An agreement entered into by the defendant and a dental firm consisting of the plaintiffs and A, after providing that the defendant was to serve the firm as a dentist for a certain period, contained a stipulation that " after the termination of this agreement " he was not to practise as a dentist within a specified area for a specified number of years from the date of the termination of the agreement. Whilst the defendant was serving the firm under the agree- ment one of the partners assaulted him without provocation; he thereupon gave notice to the firm, purporting to determine the agreement forthwith, and left the service of the firm. Shortly afterwards A retired from the partner- ship, having transferred his share and interest therein to the plaintiffs, who

19 CLR 2

continued to carry on the business; and the defendant then practised as a dentist in conjunction with A within the area above referred to. The plain. tiffs, after receiving the defendant's notice, did not communicate with him in any way until they brought an action for an injunction to restrain him from carrying on business in breach of the stipulated restriction.

Held, that such stipulation formed part of the contract, and that the defen- dant had ceased to be bound thereby, either because the contract was rescinded by the plaintiff's adopting or assenting to the defendant's determination of it, or because the plaintiffs had, by dissolving the partnership, rendered themselves unable to specifically perform their part of the contract; and that, therefore, the plaintiffs were not entitled to an injunction,

General Billposting Co. Ltd. v. Atkinson, (1908) 1 Ch., 537; (1909) A.C., 118; Measures Brothers Ltd. v. Measures, (1910) 2 Ch., 248; Brace v. Calder, (1895) 2 Q.B., 253, applied.

Decision of the Supreme Court of Western Australia (Burnside A.C.J.),

APPEAL from the Supreme Court of Western Australia.

On 23rd March 1908 the plaintiffs, Alfred Kaufman and Albert Egbert Ford had entered into a partnership with one Blitz to carry on a dental business, under the name of the Metropolitan Dental Co., at Perth. On 17th September 1910 the Company entered into a written agreement with the defendant, Edgar H. McGillieuddy, who was a registered dental surgeon, for his services as an operating and prosthetic dentist for a period of three years, with an option to the Company to extend it to five years. This option was exercised by them. The contract also pro- vided that "the said Edgar H. McGillicuddy after the termination of this agreement should not practise his profession as opera- tive and prosthetic dentist either on his own account or as the employee of or in conjunction with any other dentist or dental firm within a radius…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Kaufman v McGillicuddy

Details

AGLC: Kaufman v McGillicuddy [1914] HCA 63
Case: [1914] HCA 63
Decision Date: 2 November 1914

CaseChat Overview and Summary

The case of *Kaufman and Another (trading as The Metropolitan Dental Company) v McGillicuddy* involved an appeal to the High Court of Australia from a decision of the Supreme Court of Western Australia. The dispute concerned a contract of service between a dental firm, the Metropolitan Dental Company (represented by partners Kaufman and Ford), and a dentist, Mr. McGillicuddy. The core of the disagreement lay in a restraint of trade clause within the employment agreement, which prohibited McGillicuddy from practising dentistry within a specified area for a period after the termination of his employment.

The legal issues before the court were whether the restraint of trade clause remained enforceable against McGillicuddy. This question arose in the context of McGillicuddy's purported termination of the agreement following an alleged assault by one of the partners, the subsequent dissolution of the partnership, and McGillicuddy's commencement of practice in conjunction with a former partner. The court was required to determine if McGillicuddy was still bound by the restrictive covenant, particularly in light of the changes to the partnership and the circumstances surrounding his departure from the firm.

The High Court held that the restraint of trade clause was not enforceable. The reasoning applied was that McGillicuddy was no longer bound by the agreement. This conclusion was reached on two alternative grounds. Firstly, the contract could be considered rescinded due to the plaintiffs' conduct, either by their assent to McGillicuddy's termination of the agreement following the assault, or by their own actions in dissolving the partnership. Secondly, the dissolution of the partnership rendered the plaintiffs unable to specifically perform their obligations under the contract, which in turn meant they could not enforce the restrictive covenant. The court applied principles from cases such as *General Billposting Co. Ltd. v. Atkinson* and *Measures Brothers Ltd. v. Measures*, which establish that a party seeking to enforce a restrictive covenant cannot do so if they have themselves breached the fundamental terms of the employment contract or rendered themselves unable to fulfil their reciprocal obligations.

Consequently, the appeal was dismissed. The plaintiffs were not entitled to an injunction to restrain McGillicuddy from practising his profession, as the restrictive covenant was deemed unenforceable against him.

Orders