Non-competition clauses – No evidence of breach, then no breach

Employer claimed departed employees breached non-competition clause but couldn’t back it up
By Ronald Minken
|employmentlawtoday.com|Last Updated: 07/02/2013

An Ontario employer’s claim that employees who left to work for a competitor breached a non-competition clause prohibiting solicitation of its clients and using confidential information has been dismissed for lack of proof by the Ontario Superior Court of Justice.

In Eagle Professional Resources Inc. v. MacMullin, on a motion for summary judgment, the court dismissed an action brought by Eagle Professional Resources, an IT staffing agency based in Toronto, claiming that three former employees who left to work for a competitor breached their respective employment agreements, specifically a non-competition clause, by soliciting Eagle’s clients, employees and contractors, and by using the company’s confidential information.

Eagle also alleged that the competitor the employees now work for induced the employees to breach their employment agreements. The employees denied the company’s allegations, stating they did not have access to any of Eagle’s confidential information, they did not make use of any specific information they learned as Eagle employees, and they did not take any physical or electronic documents when they left their employment with Eagle.

The court found there was no “specific, detailed, and first-hand allegations” provided by Eagle to support its claims against the employees. Given the lack of supporting evidence, the court determined there was no evidence of the alleged breach or any corresponding inducement by the competitor. As a result, the court dismissed the company’s matter after finding there was no genuine issue for trial, and awarded costs against Eagle in the sum of $10,000.

Impact of decision on employers

Eagle Professional Resources demonstrates that while an employer may establish a non-competition or non-solicitation clause restricting an employee’s conduct for a period of time after the end of the employment relationship, an employer’s ability to enforce such clauses and obtain a remedy will depend on the evidence the employer has demonstrating the employee’s breach. Therefore, while an employee’s actions may be in breach of a non-competition or non-solicitation clause, the employer must provide evidence demonstrating the alleged breach to succeed before the courts.

Impact of decision on employees

Employees should take note of this decision for the same reason as that indicated above for employers. Specifically, an allegation that an employee has beached a non-competition or non-solicitation clause will not succeed unless there is evidence to support such an allegation.

For more information see:

Eagle Professional Resources Inc. v. MacMullin, 2013 CarswellOnt 7745 (Ont. S.C.J.).

Ronald S. Minken is a senior lawyer and mediator at Minken Employment Lawyers, an employment law boutique in Markham, Ont. He can be reached at www.MinkenEmploymentLawyers.ca. Ron gratefully acknowledges Sara Kauder and Kyle Burgis for their assistance in preparation of this article.

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