2022 ONSC 960
COURT FILE NO.: CV-21-00674125-0000
DATE: 2022-02-10
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
TAPS Media Inc.
B. Radnoff, D. Seifer and J. Cheung, for the Plaintiff
Plaintiff
- and -
Canadian Craft Brewers Association, Impact Public Affairs Corporation, Richard Dalmazzi, Scott Simmons, Ken Beattie and Kyle Larkin
M. Barrett, for Canadian Craft Brewers Association, Scott Simmons and Ken Beattie
J. Siwiec, for Richard Dalmazzi
Defendants
HEARD: January 27, 2022, via video conference at Toronto, Ontario
Mr. Justice F. Bruce Fitzpatrick
Decision On Motions
[1] This is a contest about competing contests. The contests are Canada-wide craft beer competitions. Craft brewers submit their products to be judged in multiple categories. The craft beer industry is edgy, artistic and locally based. It arose to compete with large multi-national alleged oligopolistic purveyors of a product eternally enjoyed by many. The craft beer industry’s dedication to excellence and quality of its products is well known. The entrepreneurial, competitive and freewheeling spirit of industry participants is one of its chief attractions. The owner of the rights to a longstanding competition wants to enjoin a start-up competition from holding its first ever event. This is context for the matter before the Court.
The Motions
[2] TAPS Media Inc. (“Taps”) moves for interim injunctive relief under section 101 of the Courts of Justice Act. It also moved for an order sealing certain admitted confidential material.
[3] In its factum, Taps set out the relief it was seeking in respect of the injunction motion. It differed slightly from relief sought in the notice of motion. Also, as far as relief was concerned, it used a previously defined term in the factum, “CBAC Confidential Information” which at this point in this judgment I am not prepared to adopt. Also, counsel for Taps modified the relief sought further in the course of oral argument. In my view, at the end of the day, Taps seeks the following order:
(a) an interim injunction enjoining the respondent the Canadian Craft Brewers Association (the “Association”), its agents, shareholders, employees, servants, directors and officers, or any one of them, from, directly or indirectly, or through any third party, organizing, promoting, advertising, marketing, communicating about, proceeding with, preparing for or holding the Canada Beer Cup (“the Cup”) or any other craft beer award competition or conference if the respondents Richard Dalmazzi (“Dalmazzi”), Scott Simmons (“Simmons”) and Ken Beattie are directly or indirectly, involved in any manner or using confidential information belonging to Taps or its affiliated companies;
(b) an injunction enjoining the respondents, their agents, shareholders, employees, servants, directors and officers, or any one of them, from directly or indirectly, or through any third party, making any use of the confidential information belonging to Taps or its affiliated companies;
(c) an injunction requiring the respondents to return forthwith to Taps all property in the respondents possession, power or control, belonging to the plaintiff, including confidential information belonging to Taps or its affiliated companies and all such property of the respondents that was created using the confidential information belonging to Taps or its affiliated companies.
[4] No relief is sought on this motion against the respondents Impact Public Affairs or Kyle Larkin. In regard to the sealing order motion, the affidavit had been served on the responding parties, emailed to me, but not formally filed in the court file portal. There was no issue that an order should issue sealing the affidavit and supporting material. It is so ordered. However, for a variety of reasons I advised counsel there were practical problems in implementing the order so the intended result of the order could be achieved. I leave it to counsel to make a further appointment with me through the trial coordinator in Thunder Bay to discuss this narrow issue within 30 days of the release of these reasons.
Background
[5] The following facts are not in dispute. There are three main players in this matter. Robert Engman (“Engman”) on the one hand. Dalmazzi and the Association on the other.
[6] Engman owns Taps. Engman also controls a craft beer brewery, Sawdust City Brewing Company Inc. (“Sawdust”) in Gravenhurst Ontario. Sawdust is an affiliate of Taps. Sawdust started brewing and selling beer in 2014. In 2014, Dalamazzi became Chief Operating Officer of Sawdust. He signed an employment agreement with Sawdust in January 2017. Dalmazzi provided services to Taps during the course of his relationship with Sawdust. There was no issue on this motion that in that capacity, Dalmazzi had access to confidential information belonging to Taps.
[7] Among other things, Taps owned and operated the Canadian Brewing Awards and Conference (the “Conference”). Engman acquired this business in 2005. The awards portion of the Conference grew from 100 entries in 2005 to over 2,500 entries in 2019. This growth was the result of Engman’s efforts. It was also a result in the significant growth in the craft beer industry in Canada in recent years.
[8] Taps ran its last awards conference, the 19th Annual, in Quebec City in September 2021. It is planning to run the 20th annual in Calgary, from May 12 to 14, 2022.
[9] Dalmazzi signed two agreements with Sawdust. Dalmazzi signed a consulting agreement in 2014. Dalmazzi signed an employment agreement on January 3, 2017. Dalmazzi was terminated without cause by Sawdust on October 12, 2019.
[10] The Association is a Canadian federal not-for-profit corporation. It was incorporated in October 2018. Engman was involved in its creation. Engman and Dalmazzi were among the initial directors. The purpose of the Association is to represent and promote the interests of craft breweries across Canada. Its directors are the heads of the ten provincial craft brewer associations. The Association wants to run its first revenue-generating event, the Cup, a national beer competition. It was originally scheduled to proceed in Niagara Falls on February 16, 2022. It has been postponed because of the pandemic. It has been rescheduled for in person judging to occur between March 28, 2022 and April 1, 2022. The award ceremonies are to follow virtually.
[11] Dalmazzi is now the Executive Director of the Association. In July 2018, Dalmazzi started devoting 25% of his time while continuing to be employed by Sawdust working to create the Association. On November 8, 2018 Dalmazzi entered into a consulting agreement with the Association. Dalmazzi was acting as interim president for the Association for a period of six months.
[12] In June 2020, Taps and the Association entered into negotiations for the Association to buy or acquire the Conference from Taps. I refer to this series of negotiations as “Round I”. In the course of those negotiations, Taps disclosed confidential information to the Association. A non-disclosure agreement was executed concerning the conveyance of this information. The confidential information consisted of profit and loss statements (“P&Ls’”) for the Conference for 2017, 2018 and 2019. The P&L’s also contained sub ledgers which contained sensitive financial information such as:
a) a summary of the revenues generated by, and the expenses associated with the Conference including distinguishing between the competition and the Conference;
b) The Conference’s revenue sources: (i) booth revenue, which refers to revenues sourced from vendors who occupy booths at the Conference; (ii) sponsorship revenue, which refers to revenues sourced from sponsors of the Conference; (iii) conference ticket revenue; and (iv) award entry fee revenues, which refers to revenues generated from the entries to the Canadian Brewing Awards;
c) underlying particulars of each category of revenue, except for award entry fee revenues, which included the name of each customer and the price paid by that customer; and
d) nine categories of expenses and the underlying particulars of each category of expense, including the name of each service provider or supplier and the cost charged by the service provider or supplier.
[13] This information was not publicly available.
[14] The Association made an offer to purchase the Conference on July 23, 2020. Engman rejected the offer. On August 27, 2020 the Association advised Engman it had decided not to pursue the acquisition of the Conference at that time.
[15] In October 2020, the Association reinitiated negotiations with Taps. I refer to this series of negotiations as “Round II”. For Round II, Engman proposed the Conference be formally valued by an independent third-party business valuator. This was done by MNP LLP (MNP). Again, Taps disclosed confidential information to MNP further to the valuation process in the Round II negotiations. In addition to the 2017, 2018 and 2019 P&Ls, Taps disclosed a P&L for the 2020 awards containing only information related to the competition portion of the Conference. The awards were held virtually in 2020 due to the pandemic. The conference was cancelled that year.
[16] On June 4, 2021 MNP provided a preliminary draft valuation calculation for the Conference to Dalmazzi and the Association.
[17] On June 23, 2021, the Association’s Board minutes indicate they were not interested in pursuing the acquisition because of the high valuation of the Conference.
[18] On July 26, 2021, Engman inquired of the respondent Larkin, who was acting as an intermediary in the negotiations, if the Association was still interested in making the acquisition. Larkin responded that the Association was still interested but was “finalizing some things internally”.
[19] On August 26, 2021 the Association advised it was no longer interested in pursuing the Acquisition.
[20] On November 5, 2021 Taps discovered the Association was going to launch and hold the Cup competition in February 2022. On November 19, 2021, Taps sent a detailed letter from litigation counsel threatening this motion for injunctive relief. The Association responded through litigation counsel on November 30, 2021 denying any wrongdoing.
The Legal Test on an Interlocutory Injunction Motion
[21] There is no dispute that the legal framework that governs the resolution of this motion for interim interlocutory relief was articulated by the Supreme Court of Canada in RJR Macdonald Inc. v. Canada (Attorney General) 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311, at para. 43 which sets the test out as follows;
(a) Whether there is a serious issue to be tried;
(b) Whether the moving party will suffer irreparable harm if the injunction is not granted; and
(c) Which party will suffer the greater harm from granting or refusing the remedy pending a decision on the merits (i.e., whether the balance of convenience favours the granting of the injunction).
[22] The three elements are interrelated considerations. Strength on one part of the test can compensate for weakness on the other (Livent Inc. (Reciever of) v. Deloitte & Touche, 2016 ONCA at para. 5).
[23] If a party seeks relief in the nature of a mandatory injunction it must show a strong prima facie case to satisfy the first branch of the test.
[24] An injunction is a discretionary and extraordinary remedy as it mandates significant judicial interference absent consideration of the merits of the dispute with the benefit of a full trial. (R. v. Canadian Broadcasting Corp., 2018 SCC 5, [2018] 1 S.C.R. 196, at para. 27). An injunction is also an equitable remedy and subject to the principles that govern the grant of equitable decrees and orders. (Boni v. Leonardo Worldwide Corp., 2018 ONSC 1875 at para. 72)
[25] I note a comment Sharpe J. (as he then was) made in an injunction case in the 90’s Omega Digital Data Inc. v. Airos Technology Inc. et al 1996 CanLII 11785 (ON SC), 32 O.R. (3d) 21. Sharpe J. said “It is not possible on an interlocutory motion with conflicting affidavit evidence to determine finally whether or not the plaintiff is entitled to succeed at trial and whether or not the defendants are, in fact, guilty of copying or misappropriating confidential information acquired from the plaintiff”.
The Position of the Parties
[26] Taps submits Dalmazzi, who at all material times owed a fiduciary duty to Taps, worked on Taps' well-established competing craft beer competition and had access to all of Taps' confidential information about its beer competition. While continuing to work for Sawdust, Dalmazzi was fundamentally and integrally involved in the planning, development and organization of the Cup. Taps says the Cup is a strikingly similar beer competition to the one done by Taps. Taps says there is a genuine issue to be tried about Dalmazzi’s alleged breach of his fiduciary duty and alleged misuse of the confidential information he obtained while working for Taps. Taps argues the Association knowingly participated in and assisted Dalmazzi's breach of fiduciary duty. Dalmazzi did this while the Association was negotiating with Taps to purchase Taps' beer award competition in both Round I and Round II.
[27] The respondents, Simmons and Beattie are implicated as Association directors. Taps says they too misused confidential information provided by Taps for the purpose of the Association assessing the purchase of Taps' beer competition and breached their obligations to Taps under a non-disclosure agreement by misusing the confidential information disclosed to them in order to create the Cup.
[28] Taps submit the material before the court demonstrates they have satisfied all three aspects of the RJR MacDonald test
[29] Dalmazzi and the Association respond with a blanket denial of any breach of fiduciary duty or misuse of any confidential information. Dalmazzi claims he, Simmons and Beattie destroyed whatever information they formally received from Taps during Round I and Round II of negotiations. In any event, it was unnecessary to use the information from Taps to put together the plan to stage the Cup. The Association argues the ability to arrange a national beer competition is available from many other sources. For example, the Association purchased an online platform from a Brazilian company to launch and organize the competition.
[30] The Association and Dalmazzi submit Taps is seeking a mandatory injunction. Taps has not demonstrated a prima facie case. Further Taps has not demonstrated irreparable harm and the balance of convenience favours the fledgling Association which will suffer significant financial damage if the holding of the Cup is enjoined until trial.
[31] I observe the parties have each filed detailed affidavits. Engman’s unredacted affidavit and reply affidavit contains 338 pages. His redacted material contained 405 pages. His factum was 16 pages longer than the 20-page limit mandated by Part III A. of the Consolidated Provincial Practice Direction regarding factums.
[32] Dalmazzi and the Association relied, in the main, on an affidavit sworn by Dalmazzi on January 13, 2022. It was 188 pages long. Dalmazzi put forward a reply affidavit containing another 57 pages. Like Taps, both Dalmazzi and the Associations facta exceed the Practice Direction limit by 18 pages and 17 pages respectively. The disputed events took place, arguably, over the period from the day Dalmazzi was terminated in October 2019 until Engman heard about the Cup in November 2021. It was two years that generated a fair number of documents between those involved in this litigation. Unfortunately, none of the very capable counsel involved in this matter thought it necessary to prepare either a chronology or a quick reference summary of all the disputed facts in this matter.
[33] In my view, there was a lot of material for a one-day motion.
Analysis
[34] Overall, I accept Taps submission that all the material provided on this motion by both parties demonstrates that Taps satisfies all three branches of the RJR MacDonald test. I find there is a serious issue to be tried. I find that Taps will suffer irreparable harm if the injunction is not granted. I find that the balance of convenience favours Taps.
[35] Accordingly, I am going to grant injunctive relief to Taps. The express terms of the injunction will follow at the end of these reasons. Here are the broad terms.
[36] The injunction will be time limited. It will be Canada-wide. It will end September 1, 2022. It will not continue until trial unless the trial occurs before September 1, 2022. I estimate that is unlikely. The Cup will not be held before September 1, 2022. No judging will occur prior to September 1, 2022. No collection of beer samples will occur prior to September 1, 2022. Otherwise the injunction will not enjoin the Association from carrying on with whatever plans it has for a beer competition that will be scheduled to occur after September 1, 2022. However, Dalmazzi, Simmons and Beattie are expressly enjoined from any participation in such planning or execution until September 1, 2022.
[37] The reason I am choosing to time limit the injunction is because of my view of the nature of the confidential information involved in this matter. I have had the benefit of reviewing it. It is commercial evidence of pricing, participants, revenues and expenses. It also contained a draft valuation as of December 31, 2020. It reflects evidence of what occurred in the past, the latest being the end of 2020. It is not confidential evidence of processes, or strategies or methods that are of an ongoing nature. In my view the longer this matter goes on the less sensitive or possibly useful is the information contained in the P&L statements and the draft valuation. I say this because we are in a market economy that appears to be entering a period of significant price inflation. It is a notorious fact that prices are increasing on all inputs both in the wholesale and retail market. If a misuse is made out at trial, the degree of misuse will go to the issue of remedy. I suspect by the time discoveries are conducted the contemporary numbers for like entries contained in the confidential information documents will have changed significantly. It does not excuse any misuse of the information in the past. But it does temper how long I think it is practical to allow the Association to be enjoined from staging the Cup. Injunctive relief is extraordinary. It does not have to be extraordinarily long to achieve an equitable result.
[38] I am also cognizant of how long it may take to have this matter tried. While I am not assigned to Toronto, I am aware that trial time is at a premium. I sense this matter will take more than a week to try. I believe this means it will be unlikely to be assigned a trial date in 2022. I see extending the injunction beyond September 2022 as putting the matter in a different context than the considerations that make it appropriate to enjoin the Association for a limited time.
[39] The case law mandates the granting of an extraordinary remedy is an opportunity for the Court to do equity. I see a time-limited injunction as a just and appropriate pre-trial intervention which is warranted for the case as presented on this motion.
[40] Here are my reasons for making this order.
Serious Issue to be Tried
[41] Context is important in civil litigation. The COVID-19 pandemic has caused many elements of our society to go into a kind of slow motion for the last two years. I think that is the best analogy to describe how things have gone for these two parties. The termination of Dalmazzi seems objectively to have started this feud between himself and Engman which is playing itself out in this litigation about competing competitions. I think things would have happened a lot faster between these parties had the pandemic not intervened. On a calendar basis, this dispute took what appears to be a relatively long time to develop when contrasted with the timelines demonstrated in the prior injunction jurisprudence. Alleged offending actions are usually discovered quickly and the necessity of immediate injunctive relief is attractive because the dispute is fresh and a status quo provides an overarching level of fairness.
[42] Here, it appears it took the Association about two years to get the Cup off the ground when measured from Dalmazzi’s termination. Two years is a long time in the commercial world. However, in this case, with the pandemic in the background, I do not accept this two-year period represents a long and considered process by the Association which was plausibly unconnected to it seeking out information from Engman. Things were happening in slow motion because of the pandemic. There was no way anybody was doing anything like the Cup throughout 2020 in Canada because of public health measures and our attitude toward the pandemic at that time. 2021 was still a time of caution. I think 2022 should still be a time for caution but events thus far this year seem to indicate otherwise.
[43] I think in the context of the pandemic, the timing of the Cup was relatively quick off the mark. It indicates an arguable connection between what Dalmazzi brought with him and what the Association learned from the confidential information disclosed in Round I and Round II. I think in pandemic terms there was an outside impediment on the Association going forward with the Cup in any event throughout this time period. While the Cup did not “appear” publicly until the Fall of 2021, I do not think that should count against granting relief in this case.
[44] I am also persuaded to the notion of a serious issue to be tried by Dalmazzi’s “loose lips sink ships email” referred to by counsel in oral argument. There was cross examination on the email which was also instructive to me.
[45] On January 29, 2020 Dalmazzi sent an email to a consultant, Mirella Amato, who the Association was talking to with a view to setting up a national beer competition. This is a little more than 90 days after he was terminated by Engman. It is also about 30 days before we in Canada got serious about the pandemic. In January 2020 there were reports of the pandemic in Europe and Asia. However, I do not think anybody really knew in January what was coming as far as how the pandemic would affect our economy and our daily lives.
[46] On January 29, 2020 Dalmazzi wrote Amato:
Regarding our discussion about the national beer competition, my board is open to the idea, but the feeling is that trying to do it this year might be pushing it. So we need to plan for 2021. Also, I've been careful who I've talked to because I firmly believe that loose lips sink ships in these situations.
[47] I understand the “loose lips sink ships” is an expression with a World War II genesis. It was advice to keep people from talking about something that may alert an enemy to a convoy route which in turn would lead to an unnecessary loss of life and tonnage. It is still widely understood and used today as an idiomatic expression advising to keep your mouth shut if you are trying to keep a secret that if revealed could ruin a larger plan.
[48] Dalmazzi was specifically cross examined on January 18, 2022 about the use of the phrase in the email. He testified at page 37 of his transcript:
124 Q. Do you agree with me that one of the reasons you wanted to keep it confidential or private is that you did not want Mr. Engman to find out that these discussions were ongoing?
A. I want and always do keep all preliminary discussions confidential, about anything, with outside parties.
125 Q. Well, I'm talking about this particular idea, and I'm suggesting to you that one of the reasons you wanted to keep it private or confidential was that you didn't want Mr. Engman to find out what was being discussed?
A. The only thing that entered my mind in this sentence was, Mirella, all our discussions are confidential, period.
126 Q. Well, am I correct, your understanding of the expression “loose lips sink ships” is that if information that should be kept private comes out, it could cause harm or damage? Correct?
A. I don’t understand what you’re asking me
127 Q. I'm asking you -- I'm suggesting what you meant when you used the phrase "loose lips sink ships", and I'm suggesting that your understanding is that it means if things aren't kept private, harm or damage can happen?
A. If things are not kept confidential, events may unfold other than the way you want them to and in a -- at a rate at which you want them to.
[49] I appreciate that focusing on one email, in the blizzard of “paper” that makes up this file thus far, may seem to some as being unduly focused and that more should be required. The essence of the claim at bar is an improper use of confidential material. Confidential material is meant to be kept secret. Generally sophisticated persons do not widely advertise misuse of the confidential information obtained from others. However, to me the use of the phrase at that particular time by Dalmazzi and his answers in cross examination in the overall context of how things have played out is telling. It at a minimum gives me pause. It is for certain “smoke” where a trial is needed to demonstrate “fire”. In my view, this evidence demonstrates Dalmazzi knew he was improperly using confidential information he had obtained from his former employer and he did not want Engman to know about it.
[50] In assessing the assertion by the Association that there is no hint of misuse of confidential information and no need for it anyway, in my view, Dalmazzi need not have given the potential advice to Ms. Amato that he did. His email only makes sense if he was trying to hide something and wanted her to keep quiet about the Association plans as well. I take from the evidence that the craft beer industry is still a relatively close-knit community even though it is Canada-wide. People within the industry know a lot of the same people. I accept Taps’ argument that it was important in the Association’s designs for a new competition to keep Engman in the dark.
[51] Objectively there seems to be no need for secrecy if putting on a beer competition is something anybody in the industry can do if they have any experience. Dalmazzi’s email is not consistent with that theory. It calls for secrecy for something the Association argues needs no secrets.
[52] The email confirms a contemplated timeline for the Association to come out with the Cup in 2021. In the context of the Association doing it themselves with their own resources for a 2021 launch, there would be no corresponding need to engage in confidential discussions with Engman in the summer of 2020. Why bother? The Association argues they were going to do it themselves anyway. Yet they went through two rounds of negotiations where confidential information was disclosed in 2020 and 2021. This is strong evidence that there is a serious issue to be tried about the misuse of confidential information.
[53] I also accept Taps’ argument that the Cup and Taps award program are very similar in all material respects. Each of the competitions:
(a) are national Canadian beer competitions;
(b) are open to only Canadian independent craft breweries;
(c) are judged by professional, accredited beer judges on a point scoring system, with awards given in gold, silver and bronze. Judges in each competition distribute written feedback for all submissions;
(d) share very similar style categories. Of the 70 style categories at the Canada Beer Cup, 51 of them are virtually the same as the style categories at the Canadian Brewing Awards;
(e) have an entry fee of $100 plus HST;
(f) have entrants deliver six bottles/cans of each beer to shipping locations in advance of judging and the awards ceremony to allow the judges to evaluate the submissions in advance;
(g) have a best beer or brewery award. The Cup has a “Best In Show” award and the Canadian Brewing Awards has a “brewery of the year”;
(h) present its awards at an industry conference; and
(i) source sponsorship revenue for the competition.
[54] All of this is enough for me to accept Taps’ argument that there is a serious issue to be tried that there has been a misuse of confidential information. Taps satisfies the first branch of the test.
[55] I do not agree with the Association’s argument that Taps is seeking a mandatory injunction and therefore Taps must demonstrate a prima facie case at this point. The injunction Taps requested will not practically require the Association to take positive steps. It will require them to stop relying on the talents and input of Dalmazzi, Simmons and Beattie. The injunctive relief I am going to grant will permit the Association to set up whatever competition they want to as long as it happens after September 1, 2022. Practically the pandemic has already caused the Association to reschedule. They have already refrained from going ahead as planned in February 2022. Dalmazzi deposes he has destroyed all the confidential information he received from Taps. The information was provided electronically and Taps is not seeking any kind of intrusive forensic audit of Dalmazzi’s or the Association’s electronic devices. Accordingly, I do not see the practical need to give effect to the portion of the relief requested requiring a return of the confidential information.
[56] I am also not convinced that the Association has established on the evidence before me all the alleged positive steps they say they would have to do to comply with an injunction. Apparently, the beer submitted for judging in December, for a February competition will still be good enough to be judged in April. I deduce this from the submissions about the change in the date for the Cup from February to April. I did not have evidence of the shelf lives of the contest entries or why it would make sense to return it if an injunction is granted. We are dealing with beer samples. I am confident the participants can make more for a post September 1, 2022 competition.
[57] The injunction I am going to grant will not finally determine this litigation. The Association will be free to continue to plan whatever competition they want for after September 1, 2022. They just will not be able to use Dalmazzi, Simmons or Beattie to do it before that time.
Irreparable Harm
[58] In RJR MacDonald at page 341, the Supreme Court defined irreparable harm as:
‘Irreparable’ refers to the nature of the harm suffered rather than its magnitude. It 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.
[59] I accept Taps’ submission that where the alleged misuse of confidential information relates to business or financial information the preponderance of the jurisprudence provides that irreparable harm is presumed. (Carecor Health Services Ltd. v. Health Trans Services Inc., 2006 CanLII 21049 (ONSC) at para. 20). Taps argues it will lose customers as the result of the alleged misuse and a claim for damages at trial will be met with an argument that the claim is mere speculation. The inevitability of that argument by the Association is evident in their submissions on this motion. The Association argued that damages were an adequate remedy. The argument was couched in references to “potential losses” and the lack of a demonstrated causal link between the alleged misuse and any harm that might be endured by Taps. In my view these arguments did not overcome the presumption that irreparable harm is suffered when confidential business information is alleged to be misused.
[60] I was not persuaded by the Association’s argument that damages, however difficult to prove, would be an adequate remedy for Taps’ claim in this matter. The presumption of irreparable harm in this case also was not overcome by the fact that Taps has held one competition since Dalmazzi left and is planning another in May. There is a serious issue to be tried about the misuse of the confidential information. By the time the matter comes to trial, evidence will exist as to what is going to happen in the next six months. However, for now I find that Taps has made out the second branch of the RJR MacDonald test.
The Balance of Convenience
[61] The balance of convenience test requires a determination of which party will suffer the greater harm from granting or refusal of injunctive relief. The court considers whether the benefit the claimant will gain from preliminary relief outweighs the inconvenience caused to the respondent by the granting of relief.
[62] Taps has a lot invested in its awards program. It has more than nominal value. This fact was validated by the actions of the Association in expressing a desire to purchase it from Engman not once but twice in the past two years. Taps would benefit from the relief as it would guarantee no use of confidential information until September 2022.
[63] The Association is a fledgling organization. It is a unique entity. It serves the needs of an industry. I have no evidence that any of its member organizations will fail or be seriously damaged if the injunction is granted. Practically what is going to happen is the injunction will prevent them from holding the Cup until after September 2022. The pandemic already knocked the Cup back in time. The Association did what it had to do to recover. I do not see it being held off until September 2022 as being particularly onerous.
[64] I am further persuaded on the balance of convenience question by the fact that Taps gave the Association clear warning of its intentions to seek injunctive relief on November 19, 2021 by way of a demand letter. The Association had yet to begin to collect samples at that point for the first Cup competition. Nevertheless, on November 30, 2021 counsel for the Association advised that the Cup would be going ahead. It hardly lies in the mouth of the Association now to complain that the balance of convenience does not favour Taps.
[65] The Association has listed the necessity of alerting the brewers who have registered for their event and the press as to any relief granted as assisting their position that the balance of convenience favours them. Arguably it may be a two-edged sword. The industry relies on risk-taking entrepreneurs who are dedicated to quality and excellence. Nobody forces anybody to compete in any competition. The brewers choose where they want to compete. They vote with their samples. The result of this motion may have unintended consequences for this relatively small group of businesspeople in Canada. This is another reason I am determining not to leave the injunction in place past September 2022. By that time Taps will have conducted another Canada-wide competition. It will be doing so in an environment where it might be the only national craft beer awards game in town. However, that can only last so long as far as the Association is concerned.
Order
[66] For the reasons above, order to go on the following terms;
Commencing on February 10, 2022 and ending on September 1, 2022, for any place in Canada, Canadian Craft Brewers Association, its agents, shareholders, employees, servants, directors and officers, (collectively hereinafter the “Association”), Richard Dalmazzi (“Dalmazzi”), Scott Simmons (“Simmons”) and Ken Beattie (“Beattie”) or any one of them are hereby enjoined from, directly or indirectly, or through any third party, organizing, promoting, advertising, marketing, communicating about, proceeding with, preparing for or holding the Canada Beer Cup or any other craft beer award competition or conference if Dalmazzi, Simmons or Beattie is, or are, directly or indirectly, involved in any manner or if the Association uses the confidential information ordered sealed by Fitzpatrick J. on January 27, 2022 (the “Confidential Information”);
The Association, Dalmazzi, Simmons and Beattie are hereby enjoined for any place in Canada from directly or indirectly, or through any third party, making any use of the Confidential Information from February 10, 2022 until September 1, 2022.
Costs
[67] Counsel agreed on costs prior to the release of these reasons. Taps Media Inc. shall have its costs fixed in the amount of $35,000.00 inclusive of disbursements payable forthwith jointly and severally by the Association, Dalmazzi, Simmons and Beattie.
“original signed by” The Hon. Mr. Justice F.B. Fitzpatrick
Released: February 10, 2022
2022 ONSC 960
COURT FILE NO.: CV-21-00674125-0000
DATE: 2022-02-10
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
TAPS Media Inc.
Plaintiff
- and -
Canadian Craft Brewers Association, Impact Public Affairs Corporation, Richard Dalmazzi, Scott Simmons, Ken Beattie and Kyle Larkin
Defendants
DECISION ON MOTIONS
Fitzpatrick J.
Released: February 10, 2022