When A Resignation Is Not A Resignation
by Brian A. Grosman, Q.C.
October 15, 2004
Andrew Kieran joined the Canadian operation of the multi-national corporation, Ingram Micro Inc., in November of 1989 at a starting salary of $100,000.00 when he was just 29 years of age. By the time he had reached 36 years of age, he was earning $209,617.00, in addition to bonuses and stock options. His last year of employment with Ingram Micro was 1997. Kieran was a very good employee. His competence was never in question. The central issue in Kieran v. Ingram Micro Inc., which was tried in April of 2001, was whether Kieran resigned or was dismissed. A further issue was that if he had resigned, was he free to withdraw his resignation prior to its acceptance by the company.
In December of 1996, the President of Ingram Micro departed, leaving that office vacant. In order to cope with the vacancy, and as a temporary measure, a troika-like arrangement called the “Office of the President” was created. Kieran was a member of the troika (by then he was Senior Vice President, Purchasing), along with Gordon Schofield (Senior Vice President, Sales) and Robert Carberry (Senior Vice President, Finance). Jeffrey Rodek, was President of Ingram Worldwide. It was his task to find a new president for Ingram Canada. It was his preference that the promotion be a Canadian from within the corporation. Rodek conducted a number of interviews with staff and potential candidates. It soon became evident that Kieran and Schofield were the only serious contenders. In both March and April, Kieran told Rodek that he could not possibly work at Ingram Canada if Gord Schofield became President, as he and Schofield had never got along. Kieran had an obvious dislike of Schofield and believed he could not work for a person who he disrespected. Kieran and Rodek reached an agreement concerning Kieran’s future if Schofield became President. Kieran said that Rodek promised to find him a suitable job at Ingram outside Canada. Rodek said, in his evidence, that he promised to “try” to find Kieran such a job.
The decision to appoint Schofield as President was made in late April 1997, and on May 15 th of that year, the appointment was announced. Kieran testified that Rodek had agreed to transfer Kieran outside of the Canadian operation prior to announcing Gord Schofield’s presidency. Rodek met with Kieran to advise him that it was impossible to delay the appointment any further, that Kieran was out of the running, and that the job search, though not yet successful, was continuing.
By June 5, 1997, Kieran had changed his mind about leaving Ingram Canada and advised his employer that he wished to continue on as Senior Vice President, Purchasing at Ingram Canada. He said he would work with Schofield in spite of his misgivings.
There is no doubt that when Kieran learned that he would not be promoted to President, he told Rodek and others that he could not possibly stay at Ingram Canada, if Gord Schofield was promoted to President. The trial judge found that there was nothing equivocal in Kieran’s statement. He found that it was tantamount to a resignation contingent on the happening of an uncertain future event. He found that the future event happened, (the promotion of Schofield to President) and accordingly, the contingency was met. He went on to find that a resignation does not require the use of that very word and cited Skidd v. Canada Post (1993), 47 CCEL 169 (O.C.J. Gen. Div.). The trial judge found that Andrew Kieran de facto resigned his employment effective the day that Gordon Schofield became President, that is May 15, 1997.
With regard to the question of whether Kieran was able to withdraw his resignation after May 15, 1997 when Schofield was appointed President, the trial judge indicated that it was possible for Kieran to do so unless Ingram Micro had acted, in the interim, to its detriment, relying on the case of Tolman v. Gearmatic Co. Ltd. et al. (1986), 14 CCEL 195 (B.C.C.A.) as his authority. The trial judge went on to find that the defendant, acting through its worldwide President, Rodek, went to considerable lengths to seek a job outside of Canada for Kieran. Although those efforts were not quantifiable in terms of dollars, they amounted to a detriment. Thus, the trial judge found that Kieran’s efforts on June 5, 1997, to resile from his former position that he would not work with Schofield as President, did not represent a genuine change of heart, but were based entirely upon his own personal convenience. “I cannot imagine how the Defendant could be expected to encumber its newly-appointed president with a senior vice president who had openly stated his refusal to work with him”.
The Defendant failed to find an appropriate position for Kieran elsewhere, and the position that was found, according to the trial judge, was a demotion which amounted to a constructive dismissal. Accordingly, Kieran was under no duty to accept the alternate position proposed by the company. Prior to the end of June 1997, the company proposed, in writing, to accept Kieran’s “resignation”, approximately two weeks after Kieran had indicated that he was prepared to work with Schofield. Kieran was removed from payroll at the company three days prior to the vesting of a tranche of stock options which would have provided him with over $200,000.00 ( US).
Kieran maintained throughout the trial that he had never intended to resign, and that his indication that he could not work for Schofield did not amount to a resignation. He argued that even if it did, he resiled from that position no later than June 5 th, at least two weeks prior to the company allegedly accepting his “resignation”. Throughout the trial, it was Kieran’s position that he was fired by the Defendant and entitled to reasonable notice which included the vesting of his stock options over the notice period. Nonetheless, the trial judge found that he resigned and that his attempt to withdraw his resignation was ineffective, since the company had, in the interim, suffered a detriment by seeking to find alternate employment for him within their international operations.
On appeal, the Ontario Court of Appeal unanimously held that a resignation must be clear and unequivocal, “to be clear and unequivocal, the resignation must objectively reflect an intention to resign, or conduct evidencing such an intention”. The Court cited Moore v. University of Western Ontario (1985), 8 CCEL 157 (Ont.H.C.J.), where an employee wrote the University President stating that he considered a new requirement to report to someone other than the President to amount to a constructive dismissal and that he would continue to remain in the job while he sought other employment. The University accepted this “resignation”, even though the employee responded that he had not intended to resign. In that case, the Court ruled that the President was not entitled to interpret the employee’s letter as an unequivocal intention of the employee’s resignation.
On the Kieran appeal, the issue was whether Ingram was entitled, at law, to treat Mr. Kieran’s statements as clearly and unequivocally amounting to a resignation. The Court said one must look at words or actions within a context in order to determine “whether a reasonable person, viewing the matter objectively, would have understood Mr. Kieran to have unequivocally resigned”. The Court pointed out that at no time had Kieran indicated that he intended to resign from the company. Rather, the Court found that the only thing said by Mr. Kieran was that if Mr. Schofield were chosen as President, he required an international transfer. Even after May 15, 1997 when the appointment of the new President was announced, Mr. Rodek encouraged Mr. Kieran to believe that a suitable position could and would be found for him. The Court found that Mr. Kieran’s statements did not amount to a resignation, and that even if he had resigned, he could have resiled from that resignation providing the employer had not relied upon it to its detriment. In this case, the Court of Appeal found that the Defendant did not suffer a detriment. Copyright
Brian A Grosman, Q.C.
October, 2004
This article has been reproduced from The Employment Bulletin
with the permission of the publisher, Canada Law Book Inc.
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