Court File and Parties

COURT FILE NO.: CV-18-609393 DATE: 201904 29 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Homestead House Paint Co. Inc. AND: Wendy Jamieson

BEFORE: Nishikawa J.

COUNSEL: Pulat Yunusov, for the Plaintiff Evan Tingley, for the Defendant

HEARD: April 25, 2019

Endorsement

Overview

[1] The Plaintiff, Homestead House Paint Co. Inc. (“Homestead”), and the Defendant, Wendy Jamieson, had an arrangement pursuant to which Ms. Jamieson sold, and later promoted, Homestead’s Fusion paint. Homestead has commenced an action against Ms. Jamieson for breach of contract, breach of confidence, breach of the duty of good faith, intentional interference with economic relations, and defamation.

[2] Homestead brings this motion for an injunction to prevent Ms. Jamieson from, among other things, disclosing confidential information in violation of a non-disclosure agreement. Homestead also seeks an order sealing the court file and holding hearings in the absence of the public to protect its confidential information.

[3] On January 29, 2019, on the consent of the parties, Pollak J. made an interim order prohibiting the Defendant from: (i) divulging any of the Plaintiff’s confidential information, and (ii) publishing or making statements in respect of the Plaintiff, its principals and products, until the final disposition of this motion.

[4] At the motion hearing, just before arguing in reply, Plaintiff’s counsel sought leave to bring a motion to adjourn the hearing for further evidence. Mr. Yunusov was informed that the Defendant had made a further post on her Facebook page detailing the litigation, and potentially violating the terms of the interim order. Mr. Tingley confirmed that Mr. Yunusov advised him of the post during the break, and that Ms. Jamieson has since taken the post down. Given that argument on the motion had largely been completed, and as it did not appear that the recent posting was directly relevant to the issues to be decided on the motion, I declined to adjourn the hearing.

[5] Based on my findings as detailed below, the Plaintiff has not satisfied the test for an interlocutory injunction. The motion for injunctive relief is dismissed. A limited confidentiality order is granted.

Factual Background

[6] The Plaintiff is a Canadian company that manufactures paint. Homestead develops and markets several paint lines including “Fusion Mineral Paint” which is used for do-it-yourself projects, such as painting furniture. Homestead sells Fusion paint through a network of over a thousand independent retailers that are mostly small operators.

[7] The Defendant lives in New Brunswick. Ms. Jamieson has a Facebook page called “Home Inspired” which is “public” and has more than 1,300 followers. On her Facebook page, Ms. Jamieson shares photos and information relating to DIY painting and décor.

[8] In October 2015, Ms. Jamieson applied to become a Fusion paint merchant. On October 9, 2015, the parties entered into a Merchant Agreement, pursuant to which Ms. Jamieson sold Fusion paint from her home and from a stall at a farmer’s market.

[9] In June 2017, Ms. Jamieson approached Homestead’s President, Jennylyn Pringle, about becoming Homestead’s representative to promote Fusion paint to merchants on the East Coast. Ms. Pringle responded that she had been thinking of creating a representative-type role and that she would be happy to discuss this with Ms. Jamieson.

[10] On June 23, 2017, Ms. Jamieson attended a Fusion event in Toronto. Homestead claims that at the event, Ms. Jamieson signed a non-disclosure agreement (the “NDA”). Ms. Jamieson denies signing the NDA. Homestead has produced a template of the NDA that is alleged to have been signed, and a copy of a signature page with Ms. Jamieson’s name signed on it. Ms. Pringle states that she scanned the signature page of the NDA with her cell phone, and then destroyed the original. Homestead also produced an email chain that contains the subject line “Copy of NDA signed” in which Ms. Pringle forwards the signature page to Ms. Jamieson, who responds thanking Ms. Pringle.

[11] The signature page is dated June 23, 2016, which is incorrect. The NDA states that it continues in force “in perpetuity.” It also contains a term requiring the Contractor to use reasonable efforts to keep Homestead’s Confidential Information confidential for five years after the termination of the agreement.

[12] Ms. Jamieson states that she and Ms. Pringle verbally agreed to an arrangement under which she would refer retailers to Fusion for a commission of 15 percent on their first order and 5 percent on subsequent orders.

[13] Over the next few months, Ms. Jamieson inquired when the relationship would be formalized and announced. Ms. Pringle responded with various reasons for the delay. In September 2017, however, Ms. Pringle advised Ms. Jamieson that Homestead set up an email account for her with the address eastcoast@fusionmineralpaint.com. Ms. Pringle’s email concludes stating “Thank you East Cost Rep!” In January 2018, Ms. Jamieson attended the Fusion Merchant Conference and Retreat in Ontario and was provided with a name tag that stated her name and “East Coast Representative.” Notwithstanding this evidence, Homestead’s position is that there was never a formal agreement with Ms. Jamieson, and that she has misrepresented herself “as a representative of Homestead and its Fusion line.”

[14] In the spring of 2018, the parties’ relationship broke down after Homestead planned an event with a merchant in Fredericton. Ms. Jamieson hoped to have been more actively involved in the event and felt “betrayed” when it was mostly planned without her.

[15] At that point, Ms. Pringle told Ms. Jamieson to submit invoices for her time and expenses. Homestead disputed Ms. Jamieson’s invoices, which totalled $11,600.00. Ms. Jamieson commenced a proceeding against Homestead in the New Brunswick Small Claims Court, which was heard on April 23, 2019.

[16] On May 30, 2018, Ms. Jamieson received an email from Homestead’s lawyer, Mike Hook, which stated that “my client terminated its agreement with you by email notice on May 25, 2018. Its obligation to pay commission on new retailers ended along with the agreement.” On cross-examination, Ms. Pringle claimed that she was sick at the time and the email was sent without her knowledge.

[17] Homestead alleges that Ms. Jamieson has disclosed confidential information in violation of the NDA. The alleged confidential information falls under two categories. First, Homestead claims that the fact that Ms. Jamieson approached Homestead about the East Coast representative position, that Homestead considered creating this position, and that Ms. Jamieson was a candidate were all communicated to the Defendant in confidence. Second, Homestead claims that Ms. Jamieson learned the identity of its supplier, which will be referred to in these reasons as X, when she toured Homestead’s warehouse, and that this information is confidential.

[18] Homestead alleges that since the breakdown of the relationship, Ms. Jamieson has engaged in an online campaign divulging this confidential information and attacking its reputation. Specifically, Homestead identifies the following Facebook posts made by the Defendant:

• A Facebook post on May 25, 2018, which stated: “Most of you know I sold my business to my friend Brenda Pugh of Calabria Creations and I am stepping down from being the Fusion Mineral Paint – East Coast Liaison.”
• A September 26, 2018 post stating, in part: “When I was running my business, repping for Fusion Mineral Paint and taking care of a home, trying to stay up to date and present on likeminded accounts took a lot of time.”
• A post dated May 30, 2018, which included an image of X’s products and stated: “[t]hese paints and supplies work on furniture, as well as canvas, and are a great savings to those of us who paint everything in sight!”
• A post dated May 31, 2018, which also included an image of X’s products and stated: “They have paints for furniture!! No VOS’s, Canadian made, water based, and fantastic prices”
• Facebook posts on June 16, 2018 and July 22, 2018 using the hashtags #paintisgoodforthesoul and #paintisbeautiful while promoting X and another manufacturer.
• A public post on July 13, 2018 suggesting that someone is merely labelling products, not a true founder and creator, and is retailing the product for twice the cost. The original post is not included or quoted directly.
• A July 14, 2018 reply to a public Facebook post to a page called “How to Paint Like a Pro” stating: “You will find these paints have no VOC, mineral based, Canadian made paints extremely reasonably priced as well as almost identical, except for labelling, to Fusion (in my opinion). The Fusion brand is exceptional furniture paint and this is equal to it. No matter what paint we use we need to do proper prep and Stephanie Coon and Fiona Debell know their stuff !!”
• A posting made by the Defendant on October 20, 2018 to X’s Facebook page stating: “Congratulations, X. I recently got to purchase a few of your paint lines and was pleasantly impressed. Does X also produce and manufacture Fusion Mineral Paint and the… line as pictured in the above photo?”

[19] Certain of the Defendant’s alleged posts are either quoted or paraphrased in Ms. Pringle’s affidavit and screen shots were not provided. The Plaintiff took the position that the screen shots would not be filed in court until a sealing order was obtained.

[20] Homestead makes other allegations against Ms. Jamieson, including that she cultivated her reputation as a Fusion/Homestead insider to then malign Fusion; that she was using “Fusion hashtags,” for which Homestead has applied for trademarks, to promote its supplier; and that she intended to use her knowledge of its supplier to create her own competing paint line.

Issues

[21] The Plaintiff’s motion raises the following issues:

(i) Has Homestead met the test for an interlocutory injunction? (ii) Is Homestead entitled to an order sealing the court file?

Analysis

Has the Applicant Met the Test for an Injunction?

[22] In order to obtain an interlocutory injunction, a moving party must satisfy the well-known test from RJR-MacDonald v. Canada (Attorney General), [1994] 1 S.C.R. 311 at para. 48, which requires that:

(i) There is a serious question to be tried; (ii) The moving party will suffer irreparable harm if the relief is not granted; and (iii) The balance of convenience favours granting the injunction.

Serious Question

[23] The parties disagree as to whether Homestead has demonstrated a serious question to be tried. At this stage, the question is whether the claim is frivolous or without merit, and the court does not engage in a prolonged examination of the merits: RJR-MacDonald at para. 55.

[24] The issue in this case is whether Ms. Jamieson disclosed confidential information in breach of the NDA. While Homestead alleges that Ms. Jamieson engaged in an online campaign to defame it, the motion for injunctive relief was not brought on this basis. Ms. Jamieson’s position is that she did not sign the NDA and therefore could not breach it. There is insufficient evidence for me to determine conclusively whether Ms. Jamieson signed the NDA. Ms. Pringle states, without further explanation, that she destroyed the original NDA. Her evidence on the circumstances surrounding the signing of the NDA changed from her original affidavit to cross-examination. There is an email from Ms. Jamieson in which she appears to acknowledge receiving the signature page. In her affidavit, Ms. Jamieson denies sending this email. However, she was not cross-examined on this statement.

[25] There are serious credibility issues which cannot be resolved on a motion. As Lauwers J. (as he then was) stated in Paradigm Shift Technologies Inc. v. Oudovikine, 2012 ONSC 148 at para. 4, “[t]his unsatisfactory state of affairs affects the way in which the court must exercise its responsibility under the Courts of Justice Act.” For the purposes of the motion, however, I find that the evidence raises a serious question as to whether Ms. Jamieson was bound by the NDA.

[26] As to whether Ms. Jamieson breached the NDA, I find that there is no serious question that she breached the NDA as it pertains to her disclosure of the relationship between herself and Homestead.

[27] The relationship between Homestead and Ms. Jamieson does not fall within the categories of information identified as confidential in the NDA. The information could only be confidential if it is found to be “information disclosed in circumstances in which a reasonable person would conclude that the information was intended to be treated as confidential.” While Ms. Pringle’s affidavit states that this information was confidential, there is nothing in the communications between her and Ms. Jamieson to support this. Ms. Pringle and Ms. Jamieson discussed the arrangement through private messages on Facebook. When Ms. Jamieson inquired as to when Homestead would announce the relationship, Ms. Pringle did not state that the arrangement or the circumstances leading to it were confidential. The fact that the relationship was not publicly announced does not mean that it was confidential. Moreover, the Ms. Jamieson was provided with a name tag that identified her as “East Coast Representative.” The relationship is not information “disclosed in circumstances in which a reasonable person would conclude that the information was intended to be treated as confidential.”

[28] On the second category of information, the NDA specifically identifies “customer and supplier lists” as confidential. Homestead’s position is that this would include the identity of a supplier. Homestead alleges that Ms. Jamieson obtained this information when she was given a tour of its Toronto warehouse. Ms. Pringle does not state how Ms. Jamieson might have learned the name of the supplier. Her affidavit states only that “warehouse is a secure area with confidential information visible to visitors.” There is no detail as to how or where Ms. Jamieson would have seen the name.

[29] Ms. Jamieson states that she toured only the publicly accessible areas of the warehouse and that she did not obtain the supplier information from the warehouse. Ms. Jamieson claims that she independently concluded that X was the supplier of Fusion paint because their packaging was similar to Fusion’s packaging. Ms. Jamieson further argues that none of her posts specifically states that X is the supplier for Fusion paint.

[30] The evidence does not conclusively demonstrate that the identity of the supplier is confidential information or that Ms. Jamieson disclosed that X is the supplier of Fusion paint. Nonetheless, given the low threshold on a motion for injunctive relief, I find that there is a serious question as to whether the disclosure of the supplier is a breach of the NDA.

Irreparable Harm

[31] Irreparable harm is harm that “cannot be quantified in monetary terms or which cannot be cured.” RJR MacDonald at para. 59.

[32] Homestead claims that Ms. Jamieson’s posting of confidential information will cause irreparable harm in the form of a loss of reputation and goodwill. Based on my finding of no serious issue that the representative relationship between Homestead and Ms. Jamieson was confidential information within the definition of the NDA, the alleged irreparable harm must arise from the disclosure of the identity of Homestead’s supplier.

[33] Homestead relies upon Canpark Services Ltd. v. Imperial Parking Canada Corp., 2001 CarswellOnt 3525 (Sup. Ct.), to argue that where a defendant is alleged to have breached a restrictive covenant, there is a presumption of irreparable harm. Homestead further relies upon a provision in the NDA which states:

Actual or threatened disclosure or use of the Confidential Information by the Contractor in breach of this Agreement shall be deemed to cause The Company irreparable harm for which monetary damages are not an adequate remedy. The Company shall be entitled to seek injunctive relief to prevent any actual or threatened disclosure, and the Contractor consents to the granting of such relief without proof of actual damages.

[34] In Stop’N Cash 1000 Inc. v. 1553785 Ontario Ltd, [2006] 332 O.A.C. 392, 2006 CarswellOnt 11652 (Div. Ct.) at para. 9, the Divisional Court rejected the plaintiff’s argument that where a breach of a negative covenant is clear, a moving party may not have to show irreparable harm, stating: “[u]ntil the Supreme Court has spoken again, we must follow the RJR criteria faithfully. See also, Paradigm Shift Technologies Inc. v. Oudovikine, 2012 ONSC 148 at paras. 53-54. Moreover, as held by Stinson J. in Brown v. First Contact Software Consultants Inc., 2009 ONSC 48504 at para. 61, a clause deeming a breach to constitute irreparable harm “cannot usurp the exclusive jurisdiction of this court to determine whether injunctive relief is appropriate and whether or not irreparable harm has been established.”

[35] In relation to the July 14, 2018 post, Homestead alleges that Ms. Jamieson promoted X, promoted X’s products as a replacement for Fusion and “expressly suggested that Homestead merely relabeled its supplier products to charge more for the same thing.” While the post compares the products and promotes X’s product, it does not expressly state that Homestead merely relabeled X’s product to charge more. It states that X’s product is “extremely reasonably priced as well as almost identical, except for labelling, to Fusion (in my opinion)” and that “[t]he Fusion brand is exceptional furniture paint and this is equal to it.” Moreover, in none of the posts does the Defendant expressly make negative or disparaging statements about Fusion paint. To the contrary, she makes positive statements about the Fusion product. In any event, the issue is whether disclosure of the supplier’s identity would cause Homestead irreparable harm.

[36] The case law makes clear that proof of irreparable harm must be clear and not speculative: Paradigm Shift at para. 54. Lost sales or market share can be compensated in damages. The obligation is on the plaintiff to put forward the financial information necessary to establish irreparable harm: Paradigm Shift at paras. 54-55.

[37] Ms. Pringle states that Fusion faces significant competition and has only a thin margin. For example, she states: “With the open and unlimited nature of the Internet, I do not know how far the defendant’s defamation in which she deviously weaved in confidential information can spread. Our grass-roots market is not big… It is underhanded to concoct a lie and wrap it in arbitrary information received in confidence to give the lie a plausible façade. It can also be fatal to Homestead and its Fusion line.” Homestead further states that if the Defendant’s “breach of confidentiality combined with the defamation campaign ends the Fusion line, over a thousand independent Fusion merchants will be at risk of going out of business.”

[38] These are simply bald assertions for which Homestead has provided no evidence. There is no evidence of a loss of market share, customers or profits. On cross-examination, Ms. Pringle stated that she did not know whether Fusion paint had lost any customers. While she claimed that Homestead had suffered lost profits, Homestead asserted that there was insufficient time to calculate this before the hearing of the motion. Homestead has failed to demonstrate that any harm suffered as a result of the Defendant’s breach of the NDA cannot be adequately compensated by damages.

[39] Moreover, in the absence of evidence, it is difficult to see how Homestead will suffer a loss of goodwill or reputation where the statements made by Ms. Jamieson were not in fact negative and where she has not expressly stated that X is the supplier of Fusion paint. The harm alleged by Homestead is entirely speculative.

[40] As for Fusion merchants going out of business, this would not constitute irreparable harm to Homestead. In addition, Homestead’s allegation that Ms. Jamieson’s posts could put it out of business is undermined by its own evidence. When asked whether, Fusion merchants could substitute Fusion paint with other products in the event that Fusion was no longer available, Ms. Pringle stated that “[m]any of [the suppliers] are based in the U.S. Many of our clients are in Canada. Importing from U.S. to Canada is not easy. We also provide a far superior product at a better price point.” This undermines the allegation of irreparable harm, since it suggests that Canadian merchants of Fusion paint would have difficulty replacing it.

[41] Homestead also alleges irreparable harm arising from Ms. Jamieson’s use of the identity of its supplier to achieve an unfair competitive advantage. Ms. Jamieson sent an email to the supplier inquiring whether they supplied Fusion paint and stating that she wanted to create a line of paints. The supplier forwarded this message to Homestead. There is no evidence that Ms. Jamieson has in fact started a competing business or made any further use of the information.

[42] The Plaintiff has failed to demonstrate irreparable harm in the event that an injunction is not granted.

Balance of Convenience

[43] Ms. Jamieson, relying on Canada (Human Rights Commission) v. Canadian Liberty Net, [1998] 1 S.C.R. 626, argues that since the injunctive relief that Homestead seeks is one limiting speech, the balance of convenience element should not apply. That case, however, deals with pure speech “unmixed some other commercial purpose or activity.” (at paras. 47-49)

[44] The Defendant acknowledges that the injunction sought is to limit the disclosure of Homestead’s confidential information in violation of the NDA. As a result, the RJR-MacDonald test applies. The Defendant has not put forward evidence of harm that she would suffer if the injunction is granted, other than limiting her freedom of expression. Since Ms. Jamieson has not provided any evidence of harm to herself in the event that an injunction is granted, the balance of convenience favours the Plaintiff.

[45] The motion for injunctive relief fails on the basis of the Plaintiff’s failure to demonstrate irreparable harm.

Confidentiality Order

[46] Homestead seeks an order sealing the court file and conducting hearings in the absence of the public. In support, Homestead submits that Ms. Jamieson’s identification of Homestead’s supplier in her affidavit and her recent Facebook posts about the litigation are a veiled attempt to release confidential information by referring people to the court file.

[47] Both a sealing order and an order to conduct hearings in camera are an exception to the open court principle and should only be ordered where the possibility of serious harm or injustice justifies a departure from this general principle: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 135(2). In determining whether to make an order sealing the court file and holding the hearings in camera, the court applies the test set out in Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41 at para. 53:

(a) Such an order is necessary in order to prevent a serious risk to an important interest, including a commercial interest, in the context of litigation because reasonably alternative measures will not prevent the risk; and (b) The salutary effects of the confidentiality order, including the effects on the right of civil litigants to a fair trial, outweigh its deleterious effects, including the effects on the right to free expression, which in this context includes the public interest in open and accessible court proceedings.

[48] In Sierra Club, Iacobucci J. further clarifies that “important commercial interest” is not simply the party’s commercial interest but one that invokes a broader public interest, such as the public interest in protecting confidential information. As noted by Iacobucci J., a judge must consider not only whether reasonable alternatives to a confidentiality order are available, but also to restrict the order as much as is reasonably possible while preserving the interest in question (Sierra Club at para. 57).

[49] Other than the identity of Homestead’s supplier and the relationship between Homestead and Ms. Jamieson, which I found is not confidential, Homestead has not identified further confidential information that it seeks to protect. The order sought by the Plaintiff goes far beyond what is necessary to protect the interest in question and would not be consistent with the principles enunciated by Iacobucci J. in Sierra Club.

[50] Nonetheless, a limited confidentiality order would ensure that neither party’s right to a fair trial is prejudiced, while limiting any negative effect on freedom of expression and the public interest in open and accessible court proceedings. Homestead’s concerns would be addressed by an order redacting the name of its supplier from materials filed in court, along with any confidential information that falls within the definition of the NDA, pending a final determination of the dispute.

[51] To this end, the following is ordered, until further order of this Court:

(c) the Affidavit of Wendy Jamieson, sworn March 6, 2019 (the “Jamieson Affidavit”), shall be placed under seal; (d) The Defendant shall file a redacted version of the Jamieson affidavit, redacting only the name of Homestead’s supplier, for the public record; and (e) In any further materials filed in Court, the parties shall redact confidential information as defined in the NDA, including the identity of Homestead’s supplier.

[52] Homestead’s counsel did not request that the hearing of the motion be held in camera. At this stage, as long as the supplier’s identity, and other information identified as confidential in the NDA, is not disclosed, it is not necessary to order that future hearings be conducted in the absence of the public.

Conclusion

[53] Based on the foregoing, the Plaintiff’s motion for an interlocutory injunction is dismissed and the interim order of Pollak J. is vacated. For the purposes of clarity, the dismissal is without prejudice to Homestead’s ability to bring a motion for relief based upon any Facebook post made by the Defendant immediately before or after the hearing date of this motion.

[54] Counsel submitted their costs outlines at the hearing. The Defendant’s costs total $14,745.09, including HST and disbursements of approximately $500.00. The Plaintiff’s costs were $23,508.43, including HST and disbursements of approximately $1,442.00.

[55] Pursuant to the Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131(1), the Court has broad discretion when determining the issue of costs. The overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the circumstances, rather than an amount fixed by actual costs incurred by the successful litigant: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.). Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 sets out the factors to be considered by the Court when determining the issue of costs.

[56] I have considered these factors, as well as the principle of proportionality in R. 1.01(1.1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, while keeping in mind that the Court should seek to balance the indemnity principle with the fundamental objective of access to justice. While the motion for an interlocutory injunction was dismissed, the Plaintiff was partially successful in obtaining a confidentiality order. This was not substantially opposed by the Defendant. I fix costs on a partial indemnity basis at $12,000.00, inclusive of disbursements and HST, payable by the Plaintiff to the Defendant within thirty days.

Nishikawa J. Date: April 29, 2019