Catch Engineering Partnership v Mai, 2023 ABKB 279

Court of King’s Bench of Alberta Citation: Catch Engineering Partnership v Mai, 2023 ABKB 279 Date: 20230508 Docket: 2001-03341 Registry: Calgary Between: Catch Engineering Partnership Plaintiff - and - Binh Mai Defendant _______________________________________________________ Reasons for Judgment of the Honourable Justice R.W. Armstrong _______________________________________________________ 1. Introduction [ 1 ] The Defendant, Binh Mai, was employed by the Defendant, Catch Engineering Partnership (“Catch”) pursuant to a written employment agreement dated February 21, 2019. [ 2 ] During his employment, Mr.

Mai was assigned to provide engineering services to Catch’s client, Canadian Natural Resources Limited (“CNRL”). Mr. Mai provided services to CNRL on behalf of Catch from February 2019 through to January 3, 2020. [ 3 ] Immediately following the termination of his employment with Catch, Mr. Mai went to work for CNRL, performing essentially the same functions that he was providing to CNRL on behalf of Catch. Upon Mr. Mai going to work for CNRL, CNRL terminated its engagement agreement with Catch. [ 4 ] Catch alleges that Mr.

Mai breached the terms of his employment agreement by utilizing confidential information belonging to Catch for his own gain and that Mr. Mai solicited the business of CNRL in violation of the non-solicitation covenant in the

Confidentiality Agreement that he signed. Catch further alleges that Mr. Mai breached his duties of good faith and fiduciary duties owed to Catch. As a result of the breaches committed by Mr. Mai, Catch alleges that it has suffered damages arising from the loss of the engagement with CNRL. [ 5 ] Mr. Mai denies any breach of his employment agreement or Confidentiality Agreement with Catch and denies that he breached his duty of good faith. He denies that he owed Catch any fiduciary duties. According to Mr.

Mai, any restrictive covenants contained in the Confidentiality Agreement are unenforceable and, in any event, he did not breach any of those covenants as CNRL approached him to continue working for them. Finally, Mr. Mai denies that Catch suffered any damages. 2. Issues [ 6 ] The issues for determination in this action are: A. Is the non-solicitation covenant in the Confidentiality Agreement between Mr. Mai and Catch enforceable? B. If the non-solicitation covenant is enforceable, did Mr. Mai breach that covenant? C. Did Mr. Mai breach the confidentiality clause contained in his employment agreement? D. Did Mr.

Mai breach a duty of good faith owed to Catch? E. Did Mr. Mai owe Catch fiduciary duties and if so, did he breach the fiduciary duties he owed to Catch? F. If Mr. Mai is found to have committed any breach, did Catch suffer any losses due to the breach? 3. Mr. Mai’s Employment with Catch [ 7 ] Catch is an electrical engineering, automation, telecommunications, instrumentation, and design company. Catch started business in 2003 as a corporation. In 2013 it changed its structure from a corporation to a partnership.

Chad Smith, the corporate officer on behalf of Catch for the purposes of this litigation, holds 50% of the partnership. He is Catch’s executive vice-president, overseeing company operations and business development. [ 8 ] Catch’s workforce consists of approximately 60 people: 70% permanent employees and 30% contractors. A significant part of Catch’s business involves seconding experienced engineers to third party companies who require temporary or ongoing contract workers. [ 9 ] CNRL became a client of Catch’s in 2012.

CNRL was subject to a hiring freeze and could not hire the personnel they required for certain projects. To get around the hiring freeze, CNRL entered into an agreement with Catch, whereby Catch would provide the workers CNRL required on a contract basis. By the end of 2019, CNRL was a significant client for Catch, accounting for between 10% and 20% of Catch’s annual revenue. [ 10 ] Mr. Mai is an electrical engineer, having received his Bachelor of Science degree in electrical engineering in 2014. He also obtained a Bachelor of Science degree in applied mathematics in 2018. Mr.

Mai received his professional engineer designation in 2020. [ 11 ] Prior to working for Catch, Mr. Mai worked for AMEC, first as a student, then as an engineer in training. While at AMEC, Mr. Mai developed expertise in a particular software program called SPEL, which stands for Smart Plant Electrical Administrator. [ 12 ] In February 2019, Mr. Dipendra Sitaula, a former colleague of Mr. Mai’s who was working at Catch, contacted Mr. Mai about a potential job opportunity. Catch required an engineer with SPEL experience to fulfill a request from its client, CNRL. [ 13 ] On February 11, 2019, Mr. Sitaula e-mailed Mr.

Mai a job description for a Senior SPEL Administrator position. Mr. Mai reviewed the job description and confirmed to Mr. Sitaula that he was qualified for the position and interested in the opportunity. Mr. Mai attended for an interview at Catch on February 19, 2019. [ 14 ] Catch submitted Mr. Mai as a candidate to CNRL to fulfill their need for a SPEL administrator. Mr. Mai was approved to fill the contractual position. CNRL agreed to pay Catch an hourly rate of $120.00 for Mr. Mai’s services. The term of the engagement was February 25, 2019 to December 20, 2019. [ 15 ] Mr.

Mai negotiated the terms of his employment with Catch. He agreed upon an annual salary of $90,000.00. An offer letter dated February 21, 2019 and the Confidentiality Agreement containing the non-solicitation clause were provided to Mr. Mai by email just after 9:00 a.m. on February 21, 2019. The offer letter reflected the agreed upon annual salary of $90,000.00. [ 16 ] Mr. Mai attended at Catch’s offices to sign his employment agreement on the afternoon of February 21, 2019. He was aware that his services had been committed to CNRL commencing February 25, 2019. When Mr.

Mai attended at Catch’s office, knowing that Catch was committed to providing his services to CNRL starting the very next week, Mr. Mai demanded that his salary be renegotiated. Ultimately, Catch agreed to increase Mr. Mai’s annual salary to $100,000.00. [ 17 ] Mr. Mai entered into two agreements with Catch relating to his employment. The first agreement consisted of the terms and conditions relating to Mr. Mai’s employment with Catch as set out in the offer letter dated February 21, 2019. The offer letter contains the description of the position Mr.

Mai was hired to fill, his start date and salary as well as other information about his employment with Catch including benefits, vacation, and expenses. The offer letter also has a confidentiality clause which states:

The business of Catch Engineering is of a confidential nature. As a condition of your employment you will not, except in the performance of your duties with Catch Engineering, divulge or use any confidential information of the Company, clients of the Company or any related corporation.

Confidential information that is not by law in the public domain and includes but not limited to, technical data, trade secrets, know-how, processes and confidential information related to the business, finances, accounts, dealings, transactions, methods of operation, assets or affairs of the Company, clients of the Company or any related corporation that is obtained as a result of your employment with Catch Engineering.

As an employee you will be required to sign a Confidentiality Agreement similar to that attached to this Offer of Employment. [ 18 ] The second agreement is the Confidentiality Agreement referred to in the offer letter. The Confidentiality Agreement contains a non-solicitation covenant. It says: During the term of this Agreement and for a period of twelve (12) months from the effective date of termination of employment, either by the Employee or CEP [Catch], the Employee shall not: (

a) intentionally act in any manner that is detrimental to the relations between CEP and CEP’s clients, suppliers, contractors, employees or others; and (

b) Directly or indirectly contact or solicit any customers of CEP or any of its subsidiaries or affiliates with whom he or she has dealt during the twelve (12) months prior to his or her termination, for the purpose of inviting, encouraging or requesting any CEP customer to transfer from CEP to the Employee or the Employee’s new employer, or to otherwise discontinue its patronage and business relationship with CEP, and for a period of twenty-four (24) months from the effective date of termination of employment, either by Employee or CEP, the Employee shall not: (

c) solicit, induce, recruit or encourage any of CEP’s employee’s or contractors that existed before or after entering into this Agreement. [ 19 ] Mr. Mai signed the offer letter and the Confidentiality Agreement on February 21, 2019. Mr. Smith signed both documents on behalf of Catch. [ 20 ] Mr. Mai commenced working as a contractor for CNRL pursuant to the agreement between Catch and CNRL. Mr. Mai’s supervisor at CNRL was Luis Perez. By all accounts Mr. Perez was happy with Mr. Mai’s work and he communicated that to Catch. [ 21 ] Mr. Mai had his first performance review at Catch at the end of November 2019.

He received positive feedback, and he was advised that Catch’s client, CNRL, was happy with his work. Mr. Mai immediately asked for a raise in his salary. He was advised that he had not even been with Catch for one year and that his salary would be reviewed after a year. [ 22 ] In early December 2019, Mr. Mai approached the Vice President of Engineering at Catch, Peter Strickland, with a proposal that he change his status from that of salaried employee to a contractor. To work as a contractor with Catch, Mr. Mai required an incorporated company and WCB insurance.

He did not have either of those things, but he was of the view he could earn more money if he continued with Catch as an independent contractor. Mr. Strickland advised Mr. Mai of the things he would need to do to become a contractor and commenced negotiating a contractor rate with him. [ 23 ] Catch ultimately offered Mr. Mai $60/hr to work as a contractor. Mr. Mai sought $65/hr. Mr. Strickland advised Mr. Mai that Catch was not prepared to pay him $65/hr so on Monday December 16, 2019, Mr.

Mai verbally agreed to accept $60/hr as a contractor for Catch. [ 24 ] Despite having accepted Catch’s offer, the next day, Tuesday December 17, 2019 at 3:53 p.m., Mr. Mai submitted his resignation via email to Mr. Strickland. His email said: Hi Peter Please find attached my resignation letter. Due to the differences we had during negotiations, I don’t feel like I can progress at Catch Engineering. Thanks for looking into the matter for me prior.

My last day will be Jan 3, 2020 if you have no problem with it. [ 25 ] On Tuesday December 17, 2019 at 3:56 p.m., just three minutes after submitting his resignation and while still employed by Catch (his last day not being until January 3, 2020), Mr. Mai emailed Mr. Perez, his supervisor at CNRL, asking if he could come and work for CNRL as a contractor through another agency. The email said: Hi Luis Due to negotiation differences between me and my salary employer, I have quit Catch Engineering with my last day being Jan 3 if they approve it.

If at all possible, may I please be able to work as a contractor through an agency. [ 26 ] By December 19, 2019, Mr. Mai had secured a position with Noramtec, another technical services company. Mr. Mai remained employed at Catch until January 3, 2020. His first day with Noramtec was January 6, 2020. Mr. Mai was seconded to CNRL through Noramtec to do the exact same work for CNRL that he had done through Catch. CNRL ended its engagement for a SPEL administrator with Catch. [ 27 ] Mr. Mai continues to work at CNRL though Noramtec, doing the same work that he did when he was seconded to CNRL through Catch.

4. Analysis A. Is the non-solicitation covenant in the Employment Agreement between Mr. Maiand Catch enforceable? [28] A non-solicitation clause is a form of restrictive covenant. Restrictive covenants are prima facie void as being contrary topublic policy. This general rule is, however, subject to exceptions. A non-solicitation clause will be justified where it is reasonablehaving regards to the circumstances of the case.

In Shafron v KRG Insurance Brokers (Western) Inc., 2009 SCC 6 at para 17, theSupreme Court of Canada, having noted the general rule that restraints of trade are contrary to public policy, endorsed the followingarticulation of the exception: ... recognition of the freedom of the parties to contract requires that there be exceptions to the general rule against restraints of trade. Theexception is where the restraint of trade is found to be reasonable.

At p. 565, Lord Macnaghten continued: But there are exceptions: restraints of trade and interference with individual liberty of action may be justified by the specialcircumstances of a particular case. It is a sufficient justification, and indeed it is the only justification, if the restriction is reasonable –reasonable, that is, in reference to the interests of the parties concerned and reasonable in reference to the interests of the public, soframed and so guarded as to afford adequate protection to the party in whose favour it is imposed, while at the same time it is not wayinjurious to the public.

That, I think, is the fair result of all the authorities. [Emphasis added.] Therefore, despite the presumption that restrictive covenants are prima facie unenforceable, a reasonable restrictive covenant will beupheld. [29] Whether a non-solicitation clause forms part of a commercial contract, such as for the sale and purchase of a business, orwhether it forms part of an employment contract, is a relevant circumstance.

Additional care must be taken when examining a restrictivecovenant in an employment contract due to the potential imbalance of bargaining power and the possibility that a restrictive covenant inan employment contract could deny an employee the right to utilize their knowledge, skills, and expertise to find alternate employment:Elsley v JG Collins Ins Agencies, (SCC), [1978] 2 SCR 916 at p 925. [30] For a restrictive covenant in an employment contract to be enforceable, it must be narrowly focused on protecting a legitimatebusiness interest, it must be clear and unambiguous and, considering all the circumstances, it must be fair and reasonable: see GlobexForeign Exchange Corporation v Kelcher, 2011 ABCA 240 at para 21; Rhebergen v Creston Veterinary Clinic Ltd., 2014 BCCA 97 atpara 10. [31] In the circumstances of this case, I have no difficulty finding that the non-solicitation covenant in the ConfidentialityAgreement between Mr.

Mai and Catch is reasonable and is therefore enforceable. The non-solicitation clause is reasonable andenforceable for the following reasons. [32] First, Catch has a legitimate business interest that requires protecting. Its business model, upon which its success was built, isproviding skilled technical workers to companies like CNRL who require contractors. Catch expends time and resources to develop andmaintain its relationships with its clients and Catch must have some way to protect those relationships from being appropriated by itsemployees.

When Catch seconds an employee to a client, that employee typically becomes embedded in the business of Catch’s client.If those workers can use the introductions provided by Catch to then solicit Catch’s clients to leave Catch for another service provider orto hire them directly, Catch would cease to be a viable business. [33] Second, the non-solicit clause is narrowly focused to protect only Catch’s legitimate business interests and does not otherwiseinterfere with an employee’s ability to utilize their knowledge, skills, and experience in the job market.

Catch employs a less restrictivenon-solicit clause rather than a full non-competition clause. Not every employee at Catch is subject to a non-solicit clause; rather, a non-solicit clause is only included in the employment contracts with those employees who have integrated relationships with Catch clients.The non-solicit clause is limited to only those customers of Catch with whom the embedded employee worked in the last 12 months oftheir employment with Catch and it is limited in time to 12 months. The 12-month duration is reasonable given that most of Catch’sclients renew their contracts on a one-year basis.

It is reasonable for Catch to have up to one of these full business cycles to protect andsolidify the relationship with its client when an employee, who has been embedded in the client’s business, departs. [34] Mr. Mai argues that the non-solicit covenant is not enforceable because it does not include a geographic restriction. This is anoverly restrictive

interpretation of what is required for a non-solicit clause to be reasonable. Where a non-solicit clause is restricted in itsapplication to an identified client or clients, that may be reasonable notwithstanding the absence of a geographical restriction. Given theprevalence of remote work via technology in the modern world, geographical restrictions are, in many cases, obsolete. They may beeasily defeated by remote working arrangements: see Payette v Guay Inc., 2013 SCC 45 at para 73. In this case, the non-solicit covenantonly prohibited Mr.

Mai from soliciting the single client of Catch’s to whom he had been seconded. That is reasonable. [35] Third, the prohibited activity in the non-solicitation clause is clear and unambiguous. The non-solicit clause prohibits a Catchemployee from contacting a client of Catch for the purpose of inviting, encouraging, or requesting any customer to transfer from Catch tothe employee or the employee’s new employer, or to otherwise discontinue its patronage and business relationship with Catch.

Theclause is clearly designed to prohibit Catch employees from asking the clients with whom they worked to leave Catch, and either hirethem directly or through a company other than Catch. This is not a case where an employee such as Mr. Mai would be unaware of theclient with whom they were dealing. There is nothing in the non-solicit covenant that is ambiguous or that would leave an employeeunclear as to what his or her obligations are. [36] Fourth, the non-solicitation covenant in the Confidentiality Agreement between Catch and Mr. Mai does not, in any way,restrict Mr.

Mai’s ability to go out into the employment market and find work. It is clear from the evidence in this matter that SPEL

administrators have specialized knowledge that is highly sought after in the energy sector and elsewhere. A 12-month prohibition on Mr. Mai from soliciting the customer of Catch with whom he was embedded, would not unreasonably deny him the right to use his knowledge, training, and expertise elsewhere. As the non-solicit clause does not unreasonably restrain employees from engaging in their vocation, it does not offend the public interest. [ 37 ] Fifth, there was no power imbalance during the negotiation of Mr. Mai’s terms of employment with Catch. When Mr.

Mai attended at Catch’s office to execute his employment agreement, he was aware that Catch was committed to CNRL and that they needed his expertise to fulfill CNRL’s request. Mr. Mai used this knowledge to extract an additional $10,000.00 in salary from Catch after he had already agreed to the terms of his employment. Mr. Mai was willing to use Catch’s vulnerable position vis a vis its client, CNRL, to his own advantage. [ 38 ] Having found that the non-solicitation covenant in Mr. Mai’s employment contract with Catch is enforceable, I will turn to the question of whether Mr.

Mai breached the non-solicit covenant. B. Did Mr. Mai breach the non-solicitation and confidentiality covenant? [ 39 ] On December 17, 2019, Mr. Mai was still employed by Catch. He resigned at 3:53 p.m.; however, pursuant to the terms of his resignation, he remained employed by Catch until January 3, 2020. On December 17, 2019 at 3:56 p.m., just three minutes after submitting his resignation and while still employed by Catch, Mr. Mai contacted his supervisor at CNRL, Mr. Perez, and asked him if he could come and work for CNRL through another agency. [ 40 ] Mr. Mai’s December 17, 2019 email to Mr.

Perez was a clear request to CNRL to transfer their business involving Mr. Mai from Catch to another, yet unnamed, agency. CNRL was Catch’s client at the time, and it was the client with whom Mr. Mai had been embedded pursuant to the terms of his secondment from Catch to CNRL. As Mr. Mai’s email to Mr. Perez was an invitation or request to transfer CNRL’s business from Catch to another agency, it constitutes a clear breach of the non-solicit covenant. [ 41 ] By December 19, 2019, Mr. Mai had reached out to other agencies through which he could contract his services to CNRL.

Noramtec made him the highest offer and so he signed a contract with them. Upon deciding to work through Noramtec, Mr. Mai sent another email to Mr. Perez. The email was sent on December 19, 2019 at 8:08 a.m. and it said: Hi Luis Based on the offers that I have received, I have decided that Noramtec would be the best represent me at CNRL. Please proceed with Noramtec as my decision. [ 42 ] Once again this is a clear and unequivocal invitation to Catch’s client, CNRL, to discontinue its engagement with Catch and contract Mr. Mai’s ongoing services through Noramtec. By soliciting CNRL in this fashion, Mr.

Mai is in breach of the non-solicitation covenant contained in his Confidentiality Agreement with Catch. C. Did Mr. Mai breach the confidentiality clause contained in the employment agreement? [ 43 ] Confidential information is broadly defined in the confidentiality clause that formed part of Mr. Mai’s employment agreement.

Confidential information includes information belonging to Catch and to Catch’s clients obtained as a result of employment with Catch related to, among other things, Catch’s business, dealings, methods of operation, affairs of the company and clients. [ 44 ] Given his pending employment with Catch in February 2019, Mr. Mai was given information about CNRL and the critical, time sensitive nature of the work CNRL required. Upon learning of this information, which was not publicly available, Mr.

Mai utilized the information for his own benefit to renegotiate the salary that had already been agreed to between him and Catch. Mr. Mai knew Catch was committed to CNRL and was therefore in a vulnerable position if Mr. Mai did not report to work as he agreed. Mr. Mai utilized that information for his own benefit. This was not, technically, a breach of the confidentiality clause as he had not yet signed the agreement, but it is demonstrative of Mr. Mai’s willingness to exploit the vulnerability of his employer and use confidential information for his own gain.

While that act did not constitute a breach of the confidentiality clause, his later actions did. [ 45 ] CNRL’s information regarding the project that Mr. Mai was engaged to work on fits within the definition of confidential information contained in the confidentiality clause. In particular, the critical nature of the work and the time sensitive nature of the work was CNRL’s confidential information. It is information about its affairs, technical data, operations, and processes and was therefore captured by the definition of confidential information in the confidentiality clause. Mr.

Mai utilized this information for his own benefit in December 2019 to further his plan to solicit CNRL’s business away from Catch. [ 46 ] In addition to the use of confidential information about the nature of his engagement with CNRL, Mr. Mai used additional confidential information provided by CNRL to Catch to benefit himself to the detriment of Catch. In December 2019, Mr. Mai was informed that CNRL had given Catch positive feedback about Mr. Mai’s performance at CNRL. The feedback received by Catch from CNRL constitutes confidential information belonging to Catch. The feedback was provided to Mr.

Mai so that he knew the work he was doing was good and so that he could keep it up in the service of Catch’s client. Mr. Mai did not use the feedback in furtherance of the discharge of his duties. Rather he used the information to aid in his solicitation of CNRL’s work. [ 47 ] The use of confidential information in this case is difficult to separate out from Mr. Mai’s breach of the non-solicitation covenant in that the confidential information was used to further the solicitation. Having said that, I am satisfied that the breaches did occur in that confidential information was used by Mr.

Mai for an improper purpose.

D. Did Mr. Mai breach a duty of good faith owed to Catch? [48] It is well established that there is a common law duty of good faith that applies to all contracts. It requires parties to performtheir contractual obligations honestly: Bhasin v Hrynew, 2014 SCC 71 at para 93. [49] The duty of good faith applies to employment contracts.

The nature of the duty of good faith owed by employees to theiremployers is described in Altam Holdings Ltd. v Lazette, 2009 ABQB 458 at para 125: It is an implied term in all employment relationships that the employee has a general obligation of good faith to his or her employer and aduty not to appropriate for his or her own benefit the employer’s trade secrets, customer lists and other confidential information receivedin the course of his or her employment to the detriment of the employer both before and after termination of the employmentrelationship: Employment Law in Canada 11.142 at page 11-162. [50] In Potter v New Brunswick Legal and Services Commission, 2015 SCC 10 at para 99, the Supreme Court of Canada said theduty of good faith in relation to contractual dealings requires the parties to be “honest, reasonable, candid and forthright,” Put anotherway, an employee must not engage in a course of action that harms the employer or puts the employer’s interests at risk: CRC-EvansCanada Ltd. v Pettifer (1997), (AB KB), 26 CCEL (2d) 294, 197 AR 24; aff’d 1998 ABCA 191. [51] Catch argues that Mr.

Mai breached his duty of good faith by deliberately pursuing work with CNRL through an entity otherthan Catch, and then lying about it to Catch executives. Mr. Mai argues that the duty of good faith does not extend to an employee’sefforts to secure new employment. According to Mr. Mai, his lies to Catch about working for CNRL do not amount to a breach of hisduty of good faith as they were related to the new job that he was seeking. [52] There is no doubt that Mr. Mai was dishonest with his employer, Catch. On December 18, 2019, after having submitted hisresignation but while still employed by Catch, Mr.

Mai met with Hartley Harris, the President of Catch Engineering. During thatmeeting, Mr. Harris explained that Mr. Mai’s resignation could damage Catch’s relationship with CNRL, and he asked Mr. Mai toreconsider his resignation. Mr. Harris advised that Catch was prepared to pay the $65/hr that Mr. Mai had been requesting to work as acontractor for Catch. Mr. Harris also reminded Mr. Mai about the non-solicitation covenant. Mr. Mai denied that he was contemplatingworking with CNRL. This denial was patently false as Mr.

Mai had already solicited CNRL to hire him through an agency other thanCatch. [53] It is relevant to note at this point that Mr. Mai lied under oath about his conversation with Mr. Harris when he was questionedfor discovery by Catch’s counsel. During the questioning, Catch’s counsel asked the following questions and Mr. Mai gave the followinganswers: Q. Now, during that December 18 meeting, did you tell him [Mr. Harris] you were contemplating working for the plaintiff’s client, beingCNRL? A. No. Q. But at that time, you were contemplating working for CNRL? A. No. Q. You were not contemplating working for CNRL? A.

No. Q. Were you contemplating at that point in time working for CNRL through another service company? A. No. Q. Were you contemplating engaging with CNRL in any way, shape or form? A. No. [54] Mr. Mai’s answers to these questions were clearly false. By December 18, 2019, when he met with Mr. Harris, Mr. Mai hadalready sent Mr. Perez an email asking him if he could come and work for CNRL through another agency. He had met with Mr. Perez todiscuss his ongoing work for CNRL through another agency. He was also actively engaged in soliciting offers from other agenciesthrough whom he could work for CNRL. Mr.

Mai was not only contemplating working for CNRL, but he had also taken active stepstowards that goal including the direct solicitation to CNRL to hire him through an agency other than Catch. Mr. Mai was able to givethese false answers during his questioning because he failed to disclose the email of December 17, 2019 to Mr. Perez wherein hesolicited CNRL’s work. It was not until later in the litigation that Mr. Mai eventually produced the relevant and material record. [55] Mr. Mai went far beyond simply looking for alternate employment while still employed.

He engaged in a calculated course ofaction designed to benefit himself at the expense of his employer, all while still employed and drawing a salary from Catch. [56] Mr. Perez’s evidence is that Mr. Mai was communicating with him as early as mid-December 2019 about leaving Catch.According to Mr. Perez, Mr. Mai complained that Catch was not treating him fairly and he complained about his ongoing salarynegotiations with Catch. Mr. Mai denied any such communications. I do not find Mr. Mai to be credible on this point and I accept Mr.Perez’s evidence. Mr.

Mai’s course of denying and minimizing his conduct throughout this litigation, including at trial, makes hisevidence on this point untrustworthy. [57] Furthermore, I do not accept Mr. Mai’s evidence that he did not communicate with anyone at CNRL about his intention to

leave Catch and potentially work for CNRL in another capacity because it is inconsistent with his own evidence given earlier at trial. Mr.Mai said that when he resigned, he did not have any plans for future employment and that he “decided to take a risk.” When Mr. Maitestified about being hired by Catch, his evidence was that he was not prepared to commit to Catch and resign from his existingemployment until he had a formal written offer of employment from Catch in his hands. Informal emails and a job description wereinsufficient for Mr. Mai to leave his existing employment.

He was clearly cautious about leaving one job before having another job linedup. His evidence that he was prepared to simply quit his employment with Catch without satisfying himself that he would be able tocontinue working with CNRL is inconsistent with his previously cautious approach to changing jobs. There is nothing that would explainsuch a change in his risk tolerance in the 10 months between the time that he accepted the job with Catch and when he resigned. [58] By complaining about Catch to Mr. Perez, Mr. Mai was setting the stage for his solicitation of CNRL’s business.

He wasportraying Catch in a negative light to CNRL to advance his own interests and secure CNRL’s business at a higher wage for himself. Mr. Mai’s actions, culminating in his direct solicitation of CNRL’s business, coupled with the blatantly false denial to Mr. Harris, canonly be described as a course of action that put Catch’s interests at risk for his own benefit. Mr. Mai therefore breached his duty of goodfaith to Catch. [59] Even if the non-solicitation covenant was held to be invalid, I further find that Mr.

Mai’s actions in soliciting Catch’s businesswhile he was still employed by Catch amount to a breach of his duty of good faith. This facet of the duty of good faith was well describedin the Altam decision at para 129: It is an implied term that not only will the employee or contractor not establish himself or herself in direct competition with the employer,but that they will not entice away customers of the employer during the currency of the employment relationship: McCormick Delisleand Thompson v. Ballantyne, [2001] O.J.

No. 1783 (C.A.) paras. 10 and 29; Employment Law in Canada at 11.155. [60] Employees like Mr. Mai who are seconded to the clients of their employers are in a unique position. They are integrated intothe business of the client and for the most part, they are treated like employees of the client. Regardless of this arrangement, the duty ofgood faith requires that the employee discharge their duties to their employer faithfully and honestly and that they not act in a mannercontrary to their employers’ interests.

Employers like Catch are particularly vulnerable when their employees breach the duty of goodfaith to undermine the business relationship between their employer and the client. In all the circumstances of this case, I find that Mr.Mai’s actions amounted to a flagrant breach of the duty of good faith owed to his employer. E. Did Mr. Mai owe Catch fiduciary duties and if so, did he breach those fiduciaryduties? [61] An employee may owe an employer a fiduciary duty; however, fiduciary duties typically only apply to key employees.

Akey employee is one who is an integral part of the management team with responsibility for guiding the business affairs of the employer.They must have decision making responsibilities and have access to confidential information, the disclosure of which would significantlyimpair the competitive advantage of the employer. [62] An employer's vulnerability at the hands of the employee is indicative of a fiduciary relationship; however, the employeemust also have undertaken to act in the best interests of the employer before that employee will be found to be a fiduciary: ADMMeasurements Ltd. v Bullet Electric Ltd., 2012 ABQB 150 at paras 67, 69; Firemaster Oilfield Services Ltd. v Safety Boss (Canada)

(1993) Ltd., 2000 ABQB 929 at para 29; Carlsen v Physique Health Club Ltd. (Physique Fitness Store), 1996 ABCA 358 at para 18. [63] The hallmarks of a fiduciary duty owed by an employee to an employer are absent in this case. Mr. Mai was not part of themanagement team. He did not have decision making responsibilities with respect to the overall business of Catch. While Mr.

Mai wasseconded to one of Catch’s most significant clients, CNRL, he was not the only Catch employee seconded to CNRL and he had noresponsibility for managing the relationship between Catch and CNRL. [64] While Catch was in a somewhat vulnerable position given the close relationship between Mr. Mai and their client, CNRL,that situation was not unique to Mr. Mai. That vulnerability is inherent in the business that Catch conducts seconding employees to otherbusinesses and without more it is not sufficient to raise Mr. Mai’s status to that of a fiduciary. [65] Most significantly, Mr.

Mai’s position was not one that required him to undertake to act in Catch’s best interest and there is noevidence before me that he ever made such an undertaking, either expressly or impliedly. [66] The indicia of a fiduciary relationship between Catch and Mr. Mai are absent in this case. He did not owe a fiduciary duty toCatch. As no such duty existed, Mr. Mai cannot be found to have committed a breach of fiduciary duty. F. Did Catch suffer any damages due to the breach of any obligations or duties byMr.

Mai? [67] Before Catch can be compensated for any losses it must prove, on a balance of probabilities, that its losses were caused by thebreaches of the non-solicit covenant, the confidentiality clause, and the breaches of the duty of good faith committed by Mr. Mai.

Onlythe damages that flow from these breaches are compensable. [68] The accepted approach to assessing damages in a breach of contract situation was well described in Indutech Canada Limitedv Gibbs Pipe Distributors Ltd., 2011 ABQB 38 at paras 479-480: The general rule for proof of a claim for damages in a situation of this kind was set out in Eastwalsh Homes Ltd. v. AnatalDevelopments Ltd. (1993), (ON CA), 12 O.R. (3d) 675 (C.A.) at 687, leave to appeal to S.C.C. refused, at 104 D.L.R. (4th) vii (note)(S.C.C.):

The general rule is that the burden is on the plaintiff to establish on the balance of probabilities that, as a reasonable and probableconsequence of the breach of contract, the plaintiff suffered the damages claimed. If the plaintiff is not able to establish a loss, or wherethe loss proven is trivial, the plaintiff may recover only nominal damages. A second fundamental principle is that where it is clear that the breach of contract caused loss to the plaintiff, but it is very difficult toquantify that loss, the difficulty in assessing damages is not a basis for refusal to make an award in the plaintiff’s favour.

One of thefrequent difficulties in assessing damages is that the plaintiff is unable to prove loss of a definite benefit but only the “chance” ofreceiving a benefit had the contract been performed. In those circumstances, rather than refusing to award damages, the courts haveattempted to estimate the value of the lost chance and awarded damages on a proportionate basis. [emphasis in original] Further guidance was provided by the Supreme Court in Webb & Knapp (Can.) Ltd. v.

Edmonton (City), (SCC),[1970] S.C.R. 588 where Hall J., delivering the judgment of the majority, stated at p. 601: The fact that assessment is difficult is no ground for awarding nominal damages... The broad general rule is that damages which areuncertain, contingent and speculative in their nature cannot be made a basis of recovery; but this rule against recovery of uncertaindamages is directed against uncertainty as to cause rather than as to the extent or measure. [emphasis added] [69] Based on the evidence, I am satisfied that but for Mr.

Mai directly soliciting CNRL’s business away from Catch and thenlying to Catch about his intentions, CNRL would have continued its contract for the SPEL administrator position with Catch. To use thewords of the Supreme Court of Canada in Webb & Knapp, there is no uncertainty here as to the cause of the damages. [70] Had Catch been aware of Mr. Mai’s intentions, that is, had Mr. Mai not lied to Mr. Harris on December 18, 2019, it couldhave taken steps to fill Mr. Mai’s role with another SPEL specialist.

Further, and more importantly, it could have taken steps to protectits relationship with CNRL and reassure them that they understood the importance of CNRL’s project and would immediately undertaketo fill the role formerly held by Mr. Mai. [71] Catch had a strong relationship with CNRL spanning several years. There would have been no reason for CNRL todiscontinue its engagement with Catch but for Mr. Mai’s solicitation. While Mr. Perez’s immediate concern was to keep Mr. Maiworking on his project, he was not the one responsible for the overall relationship between Catch and CNRL.

Catch was not afforded anyopportunity to discuss the situation with anyone at CNRL who had responsibilities relating to the Master Engineering and ProcurementServices Agreement that governed the larger relationship between Catch and CNRL. Mr. Mai’s breaches deprived Catch of itsopportunity to salvage its engagement with Catch. [72] While Mr. Smith candidly admitted that given Mr. Mai’s specialized role, it would not have been easy to replace him, Mr.Perez who is familiar with the specific role Mr. Mai was hired to fill said it might take two to three weeks to locate and hire anotherSPEL administrator.

On balance, I am satisfied that had Mr. Mai not solicited CNRL and lied to Catch about it, Catch would have beenable to locate and hire a replacement such that it could continued to service the contract with CNRL. [73] Quantifying Catch’s losses arising from Mr. Mai’s breaches is not a straightforward task. Having said that, difficulties inassessing damages are not grounds to relieve a wrongdoer from paying damages for a breach of contract.

The Supreme Court of Canadalooked at the historical basis for this principle and endorsed it in Penvidic v International Nickel (1975), (SCC), 53D.L.R. (3d) 748; [1975] 1 S.C.R. 267 at p 279: The difficulty in fixing an amount of damages was dealt with in the well known English case of Chaplin v Hicks [[1911] 2 KB 786],which had been adopted in the Appellate Division of the Supreme Court of Ontario in Wood v Grand Velley Railway Company [(1913), (ON CA), 30 O.L.R. 44], where at pp. 49-50, Meredith C.J.O. said: There are, no doubt, cases in which it is impossible to say that there is any loss assessable as damages resulting from the breach of acontract, but the Courts have gone a long way in holding that difficulty in ascertaining the amount of the loss is no reason for not givingsubstantial damages, and perhaps the furthest they have gone in that direction is in Chaplin v.

Hicks, [1911] 2 K.B. 786. In that case theplaintiff, owing, as was found by the jury, to a breach by the defendant of his contract, had lost the chance of being selected by him outof fifty young ladies as one of twelve to whom, if selected, he had promised to give engagements as actresses for a stated period and atstated wages, and the action was brought to recover damages for the breach of the contract, and the damages were assessed by the jury at£100. The defendant contented that the damages were too remote and that they were unassessable.

The first contention was rejected bythe Court as not arguable, and with regard to the second it was held that “where it is clear that there has been actual loss resulting fromthe breach of contract, which it is difficult to estimate in money, it is for the jury to do their best to estimate; it is not necessary that thereshould be an absolute measure of damages in each case”: per Fletcher Moulton, L.J. at p. 795. When Wood v.

Grand Valley Railway Company, supra, reached the Supreme Court of Canada, judgment was given by Davies J. andwas reported in (SCC), 51 S.C.R. 283, where the learned justice said at p. 289: It was clearly impossible under the facts of that case to estimate with anything approaching to mathematical accuracy the damagessustained by the plaintiffs, but it seems to me to be clearly laid down there by the learned judges that such an impossibility cannot“relieve the wrongdoer of the necessity of paying damages for his breach of contract” and that on the other hand the tribunal to estimatethem whether jury or judge must under such circumstances do “the best it can” and its conclusion will not be set aside even if the amountof the verdict is a matter of guess work. [emphasis in original] [74] The statement of law was cited with approval in this court in Flag Works Inc. v Sign Craft Digital

(1978) Inc., 2007 ABQB434 at para 167. [75] I do not take this statement of law to mean that a plaintiff is relieved of their obligation to prove that they suffered a loss, thatthe loss was caused by the breach committed by the defendant and that the loss is not so remote as to be unrecoverable. However, once

the plaintiff has proven these elements of loss, the defendant cannot argue that damages may only be awarded to the extent that they can be calculated with mathematical precision. In the present case, Catch has proven on a preponderance of the evidence that Mr. Mai breached his contract and his duty of good faith and that those breaches resulted in loss to Catch. It is therefore incumbent on me to assess those damages based on the evidence even though I may not be able to do so to a mathematical certainty. [ 76 ] When Catch seconded Mr.

Mai to CNRL in February of 2019, the terms of the secondment were set out in a CNRL document called an EIM – Candidate Request Review (the “2019 EIM”). The 2019 EIM set out the hourly rate paid by CNRL to Catch, the hours to be worked and the total cost of the secondment over the term of the engagement. The 2019 EIM covered the period February 25, 2019 to December 20, 2019. The total hours were based on a full time, 40-hour work week. The total amount payable to Catch pursuant to the 2019 EIM was $206,400.00. The total amount payable in the 2019 EIM was a maximum amount payable as only the hours that Mr.

Mai actually worked were compensable. According to Mr. Smith’s evidence, Catch realized approximately 90% of the total contract price in 2019. I accept Mr. Smith’s evidence on this point as it is consistent with the evidence of Mr. Perez regarding the significant amount of work CNRL had for Mr. Mai to complete. [ 77 ] Of course, not all the money paid by CNRL to Catch for Mr. Mai’s services is profit. Catch had to pay Mr. Mai’s salary and provide benefits. It had overhead expenses required to support the business. Mr. Smith provided uncontroverted evidence with respect to the expenses associated with Mr.

Mai’s employment. In 2019 Mr. Mai’s salary was $78,900.00. The cost of benefits and other amounts payable in respect of Mr. Mai’s employment in 2019, including things such as payroll taxes, vacation time, WCB and sick pay, was $23,670.00. Mr. Smith referred to this number as the “labour burden.” Finally, overhead in the amount of $48,918.00 was attributed to Mr. Mai for 2019. Overhead includes expenses such as rent, salaries for administrative support employees, insurance, and supplies.

The overhead allocation was calculated by dividing the total overhead expenses by the number of employees at Catch to arrive at a dollar amount per employee. I find this is a reasonable approach to estimating the overhead expenses attributable to Mr. Mai. If anything, given that he was seconded to CNRL who provided his office and all the supplies he required to work, Mr. Smith’s calculation may actually be an overstatement of the overhead expenses properly attributable to Mr.

Mai. [ 78 ] Based on all the foregoing numbers and the fact that Catch realized approximately 90% of the maximum engagement with CNRL in relation to the 2019 EIM, the profit to Catch related to Mr. Mai’s secondment to CNRL for the period February 25, 2019 to December 20, 2019 was $37,872.00. [ 79 ] Prior to Mr. Mai’s departure from Catch in January 2020, Catch and CNRL signed a new EIM – Candidate Request Review form for the period January 2, 2020 to December 31, 2020 (the “2020 EIM”).

Pursuant to the 2020 EIM the hourly rate payable by CNRL to Catch was $120.00 and the maximum number of workable hours was 2,080 for a total maximum cost of the engagement of $249,600.00. Based on the negotiations with Mr. Mai prior to his departure, the salary that Catch would have had to pay the employee fulfilling the 2020 EIM was $104,000.00. According to Mr. Smith, the labour burden would have been $31,200.00 and the overhead allocation to that employee would have been $64,480.00. The total profit to Catch, had it realized 100% of the contract value, would have been $49,920.00.

Based on all the evidence before me, and, in particular Mr. Perez’s evidence regarding the very significant amount of work that had to be done on the project that Mr. Mai was assigned to, I find that CNRL’s utilization of Mr. Mai would have been 100%. I therefore find that Catch’s loss attributable to Mr. Mai for 2020 is $49,920.00 [ 80 ] While the non-solicit clause would have expired on January 3, 2021, by this time, Catch’s relationship with CNRL would have stabilized. There is no question that CNRL continued to require the services that Catch provided, as they continue to contract for those services to date.

There is no evidence that CNRL is in any way unhappy with Catch or would have had any other reason to cease working with Catch as the provider of a SPEL administrator. Having said that, the further away from the date of the breach the damages are assessed, the greater effect other contingent factors may have on the losses suffered by Catch.

While I am satisfied there would not have been any material changes in the contract price or Catch’s costs associated with providing their employee to CNRL, the assessment of damages must account for contingencies such as higher salary, labour burden or overhead or reduced utilization of the contractor by CNRL. Accordingly for 2021, I shall apply a 25% discount on the amounts that Catch would have otherwise profited and for 2022 I shall apply a 50% discount for contingencies. Accordingly, I assess Catch’s damages attributable to Mr. Mai for 2021 at $37,440.00 and for 2022 at $24,960.00.

I decline to award damages beyond the end of 2022 as too speculative given the passage of time. 5.

Summary and Conclusion [ 81 ] The non-solicitation covenant between Catch and Mr. Mai is valid and enforceable against Mr. Mai. The covenant protected Catch’s legitimate business interests and the non-solicitation terms were clear and unambiguous and subject to reasonable limits. [ 82 ] Mr. Mai breached the non-solicitation covenant by soliciting CNRL, one of Catch’s significant clients, to contract Mr. Mai through an agency other than CNRL. Mr. Mai utilized confidential information of Catch to help him solicit CNRL’s business.

In doing so, he breached the confidentiality clause in his employment agreement. [ 83 ] Mr. Mai owed Catch a duty of good faith. He breached that duty of good faith. He engaged in a course of conduct contrary to his employer’s interests, and he was dishonest in his dealings with his employer. Mr. Mai’s dishonesty harmed the business interests of his employer Catch. [ 84 ] Mr. Mai did not owe Catch fiduciary duties. He was not a key employee and did not have the ability to control or affect Catch’s business. He did not undertake to act in Catch’s best interest. [ 85 ] As a result of Mr.

Mai breaching the non-solicit covenant, breaching the confidentiality clause and breaching his duty of good faith, Catch suffered damages. Judgment against Mr. Mai is awarded to Catch in the amount of $112,320.00 plus prejudgment interest pursuant to the Judgment Interest Act , RSA 2000, c J-1 . [ 86 ] As the successful party, Catch is entitled to its costs of the litigation. If the parties are unable to agree on costs, they may apply to me, in writing, for a determination.

Heard between January 3 and 5, 2023. Dated at the City of Calgary, Alberta this 8 th day of May 2023. R.W. Armstrong J.C.K.B.A. Appearances: Richard E. Harrison Wilson Laycraft for the Plaintiff Stephen Torscher Miller Thomson LLP for the Defendant