On February 21, 2019, the Supreme Court of Newfoundland and Labrador General Division (Court) issued its decision in Safety First Contracting (1995) Ltd v Murphy2019 NLSC 47 finding that Safety First Contracting (1995) Ltd (Safety First) failed to prove its allegations that its former employee, Mr Patrick Murphy (Murphy), breached any obligation of confidentiality and non-competition or that he wrongfully converted trade secrets.

Murphy resigned from Safety First and accepted a new position with one of Safety First’s competitors a few weeks later.  Some of Safety First’s customers subsequently switched over and became customers of Murphy’s new employer. Safety First sought damages against Murphy for:

  1. breach of a confidentiality and non-competition agreement;
  2. breach of confidence; and
  3. wrongful conversion of trade secrets.

Murphy denied the allegations, arguing that his employment contract with Safety First did not include a confidentiality and non-competition agreement and that he did not copy or share any of Safety First’s trade secrets.  The Court agreed with Murphy and found that Safety First did not prove its case.

Safety First was unable to produce a copy of the alleged agreement and, due to inconsistencies in Safety First’s testimony, the Court questioned the reliability of its evidence that one existed. While Safety First may have intended to have Murphy sign such an agreement, the Court found that this did not happen. 

The Court noted that, even without a written or oral agreement, Murphy had an obligation not to copy and carry away confidential documentation. However, the Court found that there was insufficient evidence to prove that Murphy had appropriated Safety First’s customer lists. The fact that some of Safety First’s customers did switch over to, and became customers of, Murphy’s new employer was insufficient to establish wrongful conversion by Murphy of Safety First’s customer lists.  Regardless, Murphy would have been free to rely upon his memory of Safety First’s customers, and contact those customers in the interest of generating business for his new employer.

Summary By: Vanessa Komarnicki

E-TIPS® ISSUE

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