[1] The plaintiff seeks an interim injunction to restrain the defendants for twenty one days from doing business or dealing in any manner with former clients of the plaintiff's Cranbrook and Nelson offices, from soliciting clients or employees of those same offices, and from using confidential information obtained in employment with the plaintiff.

[2] On November 20,2000, the defendants, Don Delamont, Reginald Bellomo, James Swift, John Evin, Dave Neilson, Edward Murray, Victor Kravski, Christine Clarke and Alan Duffy (the "employees") all left the employ of the plaintiff to join the competing brokerage firm of the defendant, Merrill Lynch. These employees included the branch manager, Delamont, and all the experienced investment advisors and their assistants of the Cranbrook and Nelson offices of the plaintiff. The result was to leave these offices with two rookie investment advisors, an office manager and receptionist.

[3] Prior to leaving the plaintiff's employ, the group had sent twenty one boxes of original client documentation to the Merrill Lynch offices, had copied or taken client information from documentation or computer records, prepared letters of notification of the move to clients and called many of their clients to inform them of the move. The move appeared planned and executed such that the employees could begin work immediately with the defendant competitor.

[4] Don Delamont became disenchanted with the plaintiff in early November when, according to him, the terms of his compensation package were unilaterally altered. There had been discussions with representatives of Merrill Lynch before but these changes prompted the decision to move. Other brokers were also disenchanted. The regional office manager had been informed but nothing was done to entice the employees to stay. On November 16, 2000, the regional manager had heard that the brokers were leaving and called a meeting with Delamont. Although Delamont said that this meeting changed his mind temporarily, the damage had already been done as the client information was already in the competitor's hands. All employees left together on November 20^th. Although Delamont had previously offered to provide a reasonable period prior to his departure for stability and transfer, this was not followed upon at the time of the move.

[5] The plaintiff sent a Calgary manager to operate the Cranbrook and Nelson offices in the immediate aftermath and one of the investment advisors, Murray, changed his mind and returned. But, the plaintiff has lost the significant whole of its sales staff along with the client information. The defendants returned twenty one boxes of documentation to the plaintiff since November 20^th and Delamont swore that he had destroyed or deleted all documentation and computer files that he had originally taken with him with the exception of client transfer forms executed since the departure.

[6] Competition to recruit investment advisors is rife within the industry. There is a great deal of movement between employers. However, recruitment in the Cranbrook/Nelson region is difficult. Clients remain loyal to the advisor at least sixty percent of the time and can be expected to move with the advisor. Independent duties to clients require that they be informed of a prospective move and given the choice of where they wish their file to remain. The movement of files is readily documented because of the requirement to prepare a transfer form prior to movement of files. Therefore, the plaintiff can keep track of all lost clients.

[7] The plaintiff did not have a non-competition agreement with its employees. The plaintiff accepts that its former investment advisors may compete fairly with it after leaving but cannot solicit clients if a fiduciary relationship existed. The defendants have sworn that they merely informed clients of their departure as they are entitled to do but did not solicit. The defendants admitted that it was wrong to take client information and confidential documents but state that all has been returned.

[8] The test to be applied in an application for an interim injunction was affirmed by the Supreme Court of Canada in RJR-MacDonald Inc. v. Canada [AG], [1994] 1 S.C.R. 311 to be a four stage test requiring the applicant to demonstrate that there is a serious question to be tried, that irreparable harm will result if the relief is not granted, that the plaintiff's undertaking and damages will not provide adequate compensation, and that the balance of convenience favours granting the injunction. The British Columbia Court of Appeal considered the test the same but differently expressed in Attorney General of British Columbia v. Wale (1986), 9 B.C.L.R. (2d) 333 (B.C.C.A.) where the three later stages of the test tend to be subsumed within the balance of convenience test (Investor First Financial Inc. v. Lawton and Pfetten (8 November 1996) Vancouver CA022424 (B.C.C.A.) ( see also Ebco Industries Ltd. v. Kaltech Manufacturing Ltd., [1999] B.C.J. No.2350; The Mark Anthony Group v. Vincor International Inc. (27 October 1998) Vancouver CA 024515 (B.C.C.A.)).

[9] The defendants do not seriously contest that there exists a serious question to be tried here. The low threshold has been met. Regardless that there was no non-competition agreement, the defendants may be considered key employees of the plaintiff given their duties and significance as a group to the Cranbrook/Nelson operations. As such they may owe a fiduciary duty to their former employer not to solicit clients from their employer (Merrill Lynch Canada Inc. v. Pastro, [2000] B.C.J. No.2042 para 49). While I appreciate that the defendants state that they have not solicited clients and rely upon the definition of solicitation found in Services Investors Ltee. v. Fainer, [2000] Q.J. No.3294 at para.47, the letters sent to clients before departure and the appearance of a concerted campaign to inform clients of the planned departure whilst still working for the plaintiff suggests otherwise. The departure of almost the whole investment group may have affected the operations of the plaintiff so much that a duty preventing solicitation may be found to exist on that basis (Barton Insurance Brokers Ltd. v. Irwin (1999), 170 D.L.R. (4^th) 60 (B.C.C.A.) at para. 28; Ebco Industries Ltd. supra at para.25)

[10] As branch manager, Don Delamont had access to all client files and organization. Solicitation of customers is common in the business and Delamont would have known that his departure with almost all of the investment advisors would significantly undermine the plaintiff's business at the branch. Given the nature of his duties as a significant part of the Cranbrook/Nelson operation, he would likely be considered a key employee who owed a duty not to solicit former clients (Barton at paras. 23, 25, 35; Delta Play v. International Play (4 May 1999) Vancouver C991871 (B.C.S.C.) at para.19). A significant question arises as to whether the other defendants would also owe such a duty because of joining Delamont in the new venture (see Barton supra at para. 25-26; Clayburn Industries Ltd. v. Piper, [1998] B.C.J. No. 2831(B.C.S.C.) at para.71-72).

[11] Regardless of the lack of a restrictive covenant here, there is a duty upon employees to act in a fair way towards a former employer (Barton supra at para 17-18). In Barton, it was considered unfair to take customer lists to use for solicitation. The taking of client documentation while still in the employ of the plaintiff appears to fall within the category of unfair conduct.

[12] The plaintiff has demonstrated that there is a serious question to be tried. The next question is whether damages will provide the plaintiff with an adequate remedy, the irreparable harm consideration. In RJR MacDonald, the Court referred to this as the nature of the harm suffered, a harm that either cannot be quantified in money or which cannot be cured. If money cannot compensate for the loss, then an injunction will usually follow. Permanent market loss or irrevocable damage to business reputation can be irreparable depending on the circumstances. The evidence as to irreparable harm must be clear and not speculative. Damages due to lost sales are usually quantifiable (The Mark Anthony Group Inc. v. Vincor International Inc. (30 March 1998) Vancouver A 98073 (B.C.S.C.) at para 27-28). Loss of goodwill cannot be inferred and can be quantified in damages (ibid).

[13] Several Courts have held that loss of clients in the investment context does not constitute irreparable harm. In Nesbitt Burns Inc. v. Lange, [2000] O.J. No. 842 (Ont.S.C.), thirty percent of the investment advisory staff left the plaintiff brokerage firm to join the defendant competitor, Merrill Lynch. Almost immediately after leaving, a campaign to contact clients began. In facts similar to here, the court found that the records of these brokerage firms are such that clients can be tracked through transfer forms and the historical profit for the branch will establish loss. Damage was capable of calculation. In a situation of fewer employees leaving, damages were considered to be capable of assessment because of the details kept of every portfolio (R.T. Investment Counsel Inc. v. Werry (11 February 1999) Vancouver C990638 (B.C.S.C.)). In CIBC World Markets Inc. v. MacDonald, [2000] B.C.J. No.1560 (B.C.S.C.) and Merrill Lynch Canada Inc. v. Pastro, [2000] B.C.J. 2042 (B.C.S.C.), similar situations as here arose between brokerage houses. However, in those cases there was a non-competition clause in operation. Proof of irreparable harm was not required if there is a breach of the negative covenant. But, breach of contract was not conclusive in Investor Group Financial Services Inc. v. Smith, [1994] N.S.J. No.466 where the court went on to find that damages for loss of investment business was quantifiable.

[14] The plaintiff's regional manager stated that a number of experienced employees have been brought into Cranbrook and Nelson to deal with the matter. The plaintiff is vulnerable to solicitation of their former clients and will suffer loss of business. There is speculation that the branch will close and that it will be difficult to obtain employees. He estimated that it would take at least six months to establish a new branch manager and investment team. There is nothing in this report that leads me to conclude that the plaintiff's damages are not quantifiable. Some of the comments are speculative. I am satisfied that the losses in this case can be quantified.

[15] The purpose of an injunction is not to stifle competition. In this case, it is not contested that sixty percent of customers would go with the investment advisor in any event of a move. Also, the advisor has a duty independent of employment to advise the client of a move. The defendants have a right to continue in business as long as they do not unfairly compete with the plaintiff. The affidavits indicate that the defendants have been careful in their notices to clients about their move. The defendants have now returned all of the client documentation and information and destroyed computer records that they previously brought with them. Any order to return documentation and information is without foundation in this circumstance.

[16] In all of the circumstances, it would not be just to order an interim injunction. The application is dismissed without costs.

"Janice Dillon J."
The Honourable Madam Justice J. Dillon

December 22, 2000 -- Memorandum to the Legal Publishers advising that the correct initial and spelling of the name for legal counsel should read as follows: