Court File and Parties

COURT FILE NO.: CV-19-0061-6384-0000 DATE: 20190507 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: THE SELECT GROUP OF CANADA INC., Plaintiff AND: MARK HEALY and SKILLSTORM COMMERCIAL SERVICES, LLC, Defendants

BEFORE: Cavanagh J.

COUNSEL: Brian N. Radnoff and Dylan E. Augruso, for the Plaintiff Michael F. Horvat and Meghan Cowan, for the Defendants

HEARD: May 3, 2019

Endorsement

Introduction

[1] The plaintiff The Select Group Canada Inc. is an employment staffing and placement agency. The defendant Mark Healy was formerly employed as the plaintiff’s Director of Branch Operations and he was formerly a director of the plaintiff. Mr. Healy is now employed by the defendant SkillStorm Commercial Services, LLC (“SkillStorm”).

[2] The plaintiff maintains that SkillStorm is a competitor and that Mr. Healy has solicited customers and an employee of the plaintiff and misused the plaintiff’s confidential information. The plaintiff relies upon a Proprietary Information, Developments Non-Competition and Non-Solicitation Agreement (the “Agreement”) that Mr. Healy signed upon the commencement of his employment.

[3] The Agreement contains covenants by which Mr. Healy agreed (i) not to disclose or use the plaintiff’s information regarding prospects and clients that Mr. Healy learned about during the course of his employment as well as any other non-public information which a third party could use to the disadvantage of the plaintiff, and (ii) for a twelve month period after the end of his employment, not to solicit any client or prospective client of the plaintiff.

[4] Mr. Healy resigned from his employment with the plaintiff in May 2018. The parties disagree about the date. Mr. Healy commenced employment with SkillStorm on January 10, 2018. SkillStorm provides outsourcing intellectual technology support and development for computer and mobile data and security applications. SkillStorm’s business is different than the business of the plaintiff in that it does not recruit IT professionals to be hired by clients directly to perform work at the client’s direction at their worksites. Instead, SkillStorm retains its IT professionals directly, and delivers a service and product to meet a client’s particular deliverable. In this sense, Mr. Healy contends that SkillStorm is not a direct competitor of the plaintiff in Canada. I find that although SkillStorm’s business is somewhat different than the plaintiff’s business, they are, nevertheless, competitors and seek business from the same types of customers.

[5] The plaintiff moves to enjoin and restrain the defendant Mark Healy from (i) disclosing the plaintiff’s proprietary information and third party proprietary information; (ii) directly or indirectly soliciting or attempting to solicit any client of the plaintiff or any prospective client of the plaintiff of which he had knowledge as result of his employment with the plaintiff, until after May 31, 2019; and (iii) directly or indirectly inducing any employee of the plaintiff from leaving his or her employment with the plaintiff, until after May 31, 2019.

[6] The plaintiff makes the following submissions in support of its motion:

a. Mr. Healy has solicited at least two of the plaintiff’s major customers to obtain their business for SkillStorm. b. In his solicitation efforts, Mr. Healy has used the plaintiff’s confidential information about those customers. c. Mr. Healy marketed the services of another former employee of the plaintiff’s parent company in the United States, who is currently employed by SkillStorm, as an asset in his solicitation efforts of a current customer of the plaintiff. The plaintiff alleges that, in so doing, Mr. Healy directed this employee to breach her post-employment obligations to the plaintiff’s parent company and to use the parent company’s confidential information to solicit business from the existing customer of the plaintiff. d. The plaintiff appears to have induced at least one other employee of the plaintiff to leave the plaintiff and join SkillStorm. This ground was not pursued at the hearing of the motion.

[7] Mr. Healy opposes the plaintiff’s motion and asks that it be dismissed with costs. Mr. Healy submits:

a. The Agreement was made after Mr. Healy had already accepted employment with the plaintiff and it was made without fresh consideration. For this reason, Mr. Healy denies that he is bound by the Agreement. b. Mr. Healy did not engage in any improper solicitation of the two customers identified by the plaintiff. c. Mr. Healy did not misuse or improperly disclose confidential information belonging to the plaintiff. d. Mr. Healy did not solicit employees of the plaintiff.

[8] For the following reasons, I grant the plaintiff’s motion for an interlocutory injunction, except with respect to solicitation of the plaintiff’s employees (because the plaintiff failed to provide any evidence that Mr. Healy had breached this covenant in the Agreement).

Analysis

[9] In order to obtain an interlocutory injunction, the moving party must establish that (a) there is a serious issue to be tried (or, in some cases, the plaintiff has a strong prima facie case); (b) the moving party will suffer irreparable harm if the injunction is not granted; and (c) the balance of convenience favours the granting of the injunction: RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CarswellQue 120 at paras. 83-85.

[10] The plaintiff acknowledges that to enforce a restrictive covenant and fiduciary duties arising in the employment context, Ontario courts have generally required the moving party to establish a strong prima facie case rather than just a serious issue to be tried.

[11] 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: Accreditation Canada International v. Guerra, 2016 ONSC 3595 at para. 41.

Has the plaintiff shown a strong prima facie case that the Agreement is valid and binding?

[12] The plaintiff is a staff recruitment agency which offers managed services and staff augmentation to businesses, with a dedicated government services division for meeting federal and local government needs. The plaintiff directs and assists its clientele in their hiring of technical staff and assist them in their internal talent management processes. The plaintiff is a wholly-owned subsidiary of a U.S. parent company located in Raleigh, North Carolina.

[13] Mr. Healy accepted an offer of employment with the plaintiff on January 13, 2016 by signing and returning the plaintiff’s offer made in a letter dated January 12, 2016. The offer of employment was described as a “conditional” offer. The offer of employment states:

This offer is conditional upon your fulfilment of all of the conditions set forth in this Letter including, but not limited to, the Company’s receipt of its standard Proprietary Information, Developments, Non-Competition and Non-Solicitation Agreement executed by you (the “Agreement”), and of the employee information packet reviewed and acknowledged by you (the “Employment Packet”), copies of which are enclosed with this Letter, and which we request you review carefully.

The copy of the offer letter appended as an exhibit to the affidavit of Sheldon Wolitski, the CEO and founder of the plaintiff’s parent company, does not include the Agreement as an attachment.

[14] Mr. Healy signed and accepted the conditional offer of employment on January 13, 2016. The text that appears just above his signature reads: “I have read, understand, and agree to all of the above and hereby accept the Company’s terms and conditions of employment as contained in the Letter. I further understand and agree that my receipt of the above-noted consideration is contingent upon my execution of the Agreements and completion of the Employment Packet.”

[15] The Agreement was first presented to Mr. Healy when he attended at the office of the plaintiff’s parent company on January 25, 2016. Mr. Healy signed the Agreement on January 25, 2016 and, when he did so, he acknowledged that he had read the Agreement carefully and that he understands and agrees to its terms.

[16] Mr. Healy submits that no fresh consideration was provided to him for his entry into the Agreement on January 25, 2016 because, by this date, he had already accepted the terms of his employment by signing the plaintiff’s offer letter on January 13, 2016, which did not include the restrictive terms upon which the plaintiff now relies. Mr. Healy takes the position that the Agreement is of no force and effect.

[17] In support of this submission, Mr. Healy relies upon the decision of the Court of Appeal for Ontario in Holland v. Hostopia .Com Inc., 2015 ONCA 762. In Holland, the respondent made a written offer of employment in a letter which described the essential terms of employment and stated that the offer could be accepted by returning a signed copy of the letter and “the subsequent signing of an employment agreement.” The letter said nothing about the appellant’s entitlement to notice of termination. Some nine months later, the appellant was presented with a written employment agreement which he signed. This agreement contained a provision which allowed the respondent to terminate the appellant’s employment without cause or notice, provided it paid him in lieu of notice in accordance with the Employment Standards Act. The Court of Appeal held at paras. 52-54 that an employment agreement made without fresh consideration could not displace the implied term of reasonable notice contained in the offer letter, with the result that the appellant was entitled to reasonable notice of termination of his employment at common law.

[18] The facts in Holland are materially different than the facts in this case, and the principle that was applied by the Court of Appeal in Holland does not apply to this case. In this case, Mr. Healy was informed when the conditional offer of employment was first made that the offer of employment was conditional upon his execution of the Agreement which was described as a standard one involving proprietary information, non-competition and non-solicitation. The Agreement was provided to Mr. Healy on the first day of his active employment, unlike the facts in the Holland where the written agreement was only provided nine months after the employee had commenced employment. Mr. Healy was given an opportunity to review the terms and conditions of the Agreement, and he acknowledged that he had done so and that he understood and agreed to its terms. When Mr. Healy signed the Agreement, he satisfied a condition to becoming an employee of the plaintiff.

[19] On these facts, I conclude that the plaintiff has shown a strong prima facie case that Mr. Healy is bound by the terms and conditions of the Agreement.

Has the plaintiff shown a strong prima facie case of breach of the Agreement?

[20] Under section 1 of the Agreement, Mr. Healy had an obligation not to disclose or use the plaintiff’s “Proprietary Information” or “Third Party Information”, as those terms are defined in sections 1.2 and 1.3 of the Agreement. The definition of “Proprietary Information” includes information regarding the prospects and clients that Mr. Healy learned about during the course of his employment, as well as any other non-public information which a third party could use to the disadvantage of the plaintiff.

[21] Under section 3 of the Agreement, Mr. Healy had an obligation for one year after his last day of employment with the plaintiff not to directly or indirectly solicit or attempt to solicit any “Covered Client”, as defined in the Agreement, in Toronto, or within a 100 km radius around Toronto. A “Covered Client” is defined in section 4.2 of the Agreement to mean any client or prospective client of the plaintiff. Under section 3 of the Agreement, Mr. Healy also had an obligation not to induce any employee of the plaintiff to leave employment to work for Mr. Healy or any third party for one year after his last day of employment.

[22] The plaintiff submits that the evidence shows that that Mr. Healy breached the Agreement by soliciting two of the plaintiff’s customers while employed by SkillStorm: Bank of Montréal (“BMO”) and Cisco Systems Canada Co. (“Cisco”).

[23] The plaintiff provided evidence that BMO is a client of the plaintiff and that Mr. Healy was familiar with the BMO from his employment. Mr. Healy knew Matthew Lombardi, Head of External Talent Solutions for BMO, from his time working for the plaintiff. In his affidavit, Sheldon Wolitski gave evidence that he attended a hockey game with Mr. Lombardi on February 6, 2019 at which Mr. Lombardi told him that Mr. Healy had reach out to him on behalf of SkillStorm to solicit business and explain what services SkillStorm could offer. Although Mr. Wolitski states in para. 1 of his affidavit that where facts and matters are stated to be made on information and belief, he believes them to be true, he does not state that the information provided at the hockey game by Mr. Lombardi is made on information and belief, and he does not state that he believes this information to be true. I do not regard the statements attributed to Mr. Lombardi to be properly in evidence because Mr. Wolitski’s affidavit does not specify the fact of his belief in Mr. Lombardi’s statement, as required by rule 39.01(4) of the Rules of Civil Procedure.

[24] In his responding affidavit, Mr. Healy gave evidence that when he joined SkillStorm on January 10, 2019, a public announcement of his hiring was made by SkillStorm and that he kept his professional profile updated regularly on LinkedIn. With respect to BMO, Mr. Healy gave evidence that in January 2019, Mr. Lombardi contacted him to ask about matters unrelated to business and, during this conversation, Mr. Lombardi requested that they meet for lunch to catch up. According to Mr. Healy’s evidence, he met Mr. Lombardi for lunch on February 5, 2019 during which they mainly spoke about personal matters. Mr. Healy’s evidence is that near the end of the lunch, Mr. Lombardi asked where he was working and what he was doing, and he then advised Mr. Lombardi that he had recently joined SkillStorm. Mr. Lombardi requested that Mr. Healy provide him further information regarding the services that SkillStorm provides to its clientele. Mr. Healy’s evidence is that further to this request, on February 6, 2019, he sent Mr. Lombardi a copy of SkillStorm’s marketing material and a “virtual tour” of SkillStorm’s facilities. His evidence is that he had no further communication with or from Mr. Lombardi regarding SkillStorm and at no time during his discussion with Mr. Lombardi did he use or disclose any information that is confidential or proprietary to the plaintiff.

[25] Mr. Healy was not cross-examined on his affidavit. Mr. Lombardi was not examined as a witness.

[26] Mr. Healy’s unchallenged evidence is that he was asked by Mr. Lombardi to provide information regarding the services that SkillStorm provides to its clientele and that he provided information to BMO in response to this request. This is not an improper solicitation. The plaintiff has failed to show a strong prima facie case with respect to BMO.

[27] With respect to Cisco, the plaintiff provided evidence from Mr. Wolitski that Cisco is a major client of the plaintiff and that Mr. Healy was familiar with Cisco from his employment with the plaintiff. Mr. Wolitski states in his affidavit that Mr. Healy knew non-public information about Cisco’s client relationship with the plaintiff, including its services, solutions and pricing for Cisco as well as Cisco’s required services and opportunities to solicit business. Mr. Wolitski states in his affidavit that Mollie Ferguson was employed by the plaintiff’s parent company and, through her employment, she managed and handled compliance and staffing issues for Cisco across North America. In this role, Ms. Ferguson corresponded regularly with a Cisco employee, Loren Hadi, who held the position of Manager and oversaw several IT contractor positions managed by the plaintiff. Ms. Ferguson departed from the plaintiff’s parent company on January 11, 2019 and she joined SkillStorm’s parent company following her departure.

[28] The plaintiff relies upon two emails dated March 22 and 27, 2019 that Mr. Healy sent to Ms. Hadi, copying Ms. Ferguson on the former, in an attempt to solicit work from Cisco in alleged contravention of his post-employment obligations.

[29] Mr. Healy sent an email to Ms. Hadi on March 22, 2019, copying Ms. Ferguson. In this email, Mr. Healy thanked Ms. Hadi for taking time to meet with him that morning, and he referred to the opportunity to “meet you as well as to explain my history working with and supporting Cisco projects”. Mr. Healy also referred to Ms. Ferguson in this email:

As I mentioned this morning, Mollie Ferguson (cc’d) was incredibly valuable to Pietro, Giovanni as well as many other managers in both Canada and the US. They really leaned on her with regards to Fieldglass, approvals and onboarding after our teams had worked with Cisco Managers to identify the best people.

I would love to have Mollie join us in Toronto for a next meeting or maybe a lunch when you have time available. I think it would be valuable for you to meet her and for her to share her Cisco experiences with you.

Mr. Healy sent a follow-up email to Ms. Hadi on March 27, 2019 in which he proposed getting together for lunch and he stated that he would like to understand “potential next steps for supporting you”.

[30] In his affidavit, Mr. Healy states that his contact with Cisco during his employment with the plaintiff was limited and, while he was employed by the plaintiff, he met with Mr. Pietro Pasqualino, a former Business Operations Manager with Cisco. Mr. Healy states that on March 13, 2019 he met Mr. Pasqualino by chance at Starbucks in Queen’s Quay in Toronto and he invited Mr. Healy to join him for coffee. At this time, Mr. Pasqualino advised Mr. Healy that he was no longer in his prior talent recruitment role at Cisco, and he offered to introduce Mr. Healy to the person who had taken over his prior position. Mr. Pasqualino sent an email introduction to this person, Ms. Hadi, on March 14, 2019 in which he advised that Mr. Healy is a vice president at SkillStorm with whom Mr. Pasqualino had worked while he was employed with the plaintiff.

[31] In his affidavit, Mr. Healy states that following this introduction, on March 22, 2019, he met with Ms. Hadi. It is clear that the purpose of the meeting with Ms. Hadi was to discuss potential business opportunities for SkillStorm with Cisco. Mr. Healy’s evidence is that during this meeting, Ms. Hadi advised that she wanted further information and potential assistance for the onboarding process for new hires. Mr. Healy introduced her to Ms. Ferguson, an account executive with SkillStorm in the United States, via email. According to Mr. Healy’s affidavit, other than the introduction and introductory meeting, no further communications transpired between himself, Ms. Ferguson and Ms. Hadi. Mr. Healy states that he did not discuss with Mr. Pasqualino or Ms. Hadi any information that is confidential or proprietary to the plaintiff.

[32] It is clear from the evidence that Mr. Healy spoke with Mr. Pasqualino and with Ms. Hadi, employees of Cisco, with respect to the opportunities for SkillStorm to provide services to Cisco. Mr. Healy introduced Ms. Hadi to Ms. Ferguson and, in this introduction, he disclosed that Ms. Ferguson had provided valuable services to other Cisco managers.

[33] Mr. Healy submits that the plaintiff has failed to show a strong prima facie case that Mr. Healy improperly solicited Cisco. He submits that former employees may advise clients that they have left their former employer to start at a new company and may send general, introductory, communications without violating non-solicitation covenants. Mr. Healy submits there must be additional evidence showing that an employee asked clients to come with them or otherwise persuaded clients to leave the former employer in order for contact to amount to improper solicitation. Mr. Healy submits that it is not a breach of a non-solicitation covenant for an employee to respond to an inquiry made by the client. Mr. Healy submits that Mr. Pasqualino reach out to him and requested information with respect to SkillStorm, and that his interactions with Mr. Pasqualino and Ms. Hadi did not amount to improper solicitation.

[34] The difficulty with these submissions as they apply to the evidence before me is that Mr. Healy does not state that Mr. Pasqualino asked him to provide information concerning the capabilities of SkillStorm before Mr. Pasqualino offered an introduction to Ms. Hadi and before Mr. Healy arranged to meet with Ms. Hadi for the purpose of pursuing opportunities for SkillStorm with Cisco. The absence of this evidence is conspicuous, particularly given that Mr. Healy, when he was addressing the plaintiff’s allegations in relation to BMO, made it clear that Mr. Lombardi, the BMO employee with whom he met, directly requested that Mr. Healy provide him with information regarding the services that SkillStorm provides its clientele. If a similar request was made by Mr. Pasqualino, it was incumbent upon Mr. Healy to say so in his affidavit.

[35] In the absence of any evidence from Mr. Healy that the meeting with Ms. Hadi happened in response to a request from Cisco, I am left with the evidence that Mr. Healy had discussions with Mr. Pasqualino and, following Mr. Pasqualino’s introduction to Ms. Hadi, he arranged and attended a meeting with Ms. Hadi for the purpose of encouraging Cisco to use the services of SkillStorm. I am satisfied that the plaintiff has shown a strong prima facie case that this is solicitation.

[36] I conclude that the plaintiff has shown a strong prima facie case that Mr. Healy breached the non-solicitation covenant in the Agreement through his contacts with the Cisco representatives.

[37] The plaintiff also alleges that Mr. Healy breached the agreement by improperly soliciting an employee of the plaintiff to accept employment at SkillStorm. The plaintiff provided no direct evidence that this had occurred, and relies upon the fact that the employee appears to have accepted employment at SkillStorm around the time that Mr. Healy was hired. Mr. Healy provided evidence that the employee made an application in response to a public job posting. The plaintiff did not press its allegations in respect of this former employee at the hearing of this motion, and I find that the plaintiff has failed to show a strong prima facie case, or even a serious issue to be tried, with respect to this allegation.

[38] The plaintiff submits that if I were to conclude that the Agreement is not valid and enforceable, Mr. Healy owed post-employment duties to the plaintiff because he was a director of the plaintiff and because in his employment with the plaintiff he had discretionary power to adversely affect the plaintiff’s interests, and the plaintiff was vulnerable to the exercise of that power. I have concluded that the plaintiff has shown a strong prima facie case that Mr. Healy is bound by the Agreement and, accordingly, in order to decide whether an interlocutory injunction should issue, it is not necessary for me to make any conclusions with respect to Mr. Healy’s post-employment duties, outside of those in the Agreement. If I had found that there was a strong prima facie case that Mr. Healy breached fiduciary duties, I would not grant any broader interlocutory relief than the relief which I grant in relation to Mr. Healy’s contractual obligations.

[39] The plaintiff submits that it has shown a strong prima facie case that Mr. Healy breached the Agreement by failing to keep the plaintiff’s “Proprietary Information” and “Third-Party Information”, as those terms are defined in the Agreement, confidential. The plaintiff submits that information concerning customers and pricing of products sold to customers in order to solicit business from these customers is misuse of confidential information and a breach of the Agreement, as well as a breach of obligations at common law not to misuse confidential information. As well, the plaintiff submits that Mr. Healy’s knowledge of Ms. Ferguson’s depth of experience as an employee of the plaintiff and her work with many managers of Cisco is valuable and confidential information that is covered by the Agreement. The plaintiff relies upon the email Mr. Healy sent on March 22, 2019 as evidence that Mr. Healy used this information to persuade Ms. Hadi to meet with him so that he could solicit business from Cisco. The plaintiff also relies upon Mr. Healy’s offer in this email for Ms. Ferguson to “share her Cisco experiences” with Ms. Hadi as evidence that Mr. Healy expected that Ms. Ferguson would disclose confidential information concerning her “Cisco experiences” at the meeting that he was trying to arrange.

[40] In support of these submissions, the plaintiff relies upon the decision of Hoy J. (as she then was) in Industrial Brush Supply & Service Ltd. v. Faria, 2003 CarswellOnt 568 in which she held that a former employee’s use of confidential information for the purpose of competing constitutes a breach of his duty of good faith and loyalty and should be enjoined. In relation to the duty not to misuse confidential information, Hoy J. applied the “serious issue to be tried” standard at the first stage of the RJR-MacDonald analysis, and not the “strong prima facie case” standard, although she applied the strong prima facie case standard in relation to alleged breaches of the non-solicitation and non-disclosure restrictive covenants in the applicable agreement.

[41] I do not need to decide whether the plaintiff must satisfy the strong prima facie case standard or the serious issue to be tried standard in relation to its request for interlocutory injunctive relief to restrain breaches of the covenant against disclosure of proprietary and confidential information in the Agreement. Mr. Healy knew of Ms. Ferguson’s value to many Cisco managers in both Canada and the United States. This was not publicly available information. I am satisfied that Mr. Healy’s information concerning the depth of Ms. Ferguson’s experiences with Cisco while she was employed with the plaintiff and the value of her knowledge and experience to many managers of Cisco was non-public information which a third party could use to the disadvantage of the plaintiff and that it falls within the broad definition of “Proprietary Information” in the Agreement.

[42] The evidence that Mr. Healy disclosed this information to Ms. Hadi to arrange a meeting with her is sufficient to show a strong prima facie case that Mr. Healy breached his obligation in the Agreement to “hold in the strictest confidence” and “not disclose or use any Proprietary Information” unless required in connection with his work for the plaintiff or the plaintiff expressly authorizes such disclosure in writing.

Has the plaintiff shown that it will suffer irreparable harm if the injunction is not granted?

[43] The second stage of the R.J.R. MacDonald analysis requires the moving party to show that it will suffer irreparable harm if the injunction is not granted. The moving party must establish this element even in cases involving a motion for injunctive relief to enforce a restrictive covenant: MD Management Limited v. Campbell, 2010 ONSC 6373 (Div. Ct.) at paras. 5-10.

[44] In Mr. Wolitski’s affidavit, he addresses the nature of the plaintiff’s business and its vulnerability to unfair competition through prohibited solicitations of its customers and employees. I quote from paragraphs 23, 24, and 25 of Mr. Wolitski’s affidavit:

As an employment staffing and placement agency, TSG Canada’s clients, client contacts and leads or prospects are its most important assets. TSG Canada’s employees develop relationships with its clients and potential clients or leads, thereby generating business for TSG Canada. Without these relationships, TSG Canada’s business could not exist.

As a result, all TSG Canada employees are required to execute agreements like the Agreement executed by Healy preventing them, for a period of time after their employment, from soliciting customers and potential customers or soliciting employees. Without these provisions, TSG Canada’s business could be destroyed when important employees, such as Healy, leave employment with TSG Canada. It is very important to TSG Canada to enforce employee obligations to prevent them from competing or soliciting employees immediately after they leave employment with TSG Canada. Similarly, it is important that TSG Canada know if its previous employees are now employed by its competitors.

Healy’s conduct, in accepting employment with a competitor without notice to TSG Canada and in attempting to solicit an important and significant TSG Canada client, causes harm to TSG Canada that cannot be appropriately compensated in damages. Further, this conduct strikes at the heart of TSG Canada’s relationships with its employees and customers, as well as its business.

[45] In MD Management, the Ontario Divisional Court quoted with approval, at paras. 6 and 8, the following passages from the edition available in 2010 of the definitive treatise written by the Honourable Mr. Justice Robert J. Sharpe, Injunctions and Specific Performance, at pp. 2-13 and 9-3 to 9-4, respectively:

If the plaintiff does demonstrate a strong prima facie case, the likelihood of ultimate success will weigh heavily in favour of an injunction. Clearly, however, the strong possibility of ultimate success is not, and should not be, conclusive. This approach would ignore the risk inherent in basing the decision solely upon a preliminary assessment of the strength of the case. It is possible that this preliminary assessment, based upon incomplete evidence and argument, is wrong and, accordingly, the other factors, discussed below, must also be taken into account.

When there is some doubt on the merits, the ordinary criteria determining the availability of interlocutory injunction apply and a plaintiff who sues upon an express negative covenant will not be awarded interlocutory injunctive relief automatically. The stronger the plaintiff’s case, however, the less emphasis should be placed on irreparable harm and balance of convenience and, in cases of a clear break of an express negative covenant, interlocutory relief will ordinarily be granted.

[46] In EJ Personnel Services Inc. v. Quality Personnel Inc., 1985 CarswellOnt 1683, Callaghan J. decided a motion for an interlocutory injunction brought by an employee placement service to restrain a former employee from further solicitation of the plaintiff’s customers. This case involved alleged breaches of fiduciary duties not to solicit, as opposed to a contractual restrictive covenant. In his reasons, Callaghan J. addressed whether damages would be an appropriate remedy:

Because of the extremely competitive nature of the business carried on in personnel employee placement, I am satisfied that damages would not be an appropriate remedy even if they could be calculated and ascertained. The nature of the business would seem to indicate that while the plaintiff regards certain corporations or employers as its customers, and clearly has established considerable goodwill in relation thereto, those customers did not feel obliged to deal exclusively with the plaintiff. The evidence before me satisfies me that their customers generally have a list of three or four businesses providing services similar to the plaintiff and select from them at random from time to time. Under the circumstances, I think it would be very difficult if not impossible for the plaintiff to establish even the barest estimate of damages at trial. Accordingly, damages would not be an appropriate remedy here.

[47] This passage was cited with approval by Aitken J.in Messa Computing Inc. v. Phipps, 1997 CarswellOnt 5596 at para. 33. The plaintiff submits that I should take from the evidence of Mr. Wolitski and these authorities that a personnel recruitment business such as the plaintiff’s business is particularly vulnerable to solicitations of its customers, more so than, for example, a professional services firm. I do not find that any given type of business is particularly vulnerable to prohibited solicitations of customers or employees. In each case, there must be evidence to satisfy the three-part test for injunctive relief.

[48] Mr. Healy submits that the plaintiff has failed to lead evidence as to what harm it has suffered or may suffer if an injunction is not granted. Mr. Healy submits that the plaintiff has failed to show that it will suffer irreparable harm if an interlocutory injunction is not granted. In support of this submission, Mr. Healy relies upon the decision of Lauwers J. (as he then was) in Paradigm Shift Technologies Inc. v. Oudovikine, 2012 ONSC 148. In Paradigm Shift, Lauwers J. held at paras. 54-55 that evidence of irreparable harm must be clear and not speculative and, where the survival of the business is not threatened, and damages are capable of being quantified, there is no irreparable harm.

[49] In Omega Digital Data Inc. v. Airos Technology Inc., 1996 CarswellOnt 5491, Sharpe J. (as he then was) considered the approach to be taken to determination of whether irreparable harm has been shown in a case such as this, at paras. 35-36:

It is clear that in cases of this precise kind the type of harm complained of by the plaintiff has repeatedly been recognized as constituting irreparable harm within the meaning of the test for an interlocutory injunction. I refer here in particular to the judgment of Justice Blair in M.D. Prescriptions Inc. v. Gandey (1991), 37 C.P.R. (3d) 472 (Ont. Gen. Div.) at p. 477, where Justice Blair adopted a decision of the English Court of Appeal in Evans Marshall & Co. v. Bertola S.A., [1973] 1 W.L.R. 349 at p. 369, [1973] 1 All E.R. 992, where Lord Justice Sachs stated at p. 349:

Applying this test it seems just to say to the defendants, you cannot breach your fiduciary duties and then expect the plaintiff to prove the damages suffered by loss of revenue, loss of share of the market, when these are difficult to accurately determine.

Justice Blair went on to say:

I do not see how it can be said that the plaintiffs can be adequately compensated in damages for this kind of a situation when no one can know, or in fact prove, what actual impact the conduct of Mr. Gandey, assuming he is a fiduciary, may have had.

Lord Justice Sachs also said in the same case that the irreparable harm test might be rephrased by asking the question, “Is it just to leave the plaintiff to its remedy of damages in the circumstances?” In my opinion, in this case it is not and I would adopt that statement as applicable to the circumstances before me. I note as well that similar statements have been made in the case law with respect to the losses that result from breach of obligations of confidentiality: see Polyresins Ltd. V. Stein-Hall Ltd., [1972] 2 O.R. 188, 21 D.L.R. (3d) 152 (H.C.J.).

[50] I regard this approach as the proper one to follow in this case. The calculation of the loss to the plaintiff from loss of customers is not limited to the loss of profits from that customer. The loss of goodwill and potential loss of market share are the kinds of harm that have been recognized as appropriately protected by injunctive relief: see KJA Consultants Inc. v. Soberman, 2002 CarswellOnt 467. I do not agree that it was incumbent upon the plaintiff to lead evidence of lost profit or to attempt to calculate the loss of goodwill or market share to which it will be subject from breaches of the Agreement. The evidence is that Cisco is an important customer of the plaintiff, and loss of Cisco as a customer would undoubtedly harm the plaintiff, as would the loss of other customers. In this case, I am satisfied that the plaintiff has shown that it will suffer irreparable harm if the injunction is not granted.

Does the balance of convenience favour the granting of an injunction?

[51] In determining the balance of convenience, the court will consider whether the benefit the claimant will gain from preliminary relief outweighs the inconvenience caused to the respondent by the granting of relief. The court must determine which party will suffer greater harm from the granting or refusal of the injunction pending a final decision: RJR-MacDonald at para. 67.

[52] The plaintiff submits that unless the relief requested is granted, the plaintiff will continue to be irreparably harmed by further breaches of the Agreement. The plaintiff submits that, in contrast, should the relief requested be granted, the effect would be to require Mr. Healy to abide by the Agreement and that it is not an inconvenience for a person to be restrained from doing something that he or she has agreed to refrain from doing. On this basis, the plaintiff submits that there is no harm to Mr. Healy in requiring him to comply with his post-employment obligations under the Agreement.

[53] Mr. Healy submits that the plaintiff has delayed unduly in seeking injunctive relief. In support of this submission, Mr. Healy states that the restrictive covenants in the Agreement (if they are found to be enforceable) will expire as of May 17, 2019. This is one year from the date when he gave notice of his resignation from employment with the plaintiff. Mr. Healy’s evidence is that after he gave this notice, his superior telephoned him and to advise that his continued attendance at the office was no longer required. His superior met with him the following day to deliver his personal belongings which had remained at the plaintiff’s offices, and to which he no longer had access. Mr. Healy’s submission is that his employment with the plaintiff ended on May 17, 2018.

[54] Mr. Healy submits that the plaintiff delayed bringing this motion for injunctive relief on an urgent basis, and that no explanation has been given for this delay.

[55] I do not agree that Mr. Healy’s employment ended on May 17, 2018. He was paid his salary and provided benefits until May 31, 2018. Through the payment of salary and provision of benefits until May 31, 2018, the plaintiff accepted the two weeks’ notice that Mr. Healy had offered. The Agreement provides that the “no solicitation” covenant is effective during the period of his employment with the plaintiff and for a period of one year after his last day of employment.

[56] I do not agree that the plaintiff has delayed unduly in bringing this motion and arranging for a hearing date, or that any delay in this case should preclude an order for interlocutory injunctive relief. Mr. Wolitski’s evidence is that he learned of what he regarded as improper solicitation of BMO by Mr. Healy on February 6, 2019. This action was commenced on March 18, 2019 and the motion record was filed on April 10, 2019. Mr. Healy’s responding motion record was filed on April 29, 2019 and this motion was heard on May 3, 2019. In the circumstances, there was no undue delay.

[57] I conclude that the balance of convenience favours the granting of an interlocutory injunction.

[58] The plaintiff does not request an interlocutory injunction restraining Mr. Healy soliciting any “Covered Client” as defined in the Agreement beyond the period of time provided for in the Agreement. The plaintiff requests an interlocutory injunction restraining Mr. Healy from disclosing the Plaintiff’s “Proprietary Information” and “Third-Party Proprietary Information”, as those terms are defined in the Agreement, until trial.

Disposition

[59] For these reasons, I make the following order:

a. Mr. Healy is enjoined and restrained from disclosing the plaintiff’s “Proprietary Information” or “Third-Party Proprietary Information”, as those terms are defined in the Agreement, until trial. b. Mr. Healy is enjoined and restrained from directly or indirectly soliciting or attempting to solicit any “Covered Client”, as defined in the Agreement, in the City of Toronto or within a 100 km radius of the City of Toronto until June 1, 2019.

[60] The parties agreed that the successful party on this motion would be entitled to an order for costs on a partial indemnity scale in the amount of $15,000 all-inclusive. I fix costs to be paid by Mr. Healy to the plaintiff in the amount of $15,000 to be paid within 30 days in accordance with rule 57.03(1)(a).

Cavanagh J. Date: May 7, 2019