Hecke v. Compagnie de Gestion Maskoutaine Ltée et al.

Hecke v. Compagnie de Gestion Maskoutaine Ltée et al.

The covenant was reasonably limited to the protection of the purchaser, not vague as to the business described, and the appellant materially breached it by organizing and directing a new competing company; therefore the stipulated $20,000 penalty is enforceable and the appeal is dismissed.

Citation
[1972] SCR 22
Parties
Appellant/defendant: Kurt W. Hecke; Respondent/plaintiff: La Compagnie de Gestion Maskoutaine Ltée; Respondent/plaintiff: La Compagnie de Gestion Cayouette Ltée
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
27 April 1971
Procedural Posture
Appeal / Appeal to the Supreme Court of Canada From the Court of Queen's Bench, Appeal Side, Province of Quebec; Final Judgment on Appeal
Outcome
Appeal dismissed; judgment of the lower courts affirmed.
Legal Topics
Restrictive Covenant, Penalty Clause, Sale of Shares, Restraint of Trade, Breach of Covenant
Source Language
English
Contract Restrictive Covenant Penalty Clause Sale of Shares Restraint of Trade Breach of Covenant

Case Brief

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Parties

Kurt W. Hecke

Appellant/defendant

La Compagnie de Gestion Maskoutaine Ltée

Respondent/plaintiff

La Compagnie de Gestion Cayouette Ltée

Respondent/plaintiff

Procedural Posture

Appeal / Appeal to the Supreme Court of Canada From the Court of Queen's Bench, Appeal Side, Province of Quebec; Final Judgment on Appeal

Legal Issues

  1. 1 Whether a post-sale restrictive covenant forbidding the vendor from carrying on a similar business for ten years is valid and enforceable
  2. 2 Whether the contractual penal clause for $20,000 is enforceable
  3. 3 Whether the appellant breached the covenant by participating in a new competing company

Ratio Decidendi

The covenant was reasonably limited to the protection of the purchaser, not vague as to the business described, and the appellant materially breached it by organizing and directing a new competing company; therefore the stipulated $20,000 penalty is enforceable and the appeal is dismissed.

Court Disposition

Appeal dismissed; judgment of the lower courts affirmed.

Orders

  • Appellant ordered to pay the stipulated penalty of $20,000 to the respondents.
  • Costs awarded against the appellant.