COURT FILE NO.: CV-21-00669995-0000
DATE: 20220929
ONTARIO SUPERIOR COURT OF JUSTICE
RE: Aware Ads Inc., Plaintiff
-and-
Greg Walker, Jasper Pirrie, and 2792721 Ontario Limited, Defendants
BEFORE: Robert Centa J.
COUNSEL: Tudor Carsten, Breanna Needham, and Cody Koblinsky, for the plaintiff
Daniel Chodos, Athanasios Makrinos, and Stephen Wolpert, for the defendant Greg Walker
Kaleigh Sonshine, for the defendants Jasper Pirrie and 2792721 Ontario Limited
HEARD: September 20 and 22, 2022
ENDORSEMENT
[1] Aware Ads Inc. seeks an interlocutory injunction to prevent Greg Walker from working for a competitor despite the facts that Mr. Walker has not worked for the company since September 30, 2021, and all of the non-competition and non-solicitation clauses in his employment contract have lapsed.
[2] The plaintiff previously sought an interim injunction against Mr. Walker as well as the other defendants in this action. Justice Vella dismissed that motion in reasons reported at 2021 ONSC 7452, 74 C.C.E.L. (4th) 239. Despite filing many affidavits, conducting many cross-examinations, and obtaining answers to hundreds of undertakings, Aware Ads’ case is not materially stronger than the case it presented to Vella J.
[3] I find that Aware Ads has not demonstrated a strong prima facie case that it will succeed on any of its pleaded causes of action. Aware Ads has not demonstrated that it will suffer irreparable harm if the injunction is not granted. The balance of convenience strongly favours Mr. Walker. I dismiss Aware Ads’ motion for the reasons set out below.
Background
[4] Aware Ads is an internet marketing company based in Toronto. It facilitates contacts between advertisers and websites. It operates a department called Oasis Ads Media that specializes in direct response marketing for affiliates (website owners) and advertisers who wish to advertise their product on as many website platforms as possible.
[5] Part of Aware Ads' business model is connecting advertisers to the online traffic they need to promote and publicize advertising campaigns on the internet. Aware Ads connects advertisers to websites willing to display the advertising campaign or offer on a webpage.
[6] Greg Walker worked for Aware Ads from September 2013 to September 30, 2021. Mr. Walker held the position of Senior Business Development Manager.
[7] Aware Ads’ theory of its case is set out in its factum:
While employed by Aware Ads, [Mr. Walker] misappropriated Aware Ads' confidential information and used that confidential information to further his own business interests. Not only did [Mr. Walker] use this misappropriated information for his own benefit and to further his own income through what he describes as "referral fees" and gifts in kind, but he did so in coordination with an entity known as "Ice"… which directly competes with Aware Ads, and with Ice's principal, Joe Scotto.
[8] Mr. Walker’s employment contract contained protections for confidential information, a six-month non-competition clause, and a 12-month non-solicitation clause that contained features of a non-competition clause.
[9] The clauses are broadly worded, overreaching, and are probably unenforceable. Their geographic limits are unclear and may not be reasonable. They do not limit competition or solicitation to only those customers with whom Mr. Walker had contact. The clauses would prohibit Mr. Walker from competing in a similar field of business. There is no requirement that Aware Ads demonstrate a proprietary interest in any information before claiming a breach of the non-solicitation clause. All of these features suggest that these clauses are unenforceable and designed to impair unlawfully future competition: Labrador Recycling Inc. v. Folino, 2021 ONSC 2195, 2021 C.L.L.C. 210-039, at paras. 24-25; 2909731 Canada Inc. (Pewter Graphics) v. Toews, 2016 BCSC 852, 56 B.L.R. (5th) 185, at paras. 73, 79-83.
[10] I do not need to address the enforceability of these clauses, however, because they have all expired. Aware Ads does not seek to enforce its contractual rights pending trial. Instead, they seek an injunction that would give them rights far beyond what they ever achieved through its bargain with Mr. Walker.
[11] The relief sought by Aware Ads changed somewhat over the life of the motion. Originally, Aware Ads sought significant relief against all defendants. They eventually dropped all requests for interlocutory relief against the defendants Jasper Pirrie and his company 2792721 Ontario Ltd.
[12] During reply submissions, Aware Ads again modified its request for relief. Ultimately, it requested that the court issue:
An order prohibiting Greg Walker from directly or indirectly carrying out work for or receiving remuneration from Ice Offers or any other entity involved in the affiliate marketing industry if that entity is also associated with Mr. Scotto.
[13] This order would be unusual in several respects. First, it would prohibit Mr. Walker from doing any work for Ice Offers, regardless of whether or not that work was similar to the work he did for Aware Ads. This order would prevent Mr. Walker, for example, from getting paid to sweep the floors for Ice Offers. Second, it would permit Mr. Walker to do exactly the work he had done for Aware Ads and to compete directly with the company through any competitor except competitors owned or associated with Mr. Scotto.
[14] As I have found that Aware Ads has not met the test to obtain an injunction, I will not consider in detail the terms of the order it proposed.
The admissibility of evidence related to a conversation between Mr. Walker and Sam Buchalter
[15] At the beginning of the hearing, I dealt with a significant dispute between the parties related to some evidence on which Aware Ads wished to rely. In its factum, the plaintiff stated that:
one of the most important pieces of evidence relied upon by Aware Ads is the recording of a one-hour telephone call on October 7, 2021 between [Mr. Walker] and Sam [Buchalter], which recording was made by [Mr. Buchalter] without [Mr. Walker’s] knowledge.
[16] The parties disagreed about what use, if any, could be made of this evidence. I heard submissions from both parties at the beginning of the hearing. I think it is most helpful to address the issues raised by the parties in three steps:
a. Is the transcript prepared from the recording admissible and, if so, for what purpose?
b. Is the recording itself admissible and, if so, for what purpose?
c. Are the questions about the recording from Mr. Walker’s cross-examination, including the attempts to refresh Mr. Walker’s memory, admissible and, if so, for what purpose.
[17] For the reasons below, I find that the transcript and the recording are not admissible for any purpose. I also uphold Mr. Walker’s objections to the questions put to him about the recording during his cross-examination.
The transcript of the recording is inadmissible
[18] On February 9, 2022, Mr. VanderLinden swore his fourth affidavit in the proceeding. In this affidavit he affirmed as follows:
[Mr. Buchalter] also provided a recording of a conversation he had with [Mr. Walker] on October 7, 2021 in which they discuss business deals. In this conversation [summary of call omitted] … Attached as Exhibit D is a copy of a typed transcript of the recording provided by [Mr. Buchalter].
[19] Exhibit D to Mr. VanderLinden’s affidavit was a 22-page typed memo that is titled “Transcript of phone conversation between Sam Buchalter (“SB”) and Greg Walkers [sic] (“GW”).” The transcript is not certified and there is nothing on its face to indicate that it was prepared by a professional with relevant experience producing an out-of-court transcript from an audio tape.
[20] During his cross-examination, Mr. Buchalter said that he did not recognize the transcript and that he did not create it. I find, therefore, that when Mr. VanderLinden states in his affidavit that he attached “a copy of a typed transcript of the recording provided by [Mr. Buchalter]” he means that Mr. Buchalter provided the recording itself, not the transcript of the recording.
[21] On cross-examination, Mr. VanderLinden admitted that he did not know who prepared the transcript. He admitted that he never listened to the recording of the telephone call, so he could not state that it was an accurate reproduction of the words spoken on the recording. Indeed, he appears to have no personal knowledge regarding the transcript. He did not and could not, at the time he swore the affidavit, personally authenticate that the transcript is what it purports to be.
[22] Someone, then, must have told Mr. VanderLinden that the document he was attaching to his affidavit was a transcript of the recording of the call between Mr. Buchalter and Mr. Walker on October 7, 2021. In his affidavit, however, Mr. VanderLinden does not state the source of that information and belief. An affidavit for use on a motion may contain statements of the deponent’s information and belief only if the source of the information and the fact of the belief are disclosed in the affidavit: rule 39.01(4) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
[23] I find that the transcript is inadmissible on this motion. First, authenticity is a necessary precondition to admissibility. The onus lies on Aware Ads as the party tendering this evidence to prove authenticity: G. Chan and S. Magotiaux, Digital Evidence, 2nd ed. (Toronto: Emond Montgomery Publications, 2022), at p. 214; R. v. Donald (1958) 1958 CanLII 470 (NB CA), 121 C.C.C. 304 (N.B.C.A.), at para. 7; R. v. Nde Soh, 2014 NBQB 20, 416 N.B.R. (2d) 328, at para. 26; R. v. Avanes, 2015 ONCJ 606, 25 C.R. (7th) 26, at paras. 37, 40; R. v. Hirsch, 2017 SKCA 14, 353 C.C.C. (3d) 230, at para. 18.
[24] Aware Ads must provide evidence to the court that the document is what it purports to be. It has not met this burden. Mr. VanderLinden has no personal knowledge about the transcript. There is no evidence before me regarding who created the transcript or gave it to Mr. VanderLinden. I agree with Myers J., who held “a person with no personal knowledge of the contents of a document cannot plunk it on the table and assert the contents to be true”: United States of America v. Gushlak, 2020 ONSC 6011, at para. 28.
[25] I strike out all of paragraph 12 (except for the first sentence) and Exhibit D from Mr. VanderLinden’s affidavit.
The recording of the conversation
[26] During oral submissions, Aware Ads wished to play excerpts of what it advised me was the recording of the conversation on October 7, 2021. In their factum on the motion, Aware Ads states:
The recording, which is over an hour long, could not be served with the motion record and had to be uploaded to a file sharing platform to be provided. On February 10, 2022 at 3:50 pm, a link was provided to counsel with the full recording being referenced at Exhibit D…. The recording itself will be available to be played at the hearing of this motion.
[27] These factual assertions are not supported by any affidavit evidence. They are probably inadmissible. In any event, there is no explanation of why the recording could not be served at the same time as the motion record. What concerns me, however, is not the time of service, it is the fact that Aware Ads never made this recording an exhibit to an affidavit.
[28] The transcript, discussed above, and the recording are not the same piece of evidence. It is the recording, not the transcript, that is the evidence upon which I would rely. In most situations, a transcript will be a very useful tool to accompany the recording, but the recoding is the real evidence. As the Court of Appeal held in R. v. Rowbotham (1988), 1988 CanLII 147 (ON CA), 25 O.A.C. 321 (C.A.), at para. 123:
It is true that the tapes themselves constitute the evidence which should be and must be considered by the jury. It is the tapes which will demonstrate, not simply the words spoken by an accused or co-conspirator, but also the emphasis given to particular words and phrases and the tone of voice employed by the participants during the intercepted conversations. Upon hearing the tape, the jocular exclamation will be readily distinguishable from the menacing threat of violence. The tapes may provide cogent and convincing evidence of culpability or equally powerful and convincing evidence of innocence.
[29] If the plaintiff wished the recording to form part of the evidence on the motion, it needed to provide affidavit evidence to demonstrate a proper foundation for the admissibility of the recording. This is not a difficult hurdle to overcome. Mr. Buchalter could easily have provided the proper foundation in an affidavit by swearing that:
a. he had a conversation with Mr. Walker on October 7, 2021;
b. he recorded the conversation himself using whatever software he used;
c. he knows the data file in the exhibit contains that recording because he listened to the file and confirmed that it was the conversation that he recorded on October 7, 2021;
d. a copy of that data file has been placed on a USB drive that is shown to him and marked as an exhibit to his affidavit or that the data file is found in an on-line repository at the URL listed in his affidavit.
[30] It is important to note that Mr. Buchalter swore an affidavit on October 7, 2022, the same day that he supposedly recorded the telephone call with Mr. Walker. Yet he made no mention of this conversation in the affidavit he swore that day. The fact that Mr. Buchalter never swore an affidavit about this recording leaves many questions unanswered.
[31] After the date of the alleged recording, the plaintiff served affidavits sworn by Stephanie Corvese, Vetura Jeyandran, and Julia Shisgal (all sworn February 8, 2022), and Mr. VanderLinden, Mr. Vice, and Nicola Masterson (February 9, 2022). Three months after that, the plaintiff had Mr. VanderLinden swear a further affidavit (April 29, 2022). Nowhere in this flurry of affidavits did the plaintiff have anyone exhibit the recording to an affidavit or provide a foundation for its admissibility.
[32] Once a proper foundation had been laid and the recording formed part of the evidentiary record on the motion, other issues could have been addressed in a straightforward manner. For example, if the plaintiff wanted me to consider the content of the recording for the truth of its contents (as opposed to the fact that the conversation took place) the recording would still have to come within an exception to the rules around hearsay statements. But affidavit evidence, again most easily from Mr. Buchalter, could have addressed the identity of the voices, the integrity, accuracy, and continuity of the recording, which would affect the weight that I could give the recording: R. v. Parsons (1977), 1977 CanLII 55 (ON CA), 17 O.R. (2d) 465 (C.A.), at para. 15, aff’d Charette v. R., 1980 CanLII 31 (SCC), [1980] 1 S.C.R. 785.
[33] I find that the recording does not form part of the evidence before me on this motion. Nothing in this ruling affects the admissibility of the recording at trial or on a subsequent motion on a different evidentiary record.
The use of the recording during the cross-examination of Mr. Walker
[34] The final issue to be addressed arises out of Aware Ads’ attempt to use the recording at the cross-examination of Mr. Walker on his affidavit.
[35] On February 14, 2022, the parties appeared before Stinson J. for a case conference. Among other issues, Stinson J. gave directions concerning this motion. Justice Stinson ordered the defendants to deliver any further evidence on or before April 15, 2022, and the plaintiff to deliver reply evidence, if any, on or before May 2, 2022. As noted above, the plaintiff had Mr. VanderLinden swear a further affidavit on April 29, 2022.
[36] Justice Stinson’s direction was consistent with rules 39.02(1) and (2), which require parties to deliver all their affidavit evidence before cross-examining on an affidavit delivered by an adverse party. These rules are designed to place limits on the evidence-building phase of motions and applications. The rules oblige parties to consider the issues raised on the motion and to put all relevant evidence forward before starting to cross-examine the other party’s witnesses: Brock Home Improvement Products Inc. v. Corcoran (2002), 2002 CanLII 49425 (ON SC), 58 O.R. (3d) 722 (S.C.), at para. 8; Van Nispen v. McCarron & Chobotiuk Financial Services, 2019 ONSC 3658, at para. 30.
[37] Justice Stinson ordered the parties to complete cross-examinations by July 31, 2022, and ticked the pre-printed directions related to rule 34.12 that appear on the Case Conference Request Form. By doing so, Stinson J. directed that:
Rule 34.12 applies to all examinations and cross-examinations taken for this motion. The witness shall answer all questions to which objection is taken unless the objection is based on lawyer-client privilege. No answer to a question to which objection has been taken may be used unless a ruling is obtained from the judge or associate judge at the hearing of the motion or application. Abuse of this rule may be subject to punitive costs or other sanctions.
[38] Counsel for Aware Ads cross-examined Mr. Walker on his affidavit on July 29, 2022. After confirming that Mr. Walker recalled a lengthy call with Mr. Buchalter sometime in October 2021, the following exchange took place:
Q. We provided an audio file of that conversation the day after we delivered our motion record but you can't attach an audio file to a motion record. So we provided it to your counsel on February 10th, 2021. Have you listened to that audio recording?
Mr. Chodos: For the record, the audio file is not in the record. And it's not referenced. There's a document referenced and so some of these questions, including this one, will be answered under objection.
Q. That's fine. You can answer under objection, sir.
[39] Mr. Walker stated that he had not listened to the recording before the cross-examination. The recording was not marked as an exhibit to the cross-examination. It was not even marked as a letter exhibit for identification only. Mr. Walker and his counsel did not admit the authenticity of the recording or that it could be admitted into evidence.
[40] In my view, if Aware Ads wanted to use the recording for any purpose on cross-examination it ought to have made the recording an exhibit to an affidavit that provided an appropriate foundation for its use: Gushlak, at para. 25. Instead, it chose to try to introduce the recording through Mr. Walker, rather than doing so itself. Aware Ads had to know that if Mr. Walker refused to confirm the authenticity and accuracy of the recording, it had a big evidentiary problem.
[41] The essence of Mr. Walker’s objection is sound: the recording was not an exhibit; Mr. Walker did not make the recording; there was no evidence in the record to demonstrate that what counsel for the plaintiff presented to him was what it purported to be. I would uphold Mr. Walker’s objection to all questions posed by counsel for the plaintiff about the recording.
[42] The plaintiff submits that it was not attempting to use the recording impermissibly, it was only seeking to refresh Mr. Walker’s recollection about the conversation. I do not accept this submission.
[43] Counsel for the plaintiff asked Mr. Walker a series of questions about the recording. In some of the questions, portions of the recording were played for Mr. Walker. Sometimes, Mr. Walker is asked if he might have told Mr. Buchalter words that were drawn from the recording. Counsel for the plaintiff then attempted to play the recording for Mr. Walker. When the audio recording was played, the sounds from the recording were not transcribed, they are only denoted with “(Audio recording is played back)” The following exchange took place:
Q. Sir, you're avoiding my direct question. I'm not asking you to answer generally. I'm asking about one specific thing. You can yes, or no, or I don't know?
A. I don't remember so I'd simply be speculating.
Q. I don't want you to do that. I'm going to aid your recollection. I'm going to play from this audio file and you tell me if it aids your recollection, sir.
Mr. Chodos: Sorry. For the record, this audio file is not in evidence on the motion. And we do not consent to it being played and we do not consent, we object to it being introduced, if that's your intention, Mr. Carsten, through the witness. We absolutely object to that. And he will not be answering questions about the recording that's not in evidence.
Q: I'm going to ask him if this -- it absolutely is in evidence. I'm going to ask him if this recording aids his recollection. So that's exactly what's going to happen now. …
Mr. Chodos: For the record, I object to the playing of the recording.
Q: I heard you.
Q. Mr. Walker, I just played a recording. Does that recording help you recollect whether you said words to the effect of "When we first got this business going three-and-a-half years ago?"
Mr. Chodos: To be clear, before the witness answers, this question is answered under objection. And for the record, in case I missed something, all questions about this recording and about any documents referencing the recording -- let me be clear -- Exhibit D in Mr. VanderLinden's affidavit that attaches what he calls a transcript, are answered under objection. I'll try and make sure I renew my objection each time. But in case I don't, I want to make sure that's clear for the record.
Q: I understand. And for the record, I'm entitled to ask Mr. Walker questions about anything in any affidavit or pose any question relevant to the motion. The audio file that I'm playing now, and the conversation that he had with Mr. Buchalter has many, many straight-up admissions from Mr. Walker of conduct that goes directly to the central issues in this motion. That's why I'm asking these questions. I'm not putting the transcript to him. I'm playing the audio recording to assist his recollection.
[44] Counsel for the plaintiff is correct that he was entitled to ask Mr. Walker questions about what was in any affidavit. The audio recording, however, was not an exhibit to any affidavit.
[45] I find that the attempts to refresh Mr. Walker’s memory were not appropriate. The Court of Appeal for Ontario set out the appropriate procedure to be used when counsel wishes to refresh the memory of a witness in R. v. Dupuis, 2020 ONCA 807, 397 C.C.C. (3d) 266, at para. 46:
Another situation in which a witness’s prior statement may be put before the witness is where counsel is refreshing memory. This is permitted only where the witness is having difficulty remembering. Whether counsel is permitted to refresh memory in this way is in the discretion of the trial judge, and there is a procedure that must be followed. Counsel must lay a foundation by ascertaining whether the witness is having difficulty remembering. Counsel should ask the witness if they wish to refer to a prior statement. If the witness confirms he or she needs assistance remembering and wishes to refer to the prior statement, counsel should seek leave from the court to refresh the memory of the witness. The statement is produced to opposing counsel, who may object to its use. If the court permits the refreshing of memory, counsel should provide the statement to the witness, and instruct the witness to consult the relevant portion in silence. Counsel can then resume questioning the witness: see Sidney N. Lederman, Alan W. Bryant & Michelle Fuerst, Sopinka, Lederman & Bryant: The Law of Evidence in Canada, 5th Edition (Toronto: LexisNexis Canada, 2018), at ss. 16.128-16.129; Peter J. Sankoff, The Law of Witnesses and Evidence in Canada (formerly Witnesses), (Toronto: Thomson Reuters Canada Limited, 2019), at c. 11.4.
[46] I would not exercise my discretion to permit counsel for the plaintiff to attempt to refresh Mr. Walker’s memory in this way, using the recording, on this cross-examination, for the following reasons:
a. Mr. Walker did not wish to refer to the recording to refresh his memory;
b. Counsel for Mr. Walker objected to the attempts to refresh the witness’s memory in this way; and
c. Counsel for the plaintiff misused the content of the recording by putting the words contained in the recording to the witness as if he was impeaching on a prior inconsistent statement as opposed to attempting to refresh memory.
[47] I sustain the objections of counsel for Mr. Walker and exclude all questions and answers arising from the recording.[^1]
The plaintiff has not made out a case for an interlocutory injunction
[48] The parties agree that the applicable test for an interlocutory injunction is contained in RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311. The parties also agree that because Aware Ads is seeking to restrain a former employee from competing with it or soliciting its customers, the plaintiff must meet the more onerous test of a strong prima facie case on the first branch of the test: Precision Fine Papers Inc. v. Durkin, 2008 CanLII 6871 (Ont. S.C.), at para. 17. The onus is on Aware Ads to establish each of the three branches of the test on clear, and not speculative, evidence. Therefore, Aware Ads must prove that:
a. There is a serious issue to be tried;
b. Aware Ads will suffer irreparable harm if the injunction is not granted; and
c. The balance of convenience favours Aware Ads
[49] For the reasons below, I find that Aware Ads has not made out a case for an injunction. The evidence falls far short of meeting the stringent test to obtain the type of relief it seeks on this motion. There is no direct evidence that Mr. Walker disclosed confidential information, improperly solicited Aware Ads’ customers, or competed improperly with Aware Ads. There is no satisfactory evidence that Aware Ads has suffered any harm or will suffer any harm in the future, much less that the harm would be irreparable. The balance of convenience strongly favours Mr. Walker.
The plaintiff has not demonstrated a strong prima facie case
[50] Aware Ads has pleaded a number of causes of action against Mr. Walker including breach of fiduciary duty, breach of confidence, breach of his employment agreement and duty of fidelity, fraudulent misrepresentation, and conspiracy.
[51] While Aware Ads would only have to demonstrate a strong prima facie case in respect of one of these causes of action, I find that they have not done so.
No strong prima facie case that Mr. Walker is a fiduciary
[52] Aware Ads led virtually no evidence in support of its contention that Mr. Walker was a fiduciary. In its factum, Aware Ads referred to three paragraphs from two of Mr. VanderLinden’s affidavits. All of this evidence was before Vella J. at the time of the plaintiff’s motion for an interim injunction. Justice Vella found that “it is by no means clear on the current state of the record” that Mr. Walker was a fiduciary.
[53] I reach the same conclusion as Justice Vella. Mr. Walker was a salesperson. He was successful and well-compensated. He attended conferences and other events with other Aware Ads employees. He had limited ability to negotiate terms of the fast-moving deals that he was attempting to close. Mr. Walker was not an officer, director, signing officer, or shareholder of Aware Ads. He did not have his own office. Indeed, Mr. VanderLinden stated in his affidavit that Mr. Walker turned down a promotion to a position called “Team Leader” during his tenure at Aware Ads. In my view, Aware Ads will have significant difficulty proving that someone who did not serve even at the level of “Team Leader” owed fiduciary duties to Aware Ads.
[54] I find that Aware Ads has not made out a strong prima facie case that Mr. Walker owed fiduciary duties to the company.
Breach of confidence
[55] Aware Ads pleads that Mr. Walker committed a breach of confidence.
[56] The elements of an action for breach of confidence are (1) that the information conveyed was confidential; (2) that it was communicated in confidence; and (3) that it was misused by the party to whom it was communicated: Lac Minerals Ltd. v. International Corona Resources Ltd., 1989 CanLII 34 (SCC), [1989] 2 S.C.R. 574, at para. 129.
[57] To establish the first two branches of the test, Aware Ads points to the provision in Mr. Walker’s contract that prohibited his use of confidential information for any purpose other than the benefit of Aware Ads. Mr. Walker agreed to the following clause:
I agree at all times during the term of my employment and thereafter, to hold in strictest confidence, and not to use, except for the benefit of the Corporation, or to disclose to any person, firm or corporation without written authorization of an officer of the Corporation, any Confidential Information of the Corporation. I understand that "Confidential Information" means any of the Corporation's proprietary information, technical data, trade secrets or know-how, including but not limited to research, product plans, products, services, customer lists and customers (including but not limited to customers of the Corporation on whom I called or with whom I became acquainted during the term of my employment), markets, software, developments, inventions, processes, formulae, technology, designs, drawings, engineering, hardware configuration information, marketing, finances or other business information disclosed to me by the Corporation either directly or indirectly in writing, orally or by drawings or observation of parts or equipment. I further understand that Confidential Information does not include any of the foregoing items which has become publicly known and made generally available through no wrongful act of mine or of others who were under confidentiality obligations as to the item or items involved.
[58] I agree with Aware Ads that equity will pursue confidential information that comes into the hands of a third party who receives it with knowledge that it was communicated in beach of confidence: Catalyst Capital Group Inc. v. Moyse, 2016 ONSC 5271, 35 C.C.E.L. (4th) 242, at paras. 68-71, aff’d 2018 ONCA 283, 130 O.R. (3d) 675.
[59] Aware Ads has led sufficient evidence for me to conclude that it is likely to prove at trial that it communicated confidential information to Mr. Walker and that the information was communicated to him in confidence. There is no doubt that Mr. Walker received confidential information from Aware Ads, including access to CAKE platform in September 2021, prior to his departure.
[60] However, Aware Ads has led very little evidence that Mr. Walker misused any of the confidential information that he received from Aware Ads. On this motion, Aware Ads has provided no direct evidence that Mr. Walker:
a. accessed its confidential information after he left Aware Ads;
b. took any confidential information with him when he left Aware Ads;
c. misused any confidential information that he received from Aware Ads before or after he left the company; or
d. provided any confidential information that he received from Aware Ads to anyone else.
[61] The evidence presented by Aware Ads is speculative and based on unproven assumptions. The centrepiece of Aware Ads’ evidence on this point is a text message exchange between Mr. Buchalter and Chris Reale in August 2021, about a month before Mr. Walker left Aware Ads. In this text exchange, Mr. Buchalter asks Mr. Reale, “So, if [Mr. Walker] is leaving [Aware Ads] then our insider intel is gone?” Mr. Reale responded “he’s built up the media buyers with Ice.”
[62] There are a number of serious problems with this evidence:
a. Mr. Walker is not a part of this text thread. Not only are the words not his, there is no evidence that he ever saw them.
b. This text thread was placed into evidence through the affidavit of Mr. VanderLinden, who was not a party to the communication. It is clearly hearsay. Moreover, there is no affidavit evidence from Mr. Buchalter to explain what he meant when he said “insider intel” and he offered no explanation during his cross-examination.
c. Mr. Reale could not remember the conversation but was certain that he had not received any insider intelligence from Mr. Walker.
[63] Mr. Walker has expressly and repeatedly denied under oath that he misused confidential information. Aware Ads has attacked the credibility of his denials, but that is not the same thing as providing positive evidence of misuse. Aware Ads did not identify to a single piece of confidential information that ended up in the hands of a third party. Its evidence remains entirely speculative.
[64] I find that Aware Ads has not made out a strong prima facie case that Mr. Walker breached a duty of confidence owed to the company. This does not change Mr. Walker’s ongoing obligation not to use or misuse any confidential information belonging to Aware Ads.
Breach of contract and duty of loyalty
[65] Aware Ads pleads that Mr. Walker breached his employment contract, including his common law duty of fidelity by misusing confidential information, taking customer lists, and working against the interests of Aware Ads.
[66] For the reasons set out above with respect to the breach of confidence pleading, I find that Aware Ads has not demonstrated a strong prima facie case that Mr. Walker breached his duty of loyalty to Aware Ads by misusing confidential information.
[67] I also find that Aware Ads has not demonstrated a strong prima facie case that Mr. Walker breached the “full time and attention” clause in his employment contract. It is apparent that Aware Ads did not enforce this provision with respect to its employees. To the knowledge of Aware Ads, Mr. Walker had a successful real estate business on the side. To the knowledge of Aware Ads, another staff member ran a separate business from the Aware Ads office and did so during business hours.
[68] Aware Ads submits that Mr. Walker “actively worked against Aware Ads’ interest while employed by Aware Ads, contrary to the duties he owed to his employer.” Aware Ads has not presented direct evidence to support this allegation. Having reviewed all the evidence, I find that Aware Ads has not demonstrated a strong prima facie case that Mr. Walker worked against the interests of the company. Aware Ads may be able to make out this case at trial, but, in my view, they are not almost certain to succeed. Far from it.
[69] The evidence before me is equivocal. There is evidence that Aware Ads allowed its sales representatives to refer potential clients out if Aware Ads could not service them. There is evidence that Aware Ads paid referral fees to its affiliates when they referred another affiliate. There is evidence that Mr. Vice knew that Mr. Walker collected referral fees and even asked Mr. Walker about his “going rate for referrals.” Mr. VanderLinden testified that Mr. Walker was permitted to send out work to other affiliate marketing companies as long as it would not impact Aware Ads’ business and that he knew that Mr. Walker was doing so.
[70] Mr. Walker’s evidence is that he collected referral fees, very large referral fees, for connecting people and businesses. He states that he collected these fees while he worked for Aware Ads, but he did not divert any business that Aware Ads could do away from it. He points to the fact that even after he left Aware Ads, he continued to refer clients to his old employer.
[71] There is no direct evidence before me that Mr. Walker diverted a single client away from Aware Ads where it could do the work. There is no direct evidence that Mr. Walker used his relationships in the industry to steer work that Aware Ads could do to anyone else. There is no evidence from a single one of Aware Ads’ clients that Mr. Walker attempted to divert work away from Aware Ads. The closest Aware Ads gets is the evidence of Mr. Buchalter, but he has never done any work with Aware Ads before or after his discussions with Mr. Walker.
[72] Aware Ads invites me to draw the inference that Mr. Walker actively worked against Aware Ads’ interest. In my view, Aware Ads is not asking me to draw an inference that is reasonably and logically available from the evidence. Instead, it is asking me to speculate. In R. v. Morrissey (1995), 1995 CanLII 3498 (ON CA), 22 O.R. (3d) 514 (C.A.), Doherty J.A. stated at p. 530:
A trier of fact may draw factual inferences from the evidence. The inferences must, however, be ones which can be reasonably and logically drawn from a fact or group of facts established by the evidence. An inference which does not flow logically and reasonably from established facts cannot be made and is condemned as conjecture and speculation. As Chipman J.A. put it in R. v. White (1994), 1994 NSCA 77, 89 C.C.C. (3d) 336 (Nfld. C.A.), at p. 351:
These cases establish that there is a distinction between conjecture and speculation on the one hand and rational conclusions from the whole of the evidence on the other. The failure to observe the distinction involves an error on a question of law.
[73] Aware Ads may be able to prove at trial that Mr. Walker breached his employment contract, but it is not apparent to me that they are almost certain to succeed. I find that Aware Ads has not made out a strong prima facie case that Mr. Walker breached his employment contract or his duty of fidelity.
Fraudulent misrepresentation
[74] Aware Ads pleads that Mr. Walker committed the tort of fraudulent misrepresentation. Aware Ads did not press this position strongly in oral argument on this motion.
[75] The Supreme Court of Canada explained in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 87 that the tort of fraudulent misrepresentation is made out where a plaintiff proves:
a. A false representation by the defendant;
b. The defendant knew that that their representation was false or was reckless about that;
c. The plaintiff acted in reliance on the representation; and
d. The plaintiff suffered a loss as a result.
[76] Aware Ads submits that this tort was made out when Mr. VanderLinden asked staff members about the participants in the Ice business and Mr. Walker remained silent. I disagree.
[77] Assuming for the moment that Aware Ads can prove that Mr. Walker knew the identities of some of the people involved with Ice and remained silent about their identities, there is very little evidence before me that Aware Ads either acted or failed to act because of that omission or suffered any loss as a result of the omission. At most, Aware Ads lost the opportunity to further investigate who was involved with Ice. Aware Ads did not make out a strong case that there was a nexus between Mr. Walker’s silence and a monetary loss to the company.
[78] I find that Aware Ads has not made out a strong prima facie case that Mr. Walker committed the tort of fraudulent misrepresentation.
Conspiracy
[79] In its factum, Aware Ads asserted that Mr. Walker was guilty of the tort of unlawful means conspiracy. The plaintiff did not raise this point during oral submissions.
[80] The tort of unlawful means conspiracy is made out where:
a. two or more people, acting in concert, by agreement or with a common design or intention;
b. engage in conduct that is unlawful;
c. the conduct was directed towards the plaintiff;
d. in the circumstances, the defendants should have known that injury was likely to result; and
e. injury or harm did, in fact, result.
[81] Aware Ads presented very little evidence that any of Mr. Walker’s conduct was directed towards it, that he should have known that Aware Ads was going to be injured, or that injury or harm did result.
[82] I find that Aware Ads has not made out a strong prima facie case that Mr. Walker committed the tort of conspiracy by unlawful means.
No proof of irreparable harm
[83] Aware Ads must also demonstrate that it would suffer irreparable harm if the injunction is not granted.
[84] Irreparable harm is harm which either cannot be quantified in monetary terms or cannot be cured, usually because the moving party cannot collect damages. Aware Ads must prove on a balance of probabilities that the "failure to grant an order now will render any prospect of recovering damages illusory": 11123688 Canada Limited v. Springthorpe et. al., 2021 ONSC 1657, at para. 26.
[85] In 2158124 Ontario Inc. v. Pitton, 2017 ONSC 411, Goodman J. described the test to be met and the need for clear evidence, not speculation, to meet that test:
[48] An assertion that a plaintiff is likely to suffer irreparable harm is insufficient to warrant the granting of an interlocutory injunction. It is necessary for the evidence to support a finding that the defendant would suffer irreparable harm. The onus is on the party seeking an injunction to place sufficient financial and other evidence before the court on which such a finding can be made. It is important to note that in order to establish irreparable harm, the moving party’s evidence must be clear and not speculative. Absent clear evidence that irreparable harm will result, an interlocutory injunction should not issue. Ciba-Geigy Canada Ltd. v. Novopharm Ltd., 1994 CanLII 19563 (FC), 1994 CarswellNat 700 (Fed. T.D.) at para. 118.
[49] Irreparable harm is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other. It is well established that irreparable harm is not made out simply because damages may be difficult to quantify. The plaintiffs must prove that the alleged harm cannot be quantified in monetary terms. As Epstein J. noted in 754223 Ontario Ltd v. R-M Trust Co, [1997] O.J. No. 282 (Ont. Gen. Div.) at para. 40: “Irreparable harm cannot be founded upon mere speculation. This evidence must be sufficient to support a finding that the moving party would suffer such harm not that it is merely likely.”
[50] Cases of unfair competition have often been recognized as ones in which damages may not adequately compensate the plaintiff for the loss suffered due to the defendant's conduct. Indeed, goodwill, market share and damage to relationships with customers can be inherently difficult to assess. In a competitive industry, such as found here, where there can be considerable fluidity of customer allegiances, it may be difficult, but not impossible for the moving party to establish an accurate measure of damages: Precision Fine Papers Inc. v. Durkin, 2008 CarswellOnt 944 (Ont. S.C.J.) at para. 25.
[51] While each case will turn on its own facts, solicitation of customers, loss of customers, loss of market share, or damage to business reputation or goodwill have all been characterized as irreparable harm: Ontario Graphite Ltd. v. Janik [2016 CarswellOnt 2642 (Ont. S.C.J.)], supra, at paras. 62-63, Messa Computing Inc. v. Phipps, 1997 CarswellOnt 5596 (Ont. Gen. Div.) at para. 32.
[86] Aware Ads has not met this test. Aware Ads:
a. has not identified a single sale or customer that it lost due to Mr. Walker’s conduct or that it will lose in the future absent the injunction it seeks;
b. has not demonstrated that, if it lost any business to Ice, that this was because of Mr. Walker’s conduct as opposed to the superior quality and price of the Ice products;
c. has not provided any compelling evidence that it has lost revenue, profit, or market share as a result of Mr. Walker’s conduct; or
d. has not provided any evidence that its business reputation or market share have been damaged by Mr. Walker.
[87] The evidence of Aware Ads on irreparable harm is unsatisfactory. This is particularly so in this industry, where Aware Ads concedes that both advertisers and affiliates will work with multiple companies simultaneously to maximize their prospect of success. For example, Aware Ads claims that it suffered an “unprecedented level of revenue decline happening only at Oasis Ads.” Its evidence on this point is a hearsay statement from a person who worked at CAKE. Aware Ads filed no financial statements to back up its claims. This is exactly the kind of speculative evidence that is insufficient to support a finding of irreparable harm.
[88] The evidence tendered by Aware Ads on this motion is no better than the evidence placed before Vella J. on the interim motion. Reviewing the evidence filed on that motion, Vella J. concluded:
Aware Ads has only put forward a bald allegation that it has suffered a loss of actual and/or potential customers without any supporting evidence, save for Buchalter, who was not a customer of Aware Ads at the time of the communications that are the subject of his affidavit. More specifically, aside from demonstrating that Walker’s personal sales statistics declined and a drastic decrease in the account from a customer, Morrie Goldstein (handled by Walker but transitioned to Walker’s successor), from 2018 to 2021, there is no evidence as to whether Aware Ad’s overall revenues and profits have actually declined during the time period that it claims Pirrie and Walker were acting in concert (in 2020–2021). There is no evidence, for example, from Morrie Goldstein suggesting that he was lured to Ice Offers by Walker and/or Pirrie, or that he is indeed a customer of Ice Offers.
[89] I agree with Vella J.
[90] Aware Ads’ claim of irreparable harm is also, in my view, undermined by the relief they ultimately sought on this motion. It seeks an order preventing Mr. Walker from working only for Ice or another venture owned by or connected to Mr. Scotto. Aware Ads would be fine, it says, with Mr. Walker competing against it in any other way. This suggests to me that Aware Ads’ true agenda is not to prevent irreparable harm but is actually to punish Mr. Walker and Mr. Scotto. That is not the purpose of an injunction.
[91] Aware Ads may be able to prove at trial that Mr. Walker breached duties he owed to the company. If so, Aware Ads will be able to claim damages resulting from those breaches and, on a better evidentiary record, may be able to prove its losses. I find, however, that Aware Ads has not demonstrated that it will suffer irreparable harm if I do not grant the injunction.
Balance of Convenience favours Mr. Walker
[92] I also find that the balance of convenience favours Mr. Walker.
[93] It has been over one year since he left Aware Ads. The company has had a year to repair its relationship with its customers, if that is in fact necessary. Mr. Walker is working to support himself and his family. I have no doubt that the balance of convenience favours Mr. Walker.
Conclusion and costs
[94] I dismiss Aware Ads’ motion for an injunction.
[95] If the parties are not able to resolve costs, Mr. Walker and Mr. Pirrie may each deliver their costs submission of no more than five double-spaced pages to be emailed to my assistant on or before October 6, 2022, 2022. Aware Ads may deliver a single responding submission of no more than five double-spaced pages on or before October 13, 2022. No reply submissions are to be delivered without leave.
Robert Centa J.
Date: September 29, 2022
[^1]: Counsel for the defendant challenged the references to this evidence found in the plaintiff’s: factum at paragraphs 31 (footnotes 76 and 78), 32, 33, 42, and Schedule D; compendium at Tabs 4F (pages 114 to 120), 4L (pages 189, 259 to 261), and Schedule D; and reply factum at paragraphs 6 and 12.