OSHAWA COURT FILE NO.: 75630/11
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN
Smilecorp Inc.
Applicant
— and —
Daniel Pesin
Respondent
COUNSEL:
James N. Aitchison for the applicant
Nick A. Porco for the respondent
HEARD: December 09, 2011; March 05, 2012
H.K. O’Connell J.
REASONS FOR JUDGMENT
THE COURT PROCEEDINGS
1I heard this application for injunctive relief on December 09, 2011 at Oshawa. In addition counsel appeared before me on March 05, 2012 based on a concern of the applicant that the respondent was acting in contravention of an Agreement which is the subject matter of this litigation, and was doing so during the time frame that my judgment was on reserve. On March 05, 2012 a temporary order was made in favour of the applicant.
2Finally on March 23, 2012, counsel and I had a teleconference to discuss the issue of the breadth of the non solicitation clause, and in particular what impact if any the case in Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6, [2009] 1 S.C.R. 157 had on this clause. Mr. Porco at that time referenced a very recent case of the Court of Appeal, Veolia ES Industrial Service Inc. v. John Brule and Clean Water Works Inc. 2012 ONCA 173, a decision released on March 20, 2012.
3I invited counsel to submit short submissions on the issue of the non advertising term in the Management Agreement. Mr. Aitchison did so on March 23, 2012 and Mr. Porco on March 26, as anticipated. I thank counsel for their subsequent submissions.
OVERVIEW
4By notice of application dated November 04, 2011, Smilecorp Inc. (Smilecorp), which is a management company owned by Mr. Victor Minas, seeks an injunction on a temporary and permanent basis to enforce restrictive covenants between itself and Dr. Daniel Pesin (Pesin).
5The particulars of the relief sought are as follows:
A declaration that the respondent, Pesin has no rights or interest in the patient charts, records and lists of patients of the Durham Dental and Denture Clinic;
An interim and permanent injunction restraining Pesin until October 31, 2013 from soliciting, contacting inviting or encouraging, either directly or indirectly, in any manner whatsoever any current or past patients of the dental practice carried on at the Centre to seek dental treatment, including dental hygiene treatment, at any location other than the premises;
An interim and permanent injunction restraining Pesin until October 31, 2013 from sending any announcement, advertising flyer, notice or any communication directly or indirectly to the patients of the dental practice carried on at the Centre or announcing the change in location of the Respondent’s practice to another location;
An interim and permanent injunction ordering Pesin to return all confidential information removed from the dental practice carried on at the Centre including patient records and list of patients and their contact information; and
An interim and permanent injunction ordering Pesin to comply with the Confidentiality Agreement made between the Applicant and Pesin on August 03, 2009.
6Smilecorp runs both a dental clinic and a denturist clinic at premises that are adjacent to each other. The premises, although sharing different municipal addresses, function as one business. The business was set up in 1995. Mr. Minas runs the denture side of the clinic. Dentists are situated on the other side, running dental practices.
7Dr. Pesin was a dentist who entered into a Management Agreement with Smilecorp. That agreement dated August 06, 2009, precipitated the relationship between Smilecorp and Pesin. Pesin commenced his association with the clinic and assumed the care over patients who were already coming to the clinic, as well as new patients solicited via advertising occasioned by Smilecorp.
8Pesin practiced Dentistry at the clinic under the auspices of the agreement. The agreement was for a five year term. There was an amendment to the agreement executed on July 01, 2010.
9The agreement was terminated by notice given by Smilecorp to Pesin on October 31, 2011. The termination was in accord with the provisions of the Agreement. The termination letter is contained in the applicant’s Application Record.
10Pesin made copies of the client lists from the Centre just prior to termination. Those lists contain client names and contact information. Pesin was approached by Victor Minas, as to his alleged removal of the list. Pesin acknowledged that he had done so. Return of the list was demanded.
11The list has not been returned. There is some dispute about the contents of the list by way of its expansiveness, however there is no issue that Pesin took a list of clients with him..
12Pursuant to the Management Agreement it is impermissible for a party to the Agreement to remove such list. The list remains in the possession of Pesin.
POSITION OF SMILECORP
13In addition to its comprehensive factum, Mr. Aitchison for Smilecorp made the following submissions to highlight his client’s position. Smilecorp notes that the Management Agreement was entered between the parties in 2009. The premises are vested with a “great deal of good will”. Historically under the terms of the Agreement when dentists leave the practice they leave behind the client lists.
14Reference was made to Articles 3 and 4 of the Agreement. In particular the agreement notes that the recipient and consultants shall not use any of the information directly or indirectly, in any manner whatsoever for their own benefit without the written consent of the Company.
15The applicant says it has a proprietary interest in the client lists, as well as in the goodwill of the premises. In this regard, at paragraph C of the Agreement it states:
The parties agree that the Manager has invested considerable time, money and effort in establishing a prime facility for the practice of self regulated health professionals including but not limited to dentistry and dental hygiene in the Premises and that the proprietary interest created by the Manager in the location, facility and Premises is worthy of protection by the Manager and further agree that because of the valuable goodwill associated with the location and Premises as created by the Manager and the absolute trust the Manager must place in the Dentist to maintain the value of the Manager’s said proprietary interest, the Dentist has agreed to the strict enforcement of the terms of this Agreement including, without limiting the generality of the foregoing, the transfer of records, the non-competition and non-solicitation provisions of this Agreement.
16The relevant provision in Paragraph 17 of the Agreement that was referenced in argument is as follows:
Upon expiry or termination of this Agreement or any renewal thereof, for a period of twenty-four (24) months thereafter, the Dentist covenants: (1) not to solicit, contact, invite or encourage either directly or indirectly, in any manner whatsoever, any patients of the Dental Practice to seek dental treatment, including but not limited to, dental hygiene treatment, at any location other than at the Premises; (2) not to send any announcement, advertising flyer, notice or any communication directly or indirectly to his patients announcing the change in location of the Dental Practice to another location….
17The Applicant seeks to enforce this clause in accordance with the agreement.
18Paragraph 18 of the Agreement notes that the parties agree with the reasonableness and validity of the provisions and that injunctive relief is the appropriate venue in event of breach.
19An amendment to the agreement was executed on July 01, 2012.
20Smilecorp alleges that Dr. Pesin has taken a list of all of the patients ever treated at Smilecorp. After Dr. Pesin left, a succeeding dentist took over the practice of Dr. Pesin. A notice was sent out to the patients saying that that dentist, Dr. Sohela Vaid, was now practicing at the business.
21The history of the clinic underscores that when a dentist leaves, he/she leaves charts behind. As that dentist leaves, he leaves the shoes behind for the next dentist. The new dentist steps into shoes of dentist he is replacing.
22Mr. Aitchison notes that there is no non competition clause in the Agreement. Dr. Pesin can practice and advertise. He simply cannot do so in contravention of Paragraph 17 of the Management Agreement.
23Thus, Smilecorp wants return of the list and enforcement of the terms of the Agreement.
24At paragraph 20.(1), the Agreement states:
(1) Upon expiry or termination of this Agreement, the Dentist shall vacate the Premises and:
(b) shall not remove any information related to any patient of the Dental practice including but not limited to, any records, patients lists or personal information such as phone or fax numbers, email or any other address of such patients from the Premises.
(c) shall comply with the Confidentiality Agreement dated August 3, 2009, entered into with the manager and without limiting the generality of the foregoing, not divulge any the Manager.
25Mr. Aitchison, in anticipation of Mr. Porco’s argument, argued that Pesin will say that a denturist has no right to the charts. Smilecorp agrees. But Smilecorp argues that this was not a transfer of records from dentist to denturist, rather a transfer from Dr. Pesin to another dentist, Dr. Vaid. Dr. Vaid is subject to the regulations that govern dentists.
26This is therefore not a case about intrusion into the dental field by Smilecorp, but rather a simple business relationship between Smilecorp and Pesin. When Pesin entered into the Agreement he had independent legal advice. There is no surprise here. To use Mr. Aitchison phrase, Pesin was “to leave the shoes behind for the next dentist.” This is all in compliance with his professional obligations as a dentist.
27Reference was made to the Practice Advisory of the Royal College of Dental Surgeons of Ontario, dated February 2007. Mr. Aitchison argues that there is nothing inconsistent between that Advisory and the Management Agreement. In the Practice Advisory that governs dentists, there is recognition that an outgoing dentist or the succeeding dentist must advise of a transfer of the patient’s files to another dentist. Dr. Vaid has notified all of the patients that she now has the records. The obligation to notify has been met.
28Smilecorp argues stridently that it is not claiming an interest in the records, per se, but rather claims an interest in the goodwill of the facility which includes the list of clients. The Management Agreement is a direct attempt to preserve goodwill. Goodwill is repeated in the agreement numerous times. It is clear.
29If Pesin is allowed to transfer the goodwill, then any dentist that Smilecorp wants to attract knows that they will have the goodwill of the clinic in their favour. Attracting dentists is not difficult because of the goodwill. Indeed Dr. Vaid came back for that very reason.
30The irreparable harm here is that the erosion of the client base will harm that goodwill. It is non-compensable in damages. Reference was made to the decision in Dr. Jack Newton Dentistry Professional Corp. v. Towell, [2005] O.J. No. 4415 (Ont.S.C.). In that case there was a restrictive covenant. Damages were suggested to be appropriate instead of an injunction. The court noted the irreparable harm issue, and the difficulty of quantifying damages. In that context an injunction was deemed appropriate.
31The inappropriateness of quantifying damages is also noted in the decision in Button v. Jones, [2001] O.J. No. 1976 (Ont. S.C.). There the court noted that where a plaintiff seeks an injunction to enforce a negative covenant it need not prove irreparable harm or that the balance of convenience favoured the granting of the injunction.
32At root this agreement is an employment contract says Mr. Aitchison. Restraint of trade is permitted when parties contract for it and it is reasonable. In the case at bar it is reasonable. There is no prohibition on the practice of dentistry by Dr. Pesin. Indeed Dr. Pesin could open up next store to Smilecorp if he was so inclined. Restraint of trade is not a factor.
33The essence of this case, says Mr. Aitchison, is the goodwill built up over 16 years by Smilecorp at the premises. That is the very proprietary interest that the parties recognized was in need of protection.
34Mr. Aitchison says that the respondent signed the agreement, is now in breach, and seeks to have the advantage of his breach. If Pesin contacts the clients, the business of the applicant and the goodwill will be thwarted, such that the applicants business will be affected. The respondent knew he was expected to transfer the good will to the next dentist, and he did, but he then took the list with the intent to contact patients. It is that action that is directly proscribed by the Management Agreement.
35Finally it is noted that the non solicitation clause is for two years, namely the remnant of the time from termination to the five year mark since Dr. Pesin first contracted with Smilecorp, namely October 2013. Pesin can advertise that he has opened his own practice. He is simply prohibited from soliciting clients that he previously had under the roof of Smilecorp.
POSITION OF DR. PESIN
36Mr. Porco, like Mr. Aitchison, was succinct and concise in his presentation. As well, like Mr. Aitchison, he supplied a very concise and detailed factum.
37He says that a non dentist is seeking to enforce a restrictive covenant dealing with dental patients against a dentist. No case is provided to uphold that type of covenant. Non dentists cannot as a matter of law, and in accordance with the statutory regime and with the policy objectives of the Royal College of Dentists, have an interest in dental patients.
38In order for a restrictive covenant to be enforced, Smilecorp must establish a valid proprietary interest. They can’t do it, says Mr. Porco, so they say look at the contract. However the courts have determined that restrictive covenants are against public policy and void unless reasonable.
39It is an interpretation of the covenant that determines the reasonableness, as the decision in J.G. Collins Insurance Agencies Ltd. v. Elsely Estate 1978 7 (SCC), [1978] 2 S.C.R. 916 makes plain.
40If it is the goodwill that is being sought to be protected, then it must be the goodwill of patients, argues Mr. Porco. Smilecorp cannot have that goodwill because Smilecorp is not a dentistry operation, rather it is a management company that employs dentists. In essence they cannot have that goodwill because they are not dentists. The Dentistry Act and the regulations thereto, prohibit it.
41At Exhibit G of Dr. Pesin’s affidavit, a Practice Advisory dated August 2007 is referenced that governs the release and transfer of patient records. At the last page of the Advisory, it notes in the context of a contract that: “the contract should not, however, provide any terms which would in any way prejudice the future treatment of patients, restrict patients’ right to choose the dentist of their choice, or limit the access of the patient to their dental records.”
42It is submitted that the dentist who replaced Dr. Pesin at the Clinic, Dr. Vaid is not giving the patient the right to chose Dr. Pesin’s treatment over hers, because she has not included his current address.
43Dr. Pesin is not saying “come to me”, in the notice that he intends to send, but rather says “I am here now”. It is an obligation of his pursuant to the Dentistry Act and the Regulations. The provision in the Agreement seeks to override his professional obligations, because it says you as a dentist cannot contact your patients and tell them of your new scenario.
44That in and of itself is against public policy, argues Mr. Porco. Reference was made to the decision in Lodwig v. Mather, a 1995 decision of the Queen’s Bench in Alberta. Mr. Porco argues that the ratio in that case is applicable here, in particular as it relates to what I will term the rights of the dentist.
45Mr. Porco further argues that here is no case cited where a non professional is seeking to enforce a restrictive covenant as against a professional. It is akin to saying that an office manager in a law office would be able to say you cannot contact the clients anymore. That is the same situation with Dr. Pesin. The relationship is between Pesin and the patient. Smilecorp has nothing to do with that relationship, and can’t have any relationship of the sort.
46Public policy negates this agreement. A patient cannot be handcuffed to a clinic. That is part of the policy objectives of the College of Dentistry. Yet Smilecorp purports to do just that.
47The Management Agreement supports this position, says Mr. Porco. At item C the Agreement defines proprietary interest and defines it as the location of the facility and the premises. It does not identify proprietary interest as the patient nor could it, as Smilecorp cannot have such a proprietary interest in the patients.
48In terms of goodwill, Smilecorp is not entitled to fee split with the Dr. Pesin. There essentially was a fee split. Pesin’s affidavit at exhibit A includes a chart outlining the payments received. It shows, says Mr. Porco, a fee split arrangement. In order for the equitable remedy of an injunction to issue, the party must have clean hands. It is argued that Smilecorp doesn’t, as fee splitting is an unclean act.
49If the goodwill associated with the premises is linked to a dentist being at the premises, there is no irreparable harm as a matter of law. Dr. Vaid took over. If goodwill is linked to a percentage of billables that the dentist makes, it is invalid as a matter of law, because it is against the law to fee split with a non dentist.
50In relation to advertising, the decision in Dr. Alain Nourkeyhani Dentistry Professional Corporation and Dr. Jaffer Pakroo (2008) 27480 (Div. Ct.) is cited for the proposition that a non solicitation clause in an agreement does not prevent a person from doing general advertising.
51In this regard the scope of what one can and cannot do in terms of advertising is not outlined in the covenant. It is ambiguous as to the scope and the extent of what is covered. In consideration of the decision of the Supreme Court in Shafron it is argued that the provision in the Agreement with respect to advertisting cannot be read down, blue pencilled, or severed.
52In addition the applicant cannot show irreparable harm. That component is required for the imposition of an injunction which will if imposed, as the parties have agreed, have final effect.
53Mr. Porco argues that Justice Brockenshire’s decision in Diagnostic Imaging International (Canada) Ltd. v. Gervais (1993) 5571(ONSC) has application. He says that a proprietary interest cannot be present between Smilecorp and the patients of the clinic. In the case at bar it is argued that Dr. Pesin simply wants to say in his notice to patients at Smilecorp that he is no longer at the clinic. He simply wants to say that he has a new address. It is not inviting, nor suggesting that people should come. Rather it is necessary to accord with his obligations to his profession both via Act and regulations.
54It is not, says Mr. Porco, a solicitation when it is sent to each patient. If the notice was limited to a general advertisement in the paper, there is no assurance that patients would read it and be able to exercise their right to seek dental work at the office of a Doctor of choice. Patients have no idea what happened to Dr. Pesin. In the context of the right of the patient to chose, and the covenant, the right to choose must be paramount. The letter proposed to be sent is generic, doesn’t solicit, and allows a patient to chose.
55Leaving no stone unturned, Mr. Porco finally argues there was an agency agreement between the parties. It covers the same scope of duties as the Management Agreement. And yet the agency agreement does not contain a restrictive covenant. It is argued that it should supercede in terms of the obligations between the parties.
Reply
56The amendment to the Management Agreement was simply to provide relief from the HST. It is not a superseding or conflicting document, argues Mr. Aitchison.
57What is more, Dr. Pesin continued to comply with the Management Agreement in respect of rent and equipment. He cannot have it both ways.
58In relation to clean hands, it is argued that if there is a fee split, it is a problem for Dr. Pesin, not for Smilecorp. Smilecorp is not governed by legislation or regulations that govern dentists.
DECISION
59The test for granting an injunction is set out in RJR MacDonald v. Canada. There must be a serious issue to be tried, there must be irreparable harm occasioned, and the balance of convenience must favour the Applicant.
60To be clear, the applicant argues that it need not show a strong prima facie case, as there is no employee/employer relationship here. Mr. Aitchison provides express reference for that argument in his factum. In addition such a determination is very difficult, if not impossible, at the level of an application for an interim injunction.
61In any event the applicant says it has met that hurdle.
The Nature of the Relationship between Dr. Pesin and Smilecorp
62In the context of this particular business relationship, I find that there was no unequal bargaining power. What is in operation is essentially a licensing arrangement. Dr. Pesin had immediate access to a client base, and the goodwill of Smilecorp, including the location and equipment for the dental practice. It is manifestly apparent from a reading of the Management Agreement that it is concise; has changes noted including each page being initialled by the parties; and is a complete template of the intentions of Smilecorp and Dr. Pesin.
63I agree that as with the fact pattern in the Dr. Jack Newton decision this case is very much a matter of contractual import, undertaken by “knowledgeable persons of equal bargaining power.” (see J.G. Collins Insurance Agencies Ltd., v. Elsley Estate, 1978 7 (SCC), [1978] 2 S.C.R. 916.
64Nothing in that arrangement fetters trade or is otherwise detrimental to the business interests of Dr. Pesin. Indeed, as Mr. Aitchison reminds, there is nothing to stop Dr. Pesin from opening a business right next store to Smilecorp. He simply has to comply with the terms of the contract that he and Smilecorp expressly and clearly methodically, bargained for.
65Likewise I find that the reference by Justice Hambly in Button, to the decision in Hardee Farms International Ltd. v. Cam & Crank Grinding Ltd. (1973), 1973 688 (ON SC), 33 D.L.R. (3d) 266, is of import to the case at bar. In Hardee the court stated:
The best analysis with which I am acquainted of the law applicable to prohibitory injunctions, as distinguished from mandatory injunctions, is contained in the judgment of Megarry, J. in Hampstead & Suburban properties Ltd. V. Diomedous {1969} 1 Chancery 248. The learned Judge [1t p. 257] examined the classic statement of Lord Carins. L.C. in Doherty v. Allman (1878), 3 App. Cas. 709 at p.720:
If the parties, for valuable consideration, with their eyes open, contract that a particular thing shall not be done, all that a Court of Equity has to do is to say, by way of injunction, that which the parties have already said by way of covenant, that the thing shall not be done; and in such case the injunction doe nothing more than give the sanction of the process of the Court to that which already is a contract between the parties. It is not then a question of the balance of convenience or inconvenience, or of the amount of damage or of injury – it is the specific performance, by the Court, of that negative bargain which the parties have made, with their eyes open, between themselves.
66Both parties were of equal bargaining power. Dr. Pesin was not plankton in the jaws of a whale.
67Likewise I see no risk arising from the terms of the Agreement that result in a restriction of Dr. Pesin’s ability to ply his chosen profession. Nothing in the Agreement whatsoever forecloses or limits that result. Rather he now has to, as most dentists do, solicit patients for his practice, with the only impediment that he cannot solicit patients effectively provided to him with the transference of the patient list from the dentist before him at Smilecorp.
Does the Applicant have a proprietary interest?
68I find that the Applicant does have a proprietary interest at stake, which is entitled to protection. It is the goodwill that Smilecorp has vested in the premises.
69I quite agree with Mr. Aitchison that if Pesin is allowed to transfer the goodwill, then any dentist that Smilecorp wants to attract knows that they will have the goodwill of the clinic in their favour. Attracting dentists is not difficult because of the goodwill. Indeed Dr. Vaid came back for that very reason.
70Both parties conceded in their Agreement that considerable goodwill has been established. The parties fully recognized the proprietary interest described in the agreement. Both parties fully understood and agreed that the patients would remain Centre patients following the termination of the Agreement.
71That agreement however does not purport, nor could it, to fetter the ability of a patient to vote with his or her feet. It does not vest in Smilecorp a propriety interest in the patients of the clinic. I agree that there could not be a proprietary interest in a patient. But that is not what Smilecorp purports to do in its Agreement with Pesin. It simply seeks to preserve its goodwill which is a proprietary interest.
72As Mr. Aitchison suggests the Centre provides all of the accoutrements of a dental practice, save the feet to fill the shoes which are already fully present for the immediate commencement of a dental practice. I find therefore that Smilecorp is not asserting a proprietary interest in dental patients, but rather in the goodwill occasioned by its management of dental practices under its roof.
Are the Covenants which are the subject of Injunctive Relief Enforceable?
73In relation to public policy, I do not find resort to the obligations of dentists to assist Dr. Pesin. I do not find conflict between what Dr. Pesin agreed to do with Smilecorp to fix an obligation on Smilecorp. Any conflict between the contract undertaken with Smilecorp and Dr. Pesin, which I am hard pressed to find, and Dr. Pesin’s obligations as a dentist, are issues for Dr. Pesin to reconcile.
74To be clear I expressely do not find that a patient is handcuffed to the clinic. No patient is so restrained. Dr. Vaid has advised that she is now the practicing dentist at the Clinic. Former patients of Dr. Pesin are advised that there is a new doctor at the clinic. There is nothing stopping a former patient from finding dissatisfaction with that result, and moving elsewhere, or for that matter, to Dr. Pesin.
75The Agreement simply forbids Dr. Pesin from taking the patient lists with him and soliciting those particular patients. That forbiddance is not objectionable. It is, as I have found part and parcel of the goodwill built up by Smilecorp over many years. Frankly without that covenant, the goodwill of Smilecorp would be obliterated. I remind again that Pesin was very alive to the issue of goodwill, and its significance.
76I find it does not lie in Dr. Pesin’s mouth to now say that a proprietary interest is not present. It is clear to me that as Mr. Aitchison suggests, the enticement to sign the Management Agreement with the Applicant is knowing that there is already a built in client base and goodwill associated with the Centre, which has been in practice since 1995.
77I find that the requirement for return of the client lists/charts is therefore a valid covenant, and is not in contravention of public policy.
78In relation to solicitation I find that the proscription on solicitation is very limited and only germane to clients who utilize the dentists who occupy premises provided by Smilecorp.
79Nor does forbidding Dr. Pesin from soliciting usurp the right of any dental patient at the clinic. In an age of ubiquitous media access, and internet saturation, it is simply not feasible to say that the restriction on solicitation as contemplated by the agreement, is against public policy or otherwise unreasonable. Finding Dr. Pesin is a very simple exercise for any patient that wishes to do so. Nothing does, or could prohibit that. But the Agreement does and can prohibit solicitation of the goodwill built up in ready-made dental practice that Smilecorp established, inclusive of the list of patients and related material that he inherited and for which he has no right of possession.
80I also find that unlike Shafron, and Veolia, this is not a case of a defective restrictive covenant, in particular as it relates to advertising. I agree with Mr. Aitchison that the terms in the covenant are not prima facie unreasonable nor are they subject to blue pencilling or reading down. No reasonable interpretation of the covenant would include forbiddance from advertising to the general public. Again that speaks fully to the very controlled restraint on Dr. Pesin that the Agreement contemplates.
81Requiring the enforcement of the covenants, and paying heed to their particularization in a vacuum of any unreasonable restraint on the trade of Dr. Pesin, is nothing more than a call to conform with a bona fide agreement.
No Unclean hands
82I reject the argument that fee splitting, even if it is present, would deprive Smilecorp of the equitable remedy of injunctive relief. I agree with Mr. Aitchison that even in the face of fee splitting, which he argues is not present, that any forbiddance of that activity is a problem for Dr. Pesin, not for Smilecorp.
Effect of Amendment to the Agreement
83I likewise agree that the amendment to the agreement does not constitute any inconsistency with the terms of the management agreement. That is patently obvious given the nature of the amendment. I do not see ambiguity in the agreements.
Damages as a Remedy
84I also concur that the applicant is not confined to a remedy in damages. Quantification of such would be exceedingly difficult. It is the very spectre of the loss of goodwill that looms large in this case. Smilecorp has established a very formidable business model. As already noted the parties contracted with respect to the presence of goodwill. It is otherwise manifestly evident. As noted it does not lie in the patients, but rather in the model of the clinic and the accoutrements provided to the dentist who simply need contract with Smilecorp to inherit a fully constituted dental practice inclusive of client lists, location and equipment.
Conclusion
85Dr. Pesin seeks to have his unilateral violation of the terms of an agreement that he freely and clearly received considerable benefit from, namely a readymade dental practice when he contracted with Smilecorp, rewarded with the evisceration of the goodwill that Smilecorp has in the business.
86This case really distils to the proposition that two savvy business people structured a fair agreement in their eyes, with minimal covenants to be obliged in the event of termination of their agreement. Regrettably one of the parties expropriated a client list for the purpose of soliciting patients, which was an ill conceived contravention of the agreement’s terms. Equally regrettably Pesin appears to have immediately embarked on solicitation efforts, also in violation of the agreement.
87Given that the parties agree that enforcement of the contemplated injunctive relief will act as a final injunction, I am satisified that an injunction should issue as requested. I have come to this determination in the context of finding that the balance of convenience would otherwise fully favour Smilecorp; that damages would not suffice to cure non compliance with the Agreement by Pesin; and that Smilecorp has otherwise satisfied me that it has made out a strong prima facie case, and indeed a virtually unassailable case. There is otherwise a serious issue that required consideration, tantamount to being tried.
88I find the relief sought is warranted in respect of all of the orders sought. An order will issue in those terms.
89If the parties cannot agree on costs, submissions to be exchanged, not to exceed 5 pages, and served to my attention no later than April 15, 2012.
The Honourable Mr. Justice H.K. O’Connell
DATE RELEASED: March 27, 2011