Drew Oliphant Professional Corporation v. Harrison, 2011 ABQB 216

Court of Queen ’ s Bench of Alberta Citation: Drew Oliphant Professional Corporation v. Harrison, 2011 ABQB 216 Date: 20110401 Docket: 0301 07399 Registry: Calgary Between: Drew Oliphant Professional Corporation and Dr. Drew Oliphant Plaintiffs - and - Dr. Kelly S. Harrison and Dr. Rolande Marchand Defendants _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice K. M. Horner _______________________________________________________ [ 1 ] This is an action by Dr.

Oliphant, a chiropractor, and his Professional Corporation against two former colleagues, also chiropractors who practised their professions together at a chiropractic clinic in north west Calgary operated under the name of Brentwood Professional Corporation (BCC or the Clinic). Dr. Oliphant (“Dr. O.”) and his Professional Corporation pursue similar but different claims against each defendant. As the Plaintiffs were represented by the same counsel at trial, called the same evidence and claim the same relief they shall be referred to throughout in these reasons collectively as Dr. O.. [ 2 ] As against Dr.

Harrison, (“Dr. H.”), Dr. O. claims breach of a contract of sale, conversion of Dr. O.’s. practice to his own, unjust enrichment, breach of a fiduciary duty, termination of his employment without reasonable notice, damages and an accounting for fees.

[ 3 ] As against Dr. Marchand (“Dr. M.”), Dr. O. claims breach of contract, wrongful eviction, conversion of his practice, damages and an accounting for fees, reimbursement of capital purchases, and payment for leasehold improvements, furnishings and equipment. Facts [ 4 ] The facts that give rise to these claims unfold over a period of more than a year and are not without some controversy and difference of opinion; which will be discussed later in these reasons. [ 5 ] The relationship between Dr. M. and Dr. O. began in 1989. Dr. M. had qualified as a chiropractor in 1981.

She founded and ran BCC alone from that time until 1989 when she decided that in order to take holidays and perhaps a maternity leave she needed to hire an associate chiropractor. [ 6 ] In 1989, Dr. M. presented Dr. O. with an agreement she had prepared entitled Associate Doctor Contract (“ADC”). After Dr. O. negotiated a couple of hand written changes to the ADC it was signed and became the cornerstone document of their relationship. Over time other associates joined BCC and also executed ADC’s at the request of Dr. M. with Dr.

M. as a counter party. [ 7 ] Each ADC sets out the terms of the business relationship between Dr. M. and the associate in question. The terms are nearly all identical. Dr. O.’s ADC provides generally that: 1. Dr. O.’s practice at BCC means patients, their records, and any other treating material. A patient becomes a patient of whoever provides the initial consultation. 2. Dr. O.’s practice belongs exclusively to him. Dr. M. has the right of first refusal should Dr. O. decide to leave BCC but while at BCC Dr. O. shall pay his proportionate share of expenses and in any event never less then twenty per cent; 3.

New patients, if not self referred, friend or family will be shared in rotation; 4. The initial term of the contract was three years, but would continue for additional one year terms thereafter until terminated. After expiry of the first three year term either party could terminate the ADC on ninety days notice to the other; 5. Dr. Marchand was the Senior Doctor with sole right to the Clinic including the name. Dr. O. was one associate Doctor responsible for establishing his own practice while following the rules and protocols of BCC; 6. Any other Doctors to be added to BCC had to be approved by both Dr.

M. and Dr. O.. Should Dr. O. wish to sell his practice Dr. M.. had the right to approve the buyer; 7. Under no circumstances could a Dr. at BCC moonlight which is, defined as working with another clinic or office and being paid for such work, unless approved in advance by Dr. M.. Absences from the clinic were to be restricted to emergencies only; 8. The relationship set out in the contract itself was not to be considered a partnership, an employer/employee scenario or be the basis for which the parties would be legally bound to each other or legally responsible for or to each other.

[ 8 ] Dr. O. was able to build a thriving practice at BCC in the following years. [ 9 ] The lease of the premises occupied by BCC was in Dr. M.’s name from the inception of BCC. A five year lease renewal was signed July 20, 1987, and further extended an additional five years on October 13, 1992 to December 31, 1997. [ 10 ] In 1992, Dr. M. and Dr. O. entered into a further agreement referred to by them at trial as the Buy/Sell Agreement (“the BSA”). The BSA contained the following relevant terms: 1.

Each party operated their own separate chiropractic practice and in the event either wished to sell their practice they had to offer it to the other first upon certain conditions. 2. Each party agreed to carry life and disability buy out insurance on the other in the amount of $100,000.00. 3. For the purposes of the buy out provisions each of the parties’ practices would carry a purchase price of $100,000.00 throughout the term of the agreement. 4.

In the event of the disability of one or the other party, such disability would constitute an offer to sell the chiropractic practice of the disabled party to the non disabled party at the agreed purchase price or the amount of the disability insurance, whichever was greater. 5. The closing of the sale of the chiropractic practice of the disabled person was to be sixty days from the date of the disability or receipt of the first disability payment, whichever occurred first. Despite this an Elimination Period of twelve months had to pass before any benefits would become payable. . 6.

During the Elimination Period both the disabled and non-disabled persons were to provide whatever reasonable assistance and support was required to assist in the retention of patients of the chiropractic practice of the disabled party. 7. The BSA contains all agreements between the parties with respect to the subject matter thereof. [ 11 ] In December, 1997 when the lease for the premises was to terminate, it was further extended for five years to December 31, 2002. For the first time Dr. O. appeared as a signatory together with Dr. M. as a tenant at Dr. M.’s invitation.

In December 2002, the lease was renewed again to December 31, 2008. In December 2002, Dr. Paul Sali, then practising at BCC under a ADC with Dr. M. also appeared as a signatory, again at the invitation of Dr. M.. [ 12 ] By early 2002 the chiropractors practising at BCC were Dr. M., Dr. O., Dr. Paul Sali and Dr. Patricia Hort. Each had entered into ADC’s with Dr. M. In addition to these Doctors the office employed an office manager, Catherine Humphrey, and a book-keeper, Nigel Carr (husband to Dr. M.), and three massage therapists. [ 13 ] Each of the Doctors gave evidence as did Ms. Humphrey and Mr. Carr.

Each of the Doctors including Dr. O. gave evidence that BCC operated generally on the following basis: 1. Each chiropractor built and operated their own practice and received one hundred per cent of their patient fees when they provided the treatment; 2. Each Doctor would co-treat other Doctor.’s patients as and when required and the treatment fees would be split evenly between the treating Doctor and the Doctor. who owned the patient file;

3. All operating expenses would be shared equally where possible with the exclusion of certain stated expenses such as malpractice insurance; 4. Each Doctor would take advantage of a central accounting and billing function; 5. Each Doctor was to work only at BCC and could not work anywhere else in competition to BCC without the consent of Dr. M.; 6. Dr. M. would pay all overhead expenses at first instance and then bill each Doctor for their share of the expenses; 7.

Due to the physical size of the Clinic the Doctors could not bring in or use alternate associates to share their practice. [ 14 ] In October 1996, Dr. O. was involved in a motor vehicle accident in Calgary. He suffered a herniated disc in his back, a torn achilles tendon, right wrist and neck injury. Dr. M. was his treating chiropractor. Dr. O. settled a damage claim related to this accident believing that his back pain had plateaued. Unfortunately, post settlement, Dr. O.’s back pain not only continued it intensified. [ 15 ] By mid 2001, Dr.

O. felt he could not continue his practice in the long term due to his back pain. Later he offered his practice for sale to each of the other three Doctors at the clinic, all of whom declined to purchase. [ 16 ] Dr. O. made a minor attempt to sell his practice in the fall of 2001 by placing one advertisement in the Bargain Finder at the purchase price of $170,000.00. Dr. O. apparently turned down an offer $140,000.00 resulting from this advertisement but no evidence of this offered was tendered. [ 17 ] In early 2002, Dr. O. requested a meeting with the other Doctors in the Clinic. At this meeting Dr.

O. outlined the options he felt open to him given his increasing back pain. By this time Dr. O. had remembered the BSA and its disability provisions. Dr. O. again mentioned selling his practice to Dr. M. using the disability buy out insurance and the provisions of the BSA. Again Dr. M.’s evidence is that she declined. [ 18 ] The parties in this meeting differ as to its outcome. Dr. O. believes Dr. M. said she would co-operate in a disability claim by Dr. O. under the BSA and use the insurance proceeds to purchase Dr. O.’s practice and then sell it to a third party, that being an associate to be hired by Dr. O..

Dr. O. further believed that the other Doctors encouraged him to go out and find such an associate who would take over his practice. Doctors M., Hort and Sali agree that at the conclusion of this meeting the understanding they had was that Dr. O. would find a third party to purchase his practice and if they approved of that person and that person needed to work at the clinic for a bridging period after Dr. O. left due to his disability but before a sale could be completed they would allow this as an exception to the firm rule in place against sharing practices with associates.

All Doctors agree that ordinarily no one was allowed to bring in an associate as there was no room at the clinic for the use of associates, it would erode the patient co-treatment protocol in place but most importantly could lead to less than a gold standard for patient care. It was the understanding of all the Doctors that their approval of the purchaser of any other Dr.’s practice was required under the ADC’s and Clinic protocol. [ 19 ] In the April/May 2002 time period Dr. O. introduced the other Doctors in BCC to Dr. H., the other defendant in this action. The other Doctors including Dr.

M. understood that Dr. H. was purchasing Dr. O.’s practice. They each approved Dr. H. as the purchaser and their future colleague. Doctors’ Hort and Sali gave evidence that they believed Dr. H. had entered into an agreement with Dr. O. to purchase his practice as soon as he had obtained financing and in any event no later than six months after Dr. H. taking over Dr. O.’s practice at the Clinic. They understood that in order to get financing Dr. H., a new chiropractor, had to work for a short period of time while he pulled together financial records to obtain a bank loan.

They understood the closing of the sale became stalled but still believed the sale would close by the end of 2002 at the absolute latest. Both Doctors’ confirmed receiving this understanding directly from Dr. H. and generally from Dr. O.. Dr. O. stopped working at the Clinic on June 26, 2002 and did not resume his position there at any time thereafter.

[ 20 ] Dr. H., Dr. O. and Dr. M. also gave evidence as to the circumstances and terms upon which Dr. H. came to be working at BCC in June, 2002. They all agree that Dr. H. was to take over Dr. O.’s practice prior to effecting a purchase of his practice because Dr. O. had to stop practising due to his disabling back pain. Dr. H. was to treat Dr. O.’s patients and adhere to the terms of Dr. O.’s ADC. In return for this Dr. H. would receive a portion of the patient fee with the balance, after expenses, to be paid to Dr. O.. The length of time that this arrangement was to continue is in dispute. Dr. H. and Dr.

M. understood it would be short term, perhaps as long as six months, but that the sale would be finalized when Dr. H. obtained financing. [ 21 ] Dr. O. takes the position that Dr. H. and Dr. M. both understood at the outset of his relationship with Dr. H. that the purchase by Dr. H. could only be completed once the Elimination Period under the BSA was exhausted and the insurance proceeds were available. Dr. O.’s evidence is that Dr. M. and Dr. H. understood from the outset that the purchase would be structured such that the practice would be sold to Dr.

M. in return for the insurance proceeds and then from her to Dr. H. for the purchase price negotiated by Dr. O. or as Dr. M. and Dr. H. otherwise agreed between them at that time. [ 22 ] This arrangement would have allowed Dr. O. to collect $100,000.00 in insurance proceeds under the BSA and his share of the fees billed by Dr. H. from June 2002 to June 2003 or closing if later. Dr. O.’s further evidence is that Dr. M. and Dr. H. also understood that the sale of his practice could not take place for up to fourteen (14) months after Dr. O. submitted his disability claim to the BSA insurer, Unum (the “Unum Claim”).

The fourteen months in Dr. O.’s view was comprised of the twelve (12) month Elimination Period and a further sixty days required to close after the end of the Elimination Period as contemplated by the BSA. [ 23 ] Additionally, unknown to Dr. M. (Dr. O.’s evidence is that he believes he mentioned this to Dr. M. at some point but Dr. M. denies this) or Dr. H. at the relevant times hereto, Dr. O. held an additional disability policy under which he had applied for benefits prior to June, 2002. Under that policy Dr.

O. began receiving benefits in July, 2002, of approximately $7,000.00 per month in non taxable disability payments and approximately $5,000.00 per month in taxable overhead reimbursements. [ 24 ] Dr. M. and Dr. H. vigorously deny that at the outset of Dr. H.’s relationship with Dr. O. they understood Dr. O.’s timing of the sale to Dr. H. Dr. M.’s evidence is that she understood the BCC prohibition against hiring associates to work at BCC was being relaxed for a short period, perhaps three to six months and only, so that Dr. H. could complete the purchase of Dr. O.’s practice. Dr.

M. says she did not agree to participate in a purchase of Dr. O.’s practice with the Unum disability insurance proceeds nor did she agree at any time that Dr. H. could work in place of Dr. O. for up to fourteen months prior to a sale closing. Dr. H.’s evidence is that he believed he could close the sale as soon as he put together the required financing. This disagreement is central to the events that unfolded after June 2002 and the issues in this action. [ 25 ] Over the summer of 2002 Dr. M. became aware that Dr.

O. had plans to open or had opened a chiropractic clinic, ultimately called Comfort Health, that would provide after hours chiropractic services in south west Calgary. By November 2002, it became clear to Dr. M. that this clinic was being operated during normal business hours as well as after hours. It appears that Dr. O. was not providing chiropractic services at this clinic himself but as the owner was receiving revenue in the form of fee splitting with the chiropractors working there. [ 26 ] In September 2002, Dr. M. became involved in attempting to close the sale of Dr. O.’s practice to Dr. H. as Dr.

H. had indicated to her in August, 2002 that he was financially able to close the sale as soon as possible. Dr. O. appeared to her to be dragging his feet for reasons unknown. Dr. O. explained that he was unable to have a formal sale agreement with Dr. H. prepared by his lawyer over the summer of 2002 as originally agreed with Dr. H. as he was completely consumed by the ill health, death and then administration of the estate of his father. In September, 2002 Dr. M., by calling a Unum representative, came to understand that Dr.

O. had made the Unum Claim and therefore her right or obligation to purchase his practice under the BSA was triggered. [ 27 ] Dr. M. believed she was faced with a problem she needed to resolve as the ADC made it clear that Dr. M. was the Senior Doctor. It was understood that no new Doctors could be accepted into the Clinic to treat the patients of another Doctor unless it was a Doctor purchasing the practice of another. Dr. O. had approached Dr. M. in 2001 and the rest of the Dr.’s in 2002 with the issue of his back problem and the possible resolutions. Dr. M., Dr. Hort and Dr.

Sali gave evidence that their response to Dr. O. was to sell his practice to someone they approved of. Doctors’ M., Hort and Sali believed that had occurred with the introduction of Dr. H., as indeed did Dr. H.. However, over two months into Dr. H.’s employment at BCC he had no signed agreement to take to his lawyer or his bank to finalize the sale and Dr. O. appeared to be in no hurry to finalize the terms and complete the sale. At the same time it appeared that Dr. O. was moonlighting by way of his ownership role in the Comfort Clinic, a tacit breach of the ADC. [ 28 ] Under these circumstances Dr.

M. contacted her counsel and began negotiating with Dr. O. to purchase his practice right away as per the terms of the BSA. After discussions between Dr. M. and Dr. O. throughout the fall of 2002 stalled, Dr. H. also hired counsel

and made a formal offer to Dr. O. in early December, 2002 to purchase his practice and close the sale immediately. Dr. O. refused to accept all offers. [ 29 ] Effective December 14, 2002, Dr. H. terminated his arrangement with Dr. O. as an associate treating Dr. O.’s patients on a fee sharing basis giving Dr. O. effective December 16, 2002, less than three days notice. Dr. H. remained working at BCC as a chiropractor but under a new contract with Dr. M.. Thereafter Dr. H. treated patients of BCC, including those of Dr.

O. and his own patients attracted to the clinic by himself, through his own marketing efforts, or as he received on a rotational basis. Dr. H.’s treatment of Dr. O.’s patients after December 14, 2002 proceeded however on a different fee splitting arrangement. [ 30 ] Dr. H. remained at BCC under a contractual arrangement with Dr. M. until he left with Dr. Hort to continue their practice in another office in north west Calgary effective June 30, 2004. [ 31 ] In December 2002, Dr. O. requested that Dr.

M. allow him to send two other chiropractors, Doctor’s Mintz and Reeves, on a rotating basis, into the Clinic to continue to treat his patients. Upon checking into these chiropractors Dr. M. learned that each chiropractor was already practising at the Comfort Health clinic with Dr. O. She refused to allow them to attend at BCC to treat Dr. O.’s patients, however she did invite Dr. O. to refer the names of other chiropractors they could discuss to provide this service. Dr. O. failed to do so. [ 32 ] In January, and February, 2003 Dr. M. and Dr.

O. continued to negotiate the basis upon which his patients would be treated at BCC and what would happen once the Unum Claim was approved. In April 2003 they agreed that once the Unum Claim was approved Dr. M. would purchase Dr. O.’s practice for the sum of the said proceeds, that being $100,000.00. Concurrently Dr. M. entered into an agreement to sell the practice to Dr. H. for $20,000.00 representing a nominal price for the existing leasehold improvements, furniture and equipment at BCC. Both agreements were frustrated however when Unum denied Dr. O.’s claim in the summer of 2003. Ultimately an appeal by Dr.

O. of the denial was also unsuccessful in February, 2004. At no time between December 11, 2002 and February, 2004 did Dr. O. request his patient files be sent to him or transferred to another clinic such as Comfort Health. [ 33 ] Dr. M. under the terms of the ADC, gave Dr. O. the required 90 days notice to terminate the ADC, such notice negotiated to be effective June 30, 2003. In February, 2004, Dr. O.’s patient files were sent to him by Dr. M.. In June, 2004, Dr. O. sent notices to his old patients advising that he had relocated his practice and was receiving patients at the Comfort Health location. Dr.

O. through various experimental and new therapies had recovered sufficiently from his back pain to recommence work as a chiropractor in November, 2003. [ 34 ] Dr. O.’s evidence at trial was that none of his BCC patients were recovered and that in his belief his practice had been absorbed into BCC between December, 2002 and February, 2004. [ 35 ] These facts give rise to the following issues. I will deal with each Defendant in turn: As Against Dr. Harrison: 1. Was there an Agreement of Purchase and Sale made between Dr. O. and Dr. H. in June, 2002; 2.

In the alternative, if there was no Agreement of Purchase and Sale, then did Dr. H. convert Dr. O.’s practice to his own; 3. Did Dr. H. owe Dr. O. a fiduciary duty not to solicit Dr. O.’s patients; 4. Did Dr. H. take or receive Dr. O.’s practice between December 2002 and February 2004 such that he was unjustly enriched; 5. Was there a Contract of Service between Dr. H. and Dr. O. and if so, did Dr. H. owe Dr. O. reasonable notice prior to its

termination; 6. Has an accounting and payment been made to Dr. O. for fees of his patients seen by Dr. H. between December 14, 2002 and June 30, 2003. As Against Dr. Marchand: 1. Did the BSA executed in 1992 discharge the ADC executed in 1989 such that only the BSA governed the relationship between Dr. M. and Dr. O. and made them partners rather than associates; 2. Did Dr. M. wrongfully exclude Dr. O. from the BCC premises effective June 30, 2003; 3. Did Dr. M. breach the BSA by failing to reasonably assist and support Dr. O. in retaining his patients after June 30, 2002; 4. Did Dr.

M. participate in or collude with Dr. H. to convert Dr. O.’s practice in favour of Dr. H. or BCC; 5. Is Dr. M. obligated to Dr. O. for any of the following: (

i) a refund for capital purchases; (ii) his share of the Clinic Maintenance Fund; (iii) compensation for the cost of a medical legal report in the amount of $650.00; (iv) his share of massage therapy fees; (

v) his accounts receivable; (vi) a payout for his interest in the leasehold improvements, furnishings and equipment at BCC. As Against Dr. Harrison: Agreement of Purchase and Sale. [ 36 ] The parties are agreed that there never was a formal signed agreement for the purchase and sale of Dr. O.’s practice to Dr. H.. The parties negotiated over an initial draft term sheet or letter of intent prepared by Dr. O., throughout the month of June, 2002. Ultimately Dr. O. was to take the marked up term sheet to a lawyer for final preparation of a contract which could then be executed. .

[ 37 ] The Plaintiffs submit that the final draft of the term sheet is a binding agreement of Purchase and Sale. The term sheet in addition to discussing purchase and sale terms contemplates and outlines the terms of the parties relationship while Dr. Harrison treated Dr. O.’s patients until a purchase of the practice could be worked out. The terms of Dr. Harrison’s employment as found in the term sheet are: 1. Dr. H. will work as many hours as BCC will allow; 2. Dr. H. will treat all Dr. O.’s patients while Dr. O. was not present and working; 3. Dr. H. is encouraged to bring in new patients; 4. Dr.

H. will participate in the co-treating protocol of BCC and assist the other Doctors by treating their patients when requested to do so; 5. Dr. O. will coach and assist Dr. H. as possible; 6. Dr. O.’s patient files are to remain his property and should Dr. H. leave BCC the patient files will remain at BCC and Dr. H. is prohibited from soliciting the patients in any way; 7. Dr. H. was to be paid as an independent contractor and would receive an agreed percentage of the fees billed, on an escalating scale based on gross monthly billing with a cap on the amount payable to Dr. O.; 8. Dr.

O. was to pay all overhead costs with Dr. H. responsible for all personal items such as business cards, stationary etc. [ 38 ] While the terms of Dr. H.’s employment are spelt out in detail the terms of a purchase and sale agreement are vague or absent. Dr. O. insists that he only invited Dr. H. to be his associate on the understanding that once the Unum Claim was approved or denied, a period of at least 12 months from June, 2002, Dr. H. would buy his practice from either Dr. Marchand or himself. The term sheet put forward by Dr.

O. in support of this understanding unfortunately does not contain sufficient terms to reflect this or to constitute a contract. [ 39 ] As Davison, J., states in Smith v. Dessaport International Corp. [1994] N.S.J. no. 444 . at para 30: 30 One of the most difficult areas of contract law which faces the court is the determination of the existence of an enforceable contract. The court will strive to enforce promises particularly where there has been reliance but difficulties arise where there appears to be open terms or reference to further agreements.

As stated by Waddams, in his The Law of Contracts Second edition at p. 29: The determination of contract formation is not a mechanical process of applying rules but a complex and flexible procedure depending on many factors. Another illustration is supplied by the case of agreements with “open” terms. The common case is that parties reach a stage in negotiations where they reach what looks like a concluded agreement, but certain matters are omitted. Sometimes further negotiations are anticipated; sometimes the parties simply hope that no problem will arise.

When a dispute arises the court has to solve the difficult questions of whether or not there is an enforceable contract. Again there can be no rule of thumb. Every agreement contains elements of implication, and the courts have frequently supplied important terms that the

parties have omitted. Again at p.30: In all problems arising out of negotiations the question is whether the parties sought to be bound has committed himself - has he takenthe leap that puts the power of acceptance into the other’s hands with no further requirement of assent on his own part? The author suggests that the most useful test may be whether a further “meeting of minds” is anticipated. [40] Or as stated by G.H.L.

Fridman in The Law of Contract in Canada (5th Edition) at page 62: “Instances of an agreement to agree must be differentiated from others where there is a possibility that the parties may have reached afinal agreement, even though some additional formality is envisaged. In Von Hatzfeldt-Wildenburg v.

Alexander [1912] 1 Ch. 284 at288-289, Parker J. said: if the documents or letters relied on as constituting a contract contemplate the execution of a further contract between the parties, it is aquestion of construction whether the execution of the further contract is a condition or term of the bargain or whether it is a mereexpression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through.

In the formercase there is no enforceable contract whether because the condition is unfulfilled or because the law does not recognise a contract toenter into a contract. In the latter case there is a binding contract and the reference to the more formal documents may be ignored. In Bawitko Investments Ltd. v. Kernels Popcorn Ltd.,(1991), (ON CA), 79 D.L.R.(4th)97(Ont C.

A) where no contractwas held to have been concluded on the facts of the case, Robins J.A., speaking for the Ontario Court of Appeal, drew the distinctionbetween situations where parties, after discussing and negotiating the proposed terms of an agreement, bound themselves to execute at afuture date a formal written agreement containing specific terms and conditions. They contracted to make a contract. Yet this is not thesame as making an agreement to agree.

When they agree on all of the essential provisions to be incorporated in a formal document with the intention that their agreement shallthereupon become binding, they will have fulfilled all the requisites for the formation of a contract. The fact that a formal writtendocument to the same effect is to be thereafter prepared and signed does not alter the binding validity of the original contract.....

Very different is the situation where there is uncertainty as to the terms of the contract, or, though there is no uncertainty as to the terms of the parties’ agreement, their understanding and intention “is that theirlegal obligations are to be deferred until a formal contract has been approved and executed..”. The original or preliminary agreementcannot constitute an enforceable contract. Such a “contract to make a contract” is not a contract at all. [41] The term sheet which Dr.

O. asserts is the contract of Purchase and Sale that he wishes to enforce has the following problemsleading me to conclude it is a contract to make a contract and not a contract at all: 1. It is not clear whether Dr. O. or Dr. Marchand will be the seller; if Dr. Marchand is the seller there may be different terms; there is no clear formula or trigger indicating what needs to happen to determine who will bethe seller; 2. The formula to determine the purchase price from Dr. O. is not clear.

It is either 50% of the gross billings in the12 monthspreceding June 2002 or 50% of the gross billings in the 12 months preceding the date of purchase, capped at a maximum of $130,000.. Itis difficult to understand why Dr. H. would help to increase the purchase price of Dr. O.’s practice by bringing in new clients prior to thepurchase. This leads one to conclude that the 12 month term is the term preceding June, 2002 which Dr. O. vehemently denies was the

intent. Further there is no formula to determine the purchase price at all if the purchase is from Dr M.; 3. The only mention regarding the date upon which to close the purchase and sale, usually an essential term of such a contract, are the words “within a year” which were scratched out and not agreed to by Dr. H.; 4. Most damaging to Dr. O.’s position is that there are no words or phrases that make it clear that Dr. H. is contracting to purchase Dr. O.’s practice. There is a vague reference to a “right of first refusal” or “an opportunity for Dr.

H. to purchase the practice if the disability insurance does not take effect”, but nothing that unequivocally states that Dr. H. will purchase the practice. 5. Neither the handwritten changes nor the term sheet is signed by either party signalling an intention that these are the final terms, vague as they are, and that the parties intend to be bound by them. [ 42 ] Dr. O.’s counsel urged that these problems amount to making the contract ambiguous and that the ambiguities could be explained by reference to parole evidence.

Reference to parole evidence is not indicated here as there is simply no contract, ambiguous or not. There is nothing more than an agreement to agree, with respect the practise at least.. Dr. O. was to have a formal agreement prepared by his counsel which he failed to do even after repeated requests from Dr. H.. [ 43 ] If reference to parole evidence were indicated the parties do not agree on the terms. Dr. H. is adamant that he was to purchase the practice as soon as he could pull together his financing. Dr. O. is equally adamant that Dr.

H. understood that the 12 month Elimination Period had to run, Unum had to then allow or disallow his disability claim so that either he or Dr. Marchand could sell the practice to Dr. H., and then a closing could take place. [ 44 ] If parole evidence could resolve the missing terms in the alleged contract, which in my view it could not, then the evidence I would accept is that of Dr. H., which is supported and corroborated in part by Doctors’ M., Hort and Sali. All were given to understand by both Dr. O. and Dr. H. that the sale of Dr.

O.’s practice would take place as soon as reasonable, at the outside within 6 months. No one, particularly Dr. M., as the Senior Dr. and the counter party to the BSA and beneficiary of the Unum insurance understood or had been told by Dr. O. that the sale would not take place for 12 to 14 months. [ 45 ] The only person’s time table that a closing of the purchase at that time would serve was Dr. O.. [ 46 ] In 2001, to early 2002, Dr. O. found himself faced with increasing back pain and two disability insurance policies.

One policy could not only provide him with a tax free monthly payment ($7,000.00) but also covered overhead costs ($5,000.00). The other, Unum, required an Elimination Period of 12 months and therefore would work well with the other policy. He could stop working, have an associate cover his practice for the Elimination Period of 12 months or more during which Dr. O. could collect insurance benefits of approximately $12,000.00 per month plus his share of treatment fees at BCC and then at the end of the Elimination Period he could still sell his practice for $100,000.00 to Dr.

M. or in the event Unum denied his claim, to the associate or someone else for its remaining value. At the same time Dr. O. was going to realise his business ambition of opening another clinic, from which, if all went well, Dr. O. would receive revenue during the Elimination Period. Therefore Dr.

O. could, between July, 2002 and June, 2003 receive income from his insurer, his practice and Comfort Health and still potentially receive at least $100,000 in insurance proceeds for the sale of his practise after June 2003 leaving him free to pursue pain remedies... [ 47 ] There were problems standing in the way of realising this revenue bonanza.. BCC had a long standing, well defined and respected protocol of prohibiting its members from introducing associates into the clinic. If you worked there you had to own the patient files.

It was a protocol integral to their collective philosophy of providing the highest quality patient care. Additionally there was a prohibition against moonlighting, which although Dr. O. felt technically he was not breaching as he did not actually practise at Comfort Health, Dr. M. did not agree. Dr O. was aware of this as they had discussed the issue before, as early as 2000. Also it would be difficult to find a Chiropractor who would wait 12 to 14 months before purchasing a practise especially if that person was also treating the patients. A chiropractor’s practise is by nature dynamic and fluid.

What you agreed to buy 12 months prior could look very different at the end of that period. [ 48 ] Dr. O. was told by Dr. M. in 2001 she would not buy his practice, early in 2002, Dr. O. was told that none of the other Doctors wanted to purchase his practice as theirs were already full, Dr. O. was told by them his option was to sell his practice to a 3 rd party and that they would be reasonable as to their approval of a new colleague.

He was told that if his back pain required him to stop working such that a purchaser would need to work his practice for a bridging period then provided he/she was approved a brief exception

to the protocol could be made. [49] Dr. H. finished Chiropractic College in April 2002 when he was referred to Dr. O. as a person who wanted to sell his practice.Dr. H. received his license in May, 2002. Dr. O.’s practice at BCC was the first time Dr. H. treated patients as a Chiropractor. [50] During their negotiations Dr. O. managed to keep the Unum Elimination period out of the discussions and term sheet with Dr.H.. I am sure Dr. O. thought once Dr. H. was installed at BCC he could continue to juggle both BCC’s expectations and Dr.

H.’sexpectations such that he could continue to maximise all revenue streams for at least a year. [51] This did not happen. In September, 2002 as soon as Dr. M. realised that Dr. O. was not moving toward finalising the sale ofhis practice to Dr. H., that Dr. O. had made application to Unum pursuant to the BSA and was opening Comfort Health she decided toattempt to accelerate the sale, without success. [52] This evidence best explains the behaviour of the parties through out 2002 .The parties conduct, including that of DrO.,conforms to this

interpretation of the evidence. Had Dr. O. simply wanted to sell his practice to Dr H. he could have done so atanytime between September, 2002 and December,2002. [53] For these reasons I would accept the evidence of Dr. H. and Dr. M. over that of Dr. O. as to the terms of any agreement. Forthe reasons previously outlined however, I find that there was no agreement for Purchase and Sale between Dr. O. and Dr. H. andtherefore no breach for which Dr. H. is liable. Conversion [54] Dr. O. asserts that if is there is no Agreement of Purchase and Sale then Dr.

H. is liable to him for converting or taking hispractise. [55] At no time did Dr. O. remove his patient files from BCC. He did however request that Dr. H. cease treating his patientseffective December 14, 2002 , that he cease using his treatment rooms or any of his equipment or have access to any of his productinventory. Dr. M., Dr. H., Dr. Hort and Dr. Sali confirm that Dr. H. did continue to treat the patients of Dr. O. however these patientscontinued to be identified by their blue file.

Under ordinary treatment protocol if another Doctor treated a patient in excess of ten timesthe patient would be transferred to that Doctor’s practice. In the case of Dr. O.’s files between December, 2002 and February, 2004 nonewere transferred to any other Doctor no matter how many times another Doctor treated that patient. After February, 2004 when theUnum Claim was exhausted and the sale to Dr M. frustrated, if a patient previously represented by a blue file requested to switch theirtreating Doctor to Dr.

H. or another Doctor in the Clinic they were asked to sign a transfer form making it clear that their switch to theother Doctor from Dr. O. was at their request and entirely voluntary. [56] From December , 2002 to June 30, 2003 whenever Dr. H. treated a patient of Dr. O.’s the treatment was recorded and the feeswere split equally between Dr. H. and Dr. O.. A similar fee sharing was done if a patient of Dr. O. was seen by any other Doctor at theClinic other than Dr. H.. On December 16, 2002 Dr. H. ceased to use the former treating rooms of Dr. O. and discontinued the use anyof Dr. O.’s product inventory. [57] Dr.

O. did not attempt to send other Chiropractor’s into the Clinic to treat his patients after Doctor’s Mintz and Reeves weredenied access in early January 2003. Nor did Dr. O. request his files be transferred to another office at any time. Pursuant to atermination notice from Dr. Marchand under the ADC, Dr. O.’s associateship was terminated and he was effectively excluded from theClinic offices on June, 30, 2003. Dr. O. still did not request that his files be surrendered to him. His preference was to continue to pursuethe Unum Claim in the hope that the insurance proceeds would be used by Dr.

M. to purchase whatever was left of his practice when itwas approved. [58] In Boma Manufacturing Ltd. v. Canadian Imperial Bank of Commerce (SCC), [1996] 3 S.C.R. 727 the

S.C.C. defines conversion as “the tort of conversion involves a wrongful interference with the goods of another, such as taking, using or destroying these goods in a manner inconsistent with the owner’s right of possession.” [ 59 ] G.H.L. Fridman, the Law of Torts in Canada, (2 nd Ed.) (Toronto: Carswell, 2002) identifies the following elements as forming the tort of conversion: 1. “A wrongful act”; 2. Involving a chattel; 3. Consisting of handling, disposing or destruction of the chattel; 4.

With the intention or effect of denying or negating the title of another person to such chattel. [ 60 ] The key factor to a wrongful act is whether the Defendant’s act is serious enough interference with the rights of an owner to impose a forced of sale from the owner to the Defendant. Case law makes it clear that client lists or files are chattels capable of being converted. The patients themselves are not .The owner’s consent to the Defendant’s possession operates as a defence. Damages are assessed at the full net value of the goods at the time of conversion.

The Plaintiff has the obligation to mitigate as soon as possible once he learns of the conversion. [ 61 ] There is insufficient evidence that Dr. O.’s patients or his practice was converted or taken by Dr. H.. [ 62 ] Dr. H. and the other Dr.’s treated Dr. O.’s patients with his consent, express or implied, until February, 2004. From December 16, 2002 to June 30, 2004, Dr. H. participated as an associate at BCC pursuant to an agreement with Dr. M. and as such was assigned walk-in patients on a rotating basis with the other three Dr.’s. Pursuant to his arrangement with Dr.

O. these patients had formerly been considered to be the property of Dr. O. and a blue file was opened. After December 16, 2002, Dr. H.’s participation in BCC as a chiropractor was as per his new arrangement with Dr. M.. [ 63 ] Dr. O.’s evidence at trial was that 90 to 95% of the patients Dr. H. took with him to his new practice in June, 2004 were his former patients. This was specifically denied by Dr. H.. Dr. O. stated that his practice consisted of approximately 2,000 blue files. Dr.

H. agrees that approximately 150 of the files he took with him to his new practice were patients formerly represented by blue files. Dr. H.’s evidence is that these patients all signed letters indicating that they desired to change their treating Doctor from Dr. O. to Dr. H. after February, 2004. Dr. H. indicated that he did not at any time solicit any patient of Dr. O.’s to switch to him as the primary treating Doctor. [ 64 ] Effective December, 2002 Dr. O. had advised Dr. H. that he would be seeking damages due to Dr. H.’s breach of the alleged contract of purchase and sale. As a result Dr.

H. gave evidence that he was very careful in his treatment of and transfer of any of Dr. O.’s patients to himself. [ 65 ] On this evidence I am satisfied that there was no conversion of Dr. O.’s practice by Dr. H., I find no evidence that a wrongful act took place on these facts. The patients of Dr. O. who switched to Dr. H. did so voluntarily. Some percentage of patient transfer was foreseeable. By leaving his files at BCC Dr. O. implicitly consented to others, including Dr. H. treating his patients leaving open the possibility that they would willingly switch their treating Doctor. Dr.

O. could have called for his patient files at any time. No evidence was led to suggest that either insurance policy would only be valid if Dr. O.’s practice was at BCC. Fiduciary Duty [ 66 ] This court, in both Torcana Valve Services Inc. v. Anderson, 2007 ABQB 356 , [2007] A.J. No. 589 (Alta. Q.B.) and Flag

Works Inc. (1978) 2007 ABQB 434, 427 AR 206 considered the application of fiduciary principles in the employment context. InTorcana, Graesser, J. said this at paragraph 31: 31 Fiduciary relationships arise out of situations of trust, discretion and confidence and require that the fiduciary act loyally in thebeneficiary’s best interests. In the employment context, certain employees may become fiduciaries by virtue of their unique positions ofpower and trust within the employer’s organization: see Hodgkinson v. Simms, (SCC), [1994] 9 W.W.R. 609 (S.C.C.) at629.

Where it is established that an employee held a position of senior management or could be described as a “key” employee, he or shewill be precluded from exploiting “that particular vulnerability that flows from the special or unique relationship between himself and his employer” for his own business interest: Physique Health Club Ltd. v. Carlsen (1996), 1996 ABCA 358 , 141 D.L.R. (4th) 64(Alta. C.A.) at 69. [67] On these facts I find that Dr. H. owed no fiduciary duty to Dr. O., Dr. O. received regular income from December, 14, 2002 toJune 30, 2003 when he stopped paying overhead and was excluded from the Clinic.

Clearly Dr. O. realised that the other Doctors,including Dr. H., were treating his patients leaving it open to those patients to change treating Doctors. This was not a situation whereDr. O. was in a position of vulnerability where he could be exploited against his will. [68] Even if Dr. H. could be considered to have owed a fiduciary duty to Dr. O. not to solicit his patients I have already found withregard to the claim of conversion that Dr. H. did not so solicit.

Unjust Enrichment [69] It is well settled law that the three elements required to found a claim for unjust enrichment are: 1. an enrichment, 2. acorresponding deprivation, 3. no juristic reason for the enrichment. [70] On the facts outlined under conversion, it is arguable that Dr. H. was enriched by the transfer of a some of Dr. O.’s patientfiles to him. Even though very few patients followed their file when it was returned to Dr. O., this did not represent a deprivation to Dr.O..

He made a conscious decision to leave his practice at BCC in order to continue to receive his disability payments and to pursue theUnum Claim. He did not suffer a deprivation as a result of the loss of his practise. A deprivation occurred when the Unum Claim wasdenied and his Agreement with Dr. M. was frustrated for reasons having nothing to do with Dr. H.. In the interim, in reliance on theUnum Claim, Dr. O. simply abandoned his practise. Contract of Service [71] As outlined previously Dr. H. did enter into an a contract of service with Dr.

O. the terms of which were predominantly set outin the term sheet prepared by Dr. O. This contract was terminated by Dr. H. by written letter dated December 11, 2002 but effectiveDecember 14, 2002 providing essentially 3 days notice. Dr. O. alleges that Dr. H. owed him reasonable notice prior to terminating hisemployment and that reasonable notice would have been one month. Dr. H. denies that he owed Dr.

O. notice but concedes that if noticeis required one month would be the reasonable time period. [72] The law is well settled that notice is required for termination of a employment contract, whether the termination arises at thebehest of the employer or the employee. Conversely, the law is clear that, absent a provision to the contrary, a contact for services by anindependent contractor can be terminated at will and without notice. In recent years, a third category has developed, in which the partycontracting is considered a “dependant contractor”.

In those cases notice of termination is required notwithstanding the absence of anemployment relationship. [73] Though the overwhelming majority of cases in the employment context consider the notice required for termination by anemployer, it is also clear that an employee has an obligation to give notice of termination of his employment. This obligation wasdiscussed at some length by Justice Martin in Flagworks Inc. v. Signcraft Digital Inc. (supra) at para. 61 - 62.;

“Few cases delineate the manner in which the time for the notice owed by an employee should be determined. I do not accept andcounsel for the Plaintiff agreed, that the amount of notice to be given by an employee should be calculated the same way a courtapproaches notice when an employee sues an employer for unjust dismissal. The policy considerations at play in each case are different.Employees are required to give notice to permit the employer adequate time to hire a replacement or adapt operations to minimize theloss or disruption caused by the employees departure.

Employers are required to give notice sufficient to “cushion the blow” to the employee of losing their employment; see Sure - Grip (1993) 45 CCEL 276, 46 CPR (3rd) 443 (Ont. Gen.

Div.), at p.p. 281 - 2. “In Sure - Grip, the court at pages 281 - 2, set out the relevant factors to consider in determining an employee’s notice obligations: theemployee’s responsibilities, the employee’s length of service, the employees salary; and, the time reasonably required for an employer toreplace the employee or takes steps to adapt to its loss.” [74] In the absence of an employment relationship the courts have traditionally held that the relationship is that betweenindependent contractors and that such a relationship may be terminated without cause and without notice unless there is contractualprovision to the contrary.

In JKC Enterprises Ltd. v. Woolworth Canada Inc. 2001 ABQB 791, 300 A.R.1, Coutu, J. referred to thistraditional approach at para 53: “Traditionally, in assessing whether a party is entitled to an implied term providing for reasonable notice when terminated without causeand without any binding contractual provision, the courts have been faced with determining whether the relationship between the partiesis one of employer - employee or employer independent contractor.

In the former relationship unless there was just cause, the employercould not terminate the employee without reasonable notice, whereas the employer could terminate the latter relationship at will andwithout notice.” [75] However, a line of case law has developed in which the courts have found a contracting party to be neither a employee nor anindependent contractor, but instead to fall into a “intermediate” category that of dependant contractor.

Typically these cases involve anindividual corporation having a long standing relationship with the other contracting party, often with a degree of exclusively in thecontract. The rationale behind the development of this third category was set out recently by the Ontario Court of Appeal in McKee v.Reeves Heritage Homes,

(2009) ONCA 916 at paragraphs 35 - 6: This process of analysis serves the policy purposes that underlie the jurisprudence.

In summarizing the case law, Geoffry England, Roderick Wood & Innes Christie, Employment Law in Canada, 4th ed. (Markham, Ont: LexisNexis Canada), volume 1 at s2.33 describesthe frequently stated policy reasons for recognising an intermediate category: “these decisions have frequently acknowledged the policy justification for using the ‘intermediate status’ doctrine in order to extend thesafeguards of the employment contract to self employed workers who are subject to relatively high levels of subordination and/oreconomic dependancy, but who, technically do not qualify as employees in this strict sense.

Given this concern to safeguard workers who are formally contractors but who are in a position of economic vulnerability, it only makessense to carve the dependant contractor category out of the broader existing contractor category and leave the range of the employeecategory intact. Therefore the appropriate analysis for distinguishing employees from contractors generally is the existing analysis fordistinguishing employees from independent contractors. [76] To determine the true character of the relationship a broad range of criteria may be examined. In Marbry et al v.

AvrecanInternational Inc. (1999), 1999 BCCA 172 , 119 BCAC 266; 194 W.A.C. 266; 1999 BCCA 172 (C.A.), Braidwood, J.A.reviewed the factors which led to the conclusion the relationship was in the intermediate category (at p. 38): “After reviewing the case law I suggest the following factors be considered. While I do not suggest that this list is exhaustive I find ithelpful in determining where on the continuum a relationship of this nature resides. These factors are: (

i) Duration/Permanency of the Relationship. The longer the duration of the relationship or the more permanent it is militates infavour of a reasonable notice of requirement. Amongst other evidence, the purchase and maintenance of inventory, which contains apermanency aspect, should be considered:

(ii) Degree of Reliance/Closeness of the Relationship. As these two inter-related sub-factors are increased the more likely it is the relationship falls on the employer/employee side of the continuum. Included in this factor is whether the sale of the Defendants products amounted to a significant percentage of the Plaintiffs revenues: (iii) Degree of Exclusivity. An exclusive relationship favours the master/servant classification.

None of these factors are by themselves conclusive and not every factor need be present in order to classify a relationship as one requiring notice to terminate.” [ 77 ] I find after considering these factors, in particular the degree of reliance by Dr. O. and the exclusiveness of his use of Dr. H. only to treat his patients, that their contract of service fell into the intermediate category, that of dependant contractor and therefore reasonable notice to terminate was required. [ 78 ] I concur with counsel for Dr. O. and Dr.

H., that reasonable notice under all the circumstances would have been one month expiring January 14, 2003. [ 79 ] Damages in lieu of notice should be calculated as the difference in the fees Dr. O. and Dr. H. would have split under their fee sharing formula less the fees that Dr. O. actually received from BCC for the period in question. I direct that BCC provide Dr. O. with an accounting for all of his patients treated by Dr. H. at the Clinic between December 14, 2002 and January 14, 2003 inclusive. The fees generated by these attendances are to then be notionally split between Dr. O. and Dr. H.

Any fees owing to Dr. O. as a result, after deduction of the fees actually paid to him by BCC, are to be paid by Dr. H. to Dr. O. in lieu of notice. Additionally I direct that BCC determine, if possible, those patient files of Dr. H.’s which were opened in the period in question but were walk-in patients that would ordinarily have been rotated to Dr. O.. Any treatment fees generated during the foresaid notice period on these patient files, whether by Dr. H. or another Doctor, are also to be paid to Dr. O. pursuant to the appropriate fee sharing formula (either the contract between Dr. H. and Dr.

O. or the BCC protocol) by either Dr. H. or Dr. M. on behalf of the treating Doctor. Accounting [ 80 ] From December 14, 2002, to June 30, 2003, BCC at Dr. M.’s direction, continued to operate with Dr. O. as a participating colleague under his ADC. All patients treated that were identified with a blue file had their fees split 50/50 with 50 per cent going to Dr. O.. An accounting and payment was made for all of Dr. O.’s patients who had massage therapy or bought products from what remained of Dr. O.’s inventory. The only change was that walk-in patients were no longer assigned to Dr. O. in rotation or at all. Dr.

H. did continue to treat Dr. O.’s patients which was a necessity as the other three Doctors had full practices. If a patient of Dr. O. used a massage therapist Dr. O. received a full split of the fee between himself and the massage therapist pursuant to his existing fee arrangement with the respective massage therapist. [ 81 ] For patients of Dr. O. treated after June 30, 2003 a full share of the fees attributable to Dr. O. was accounted for and held in trust for Dr. O. by the Clinic. These monies were dealt with prior to trial. [ 82 ] BCC tracked the treatment of Dr.

O.’s patients and remitted the appropriate fee amount to Dr. O. monthly until June 30, 2003. Dr. O. was charged his share of the overhead from December, 2002 to June 30, 2003. Additionally Dr. O. was charged 25% of certain capital equipment items purchased by BCC prior to June 30, 2003. [ 83 ] Dr. M. asserts, as corroborated by Ms. Humphrey and Mr. Carr, that a proper accounting was done and that Dr. O. was paid all fees generated by his patients as identified by their blue files from December 14, 2002 to June 30, 2003. [ 84 ] Nonetheless, Dr. O. asserts a claim against Dr. H. for $24,448.37.

This amount is calculated by Dr. O. somewhat arbitrarily.

He asserts that from December 14, 2002 to June 30, 2003 Dr. H. treated his patients and that he did not receive his rightful share of the fee. In support of this submission Dr. O. points to the fact that the income from his practice between July, 2002 to December 14, 2002 was nearly halved in December 14, 2002 to June 30, 2003. Based on the accounting records kept by Dr. M. through Ms. Humphrey and Mr. Carr, it appears that a proper accounting was done. No one can provide an explanation as to the drop in the fees generated by Dr. O.’s blue files. Dr. O. asserts the logical inference is that Dr.

H. continued to treat his patients but claimed them as his own such that the accounting is invalid. Dr. O. advised that he carefully analysed each day’s accounting for the period in question and the fees from names that he recognised as his patients that Dr. H. saw but he did not receive the fee total $48,986.00. Dr. O. asserts that a fair fee split to apply to these fees is 50% as that is an average of the sliding scale in effect between prior to December 14, 2002 and that therefore Dr. H. owes him $24, 448.37. [ 85 ] Dr. O. was unable to introduce any evidence that the record keeping conducted by Ms.

Humphrey and the calculations made by Mr. Carr were compromised. As a result no claim against Dr. H. for additional fees has been made out. As Against Dr. Marchand: Discharge of Associate Doctor Contract (ADC) by the Buy/Sell Agreement (BSA) and Termination of Dr. O.’s ADC. [ 86 ] Dr. O. argues that the BSA discharged and replaced the ADC as the document governing his business relationship with Dr. M. after 1992. As a result of this Dr. M. then had no legal right to terminate Dr. O.’s ADC and exclude him from the premises. Dr.

O. asserts that but for this he would have returned to assume conduct of his practice at BCC commencing in November, 2003. [ 87 ] The evidence which Dr. O. asserts that supports his position that the ADC is superceded or discharged by the BSA is as follows: 1. Paragraph 14 of the BSA dealing with arbitration refers to the parties as “partners” and the business of the “partnership;” 2. Paragraph 16 of the BSA is a typical “entire agreement” clause and indicates that it supercedes all prior agreements with respect to the “subject matter thereof”. Dr.

O.’s view is that the BSA encompasses the whole of the operation of BCC and not just the death and disability provisions plainly set out therein; 3. The natural evolution of the operation of BCC had caused some terms of the ADC to fall into disuse; such as, the sharing of costs based on gross billings as opposed to a straight per Dr. percentage split which was in use in 2002; the split between the Dr.’s when one treated the patient of another had evolved to 50/50 rather than the 40/60 initially in place under the ADC; 4. The ADC clearly states that the Senior Doctor, Dr. M. and the Associate, Dr.

O. are not partners. The ADC contains a right of first refusal as does the BSA, albeit on different terms. The ADC contains a termination clause whereby either party can terminate their relationship on 90 days notice. The BSA at para. 9 makes it clear that the bankruptcy or winding up of either party is a termination event, as is an agreement signed by the parties terminating the agreement. Dr. O. asserts that these differences are in direct contrast and conflict with each other and therefore the ADC must be considered discharged; 5.

Certain documents filed with the Worker’s Compensation Board, a business license issued by the City of Calgary in 2002 and a massage therapy agreement all refer to Dr. M. and Dr. O. as the business owners of BCC generally; 6. Prior to 1997, Dr. M. alone had been the signatory to the lease for the Clinic premises. In 1997 Dr. M. requested that Dr. O. also sign as a tenant, which he did. Dr. O. asserts this is in furtherance of their partnership. However, Dr. M. also offered to have Dr.’s Hort and Dr. Sali become signatories to the lease. Dr. Hort declined but Dr. Sali became a signatory in 2002. [ 88 ] Dr.

M. unequivocally states that the BSA was intended to be restricted to its terms. She never intended to become a partner with Dr. O. with all the ensuing legal obligations and responsibilities that would include. Her counsel suggests the wording in paragraph

14 is nothing more than sloppy drafting and I agree. A plain reading of paragraph 16 makes it clear the BSA only supercedes any prior Buy/Sell agreement. The W.C.B. documents and business license do not hold Dr. M. and Dr. O. out to the public as partners but merely as the parties running the business. The changes to operations of the Clinic have been organic and are minor amendments to the ADC by conduct.

The contract provisions in each of the ADC and the BSA do not contradict each other once the BSA is understood as nothing more than a contract that provides for the purchase of each others practice in the event of death or disability. The terms in the BSA are simply not triggered or operative except in the event of the death or disability of one of the parties. Should that event occur then the right of first refusal and the purchase of the disabled party’s practice would be as per the BSA and not the ADC, although their terms could co-exist. [ 89 ] I believe Dr.

M. when she says she did not intend the BSA to be a partnership agreement superceding the ADC. Considering all the circumstances I also find that the parties did not, by their conduct treat each other any differently after the BSA and did not treat each other or consider each other partners. The terms of each contract in my view can stand together. There are no inconsistencies that go the heart of the ADC such that it must be considered to be discharged. Dr. M. had the legal right to provide notice to Dr. O. to terminate his ADC effective June 30, 2003. Dr.

O. could have attempted to enforce his right to possession through his execution of the lease as a tenant by involving the Clinic’s landlord but he chose not to do so. Retention of Dr. Oliphant’s Patients: [ 90 ] Paragraph 4.5 of the BSA requires the non-disabled partner, here Dr. M., to reasonably assist and support the disabled partner, here Dr. O., in the retention of his patients during the Elimination Period. Dr. O. applied under the Unum policy in July, 2002 triggering this obligation. Although Dr. O. did not advise Dr. M. of his application she became aware of it in September, 2002. The conduct Dr.

O. asserts was a breach of this obligation took place from September, 2002 to February, 2004 the date upon which the Unum Claim was conclusively denied. [ 91 ] Dr. O. states that Dr. M.’s interference in his sale negotiations with Dr. H, Dr. M.’s refusal to allow Doctors’ Mintz and Reeves into BCC to treat his patients after Dr. H. terminated his associateship, her hiring of Dr. H. on a fee sharing basis, the termination of the ADC agreement effective June, 30 2003 and her overall supervision of his files during this period constitute a breach of this term. Dr.

O. states that the fact that his practice was effectively lost is prima facie proof that Dr. M. failed in her obligation. [ 92 ] Dr. M.’s evidence is that she was entitled to reject Doctors Mintz and Reeves as they were actually practising at Comfort Health during the same hours that BCC was open for business and as such were direct competitors. She felt as well that two different Doctors attending at different times on different days would inject a degree of chaos into the small office. She felt her retention of Dr.

H. on a basis similar to the other doctors working in the office was sufficient to assist in the retention of Dr. O.’s patients and provided a continuity for those patients who had already seen Dr. H. in the preceding period. Dr. M. was confident that by making sure none of Dr. O.’s clients were allowed to switch Doctors and that all referrals from Dr. O.’s patients were opened in blue files was sufficient to ensure that Dr. O. would always receive his equitable share of fees. She felt it fair however to allow Dr.

H. to open his own files for those prospective patients who walked in as he was present and able to provide the care. [ 93 ] It must be remembered that Dr. M. was to only “reasonably” assist and support Dr. O.. Dr. O. meanwhile after December, 2002 effectively abandoned his practice as previously outlined. Even while Dr. H. was his associate he rarely visited BCC according to Dr. H.,Dr. M, and Doctors’ Hort and Sali. After Dr. H.’s associateship was terminated he attended only once or twice prior to June 30, 2003 and never after that date. [ 94 ] Under all the circumstances, including Dr.

O.’s attempts to breach the protocol against Doctors’ hiring their own associates, filing insurance claims without advising Dr. M., and opening a potentially competing business without advising her, I find that Dr. M.’s conduct was more than reasonable in assisting and supporting Dr. O. in the retention of his practice. Conversion [ 95 ] As I have already found that Dr. H. did not convert Dr. O.’s practice there is no need to determine whether Dr. M. participated or colluded in a conversion. The same reasoning enables me to also conclude that Dr. M. did not convert Dr. O.’s practice to BCC.

Accounting [ 96 ] Dr. O.’s claim against Dr. M. for liquidated amounts arising out of six separate and distinct matters. (

i) Capital Purchases [ 97 ] Dr. O. was charged $739.33 for his 25% share of capital items purchased by Dr. M. for BCC prior to June 30, 2003. Dr. O.’s approval to purchase these items was not requested nor obtained. This was a breach of the ADC and the protocol in place for the office. Dr. M.’s position is that the items were necessary for the operation of the clinic, that Dr. O.’s ADC was in place at the time they were purchased, and that her failure to request his approval was an oversight. [ 98 ] The approval of Dr. O. to purchase capital items for BCC was a condition precedent to his liability for same. Dr.

M. will reimburse Dr. O. $739.33 (ii) Maintenance Fund [ 99 ] Dr. O. maintained a Maintenance Fund of $2,500.00 that each Dr. contributed to equally. This fund was to be used by the BCC as a slush fund for purchases and was replenished as required. Dr. M.’s evidence, supported by Ms. Humphrey is that by June 30, 2003 the fund was in a deficit therefore no monies are owing to Dr. O.. (iii) Medical Legal Fee [ 100 ] Dr. O. asserts that a fee of $650.00 for a medical legal report he prepared was paid to BCC and not forwarded to him. This was conceded by Ms. Humphrey and therefore will be paid by Dr. M. to Dr.

O.. (iv) Massage Therapy Fees [ 101 ] Dr. O. asserts that Dr. H. received his share of massage therapy fees between December 14, 2002 and June 30, 2003. Dr. H. and Dr. M. both deny that this occurred. Dr. M. confirmed that Dr. O.’s share of massage therapy fees generated by a patient represented by a blue file was tracked and paid to him. No evidence was tendered to the contrary. (

v) Accounts Receivable [ 102 ] Dr. O. asserts that as at December 2002, his practice had accounts receivable of $3,324.00. He is of the belief that these fund’s were paid to BCC prior to February, 2004 and not then paid to him. Again, Dr. M., and Ms. Humphrey gave evidence that if these amounts were received by BCC they would have been recorded and paid to Dr. O.. No evidence was tendered to the contrary. (vi) Leasehold Improvements, Furnishings and Equipment [ 103 ] Dr. O. claims that his share of the leasehold improvements, furnishings and equipment in BCC should be paid to him by Dr. M..

The ADC is silent as to the treatment of these assets upon a termination. In the ADC that Dr. M. had with Dr. H. he was to pay a $25,000.00 contribution toward the leasehold improvements, furnishings and equipment of the Clinic. Dr. M. and Dr. H. both state however that Dr. H. did not pay this amount as they were waiting to see if Dr. H. would be able to purchase the practice from Dr. M. if Unum proceeded with the disability claim. [ 104 ] The ADC with Dr. O. makes it clear that Dr. M. owned certain assets in 1989 that Dr. O. purchased an interest in by payment

over a 3 year period. It appears then that by June 30, 2003 Dr. O. would have either purchased an interest in or paid his proportionate share for all the leasehold improvements, furnishings and equipment at BCC not otherwise individually owned. With no other evidence as to value having been tendered I direct that Dr. M. pay Dr. O. $25,000.00 for his interest in the leasehold improvements, furnishings and equipment of BCC. Damages [ 105 ] Some time was spent at trial by Dr. O. as to what damages he would be entitled to were he successful in any of the substantive claims against the Defendants.

In the event I am wrong in my findings and damages for the loss of the practise could be assessed in favour of the Plaintiffs, then I would award the sum of $100,00.00 using as my guideline the purchase price Dr O. agreed to with Dr. M. in their Agreement of April 2003.

Summary [ 106 ] Dr. O. is to receive the fee differential, if any, from Dr. H. for the notice period of December 15 th , 2002 to January 14, 2003 inclusive. Additionally, Dr. O. is to be paid by Dr. M. $739.33 reimbursement for capital purchases, $650.00 reimbursement for his medical legal fee, and $25,000.00 for his interest in the leasehold improvements, furnishings and equipment at BCC. The balance of the Plaintiffs’ Claim is dismissed. [ 107 ] All such amounts are to bear interest at the applicable Judgement Interest Act rates and be paid by the respective Defendants.

Costs [ 108 ] Ordinarily costs are awarded in favour of the successful party. While the Plaintiffs have been marginally successful it can be seen that the Plaintiffs have been wholly unsuccessful on the substantive issues in this trial. For this reason I award to each of the Defendants 75% of their costs. As the trial was completed prior to the issuance of the current Rules of Court it is the former Rules of Court that govern this costs award. Further, although 2 counsel appeared for Dr. M. I do not allow a second counsel fee. Dated at the City of Calgary, Alberta this 1 st day of April, 2011. K.M.

Horner J.C.Q.B.A. Appearances :

George C. Stewart for the Plaintiffs Phillip A. W. Carson Miller Thomson LLP for the Defendant Dr. Harrison G. Price, Q.C. Machida Shewchuk James; and T. K. Viccars Viccars Law Firm for the Defendant Dr. Marchand