Norsemont loses former VP's wrongful dismissal case

 

2013-02-04 13:47 ET - Street Wire

by Mike Caswell

Norsemont Mining Inc. has been ordered to pay $105,000 to James Kelly, its former vice-president of finance, after firing him in a "harsh, vindictive, reprehensible and malicious" manner. A judge has found that Norsemont's president, Marc Levy, dismissed Mr. Kelly for no good reason after just seven months of employment. Mr. Levy then threatened to bankrupt Mr. Kelly, unreasonably withheld his final pay and even tried to wrestle Mr. Kelly's personal laptop away from him, the judge ruled.

The decision, handed down in the Supreme Court of British Columbia by Madam Justice Lauri Fenlon, comes after a 33 days of trial. Of the award, $100,000 represents punitive damages stemming from the way that Norsemont fired Mr. Kelly, and the remaining $5,000 is for wrongful dismissal.

The punitive damages arose from the conduct of Norsemont, and in particular that of its then-president, Mr. Levy. After the firing, Mr. Levy told Mr. Kelly he would bankrupt him and would ensure that he would never have money to pursue a court case against the company, the judge found. In addition, Mr. Levy attempted to wrestle Mr. Kelly's personal laptop away from him and, in the weeks after the firing, refused to hand over other personal items Mr. Kelly had left behind, including a signed photograph.

The judge also criticized Mr. Levy's conduct during the trial, saying it was consistent with his attitude toward Mr. Kelly. As a witness Mr. Levy was "at times openly sarcastic and contemptuous," and at one point he ridiculed Mr. Kelly for how little money he had made. The judge recognized that the case was difficult, because Mr. Kelly represented himself at trial, but even in the circumstances the comments "were both cruel and unnecessary."

Mr. Kelly's employment at Norsemont, as described by the judge, began in late 2004 when he was 55 years old. Prior to Norsemont Mr. Kelly had worked as a broker in Vancouver, earning up to $300,000 per year, and before that as a fighter pilot in the Canadian Air Force. The company hired him as the VP of finance on Dec. 1, 2004, with his job being to raise money. He was to use his contacts in the brokerage industry.

Not long into his job, however, Mr. Kelly soon began to have disagreements with others in the office over how to promote the stock. Mr. Kelly was of the view that methodical presentations and developing the company's assets were best, while others advocated more aggressive methods, such as cold-calling on a larger scale.

The disagreements over promoting the stock, as described by the judge, led to a meeting on June 27, 2005, with Mr. Kelly and the company's directors. Mr. Kelly's evidence was that the meeting was "pre-planned attack" on him. One director, Len DeMelt, asked him whether he was going to "get on board" with the plans to promote the stock. Mr. Kelly said that he had no problem if the plans were legitimate, but if they involved breaking the law he was not on board. According to Mr. Kelly, the response from Mr. DeMelt was, "You just signed your death warrant."

The meeting continued with Mr. Kelly protesting to the board about $30,000 that he claimed the company owed him. He felt the money was due to him because of delays in granting him a stock option. The only reply, however, was that Mr. Kelly did not deserve the money. The meeting, which the judge said included many raised voices, ended with no conclusion.

Mr. Kelly met with Mr. Levy a few days later, with that conversation leading to his firing. At that meeting, he spoke to Mr. Levy about the $30,000, and asked if he would have to "get a lawyer involved." Mr. Levy's reply, as quoted by the judge, was: "You're threatening the company with litigation. That's grounds for dismissal. You are fired."

According to Norsemont, the demand for additional compensation was unreasonable given previous stock option grants Mr. Kelly had received. It amounted to a bad faith "cash grab" that showed little regard for the company. The judge, however, found that the dispute was simply a "genuine or honest disagreement" that did not justify dismissal.

Norsemont's other argument, as summarized by the judge, was that Mr. Kelly had failed in his job, which was to draw investors to the company. He did not speak to a reasonable number of brokers and failed to follow the "high volume, more aggressive and persistent approach" that Mr. Levy advocated.

The judge, however, found that Mr. Kelly's performance was not poor enough to warrant immediate dismissal. Potential investors who testified at trial said Mr. Kelly was a trustworthy and professional salesmen. One witness stated that the only reason he did not invest in Norsemont was that Mr. Levy did not strike him as having any integrity.

In determining damages, Justice Fenlon found that Norsemont was obligated to pay Mr. Kelly $5,000 for one month of salary, the termination payment specified in his employment agreement. Mr. Kelly had also claimed $30,000 owing for the delays in granting an option, but the judge disallowed that claim, saying that Mr. Levy had made no firm promises.

The largest portion of the award, $100,000 in punitive damages, stemmed almost entirely from the manner of firing. The judge said that after the firing, Mr. Levy deliberately threatened Mr. Kelly financially, promising to "bankrupt him" in an attempt to dissuade him from pursuing legal rights. The company then withheld money it owed him in an effort to extort a release of liability, the judge found.

Moreover, the company accused Mr. Kelly of fraud and incompetence in the course of the lawsuit. Those allegations made it more difficult for Mr. Kelly to find other work in his field. "The defendant engaged in conduct that was vindictive, reprehensible and malicious -- conduct that is deserving of the strongest rebuke," Justice Fenlon wrote.

The trial in the case took 33 days, spread between March, 2011, and June, 2012.