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.
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