Landmark case establishes employers can't hide retaliation behind legitimate business reasons.
The Ontario Superior Court has awarded over $5.3 million to a terminated CEO who raised compliance concerns.
This marks the first-ever interpretation of the province's whistleblower protection provisions under the Securities Act.
Justice Robert Centa ruled that Global Growth Assets violated the law when it fired Ian McPherson in February 2019, just six months into his role as chief executive officer and “ultimate designated person” at the education savings plan company.
CEO hired in 2019
McPherson was hired in August 2018 to bring the financially regulated company into compliance with Ontario securities law after years of sanctions against the owner and his daughter. When the board removed the owner's daughter from McPherson's supervision without consulting him, he repeatedly tried to raise concerns that this violated his regulatory obligations. Three weeks later, he was terminated.
The court ruled that if protected activity is part of the reason for termination, the dismissal violates the Act. The court awarded double McPherson's lost remuneration with no requirement to deduct post-termination earnings.
Board decision backfires spectacularly
In January 2019, Global's board ordered that Hanane Bouji would no longer report to McPherson. Bouji was the daughter of the sanctioned owner and chair of the board of directors. The board made this decision without consulting McPherson and left it to Bouji to inform him of the change.
McPherson was deeply troubled by this, according to the decision. The Ontario Securities Commission had previously refused to allow Bouji to serve as ultimate designated person because she had proven "unwilling or unable to take the necessary steps to limit her father's involvement." McPherson knew the Commission had found deficiencies in areas Bouji supervised.
He requested private meetings with independent board members and warned there would be consequences if they couldn't explain the restructuring. The board never granted those meetings. Instead, on Feb. 28, 2019, they terminated his employment for alleged poor performance.
‘I do not believe them’: Justice
At trial, board members testified they fired McPherson solely because of poor performance, not because he raised compliance concerns. Justice Centa rejected this explanation entirely, stating: "I do not believe them."
The court found the defendants' evidence lacked credibility, noting it appeared to be "the product of hindsight" and was "flatly contradicted by contemporaneous documents." The defendants failed to produce crucial evidence including board minutes, meeting resolutions, or the termination resolution itself.
Justice Centa concluded: "Global's decision to terminate Mr. McPherson's employment was a reprisal contrary to the Act because the board made that decision, at least in part, because Mr. McPherson had engaged in activity protected by the Act."
Mixed motives and missing documentation
The court ruled that employers cannot rely on legitimate business reasons when protected activity plays any role in a termination decision. Even if valid performance concerns exist, the termination violates the law if the employee's compliance-related actions were considered at all.
Justice Centa explained: "Despite the existence of legitimate reasons for the termination of an employee, if statutorily prohibited misconduct was taken into account at all by the employer in so doing, the termination has been tainted by improper motive, and the employee may seek relief under the governing legislation."
The Act protects employees who provide information or express intention to provide information to their employer about acts they "reasonably believe" violate Ontario securities law. The court determined McPherson had reasonable belief that removing Bouji from his oversight interfered with his regulatory duties. This protection extends beyond actual reporting to include expressing concerns internally.
The defendants' inability to produce key documents severely damaged their case. The board chair testified the board may not have kept minutes and was certain they did not keep minutes of private meetings because she "did not view in camera meetings of the board as board meetings."
The court noted: "It is curious that none of the independent board members except Mr. Ostapchuk appeared to be concerned that Ms. Bouji did not fulfill this basic corporate governance task."
The absence of contemporaneous records meant there was no evidence corroborating the defendants' testimony about performance concerns.
