Mining company ‘untruthful, misleading and unduly insensitive’ in how it handled executive’s departure: Ontario court

Photo: Dominik Vanyi/Unsplash

An Ontario court has awarded a mining executive $50,000 in moral damages for the way his without cause termination was handled.

William Gascon was hired as the general manager of Goldcorp’s Musselwhite Mine in 2013. In 2016, he accepted the position of general manager of the company’s Red Lake Mine.

Gascon was the most senior employee on site, with responsibility for a workforce numbering about 1,000 people – including 900 employees and 200 contractors.

His base salary in 2016 was $280,000 and his annual bonus target was 50 per cent of his base salary. There were also long-term incentives (LTIs) awarded at the discretion of the company, including restricted share units (RSUs), stock options and performance share units (PSUs).

Sale of the mine – twice

In April 2019, all issued and outstanding shares of Goldcorp were acquired by Newmont Mining Corporation (NMC). As a result, NMC became the owner of the Red Lake Mine that Gascon ran.

NMC decided to keep Gascon on, and on May 6, 2019, they executed a new employment contract.

In November 2019, NMC sold the Red Lake Mine to Evolution Mining Gold Operations Ltd. The anticipated completion date of this transaction was March 31, 2020. Between those dates, Gascon – in his role as general manager – assisted in facilitating the sale.

Gascon let go

On March 24, 2020, NMC learned that Evolution would not be retaining Gascon as an employee after the purchase was completed. On March 30, 2020, NMC gave Gascon notice of termination of his employment, effective March 31, 2020. The termination was without cause.

In August 2020, Gascon started a wrongful dismissal claim against NMC. For the purposes of this story, HR Law Canada is zeroing in solely on the reasons for the moral or exemplary damages of $50,000.

Manner of termination

Gascon’s statement of claim sought higher damages – $250,000 – for bad-faith damages for the way NMC treated him prior to his March 30, 2020 termination and in the manner of his termination. At hearing, he reduced that claim to $60,000.

The obligation to treat employees in good faith in the manner of dismissal arises from the landmark 1997 Supreme Court of Canada ruling in Wallace v. United Grain Growers.

“Damages are available where an employer engages in conduct that ‘unfair or is in bad faith by being… untruthful, misleading or unduly insensitive,'” the court wrote.

Pre- and post-termination conduct may be considered for moral damages, so long as it is a “component of the manner of dismissal.”

What happened

In the late summer and early fall of 2019, management told Gascon that NMC was actively trying to sell the Red Lake Mine and that he would be “going with” the mine when it was sold.

Gascon, an executive with about 30 years’ experience in the mining industry, understood this to mean the purchaser of the mine would retain him after the transaction was completed. There was no discussion about what might happen if the purchaser of the Red Lake Mine chose not to employ Gascon.

In November 2019, when it was revealed Evolution was buying the mine from NMC, Gascon received two emails from NMC executives essentially thanking him for his service and wishing him well in the future.

Gascon took these emails to mean his employment with NMC would, in all likelihood, end upon the sale of the Red Lake Mine to Evolution.

But it wasn’t 100 per cent clear. Gascon approached David Thornton, vice-president of productivity at NMC about his future in light of the emails from NMC management and specifically asked him if Gascon still had a job with NMC. According to Gascon, Thornton told him he did and that he would “go with” the mine when sold.

4 months of limbo

But for the next four months, Gascon was left to speculate about his future employment with NMC while working diligently to facilitate the sale to Evolution. The court said the repeated suggestions by Thornton that Gascon would “go with” the mine appear to have been “clumsy attempts to placate and/or mislead Mr. Gascon, a senior employee who was essential to the successful completion of the sale to Evolution.”

Thornton said it was NMC’s “understanding” that Evolution intended to retain Gascon as general manager of the Red Lake Mine and that it would “likely be making him an offer of employment.” He further said that he “made it clear to Mr. Gascon that he would have to await further information.”

What was never made clear was NMC’s intention regarding Gascon’s future employment with NMC if Evolution chose not to retain him.

The court said it could not conclude exactly when Thornton or NMC made the decision that Gascon would be terminated if Evolution did not hire him, but – given some compensation decisions around LTI awards – it was likely well prior to March 2020.

But at no time was Gascon told he would not have a job with NMC if Evolution did not hire him.

“Gascon was left to speculate and draw his own conclusions about his future employment,” the court said.

No unusual mental distress

Thornton found out on March 24, 2020, that Evolutoin was not hiring Gascon. Gascon was then terminated on March 30, 2020. The court said there was no evidence that the manner of termination, or NMC’s conduct, caused Gascon any mental distress beyond that normally accompanying a dismissal.

Where the court did find fault is that Thornton knew, as early as November 2019, that Gascon – the most senior employee at the Red Lake Mine and an instrumental party in the completion of the $375 million sale – was concerned about his future employment.

“The duty of honest performance – meaning that parties must not knowingly mislead their counterpart about matters directly linked to the performance of the contract – simply required Mr. Thornton to tell Mr. Gascon the truth as it was known to Mr. Thornton in November 2019 and as the sale transaction proceeded into 2020,” the court said.

Given decisions on long-term compensation, the court said Thornton must have known as early as February 2020 that NMC would be terminating Gascon upon the sale if Evolution did not hire him because he cited this as the rationale for not awarding the LTI in March 2020.

In short, while Thornton did not know if Evolution would hire Gascon he certainly knew that NMC would not be retaining him if that didn’t happen.

“Mr. Thornton never advised Mr. Gascon of this fact.  In his March 16, 2020 email to Mr. Gascon, Mr. Thornton again misled Mr. Gascon,” the court said. “He implied that Evolution would be hiring him and asked for Mr. Gascon’s “cooperation in continuing to perform [his] job duties on a business as usual basis until Closing”.   Surely the contractual duty of honesty and good faith in the employment context demands more of an employer in these circumstances.”

‘Untruthful, misleading and unduly insensitive’

Gascon said he “sought numerous opportunities to have a frank discussion” with NMC about future employment and was denied repeatedly.

“I find that Mr. Thornton’s conduct toward Mr. Gascon in the four months prior to his without cause termination on March 30, 2020 was untruthful, misleading and unduly insensitive.  This finding supports an award of moral or exemplary damages in favour of the plaintiff in the amount of $50,000 and I so order,” the court said.

For more information see Gascon v. Newmont Goldcorp, 2022 ONSC 2511 (CanLII).