The Whalley Trial Part VIII: Resignation

Editor’s Note: John Whalley, the former Economic Development Manager of the Cape Breton Regional Municipality (CBRM) is suing the CBRM for constructive dismissal. The case finally came to trial from 20-24 August 2018 and the Spectator was there. We’re presenting our coverage in a series of articles because the trial touched on so many issues of interest to CBRM residents. This is Part VIII (Read Part I,Part II,Part III,Part IV,Part V, Part VI and Part VII)

 

The defense called its second witness on the afternoon of Tuesday, August 21: it was the former CAO of the CBRM, Michael Merritt, who chose to swear on the bible before offering his testimony.

I have already covered some of what Merritt had to say in previous parts of this series and I don’t intend to go over it all again, but his testimony provides an obvious time to consider the circumstances surrounding Whalley’s actual resignation, which will be the focus of Part VIII.

That said, Merritt testified and was cross-examined over three days, so before digging into exactly what happened on 28 May 2015, I thought I’d share with you some of the other things he had to say.

 

Merritt miscellanea

Merritt began by explaining that he’d worked for the CBRM from October 2014 to the spring of 2017, at which point, he told the CBRM’s lawyer Tony Mozvik, he resigned as he had “found another position.” (Which, sharp listeners will note, implies he was “looking for another position.”)

Merritt’s new job is CAO of Olds, Alberta, a town of 9,000 people located about 100 km north of Calgary. A press release announcing his hire described his accomplishments in the CBRM this way:

He is currently the CAO of the Cape Breton Regional Municipality in Nova Scotia, a large rural municipality of nearly 100,000 residents. As well, he serves as Chair for the Port of Sydney Development Corporation. He was instrumental in recently closing a contract with Ports America to be the largest operator the Region has ever seen.

(Reading that I realized why he’d left us: his work here was clearly done. He had been instrumental in securing the largest operator the Region has ever seen, what more was there for the man to do?)

Under questioning from Mozvik, Merritt lost no time in contradicting John Whalley’s testimony as to the nature of Whalley’s job.

Asked about the port file, which Whalley had claimed as one of his chief responsibilities, Merritt said that in the spring of 2015, when Whalley resigned, the port file was in the process of being transferred to the new Port of Sydney Development Corporation (PSDC). Moreover, according to Merritt, even before the transfer was complete, the file was:

…basically worked on by a number of people in the municipality, including yours truly. Mr Whalley was involved in the port file to a degree…Business Cape Breton had a consultant or a contract employee, Mike Moore who was also involved in the port file. There was a number of people. Marie Walsh, the CFO, was obviously involved in the port file…It was a big file…

Merritt also testified that administering the Sustainability Fund (a municipal fund providing grants to community groups) would have represented “a good portion of what Mr. Whalley was doing” when Merritt arrived in the CBRM. (Whalley had testified the Sustainability Fund had ceased to be a major file for him around 2000, i.e., 14 years before Merritt arrived in the CBRM.)

Merritt stated that the job of the economic development manager, in his estimation, involved “job creation,” (Whalley and former CAO Jerry Ryan had both testified this was not the case) and that Whalley and Mike Moore had worked together on the sale of Archibald’s Wharf to Canadian Maritime Engineering. (Whalley had testified he’d had absolutely no involvement in negotiating the deal but had been asked to present it to council.)

Mozvik led Merritt from there to a discussion of Whalley’s March 2015 offer to give up his budget to Business Cape Breton (BCB), which Mozvik (and Merritt) viewed as an offer to quit.

Merritt’s response, he testified, was to say:

John, that’s premature. There is a lot of economic development activities that the municipality’s involved with…If you really want to leave, you can, but you should be finding yourself a job before you leave this one.

(Interesting that Merritt was giving Whalley advice he himself would follow a year or so later.)

Merritt was allowed to go on at some length about himself — his current position in Olds, his career as a provincial bureaucrat, his degree in business administration from St. Francis Xavier University, his further education which, he testified:

…has been more in the leadership and the development of not only programs but people, so leadership, a lot of leadership courses.

Mozvik also led Merritt to discuss the “importance” of moving the Nova Scotia Community College Marconi Campus to the waterfront, which allowed Merritt to talk about how vital it was to downtown development and how very much work would be involved from the municipal side. (Again, contradicting Whalley who’d said the decision rested entirely with the province and the municipality’s responsibilities vis-a-vis such a move would not constitute a viable job for an economic development manager. As we noted in Part VII, supervision of the Marconi move did not feature in the job description when the CBRM set out to hire a replacement for Whalley.)

Okay, now let’s focus on the testimony about Whalley’s departure.

 

28 May 2015

I looked up the weather for 28 May 2015, out of curiosity, and it seems to have been unusually warm for late May in Cape Breton — a high of 27 (that felt like 33 with the humidity) under mostly overcast skies.

At the CBRM Civic Centre (which had yet to be renamed the “City Hall”), a “large group of employees,” according to Merritt, was meeting to discuss ongoing Aboriginal negotiations over certain federally owned lands the CBRM hoped to include in its port development scheme. John Whalley was one of those in attendance at the meeting.

After the meeting,  (“around lunch time,” according to Whalley), Merritt knocked on his door and asked him to come to his office. Whalley went in and sat down. What followed, he testified, was “not a friendly meeting.”

It was a very brief meeting, probably not any more than two minutes. I was advised that I was being removed from all aspects of port development, I would have no further involvement in the file in any way and that I was heretofore going to be responsible for the management of what he called the Marconi Project.

And before you jump to the conclusion (as I did) that Merritt was re-inventing the telegraph, let me hasten to explain the “Marconi Project” was moving the NSCC’s Marconi Campus to the Sydney
waterfront.

Merritt recalled the meeting this way:

I then had a brief discussion of probably no more than five to 10 minutes with Mr. Whalley, indicating now that we have a CEO responsible for the port development, now that I’ve been named chair of the…Port of Sydney Development Corporation for at least the next year or two, that we would take on responsibility for Aboriginal consultation, with our legal adviser, Demetri Kachafanas and Jim Gogan who we hired as the outside lawyer from Breton Law to basically represent us in those negotiations.

Two quick asides: one, Merritt clearly sees being “named chair of the Port of Sydney Development Corporation” as an honor that reflects well on him personally, like it was the pay-off for all those “leadership courses” he took. (You’ll remember it was even highlighted in the press release introducing him to the good people of Olds, Alberta.) He lets his audience assume that he was chosen for the position by his fellow directors, not mentioning that, in fact, he chaired the interim board and the role was ex-officio —  if council had hired a  Wentworth Park duck as CAO of the municipality, the duck would have been chair of the interim PSDC board.

And two, hearing Merritt state, so matter-of-factly, that his term as interim PSDC board chair would last for “the next year or two” was a real eye opener, because as far as the public was concerned, the permanent board was supposed to be in place by the spring of 2016. This suggests the plan from the beginning was to have the interim board in power for at least two years.

Okay, back to resignation day:

Merritt further testified that he also asked Whalley to “take the lead” on the potential relocation of the NSCC Marconi Campus to downtown Sydney. The assignment, he told the court, would have required “some travel to Halifax”(which Merritt, who racked up $86,000 worth of expenses during his time with the CBRM, clearly saw as a carrot).

Following this conversation, Whalley left Merritt’s office and Merritt prepared “to head up to Halifax” for his daughter’s “graduation from law school.” (Interestingly, the biography Merritt presented to CBRM council when he was first hired noted that his wife had also recently graduated from law school. Our former CAO has lawyered up.)

“All seemed to be good,” Merritt testified, until a “resignation letter occurred.”

 

Complicity

All didn’t seem to be good from John Whalley’s perspective.

He had testified earlier in the week that following this discussion with Merritt (during which, he said, “the entirety of [his] responsibilities had been completely removed in a two-minute conversation”), he had gone home for “about an hour” to evaluate his situation.

Whalley testified that for him, it came down to two basic considerations, the first, he said, was:

I’m an economic analyst, I was hired as such. Essentially, Michael was telling me that was no longer a requirement or a priority for the municipality. So I’m wondering, what am I going to do?

The second “equally if not more important” consideration was that:

What was being offered was pay with effectively no work or responsibilities. And my interpretation of that was that Michael wanted me to stay in my position, which was a shell, and pay me, because he didn’t want me to negatively comment on the commercial development proposal that was going to council.

So for me, the decision is, if I had information that was important for council and I stayed, said nothing, and collected a salary, I was complicit and my professional reputation was out the door.

The “commercial development proposal” was the McKeil deal, which we covered in depth in Part VI.

Whalley returned to work and wrote his resignation email which was sent at about 2:55 PM on May 28 to council and Merritt and the CBRM directors’ group.

In his cross-examination, Mozvik said to Whalley, “You didn’t give yourself much time” to write a resignation letter, to which Whalley replied, “I didn’t need it.”

The letter began:

Earlier this day I was advised by the CAO that I would be reassigned from any future involvement with the port file.

Merritt replied to the email at 5:56 PM saying:

I accept your resignation and wish you all the best in the future.

Whalley had already left the office and did not receive the email.

 

Port in a storm

An interesting issue arose during the discussion of Whalley’s resignation when Mozvik asked Merritt if, had Whalley stayed on after May 28, there would have been any port related duties in his file?

Merritt said there would have been “some” but the “intent” was to “migrate” the file to the the new corporation, which planned to hire its own “economic development adviser.”

This is interesting for a couple of reasons: first, because Whalley had testified that in the spring of 2015, he had asked to be re-assigned to the PSDC (Merritt denied Whalley had made this request).

Second, it’s interesting because of who the Port did hire. According to Merritt:

Initially, I believe  Michael Moore took on that position…and then they did hire an individual, Abraham, I can’t remember his last name…

So, to be clear, the Port of Sydney Development Corporation did not need the assistance of John Whalley, a trained economist who had been working on the port file for roughly 15 years, because it had the temporary assistance of consultant Mike Moore and ultimately, as of January 2016, the services of Abraham Somavarapha, a 27-year-old former fundraiser for the Knights of Columbus who had recently completed a five-day CERTIFIED PORT EXECUTIVE™ course with the MacDonnell Group.

Somavarapha’s hire was celebrated by the Cape Breton Post , which accepted his certified port executive status at face value, but his departure, which happened sometime before the Port AGM in February 2018, went unheralded. I actually don’t think Merritt knew Somavarapha had left.

 

Open door

Whalley had no further contact with Merritt after submitting his resignation. Asked if he felt the door was open to Whalley’s return, Merritt said:

I always consider everything as a leader and manager and such…I would say it’s always open but the resignation wasn’t just a resignation, it wasn’t specifically to myself, it was to all of council at the time.

And, in fact, Whalley had testified that his email was intended to alert council to his concerns about what he termed in the email the “serious flaws” in the McKeil deal.

But current CBRM CAO Marie Walsh, who testified that she was shocked to receive Whalley’s resignation email, said she received a call from Mayor Cecil Clarke the night of May 28 and went to visit Whalley at his home the next day bearing a message from the mayor (who, let us say it one more time, has no power to hire or fire municipal employees):

The mayor did say that…certainly the job was still there for John if he wanted it.

Mozvik asked Walsh if Whalley had expressed any interest in returning. Walsh replied:

I think John, at the time, he said he would have come back, but… he didn’t have respect or confidence in the current CAO and would not come back during his regime.

 

New Dawn

Approximately four weeks after Whalley resigned, he landed a new job, as CFO of New Dawn Enterprises.

Mozvik, in his cross-examination, questioned Whalley’s qualifications for the post, suggesting his “background” was “not would typically be in that position.”

Whalley responded that although he was not a chartered accountant, the organization felt he had sufficient economic expertise and the job is to set out New Dawn’s “economic priorities.” Whalley also admitted that he was hired without having applied for the job.

Mozvik entered into evidence an interview with Whalley published in the Cape Breton Post on 4 November 2015 in which he said of his new job with New Dawn, “I love it. I’m out of politics. It’s a huge weight off me.”

Mozvik suggested Whalley couldn’t handle the political aspects of his job (which Whalley had testified he’d been warned about in ’97 when he was first offered the post) but Whalley responded that in 18 years on the job he’d grown accustomed to presenting controversial files to council. What he had not “become accustomed to,” he told Mozvik, was “a CAO who would withhold information from council.”

And that, may it please the court, is all I know about the day John Whalley resigned.

Next up: the defense calls its final witness.

 

 

 

 

 

 

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