The BC Supreme Court recently dismissed an employer’s action against an employee to recover profits from the repair and resale of property purchased by the employee from the Company.
The employer was in the business of selling machines and machinery parts used to produce engineered wood products. One of the employer’s machines began to malfunction and the employer made inquiries to determine whether the machine could be repaired or sold for parts. Ultimately determining that neither option was viable, the employer informed its staff that the machine was worthless and expressed a willingness to sell it. The employee offered to purchase the machine on behalf of a company without disclosing that he was the company’s principal. The employee bought the machine, repaired it and then sold it to one of the employer’s suppliers for a profit of $13,000.
The Court found that the employee’s conduct did not breach his duty of good faith to the employer because he had not made a profit at the employer’s expense. Having decided not to devote time or parts to repair the machine, the Company had relinquished the opportunity to earn a profit from its repair and resale. Moreover, the Court found that the employee did not attempt to conceal his personal involvement in the purchase from the employer. On that basis, the employer’s action was dismissed.