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Civil suit: How Terrace Tourism Society's end found its way into this municipal election
A four-year-long court battle quietly put to rest this January is resurfacing during this municipal election.
Lewis vs. Terrace Tourism Society, as it became known, is the history between current mayor Dave Pernarowski and Jennifer Lewis, one of his opponents in 2011’s mayoral race.
Lewis says the case’s details are closely tied to why she’s running — instilling in her what she calls a deep sense of social justice.
ON MAY 3, 2004, Lewis became executive director of the Terrace Tourism Society.
Financing for the society, first formed in 2002, came from a two-per-cent hotel tax, levied by the province and distributed through the Regional District of Kitimat Stikine. The city of Terrace gave the society $35,000 yearly. Advertising revenues also made up part of the society’s budget.
As time went on, the City of Terrace developed different ideas on how it wanted tourism promoted.
The city then hired a consultant, leading to a series of recommendations. But Lewis said she and the board rejected the recommendations, one of which was that the executive director position be terminated and re-hired.
The city pulled its financing August 16, 2006, and had also asked the regional district to transfer hotel taxes to it to be used for the same purpose. The city incorporated its own tourism society — Kermodei Tourism — on Jan. 31, 2007.
LEWIS had barely started a year-long maternity leave when, on Feb. 19, 2007, Terrace Tourism Society members voted to dissolve the organization in favour of city-sponsored Kermodei Tourism.
This capped a vigorous debate outlining philosophical differences between how the city wanted tourism promotion handled and how the Terrace Tourism Society wanted to do its job.
Dave Pernarowski, then manager of the Scotiabank which handled the society’s accounts, became a key figure in how the Terrace Tourism Society’s affairs wound up as the head of a three-person dissolution committee. That process included transferring the society’s assets and determining how much severance Lewis should get.
In the process of finalizing the society’s books, Pernarowski discovered one month of paid medical leave to Lewis not supported by any of the society’s minutes. He also noticed Lewis’ pay cheques were inconsistent with salary information he had.
Although Lewis informed the committee her pay was correct, Pernarowski hesitated to issue severance as he wasn’t comfortable he’d received all the information he needed. Pernarowski then sent an email to former directors of the society saying he had noticed inconsistencies in what Lewis was being paid.
By March 6, 2007 Pernarowski received supporting documentation that Lewis’ salary was, in fact, correct, and the process of considering her severance started.
On March 16, Pernarowski sent an email to a member of the dissolution committee noting a severance package would be available to Lewis in the coming week.
THREE days later, March 19, Lewis filed a small claims action seeking damages for constructive dismissal, defined as when an employer has broken the terms of an employee’s contract in a major way.
Lewis said she filed because when the society voted to dissolve, it ended her job. She was also worried the society was being dissolved so fast its assets would be transferred out of its control before she could be paid severance.
On April 27, 2007, the Terrace Tourism Society fired Lewis, citing the small claims action as the reason.
LEWIS then added defamation to her filings based on the content of Pernarowski’s emails. That moved the case to the BC Supreme Court.
Mr. Justice Brian Joyce dismissed the defamation portion, saying that while Pernarowski’s communications may have been defamatory, he was charged with a financial examination of the society, giving rise to qualified privilege.
Mr. Justice Joyce also dismissed Lewis’ dismissal claim, finding that dissolving the society did not amount to wrongful or constructive dismissal. Joyce found that the society had the right to terminate Lewis as long as it provided pay in lieu of reasonable notice. Since Lewis was on maternity leave until January 2008, the society was unable to give notice, he added.
Since Lewis filed a small claims action against her employer which breached her contract, the society had reasonable cause for firing her, Joyce also found.
He did note that had the dissolution committee and Lewis sat face to face, “this litigation could have been avoided.”
LEWIS filed with the BC Court of Appeal, saying Mr. Justice Joyce “erred in finding that the elimination of her position did not amount to constructive dismissal and that the small claims action provided cause for dismissal.”
She did not appeal the defamation dismissal.
Madam Justice Risa E. Levine ruled Lewis was, in fact, constructively dismissed.
Madam Justice Levine found Lewis’ position was not altered by commencing maternity leave.
She also stated Lewis’ job was clearly at an end when the society’s membership voted to wind up its affairs.
“The trial judge seems to have concluded...that because she was on leave, some remnant of her employment relationship survived the society’s effective cessation of operations,” said Madam Justice Levine in her ruling. “Her employment could not survive, however, by virtue of the society’s delay, apparently because she was on leave, in informing her that her position was terminated, or in determining the amount of her severance.”
Madam Justice Levine noted a terminated employee’s legal rights are not suspended and do not vary because they are on leave. “Dismissal is a matter of substance, not form,” she wrote. “It is effective when it leaves no reasonable doubt in the mind of the employee that his or her employment has already come to an end or will end on a set date.”
Mr. Justice Richard Low agreed with Madam Justice Levine, resulting in a 2 to 1 decision in favour of Lewis.
LEWIS and the Terrace Tourism Society settled quietly out of court in December 2010.
There’s just one tiny reference to the case in a set of Kitimat-Stikine regional district minutes from January – “In Camera - Jennifer Lewis Court Action”.
The details and amount of the settlement are secret, hidden behind a confidentiality agreement signed by everyone involved.
The money, however, did come from a sum held back by the regional district at the time the Terrace Tourism Society dissolved.
THE effects of the case were far reaching.
Pernarowski lost his job as the manager of the Scotiabank on Oct. 2, 2007, resulting directly from the involvement with the dissolution of the society.
“The bank determined that I had breached business conduct guidelines,” he wrote in an e-mail that day. “I believe they were concerned about the potential conflict of interest that could damage the bank’s reputation with my involvement with [the Terrace Tourism Society] and the lawsuit claiming slander.”
Lewis fought her case, which began shortly after giving birth.
She said she struggled to find locally-based employment in the aftermath of the society’s dissolution.
She did work shortly for a newspaper then being published by Merv Ritchie, another mayoral candidate.
That ended with Lewis saying her job selling advertising was hindered by a damaged reputation. She is now working for Air Canada Jazz.
WHEN asked why she has waited until now to talk about her settlement win, she answers, “During the 2008 election, Mr. Pernarowski used that ‘I lost the court case’ campaign and him and his friends emailed that all over, and I think it was one of the reasons why he won.”
She says she was badly treated by Pernarowski at a time when he was essentially her boss.
“It is also showing now that I’ve been able to stand up for myself and also stand up for doing what’s right,” she said.
Pernarowski said he did not intend to cause harm to anyone during the society’s dissolution, and expressed regrets about what happened.
“As a member of the Terrace Tourism Society Dissolution committee, we fulfilled our duties outlined by the membership to the best of our abilities,” he said. “It was really unfortunate that all parties involved in this matter could not resolve their differences outside of court.”
Pernarowski says he’ll remain focused on the positive and is looking forward, not backward, during these elections.
THE Terrace Tourism Society is also linked to two other mayoral candidates this election.
It was the first event Merv Ritchie ever wrote about and published under the Terrace Daily.
Bruce Martindale volunteered to help lead the society at a time when its board of directors resigned, and was also a voting member through his small business McBike.