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Whitehouse v RBC Edited.doc

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Department
Business Law
Course
B LAW402
Professor
Elaine Geddes
Semester
Winter

Description
Whitehouse v. RBC Dominion Securities Inc., (Edited) 2006 ABQB 372 Facts The Plaintiff, now age 51, was a vice-president and investment advisor with the Defendant from February 1988 to January 22, 2004 in Calgary. He was successful in his business. He ranked nationally among the company’s top two hundred of fifteen hundred investment advisors in recent years. He managed $125 million of his clients’ capital and earned $424,500 in commissions in the year before his termination. He benefited from several company incentive programmes. All that came to an abrupt end as a result of an event on the evening of January 20, 2004. The Plaintiff had been drinking heavily. He went looking for a prostitute and met a woman named Cassandra Stolarchuk. At his suggestion they travelled by taxi to his office in the Canada Trust tower in downtown Calgary, arriving just before 10:30 pm. These were the business premises of the Defendant. This was not the first time the Plaintiff had used his employer’s offices for such purposes. The Plaintiff had paid Cassandra $60.00, the agreed fee was $200.00. They arrived at the office building. The Plaintiff used his pass card to enter the building, perhaps forgetting a security camera in the ground floor lobby. He again used his pass card so they could travel by elevator to the office of RBC Dominion Securities Inc. on the 16th floor. The elevator emptied into an open lobby area which bore the Defendant’s corporate name and contained a reception desk and unlocked file cabinet. Behind that desk were locked doors leading into the various interior offices and work stations. After using a washroom, where Ms. Stolarchuk consumed some cocaine, the Plaintiff led her to a card operated door which accessed the interior offices. A card reader report not only marked the precise time of entry - 10:29:48 pm - but also the name of the card owner - James Whitehouse. They began to walk along the interior hall past workstations and offices towards the Plaintiff’s office on the opposite side of the floor. Ms. Stolarchuk testified that she observed papers and photographs on desks as they passed by. She said she didn’t look closely. An argument developed over payment of the balance. The services contracted for were not performed. The Plaintiff demanded that Ms. Stolarchuk leave. She demanded the balance of her fee before she would leave. She described him as highly intoxicated and rude. He admits to at least the former. He testified that he felt threatened, in part because he had placed himself at risk with prostitutes on other occasions. He testified as well that, no services having been gained, he was disinclined to pay. The result was that they returned to the lobby area and the Plaintiff left, leaving Ms. Stolarchuk behind. The card reader report doesn’t report exits but does show another entry using his card at 10:48:52 pm. In the intervening 19 minutes Ms. Stolarchuk was left by herself in the lobby area. She would have had easy access to any files or papers on the reception desk or in the file cabinet behind it. She used a telephone there to leave a message, recorded at 10:41 pm, on another phone in the office. That message was as follows: Hi, I don’t know what time it is at night, but I’m here in your RBC Investment offices, RBC Canadian Securities Incorporated. A man who works in your office named Bill brought me up here. I’m a hooker from 3rd Avenue and he picked me up in a taxi and brought me up here to do me in his office. He’s not paying me the rest of my money, so therefore he’s left me in your building at night. Your phones say night on them in here. I don’t know where he is. I don’t know how to get out. He’s left me up here in the office building. So I’m sure you’ll have many questions for me tomorrow. You can call me at 889-1602. My name is Cassandra. And I’m not joking around about this. She also phoned a friend and a taxi. She left the premises without seeing the Plaintiff again. The Plaintiff testified that he went to find security to remove Ms. Stolarchuk from the office. He says he wandered around the building and found no-one so he caught a taxi to go home. He changed his mind after a few blocks and returned to the office. She wasn’t in the lobby area so he re-entered the secure interior at 10:48:52. That suggests he thought she could have made her way back through security. However she wasn’t there either so he went home. The Plaintiff’s late night indiscretion rapidly became a public spectacle the next day, January 21st. Ms. Stolarchuk, in pursuit of her fee, first telephoned (likely mistakenly) the Dome Tower branch of RBC Dominion Securities Inc. and was put through to Heather Sully, the branch administrator, at about 11:00 am. She inferred she was a prostitute who had been there the night before with someone who worked there and owed her money. She said she had been left alone on the premises for one and a half hours. She also said she was on her way over to collect. Ms. Sully did not take the call very seriously. Shortly thereafter Cassandra Stolarchuk appeared at the Canada Trust Tower offices of the Defendant, during business hours, and spoke to the receptionist, Courtnaye Greenwell. Ms. Greenwell testified that Ms. Stolarchuk told her she was a prostitute and that she had been in that office the prior evening with someone who worked there and who owed her money. She was there to collect. The sum had escalated overnight to $1,000. Ms. Stolarchuk denied demanding $1,000 but I prefer the evidence of Ms. Greenwell. Ms. Greenwell perceived her visitor to be aggressive and threatening. Having observed her give testimony I have no difficulty concluding that Ms. Greenwell’s perception of Ms. Stolarchuk was accurate. Ms. Greenwell further testified that Cassandra Stolarchuk told her that she had been in the person’s office and she described how to get to it and what it looked like. She also described the items behind the reception desk. She gave her name and phone number and left the premises. Ms. Greenwell acknowledged that client documents were customarily in piles on her reception desk at the end of a day. In the normal course of business she received cheques, applications for retirement plans and statements of client investments. She also said that by the next day “everyone” knew about the incident. Lisa Harder was the branch administrator. She heard of Ms. Stolarchuk’s visit from Courtnaye Greenwell right away. She called Heather Sully for advice. Ms. Harder then called security to review the card reader report and learned whose card had been used and when. She then reported to Jason Baba, who was the branch manager for both the Dome and Canada Trust offices. The next day the employee on whose phone Ms. Stolarchuk had left the message reported the event to Ms. Harder and she had it recorded by a technologist. Events moved quickly once Mr. Baba was informed in the late afternoon of January 21st. He viewed the card reader report which identified the card used as belonging to the Plaintiff. He viewed the security videotape and testified that he saw the Plaintiff and a woman enter an elevator from the ground floor lobby. He listened to the phone message left by Ms. Stolarchuk. He reported the incident to his superior in Edmonton, who in turn spoke to his superior in Toronto. Mr. Baba then brought in Kelly Mitchell, who was the Plaintiff’s immediate supervisor in the Canada Trust branch. The two of them met with the Plaintiff on January 22nd at about 9:00 am. The Plaintiff admits that he was twice asked by Mr. Baba whether he had brought a prostitute into the office the night of January 20th and both times the Plaintiff denied it. Only after being told there was videotape evidence did the Plaintiff acknowledge the fact. There is much debate and conflicting memory over what happened next. Mr. Baba said he waited five or 10 seconds for an explanation and getting none he told the Plaintiff that his employment was terminated for cause. Mr. Mitchell, who observed the conversation in silence, recalled that Mr. Baba said “explain” or words to that effect and that no explanation was offered. The Plaintiff on the other hand said that he was given no chance to explain. However, even on the Plaintiff’s version I conclude that there was an opportunity to advance an explanation, whatever it might have been. Instead of two denials, for example, he could have answered truthfully and given his explanation. He chose not to. His complaint now that he wasn’t able to explain is not persuasive. Having been told that his employment was terminated for cause, the Plaintiff was asked to leave the premises. The story spread quickly, which is not surprising given the number of people necessarily involved. Mr. Baba cautioned employees about being discrete. It was not in the Defendant’s interest that the firm’s reputation be tarnished. Nevertheless there was evidence that the Plaintiff’s conduct became common knowledge among brokerage houses and their employees. Issues 1. Did the Defendant have cause to terminate the Plaintiff’s employment without notice? 2. If not, what are the appropriate damages? The Defendant relies upon two grounds for the summary dismissal of the Plaintiff: 1. the Plaintiff’s conduct in bringing a prostitute into the Defendant’s offices; 2. the Plaintiff’s conduct in leaving the prostitute alone in the lobby area, privy to client and corporate documents; This case is factually unique. The authorities recognize as cause for summary dismissal such matters as: conflict of interest, breach of duty of fidelity, wilful disobedience, fraud or dishonesty, intoxication, serious incompetence or sexual harassment. The Plaintiff’s conduct here cannot easily be described in any of these terms. Other cases justify summary dismissal with the more general description of serious misconduct and revelation of character. Serious misconduct is not easily defined, it depends very much on the nature of the employment and the consequences of the act on the employer. Revelation of character relates to conduct which indicates character that is incompatible with continued employment - generally dishonesty or untrustworthiness. The concept of just cause was restated in R. v. Arthurs, ExP. Port Arthur Shipbuilding Company (1967): 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. Notwithstanding the clarity of the principal, there is no single test to define the degree of misconduct which will justify summary dismissal. What is now clear is that the context - that is, the nature of the act, the circumstances surrounding its occurrence and the employment relationship - must be considered. It cannot be said that certain kinds of misconduct, for example, dishonesty, are always cause for summary dismissal. The Supreme Court of Canada in McKinley v. B.C. Tel, though dealing with an allegation of dishonesty, approved this contextual approach to the determination of just cause: In light of the foregoing analysis, I am of the view that whether an employer is justified in dismissing an employee on the grounds of dishonesty is a question that requires an assessment of the context of the alleged misconduct. This being the case I conclude that a contextual approach to assessing whether an employee’s dishonesty provides just cause for dismissal emerges from the case law on point. In certain contexts applying this approach might lead to a strict outcome. Where theft, misappropriation or serious fraud is found, the decisions consid
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