Injunctive Relief and the Departing Employee

• Author: Paul Le Vay, Owen M Rees, and Justin Safayeni
• Pages: 317-348



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Marevainjunctions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