Court File and Parties

COURT FILE NO.: CV-22-677115-0000 DATE: 20220713 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Wellsky Corporation and 1950766 Ontario Inc. AND: Moyra Miller

BEFORE: J.T. Akbarali J.

COUNSEL: Hugh Christie and Emily Cohen-Gallant, for the plaintiffs Greg McGinnis, for the defendant

HEARD: June 15, 2022

Overview

[1] The plaintiffs move for injunctive relief, restraining the defendant from directly or indirectly working for her current employer (a competitor of the plaintiff Wellsky Corporation) or competing with the plaintiffs anywhere in Canada and the USA for a period of one year. They also move for an order restraining the defendant from soliciting away any employee, customer, or potential customer of the plaintiffs for a period of 18 months following the date of the order, and restraining her from directly or indirectly disclosing or using the plaintiffs’ confidential or proprietary information. They seek ancillary orders related to the return of their confidential information.

[2] At the hearing of the motion the plaintiffs moderated their position, and suggested that the equities of this case would best be met by an order limiting the scope of the duties the defendant can undertake for her current employer until the end of 2022, and ordering her to neither use nor disclose the plaintiffs’ confidential information.

[3] The defendant argues that the plaintiffs have not met the test for injunctive relief, such that the motion must be dismissed.

Brief Background

[4] WellSky Corporation is a technology company in the business of developing, implementing and supporting community and health care software solutions. It is part of a large corporate structure and operates in several countries. The numbered company plaintiff is a wholly owned subsidiary and is part of WellSky Corporation’s overall corporate structure. The record is not entirely clear as to its operational relationship with WellSky Corporation.

[5] The defendant is a former employee of one or the other of the plaintiffs, or of both of them. I use the term WellSky to refer to whatever entity or entities employed her.

[6] The defendant is in her 60s. At WellSky, she held the title of Vice President of Client Success. She supervised a team of 16 employees and their subordinates. The team managed the clients of a WellSky division known as WellSky Home. WellSky Home generated about a third of WellSky’s total revenue. The defendant was the most senior employee of WellSky in Canada. The defendant was the 84th highest paid employee within the WellSky organization.

[7] The defendant was also a director of the plaintiff numbered company. She left her employment and resigned her directorship in January 2022, and took a job with another company which competes with WellSky, moving into a role also titled Vice President of Client Success.

[8] The plaintiffs seek extraordinary injunctive relief, arguing that the defendant was a fiduciary and has breached her duty of good faith to them. They rely on contractual non-competition and non-solicitation clauses, but not as sources of the obligations they allege are owed to them; rather, they argue that the contracts inform the parties’ expectations. They argue that the defendant was a fiduciary by virtue of her role at WellSky, and by virtue of her status as a director of the numbered company. They point to extra compensation she received over the last five years of her employment totalling $850,000 USD, although they acknowledge that nearly $300,000 USD of that amount has not been paid and the plaintiffs have not committed to paying it.

[9] The plaintiffs argue that, as a fiduciary, the defendant had an obligation to communicate with them about her plans to begin work for a competitor so that appropriate discussions could be had about how she would meet her obligations to WellSky and the numbered company in her new position.

[10] The plaintiffs also rely on what they refer to as “coincidences” that have given them pause. In particular:

a. After the defendant joined her current employer, another senior employee from her team, Greg Skillas, also left WellSky to join the defendant’s current employer;

b. Before she left WellSky, the defendant downloaded to her work laptop certain customer lists and a conversation guide, all of which contained confidential information. Although her work laptop was returned to WellSky on her departure, the plaintiffs cannot tell whether she saved a copy of the documents to a thumb drive or whether she printed a hard copy of the documents;

c. WellSky’s bid for work from a potential client was unsuccessful, which came as a surprise to WellSky. The potential client accepted a bid from the defendant’s current employer instead.

[11] In response, the defendant gives evidence that:

a. She had no involvement in recruiting or hiring Mr. Skillas, or in encouraging him to leave his employment with the plaintiffs;

b. She downloaded the documents at issue because she had to work on them as part of her job, and doing so was neither unusual nor improper. She did not retain copies of the documents, or save or send them anywhere from which she could later access them. In any event, her new job does not require her to be involved in the solicitation of employees, customers, or potential customers, or to use or disclose any confidential information, trade secrets, or intellectual property belonging to the plaintiffs.

c. She had no involvement in WellSky’s bid for work from the potential customer (a fact with which WellSky agrees) and she had no involvement in her new employer’s bid for that work.

[12] The plaintiffs cross-examined the defendant and no additional evidence to support their allegations of solicitation or misuse of confidential information was uncovered. No one chose to seek to examine Mr. Skillas.

[13] The plaintiffs’ own evidence, while using inflammatory headings like “Ms. Miller’s Theft of WellSky’s Confidential and Proprietary Information”, does not go so far as to establish that Ms. Miller has done any of things the plaintiffs suspect her of doing. Their evidence is that they do not know whether she retained any confidential information, but if she did, and were she to use it improperly, they would suffer irreparable harm. At the same time, they acknowledge that she may have had legitimate reasons to download the documents they are concerned about. They offer no evidence to link the defendant with Mr. Skillas’ new employment, nor with the loss of a single customer bid to the defendant’s new employer.

Injunctive Relief

[14] The three-part test to obtain interlocutory injunctive relief is well-known, and set out in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] S.C.R. 311:

a. Is there a serious issue to be tried? In cases where an employer is seeking to enforce a restrictive covenant, or is seeking an interlocutory injunction alleging breach of post-employment fiduciary obligations, the court asks whether the plaintiff has established a strong prima facie case: Orpheus Medica v. Deep Biologics Inc., 2020 ONSC 4974, at para. 14.

b. Is there irreparable harm to the moving party? Irreparable harm refers to the nature of the harm suffered rather than its magnitude. The court asks whether damages awarded after a trial will provide the plaintiff with an adequate remedy without the need for an interlocutory injunction. Evidence of irreparable harm must be clear and not speculative: Optilinxs Systems Inc. v. Fiberco Solutions Inc., 2014 ONSC 6944, at paras. 10-11.

c. Does the balance of convenience favour the relief sought? The balance of convenience considers which party will suffer the greater harm from granting or refusing to grant an interlocutory injunction pending a decision on the merits: Optilinxs, at para. 13.

[15] I conclude that the plaintiffs have not established that an interlocutory injunction is warranted.

[16] I assume, without deciding, that there is a serious issue to be tried. I note this issue was hotly contested, but it is not necessary to deal with it for me to dispose of this motion efficiently.

[17] The motion fails because there is no evidence of irreparable harm on the record. There is no evidence that the defendant has done any of the things she has been accused of doing.

[18] The plaintiffs agree she could have downloaded their confidential documents to her work laptop for legitimate reasons, and they have no evidence that she kept, saved, or printed a copy of those documents. They have no evidence of their confidential evidence being used. The defendant denies doing anything improper with the plaintiffs’ confidential information.

[19] The plaintiffs have no evidence that the defendant solicited Mr. Skillas, the potential customer who did not accept their bid, or anyone else at all. The defendant denies having been involved with Mr. Skillas’ departure from the plaintiffs, or with the client bid, either for her current employer or for WellSky. WellSky agrees she was not involved in its bid.

[20] Suspicion does not amount to the clear and not speculative evidence of irreparable harm that is required.

[21] Moreover, the balance of convenience does not favour the plaintiffs. The plaintiffs are part of a massive corporate structure operating in multiple countries, and they have no evidence they have been harmed by the defendant. On the other hand, the defendant is a woman in her 60s whose employment is presumably important to her ability to finance her needs, and her eventual retirement. The balance of convenience does not so much tip in favour of the defendant as it topples.

[22] The motion for interim injunctive relief is dismissed.

Sealing Order

[23] Originally the plaintiffs sought to file confidential documents on this motion for which they sought a sealing order. The confidential documents were never referred to, and in the result, the plaintiffs advised that they wished to withdraw their request to file those documents. It follows that no sealing order is required, as these documents never became part of the court file.

Costs

[24] The three main purposes of modern costs rules are to indemnify successful litigants for the costs of litigation, to encourage settlement, and to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan (1999), 1999 CanLII 2052 (ON CA), 46 O.R. (3d) 330, at para. 22.

[25] Subject to the provisions of an Act or the rules of court, costs are in the discretion of the court, pursuant to s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. The court exercises its discretion taking into account the factors enumerated in r. 57.01 of the Rules of Civil Procedure, including the principle of indemnity, the reasonable expectations of the unsuccessful party, and the complexity and importance of the issues. Overall, costs must be fair and reasonable: Boucher v. Public Accountants’ Council for the Province of Ontario, 2004 CanLII 14579 (Ont. C.A.), 71 O.R. (3d) 291, at paras. 4 and 38. A costs award should reflect what the court views as a fair and reasonable contribution by the unsuccessful party to the successful party rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier, 2002 CanLII 25577 (ON CA), 2002 CarswellOnt 4020, 118 A.C.W.S. (3d) 341 (C.A.), at para. 4.

[26] The defendant is the successful party on this motion and is presumptively entitled to her costs. She submitted that this motion was poorly conceived, and even if reasonable at the outset, should have been abandoned as the record was developed. She argues she is entitled to full indemnity costs, or at least substantial indemnity costs, to reflect the fact that this motion should not have been brought or, at least, not continued.

[27] The defendant’s actual costs on this motion, all-inclusive, are $41,806.09. In contrast, the plaintiffs’ actual costs, all-inclusive, total $163,496.35. On a partial indemnity scale, the plaintiffs’ fees, before HST and disbursements, are $72,209.

[28] I am prepared to award the defendant costs of $40,000, all-inclusive, for the following reasons:

a. Even awarding the defendant nearly full indemnity costs, given the plaintiffs’ costs, the amount is well within the plaintiffs’ reasonable expectations of even a partial indemnity costs award. It is far less than they would have sought themselves.

b. I agree with the defendant that, at least at some point as the record developed, it should have been clear to the plaintiffs that they did not have sufficient evidence to make out the criteria for an interlocutory injunction. Rather than discontinue the motion, they pursued it, and as their costs show, they did so with vigour. The plaintiffs are part of a world-wide corporate conglomerate, with resources unavailable to the defendant. Without evidence of wrongdoing, or of any harm they suffered, they forced the defendant through a process that was expensive, undoubtedly stressful, and that threatened her ability to earn a livelihood. They had no good reason to do so. A substantial costs award will, in my view, both provide the plaintiff with indemnity, and encourage the defendants to consider the steps they take in this litigation going forward.

c. Given the costs incurred by the plaintiffs, the defendant’s costs are reasonable. She had to respond to the materials put forward by the plaintiffs. The disparity in the bills of costs suggests that her costs were, in fact, frugal.

d. The issues in this proceeding were of the utmost importance to the defendant, given the potential of this motion to impact her ability to work and earn an income.

Conclusion

[29] In summary, I dismiss the plaintiffs’ motion. The plaintiffs shall pay the defendant’s costs of $40,000 all-inclusive, within thirty days.

J.T. Akbarali J.

Date: July 13, 2022