Just Cause for Dismissal
In a new decision of the British Columbia Supreme Court, Vestergaard v Destiny Media (2025 BCSC 2093), the Court reaffirmed the contextual approach to just cause, examining whether a CEO’s misconduct – viewed in light of his senior role – irreparably undermined the employment relationship. The Court found that the plaintiff engaged in a persistent pattern of neglecting his duties and defying the board’s directives, which breached the trust at the core of the relationship and rendered him effectively “ungovernable”:
[142] More than that, I find that Mr. Vestergaard, by such conduct, demonstrated himself to essentially be ungovernable as an employee.
The key grounds for just cause included:
- Misuse of Company Time/Resources: Allowing a Company employee to work on the CEO’s personal side business during company time, thereby diverting corporate resources.
- Neglect of Duties: Repeatedly failing to perform fundamental job responsibilities – for example, ignoring board instructions and never delivering the business plans that the board had expressly required, repeatedly.
- Insubordination (Non-Cooperation): Refusing to fully cooperate with an independent investigation into his conduct, despite being directed to do so during a paid suspension.
These sustained breaches of duty and instances of insubordination destroyed the necessary trust in the employment relationship. As a result, the Court held that summary dismissal was justified – for a fiduciary CEO in such circumstances, termination for cause was “the only appropriate response”.
Fiduciary Obligations of Executives
The decision highlights the heightened fiduciary duties of senior executives. As a CEO, the plaintiff owed fiduciary obligations to act in the best interests of the corporation. The Court emphasized that high-level employees who enjoy broad autonomy or discretion are held to a higher standard of conduct, because trust is fundamental to these roles. In this case, the CEO breached his fiduciary duties by prioritizing personal interests and persistently failing to fulfill critical obligations to the company (e.g. disregarding board directives and missing key deliverables). The board’s move to remove him was therefore seen as a proper exercise of the directors’ own fiduciary duty to protect the company, not part of any conspiracy. This clarified that when an executive’s loyalty and performance fall short of fiduciary standards, the employer is justified in taking decisive action.
After-Acquired Cause
The Court also clarified the doctrine of after-acquired cause in the employment context. It affirmed that an employer may rely on misconduct discovered after the termination to justify a dismissal, so long as the misconduct in fact occurred before or at the time of termination. In other words, the critical legal question is whether sufficient grounds for dismissal existed at the time the employee was fired – not whether the employer knew of those grounds or cited them at that moment. Even if the employer learns new facts post-termination, those facts can be invoked in court to uphold a just-cause firing, provided the underlying misconduct pre-dated the dismissal.
Duty to Cooperate with Investigations
Finally, Vestergaard underscores an executive’s obligation to cooperate with legitimate workplace investigations. The CEO in this case was explicitly warned that failing to cooperate with an independent investigation during his suspension would be deemed insubordination and could lead to termination. His subsequent refusal to participate was viewed as a serious breach of his duties. The Court made clear that for senior fiduciary employees, responsiveness and cooperation are part of the expected duty of loyalty – a deliberate failure to cooperate with a proper internal investigation can itself amount to just cause for dismissal. This principle reinforces that when trust and transparency are essential (as with executives), continued defiance or non-compliance with an investigation will justify termination for cause.
Key Takeaways
Elevated standard of senior/fiduciary employees
- The decision reaffirmed that where an employee holds a senior role with significant autonomy and fiduciary‐type obligations (e.g., reporting directly to a board, exercising discretion), a higher standard of conduct applies.
- The more autonomous the role, the more central trust and confidence become to the employment relationship. Miscues that might be tolerable for a junior employee may not be acceptable for a senior executive.
Contextual assessment & proportionality
- The Court emphasized that the decision whether just cause exists depends on the context: the nature of the role, the seriousness and repetition of the misconduct, and whether that misconduct destroys the basis of the employment relationship (especially trust and confidence).
- The standard for senior executives is elevated and the threshold for what constitutes cause is accordingly stricter.
Warning / progressive discipline (or when it may not be required)
- Although the standard position is that warnings or progressive discipline are usually required before termination for cause, especially for less‐serious misconduct, the Court held that in this case formal warning(s) were not required (or were effectively given by implication) because the board had repeatedly and clearly communicated to the employee the requirement to produce business plans, and the misuse of resources was clear. The repeated failures made it reasonable to infer the employee knew termination was possible.
- A direct warning was given that failure to cooperate with the investigation would be treated as insubordination, so the refusal to cooperate forfeited the need for another warning.
In summary: the court in Vestergaard confirms that for senior executives occupying trust‐intensive roles, the standard for just cause is stricter. Misconduct such as diverting company resources, neglecting core duties, and refusing to cooperate with investigations can justify immediate dismissal. The key question is whether the employee’s conduct destroyed the viability of the employment relationship — especially trust and confidence — and this will depend on role, context, and the conduct’s nature and seriousness.
*Always seek legal advice. The above is for information purposes only.
Stephen Dugandzic received his Juris Doctor degree from the University of Alberta in 2013 and is Calgary-based. He previously practised with Bennett Jones LLP and Taylor Janis LLP before founding YYC Employment Law Group in 2018 and Evolution Legal in 2026.