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B.C. Court case about stealing charts

By November 21, 2013December 3rd, 2021Buying a Practice, Practice Management, Selling A Practice

Here’s an interesting case I came across out of B.C. It involved a dentist claiming that his charts were stolen by another dentist. The Court disagreed and dismissed the case.

In Stelmaschuk v. Lui, [2013] B.C.J. No. 929, Dr. Clarence Peter Stelmaschuk’s license to practice was suspended in February 2011. So, in March 2011, as a result of the suspension and without solicitation, he delivered all of his dental records to Dr. Chung Wo Lui, another dentist in the same building (who also happened to be the landlord of the building). At the time of the transfer, Dr. Stelmaschuk did not stipulate any conditions on the use of the dental records. Dr. Lui had previously had his practice appraised for about $720,000 in 2010. But in the summer of 2011, Dr. Lui sold his practice for $900,000. Dr. Stelmaschuk claimed that that sale included the value of his dental records and had increased the purchase price by $180,000. But Dr. Lui claimed that the increased value of the dental practice was based on his own efforts (not by taking Dr. Stelmaschuk’s patients). Dr. Lui also argued that the dental records were never included in the sale and had been left on the premises after the sale was completed and that he had even asked Dr. Stelmaschuk to retake possession of the dental records, but received no response.

The B.C. Supreme Court Agreed with Dr. Lui and dismissed the lawsuit against him. The Court reviewed the tort of conversion (i.e. civil theft) and concluded as follows:

31 Clerk & Lindsell of Torts, 20th Edition, at page 1115 lists seven principal ways in which conversion can occur: (1) when property is taken or received by someone who is not entitled to take it or receive it; (2) when property is wrongfully parted with; (3) when it is lost by a bailee in breach of the duty to the bailor; (4) when property is wrongfully sold; (5) when property is wrongfully retained; (6) when property is wrongfully misused or destroyed; and (7) when access by the owner of property is wrongfully denied. The learned authors do not suggest this is a closed list, but the circumstances here do not require any different analysis.

32 In this case, the charts and medical records were delivered by Dr. Stelmaschuk to Dr. Lui’s premises without his knowledge, after Dr. Stelmaschuk’s suspension. The evidence establishes that Dr. Lui was then given authority to use the records to assist Dr. Stelmaschuk’s former patients, some of which he did. Dr. Lui called Dr. Stelmaschuk to retrieve his records prior to the sale, although Dr. Stelmaschuk denies this. There is no evidence of a letter, correspondence or any indication of Dr. Stelmaschuk ever trying to ask for or retrieve his records. I accept the evidence of Dr. Lui that he made the request of Dr. Stelmaschuk to retrieve the records but Dr. Stelmaschuk did not reply.

33 Dr. Lui did not purport to pass title to the records to the purchasers of his practice but simply left them on the premises. He declined to sign a Vendor’s Certificate that would have asserted title to the records. Dr. Lui did not at any time assert title to the records. As he put it, they were a liability, as they had to be retained for 30 years. There is no evidence that Dr. Stelmaschuk ever sought either access to or return of the records, either from Dr. Lui or from the purchasers of Dr. Lui’s practice. Nor is there any evidence of the purchasers asserting title to the records.

34 In my opinion, in these circumstances, conversion has not been made out. For that reason, I would dismiss the action…

Interestingly, the Court went on to discuss the issue of damages (in the event that its decision on liability was wrong). The Court cited a number of reasons to explain why and how Dr. Lui was able to command a $180,000 increase in the purchase price in the summer of 2011 vis-a-vis what the practice had been appraised for in 2010:

  • Mr. Henry Doyle (of Al Heaps & Associates Inc.) confirmed that dental practices were a scarce commodity and selling for multiples of historic production. This was also facilitated by easier access to debt, brought about by low-interest rates.
  • Dr. Lui increased production by working longer hours and being open on Saturdays (an additional day per week).
  • The purchasers had a connection with the community where Dr. Lui’s practice was located (i.e. close proximity of a Sikh temple) and there was little else for sale in and around the area.