Plaintiffs v Defendants

2 By the plaintiffs' summons dated 12 November 2020, the plaintiffs seek, among other things, an order for specific performance of a Deed of Dissolution of Partnership made 28 August 2020 ('Deed of Dissolution'), further and alternatively, an order that the defendants deliver to the plaintiffs forthwith vacant possession of the existing premises.

3 The application is supported by affidavits of Theresia Rini Sudjalim, affirmed 12, 23 and 24 November 2020 respectively; an affidavit of Kirsty Bond, affirmed 12 November 2020 and an affidavit Kieran Patrick Best, affirmed 15 November 2020.

4 In opposition to the application, the defendants rely upon the affidavits of Christopher Ian Homewood, dated 20 November 2020; Bree Danielle Airdrie, dated 20 November 2020 and an affidavit of Jack Pembroke-Birss, dated 25 November 2020.

5 The relevant facts may be shortly stated. Dr Homewood has operated an orthodontic practice at the existing premises since at least 2007. Dr Sudjalim commenced working as an orthodontist at the practice in 2007 and in or about December 2009 entered into partnership with Dr Homewood. From about 2017, the professional working relationship between the parties deteriorated. In 2019, they decided to dissolve their partnership.

6 At a mediation held on 19 June 2020, the parties reached an 'in principle' agreement regarding the terms of its dissolution. Detailed terms were finalised after the mediation through the parties' respective legal advisors and were embodied in the Deed of Dissolution. Counterparts of the Deed of Dissolution were exchanged on 28 August 2020.[2]

7 The terms of the Deed of Dissolution provide that after the dissolution of the partnership, Dr Homewood or his nominee will carry on his orthodontic practice at new premises at 18-24 Clyde Road Berwick ('the new premises'). In mid-October 2020, Dr Homewood advised Dr Sudjalim that fit-out works at the new premises would not be completed by 14 November 2020 and that he was therefore not in a position to vacate the premises on that date.

8 It is in this context that Dr Sudjalim seeks an interlocutory injunction requiring Dr Homewood to vacate the existing premises.

1. From 17 December 2009 to the date of this Deed (Commencement Date) the Partners have carried on the Business in partnership (the Partnership) on the terms of the Partnership Agreement dated 17 December 2009 (Partnership Agreement). The Company is the manager of the Partnership.
2. TR Sudjalim has borrowed funds currently totalling $1,130,000 (the Facility) from the Westpac Banking Corporation (Westpac). The Facility is a twelve month facility renewable by agreement with Westpac and secured by:

(1) An unlimited guarantee and indemnity from Theresia (the Sudjalim Guarantee) supported by a mortgage over her property at 154 Wellington Street, Kew, 3101, Victoria (the Mortgage); and

(2) A debt and interest guarantee and indemnity and deed of covenant from the Company (the Company Guarantee) and a fixed and floating charge over all assets and uncalled capital of the Company (the Charge).

1. The Partners have agreed to dissolve the Partnership on the terms and conditions set out in this Deed.

1. The agreed terms for the dissolution of the Partnership involve some relocation and capital works and other transitional arrangements. Accordingly the parties have agreed to request that Westpac extend the Facility through to the Dissolution Date, and to each work progressively and professionally towards the dissolution of the Partnership from signing this Deed, with final dissolution to take effect on and from the close of business on the 30th day of September 2020 or such other time as agreed between the parties in writing (Dissolution Date).
2. The period from the date of this Deed to the Dissolution Date (or in the context of premises until each Partner is operating their separate business from separate premises) is the Transitional Period.

1 Definitions and interpretations

...

1.4 The following additional definitions shall apply:

...

(4) The Existing Premises means premises at 2/31 Clyde Road, Berwick, 3806, Victoria from which the Partnership currently carries on the business of the Partnership;

(5) Homewood Party means Kip, Homle and any entity that Kip shall own or control;

(6) The New Premises means premises at 18-24 Clyde Road, Berwick, 3806, Victoria from which Kip or his nominee will carry on its orthodontic practice after the Dissolution of the Partnership;

(7) Sudjalim Party means Theresia, TR Sudjalim and any entity that Theresia shall own or control; and

(8) The Transferring Employees means those Employees who will cease employment with the Company and commence employment with Kip in the orthodontic practice to be conducted at the New Premises after the Dissolution Date.

2.1 The Partners have agreed to dissolve the Partnership with effect on and from the close of business on the Dissolution Date.

2.2 The agreed framework for the dissolution of the Partnership is as follows:-

(1) The Partners will operate separate businesses from the Dissolution Date:-

(a) Kip will operate his business from the New Premises under the name South East Specialist Orthodontics, and using the existing website currently used by the Partnership business;

(b) Theresia will operate her business from the Existing Premises but under a name other than 'South East Orthodontics' that cannot be mistaken for the Partnership Business and with a new website;

(c) The Company will changes its name to a name other than South East Orthodontics and all parties will execute such documents, pass such resolutions and do such acts and things as shall be required by Homle or Kip to enable them to register and carry on business under the name and brand South East Orthodontics.

(d) Kip will resign as a director of the Company as at the Dissolution Date;

(e) Homle will transfer all shares it owns in the Company to TR Sudjalim or nominee for $1 on or before the Dissolution Date; and

(f) Theresia will procure the immediate transfer of the registered office of the Company from its current registered office to such alternative address as she shall determine.

...

2.3 The parties have agreed to each work progressively and professionally towards the dissolution of the Partnership from signing this Deed. This includes adhering to the terms of the Transitional Arrangements set out in this Deed during the Transitional Period.

3 Transitional Arrangements - Business Operation

3.1 The Partners have agreed to dissolve the partnership and operate as separate businesses, with clients, referrers and employees following one or other of the Partners from the Dissolution Date in the manner in the manner set out in this Deed.

3.2 During the Transitional Period each Partner will take such steps as are reasonably required by the other Partner to enable dissolution to occur seamlessly and professionally on the Dissolution Date.

3.3 During the Transitional Period, and noting and subject to any additional or varied health or safety requirements applying to orthodontic businesses in Victoria due to the impact of the COVID-19 pandemic, the Partners will continue to operate the Partnership business in partnership in the usual course except that:-

(1) TR Sudjalim will continue to carry on the orthodontic practice located at 6 Bond Street, South Yarra VIC 3141 (South Yarra Business) on its own account rather than as part of the Partnership business, but this occurs without prejudice to any future claim against the South Yarra business and/or TR Sudjalim should dissolution of the partnership not occur in the manner set out in this Deed; and

(2) the Partners must devote a minimum of 16 billable hours per week to the Partnership business (New Minimum Commitment) and a failure by a Partner to meet the Minimum Commitment will result in a negative adjustment of the Partnership income against that Partner;

(3) Theresia will have the exclusive right to work on Tuesdays and Wednesdays and Kip will have the exclusive right to work on Mondays and Thursdays. Neither shall have the right to work on Fridays. The Partnership shall allocate hours to work on Fridays to Kip's employees and to Theresia's employees on a 50/50 basis.

3.4 For the avoidance of any doubt incoming patients are to be directed to the orthodontist who previously treated that patient. New patients are to be directed to the orthodontists of a patient's choosing or otherwise to the first available orthodontist with the intention that each of Theresia, Thomas Lo, and John Bradley on the one hand and Kip on the other hand shall receive approximately 50% of any new patients who are not referred to a specific orthodontist.

...

5 Premises

5.1 New Premises

Theresia warrants to Kip and Homle as follows:

(1) Theresia or an entity she owns and controls has signed a binding lease of the New Premises with the landlord of the New Premises;

(2) The New Premises Lease is for a period of 5 years from December 2019, with the tenant having two further options of 5 years. Rental for the initial 12 months of the New Premises Lease is not more than $7,500 plus GST and normal outgoings per calendar month, and the commercial terms are those normally to be expected in commercial leases of this nature. Rent is reviewed annually to CPI, with market rent review each 5 years; and

(3) Theresia will procure that all current breaches of the lease of the New Premises are remedied to the satisfaction of the landlord of the New Premises.

5.2 Existing Premises

Kip warrants to Theresia and TR Sudjalim that an entity he owns and controls is the owner of the Existing Premises.

5.3 Relocation and Upgrading of Premises

The parties agree to co-operate and do all of their respective acts, matters and things under this clause and in compliance with all applicable laws and directions of any applicable authority to procure that:-

(1) By 15 August 2020 or otherwise within not more than 1 month of signing this Deed the landlord of the New Premises agrees in writing to assign or novate the existing lease of the New Premises to Kip or his nominee. Theresia and TR Sudjalim acknowledge that this will, among other things, require them to reach a final agreement with the landlord in relation to the amount of approximately $40,000 in current rent and outgoings due but unpaid under the lease of the New Premises. Unless the landlord agrees to accept a lesser sum in full and final settlement of all claims Theresia and TR Sudjalim acknowledge that they must pay the landlord in full all rent owing up to the date of assignment of the lease for the New Premises;

(2) Within not more than 1 month of signing this Deed Kip or his nominee is able to commence outfitting the New Premises so that he will be able to conduct his orthodontist business from the New Premises not later than 14 November 2020;

(3) On or before the Dissolution Date the landlord of the Existing Premises agrees to grant a lease of the Existing Premises to Theresia or her nominee for a period of 5 years, with the tenant having two further options of 5 years. Rental for the initial 12 months of the New Premises Lease must be not more than $7,000 plus GST and normal outgoings per calendar month, and the commercial terms must be those normally to be expected in commercial leases of this nature as contained in the Law Institute of Victoria format lease. Rent is to be reviewed annually to CPI, with market rent review each 5 years. Theresia and TR Sudjalim must execute a joint and several personal guarantee in favour of the landlord in relation to the lease of the Existing Premises.

(4) The New Premises are outfitted and equipped to enable Kip or his nominees to carry out his orthodontic practice from the New Premises. Kip must use his best endeavours to complete this work within 3 months of written approval of the assignment of the lease for the New Premises, which is expected to be no later than 14 November 2020.

(5) As and from the Dissolution Date Theresia and TR Sudjalim are indemnified by the Homewood Parties or released from all liability or guarantees concerning the lease for the New Premises.

(6) During the Transitional Period, and in the event of any delay beyond the Dissolution Date, allow Kip and Homle to carry on business from the Existing Premises, on the basis that the parties agree to share the Existing Premises in good faith and not to interfere with the business of the other party and with such arrangement to cease by no later than 14 November 2020.

(a) Until the Dissolution Date all rent and outgoings for the Existing Premises shall be paid by the Partnership. Thereafter all rent and outgoings will be paid solely by Theresia or her nominee, unless Kip remains in partial occupation by virtue of the works on the New Premises being incomplete, in which case he will pay 50% of the rental for the existing Premises for such period (with such period ending by no later than 14 November 2020);

(b) Up to the date that the lease of the New Premises is assigned to Kip or his nominee (expected to occur on or about 15 August 2020), all rent and outgoings for the New Premises shall be paid by Theresia. Thereafter all rent and outgoings will be paid solely by Kip or his nominee;

(c) For the avoidance of doubt the obligation for Kip to pay rent and outgoings in relation to the New Premises shall only commence once Kip receives all of the following:-

(i) A copy of the signed lease of the New Premises;

(ii) Confirmation that the terms of the lease of the New Premises are as warranted by Theresia in this Deed; and

(iii) A Deed of Assignment of Lease in executable form from the landlord of the New Premises that confirms that Kip or his nominees will be able to conduct the orthodontist practice from the New Premises in the manner contemplated by this Deed.

5.4 Fit out and Premises Upgrade

Any costs and outlays associated with the assignment or novation of the lease of the New Premises will be borne by the Partnership. Any costs and outlays associated with relocating equipment and the fit out of the New Premises will be borne exclusively by Kip or his nominee.

5.5 From the Dissolution Date and for the avoidance of any doubt:

(1) the Continuing Partner will continue to use the Existing Premises to carry out his/her orthodontic practice, but will not be permitted to carry out that orthodontic practice, nor any business or activity associated with the former Partnership at the New Premises; and

(2) the Transferring Partner will use the New Premises to carry out his/her orthodontic practice, but will not be permitted to carry out that orthodontic practice, nor any business or activity associated with the former Partnership at the existing Premises;

(3) the Parties will be otherwise unrestrained in their business activities.

The current Dolphin software system is to remain with the Company and Theresia, who will continue to have the benefit of this licence. Kip will at his expense acquire a separate licence for the Dolphin software system. The parties will cooperate to ensure that Kip's licence will provide or enable full access or the efficient transfer to Kip of his past and present patient information and all other information relevant to Kip currently stored on or accessed via the Dolphin system.

...

26 Miscellaneous

26.1 This Deed:

(1) is the entire agreement and understanding between the parties on everything connected with the subject matter of this Deed; and

(2) supersedes any prior agreement or understanding on anything connected with that subject matter.

26.2 This Deed may be executed in any number of counterparts. Each counterpart is an original but the counterparts together are one and the same Deed. This Deed is binding on the parties on the exchange of executed counterparts. A copy of an original executed counterpart sent by facsimile machine:

(1) must be treated as an original counterpart;

(2) is sufficient evidence of the execution of the original; and

(3) may be produced in evidence for all purposes in place of the original.

10 It is common ground that on an application for an interlocutory injunction, the Court will need to determine whether there is a serious question to be tried as to the plaintiffs' entitlement to relief; whether the balance of convenience favours the granting of an injunction,[3] including whether the plaintiffs are likely to suffer an injury for which damages will not be an adequate remedy; and whether there are any discretionary considerations which weigh for, or against, the grant of relief. These questions must be examined together.[4] An apparently strong claim may lead a court more readily to grant an injunction where the balance of convenience is fairly even. A more doubtful claim, which nevertheless raises a serious question to be tried, may still attract interlocutory relief if there is a marked balance of convenience in favour of it.[5]

11 The Court is to adopt the course which carries the lower risk of injustice if the decision made proves to be 'wrong' in the sense of granting an injunction to a party who does not succeed at trial or in failing to grant an injunction to a party who succeeds at trial.[6] This approach is to be taken irrespective of whether the injunction sought is prohibitory or mandatory.[7]

12 The parties disagree on the proper construction of the Deed of Dissolution.

13 The plaintiffs submit that on its proper construction and in particular pursuant to cl 5.3(6) of the Deed of Dissolution, a transitional arrangement whereby the parties agreed to share the existing premises in good faith and without interference with the business of the other in the event of any delay beyond the Dissolution Date, was to cease by no later than 14 November 2020.

14 To similar effect, and in particular pursuant to cl 5.3(7)(a) of the Deed of Dissolution, the plaintiffs submit that an arrangement agreed upon in relation to the sharing of rental whilst Dr Homewood remained in partial occupation (by virtue of works on the new premises being incomplete) was to end by no later than 14 November 2020.

15 The defendants submit that on its proper construction, reading the Deed of Dissolution as a whole, the Transitional Period, as that term is defined in Recital E, is to continue 'until each partner is operating their separate business from separate premises' and has no fixed end date.

16 The plaintiffs submit that if the parties intended the end of the Transitional Period to be defined by that circumstance (i.e. each partner operating their separate business from separate premises) there would be no need to refer to any date.

17 One aspect of the construction question may be the extent to which Recital E informs the interpretation of the operative parts of the Deed of Dissolution. In Adventure Golf Systems Australia Pty Ltd v Belgravia Health & Leisure Group Pty Ltd, Santamaria JA (Kaye and Ashley JJA agreeing) said:

Whilst recitals can be used as an aid to construction of an operative provision in an agreement, they are not themselves operative terms. Where [...] the operative words are clear and unambiguous, a recital cannot cut down the operative words - no matter how clear and unambiguous the words of that recital might be.[8]

18 It is clear there is a serious question to be tried as to the proper construction of the Deed of Dissolution, and in particular as to whether the defendants are in breach of the Deed of Dissolution by continuing to occupy, or failing to vacate, the existing premises by 14 November 2020 in the events which have occurred.

19 On the issue of balance of convenience, the plaintiff relies principally on the evidence of Dr Sudjalim and Kirsty Bond, Practice Manager, who depose to the following effect:

(a) the continuation of the transitional arrangements are causing significant financial harm. Dr Sudjalim's business has been operating at 50% of its intended level as it is limited to seeing patients five days per fortnight instead of ten, and can only treat approximately half the patients it would otherwise be able to treat from the premises. This equates to a 50% reduction in billable work and revenue of up to $45,314 per week (if it were operating at full capacity);[9]

(b) Dr Sudjalim is unable to apply lost revenue to increasing current working hours of staff or to acquiring new equipment to replace assets assigned to Dr Homewood under the Deed of Dissolution;[10]

(c) the transitional arrangements are fundamentally unworkable for Dr Sudjalim's practice, including by reason of the need to run operational decisions or procedures past the staff of Dr Homewood's practice; the inability to access the premises, systems and records as required; the dependence on Dr Homewood's practice's cooperation in tasks ranging from supply arrangements to taking messages from patients; and administrative and clinical tasks which are all impacted;[11]

(d) Dr Sudjalim is unable to make effective business decisions regarding her practice, including plans to upgrade the fit-out and hire additional staff, which have had to be put on hold;[12]

(e) staff are facing the uncertain prospect of their working hours remaining at reduced levels for a continuing period with ongoing financial burdens. Two staff members have reported financial stress, giving rise to concern that one or more of Dr Sudjalim's staff may seek alternative employment;[13]

(f) the current working arrangements have damaged staff wellbeing with a risk of staff resignation and the loss of years of experience and knowledge of Dr Sudjalim's working patterns and patients;[14]

(g) adverse impact on the ability of Dr Sudjalim's practice to provide quality care and customer service to its patients manifested by, among other things:

(i) patients being unable to be accommodated on their preferred or convenient days of the week;

(ii) patients facing longer wait times due to reduced operating days;

(iii) patients facing difficulties in dealing with staff of Dr Homewood's practice over the phone and at the premises;

(iv) delays and interruptions to patient treatments due to difficulties locating stock or navigating the shared practice;

(vi) patients who will need to be contacted at short notice to inform them that their treatment needs to be rescheduled in circumstances where Dr Sudjalim's practice may not be able to offer them an appointment for some months should Dr Homewood's practice remain at the premises;[15]

(vii) potential for reputational consequences for Dr Sudjalim as between her patients and referring dentists;[16]

(viii) concern as to the mental health of staff members, and the significant level of anxiety and distress experienced by six staff members, causing Ms Bond to have real concerns that several staff may resign in order to preserve their wellbeing, in the knowledge that some staff have informed her that they refuse to attend the premises on any day when there is a chance that Dr Homewood's practice staff may be present;[17]

(ix) difficulties with existing bookings and rescheduling patient appointments;[18]

(x) the continued use by Dr Homewood's practice of the Dolphin Imaging and Management software system ('Dolphin software') that was assigned to Dr Sudjalim, which has led to patient data for Dr Homewood's practice patients being maintained in the third plaintiff Berwick Orthodontic Specialists Pty Ltd's ('BOS') database leading to confusion among staff;[19]

(xi) the risk of breach of patient privacy as booking details of BOS's patients are visible to Dr Homewood's practice staff and vice versa;[20] and

(xii) the potential breach of the licence agreement with respect to the Dolphin software should the current licensee (Dr Sudjalim's interests) be seen to be allowing a separate business to use the licence without authority.[21]

20 Dr Sudjalim deposes that, having read the affidavit of Dr Homewood, she now knows with certainty that Dr Homewood's practice intends to remain at the existing premises until at least the end of February 2021, and that she is not prepared to ask her staff to continue to work there until that time (and for possibly longer in the event of delay of the fit-out of Dr Homewood's new premises) in the circumstances described above.

21 In circumstances where Dr Homewood's practice is permitted to remain at the existing premises for such period, Dr Sudjalim intends to take steps to urgently source alternative premises and relocate her business until such time as Dr Homewood's practice vacates the existing premises despite the significant financial cost and inconvenience to herself, her patients and staff. If this were to occur, it would require BOS to contact 1,339 patients who currently have appointments booked at the existing premises between the date of swearing of the affidavit and February 2021.[22]

22 Dr Homewood's evidence includes the following matters:

(a) after the mediation, Dr Homewood made enquiries of Optima Healthcare Group Pty Ltd ('Optima'), a specialist design and construction business with expertise in orthodontic fit-outs, in respect of the fit-out of the new premises. On 30 June 2020, Dr Homewood received a project proposal from Optima which envisaged that a fit-out would be completed by the last week of November 2020. On 20 August 2020, Dr Homewood provided a signed letter of intent to Optima accepting the project proposal;[23]

(b) since the exchange of the Deed of Dissolution on 28 August 2020 Dr Homewood took steps in relation to the fit-out of the new premises, which included attending meetings with representatives of Optima as part of the design and development phase of the project proposal;

(c) on 29 September 2020, Dr Homewood executed a written contract with Optima to fit-out the new premises;

(d) on 8 October 2020, Dr Homewood was provided with a 'construction plan' which showed the date of completion of the fit-out (being the date on which he could move his practice into the new premises) as 22 February 2021. This was the first time he became aware that the fit-out was not expected to be completed until early 2021;

(e) on 12 October 2020, Dr Homewood emailed Dr Sudjalim informing her that he would not be in a position to move out of the existing premises;[24]

(f) Dr Homewood deposes that in order to protect patients and staff from the risk of COVID-19, and in response to the COVID-19 restrictions ordered by the Victorian Government, Dr Sudjalim and Dr Homewood formally divided the staff of the partnership into two teams operating on different days, varying slightly each fortnight. Since 1 October 2020, Dr Homewood's team has worked on Mondays, Thursdays and alternating Fridays, and Dr Sudjalim's team has worked on Tuesdays, Wednesdays and the remaining Fridays. This sharing arrangement continues to the date of the swearing of his affidavit;[25]

(g) in Dr Homewood's experience, the sharing arrangement between practices has been workable without any major interruption on his assigned days. To the extent that there have been difficulties and inefficiencies, these have been overcome by communication and professional cooperation between his staff and Dr Sudjalim's staff. Dr Homewood acknowledges that the sharing arrangements are not ideal for either practice, and that they have caused disruption for staff. Dr Homewood has instructed his staff to be considerate and courteous of Dr Sudjalim's practice and staff;[26]

(h) Dr Homewood deposes that, on average, he has 130 to 180 patient appointments in his 2.5 day working week. In order to treat his patients, he requires premises with a waiting room capable of accommodating up to 14 people at any one time while observing social distancing arrangements, and access to the Dolphin software; access to monitors in treatment rooms and work stations that allow him and his staff to view patient information through Dolphin software while working; dental X-ray equipment that is able to produce images that can be saved efficiently into the Dolphin software; and a large and efficient sterilisation area. The existing premises currently has these facilities;

(i) Dr Homewood has made enquiries about options for temporarily relocating his practice until the fit-out of the new premises is complete. He deposes that two practices nearby had only limited capacity, could not accommodate the number of patients in his practice, had only one or two dental chairs available in a smaller waiting room, and could not accommodate the patient load of his practice. Further, their computer systems did not have the power or storage infrastructure to install and utilise Dolphin software nor X-ray equipment that could efficiently save images into the Dolphin software;

(j) enquiries Dr Homewood made about the possibility of Optima providing a temporary pop-up clinic for his practice made it apparent to him that a temporary clinic was not a feasible option, as there is insufficient space at the new premises. The car park at the new premises is not large enough to install the temporary clinic, which has only two operating stations and a small waiting room and could not accommodate the patient load of his practice. Further, the temporary clinic's computer systems do not have the power or storage infrastructure to install and utilise the specialist clinical software used by Dr Homewood's practice or a large and efficient sterilisation area. Further enquiries made of Optima about the potential to custom build a temporary clinic sufficient for Dr Homewood's needs resulted in an estimate of 16 weeks to provide, with an indicative cost of $330,000 plus weekly hire costs;

(k) Dr Homewood deposes that if he had to vacate the existing premises, the consequences for his practice, staff and patients would be severe and immediate; as with no viable temporary options, he would have to cease operating his practice until at least 29 February 2021 (allowing for the completion date of 22 February 2021 and for a week to move into the premises). Dr Homewood deposes that if a patient required an emergency appointment, he would have to make ad hoc arrangements to see them at another practice;[27]

(l) Dr Homewood deposes that the closure of his practice for three months:

(i) would significantly impact his patients. He currently has about 850 appointments scheduled from 16 November to 31 December, and that due to COVID-19 restrictions he has not seen some of his patients for six months and many patients are urgently in need of orthodontic care, including those who need appointments for the purpose of monitoring appliances, beginning scheduled treatment having consultation due to an orthodontic referral and general monitoring and detection of possible orthodontic problems.[28] A further delay of three months is likely to have a severely detrimental effect on the wellbeing of many of his patients, with particular concern about patients who have appliances and devices actively working where delay in seeing those patients would severely compromise their treatment in the short and medium term, some irreversibly, without regular review;

(ii) would be detrimental for his staff personally, financially and professionally, and that his staff had already been placed under significant financial stress as a result of the closure of his practice as a consequence of the COVID-19 restrictions, including the placement of staff onto the Commonwealth Government's JobKeeper subsidy and a reduction in normal working hours and wages for ten of his staff during the sharing arrangements implemented in April 2020. He would have to stand down his staff and they would not receive an income from his practice until he is able to resume operations and could be placed in critical financial stress during a severe economic recession. Dr Homewood is concerned about the toll such stress would take on his staff's mental health and wellbeing and the potential impact on their career advancement if they were required to seek employment in another practice;[29] and

(iii) would have a significant financial impact on his practice in the short and long term and cause damage to its goodwill and reputation. Dr Homewood notes the potential for patients to seek out other orthodontists and for staff to commence employment in alternative practices or businesses with a potential loss of trusted employees with a knowledge of Dr Homewood's practices and existing excellent working relationships. Dr Homewood estimates his practice would suffer a loss of profit of at least $150,000 if it is shut down for three months.[30]

23 Bree Airdrie, practice manager for Dr Homewood's practice, deposes in substance that:

(a) she had not observed staff, after the separation of the practice, behaving in a rude or disrespectful manner to Dr Sudjalim or her team, though four of the five staff members transferred from Dr Homewood's team to Dr Sudjalim's team stated to her they did not feel welcome when working with Dr Sudjalim's team; that they did not wish to continue working with Dr Sudjalim's team; and that despite Dr Homewood and Ms Airdrie's attempts to manage these workplace concerns by encouraging the four staff members to continue working with Dr Sudjalim's team, ultimately those who were unhappy working for Dr Sudjalim returned to Dr Homewood's practice. Ms Airdrie disagrees that sharing premises is unworkable for a further period of three months. Ms Airdrie acknowledges that the current sharing arrangement is not ideal for either practice; that it requires the staff of both practices to take steps to be accommodating; that the current arrangements have been working effectively for about nine months; and that Dr Homewood and Dr Sudjalim have worked on different days of the week and only crossed over at most once a week for a number of years;

(b) the sharing arrangement constrains each practice from working every day of the week and that in order to overcome this issue, Dr Homewood's practice has been utilising additional hours and working on weekends to accommodate patients.[31] The sharing arrangement has placed strain on practice management staff and that the working week is not ideal for herself and other staff. This is managed by prioritising work that can only be done in the clinic on rostered days and trying to complete other tasks from home using remote access to clinic computers;[32]

(c) Dr Sudjalim's team should be able to satisfactorily manage under the current working arrangement for a further short period and that staff have been instructed to do their best to collaborate with Dr Sudjalim's practice in respect of operational matters. Ms Airdrie's experience of the current arrangement has been that both practices have managed operational matters to avoid major disruption. She deposes she has never intentionally delayed passing on information to Dr Sudjalim's team;[33]

(d) as to the shared use of the landline phone and the fact that calls to BOS are now being diverted to Dr Sudjalim's team's mobile numbers on days that her team is not in the clinic, Ms Airdrie deposes that the shared use of a telephone is not ideal for either practice and that from her observations, Dr Homewood's staff have done their best to work around the difficulties of a shared phone;[34]

(e) until Dr Homewood's practice is able to move into new premises, there is no feasible option but to continue to use the Dolphin software that is installed on the computers in the clinic. Even if data is transferred to new software, Dr Homewood's team would not have access to practice management software at the clinic for use on allocated working days and there is insufficient space in the clinic to have two computers set up at each workstation;

(f) she is unsure whether it is technically possible to have separate practice management software programs running simultaneously on the existing clinic computers.[35] Once the server and other IT equipment is available in the new premises, the practice will be able to migrate its patient data and practice management software to the new system;[36]

(g) any issues between staff can be adequately addressed by communication between the two practices and that a working relationship can be maintained for another three months; that although the sharing arrangement has placed additional strain on staff, the arrangement is workable for another three months; and that the staff are capable of collaborating and communicating professionally to manage the additional strain;[37]

(h) if Dr Homewood's practice was forced to close for three months, Ms Airdrie deposes the personal consequences for her would be severe. She would be out of work and unable to pay her bills and support her child. Several other members of Dr Homewood's staff would also face financial stress if the practice were forced to close and they could no longer work. Ms Airdrie is concerned about the impact on her staff's mental health and wellbeing if the practice was forced to close for yet another period this year, particularly given the previous closures caused by COVID-19;[38]

(i) rescheduling appointments is difficult for patients. If Dr Homewood's practice were forced to close for three months, the consequences for his patients would be extreme. Patients would have to reschedule for appointments in at least three months' time. Many of these patients need to be seen as they have active appliances in place as part of ongoing treatment. That there is a possibility that patients would move to another orthodontist if they cannot receive timely treatment with Dr Homewood;[39] and

(j) the reputation of the practice would be severely affected by such a closure.[40]

24 When considering the balance of convenience it is necessary to take into account the strength of the plaintiffs' prima facie case.

25 Recital E of the Deed of Dissolution defines the Transition Period which, it seems, incorporates two periods. Except in so far as it is relates to the existing premises, the Transition Period is the period from the date of the Deed of Dissolution (28 August 2020) to the Dissolution Date (30 September 2020).[41] In the context of premises, the Transition Period is the period from the date of the Deed 'until each Partner is operating their separate business from separate premises'.

26 Clause 5.3(4) provides that Dr Homewood 'must use his best endeavours to complete fit-out works at the new premises within three months of written approval of the assignment of the lease of the new premises, which is expected to be no later than 14 November 2020'. Dr Homewood contends that (insofar as premises are concerned), the Transition Period has a non-specific end date, which is dependent on completion of the fit-out of Dr Homewood's new premises, and that it follows that Dr Homewood is entitled to remain in occupation of the existing premises until the fit-out is complete.

27 In my view, there are strong counter-indications to this proposition.

28 Clause 5.3(6) relevantly provides that the partners do all things to procure that: 'during the Transition Period, and in the event of any delay beyond 30 September 2020, allow (i.e. give permission to) Dr Homewood to carry out business from the existing premises' on an express basis, namely 'that the parties agree to share (which probably means have agreed to share) the existing premises in good faith and without interfering with the other, with such arrangement to cease by no later than 14 November 2020'.

29 Ancillary to cl 5.3(6) is cl 5.3(7), which provides for sharing of rent on a 50/50 basis for a period which Dr Homewood remains in partial occupation of the existing premises (by virtue of the fit-out works being incomplete) with such period ending by no later than 14 November 2020.

30 Clause 5.3(2) relevantly provides for the parties to do all things to procure that Dr Homewood is able to commence outfitting the new premises so that he will be able to conduct his orthodontic practice from the new premises not later than 14 November 2020.

31 The operative clauses of the Deed of Dissolution considered together provide a strong indication of an objective intention that any shared occupation of the existing premises following the dissolution of the partnership on 30 September 2020 would not be open ended. Whilst there was some allowance for the contingency of delay in the fit-out works which might involve continued sharing of premises whilst separate orthodontic businesses were run there, it appears strongly arguable that the parties agreed on a cut-off date of 14 November 2020, when any shared occupation on that basis would cease. It appears unlikely that nomination of a specific date has any other purpose.

32 Further, it is probable that choice of a date reflects allocation of risk, with Dr Sudjalim taking the risk of the fit-out works not being complete and being required to continue to share premises for a period after the dissolution date of 30 September 2020, even though the parties would by then be running separate practices, and Dr Homewood taking the risk that if the fit-out works were incomplete by 14 November 2020, his licence to remain in occupation of the premises would cease and he would have to vacate.

33 It seems to me (without making a finding on the construction question at this interlocutory stage) that there is a very strong prima facie case that the plaintiffs' construction of the Deed of Dissolution is to be preferred. I accept that there is some ambiguity in the terms, which will likely enable resort to evidence of surrounding circumstances as an aid to construction. Correspondence between the parties' legal advisors in emails exhibited to the affidavit of Kieran Patrick Best tends to lend support a construction which would allow continued shared occupation of the existing premises for a period during the fit-out of the new premises but for that arrangement to have a fixed and stated expiry date.[42]

34 The evidence from witnesses from each practice conveys significantly different individual perceptions. The plaintiffs' side on the evidence is finding that the sharing of the existing premises very stressful, and it seems almost unbearable, to the point where Dr Sudjalim has gone on oath to say that she will feel obliged to relocate the practice herself in the interests of staff and patient care if Dr Homewood is permitted to remain in occupation of the premises.

35 The defendants' side, whilst acknowledging the difficulty of sharing orthodontic rooms after a partnership has dissolved, has adduced evidence to the effect that the current arrangements are workable for at least the next three months, until Dr Homewood's new rooms are ready.

36 In the absence of seeing and hearing the deponents to the affidavits and being in a position to evaluate their evidence after cross-examination, I accept that each account is prima facie sincere, though I question whether the consequences of requiring Dr Homewood to vacate the existing premises are as serious as portrayed. In particular, the defendants' evidence tends towards an extreme characterisation of potential damage to patients, reputation and finances if the current arrangements were to change.

37 I am not persuaded that there will be a catastrophic outcome if Dr Homewood were required to vacate.

38 There is no evidence from any patients. I am not persuaded that patients would be intolerant of a delay or inconvenience if they were advised that the fit-out works for the new rooms were incomplete. I have no reason to suppose that the parties would not conduct themselves professionally towards their respective patient cohort in a way that is likely maintain the orthodontist/patient relationship.

39 There is no evidence to suggest that Dr Homewood could not identify and prioritise patients with urgent needs, including those with active appliances, to ensure they did not overcorrect.

40 It is my clear impression that Dr Homewood is striving for an outcome that will allow him to continue at optimal capacity, running four chairs as before, with undiminished access to the Dolphin software (even though it has now been assigned to Dr Sudjalim) and booking patients to 31 December 2020, despite the terms of the Deed of Dissolution, which strongly suggest he is required to depart the premises by 14 November 2020.

41 I do not accept that Dr Homewood could not work in a situation where his working conditions were less than ideal or that he could not on a temporary basis work more days in a practice with less chairs and see the same or a very similar number of patients. There seems to be no reason that patients could not be managed in a way that overcomes the problem of a smaller than ideal waiting room, or that work could not be done in premises with smaller sterilisation facilities, or that dental X-ray needs could not be temporarily outsourced with the images digitally transferred. Indeed it has become commonplace, given COVID-19 constraints, for medical and dental practices to utilise 'virtual' waiting rooms, and to require patients to wait for their appointments outside clinic buildings.

42 Further, there is no evidence from an IT specialist to say that a temporary computer software solution could not be put in place to store or transfer data and enable adequate practice management on an interim basis.

43 I also note it is highly likely, given my preliminary view of the strength of the plaintiffs' case on the construction question, that by the actions of Dr Homewood in declining to vacate, Dr Sudjalim is suffering a loss of the benefit of the 14 November 2020 'cut-off' date, and for as long as Dr Homewood remains in occupation, Dr Sudjalim will continue to suffer that loss, only some of which will be readily compensable in damages.

(a) now that the Dolphin software licence has been assigned to Dr Sudjalim and the practices are operating separately, it appears likely that Dr Homewood's practice is operating in breach of the licence;

(b) there is a strong probability given the contents of the affidavit of Ms Airdrie, sworn in opposition to this application, that Dr Homewood's practice staff are breaching, or have breached, the dentist and patient privacy of Dr Sudjalim's patients by accessing the booking details of Dr Sudjalim's practice; and

(c) comparison of an indicative guide given by Optima as to the timeline for fitting out the new premises prepared in about June 2020 with documents produced to the Court by Optima under subpoena suggests it is highly likely that Dr Homewood exchanged the Deed of Dissolution on 28 August 2020 knowing that the fit-out works would not be completed until after 14 November 2020, but did not inform Dr Sudjalim that he would be unable to move by 14 November 2020 until 12 October 2020.[43]

45 Dr Sudjalim has given evidence that her only option is to temporarily move out of the existing premises and set up practice elsewhere. In my view, this would not be a just outcome, not only having regard to the apparent strength of the plaintiffs' case, but also because it is common ground that Dr Homewood has to vacate the existing premises in the near future whatever the outcome of the construction argument.

46 The defendants' asserted case for remaining at the existing premises produces considerable uncertainty. Completion of the fit-out is planned for 22 February 2021, but it is clear from the evidence that Dr Homewood is allowing a week for moving in so the earliest potential date appears to be 29 February 2021. I note there is no evidence of the current rate of progress of the fit-out works in the new premises which adds to the uncertainty. If there is a delay, the move would occur at an indeterminate future date. If there is a lengthy delay there would be a lengthy period of unhappy cohabitation of the existing premises. The level of uncertainty can only exacerbate the stress and anxiety experienced by those working together. In my view, an outcome which, to the extent possible, minimises uncertainty is preferable.

47 Dr Homewood's evidence that he would close his whole practice if he were required to vacate has the potential to exacerbate any damage and harm. Both Dr Sudjalim and Dr Homewood are bound to mitigate losses and to take a course to minimise harm to themselves and to each other. Given the options available, closure of either practice would very likely offend against this principle.

48 Weighing all matters carefully, I have come to the conclusion that the balance of convenience in this case[44] favours orders substantially in the form sought in paragraph 3 of the summons, requiring Dr Homewood to give vacant possession of the premises. The plaintiffs will be required to give the usual undertaking as to damages. It seems to me that this outcome will produce a lower risk of injustice (in the sense understood in Bradto). To minimise disruption, and despite the plaintiffs' application that Dr Homewood should be required to vacate forthwith, the defendants will be given until 4.00 pm on Friday 18 December 2020 to do so.

TR SUDJALIM PTY LTD (ATF THE TR SUDJALIM FAMILY TRUST)

[1] For convenience, in these reasons where the context allows, a reference to either of Dr Sudjalim or Dr Homewood is also a reference to their respective family trusts.

[2] Affidavit of Theresia Rini Sudjalim, affirmed 12 November 2020 ('First Sudjalim affidavit'); Exhibit TS1-1 to the First Sudjalim affidavit, pp 29-51.

[3] ABC v O'Neill [2006] HCA 46; (2006) 227 CLR 57; Bradto v State of Victoria [2006] VSCA 89; (2006) 15 VR 65.

[4] Nicholas John Holdings Pty Ltd v Australian and New Zealand Banking Group Ltd [1992] VicRp 98; (1992) 2 VR 715, [723].

[5] See Brook v Federated Furnishing Trades Society of Australasia [1985] FCA 19; [1985] 5 FCR 464, [472].

[6] Bradto Pty Ltd v State of Victoria [2006] VSCA 89; (2006) 15 VR 65, [35].

[7] Bradto Pty Ltd v State of Victoria [2006] VSCA 89; (2006) 15 VR 65, [35].

[8] Adventure Golf Systems Australia Pty Ltd v Belgravia Health & Leisure Group Pty Ltd [2017] VSCA 326, [114]. See also Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407, [380].

[9] First Sudjalim affidavit, [56]-[60].

[13] First Sudjalim affidavit, [68]; Affidavit of Kirsty Bond, affirmed 12 November 2020 ('Bond affidavit'), [30], [35].

[14] First Sudjalim affidavit, [70]; Bond affidavit, [37].

[16] First Sudjalim affidavit, [75]-[76].

[22] Second Affidavit of Theresia Rini Sudjalim, affirmed 23 November 2020 ('Second Sudjalim affidavit'), [46]-[49].

[23] Affidavit of Christopher Ian Homewood, dated 20 November 2020 ('Homewood affidavit'), [16]-[20].

[26] Homewood affidavit, [33] and [34].

[27] Homewood affidavit, [41]-[45].

[28] Homewood affidavit, [46]-[47].

[30] Homewood affidavit, [58]-[72].

[31] Affidavit of Bree Airdrie, dated 20 November 2020 ('Airdrie affidavit), [36] and [38].

[41] Deed of Dissolution dated 28 August 2020, Recital D and Recital E.

[42] Exhibit KPB 1/1-184 to the affidavit of Kieran Patrick Best, affirmed 15 November 2020, pp 61,76,78 and 105.

[43] Second Sudjalim affidavit, [9]-[10], [17].

[44] Cf Hera Project Pty Ltd v Bisognin [2016] VSC 591.