Home Featured Ontario court refuses to grant injunction as feud percolates between online coffee sellers who used to be in business together

Ontario court refuses to grant injunction as feud percolates between online coffee sellers who used to be in business together

by HR Law Canada

A feud between two parties who provide “home coffee solutions” online has shed some light into the complex world of partnership disputes within the burgeoning e-commerce market.

In this case, the plaintiffs — Home Coffee Solutions Ltd. and 2079162 Ontario Ltd. (the Plaintiffs) — faced off against a group of defendants carrying on business as The Kitchen Barista & Gifts.

The Plaintiffs sought an interlocutory injunction, claiming that their former contractors and partners had cloned their e-commerce trade, including product descriptions, customer base, and business methodologies. They accused the Defendants of breaching fiduciary duties and causing irreparable harm to their business.

However, the Defendants, who now operate competing businesses, countered these claims. They argued that their actions were part of fair business competition, as they had not violated any non-competition or non-solicitation agreements.

The conflict began in 2017 when the Plaintiffs expanded into the home coffee market with the Defendants’ help. Despite a successful collaboration, no formal partnership or agreement was established, leading to a dispute over the nature of their business relationship. The Defendants argued for a partnership model, while the Plaintiffs viewed it as more contractual.

The situation escalated when the Defendants launched a new website for their business, initially mirroring the Plaintiffs’. This similarity was short-lived, as the Defendants altered their web design after six weeks, easing one of the Plaintiffs’ major concerns.

Central to the dispute was the question of customer data ownership and the use of a customer list, which the Plaintiffs alleged the Defendants had misappropriated. However, Justice Morgan of the Ontario Superior Court of Justice noted that there was no concrete evidence of such a list being used to the Plaintiffs’ detriment.

Ultimately, the court found the Plaintiffs’ claims lacking in substantial evidence. They failed to demonstrate exclusive ownership of disputed properties, actual financial loss, or imminent harm. As a result, their request for an injunction was denied.

“If an injunction is not granted, the Plaintiffs will likely just continue along the business path that they are already on. They are using their website and conducting sales now, and will be able to continue to do so,” the court said.

“An interlocutory injunction would add cream and, perhaps, a sweetener to the Plaintiffs’ business, but its absence will make little difference to them.”

The case concluded with an agreement to transfer funds related to Amazon sales into court, pending further legal proceedings. The parties were also instructed to submit written submissions regarding the costs of the legal battle.

This case highlights the complexities of business relationships in the digital age, especially when formal agreements are not in place.

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