One of three brothers who own a Burnaby tech company has won a court battle against his siblings for firing him.
Doug Zoehner was awarded $568,482.74 in damages last week, after a B.C. Supreme Court judge ruled he had been wrongfully dismissed by Algo Communication Products Ltd.
All in the family
The Burnaby-based telecommunications equipment supplier, which has its offices at 4500 Beedie St., is owned through holding companies by Doug, Paul and Kerry Zoehner, according to a Feb. 15 ruling.
The firm was founded by the brothers’ mother and father in 1968 and taken over by them after their parents’ death.
Doug, the company's president, was in charge of Algo’s “Interconnect Division,” which installed and serviced telephone systems for businesses, while Paul, the company's secretary, headed Algo’s “Manufacturing Division,” which develops and manufactures internet protocol based communications equipment, including intercom devices, speakers and visual alert lights for commercial and industrial settings.
Kerry is not an Algo employee, but has been one of the company’s three directors – along with Doug and Paul – since November 2020.
In January 2021, Kerry and Paul voted to fire Doug, according to the ruling.
Doug had arranged for Algo’s Interconnect Division to be sold off in December 2019 amid “terrible” financial performance, according to the ruling, but Doug was still collecting a $350,000 annual salary from the company despite having had no more work to do for his former division after April 30, 2020.
Doug maintained he was still employed by Algo and continued to be entitled to draw his salary until the whole company was sold, but Paul argued Doug had effectively retired with the sale of the Interconnect Division and was obliged to decline payment of his salary.
“Your expectation to continue collecting a salary of $350,000 until such time as the company is sold is abusive to the other shareholders,” stated a May 27, 2020 email from Paul to Doug quoted in the court ruling.
The two brothers continued in a “stalemate” for months because they were Algo’s only two directors, but the standoff ended soon after Kerry became the company’s third director and voted with Paul to fire Doug.
In a termination letter, Paul claimed Doug had “abandoned his employment” with Algo as of May 2020.
“…You have not served any functional role within Algo since the divestiture of the Interconnect Division,” stated the letter. “Your decision to divest the Interconnect Division, and the repeated refusal to provide any services or fulfill a job within Algo since Interconnect’s [divestiture] demonstrates an intention that you have abandoned your employment with Algo.”
But B.C. Supreme Court Justice Frits Verhoeven disagreed.
“From a legal point of view, Algo chose to sell the Interconnect Division, rendering Doug’s position redundant. Fundamentally, this was Algo’s doing, not the plaintiff’s,” he wrote. “Beyond any question, the sale was agreed to by Algo as a corporate entity, and as Doug’s employer.”
Algo could have given Doug notice of termination when the Interconnect Division was sold, according to Verhoeven.
“Algo’s dysfunctional management precluded this, but Paul could have foreseen the problem, and taken steps to bring in Kerry as the third director earlier,” he said.
In the circumstances, Verhoeven ruled the onus was on Algo to continue Doug’s employment “in a suitable capacity” or terminate it with notice.
“Algo’s real complaint is that the plaintiff refused to resign,” Verhoeven wrote. “His refusal to resign was not a repudiation of his contract of employment.”
Verhoeven ruled Algo had fired Doug without reasonable notice and awarded him damages equal to more than 19 months’ salary ($560,000) as well as replacement insurance expenses of $8,482.74 and court costs.
Follow Cornelia Naylor on Twitter @CorNaylor