Safety first contracting (1995) ltd. Trading as Safety First - SFC ltd. Plaintiff And: Patrick Murphy First Defendant And: Hi-vis traffic control inc. Second Defendant, 2019 NLSC 47

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Safety First Contracting

(1995) Ltd. v. Murphy , 2019 NLSC 47 Date : February 21, 2019 Docket : 201601G4179 Between: Safety first contracting (1995) ltd. Trading as Safety First - SFC ltd. Plaintiff And: Patrick Murphy First Defendant And: Hi-vis traffic control inc. Second Defendant Before: Justice William H. Goodridge Place of Hearing: St. John’s, Newfoundland and Labrador Dates of Hearing: March 12, 13, 14, 15, 16, 2018 May 22, 23, 24, 2018 June 21, 2018

Summary: The Plaintiff failed to prove the existence of a confidentiality and non-competition agreement, and failed to establish that the First Defendant (its former operations manager) wrongfully converted its trade secrets to the benefit of a competing company. The Plaintiff’s claim was dismissed and the Defendants were awarded costs. Appearances: Keith S. Morgan and Sarah G. Fitzgerald Appearing on behalf of the Plaintiff

Judy M. Manning and Gerald F. O'Brien, Q.C. Appearing on behalf of the Defendants Authorities Cited: CASES CONSIDERED: F.H. v. McDougall, 2008 SCC 53; Moores v. Daley Brothers Ltd. (1996), (NL SC), 138Nfld. & P.E.I.R. 343, 60 A.C.W.S. (3d) 1145 (Nfld. S.C. (T.D.)); Imperial Sheet Metal Ltd. v. Landry 2007 NBCA 51; Barton InsuranceBrokers Ltd. v. Irwin, 1999 BCCA 73; Canadian Aero Service Ltd. v. O'Malley, (SCC), [1974] S.C.R. 592; KennedyEstate v. Cluney (Guardian ad litem of) (2002), (NL SC), 218 Nfld. & P.E.I.R. 342, 117 A.C.W.S. (3d) 884 (Nfld.S.C. (T.D.)). REASONS FOR JUDGMENT Goodridge, J.: INTRODUCTION [1] Safety First Contracting

(1995) Ltd. (“Safety First”) is involved in the management of traffic diversion and safety during roadredesign and construction activity. Its clientele includes construction companies, municipalities and public utilities. Safety First had anear monopoly in the traffic control business for the St. John’s metropolitan market from 2011 to 2016, at least with respect to trafficcontrol for the more complicated construction sites.

This lawsuit arises from circumstances surrounding the end of that near monopoly,and the decision of Safety First’s former operations manager, Patrick Murphy, to accept a near identical management position with thenew competitor in the marketplace, Hi-Vis Traffic Control Inc. (“Hi-Vis”). Mr. Murphy had been with Safety First for just 14 months atthe time he tendered his resignation. He accepted the new position with Hi-Vis less than three weeks after resigning. In the St. John’smetropolitan market, Safety First and Hi-Vis compete for the same customers. [2] Safety First seeks damages against Mr.

Murphy for breach of a confidentiality and non-competition agreement, breach ofconfidence, and wrongful conversion of trade secrets. Safety First claims that Mr. Murphy signed a confidentiality and non-competitionagreement as part of his employment terms, and that he violated that agreement by accepting employment with Hi-Vis and by passingtrade secrets over to Hi-Vis. Alternatively, Safety First says that Mr. Murphy violated his common law obligations of confidentiality andnon-competition. Safety First also seeks damages against Hi-Vis, alleging that it is vicariously liable as the beneficiary of Mr.

Murphy’sunlawful actions. [3] Hi-Vis was incorporated on April 18, 2016 and began business activity on June 1, 2016. Mr. Murphy resigned from SafetyFirst on May 9, 2016, accepted the position as Hi-Vis general manager on May 26, 2016, and commenced work with Hi-Vis on June 1,2016. The trade secrets that Mr.

Murphy is alleged to have copied from Safety First, and passed over to Hi-Vis, include, inter alia:practice manuals, customer lists, industry contact lists, employee pay scales, and employee contact information. [4] The main allegations made by Safety First are set out in paragraph 21 of the statement of claim: 21. …. Mr. Murphy is in breach of the [confidentiality and non-competition] agreement by: a. Contacting current and former employees in relation to his association with [a competitor]; and b. Releasing the trade secrets to [a competitor]; c.

Entering into a partnership, share ownership, contract, employment and/or alternate form of association with [a competitor]. [5] Mr. Murphy denies that his employment contract with Safety First included a confidentiality and non-competition agreement,and he denies that he copied or shared any of Safety First’s trade secrets. ISSUES [6] The issues are: • Is there a contractual obligation of confidentiality and non-competition owed by Mr. Murphy to Safety First?

• Is there a common law obligation of confidentiality and non-competition owed by Mr. Murphy to Safety First? • Did Mr. Murphy breach any obligation of confidentiality and non-competition? • If Mr. Murphy wrongfully converted trade secrets for which Safety First held a proprietary interest, is Hi-Vis vicariously liablefor the resulting damages? STANDARD OF PROOF [7] The civil standard of proof at common law is proof on a balance of probabilities. Context remains important in assessinginherent probabilities or improbabilities or the seriousness of the allegations or consequences.

However, these considerations do notchange the standard of proof. At paragraph 49 of F.H. v. McDougall, 2008 SCC 53, Rothstein, J., writing for a unanimous panel, stated: [I]n civil cases there is only one standard of proof and that is proof on a balance of probabilities. In all civil cases, the trial judge mustscrutinize the relevant evidence with care to determine whether it is more likely than not that an alleged event occurred. BACKGROUND [8] Safety First has been in business since 1995, mostly in traffic control, but also in training of flag persons.

The trainingcomponent of Safety First’s business, a half-day program, is a small component of its overall business. The business is mostly seasonal,tied in to construction activity. Safety First has offices in Nova Scotia, New Brunswick, and Newfoundland and Labrador. TheNewfoundland and Labrador office closed for several years while the company focused on business opportunities in the MaritimeProvinces. The Newfoundland and Labrador office reopened in 2011. [9] Safety First hired Mr. Murphy on March 4, 2015, as its Newfoundland and Labrador operations manager. There was acompetitive application process and Mr.

Murphy was the successful applicant among eleven candidates interviewed. Mr. Murphyreported to the Newfoundland and Labrador regional manager, Roger Motty; the regional manager reported to the general manager,Jason Hiltz; the general manager reported to the president, James MacDonald. [10] Mr. Hiltz and Mr. Motty conducted the interviews during the job competition and made the follow up contact with Mr.Murphy offering him the position. [11] The duties of the operations manager are mostly administrative, relating to the day-to-day management of Safety First’s St.John’s office.

ANALYSIS Is there a contractual obligation of confidentiality and non-competition owed by Mr. Murphy to Safety First? [12] In Moores v. Daley Brothers Ltd. (1996), (NL SC), 138 Nfld. & P.E.I.R. 343, 60 A.C.W.S. (3d) 1145(Nfld. S.C. (T.D.)), Roberts, J. stated: The burden of proving an agreement between two parties is upon the party seeking to prove its existence.

The standard is the balance ofprobabilities. … [13] I find that Safety First has failed to prove the existence of an agreement, either written or oral, on confidentiality and non-competition. [14] There was conflicting testimony on the existence of a confidentiality and non-competition agreement between Safety First andMr. Murphy. There was no signed agreement entered as evidence. Safety First’s evidence, coming from Mr. Hiltz and Mr. Motty, isthat there was a signed agreement but that it was lost or stolen. Both of these men testified that that a draft of the agreement was sent toMr.

Murphy by email on March 5, 2015; that the terms of the agreement were discussed with Mr. Murphy prior to his first day of workon March 9, 2015; and that a signed version of the agreement was delivered by Mr. Murphy to Mr. Motty on March 9, 2015. I acceptthat Safety First intended to have Mr. Murphy sign a confidentiality and non-competition agreement; however, I find that the intentiondid not translate into words or actions. [15] Mr. Hiltz testified that he told Mr. Murphy, during the job interview, that confidentiality was expected from managerial staff. Mr.

Murphy acknowledges that this was mentioned, but says that it was only a passing comment, and that there was no mention ofdetails, no mention of a formal agreement on confidentiality, and no mention of non-competition. I accept Mr. Murphy’s evidence thatthere was no discussion with him regarding specific conditions of employment relating to confidentiality or non-competition, and nodiscussion of the requirement to sign a confidentiality and non-competition agreement. [16] I find that Mr. Murphy did not open or see the confidentiality and non-competition agreement that was attached to the March 5,2015 email.

The failure to view the attachment was inadvertent, or due to removal of the attachment by antivirus software. Either way,it was not opened or viewed by Mr. Murphy. I find that Mr. Murphy did not deliver a signed copy of the agreement to Mr. Motty whenhe reported to work on March 9, 2015. I accept the evidence of Mr. Murphy that he did not see or sign this agreement. I reject theevidence of Mr. Motty that he received a signed copy of the agreement on March 9, 2015. [17] Mr. Hiltz testified that he discussed the confidentiality requirements with Mr.

Murphy during the job interview on February 25,2015, but concedes that he may not have discussed that issue with any of the other ten candidates interviewed. Mr. Hiltz testified that hediscussed the confidentiality requirement again with Mr. Murphy during a February 27, 2015 phone call in which Mr. Murphy was

advised that he was on a short list of two finalists. Mr. Hiltz was unsure whether he discussed the confidentiality issue with the other candidate who had been short-listed. The uncertainty that Mr. Hiltz had about whether he discussed the confidentiality requirement with any of the other job applicants, or the other finalist, is part of the reason why I have doubts about the overall reliability of his recall on discussions with Mr. Murphy. How can he be so certain of the matters he discussed with Mr.

Murphy, yet not have recall about whether he discussed the same matters with the other job applicants? [ 18 ] On cross-examination, Mr. Hiltz was inconsistent in recalling the telephone discussions he had with Mr. Murphy during the week of March 2 to 5, 2015. Initially, he said that details of the confidentiality and non-competition agreement were discussed, including discussion of the four specific bullet points found in the unsigned copy of the draft agreement that had been entered as evidence. When challenged (on cross-examination) about whether he really did get into those details, Mr.

Hiltz conceded that he did not go over the agreement in any detail. This was an inconsistency going to the reliability of his evidence -- his memory of events. [ 19 ] Mr. Hiltz was cross-examined on his affidavit of August 11, 2016. Paragraph 25 of that affidavit, when read in the context of preceding paragraphs, indicates that the first notice Mr. Hiltz provided to Mr. Murphy about the requirement to sign a confidentiality and non-competition agreement, was on March 5, 2015: … I, on behalf of Safety First offered him the position of Operations Manager over the telephone on or about March 5 th 2015.

During this conversation I explained Safety First’s policy to require managerial employees to sign a non-compete and non-disclosure agreement … [ 20 ] The date of first notice of the requirement for a confidentiality and non-competition agreement in this affidavit (March 5, 2015) is different from the date given during court testimony (February 25, 2015). Again, that is an inconsistency going to the reliability of Mr. Hiltz’s evidence. [ 21 ] Mr. Motty attended with Mr. Hiltz for the February 25, 2015 job interview. He testified that the confidentiality requirement for managerial employees was raised with Mr.

Murphy during the interview, but that no specifics were addressed. That is inconsistent with Mr. Hiltz’s initial testimony that specifics of the confidentiality requirement were discussed, including the non-competition clause. I acknowledge that Mr. Hiltz corrected himself on cross-examination, but the inconsistency still exposes the uncertain reliability of memories as to what, if anything, was said about the proposed agreement on confidentiality and non-competition. [ 22 ] Mr. Motty says that he met with Mr.

Murphy on the morning of March 9, 2015, and received a bundle of signed employment documents that he subsequently placed in Mr. Murphy’s personnel file. He claims that the signed confidentiality and non-competition agreement was included in the bundle. Mr. Motty testified that some of the documents included in that bundle were signed in his presence and others had been previously signed. Mr.

Motty recalled that Safety First’s printed harassment policy was reviewed and signed in his presence, but he had no specific recall of discussing the confidentiality and non-competition agreement, or any of the other employment related documents. [ 23 ] In addition to this lack of recall, which of course adversely affects reliability, Mr. Motty’s testimony had a minor inconsistency. The inconsistency added to my concern regarding the reliability of Mr. Motty’s memory of receiving a signed confidentiality and non- competition agreement. Mr.

Motty gave inconsistent evidence on whether he printed off the agreement and had Mr. Murphy sign in his presence, or if Mr. Murphy brought a signed copy with him. On direct examination, he testified that he was not sure whether the agreement was signed in his presence. On cross-examination, he testified that the agreement was not signed in his presence. The issue of whether the agreement was signed in Mr. Motty’s presence or buried within a package of other signed documents that Mr. Murphy merely handed over as a bundle, is an important detail.

The lack of recall, and the subtle inconsistency between responses on direct and cross-examination, raised doubts in my mind about whether the confidentiality and non-competition agreement was included in the bundle, or signed at all. [ 24 ] The second attachment to the March 5, 2015 email from Mr. Hiltz to Mr. Murphy, a draft of the proposed confidentiality and non-competition agreement, makes it clear that Safety First was intending to obtain such an agreement from Mr. Murphy. I find that Mr.

Murphy never became aware of the attachment. [ 25 ] The body of this March 5, 2015 email, states as follows: Re: acceptance and confidentiality letter Please find attached your acceptance and confidentiality letter. Upon your review please sign and bring to work with you Monday morning for 7 am. [ 26 ] There were two letters attached, despite the subject line, and the body of the email referring to the singular, “letter”. The letters were forms of agreement, the first relating to the usual terms of employment, and the second relating to confidentiality and non- competition. Mr.

Murphy says that he saw only the first attachment, and assumed that there was only the one letter attached to the March 5, 2015 email. The attachment that Mr. Murphy opened was the letter detailing the usual terms of employment (job title, lines of authority, salary, and benefits). He signed that letter and passed it over to Mr. Motty when he reported for his first day of work on March 9, 2015. Mr. Murphy denies ever seeing the second letter. [ 27 ] There was evidence from computer experts, addressing whether the second letter (the confidentiality and non-competition agreement) was received and opened at Mr.

Murphy’s inbox. None of the experts who testified could say with certainty whether both attachments on the March 5, 2015 email arrived at Mr. Murphy’s inbox. All experts agreed that anti-virus software does occasionally remove an attachment during transmission, and that the sender would have no way of knowing that this had occurred. [ 28 ] John Murphy, a technical specialist in IT security, testified that attachments to emails, or even single attachments on an email with multiple attachments, can be intercepted and not arrive at the intended recipient’s email account. Servers and desktop computers are

designed to screen malware and spam. The screening technologies are not perfect and items can be quarantined or deleted without the sender or recipient knowing. [ 29 ] Craig H. Bennett, who manages Safety First’s email server, testified that he reviewed Mr. Murphy’s company email account -- patrick@safetyfirst-sfc.com -- and was of the view that neither attachment had been quarantined or deleted. He could see that a document of the same size, suggesting two separate documents, was received by Mr. Murphy on the Safety First email account. That evidence is not helpful because Mr.

Murphy was not able to open attachments on the Safety First email account at that time. On the day the email was sent, Mr. Murphy was snowmobiling in a remote area of Newfoundland. He was using a hand held smart phone. He could reply to the email but he could not open the attachment. He forwarded the email to his two personal email accounts -- paddymurphy1272@gmail.com and paddy@circusorange.com. Mr. Bennett had no way of determining if both attachments were received at Mr. Murphy’s personal email accounts. [ 30 ] I find that Mr.

Murphy was unaware of the second letter, which Safety First refers to as the confidentiality and non-competition agreement. If it did arrive at one of Mr. Murphy’s personal email accounts, it was not opened or viewed by him. The failure to open the second letter, if it was received as an attachment, may have been inadvertent, but it was not unreasonable. The matter referenced in the email from Safety First suggested that there was only a single letter attached, and there was no mention in the body of the email about non-competition. There was nothing that would signal to Mr.

Murphy the need to search for a second attachment. [ 31 ] The suggestion, by both Mr. Motty and Mr. Hiltz, that Mr. Murphy stole the confidentiality and non-competition agreement is entirely speculative and is rejected. The existence of a confidentiality and non-competition agreement was meaningless to Mr. Murphy when he left Safety First’s employ. I find that Mr.

Murphy had no plans to join Hi-Vis when he resigned from Safety First on May 9, 2016 and no knowledge that there was a new competitor about to enter the marketplace. [ 32 ] I accept the evidence of Reginald Chaytor, owner of Hi-Vis, that he kept secret his plans to set up a separate corporate entity to compete in the traffic control business, and that he made no approach to Mr. Murphy until May 24, 2016. I acknowledge that there was regular telephone communications between Mr. Murphy and Mr.

Chaytor during March to May 2016 time frame, but I find that contact was in relation to ongoing dealings with CFE Holdings Inc. (“CFE”). CFE was a construction company owned by Mr. Chaytor, and it had frequent dealings with Safety First. The planned launch of Hi-Vis was not discussed with Mr. Murphy during the pre-May 9, 2016 telephone contact. Mr. Chaytor learned of Mr. Murphy’s resignation from Safety First during a telephone call with Mr. Motty after May 9, 2016. He met with Mr. Murphy on May 24, 2016 and presented a job offer; Mr.

Murphy accepted the offer on May 26, 2016; a signing bonus was paid on May 27, 2016; work commenced on June 1, 2016. [ 33 ] As of May 9, 2016, Mr. Murphy’s sole plan was to start a business in small engine repair. Steps that Mr.

Murphy took, prior to resigning from Safety First’s employ, corroborate his intention to start-up this new business venture, include: • Disclosed this intent to close acquaintances during winter 2016; • Completed course work to become certified as a small engine repairman; • Designed logo for small engine repair business; • Arranged printing of business cards and brochures for the new business venture; • Made email contact with potential customers; and • Made email contact with potential automotive parts suppliers. [ 34 ] The suggestion by Messrs.

Hiltz and Motty about theft of the agreement does not make sense when one considers Safety First’s usual practice of creating electronic duplicates of all documents in a drop box for access by head office in Nova Scotia (cloud storage). No electronic duplicate was made of this agreement, according to Safety First, because it had decided to increase administration authority to the Newfoundland and Labrador office. Mr. Murphy would not have known about this decision. [ 35 ] The absence of any copy of the signed agreement, my doubts about the reliability of the testimony (memories) of Mr. Hiltz and Mr.

Motty, the absence of reliable evidence of any oral agreement, and my finding that Mr. Murphy had no motive to steal or destroy a confidentiality and non-competition agreement, support my conclusion on this first issue. Safety First’s intent to obtain an agreement from Mr. Murphy on confidentiality and non-competition fell through the cracks. It was overlooked by Mr. Hiltz and Mr. Motty. I accept Mr.

Murphy’s evidence that the requirement to sign a confidentiality and non-competition agreement was not discussed; that he did not receive a draft agreement; and that he did not sign such an agreement. [ 36 ] There was no agreement on confidentiality and non-competition, and accordingly there was no breach of agreement and no entitlement to damages for breach. Is there a common law obligation of confidentiality and non-competition owed by Mr. Murphy to Safety First? [ 37 ] Even without a written or oral agreement, there are confidentiality and non-competition obligations imposed by common law.

If an employee occupied a fiduciary position, then there is a continuing obligation post-employment to keep confidences, and not to actively solicit the customers of the former employer for a reasonable period. If an employee occupied a non-fiduciary position, then there are lesser obligations, and these are balanced (or perhaps conflicting) with the common law right of former employees to compete with their former employers. However, the non-fiduciary employee still has an obligation not to copy and carry away confidential documentation for the use and benefit of a new employer.

As stated by Robertson J.A. in Imperial Sheet Metal Ltd. v. Landry 2007 NBCA 51 , at paragraph 33 : …[A] former [non-fiduciary] employee is entitled to exploit freely the general skills and knowledge acquired as a result of the employment relationship, so long as that knowledge is a product of his or her memory and unaided by the [prior] employer's documentation. [ 38 ] There is no bright line distinguishing fiduciary and non-fiduciary employees.

Senior management, or senior officers with access to confidential corporate information and with independent decision-making authority, are more likely to be fiduciary employees. The courts are hesitant to classify employees as fiduciaries unless the evidence is clear, because that classification carries more onerous restrictions post-employment. The law favours freedom for individuals to pursue economic advantage through mobility in employment. As Hall, J.A. of the British Columbia Court of Appeal explained in Barton Insurance Brokers Ltd. v.

Irwin , 1999 BCCA 73 , at paragraph 39 : [T]he general interest of the public in free competition and the consideration that in general citizens should be free to pursue new opportunities, in my opinion, requires courts to exercise caution in imposing restrictive duties on former employees in less than clear circumstances.

Generally speaking, as I noted from the earlier authorities referred to, the law favours the granting of freedom to individuals to pursue economic advantage through mobility in employment. [ 39 ] The specific duties of the operations manager included hiring employees, setting work schedules, dispatching employees to job sites, administering payroll, tracking equipment use for billing purposes, and ensuring clients’ need are satisfied. The remuneration ($60,000 per annum) and responsibilities are more in line with an administrative position, as distinct from a senior management position.

Safety First functioned well for many years without an operations manager, and in that sense, Mr. Murphy was not a key employee. In addition, Mr. Murphy had no significant decision making authority, did not handle funds, and was restricted in his access to corporate information. On this last point, t here was conflicting evidence about the level of access that Mr. Murphy had to Safety First’s corporate information. That information, including trade secrets, was stored in a drop box (electronic file hosting service) using password protected cloud storage.

There were at least three electronic folders stored in the drop box that contained this corporate information: “NFLD”, “Safety” and “Controlled Docs”. [ 40 ] I accept the evidence of Mr. Murphy that he was not advised that he had unrestricted access to all folders, or to all sub-files within NFLD folder. He only accessed sub-files relating to his job functions. There is no way to prove that Mr. Murphy accessed other files in the drop box, and the witnesses presented by Safety First offered inconsistent evidence about what access was authorized to Mr. Murphy. Mr. MacDonald and Mr. Hiltz testified that Mr.

Murphy had unlimited access to the “NFLD” folder. Mr. Motty testified that Mr. Murphy had unlimited access to all three folders: “Controlled Docs”, “NFLD”, and “Safety First”. The inconsistent responses raised doubts in my mind, and caused me to conclude that Mr. Murphy did not have unrestricted access to corporate information. I accept the evidence of Mr. Murphy that he used his password solely for the purposes of accessing information relating to his job duties.

If he had unrestricted access to corporate information in sub-files, he was unaware of it. [ 41 ] Considering the limited decision-making authority, limited access to corporate information, and no handling of funds, I find that Mr. Murphy is a non-fiduciary employee. As a non-fiduciary employee, Mr. Murphy had fewer restrictions upon post-employment competition compared to fiduciary employees. However, as stated above, he still had a common law obligation not to copy and carry away confidential documentation for the benefit of a subsequent employer. [1] Did Mr.

Murphy breach any obligation of confidentiality and non-competition? [ 42 ] I find that Mr. Murphy did not breach any obligation of confidentiality and non-competition. Safety First has failed to prove that Mr. Murphy appropriated any trade secrets or customer lists of Safety First, and failed to prove that Mr. Murphy was engaged in the enticement of Safety First customers. I accept Mr. Chaytor’s evidence that he did not receive any documents from Mr. Murphy, and was not aware of any documentation in Mr.

Murphy’s possession, that originated with Safety First. [ 43 ] The trade secrets, as defined by Safety First in the pleadings, include, inter alia : practice manuals, customer lists, industry contact lists, employee pay scales, and employee contact lists. There was only one practice manual entered into evidence, namely the 2015 edition of Safety First’s a safety manual. There was reference to a Traffic Control Manual published by the Newfoundland and Labrador Department of Transportation and Works (DOT). Safety First does not have a proprietary interest in that second manual. There was testimony from Mr.

Motty that the DOT manual is available to the public. [ 44 ] The statement of claim alleges that Mr. Murphy copied the trade secrets and supplied copies to Hi-Vis. Mr. Murphy responded that he has “no knowledge or interest in the so called trade secrets [and] never took possession of, detained or converted any trade secrets”. The evidence presented by Safety First, that Mr. Murphy had copied trade secrets, was almost entirely circumstantial. I find that the circumstantial evidence falls well short of establishing proof on the balance of probabilities that Mr.

Murphy wrongfully copied the trade secrets and supplied copies to Hi-Vis. [ 45 ] I accept the evidence of Mr. Chaytor that he knew the potential customers for traffic control services in the St. John’s metropolitan area. The municipalities and utility companies are easy to identify, and Mr. Chaytor knew the main construction companies. These are the prospective customers in question. He had been dealing with these potential customers for many years (through CFE), and Mr. Murphy did not give him Safety First’s customer list. Mr. Chaytor had a long history in construction and traffic control through CFE.

The fact that some of Safety First’s traditional customers switched over and became customers of Hi-Vis, is not enough to establish wrongful conversion by Mr. Murphy of Safety First’s customer lists. It is a competitive marketplace and consumers will occasionally switch loyalties.

[ 46 ] In addition, Mr. Murphy was free to rely upon his memory of Safety First’s customers, and contact those customers in the interest of generating new business for Hi-Vis. This type of information, from memory and unaided by the employer’s documentation, does not fall within the scope of confidential trade secrets (see Imperial Sheet Metal at paragraphs 42 and 53). This is not a finding that Mr. Murphy gave a listing of Safety First customers to Hi-Vis. On the contrary, I find that Mr. Murphy did not share that information from memory or otherwise. [ 47 ] Mr.

Chaytor testified that he did not receive anything from Mr. Murphy about the Safety First pay scales, and that he would not need the information in any case. I accept that evidence. He was already aware of the pay scales because these were included in the invoices that CFE received from Safety First. This was information known to Mr. Chaytor and there is no reliable evidence that Mr. Murphy copied and passed over such information to Hi-Vis. My finding of fact on this point is also supported by the reality that Hi-Vis did nothing that might indicate use of Safety First pay scale information.

Hi-Vis paid its employees at the same rate as CFE paid its employees. Mr. Chaytor owned both companies and maintained an even hand in the pay scales. The CFE pay scales had been in place for many years. Mr. Chaytor testified that he had developed a pricing structure with CFE and merely duplicated that for Hi-Vis. [ 48 ] Mr. Murphy denies that he copied an employee contact list from Safety First, but admits that he had contact information for some of these employees. He contacted at least seven of Safety First’s employees to invite them to the June 9, 2016 recruitment meeting for Hi-Vis.

There is no obligation on Mr. Murphy to purge saved names and numbers on his cellular phone, and no obstacle to using those names and numbers to recruit new employees for Hi-Vis. I agree and adopt the comment of Robertson J.A. in Imperial Sheet Metal at paragraph 35 that “ there is nothing inherently wrong in a former employee approaching the employees of the former employer in the hope of enticing them to accept employment with a competitor.” [ 49 ] The only direct evidence that Mr. Murphy had copied trade secrets was provided by Corrine Little, a contractor who was involved with both Safety First and Hi-Vis.

For the reasons that follow, I find that Ms. Little was not a reliable witness and I reject her evidence. [ 50 ] Ms. Little testified that on June 7, 2016 she observed Mr. Murphy insert a thumb drive into his computer at the Hi-Vis office and bring up a menu list of Safety First’s documents, including: customer lists, industry contacts, employee names, billing information, and a safety manual. Ms. Little testified that she was at the Hi-Vis office on that date to discuss a work opportunity, namely, the drafting of a safety manual for Hi-Vis that would be COR compliant [2] .

During the meeting, she agreed to do the drafting work for a flat fee of $300.00. About three weeks later, Ms. Little delivered a COR compliant safety manual to Hi-Vis. [ 51 ] Mr. Murphy and Mr. Chaytor were both with Ms. Little during this June 7, 2016 meeting, and testified that the only thumb drive produced was the one that Ms. Little brought with her. Mr. Murphy and Mr. Chaytor recalled that, after brief discussions about the proposed work, Ms. Little sat down at Mr. Murphy’s work station and downloaded a sample safety manual, and then sent an email to herself. Mr. Murphy and Mr. Chaytor testified that Ms.

Little stated that she was sending the email to herself merely to start an email communication chain for the contract work she was about to undertake. A copy of this June 7, 2016 email was entered as an exhibit. CL#1 is an email sent to clittle@nl.rogers.com on June 7, 2016 with a 1.6 MB attachment described as “Safety Manual.docx”. The subject line of the email is “test”. I find that Ms. Little brought the document on her thumb drive and then sent the email to herself using Mr. Murphy’s computer. My reasons for accepting the evidence of Messrs. Murphy and Chaytor, and rejecting the evidence of Ms.

Little include: • Ms. Little’s claim that she viewed the drop down menus is inconsistent with her claim that she was not sitting in front of the computer monitor; • It is not logical that Mr. Murphy would hire someone to draft a document while at the same time emailing a duplicate of the document to be drafted to that same person; • The safety manual used by Hi-Vis, as drafted by Ms. Little, is adopted from a template available on-line through the Newfoundland and Labrador Construction Safety Association and is not a reproduction of the manual used by Safety First; • Ms.

Little had access to the original safety manual for Safety First (she admits retaining a duplicate of it with the company name removed); • The subject reference on the June 7, 2016 email, “test”, is more consistent with the testimony of Messrs. Murphy and Chaytor -- a non-significant email merely to start an email chain; • Ms. Little admitted at her discovery that, while doing the contract work for Hi-Vis in June 2016, she was surreptitiously trying to build a case and help Safety First prove that Mr. Murphy had stolen documents; • Ms. Little was reporting back to Mr.

Motty, at Safety First, all intelligence that she could gather during the course of her June 2016 contract work for Hi-Vis;

• Ms. Little admitted at her discovery that she lied in a sworn affidavit that was filed with the Court (in para. 6 of the September 12, 2016 affidavit Ms. Little falsely stated that she declined the request of Hi-Vis to draft a safety manual); • Ms. Little admitted in Court that she had lied in the past to secure a personal advantage; • Ms. Little was devious, dishonest, and manipulative in efforts to secure employment, first with Safety First and, later, with Hi-Vis; and • The testimony of Messrs. Murphy and Chaytor was internally consistent, and consistent with each other. [ 52 ] Ms.

Little is loose with the truth, and it would be only a guess to identify the parts of her testimony that were truthful. I do not accept her evidence that Mr. Murphy had a duplicate electronic copy of a safety manual that originated with Safety First. I accept the evidence of Messrs. Murphy and Chaytor that it was Ms. Little who sent the June 7, 2016 email to clittle@nl.rogers.com . [ 53 ] I repeat that Safety First has failed to prove that Mr. Murphy copied and converted any of its trade secrets. If Mr.

Murphy wrongfully converted trade secrets of Safety First, is Hi-Vis vicariously liable for the resulting damages? [ 54 ] In light of my finding that Mr. Murphy did not wrongfully convert trade secrets of Safety First, it is unnecessary for me to address the issue of vicarious liability of Hi-Vis. CONCLUSION [ 55 ] Safety First has failed to prove that Mr. Murphy had a contractual obligation of confidentiality and non-competition, failed to prove that Mr. Murphy breached his common law obligations of confidentiality and non-competition, and failed to prove that Mr. Murphy wrongfully converted any trade secrets.

Accordingly, this civil claim of Safety First is dismissed. COSTS [ 56 ] I allow Hi-Vis 100% costs for lead counsel (Column 3) and 50% costs for second counsel (Column 3). Judy M. Manning was lead counsel at trial and conducted the vast majority of examinations and cross-examinations. Gerald F. O'Brien Q.C. was present and was, in my opinion, necessarily so, but he had a lesser role at trial. It is for that reason that I exercise my discretion in awarding 50% of taxed costs for the second counsel. [3] _____________________________ William H. Goodridge Justice