Court File and Parties

COURT FILE NO.: 18-67294 DATE: 2019/05/06 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

Stress-Crete Limited and King Luminaire Company Inc. Applicants

E. Nanayakkara and G. Mallia, for the Applicants

• and -

Stephen William Harriman Respondent

L. Armstrong and K. Cora for the Respondent

HEARD: April 17, 2019 A.J. Goodman J.

Endorsement

[1] The applicants, Stress-Crete Limited and King Luminaire Company, Inc. (collectively “StressCrete”), seek an order to prevent the respondent, Stephen Harriman (“Harriman”) from engaging in employment with Cyclone Lighting, (“Cyclone”), a direct competitor of StressCrete. StressCrete moves for a permanent injunction restraining Harriman from committing alleged breaches of non-competition, non-solicitation and confidentiality in violation of an Employee Confidentiality and Non-Competition Agreement (“Agreement”) entered into by the parties.

[2] At issue in this action is whether Harriman has breached his non-competition, non-solicitation and confidentiality obligations under an employment agreement. If such a breach is found, does it warrant injunctive relief sought by the applicants?

Background:

[3] StressCrete Limited and King Luminaire Company, Inc. are Ontario Corporations carrying on business internationally in manufacturing and supplying commercial, municipal, utility and industrial lighting solutions, including concrete poles and arms. Both are family-run businesses whose principal is Michael Schwenger. StressCrete has affiliated offices or plants throughout Southern Ontario and the United States. The applicants’ head office is located in Burlington, Ontario.

[4] StressCrete’s largest market is in Ontario, which comprises a substantial portion of StressCrete’s revenue. Sales from StressCrete’s products in Ontario support numerous employees located in four different locations across Hamilton, Burlington, Stoney Creek and Ohio. StressCrete also supports lighting manufacturing agents TyMat Solutions and Lighting Design Group Inc.

[5] The respondent is a former employee of StressCrete. He was hired as a Regional Sales Manager on August 15, 2011, at an annual salary of $60,000.00 and was responsible for a large territory spanning various parts of the United States and managing business consisting of commercial and government clients located primarily in the United States.

[6] Harriman was promoted to Sales Manager of U.S. Northeast and Canada on September 22, 2014, where he became responsible for achieving sales targets and the management of all Regional Sales Managers in his territory. In his employment with StressCrete, the respondent entered into several employment agreements.

[7] On October 22, 2018, Harriman presented his resignation letter to StressCrete. At the time of his resignation, he advised StressCrete he was contemplating numerous offers of employment, some of which were from non-competitors of StressCrete.

[8] On October 24, 2018, in response to the respondent’s resignation StressCrete offered Harriman continued employment until such time that he obtained alternative employment with a non-competitor of StressCrete. However, the applicants did not offer Harriman a position in Ontario, which was the top priority for him given his family situation. StressCrete also offered to assist the respondent with finding alternative employment with a non-competitor. It was highlighted to the respondent that his employment with Cyclone would adversely affect employees of StressCrete. On October 26, 2018, Harriman advised he was accepting a sales representative position with Cyclone.

Positions of the Parties:

[9] The applicants submit that in consideration of his employment and promotion to the Sales Manager position, the respondent executed and agreed to be bound by the employment agreements. The Agreement restrains Harriman from engaging in employment activities with StressCrete’s direct competitors, by enforcement of the non-competition, non-solicitation, and confidentiality clauses.

[10] Despite the express terms of the Agreement, the respondent had accepted employment as a sales representative in Ontario for Cyclone, a direct competitor of StressCrete, and specifically, King Luminaire. StressCrete alleges that even prior to his resignation, Harriman retained confidential information and customers in breach of the Agreement. In this regard, he accessed and used client information confidential to StressCrete. Harriman also repeatedly stated that he did not consider the impugned provisions to be unreasonable. He also agreed that the two-year non-competition and non-solicitation clauses in the Agreement are clear and unambiguous.

[11] The applicants submit that injunctive relief is necessary to protect its business and client base and that its business will be irreparably harmed if relief is not granted. The balance of convenience favours the applicants in granting of the relief sought.

[12] The respondent’s position is that the motion ought to be dismissed on the grounds that there is no serious issue to be tried, there is no evidence of irreparable harm suffered by the applicant and the balance of convenience clearly favours him.

[13] The respondent submits that the restrictive covenants in the Agreement are vague, overly broad, unreasonable, and contrary to the public interest. To grant the applicants’ request for an injunction will cause irreparable harm, as he will be rendered jobless while being the primary breadwinner for his family. Conversely, the applicants will not suffer any immediate or urgent harm if the injunction is not granted, as Harriman does not possess any proprietary information, trade secrets, or otherwise confidential information that warrant protection.

[14] The respondent submits that there was no breach of the Agreement between the parties as he never misused any confidential information. The respondent says that he only ever accessed the U.S. price book. Even in his capacity as Sales Manager, he never quoted or used the Canadian price book. The price book, or price list, for each product is simply a “starting point”. The final price for each product is determined based on the specifications set by the customer or end user, which requires knowledge of the bill of materials for each fixture, as well as other factors such as freight and commissions. The applicants regularly participate in public bids for municipal projects. These bids are usually published online. Therefore, StressCrete and King Luminaire pricing is and can be easily accessed by the public, including competitors.

[15] Further, Cyclone does not sell concrete poles and only sells lighting fixtures. The respondent did not access and does not have knowledge of any of the applicants’ clients for lighting fixtures in Ontario. In addition to the 24 month non-solicitation provision, the temporal and geographical restrictions are excessive. The respondent submits that as he is not aware of the identity of all or most of StressCrete’s Canadian client base, these provisions are ambiguous and unfairly restrict his ability to utilize his skills, experience and knowledge.

[16] The respondent also says that he was not encouraged to seek legal advice before signing each of the agreements. He did not think to consult a lawyer at any of those times. He signed the agreements because he was asked to sign them. The terms of the Agreement is therefore unconscionable because it gives the applicants an immoderate advantage in protecting their own interests while purporting to disentitle the respondent to any legal recourse in a proceeding against him.

[17] In the alternative, the respondent submits that even though the Agreement provides a quantification for business losses, the applicants have not demonstrated that any alleged loss could not be remedied by an award of damages.

Legal Principles:

[18] An injunction is an extraordinary remedy that should only be issued to restrain a clear breach of legal obligations. The test to be met for the granting of an interim or interlocutory injunction has been set out by the Supreme Court of Canada in its seminal case of RJR-MacDonald Inc. v. Canada (Attorney General), 1 S.C.R. 311. The moving party must demonstrate:

a. that there is a serious issue to be tried;

b. that the moving party will suffer irreparable harm if the injunction is not granted; and

c. that the balance of convenience favours the granting of the injunction.

Discussion:

[19] As a general rule, restrictive covenants in employment agreements are unenforceable, unless they are reasonable between the parties and not adverse to the public interest.

[20] The first question to ask is whether there is ambiguity in the interpretation of the restrictive covenant. A restrictive covenant that is ambiguous as to time, activity, or geography is prima facie unreasonable and unenforceable. An ambiguous covenant is prima facie unreasonable and unenforceable: Shafron v. KRG Insurance Brokers 2009 SCC 6 at para. 43.

[21] If found to be unambiguous, the validity of a restrictive covenant can be determined upon a holistic analysis of the clause in question, the overall agreement, and the surrounding circumstances, having regard to some of these considerations:

(a) Whether the employer has a proprietary interest entitled to protection;

(b) Whether the temporal or spatial limits of the clause are too broad; and

(c) Whether the covenant is unenforceable because it prohibits against competition generally and not just solicitation of the employer’s customers.

[22] According to the applicants, the Agreement contains certain clauses that are very important to them. StressCrete’s rationale for these provisions is as a means of protecting its market share and jobs in the event the respondent departed the company and sought employment with a direct competitor.

[23] There is no dispute that StressCrete’s primary asset is its technical or sales information in a very unique or select area of manufacturing; and its customer base, including names, addresses, contact information, information that would be extremely beneficial to another company.

[24] At para. 2, the non-competition provision in the September 22, 2015 Agreement specifies:

I shall not, for a period of two (2) years after the termination of my employment for any reason whatsoever, be employed by a director, officer, shareholder, principal, agent or partner of, operate, act as consultant to, invest in, loan money to, or directly or indirectly engage or be involved in, any person, corporation, association, firm, partnership, or business which has all or part of its undertaking the manufacture, sale or lease of:

a) poles used to carry utility services; or

b) lighting fixtures; or

c) any other products manufactured or sold by StressCrete or any of the StressCrete association corporations, (King Luminaire Co. Inc.),at the time of my termination of my employment, or

d) any or products similar to, or competitive with the products described in (a) (b) or (c) within a 750-mile radius of any StressCrete Ltd, StressCrete Inc. or King Luminaire Co. Inc. production facilities.

[25] The non-solicitation provision specifies the following at para. 3:

I shall not, for a period of two (2) years after the termination of my employment for any reason whatsoever:

a) Solicit or entice, or attempt to solicit or entice, either directly or indirectly, any of the employees of StressCrete to enter into employment or service with any business described in Clause 2 above; or

b) Contact any person, firm, corporation, or governmental agency who was a customer of StressCrete at any time during my employment with StressCrete.

[26] In respect of the duty to return confidential information of StressCrete, at para. 4, the retention and disclosure provision states:

Upon termination of my employment for any reason, I shall immediately return to StressCrete all customer lists, notes, records, files, communications and memory equipment, tapes, drawings and copies in my possession or control, which contain or refer to the confidential information listed above.

Serious Issue to be Tried:

[27] Whether the "serious question to be tried" test or the higher standard of a "strong prima facie case" is to be applied in this case must be met in relation to certain aspects of the applicants' claim. The authorities suggest that where the interlocutory injunction will interfere with the defendant's ability to make a living, the threshold should be the higher one of “strong prima facie ” case.

[28] In Van Wagner Communications Co., Canada v. Penex Metropolis Ltd., [2008] O.J. No. 190, at para 39, Pattillo J. addressed the question of the appropriate test to be applied:

…Each of those respected judges are saying, in my view, that in the case of an interlocutory injunction to restrain a breach of a negative covenant, irreparable harm and the balance of convenience need to be still considered. The extent of the consideration, however, will be directly influenced by the strength of a plaintiff's case. Even where there is a clear breach of a negative covenant which is reasonable on its face, the issues of irreparable harm and balance of convenience cannot be ignored. They may, however, become less of a factor in reaching the final determination of the issue depending on the strength of the plaintiff's case.

[29] I agree with Pattillo J.’s application of the general test and weight to be placed on the various factors for injunctive relief. See also Rogers Communications Inc. v. Shaw Communities Inc., [2009] O.J. No. 3842 (S.C.).

[30] A restrictive covenant in an employment contract akin to a restraint of trade is voidable and will not be enforced unless justified as reasonable between the parties or in the public interest. The reasonableness of a restrictive covenant is determined by considering the extent of the activity sought to be constrained. Thus, the onus is on the employer trying to enforce the restrictive covenant to justify it as being no more than is reasonably required to protect its valid proprietary interests.

[31] With respect to restrictive covenants in employment agreements generally, the case law in Ontario is mixed as to whether the standard to be applied ought to be the lower "serious question to be tried" or the higher "strong prima facie case" test. The majority of reported cases that applied the higher standard of a strong prima facie case dealt with restrictive non-competition clauses, as opposed to mere non-solicitation clauses.

[32] One line of cases in Ontario has found that the higher standard of a strong prima facie case should be met where parties are seeking to enforce restrictive covenants. In these cases, if the higher standard is met, less emphasis is placed on the second and third parts of the injunction test. Still, other jurisprudence provides that a court need not choose between a higher or a lower threshold but, depending on the strength of a plaintiff’s case, irreparable harm and the balance of convenience will be given either more or less weight; less if a strong prima facie case, more if it is simply a serious issue to be tried.

[33] In addressing a non-solicitation clause, the question is whether the covenant in the Agreement are unenforceable as being against competition generally and not limited to former clients: J.G. Collins Insurance Agency v. Elsley, [1978] 2 S.C.R. 916 at p. 926. Where a non-solicitation provision is limited to customers or clients of the employer, a geographic limit is irrelevant and not required. In this case, the two-year clause appears to be in line with general industry norms.

[34] The applicants say that if an interlocutory injunction is granted, the respondent will not be prevented from continuing his employment in other sales areas. The respondent argues that the Agreement provides for very restrictive covenants and thus, a strong prima facie case standard is applicable.

[35] The Agreement imposes a geographical limit of “a 750 mile radius of any “StressCrete Ltd, StressCrete Inc. or King Luminaire Co Inc production facilities”. The applicants submit that the 750-mile non-competition radius contemplated by the Agreement is reasonable in the circumstances as it directly reflects the competitive shipping range of lighting and concrete poles. The respondent read and understood the non-competition radius to be clear, straightforward and unambiguous.

[36] The respondent’s dispute is not focussed on the two-year timeframe. Rather, he argues that the non-compete provision is too broad because it applies to all of the applicants’ production facilities in North America. It does not identify whether the production facilities are in the United States or in Canada, and therefore casts a greater blanket prohibition in both countries. Further, it appears that the 750-mile radius directly reflects the competitive shipping range of concrete poles. Cyclone does not sell concrete poles. It only sells lighting fixtures. Thus, it is argued that the spatial limit in the Agreement therefore does not apply to Cyclone target market.

[37] I appreciate that the 750-mile radius was designed to encapsulate StressCrete’s sales territory and may be reasonable in the context of that industry. Indeed, it may be that the 750-mile radius is sensible as it delineates the sales territory the respondent was operating in with respect to the shipping range of StressCrete’s products. While the temporal limits of the Agreement were understood by the parties to be clear and unambiguous, I agree with the respondent that these limits are vague and imprecise as it pertains to the non-compete provision. The scope of the restrictive geographical boundary is not clearly defined as it relates to the various production facilities across North America. In other words, the restriction covered by this clause is not just delineated or restricted to the Burlington head office location, which was likely the intention for clause 2. Clause 7 of the Agreement cannot remedy the ambiguity for the non-competition restriction. As such, the specific provision is unreasonable.

[38] Turning to clause 3, the difference between a non-solicitation clause and a non-competition clause has been described by the Court of Appeal in H.J. Staebler Co. v. Allan, 2008 ONCA 576, 2008 CarswellOnt 4650 at para. 38 as follows:

…A restrictive covenant may restrain either competition or solicitation. A non­competition clause restrains the departing employee from conducting business with former clients and customers whereas a non-solicitation clause merely prohibits the departing employee from soliciting their business.

[39] Various courts have been reluctant to uphold non-compete clauses where a non-solicitation clause would adequately protect an employer's interest. If it is a non-solicitation clause, it is more likely to be enforced. However, a valid non-solicitation clause must clearly advise the former employee which customers are off limits to her or him. In cases where the specific customers that are not to be solicited have not been clearly identified, restrictive covenants have been found to be ambiguous in their practical implementation and therefore, unenforceable and void: ThyssenKrupp Elevator (Canada) Ltd. v. Amos, [2014] O.J. No. 3155 at paras. 31 and 32; Mason v. Chem-Trend Limited Partnership, 2011 ONCA 344 at para. 30.

[40] Paragraph 3 of the Agreement employs the words "solicit, or entice". In my view, this is very clearly language of solicitation. Nowhere do the provisions curtail Harriman's right or ability to carry on a livelihood or business as an insurance broker.

[41] During his terminal discussions with StressCrete, Harriman had already accepted an offer of employment from Cyclone (on October 19, 2018). On cross-examination, the respondent admitted to being dishonest to employees of StressCrete regarding his status of employment at the time of his resignation. On October 23, 2018, after accepting employment with Cyclone, the respondent advised a Regional Sales Manager of StessCrete, that he was still considering multiple offers and confirmed that he was well-positioned to secure employment. It is clear to me that Harriman was far from being honest or forthright with StressCrete before or at the time of his departure. Although equitable relief is not being claimed, it seems that the respondent does not come to this hearing with “clean hands”.

[42] The argument raised by the parties in addressing non-solicitation is focussed on Ontario. Hence, the 750-mile restriction that I have discussed earlier does not give rise to the same level of ambiguity. It is true that Harriman only ever worked within the U.S. Great Lakes Region throughout his entire tenure. The respondent argues that it is impossible for him to have intimate knowledge of all of the applicants’ customers in all of its offices for the duration of his employment. The respondent argues that the non-solicitation clause is unreasonable because it is unworkable in practice and effectively prohibits the respondent from competing with the applicants.

[43] Based on the email evidence filed along with the affidavit of Michael Schwenger at paras. 13 - 16, I am satisfied that Harriman knew who the relevant clients were in both Canada and the United States, had their contact information, was aware of the products they had purchased and had knowledge of the costs of products, sales performance including pricing. Frankly, Harriman’s assertions throughout his cross-examination and in his affidavit are somewhat self-serving. To explain or justify his conduct by claiming that he only had dealt with U.S. clients and selectively chose to ignore emails or sensitive information or otherwise disregard any reference to Canadian clients or related sales is not believable.

[44] I conclude that Harrison has or will attempt to solicit clients of StressCrete immediately after his resignation from the applicants’ business. This is amply borne out in his evidence arising from the cross-examinations.

[45] There may have been sufficient consideration in the form of a promotion in exchange for a signed Agreement. However, the respondent also argues that the Agreement is not binding or enforceable and does not automatically entitle the applicants to an injunction order because of the inequality of bargaining power between the parties at the time of its execution and its unconscionable terms.

[46] The respondent claims that he did not have the opportunity to seek independent legal advice before signing the Agreement. Notwithstanding the terminology in clause 9, he deposes that he signed the Agreement in order to accept the promotion offered to him and because he was asked to do so. He did not understand the legal implications of the terms contained in para. 6 of the Agreement. The respondent argues that the Agreement also has a high degree of unfairness. If upheld, it waives any possible defence by the respondent to its enforcement, and it automatically entitles the applicants to a court-ordered injunction.

[47] Unconscionability has been defined as “an immoderate gain or undue advantage taken of inequality of bargaining power” and a transaction where “the stronger party has taken unfair advantage of the other’’.”

[48] With respect, I disagree with the respondent’s submissions on this issue. I accept that at all times Harriman was treated fairly in the execution of the Agreement, and despite the opportunity, failed to avail himself of the occasion to speak with a lawyer. There was no rush to sign the various employment agreements. There was no pressure exerted on him by StressCrete. He was also given the opportunity to read and sign the Agreement, without restriction. Again, the respondent admits and agrees the Agreement is clear, unambiguous and straightforward. He admits he had the opportunity to read and seek advice from a lawyer prior to signing the Agreement. He declined to do so. The respondent acknowledged receiving adequate consideration in exchange for signing the Agreement.

[49] I accept that Harriman’s mindful decision to decline the opportunity to seek legal advice prior to signing the Agreement or the terms that mirror the former employment agreement do not equate to unequal bargaining power or unfairness. At all times, StressCrete acted fairly and reasonably, even during the course of this litigation.

[50] Taking into account all the evidence presented, the language in the Agreement is clearly in the realm of a reasonable non-solicitation prohibition and does not constrain Harriman’s ability to work in the sales field or in another related occupation.

[51] In respect of confidential information, it does not make a difference if a departing employee has information that allows him to correspond with and solicit former clients, to the extent that he is doing so from memory. Committing to memory or on his computer, the names of clients, their contacts, the clients' needs or preferences, and the rates that the clients were willing to pay, is confidential information and exploiting such information to solicit former clients "is tantamount to the physical asportation of a client list" and its use is prohibited: Quantum Management Services Ltd. v. Hann, 1989 CarswellOnt 124 (S.C.J.) at paras. 43-44; aff’d. 1992 CarswellOnt 1707 (C.A.) at para. 3, Sheehan & Rosie Ltd. v. Northwood, 2000 CarswellOnt 670 (S.C.J.) at paras. 52-53.

[52] In addressing the confidential information provision, at para. 12 of Harriman’s affidavit, sworn November 12, 2018, he denied under oath to possessing StressCrete’s proprietary information. During his cross-examination on February 5, 2019, Harriman admitted to possessing StressCrete’s information, contrary to his previous sworn evidence and in violation of the provisions of the Agreement with respect to the return of confidential information.

[53] Again, I agree with the applicants that the non-solicitation and confidentiality provisions in the Agreement are reasonable and not ambiguous. Furthermore, the evidence raised by StressCrete including the emails and other statements made by the respondent clearly and objectively shows an intention to solicit business. The use of confidential information to facilitate solicitation is a breach in and of itself.

[54] I appreciate that the restrictions imposed by the Agreement are designed to prevent the respondent from taking unfair advantage of his former position to access StressCrete’s proprietary information and using his intimate knowledge of StressCrete’s products to usurp or undercut StressCrete in bids for jobs in Ontario.

[55] That being said, StressCrete has met its onus and has demonstrated a serious issue to be tried.

Irreparable Harm:

[56] In RJR-MacDonald, the Supreme Court of Canada had defined “irreparable harm” as the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other. Examples include instances where one party will suffer permanent market loss or irrevocable damage to its business reputation.

[57] It is settled law that in order to succeed on an application for an interlocutory injunction, the moving party must establish that it would suffer irreparable harm unless the injunction is granted. The moving party must show whether a refusal to grant the relief sought could so adversely affect its own interests that the harm could not be remedied if the eventual decision on the merits does not accord with the results of the motion. RJR-MacDonald, at para. 63.

[58] An assertion that a plaintiff is likely to suffer irreparable harm is insufficient to warrant the granting of an interlocutory injunction. It is necessary for the evidence to support a finding that the defendant would suffer irreparable harm. The onus is on the party seeking an injunction to place sufficient financial and other evidence before the court on which such a finding can be made. It is important to note that in order to establish irreparable harm, the moving party’s evidence must be clear and not speculative. Absent clear evidence that irreparable harm will result, an interlocutory injunction should not issue. Ciba-Geigy Canada Ltd. v. Novopharm Ltd., 1994 CarswellOnt 700 (F.C.T.D.) at para. 118.

[59] Irreparable harm is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other. It is well established that irreparable harm is not made out simply because damages may be difficult to quantify. The plaintiffs must prove that the alleged harm cannot be quantified in monetary terms. As Epstein J. noted in 754223 Ontario Ltd v. R-M Trust Co, [1997] O.J. No. 282 (Gen. Div.) at para. 40: “Irreparable harm cannot be founded upon mere speculation. This evidence must be sufficient to support a finding that the moving party would suffer such harm not that it is merely likely.”

[60] If damages would be an adequate remedy, and the defendant would be in a position to pay them, no interlocutory injunction should normally be granted, no matter how strong a plaintiff’s claim appears to be. Even where a plaintiff demonstrates that damages might be difficult to ascertain, the moving party will not have discharged their onus of proving irreparable loss and that damages would not be an adequate remedy: MacDonald Ohm Insurance Brokers Ltd. v. Gillmore, [2000] O.J. No. 2745 (Sup. Ct.) at para. 16.

[61] Cases of unfair competition have often been recognized as ones in which damages may not adequately compensate the plaintiff for the loss suffered due to the defendant's conduct. Indeed, goodwill, market share and damage to relationships with customers can be inherently difficult to assess.

[62] While each case will turn on its own facts, solicitation of customers, loss of customers, loss of market share, or damage to business reputation or goodwill have all been characterized as irreparable harm: Ontario Graphite Ltd. v. Janik, supra, at paras. 62-63, Messa Computing Inc. v. Phipps, 1997 CarswellOnt 5596 (Gen. Div.) at para. 32.

[63] The respondent says he has no knowledge of the applicants’ clients in Ontario and had no access to Canadian pricing. Further, the applicants’ share of the market in Ontario is substantially larger than that of Cyclone, as they have been the incumbent lighting providers in the province for over 25 years. As such, the applicants will suffer no irreparable harm as a result of the respondent’s employment with Cyclone.

[64] In this line of business, I accept that contracts are long-term and deal with a finite and unique group of clients. I am persuaded that, at this juncture and going forward, the applicants cannot determine how much business losses might be subject to solicitation of these discrete clients. In fact, the respondent concedes that a risk of lost market opportunities, actual or potential customers, goodwill, market share, and reputation can constitute harm that is not compensable by monetary damages; albeit, such harm is not necessarily unquantifiable.

[65] Unlike the facts in Mason, wherein the court determined that the employee did not know, or it was not possible for the employee to know which potential clients he was prohibited from dealing with; here there is cogent evidence to establish that the respondent has or at least had access to confidential or private information related to all of StressCrete’s clients wherever situated. Again, during cross-examination, Harriman admitted to having received confidential sales reports with data as it relates to Ontario sales for StressCrete. I am persuaded that the respondent possesses intimate knowledge of how StressCrete goes to market, how StressCrete prices jobs, what StressCrete’s pricing levels are and how StressCrete products perform in the marketplace. On cross-examination, Harriman admitted that he had access to StressCrete’s internal server, to StressCrete Canadian and American price lists, to StressCrete quotes, sales reports and to customers’ lists. I also accept that Harriman has inside understanding of how King Luminaire lights are costed and manufactured. If provided to a competitor, this knowledge will be used to undercut StressCrete in its bidding processes for work in Ontario.

[66] Harriman admits that Cyclone is a direct competitor of King Luminaire in Ontario and that he intends to compete against StressCrete. Harriman also agrees that if Cyclone sells lights to customers of StressCrete, it would result in a loss to StressCrete. He admits he is trying to expand Cyclone’s market share in Ontario. He admitted that it was his intention to use the information and documentation he obtained while an employee of StressCrete against StressCrete after his resignation and during this lawsuit.

[67] Also during cross-examination, Harriman admitted that prior to his resignation, and in anticipation of litigation with StressCrete, he created a separate file on his home computer that consisted of information and documentation owned by StressCrete. This information and documentation has not been returned to StressCrete. The respondent admitted that he has a wide range of broad sales experience and knowledge, and is capable of training himself in different areas.

[68] It is true that the Agreement does not define "confidential information". However, I disagree with the respondent’s assertions that the scope or description of this information is not proprietary, or confidential, and would otherwise be available to him or the general public.

[69] The respondent also argues that the applicants have not provided any evidence to support their position that his employment with Cyclone will result in lost market opportunities, market share, or actual or potential customers. While there may be no direct evidence that Harriman has misused any information about customer needs, preferences, cycles or other business requirements, I am able to draw a reasonable inference that such information is available and has been or may be employed: Lyons v. Multari, [2000] O.J. No. 3462.

[70] Frankly, the evidence presented by the applicants on the issue of irreparable harm and damages is far from detailed or comprehensive. However, while this is a close call, I am persuaded that StressCrete has confidential and proprietary interests that are entitled to protection. The valuable knowledge of StressCrete’s business processes and sales operations will give Cyclone or any other local competitor inside information it would not otherwise attain.

[71] I am persuaded that Harriman’s employment with Cyclone will cause harm to StressCrete, as he will deliver to Cyclone an unfair competitive advantage in pricing and product marketability, which will adversely affect StressCrete’s ability to obtain further contracts for the manufacture and distribution of its unique lighting products with its current client base. Such cannot be remedied by an award of damages and the applicants have demonstrated the probability of irreparable harm.

Balance of Convenience:

[72] The balance of convenience is a determination of which of the two parties will suffer the greater harm from the granting or refusal of an interlocutory injunction, pending a decision on the merits. The factors which must be considered in assessing the balance of convenience are numerous and will vary in each individual case. Turning now to the issue of the alleged misuse of confidential business and personal information, I accept that the preponderance of the jurisprudence provides that irreparable harm is presumed: Carecor Health Services v. Health Trans Services Inc., 2006 CarswellOnt 3781 (S.C.) at para. 20.

[73] There are numerous factors that must be considered in addressing this prong of the RJR-MacDonald test. The question of balance of convenience and irreparable harm are closely aligned, but the former also relates to matters difficult to quantify in monetary terms.

[74] In determining where the balance of convenience lies, the court will weigh the benefit to the plaintiff of granting the injunction as against the burden on the defendants. Courts have sided with the employer where confidential information is at stake or where the departing employee has solicited existing customers of his employer with whom he had direct dealings during his former employment.

[75] The respondent argues that that the balance of convenience favours him. The applicants do not have proprietary interests that must be protected by the Agreement. If the respondent is permitted to continue his employment with Cyclone, the harm suffered by the applicants is nominal compared to the harm that will be suffered by the respondent and his family if he is forced to leave his new place of employment and seek a position outside the lighting industry, which he already attempted to do without success.

[76] As I have already determined that the non-compete clause is ambiguous in the circumstances of this case, it is apparent that the balance of convenience on this specific issue favours the respondent.

[77] It is true that the non-solicitation clause does not prohibit Harriman from being employed. Harriman is free to deploy his knowledge, skills and experience as a sales person in any industry in which he desires that does not breach the terms of the Agreement. By his own admission, he possesses skills, knowledge and expertise in sales, which translate to a wide range of gainful employment outside of the narrow industry of commercial light fixtures.

[78] In my opinion, in considering where the balance of convenience lies, it would be inequitable to permit a wrongdoer who had voluntarily signed and potentially benefitted from a breach of a non-solicitation or confidentiality covenant to claim that he would be more hurt by the granting of an interlocutory injunction. I am satisfied that the balance of convenience lies with the applicants to restrain the respondent’s activities with respect to the non-solicitation and confidentiality provisions of the Agreement.

Conclusion:

[79] In my consideration of the RJR-MacDonald factors for injunctive relief, Stress-Crete has met its burden to demonstrate that there is a serious issue to be tried.

[80] Given the lack of geographic or spatial definition of the non-competition clause, I find it to be ambiguous and unreasonable. As such, it is overly restrictive and unenforceable.

[81] However, I find that the non-solicitation and confidentiality provisions are clear, not ambiguous and reasonable.

[82] StressCrete has established that they will suffer greater harm if an injunction is not granted in respect of the non-solicitation provision arising from the Agreement. On balance, I find that StressCrete has met its onus to obtain the extraordinary remedy of an permanent injunction. Further, I accept that StressCrete has demonstrated irreparable harm from the use of confidential information in Harriman’s possession arising from his former employment. In my opinion, the loss arising from such use cannot be compensated for by damages or, an award of damages would be inadequate compensation for the loss of the applicants’ position in this unique market.

[83] Overall, I am satisfied that the balance of convenience lies with the applicants as it pertains to the solicitation of StressCrete’s current clients and the respondent’s use of confidential production or sales information in any form or manner.

[84] Therefore, the applicants’ motion for a permanent injunction is granted, in part.

[85] An order shall issue along the following terms: The respondent is prohibited or restrained from soliciting or contacting any StressCrete employee, person, firm, business, corporation or governmental agency who was a customer of StressCrete at any time during his employment with StressCrete. Such restriction shall continue for a period of two years from the date of his resignation - in accordance with clause 3 - and shall encompass a region within 750 miles of Burlington, Ontario, (with adoption of the relevant segments of clauses 2(a) to 2(d), as the case may be).

[86] The respondent shall not use, employ or disclose any confidential or proprietary information, customer lists, suppliers, pricing, production methods or trade secrets of StressCrete or any other private information as specified in clause 1.

[87] In accordance with clause 4, the respondent shall return to the applicants all of StressCrete’s information or other confidential or private records or documents in whatever format, forthwith.

Costs:

[88] If the parties cannot agree on the issue of costs, I will consider brief written submissions. These cost memoranda shall not exceed three pages in length, (not including any bill of costs or offers to settle). StressCrete shall file its costs submissions within 15 days of the date of this endorsement. Harriman may file his submissions within 15 days of the receipt of the applicants’ materials. StressCrete may file a brief reply within five days thereafter. If submissions are not received by June 14, 2019, the file will be closed and the issue of costs considered settled.

A.J. Goodman J. Date: May 6, 2019