I’m so proud of the brave souls who battled the bitter cold, wet and windy weather yesterday to participate in our first Run With DMC Law event @ the Toronto Goodlife Marathon (by Ontario Place).
6:00 a.m. – Disaster!
I arrived at Ontario Place shortly after 6:00 a.m. to help Benjamin Kong (my law clerk) set up our tent and bring in our swag. That’s when I realized I had left my race bib at home! Oh no! I couldn’t leave and get it and come back in time to set up. So I asked Ben to get it on the way in. He was a trooper. He drove to my house and rang on the bell. But it was my neighbour’s house… oh no!!!! Way too early… Sorry neighbour! So Ben then went to the correct house and woke Paris up. She gave him my bib and off he went to our tent. Now during this time, I had to lug these large DMC Law bags of swag to our private tent. They were not light. They each had 2 water bottles, 2 gatorade bottles, some tic tack, some protein bars, Proctor and Gamble’s latest 2-step teeth whitening kit (retails for $15), some cookies, a flyer from our co-sponsor Geoffrey Penal (wealth advisor, CIBC Wood Gundy), and a very awesome “Run With DMC” shirt. The bag and all the swag was valued at $200 a piece – not too shabby!
7:00 a.m. – Rain, Chills, Go Away!
It seemed to be getting colder and wetter as the day went on. Puddles and pot holes everywhere! The wind picking up. The non-stop rain! The poor tent next to us (Team Diabetes) didn’t have any side coverings on their tent, so they got soaked! They eventually came into our tent and posted this pic when we let them stay (we eventually gave them our tent after we left):
8:00 a.m. – Time to Run!
With literally just a few seconds before the run started (I was doing the 5 km with most of our team), Ben arrived and handed me my bib. No time to warm up; I was already warm from dragging all the bags to our tent. And away we go! 5 km isn’t difficult at all – especially when you’re running / chatting with friends 😉 A special mention to Peter Chudak (Dr. Samantha Amaro’s husband) who ran his 5 km in about 22 minutes – a fantastic time!
When we got back to the tent, we had some food, drink, towels (courtesy of Ben – who was thinking ahead) and took a group photo. Then we called the 5 km walkers and told them not to show up because the weather was getting REALLY windy and wet. I really felt bad for the marathon and half marathon runners who had been getting soaked for hours in that weather. I hope they didn’t get sick, but I wouldn’t be surprised if they did.
Overall, I think the event was a good one, but could have been better if we just had some decent weather. I wanted to once again thank all of the participants (Dr. Jackie Geroche, Dr. Aliea Butt, Dr. Millie Calko, Dr. Samantha Amaro, Peter Chudak, Marc Z. and Jason Brown of Henry Schein, Rodney Miller of TD, Carlos of DentalFix, and of course – our very own Benjamin Kong who worked so hard to make this a reality!). Special thanks out to Kate and Burke who helped manage security at our tent. I’m sure the next one will be bigger and better!
Just following up on some unconventional non-compete cases that recently came out of BC and Alberta (that left a somewhat unsatisfactory taste in my mouth), which I blogged about here, I’m pleased to announce that Ontario Dentist will be publishing a new article entitled written by myself, Jonathan Borrelli (our employment law lawyer) and Ljubica Durlovska (our employment law lawyer) entitled “Are Non-Complete Clauses Legal In Ontario? It Depends…” It will be out later this year (likely in the Fall) and, as usual, it will be available for download for free on this website.
Hmmm… some interesting things are happening out West with non-compete clauses in associate agreements (the first one involved a veterinarian associate in BC; the second one involved two dentist associates in Alberta). Here are some recent cases and my thoughts are at the end:
Unconventional Non-Compete (BC Case) = Enforceable!!!
In a recent B.C. case involving a veterinarian, the B.C. Court of Appeal enforced an unconventional non-compete clause. In Rhebergen v. Creston Veterinary Clinic Ltd., 2014 BCCA 97, a veterinarian (Dr. Steph Rhebergen) signed an employment agreement with a veterinary clinic (Creston Veterinary Clinic Ltd.) that contained a non-compete clause. The non-compete clause required Dr. Rhebergen to pay fixed sums of money to the Clinic if she “sets up a veterinary practice in Creston, BC or within a twenty five (25) mile radius” of the Clinic within certain timeframes after the termination of the employment contract. The amounts varied from $150,000 if her practice was set up within 1 year of the contract being terminated to $90,000 if her practice was set up within 3 years of the contract being terminated. This non-compete was unconventional because the amounts to be paid were based upon the occurrence of an event (as opposed to a breach of the contract) – namely, setting up a competing veterinary clinic within a restricted area.
Dr. Rhebergen challenged the non-compete and asked that it be declared unenforceable. The B.C. Supreme Court agreed, finding that it was an illegal penalty, unreasonable, and vague. The Court also cited the Ontario case of Lyons v. Multari in concluding that this was not an exceptional case warranting the enforcement of a non-competition clause.
On appeal, however, the B.C. Court of Appeal upheld the non-compete. The Court noted that the lump sum payment wasn’t an illegal penalty but rather compensation for the costs incurred by the veterinary clinic for training Dr. Rhebergen (which she acknowledged was reasonable). Further, the Court found that the non-compete clause was clear enough to be enforceable. If Dr. Rhebergen intended to provide veterinary services on a regular or continuous basis within the restricted area, then the non-compete would be triggered. The Court also took into account the factual matrix: there were no other veterinary clinics around, and given that there were only 8 dairy herds (patients / clients of the Clinic) in the restricted area where Dr. Rhebergen was interested in targeting, she would necessarily have to set up her practice within that restricted area. Dr. Rhebergen admitted that her intention was to set up a practice in order to compete with the clinic for its existing clients, thereby violating the non-compete clause. For these reasons, her case was dismissed.
Unconventional Non-Compete (Alberta Case) = Enforceable!!!
A recent Alberta case resulted in the Court upholding an unconventional non-compete clause.
In Jones v. Gerosa, 2016 ABQB 207, Dr. Robert Martin Jones sued two former associate dentists (Drs. Mary Gerosa and Jack Phan) for breaching identical non-compete clauses in their associate agreements after they resigned and set up a new clinic shortly thereafter. The non-compete clauses stated that the associates were not to be “engaged in the practice of Dentistry at any location with the City of Fort McMurray, Province of Alberta or a radius of fifty miles thereof”; the non-compete had no time limitation. Unconventionally, the non-competes said that the associates were free to practice anywhere so long as they purchased their portion of the goodwill from Dr. Jones’ clinic, calculated at $90,000 each.
Drs. Gerosa and Phan argued that the non-compete clauses were unenforceable because, among other things, they constituted an illegal penalty and were uncertain and unreasonable (namely, because 50 miles surrounding Fort McMurray was too large, there weren’t any time limitations, and they were contrary to the public interest).
The Alberta Court of Queen’s Bench, however, found in favour of Dr. Jones and ordered the associates to each pay him $90,000. The Court found that the permissive nature of the non-compete clauses constituted license fees to compete instead of an illegal penalties. The clauses were also clear and reasonable enough to enforce. Despite there being no time limits, the reality was that Drs. Gerosa and Phan set up their new clinic very quickly after leaving and acquired 800 patients from Dr. Jones’ clinic within the first 2 years, generating over $650,000 in fees. These facts, coupled with a lack of evidence to suggest that them each paying $90,000 would be crippling and tantamount to an absolute prohibition, led the Court to conclude that that amount was reasonable. There was also no evidence to suggest that the territorial restriction was too broad or unreasonable.
With respect to the non-compete clauses being unreasonable in the public interest, the Court wrote: “I do not think the public is too concerned about how much money dentists are able to generate from their practices, or what it may cost them to set up. There is ultimately no evidence as to any negative impact the clauses may have had on the public in Fort McMurray at the time.”
I think these cases are interesting because the non-compete clauses are permissive in nature; if you want to compete, you just need to pay. And that’s what makes them different from a traditional non-compete which, following the seminal Ontario case of Lyons v. Multari, are generally unenforceable except in exceptional circumstances (particularly given that a non-solicitation could have sufficed). I actually think the courts came to the right decision in not characterizing these payments as penalties but rather license fees to compete.
I think the biggest difficult I have in loving the BC Court of Appeal’s decision in Rhebergen v. Creston Veterinary Clinic Ltd. is that they didn’t (nor did they have to) give any credit to Lyons v. Multari – as the lower court in that case did. The BC Court of Appeal wrote a very SHORT decision and focused on issues such as reasonableness, the factual matrix, and the way in which the veterinary brought the legal challenge forward. I’m not in love with this decision.
I’m also not in love with the Alberta Court’s decision in Jones v. Grosa because there was no temporal limitation on the non-compete and because there was a general lack of evidence on a lot of the different topics that were important to the court’s ultimate decision. So the court simply looked at the facts (before and after material events took place) and made decisions with 20/20 hindsight.
These things being said, I do recognize that these courts were faced with an unconventional non-compete clause and unusual circumstances. I’m curious to see how an Ontario court – following Ontario laws but faced with an unconventional non-compete clause such as the one above – would decide cases like the two above. Keep in mind that an Ontario Court would be influenced to follow Lyons v. Multari as a starting point and NOT Rhebergen v. Creston Veterinary Clinic Ltd. (despite it being a BC Court of Appeal case) and NOT Jones v. Grosa (a decision from an Alberta lower court).
Please note that the information contained herein is for educational purposes only and is not intended to be relied upon for any legal advice. If you need legal advice, please contact me (Michael Carabash) or David Mayzel.
I’m pleased to announce that two (2) Toronto dental practices (one general practice and one specialty practice) that were listed on www.DentalPlace.ca have now sold. I’m sure the buyers / sellers are very happy with the transactions. For the buyers, I think they were happy with the transparency and smoothness of the transaction. We went above and beyond to work with their lawyers and accountants to ensure a smooth transaction – all in record time! For the sellers, I think the best part is that they had legal advice / representation from the beginning (dealing with the lease, staff issues, corporate issues, tax issues, etc.), which you can’t get when you only engage a real estate salesperson to sell your practice. We also saved the sellers have from having to pay 10% of their life’s work to a real estate salesperson. This equates to TENS of THOUSANDS of dollars in savings. And how about the ultimate purchase price? Well, they were over appraised. This should be expected these days for good practices, as it is a seller’s market and there is competition for the limited number of practices out there. If you’re thinking about selling / buying a practice, you can reach out to myself (647.680.9530) or David Mayzel (416.528.5280).
As promised, here are important race day details for May 1st:
1. The private tent and 5km start line are located near the “finish area” in front of the old Ontario Place, south side of Lake Shore Blvd. W. (across the street from Exhibition Place at Remembrance Drive).
2. Our private tent will be open from approximately 7am to 1:30pm.
3. Paid parking near the finish area is available at Exhibition Place.
4. The 5km run (8am start) and 5km walk (12 noon start) begin and end in the finish area. The 10km, half-marathon and full marathon begin at other locations in the city – be sure you know when and where you need to be for the start of your race (more information is available at www.torontomarathon.com).
4. Plan your commute according to road closures (visit the Goodlife Toronto Marathon Website for a complete list of closures). Note that Lake Shore Blvd. W. will be completely closed in the area.
5. If you are taking public transit, the TTC subway does not run before 8am – visit www.ttc.ca for more info.
6. Aim to arrive at least one hour before your event’s scheduled start time.
7. For those parking at Exhibition Place, walk south and cross the street (Lake Shore Blvd. W.) via the pedestrian bridge to access the finish area.
8. The forecast indicates that rain is possible, so pack a rain coat and hat just in case (umbrellas are not recommended on the race course for everyone’s safety.)
9. Do not leave children or valuables unattended.
10. I will be hosting an “introduction to racing” talk and warm up at 7:30am (for the 5k run) and 11:30am (for the 5k walk) at our private tent. All are welcome to join us. We will then take a team photo and walk to the start line together 15 minutes prior to the start of each race.
I look forward to seeing all of you!
David Mayzel is your legal risk manager. He is a trained courtroom lawyer and has spent many years resolving disputes both in and out of court. He knows how to prepare documents and execute transactions in a way that avoids or mitigates legal risks. He can be reached at 416.528.5280. or firstname.lastname@example.org.
Michael Carabash is your business law adviser. He is an entrepreneur at heart who helps you see the big legal picture. He drafts clear and effective agreements that protect your rights while promoting your interests. He can be reached at 647.680.9530. or email@example.com.
Ljubica Durlovska is your transition lawyer. She helps you with staff and associates, maintaining your corporation, and other business matters. She can be reached at 416.443.9280. or firstname.lastname@example.org.
David, Michael, and Ljubica are a truly dynamic team. Their diverse knowledge, skills, and experiences will help you get the best deal possible while promoting your interests and protecting your rights. You can read dentist testimonials here.