A federal Crown corporation wrongfully dismissed an employee whose sharing of too much information to consultants submitting proposals wasn’t appropriate but wasn’t serious enough to warrant termination, the Ontario Superior Court of Justice has ruled.
Donald Schultz, 61, was the director of real estate in Ottawa for the Canada Lands Company (CLC), a federal Crown corporation specializing in real estate, development, and attractions management. CLC initially hired Schultz in July 2012 for a project developing a former Canadian Forces Base in which he was responsible for all real estate activities for the project such as drafting the master plan, securing planning approvals, implementing marketing strategies, and implementing a public consultation process. As part of his role, Schultz communicated with consultants CLC had hired for input on the scope of the work for both the municipal planning contract and landscape design contract that were part of the project.
Initially, the project had a goal of being ready to sell to developers by the end of March 2017. However, CLC needed to secure revenue after another project was delayed, so it moved up the deadline to the end of March 2016, which worried Schultz as he felt everything would have to go exactly as planned to meet the new deadline.
In early 2015, CLC decided to start a new procurement process for consultants as many contracts were ending or had been extended already. Schultz didn’t want some of the consultants to have to go through the process again, as the tighter deadline made it desirable to continue with consultants who were already familiar with the project.
Information given to consultant submitting proposals
In addition to his concerns over the procurement process and the shorter timeline, Schultz had to contend with an office environment that was fractured due to personality conflicts and differing work styles. CLC sent a human resources representative to the office to help resolve the issues, but while she was there an employee told her she had seen an email that suggested Shultz had shared information with a candidate in the procurement process for consultants.
Upon learning this information, CLC hired a third-party firm to conduct a forensic audit of the Ottawa procurement processes. A March 2016 report of the audit identified several emails sent by Schultz to consultant candidates in which he had sent confidential information to them. This included emails to two incumbent consultants who were bidding in the new procurement process that were intended to get input from them on the scope of work — not an uncommon practice — but the emails contained requirements for a successful bidder, a draft memo with the evaluation team’s recommendations for each proposal, and an emphasis that it was confidential information. One of the consultants was submitting a proposal for the municipal planning contract and the other for the landscape design contract.
CLC also learned that Schultz went to a soccer game and a concert with employees of the municipal planning consultant firm. While Shultz saw these events as normal social contact with contractors, CLC felt there were different standards when the procurement process was underway.
CLC felt Schultz breached confidentiality by providing the scope of work and information on the proposal evaluation to consultants who would be submitting proposals, as this went beyond simply asking for input on the work and was contrary to CLC’s policies. In addition, the company believed the work in question wasn’t complex enough to require consultants with the incumbent contractors. In addition, Schultz admitted that he had favoured the incumbent consultant by providing it with the information.
CLC terminated Schultz’s employment for cause effective March 31, 2016. Schultz then sued for wrongful dismissal and breach of the common law duty of good faith. He argued seeking the input of the incumbent contractor was a breach of CLC’s code of conduct and his request for confidentiality was to keep it from outside parties, not to hide what he was doing from CLC. He also said providing that information ensured the proposals received in the procurement process would properly relate to the work required — it wasn’t uncommon to seek the input of the incumbent contractor, regardless of whether they were submitting a new proposal or not.
Schultz also pointed to a previous incident when he had advised a contractor about a contract before a formal decision had been made. His supervisor talked to him about it but there was no discipline or warning. The third-party audit also revealed an instance where a contract was awarded before a recommendation was drafted — a breach of CLC policy — but there were no consequences for the employee involved.
The court noted that Schultz was working under tight timelines and was concerned about potential delays new contractors could cause, so CLC may not have liked the way he sought input from the incumbent contractors given the information he included, but his motivation was in the best interests of the company. In addition, CLC was concerned about the perception of conflict of interest in their procurement process, but the evidence was that CLC had been lax in the past about applying their policies, the court said.
The court found that Schultz overstepped in the information he supplied to the incumbent consultants, but his motivation, the relatively minor seriousness of the infraction, and CLC’s lack of enforcement of its policies in the past meant his misconduct was not enough to deserve termination without cause. CLC was ordered to pay Schultz damages equal to 12 months’ pay, benefits, and bonus payments for wrongful dismissal. Though Schultz requested moral and punitive damages for bad-faith conduct, the court found CLC’s actions didn’t “represent a marked departure from ordinary standards of decent behaviour” and Schultz admitted he didn’t suffer any psychological damage greater than what would ordinarily result from dismissal.
For more information see:
Schultz v. Canada Lands Company CLC Limited
, 2019 ONSC 2124 (Ont. S.C.J.).
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