Court of Appeal Upholds Non-Solicitation Agreement

Andrew Ottaway, B.A. (Hons.), LL.B.Appeals, Breach of Non-Competition Agreement, Breach of Non-Solicitation Agreement, Breach of Non-Solicitation Clause, Business Litigation, Civil Litigation, Employment, Non-Solicitation Agreement, Non-Solicitation Clause0 Comments

In MD Physician Services Inc. v. Wisniewski, 2018 ONCA 440 (CanLII), the individual defendants signed a non-solicitation agreement with the plaintiff company.  The agreement provided that the individual defendants “shall not solicit during the Employee’s employment with the Employer and for the period ending two (2) years after the termination of his/her employment, regardless of how that termination should occur, within the geographic area within which s/he provided services to the Employer.” “Solicit” was defined as: “to solicit, or attempt to solicit, the business of any client, or prospective client, of the Employer who was serviced or solicited by the Employee during his/her employment with the Employee.” The individual defendants left the plaintiff to work for a competitor, the defendant company.  On their first day of work for the defendant company, the individual defendants began contacting the plaintiff’s clients.

The trial judge found that the individual defendants had breached the non-solicitation agreement, and that the defendant company was vicariously liable for the breach.  The defendants appealed, arguing primarily that the agreement was ambiguous as to the definition of “solicit”, the geographic scope, the applicability to prospective clients, and the temporal length of the restriction.

The Court of Appeal disagreed, stating that the meaning of “solicit: was obvious.  The Court also stated that the trial judge properly considered the principles applicable to the enforceability of a non-solicitation clause as set out by the Supreme Court in Elsley Estate v. J.G. Collins Agencies Ltd., 1978 CanLII 7 (SCC): the trial judge found that the plaintiff was a specialized company which had a proprietary interest in ensuring that its business was not used by its employees to take customers away from it.  Further, the Court stated that the scope of the non-solicitation was clearly defined by the agreement: the individual defendants were not to solicit the business of clients or prospective clients they had serviced or solicited while employed by the respondents for a period of two years after they left the plaintiff. The Court of Appeal dismissed the appeal.

The lawyers at Gilbertson Davis LLP have experience with business dispute litigation, including breach of non-solicitation and non-competition agreements.  Please contact us for an initial consultation.

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About the Author
Andrew Ottaway, B.A. (Hons.), LL.B.

Andrew Ottaway, B.A. (Hons.), LL.B.

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