Restrictive Covenants - Detailed Analysis
Last Updated: October 2022
10. Judicial Interpretation of Certain Words or Phrases Used in Covenants
In a covenant which prohibited an employee from “solicit(ing) any account within employee’s territory”, the court held that “when the word “account” is used and if it is used in the usual business or commercial sense, it simply means “customer”.”1
“Lower Mainland of British Columbia”
A non-compete clause purporting to restrict an employee from selling products in the “Lower Mainland of British Columbia” was not enforced, due, amongst other things, to its ambiguity. The term “lower mainland”, while often used, is not a term of art and may mean different things to different people. 3
“Solicit” or “Solicitation”
• “On the evidence presented in the case at bar and in light of these authorities illuminating the meaning of the word “solicit”, I struggle to see how fielding inquiries, answering questions, providing quotes to persons or companies who initiate contact with Source voluntarily, or the presence of a Source van that “appears to be delivering items” in Kamloops, could come within the meaning of “solicit”.4
• “I cannot see how any general advertisement in a newspaper that consists of a photo and information about the location of an office can come within either expression. (“soliciting” or “communicating for the purposes of soliciting”).”5
• A departed optometrist ran a weekly advertisement in the local newspaper for three weeks that announced the opening of her new clinic and stated that she “looks forward to seeing familiar faces and welcoming new patients.” The court was not persuaded that the advertisement “solicits or endeavours to entice away any (of the plaintiff’s) patients.”6
• “A finding of solicitation would require her to have affirmatively approached a patient with a view of enticing the customer to cease doing business with the defendant…”7
- W. R. Grace & Co. of Canada Ltd. v. Sare et al., 1980 CanLII 1568 (ONSC), at p. 12.
- Progressive Automations Inc. v Jahromi, 2018 BCSC 1015 (CanLII), at para. 47.[/note]
“Serve or Provide Advice to”
The phrase “serve or provide advice to” was used in a covenant restricting a departing shareholder from certain activities regarding the plaintiff’s customers. The word “serve” included the act of both selling goods and providing services, distinct from “provide advice”, which meant to guide or make recommendations.2853947 B.C. Ltd. v. Source Office Furniture & Systems Ltd., 2016 BCSC 2233 (CanLII), at para. 56.
- 853947 B.C. Ltd. v. Source Office Furniture & Systems Ltd., 2016 BCSC 2233 (CanLII), at para. 87.
- Dr. P. Andreou Inc. v. McCaig, 2007 BCCA 159 (CanLII) at para. 36, and see list of authorities considered at paras. 23-35.
- IRIS The Visual Group Western Canada Inc. v. Park, 2016 BCSC 2059 (CanLII), at paras. 10, 44-46, aff’d IRIS The Visual Group Western Canada Inc. v. Park, 2017 BCCA 301 (CanLII).
- Nicholas v. Dr. Edyta Witulska Dentistry Professional Corporation, 2022 ONSC 2984, at para. 86.