Each week Wise Law Blog reviews recent decisions from the Ontario Court of Appeal.
Mason v. Chem-Trend Limited Partnership. A separate application related to a wrongful dismissal suit, where the plaintiff (the dismissed employee) sought to challenge a restrictive covenant in his employment contract as unenforceable.
Mr. Mason, upon being hired by Chem-Trend as a technical sales representative, signed an employment contract containing a restrictive covenant preventing him from engaging in "any business or activity in competition with the Company by providing services or products to, or soliciting business from, any business entity which was a customer of the Company during the period in which I was an employee of the Company" for one year following his termination for any reason.
The application judge stated that the covenant was not ambiguous, and that Mr. Mason understood its meaning when he signed it. The judge also stated that given Chem-Trend's worldwide scope, the worldwide scope of the restrictive covenant was therefore reasonable, as was restricting any activity by the appellant in conjunctin with Chem-Trend's competition for the same reason. The application judge also noted that the one-year restriction period was relatively short.
The Court of Appeal disagreed. The Court noted that the caselaw in this regard suggests that an unreasonable restrictive covenant can be found invalid if the overall limits of the clauses in the convenant are overly broad and prevent competition generally (as opposed to specifically competing against the employer by soliciting its customers).
Mr. Mason, upon being hired by Chem-Trend as a technical sales representative, signed an employment contract containing a restrictive covenant preventing him from engaging in "any business or activity in competition with the Company by providing services or products to, or soliciting business from, any business entity which was a customer of the Company during the period in which I was an employee of the Company" for one year following his termination for any reason.
The application judge stated that the covenant was not ambiguous, and that Mr. Mason understood its meaning when he signed it. The judge also stated that given Chem-Trend's worldwide scope, the worldwide scope of the restrictive covenant was therefore reasonable, as was restricting any activity by the appellant in conjunctin with Chem-Trend's competition for the same reason. The application judge also noted that the one-year restriction period was relatively short.
The Court of Appeal disagreed. The Court noted that the caselaw in this regard suggests that an unreasonable restrictive covenant can be found invalid if the overall limits of the clauses in the convenant are overly broad and prevent competition generally (as opposed to specifically competing against the employer by soliciting its customers).
In terms of Mr. Mason's employment contract, the Court observed that the restrictive convenant clause prevented Mr. Mason from working with any business entity which was a customer of Chem-Trend for the entirety of Mr. Mason's tenure with the company - over seventeen years. The Court held that a prohibition from working with all companies that had been customers of the business for nearly two decades was excessive; they also reasoned that this prohibition was at odds with the one-year time period of the covenant, since if the covenant expired after a year the assumption then was that Mr. Mason's information on the company and its clients would no longer be current at that time, and therefore the seventeen-year restriction was even more excessive as it was therefore unreasonable. The Court also pointed out that since the restrictive convenant contained a clause protecting trade secrets that the clause on employment restrictions was even less defensible given that other elements of the covenant protected the company in that regard. The Court therefore declared that the restrictive covenant was unenforceable. Read-the-whole-case rating: 2.
United Stated of America v. Khadr. Abdullah Khadr was abducted by Pakistan's Inter-Services Intelligence Directory (the "ISI"), who were in turn paid by the United States for that purpose. Mr. Khadr was secretly held in detention for fourteen months, then for another nine months before Mr. Khadr was repatriated to Canada. The United States requested extradition, which failed when the judge of the Superior Court who considered the case deemed the violations of Mr. Khadr's human rights to be "shocking and injustifiable," and ordered a stay of proceeding based on abuse of process. The Attorney General of Canada (acting for the USA) appealed the stay on the basis that the extradition judge's stay was outside of his jurisdiction, and alternatively that his case did not qualify for a stay.
The Court dismissed the appeal. Firstly, the Court stated that the residual power of a Superior Court Judge to order a stay to remedy an abuse of process was not limited strictly to procedural abuse, and that the law clearly allowed the court to order a stay where allowing a case to continue would endanger public confidence in the judicial system.
The appellant, however, proposed that s. 44(1)(a) of the Extradition Act, where the Minister of Justice is granted authority to refuse to make a surrender order at the end of the immigration process, deprived a superior court of the power to order a stay since that power created a remedy for instances of abuse of process. Some extradition cases suggests that where Charter of Rights and Freedoms issues arise and refusal to surrender is a potential remedy, that then the remedy is exclusively that of the Minister of Justice.
United Stated of America v. Khadr. Abdullah Khadr was abducted by Pakistan's Inter-Services Intelligence Directory (the "ISI"), who were in turn paid by the United States for that purpose. Mr. Khadr was secretly held in detention for fourteen months, then for another nine months before Mr. Khadr was repatriated to Canada. The United States requested extradition, which failed when the judge of the Superior Court who considered the case deemed the violations of Mr. Khadr's human rights to be "shocking and injustifiable," and ordered a stay of proceeding based on abuse of process. The Attorney General of Canada (acting for the USA) appealed the stay on the basis that the extradition judge's stay was outside of his jurisdiction, and alternatively that his case did not qualify for a stay.
The Court dismissed the appeal. Firstly, the Court stated that the residual power of a Superior Court Judge to order a stay to remedy an abuse of process was not limited strictly to procedural abuse, and that the law clearly allowed the court to order a stay where allowing a case to continue would endanger public confidence in the judicial system.
The appellant, however, proposed that s. 44(1)(a) of the Extradition Act, where the Minister of Justice is granted authority to refuse to make a surrender order at the end of the immigration process, deprived a superior court of the power to order a stay since that power created a remedy for instances of abuse of process. Some extradition cases suggests that where Charter of Rights and Freedoms issues arise and refusal to surrender is a potential remedy, that then the remedy is exclusively that of the Minister of Justice.
However, the Court of Appeal cited United States of America v. Cobb, where issues that fall within the committal stage - including the use of the stay power - are the jurisdiction of the courts. The appellant suggested that Cobb was distinguishable on the grounds that this case dealt with conduct which did not directly implicate the extradition hearing, whereas Cobb was a case where the potential extraditees were intimidated from exercising their rights to a hearing.
The Court disagreed with this analysis, pointing out that the entire basis for the stay in the first place was that the United States had perpetrated a serious misconduct in garnering its information which caused it to request extradition, which meant that the abuse of process was the root cause for the extradition hearing to happen in the first place. The Court also stated that the Attorney General's reading of Cobb was overly narrow and that common law suggested that the power for an extradition judge to stay proceedings for abuse of process was much broader than simply relating to the fairness of the hearing itself, and finally state that recognizing this power coincided with the idea that the courts should not surrender their own authority to protect their integrity to the executive.
The Court then considered whether this case qualified for a stay, given that they had clearly decided that the stay power was usable in this instance. They noted that the Attorney General had not appealed the findings of the extradition judge that Mr. Khadr's human rights violations were "shocking and unjustifiable," and then stated that the judge's findings were sufficient to trigger discretionary use of a stay in this instance. The Attorney General also submitted that the extradition judge had no jurisdiction to find that Mr. Khadr's detention had been illegal under Pakistani law, but the Court pointed out that the judge had relied upon an expert affidavit from a law professor to establish that fact.
Finally, the Court rejected the appellant's argument that the stay should be rejected on the basis that the extradition judge had not appropriately balanced the effect of the stay against the public's interest in seeing an alleged terrorist committed for extradition. The Court first stated that balancing the merits of a stay should only occur in borderline cases of abuse, rather than in clear cases, then pointed out that the Attorney General itself had conceded that Mr. Khadr was liable under the Criminal Code of Canada for terrorist acts committed in another country and that therefore, even if balancing were necessary, the fact that other means existed to address the public's interest in this case would tip that balance in favour of the stay. Read-the-whole-case rating:4.
The Court disagreed with this analysis, pointing out that the entire basis for the stay in the first place was that the United States had perpetrated a serious misconduct in garnering its information which caused it to request extradition, which meant that the abuse of process was the root cause for the extradition hearing to happen in the first place. The Court also stated that the Attorney General's reading of Cobb was overly narrow and that common law suggested that the power for an extradition judge to stay proceedings for abuse of process was much broader than simply relating to the fairness of the hearing itself, and finally state that recognizing this power coincided with the idea that the courts should not surrender their own authority to protect their integrity to the executive.
The Court then considered whether this case qualified for a stay, given that they had clearly decided that the stay power was usable in this instance. They noted that the Attorney General had not appealed the findings of the extradition judge that Mr. Khadr's human rights violations were "shocking and unjustifiable," and then stated that the judge's findings were sufficient to trigger discretionary use of a stay in this instance. The Attorney General also submitted that the extradition judge had no jurisdiction to find that Mr. Khadr's detention had been illegal under Pakistani law, but the Court pointed out that the judge had relied upon an expert affidavit from a law professor to establish that fact.
Finally, the Court rejected the appellant's argument that the stay should be rejected on the basis that the extradition judge had not appropriately balanced the effect of the stay against the public's interest in seeing an alleged terrorist committed for extradition. The Court first stated that balancing the merits of a stay should only occur in borderline cases of abuse, rather than in clear cases, then pointed out that the Attorney General itself had conceded that Mr. Khadr was liable under the Criminal Code of Canada for terrorist acts committed in another country and that therefore, even if balancing were necessary, the fact that other means existed to address the public's interest in this case would tip that balance in favour of the stay. Read-the-whole-case rating:4.
- Christopher Bird, Toronto
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