Executive Summary: Key Legal and Evidentiary Issues

• Central issue was whether the plaintiff’s dismissal was for just cause, or part of a conspiracy to remove him from control of the Destiny Companies.

• The plaintiff’s credibility as a witness was found lacking, with the court preferring the consistent and corroborated testimony of the defendants’ witnesses.

• Evidence established the plaintiff prioritized personal business interests over his duties as CEO, failed to provide required business plans, and condoned an employee’s use of company time for non-company work.

• The Board’s actions in suspending and terminating the plaintiff were found to be lawful, properly noticed, and motivated by fiduciary duty rather than malice.

• Claims of civil conspiracy and defamation were dismissed due to lack of evidence of unlawful conduct, intent to injure, or publication of defamatory statements.

• The court concluded that the plaintiff’s conduct constituted just cause for dismissal, resulting in dismissal of all claims and an award of costs to the defendants.

Facts of the case

Steven Eric Vestergaard, the founder and former President and CEO of Destiny Media Technologies Inc. and its subsidiaries, brought an action against Destiny Media Technologies Inc., Destiny Software Productions Inc., Sonox Digital Inc., MPE Distribution Inc., Hyonmyong Cho, S. Jay Graber, and Fredrick Vandenberg. He alleged wrongful dismissal, civil conspiracy, and defamation following his suspension and subsequent termination by the Board of Destiny Media in June 2017. The Board, comprised of Hyonmyong Cho and S. Jay Graber (alongside Vestergaard), voted to suspend and then terminate Vestergaard after concerns arose regarding his performance and conduct.

Vestergaard had been with Destiny since its inception and continued as CEO after Destiny Software was acquired by Destiny Media in 1999. In 2016, he became involved in a separate business, Broughton & Broughton, which operated retail businesses in Lions Bay. During this period, concerns grew among Destiny’s management and Board about Vestergaard’s frequent absences, failure to fulfill key duties (such as preparing business plans and press releases), and his prioritization of personal business interests over Destiny’s needs. These issues were compounded by similar conduct from another employee, Ms. Dove, who was also terminated for cause.

Employment relationship and Board dynamics

The Board expected Vestergaard, as CEO, to provide strategic leadership, including the preparation of business plans for Destiny’s core products. Despite repeated requests and clear communication from the Board, Vestergaard failed to deliver the required plans. His absences and lack of engagement in company matters were documented and corroborated by multiple witnesses and documentary evidence. The Board’s concerns escalated after Vestergaard demanded a significant pay raise and threatened to terminate key employees, prompting the Board to seek legal advice and commission an independent workplace investigation.

Events leading to dismissal

Vestergaard was suspended on June 22, 2017, pending the outcome of the investigation. He was directed to cooperate with the investigator, Ms. Boddie, but refused to participate in the interview process, despite multiple clear instructions and warnings that non-cooperation would be considered insubordination. After the investigation concluded unfavorably for Vestergaard, the Board voted to terminate his employment for cause on June 28, 2017. The court found that the process followed by the Board, including notice of meetings and the authority to act, was proper and lawful.

Analysis of policy terms and legal framework

The court applied the legal framework for wrongful dismissal, emphasizing that senior executives with fiduciary duties are held to a higher standard of conduct. The evidence established that Vestergaard breached his fiduciary duties by prioritizing personal business interests, failing to perform core responsibilities, and condoning misuse of company resources by another employee. The court found that the Board’s directions were clear and lawful, and Vestergaard’s refusal to comply constituted willful disobedience and insubordination.

Outcome and ruling

Justice Tucker dismissed all of Vestergaard’s claims. The court found that the defendants acted in good faith, in the best interests of the company, and with just cause in terminating Vestergaard’s employment. The conspiracy and defamation claims were also dismissed due to lack of evidence of unlawful conduct, intent to injure, or publication of defamatory statements. The court awarded costs to the defendants as the successful parties. No specific monetary award was ordered in favor of the defendants, but they are entitled to their costs, with the amount to be determined if further submissions are made.