SUPREME COURT Citation: Keltic Transportation hic. v. David Between: Keltic Transportation Inc. and V. David Montgomery and Fulcrum Transportation Judge: The Honourable Justice Heard: October 14, 2014, in Oral Decision: October 16, 2014 Written Decision: November 14, 2014 Counsel: Rick M. Dunlop, for Jeff Aucoin, for the Defendants OF NOVA SCOTIA Montgomery, 2014 NSSC 407 Date: 20141016 Docket: Hfx. No. 429987 Registry: Halifax Keltic Freight Services Inc. Plaintiffs Management Limited Defendants Suzanne Hood Halifax, Nova Scotia the Plaintiffs
By the Court: Orally [I] Keltic Transportation Inc. and Keltic injunction: (a) Restraining and enjoining the Defendants business of any customers of Keltic quote for services from Keltic during termination of Montgomery’s employment with 2104; (b) Restraining and enjoining the Defendants Keltic from whom it acquired business (c) Requiring return of all confidential information of the Defendants forthwith. [2] They have filed the required undertaking any losses caused by the interlocutory injunction trial judge determines that the claim is not justified. [3] The issue is whether the interlocutory [4) Keltic provides what 1 will refer to Atlantic Canada. Its Vice-President of who has filed two affidavits. [5] David Montgomery is a former employee of the second defendant, Fulcrum Transportation Page 2 Freight Services Inc. (“Keltic”) seek an from contacting or soliciting who purchased services or requested a the six (6) months preceding the Keltic until December 4, from servicing any customers of through unlawful conduct; and of Keltic in the possession to indemnify the defendants for if granted, in the event that the injunction should be granted. as transportation services in Ontario and Business Development is Jaime Farrah, of Keltic and is now the president Management Limited (“Fulrum”).
He was employed with Keltic from January employment he signed two Confidentiality agreements: the first in September 2010 also filed an affidavit and he was cross-examined [6] It is the non-solicitation clause which Montgomery solicited work from Keltic’s covenants, which provided in this regard: 4. I agree that during the term of period of six (6) months following the date any reason whatsoever, I shall not, either benefit or for the benefit of any person, enterprise solicit the business of any customer(s) of from or requested a quote for services from preceding the date of my termination of employment. That is from the September 2010 agreement, agreement is the same. [71 David Montgomery sent a letter of offered to stay on a further 90 days, but on employment was terminated effective the on June 11,2014. Page 3 2010 until June 2014. During his Non-Solicitation and Non-Competition and the second on January 21, 2014. He on his affidavit. is at issue here. Keltic says David customers, contrary to the restrictive my employment with Keltic and for a of termination of such employment for directly or indirectly, for my own or entity, solicit or attempt to Keltic who may have made a purchase Keltic in the six (6) month period but the wording of the 2014 resignation to Keltic on June 4, 2014. He June 6°’ he was advised that his June 4th date. Fulcrum was incorporated
Analysis [8] The Judicature Act R.S., c. 240, provides injunction in circumstances where it is “just or [9] The leading authority of granting of Canada, [1994) 1 S.C.R. 311. In that decision part test referring Manitoba (Attorney General) [1987) 1 S.C.R. 110). 48 Metropolitan Stores adopted a three-stage considering an application for either a stay preliminary assessment must be made of is a serious question to be tried. Secondly, it must be applicant would suffer irreparable harm an assessment must be made as to which from the granting or reffisal of the remedy [10] The test was restated by Saunders LaserNetworks,) v. Laserworks Computer (S.C.), at para. 21, when he said: 21 Whether they are (as put by Mr. Justice separate “tests”, or simply steps to be taken any claim for injunctive relief will necessitate I .an assessment of the strength of facie case” standard or on a “serious 2. a consideration of irreparable harm; 3. a determination of the balance Page 4 in s. 43(9) that I may grant an convenient to do so”. injunctions is RJR — MacDonald hic. v. at para. 48, the court set out a three-v. Metropolitan Stores (MTS,) Ltd., test for courts to apply when or an interlocutory injunction. First, a the merits of the case to ensure that there determined whether the if the application were reffised. Finally, of the parties would suffer greater harm pending a decision on the merits... J. (as he then was) in Noreco Inc. (c.o.b. Services Inc., [1994] N.S.J. No. 408 Beetz in Metropolitan Stores) in resolving the application, I think a three stage analysis: the plaintiffs case on either a “prima question” standard; of convenience between the parties.
[11] He also cautioned against too ready in para. 27 (referring to the wording in the 27 . . Is it just or convenient that I exercise the temporary but drastic remedy of considered the cases referred to me by reticence in allowing interlocutory injunctions. remedy reserved to those cases where there necessitating its imposition. The reasons application is to impose a harsh remedy at the been a thorough, proper and vigorous determination of the parties. There is also a hightened limited to affidavit evidence which may examination... [12] He also cautioned at para. 31: 31 1 recognize that it is not my function conflicts of evidence or decide difficult questions argument and careful consideration. Those refrain from elaborating on the factual matters necessary to decide the application. [13] Therefore, I must be careful not to be satisfied that this is one of the those extraordinary referred, and that the evidence is clear that it is Prima Facie Case [14] In cases involving employment, the used. In J.G. Collins hisurance Agencies Dickson J. (as he then was) distinguished Page 5 use of interlocutory injunctions. He said Judicature Act): my judicial discretion by granting interlocutory injunctive relief? I have counsel. They suggest to me a healthy It is, after all, an extraordinary is clear evidence of circumstances for restraint are obvious. To permit the interlocutory stage before there has of the rights and obligations [sic] risk of error when applications are or may not be tested by cross-at this stage to attempt to resolve of law which call for hill are subjects properly left for trial. I in dispute except insofar as is easily grant this drastic remedy. I must cases to which Saunders J. absolutely necessary to grant it. old test of “prima facie case” has been Ltd. v. Elslev, [1978], S.C.J. No. 47, between a restrictive covenant entered
into on the sale of a business and one in paras. 15 and 16: The distinction made in the cases between agreement for the sale of a business employment, is well-conceived and responsive person seeking to sell his business might commodity if denied the right to assure the not later enter into competition. Difficulty which, and the area within which, the non-competitive if these are reasonable, the courts will normally A different situation, at least in theory, obtains employment, where an imbalance of bargaining and a denial of the right of the employee employment, in the public interest and in obtained during employment. Again, a restraints on freedom to complete are generally have recognized and afforded reasonable information and trade connections of the [15] In Front Line Safety Ltd. MacKenzie decide whether the test in that case was “a case”. He quoted from Noreco, supra, in .A too rigid application of one test over result. The particular circumstances between considered in deciding whether it is just and injunction. [16] LeBlanc J. continued in para. 21 contracts the trend is to use the “primafade .there is a general trend towards the application involving restrictive covenants in employment contracts. Page 6 a contract of employment. He said at a restrictive covenant contained in an and one contained in a contract of to practical considerations. A find himself with an unsaleable purchaser that he, the vendor, would lies in definition of the time during covenant is to operate, but give effect to the covenant. in the negotiation of a contract of power may lead to oppression to exploit, following termination of his own interest, knowledge and skills distinction is made. Although blanket held unenforceable, the courts protection to trade secrets, confidential employer. 2003 NSSC 15, LeBlanc J. had to serious issue to be tried” or “primafade para. 20, where Saunders J. had said: the other might well lead to an unjust the parties should always be equitable to grant an interlocutory to say that in the case of employment case” test. He said: of the ‘prima facie’ test in cases
See Jet Print Inc. 1’. Cohen, 1999 O.J. No. 2864 Justice Nordheirner held that: .in cases involving restrictive covenants generally adopted the higher threshold that the prima facie case before injunction relief will be [17] In paras. 22 and 23 of Front Line texts: S.R. Ball in Canadian Employment Law and Sharpe, Injunctions and Specific Peiformance 2001). From the former he quoted the text as Special considerations arise in the employment context threshold test that should be utilized in issue. An examination of the relative appropriate where the likelihood of delay the action will mean that the time which an will expire before trial. If an interlocutory the action, there has been strong judicial sentiment to case. Depending on the likelihood of a trial taking for the court to determine more than whether despite the fact that the court seeks to discourage based on contradictory affidavit evidence. In Jet Print, supra, Nordheimer J., also noted sought is intended to place restrictions chosen vocation and to earn a livelihood, the facie case is the more appropriate test to be [18] LeBlanc J. also quoted from what Injunctions and Specific Performance. Ontario Court of Appeal) said at para. 2:310: Indeed, in cases falling within this category, factors case are truly irrelevant. Page 7 (Ont. S.C.J.) at para. 10, where in employment contracts, courts have plaintiff must establish a strong granted... Saftey, supra, LeBlanc J. referred to two (Aurora: Canada Law Book, 2002) (Aurora: Canada Law Books, follows (p. 22-4): as to the appropriate deciding whether an injunction should strength of each party’s case may be in obtaining a hearing date for trial of employee can effectively be restrained injunction will effectively dispose of look at the merits of the place, it may become necessary there is a serious issue to be tried, prolonged interlocutory battles at para. 11 that “when the injunction on a person’s ability to engage in their higher threshold of a strong prima applied.” he said was the authoritative text: Robert Sharpe, (now Sharpe, J.A. of the other than the strength of the
[19] I conclude that the proper test is “prima matter whether the restrictive covenant solicitation clause. Both are part of an context with the imbalance of power often lesser degree a non-solicitation clause does after leaving the former employer. In my injunction in this case is establishment ofaprimafacie [20] Although I am not to make findings preliminary assessment of the merits, I conclude made out a prima facie case based upon Co.i’. Ethicon [1975] A.C. 396. [21] Quinn J. in Sheehan & Rose Ltd. the following in para. 19: 19 How does one quantify a ‘strong prima facie case, it means that he will succeed evidence is not rebutted; and, to succeed balance of probabilities. Thus, I gather that a the probability of success (in the absence 51% (but how much better I do not know). [22] Restrictive covenants are enforceable contrary to the public interest. The onus Page 8 fade case”. In my view it does not is a non-competition clause or a non-agreement signed in the employment found in such situations. Although to a affect an employee’s ability to work view the result is that the first step for an case. of fact or do more than make a I must determine if Keltic has the old test before American O’anamid v. Northwood, [2000] O.J. No. 716, said prima facie case’? If a plaintiff has a at trial on his evidence if that at trial, he must establish his case on a strong prima fade case is one where of rebutting evidence) is better than only if they are reasonable and not is on the employer for the former and on
the former employee for the latter. I refer Ltd. v. Elsley, supra. [23] However, before I can consider covenant or whether it is contrary to public prima facie case for its validity. Consideration for restrictive covenant [24] The defendants say the restrictive consideration was given for their execution. nine months after David Montgomery commenced was signed in January of2014. In his affidavit, Mr. Montgomery to the latter: 23. In January, 2014 Mr. Stephen confidentiality/non-solicitation agreement and Farrah had sent it to him and asked him immediately. I took the agreement from immediately to inquire about why this was was a condition of my employment at Keltic. employment, to retain my job. [25] Case authorities seem to go two ways said that continued employment is not valid Page 9 to para. 26 of J.G. Collins Ins. Agencies the reasonableness of the restrictive policy, I must determine if there is a covenants are invalid because no The first was signed approximately work at Keltic and the second says with respect appeared in my office with a asked me to sign. He said Mrs. to get the whole office to sign it Scott and contacted Mrs. Farrah necessary. She made it very clear it I signed it, as a condition of on the issue. In some, the courts have consideration because the employer
was already required to continue to employ courts have said that continued employment is [26] I do not rely on the authorities which context of the sale of a business. In Guav concluded the restrictive covenant was related [27] In my view, the better line of authorities in Kohier Canada C’o. v. Porter, [2002] Maguire v. North/and Drug Company Products Ltd. v. Wolda, [2001], O.J. No. 3822 Imperial Bank of Commerce,[1994], O.J. No. 2657 different results on the issue of consideration, Molloy same but the facts differed from those in the [28] In Maguire, supra, the defendant could termination of employment, and in the case consultancy contract. In Maguire, supra, employer and in the latter, Techform’s evidence the contract if the agreement was not signed Page 10 the employee. In other cases, the valid consideration. dealt with restrictive covenants in the Inc.v. Fayette, 2013 SCC 45, Wagner J., to the sale of the business. are those referred to and explained O.J. No. 2418. Molloy J. considered Limited, [1935] S.C.R. 412, Techform (C.A.), and Francis i’. Canadian (C.A.). Although they came to J. said the principles are the decision before her. be given a short period of notice of of Techform, supra, termination of his a longer notice period was given by the was that it would have terminated by the defendant. That evidence was
accepted by the trial judge. The courts concluded signing of the agreements in those cases. [29] In Francis, supra, and Kohier, supra, the there was no consideration. In Francis, containing a restrictive covenant was executed been made and accepted. [30] In Kohier, Molloy J. concluded in para. 40: In the case before me, there was no consideration exchange for his promise to give up the Kohler for a one year period post employment. The continued “employment status with Kohler employment” are things that Mr. Porter was employment relationship with Kohler. The amendment to the existing employment employee. As such, the employer is required employee in exchange for that promise, beyond the employee is already entitled under the She then concluded the agreement was denied. [31] In this case the first agreement Montgomery started work. There is no agreement. The only evidence of consideration Page 11 there was consideration for the court concluded in each case that supra, an employment agreement after an offer of employment had flowing to Mr. Porter in right to work for any competitor of stated consideration of and the payment of salary during such already entitled to under his existing non-competition clause was clearly an relationship that was adverse to the to give something of value to the continued employment to which original contract. not enforceable and the injunction was was signed nine months after Mr. evidence of any consideration for that for the January 2014 agreement
was in Mr. Montgomery’s affidavit quoted sign it and he did so to “retain my job.” [32] This is a similar situation to that which Techfonn, supra, at para. 26 where he said: Where there is no clear prior intention to and no promise to refrain from discharging amendment, it is vet-v difficult to see anything return for his signature. The employer cannot, out of employee with an amendment to the employment contract say fired” and expect a binding contractual amendment implicit promise of reasonable forbearance [33j I am not satisfied that Keltic has was consideration for the restrictive covenant that there is aprimafacie case for its validity. [34] The defendants have also said that the because it is unreasonable. The onus is Although I need not deal with this in light of any event that its length does not appear would be a reasonable time to allow Keltic establish or re-establish the relationship Montgomery. Page 12 above. He was told everyone had to was posited by Rosenberg J.A., in terminate that the employer sets aside, for any period after signing the of value flowing to the employee in the blue, simply present the “sign or you’ll be to result without at least an for some period of time thereafter. established a prima fade case that there and, therefore, I cannot be satisfied restrictive covenant is unenforceable on Keltic to establish its reasonableness. my conclusion above, I will say in to be unreasonable. A six month period to contact its customers and try to it had with them through David
[35] Failing to specify a geographic area unreasonable either in light of the nature of restricted to a limited geographic area. As Guay, supra, with respect to a non-solicitation 73 Moreover, I am of the opinion that a necessary for a non-solicitation clause applying customers to be valid, since such a limitation the target customers. In World Wide Chemicals 1157, L.E.L. !vIarkeringLrée i’. Otis, [1989] v. Charerte (1987), 19 C.C.E.L. 277 (Que. S.C.), for noted that a non-solicitation clause does Finally, in the context of the modem technologies, customers are no longer limited territorial limitations in non-solicitation clauses [36) In my view, specifying a geographic competition cause is in issue since it affects But in my view’ that is not the case for a non-solicitation Fiduciary [37] Keltic’s alternate argument is that David has breached his duties as such. Keltic because of his role in Keltic’s business. limited than that of someone found to be a Page 13 in these circumstances may not be the transportation business which is not the Supreme Court of Canada said in clause: territorial limitation is not absolutely to all or some of the vendor’s can easily be identified by analyzing Inc. i’. Bolduc, 1991 CarswellQue Q.J. No. 1229 (Que. S.C.), and Moore example, the Superior Court not require a geographic limitation. economy, and in particular of new geographically, which means that have generally become obsolete. area is a requirement where a non-where a former employee may work. clause. Montgomery was a fiduciary and says David Montgomery was a fiduciary Mr. Montgomery says his role was more fiduciary.
[38) The leading case on fiduciaries is Frame that decision, Wilson J., in dissent, set relationship. Her test, however, has been 1987. She said in para. 60: 60 Relationships in which a fiduciary possess three general characteristics: (1) The fiduciary has scope for the exercise (2) The fiduciary can unilaterally exercise affect the beneficiary’s legal or practical interests. (3) The beneficiary is peculiarly vulnerable holding the discretion or power. [39] These characteristics have been described which Wilson J. referred in para. 64 of her from Hospital Products Ltd. v. United States 417, a decision of the Australian High Court where there were two matters of importance in the existence of the relevant fiduciary duty. First, if undertakes, to act in relation to a particular entrusted with the power to affect those interests situation is... analogous to a trust. Secondly. ... the special vulnerability of those whose another to the abuse of that power. Page 14 v. Smith, [1987) 2 S.CJ. No. 49. In out the characteristics of a fiduciary widely accepted since that decision in obligation have been imposed seem to of some discretion or power. that power or discretion so as to to or at the mercy of the fiduciary otherwise in the authorities to decision. In that paragraph, she quoted Surgical Corp. (1984), 55 A.L.R. Gibbs, C.J. said at p. 432: deciding when the court will recognize one person is obliged, or matter in the interests of another and is in a legal or practical sense, the the reason for the principle lies in interests are entrusted to the power of
[40] Wilson J. also quoted in para. 64 from 454: the fiduciary undertakes or agrees to act for or on another person in the exercise of a power interests of that other person in a legal between the parties is therefore one opportunity to exercise the power or discretion person who is accordingly vulnerable to abuse [41] Wilson J. also referred in para. 64 decision in H.L. Misener and Son Ltd. (N.S.C.A.), where MacDonald J.A. said at The reason such persons [directorsj are apparently is because they have a leeway with third parties which can affect the legal position [42] More recently in Survival Systems 2012 NSSC 202, Edwards J. considered owed fiduciary duties. He considered their said at para. 38 38 ... Comeau, as Special Projects worked together with Carroll to develop market SSTLs services to clients and maintain He concluded he owed fiduciary duties. Page 15 a further portion of that decision at p. behalf of or in the interests of or discretion which will affect the or practical sense. The relationship which gives the fiduciary a special to the detriment of that other by the fiduciary of his position. to the Nova Scotia Court of Appeal v. Misener (1977), 77 D.L.R. (3d) 428 p. 440: subjected to the fiduciary relationship for the exercise of discretion in dealing of their principals. Training Ltd. v. Survival Systems Ltd., whether the plaintiffs former employees job duties and with respect to one he Officer, was a manager with SSTL and and implement business strategies, client relations.
[43] Edwards J. also concluded a number employees who owed fiduciary duties. Forsyth, 2009 CarswellOnt 5773 (Ont. S.C.J.) employee and the factors in determining 39 Edwards .1. quoted at length from the Gas 82 [...] A key employee is one whose essential to the employer’s business, making to competition upon that employee’s departure. i. What were the employee’s job duties ii. What was the extent or frequency and the former employers customers iii. Was the employee the primary suppliers? iv. To what extent was the employee iv. To what extent did the employee otherwise have knowledge of, the accounts, the former employer’s products and services? v. To what extent was the former customers, suppliers, pricing, etc., confidential? 84 After identifying an employee as employee is a “fiduciary” is a difficult endeavor. According “generally, a fiduciary is one who is empowered benefit of another with the ability to affect that other’s discretion” (Employment Obligations in Law Book 2006)) 85 The jurisprudence has imposed fiduciary number of different factual circumstances (a) whether the employee has scope power, the employee can unilaterally exercise Page 16 of other employees were key At para. 39 he cited Gas TOPS Ltd. v. where Granger J. described a key if someone is a key employee. In para. TOPS decision, paras. 82 to 85: position and responsibilities are the employer particularly vulnerable with the former employer? of the contact between the employee and/or suppliers? contact with the customers and (or) responsible for sales or revenue? have access to and make use of, or former employer’s customers, their pricing practices, and the pricing of employee’s information as regards “key”, further determining whether that to James D’Andrea, to act on behalf of and for the interest through the use of Canada, looseleaf (Aurora Ont.; Canada obligations on employees in a and in so doing have considered: for the exercise of some discretion or that power or discretion so as to
effect the beneficiary is [sic] legal or practical is vulnerable to or at the mercy of the fiduciary (b) knowledge of customer contact information, needs therefore, an ability to influence customers. An fiduciary if they are [sic] found to have employers customers, unrestricted access concerning customers, privy to policy responsibility for, a large portion of customers (e) knowledge of the business and playing a role in the employer’s strategic market development determining if the employees owed a fiduciary [...] (d) knowledge of and access to confidential information. for an employee to have access to corporate be a fiduciary. It is the employee’s access would make the employer vulnerable. information is critical or in a technological environment, product specifications are critical [...] (e) direct and trusted relationships particularly where there is a unique contacts and [the defendants] had direct access the clients’ needs, preferences and accepted (0 whether or not the employee’s functions business, therefore rendering the employer Any one of these factors, or a combination an individual owes a fiduciary obligation [References Omitted] [44] Keltic says David Montgomery’s Justice Granger in Gas TOPS, supra, with [45] Keltic also referred to the decisions 1977 CarswellOnt 48 (Ont. H.C.J.), and Page 17 interest and whether the beneficiary holding the discretion or power; and preferences, and employee may be held to be a ‘encyclopedic knowledge’ of their to all customer lists and information issues and personal contact with, and ...; market opportunity of the employer or is a consideration in duty to the former employer ...; It is not necessary financial information to be found to to information of which disclosure In a sales environment, customer with existing and potential customers, relationship with the clients personnel to confidential information as to rates” ...; are essential to the employer’s vulnerable to the employee’s departure of them, could result in a finding that to his employer. duties answer the questions posed by the result that he was a fiduciary. in Edgar T. Alberts Ltd. v. Mountjoy, in White Oaks Welding Supplies v. Tapp,
1983 CarswellOnt. 915 (Ont. S.C.), both Ltd. v. O’Malley, [1973] S.C.J. No. 97. [46] In the former, Mountjoy was the chief Estey C.J.H.C. (as he then was) said of tvlountjoy, he: .in effect managed the business as a sole authority to hire and fire or interfere with is clear that operationally he reported to nobody. [47] In finding that Mountjoy had owed Estey C.J.H.C. referred to the nature of the 3 1 Thus, the substantial business asset of attachment with its clients, is a vulnerable competition in all forms and particularly Accordingly, it is not surprising to find employees for the protection of the undertaking [48] He continued at para. 34 with respect plaintiff 34 The vulnerable and exposed asset of the opportunity to obtain renewal commissions the plaintiffs clientele came up for renewal in undisturbed, represented the earning power the existence and nature and extent of customers was, of course, completely and defendant Mountjoy and to a Page 18 of which cited Canadian Aero Service executive of the plaintiff. At para. 13 proprietor. That is not to say he had the capital assets of the business, but it fiduciary duties to his former employer, business, saying in para. 31: decision: the plaintiff, namely, its trade asset exposed to the depredations of competition from ex-employees. a fiduciary duty arising in fonner of the former employer. to the particular business of the the plaintiff in this case is, of course, when the contracts of insurance of the future. That attachment, left of the plaintiff The entire details of the attachment between each of its properly within the knowledge of the lesser extent the defendant Butt.
[49] In White Oaks Welding Supplies v. Tapp, supra, Osler facts from those in Can Aero, supra, and conclude Tapp was a fiduciary saying in para. 15: Nevertheless, the defendant, with plaintiffs customers, his unrestricted access concerning such customers, and his personal contact with large proportion of the plaintiff ‘s customers, was fiduciary relationship to his employer of those discussed in those cases. His obligation employee to refrain from taking with employer’s business and making use of such of an altogether higher nature and was to deliberately soliciting customers of the plaintiff, other customer public to whom general solicitation [50] To the contrary, the defendants refer two of the defendants were president and and Laskin J. (as he then was) said of them: • .They were “top management” and not mere employer.. consisted only of respect for trade customer lists. [51] He continued that: their positions as senior officers of initiatives and with responsibilities far servants. [52] The defendants also referred to Phytoderm 383 (Ont. C.J.) where Low J. concluded fiduciaries. She said in para. 17: Page 19 .1. distinguished the Edgar Alberts, supra, but went on to his encyclopaedic knowledge of the to all customer lists and information and responsibility for a a senior employee with a the same type and on the same plane as was not simply that of every him material related to his former material. The obligation of Tapp was refrain, not from competition, but from than as part of the general might be made. me to Can Aero, supra. In that case, executive vice president of the plaintiff employees whose duty to their secrets and for confidentiality of a subsidiary,... charged them with removed from the obedient role of Inc. v. Urwin, [1999] O.J. No. that not all sales representatives are
it cannot be said that an employee becomes she has had knowledge of and contact with engaged in promoting and selling the employers required, every sales representative would corporate employer can only interact with that sales and marketing employees are crucial to but not every salesperson is a fiduciary, and officer or a very senior managerial position position of intimate knowledge and control over assumption is that an employee is not a exist. [53] In RBC Dominion Securities Inc. v. Merrill B.C.J. No. 2700 (S.C.), Holmes J. concluded key to the operations of the bank branch, did para. 45: To characterize as a fiduciary every employee and who is difficult to replace would be, in fiduciary relationship beyond its proper scope [54] Nor did she conclude that the branch she set out his duties as follows in para. 55: As branch manager, Mr. Delamont was operations of the Cranbrook branch, for disciplining employees, ensuring compliance representing the firm in the local community, arranging (subject to some constraints discussed below) He was privy to the confidential information He was the highly-regarded leader of the and mentor to many of the lAs. [55] However, she concluded in para. 58: Page 20 a fiduciary simply because he or the employers customers and has been goods. If that were all that were be a fiduciary. It is axiomatic that a its customers through individuals and selling an employers products, in the absence of a role as director, such as to put the employee into a the employer’s operations, the fiduciary unless special circumstances Lynch Canada Inc., [2003] that investment advisors, although not owe fiduciary duties. She said in who is necessary to an operation my view, to extend the reach of a as contemplated in Frame v. Smith. manager was a fiduciary, even though responsible for running the day-to-day hiring, coaching lAs. supervising and with regulatory requirements, for local advertising, and setting the budget for the branch. of all of the clients of the branch. branch, and was a role model, coach,
However, I am unable to conclude responsibilities were sufficient to imbue him [56] Holmes J. said he lacked final authority budget but based upon a so-called template for the leasing of the premises and related involvement in setting company policy. [57] So the question for me is whether Keltic facie case that David Montgomery owed a and they are disputed. Applying the law to view a matter for trial. [58] Keltic is not a small company Montgomery running Keltic’s office much in the Edgar Alberts case. He did have customers that Mr. Tapp had in the White that both White Oaks and the Edgar Alberts Supreme Court of Canada decision in Frame Dominion Securities both were decided after [59] In my view there is a real question exercise of discretion so as to affect Keltic’s Page 21 that Mr. Delarnont’s larger role and with fiduciary status. to hire and fire; prepared the branch from head office; had no responsibility activities; and had little direct has satisfied me that it has a prima fiduciary duty. Much turns on the facts facts that are to be determined is in my like Survival Systems nor is David like a sole proprietor as Mountjoy was the sort of knowledge and contacts with Oaks Welding case. However, I note decisions were made before the v. Smith, supra. Phytoderm and RBC Frame v. Smith, supra. about David Montgomery’s scope for interest. He was the business
development manager and attended at least one senior executives at Keltic. This in my view the test is whether this establishes aprimafacie fact or delve too closely into the merits in should be granted. It may be that Keltic also may not. [60] I therefore cannot say that Keltic issue. Accordingly, I do not grant the interlocutory test not having been met. [61] Although I do not need to do so, Keltic test, I will deal very briefly with the issues convenience. Irreparable harm [62] If a prima facie case had been established, the would have had less importance. In this case, the ascertained. Page 22 high-level meeting of the most raises a serious question for trial, but case. I am not to make findings of deciding whether or not the injunction will succeed on this issue at trial but it has made out a prima facie case on this injunction, the first step of the having failed on the first part of the of irreparable harm and balance of issue of irreparable harm issue is whether damages can be
[63) Keltic must produce evidence of irreparable loss of market share, a loss of goodwill and that these are not compensable by damages. [64] Keltic also points to the difficulties David Montgomery’s Blackberry and computer, which of data containing all customer files. Some Keltic says that it cannot be certain that it has [65] The defendants say that the damages successful at trial. They cite authorities these damages have been determined after so is not a reason to conclude Keltic would [66] 1 conclude, based on a review of the solicitation clause, although it may be irreparable harm which cannot be compensated information which would be necessary to success, is the books and records of the defendant Fulcrum. Balance ofconvenience Page 23 harm. It says it has suffered a a permanent loss of business. It says caused by the loss of information from were returned wiped clean of the files had been recovered but all of them. can be ascertained if Keltic is which state that in circumstances such as trial. They say that difficulty in doing suffer irreparable harm. authorities, that in the case of a non-difficult to assess damages, there is no by damages. A good source of the make this determination, in the event of
[67] On the issue of balance of convenience supra, to refer to this as the balance of inconvenience being considered. [68j Keltic has lost the opportunity to make retain them. That was the purpose Montgomery has not denied wiping clean at Keltic. Keltic is not saying that Mr. Montgomery with them, they say they are simply trying [69] On the other hand, Fulcrum is a new that if it was prevented from contacting operate sustainably.” Implicit in this is an customers form a large part, at least, of Fulcrum’s [70) Keltic is an established company. Moncton with Oakville, Ontario and Mount Pearl offices. The where David Montgomery worked is no Keltic’s website also lists other people as David Montgomery had. Page 24 I prefer, as Quinn J. did, in Sheehan, since that is really what is contact with its customers and try to of the non-solicitation clause. David the Blackberry and the computer he used and Fulcrum cannot compete to protect their own customer base. company. David Montgomery says former customers of Keltic it “could not acknowledgement that Keltic’s former business. Its website lists its head office as Dartmouth office longer listed on the Keltic website. business development managers, the title
[71] I also note that David Montgomery he joined Keltic, that being the reason Keltic Keltic, in hiring David Montgomery, did what David take customers from a former employer for [72) In all the circumstances, I conclude defendants if the injunction were granted. If trial to be unenforceable and David Montgomery may be determined that there was no customers. If the injunction is granted, the to put them out of business. Keltic on compensated in damages for the actions of balance, in my view, clearly falls in favour CoNcLusIoN: [73] The interlocutory injunction is not granted. receipt of written submissions of counsel.Page 25 brought many customers with him when hired him. Therefore it appears that Montgomery has now done — its own business. it would be more harmful to the a non-solicitation clause was found at found not to be a fiduciary, it prohibition on him contacting Keltic’s effect on the defendants will likely be the other hand, if successfUl, can be David Montgomery and Fulcrum. The of the defendants. Costs are to be determined after
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.