This summary and analysis involves a complex issue in employment law and civil litigation generally. I have made this summary as accessible to non-lawyers as I can without diluting its value to the lawyers who read these analyses.
Secure Resources Inc. v Wilson, 2021 ABQB 744 is a new Alberta case in which the Honorable Justice M.J. Lema overturned an Anton Pillar order and interim injunction because the employer had not made full disclosure of all the material facts in court. The employer had essentially advocated its position that the employee resigned, without disclosing facts which could have led to the conclusion that he was actually constructively dismissed.
A few things I should point out to non-lawyers before jumping in to the case summary and analysis:
- An “Anton Pillar order” is an extraordinary civil search and seizure remedy. It allows a surprise search of property without notice to the other side, usually in cases where there is strong evidence that the other side will destroy property or evidence if they were to receive notice;
- An “injunction” is a court order that forbids someone from doing something. In this case, forbidding an employee from continuing to violate a non-competition clause;
- An often-fought battle in employment law cases centers around the question of whether someone “resigned” or was “constructively dismissed”. The usual reason for the battle is, if it is a true resignation, then the employee is not normally entitled to reasonable notice severance, whereas if the employee had no reasonable choice but to resign, then it could be said to be a constructive dismissal and the employee might be entitled to severance;
- A less common reason for this battle over resignation versus constructive dismissal is, in a true resignation, a non-solicitation or non-competition agreement signed by the employee when they were employed is much more likely to be enforceable against the employee after they leave than it is in the case of a constructive dismissal;
- A “comeback application” is when the parties return to court to consider a matter further. In this case, it was a comeback application to consider whether the Anton Pillar order and interim junction ought to have been granted in the first place.
Facts
In the prior decision that was the subject of the comeback application, this employer had been granted an Anton Pillar order and an interim injunction against a former employee on the basis of this evidence:
- This employee had been subject to an employment agreement with restrictive covenants in it, including a non-competition clause;
- As a result of increasing performance concerns, the employer issued a warning letter to the employee on May 27, 2021. After receiving the letter, the employee was “furious”;
- On June 2, 2021, the employer became aware that the employee may have been contacting customers and instructed its lawyer to issue a cease and desist lawyer to the employee;
- The employee’s response was that he disagreed with the allegations of breaches and alleged without detail and that the employer failed to pay him wages without warning, which was a constructive dismissal;
- The employee had claimed there were wages owing to him that amount to constructive termination, but he had not specified what specifically he is referring to, although the employer thought it may be the temporary thirty (30%) rollback on salaries it has instituted;
- The employer said it was clear that the employee chose to resign his position.
In the comeback application (i.e. the decision summarized here), the employee brought more evidence to the attention of the court, which changed the picture of what happened somewhat. The most significant parts of the employee’s evidence were as follows:
- The compensation that was held back from the employee was his tonnage bonus, which is an integral part of his compensation and set out in his employment agreement as being due and owing at that time;
- The 30% reduction in salary and withholding of bonuses were not expressed to the employee as being temporary, and he did not consent to them. The 30% reduction had already been in effect for 2 pay periods prior to the end;
- The employee had a phonecall with the employer about the withheld amounts, and the employer said it would look into paying some of the bonus and his regular pay on May 28;
- On May 28, neither amount had been paid to the employee, so he resigned and said he was treating it as constructive dismissal.
Analysis
The court declined to decide whether or not the evidence outlined above amounted to constructive dismissal, but found that the employer had declined to tell the whole story of the parties’ positions and the evidence when it originally obtained the Anton Pillar order and the Interim Injunction against the employee.
The court overturned the Anton Pillar order and Interim Injunction, noting as follows:
[14] Secure failed to discharge that duty in its initial materials and submissions […]
[15] Effectively, Secure tried to portray a clear resignation, with any (minor) uncertainty arising from some kind of misunderstanding about a temporary salary rollback.
[…]
[22] All in all, given the centrality of “constructive dismissal or not”, Secure presented a materially incomplete picture of the key events bearing on that issue.
[23] If I had received the reflecting-the-above-incremental-details fuller picture from Secure at the initial application, I would have found that Secure had not met the “strong prima facie” requirement for either order, instead considerable uncertainty over whether Wilson had resigned versus having been constructively dismissed and, by extension, given the governing ABCA precedents (ServiceMaster and Globex), over whether the restrictive covenants were still in place.
My Take
It is very hard to present all the facts neutrally in court, because no one wants to characterize facts in a manner that is unflattering to their own case. However, parties attempting to obtain any order on an ex parte basis must be totally transparent with the court and disclose both sides of the story, to the extent that is possible. This is especially true with an extraordinary order like an Anton Pillar order. The reasoning for this requirement is obvious: if the other side is not there in court to stand up for themselves and advance their position, the court should still be in a position to know what their position is and what evidence they would probably have presented if they had been given the chance.
The result of this come-back application is not surprising, because if the employee’s evidence is ultimately accepted in a trial, this was almost certainly a constructive dismissal. It will be interesting to see if this one goes to trial.
A published copy of Secure Resources Inc. v Wilson, 2021 ABQB 744 can be found at this link: https://www.canlii.org/en/ab/abqb/doc/2021/2021abqb744/2021abqb744.html?searchUrlHash=AAAAAQANMjAyMSBBQlFCIDc0NAAAAAAB&resultIndex=4
