Fiske v. Nova Scotia (Attorney General)

Fiske v. Nova Scotia (Attorney General) Court Supreme Court Date 2001-07-09 Citation 2001 NSSC 99 Docket SH 147164 Judge/Registrar/Adjudicator Gruchy, David W. (Honourable Justice) Document Type Decision Relations Library Sheet - Fiske v. Nova Scotia (Attorney General) - 2001 NSSC 99 - 2001-07-09 - Library Sheet Decision Content Date: 2001/07/09 Docket: S.H. No. 147164 IN THE SUPREME COURT OF NOVA SCOTIA [Cite as: Fiske v. Nova Scotia (Attorney General), 2001 NSSC 99] BETWEEN: RALPH F. FISKE PLAINTIFF - and - THE ATTORNEY GENERAL OF NOVA SCOTIA, representing HER MAJESTY THE QUEEN in right of the Province of NOVA SCOTIA and THE NOVA SCOTIA GAMING CORPORATION DEFENDANTS D E C I S I O N HEARD BEFORE: The Honourable Justice David W. Gruchy PLACE HEARD: Halifax, Nova Scotia DATES HEARD: May 8, 9, 10, 11, 12, 15, 16, 17, 18, 19, 23, 24, 25, 26, 2000; June 15, 16, 20, 21, 22, 26, 27, 28, 29, 30, 2000; September 11, 12, 13, 14, 15, 18, 19, 20, 21, 25, 26, 27, 28, 2000; January 2, 3, 4, 5, 8, 9, 10, 11, 12, 2001 DECISION: July 9, 2001 COUNSEL: Bruce MacIntosh, Q.C. & Joel Sellers for the plaintiff Robert Barnes, Q.C., Brian Curry & Colleen Keyes for the defendants GRUCHY, J.: In view of the length of the following and the number of issues to be addressed, this decision will be set forth as follows: I – INTRODUCTION II – BACKGROUND III – RALPH FISKE IV – FISKE'S APPOINTMENT V – SHERATON VI – "CONDUCT AND MANAGE" VII – SKETCH OF FISKE'S TENURE VIII – CONSTRUCTIVE DISMISSAL IX – FISKE – THE HONOURABLE MR. GILLIS X – FISKE/ PREMIER RUSSELL MACLELLAN XI – SUMMARY RE WRONGFUL DISMISSAL XII – DAMAGES – AGGRAVATED/PUNITIVE/EXEMPLARY XIII – MITIGATION XIV – CREDIBILITY XV – CONCLUSION I – INTRODUCTION [1] On February 23, 1995, the plaintiff Ralph Fiske (Fiske) was appointed by Order-in-Council as Chairman of the Nova Scotia Gaming Corporation (the Corporation). On September 30, 1997, Fiske tendered his resignation to be effective October 3, 1997. He claims to have been constructively dismissed by or through the actions of the Corporation and the Government of Nova Scotia. [2] A 46-day trial has been held during which over 500 documentary exhibits were filed. The defendants have filed a 297-page post-trial brief; the plaintiff has filed a 1,674-page post-trial brief, consisting of a brief, a "partial chronology" of events and a "summary" of and comments concerning witnesses' testimony. The defendants replied in a 158-page brief. The plaintiff requested leave to file a further brief, which request I refused. II– BACKGROUND [3] In or about 1974, provincially controlled casino gambling became legally possible in Canada as a result of an amendment to the Criminal Code of Canada, as follows: 207.(1) Permitted lotteries – Notwithstanding any of the provisions of this Part relating to gaming and betting, it is lawful (a) for the government of a province, either alone or in conjunction with the government of another province, to conduct and manage a lottery scheme in that province, or in that and the other province, in accordance with any law enacted by the legislature of that province; . . . (3) Offence – Every one who, for the purpose of a lottery scheme, does anything that is not authorized by or pursuant to a provision of this section (a) in the case of the conduct, management or operation of that lottery scheme (i) is guilty of an indictable offence and liable to imprisonment for a term not exceeding two years, or (ii) is guilty of an offence punishable on summary conviction; or (b) in the case of participating in that lottery scheme, is guilty of an offence punishable on summary conviction. (4) Definition of "lottery scheme"– In this section, "lottery scheme" means a game or any proposal, scheme, plan, means, device, contrivance or operation described in any of paragraphs 206(1)(a) to (g), whether or not it involves betting, pool selling or a pool system of betting other than (a) three-card monte, punch board or coin table; (b) bookmaking, pool selling or the making or recording of bets, including bets made through the agency of a pool or pari-mutuel system, on any race or fight, or on a single sport event or athletic contest; or (c) for the purposes of paragraphs (1)(b) to (f), a game or proposal, scheme, plan, means, device, contrivance or operation described in any of paragraphs 206(1)(a) to (g) that is operated on or through a computer, video device or slot machine, within the meaning of subsection 198(3), or a dice game. [4] In 1993, the Province of Nova Scotia became interested in taking advantage of the opportunities afforded by the Criminal Code. The financial rewards in participating in regulated gambling were very attractive. The Minister of Finance of the Province of Nova Scotia was then the Honourable Bernie Boudreau and he actively pursued the matter of casino gambling on behalf of the Province. [5] The subject of legalized gambling was (and is) a highly controversial subject and religious and other public interest groups participated in debating it. The Province of Nova Scotia commissioned a task force to investigate the matter and to make a report and recommendations to government on the subject. This task force was headed by a former mayor of the County of Halifax, Lazlo Lichter, who in due course reported to the government. The Province accepted the Lichter report while acknowledging concerns about potential criminal behaviour which might become associated with gambling. [6] The Lichter report made recommendations which led the Province's enactment of the Gaming Control Act, S.N.S. 1994-95, c.4. In examining the subject of casino gambling, the Province accepted Lichter's expressed concern about the potential for criminal activity. Premier Savage was so concerned about this matter that he threatened to fire any of his Cabinet Ministers who had communication with applicants who were interested in setting up a casino. [7] It was clear by virtue of s.207 of the Criminal Code that it was incumbent upon the Province to conduct and manage any gambling venture. [8] After the Province had studied the subject of gambling, proposals were invited for the construction and operation of casinos in Halifax and Sydney and at the same time the Legislature enacted the Gaming Control Act. [9] The scheme of the Act is that two bodies were created – The Gaming Control Commission and the Nova Scotia Gaming Corporation. The Commission was given certain autonomous and quasi-judicial powers and authority, which need not concern us. The Corporation was assigned certain objects, duties and powers including the right to contract for the operation of a casino. It was clear by the legislation that while the Corporation was to have a large degree of independence in its operation the Cabinet (variously referred to as "The Governor- in-Council", or the Executive Council) would have overriding ultimate authority in the activities of the Corporation as found in the following provisions of the Act: Purpose of Act 2 The purpose of this Act is to (a) establish a framework for conducting, managing, controlling and regulating casinos and other lottery schemes so as to increase the level of sustainable economic activity within the Province and increase the net revenue of the Province; (b) ensure that casinos and other lottery schemes are conducted in a socially responsible manner; and (c) ensure that any measures taken with respect to casinos and other lottery schemes are undertaken for the public good and in the best interests of the public and, without limiting the generality of the foregoing, to minimize the opportunities that give rise to problem gambling and other illnesses, crime and social disruption. 1994-95, c.4, s.2. . . . Objects of Corporation 10 The objects of the Corporation are to (a) develop, undertake, organize, conduct and manage casinos and other lottery schemes on behalf of the Province or on behalf of the Province and another province of Canada; (b) provide for the operation of casinos and any business that the Corporation considers reasonably related to operating a casino, including any business that offers goods or services to persons playing games of chance in a casino; (c) ensure that lottery schemes conducted and managed by the Corporation are conducted and managed in accordance with the Criminal Code (Canada) and this Act and regulations; and (d) do such other things in respect of lottery schemes, as the Minister or the Governor in Council may from time to time require. 1994-95, c.4, s.10. . . . Duties of Corporation 24 (1) The Corporation shall (a) subject to this Act and the regulations, comply with any direction given to it by the Governor in Council; (b) conduct and manage casinos and other lottery schemes in accordance with this Act and the regulations and the Criminal Code (Canada); (c) post in a prominent place in every casino a copy of the rules of play for games of chance as approved pursuant to Part II and, as prescribed by the regulations, make the rules available to the public; (d) ensure that proper security clearance is given in accordance with the regulations for each member of the Board and the Chief Executive Officer and each other officer and employee of the Corporation; (e) report forthwith to the Minister and the Commission any defect, abuse, illegality or criminal activity in relation to casinos and other lottery schemes; and (f) submit annually to the Minister a report respecting the administration, operation and management by or on behalf of the Corporation of casinos or other lottery schemes in the Province, including the matters referred to in clause (e). Tabling of report (2) Within sixty days of receiving the report referred to in clause (1)(f), the Minister shall table in it the House of Assembly or, if the Assembly is not then sitting, with the Clerk of the Assembly. 1994-95, c.4, s.24. Powers of Corporation 25 (1) Subject to this Act and the regulations, the Corporation has all of the capacity, rights, powers and privileges of a natural person necessary to carry out its objects in accordance with this Act and the regulations and, without limiting the generality of the foregoing, the Corporation may (a) with the approval of the Governor in Council, develop, undertake, organize, conduct and manage lottery schemes on behalf of the Government of the Province or on behalf of the Government of the Province and the government of another province of Canada; (b) with the approval of the Governor in Council, enter into an agreement with a person to operate a casino or other lottery scheme on behalf of the Corporation upon such terms and conditions as the Governor in Council determines; (c) with the approval of the Governor in Council, enter into an agreement with a person to develop, undertake, organize, conduct and manage a lottery scheme or with the Government of Canada or the government of another province of Canada, or an agent of either of them; (d) with the approval of the Governor in Council, enter into an agreement for the purpose of this Act with the Government of Canada, the government of another province of Canada or a municipality, or a department or agent of any of them; (e) with the approval of the Governor in Council, enter into an agreement with a government of another province of Canada, or an agency thereof, to incorporate a body to undertake, conduct and manage a lottery scheme on behalf of the Corporation and that government; (f) subject to this Act and the regulations, enter into any other agreement that the Board considers necessary to carry out its objects; (g) conduct and manage lottery schemes within the Province and another province of Canada pursuant to an agreement; (h) establish bank accounts; (i) make payments to trust or special funds as authorized by this Act and the regulations; (j) subject to this Act and the regulations, make by-laws for the management of its affairs including, without restricting the generality of the foregoing, rules for the conduct of the meetings of the Board, the use of its seal, the execution of documents by the Corporation and the establishment of committees. [10] The political scheme of the Act with respect to the Corporation was to serve two objectives of concern herein: (1) to allow the Province to conduct and manage casinos within the confines of the Criminal Code – an authority which clearly could not be delegated to private enterprise except as an agent of the Province; and (2) to insulate the members of the Legislature of the time, under Premier John Savage who expressed clearly that Cabinet Ministers were not to be directly involved in the establishment of casino operations. III – RALPH FISKE [11] Fiske is now 69 years of age. He had been a highly successful real estate developer and entrepreneur. He had been actively involved in politics and had served as a Cabinet Minister under Premier Gerald Regan in 1970-1973. He ultimately resigned from his Cabinet post and government as a result of his resistance to continue to fund the financially failing Sydney Steel Mill. He had actively participated in numerous community and charitable activities. [12] Fiske had long seen the financial potential for a casino business in Halifax. He had looked into the matter even before the Province actively pursued the subject. When the Province publicly indicated its interest in the possibility of developing casinos, Fiske thought he saw a business opportunity for himself. He investigated the possibility of obtaining a site for a casino and formed an alliance with British interests whom he considered to be experts in the field. As a result of these activities Fiske gained knowledge of the business of gambling. [13] All witnesses who addressed the matter of Fiske's reputation agreed that his honesty and integrity were beyond reproach. [14] Prior to the Government's call for proposals for the establishment of a casino in Halifax Fiske's activity towards developing such a casino had reached the point of acquiring an option to lease space in the Halifax World Trade and Convention Centre with a view to establishing a casino there. He testified that the Province in actively planning the development of a casino arranged to cancel or revoke his option. He decided not to proceed with any proposal on his own. [15] After the Lichter Report had been presented and accepted, active planning for the passage of the Gaming Control Act continued. Fiske, of course, was familiar with the political process and became familiar with the Act. In August, 1994, he was approached by Premier Savage to see if he was interested in becoming the Chairman of the proposed Corporation. Fiske and Dr. Savage had a number of discussions about the matter before Fiske accepted the position. [16] Fiske said, and I accept, that Dr. Savage emphasized that he had been selected because of his reputation for honesty and integrity. The Premier expressed his concern about the potential for criminal elements in gambling matters and promised broad operational independence both for Fiske and for the Corporation. I find as a fact that such a promise was made. Premier Savage told Fiske that lobbying of members of Government was prohibited. Fiske said that he was promised access at all times to the Minister of Finance, then Bernie Boudreau, who had been the moving force behind the casino concept and to the Premier himself. Fiske said he was fully briefed on the necessity for very careful supervision of all aspects of gambling and in the establishment of a casino. [17] In recent years Fiske has suffered from failing physical health and during trial required some assistance in reading. However, he remains mentally alert and keen as he amply demonstrated during his testimony before me. IV– FISKE'S APPOINTMENT [18] On February 23, 1995, the Order-in-Council by which Fiske was appointed Chairman of the Nova Scotia Gaming Corporation was passed and it read as follows: 95-146 The Governor in Council on the report and recommendation of the Minister of Finance dated February 9, 1995, pursuant to Sections 8, 12, 13 and 15 of Chapter 4 of the Acts of 1994-95, the Gaming Control Act, is pleased to. (a) appoint the following persons as members of the Board of Directors of the Nova Scotia Gaming Corporation, each to hold office for a term commencing February 15, 1995 and not to exceed February 15, 2000: Robert A. Cordy of Dartmouth, Halifax County; Ralph F. Fiske of Halifax, Halifax County; Marilyn L. Gaudet of Fall River, Halifax County; Dara L. Gordon of Musquodoboit Harbour, Halifax County; and R. Glenn Hynes, C.A. of Bedford, Halifax County, see 97-113 (b) appoint Ralph F. Fiske of Halifax, Halifax County, to be Chair of the Board of Directors of the Nova Scotia Gaming Corporation to hold such office for a term not to exceed February 15, 2000; (c) appoint Dara L. Gordon of Musquodoboit Harbour, Halifax County to be Vice-chair of the Board of Directors of the Nova Scotia Gaming Corporation to hold such office for a term not to exceed February 15, 2000; (d) determine the remuneration for the Chair of the Board of Directors of the Nova Scotia Gaming Corporation to be commensurate with the salary authorized for a judge of the Provincial Court under the Provincial Court Act; (e) determine the remuneration for the Vice-chair of the Board of Directors of the Nova Scotia Gaming Corporation to be $400.00 per day while conducting the business of the Corporation; and (f) determine the remuneration for members of the Board of Directors of the Nova Scotia Gaming Corporation to be $250.00 per day while conducting the business of the Corporation. BRENDA SHANNON CLERK OF THE EXECUTIVE COUNCIL [19] Fiske, Mr. Boudreau and Ms. Gordon said they assumed this appointment was for a fixed term of five years although Ms. Gordon said that during these proceedings she re-examined her appointment when she realized it was for a term "not to exceed the five years not to exceed February 15, 2000". The defendants have submitted that the appointment was "at pleasure" only and therefore Fiske could have been dismissed at any time without notice. [20] Sections 12(2) and 13(1) of the Act addressed the matter of appointments as follows: Term of office (2) A member of the Board holds office for such term, not exceeding five years, as the Governor in Council determines. . . . Chair and Vice-chair 13 (1) The Governor in Council shall appoint one of the members of the Board to be its Chair and one member to be its Vice-chair. [21] The recommendation to Cabinet for Fiske's appointment read as follows: Term of appointment – February 15, 1995 (date of beginning) to not to exceed five years. [22] In the interpretation of Fiske's appointment it is also necessary to consider provisions of the Interpretation Act, R.S.N.S. 1989, c.235. Section 17 and 18 of that Act provide as follows: Term of office of public officer 17 Except when otherwise expressed in the enactment or in his commission or appointment, a public officer, appointed before or after this Act comes into force under authority of an enactment or otherwise, holds office during pleasure only. R.S., c.235, s.17. Implied power respecting public officer 18 (1) Words authorizing the appointment of a public officer include the power of (a) removing or suspending him; (b) reappointing or reinstating him; (c) appointing another in his stead or to act in his stead; and (d) fixing his remuneration and varying or terminating it, in the discretion of the authority in whom power of appointment is vested. Successor and deputy to public officer (2) Words directing or empowering a public officer to do any act or thing, or otherwise applying to him by his name of office, include his successors in the office and his or their deputy. . . . Power to be exercised by holder of office (4) Where a power is conferred or a duty imposed on the holder of an office as such, the power may be exercised and the duty shall be performed by the person for the time being charged with the execution of the powers and duties of the office. R.S., c.235, s.18; revision corrected 1998. [23] The plaintiff's position is that he was employed by the defendants under a contract of employment which was for a fixed five-year term. Accordingly, the plaintiff says that in the event of premature termination of such term contract without just cause or upon being constructively dismissed, he is entitled to claim all remuneration and benefits he would have received for the unexpired portion of the term, subject to the duty to mitigate. (see: Glover v. SNC Lavalin Inc. (1998), 229 A.R. 41 (Alta, Q.B.) and Burton v. Howlett (1999), 178 N.S.R. (2d) 325 (N.S.S.C.)) [24] Having reviewed the evidence of Dr. Savage, Mr. Boudreau, Mr. Bill Gillis who replaced Mr. Boudreau as Minister of Finance and Ms. Gordon there is no doubt these active participants in Fiske's appointment and tenure had considered it was for a fixed term of five years. [25] The defendants rely on the historic common law that Crown employees serve at pleasure and may be dismissed at any time. See Halsbury's Laws of England, Vol. 8, 4th ed. (London: Butterworths 1974) at para. 1106: 1106. Tenure of office. Except where it is otherwise provided by statute, all public officers and servants of the Crown hold their appointments at the pleasure of the Crown, and all, in general, are subject to dismissal at any time without cause assigned. [26] The defendants further cite as authority Harris, Wrongful Dismissal (Toronto: Carswell) at 2-28, 2-29. Indeed, the common law appears to have been reflected in the provisions of the Interpretation Act set forth above. The defendants have also referred to McKeen v. Province of New Brunswick (1971), 3 N.B.R. (2d) 418 (N.B.S.C.) and MacEachern v. Nova Scotia (Attorney General) (1987), 83 N.S.R. (2d) 57 at 72 (T.D.). To similar effect was the decision in Malone v. Ontario (1983), 45 O.R. (2d) 206 (Ont. H.C.J.) and Lethbridge v. Newfoundland (Minister of Health) (1992), 103 Nfld. & P.E.I.R. 13 (Nfld. S.C.T.D.). Chipman, J.A. also addressed the subject in McNaughton v. Nova Scotia (Attorney General) (1993), 121 N.S.R. (2d) 232 (N.S.C.A.) and Boudreau, J. examined the subject in Furey v. Nova Scotia (Attorney General) (1995), 144 N.S.R. (2d) 58 (N.S.S.C.). [27] The plaintiff, however, refers to the more recent decision of the Supreme Court of Canada in Wells v. Newfoundland, [1999] 3 S.C.R. 199. In the latter case, Major J. said at para. 22: A common-sense view of what it means to work for the government suggests that these relationships have all the hallmarks of contract. There are negotiations leading to agreement and employment. This gives rise to enforceable obligations on both sides. The Crown is acting much as an ordinary citizen would, engaging in mutually beneficial commercial relations with individual and corporate actors. Although the Crown may have statutory guidelines, the result is still a contract of employment. And at para.29: In my opinion, it is time to remove uncertainty and confirm that the law regarding senior civil servants accords with the contemporary understanding of the state's role and obligations in its dealings with employees. Employment in the civil service is not feudal servitude. And at para.30 Justice Major said: As Beetz J. clearly observed in Labrecque, supra, the common law views mutually agreed employment relationships through the lens of contract. This undeniably is the way virtually everyone dealing with the Crown sees it. While the terms and conditions of the contract may be dictated, in whole or in part, by statute, the employment relationship remains a contract in substance and the general law of contract will apply unless specifically superceded by explicit terms in the statute or the agreement. [28] I have set forth above the provisions of s.17 of the Interpretation Act. I have also set forth above the precise terms and conditions expressed in the order of Council whereby Fiske was appointed. I have also considered the recommendation to Cabinet whereby Fiske was ultimately appointed. [29] I consider the phrase "... to hold office for a term commencing February 15, 1995 and not to exceed February 15, 2000" constitutes a fixed term. Similarly, Fiske's appointment as Chair of the Board of Directors, ... "to hold such office for a term not to exceed February 15, 2000", when read in conjunction with the general appointment of all the members of the Board constitutes a fixed term appointment. The terms of the appointments do not specify that they are for pleasure only. In accordance with my understanding of s.17 of the Interpretation Act, I have concluded that the phrasing of the Order-in-Council falls within the introductory words of s.17 – "except when otherwise expressed". [30] Fiske's term of appointment was for a fixed term of five years, terminating February 15, 2000. [31] Alternatively, I conclude as well that both parties – the Government of Nova Scotia through the Premier and Fiske – considered the appointment was for a term of five years. This understanding was not an implied condition as contemplated in McNaughton v. Nova Scotia (Attorney General) (supra), but was, rather, an express oral term. [32] Alternatively, as well, even if the appointment was at pleasure (and it was not) a dismissal would still have required reasonable notice. In accordance with Wells v. Newfoundland (supra), justice and fairness would require nothing less. V– SHERATON [33] The Province called for proposals for the construction and operation of a casino at Halifax. Various proposals were submitted including one from Metropolitan Entertainment Group (MEG) a corporation involved in the ownership and operation of the Sheraton Hotel in Halifax. That hotel is situated on the Halifax Waterfront and is adjacent to or near certain provincially owned or controlled lands. The company which owned the hotel has gone through various corporate changes and transfers which are not germane to the situation now addressed. For the purposes of this decision I will refer to the corporation which was to build and operate the casino as "the Sheraton" or as "Sheraton". [34] The Province accepted the Sheraton proposal and entered into agreements with that corporation. [35] During the period of Fiske's employment, the Sheraton had offices at Las Vegas, Nevada and at New York City. Throughout that period the Sheraton continued to operate its hotel at Halifax and until a new casino was built, operated a temporary casino in the hotel. VI – "CONDUCT AND MANAGE" [36] Virtually from the first meetings of the Board of Directors in February and March, 1995, there was concern by the Board and Fiske about the meaning of the term "conduct and manage". Fiske recognized the necessity for a precise understanding of that phrase. As noted above, the Criminal Code mandated that it was the provincial responsibility to conduct and manage casinos. The question arose almost immediately when the Board commenced its operation as to the degree of management required when the Province contracted with the Sheraton to operate a casino in the hotel and to construct a $95 million establishment on the lands near the hotel. Questions also arose in this context about the costs the Sheraton was incurring in both these operations. The Province had a guarantee from the Sheraton that it would pay to the Province at least $25 million per year for the first five years of its operation. But questions and disagreements arose early in the relationship between the Corporation and the Sheraton concerning the construction of the new casino, the scheduling of the construction and the non-arm's length transactions involving charges to the construction and/or operation of the temporary casino which might ultimately be charged back to the Province at the end of the guarantee period. [37] Fiske obtained legal opinions as to the precise meaning of the phrase "conduct and manage" from various counsel. He concluded that the advices he received were conflicting. In the meantime there was delay in proceeding with the construction of the permanent casino. [38] The Sheraton objected strenuously to the Corporation's alleged "micro-managing" of the operations and budgeting and relations between the Corporation and the Sheraton deteriorated significantly. [39] A review of the documentary evidence shows that Fiske found himself treading a fine line between the duty imposed upon the Corporation by ss.10 and 24(b) of the Act (supra) and the various advices he had received from lawyers Peter MacKeigan, James Spurr and Noella Fisher. For the purposes of my decision it is not necessary to enquire into the correctness of any of these opinions (or later opinions), but merely to recognize the dilemma thrust upon Fiske as Chairman of the Board of Directors and in his role as chief executive officer. [40] Similarly, Fiske and staff members of the Corporation were required to maintain tight financial controls over the Sheraton by virtue of the operating contract between the Province and the Sheraton dated May 31, 1995. Again, I do not see that it is necessary for me to review the precise provisions of the operating contract or to make judgment as to whether the Sheraton properly complied with these requirements; all that is necessary for the purposes of this decision is to determine whether Fiske's concerns appear to have been reasonable and whether they were within the mandated duties of the Corporation. [41] In order to understand Fiske's eventual position taken with the Sheraton and ultimately with Premier Savage and his successor, Premier MacLellan, I will review briefly some of the aspects of his dilemma. [42] By the end of July, 1995, Ms. Sheila Butler was hired as the Director of Finance of the Corporation. By the end of August, 1995, the relations between Sheraton and the Corporation deteriorated further as the Sheraton objected to providing the detailed information requested by Ms. Butler. In the meantime, the Sheraton requested delay in the construction schedule for the permanent facility and this as well created a tension between the parties. [43] In October Ms. Butler objected to a pro forma budget presented by Sheraton in 1994 and requested additional information. This request also was resisted. [44] By November 23, 1995, Fiske, on behalf of the Board, had requested the opinion of Edwin Harris, Q.C. concerning possible violations by the Sheraton of the operating agreement. Mr. Harris gave an opinion to the effect that the Sheraton was in violation of the agreement. [45] In October, 1995, Fiske and the Minister of Finance, Bernie Boudreau, travelled to Las Vegas, Nevada, to discuss, amongst other things, a possible extension of the building schedule. I will deal more fully with this subject below, but ultimately Mr. Boudreau announced in public that he had approved a six-month extension for submission of casino design documents as required by contract. On October 25, 1995, as is apparent from the notes of the meeting, the Board took Fiske to task for allowing the extension which was apparently granted by the Minister without the Board of Directors' recommendation and for losing an opportunity to extract consideration from the Sheraton for that extension. The notes also indicate the Board felt it was important not to make the Board look ineffective and such an occurrence was not to happen again. [46] In juxtaposition with the Board's admonition to Fiske, however, the then civil servant solicitor for the Board, James Spurr, by letter dated November 27, 1995, reminded Fiske that pursuant to s.7 of the Act the Minister has the general supervision and management of Part I of the Act. Mr. Spurr concluded his advice to Fiske as follows: In particular, the Board of Directors of the Corporation should be under no illusion that it operates independently and to the exclusion of a general supervisory power of the Minister responsible for Part I of the Act, being the Minister of Finance. [47] As well, as evidenced by Fiske's personal notes, on December 4, 1995, Sheraton staff reported to him that Mr. Spurr had complained Sheila Butler was "too aggressive". [48] On December 5, 1995, problems developed between the Corporation and the Sheraton concerning Sheraton's claim for salaries and benefits to be charged to the capital cost of the Casino and which Ms. Butler thought might ultimately be charged to the Province after the expiration of the guarantee period. [49] By January, 1996, Fiske apparently perceived that he and the Board had received conflicting advice from Messrs. Harris and Spurr. For this and other reasons he recommended that the Corporation no longer be required to use the Civil Service designate Mr. Spurr and to retain Edwin Harris, Q.C. [50] During January of 1996, the interpretation of "conduct and manage" continued to be a sore point between the Corporation and the Sheraton. On February 7, 1996, the Board met Mr. Harris who reviewed his opinion of the concept of "conduct and manage" as mandated by the Criminal Code and as reflected in the Gaming Control Act. Mr. Harris explained to the Board the proper role of the Corporation and the requirement to monitor and review the operations of the Sheraton to ensure that the casinos are operated correctly from a financial and public policy point of view and in particular that profits are properly calculated. Mr. Harris suggested that the Corporation should take particular interest in non arm's length or related party transactions. Mr. Harris further indicated that he had participated in advising the Corporation's staff of their role and he was satisfied the level of involvement by staff was consistent with that of a reasonable principal in the circumstances. [51] Despite this advice, it is clear that Sheraton continued to complain about the "micro-managing" by the Corporation. [52] From a review of the minutes of the Board of Directors exhibited herein and of the various correspondence amongst the solicitors, it is obvious that the precise meaning of the phrase "conduct and manage" and its practical implications remained a contentious item between the Corporation and the Sheraton, and particularly for Fiske, until Fiske's eventual resignation. Eventually the relationship between the Corporation and the Sheraton deteriorated to such a degree that the staff of the Sheraton was forbidden to give any information directly to the Corporation and all information had to be funnelled through the Sheraton's legal counsel in Nevada. I find that one of the major underlying causes for this deteriorated relationship was precisely as Fiske had recognized it – the interpretation and the meaning of the phrase and its practical application. It is also clear, and I find that the agreements between the Province and the Sheraton failed to address properly what, in hindsight, was a major difficulty. [53] Fiske's major concern arising from the phrase was for the long-term. With the guarantee of at least $25 million per year for five years the short-term financial effects of a failure to conduct and manage closely (or micromanage) were not immediately obvious. But Fiske was concerned, upon the advice of Sheila Butler, that the attribution of expenses incurred by the Sheraton in the conducting and managing of the interim casino and of the long-term capital costs of a permanent casino would ultimately be of vital importance as the Sheraton would be able to recapture those costs after the guarantee period. I do not consider it appropriate for me, in the context of this trial, to judge whether Fiske or Ms. Butler was correct in this assessment and interpretation of the various agreements. Rather, for the purposes of this trial my function is to determine whether Fiske's position appears to have been reasonably held. I find it was reasonable. Accordingly, I also find Fiske was under a practical duty to attempt to bring about a more precise working relationship based on the phrase "conduct and manage" than that which was then in place. As Chairman of the Board Fiske obviously could be overruled by that Board (and was) but as Chairman he was under a duty to attempt to lead the Board. It was also clear by virtue of s.24 of the Act that the Governor-in-Council had the legal right to give to the Corporation "any direction". By virtue of s.25 the Corporation was mandated to carry out its objects and the Governor-in-Council had the overriding authority of approval. [54] Fiske, as Chair of the Board of the Corporation, had a leadership role to play and it was necessary at all times for him to be aware of the need to conduct and manage; that authority was not capable of delegation to the Sheraton. Any purported delegation of that duty, or any such authority assumed by the Sheraton had the potential of running afoul of the Criminal Code. [55] Thus, Fiske had to observe a very thin line between his Board and the Sheraton. In fact, he had to observe that line for the protection of both parties and for the protection of the Province's financial interests. VII – SKETCH OF FISKE'S TENURE [56] While recognizing the risk of repetitiveness, I will chronologically sketch some of the details of Fiske's tenure of office which I feel led eventually to his resignation. Some of the incidents I now mention have already been touched upon and others will be amplified later. Before doing so, however, I emphasize that it is only a sketch. The trial involved the minute examination of what amounted to thousands of pages of documents and correspondence, detailed reviews of minutes of meetings, the notes of participants and the review of many details of Fiske's performance. [57] Fiske was appointed on February 23, 1995. As I have already indicated he quickly recognized potential problems in the Corporation's mandate to "conduct and manage" and obtained legal advice on the matter. In addition to legal advice the Board sought and obtained the advice of the Auditor General of the Province of Nova Scotia. On May 31, 1995, the operating contract between the Sheraton and the Corporation was executed. [58] On July 31, 1995, Sheila Butler was appointed Director of Finance of the Corporation. It is my understanding that she is a Chartered Accountant. [59] During the balance of the summer of 1995, it is clear from the minutes and correspondence, the relationship between the Corporation and Sheraton became difficult. [60] As well, during the early fall of 1995 Sheraton pressed the Corporation for an extension of time for the construction of the casino. [61] As a result of the request for an extension, on October 16, 1995, Fiske and the Honourable Mr. Boudreau, the Minister of Finance, travelled to Las Vegas for meetings with the Sheraton and the Minister agreed to a delay in the scheduled presentation of the construction design documents. I will examine this incident in more detail below. [62] As well, in November of 1995, the poor relationship developing between the Sheraton and the Corporation was the subject of comment by James Spurr, who was then the solicitor for the Board, to Larry Hayes, Q.C., solicitor for the Sheraton. The degree of management to be exercised by the Corporation continued to be a contentious point and was the subject of an opinion from Mr. Spurr to the Corporation. The Sheraton continued to complain about alleged intrusiveness on the part of the Board. [63] In early 1996, Mr. Spurr (then a civil servant) was relieved of his duties as the Corporation's legal counsel and Edwin Harris, Q.C. was retained. He as well advised the Board and Fiske on their functions. [64] During this period Fiske had a friendly professional relationship with William MacInnes, Q.C. who as well represented the Sheraton. Fiske and MacInnes spoke from time to time about the poor relationship between the parties. On March 18, 1996, apparently as a result of a conversation between Mr. MacInnes and Fiske, Mr. MacInnes drafted a proposed memo from Fiske to the Honourable Mr. Boudreau concerning the relationship and delays in construction. A second draft was apparently delivered to Fiske as well, but (and I find) it was never acted upon and never forwarded to Mr. Boudreau. I also find that although the letter arose from a discussion between Fiske and Mr. MacInnes it did not accurately set forth Fiske's views. During trial and preparation for trial this letter became the subject of considerable controversy. [65] In March and April 1996 the Sheraton recognized that it may require a further extension and discussions were held. At the same time it is apparent from the correspondence and minutes that the Sheraton pressed for either a permanent hotel-based casino or possibly a casino much reduced in size from that contemplated in the agreements. [66] In April 1996, Ms. Butler continued to raise questions about the accounting practices of the Sheraton. The Sheraton continued to suggest alternate proposals for the Casino and the Corporation responded consistently that while they were prepared to consider such proposals if they could be shown to be in the best interest of the Province, they continued to hold the Sheraton to its contractual obligations to construct a $97 million casino. It is clear from the correspondence that it would have been financially advantageous to the Sheraton to delay the construction of the permanent casino, thereby profiting its hotel or even to persuade the Province to have a permanent hotel-based casino. [67] On April 30, 1996, the Sheraton presented casino design documents, construction budget and a construction schedule for the permanent casino as required by s.2.02 of the construction contract. The Corporation eventually objected strenuously to the casino design documents, claiming that they were merely "pretty pictures" and had been submitted for the purpose only in pro forma compliance with contractual obligations. This matter eventually became a serious issue between the parties and was one of the subjects for arbitration. [68] Until the Honourable Mr. Boudreau resigned his position as Minister of Finance Fiske maintained a close relationship with him and formally and informally kept him fully informed on all developments. While during the trial there was criticism of Fiske for his close relationship with the Minister I find such criticism was unjustified. The Minister has the general supervision and management of Part I of the Act and therefore Fiske as Chair of the Board, was entirely correct in his relationship with Mr. Boudreau. Similarly, when Mr. Boudreau resigned the position he stayed on as Chair of the Priorities and Planning Committee of the Government and in view of the power of the Governor-in-Council to direct the Corporation, the relationship remained appropriate and desirable for the purpose of keeping Mr. Boudreau informed. [69] On June 27, 1996, the Honourable Mr. Boudreau was appointed the Minister of Health and the Honourable Mr. Gillis was appointed Minister of Finance. [70] In July, 1996, it was clear to Fiske and the Corporation that there was a sufficient number of contentious issues existing between the Corporation and the Sheraton that steps should be taken to resolve them. As the contract provided for a mediation procedure the Board agreed that process should be followed. It was the desire of the Board that all issues then outstanding should be addressed and resolved. [71] It is also clear from the evidence that while Mr. Boudreau had become the Minister of Health he continued, in his capacity as Chairman of Priorities and Planning, to have a professional relationship with Larry Hayes, Q.C. who throughout the period under consideration was the solicitor for the Sheraton. In mid July, 1996, Mr. Boudreau and Mr. Hayes met and discussed a possible alternate casino. On July 16, 1996, Mr. Boudreau wrote a note to Fiske indicating he would be receiving a Sheraton proposal and requesting Fiske to make a presentation to Priorities and Planning concerning this matter. Fiske, apparently, was concerned about the direct involvement between the Sheraton's solicitor and the Minister, as evidenced by a note he wrote to Dara Gordon. At that time, the evidence shows, there was a lot of speculation within the Board and its staff that the Sheraton had an inside relationship with the Government, and hence the concern, particularly in view of the promise to Fiske of operational independence and in view of the objects of the Corporation found in s.10 of the Act. [72] When the Sheraton presented an alternate proposal, on July 18, 1996, Edwin Harris, Q.C. made it clear to Larry Hayes, Q.C. that any dialogue with respect to alternate proposals was without prejudice and did not relieve the Sheraton of any of its contractual obligations. As well, in July the Corporation and the Sheraton had an ongoing dispute concerning the casino design documents. [73] On July 18, the Corporation advised Mr. Hayes that it desired to proceed with the mediation process concerning the dispute about the adequacy of the casino design documents (dubbed "pretty pictures"). [74] On August 6, 1996, the Sheraton provided an alternate proposal whereby there would be a hotel-based casino and the Corporation would buy the hotel over a period of 17 years. The Corporation then considered this proposal and rejected it, while continuing to make it clear that they considered the Sheraton to be bound by the contract to build a permanent casino. The Sheraton continued to press for further consideration of the alternate plan. During this period Fiske expressed concern to Mr. Gillis about a possible "end run" by the Sheraton to Government. [75] On September 17, 1996, the Sheraton expressed a desire to refer all outstanding unresolved issues to arbitration, but on September 18, 1996, the Board considered this matter and resolved to take the matter to mediation, as contemplated by the contract. Fiske kept the Government fully informed through his association with the Finance Minister, Honourable Mr. Gillis, as did Ms. Butler. [76] On October 15, 1996, at the invitation of Robert MacKay, Deputy Minister to Premier Savage, Fiske made a presentation to Priorities and Planning Committee concerning the status of negotiations with Sheraton. As a result of this presentation the Government approved the hiring by the Corporation of a consultant for the assessment of alternate proposals. Eventually the consultant recommended to the Board that they proceed with the original plan of a $97 million permanent casino. [77] From December 9, 1996, to December 13, 1996, the Corporation and the Sheraton took all outstanding issues between the parties to mediation. That effort concluded unsuccessfully. [78] On December 20, 1996, the Sheraton complained by letter to Fiske about "receiving requests for voluminous information that we consider inappropriate and well beyond the scope of our obligations under the Operating Contract." The Sheraton pointed out that by virtue of the agreement it had this "sole and exclusive right to manage and operate the casino complexes". It took the position it was not an agent of the Corporation. The Sheraton continued: This is totally unacceptable to MEG and disruptive to our management of the Casinos. We are, therefore, obliged to advise you that MEG will now only respond to requests for information as required by the terms of the Operating Contract. [79] Later in the same letter the Sheraton said: The constant and seemingly insatiable demands by NSGC for increasingly more detailed information constitute an unwarranted intrusion on our management rights and violate our contractual rights. The Sheraton claimed autonomy in the operation of the Casino, subject only to reporting requirements. [80] It was then obvious that the conflict between the Sheraton and the Corporation centred about the requirement of the Criminal Code that the Province "conduct and manage" a casino. The conflict between the Sheraton's demand for autonomy and the requirements of the Criminal Code was obvious. The letter of December 20 made it abundantly clear that the Sheraton claimed the right to manage the Casino, notwithstanding that that duty had been mandated to the Province and the Corporation. [81] On December 31, 1996, Mr. Hayes notified Mr. Harris that as the Corporation had decided to reject the casino design documents of April 30, 1996, there was an automatic extension of the scheduled construction completion date. This matter, together with the adequacy of the casino design documents ultimately became the points of contention in arbitration. The parties then proceeded to arrange for arbitration of certain of the issues outstanding between them, including the adequacy of the design documents and the matter of the Sheraton's claim that the completion deadline had been extended. In February, 1997, as a result of a call for proposals for the provision of legal services, Mr. Carl Holm became the solicitor for the Corporation replacing Mr. Harris, effective February 27. [82] During the period of February and March of 1997, it is clear from the documentary evidence before me that Fiske kept Premier Savage and Priorities and Planning fully informed as to the progress being made and plans for the arbitration. Neither Premier Savage nor Priorities and Planning appears to have raised any objection or concern to Fiske's plans for the arbitration or the reasoning behind it [83] On February 21, 1997, the Honourable Mr. Boudreau resigned as Chairman of Priorities and Planning, but remained as a committee member. At or about this time Mr. Boudreau, as he had then offered his name in nomination for the leadership of the Nova Scotia Liberal Party, appointed Mr. Hayes his official agent for that purpose. In early March 1997, Mr. Holm retained John Merrick to represent the Corporation in the arbitration then pending. [84] On or about April 18, 1997, Mr. Merrick interviewed Fiske and Ms. Sheila Butler. His notes indicate: Saunders (of Sheraton) apparently said in company that he had a commitment from Minister that would agree to an alternative. [85] This note in Mr. Merrick's files became significant as Fiske later claimed that the Sheraton had said they had a commitment from an "honourable gentleman" concerning an alternative plan for the casino. This claim by Fiske ultimately attracted a great deal of media attention and derision as it was alleged that Fiske had fabricated it later at meetings of the Public Accounts Committee of the Legislature. [86] It is clear that for some period of time preceding April, 1997, Mr. Hayes had ongoing discussions with Robert MacKay Deputy Minister to the Premier, during which the deteriorating relationship between the Corporation and the Sheraton was discussed. In fact, as the time for the arbitration approached Messrs. MacKay and Hayes discussed matters and Mr. MacKay eventually advised Mr. Hayes that Robbie MacKeigan, Q.C. was to be appointed to act for the Premier's Office with respect to the pending arbitration. [87] Over the weekend of April 19, 1997, the annual meeting of the Liberal Party was held. [88] On Monday, April 21, 1997, Fiske, Merrick and Holm who were then preparing for the arbitration were requested to attend a meeting in the Premier's Office at 3:00 p.m. that day. There had been no discussion among them about such a meeting and they were surprised by the request. Mr. MacKeigan had been retained by Robert MacKay at 9:00 a.m. and he and Mr. MacKay also were also in attendance. This meeting, I find, was relatively low-key and the Premier led a persuasive conversation in which Messrs. Merrick and Holm were essentially requested to explore the possibility of a negotiated settlement of the matters pending in the arbitration. [89] The meeting itself and the discussion during it were not at all disturbing. I find, however, the following aspects of this meeting disturbing: - the timing of the meeting – immediately after the annual meeting of the Liberal Party of Nova Scotia; - that the meeting was called on such short notice, immediately before the scheduled commencement of the arbitration; - that prior to this meeting the Premier had not expressed any concern about the arbitration; - that Mr. MacKay had apparently concluded that the Premier ought to have independent or separate legal advice. Mr. MacKay, and through him the Premier, had decided there was a conflict of the interests of the Corporation and those of the Premier's Office. In view of the Cabinets' authority pursuant to the Act to overrule decisions of the Corporation, the authority of the latter had obviously been compromised. [90] As the arbitration was to proceed the following day, the Premier asked Messrs. Merrick, Holm and Fiske to see if they could obtain an adjournment of the proceeding so as to allow time for further negotiations. At this meeting Premier Savage said that the matters under arbitration had been discussed by Cabinet who wished the dispute could be settled without arbitration. Fiske claimed that at this meeting Mr. MacKay advised him that they wanted to get this matter of the arbitration beyond July 13. The latter date was the date of the Liberal leadership convention. I accept as a fact that Mr. MacKay did make that statement to Fiske. [91] On the following morning Fiske conveyed to Premier Savage the proposed terms for the adjournment and later that morning the Premier notified Fiske that they were satisfactory. When the terms for the adjournment were put to the Sheraton, however, they were rejected and the arbitration proceeded. Due to scheduling difficulties the arbitration adjourned around noon. [92] Mr. MacKeigan's notes of the April 22 conversation with Mr. Hayes included the following: Relationship from day one has been tarnished because Corporation was ... Larry says relation with Fiske has been rent asunder ... Larry called Bob ... Soto is running the show ... Merrick thinks he'll (Ralph Fiske) take reasonable advice if you make it clear. Very high up in Province. (The reference to "Soto" is to Mr. Rivera-Soto, a lawyer and officer of the Sheraton, who was present for the arbitration and who instructed Mr. Hayes and his associates.) [93] These notes also refer to a meeting of February 7, 1996 between Boudreau and Fiske with Sheraton representatives. [94] When the arbitration proceeded on April 13 Mr. MacKeigan was in attendance and Fiske claimed to be totally surprised by that fact although I do accept that Mr. MacKeigan had discussed his attendance with Mr. Merrick. The degree to which the relationship between the Corporation and Sheraton had deteriorated is evidenced by the fact that the Sheraton representatives refused to sit in the same room as Fiske or to discuss matters with him. It was, however, agreed at Mr. MacKeigan's instance that the arbitration be adjourned to allow him to conduct negotiations and attempt settlement. Mr. MacKeigan conducted "shuttle diplomacy" between the parties and they agreed to meet the following morning. [95] On this day as well, Mr. Hayes privately provided Mr. MacKeigan with a copy of the Order-in-Council by which Fiske had been appointed Chair of the Board. Despite denials, I infer and conclude that the exchange and examination of the terms of the Order-in-Council were motivated by a consideration of Fiske's removal from office. [96] It is also noteworthy that at the arbitration meeting of April 23, 1997, Mr. MacKeigan was introduced to the arbitrator as being present on behalf of Cabinet. [97] On Thursday, April 24, 1997, negotiations continued at Mr. MacKeigan's office. At the early suggestion of Dara Gordon who was in attendance Mr. MacKeigan withdrew from the negotiations as she felt his presence while representing Cabinet confused issues. Shortly after Mr. MacKeigan's withdrawal from the meeting the Sheraton broke off negotiations. At the conclusion of the meeting and upon departure from it, the Sheraton commented that at the most pursuant to the contracted penalty clause, delay would cost them $10,000.00 per day from September 30, 1998. [98] At a meeting of the Board of Directors on April 30, 1997, the matters arising from the adjourned arbitration and failed attempts at negotiations were discussed. The details of the discussion are not necessary for my consideration except as they reflect (by virtue of the recording secretary's notes) a recognition by Mr. Merrick that Sheraton had adopted a "divide and conquer strategy" and "attempts to bypass the Corporation and go directly to the Province". [99] On May 8, 1997, the United States Consul General and John Young, Q.C. met Fiske. Mr. Young was a friend of Fiske whom Fiske consulted professionally from time to time about Board matters. Mr. Young described the meeting as a pleasant courtesy and nothing substantive was discussed. Fiske testified he had understood from Mr. Young the U.S. Consul General had been asked by Foreign Affairs in Washington to see what he might be able to do to resolve the situation existing between the Sheraton and the Corporation. In view of the tense situation then existing between the parties and the timing of this event, I accept Fiske's version as to the reason for the meeting – i.e., to discuss the Sheraton situation – and I conclude that the meeting was calculated to exert gentle pressure on Fiske and the Corporation. My assessment of the implications of the American Consul's visit to Fiske are strengthened by Fiske's personal note exhibited to me and a voice message from Robert MacKay to Robbie MacKeigan on May 12, 1997 as follows: Now I don't know how much of this is wishful thinking on Ralph's part, I don't know how much of it is of substance, but I must tell you that this is a curve or a development in this situation that I had not anticipated. It's not often that I've had to deal even remotely with an intervention by the American Embassy. What does concern me to some extent is how much this issue appears to be broadening and the number of players that are getting involved in it. [100] Within the same time frame it is clear that Mr. Boudreau and Mr. Hayes had an understandable and appropriate relationship regarding Mr. Boudreau's leadership aspirations but within the course of that relationship and through that means Sheraton had a direct relationship with Government – either through Mr. Boudreau or through Mr. MacKay. For example, Mr. MacKeigan's notes of May 9, 1997 include: "Larry spoke to Bernie Boudreau yesterday and brought him up-to-date." There are other such indications that the Sheraton dealt directly with the Premier's Office. I attach no criticism to Mr. Hayes for such a contact; he was doing a solicitor's job. [101] In the meantime, Messrs. Holm and Hayes continued to negotiate, with input from Mr. MacKeigan and Fiske, a settlement agreement concerning the adjourned arbitration and other matters. This process, however, was slow and both parties complained of a lack of cooperation. In the meantime, as well, disagreement between the Sheraton and the Corporation with respect to information sought by the Corporation continued. [102] In view of the stalled negotiations and the lack of cooperation between the Sheraton and the Corporation's accounting staff Fiske approached Mr. MacKay on May 13, 1997 to ask for the Premier to intervene. Mr. MacKay declined to do that but offered to convene a meeting with the Sheraton without the Premier or Fiske present. In the meantime as well, the Premier, through Mr. MacKay, made clear to all concerned that the Premier's Office was anxious to get a settlement. Mr. MacKay passed that message along to the lawyers: they were to settle the case. The meeting was held on May 15 and Fiske was asked not to attend. At that meeting Mr. MacKay spoke on behalf of the Premier's Office and made it abundantly clear that the Premier wanted the Corporation to settle the issues outstanding with the Sheraton "regardless". [103] At the meeting of May 15, (Mr. Holm later stated) he understood Robert MacKay to have said to Sheraton that both Premier Savage and the Honourable Mr. Gillis wanted a settlement and that the Province had considerable flexibility even if it meant an extension without fee. I contrast that position with the Board's remonstration to Fiske after Mr. Boudreau's Las Vegas trip. Fiske testified that Mr. Merrick had been upset by Mr. MacKay's stance at the meeting as he had effectively given away the Corporation's ability to negotiate. There is no doubt that by the meeting of May 15, the Sheraton understood that the Corporation was receiving instructions from Mr. MacKay that the arbitration was to be settled, as reflected in Board member Robert Cordy's personal notes of the Board meeting of May 20 as follows: "Thursday p.m. (May 15): MacKay, Premier and Province - settle case." [104] Similarly, Dara Gordon's entry in her notes was to the effect, "R. Fiske advises Board that he has spoken to R. MacKay, who said that 'Province wants the matter settled regardless.'" [105] By May 17, 1997, the Sheraton put a settlement proposal to the Corporation. This proposal had been put together with the active input of Messrs. MacKeigan and MacKay and was to be presented to the Corporation by Messrs. Holm and Merrick on May 20. Mr. MacKeigan noted that Mr. Merrick thought the majority of the Board would not support the present settlement proposal. At the same time the Sheraton sought a further extension of the completion date. As well by that time Sheraton's Nevada counsel, Rivera-Soto had instructed Sheraton's staff not to deal with Fiske or Ms. Butler. [106] On the following Monday, May 19 (Victoria Day) Mr. Merrick indicated to Mr. MacKeigan that he would report the settlement proposal to the Board as put forward by the Sheraton without recommendation, but after a discussion, Mr. MacKeigan suggested to Mr. Merrick that there was an obligation to recommend the settlement and gave Mr. Merrick a list of certain criteria which he considered ought to be put to the Gaming Corporation to persuade the Board that the proposed settlement was acceptable. [107] On May 20, 1997, in a discussion between Mr. Merrick and Mr. MacKeigan, Mr. MacKeigan indicated that he had received a call from Mr. Hayes to see if the Province was prepared to make any "further interventions". [108] At the Board meeting of May 20, 1997, the proposed settlement was considered. I will discuss some aspects of the resolution elsewhere in this decision. It is clear, however, from a reading of the Minutes and of the various notes of the participants that there were three major factors leading to the adoption of the resolution approving the settlement proposal. (1) that the Government had been fully "apprised" of the settlement details; (2) that the Government had made it known that settlement was wanted and that the Government was prepared to accede to Sheraton's request to obtain same; and (3) that Mr. Merrick, on reflection and having discussed the matter with Mr. MacKeigan, felt his opinion concerning the probability of success in the arbitration process was not quite as certain as he had earlier thought. It was repeatedly stated, however, that the Government did not want to dictate a settlement, but had made its wishes very clear. [109] Notwithstanding Fiske's assertion that the settlement was valueless to the Board and the Province, I do not consider it to be a function of this trial to appraise its worth. Rather, germane to my considerations is whether Fiske reasonably concluded that his and the Board's authority had been undermined to such an extent that there had been a substantial change in Fiske's "job description". [110] I do say, however, that it was my impression that counsel had not fully appraised the long-term financial effects about which Ms. Butler had warned Fiske and the Board. I am not sure that was their function. [111] The notes of the various participants at the meeting persuade me, and I find as a fact, that despite subsequent denials, the Board and the Board members felt to be under considerable pressure from Government transmitted by Mr. MacKay. [112] There was some concern later by Messrs. MacKeigan and MacKay about the precise wording of the resolution adopted by the Board which subject I will remark upon below in para. [116]. [113] With respect to the various perceptions of the meeting approving the settlement I found Mr. MacKeigan's note concerning a telephone call he received from Mr. Holm on May 20 revealing and which was as follows: Carl called me at home to advise they thought they had a gun to their head - especially with Merrick's introduction of the good points. [114] On the following day Mr. MacKeigan's notes concerning the same meeting included, "Sheila thinks we have sold out". [115] Later Mr. Holm described the events surrounding the May 20 meeting in the following terms: Corporation feels strongly that they were forced to bend over for the Sheraton by MacKay, that having been forced to bend over, they have been undermined and their ability to control the Sheraton is lost if it can go around the Corporation and force settlements. [116] In a subsequent letter from Mr. Merrick to the Board concerning the settlement he addressed the matter of whether the Province had been "fully apprised". He said he was satisfied that Mr. MacKay through Mr. MacKeigan was fully and completely informed and it was also his understanding, from Mr. MacKay, that acceptance of the settlement was in accordance with the wishes of the shareholder (the Government). I have no evidence before me which persuaded me that the Government (beyond Mr. MacKay) had been fully informed. [117] There was considerable controversy within the Board as to why Mr. Merrick had changed his opinion and reduced his forecast of the probability of success in the arbitration, but I do not consider it necessary or advisable to second–guess that opinion. Similarly, the plaintiff has analyzed the overall effect of the settlement, but I decline to pass any judgment on that as well. [118] The Board eventually asked Mr. Merrick to appear before them to explain why he apparently changed his opinion concerning the likelihood of success in the arbitration. Mr. Merrick did in fact explain this apparent change but which explanation was never accepted by Fiske. It is clear that Mr. Merrick did soften his opinion as to the likelihood of success after speaking to Mr. MacKeigan, but I attach no sinister implication to same. Similarly, Fiske has been extremely critical of Mr. Holm for having given business advice with respect to the settlement, as opposed to legal advice. I cannot support Mr. Fiske's position with respect to this issue. [119] I note that when Mr. Merrick reported to the Board concerning his change of advice he mentioned, amongst other things, that the Sheraton "had gone to the Province". [120] In the latter part of May, 1997, after the approval of the settlement proposal Fiske 's reservations about it solidified and it was clear also from the evidence that Messrs. MacKay and MacKeigan had some doubts about the accuracy of the recitals of the resolution. Fiske expressed the view that the Corporation had become ineffective and there is documentary evidence to the effect that Fiske and others concluded that Sheraton now controlled the situation. There was also some concern that Ms. Butler's forecast of considerable loss to the Province might have some validity. Fiske in fact indicated to Minister Gillis that he could not sign the agreement and Gillis suggested that Fiske should speak to the Premier. Fiske had concluded that the settlement was not in the Province's best interests and expressed that to Mr. Gillis. [121] In Gillis' diary of May 29 he noted that the Premier had said that "three lawyers say could not win arbitration". That opinion or statement does not appear to be substantiated in any way. I can find no evidence of it having been said by three lawyers. I find, nonetheless, Premier Savage said it. [122] At about this time Fiske attempted to do what he could to delay Cabinet's approval of the settlement and in this regard sought the assistance of Messrs. Gillis and Boudreau. In fact he was still pressing for the arbitration to proceed as he considered that it would be necessary to establish the authority of the Corporation through that process. He had reasoned that even in the unlikely event of a lost arbitration the Corporation would have clarified its position. [123] It was arranged for Fiske to meet the Premier on June 5. I will deal with the matter of this meeting separately as the evidence concerning that meeting presents an excellent opportunity to make and express findings of credibility. Those present at that meeting were Messrs. Gillis, Fiske, Savage and MacKay. [124] A review of the documentary evidence, including especially the account of Robert MacKeigan for his services rendered with respect to the arbitration shows that Mr. MacKeigan, on behalf of the Premier, had direct contact with the solicitors for the Sheraton throughout that period, and I so find. From an ethical or legal point of view there is no criticism of that fact, but it must be considered in relation to the Gaming Corporation's role and in relation to whether the Premier's Office had interfered with that role. [125] During the month of June Mr. Holm and Mr. Hayes further attempted to draft the Minutes of Settlement. Various drafts were exchanged after the meeting of June 5. Dara Gordon and Fiske attempted to delay the execution of any minutes until after the election of a new leader of the Liberal leader in the hope that the person elected might be prepared to re-examine the settlement and refuse to ratify it. [126] On July 12, 1997, the Liberal leadership convention was held and Honourable Mr. Russell MacLellan became Premier elect. On the following day Mr. Gillis requested Fiske to prepare a memo to Premier MacLellan to be ready by noon the following day. I find as a fact that Mr. Gillis initiated this approach for the specific object of having Cabinet overrule the settlement. I find that Mr. Gillis led Fiske to believe that he fully supported Fiske's position. Mr. Gillis, I also find, participated actively in the drafting of the memorandum to the Premier both in content and text. Ms. Butler was the major author with Fiske's assistance. The Board of Directors did not know of the intended briefing of Premier MacLellan by Fiske and Mr. Gillis. [127] On July 18, 1997, Russell MacLellan was sworn in as the new Premier and Fiske attended the ceremony. Fiske testified that Premier MacLellan thanked him for not allowing the "Boudreau deal" to proceed, a reference allegedly to the settlement or to a reduced casino. Mr. MacLellan denies that such a conversation occurred. I find as a fact that a brief conversation did occur and Mr. Boudreau was mentioned but the contents of that conversation are not sufficiently clear for me to make a definitive finding. Arrangements were then made for Fiske to brief Premier MacLellan. [128] Fiske and Mr. Gillis then prepared for an eventual meeting with Premier MacLellan. Various notes prepared prior to the meeting are revealing in that they appear to refer to some of the allegations which Fiske eventually levelled at the defendants. [129] The meeting between Fiske and MacLellan occurred on July 29, Fiske alleged that there had been political interference by the Premier's Office in the role of the Corporation and attempts to preserve "Bernie's deal" had been made. He also made allegations concerning the adverse financial implications of the settlement. David Thompson, Premier MacLellan's Deputy Minister, was present and Premier MacLellan instructed him that the entire matter be looked into. [130] At or about this time Mr. Gillis requested Fiske and Ms. Butler to prepare a memo to Cabinet giving the history of the terms of settlement. It was to be available for completion by Tuesday, August 5. Ultimately, a 14-page memorandum was prepared and at one point during its preparation John Young assisted Fiske and Sheila Butler. [131] During the months of July and August Messrs. Holm and Hayes continued to work toward the preparation of the Minutes of Settlement, but without success. At one point Mr. Hayes went so far as to request the arbitrator, the Honourable Mr. Stevenson, to intervene to enforce the perceived settlement, but which request was refused in the absence of the consent of both parties. [132] The draft memo to the Premier, prepared with the active assistance of Mr. Gillis, was reviewed by Carl Holm. He expressed concern to Fiske that the memo may come close to showing bad faith with the Sheraton. [133] After Premier MacLellan's direction to David Thompson to inquire into Fiske's allegations, the matter was turned over to Ms. Ena MacDonald, a Priorities and Planning solicitor. She appears to have made some inquiries, but did not come to any conclusions with respect to the allegations of the prospective financial loss. Rather, she turned the matter back to Mr. Thompson who in turn referred the matter to Mr. Howard Windsor a policy analyst with the Priorities and Planning Secretariat. It is unfortunate that Ena MacDonald's notes concerning her investigation were destroyed, despite Premier MacLellan's instructions that all documents concerning the subjects of Fiske's allegations were to be preserved. Ena MacDonald had not been comfortable in performing a financial evaluation of the settlement, so that function was assigned to Windsor. That investigation appears to have been restricted to brief conversations with Government representatives on the Board, Messrs. O'Connor and MacAloney, and with Fiske and Ms. Butler. I do not have any evidence that a financial analysis was prepared for the purpose of this "inquiry". [134] When the Board of Directors became aware of the draft 14-page memo, there was a meeting on August 19. There was considerable discussion about the memo. Dara Gordon clearly expressed her view at that time that the Corporation should take a strong position with the Minister and the Government with a view to taking a firm stance in dealing with the Sheraton. The Board agreed that the memorandum as prepared and presented should be withdrawn. There was concern that it was one–sided and may show bad faith with the Sheraton. In the discussions with the Board, Fiske once again sought an opportunity to restore authority to the Corporation and took the position that the legal advice they had obtained with respect to "the shareholder directive" may have been incorrect. [135] The reference to a "shareholder directive" is related to the theory that the only way the Cabinet should interfere with the Board's function, pursuant to s.24(1)(a) of the Act, was by means of a formal directive. Fiske had taken the position, subsequent to the Board's resolution approving the settlement proposal, that the Board had mistakenly taken the Premier's expressed request for settlement as a directive and had accordingly proceeded on a wrong principle. [136] The status of the memorandum under consideration had been the subject of considerable discussion within Mr. Holm's firm and Peter Darling of that firm on August 21 gave an opinion to Mr. Holm which was apparently not accepted or acted upon by Mr. Holm. The Darling opinion is an analysis of the effect of the memorandum and it particularly noted that the memorandum was to be from the Minister and not from the Corporation and therefore could not have amounted to an act of bad faith on the part of the Corporation. Yet there is evidence that Mr. Holm privately contacted a Board member and warned him that the memo could be construed as an act of bad faith and might thereby attract liability against the Corporation or even personal liability. I attach no criticism to Mr. Holm for this incident; the decision to accept or reject Darling's opinion was a matter of judgment, as was the decision to contact a Board member. [137] By August 28, 1997, Minister Gillis was firm in his request to take the proposed Minutes of Settlement to Cabinet, but with no recommendation. At the Board meeting of August 28 Messrs. Holm and Merrick appeared and were questioned about bases for their opinions which had led to the Minutes of Settlement. Fiske, through counsel, has in this proceeding, challenged the validity and ethical standards of their opinions. Fiske's submission with respect to this meeting challenges many aspects of their opinions. Indeed, counsel's summations herein question the truthfulness of the opinions. [138] Mr. Merrick's opinion was that the settlement was the best deal possible for the Corporation. He is reported to have said that it was the only deal possible if the Province and the Corporation wanted a settlement as: (a) given the fact the Province and N.S.G.C. wanted a settlement, he had negotiated as much as was achievable; (b) some people believed Sheraton had been done wrong; (c) Sheraton was a hard-ball operator; (d) Sheraton had gone to the Province. In the context of Fiske's role and that of the Board, Mr. Merrick's last reason is particularly important as evidence that, in Mr. Merrick's view, the Sheraton had dealt directly with the Province, contrary to the stated policy and contrary to denials expressed in evidence. [139] At this meeting of August 28, as well, the Board reviewed a letter drafted by Mr. Young for Fiske's signature to David Thompson protesting Sheraton's meetings with the Premier's staff. [140] On August 29, 1997, the Board met Mr. Holm and discussed a new memorandum to go to Cabinet replacing that which had been prepared. The Board approved an amended draft of a new memorandum. [141] It is clear that Minister Gillis expressed a desire to have the full scope of the disagreements between the Sheraton and the Corporation put to Cabinet and suggested that Hugh Windsor, a Priorities and Planning policy analyst, should be consulted "... to find a way to present to P & P and to Cabinet". In fact, Mr. Gillis continued to meet with Fiske and Ms. Butler to that end. [142] When the memo from the Board, signed by Gillis, was presented to the staff of Priorities and Planning, the staff of that committee or secretariat prepared their own memo recommending approval of the terms of settlement. When the matter went to Priorities and Planning Mr. Gillis was present and was aware of the P & P staff memo and despite having previously approved the memo from the Board, and having participated with apparent approval of the original 14-page memo, apparently made no objection to the contrary submission. The P & P staff memo notes in particular: 5. In an effort to resolve the issue of the permanent casino, as well as other outstanding matters, the Corporation and the Casino agreed to enter into negotiations with the benefit of an independent mediator. This process did not lead to a resolution. 6. With the failure of the mediation process it was decided by both parties to proceed to arbitration in April of this year. 7. However, arbitration did not proceed as the Corporation received direction from the shareholder to adjourn the process and resolve all outstanding matters. 8. In late May, after discussions between solicitors for MEG and the shareholder, Terms of Settlement were developed and presented to the Board of Directors for approval. The Board, on the advise of their solicitors, approved the Terms of Settlement subject to Governor in Council approval. . . . 15. There is a concern by some that the negotiation process between the shareholder and Sheraton, and approval of the terms of settlement, will undermine the ability of the Gaming Corporation to deal effectively with the Sheraton. The Sheraton are likely of the opinion that they undertook negotiations with the shareholder in good faith. [emphasis added] [143] The report concluded, inter alia: Measures should be taken to improve the relationship between the Corporation and the Sheraton. No measures were specified, but it was speculated at trial by Fiske's counsel that they were to include Fiske's removal from office. [144] Fiske's position is also that this P & P staff memorandum to Cabinet had not been approved by the Board and, in fact, misinformed Cabinet of the Board's position. Fiske claims that although his signature is on this memorandum he had not realized its contents. I find this difficult to understand, but it must be remembered that Fiske did not know then that P & P staff disagreed with his position. [145] On September 11, 1997, Cabinet approved the terms of settlement with Mr. Gillis in attendance. [146] After the Cabinet meeting and when Fiske learned of the approval by Cabinet he and Mr. Gillis spoke and Fiske indicated he intended to resign. [147] After Cabinet's approval there were further meetings of various lawyers and civil servants, when, as I infer, the possible removal of Fiske from his office was considered. [148] There was then apparent confusion as to which of several versions of the Minutes of Settlement had been approved by Cabinet. This confusion need not concern me in this decision. There were also discussions and correspondence concerning various aspects of the ongoing relationship between the Sheraton and the Corporation. It was also clear, once again, that the Sheraton resorted to direct contact with representatives of the Province, as opposed to the Corporation. In particular, Mr. Hayes corresponded directly with Mr. Spurr who was then assigned as solicitor to Priorities and Planning. Neither the Corporation nor Fiske was aware then of these direct contacts. [149] On September 25, 1997, after considerable correspondence and a number of conferences among counsel and others, Fiske attended at David Thompson's office and conferred with him. I accept as factual that at this time Mr. Thompson instructed Fiske that there were to be no further disputes brought forward to the Government and any other items requested by Sheraton, including further extensions, were to be provided. Fiske informed Mr. Thompson of his intended resignation and Thompson enquired as to what he would say to the media. On September 26, 1997, Fiske received a letter from Rivera-Soto making further demands for an extension of the construction completion date. I intentionally link these incidents. Fiske spoke to Dara Gordon and indicated to her what Thompson's instructions to him were. He told her he had received directions from Cabinet and that the entire matter was to be kept out of the hands of Bill Gillis and in the hands of the Premier, who was directing "the whole thing". [150] On September 29, 1997, Fiske met with the Board of Directors. He reported that the Premier and Cabinet were anxious to have the permanent Casino built and the Cabinet was willing to agree to all items in dispute and the Corporation was to agree to additional items, if requested. He further indicated he had been instructed that there were to be no further partnership difficulties and that the Board was to provide a solution to Cabinet. [151] At this time Fiske objected strenuously to certain aspects of the Sheraton's July draft of the Minutes of Settlement and in particular to a "governing protocol" which, he said, removed the Corporation's ability to control the Sheraton. [152] In Dara Gordon's notes concerning the meeting of September 29, she referred to Thompson's instructions as "a directive" from Cabinet. [153] On September 30, 1997, Fiske met Mr. Gillis concerning his resignation. He described to Mr. Gillis the meeting with Mr. Thompson of September 25. He tendered his resignation letter which read as follows: September 30, 1997 The Honourable J. William Gillis Minister responsible for the Nova Scotia Gaming Corporation Province of Nova Scotia 1723 Hollis Street, 7th Floor Halifax, Nova Scotia B3J 2N3 Dear Minister: On Thursday, September 25, 1997, Mr. David Thompson provided instructions from Cabinet with respect to our recent dealings with Metropolitan Entertainment Group. Mr. Thompson indicated that Cabinet wanted the Nova Scotia Gaming Corporation to conclude the ongoing negotiations with Metropolitan Entertainment Group and if in so doing, other items were requested by Metropolitan Entertainment Group, including further extensions, that they should all be provided. In addition, Mr. Thompson related that no further disputes should be brought forward by the Nova Scotia Gaming Corporation including the default notification with respect to the commencement of construction. As you are aware, since the early days of our relationship with Metropolitan Entertainment Group, the Nova Scotia Gaming Corporation has been plagued with many problems including significant financial errors, lacklustre performance and many failed commitments. To counter our concerns, Metropolitan Entertainment Group has continually accused the Nova Scotia Gaming Corporation of "micro-managing". At a minimum, the Nova Scotia Gaming Corporation would have expected Metropolitan Entertainment Group to have responded in a responsible way to our many concerns especially the very disappointing operating results in Halifax. As we are all aware, the Nova Scotia Gaming Corporation must comply with the Gaming Control Act and our various contracts with Metropolitan Entertainment Group. The decision by Cabinet to provide Metropolitan Entertainment Group with all items requested, plus the September 26, 1997 request of an additional extension to the construction completion date is an error. The impact of Cabinet's decision on the future relationship between the Nova Scotia Gaming Corporation and Metropolitan Entertainment Group has been seriously compromised. The Nova Scotia Gaming Corporation will not be able to fulfill its statutory mandate in light of this most recent decision. I regret that I cannot effectively continue in my capacity as Chair of the Nova Scotia Gaming Corporation. As discussed this morning, I now submit my resignation as Chair of the Nova Scotia Gaming Corporation effective at the close of business on Friday, October 3, 1997, unless you choose an earlier date. Yours very truly, Ralph F. Fiske Chair cc: Board Members, Nova Scotia Gaming Corporation [154] On October 2, 1997, the Minister accepted the resignation and replied as follows: October 2, 1997 Mr. Ralph F. Fiske Chair Nova Scotia Gaming Corporation 8th Floor, 5151 George Street Halifax, Nova Scotia Dear Mr. Fiske: This will acknowledge receipt of your letter of resignation as Chair of the Nova Scotia Gaming Corporation, dated September 30, 1997. As you requested, I accept your resignation effective the close of business on Friday, October 3, 1997. In light of the balance of the content of your letter of resignation, I feel obliged, as Minister responsible for the Nova Scotia Gaming Corporation, to respond to some of the points raised therein. As you will recall, it was widely reported on or about July 15, 1997, that the Nova Scotia Gaming Corporation and the casino operator had finally agreed on a new plan for the Halifax permanent casino. This was the result of negotiations that had been under way since approximately May 1996. In its consideration of this matter on September 11, 1997, Cabinet was aware that little or no progress had been made by the parties since the public announcement in by the Sheraton in July. Cabinet's primary objective, as a result of its deliberations on September 11, was to get the project moving. The decision of Cabinet initially was conveyed to the Gaming Corporation by the undersigned by telephone. Subsequently this decision was sent to you via correspondence from the Acting Clerk of the Executive Council, James Spurr, and from the Deputy Minister of the Priorities and Planning Secretariat, David Thompson. Nothing of what was conveyed to you by Mr. Thompson, Mr. Spurr, or the undersigned in respect of Cabinet's decision in this matter was in any way intended to be construed as conceding all outstanding issues between the parties nor as precluding negotiation of issues in dispute arising in the future. Secondly, your description of the relationship between Metropolitan Entertainment Group and the Nova Scotia Gaming Corporation, contained in the second paragraph of your September 30 letter, is not a description shared by the Province of Nova Scotia. I wish you to know that I was present for, and participated in, most if not all Cabinet discussions in this matter. I can assure you that all Members of Cabinet have acted in this matter diligently, in good faith, and for the benefit of all Nova Scotians. In closing, on behalf of the Province of Nova Scotia, and personally, I thank you for your service to the Province during your tenure as Chair of the Nova Scotia Gaming Corporation. Yours sincerely, William Gillis Minister responsible for the Nova Scotia Gaming Corporation WG:amf cc Board Members, Nova Scotia Gaming Corporation VIII– CONSTRUCTIVE DISMISSAL General [155] The plaintiff was employed by the Province as Chair of the Gaming Corporation. I have found his employment was for a fixed term of five years. The plaintiff was also employed by the Gaming Corporation as Chief Executive Officer, even though he had never received a formal appointment to that position. [156] In Fiske's position as Chair he reported to the Minister of Finance and by virtue of the Act was subject to the formal directives of Cabinet. Many of the functions of the Board, as set forth in the Act, were subject to the approval of the Cabinet. [157] The parties agreed that a concise summary of the law of constructive dismissal is found in the Supreme Court of Canada decision in Farber v. Royal Trust Co., [1997] 1 S.C.R. 846 where Gonthier, J. stated at p.863: (ii) Situation in the Canadian Common Law Provinces In cases of constructive dismissal, the courts in the common law provinces have applied the general principle that where one party to a contract demonstrates an intention no longer to be bound by it, that party is committing a fundamental breach of the contract that results in its termination. The leading case on this question is an English decision, In re Rubel Bronze and Metal Co. and Vos, [1918] 1 K.B. 315, in which the following was stated at pp. 321-22: But if a claim for wrongful dismissal be founded on repudiation by the master, then I think that the general and recognized rules which apply in the case of ordinary contracts should apply also in the case of master and servant. . . .It has been authoritatively stated that the question to be asked in cases of alleged repudiation is "whether the acts and conduct of the party evince an intention no longer to be bound by the contract" . . . . The doctrine of repudiation must of course be applied in a just and reasonable manner. A dispute as to one or several minor provisions in an elaborate contract or a refusal to act upon what is subsequently held to be the proper interpretation of such provisions should not, as a rule, be deemed to amount to repudiation. . . . But . . . a deliberate breach of a single provision of a contract may, under special circumstances and particularly if the provision be important, amount to a repudiation of the whole bargain. . . . Thus, it has been established in a number of Canadian common law decisions that where an employer unilaterally makes a fundamental or substantial change to an employee's contract of employment — a change that violates the contract's terms — the employer is committing a fundamental breach of the contract that results in its termination and entitles the employee to consider himself or herself constructively dismissed. The employee can then claim damages from the employer in lieu of reasonable notice. (See, for example, Stewart v. MacMillan Bloedel Ltd. (1992), 42 C.C.E.L. 225 (B.C.C.A.), aff'g (1991), 37 C.C.E.L. 292 (B.C.S.C.); Cox v. Royal Trust Corp. of Canada (1989), 26 C.C.E.L. 203 (Ont. C.A.), leave to appeal refused, [1989] 2 S.C.R. x; Mifsud v. MacMillan Bathurst Inc. (1987), 60 O.R. (2d) 58 (H.C.); Schwann v. Husky Oil Operations Ltd. (1989), 27 C.C.E.L. 103 (Sask. C.A.); Saint John Shipbuilding Ltd. v. Snyders (1989), 29 C.C.E.L. 26 (N.B.C.A.); Farquhar v. Butler Bros. Supplies Ltd. (1988), 23 B.C.L.R. (2d) 89 (C.A.); Baker v. Burns Foods Ltd. (1977), 74 D.L.R. (3d) 762 (Man. C.A.). See also Cayen v. Woodwards Stores Ltd. (1993), 45 C.C.E.L. 264 (B.C.C.A.); Poole v. Tomenson Saunders Whitehead Ltd. (1987), 16 B.C.L.R. (2d) 349 (C.A.); Orth v. MacDonald Dettwiler & Assoc. Ltd. (1986), 8 B.C.L.R. (2d) 1 (C.A.); Reber v. Lloyds Bank International Canada (1985), 61 B.C.L.R. 361 (C.A.); although it was found in these cases that there had been no constructive dismissal.) [158] The parties, as well, referred to the decision of Hallett, J. in Stacey v. Electrolux Canada (1987), 76 N.S.R. (2d) 91 (T.D.) when he said at p.94: The relevant questions that must be answered in a case where the plaintiff alleges constructive dismissal are as summarized by Esson, J.A., in Reber v. Lloyds Bank International Canada (1985), 7 C.C.E.L. 98, at p.101. Those questions are: (1) What are the terms of the contract? (2) Has there been a breach of the terms of the contract by the employer; and (3) If there has been a breach, does it amount to a fundamental breach of the contract that would entitle the employee to consider the employer has repudiated the contract? [159] The defendants emphasized that the burden of proof is upon a dismissed employee and cited as authority Boudreau v. Assumption Mutual Life Insurance Corp., [1999] N.S.J. 105 and have as well submitted that the test whether constructive dismissal has occurred is an objective one. In support of that position they cited Orth v. MacDonald Dettwiler & Associates Ltd. (1986), 16 C.C.E.L. 41 (B.C.C.A.) and Smith v. Viking Helicopters Ltd. (1989), 68 O.R. (2d) 228 (Ont. C.A.) and Fisher v. Eastern Bakeries Ltd. (1986), 73 N.S.R. (2d) 336 (T.D.). [160] The terms of Fiske's contract of employment are gathered from the provisions of the Act and such undertakings given to him by Premier Savage. The objects of the Corporation are set forth in s.10 of the Act and which are explicitly subject to the provision that lottery schemes (and casinos) are to be "conducted and managed in accordance with the Criminal Code (Canada) and this Act and the Regulations". It is my view that this provision must take precedence over all others. Thus, where by s-s. (d) of s.10, the Corporation is to do such other things "... as the Minister or the Governor in Council may from time to time require", that is clearly subject to the requirement to obey the Criminal Code. Similarly, the duties of the Corporation as set forth in s.24 must also be subject to the same restriction. Indeed, s-s.(b) of s.24 is explicit in this regard. The same restriction applies to the powers of the Corporation as set forth in s.25. The latter section sets forth certain powers of the Corporation to be exercised only with the approval of the Governor-in-Council. The powers of the Corporation, however, are not restricted by an overriding authority or power of either the Minister of Finance or of the Premier. It is clear, in my view, that the powers of the Corporation are restricted only by the Governor-in-Council and even then, such restriction cannot extend to any activity not within the mandate of the Criminal Code of Canada. It was of utmost importance and a basic condition of Fiske's employment to ensure that the Casino was conducted and managed by the Corporation in strict compliance with the Act and the Code. [161] Fiske has said that the actions of the Premier, the Minister and certain of the civil servants had the effect of usurping the function of the Corporation as mandated by the Act; that is, the ability to conduct and manage. By doing so, Fiske says, the defendants, through the actions of the Premier and the Ministers, breached a fundamental term of his employment contract. [162] I find that Fiske was constructively dismissed as the Province breached that fundamental term of employment. I will now set forth certain incidents in or aspects of his employment giving rise to that conclusion. The incidents to which I refer are not intended to be exclusive or complete. They are only examples of what I found to be a fundamental flaw in the manner in which the Government of Nova Scotia related to the Corporation. The First Extension I have already referred to this matter in para. [45] herein and I now expand upon it. [163] As a result of the tendering process the Sheraton had undertaken to build a permanent casino. But as I have already said, by early 1995 the Sheraton began to raise questions as to the economic viability of a permanent casino as contemplated and requested from time to time extensions of time limits or amendments to agreements. As a result of these requests to Fiske by representatives of the Sheraton, Fiske appropriately discussed the matter with Honourable Mr. Boudreau, then Minister of Finance, and he decided they should go to Nevada to discuss these matters with the Sheraton. Mr. Boudreau's evidence on this point was as follows: Q. And how did it come to be that you went with him to Nevada? What was the purpose of the trip? A. We were going to discuss an extension for the construction date of the casino, and so we set up a meeting with their senior people there. And I guess that was easier for us to go there. And besides, it was warm and I thought I might get a golf game in. Q. All right. And who was it that invited who to go? Did you invite Mr. Fiske or did he invite you, or how did it come to be that you came along, or went along? A. I don't know that there was any specific invitation extended one way or another. I mean, it was something we were probably having a discussion about and I -- I may have initiated the meeting. I'm not sure. But it doesn't stick strongly in my mind one way or another. It was clear that both of us should go. Q. And why was that? Why was that clear? A. Well, because at the end of the day, a fundamental decision such as that was going to have to be ratified by cabinet and I was going to have to carry the ball on that one. Q. Okay. A. So I think we both understood that we should play this one together. [164] En route to Nevada Boudreau and Fiske discussed these matters and decided they would tell the Sheraton that they would entertain an extension of time limits. Mr. Boudreau testified as follows: Q. Did you know whether this issue of the first extension had been discussed with the board of the Gaming Corporation before you went to Nevada? A. I don't think I knew that specifically. I don't think that issue ever came up. I don't think Ralph and I ever sat down and -- but I'm not certain of that. I would have made the assumption that there had been some discussion of this because it was not an issue that popped up out of the blue and Ralph and I got on a plane and flew to Las Vegas. I mean, it must -- there was -- this issue had been on the plate for a while so I guess I assumed that there had been discussions. Q. Now did this trip become somewhat controversial upon your return? A. Everything we did in relation to casinos turned out to be controversial. Q. But in terms of the board, the Gaming Corporation board? A. Yes. Q. And what were the particulars of that? A. Well I clearly made a mistake. I was -- after a particularly vigourous session in the House of Assembly, I came out to meet the scrum and indicated that we would be granting an extension, and I think that comment was made prior the board officially approving such an extension. It was a case I probably was caught short and should have kept my mouth for another two days and didn't. Indeed, it is clear on the evidence that the Board had not approved the extension and, as I have noted above in para. [45] took Fiske to task for Boudreau's announcement. There is no evidence that the Governor-in-Council had approved the extension. The Minister had no authority to grant the extension and the Board, at that point, recognized that there was a public appearance that its authority had been usurped. [165] Mr. MacIntosh questioned Mr. Fiske about this trip to Las Vegas: Q. Thank you. Now, let's turn to the whole issue of October, 1995, when you and Mr. Boudreau, Minister Boudreau, go to Las Vegas to discuss the extension. And to place it in context, I want to read you an excerpt from the defendants' pretrial memorandum at page 3, and it says: "In October, '95, the Sheraton requested a six month extension to the completion date for construction of the permanent casino, presumably to give it time to make its case for a scaled down casino. This request was agreed to by the plaintiff and by the minister of finance, Bernie Boudreau, during a trip that they took to Nevada in that same month ..." I repeat: "... was agreed to by the plaintiff and by the minister of finance, Bernie Boudreau, during a trip that they took to Nevada in that same month, notwithstanding the fact that the plaintiff did not have the approval of the board of directors of the Gaming Corporation for such an extension. The members of the board were not pleased when they learned of this development as the decision had been one that the plaintiff did not have the authority to make without board approval. While Mr. Fiske has blamed the minister for announcing the extension decision without the prior approval of the board, the essential fact remains that the board was never consulted by the plaintiff before he and the minister agreed to the Sheraton's request. Mr. Fiske treated the approval of the board as unnecessary." Now, that's what the defendants are alleging in this lawsuit, Mr. Fiske, and we are prevented from putting on record what Mr. Boudreau said on November 1st, so let's just have your recollection of what occurred. A. Mr. MacIntosh, that's just absolutely incorrect. The board were well aware of the purpose of my trip to Las Vegas. They were aware that Mr. Boudreau was accompanying me or I was accompanying him. They were aware of the Sheraton's request for an extension. They were aware that I felt that we should consider that extension. When we -- while we were in Las Vegas, we met with ... At Las Vegas Mr. Boudreau and Fiske met with various officials of the Sheraton and then, as Fiske testified: Q. ... What was -- after that discussion that Mr. Boudreau had where he intimated to the Sheraton that he would support an extension, what was your intention when the two of you arrived back in Nova Scotia? What was your plan? A. Following the meeting on the second day with Mr. Saunders, Mr. Boudreau -- Mr. Boudreau and I discussed the meeting and we determined that we would return to Halifax, I would meet with my board and get their approval for the extension and some announcement would be made. Mr. Boudreau came home one day ahead of me, or I came home with a visit on the way to examine the Aquatique that was in Florida. So I was a day late getting home from Mr. Boudreau. When I arrived home, as I recollect, Mr. Boudreau had announced it that afternoon in a scrum. Mr. Fiske described the Board's reaction as follows: A. ... My board were annoyed. I think they were annoyed with Mr. Boudreau but I think they were also annoyed with me and for having permitted this to happen, if you will. And I understood that. I -- I had no -- I regretted the way that it worked out, because the -- one or -- one of them felt in particular very upset that this had happened and blamed me for it. [166] I find as a fact that Mr. Fiske's description of these events was accurate. I also conclude that the Minister had exercised an authority he did not have by virtue of the Act. This incident, by itself, did not amount to a constructive dismissal, but was one of what eventually was a serious of incidents which when considered cumulatively led me to my ultimate conclusion of constructive dismissal. Boudreau – Sheraton [167] While the Honourable Mr. Boudreau was the Minister of Finance he had a function to be served with the Corporation and with Fiske. He had the general supervision and management of Part I of the Act. Nonetheless, as I have already found, in exercising that authority it was necessary for the Minister not to intrude on the function of the Corporation to conduct and manage the Casino. Fiske and Boudreau considered they had a good working relationship. Fiske often contacted Boudreau and discussed matters with him. Neither of them saw or felt there was anything inappropriate about that relationship, and neither do I. But after Mr. Boudreau had resigned his position as Minister of Finance the situation changed. He no longer had any responsibility to report to Government for the activities of the Corporation and although he retained his chairmanship of the Priorities and Planning Committee that office gave him no right of management of the Corporation. Fiske, however, did continue to consult him from time to time. [168] While Mr. Boudreau was Chair of Priorities and Planning, he testified, he had no ongoing direct or indirect relationship with the Sheraton at that time. It is clear, however, from the evidence of Mr. Hayes they had met in July or August 1996. I find as a fact that at that meeting (although it is clear that the Sheraton was not the prime subject of discussion), Mr. Hayes outlined to Mr. Boudreau that a new representation for an alternate proposal for the issues was coming forward to the Corporation. I also conclude that Mr. Boudreau assured Mr. Hayes that the alternate proposal would be properly considered. On July 18, 1996, the Executive Assistant of Minister Gillis, Ian MacDonald, made a note concerning a telephone call he had received from Mr. Hayes as follows: Larry Hayes acts for Sheraton. Had been speaking to Bernie Boudreau. Proposal re alternate to permanent casino. To be meeting with Fiske. Sheraton not backing off on Parcel "P" if proposal not acceptable then will honour. He has spoken to Bernie Boudreau in his role as chair of P & P. The real message is gamesmanship. Board of Corporation. Maybe last week in August. Hopefully all will be resolved by then. Want full and fair consideration to alternate proposal. Don't dismiss because someone is in a snit. They are not sure what is going on. Consequently, not happy. Corporation demanded payment of $1 million for delay of completion. Larry says no delay. Not asking for delay. Will be built before deadline. While this note is ambiguous as to the original source of the statement in it, the linking of Mr. Boudreau to the Sheraton is obvious. On the same day Mr. Boudreau wrote a note on letterhead of Minister of Health as follows: Ralph: I understand you will be receiving Sheraton's proposal by month end. Could you arrange to make a presentation to P & P, outlining our options, A.S.A.P. after receipt. Thanks. Bernie There was also an indication elsewhere in the files that Mr. Hayes had been talking to Mr. Boudreau. Mr. Boudreau's explanation for the note was contained in this following testimony. A. I -- I think that quite clearly my recollection is that that was placed on the agenda of P & P, my judgment or recollection would be, probably as a result of conversations with Ralph. [169] But when Fiske received the note he wrote on its margin a note to Dara Gordon: Dara. What do you make of this? Ralph [170] I attach no criticism to either Mr. Boudreau or to Mr. Hayes for having had a conversation concerning the Sheraton. But in the circumstances that conversation had the effect of usurping a management function of the Corporation. Proper management dictated that the proposal should have gone first to the Board of the Corporation through Fiske and then, if that was their decision, Fiske could make such presentation to Priorities and Planning as the Board decided. It might have been said that the Minister of Finance might have had a role in this matter, but the same cannot be said for the Chair of Priorities and Planning. [171] There is evidence that the relationship between Mr. Boudreau and counsel for the Sheraton was continuing on September 5, 1996 as on that date Mr. Hayes wrote an appropriate letter to Mr. Fiske but, inter alia, sent a copy to Mr. Boudreau. On that same date Fiske and Mr. Gillis briefed Premier Savage on the development of the Casino and Mr. Gillis' notes indicate that Fiske expressed a concern about the Sheraton "doing an end run" around the Corporation. Meeting with Premier Savage, April 21, 1997 [172] By April 1997, as I have outlined above, attempts at mediation between Sheraton and the Corporation had failed and the parties were proceeding and actively preparing for arbitration. Mr. Boudreau had resigned as Chairman of the Priorities and Planning but remained on as a committee member. Mr. Boudreau had then offered his name in nomination for the leadership of the Nova Scotia Liberal Party. Mr. Hayes was his official agent for that purpose. Edwin Harris, Q.C. had been replaced as Board's solicitor by Carl Holm, Q.C. Mr. Holm had retained Mr. Merrick. [173] On April 15, Fiske met with Priorities and Planning and Robert MacKay had been in attendance. Fiske had summarized for the Minister the plans and strategies for the upcoming arbitration and the committee expressed no concern about them. [174] At the annual meeting of the Liberal Party on April 19, 1997, Mr. Fiske, Mr. Boudreau and Mr. Hayes had been in attendance. Mr. Boudreau testified that to the best of his recollection he did not have any discussions with anyone concerning the Sheraton or the Casino or the arbitration. Mr. Hayes said that he had no private meetings at the annual meeting with anybody about the Sheraton or the Casino. He did have a conversation with Fiske for about 10 or 15 minutes. [175] Then a meeting with the Premier was called on April 21 by Mr. MacKay. Mr. MacKay's testimony as to how that meeting came to be arranged was as follows: A. I don't know how it came to be arranged. I do know that I was involved in arranging the meeting. Whether it came forward as a result of a holdover from a previous meeting or whether it came as a result of Dr. Gillis or somebody else seeking it or whether it was routine in the sense that there would have been a necessity somewhere along the line to keep the premier and cabinet apprised of what was taking place, but how it got to be set up, I don't know. I do know that I was involved through my secretary in setting it up. When it was determined that it be set up, I don't know. It may have been as late as that Monday morning, the 21st, or it may have been earlier. I don't know. I do know it was set up and I do know that was the day. He said that the purpose of the meeting was "pretty straightforward". [176] Mr. MacKay called Mr. MacKeigan April 21, 1997 to ask him to attend the meeting with Premier Savage. Mr. MacKeigan, in fact, was retained by Mr. MacKay to act on behalf of the Premier. Mr. MacKay's explanation as to why Mr. MacKeigan was in attendance was as follows: A. I had asked Robbie MacKeigan to attend, to be in a position, if needed, to provide advice on the arbitration process, what would happen with arbitration if there were issues -- and I didn't know what they might be -- that might come up during the -- during the briefing that we might need some other clarification on. That was the reason he was there. Robbie, to some extent would, to me, on that aspect of things, fulfil the role somewhat similar to what a policy analyst in the P & P shop would have done. He would have had an involvement to brief with respect to the statutes and the file. Q. Was this unusual, to have Executive Council with separate legal representation? A. No. It's not unusual at all. ... I do not accept Mr. Mackay's explanation that this was not unusual. While it may not be unusual to arrange separate legal representation I do find it unusual that this particular retainer occurred with practically no notice and no prior expression of concern to the Corporation. It was also a clear indication that at least Mr. MacKay perceived a divergence of interests as between the Premier and the Corporation. [177] At this meeting the discussion amongst the various participants was general. I find that the discussion was gently led by Premier Savage in the direction that a negotiated settlement would be preferable to proceeding with the arbitration. There was a suggestion in the evidence that at this meeting Fiske raised a concern that the Corporation would have the appearance of being neutered. I am not satisfied that remark was made at this particular meeting. If it was made, then it was made to Messrs. Holm and Merrick, but not to Messrs. MacKeigan, MacKay and Savage. [178] It was clear, however, and I so find, the thrust of Premier Savage's influence on the meeting was to the effect the arbitration should be settled through negotiations even though that would result in a delay of construction completion. [179] Premier Savage testified that the meeting of April 21 was not the result of the P & P meeting of April 15, but was rather the result of Mr. MacKay's recommendation to him that he should be involved. Premier Savage's impression is bolstered by the fact that Mr. Hayes had kept Mr. MacKay informed as to the deteriorating relationship between Fiske and the Sheraton. [180] Mr. MacKay as well admitted that he may have had a mistaken belief that the Casino might not be constructed or not be constructed on time. He held the view that the arbitration might have led to the loss of the Casino. I infer therefore that Mr. MacKay, whether on the basis of his own lack of information or perhaps on the basis of remarks made to him by Sheraton, had led Premier Savage to that concern. [181] At trial Premier Savage testified as follows: THE COURT: Did you think that the arbitration could result in the loss of the entire casino? DR. SAVAGE: No, but we felt that the declining relationship between the two of us, that is the government and the corporation and Sheraton, would be responsible for some problems arising that meant maybe an interruption of the money. That was a serious issue for us at the time. THE COURT: I'm sorry. MR. MACINTOSH: No, no. Not at all, My Lord. BY MR. MACINTOSH: Q. And I'd like to take you back to the answer you jut [sic] gave, Dr. Savage, and give you another opportunity. His Lordship just asked you whether you thought at the time that losing the arbitration could result in the loss of the whole casino. Your answer was, "No, sir." A. Well, let me try and explain this. We understood that we could not lose the casino, but we also had believed that there were -- there was the possibility that a long, drawn-out dispute would impact on the ability of the province to get twenty-five million dollars ($25,000,000) a year. Q. Dr. Savage, is that statement consistent with your previous statement? A. As far as I'm concerned, it is. What -- in what way is inconsistent? Q. Have you ever said that it was your view that if you lost the arbitration you could lose the whole hundred million dollar ($100,000,000) casino? A. I think what I said, and you can check in my -- in my -- the thing that you do in the beginning when you go to the lawyer. Q. Discovery. A. I think I said that there was a real concern about what would happen vis-a-vis the arbitration, but more importantly, about the whole casino business. Q. I suggest to you, sir, that there was not a single solitary person, including lawyers, that ever would have advised you that there was any risk of losing the whole hundred million dollar ($100,000,000) casino if you lost the arbitration. Dr. Savage's discovery testimony was put to him as follows: Q. Yes, you may. Page 48 of your discovery, line 20. "You keep saying 'we' and 'us'. Are you ..." Well, let me back up and give a fuller context for you. Line 12. "I think part of it relates to what we had seen in the papers about the fighting between the casino and Mr. Fiske. I'm not sure whether it was ever thrown at us that they would walk away from it. Certainly I have never received any intimation, but you always feel you don't want what we thought was a good thing, which was the twenty-five million dollar ($25,000,000) a year deal -- we did not want to lose that. Question: You keep saying 'we' and 'us'. Are you referring to yourself and Mr. MacKay, yourself and cabinet? Answer: Well, what I recommended to cabinet the following morning was that, under the circumstances, we did not want to jeopardize a good deal, and we felt that rather than go and wash your dirty linen in public and continue fighting in a way that wasn't doing credit to anybody, that it was best to negotiate. But again, 'we' felt? Answer: Well, by that time, cabinet agreed, and therefore, it became a cabinet recommendation." What was your reference to dirty linen? A. Well, I think the dirty linen was that it's better to negotiate than have an arbitration which would settle in public all the facts and issues that were being discussed. I think the reference to dirty linen here is purely and simply a passing reference to what happens when things get out about all kinds of things, nothing to do with an alleged Boudreau -- or anything like that, but the relationship between the two was the issue more than anything. Q. Well, the only issue that was going before that arbitrator was -- were these pretty pictures. A. Yeah, I guess you and the lawyers might have understood that. We felt very strongly that there was a serious problem that we might lose money. Q. And you don't know who it was that was planting that seed in your mind? A. I think it was felt generally and many people in cabinet, that this was not a time to lose the money. And further as follows: A. So the idea of that being threatened, not in the sense that it would collapse but in the fact that there might be a long, drawn-out battle in which somehow we might not get the money, was of considerable importance to me, and also to other members of cabinet whose particular department might have been affected significantly. Q. I'd suggest to you, Dr. Savage, that neither Mr. Merrick nor Mr. Holm nor Mr. Fiske nor any other representative of the Gaming Corporation would have ever put that scenario to you or to any members of your cabinet. A. No, I'm not saying they did. Q. But somebody else from the Sheraton may have been? A. No, because I never spoke to the Sheraton. Q. But that idea came from somewhere? A. Well, when you have 17 people around the room in a cabinet, the issue of losing money and the issue of having difficulty with problems that didn't seem to be somehow resolving, that's a serious issue. Q. I refer you to page 47 of your discovery of this March, at line 17: "Question: Was it your impression at the time that, should the arbitration fail, that the province might lose the casino? Answer: That was the impression that we had." A. Yeah, that's why I was ... MR. BARNES: I think you have to go on and read the next one. MR. MACINTOSH: Okay. BY MR. MACINTOSH: Q. Okay. And then you continue: "The impression was that not only might it be delayed, there was also the fear that the Sheraton might say, 'We're out of this.' Most of the two items that I've described were the two actual ones that relate to the postponement and to the decoration or specifics of the casino. But overall, this was the kind of fear that this might -- because of the very poisonous relationship between the two, that this was something that might result in them walking out. We had no substantial evidence except that it was, we felt, a possibility, and that would have meant a significant loss for us." MR. MACINTOSH: Is that sufficient, Bob? MR. BARNES: Yeah. BY MR. MACINTOSH: Q. Now I'll come back to the first part, doctor. This morning you had testified that you did not think losing the casino was a risk in your mind. I understand from this that you were saying you did. A. No, as a result of the arbitration, you asked me. It wasn't that sole issue. Here was a government that was struggling to deal with very difficult financial times. Here was a government that was patting itself on the back that it had a good corporate partner in the Sheraton. Whether that's right or wrong, you have to interpret. But it was a twenty-five million dollar ($25,000,000) a year -- we did not want -- and when I say "we", there was general conversation around the cabinet table several times, "We don't want to mess this up." And that's where I think some of the inclination that may have been unconsciously in my mind came about. Q. But this, with respect -- let me read it again. I think it's a more precise question, doctor. "Question: Was it your impression at the time that, should the arbitration fail, that the province might lose the casino? Answer: That was an impression that we had." A. But that's what I said. Q. You're linking it right into losing the arbitration, could result in the casino never being built. A. But the arbitration was only one of the issues. MR. BARNES: To be fair though -- to be fair though, that's really the start of the next answer. When you say "Okay", then he says the impression which he's referring to was that not only might it be delayed, but there was also the fear that the Sheraton might say, "We're out of this." And then he goes on to say that they might walk away. So I don't think it's fair to put that one answer to him as being representative of what his answer was. MR. MACINTOSH: Well, I -- I'm not going to quarrel with My Friend. He's ... THE COURT: The whole of the question and the answer has now been read to me. I've heard his comment. What else can you ... BY MR. MACINTOSH: Q. Anything further to add to that, Dr. Savage? A. No, except to repeat that it was the combination of all those things that was important to us. Mr. MacKay had apparently, at the time of the arbitration, held the same view and testified in confirmation of his discovery evidence as follows: Q. Okay. And you've confirmed as well that you also considered it possible that the arbitration could have led to the loss of the casino. That was your view at the time. Right or wrong, meritous or non-meritous. A. Yes, I think that's correct. Q. Thank you. Do you recall where you got that impression from, that the loss of the arbitration might lead to the loss of the casino? A. No, I don't. [182] There is a clear inference to be drawn from the evidence before me that there was a relationship between what occurred at or about the time of the annual meeting of the Liberal Party and Mr. MacKay's calling the meeting the following Monday and his retainer of Mr. MacKeigan. I conclude that Mr. MacKay passed on a concern to Premier Savage who in turn had an indirect concern that the Province might lose a $25 million a year deal or worse. I explicitly recognize that there are implied findings of credibility in this conclusion. The arbitration [183] The arbitration proceeded on April 22 and then adjourned around noon. Mr. MacKay then retained Mr. MacKeigan again to attend the continued arbitration on behalf of the Premier to explore the possibility of a settlement. [184] On April 22, Mr. MacKeigan made the note in his diary to which I referred to in para.[90] above. [185] Although Mr. MacKay professed to have no recollection of it, I conclude that note refers to a telephone call from Mr. Hayes to Robert MacKay on April 22. At that time therefore there was a direct relationship between Mr. Hayes on behalf of the Sheraton and Mr. MacKay on behalf of the Premier's Office – all without the knowledge of Fiske or the Corporation. That contact had the effect of undermining the ability of the Corporation to manage the Casino as required as the Sheraton thereby had a direct link to the means to overrule the Corporation. [186] Mr. MacKeigan attended the resumed arbitration. He had earlier checked with Mr. Merrick who had agreed prior to his attendance. I find, however, that Mr. Merrick did not discuss Mr. MacKeigan's attendance at the arbitration with Fiske and that upon his appearance Fiske was surprised. I also find that Mr. MacKeigan whether accidentally or by design briefly met with Sheraton representatives immediately prior to the resumed arbitration. Fiske inferred that the Sheraton and Mr. MacKeigan were cooperating with one another against the plans and strategy of the Corporation. [187] Mr. MacKeigan's intervention was highly significant. It probably led to the settlement of the matters then under arbitration and others. The effect of his attendance and presence at the arbitration, however, had the unfortunate but foreseeable effect of displaying to the Sheraton that there was a divergence of interests between the Corporation and the Premier's Office. In my view that perception was correct and in my view it had the effect of substantially weakening the Corporation's bargaining or arbitration position. [188] It is my conclusion that the retention of Mr. MacKeigan and placing him at the bargaining table or in the arbitration process so weakened the Corporation's position that it amounted to a material change in the authority of the Corporation and of Fiske. Fiske knew and the Sheraton could conclude that he was then in a position where his negotiating stances might not have the approval of the Province. [189] Notwithstanding that I found that even previous to this incident Fiske's authority had been undermined, it is my conclusion that as at this date Fiske was constructively dismissed. While pursuant to the Act the Province had the authority to overrule the actions of the Corporation and/or Fiske, this intervention had the effect of interfering dramatically with the ability of the Corporation to manage. IX - FISKE - HONOURABLE MR. GILLIS [190] John William Gillis, who insists on being known as Bill Gillis, assumed the finance portfolio in June, 1996. He as well developed a relatively easy relationship with Fiske, but clearly did not have the same depth of understanding of the gambling/casino enterprise as Mr. Boudreau had. Fiske kept Mr. Gillis fully briefed on all issues before the Corporation, including the necessity to conduct and manage the Casino and Fiske's perception of the necessity for the arbitration and the arbitration strategies. [191] Gillis, as well, was summoned to the Premier's Office on April 21, 1997, but as that was a Monday, Gillis' constituency day, he did not attend. He had not been informed that Mr. MacKeigan would be present and was not informed as to what was intended to be discussed. [192] On the morning of April 22, Gillis attended a Cabinet meeting at which the Premier, instead of Gillis as Minister of Finance, reported on the Casino situation. Gillis' evidence was as follows: Q. Okay. Did you, as minister responsible under the act, provide any report to cabinet on that issue? A. No. The premier made the report to cabinet on that occasion. Q. And what was -- what was that report? A. As I recall, it was negotiate a settlement rather than go to arbitration. Q. Okay. Negotiate a settlement rather than go to arbitration. And what was the directive of cabinet? A. I don't know if it was a directive, but it was more a decision that cabinet felt it was better to negotiate than to arbitrate. Later Mr. Gillis testified as follows: Q. Okay. And what, for the record, was the decision? A. To proceed with negotiations. Q. To proceed with negotiations. In other words... A. Not to arbitrate. Q. ...not to arbitrate. There was a firm directive? A. That's my understanding. [193] No order-in-council was ever prepared to give effect to Cabinet's decision, although Mr. Gillis testified that most decisions of Cabinet do not have orders-in-council related to them. [194] Following the adjournment of the arbitration Mr. Gillis was not aware that Robert MacKay continued to instruct Mr. MacKeigan on behalf of Cabinet. [195] Mr. MacKay gave evidence of the Cabinet meeting of April 22 as well, but his evidence was to the effect that the Cabinet's action with respect to the arbitration were not as firm as that described by Mr. Gillis. He testified: We then went to the cabinet meeting. Sometime during that cabinet meeting, the premier would have, and did, raise the fact that he had had a discussion, or to the effect that he had a discussion with Ralph Fiske of the Gaming Corporation and had reviewed the concept of negotiating or attempting to achieve negotiations rather than arbitration, or to that effect. I don't recall any discussion at cabinet. I do recall that Premier Savage sometime thereafter communicated to Mr. Fiske that, yes, this seemed -- this seemed fine. [196] As between the two versions of Cabinet's action, I prefer that of Mr. Gillis. Based upon Mr. MacKay's subsequent actions I conclude that he took Cabinet's position to be an instruction that the Corporation was to negotiate rather than arbitrate, but it is clear that any such decision by Cabinet was taken without full advice of the issues. [197] After the matters at issue in the arbitration had been settled and accepted by the Board of the Corporation or apparently settled, Fiske was extremely upset. He and certain other members of this Board felt that Cabinet, through Mr. MacKay, had pressured the Corporation into the settlement. Fiske outlined his concerns to Mr. Gillis who gave Fiske to understand that he shared them. I find that Mr. Gillis later (in August) actively encouraged and/or assisted Fiske and others to prepare a memorandum to Cabinet essentially outlining the reasons why Cabinet should not approve the settlement. At trial Mr. Gillis said that he did not agree with everything that was in the memorandum, but he did not tell that to Fiske or Sheila Butler who was the primary author of the memorandum. He said he was not accountable to them. I find that Mr. Gillis was not candid or frank with Fiske. He led Fiske to believe that he supported Fiske's position and that he would put it forward to Cabinet. In this respect Mr. Gillis was totally ineffective. He stated repeatedly in testimony that this memorandum was merely an opportunity for Fiske to state his views, some of which Mr. Gillis did not share. I do not accept this. Mr. Gillis spent many hours on this memorandum. I conclude that the memorandum in fact represented Mr. Gillis' and Fiske's views on the matters. Perhaps one of the most telling aspects of Mr. Gillis' lack of candor (or hypocrisy) is found in the statement in the memo which Mr. Gillis assisted in drafting, "it became clear during the briefing sessions with the Minister of Finance during the April/May period that Mr. Gillis had not been involved in the discussion related to the proposed terms of settlement and the shareholders directive as advanced by Bob MacKay and Mr. Robbie MacKeigan." Mr. Gillis did not tell Fiske he disagreed with this statement. Further, it was a statement of fact, not a view as Mr. Gillis described it in testimony. Frankness and candor demanded that Mr. Gillis should have told Fiske of any aspect of the memorandum which was not in accord with the facts or with Mr. Gillis' own views. [198] Mr. Gillis arranged a meeting of the Premier, Mr. MacKay, himself and Fiske for June 5, 1997. I have compared the four versions of the recollections of that meeting and I will now set forth some aspects of them. Fiske testified as follows: A. We met with Dr. Savage, and Bob MacKay was in attendance. Dr. Gillis simply indicated -- I believe he spoke first -- why we were there, which was to help myself to have a better understanding as to why the decision was taken, and that he himself had not been knowledgeable, been made knowledgeable, and not been involved in these events, and therefore, was not able to explain. And hopefully, Dr. Savage, Premier Savage would. So he asked me to speak, and I did. I think my first comments were of the nature that I felt that the decision that the government had made or his office had made would be very damaging to his government, and that the fact that this was being opposed by the Gaming Corporation as it was, it was certainly having the effect of neutering us. And I used that word many, many times over those months. That it was difficult to have negotiations going on without our knowledge, that Dr. Gillis had no knowledge of what was going on, that he had not been kept informed. Bob MacKay became very agitated at that comment and simply indicated that he felt no need to keep Dr. Gillis informed, that he had no desire to spend time doing that. And then we got back on track and I asked Dr. Savage if he would explain to me why he felt so strongly that we couldn't go through the arbitration procedure which was laid down in our agreements, which was a standard business solution to disagreement. Dr. Savage indicated that -- that he didn't want this to go to arbitration because he was convinced the public would learn of it. And many times in the past in his -- during his term, it had been said of his government that they did some good things but had proceeded to foul up, if you will, those good things in the implementation of those policies, of good policy. And he did not want this to -- he wanted to keep this from the public so that they would not say the same thing about the casino, this casino event, because it had been Bernie's baby. And I believe that's the expression that he used. And they would blame Bernie and it could affect his leadership, and we had to do everything possible to avoid hurting Bernie in his leadership efforts. I became very excited, emotional, whatever you call it, and I pounded his desk and indicated that I was shocked that he would do such a thing, that I thought that it was -- I said things that I'm not very proud of and I don't think it's appropriate that I probably repeat them here. Q. No, that's fine. A. I -- things like I had supported him in his leadership. He had asked -- put me in this job because he thought I was honest and that I would be a good man for the job, and I accepted, and now he would do the likes of this. And I must say, I said many things that I -- that were perhaps uncalled for. [199] Premier Savage's testimony concerning of the June 5 meeting was as follows: Q. Now, Dr. Savage, you had a second meeting with Mr. Fiske, I believe, on June the 5th, 1997? A. That's right. Q. Yes. And what do you recall about how that meeting came to be arranged? A. It's my understanding that Dr. Gillis arranged it. Q. And do you have any more than an understanding or a general recollection? Do you recall any of the details or how the meeting came to be arranged? A. I would have -- I would have thought Dr. Gillis would have come to me, probably, and said, "I think you should meet Mr. Fiske" THE COURT: I'm sorry, Dr. Savage. You're saying "I would have thought." It's better to (inaudible), if I can put it that way. What did happen? DR. SAVAGE: I don't recall exactly what happened. BY MR. BARNES: Q. Okay. You have no present recollection of that? A. I think that I remember a meeting with Dr. Gillis but I really don't -- I can't say with absolute certainty that I remember a meeting. . . . Q. Okay. No I'd appreciate that, but I guess my question was whether you have any recollection of anyone reporting concerns to you that Mr. Fiske may have been expressing before the meeting on June 5th? A. In all honesty, I cannot recall. Q. Who do you remember being present at this meeting on June the 5th? A. Mr. Fiske, Mr. MacKay, Dr. Gillis and myself. Q. And do you have any present recollection as to what your understanding of the purpose of the meeting was before you attended? A. Well, by this time the decision of the Gaming Corporation had obviously become public, that they had agreed, and I assume that Mr. Fiske would not be happy. Q. Why would you have assumed ... A. Well, otherwise he would not be looking for a meeting with me, presumably. Q. Okay. Did you have any specific knowledge, though, as to ... A. No, not that I recall. Q. Okay. What do you remember of .. well let's go back a step. Do you recall what time the meeting was? A. Well, I think it was in the morning. 9:00? I'm not actually certain. I haven't checked the exact time. Q. Okay. And what do you remember about the discussion that occurred at that June 5th meeting? A. It was a very hostile meeting. Right from the beginning, the hostility was clear. There was some table thumping, and it was obvious that Mr. Fiske was, as I have said before, exercised. I think the issue that prompted me to become exercised also was the fact that he alleged that the Sheraton had got to me, and that annoyed me beyond measure. At no time did I speak to the Sheraton, at no time had I any contact with the Sheraton, and at no time had I given in in any way to the Sheraton, simply because I had no contact with them. And the insinuation, the insult, was that "They got to you," which I denied. Q. Now, you mentioned there was some table thumping. Who was thumping whose table? A. It's my recollection that it was my table and Mr. Fiske was thumping his end of my table. Q. And do you recall how quickly the tone of the meeting became hostile in the way that you've described? A. It was fairly prompt. Q. And do you recall what Mr. Fiske's initial reaction was when he came into your presence? Do you recall any of the details of how the conversation evolved? A. No, not particularly I don't . All I recollect was that it was a hostile meeting and that he accused me of being got at. Q. Was that -- was this somewhat of an unusual experience for you, or was this a kind of meeting that you had in the past on occasion? A. I didn't have too many meetings in my office at which people thumped the table, no. I don't think it was a usual kind of meeting and I was taken aback at his remarks and his insinuations, and probably told him so. Q. Do you recall -- apart from what you've said, that you denied these accusations you were gotten at or whatever, do you recall any of your other remarks or replies to anything he may have suggested to you? A. Not really. It was -- it was, as I say, a hostile meeting. I think he was throwing figures around, whatever. We had surrendered, etc., etc., but it was the insinuation that I had been got at that annoyed me so much. Q. Do you recall what it was that he was trying to communicate to you, what he was hoping to do with this meeting with you? Was that clear to you? A. It's not clear, except he was sounding off. Q. Do you remember anything about Dr. Gillis's involvement or Bob MacKay's involvement in the meeting in any specifics? A. Not -- I would imagine that, from my memory of Dr. Gillis, that he was probably trying to referee a little, but I don't really recollect a great deal other than the palpable hostility that was being exercised by Mr. Fiske. Q. Do you recall if Dr. Gillis kept -- do you have any specific recollection of Dr. Gillis keeping any notes at this meeting. A. I have since been informed that he did. Q. But, in fact, do you recall? A. Dr. Gillis always had a notebook in front of him too, so... Q. Well, apart from your awareness of his habit, do you have any recollection of actually seeing him there scribbling away on that day or ... A. I would doubt whether I was interested in what Dr. Gillis was doing. I was interested more in Mr. Fiske's accusations. . . . Q. Do you remember how long it took? A. Not really. Q. Now, Mr. Fiske says at this meeting on June the 5th you brought up or mentioned this business about Bernie Boudreau's leadership interests and the need to keep this arbitration away from the public limelight in order to protect his leadership campaign. Again, for the record, what do you say about that allegation? A. I deny it categorically. I at no time talked about Mr. Boudreau. It would not have made any sense to have discussed this kind of thing and it was simply not my style. Q. Well, was it part of your thinking at the time? A. No, it was not anything that I ever thought of as a -- as a way of doing business. [200] Mr. Gillis was asked about the meeting of June 5 as follows: Q. Let's turn then to the conversation that Dr. Savage has described on June 5th and that Mr. Fiske has described. Both describe a very serious argument and allegations, both slightly different. And if I can summarize and paraphrase for them -- and I know you've heard them -- Mr. Fiske says, when he questions Premier Savage about having to do this deal, that Premier Savage told him, "Look, we don't want anything to hurt Bernie Boudreau's upcoming leadership, and sometimes you just have to do what you have to do." Dr. Savage vehemently denies ever having said that and says instead that it was Mr. Fiske that came to him and accused Dr. Savage of having been got at by the Sheraton. You were present during that meeting. Which of the two versions do you recall? Because we have described them as being heated. Mr. Fiske has described how there was pounding on the premier's table. Premier Savage has described being very upset and very offended and never had he had anybody act in that manner in his presence before. Which of those versions do you recall, Dr. Gillis? A. Your Honour I recall neither. I recall, in my earshot, neither the mention of being got at or Bernie Boudreau's leadership. And I say that again under sworn testimony. . . . Q. Well, at any point did Mr. Fiske and Premier Savage sort of break off to a corner of the room and do things, whether it's pounding on the table or shouting at each other, that you would not have heard? A. I'm not aware that they did. Q. No. It was a relatively small room, was it not? A. Relatively small room. Q. If an event like Mr. Fiske or Premier Savage has described did occur, would you agree that it would be very difficult for you not to have noticed it? A. Well, if either of those things were said, the got at or the Bernie Boudreau leadership, if it were within my range of hearing, I certainly would have reported it. And to the very best of my knowledge and under oath I say that I didn't -- I don't recall that happening within my range of hearing. I don't know how other I can say it. And I'm talking both of them, both the alleged comments by Mr. -- Dr. Savage on the one hand and Mr. Fiske on the other. I'm not taking sides. Q. When -- pardon? A. I'm not taking sides. Q. Well, sometimes it's not a question of taking sides, Dr. Gillis. It's a question of just testifying to what you recall. A. Your Honour, I already did, about three times say I -- those -- those comments were not made within my ear -- range of hearing. . . . Q. Now, let's talk again about -- for a moment about how that meeting broke up. Would you describe that please? A. Well, I don't there's anything -- I don't recall anything particularly noteworthy. I think the end of my notes, Your Honour, will show the premier said something about proceed as best we can. You know, I don't remember anything particularly notable about it. It was an hour meeting and that was it. Q. Do you recall Mr. Fiske steaming out of the meeting? A. Your Honour, would counsel repeat the question? Q. Yes, do you recall Mr. Fiske steaming out of the meeting? I'm sure there is a better expression than "steaming." Leaving the meeting in an abrupt fashion with emotion and anger? A. No I don't specifically recall that. [201] Mr. MacKay's version of the meeting was as follows: Q. Now, you were also in attendance for a meeting with Premier Savage, Dr. Gillis and Mr. Fiske on June the 5th, I believe, of 1997. Is that correct? A. That is correct, yes. Q. And do you recall that particular meeting? A. Yes, I do. I recall the meeting. Q. Do you remember how it came to be arranged? A. I'm reasonably sure that the meeting came about as a request by Dr. Gillis on behalf of Mr. Fiske that he wanted to have a discussion with the premier with respect to the events that had transpired leading up to the settlement and the board having made a decision to recommend a settlement and recommend a subsequent amendment to cabinet, but that would have been the tenor behind it. The -- I think Mr. Fiske wanted, as I understood it when I got there, wanted to have a discussion to express his views around that settlement to the premier. Q. And what do you remember about the discussion? A. I again recall in general terms that the meeting was tense. I don't think there's any question that Ralph felt that negotiation had taken place that he wasn't aware of, that things had transpired behind his back, that this may or may not have been a good settlement but that the relationship with the Sheraton still wasn't a good relationship and so on. So, I guess those are what I recall from the position that was put. I think that -- and there's no question from my perspective that I did not feel and was not aware that any negotiations had gone on behind Ralph's back, that no negotiations that I was aware of had gone on without the corporation's counsel present. I know that Robbie MacKeigan was not involved in the negotiations. So I didn't feel that there were any negotiations that had transpired beyond that. But Ralph was quite convinced that something had happened, that there were a set of negotiations that took place without his or his counsel's knowledge, and then that's the general tenor that I recall. It was -- it was a difficult meeting from that perspective. Q. Do you recall any anger being expressed between or among the participants? You've described it as being tense, but I wonder if it went any further than that? A. I don't recall anything that I would have termed to be anger. I do recall a tense meeting where Ralph expressed what his beliefs were, and I expressed what mine were. And I'm reasonably sure the premier would have expressed what his were, that as to his knowledge, and I can't quote him, but I can -- I mean, if anything, it was -- there was no belief on our part that negotiations had taken place. So, there was -- there was no foundation to the perception. Q. Do you recall -- well, let me ask you this. I want to read you a little bit more testimony. This is from May 18th at page 33 at line 21 (from Fiske's evidence). "Answer." This is in answer to a question. "At a meeting with the premier, Bob MacKay, Dr. Gillis and myself, I think I had mentioned that it was difficult for the minister at this time because he was not being kept informed as to what was going on in this area, and he was being denied knowledge of anything -- of these things that were being done. Bob MacKay became quite agitated and said it didn't matter whether Dr. Gillis was informed or not, he didn't need to be informed. That was particularly difficult for Dr. Gillis." What do you say about the accuracy of that testimony? A. Well, I can't see me ever saying that to Bill Gillis. I just -- I just don't see where it was there. I -- also, I was of the belief that no negotiations had been taking place in any of that. So, I can't see me taking or being critical or making that statement about Bill Gillis. [202] Other of Fiske's testimony was put to Mr. MacKay as well and in particular he denied that anything had been said about keeping the matter of the arbitration from the public as it might hurt Bernie Boudreau's chances in the leadership race. [203] Of the four versions of this meeting I prefer that of Fiske as the most accurate. I specifically decline to accept that of Mr. Gillis. Mr. Gillis' testimony concerning this and other matters about which he was examined was unbelievably vague. I as well found Mr. MacKay's evidence with respect to this and other matters lacking in credibility. I conclude that the meeting was hostile almost from the start. I conclude Premier Savage did in fact say something about Boudreau's leadership aspirations (and it is reasonable to conclude that, given Savage and MacKay both had the impression the casino project might be threatened if the arbitration went ahead) and concern was expressed about potential adverse publicity, both with respect to Mr. Boudreau and with respect to the Liberal Party. I also conclude Fiske alleged Premier Savage had not been kept properly informed – an insinuation against Mr. MacKay – and both Mr. MacKay and Dr. Savage reacted with hostility. I also conclude Fiske made a remark which inferred to Savage that he had been "got at" by the Sheraton. Dr. Savage reacted with hostility to such an inference as he said, and I accept, that he had never had any direct dealings with the Sheraton. I again indicate my conclusion is that Mr. MacKay had in fact had direct dealings with Sheraton through their counsel. By that conclusion I do not infer any unacceptable activity on the part of Sheraton's counsel. [204] I also find that again the relationship between Fiske and his employer was fundamentally and fatally damaged as a result of this meeting. [205] I also conclude that Mr. Gillis had led Fiske to the assumption that he would support Fiske in his efforts to persuade Cabinet to refuse to ratify the proposed settlement. He did not do so. [206] There are two versions of the effect this meeting had upon Mr. Gillis. I accept, once again, Fiske's version of what occurred immediately after the meeting; that is Mr. Gillis was crushed. It was obvious that he had been kept "out of the loop" by Mr. MacKay. [207] My conclusions with respect to the tenor and content of the meeting of June 5, 1997 are supported by the minutes of the Gaming Corporation Board later the same day. The formal minutes contain the following: R. Fiske expressed to the Board that he was concerned about the potential perception of the Board and the Board's ability to be effective. R. MacAloney added that he believed the Board could continue in an effective manner. B. Cordy noted that he felt the proposed settlement agreement might achieve NSGC's objectives over the long-term. D. Gordon commented on her past understanding the Board's independence and its mandate to make decisions on behalf of the Province. In a draft and unedited version of the minutes of that meeting was the following report: 2) Update re Meeting with Premier (unscheduled agenda item) R. Fiske indicated that at the request of Minister Bill Gillis, he had met earlier in the morning with the Premier, Bob MacKay and the Minister regarding the proposed settlement. He related that the Premier indicated that at no time had any representatives of the Sheraton approached him regarding the proposed settlement. R. Fiske reiterated that NSGC would follow the wishes of the Province. The Premier responded that the Province did not want to provide a directive on this issue and reminded R. Fiske that NSGC was a Crown Corporation. R. Fiske added that he felt that accepting the proposed settlement in its present form was an error on behalf of the Province. The meeting concluded as R. Fiske returned to chair the Board Meeting. [208] In the left hand margin of this minute is the handwritten comment, apparently that of Sean O'Connor, a Board member: "not relevant to Board meeting". [209] The notes of the recording secretary of this meeting (while not entirely clear) contain references which reflect statements apparently made by Fiske within a contemporaneous time frame of the meeting with the Premier. Meeting with Premier. Arranged by William Gillis. Premier indicated that William Gillis pleaded with him listen. Bill Gillis – upset about not being in loop of settlement. Premier/said understood that Sheraton was going around us (?) that bothered us. Nobody from Sheraton had ever talked to him. Had talked to some Cabinet Ministers. Ralph Fiske said directions would be followed. R. Fiske – 7.5 extension (no public process) Not perceived as want to hurt Sheraton R. Fiske want to receive directions from you. Premier said "no" Bob resented implication of having dealt with Board. R. Fiske – Bob resented implication of having dealt with Board. R. Fiske – Board decides to approve – Minister Thinks it's a major mistake Premier said "yes, that's what they were looking for." Again Bob said he resented insinuation of being directed. Premier reminded we are a Crown Corporation. (1) Public kicked legs out from under (2) ineffective as Board. R. MacAloney expressed view that not end of world still can be effective. R. Fiske – upset with current condition. B. Cordy says in long-term agreement in best light from NSGC Dara Gordon – promised of independence. [210] Dara Gordon made a note on a memorandum from Sheila Butler dated June 4, 1997. I conclude the note was made on June 5, 1997, and reflected either her personal comments made as a result of Fiske's report to the Board, or reflected what Fiske reported to the Board. The notes read as follows: - originally political appointment; - way done in Nova Scotia – seemed to assume otherwise; - shareholder directive; do whatever – have to bring shareholder on side or give way to political. [211] The compliant position of the Board as expressed at the meeting is in sharp contrast with that occasion when the Board took Fiske to task as Mr. Boudreau made a public statement concerning the extension granted following their trip to Las Vegas. [212] I have reviewed the evidence concerning the relations between Fiske and Mr. Gillis. I find that Mr. Gillis' lack of candor with Fiske and his failure to support Fiske in the manner he had led Fiske to believe would be done were factors in Fiske's ultimate realization that his employment contract had been breached. X - FISKE/PREMIER RUSSELL MACLELLAN [213] Immediately after Russell MacLellan was elected leader of the Nova Scotia Liberal Party, Mr. Gillis suggested that Fiske prepare a briefing note for the Premier. [214] At the swearing in of Mr. MacLellan Fiske and the Premier exchanged pleasantries and Fiske said that Premier MacLellan thanked him for not letting the Bernie Boudreau deal proceed. Mr. MacLellan did not recall any such exchange. [215] On July 29, 1997, Fiske and Mr. Gillis briefed Premier MacLellan on the basis of a briefing note prepared by Sheila Butler, which note included various allegations including one concerning Fiske's understanding that the Sheraton had stated that they had an undertaking from an "honourable gentleman" about the construction of the Casino. It was clear, however, (and I find) that Premier MacLellan had been briefed by other persons in advance of this meeting and had been told that Fiske was wrong in his allegation about the extent of the potential loss to the Province as a result of the settlement. I have outlined in para. [133] (above) the results of this meeting and the inquiries resulting from it. [216] I have no persuasive evidence before me that the investigation was effective. It appears to have been related mainly to the $20 million loss allegation and I have no evidence which persuaded me that a complete inquiry was made into other allegations. [217] On July 31, 1997, Mr. Gillis requested of Butler and Fiske a detailed memo to go to Cabinet. That memo was prepared, but when the Gaming Corporation Board became aware of it they expressed concern about its contents. There was clearly a division amongst the Board members. In particular, Dara Gordon said that she was "prepared to go to war with the Sheraton" and was pleased that Mr. Gillis supported them. Other members did not support the memorandum. [218] Eventually, the memo prepared and edited by Gillis for presentation to Cabinet was redrafted extensively and taken to Cabinet together with a memo from staff which essentially disagreed with Fiske's and Gillis' expressed position. That is, Howard Windsor's staff memo to Cabinet was to the effect that the terms of the settlement ought to be accepted. [219] In his evidence at trial, Mr. Thompson acknowledged that Premier MacLellan had said that Fiske's allegations were to be taken seriously and that he expected a thorough inquiry into them. It is clear, however, that Mr. Thompson did not take his instructions to include any inquiry into political activity. Nor do I have any evidence which persuaded me that Mr. Thompson investigated to any depth Mr. MacKay's involvement. He talked with Mr. MacKay and formed the impression that Mr. MacKay was very frustrated with Fiske. He never spoke to Mr. Merrick or to Mr. Holm concerning the allegations. [220] As I outlined in para. [149] herein, Fiske met with David Thompson on September 25, 1997 and I have made my findings of fact concerning that meeting. I have no doubt by that time Mr. Thompson was frustrated with Fiske and with the poor relationship between the Corporation and the Sheraton. I must also conclude that Mr. Thompson spoke on behalf of the Province. But as well, by that time I find Fiske had lost his sense of objectivity about his relationship with either the Sheraton or the Cabinet. I am unable to reach any firm conclusion as to the correct version of some of the details of the meeting between Thompson and Fiske on this date. Nonetheless, as a result of that meeting (and the cumulation of other events) Fiske tendered his resignation. I do not consider that I have enough evidence before me to conclude that if this meeting had occurred without the preceding events upon which I have made my findings it would have amounted to a wrongful dismissal. That is, I am simply not satisfied on a preponderance of probabilities that Thompson forced the resignation by this one meeting. It is my conclusion that the employment relationship had already been destroyed. [221] Alternatively, even in the absence of firm conclusions as to the precise details of the latter conversation, it is clear that Thompson gave Fiske his "marching orders". In the context of the Act that was inappropriate. Directing Fiske and the Corporation to settle all outstanding demands by the Sheraton deprived them of the ability to manage effectively and amounted to a breach of the employment contract. [222] I do not attach criticism to Premier MacLellan for this incident. I am not convinced that he authorized or directed the high–handedness of Mr. Thompson's approach. XI - SUMMARY RE WRONGFUL DISMISSAL [223] As I found in para. [30] above, Fiske was employed by both the Corporation and the Province. In his capacity as Chair he was employed for a fixed five-year term and not at pleasure. My conclusion is that he was constructively dismissed. [224] Constructive Dismissal: There was a unilateral substantial change to essential terms of the employment contract. Accordingly, there was a constructive dismissal. (See Stacey v. Electrolux Canada (supra)). (1) Fundamental Change: In the circumstances, Fiske's continued employment became intolerable. There had been a fundamental change in his employment contract. (See Shah v. Xerox Canada Ltd. (2000), 49 C.C.E.L. (2d) 166). Fiske's loss of authority would eventually prevent the effective exercise of his duties. (2) Breach of Implied terms: (a) As the result of the various occurrences outlined above and others Fiske's relationship with the Government of Nova Scotia had been undermined. He now felt, with justification, that he could no longer trust his relationship with the Government. (See Malik & anr v. Bank of Credit and Commerce International SA, [1997] NLOR No. 507 (HL)(QL)). Mutual trust was an implied term of the contract. (b) His authority had been undermined. (See Park v. Parsons Brown and Co. (1989), 62 D.L.R. (4th) 108 (B.C.C.A.)) That is, his duties and powers with respect to dealing with the Sheraton had been stripped. In fact, his ability to do the job for which he had been employed had been severely obstructed. (See William Hill Organisation Ltd. v. Tucker, [1998] E.W.J. No. 397 (C.A.)(Q.L.)). (3) Change in Status and Prestige: At least with respect to Fiske's relations with his Board and with Government and judging the situation objectively, Fiske had lost status and prestige. He was no longer able to act independently and the Corporation had lost its ability to conduct and manage a casino on behalf of the Province as required by the Act. That ability had been assumed by the Government. His authoritative status concerning the Sheraton no longer existed. XII - DAMAGES – AGGRAVATED/PUNITIVE/EXEMPLARY [225] In addition to special damages the plaintiff has claimed punitive and aggravated damages, damages for a separately actionable wrong and damages arising from bad faith conduct on the part of the defendants. I will examine each of these heads of damages separately. Before doing so, however, I consider Fiske's claim as pleaded. The Pleadings [226] He claimed damages as follows: 12. The plaintiff claims that he was constructively dismissed. The plaintiff further states that his termination was communicated by the Crown to the public in a manner which falsely portrayed such constructively dismissal as a voluntary resignation on the part of the plaintiff. 13. The plaintiff states that as a direct result of his wrongful termination and the manner in which it was communicated to the public, he has suffered damages including loss of income, personal embarrassment and humiliation, loss of reputation and prestige in the community, and mental distress. 14. The plaintiff therefore claims as against the defendants, both jointly and severally, the following: (a) General damages for mental distress and loss of reputation to be assessed; (b) Special damages for loss of income and corollary employment benefits from October 1, 1997 to February 14, 2000; (c) Other special damages to be assessed; (d) Punitive and exemplary damages to be assessed; (e) Pre-judgment interest and costs of the Action; and (f) Such further and other relief as this Honourable Court deems just and reasonable. [227] The defendants say that Fiske has not pleaded a specific separately actionable wrong. He has, rather, pleaded constructive wrongful dismissal and claimed damages arising from that dismissal and for the "... manner in which it was communicated to the public" and for the "... manner which falsely portrayed such constructive dismissal as a voluntary resignation ..." While it would certainly have been helpful to have had more precise pleadings of any separately actionable wrong, this absence is not fatal to Fiske's claim. [228] Both parties have referred to Vorvis v. Insurance Corporation of British Columbia (1989), 58 D.L.R. (4th) 193 (SCC). The defendants herein initially submitted that an employee will not be compensated for an injury arising from the dismissal itself, but rather a separate tort recognized in law must be pleaded and proven. The defendants cite the decision of McIntyre, J., who wrote for the majority and who stated at p.204: From the foregoing authorities, I would conclude that while aggravated damages may be awarded in actions for breach of contract in appropriate cases, this is not a case where they should be given. The rule long established in the Addis and Peso Silver Mines cases has generally been applied to deny such damages, and the employer/employee relationship (in the absence of collective agreements which involve consideration of the modern labour law régime) has always been one where either party could terminate the contract of employment by due notice, and therefore the only damage which could arise would result from a failure to give such notice. I would not wish to be taken as saying that aggravated damages could never be awarded in a case of wrongful dismissal, particularly where the acts complained of were also independently actionable, a factor not present here. As noted by Hinkson J.A. in the Court of Appeal, at p.46: It was not suggested by the plaintiff that Reid's actions in the months prior to his termination constituted a breach of contract. Upon the basis of the reasoning in the Brown case, Reid's conduct was not a separate head of damages in the claim for breach of contract. His reference to the Brown case was to the words of Weatherston J.A. in Brown v. Waterloo Regional Board Com'rs of Police, supra, p.736, where speaking for the court, he said: If a course of conduct by one party causes loss or injury to another, but is not actionable, that course of conduct may not be a separate head of damages in a claim in respect of an actionable wrong. Damages, to be recoverable, must flow from an actionable wrong. It is not sufficient that a course of conduct not in itself actionable, be somehow related to an actionable course of conduct. [229] Mr. Justice Hallett, in Killorn v. Healthvision Corp. (1997), 156 N.S.R. (2d) 1 (C.A.) followed and applied Vorvis and said at p.30: [133] The trial judge ought to have instructed himself in accordance with the general rule adopted by the majority of the Supreme Court of Canada in Vorvis that damages in cases of wrongful dismissal are limited to damages arising from failure to give required notice unless there is, in addition, a separate actionable wrong upon which a claim for damages for mental distress can be founded. Damages for mental distress can only be awarded if there is a separate actionable wrong out of which the mental distress claim flows; ... [230] By virtue of the British Columbia Court of Appeal decision in Deildal v. Tod Mountain Development Ltd., [1997] B.C.J. No. 860, I conclude that a failure to plead a separate cause of action is not fatal to the plaintiff's claim arising from such cause. Braidwood, J.A. said in para. 101 ( when referring to the question of aggravated damages): Nothing in Vorvis suggests that the impugned conduct must be anything more than potentially independently actionable at the time it occurred. It is not necessary to plead and argue a separate cause of action -- to find otherwise would be to make Vorvis irrelevant. In my opinion, McIntyre J. in that case was indicating a fundamental requirement that there be some aggravating act, some serious wrongdoing, by the employer, before the action can be taken beyond a simple wrongful dismissal and aggravated damages made available. In stating that the wrongdoing must be serious enough to be independently actionable, he was then setting a threshold test of seriousness to enable a court to determine when this would be so. I am of the opinion that the test is met in the case before us. [231] In view of this latter decision, the defendants in their reply submission stated: In summary, while the Defendants continue to maintain that a plaintiff should be required to plead the separate cause of action in his or her Statement of Claim, they acknowledge that Tod Mountain, supra, would suggest that the failure to plead an identified tort may not be fatal but that a plaintiff must be able to identify the particulars of the alleged separately actionable conduct of a defendant and, more importantly, to ultimately establish such separately actionable conduct on a balance of probabilities at trial. [232] Despite the uncertainty of pleadings, I have examined the evidence before me to determine if the defendants, in addition to constructively dismissing Fiske, have been shown on a balance of probabilities to have committed "... some aggravating act, some serious wrongdoing ...". [233] Difficulties do arise, however, in the absence of clear pleadings. In the conduct of this trial, for instance, it was never clear whether this was a case of alleged defamation; and if so, did any of the defences to defamation such as justification or fair comment apply? Did the plaintiff's allegations of "trashing" amount to a pleading of defamation? In the ultimate result in this case the answers to these questions were unnecessary. [234] There is sometimes confusion about the precise meanings of aggravated, exemplary and punitive damages. McIntyre, J. carefully distinguished aggravated and punitive damages in Vorvis at p.201: Before dealing with the question of punitive damages, it will be well to make clear the distinction between punitive and aggravated damages, for in the argument before us and in some of the materials filed there appeared some confusion as to the distinction. Punitive damages, as the name would indicate, are designed to punish. In this, they constitute an exception to the general common law rule that damages are designed to compensate the injured, not to punish the wrongdoer. Aggravated damages will frequently cover conduct which could also be the subject of punitive damages, but the role of aggravated damages remains compensatory. The distinction is clearly set out in Waddams, The Law of Damages, 2nd ed. (1983), at p.562, para.979, in these words: An exception exists to the general rule that damages are compensatory. This is the case of an award made for the purpose, not of compensating the plaintiff, but of punishing the defendant. Such awards have been called exemplary, vindictive, penal, punitive, aggravated and retributory, but the expressions in common modern use to describe damages going beyond compensatory are exemplary and punitive damages. "Exemplary" was preferred by the House of Lords in Cassell & Co. Ltd. v. Broome, but "punitive" has also been used in many Canadian courts including the Supreme Court of Canada in H.L.Weiss Forwarding Ltd. v. Omnus. The expression "aggravated damages", though it has sometimes been used interchangeably with punitive or exemplary damages, has more frequently in recent times been contrasted with exemplary damages. In this contrasting sense, aggravated damages describes an award that aims at compensation, but takes full account of the intangible injuries, such as distress and humiliation, that may have been caused by the defendant's insulting behaviour. The expressions vindictive, penal and retributory have dropped out of common use. Aggravated damages are awarded to compensate for aggravated damage. As explained by Waddams, they take account of intangible injuries and by definition will generally augment damages assessed under the general rules relating to the assessment of damages. Aggravated damages are compensatory in nature and may only be awarded for that purpose. Punitive damages, on the other hand, are punitive in nature and may only be employed in circumstances where the conduct giving the cause for complaint is of such nature that it merits punishment. [235] I have kept in mind these distinctions while reviewing the pleadings and have concluded that the scope of them, while somewhat indistinct, is sufficient to consider whether any actions of the defendants are within the range of seriousness contemplated in Deildal v. Tod Mountain. [236] Wallace is an example of an independent cause of action arising in a wrongful dismissal situation. Fiske has drawn my attention to the dissenting opinion of McLachlin, J. (as she then was) in this case when she addressed the matter of a separately actionable wrong in the following terms (at para. 133 et seq.): 5. The Availability of Other Remedies It is argued that employer misconduct in the manner of dismissal not affecting prospects of re-employment must be taken into account in calculating the notice period in order to avoid injustice and provide an adequate remedy to the employee in a case such as this. The answer to this argument is that the law affords other remedies for employer misconduct in these circumstances. The law of tort and contract recognizes a number of independent causes of action for misconduct in dismissing an employee. If the employer defames the employee or wilfully inflicts mental distress, the employee can sue in tort. If the employer has lured the employee from a secure position with promises of better terms, the employee may be able to sue in tort for negligent misrepresentation or for breach of an express contractual term. Finally, unfair treatment at the time of dismissal may give rise to an action for breach of an implied term in the contract of employment. [237] The defendants point out correctly that this statement was made in a dissenting opinion. Other examples of injuries resulting from wrongs which may attract aggravated damages are found in the majority opinion of Iacobucci, J. at paras. [102]-[104] of Wallace: [102] The Court of Appeal in the instant case recognized the relevance of manner of dismissal in the determination of the appropriate period of reasonable notice. However, relying on Trask, supra, and Gillman v. Saan Stores Ltd. (1992), 45 C.C.E.L. 9 (Alta.Q.B.), the court found that this factor could only be considered “where it impacts on the future employment prospects of the dismissed employee” (p.180). With respect, I believe that this is an overly restrictive view. In my opinion, the law must recognize a more expansive list of injuries which may flow from unfair treatment or bad faith in the manner of dismissal. [103] It has long been accepted that a dismissed employee is not entitled to compensation for injuries flowing from the fact of the dismissal itself; see e.g. Addis, supra. Thus, although the loss of a job is very often the cause of injured feelings and emotional upset, the law does not recognize these as compensable losses. However, where an employee can establish that an employer engaged in bad faith conduct or unfair dealing in the course of dismissal, injuries such as humiliation, embarrassment and damage to one’s sense of self-worth and self-esteem might all be worthy of compensation depending upon the circumstances of the case. In these situations, compensation does not flow from the fact of dismissal itself, but rather from the manner in which the dismissal was effected by the employer. [104] Often the intangible injuries caused by bad faith conduct or unfair dealing on dismissal will lead to difficulties in finding alternative employment, a tangible loss which the court of Appeal rightly recognized as warranting an addition to the notice period. It is likely that the more unfair or in bad faith the manner of dismissal is the more this will have an effect on the ability of the dismissed employee to find new employment. However, in my view the intangible injuries are sufficient to merit compensation in and of themselves. I recognize that bad faith conduct which affects employment prospects may be worthy of considerably more compensation than that which does not, but in both cases damage has resulted that should be compensable. As I have found elsewhere, the matter of re-employment is not a factor for consideration here. Iacobucci, J. continued at para. 105: [105] The availability of compensation for these types of injuries has been recognized in other areas of the law. In McCarey v. Associated Newspapers Ltd. (No. 2), [1965] 2 Q.B. 86 (C.A.), Pearson L.J. examined the scope of recovery in an action for libel. At pp. 104-5 he stated: Compensatory damages, in a case in which they are at large, may include several different kinds of compensation to the injured plaintiff. They may include not only actual pecuniary loss and anticipated pecuniary loss or any social disadvantages which result, or may be thought likely to result, from the wrong which has been done. They may also include the natural injury to his feelings – the natural grief and distress which he may have felt at having been spoken of in defamatory terms, and if there has been any kind of high-handed, oppressive, insulting or contumelious behavior by the defendant which increases the mental pain and suffering, caused by the defamation, and may constitute injury to the plaintiff's pride and self-confidence, those are proper elements to be taken into account in a case where the damages are at large. [106] Pearson L.J.'s list of the elements properly compensated for in an award of this type found favour with the Nova Scotia Supreme Court, Appeal Division in Barltrop v. Canadian Broadcasting Corp. (1978), 25 N.S.R. (2d) 637, at pp.661-62, 86 D.L.R. (3d) 61, leave to appeal refused, [1978] 1 S.C.R. vi. Having been asked to assess damages in an action for defamation, MacKeigan C.J.N.S., writing for a unanimous court, quoted the above cited passage with approval (see also: Stumpf v. Globe Holdings Ltd. (1982), 22 Alta. L.R. (2d) 55 (Q.B.), at p.61). [107] In my view, there is no valid reason why the scope of compensable injuries in defamation situations should not be equally recognized in the context of wrongful dismissal from employment. The law should be mindful of the acute vulnerability of terminated employees and ensure their protection by encouraging proper conduct and preventing all injurious losses which might flow from acts of bad faith or unfair dealing on dismissal, both tangible and intangible. I note that there may be those who would say that this approach imposes an onerous obligation on employers. I would respond simply by saying that I fail to see how it can be onerous to treat people fairly, reasonably and decently at a time of trauma and despair. In my view, the reasonable person would expect such treatment. So should the law. [238] Fiske has submitted that there is evidence of the following separately actionable wrongs: (a) wilful infliction of mental suffering; (b) wilful or negligent infliction of harassment and oppression; (c) negligent misrepresentation with respect to absence of improper political interference; (d) tort of deceit or injurious falsehood, both in the manner of initially announcing the plaintiff's letter of resignation, and subsequently in the manner in which the plaintiff's accounting of his tenure of public service was trashed and discredited for improper purposes; and (e) breach of fiduciary duty/obligation of good faith and fair dealing owed to a former employee. I will address each of these claims: (a) I have not been persuaded that the defendants or either of them, or any person on their behalf either before or after resignation wilfully or negligently inflicted mental suffering on Fiske. He was undoubtedly placed under stress as a result of those actions which I consider amounted to wrongful dismissal, but I do not consider any of those actions to have been wilful. Nor have I concluded that any such suffering was foreseeable or did not come within that range of consequences ordinarily attendant upon or resulting from a dismissal. That is, Fiske undoubtedly had injured feelings and emotional upset, but in the absence of bad faith conduct or unfair dealing these are not ordinarily recognized as compensable losses in a wrongful dismissal action. (b) Similarly, I do not consider there was any wilful or negligent infliction of harassment and oppression of Fiske. If I understand Fiske's position correctly, he claims that such did occur at or resulting from the Public Accounts Committee hearing, but that event is not within the ambit of this trial. The events constituting Fiske's constructive dismissal were the result of serious errors in judgment but did not amount to harassment and oppression. (c) I am not aware of a separately actionable wrong described in this manner. Even if the defendants' acceptance of Fiske's resignation wrongly denied an absence of political interference, that denial did not cause any compensable harm to Fiske. (d) I am unable to discern a tortious act by the defendants, or either of them, which resulted in any sort of compensable harm arising from the manner in which the Province announced Fiske's resignation. It may have been ill-advised or thoughtless, but it was not actionable. The text Remedies in Tort by Klar, Linden, Cherniak, Kryworuk, vol. 1 at p. 5-11 addresses the tort of deceit as follows: 1. Nature of Cause of Action §1 Deceit emerged as an independent and general cause of action in tort in the late 18th century1 and was thus freed from its previous connections with contracts.2 Nevertheless, the tort of deceit is closely associated with bargaining transactions and thus largely reflects the ethical and moral standards of the marketplace. Accordingly, the action typically involves pecuniary loss, although it also applies to personal injuries or harm to tangible property.3 1 Pasley v. Freeman (1789), 3 Term Rep. 51, 100 E.R. 450. 2 Fleming, The Law of Torts, 6th ed. (1983), at pp. 594-95. 3 Ibid. §2 In order to sustain an action of deceit, there must be proof of fraud.4 Fraud is proved when it is shown that a false representation has been made knowingly, without belief in its truth, or recklessly, careless whether it is true or false.5 4 "Fraud is not mistake [or] error . . . fraud is something dishonest and morally wrong": Washburn v. Wright (1914), 31 O.L.R. 138 19 D.L.R. 412 (C.A.), per Riddell J. 5 Derry v. Peek (1889), 14 App. Cas. 337 (H.L.); DeVall v. Gorman, Clancey & Grindley Ltd., 58 S.C.R. 259, [1919] 1 W.W.R. 836, 45 D.L.R. 654. . . . §3 An action for deceit lies only where the defendant intended that the plaintiff should act in reliance on the representation6 and where the plaintiff suffered damage as a result of such reliance.7 6 Street, The Law of Torts, 6th ed. (1976), at p.379. 7 Pasley v. Freeman, supra, at p.457, per Grose J., quoting Croke J. in Baily v. Merrell (1688) 3 Bulst. 95, 81 E.R. 81 (K.B.): "Fraud without damage, or damage without fraud, gives no cause of action: but where these two do concur, there an action lieth." Fiske suffered no pecuniary loss from the Province's announcement of his resignation; nor did he suffer personal injuries or harm to tangible property. I have not been persuaded that there is any proof of fraud. I am not aware that Fiske relied in any sense on the announcement. (e) There is no tort of breach of good faith dealing with regard to dismissal. Iacobucci, J. said in Wallace (supra) at paras. 77 and 88: [77] I must also reject the appellant's claim that he can sue in tort for breach of good faith and fair dealing obligation with regard to dismissals. The Court of Appeal noted the absence of persuasive authority on this point and concluded that such a tort has not yet been recognized by Canadian courts. I agree with these findings. To create such a tort in this case would therefore constitute a radical shift in the law, again a step better left to be taken by the legislatures. . . . [88] The appellant urged this court to recognize the ability of a dismissed employee to sue in contract or alternatively in tort for "bad faith discharge". Although I have rejected both as avenues for recovery, by no means do I condone the behaviour of employers who subject employees to callous and insensitive treatment in their dismissal, showing no regard for their welfare. Rather I believe that such bad faith conduct in the manner of dismissal is another factor that is properly compensated for by an additional to the notice period. [239] Fiske claimed that the following circumstances (amongst others), attract punitive damages: (1) statements before the Public Accounts Committee; (2) statements made outside the House of Assembly by the Premier and others; (3) statements made during the three and one-half hour July 7 press conference; (4) through the methodical and structured efforts of the various "communications strategists" employed by the defendants to spin and control the defendants' message in the media and amongst opinion leaders within the Nova Scotia community; (5) through the letter to the editor of the Board of Directors; (6) through the formal and informal networking and whispering of the defendants, their agents, their witnesses and others; (7) through the defendants' silence in the face of the foregoing other initiatives. [240] I will address each of these circumstances: 1. Statements before the Public Accounts Committee. On the express agreement of counsel, and notwithstanding my expressed reservations, statements made at the Public Accounts Committee and fair and accurate reports thereof have Parliamentary immunity. As Fiske has not contested the defendants' position or that of the Clerk of the House of Assembly with respect to this immunity I accept the position that absolute immunity for matters expressed in Parliamentary proceedings extends not only to members of Parliament/Legislature but also to any non member necessarily involved in the business of the House and fair and accurate reports of the proceedings. This immunity extends to Committee members and to witnesses who appear before them. The admissible media reports properly exhibited to me (and I clearly indicate many of the reports presented were not within that category) show that the media embarked upon a "feeding frenzy" on the reports and statements made at the Public Accounts Committee. They are all privileged. Further, in my view, there is no legal obligation on the defendants to have defended Fiske against careless or intemperate reporting. I know of no such duty. 2. Statements made outside the House of Assembly by the Premier and others. I have examined such statements as are properly in evidence and made by the Premier and others outside the House of Assembly or outside the Public Accounts Committee and I have not been able to determine that any of those statements would justify a finding of a separately actionable wrong. None of the statements in evidence before me falls within behaviour described in McCarey v. Associated Newspapers Limited (No. 2). 3. Statements made during the three and one-half hour July 7 press conference: I have examined the contents of this press conference. Certain aspects of it were arguably incorrect, or were opinions based upon incorrect facts. Nonetheless, for the same reasons as expressed above, I cannot find any of the contents of this press conference would constitute a separately actionable wrong. 4. Through the methodical and structured efforts of the various "communication strategists" employed by the defendants to spin and control the defendants' message in the media and amongst opinion leaders within the Nova Scotia community. I have concluded that there is no acceptable evidence of a "methodical and structured effort" before me. 5. Through the letter to the editor of the Board of Directors. I have examined this letter and find that nothing therein is actionable. 6. Through the formal and informal networking and whispering of the defendants, their agents, their witnesses and others. I have concluded that there is no evidence of such "informal networking and whispering". 7. Through the defendants' silence in the fact of the foregoing other initiatives. I am not aware of any obligation on the defendants to have broken silence with respect to Fiske's real or imagined torts committed against him. [241] Aggravated Damages: Notwithstanding that there is no tort of bad faith discharge, the plaintiff has nonetheless claimed punitive or aggravated damages. I have set forth above the distinction between these two heads of damages as enunciated in Vorvis. [242] Boudreau, J. of this Court addressed the restrictions on punitive damages awards in Russell v. Nova Scotia Power Inc.(1996), 150 N.S.R. (2d) 271 (N.S.S.C.) at p.279 para.39. [243] Even if the actions of the defendants amounted to something more than wrongful dismissal there are clearly restrictive limits on such a claim. See Vorvis at p.204: From the foregoing authorities, I would conclude that while aggravated damages may be awarded in actions for breach of contract in appropriate cases, this is not a case where they should be given. The rule long established in the Addis and Peso Silver Mines cases has generally been applied to deny such damages, and the employer/employee relationship (in the absence of collective agreements which involve consideration of the modern labour law régime) has always been one where either party could terminate the contract of employment by due notice, and therefore the only damage which could arise would result from a failure to give such notice. I would not wish to be taken as saying that aggravated damages could never be awarded in a case of wrongful dismissal, particularly where the acts complained of were also independently actionable, a factor not present here. As noted by Hinkson J.A. in the Court of Appeal, at p.46: It was not suggested by the plaintiff that Reid's actions in the months prior to his termination constituted a breach of contract. Upon the basis of the reasoning in the Brown case, Reid's conduct was not a separate head of damages in the claim for breach of contract. His reference to the Brown case was to the words of Weatherston J.A. in Brown v. Waterloo Regional Board Com'rs of Police, supra, p.736, where speaking for the court, He said: If a course of conduct by one party causes loss or injury to another, but is not actionable, that course of conduct may not be a separate head of damages in a claim in respect of an actionable wrong. Damages, to be recoverable, must flow from an actionable wrong. It is not sufficient that a course of conduct not in itself actionable, be somehow related to an actionable course of conduct. [244] The Supreme Court in Vorvis addressed the subject of punitive damages at pp.206-207: When then can punitive damages be awarded? It must never be forgotten that when awarded by a judge or a jury, a punishment is imposed upon a person by a court by the operation of the judicial process. What is it that is punished? It surely cannot be merely conduct of which the court disapproves, however strongly the judge may feel. Punishment may not be imposed in a civilized community without a justification in law. The only basis for the imposition of such punishment must be a finding of the commission of an actionable wrong which caused the injury complained of by the plaintiff. This would be consistent with the approach of Weatherston J.A. in Brown, supra, and it has found approval in the Restatement on the Law of Contracts 2nd (St. Paul Minn.: American Law Institute, 1986), in the United States, as noted with approval by Craig J.A. at p.49, where he referred in the Court of Appeal to s.355, which provides: "Punitive damages are not recoverable for breach of contract unless the conduct constituting the breach is also a tort for which punitive damages are recoverable." The Court went on to state at pp. 207-208: In my view, while it may be very unusual to do so, punitive damages may be awarded in cases of breach of contract. It would seem to me, however, that it will be rare to find a contractual breach which would be appropriate for such an award. In tort cases, claims where a plaintiff asserts injury and damage caused by the defendant, the situation is different. The defendant in such a case is under a legal duty to use care not to injure his neighbour, and the neighbour has in law a right not to be so injured and an additional right to compensation where injury occurs. The injured party is entitled to be made whole. The compensation he is entitled to receive depends upon the nature and extent of his injuries and not upon any private arrangement made with the tortfeasor. In an action based on a breach of contract, the only link between the parties for the purpose of defining their rights and obligations is the contract. Where the defendant has breached the contract, the remedies open to the plaintiff must arise from that contractual relationship, that "private law", which the parties agreed to accept. The injured plaintiff then is not entitled to be made whole; he is entitled to have that which the contract provided for him or compensation for his loss. This distinction will not completely eliminate the award or punitive damages but it will make it very rare in contract cases. And further at p.208: ... punitive damages may only be awarded in respect of conduct which is of such nature as to be deserving of punishment because of its harsh, vindictive, reprehensible and malicious nature ... in any case where such an award is made the conduct must be extreme in its nature and such that by any reasonable standard it is deserving of full condemnation and punishment. [245] I do not find the actions of the defendants were of such a nature as to deserve punishment. The defendant's action in forcing Fiske's resignation were thoughtless and careless and even negligent but I do not find they were "hard, vindictive, reprehensible and malicious". [246] Fiske, in his counsel's post-trial brief, addressed the question of the extent of personal harm, which includes that harm allegedly caused by post dismissal conduct, in the following paragraph (p.220, plaintiff's brief): The myriad examples of the trashing and discrediting of the Plaintiff Fiske need not be listed in this portion of the Plaintiff's Post-Trial Brief. They are recorded in part, in both the chronology and the Witness Summaries, and partially listed elsewhere in Section V of this Post-Trial Brief. Suffice it to say that the actions of the defendants were motivated at all times by conduct which falls under the rubric of malicious political spin doctoring. The strategy was to drive the Plaintiff into self imposed silence. To embarrass and humiliate him - to destroy him - to such an extent that he would not again raise his public head or speak a public word. The character assassination was the price willingly paid by the Defendants in order to preserve their own political survival, or camouflage their own subservience to the will of the Premier's Office. What occurred to the Plaintiff was not a matter of differing reasonable people having differing reasonable opinions about the same set of facts. The Defendants' conduct described in this trial was motivated by self-interest, and implemented with malice. [247] I have not been persuaded on a balance of probabilities of the validity of these accusations. They echo Fiske's testimony that John Young, when Fiske told him of his resignation, had said, "they will destroy you". I am sure a conversation did occur, but doubt it was as strong or as blunt as alleged. One aspect of these accusations which I found to be substantiated was that there was a political motive in forcing the settlement of the arbitration with the Sheraton and delaying the arbitration proceedings until after the Liberal leadership convention. But those actions fall far short of the accusations set forth above. Fiske's resignation letter of September 30, 1997, set forth above, clearly made accusations which he ought to have expected would prompt reply. The reply was as I have set forth above. In retrospect both parties ought then to have set aside their anger. They did not. [248] But on October 6, 1997, Mr. Gillis' press release was innocuous although a media report made a reference to Fiske enjoying his "golden years". Whether that quotation was accurate or not has not been proved, but at any rate Fiske reacted to that as well. His comments to news media at the time, and which he acknowledged at trial, were such as would undoubtedly attract media attention. [249] Within a week of his resignation Fiske gave detailed interviews to the press concerning it. While he denied he contacted the press concerning the matter, it was clear he cooperated with them by giving interviews. Those interviews led to public controversy, whether justified or not. The degree of Fiske's participation in the controversy is shown by the admitted possibility that he gave interviews to four press outlets within the first three or four weeks after his resignation. [250] After Fiske's news interviews the situation between the parties spiralled out of control, but there is no hard or acceptable evidence of a deliberate smear campaign. Rather the individuals involved including Fiske attempted to justify their own roles. The Province through Gillis and others made remarks which angered Fiske and he reacted. The situation between the parties was aided and abetted by news media. [251] In blaming Fiske for the lack of progress in the construction of the casino no attempt was made, as far as I can see, by any of the players to track down the real sources of the problems: agreements whereby Sheraton was granted the right to build and operate a casino, a lack of precision in the Corporation's role – "to control and manage" a casino in compliance with the Criminal Code and a reluctant Sheraton whose understandable object was to have a casino which would be most profitable for itself by means of a hotel–based operation which would have in turn created or maintained a profitable hotel. Nobody in Government appears to have examined carefully or critically the strategies employed by the Sheraton and in particular by the negotiating activities employed by it through Mr. Rivera-Soto who, by all accounts was an aggressive and abrasive negotiator. [252] Politicians were probably correct when they took the position publicly that they had not personally interfered with the relationship between the Gaming Corporation and the Sheraton; rather, others did on their behalf. It is likely that the interference was performed in the belief that it was the wish of Government. [253] The public criticism led to Fiske's appearance at the Public Accounts Committee on June 17, 1998, in which he read a 15-page prepared statement which he made public independently of the Committee hearing and which, even on the basis of my findings of fact and conclusions expressed elsewhere herein, contained inaccuracies and inferences which seemed to require response. For example, he alleged that Mr. Robbie MacKeigan arrived at the arbitration, having been retained by the Premier's Office, "unannounced and uninvited". That statement perhaps unwittingly ignored the fact that Mr. MacKeigan had asked Mr. Merrick's permission prior to arriving. He also alleged that Mr. MacKeigan asked for a brief adjournment and an opportunity to negotiate directly with the casino operators in the absence of the Corporation. Such an allegation has a pejorative sting directed at Mr. MacKeigan and the Province and while I am critical elsewhere of that participation, it does not accurately state the fact that Mr. MacKeigan was attempting to exercise "shuttle diplomacy". [254] As well, he alleged, "for reasons that to this day remain inexplicable to me, our legal counsel, Mr. John Merrick was later advised by Mr. Bob MacKay, Deputy Minister to Premier Savage, that the Province wanted our Board to accept a lopsided deal that had already been negotiated by Mr. MacKay and Mr. MacKeigan the preceding week, without our direct involvement." This allegation invited denial and retaliation. [255] In addition he alleged, "in the end because of Mr. MacKay's forceful persuasion on behalf of the Premier's Office, our Board of Directors begrudgingly passed a resolution approving the terms of the settlement negotiated by lawyers acting under the direction of the Premier's Office". I have in fact found that Mr. MacKay used "forceful persuasion" and that the Board of Directors begrudgingly passed the resolution. But the allegation that the settlement was negotiated by "lawyers acting under the direction of the Premier's Office" is clearly an unacceptable allegation made against Carl Holm and John Merrick. [256] In addition, Fiske alleged publicly that the agreed compromises cost the taxpayers of Nova Scotia $20 million, conservatively estimated. While, as I have found, Fiske had reason to be concerned about that matter and was entirely justified in raising it to Government, the allegation was not sufficiently certain so as to justify a public accusation. Other allegations made by Mr. Fiske, although I find to be true, were such that would inevitably invite response. [257] That response took the form of a press conference on July 7, 1998, convened by the Board of the Corporation. The press conference, in my view, appeared to attempt to avoid personal attacks on Mr. Fiske but attempted to defend themselves. The written statement prepared by the Board was read by Dara Gordon, and while I disagree with some aspects of that response, it falls far short of "trashing" Fiske as he alleges. [258] On July 8, 1998, Fiske again appeared before the Public Accounts Committee and read a 55-page prepared written statement in which he made serious allegations against the Premiers, the Ministers, the lawyers, the Deputy Ministers and the Board members. Some of those allegations I frankly agree with but I find that many of the allegations are unsubstantiated and did nothing but attract further media attention and denials by those accused. [259] I make no award for aggravated, punitive or exemplary damages. [260] In a wrongful dismissal case not involving a fixed term contract in the absence of having been satisfied on a balance of probabilities that the defendants committed a separately actionable wrong, a plaintiff's redress for negligent infliction of mental distress is limited to an extension of the period of notice of termination. [261] Hinds, J.A. in Truong v. British Columbia (1999), 178 D.L.R. (4th) 644 (B.C.C.A.) adopted the approval of Iacobucci, J. in Wallace, paras. [88] and [95] of which are especially apposite: [52] Mr. Justice Iacobucci, who gave the majority judgment in Wallace, concluded that although damages for negligent infliction of mental distress could not, in the absence of an independently actionable wrong, be made in the form of aggravated damages, nevertheless damages for negligent infliction of mental distress could be made by an award in the form of an extension of the period of notice of termination of employment. In Cassady v. Wyeth-Ayerst Canada Inc. (1998), 163 D.L.R. (4th) 1 (B.C.C.A.), at para. 28, Esson J.A., who gave the judgment of the Court, stated with reference to the foregoing form of relief expressed in Wallace: The creation of that form of relief is the aspect of the Wallace decision which is essentially novel and which creates a fundamental revision of the law in this area. [53] Iacobucci J. in Wallace, made a number of observations concerning the obligation of an employer to exercise good faith in the termination of an employee's employment, including the following at 739-45: [88] ... by no means do I condone the behaviour of employers who subject employees to callous and insensitive treatment in their dismissal, showing no regard for their welfare. Rather, I believe that such bad faith conduct in the manner of dismissal is another factor that is properly compensated for by an addition to the notice period. . . . . . [95] ... In my opinion, to ensure that employees receive adequate protection, employers ought to be held to an obligation of good faith and fair dealing in the manner of dismissal, the breach of which will be compensated for by adding to the length of the notice period. [262] Truong gives an example of the range of damages to consider. I have concluded above that Fiske is entitled to damages equal to the balance of the term of his contract which is a period in excess of two years which the Supreme Court of Canada noted Wallace was "at the high end of the scale". I consider that such a period of notice is not unreasonable, taking into account all the factors and "including any bad faith conduct on the part of the defendants in forcing Fiske's resignation." XIII–MITIGATION [263] There is a responsibility on a dismissed employee to make reasonable effort to mitigate his/her loss. See Grant v. Allstate Insurance Co. (1995), 148 N.S.R. (2d) 251 (N.S.S.C.); Holland v. Midland Walwyn Capital Inc. (1993), 124 N.S.R. (2d) 204 (N.S.S.C.) and Michaels et al. v. Red Deer College (1975), 5 N.R. 99 (SCC). [264] I find that mitigation was not a realistic possibility here. Fiske probably does not want to admit it to himself, but he was not at an age where new employment would have been available and new enterprises would have been hard to develop. [265] In addition, and as I have stated elsewhere, the circumstances of his constructive dismissal were stressful for Fiske. I find that during the balance of the contracted term of office Fiske was quite incapable of taking firm steps to mitigate his loss, even if such steps had been available, and they were not. XIV–CREDIBILITY [266] I must say something about the issues of credibility I have had to face in arriving at my decision. [267] The parties have submitted that credibility is a key consideration in this case. Counsel for Fiske addressed the subject virtually on a witness by witness basis in his examination of testimony in the "partial chronology", "index of witness statements" and his post-trial brief which together dissected in detail all the testimony of opposing witnesses. The defendants examined the matter on an incident by incident basis and devoted 80 pages of their post-trial brief to the subject. [268] I have relied upon my judgment with respect to determining credibility. I may accept all, part of or none of any witness' testimony. In fact, it seemed obvious to me that virtually every witness – to greatly varying degrees – experienced subjectively selective memories. Except as I specifically mentioned in this decision the conflicts in testimony of witnesses are the result of those subjective memories. [269] I found that Fiske made a sincere effort to be truthful. But I also found that he had been hurt by what he considered the perfidious behaviour of his former political friends and associates and felt he had been attacked for his principles. Those feelings ultimately coloured his perception of events. [270] Somewhat similarly, other witnesses felt (appropriately) they had been attacked by Fiske for the performance of professional duties, thereby colouring their retrospective views of occurrences and events. The politicians and board members felt their honesty and integrity had been attacked by Fiske, thereby colouring their retrospective views of occurrences and events. [271] Therefore, in arriving at my conclusions of fact and inferences, I have resorted where possible to documentary evidence. At other times I simply resorted to what I hope was a common sense approach to very human situations. XV – CONCLUSION (a) Fiske has claimed special damages arising from the lost salary for the balance of the fixed term as follows: October 1, 1997 to October 31, 1997 $ 8,252.83 November 1, 1997 to March 31, 1998 42,540.00 April 1, 1998 to March 31, 1999 124,000.00 April 1, 1999 to February 15, 2000 113, 750.00 TOTAL: $288,542.83 The defendants did not take issue with these calculations, without admitting liability. Harris, Wrongful Dismissal (Toronto: Carswell) p.9-14.7, addresses the matter of damages for wrongful dismissal in cases involving fixed term contract as follows: The consequential damages arising out of the breach of a defined term employment contract are substantially different from those in the case of an employment contract for an indefinite period. Where an employer repudiates a defined term contract, the employee has the right to sue for damages accruing to the termination date: Sinclair v. Canadian Ice Machine Co., [1955] S.C.R. 777 at p.781, [1955] D.L.R. 1; Zaglanikis v. Dana West Hotels Ltd. (1982), 20 Sask. R. 59 (Q.B.), affirmed (1983), 27 Sask. R. 319 (C.A.); Chilagan v. Island Lake Band No. 161, 3 C.C.E.L. (2d) 35, [1994] 5 W.W.R. 308, (sub nom. Chilagan v. Island Lake Indian Band No. 161) 119 Sask. R. 195 (Q.B.). Fiske is entitled to recover the sum of $288,542.83 for lost salary. (b) Fiske has also claimed motor vehicle allowance of $500.00 per month for 28.5 months, that being the balance of the term. He explained that this allowance was a fully taxable personal benefit. The defendants did not challenge this assertion. Fiske is entitled to recover the sum of $14,250.00 for the loss of this benefit. (c) Fiske has also claimed and is entitled to prejudgment interest. The parties did not agree on a rate of interest to be applied. I fix that rate at seven per centum per annum, simple interest. (d) The matter of costs in this action will be a difficult subject. I have already indicated to counsel that this subject will be addressed after this decision. I invite counsel to advise me in writing how they would prefer to approach this subject. (e) I have found that Fiske will not be awarded aggravated or exemplary/punitive damages. J.