In a case involving allegations of wrongful dismissal and restrictive covenant breaches, the Supreme Court of British Columbia ruled that a former engineer and business owner was entitled to compensation following his termination without cause from Facility Condition Assessment Portfolio Experts Ontario Ltd. (FCAPX), also known as Roth IAMS Ltd.
The court found that A.B. held a three-year fixed-term employment contract and was owed the balance of that term. Additionally, the court upheld the enforceability of restrictive covenants in an asset purchase agreement, but limited the damages to specific earnings linked to competing activities.
Three-year fixed-term contract entitlement
At the centre of the case was the nature of A.B.’s employment arrangement with FCAPX. A.B. argued he had a three-year fixed-term contract that entitled him to the remaining term’s salary after his termination in July 2020. His employment began in September 2018, and he sought compensation for the 14 months remaining on the contract, citing terms in the asset purchase agreement (APA) he entered with FCAPX. He claimed that the APA’s terms superseded any conflicting provisions in his employment contract.
Justice Walkem agreed, concluding that “the fixed term established in the APA supersedes provisions allowing for without cause termination.”
This meant that A.B. was entitled to a payout covering the remainder of the three-year term, with no duty to mitigate the damages. The court awarded A.B. compensation equivalent to the unpaid balance of the contract, after deducting two weeks’ severance he had already received. That amounted to about $102,650.
Restrictive covenants and competing business activities
Following his termination, A.B. engaged in engineering work through his own company, Bouchard Associates, and another entity. FCAPX alleged this violated the restrictive covenants in their APA, which included non-competition and non-solicitation clauses extending three years post-termination.
FCAPX argued that these restrictions, which applied within a 100-kilometre radius of A.B.’s primary work location in Chilliwack, B.C., were reasonable given the nature of the business sale.
The court upheld the validity of these restrictive covenants. Justice Walkem explained that restrictive covenants tied to commercial agreements, like the sale of business assets, are generally enforceable unless proven unreasonable.
A.B.’s activities with three specific clients were found to directly compete with FCAPX, constituting a breach. The court awarded FCAPX $20,692.18 in damages, based on A.B.’s earnings from these clients, less a 30% margin for business expenses.
Payment dispute under the APA
Lastly, the court addressed a disputed $5,000 payment FCAPX withheld, claiming A.B. had not provided necessary documents as required by the APA. A.B. asserted he shared the documents via a Dropbox link that FCAPX did not access. The court instructed A.B. to deliver the documents through his legal counsel’s office and ordered FCAPX to make the outstanding payment with interest once the documents were received.
In sum, A.B. was awarded a net amount of nearly $87,000 — including the payment for the balance of his fixed-term contract and the $5,000 payment, minus the approximately $20,700 for breaching the restrictive covenants.
For more information, see Bouchard v Facility Condition Assessment Portfolio Experts Ontario Ltd., 2024 BCSC 1870 (CanLII).
