Executive Summary: Key Legal and Evidentiary Issues

• Determination of whether the termination of a senior executive’s indefinite-term employment was without serious cause under articles 2091, 2092 and 2094 C.c.Q., thus triggering a right to reasonable notice by way of an indemnité de délai-congé.
• Assessment of alleged post-termination breach of the employee’s duty of loyalty under article 2088 C.c.Q., including whether sparse and uncorroborated suspicions regarding discussions with a business partner could justify dismissal without notice.
• Evaluation of the employee’s efforts to mitigate his loss, including both his refusal of a position at an affiliated company and his subsequent job search and operation of a new poultry-trading business generating profits to be deducted from the notice indemnity.
• Quantification of reasonable notice for a 53-year-old executive vice-president with eight years’ service in a niche industry, including which elements of global compensation (salary, pension contributions, bonus) properly form part of the indemnity.
• Consideration of a claim for additional moral/extra-contractual damages based on allegedly abusive or bad-faith termination and stalled discussions about potential share ownership in an affiliated company.
• Ruling on evidentiary privilege over a written “Release, Waiver and Transaction” offer and its irrelevance to the ultimate outcome, given that liability and quantum were decided on other independent evidence.

Facts of the case
Thomas Montzenigos worked for Aliments Sunchef inc., a Montréal-based poultry business, from 2013 and occupied the position of executive vice-president from April 2017 until his employment ended in late 2021. In that role, he was involved in virtually all aspects of the company’s operations (development, marketing, human resources, operations), except for finance, which was handled by a separate vice-president. The president and sole key shareholder of both Aliments Sunchef and a related company, Aliments Bveggie inc., was Theodore Eliopoulos, who was not involved in the day-to-day operations. The employer’s business model was heavily affected in July 2021 when it lost a major contract with Olymel, leading to the cessation of about 85% of its chicken processing activities. However, Sunchef continued to conduct significant buying and selling of poultry products, with annual revenues still in the tens of millions of dollars, and was in the process of converting its Anjou plant to produce plant-based protein products (such as burgers and sausages) for Beyond Meat. In parallel, a new entity, Bveggie, was incorporated in 2019 to develop plant-based food products. Montzenigos had been heavily involved in creating and implementing Bveggie’s operations. Over several months, he and Eliopoulos discussed the possibility that he might become a shareholder in Bveggie. These discussions occurred roughly eight times but never matured into a concrete, detailed agreement; no specific terms or binding promise were ever finalized. As of October 2021, Bveggie instead offered him a role as salaried vice-president, not equity participation.

Events leading to the termination
On 14 October 2021, there was a meeting where Montzenigos was offered a position as vice-president at Bveggie on the same conditions as his then-current employment, but without any confirmed shareholding. A further short meeting occurred on Friday, 29 October 2021, at which he hoped to receive a formal offer of equity participation in Bveggie. Instead, the same salaried VP offer was reiterated. Emotions ran high; the parties parted ways in disagreement, but no explicit ultimatum was given that refusal would immediately terminate his employment at Aliments Sunchef. Over that weekend, on Sunday, 31 October 2021, Montzenigos discovered that his work email and alarm codes no longer worked. He emailed Eliopoulos asking what was happening, and the latter replied that his employment was terminated and that they would speak in the coming days to clarify. Despite the termination message, Sunchef continued to pay his base salary for four more weeks, as reflected in his November 2021 pay slips, while no further services were rendered. The exact date of termination was not formally admitted in the parties’ joint declaration, but the court held that certainty of dismissal only arose on 31 October 2021, when access was cut and the president expressly confirmed the end of employment.

Claims of the employee
Montzenigos alleged that he had been dismissed without just and sufficient cause and without reasonable notice. He claimed an indemnité de délai-congé equivalent to 11 months of his overall compensation, including base salary, pension plan benefits and bonus, in the total amount of 393,647.06 CAD, and he also sought an additional 25,000 CAD in compensatory damages for bad faith surrounding his termination and the handling of the Bveggie shareholding discussions. He pursued these amounts on a solidary basis against Aliments Sunchef inc., Aliments Bveggie inc. and Eliopoulos personally, in his capacity as president, director and shareholder of both corporations. The parties admitted that he had been employed by Sunchef since October 2013, that he had held the executive vice-president role from 2017 until the end of his employment, and that he started a new job on 26 September 2022. They also admitted that, if Sunchef were condemned to pay any amount, Bveggie and Eliopoulos would be solidaire (jointly and severally liable) with Sunchef for that judgment.

Defences of the employer and related parties
Sunchef, Bveggie and Eliopoulos advanced two main defences on liability and quantum. First, they claimed a serious motive (motif sérieux) for dismissing Montzenigos, arguing that he had violated his post-contractual duty of loyalty under article 2088 C.c.Q. Specifically, they alleged that he had inappropriately discussed an ongoing Federal Court dispute between Sunchef and the federal authorities with representatives of Beyond Meat. This underlying dispute concerned customs and duty assessments by the Canada Border Services Agency and was unrelated to his dismissal, but the employer asserted that his alleged disclosure of litigation information was disloyal. Second, they maintained that he had failed to mitigate his damages. The core of this argument was that he had declined a “reasonable” offer to become vice-president of Bveggie on equivalent terms, which, in their view, he should have accepted. They also argued that his subsequent business activities could not fully offset his claimed loss and that no separate fault had been committed in either terminating him or in not granting him shares in Bveggie.

Applicable legal framework under Québec civil law
The court reviewed the special regime under the Civil Code of Québec for contracts of employment. Although contracts are ordinarily irrevocable under article 1439 C.c.Q., articles 2091 and 2092 permit either party to terminate an indeterminate-term employment contract unilaterally, provided that reasonable notice is given or a lump-sum indemnité de délai-congé is paid. This right to reasonable notice is of public order (ordre public), and its main purposes are to allow the employee sufficient time to find a comparable job while being financially protected, and to give the employer time to organize and replace the employee. Determining the length of reasonable notice is highly fact-specific. Courts generally look at multiple contextual factors: length of service, age and health of the employee, nature and level of the position, responsibilities carried, labour market conditions and the availability of comparable roles given the person’s experience, training and skills. All forms of pecuniary benefits forming part of the employee’s overall remuneration, including bonuses and increases, are usually included in the calculation, provided they are sufficiently regular and non-discretionary. While awards of up to 24 months’ notice have been recognized, that figure is not treated as an absolute ceiling. Article 2094 C.c.Q. creates a narrow exception: where a serious cause, attributable to the employee, justifies termination without notice or compensatory indemnity. Serious cause may arise from incompetence, incapacity, repeated failures or serious misconduct, but only when these have been clearly signaled to the employee and he has failed to correct them in a timely way. By contrast, economic difficulties or business restructuring do not constitute serious cause that would obviate the need to pay notice; they justify the termination but not the denial of compensation. Under article 2088 C.c.Q., employees owe both an ongoing and a limited post-contractual duty of loyalty. A serious or repeated breach of this duty can, in theory, constitute serious cause. However, the duty of loyalty after the end of employment only persists for a reasonable time and does not bar all forms of competition; the employer must prove with cogent evidence that the former employee misused confidential information or otherwise acted disloyally. Separately, article 1479 C.c.Q. codifies an employee’s obligation to mitigate damages after a wrongful dismissal by taking reasonable steps to find comparable work and by not declining reasonable job offers. The burden rests on the employer to show not only that the employee failed to mitigate but also that this failure increased the loss. An employee may sometimes even be required to accept a temporary return to the same employer if no obstacles make such a return unreasonable. Finally, Québec law allows for additional damages where an employer violates duties of good faith (articles 6, 7 and 1375 C.c.Q.) in the manner of dismissal. A termination may be considered abusive if carried out with malice or bad faith or, even in the absence of intent, where the employer commits a fault causing prejudice beyond the ordinary effects of dismissal, such as serious, reputational, humiliating or degrading treatment.

Analysis of cause and duty of loyalty
The court first determined that the termination was without serious cause. It was admitted that Montzenigos was competent, effective and subject to no prior complaints in his function as executive vice-president. Though the October meetings created some loss of trust and emotional tension between him and Eliopoulos, mere loss of confidence or the eventual abolition or transformation of a role is not serious cause in the sense of article 2094 C.c.Q. Because serious cause must be attributable to the employee personally, the employer’s economic transformation and evolving business model could not justify denying him notice. On the alleged breach of duty of loyalty, the employer’s argument centered on the claim that, after his departure, Montzenigos discussed the pending Federal Court customs litigation with Beyond Meat personnel. Yet the defendants produced no documentary proof and no independent witness to corroborate these suspicions. At trial, Montzenigos admitted that, in the context of his job search, he answered questions from potential employers, including Novo Volaille, acknowledging the existence of litigation with the federal authorities. However, he testified that he did not provide details or comment on the case. The existence of the Federal Court proceedings was publicly accessible via the online docket. Multiple industry players reportedly faced similar disputes over customs duties in the poultry sector. In these circumstances, and in the absence of concrete evidence of misuse of confidential information or disparaging remarks, the court found that the employer’s allegations of disloyalty amounted only to unsubstantiated suspicions, which are insufficient to justify termination without notice or to deny the indemnité de délai-congé.

Mitigation of damages and timing of the obligation
The court then addressed whether Montzenigos met his obligation to minimize his loss. It held that an employee’s duty to mitigate only arises once the termination is effectively known and becomes operative, which, on these facts, was 31 October 2021, when he lost access to his accounts and received a clear notice that his employment was over. The Bveggie offer was made on 14 and 29 October, before the termination became certain, and there was no evidence that this offer remained open after 29 October. Neither party testified clearly that the offer continued past that date, and no document confirmed its validity on or after 31 October. As such, the court ruled that his refusal of the pre-termination Bveggie position could not legally amount to a post-termination failure to mitigate. From November 2021 onward, the evidence showed that he actively pursued new employment. He contacted industry contacts starting in November, maintained ongoing job search efforts, and engaged in sustained discussions with Novo Volaille from February 2022 onward. These negotiations culminated in his appointment as president of Novo Volaille on 26 September 2022, roughly 11 months after the termination. Given his 25 years of experience in the poultry industry, the niche nature of the sector and the seniority of the role sought, the court considered an 11-month job-search period to be reasonable. It therefore rejected the claim that he failed to mitigate by inactivity.

Impact of the new business and deduction of profits
An important part of the mitigation analysis concerned a new company, Tanda inc., which Montzenigos set up in November 2021 to trade in poultry products. Financial statements and supporting documents showed that Tanda generated net profits of 92,811.31 CAD between 6 December 2021 and 26 September 2022. The court treated these profits as income mitigating his loss and therefore deducted them from the gross notice indemnity it otherwise would have granted. Far from demonstrating a failure to mitigate, the creation and development of Tanda showed that Montzenigos had taken proactive steps to generate new income quickly after dismissal, to the benefit of the employer because these profits reduced its financial exposure.

Assessment of compensation and treatment of bonus
On quantum, the court first identified the components of compensation to be included in the indemnité de départ. It accepted that his base salary was 350,000 CAD per year and that Sunchef’s contribution to his retirement plan was 5% of base salary, i.e., 17,500 CAD per year. It recognized that Sunchef had continued paying his base salary for one month in November 2021, despite the termination, but had not contributed to his pension during that month. Accordingly, the court calculated base salary damages for 10 months of notice (not 11) at 291,666.70 CAD (350,000 × 10/12) and pension contributions for 11 months at 16,041.67 CAD (17,500 × 11/12). Together, these produced a gross notice indemnity of 307,708.37 CAD before mitigation. The court then addressed whether to include any amount for bonus. In April 2021, Montzenigos had received a large payment of 390,000 CAD, which he characterized as a performance bonus. The employer argued that only 190,000 CAD was a bonus and that 200,000 CAD represented a retroactive salary adjustment of 50,000 CAD per year for the four years from 2017 to 2021. The court ultimately held that it did not need to resolve this internal categorization because, in any event, Sunchef lacked a clear, regular and established bonus policy, and the employment contract contained no precise bonus terms. The award of bonuses was essentially discretionary and ad hoc, depending on the president’s will, and therefore did not satisfy the legal criteria for inclusion as a predictable element of global remuneration for the purpose of notice. Consequently, no sum for bonus was added to the notice indemnity. After deducting the Tanda net profits of 92,811.31 CAD from the gross figure of 307,708.37 CAD, the court arrived at a net compensatory indemnity of 214,897.06 CAD corresponding to 11 months of global compensation (salary and pension) less mitigated earnings.

Claim for additional damages and good faith at termination
The court next examined Montzenigos’s claim for 25,000 CAD in additional damages based on alleged bad faith and abusive conduct in the manner of termination and in the handling of the Bveggie shareholding issue. It acknowledged that the termination was sudden, and that the employer had unilaterally ended his contract by cutting access and then confirming the dismissal by email. Nonetheless, under Québec civil law an employer is entitled to terminate an indeterminate-term contract unilaterally, so long as reasonable notice or its monetary equivalent is given. The payment of the indemnité de délai-congé is the appropriate remedy for a dismissal without cause; the mere fact of termination, even if unexpected, is not in itself a fault. Regarding the Bveggie equity discussions, the evidence showed that while Montzenigos expressed a strong wish to become a shareholder and believed he had earned this through his work developing the business, Eliopoulos never concretely promised him shares. The parties did not negotiate or agree specific terms such as price, percentage, timing or conditions. In fact, there was a fundamental divergence: Montzenigos saw equity as a reward for services already rendered, whereas Eliopoulos viewed any shareholding as something that would have to be purchased for a substantial sum, over and above his paid employment. In light of this, the court concluded that the employer had not abused its contractual rights or acted with malice or excess; there was no clear evidence that the contract was terminated to deliberately harm him or in a manner that produced prejudice beyond the normal stress and inconvenience that typically accompany job loss. Québec jurisprudence recognizes that ordinary stress or anxiety linked to termination is not generally compensable absent a distinct fault and a prejudice not already addressed by the notice indemnity. Here, those conditions were not met, so the claim for an extra 25,000 CAD in moral or exemplary damages was dismissed.

Evidentiary privilege over settlement communications
Finally, the court ruled on an evidentiary objection related to a document filed as Exhibit P-2, titled “Release, Weaver and Transaction,” which Sunchef had sent to Montzenigos on 3 November 2021, shortly after his dismissal. The employer objected to its admissibility on the basis of settlement privilege, arguing that it was part of an attempt to resolve the dispute amicably before litigation. Applying the established three-part test for settlement privilege, the court held that P-2 was indeed a privileged settlement communication: a dispute (or at least a potential dispute) existed; the document was communicated to settle that dispute; and there was an implied intention that its terms not be disclosed without mutual consent. As such, the objection was allowed, and P-2 was excluded for purposes of proving liability or quantum. However, the court emphasized that the outcome of the case did not depend on this document. Its findings on termination without cause, quantum of notice, mitigation and good faith were all grounded in other evidence, including witness testimony, admissions and financial documents.

Outcome and final orders
In the result, the Superior Court of Québec concluded that Montzenigos had been dismissed without serious cause and that Sunchef was obliged to provide reasonable notice. Based on his age (53), length of service (eight years), senior executive role, level of responsibility (approximately 500 employees under his supervision) and the specialized nature of the poultry industry, together with his successful but protracted job search and entrepreneurial efforts, the court found that an 11-month notice period was fair. It fixed the indemnité de départ at a net amount of 214,897.06 CAD, composed of 10 months’ base salary and 11 months’ pension contributions, less the net profits from his new company. It rejected any additional amount for discretionary bonuses and dismissed the claim for 25,000 CAD in extra moral or bad-faith damages, as well as all allegations of serious cause and of breach of loyalty. The court ordered Aliments Sunchef inc., Aliments Bveggie inc. and Theodore Eliopoulos to be solidarily liable for paying 214,897.06 CAD to Thomas Montzenigos, together with legal interest from 7 February 2022 and the additional indemnity under article 1619 C.c.Q., plus judicial costs; while those interest and cost components will increase the total recovery in his favour, their exact aggregate amount cannot be determined from the face of the judgment because it depends on statutory rates, taxation of costs and the passage of time.