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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