We successfully defended against an injunction application Westpac brought against their former employee Mr. Morgan and his new employer ICS Supplies Ltd. (both of whom we represented) to enforce a non-competition clause in Mr. Morgan’s previous employment agreement. Based on the terms of that agreement, Westpac argued that Mr. Morgan should be restrained from competing with their business in the Metro Vancouver area for a period of 12 months following the termination of his employment with them. In other words, they were endeavouring to prevent Mr. Morgan from working for ICS for 12 months.
In seeking the injunction, Westpac was required to show that:
- There was a strong prima facie case that the non-competition covenant was enforceable (see below for more on this);
- Westpac would suffer irreparable harm if the relief was not granted; and
- The balance of convenience favoured granting the relief.
To be enforceable, a non-competition covenant must be:
- Protective of a legitimate proprietary interest of the employer;
- Reasonable between the parties in terms of temporal length, spatial area covered, the nature of activities prohibited and overall fairness;
- Governed by terms that are clear, certain and not vague; and
- Reasonable in terms of the public interest.
The Court found that the non-competition covenant was unenforceable based on the size of the geographic area and the unreasonable restraint on Mr. Morgan’s employment. The court commented that the impact on Mr. Morgan would be unreasonable and unnecessary in light of his agreement to refrain from soliciting Westpac’s customers and from using Westpac’s confidential information. The Court found that it was not necessary to restrain Mr. Morgan from working in the industry to protect Westpac’s legitimate business interests.
To read the decision in Westpac v. Morgan, click here.
To learn more about non-competition clauses, visit our blog here.