Steel v. Coast Capital Savings Credit Union: Did the Penalty Fit the Crime?

By Andres Barker, Lawyer.

Steel 1

For the second time this year, the British Columbia Court of Appeal has ruled on the issue of whether dismissal without notice can be warranted for a single act of misconduct. (See our previous blog post on Roe v. BC Ferries for a discussion of the first.)

In this blog post we will review the circumstances of the plaintiff’s litigation in the recently decided case of Steel v. Coast Capital Savings Credit Union, 2015 BCCA 127, and identify the key takeaway points for employees and employers.

Background

Ms. Steel was a 21-year employee of the Coast Capital Savings Credit Union (“Coast Capital”), working as part of the IT Helpdesk team. Because of the nature of Ms. Steel’s position, she had unfettered access to every document in Coast Capital’s database.

Each Coast Capital employee has personal electronic folders on the organization’s network which are used solely by that employee, and which contain both confidential personal information and business-related documents. Employees, including Ms. Steel, are forbidden by company policy from accessing any other employee’s personal folder without that employee’s permission.

In the course of her employment, Ms. Steel accessed a document in her manager’s personal folder, a fact discovered by the manager when she attempted to access that document and learned it was being remotely viewed by Ms. Steel. Coast Capital then dismissed Ms. Steel with cause. Ms. Steel sued Coast Capital for wrongful dismissal, and the trial judge dismissed the case, finding that Ms. Steel’s actions amounted to just cause.

BC Court of Appeal Decision

The three members of the Court who heard Ms. Steel’s appeal of the trial decision were not unanimous in their findings.

Majority Decision

A majority of the BC Court of Appeal identified the Supreme Court of Canada’s decision in McKinley v. BC Tel, 2001 SCC 38 as containing the relevant proportionality test for assessing whether there is just cause for dismissal. Under this test, a court must determine first, whether the employee committed any misconduct, and second, whether the misconduct gave rise to an irreparable breakdown in the employment relationship such that dismissal was a proportionate response.

Under the case law, one factor that is relevant to a court’s assessment of whether there was a breakdown in the employment relationship is a lengthy period of unblemished service by the employee. Significantly, the majority expressed that while it may be appropriate on the facts of the case to weigh the employee’s years of good service against the misconduct, there is no express requirement on a court to do so.

In determining whether the trial judge had erred in dismissing Ms. Steel’s claim, the majority considered:

  • Ms. Steel’s position of trust in an industry where trust is of central importance;
  • Her access to any employee’s confidential materials; and
  • Her knowledge that she was not permitted to access any confidential materials without express permission to do so.

Ultimately, the Court of Appeal upheld the trial court’s decision, on the basis that it had engaged in the proper contextual analysis and committed no palpable or overriding error in doing so.

Dissenting Opinion

The third member of the appeal panel, Justice Donald, disagreed with his colleagues’ decision. He wrote a dissenting judgment which emphasized the contextual approach to assessing “just cause” set out in the McKinley case. He opined that the contextual approach requires more than simply determining whether the “penalty fits the crime”, and involves a wider appreciation of the employment relationship, including an accounting for the length and quality of service. Justice Donald even took the interesting step of noting that McKinley was a rejection of the BC Court of Appeal’s previously hardline stance on employee dishonesty, which was overruled by the Supreme Court of Canada’s more humane approach.

Based on his understanding of McKinley, Justice Donald ruled that absent an analysis of the surrounding circumstances of the alleged misconduct, its level of seriousness, and the extent to which it impacted on the employment relationship, dismissal for dishonesty may have overly harsh and far-reaching implications for employees. In such a context, what was absent from the trial judge’s decision in Steel was an explanation of why a single instance of a privacy breach should end a 21 year career, particularly in the absence of deceit, fraud, theft or stealth. Also important to Justice Donald was the fact that despite Ms. Steel’s industry being one requiring elevated levels of trust, her actions did not involve money or client affairs.

Ultimately, Justice Donald held that a full McKinley analysis would lead to a favourable result for Ms. Steel.

Implication for Employees and Employers

For the second time this year, the BC Court of Appeal has taken a hardline approach to employees who commit single acts of misconduct, where the actions of the employees were seemingly minor in degree but clearly wrong in principle. Employees should therefore be mindful that any misconduct that goes to the core of their integrity or honesty can result in a summary dismissal with cause.

For employers, this decision will provide an added layer of confidence for dismissing employees who engage in actions that breach the trust necessary for a working employment relationship.

Of course, the matter may still not be settled. It is always open to Ms. Steel to seek leave to appeal to the Supreme Court of Canada, and the strong tone of Justice Donald’s dissent could be just enough to motivate her to do so.

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