Stockwoods lawyers Paul Le Vay and Carlo Di Carlo successfully represented their client in a partial summary judgment motion brought by an investment management company of which he was a co-founder, Jones Collombin Counsel Inc. (“JCIC”). JCIC sought to enforce a restrictive covenant wherein Stockwoods’ client promised not to “solicit, endeavor to solicit or gain” the business of anyone who was a JCIC client in the preceding 12 months. JCIC alleged that this clause was breached because after he left JCIC, Stockwoods’ client began working at a competing investment management company and several former JCIC clients brought their business to him. There was no evidence on the motion of solicitation.
JCIC brought its motion based on an interpretation of the restrictive covenant that the word “gain” prohibited accepting the business of former JCIC clients, even if nothing was done to obtain that business. The court accepted the submissions of Stockwoods and rejected this argument. The Judge found that the plain meaning of the clause required some positive action rather than mere acquiescence. The restrictive words used were verbs (action words) and, in context, the word “gain” suggested a result obtained through effort. Interestingly, the judge saw the restrictions that JCIC’s interpretation would place on the choices of strangers to the contract – the clients – as requiring clearer language in order to displace a client’s freedom of choice of advisor. This follows what is now a clear trend in the jurisprudence of client focused considerations in the case law dealing with departing investment advisors.
In addition, Stockwoods also obtained summary judgment on their client’s cross-motion seeking to enforce a promissory note. See the decision here.
