Unauthorized Innovation: Court Upholds Just Cause Termination for Confidentiality Breaches + Conflict of Interest

In Benham v Suncor Energy Inc., an employee had been employed with Suncor's predecessor companies before joining Suncor as a Senior Technical Advisor within its Enterprise Technical Services group, a group responsible for refining and supporting existing Suncor technology in collaboration with Suncor's Enterprise Technology Development group ("TD Group"). In 2017, the employee was responsible for developing a patent to convert heavy oil and gas to liquids (the "ITP Patent").

Between 2017 and 2018, the employee and his son, who was a newly graduated engineer, collaborated on the design of the ITP Patent, despite his son not being employed by Suncor. This collaboration involved the employee disclosing Suncor's confidential information. As part of their work together, and without Suncor's consent, the employee forwarded internal Suncor email exchanges regarding the ITP Patent to his son, including emails with Suncor's external legal counsel. Through their collaboration, the employee's son developed a fundamental characteristic of Suncor's new technology, which ultimately became part of the ITP Patent. The employee later disclosed his son's involvement, expressing that his son would need to be noted as an inventor of the ITP Patent.

Suncor investigated and subsequently reprimanded the employee for sharing confidential information and collaborating with his son with respect to the ITP Patent. Despite various warnings and a formal reprimand, the employee continued to work with his son on the ITP Patent technology. His son even used the ITP Patent to develop a new process, for which he filed for and received a patent (the "JS Patent"). According to the employee, the JS Patent was designed to fix problems that his son identified in Suncor's ITP Patent.

After the JS Patent was filed, the employee disclosed to Suncor that he may have a conflict of interest in relation to the ITP Patent. Only after being asked three times by his immediate supervisor did he disclose the true nature of this conflict, namely his son's JS Patent. Suncor cautioned the employee to cease sharing confidential information with his son and to refrain from engaging in conduct that could potentially contaminate Suncor's intellectual property rights.

Despite prior warnings and discipline, the employee continued requesting that Suncor hire his son, adopt the JS Patent, and consider his son's recommendations. Suncor ultimately negotiated the purchase of the JS Patent from the employee's son. The employee was removed from the ITP Patent project. Suncor notified the employee that it was investigating his misconduct. On March 18, 2021, Suncor terminated the employee's employment for just cause.

What the Court Said

The Honourable Justice N.F. Dilts began her analysis by emphasizing that workplace policies are an integral aspect of an employer's management rights and are necessary for good corporate governance. Employees are required to abide by policies that are reasonable, unambiguous, accessible, and published. Despite their importance, not all policy breaches warrant termination for just cause. Justice Dilts held that a just cause termination must be "contextually proportionate to the misconduct." Factors that a court will consider when determining whether an employer was justified in terminating an employee for just cause include:

1. the employee's length of service, including their role and responsibility within the organization;
2. the employer's reasonable expectations given the employee's role, responsibilities, and the employer's policies;
3. the employee's prior disciplinary history;
4. how the employer's business was, or could have been, impacted by the misconduct; and
5. whether the misconduct was an isolated incident.

Employers are entitled to consider the cumulative effect of an employee's misconduct when deciding whether termination for just cause is appropriate. The central question a court will ask is whether the misconduct has rendered a continued employment relationship untenable.

Justice Dilts held that the employee's ongoing collaboration with his son on the ITP Patent, his ongoing work with his son that led to Suncor having to purchase the JS Patent, and his consistent unauthorized disclosure of confidential information constituted grave and repeated violations of Suncor's policies. Justice Dilts also held that the employee placed himself in a conflict of interest by promoting Suncor's use of the JS Patent. In Justice Dilts' view, the employee was obligated to avoid behaviours that created a conflict between his duties owed to Suncor and his personal interests. The employee's cumulative conduct demonstrated "a lack of awareness and understanding as to the fundamental obligations he owed his employer." As the employee's role involved developing and protecting Suncor's confidential and proprietary information, his persistent breaches of Suncor's policies made his continued employment untenable.

Takeaways

Benham serves to reinforce the proposition that the higher an employee's position within an organization, the greater the responsibility that employee has to avoid conflicts of interest and safeguard confidential information. Breaching these fundamental duties, despite being well-intentioned, can warrant termination of employment for just cause.

Questions about just cause termination, confidentiality obligations, and conflicts of interest are complex, especially when senior employees in positions of trust are involved. The development of comprehensive workplace policies regarding confidentiality, intellectual property, and conflicts of interest is essential and can also quickly become complex. Contact David Di Gianvittorio in Calgary, Joël Michaud in Edmonton, or any member of Field Law's Labour + Employment Group for guidance on termination decisions and workplace policy issues.

Link to decision: Benham v Suncor Energy Inc., 2026 ABKB 364