Court File and Parties

COURT FILE NO.: CV-21-00664867-0000 DATE: 20231023 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

JOE RAE Plaintiff

• and - ECOLAB CO. Defendant

COUNSEL: Jason Wong, for the Plaintiff Nafisah Chowdhury and Safa Warsi, for the Defendant

HEARD: September 26, 2023

MERRITT J.

REASONS FOR JUDGMENT

OVERVIEW

[1] This is a motion by the Defendant for an order requiring the Plaintiff to return documents.

[2] The Plaintiff, Joe Rae (“Rae”), is a Certified Public Accountant (“CPA”) and the former Canada Controller of the Defendant, Ecolab Co. (“Ecolab”). Rae’s employment was terminated without just cause in February 2020 and he was given ten months’ working notice until December 31, 2020.

[3] Rae commenced this action for wrongful dismissal in 2021 and served his Affidavit of Documents in 2022. Rae’s Affidavit of Documents contains some of Ecolab’s records, which he obtained during his employment (the “Documents”).

[4] Rae admits to privately taking the Documents without Ecolab’s knowledge because he intended to use them for this litigation. Ecolab has scheduled a summary judgment motion to summarily dismiss Rae’s action on the basis of after-acquired cause because Rae took the records. Rae intends to file the Documents as part of his responding motion materials.

DECISION

[5] Rae is ordered to return the documents to Ecolab. The documents belong to Ecolab. The proper procedure for Rae to have followed was to bring a motion for production of the records, where issues of relevance and confidentiality could be addressed. I do not need to see the contents of the records for the summary judgement motion. It is sufficient for me to know the type of documents that Rae took and the type of information contained in those documents. I am not deciding on the relevance or admissibility of the documents at trial. That is for the trial judge to determine.

[6] Ecolab’s position is that the Documents were unlawfully taken pursuant to a significant breach of fiduciary duty and breach of confidence; they are not relevant to the matters at issue; many contain Ecolab’s highly confidential financial information and at least one of the Documents was clearly privileged. The prejudicial effect of permitting Rae to rely on them far outweighs any probative value, and to permit Rae to use Ecolab’s stolen documents as a tool to gain litigation advantage over Ecolab would be an abuse of process.

[7] Rae’s position is that the documents are relevant to his claim. Rae says there is no breach of confidence because he has not misused the information and the disputed documents should not be considered confidential given Ecolab’s failure to comply with its own Code of Conduct.

BACKGROUND FACTS

[8] Ecolab is the Canadian arm of a global company that specializes in water, hygiene and energy technologies and services. It operates in a highly competitive market. Its parent company, Ecolab Inc., which is headquartered in the United States (“U.S.”), is publicly listed. Ecolab (the Canadian entity) is not a publicly listed company. Its financial information is confidential and is not subject to public disclosure.

[9] Rae was employed by Ecolab between January 5, 2009 and February 28, 2020. He had responsibility for directing Ecolab’s accounting and financial control standards and the administrative functions of the Finance and Administrative team. His responsibilities included overseeing, preparing and finalizing Ecolab’s Canadian tax returns, and ensuring that Ecolab’s policies and procedures were followed. He was also a director.

[10] As Canada Controller, Rae was one of four employees within the North American finance department to whom Ecolab Inc. provided the highest degree of access to its information and documents.

[11] Rae had access to Ecolab’s confidential information including financial information. Access to this confidential information was password protected. For some confidential financial documents, Ecolab’s parent company granted restricted access to a very small number of executive-level employees, including Rae. Approved employees had unique confidential and non-transferrable login credentials.

[12] Rae had access to the confidential financial information of both his employer Ecolab and its U.S. parent company, Ecolab Inc.

[13] Rae’s duty of confidentiality was set out in his employment agreement, an additional employment agreement for management-level employees, and in the company’s Code of Conduct. The Code of Conduct provides that Rae was never to “use the Company’s confidential or proprietary information for personal gain either during your employment with Ecolab or after you leave the Company.” Rae received annual training on the Code of Conduct and on computer security.

[14] On January 28, 2020, Ecolab decided to eliminate the entire Canadian Finance and Administration team effective November 13, 2020 and to move its functions to the U.S. Therefore, on February 28, 2020, Ecolab provided Rae with notice that his employment was being terminated without cause effective December 31, 2020.

[15] On June 30, 2021, Rae commenced this action against Ecolab claiming damages in lieu of 24 months’ notice for wrongful dismissal, punitive or aggravated damages, and special damages for job search expenses.

[16] The basis for Rae’s claim for punitive or aggravated damages are set out in the claim and relate to Ecolab’s conduct both leading up to his termination and during the period of his working notice.

[17] Ecolab denies any wrongdoing.

[18] In April 2022, Rae served an unsworn Affidavit of Documents and his examination for discovery was on June 30, 2022.

[19] On his examination, Rae said he had access to confidential information, he has not publicly disclosed Ecolab’s confidential information, and that he only took copies of Ecolab’s documents between March 13 and December 31, 2020, and only for the purpose of litigation because Ecolab was acting in bad faith.

[20] He said that he made sure the Documents were stored in a secure site because of his code of ethics. His evidence was unclear as to whether he sent PDF copies to the hard drive on his personal computer or to his personal cloud-based OneDrive.

[21] Rae said that at the time he took the Documents, he felt contempt for Ecolab as a result of the circumstances surrounding the termination of his employment. He said he intended to use them in the litigation if Ecolab did not concede the facts.

[22] After the discoveries, Ecolab amended its defence to assert after-acquired cause and filed a counter claim for breach of fiduciary duty and breach of confidence. Ecolab also attempted to secure the return of the Documents. Rae intends to go to trial and use the Documents at trial. Ecolab has scheduled a motion for summary judgment based on its claim of after-acquired cause.

[23] Rae says he needs the documents to defend the after-acquired cause allegations on Ecolab’s summary judgment motion and to probe his claim of bad faith at trial.

[24] Ecolab now seeks the return of the Documents.

THE ISSUE

[25] The issue is whether Rae should be required to return the Documents or be permitted to use the Documents in this litigation.

ANALYSIS

[26] Rae admits he took the Documents which belong to Ecolab.

[27] I find that many, if not all, of the documents taken by Rae are confidential. The Documents include financial information, which is not subject to public disclosure, including information relating to national sales revenues broken down on a division-by-division basis, cash flows, debts, costs (including confidential and competitive payroll information), and profits and losses. Rae does not seriously dispute the information is confidential. Rather his position is that Ecolab’s breaches of the Code of Conduct justified him taking the Documents and that he has not misused confidential information.

[28] Rae says the Documents should not be considered confidential because Ecolab did not comply with its own Code of Conduct. The Code of Conduct states that Ecolab must “act with integrity” and that “failure to comply with the law will be considered a Code violation” which includes “applicable labor and employment law.” The Code guides both the employee and employer to comply with the law. Rae says that Ecolab’s failure to adhere to the law with respect to his wrongful dismissal and bad faith render the nature of the disputed documents no longer confidential.

[29] I do not accept and was given no authority for the proposition that Ecolab’s alleged wrongful conduct changes the confidential character of the Documents. Nor does it justify Rae taking the Documents the way he did.

[30] Rae relies on ORBCOMM INC. v. Randy Taylor Professional Corporation, 2017 ONSC 2308, which is distinguishable from the case here. In ORBCOMM there was no contractual requirement to return company property.

[31] Rae’s employment was subject to a written employment contract. Rae’s contract requires Rae to return company property upon the termination of his employment. The contract includes a requirement that upon termination of employment Rae “will immediately return in good order all Ecolab property including but not limited to all Confidential Information in tangible form.” “Confidential Information” is defined as:

information and trade secrets not generally known about Ecolab’s business, such as, but not limited to, unpublished financial data, marketing, financial or other plans, customer or vendor lists, sales reports, price lists, blueprints, formulae, manufacturing processes, inventions and other propriety data.

[32] In 2010, the English Court of Appeal in Tchenguiz v. Imerman, [2011] 1 All E.R. 555 (Eng. C.A.), at paras. 66, 69, 73, 117, 118, thoroughly reviewed the law regarding the use in civil litigation of documents and information taken in breach of the law. In that case, in the context of matrimonial litigation, the wife’s brother (possibly with the help of others) took documents from the server of the office they shared with the husband because they feared the husband would conceal his assets from his wife. The wife’s lawyer arranged for another lawyer to review the files and remove any privileged information. The wife sought to use the information in her litigation. The husband brought proceedings against the brother and those who assisted him (the “defendants”) to require the return of the documents. At first instance, the judge made an order restraining the defendants from communicating or disclosing to third parties, including the wife, any information in the documents and from copying or using any of the documents or information contained therein. He also required the defendants to return the documents to the husband. The Court of Appeal agreed with the court below, reversed the trend that had developed of permitting the use of unlawfully obtained information, ordered the return of financial documents obtained illegally, and forbade any additional use of those documents in the litigation:

…[I]t would be a breach of confidence for a defendant, without the authority of the claimant, to examine, or to make, retain, or supply copies to a third party of, a document whose contents are, and were (or ought to have been) appreciated by the defendant to be confidential to the claimant…. [A] claimant who establishes a right of confidence in certain information contained in a document should be able to restrain any threat by an unauthorized defendant to look at, copy, distribute any copies of, or to communicate, or utilise the contents of the document (or any copy) and also be able to enforce the return (or destruction) of any such document or copy…

…[W]hether the claimant had a ‘reasonable expectation of privacy’ in respect of the information in issue, is… a good test to apply when considering whether a claim for confidence is well founded.

…If the defendant has taken the documents, there can almost always be no question that he must return them, they are the claimant’s property. If the defendant makes paper or electronic copies, the copies should be ordered to be returned or destroyed (again in the absence of good reason otherwise).

Without such an order, the information would still be “out there” in the possession of someone who should not have it.

……[Self-help] cannot be a justification for riding roughshod over established legal rights nor for permitting a litigant without sanction to evade by lawless recourse to self-help the safeguards of the Anton Piller (search order) jurisprudence…

[33] Tchenguiz was applied by this court in Bielak v. Dadouch, 2017 ONSC 3827, at paras. 26-30. In Bielak, in the context of matrimonial litigation, the wife surreptitiously photographed several documents from the husband’s briefcase shortly before the parties separated. The husband claimed that the documents were privileged as they resulted from meetings with his lawyer in anticipation of litigation. Morgan J. held that the wife was not entitled to keep the documents, and had to turn them over and destroy all copies:

26 Once identified by Mr. Dadouch’s lawyers as privileged documents, Ms. Bielak should have turned the photos of the Purloined Notes over to his lawyers and deleted them from her cell phone. Then, if she and her counsel thought it advisable, she could have challenged the assertion of privilege in the usual way. She should not have simply held onto them on the theory that she understands Mr. Dadouch’s handwritten notations better than he does. That compelled Mr. Dadouch to bring this unusual motion for return or destruction of the photographic and digital copies.

27 The end result would have been the same — that is, the privileged character of documents does not change regardless of who is the moving party — but the respect for legal process would have been elevated rather than degraded. In a remarkably similar case, the Court of Appeal in the UK has recently pointed out that since the Middle Ages the law of England has expressed an aversion to the kind of self-help practiced by Ms. Bielak, and has prohibited “revenge or distress of his own authority, without award of the King’s court”: Tchenguiz v. Imerman (2010), [2011] 2 W.L.R. 592 (Eng. & Wales C.A. (Civil)), at para 117, quoting Statute of Marlborough, 1267, s. 1.

28 The taking of documents, or their copying for use where the copier has no right to them, is conduct that cannot be condoned. Again, in the words of the English Court of Appeal, “If, as I hold, the removal, use and retention of documents can amount to the tort of interference with property and as such be a civil wrong, then the justification for the wife’s actions, namely, to prevent the husband’s wrongfully withholding them, cannot be legitimate. In the words of the old adage: ‘Two wrongs don’t make a right’”: White v. Withers, [2009] EWCA Civ 1122 (Eng. & Wales C.A. (Civil)), at para 59 (per Ward LJ).

29 The Purloined Notes that Ms. Bielak photographed and then replaced in Mr. Dadouch’s briefcase were privileged. That this is matrimonial litigation rather than commercial or some other form of civil litigation makes no difference to the rules governing confidentiality and privilege. “The fact that a defendant has a means of access to get into a claimant’s room or even into his desk does not by any means necessarily lead to the conclusion that he has the right to look at, let alone to copy, or even disseminate, the contents of the claimant’s private or confidential documents contained therein”: Tchenguiz v. Imerman, at para 79.

30 Ms. Bielak was not entitled to use surreptitious means to acquire copies of the Purloined Notes, and she is not entitled to keep them, or copies of them, in her possession.

[34] Although Bielak involved documents which the husband claimed to be privileged, as opposed to confidential only, I find that the principles apply here.

[35] The Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provide for production of relevant documents in litigation. The proper course for Rae to have followed would have been to request copies of the Documents from Ecolab in the context of the litigation and then, if necessary, bring a motion for a further and better Affidavit of Documents. Alternatively, his counsel could have requested the documents by way of undertaking at Ecolab’s examination for discovery and if Ecolab refused to produce them, brought a motion to compel production. In either case Ecolab would have had an opportunity to make submissions to the court about the relevance of the documents. In addition, the court could consider any issues of privilege or confidentiality and consider whether some form of non-publication order was appropriate. In proceeding in the manner in which he did, Rae has circumvented proper court procedures.

[36] Ecolab seeks an order requiring Rae to return the documents.

[37] Section 104 of the Courts of Justice Act, R.S.O. 1990, c. C.43, and r. 44 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 address motions for interim orders for recovery of property as follows:

104 (1) In an action in which the recovery of possession of personal property is claimed and it is alleged that the property, (a) was unlawfully taken from the possession of the plaintiff; or (b) is unlawfully detained by the defendant, the court, on motion, may make an interim order for recovery of possession of the property.

44.01 (1) An interim order under section 104 of the Courts of Justice Act for recovery of possession of personal property may be obtained on motion by the plaintiff, supported by an affidavit setting out, (a) a description of the property sufficient to make it readily identifiable; (b) the value of the property; (c) that the plaintiff is the owner or lawfully entitled to possession of the property; (d) that the property was unlawfully taken from the possession of the plaintiff or is unlawfully detained by the defendant; and (e) the facts and circumstances giving rise to the unlawful taking or detention.

(2) The notice of motion shall be served on the defendant unless the court is satisfied that there is reason to believe that the defendant may improperly attempt to prevent recovery of possession of the property or that, for any other sufficient reason, the order should be made without notice.

[38] Making such an order is injunctive in nature and involves determining the balance of convenience: ORBCOMM Inc. v. Randy Taylor Professional Corp., 2017 ONSC 2308, at paras. 27-28.

[39] The balance of convenience favours Ecolab. Rae will not be prejudiced if he is prevented from using the Documents on the upcoming summary judgment motion. I do not need to see the documents to decide if Ecolab had just cause to terminate Rae’s employment without notice because he took them. It is sufficient for the purposes of the summary judgment motion if I know the nature of the Documents and the type of information they contain. That information can be described by both parties in affidavits filed on the motion. That will be sufficient for me to determine whether the Documents are of such a quality as to justify termination for cause.

[40] In this case we are dealing with electronic documents that can be copied multiple times and stored on various media. Ecolab has copies of the documents. What is needed is an order for Rae to delete or destroy his copies. The court has inherent jurisdiction to maintain the integrity of its process and Rae has circumvented that process: MD Physician Services Inc. v. Jonathan Financial Inc., 2011 ONSC 2715, at para. 7.

[41] In the event that I am wrong about my inherent jurisdiction to order the documents destroyed, I will determine whether Ecolab is entitled to an injunction requiring him to destroy his copies of the documents. The test for an injunction was set out in RJR MacDonald Inc. v. Canada (Attorney-General), [1994] 1 S.C.R. 311:

a. Is there a serious question to be tried? (or, in some cases, is there a strong prima facie case?) b. Will the moving party suffer irreparable harm if the injunction is not granted? c. Does the balance of convenience favour granting the injunction?

[42] Rae has admitted that he has taken Ecolab’s documents to use in this litigation. This is conversion of Ecolab’s property. It is contrary to the provisions of his employment agreement and constitutes a misuse of Ecolab’s confidential information. Rae says he has not misused the confidential information yet; however, he admits he intends to file all of the Documents in the public record on the summary judgment motion. Ecolab has established a strong prima facie case.

[43] Rae admits the documents contain Ecolab’s confidential financial information. In cases alleging misuse of confidential information, irreparable harm is presumed: Carecor Health Services Ltd. v. Health Trans Services Inc., at para. 20. If Rae is allowed to keep the Documents and file them on the summary judgment motion as he intends, they will be in the public record and accessible to Ecolab’s competitors.

[44] Ecolab’s evidence, which I accept, is that even dated financial information can be used by competitors to unfairly compete because they can analyze trends and spot vulnerabilities in Ecolab’s business for exploitation.

[45] Ecolab must be able to trust that employees who take confidential information are prevented from using the information for their own benefit or widely disseminating it and are required to return it.

[46] Ecolab cannot perform critical business functions such as business planning, completion of mandatory tax filings and provision of financial information to its parent company unless it provides the information in the Documents to its key employees, and it must be able to ensure that they will safeguard it.

[47] As set out above, the balance of convenience favours Ecolab.

[48] Although there was some delay in Ecolab bringing this motion, I find that it was reasonable. First Ecolab sought the return of the Documents through correspondence between counsel for the parties. Then for several months the parties engaged in settlement discussions and then in discussions to resolve the issue of the taking of the Documents. When those discussions ended and the plaintiff filed his trial record, Ecolab contacted the court about this motion. It was not necessary for Ecolab to bring this motion until it became clear that Rae intended to file the Documents in the public record on the summary judgment motion.

[49] I am not making any determination of the relevance of the Documents to Rae’s claims for bad faith. That is an issue for trial. At the trial, unlike on the summary judgment motion, there will be an opportunity for submissions from the parties on relevance, admissibility, confidentiality, and the appropriateness of any non-publication order such as redacting or sealing documents. There will be judicial screening and consideration of same in the context of the evidence led at trial.

[50] Ecolab has not filed an undertaking as required by rule 40.03. This is a curable irregularity under rule 59.06: Vetech Labratories Ltd. v. 621870 Ontario Ltd., (1991) 2 C.P.C. (3d) 135. Ecolab can file the undertaking now.

[51] Ecolab’s motion for an order requiring Rae to return the documents is granted. Rae must return the Documents and all copies; they are Ecolab’s property. If he made paper or electronic copies, the copies should be returned or destroyed. The self-help remedy employed by Rae cannot be condoned.

COSTS

[52] The parties are encouraged to agree on costs. If they cannot do so, they may make submissions in writing of no more than 3 pages in length in addition to costs outlines, by November 3, 2023.

Merritt J. Released: October 23, 2023