Case Report – Departing employees and the injunction standard

19 Aug

On July 3rd the Ontario Superior Court of Justice dismissed a motion for an interlocutory injunction in a departing employee case where the plaintiff claimed breach of fiduciary duty, breach of contract (notice of resignation and non-solicitation provisions) and breach of confidence.  The claim and motion were brought after a senior investment advisor and his two subordinates joined a competitor.The award is most notable for its clear statement on the standard to be applied on the first part of the RJR-MacDonald test.

I agree that where alleged breaches of restrictive covenants or fiduciary duty are asserted in an attempt to restrict a person’s ability to engage in their chosen vocation the higher standard strong prima facie case should be applied.  Where the allegation relates to breach of common law duties regarding use of confidential information to compete, the test is serious issue because it involves protection of employer’s rights as opposed to restraint of trade.

The Court held that the plaintiff did not establish the strong prima facie case necessary to support an injunction restraining further solicitation of its clients.  Although the Court held that the plaintiff did establish a serious issue to be tried in its request for an injunction to restrain further use of its confidential information (client lists), the Court held that the plaintiff did not establish irreparable harm and did not establish that the balance of convenience favoured an injunction.  In addressing the balance of convenience, the Court stated, “I think it is also important to consider in this discussion the interests of clients about who the fight is really all about and who are entitled to have access to the investment adviser of their choice.”

BMO Nesbitt Burns Inc. v. Ord, 2007 CanLII 2463 (Ont. S.C.J.).

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