ARC Surveys Ltd v Ni

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.