Goruk v. Greater Barrie Chamber of Commerce 2021 ONSC 5005

COURT FILE NO.: 14-757-SR

DATE: 20210719

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

SYBIL GORUK

Plaintiff

– and –

GREATER BARRIE CHAMBER OF COMMERCE

Defendant

Ronald S. Minken, Kyle D. Burgis and Tejpreet Sambi for the Plaintiff

Eric Gionet and Jonathan De Biasi for the Defendant

HEARD: May 25, 26, 27, 28, 30 and June 1, 2, 3, 7, 8, 9, 16 and 23, 2021 by Zoom videoconference

Reasons for Decision

c. boswell j.

A. OVERVIEW

[1] Thoughts of slowing down were only beginning to formulate in Sybil Goruk’s mind in the winter of 2014. At 75, she had been employed by the Barrie Chamber of Commerce for about 17 years. For most of that time she was the Chamber’s executive director, which was their most senior staff position.

[2] On February 19, 2014, however, she was placed on a paid administrative leave pending an investigation into unparticularized “irregularities”. Her employment was subsequently terminated, by email, on April 29, 2014. She received no compensation at the time of termination.

[3] The Chamber contends that it had just cause to terminate Ms. Goruk’s employment without notice or compensation. They assert that Ms. Goruk occupied a position of trust within their organization and owed them a duty to act in their best interests at all times. The Chamber alleges that she breached that duty in numerous ways, including by (i) uttering a forged document to the Chamber’s bank; (ii) taking unauthorized vacation pay; (iii) granting herself an unauthorized pay raise; (iv) awarding contracts to her sons without following the Chamber’s established protocol and without disclosing those transactions to the Chamber’s auditor; (v) suppressing a letter from the Chamber’s auditor which expressed a number of concerns regarding their financial statements; and (vi) reimbursing herself for charges on her personal American Express credit card without supplying proper supporting documentation.

[4] Ms. Goruk says that the Chamber’s position is disingenuous. The allegations of just cause are, she says, much ado about nothing. They are a post-facto rationalization for having terminated her in a fit of pique over an email she permitted one Chamber member to send to all others using an internal broadcast system. The email was critical of the board of directors.

[5] Ms. Goruk alleges that her dismissal was wrongful. At the time of her dismissal she was earning a salary of $65,500 per year plus a car allowance of $300 per month. She seeks damages equal to 24 months’ salary and car allowance. She also seeks aggravated damages of $200,000 to compensate her for the unfair and unduly insensitive manner of her dismissal. Finally, she seeks punitive damages of $500,000, arguing that the Chamber’s conduct was malicious, oppressive and high-handed, thus warranting the court’s condemnation. The total sought, by my calculation, is $838,200.

[6] The positions of the parties, when considered in the context of the substantive law and the evidentiary record, raise the following central issues for determination:

1. Was Ms. Goruk a fiduciary? In other words, did she owe the Chamber duties of loyalty, good faith and the avoidance of conflicts of interest?

2. Did the Chamber have grounds to terminate Ms. Goruk for cause, whether for breach of a fiduciary duty or otherwise?

3. If the answer to (2) is no, what is Ms. Goruk entitled to by way of damages:

(i) In lieu of notice?

(ii) As aggravated or moral damages?

(iii) As punitive damages?

[7] In addition to the foregoing issues, there are two evidentiary issues that remain outstanding from the trial. I will outline them momentarily. Before I get to any of the live issues, however, I need to provide some modest contextual background. In the section that follows, I will review enough of the evidence to provide a general overview of Ms. Goruk’s position with the Chamber and the circumstances that led to her termination. I will provide additional factual details as I assess each of the Chamber’s assertions of misconduct.

B. THE NARRATIVE

[8] The general narrative of events relevant to this claim can be stated relatively briefly.

[9] The Chamber is a not-for-profit organization with a membership of businesspeople and professionals. Its self-described aspirations include promoting the commercial, social and civic interests of the community. It provides support and resources for its members, including networking events, group insurance and community fundraising.

[10] The Chamber is governed by a volunteer board of directors, elected by the membership. Within the board is an executive committee, comprised of a president, two vice-presidents, a secretary, a treasurer and the immediate past-president.

[11] The board is comprised of thirteen directors in all. Each director serves for a two-year term. Each year either six or seven board positions come up for re-election at the annual general meeting (“AGM”). Turnover on the board is a constant feature, as is turnover in the membership of the executive committee.

[12] The Chamber employs a relatively small staff. At the time of Ms. Goruk’s termination, the staff consisted of, in addition to Ms. Goruk: an office manager, Julie Craft; a receptionist, Ann Chamaillard; and a fourth staff member named Jean Oostrom, whose role I am not entirely certain of. The Chamber also retained a bookkeeper on a part-time basis. Her name was Cheryl Ninno.

[13] Ms. Goruk was hired by the Chamber as an office manager in 1997. Less than a year later she was promoted to the executive director position. In that role, she was responsible for the day-to-day operations of the Chamber. She managed the budget, within the parameters set by the board. She attended board and committee meetings. She implemented the plans and programs set by the board. She organized and attended regular Chamber-sponsored events. She generally promoted the Chamber and its activities, including attracting new members and retaining existing ones.

[14] By all appearances, Ms. Goruk performed her job well. Four past-presidents of the Chamber testified on her behalf. Each expressed a high level of satisfaction with her knowledge, enthusiasm and overall job performance.

[15] The most current terms of Ms. Goruk’s employment were set out in a letter dated August 27, 2008, signed by the then-president and two vice-presidents of the Chamber. The letter began with the following observation:

We recognize your excellent, conscientious and commendable efforts in the promotion, personal administration and fiscal management of the Greater Barrie Chamber of Commerce.

[16] It went on to outline the terms of employment which included:

(a) An annual salary of $65,500;

(b) Six weeks of vacation per year; and,

(c) Benefits, which included a $300 per month vehicle allowance, a discretionary expense account of $4,000 per year and all of the expenses for her and her spouse to attend any Chamber events and conferences, which included the annual National Chamber of Commerce conference each year.

[17] The terms outlined in August 2008 continued to be in place at the time of Ms. Goruk’s termination.

[18] Ms. Goruk’s time at the Chamber appears to have been largely conflict-free prior to the last 18 months of her employment.

[19] No one knew it at the time, but the beginning of the end of Ms. Goruk’s tenure was probably triggered at the Chamber’s AGM in June 2012. A slate of new directors was elected, one of whom was Stella Millis. Ms. Millis is a chartered accountant and a licensed insolvency trustee. She was an ideal person to assume the role of treasurer and indeed she was voted in as the Chamber’s treasurer at a meeting of the board of directors in July 2012.

[20] Ms. Millis took her role as treasurer very seriously. She appears to have been significantly more hands-on than other treasurers had been in the past. She insisted on keeping a close eye on the financial records of the Chamber. But she experienced difficulty getting access to the Chamber’s books and records in a timely way. There was a good deal of friction in her relationship with Ms. Goruk, who she perceived as impeding her ability to function as treasurer.

[21] Ms. Millis testified that she would routinely ask for financial statements in advance of board meetings so that she could prepare monthly reports for the board’s review. She said she would not get the statements until the day before a board meeting and even then, she was only getting a balance sheet and a profit and loss statement. She wanted a copy of the detailed general ledger, as well as accounts receivable and accounts payable statements.

[22] Ms. Millis said she attempted to go directly to the bookkeeper, Ms. Ninno, for the statements she wanted but was told by Ms. Ninno that she lacked the authority to provide that information. Ms. Ninno directed her to Ms. Goruk. Ms. Goruk reprimanded her, she said, for attempting to circumvent her.

[23] Ms. Millis said she had to go to the Chamber president to intervene. Ms. Goruk eventually gave the okay for the bookkeeper to share with her the statements she was looking for. Minutes of a meeting of the Chamber executive on December 18, 2012 reflect Ms. Goruk’s agreement to let Ms. Millis speak with the bookkeeper. But even then, Ms. Millis said, Ms. Goruk continued to impede her access to the records she needed. Ms. Goruk, for instance, required her to attend at the Chamber office to pick up hard copies of the statements. Ms. Millis wanted them emailed to her in electronic form.

[24] The first time Ms. Millis was able to deliver a monthly financial statement to the board was in February 2013, despite the fact that she had been treasurer since July 2012.

[25] In an effort to resolve the issues between her and Ms. Goruk, Ms. Millis arranged to meet with Ms. Goruk in the presence of one of the Chamber’s vice-presidents, Patricia Copeland. The meeting took place March 1, 2013. They discussed the parameters of her role as treasurer. She clarified what financial records she wanted and when she needed them by each month. Her access to the records improved somewhat after this meeting, but problems persisted.

[26] Ms. Millis testified that as time went on, she became increasingly concerned about a number of irregularities she identified in the Chamber’s finances. I will examine these purported irregularities in detail momentarily. Suffice it to say for now that by late 2013 and into early 2014, Ms. Millis was becoming more vocal at board and executive committee meetings about her concerns regarding the Chamber’s books and records. On her recommendation, the board refused to approve the Chamber’s monthly financial statements beginning in the late fall of 2013, pending an investigation by Ms. Millis into a number of outstanding issues.

[27] At a board meeting on February 18, 2014, Ms. Millis reported that she had made extensive inquiries of the Chamber’s bookkeeper regarding a number of issues and received replies back. The minutes are otherwise entirely vague about what the issues were. They do reflect, however, that Ms. Millis was still in pursuit of additional information and that a meeting was set with the bookkeeper and Ms. Goruk for February 27, 2014. She recommended deferring approval of the Chamber’s financial statements until she received all of the data she was seeking.

[28] Later in the day on February 18, 2014, however, a straw was dropped on the back of the proverbial camel, causing it to fracture. The board had called a special meeting for March 18, 2014 to consider and vote on proposed changes to the Chamber’s constitution. One member – David Service – had concerns about the proposed amendments. Mr. Service was a local lawyer and a former president of the Chamber. He was also on the Chamber’s constitution committee. He penned a memorandum to all Chamber members setting out his concerns with respect to the proposed amendments. He urged all members to attend the special meeting and vote no.

[29] The Chamber had an e-broadcast service that it made available to members. For a fee, any member could utilize the service to promote their business or to advertise upcoming events. Mr. Service’s email was not the typical message that went out through the e-broadcast system. That said, there was no policy in place about what types of messages could, or could not, be distributed as e-broadcasts.

[30] On this occasion, Mr. Service dropped off his message to the receptionist, Ann Chamaillard. She passed it on to Julie Craft. Ms. Craft brought the message to Ms. Goruk and expressed a concern that it was not an appropriate message to circulate through the e-broadcast system. Ms. Goruk demurred. She was aware that Mr. Service had been working on the constitution committee and she thought the members should know of his concerns. She authorized the message to be sent.

[31] Mr. Service’s message had immediate repercussions. Todd Tuckey, an existing board member, circulated an email to other board members in which he referred to Mr. Service as an “idiot” and said that he was “floored that such an article has been approved by the Chamber office for broadcast.” Then-president, Debbie DeCaire contacted Ms. Goruk and left the following voicemail message for her:

Sybil, this is Debbie. I just saw the note. I am absolutely abhorred at what you’ve done. This is insubordination. I will be calling an emergency board meeting to deal with it. And how dare you?

[32] Ms. DeCaire did call an emergency board meeting for the next morning, February 19, 2014, at 7:30 a.m. The minutes of that meeting reflect that six board members attended: Ms. DeCaire and Mr. Tuckey, together with Lisa Bertram, Stella Millis, Karl Cadera and Suzanne Taylor. Mr. Tuckey was given the written proxies of two other directors and Ms. Taylor was given the written proxy of one other director.

[33] The meeting minutes further reflect that two items were discussed. The first was a revisiting of the financial irregularities issue. Recall that a decision was made at the regular board meeting the day before to defer any action on outstanding financial issues pending a meeting between Ms. Millis, Ms. Goruk and Ms. Ninno scheduled for February 27, 2014. At this emergency board meeting, however, a decision was made to place Ms. Goruk on paid suspension during a forensic audit of financial irregularities.

[34] The second item discussed on February 19, 2014 was the e-broadcast. The minutes do not provide details of the actual discussion. The reflect only that a decision was made to remove the e-broadcast from the Chamber’s system.

[35] Later in the day on February 19, 2014, Ms. DeCaire hand-delivered a letter to Ms. Goruk advising her that she was being placed on paid leave. The letter provided as follows:

This letter is to advise that, effective immediately, you will be placed on paid leave of absence from your duties as Executive Director of the Barrie Chamber of Commerce, pending an internal investigation in regards to irregularities.

During this period of suspension you are not to contact Chamber staff, attend the Chamber office or any Chamber events until further notice, including any events in which you represent the Chamber in your capacity as Executive Director.

You may be contacted during this period of suspension to provide the Chamber with information required in furtherance of the investigation. You will be notified when the Chamber has received the results of the investigation.

[36] No particulars were provided as to what “irregularities” were being investigated.

[37] On April 1, 2014, Ms. DeCaire emailed Ms. Goruk, attaching a letter of that same date written on Chamber letterhead and signed by Ms. DeCaire in her capacity as Chamber president. The letter set out 41 questions that Ms. Goruk was asked to answer no later than April 4, 2014. I do not intend to set out all 41 questions here, but a small sample will provide the flavor of the inquiries:

• to provide an explanation for vacation pay taken in lieu of vacation days;

• to explain her 3% salary increase in November 2013;

• to advise if she received competitive bids for snow removal before hiring Sybran Property Maintenance (a company owned by her son);

• to provide details of a Chamber conference she attended in Vancouver in September 2013 with reference to the expenses paid by the Chamber;

• to provide details in relation to a list of restaurant charges expensed to the Chamber, including the identity of those in attendance, the purpose of the meal and the benefit to the chamber;

• to explain why she wrote cheques with only one signature; and,

• to explain an amended direction sent to the TD Bank regarding the transfer of funds from one Chamber account to another.

[38] Ms. Goruk’s counsel wrote to the Chamber’s counsel on April 4, 2014 and expressed, amongst other things, concern about the short turnaround time expected by the Chamber in response to their 41 questions. The Chamber then granted an extension to April 11, 2014.

[39] Ms. Goruk’s answers were provided on April 14, 2014. Evidently they were not sufficient because her employment was terminated by letter dated April 28, 2014. The Chamber alleged just cause in the following terms:

1. Financial matters, including non-disclosure:

a. unauthorized paid vacation

b. undisclosed contracts with family members – non disclosure to Auditor

c. numerous expenses submitted with no support

d. abuse of “discretionary funds” – no supporting documents

e. mismanagement of budget

f. numerous restaurant charges – failure or refusal to provide support

g. purchase of alcohol contrary to Chamber policy

h. monthly payment of personal American Express card with no supporting document, annual fee charged to the Chamber

i. unauthorized salary increase

j. withholding or concealment of information (i.e. Audit reports)

k. changing of bank documents

i. altered bank transfer document after it was executed by two signatories on behalf of the Chamber

ii. placing Ms. Goruk as single signature on bank transfer (at time of change of volunteer board) contrary to Chamber policy

2. Purposely refusing access to the bookkeeper, including refusal to provide details around financial transactions.

3. Continuing to refuse access or provide answers after discussions with the Auditor and confirmation from the Auditor.

4. Past Treasurer resignation – previous Treasurer confirms frustrations with above dealings with Ms. Goruk.

5. Current Treasurer continually asking Ms. Goruk for financial information with little or no disclosure provided.

[40] The board appears to have authorized the termination for cause in an in-camera meeting on April 15, 2014. The in-camera minutes suggest that the termination was in fact authorized on March 28, 2014. Mr. Tuckey testified, however, that the meetings are mistaken in that regard. He said no such authorization was given until April 15, 2014.

[41] Ms. Goruk’s action was commenced on July 7, 2014

C. EVIDENTIARY ISSUES

[42] I mentioned earlier that there are two outstanding evidentiary issues that need to be resolved. I will address those now. They are:

(a) Patricia Copeland testified that she heard Todd Tuckey and a few other members of the board say, at a social event, that they wanted to replace Ms. Goruk. This utterance allegedly occurred at some point prior to Ms. Goruk’s dismissal. Ms. Goruk offers it as evidence of the bad faith conduct of the board. The Chamber objected to its admission into evidence on the basis that it is hearsay; and,

(b) The Chamber offered into evidence a copy of Ms. Millis’ Treasurer’s Report as at November 30, 2013. It includes financial statements that are covered with the handwritten notes of Ms. Millis. Ms. Goruk asserts that the notes are inadmissible as prior consistent statements. The Chamber argues that the notes are evidence that Ms. Millis was conducting an in-depth investigation into financial irregularities well before Ms. Goruk was placed on suspension. This is significant, the Chamber says, because it tends to rebut Ms. Goruk’s allegation that any post-suspension investigation into financial issues was really just a pretext, to cover up the fact that she was fired for having allowed Mr. Service’s e-broadcast to go out.

[43] In my view, both the board members’ alleged utterances and Ms. Millis’ handwritten notes are admissible in evidence. I will briefly explain why, beginning with the purported utterances of Mr. Tuckey and other members of the board.

The “Replace Ms. Goruk” Utterances

[44] A foundational principle of our law of evidence is that all relevant evidence is admissible. That principle is, of course, subject to many exceptions. Sometimes, for one reason or another, relevant evidence is excluded. Hearsay evidence is a classic example. Hearsay is defined as an out-of-court utterance offered in court as proof of the truth of its contents, in the absence of a contemporaneous opportunity to cross-examine the declarant. See R. v. Khelawan, 2006 SCC 57 at para. 35. Hearsay is presumptively inadmissible, not because of a lack of relevance, but because of concerns about an inability to test its reliability.

[45] To be admitted into evidence, hearsay must fall within a recognized exception, either one of the so-called traditional exceptions, or the principled exception, which engages an assessment of the issues of necessity and threshold reliability.

[46] In this instance, Ms. Copeland testified that she was at a Chamber-sponsored social event, known as a “Business After Five” session, when she overheard Mr. Tuckey and other board members make comments to the effect that they wanted to replace Ms. Goruk as the Chamber’s executive director. These comments are offered in evidence as proof of their contents – that Mr. Tuckey and some of the other board members indeed wanted to replace Ms. Goruk. There was, of course, no opportunity to cross-examine any of the declarants at the time the comments were purportedly made. Mr. Tuckey gave evidence at trial, but he was not asked by anyone about the circumstances of the alleged statement.

[47] There are two possible routes to admissibility of this evidence.

[48] In my view, the utterances are not actually hearsay at all. Ms. Goruk has clearly put the states of mind of the board members squarely in issue, in terms of their intentions with respect to her employment and when they formed those intentions. Utterances by board members to the effect that they wanted to replace her are original evidence of those members’ states of mind, not hearsay. See R. v. Griffen, 2009 SCC 28 at para. 59.

[49] If I am wrong – in other words, if the utterances are properly characterized as hearsay – they fall within a recognized, traditional exception. They appear to have been made in a natural manner and not in circumstances of suspicion and fall within the exception for declarations of present states of mind.

Ms. Millis’ Notes

[50] Ms. Millis testified at trial that she had many questions, verging at times on suspicions, in relation to certain aspects of the Chamber’s financial statements. She made copious notes on a copy of her November 2013 Treasurer’s Report and its attachments, which reflect concerns she had about the content of the Chamber’s financial statements. Those notes are prior, out-of-court statements consistent with the testimony she gave at trial.

[51] Evidence of a witness’s prior consistent statements are presumptively inadmissible. There are several reasons why. First, they are hearsay. Second, they tend to be self-serving. Third, they have no probative value because of the simple fact that the veracity of a statement is not enhanced through repetition.

[52] There are, however, a number of exceptions to the rule excluding prior consistent statements. These exceptions include:

(a) Where the statement plays a useful part in the narration of other relevant and admissible evidence;

(b) Where the statement is introduced to rebut an allegation of recent fabrication;

(c) Where the statement operates as circumstantial evidence of the state of mind of the statement-maker at a relevant point in time; and,

(d) Where the statement is part of the res gestae.

See R. v. Liard, 2015 ONCA 414, at para. 46.

[53] In this case, Ms. Goruk contends that the event that precipitated her dismissal was Mr. Service’s e-broadcast. Everything else that happened afterwards, purportedly by way of investigation, was, she submits, pretext. The Chamber submits that Ms. Millis’ notes provide evidence that there was relatively intense investigating going on well before the e-broadcast and Ms. Goruk’s subsequent suspension. In other words, they are tendered to rebut an allegation of recent fabrication.

[54] An allegation of recent fabrication is essentially an assertion that the witness has made up a story to “meet the exigencies of the case”: R. v. O’Connor, 1995 CanLII 255 (ON CA), [1995] O.J. No. 2131 (Ont. C.A.) at para. 16. To be “recent”, a fabrication need only have been made after the event testified about: R. v. Ellard, 2009 SCC 27, at para. 33.

[55] One aspect of Ms. Goruk’s position is that the Chamber came up with the financial irregularities angle to meet the exigencies of the case, after they fired her for the e-broadcast. Ms. Millis’ investigatory notes tend to rebut that position and, as such, fall within a recognized exception to the exclusionary rule.

[56] With those evidentiary issues settled, I will move on to an analysis of the live issues between the parties.

D. ANALYSIS

1.0 WAS MS. GORUK A FIDUCIARY?

[57] The “loss of trust” assertion is a thread that runs through the various grounds that the Chamber relies upon to establish that it had just cause to immediately terminate Ms. Goruk. The first question to come to grips with is, therefore, whether Ms. Goruk stood in a position of trust with respect to the Chamber.

1.1 The Governing Principles

[58] All employees owe a general duty of fidelity to their employers. See Dunsmuir v. Royal Group Inc., 2017 ONSC 4391 at para. 132. The proper functioning of the employment contract requires no less. See Spendlove v. Thorne, Ernst & Whinney, 1999 CanLII 3814 (ON CA) at para. 21.

[59] An employee who stands in a fiduciary relationship to her employer will, however, owe even higher duties. Those include loyalty, good faith and avoidance of conflicts of interest. See Canadian Aero Service Ltd. v. O’Malley, 1973 CanLII 23 (SCC), [1974] S.C.R. 592, 1973 CarswellOnt 236 at para. 24 and Dunsmuir, as above, at para. 127.

[60] A fiduciary duty is a duty of trust. It requires that the fiduciary act with absolute loyalty towards the beneficiary of the trust. See Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24, at para. 22.

[61] The Court of Appeal recently summarized the essential elements of a fiduciary relationship in Plate v. Atlas Copco Canada Inc., 2019 ONCA 196. Former Associate Chief Justice Hoy observed, at para. 65, that a fiduciary relationship arises where:

(1) there is an undertaking by the fiduciary to act in the best interests of the beneficiary;

(2) the beneficiary is vulnerable to the fiduciary’s exercise of discretion or control; and,

(3) an identifiable legal or practical interest of the beneficiary stands to be adversely affected by the fiduciary’s exercise of discretion of or control.

See also Elder Advocates, at para. 27.

[62] There are certain traditional relationships where fiduciary duties are implied, such as trustee-beneficiary, agent-principal, lawyer-client and parent-child. Other cases, like this one, have to be determined contextually.

1.2 The Parties’ Positions

[63] In the Chamber’s submission, fiduciary duties are frequently imposed on senior managers given the degree of control their positions afford them. See Canadian Aero, as above, at para. 32.

[64] The Chamber argues that Ms. Goruk was a key employee. She was the most senior manager in the organization. She was responsible for making important executive decisions. She was responsible for the financial management of the Chamber. Her role was all the more significant given the regular turnover of the volunteer members of the board of directors. She provided stability and continuity to the organization.

[65] Ms. Goruk took no position on the issue of whether she stood in the position of a fiduciary to the Chamber. Her position focused on the lack of any justifiable basis for her termination without notice.

1.3 Findings

[66] I accept that Ms. Goruk stood in the position of a fiduciary to the Chamber and, as such, owed them duties of loyalty, honesty, good faith and a strict avoidance of conflicts of interest.

[67] I find that there was an implied undertaking given by Ms. Goruk to act in the best interests of the Chamber. The undertaking arose from the nature of the relationship itself.

[68] The Chamber is a volunteer-based, non-profit organization. It is governed by a constantly changing board of directors. The board has, historically, as one might expect, been responsible for governance, rather than hands-on management. The board relies entirely on the executive director for day-to-day management.

[69] Ms. Goruk understood what was involved in the executive director position when she took it on. She knew the weight that would fall upon her shoulders. In taking the role on, I find that she implicitly undertook to act in the best interests of the Chamber.

[70] I also find that the Chamber was particularly vulnerable to the exercise of Ms. Goruk’s discretion. Until Ms. Millis took on the role, it would appear that the treasurer was a largely hands-off position. Ms. Goruk, by and large, had free rein to manage the day-to-day business of the Chamber with relatively modest oversight.

[71] The reality is that the very existence of the Chamber was in Ms. Goruk’s hands. She oversaw all aspects of its operations: memberships, fundraising, events, banking and promotion. She was its public face; it’s one consistent feature in an ever-changing landscape of governance.

[72] There is no question that the board of directors relied on Ms. Goruk to keep the operation afloat, to keep them informed of its well-being on a month-to-month basis and to generally ensure its viability and stature in the local business community.

2.0 WAS THERE JUST CAUSE FOR TERMINATION?

2.1 The Governing Principles

[73] What we do for a living may not entirely define us as human beings, but it is undeniably a significant component of self-identity for most people. Former Chief Justice Dickson famously described the importance of work to one’s self-worth in the following terms in Reference Re Public Service Employee Relations Act (Alta.), 1987 CanLII 88 (SCC), [1987] 1 S.C.R. 313, at para. 91:

Work is one of the most fundamental aspects in a person's life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person's employment is an essential component of his or her sense of identity, self-worth and emotional well-being.

[74] Given the important place work holds for individuals and for society more generally, it is understandable that in Ontario there is implied in every contract of employment for an indefinite term, a provision that the employment will not be terminated by the employer, absent just cause, without reasonable notice having been given.

[75] The core issue in this case is whether the Chamber had just cause to terminate Ms. Goruk’s employment without providing her with reasonable, or any, notice. It is the Chamber’s onus to establish that just cause is made out.

[76] Many attempts have been made over the years to capture the essence of just cause in a pithy manner. As Echlin J. noted in Carscallen v. FRI Corp., [2005] O.J. No. 2400, at para. 70, Schroeder J.A. did just that in a dissenting opinion in R. v. Arthurs, ex parte Port Arthur’s Shipbuilding Co. (1967), 1967 CanLII 30 (ON CA), 62 D.L.R. (2d) 342 (Ont. C.A.) where he said, at p. 348:

If an employee has been guilty of serious misconduct, habitual neglect of duty, incompetence or conduct incompatible with his duties, or prejudicial to the employer's business, or if he has been guilty of wilful disobedience to the employer's orders in a matter of substance, the law recognizes the employer's right to summarily dismiss the delinquent employee.

[77] The Supreme Court elaborated on these same principles in McKinley v. BC Tel, 2001 SCC 38 holding that dismissal for cause will be warranted where the employee’s misconduct is so serious that it amounts to a repudiation of the employment relationship. The court instructed that a key element of the just cause assessment is the concept of proportionality. In other words, in view of the nature and extent of the misconduct in question, was dismissal a proportionate response?

[78] Each case must be examined contextually, and a determination made as to whether the employee has engaged in misconduct that is “incompatible with the fundamental terms of the employment relationship.” See Dowling v. Ontario (Workplace Safety and Insurance Board), 2004 CanLII 43692 (ON CA), [2004] O.J. No. 4812 at para. 49.

[79] In Dowling, Justice Gillese instructed, at para. 50, that the application of the McKinley analytical framework involves the following three steps:

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 proportionate response).

[80] As I noted above, at the time of termination, the Chamber enumerated some fifteen areas of misconduct that they said supported their decision to terminate Ms. Goruk’s employment immediately for cause. In closing submissions, the Chamber’s counsel focused on six specific areas that he said, taken cumulatively, support a finding that the Chamber’s trust in Ms. Goruk had been irredeemably fractured. In the Chamber’s submission, a foundational component of the employment relationship was undermined, warranting termination.

[81] I will, in the circumstances, focus my analysis on the six areas of misconduct relied upon by the Chamber. I recognize, of course, that the other areas of misconduct identified by the Chamber form part of the background context and are not rendered irrelevant simply because they are not relied upon directly as grounds for immediate termination.

2.2 The Allegations

(a) The Altered Bank Document

The Circumstances

[82] The City of Barrie has, for some years, been one of Canada’s fastest growing communities. The number of practicing family physicians in the city has not kept pace with demand. Significant efforts have been made over the past two decades or so to recruit physicians to the area and to otherwise find ways to combat the severe shortage. One example of those efforts was a family medicine residency program established by the Royal Victoria Hospital. Part of that program included a Family Medicine Teaching Unit (“FMTU”) which was designed to provide medical residents with hands-on experience managing a limited caseload of patients.

[83] In 2013 the Chamber ran a fundraising campaign to support the FMTU. They raised over $26,000. The money was held in the Chamber’s current account. A decision was made, on the advice of the Chamber’s auditor, to segregate the FMTU funds in their own account.

[84] On July 10, 2013, Ms. Goruk and then-president David Zilstra, countersigned a direction to TD Bank to transfer roughly $26,000 from the Chamber’s current account to the segregated FMTU account. It was subsequently determined by Ms. Goruk and Ms. Ninno that roughly $3,000 had already been transferred to the FMTU account. In the result, the direction to the bank was $3,000 too high.

[85] The proper course of conduct would have been to prepare a new direction and have it counter-signed. But that is not what happened. Instead, the original direction was altered. A piece of paper was taped over the top of the direction covering the portion that set out the amount to be transferred. The taped-on paper directed the bank to transfer $23,000 rather than $26,000. The altered document was scanned and sent to the TD Bank as an email attachment.

[86] The parties dispute Ms. Goruk’s role in the alteration of the direction and how consequential any such role is.

[87] Ms. Goruk testified at trial that when she realized that the amount on the direction was wrong, she instructed Ms. Ninno to get in touch with Mr. Zilstra to tell him the direction had to be changed. She left it in Ms. Ninno’s hands because she had to run out to a meeting. She said that, as it turned out, Ms. Ninno could not find Mr. Zilstra, so she just changed the document and sent it out.

[88] When cross-examined, Ms. Goruk denied ever seeing a direction with a piece of paper taped over top of it. She acknowledged receiving a copy of the email Ms. Ninno sent to the bank with the $23,000 direction attached. She was unable to explain how her signature got on a direction in the amount of $23,000.

[89] Portions of Ms. Goruk’s examination for discovery were read in as part of the defendant’s case. She was asked on discovery whether she had any role whatsoever in the alteration of the direction. She said, “definitely not”.

[90] One of the 41 questions put to Ms. Goruk in the Chamber’s letter of April 1, 2014 asked her to explain the altered direction. She did not deny having a part in it. Instead, she said the following:

Cheryl and I opened a bank account for FMTU. The Chamber was able to raise funds of $26,610.75. $23,536.85 was deposited in the Chamber account. $3,073.90 was deposited in the FMTU account. The written direction to transfer $26,610.75 to the FMTU account was revised as there was already $3,073.90 in the FMTU account.

[91] Ms. Ninno was called as a witness for the Chamber. She testified that she recalled there being some urgency to the transfer of the FMTU funds. Mr. Zilstra was not available at the time that they realized the mistake on the direction. She said she came up with the suggestion to alter the document. According to her, she and Ms. Goruk did it together. They did it at Ms. Goruk’s desk in her office. She did not think there was anything wrong with what they did. They were simply protecting the Chamber’s interests.

The Parties’ Positions

[92] In the Chamber’s submission, the fact that Ms. Goruk participated in the alteration of a banking document is, on its own, sufficient reason to immediately terminate her employment.

[93] The Chamber appreciates that Ms. Goruk did not personally benefit from the altered document. They accept that it may have been done with the Chamber’s interests in mind. But their concern is that Ms. Goruk was willing to utter an altered document to the bank. She was willing to circumvent the Chamber’s policies and she never said a word of it to anyone on the executive or the board.

[94] In short, the Chamber asserts that Ms. Goruk did something fraudulent and lied about it here. Her duty to act in good faith was breached. The board’s trust in her was broken.

[95] Mr. Tuckey assumed the role of acting executive director when Ms. Goruk was placed on suspension. He testified that he was “floored” and “blown away” when he found out about the alteration. He considered it a betrayal of trust. Ms. DeCaire testified that it was a “holy shit” moment for her. She wondered “what else might be buried out there?” Ms. Millis testified that she wondered “what else is she capable of doing?”

[96] Ms. Goruk responds to the Chamber’s submissions in three ways.

[97] First, she takes the position that she had no part in altering the direction or uttering it to the bank.

[98] Second, she notes that she received no benefit from the alteration. In fact, the Chamber was the beneficiary.

[99] Finally, she submits that the Chamber is overblowing the significance of the incident in an effort to shore up a shoddy case of just cause. She points out that Ms. Ninno was not disciplined in any way. Moreover, it is not reasonable to suggest that this incident would break the board’s trust in her. Even if she had participated in the alteration, which is denied, it was for the benefit of the Chamber.

Findings

[100] The first issue to come to grips with is whether Ms. Goruk had any part in the alteration of the banking direction. I find that she did. I accept Ms. Ninno’s version of events. I find her account to be more in keeping with the probabilities of the prevailing circumstances as a whole.

[101] I reject Ms. Goruk’s denial of having played any part in the alteration for the following reasons.

[102] The first accounting provided by Ms. Goruk about the altered direction was her answer to the 41 questions letter. The circumstances surrounding the alteration would have been freshest in her memory at that moment (April 2014), compared to discoveries (December 2017) or trial. Moreover, at the time she provided her answers to the 41 questions, she was on suspension while an investigation into unspecified “irregularities” was ongoing. If ever there was a time to deny any wrongdoing, it was then. Yet nothing in her answer suggested that she did not play a role in the alteration of the direction. She said nothing about leaving it in Ms. Ninno’s hands while she ran out to a meeting.

[103] Ms. Goruk testified at trial that she had never seen a copy of a taped-over direction, yet that document was found in a file in her office.

[104] Ms. Ninno sent Ms. Goruk a copy of the email she sent to the bank, enclosing the altered direction. Ms. Goruk would certainly have been aware that she did not sign a direction for $23,000. She would have been alive to the fact that the document had to have been altered. Yet no alarm bells went off and no questions were asked of Ms. Ninno. The reason, in my view, is that Ms. Goruk did not need to ask how it happened. She knew; because she participated in it.

[105] I find that Ms. Goruk participated, with Ms. Ninno, in the alteration of the document with the intention that it be sent to the bank and that the bank rely upon it as though it were genuine. I find that she was not truthful about her role both on discoveries and in her trial testimony.

[106] The next questions to address are whether participating in the alteration of the banking direction is misconduct and, if it is, how serious is it?

[107] There can be little doubt that altering the banking direction amounted to misconduct. It is patently improper to provide a bank with instructions that purport to be counter-signed but were in fact never signed at all. It is a misrepresentation. The Chamber is a not-for-profit organization accountable to its membership, amongst others. There were sound policy reasons for requiring two signatures on banking documents, including fiscal responsibility, accountability and transparency. The actions of Ms. Goruk and Ms. Ninno, however well-meaning, threw the Chamber’s sound policy out the window.

[108] Moreover, the Chamber is a public-service organization. Its reputation for honesty and integrity in the community are key to its mandate and to its long-term success. The actions of Ms. Goruk and Ms. Ninno threatened that reputation.

[109] The Chamber’s position is that Ms. Goruk’s conduct amounted to fraudulent activity by a senior manager. They say that such activity, even if done in good faith, is sufficient to justify dismissal. See Geluch v. Rosedale Golf Assn., Ltd., 2004 CanLII 14566 (ON SC), [2004] O.J. No. 2740 (S.C.J.) at para. 89.

[110] In my view, the Chamber overstates it. A fraud involves depriving a third party of something of value through deceit, falsehood or other means. In this instance, no one was deprived. That said, Ms. Goruk did participate in the creation of a false document, knowing it was going to be provided to the bank and expecting the bank would act on it as though it was genuine. That behavior is perilously close to forgery.

[111] At the very least, the conduct was dishonest. For obvious reasons, dishonest conduct has generally been treated as a particularly significant form of misconduct. See, for instance, Barton v. Rona Ontario Inc., 2012 ONSC 3809 at para. 50.

[112] Nevertheless, McKinley makes it clear that a finding of dishonest conduct does not immediately equate to just cause. Again, each case must be examined contextually. The central question is, has the employee engaged in misconduct that is incompatible with the fundamental terms of the employment relationship?

[113] The Chamber draws a parallel between the facts of this case and those of a 1981 B.C. case called Jewitt v. Prism Resources Ltd., [1981] B.C.J. No. 1064 (B.C.C.A.). In Jewitt, the plaintiff had been hired as the president and CEO of a mining company in January 1979. He was also on the board of directors. An annual meeting of shareholders was scheduled for the end of April 1979. Audited financial statements were prepared for presentation to the shareholders. Before being sent out, however, they needed to be signed by two directors. The plaintiff was the only director available to sign the documents as the mailing deadline approached. He affixed his own signature and instructed his assistant to trace the signature of another director and apply it to the financial statements, which were then copied and mailed.

[114] Mr. Jewitt’s employment was terminated when his actions came to light. The trial judge found that his actions were driven by perfectly honest intentions. Nevertheless, they revealed a character flaw that justified his dismissal. Honesty, the trial judge said, is still important. And with senior management it must not only be inherent, but patent. The British Columbia Court of Appeal agreed.

[115] Although Jewitt appears to be a reasonably similar case, there are important distinguishing factors to consider.

[116] First Jewitt is a 40 year old case. Employment law has progressed significantly in the last four decades. It is far from clear, in my view, that the result in Jewitt would be the same today.

[117] Second, and perhaps more significant, Mr. Jewitt’s tenure as president of the mining company was four months. Ms. Goruk’s tenure with the Chamber was 17 years. There is a much greater sample size in her case, upon which to assess her character.

[118] I appreciate that the honesty and integrity of the Chamber’s executive director must be beyond reproach. But having said that, there was nothing else in Ms. Goruk’s history with the Chamber that suggested she was a dishonest person. In fact, the evidence given by a string of past presidents called by Ms. Goruk’s lawyers, is that she always served and represented the Chamber in an exemplary way.

[119] I accept that altering a bank document and passing it off to the bank as genuine reflects a flaw in Ms. Goruk’s character. She ought not to have done that. But the incident needs to be put into perspective. The direction was to transfer some money from one account to another. What she and Ms. Ninno did was to correct the amount to be transferred. That correction protected the Chamber’s interests.

[120] A number of the Chamber’s witnesses testified about their shock and dismay at finding out about the altered document. But that shock has to be put into context. These witnesses were already predisposed to removing Ms. Goruk from her position, given what they thought about the e-broadcast and about the financial issues raised by Ms. Millis. I am not suggesting their emotional reactions were not genuine. But I believe they are somewhat disproportionate to the circumstances.

[121] The Chamber’s investigation must have revealed that Ms. Ninno had a part to play in the alteration. Yet Ms. Ninno, an independent contractor, was not disciplined in any way, much less terminated. Ms. Ninno was not, of course, a senior executive, but as the bookkeeper she too would have to be implicitly trusted. The lack of discipline in her case speaks volumes to me about how serious the board actually viewed the conduct – at least when considered in isolation.

[122] For the moment, I intend to consider each assertion of misconduct in isolation. When I have completed the analysis of each assertion individually, I will take a step back and consider the assertions on the whole and in the context of the other issues identified by the Chamber as the trial progressed.

[123] And for the moment, while I consider the altered bank direction to be a serious issue – certainly worthy of discipline – it is not enough, on its own, to warrant immediate termination.

(b) Unauthorized Vacation Pay

The Circumstances

[124] Ms. Goruk was entitled to six weeks paid vacation each year. She testified that she did not always take her full six weeks. At issue is whether she was entitled to take a cash payout in lieu of any unused holiday time.

[125] Section 15.1 of the Employment Standards Act, 2000, S.O. 2000 c. 41 (the “ESA”) requires employers to maintain records of employees’ vacation entitlements and vacations taken. The Chamber kept such records, which reflected accruing vacation entitlements for each staff member, including Ms. Goruk. When a staff member took a week off, they would receive their usual pay, which would be recorded as a corresponding reduction in their vacation accrual account.

[126] The evidentiary record is not clear about how many weeks of holidays Ms. Goruk took each year prior to 2013, nor about whether any unused weeks rolled over from year to year. According to the Chamber’s employee manual, unused holiday time could not be banked, without written approval. Ms. Goruk never asked for written approval to bank holiday time.

[127] At some point in 2013, Ms. Goruk had a meeting with Ms. Millis and Ms. Ninno. I am not certain about the date it took place. Ms. Goruk could not recall the date. She said she thought it was during Ms. Millis’ second term as treasurer, which began in July 2013. On the other hand, Ms. Ninno remembered it occurring in early 2013. At any rate, one of the topics discussed at the meeting was Ms. Goruk’s accrued vacation time. Ms. Millis advised that Ms. Goruk had accrued vacation that was causing a deficit in the books. Each of the meeting participants recalls the balance of the discussion differently.

[128] Ms. Millis recalls encouraging Ms. Goruk to take the holiday time. She testified that the Chamber wanted people to take their vacations. They did not want vacation time accruing on the books because it was a liability. That said, employees were to take their vacations as holiday time, not as pay over and above their regular salaries.

[129] Ms. Goruk testified that she did not realize that she had vacation money owing to her. She recalls Ms. Millis telling her she would not lose the vacation pay and that she should take it.

[130] Ms. Ninno testified that Ms. Millis expressed concern about accrued vacation time and encouraged Ms. Goruk to take time off. While Ms. Millis did not authorize the payout of accrued vacation pay, she said Ms. Goruk was not going to lose her vacation dollars.

[131] Ms. Goruk and Ms. Ninno spoke about the vacation pay issue after the meeting with Ms. Millis. Ms. Goruk testified that she asked Ms. Ninno if she had correctly understood Ms. Millis to be saying she should take vacation pay in lieu of time owed, to reduce the liability on the books. Ms. Ninno expressed the same understanding to her. Indeed, Ms. Ninno testified here that she and Ms. Goruk both formed the impression that it would be okay to pay out the vacation money.

[132] Prior to 2013, Ms. Goruk had never taken vacation pay in lieu of holiday time. Based on her understanding of Ms. Millis’ instructions, she took six weeks of vacation pay in lieu of holiday time between April 19, 2013 and January 24, 2014. In addition, she took four weeks of actual holidays.

The Parties’ Positions

[133] The Chamber is very troubled by what they consider to be Ms. Goruk’s unilateral decision to take vacation pay in lieu of time off. They are particularly troubled by the fact that when she took the vacation pay, which amounted to more than $8,000, the Chamber was in poor financial shape.

[134] In the Chamber’s submissions, Ms. Goruk had no authority to instruct the bookkeeper to pay her vacation pay on top of her regular salary. Vacations were to be taken as holiday time. Ms. Goruk ought to have sought board approval for any cash pay-out. She did not do so and, moreover, did not advise anyone on the board that she was taking any such payments. She began to do so in April 2013, which is a time period during which Ms. Millis said she was having difficulty getting access to the financial records of the Chamber.

[135] The Chamber submits that Ms. Goruk breached her duty to act in the best interests of the Chamber and thereby increased the financial stress it was under. She put her own interests first and, in doing so, further eroded the trust the Chamber once had in her.

[136] Ms. Goruk denies that there was any misconduct in relation to vacation pay. She says she understood that Ms. Millis had instructed her to take the vacation pay to get it off the books. She is supported in that understanding by Ms. Ninno, who had the same impression after their meeting.

[137] Ms. Goruk asserts that she had a legal entitlement to the vacation pay and a genuine belief that she was authorized to take it out in cash.

[138] Even if she and Ms. Ninno misunderstood Ms. Millis and were mistaken about having the authorization to take vacation pay, termination would not be a proportionate response in all the circumstances. It was, at its worst, an honest mistake.

Findings

[139] In my view, the vacation pay issue is a misunderstanding on Ms. Goruk’s part, exacerbated by the exercise of poor judgment.

[140] Significant time was spent during the trial addressing the Chamber’s policy with respect to holiday time.

[141] Mr. Tuckey, Ms. Millis and Ms. DeCaire each testified that the Chamber had a “use it or lose it” policy. They referenced the section in the employee manual that prohibited the banking of holiday time without express written approval in support of the asserted use it or lose it policy.

[142] Ms. Goruk denies that there was a use it or lose it policy. She said that she permitted all of the other staff to bank holidays and to roll them over from year to year. She further points to Ms. Millis’ indication that she would not lose any of her accrued vacation time as evidence that no use it or lose it policy was ever enforced.

[143] It is impossible for me to conclude with any confidence whether the Chamber employed a use it or lose it policy. I say that because I have no evidence as to how many weeks of holidays Ms. Goruk took each year and how those weeks were reflected in her accrued vacation account. I have the impression that before 2013, no one really ever turned their mind to the policy.

[144] In any event, the ESA establishes mandatory minimum vacation entitlements, which cannot lawfully be subject to a use it or lose it policy. Whether Ms. Goruk took her minimum entitlements each year is unclear to me. Some of her contractual holiday entitlements are over and above the statutory minimums. Whether contractual holiday time above and beyond the ESA minimums can be subject to a use it or lose it policy is unsettled in the jurisprudence. In my view, this is not the case to resolve that issue.

[145] There is no evidence before me that suggests Ms. Goruk was not entitled to the vacation time in her accrual account, whether by way of holidays or pay in lieu thereof. The dispute here is about whether she was authorized to take pay in lieu of holiday time or whether she was obliged to take her vacations as time off.

[146] I am satisfied that there was a genuine misunderstanding between Ms. Millis and Ms. Goruk about whether she could, or even should, be paid vacation pay to reduce an accrued liability on the Chamber’s books. Ms. Ninno appears to have been just as confused as Ms. Goruk on the point.

[147] I do believe, however, that Ms. Goruk exercised poor judgment in taking out the vacation pay at the time and in the manner she did. She had never, in 16 years, been paid vacation pay in lieu of her holiday time. At the end of the meeting with Ms. Millis, she was not clear about whether that was something she was authorized to do. She asked the bookkeeper for her thoughts, but the person she really ought to have asked for clarification was Ms. Millis.

[148] Moreover, the amount she took in vacation pay over a ten month period was a significant boost to her salary – and a significant expense to the Chamber – at a time when they could ill-afford it.

[149] In my view, the Chamber could be rightfully disappointed in Ms. Goruk over the vacation pay issue. I would not, however, characterize it as misconduct in all the circumstances. It is certainly not conduct that, on its own, justifies immediate termination for cause.

(c) The Unauthorized Raise

The Circumstances

[150] In October 2013, the board of directors authorized a 3% raise for all staff members. The raise did not include Ms. Goruk. Perhaps she deserved a raise, given that her salary had remained stagnant for five years. But her salary was a matter of negotiation between her and the president. It is agreed between the parties that she was not included in the 3% raise, which took effect mid-November, 2013.

[151] The bookkeeper mistakenly understood that Ms. Goruk was to be included in the pay raise. The raise is first reflected on Ms. Goruk’s pay on November 29, 2013.

[152] Ms. Goruk testified that when she realized she had been given a raise, she advised Ms. Ninno that it was a mistake. She did not say when she first realized the mistake, but it would have been evident on her November 29, 2013 pay. She also did not say when she raised the mistake with Ms. Ninno. She said they were in the process of figuring out what she would have to repay to the Chamber when she was terminated.

[153] Ms. Ninno testified that had assumed the raise applied to Ms. Goruk because it was in the approved budget and she was deserving of it. She said that Ms. Goruk may have told her she was not entitled to it and was going to have to repay it. She said she corrected it but is not sure when.

[154] There is no evidence that anyone on the executive committee, or the board more generally, was ever told about the mistaken raise, or told that Ms. Ninno had been instructed to correct it.

The Parties’ Positions

[155] The Chamber submits that the unauthorized raise is yet another example of Ms. Goruk self-dealing at the Chamber’s expense. If there was truly an error, the correction would have been very simple. The fact is, the raise in pay continued on until after Ms. Goruk’s suspension. She did nothing about it from late November 2013 until her suspension in mid-February, 2014. Indeed, it appears to have continued on until the end of March 2014.

[156] The Chamber asks that I reject Ms. Goruk’s evidence that she instructed Ms. Ninno to correct the mistaken raise for reasons which include:

(a) The fact that no correction was ever made, prior to Ms. Goruk’s suspension. Presumably Ms. Ninno could have implemented the correction immediately and determined any overpayment within minutes. Ms. Goruk’s suggestion that she and Ms. Ninno were “working on calculating how much she would have to repay” is simply unbelievable. That calculation was simple;

(b) Ms. Ninno and Ms. Goruk discussed that she was deserving of the raise. Ms. Ninno recalled correcting the pay raise, but could not clearly recall if it was Ms. Goruk who told her to do so;

(c) In her answers to the Chamber’s 41 questions letter, Ms. Goruk explained that the raise was given to her in error. She said nothing about having instructed Ms. Ninno to correct it; and,

(d) No indication was ever given to the board that the mistake had been made and was being corrected.

[157] The Chamber asserts that Ms. Goruk knew she got the raise, was complicit in it and, in effect misappropriated Chamber funds. Doing so was sufficient cause for immediate termination. Again, her actions breached the duties of loyalty and trust she owed the Chamber.

[158] Ms. Goruk’s position is straightforward. She says the raise was a mistake by the bookkeeper. She maintains that she instructed the bookkeeper to correct the mistake. There was, she contends, no misconduct on her part.

Findings

[159] I am satisfied that Ms. Goruk did not instruct the bookkeeper to give her a raise. I am further satisfied that the raise was as a result of the bookkeeper’s error.

[160] I am not satisfied, however, that Ms. Goruk instructed the bookkeeper to correct the error. I say that because the simple fact is, the error did not get corrected. If the executive director had told the bookkeeper to make the correction, there is no reason why she would not have immediately done so.

[161] Ms. Goruk would have noticed the raise on the first pay that it took effect. And she knew that the staff raise was taking effect at that time because she helped prepare the budget that provided for it. She could easily have inferred that the bookkeeper mistakenly included her in the raise. It does not take three or more months to correct a mistake of that nature.

[162] I only have the payroll records to March 23, 2014, but at that time the raise was still being paid. I infer from that fact that, prior to her suspension, Ms. Goruk had not instructed the bookkeeper to make any correction. If they had discussed anything about it, she certainly was not insistent. The evidence appears clear that she permitted the increased salary to be paid to her.

[163] Gauging the seriousness of this misconduct is not easy. On the one hand, the raise is very modest and frankly, Ms. Goruk probably was deserving of it. Moreover, I accept that she did not instruct the bookkeeper to put it into effect. On the other hand, she failed to bring the mistake to the treasurer or the board and, more significantly, she did not do enough, if anything, to correct it. I am mindful of the fact that the effort required to correct the mistake would have been exceedingly minimal.

[164] Allowing the raise to continue was, in effect, a misappropriation of Chamber funds. Not a significant amount, but an amount nonetheless. I appreciate Ms. Goruk’s testimony to the effect that she always intended to repay it. But no repayment was ever made. No calculation was ever done as to how much had to be repaid and, as I have noted, the raise was not undone until well after Ms. Goruk was suspended.

[165] Reasonable people may differ about whether the pay raise issue is sufficient, on its own, to warrant immediate termination. It is certainly a significant concern, given that I have found that Ms. Goruk was a fiduciary in relation to the Chamber. Preferring one’s own financial interests to those of the beneficiary of the fiduciary relationship is antithetical to that relationship.

[166] Looked at in context, however, I am not satisfied that this issue, alone, is sufficient to establish just cause. Most significantly, Ms. Goruk had 17 years of faithful service to the Chamber in the bank. She was highly regarded with past executive members and in the community at large. She had served the Chamber well, in terms of its mandate, its growth and its fiscal management. And there was a real element of mistake associated with the pay raise. I am not satisfied that immediate termination on the basis of this issue alone is a proportionate response.

(d) Related-Party Contracts

The Circumstances

[167] One of Ms. Goruk’s sons runs a property maintenance company. Another one has a catering truck. Both were hired by Ms. Goruk to work for the Chamber. The Chamber raises two concerns. First, Ms. Goruk failed to follow the proper protocol for hiring contractors when she hired her sons. Second, she failed to report related-party transactions to the auditor when asked.

[168] The Chamber serves a large and diverse group of local businesses, all of whom pay to be members of the Chamber. The Chamber had, at all relevant times, a policy in place that afforded its members an opportunity to bid on work that the Chamber required. There were a number of reasons for the policy, including transparency, fairness to all members and to ensure that the Chamber got the best value for its money.

[169] The relevant policy provided as follows:

An RFP[Request for Proposal]/TENDER will be sent out to all relevant Chamber members for special project purchases, new services and long/short term contracts (non-administrative costs) that will cost $3,000 or more. Each proposal received will be evaluated on its individual merits by the Executive Committee; their resulting decision is to be forwarded to the Board for approval/ratification. Chamber members will be given preference; the lowest proposal will not necessarily be accepted.

[170] As executive director, Ms. Goruk had authority to enter into contracts of less than $3,000 without going through the RFP process. That said, contacts with a value over $1,000 required approval from the executive committee.

[171] In 2003 Ms. Goruk hired a company called Sybran, owned by her son, Brian, to do snow removal and some summer landscaping work for the Chamber. The initial hiring was done through an RFP. Thereafter, Sybran’s contract was renewed year over year. The RFP process was not adhered to, nor was there express executive committee approval for the annual contracts after 2003.

[172] At some other point, the date of which is unclear to me, Ms. Goruk hired a company called Hannahman’s, owned by her son, David, to provide catering services. She did not utilize the RFP process, nor was there express executive committee approval for any of Hannahman’s services.

[173] On June 11, 2013, as the Chamber’s annual general meeting approached, Ms. Goruk had a meeting with the Chamber’s auditor, Thomas Bolland, to review their audited financial statements. Mr. Bolland presented her with a client representation letter, which he reviewed with her and asked her to sign. She did. Included in the letter was a confirmation that all related-party transactions had been disclosed to him. In fact, Ms. Goruk did not disclose to him the Chamber’s contracts with her sons.

The Parties’ Positions

[174] The Chamber takes the position that its policies were clear about when RFPs and executive committee approval for contracts were required. Ms. Goruk was well aware of the policies and knowingly breached them. Her breaches involved contracts to her own sons. In addition to breaching the Chamber’s policies, therefore, she also breached the duty she owed to the Chamber, as a fiduciary, to scrupulously avoid conflicts of interest.

[175] Ms. Goruk’s position with respect to the catering services provided by her son, David, is that it was not her idea to hire him. An unnamed board member mentioned to her that she had eaten at a catering truck and the food was really good. The board member suggested they get the caterer to cater some of their meetings/events. Ms. Goruk said, “that’s my son”. Everyone on the board new it was her son and no one objected.

[176] With respect to Sybran, Ms. Goruk said that her son’s price was competitive and he did a good job so she just renewed his contract year after year. She said it was well-known to the board members that Sybran was her son’s company. No one took issue with his contract being renewed without an RFP. She asserts that if she failed to follow proper protocols, that failure was condoned year after year.

[177] In relation to the failure to disclose related-party transactions, Ms. Goruk submits, again, that the related-party transactions were well-known to the members of the board. She believes that Mr. Bolland also knew of the contracts with her sons. She did not appreciate that she needed to do more, when she signed the client representation letter on June 11, 2013. She would not normally sign that letter; that would be a job for the treasurer. At any rate, as Mr. Bolland testified, it was not a big deal. Had she disclosed the contracts with her sons, he would simply have had to add a short note to that effect on the financial statements.

Findings

[178] I will begin my analysis with the Chamber’s business with Hannahman’s. I do not have a sufficient evidentiary basis upon which to conclude that any of the purchases from Hannahman’s exceeded $1,000, much less the threshold of $3,000 to require an RFP. Moreover, the record is clear that Hannahman’s – a Chamber member by the way – was hired at the request of a board member.

[179] In my view, the business given to Hannahman’s did not breach a Chamber policy, nor did it amount to a breach of Ms. Goruk’s fiduciary duties.

[180] The renewals of Sybran’s contracts are different. They were for more significant amounts, though it is not clear to me whether, in any given year, they crossed the $3,000 threshold. Ms. Goruk agreed, in cross-examination, that the contract was valued at more than $3,000 in some years, but not all. Perhaps, buried in the evidentiary record, there is an entry in a general ledger regarding amounts paid to Sybran. I am not clear about that. But that evidentiary shortcoming, if it is one, is of no moment. I say that for three reasons.

[181] First, it is clear that the initial contract with Sybran required an RFP. At least some of the other years required one. None was ever used after 2003.

[182] Second, I have no doubt that the annual contracts with Sybran exceeded $1,000 and therefore, at the very least, required executive committee approval.

[183] Third, despite the foregoing two factors, I am persuaded that the Chamber condoned the renewal of contracts with Sybran and cannot now raise hue and cry about any failure on Ms. Goruk’s part to follow protocol.

[184] Four past-presidents of the Chamber testified that they were aware that Sybran was a company owned by Ms. Goruk’s son and that it was providing services to the Chamber, including David Service, Rick Butler, Brendon Saxton and Monica Maizes.

[185] To be fair, each of Mr. Service, Mr. Butler and Mr. Saxton testified that he expected that Ms. Goruk would – and should – have followed the RFP process, though none could say whether she did. I appreciate that an argument can readily be made that one cannot condone conduct one is unaware of. That said, each president would have been on the executive committee and would have known, at the relevant times, whether approval had been given for contract renewals with Sybran. Not only did the executive committee have to give authority for contracts over $1,000, but they also had the responsibility of selecting winning bids when the RFP process was utilized. In other words, each of these past presidents was aware that Sybran’s contract was being renewed year over year and each would have been aware, at the time, that no RFP was used. Yet none took any action to either insist on the use of an RFP or to take Ms. Goruk to task for failing to use one.

[186] One past president, Ms. Maizes, testified that she was a long time member of the Chamber. She was on the board for a number of years, though I am not clear on just how many. I know she was a vice president in 2008 and president in 2010. She said she was off the board by 2012. She testified that she was aware, as a board member, that Sybran was initially retained through an RFP. Thereafter, the board simply renewed Sybran because they were very happy with the work. According to her, the board did not require an RFP.

[187] It was not until Ms. Millis assumed the role of treasurer that the board put the brakes on the renewal of Sybran’s contract without recourse to an RFP. It appears clear that Ms. Millis brought a more rigorous approach to the task of financial oversight. She flagged the related-party transactions as a concern and I think rightfully so. That said, it would not be appropriate, in my view, to discipline Ms. Goruk for conduct that had been condoned in the past.

[188] Following Ms. Goruk’s termination, the snow clearing contract was made the subject of an RFP. Sybran bid and was successful. Mr. Tuckey testified that the Sybran bid was 40% less than the last year it had been renewed by Ms. Goruk. I believe he was urging the court to infer that Ms. Goruk was overpaying for Sybran’s services. I am unable to draw that inference, however, because I am not able to compare the scope of the work bid on in 2014 as compared to prior years.

[189] Ms. Goruk no doubt ought to have told the auditor about the contracts with her sons before she signed the client representation letter confirming that those contracts had been disclosed. Her failure to do so, however, does not significantly trouble me.

[190] Ms. Goruk was, no doubt, under the impression that everyone, including the auditor, knew about the contracts with her sons; particularly Sybran. By 2013, Sybran had been doing the Chamber’s snow removal and salting for 10 years.

[191] The auditor, Mr. Bolland, testified that he audited the Chamber’s financial statements from 2009 to 2013 inclusive. In other words, 2013 was the fifth year he had audited their statements. One would naturally expect that the contracts with Sybran would have been disclosed to him at some earlier point during one of the prior year’s audits.

[192] Ms. Goruk was, moreover, not generally responsible for signing off on the client representation letter. She did so on June 11, 2013 because Ms. Millis was, for whatever reason, unable to attend the meeting with the auditor. Ms. Goruk attended alone, which was unusual. It put her in an uncomfortable position. If something got missed, it is not hugely surprising.

[193] Based on the foregoing, I am not satisfied that the related-party contracts issue has any legs. If this were the Chamber’s only complaint, I would agree with Ms. Goruk’s assessment that it is “much ado about nothing.”

(e) Suppressed Auditor’s Letter

The Circumstances

[194] I have already alluded to the meeting Ms. Goruk had with the auditor on June 11, 2013. At some point during that meeting Mr. Bolland provided Ms. Goruk with a typed letter. He referred to it as a letter of identified weaknesses. It was not on letterhead and Mr. Bolland testified that he believes it was a working draft. He did not provide it to the president or the treasurer.

[195] Mr. Bolland did not have a strong recollection of having reviewed the letter with Ms. Goruk, nor about whether he provided her with a copy. On the latter point, I find that he did, since a copy of it was located in her office after her suspension.

[196] The weaknesses identified by Mr. Bolland included: (1) the lack of two authorized signatures on some cheques; (2) the absence of supporting documents for certain expenses; and (3) the treating of a commissioned membership salesperson as an independent contractor rather than an employee.

The Parties’ Positions

[197] The Chamber’s complaint is that Ms. Goruk did not bring the letter to the attention of the board or the executive committee. As a fiduciary, she had a duty to do so.

[198] Ms. Goruk’s position is that she did provide a copy of the auditor’s letter of identified weaknesses to the board. While she did not have a specific recollection of doing so, she said the board acted on weakness #3 and therefore they must have been given the letter. Ms. Goruk also testified that she understood Mr. Bolland was going to give a copy of the letter to the board.

[199] In any event, Ms. Goruk relies on Mr. Bolland’s testimony that the issues raised in the letter were minor.

Findings

[200] I am unable to say whether Ms. Goruk brought the letter of identified weaknesses to the board’s attention. If she didn’t, she probably should have. That said, any failure to do so is mitigated by the following factors:

(a) Ms. Goruk was left to attend the audit meeting on her own because no one from the executive attended. Mr. Bolland testified that it was unprecedented that the president or the treasurer would not attend. Ms. Goruk had not had sole responsibility for the audit meeting before so if she didn’t get everything just right, it is not a surprise;

(b) What was provided to Ms. Goruk was just a draft of the letter that Mr. Bolland was ultimately going to produce. She can be forgiven if she thought, as she said she did, that he was going to send the letter to the board; and,

(c) The weaknesses identified were, on Mr. Bolland’s evidence, minor.

[201] The failure to pass on the letter would be arguably more significant if I found that Ms. Goruk was intentionally trying to suppress information from the board. But that is not a finding I am prepared to make. As it is, the failure to pass on Mr. Bolland’s draft letter is small beer.

(f) The American Express Card

The Circumstances

[202] Ms. Goruk had two credit cards that she used for Chamber purposes. One was a TD card issued directly to the Chamber. The other was an American Express card issued to Ms. Goruk.

[203] Ms. Goruk testified that she wanted a card that accumulated air miles because every year she and the Chamber president, and their spouses, would travel to the National Chamber of Commerce conference. She said she would use the accumulated points to help pay for flights.

[204] According to Ms. Goruk, Amex would not issue a card to a not-for-profit organization. She therefore had the card issued in her name. The Chamber paid the annual fee for the card, which was about five hundred dollars.

The Parties’ Positions

[205] The Chamber takes issue with three things. First, whether Ms. Goruk actually used all of the points for the Chamber, or whether she may have used some of the points for herself. Second, whether the card was really for Chamber business or whether it was personal, in which case the Chamber ought not to have been paying the annual fee. Third, the fact that Ms. Goruk was not as careful as she ought to have been in terms of distinguishing personal from business expenses and providing sufficient supporting documentation.

[206] Ms. Goruk takes the position that the Chamber is off-base on all of its allegations.

Findings

[207] In my view, the Amex card is a non-issue for a number of reasons, which include:

(a) The card was clearly used for Chamber expenses – there is a lengthy, documented history of that. Moreover, Ms. Goruk’s explanation as to why the card is in her name makes sense;

(b) Ms. Goruk really ought to have been careful not to use the Amex card for personal expenditures. That was a mistake. But a proportionate response is not to fire her, it is to tell her to stop using it for personal expenditures;

(c) The annual fee is a trivial item. If the board had an issue with it, someone could have taken it up with Ms. Goruk and resolved it;

(d) The level of detail provided in respect of expenses covered by the card could have been better. That said, this case is about whether there was just cause for dismissal. If the board, or the executive, wanted Ms. Goruk to provide better particulars, they should have asked. It appears to me that Ms. Goruk followed the same practices for years without complaint. When the board decided to follow more rigorous practices, the reasonable approach would have been to advise Ms. Goruk of the new requirements and to give her a chance to comply with them.

[208] There is no compelling evidence that Ms. Goruk was using the Amex for personal expenses and charging them to the Chamber, thereby misappropriating Chamber funds. There is no breach of a fiduciary duty here; only less than ideal accounting practices.

[209] The Amex card is, in my view, a minor issue.

[210] The foregoing six issues are the principal ones identified by the Chamber as supporting its decision to terminate Ms. Goruk’s employment for cause. These issues must be viewed in context of course. That context includes other concerns raised by the Chamber, two of which I will briefly address before I move on to my conclusions based on the evidentiary record as a whole.

[211] The two additional issues I will specifically address are the difficulties Ms. Millis allegedly had in gaining access to the Chamber’s books and records and the David Service e-broadcast.

(g) Impeding Access to Financial Records

[212] Ms. Millis assumed the role of treasurer in July 2012. She testified here about significant difficulties she experienced obtaining ready access to the financial records of the Chamber. I have already addressed this issue to some extent in the Narrative section above. I will try not to repeat much of what I said earlier.

[213] Ms. Goruk was confronted by the Chamber’s counsel about impeding Ms. Millis’ access to the books. She testified that while there were some initial bumps in the road, they got hammered out and she and Ms. Millis began to get along well. Her evidence left the impression that Ms. Millis’ access to the Chamber’s books and records was a minor issue that was fairly quickly resolved.

[214] Ms. Millis’ testimony was to the contrary. She testified that they got off to a very rocky start. While things eventually improved, there remained problems right up until the point when Ms. Goruk was suspended. She certainly did not give the impression that they ever got along well.

[215] In my view, the evidentiary record tends to support Ms. Millis’ position.

[216] In November 2012, Ms. Millis sent an email to Ms. Ninno seeking a variety of financial documents. The response she received back was that Ms. Goruk had not authorized the release of those documents to her. Ms. Millis therefore emailed Ms. Goruk seeking the same documents. The response she got from Ms. Goruk was a copy of the Roles and Responsibilities of the Treasurer and a reprimand for having attempted to go through staff rather than her.

[217] Ms. Millis took her concerns to the executive committee. She expressed that each one of them should be concerned about the lack of transparency. She advised them that she would have a difficult time remaining in the role of treasurer if she were not given unfettered access to the books. In the result, then-president, David Zilstra, got involved. The issue was significant enough that it came before the board in mid-December 2012. A resolution was passed at that time that Ms. Goruk would allow Ms. Millis access to the bookkeeper.

[218] Nevertheless, problems persisted. Some two and a half months later, Patricia Copeland – at the time a vice president of the Chamber – attended a meeting with Ms. Goruk and Ms. Millis in an effort to mediate a solution. Thereafter, things improved somewhat but Ms. Millis continued to experience difficulty getting documents in a timely way. Ms. Goruk initially insisted that Ms. Millis pick up hard copies of any records she wanted from the Chamber offices, at specific, limited, time slots. Ms. Millis had a busy professional practice and had asked for electronic copies of the records to be emailed to her.

[219] The auditor, Mr. Bolland eventually had to intervene to advise Ms. Goruk to be transparent and to provide the financial disclosure requested. But, as he observed, she did not listen to him.

[220] It was not until February 2013 that Ms. Millis was able to put together her first financial report to the board, even though she had been named treasurer in July 2012. The fiscal year-end of the Chamber was March 31. After March 31, 2013 Ms. Goruk took the position that the board’s authority to make decisions had run out. They were, in effect, a lame duck board, until the new directors were appointed at the June 2013 annual general meeting. She did not, therefore, provide Ms. Millis with any financial disclosure for April and May 2013.

[221] It was not until August 2013 that Ms. Millis was able to produce a second monthly treasurer’s report to the board.

[222] According to Ms. Millis’ evidence, which I accept, problems in getting prompt access to financial records of the Chamber persisted until the time that Ms. Goruk was suspended. Moreover, Ms. Goruk insisted on being present whenever Ms. Millis met with the bookkeeper.

[223] Ms. Goruk offered very little by way of an explanation as to why she did not permit Ms. Millis unfettered access to the Chamber’s books and records. She said she did not know Ms. Millis before she was appointed treasurer. In addition, prior treasurers had not taken such a robust approach to the task. It evidently made her uncomfortable.

[224] The fact is, the Chamber was not Ms. Goruk’s private enterprise. It was a not-for-profit corporation governed by a board of directors. Ms. Goruk reported to that board.

[225] I appreciate that there may have been a personality conflict between Ms. Millis and Ms. Goruk. But in my view, Ms. Goruk showed very poor judgment in her dealings with Ms. Millis. She ought to have provided her with prompt access to whatever financial records she sought, as a matter of routine. She failed to do so. She continued to demonstrate a reluctance to do so even after the intervention of the president, a vice-president and the Chamber’s auditor. It is against this backdrop that the Chamber’s other concerns must be assessed. It is particularly concerning that Ms. Goruk was not facilitating unfettered access to the Chamber’s books at times that correspond to concerns raised by the Chamber about the vacation pay, the unauthorized raise and the lack of supporting documents for claimed Chamber expenses.

(h) The E-Broadcast

[226] I have earlier set out the details of Mr. Service’s e-broadcast and I won’t repeat them here.

[227] The Chamber has not expressly relied on Ms. Goruk’s role in facilitating the e-broadcast as an element of its just cause argument. In my view it is nevertheless an important feature of the background.

[228] Ms. Goruk asserts that she was fired because of the e-broadcast and that every other alleged concern raised by the Chamber is disingenuous window dressing. I agree with her, to a point. The e-broadcast absolutely triggered her suspension and eventual dismissal.

[229] Ms. DeCaire called an emergency meeting of the board the morning after the e-broadcast went out. Ms. Goruk’s suspension was approved at that meeting. Any suggestion that it was not the e-broadcast that triggered the suspension is definitely disingenuous.

[230] That said, I agree with Mr. Tuckey’s characterization of the e-broadcast as the “last straw”. There were other reasons for the suspension and the termination – generally financial in nature. The investigation of those issues had been ongoing for months prior to the suspension. The e-broadcast was a triggering event that brought to a head all of the concerns that Ms. Millis and other members of the executive committee had been discussing for some time.

[231] It is factually wrong to suggest that the Chamber’s financial concerns were nothing but an after-the-fact attempt to rationalize a firing driven by the e-broadcast. The e-broadcast lit the fuse on a powder keg.

[232] In any event, the e-broadcast was not an entirely benign event.

[233] Ms. Goruk did not owe Mr. Service a duty of loyalty, fidelity or good faith. But she did owe those things to the board. The board, whom she reported to and served, was seeking to make changes to the Chamber’s constitution. Mr. Service opposed those changes, as he was entitled to do. But Ms. Goruk permitted him to use the Chamber’s broadcast system to rail against the board and to seek to undermine the amendments they wished to enact.

[234] Ms. Goruk argues that there was no policy in place as to what could or could not be sent out through the e-broadcast system. I accept that. Access to the e-broadcast system was subject to Ms. Goruk’s judgment. And in the case of Mr. Service’s e-broadcast, she demonstrated very poor judgment. She could not have been surprised to hear from board members who were angry and disappointed with her decision. She breached her duty of loyalty to them, in favour of a past-president whose views I suspect she may have shared.

[235] With the foregoing review complete, I will turn now to my conclusions based on the evidentiary record as a whole.

2.3 Conclusions

[236] Ms. Goruk ran the Chamber for the better part of 17 years. By all accounts, she did a terrific job of it. All of the past presidents who testified, save Mr. Tuckey, said that she did an exemplary job and that they had no concerns about her fiscal management.

[237] According to former president, Monica Maizes, Ms. Goruk took the Chamber from a “smallish organization to a really good membership”. She described Ms. Goruk as devoted and hard-working.

[238] Until her suspension, Ms. Goruk’s employee file was entirely bereft of concerns, complaints or disciplinary actions.

[239] For reasons I am not entirely able to explain, things began to go sideways after the 2012 AGM. The complexion of the board appears to have changed somewhat. It remained a governance board, but there was a greater emphasis on accountability and transparency and a more hands-on approach to oversight.

[240] The board’s new approach was particularly evident with the new treasurer, Ms. Millis. As I have noted, she took a far more robust approach to fiscal oversight than any of her predecessors. And for reasons best known to Ms. Goruk, that approach did not sit well with her.

[241] I sense that Ms. Goruk felt that Ms. Millis was stepping on her toes. It does not appear that any prior treasurer, or other board member for that matter, had ever questioned her expenditures or the adequacy of the books and records she kept. I believe that Ms. Goruk had virtually carte blanche to run the Chamber as her own small shop, until Ms. Millis assumed the role of treasurer. Until July 2012 she had experienced about fifteen years of running that shop her way, without interference from the board. I believe that Ms. Goruk chaffed under the sudden and unprecedented oversight. I can think of no other explanation for why Ms. Goruk would have impeded unfettered access by Ms. Millis, or any other board member, to the full financial records of the Chamber. Unless, of course, there were things in those records that she did not want Ms. Millis to see.

[242] Ms. Goruk worked for the Chamber. She owed them fiduciary duties of trust, loyalty and good faith. Yet I find that she impeded Ms. Millis’ efforts to engage in the financial oversight that was her responsibility. Ms. Millis may have rubbed Ms. Goruk the wrong way. But she was entitled to access the financial reports she sought and entitled to answers to the questions she raised. In my view, her rigorous approach was laudable. But Ms. Goruk had a hard time with it. The evidentiary record is clear about that.

[243] Against that backdrop, I have found two acts of misfeasance. First, the alteration of the banking direction and the uttering of that falsified document to the TD Bank. I have found that Ms. Goruk participated in the alteration and was not forthright about her involvement in her testimony here. Second, the unauthorized raise. I accept that the raise was a bookkeeping error, but I do not accept Ms. Goruk’s testimony that she instructed Ms. Ninno to correct it. I find, instead, that she was of the view that she deserved the raise – perhaps she did – and she let it continue.

[244] These two acts of misfeasance are, arguably, not major. The Chamber did not suffer any loss as a result of the altered banking document. Indeed, their interests were protected. The Chamber suffered a modest loss as a result of the unauthorized raise, but it was capable of being corrected.

[245] The significance of the misfeasance, however, in both instances, is the aspect of dishonesty.

[246] As I noted, the Chamber is a not-for-profit community-based organization. It had, and continues to have, a high profile in the community. It serves the interests of hundreds of members, who pay annual fees to be a part of the organization. Its reputation for integrity and honesty is important.

[247] In addition to the two acts of malfeasance I have identified, Ms. Goruk demonstrated, in the last 18 months of her tenure, a tendency to exercise very poor judgment in significant ways.

[248] In addition to impeding the treasurer’s access to the books and records of the Chamber, her decision to take out vacation pay in cash was a very poor one. It may be that she was entitled to the vacation time. But, as I noted earlier, she should have ensured that she had proper approval from the board to take cash in lieu of time, particularly when the board was not doing well financially through 2013. Finally, as I have set out, there was her authorization of Mr. Service’s e-broadcast.

[249] Ms. Goruk, as the executive director, was the public face of the Chamber. She ran its day-to-day operations. The board of directors were volunteers. They could engage in only modest oversight of her activities. They relied implicitly on her integrity and trustworthiness.

[250] Robert Brown was the Chamber president in 2009-10. He testified that trust in the executive director was integral to the role. Brendon Saxton was president in 2005-06. He testified that he trusted Ms. Goruk and that trust was absolutely integral to her role. Debbie DeCaire was the president in 2013-14. She testified that the board simply lost faith and trust in Ms. Goruk and, in the result, voted unanimously to terminate her for cause.

[251] I accept the evidence offered by the Chamber that the termination was a result of a loss of faith and trust in Ms. Goruk to carry out the role of executive director. That loss was informed by an accumulation of factors. A volunteer board is simply unable to watch over the executive director’s every move. If her honesty was not patent, if they could not trust her implicitly, she was not fit for the role.

[252] Any one of the incidents of malfeasance or the exercise of poor judgment would not, in my view, be sufficient to support a termination for cause. But taken together they do.

[253] Honesty, faith and trust were integral components of Ms. Goruk’s employment. I find that the board was justified in reaching the conclusion that Ms. Goruk had not acted with complete honesty in the discharge of her duties as executive director. That absence of integrity and the demonstrated exercise of poor judgment on significant issues justified her immediate termination.

[254] In other words, her conduct was incompatible with the fundamental terms of the employment relationship. The Chamber has, in the result, satisfied me, on a balance of probabilities, that just cause existed for her termination.

[255] Before moving on to briefly address the issue of damages, I will take a moment to address the issue of warnings and of the use of escalating forms of discipline.

[256] I accept that in many situations, proportionate discipline will necessarily involve the giving of warnings and an opportunity for correction. In other cases, a ladder approach to discipline will be an appropriate and proportionate response to repeated instances of misconduct.

[257] Here, however, all of the issues that led to the termination of Ms. Goruk came to a head at or around the same time period. They cumulatively amounted to a repudiation of the employment contract. I am satisfied that it was unnecessary, in the circumstances, for the Chamber to provide warnings or to implement a stepped approach to discipline.

3.0 DAMAGES

3.1 The Notice Period

[258] As a result of my conclusion that just cause existed for termination, no damages in lieu of notice are payable.

[259] I also find that no termination pay is payable pursuant to the ESA. Section 57 of the ESA provides for a notice period of eight weeks on termination. Section 2(1)3 of Ontario Regulation 288/01 made pursuant to the ESA provides, however, that no notice is required in respect of a termination where the employee “has been found guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.”

[260] I find that Ms. Goruk engaged in wilful misconduct, particularly in relation to the forged banking document and the unauthorized pay raise. In the result, no notice was required under the provisions of the ESA.

3.2 Aggravated (Moral) Damages

[261] Ms. Goruk seeks aggravated damages as compensation for mental suffering she says she endured as a result of the manner of her dismissal. Her claim is legally grounded in the Supreme Court’s seminal case of Honda Canada Inc. v. Keays, 2008 SCC 39.

[262] In Keays, the Supreme Court took an opportunity to clarify the principles that govern the award of aggravated damages in employment cases and to resolve a confusion in the jurisprudence arising from some of its earlier decisions in cases such as Wallace v. United Grain Growers Ltd., 1997 CanLII 332 (SCC), [1997] 3 S.C.R. 701 and Fidler v. Sun Life Assurance Co. of Canada, 2006 SCC 30. Specifically, the court concluded that damages for mental distress arising from the manner of dismissal – referred to by the court as moral damages – are to be awarded on the basis of the well-established principle of foreseeability. There is no requirement, as Wallace suggested, that there be a separate actionable wrong to ground an award of aggravated damages.

[263] Justice Bastarache wrote as follows, at paras. 56-59 of Keays:

56 We must therefore begin by asking what was contemplated by the parties at the time of the formation of the contract, or, as stated in para. 44 of Fidler: "[W]hat did the contract promise?" The contract of employment is, by its very terms, subject to cancellation on notice or subject to payment of damages in lieu of notice without regard to the ordinary psychological impact of that decision. At the time the contract was formed, there would not ordinarily be contemplation of psychological damage resulting from the dismissal since the dismissal is a clear legal possibility. The normal distress and hurt feelings resulting from dismissal are not compensable.

57 Damages resulting from the manner of dismissal must then be available only if they result from the circumstances described in Wallace, namely where the employer engages in conduct during the course of dismissal that is "unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive" (para. 98).

58 The application of Fidler makes it unnecessary to pursue an extended analysis of the scope of any implied duty of good faith in an employment contract. Fidler provides that "as long as the promise in relation to state of mind is a part of the bargain in the reasonable contemplation of the contracting parties, mental distress damages arising from its breach are recoverable" (para. 48). In Wallace, the Court held employers "to an obligation [page391] of good faith and fair dealing in the manner of dismissal" (para. 95) and created the expectation that, in the course of dismissal, employers would be "candid, reasonable, honest and forthright with their employees" (para. 98). At least since that time, then, there has been expectation by both parties to the contract that employers will act in good faith in the manner of dismissal. Failure to do so can lead to foreseeable, compensable damages. As aforementioned, this Court recognized as much in Fidler itself, where we noted that the principle in Hadley [Hadley v. Baxendale (1854), 9 Ex. 341, 156 E.R. 145], "explains why an extended period of notice may have been awarded upon wrongful dismissal in employment law" (para. 54).

59 To be perfectly clear, I will conclude this analysis of our jurisprudence by saying that there is no reason to retain the distinction between "true aggravated damages" resulting from a separate cause of action and moral damages resulting from conduct in the manner of termination. Damages attributable to conduct in the manner of dismissal are always to be awarded under the Hadley principle. Moreover, in cases where damages are awarded, no extension of the notice period is to be used to determine the proper amount to be paid. The amount is to be fixed according to the same principles and in the same way as in all other cases dealing with moral damages. Thus, if the employee can prove that the manner of dismissal caused mental distress that was in the contemplation of the parties, those damages will be awarded not through an arbitrary extension of the notice period, but through an award that reflects the actual damages. Examples of conduct in dismissal resulting in compensable damages are attacking the employee's reputation by declarations made at the time of dismissal, misrepresentation regarding the reason for the decision, or dismissal meant to deprive the employee of a pension benefit or other right, permanent status for instance (see also the examples in Wallace, at paras. 99-100).

[264] Based on the principles enunciated in Keays, I am not satisfied that Ms. Goruk has established an entitlement to aggravated damages in the circumstances of this case.

[265] First, because I find there was no breach of contract. I have found that there was just cause for dismissal, so there was no breach of the implied agreement to provide reasonable notice.

[266] Second, because I am not satisfied, on a balance of probabilities, that the Chamber carried out the dismissal in bad faith. In other words, there was no breach of any implied requirement that any termination would be carried out in good faith.

[267] Finally, because I am not satisfied, in any event, that Ms. Goruk has provided an evidentiary record upon which to find that she actually suffered any compensable damages arising from the manner of her dismissal.

[268] Ms. Goruk points to a range of factors that she says support the conclusion that the Chamber dealt with her in bad faith. Her counsel listed more than 20 factors, but I will hit only the highlights. They include:

(a) Alleging cause when there was no basis for cause;

(b) Passing off the dismissal as relating to financial issues when it was the result of Mr. Service’s e-broadcast;

(c) Failing to provide Ms. Goruk with any particulars for why she was suspended, and in particular, failing to provide Ms. Goruk with any particulars of what the alleged irregularities were;

(d) Conducting a pretext investigation;

(e) Posing 41 categories of questions and expecting a response from Ms. Goruk within 3 days;

(f) Publicizing her termination prior to advising her of it;

(g) Attending the police station to report Ms. Goruk’s alleged misconduct to open a criminal investigation into Ms. Goruk; and,

(h) Failing to pay Ms. Goruk her statutory notice payments.

[269] I agree that Ms. Goruk’s termination could have been handled better. I do not agree that the Chamber acted in bad faith.

[270] I have found that the termination was justified, and that Ms. Goruk was not entitled to common law or statutory notice. Those findings tend to undermine a good deal of the bad faith arguments.

[271] I have found that the triggering event to the suspension was the e-broadcast. That said, there is much more to the just cause assertion that I have found to be valid. It is not factually accurate to say that the termination was the result of the e-broadcast and that everything else is pretext.

[272] The Chamber’s investigation, for instance, was not pretext. I find that it was validly undertaken and had been ongoing in earnest for some time prior to the suspension.

[273] The Chamber ought to have given more detail in the suspension letter as to what irregularities it was investigating. That said, Ms. Goruk retained counsel almost immediately. Her counsel quickly communicated with the Chamber’s counsel and obtained information about the Chamber’s concerns. Moreover, the 41 questions letter would have left no doubt about what investigations were being undertaken.

[274] The three-day response demand to the 41 questions was unreasonable in the circumstances, but it was extended upon request. It gave Ms. Goruk an opportunity to have some participation in the process.

[275] The evidence that someone from the Chamber publicized Ms. Goruk’s termination prior to her being notified of it is sketchy at best. Ms. Goruk testified that she was eating at a local restaurant, while under suspension. She says she was approached by the manager who said he was sorry to hear she had been let go. The problem with this evidence is that the manager did not testify. I am unable to conclude the source of his information or its reliability. He may have, for instance, misheard something or misinterpreted what he heard. I am certainly not able to conclude on the basis of this evidence that the Chamber was acting in bad faith.

[276] Similarly, Ms. Copeland’s evidence that she overheard board members saying they wanted to replace Ms. Goruk is not compelling given its lack of detail. Apart from Mr. Tuckey, I don’t know who else allegedly made comments of that nature. I don’t know when those comments were made relative to the events in issue in this case. And I don’t know to whom they were said.

[277] The fact that the police were involved bothers me somewhat. I think that going to the police was a little offside. Having said that, my concerns are attenuated by two factors. First, it appears to have been a low-key, private meeting with a police officer. It went no further. No one publicly accused Ms. Goruk of criminal wrongdoing. Second, the concerns of some of the board members about possible criminal wrongdoing were honestly held. Ms. Millis had very strong concerns that Ms. Goruk had been misappropriating Chamber funds through (i) taking vacation pay in cash; (ii) taking an unauthorized raise; and (3) claiming her personal credit card expenses as though they were Chamber business.

[278] On the whole, things did not go as well as they could have. But they rarely do. I am not satisfied that there is a basis upon which moral damages can be founded.

[279] I am, in any event, not satisfied that Ms. Goruk has made out any actual damages suffered as a result of the manner of her termination.

3.3 Punitive Damages

[280] I have awarded no compensatory damages. It would be highly unusual to award punitive damages in the circumstances.

[281] I find no basis to award them here.

CONCLUSIONS

[282] For the foregoing reasons, I am satisfied that the Chamber has established, on a balance of probabilities, that it had just cause to terminate Ms. Goruk. A combination of misfeasance and bad judgment created a situation where the board could no longer trust her. Trust was an integral part of her position. The loss of trust, arising from her misconduct, undermined the fundamental terms of the employment relationship. Termination was an unfortunate, but proportionate, response.

[283] No damages in lieu of notice are payable, either at common law or under the ESA for the reasons stated. Moreover, I am not satisfied that aggravated or punitive damages are made out on the facts.

[284] In the result, Ms. Goruk’s claim is dismissed.

[285] The parties are encouraged to agree on the issue of costs. If they are unable to agree, they may make written submissions, not to exceed 3 pages (not including costs outlines). The Chamber’s submissions will be due by August 9, 2021 and Ms. Goruk’s by August 30, 2021.

[286] I wish to thank counsel for their efforts and their assistance in completing this trial remotely. They were impeccably prepared, flexible and promoted their parties’ positions with admirable zeal.

Boswell J.

Released: July 19, 2021