Employee took over 1,000 confidential documents when he left to start competing business
An Ontario employer proved its former vice president wrongfully took over 1,000 confidential documents when he left to start a competing business — but the company was awarded zero damages and ordered to pay $181,264 in legal costs.
The Court of Appeal for Ontario dismissed the appeal in a decision dated October 9, 2025, upholding the judgment of Justice Eugenia Papageorgiou of the Superior Court of Justice from June 25, 2024. The three-judge appeal panel found the employer, Titus Steel Company, failed to prove it suffered actual losses from Wayne Robert Hack's misconduct.
When proving a breach isn't enough
Titus Steel, a family-run business selling ballistic steel products, hired Hack as director of sales in 2001. He was promoted to vice president in the Dynamic Steel Division in 2004. By late 2015, Hack had grown increasingly dissatisfied with his job and his relationship with company director Mike Usatis deteriorated.
During this period, his wife incorporated a numbered company, registered the domain name “Progressive Armor,” and retained legal counsel.
Hack resigned in March 2016 and subsequently began operating Progressive Armor, which also sold ballistic steel. Shortly after his departure, Titus discovered Hack had copied and downloaded confidential information before leaving. He returned the backup USB drives containing the company’s documents but continued operating his competing business.
Titus sued, alleging Hack breached fiduciary obligations and employment duties. However, Papageorgiou found that Hack was not a fiduciary, noting that close oversight by management meant the company lacked the necessary vulnerability to establish such a relationship: “Salesmen, like Wayne, are rarely found to be fiduciaries,” she wrote.
The court also found something more surprising: Hack “did not breach his employment duties of good faith, loyalty, and fidelity by competing.” In other words, planning a competitive business while still employed didn't cross the line.
Lack of evidence for employer
The trial judge found Hack did breach his employment duties “by virtue of misappropriating Titus’ business documents and sharing them with his competitive business,” which constituted the tort of conversion. However, she was not persuaded that Titus suffered any damages because of this breach.
The employer’s case fell apart on damages. Titus failed to lead any evidence that Hack’s competing business caused the company to lose customers or profit. Making matters worse, Progressive Armor operated at a loss for one year and ultimately closed.
The trial judge also rejected claims that Hack committed the tort of breach of confidence, finding that while he kept over 1,000 business documents after resigning, Titus failed to show “that the use of the confidential information by the employee caused the employer losses.”
Papageorgiou ordered Hack to return all business records within seven days but declined to award punitive damages. She awarded costs in favour of Hack totalling $161,264.
Costly appeal despite employee theft
The Court of Appeal dismissed Titus’ appeal, finding the trial judge’s conclusions were supported by the evidence. “The appellant seeks through this appeal to relitigate the findings of the trial judge,” the three-judge panel wrote. “Those findings are entitled to deference.”
The appeal added another $20,000 to Titus' legal bill, bringing the total cost to roughly $181,264.
