Contract prohibited apprentice from setting up own business within a 320 km radius for three years
A tattoo parlour’s restrictive covenant preventing a tattoo artist from setting up shop after leaving is not enforceable, the Saskatchewan Provincial Court has ruled.
On Aug. 8, 2007, Adam Paton became an apprentice to Dennis Cantelo, a tattoo artist who ran a parlour called Drillers Tattoos in Yorkton, Sask. Paton was required to sign an agreement that stipulated if either party terminated the agreement or it expired, Paton could not “engage in tattooing for gain nor will he be a proprietor of, nor employee, servant or contractor of any person or corporation engaged in the operation of a tattooing business within a 200 mile (320 km) radius of the City of Yorkton for a period of three years.” If Paton violated this agreement, he would be on the hook for a $10,000 payment to Cantelo. Cantelo suggested that Paton take the agreement to a lawyer before signing it, but Paton declined.
Once Paton completed his apprenticeship, he continued to work at Drillers Tattoos, renting a chair. There was no written chair rental agreement, but Paton paid $500 per month. Paton was responsible for his own income tax, as well as all his earnings other than the rental amount. While working at Drillers, Paton made money from his own clients he booked directly.
In July 2010, Cantelo closed down the shop for a week so he could go on holiday. Paton expected Cantelo to provide him with a key so he could continue to work in Cantelo’s absence, as he had done on previous occasions, but this time Cantelo did not. Paton didn’t like this, as he was getting married and needed to make money.
Paton quit his position and started up a new tattooing business in September 2010. This business operated in Yorkton and Paton spread the word through Facebook and the Yorkton Chamber of Commerce that he was open for business. He didn’t take any client lists from Drillers and only informed his own clients of his move.
Cantelo sued Paton for the $10,000 Paton owed under the agreement signed at the start of Paton’s apprenticeship.
The court found that Paton was “not the face of Drillers Tattoos” and was not in charge of the client list or booking procedures there. While renting a chair, he was treated like an independent contractor, said the court.
However, when Cantelo went on vacation and closed down the shop, Paton was subject to the regular business hours for Drillers. By not providing a key, Cantelo prevented Paton from earning a living while Cantelo was on holiday.
The court found Drillers had “no proprietary interest” in potential or actual customers of Paton’s new business, and Paton only informed his own customers of his new venture. As a result, Paton’s business didn’t cause any undue harm to Cantelo’s business. The restrictive covenant, said the court, was designed more to protect Drillers from competition rather than harm to its business.
“I have trouble finding a proprietary interest other than a continued wish for a lack of competition that should be protected in this instance,” said the court. “I am of the view that this restrictive covenant was aimed at eliminating competition as opposed to protection of a genuine propriety interest and is therefore against public policy.”
