DENTIST’S PRACTICE

Dominion, Volume 27, Issue 189, 9 May 1934, Page 14

DENTIST’S PRACTICE

Injunction to Restrain From Commencing CASE IN SUPREME COURT An injunction to restrain Harold William Frost, dentist, of Wellington, from carrying on the practice of his profession in the city, except on behalf of Frosts Ltd., more commonly known as Frost and Frost, was sought in a case commenced in the Supreme Court before Mr. Justice Reed yesterday. The ground of the action was that Mr. Frost was a director of Frosts Ltd., which he denied, and that bls position thereby precluded him from entering into competition with the other two directors of the company, Gordon Frederick Harkness and Charles Frederick Cooper. The case was not completed when the court rose, and the hearing was adjourned sine die. Mr. P. Keesing appeared for plaintiff company, and Mr. E. C. Wlren for defendant Frost. The statement.of claim set out tbit Frosts Ltd. was a company duly incorporated In April. 1927, having a nominal capital of £2lOO. 700 £1 shares being held each by defendant. Mr. Harkness and Mr. Cooper, of Wellington, dentists, who were the three direc tors of the company. For 12 mouths prior to incorporation, and even since then, defendant Frost bad not actively engaged in the practice of dentistry In Wellington, and the practice of the company had been carried on exclusively by Mr. Harkness and Mr. Cooper. Commencing Another Practice. Defendant, the statement of claim continued, was about to commence in Wellington another dental practice in competition with the practice carried on by plaintiff company. It was alleged that be had entered into an'agreement with Mr. W. J. Simpson, a dentist practising in Wellington, who. advertised his practice and his fees, and who was the strongest competitor with plaintiff company, and that he had agreed with Mr. Simpson upon a common scale of fees substantially lower than- those charged by plaintiff company. It was alleged that what defendant Frost had done, and was intending to do, was done maliciously for the pur,pose of damaging the practice of plaintiff company. The use of the name “H. W. Frost” in connection with defendant’s intended business was likely, It was alleged, to cause the public to confuse plaintiff company’s business with defendant’s. The plaintiff claimed an Injunction restraining defendant from. carrying on the piactlce of dentistry tinder the name of “H. W. Frost,” or uiider at«.r other name whatsoever in . Wellington except on behalf of plaintiff company, from permitting defendant’s name to be advertised or used in connection with any dental practice carried on in Wellington other than that of plaintiff company, and from entering into any agreement with any person or company carrying on the practice of dentistry in Wellington with the object o r competing with plaintiff company. Defendant Frost, in his statement of defence, alleged that on April 4 last he resigned his position as a director of Frosts Ltd. He stated that his dental practice had not actually been managed and carried on exclusively by Mr. Harkness and Mr. Cooper. Reasons for Action. Owing to the fact that he had been receiving an ever-diminishing income from .plaintiff company,, due to the unsound business and advertising methods of the two directors. Mi. Harkness and Mr. Cooper, and that owing to the fact that at an extraordinary meeting of the company at which' the two directors mentioned passed a resolution voting to themselves such an exorbitant salary as to have the effect of assuring to them practically the whole of the profits (>f tne company, defendant said he was forced to. take the only means at nw disposal to restore his income by commencing the practice of his profession as a dentist in Wellington. He stated he had not acted maliciously in. so pro 'tenting his own interests, and alleged on the other hand that Mr. Harkness and Mr. Cooper had acted maliciously in passing the resolution they did at the meeting of the company. After Mr. Keesing had proceeded some distance with his argument, 'his Honour said that his view, a view formed from the reading of the papers without hearing argument, was, that defendant should be restrained to thejexterd, so far as it was possible to do so without preventing him using his name, of preventing confusion with plaintiff company. It struck him that if an injunction was granted, Mr. Frost would be only allowed to carry on business under the name of “Harold Wil-, liam .Frost,”, and he should add that fact to any advertisement in connection with Frost and Frost or Frosts, Ltd. Mr. Keesing said if that course were followed, he wbulcl draw the attention of the court to the last announcement of Mr. Frost, which stated he had no active connection with plaintiff company. He stated he-was In no way remotely connected. That was a matter of considerable importance to playitiff company, because by virtue of statutory requirements, it was obliged to have de ’ fendant’s name on its door. His Honour: Surely you cannot do that, if he has asked to have bis name taken off? Mr. Keesing: I submit strongly otherwise. Case for Defence. Mr. Wiren said that Mr. Frost had carried on business fnr some 20 years in Wellington, and then he took Mr. Harkness and Mr. Cooper into partnership -with him,forming a limited liability company. In a practice such as a dentist’s there was no goodwill ot any value at all. Defendant now was in no way connected with the company. Counsel submitted his client was perfectly entitled to set up a competing business. There was no restrictive covenant, and he might, if be chose, advertise himself ns being a partner, manager or employee of the old business. Kov the year ended March 31, 1934, each of the three directors had received £635 in dividends, but for the .rear commenced April 1. 1934. a resolution had been passed allocating £624 each to Mr. Harkness and Mr. Cooper, before there was to be any division of the profits. There was nothing to prevent those two directors voting themselves at any time the whole of the profits of the company, and yet they were ' the plaintiffs in the present action.

After, the court resumed in the afternoon. Mr. Keesing intimated be was not prepared at that stage to proceed with his main argument.... He asked his Honour whether he would grant an interim injunction restraining defendant in the meantime from practising, unless he stated his business was in

no way connected with Frost and Frost, or Frosts Ltd. Mr. Wiren objected to any interim Injunction being granted, and the motion for injunction was postponed sine die. His Honour-added that- Mr Frost would have to be very careful with adverti.X'inents, because when the case came on for nnal hearing it might make a lot c£ difference.