Executive Summary: Key Legal and Evidentiary Issues

• The plaintiff claimed breach of a non-solicitation clause and fiduciary duty by a former employee, who moved to a competing firm.

• Defendants failed to respond and were noted in default, leading to a default judgment process under Rule 3-26.

• The Court accepted that eight clients were unlawfully solicited within the restricted period and considered lost profits over one year.

• Vicarious liability was imposed on the corporate defendant despite no direct evidence it knew of the misconduct.

• Damages were limited to losses during the contractual restriction period and did not include speculative future loss.

• Total judgment awarded included damages, interest, and fixed costs due to defendants' non-participation in litigation.

Background and nature of the dispute
Blackbird Security Inc., a licensed security company operating in Saskatchewan, initiated a lawsuit against its former employee Michael McIntyre and his new employer, EyeQ Security Services Inc., alleging breaches of a non-solicitation agreement and fiduciary duty. McIntyre had served as Blackbird’s Business Development Manager and left in December 2023. Upon departure, he joined EyeQ, a direct competitor, and was quickly promoted. Blackbird alleged that within a year of leaving, McIntyre solicited eight of its long-standing clients and attempted to poach at least one employee.

Proceedings and default
Neither McIntyre nor EyeQ filed a defence after being served, and both were noted in default. Blackbird applied under Rule 3-26 of The King’s Bench Rules for a judgment on damages. The Court reviewed extensive affidavit evidence and determined that the defendants, by defaulting, admitted to the claims of breach of contract, fiduciary duty, and vicarious liability.

Breach of contract and fiduciary duty
The Court found McIntyre violated a twelve-month non-solicitation clause, which he had acknowledged in his resignation letter. He had contacted Blackbird clients and at least one employee during the restricted period. The Court held the clause was reasonable and enforceable. Given McIntyre’s managerial responsibilities and client-facing role, he also owed and breached fiduciary duties to his former employer.

Assessment of damages
While Blackbird sought damages for lost profits over three years, the Court restricted compensation to the duration of the non-solicitation clause—one year. It disallowed future projected losses as speculative and acknowledged that only one of the clients had a written agreement with Blackbird. The Court relied on the Bansal Affidavit to quantify actual lost profits, client retention costs, and management expenses. However, it excluded a claim for an employee’s salary increase, viewing it as a market correction. The final damages award totaled $223,882.40.

Vicarious liability of the new employer
The Court held EyeQ jointly liable for the damages under the doctrine of vicarious liability. It found that EyeQ had benefited directly from the misconduct, even if it was unaware of the breach, as McIntyre brought client accounts over to EyeQ. The Court noted this benefit was sufficient to establish liability.

Costs and final orders
Given the defendants' failure to engage with the litigation, the Court awarded fixed costs of $2,500 to Blackbird. Prejudgment interest was also granted under The Pre-judgment Interest Act. The Court praised plaintiff’s counsel for the quality and completeness of submissions.

Final outcome
Judgment was granted in favour of Blackbird Security Inc. against both defendants, jointly and severally, for $223,882.40 in damages, plus interest and costs. The Court reinforced the enforceability of reasonable non-solicitation clauses and the application of vicarious liability in competitive employment settings.