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Employment Law - Implied duties of employee - Loyalty and non-competition

Thursday, September 01, 2016 @ 8:00 PM  


Appeal by the plaintiff, Northern Industrial Services Group Inc. (NISG), from a summary judgment granted in favour of the defendant, Duguay. The defendant owned and operated a business engaged in commercial and industrial high pressure washing, vacuuming and associated services. His son was a longtime employee of the business. As the defendant approached retirement, he entered a share purchase agreement with the plaintiff. The agreement contemplated payment of $100 on closing in 2011, $274,950 in 2012 and $274,950 in 2013. The agreement included a non-competition provision for a four-year period that bound the defendant from competing with the plaintiff. The defendant remained employed with the plaintiff for 18 months after closing. In 2013, the defendant left to work for his son’s numbered company carrying on a rival business. The plaintiff refused to pay the third instalment and sued the defendant, his son, and the new company for damages for breach of contract and fiduciary duty. The motion judge dismissed the plaintiff’s action as against the defendant and granted his counterclaim for $274,900 owed under the share purchase agreement. The plaintiff appealed.

HELD: Appeal dismissed. There was no error in the motion judge’s application of the test for summary judgment. The judge’s critical factual findings were amply supported by the evidentiary record and were dispositive of the issue of whether the defendant breached the non-competition provision. There was no evidence to support the plaintiff’s contention that the defendant provided money to his son for the specific purpose of funding the new competing company. The plaintiff’s evidence in that regard was based on rumour and suspicion. Similarly, no breach of the non-competition agreement by the provision of property or assistance to the new company was established on the whole of the evidence. The motion judge’s credibility assessment entitled the defendant to summary judgment on the counterclaim for the monies owed under the share purchase agreement.