N.B. court finds restriction unreasonable in geographic scope and duration
A New Brunswick engineering firm's attempt to enforce a non-competition clause against two former employees failed — even though the restriction was embedded in a shareholder agreement
Justice Danie Roy of the Court of King's Bench of New Brunswick granted summary judgment in favour of defendants Louis Ruest and Alain Carrier, rejecting Le Groupe Roy Consultants' $706,499 claim for damages and ordering the company to pay $3,000 in legal costs.
The ruling establishes that making employees shareholders does not allow employers to impose broader restrictions than would be permitted in a standard employment contract.
Ruest and Carrier worked as engineers at Roy Consultants' Edmundston office starting in 2009, with Ruest serving as regional director starting in August 2014. On Nov. 1, 2014, both purchased shares in the parent company, 603414 NB Inc., and joined an existing unanimous shareholder agreement from October 2010 containing a three-year non-competition clause.
The restriction prohibited shareholders from working in the same field "in all the territory served by the company and/or the affiliated company" for three years after disposing of their shares. By the end of March 2019, Ruest held 169 shares and Carrier held 234 shares in the company.
Despite their shareholder status, neither Ruest nor Carrier were members of Roy Consultants' board of...
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