Böhmer v. Burns Lake Native Logging Ltd.

2018 BCSC 1052 Böhmer v. Burns Lake Native Logging Ltd.

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Böhmer v. Burns Lake Native Logging Ltd., 2018 BCSC 1052 Date: 20180530 Docket: S17445 Registry: Smithers Between: Westlin Böhmer Plaintiff And Burns Lake Native Logging Ltd. Defendant Before: The Honourable Mr. Justice Macintosh Corrected Reasons: These reasons were corrected on the cover page on July 3, 2018 Oral Reasons for Judgment after Trial Counsel for the Plaintiff: Ian B. Lawson Counsel for the Defendant: Scott A. McCann Tom A. Posyniak Place and Dates of Trial: Smithers, B.C. May 11, 15-18, 2018 Place and Date of Judgment: Smithers, B.C. May 30, 2018 [1] Mr. Böhmer sues Burns Lake Native Logging Ltd. ("Native Logging") for damages resulting from his alleged wrongful dismissal for cause from Native Logging on October 19, 2015. For 18 years, Mr. Böhmer had served the company as its operations manager. He reported to the general manager of Native Logging's parent company, Burns Lake Native Development Corporation ("NDC"). Mr. Böhmer was 61 when he was dismissed. At the time of his dismissal, he was earning $83,257 annually. [2] Native Logging presented four grounds for the dismissal when it terminated Mr. Böhmer's employment on October 19, 2015. After his dismissal, it added three further grounds, which it discovered after the dismissal. [3] Throughout his time at Native Logging, Mr. Böhmer, in many respects, was an

excellent employee. He was dedicated, knowledgeable, hardworking, and loyal to his staff. He had vast experience in the logging industry to bring to his work as the most senior employee at Native Logging. He worked long hours. He often had extra work placed on his shoulders, which he performed without complaint. His employee file contained several commendations. [4] In the course of Mr. Böhmer's 18 years at Native Logging, NDC employed five general managers. The first one in Mr. Böhmer's time, Alex Tett, appears to have been the best one for attending to Native Logging's interests and was clearly the best one from Mr. Böhmer's viewpoint. Mr. Tett also had extensive experience working in the logging industry, and could liaise effectively with Mr. Böhmer. Both men appear to have been practical "hands on" people, who attended to their responsibilities without fanfare and without much regard to the formalities of their positions. When I speak of formalities, I include particular adherence to the Native Logging Financial Procedure Manual and the NDC Financial Procedure Manual (the two documents are highly similar to one another.) They set out specific requirements for, among other matters, Native Logging through Mr. Böhmer as operations manager obtaining approval through NDC's general manager, for making capital acquisitions and for incurring loans. Under the Manuals, for such

approvals, the general manager was, in turn, supposed to go to the board of directors of Native Logging and NDC. (NDC owns several undertakings, including Native Logging. The six‑member board was common to NDC and each of its subsidiaries. The six board members each represented one of six First Nations which owned NDC. NDC and its subsidiaries were intended to train and employ First Nations people as much as possible, as well as to make money for the six First Nations owners). [5] Mr. Böhmer appears to have enjoyed a good working relationship with Native Logging's employees and to have worked at training and employing as many First Nations people as he could. [6] At the time of Mr. Böhmer's dismissal, the NDC general manager was Rick Morrison. Mr. Böhmer and Mr. Morrison did not work together well. Mr. Morrison's background was primarily in financing, including employment as a lender at the RBC for 16 years. He knew little about the day‑to‑day work Mr. Böhmer undertook at Native Logging, with the result that it was difficult for Mr. Morrison to give meaningful input as an overseer of Mr. Böhmer's work. The two men also had different mindsets. Mr. Böhmer was rough and ready in his work, and Mr. Morrison was meticulous. He was "by the book", and strove to ensure that every step fully complied with the two Financial Procedure Manuals. The third problem was that Mr. Morrison was

often unavailable because of work he did away from the NDC office. He was employed only half‑time, and several other organizations with whom he worked, I believe on behalf of NDC, held meetings which frequently meant he was unavailable for Mr. Böhmer. [7] In the result, Mr. Böhmer was largely working on his own in running Native Logging in the two and a half years he served under Mr. Morrison. [8] In or about September 2015, Mr. Morrison learned that in late 2014, Mr. Böhmer had caused Native Logging to borrow $100,000 from a company called Mountain Thunder Logging Ltd. Mr. Morrison learned that because Mountain Thunder contacted him when the loan repayment went into default. No one at NDC had any knowledge that Mr. Böhmer had caused Native Logging to incur that debt. Mr. Böhmer reasonably believed the loan was necessary in order for Native Logging to continue operating. Money was very tight, and Mr. Böhmer had earlier tried, unsuccessfully, and with Mr. Morrison's knowledge, to obtain money for Native Logging from other sources. [9] Mr. Morrison also discovered that Mr. Böhmer had caused Native Logging to make three capital acquisitions, one for a truck and two for trailers, without his, NDC's, or the board's knowledge. Mr. Morrison presented to the board a confidential incident report, dated October 14, 2015. It summarized the loan and the truck and trailer purchases. Mr.

Morrison had previously raised the alarm to the board about these matters, in a meeting on September 29, 2015. From then until October 19, 2015, when he fired Mr. Böhmer, he never sat down with Mr. Böhmer to get his side of the story. He should have, but this case, in my view, does not turn on that omission. [10] The evidence is clear that Mr. Böhmer took the steps he did, that is, incurring the loan and purchasing the truck and trailers, entirely for the benefit of Native Logging and not for his own interests. He was operating the way he had up to 2012, when Mr. Tett left, by which I mean he was taking such steps without informing the NDC board or following the protocols in the Financial Procedure Manuals. When Mr. Tett had been the NDC manager, he knew what Mr. Böhmer was doing on behalf of Native Logging and Mr. Böhmer was permitted to act largely unfettered insofar as Native Logging or NDC policies were concerned. [11] Sadly, Mr. Böhmer did not detect the change in the governing mentality at NDC after Mr. Tett's departure. In his last two and a half years, that is, during Mr. Morrison's tenure as the NDC general manager, Mr. Böhmer failed to realize that it was becoming necessary for him to comply with the Manuals, which required him to obtain board approval for Native Logging borrowing money and for buying equipment. [12] Mr. Böhmer sought to rely on a letter addressed "To

whom it may concern", dated January 21, 2013, signed by the board chair. He argued that the letter gave him carte blanche for running Native Logging in all respects. But that letter, in my view, simply gave him signing authority on behalf of NDC, Native Logging, and other entities, when dealing with third parties. It did not purport to allow Mr. Böhmer to borrow or buy equipment on behalf of Native Logging without board approval. [13] On October 19, 2015, Mr. Morrison called in Mr. Böhmer and presented him with the following letter: Subject: Request for information re Possible Breach of Policy. It has come to my attention of certain actions/events undertaken by yourself, which are of concern and warrant this request. Preliminary details/actions appear to be in a serious breach of BLNDC/BLNLL Policy relating to "Capital Asset Acquisitions" and "Capital Borrowings". Also there is a serious breach of "Code of Conduct". As you are aware any breach of policy must be investigated. Therefore to assist, you are requested to provide a signed reply letter advising of the reasons for your actions and under what authorities. Your written reply is to be provided by 2:00 pm, Wednesday, October 21, 2015, which is to be hand delivered to: Burns Lake Native Development Corporation, Attention: Rick Morrison General Manager. Your reply to the following items should also include support documents,

such as copies of emails, correspondence and or other documents or agreements/contracts. Item #1 Details As to monies/funds borrowed in December 2014 under Burns Lake Native Logging Ltd., from Mountain Thunder Logging Ltd. Item #2 Details as to acquisition of capital assets under Burns Lake Native Logging Ltd., relating to one 2007 Timmins L503A Hayrack Trailer, acquired December 15, 2014 from Groot Bros Contracting Ltd. Item #3 Details as to acquisition of capital assets under Burns Lake Native Logging Ltd. relating to one 2005 Western Star, acquired December 6, 2014 from Pacific Truck & Equipment Inc. Item 4 Details as to acquisition of capital assets under Burns Lake Native Logging Ltd. via a lease/rent to own relating to a 2016 BWS Tridem Hayrack Trailer acquired December July 28, 2015 from Summit Trailer Repair Ltd. Should you have any questions please contact me to discuss. [14] The letter set out Mr. Morrison's and NDC's four grievances against Mr. Böhmer. Mr. Böhmer was furious on receiving the letter. He stormed out, saying he had had enough, and that he was quitting. One can understand Mr. Böhmer's anger and frustration. As I said earlier, Mr. Morrison had not sat down with him at any time in late September, or in the first 18 days of October, to get Mr. Böhmer's explanations in a better setting than the October 19 confrontation. I repeat that Mr. Morrison should have

done so, although, as I also said earlier, this case does not turn on that failure, in my view. [15] Mr. Böhmer did not take up the requirement in the letter to reply to the complaints by 2:00 p.m. two days later. [16] Mr. Böhmer testified that he had spoken to Mr. Morrison early in 2015 about the three capital acquisitions. Mr. Morrison did not recall that. The evidence on that point was inconclusive. Certainly Mr. Böhmer had incurred the loan from Mountain Thunder Logging without Mr. Morrison or NDC's knowledge. [17] In the face of Mr. Böhmer's refusal to address any of the issues, Mr. Morrison, a few minutes later on October 19, presented him with a letter of dismissal for cause. It read as follows: Subject: Notice of Termination with Cause This letter will serve as your formal "Notice of Termination" with just cause effective immediately. Your termination is due to multiple actions undertaken by yourself as "Operations Manager" for Burns Lake Native Logging Ltd. These actions are in serious breach of policy and authorities of Burns Lake Native Logging Ltd and Burns Lake Native Development Corporation and also a serious breach of the "Employee Code of Conduct Policy". Your actions are in breach of authorized authorities as you did not have authority nor approval from the Board of Directors. A letter was issued to you dated October 19, 2015 which outlines these actions/events

and transactions. Your actions involved the securing of a Loan on December 15, 2014, in name of Burns Lake Native Logging Ltd., without the mandatory Board of Directors approval and Board Resolution authorizing the borrowings. Furthermore you have entered into multiple agreements/transactions to purchase/acquire capital assets and/or leases between the dates of December 6, 2014 thru July 28, 2015. You actions are a serious contravention of the Finance and Capital acquisition policies and procedures. Your actions were done with blatant disregard of the Policies and procedures that are to be adhered to as per the "Operation Manager's position mandate. Your actions are a serious breach of your job duty responsibilities and authorities, and you have created unauthorized debt on Burns Lake Native Logging Ltd. You have held your position since 1997, as operations manager and were fully aware of the policies and procedures. Given your actions, and evidence of these unauthorized borrowings and unauthorized capital acquisitions, you are hereby "Terminated with Just Cause". We advise that your benefits package will be terminated as of your termination date. You are requested to return all company property and corporate documents and items in your possession including: Chevrolet Pickup and pick up keys Office Keys and any Company keys in your possession Corporate Visa Card Corporate Visa

Card Fuel Card and any additional cards and pass codes Cell Phone & Charger Mobile radios & Chargers Any other misc portable equipment you may have [18] If matters had ended there, this case, in my view, would be difficult to resolve. Also, if matters had ended there, I would devote greater space in these reasons than I am going to, in analyzing the four complaints against Mr. Böhmer addressed in both of the October 19 letters. While it was clear from the evidence of NDC witnesses that NDC and Mr. Morrison honoured the Native Logging and NDC Financial Procedure Manuals to the letter, the reality was that NDC and Mr. Morrison had given virtually no guidance or direction to Mr. Böhmer on any aspect of running Native Logging for several years. NDC and Native Logging had been short of money since at least 2012, with the result that the NDC office ran with reduced staff working only half‑time. In reality, Mr. Böhmer was then on his own. [19] I would have difficulty concluding that Mr. Böhmer was lawfully dismissed for cause based on the case against him in the October 19 letters. The exceptional working relationship, or lack of relationship, he had with Mr. Morrison and NDC forced him to do what he thought best for Native Logging, and I am satisfied that in his 18 years with the company, he nearly always did what he sincerely believed was in Native Logging's best interests. The

Financial Procedure Manuals show that he should have obtained permission for the loan and the capital acquisitions, but the evidence does not demonstrate clearly to me that the requirements in the manuals were treated between 2012 and 2015 as governing Mr. Böhmer or Native Logging. If the case ended with the facts stated above, I would have been inclined to employ the reasoning of the Supreme Court of Canada in McKinley v. BC Tel, 2001 SCC 38, and find that Mr. Böhmer's instances of non‑compliance with the Manuals, if they can in any way be construed as a form of dishonesty, did not, objectively viewed, give rise to a breakdown in the employment relationship. [20] However, the facts of this case did not end with the October 19 letters or the allegations they contained. [21] After Mr. Böhmer left his employment on October 19, 2015, NDC learned of three events which, probably individually, and certainly when taken together, warrant his dismissal for cause. [22] I will come to those three events in a moment, but I say first that I am satisfied Native Logging and NDC did not know of them on October 19, 2015, and only came to learn of them afterward, when reviewing their records relevant to Mr. Böhmer. [23] Courts scrutinize so‑called after‑acquired grounds for dismissal, as they should, because they can amount to allegations which are trumped up to some extent in order to justify

the dismissal when there is little substance to them, and when the employer knew or should have known of them before. I am satisfied that such concerns are not present here. Indeed, the three after‑acquired grounds for dismissal were unknown to Native Logging and NDC because of the reality I described earlier, that Mr. Böhmer was largely left alone to run Native Logging as though it were his own operation. [24] The first of the three grounds is a pay raise Mr. Böhmer gave himself. By June 2, 2014, he had not had a pay raise in approximately three years. He completed a memorandum for himself at that time entitled, "Employee Rate Change". He provided it to the controller. She testified at trial on Mr. Böhmer's behalf. Mr. Böhmer attempted to explain matters by saying that dealing with the controller about this was enough. Initially, at least from reading the June 2, 2014, memorandum, Mr. Böhmer was going to increase his salary to $3,948 per pay period, which would have been a raise annually to $94,752. However, he appears on the document and from his testimony to have finally decided on a lesser raise of six percent, which the controller helped him calculate as a change from $3,114 to $3,301 every two weeks, to be effective six months later, January 1, 2015. That is when it came into effect, in fact. Mr. Böhmer can take no comfort from having worked on this with the controller,

as if she was an agent of the employer or the board. From the evidence, it is clear that the controller did not view herself in that role and nor did Mr. Böhmer. The controller reported to Mr. Böhmer. She respected him, and helped him with the pay raise solely in a clerical role on his behalf. Neither she nor Mr. Böhmer ever told anyone about the raise. Mr. Böhmer never sought permission from the general manager or anyone at NDC to obtain the raise, nor did he alert them of it by memorandum or conversation at any time afterward. The raise was taken by Mr. Böhmer at a time when he knew, and it was widely known at both companies, that money was scarce and layoffs might be necessary. [25] The second of the three grounds stems from Mr. Böhmer paying himself what I will call a bonus. In September of 2014, he made a lump sum payment to himself of $6,475. In his direct examination, he denied receiving any such payment. He was challenged on cross-examination. He then adamantly denied having received any kind of bonus payment. However, his examination for discovery transcript was put to him, in which he gave the following evidence. He did recall authorizing a bonus for himself, although he did not remember when. The bonus was apparently for extra work done by Native Logging on behalf of other entities. Mr. Böhmer did not remember how he decided on the amount of the bonus. He relied on

the January 2013 letter, referred to above at para. [12] of these reasons, for his authority to award himself a bonus, and he said that the only limit on his authority was what he thought was fair. [26] After being confronted with that discovery evidence, Mr. Böhmer continued to deny having received any kind of payment in September 2014, even when provided with particulars of the specific event leading to the payment, which was work completed by Native Logging fighting a forest fire in August 2014. [27] Mr. Böhmer was confronted at trial with payroll documents showing that he had in fact received the $6,475 payment. He admitted that the payment to himself was related to work done by Native Logging on the forest fire. He admitted further in cross-examination that Native Logging had a firefighting contract, that he was not paid by the hour, and that he "self‑authorized" the payment to himself after speaking to the same controller who processed his raise. He admitted that he received his regular salary at that time as well, and that at no time did he inform the board or Mr. Morrison of this additional payment of $6,475, or seek to obtain their approval in arranging it. [28] The bonus payment which Mr. Böhmer authorized himself would otherwise have been general revenue to Native Logging from the contract Native Logging had entered into to provide firefighting services. [29] The

third of the three additional grounds arose because Mr. Böhmer, on January 8, 2015, used Native Logging money and equipment to buy an all‑terrain vehicle (ATV), apparently for himself, at a total cost to Native Logging of $10,615. He registered the ATV in his own name. He said the government practice or law at the time required that such vehicles be registered in a person's name and not a company's name. Native Logging called an insurance salesman to negate that evidence. Her testimony was equivocal, because she was unclear, and gave largely hearsay evidence. I am left wondering why the ATV could not have been registered in Native Logging's name, but that mystery remains less than fully solved. Mr. Böhmer kept the ATV at his house. He said he did that to protect it from thieves at the Native Logging site, but other smaller pieces of Native Logging equipment vulnerable to thieves were kept at the Native Logging site. Mr. Böhmer used the ATV for his own use, at least to some extent for hunting. After his dismissal, he did not contact Native Logging to say he had their ATV. The company discovered that there was an ATV which was missing six months after Mr. Böhmer's dismissal. They contacted him then and retrieved it. Until then, Mr. Böhmer had never notified the general manager or NDC that he had the ATV, and he had never obtained approval to buy it or keep it. [30] In my view,

each of the first two after‑acquired grounds for dismissal with cause, the pay raise and the bonus, individually constitute lawful grounds for dismissal. The third ground probably does as well, but I also add it to the other two grounds as cumulatively also justifying dismissal for cause. [31] No employee can obtain a raise or a bonus without the employer's approval. To do so deprives the employer of its money, without the employer's knowledge. Whether the raise or bonus is deserved is beside the point. Either or both of the payments may have been deserved in Mr. Böhmer's case. The employee must still have permission before taking the money or else it is really a form of theft or fraud. [32] Going back to the reasoning in McKinley v. BC Tel, cited earlier, the wrongful taking of the money gave rise to a breakdown of the employment relationship in this case. Of course, the facts of each case must be examined, and there may somehow be a case where an unauthorized raise or bonus could be legally rationalized. It is hard to imagine such a case, and there is nothing in the facts at bar to bring this case into that strange hypothetical circumstance. [33] With regard to the ATV, I cannot accept Mr. Böhmer's protestations of innocence. Had he taken any initiative after his dismissal to return it, the conclusion might be different, but that is not what happened. [34] The authorities are

uniform in necessitating Mr. Böhmer's dismissal. The essential principles include the following. [35] The test for just cause for summary dismissal is an objective one, viewed through the lens of a reasonable employer, taking into account all the relevant circumstances. The court must ask, is the misconduct something a reasonable employer could not be expected to overlook, having regard to the nature and circumstances of the employment. In other words, did the misconduct violate an essential condition of the employment contract, breach the faith inherent to the work relationship, or was it fundamentally or directly inconsistent with the employee's obligations to the employer. See Roe v. British Columbia Ferry Services Ltd., 2015 BCCA 1; and Lewis v. M3 Steel (Kamloops) Ltd., 2006 BCSC 681 at para. 25. [36] The court is entitled to consider the cumulative effect of an employee's misconduct in conducting the so‑called contextual analysis mandated by McKinley: see Ogden v. Canadian Imperial Bank of Commerce, 2015 BCCA 175 at para. 27. [37] This Court and our Court of Appeal have held repeatedly that the nature and degree of an employee's misconduct is exacerbated when the dismissed employee was a person in a senior position in the organization, entrusted with significant responsibility. Such employees are held to a higher standard of conduct: see Roe, cited earlier; Durand v.

Quaker Oats of Canada Ltd. (1990), 45 B.C.L.R. (2d) 354 (C.A.); Jewitt v. Prism Resources Ltd. (1980), 110 D.L.R. (3d) 713 (S.C.), affirmed (1981), 127 D.L.R. (3d) 190 (B.C.C.A.); and Steel v. Coast Capital Savings Credit Union, 2015 BCCA 127. [38] Employees who work with greater autonomy are also held to a higher standard of trust. The greater the autonomy, the more fundamental the trust becomes to the employment relationship: see Steel, cited above, at para. 9 in Steel. [39] Misappropriation of company funds for personal gain is fraud, and is cause for summary dismissal: see Echlin and Certosimo, Just Cause: The Law of Summary Dismissal in Canada, (Toronto) Canada Law Book 2017 at 11-13. [40] It is no answer for Mr. Böhmer that he honestly believed the bonus and raise were reasonable in all the circumstances. They may have been, but companies could not function if senior managers were permitted to help themselves to secret pay raises. A case, the facts of which bear some similarity to those at bar, addressed that problem: see MacDonald v. Tamitik Status of Women Association, [1998] B.C.J. No. 2709 (S.C.) at paras. 73-76. [41] In conclusion, Mr. Böhmer was dismissed for just cause based on the three after‑acquired grounds as set out above in these reasons. I do not find it necessary to determine the appropriate damages as if Mr. Böhmer had been dismissed without just cause. [42] Subject to hearing submissions from the parties, Native Logging is entitled to its party‑and‑party costs at the ordinary scale. "MACINTOSH J."