In Rhebergen v Creston Veterinary Clinic Ltd., 2014 BCCA 97, a majority of the BC Court of Appeal refused to relieve the plaintiff of the burden of the restrictive covenant she had assumed in an associate agreement between herself and the veterinarian clinic that employed her.
The covenant did not restrict her post-employment conduct but required her to pay a specified amount if she set up a practice in an area within 25 miles of the clinic that had previously employed her. The amount was reduced each year over a 3-year period. The lower court found that the covenant was in restraint of trade, ambiguous and unenforceable.
The Court of Appeal agreed that the covenant was a restraint of trade, in that it burdened the plaintiff with financial consequences that she would not otherwise have had for engaging in post-employment competition. The clause was not a penalty however; it was compensation for the costs incurred by the clinic in training the plaintiff. The majority held no ambiguity arose from the fact that the payments were triggered by the plaintiff ‘setting up a veterinary practice’. The plain and ordinary meaning of the words used by the parties, the factual matrix in which the agreement was made and the plaintiff’s own efforts to have the covenant declared void so that she could “set up” a practice to compete with the clinic for its existing clients supported this finding. The majority held that the covenant could not be avoided by the plaintiff should she pursue her intended mobile practice.