Impact Healthcare Pty Ltd v St Vincent's Private Hospitals Ltd [2025] QSC 117

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - IMPLIED TERMS - GENERALLY - where the applicant and the respondent were parties to a written agreement, under which the applicant provided professional services in the management and operation of the emergency department at the hospital owned by the respondent - where it was provided that the agreement would continue unless terminated under certain clauses in the agreement - where the agreement contained clauses pursuant to which the agreement could come to an end - where the agreement contained an entire agreement clause - whether the agreement could be terminated on the giving of reasonable notice - whether the agreement contained a term implied in law permitting such termination - whether the agreement contained a term implied in fact permitting such termination

Australian Blue Metal Pty Ltd v Hughes [1963] AC 74, applied

Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd (2015) 235 FCR 305, applied

Barro Group Pty Ltd v Fraser [1985] VicRp 59; [1985] VR 577, explained

Body Corporate for Ocean Pacifique v Pugliese [2023] QCA 129, applied

BP Australia Pty Ltd v Nyran Pty Ltd [2003] FCA 520; (2003) 198 ALR 442, cited

BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, applied

Cherry v Steele-Park [2017] NSWCA 295; (2017) 96 NSWLR 548, applied

Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, applied

Crawford Fitting Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438, considered

Etna v Arif [1999] VSCA 99; [1999] 2 VR 353, applied

Futuris Industrial Products Pty Ltd (Federal Court of Australia - Full Court, unreported, BC9405891), cited

Hart v Macdonald [1910] HCA 13; (1910) 10 CLR 417, applied

Impact Healthcare Pty Ltd v St Vincent's Private Hospitals Ltd [2024] QSC 62, cited

International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151, cited

Jireh International Pty Ltd t/a Gloria Jean's Coffee v Western Exports Services Inc [2011] NSWCA 137, cited

Llanelly Rail and Dock Co v London and North-Western Railway Co (1873) L R [1873] UKLawRpCh 85; 8 Ch App 942, cited

Liverpool City Council v Irwin [1976] UKHL 1; [1977] AC 239, cited

Martin-Maker Aircraft Co Ltd v Canadian Flight Equipment Ltd [1955] 2 QB 559, cited

McClelland v Northern Ireland General Health Services Board [1957] 1 WLR 594, cited

New South Wales Cancer Council v Sarfaty (1992) 28 NSWLR 68, cited

Pacific Diamond 88 Pty Ltd v Tomkins Commercial & Industrial Builders Pty Ltd [2025] QCA 50, cited

Primary Flooring Pty Ltd v Australia Comfort Group Pty Ltd [2019] VSC 104, cited

Quilkey v Tractile Combined Pty Ltd [2023] QDC 204, applied

Realestate.com.au v Hardingham [2022] HCA 39; (2022) 277 CLR 115, applied

Re Spenborough Urban District Council's Agreement [1968] Ch 139, cited

Rosser v Marine Ministerial Holding Corporation [1999] NSWCA 72, explained

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, cited

United Resource Management Pty Ltd v Par Recycling Services Pty Ltd [2023] NSWCA 236, cited

WIN Corporation Pty Ltd v Nine Network Australia Pty Ltd [2016] NSWCA 297; (2016) 341 ALR 467, cited

Winter Garden Theatre (London) Limited v Millennium Productions Limited [1948] AC 173, cited

• [1] The outcome of this proceeding turns on a narrow issue: whether, on its proper construction, a written agreement contains a term (implied in law or implied in fact) that the term of the agreement (save for express terms dealing with termination) is indefinite, rather than perpetual, such that the agreement can be terminated by the respondent on the giving of reasonable notice to the applicant.
• [2] Those terms, indefinite and perpetual, are not legal terms. They are ordinary English words to be given their ordinary English meaning (unless it can be demonstrated that they were used in a way that they carry some other meaning).
• [3] "Indefinite" relevantly means:

(a) (Shorter Oxford English Dictionary) - (1) having no clearly determined being or character; indeterminate, vague, undefined; (2) of undetermined extent, amount or number; unlimited.

(b) (Macquarie Dictionary) - (1) not definite; without fixed or specified limit; unlimited; (2) not clearly defined or determined; not precise.

• [4] "Indefinitely" does appear in Black's Law Dictionary as meaning, relevantly - (1) for a length of time with no definite end.
• [5] "Perpetual" relevantly means:

(a) (Shorter Oxford English Dictionary) - (1) lasting or destined to last forever; eternal; (of a position, office, etc) permanent (during life); that serves or remains valid for ever or for an unlimited time; (2) continuing or continued in time without interruption; incessant; continuous; constant; frequent; much repeated.

(b) (Macquarie Dictionary) - (1) continuing or enduring forever or indefinitely; (2) continuing or continued without intermission or interruption.

• [6] "Perpetuity" does appear in Black's Law Dictionary as meaning, relevantly - (1) the state of continuing for all future time; the condition of persisting forever.
• [7] In summary in this case the applicant's position is that save for the express terms dealing with termination, the agreement is perpetual (that is, cannot be terminated by the respondent on the giving of reasonable notice). It says the express terms in the agreement dealing with termination are exhaustive of termination rights granted to the parties. It says the agreement is not of the type which in law would have implied into it a right to terminate on the giving of reasonable notice. Nor can such a term be implied in fact as the alleged implied term does not meet the BP Refinery[1] test for the implication of a term in fact because:

(a) it is not reasonable and equitable;

(b) it is not required to give business efficacy to the agreement;

(c) it is not so obvious as to go without saying;

(d) it contradicts (or at least is in tension with) express terms of the agreement.[2]

• [8] In summary in this case the respondent's position is that an implied term permitting it to terminate the agreement on the giving of reasonable notice:

(a) arises as an implication in law having regard to the nature of the agreement;

(b) arises as an implication in fact where the term:

(i) is reasonable and equitable;

(ii) is required to give business efficacy to the agreement;

(iii) is so obvious as to go without saying;

(iv) is capable of clear expression;

(v) does not contradict any express terms of the agreement.

(a) the extrinsic evidence relied upon by the applicant in support of the proper construction of the agreement is in parts inadmissible, and where admissible is of little weight;

(b) on the proper construction of the agreement there is a term implied in law that the agreement is terminable by the respondent on the giving of reasonable notice;

(c) if that conclusion be wrong, on the proper construction of the agreement there is a term implied in fact that the agreement is terminable by the respondent on the giving of reasonable notice.

• [10] A declaration as to the proper construction of the agreement will be made.

• [11] The applicant (a corporation) (Impact) and the respondent's predecessor[3] entered into a written agreement (Agreement) in early 2001. The respondent (Hospital) was assigned its predecessor's rights under the Agreement in June 2019.
• [12] The Agreement is titled "Agreement for the operation of the Holy Spirit Northside Emergency Centre". On the face of the document, it was prepared by lawyers - Deacons, in their Brisbane office.
• [13] Under the Agreement, Impact is referred to as the Consultant. That term is defined in clause 1.1 (definitions) to extend to and include Impact's successors in title subject to clause 4.13 (that deals with changes in control).
• [14] Under the Agreement, the respondent/Hospital is referred to as the Principal.
• [15] The recitals to the Agreement record:

1. The Principal operates a private hospital in the State of Queensland known as "Holy Spirit Northside Private Hospital" (hereinafter called "the Hospital").

B. The Principal is in the process of setting up an emergency centre within the Hospital.

1. The Consultant has considerable expertise and experience in the establishment and subsequent management control of emergency centres.

1. The Principal has engaged the Consultant to provide professional services in connection with the strategic management of an emergency centre within the Hospital.
2. The parties acknowledge that a large amount of synergy is required between the Principal and the Consultant in order to obtain maximum benefit from the consultancy.

F. The parties are desirous of recording the terms of conditions of the consultancy.

• [16] The person standing behind Impact who had the considerable expertise and experience was Dr Phillip Kay.
• [17] The Agreement contains an entire agreement clause - clause 1.4; and a no amendment clause - clause 21.
• [18] The key clauses of the Agreement for the purposes of this proceeding include the following.
• [19] Clause 2.2 (Term) of the Agreement provides:

(1) The engagement of the consultant shall be deemed to have commenced on the 1st [of] October 2000 and shall continue, unless terminated as hereinafter provided by clauses 4.13 or 7.

(2) The parties acknowledge the current volatility in the healthcare industry and hereby agree to renegotiate the appropriate clauses in the event of major changes induced by the Government or Health funds which by its nature causes serious immediate detriment to either party such as Medicare schedules, Health Fund legislation.

(3) The parties may terminate this contract by mutual agreement or if the consultant wishes to terminate, for whatever reason, a minimum of six months notice shall apply.

• [20] Clause 2.3, dealing with the dates by which separate phases of the project[4] were to be completed, indicates that the design and construction phase to the post-opening consolidation period was expected to occur between October 2000 and December 2005. The opening target date of the hospital and emergency centre was 30 July 2001. That gives some sense of what the parties estimated[5] in terms of the time required for the emergency centre to open and then reach "usual operations" (my term).
• [21] The clauses of the Agreement pursuant to which the Agreement could come to an end are as follows.
• [22] Clause 7 of the Agreement dealing with Early Determination provides:

7.1 Early Determination by the Principal > > The Principal may by notice in writing to the Consultant (to be served in any of the modes set out in this agreement) determine this Agreement forthwith if: > > (1) the Consultant should suffer or permit execution to be levied against it or a receiver (or receiver or manager) or controller of the whole or any part of its property or undertaking to be appointed; > > (2) an administrator is appointed under Sections 436A, 436B, 436C of the Corporations Law; > > (3) commences to be wound up or ceases to carry on business; > > (4) enters into a compromise or arrangement with its creditors or any class of them; > > (5) or any of the Approval Personnel identified in the Schedule acting in the discharge of their duties is guilty of any fraudulent act or wilful misconduct. > > 7.2 Notice of Breach of Obligations > > If the Consultant fails to perform its obligations under this agreement then: > > (1) the Principal may give notice in writing to the Consultant ("the notice") of its intention to terminate this agreement at the expiration of not less than twenty-one (21) days from the date of delivery of the notice to the Consultant in the event that the Consultant fails to remedy the breaches identified in the notice within that time or some other time as may be agreed upon by the parties in writing; > > (2) in the event that the Consultant fails to remedy the breaches specified in the notice within the time specified in the notice or such further time as may have been agreed upon by the parties in writing, then the Principal may terminate this agreement by further written notice to the Consultant and the agreement will automatically terminate upon the delivery of such further notice to the Consultant; > > (3) If the Consultant alleges a notice purportedly given under this clause has not been properly delivered, does not specify with sufficient particularity the alleged breach or the Consultant believes alleged the breach [sic] has not occurred, the Consultant may invoke the dispute resolution provisions set out in clause 19 and in that case the notice will be deemed to be stayed pending the conclusion of the dispute resolution process. > > 7.3 Early Determination by Consultant > > The Consultant may by notice in writing to the Principal (to be served in any of the modes set out in this agreement) terminate this agreement forthwith if the Principal should fail to make a payment to the Consultant under clause 7 of this agreement by the due date and such default shall continue for a period of fourteen (14) days after the Consultant has requested payment in writing indicating an intention to invoke this clause if payment is not received. > > 7.4 Principal's Obligation to pay upon termination > > If this agreement is terminated under Clauses 7.1 or 7.2 hereof then the Principal shall pay to the Consultant any part of the Consultant's remuneration which has accrued prior to the termination but has not been paid which shall be accepted by the Consultant in full satisfaction of all claims for fees and reimbursable expenses which the Consultant may have against the Principal under this agreement. > > 7.5 Post Termination Obligations > > Upon the termination of the agreement for whatever reason, the parties will return to each other all material in their possession which belongs to the other party and the Consultant may, at its own cost and expense, remove from the Emergency Centre all books, documents, papers, computer hardware and software, communication devices and medical instruments which it has provided in connection with implementation of the project and in so doing, will ensure that minimal damage and disruption is caused to the physical layout of the Emergency Centre and its continued operation. The cost of reinstating the Emergency Centre after the Consultant removes its possessions, will be the responsibility of the Principal.

• [23] Clause 12 of the Agreement dealing with Assignment provides:

12.1 Assignment by the Principal > > The Principal must as soon as it forms an intention to assign its rights and obligations under this agreement, advise the Consultant in writing of such intention and provide the Consultant with details of the party or parties to whom the Principal intends assigning such rights and obligations and the Consultant may, within 14 days of receipt of such notice, at its own election and without penalty, terminate this agreement by notice in writing to the Principal. > > 12.2 In the event that the Principal decides to sell, assign or otherwise part with control of the operation of the Hospital, the Principal must immediately give written notice of such intention to the Consultant and the Consultant may within 14 days of receipt of such notice, as its own election and without penalty, by notice in writing to the Principal, terminate this agreement. > > 12.3 In the event that the Consultant does not terminate this agreement pursuant to this clause, the Hospital will use its best endeavours [to] ensure that it is a term of any contract between the Principal and the party or parties to whom the Principal intends selling, assigning or otherwise parting with control of the operation of the Hospital or the Emergency Centre that such party agrees to an assignment of the Principal's rights and obligations under this agreement. Failure on the part of the Principal to procure that the party or parties to whom the Principal sells, assigns or otherwise parts with control of the operation of the Hospital accepts an assignment of this agreement will mean this agreement will, upon the settlement of the sale or otherwise of the Hospital, come to an end and the Principal will pay to the Consultant the Early Termination Costs within 30 days of the Agreement coming to an end under this clause.

• [24] The Agreement contains some small parts that appear superfluous; likely leftover from early versions of the Agreement. For example, in clause 9.4 there is reference to "the expiration of the term or any extended term of this agreement." The Agreement in fact contains no term or extended term and accordingly those words have no meaning in the context of the Agreement.[6] Such words therefore provide no assistance in the construction exercise required to be undertaken for the purpose of this proceeding.
• [25] Other relevant clauses of the Agreement are as follows.
• [26] Clause 4.13 of the Agreement dealing with a Change in Control provides:

(1) Should Dr Phillip Kay: > > (a) cease to be a director of the Consultant; > > (b) sell his shares in the Consultant; or > > (c) cease to manage the Emergency Centre, > > without the Principal's prior informed approval (unless he dies or becomes so ill or incapacitated as to be unable to perform his role as director and manager), the Consultant will be in breach of its obligations under the agreement. > > (2) The Principal will not unreasonably withhold its approval to: > > (a) the sale by Dr Kay of his shares in the Consultant; > > (b) his ceasing to be a director of the Consultant; or > > (c) his replacement as a manager of the Emergency Centre, > > after the Emergency Centre has been operating for 3 years continuously. > > (3) In any case where Dr Kay ceases to manage the Emergency Centre, the Consultant must replace him with someone of at least equivalent ability, experience and expertise approved by the Principal and (except where the replacement is consequent upon the death of Dr Kay) the Consultant must ensure that there is a proper handover which will involve Dr Kay training his replacement and both of them working together in the Emergency Centre for a period of at least four weeks.

• [27] Clause 17 of the Agreement is the Agreement's dispute resolution clause that provides:

17.1 Any dispute or difference whatsoever arising out of or in connection with this contract ("dispute") shall be resolved as provided for in this Clause. > > 17.2 The parties shall first refer the dispute to mediation by a Law Society approved mediator agreed by the parties or failing agreement appointed by the President of the Society under the terms of the standard mediation agreement approved by the Queensland Law Society. > > 17.3 The reference shall commence when any party gives written notice to the other specifying the dispute and requiring its resolution under this Clause. > > 17.4 Any information or documents obtained through or as part of the reference under this sub-clause shall not be used for any purpose other than the settlement of the dispute under this sub-clause. > > 17.5 If the dispute is not resolved within twenty-one (21) days of the commencement of the reference under sub-clause 17.1, either party may then, but not earlier, commence proceedings in any Court of competent jurisdiction. > > 17.6 Any mediation under this Clause shall be held at the offices of the Queensland Law Society unless the parties otherwise agree. > > 17.7 Each party shall continue to perform this Contract notwithstanding the existence of a dispute or any proceedings under this Clause.

• [28] Some further matters of preliminary note about the provisions of the Agreement are:

(a) despite the terms of clause 2.2(1), clause 4.13 (Change in Control) is not actually a clause under which a termination of the Agreement can occur;

(b) further, despite the terms of clause 2.2(1), there are clauses of the Agreement, other than clauses 4.13[7] and 7, under which a termination of the Agreement can occur. Those other clauses are clauses 2.2(3), 12.1, 12.2 and 12.3;

(c) in respect of the express terms of the Agreement dealing with termination of the Agreement:

(i) clause 2.2(3) permits of a termination by mutual agreement;

(ii) clause 2.2(3) also permits of a termination by the Consultant for whatever reason on the giving of six months' notice - there is no like express provision in favour of the Principal;

(iii) clause 7.1 permits of a termination by the Principal in five specific circumstances;

(iv) clause 7.2 permits of a termination by the Principal effectively "for cause" (my term) but only after the giving of notice and the breach not being remedied;

(v) clause 7.3 permits of a termination by the Consultant for non-payment but only after the giving of notice and the payment still not being made - this "for cause" provision is much narrower in scope than clause 7.2, and does not cover general breaches by the Principal;

(vi) clauses 12.1 and 12.2 permit of a termination by the Consultant in two specific circumstances;

(vii) clause 12.3 automatically terminates the Agreement in a specific circumstance and requires the Principal to pay Early Termination Costs (as defined) to the Consultant. Early Termination Costs includes redundancy payments.

• [29] In about late 1999 or early 2000, Dr Kay was approached by the State manager of HSNPH, Mr Read. Mr Read asked Dr Kay whether he would be interested in establishing and operating the emergency department at what is now known as the St Vincent's Private Hospital in Chermside that was then under construction.
• [30] Mr Read explained to Dr Kay that:

(a) HSNPH was in the process of establishing the hospital;

(b) it was a condition of HSNPH's tender that the hospital operate an emergency department;

(c) only one doctor had expressed any interest in doing so, but that doctor was too inexperienced;

(d) HSNPH was concerned about the emergency department because it lacked experience in operating one.

• [31] Dr Kay was not initially interested; Mr Read pressed Dr Kay further. Negotiations between Dr Kay and HSNPH ensued. There is no doubt that the pre-contractual negotiations demonstrate that HSNPH was very keen to secure the services of Dr Kay, that Dr Kay was eminently qualified, and finding a suitable alternate candidate to Dr Kay was likely to be very difficult, if not practically impossible.
• [32] In the course of those negotiations:

(a) Dr Kay explained to Mr Read that:

(i) he required indefinite perpetual tenure;

(ii) one of the reasons that was required was because he needed to recruit appropriately qualified emergency medicine specialists to work fulltime within the emergency department;

(iii) most emergency medicine specialists, which were in short supply, worked in the public sector on long-term fixed employment contracts with no expiry;

(iv) the only way to entice those specialists to work in the emergency department would be to offer them similar contracts,

(b) Dr Kay also explained that the establishment of the emergency department would involve significant expenditure;

(c) Mr Read, initially, suggested that the agreement have five-year rolling terms;

(d) Dr Kay rejected that proposal and explained the reasons why such an arrangement was not acceptable to him.

• [33] A draft agreement was prepared by Dr Kay's solicitors (Deacons), on Dr Kay's instructions, in about July 2000. That draft agreement is not in evidence. Dr Kay says that draft agreement was provided to Mr Read in about August 2000. There was then a meeting that took place between Dr Kay and Mr Read on 23 August 2000.
• [34] Following that meeting, an email exchange occurred between Mr Read and Dr Kay (around 30 August to 4 September 2000). In that exchange:

(a) Mr Read explained that HSNPH's board was only interested in a "three year contract with options";

(b) Dr Kay rejected that proposal and reiterated some of the matters he had earlier told Mr Read;

(c) Mr Read responded by telling Dr Kay he would discuss the matter with HSNPH's board.

• [35] Of particular importance in the matters reiterated, in respect of the need to recruit suitable doctors in the current environment Dr Kay said:

Two exceptional people in particular that I already have in mind already have excellent positions from which they would have to be strongly encouraged to leave. I think the Board needs to view this in the same way as they would a radiology agreement, i.e. once contracted they are there forever unless their performance clauses are not met.

I also, am not prepared to do all the early hard yards and then have the arrangement expire just as the centre is starting to reap the rewards of this effort.

If the hospital wants only a short term deal then they will have to offer an absolute fortune to cover the risks. None of my docs are prepared to commit to a job share and then maybe lose it and not be able to go back to full time secure position.

There are two major issues which need to be brought to the Board

1 If they want us to do it then we want a very long term deal

If you want to revise the board's terms then we can get on with it, and finalise the deal very soon. Otherwise I will regretfully withdraw from negotiations as I am not prepared to put my name to a sub-standard result.

• [36] After that exchange, Dr Kay met with HSNPH's board. Dr Kay told the board some of the same things he had told Mr Read, including that he was only interested in the project if he had absolute tenure.[8] He explained that the terms of the draft agreement provided for that.
• [37] On 30 October 2000, Mr Read wrote to Dr Kay passing on some concerns about the amounts payable under the proposed agreement. In doing so, he mentioned that "we are signing up for an indefinite period". That appears to have, at least, acknowledged the parties' specific decision not to include HSNPH's floated proposals for an agreement with 3 or 5 year rolling terms.
• [38] There was a second draft agreement (in a marked up form from an earlier draft) produced by Deacons (Mr Kay's solicitors) to Impact on 8 January 2001. There is no evidence as to whether that second draft agreement was actually ever provided to the HSNPH by Impact. Apparently some amendments to the draft agreement were given to Mr Read - but whether that was the second draft agreement is not clear.[9] The second draft agreement is not identical with the Agreement in substantial ways - for example, the change in control clause 13.3 (should be 5.3) in the second draft agreement is in quite different terms to clause 4.13 in the Agreement.
• [39] Impact and HSNPH ultimately entered into the Agreement in early 2001. HSNPH assigned its rights under the Agreement to the Hospital in June 2019.
• [40] Dr Kay retired from clinical practice on 30 June 2023. Notwithstanding, he continues to manage the emergency department pursuant to the Agreement.
• [41] Following Dr Kay's retirement, he began having discussions with PEHA Holding Co Pty Ltd (PEHA) about selling some of his shares in Impact. Those negotiations matured into a proposal for PEHA to purchase 70% of Dr Kay's shares in Impact. Thereafter:

(a) Impact sought the Hospital's consent to the sale of 70% of Dr Kay's shares in Impact;

(b) the Hospital did not provide that consent and, in a letter on 22 February 2024 concerning that request, asserted that the Agreement was subject to the alleged implied term;

(c) the Hospital repeated its position about the alleged implied term in a letter from its solicitors dated 8 March 2024.

• [42] A dispute about the Hospital's non-provision of consent resulted in a proceeding being commenced in this Court by Impact (BS 3565/24). After a hearing last year, Applegarth J concluded that the Hospital had unreasonably withheld its consent and made a declaration to that effect.[10]
• [43] Negotiations between Dr Kay and the Hospital about the sale of Dr Kay's shares in Impact continued in 2024. Ultimately, Impact sought the Hospital's consent to the sale of all of Dr Kay's shares in Impact to PEHA. The Hospital consented to that transaction, but maintained its position that the Agreement is subject to the alleged implied term.
• [44] Impact, thereafter, gave the Hospital a notice of dispute under the Agreement concerning the parties' opposing views as to whether the Hospital has an implied right to terminate the Agreement on the giving of reasonable notice. PEHA will not proceed with any transaction to acquire Dr Kay's shares in Impact whilst the Hospital maintains its position about the alleged implied term. Even though there is evidence from the Hospital that it has no present intention of seeking to terminate the Agreement, the above circumstances demonstrate sufficiently that there is utility in determining the issue in dispute in the proceeding. No party suggested to the contrary.

• [45] The factual background summary I have recited above refers to some extrinsic evidence and Impact does seek to rely upon extrinsic evidence to support its arguments regarding the proper construction of the Agreement.[11] Objection has been made by the Hospital to:

(a) [18]-[22], [23]-[28], [30], [33], [35]-[39], first affidavit of Dr Kay (CDI 3);

(b) the whole of the second affidavit of Dr Kay (CDI 9),

on the basis that such evidence is inadmissible under the parole evidence rule and having regard to clause 1.4 of the Agreement (the entire agreement clause) that provides that the Agreement supersedes all prior negotiations.

• [46] I indicated during the hearing that I would rule upon the objections to evidence as part of my reasons and I do so here. I also make some findings about the extrinsic evidence and the use that might be made of it.

• [47] There does not appear to be any real dispute between the parties as to the relevant principles to be applied when determining whether extrinsic evidence is admissible in a particular case to inform the proper construction of a contract. In summary:

(a) parole evidence is generally inadmissible;

(b) the rights and liabilities of parties to a contract are to be determined objectively - that is, by ascertaining what a reasonable person would understand by the language used in the contract;[12]

(c) in addition to the text of the contract, the surrounding circumstances known to both parties and the purpose or object of the transaction can be considered;

(d) evidence of negotiations can be used to determine the surrounding circumstances known to both parties, but not if it only goes to parties' intentions or expectations;[13]

(e) the subjective beliefs or understandings of the parties are not relevant;[14]

(f) that is so even if the subjective belief or understanding of a party is communicated to the other party - an element of concurrence is required before it can be part of the surrounding circumstances known to both parties;[15]

(g) parol evidence is admissible where it shows the parties were united in refusing to include a term that would give effect to the presumed intention (such evidence rebuts any inference of presumed intention).[16]

• [48] As was noted by Porter KC DCJ in Quilkey v Tractile Combined Pty Ltd [2023] QDC 204 at [157], the fundamental principles of construction for a contract in writing were restated by Kelly J in Body Corporate for Ocean Pacifique v Pugliese [2023] QCA 129 at [18]- [20] (footnotes omitted, bolding added):

[18] Before addressing these arguments, it is necessary to refer to some relevant principles of interpretation. A convenient starting point is the often cited statement in Australian Broadcasting Commission v Australasian Performing Right Association Ltd, where Gibbs J said:

"It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, "even though the construction adopted is not the most obvious, or the most grammatically accurate", to use the words from earlier authority cited in Locke v Dunlop [1888] UKLawRpCh 140; (1888) 39 Ch D 387, at p 393, which, although spoken in relation to a will, are applicable to the construction of written instruments generally; see also Bottomley's Case [1880] UKLawRpCh 258; (1880) 16 Ch D 681, at p 686. Further, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument. Finally, the statement of Lord Wright in Hillas & Co Ltd v Arcos Ltd [1932] UKHL 2; , at p 514, that the court should construe commercial contracts "fairly and broadly, without being too astute or subtle in finding defects", should not, in my opinion, be understood as limited to documents drawn by businessmen for themselves and without legal assistance (cf. ; , at p 437).'

• [49] [18]-[20] of the first affidavit of Dr Kay are inadmissible and are struck out. Those paragraphs contain subjectively known matters only, with no evidence that such matters were communicated to Mr Read in that form or matters with which Mr Read concurred. What was allegedly communicated about such matters is only what is in [23(a)] of the affidavit and I will deal with that paragraph separately.
• [50] I allow [21]-[22] of the first affidavit of Dr Kay to be admitted as general background known to both parties of a conversation that occurred prior to the Agreement. The paragraphs seem to have very little relevance to the key issue in dispute though.
• [51] With some significant hesitation I allow [23]-[28] of the first affidavit of Dr Kay to be admitted as general background known to both parties of conversations that occurred prior to the Agreement. Again though, the paragraphs seem to have very little relevance to the key issue in dispute. Insofar as Dr Kay indicated at [25(b)] that he had a non-negotiable condition that he required "indefinite perpetual tenure" for certain purposes, that does not appear to be a matter with which Mr Read specifically agreed: referring to [27], Mr Read said conditions would require Board approval, and it was still early in the negotiation for the Agreement, so I do not think the evidence displays any real concurrence in the relevant proposition put by Dr Kay.
• [52] Again, with some significant hesitation I allow [30] of the first affidavit of Dr Kay to be admitted as general background known to both parties of a conversation that occurred prior to the Agreement. Again, the paragraph seems to have very little relevance to the key issue in dispute and in any event Mr Read's response falls far short of expressing concurrence: instead it is said he expressed that "he understood completely where I was coming from". That is not the same as expressing concurrence with the proposition.
• [53] In respect of [33] of the first affidavit of Dr Kay, I admit the relevant pages of the exhibit, but disallow the purported summary of the email chain that I can read for myself.
• [54] Again, with some significant hesitation, I allow [35][17] and [36] of the first affidavit of Dr Kay to be admitted as general background known to both parties of a conversation that occurred prior to the Agreement. Again, the paragraph seems to have very little relevance to the key issue in dispute: although it is noteworthy that Dr Kay gives evidence relating to an indefinite agreement.

• [57] For context, the first affidavit of Dr Kay refers to a "Draft Agreement", a copy of which was not retained by Dr Kay (and accordingly is not in evidence). That Draft Agreement would have been in existence prior to the second draft agreement referred to in the second affidavit of Dr Kay, so it can be inferred that the Draft Agreement was in existence in about December 2000.
• [58] The second affidavit of Dr Kay refers to and exhibits a "Second Draft Agreement" from early January 2001 following a meeting in December 2000. It said to be different from the Draft Agreement referred in the first affidavit.
• [59] I will allow the admission of the draft agreements (and references to the draft agreements) into evidence as part of the general background, but it is noted that no specific relevant differences between the Draft Agreement, the Second Draft Agreement and the Agreement have been identified that cast light on the key issue in dispute. There are no submissions made by Impact which rely upon any particular different content in the draft agreements and so the admission of the evidence does not appear to go far.
• [60] I allow [9]-[12] of the second affidavit of Dr Kay on the basis that those paragraphs concern corrections to paragraphs of the first affidavit of Dr Kay that I have allowed into evidence.

Were the parties united in refusing to include a term

• [61] I note the relevant principle summarised at [47](g) above. I was referred during argument to a recent case invoking such principle in Pacific Diamond 88 Pty Ltd v Tomkins Commercial & Industrial Builders Pty Ltd [2025] QCA 50.
• [62] The argument seemed to be advanced by Impact that its construction of the Agreement as otherwise perpetual is supported by the parties having rejected the inclusion of 3 or 5 year rolling terms in the Agreement and the above principle is thereby invoked. I do not consider that to be so. The Hospital is not contending in the proceeding that the presumed intention of the Agreement is that there would be 3 or 5 year rolling terms. The principle has no direct application in this case: it would only apply if the Hospital were contending that the alleged implied term was that the Agreement was subject to 3 or 5 year rolling terms.

The weight of the extrinsic evidence admitted

• [63] Insofar as I have admitted extrinsic evidence from Dr Kay, I do not give it significant weight in the construction exercise required to be undertaken. Most of it is of little relevance to the key issue in dispute. In the result I conclude that the outcome of the proceeding is not affected by the admissible extrinsic evidence.
• [64] I give the admissible extrinsic evidence only a small amount of weight because:

(a) the parties did expressly agree to the inclusion of clause 1.4 of the Agreement (the entire agreement clause);

(b) the admissible extrinsic evidence relates to matters that occurred now approximately 25 years ago: the likelihood that any person, even with their best efforts, recalls with precision what was said or done is remote;

(c) whilst the admissible extrinsic evidence points clearly enough to rolling 3 or 5 year terms under the Agreement not being acceptable to Dr Kay, and that the Agreement would be long term and indefinite (subject to express termination rights), it is not unequivocal from that evidence that the Agreement would be perpetual and not determinable by the Hospital on the giving of reasonable notice;

(d) there is no compelling evidence that the Second Draft Agreement was ever actually provided by Impact to the Hospital, and there are no submissions going to the relevance (if any) of the content of that Second Draft Agreement (or any earlier draft).

Specific extrinsic evidence identified as relied upon by Impact

• [65] Impact, at [6] of its written submissions says that one element of the extrinsic evidence that is telling is that:

(a) the success of the emergency department would depend upon recruiting doctors from the public sector, where doctors were employed on permanent contracts;

(b) to entice those doctors, they would have to be offered long-term contracts with security of tenure.

• [66] I do not consider that is particularly telling extrinsic evidence to the key issue in dispute. The contemplation of both parties when the Agreement was entered into was that it would govern a long-term relationship between the parties. There is no compelling evidence that doctors recruited for the emergency department could not be offered permanent contracts unless (save for the express terms) the Agreement was perpetual. That the alleged implied term might result in a situation where recruited doctors were made redundant at some future point in time (as can happen in nearly every workplace, and as seems expressly contemplated by clause 12.3 of the Agreement) does not tell strongly against the implication of the alleged implied term.

Whether the argument is available to be made by the Hospital as to alleged implied term being implied in law

• [67] In oral reply submissions, as a consequence of two cited decisions of courts of intermediate appeal, I understood it to be submitted by Impact that I am bound to reject the Hospital's arguments as to the implication of the alleged implied term in law, and must only approach the implication of the alleged implied term in fact (that is, by applying the BP Refinery test).
• [68] The two cases cited as supporting that submission were Barro Group Pty Ltd v Fraser [1985] VicRp 59; [1985] VR 577 (Barro Group) and Rosser v Marine Ministerial Holding Corporation [1999] NSWCA 72 (Rosser).
• [69] Barro Group is a 1985 decision of the Full Court of the Supreme Court of Victoria, comprising Kaye, McGarvie and Marks JJ. The decision was of the Court. Barro Group was the owner and operator of a quarry. The respondents were a husband and wife who ran a trucking business as partners. Barro Group and the respondents entered into a contract concerning the carrying of quarried materials. The contract contained no express provisions as to its duration or how it might be terminated. Barro Group summarily terminated the contract. The respondents sued for damages for alleged wrongful termination of the contract. The appeal primarily concerned findings that the relationship between the parties was an employment contract and the award of damages for wrongful termination. In the result, the Full Court held the relationship between the parties was that of principal and independent contractor, and the contract was determinable by either party on the giving of reasonable notice to the other.
• [70] Important to the issue for consideration here, the parties in that case both accepted that notwithstanding the absence of an agreed term, the contract was revocable. The Court noted that acceptance was based on (at pp. 582-3):

a line of authority that where a contract for an indefinite period does not confer on the parties or either of them a power to determine the contract, whether such a power could be inferred depends upon the true construction of the language used by them: Winter Garden Theatre (London) Ltd v Millennium Productions Ltd [1948] AC 173, at p. 203, per Lord MacDermott; Martin-Baker Aircraft Co Ltd v Canadian Flight Equipment Ltd [1955] 2 QB 556, at p. 578, per McNair J; Staffordshire Area Health Authority v South Staffordshire Waterworks Co [1978] 1 WLR 1387, at pp. 1395-7, per Lord Denning MR; [1978] 3 All ER 769, at pp. 775-6. Buckley J in Re Spenborough Urban District Council's Agreement [1968] Ch 139, at p. 147, said that the question of construction of a contract for an indefinite term with no provision for its determination: "is not one of construction in the narrow sense of putting a meaning on language which the parties have used, but in the wider sense of ascertaining, in the light of all the admissible evidence and in light of what the parties said or omitted to say in the agreement, what the common intention of the parties was in the relevant respects when they entered into the agreement". The matters to which his Lordship there referred may be described as the factual matrix existing at the time when the contract was made: Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989, at pp. 995-7, per Lord Wilberforce; , at pp. 574-5.

It is noteworthy that the Court did not at that juncture express any concern about the basis upon which the parties had accepted, notwithstanding the absence of an express term, that the contract was revocable. The accepted basis seemed to be an implication in law, rather than in fact. No reference to the BP Refinery test was here made in the decision.

• [71] The Court then from p. 583 (about line 33) commenced with a consideration of whether the contract was terminable summarily or only on the giving of reasonable notice. The Court said at pp. 583-4:

In Australian Blue Metal Ltd v Hughes [1973] AC 74, at p. 98, Lord Devlin in the course of the judgment of the Privy Council remarked as follows: "It is true that it does not require very much to induce a court to read into an agreement of a commercial character, either by construction or by implication, a provision that the arrangements between the parties, whatever they may be, shall be terminable only upon reasonable notice."

• [72] Reference was then made by the Court to the BP Refinery test at p. 584 (commencing line 8) in the context of deciding whether the contract could be revoked summarily or only on the giving of reasonable notice. It was concluded in the final paragraph of p. 584 that:

Moreover, we consider that the conditions formulated in B.P. Refinery (Westernport) were capable of satisfaction at the time when the contract was made, so that a term for reasonable notice upon determination of the contract given by either party ought to be implied.

• [73] And then at the top of p. 585 the Court said:

It might remain to consider what length of time ought to be deemed reasonable in the light of the circumstances existing when the defendant peremptorily determined the contract, this being an essential factor in the assessment of damage suffered by the plaintiffs.

• [74] What should be taken from Barro Group relevant to the issue about the binding nature of the decision is that:

(a) the Court seems to have impliedly accepted that there was no difficulty with the parties proceeding on the basis that the contract was revokable on the basis of a term implied in law (without reference to the BP Refinery test);

(b) in the particular case, the Court determined the issue about whether the revocation could occur summarily or required reasonable notice at least by reference to the BP Refinery test. It is not clear if the issue was argued or determined on a term implied in law basis. The Court did not positively assert that the issue about the means of revocation could not be determined by reference to implication in law, and I do not consider that can be inferred from the decision;

(c) the assessment of what was reasonable notice was a separate issue.

• [75] Accordingly, I do not see in Barro Group any findings that would require me to positively reject the Hospital's argument that in this case the alleged implied term might be implied in law.
• [76] Rosser is a 1999 decision of the New South Wales Court of Appeal, comprising Meagher JA, Beazley JA and Fitzgerald JA. Fitzgerald JA wrote the judgment with which the other members of the Court agreed.
• [77] Impact in support of its proposition at [67] above, referred to [15] of Rosser that provides:

The trial judge did not explain why a provision for termination on reasonable notice should be implied. Such a provision was not necessary to give business efficacy to the contract and, in my opinion, the implication of a provision for termination on reasonable notice was contrary to the received doctrines governing the implication of terms. It is unnecessary to consider whether other terms might legitimately be implied; for example, a provision that all or some of the work should cease if the material stockpile site or sites became unavailable without fault of either party. Neither Rosser nor the Board advanced such a contention.

• [78] Rosser concerned a dredging contract. Rosser contended that the contract authorised him to carry out the required dredging works over a period of 6.5 years and that the Board had no right to terminate the contract earlier. The Board contended that it could terminate the contract earlier. The Board said it was required to give three months' notice: that arose from some early correspondence, after which the scope of the project had significantly changed.
• [79] The trial judge held that the contract contained an implied term that the contract was terminable by the Board on the giving of reasonable notice, which he determined was six months (see at [37] of Rosser).
• [80] The Court of Appeal held that the Board's contention was plainly untenable (at [14]), and it held that the Board did not have a right to terminate the contract during the 6.5 years term (at [39]). [15] of Rosser (at [77] above) was said in that context. It appears that the trial judge did not explain at all why a provision for termination on reasonable notice should be implied. It is not known what arguments about implications of terms were advanced by the parties before the trial judge. Whilst the appeal decision refers to one of the criteria of the BP Refinery test (business efficacy), it also refers to the "received doctrines covering the implication of terms". It identifies the necessity to give business necessity as one basis for implying a term, but not necessarily the sole basis. I see no reason to read that as referring to the implication of terms in fact only.
• [81] Accordingly, I do not see in Rosser any findings that would require me to positively reject the Hospital's argument that in this case the alleged implied term might be implied in law.
• [82] In summary, I do not accept the submissions of Impact. I consider myself obliged to consider and determine the Hospital's argument that the alleged implied term is implied in law, or as some of the earlier cases express it, as a matter of construction[19] - without needing to satisfy the BP Refinery test for the implication of terms in fact.

• [83] The process of construction concerning whether there is an implied term as to the duration of a contract is well summarised by the following extract from Chitty on Contract (13th edition) at 13-027:

Implied term as to duration of contract. A contract which contains no express provision for its determination may yet be determined by reasonable notice on the part of one or both of the parties. The question whether a contract can be determined in this way is often said to depend upon the implication of a term, although it is probably better to regard it as depending upon the true construction of the agreement.[20] Nevertheless, since ex hypothesi, the agreement contains no provisions expressly dealing with determination, the question is not one of construction in the narrow sense of putting a meaning on language which the parties have used, but in the wider sense of ascertaining, in the light of all the admissible evidence and in the light of what the parties have said or omitted to say in the agreement, what the common intention of the parties was in the relevant respect when they entered into the agreement.[21]

• [84] The Agreement is a commercial contract with no end date. It contains no express ability of the Hospital to terminate the Agreement on the giving of reasonable notice, or without some form of cause or specific circumstances existing as detailed in its express terms.
• [85] The Hospital's primary position is that the Agreement contains an implied term permitting the Hospital to terminate the Agreement on the giving of reasonable notice (without cause and in any circumstances), such term being implied as a consequence of the "nature of the contract itself" as expressed in the words of Agreement.[22] This is a form of a term implied in law.
• [86] Impact denies that any proper basis for implication of the alleged implied term exists on that basis.
• [87] A term is implied on that basis (in law) where:

(a) the implied term is a legal incident of the type of contract; or

(b) wider considerations, having regard to the inherent nature of the contract, implicitly require the implied term.[23]

• [88] Wider considerations can encompass matters such as the particular class of contract, the relationship established under the contract and more general considerations. The types of contracts where an implied term allowing termination of the contract on the giving of reasonable notice has been implied in law are often ones where the contract relies upon trust and confidence between the parties, personal relations between the parties, or co-operation between the parties. Contracts that tend to have such features often involve partnerships or joint ventures, agency or service/employment. Examples of such cases include Martin-Maker Aircraft Co Ltd v Canadian Flight Equipment Ltd [1955] 2 QB 556 at 580 (Martin-Maker Aircraft) and Winter Garden Theatre (London) Limited v Millennium Productions Limited [1948] AC 173 at 204.[24]
• [89] I commence with a general proposition that ordinarily the nature of a commercial agreement is such that, unless it says otherwise, the parties are likely to have intended that the agreement be terminable on notice.[25] Perpetual agreements, in the context of commercial dealings, are unusual, although certainly not impossible. But that is not to say one starts with a presumption either way. As was said in Martin-Maker Aircraft at 577:

Accordingly, it appears to me that I have to approach the determination of this question not with any presumption in favour of permanence; and, indeed, if there is any presumption at all, it would seem to me to be a presumption the other way. It is to be borne in mind that this agreement is one in a commercial or mercantile field. No case was cited to me where it has been held that this doctrine of irrevocability applies to a contract in the commercial or mercantile field, and I do not feel that the law merchant would normally look at such an agreement as this as being an agreement intended to constitute permanent relationships. For example, I have little doubt that the law merchant would regard a contract for sale of 100 tons of coal monthly at a fixed price, no period being specified, as a contract determinable on reasonable notice.

• [90] And in Australian Blue Metal Pty Ltd v Hughes [1963] AC 74 at 98:

It is true that it does not require very much to induce a court to read into an agreement of a commercial character, either by construction or by implication, a provision that the arrangements between the parties, whatever they may be, shall be terminable only upon reasonable notice. ... But a question of this sort depends entirely on the facts of the particular case.

• [91] Picking up and emphasising the quote immediately above, whether there is any implied term in a particular case is a matter of construction of the contract.[26]
• [92] That is even so in cases where the contract contains express provisions dealing with the circumstances in which the contract can be brought to an end. That does not automatically exclude the possibility that the contract might be terminated on the giving of reasonable notice - but it is a question of construction.[27]

• [93] I am persuaded that the proper construction of the Agreement is that there is a term implied in law that the Agreement can be terminated by the Hospital on the giving of reasonable notice.
• [94] I reach that conclusion for the following reasons.
• [95] The Agreement - despite being a commercial contract, extensive in its terms, and prepared by lawyers - is one that, from a reading of the Agreement, it can be seen:

(a) requires a high degree of trust and confidence between the parties to fulfil its objectives;

(b) requires a high level of cooperation between the parties to fulfil its objectives;

(c) is quite high level / generalised in some of its terms;

(d) is intended to operate over an extended period of time;

(e) acknowledges the possibility of changes impacting on the Agreement over time.

• [96] In respect of the high degree of trust and confidence, and high level of cooperation, between the parties necessary to fulfil the objectives of the Agreement, the following clauses can be highlighted (whilst not intending to be an exhaustive list):

(a) recitals D and E;

(b) the nature of the Services in clause 3.1;

(c) the standard of the Services to be provided in clause 3.2 (noting particularly 3.2(4) - the obligation to have regard to the best interests of the Principal);

(d) clause 3.7 with the parties' philosophy to be implemented;

(e) clause 4.4 dealing with the services the Principal is to supply to the Consultant;

(f) clause 4.11 dealing with the Consultant's personnel who are essential to the proper operation of the emergency department.

• [97] Having regard to the express terms of the Agreement, I refer to the matters noted at [28] above.
• [98] I conclude that on its proper construction clause 2.2(1) does not purport to exhaustively set out the ways in which the Agreement can be brought to an end. Nor does the entire agreement clause 1.4 not permit of the possibility of the alleged implied term.[28] Reference to clause 21 does not change the position - it deals with changes to the Agreement after the Agreement is made rather implied terms that will exist at the time the contract is formed.
• [99] That conclusion is reached having regard to:

(a) despite the terms of clause 2.2(1), there are clauses of the Agreement, other than clauses 4.13[29] and 7, under which a termination of the Agreement can occur. Those other clauses are clauses 2.2(3), 12.1, 12.2 and 12.3;

(b) despite the terms of clause 2.2(1), clause 4.13 (Change in Control) is not actually a clause under which a termination of the Agreement can occur;

(c) the nature of the Agreement as summarised at [95] above;

(d) the Agreement not containing express clauses dealing with repudiation, force majeure or other matters that might cause a frustration (or something approaching frustration) of the Agreement that could have been readily contemplated as real possibilities by the parties.

• [100] Clause 2.2(3) of the Agreement is properly construed as the parties specifically identifying in a case where the Consultant wishes to terminate without cause and without the mutual agreement of the Hospital, what the minimum period of notice is required to be given by the Consultant. It effectively agrees in advance what is the minimum notice in such a circumstance. It does not necessarily or obviously imply that there can be no termination by the Hospital without cause and without the mutual agreement of the Consultant. In remaining silent, it merely does not identify in advance what notice the Hospital would have to give for a termination without cause. Put another way, a construction of the Agreement that involves the implication of the alleged term, in law or in fact, is not inconsistent with the silence on the issue (including in respect of the period of notice) in clause 2.2(3).
• [101] Therefore, that the Agreement is silent on this issue in clause 2.2(3) I do not consider points particularly one way or the other in the proper construction of the Agreement. The Agreement could have readily identified one way or the other that the Agreement was otherwise perpetual or that the Agreement was or was not terminable by the Hospital without cause. An example of an agreement that expressly excluded the right to terminate without cause is Primary Flooring Pty Ltd v Australia Comfort Group Pty Ltd [2019] VSC 104. The clause governing termination in that case provided:[30]

This agreement commences on the Commencement Date and will continue until terminated by mutual consent in writing, or as a result of this clause 6. For the avoidance of doubt, it is the parties' intention that this agreement continue to bind the parties' successors or assigns, and it may not be terminated, whether by a party giving reasonable notice or by any other means or on any other grounds, except as provided by this clause 6 [which proceeded to set out agreed events of termination].

• [102] Having regard to the above matters, I consider it most unlikely that the parties intended that the Agreement be perpetual save for its express rights of termination (or even save for its express rights of termination and any termination rights remaining at common law). I also consider it unlikely that the parties intended that the express clauses dealing with termination were intended to be exhaustive.
• [103] I consider that the construction I prefer is also consistent with the rights given in clause 2.2(2). That clause provides:

The parties acknowledge the current volatility in the healthcare industry and hereby agree to renegotiate the appropriate clauses in the event of major changes induced by the Government or Health funds which by its nature causes serious immediate detriment to either party such as Medicare schedules, Health Fund legislation.

• [104] The reality of that clause, even with the operation of the dispute resolution clause and the promises (if implied) of acting in good faith and acting to give the other party the benefit of the contract, could result in the Agreement becoming unworkable from one or both parties' perspective. And there might be other circumstances arising not in the contemplation of clause 2.2(2) that could result in the Agreement becoming unworkable from one or both parties' perspective (another contractual example would be clause 6.2). Construing the Agreement in a way that would not permit a termination without cause, would be, I conclude, inconsistent with the parties' objectively ascertained intentions.
• [105] Nor do I accept Impact's submission that there would have been little need to include clause 2.2(2) in the event that the Agreement was subject to the alleged implied term. Even with the alleged implied term, what the clause does is identify a particular future circumstance that the parties acknowledge may need to be addressed by way of renegotiation of terms. It can be properly concluded that the clause is pointless or entirely superfluous if the alleged implied term exists.
• [106] I conclude that the alleged implied term is implied into the Agreement in law.

• [107] Lest I am wrong in my conclusion about the alleged implied term being implied in law, I will separately consider whether the alleged implied term is implied in fact. The analysis set out above about why the alleged implied term is implied in law, equally applies to the implication of the alleged implied term in fact (which again involves a process of construction), and I will attempt to avoid repetition.
• [108] The BP Refinery test permits of the implication in fact of a term where the alleged implied term:

(a) is reasonable and equitable;

(b) is required to give business efficacy to the contract;

(c) is so obvious as to go without saying;

(d) is capable of clear expression;

(e) does not contradict any express terms of the contract.

• [109] Edelman and Steward JJ of the High Court made clear in Realestate.com.au v Hardingham [2022] HCA 39; (2022) 277 CLR 115 at [113]- [115] per Edelman and Steward JJ (Realestate.com.au v Hardingham) that each of the BP Refinery criteria are flexible and are not to be applied in an overly rigid way. The criteria apply on a spectrum and are ultimately directed to the question of what would have been intended by a reasonable person in the position of the contracting parties.
• [110] I will start with the final criteria as that is where the parties focussed most of their attention.

Does not contradict any express terms of the contract

• [111] I have dealt with this topic when addressing implication in law.
• [112] At [5] of its written submissions Impact summarises four points relevant to the text of the Agreement that it contends precludes the implication of the alleged implied term and shows that the Agreement was contemplated (outside of the express terms dealing with termination) to be indefinite (I read that submission to mean perpetual).
• [113] I deal with each of those points in turn.
• [114] First, Impact says that the parties expressly turned their minds to the term of the Agreement and the circumstances in which it could be terminated, that demonstrating a deliberate choice that the Hospital would not, except in certain specific and confined circumstances, have the right to terminate the Agreement.
• [115] I have addressed that argument in substance from [98] above.
• [116] Second, Impact says the Agreement contemplates an indefinite (perpetual) arrangement between the parties because the parties thought it necessary by clause 2.2(2) to include a term requiring them to renegotiate parts of the Agreement in the event of major changes to the healthcare industry. There would have been little need to include such a clause in the event that the Agreement was subject to the alleged implied term.
• [117] I have addressed that argument in substance from [103] above.
• [118] Third, Impact says the Agreement contemplates an indefinite (perpetual) arrangement between the parties because it was contemplated, by clauses 4.13 and 5.1, that the Agreement would continue even after Impact ceased to be managed, controlled, or owned by its principal and alter ego (Dr Kay).
• [119] I do not consider those clauses point to the Agreement being perpetual; if anything they point to the Agreement being indefinite. The clauses contemplate that someone other than Dr Kay, but with similar skills to Dr Kay, takes over. Where the Agreement so heavily relies on Dr Kay's involvement, it might be readily anticipated that even if Dr Kay is replaced with a person with similar skills to Dr Kay that the mutual trust and confidence required for the Agreement to operate as intended might be reduced or lost. The parties are unlikely to have intended in such circumstances that the Hospital is bound to the Agreement forever (except for limited express termination rights).

• [133] The parties did not address specific separate submissions to the criteria of whether the alleged implied term was reasonable and equitable. Given reasons I have already expressed, I consider this criteria is met.

Required to give business efficacy to the contract

• [134] This criteria was described in Realestate.com.au v Hardingham at [19] per Keifel CJ and Gageler J as being where the term is "necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case".
• [135] Without the alleged implied term, the Hospital has no right to terminate save for the express termination rights granted under the Contract. In my opinion, such a construction deprives the Agreement of business efficacy given the nature of the Agreement including as set out in [95] above.
• [136] The Hospital in written submissions (at [40]), posited a number of examples which I agree demonstrate the lack of business efficacy in the Agreement unless the alleged implied term is implied. For example, there may be valid reasons for the Hospital being unhappy with choices that are to be made under the Agreement by Impact (for example):

(a) staff selections made by Impact in respect of positions to be filled by Impact (which include senior positions such as emergency specialists and practice management coordinator - clauses 4.11, 3.1, payment responsibility schedule);

(b) charging of patients by the emergency centre (clause 4.10(2));

(c) if there is a significant breakdown in the trust and confidence existing between the parties.

In any of such circumstances, if the dispute resolution procedure is unsuccessful, the Hospital has no further means of redress without the alleged implied term. The alleged implied term is therefore necessary to give business efficacy to the Agreement.

• [137] This criteria is to be assessed by reference to the position of reasonable persons in the position of the relevant parties at the time of contracting.
• [138] In this case, I consider it to be the position that if the parties were asked specifically about the issue at the time of contracting they would not have contended that the Agreement was intended to run forever, unless an express right of termination arose. It would have been obvious that the Agreement contained (or would need to contain) some mechanism by which the Agreement could come to an end, other than those in respect of which express rights of termination were granted. There were too many unknowns possible at the time of the Agreement being entered into and the dispute resolution clause would not be the panacea to all those unknowns. It could not have been contemplated that the Agreement would continue in perpetuity regardless of other circumstances that might arise outside of the specific termination rights.

• [139] The satisfaction of this criteria is not in dispute. I agree that the alleged implied term is capable of clear expression.

• [140] Having regard to the above criteria and then turning to the ultimate question of what did the parties objectively intend, I conclude that the parties objectively intended that the Agreement could be terminated by the Hospital on the giving of reasonable notice. Therefore, the alleged implied term is implied into the Agreement in fact.

• [141] First, in light of the Agreement having now been on foot for approximately 25 years and the evidence of the Agreement being highly profitable for Impact over that period (such that any capital invested by Impact can be assumed to have been amply returned), in reaching the conclusion I have, it has not been necessary for me to consider whether the alleged implied term would have been subject to some further restriction if it were sought to be relied upon in the early years of the operation of the Agreement. An example of such a case is Jireh International Pty Ltd t/as Gloria Jean's Coffee v Western Exports Services Inc [2011] NSWCA 137. In respect of the implied term regarding termination in that case, it was concluded that neither party was able to terminate the contract for the first ten years of operation of the contract.
• [142] Second, in support of Impact's construction of the Agreement, a faint point appeared to be made on behalf of Impact relating to the fact that "reasonable notice" under the alleged implied term would only be a period long enough to deploy Impact's resources elsewhere. The case of Crawford Fitting Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438 (Crawford Fitting) was cited as supporting that proposition.
• [143] Crawford Fitting provided at 444 per McHugh JA (with whom Priestley JA agreed):

When a contract is terminable on reasonable notice, the period of notice must be sufficiently long to enable the recipient to deploy his labour and equipment in alternative employment, to carry out his commitments, to bring current negotiations to fruition and to wind up the association in a businesslike manner.

• [144] Impact's argument then proceeded that because that would not likely be a lengthy period of notice in the circumstances of the Agreement, that told against the alleged implied term.
• [145] I am not prepared to conclude for the purposes of this decision that no other factors would be relevant in this case to the assessment of what is a reasonable period of notice under the Agreement for termination by the Hospital without cause.
• [146] The Hospital did not contend that the assessment of what is a reasonable period of notice under the Agreement is limited to the factors identified above, and accepted that different cases might require different assessments.
• [147] I am not prepared on the evidence I have before me in this proceeding (that does not squarely go to the particular issue) to assume any particular length of notice would be required for a termination without cause by the Hospital - short or long, whatever that might be or mean in the context of this case. Accordingly, I am not prepared to give any significant weight to the possibility of a short period of time being a reasonable notice period pursuant to the implied term. It is an issue for another day.

• [148] In this case I have found, inter alia, that:

(a) on the proper construction of the Agreement there is a term implied in law that the Agreement is terminable by the Hospital on the giving of reasonable notice;

(b) if that conclusion be wrong, on the proper construction of the Agreement there is a term implied in fact that the Agreement is terminable by the Hospital on the giving of reasonable notice.

• [149] A declaration as to the proper construction of the Agreement will be made. I will hear from the parties as to the form of that declaration and costs.

[1] BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283 (BP Refinery).

[2] The applicant does not cavil with the proposition that the alleged implied term is capable of clear expression.

[3] Holy Spirit Northside Private Hospital (HSNPH).

[4] Defined in clause 1.1 to mean the establishment and subsequent management and operation of an emergency medical centre at the hospital.

[6] Similarly clauses 9.2, 10.2 and 11.1 of the Agreement.

[8] Precisely what "absolute tenure" meant in the particular circumstances is not clear. Tenure is a word often used in association with academic positions at higher educational institutions, colloquially meaning a job for life.

[9] See second affidavit of Kay at [7]-[8].

[10] Impact Healthcare Pty Ltd v St Vincent's Private Hospitals Ltd [2024] QSC 62.

[11] Although it has not identified with precision what is the extrinsic evidence sought to be relied upon relevant to the construction exercise. General indications only have been given.

[12] Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165.

[13] Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd (2015) 235 FCR 305 at [120] per the Court (Automotive); Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 352 per Mason J (with whom Stephen and Wilson JJ agreed) (Codelfa).

[14] Cherry v Steele-Park [2017] NSWCA 295; (2017) 96 NSWLR 548 at [57]- [60] per Leeming JA (with whom Gleeson JA agreed) referring to the decisions in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40], WIN Corporation Pty Ltd v Nine Network Australia Pty Ltd [2016] NSWCA 297; (2016) 341 ALR 467 at [57] per Barrett AJA (with whom McColl JA and Sackville AJA agreed), International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151 at [8] per Gleeson CJ.

[15] BP Australia Pty Ltd v Nyran Pty Ltd [2003] FCA 520; (2003) 198 ALR 442 at [46] per R D Nicholson J.

[17] Noting that [10]-[12] of second affidavit of Kay makes some corrections to this paragraph.

[18] Note [11] of the second affidavit of Kay that makes some corrections to that evidence.

[19] Liverpool City Council v Irwin [1976] UKHL 1; [1977] AC 239 (Liverpool City Council) is an example of that type of case - see particularly from 253(F) to 255(C).

[20] Winter Garden Theatre (London) Ltd v Millennium Productions Ltd [1948] A.C. 173, 195, 201.

[21] Re Spenborough U.D.C.'s Agreement [1968] Ch. 139, 147. See also Llanelly Rail and Dock Co v L & N.W. Ry [1873] UKLawRpCh 85; (1873) L.R. 8 Ch. App. 942; (1875) L.R. 7 H.L. 550 cf Carnegie (1969) 85 L.Q.R. 392.

[22] Referring to Liverpool City Council.

[23] Liverpool City Council at 254-5, referred to in Codelfa per Mason J at 345-6 (with whom Stephen and Wilson JJ agreed).

[24] The latter is an interesting case in that the express agreement provided for the licensee to have a right to terminate on the giving of one month's notice but no express right of termination on the part of the licensor. On what was described as the proper construction of the agreement, the House of Lords unanimously held that there was an implied term entitling the licensor to terminate the agreement.

[25] Crawford Fitting Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438 at 443F, 444B-C per McHugh JA (with whom Priestley JA generally agreed) (Crawford Fitting); Australian Blue Metal Pty Ltd v Hughes [1963] AC 74 at 98; Futuris Industrial Products Pty Ltd (Federal Court of Australia - Full Court, unreported, BC9405891) at 18-19.

[26] Winter Garden Theatre (London) Limited v Millennium Productions Limited [1948] AC 173 at 198 per Lord Uthwatt, 203 per Lord MacDermott; Martin-Maker Aircraft at 576-7; Re Spenborough Urban District Council's Agreement [1968] Ch 139 at 146-7; Barro Group at 582-3; Crawford Fitting at 443C per McHugh JA (with whom Priestley JA generally agreed); United Resource Management Pty Ltd v Par Recycling Services Pty Ltd [2023] NSWCA 236 at [41] per Meagher JA (with whom Ward P and Gleeson JA agreed).

[27] New South Wales Cancer Council v Sarfaty (1992) 28 NSWLR 68 at 74 per Gleeson CJ and Handley JA citing McClelland v Northern Ireland General Health Services Board [1957] 1 WLR 594.

[28] Hart v Macdonald [1910] HCA 13; (1910) 10 CLR 417 at 421 per Griffith CJ (with whom O'Connor J generally agreed); Etna v Arif [1999] VSCA 99; [1999] 2 VR 353 at [46] per Batt JA (with whom Charles and Callaway JJA agreed).

[29] Which in fact does not contain a termination right.