Shalagin v. Mercer Celgar Limited Partnership, 2022 BCSC 112

Mitha Law Group successfully represented the defendant employer in a wrongful dismissal claim, establishing for the first time in Canadian history that surreptitious recording in the workplace constitutes just cause for termination. 

The plaintiff, Mr. Shalagin, was employed as a financial analyst by the defendant from 2010 until 2020 when he was terminated on a without cause basis. Mr. Shalagin was given eight weeks’ severance. 

Mr. Shalagin commenced a court action seeking additional severance, and also filed human rights and employment standards complaints. In the legal proceeding, Mr. Shalagin produced various documents, including information about surreptitious recordings he had made of conversations with colleagues and superiors while employed. The defendant asked Mr. Shalagin about these surreptitious recordings in his examination for discovery, and Mr. Shalagin admitted to making hundreds of secret recordings during his 10-year employment with the defendant. 

When asked why he did not disclose or seek permission to make these secret recordings, Mr. Shalagin admitted that although his conduct was not illegal, he was aware it would make his colleagues uncomfortable if they knew they were being recorded. He explained that his initial recordings were meant to help him with his English. For the later recordings involving one-on-one discussions, Mr. Shalagin said he made the recordings to protect his rights. 

After learning about these recordings, the defendant amended its pleadings to allege just cause based on after acquired knowledge of Mr. Shalagin’s conduct while he was employed. 

The BC Supreme Court concluded that the defendant had established just cause for termination based on the surreptitious recordings. Factors supporting just cause included:

• Mr. Shalagin knew it was ethically wrong to record his fellow employees;

• As a CPA, Mr. Shalagin was expected to respect the standards established by his profession;

• There was no legitimate basis for him to make the recordings; and

• From a policy perspective, it would not be a positive development to encourage employees to secretly record co-workers.

As a result of finding the defendant had after-acquired cause, the Court dismissed the plaintiff’s claim.

Deduction of CERB Payments

The Court also addressed the issue of damages in the event it had declined to find cause.

Concerning the deductibility of Canada Emergency Response Benefit (CERB) payments, the Court followed the reasoning in Hogan v. 1187938 B.C. Ltd., 2021 BCSC 1021 and Yates v. Langley Motor Sport Centre Ltd., 2021 BCSC 2175, and determined that Mr. Shalagin’s CERB payments would have been deductible from any award of damages. 

The full reasons of the trial judge can be found here.