BrettYoung Seeds Limited Partnership v. Dyck et al., (2013) 563 A.R. 138 (QB)

• Judge: Wakeling, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: April 03, 2013
• Citations: (2013), 563 A.R. 138 (QB);2013 ABQB 319

BrettYoung Seeds Ltd. Partnership v. Dyck (2013), 563 A.R. 138 (QB)

MLB headnote and full text

Temp. Cite: [2013] A.R. TBEd. JN.015

BrettYoung Seeds Limited Partnership (plaintiff) v. Ken Dyck, Shaun Dyck and Green Patch Environmental Consulting Ltd. (defendants)

(1203 15159; 2013 ABQB 319)

Indexed As: BrettYoung Seeds Limited Partnership v. Dyck et al.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Wakeling, J.

May 28, 2013.

Summary:

The plaintiff sought an interim and interlocutory injunction enjoining the Dycks (father and son), along with their company (collectively, the defendants), from competing with and soliciting the plaintiff's customers for an 18 month period following September 1, 2012. The plaintiff also sought an order requiring the defendants to return confidential material that it alleged was unlawfully in their possession.

The Alberta Court of Queen's Bench dismissed the application.

Contracts - Topic 1602

Formation of contract - Mistake, misunderstanding or misrepresentation - Non est factum - Bars - Carelessness or negligence - [See first Equity - Topic 3726 ].

Contracts - Topic 6732

Illegal contracts - Contrary to public policy - Restraint of trade - Agreements not to compete or solicit - The parties entered into agreements in 2011, which expired on August 31, 2012 - The plaintiff sought an interim and interlocutory injunction enjoining the defendants (the Dycks (father and son) and their company) from competing with and soliciting the plaintiff's customers for an 18 month period following September 1, 2012 - The Alberta Court of Queen's Bench dismissed the application - The court held that the noncompetition promises which the plaintiff sought to enforce did not apply if the 2011 agreements expired on account of the passage of time, as happened here - Alternatively, even if the plaintiff could rely on the noncompetition and nonsolicitation terms in the 2011 agreements, they would be unenforceable - The court approached the issue on the assumption that the Dycks were the plaintiff's employees - Most employers could not enforce a noncompetition agreement which was not inextricably tied to a sale of business agreement absent extraordinary circumstances - There was nothing extraordinary about the defendants - A nonsolicitation agreement for seven months would have adequately protected the plaintiff's legitimate business interests - This was the time period within which the Dycks had established a good working relationship with the customers their predecessor had served - As there was no sophisticated severance clause in the 2011 agreements, severance was not available (general rule that a restrictive covenant in an employment contract found to be unreasonable was void and unenforceable) - If a nonsolicitation promise was not a satisfactory device to protect the plaintiff's interests and noncompetition was necessary, 18 months was far too long - More than seven months would be hard to justify (already expired) - Further, the Dycks were not fiduciaries, but sales representatives who were part of an integrated sales force - Even if they were fiduciaries, a fiduciary could compete with the person to whom it owed fiduciary duties provided they did not use the former employer's proprietary information and did not solicit the former employer's customers until a reasonable period of time had elapsed following the end of employment - Those conditions were satisfied here - Again, the nonsolicitation period was seven months and had expired - See paragraphs 120 to 131.

Contracts - Topic 7416

Interpretation - General principles - Most commercially reasonable interpretation - The parties entered into agreements in 2011, which expired on August 31, 2012 - The plaintiff sought an interim and interlocutory injunction enjoining the defendants (the Dycks (father and son) and their company) from competing with and soliciting the plaintiff's customers for an 18 month period following September 1, 2012 - The Alberta Court of Queen's Bench held that the noncompetition promises which the plaintiff sought to enforce did not apply if the 2011 agreements expired on account of the passage of time, as happened here - Why the plaintiff would draft an agreement so as to impose a promise on the Dycks not to compete only if the Dycks decided to terminate the agreement before August 31, 2012, was not obvious - A sound business reason might not have existed - It was not the court's role to ignore unambiguous contract provisions because they failed to implement sensible business practices and to make the modifications necessary to eliminate this perceived shortcoming - Although courts were predisposed to give effect to sound business considerations, the text had to support more than one possible meaning - A determination that the noncompetition and nonsolicitation provisions did not have effect unless the defendants terminated the 2011 agreements did not make them ineffective - There was obvious value to the plaintiff in denying the Dycks the right to compete if they terminated the agreement before August 31, 2012 - See paragraphs 15 and 110 to 119.

Equity - Topic 3607

Fiduciary or confidential relationships - General principles - Relationships which are not fiduciary - [See Contracts - Topic 6732 ].

Equity - Topic 3726

Fiduciary or confidential relationships - The employer-employee relationship - Duty of employee after termination - The plaintiff sought an interim and interlocutory injunction enjoining the defendants from competing with and soliciting the plaintiff's customers for an 18 month period following the end of their contracts - The Alberta Court of Queen's Bench, after discussing the principles governing the resolution of interim and interlocutory injunction applications, discussed the following other principles of substantive law that were engaged by the application: (1) the common law principle that promoted free enterprise; (2) noncompetition agreements with employees were enforceable in limited circumstances; (3) a person who was a fiduciary employee could compete with a former employer after his employment ended if he complied with the obligations which survived the end of the employment relationship; (4) an independent contractor carried on a business, unlike an employee who was part of another's business; and (5) promises contained in an agreement a person signed without reading were generally enforceable - The court referred to and discussed extensive case law - See paragraphs 90 to 103.

Equity - Topic 3726

Fiduciary or confidential relationships - The employer-employee relationship - Duty of employee after termination - [See Contracts - Topic 6732 ].

Injunctions - Topic 1600

Interlocutory or interim injunctions - General principles - General principles respecting grant of interlocutory or interim injunction - The Alberta Court of Queen's Bench discussed the principles governing the resolution of interim and interlocutory injunction applications - The court referred to and discussed extensive case law - See paragraphs 77 to 89.

Injunctions - Topic 1616

Interlocutory or interim injunctions - General principles - Arguable issues of law involved or serious question to be tried - The Alberta Court of Queen's Bench held that the first part of the tripartite test for an interlocutory injunction (whether there was a serious question to be tried) was modified when the applicant was seeking an order enjoining the respondent, who was either an employee of the applicant or an independent contractor with whom the applicant had a business relationship at the time that the obligation the applicant wished to enforce was entered into, from competing with the applicant for a stipulated period of time - An applicant for an interlocutory injunction prohibiting a respondent from engaging in commercial activity that it would otherwise be free to undertake had to present sufficient evidence to allow a motions court to conclude that it was more likely than not that a trial court reviewing the same evidence would grant the plaintiff the requested relief - A court should not impose such a burden on a respondent at this early stage of the litigation in the absence of a compelling reason to do so - A compelling reason existed if the applicant would probably prevail at trial - See paragraphs 2, 13, 83 and 84.

Injunctions - Topic 5971

Particular matters - Restrictive covenants - Covenant not to compete - [See first Equity - Topic 3726 and Injunctions - Topic 1616 ].

Master and Servant - Topic 303

Nature of relationship - What constitutes an employer-employee relationship - [See first Equity - Topic 3726 ].

Master and Servant - Topic 307

Nature of relationship - Contract for services - [See first Equity - Topic 3726 ].

Master and Servant - Topic 308

Nature of relationship - Contract of service and contract for services distinguished - [See first Equity - Topic 3726 ].

Master and Servant - Topic 4207

Duties of servant - General - Fiduciary duty - The Alberta Court of Queen's Bench stated that "A fiduciary employee is an employee who played a key role in his employer's business and would be in a position, either alone or as part of an enterprise other than the employer's business, to unfairly compete with the former employer by exploiting the benefits derived from his or her key role with the former employer until a reasonable period of time has elapsed after the end of his employment. In most cases, a key employee has the capacity to make important management decisions." - See paragraph 95.

Master and Servant - Topic 4305

Duties of servant - On termination - Competition in business - General - [See Contracts - Topic 6732 ].

Master and Servant - Topic 4306

Duties of servant - On termination - Competition in business - Use of employer's material or process - [See Contracts - Topic 6732 ].

Master and Servant - Topic 4307

Duties of servant - On termination - Competition in business - Solicitation of clients of former employer - [See Contracts - Topic 6732 ].

Cases Noticed:

Dreco Energy Services Ltd. et al. v. Wenzel et al., [2004] 6 W.W.R. 54; 346 A.R. 356; 320 W.A.C. 356 (C.A.), refd to. [para. 1, footnote 1].

RJR-MacDonald Inc. et Imperial Tobacco Ltd. v. Canada (Procureur général), [1994] 1 S.C.R. 311; 164 N.R. 1; 60 Q.A.C. 241, refd to. [para. 1, footnote 1].

Metropolitan Stores (MTS) Ltd. v. Manitoba Food and Commercial Workers, Local 832 and Labour Board (Man.), [1987] 1 S.C.R. 110; 73 N.R. 341; 46 Man.R.(2d) 241, appld. [para. 2].

Feigelman, Feigelman, Goldberg, R.L.L. Holdings Ltd. and Pre-Vue Co. (Canada) Ltd. v. Aetna Financial Services Ltd., Lax and Burke, [1985] 1 S.C.R. 2; 56 N.R. 241; 32 Man.R.(2d) 241, refd to. [para. 78].

Potash Corp. of Saskatchewan Inc. v. Mosaic Potash Esterhazy Limited Partnership (2011), 377 Sask.R. 78; 528 W.A.C. 78; 341 D.L.R.(4th) 407 (C.A.), refd to. [para. 80].

Harper v. Canada (Attorney General), [2000] 2 S.C.R. 764; 262 N.R. 201; 271 A.R. 201; 234 W.A.C. 201, refd to. [para. 81].

Québec (Sous-ministre du Revenu) et autres v. 143471 Canada Inc. et autres, [1994] 2 S.C.R. 339; 167 N.R. 321; 61 Q.A.C. 81, refd to. [para. 81].

Pacific Western Airlines Ltd. v. International Union, United Automobile Aerospace and Agricultural Implement Workers of America et al. (1986), 70 A.R. 67; 43 Alta. L.R.(2d) 289 (C.A.), refd to. [para. 83].

Potash Corp. of Saskatchewan Mining Ltd. v. Todd et al., [1987] 2 W.W.R. 481; 53 Sask.R. 165 (C.A.), refd to. [para. 83].

Dreco Energy Services Ltd. et al. v. Wenzel Downhole Tools Ltd., [2008] 10 W.W.R. 445; 440 A.R. 273; 438 W.A.C. 273 (C.A.), refd to. [para. 84].

Globex Foreign Exchange Corp. v. Kelcher et al. (2005), 376 A.R. 133; 360 W.A.C. 133 (C.A.), refd to. [para. 84].

Enerflex Systems Ltd. v. Lynn (2005), 363 A.R. 136; 343 W.A.C. 136 (C.A.), refd to. [para. 84].

American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396 (H.L.), refd to. [para. 85].

Board of Education of Whitecourt (Roman Catholic Separate) School District No. 94 et al. v. Alberta (1995), 169 A.R. 195; 97 W.A.C. 195 (C.A.), refd to. [para. 85].

Sky Petroleum Ltd. v. V.I.P. Petroleum Ltd., [1974] 1 W.L.R. 576 (Ch.), refd to. [para. 85].

KRG Insurance Brokers (Western) Inc. v. Shafron et al., [2009] 1 S.C.R. 157; 383 N.R. 217; 265 B.C.A.C. 1; 446 W.A.C. 1, refd to. [para. 90].

Doerner v. Bliss & Laughlin Industries Inc. et al., [1980] 2 S.C.R. 865; 34 N.R. 168, refd to. [para. 90].

Collins (J.G.) Insurance Agencies Ltd. v. Elsley Estate, [1978] 2 S.C.R. 916; 20 N.R. 1, refd to. [para. 90].

Nordenfelt v. Maxim Nordenfelt Guns & Ammunition Co., [1894] A.C. 535 (H.L.), refd to. [para. 90].

Herbert Morris Ltd. v. Saxelby, [1916] 1 A.C. 688 (H.L.), refd to. [para. 90].

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Staebler (H.L.) Co. v. Allan et al. (2008), 239 O.A.C. 230; 92 O.R.(3d) 107 (C.A.), refd to. [para. 90].

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Lyons v. Multari (2000), 136 O.A.C. 281; 50 O.R.(3d) 526 (C.A.), refd to. [para. 91, footnote 2].

Petrofina (Great Britain) Ltd. v. Martin, [1966] Ch. 146 (C.A.), refd to. [para. 91, footnote 2].

Semiconductor Insights Inc. v. Kurjanowicz, 1995 CarswellOnt 1032 (Gen. Div.), refd to. [para. 91, footnote 3].

Lucas (T.) & Co. v. Mitchell, [1974] 1 Ch. 129 (C.A.), refd to. [para. 91, footnote 3].

Esso Petroleum Co. v. Harper's Garage (Stourport) Ltd., [1968] A.C. 269 (H.L.), refd to. [para. 91, footnote 4].

Putsman v. Taylor, [1927] 1 K.B. 637, refd to. [para. 91, footnote 5].

Maguire v. Northland Drug Co., [1935] S.C.R. 412, refd to. [para. 91, footnote 6].

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Globex Foreign Exchange Corp. v. Kelcher et al. (2011), 513 A.R. 101; 530 W.A.C. 101; 337 D.L.R.(4th) 207 (C.A.), refd to. [para. 94].

Anderson, Smyth & Kelly Customs Brokers Ltd. v. World Wide Customs Brokers Ltd. et al. (1996), 184 A.R. 81; 122 W.A.C. 81 (C.A.), refd to. [para. 97, footnote 8].

Torcana Valve Services Inc. v. Anderson et al., [2007] 10 W.W.R. 527; 421 A.R. 157 (Q.B.), refd to. [para. 97, footnote 8].

Jones et al. v. Klassen (2006), 390 A.R. 66; 2006 ABQB 41, refd to. [para. 97, footnote 8].

Alberta Care-A-Child Ltd. v. Payne et al., [2006] 6 W.W.R. 356; 383 A.R. 43 (Q.B.), refd to. [para. 97, footnote 8].

CRC-Evans Canada Ltd. v. Pettifer et al. (1997), 197 A.R. 24 (Q.B.), refd to. [para. 97, footnote 8].

Hodgkinson v. Simms et al., [1994] 3 S.C.R. 377; 171 N.R. 245; 49 B.C.A.C. 1; 80 W.A.C. 1, refd to. [para. 97, footnote 8].

Canada Safeway Ltd. v. United Food & Commercial Workers, Local 401 (1992), 26 L.A.C.(4th) 409, refd to. [para. 97, footnote 8].

Tree Savers International Ltd. v. Savoy (1991), 81 Alta. L.R.(2d) 325 (Q.B.), refd to. [para. 97, footnote 8].

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Marvco Color Research Ltd. v. Harris and Harris, [1982] 2 S.C.R. 774; 45 N.R. 302, refd to. [para. 102].

Prudential Trust Co. v. Cugnet, [1956] S.C.R. 914, refd to. [para. 102].

Saunders v. Anglia Building Society, [1971] A.C. 1004 (H.L.), refd to. [para. 102].

General Refrigerator and Store Fixtures Co. v. Fry (1958), 141 A.2d 836, refd to. [para. 103].

Eli Lilly & Co. et al. v. Novopharm Ltd. et al., [1998] 2 S.C.R. 129; 227 N.R. 201, refd to. [para. 117].

Co-Operative Wholesale Society Ltd. v. National Westminister Bank plc, [1995] 1 E.G.L.R. 97 (C.A.), refd to. [para. 117].

Jostens Canada Ltd. v. Gibson Studios Ltd. et al., [1996] B.C.T.C. Uned. 233 (S.C.), revd. in part [1998] 5 W.W.R. 403; 99 B.C.A.C. 35; 162 W.A.C. 35 (C.A.), refd to. [para. 119].

Friesen and Hamilton v. McKague (1992), 81 Man.R.(2d) 290; 30 W.A.C. 290; 96 D.L.R.(4th) 341 (C.A.), refd to. [para. 123].

Mason v. Provident Clothing and Supply Co., [1913] A.C. 724 (H.L.), refd to. [para. 125].

Ensign Drilling Inc. v. Lundle et al., [2007] 9 W.W.R. 149; 418 A.R. 267 (Q.B.), refd to. [para. 127].

101109718 Saskatchewan Ltd. et al. v. Agrikalium Potash Corp. et al., [2011] 9 W.W.R. 757; 375 Sask.R. 136; 525 W.A.C. 136 (C.A.), refd to. [para. 132].

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Authors and Works Noticed:

England, Geoffrey, Wood, Roderick, and Christie, Innis, Employment Law in Canada (4th Ed.) (2010 Looseleaf Update, Release 37), para. 11.145 [para. 97, footnote 10].

Rotman, Leonard, Fiduciary Law (2005), p. 251 [para. 97, footnote 8].

Scalia, Antonin, and Garner, Bryan, Reading Law: The Interpretation of Legal Text (2012), pp. 57, 58 [para. 116].

Sharpe, Robert J., Injunctions and Specific Performance (2012 Looseleaf Update, Release 21), paras. 1.990 [para. 134]; 2.15 [para. 1, footnote 1]; 2.450 [para. 85].

Counsel:

Patrick D. Fitzpatrick (Burstall Winger LLP), for the plaintiff;

Bryan Kickham, Q.C., and Monique Petrin Nicholson (Miller Thomson LLP), for the defendants.

This application was heard on April 3, 2013, by Wakeling, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following decision on May 28, 2013.