Court File and Parties

COURT FILE NO.: CV-18-137914 DATE: 20181122

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Planet Paper Box Group Inc. Plaintiff – and – Mary McEwan Defendant

COUNSEL: A. Chan, for the Plaintiff E. Gionet, for the Defendant

HEARD: November 19, 2018

REASONS FOR DECISION

CHARNEY J.:

Introduction

[1] On November 1, 2018, the Court granted the plaintiff’s urgent ex parte motion for an interim injunction to restrain the defendant, Mary McEwan, from contacting the plaintiff’s customers and from using the plaintiff’s confidential information. The Notice of Motion was dated October 31, 2018.

[2] The specific terms of the order restrained Ms. McEwan from:

a. Obtaining, utilising or disseminating in any way confidential information belonging to or relating to the plaintiff’s, Planet Paper Box Group Ltd. (Planet), business, however obtained;

b. Directly or indirectly contacting customers of Planet that were customers of it on or before June 15, 2018, including 12 customers expressly named in the order.

[3] In addition, the Court ordered Ms. McEwan to return to Planet within 2 days of service of the Order all information, including all confidential and propriety information, belonging to or relating to Planet’s business, howsoever obtained and in whatever format including all electronic and documentary copies of such information.

[4] The injunction was granted for 15 days, and made returnable on November 15, 2018, with notice to the defendant. The matter could not be reached that day, and the November 1, 2018 Order was extended until November 19, 2018, and the matter adjourned to that day.

[5] I heard the motion to extend the interim injunction on November 19, 2018, and at the end of the hearing I released a brief endorsement setting aside the interim injunction, with reasons to follow. These are those reasons.

Facts

[6] The plaintiff, Planet, is a manufacturer of corrugated paper boxes. The defendant, Mary McEwan, is a former sales representative of the plaintiff.

[7] On October 31, 2018, Jason Berns, the President of Planet, swore an affidavit in support of the motion for an interim injunction. Mr. Berns deposed the following facts, which are not in dispute:

i. Ms. McEwan was a sales representative for Planet from 2012 until her resignation in June 2018.

ii. The terms of Ms. McEwan’s written contract with Planet contained a non-solicitation clause, a non-competition clause, and a confidentiality clause.

iii. The non-solicitation clause provided that Ms. McEwan could not “for a period of one year after the conclusion of your employment with Planet, solicit orders from any customer of Planet for such products as are sold by Planet…”

iv. The non-competition clause provided that Ms. McEwan would not “for a period of one year after the conclusion of your employment with Planet…work for a competitor of Planet that is situated or has an office within a 250 kilometer radius of Planet’s head office.”

v. The confidentiality clause provided that Planet’s “pricing from its suppliers and pricing to its customers is confidential in nature” and that Ms. McEwan would keep Planet’s “pricing schedules and strategies confidential”. It further provided that Planet’s customer list and manufacturing process were confidential. Finally, it provides that Ms. McEwan will, upon request by Planet, “immediately return any and all documents, note, copies extracts or other items of any information that Planet may, in its sole discretion, deem to be the proprietary items, confidential information or products of PPB whether or not they contain any information that may or may not be considered confidential in nature.”

vi. Ms. McEwan had resigned from her position at Planet because she felt that a company employee was unfairly targeting her and making her life at the company extremely difficult.

vii. Planet’s lawyer wrote to Ms. McEwan on July 9, 2018, to remind her that if she breached the non-solicitation clause they would be forced to take legal action.

viii. Planet’s lawyer wrote to Ms. McEwan on October 25, 2018, to advise that they had information that she was in breach of the non-solicitation, non-competition and confidentiality clauses and they would “pursue all available legal remedies against you”.

ix. Planet commenced an action against Ms. McEwan on October 29, 2018 for breach of the non-solicitation and confidentiality clauses in her contract of employment. The Statement of Claim was served on Ms. McEwan on November 2, 2018, along with the interim injunction Order of November 1, 2018.

[8] In addition, Mr. Berns deposed that he learned that Ms. McEwan had accepted work with his competitor, Container Corporation of Canada, and that she was soliciting Planet’s clients and luring them to her new employer. He states:

I recently learnt that McEwan has been actively contacting and soliciting customers properly belonging to Planet Paper Box and has succeeded, to a large extent, in luring those customers to terminate business with the company. To achieve this, McEwan has been disclosing and using confidential information belonging to Planet Paper Box on behalf of her new employer, Container Corporation of Canada, which is also an industry competitor.

[9] According to Mr. Berns, Ms. McEwan had solicited 16 companies which were Planet’s clients, and “of those 16 solicited clients, 4 clients have terminated their established business dealings with Planet Paper Box.”

[10] It is clear from a reading of the Court’s decision of November 1, 2018, that the crucial paragraphs in Mr. Berns’ affidavit are paras. 21, 22, 25, and 26, which state:

[21] In or around October 2018, I was informed by an alarming number of the company’s clients that they had been contacted by McEwan, given quotes that substantially undercut Planet Paper Box’s prices, and to terminate business with Planet Paper Box and switch to Container Corporation of Canada.

[22] These company customers who were solicited by McEwan and whose various sales representatives subsequently informed me via telephone include the following: [the names of 16 clients are listed]

[25] In particular, Ed Donaldson of Medika Plastics specifically informed me that Ms. McEwan had presented pricing lists of Planet Paper Box in comparison to pricing lists of Container Corporation of Canada in efforts to undercut Planet Paper Box’s prices.

[26] In total, Planet Paper Box has lost approximately $682,068.95 in sales based on 2017 sales figures…

[11] The $682,068.95 referenced in para. 26 of Mr. Berns’ affidavit was the total 2017 revenue from the four “lost” clients.

[12] Given that the matter proceeded as an ex parte motion, the judge who granted the interim injunction accepted this evidence in reaching her conclusion that the plaintiff had met the three part test in RJR MacDonald v. Canada (Attorney General), [1994] 1 S.C. R. 311.

Position of the Defendants

[13] The defendant argues that the interim injunction should be dismissed for four reasons:

a. The motion was not urgent and should not have been dealt with on an ex parte basis.

b. The plaintiff failed to make full and fair disclosure of all material facts, and most of the “facts” relied on by the plaintiff to obtain the interim injunction are incorrect.

c. The plaintiff cannot meet the higher “strong prima facie case” test for a motion for an interim injunction that applies to situations where the plaintiff seeks to enforce a covenant that restrains a former employee from competing or soliciting customers.

d. The terms of the November 1, 2018 Order were excessively broad and imposed restrictions not found in the employment contract.

[14] In my view the first two points are sufficient to dispose of the plaintiff’s motion, and will be considered below. I will also briefly consider the defendant’s additional arguments.

Analysis

a. Should the motion have been dealt with on an ex parte basis?

[15] Proceeding with a motion on an ex parte basis is an extraordinary process. Ex parte proceedings affecting the legal rights of persons not before the court should only occur where there is good reason to believe that the defendant, if given notice, will act to frustrate the process of justice (e.g. by removing, hiding or disposing of assets) before the motion can be decided, or if there is simply no time or means to provide notice: Robert Half Canada Inc. v. Jeewan; 71 OR (3d) 650 (ON SC), at paras. 30-38; Sprott Resources Lending Corp (Re), 2013 ONSC 4350, at para 9; Komarnycky v. Laramee, 2012 ONSC 6503, at paras. 19 and 22.

[16] Neither of those conditions applied to this case.

[17] There was no overwhelming urgency in this motion. Even if the relief requested by the plaintiff could be described as urgent, there was no basis to suggest that notice to the defendant could frustrate the process of justice. There was no risk of dissipation or destruction of the subject matter of the action. None of the remedies sought by the plaintiff could have been frustrated by the simple act of giving the defendant notice before the motion was heard.

[18] Even if the plaintiff’s motion was urgent, it could have advised the defendant of its intention to proceed with the motion on an urgent basis. At the time that the plaintiff filed its Notice of Motion with the court, the plaintiff’s law firm was in regular communication with the defendant to set up a meeting with regard to a harassment complaint that Ms. McEwan had made to the Ministry of Labour against Planet. The relevant dates are as follows:

a. On October 29, 2018, Planet’s lawyers issued the Statement of Claim against Ms. McEwan in relation to this action. On that same date, Planet’s lawyers wrote to Ms. McEwan to allege breaches of the non-solicitation clause and to threaten legal action. This letter demonstrates that there was no real concern that notice of the action would “tip-off” the plaintiff and frustrate the process of justice before the motion was decided.

b. On October 30, 2018, Planet’s lawyers wrote to Ms. McEwan to advise that they would be conducting an “impartial investigation of Planet Paper Box and its employees based on the harassment complaint lodged by you with the Ministry of Labour” [1], and to request a meeting with her.

c. On October 31, 2018, Planet’s lawyers prepared the ex parte motion materials (the Notice of Motion and Affidavit of Jason Berns).

d. On November 1, 2018, Planet’s lawyers exchanged a series of emails with Ms. McEwan to arrange a meeting to discuss her harassment complaint. On this same day, Planet’s lawyers were attending court to obtain the ex parte injunction against Ms. McEwan.

e. On November 2, 2018, Planet’s lawyers emailed Ms. McEwan enclosing the injunction order and motion materials.

[19] Obviously there was both time and means to give the defendant some notice of the impending motion. No explanation was provided as to why the same law firm that was communicating with Ms. McEwan with regard to the “impartial investigation” of her harassment complaint could not also provide notice of the motion it was about to bring on behalf of the same client.

[20] In Robert Half Canada, Corbett J. concluded, at paras. 2, 41 and 42, that where an interim injunction ought not to have been sought or granted without notice, the appropriate remedy could be to refuse to continue the interim order “on that basis alone”. I agree with this conclusion. It is particularly unfair for a party to gain any advantage in litigation by proceeding on an ex parte basis in circumstances in which notice could and should have been given. Given my analysis below, however, I do not have to decide whether I would have refused to continue the interim injunction on this basis alone.

b. Did the plaintiff make full and fair disclosure of all material facts?

[21] Rule 39.01(6) of the Rules of Civil Procedure imposes “full and fair disclosure” obligations on a party that brings a motion without notice. The rule provides:

Where a motion or application is made without notice, the moving party or applicant shall make full and fair disclosure of all material facts, and failure to do so is in itself sufficient ground for setting aside any order obtained on the motion or application.

[22] In R. A. Fox v. R.S. Fox, 2014 ONSC 1135, the Divisional Court outlined the reason for Rule 39.01(6) (at paras. 11-13):

The reason for requiring such disclosure is based on the recognition that the judicial officer hearing a motion has only the moving party or their counsel before him. There is usually no opponent present who can file opposing evidence and make opposing submissions. Accordingly, there is a heavy burden on a moving party to tender evidence that he might prefer not to tender so the judicial officer can obtain a reasonably balanced view of those facts that might reasonably affect the outcome of the motion.

The burden that rests on the moving party is not to make full and fair disclosure of every fact relevant to the motion. That would be an undue burden that would require the moving party to disclose an unnecessarily large volume of facts of likely little to no probative value. The obligation to make disclosure of “all material facts” should be interpreted to mean only “all facts that might reasonably affect the outcome of the motion”.

If the judicial officer hearing a motion is deprived of an opportunity to know about all of the material facts known to the moving party because the moving party fails to comply with rule 39.01 (6), the same rule creates a consequence for that moving party. It provides that his failure to comply, in itself, is sufficient ground for setting aside any order made on the motion. “In itself”, in this context means that the other party does not necessarily have to establish anything more than the moving party’s failure to comply.

[23] In other words, the failure to fairly disclose can result in the setting aside of the order even if disclosure would not have changed the result (Royal Bank of Canada v. Kaveh, 2014 ONSC 2582, at para. 10).

[24] That said, the duty of full and fair disclosure recognizes that ex parte motions prepared on an urgent basis may suffer from imperfections that should not necessarily defeat the continuation of the injunction. In Boal v. International Capital Management Inc., 2018 ONSC 2275, Perell J. summarized the factors to be considered, at para. 62:

The court has some discretion and may continue the interlocutory injunction if the undisclosed facts were not material or the non-disclosure was not intentional. In exercising its discretion to continue the injunction in circumstances of non-disclosure, the court should consider: (a) the practical realities that there is often urgency or an emergency that explains why the motion is made without notice; (b) whether facts were intentionally suppressed or whether simple carelessness or ignorance was the cause of the non-disclosure; (c) the pervasiveness of the non-disclosure; (d) the difficulty of determining what is a material or an immaterial non-disclosure; and (e) the significance to the outcome of the motion of the matters that were not disclosed to the court.

[25] In the present case, the defendant points to several aspects of the plaintiff’s affidavit evidence that fails the fair and full disclosure obligation. A significant failure in this regard is Mr. Berns’ failure to disclose the source of the information deposed in his affidavit.

[26] Rule 39.01(4) of the Rules of Civil Procedure provides that an affidavit for use on a motion “may contain statements of the deponent’s information and belief, if the source of the information and the fact of the belief are specified in the affidavit”. The purpose of this rule is to permit the opposing party (and ultimately the court) to investigate the accuracy of the information at its source. Such investigation is impossible if the source of the information is not specified. The requirements of Rule 39.01(4) cannot be met by attributing the information to an anonymous source.

[27] In the present case, the substance of Mr. Berns’ allegations against Ms. McEwan are based on “information and belief”, but the source of that information is either not provided or is inaccurately provided.

[28] For example, para. 6 of Mr. Berns’ affidavit states:

I recently learned that McEwan has been actively contracting and soliciting customers properly belonging to Planet Paper Box…To achieve this, McEwan has been disclosing and using confidential information belonging to Planet Paper Box on behalf of her new employer, Container Corporation of Canada…

[29] This allegation was the fundamental basis for the plaintiff’s claim for an interim injunction. Yet the source of Mr. Berns’ information regarding Ms. McEwan’s alleged solicitation of third parties, her alleged disclosure and use of confidential information, and the alleged identity of her new employer, are not provided in Mr. Berns’ affidavit.

[30] Moreover, now that Ms. McEwan has had notice and a fair opportunity to reply, she denies all of these allegations. Indeed, the undisputed evidence on the motion material before me is that Ms. McEwan has never been employed by Container Corporation of Canada. Since her resignation from Planet in June 2018, Ms. McEwan has worked for a company called Tec Freight, which is a broker for corrugated and non-corrugated packaging. It does not produce corrugated boxes.

[31] Mr. Berns’ affidavit alleges (at para. 5): “I have recently learnt that Mary has been soliciting a significant number of Planet Paper Box’s customers on behalf of her new company, Container Corporation of Canada…”

[32] Again, the source of this information is not disclosed. Whatever its source, it is plainly incorrect.

[33] The allegations are repeated by Mr. Berns at para. 21 of his affidavit (quoted at para. 10 above), which offers the following source for his information: “I was informed by an alarming number of the company’s clients”. Nowhere does he identify the names of the persons who provided this information. In my view this reference to anonymous clients, however alarming their number, does not comply with the requirements of Rule 39.01(4), which requires that the source of the information be specified.

[34] Again, para. 21 of Mr. Berns’ affidavit states that these “alarming number” of anonymous clients told him that they were being contacted by Ms. McEwan to terminate their business with Planet and switch to Container Corporation of Canada. Given that Ms. McEwan does not work for Container Corporation of Canada, the defendant would no doubt like to contact these anonymous sources to investigate the information in Mr. Berns’ affidavit. Mr. Berns has made this impossible.

[35] Paragraph 22 of Mr. Berns’ affidavit (quoted at para. 10 above) gives the source of his information as “various sales representatives” who informed him “via telephone”. Again, this reference to anonymous sales representatives fails to comply with the requirements of Rule 39.01(4). These anonymous allegations are not subject to investigation or confirmation.

[36] The only “source” specified in Mr. Berns’ affidavit is at para. 25, where he testifies that “Ed Donaldson of Medika Plastics specifically informed me that Ms. McEwan had presented pricing lists of Planet Paper Box in comparison to pricing lists of Container Corporation of Canada in efforts to undercut Planet Paper Box’s prices”.

[37] Putting aside the fact that Ms. McEwan does not work for Container Corporation of Canada, the difficulty with this assertion is that Ms. McEwan’s affidavit states that Ed Donaldson does not work for Medika Plastics, but is an employee of Planet. If Ed Donaldson was indeed the source of Mr. Berns’ information, this begs the question as to the identity of Ed Donaldson’s source. If the actual source of the information remains anonymous, the purpose of Rule 39.01(4) is not met.

[38] Mr. Berns swore a supplementary affidavit on November 14, 2018 to respond to Ms. McEwan’s affidavit. This supplementary affidavit fails to correct any of the deficiencies identified in his first affidavit. He remains silent regarding the identity of the source of any of his information, and states only that he has “been reaching out to the 15 companies since Tuesday…and asked that they swear affidavits attesting to my statement…at the time of the swearing of this affidavit, I have not yet heard back from all of them.”

[39] Is Mr. Berns’ affidavit (and the plaintiff’s motion) based on speculation and conjecture, or is it based on fact? Without the source of his information, the court cannot know.

[40] In my view, Mr. Berns’ failure to provide the specific source of his information and belief, as required by Rule 39.01(4), is also a failure to make “full and fair disclosure of all material facts” as required by 39.01(6). The source of his information and belief is a material fact necessary for the court hearing the motion to have a balanced view of those facts that might reasonably affect the outcome of the motion.

[41] The failure to disclose the source of his information was a deliberate non-disclosure. If Mr. Berns knew the source, they should have been identified, if he did not know the source, that material fact should have been disclosed.

Conclusion

[42] To summarize:

a. The interim injunction ought not to have been sought or granted without notice;

b. The plaintiff’s failure to disclose the source of his information with respect to the defendant’s alleged activities was a failure to make full and fair disclosure of material facts contrary to Rule 39.01(6); and

c. The plaintiff’s failure to specify the source of his information regarding the defendant’s alleged activities was contrary to Rule 39.01(4), and the affidavit evidence based on information and belief was therefore inadmissible.

[43] I would have set aside the November 1, 2018 interim injunction on the basis of (a) and (b) above.

[44] Once (c) above is also considered, the entire evidentiary basis for the interim injunction evaporates. The evidence does not support the plaintiff’s position that Ms. McEwan is employed by Container Corporation of Canada or that she has been actively soliciting Planet’s customers or disclosing and using confidential information belonging to Planet.

Additional Issues

[45] While this is sufficient to dispose of the plaintiff’s motion to continue the interim injunction, the defendant has raised several additional issues that merit some consideration.

[46] The defendant argues that para. 26 of Mr. Berns’ affidavit, which alleges a $682,068 loss based on 2017 sales figures is misleading. This dollar figure represents the total 2017 sales from the four clients Mr. Berns alleges were lost to Planet when Ms. McEwan left. This evidence was crucial to the motion judge’s decision to grant the interim injunction on November 1, 2018.

[47] There are several difficulties with this evidence. Firstly, Mr. Berns asserts that these clients were lost to Container Corporation of Canada, and the evidence on the record is that the defendant does not and has never worked for Container Corporation of Canada. There is no evidence that any sales were lost to Ms. McEwan’s employer, Tec Freight.

[48] Second, there is no real evidence that these four corporations have terminated their relationship with Planet or that Planet has lost these accounts. Indeed, while sales to two of these four companies decreased in 2018, sales to the other two companies actually increased in 2018. There is no evidence that any of these companies have in fact cancelled their accounts with Planet or have advised Planet that they will no longer be doing business with them.

[49] Third, most of the “lost” sales relate to a company named Bestcorr Corrugated Sales Inc. (Bestcorr). Bestcorr is a broker for corrugated cardboard products and did over $466,000 business with Planet in 2017. The defendants have produced an affidavit from the owner of Bestcorr, who testified that he began to reduce his business with Planet before Ms. McEwan left in June 2018, and his reasons for reducing his business were completely unrelated to Ms. McEwan. He states that Planet’s prices were too high, and that Planet started to by-pass his company, and to supply his customers directly, which he felt was improper. Bestcorr continued to contract with Planet after Ms. McEwan left in June 2018, and Bestcorr still has an account with Planet.

[50] The evidence, therefore, does not support Mr. Berns’ assertion that Planet has lost $682,000 in sales or that any loss of sales from these four companies is as a result of any conduct by Ms. McEwan.

[51] The defendant further argues that the motions court judge relied on the “serious issue to be tried” test set out in RJR-MacDonald, rather than the “strong prima facie case” test. In Boehmer Box L.P. v. Ellis Packaging Ltd., [2007] O.J. No. 1694 (S.C.J.), at para. 39, Brown J. (as he then was) indicated that this higher “strong prima facie case” test should be applied in situations where the plaintiff seeks to enforce a covenant that restrains a former employee from competing or soliciting customers:

In RJR-MacDonald Inc., supra, the Court noted that in cases where an interlocutory injunction would effectively put an end to the action, a court should consider more carefully the likelihood of whether the plaintiff will succeed at trial. In cases involving injunctions seeking to restrain a former employee from competing with, or soliciting customers of, his former employer, this principle operates to require a moving party to establish a strong prima facie case in order to meet the first branch of the RJR-MacDonald test: Poppa Corn Corp. v. Collins, 2005 WL 845527 (Ont. S.C.J.); 1259695 Ontario Inc. v. Guinchard, [2005] O.J. No. 2049 (S.C.J.); Jet Print Inc v. Cohen, [1999] O.J. No. 2864; Gerrard v. Century 21 Armour Real Estate Inc., (1991), 4 O.R. (3d) 191 (Ont. Ct. Gen. Div.); Sherwood Dash Inc. v. Woodview Products Inc., [2005] O.J. No. 5298, at para 58. As explained by Nordheimer J. in Jet Print Ink, supra., at para. 11:

“... when the injunction sought is intended to place restrictions on a person's ability to engage in their chosen vocation and to earn a livelihood, the higher threshold of a strong prima facie case is the more appropriate test to be applied.”

[52] See also Benson Kearley & Associates Insurance Brokers Ltd. v. Jeffrey Valerio, 2016 ONSC 4290, at paras. 19-21; Gunning and Associates Marketing, Inc. v. Kesler, at para. 6; Lockwood Fire Protection Ltd. v. Jason Caddick et al., 2015 ONSC 6320, at para. 35; Polar Wireless Corp. v. Roberts, 2012 ONSC 6482, at paras. 21-25; Sherwood Dash Inc. v. Woodview Products Inc., [2005] O.J. No. 5298 (S.C.J.), at para. 58; and Precision Fine Papers Inc. v. Durkin, at para. 17.

[53] A strong prima facie case is one in which there is “a substantial likelihood of success in the action that justifies extraordinary relief at the very commencement of the proceeding” (See: Factor Gas Liquids Inc. v. Jean, 2010 ONSC 2454, 264 O.A.C. 46 (Div. Ct.), at para. 42). It is not enough to establish that the case will succeed on a balance of probabilities; the plaintiff must establish that he or she is “clearly right and almost certain to be successful at trial” (Barton-Reid Canada Ltd. v. Alfresh Beverages Canada Corp., at para. 9, and Accreditation Canada International v. Guerra, 2016 ONSC 3595, at para. 41).

[54] I agree that the “strong prima facie case” test is the appropriate standard to be applied to interim injunctions sought in cases like the present where the plaintiff seeks to enforce a covenant that restrains a former employee from competing or soliciting customers.

[55] I also agree that there are serious questions about the enforceability of the non-solicitation and confidentiality clauses at issue in this motion [2] on the basis that the ex-employee cannot know all the previous employer’s customers and, therefore, cannot know whether she would be in breach of the non-solicitation clause (see Mason v. Chem-Trend Limited Partnership, 2011 ONCA 344; 106 OR (3d) 72, at paras. 16 and 27-30; Benson Kearley, at paras. 35-43 and 52-58; ThyssenKrupp Elevator (Canada) Limited v. Amos, 2014 ONSC 3910, at paras. 31-32).

[56] Nor can the plaintiff seek to resolve this uncertainty by now offering to limit the scope of these provisions by proposing a limited list of customers not found in the original agreement. In H.L. Staebler Co. v. Allan (2008), 2008 ONCA 576, 92 O.R. (3d) 107, the Ontario Court of Appeal stated, at para. 43:

[T]he fact that a clause might have been enforceable had it been drafted in narrower terms will not save it. The question is not whether a valid agreement might have been made but whether the agreement that was made is valid.

[57] The uncertainty inherent in these provisions, it is argued, prevents the plaintiff from meeting the strong prima facie case test.

[58] Given my conclusion that the plaintiff, on the evidence presented on this motion, has not met even the lower serious issue to be tried test, it is unnecessary to consider the argument that it has failed to meet the strong prima facie case test.

[59] Finally, the defendant argues that the terms of the ex parte injunction granted on November 1, 2018 are excessively broad, and go beyond the wording or scope of the non-solicitation clause in Ms. McEwan’s contract. For example, the contract provided only that Ms. McEwan could not “solicit orders from any customer”, while the interim order prevented Ms. McEwan from “directly or indirectly contacting customers”. The defendant argues that the prohibition on “contacting” customers is broader than the restriction on “soliciting” customers.

[60] Given my decision to set aside the interim injunction, it is not strictly necessary for me to deal with this issue. I will note, however, that the various judicial decisions dealing with the enforcement of covenants that restrain an ex-employee from competing or soliciting customers have demonstrated a consistent policy in favour of a person’s ability to engage in their chosen vocation and to earn a livelihood, as well as “the public interest in free and open competition” (Mason at para. 31). This is not to say that a properly drafted non-solicitation clause will be unenforceable, but that the courts must be cautious that the judicial enforcement of such clauses does not exceed the limits imposed by the contract of employment.

[61] The prohibition on “contacting” customers may well exceed the contractual restriction on soliciting former customers. For example, in Veolia ES Industrial Services Inc. v. Brulé, 2012 ONCA 173, the Ontario Court of Appeal held (at para. 44) that a bid submitted in response to a public tender is not a solicitation. Similarly, in IBM Canada Ltd v Almond, 2015 ABQB 336, the Court held (at para. 79) that responding to a request for proposals (RFP) is not solicitation. Similarly, in IT/Net Inc. v. Doucette, 2007 ONCA 52, the Ontario Court of Appeal upheld a Superior Court decision that held that where the respondent was approached by a prospective client and accepted the business opportunity this conduct did not constitute a breach of a non-solicitation clause. See also: Computer Enhancement v J.C. Options, et al, 2016 ONSC 452, at paras. 84-88.

[62] It is clear that the courts in these cases are deliberately interpreting the term “solicit” narrowly to be consistent with the public policy in favour of promoting free competition. It is not clear that a prohibition on “contacting” would have the same narrow definition.

Disposition

[63] For these reasons I dismissed the plaintiff’s motion to extend the interim injunction dated November 1, 2018. This dismissal did not apply to paragraph 3 of the Order, which required the defendant to return to the plaintiff all confidential and proprietary information belonging to the plaintiff within 2 days of service of the Order, since that deadline has already expired and the defendant has taken the position that she has no such confidential or proprietary information in her possession.

[64] The defendant is presumptively entitled to its costs. If the parties are not able to agree on costs, the defendant may serve and file costs submissions within 20 days of the release of this decision. Such submissions are limited to 3 pages, plus costs outline and any offers to settle. The plaintiff may serve and file responding submissions on the same terms within 15 days thereafter.

Justice R.E. Charney

Released: November 22, 2018

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Planet Paper Box Group Inc. Plaintiff – and – Mary McEwan Defendant REASONS FOR DECISION Justice R.E. Charney Released: November 22, 2018

Footnotes

[1] One might question the ability of a law firm that represents the employer in litigation against an employee to conduct an “impartial investigation” into that same employee’s harassment complaint against the employer, but that is not an issue before me.

[2] I note that the non-competition clause was not relied upon by the plaintiff in this proceeding. There was, for example, no evidence that the defendant’s current employer has a head office within a 250 km. radius of Planet’s head office, as required by the contract. As such, no arguments were made regarding the enforceability of this provision.