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
Ontario Court Favours Place of Arbitration over Forum Selection Clause in Asset Purchase Agreement
In Tehama Group Inc v. Pythian Services Inc., 2024 ONSC 1819, the Ontario Superior Court of Justice held that the place of an arbitration, not a forum selection clause in a contract, determines the jurisdiction that recourse against an arbitral award must be taken in. The litigants were parties to a cross-border asset purchase agreement (the “APA”). The APA included an arbitration clause for disputes regarding the calculation of the purchase price, and the parties appointed “the Toronto office” of an accounting firm as arbitrator for these disputes. The APA also included broad forum selection and governing law clauses, which required “any suit, action or other proceeding arising out of this Agreement” to be brought exclusively in the courts of New York and in accordance with its laws. A dispute arose regarding an earnout clause in the APA, and the parties proceeded to arbitration. When the Toronto-based arbitrator rendered an … Read More
Entire Agreement Clause Not A Shield To Fraudulent Misrepresentation
In the recent Court of Appeal ruling of 10443204 Canada Inc. v. 2701835 Ontario Inc., 2022 ONCA 745, the Court of Appeal clarified that entire agreement clauses in contracts do not shield any representor or deprive any party to a contract from remedies available for a fraudulent misrepresentation. Background In May of 2019 the appellant Chirag Patel and his corporation 2701835 Ontario Inc. (the appellants) entered into a purchase agreement (the “APS”) with the respondent 10443204 Canada Inc. (the respondent), related to the purchase of a coin laundry business located in Brampton. The APS contained an entire agreement clause of which the relevant part indicated: “There is no representation, warranty, collateral agreement or condition, affecting this Agreement other than as expressed herein.” In accordance with amended terms to the APS concerning the purchase price the appellants made a partial payment of $100,000 on closing and the balance of the purchase … Read More