Senos v. Pacesetter Performance Drilling Ltd. et al., 2010 ABQB 533

• Judge: Graesser, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: July 22, 2010
• Citations: 2010 ABQB 533;(2010), 497 A.R. 1 (QB)

Senos v. Pacesetter Performance Drilling Ltd. (2010), 497 A.R. 1 (QB)

MLB headnote and full text

Temp. Cite: [2010] A.R. TBEd. AU.071

Sean Senos (plaintiff) v. Pacesetter Performance Drilling Ltd., Christopher Afseth, John Doe 1 and John Doe 2 (defendants)

And Between:

Pacesetter Performance Drilling Ltd. (plaintiff by counterclaim) v. Sean Senos (defendant by counterclaim)

(1001 02077; 2010 ABQB 533)

Indexed As: Senos v. Pacesetter Performance Drilling Ltd. et al.

Alberta Court of Queen' s Bench

Judicial District of Calgary

Graesser, J.

August 17, 2010.

Summary:

At issue on this application was the determination of a preliminary point of law respecting the interpretation of a non-competition clause in a shareholders agreement.

The Alberta Court of Queen's Bench interpreted the clause accordingly.

Contracts - Topic 6732

Illegal contracts - Contrary to public policy - Restraint of trade - Agreements not to compete - The Alberta Court of Queen's Bench reviewed the principles applicable in interpreting and enforcing restrictive covenants and non-competition agreements - See paragraph 34.

Contracts - Topic 6732

Illegal contracts - Contrary to public policy - Restraint of trade - Agreements not to compete - Senos was one of the founding shareholders of a company (Pacesetter) that provided performance and directional drilling services to the oil and gas industry primarily in British Columbia, Alberta and Saskatchewan (the three provinces) - A shareholders agreement, which was later incorporated into a share repurchase agreement when Senos' employment ended, contained a one year non-competition clause - An issue arose as to the enforceability and interpretation of the clause - The Alberta Court of Queen's Bench held that the clause was enforceable - The court interpreted the agreement, holding that Senos could not, while he was in the three provinces, conduct any business in the performance or directional drilling industry, regardless of where that work was to be performed - While he was outside those provinces, he was able to conduct that type of business, so long as the work was not to be performed in the three named provinces - He could not work for a Pacesetter competitor based in the three provinces - He could not solicit Pacesetter customers, clients or personal contacts within Pacesetter customers or clients, including contacts who might have left a Pacesetter customer and gone to work for someone other than a Pacesetter customer - The court opined that it would have declared a world wide restriction on Senos' activities contrary to public policy - See paragraphs 34 to 85.

Cases Noticed:

Venture Capital USA Inc. et al. v. Yorkton Securities Inc. (2005), 197 O.A.C. 264; 75 O.R.(3d) 325 (C.A.), refd to. [para. 32].

Water Street Pictures Ltd. v. Forefront Releasing Inc. et al. (2006), 231 B.C.A.C. 189; 381 W.A.C. 189; 2006 BCCA 459, refd to. [para. 32].

Eli Lilly & Co. et al. v. Novopharm Ltd. et al., [1998] 2 S.C.R. 129; 227 N.R. 201; 1998 CarswellNat 1061, refd to. [para. 32].

Castledowns Law Office Management Ltd. v. 1131102 Alberta Ltd. et al., [2009] 9 W.W.R. 43; 454 A.R. 328; 455 W.A.C. 328; 78 R.P.R.(4th) 1; 2009 ABCA 148, refd to. [para. 32].

Zaccardelli et al. v. Kraus et al., [2003] A.R. Uned. 218; 2003 ABQB 319 (Master), refd to. [para. 32].

Gainers Inc. v. Pocklington Holdings Inc. (2000), 255 A.R. 373; 220 W.A.C. 373; 2000 ABCA 151, refd to. [para. 32].

Paddon Hughes Development Co. v. Pancontinental Oil Ltd. et al. (1998), 223 A.R. 180; 183 W.A.C. 180; 1998 ABCA 333, refd to. [para. 32].

Can-Dive Services Ltd. et al. v. Pacific Coast Energy Corp. et al. (2000), 134 B.C.A.C. 19; 219 W.A.C. 19; 74 B.C.L.R.(3d) 30; 2000 BCCA 105, refd to. [para. 32].

Sylvan Lake Golf & Tennis Club Ltd. v. Performance Industries Ltd. and O'Connor (No. 2), [2002] 1 S.C.R. 678; 283 N.R. 233; 299 A.R. 201; 266 W.A.C. 201; 209 D.L.R.(4th) 318; 2002 SCC 19, refd to. [para. 32].

Rose (Frederick E.) (London) Ltd. v. Pim Jr. (William H.) & Co., [1953] 2 Q.B. 450 (C.A.), refd to. [para. 32].

Reed Shaw Osler Ltd. v. Wilson (1981), 35 A.R. 451 (C.A.), refd to. [para. 32].

Davidson et al. v. Eaton/Bay Trust Co. (1986), 71 A.R. 184 (Q.B.), refd to. [para. 32].

KRG Insurance Brokers (Western) Inc. v. Shafron et al., [2009] 1 S.C.R. 157; 383 N.R. 217; 265 B.C.A.C. 1; 446 W.A.C. 1; 2009 SCC 6, refd to. [para. 32].

Anderson v. Berry-Heldt et al., [2005] B.C.T.C. 1825; 2005 BCSC 1825, affd. (2007), 238 B.C.A.C. 39; 393 W.A.C. 39; 2007 BCCA 100, refd to. [para. 32].

Anderson v. Trilink Travel Inc. - see Anderson v. Berry-Heldt et al.

Capital Safe & Lock Service Ltd. v. Steeves et al. (2000), 230 N.B.R.(2d) 117; 593 A.P.R. 117; 2000 NBCA 1, refd to. [para. 32].

Ensign Drilling Inc. v. Lundle et al. (2007), 418 A.R. 267; 2007 CarswellAlta 687; 2007 ABQB 357, refd to. [para. 33].

Indian Molybdenum Ltd. v. R., [1951] 3 D.L.R. 497; 1951 CarswellNat 280 (S.C.C.), refd to. [para. 33].

Mifsud v. Owens Corning Canada Inc., [2003] O.T.C. 871; 2003 CarswellOnt 3823 (Sup. Ct.), refd to. [para. 33].

Gainers Inc. v. Pocklington Holdings Inc. (2000), 255 A.R. 373; 220 W.A.C. 373; 2000 ABCA 151, refd to. [para. 33].

Collins (J.G.) Insurance Agencies Ltd. v. Elsley Estate, [1978] 2 S.C.R. 916; 20 N.R. 1; 1978 CarswellOnt 1235, refd to. [para. 33].

Globex Foreign Exchange Corp. v. Kelcher et al. (2005), 376 A.R. 133; 360 W.A.C. 133; 2005 CarswellAlta 1790; 2005 ABCA 419, refd to. [para. 33].

Doerner v. Bliss & Laughlin Industries Inc. et al., [1980] 2 S.C.R. 865; 34 N.R. 168, refd to. [para. 34].

Dale and Co. v. Land (1987), 84 A.R. 52; 56 Alta. L.R.(2d) 107 (C.A.), refd to. [para. 34].

Esso Petroleum Co. v. Harper's Garage (Stourport) Ltd., [1968] A.C. 269 (H.L.), refd to. [para. 34].

Toronto-Dominion Bank v. Leigh Instruments Ltd. (Bankrupt) et al. (1998), 63 O.T.C. 1; 40 B.L.R.(2d) 1 (Gen. Div.), refd to. [para. 40].

Herbert Morris Ltd. v. Saxelby, [1916] 1 A.C. 688 (H.L.), refd to. [para. 66].

Authors and Works Noticed:

Canadian Encyclopedic Digest, vol. 3e, § 286 [para. 32].

Fridman, Gerald Henry Louis, The Law of Contract in Canada (4th Ed. 1999), pp. 273, 482 to 484 [para. 32].

Hall, Geoff R., Canadian Contractual Interpretation Law (1st Ed. 2007), pp. 142 [para. 32]; 276 [paras. 33, 34].

Counsel:

G. Brian Davison, Q.C. (Davison Worden LLP), for the plaintiff;

Timothy P. Chick (Davis LLP), for the defendants.

This application was heard on July 22, 2010, before Graesser, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following judgment at Edmonton, Alberta, on August 17, 2010.