Court File and Parties
COURT FILE NO.: CV-19-81185 DATE: 2019/11/14
COURT OF ONTARIO, SUPERIOR COURT OF JUSTICE
RE: 1760465 ONTARIO LTD. o/a MAINTNANCE REPAIR SERVICE, Plaintiff AND: 5010520 ONTARIO INC. o/a CLEAR CHOICE CONTRACTING, DSG CONTRACTING INC., NOJO INDUSTRIES INC., NOAH JOHN APSIMON, NORMAN J. SARGANT, ERIC HARVEY, and THANH PHAM a.k.a. THANH THI PHAM, Defendants
BEFORE: Mr. Justice Calum MacLeod
COUNSEL: Geoffrey Cullwick & Mario Torres, for the Plaintiff Stacey R. Ball & Sean J. O’Donnell, for the Defendants ApSimon, Clear Choice, DSG and Pham Paul Champ & Christine Johnson, for the Defendant Harvey Brent Craswell & J.P. Zubec, for the Defendants Sargant and Nojo Industries
HEARD: September 30, 2019
DECISION AND REASONS
[1] This is a motion for an injunction pursuant to s. 101 of the Courts of Justice Act, R.S.O. 1990, c. C. 43, and r. 40 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The Plaintiff seeks an order preventing the Defendants from soliciting and targeting its customers by using their knowledge, experience and relationships gained during their employment with the Plaintiff. The Plaintiff seeks court protection from what it asserts to be unlawful competition inflicting irreparable harm on the Plaintiff and its business.
[2] There is no doubt the Defendants are competing with the Plaintiff. Whether that competition is unlawful or not and whether the Plaintiff has suffered actionable damage is the subject matter of the litigation. An interim injunction will only be granted in cases in which it is necessary to prevent the continuation of behaviour which may be wrongful and which ought to be restrained until the Court can reach a decision on the merits. It is extraordinary and powerful relief.
[3] For the reasons that follow, this is not a case in which a temporary injunction should issue. The owners of the Plaintiff feel betrayed and vulnerable facing what they see as an orchestrated attack with the possibility of a permanent loss of market share. Outrage and fear, however, are not the tests for granting a remedy in advance of judgment. There is a three part test for such orders. Firstly, the Court must be persuaded there is a serious issue to be tried or in certain cases that the plaintiff appears to have a strong case against the defendants. Secondly, the Court must be persuaded that the harm to the Plaintiff will be irreparable if the order is not granted. Thirdly, the Court must assess which of the parties will suffer the greatest harm from the granting or refusal of the order.[^1]
[4] In this case the Plaintiff may well have a cause of action and a claim for significant damages but it is doubtful it can meet the standard of a strong prima facie case. More importantly, the evidence does not support a finding of irreparable harm. To the contrary, a significant portion of the Plaintiff’s business is secured by its major exclusive contract. If the Plaintiff is successful in the litigation, one or more of the Defendants may be liable for significant damages but at this stage it appears that damages would be an adequate remedy.
[5] By way of background, the Plaintiff is in the business of providing handyman services to grocery stores, a business the Plaintiff characterizes as a niche market. It has an exclusive fixed term contract to provide services to certain locations of a major grocery chain but it also provided service to various independent retailers and stores as an approved supplier on a non-exclusive basis.
[6] The Defendant, ApSimon, was the Chief Operating Officer of the Defendant when his employment was terminated in June of this year. The Plaintiff alleges that the termination was for cause whereas the Defendant alleges he was wrongfully dismissed. Since that time, it appears the Defendant has created or assisted in creating a competing business. He and other former key employees of the Plaintiff who were to a large degree the day to day face of the Plaintiff in the provision of services have successfully marketed their own handyman services to certain of the Plaintiff’s customers.
[7] The Plaintiff has various reasons for asserting that ApSimon is precluded from competing with it and the other defendants should be prohibited from assisting him in an unlawful scheme to get around those obligations. Firstly, ApSimon was originally the proprietor of a business he sold to the Plaintiff in April of 2015. There was a non-competition agreement which formed part of that sale. Although the term of that agreement was for 2.5 years, the goodwill of the original business formed part of the sale. Secondly, following the sale, ApSimon became an employee of the Plaintiff and signed a non-competition agreement that was not time limited. Finally, at the time of his termination, there is no doubt that ApSimon had become a senior employee in a position which was impressed with a fiduciary duty towards the corporation.
[8] This position is not free from problems. As noted, the original non-competition agreement forming part of the agreement of purchase and sale has expired. The non-competition agreement forming part of ApSimon’s original employment contract is so broadly worded that it is probably unenforceable besides which the position he held at the time of termination was a very different position than the job he was originally hired to do.
[9] There is no evidence that further non-competition agreements were signed at the time of ApSimon’s promotions; in particular when he was appointed Chief Operating Officer. While a senior officer of a corporation has fiduciary obligations to the corporation not to exploit his position for personal gain, it is not at all clear that such an obligation would translate into an independent duty not to compete with the corporation after the end of his employment. In any event, that obligation may be nullified if he was wrongfully dismissed. Even if he was terminated for cause and had a continuing obligation not to poach the customers of the Plaintiff, such an obligation is unlikely to endure forever.
[10] The duty not to misuse proprietary information belonging to the corporation does not easily attach to knowledge and experience. In this case, it is not at all clear that the corporation has any trade secrets or other intellectual property which are possessed by any of the Defendants and there is no evidence that price lists, customer lists or other physical property was removed from the Plaintiff and has been used to compete unfairly. The Defendants argue that the identity of grocery stores serviced by the Plaintiff, the price for various services and the nature of the services required by such customers are public knowledge in a competitive marketplace.
[11] The order sought by the Plaintiff would constrain the Defendants in pursuing their livelihoods. In my view this means that the first branch of the injunctive test requires more than the American Cyanamid/RJR MacDonald test of “serious issue to be tried” and instead demands the Plaintiff demonstrate a strong prima facie case.[^2] Given the hurdles the Plaintiff must meet in this case, it is not evident that this test can be met.
[12] In any event, and more importantly, damages are an adequate remedy if the Plaintiff is ultimately successful. The evidence does not support a finding that permanent irreparable damage will be done to the Plaintiff’s business if the order is not granted. To the contrary, the evidence establishes that the Plaintiff has hired replacement employees and its major contract is secure for the time being. The competition to which the Plaintiff is exposed will impact only a percentage of its potential revenues. It cannot be seen as an existential threat. The balance of convenience in this case favours the Defendants.
[13] For all of these reasons the injunction is refused.
[14] The Defendants are cautioned that the refusal of an interlocutory injunction should not be interpreted as a licence to abuse the rights of the Plaintiff. Injunctive relief is an extraordinary remedy to preserve the rights of the parties in pending litigation. Refusal of an injunction in no way determines that the Plaintiff cannot succeed in the litigation. If the Defendants have acted wrongfully and continue to do so, the damages may be profound.
[15] I am advised that the Plaintiff no longer seeks an order for recovery of personal property as this issue has been resolved.
[16] In conclusion the motion is dismissed. Counsel are encouraged to resolve the question of costs but they may otherwise approach my office for further direction.
Mr. Justice C. MacLeod
Date: November 14, 2019
COURT FILE NO.: CV-19-81185 DATE: 2019/11/14
ONTARIO
RE: 1760465 ONTARIO LTD. o/a MAINTNANCE REPAIR SERVICE, Plaintiff AND: 5010520 ONTARIO INC. o/a CLEAR CHOICE CONTRACTING, DSG CONTRACTING INC., NOJO INDUSTRIES INC., NOAH JOHN APSIMON, NORMAN J. SARGANT, ERIC HARVEY, and THANH PHAM a.k.a. THANH THI PHAM, Defendants
BEFORE: Mr. Justice Calum MacLeod
COUNSEL: Geoffrey Cullwick & Mario Torres, for the Plaintiff Stacey R. Ball & Sean J. O’Donnell, for the Defendants ApSimon, Clear Choice, DSG and Pham Paul Champ & Christine Johnson, for the Defendant Harvey Brent Craswell & J.P. Zubec, for the Defendants Sargant and Nojo Industries
HEARD: September 30, 2019
DECISION AND REASONS
Mr. Justice Calum MacLeod
Released: November 14, 2019
[^1]: American Cyanamid v. Ethicon Ltd., 1975 CanLII 2598 (FC), [1975] A.C. 396 (H.L.), RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 SCR 311 (SCC).
[^2]: See Gerrard v. Century 21 Armour Real Estate Inc, (1991) 1991 CanLII 7104 (ON SC), 4 OR (3d) 191 (Gen.Div) and Jet Print Inc. v. Cohen, (1999) 43 CPC (4th) 123 (Ont.SCJ)