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Court refuses to issue injunction to enforce restrictive covenant
February 1, 2006

The BC Supreme Court has refused to issue an injunction to enforce a non-competition covenant in a contract of employment between a hairdressing salon and one of its stylists, finding that the salon’s damages could be easily quantified and that granting injunctive relief would inflict disproportionate harm on the defendant.

The defendant was a hair stylist who had been employed by Raymond Salons at its Park Royal location in West Vancouver for just under 4 years. When he commenced employment, the defendant signed an employment contract containing a covenant that prevented him from engaging in similar employment within 2 miles of the plaintiff’s salon for one year following the termination of his employment. In 2005, the defendant resigned and purchased a salon in Edgemont Village in North Vancouver, which was more than 2 miles from Park Royal by road but only 1.8 miles away “as the crow flies”.

Raymond Salons applied to the BS Supreme Court for an injunction to enforce the restrictive covenant. It admitted that the defendant’s salon was not having much financial impact on its business, and that its real reason for seeking the injunction was to send a message that Raymond Salons would strictly enforce its restrictive covenants and would always obtain injunctions against employees who breached them.

The Court noted that the test for injunctive relief is whether there is a fair question to be tried, and whether the balance of convenience favours the granting of an injunction. The latter issue involves consideration of whether either party would suffer irreparable harm if the injunction were granted or refused.

The Court declined to issue an injunction, finding that although the plaintiff had established a fair question to be tried, the balance of convenience did not favour the granting of injunctive relief. To the extent that damages had been suffered by the plaintiff, they could be easily quantified and were only around $6,000. Also, granting an injunction would put the defendant out of business for the balance of the one year period, which was disproportionate to the amount of the potential damage suffered by the plaintiff. The effect of granting the injunction would be catastrophic to the defendant, given his investment and his family obligations. The Court also noted that the breach was not significant, in that it was only 350 metres within the 2 mile radius described in the covenant and was in a different business district.

The Court dismissed the injunction application, leaving the plaintiff at liberty to pursue its action against the defendant for damages.

Raymond Salons Ltd. v. Janmohamed, 2005 BCSC 1809