Executive Summary: Key Legal and Evidentiary Issues

• Termination for cause was upheld based on ACTS’ after-acquired knowledge that John Sobolewski had fabricated a false API certificate used in a major Kerui bid, with the court finding this dishonest misconduct justified dismissal.

• The court rejected Sobolewski’s allegation that co-founders Darryl Firmaniuk and Jason Wang knew of, participated in, or condoned the falsified certificate, concluding ACTS was unaware of the misconduct at the time of dismissal.

• The judge found that Sobolewski alone created the falsified Xi’an API certificate on his laptop on March 18, 2022, while in Estevan, and that his narrative on dates and involvement of others was inconsistent, implausible, and tailored to fit the documentary record.

• Considering the contextual factors, including Sobolewski’s role as President in a closely held company and the deliberate, multi-step nature of the fabrication, dismissal was held to be a proportionate response to his dishonest misconduct.

• The field bonus claim was dismissed because the bonus was discretionary, subject to conditions in the ACTS Variable Pay Programs Policy, and there was no evidence the required documentation and customer agreement for payment had been met or that ACTS unreasonably exercised its discretion.

• The mileage reimbursement claim and ACTS’ counterclaim for reputational damages were both dismissed, the former because Sobolewski had effectively decided not to claim and missed policy deadlines, and the latter because ACTS proved no actual reputational, regulatory, or business harm.

Background and parties’ relationship

John Sobolewski was dismissed without notice on April 1, 2022, from his position as President of Advanced Completions Technology Services Ltd. (ACTS), a small boutique company providing bespoke tools for the oil and gas field. He received five weeks of base salary in lieu of notice under employment legislation. He had no written employment contract with ACTS.

Sobolewski was invited into ACTS at its inception by two engineers, Darryl Firmaniuk and Jason Wang. The three men knew each other from previous employment and were shareholders and Directors of ACTS. In June 2015, Sobolewski and Wang travelled to China to meet with prospective investors known as the Polydoctor Group, which invested approximately $5 million into the company. Members of the Polydoctor Group also sat on ACTS’ Board of Directors.

ACTS was a closely held business. The court found that all three men were committed to its success for financial and personal reasons and had, at times, willingly reduced their salaries when the company’s financial health was questionable. Sobolewski was the outward face of the business, with managerial strengths and field tool knowledge, while Firmaniuk and Wang, as engineers, had defined roles consistent with their expertise. All three had worked together in large corporations, and each was a shareholder and Director who would logically be aware of and concerned with the general operations of the business, although the court accepted that Wang and Firmaniuk were not involved in the minutiae of daily operations.

The Kerui bid and the falsified API certificate

Prior to and at the time of Sobolewski’s dismissal, ACTS was struggling financially. On March 20, 2022, Sobolewski completed and submitted a bid to Kerui for what would have been the largest bid ACTS had applied for to date, with potential revenue of 1.7 million dollars for the company. As part of the Kerui bid, a bid requirement was a document bestowing API certification. ACTS itself had no API certification.

Shortly after Sobolewski’s dismissal, Firmaniuk and Wang learned that a falsified document had been submitted by Sobolewski as part of the Kerui bid. The falsified document purported to grant ACTS certification through the American Petroleum Institute (API), even though ACTS had no such certification.

The court accepted that ACTS had, in the past, relied on an API certificate held by Xi’an Haizhi Electromechanical Equipment Company, a Polydoctor subsidiary in China, when a company wanted or inquired about API certification. According to the evidence, that Xi’an certificate often boosted ACTS’ credibility and enhanced bids. Around 2008, all three men had shared the certificate through WeChat.

For the Kerui bid, Sobolewski approached his colleagues about the certificate. Wang looked into whether Xi’an held a current API certification and found that the certificate had not been renewed. Sobolewski testified that Wang sent him the certificate via WeChat so that he could manipulate it, but Wang denied this and said he no longer had the WeChat message on his new phone. There was no documentary or electronic evidence, such as an email, supporting Sobolewski’s claim that Wang sent him the certificate.

Sobolewski then asked Firmaniuk for the Xi’an certificate because Firmaniuk was the only one of the three who still had access to the historical WeChat message. Firmaniuk forwarded the Xi’an certificate from WeChat to his own email address and then forwarded that email to Sobolewski. He did not look at or change the certificate before sending it and did not verify its validity. The certificate was sent in an image (“jpg”) format, consistent with the WeChat image.

The falsified certificate ultimately used in the Kerui bid was created by manipulating a vendor’s API certificate. That vendor provided pipe threading for the Kerui bid. The court accepted Firmaniuk’s evidence that the vendor’s certificate was on ACTS’ main server, to which Sobolewski had access, and that if asked, he would have directed Sobolewski to that server. There was no email or other evidence that Firmaniuk sent the vendor’s certificate directly to Sobolewski.

The court found that Sobolewski used the vendor’s API certificate and manipulated it into a falsified Xi’an API certificate. According to his computer files, the falsified Xi’an certificate was created on Sobolewski’s laptop on March 18, 2022, at 4:44 PM and last modified on March 18, 2022, at 4:58 PM. At that time, Sobolewski was in Estevan on a field job, as confirmed by his mileage claim showing he left for Estevan on March 17 and completed his journey on March 18.

Conflicting evidence and the court’s credibility findings

A key issue was whether ACTS, through Firmaniuk and Wang, knew of or participated in the fabrication of the false API certificate before Sobolewski’s dismissal, or whether the knowledge was only acquired afterward. Sobolewski admitted fabricating the false API certificate but claimed that both Firmaniuk and Wang were part of the decision to create it, assisted in its fabrication, and were present when it was made. He argued that ACTS therefore condoned the misconduct and could not rely on it as just cause.

Firmaniuk and Wang denied any knowledge or involvement in the fabrication and maintained that they only learned of the falsified certificate after Sobolewski had been dismissed.

Because their evidence was at variance, the judge conducted a detailed credibility assessment, mindful that all three had an interest in the outcome. She evaluated plausibility, believability, and consistency, and tested each narrative against the probabilities a practical and informed person would recognize as reasonable in the circumstances, applying the balance of probabilities standard.

The court found that all three men tended to minimize the roles they played in managing the business. The judge did not accept that Firmaniuk and Wang left all business decisions to Sobolewski, nor that Sobolewski never made decisions without them. Nonetheless, the judge accepted that bids were Sobolewski’s responsibility, that he had carriage of preparing bids, that he advised Kerui he was the lead person on the Kerui bid, and that while the engineers would be apprised generally and provide supporting documents, they would not necessarily know all details of the bid package.

The judge highlighted inconsistencies in Sobolewski’s evidence about when and where the certificate was fabricated and who was present. In direct examination, he said he fabricated the certificate at ACTS’ office on March 16 while Wang and Firmaniuk watched, and that he travelled to Estevan afterwards. In cross-examination, he changed the date to March 18, then, when confronted with his presence in Estevan on March 18, altered it again to March 17. He also gave conflicting evidence about who sent him which certificate and on which date.

The court found that Sobolewski’s narrative evolved during his testimony and concluded that these changes were more than simple memory lapses. The judge found they resulted from his desire to tailor his evidence to match the indisputable documentary evidence, including the March 18 email from Firmaniuk and the computer file information.

Considering the totality of the evidence, the court drew the only reasonable inference that Sobolewski, on his own, created and manipulated the vendor API certificate into a falsified Xi’an API certificate on March 18, 2022, when he was alone in Estevan. The judge completely rejected his evidence that Wang and Firmaniuk were involved in or aware of the falsified certificate. On a balance of probabilities, the court found his evidence on this issue implausible, inconsistent, and not worthy of belief.

Accordingly, the judge held that ACTS was not aware of the fabrication at the time of dismissal and had not condoned the misconduct. ACTS therefore could rely on after-acquired cause.

After-acquired cause and proportionality of dismissal

The legal framework applied by the court recognized that if just cause existed at the time of dismissal, dismissal may be justified for cause even if the employer did not know of and did not rely on that cause at the time. ACTS bore the onus of proving just cause. The court then applied the contextual, fact-driven analysis required in cases of dishonest misconduct, considering whether Sobolewski’s actions were such that the employment relationship could no longer viably subsist.

The judge identified several factors weighing against dismissal as a proportionate response:

• Sobolewski’s misconduct was done in an effort to help save the financially strained company and had a dimension of desperation.

• He acted during a stressful period while travelling and taking on extra duties.

• The misconduct was done with the encouragement of the person he was in contact with at Kerui.

• He did not hide the falsified certificate; it was found in the Kerui bid folder he left when dismissed.

• He had been with the company since it started, worked hard for seven years, and had a personal commitment to its success.

• There were no prior acts of misconduct or poor performance reviews.

The judge then listed factors favouring dismissal:

• Leaving the falsified certificate in the Kerui bid folder could also indicate a cavalier attitude toward the conduct.

• Sobolewski advised Kerui that he was solely in charge of the bid and had sole access to Kerui and the bid process at the time of the deceit.

• He repeatedly minimized his dishonesty by characterizing the certificate as merely “checking the boxes.”

• His conduct could be viewed as a serious betrayal in light of the close personal and business relationship between the three men.

• The misconduct was intentional, planned, deliberate, and sophisticated, involving detailed changes to create a certificate that looked real enough to be relied on.

• It was conducted in secret, which suggested it was also used to bolster his status and position in the company.

• It deceived not only Kerui but also ACTS employees and directors, particularly the Polydoctor Group.

• The misconduct was heightened by his experience as a knowledgeable business manager and his failure to do enough to protect both his own and ACTS’ reputation.

• As President of a small, closely held boutique business, his role required the highest level of ethics and fiduciary trust.

The court acknowledged that dismissal for cause is the “capital punishment” of employment law and must be proportionate, given the importance of work to a person’s identity, self-worth, and dignity. Even so, after reviewing all contextual factors, the judge concluded that Sobolewski’s dismissal was proportionate and was the only response open to ACTS.

The Kerui bid was significant for ACTS, being its largest financial bid, and crucial to the company’s financial health. The judge found that Sobolewski took a chance the deception would not be uncovered, was willfully blind to warning signs, and did not vigorously challenge the request for a false certificate or step back from the bid. The judge considered alternatives such as a reprimand, warning, or ethical training but rejected them as inadequate given the importance of trust in a closely held company and the existing negative view of Sobolewski held by the major shareholder, which blamed him for ACTS’ sluggishness in the market.

Although this was the only act of misconduct, the court emphasized that its nature and extent were significant and that the one act involved many dishonest steps. The misconduct breached the “faith inherent to the work relationship.” The judge found that if ACTS had known of the misconduct at the time, dismissal for just cause would have been appropriate, and that, based on after-acquired knowledge, ACTS had discharged its onus to establish termination as a proportionate sanction.

Field bonus claim under the ACTS Variable Pay Programs Policy

Sobolewski also claimed a field bonus for work he performed in the field. The court treated this bonus claim as a separate cause of action. The field bonus program was described in ACTS’ Variable Pay Programs Policy, which Sobolewski had created with help from human resources professionals. The policy was designed for field workers. Sobolewski was not ordinarily a field worker, but at the relevant time he was working in the field and performing field-type work.

The judge found that the field bonus was not an integral part of his wage structure. Rather, it was a performance bonus for work he did not usually perform in his Presidential role.

Several eligibility requirements in the policy restricted his eligibility:

• The job bonus was payable at the conclusion of the work. The court accepted that he finished the job and returned to Calgary on or about March 22, 2022, and therefore “earned” the bonus in that limited sense.

• The bonus was “contingent” on the customer’s agreement to pay it. When asked if the customer agreed to pay, Sobolewski’s responses were equivocal and non-responsive. He described general procedures for a claim but did not clearly establish that the customer had agreed to pay the bonus.

• There was no documentary evidence filed at trial to support his general assertions—no signed service tickets and no evidence that an office manager had submitted tickets to the customer.

The policy also provided that a job bonus accrued only if all job-related documentation, reporting, and administration were properly completed by the job bonus date, defined as when the job concluded and payment of the “ticket agreed-to by the customer” was made. The court found there was no evidence that the ticket was agreed to by the customer or that all required documentation, reporting, and administration had been completed.

Finally, the policy clearly gave ACTS “sole” discretion to determine eligibility. The court found that, even if the field bonus was otherwise payable, ACTS was not unreasonable in exercising its discretion to decline payment because the bonus was intended for field staff, not executives. At the time, ACTS was coming out of the COVID years, its business had greatly reduced, and its workforce had been reduced. Sobolewski took on field work to fill a gap in a financially sound way, and the executive team, including him, had agreed to reduce salaries because of financial difficulties. It was, in the judge’s words, counter-intuitive for ACTS to pay a field bonus to its President in those circumstances.

The court held that Sobolewski failed to establish the field bonus claim on a balance of probabilities and dismissed it.

Mileage reimbursement claim and waiver

The mileage reimbursement claim was also treated separately from salary, as a permitted reimbursement for expenses when using a personal vehicle for business purposes. The court examined whether the claim was payable at the time of dismissal.

One issue was timing. A “monthly km reimbursement report” listed reimbursements starting with “12-Oct-22,” even though Sobolewski had been dismissed on April 1, 2022. Another document suggested the claims for October to December 2022 were actually for 2021. The mileage policy required all personal mileage reporting for the previous year to be completed by the first week of January in the subsequent year. The 2021 mileage claims were not reported by the first week in January 2022, so the court held they were not valid, subsisting claims.

The court also considered that Sobolewski had not claimed mileage since 2019 and submitted these 2022 (and 2021) claims only six days after his dismissal. The judge noted evidence from Firmaniuk that Sobolewski had said he was “doing the company a favour” by not claiming mileage during COVID and ACTS’ financial downturn.

Sobolewski explained the delay by saying it “slipped his mind,” but the court found this not credible given his practice of carefully recording mileage in a journal kept in his car and the fact that he had recently undertaken two lengthy trips to Saskatchewan and Manitoba. The judge preferred and accepted Firmaniuk’s evidence that the executive team agreed not to make mileage claims because of the company’s tenuous financial situation.

The court found that Sobolewski made an informed decision not to claim mileage to assist ACTS financially, consistent with the earlier salary reductions, and that he never intended to claim this mileage at the time. The judge concluded that he had waived his right to claim it and dismissed the mileage claim.

Because ACTS did not act improperly, unreasonably, or unfairly in refusing to pay the bonus and mileage claims, the court also dismissed Sobolewski’s claim for punitive damages.

Reputational damages and dismissal of ACTS’ counterclaim

ACTS counterclaimed for reputational damages arising from Sobolewski’s misconduct. The court found that ACTS failed to prove, on a balance of probabilities, that it suffered reputational harm. ACTS did not lose any business from Sobolewski’s actions, did not face any disciplinary action from APEGGA (the engineering profession’s regulator), and did not suffer any other loss attributable to the misconduct.

The court also noted that ACTS significantly mitigated potential loss by not disclosing the misconduct. As a result, there were no damages to compensate, and the court dismissed the counterclaim for reputational damages.

Overall outcome

The judge concluded that ACTS acquired knowledge of Sobolewski’s misconduct after his termination and that ACTS had just cause to terminate him. The dismissal was proportionate to the seriousness of his dishonest misconduct.

The court found no cause of action for the field bonus because Sobolewski did not establish, on a balance of probabilities, that the bonus was due to him under the field bonus policy, and no cause of action for the mileage claim because he had no intention of claiming mileage before his dismissal. His claim for punitive damages was dismissed.

ACTS’ counterclaim for reputational damages was also dismissed because there was no evidence of reputational harm or loss suffered by the company attributable to Sobolewski’s misconduct. No party succeeds in obtaining a money judgment.