In Ryan-Lewis v. Penticton Indian Band, 2024 BCSC 1968, the Court found that the plaintiff, who was the administrator of Penticton Indian Band, breached his fiduciary duty by failing to avoid conflicts of interest in relation to a wage increase and failing to bring material information forward. The employee’s claim for wrongful dismissal was dismissed and the employer’s counterclaim against the employee for damages succeeded.
The Facts
The defendant hired the plaintiff, Mr. Ryan-Lewis in August 2017. As a term of his contract, the plaintiff was required to abide by the defendant’s conflict of interest policy, as amended from time to time.
The plaintiff directed his subordinate, an HR Manager, to prepare a wage grid that included the plaintiff’s own salary. The plaintiff further approached the HR Manager to develop a strategy to enable him to pursue a pay increase to the plaintiff’s own contract. While approaching the HR Manager for wage grid strategies, the plaintiff was at the same time involved in negotiating the HR Manager’s long-term contract with the defendant.
When the plaintiff presented the wage grid amendments to the Chief and Council, his briefing notes omitted, among other things, the retroactive aspect of his pay increase and his direct involvement with developing the wage grid. Chief and Council were also unaware that the increase to his salary was not budgeted. The Chief and Council approved the wage grid, without knowledge of the plaintiff’s involvement or disclosure of material facts.
After the issue came to light, and Council terminated the plaintiff’s employment for cause. The plaintiff filed an action for wrongful dismissal. The defendant counterclaimed against the employee for breach of fiduciary duty, fraudulent misrepresentation and breach of confidentiality, and sought repayment of the wage increase the plaintiff obtained.
The Decision
The Court found that the defendant had just cause to terminate the plaintiff’s employment. He breached his duties to his employer by placing himself in a conflict of interest with respect to his wage increase, and failed to make full disclosure to Chief and Council. At a minimum, the plaintiff ought to have disclosed his involvement in developing the wage grids.
The Court further awarded the defendant with damages for the plaintiff’s breach of fiduciary duty, equal to the amount that he received as a retroactive pay increase.
Key Takeaways
Although the circumstances in which an employer may pursue a claim against an employee are limited, this case is a good reminder that, in some circumstances, a claim can succeed. The employee at issue in this case was a fiduciary employee with heightened duties and obligations to the employer, which go beyond that of a non-fiduciary employee. This was an important fact in this case. Employers considering a claim of this nature are encouraged to seek legal advice prior to proceeding.
