Specialized Property Evaluation Control Services Ltd v Les Evaluations Marc Bourret Appraisals Inc, 2016 ABQB 85

Court of Queen ’ s Bench of Alberta Citation: Specialized Property Evaluation Control Services Ltd v Les Evaluations Marc Bourret Appraisals Inc, 2016 ABQB 85 Date: 20160212 Docket: 1501 13965 Registry: Calgary Between: Specialized Property Evaluation Control Services Ltd. Applicant - and - Les Evaluations Marc Bourret Appraisals Inc. and Ross Huartt Respondents _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice W.A.

Tilleman _______________________________________________________ Introduction [ 1 ] The Plaintiff, Specialized Property Evaluation Control Services Ltd. (“SPECS”), brings an application for an interlocutory injunction against its former employee, the Defendant Ross Huartt, to enforce non-competition and non-solicitation covenants contained in his employment contract.

[ 2 ] SPECS also seeks an interlocutory injunction against the Defendant, Les Evaluations Marc Bourret Appraisals Inc. (“Bourret”), prohibiting it from directly or indirectly receiving, using or disclosing SPECS’ confidential information and providing any services to SPECS’ clients for a period of 6 months. [ 3 ] SPECS also sought an application for a mandatory injunction requiring the Defendants to return all SPECS’ property in their possession, but this matter was resolved during the oral hearing. Factual background [ 4 ] In March 2014, SPECS hired Mr. Huartt to join its technical services division. Mr.

Huartt twice signed an employment agreement containing restrictive covenants, the first in March 2014 and the second in October 2015. There is some dispute between the parties as to whether a job description was attached to the employment agreement Mr. Huartt signed in March 2014. Mr. Huartt argues his job title and duties were changed from Technical Large Loss Appraiser to Technical Large Loss Construction Estimator. For the purposes of this application, I find that nothing turns on these different job titles, descriptions, or duties. [ 5 ] The restrictive covenants, broadly speaking, purport to restrict Mr.

Huartt from being engaged in or being involved in any business that competes with SPECS in a specified territory for 3 months following termination and from soliciting SPECS’ clients for a 6 month period. I will set out and discuss the specific language of each clause later in these reasons. [ 6 ] In November 2015, SPECS had reason to believe that Mr. Huartt, while still employed by SPECS, had begun working for the Defendant Bourret, a direct competitor of SPECS. On the afternoon of November 12, SPECS received a phone call from a client asking who would be handling Mr. Huartt’s files, as Mr.

Huartt had told the client’s representative that he was leaving SPECS. This was the first time SPECS learned of Mr. Huartt’s planned departure. [ 7 ] Mr. McAlister called Mr. Huartt to confirm that he was telling SPECS’ clients that he was leaving. According to Mr. Huartt, Mr. McAlister wrongly accused him of refusing work and leaving SPECS’ employ, without giving him an adequate opportunity to defend himself. [ 8 ] Following this conversation, SPECS decided to sever ties with Mr. Huartt. Mr. McAlister advised Mr. Huartt that his employment would be terminated, but gave Mr.

Huartt the option of presenting an immediate resignation. Although Mr. Huartt tendered a letter of resignation, with a resignation date effective November 20 , 2015, he now asserts that he was summarily dismissed on November 12, 2015. SPECS immediately locked Mr. Huartt out of all information technology systems and his inbound email messages were forwarded to Mr. McAlister. [ 9 ] On November 14, 2015, one of the documents forwarded to Mr. McAlister was an email with an attachment that recorded numerous hours worked by Mr.

Huartt on November 13, 2015 (the day after his termination) on a non-SPECS project. [ 10 ] Around November 14, 2015, Mr. McAlister discovered a progress report dated November 11, 2015, on SPECS letterhead addressed to one of SPECS’ clients that asked the client to contact competitor “Bourret Limited” with any questions. Mr. Huartt’s explanation for the reference to Bourret was that it “must have been a slip”. SPECS has continued to identify issues of concern with respect to Mr.

Huartt’s activities while at SPECS and his conduct following termination. [ 11 ] SPECS argues that its relationships with insurance companies and independent insurance adjusters are an important part of its business development. SPECS introduced Mr. Huartt to a number of contacts and facilitated him in building relationships with them. The evidence suggests he contacted a number of those contacts before his departure from SPECS and that he has solicited them for work and has dropped off gifts as part of that solicitation.

There is also evidence to suggest that SPECS lost at least one contract to Bourret as a result of Mr. Huartt’s actions. Issue [ 12 ] SPECS submits that Mr. Huartt is in breach of his non-competition and non-solicitation covenants and seeks an injunction to enforce them. Preliminary matters [ 13 ] This matter was first heard on January 15, 2016. At the end of the hearing, I gave the parties the opportunity to submit further affidavits and written argument to address a number of issues that arose in oral argument. I set out a

schedule for the filing of these affidavits and submissions, in anticipation of continued oral argument on February 10, 2016. [ 14 ] On February 8, 2016, I received a letter from Plaintiff’s counsel requesting the court’s permission, pursuant to rule 6.11(1)(f), to rely on evidence filed in Alberta Court of Queen’s Bench action no. 1601-01887, namely, an affidavit of Mr. McAlister, sworn February 4, 2016. [ 15 ] The Defendants object on the basis that this affidavit was filed in a separate action in which Mr.

Huartt is only one of three defendants; there has been no opportunity to cross-examine; they were not provided with a filed copy 5 days in advance, as required by the Rules (there was some dispute as to whether the Defendants received notice on Friday or Monday); the late proffer of this evidence violates the

schedule imposed after the January 15 hearing and clearly caught the other side by surprise, let alone give the court enough time to read it and consider it before final argument.

[16] While the very late filing of this affidavit may have barely satisfied the technical requirements of Rule 6.11(1)(f), itsadmission requires this Court’s permission and I do not grant it. It does not comply with the deadlines and

schedule set for submissionsin this matter, nor were the Defendants or the court given sufficient notice of the Plaintiff’s intentions. Analysis [17] To grant an interlocutory injunction the court must be satisfied that the applicant has a strong prima facie case, it will sufferirreparable harm if the injunction is not granted, and that the balance of convenience favours granting the injunction: IBM Canada Ltd. vAlmond, 2015 ABQB 336 at paras 9-10; RJR-Macdonald Inc. v Canada (Attorney General), (SCC), [1994] 1 SCR 311.

General principles [18] Restrictive covenants are prima facie unenforceable unless they are shown to be reasonable: Shafron v KRG InsuranceBrokers (Western) Inc., 2009 SCC 6 at para 43. Reasonableness is assessed in reference to the interests of the parties concerned andreasonable in reference to the interests of the public: Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co., [1894] AC 535 at p 565. [19] In J.G. Collins Insurance Agencies Ltd. v Elsley Estate, (SCC), [1978] 2 SCR 916 (“Elsley”) at p 925, thecourt explained that reasonableness is determined by assessing the following:

a) Does the employer have a proprietary interest entitled to protection?

b) Are the temporal and geographic elements of the agreement too broad?

c) Is the covenant unenforceable as being against competition generally, and not limited to proscribing solicitation of clients of theformer employer? [20] SPECS has the onus of establishing the reasonableness of the restrictive covenants as between the parties. The onus ofproving the restrictive covenant is contrary to the public interest lies with Mr. Huartt: Elsley at p 928.

The reasonableness of a restrictivecovenant is determined by considering the extent of the activity sought to be prohibited and the extent of the temporal and spatial scopeof the prohibition: Shafron at para 43. [21] The reasonableness of the covenants can only be decided by considering the nature of the business and the nature andcharacter of the employment.

Dickson J cautioned in Elsley at p 923-924 against examining restrictive covenants in isolation: It is important, I think, to resist the inclination to lift a restrictive covenant out of an employment agreement and examine it in adisembodied manner, as if it were some strange scientific specimen under microscopic scrutiny. The validity, or otherwise, of arestrictive covenant can be determined only upon an overall assessment of the clause, the agreement within which it is found and all ofthe surrounding circumstances. [22] Malcolm J. MacKillop writes in “Enforcement of Restrictive Covenants”

(2007) The Law Society of Canada Special Lectures297 at 305 that Elsley recommends that the court evaluate the reasonableness of a restrictive covenant on its own merits in the context ofthe particular circumstances. [23] To determine reasonableness, the terms of the covenant must be unambiguous such that its meaning can be determined. Anambiguous restrictive covenant will be prima facie unenforceable because the party seeking enforcement will be unable to demonstratereasonableness in the face of an ambiguity: Shafron at para 27. Notional severance cannot be used to cure an ambiguous covenant:Shafron at para 41.

Strong prima facie case [24] A strong prima facie case for an injunction requires the applicant to demonstrate that the restrictive covenants are enforceableand that they were breached. Before considering the enforceability of the covenants, however, I must consider the Defendants’ argumentthat the restrictive covenants do not apply at all because Mr. Huartt was wrongfully dismissed. Was Mr.

Huartt dismissed for cause? [25] Wrongful dismissal repudiates the employment agreement and terminates the contract, thereby discharging parties fromfuture obligations: Windship Aviation Ltd. v deMeulles, 2002 ABQB 669 and Globex Foreign Exchange Corp. v Kelcher, 2011 ABCA240.

Hunt JA stated in Globex at para 72 that an employer who wrongfully terminates a contract of employment should not be able tocapitalize on its failure to give notice or damages in lieu of notice by enforcing prospective obligations against an innocent employee.Wrongfully dismissed employees are excused from compliance with restrictive covenants.

This is the case even where the contract, ashere, mentions termination “for whatever reason, including an unjustified termination by SPECS”: Globex at paras 67-72. [26] In Molloy v EPCOR Utilities Inc., 2015 ABQB 356 at para 140, Justice Topolniski noted that a dismissed employee need onlyprove the fact of employment and dismissal; the onus of proving just cause rests with the employer. Thus, before I consider therestrictive covenants, I must find that SPECS can establish a strong prima facie case that it had just cause to dismiss Mr. Huartt. [27] Mr.

Huartt argues that he was dismissed without notice and without cause and that SPECS failed to follow the progressivediscipline procedures set out in its Employee Handbook of verbal warning, written warning and suspension before dismissal andtermination. He submits that SPECS had a duty of good faith and fair dealing and that it was required to conduct an adequateinvestigation and to afford him a reasonable opportunity to defend himself.

[28] Topolniski J summarized the fundamental principles of just cause dismissal at para 142 of Molloy, drawing on the SupremeCourt of Canada’s decision in McKinley v BC Tel, 2001 SCC 38: (

a) cause is a question of fact; (

b) the assessment of cause is objective,contextual, and proportionate; (

c) the assessment of cause requires determining the nature and extent of the alleged misconduct in thefull context of all the surrounding circumstances, and deciding whether the response to the alleged misconduct was balanced. Thequestion is whether the alleged misconduct is so incompatible with the fundamental terms of the employment relationship that itwarrants dismissal. [29] The law recognizes the employer’s right to summarily dismiss an employee guilty of conduct incompatible with the fulfilmentof his duties or conduct prejudicial to the employer’s business: Callihoe v F.A.C.T.S.

Oil Tools Ltd. (1994), (AB KB),19 Alta LR (3d) 259 (QB) at para 36. In McKinley at para 51, Iacobucci J recommended applying a contextual approach to determiningwhether an employee’s dishonesty provides just cause for dismissal.

The principle of proportionality requires an effective balancebetween the severity of the employee’s misconduct and the sanction imposed: McKinley at para 53. [30] Furthermore, if good cause for dismissal existed at the time of termination of employment, although unknown and not reliedupon at the time of dismissal, the dismissal may be justified after the fact, for cause: Schafer v Pan Matrix Informatics Ltd., (1987), (AB KB), 80 AR 378 (QB) at paras 35-36. This suggests that even if Mr.

McAlister did not have quite enough evidencebefore him in the phone call to justify dismissal for cause, the information brought to light over the next few days in reviewing Mr.Huartt’s emails can add strength to SPECS’ prima facie case. [31] On the evidence before me, I find that SPECS has established a strong prima facie case to assert it dismissed Mr. Huartt forcause. Mr. Huartt signed two employment contacts, both of which set out some general duties owed by employee to employer.

Theseincluded a duty to “devote the whole of his attention and ability to his designated responsibilities and duties...diligently, faithfully andhonestly...and use his best efforts to promote the interests of SPECS.” The agreement specifically states that the employee “shall notaccept any other employment, remuneration, or participate in any other business activity which would result in the employee beingplaced in, or being perceived to be placed in, a conflict of interest with his duties under this agreement.” [32] The Employee Handbook requires employees “to act in a professional, respectful and ethical manner” and warns thatbehaviour “that is detrimental to the company” may be considered a violation of the policy and that failure to abide by the policy mayresult in “disciplinary action up to and including termination.” [33] The evidence strongly suggests that Mr.

Huartt was working for Bourret, SPECS’ competitor, while employed at SPECS. Thisis a clear violation of the duties of an employee and an action that is detrimental to the company. In his affidavit and questioning onaffidavit, Mr. Huartt confirms that he met with Bourret in and around November 2015 and that on November 13, 2015, “well after”SPECS terminated his employment, he reached a sub-contracting agreement with Bourret.

November 13, however, was only one dayafter he was terminated by SPECS and was within the time period captured by his resignation notice, when he still purportedly workedfor SPECS. [34] There is also evidence suggesting that Mr. Huartt diverted a fire loss claim from SPECS to Bourret; there is the progressreport encouraging the client to contact “Bourret Limited” with any questions; and, the invoice for 9 hours of work on a non-SPECSproject the day after Mr. Huartt’s employment at SPECS was terminated.

It defies credulity to suggest that he acquired this work and filethe day after his employment was terminated, rather than having had it set up in advance while still in SPECS’ employ. [35] The evidence also reveals that Mr. Huartt delivered wine to a number of SPECS’ clients on November 13, 2015, althoughwhether his actions were to promote himself as an independent contractor or to promote Bourret remains in dispute.

I conclude that the Plaintiff has established a strong prima facie case for just cause dismissal and that the restrictive covenants in theemployment agreement can be enforced, provided the covenants themselves are reasonable and enforceable.

Are the restrictive covenants reasonable? [36] The two employment agreements contain the same non-competition and non-solicitation restrictive covenants at clauses 6.1and 6.2: 6.1 During the term of this Agreement and for a period of three months following the termination of this Agreement (for whateverreason, including an unjustified termination by SPECS) the Employee shall not engage or be involved in, either directly or indirectly, anybusiness which competes with SPECS’s Business in the Territory as defined in

Schedule “A”. 6.2 During the term of this Agreement and for a period of six months following the termination of this Agreement (for whatever reason,including an unjustified termination by SPECS), the Employee shall not, directly or indirectly, solicit or attempt to solicit any customeror client of SPECS to commence or increase doing business with any other organization, or to cease or decrease the business that suchclient or customer does with SPECS. [37] At clause 6.3, Mr.

Huartt agreed that the above covenants were reasonable and necessary to protect SPECS’ legitimatebusiness interests. [38] The term “Business”, used in clause 6.1, is defined at clause A of the employment agreement: “SPECS provides specializedproperty assessment appraisal services to customers in the Territory and elsewhere in Canada”. The “Territory” is defined as “Themunicipal limits of the City of Calgary and 100 kilometers from such municipal limits.” [39] Mr. Huartt testified in cross-examination on affidavit that he had no concerns about these clauses.

He agreed that the temporaland geographic limits were clear and denied having any uncertainty about their meaning.

Proprietary interest [ 40 ] The first step in the reasonableness inquiry is to determine whether SPECS has a proprietary interest entitled to protection. SPECS seeks to protect its goodwill and client relationships, as well as other confidential documents and records related to its business. [ 41 ] When an employer introduces an employee to customers and facilitates a relationship between its customers and the employee, there is a proprietary interest entitled to protection: Innersolutions Ltd. v Hooper , 2015 ABQB 258 at para 49 .

In that case, the employees had broken with their employer and started their own competing business. The employer established that she had provided them with financial information, marketing and promotion techniques, client and course lists, and operational information. [ 42 ] The Defendants argue that no such information was given to Mr. Huartt. They also argue that the Alberta government publishes lists of insurance companies and licenced insurance adjusters that are publicly available in Alberta, as such they cannot be proprietary information.

The Defendants also provide evidence to suggest that different insurance companies use different appraisal companies for different purposes. I find that this does not negate SPECS’ proprietary interest in its own client relationships. The proprietary interest at issue is Mr. Huartt’s relationships with SPECS’ clients, fostered during the course of his employment, not the name or identity of the clients themselves. [ 43 ] Furthermore, SPECS hired Mr. Huartt when he had little to no experience or contacts in Canada.

SPECS trained him, brought him on marketing trips, and introduced him to clients and client representatives. SPECS also holds a proprietary interest in the confidential forms and documents it uses in the course of its business and that it trained Mr. Huartt to use. I conclude that SPECS has a propriety interest that is entitled to protection. Temporal and geographic restrictions [ 44 ] The parties agree that the temporal restrictions (3 months non-competition and 6 months non-solicitation) are reasonable. The Defendants dispute the geographic scope of the non-competition covenant. They argue that Mr.

Huartt’s work with SPECS was within Calgary and that the addition of 100 km beyond the City limits in the non-competition clause is excessive and potentially ambiguous. I reject this argument. This is not a case like Shafron where the meaning of “Metropolitan City of Vancouver” was at issue. The city limits of Calgary are well demarcated and it is easy to calculate 100 km beyond these limits. [ 45 ] The combined effect of the three month time period with this geographic scope is reasonable and enforceable. Breadth of restriction [ 46 ] The Defendants strongly argue that the covenants are ambiguous and over broad.

They submit that the non-competition covenant is ambiguous in that it does not provide a clear description of SPECS’ business, so it is impossible to know what business might compete with SPECS’ business interests. [ 47 ] I reject this argument. Mr. Huartt worked for SPECS for over one and a half years. He is fully aware of his own role within SPECS and the business SPECS undertakes. The covenant restricts Mr. Huartt's involvement with any business that competes with SPECS in the specified territory for a 3 month period. He must not work for a competitor during that time.

The covenant is reasonable and does not fail for ambiguity. [ 48 ] With regard to the non-solicitation covenant, the Defendants argue that it is overly broad. The relevant portion of the covenant reads as follows: “...the Employee shall not, directly or indirectly, solicit or attempt to solicit any customer or client of SPECS to commence or increase doing business with any other organization , or to cease or decrease the business that such client or customer does with SPECS.” [Emphasis added.] [ 49 ] The Defendants argue that SPECS’ claim for injunctive relief is based on the relationship that Mr.

Huartt developed with his own clients, approximately 29 in number, yet the non-solicitation covenant creates a limitation that goes beyond those clients and seeks to restrict Mr. Huartt’s access to persons with whom he had no dealing while employed at SPECS. [ 50 ] The Defendant also submits that the non-solicitation covenant is overbroad because it states that Mr.

Huartt shall not “solicit any customer or client of SPECS to commence or increase doing business with any other organization...” These words seek to limit the commencement or continuation of any form of business, including the rendering of services or business in which SPECS is not engaged. [ 51 ] In Globex Hunt JA concluded that a similarly worded non-solicitation covenant was overbroad.

The covenant provided that the former employee would not “...solicit customers in any manner whosoever, in any business or activity for any client of Globex with which he/she had dealings on behalf of Globex...” [ 52 ] The judge concluded first at para 16 that the term “dealings” was ambiguous in meaning and practical application. Did dealings include a one-time phone call with a client? Did it include taking care of a client for a colleague who was on vacation?

The evidence revealed that it would be impossible to know with whom a trader had had dealings. [ 53 ] More importantly for our purposes, however, was the appeal court’s finding that the clause was overbroad because it prohibited the former employee from “solicit[ing] customers in any manner whosoever, in any business or activity for any client of Globex.” Hunt JA explained at para 21: ...The appellant’s business was foreign currency exchange and undoubtedly it had an interest in protecting its customers (if they could be ascertained) in that business .

But it is difficult to see what legitimate interest the appellant had in preventing its ex-employees from contacting customers as regards other businesses. Yet that is precisely what the 2003 non-solicitation clause purports to do. [ 54 ] The Alberta Court of Appeal referred to the Ontario Court of Appeal’s decision in H.L. Staebler Co. v Allan , 2008 ONCA

576 , in which the court found that a non-competition restrictive covenant was unenforceable because the type of work that the employees were prohibited from conducting was defined too broadly. The prohibition was against doing “business” with the former employer’s clients and customers.

The court held that precluding former employees from conducting business of any sort with their former employer’s clients, whether or not that business was in competition with the former employer, went well beyond protecting legitimate trade connections. [ 55 ] I am mindful of Dickson J’s comments to consider the restrictive covenant in the context of the employment agreement as a whole, yet even so, I conclude that the non-solicitation covenant is overbroad.

While it may have been SPECS’ intention to protect its client base and interests, the language used, namely “any customer or client” and “any other organization”, encompasses too many possibilities and amounts to an unjustified restraint of trade. Conclusion re: reasonableness [ 56 ] I conclude that SPECS has successfully established that the non-competition covenant is reasonable and enforceable; it has not established that the non-solicitation covenant is reasonable. [ 57 ] The evidence shows that Mr. Huartt worked for Bourret in 2015, immediately after, if not before, being dismissed from SPECS.

The evidence also suggests that Mr. Huartt worked for Bourret on at least one file in the Calgary area. I conclude that Mr. Huartt is in clear breach of the non-competition covenant. [ 58 ] The evidence also suggests that Mr. Huartt solicited some of SPECS’ clients and that he diverted at least one contract to Bourret. If I had found the non-solicitation covenant to be reasonable and enforceable, I would have concluded that Mr.

Huartt was in breach of that covenant. [ 59 ] The next steps of the injunction analysis are to determine whether SPECS has established that it will suffer irreparable harm and to assess with whom lies the balance of convenience. Irreparable harm [ 60 ] Irreparable harm is harm that cannot be quantified in monetary terms or that cannot be cured: RJR-MacDonald at para 59. Examples include permanent market loss, irrevocable damage to a business reputation, or the real potential that an applicant will be put out of business if the injunction is not granted: RJR-MacDonald at para 59.

This court has held that irreparable harm is harm for which there is “no fair or reasonable redress”: Groeneveld v 1034936 Alberta Ltd. , 2005 ABQB 834 at para 22 ; [ 61 ] The courts have recognized loss of market share, damage to customer relationships and goodwill arising from an ex- employee’s breach of covenants as forms of irreparable harm: Catalyst Canada Services LP v Catalyst Changers Inc. , 2013 ABQB 73 at paras 79-82 ; Culligan Canada Ltd. v Fettes , 2009 SKCA 144 at paras 35-36 ; Dreco Energy Services Ltd. v Wenzel , 2004 ABCA 95 at para 15 .

It is enough to raise a doubt as to the adequacy of damages. [ 62 ] SPECS argues that it has lost at least one file as a result of Mr. Huartt’s actions.

While the loss of this file might be quantifiable, it submits it cannot quantify the cascading effect of losing that file, along with other yet to be identified losses that could affect SPECS’ market share causing further irreparable harm. [ 63 ] SPECS also argues, relying on Stonewater Group of Restaurants Inc. v Mikes Restaurants Inc. , 2005 ABQB 799 at paras 10 & 36 , affirmed 2006 ABCA 193 , that where there is a clear breach of a clear covenant, the test for irreparable harm is applied with less rigour. [ 64 ] The Defendants argue that there is no irreparable harm in this case.

They submit it is not a case like Catalyst where there were only four pieces of a specific type of equipment in the province, two of which belonged to the plaintiff and two to the defendant. The plaintiff established it would suffer irreparable harm if the defendant’s equipment, which had been confiscated, was returned. The defendant’s equipment was allegedly copied from the plaintiff’s confidential and proprietary information.

Its return would permit the defendant to compete directly with the plaintiff and the plaintiff lose market share. [ 65 ] Nor is it a case like Culligan , in which several former senior employees opened a competing business and then recruited 15 of their former employer’s highest income earners to come work with them. The evidence suggested that the former employees had knowledge of the plaintiff’s strategic plans, margins and price lists, input costs, suppliers, customer lists, and the specific needs of customers.

The injunction sought to enjoin the misuse, to the new employer’s advantage, of this confidential information. [ 66 ] The facts herein are less compelling. While there is evidence of one contract that has been diverted to Bourret, the remainder of the evidence suggests that Bourret stopped working with Mr. Huartt once this lawsuit was filed, waiting until the expiry of the restrictive covenants. [ 67 ] Furthermore, the 3-month period under the terms of the non-competition covenant ends on February 13, 2016, three days after the second day of hearing in this matter.

Justice Greckol noted in Dreco Energy Services Ltd. v Wenzel , 2008 ABQB 112 at paras 63-65 , affirmed 2008 ABCA 290 , that there appear to be no Canadian authorities that provide for an injunction which has the effect of extending the term of a restrictive covenant beyond that set out in the contract between the parties.

While I am sympathetic to Plaintiff’s counsel’s able argument regarding the jurisdiction of the court to craft its own equitable remedies and the suggestion that the injunction can begin to run from the day of the court order, which arises when the court issues an injunction prohibiting competition in the absence of a contractual non-competition clause, I note that interlocutory injunctions are extraordinary remedies and I am not prepared to extend the contracted for period of non-competition on the facts of this case. [ 68 ] There has been no evidence to show that SPECS will suffer irreparable harm from competition in the remaining three-day period.

Because of that, the Plaintiff has not established irreparable harm.

[ 69 ] With respect to the non-solicitation covenant, I find that if the clause had been specific enough to limit Mr. Huartt’s activities to the non-solicitation of clients with whom he had a direct relationship and to businesses in direct competition with SPECS, I would have found that his solicitation of those clients caused SPECS irreparable harm. Balance of convenience [ 70 ] Assessing the balance of convenience requires determining which party will suffer the greater harm if the injunction is granted or refused. [ 71 ] The Honourable Robert J.

Sharpe in Injunctions and Specific Performance , looseleaf, 6 th ed. (Canada Law Book, 2008) at para 2.530 provides the following guidance: ...Apart from, and in addition to, the risks of monetary loss and gain, what will be the relative impact upon the parties of granting or withholding the injunction? Does the benefit the plaintiff will gain from preliminary relief outweigh the convenience to the defendant of withholding relief? Is the inconvenience to the defendant, should the injunction be granted, more substantial than the inconvenience the plaintiff will suffer if relief is withheld? ...

Would the injunction prejudice the public interest or the rights of parties not before the court? Would withholding the injunction result in an injustice?... [ 72 ] The applicant contends that Mr. Huartt has the ability to work outside of Calgary, particularly since Bourret has offices across Canada. He has sworn and testified to having qualifications and the capacity to work beyond the role for which he was employed at SPECS. The applicant submits there is no harm to Mr. Huartt or to Bourret that cannot be remedied by using other staff to cover Calgary and restricting Mr.

Huartt to non-Calgary markets until his covenants expire. There is no evidence of any inconvenience to Bourret in tasking its other employees or independent contractors with work in Calgary until February 2016, and restricting Mr. Huartt’s business development activities to avoid solicitation of SPECS’ clients in Calgary until May 2016. [ 73 ] Even if there was such difficulty, SPECS has filed an undertaking as to damages to address any concerns about such possible harm. [ 74 ] The Defendants argue that restricting Mr.

Huartt from working as a quantity surveyor in the face of an agreement under which he was hired merely as an appraiser, then as an estimator, would be unduly prejudicial. They submit a quantity surveyor’s role goes well beyond that of an appraiser and an estimator, and can include project loan monitoring services and dispute resolution services. [ 75 ] I accept the Plaintiff’s arguments that Mr. Huartt could have worked for Bourret outside the “Territory” until February 2016. Yet, as discussed above in relation to irreparable harm, the 3-month period expires on February 13.

This shifts the balance of convenience to the Defendant. The Plaintiff can pursue its remedies in damages. [ 76 ] With respect to the non-solicitation covenant, I come to the same conclusion as on irreparable harm: if I had found the clause to be reasonable and enforceable, I would have found the balance of convenience to lie in SPECS’ favour. Given my conclusions as to the overbreadth of the clause, however, the balance of convenience favours Mr. Huartt.

Other issues [ 77 ] The Defendants raise the maxim “he who seeks equity must do equity; he who seeks equity must come with clean hands” and argue that the Plaintiff cannot seek a remedy because it has failed to remit Mr. Huartt’s final payments in breach of the Employment Standards Code . There is also conflicting evidence about Mr. Huartt’s professional designations and whether SPECS asked him to falsify his credentials or whether Mr. Huartt did so of his own volition.

The evidence on these points was troubling yet inconclusive and I reject these arguments as immaterial to the underlying injunction application. [ 78 ] I do take issue, however, with some aspects of the injunction the applicant seeks, particularly some of the terms against the Defendant Bourret.

The Plaintiff applies for an injunction prohibiting Bourret from providing any services to SPECS’ clients for a period of 6 months. [ 79 ] This is not a case of a former employee opening up a competing business, drawing away other former employees and using the knowledge derived from their collective prior employment to the former employer’s detriment. There is no privity of contract between SPECS and Bourret.

The evidence establishes that insurance companies and adjusters use a variety of appraisal companies depending on the specific needs of their file. [ 80 ] Although there was no evidence to show the potential overlap between SPECS' and Bourret’s clients, Bourret should not be precluded from providing services to those clients for 6 months simply because it hired one of SPECS' former employees. Conclusion [ 81 ] I find SPECS was justified in seeking to impose restrictive covenants on its employee, Mr. Huartt. I also find that Mr.

Huartt’s conduct during and after his employment with SPECS was in breach of the non-competition covenant and the non-solicitation covenant. Nonetheless, I am unable to grant the injunction requested. With only three days remaining in its application, the non-competition covenant is effectively moot – it fails to satisfy the tests for irreparable harm and balance of convenience. The non-solicitation covenant fails, at this interlocutory stage, because I conclude it is overbroad in its reach.

[ 82 ] The Plaintiff’s application for an interlocutory injunction is denied. Heard on the 15 th day of January, 2016 and the 10 th day of February, 2016. Dated at the City of Calgary, Alberta this 11 th day of February, 2016. W.A. Tilleman J.C.Q.B.A. Appearances: Robert Hawkes, Q.C. and Deborah Book Jensen Shawa Solomon Duguid Hawkes LLP for the Applicant Nelson Osamudiamen FP Legal for the Respondents