Court File and Parties

COURT FILE NO.: 3092/06 DATE: 2016/04/27 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Janice Lori Martin, Plaintiff

– and –

Munsee Delaware Nation, Michelle Fisher and Barb Peters, Defendants

Counsel: Amy Dale, for the Plaintiff Sean Flaherty, for the Defendants

HEARD: January 12, 13, 14, 15, 18, 19, 20, 21 & 22 (at St. Thomas)

REASONS FOR JUDGMENT

Rady J.

Introduction

[1] Ms. Martin, the former band administrator for the defendant First Nation, sues for damages for wrongful dismissal, mental distress and defamation. In the event she is unsuccessful on the mental distress claim, she seeks aggravated damages for the manner in which she was terminated.

[2] Ms. Martin was terminated on February 23, 2006 following an investigation into what the First Nation characterized as her inappropriate or unauthorized spending and allocation of funds as well as other financial and disciplinary irregularities.

[3] The defendants allege that the plaintiff was terminated for cause and the First Nation counterclaims for misappropriation of funds. Their allegations of just cause can be conveniently summarized as follows:

• Ms. Martin reimbursed herself for vacation pay and CPP, EI and pension payroll deductions, none of which were contemplated by her contract of employment;
• she authorized the payment of band funds for her benefit or those close to her, including her mother and the then Chief of the First Nation, Roger Thomas;
• she authorized payment of expenses in excess of her discretionary limit without the authorization of Chief and Council;
• she imposed disciplinary sanctions on another band employee without council authorization.

[4] The defendants say that the tort of defamation cannot be established because the plaintiff cannot prove that anything defamatory was published; there is no evidence that the defendants disseminated defamatory material; and in any event, the information that circulated in the community was true.

[5] The plaintiff alleges that the defendant First Nation is attempting to enforce an employment contract that does not reflect the agreement that was signed by a representative of the First Nation, George Lanouette and her. She alleges that she was paid in accordance with the terms of the employment contract she negotiated with Mr. Lanouette. She submits that there were no spending ceilings and in any event, she reported appropriately and was authorized to make the financial expenditures that she did. She also says that the defendants carried out an incomplete and inadequate investigation before deciding to terminate her employment. She alleges that Ms. Fisher and Ms. Peters circulated a letter dated February 2, 2006, marked private and confidential, from the First Nation Council which was signed by them and addressed to Ms. Martin. The letter contained detail of the First Nation’s concerns respecting Ms. Martin’s conduct. She says the letter was circulated in the Munsee Delaware community as well as in her First Nation. She also alleges that they spoke to the media about the investigation into these concerns, as a result of which there was newspaper coverage.

The Parties

[6] The plaintiff is a 58 year old member of the Aamjiwnaang First Nation at Sarnia. Prior to being hired by the Munsee Delaware Nation (MDN), she was a 25 year employee of Indian and Northern Affairs Canada (INAC). She had gained a variety of employment related certifications such as for human resources during her time with INAC. She was in her early forties when hired by MDN.

[7] The band administrator (or manager) is responsible for the finances and accounting of the First Nation. The band manager is the highest ranking employee of the First Nation and reports to Chief and Council. It is a management role, as the title suggests. Generally, eleven employees work under the manager’s supervision although the number fluctuates from time to time. There can be no doubt that the manager stands in a fiduciary relationship with the First Nation.

[8] MDN is a small reserve of some 300 people located southwest of London, Ontario and approximately 25 kilometres west of St. Thomas. Ms. Peters and Ms. Fisher were both elected band councillors during Ms. Martin’s tenure as administrator. Chief and Council oversee the administration of the First Nation. The Chief and the four members of Council are elected by members of the First Nation. Each councillor has one vote and the Chief only votes in the event of a tie.

[9] It is fair to say that the First Nation is not the usual private or public sector employer given its governance structure. Moreover, in this case, the First Nation had a number of particular challenges including:

• there were social and economic issues in the community that caused mistrust and unrest;
• misappropriation of funds was not uncommon and financial oversight was unconventional;
• Council was run by elected officials who had no stake in outcomes;
• a rift developed between the Chief and Council;
• First Nation funds are public dollars administered for the benefit of the community.

The Evidence

[10] Ms. Martin testified that she was a long time employee of INAC where she gained experience in a wide variety of areas. She was paid an annual salary of $70,000. She had six weeks vacation, a federal government pension and disability, dental and prescription benefits.

[11] In the spring of 2003, she was contacted by Mr. Lanouette who was employed by the Southern First Nation Secretariat (SFNS). He was a co-manager of MDN – an arrangement put into place by INAC when a band is in financial difficulty. Ms. Martin’s husband was also with SFNS. INAC and SFNS exercised increased oversight and control over MDN during co-management because it was considered incapable of managing its affairs. The band manager had the customary duties associated with the position but the added responsibility to get the First Nation’s financial and programming affairs under control.

[12] Mr. Lanouette advised Ms. Martin that there was an opportunity at MDN for the position of band administration/manager. At the time, she was on bereavement leave from INAC. Ms. Martin submitted a resume with a letter dated April 25, 2003. She advised that she sat on the council of her own First Nation and had responsibility for “management, social, health and governance”. She outlined her experience in human resources and financial management that were not elaborated in her resume.

[13] Ms. Martin was selected for an interview with the hiring committee. In due course, Mr. Lanouette advised her that she was the successful candidate and discussions followed about the terms of her employment. It is at this point that the evidence diverges dramatically and its resolution is central to the outcome of this lawsuit. Indeed, for the reasons that follow, it is largely determinative of the issues raised during trial.

[14] Two letters, one dated June 9, 2006 and the other dated June 10, 2006, both apparently on MDN letterhead are at the heart of the evidentiary conflict. They will be discussed in detail below. However, because of their importance to this case they are reproduced in their entirety at Schedule A at the end of these reasons.

[15] By email dated May 26, 2003, Ms. Martin wrote to Mr. Lanouette expressing her gratitude for the position. She also wrote:

George as previously discussed, my understanding is that you will negotiate the terms and conditions of employment with me and present it to council. As discussed we talked about a flexible work week of 4 days per week, six week [sic] holidays along with benefits. What we touched on briefly was salary and I was to think this over and discuss with you today. I do understand that the First Nation is not in a position to offer a high salary but after careful consideration and the complexity of the position I feel its fair the request a starting salary of 55k per annum.

[16] By letter dated May 27, 2003, Mr. Lanouette wrote to Ms. Martin. The letter is on Munsee-Delaware Nation letterhead with an address of 271 Jubilee Road, Muncey, Mr. Lanouette noted that the letter was a written offer of employment “under the following conditions

• Annual salary of $55,000.00(CDN).
• Four weeks of paid holidays per year.
• Six month probationary period.
• Work can be conducted outside the office one day per week.
• Effective start date of June 9, 2003.”

[17] The letter asked her to sign and return the original to “this office” for retention. The letter found in the joint document brief (Exhibit 1) is not signed by Mr. Lanouette or Ms. Martin.

[18] Ms. Martin wrote a letter to Mr. Lanouette on May 28, 2003 referring to their telephone conversation. She confirmed that INAC was prepared to extend her leave but it would not fund her position at MDN. She went on to say:

As discussed, I understand that the Nation is in financial difficulty and the salary therefore becomes an issue. I am prepared to take a cut in pay in the amount we agreed upon at $55,000.00 per annum, with the provisions that the Nation covers all the employee benefits, CPP, EI, Pension employers and employees share. Also agreed is that my paid holidays will remain at six (6) week [sic] per year with a four day work week. As discussed this arrangement will be open for negotiation once Munsee-Delaware Nation is out of co-management and in better financial standing.

I appreciate that I will be reporting to Ms. Arnette Timothy from the Southern First Nations Secretariat while Munsee-Delaware Nation is under co-management. As agreed this will alleviate any potential conflict-of interests that may arise. The effective start date remains unchanged and I will report on June 9, 2003.

This concludes what we discussed during our telephone conversation with respect to the terms and conditions of employment. I understand that you will be sending me a revised letter of offer with the above-noted terms and conditions that we agreed upon.

[19] The defendant produced a copy in its affidavit of documents and the original at trial (Exhibit 6) of a letter dated June 10, 2003 that contains precisely the same terms as the May 27, 2003 letter. The letter is formatted identically to the May 27 letter, on the same letterhead and using the same font (which appears to be Century or something similar). This letter bears Mr. Lanouette’s signature as well as the following handwriting:

“I accept: Jan Martin”

[20] The same day Mr. Lanouette prepared a memorandum to Crystal Flewelling (a MDN accounting clerk) that noted as follows:

This memo will serve to confirm that Jan Martin has accepted the offer of employment made to her by letter of May 27, 2003.

• Annual salary of $55,000.00 (CDN).
• Four weeks of paid holidays per year.
• Six month probationary period.
• Work can be conducted outside the office one day per week.
• Effective start date of June 9, 2003

Jan is eligible for the employee benefits package effective June 9, 2003.

Please make the necessary arrangements with Jan to get her on the payroll and on the benefits package. Thanks.

[21] The plaintiff has produced a photocopy of a letter dated June 9, 2003, bearing Mr. Lanouette’s signature, on MDN letterhead with an address of Administration Office 289 Jubilee Road, R.R. #1 Muncey. It contains the following handwriting:

“George I accept Jan Martin

June 9/03”

[22] This letter contains a different and bolder looking font (like Arial) than the June 10, 2003 letter although Mr. Lanouette’s typed name appears to be in the same font as the June 10, 2003 letter. The terms of this letter are obviously different than those in the June 10, 2003 letter.

[23] During her testimony, Ms. Martin denied that she signed the letter of June 10, 2003 although she acknowledged the signature looks like hers. She identified her signature as the one on the June 9, 2003 letter. It is Ms. Martin’s position that it is the June 9, 2003 letter that sets out the terms of her employment. This is important because if it is the governing letter, then Ms. Martin’s subsequent payment to herself of holiday pay and pension, CPP and EI deductions could arguably be justified.

[24] It is the defendants’ position that the letter of June 9, 2006 produced by Ms. Martin is a forgery and the true terms of her employment are reflected in the letter of June 10, 2003, the original of which was produced at trial.

[25] I have concluded that the letter upon which Ms. Martin relies is indeed a forgery. That being the case, it follows that MDN’s termination of her employment was justified. I am driven to this conclusion for several reasons. Before elaborating, I am going to refer to Exhibit 6 as the “first letter” and the letter produced by Ms. Martin as the “second letter”, notwithstanding their dates chronologically.

[26] As noted, the first letter is on MDN letterhead with an address of 271 Jubilee Road. The second letter is on letterhead with an address of Administration Office 289 Jubilee Road, R.R. #1. The fonts used on the two letters are significantly different in appearance.

[27] Although not raised in evidence, as a result of my inquiry, the parties have agreed that the administration office moved from 271 Jubilee Road to 289 Jubilee Road in October and/or November, 2003. Prior to that time, the facility located at 289 Jubilee Road required renovations and no funding had been available to do so.

[28] I pause here to note that there was evidence that MDN letterhead with either address appears to have been used somewhat interchangeably and with or without the descriptors “Administration Office” and “R.R. #1”. As an example, the plaintiff has produced a letter bearing Chief Thomas’ signature dated December 19, 2005 which shows the administration office at 271 Jubilee Road. A letter dated February 23, 2006 shows the office at 289 Jubilee Road but does not contain the descriptor R.R. #1 before the word Muncey. Yet another example is a letter authored by Ms. Martin to Ms. Flewelling dated November 18, 2005 that shows the administration office at 271 Jubilee Road R.R. #1. And curiously, there is yet another document called a “New Employee – Information Sheet” for Ms. Martin which locates the Administration Office at 279 Jubilee Road. As an aside and with respect to this last document, Ms. Martin’s salary is listed as $54,999.98. Deductions for EI, CPP and benefits are shown to “apply” rather than to be “exempt”. The form stipulated that Ms. Martin was “exempt” from federal tax.

[29] In any event, having acknowledged these anomalies, I was referred to no other MDN letter or document that used the 289 Jubilee Road address for the Administrative Office in May or June 2003. It is significant that the letterhead used by Mr. Lanouette in the first letter and the memorandum to Ms. Flewelling the following day use precisely the same letterhead. It makes no sense to have used one letterhead for the first letter, a different one for the second letter and then revert to the first in the memo of June 10, 2003. Moreover, the first letter uses letterhead that is consistent with other correspondence prepared by Mr. Lanouette. Finally, Ms. Martin’s May 28, 2003 letter was addressed to Mr. Lanouette at 271 Jubilee Road.

[30] A comparison of the first and second letters shows a marked difference in appearance. The first letter is written in a font that appears to be Century while the second letter’s font appears to be Arial. The second letter appears to be in bold or at least in a darker shade than Mr. Lanouette’s other correspondence. The one exception is Mr. Lanouette’s typewritten name. It appears in a font consistent with the first letter. It also appears to be crooked and moves on a slightly upward angle from left to right. The body of the second letter refers to “MDN”, a short form that does not seem to appear in other correspondence or documentation. The first letter refers to developing “deeper relationship s between Munsee-Delaware and other First Nations”. The second letter refers to developing “deeper relationship …”

[31] In the first line of the first letter, Mr. Lanouette refers to MDN in full as the Munsee-Delaware Nation. The second letter refers to Munsee-Delaware Nation, omitting the article. These discrepancies make no sense in a word processing environment.

[32] Similarly, the first letter asks Ms. Martin to sign and return the original “to this office”. The second letter asks her to return the original “to me” (i.e. Mr. Lanouette). The first letter is copied to Chief Thomas; the second is not. Finally, the two letters are formatted differently such that the right margin justification between the two letters is not the same.

[33] I have reviewed the correspondence and documentation in the parties’ respective document briefs (Exhibits 2A and B, 4 and 5) and see no other MDN material that uses the same font as the letter of June 9, 2003.

[34] Two more observations support the conclusion that the second letter is a forgery. The original of the second letter is not found in any of MDN’s files. I heard evidence that documentation did go missing from time to time and security was lax at the administration office. However, Mr. Cooper (another MDN employee) did testify that he saw the June 10, 2003 memorandum in the plaintiff’s employment file.

[35] However, and perhaps most importantly, the plaintiff did not produce the second letter until five years after her termination, in response to an undertaking given at her examination for discovery. It was not produced when she was being asked to respond to MDN about its concerns before this litigation was commenced. Nor was it disclosed in her affidavit of documents. Ms. Martin knew very early in the litigation that MDN said that the first letter formed the contract. Why then would the June 9, 2006 letter not be produced until so much later? It defies logic.

[36] The one person who might have shed light on the true contract is Mr. Lanoette. Unfortunately, he died before this matter came to trial.

[37] I have not overlooked that there is a curious reference in undated Council minutes of an in camera meeting (but which likely occurred on November 24, 2005) to a motion made by Ms. Peters and seconded by Ms. Fisher that MDN would “revert back to the original letter of offer to Jan Martin dated May 27, 2003”. There is, of course, no difference between the May 27, 2003 letter and that of June 10, 2003. From what were they reverting?

[38] Both Ms. Fisher and Ms. Peters were questioned about the motion during their testimony. They either could not remember the event or had no explanation, perhaps not surprising given the passage of time. However, the elaboration contained in the minutes is of assistance in discerning the meaning of the reference. The minutes read as follows:

Munsee-Delaware Nation Council revert back to the original letter of offer to Jan Martin dated May 27, 2003 which states: work can be conducted outside of the office 1 day per week. This will be with prior approval from Council of “the day Jan Martin chooses to work outside of the office”. The four day work week will be from 8:30 a.m. to 5:00 p.m.

If unable to obtain Council approval Jan will inform Assistant Manager Frank Cooper of the day she is going to conduct work out of the office, also reports of any absences or lateness from Jan Martin are to be made directly to the Assistant Manager Frank Cooper.

To avoid any further confusion all staff will report lateness or absences to the Assistant Manager Frank Cooper, effective immediately.

Carried By Consensus

[39] The following day, Ms. Martin was notified of the motion by email. It appears to me that the minutes simply record Council’s concern respecting Ms. Marin’s absences from the office.

Analysis

[40] The evidence establishes on a balance of probabilities that the second letter is a forgery. It must have been prepared by Ms. Martin or at her direction. It follows that during her tenure, she knew that the first letter governed her employment relationship and that she was not entitled to the monies she paid to herself for vacation pay and for EI, CPP and pension reimbursement. I have concluded that this constituted just cause for her termination. It amounted to theft from her employer on a repeated basis of public funds available for the benefit of the First Nation.

[41] I am mindful that a single act of dishonesty may not warrant dismissal. A contextual approach must be taken to determine whether such conduct gives rise to just cause. So, for example, lesser sanctions may be called for in cases of less serious misconduct.

[42] McKinley v. BCTel, 2001 SCC 38 is instructive. Justice Iacobucci, writing for the court noted at para. 57:

I favour an analytical framework that examines each case on its own particular facts and circumstances, and considers the nature and seriousness of the dishonesty in order to assess whether it is reconcilable with sustaining the employment relationship. Such an approach mitigates the possibility that an employee will be unduly punished by the strict application of an unequivocal rule that equates all forms of dishonest behaviour with just cause for dismissal. At the same time, it would properly emphasize that dishonesty going to the core of the employment relationship carries the potential to warrant dismissal for just cause.

[43] The McKinley case was discussed in Dowling v. Ontario (Workplace Safety and Insurance Board), [2004] O.J. No. 4812 (C.A.) in which Justice Gillese commented as follows:

[49] Following McKinley, it can be seen that the core question for determination is whether an employee has engaged in misconduct that is incompatible with the fundamental terms of the employment relationship. The rationale for the standard is that the sanction imposed for misconduct is to be proportional -- dismissal is warranted when the misconduct is sufficiently serious that it strikes at the heart of the employment relationship. This is a factual inquiry to be determined by a contextual examination of the nature and circumstances of the misconduct.

[50] Application of the standard consists of:

1. determining the nature and extent of the misconduct;
2. considering the surrounding circumstances; and,
3. deciding whether dismissal is warranted (i.e. whether dismissal is a proportional response).

[51] The first step is largely self-explanatory but it bears noting that an employer is entitled to rely on after discovered wrongdoing, so long as the later discovered acts occurred pre-termination. See Lake Ontario Portland Cement Co. v. Groner, 1961 SCC 1, [1961] S.C.R. 553.

[52] The second step, in my view, is intended to be a consideration of the employee within the employment relationship. Thus, the particular circumstances of both the employee and the employer must be considered. In relation to the employee, one would consider factors such as age, employment history, seniority, role and responsibilities. In relation to the employer, one would consider such things as the type of business or activity in which the employer is engaged, any relevant employer policies or practices, the employee’s position within the organisation, and the degree of trust reposed in the employee.

[53] The third step is an assessment of whether the misconduct is reconcilable with sustaining the employment relationship. This requires a consideration of the proved dishonest acts, within the employment context, to determine whether the misconduct is sufficiently serious that it would give rise to a breakdown in the employment relationship.

[44] In this case, Ms. Martin’s payment to herself of EI, CPP and pension deductions, contrary to the terms of her contract of employment and of her payment of vacation pay in excess of her entitlement, over the course of two years, was incompatible with the continuation of her employment relationship with MDN. The sums were not unsubstantial and the misappropriation was repeated over a period of years. The theft was especially egregious because Ms. Martin was a fiduciary, had responsibility for the First Nation’s accounting department and its financial management, at a time that the First Nation was in co-management because of concerns respecting its solvency.

[45] Ms. Martin is clearly an intelligent and resourceful individual. MDN would rely upon her to act honestly and with integrity in the management of its finances.

[46] Having made that determination, it is not necessary to consider the allegations of the various other financial improprieties or inappropriate allocations.

Defamation

[47] It is necessary to deal with the issue of defamation however. In order to establish defamation, a plaintiff must prove:

• that the impugned words were defamatory or in other words that they would tend to lower the plaintiff in the eyes of a reasonable person;
• the words referred to the plaintiff; and
• the words were published, meaning that they were communicated to at least one person other than the plaintiff.

See Grant v. Forstar Corp., 2009 SCC 61.

[48] Publication is an essential element of the tort and a defendant is not responsible for the publication by others: see Lysko v. Braley, [2006] O.J. No. 1137 (C.A.). If the impugned statement(s) is true, the claim fails.

[49] The plaintiff’s claim fails because the third component of the test is not met. There is no evidence whatsoever that Ms. Fisher or Ms. Peters disseminated or authorized the dissemination of the February 2, 2006 letter. Nor is there any evidence that they spoke to the media although it appears that Chief Thomas did. These defendants cannot be held responsible for his actions. And in any event, there is no evidence that the Chief said to the media anything that was untruthful. Indeed, his comments in one of the articles seem supportive of Ms. Martin. The other article reports on a fractious Council meeting involving two new councillors and Ms. Fisher, Ms. Peters and Ms. Martin. Again, there is nothing defamatory in the article’s contents and Ms. Martin herself is quoted as are some other community members who are supportive.

[50] The plaintiff submits that the court could draw an inference since the letter found its way into the MDN and Aamjiwnaang communities. Such an inference is not available and would not be justified. It is helpful to quote from R. v. Munoz, [2006] O.J. No. 446 (S.C.J.) at para. 31:

…the requirement of reasonable or logical probability is meant to underscore that the drawing of inferences is not a process of subjective imagination, but rather is one of rational explication. Supposition or conjecture is no substitute for evidence and cannot be relied upon as the basis for a reasonably drawn inference. Therefore, it is not enough simply to create a hypothetical narrative that, however speculative, could possibly link the primary fact or facts to the inference or inferences sought to be drawn. As Fairgrieve J. noted in R. v. Ruiz, [2000] O.J. No. 2713 (Ont. C.J.) at para. 3, “Simply because a possibility cannot be excluded does not necessarily mean that a reasonable trier could be justified in reaching such a conclusion on the evidence.” The inference must be one that can be reasonably and logically drawn and, even where difficult; it cannot depend on speculation or conjecture, rather than evidence, to bridge any inferential gaps.

[51] Munoz was a criminal case but its quoted reasoning applies equally here.

The Counterclaim

[52] At the conclusion of trial, I was advised that MDN abandoned its counterclaim as it related to payments not actually paid to or for the plaintiff’s benefit. Accordingly, its claim related to only the CPP, EI and pension reimbursement totalling $12,933.00; and to vacation pay Ms. Martin directed to herself. A word of explanation is necessary respecting the latter claim, which totals $5,711.58. Ms. Martin testified that she did not take her allotted vacation and was therefore entitled to payment in lieu. However, no written agreement was executed documenting a waiver of vacation as required by the Canada Labour Standards Regulations, C.R.C., c. 986, s. 14. This is significant because in the absence of an agreement to the contrary, the First Nation could stipulate that its employee take the vacation allotted.

[53] Ms. Martin also paid herself for twelve weeks – in excess of even what she says she was entitled to as vacation time.

[54] For these reasons, the claim is dismissed and the counterclaim is allowed for $18,644.58.

[55] If the parties cannot agree, I will receive brief written submissions on costs first from the defendants by May 13, 2016 and the plaintiff by May 27, 2016.

Justice H. A. Rady

Released: April 27, 2016

Schedule A

COURT FILE NO.: 3092/06 DATE: 2016/04/27 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Janice Lori Martin, Plaintiff – and – Munsee Delaware Nation, Michelle Fisher and Barb Peters, Defendants REASONS FOR JUDGMENT Rady J. Released: April 27, 2016