The duty of good faith has long arms, even in contractor and staffing arrangements
An Ontario staffing vendor that withheld approximately two months of a consultant's earned pay has been hit with punitive damages and had its non-compete clause thrown out. In ITCAD Tech Inc. v. Patel et. al., 2026 ONSC 368, released January 23, 2026, Justice H. Sachs found the restrictive covenant unenforceable because it was used to circumvent a government client's decision to revoke the vendor's authorization. The ruling upheld $15,750 in punitive damages.
IT consultant Kishan Patel wanted to work for a branch of Ontario's Ministry of Health. Because the ministry does not hire consultants directly, he went through ITCAD Tech Inc., a government vendor of record.
After coaching from ITCAD's operator, Linda Zhao, Patel secured the position and incorporated TechSpirer Inc., which entered into an Independent Contractor Agreement with ITCAD on May 21, 2021, containing a 12-month non-competition clause. Patel signed a second contract on November 24, 2022, with essentially the same terms.
ITCAD billed the ministry and retained a portion of fees. In February 2023, ITCAD and Zhao were named defendants in a fraud action, suspending ITCAD's vendor-of-record status. ITCAD found other vendors willing to pay it a share, offering to waive the non-compete if the consultants signed with one. TechSpirer instead signed with a different vendor on March 30, 2023, one that agreed to pay TechSpirer a greater...
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