Powell River Industrial Sheet Metal Contracting Inc. (P.R.I.S.M.) v Kramchynski, 2016 BCSC 883, is a decision from the Supreme Court of British Columbia that dealt with the enforcement of a restrictive covenant in the context of a commercial transaction. The decision stands for the proposition that a court may refuse to enforce a restrictive covenant where an employer fails to satisfy its obligations to the employee.
The defendant entered into an agreement for the purchase of his refrigeration, air conditioning and furnace repair business. In addition to the agreement for the purchase of the business, the defendant also entered into a non-competition agreement with the Plaintiff, requiring that the Defendant not compete or be employed in the refrigeration business in the Powell River area for a period of three years.
After the acquisition, the Defendant was not able to obtain sufficient hours in working for the Plaintiff, which resulted in a significant decline in his earnings. The Defendant wanted to supplement his income with other work in Powell River, but the Plaintiff refused, holding the Defendant to the restrictive covenant.
The Court refused to enforce the non-competition agreement, holding that the agreement became unreasonable when the plaintiff failed to provide the defendant with sufficient work. The Defendant was entitled to reasonably expect that the Plaintiff would satisfy its obligations under the agreement, which were to be employed at a consistent level with his pre-sale hours.
Written with the assistance of Tyler Raymond, articling student.
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