February 5th - 2006

LegalBeat: How do you measure far?

A dentist warranted and agreed that he would not carry on a dental practice within a radius of 15 kilometres of the existing practice being purchased.

A dentist warranted and agreed that he would not carry on a dental practice within a radius of 15 kilometres of the existing practice being purchased.

The non-competition agreement was a term of the sale of his practice for $635,000, which included $346,000 for goodwill. His new dental office is actually 11.6 kilometres from the existing practice. The natural and ordinary meaning of the word “radius” was found to be as it appeared in the Concise Oxford Dictionary, namely, "A straight line from the centre to the circumference of a circle or a sphere."

An earlier case of Giannakopoulos v. Minister of National Revenue held that when a legislative enactment speaks of the distance between two geographic points and no method of measurement is specified, the normal route of public travel should be used and not a straight line – "as the crow flies" – for example. That case dealt with a taxpayer's ability to claim expenses for moving a distance greater than 40 kilometres to obtain employment. The court considered the context and the purpose of the provision and decided that the distance should be measured using the distance by road.

In this case, the relevant non-competition agreement states that he agreed not to operate a dental office within a "radius of 15 kilometres." The wording did not state, "a distance of 15 kilometres."

Dr. Jack Newton Dentistry Professional Corporation v. Towell, 2005 CanLII 37351 (ON S.C.)

MERV'S COMMENTS
As you can see from this case, one word can make a significant difference. Think about words like 'radius' or a 'distance' in your agreements and maybe use a map as a schedule, or some other precise method of describing the territory.

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