COURT FILE NO.: 178/08

DATE: June 6, 2008

SUPERIOR COURT OF JUSTICE – DIVISIONAL COURT – ONTARIO

RE: DR. ALAIN NOURKEYHANI DENTISTRY PROFESSIONAL CORPORATION (Responding Party/Plaintiff)

and

DR. JAFFAR PAKROO (Moving Party/Defendant)

COUNSEL: Richard P. Quance, for the Moving Party

Julian Heller and Zabi Yaqeen, for the Responding Party

HEARD: June 5, 2008

E N D O R S E M E N T

MOLLOY J:

Introduction

[1] The defendant, Dr. Pakroo, seeks leave to appeal to the Divisional Court from the Order of Patillo J. dated April 10, 2008, granting an interim injunction and other related relief against the defendant.

[2] Dr. Pakroo is a dentist. In August 2007, he sold his practice to the plaintiff corporation, of which the sole shareholder is Dr. Nourkeyhani. Both Dr. Pakroo and Dr. Nourkeyhani are of Iranian descent. Dr. Pakroo’s dental practice had 1700 active patients, drawn largely from Toronto’s Iranian community.

[3] The agreement for the sale of the practice contained various restrictive covenants, including that Dr. Pakroo would not, for a period of five years, practise as a dentist within a 10-mile radius of his then current office. Dr. Pakroo also agreed that he would not “directly or indirectly, contact, solicit, interfere with or endeavour to entice away from the Purchaser in any manner whatsoever, any patient”.

[4] Less than a year later, Dr. Pakroo opened an office in Markham, which was within the 10-mile radius of his previous office, and the plaintiff commenced this action seeking damages and injunctive relief.

The Order of the Motion Judge

[5] The plaintiff moved for interlocutory injunctive relief and for a Mareva injunction. That motion was argued on April 9, 2008 and the motion judge issued his endorsement the next day. The motion judge dismissed the motion for the Mareva injunction but granted various other forms of interlocutory relief.

[6] The Order made by the motion judge includes the following:

• a number of specific injunctions basically tracking the language of the restrictive covenants in the contract between the parties (paragraph 1 of the Order);

• an order that the defendant shall not engage in the practice of dentistry at his Markham office;

• orders with respect to the return of documents, cheques, a direction to Canada Post and a website, that have no bearing on this motion for leave to appeal;

• and order that the defendant “cease and desist from advertising his services as a dentist in the Iranian media in the Greater Toronto area” (paragraph 7 of the Order).

[7] The defendant seeks leave to appeal with respect to two aspects of the Order. First, the defendant argues that the motion judge erred by granting the general injunctive relief in paragraph 1 of his Order as there had been no evidence of irreparable harm sufficient to warrant injunctive relief. Second, the defendant takes issue with paragraph 7 of the Order restraining him from advertising in the Iranian media.

The Test for Granting Leave to Appeal

[8] The test for granting leave to appeal under Rule 62.02(4) is well-settled. It is recognized that leave should not be easily granted and that the test to be met is a very strict one. There are two possible branches upon which leave may be granted. Both branches involve a two-part test and in each case, both aspects of the two-part test must be met before leave may be granted.

[9] Under Rule 62.02(4)(a), the moving party must establish that there is a conflicting decision of another judge or court in Ontario or elsewhere (but not a lower level court) and that it is in the opinion of the judge hearing the motion “desirable that leave to appeal be granted”. A “conflicting decision” must be with respect to a matter of principle, not merely a situation in which a different result was reached in respect of particular facts: Comtrade Petroleum Inc. v. 490300 Ontario Ltd.¸(1992), 7 O.R. (3d) 542 (Div.Ct.).

[10] Under Rule 62.02(4)(b), the moving party must establish that there is reason to doubt the correctness of the order in question and that the proposed appeal involves matters of such importance that leave to appeal should be granted. It is not necessary that the judge granting leave be satisfied that the decision in question was actually wrong; that aspect of the test is satisfied if the judge granting leave is satisfied that the correctness of the order is open to “very serious debate”: Nazari v. OTIP/RAEO Insurance Co., [2003] O.J. No. 3442 (S.C.J. per Then J.); Ash v. Lloyd’s Corp. (1992), 8 O.R. (3d) 282 (Gen Div., per Farley J.). In addition, the moving party must demonstrate matters of importance that go beyond the interest of the immediate parties and involve questions of general or public importance relevant to the development of the law and the administration of justice: Rankin v. McLeod Young Weir Ltd. (1986), 57 O.R. (2d) 569 (H.C.J. per Catzman J.); Greslik v. Ontario Legal Aid Plan (1988), 65 O.R. (2d) 110 (Div.Ct.).

The General Injunction Order

[11] With respect to the general injunctive relief granted in paragraph 1 of the Order, the test for leave to appeal is not met under either of the two branches of Rule 62.02(4).

[12] Paragraph 1 of the Order is essentially an order requiring Dr. Pakroo to comply with the restrictive covenants in the agreement he signed. This is in a context in which it is clear that Dr. Pakroo is in breach, at the very least, of the requirement that he not practise dentistry within a 10-mile radius of his former office. The only issue upon which this relief is challenged is that the motion judge failed to properly consider the evidence in concluding that the plaintiff had suffered irreparable harm.

[13] There is no suggestion of conflicting decisions. The issue is the application of the “reason to doubt correctness” test. There was evidence before the motion judge upon which he could reasonably conclude that the plaintiff had lost customers as a result of the actions of the defendant. The motion judge correctly identified the legal test for granting an interlocutory injunction and applied that test to the facts in evidence before him. I see no reason to doubt the correctness of his decision.

[14] Furthermore, even if there was reason to doubt its correctness, this is strictly a matter of enforcing a specific agreement between these two parties. There is no issue of general importance beyond the interest of the parties. Therefore, the defendant has failed to meet both aspects of the test and leave to appeal is denied with respect to that aspect of the Order.

The Injunction Restraining Advertising in the Iranian Media

[15] The situation with respect to the injunction preventing the defendant from advertising in the Iranian media is a different matter.

[16] There is nothing in the agreement between the parties that deals specifically with the defendant’s right to advertise his services. There was evidence before the motion judge that the defendant had advertised his dental practice for 17 years in the IranStar (a Toronto area newspaper directed towards the Iranian community) as well appearing on an Iranian television channel and Iranian radio station for many years. Although this was well known to the plaintiff, and although the agreement addresses the issue of competition, the agreement is silent on the issue of advertising.

[17] The plaintiff argues that by advertising the new address of his dental practice in the Iranian media, the defendant was in breach of the very broadly worded non-solicitation clause in the agreement (as quoted in paragraph [3] above). On this issue, the motion judge’s endorsement states:

Finally, as part of my order, I order that the defendant cease and desist from advertising his service as a dentist in the Iranian media in the Greater Toronto area. The evidence established that the defendant’s practice, which he sold to the plaintiff had 1,700 active patients last year drawn mainly from the Iranian community. Given the defendant’s actions to date in breach of the agreements he signed, it is my view that such advertising goes beyond what might otherwise be permissible and is sufficient to constitute soliciting. For that reason it should not continue.

[18] It is generally recognized that a non-solicitation clause in an agreement does not prevent a person from doing general advertising in the media: Groupe Financier Assbec Ltée v. Dion, (1994), 61 C.P.R. (3d) 289 (Que.C.A.); Hawboldt Industries Ltd. v. Chester Basin Hydraulics & Machine Ltd., [1983] N.S.J. No. 87, 57 N.S.R. (2d) 413 (N.S.S.C.)at paras 55 and 62; Sanford Evans List Brokerage v. Trauzzi, [2000] O.J. No. 1394, 50 C.C.E.L. (2d) 105 (S.C.J.) at para 49, and cases referred to therein. In addition, it is generally not considered to be solicitation of customers if advertisements are placed in trade journals or the like, provided that confidential information is not used: Hawboldt Industries Ltd. If advertising of a general nature is carried out, it is irrelevant that information with respect to the defendant’s new location may come to the attention of his former customers and irrelevant that they might therefore seek him out. That does not constitute solicitation. It is only where a defendant makes use of confidential information or targets specific members of the former client base that advertising efforts have traditionally been found to be objectionable.

[19] In Dr. P. Andreaou Inc. v. McCaig, [2007] B.C.J. No. 537 the British Columbia Court of Appeal held that a dentist who sold his practice in Surrey and then placed an advertisement in the local Surrey newspaper announcing the new location of his practice (which was outside the Surrey area) did not breach the terms of the sale agreement prohibiting him from soliciting former patients. The wording of the non-solicitation clause in that case is strikingly similar to the one at issue in this case. Further, the fact that the ads were placed by Dr. McCaig in the Surrey newspaper where the former practice was located, rather than in the new community in which he was practicing, is significant. The ads were placed in the community where those patients were located.

[20] In my view, the decision of the motion judge on this issue is in conflict with the cases I have cited, and in particular with the British Columbia Court of Appeal decision referred to in the preceding paragraph. This is not simply a matter of exercising discretion in a different way. It appears to me that there is an actual conflict in principle.

[21] Alternatively, based on these authorities and on the wording of the agreement in this case, I have reasons to doubt the correctness of the motion judge’s decision in this regard. The plaintiff knew about the advertising Dr. Pakroo had done in the past. It would have been a simple matter to insert a provision with respect to advertising if it was the intention of the parties that there should be a limit on advertising. It also appears that the motion judge took into account that the defendant had breached the geographic restriction in the non-competition clause when issuing the order prohibiting future advertising. In my view, it is debatable that the defendant’s bad conduct in where he chose to relocate his practice can be used to restrain his right to advertise his practice, which otherwise is an untrammeled right. The fact that advertising generally is not restrained, but merely advertising in the Iranian media, does not alter the fact that there is nothing in the agreement prohibiting advertising at all, whether in the Iranian media or elsewhere. Just because a large proportion of Dr. Pakroo’s former patients are Iranian does not mean that placing advertisements in the Iranian media is a “solicitation” of those people. Clearly, Dr. Pakroo sought to reach individuals likely to be particularly interested in his services, and clearly many of his former patients would be likely to see or hear the ads he placed, but so would many other potential clients. It is strongly arguable that more than this is required before a person can be restrained from communicating his place of business to the public.

[22] In my opinion, this is an issue that goes beyond the interest of the two parties involved. Toronto has a rich and diverse population. There are many separate cultural communities within the Greater Toronto area and many media sources serving the particular needs of those communities, often in their own language. Many individuals in those communities have a less than perfect grasp of the English language and prefer to deal with professionals, such as doctors, who can communicate with them in their native languages. Prohibiting a professional from advertising in his own cultural community whenever he or she is restrained from soliciting former clients or patients has implications both for those professionals, and for the community they serve.

[23] I am therefore of the opinion that it is “desirable that leave be granted” (within the meaning of Rule 62.02(4)(a)) and that the proposed appeal “involves matters of such importance that leave to appeal should be granted”(within the meaning of Rule 62.02(4)(b)). Both aspects of both parts of the test are met. Leave to appeal is granted, but only with respect to paragraph 7 of the Order.

Stay Pending Appeal

[24] The defendant’s notice of motion, in addition to seeking leave to appeal the Order, also requested a stay of the Order pending appeal. However, the factum filed by the defendant made no reference at all to the issue of a stay. The only relief mentioned is the leave to appeal. In these circumstances, the plaintiff submits that he has been caught unawares by defence counsel’s request in oral argument for a stay pending appeal. I agree that it would be unfair to require the plaintiff to address this point without more adequate notice. Accordingly, I am not granting a stay at this point, but that is without prejudice to the right of the defendant to seek a stay upon appropriate notice to the plaintiff.

Costs

[25] Success was divided. In these circumstances, it seems appropriate to me that each side should bear its own costs. Accordingly, no order as to costs of this motion. Given the outcome, and given the result before the motion judge, I see no basis for interfering with his order as to costs.

MOLLOY J.

Date: June 6, 2008