Department of National Defence contract followed worker to new employer
IT / Net Inc. v. Doucette, 2005 CarswellOnt 1805 (Ont. S.C.J.)
An Ontario court has rejected a company’s claim that an ex-salesman violated his duty when his new employer was awarded a contract he had cultivated for the company.
When Carl Doucette joined IT/NET as an account executive in May 2000 he signed a contract that included non-solicitation and non-competition provisions. It was to apply for 12 months and specified that: “In effect we want to ensure that you will not use any ‘insider’ knowledge.”
In late 2000 it became known the Department of National Defense (DND) was seeking to update its technical abilities. Doucette was assigned to work on the contract, valued at $100,000.
On Sept. 14, 2001, Doucette reported getting the DND contract was “100 per cent” likely. That was his last day for IT/NET as he had given his notice on Aug. 27 and was scheduled to start with DMR, a competitor of IT/NET, on Sept. 17. Before leaving, Doucette e-mailed a number of DND contacts informing them he was leaving and joining DMR. His e-mail advised them to contact IT/NET on any outstanding business.
DMR ultimately received the DND contract. IT/NET filed an action seeking $50,000 in general damages. It argued Doucette violated the non-competition and non-solicitation provisions of his employment contract, that he had breached his fiduciary obligation to IT/NET and his common-law duty not to disclose confidential information.
In rejecting IT/NET’s claims the Ontario Superior Court of Justice considered the testimony of Col. Bernier, who was responsible for securing the contract on the DND end. He said he had never made up his mind on the project, that he came up with an idea for an alternative proposal and on Sept. 18 e-mailed it to Doucette without knowing he had left IT/NET. Bernier and Doucette met by chance on Oct. 1 and eventually a contract was entered into between the DND and DMR. On Oct. 4 Doucette’s ex-boss discovered the Sept. 18 e-mail from Bernier. When he responded he was told Col. Bernier had gone elsewhere.
The court decided there was little evidence Doucette had schemed to reroute the contract to DMR. The DND had never decided it would hire IT/NET and there was nothing underhanded in Doucette’s dealings. The company may have lost the contract by its own delinquency in replying to Col. Bernier, the court said.
Doucette did not owe a fiduciary duty to IT/NET. He had no authority as to the management or direction of the company. He was simply one of many sales staff. Similarly the court did not find Doucette had substantively violated his common-law duty to IT/NET. The e-mail he sent and the persons he sent it to might have been a technical breach – but that was not linked to the DND contract, which was the basis of any loss suffered by IT/NET. Bernier never saw that e-mail and there was nothing unfair or improper in the subsequent dealings he had with Doucette, the court said.
An Ontario court has rejected a company’s claim that an ex-salesman violated his duty when his new employer was awarded a contract he had cultivated for the company.
When Carl Doucette joined IT/NET as an account executive in May 2000 he signed a contract that included non-solicitation and non-competition provisions. It was to apply for 12 months and specified that: “In effect we want to ensure that you will not use any ‘insider’ knowledge.”
In late 2000 it became known the Department of National Defense (DND) was seeking to update its technical abilities. Doucette was assigned to work on the contract, valued at $100,000.
On Sept. 14, 2001, Doucette reported getting the DND contract was “100 per cent” likely. That was his last day for IT/NET as he had given his notice on Aug. 27 and was scheduled to start with DMR, a competitor of IT/NET, on Sept. 17. Before leaving, Doucette e-mailed a number of DND contacts informing them he was leaving and joining DMR. His e-mail advised them to contact IT/NET on any outstanding business.
DMR ultimately received the DND contract. IT/NET filed an action seeking $50,000 in general damages. It argued Doucette violated the non-competition and non-solicitation provisions of his employment contract, that he had breached his fiduciary obligation to IT/NET and his common-law duty not to disclose confidential information.
In rejecting IT/NET’s claims the Ontario Superior Court of Justice considered the testimony of Col. Bernier, who was responsible for securing the contract on the DND end. He said he had never made up his mind on the project, that he came up with an idea for an alternative proposal and on Sept. 18 e-mailed it to Doucette without knowing he had left IT/NET. Bernier and Doucette met by chance on Oct. 1 and eventually a contract was entered into between the DND and DMR. On Oct. 4 Doucette’s ex-boss discovered the Sept. 18 e-mail from Bernier. When he responded he was told Col. Bernier had gone elsewhere.
The court decided there was little evidence Doucette had schemed to reroute the contract to DMR. The DND had never decided it would hire IT/NET and there was nothing underhanded in Doucette’s dealings. The company may have lost the contract by its own delinquency in replying to Col. Bernier, the court said.
Doucette did not owe a fiduciary duty to IT/NET. He had no authority as to the management or direction of the company. He was simply one of many sales staff. Similarly the court did not find Doucette had substantively violated his common-law duty to IT/NET. The e-mail he sent and the persons he sent it to might have been a technical breach – but that was not linked to the DND contract, which was the basis of any loss suffered by IT/NET. Bernier never saw that e-mail and there was nothing unfair or improper in the subsequent dealings he had with Doucette, the court said.
