Kent Smith, a professional engineer and senior manager, was employed by Pacific Coast Terminals Co. Ltd. for more than 16 years.  Pacific had two new construction projects that required permits. Smith applied for those permits but then gave the green light to start construction before they were obtained.

Two months later, Port Metro Vancouver threatened to halt construction on the basis of neither having a permit. Outraged, Pacific declared Smith’s conduct, authorizing work prior to receipt of the permits, to be dishonest and misleading.

It then uncovered that Smith had stored large amounts of hard-core pornography on his work computer and that he had also divulged confidential information to an outside party. As well, when, unbeknownst to Pacific, Smith was romantically involved with a co-worker, Zerlina Robertson, he participated in decisions regarding her salary. He also assisted with her search for new employment outside the company and brought her with him on a business trip to Europe while she was on disability leave.

The above incidents led to Smith’s dismissal with cause. Subsequently, he sued his employer for wrongful dismissal.

On its face, such egregious acts would appear amply sufficient to terminate an employee with cause. But Justice Sigurdson of the B.C. Supreme Court closely examined the circumstances of each act to determine whether the misconduct was fundamentally inconsistent with Smith’s obligations, including his managerial autonomy.

With respect to the unsanctioned construction, the judge found Smith to have made an error in judgment rather than having acted dishonestly or having intended to mislead. While the court was critical of Smith’s other actions, based on the circumstances, the court ruled those actions similarly did not justify his dismissal for cause.

For example, the pornography had been stored on Smith’s computer 10 years earlier, at a time when that was part of the corporate culture. His involvement in Robertson’s salary negotiations, although placing him in a conflict of interest, had occurred seven years earlier. Smith’s actions were sloppy for a senior manager but did not rise to such dishonesty as to justify termination with cause.

Employers beware: If you think you have cause, run the facts by an employment lawyer. And conduct an investigation so that pertinent facts don’t first emerge at trial — but don’t have a lawyer do it; conduct it internally. You don’t want the employee to refuse to participate or later allege coercion because they were confronted by outside counsel.