The Alberta Court of King’s Bench has released a detailed and instructive decision on after-acquired cause, employee dishonesty and proportionality in termination for cause, particularly in the context of a closely held business and a senior executive role.
In Sobolewski v Advanced Completions Technology Services Ltd, Justice Lisa Silver dismissed a wrongful dismissal claim brought by the former president of a boutique oil and gas services company, finding that the employer was entitled to rely on serious misconduct discovered only after termination. At the same time, the Court rejected the employer’s counterclaim for reputational damages, underscoring that reputational harm must be proven, not presumed.
Background: A High-Stakes Bid and a Falsified Certificate
John Sobolewski was dismissed without cause in April 2022 from his role as president of Advanced Completions Technology Services Ltd (ACTS). At the time, the company was under significant financial pressure.
Shortly after the termination, ACTS discovered that Mr. Sobolewski had fabricated an American Petroleum Institute (API) certificate and submitted it as part of a major bid worth approximately $1.7 million.
Mr. Sobolewski admitted falsifying the certificate but claimed the company’s other principals knew about and participated in the misconduct. ACTS denied any knowledge until after the dismissal and relied on the fabrication as after-acquired cause justifying termination for cause.
After-Acquired Cause: What it is and Why it Matters
One of the most significant aspects of this decision is its careful treatment of after-acquired cause, a doctrine that frequently arises in wrongful dismissal litigation but is often misunderstood.
After-acquired cause allows an employer to justify a termination after the fact, based on misconduct that
- occurred before dismissal;
- was not known to the employer at the time of termination; and
- would have justified termination for cause, had it been known at the time.
The focus is not on the employer’s knowledge at the moment of dismissal, but on whether just cause objectively existed at that time.
Justice Silver reaffirmed that an employer is not barred from relying on serious misconduct simply because it was discovered later. However, the doctrine is not automatic and is subject to important safeguards.
The Court’s analysis reflects a two-stage framework.
1. Did the misconduct exist at the time of dismissal?
The employer bears the onus of proving, on a balance of probabilities, that
- the misconduct actually occurred before termination, and
- the misconduct was potentially serious enough to amount to just cause.
In Sobolewski, this element was straightforward. The falsified API certificate was created and submitted before Mr. Sobolewski was dismissed, and the misconduct was admitted.
2. Was the misconduct known or condoned by the employer?
An employer cannot rely on after-acquired cause if it knew of the misconduct at the time of dismissal and either expressly or implicitly condoned it, including by failing to take reasonable steps in response. Where the employer had knowledge and chose to tolerate, accept or overlook the conduct, after-acquired cause is unavailable. On this issue, the burden shifts to the employee.
Mr. Sobolewski argued that ACTS’ other principals were aware of, and involved in, the falsification. Justice Silver rejected this argument after a detailed credibility analysis grounded in objective computer metadata, email records and timelines, and inconsistencies in the employee’s evolving testimony.
The Court found that ACTS had no knowledge of the falsified certificate at the time of dismissal and therefore had not condoned the misconduct. This finding was decisive in allowing the employer to rely on after-acquired cause.
Proportionality Remains Central
Proving after-acquired cause does not end the analysis. The Court must still apply the contextual proportionality framework from McKinley v BC Tel and ask was the misconduct, viewed in its full context, such that the employment relationship could no longer viably subsist?
Justice Silver emphasized that dismissal for cause remains the "capital punishment" of employment law and must be reserved for misconduct that fundamentally undermines the employment relationship.
The Court acknowledged several mitigating considerations, including the company’s financial distress, the high-pressure environment surrounding the bid, Mr. Sobolewski’s long service and prior clean record and his personal commitment to the company’s success.
Ultimately, however, the aggravating factors prevailed: the misconduct was intentional, planned and sophisticated; it involved falsifying a regulatory-style certificate in a major commercial bid; Mr. Sobolewski was the president and outward face of a small, closely held business; the deception misled not only a potential client but also shareholders and directors; and the role demanded a heightened level of trust, ethics and fiduciary responsibility.
The Court concluded that this was not a remediable policy breach or lapse in judgment. It was a deliberate act that irreparably damaged the trust essential to the business and made continued employment untenable.
Key Takeaways
Sobolewski is a timely reminder that
- after-acquired cause remains a robust defence in wrongful dismissal cases
- credibility and documentary evidence can be determinative
- proportionality remains the central safeguard against overreach
For employers, the decision underscores the importance of careful investigation and evidentiary discipline when relying on after-acquired cause. In Sobolewski, the outcome turned on objective records including computer metadata, emails, and travel logs rather than competing narratives. Without that documentary foundation, the employer’s defence may have failed. The decision also confirms that a single, deliberate act of dishonesty can justify termination for cause, even if uncovered only after the employment relationship has ended.
