Restrictive Covenants - Detailed Analysis
Last Updated: October 2022
1. Covenants Provided Outside the Sale of a Business
| Citation, Industry | Covenant(s) | Decision |
|---|---|---|
| Canadian University Press Media Services Ltd. v. Pleasants, 2000 CanLII 22599 (ONSC) Student Newspaper Cooperative | Non-compete prohibiting, as employee or in partnership, engagement in business that “may” be competitive, anywhere in Canada, for two years. | Length and geographic scope reasonable, but use of “may” too broad in application to possible future events. |
| 947535 Ontario Ltd. (c.o.b.) H & R Block v. Jex, [2003] O.J. No. 3290 (S.C.) Tax Preparation | Non-compete prohibited filing income tax return for employer’s customers within 25 miles and for two years. Non-solicit within 25 miles for two years. | Unenforceable. 25 miles too broad as it captured other urban centres. Two years too long. |
| Maxwell v. Gibsons Drugs Ltd., 1979 Canlii 702 (BCSC) Drug store | Prohibition on pharmacist-manager operating or managing any other drug store within radius of 25 miles, for two years. | Enforceable. Employee not prohibited from acting as a pharmacist. Public had ready access to other drug stores. |
| Sherk et al. v. Horwitz, 1972 CanLII 391 (ONSC) Medical Clinic | Covenant prohibiting gynaecologist from engaging in practicing medicine within city or 5 mile radius thereof for five years. | Unenforceable. Too broad and against public interest as people have right to continuing care from medical practitioner. |
| H.L. Staebler Company Limited v. Allan, 2008 ONCA 576 (CanLII) Insurance sales | Non-compete prohibiting doing business with any clients or customers employee had serviced, for two years. | Unenforceable due to absence of geographical limit combined with blanket prohibition on conducting business. |
| Mason v. Chem-Trend Limited Partnership, 2011 ONCA 344 (CanLII) Technical sales | Covenant imposing one-year prohibition on engaging in competition by providing service or soliciting business from, any customer of employer. | Unenforceable. Complete prohibition on competition rendered clause overly broad. |
| MacMillan Tucker MacKay v. Pyper, 2009 BCSC 694 (CanLII) Law | Non-compete prohibiting practice of law within five miles of firm in Surrey. | Overly broad and unreasonable. Complete prohibition on practice of law not necessary to protect firm’s legitimate proprietary interests. |
| The Travel Company Ltd. v. Keeling, 2009 ABQB 399 (CanLII) Travel Agency | Non-compete prohibiting employee from working in travel agency within Lethbridge or 100 mile radius for eight months, asserting $60,000 as pre-estimate of damages. | Overly broad in terms of length and territory. Actual losses of employer assessed at $15,000 max. |
| Raymond Salons Ltd. v. Boucher, 1990 CanLII 1763 (BCSC) Hair Salon | Non-compete prohibiting employee from having any interest in similar business within two miles, for one year. | Enforceable. Reasonable as to time and geographic scope. |
| Community Credit Union Ltd. v. Ast, 2007 ABQB 46 (CanLII) Financial Planning | Non-compete prohibiting involvement in competing business. Clause provided series of scenarios where failure of one scenario dropped enforcement to the next lesser term (prohibited area ranging from 100 mile radius to 5 mile radius; prohibited period ranging from 5 years to 1 year.) | Court held that the lesser covenant in clause could apply. One year and 20 mile radius reasonable and enforceable. |
| Arctec Alloys v. Payne and Alloy Sales, 2001 MBQB 1 (CanLII) Welding supplies | Non-compete for 18 months within “Manitoba Region” consisting of several “sales areas”. Clause said court could reduce to 12 months and only certain sales areas if considered unreasonable. | Unreasonable and unenforceable. No evidence of proprietary interest in customer base. |
| Jardine Lloyd Thompson v. Fogal et al., 2007 BCSC 271 (CanLII) Insurance | Non-solicit preventing employee from soliciting clients he had contact with, or offering employment to company’s employees, for 12 months after termination. | Prima facie enforceable (employer obtained injunction until disposition) Clear, fair and reasonable. |
| Wm. Tapper Ltd. v. Valero Energy Inc., 2017 CanLII 16210 (NLSCTD) Home heating fuel delivery | Non-compete prohibiting engagement in business of petroleum products for 12 months within metro St. John’s area. | Unenforceable. Spatial and temporal aspects reasonable but scope of activity too broad. |
| Sunsweet Fundraisers Inc. v. Moldenhauer and Theissing, 1991 CanLII 7672 (SKQB) Fundraising consultants | Covenant prohibiting soliciting or performing services for employer’s customers in Northeast Saskatchewan sales district for two years. | Reasonable and enforceable. |
| Cantelo (Drillers Tattoos) v Paton, 2011 SKPC 186 (CanLII) Tattooing | Non-compete prohibiting engagement in tattooing business within 200 mile (320 km) radius of City of Yorkton for three years. | Unenforceable. Covenant aimed at eliminating competition as opposed to protection of genuine proprietary interest and therefore against public policy. |
| Napier Environmental Technologies Inc. v. Vitomir, 2002 BCSC 716 (CanLII) Paint equipment products (design, distribution, manufacturing) | Non-compete prohibiting involvement in similar business for one to two years, in area ranging from worldwide to province of BC. Clause stated court to apply severance to obtain appropriate time and area. | Unreasonably broad and unenforceable. Court held it was not acceptable to change provision to make it reasonable. |
| Jordon v. Pacific Sign Group Inc. et al, 2007 BCSC 574 (CanLII) Sign design and manufacture | Covenant prohibiting engagement in similar business, and soliciting clients with whom employee had dealt, for one year. Applied throughout Canada and USA and any local geographic area where company sold products. | Overly broad, unenforceable. |
| BMR Bath Master Reglazing Ltd. v. Watson, 2010 BCSC 1170 (CanLII) National Franchisor of “BMR System” of bath remodeling Franchisor agreement | Covenants prohibiting solicitation and competition for a period of two years, in any area in province with existing BMR franchise. | Overly broad, unenforceable. Would prevent former employee from engaging in his trade/calling. |
| See Thru Window Cleaners Inc. v. Mahood, 2016 BCSC 2134 (CanLII) Window cleaning | Non-compete stating employee will not attempt to start own business in window cleaning, gutter cleaning or pressure cleaning in the City of Kamloops. | Overly broad and ultimately unreasonable. |
| Friesen v. McKague, 1992 CanLII 4023 (MBCA) Veterinary clinic | Non-compete prohibiting employee veterinarian from being concerned or engaged in veterinary practice within 25 mile radius of Steinbach, Manitoba, for three years. | Enforceable. Reasonable in terms of time and scope. No suggestion that public interest adversely affected by enforcement of clause. |
| Donaldson Travel Inc. v. Murphy et al, 2016 ONSC 740 (CanLII) Travel agency | Non-compete prohibiting employee from soliciting or accepting business from any corporate accounts or customers serviced by employer. | Unenforceable. No temporal or geographic restriction, overly broad. |
| Specialized Property Evaluation Control Services Ltd v. Les Evaluations Marc Bourret Appraisals Inc., 2016 ABQB 85 (CanLII) Property appraisals | Non-compete prohibiting employee from being engaged in any competing business in Calgary and 100 km from city limits for 3 months. Non-solicit prohibiting employee from soliciting employer's clients to do business with "any other organization" for 6 months. | Non-compete reasonable and enforceable. Non-solicit unenforceable as "any other organization" too broad. |
| Shalimar Physiotherapy Ltd. v. Deans, 1989 CanLII 3207 (ABQB) Pysiotherapy Clinic | Non-compete prohibiting employee from providing physiotherapy services to any patient or former patient of employer for 4 years. | Enforceable. Reasonable and not against public interest. |
| Target Marketing & Communications Inc. v. MacDonald, 1998 CanLII 13323 (NLSCTD) Marketing/Advertising | Non-compete prohibiting engagement in any business providing similar services as employer, with an office in City or 50 miles from City, for six months. | Unenforceable. Unreasonable and too broad in scope. |
| Lyons v. Multari, 2000 CanLII 16851 (ONCA) Dental practice | "Protective Covenant. 3 yrs. -- 5 mi." | Unenforceable. Overly broad. |
| Promotional Wearhouse Inc. v. Campbell, 2002 ABQB 502 (CanLII) Sales | Non-compete prohibiting selling of competitive goods for 12 months. | Unenforceable due to lack of geographic restriction. |
| Business Consultants v. Kindret, 2002 MBQB 124 (CanLII) Tax services | Covenants prohibiting competition for 60 days, solicitation of employer clients for two years, and solicitation of any "members" with whom employee had dealt with in employment for one year. | Enforceable. Terms reasonable and not against public policy; many alternatives for tax services in area. |
| Reed Shaw Osier Limited v. Wilson, 1981 ABCA 317 (CanLII) Insurance | Non-compete prohibiting engagement in insurance business for three years within 100 mile radius, and prohibiting involvement in any entity catering to customers of employer in area of insurance. | Unenforceable. Overly broad; would purport to preclude employee from engaging in any aspect of insurance field, which covers a wide range of functions. |
| Direct Integrated Transportation Inc. v. Haryett, 2005 SKQB 55 (CanLII) Courier services | Non-compete prohibiting employee from providing any courier services for 12 months. | Unreasonable; no geographic limitation. |
| Winnipeg Livestock Sales Ltd. v. Plewman, 2000 MBCA 60 (CanLII) Livestock auctioneering | Covenant prohibiting independent contractor from soliciting business from or providing auctioneering services to any person in Manitoba who is "likely to be in competition with" the business, for 18 months. | Unenforceable. No evidence that business required protection of covenant. |
| Rawlco Radio Ltd v Lozinski, 2012 SKQB 460 (CanLII) Radio advertising | Covenant prohibiting employee from competing in Saskatoon or 100 kilometre radius of Saskatoon for six months. | Reasonable and enforceable. |
| Salloum v. Thomas, 1986 CanLII 1238 (BCSC) Law Practice | Partnership agreement with covenant restricting partner from being interested in practice of law within 20 mile radius of Kelowna for two years. | Unenforceable. Contrary to public policy; precluded former partner from earning livelihood. |
| E. P. Chester Ltd. v. Mastorkis et al., 1968 CanLII 747 (NSCA) Babywear and hosiery sales | Covenant prohibiting employee from being interested in competitive business in Atlantic provinces for two years. | Enforceable when province of Newfoundland severed. (Query whether the same result would apply today in light of Shafron v. KRG Insurance Brokers (Western) Inc., [2009] 1 SCR 157, 2009 SCC 6 (CanLII). |
| Towers, Perrin, Forster & Crosby, Inc v. Cantin, 1999 CanLII 15100 (ON SC) Actuarial services | Non-compete prohibiting employee from performing similar services for, soliciting business from, or participating in client relationship management activities with respect to any client of company for two years. | Enforceable. Reasonable as between parties and with reference to public interest. Not a blanket restraint on freedom to compete. |
| Kerzner v American Iron & Metal Company Inc., 2017 ONSC 4352 (CanLII) Metal and steel sales | Non-compete and non-solicit effective for two years in Québec and Ontario. Contained in two year fixed-term employment contract. | Unenforceable. Unreasonable in context of short, fixed-term contract with broad geographic restriction. |
| Steinke o/a Muscle Mechanics Massage Therapy v. Barrett et al., 2012 MBQB 49 (CanLII) Massage therapy | Non-compete prohibiting carrying out massage therapy services within 5 km of Muscle Mechanics Massage Therapy for two year period. | Covenants unreasonable. Scant evidence of harm to plaintiff from breach of covenants. |
| Yellowhead Petroleum Products Ltd. v. United Farmers of Alberta Co- Operative Limited, 2004 ABQB 665 (CanLII) Contract for Yellowhead to act as sales agent for United Farmers | Covenant prohibiting Yellowhead from involvement in competing business within defined territories or 30 kilometres of boundary of territories for three years after termination. | Reasonable, enforceable. Required to afford adequate protection to legitimate interest in goodwill. |
| Carrick v. Glover, 2006 BCSC 1329 (CanLII) Athletic training | Settlement agreement after dissolution of partnership had covenant prohibiting involvement in business of training athletes or teams within boundaries of Surrey, White Rock or Langley for seven years. | Enforceable. Reasonable in duration, geographic reach and business objectives. Not injurious to public interest. |
| Mercer v. Barrett, 2000 BCSC 1035 (CanLII) Dentistry clinic | Non-compete prohibiting ownership of dental practice in city of Trail, Rossland, and/or within eight km of business (in Trail) for two years. Non-compete prohibiting practice of dentistry in same area for 3 years, and practice of dentistry in extended care facility within eight km of business for two years. | Injunction application. Court upheld covenant restricting owning/operating dental office within Trail, Rossland, and eight km of business. Evidence of irreparable harm, covenant enforced until its expiry or court decision/order. |
| Dream Weavers v. Astley, 2000 PESCTD 32 (CanLII) Industry not stated, but presumably wedding planning | Non-compete prohibiting involvement in similar or competitive business/venture, for two years. | Unenforceable. Overly broad as no geographic limit. |
| Dent Wizard v. Catastrophe Solutions, 2011 ONSC 1456 (CanLII) Car dent repair services | Non-compete prohibiting engagement in “automotive related business or activities engaged in by Employer”, for two years, in Canada and USA. Non-solicit prohibiting soliciting or accepting business from any client or prospective client for two years. | Non-compete overly broad and unenforceable. Temporal over-reach but geographic scope would have been reasonable. Non-solicit overly broad and unenforceable. No geographic limit. |
| Co-operators General Insurance Co. et al. v. Stoyles et al., 2000 CanLII 28793 (NLSCTD) Insurance Agency agreement | Non-compete prohibiting soliciting, contracting or “otherwise dealing” with customer of agency for purpose of offering similar or competitive products or services, for one year. | Overly broad, unreasonable restraint of trade, contrary to public policy. |
| Terra Engineering Ltd.v. Stewart, 1994 CanLII 590 (BCSC) Engineering company Shareholder Agreement | Non-compete prohibiting shareholder/employee from involvement with any person or entity interested in any business carried on by the company, within 150 km from any office or place of business of company. In force for 20 months after ceasing to be a shareholder. | Overly broad in prohibited activity and geographic scope. Would prevent former shareholder from working in his profession. Court stated more akin to employer/employee relationship. |
| F & G Delivery Ltd. v. MacKenzie, 2010 BCSC 195 (CanLII) Equipment delivery and crane servicing | Non-solicit prohibiting soliciting any client/customer or potential client/customer of company, within Restricted Area, for two years. Covenant prohibiting causing hiring or taking away of any employee of company employed during three years preceding termination, for three years following termination. | Both clauses much broader than necessary to protect any legitimate proprietary interest of company. |
| Chen v. Kiss, 1995 CanLII 7326 (ONSC) Dental Surgeon Associate agreement | Covenant prohibiting engagement in practice of general dentistry within three mile radius of practice (“Restricted Area”) for three years following termination of agreement. Covenant prohibiting lending money or guaranteeing debts of any individual, firm or corporation engaged in practice of general dentistry within Restricted Area for three years following termination of agreement. | Reasonable in the interests of parties. No evidence showing not reasonable in terms of public interest. |
| Cantol Ltd. v. Brodi Chemicals Ltd. et al., 1978 CanLII 1377 (ONSC) Chemical sales | Covenant prohibiting soliciting or endeavoring to take away customers of company for one year following termination. | Injunction application denied. Employee had brought clientele to company when hired; unreasonable that he would be cut off from them. |
| W-K Trucking Inc. v. Bidulock Oilfield Service Ltd., 1998 ABQB 959 (CanLII) Independent contractor agreement for trucking services | Covenant prohibiting trucking company from transporting crude oil or water intended to be used for oil and gas production, to or from a point within Village of Hairy Hill, or within 100 miles from boundary thereof, for three years after termination of agreement. | Injunction granted. Terms reasonable and evidence of legitimate proprietary interests requiring protection. |
| Craig Agency of Ontario Ltd. et al. v. Bennett et al., 1977 CanLII 1145 (ONSC) Employment Agency | Non-solicit prohibiting employee from contacting or soliciting any clients of agency for one year following termination. Non-compete prohibiting engagement in employment agency business within 25 miles of agency, for three months following termination. | Injunction application dismissed. Agency could not make out case that employees had intimate or confidential relationship with clients such that they could appropriate agency’s goodwill. |
| AllWest Insurance Services Ltd. v. Meredith Phendler, 2009 BCSC 2 (CanLII) Insurance agency | Non-solicit prohibiting employee from approaching or soliciting any clients of agency with a view to conducting insurance-related business, for one year following termination. Non-compete prohibiting employee from conducting insurance-related business with any person/entity that was client of agency during employment, for one year following termination. | Injunction application granted. Sufficiently clear, reasonable and no evidence of being contrary to public interest. Would not prevent former employee from earning a living. |
| Tank Lining Corp. v. Dunlop Industrial Ltd., 1982 CanLII 2023 (ONCA) Railway tank car lining Licensing agreement | Covenant prohibiting either party from engaging in business of tank lining in Canada for two years following termination of agreement. | Valid and enforceable. Restraint reasonable in terms of interests of parties and public. |
| Evans v The Sports Corporation, 2013 ABCA 14 (CanLII) Sports Agency | Covenant prohibiting, for two years following termination of employment, soliciting or attempting to solicit any client of company which has been a client of company or any other company to whom employee provided services related to the company’s business. | Ambiguous and unenforceable. Clause could be read as prohibiting solicitation of past clients which had left company, and had no geographic limitation. |
| 2909731 Canada Inc. (Pewter Graphics) v. Toews, 2016 BCSC 852 (CanLII) Printing/Graphics | Covenant prohibiting seeking employment or working in similar field for competitive entity for 12 months following termination. | Unenforceable. Ambiguous, broad and sweeping, no geographic limitation. |
| Hub International v. Redcliffe, 2012 BCSC 1280 (CanLII) Insurance brokerage | Covenant prohibiting soliciting (for 12 months) or doing insurance-related business (for 24 months) with clients or prospective clients of company. | Strong prima facie case that covenant enforceable. Only restricted former employee from dealing with company’s clients. |
| Tal Global Asset Management Inc. v. Wai-Ping, 2003 CanLII 5056 (ONSC) Wealth management | Non-compete prohibiting involvement/connection with any person or company soliciting or serving clients of company, CIBC or its affiliates, for one year. Non-solicit prohibiting soliciting employment or association with any employee/officer/agent of company, CIBC or its affiliates, for one year. | Unreasonable as to scope of activities and no geographic limit. Injunction application dismissed. |