COURT FILE NO.: CV-22-00089664
DATE: 2022/08/02
COURT OF ONTARIO
SUPERIOR COURT OF JUSTICE
161 Elgin St., Ottawa, Ontario K2P 2K1
RE:
RIGHT AT HOME REALTY, formerly known as RIGHT AT HOME REALTY INC., Plaintiff
-AND-
TRU REALTY INC., KEVIN SAUNDERS, ANAS SALEH, YOGESH KALYANI, DONALD HOUSTON, ITALO MEDUGNO, VITOR AVILA, PAUL McALLISTER, MANNY MANGIBIN, SEAN VERMA, JULIE JAMIESON, ELISSA CHENG (also known as ANG BUOI CHENG), and AMANDA MARY DOMINIQUE, Defendants
BEFORE:
Regional Senior Justice C. MacLeod
COUNSEL:
Seth Holland, for the Plaintiff (Moving Party)
No one appearing for the defendants
DECISION AND REASONS
[1] This is a motion brought without notice for what purports to be an order to preserve evidence for the purpose of this litigation but was, in reality, more like a motion for the civil equivalent of a search warrant, an “Anton Pillar order”.
[2] The plaintiff seeks an order to seize cell phones and other devices owned by the defendants so that an independent third party may search for evidence supporting the plaintiff’s allegations. For the reasons that follow, the facts of this case do not justify such extraordinary ex parte relief.
[3] Although a preservation order is far less intrusive and might be available on these facts, I am not persuaded that there is sufficient evidence to justify the motion being brought without notice. I believe the appropriate procedure would have been a demand for a “litigation hold” followed by a motion on notice if the defendants indicated they were unwilling to comply or refused to provide the necessary reassurances.
[4] The motion is dismissed without prejudice to the plaintiff renewing it should that appear necessary. Needless to say, the dismissal of the motion brought without notice is not a licence for the defendants to hide evidence or fail to live up to their disclosure obligations under the rules.
Background Facts
[5] The plaintiff is a real estate brokerage with its head office in Toronto. In early 2019, the plaintiff bought out an Ottawa brokerage, Your Choice Realty Corp. It was part of the agreement that the purchase price was dependant on how many of the agents working for Your Choice transferred to the plaintiff. Ultimately 114 agents transferred their licences to the plaintiff.[^1] The defendant Saunders was hired as the branch manager.
[6] Saunders was the key employee in the Ottawa branch. His duties included recruitment and retention of agents as well as managing the Ottawa office. While his employment contract did not prohibit him from leaving his employment and setting up in competition with the plaintiff, it did prohibit him from making use of confidential information and it specifically prohibited him from recruiting customers or agents of the plaintiff and from hiring any agents that were employed by the plaintiff. Specifically, the agreement read that during his employment with the plaintiff and for 12 months thereafter he was not to interfere with the employment arrangements between the plaintiff and any of its agents or employees. He specifically agreed that he would not “in any way solicit, recruit, hire, assist others in recruiting or hiring, or discuss employment with any agents or employees of the plaintiff.
[7] In 2021, a dispute arose between the plaintiff and Mr. Saunders which was due to the plaintiff deciding to enforce a clause in the employment agreement that permitted the employer to limit the branch manager from personally buying and selling real estate. On March 15, 2021, Mr. Saunders tendered his resignation with two weeks notice and apparently set up the defendant TRU Realty in competition with the plaintiff.
[8] Between May of 2021 and June of 2022, 13 agents resigned from the plaintiff’s office and went to work for the defendant TRU. In the majority of cases, they submitted a form letter drafted by the defendant Saunders certifying that they had not been solicited by Saunders or TRU, but rather it was the agent who had approached TRU for information.
[9] The plaintiff alleges that the history of communication between the defendants would show active steps to recruit agents and acts of subterfuge. The plaintiff asks the court to order that all evidence be preserved and all communications devices be turned over to a third party so that the evidence may be extracted, evaluated and made available for the purposes of this litigation. The plaintiff also alleges that if the order is not granted without notice, the defendant Saunders cannot be trusted not to destroy the evidence. The order sought contains the following terms:
(a) Restraining the defendants from “erasing, removing, deleting, altering, defacing, discarding, concealing, destroying or in any way disposing of any data, metadata or information (electronic or otherwise) related to the hiring or retention for services of the Defendant Agents, or any other current or former employees or real estate agents of RAHR, to perform services of any kind with TRU Realty (“Solicitation Information”), or to transmit, disseminate, communicate, copy, duplicate, photocopy, photograph, image or record any such data, information or records, that are in the Defendants’ possession, power or control, including but not limited to:
i. Solicitation Information contained on the Defendants’ cell phone(s) (personal or work);
ii. Solicitation Information contained on the Defendants’ computers (personal or work);
iii. Solicitation Information contained within the Defendants’ email accounts (personal or work); and
iv. any other electronic location that is within the Defendants’ possession or control, including but not limited to USB keys and external hard drives;
(b) requiring the Defendants to immediately surrender at the time of service of this interim order their cell phone(s), computer(s) and any other equipment or electronic device(s) used (with any passwords associated thereto) by the Defendants (collectively, the “Property”) to an independent third party, Kevin Lo of Froese Forensic Partners through his representative, Andrew Downey (the “Independent Third Party”).
[10] Rule 45.01 permits the court to make orders for the preservation of any property that is relevant to an issue in dispute in litigation and includes the power to authorize entry on or into any property in order to enforce the order. While the rule also covers orders to preserve property that is in dispute in the litigation, it includes orders for the preservation of evidence. The breadth and scope of the Rule was discussed at length by the Court of Appeal in the BMW Canada case cited by the plaintiff in its factum.[^2] It is abundantly clear at paragraph 49 of that decision and the discussion preceding it that the rule can be used to prevent the potential spoliation of evidence. Conversely, the mere fact that there may be remedies for spoliation and there may be a duty on litigants to preserve evidence without an order is not a bar to obtaining a Rule 45.01 order.
[11] It is one thing to bring a motion on notice to preserve evidence that clearly exists. That was the case in the BMW Canada case. That was a contested motion to preserve automobiles for testing by experts. One of the challenges was the cost of storing the vehicles.
[12] It is quite another thing to seek an order to without notice to enter property and to seize computers and telephones in order to search them for potential evidence. This is, in essence, an Anton Pillar order. The only justification for such an extraordinary remedy is that the plaintiff has a strong prima facie case and can demonstrate that on the facts, absent such an order, there is a real possibility relevant evidence will be destroyed or otherwise made to disappear.[^3] It is a highly intrusive measure that, unless sparingly granted and closely controlled, is capable of causing great prejudice and potentially irremediable loss.[^4]
[13] In the case at bar, the statement of claim has just been issued and has not yet been served. The defendants are unaware of the action. They have not been asked to freeze or preserve evidence relevant to this litigation. That is not fatal. If the plaintiff had cogent evidence to show that the evidence it is requesting was in the hands of the defendants and was likely to be destroyed if the defendants had notice, was critical to the case and all of the other factors identified by the Supreme Court of Canada were satisfied, such an order could issue with appropriate safeguards.
[14] That is not the case here. The only basis for the motion is the belief that there must be relevant communications on the electronic devices belonging to the defendants. The only basis to assert that the defendants will destroy evidence if they are given notice of the obligation to preserve it is the bald allegation that the defendant Saunders is dishonest and surreptitious because he appears to be acting in breach of his contract and that the other defendants are aware of his obligations.
[15] In my view this falls well short of the mark for seeking extreme relief without notice. The plaintiff appears to have a strong case that Mr. Saunders has breached his contract and may be in breach of fiduciary duties by hiring the agents employed by the plaintiff and undercutting the plaintiff’s commission structure. The strength of the action against the other defendants is far less evident since it depends on proving intention to harm the plaintiff insofar as it relies on conspiracy.
[16] The evidence on this motion does not persuade me either that Mr. Saunders is likely to destroy evidence if he is given notice of the demand nor that there are not adequate remedies available to the plaintiff if he does so in the face of a preservation demand or a pending motion. Finally, I am not convinced that the suspected evidence is critical to the plaintiff’s capacity to successfully prosecute the action.
[17] I add only that the relief sought is extreme. To seize computers and telephones from an active real estate practice would have the effect of disrupting the business in a manner that might be both damaging and public. Moreover, the obligations of the defendant not to solicit the agents was time limited and the time has now expired. The appropriate remedy in this case will be damages.
[18] In conclusion the plaintiff’s motion is denied. This is without prejudice to an appropriate motion on notice should the facts justify the need for such a motion.
Mr. Justice C. MacLeod
Date: August 12, 2022
COURT FILE NO.: CV-22-00089664
DATE: 2022/08/02
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Right at Home Realty, formerly known as Right Home Realty Inc., Plaintiff
AND:
TRU Realty Inc., Kevin Sanders, Anas Saleh, Yogesh Kalyani, Donald Houston, Italo Medugno, Vitor Avila, Paul McAllister, Manny Mangibin, Sean Verma, Julie Jamieson, Elissa Cheng (also known as Ang Buoi Cheng) and Amanda Mary Dominique, Defendants
BEFORE: Regional Senior Justice Calum MacLeod
COUNSEL: Seth Holland, for the Plaintiff (Moving Party)
DECISION AND REASONS
Regional Senior Justice Calum MacLeod
Released: August 12, 2022
[^1]: According to the affidavit. This might be
[^2]: BMW Canada Inc. v. Autoport Limited, 2021 ONCA 42
[^3]: Celanese Canada Inc. v. Murray Demolition Corp. 2006 SCC 36, [2006] 2 SCR 189
[^4]: British Columbia (Attorney General) v. Malik, 2011 SCC 18, [2011] 1 S.C.R. 657```