The Alberta Court of King’s Bench has dismissed Badger Infrastructure Solutions’ application for an interim injunction against its former area manager and his new employer, Ontario Excavac (OE).
The company had sought to prevent the former manager and OE from soliciting its employees and customers, as well as using confidential information, until the matter could be resolved at trial.
In a detailed ruling, Justice Simard found that Badger had failed to establish a strong prima facie case against the manager or a serious issue to be tried against OE. The ruling also addressed jurisdictional issues and whether Badger had waived its right to enforce restrictive covenants when the manager was terminated in 2023.
Background of the case
The manager, J.P., worked for Badger as an area manager at its Bradford, Ont., location from January 2016 until his termination for cause on Sept. 12, 2023. Less than two months later, on Nov. 6, 2023, he began working for OE, a competitor in the hydrovac excavation market.
Badger filed its lawsuit in July 2024, claiming that J.P. had breached his obligations under a confidentiality, non-solicitation, and non-competition agreement signed in 2020, by soliciting Badger’s employees and customers for OE.
Badger also alleged that OE conspired with J.P. to carry out these breaches. Both J.P. and OE denied the allegations. In his defence, J.P. argued that Badger had waived most of the obligations it now sought to enforce, and OE contested the jurisdiction of the Alberta court, arguing that the events took place in Ontario.
Despite these challenges, the court determined that it had jurisdiction to hear the case, as J.P.’s employment agreement stipulated that any disputes arising from it would be resolved in Alberta courts.
Waiver of restrictive covenants
One of the pivotal issues in the case was whether Badger had waived its right to enforce the restrictive covenants in his employment contract. J.P.’s lawyer had sought clarification from Badger on these restrictions in late 2023. In a Nov. 6, 2023 email, Badger’s legal counsel stated that J.P. “is not bound by any restrictive covenants, and to the extent that he was, they would not be enforcing same against him.”
J.P. forwarded this communication to OE, which hired him the same day.
Justice Simard found that Badger had unequivocally waived its right to enforce both the non-competition and non-solicitation covenants, ruling that “the plain meaning of the term ‘any restrictive covenants’ includes both non-competition and non-solicitation covenants.” The court also rejected Badger’s argument that the waiver applied only to the non-competition covenant, noting that Badger had ample time to clarify its position but chose not to do so.
The court also found that the doctrine of promissory estoppel applied, meaning that Badger was prevented from enforcing the covenants after making a clear promise not to do so. “Badger, a large and sophisticated corporation, was communicating via its knowledgeable and experienced counsel, on a ‘with prejudice’ basis,” the ruling stated.
No strong prima facie case
In dismissing Badger’s application for an interim injunction, Justice Simard ruled that the company had failed to prove that J.P. had solicited its employees or customers or misused its confidential information.
The court found that four former Badger employees who left for OE under J.P.’s supervision did so voluntarily. “The parties dispute whether (J.P.) solicited these four individuals to leave Badger and apply to work at OE, or whether they left of their own volition,” the ruling noted. On the available evidence, the court found that Badger had not established a strong prima facie case that he had solicited them.
Badger also alleged that J.P. had solicited several of its customers, but the court found that the evidence was not persuasive. Badger’s claims relied on hearsay evidence, while J.P. provided documentary evidence of legitimate business communications with the customers in question, including providing rate sheets at their request.
OE’s involvement
Badger also alleged that OE had conspired with J.P. and unlawfully interfered with its economic relations. However, the court found that Badger had not provided sufficient evidence to establish a serious issue to be tried against OE. “This factual record is insufficient to establish a serious issue to tried against OE with respect to any of the causes of action pleaded against it,” the ruling concluded.
Conclusion
As a result of these findings, Justice Simard dismissed Badger’s application for an interim injunction. The case will proceed to trial, but for now, J.P. and OE are free to continue their operations without restriction. If the parties cannot agree on the issue of costs, they may address that issue in writing within 45 days of the decision.
For more information, see Badger Infrastructure v Parent-Walker, 2024 ABKB 550 (CanLII).
