The Ontario Superior Court of Justice has rejected a request for an injunction from LivingArt Kitchens Inc. that sought to restrict three former employees from competing and using alleged confidential information.
The ruling highlighted the shortcomings in LivingArt’s evidence and the overreach of their claims.
LivingArt’s claims and the defendants’ responses
LivingArt Kitchens Inc. sought an interim and interlocutory injunction against the three former employees along with their associated entities, Rada Group Inc. and AM Alpha Construction Trade Inc. The company accused them of breaching their contracts and fiduciary duties by using confidential information to compete unfairly.
LivingArt requested various prohibitory orders, including freezing assets and returning company information.
However, the court found that LivingArt failed to provide sufficient evidence to support its claims. Justice Perell noted that the motion was “riddled with factual and legal holes and inadmissible evidence,” and the evidence presented was largely “irrelevant, uncorroborated, unreliable, or unbelievable.”
Key findings and judicial analysis
Justice Perell’s detailed analysis of the case revealed several critical points:
Lack of clear evidence: The court found that much of LivingArt’s evidence was based on hearsay and speculative claims. The expert reports presented by LivingArt were deemed inadmissible due to procedural irregularities.
Employment status and agreements: The three former workers were not found to be senior management or key employees with fiduciary duties to LivingArt. Merenich and one of them denied signing any restrictive employment agreements, with another even alleging forgery. Justice Perell observed that there was no strong prima facie case for the misappropriation of confidential information by the defendants.
Irreparable harm not proven: LivingArt failed to demonstrate that it would suffer irreparable harm without the injunction. The court noted that LivingArt’s claims of potential financial loss were speculative and unsupported by financial statements or detailed analysis.
Balance of convenience: The court concluded that the balance of convenience did not favour granting the injunction. Justice Perell stated that the requested relief was grossly overreaching and that damages would be an adequate remedy if LivingArt succeeded at trial.
The decision and its implications
The court’s ruling underscored the importance of presenting clear, corroborated evidence when seeking interlocutory relief.
LivingArt’s motion was seen as an attempt to stifle competition from Rada Group and to deprive the former employees of their livelihood. “LivingArt’s motion is an attempt to kill competition from Rada Group and to deprive (the three former employees) of a livelihood and the ability to use their own knowledge and expertise,” Justice Perell stated.
Conclusion and next steps
LivingArt Kitchens Inc.’s motion for an injunction was dismissed, allowing the defendants to continue their business activities. The court left open the possibility for LivingArt to pursue damages at trial if it can substantiate its claims.
The decision highlights the judiciary’s careful consideration of evidence and procedural propriety in disputes involving employment and competition. As the case proceeds to trial, both parties will have the opportunity to present their full arguments and evidence.
For more information, see LivingArt Kitchens Inc. v. Merenich, 2024 ONSC 3088 (CanLII).
