COURT FILE AND PARTIES

COURT FILE NO.: C-1110-07

DATE: 2013-08-23

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Conestoga Materials Handling Ltd. - Plaintiff (Responding Party)

AND:

Corey Cotter and Warehouse Solutions Inc. - Defendant (Moving Party)

BEFORE: The Honourable Mr. Justice J. W. Sloan

COUNSEL:
Justin Heimpel - Counsel for the Defendant (Moving Party)

David Linton & David M. Steele - Counsel for the Plaintiff (Responding Party)

HEARD: August 14, 2013

ENDORSEMENT

[1] The defendant Cotter brings this motion seeking summary judgment (1) dismissing the plaintiffs claim or (2) in the alternative partial summary judgment dismissing the claim for damages as it relates to the company Frazier and (3) in a further alternative limiting the plaintiffs claim for damages to one year. And in the event they do not obtain summary judgment dismissing the claim they seek leave to amend their statement of defense.

[2] Cotter was employed by the plaintiff from October 2006 to September 25, 2007.

[3] Unfortunately for Cotter, after leaving the employ of the plaintiff he fell off a ladder in November of 2007 and has no independent recollection of events prior to November 2007.

[4] The facts in this case are for the most part in dispute.

[5] The plaintiff claims that Cotter signed a noncompetition agreement and Cotter states that he did not.

[6] Since Cotter would have no recollection of this his information comes from his wife who tells him that they discussed the noncompetition agreement and that he refused to sign it.

[7] Unfortunately, a copy of the signed noncompetition agreement cannot be found and the plaintiff alleges that Cotter stole it before he left the employ of the plaintiff.

[8] Was Cotter a fiduciary, was he a key personnel and did he owe a fiduciary duty to the plaintiff?

[9] What is clear from the evidence is that of February 2007 Cotter got a 50% increase in his salary and took on more duties with respect to his employment.

[10] Although Cotter was not an officer, director or shareholder of the plaintiff and did not have signing authority at the bank he certainly had contact with the plaintiff's customers and potential customers and it appears was able to send out quotations on behalf of the plaintiff without the approval of any one else.

[11] Cotter submits even if the noncompetition agreement was signed it is unenforceable because it has no geographic restriction and no restriction with respect to the type of work that Cotter would be precluded from doing for the plaintiff's customers.

[12] The plaintiff argues that the geographic limitation must be read into the noncompetition agreement because it simply refers to customers of the plaintiff and their geographic location be known.

[13] Likewise, the the type of work restricted must be read into the noncompetition agreement because the plaintiff did nothing but supply racks to industry and the plaintiff argues it's therefore obvious that that would be the only type of work that would be precluded.

[14] To say the least it would be unusual if an employer gives an employee a noncompetition agreement to sign that the employee would continue working for the employer while at the same time refusing to sign the noncompetition agreement.

[15] With respect to whether or not Cotter owed a fiduciary duty to the plaintiff the evidence certainly points to the fact that he had a reasonable amount of unfettered contact with the plaintiff customers.

[16] This of course would allow him to forge personal relationships with them.

[17] Sometime in 2007 a large manufacturer of racks, Frazier, set up shop in Canada.

[18] The plaintiff did one installation for Frazier and of course was hoping for more.

[19] Although the evidence isn't clear there is evidence from Frazier employees that after this installation Frazier would not do any further business with the plaintiff.

[20] This could be because of a second invoice sent by the plaintiff to Frazier or it could be because of some installation problems that came to light later.

[21] The plaintiff however alleges that it also could be because Cotter, for his own personal gain, poisoned the relationship between the plaintiff and Frazier.

[22] While Cotter can make some strong arguments on his behalf unfortunately for him, his credibility has been seriously called into question.

[23] While still in the employ of the plaintiff, he sent out a purchase order on the plaintiff's behalf to Frazier and at the same time sent a second purchase order on behalf of his own company to Frazier for slightly less money.

[24] At the time of this skulduggery he was being paid by the plaintiff and unknown to the plaintiff he was in direct competition with them for the same business.

[25] To say the least this would make the plaintiff very vulnerable at the hands of Cotter. It may also lead the court to conclude on a balance of probabilities that Cotter stole the signed noncompetition agreement from the plaintiff’ safe when he left its employ.

[26] Based on the behavior of Cotter it is impossible for this court to have a full appreciation of the facts of this case, which will require the full trial narrative so that things can be put in context for the trier of fact.

[27] I therefore dismissed the motion of Cotter with costs for all relief except he may amend his statement of defence as set out at exhibit “A” of his affidavit dated the 26th day of September 2011 within 30 days.

[28] The plaintiff shall be entitled to file a reply within 20 days of it being served with the amended statement of defence. The plaintiff shall also be entitled to a further discovery with respect to all of the amendments.

[29] If the parties are unable to agree on costs, Mr. Linton shall forward his brief submissions on costs to me by August 30, 2013. Mr Heimpel shall forward his brief response to me by September 6, 2013. Mr. Linton shall then forward his reply, if any, to me by September 13. Cost submissions may be sent to my attention by email, care of Kitchener.Superior.Court@ontario.ca.

J. W. Sloan J.

Date: August 23, 2013