Injunctive Relief and the Departing Employee

AuthorPaul Le Vay, Owen M Rees, and Justin Safayeni
Pages317-348

InjunctiveReliefand
theDepartingEmployee
PaulLeVayOwenMRees
andJustinSafayeni*
AINTRODUCTION
ConsideranumberofcommonscenariosAnemployeequitsabsconds
withhisformeremployerscustomerlistandothercustomerinforma-
tionandmisusesthatinformationinordertosolicitthosecustomers
awaytoacompetitorInanothercaseanemployeewhileleavinghis
employermisappropriatesvaluabletradesecretswhichheintendsto
use to set up a competing business In yet anot her case a senior em-
ployeehasconspiredwithotherstodefraudmillionsofdollarsfromhis
employerandthefraudstersmaybeintheprocessofeitherhidingor
dissipatingthoseassetsFinallyinafourthcaseanemployeehasen-
tered into a non-solicitation agreement designed to protect his employ-
erscustomerbaseHeresignsandimmediatelystartssolicitingclients
SuchsituationsoccuronaregularbasisThepotentiallossestothe
employercanbecripplingWhatformsofequitablereliefareavailable
inOntariotoemployerstoprotecttheirinterestsWhatrestrictionsdo
courtsplaceupontheavailabilityofsuchreliefinordertoensureamong
 AllofStockwoodsLLPPaulLeVayisapartnerandiscertiedasaSpecialistin
CivilLitigationbytheLawSocietyofUpperCanadaOwenMReesisalsoapart-
nerhispracticefocusingoncivilandregulatorylitigationhehasbeenanadjunct
professoratOsgoodeHallLawSchoolSinceearningmanyacademicawardsand
beingcalledtothebarinJustinSafayenihaspractisedlitigationandalso
teachesatWilfridLaurierUniversityTheviewsexpressedinthispaperarethose
oftheauthors
PLVOMRJS
otherthingsthattradeisnotundulyrestrainedandemployeesarefree
toengageintheirchosenoccupation
Inthispaperweaimtoprovideasummaryofthecurrentstateofthe
lawinOntariowithrespecttoinjunctivereliefagainstformeremploy-
eesWeexaminethefollowinginjunctiverelieftoenforcerestrict-
ivecovenantsinjunctiverelieftopreventthemisuseofcondential
information and to require t he return of condential in formation 
Anton Pillerinjunctionswhichprovidetheplaintiwithaccesstothe
defendantspremisestoinspectandremoveitemsinordertopreserve
evidenceNorwichorderswhichprovidetheapplicantwithpreac-
tiondiscoveryandMarevainjunctionswhichrestrainadefendant
fromdissipatingassetsorremovingthemfromthejurisdictionpending
thecourtsdeterminationoftheproceedingsAsidefromeachofthese
remedieswealsoconsidertheseingasideofinterlocutoryreliefmade
on an ex parte basisWedonotintendtobecomprehensiveinourtreat-
mentof t hese subjects  to do so is beyond the scope of this paper
Ratherwehavetakenapracticalapproachtoseingoutthevariousele-
mentsoftheseremediesandaddressingsomecommonissuesthatarise
inthecourseoflitigatingthem
B. INJUNCTIVERELIEFTOENFORCE
RESTRICTIVECOVENANTS
Givent he paceof c ivil litigation and the relatively short time frames
during which restrict ivecovenants a re reasonably enforceableinter-
locutoryinjunctionsaretheequitableremedyofchoicetoenforcenon
competitionornonsolicitationclausesHoweverthetrendinOntario
isthatinterlocutoryinjunctiverelieftoenforcerestrictivecovenantsis
generally not availablebec ause damages will be an adequate remedy
iftheplaintiissuccessfulattrialThusasweshallseethenecessary
requirementofshowingirreparableharmcannotbemet
DrawingontheEnglishcaselawtheSupremeCourtofCanadaset
outthetestforthegrantingofaninterlocutoryinjunctioninRJRMac
 ForacomprehensiveexpositionoftheseremediesinCanadaseeRobertJSharpe
InjunctionsandSpecicPerformancelooseleafconsultedonMayAurora
CanadaLawBookForatreatmentofthelawintheUnitedKingdomsee
JohnMcGheeEdmundHTSnellSnellsEquitydedLondonSweetMax-
wellIanCFSpryEquitableRemediesthedSydneyThomsonReuters
 AmericanCyanamidCovEthiconLtdACHL
InjunctiveReliefandtheDepartingEmployee
Donald Inc v Canada Aorney General The moving party must show
that
there is a serious issue to be tr iedon t he merits subject to a re-
quirementthatastrongprimafaciecasebeshownincertaincircum-
stances
 irreparableharmwillbesuerediftheinjunctionisnotgrantedand
 thebalanceofconveniencefavoursthegrantingofaninjunction
Thetestiscumulativeandthemovingpartymustsatisfyeachlimb
Thetestmustbeconsideredholistically
 StrongPrimaFacie Case
Aninterlocutoryinjunctionisanextraordinarydiscretionaryremedy
that should be granted only sparinglyCourts are r ightly cautiousof
exercisingthisintrusivepowerparticularlyinemploymentcaseswhere
theinjunctionwouldconstituteaseriousinterferencewiththeabilityof
individualstoearntheirlivelihoodsintheirchoseneldsThisreects
thecommonlawspolicyagainstrestrictivecovenantsandrestraintsof
tradesubjecttolimitedexceptionsMoreoverthegrantingoftheinter-
locutoryinjunctionwillalmostalwaysasapracticalmaeramounttoa
naldeterminationofthecaseAsSharpeJAexplains
Itsurelywouldbewrongtosaythattheapplicationshouldturnsolely
uponthebalanceofconvenienceandthattheresultshouldbethesame
wherethecovenantisprobablygoodaswhereitisprobablybadIn-
deedreasonablenessastothedurationofthelifeofthecovenantis
oneofthetestsofitsvalidityTobeatallvalidthelifeofthecovenant
mustbereasonableandthatwilloftenbeforashortertimethanitwill
taketogetthecasetriedEvenifthelifeofthecovenantexceedsthe
time it takes to complete pretrial proceedings and work through the
queuefortrialthecrucialperiodforbothpartieswillusuallybethe
rstyearorso
 SCRatparaRJRMacDonald
 Ibidatpara
 AuroraTownvAnglicanHousesORdHCJ
 ITNetvDouceeBLRthatparaOntSCJadONCA
ParadigmShiftTechnologiesvOudovikineONSCatparaParadigmShift
ShafronvKRGInsuranceBrokersWesternSCCShafronElsleyvJGCollins
InsuranceAgenciesSCRElsley
 FellowesSonvFisherQBCAseealsocommentarybySharpeabove
noteatpara

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