Optilinx Systems Inc. v. Fiberco Solutions Inc. et al.

[Indexed as: Optilinx Systems Inc. v. Fiberco Solutions Inc.]

Ontario Reports

Ontario Superior Court of Justice,

Perell J.

December 1, 2014

123 O.R. (3d) 602 | 2014 ONSC 6944

Case Summary

Injunctions — Interlocutory injunctions — Plaintiff moving for interlocutory injunction to restrain former employees from providing goods and services to two of plaintiff's major customers — Motion dismissed — Defendants having no non-competition or non-solicitation agreement with plaintiff and not being officers, directors or senior management — Plaintiff failing to present strong prima facie case that defendants were anything other than ordinary employees who were allowed to compete with plaintiff — Plaintiff not suffering irreparable harm if injunction not granted — Balance of convenience favouring defendants.

F was formerly employed by the plaintiff as the project manager of its fibre optic division. He was not an officer or director of the plaintiff and was not in senior management. F resigned and carried on his trade as a fibre optic cable installer through F Inc. C, who was also employed by the plaintiff, left to join F Inc. The plaintiff sued F Inc., F and C. The case against F, who had no non-competition or non-solicitation agreement with the plaintiff, was that he was a key employee who was breaching his fiduciary duty by competing against the plaintiff. The case against C was that he knowingly assisted F's breach of fiduciary duty. The plaintiff brought a motion for an interlocutory injunction to [page603] restrain F and C from providing goods and services for a one-year period to two of the plaintiff's major customers.

Held, the motion should be dismissed.

The plaintiff had not shown a strong prima facie case that F was other than an ordinary employee, free to compete with his former employer. The fact that F might have been a very important employee, the lynchpin of the plaintiff's success, did not mean that he was entrusted with or that he assumed the duties of a fiduciary. Assuming that F did have fiduciary responsibilities, there was not a strong prima facie case that he breached his fiduciary duty not to actively solicit business from his former employer's customers. The plaintiff would not suffer irreparable harm if an injunction were not granted. The balance of convenience favoured the defendants.

RJR-MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC), [1994] 1 S.C.R. 311, [1994] S.C.J. No. 17, 111 D.L.R. (4th) 385, 164 N.R. 1, J.E. 94-423, 60 Q.A.C. 241, 54 C.P.R. (3d) 114, 46 A.C.W.S. (3d) 40, apld

Other cases referred to

Adga Systems International Ltd. v. Valcom Ltd., 1992 15384 (ON SC), [1992] O.J. No. 11, 40 C.P.R. (3d) 395, 30 A.C.W.S. (3d) 1196 (Gen. Div.); American Cyanamid Co. v. Ethicon Ltd., 1975 2598 (FC), [1975] A.C. 396, [1975] 1 All E.R. 504, [1975] 2 W.L.R. 316, [1975] R.P.C. 513, [1975] F.S.R. 101 (H.L.); Aquafor Beech Ltd. v. Whyte (2010), 102 O.R. (3d) 139, [2010] O.J. No. 2011, 2010 ONSC 2733, 70 B.L.R. (4th) 135, 82 C.C.E.L. (3d) 129, [2010] CLLC Â210-039 (S.C.J.); Bell Canada v. Rogers Communications Inc., 2009 39481 (ON SC), [2009] O.J. No. 3161, 76 C.P.R. (4th) 61, 179 A.C.W.S. (3d) 423 (S.C.J.); Benayoune & Associates FZE v. Kanata Chemical Technologies Inc., [2014] O.J. No. 4808, 2014 ONSC 5874 (S.C.J.); Boehmer Box L.P. v. Ellis Packaging Ltd., [2007] O.J. No. 1694, [2007] CLLC Â210-025, 157 A.C.W.S. (3d) 147 (S.C.J.); Cana International Distributing Inc. (c.o.b. Sexy Living) v. Standard Innovation Corp., [2010] O.J. No. 4919, 2010 ONSC 6273 (S.C.J.); Canadian Aero Service Ltd. v. O'Malley, 1973 23 (SCC), [1974] S.C.R. 592, [1973] S.C.J. No. 97, 40 D.L.R. (3d) 371, 11 C.P.R. (2d) 206; Cantol Ltd. v. Brodi Chemicals Ltd. (1978), 1978 1377 (ON SC), 23 O.R. (2d) 36, [1978] O.J. No. 3671, 94 D.L.R. (3d) 265, 5 B.L.R. 177, 42 C.P.R. (2d) 111, [1979] 1 A.C.W.S. 8 (H.C.J.); Creditel of Canada Ltd. v. Faultless (1977), 1977 1043 (ON SC), 18 O.R. (2d) 95, [1977] O.J. No. 2474, 81 D.L.R. (3d) 567, 2 B.L.R. 239, 36 C.P.R. (2d) 88, [1977] 2 A.C.W.S. 917 (H.C.J.); Edgar T. Alberts Ltd. v. Mountjoy (1977), 1977 1026 (ON SC), 16 O.R. (2d) 682, [1977] O.J. No. 2334, 79 D.L.R. (3d) 108, 2 B.L.R. 178, 36 C.P.R. (2d) 97, [1977] 2 A.C.W.S. 314 (H.C.J.); Empire Stevedores (1973) Ltd. v. Sparringa (1978), 1978 1479 (ON SC), 19 O.R. (2d) 610, [1978] O.J. No. 3354, 4 B.L.R. 103, 39 C.P.R. (2d) 177 at 178, [1978] 2 A.C.W.S. 28 (H.C.J.); Evans Marshall & Co. v. Bertola S.A., [1973] 1 W.L.R. 349, [1973] 1 All E.R. 992, [1973] 1 Lloyd's Rep. 453, 117 Sol. Jo. 225 (C.A.); Gerrard v. Century 21 Armour Real Estate Inc. (1991), 1991 7104 (ON SC), 4 O.R. (3d) 191, [1991] O.J. No. 261, 35 C.C.E.L. 128, 35 C.P.R. (3d) 448, 25 A.C.W.S. (3d) 931 (Gen. Div.); Jet Print Inc. v. Cohen, [1999] O.J. No. 2864, 43 C.P.C. (4th) 123, 90 A.C.W.S. (3d) 474 (S.C.J.); Jordan Inc. v. Jordan Engineering Inc., 2004 5863 (ON SC), [2004] O.J. No. 3260, [2004] O.T.C. 687, 48 B.L.R. (3d) 115, 132 A.C.W.S. (3d) 895 (S.C.J.); Jordan Inc. v. Jordan Engineering Inc., [2005] O.J. No. 4110 (S.C.J.); Kanda Tsushin Kogyo Co. v. Coveley, [1997] O.J. No. 56, 96 O.A.C. 324, 72 A.C.W.S. (3d) 745 (Div. Ct.); KJA Consultants Inc. v. Soberman, 2004 36050 (ON CA), [2004] O.J. No. 4560, 192 O.A.C. 116, 39 C.C.E.L. (3d) 13, 50 B.L.R. (3d) 283, 135 A.C.W.S. (3d) 99 (C.A.), affg 2003 13546 (ON SC), [2003] O.J. No. 3175, [2003] O.T.C. 739, 36 B.L.R. (3d) 19, 29 C.C.E.L. (3d) 47, 124 A.C.W.S. (3d) 698 (S.C.J.); Kohler Canada Co. v. Porter, [2002] O.J. No. 2418, [2002] O.T.C. 411, 26 B.L.R. (3d) 24, 17 C.C.E.L. (3d) 274, 117 A.C.W.S. (3d) 620 (S.C.J.); MD Management Ltd. v. Campbell, 2010 ONSC 6373, affg [2010] O.J. No. 1890, 2010 ONSC 2315 (S.C.J.); Mercury Marine Ltd. v. Dillon (1986), 1986 2602 (ON SC), 56 O.R. (2d) 266, [1986] O.J. No. 957, 30 D.L.R. (4th) 627, 11 C.P.C. (2d) 235, 12 C.P.R. (3d) 158, 1 A.C.W.S. (3d) 282 (H.C.J.); Omega Digital Data Inc. v. Airos Technology Inc. (1996), 1996 11785 (ON SC), 32 O.R. (3d) 21, [1996] O.J. No. 5382 (Gen. Div.); Ontario v. Shehrazad Non Profit Housing Inc. (2007), 85 O.R. (3d) 81, [2007] O.J. No. 1388, 2007 ONCA 267, 223 O.A.C. 76, 46 C.P.C. (6th) 195, 156 A.C.W.S. (3d) 523; Paddington Press Ltd. v. Champ, 1979 4566 (ON SC), [1979] O.J. No. 796, 43 C.P.R. (2d) 175 (H.C.J.); Planit Search Inc. v. Mann, [2013] O.J. No. 5033, 2013 ONSC 6847 (S.C.J.); Polar Wireless Corp. v. Roberts, [2012] O.J. No. 5465, 2012 ONSC 6482 (S.C.J.); Quizno's Canada Restaurant Corp. v. 1450987 Ontario, 2009 20708 (ON SC), [2009] O.J. No. 1743, 2009 CarswellOnt 2280, 176 A.C.W.S. (3d) 1016 (S.C.J.); Sherwood Dash Inc. v. Woodview Products Inc., [2005] O.J. No. 5298, [2005] O.T.C. 1061, 144 A.C.W.S. (3d) 730 (S.C.J.); Sure-Grip Fasteners Ltd. v. Allgrade Bolt & Chain Inc., 1993 17526 (ON SC), [1993] O.J. No. 193, 45 C.C.E.L. 276, 93 CLLC Â14,021 at 12113, 46 C.P.R. (3d) 443, 38 A.C.W.S. (3d) 98 (Gen. Div.); Synergism Arithmetically Compounded Inc. v. 1130163 Ontario Inc., 1997 12381 (ON SC), [1997] O.J. No. 4271, 81 C.P.R. (3d) 25, 80 A.C.W.S. (3d) 164 (Gen. Div.); Traynor v. Unum Life Insurance Co. of America (2003), 2003 40149 (ON SCDC), 65 O.R. (3d) 7, [2003] O.J. No. 2252, 228 D.L.R. (4th) 228, 172 O.A.C. 359, 2 C.C.L.I. (4th) 91, [2003] I.L.R. I-4204, 123 A.C.W.S. (3d) 746 (Div. Ct.); W.J. Christie & Co. v. Greer, 1981 2733 (MB CA), [1981] M.J. No. 77, 121 D.L.R. (3d) 472, [1981] 4 W.W.R. 34, 9 Man. R. (2d) 269, 14 B.L.R. 146, 59 C.P.R. (2d) 127, 8 A.C.W.S. (2d) 19 (C.A.); W. R. Grace & Co. of Canada Ltd. v. Sare (1980), 1980 1568 (ON SC), 28 O.R. (2d) 612, [1980] O.J. No. 3599, 111 D.L.R. (3d) 204, 51 C.P.R. (2d) 83 (H.C.J.)

MOTION for an interlocutory injunction.

Jeffrey Radnoff, for plaintiff.

Dennis Buchanan, for defendants.

[1] PERELL J.: — The plaintiff, Optilinx Systems Inc., which is in the business of installing fibre optic cable for the communications industry, brings a motion for an interlocutory injunction to restrain two former employees, the defendants Mario Foresta and Andrew Cannon, from providing goods and services for a one-year period to Cogeco and Allstream, which are two of Optilinx's major customers.

[2] The case against Mr. Foresta -- who has no non-competition or non-solicitation agreement and is not senior management -- is that he was a key employee who is breaching his fiduciary duty by competing against his former employer. The case against Mr. Cannon, who is just a former employee, is that he knowingly assisted Mr. Foresta's breach of fiduciary duty.

[3] For the reasons that follow, I dismiss Optilinx's motion.

[4] In deciding whether to grant an interlocutory injunction, the court applies a three-factor test: (1) whether the plaintiff has presented a serious issue to be tried or, in a narrow band of cases, a strong prima facie case; (2) whether the plaintiff would suffer irreparable harm if the remedies for the defendant's misconduct were left to be awarded at trial; and (3) where does the [page605] balance of convenience or inconvenience lie in the granting or the refusing to grant an interlocutory injunction. See RJR-MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC), [1994] 1 S.C.R. 311, [1994] S.C.J. No. 17.

[5] In order to be granted an interlocutory injunction, the plaintiff must also provide an undertaking as to damages, which Optilinx has done.

[6] In the three-factor test for an interlocutory injunction, the strong prima facie test standard is the measure used for determining whether it is appropriate to enforce a restrictive covenant in an employment context and thus interfere with an individual's cherished ability to make a living and to use his or her knowledge and skills obtained during employment.

[7] See Benayoune & Associates FZE v. Kanata Chemical Technologies Inc., [2014] O.J. No. 4808, 2014 ONSC 5874 (S.C.J.); Planit Search Inc. v. Mann, [2013] O.J. No. 5033, 2013 ONSC 6847 (S.C.J.); Sherwood Dash Inc. v. Woodview Products Inc., [2005] O.J. No. 5298, [2005] O.T.C. 1061 (S.C.J.); Kohler Canada Co. v. Porter, [2002] O.J. No. 2418, [2002] O.T.C. 411 (S.C.J.); Jet Print Inc. v. Cohen, [1999] O.J. No. 2864, 43 C.P.C. (4th) 123 (S.C.J.); Adga Systems International Ltd. v. Valcom Ltd., 1992 15384 (ON SC), [1992] O.J. No. 11, 40 C.P.R. (3d) 395 (Gen. Div.); Gerrard v. Century 21 Armour Real Estate Inc. (1991), 1991 7104 (ON SC), 4 O.R. (3d) 191, [1991] O.J. No. 261 (Gen. Div.); Mercury Marine Ltd. v. Dillon (1986), 1986 2602 (ON SC), 56 O.R. (2d) 266, [1986] O.J. No. 957 (H.C.J.); W.R. Grace & Co. of Canada Ltd. v. Sare (1980), 1980 1568 (ON SC), 28 O.R. (2d) 612, [1980] O.J. No. 3599 (H.C.J.); Cantol Ltd. v. Brodi Chemicals Ltd. (1978), 1978 1377 (ON SC), 23 O.R. (2d) 36, [1978] O.J. No. 3671, 94 D.L.R. (3d) 265 (H.C.J.); Creditel of Canada Ltd. v. Faultless (1977), 1977 1043 (ON SC), 18 O.R. (2d) 95, [1977] O.J. No. 2474, 81 D.L.R. (3d) 567 (H.C.J.).

[8] I will apply the strong prima facie case in the circumstances of the case at bar. That said, I regard Optilinx's case as weak and on the borderline of showing a serious issue to be tried that Mr. Foresta was a fiduciary of Optilinx.

[9] I can say at the outset that there is no basis for holding that Mr. Cannon was a key employee and the case against him is only a knowing assistance claim.

[10] In determining whether the plaintiff would suffer irreparable harm, the court will consider whether damages awarded after a trial will provide the plaintiff with an adequate remedy without the need for an interlocutory remedy: Traynor v. Unum Life Insurance Co. of America (2003), 2003 40149 (ON SCDC), 65 O.R. (3d) 7, [2003] O.J. No. 2252 (Div. Ct.); Paddington Press Ltd. v. Champ, 1979 4566 (ON SC), [1979] O.J. No. 796, 43 C.P.R. (2d) 175 (H.C.J.); Evans Marshall & Co. v. Bertola S.A., [1973] 1 W.L.R. 349, [1973] 1 All E.R. 992, at p. 379 W.L.R.

[11] If damages or some other trial remedy would come too late or be inadequate to repair the harm or be insufficient to do justice, then the harm may be said to be irreparable. Evidence of irreparable harm must be clear and not speculative: RJR-MacDonald, supra, at paras. 57-59; Kanda Tsushin Kogyo Co. v. Coveley, [1997] O.J. No. 56, 96 O.A.C. 324 (Div. Ct.), at para. 14; Ontario v. Shehrazad Non Profit Housing Inc. (2007), 2007 ONCA 267, 85 O.R. (3d) 81, [2007] O.J. No. 1388 (C.A.), at para. 26.

[12] A loss of market share, a loss of goodwill or damage to reputation can -- in a given case -- constitute irreparable harm; however, these losses are not necessarily or categorically irreparable harm, and the attendant damages from a loss of market share, a loss of goodwill or damage to reputation are not necessarily unquantifiable: Bell Canada v. Rogers Communications Inc., 2009 39481 (ON SC), [2009] O.J. No. 3161, 76 C.P.R. (4th) 61 (S.C.J.); MD Management Ltd. v. Campbell, [2010] O.J. No. 1890, 2010 ONSC 2315 (S.C.J.), at para. 32, affd 2010 ONSC 6373; Cana International Distributing Inc. (c.o.b. Sexy Living) v. Standard Innovation Corp., [2010] O.J. No. 4919, 2010 ONSC 6273 (S.C.J.), at paras. 18-19.

[13] The balance of convenience analysis considers what is the effect on the parties and sometimes on third parties of the court granting or not granting the interlocutory injunction: American Cyanamid Co. v. Ethicon Ltd., 1975 2598 (FC), [1975] A.C. 396, [1975] 1 All E.R. 504 (H.L.); Synergism Arithmetically Compounded Inc. v. 1130163 Ontario Inc., 1997 12381 (ON SC), [1997] O.J. No. 4271, 81 C.P.R. (3d) 25 (Gen. Div.). This analysis involves a determination of which of the two parties will suffer the greater harm from the granting or the refusal to grant an interlocutory injunction pending a decision on the merits. In this context, the court will need to compare and contrast the harm that the plaintiff may suffer if the interlocutory injunction is refused with the harm that the defendant would suffer that would not be reparable by the plaintiff's undertaking as to damages if the interlocutory injunction is granted. The factors that the court may consider in assessing the balance of convenience and the weight to be given to them are indeterminate and will vary from case to case: RJR-MacDonald Inc. v. Canada (Attorney General), supra.

[14] In considering the balance of convenience, it is appropriate to reconsider the comparative strength of the parties' cases. If the plaintiff's case seems weak, then the undoubted convenience of an injunction may not balance the inconvenience of the defendant suffering the interference with his or her rights based on a doubtful claim. Conversely, if the merits of the plaintiff's case seem quite strong then the plaintiff's inconvenience of being denied an interlocutory remedy may seem to outbalance the inconvenience of the defendant having to suffer a restraint on his or her rights: Quizno's Canada Restaurant Corp. v. 1450987 Ontario Corp., 2009 20708 (ON SC), [2009] O.J. No. 1743, 2009 CarswellOnt 2280 (S.C.J.), at para. 46; Bell Canada v. Rogers Communications Inc., 2009 39481 (ON SC), [2009] O.J. No. 3161, 76 C.P.R. (4th) 61 (S.C.J.), at para. 38; American Cyanamid Co. v. Ethicon Ltd., supra; Omega Digital Data Inc. v. Airos Technology Inc. (1996), 1996 11785 (ON SC), 32 O.R. (3d) 21, [1996] O.J. No. 5382 (Gen. Div.); Empire Stevedores (1973) Ltd. v. Sparringa (1978), 1978 1479 (ON SC), 19 O.R. (2d) 610, [1978] O.J. No. 3354 (H.C.J.).

[15] The factual background to Optilinx's motion for an interlocutory injunction is as follows.

[16] In April 1999, Nick Conforti along with Steve Bronizewski created Optilinx. Its main business is the installation of fibre optic cables, including associated excavation and construction. It has a staff of about 50 employees. Mr. Conforti is the president of the corporation.

[17] Optilinx's major customers are Rogers, Bell Canada, Toronto Hydro, Allstream and Cogeco. Optilinx does not have exclusive contracts with its customers, and it competes for its customers' business against other fibre optic cable companies.

[18] In 2002, shortly after receiving a degree in telecommunications, Mr. Foresta began working for Optilinx as a fibre optic technician. When he resigned in August 2014, Mr. Foresta was the project manager of the fibre optic division and Optilinx's highest paid staff employee.

[19] Mr. Foresta was Optilinx's main but not exclusive salesperson with its customers, and he reported directly to Mr. Conforti. There is no evidence that Foresta had any hiring authority or that he was engaged in any management and administrative activities including financial or business planning. He was not a director, officer or owner of Optilinx.

[20] In 2009, Mr. Foresta decided to leave Optilinx to start his own business, but he was persuaded to stay with the inducement of having his salary doubled. Optilinx described Mr. Foresta as its "key employee".

[21] It is a disputed fact but for the purposes of this motion, I accept that in the fall of 2013, again in the spring of 2014, and yet again in the summer of 2014, Mr. Foresta indicated to other employees in confidence that he was again planning to leave and to start his own business that would complete with Optilinx. He indicated to these other employees that they would be welcome to join him in the new business and that they should seriously consider their future because his departure would imperil the business success of Optilinx.

[22] In June 2014, Mr. Foresta incorporated Fiberco Solutions Inc. and he obtained financing in the amount of $300,000 for material, equipment and a truck.

[23] At the end of August 2014, Mr. Foresta gave two weeks' notice of his intention to quit. Shortly thereafter, Mr. Cannon also quit, and he was hired by Fiberco. Subsequently, three other Optilinx employees quit to join Fiberco.

[24] Before his departure, Mr. Foresta returned all of Optilinx's confidential information in his possession and he deleted any confidential information from his personal cellular phone.

[25] After his departure, Mr. Foresta carried on his trade as a fibre optic cable installer through Fiberco, which carries on the business of installing fiber optic cables as a subcontractor for other contractors including NX Utilities, which is a multinational company with pre-existing relationships with Optilinx's customers. NX carries on its own sales activities, and Fiberco completes work on behalf of NX.

[26] It was Mr. Foresta's testimony that he and Fiberco have never directly solicited Optilinx's customers. Optilinx has no proof to the contrary.

[27] It is a disputed fact as to how it came about, but after Mr. Foresta's departure from Optilinx to establish Fiberco, Fiberco was hired by NX Utilities as a subcontractor to provide optical cable services for Cogeco. Mr. Foresta's testimony was that he received a cold call inviting his new company to be a subcontractor.

[28] For the purposes of this motion for an interlocutory injunction, I accept that Mr. Foresta has knowledge of confidential information about Optilinx's pricing and customers. There is no evidence, however, that his knowledge is other than what he learned as an employee of Optilinx. There is no evidence that he made copies of documents or departed with any business records of Optilinx.

[29] Mr. Conforti testified that Optilinx's revenues had decreased by 60 per cent since Messrs. Foresta's and Cannon's departure. Under cross-examination, however, it emerged that this was an estimate based on Optilinx's calendar of booked business and did not refer to Optilinx's overall revenue. There is no meaningful evidence substantiating Mr. Conforti's testimony and there is nothing to tie any decline in revenues as being caused by Mr. Foresta's departure.

[30] As noted above, Optilinx's case against Mr. Foresta is that he was no ordinary employee but rather was a key employee who had fiduciary duties toward his employer. Optilinx relies on the law as articulated by the Manitoba Court of Appeal in W.J. Christie & Co. v. Greer, 1981 2733 (MB CA), [1981] M.J. No. 77, 9 Man. R. (2d) 269 (C.A.), at p. 275 Man. R., where Justice Huband stated:

There is nothing to prevent an ordinary employee from terminating employment, and normally that employee is free to compete with his former employer. The right to compete freely may be constrained by contract. It would be improper too, for an employee to purloin trade secrets or confidential information, including customer lists. But it is different for a director/officer/key management person who occupies a fiduciary position. Upon his resignation and departure, that person is entitled to accept business from former clients, but direct solicitation of that business is not permissible. Having accepted a position of trust, the individual is not entitled to allow his own self-interest to collide and conflict with fiduciary responsibilities. The direct solicitation of former clients traverses the boundary of acceptable conduct.

[31] I accept Justice Huband's statement as a correct statement of the law as it would apply in Ontario. See Planit Search Inc. v. Mann, supra; Polar Wireless Corp. v. Roberts, [2012] O.J. No. 5465, 2012 ONSC 6482 (S.C.J.); Aquafor Beech Ltd. v. Whyte (2010), 102 O.R. (3d) 139, [2010] O.J. No. 2011, 2010 ONSC 2733 (S.C.J.); Boehmer Box L.P. v. Ellis Packaging Ltd., [2007] O.J. No. 1694, [2007] CLLC Â210-025 (S.C.J.); KJA Consultants Inc. v. Soberman, 2003 13546 (ON SC), [2003] O.J. No. 3175, [2003] O.T.C. 739 (S.C.J.), affd 2004 36050 (ON CA), [2004] O.J. No. 4560, 192 O.A.C. 116 (C.A.); Jordan Inc. v. Jordan Engineering Inc., [2004] O.J. No. 3260, [2004] O.T.C. 687 and [2005] O.J. No. 4110 (S.C.J.); Sure-Grip Fasteners Ltd. v. Allgrade Bolt & Chain Inc., 1993 17526 (ON SC), [1993] O.J. No. 193, 45 C.C.E.L. 276 (Gen. Div.); Edgar T. Alberts Ltd. v. Mountjoy (1977), 1977 1026 (ON SC), 16 O.R. (2d) 682, [1977] O.J. No. 2334 (H.C.J.); Canadian Aero Service Ltd. v. O'Malley, 1973 23 (SCC), [1974] S.C.R. 592, [1973] S.C.J. No. 97, 40 D.L.R. (3d) 371.

[32] Applying that law, based on the evidence presented on this motion, Optilinx has not shown a strong prima facie case that Mr. Foresta is other than an ordinary employee free to compete with his former employee.

[33] Mr. Foresta may have been a very important employee and a very productive employee, and he may have been the lynchpin to Optilinx's success, but that does not mean that he was entrusted with or that he assumed knowingly or otherwise the duties of a fiduciary with the attendant duties of loyalty and unselfishness.

[34] Assuming that Mr. Foresta did have fiduciary responsibilities, there is not a strong prima facie case that he breached his fiduciary duty not to actively solicit business from his former employer's customers. In the case at bar, there is not a strong prima facie case that Mr. Foresta solicited Cogeco or Allstream. As Justice Huband notes, even a fiduciary is entitled to accept work from former clients, and, in the case at bar, there does not appear to have been any direct solicitation of former clients.

[35] I conclude that Optilinx has not satisfied the first branch of the RJR-MacDonald Inc. v. Canada (Attorney General) test for an interlocutory injunction.

[36] I also conclude that it has not satisfied the second and third branches of the test.

[37] There is little more than Mr. Conforti's belief that Optilinx has suffered irreparable harm because of Mr. Foresta's departure. There is no evidence of anything other than an imagined loss of business attributable to Mr. Foresta's departure. Such evidence as there was indicated that Optilinx's customers always spread their work around and that other Optilinx employees, including those on the construction side of its business had contacts and established relationships with Optilinx's customers. Mr. Conforti's own evidence was that the business was beginning to rebound and to successfully compete for business.

[38] There was no hard financial evidence of any temporary or any permanent loss of market share, reputation or goodwill.

[39] The narrowness of the scope of the injunction request, which was limited to Cogeco and Allstream's business, also casts doubt that an injunction is even necessary to prevent irreparable harm because it diminishes the likelihood that damages would be an incalculable or an inadequate remedy. There was nothing to suggest that Optilinx could not replace Mr. Foresta and successfully compete for Cogeco's and Allstream's business.

[40] Particularly given the weakness of Optilinx's case for a breach of fiduciary duty, the balance of convenience favours not granting the injunction. It appears that Mr. Foresta would be harmed more by the granting of the injunction than Optilinx would be harmed by the refusal to grant the injunction. As a subcontractor in the fibre optic business, Fiberco is likely to lose more than just Cogeco's and Allstream's indirect business even if enjoined in the proposed limited way because contractors may be disinclined to subcontract with a supplier subject to a court order about what business it can lawfully accept. And Fiberco's losses as a start-up business may genuinely be difficult to assess and the undertaking as to damages may be cold comfort in these circumstances.

[41] For the above reasons, Optilinx's motion is dismissed.

[42] If the parties cannot agree about the matter of costs, they may make submissions in writing, beginning with the defendants' submissions within 20 days from the release of these reasons for decision followed by Optilinx's submissions within a further 20 days.

Motion dismissed.

End of Document