Dealing with suspected employee theft often places an employer
in a sticky situation. A recent Alberta Court of Appeal case,
581257 Alberta Ltd. v. Aujla is, however,
good news for employers. The court reversed the normal onus of
proof, requiring the employees to prove
that certain monies they deposited into their bank account were
not stolen from their employer.
From 2001 to 2008, an Edmonton liquor store called Crown Liquor
North employed husband and wife Balwinder and Harwinder Aujla as
cashiers. Routine surveillance video in late 2007 suggested
that the couple was failing to deposit all sale proceeds into the
till. Additional security cameras were installed. More
evidence of theft was obtained.
The biggest problem for Crown Liquor was proving how much money
had been stolen. Not only did the thefts occur in small
amounts over seven years, but it was done by the Aujlas while they
were alone in the store. It was impossible to tell from Crown
Liquor's own records exactly how much money they had
Rather than relying on its own records, Crown Liquor relied on
the records of the Aujlas. The Aujlas were questioned under
oath. Their bank records were obtained and analyzed. The
Aujlas ultimately failed to explain how $116,000 had been deposited
into their accounts over the seven-year period. Crown Liquor
used this $116,000 figure as the basis for its claim to recover
Although the trial judge readily accepted that theft had
occurred, she did not accept Crown Liquor's method of
calculating the amount stolen. The employer argued that the
Aujlas were fiduciaries, that is, employed in highly responsible
positions of trust. That would shift the onus of proof onto them.
Rather than the employer having to prove the amount stolen, Crown
argued that the Aujlas should be required to prove that the
$116,000 was not stolen.
The trial judge disagreed. She
found that as cashiers, the Aujlas were not employed in fiduciary
positions. This finding meant that Crown Liquor had to prove
the amounts stolen. For the most part, it could not
conclusively do so. The trial judge awarded Crown Liquor only
$15,000. This was based on what could be proven with the
The Alberta Court of Appeal overturned the trial judge's
finding on fiduciary duties. Although courts usually tend to
limit the scope of fiduciary duties in employment situations, this
is often where an employer is trying to restrict a former employee
from competing. The Court distinguished these cases from the
situation at hand. The Aujlas were left alone in the store and
responsible for the actual proceeds of the business, including
cash. While a cashier position is not normally associated with
fiduciary duties, the Aujlas were in a fiduciary position regarding
the handling of money.
Once the Court found that a fiduciary duty existed and that the
employer had made all reasonable efforts to establish the amount
stolen, the onus shifted to the Aujlas to disprove that the
$116,000 was stolen from their employer. Regarding
"reasonable efforts", the Court stated that this
requirement varies according to the facts of the case. The
Court also ruled that "reasonable efforts" did not mean
that the employer had to exhaust all avenues before the onus would
shift onto the fiduciary employees.
Although the Court of Appeal ruled that the Aujlas breached
their fiduciary duties, it refused to rule on the actual amount of
damages. It sent the case back to the lower court for a
re-trial on that issue.
Lessons for Employers
The Court of Appeal's employer-friendly decision is
important for several reasons. Most obviously, it confirms
that in cases of employee theft, the burden may sometimes shift to
the employee to prove that the alleged funds were
not stolen from the
employer. Further, an employer does not have to exhaust all
avenues to determine how much might have been stolen before this
burden shifts. Rather, the employer merely has to engage in
In addition to this reassuring finding, the decision is notable
for its interpretation of fiduciary duties. The extension of
fiduciary duties to employees who would not normally qualify as
being employed in a fiduciary position (ie: employees who are not
senior officers or directors) is important. In this case, the
finding of fiduciary duty was based on a specific employee duty -
the handling of cash - rather than their overall roles and
job descriptions. While this seems like a natural conclusion
given the facts, the finding opens the door for future arguments
that employees other than senior managers may have fiduciary
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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