Court File and Parties

COURT FILE NO.: CV-19-00619754-0000 DATE: 2019/05/17 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

2298679 Ontario inc., dba aurum property care (formerly dba gold standard property care) Plaintiff

• and - NORTHERN HOMECARE SOLUTIONS INC., JOSHUA GOLDKIND, JOSHUA GOLDMAN, JARED HYDE, ANDREW AROUS, and RYAN EDWARDS Defendant

Counsel: Sarah Walker for the Plaintiff

HEARD: May 15, 2019

PERELL, J.

REASONS FOR DECISION

A. Introduction

[1] The Plaintiff 2298679 Ontario Inc., which carries on business as Aurum Property Care, moves, without notice, for an Anton Piller Order to search and seize electronic devices from the headquarters of the Defendant Northern Homecare Solutions Inc. and from the residence of the Defendant Joshua Goldkind, who is one of the principles of Northern Homecare. Aurum Property also requests an injunction restraining Northern Homecare, Mr. Goldkind and the other Defendants, Joshua Goldman, Jared Hyde, Andrew Arous, and Ryan Edwards prohibiting them from possessing or transmitting Aurum’s confidential customer information in any form or through any medium whatsoever. Aurum also requests a sealing Order.

[2] For the reasons that follow, I dismiss the motion for an Anton Pillar Order, and I grant an interim injunction and mandatory order that, subject to a motion to extend, shall terminate ten days after the release of these Reasons for Decision. The terms of the interim injunction and mandatory order are as follows:

a. The Defendants and Northern Homecare’s officers, directors, servants, agents, employees, and anyone acting on their behalf shall not pass themselves off as carrying on the business of Aurum;

b. The Defendants and the corporate Defendant’s officers, directors, servants, agents, employees, and anyone acting on their behalf shall not access, use, or exploit any confidential information of Aurum in their possession including, without limitation, customer lists, employee lists, partnership lists, supplier contracts, customer contracts, pricing policies, patents, trademarks, and other intellectual property;

c. Mr. Goldkind and Northern Homecare shall retain any confidential information of Aurum in their possession including, without limitation, customer lists, employee lists, partnership lists, supplier contracts, customer contracts, pricing policies, patents, trademarks, and other intellectual property; and

d. Mr. Goldkind and Northern Homecare shall disclose to Aurum within five days of the service of these Reasons for Decision in an Affidavit of Documents any confidential information of Aurum in their possession including, without limitation, Aurum’s customer lists, employee lists, partnership lists, supplier contracts, customer contracts, pricing policies, patents, trademarks, and other intellectual property.

B. Facts

[3] At first blush based on what Aurum describes in its factum, it would appear that the factual background to its request for an Anton Piller Order is that three former employees of Aurum stole Aurum’s complete confidential customer list and used that confidential and proprietary information for the benefit of their new employer Northern Homecare and that Aurum is suffering irreparable harm and significant damages and that injunctive relief is necessary to stop serious damage and to preserve the evidence which may be destroyed.

[4] However, as I shall now describe a closer examination of the evidence suggests that while there appears to have been wrongdoing, most likely by Messrs. Goldkind and Goldman, it is not clear whether the harm they caused was trivial or substantial. It appears that it is only an inference that the three former employees stole the whole data base of customer information.

[5] However, it is not clear whether the three former employees did anything more than inform Northern Homecare of a few contacts and that Northern Homecare used those few contacts to compete for business in a wrongful way when they should and could have competed for the customers in a lawful way.

[6] On the other hand, it is not known whether more than a few of Aurum’s customers were contacted and whether Northern Homecare is more than a minor nuisance and a major threat to Aurum’s residential business. In any event, at this juncture, there is no evidence to suggest that Northern Homecare or Mr. Goldkind has Aurum’s customer list on its computers or that there is reason to believe that they would destroy that evidence.

[7] What the current evidentiary record reveals is as follows.

[8] Aurum, which has a head office in Toronto, describes itself as an industry leader in commercial window cleaning and property maintenance servicing, among others, government buildings, commercial high-rise buildings, condominium towers, hotels and hospitals across North America. It also services residences and has a customer list of residential customers and leads numbering 35,000 contacts. Aurum does not disclose the significance of the residential branch to its overall business, but does it indicate that it may sell that part of its business, which may suggest that the commercial branch is the foundation of the business.

[9] Aurum maintains a customer list that includes: customer names, customer addresses, customer email addresses and details of past services including dates and prices. Common sense would suggest that pricing information for Aurum’s residential home services, which include cleaning windows and eaves troughs, is not as valuable as information about what Aurum charges for cleaning the windows and providing property maintenance for the commercial branch.

[10] On April 19, 2018, Northern Homecare was incorporated with its headquarters in Thornhill, Ontario. Northern Homecare’s executive is comprised of Gabriel Jablonski, Nicholas Hatsios, Mr. Goldkind, and Mr. Goldman, Mr. Goldkind is the CEO and Mr. Goldman is the COO. Northern Homecare carries on a residential window cleaning and property maintenance business.

[11] Messrs. Arous, Edward, and Hyde are former employees of Aurum.

a. Mr. Arous was employed as field business development representative from April 1, 2018 to July 6, 2018, when his employment was terminated.

b. Mr. Edwards was first employed as a field business development representative and was promoted to outbound business development representative. He was employed from April 1, 2018 to August 2, 2018, when his employment was terminated.

c. Mr. Hyde was employed as a field business manager from May 1, 2017 to August 25, 2018 when he was terminated

[12] Messrs. Arous, Edward, and Hyde respectively signed employment agreements. The agreements contained the confidentiality and non-disclosure provisions as follows:

Confidentiality

a. You acknowledge that in the course of your relationship with the Company, you may acquire knowledge and/or information relating to the business, financing and operations of the Company or any of its affiliates all of which is confidential to the Company and its affiliates, as applicable, (collectively, "Confidential Information") including, without limitation, customer lists, employee lists, partnership lists, supplier contracts, customer contracts, pricing policies, patents, trademarks and other intellectual property, marketing or product knowledge, technical information, user manuals and any other information that concerns the Company or any of its affiliates that is not generally available to the public. You acknowledge that the Company and its affiliates, as applicable, own all right, title and interest in and to the Confidential Information, and the right to maintain exclusivity of such Confidential information constitutes a proprietary right that the Company is entitled to protect.

b. You acknowledge that Confidential Information could be used to the detriment of the Company, and agree that other than to fulfill the Employee's obligations under the Employment Agreement, you will not (a) use the Confidential Information, directly or indirectly, for any purpose; (b) disclose to any other person, firm or corporation without the previous consent in writing of the Company, any Confidential Information; or (c) copy or transmit the Confidential Information by any means.

c. Upon termination of employment, or at any time at the request of the Company, you will deliver all copies of Confidential Information in any form whatsoever in your possession, care or control to the Company, and will comply with all security measures and to follow all instructions provided by the Company in order to safeguard and protect any Confidential Information.

d. Your obligations with respect to Confidential Information do not apply to information which you can demonstrate: (a) is generally available to or known by the public other than as a result of improper disclosure to you; (b) was rightfully obtained by you from a third party who did not obtain it under an obligation of confidentiality to the Company; or (c) is information which you are obligated to disclose by law, provided that you shall provide prompt notice to the Company of such obligation of disclosure to permit the Company to prevent or limit such disclosure. You will disclose only that portion of the Confidential Information which it is advised by written opinion of counsel is legally required.

e. You acknowledge that your obligations with respect to Confidential Information apply both during the term of your employment and survive the termination of your employment, regardless of the reason for termination.

[13] During their employment, Messrs. Arous, Edward, and Hyde had access to Aurum’s residential customer lists.

[14] Although Aurum was not aware of it until recently: (a) after Mr. Arous was terminated, he logged into Aurum’s management software, which contains Aurum’s customer list, on August 29, 2018, December 13, 2018, February 5, 2019, and March 15, 19, and 26, 2019; (b) after Mr. Edwards was terminated, he logged into Aurum’s management software twice on March 5, 2019, and again on March 26, 2019; and (c) after Mr. Hyde was terminated he logged into Aurum’s management software on at least thirty occasions.

[15] Aurum properly disclosed in its affidavit material that it does not know: (a) the extent of information that was obtained by Messrs. Arous, Edward, and Hyde; (b) how the information was used; and (c) with whom the information was shared. Aurum conceded that the extent of the confidential information allegedly misappropriated by the Defendants will be an important factet of Aurum’s damages claim.

[16] Up until March and April of 2019, approximately eight months after it had terminated the employment of Messrs. Arous, Edward, and Hyde, Aurum had no knowledge of these intrusion on its computer system. In March and April 2019, however, there were a series of events that prompted Aurum to investigate; namely:

a. Customers DD, OA, ED, and AS cancelled appointments because they had already been contacted by persons presenting themselves as being Aurum. Based on the information provided by these customers, Aurum believes that the contacts were made by somebody named Joshua or with a last name: “Gold…” these customers.

b. Customer ND advised Arum that she had been contacted by persons presenting themselves as being Aurum. She did not cancel her contract with Aurum. Aurum infers that Northern Homecare was using information provided by Messrs. Arous, Edward, and Hyde to contact ND.

c. Customer DS advised Aurum that he had been contacted by Mr. Goldkind who misrepresented himself as representing a reorganized Aurum. Mr. Goldkind disparaged Arum as it had formerly existed. DS advised Aurum of the contact. Mr. Goldkind, to put it mildly, was lying and Aurum, once again, infers that the wrongdoing of Mr. Goldkind was a spinoff of Messrs. Arous, Edward, and Hydes’ disclosing confidential information.

[17] Aurum suspects but does not actually know that Messrs. Arous, Edward, and Hyde provided confidential information to Northern Homecare. It has this suspicion because, to quote from paragraph 41 of its factum: “There is good reason to believe that the former employees gave Northern Homecare access to the confidential information because Aurum customers have reported that when solicited by Northern Homecare, the Northern Homecare representative had knowledge of past services provided to the customer.

[18] It is not clear, however, from the evidence what is the precise relationship or connection between Northern Homecare and the three former employees, who as far as I can perceive may have a connection as employees, independent contractors, dependent contractors, sales agents, or intermediators.

[19] Aurum does not know the precise nature of the relationship between Messrs. Arous, Edward, and Hyde and Northern Homecare. Michael Morozov, Aurum’s CEO, only knows that Mr. Goldkind had some connection with Mr. Hyde. He knows this because Mr. Hyde, when he was an employee, had introduced Mr. Goldkind to Mr. Morozov as a candidate for an employment position at Aurum.

[20] Aurum asserts that Messrs. Arous, Edward, and Hyde have breached their employment contract. Paragraph 44 of its factum states:

44. It is important to note that this is not a case of former employees attempting to use the knowledge and experience they gained in their former employment for the purpose of earning a living with a new employer. Aurum acknowledges that in such a circumstance, this Court might be hesitant to limit the former employees’ ability to earn a living. This case is different. This appears to be a case of former employees taking their former employers customer list and giving it to a third party. This type of behaviour cannot be tolerated.

[21] However, it should be noted that under their employment contracts, Messrs. Arous, Edward, and Hydes’ obligations with respect to Confidential Information do not apply to information which they can demonstrate is generally available to or known by the public other than as a result of improper disclosure to them. At this juncture, without having heard from Messrs. Arous, Edward, and Hyde it is impossible to say that they have no defence to a breach of contract claim for the conduct of passing on information to Northern Homecare if that is what they did.

C. Discussion

[22] An injunction is a remedy to enforce, or to protect the enforcement of, existing legal, equitable or statutory rights. [1] Under the RJR-MacDonald Inc. v. Canada (Attorney General) [2] test for an interlocutory injunction, the court considers three factors: (1) whether the plaintiff has presented a serious issue to be tried or, in a narrow band of cases, a strong prima facie case; (2) whether the plaintiff would suffer irreparable harm if the remedy for the defendant’s misconduct were left to be granted at trial; and (3) where does the balance of convenience or inconvenience lie in the granting or the refusing to grant an interlocutory injunction.

[23] To satisfy the irreparable harm factor, the plaintiff must provide clear and non-speculative evidence that harm not compensable in damages will result if the interlocutory injunction is not granted. [3] If damages granted after a hearing would be adequate, it follows that the extraordinary equitable remedy of an interlocutory injunction is unnecessary. [4] If, however, damages or some other trial remedy would come too late or be inadequate to repair the harm or to do justice, then the harm may be said to be irreparable. The irreparable harm analysis means the court will consider whether damages awarded after a trial will provide the plaintiff or applicant with an adequate remedy without the need for an interlocutory remedy. [5] The onus is on the plaintiff or applicant to show that if made to wait for a hearing where damages are awarded, then he or she will suffer irreparable harm. Irreparable harm is not made out simply because damages may be difficult to quantify. [6]

[24] Irreparable harm refers to the nature of the harm, not its magnitude. [7] Irreparable harm may include harm that cannot be quantified in monetary terms. Examples of irreparable harm noted in the RJR-MacDonald judgment included: the plaintiff being put out of business, the plaintiff suffering a permanent injury to its business reputation, the plaintiff suffering a permanent loss of market share, and the plaintiff’s property being permanently depleted.

[25] In Canpages Inc. v. Quebecor Media Inc., [8] Justice M.F. Brown stated at paragraph 14:

14. The loss of goodwill is something that damages cannot reverse. There is evidence that the plaintiff would suffer not only loss of profits and goodwill but also loss of reputation. The loss of actual or potential customers, goodwill and diminution of a plaintiff's reputation have been recognized as irreparable harm not compensable in damages because it is difficult, if not impossible for a plaintiff to establish the extent to which customers were lost by it or gained by the defendant as a result of the impugned conduct. In a competitive business market, there is no way for the plaintiff to adequately track the current customers who do not renew contracts, or the prospective customers who do not sign on, due to the interference of the alleged wrongful new competition. I am satisfied that the plaintiff will suffer irreparable harm if an interlocutory injunction is not granted.

[26] Where doubt exists as to the adequacy of the remedies available to either party (damages for the plaintiff, the undertaking as to damages for the defendant), regard is had to where the balance of convenience lies. [9] This branch of the test involves a determination of which of the two parties will suffer the greater harm from the granting or the refusal to grant an interlocutory injunction pending a decision on the merits. [10] The factors that the court may consider in assessing the balance of convenience and the weight to be given to them are indeterminate and will vary from case to case. [11]

[27] In the case at bar, I am satisfied that Aurum has presented a serious issue to be tried about whether the Messrs. Arous, Edward, and Hyde and whether the Defendants committed the tort of breach of confidence. Aurum’s suspicions may be found to be true. There is, in any event, evidence that reveals that Northern Homecare may have committed the tort of injurious falsehood and it may be the case that it did so using information passed on by the other defendants.

[28] The elements of a claim of breach of confidence are: (1) the plaintiff imparts information having a quality of confidence (confidential information); (2) the information was imparted in circumstances in which an obligation of confidentiality arises (communication in confidence); and (3) the defendant makes an unauthorized use of the information (misuse of information). [12]

[29] The elements of a claim of injurious falsehood are: (1) the publication of false statements reflecting adversely on the plaintiff’s business, property, or title to property; (2) the statements are made maliciously without just cause or excuse; (3) the statements are calculated to induce person’s not to deal with the plaintiff; and, (4) the plaintiff suffered damages. [13]

[30] Although I conclude that Aurum has established a prima facie case for breach of confidence with an associated claim of breach of contract, it remains to be seen (contrary to what it asserts in paragraph 44 of its factum) whether this is a case of former employees attempting to use the knowledge and experience they gained in their former employment for the purpose of earning a living with a new employer. There is, in any event, a serious issue to be tried.

[31] Aurum asserts that it has, is, and will suffer irreparable harm because of the wrongful activities of the Defendants and it submits that its ability to sell its residential branch has been diminished; however, there is also no evidence about Aurum’s actual plans for its residential branch. Thus, the situation with respect to irreparable harm is that at this juncture Aurum has established only a significant possibility of harm from a breach of confidence or a breach of contract. In this regard, it should, nevertheless, be noted that at the time of the ex parte injunction motion, Aurum had only discovered the alleged wrongdoing less than a month before.

[32] It is a close call on irreparable harm, nevertheless, I conclude that for the purposes of an interim, ten-day, injunction that Aurum has suffered irreparable harm and that the balance of convenience favours granting an interim injunction.

[33] I, therefore, order as follow:

a. The Defendants and Northern Homecare’s officers, directors, servants, agents, employees, and anyone acting on their behalf shall not pass themselves off as carrying on the business of Aurum; and,

b. The Defendants and the corporate Defendant’s officers, directors, servants, agents, employees, and anyone acting on their behalf shall not access, use, or exploit any confidential information of Aurum in their possession including, without limitation, customer lists, employee lists, partnership lists, supplier contracts, customer contracts, pricing policies, patents, trademarks, and other intellectual property.

[34] This brings the discussion to Aurum’s request for an Anton Piller Order.

[35] An Anton Piller order is a very intrusive and exceptional interlocutory order. It authorizes the plaintiff to enter the premises of the defendant to seize evidentiary material or the property that is claimed by the plaintiff in the proceedings. The form of the order is that the defendant is ordered to permit entry to his or her premises at the risk of being held in contempt for refusing permission. The purpose of the order is to prevent property from being lost, destroyed or removed, and to preserve relevant evidence, but it does not authorize access to privileged communications of documents. [14] An Anton Piller order is at the extremity of the court’s powers and is granted only when there is no alternative way to ensure that justice may be done. [15]

[36] The requirements for an Anton Piller order are: [16] (1) there must be an extremely strong prima facie case; (2) the damage, potential or actual, must be very serious for the plaintiff; (3) there must be convincing evidence that the defendant has in his or her possession incriminating documents or objects; and (4) there is a real possibility that the material may be destroyed or secreted before the parties may put their respective rights before the court. [17] An Anton Piller order is an exceptional remedy and should be granted only on clear and convincing evidence. [18]

[37] In the immediate case, in my opinion, there is a not an extremely strong prima facie case as against Messrs. Arous, Edward, Hyde, and Goldman but Aurum is not requesting an Anton Piller order as against them. In my opinion, I would regard the case as against Northern Homecare and Mr. Goldkind for injurious falsehood as strong but not extremely strong. Thus, Aurum does not satisfy the criteria for an Anton Piller Order.

[38] Further, for the injurious falsehood claim, which centers on the seeming impersonation and slander of the goods and operations of Aurum before its alleged reorganization, in my opinion, only the second of the remaining elements for an Anton Piller Order are satisfied.

[39] Remembering that it is Messrs. Arous, Edward, and Hyde that obtained the customer information, that the extent of the information obtained is unknown, and that there is only an inference that they passed the information to Northern Homecare, it is entirely speculative that Northern Homecare has incriminating evidence or that there is any possibility (let alone a real possibility) that material may be destroyed or secreted before the parties put their respective rights before the court.

[40] Moreover, as noted above, an Anton Piller order is at the extremity of the court’s powers and is granted only when there is no alternative way to ensure that justice may be done. In the immediate case, there are reasonable alternatives that will protect Aurum for the potential loss of evidence. Therefore, I order as follows:

a. Mr. Goldkind and Northern Homecare shall retain any confidential information of Aurum in their possession including, without limitation, customer lists, employee lists, partnership lists, supplier contracts, customer contracts, pricing policies, patents, trademarks, and other intellectual property; and

b. Mr. Goldkind and Northern Homecare shall disclose to Aurum within five days of the service of these Reasons for Decision in an Affidavit of Documents any confidential information of Aurum in their possession including, without limitation, Aurum’s customer lists, employee lists, partnership lists, supplier contracts, customer contracts, pricing policies, patents, trademarks, and other intellectual property.

[41] I further order that these Reasons for Decision along with the motion material from the ex parte motion be served on the Defendants.

D. Conclusion

[42] Order accordingly.

Perell, J.

Released: May 17, 2019

COURT FILE NO.: CV-19-00619754-0000 DATE: 2019/05/17 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

2298679 Ontario inc., dba aurum property care (formerly dba gold standard property care) Plaintiff

• and - NORTHERN HOMECARE SOLUTIONS INC., JOSHUA GOLDKIND, JOSHUA GOLDMAN, JARED HYDE, ANDREW AROUS, and RYAN EDWARDS Defendants

REASONS FOR DECISION

PERELL J.

Released: May 17, 2019