Imperial Sheet Metal v. Landry,

• Jurisdiction: New Brunswick
• Judge: Turnbull, Daigle and Robertson, JJ.A.
• Neutral Citation: 2007 NBCA 51
• Citation: 2007 NBCA 51,(2007), 315 N.B.R.(2d) 328 (CA),315 NBR (2d) 328,[2007] CarswellNB 298,[2007] NBJ No 226 (QL),315 N.B.R.(2d) 328,(2007), 315 NBR(2d) 328 (CA),315 NBR(2d) 328,[2007] N.B.J. No 226 (QL)
• Date: 21 February 2007
• Court: Court of Appeal (New Brunswick)

Imperial Sheet Metal v. Landry (2007), 315 N.B.R.(2d) 328 (CA);

    315 R.N.-B.(2e) 328; 815 A.P.R. 328

MLB headnote and full text

Sommaire et texte intégral

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2007] N.B.R.(2d) TBEd. JN.034

Renvoi temp.: [2007] N.B.R.(2d) TBEd. JN.034

Imperial Sheet Metal Ltd., Imperial Kool/Ray Inc., Imperial Brush Co. Ltd., Kem-Kel Limited and Filtration Plus Limited (plaintiffs/appellants) v. Joseph Landry and Gray Metal Products Inc. (defendants/respondents)

(101/06/CA; 2007 NBCA 51)

Indexed As: Imperial Sheet Metal Ltd. et al. v. Landry et al.

Répertorié: Imperial Sheet Metal Ltd. et al. v. Landry et al.

New Brunswick Court of Appeal

Turnbull, Daigle and Robertson, JJ.A.

June 21, 2007.

Summary:

Résumé:

The plaintiff employer applied for an interlocutory injunction restraining its former employee and his new employer, the corporate defendant, from: (a) using, disseminating or otherwise violating the plaintiff's confidential information such as customer lists, customer contracts, price lists, etc; (b) servicing any of the plaintiff's customers; and (c) persuading the plaintiff's sales representatives or agents to work for the corporate defendant.

The New Brunswick Court of Queen's Bench, Trial Division, in a decision reported 308 N.B.R.(2d) 42; 797 A.P.R. 42, dismissed the application. The employer appealed. The employer abandoned item (c) above.

The New Brunswick Court of Appeal dismissed the appeal.

Injunctions - Topic 1607

Interlocutory or interim injunctions - General principles - Requirement of strong prima facie case or appearance of right - The New Brunswick Court of Appeal ruled that the threshold standard of "serious issue to be tried" continued to apply respecting interlocutory injunctive relief applications in employment law cases, save in three exceptions: (1) those cases involving a question of law, such as the interpretation of a contractual provision; (2) cases in which there has been oral cross-examination; and (3) cases where it was reasonable to predict that the request for injunctive relief would become moot by the time the matter went to trial - If any exception applied, the elevated prima facie case standard could be applied - That standard translated into an inquiry as to the relative strength of the plaintiff's case and was not to be treated as a threshold test - See paragraphs 8 to 24.

Injunctions - Topic 1616

Interlocutory or interim injunctions - General principles - Arguable issues of law involved or serious question to be tried - [See Injunctions - Topic 1607 ].

Injunctions - Topic 1616

Interlocutory or interim injunctions - General principles - Arguable issues of law involved or serious question to be tried - The plaintiff employer, a corporation involved in the sheet metal industry, sought an interlocutory injunction to prevent the defendant former employee from using its customer lists, its price lists, servicing its clients, etc. - The defendant had been dismissed and went to work for a competitor - The application was dismissed but the New Brunswick Court of Appeal held that the employer established a serious issue to be tried respecting the following: (1) product costs, profit margins and discount structures information for which confidentiality was claimed; (2) whether the defendant possessed confidential pricing information and used that information to underbid the employer, thereby breaching his equitable duty to keep confidences; and (3) whether the defendant owed fiduciary obligations to the employer - See paragraphs 65 to 76.

Injunctions - Topic 1802

Interlocutory or interim injunctions - Requirement of irreparable injury - What constitutes - The plaintiff employer, a corporation involved in the sheet metal industry, sought an interlocutory injunction to prevent the defendant former employee from using its customer lists, its price lists, servicing its clients, etc. - The defendant had been dismissed and went to work for a competitor - The application was dismissed - The New Brunswick Court of Appeal held that the employer did not establish irreparable harm where its claim of irreparable harm based on loss of market share was "speculative" and where the competitor was capable of paying any damage award if the employer succeeded at trial - As for the employee, an injunction would effectively prevent him from engaging in employment with the competitor or another employer, hence irreparable harm - See paragraphs 77 to 81.

Injunctions - Topic 1808

Interlocutory or interim injunctions - Requirement of irreparable injury - Threshold test - The New Brunswick Court of Appeal held that: "A finding of irreparable harm to the plaintiff is not a condition precedent to the granting of injunctive relief. In other words, it is not a threshold test and, therefore, it is unnecessary to identify the appropriate standard of proof. In some cases, the evidence of harm may be overwhelming or unanswerable. In others, there may be a nagging doubt. In both circumstances, it is both wise and necessary to complete the tri-partite analysis" - See paragraphs 25 to 30.

Injunctions - Topic 6309

Particular matters - Injury to trade - Competition from former employee, shareholder, franchisee, etc. - [See second Injunctions - Topic 1616 and Injunctions - Topic 1802 ].

Master and Servant - Topic 4207

Duties of servant - General - Fiduciary duty - The New Brunswick Court of Appeal discussed the post-employment obligations of the fiduciary employee and the test to establish who was a fiduciary employee - The court adopted the "key employee" test articulated by the Supreme Court of Canada in Canadian Aero Service Ltd. v. O'Malley (Canaero) - The court rejected the "vulnerability" test - The court held that a "key employee" was: "(1) an integral and indispensable component of the management team that is responsible for guiding the business affairs of the employer; (2) necessarily involved in the decision-making process; and (3), therefore, has broad access to confidential information that if disclosed would significantly impair the competitive advantages that the former employer enjoyed. These employees fall within the categories: 'top management', 'senior management' or 'key management'" - See paragraphs 43 to 63.

Master and Servant - Topic 4302

Duties of servant - On termination - Confidentiality - The New Brunswick Court of Appeal stated that a "non-fiduciary employee owes the employer a general duty of good faith and fidelity during the currency of the employment relationship. This translates into a duty not to compete with the employer, either directly or indirectly, during the currency of the employment relationship. It also translates into a duty not to disclose 'trade secrets' and other 'confidential information'. Once the employment relationship ends, the duty of non-disclosure persists. However, confidential information does not include the general skills and knowledge acquired by the employee while working for the former employer. This is true so long as the skill and knowledge is committed to memory and not dependant on the employer's documentation " - The court added that knowledge of a customer's needs and preferences, let alone the names of contact persons, did not qualify as confidential information - See paragraphs 33 to 42.

Master and Servant - Topic 4305

Duties of servant - On termination - Competition in business - General - [See Master and Servant - Topic 4302 ].

Employeurs et employés - Cote 4207

Devoirs des employé - Généralités - Devoir fiducial - [Voir Master and Servant -Topic 4207 ].

Employeurs et employés - Cote 4302

Devoirs de l'employé - Cessation d'emploi - Confidentialité - [Voir Master and Servant - Topic 4302 ].

Employeurs et employés - Cote 4305

Devoirs de l'employé - Cessation d'emploi - Concurrence en affaires - Généralités - [Voir Master and Servant - Topic 4305 ].

Injonctions - Cote 1607

Injonctions interlocutoires ou provisoires - Principes généraux - Nécessité d'une solide preuve suffisante à première vue ou d'une apparence de droit - [Voir Injunctions - Topic 1607 ].

Injonctions - Cote 1616

Injonctions interlocutoires ou provisoires - Principes généraux - Point de droit ou question sérieuse à juger - [Voir Injunctions - Topic 1616 ].

Injonctions - Cote 1802

Injonctions interlocutoires ou provisoires - Risque de préjudice irréparable - En quoi consiste - [Voir Injunctions - Topic 1802 ].

Injonctions - Cote 1808

Injonctions interlocutoires ou provisoires - Risque de préjudice irréparable - Si un critère préliminaire - [Voir Injunctions - Topic 1808 ].

Injonctions - Cote 6309

Questions particulières - Préjudice commercial - Concurrence faite par un ancien employé, actionnaire, franchisé, etc. - [Voir Injunctions - Topic 6309 ].

Cases Noticed:

Canaero - see Canadian Aero Services Ltd. v. O'Malley.

Canadian Aero Services Ltd. v. O'Malley, [1974] S.C.R. 592; 40 D.L.R.(3d) 371, refd to. [para. 5].

Alberts et al. v. Mountjoy et al. (1977), 16 O.R.(2d) 682 (H.C.), refd to. [para. 5].

Frame v. Smith and Smith, [1987] 2 S.C.R. 99; 78 N.R. 40; 23 O.A.C. 84, refd to. [para. 5].

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57, refd to. [para. 5].

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. 5].

American Cyanamid Co. v. Ethicon Ltd., [1975] 1 All E.R. 504 (H.L.), consd. [para. 8].

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, consd. [para. 8].

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, consd. [para. 8].

Fellowes & Son v. Fisher, [1976] Q.B. 122 (C.A.), refd to. [para. 9].

Leby Fixtures & Interiors (Receivership), Re (2006), 305 N.B.R.(2d) 199; 791 A.P.R. 199; 2006 NBCA 93, refd to. [para. 15].

Treiger v. Canadian Broadcasting Corp. (1988), 66 O.R.(2d) 273 (H.C.), refd to. [para. 15].

Daigle v. Tremblay, [1989] 2 S.C.R. 530; 102 N.R. 81; 27 Q.A.C. 81, refd to. [para. 15].

R.J.V. Gas Field Services Ltd. v. Baxandall et al. (2003), 330 A.R. 115; 299 W.A.C. 115; 2003 ABCA 170, refd to. [para. 16].

Canadian University Press Media Services Ltd. v. Pleasants, [2000] O.T.C. Uned. 466 (Sup. Ct.), refd to. [para. 16].

Windship Aviation Ltd. et al. v. deMeulles et al., [2002] A.R. Uned. 384; 2002 ABQB 669, refd to. [para. 16].

Jet Print Inc. et al. v. Cohen et al., [1999] O.T.C. Uned. 644 (Sup. Ct.), refd to. [para. 16].

Steinbach Credit Union Ltd. et al. v. Hardman et al. (2007), 212 Man.R.(2d) 283; 389 W.A.C. 283; 2007 MBCA 25, refd to. [para. 18].

Salada Foods Ltd. v. Buckley (W.K.) Ltd., [1973] F.C.J. No. 109 (T.D.), refd to. [para. 20].

Series 5 Software Ltd. v. Clarke et al., [1996] 1 All E.R. 853 (Ch. Div.), refd to. [para. 21].

Collins (J.G.) Insurance Agencies Ltd. v. Elsley's Estate, [1978] 2 S.C.R. 916; 20 N.R. 1, refd to. [para. 23].

Imperial Oil Ltd. v. H.H.L. Fuels Ltd. et al. (2006), 294 N.B.R.(2d) 371; 765 A.P.R. 371; 2006 NBCA 1, refd to. [para. 23].

Canada East Manufacturing Inc. v. Harvey and Maritime Wire Co. (1996), 183 N.B.R.(2d) 293; 465 A.P.R. 293 (C.A.), refd to. [para. 28].

Melanson v. New Brunswick et al. (2006), 311 N.B.R.(2d) 292; 803 A.P.R. 292 (C.A.), refd to. [para. 28].

Dominion Refuse Collectors v. Thomson et al., [2003] N.B.R.(2d) (Supp.) No. 48; 2003 NBQB 305, refd to. [para. 29].

RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc. et al. (2007), 235 B.C.A.C. 126; 388 W.A.C. 126; 2007 BCCA 22, refd to. [para. 34].

Barton Insurance Brokers Ltd. v. Irwin et al. (1999), 119 B.C.A.C. 109; 194 W.A.C. 109; 1999 BCCA 73, consd. [para. 36].

Thomson (A.R.) Ltd. v. Stock, [1990] B.C.J. No. 2164 (S.C.), consd. [para. 38].

Clayburn Industries Ltd. et al. v. Piper et al., [1998] B.C.T.C. Uned. H44 (S.C.), refd to. [para. 39].

Sanford Evans List Brokerage v. Trauzzi - see Sanford Evans Communications Ltd. v. Trauzzi et al.

Sanford Evans Communications Ltd. v. Trauzzi et al., [2000] O.T.C. 280 (Sup. Ct.), refd to. [para. 39].

Monarch Messenger Services Ltd. v. Houlding (1984), 56 A.R. 147 (Q.B.), not folld. [para. 40].

Tomenson Saunders Whitehead Ltd. v. Baird, [1980] O.J. No. 386 (H.C.), refd to. [para. 40].

Faccenda Chicken Ltd. v. Fowler et al., [1986] 1 All E.R. 617 (C.A.), consd. [para. 41].

Wallace Welding Supplies Ltd. v. Wallace, [1986] O.J. No. 138 (H.C.), refd to. [para. 43].

Physique Health Club Ltd. v. Carlsen et al. (1996), 193 A.R. 196; 135 W.A.C. 196 (C.A.), refd to. [para. 43].

CRC-Evans Canada Ltd. v. Pettifer et al. (1998), 216 A.R. 192; 175 W.A.C. 192; 1998 ABCA 191, refd to. [para. 43].

Star Linen Supply Ltd. v. Elite, [1979] O.J. No. 952 (H.C.), consd. [para. 47].

Gemstar Investments Ltd. v. Lavallee et al. (1998), 133 Man.R.(2d) 10 (Q.B.), consd. [para. 47].

57134 Manitoba Ltd. v. Palmer, [1989] B.C.J. No. 810 (C.A.), consd. [para. 47].

East Coast Lumber Ltd. et al. v. McLean et al. (1984), 53 N.B.R.(2d) 137; 138 A.P.R. 137 (T.D.), dist. [para. 48].

Edward Jones et al. v. Klassen (2006), 390 A.R. 66 (Q.B.), consd. [para. 52].

Delta Motors Ltd. v. Abric (2002), 255 N.B.R.(2d) 183; 668 A.P.R. 183; 2002 NBQB 387, refd to. [para. 52].

Investors Syndicate Ltd. v. Versatile Investments Inc. et al. (1983), 42 O.R.(2d) 397 (C.A.), consd. [para. 53].

McCormick Delisle & Thompson Inc. v. Ballantyne et al. (2001), 145 O.A.C. 379 (C.A.), leave to appeal refused (2001), 285 N.R. 397; 158 O.A.C. 196 (S.C.C.), refd to. [para. 54].

Hudson's Bay Co. v. McClocklin (1986), 42 Man.R.(2d) 283 (Q.B.), refd to. [para. 56].

Quantum Management Services Ltd. v. Hann (1989), 69 O.R.(2d) 26 (H.C.), refd to. [para. 56].

Lefebvre v. HOJ Industries Ltd.; Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986; 136 N.R. 40; 53 O.A.C. 200, refd to. [para. 57].

Christie (W.J.) & Co. v. Greer et al. (1981), 9 Man.R.(2d) 269 (C.A.), consd. [para. 60].

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.), consd. [para. 60].

Guerin v. Canada, [1984] 2 S.C.R. 335; 55 N.R. 161, refd to. [para. 60].

G.M.G. Fish Services Ltd. v. McGrattan et al. (2001), 231 N.B.R.(2d) 330; 597 A.P.R. 330 (T.D.), refd to. [para. 60].

White Oaks Welding Supplies v. Tapp (1983), 42 O.R.(2d) 445 (H.C.), refd to. [para. 61].

Direct Plus Food Group Inc. v. Comeau (2003), 265 N.B.R.(2d) 1; 695 A.P.R. 1; 2003 NBQB 255, refd to. [para. 61].

Alberta Care-A-Child Ltd. v. Payne et al. (2005), 383 A.R. 43; 2005 ABQB 561, refd to. [para. 62].

Repap New Brunswick Inc. v. Pictou et al. (1996), 182 N.B.R.(2d) 228; 463 A.P.R. 228 (C.A.), refd to. [para. 64].

Night Shift Answering Service et al. v. Driscoll et al., [2004] N.B.R.(2d) Uned. 165; 2004 NBQB 448, leave to appeal refused [2005] N.B.R.(2d) Uned. 26 (C.A.), refd to. [para. 69].

Eversoft Fibre & Foam Ltd. v. James et al., [2001] O.T.C. Uned. 970 (Sup. Ct.), not folld. [para. 78].

Harris Scientific Products Ltd. v. Araujo, [2004] A.R. Uned. 631; 2004 ABQB 704, refd to. [para. 80].

Authors and Works Noticed:

Ball, Stacey Reginald, Canadian Employment Law (2006 Looseleaf), generally [para. 32]; pp. 13-16 [paras. 55, 65]; 13-17 [para. 55]; 13-24 [para. 43]; 13-31, fn. 212 [para. 43]; 15-6 [para. 37]; fn. 98, 99 [para. 65].

D'Andrea, James A., Employee Obligations in Canada (2006 Looseleaf), generally [para. 32].

England, Geoffrey, Wood, Roderick and Christie, Innis, Employment Law in Canada (4th Ed. 2005) (Looseleaf), generally [para. 32]; p. 11-161, para. 11.141 [para. 37].

Sharpe, Robert J., Injunctions and Specific Performance (1997 Looseleaf Update), pp. 2-11, 2-12 [para. 20]; 2-14 [para. 21]; 2-35 [para. 28]; fn. 100, 100a [para. 28].

Counsel:

Avocats:

Peter M.S. Bryson, Q.C., for the appellants;

J. Gordon Petrie, Q.C., and Clarence L. Bennett, for the respondents.

This appeal was heard on February 21, 2007, by Turnbull, Daigle and Robertson, JJ.A., of the New Brunswick Court of Appeal. The decision of the Court of Appeal was delivered in both official languages on June 21, 2007, by Robertson, J.A.