Executive Summary: Key Legal and Evidentiary Issues

• Dispute centers on enforcement of a non-compete clause in an independent contractor agreement following business sale.

• Plaintiff argued that the defendant’s ongoing recruitment work violated restrictive covenants binding her post-termination.

• The definition of “Company’s Business” became pivotal in assessing the scope of the restrictive covenant.

• Court found insufficient evidence to support plaintiff’s claim that recruitment services fell under the restricted activities.

• No irreparable harm was proven by the plaintiff to justify granting an injunction.

• Application for a broader injunction was dismissed, though limited consent orders were approved.

Background and facts of the case

Heaps & Doyle Practice Solutions Inc. brought an application in the Supreme Court of British Columbia seeking to enforce a restrictive covenant against Kimberly Pacula and her business, Inspire Professional Teeth Whitening Inc. The plaintiff claimed that Pacula continued to engage in associate dentist recruitment services in Canada in breach of a non-compete clause agreed to under two prior agreements, stemming from a 2018 purchase of her business.

In 2018, Pacula and her company sold their business to Hill Kindy Practice Sales & Realty Inc., which later became Heaps & Doyle. As part of the deal, they entered into an Independent Contractor Agreement (ICA) under which Pacula was to provide recruitment services exclusively in the dental field for the buyer. The agreement included a restrictive covenant that barred competition with Heaps & Doyle’s defined business for two years post-termination. Her contractual engagement ended in July 2024, and Heaps & Doyle sought an injunction preventing her from continuing any dental recruitment work until July 2026.

Arguments and legal analysis

Heaps & Doyle contended that Pacula’s ongoing recruitment activity directly competed with their business, violating the non-compete clause. They interpreted the ICA’s reference to “recruitment and consulting services” as part of their “Company’s Business,” which would be protected under the covenant. The court, however, found the language in the agreement ambiguous and held that recruitment was not expressly included in the defined term “Company’s Business,” which focused more narrowly on dental practice sales and related activities.

In determining whether to grant an injunction, the court applied the three-part RJR-MacDonald test: a serious question to be tried (or a strong prima facie case), irreparable harm, and balance of convenience. Given the potential for the injunction to effectively decide the central issue before trial, the court required a strong prima facie case. It found the plaintiff did not meet this standard due to the lack of clarity in the agreement's language and insufficient evidence to show that the restrictive covenant covered Pacula’s current recruitment work.

Court’s findings on harm and balance of convenience

The court further found that Heaps & Doyle failed to prove it would suffer irreparable harm absent the injunction. Although eight of Pacula’s clients had formerly worked with Heaps & Doyle, there was no proof she solicited them or that her activities caused reputational or financial damage to the plaintiff. The court emphasized that speculation alone could not satisfy the irreparable harm requirement.

On the balance of convenience, the court sided with Pacula, noting that her recruitment business was her primary source of income and the proposed injunction would significantly affect her livelihood. Conversely, Heaps & Doyle presented no evidence showing how her activities harmed their operations or client base.

Final outcome and court orders

The court dismissed the plaintiff’s request for a broad injunction restraining Pacula from engaging in dental associate recruitment across Canada. However, two orders were granted by consent: Pacula and her business were barred from soliciting or engaging with Heaps & Doyle’s current clients and from using the business name “Associates on Demand” until July 2026 or until further court order.

The case illustrates the importance of precision in contract drafting, particularly when defining the scope of business activities subject to non-compete clauses. It also reinforces the high evidentiary bar plaintiffs must meet when seeking injunctive relief that could limit a party’s ability to earn a livelihood.