Employer must pay $30,000 for defaming former employee

Company owners made false accusations against former employee to clients
By Jeffrey R. Smith
|Canadian Employment Law Today|Last Updated: 05/13/2015

Two British Columbia company owners must pay a former employee $30,000 for defamatory comments they made to clients in the business following an acrimonious termination, the B.C. Supreme Court has ruled.

Balazs Batyka joined Binary Environments, a web-hosting and software development company in Vancouver, in 1998. He became a one-third shareholder in the company and provided technical and sales support.

Like all Binary staff, Batyka was given a personal email address on a Binary-owned domain name. He also had an email address on another Binary-owned domain name that was used for business purposes, as well as shared access to general business email addresses. Staff members were often allowed to keep their personal email addresses even after leaving employment at Binary.

In 2008, the owners of Binary sold the company to Dynaworx, another web-hosting and software development company, which was owned by Jonathan and Lucy Barber. Batyka signed an agreement with the Barbers to continue his relationship with Binary in the same capacity for a minimum of one year. It was agreed that after one year the Barbers could buy Batyka’s share of Binary for the higher of $7,000 or current market value. The contract cancelled any former agreements Batyka had with Binary.

Over the next couple of years, the relationship between Batyka and the Barbers deteriorated and in July 2010 they discussed buying Batyka out. Barber outlined several points for an agreement that included the stipulation Batyka had to redirect all Binary-related calls on his personal cellphone to the Binary office with the explanation his duties had changed rather than saying he left the company. It also told Batyka he would have to transfer his personal email address and its content on the Binary-owned domain name to Binary and sign a non-compete agreement.

Buyout negotiations failed

Batyka refused these terms and on July 12 he emailed Jonathan Barber to tell him he was terminating his service relationship with Binary effective Aug. 15, 2010. Barber replied by terminating the relationship immediately, effective at 11 p.m. on July 15.

On July 18, the Barbers moved the email hosting for Batyka’s personal email address to a different server and re-created his email address. Then they locked Batyka out of the email account and intercepted his email. Jonathan Barber also responded to emails intended for Batyka.

On Nov. 16, 2010, Lucy Barber called an employee of a former client of Binary. She told the employee that Batyka had stolen software from Binary and “I feel bad that your company will get stuck in the middle and will go down.” She offered to shut down the client’s website, which had been set up while Batyka had been employed with Binary.

About three weeks later, on Dec. 6, another client called Binary and asked for Batyka, Jonathan Barber told her Batyka no longer worked at Binary because “he was let go for unscrupulous business practices."

In April 2011, Lucy Barber spoke to another client and told him Batyka had been “fired for theft from the company, not living up to his professional obligations, and for incompetence.”

In December 2011, Binary began legal proceedings against Batyka for software misappropriation, trademark violation and breach of fiduciary duty. They discontinued the action in March 2014.

Batyka sued the Barbers for defamation because of their comments to clients and for breach of privacy related to his personal email address on the Binary-owned domain name. He also demanded written retractions and an apology to be sent to the clients who were told the defamatory statements, with a copy to his legal counsel. The Barbers denied making any defamatory statements, arguing anything they said about Batyka was true and that Batyka had no reasonable expectation of privacy on the email account owned by Binary.

Batyka also set up a website with the address Binary Environments.ca, which featured a statement that said: “Stay tuned as we bring you information about funny true stories about trolls working in their garage pretending to be corporate IT entities while making idiots of themselves getting sued.”

The court found that the Barbers made the statements about Batyka to clients —they didn’t deny doing so — but, contrary to their claims, the statements weren’t true. The evidence indicated Batyka resigned from Binary when he didn’t agree to the terms of the share buyout — he wasn’t fired for theft or any other reasons the Barbers told the others.

The court also found Binary didn’t attempt to determine whether Batyka had solicited any clients, infringed its trademark, or appropriated the software system it had been developing with one of the clients in question. This led to the collapse of its legal action, which ultimately only served to aggravate the potential harm to Batyka’s reputation, said the court.

With regards to the breach of privacy complaint, the court found though some former employees may have kept their personal email addresses on the Binary-owned domain name, there was nothing in any written employment agreements saying personal email addresses would be retained upon leaving Binary. In the end, Batyka couldn’t prove Binary didn’t own the domain name and the court found the email address Batyka claimed to be personal was a “mixed-use personal and Binary business email address.” The court noted that “most businesses would not wish former employees to use an email domain that was identified with the business through past use, name, initials, or otherwise.”

The court found the defamatory statements were made “with actual malice” and were “intended to injure” Batyka. Though the clients ultimately didn’t take the comments seriously, they caused injury to Batyka’s feelings and had potential harm to his reputation upon which he depended for his livelihood. The Barbers offered no apology and were meant to harm Batyka financially, said the court.

The court took into account Batyka’s actions in setting up the website after his termination, which was a deliberate attempt to harm Binary financially. This reduced the potential damage award. However, the court still ordered each of the Barbers to pay Batyka $10,000 in general damages and $5,000 in aggravated damages, for a total award of $30,000.

For more information see:

Batyka v. Barber, 2015 CarswellBC 93 (B.C. S.C.).