Lessons from Vestergaard v Destiny Media Technologies Inc., 2025 BCSC 2093
In October 2025, the British Columbia Supreme Court dismissed all claims brought by Steven Vestergaard, the founder and long-serving CEO of publicly-traded Destiny Media Technologies Inc. The Court upheld his June 2017 suspension and termination for cause, finding that Mr. Vestergaard had repeatedly breached his employment and fiduciary duties through chronic neglect of duty, prioritization of a private business, condonation of an employee’s misuse of company time, and wilful insubordination.
The 175-paragraph judgment is one of the most thorough recent Canadian decisions on just cause for a senior executive and provides a roadmap — and several cautionary tales — for employers.
Key Facts
- Mr. Vestergaard founded Destiny in 1991 and remained President & CEO after the company went public.
- In 2016 he acquired a 50% interest in unrelated retail businesses in Lions Bay (“LB Businesses”).
- From late 2016 onward, Mr. Vestergaard and a subordinate employee (Ms. Dove, the “List Manager”) spent large amounts of regular working hours on LB matters while being frequently absent from the office.
- Newly-elected independent directors (Cho and Graber) repeatedly requested detailed business plans for the company’s core product (PlayMPE) and its money-losing side project (Clipstream). Mr. Vestergaard ignored or deflected every request.
- In June 2017 the board suspended Mr. Vestergaard and Ms. Dove, retained an independent workplace investigator, and directed both to participate in interviews. Mr. Vestergaard refused.
- The board terminated both employees for cause on June 28, 2017.
- After a 20-day trial, Justice Tucker found Mr. Vestergaard’s testimony “rife with unexplained conflicts” and “an unreliable narrator,” while preferring the evidence of all six defence witnesses.
Grounds on Which Just Cause Was Upheld
The Court distilled the misconduct into four categories (any one of which would have been sufficient):
- Persistent neglect of core CEO duties
- Repeated failure to produce requested business plans despite clear, written board directives.
- Missing or cancelling key internal management meetings and external commitments (e.g., office lease viewings).
- Forgetting to issue scheduled quarterly earnings press releases (a securities-law obligation).
- Prioritization of private business interests over company duties
- Routine handling of detailed LB operational matters (inventory, shelving, liquor selection, POS system fixes) during regular business hours.
- Cancelling of Destiny commitments to attend LB-related meetings.
- Breach of fiduciary duty by condoning/encouraging subordinate misuse of company time
- Ms. Dove spent 20+ hours per week on LB work during paid Destiny time while falling behind on her own duties.
- Mr. Vestergaard was fully aware (he was copied on hundreds of LB emails and openly praised her contribution to LB).
- Wilful insubordination
- Refusal to participate in a lawful workplace investigation despite multiple clear directions and an explicit warning that non-cooperation would be treated as insubordination.
The Court emphasized that a higher standard of loyalty and performance applies to senior fiduciary employees, especially those (like a CEO) who enjoy significant autonomy and minimal day-to-day oversight.
Key Takeaways & Practical Guidance for Employers
| # | Lessons | Practical Actionable Recommendations | |
| 1 | Document performance expectations in writing, even for the CEO | Boards should issue clear written directives (e.g., the April 2017 Memo in this case) specifying deliverables and timelines. Emails saying “we’d like this when you get a chance” are not enough. | |
| 2 | Repeated failure to follow a reasonable board directive can = just cause | Persistent refusal to produce a business plan was treated as a fundamental breach going to the root of the CEO employment contract. | |
| 3 | Side businesses are dangerous when they encroach on working time | Even if the employment contract is silent, prioritizing private ventures over core duties (especially for a fiduciary employee) can justify summary dismissal. | |
| 4 | Condoning subordinate misuse of company time could be cause in itself | A manager/CEO who knowingly permits or encourages an employee to work on private matters during paid company time commits a separate breach of fiduciary duty. | |
| 5 | Refusal to participate in a lawful investigation is almost always detrimental for the refuser | The Court cited the explicit warning (“failure to cooperate will be considered insubordination”) and the multiple opportunities given. Refusal after a clear warning = textbook wilful disobedience. | |
| 6 | Credibility findings matter enormously in long-cause cases | Contemporaneous documents (emails, access-card logs, calendars) and consistent witness evidence overwhelmed the plaintiff’s shifting narrative. Always keep records. | |
| 7 | After-acquired cause is valid | The board did not know the full extent of the LB email volume when it terminated; the Court still relied on it because the question is whether grounds existed at the time, not whether the employer knew every detail. | |
| 8 | Higher standard applies to senior/fiduciary employees | Autonomy cuts both ways: the more trust and discretion an employee is given, the less tolerance there is for disloyalty or neglect. | |
| 9 | Process still matters | The board gave notice of meetings, documented resolutions, obtained legal advice, retained an independent investigator, and gave multiple opportunities to cooperate → all cited favourably by the Court. | |
| 10 | A single serious breach can suffice, but cumulative misconduct removes any doubt | The Court noted that any one of the four categories would have justified dismissal; together they made continuation of employment “untenable.” |
Red Flags Employers Should Watch For (Especially with Long-Tenured or Founder CEOs)
- Sudden or unexplained absences from the office
- Subordinate employees mirroring the CEO’s absence patterns
- CEO demanding large raises or threatening to fire key staff while deliverables remain outstanding
- CEO refusing reasonable board requests for basic strategic/planning documents
- Volume of personal or side-business email traffic on company systems during working hours
Conclusion
Vestergaard v Destiny Media is now the leading British Columbia authority confirming that even a founder-CEO with decades of service can be terminated for cause — without notice or severance — when they persistently neglect core duties, prioritize private interests, and defy lawful board directives.
The decision reinforces that boards do not need “smoking gun” fraud or dishonesty; chronic performance failure, disloyalty, and insubordination are sufficient, provided the employer can prove the misconduct based on credible evidence and has followed a defensible process.
Employers (and particularly boards of small public or private companies) should treat this case as a checklist both for preventing these situations (clear written directives + monitoring) and, if necessary, for lawfully effecting a for-cause termination of even the most senior executive.
Source: 2025 BCSC 2093 (CanLII) | Vestergaard v Destiny Media Technologies Inc. | CanLII
