Case information

Contracts — Contract of employment — Obligation to act faithfully — Competition — Company formed in direct competition with former employer — Whether it is of public importance that this Court intervene to restore legislature’s intention, codified in art. 2088 C.C.Q., that employee’s obligation to act faithfully include obligation to make every necessary effort to avoid being in conflict of interest with employer, whether conflict is apparent, real or potential, while also acting honestly toward employer — Civil Code of Québec, art. 2088.

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On November 21, 2015, the respondent Lotfi Sahlaoui resigned from his full-time position as an orthotist/prosthetist, which he had held for about 10 years with the applicant, 2330 2029 Québec inc. f.a.s.r.c. Médicus, a large company specializing, among other things, in the manufacturing and sale of orthopedic appliances and protheses. Within days of Mr. Sahlaoui’s departure, the respondent Evo Orthopédie Technique inc., a company of which he was the majority shareholder, began operating in direct competition with Médicus. During the days and weeks that followed his resignation, Mr. Sahlaoui met with orthopedists with whom he had previously dealt and invited them to do business with him, and Evo became a preferred supplier for a hospital through a competition, which cost Médicus many customers. Médicus sued Mr. Sahlaoui and his company, Evo, and claimed compensatory damages for unfair competition.

The Superior Court allowed the application brought by Médicus in part. It ordered Mr. Sahlaoui and Evo solidarily to pay Médicus $135,238, the equivalent of a year of lost profits, in reparation for the injury suffered. It held that Mr. Sahlaoui had breached his duty to act faithfully both before and after his resignation and that he had done so with the complicity of Evo, of which he was a shareholder and which worked in the same field as his former employer. The Court of Appeal allowed the appeal, set aside the trial judgment and dismissed the action brought by Médicus against Mr. Sahlaoui and Evo. It found that the losses incurred by Médicus were the result of legitimate competition, not unfair competition.