Dentist lacks goodwill

Interlocutory injunction granted to enforce non-competition clause in purchase and sale agreement
|Canadian Employment Law Today

In 1996 A.R. (Dick) Jones sold his dental practice to Richard G. Button for $150,000. Of that amount, the agreement of purchase and sale assigned $84,260 to “goodwill, patients, charts, x-rays, models and records.” As part of the purchase and sale, the parties agreed to a non-competition and non-solicitation undertaking which required that, for a period of four years from Feb. 1, 1996, Jones not carry on or be engaged in a dental practice within the city of Kitchener/Waterloo.

As part of the agreement of purchase and sale, Button and Jones entered into an association agreement until Dec. 31, 1997. Jones began to practice at Button’s premises. The agreement provided that they would split the revenue generated by the practice in the ratio of 60 per cent to Button and 40 per cent to Jones. They acknowledged that they were independent contractors. Despite their intention, their practices did not merge and each continued to serve his own patients.

In December 1999 the association agreement was renewed with a provision that Button could terminate the agreement on Dec. 31, 2000, by giving 90 days written notice. The revenue generated by Jones was to be split in the ratio of 70 per cent to Button and 30 per cent to Jones.