COURT FILE NO.: CV-20-00648496-0000
DATE: 202107803
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: TERRI LEE-ANNE STOREY, TERRACE WELLNESS GROUP INC. and TERRACE YOUTH RESIDENTIAL SERVICES Plaintiffs
AND: BRENDA IRWIN, JEFFREY YORK, JOANNE YORK, JEFF DERIGER, JASON MOORE, PIERRE CLEROUX, CHRISTA PLUMLEY and SNAPCLARITY INC. Defendants
AND RE: SNAPCLARITY INC. Plaintiff by Counterclaim
AND: TERRI LEE-ANNE STOREY Defendant by Counterclaim
BEFORE: Mr. Justice Chalmers
COUNSEL: D. Lederman, S. Galway and M. Wilson, for the Plaintiffs/Defendant by Counterclaim A. Chisholm and L. Brazil, for the Defendants/Plaintiffs by Counterclaim
HEARD: June 24, 2021, by videoconference
ENDORSEMENT
Overview
[1] The Defendant, Plaintiff by Counterclaim, Snapclarity Inc. brings this urgent motion seeking an interim and interlocutory injunction restraining Terri Lee-Anne Storey, the former CEO of Snapclarity and principal of Terrace Wellness Group Inc. (“TWG”) from using its copyrighted works and transferring its intellectual property to MCI OneHealth Technologies Inc. (“MCI”). Snapclarity also seeks an order restraining Ms. Storey from competing against it.
[2] Snapclarity states that Ms. Storey replicated Snapclarity’s key asset; an online mental health intake assessment questionnaire and is using this to operate a virtual mental health services platform in competition with it. Snapclarity says it will suffer significant, unquantifiable impacts on its competitive position if the injunction is not granted. Snapclarity also argues that the balance of convenience favours granting the injunction because it will preserve the status quo and prevent its competitor, MCI from purchasing TWG and acquiring the mental health assessment questionnaire.
[3] Ms. Storey argues that the mental health questionnaire is not the property of Snapclarity but is the property of TWG. The questionnaire was designed by Dr. Jennifer Thake while she was employed as TWG’s CEO. Ms. Storey also says that Snapclarity will not suffer irreparable harm if the injunction is not granted; the Snapclarity platform is no longer offered by Snapclarity. Snapclarity was sold to CloudMD on October 14, 2020. The Snapclarity platform has been integrated into a product offered by HumanaCare, another subsidiary of CloudMD. Ms. Storey states that if the injunction is granted, she will suffer harm, in that this will likely prevent the sale of TWG to MCI.
[4] For the reasons set out below, I dismiss the motion.
BACKGROUND FACTS
[5] Ms. Storey and Jeff Deriger co-founded TWG in 2008. At that time, TWG provided in-person counselling in a brick-and-mortar mental health clinic. In July 2016, Ms. Storey and Mr. Deriger incorporated Snapclarity. The purpose of the new company was to develop a mobile app offering virtual mental health services.
[6] Ms. Storey was the CEO of Snapclarity from April 4, 2017 until her termination on June 15, 2020. At the time the company was incorporated, Ms. Storey executed various agreements, including a Shareholders’ Agreement. The Shareholders’ Agreement provides that Ms. Storey is not to disclose or use any confidential knowledge or information, including but not limited to Snapclarity’s customers, products, technology, trade secrets, systems, and operations. The Shareholders’ Agreement also provides that Ms. Storey is not to hold any interest in a business that competes with Snapclarity or to solicit any customers of Snapclarity for two years from the date she ceases to be a shareholder.
[7] Ms. Storey’s work for Snapclarity was performed pursuant to a Consulting Agreement. The Consulting Agreement appended an Intellectual Property Rights and Confidentiality Agreement. The Consulting Agreement contains covenants preventing Ms. Storey from competing with Snapclarity for a period of one year from the date her employment at Snapclarity ceases. The Intellectual Property Rights and Confidentiality Agreement contains provisions concerning confidential information and trade secrets.
[8] Snapclarity developed a digital platform that assesses an individual’s personal risk of mental health disorders. The Snapclarity platform includes a mental health questionnaire. An external software developer, Extreme Innovations, worked on technology that processes answers to the questions using an algorithm that identifies mild, moderate, or high-risk areas. Following completion of the questionnaire, individuals are presented with an action and treatment plan and referrals to the appropriate mental health resources.
[9] Snapclarity states that it invested significant time and energy to create the mental health app. On March 23, 2017, Snapclarity contracted with Extreme Innovations to create the digital platform. According to Jon Harju, the Chief Technology Officer of Snapclarity, Extreme Innovations was paid at least $350,000 to develop the app.
[10] The parties agree that the online mental health questionnaire used in the intake process was developed by Dr. Thake. Snapclarity argues that in late 2017 and 2018, Dr. Thake worked for Snapclarity to develop the intake process, which included the mental health assessment questionnaire. Ms. Storey takes the position that Dr. Thake developed the questionnaire when she was CEO of TWG and completed that work before she joined Snapclarity.
[11] Dr. Thake became the CEO of TWG in April 2017. On April 21, 2017, Dr. Thake sent an e-mail to Ms. Storey enclosing the mental health assessment questionnaire. This version was similar but not identical to the questionnaire that would eventually be used by Snapclarity. On August 31, 2017, Dr. Thake sent an e-mail resigning from her position as CEO of TWG effective September 8, 2017. On September 14, 2017, Dr. Thake sent an e-mail to Extreme Innovations, with a copy to Ms. Storey and Mr. Deriger, attaching the mental health assessment marked “final”. She stated that she had made some updates and that the assessment was “finally in a good place”. The final mental health assessment is dated September 26, 2017. Dr. Thake invoiced Snapclarity on November 9 and December 11, 2017 for work performed after her resignation from TWG. The invoices refer to Dr. Thake as a consultant.
[12] On April 3, 2018, Dr. Thake entered into an Intellectual Property Rights and Confidentiality Agreement with Snapclarity. The effective date of the agreement is January 1, 2018. The agreement was later converted to a Consulting Agreement. A document describing Dr. Thake’s duties at Snapclarity was prepared. The tasks include compiling the screening questions into a unique assessment. Snapclarity takes the position that the document was prepared by Dr. Thake. I am unable to conclude that Dr. Thake prepared the document. The document does not have a title or description. It is undated and unsigned. Donna Price, the corporate secretary of Snapclarity, was cross-examined on her affidavit. She testified that this document was not in their files but was received from their lawyers. She testified that she could not recall when she received the document.
[13] On June 15, 2020, Ms. Storey was terminated as Snapclarity’s CEO. She remained a shareholder. The termination is described by the parties as “acrimonious”.
[14] In June or July 2020, after the termination of Ms. Storey’s employment as CEO, Snapclarity issued convertible debentures to Mr. Deriger. Ms. Storey takes the position that the issuance of the convertible notes was not disclosed to her. Those debentures were converted into equity on September 11, 2020. The issuance of the debentures and their conversion into equity had the effect of diluting Ms. Storey’s interest in Snapclarity from 32.64 percent to 17.01 percent. After the conversion of the debentures, the Shareholders’ Agreement was amended on September 14, 2020 to reduce the number of votes required for a shareholder majority from 75 percent to 66.66 percent. Ms. Storey learned of the amendment of the Shareholders’ Agreement following Snapclarity’s issuance of a Management Information Circular on September 23, 2020. The Circular was issued in connection with the proposed acquisition of Snapclarity by CloudMD.
[15] After learning of the dilution of her shares and the amendment of the Shareholders’ Agreement, Ms. Storey formally objected to the Circular and requested an explanation from Snapclarity. On September 25, 2020, Snapclarity advised that the Shareholders’ Agreement had been amended and took the position that Ms. Storey was in breach of her obligations under such. A few days later, Ms. Storey was advised that Mr. Deriger had been issued convertible debentures, which had been converted into equity. Ms. Storey requested documentation with respect to the equity issuance. Ms. Storey states that the requested documentation has not been provided to date.
[16] After the termination of her position as CEO of Snapclarity, Ms. Storey and TWG created OneHealth Technologies Inc. The OneHealth platform is a web-based portal that delivers and manages therapy and counselling care. The platform uses a mental health assessment questionnaire. Snapclarity takes the position that the OneHealth platform copies, verbatim, Snapclarity’s intake questionnaire. The questionnaire used by OneHealth allows the care team member to develop a personalized care plan. OneHealth does not use the algorithm designed by Extreme Innovations to automatically match the user to a therapist.
[17] Snapclarity argues that many of the documents used to create the online platform, including the mental health questionnaire, were held in a Google Drive. Following the termination of her employment from Snapclarity, Ms. Storey accessed the Google Drive on July 3, 2020 and copied the mental health questionnaire. She also accessed presentations to shareholders, investors, and potential customers. Ms. Storey does not deny that she accessed the Google Drive after the termination of her employment with Snapclarity. She takes the position that the drive belonged to TWG and not Snapclarity.
[18] On October 14, 2020, CloudMD acquired 100 percent of the issued shares of Snapclarity for $3.35 million, subject to certain holdbacks. The purchase included a potential for a further $3.65 million in equity-based consideration. Ms. Storey took the position that the transaction was improper because of the dilution of her shares. In January 2021, CloudMD acquired HumanaCare Organizational Resources Inc. and its parent company, HumanaCare. After the acquisition, Snapclarity’s platform was integrated into HumanaCare’s platform.
[19] Ms. Storey and TWG commenced this action on September 29, 2020, seeking various forms of relief, including the oppression remedy and damages for breach of the Shareholders’ Agreement. In the Statement of Claim, they plead that TWG owned the mental health assessment questionnaire and sought to protect its copyright. The Defendants delivered a Statement of Defence and Counterclaim. The Defendants allege that Ms. Storey infringed Snapclarity’s copyright in the in-take process, treatment plans and marketing materials. The Defendants allege that Ms. Storey was in breach of the Shareholders’ Agreement and Consulting Agreement because she was the CEO of OneHealth and was competing with Snapclarity.
[20] On February 16, 2021, OneHealth was formally acquired and became a wholly owned subsidiary of MCI. On May 6, 2021, MCI announced it was acquiring TWG. In the press release, MCI states that the purpose of the acquisition is to “partner” with Ms. Storey and to add mental health services to MCI’s online platform. MCI is a competitor of CloudMD.
[21] On May 31, 2021, Snapclarity brought this motion for an interim injunction to enjoin TWG and Ms. Storey from using or transferring Snapclarity’s intellectual property until this litigation is resolved. On June 1, 2021, MCI, Ms. Storey, and TWG provided an undertaking that they would not close the acquisition of TWG until three days after the court provides its decision with respect to the motion.
ANALYSIS
[22] Section 101 of the Courts of Justice Act, R.S.O. c. C.43, provides that an interlocutory injunction may be granted where it appears to the judge to be just or convenient to do so. The test for granting an injunction is not in dispute: see RJR-MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC), 1994 SCC 117, [1994] 1 S.C.R. 311, at pp. 335-337. It consists of three parts:
a. there is a serious issue to be tried;
b. the moving party will suffer irreparable harm if the relief is not granted; and
c. the balance of convenience favours granting the injunction.
[23] The three elements of the test are to be considered as a whole. Strength in one part of the test can make up for weakness in another. The court is then to consider whether the injunctive relief is appropriate in the circumstances: see Struik v. Dixie Lee Food Systems Ltd., 2006 27574 (Ont. S.C.), at paras. 35-36.
Serious Issue To Be Tried/Strong Prima Facie Case
[24] The first branch of the test requires the court to make a preliminary assessment of the merits of the moving party’s case. Snapclarity states there is a serious issue to be tried regarding two main issues: (1) that Ms. Storey infringed copyright with respect to the mental health questionnaire and marketing materials; and (2) that Ms. Storey breached the non-compete clauses of the agreements.
[25] With respect to the allegations of copyright infringement and misuse of confidential information, Snapclarity must demonstrate that there is a serious issue to be tried. Snapclarity argues that this is a low standard; the moving party is required to show that the case is not frivolous or vexatious: see Global Knowledge (Canada) Inc. v. ESI International Inc., 2009 CarswellOnt 8163 (S.C.), at para. 11. In the case of the non-compete clause, Snapclarity must meet the higher threshold of establishing a strong prima facie case: see Berkeley v. Miller, 2018 ONSC 3645, at para. 8. The moving party must prove that it is very likely to succeed at trial: R. v. Canadian Broadcasting Corp., 2018 SCC 5, [2018] 1 S.C.R. 196, at para. 17.
Infringement of Copyright
[26] Snapclarity states that there is sufficient evidence that Ms. Storey and TWG infringed Snapclarity’s copyright with respect to the intake mental health questionnaire and that this is a serious issue to be tried. Snapclarity points out that the wording of the intake questionnaire used by OneHealth is virtually identical to the Snapclarity questionnaire and even includes the same typo.
[27] Ms. Storey does not dispute that the questionnaires are basically the same. It is her position, however, that the copyright in the questionnaire is owned by TWG and not Snapclarity. She states that the mental health questionnaire was developed by Dr. Thake when she was the CEO of TWG and therefore TWG holds the copyright. Snapclarity argues that Dr. Thake developed the questionnaire when she was working for Snapclarity in late 2017 and 2018.
[28] Dr. Thake was CEO of TWG from April 2017 to September 2017. On April 21, 2017, Dr. Thake sent an e-mail to Ms. Storey attaching the working version of the mental health assessment questionnaire. On September 14, 2017, six days after her resignation as CEO of TWG was effective, Dr. Thake sent an e-mail to Extreme Innovation in which she attached the “final” version of the questionnaire. In both e-mails, she identifies herself as the CEO of Terrace Wellness Group and uses her TWG e-mail account.
[29] Dr. Thake’s consulting agreement with Snapclarity was effective January 1, 2018. There is no evidence that Dr. Thake worked on the questionnaire in 2018. She sent the final version of the questionnaire to Extreme Innovations on September 14, 2017. Mr. Harju confirmed that all the work carried out by Extreme Innovations on the questionnaire was done in 2017. Donna Price, the corporate secretary of Snapclarity, confirmed that in August 2017, she was in discussions with TWG to purchase the questionnaire for use by Snapclarity. Snapclarity has not produced any documentation which provides that Dr. Thake performed any work on the questionnaire when she was under contract with Snapclarity.
[30] Snapclarity argues that Dr Thake was not an employee of TWG at the time she sent the final version to Extreme Innovations on September 14, 2017. Although Dr. Thake may not have been an employee of TWG when she sent the final version of the questionnaire, there is no evidence she was an employee of Snapclarity. I am of the view that at the time she sent the final version, she was not an employee of either TWG or Snapclarity. She was a consultant. As a consultant, Dr. Thake owns the copyright in the absence of an agreement to the contrary: see Keatley Surveying Ltd. v. Teranet Inc., 2019 SCC 43, 437 D.L.R. (4th) 567, at para. 60. No agreement has been identified.
[31] On the evidence before me, I am satisfied that the mental health assessment questionnaire was developed by Dr. Thake when she was an employee of TWG and was completed when she was an independent consultant. There is no evidence to support Snapclarity’s position that Dr. Thake developed the questionnaire when she was working for, or under contract with, Snapclarity. I am unable to conclude on the evidence before me that Snapclarity owned the copyright in the questionnaire.
[32] Snapclarity argues that Ms. Storey improperly obtained and used the marketing materials developed by Snapclarity. It states that the slide decks in the marketing materials used by OneHealth and Snapclarity are “very close”. I reviewed the marketing materials. The two versions are similar. However, there is no evidence with respect to the ownership of the marketing materials. Ms. Storey takes the position that the marketing materials do not belong to Snapclarity. Mr. Harju of Snapclarity, in his affidavit, states that Ms. Storey accessed several years of marketing materials, but he does not state that the marketing materials were the property of Snapclarity.
[33] Snapclarity argues that Ms. Storey improperly obtained the mental health questionnaire and the marketing materials from the Google Drive she accessed a few days after she was terminated from her employment at Snapclarity. Ms. Storey argues that the Google Drive was created by Dr. Thake in the fall of 2017 and was the property of TWG. TWG controlled the permission on the account. After Ms. Storey realized that Mr. Harju had access to the drive, she removed his access. No steps were taken by Snapclarity to have its access to the Google Drive restored.
[34] On the evidence before me, I am unable to conclude that the Google Drive was owned by Snapclarity or that Ms. Storey acted improperly in accessing the Google Drive following the termination of her employment.
Breach of the Restrictive Covenants
[35] Snapclarity seeks to enforce the non-compete clause in the Shareholders’ Agreement. The Shareholders’ Agreement provides that a shareholder is restricted from directly or indirectly being involved in a business that competes with the business carried on by Snapclarity for a period of two years after ceasing to be a shareholder. Ms. Storey ceased to be a shareholder of Snapclarity on October 1, 2020.
[36] Snapclarity argues that a two-year restrictive covenant in a commercial agreement is reasonable, particularly in the case of Ms. Storey, who was the co-founder and CEO of Snapclarity: see Edgetech HVAC Services Ltd. v. Ubhi, 2016 ONSC 7564, at paras. 30-33.
[37] Ms. Storey argues that the Shareholders’ Agreement was breached by Snapclarity when it issued debentures to Mr. Deriger and converted the debentures to voting shares after Ms. Storey was terminated from her position as CEO. At the time the Shareholders’ Agreement was entered into, Ms. Storey had veto rights with respect to any potential sale. Her voting rights were subsequently diluted, and her veto rights were lost. She argues that Snapclarity failed to provide evidence that notice was provided to her with respect to the issuance of the convertible debentures.
[38] Snapclarity denies the allegations and argues that it complied with all obligations pursuant to the Shareholders’ Agreement. At worst, it did not provide notice of the issuance of the debentures. Snapclarity argues that a failure to provide notice (which is denied) is not sufficient to repudiate the agreement.
[39] I am of the view that Snapclarity’s conduct in issuing the debentures and converting the debentures into equity puts in issue whether the agreement remains in force. There is no evidence on the motion that Ms. Storey agreed to an amendment of the agreement. Snapclarity has not provided proof that notice of the issuance of the debentures was provided to Ms. Storey. Snapclarity’s conduct supports Ms. Storey’s position that Snapclarity was not prepared to be bound by the Shareholders’ Agreement, and that it would be unjust to grant an injunction in the circumstances.
[…] as an injunction is an equitable remedy, it would be unjust that an interlocutory stage to specifically enforce the term of an agreement against one party at the behest of the party who is not prepared to continue to be bound by the terms of that agreement: Gerrard v. Century 21 Armour Real Estate Incorporated (1991), 1991 7104 (ON SC), 4 O.R. (3d) 191 (Gen. Div.), at para. 38.
[40] Ms. Storey also argues that the two-year non-compete clause in the Shareholders’ Agreement is unreasonable when one takes into account the one-year non-compete clause in the Consulting Agreement. Under the Consulting Agreement, Ms. Storey was contracted to be the CEO of Snapclarity. As CEO she was involved in the day-to-day operation of the business. The parties were satisfied that a one-year restrictive covenant was sufficient to protect Snapclarity if Ms. Storey was no longer the CEO. Ms. Storey argues that there is no justification for the restrictive covenant being longer in the Shareholders’ Agreement than the Consulting Agreement. Ms. Storey was terminated from her position as CEO and removed from the business in June 2020. The restrictive covenant in the Consulting Agreement expired in June 2021.
[41] Ms. Storey also argues that she is not competing with Snapclarity. The Shareholders’ Agreement provides that the shareholder is not to be associated with a business that competes with the business carried on by the corporation or any subsidiary of the corporation. Based on the wording of the non-compete clause, it applies only to preclude Ms. Storey from competing with Snapclarity or any of its subsidiaries. The clause does not prevent Ms. Storey from competing with Snapclarity’s parent corporation, CloudMD, or subsidiaries of CloudMD, such as HumanaCare.
[42] Ms. Storey argues that Snapclarity is no longer offering the Snapclarity platform. Following the purchase by CloudMD, the Snapclarity platform was developed and sold by CloudMD. Since January 12, 2021, the Snapclarity platform has been integrated into the HumanaCare platform. In argument, counsel for Snapclarity stated that Snapclarity continues to offer the app for mobile phones, and that it has “many employees”. The evidence on the motion does not support this submission. There are currently only three employees, and one consultant with Snapclarity. There is no evidence on the motion as to Snapclarity’s current revenue. Mr. Harju of Snapclarity testified on his cross-examination:
Q. So the idea is that the standalone business that Snapclarity was performing, or the standalone product that Snapclarity was offering, all of that now is being rolled in to a consolidated, integrated product which will probably take effect, according to you, in three or four months, is that correct?
A. If everything goes as planned, yes…..
Q. Is the plan that CloudMD will develop, market and sell the integrated product?
A. Yes.
Q. Now, that might be the plan that CloudMD will develop, market and sell the integrated product, but at this point currently as of today, it’s HumanaCare who is doing that, is that correct?
A. Correct, yes.
Q. … since after January 12, 2021, the Snapclarity platform has become integrated into HumanaCare’s business, correct?
A. That is correct.
[43] Finally, Ms. Storey argues that the platform offered by OneHealth is not the same as the Snapclarity’s platform. The Snapclarity platform was an app that requires users to complete a mental health assessment questionnaire. The answers were processed by an algorithm which matched users to a mental health professional. The OneHealth platform requires patients to answer questions about their mental health, but does not use an algorithm to match the users with a mental health professional.
[44] On the evidence before me, I am unable to conclude that it is “very likely” Snapclarity will succeed at trial with respect to the claim that Ms. Storey breached the restrictive covenant in the Shareholders’ Agreement.
Irreparable Harm
[45] The moving party must prove that if the injunction is not granted it will suffer harm that cannot be quantified in monetary terms and cannot be cured. The moving party must lead clear and non-speculative evidence that irreparable harm will result if the injunction is not granted: see Homestead House Paint Co. Inc. v. Jamieson, 2019 ONSC 2660, at para. 34.
[46] Snapclarity argues that Ms. Storey agreed that if she breached the agreements there would be a presumption of irreparable harm. The Shareholders’ Agreement provides that in the event of a breach, a party could obtain injunctive relief without proof of actual damages. In the Consulting Agreement, Ms. Storey acknowledges that it would be difficult to compute the monetary loss to the company arising from a breach or threatened breach of the agreement. In the Intellectual Property and Confidentiality Rights Agreement, the parties acknowledge the difficulty in computing a monetary loss in the event of a breach of the agreement.
[47] Clauses in agreements that state the non-breaching party is entitled to a finding of irreparable harm which would support an injunction, are not binding on the court: see Homestead House Paint, at para. 31. Snapclarity argues that although the agreements are not binding, they raise a presumption of irreparable harm: see Canpages Inc. v. Quebecor Media Inc., [2008] O.J. No. 2169, at para. 13.
[48] Snapclarity argues that there is sufficient evidence to establish that if the injunction is not granted, it will suffer a loss of competitive advantage that cannot be quantified in monetary terms. Snapclarity states that it is inherently difficult to assess a loss of goodwill in cases of unfair competition. In an industry in which there is fluidity of customer allegiances, it may be difficult to establish an accurate measure of damages: see Precision Fine Papers Inc. v. Durkin, 2008 6871 (Ont. S.C.), at paras. 24-25.
[49] Snapclarity concedes that it does not have significant revenues on its own, but the value is when the Snapclarity program is part of an integrated system. Snapclarity filed the affidavit and report of Patrick McCabe, a forensic business valuator. In his report, Mr. McCabe provides the opinion that the overall harm to Snapclarity, as a result of copyright infringement, is not quantifiable in monetary terms. This evidence was challenged on cross-examination. Mr. McCabe testified that CloudMD has determined and disclosed the fair market value it ascribes to the intangible assets it acquired from Snapclarity. He conceded that if the fair market value of the intangible assets changes in the future, it would be possible to calculate the change in the value.
[50] Snapclarity sold its business to CloudMD on October 14, 2020. The Snapclarity platform was integrated into the HumanaCare platform as of January 12, 2021. The platform Snapclarity states is being affected by Ms. Storey’s conduct is now offered by HumanaCare. Although CloudMD or HumanaCare may be harmed if the injunction is not granted, I am not satisfied that Snapclarity will suffer irreparable harm. A company that no longer operates cannot suffer irreparable harm: see FLS Transportations Series Inc. v. Charger Logistics Inc., 2016 ONSC 3652, at para. 62.
Balance of Convenience
[51] In considering the balance of convenience, I must consider which of the two parties will suffer the greater harm from either granting or refusing to grant the interim injunction pending a determination on the merits: see RJR-MacDonald, at paras. 62-63.
[52] Snapclarity argues that the balance of convenience supports granting the injunction and preserving the status quo. The injunction will prevent the transfer of Snapclarity’s property to MCI prior to a determination of who owns the intake process. It will allow CloudMD to consolidate its services into a single integrated product. Snapclarity argues that there is little evidence that OneHealth or TWG will be harmed by an injunction.
[53] Ms. Storey argues that if the injunction is granted, the sale to MCI is not likely to proceed and she and TWG will lose the benefit of the sale.
[54] Ms. Storey further argues that the status quo involves OneHealth using a mental health questionnaire. Snapclarity was aware as of November 2020 that Ms. Storey continued to work at TWG and had created OneHealth. In a letter to Ms. Storey’s counsel dated November 13, 2020, Snapclarity’s counsel asserted that Ms. Storey’s involvement in OneHealth was a breach of her fiduciary and contractual duties. Snapclarity raised the issues related to the breach of confidential information in its Statement of Defence and Counterclaim in December 2020. It is specifically alleged at para. 5 of the Statement of Defence that Ms. Storey is the CEO of OneHealth and competes with Snapclarity. At para. 92, it is alleged that Ms. Storey now holds a position in a company that competes with Snapclarity. At para. 113, the Defendants allege that they will suffer irreparable harm as a result of Ms. Storey’s breaches.
[55] Although Snapclarity was aware of Ms. Storey’s role in OneHealth in November 2020, it did not bring a motion for injunctive relief until after it learned that OneHealth was being sold to MCI. MCI is a competitor of CloudMD and HumanaCare. This suggests that Snapclarity is bringing this motion because of a concern about competition with CloudMD and HumanaCare, and not competition with Snapclarity. CloudMD and HumanaCare are not parties to this action.
[56] Delay in bringing a motion for injunctive relief is a relevant consideration in equity and in assessing the balance of convenience: see 911887 Ontario Inc. v. LeBlanc, 2002 CarswellOnt 2526, at para. 23. By November 2020, Snapclarity was aware of the conduct of Ms. Storey, which it now seeks to enjoin. I am satisfied that the delay in proceeding with the motion undermines its argument that there is a risk of irreparable harm and that the balance of convenience favours granting the injunction.
[57] As set out in paragraphs 45-50 above, I am not satisfied that Snapclarity will suffer damages if the injunction is not granted. However, if the injunction is granted, Ms. Storey and TWG will likely lose the benefit of the sale to MCI. I conclude that the balance of convenience favours refusing to grant the injunction.
Undertaking as to Damages
[58] Snapclarity has proposed an undertaking as to damages in the event it is unsuccessful at trial. Snapclarity notes in its factum that although it has proposed an undertaking as to damages, Ms. Storey and TWG have not made such an offer. As responding parties to a motion for an injunction, there is no obligation on Ms. Storey or TWG to provide an undertaking as to damages.
[59] Snapclarity is the only party that can provide the undertaking as to damages. Snapclarity states that it continues to be a “going concern”. The evidence on the motion suggests the contrary. The Snapclarity product has been integrated into the HumanaCare platform. There is no evidence with respect to the ongoing revenue of Snapclarity. Snapclarity currently has only three employees and one consultant. In these circumstances, it is incumbent upon Snapclarity to provide evidence of its ability to honour the undertaking. No such evidence was provided. Counsel for Ms. Storey argues that in these circumstances, the undertaking as to damages is effectively worthless. I agree.
DISPOSITION
[60] An injunction is an extraordinary equitable remedy. In considering the test as a whole, I am of the view that an injunction is not warranted in the circumstances of this case. I dismiss the motion.
[61] Ms. Storey is successful on the motion and is presumptively entitled to her costs. After argument, I asked both parties to provide their Bills of Costs. Ms. Storey’s Bill of Costs is in the amount of $159,339.49 on a partial indemnity basis, inclusive of counsel fee, disbursements, and HST. Snapclarity’s Bill of Costs is in the amount of $218,119.72 on a partial indemnity basis, inclusive of counsel fee, disbursements, and HST.
[62] In exercising my discretion in assessing costs, I considered the factors identified in Rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. I also considered the overall objective of any costs award: that it be fair and reasonable and within the reasonable expectation of the unsuccessful party to pay: see Boucher v. Public Accountants Council (Ontario) (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at paras. 26, 38.
[63] This motion was argued over a full day. There was extensive cross-examination of the affiants. Counsel clearly spent a considerable amount of time to organize the complicated history in a clear and coherent manner. The oral submissions of counsel for both parties were particularly skillful. I award costs of the motion to Ms. Storey fixed in the amount of $150,000, inclusive of counsel fee, disbursements, and HST. The costs are payable within 30 days of the date of this endorsement.
DATE: AUGUST 3, 2021