Supreme Court Declares Ambiguous Non-Competition Clauses Unenforceable

On January 23, 2009, the Supreme Court of Canada handed down a decision regarding the Court's role in interpreting and enforcing restrictive covenants. More specifically, the Supreme Court held that it is not for a Court to interpret or "fix" ambiguous restrictive covenants in an effort to uphold their validity.

Facts and Judicial History

In the case of Shafron v. KRG Insurance Brokers (Western) Inc.¹, Mr. Shafron's employment contract with KRG Insurance Brokers (Western) ("KRG") contained a restrictive covenant that prohibited him from competing with KRG for a three-year period after the termination of his employment in the "Metropolitan City of Vancouver". In 2001, Mr. Shafron left the employ of KRG and began working as an insurance salesman for Shaw Insurance Agency in Richmond, British Columbia. KRG sought to have the restrictive covenant contained in Mr. Shafron's employment contract enforced. Mr. Shafron challenged the enforceability of the restrictive