FORWARD SIGNS INC. et al. v. PHILCAN GROUP INC. et al.

COURT FILE NO.: CV-21-666474

DATE: 20221003

ONTARIO SUPERIOR COURT OF JUSTICE

RE: FORWARD SIGNS INC., FORWARD POWER LIGHTING INC., HUMMINGBIRD CONSTRUCTION INC., and 2219371 ONTARIO INC., Plaintiffs

-and-

PHILCAN GROUP INC., MING KWOK HO also known as PHILIP HO, WAI MAN HO also known as RAYMOND HO, PETER LUK, GUO WEI LI, Defendants

BEFORE: FL Myers J

COUNSEL: John Philpott, for the Plaintiffs

H. Keith Juriansz, for the Defendants

HEARD: September 22, 2022

ENDORSEMENT

The Motions and Outcome

[1] This is a motion to continue to trial an interim injunction granted by Black J. more than a year ago. The plaintiffs also move for production of documents to move this action forward. The defendants move for production of documents and to schedule a related oppression proceeding commenced by Philip Ho against the plaintiffs and their majority owner Simon Ho under Court File No. CV-21-660277.

[2] For the reasons that follow, the motion to extend the interim injunction granted by Black J. dated September 8, 2021 is dismissed. The order is spent and is no longer operative. The defendants are required to keep careful and detailed accounts of all contacts with and revenues derived from the plaintiffs’ former customers pending trial.

[3] Philip Ho’s application will proceed as an action. He is to deliver a statement of claim within 30 days. The respondents in that application will deliver a statement of defence within the ensuing 30 days. Thereupon that converted action and this action will have common productions, common discoveries, and will proceed to trial together or one following the other as the pretrial and trial judges may direct.

[4] I provide some general directions regarding the parties’ procedural issues below. However, scheduling and production of documents are most comprehensively and efficiently dealt with in this case by case management discussions. Accordingly, as delegate of the Regional Senior Justice, I direct both of these proceedings into case management under Rule 77.05 (1). Under Rule 77.06 (1) I direct that an Associate Justice be identified by the Administrative Associate Justice’s office to case manage these proceeding.

[5] One should not conclude from this outcome that I take any issue with the appropriateness of the relief previously granted or that this represents any form of vindication of the defendants’ approach and conduct throughout. However, as discussed below, a year has passed. A year is at the high end for the duration of an interim injunction to protect an employer from the springboard effect of unfair competition by a former fiduciary employee. The injunction has served its purpose. Because of the slow return of this motion, the plaintiffs have already had the benefit of the interim protection to which they were entitled by the defendants’ misconduct. They still have their damages claims and other remedies available. Moreover, I am preventing the related oppression proceeding from advancing on a standalone basis.

The Basic Claims

[6] Simon Ho owns 60% of the plaintiffs’ commercial sign design, fabrication, and installation business. Philip Ho is Simon Ho’s brother. Philip Ho owns 40% of the business. At the relevant time they were both directors and officers of the parent company that sits atop the operating companies. For historical reasons they held technically different positions within each company. But the 60/40 ownership structure of the enterprise was protected by the 60/40 split of the shares of the parent holding company.

[7] Philip Ho’s son Raymond Ho was a senior employee of the corporate group as well.

[8] All of the parties agree that the plaintiffs’ business is particularly sensitive to client relationships. It participates in a competitive field in which forming and managing relationships with potential customers is fundamentally important to obtain business. It also does not seem to be in doubt that Philip Ho and Raymond Ho were the market-facing managers of the plaintiffs’ business. They were the persons who cultivated and maintained customer relationships in the main. As a result, the plaintiffs’ businesses were especially vulnerable to harm if Philip Ho and Raymond Ho left.

[9] As discussed more fully by Black J., in the fall of 2020, Philip Ho and Raymond Ho incorporated a new company to surreptitiously take the business of the plaintiffs. There were no non-competition or non-solicitation clauses in their contracts of employment. Had Philip Ho and Raymond Ho left decently and lawfully, they could have ramped up their business and probably competed very well against the plaintiffs.

[10] Instead, they commenced operations, solicited work, and recruited other senior employees of the plaintiffs’ business at a time they remained employed and owed fiduciary duties of loyalty to the plaintiffs[^1]. Instead of proceeding decently, like family and fiduciaries, they hid their competitive activities for months. In addition to deflecting their own time and attention to their surreptitious enterprise, they had employees of the plaintiffs conduct work for them too. They appear to have run some of their expenses through the plaintiffs.

[11] When confronted by Simon Ho, Philip and Raymond Ho both overtly lied and denied their involvement in a competing business.

[12] At the same time, Philip Ho commenced his oppression application seeking shareholder relief against Simon Ho. Philip Ho expressed concern about a proposed sale of the plaintiffs’ head office building by Simon Ho. Philip Ho tried to obtain a broad range of relief on an ex parte basis. A judge refused and ordered that Philip Ho give notice of the proceeding to Simon Ho. Thereafter a minor consent order was agreed upon and the application went into abeyance.

[13] What is most significant about the application however, is that Philip Ho brought the proceeding before Simon Ho knew about the competitive business that was then being operated by Philip Ho, Raymond Ho, and the other senior employees of the plaintiffs they had recruited. Incredibly, in his ex parte oppression proceeding, Philip Ho did not disclose the operation of his competitive business. So, while seeking the value of 40% of the major asset of the plaintiffs’ business, he did not disclose that, at the same time, he was engaged in a plot to arrogate the value of the business through a competitive enterprise.

The Order made by Black J.

[14] On discovering the defendants’ competitive activities, the plaintiffs commenced this proceeding. Black J. granted a broad injunction to protect the plaintiffs from the impact of the defendants’ breaches of fiduciary duties. Black J. described his principal holding as follows:

[26] These examples are representative but not exhaustive. Collectively, together with other evidence in the record, they show a clear plan and effort led by Philip and involving all of the individual defendants, to incorporate, develop and operate a new business to compete with the FS Group. They also show that the defendants actively solicited customers and employees of FS Group, and that the creation, planning and operation of the business, including the solicitation of FS Group employees and customers, was, and was intended to be, secretive and deceitful. The defendants, and especially Philip, denied their involvement in the Philcan Group business even very recently at a time and in circumstances which should have made it clear that "the jig was up".

[15] It is significant that the evidence about possible abuse of confidential information before Black J. was less impactful. He found:

[27] It is also alleged that the defendants, and in particular Raymond, have taken and continue to possess confidential information, including FS Group customer lists and technical information. While the evidence on this score is circumstantial, it is nonetheless concerning.

[16] In weighing the outcome, Black J. held:

[45] In terms of balance of convenience, whereas the plaintiffs' business has been operating for over 30 years, the defendants have been creating and planning their business for less than a year and operating that business for only a few months. While the defendants would argue that therefore the balance of convenience favours allowing them the opportunity to develop their business without impediment, since the plaintiffs' business is well-established, I find instead that there is no imperative, particularly given the secretive and dishonest way in which the defendants have conducted themselves to date, to allow them unfettered opportunity to compete for the plaintiffs' customers.

[17] The formal order signed by the court provides:

1. THIS COURT ORDERS, on an interim basis pending a disposition of this matter, that the defendants, and each of them, are prohibited from:

(a) approaching, contacting or soliciting any current or pipeline customers of the plaintiffs, or any customers to which or to whom the plaintiffs have provided services, during the past three years (from the date of this decision), which includes general contractors from whom or which the plaintiffs have received referral business in the past (or on an ongoing basis);

(b) approaching, contacting or soliciting any current employees of the plaintiffs;

(c) possessing, divulging or making any use of confidential information of the plaintiffs, including customer lists and proprietary or confidential technical information used in the plaintiffs' business operations.

2. THIS COURT ORDERS that, on an interim basis pending a disposition of this matter, in instances where there is a bidding process for new work which necessitates contact with general contractors, the defendants may have contact with general contractors if and when invited to bid, but as set out above the defendants are prohibited from approaching general contractors from whom or which the plaintiffs receive work, and may only participate in bidding for work if invited to do so, and provided that the defendants make no use of pricing or other confidential information of the plaintiffs.

[18] It is apparent from para. 2 of the order that the defendants were not completely precluded from operating or from competing with the plaintiffs. The order expressly permits the defendants to bid on work for customers of the plaintiffs if invited to do so and to contact general contractors in association with such bidding and work.

What did the Order made by Black J. Prohibit the Defendants from Doing?

[19] Mr. Philpott submits that Black J. prohibited the defendants from being in contact at all with the plaintiffs’ existing customers except when invited by a customer to bid in a market-wide tender or a general solicitation of the market place. That is the interpretation the plaintiffs place on the order enjoining the defendants from “contacting, approaching, and soliciting” customers and employees of the plaintiffs. Therefore, in the plaintiffs’ submission, all work and all contacts between the defendants and the plaintiffs’ customers amount to breaches of the order made by Black J. unless the customer invited a bid from the defendants through an industry wide tender or solicitation.

[20] Black J. discussed the scope of relief he ordered as follows:

[47] I decline to preclude the defendants, as requested by the plaintiffs, from competing with the plaintiffs at all. While the defendants' conduct has been unacceptable, in my view prohibiting them from operating in this space at all, even on an interim basis, goes further than necessary. While the defendants cannot approach, contact or solicit customers or employees of the plaintiffs, and cannot make use of confidential information of the plaintiffs, the defendants can operate a website and/or advertise their services in a general way (i.e. ., without targeting customers of the plaintiffs), and, to the extent that the defendants are approached by prospective customers, can provide services to those customers. To be clear, I am prohibiting the defendants, as part of the scope of paragraph 46(a) above, from contacting general contractors from whom or which FS Group has received referral business in the past (or on an ongoing basis). It is clear that these contacts are an important source of business in this industry and I am prepared to prohibit the defendants from exploiting contacts made while in the service of the plaintiffs in order to generate revenue for the new business.

[48] I understand from counsel that in some instances there is a bidding process for new work which necessitates contact with general contractors. In those instances, the defendants may have contact with general contractors if and when invited to bid, but as set out above the defendants are prohibited from approaching general contractors from whom or which FS Group receives work, and may only participate in bidding for work if invited to do so, and provided that the defendants make no use of pricing or other confidential information of the plaintiffs.

[49] I appreciate that some of the prohibitions will be difficult to police and enforce…

[21] Mr. Philpott submits that Black J precluded the defendants from exploiting contacts that they made while in the plaintiffs’ service. As such, they cannot be in contact with the plaintiffs’ customers or employees at all. He allows for a narrow exception where a contractor approaches the defendants to participate in a general solicitation to the marketplace. Mr. Philpott submits that if a customer approaches the defendants for a privately quoted job i.e. not part of an industry-wide tender, the defendants must refuse to speak with them.

[22] Along the same vein, the plaintiffs submit that all offers of employment to an employee of the plaintiffs who approached the defendants of his or her own motion were also breaches of the order.

[23] That is not what the order or the endorsement say. First, the defendants are allowed to operate a website and advertise in a generally way. They can provide services to the plaintiffs’ customers “to the extent that the defendants are approached by prospective customers”. They are prohibited from contacting general contractors. But they can have contact with a general contractor “if and when invited to bid”.

[24] The injunction prohibits the defendants from “contacting, approaching, and soliciting” the plaintiffs’ customers and employees. In my view, “contacting, approaching , and soliciting” are all active verbs with different nuances as to the degree of intention and depth of communication. But all connote active effort by the defendants. The order prohibits the defendants from taking active steps. It does not preclude the defendants from passively “being in contact” when approached by customers or employees of the plaintiffs as submitted by Mr. Philpott. To the contrary, it allows the defendants to approach and contact general contractors when they are invited to bid. There is no distinction between contractor bids that are general solicitations to the marketplace and those which are aimed at just a few service providers or even the defendants alone.

[25] The order also does not prohibit the defendants from hiring employees of the plaintiffs who apply for a job. The act of offering a contract of employment is not a prohibited contact where the employee has made contact first.

[26] I am bolstered in these views by two points. First, if Black J. forbade all contact or the state of being “in contact”, then the non-solicitation provision would be redundant and unnecessary. If the defendants can’t be in contact with customers or employees at all, even when the customers or employees make the call, then the defendants could never solicit anyway. The words “approaching” and “soliciting” would be superfluous. But, reading the words as requiring active effort on the part of the defendants, then even when they are allowed to contact and/or approach a customer in response to an invitation to bid, they still cannot solicit other work.

[27] Second, the order would be much easier to enforce if it just forbade the defendants from carrying on business or communicating at all with the plaintiffs’ customers. Black J. found that degree of protection unnecessary. He adopted the common law distinction between actively soliciting and responding to contacts made by others. As stated by Perell J. at para. 16 of Cosolo v Geo. A. Kelson Limited, 2017 ONSC 4150:

The former fiduciary may accept orders from former clientele of the employer, but the former fiduciary may not directly solicit that trade until a reasonable period of time has elapsed.

[28] In adopting that distinction, Black J. recognized expressly that this would make the order more difficult to police and enforce. A simple “no contact” order as submitted by Mr. Philpott would have been much simpler. But Black J. did not find it appropriate to make the simpler, stark order in the circumstances.

[29] In all the evidence of the many communications between the defendants and the customers or former customers of the plaintiffs, the plaintiffs are not able to establish that the defendants actively contacted, approached, or solicited their business. The same is true with former employees. They are also unable to prove that the defendants used any confidential information of the plaintiffs.

[30] Mr. Philpott submits that the defendants are acting in secrecy and are refusing to disclose documents describing their contacts so the court can see the full effect of their behaviour. I cannot speak to how a year went by without disclosure of all relevant documents being made. I deal with the lack of cross-examination and ongoing process issues below.

Injunctions to Protect an Employer from Unfair Competition by a Former Fiduciary

[31] Once a person leaves a fiduciary position, his or her fiduciary duties generally end. Both sides agree that there were no contractual limitations on the defendants’ right to compete against the plaintiffs. Had Philip Ho and Raymond Ho left like menschen, they could have competed on their own account. Like everybody else, they could not abuse confidential information of the plaintiffs. But they were free to trade on their own industry knowledge and experience. As the personal relationships with customers were largely theirs and were already in their heads so to speak, Philip Ho and Raymond Ho were well-situated to start a new business.

[32] But what they could not do however, was to violate their duties of honesty and loyalty while they remained employed subject to fiduciary duties in their very senior positions with the plaintiffs. Whether as a member of the board of directors, officers, and the most senior employees, Philip Ho and Raymond Ho owed duties to protect and promote the business and affairs of the plaintiffs honestly and selflessly. While they remained in their positions, they were not free to start their own competing business, solicit customers and employees, utilize firm assets for their own purposes, or arrogate to themselves firm revenue or goodwill.[^2]

[33] As a fiduciary is allowed to compete fairly when he or she leaves a business, the essence of the breach in these cases is that the fiduciary has abused his or her position to accelerate their ability to get the new business up and running. Cases talk about steps taken by the fiduciary before he or she leaves their employment that illicitly provide the fiduciary an unfair “springboard” into their new business.

[34] Normally it would take some months to go out and develop a new competing enterprise. During that time, the old business should be able to try to solidify its customer relationships and bolster its goodwill free of significant competition by its former fiduciaries. But when Philip Ho and Raymond Ho finally left the plaintiffs’ business, they were able to springboard into full-fledged competition against the plaintiffs because they incurred their laborious start-up months while still employed by the plaintiffs violating their duties of honest, loyal, and selfless devotion.

[35] Interlocutory injunctions in these cases are typically time-limited. They cannot just extend to trial like most interlocutory injunctions, because the time needed to move the lawsuit to trial exceeds the time that the plaintiffs should have had to react had the defendants not taken their unlawful springboard.

[36] In assessing the appropriate length of an injunction protecting a business from unfair competition by departing fiduciaries, cases like Levert Personnel Resources Inc. v. Leclair, 2007 CanLII 56506 (ON SC) and Cygnal Technologies Corp. v. Taylor, 2005 CanLII 25889 (ON SC) have adopted the approach taken by the Alberta Court of Appeal in Anderson Smyth and Kelly Custom Brokers Ltd. v. World Wide Custom Brokers Ltd., 1996 ABCA 169:

32. In my view, the duty of a departing fiduciary employee subsists for so long after his termination as is reasonable in the circumstances to enable the former employer to himself contact his clients and attempt to retain their loyalty. The length of that period will obviously be affected by the nature of the position held by the departing employee. Generally, the higher the level of trust and confidence reposed in the employee, with a corresponding vulnerability of the employer, the longer the period will be. Following the expiry of that period the departing employee is in the same position as any other former employee turned competitor – free to contact the clients of his former employer for the purpose of inducing them to follow him.

33. The evidence at trial portrayed the customs brokerage business as one in which personal contact between individual brokers and clients is important. The Trial Judge found that in Kelly’s case, and in the industry generally, the clients’ “…personal loyalty was to the individual broker rather than to the brokerage firm…”

34. Given the degree of personal loyalty to the individual customs broker in this case and throughout the industry generally, I believe that it would have been reasonable for the Appellant to expect Kelly to have refrained from soliciting its clients for a period of one year after his departure. During this time, the Appellant would have had the opportunity to solidify and secure its relationship with its clients and to compensate for any destabilizing effect Kelly’s departure may have had. After this one-year period, however, Kelly, like any other customs broker in the marketplace, would be entitled to approach the Appellant’s clients to solicit their business. [Emphasis added.]

[37] Almost all of the cases subsequent to those set a range of protection between six months and one year. The plaintiffs need time to develop and implement a strategy to contact their clients to try to retain their loyalty in face of the defendants’ breaches of their duties. That cannot reasonably take more than a few months generally. The plaintiffs have already held their interim injunction for more than a year.

[38] The plaintiffs’ submit that they need and are entitled to further time to repair the harm unlawfully inflicted on them. They submit that the defendants have breached the order made by Black J. and thereby deprived them of the reasonable period they need to protect their customer relationships and goodwill.

The Plaintiffs Offer Little Evidence of Efforts to Protect their Customer Relationships and Goodwill

[39] The plaintiffs presented no evidence of any plan devised or implemented by Simon Ho to enhance or protect the goodwill of the plaintiffs’ businesses after the defendants left. There is no evidence from the plaintiffs of steps they took to contact general contractors or other customers to reinforce and protect their all-important bilateral relationships. There is no evidence of an advertising campaign to show the market that the plaintiffs are still operating at peak levels despite the loss of important personnel. There is no evidence of any steps by the plaintiffs to assess their internal business processes in response to a fear that they may be compromised if the defendants took and utilized confidential information.

[40] The plaintiffs offer no evidence of steps they plan to take during a period of further protection or of why those steps have not occurred as yet.

[41] Of particular note, there is no evidence from Simon Ho of any use of confidential information by the defendants. Justice Black accepted for the purposes of the interim order that he made that the circumstantial evidence established a real risk that the defendants would misuse the plaintiffs’ confidential information. But it is now a year later. The plaintiffs have not identified any specific information that is confidential or proprietary to their business that they possess or that the defendants took and used.

[42] The plaintiffs’ evidence for this motion consists mainly of accusations that the defendants breached the terms of Justice Black’s order by being “in contact” with customers and general contractors. Accusations started shortly after the order was made last fall. The lawyers then got deflected into months of letter-writing in which each demanded documents from the other and each denied the other’s entitlement. A year has gone by and there have not even been cross-examinations.

[43] The defendants have adduced some evidence that Simon Ho took a team of people to one or two customers to show them the order made by Black J and to try to warn the customers off dealing with the defendants. There is some controversy in the evidence as to what precisely was said. But, whether the plaintiffs bad-mouthed the defendants, or put their best foot forward, the plaintiffs were able to hold these meetings regardless of anything done by the defendants in the interim.

[44] The defendants have adduced evidence, at least on a hearsay basis, from virtually all customers and in relation to all employees whom they hired away from the plaintiffs, that the customers and employees approached the defendants. As the defendants were the ones with the customer relationships, this evidence is to be expected. Apart from raising a logical inference that the evidence may be self-serving and could possibly have been manufactured, the plaintiffs chose to refrain from examining any witnesses or cross-examining on the affidavits filed.

[45] As to the employees, even assuming that I accept that the defendants raided the plaintiffs in the fall of 2021, the employees apparently wanted to go. There is no evidence that the plaintiffs did anything to retain the employees such as raising salaries or paying a “stay bonus” for example. There is no evidence that the defendants thwarted the plaintiffs from taking desired steps to protect their employee base after the order made by Black J. They do say they incurred training costs on replacement staff of over $76,000.

[46] I cannot enslave employees to the plaintiffs. As with the customers, the issue before me is whether the defendants acted unfairly and abused their fiduciary duties to obtain an unfair springboard. There may be a damages claim at trial. But I am considering whether extraordinary, interim protection against an unfair springboard should continue after today.

There is no Evidence that the Defendants Interfered with the Plaintiffs’ Ability to Communicate with Customers and Employees

[47] The one issue that gives me pause is whether the defendants’ conduct over the past year has undermined the plaintiffs’ ability to respond to their unfair competition. In Precision Fine Papers Inc. v. James Durkin, Wendy Durkin and Inter-World Paper Overseas Limited, [2008] OJ No 703 (SCJ) Strathy J. (as he then was) considered the effect of breaches of a six-month non-solicitation covenant by a former employee. He held:

[38] To accept the defendants' submissions would be to attach no consequences to Mr. Durkin's breach of his contract. It would also ignore the fact that the contract may have been breached for a period of almost four months, between the time that the Durkins started at Inter- World until the order of Perell, J. on November 30, 2007. During those four months, there is substantial evidence that the Durkins were engaged in a concerted effort to solicit the plaintiff's most important customers and that they had considerable success in so doing. To limit the injunction to the six month period would be to give the defendants the fruits of their breach and would fail to adequately protect the plaintiff's legitimate interest in its customer base.

[39] The period since the interim order has not given Precision the necessary tranquility and stability to repair its business relationships, let alone take measures to solidify them. In preparing for this motion, there have been affidavits prepared, key customers and suppliers have been brought into the litigation fray, and cross-examinations have taken place. The process has undoubtedly disrupted the plaintiff, a relatively small business with few employees and the uncertainty over the ultimate outcome has likely made it difficult to make plans or reassure customers. [Emphasis added.]

[48] In para. 67 of Simon Ho’s second affidavit, he says baldly that the activities of the defendants amount to breach of the order made by Black J. and “remain unfair competition that will result in irreparable harm”.

[49] Moreover, after giving evidence of employees leaving to go to the defendants last October, 2021, Simon Ho swears:

The harm in terms of the cascade effect of multiple employees leaving, the effect on staff morale, the potential loss of confidential and sensitive information, and in other ways is incalculable and irreparable. It is striking that the Philcan Group and Defendants have approached, contacted, and solicited current employees of the FS Companies in clear breach of the Black Order.

[50] Simon Ho’s evidence of solicitation of employees of the plaintiffs by the defendants is predicated on the plaintiffs’ submission that the order made by Black J. prohibited the defendants from offering employment to the plaintiffs’ employees no matter who actively contacted whom. I have already rejected that interpretation of the order above.

[51] Nevertheless, Mr. Philpott submits that the defendants have deprived the plaintiffs of the necessary tranquility and stability to repair their business relationships and to protect their legitimate interest in their customer base and employees. But, as mentioned above, there is lots of evidence of the plaintiffs demanding production of documents from the defendants to try to learn details of alleged breaches. But there is simply no evidence that the plaintiffs needed tranquility, were denied tranquility, or did anything to stabilize and repair relationships in the year since the order made by Black J. Neither is there any evidence showing that any efforts or plans of the plaintiffs were disrupted or delayed by anything done by the defendants.

[52] Therefore, even if I were to find that the defendants committed ongoing breaches of Justice Black’s order, I am still left with considering whether or to what extent these breaches affect the reasonable time necessary to enable the plaintiffs to contact their clients and attempt to retain their loyalty as discussed in the case law.

The Plaintiffs have not Shown that they Reasonably Need More Time to Restore Customer Relationships or to Protect their Goodwill.

[53] This is not a trial The plaintiffs do not need to prove breaches of the existing court order to a burden of proof.[^3]

[54] Counsel’s efforts to demand documentation of breaches and then ask the court to draw an inference that the defendants breached the court’s order due to the defendants’ refusal to produce documents is misguided. There is no nominate tort for breach of a court order per se. See: Frame v. Smith, 1987 CanLII 74 (SCC). If the defendants have improperly contacted customers or improperly taken on employees in breach of the injunction, then they may well face claims for breach of fiduciary duty or otherwise. But evidence and argument about whether the defendants breached the court’s order alone, especially without cross-examinations or a production motion, tells me little about what protection the plaintiffs’ needed or still needs to respond reasonably to the defendants’ unfair competition.

[55] The issue is not whether the defendants committed breaches of the interim order or whether the court should infer breaches by non-disclosure. The issue is whether anything was done by the defendants that undermined the protection granted to the plaintiffs by the order made by Black J. There is no evidence before me indicating how this is so. The plaintiffs offer no evidence that their efforts to take steps to contact customers and secure their goodwill were foiled or even hampered by the defendants. There is equally no evidence of any steps they currently plan to take that they could not have taken until now due to the defendants’ wrongdoing.

[56] Breaches or not, the plaintiffs have not shown that they need more time to take steps to protect themselves from the effects of the defendants’ springboard into competition in the marketplace. The plaintiffs do not say what they have done, if anything, to contact customers or to try to retain employees. The plaintiffs offer no evidence that any acts by the defendants actually interfered with the plaintiffs’ ability to take steps to secure their relationships with customers and employees. They do not say that they tried but could not contact their customers effectively within the past thirteen months. The outflow of employees was staunched ten months ago. There is no evidence that the defendants have or have used any confidential information. I find that the plaintiffs have had a reasonable amount of time as discussed by the Alberta Court of Appeal in Anderson Smyth and Kelly Custom Brokers Ltd. and the other cases that follow that decision. There is no basis in the evidence to continue the injunction beyond today.

Process Issues

[57] In this case Black J. granted an interim injunction pending an extension being sought by the plaintiffs after the full evidentiary record was completed. Normally, after an injunction is granted on an interim basis, the motion for an interlocutory injunction comes back to court for a hearing in a few weeks or a short number of months after further evidence is adduced and cross-examinations are held.

[58] Here, the parties became consumed with competing demands for document production. I know that just as the defendants were unwilling to disclose most documents related to their contacts with the plaintiffs’ customers, the plaintiffs were unwilling to disclose documents related to the real estate transaction to which Philip Ho has objected. I have read much of the back and forth correspondence that occupied months and months. Neither side presents especially favourably on these procedural matters. All knew that relevant documents must be produced. Neither side adopted a cooperative approach to minimize cost and delay.

[59] Several days before the hearing I met counsel at a case conference at which the plaintiffs sought an adjournment of the motion pending cross-examinations. I saw doctors’ notes saying that in the summer Simon Ho had become too ill to be cross-examined. I saw private detective reports showing that while claiming to be too ill to be examined as a witness, Simon Ho was out and about. I decided that I could not really assess what was happening at a brief case conference without digging into the record. I therefore deferred the adjournment request to the hearing at which I would be fully prepared on all of the voluminous evidence.

[60] At the case conference, I offered to require Philip Ho to attend for cross-examination in the few days prior to the hearing despite Mr. Juriansz’s office initially writing that he had absolutely no time available. To his credit, Mr. Juriansz agreed at the case conference to find time for the cross-examination of his client(s) if required. But Mr. Philpott demurred as his schedule was too full.

[61] I also advised counsel in my endorsement that even if the hearing was to be adjourned for cross-examinations, there would still be an issue as to whether to continue the injunction ordered by Black J. for a further interim period pending the completion of those examinations.

[62] On the date of the hearing, Mr. Philpott advised that the plaintiffs no longer sought an adjournment. But I am left with a record that has not been tested.

[63] For reasons that I do not understand, the plaintiffs also failed to produce five current employees who had been served with summonses by the defendants in Simon Ho’s absence. The plaintiffs did not move to strike the summonses as an abuse of process. The witnesses just failed to appear as required by law.

[64] As to Simon Ho, he has produced two doctor’s notes that are unconvincing. I have no doubt that he is very ill. I also know that medical advice will often be for ill patients to avoid highly stressful activities like cross-examination. But here, it is the plaintiffs that want relief. They are not withdrawing their motion due to Simon Ho’s illness. They continue to rely on his evidence. In the circumstances, the defendants have a prima facie right to test his evidence by cross-examining him.

[65] Of course doctors say that it is better for the health of an ill patient that he is not cross-examined. It is better for everyone’s health not to be cross-examined. But here, the patient was well enough to go into the plaintiffs’ office and out to dinner.

[66] There is no medical evidence as to why Simon Ho could not be examined in a manner to minimize or contain any identified health risks. High intensity examinations are usually the stuff of television dramas. Real life examinations are usually much more mundane. What risks is it that the doctor fears? How significant are they both in likelihood and severity? Can those risks be adequately minimized or accommodated?

[67] Cross-examinations can be done virtually with the patient at home in bed with a health practitioner at his side. There can be brief periods of examination followed by lengthy breaks over a number of days. Cross-examination does not have to be conducted with a sledge hammer. An iron fist in a velvet glove is often a more successful approach.

[68] The court is balancing the rights of two parties and needs to ensure a fair process to all. The doctor, by contrast, is a fiduciary with a singular focus on the health of the patient. The fact that a doctor provides a broadly stated opinion that a patient should not be cross-examined is not worth much weight in the balance without a far better explanation of why routine accommodations will not suffice to protect the patient from whatever unstated risks the doctor perceives.

[69] I do not see it as fair or convincing for a party to continue to rely on his own untested evidence without showing that his doctor has knowledge of specific health risks posed by the proposed cross-examination process and explaining why those risks cannot be accommodated in the specific circumstances of the case.

[70] I do not reject the doctors’ opinions. But they do not address how it can be fair for the plaintiffs to continue to rely on Simon Ho’s testimony on hotly contested facts without establishing that routine accommodations could not have been implemented to allow the defendants to cross-examine him.

[71] It seems clear to me that with an interim injunction in hand, the plaintiffs were not keen on hurrying to get back into court or on allowing Simon Ho or any of their employees to be cross-examined. I am not dissolving the order on this basis although there may be cases where that is the appropriate thing to do. People who hold interim injunctions cannot stall out the return of the interlocutory hearing. Neither can witnesses or parties just ignore summonses to witness. But here, the interim order has run its course without considering if the plaintiffs unduly delayed the return of the motion. I do note that the defendants bear much responsibility for the ongoing unproductive communications and stalled proceedings between the parties. Rather than making a finding as to which side was more to blame for the dilatory return of this motion, if either, this just feeds and informs my understanding and discretion as to next steps.

Next Steps

[72] Both sides want these proceedings to be put on a schedule and moved forward. Both must proceed together. Any separation of the brothers as shareholders now must deal with the reality of the past two years of activity.

[73] The defendants delivered an affidavit of documents in late July. They have disclosed a few documents ostensibly to try to show their very first contacts with the customers of the plaintiffs. Mr. Juriansz submits that if the plaintiffs cannot prove solicitation or an active contact or approach by the defendants, then there is nothing more to produce. I disagree. The obligation is to produce all relevant documents and not just to cherry-pick leaving the plaintiffs to prove matters that the defendants would like to be kept secret. Moreover, documents concerning the defendants’ contacts with the plaintiffs former customers and employees are relevant for more than to show solicitation in breach of the order of Black J. They will help assess the degree to which the defendants may be found to have unfairly exploited the plaintiffs’ relationships with the clients and employees. They will also go to proof of damages.

[74] The defendants have also redacted or blacked-out information from documents claiming it to be irrelevant or confidential. There is no general right for a party to deliver a redacted document. Rule 30 requires production of documents – not redacted documents. If a party claims it has valid grounds to withhold information, then a consent order should be obtained. In the unlikely event that the parties cannot agree on the terms of a consent order after counsel have explained to their clients the need to proceed in good faith, efficiently, affordably, and cooperatively on procedural matters, then an Associate Justice will resolve the issues for them.

[75] As is usual in a competition case, in my view, the defendants should and are hereby required to keep careful and detailed accounts of all contacts and revenues derived from the plaintiffs’ former customers pending trial.

[76] Similarly, I wrote a year ago in triage directions that Simon Ho and the plaintiffs will be required to be transparent with their efforts to sell the head office building. I see no legitimate basis for those documents to be withheld in the oppression proceeding. Philip Ho points to enough that was unusual about Simon Ho’s aborted sale transaction to raise material issues of propriety in the oppression proceeding.

[77] However, I do not intend to deal with the precise scope of discovery today. Rather, it seems apparent that these proceedings require the active involvement of a case management judge to focus the parties on the substance rather than ongoing procedural tactics. Accordingly, as delegate of the Regional Senior Justice, I direct both of these proceedings into case management under Rule 77.05 (1). Under Rule 77.06 (1) I direct that an Associate Justice be identified by the Administrative Associate Justice’s office to case manage these proceeding.

Costs

[78] The defendants may deliver no more than five pages of costs submissions by October 10, 2022. The plaintiffs may deliver no more than five pages of costs submission by October 17, 2022. To be considered, each submission shall be accompanied by a Costs Outline. The parties may also deliver any offers to settle on which they rely. Submissions and Costs Outlines shall be uploaded to Caselines

FL Myers J

Date: October 3, 2022

[^1]: Black J. found that all the initial participants were likely fiduciaries. It does not matter because Philip’s status as a member of the board of directors and an officer of the companies makes him a fiduciary per se. The others who helped him breach his duties are equally liable with him. See: Edgar T. Alberts Ltd. v. Mountjoy (1977), 1977 CanLII 1026 (ON SC), 16 O.R. (2d) 682 (H.C.), as cited by Black J. at para. 37 of his decision.

[^2]: It is not necessary for me to find precisely when the fiduciary duties were breached. I am aware of cases, for example, that allow employees to incorporate a new corporations prior to the employee leaving a business. Philip Ho and Raymond Ho did not confine their activities to such a benign step.

[^3]: The plaintiffs have moved for a contempt order. But Mr. Philpott was clear that they were not proceeding with that relief at this time. Rather, they relied on evidence of breaches of the order made by Black J. try to establish the need for an extension of the order to trial.