The Court of King’s Bench of Alberta dismissed a request by H&R Block for summary judgment against a former vice-president, allowing a wrongful dismissal lawsuit to proceed to trial.
The judge held that the complex circumstances surrounding after-acquired cause, specifically the employee’s surreptitious recordings of workplace conversations, required a full hearing rather than a quick dismissal.
What happened
The plaintiff, T.W., served as a vice-president of product development and innovation with H&R Block Canada Inc. before being dismissed for cause. The defendant employer argued that T.W. had engaged in misconduct by secretly recording meetings without the knowledge or consent of other participants. While those recordings were not cited at the time of termination — indeed, they were discovered after the fact during litigation — the employer relied on them to bolster its claim that it had cause to terminate T.W. without notice.
Justice J.R. Farrington concluded that the issues were too nuanced and credibility-dependent to be decided on a summary basis.
“I find that the issues in this action cannot be determined fairly and justly on the paper record alone,” the judge wrote, adding, “Much of the result depends on subtleties and nuances as to [T.W.’s] motivations, the pressures that he may or may not have been under in relation to the workplace, and the workplace environment generally.”
After-acquired cause
The legal question at the heart of the case centred on after-acquired cause. The employer maintained that, even if the initial reason for dismissal was not fully substantiated, the later discovery of T.W.’s secret recordings of colleagues justified the termination. According to the ruling, the primary dispute was whether secretive recordings, in the absence of a specific prohibition, constitute sufficient grounds for dismissal, and whether the employer’s code of conduct implicitly forbids such actions.
Justice Farrington noted that while the defendant’s code of conduct and confidentiality agreements do not expressly prohibit recording, case law on this issue is evolving. The decision cited two recent trial judgments — Rooney v GSL Chevrolet Cadillac Ltd and Shalagin v Mercer Celgar Limited Partnership — that grappled with secret workplace recordings. The judge extracted lengthy portions of the reasoning in those cases to show the complexity of determining when surreptitious recordings might amount to just cause for dismissal.
In Rooney, the court found that an employee’s secret recordings of supervisors were justified given a “relationship power imbalance.” Justice Farrington quoted that ruling’s finding that “[Mr. Rooney’s] actions in recording conversations with his supervisors were justified because GSL exerted its power over Mr. Rooney by imposing unilateral changes on his employment terms.” By contrast, in Shalagin, the court undertook “a broad review of the law” and concluded that secretive recordings, depending on circumstances, could destroy the trust relationship, noting that the employee’s conduct there was “at least ethically” wrong.
However, Justice Farrington emphasized that these cases were both decided after full trials, not at a summary judgment stage. The judge stated, “The case law generally would seem to reflect the following: In the absence of a specific agreement, there is not an automatic consequence that comes with recording.… [R]ecording may sometimes be referred to as unethical or distasteful, [but] it is not in itself illegal.”
Context is key
The ruling underscored that whether recordings justify dismissal depends heavily on context. The judge observed that the law distinguishes between “offensive” and “defensive” uses of recordings.
Some employees record to “enhance a cause of action,” while others do so out of concern for their own protection in a tense work environment. The extent of any trust breach, the content of recorded conversations, and the employee’s rationale are factors that weigh differently depending on the facts.
Justice Farrington noted that T.W. had allegedly been encouraged by a previous president of the company to record problematic conversations with at least one colleague, identified as K.W. “Mr. Wan was told by a prior president of the moving defendant when he was having difficulty with an employee … that perhaps he ought to record their conversations,” wrote the judge. “That is an import[ant] fact.” T.W. recorded not just K.W. but other colleagues as well.
Timing and discovery of the recordings
The timing and discovery of the recordings also played a role in the judge’s decision. The employer learned of the recordings only after T.W.’s dismissal, thereby raising the question of after-acquired cause. The judge acknowledged that determining whether these recordings provided valid cause would require careful scrutiny of the parties’ credibility and the workplace circumstances at trial. “The issues here are more fairly determined in a bilateral process,” the judge wrote.
According to the reasons, the initial cause relied upon by the employer at the time of termination related to the alleged dissemination of confidential information by T.W. at a conference, as well as an incident in which T.W. was accused of misleading a new corporate president on a compensation matter. The secret recordings surfaced later, and their role in potentially justifying the termination remains unclear without a more detailed factual examination.
The ruling highlighted that the absence of certain internal emails, which were deleted by the employer after one year as part of a standard practice, could influence the final outcome at trial. While formal spoliation was not pleaded, the judge suggested that the missing evidence might affect credibility findings.
Furthermore, Justice Farrington underscored that summary judgment procedures, endorsed by the Supreme Court of Canada and appellate courts to ensure fairness and proportionality, are not always suitable. While courts encourage efficient resolution of disputes, the judge wrote that this was “not the type of case” where summary dismissal would be appropriate. The issues, he concluded, hinged on subtle details and required a full trial process, including oral evidence and cross-examination, to produce a fair outcome.
“[T]here is no general legal principle that secretive recording always equals grounds for dismissal,” Justice Farrington wrote, noting that the matter is fact-specific. In this instance, the complexity of T.W.’s employment relationship, the role of possible encouragement from the employer’s former president, and the motivations behind the recordings all remain in dispute.
The judge dismissed the employer’s application for summary dismissal and awarded costs to T.W. related to the application. If the parties cannot agree on costs, they may address the matter in morning chambers within four months.
For more information, see Wan v. H&R Block Canada Inc., 2024 ABKB 734 (CanLII).
