) ) CANADIAN BANK NOTE COMPANY LIMITED Plaintiff – v. –, 2013 ONSC 2435

CITATION : Canadian Bank Note v. Leblanc , 2013 ONSC 2435 COURT FILE NO.: 11-52448 DATE: 2013/04/29 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: ) ) CANADIAN BANK NOTE COMPANY LIMITED Plaintiff – and – LIONEL LEBLANC Defendant ) ) ) ) ) ) ) ) ))) Mitchell K. Kitagawa, for the Plaintiff Thomas G.

Conway/Adam Huff, for the Defendant/Plaintiff by Counterclaim ) ) ) HEARD: April 9 th , 2013 decision ON MOTION MCNAMARA, J. [ 1 ] On this motion the Plaintiff seeks the following orders: a. for an interlocutory injunction prohibiting the Defendant from using any confidential information obtained during the course of his employment with the Plaintiff; b. for an interlocutory injunction prohibiting the Defendant from disclosing any confidential information obtained during the course of his employment with the Plaintiff; c. that the Defendant shall destroy all documentation in his possession, power or control that contains confidential information belonging to the Plaintiff or was originally obtained by the Plaintiff in confidence from third parties, including inter alia , the following documents: i. technical specifications from Venezuela, as supplied to Trevor Jones on March 31, 2011; ii. the Plaintiff’s Banknote Market Study; and iii. any and all copies, extracts, and summaries thereof. d. that a copy of all documents identified by the Defendant as set out in Paragraph 3 herein shall be provided to the Plaintiff prior to destruction; and e. that the Defendant produce all of the electronic records copied as a result of the Anton Piller Order dated September 30, 2011.

Background Facts [ 2 ] The Plaintiff, Canadian Bank Note, is a developer and manufacturer of security printing services and security systems. The Defendant Lionel Leblanc was an employee of the Plaintiff from December 1996 to May 3, 2011.

In July 2010 he became the Executive Director Marketing, Payment Systems division of Canadian Bank Note (CBN). [ 3 ] Prior to his commencement of employment with the Plaintiff, the Defendant executed a Security Agreement in which he agreed not to disclose and to keep confidential his knowledge of all “plant equipment, processes, business and financial data, trade secrets, marketing research data, customer lists and/or other confidential information relating to the business of CBN and its customers.” On January 23, 2008, the Defendant executed a Secrecy and Security Non-Disclosure Agreement in which he agreed not to use or disclose any confidential information to any third party, including “any product specifications, marketing plans, materials used, manufacturing processes, research data, trade secrets, technical information, financial data, computer systems or any customer

information.” [4] The Defendant left the Plaintiff’s employment effective May 3, 2011. [5] On August 11, 2011, one of the Defendant’s former supervisors at the Plaintiff was provided with a copy of an email fromthe Defendant dated May 6, 2011, and directed to an individual who at the time was a consultant involved with a company thatrepresented other companies in CBN’s industry.

That email, in part, reads as follows: “This weekend, I will be sending you quite confidentially a plan of attack, in case you are interested and think that Goznak has strongenough references in the passport printing area to take on CBN as supplier for Trinidad and Tobago, where they plan a tender for 2million books…You would not need to worry about the technical aspect of this sale, as I would brief fully along the journey. I havelargely written their “tenders”, so I am familiar with how CBN would try to shut out others.

If you are interested and have the time and inclination to pursue this, I will help guide matters at every stage. If you are successful, oncepaid, I would appreciate kind consideration. I would then direct you to how to wind Jamaican and Guyanese passports as well. I canmake the volumes worthwhile, as these things can be manipulated. If you don’t think that Goznak is strong enough internationally to take on this market, I’d be grateful to know the soonest, as I wouldfrankly help another (G&D). [6] On September 30, 2011 the Plaintiff obtained, ex parte, an Anton Piller Order.

It was executed on October 6, 2011 at theoffices of the Defendant’s new employer, the Mint, and at his home. A number of items were seized including laptops, USB keys, CDs,et cetera. [7] On October 11, 2011 the Defendant moved for an order, amongst other things, setting aside the Anton Piller Order. By orderof Warkentin J. of this court that same day, the operation of the Anton Piller was suspended. A consent order was then obtained fromWarkentin J. on October 28, 2011 setting aside the order and awarding costs to the Defendant.

Pursuant to the order all data from thecomputers et cetera was given to the Defendant’s solicitor. Analysis Claims for Injunctive Relief [8] The parties, of course, agree that in order to be entitled to the interlocutory injunctions sought the Plaintiff must satisfy thethree branches of the test established by the Supreme Court of Canada in RJR – MacDonald Inc. v. Canada (Attorney General), (SCC), [1995] 3 S.C.R. 199: (

a) Is there a serious issue to be tried? (

b) Will the applicant suffer irreparable harm if the injunction is not granted? (

c) Which party will suffer the greatest harm from granting or refusing the injunction, i.e. where does the balance of convenience lie? [9] It is the position of the Plaintiff that on the strength of the materials filed on the motion, it is clear the injunction shouldissue. They argue that it is particularly so in this case where the evidence is viewed against the backdrop of a negative covenant to whichthe Defendant agreed as a term of his employment. [10] The Defendant argues that the Plaintiff has not met the test on any of its three branches.

They argue that there is no seriousissue to be tried when one looks at the evidence through the lens of the strong prima facia case that is required when an injunction willtend to place restrictions on a person’s ability to engage in their chosen vocation.

Next they argue there is no evidence the Plaintiff willsuffer irreparable harm nor does the balance of convenience favour the Plaintiff. [11] In my view it is necessary to examine the evidence in the context of the wording of the agreements signed by the Defendant.Those agreements provide, amongst other things, that the Defendant will not disclose or use his knowledge of product specifications,business and financial data, marketing research data, marketing plans, and customer lists of the Plaintiff.

Comparing that list of things the Defendant agreed he would not do with particularly the first paragraph of the email of May 6th quoted above, it would appear primafacie to be in breach of the covenant. There appear to be references to information known to the Defendant and not generally known tothe public.

The Defendant in his affidavit states, specific to this email, that having just left the Plaintiff he was in an emotional andfragile state of mind, that he regrets the tone of the email, and that he was simply trying to utilize his contacts in order to exploreemployment possibilities with another company in the industry.

It may be established at the trial that that was indeed the case, but in myview the email, and others written both before and after his departure, raise a serious issue to be tried. [12] In terms of the irreparable harm requirement, the law is clear that irreparable refers to the nature of the harm rather than itsmagnitude. It includes harm which cannot be quantified in monetary terms including situations where a party may suffer permanentmarket loss. It is common ground between the parties that the bank note industry is a highly competitive, small, niche market.

TheDefendant during his time with the Plaintiff worked almost exclusively in international sales. The Defendant undoubtedly had

confidential information, the sharing of which would have the potential to cause the Plaintiff permanent market loss. [13] Turning to the balance of convenience, again it must be remembered that what the Plaintiff seeks is enforcement of covenantsto which the Defendant agreed as a term of his employment.

The Defendant covenanted not to engage in a particular course of conduct,and the record shows some evidence that could constitute a breach of that covenant. [14] In analysing this aspect of the relief sought on this motion I found considerable assistance in the words of Pennell J. of thiscourt in the decision Hardee Farms International Ltd. v. Cam & Crank Grinding Ltd., (ON SC), [1973] 2 O.R. 170(Ont. H.C.), where in a case involving alleged breaches of a negative covenant the court indicated at para. 19 of the decision as follows: 19.

The best analysis with which I am acquainted of the law applicable to prohibitory injunctions, as distinguished from mandatoryinjunctions, is contained in the judgment of Megarry, J. in Hampstead & Suburban Properties Ltd. v. Diomedous, [1969] 1 Ch. 248. Thelearned Judge examined the classic statement of Lord Cairns, L.C. in Doherty v. Allman (1878), 3 App.

Cas. 709 at p. 720: If parties, for valuable consideration, with their eyes open, contract that a particular thing shall not be done, all that a Court of Equity hasto do is to say, by way of injunction, that which the parties have already said by way of covenant, that the thing shall not be done; and insuch case the injunction does nothing more than give the sanction of the process of the Court to that which already is the contractbetween the parties.

It is not then a question of the balance of convenience or inconvenience, or of the amount of damage or of injury – itis the specific performance, by the Court, of that negative bargain which the parties have made, with their eyes open between themselves. [15] The logic in that quote seems obvious to me and in all the circumstances I am satisfied the Plaintiff is entitled to the injunctiverelief sought.

Production of Electronic Records and Confidential Information [16] As itemized in detail earlier in these reasons, the Plaintiff seeks an order that the Defendant shall destroy certaindocumentation after providing copies of same to the Plaintiff, and that the Defendant produce all of the electronic records copied as aresult of the Anton Piller Order.

Specific to the information and records seized pursuant to that order, they argue the Plaintiff has a rightto this information as it likely contains further confidential information and trade secrets which are at the core of the dispute between theparties. [17] Dealing firstly with the materials seized, the first point that needs to be made is that the Anton Piller Order has been set asideby a consent court order. The next point of significance is that what the Plaintiff seeks in asking for this relief is for someone to reviewall manner of material that undoubtedly contains a great deal of personal information.

That represents a significant interference with theprivacy rights of the Defendant and, importantly, members of his family that are not parties to this litigation. In my view, before such anorder should be made there would need to be a clear and convincing reason, on the materials before me, for making such an intrusiveorder.

In my view, there is no evidence of sufficient substance to indicate the Defendant has attempted to destroy or has hidden evidencerelevant to the Plaintiff’s claim. [18] In support of his argument that there must be more relevant documents amongst the Defendants personal materials, thePlaintiff points to the fact that the Defendant produced emails, subsequent to the delivery of his affidavit of documents, thatdemonstrated that work related material had been sent to his personal email account from CBN while he was employed there.

TheDefendant points out, however, that it was well known that the Defendant did this while employed at CBN in order that he might workfrom home, there is no evidence that the emails are confidential, and they were not disclosed initially in the affidavit of documentsbecause they were not considered to be relevant to the Plaintiff’s claim as framed.

It is also noteworthy that in his affidavit of March ofthis year the Defendant swears that he does not have in his possession at present any information or documents which are confidential ofproprietary to CBN and, specific to the request for his copy of the Bank Note Market Survey, he no longer has that document. He furtherindicates, under oath, that he received a letter from the Plaintiff on June 9, 2011 directing him to delete or destroy all CBN documents inhis possession, and he complied.

In terms of the technical specifications from Venezuela that, again, the Plaintiff wants destroyed, heindicates in his affidavit that they are in the public domain and readily accessible to anyone in the industry. [19] While it is true that some documents were produced subsequent to the delivery of the affidavit of documents, firstly thatroutinely happens in litigation for a variety of reasons.

The fact is they were voluntarily produced, and the simple fact that occurredsubsequent to delivery of the affidavit of documents does not in any way lead to an inference that there is “likely” further confidentialinformation and trade secrets in the Defendant’s possession. [20] It is also of some significance, in my view, that there has been no motion brought by the Plaintiff under the rules suggestingthat the affidavit of documents is incomplete and that the Plaintiff is entitled to a better one.

There certainly is no issue from thearguments advanced during this motion that the Defendant has voluntarily disclosed a number of documents that the Plaintiff thinks arenegative to the Defendant’s position, and that they are relying on to support their case. [21] There is little evidence before me that, in my view, would justify an order that would amount to such a significant violation ofan individual’s privacy rights. Costs [22] I did not hear from the parties as relates to costs, but in my view, unless there are facts of which I am not aware, having regard

to the divergence of the positions in this litigation and the fact that success on the motion was divided, costs ought to be in the cause. McNamara J. Released: April 29, 2013 CITATION : Canadian Bank Note v. Leblanc , 2013 ONSC 2435 COURT FILE NO.: 11-52448 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: CANADIAN BANK NOTE COMPANY LIMITED Plaintiff – And – LIONEL LEBLANC Defendant DECISION ON MOTION McNamara, J. Released: April 29, 2013