ARC Surveys Ltd v Ni
ARC Surveys Ltd.
Law Firm / Organization
Blake, Cassels & Graydon LLP
Han Da Ni
Law Firm / Organization
Not Specified
DJ Drafting Consultants Ltd.
Law Firm / Organization
Whitelaw Twining (WT BCA LLP)
Lawyer(s)

Ram Sankaran

Zoom Surveys Ltd.
Law Firm / Organization
LG Wilson Law
Lawyer(s)

Edward Gale

Key Issues:

  1. Non-Competition Agreement (NCA) & Non-Solicitation Agreement (NSA):

    • ARC sought a permanent injunction claiming breaches of these agreements by the Defendants.
    • Defendants, Han Da Ni, DJ Drafting Consultants Ltd., Zoom Surveys Ltd., argued the agreements were vague, unreasonable, and unenforceable.
  2. Reasonableness of the Restrictive Covenants:

    • Duration: The court found the seven-year restriction unreasonable, favoring Ni's claim that the term was excessively punitive without proper consideration.
    • Geographic Scope: Applied to all of Alberta, deemed overly broad.
  3. Summary Judgment:

    • The court handled parts of the case summarily, addressing the enforceability of the NCA/NSA.
    • The full merits of the alleged breaches and corresponding damages require a full trial due to issues of credibility and detailed fact-finding.

Court Findings:

  • Enforceability: The restrictive covenants were declared unreasonable and unenforceable due to:
    • Excessive duration.
    • Lack of sufficient evidence for a compelling need to protect ARC's business.
    • Lack of new consideration for the extended restrictions beyond the agreed terms in earlier shareholder agreements.
  • Result: The Defendants' cross-application was granted, invalidating the restrictive covenants. ARC’s application for an injunction was dismissed.

Practical Implications:

  • The decision underscores the importance of clearly defined and reasonable terms in restrictive covenants.
  • The case demonstrates judicial reluctance to enforce excessively broad non-competition clauses without clear justification.

Next Steps:

  • The court invited parties to address costs and the continuation of obligations under the Share Purchase Agreement (SPA).
  • No monetary award was specified at this stage.
Court of King's Bench of Alberta
2101 08568
Employment law
Defendant