Enforceability of Non-Compete Clauses in a Business Sale Upheld by Ontario Court of Appeal

Tyler O’HenlyAppeals, Breach of Non-Competition Agreement, Breach of Non-Competition Clause, Breach of Non-Solicitation Agreement, Breach of Non-Solicitation Clause, Business Disputes, Business Litigation, Civil Litigation, Contract Disputes, Employment, Non-Compete, Non-Competition Clause, Non-Solicitation Clause, Sale of Business Claims, Sale of Business Disputes0 Comments

In Dr. C. Sims Dentistry Professional Corporation v. Cooke, 2024 ONCA 388, the Ontario Court of Appeal confirmed that restrictive covenants negotiated as part of the sale of a business must be treated differently by courts than those contained in employment contracts. The dispute arose from an agreement of purchase and sale between two dentists for a dentistry practice in Hamilton, Ontario (the “APS”). The APS contained a non-solicitation/non-competition provision, which prohibited the vendor from practicing dentistry within 15 km of the practice for a period of five years post-closing (the “Noncompete Provision”). About three years after the purchase and sale, the vendor began working at a separate practice in a location that violated the Noncompete Provision, and the purchaser commenced an action to enforce it. The purchaser was successful at trial, and the vendor made this appeal. In his appeal, the vendor submitted that the trial judge incorrectly placed … Read More

Licensing Breaches and Lingering Fiduciary Obligations – Ontario Court of Appeal Rules License Agreement Breach Constitutes Fiduciary Duty Violation

Harrison Neill-MorabitoBusiness Arbitrator, Business Dispute Arbitrator, Business Disputes, Business Law, Business Litigation, Business Torts | Economic Torts, Civil Litigation, Closely-Held Business Disputes, Commercial and Contract Litigation, Commercial Contracts, Commercial Law, Commercial Litigation, Contract Disputes0 Comments

In 7868073 Canada Ltd v 1841978 Ontario Inc, 2024 ONCA 371, the Ontario Court of Appeal recently assessed the legal effects of engaging in competing business ventures and the importance of honoring fiduciary duties stemming from license agreements following a parties departure from a former corporation. Robert Langlois (“Langlois”), alongside two partners, launched a powder-coating business, whereby Langlois granted a perpetual license (the “License”) for his industry “knowledge” to 7868073 Ontario Inc. (“786”), a company which the three parties formed and held equal shares in. In turn, 786 owned shares in two other companies (collectively referred to as “ACS”), which Langlois worked with. When Langlois left ACS to start another business without informing his former partners, ACS alleged that Langlois breached the License. The Court of Appeal affirmed the trial judge’s findings, rejecting the argument that the License was void ab initio due to its unreasonable worldwide scope and restrictions … Read More