Employer Found Liable of Defamation and Procedural Abuse Towards its Former Employee

April 27, 2012

Author: Marie-Pier Côté

An Employer terminated its Employee, an accounting clerk, for it firmly believed that she had stolen a sum of $30,000 over a certain period of time. A succession of proceedings ensued.

The Court of Québec recently put an unexpected end to this lengthy quarrel by awarding, through the Employee’s separate proceeding, moral damages and the reimbursement of some of the Employee’s legal fees. Obstinately accusing an employee of fraud may hence be costly, should the Employer not be able to prove its assertions…

The Employer’s proceedings

The Employer filed a Motion with the Québec Court seeking the reimbursement of the stolen sum as well as the reimbursement of related expenses. It also filed a declaration with the police which led the attorney general to, in turn, file criminal accusations against the Employee. To consolidate its position, the Employer vigorously contested the Employee’s right to employment insurance and appealed the approval with the board of referees. This appeal was dismissed.

The Motion for reimbursement with the Court of Québec

Although the proof at trial demonstrated that a sum of $30,000 actually disappeared and that some of the accounting entries had been falsified, an unchallenged expertise established that the Employee’s level of training and her accounting abilities were insufficient to reasonably imagine that she could have set up the fraud scheme. The Court further underlined that four employees had access to the accounting books and the safe-deposit box of the enterprise and that the programs and computer used by the Employee were not secured by any password.

As no direct proof established that the Employee did defraud the Employer, the judge dismissed the Motion with costs, emphasizing the patent lack of diligence of the Employer’s representative in its management as well as its lack of credibility before the court. The Employer filed an appeal which was summarily dismissed.

The Employee’s proceedings

During the course of the Employer’s proceeding before the Court of Québec, the Employee filed various claims, including her own separate Motion against the Employer for disparagement before various instances and before her new employer. She was further seeking reimbursement of her incurred legal fees, claiming that the Employer’s fierceness to maintain its position before numerous instances constituted an abuse of proceedings.

The Court found that the Employer’s representative did defame the Employee by filing an inaccurate declaration with the police (as some of the allegations were false and brought one to conclude that the Employee was the only possible suspect for the fraud and stealing), by communicating this false declaration to her new employer and to HRDC and by communicating incomplete information regarding the fraud and stealing to its insurer. The Court ordered damages in the amount of $5,000.

As to the alleged Employer’s abuse of proceedings, the Court concluded that the Employer should have realized it simply could not prove its assertions when its appeal was summarily dismissed. Consequently, the Court found that the Employer did commit an abuse of proceedings as it thereafter acted either recklessly, with a will to cause prejudice or with wilful blindness. As a result, the Court ordered reimbursement of the Employee’s legal fees incurred after the decision of the Appeal Court.

Employers should give careful attention to the transparency of their internal investigation in the context of a potential serious offence such as a fraud or stealing. Indeed, concerning discharge for cause of a criminal nature, the quality of the evidence required must be particularly compelling and, if it is circumstantial, must be based on assumptions of fact that are serious, precise and concordant.

Employers must further avoid communicating biased or incorrect information to third parties, as it can ground an award for defamation or moral damages and turn out to be costly.

Lagacé c. 9132-5126 Québec inc., 2012 QCCQ 1626 (CanLII)

9132-5126 Québec inc. (Pub Edward & Mo) c. Lagacé, 2010 QCCQ 9179 (CanLII)

9132-5126 Québec inc. c. Lagacé, 2010 QCCA 2298 (CanLII)


This blog sets out a variety of materials relating to the law to be used for educational and non-commercial purposes only; the author(s) of this blog do not intend the blog to be a source of legal advice. Please retain and seek the advice of a lawyer and use your own good judgement before choosing to act on any information included in the blog. If you choose to rely on the materials, you do so entirely at your own risk.