Court of Appeal for Ontario

Date: 2018-05-09 Docket: C64213

Judges: MacPherson, Hourigan and Benotto JJ.A.

Between

MD Physician Services Inc. and MD Management Limited Respondents (Plaintiffs)

and

Duane Wisniewski, Joy Sleeth and RBC Dominion Securities Inc. Appellants (Defendants)

Counsel

Nigel Campbell and Doug McLeod, for RBC Dominion Securities Inc.

Kenneth Dekker and Annie Tayyab, for the respondents

Heard and released orally: May 1, 2018

On appeal from the judgment of Justice Wolf Tausendfreund of the Superior Court of Justice dated July 21, 2017.

Reasons for Decision

[1] The appellants Joy Sleeth and Duane Wisniewski are two former employees of the respondent companies ("MD"). They, together with their current employer, the respondent RBC Dominion Securities Inc. ("RBC"), appeal from the trial judge's finding that they breached the non-solicitation terms of their employment contract with MD.

[2] The appellants were hired by MD in 2003 and 2005 respectively. Their job was to provide financial services to MD's clients who are primarily physicians. They each signed identical non-solicitation agreements which provided as follows:

Non-Solicitation. The Employee agrees that the Employee 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" means: 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.

[3] Sleeth and Wisniewski left MD in 2013 to join RBC, a competitor company. On their first day of work with RBC, the appellants wrote out from memory a list of MD's clients that they had serviced and began phoning them.

[4] A trial proceeded on the issue of the enforceability of the contract only. Damages were left to another day. Following eight days of testimony and written and oral submissions, the trial judge concluded that Sleeth and Wisniewski had breached the non-solicitation agreement and that RBC was vicariously liable for the breach.

[5] The appellants submit that the trial judge erred by applying the wrong legal principles to the enforceability of restrictive covenants and non-solicitation clauses in an employment law context. In particular, they allege that the agreement was ambiguous in regard to the term "solicit", the geographic scope, the applicability to prospective clients, and the temporal length of the restriction. They also allege errors relating to the formation of the contracts generally.

[6] The appellants' primary submission, however, is that the agreement was so ambiguous – particularly with respect to the meaning of "solicit" – that it must be unenforceable.

[7] We do not agree.

[8] The meaning of the word "solicit" is obvious. The calls made by the appellants to former clients were not – as the appellants suggest – courtesy calls. They were clearly made with a view to bringing the clients to RBC. The calls were made immediately after being hired by RBC, they were made personally, by telephone and followed a predetermined structure. The evidence supports the trial judge's conclusion that the calls were to solicit business.

[9] The trial judge properly directed himself with respect to the legal principles that address the enforceability of a non-solicitation clause. He referred to and applied the test in Elsley Estate v. J.G. Collins Agencies Ltd., [1978] 2 S.C.R 916, and H.L. Staebler and Co. v. Allan, 2008 ONCA 576. He concluded that MD is a specialized company dealing with physicians and has a proprietary interest in ensuring that its business is not used by financial planners to take customers away from it.

[10] He found that the clause was reasonable in terms of the public interest. It protects MD without unduly compromising its employees. There was no ambiguity with respect to the two year term.

[11] The scope of the proscribed activities was clearly defined by the agreement. Sleeth and Wisniewski 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 MD's employ. As well, the geographical scope was reasonable.

[12] Contrary to the appellants' submission, the trial judge was alive to the distinction between non-competition clauses and non-solicitation clauses. He referred to Staebler at para 42:

. . . a non-solicitation clause – suitably restrained in temporal and spatial terms – is more likely to represent a reasonable balance of the competing interests than is a non-competition clause. An appropriately limited non-solicitation clause offers protection for an employer without unduly compromising a person's ability to work in his or her chosen field. A non-competition clause, on the other hand is enforceable only in exceptional circumstances.

[13] With respect to the formation of the contracts, the trial judge found that the individual appellants were provided with a copy of the non-solicitation provisions before starting their employment. This was a factual finding open to him on the evidence as were other factual findings made in his judgment. There is no reason for appellate intervention.

[14] The appeal is dismissed with costs payable to the respondents in the agreed upon amount of $55,000 inclusive of disbursements and HST.

"J.C. MacPherson J.A."

"C.W. Hourigan J.A."

"M.L. Benotto J.A."