Case information

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Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

Employment law - Restrictive covenants - Contracts - Breach - Enforceability - Liquidated damages clauses - Did the Court of Appeal err in concluding that the restrictive covenant was unenforceable due to the lack of an express spatial restriction when one was implied or was otherwise unnecessary - Did the Court of Appeal err in considering an employee’s status as a fiduciary in its determination as to the enforceability of a contractual restrictive covenant - Did the Court of Appeal err in disregarding or discounting the closeness of the relationship between the departed employees and the employer’s customers because such relationships are common in the subject industry - Did the Court of Appeal err in considering the employees’ special knowledge and influence over the employer’s business as opposed to the business of the employer’s customers - Whether the Ontario Court of Appeal misapplied the principles of J.G. Collins Insurance Agencies v. Elsley Estate, [1978] 2 S.C.R. 916 to the restrictive covenant in this case - Whether the Court of Appeal erred in overturning findings of fact made by the trial judge without concluding that he had made any palpable or overriding errors.

The Respondent employees worked for the Applicant as insurance salesmen, selling commercial insurance to businesses in the region of Waterloo, Ontario. On October 15, 2003, the employees and their assistants resigned and began working in a similar capacity for the Respondent Stevenson & Hunt Insurance Brokers (KWC) Limited (“Stevenson & Hunt”). Despite restrictive covenants in their employment contracts with the Applicant, the employees immediately contacted and began doing business with some of their old clients. By October 29, 2008, the Applicant successfully applied for an injunction preventing the Respondents from soliciting their customers; however, 118 of the Applicant’s customers had already transferred their accounts to Stevenson & Hunt. The Applicant brought an action in damages against the Respondents for breach of the employment contracts, breach of fiduciary duty, conspiracy, and inducing breach of contract.