Overview

[1] The Plaintiffs bring this motion for an injunction to enforce restrictive covenants in an employment agreement with their former employee, Antonios Kranidis. Mr. Kranidis submitted a resignation letter to the Plaintiffs on July 23, 2019. He intended to start a new position at a competitor of the Plaintiffs, the Defendant Tate ASP Access Floors Inc. (“Tate”), on August 26, 2019. He has since started at Tate in a modified position pursuant to an undertaking in force until the end of this month. Although the parties have raised a number of issues before me, the primary issues for me to determine are whether the Plaintiffs have a strong prima facie case that the restrictive covenants in Mr. Kranidis’ employment agreement are enforceable and whether the Plaintiffs are entitled to an injunction on the basis of a misuse of confidential information.

[2] I have not analyzed every issue raised by the parties in detail. I am mindful of the importance of releasing these reasons on a timely basis and therefore have focused my analysis on the issues I consider necessary to determine the motion.

[3] Mr. Kranidis was employed by the Plaintiffs from January 2015 until he provided notice on July 23, 2019. He originally was employed by Camino Modular Systems Inc. (“Camino”). In 2017, Camino purchased two companies and brought all three companies under central management through a new company, Global Integrated Flooring Solutions Inc. I will refer to the Plaintiffs jointly as “Global IFS.”

[4] Global IFS and Tate both specialize in the business of raised access flooring (“RAF”), which is an elevated structural floor that allows for a hidden passage of mechanical, ventilation and electrical equipment underneath. The RAF systems allows for easy access to technical infrastructure, referred to as modular power distribution (“MPD”), stored underneath the raised floor. It also allows for the installation of under floor air distribution (“UFAD”), which is an air-cooling system that provides ventilation air to the space above the raised floor. The combination of RAF, UFAD and MPD can be described in layperson’s terms as flooring, air conditioning and electrical wiring. Tate and Global IFS are the two main competitors for RAF in Canada and the United States.

[5] Mr. Kranidis’ title at the time he left Global IFS was Vice-President, Engineering and Technical Sales for Global IFS and Executive Vice-President for Camino. However, Mr. Kranidis submits that his title belied the fact that he was increasingly losing responsibility and being marginalized within Global IFS. Mr. Kranidis’ employment agreement with Global IFS (the “Agreement”) contains a non-competition clause, a non-solicitation clause and a clause limiting the use of confidential information. Although Mr. Kranidis submits that the Agreement is not enforceable, as he only signed it after starting his employment at Camino, there is no evidence that any of the restrictive covenants, nor any other term detrimental to Mr. Kranidis, were added after the version of the Agreement he agreed to prior to starting his employment. In any event, it is clear from communications between Mr. Kranidis and Tate that Mr. Kranidis considered his employment Agreement with Global IFS to include the restrictive covenants. Indeed, he disclosed the non-competition and non-solicitation clauses from that Agreement to Tate during the hiring process. Therefore, I proceed on the basis that Mr. Kranidis and Global IFS did agree to a valid employment Agreement, including the restrictive covenants.

[6] Mr. Kranidis was disenchanted with his employment situation at Global IFS. In May 2019, he contacted Tate in response to a position it had posted. Ultimately, on July 22, 2019, Mr. Kranidis entered into an employment agreement with Tate. It was agreed that he would start in the position of director of technical marketing commencing August 26, 2019. He would work in this position for six months reporting to the current general manager of Canada, after which he would move into the position of general manager of Canada.

[7] On July 23, 2019, Mr. Kranidis submitted a letter of resignation to Global IFS. He purported to provide Global IFS with 30 days’ notice of his departure. There is some dispute as to whether this was true notice, as he included various caveats to his availability, including vacation and time off for the birth of his baby. Further, in his letter, Mr. Kranidis indicated that he had left his “company supplied computer” in the office. However, he did not mention that he also had kept with him another company laptop.

[8] Upon learning that Mr. Kranidis was assuming a position at Tate, Global IFS immediately retained counsel, who wrote to Mr. Kranidis to assert that he was bound by the restrictive covenants in the Agreement. When Global IFS later discovered that Mr. Kranidis still had a laptop, counsel wrote to demand the return of the laptop. Mr. Kranidis returned the laptop on August 6, 2019. However, prior to returning it, according to a forensic report obtained by Global IFS, he attached a USB device to the laptop. He also deleted his Global IFS files from the computer.

Conclusions

[9] I conclude that Global IFS has not shown a strong prima facie case that the restrictive covenants are enforceable. I am not persuaded that the clauses are protecting a proprietary interest. In addition, they are overly broad. Further, although Mr. Kranidis’ conduct on his resignation raises questions as to his intentions, the evidence does not support that Mr. Kranidis misused confidential information to Global IFS’s detriment. Global IFS has not demonstrated irreparable harm or that the balance of convenience weighs in its favour. Therefore, I decline to grant the injunction.

Preliminary Motion

[10] At the outset of the motion, the Defendants raised an objection to the admissibility of the affidavit of Sharon Russell Snowden. Ms. Russell Snowden is the Vice-President of Sales for Global IFS. Her affidavit was served after the completion of cross-examinations for the motion. The Defendants object to its admissibility pursuant to R. 39.02(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which provides that a party who has cross-examined another party shall not subsequently deliver an affidavit without consent or leave of the court. The Plaintiffs seek to rely now only on certain portions of the affidavit and ask that I exercise my discretion to admit these portions. They submit that the relevant parts of the affidavit arose in response to cross-examinations and do not prejudice the opposing parties.

[11] I decline to admit this evidence. Under R. 39.02(2), the moving party has a “very high threshold” and leave should be “granted sparingly”. It is also important to take a flexible, contextual approach, having regard to the overriding principle outlined in R. 1.04: Shah v. LG Chem, Ltd., 2015 ONSC 776, at paras. 22-23.

[12] Here, the Plaintiffs do not meet the high threshold and the context is not such that leave should be granted. This is not a situation in which the Defendants can be provided with an opportunity to file further evidence or to cross-examine Ms. Russell Snowden, given the urgency to the parties of obtaining a decision on the injunction. The parties first sought a date to have this motion heard in August 2019 and were granted this date in October, with the Defendants undertaking to have Mr. Kranidis work in a temporary role only until the end of this month. One of the portions of the affidavit the Plaintiffs wish to rely on, sets out Ms. Russell Snowden’s beliefs and opinions regarding an e-mail of which Mr. Kranidis retained a copy. I agree with counsel for the Defendants that these statements would be ripe for cross-examination.

[13] In addition, I have reviewed the proferred evidence and do not consider it helpful in my determination of the issues on the motion. For example, I would put little weight on Ms. Russell Snowden’s views about the e-mail in question, and a copy of the e-mail is already in evidence elsewhere. Similarly, with respect to the various drafts of the Agreement, I have already determined above that the Agreement was valid. In view of this, the Plaintiffs have not met the high threshold for the court to grant leave.

Issues

[14] The issues for me to determine on the motion for the injunction are:

(1) Does Global IFS have a strong prima facie case that the restrictive covenants in the Agreement are enforceable?

(2) Has Global IFS shown a serious issue to be tried that Mr. Kranidis misused confidential information?

(3) Has Global IFS satisfied the injunction test with respect to irreparable harm and balance of convenience?

Test on an Injunction to Enforce Restrictive Covenants

[15] A party seeking an interlocutory injunction to enforce a restrictive covenant must satisfy the three-part test in RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311, but with the first part modified. Instead of showing a serious issue to be tried at the first step of the test, the moving party must show that it has a strong prima facie case. This higher threshold is appropriate since the injunction is intended to place restrictions on a person’s ability to engage in their chosen vocation and to earn a livelihood: Kohler Canada Co. v. Porter, [2002] O.J. No. 2418 (S.C.J.), at paras. 14-19; Jet Print Inc. v. Cohen, [1999] O.J. No. 2864 (S.C.J.), at para. 11. The moving party also must show that it will suffer irreparable harm if the injunction is not granted and that the balance of convenience weighs in its favour.

No Strong Prima Facie Case

[16] In this case, I am not satisfied that the Plaintiffs have met the high onus of a strong prima facie case. To meet the requirement of a strong prima facie case, the moving party must show that its claim is almost certain to succeed: FLS Transportation Services Inc. v. Charger Logistics Inc., 2016 ONSC 3652, at para. 18.

Non-competition clause

[17] Here, in my view, Global IFS’s case is not almost certain to succeed. I will first address the non-competition clause in the Agreement. The general rule is that non-competition clauses in employment contracts are void. They will only be enforced in exceptional circumstances: H.L. Staebler Company Ltd. v. Allan et. al., 2008 ONCA 576, (2008), 92 O.R. (3d) 107 (C.A.), at para. 42; Kohler, at para. 41. In particular, restrictive covenants will be enforced only where they are “reasonable between the parties and with reference to the public interest”: J.G. Collins Insurance Agencies v. Elsley, 1978 CanLII 7 (SCC), [1978] 2 S.C.R. 916, at para. 13; Staebler, at para. 33.

[18] According to the Supreme Court of Canada in Elsley, in determining whether a restrictive covenant is reasonable, the court should consider:

(1) Is there a proprietary interest entitled to protection?

(2) Are the temporal or spatial features of the clause too broad?

(3) Is the covenant unenforceable as being against competition generally and not limited to proscribing solicitation of clients of the former employer? Elsley, at para. 19. See also Staebler, at para. 36.

[19] It is also important to assess whether the restrictive covenant is ambiguous. A restrictive covenant that is ambiguous as to time, activity or geography is prima facie unreasonable and unenforceable: Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6, [2009] 1 S.C.R. 157, at para. 43; Stress-Crete Limited v. Harriman, 2019 ONSC 2773, at para. 30.

(a) No proprietary interest

[20] The onus is on Global IFS to demonstrate a strong prima facie case that the non-competition clause is reasonable. Here, I am not satisfied that it has done so. First, Global IFS does not have a strong prima facie case that it has a proprietary interest entitled to protection.

[21] In its original affidavit materials, Global IFS relied heavily on at least two points in support of its claimed proprietary interest, both of which were, in my view, significantly undermined by the responding evidence on the motion.

[22] The first was the distinction between the Global IFS and Tate business models. Global IFS’s affiant, the Executive Chairman of its board, Mr. Rosser, described Global IFS as having an “integrated approach” to RAF. Specifically, Global IFS manufactures, distributes and installs integrated MPD and UFAD systems with its RAF projects. Other manufacturers, like Tate, offer RAF systems that can be used in conjunction with UFAD and/or MPD but they must partner with third party manufacturers of MPD and UFAD and with contractors.

[23] Mr. Rosser stated that Global IFS’s integrated approach created a “unique market advantage” and that the fact that Tate did not offer an integrated approach put Tate at a competitive disadvantage. He stated that Global IFS needed the non-competition clause in the Agreement with Mr. Kranidis because of Mr. Kranidis’ knowledge of the integrated approach.

[24] However, Tate’s evidence was that it did not consider Global IFS’s integrated system strategy to be key to expanding the market for RAF. It planned to continue to rely on industry partners to design and supply UFAD and MPD. Tate’s growth strategy is based instead on the development of an expanding range of floor finishes, particularly high-end finishes. Mr. Rosser admitted that he had “assumed” Tate wanted to expand into the integrated RAF marketplace. He did not provide evidence that Tate intended to do so.

[25] Global IFS has relied on an e-mail dated June 17, 2019 from Mr. Kranidis to David Maybury, the General Manager for Tate for North America, which it submits supports the importance of integration. The e-mail arose in the context of discussions and negotiations leading up to Tate hiring Mr. Kranidis. In the e-mail, Mr. Kranidis appears to be promoting himself on the basis that he could assist Tate with the integrated approach. He wrote: “Although Donal didn’t seem overly excited about ufad, we have achieved tremendous success selling the integrated package”. However, in my view, it is important that in the e-mail, Mr. Kranidis acknowledged that “Donal” was not “overly excited” about the integrated approach. “Donal” is a reference to Donal Curtin, the President of Tate America. I take it from this e-mail that, although Mr. Kranidis was promoting his knowledge of the integrated approach, Tate was not overly interested in it. In other words, Mr. Kranidis’ knowledge of the integrated approach is not valuable to Tate.

[26] Another key point highlighted by Global IFS in its materials was that, toward the end of his employment, Mr. Kranidis was responsible for developing a “new product,” which was being sourced and sold in the Canadian marketplace for the first time. Mr. Rosser stated that Mr. Kranidis was responsible for designing the product and that no patent had yet been secured for it.

[27] Mr. Kranidis’ uncontradicted evidence, though, was that the so-called “new product” was not unique. It was a product called an “Air Tower,” which is an air handling unit that circulates temperature-controlled air beneath the raised floor system. According to Mr. Kranidis, the Air Tower is essentially an air conditioning unit and the technology has been around for decades. Other large manufacturers sell similar units and do not have patent protection for them because they are not unique products. Global IFS’s plan was to copy another company’s pre-existing product and find a supplier for it in Ontario. Mr. Kranidis’ role was to find the Ontario supplier, provide the designs and specifications copied from the pre-existing product, participate in Global IFS’s marketing of the product from a technical perspective, and assist in the preparing of pricing information for the Air Tower.

[28] Global IFS also made other submissions in support of having a proprietary interest. For example, it submitted that Mr. Kranidis was the “face of Camino.” According to Mr. Rosser, Mr. Kranidis was often the “point man” on major products. However, in Ontario, Global IFS had a team of sales people. Elsewhere in Canada and in the United States, the sales were conducted by independent third-party dealers. On cross-examination, Mr. Rosser agreed that Mr. Kranidis’ role was to provide technical support to salespeople.

[29] Global IFS further submitted that Mr. Kranidis was involved in determining and overseeing the ultimate pricing on every project, according to confidential, proprietary pricing models. However, according to Mr. Kranidis, he was rarely asked to review Canadian pricing estimates, but did review the estimates for American dealers for accuracy. The Canadian estimates were prepared by an “estimating department” and the VP of Sales would adjust the overall quote margin without Mr. Kranidis’ involvement. Mr. Kranidis also stated that pricing estimates were often duplicated from prior proposals due to the fact that products and designs are so similar. The “confidential pricing model” was only a pricing list with a margin applied to it.

[30] A significant consideration in my determination that Mr. Kranidis’ knowledge of clients, pricing, and any other project-specific information did not constitute proprietary information relates to the nature of the industry. First, the type of large projects that require RAF generally are commercial buildings and data centres. These projects are managed by contractors, who typically seek bids from Tate and/or Global IFS through a request for proposal (“RFP”) process. Customers are not exclusive to Global IFS or Tate and do not always return to the same company to supply products and services after engaging on a previous project. Further, the contractors are large developers and would be known to everyone in the business.

[31] Second, the projects are large, long-term projects. The non-competition clause in the Agreement is for 12 months. It is not obvious how a 12-month restriction makes sense in the context of the industry. Global IFS has not identified any specific upcoming or ongoing projects that Mr. Kranidis has specific knowledge of that could be detrimental to them. The only specific project it has referenced is a project to provide the Air Tower to Toyota. Mr. Kranidis was involved in sourcing the supplier for that project and in negotiating the pricing. However, that project is already underway. The installation was to occur in August 2019. The Plaintiffs have not suggested that Mr. Kranidis has any confidential information about any other specific project or potential project that would harm them in the next 12 months.

[32] In short, given the nature of the industry, knowledge of customers is not proprietary. Global IFS also has not identified specific information, products or projects that are proprietary. I conclude that Global IFS has not shown a strong prima facie case that it has a proprietary interest entitled to protection from Mr. Kranidis.

(b) Clause ambiguous and too broad

[33] In addition, although the Defendants do not take issue with the geographic (Canada and the United States) and temporal (12 months) scope of the clause, I accept that the non-competition clause is overly broad in the activities it covers. The non-competition clause reads as follows, with the relevant language in bold:

In order to protect the goodwill of the Company and the Company’s and its Affiliates’ interest in the Confidential Information, the Executive agrees that while employed by the Company and during the period commencing on the Termination Date and ending on the later to occur of (i) the end of the twelve (12)-month period following the Termination date and (ii) the date of payment of the last Severance Payment, the Executive shall not, without the prior written consent of the Board, directly or indirectly and whether alone or in conjunction with or on behalf of any other person and whether as principal, director, employee, agent, consultant, partner or otherwise own, manage, control, participate in, be employed by, consult with, render services for, or in any manner engage in or represent any business competing with the Business or with any other businesses, products or services of the Company or its Affiliates as such businesses, products and/or services exist on the Termination Date (collectively, the “Restricted Business”) within the Restricted Territory. Nothing herein shall prohibit the Executive from being a passive owner of not more than two percent (2%) of the outstanding shares of any class of a corporation which is publicly traded that is engaged in the Business, so long as the Executive has no active participation in the business of such corporation. [Emphasis Added]

[34] According to this clause, then, Mr. Kranidis is restricted from taking any position at all in a competing business, including a position in which he is not actually competing. Currently, by way of undertaking, Mr. Kranidis is working for Tate in a position dealing only with ceilings and partitions. This was agreed-upon by the parties because it is not competitive with Global IFS. Nonetheless, Global IFS’ affiant has acknowledged that Mr. Kranidis’ current position is contrary to the non-competition clause. I conclude that the Plaintiffs do not have a strong prima facie case of an enforceable non-competition clause when the clause is drafted to prevent Mr. Kranidis from taking positions in which he would not be in competition with them.

[35] The Defendants have made a number of other arguments about the ambiguity of the non-competition clause. I will not address those arguments, as the conclusions above are sufficient to show that the Plaintiffs do not have a strong prima facie case with respect to the enforceability of the non-competition clause.

Non-Solicitation Clause

[36] The Plaintiffs also do not have a strong prima facie case that the non-solicitation clause in the Agreement is enforceable. As set out above, I have concluded that Global IFS does not have a proprietary interest with respect to Mr. Kranidis’ knowledge of customers, in view of the nature of the industry. In addition, the non-solicitation clause is extremely broad. It runs for a period of two years and covers every possible “business relation” of the “Company” (defined as Camino Modular Systems, Inc.) or any “Affiliate.” Affiliate itself is broadly defined to include the Company, the holding company, CM BC Holding Corp. “and entities from time to time directly or indirectly owned or controlled” by them. The non-solicitation clause reads in relevant part:

While employed by the Company and for a period of two (2) years following the termination of the Executive’s employment for any reason, the Executive shall not directly or indirectly through another person or entity:

(iii) solicit, induce or attempt to solicit or induce any Customer, supplier, licensee, subcontractor or other business relation of the Company or any Affiliate to cease or reduce doing business with the Company or any such Affiliate, or in any way interfere or attempt to interfere with the relationship between any such Customer, supplier, licensee, subcontractor or business relation, on the one hand, and the Company or any such Affiliate, on the other hand;

[37] A non-solicitation clause, to be valid, must clearly advise the former employee which customers are off limits to him or her. In cases where the specific entities not to be solicited are not clearly identified, restrictive covenants have found to be ambiguous and therefore unenforceable: Stress-Crete, at para. 39; Mason v. Chem-Trend Limited Partnership, 2011 ONCA 344, at para. 30.

[38] The scope of the clause in this case is exceedingly broad. It covers all customers, suppliers, licensees, subcontractors or “other business relations.” It is unclear what “other business relation” would cover. “Customer,” itself is broadly defined in the Agreement and includes any third party who was a client or customer of the Company or any Affiliate “at any time.” Therefore, this could include customers from prior years who are no longer customers. Further, it would be unclear to an employee which entities the clause covered, given that it includes reference to “Affiliates,” which changed from time to time. The Plaintiffs’ affiant on cross-examination was unable to identify what entities the holding company owns.

[39] Overall, I conclude that the non-solicitation clause is overly broad and ambiguous. The Plaintiffs do not have a strong prima facie case that it is enforceable.

Confidential Information Clause

[40] I also conclude that Global IFS does not have a strong prima facie case with respect to the enforceability of the clause in the Agreement addressing breach of confidential information. Again, the clause is extremely broad. Enforcing it would result in a restraint on Mr. Kranidis’ ability to compete generally or obtain employment in the industry. Pursuant to the clause, the “Executive” (Mr. Kranidis) is required to, among other things, hold in trust and not disclose without written consent any confidential information, as defined in the Agreement. The Executive is prohibited from disclosing confidential information indefinitely – that is, during the period of employment “and thereafter.” Without reproducing the entire, lengthy, definition of “Confidential Information” in the Agreement, the following excerpts show the breadth of it:

As used in this Agreement, the term “Confidential Information” means information that is used, developed or obtained by the Company or any Affiliate in connection with its business, including, but not limited to, information, observations and data obtained by the Executive while employed by the Company concerning (i) the business or affairs of the Company or its Affiliates, … (xvi) all similar and related information in whatever form, unless the information becomes publicly known through no wrongful act or breach of obligation of confidentiality….

[41] This clause is so broad that it covers all information used or obtained by the company in connection with its business. It seems to cover all information of any kind Mr. Kranidis came into contact with during the course of his employment, much of which would otherwise be considered part of his general experience and understanding of the industry. Employees are entitled to use general knowledge acquired in the course of former employment to compete against the former employer: John A. Ford & Associates Inc. (c.o.b. Training Services) v. Keegan, 2014 ONSC 4989, [2014] O.J. No. 3995, at para. 176. In short, this clause is not limited to a proprietary interest and otherwise is too broad.

Fiduciary Duty

[42] The Plaintiffs submit that Mr. Kranidis owed and continues to owe them a fiduciary duty. They submit that the breach of a fiduciary duty is an important factor to consider in enforcing non-competition provisions.

[43] Mr. Kranidis’ title and the terms of the Agreement suggest he was in a fiduciary relationship with Global IFS. His title at the time of his departure officially was Vice-President, Engineering and Technical Sales for Global IFS and Executive Vice-President for Camino. The Agreement included a 90-day notice provision upon his resignation, as well as an equity participation agreement. These provisions suggest a senior role and possibly fiduciary relationship.

[44] Mr. Kranidis submits, however, that as a practical matter, particularly as time went on, he was being marginalized within the Global IFS business. For example, although the Agreement provides that he would report to the company’s President, in early 2018, the reporting structure had changed unilaterally four times, with reductions in his seniority. Further, although his title would suggest more discretion and control, Mr. Kranidis’ role over time increasingly was in technical operations. He had minimal involvement in Global IFS’s business strategy.

[45] For purposes of this motion, I do not need to determine whether or not Mr. Kranidis was in a fiduciary position. A fiduciary is not precluded from competing with his employer after he leaves, as long as he does not do so unfairly: Aquafor Beech Ltd. v. Whyte, 2010 ONSC 2733, at para. 47; 1488245 Ontario Ltd. v. Irene Riska et al, 2010 ONSC 6780, at para. 27.

[46] Soliciting clients, or at least “active, direct and aggressive solicitation” has been found to be unfair: 1488245 Ontario Ltd., at paras. 27-29. In this case, there is no evidence that Mr. Kranidis has engaged in any solicitation of Global IFS customers or other unfair competition. In addition, given the nature of the industry, where projects are bid on through RFPs, and clients are large, well-known and non-exclusive, even if Mr. Kranidis were found to have a fiduciary relationship to Global IFS, I would not consider the non-competition and non-solicitation clauses to be enforceable. I also would not find a strong prima facie case that Mr. Kranidis breached any independent fiduciary obligation. Global IFS’s case does not succeed on this point.

Other Issues

[47] Mr. Kranidis raises other issues against enforcing the restrictive covenants and allowing the injunction, such as constructive dismissal and that Global IFS is seeking discretionary relief with “unclean hands.” I do not need to address these issues in view of my conclusions that there is no strong prima facie case that the restrictive covenants are enforceable.

Injunction Restraining Use of Confidential Information

[48] Global IFS also seeks an injunction restraining Mr. Kranidis’ use of confidential information. It submits that Mr. Kranidis has a common law duty not to misuse confidential information obtained in the course of his employment. In addition, the Agreement prohibits the misuse of confidential information. Global IFS has serious concerns about Mr. Kranidis’ misuse of confidential information in view of his actions, including retaining the company laptop, attaching USB devices to it and wiping it of information before returning it.

[49] Global IFS submits that the test for an injunction prohibiting the use of confidential information requires that it only show a “serious issue to be tried,” rather than the more onerous strong prima facie case standard: See Canadian Bank Note v. Leblanc, 2013 ONSC 2435, at para. 11. The Defendants have relied in their material on the strong prima facie case standard.

[50] The cases are not entirely consistent in the standard to be used for an injunction relating to the misuse of confidential information. This may be because injunctions for breach of confidence are often intertwined with non-competition and non-solicitation issues. I have discussed the enforceability of the confidential information clause in the Agreement above using the strong prima facie case test. The manner in which that clause is drafted essentially results in a broad non-competition clause. It is not truly limited to confidential information.

[51] However, I am prepared to assume for this motion that the serious issue to be tried is the appropriate standard when looking specifically at the issue of misuse of confidential information that would not result in a restraint on trade. That said, as set out in Plaza Consulting Inc. v. Grieve, 2013 ONSC 5338, at paras. 10-11, the most important question under either test is to identify the factual basis for the claim and, in particular, the basis for the claim that the Plaintiff has confidential information entitled to protection.

[52] In this case, I have some sympathy for Global IFS’s concern about Mr. Kranidis’ intentions. Mr. Kranidis took several steps at the time of his departure from Global IFS that would raise a serious issue that he intended to use Global IFS documents to somehow benefit his new employment.

[53] In his resignation letter to Global IFS, Mr. Kranidis wrote that his “company supplied computer has been left in the office.” He did not mention that he had another company laptop still in his possession. This was the computer he used for most of his Global IFS duties. Mr. Kranidis’ explanation is that he genuinely intended to be available for company business over the 30 days of notice he provided. I note that he has provided some evidence of e-mails he sent on ongoing work immediately after he provided notice.

[54] However, when Global IFS’s counsel sent him a letter on July 24, 2019 reminding him of the Agreement’s restrictive covenants, they also demanded that he return all company documents in his possession. Mr. Kranidis did not return the laptop at that time. Instead, according to the forensic audit subsequently obtained by Global IFS, on August 1, 2019, he attached a USB device to the laptop. He then engaged in a mass deletion of files and returned the laptop on August 6, 2019.

[55] Mr. Kranidis claimed on cross-examination that the reason for attaching the USB device to the laptop was to copy over personal files. However, the forensic IT expert retained by Global IFS was able to identify at least one draft e-mail copied to the USB that was work-related. This e-mail set out Mr. Kranidis’ work on a product being developed by Global IFS and the milestones reached at each stage of development of the product. Although Mr. Kranidis claimed that he wanted this e-mail as evidence related to not receiving his bonus, this explanation is not persuasive given that Mr. Kranidis was leaving the company, had not asserted a right to a bonus, and probably was not entitled to one.

[56] The test for breach of confidence requires: (1) that the information be confidential; (2) that it was misused by the Defendant; and (3) that the Plaintiff suffered harm from the misuse: Edac Inc. v. Tullo, 1999 CanLII 14868 (ON SC), [1999] O.J. No. 4837 (S.C.J.), at para. 52.

[57] My concerns about Mr. Kranidis’ conduct support a serious issue to be tried with respect to his intentions to misuse Global IFS. However, I conclude that there is no serious issue that the test for breach of confidential information is actually met. As set out above, the allegedly confidential information asserted by Global IFS does not constitute a proprietary interest. The specific information identified, such as the Air Tower, does not relate to a unique product. Moreover, I understand the project with Toyota already is public. No other specific projects or products were identified. In addition, the nature of the industry is such that knowledge of particular customers, for example, is not proprietary and confidential. Customers in the industry are large, well-known and non-exclusive. Even if Mr. Kranidis’ knowledge of the integrated approach could be considered confidential, the evidence supports that Tate is not interested in it. Therefore, there is no serious issue of Global IFS suffering a detriment from Mr. Kranidis’ use of the information.

[58] I am also satisfied there is no serious issue because, in spite of what may have been Mr. Kranidis’ intentions, Tate has not received any confidential information from Mr. Kranidis. According to Tate’s affiant, David Maybury, the role Mr. Kranidis is being hired for is very different from the role he performed at Global IFS. He will not be in an engineering role at Tate. Further, Tate has a different growth strategy than Global IFS and was not interested in information from Global IFS. Mr. Maybury has stated directly that Mr. Kranidis did not disclose any laptop to Tate nor provide Tate with access to the contents of a laptop. Further, Mr. Kranidis’ employment agreement with Tate includes a clause in which Mr. Kranidis warrants that, during the negotiation of the agreement, he did not use or disclose to Tate any confidential information belonging to any person. He also warrants that he will not use or disclose confidential information in breach of any agreement or obligation to any person. With respect to pricing, Mr. Maybury states that Tate has developed its own pricing models geared to its own products. Tate has a long history of bidding against Global IFS that has enabled both companies to have a general understanding of each other’s pricing practices.

[59] When asked in this litigation to produce the USB devices he attached to the laptop, Mr. Kranidis’ response was that he had searched for them and did not have possession of them. Global IFS suggests I should draw an adverse inference against Mr. Kranidis for his failure to produce the USB devices. I cannot infer from the failure to produce the devices that Mr. Kranidis misused confidential information. I agree that there is a serious issue that he intended to do so, but in my view, the most likely explanation is that he has now disposed of the devices and any information on them is no longer available to anyone. There is no serious issue that confidential information was misused to Global IFS’ detriment

[60] Therefore, in considering the three-part test for misuse of confidential information, I am satisfied that Global IFS has not shown a serious issue to be tried.

No Irreparable Harm

[61] In view of my conclusions above, Global IFS has not shown that it will suffer irreparable harm if the injunction is not granted. As I am not persuaded that Mr. Kranidis has confidential and proprietary information, nor that he has shared confidential and proprietary information with Tate, its claim of suffering irreparable harm fails.

Balance of Convenience

[62] Given that I do not consider Global IFS to have suffered harm, the balance of convenience weighs in favour of denying the injunction. Mr. Kranidis is the sole income earner for his family. His wife currently is caring for their two infant children. Mr. Kranidis also provides financial care to his elderly parents who have significant health issues. If the injunction were granted, Mr. Kranidis would not be able to take a position with Tate for 12 months. He does not have any other employment arranged and has been working in this particular industry for the majority of his career.

[63] The loss of a job is a significant factor in the balance of convenience. I have not been persuaded that Mr. Kranidis has disclosed any confidential information to Tate, nor that he is competing with Tate in an unfair manner. In these circumstances, the balance of convenience weighs in favour of Mr. Kranidis.

Other Relief Requested

[64] Global IFS has requested other relief including a specific order requiring Mr. Kranidis to comply with his non-solicitation obligations and an order that Mr. Kranidis should submit his electronic devices and personal e-mail account to his lawyer for scanning. These orders are not appropriate on the record before me. Given that there is no evidence of improper solicitation on the part of Mr. Kranidis, and given that clients in the industry are not exclusive and confidential, an order with respect to non-solicitation is not required.

[65] The requested order with respect to Mr. Kranidis’ electronic devices is highly intrusive: Plaza Consulting, at para. 43. It is not supported by this record given my conclusions with respect to the absence of confidential information and that there is not a serious issue of confidential information having been misused. If a forensic examination is necessary as this matter proceeds, the issue can be raised during the discovery process.

Costs

[66] I intend to award costs for this motion in favour of both Defendants. I have received the parties’ costs outlines and note that the partial indemnity costs for all parties are very similar. However, I will provide counsel for the Defendants with an opportunity to make any additional submissions on costs, of no more than two pages, within ten days of the date of this decision. The Plaintiffs then will have seven days to provide responding submissions. If I do not receive any submissions by the Plaintiffs’ deadline, I will assume I can make a decision on costs using the costs outlines provided. Submissions can be e-mailed to my judicial assistant, Anna Maria Tiberio at annamaria.tiberio@ontario.ca.

Disposition

[67] The motion is dismissed.

O’Brien, J

Released: October 28, 2019

COURT FILE NO.: CV-19-625112

DATE: 20191028

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

CAMINO MODULAR SYSTEMS INC. and GLOBAL INTEGRATED FLOORING SOLUTIONS INC.

Plaintiffs

– and –

ANTONIOS KRANIDIS and TATE ASP ACCESS FLOORS INC.

Defendants

REASONS FOR JUDGMENT

O’Brien, J.

Released: October 28, 2019

Camino Modular Systems Inc. v. Kranidis, 2019 ONSC 7437

Case Summary

Overview

Conclusions

Preliminary Motion

Issues

Test on an Injunction to Enforce Restrictive Covenants

No Strong Prima Facie Case

Non-competition clause

(a) No proprietary interest

(b) Clause ambiguous and too broad

Non-Solicitation Clause

Confidential Information Clause

Fiduciary Duty

Other Issues

Injunction Restraining Use of Confidential Information

No Irreparable Harm

Balance of Convenience

Other Relief Requested

Costs

Disposition

Counsel

Parties

Areas of Law

Fact Patterns

Issues

Statutory Provisions 1

Legal Tests 3

Legislation 1