In Luxi & Co. 2023 Inc. v Hradinovych, 2026 ABCJ (Higa) (unreported), the Alberta Court of Justice dismissed a claim against a former employee for competition, solicitation of clients, and breach of confidence. The Court also dismissed the employee’s counterclaim for constructive dismissal.
Legal counsel for the successful defendant employee was Bow River Law employment lawyer Daniel Jonasson.
This case illustrates that suspicion of bad behavior is not enough for legal liability. Evidence is always required.
Facts
The following were some of the pertinent facts found by the ACJ:
- The defendant employee, Ms. Hradinovych, worked for the employer, Luxi & Co
- The employee had signed an agreement entitled “Non-compete/Confidentiality/Non-Disclosure Agreement” (the “Agreement”) while employed. The Agreement was signed by the employee but did not explicitly include Luxi as a party
- The Agreement stated that the employee was to hold in confidence and not to use, disclose, transfer or reveal the employer’s confidential information
- The employee left the employer
- The employee accessed the employer’s “Mind Body” accounting software 24 times in the 2 month period following her departure. Her evidence was that this was to access her payroll information
- The employer sued the employee, alleging breach of the Agreement, including breach of confidence and improper solicitation
- The employer was alleging that the employee accessed client information and used that to solicit Luxi clients, and may have deleted client appointments
- The employer had evidence of 68 clients that had regularly used Luxi’s services prior to the employee’s departure, but not after that
- The employee admitted that she was now providing services to 7 former Luxi clients, but said those clients found her on their own and not through solicitation
- The employee counterclaimed for constructive dismissal severance damages
- The constructive dismissal counterclaim was based on allegations that the employer had provided NSF payroll cheques, paid wages late, terminated access to portions of accounting software, and made disparaging comments, all leading the employee to resign.
Analysis / Conclusion
The Court found there was no reliable evidence that the employee disclosed any information she accessed to any third party, that she solicited Luxi clients, or that she deleted appointments. There was no evidence of any damages resulting to Luxi as a result of the employee’s access to the accounting system after departing employment:
[32] [The expert] investigation and report do not address what areas of Luxi’s accounting and management software was accessed […]. The investigation and report do not address whether any information was printed or downloaded. [The expert] did not provide any testimony whether information contained in the software was deleted or manipulated in any manner.
Regarding the 68 clients no longer patronizing Luxi after the employee’s departure, the Court noted that none of these clients testified at trial and there was no actual evidence that any of them were solicited by the employee.
Ultimately, the employer’s claim for breach of confidence was dismissed.
The Court also dismissed the employee’s counterclaim for constructive dismissal.
The Court found that some of these things complained of did not satisfy the constructive dismissal test from Potter’s second branch, because they: did not go to the heart of the employment relationship, occurred too long ago, were rectified by the employer, or were not proven on the record.
My Take
Most employers would be unhappy to learn that their system was accessed by an employee after departure. Additionally, any business losing clients will be unhappy about that.
Generally, it is not uncommon for there to be a dispute of some kind after an employee departs. However, bald suspicion of misuse of confidential information and of improper solicitation of clients is not enough for liability.
This case is unreported, but its not under publication ban. I am happy to make the written decision available to any lawyer or HR professional requesting it.
