Recently the Alberta Court of Appeal (“Court of Appeal”) released a decision that expanded the duties employees have to their employers. In 581257 Alberta v Aujla, 2013 ABCA 16 (“Aujla”), two employees were caught on camera stealing money from the tills of the convenience store where they worked. The Employer sued the Employees and provided expert evidence from their accountant. The accountant reviewed the Defendants’ bank accounts and tax filings and concluded that $346,717.00 was unaccounted for and therefore had been stolen. The Employer’s records were not determinative because the amounts stolen were in small amounts each time and receipts of the cash register, cash deposits, or inventory and sale logs were not available.
The Trial Judge held that the onus lies on the Employer to prove the amount of loss. Since the Employer in Aujla did not have conclusive evidence to support their accountant’s findings, the Trial Judge employed his own estimated method of loss to hold the employees liable for $14,784.42 plus pre-judgement interest.
The Court of Appeal held that employees who are entrusted with keys to the till, and with handling the funds, are in a fiduciary relationship with their employer, especially where the employer is a small company with few employees and limited oversight of those employees. As such, once fraud or breach of fiduciary duty is established, and the employer has made reasonable efforts to establish the amount of loss based on the circumstances, the burden of proof shifts to the defendant to disprove the amount and cause of the loss. As a result, the Court of Appeal allowed the appeal and sent the case back to the Court of Queen’s Bench for a new trial based on their findings. The application for leave to appeal to the Supreme Court of Canada was dismissed with costs on May 16, 2013.
Aujla is good news for employers in the event of fraud or theft by their employees. It recognizes that many employees, even those who are not in high-ranking or executive positions, are still afforded a significant amount of trust and responsibility in the company, and therefore are subject to a fiduciary duty to their employer.