for Deep Foundations Contracting Inc. as an engineer. There is no suggestion that Mr. Wilkes was acting to undermine the Defendant. Nor is there evidence that the Plaintiff acted so as to pass along confidential information of the Defendant.

[26] When Mr. Starke became aware of the Plaintiff helping Mr. Montgomery, he was displeased and did not want such assistance provided again. There is no suggestion that the Plaintiff ever did so again.

[27] On July 30, 2009, Mr Starke laid down a directive that Mr. Wilkes was not to do outside consulting work beyond what he was doing with George Brown College. The Plaintiff testified that he understood this directive to mean not assisting someone in the position of Mr. Montgomery. There is no evidence that Mr. Wilkes ever did so again.

[28] Mr. Wilkes had had the use of a company truck for his work, but that was stopped prior to his dismissal. He was told to use his own vehicle. Mr. Wilkes said that he thought that this was an indication of the writing being on the wall that he was not going to be working for Deep Foundations Contracting Inc. much longer. I interpret that conclusion to be reasonable. When one senses bad vibes, one should expect that all is not well and plan for a change in employment. He sensed correctly because he was dismissed on November 30th, 2009.

[29] On November 30th, 2009, the president of the company, Mr. William Starke, summoned Mr. Wilkes to the office for a meeting with him and Mr. Cianchetti. He was confronted with a conclusion reached by the Defendant. He was leaving that meeting no longer working for the Defendant. Either he was to resign and all would be ended as no more than an indication that he no longer worked for Deep Foundations Contracting Inc. or he would be fired. Mr. Starke told Mr. Wilkes that he had continued to do outside consulting work, but Mr. Wilkes thought that the July 30th directive had been related to Mr. Montgomery. Mr. Wilkes agreed to resign; however, before he completed cleaning out his desk in the presence of Mr. Cianchetti, he discovered that Mr. Starke had contacted Mr. Hary of Rockwood and divulged details regarding Mr. Wilkes being released from employment. Mr. Wilkes sought to withdraw his resignation following which he was told he was dismissed for cause because of outside consulting work. In early December, the Defendant provided another letter dismissing Mr. Wilkes for cause.

[30] Later came the counterclaim in which the Defendant accused the Plaintiff of taking their product, i.e. the health and safety manual and converting it to his own use.

[31] During the trial, the Defendant through Mr. Starke presented an allegation that Plaintiff not only continued to work at outside consulting work after July 30, 2009, but also that the Plaintiff doctored the dates on various invoices and the Rockwood manual so that he could say that this was work predating the July 30, 2009 meeting.

[32] The evidence presented does not substantiate the allegations of the Defendant. The consulting work appears to have been done prior to July 30, 2009. If I were to conclude that some was done after that date, there was room for the Plaintiff to have interpreted the meeting directive to relate to a Mr. Montgomery situation.

[33] The evidence at trial leads me to conclude that the template for health and safety manuals was the property of Mr. Wilkes. The actual manual for Deep Foundations Contracting Inc. would have been the property of the Defendant only. There is no proof that the Plaintiff converted the property of the Defendant for his own use. There is no evidence that Mr. Wilkes broke a directive about consulting work following July 30, 2009.

[34] I am satisfied that the Defendant did not have a foundation to terminate Mr. Wilkes from his 4-year employment contract. The Plaintiff was correct to sense that the company was setting the stage for Mr. Wilkes to cease to be with the company. I conclude that the company did not want to end the working relationship prior to 4 years with an obligation to pay 9 months’ salary. Mr. Starke was aware that Mr. Wilkes was looking for other work and if the Defendant dismissed him, Deep Foundations Contracting Inc. would have an obligation to pay him for 9 months. I think that the Defendant set out to organize an end to the working relationship in a way that would save them a 9-month salary payment.

[35] Deep Foundations Contracting Inc. and Mr. Wilkes had entered into an employment contract whereby the Defendant would pay the Plaintiff his salary for 9 months if they ended the deal early. I agree that if Mr. Wilkes were fired for cause, he would not have a claim for compensation. I agree that if he just quit, he would not have a claim for his salary for 9 months. However, he was released by Deep Foundations Contracting Inc. on allegations not substantiated by evidence at this trial.

[36] In the end, Mr. Wilkes was released from his employment without any just cause for terminating his employment. That means that he was entitled to be compensated for 9 months as set out in the employment contract.

[37] His salary at the time of his release was $91,000 so that compensation for 9 months would be $68,250.

[38] With respect to claims for aggravated and punitive damages, I am not persuaded that they should be awarded. Aggravated damages addresses conduct of a party that merits greater compensation. Punitive damages recognizes that additional damages be given to the party in the form of punishment for the conduct of the other party.

[39] In this case, one might be unimpressed with the actions of the Defendant; however, I do not see additional conduct leading to a higher degree of damages either as aggravated or punitive damages. In many dismissals from employment circumstances, one sees unpleasant events that place an employee in a stressful position of losing financial security. I determine this case to be one that does not advance beyond such a position. That being the case, additional damages are not warranted.

[40] Costs on a partial indemnity basis will be awarded to the Plaintiff in the sum of $17,200 plus HST and disbursements of $1700.

Conclusion

[41] Mr. Wilkes was hired in 2006 for a four-year employment contract and the Defendant knew he did work for George Brown College. Further, Deep Foundations Contracting Inc. did not impose any restriction upon Mr. Wilkes working in his own hours doing consulting work.

[42] The Defendant has not shown that the Plaintiff did consulting work after July 30, 2009.

[43] The health and safety manual was the template of Mr. Wilkes. He created it. He continued to be the owner of the template and could produce manuals for others. Only the manual created for Deep Foundations Contracting Inc. was the property of the Defendant. The Plaintiff continued to own the template.

[44] The Plaintiff did not sell a manual belonging to Deep Foundations Contracting Inc. to any other business, company or person.

[45] The Defendant terminated Mr. Wilkes without cause.

[46] Judgment to the Plaintiff for damages for dismissal fixed at $68,250 for 9 months’ salary.

[47] There will be no aggravated or punitive damages.

[48] The counterclaim of Deep Foundations Contracting Inc. is dismissed.

[49] Costs to Mr. Wilkes fixed on a partial indemnity basis in the sum of $17,200 plus HST together with disbursements of $1700.

[50] Pre-judgment and post-judgment interest to apply to the judgment as per The Courts of Justice Act.

Justice B. Glass

Released: November 25, 2013