Injunctive Relief and the Departing Employee
Author | Paul Le Vay, Owen M Rees, and Justin Safayeni |
Pages | 317-348 |
InjunctiveReliefand
theDepartingEmployee
PaulLeVayOwenMRees
andJustinSafayeni*
AINTRODUCTION
ConsideranumberofcommonscenariosAnemployeequitsabsconds
withh isformer employerscustomerl istand other customer informa-
tion and misuses that in formation in order tosol icitt hose customers
awayto a competitorIn another case an employeewhile leaving his
employerm isappropriatesvaluable trade secrets which he intends to
use to set up a competing business In yet anot her case a senior em-
ployeehasconspiredwithotherstodefraudmillionsofdollarsfromhis
employerand the fraudstersmay bei nthe process ofeitherhiding or
dissipatingt hosea ssets Finallyin afour th casea nemployeeha sen-
tered into a non-solicitation agreement designed to protect his employ-
erscustomerbaseHeresignsandimmediatelystartssolicitingcl ients
Suchsituationsocc uronareg ularbasisT hepotentialloss estothe
employercanbe cripplingWh atforms ofequitable reliefare available
inOntar ioto employerstoprotecttheiri nterestsWhatrestrictions do
courtsplaceupontheavailabilityofsuchreliefinordertoensureamong
AllofStockwoodsLLPPaulLeVayisapartnerandiscert iedasaSpecia listin
CivilLitigationbyth eLawSocietyofUpperCa nadaOwenMReesisals oapart-
nerhispracticefocu singoncivila ndregulatoryl itigationhehasbee nanadjunct
professoratOsgoodeHallLawS choolSinceearn ingmanyacademicaward sand
beingcalledtot hebarinJustinSafayenih aspractisedl itigationandalso
teachesatWilfr idLaurierUniversityTheviewsexpr essedinth ispaperarethose
oftheauthors
PLVOMRJS
otherthingsthattradeisnotundulyrestraineda ndemployeesarefree
toengageintheirchosenoccupation
Inthispaperweaimtoprovideasummaryofthecurrentstateofthe
lawin Ontariow ithrespecttoinjunctiverel iefagainst formeremploy-
ees Weexami ne the following i njunctive relief to enforce restrict-
ivecovenantsinjunctiverelieftopreventt hemisus eofcon dential
information and to require t he return of condential in formation
Anton Pillerinjunct ionswhic hprovide the plainti with access to the
defendantspremisesto inspect and removeitemsin orderto preserve
evidenceNorwich orderswhichprovidetheapplicantwithpreac-
tiondi scoveryand M areva injunctions which restrai na defendant
fromdissipatingassetsorremovingthemfromthejurisdictionpendi ng
thecourt sdeterminationof the proceedingsAside fromeach ofthese
remedieswealsoconsiderthesei ngasideofinterlocutoryreliefmade
on an ex parte basisWedonotintendtobe comprehensiveinourtr eat-
mentof t hese subjects to do so is beyond the scope of this paper
Rath erweh aveta kena prac tica lapp roac htos ei ngout the vari ouse le-
mentsoftheseremediesandaddressingsomecommonissuesthatari se
inthecourseoflitigatingt hem
B. INJUNCTIVERELIEFTOENFORCE
RESTRICTIVECOVENANTS
Givent he paceof c ivil litigation and the relatively short time frames
during which restrict ivecovenants a re reasonably enforceableinter-
locutoryinjunct ionsare theequitable remedyofchoiceto enforcenon
competitionor nonsolicitation clauses Howeverthet rendi nOnta rio
isth atinterlocutory injunctive relief toen forcerestr ictivecovenants is
generally not availablebec ause damages will be an adequate remedy
iftheplai ntiis successfulatt rialThus asweshal lseethe necessary
requirementofshowingirreparableharmca nnotbemet
DrawingontheEngl ishcaselawtheSupremeCourtofCanadaset
outthe testfor theg rantingof an interlocutoryinju nctioninRJR Mac
Foracomprehensiveexpositionofthes eremediesinCa nadaseeRobertJSha rpe
InjunctionsandSpecicPerformanceloo seleafconsultedonMayAurora
CanadaLawBookForatreatmentofthelawint heUnitedKingdomsee
JohnMcGheeEdmundHTSnel lSnellsEquitydedLondonSweetMax-
wellIanCFSpryEquitableRemediesthedSydneyThomsonReuters
AmericanCyanamidCovEthiconLtdACHL
InjunctiveReliefandtheDepartingEmployee
Donald Inc v Canada Aorney General The moving party must show
that
there is a serious issue to be tr iedon t he merits subject to a re-
quirementthatastrongprimafaciecasebeshownincer taincirc um-
sta nc es
irreparableharmwillbesueredift heinjunctionisnotgrantedand
thebalanceofconveniencefavoursthegrantingofaninjunction
Thetestiscumulativeandthemovingpartymustsatisfyeachlimb
Thetestmustbeconsideredholistically
StrongPrimaFacie Case
An interlocutory injunction is an extraordin arydiscre tionary remedy
that should be granted only sparinglyCourts are r ightly cautiousof
exercisingthisintrusivepowerparticularlyinemploymentcaseswhere
theinjunctionwouldconstituteaseriousinterferencewit htheabilityof
individualstoear ntheir livelihoodsin theirc hoseneldsThi sreects
thecommonlawspolicyagai nstrestrict ivecovenantsandr estraintsof
trad esub jec tto li mite dexc ept ion sMoreover thegra nt ing oft hei nte r-
locutoryinjunctionwillalmostalwaysasapracticalmaeramounttoa
naldeterminationofthec aseAsSharpeJAexplains
Itsurelywouldbew rongtosayth attheapplicat ionshouldtu rnsolely
uponthebalanceofconvenienceandthattheresultshouldbethesame
wherethe covenant isprobably goodas where itis probablybadI n-
deedrea sonableness as tothe duration of the life of the covenant is
oneofthetestsofitsvalidityTobeatallvalidthelifeofthecovenant
mustbereasonableandthatwilloftenbeforashortertimethanitwill
taketo gett hecas etried Evenif the life ofthe covenant exceedst he
time it takes to complete pretria l proceedings a nd work through the
queuefort rial thecr ucialper iodfor bothpar tieswi llusua llybe the
rstyearorso
SCRatparaRJRMacDonald
Ibidatpara
AuroraTownvAnglicanHousesORdHCJ
ITNetvDouceeBLRthatparaOntSCJadONCA
ParadigmShiftTechnologiesvOudovikineONSCatparaParadigmShift
ShafronvKRGInsuranceBroker sWesternSCCShafronElsleyvJGCollins
InsuranceAgencies SCRElsley
FellowesSonvFisherQBCAseealsocommentar ybySharpeabove
noteatpara
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