Court takes car dealership’s tolerance for misbehaviour into account

Varsity Plymouth Chrysler (1994) Ltd. v. Pomerleau [2002] A.J. No. 929 (Alta. Q.B.)

Kurt Pomerleau was hired in 1995 and was a successful salesperson for Varsity. In 1996 he was promoted to sales manager and in 1998 he received an increase in salary. Varsity ran a program for its employees that allowed them to buy vehicles for personal use.

Pomerleau purchased many vehicles over the four years he was at Varsity, always turning them around for resale. Pomerleau never had to pay directly for his purchases — they would be deducted from payroll.

He was often sloppy with his accounts and often took weeks to complete these purchases. There were no complaints by Varsity about this practice. In 1999 Pomerleau sold a truck for which it took him weeks to organize payment. The judge concluded Pomerleau lied about who the prospective purchaser would be because he wanted to buy the vehicle for himself but couldn’t do so immediately because he was financially overextended.

Shortly thereafter Pomerleau approached Varsity about another employment opportunity he had been offered. The owner of Varsity told him he had a future with the company, and Pomerleau turned down the other employment opportunity. He was dismissed one month later.

Varsity claimed they had just cause because Pomerleau lied about who had purchased the truck for his own personal gain. Varsity also claimed Pomerleau’s practice of turning around personal vehicles for profit was dishonest.

The judge held that in assessing whether an act of dishonesty constitutes just cause that one must look at all the circumstances, including the particular business culture of the corporation at hand. Varsity’s acquiescence to Pomerleau’s earlier vehicle purchases, in addition to the fact another salesperson also resold a car without punishment, showed Varsity was not overly concerned with this behaviour.

In addition the court considered that the company had a high tolerance for poor behaviour including only a slight reprimand for a general sales manager whose conduct led to a sexual harassment claim. The judge found the abrupt termination out of sync with the business culture at Varsity. Pomerleau’s reasonable notice period was limited to two-and-a-half months’ salary, calculated to be $19,905.54, as he was able to mitigate his damages by getting a similar position at another dealership.

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