Sunday, August 7, 2011

Application is not appropriate for enforcing restrictive covenants

For non-law readers, let me first simply explain a point of civil procedure.

In civil litigation, there are really two kinds of proceedings: Applications, and actions. (It's really quite a bit more complicated than that, but let's keep it simple.) An action is what we usually think of as a law suit: I sue you, you defend, we go through disclosure and discovery, pre-trial conferences, then we set a trial date.

An application under the Rules of Civil Procedure is usually a much briefer and simpler process. If I'm issuing a Notice of Application, I will obtain a date from the Court before I even start the process, which could be just a couple of weeks out. I issue the documents, serve them on any respondents, and you have an opportunity to file responding materials...but we end up in Court fairly quickly. Witnesses aren't usually called to testify, but evidence is introduced through affidavit.

It's simpler and faster, but not always permissible under the Rules. Even in cases in which an application is permissible, if there are serious facts in dispute, such matters can be referred to a trial, and are then treated as an action.

In the recent case of Portable Packaging Systems Inc. v. Brackin, the employer attempted to proceed by application to enforce restrictive covenants against the employee, seeking damages and injunctive relief. The Court noted that injunctive relief is only available on an application where it is ancillary to other relief properly sought by application, and damages are seldom available on applications.

The proceeding by application is likely a consequence of the admitted difficulty in proving damages. But the Court ultimately concluded that an application was inappropriate and that the relief sought should be sought by way of an action. Accordingly, the Court dismissed the application.

I question why the decision does not address the applicability of Rule 14.05(3)(d), which permits applications seeking, among other things, "the determination of rights that depend on the interpretation of a ...contract...". Consider, for example, Mason v. Chem-Trend Limited Partnership, which I blogged about here: The employee brought an application for a declaration that restrictive covenants were unenforceable, and the Court of Appeal ultimately found them not to be enforceable.


This blog is not intended to, and does not, provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

No comments:

Post a Comment