Court File and Parties

Court File No.: 16-67194 Date: 2016/06/01 Ontario Superior Court of Justice

Between: ACCREDITATION CANADA INTERNATIONAL and ACCREDITATION CANADA, Plaintiffs – and – JOSÉ LUIS CABEZAS GUERRA aka LUIS CABEZAS c.o.b. as ACCREDITATION COUNCIL CANADA aka ACCREDITATION COUNCIL CANADA INTERNATION and EFFICIENCY ON HEALTH SERVICES CANADA INC. and BIEU (MARTY) VAN HUYNH and JANE DOE and JOHN DOE, Defendants

Counsel: Sarah Willis, Todd J. Burke and Zachary DeLong, for the Plaintiffs Sean P. Bawden, for the Defendant José Luis Cabezas Guerra c.o.b. as Accreditation Council of Canada aka Accreditation Council Canada International Ken J. Birchall, for the Defendants Efficiency on Health Services Canada Inc. and Bieu (Marty) Van Huynh

Heard: March 17, 2016

Before: Patrick Smith J.

Reasons for Decision

Overview

[1] This is a motion brought by the Plaintiffs for an order extending and varying the Order of the Honourable Justice James dated January 20, 2016, as extended by the Order of the Honourable Justice Hackland on February 1, 2016, which granted an interlocutory injunction to the Plaintiffs enjoining the Defendants from, inter alia, soliciting current or prospective clients of the Plaintiffs.

[2] There are three Defendants – Jose Luis Cabezas Guerra, Bieu (Marty) Van Huynh and Efficiency on Health Services Canada Inc. (“EHSC”). Only the Defendant Cabezas filed material and made oral submissions on the motion.

[3] For several years the Plaintiffs, Accreditation Canada (“AC”) and Accreditation Canada International (“ACI”), have developed international reputations for their not-for-profit, Canadian, health care accreditation services.

[4] In December of 2015, following the termination with notice of the Defendant, Jose Luis Cabezas Guerra, the Plaintiffs allege that they learned that Mr. Cabezas and another former employee, Bieu (Marty) Van Huynh, had been directly competing with AC and ACI, and had been providing accreditation services under a number of business trade names similar to AC and ACI including: Accreditation Council Canada (“ACC”), Accreditation Health Care Council, Accreditation Council Canada International, Canada Accreditation, Canadian International Accreditation, Canadian Accreditation and Canadian Accreditation Council International.

[5] The Plaintiffs state that, payments for services, in at least some cases, were directed to the defendant corporation, EHSC, of which Mr. Huyhn is the sole director.

[6] The Plaintiffs claim that these activities began while Mr. Cabezas was still employed in a manager level role with the Plaintiff, ACI.

[7] It is the position of the Plaintiffs that Mr. Cabezas and Mr. Huynh improperly used confidential information obtained while employed with the Plaintiffs. Specifically, the Plaintiffs allege that both Defendants began approaching their clients and prospective clients and used misleadingly-named businesses in order to direct business away from them.

[8] The Plaintiffs allege that in order to obtain a further competitive advantage, Mr. Cabezas deleted numerous accounts pertaining to current and prospective clients from the Plaintiffs’ Customer Relationship Management system (“CRM”) while still an employee of ACI.

[9] Once having made contact with the Plaintiffs’ clients and potential clients, the Defendants allegedly used the Plaintiffs’ confidential and proprietary information to enter into the accreditation services market in competition with them, even falsely holding themselves out as organizations affiliated with or established by the Plaintiffs.

[10] The Plaintiffs submit that Mr. Cabezas was not permitted to solicit clients on behalf of ACC while an employee of ACI or afterwards, as per his employment agreement, the associated confidentiality agreement, and/or as a fiduciary.

[11] The Plaintiffs also submit that ACC is not a separate corporate entity and that, absent proof of ACC’s incorporation, any interlocutory injunction resulting from this motion is binding on any one purporting to act for ACC, or purporting to act on behalf of any other trade name used by Mr. Cabezas.

[12] Mr. Cabezas opposes the request for an order enjoining him from soliciting the current and prospective clients of the Plaintiffs for the purposes of offering services similar to those provided by the Plaintiffs. He does not oppose the orders sought in the following paragraphs of the Second Amended Notice of Motion, dated February 18, 2016 namely: (a)(i); (a)(ii)(1); (a)(ii)(3); (a)(ii)(4) and (a)(ii)(5) requiring him to preserve records and data; to refrain from accessing, possessing, and disclosing proprietary or confidential information of AC or ACI; to refrain from holding himself out as, or representing himself as, being affiliated with AC or ACI; to refrain from indicating that his activities are associated with, approved by, or endorsed by AC or ACI; and to refrain from using the trademarked material of AC or ACI or any derivative or confusing trade name.

[13] Mr. Cabezas takes the position that he was permitted to solicit clients on behalf of ACC because the clients he targeted were not prospective clients of his employer, ACI.

[14] Further, Mr. Cabezas asserts that the interlocutory injunction the plaintiffs seek on this motion is not binding against ACC. Essential to Mr. Cabezas’ position is his assertion that ACC is not merely a name under which he was carrying on business, but is an incorporated and distinct legal entity.

[15] It is Mr. Cabezas’ position that an injunction should not be awarded for the following three reasons:

1. The contractual provision on which the Plaintiffs seek to rely is of no force or effect because it is ambiguous as to both scope and duration;
2. He was never a fiduciary employee of the Plaintiffs; and
3. The Plaintiffs are not-for-profit charitable organizations; the services that they provide and seek to enjoin him from providing are charitable services and such an order would place an undue burden on the health and welfare of the public for the sake of the Plaintiffs’ commercial gain.

The Facts

[16] The Plaintiffs, Accreditation Canada (“AC”) and Accreditation Canada International (“ACI”), are not-for-profit corporations under the Canada Not-for-Profit Corporations Act, S.C. 2009, c. 23. AC was founded in 1958 to provide health care accreditation services in Canada. ACI was established in 2010 to provide Canadian health care system accreditation in Europe, Asia, the Middle East, South America, and the Caribbean. At this time, AC employs approximately 125 permanent employees, while ACI employs approximately 25.

[17] Accreditation is an improvement methodology designed to improve the quality of patient safety in health care organizations. While accreditation standards vary by country, there are certain commonalities and accepted best practices. AC and ACI, along with a number of other Canadian and foreign organizations, work with the International Society for Quality in Health Care in providing their accreditation services.

[18] The Defendant, Bieu (Marty) Van Huynh began working with AC as a research analyst in 2004 and resigned in 2013 after which time he worked for both AC and ACI on a consultancy basis until the end of November 2015.

[19] Mr. Huynh’s employment was governed by both his offer of employment, and a confidentiality, intellectual property, and non-solicitation agreement he signed upon joining AC.

[20] While employed with AC, Mr. Huynh’s primary responsibilities included conducting research and evaluating, analyzing, and interpreting complex data. Mr. Huynh also performed services for ACI from time to time.

[21] By virtue of Mr. Huynh’s work, he had access to the confidential and proprietary information of both AC and ACI, including the Qmentum program methodologies and data, accreditation methodologies, confidential client data such as survey schedules and results, and marketing strategies and materials.

[22] After Mr. Huynh resigned from AC in 2013, he continued to work as a consultant with the Program Development team at AC in 2014 and then with ACI until as late as the end of November 2015. As a consultant, Mr. Huynh continued to have access to the confidential and proprietary information of both AC and ACI; however, access was typically granted on a program-specific basis.

[23] Mr. Huynh incorporated Efficiency on Health Services Canada Inc. on July 20, 2015 and is the sole director of that company.

[24] The Defendant, Jose Luis Cabezas Guerra was employed by AC from 2010 to 2011 and by ACI from 2011 to 2015. The Defendant was originally hired by AC as Permanent Full-time International Accounts Manager. After the creation of ACI, he transferred to that organization, where he held four different positions between 2011 and 2015. The highest position he held was Regional Manager of the Americas and Europe. ACI dismissed Mr. Cabezas on December 3, 2015 on a without cause basis. ACI alleges dismissal was based upon communication and performance issues.

[25] In his role as Regional Manager, Mr. Cabezas was responsible for seeking out, developing, and monitoring the implementation of new opportunities, proposals, and service plans in his region. While Regional Manager, he reported to either the Director of Business Development or to the CEO of ACI. The full extent of his autonomy is debated. However, it is clear that he was responsible for reaching out to potential clients and negotiating service arrangements.

[26] Though originally his position included responsibility for markets in a large number of countries, by the end of his employment, Mr. Cabezas had been instructed to narrow his focus to three countries: Ecuador, Colombia, and Peru. Opportunities in Mexico, and the other countries Mr. Cabezas had been responsible for, were reassigned to other ACI employees.

[27] By virtue of his position, the Plaintiffs state that Mr. Cabezas had access to a substantial amount of specific confidential and proprietary information, including, but not limited to:

• the Plaintiffs’ full client management database, which contains information about current clients and prospective clients and client accreditation renewal dates;
• accreditation methodologies;
• company strategies including enterprise risk plans which identify and address organizational vulnerabilities;
• the names, addresses, and other particulars of contractors and surveyors; and
• marketing strategies and materials.

[28] In or around 2015 ACI became concerned about the work performance of Mr. Cabezas and began monitoring his work email and discovered that he had been sending work-related emails to his personal Hotmail account. The Plaintiffs maintain that, despite being warned to cease this practice, Mr. Cabezas continued to use his personal email account throughout the Fall of 2015.

[29] In August 2015 ACI assigned Mr. Cabezas to an initiative in Ecuador and instructed him that thereafter he was to limit his business development activities strictly to Ecuador, Columbia and Peru. Allegedly, Mr. Cabezas did not follow his directive and continued to engage in business activities in other countries, specifically in Mexico.

[30] On December 3, 2015, ACI dismissed Mr. Cabezas on a without cause basis.

[31] After Mr. Cabezas was dismissed from ACI, the Plaintiffs allege that they discovered that he had been working with the other Defendants to engage in a scheme of deception whereby he used confidential and proprietary information of the Plaintiffs to mislead the Plaintiffs, as well as members of the healthcare community in an attempt to earn a profit.

[32] In particular the Plaintiffs maintain that:

• Mr. Cabezas had established a business or represented to others that he had established a business, Accreditation Council Canada, which he had sometimes referred to as Accreditation Council Canada International, Accreditation Health Care Council, Canada Accreditation, Canadian International Accreditation, Canadian Accreditation, Canadian Accreditation Council, and Canadian Accreditation Council International;
• Mr. Cabezas was working with Mr. Huynh through both ACC and EHSC to solicit current and prospective clients of ACI;
• Mr. Cabezas and/or Mr. Huynh appropriated confidential and proprietary information of AC and ACI and have been using it for their benefit; and
• Mr. Cabezas contracted with numerous hospitals for accreditation services through his various businesses. One of these hospitals was a current client of ACI at the time and the others are prospective clients of ACI. At least one of these hospitals was led to believe that Mr. Cabezas was working with AC and/or ACI in providing this accreditation.

[33] Mr. Cabezas’ employment with AC and ACI was governed by his employment agreements, as well as amendments thereto, a Confidentiality, Intellectual Property, and Non-Solicitation Agreement, and a Code of Ethics. During the course of his employment, Mr. Cabezas signed no fewer than three such agreements. The material term of those agreements, for the purposes of this motion, is as follows:

During the course of his or her employment with ACCREDITATION CANADA INTERNATIONAL and for a period of one (1) year from the date of the termination of his/her employment, however caused, the employee will not for any reason directly or indirectly, individually or in partnership with any one or more persons, firms, associations, syndicates or corporations as principle, agent, shareholder of any company or in any manner whatsoever solicit ACCREDITATION CANADA INTERNATIONAL’s clients or persons whom ACCREDITATION CANADA INTERNATIONAL was soliciting as customers at the time the Employee’s employment was terminated.

[34] In defence of his actions Mr. Cabezas claims to have undertaken these activities on a volunteer basis and to have reached out only to those organizations which did not qualify for, or could not afford, the services provided by ACI. Mr. Cabezas’ evidence is that if he learned that a hospital could not afford ACI’s accreditation services, (and therefore did not “qualify” as either a “prospect” or “lead” for ACI) he would then mention and promote other accreditation bodies, including but not limited to ACC, to such organizations.

[35] Mr. Cabezas therefore admits to facilitating communications between such organizations that did not “qualify” for the receipt of ACI’s charitable programming and ACC. He also acknowledges that he provided charitable services to other charitable organizations, including ACC both while he was employed by the Plaintiff, ACI, and subsequent to the termination of his employment, and that ACI was unaware of his activities with respect to ACC while employed by ACI.

[36] Mr. Cabezas expressly denies receiving any remuneration, either directly or indirectly, for his activities related to ACC. He maintains that he has donated his personal time, his vacation time, and his own money to help hospitals outside of his employment with ACI.

Statement of Issues

[37] The sole issue on this motion is whether the Plaintiffs are entitled to an interlocutory injunction enjoining the Defendants from soliciting current and prospective clients of the Plaintiffs.

The Law and the Parties’ Positions

[38] In R.J.R. Macdonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, at pp. 347-349, the Supreme Court set out the following three part test for obtaining an injunction:

1. Is there a serious question to be tried, or, in some cases, has the moving party shown it has a strong prima facie case?
2. Will the moving party suffer irreparable harm if an injunction is refused? and
3. Does the balance of convenience favour granting an injunction?

[39] The three branches of the test are to be considered as a whole, with the strengths found in one aspect compensating for weaknesses in another (See: DCR Strategies Inc. v. Vector Card Services, 2011 ONSC 4241, at para 20).

First Branch – Serious Question

[40] Courts have been divided on whether the “serious question” or “strong prima facie case” test should apply when considering restrictive covenants in the employment context. Most recently, Ontario courts have adopted the stricter “strong prima facie case” test (See: Ontario Graphite Ltd. v. Janik, 2016 ONSC 716, at para 50; Lockwood Fire Protection Ltd. v. Caddick, 2015 ONSC 6320, at paras 34-37).

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

Position of the Plaintiffs

[42] For the purposes of this interlocutory injunction, the Plaintiffs rely on the torts of breach of contract, breach of fiduciary duty, breach of the duty of loyalty, breach of confidence, intentional interference with economic relations and passing off. This decision will not discuss the torts of intentional interference with economic relations or passing off as these do not relate to the sole contested issue on the motion.

A) Breach of Contract

[43] The Plaintiffs submit that Mr. Cabezas is in breach of his confidentiality, non-compete, and non-solicitation agreement. In particular:

• Mr. Cabezas has appropriated confidential and proprietary information of the Plaintiffs and has made unauthorized use of it outside the course of his employment with the Plaintiffs, and for the purpose of soliciting current and prospective clients of the Plaintiffs;
• Mr. Cabezas destroyed confidential and proprietary information belonging to the Plaintiffs in order to gain a business advantage over the Plaintiffs; and
• Mr. Cabezas has actively solicited current and prospective clients of AC and ACI during the course of his employment with ACI and after his dismissal.

[44] The Plaintiffs contend that Mr. Cabezas continued to solicit the Plaintiffs’ current and prospective clients through the defendant corporations, and through the various trade names that he created. Further, the Plaintiffs maintain that Mr. Cabezas has employed and engaged in these solicitation activities despite being specifically enjoined from doing so by his Confidentiality, Intellectual Property and Non-Solicitation Agreement.

B) Breach of Fiduciary Duty and Duty of Loyalty

[45] The Plaintiffs assert that Mr. Cabezas owed a fiduciary duty to ACI, and that he breached this duty by usurping corporate opportunities, actively soliciting current and prospective clients, and clandestinely competing with the Plaintiffs while still an employee.

[46] Mr. Cabezas was a key employee and the Plaintiffs assert that they were vulnerable to him, thus giving rise to a fiduciary obligation (See: Guzzo v. Randazzo, 2015 ONSC 6936, at paras 107-116).

[47] The Plaintiffs allege that Mr. Cabezas possessed detailed confidential information regarding ACI’s clients and practices, he was the primary point of contact for many clients, and for a period, he had exclusive responsibility for client outreach and growth in Mexico and South America with minimal oversight. He controlled what information was input for his region and was a key player in market development.

[48] The Plaintiffs assert that Mr. Cabezas’ actions of soliciting and diverting ACI clients breached the fiduciary duty and duty of loyalty he owed to his employer.

C) Breach of Confidence

[49] Relying on International Corona v. Lac Minerals, [1989] 2 S.C.R. 574, at pp. 608 and 614, the Plaintiffs submit that the test for an actionable breach of confidence requires proof:

a) that the information conveyed was confidential; b) that it was communicated in confidence; and c) that it was misused by the party to whom it was communicated.

[50] It is the Plaintiffs’ position that all three of above elements are made out in this case: (1) the Defendant had access to and had obtained confidential and proprietary information belonging to the Plaintiffs; (2) this information was communicated to him in confidence in his capacity as Regional Manager of the Americas and Europe; and (3) the Defendant capitalized on that information in order to establish or promote his competing accreditation services, taking advantage of the very same business relationships Mr. Cabezas had cultivated while an employee of ACI.

Position of the Defendant

[51] The Defendant submits that the Plaintiffs cannot meet the strong prima facie case threshold on any of the causes of action that it raises.

A) Breach of Contract

[52] The Defendant’s position is that there is no strong prima facie case that the contractual restrictive covenant was breached. Indeed, the Defendant claims, there is a strong prima facie case that the restrictive covenant was void ab initio.

[53] The Defendant claims that the restrictive covenant in question is demonstrably ambiguous, and does not set out the activities he is prohibited from engaging in, or who he is prohibited from soliciting.

[54] In the alternative, the Defendant asks this court to find the covenant unenforceable because (1) he was wrongfully dismissed, and (2) the prevention of solicitation would do disservice to the public by denying them charitable services.

B) Breach of Fiduciary Duty and Duty of Loyalty

[55] The Defendant denies that he was ever a fiduciary employee of the Plaintiffs. He was never an officer or director of either company, at all material times he reported to a supervisor, he had no responsibility for business strategy planning, and he operated in a very limited geographic region. He concedes that he may have been a valued employee, and possibly a “key” employee, but that he never rose to the level of a fiduciary employee.

C) Breach of Confidence

[56] The Defendant submits that the Plaintiffs have no confidential information. ACI publishes a list of accredited institutions on its webpage and prospective clients are free to discuss any dealings even before a contract is finalized. The prospective client list is derived from a report from the Conference Board that demonstrates where Canadians actually travel. While not in the public domain, this report, and the resulting list of prospective clients, can be purchased from the Conference Board by anyone who wants it.

[57] Further, the accreditation standards and methodologies used by the Plaintiffs are not unique and are very similar to those used by other organizations in the marketplace.

[58] Finally, the Defendant claims that he only markets to organizations abandoned by ACI or who do not qualify for ACI’s services, and that there is no property interest in an abandoned client or unqualified client.

[59] In the alternative, the Defendant argues that the Plaintiffs have provided no proof of misuse of any of their allegedly confidential information.

Second Branch – Irreparable Harm

[60] The test for irreparable harm “consists in deciding whether the litigant who seeks the interlocutory injunction would, unless the injunction is granted, suffer irreparable harm” (See: R.J.R. MacDonald, at pp. 340-341). Irreparable harm is harm which either cannot be quantified in monetary term or which cannot be cured and can include “permanent market loss or irrevocable damage to its business reputations” (R.J.R. MacDonald, at p. 341).

[61] In Ontario, courts have held that “evidence of irreparable harm must be clear and not speculative” (See: Kanda Tsushin Kogyo Co. v. Coveley (1997), 96 O.A.C. 324 (Div. Ct.), at para 14; Optilinxs Systems Inc. v. Fiberco Solutions Inc., 2014 ONSC 6944, at para 11). As Justice Glustein writes in Catalyst Capital Group Inc. v. Moyse, 2015 ONSC 4388, at para 34: “It is not enough to show that a moving party is ‘likely’ to suffer irreparable harm; one must establish that he or she ‘would suffer’ irreparable harm.”

Position of the Plaintiffs

[62] The Plaintiffs claim that the Defendants’ actions caused them irreparable harm, namely, permanent market loss and irrevocable damage to their reputation.

[63] The Plaintiffs argue that the Defendants have used confidential information to solicit AC and ACI’s clients, and the resulting damage to market share will be impossible to quantify. Further, they argue that the damage that has already been done to their reputation and goodwill is irreparable harm which will worsen if an injunction is not granted. In particular they point to the Defendants’ purported affiliation with the Plaintiffs, the use of confusing trade names and the active soliciting of the Plaintiffs’ current and prospective clients.

Position of the Defendant

[64] The Defendant asserts that the Plaintiffs have suffered no harm, or, in the alternative, that any harm suffered could be compensated for by a monetary award. In either case, the Plaintiffs have suffered no irreparable harm.

[65] The Defendant argues that he promotes and provides charitable services to organizations that have expressly rejected the charitable programming of the Plaintiffs as being too expensive. These organizations have been “abandoned” by ACI and would not become ACI customers regardless of the Defendant’s actions.

[66] Further, any lost revenues occasioned by the Defendant’s actions could be compensated for by a monetary award. The harm is not irreparable.

Third Branch – Balance of Convenience

[67] Determining the balance of convenience requires “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” (R.J.R. MacDonald, at p. 342). This is largely a factual determination.

Position of the Plaintiffs

[68] The Plaintiffs’ position is that the balance of convenience favours the employer with an established business over the departing employee who wishes to use confidential information for his own profit. If no injunction is granted, the integrity of the Plaintiffs’ organizations will be in jeopardy.

[69] The Plaintiffs note that the injunction will not prevent the Defendants from running a business, so long as they do so under a trade name that is clearly distinct and in a manner that does not involve soliciting the Plaintiffs’ clients or using their confidential information.

Position of the Defendant

[70] The Defendant argues that the effect of an injunction would be to prevent him from advancing the interests of charity. He solicits only those clients deemed “abandoned” or “not qualified” by ACI and offers them better service at a lower price. The balance of convenience favours providing charitable services as widely as possible.

Discussion – The Credibility of the Parties

[71] The Plaintiffs filed an extensive brief describing the activities of the Defendants.

[72] The brief cites several examples of how the Defendants solicited current and prospective clients of AC and ACI. One example, Galenia Hospital, serves to illustrate how the Defendants operated.

[73] Galenia Hospital (“Galenia”) was a client of ACI at the time Mr. Cabezas was employed with ACI and was accredited by ACI from 2012 through to October 2015. Mr. Cabezas was initially responsible for coordinating with and following up on Galenia’s accreditation needs.

[74] In the fall of 2015, Mr. Cabezas informed Sebastien Audette, the CEO of ACI, that the hospital was being sold and that Galenia had decided to postpone its decision to move forward with accreditation. This statement was completely untrue. Without the Plaintiffs’ knowledge, Mr. Cabezas and Mr. Huynh had, through their various businesses, engaged Galenia in an accreditation process with an entity that they had created.

[75] During this time period Mr. Cabezas repeatedly deceived his supervisors, colleagues, and Galenia as to his whereabouts and intentions.

[76] In speaking with representatives of Galenia in December 2015, the Plaintiffs learned that Mr. Cabezas had led Galenia to believe that AC had established the company ACC, that Mr. Cabezas was acting on behalf of AC in providing accreditation services, that Galenia’s relationship was still with AC, albeit under a different name, and that the individuals involved in the accreditation process, as well as the company’s expertise and resources, had not changed.

[77] The Plaintiffs also learned that during the fall of 2015, Mr. Cabezas had been traveling to meet with representatives of Galenia and to assist with the survey process. Mr. Cabezas was absent from work and told his supervisors and colleagues that he or members of his family were ill. For example, between October 26 and October 28, 2015, Mr. Cabezas told his direct supervisors that he could not come into the office because he was assisting his sick, pregnant wife, when in fact he was in Cancun meeting with individuals at Galenia.

[78] In addition, Mr. Cabezas personally arranged for Isabel Velasquez, a surveyor he used as an employee of ACI, to perform the evaluation of Galenia Hospital, without specifying that this work was not for ACI. The emails between Ms. Velasquez and Mr. Cabezas verify this and are marked as Exhibit No. 18 to the cross-examination of Mr. Cabezas.

[79] Another example of Mr. Cabezas’ deception occurred on November 16, 2015. Mr. Cabezas emailed his supervisor, attaching a purported note from a doctor in Ecuador stating that he was seriously ill and had to stay in Ecuador. Meanwhile, he was in Cancun.

[80] Evidence shows that Mr. Cabezas invoiced Galenia a total of $35,000 for accreditation services. The invoices were issued by an entity called “Canadian International Accreditation”. Mr. Cabezas requested that payment be made to EHSC and as of December 15, 2015, Galenia had paid EHSC $28,000 towards these services.

[81] Galenia provided ACI with a copy of the cheque it issued to EHSC – it can be found at Exhibit Z to the Affidavit of Sebastien Audette, sworn January 19, 2016.

[82] Mr. Cabezas attempted to paint a very different picture of what he was doing and why he was going it.

[83] In paragraphs 29, 30 and 31 of his factum, Mr. Cabezas admits to facilitating communications between organizations that did not “qualify” for the receipt of ACI’s charitable programming and acknowledges that he provided charitable services to other charitable organizations, including ACC, while he was employed by the Plaintiffs, ACI, and subsequent to the termination of his employment, and that ACI was unaware of his activities with respect to ACC while employed by ACI.

[84] Further, Mr. Cabezas states that he did not receive any remuneration for his activities related to ACC, and that he donated his personal time and money to help hospitals outside of this employment with ACI

[85] At paragraph 29 of his factum he states: “… if he learned that a hospital could not afford ACI’s accreditation services, (and therefore did not “qualify” as either a “prospect” or “lead” for Accreditation Canada International) he would then mention and promote other accreditation bodies, including but not limited to Accreditation Council Canada (“ACC”), to such organizations”.

[86] Based upon the evidence before me it is difficult to afford any credibility to the position of the Defendants.

Findings

Serious Question

[87] I find that the Plaintiffs have established a strong prima facie case and that there is a substantial likelihood of success justifying the granting of injunctive relief.

[88] The evidence strongly demonstrates that Mr. Cabezas knowingly misappropriated confidential and proprietary information to solicit current and prospective clients of AC and ACI thereby breaching his Confidentiality, Non-Compete and Non-Solicitation Agreements.

[89] Mr. Cabezas was a senior employee and the primary contact point for the Plaintiffs’ clients in Mexico and South America. By using confidential information that he was able to obtain as a result of his position, he breached his employment contract and his duty of confidence owed to his employer by actively engaging in activities designed to compete with his employer for his own advantage.

Irreparable Harm

[90] I find that the Plaintiffs have satisfied the test of demonstrating irreparable harm by showing that the Defendants have used confidential information to surreptitiously solicit AC and ACI’s clients such that it is impossible to now quantify the extent of the damage done in the market place.

[91] The awareness by several existing and potential clients of AC and ACI that former high level employees of the Plaintiffs were soliciting their business using a corporate identity crafted to appear to be AC or ACI cannot but harm the reputation of the Plaintiffs. If not restrained I have no doubt that the Defendants will continue this practice, thereby furthering the damage to the good will and reputation of the Plaintiffs. It would be difficult if not impossible to prove the extent of the damage should it be allowed to continue unrestrained until trial.

Balance of Convenience

[92] There is no question that the balance of convenience favours the Plaintiffs – they would undoubtedly suffer the greater harm from the refusal to grant the injunction sought.

[93] AC and ACI are well established and have earned a global reputation of excellence since 1958 and 2010 respectively.

[94] There is credible evidence showing that clients were upset when they discovered that the entity with whom they thought they were dealing was not AC or ACI. I have no doubt that this information would serve to harm the reputation of the Plaintiffs and undermine the confidence of clients and potential clients with whom they wished to conduct business.

Conclusion

[95] An order shall issue granting an interlocutory injunction in favour of the Plaintiffs.

[96] In the event that the parties are unable to agree on the wording of the order they can arrange to speak with me to settle the terms of the order.

[97] Regarding the issue of costs, in the event that the parties are unable to agree on the issue of costs they may file written submissions within 45 days of the date of this order. Submissions should not exceed 5 pages in length.

Patrick Smith J. Released: June 1, 2016