Veolia ES Industrial Services Inc. v. Brulé et al., 2012 ONCA 173

• Judge: Doherty, Rosenberg and Hoy, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: Monday January 16, 2012
• Jurisdiction: Ontario
• Citations: 2012 ONCA 173;(2012), 289 O.A.C. 207 (CA)

Veolia ES Ind. v. Brulé (2012), 289 O.A.C. 207 (CA)

MLB headnote and full text

Temp. Cite: [2012] O.A.C. TBEd. MR.013

Veolia ES Industrial Services Inc. (plaintiff/appellant/respondent by way of cross-appeal) v. John Brulé and Clean Water Works Inc. (defendants/respondents/appellants by way of cross-appeal) and John Brulé (plaintiff by counterclaim)

(C53054; 2012 ONCA 173)

Indexed As: Veolia ES Industrial Services Inc. v. Brulé et al.

Ontario Court of Appeal

Doherty, Rosenberg and Hoy, JJ.A.

March 20, 2012.

Summary:

Veolia ES Industrial Services Inc. successfully sued its former employee, Brulé, for breaching a non-competition covenant in his employment contract and for breach of fiduciary duty. Veolia appealed the quantum of damages awarded. Brulé cross-appealed, claiming that the trial judge erred in finding that he breached the non-competition covenant or his fiduciary duty.

The Ontario Court of Appeal held that the trial judge erred both in finding that Brulé breached his non-competition covenant and in finding that he breached his fiduciary duty. The court allowed Brulé's cross-appeal and dismissed the action. It was not necessary to address the issue of damages raised by Veolia and the court dismissed its appeal.

Contracts - Topic 5601

Unenforceable contracts - General - [See Master and Servant - Topic 1325].

Equity - Topic 3721

Fiduciary or confidential relationships - The employer-employee relationship - General - [See Master and Servant - Topic 344].

Master and Servant - Topic 344

Fiduciary duty - Breach - Brulé founded Veolia ES Industrial Services Inc. - Veolia engaged in inspecting, cleaning and rehabilitating sewers using a cost-effective technique that it developed - Brulé sold Veolia to its current shareholders and stayed on as an employee - In January 2004, the parties entered into a Senior Executive Employment Agreement - The Agreement included a non-competition covenant - In July 2004, Brulé gave notice to Veolia, under s. 2.3(b) of the Agreement, that he was terminating his employment - Brulé had a Veolia employee assemble a binder containing 30-50 recent municipal tenders and information about bids by Veolia and others - He took this binder and a list of Veolia's employees when he left Veolia - Brulé incorporated the defendant Clean Water Works Inc. - He intended Clean Water Works to be involved in rehabilitating water mains, not sewers - In the fall of 2005, the City of Ottawa issued a public tender for sewer work - Brulé obtained the tender documents - Veolia was aware that Brulé had obtained the tender documents - Both Veolia and Clean Water Works submitted bids - Clean Water Works was awarded the tender - Veolia was the next-lowest bid - Veolia successfully sued Brulé for breaching his fiduciary duty - The Ontario Court of Appeal allowed Brulé's cross-appeal and dismissed the action - Brulé did not compete unfairly with Veolia, and in the result did not breach his fiduciary duty, as a result of Clean Water Works submitting its bid to the City of Ottawa - With respect to the binder, Brulé did not use the information contained therein to prepare his bid and, in any event, the information was not confidential - Further, the City of Ottawa tender was public - See paragraphs 32 to 45.

Master and Servant - Topic 1325

Contract of hiring (employment contract) - Covenants in restraint of trade - Restrictive covenants - Whether reasonable - Term - Brulé founded Veolia ES Industrial Services Inc. - Veolia engaged in inspecting, cleaning and rehabilitating sewers using a cost-effective technique that it developed - Brulé sold Veolia to its current shareholders and stayed on as an employee - In January 2004, the parties entered into a Senior Executive Employment Agreement - The Agreement included a non-competition covenant - In July 2004, Brulé gave notice to Veolia, under s. 2.3(b) of the Agreement, that he was terminating his employment - Brulé had a Veolia employee assemble a binder containing 30-50 recent municipal tenders and information about bids by Veolia and others - He took this binder and a list of Veolia's employees when he left Veolia - Brulé incorporated the defendant Clean Water Works Inc. - He intended Clean Water Works to be involved in rehabilitating water mains, not sewers - In the fall of 2005, the City of Ottawa issued a public tender for sewer work - Brulé obtained the tender documents - Veolia was aware that Brulé had obtained the tender documents - Both Veolia and Clean Water Works submitted bids - Clean Water Works was awarded the tender - Veolia was the next-lowest bid - Veolia successfully sued Brulé for breaching the non-competition covenant - The Ontario Court of Appeal allowed Brulé's cross-appeal and dismissed the action - The non-competition covenant provided that Brulé could not compete with Veolia "two (2) years commencing on January 1, 2007 following termination" - The restrictive covenant, which commenced two years after Brulé ceased to be employed by Veolia, was clearly unreasonable and unenforceable - Moreover, the undisputed evidence was that Brulé competed with Veolia in the fall of 2005 and not in the two years commencing on January 1, 2007 - As a result, even if the non-competition covenant was enforceable, he did not breach it - Finally, blue-pencil severance was not available to remove the words "commencing on January 1, 2007" - See paragraphs 17 to 31.

Master and Servant - Topic 1330

Contract of hiring (employment contract) - Covenants in restraint of trade - Restrictive covenants - Breach of - What constitutes - [See Master and Servant - Topic 1325].

Master and Servant - Topic 4207

Duties of servant - General - Fiduciary duty - [See Master and Servant - Topic 344].

Cases Noticed:

Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., [1980] 1 S.C.R. 888; 32 N.R. 488, refd to. [para. 13].

Canadian American Financial Corp. (Canada) Ltd. v. King (1989), 60 D.L.R.(4th) 293 (B.C.C.A.), refd to. [para. 21].

Canadian Aero Service Ltd. v. O'Malley et al., [1974] S.C.R. 592, refd to. [para. 32].

Alberts et al. v. Mountjoy et al. (1977), 16 O.R.(2d) 682 (H.C.), refd to. [para. 33].

Cygnal Technologies Corp. v. Taylor et al., [2005] O.T.C. 644 (S.C.), refd to. [para. 33].

Sanford Evans Communications Ltd. v. Trauzzi et al., [2000] O.T.C. 280 (Sup. Ct.), refd to. [para. 33].

Counsel:

Rodney M. Godard and Daniel Ableser, for the appellant/respondent by way of cross-appeal;

Joseph Y. Obagi and Elizabeth A. Quigley, for the respondents/appellants by way of cross-appeal.

This appeal and cross-appeal were heard on January 16, 2012, by Doherty, Rosenberg and Hoy, JJ.A., of the Ontario Court of Appeal. The following judgment of the Court of Appeal was delivered by Hoy, J.A., on March 20, 2012.