Canada: Ontario Court Finds Non-Solicitation Clause Valid Based On Unique Dealer Structure

Last Updated: July 10 2018
Article by Daniel Babin

In our June 20, 2018 blog post, we noted that in National Bank Financial Inc. v Canaccord Genuity Corp. the British Columbia Supreme Court held that non-solicitation clauses in employment agreements between financial advisors and their employers may be found invalid for public policy reasons, as the interests of clients must be put ahead of those of the firm.

By contrast, in the recent decision of MD Physician Services Inc. v. Wisniewski, the Ontario Court of Appeal upheld a trial decision of the Ontario Superior Court of Justice enforcing a non-solicitation clause, and finding that the advisors (and their new employer) were liable for breach of such clause. The Court of Appeal specifically approved the lower Court's application of specific criteria to the question of whether or not such a clause should be enforced.

Background: MD Physician Services Inc. ("MD") hired the appellant advisors Joy Sleeth and Duane Wisniewsk in 2003 and 2005, respectively, to provide financial advisory services to MD's clients, who were primarily physicians and their families.

MD provided the advisors with a book of business, and paid them a salary and bonus based on a variety of factors. Each of the advisors signed agreements containing identical non-solicitation clauses.

The clauses stated:

Non-Solicitation: The Employee agrees that the Employee shall not solicit during the Employee's employment with the Employer and for the period ending two (2) years after the termination of his/her employment, regardless of how that termination should occur, within the geographic area within which s/he provided services to the Employer.

"Solicit" means: to solicit, or attempt to solicit, the business of any client, or prospective client, of the Employer who was serviced or solicited by the Employee during his/her employment with the Employee.

In 2013, the advisors left MD to join a competitor, RBC Dominion Securities Inc. ("RBC"). At RBC, advisors were expected to build their own businesses from scratch. Compensation was to be primarily based on a percentage of fees generated by such businesses. On their first day of work with RBC, the appellants wrote out from memory a list of clients that they had serviced at MD, and began soliciting them to move their accounts to RBC.

The trial judge concluded that both Sleeth and Wisniewski had breached the non-solicitation clause in their respective agreements, and that RBC was vicariously liable for the breach. The advisors and RBC appealed from the trial judge's finding.

Trial Judge's Analysis: In order to determine whether the non-solicitation clauses were enforceable, the trial judge considered the following questions.

  1. Do the Plaintiffs have a proprietary interest entitled to protection?
  2. Is the covenant reasonable in terms of the public interest?
  3. Is the restrictive covenant ambiguous with respect to any of:

    1. Temporal length,
    2. Geographical scope, or
    3. Scope of the proscribed activities?

The trial judge found that the advisors did not have a proprietary interest in the client lists. The lists were not the result of either of the advisors' hard work at MD or elsewhere, but were provided to them by MD when they began their employment.

The Court also found that as a specialized company dealing with physicians, MD had a genuine interest in ensuring that it was not used simply as an opportunity for advisors to establish contacts with physician investors, within the relatively protected environment of the firm, and then attempt to utilize those contacts to take clients away.

The Court held that an appropriately limited non-solicitation clause should offer protection for an employer, without unduly compromising a person's ability to work in his or her chosen field. The court also considered the temporal length, geographic scope and the scope of the proscribed activities.

The Court determined that the clause protected MD without unduly compromising its former employees ability to work in their field.

The limitation period of two years from contacting MD clients was neither ambiguous nor unreasonable.

The geographic scope of the agreement was "trivial and not part of the main purport of the restrictive covenant", as instant electronic communication meant that financial advice can be and is provided over both long and short distances with no trouble at all.

The scope of the prohibited activities was clear. It related to clients who had been serviced by the appellants during their MD employment, and prospective clients they had solicited during that time in their roles as MD employees. The clause did not restrict them from soliciting MD clients whom they had not worked with, or from soliciting physicians who were not MD clients.

The Court ruled that the advisors' actions, in calling and soliciting their former clients, were clearly in violation of the non-solicitation clause, and that RBC, as the subsequent employer who had encouraged them to breach the clause, was vicariously liable.

Appeal: On appeal, the appellants argued that the agreement was so ambiguous that it must be held to be unenforceable. The Court of Appeal did not agree. It found that the trial judge "properly directed himself with respect to the legal principles that address the enforceability of a non-solicitation clause," and that his findings were supported by the evidence.

The Court found that the evidence supported the trial judge's conclusion that the calls made to clients were not "courtesy calls". The calls were clearly made with a view to bringing the clients to RBC, as they were made immediately after being hired by RBC, by personal telephone call, and they followed a predetermined structure.

The Takeaway: This decision provides helpful guidance regarding the circumstances in which a non-solicitation clause may be enforceable against advisors. However, some caution is warranted. The MD firm is likely unique as compared to other dealers, due to its focus on physicians and their families, and its compensation structure.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions