IN THE SUPREME COURT OF NOVA SCOTIA Citation: MacQuarrie’s Drugs Ltd. v. Salsman, 2012 NSSC 139 Date: 20120329 Docket: HfxLC388365 Registry: Halifax Between: MacQuarrie’s Drugs Limited v. Larry Salsman Respondent LIBRARY HEADING Judge: The Honourable Justice Frank Edwards Heard: March 29, 2012 in Halifax, Nova Scotia Written Release of April 5, 2012 Oral Decision: Subject: Motion for Interim Injunction CPR 41.04 Facts: 30 year employee of Plaintiff Company resigns to open competing business. Had signed non compete agreement in 1995. Issue: Whether interim injunction should issue in advance of motion for interlocutory injunction. Result: Interim injunction issued. Factors in CPR 41.04 satisfied. In particular, an urgency existed in the sense that the Defendant had resigned only weeks earlier and the opening of the new business was imminent. The Plaintiff had not had sufficient time to gather all the evidence it wished to present on an interlocutory motion. Considering all the circumstances, it was just to issue the interim injunction. Plaintiff’s motion was not frivolous or vexatious. There was a serious issue to be tried. The Plaintiff’s business risked irreparable harm. The balance of convenience favored the Plaintiff. Cases Noted: None previously reported on 41.04 THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT'S DECISION. QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET. SUPREME COURT OF NOVA SCOTIA Citation: MacQuarrie’s Drugs Ltd. v. Salsman, 2012 NSSC 139 Date: 20120329 Docket:HfxLC388365 Registry: Halifax Between: MacQuarrie’s Drugs Limited v. Larry Salsman Defendant Judge: The Honourable Justice Frank Edwards Heard: March 29, 2012, in Halifax, Nova Scotia Written Decision: April 5, 2012 Counsel: Charles Thompson, for the plaintiff Rebecca Saturley, for the defendant [1] This is a motion for an interim injunction pursuant to CPR 41.04. Background: [2] The Plaintiff operates the only drug store in the semi-rural community of Berwick. The Defendant, Larry Salsman, was employed by the Plaintiff and its successors from February 1, 1978 until March 5, 2012. Salsman variously acted as General Manager, Dispensary Manager and staff Pharmacist for the Plaintiff. In 1995, Salsman signed non-compete agreement wherein he agreed not to engage in the drug store business within 10 miles of the Plaintiff’s business for years after the end of his employment. [3] On March 5, 2012, Salsman resigned with the intention of opening of new drug store down the street from the Plaintiff. Other key employees of the Plaintiff have indicated their intention to resign from the Plaintiff and work with Salsman. The opening of the new business is contemplated for early April, 2012. [4] I am going to grant the Interim Injunction. [5] Ms. Saturley’s comments are well taken. do have some concerns about the year duration of the non-compete clause and with the chances of the Plaintiff ultimately succeeding. When look at s. 41.04 and the implications of granting an Interim Injunction at this time, however, have decided that it is the appropriate and just thing to do in the circumstances. Section 41.04 states party who files an undertaking as required by Rule 41.06 (and that has been done) may make motion for an Interim Injunction to Judge who, being satisfied with all of the following, may grant the motion: 41.04 (2) (a) the party claims an injunction...as final remedy in the proceeding, or it is in the interests of the justice that an injunction...be in place before determination of the claims in the proceeding; b) the party has moved, or will move, for an interlocutory injunction or interlocutory receivership and is proceeding without delay. c) an urgency exists and it cannot await the determination of the motion for an interlocutory injunction or interlocutory receivership, and d) considering all of the circumstances, it is just to issue an order for an interim injunction or interim receivership. [6] The new Rules differentiate between Interim and Interlocutory Injunctions. This is one of the circumstances which was contemplated when the new Rule was put in place. The Plaintiff has only become aware of the threat to its business within the last few weeks. The new business will open within weeks. The Plaintiff has not had sufficient time to prepare for full Interlocutory Hearing. [7] The seriousness of the matter for the parties involved and for some persons who are not formally parties, could not in business sense be more grave. suspect that the determination on the hearing of the Interlocutory Injunction has high potential to be the ultimate determination in the case. It is with that in mind, and in that context, that have approached the issue of whether should grant the Interim Injunction here today. [8] On the one hand, we have an existing business run by the Plaintiff and on the other, we have the business contemplated by Mr. Salsman and his business associates. This is Thursday the new business is scheduled to open either next week or the week after. had thought from reading the motion, that it was scheduled for next Monday or Tuesday, but apparently, the precise date has not been settled. In any event, this matter has just arisen in the last few weeks in the sense that Mr. Salsman has resigned effective March 5th, 2012. Mr. Salsman was long-serving employee and at times the manager of the Plaintiff’s company. As well, Mr. Salsman has obviously had access to the confidential information of the pharmacy, to and including the confidential information pertaining to the customers of the pharmacy. [9] In addition, other key staff members intend to leave the Plaintiff company to join the new company. take it as matter of common sense, and not speculation, that the opening of the new business is likely to have very profound negative effect upon the operation of the Plaintiff’s company. [10] am of the view that the hearing of the Interlocutory Injunction should be full and consider all of the evidence. By that, mean, not only what we have here today, but also the cross-examinations of the various affiants, as well as the information which Mr. Thompson stated that he required more time to access and submit. That included more information re the circumstances of the signing of the 1995 agreement, more evidence on the extent of the relationship between Mr. Salsman and the Plaintiff’s customers, the number of clients involved and more evidence on the impact of the opening of the Defendant’s business. [11] The impending and imminent opening of the new business satisfies the requirement that of 41.04 2 (c) that urgency exists and cannot await the determination of the motion for an Interlocutory Injunction. It is obvious that once that new business opens, the effect upon the Plaintiff company will be profound and there is really no going back. [12] Ultimately come to Rule 41.04 2(d): considering all of the circumstances is it just to issue an order for an Interim Injunction. [13] In determining whether or not it is just, look at the usual criteria which are put forward on an injunction application. Here, if were considering this as an Interlocutory matter, might well consider the more demanding standard that the Plaintiff would have to put forward strong prima facia case. (I will not compromise the Justice who will ultimately hear the Interlocutory motion by giving an opinion as to whether or not that should be so). [14] At this stage, am satisfied that have only to consider whether there is serious issue to be tried. Despite my concern about the ultimate viability of the five year non-compete, I am satisfied, when I look at the circumstances by way of overview, that this is not a frivolous or vexatious application. The Plaintiff is facing serious threat to its business and it has reasonable argument that this Court should examine the situation and perhaps intervene. [15] Secondly, on the irreparable harm issue, it is my view that there is a high potential for irreparable harm to the Plaintiff company - the loss of customers, or market share, though difficult to quantify, is real and is the type of harm contemplated by this branch of the test. [16] Again, I do not think that we get into the realm of speculation when one considers a small community like Berwick. have no evidence on the size of Berwick, but it appears to be common ground that it is semi-rural community with one drug store. When another drug store opens down the street, common sense would dictate that the new store is obviously going to have huge effect on the business of the existing drug store. That would be the case even if unrelated third parties were opening the new business. But here the new business is essentially going to be run by 30 plus year former employee of the Plaintiff company. The potential negative consequences for the Plaintiff company are obvious. [17] That takes me to the third branch of the test, the balance of convenience. Despite the able submission by Ms. Saturley about the consequences of losing time for a small business in Nova Scotia, the bottom line is that the Defendant is facing only the postponement of the opening for a few weeks. The stakes are much higher for the Plaintiff’s existing business. The balance of convenience, obviously favours the status quo. [18] The Interim Injunction will issue. The Interlocutory Injunction motion will be heard in Halifax before Justice LeBlanc on April 24, 2012.
The applicant is the only drug store in a rural community. The respondent worked there for 30 years, in various positions. He signed a 5-year, 10 mile non-competition clause in 1995. He quit in early March with the intention of opening a new drug store down the street in early April. Other key staff members intended to quit and work in the new store. The applicant moved for an interim injunction to prevent the respondent from opening his store pending the hearing of their motion for an interlocutory injunction. Interim injunction granted. The new Civil Procedure Rules (2008) distinguish between interim and interlocutory injunctions. This is one of the circumstances which was contemplated when the new Rule 41.04 was enacted. Urgency exists and the applicant can't wait. While the non-competition clause may well not survive a challenge at the full hearing of the interlocutory injunction motion, all the applicant needs to show is that there is a serious issue to be tried. There is. This isn't a frivolous or vexatious application. There's a high potential for the applicant to suffer irreparable harm (e.g. the loss of customers, market share) especially given that this is a small community. An interim injunction will only result in a delay of a few weeks. The interlocutory injunction is set to heard at the end of April. The stakes are higher for the applicant than they are for the respondent.