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h isformer employerscustomerl istand other customer informa-
tion and misuses that in formation in order tosol icitt hose customers
awayto a competitorIn another case an employeewhile leaving his
employerm isappropriates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i nthe process ofeitherhiding or
dissipatingt hosea ssets Finallyin afour th casea nemployeeha sen-
tered into a non-solicitation agreement designed to protect his employ-
erscustomerbaseHeresignsandimmediatelystartssolicitingcl ients
Suchsituationsocc uronareg ularbasisT hepotentialloss estothe
employercanbe cripplingWh atforms ofequitable reliefare available
inOntar ioto employerstoprotecttheiri nterests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cert iedasaSpecia listin
CivilLitigationbyth eLawSocietyofUpperCa nadaOwenMReesisals oapart-
nerhispracticefocu singoncivila ndregulatoryl itigationhehasbee nanadjunct
professoratOsgoodeHallLawS choolSinceearn ingmanyacademicaward sand
beingcalledtot hebarinJustinSafayenih aspractisedl itigationandalso
teachesatWilfr idLaurierUniversityTheviewsexpr essedinth ispaperarethose
oftheauthors
PLVOMRJS
otherthingsthattradeisnotundulyrestraineda nd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w ithrespecttoinjunctiverel iefagainst formeremploy-
ees Weexami ne the following i njunctive relief to enforce restrict-
ivecovenantsinjunctiverelieftopreventt hemisus eofcon dential
information and to require t he return of condential in formation 
Anton Pillerinjunct ionswhic h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di scoveryand M areva injunctions which restrai na defendant
fromdissipatingassetsorremovingthemfromthejurisdictionpendi ng
thecourt sdeterminationof the proceedingsAside fromeach ofthese
remedieswealsoconsiderthesei ngasideofinterlocutoryreliefmade
on an ex parte basisWedonotintendtobe comprehensiveinourtr eat-
mentof t hese subjects  to do so is beyond the scope of this paper
Rath erweh aveta kena prac tica lapp roac htos ei ngout the vari ouse le-
mentsoftheseremediesandaddressingsomecommonissuesthatari se
inthecourseoflitigatingt hem
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injunct ionsare theequitable remedyofchoiceto enforcenon
competitionor nonsolicitation clauses Howeverthet rendi nOnta rio
isth atinterlocutory injunctive relief toen forcerestr ictivecovenants is
generally not availablebec ause damages will be an adequate remedy
iftheplai ntiis successfulatt rialThus asweshal lseethe necessary
requirementofshowingirreparableharmca nnotbemet
DrawingontheEngl ishcaselawtheSupremeCourtofCanadaset
outthe testfor theg rantingof an interlocutoryinju nctioninRJR Mac
 Foracomprehensiveexpositionofthes eremediesinCa nadaseeRobertJSha rpe
InjunctionsandSpecicPerformanceloo seleafconsultedonMayAurora
CanadaLawBookForatreatmentofthelawint heUnitedKingdomsee
JohnMcGheeEdmundHTSnel l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cer taincirc um-
sta nc es
 irreparableharmwillbesueredift he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 extraordin arydiscre tionary 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wit htheabilityof
individualstoear ntheir livelihoodsin theirc hoseneldsThi sreects
thecommonlawspolicyagai nstrestrict ivecovenantsandr estraintsof
trad esub jec tto li mite dexc ept ion sMoreover thegra nt ing oft hei nte r-
locutoryinjunctionwillalmostalwaysasapracticalmaeramounttoa
naldeterminationofthec aseAsSharpeJAexplains
Itsurelywouldbew rongtosayth attheapplicat ionshouldtu rn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I n-
deedrea sonableness 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t hecas etried Evenif the life ofthe covenant exceedst he
time it takes to complete pretria l proceedings a nd work through the
queuefort rial thecr ucialper iodfor bothpar tieswi llusua lly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Broker sWesternSCCShafronElsleyvJGCollins
InsuranceAgencies SCRElsley
 FellowesSonvFisherQBCAseealsocommentar ybySharpeabove
noteatpara

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