A British Columbia appeal court has ruled that an injunction granted against an investment advisor by a lower court is too restrictive, and ordered parts of the injunction struck out.
In a decision released Tuesday, the Court of Appeal for B.C. ruled in favour Randy Voldeng, his assistant, and his new firm, RBC Dominion Securities Inc., in their appeal of an injunction that was granted by a lower court back in April.
Voldeng was employed for 10 years as an investment advisor in the Oak Bay, B.C. office of Edward Jones. Brenda Jarvis was his assistant.
The lower court granted Edward Jones an interlocutory injunction against Voldeng, restraining him from soliciting business from his former clients. It also prevents him from using any confidential information acquired at Edward Jones, and orders Voldeng and Jarvis to return any private information in their possession.
Court blocks B.C. broker from soliciting former clients
The appeal court has struck down the parts of the injunction that relates to contacting former clients, but preserves the provisions relating to the use of confidential information.
“Arguably, any contact with former clients is solicitation, but this court has made it clear that in certain relationships some such conduct is not only proper, but is desirable,” the decision notes. And, it says that the interests of clients should be taken into account when considering the “balance of convenience”, in deciding whether an injunction is justified.
In this case, when it comes to the solicitation of former clients, the court found that the balance of convenience favours the advisor, and not the former firm.
The appeal court says it disagrees with the lower court’s finding that the former firm would suffer irreparable harm from improper solicitation by an advisor. “The [firm] has a clear right to calculable damages if a breach is established,” it says, whereas, if a breach is not established, and an injunction may cause irreparable harm to the advisor because, “if his conduct were found to be proper, it would not be possible to determine which of his clients would have shifted to RBC if he had been able to inform them of his new contact particulars.”
Ultimately, it concludes, “the [lower court] judge erred in determining that the respondent would suffer irreparable harm by Mr. Voldeng improperly soliciting his former clients and erred in prohibiting him from any contact with his former clients.”
That said, the appeal court decision doesn’t endorse improper solicitation, saying, “an interlocutory injunction is an extraordinary remedy, the refusal of which in no way condones the conduct of a defendant that ignores contractual obligations. The judge has found that there is a strong prima facie case that Mr. Voldeng improperly solicited his clients; a word to the wise.”