What is the test for enforcing a restrictive covenant?
Alberta, Canada
The following excerpt is from Ensign Drilling Inc. v. Lundle, 2007 ABQB 357 (CanLII):
The Ontario Court of Appeal in Tank Lining Corp v. Dunlop Industrial Ltd., (1982) 40 O.R. 2nd 29, reiterated at page 223 that the determination as to whether a restrictive covenant is enforceable requires a four stage inquiry as follows: •Firstly, is the covenant under review a restraint of trade? •Secondly, is the restraint one which is against public policy and, therefore, void? •Thirdly, can the restraint be justified as reasonable in the interest of the parties? and •Fourthly, can it also be justified as reasonable with reference to the interests of the public?
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