Ontario court enforces rare non-compete against departing investment advisor

The advisor argued the non-competition clause was so sweeping that enforcing it would push him into retirement, since he holds a securities license only in Ontario and is now 68. Justice Mills was not persuaded. She found the clause clear rather than ambiguous, confined to Ontario, capped at 12 months, and precise about the activities it ruled out.

What tipped the balance was how the deal had been struck. The advisor had sold his business for good money, described his services as “unique and extraordinary,” and signed the agreement with a team of lawyers and independent legal advice. There was, the judge found, no imbalance of power. Enforcing a covenant this carefully drawn was, in her view, the whole point of having one. “To require more directed constraints on anti-competitive behaviour by a senior professional would render non-competition provisions entirely meaningless and utterly toothless,” she wrote.

Client lists, private numbers and a colleague’s resume

On the second restraint, the non-solicitation clause, the advisor conceded it was valid but denied crossing it. The judge found otherwise. Before he even told the firm he was leaving, he had handed his new employer a full list of the clients he serviced, along with their private investment details, fee schedules and who received recurring withdrawal payments. He conceded he did so expecting the clients to follow him.

He also wrote to clients right after resigning, telling the court in an affidavit that none of the messages breached his agreement. He did not attach the emails, and Justice Mills found the contact amounted to direct solicitation.

Then there was the colleague. The advisor said he had merely “passed along” another employee’s resume to his new firm as a favour, forwarding it with a one-line “FYI.” The judge read it differently, treating the gesture as circumstantial evidence that he had been improperly soliciting staff as well as clients.