A regional catering and event services company in southern Ontario had employed a senior sales manager for 7 years before that manager resigned to establish a competing business in the same geographic market. The departure itself was unremarkable, governed by a standard employment contract that included a 12-month non-solicitation clause covering existing clients but no broader non-compete restriction. Within 3 months of the manager's departure, the original company began losing contracts with clients it had served for years, including 2 municipal governments and a regional hospital that together represented approximately $340,000 in annual revenue.
The owner of the original company suspected the former manager was actively soliciting clients covered by the non-solicitation agreement and began gathering information. Through a contact at one of the municipal clients, the owner obtained internal emails suggesting the former manager had reached out to procurement staff before leaving her position, discussing the possibility of future business arrangements. The owner also discovered that the former manager's new company was circulating marketing materials to prospective clients that included comparative statements about food safety practices, implying the original company had experienced health inspection issues that had never actually occurred.
The situation escalated when the original company's owner posted a detailed account on a regional business networking platform describing the former manager's conduct, including allegations about dishonesty during her employment and claims that she had accessed confidential client pricing information before her departure. The post named the former manager's new business and urged other business owners in the region to avoid working with her. Within 2 weeks, 3 suppliers who had been negotiating contracts with the new catering company withdrew from those discussions, citing concerns about the allegations.
The former manager responded by sending a letter to the original company's remaining clients, attaching what she described as evidence of workplace safety violations at the original company's food preparation facility, including photographs taken during her employment that showed kitchen conditions and identifiable staff members. The letter also included salary information for several current employees, presented as evidence that the original company underpaid its workers compared to industry standards.
Both parties retained counsel. The original company claimed damages exceeding $500,000 for lost contracts and reputational harm. The former manager counterclaimed for defamation and interference with her new business relationships, seeking $750,000 in damages. The underlying questions concern which statements and conduct by each party may attract liability, what defences may apply, and how the overlapping claims of reputational harm, privacy violation, and economic interference interact under Canadian tort law.