Court File and Parties

CITATION: Downtown Kids Academy Inc. v. Zakrzewski, 2017 ONSC 5045

COURT FILE NO.: CV-17-579906

DATE: 20170825

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Downtown Kids Academy Inc.

AND:

Saida Rachel Zakrzewski

BEFORE: P. J. Monahan J.

COUNSEL: Lorne Sabsay, for the Applicant

Daniel Lublin and Simone Ostrowski, for the Respondent

HEARD: August 23, 2017

ENDORSEMENT

[1] Downtown Kids Academy Inc. (“DTKA”) is a commercial daycare facility providing care to pre-school aged children, located at 905 King Street West in the City of Toronto. It has approximately 50 children in care, 11 employees, and has been in business for 13 years. DTKA applies for an interim injunction restraining Saida Rachel Zakrzewski (“Zakrzewski”), a former employee, from soliciting any of DTKA’s clients or employees.

Facts

[2] Zakrzewski was employed by DTKA from May 22, 2015 until June 30, 2017. Zakrzewski resigned from DTKA to launch her own business, Liberty Kids Play (“LKP”), offering a variety of children’s programming. LKP is located at 125 Western Battery Road, approximately one kilometre away from DTKA.

[3] Zakrzewski was originally hired on a one-year contract to replace another employee who was going on maternity leave. The contract included a ‘non-solicitation’ clause, as follows:

You expressly agree that you will not, either during your employment or for a period of 6 months following termination of your employment for any reason (including resignation) directly or indirectly, by any means, in any capacity, approach, solicit, or contact or attempt to direct away from Downtown Kids Academy Inc. any clients or prospective clients or employees.

[4] Zakrzewski’s employment was extended after the conclusion of the one-year maternity leave, pursuant to employee evaluations undertaken June 1, 2016 and June 1, 2017. DTKA is of the view that the non-solicitation provision was extended as a term of her continuing employment. Zakrzewski takes issue with this position. This aspect of the matter was not fully argued and, for reasons that will become apparent, I do not find it necessary to make a determination on this particular issue in order to resolve this application for an interim injunction.

[5] In June 2017, following discussions between Zakrzewski and the co-owners of DTKA, it was agreed that Zakrzewski would resign effective June 30, 2017 in order to launch LKP. On June 27, 2017, DTKA send an email to all of their clients announcing Zakrzewski’s departure, wishing her success in her new venture, and providing DTKA’s clients with Zakrzewski’s new contact information.

[6] It appears that sometime in July, 2017, Zakrzewski approached Charisse Perca Mendoza (“Mendoza”), a part-time employee of DTKA, and offered her a position with LKP. Mendoza declined the offer and was subsequently offered and accepted full-time employment with DTKA, but informed DTKA of the approach by Zakrzewski.

[7] Shortly thereafter, DTKA learned of the fact that another of their employees, Tamara Smith (“Smith”), had received an offer of employment from Zakrzewski. On July 21, 2017, the co-owners of DTKA sent an email to Zakrzewski which reminded Zakrzewski of the non-solicitation clause and further stated as follows:

You are welcome to attract any supply staff we have used over the years for potential hires however, I do want to remind you that you have signed a contract with a solicitation clause pertaining to clients and employees…So while we will continue to refer clients your way and support your business through the years, we also ask that you respect our business. Please be mindful of your agreement with us and not to solicit our employees.

[8] Zakrzewski did not respond to this email. Subsequently, on July 24, Smith informed DTKA that she was resigning to take up a position with LKP, but indicated that she had not been solicited by Zakrzewski.

[9] Within the next week or so, DTKA learned of one client and one prospective client who had decided to place their children in care with LKP rather than DTKA. DTKA became concerned that Zakrzewski was soliciting DTKA clients, contrary to the terms of the non-solicitation provision.

[10] This prompted counsel for DTKA to write on two occasions to Zakrzewski, instructing her to rescind the offer of employment to Smith and to cease from any further attempts to solicit employees or clients of DTKA. On August 1, 2017, counsel for DTKA wrote to Zakrzewski indicating that DTKA would be seeking an interim injunction preventing LKP from hiring Smith, or other DTKA employees, pending a hearing to determine whether Zakrzewski had breached her non-solicitation obligations. The hearing on the latter issue has been scheduled for December 2017.

[11] In her responding materials, Zakrzewski filed an affidavit, along with affidavits from Smith and Chona Rosello-Barry, the DTKA client who is placing her child with LKP rather than DTKA and who had come to the attention of the co-owners of DTKA.

[12] Zakrzewski does not deny making an offer to Mendoza. However, she denies having approached Smith, claiming that Smith had indicated on a number of occasions that she was unhappy with her employment at DTKA and, further, that Smith had sought employment from Zakrzewski, not the other way around.

[13] Smith’s affidavit supports this version of events, indicating that she had been increasingly unhappy with her employment at DTKA, had decided to leave, and had approached Zakrzewski for a position. Smith commenced employment with LKP on August 14, 2017 and indicates that she has no desire to return to DTKA.

[14] Rosello-Barry indicated that her daughter had been in care at DTKA but was too old to continue. She indicates that she decided to place her two children in care at LKP not because of any solicitation from Zakrzewski but because she wishes to keep her two children together at the same daycare for convenience.

Analysis

[15] The test for granting an interlocutory injunction is well known. The Supreme Court of Canada in RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311, (“RJR MacDonald”) at p. 344 indicated that the judge must assess:

(i) whether there is a serious question to be tried;

(ii) whether the moving party would suffer irreparable harm if the injunction were refused; and

(iii) which party would suffer greater harm from the granting or refusal of the injunction.

[16] With respect to the first issue, I note that, apart from the offer made to Mendoza, there is no direct evidence of Zakrzewski having solicited employees of DTKA. Moreover, in the July 21, 2017 email from DTKA to Zakrzewski referred to above, DTKA appeared to take the position that Zakrzewski’s non-solicitation obligation only applied to full-time as opposed to casual employees. The only full-time employee who is alleged to have been solicited by Zakrzewski is Smith, and both Zakrzewski and Smith deny that the latter was solicited by the former. I note that the non-solicitation clause does not purport on its face to prohibit Zakrzewski from hiring employees of DTKA who wish to leave DTKA’s employ, merely that she not solicit or direct them away from DTKA.

[17] Nevertheless, the assessment of whether there is a “serious issue to be tried” is a low standard and merely requires demonstration that the claim is not frivolous or vexatious. I am satisfied that the applicant has met this aspect of the test in RJR MacDonald.

[18] What is less straightforward is whether the applicant will suffer irreparable harm if the injunction is not granted. DTKA argues that Smith was a particularly vital employee because she worked a “split shift”, involving work in the morning and the afternoon with a gap in the middle of the day. DTKA indicates that, as of August 3, 2017, they had been unable to find a replacement for Smith, and that her loss amounts to irreparable harm.

[19] They further argue that the loss of 2 clients whom they allege were solicited by Zakrzewski represents almost 5% of DTKA’s revenue for 2017-18, which is significant harm to a small business, and which cannot be reversed. Counsel for DTKA argues that this also represents irreparable harm.

[20] Counsel for Zakrzewski tendered evidence responding to these claims of irreparable harm. The Smith affidavit included an August 11, 2017 email from one of the co-owners of DTKA indicating that they had identified a temporary replacement for Smith and were interviewing for a permanent replacement to commence employment September 5, 2017. Zakrzewski’s affidavit also included a job posting for a ‘split shift’ position at DTKA, posted on August 8, 2017.

[21] DTKA did not disclose that it had located a temporary replacement for Smith, nor that it was in the process of identifying a permanent replacement. Nor did DTKA provide any information about the status of the recruitment process, including the number or quality of applicants, and whether a permanent replacement has already been hired, or will likely be found by September 5, 2017. Further, in oral argument, counsel for DTKA indicated that the applicant was no longer seeking to prevent Smith from working at LKP.[^1]

[22] It is well established 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 will not issue: 2158124 Ontario Inc. v. Pitton, 2017 ONSC 411 at paragraph 48.

[23] In my view, the claim that the loss of Smith constitutes irreparable harm has simply not been made out on the record before me. It is not suggested that Smith had specialized expertise or performed specialized work at DTKA. She was described as a vital employee merely by virtue of the fact that she worked a split shift. However DTKA has been able to replace Smith on an interim basis, and there is no direct evidence before me which indicates whether DTKA has or will have any difficulty in replacing her on a full time basis. Moreover, as indicated, during oral argument counsel for DTKA indicated that he was not seeking to prevent Smith from continuing her employment at LKP.

[24] With respect to the claims respecting revenue lost from two clients or prospective clients who have placed their children with LKP, Zakrzewski provided evidence suggesting that there is significant excess demand for child care in the community where DTKA operates. DTKA provided no financial or other information that would permit a meaningful assessment of whether the loss of the two clients in question, even assuming them to have been solicited by Zakrzewski, has resulted in any financial loss to DTKA. In any event, even assuming such loss to have occurred, it would appear that this would be compensable in damages and would not constitute irreparable harm.

[25] In my view, therefore, DTKA has not demonstrated that it has suffered irreparable harm from the loss of Smith or the two clients in question.

[26] As to whether there is a risk of irreparable harm from further solicitation activities by Zakrzewski, there is no indication of any such ongoing activity. Zakrzewski has indicated that she has no intention of soliciting employees or clients of DTKA and, apart from the instances discussed above, DTKA has provided no evidence of any kind to the contrary. I therefore regard it as speculative to suggest that Zakrzewski will solicit employees or clients at DTKA between now and early December, when DTKA’s application with respect to the non-solicitation obligations of Zakrzewski will be heard.

[27] I conclude that DTKA has failed to establish irreparable harm and, accordingly, it is unnecessary for me to consider the third branch of RJR MacDonald, the balance of convenience. DTKA’s application for an interim injunction is dismissed, with costs payable within 30 days. If the parties are unable to settle the quantum of costs, they may make written costs submissions of up to three pages, excluding bills of costs, with 21 days.

P. J. Monahan J.

Date: August 25, 2017

[^1]: The notice of application, in terms, did not seek to prevent Smith from working at LKP. Nevertheless, in the correspondence from DTKA’s counsel to Zakrzewski, it was indicated that DTKA was seeking this relief on an interim basis; moreover, in oral argument, counsel for DTKA indicated that he had originally sought to have the application for interim relief heard prior to August 14, 2017, presumably to prevent Smith from commencing employment with LKP on that date.