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Idameneo (No 123) Pty Ltd v Zahedpur

 

[2015] QSC 255

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

Idameneo (No 123) Pty Ltd v Zahedpur [2015] QSC 255

PARTIES:

IDAMENEO (NO 123) PTY LTD
ACN 002 968 185

(plaintiff)

v

MEHDI ZAHEDPUR

(defendant)

FILE NO:

No 9836 of 2012

DIVISION:

Trial Division

PROCEEDING:

Civil Trial

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

3 September 2015

DELIVERED AT:

Brisbane

HEARING DATE:

7, 8, 9, 13 April 2015

JUDGE:

Daubney J

ORDER:

  1. There will be judgment for the plaintiff against the defendant for $234,202 inclusive of interest to date.
  2. I will hear the parties as to costs.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH, AND DEFENCES TO ACTION FOR BREACH – OTHER MATTERS – where the plaintiff is a corporation which provides premises for medical practitioners to render medical services – where the defendant is a medical practitioner – where the plaintiff and defendant entered into an agreement by which the plaintiff would sell and the defendant would buy the defendant’s medical practice – where the plaintiff and the defendant entered into an agreement by which the defendant agreed to provide medical services at one the plaintiff’s medical centres – where the relationship between the plaintiff and defendant broke down – where the defendant refused to work for the plaintiff in accordance with the agreements made – where the defendant did not remedy the breach by returning to the medical practice – where the plaintiff subsequently terminated the agreements made with the defendant – whether the failure to continue to render medical services was a fundamental breach of the agreements made – whether the plaintiff is entitled to remedy in damages for breach of contract – whether the plaintiff is alternatively, entitled to restitution for unjust enrichment

Idameneo (No 123) Pty Ltd v Fox (No 2) [2014] NSWDC 209

COUNSEL:

K Barlow QC and D de Jersey for the plaintiff

The defendant appeared in person

SOLICITORS:

HopgoodGanim Lawyers for the plaintiff

  1. The plaintiff has sued the defendant for damages for breach of contract, or alternatively for restitutionary relief.

Background

  1. The plaintiff, a wholly owned subsidiary of Primary Health Care Ltd (“PHC”), operates medical centres across Australia by providing administrative services to medical and allied health professionals who render their services from the plaintiff’s centres. 
  2. As at June 2009, the defendant, a doctor, was in practice as a general practitioner in Gladstone.  He telephoned a Mr Wheat, who is a recruitment consultant whose name was featured in promotional material put out by the plaintiff.  The defendant told Mr Wheat that he was interested in relocating, preferably to a bigger city. 
  3. At that time, the defendant was a registered medical practitioner, but had not yet qualified as a Fellow of the Royal Australian College of General Practitioners.  The defendant was an overseas-trained doctor, but he was able to practise without holding a fellowship if his practice was in a particular geographic area.  As was explained to me in evidence,[1] for an overseas-trained doctor to work in Australia at that time, apart from the necessary immigration and visa requirements, such a doctor had to practice in a “district of workplace shortage” (DWS”); i.e. an area in which the population’s need for medical services has not been met (as designated by the relevant section within the Department of Health and Ageing). 
  4. Negotiations then took place with a view to the defendant commencing practice at the plaintiff’s centre at Belconnen, in the Australian Capital Territory.  Indeed, the primary contracts originally signed on 18 December 2009 between the parties clearly contemplated the defendant starting practice at Belconnen on 1 March 2010.  It was not in issue before me that the defendant did not start at Belconnen, because the necessary paperwork was taking too long and a supervisor was not available.  I will refer to the primary contracts in further detail shortly.
  5. By 18 May 2010, the defendant had still not obtained his fellowship, and he and the plaintiff then executed an amending agreement by which the defendant agreed to provide his medical services from the plaintiff’s Springfield Medical Centre from 1 July 2010.  The Springfield centre was, at that time, a DWS.
  6. On 9 June 2010, the parties executed a further amending agreement, by which the defendant agreed to provide his medical services from the plaintiff’s Forest Lake centre from 1 July 2010, until the defendant obtained his fellowship and that qualification was recognised by Medicare, at which time he would move to the Springfield centre.  This occurred because, until he had his fellowship, the defendant needed to be in an “area of need” placement for the purposes of Medicare.  He was able to fulfil that by practising from the Forest Lake centre until he had his fellowship.
  7. The defendant started practising at the Forest Lake centre on 28 July 2010.  On 29 July 2010, he was paid the purchase price of $550,000 under the “Sale of Practice” agreement he had entered into with the plaintiff. 
  8. It was (ultimately) not in issue before me that the initial duration of the defendant’s agreement to provide medical services was five years from 29 July 2010, i.e. it would have expired on 28 July 2015. 
  9. The defendant subsequently obtained his fellowship, but elected at that time, and with the plaintiff’s consent, to continue practising from the Forest Lake centre. 
  10. In July 2011, the plaintiff closed the Forest Lake centre, and from 15 August 2011 the defendant commenced providing medical services from the Springfield centre.
  11. Before describing the breakdown in relations between the plaintiff and the defendant, it is convenient to refer to the agreements they executed in December 2009.  It was not in issue that the relevant operative parts of those agreements were not affected by the subsequent amendments.

The agreements

  1. By a “Sale of Practice” agreement dated 18 December 2009 (“the Sale Agreement”), the defendant agreed to sell, and the plaintiff agreed to purchase, the medical practice owned and conducted by the defendant from stated premises in Gladstone for the sum of $500,000 plus GST, i.e. a total of $550,000.  The Sale Agreement expressly required that the defendant contemporaneously execute a “Practitioner Contract” with the plaintiff.  The Sale Agreement contained mechanical provisions for the payment of the purchase price and the completion of details of the “Commencement Date” in the Practitioner Contract.  In short, the commencement date of the Practitioner Contract was to be the date on which the purchase price was paid to the defendant. 
  2. By cl 4.2 of the Sale Agreement, the defendant agreed that under the Practitioner Contract he would render medical services from the “New Premises” for at least five years from the date of commencement of the Practitioner Contract.  (The “New Premises” were originally described as the Belconnen Medical Centre.  It was uncontroversial that this was effectively amended by the subsequent variation agreements.)
  3. The defendant agreed to render medical services during those five years “for no less than 50 hours per week for 48 calendar weeks per financial year”. 
  4. Clause 4.2 of the Sale Agreement also required the defendant, under the Practitioner Contract, to:

“(d)act in a harmonious way with other practitioners and staff at the New Premises; and

(e)use the Doctor’s best endeavours to, ethically and professionally, expand the turnover, profitability, quality and image of the services provided at the New Premises.”

  1. Clause 8 of the Sale Agreement made the following provisions for termination:

“8.1The Doctor may terminate this Deed by notice in writing to the Purchaser if the Purchaser commits any breach of any provision of this Deed other than a breach which (being capable of being remedied) is remedied within 7 days of notice being given to the Purchaser by the Doctor.

8.2The Purchaser may terminate this Deed on the happening of any of the following events:

(a)the Doctor commits any serious breach of any provision of this Deed and the Doctor has failed to remedy that breach within 7 days of receiving a notice from the Purchaser calling for that breach to be remedied; or …”

  1. Clauses 9 and 10 of the Sale Agreement then provided:

9.  TERMINATION OF PRACTITIONER CONTRACT

The parties agree that:

(a)a due termination of this Deed by the Doctor under Clause 8.1 above is automatically a due termination of the Practitioner Contract under its Clause 9.1, and vice versa;

(b)a due termination of this Deed by the Purchaser under Clause 8.2 above is automatically a due termination of the Practitioner Contract under its Clause 9.2, and vice versa.

10.  RELATIONSHIP

(a)the Doctor and the Purchaser are not partners and are not in an employer/employee relationship and the Doctor, in rendering medical services and doing other things, is at all times an independent contractor and not doing so as the servant or agent or otherwise on behalf of the Purchaser; and

(b)the Doctor is responsible for insurance, workers compensation (if any), taxation deductions and payments (if any), and provision of holidays in respect of the Doctor; and

(c)the Purchaser only supplies non-medical services to the Doctor (and other medical practitioners at the New Premises); and

(d)the Purchaser does not provide medical services to any person or hold itself out as doing so; and

(e)the Doctor must not purport to act, or hold out that the Doctor is acting, as the servant or agent or otherwise on behalf of the Purchaser in respect of any matter, whether in rendering medical services or otherwise; and

(f)the Doctor must at all times indemnify the Purchaser in relation to each and all of the matters in this Clause.

Note:  The only employees of the Purchaser are clerical and administrative staff (for example, the receptionist) at the New Premises.  The medical practitioners at the New Premises are not employees.  The Purchaser’s relationship with the medical practitioners is that the Purchaser provides extensive services to each medical practitioner in the form of the use of the New Premises, the use of the Purchaser’s clerical staff, and the use of the Purchaser’s equipment.

  1. On 18 December 2009, the plaintiff and the defendant also executed an agreement entitled “Provision of services to medical practitioner” (“Practitioner Contract”).  Clause 3 of the Practitioner Contract specified the services and the facilities which were to be supplied by the plaintiff:

3.  SERVICES AND FACILITIES TO BE SUPPLIED BY THE COMPANY

3.1The Company must, at its cost and expense, provide supply and maintain to and for the Doctor, and such other persons as may at any time practise medicine and provide paramedical services from the Premises, such administrative services, clerical staff, facilities, plant and equipment as are in the opinion of the Company necessary for the Doctor to render medical services from the Premises.

3.2The services and facilities to be provided by the Company under Clause 3.1 include:

(a)the provision of space within the Premises suitable for the conduct (during such hours as are mutually agreed between the Company and the Doctor at any time) of a professional practice by the Doctor, the location of such space being specified from time to time by the Company; and

(b)the provision of all necessary plant, equipment, apparatus, instruments, fittings, furniture and furnishings as are in the opinion of the Company reasonably necessary for the provision of medical services by the Doctor from the Premises; and

(c)the maintenance, repair, cleaning and keeping in good order and condition of the space within the Premises provided for the use of the Doctor and of all equipment, plant, apparatus, instruments, fittings, furniture and furnishings used by the Doctor at the Premises; and

(d)the provision of all staff, employees and contractors as are reasonably necessary to provide the services to be made available by the company in accordance with this Deed; and

(e)the provision of materials, drugs and medical requisites used and reasonably required by the Doctor for the purpose of providing medical services from the Premises; and

(f) the provision of stationery and postage stamps for use by the Doctor for the purpose of and in connection with the provision of the medical services by the Doctor from the Premises; and

(g)the provision of electricity and standard telephone to the Premises; and

(h)the keeping and writing up of accounts in connection with medical services rendered by the Doctor, the collection on behalf of the doctor and the banking of all fees and other money paid or payable to the Doctor in respect of such medical services and the issue of receipts on behalf of and in the name of the Doctor.

3.3The services and facilities provided by the Company under the 2 preceding Clauses are to assist the Doctor to render medical services from the Premises and the Doctor must not use them for the Doctor’s private or other purposes.”

  1. Clause 4 of the Practitioner Contract contained provisions relating to the rendering of accounts and the receipt of, and dealing with, monies received from Medicare. 
  2. The defendant’s obligations under the Practitioner Contract were set out at length in Clause 5:

5.  MEDICAL SERVICES

5.1The Doctor must attend at the Premises and render medical services:

(a)from such location within the Premises as may be specified at any time by the Company; and

(b)during such hours as are mutually agreed between the Company and the Doctor at any time.

5.2The Company must not specify or direct the Doctor as to how the medical services are to be performed and the Doctor is free to exercise the professional judgment of the Doctor as to the manner in which the medical services are performed.

5.3The Doctor must:

(a)use the Doctor’s best endeavours to promote the interests and welfare of the practice at the Premises; and

(b)subject to Clause 5.2, diligently observe all the lawful directions of the Company given at any time concerning the operation or management of the Premises and the business conducted form the Premises; and

(c)act in a harmonious way with other practitioners and staff at the Premises.

5.4The Doctor must support on appropriate occasions, by word of mouth and appropriate referrals, the medical and paramedical services available at the Premises.  Such support must be given insofar as it is professionally, ethically and medically acceptable.  If at any time the Doctor feels the Doctor cannot support particular services at the Premises, the Doctor must discuss the matter with the Medical Director at the Premises so as to assist the Medical Director in relation to quality control of services at the Premises.

5.5The Doctor must promptly provide the Company with all such information and documents as the Company may require at any time in respect of any matter which falls within the ambit of this Deed or touches upon its operation.

5.6As part of the maintenance of the Company’s business, the Doctor must record on each patient’s record, in the manner and at the time set by:

(a)the standards for adequate and contemporaneous records under the Health Insurance (Professional Services Review) Regulations 1999 (Cth); and;

(b)the standards required at the relevant time by the ACT Medical Board, the ACT Health Professions Tribunal, or any Professional Standard Panel or Personal Assessment Panel established under the Act;

all information, particulars and details required to be recorded by those standards, and otherwise so that the record includes sufficient information concerning the patient’s case to allow another registered medical practitioner to continue management of the patient’s case.  It is agreed that all such records remain the property of the Company, and the Doctor must not make copies of the whole or any part of them or remove them from the Premises either during or after the termination of this Deed.

5.7The Doctor must not, without the prior written consent of the Company, have, keep or store in any part of the Premises any possessions unless they relate directly to the normal provision of medical services by the Doctor from the Premises.”

  1. Remuneration of the plaintiff for providing services under the Practitioner Contract was dealt with in cl 6.  It is sufficient to note the following base provision in cl 6.1:

“6.1The Company charges, and the Doctor agrees to pay to the Company, by way of remuneration for the use of the Premises by the Doctor and the services provided by the Company under this Deed, 50% of all such money banked (and required to be banked under Clause 4.2) to the credit of the banking account referred to in Clause 4.1 as are directly referrable to medical services rendered by the Doctor.”

  1. Termination of the Practitioner Contract was provided for in cl 9:

“9.1The Doctor may terminate this Deed by notice in writing to the Company if the Company commits any breach of any provision of this Deed other than a breach which (being capable of being remedied) is remedied within 7 days of notice being given to the Company by the Doctor.

9.2The Company may terminate this Deed on the happening of any of the following events:

(a)the Doctor commits any serious breach of any provision of this Deed and the Doctor has failed to remedy that breach within 7 days of receiving a notice form the Company calling for that breach to be remedied; or …”

  1. The Practitioner Contract also contained a “relationship” clause in terms relevantly identical to that set out in the Sale Agreement, as quoted above.

Relationship breakdown

  1. Soon after he commenced practice from the Forest Lake centre, the defendant started expressing concerns to the plaintiff about a number of administrative and management procedures in the medical centre, and the way it was run by the plaintiff.  This led to an increasingly rancorous stream of communication between the defendant and the plaintiff’s representatives over a period of more than a year.  Many of the matters about which the defendant complained, and on which responses were provided by the plaintiff’s representatives, are not relevant for the purposes of the present proceeding.  The escalation in the breakdown of the relationship between the defendant and the plaintiff can be seen from a review of the correspondence which passed between them. 
  2. On 6 December 2010, the defendant sent Mr Wheat a five page summary of his concerns, which he described as “current flaws in management procedures at the practice”.  One of the matters to which he referred was the fact that, unlike pathology results, radiology reports were not received electronically.  The conclusion to this memorandum from the defendant included the following:

“I conclude in three areas.

a.Effectively, I am company’s client/customer and the premises are a shop with Primary’s employees being shop staffs.  I am trustee of my patients to buy them quality service from the shop, and to safeguard their health information.  I believe the company has left vital essence of its business, ie client satisfaction, to the robotic approach of an army of managers who feel responsible to their upper level managers rather than towards clients and their patients.  Beyond the satisfaction factor, I find my safety of practice, and my patients’ privacy, violated by Primary.

b.As a customer, I would like to be dealing only with the shop staffs for all of my concerns.  Should the issue remains unresolved after a week, the correct approach for me would not be my begging upper-level managers of company for attention.  I am not an employee of the company.  The correct approach is my involving customer support authorities, quality control authorities, indemnity insurer, office of privacy commissioner etc, and most importantly, my patients.

c.I have no intention to end my contract with Primary.  I have already spent some months here and I am going to practice here for 5 years as per my contract.  I will do my best to eliminate the concerns.

A modified issue of this letter has been handed to the Practice Manager on 30/11/2010 as a draft of a letter to AGPAL.  I asked for some of the issues to be resolved as soon as possible.  She has informed ‘the company’ and I am supposed to wait till further notice.

Should ‘the company’ take no sensible action, I will be starting to implement some legal means to make changes happen.”

  1. Meetings were held between the defendant and representatives of the plaintiff, and a formal response was provided to the defendant’s concerns. 
  2. On 23 May 2011, the defendant again wrote to the plaintiff by a letter headed “Summary of disputed issues, requests for remedies, and moratorium”.  Again, this letter traversed a wide range of complaints which are not relevant to the issues raised in the present proceeding.  In the course of that letter, the defendant said:

“I would like the following items to happen before the end of Wednesday 8th June.  Should the issue not resolved; I would consider ceasing practice till proper resolution takes place.  I expect the company to consider rostering of other doctors of the premises on Saturdays to keep the practice open.  I will be attending the premises for a while to temporarily hand-over the care of patients and files to colleagues. …  So long as I am in contract with Idameneo, I intend to resume practice when the matter is properly rectified.  In case that Idameneo ends our contract unilaterally, that would deprive the company from the benefits of the contract.

I will be available for written disclosure.”

  1. On 23 May 2011, the defendant also sent an email to the area manager of the plaintiff in which, amongst other things, he said:

“Since my 5-page complaint letter to Mr Robert Wheat in December 2010, and the subsequent discussion with Fiona and Robert; I have not received any official reply from Primary/Idameneo.  I have made lots of emails and phone calls to different staffs of your company asking for a feedback.  I beleive the issues listed in the letter, and some other issues, are still source of real medicolegal worry.  Some of the issues are cases of company’s breech of our contract. …

I expect a decent action and written advice by the end of Wednesday 8th June.  Beyound that point, I will consider ceasing practice – partly or completely – while insistingly staying in contract with Idameneo.  Proper resolution of the matters of concern, and proper measures for preventing them in the future would be the least prerequisites for my resuming practice at Forest Lake premises.”

  1. The plaintiff responded by a letter from its in-house counsel dated 31 May 2011.  This letter noted, amongst other things, that the defendant’s letter of 23 May 2011 could not constitute notice for the purposes of cl 8.1 of the Sale Agreement, or cl 9.1 of the Practitioner Agreement because it did not identify any breach of any obligation imposed on the plaintiff under those agreements.  The letter also advised:

“22.You have no entitlement to cease practising, other than in accordance with the terms of the Services Deed and the Sale Deed.  Any failure to comply with the terms of the Services Deed and the Sale Deed will be treated as a breach by you of your obligations.”

  1. On 1 June 2011, the defendant effectively responded to that letter, albeit by a letter written to Ms Fiona Ward, who was PHC’s Queensland State Manager at the time.  The defendant’s letter again rehearsed some of his complaints, and he said:

“I would like the following items to happen before the end of Wednesday 8th June.  Should the issues not resolved; I would consider ceasing practice till proper resolution takes place.  I expect the company to consider rostering of other doctors of the premises on Saturdays to keep the practice open.  I will be attending the premises for a while to temporarily hand-over the care of patients and files to colleagues.  That will protect me from facilitating the company’s illegal practice, and my patients from having their files accessed illegally under my responsibility.  So long as I am in contract with Idameneo, I intend to resume practice when the matter is properly rectified.  In case that Idameneo ends our contract unilaterally, that would deprive the company from the benefits of the contract.”

  1. The defendant’s concerns were not alleviated by his move to the Springfield centre.  On 25 September 2011, the defendant wrote to the plaintiff saying that there were “issues of concern” at his new workplace, and some of those were similar to the ones about which he had complained at Forest Lake.  He then “summarised” a range of complaints, most of which are irrelevant for the purposes of the present proceeding.  One complaint of relevance was:

“Except for the reports of QML Pathology and QDI Radiology, both owned by the mother company of Idameneo’s, the pathology and imaging reports of other providers in the area such as Sullivan-Nicolaides  are not provided to me online.”

  1. The defendant complained that the inability to have online access to these reports from other pathology and radiology services resulted in wasted time.  He also complained about the fact that he could not make phone calls from his room to mobile phone numbers, but had to ask for the medical centre’s reception staff to place calls to mobile telephone numbers.  He said that this wasted time and “can lead to misses or near misses in patient care”.  He said he needed to be “able to dial mobile phone numbers from my room telephone”. 
  2. In this letter, the defendant also asserted:

“There should be a board in the waiting room with my name and qualification beside those of other doctors of the premises on that.  Names of the doctors of the premises shall not be kept from incoming patients as they have a right to choose from a list according to their own preferences.”

  1. The plaintiff responded by a letter from its in-house counsel dated 7 October 2011.  Relevantly, the defendant was told in this letter:

(a)that the plaintiff would not allow its patient records to be exposed to data corruption, and the plaintiff protected the integrity of its IT infrastructure and network by not allowing external service providers access to the network;

(b)the plaintiff provided services, including telephone services, for use by the defendant as an independent contractor in rendering medical services.  It was pointed out that the defendant was not prevented from making telephone calls to mobile phones, but the reception staff needed to place such calls.  It was noted that the defendant had not identified any instance in which that policy had resulted in a “miss or a near miss” in patient care;

(c)the plaintiff denied an assertion by the defendant that a description of the services provided at the Springfield centre of a “walk-in doctor” gave any impression that the doctor in question was of an inferior capacity. 

  1. The letter went on to say that, in any event, staff at Springfield were now asking patients whether they would like to see a particular doctor or the first doctor who was available.  The letter also set out the reasons why the plaintiff did not set out doctors’ names on a board in the medical centre, referring particularly to the fact that the doctors at the centre provided their services on a rostered basis, and not all doctors on the board would be at the centre at all times.
  2. Correspondence then ensued between the defendant and the plaintiff’s representatives, largely about matters unrelated to this litigation, leading to a letter from the defendant to the plaintiff dated 6 February 2012 which concluded with the following:

“Beyound 2 weeks from the date of this letter, ie 19 February 2012; in case that IPL fails to eliminate the abovementioned unfair conditions at the centre, or fail to secure an appointment system for me at the centre, I preserve the right to temporarily seek alternative income elsewhere.  Your trade conditions are so unfair that I would prefer starting elsewhere from zero, for the second time in less than a year, and due to your business practices.  IPL will be held responsible for the losses I will suffer for my move-out from the centre, and the possible later move-in.  Losses will include my transport and time expenses for working at any place farther from my residence than Springfield Medical Centre.  For my coming back to the centre under my current contract, IPL will be responsible for my losing of my patient database which I have built away from Springfield Medical Centre.

Should IPL cancel my contract, the dispute is taken to next level by the company.  I will be there.”

  1. On 20 February 2012, the defendant wrote to the plaintiff saying:

“I refer you to all of our previous correspondences, all of the concerns I have raised, and all of the requests I have made to Idameneo Pty Ltd (IPL, the company); especially my letters of 06-Feb-2012 and 16-Feb-2012.

With the deadline of 19-Feb-2012 past, none of my major concerns are addressed properly by IPL.  IPL has made no suggestions or offers on alternative solutions either.  I am therefore ceasing to work at Springfield Medical Centre from 20-Feb-2012.

I will receive your correspondences via my email address: m.zahed@yahoo.com, and I will send my correspondences to the mutually agreed-on email address: katecross@primaryhealthcare.com.au

I am arranging to start seeing patients at the following address:

 

Medicross Greenbank

Cnr Teviot Rd & Pub Lane, Greenbank QLD 4124

Telephone:0732000197

Fax:0732000922

I have made sure the new address is outside the 10km radius of Springfield Medical Centre.

Dr Ramesh Venkataraman at Springfield Medical Centre has accepted to take-over the care of my patients.  Please deliver all of my paperwork and mail to him.”

  1. On 21 February 2012, the plaintiff’s in-house counsel wrote to the defendant, addressing the issues which had been raised in the defendant’s previous correspondence.  The letter concluded:

“27.Many of the matters raised in conclusions are reiterations of matters dealt with above.  I will not respond further other than to say that IPL will not be changing the GP numbers at the centre as you request, and will not be arranging appointment systems for you or other doctors at the centre as you request.

  1. IPL notes that you have failed to render medical services in accordance with your roster yesterday or today and have apparently started working at a medical centre in Greenbank. That will be the subject of separate correspondence. IPL is not responsible for any of the losses you claim to have suffered from your move to Medicare Green Cross and your breaches of contract.

  1. In IPL’s view you do not have any contractual right to ‘walk away’ from IPL as you propose.  IPL has an expectation that you return to the Centre and attend the Centre in accordance with the roster that was agreed by you.
  1. That matter will be dealt with in separate correspondence and IPL reserves all of its rights.”
  1. On that same day, 21 February 2012, the plaintiff sent the defendant a letter headed “Notice of serious breach”.  The letter commenced:

“1.This notice of serious breach (Notice) is issued pursuant to Clause 8.2(a) of the deed entitled ‘Sale of Practice Deed’ between IPL and you 18 December 2009 (and as amended by the deed entitled ‘Amendment of Contract’ between IPL and you dated 18 May 2010 and the deed entitled ‘Second Amendment of Contract’ between IPL and you dated 9 June 2011) (Sale Deed).

  1. This Notice is issued pursuant to Clause 9.2(a) of the deed entitled ‘Provision of Services to Medical Practitioner’ between IPL and you dated 18 December 2009 (Services Deed).
  1. I refer to your letter dated 20 February 2012 sent to Kate Cross of IPL at 12:25am on that date (Your Letter) and entitled ‘Ceasing to practice at Springfield Medical Centre (the Centre)’ noting that you are ceasing to work at the Springfield Medical Centre from 20 February 2012 and are moving to the Medicross Medical Centre at Greenbank QLD (Medicross Centre).  A telephone call to the Medicross Centre on 20 February 2012 confirmed that you commenced there full-time on 20 February 2012.  It appears then that you must have made arrangements for your move well in advance on 20 February 2012.
  1. You are in serious breach of your obligations under the Sale Deed and the Services Deed as set out in this Notice.”
  1. The letter then referred to specific obligations under the Sale Agreement and the Practitioner Contract, and identified that the defendant’s failure to attend at the Springfield centre to render medical services constituted a serious breach of each of the agreements.  It expressly required the defendant to remedy the breach by, relevantly, returning to render medical services at the Springfield centre in accordance with his roster.
  2. On 22 February 2012, the defendant wrote to the plaintiff responding to a number of pieces of correspondence.  So far as the notice of breach was concerned, the defendant said:

“Your third letter (letter 3) is a notice of breach.  My ceasing to work at Springfield Medical Centre (the centre) has been a result of IPL’s unfair business practices.  It could be considered as breach of contract only by focusing on one clause of my contract about the 5-year commitment; and disregarding the whole dispute and rest of the contract.  I have set out my expectations from IPL, and IPL has failed to response or suggest an alternative solution within the 2-week period of my given deadline.  My position is as I mentioned in my letter of 06-Feb-2012.”

  1. On 15 March 2012, the plaintiff wrote to the defendant referring, inter alia, to the notice of serious breach dated 21 February 2012, and noting that the defendant had failed to remedy the breaches identified in that notice.  This letter also observed that the defendant’s failure to render medical services at the Springfield centre since 20 February 2012 constituted a repudiation of the Sale Agreement and the Practitioner Contract. 
  2. By the letter of 15 March 2012, the plaintiff gave the defendant notice of termination of the Sale Agreement, noting that termination of that agreement was automatically a due termination of the Practitioner Agreement.  It was said, in the alternative, that the plaintiff accepted the defendant’s repudiation of the agreements, and elected to terminate both agreements.

The present proceeding

  1. On 22 October 2012, the plaintiff commenced the present proceeding by a claim which sought:

(a)damages for breach of contract;

(b)further or alternatively, restitution for unjust enrichment;

(c)interest, and

(d)costs.

  1. By the time of trial, the plaintiff’s current pleading was its third amended statement of claim (“3ASOC”), which was filed on 6 February 2015 in accordance with an order which had been made by Applegarth J on 27 January 2015.  The 3ASOC relevantly made it clear that restitution was being sought only in the alternative to damages for breach of contract.  Moreover, the only damages claimed were limited to “$533,615 comprising the loss of profit from the service fee revenue that the plaintiff would have earned if the defendant had rendered medical services, in accordance with the terms of the Sale Deed and the Practitioner Deed, for no less than 50 hours per week for 48 weeks in each financial year (and pro rata in the financial years ending on 30 June 2011 and 30 June 2016) from the Commencement Date to 28 July 2015”.
  2. I note in passing that, by these amendments, the plaintiff’s claim clearly fell within the jurisdiction of the District Court.  So much was conceded before me by counsel for the plaintiff.  Yet the plaintiff’s counsel was unable to give me any explanation for why the proceeding had not been remitted to the District Court for trial. 
  3. The defendant’s current pleading at trial was his seventh amended defence (“7AD”).  In its various previous iterations, the defence had raised a wide variety of matters which, it had been alleged, constituted breaches by the plaintiff of its contractual obligations, and which disentitled the plaintiff from terminating the agreements.  These were, by and large, repetitions of the diverse range of administrative and management complaints which the defendant had levelled at the plaintiff during the protracted course of correspondence.  By the time of trial, most of these allegations in the defence had been struck out or abandoned, and the only relevant allegations which remained in the 7AD amounted to the following:

(a)That between 30 October 2010 and 20 February 2012, the plaintiff did not allow the defendant to make appointments with patients at the Forest Lake centre or the Springfield centre;[2]

(b)That between 15 August 2011 and 20 February 2012, the plaintiff did not permit its reception staff at the Springfield centre to ask patients who had been treated by the defendant on their previous visit to the Springfield centre if they wished to see the defendant;[3]

(c)That between 15 August 2011 and 20 February 2012, the plaintiff refused to permit the defendant to have his name displayed at the reception desk at the Springfield centre;[4]

(d)That between 15 August 2011 and 20 February 2012, the plaintiff did not allow the defendant to make telephone calls to mobile telephones of patients without the involvement of a third party;[5]

(e)That between 15 August 2011 and 20 February 2012, the plaintiff did not provide the defendant with electronic provision of all of the incoming radiology and pathology reports.[6]

  1. Each of these matters was alleged to be “in breach of clause 3.1 and 3.3 and 5.2, and 10(c) and 10(f) (Note) of the practitioner contract”.[7]
  2. Moreover, the defence referred to the plethora of letters which the defendant had sent the plaintiff between December 2010 and February 2012, asserting that these letters constituted notices to the plaintiff for it to remedy its alleged breaches of contract, and contended that, as a consequence of the plaintiff’s failure to remedy those breaches, the defendant was entitled to terminate the agreements.  It was asserted that the defendant terminated the agreements by his letter of 20 February 2012.[8]
  3. I will deal with each of the defendant’s complaints in turn.

The defendant’s complaints

  1. The first complaint, concerning the allegation that the plaintiff did not allow the defendant to make appointments with patients, was a reflection of the defendant’s dissatisfaction with the plaintiff’s “walk in” model.  In general terms, the administrative model under which the plaintiff’s medical centres operated was that patients did not make appointments to see particular doctors, but were seen by the first available doctor rostered on for duty at the time the patient attended.  This was to be contrasted with an appointment based system, such as had previously operated at the Forest Lake centre before it was purchased by the plaintiff.  The engagement contracts of doctors who commenced practising from the Forest Lake centre before it was owned by the plaintiff allowed for an appointment based system of attendance on particular doctors.  When the plaintiff took over the Forest Lake centre, the existing doctors who had the benefit of those arrangements continued under that system.  It was clear enough on the evidence before me that the plaintiff was transitioning the Forest Lake centre to its standard “walk in” procedure.  It was not in issue before me that the defendant knew of the plaintiff’s standard “walk in” arrangements, and indeed that he knew of these arrangements before he executed the Sale Agreement and the Practitioner Contract. 
  2. Moreover, it was simply not the case that a patient who wanted to see the defendant was prevented from seeing the defendant as a consequence of the general “walk in” arrangements.  If a patient attended at the medical centre and wished specifically to be seen by the defendant, that request would be accommodated.  The only effective proviso was that the patient would have to “wait in line” until patients who had arrived at the centre ahead of that particular patient had been attended to by the doctors (including the defendant) available at the centre at that time.
  3. In respect of a situation where a patient attended but could not remember the name of the doctor who had seen the patient on a previous occasion, there was some confusion in the evidence of the plaintiff’s senior administrative officers as to whether reception staff at the medical centres could assist those patients by identifying the doctors they had seen previously.  The best and most reliable evidence on this point came from Ms Corey, who worked as a receptionist at the Springfield centre while the defendant was based there.  Her evidence was that when a patient attended, she would ask whether the patient would like to see the first available doctor or a particular doctor.  If the patient said that they would see the first available doctor, then she would allocate the patient to one of the doctors then on duty.  If the patient asked to see a particular doctor, then Ms Corey would put that patient on that particular doctor’s list.  In relation to patients asking to see a particular doctor, Ms Corey’s evidence was as follows:[9]

“Right.  Now, would you ask patients who had been – would you look up who the patient had previously seen without the patient first asking you to do so?
--- No, not without them asking.  If they said I would like to see the doctor who I saw last time, or can I see the doctor I saw last time, then we can look up who they saw, but we’d just ask first available or a certain doctor.

And so if they didn’t know the name of the doctor they’d seen but they wanted to, you could find out the name of the doctor they’d previously seen, could you?--- Yep.

How would you do that?--- Just search their name, and then you could just go to the last visits, and it would just show who had clicked on them.

Sorry, what would you be searching to search the name?--- The patient’s name.”

  1. The defendant’s pleaded complaint is that “the plaintiff did not allow the defendant to make appointments with patients”.  That is representative of the “walk in” administrative system which the defendant well knew was operative in the plaintiff’s medical centres.  Patients were not, in fact, prevented from seeing the defendant if they so wished.   The implementation of the “walk in” system did not constitute any breach of the Sale Agreement or the Practitioner Contract by the plaintiff.
  2. Those findings also effectively dispose of the defendant’s second complaint.  Indeed, as I have noted, Ms Corey’s evidence was that she would ask patients if they would like to see the first available doctor or a particular doctor. 
  3. As to the defendant’s third complaint, the plaintiff did not display the names of any of the doctors on boards at its medical centres.  The management rationale for not putting the names of all of the doctors up on a board at a medical centre was, in essence, that not all of the doctors were rostered on for duty at any particular time.  Clearly enough, it was the defendant’s preference that his name, and the names of other doctors, be on a display board.  There was, however, simply no obligation in the Sale Agreement or the Practitioner Contract for the plaintiff to advertise the names of the doctors at a particular centre in this way.  The defendant was unable to point me to any way in which the presence or otherwise of such a display board impacted on the defendant’s capacity or ability to render medical services from the particular medical centre.  Again, the defendant may have liked to have had his, and the other doctors’, names up on a display board, but there was no obligation on the plaintiff to provide that facility.
  4. The defendant’s next complaint was that the plaintiff did not allow him to make telephone calls from his room to patients’ mobile telephone numbers.  In order to contact a mobile telephone number, the defendant had to place the call through the medical centre’s reception staff.  This restriction on the defendant’s capacity to make telephone calls was confirmed as correct.  The rationale for that restriction, according to Ms Cross, the plaintiff’s State Manager from November 2011, was that this restriction was imposed both as a cost efficiency exercise, and also to “mitigate any risk of not recording any patient notes that were required to keep the record complete”.[10]
  5. The defendant clearly did not like the fact that he was restricted from placing calls directly to a patient’s mobile telephone number.  He raised the spectre of needing to be able to contact a patient urgently in order to prevent them from taking a potentially lethal dose of medication. There was no evidence of the sort of drastic scenario posited by the defendant having actually occurred.
  6. The plaintiff was required, by cl 3 of the Practitioner Agreement, to provide specified services and facilities as were “in the opinion of [the plaintiff] necessary for [the defendant] to render medical services” from the relevant medical centre.  By cl 3.2(g), that included the provision of “standard telephone”.   The defendant was provided with those services.  He was not prohibited from making calls to mobile telephone numbers.  The only restriction, for the administrative purposes explained to me in evidence, related to the way in which such calls would be placed.  Yet again, the defendant obviously did not like that administrative restriction, but that does not mean that the plaintiff breached its obligations to him by having that system in place.
  7. The defendant’s final complaint concerned the electronic provision of incoming radiology and pathology reports.  It was not in issue before me that pathology and radiology reports which came from service providers within the PHC group were able to be provided electronically.  Reports which came from pathology laboratories or radiology practices which were not within the PHC group were not directly available in electronic form.  On the evidence, that had as much to do with IT security concerns as with a desire on the part of the plaintiff to facilitate the provision of such reports from providers within the same group of companies.  There was no evidence to suggest that the defendant was precluded from seeking such reports from external laboratories and practices.  Nor was there any evidence to suggest that the reports provided by those external providers were not supplied to the defendant.  Nor was there any evidence to suggest that there had been any instance in which the defendant's ability to render medical services to his patients had in any way been compromised or affected by these restrictions.  Yet again, the defendant may have preferred to have received all reports, regardless of the identity of the provider, by direct electronic means.  But the fact that the system did not permit this does not mean the plaintiff was in breach of its obligations under the Sale Agreement or the Practitioner Contract.
  8. Accordingly, I find that the defendant has not made out any of the breaches he alleged against the plaintiff.
  9. For completeness, I should also record a finding that none of the letters sent by the defendant to the plaintiff constituted formal notices of breach for the purposes of the Sale Agreement or the Practitioner Contract.

The plaintiff’s case

  1. Having made those findings, it necessarily follows that any supposed justification which the defendant might have had for refusing to provide his services in accordance with the Practitioner Contract disappears.  The defendant conceded as much in argument. 
  2. It is obvious that the defendant’s failure to continue to render medical services from 20 February 2012 was a fundamental breach of the Practitioner Contract and the Sale Agreement.  The plaintiff was entitled to call for that breach to be remedied, in accordance with the terms of the contracts.  The defendant did not remedy the breach by returning to his rostered duties at the practice, and the plaintiff was entitled to terminate the agreements, as it did.

Damages

  1. I turn now to the question of damages.  In so doing, I note that it was properly conceded by counsel for the plaintiff that, in dealing with the case as one of breach of contract, it is unnecessary for me to deal with the alternative claim for restitution.
  2. The plaintiff cast its damages claim as being profits lost as a consequence of the “lost service fee revenue” which it would have derived from the defendant. 
  3. Before turning to the proper quantification of that loss, I should deal with a general contention by the defendant that the plaintiff had failed to prove any loss.
  4. For the purposes of advancing its claim for damages, the plaintiff relied on expert reports prepared by a forensic accountant, Mr Paul Vincent.  Mr Vincent’s primary report dated 5 March 2014 was supplemented by an updated report dated 6 April 2015 and by a further updated schedule provided at trial (Exhibit 14).
  5. The defendant’s fundamental objection was that Mr Vincent’s reports, of themselves, did not prove the losses which had been suffered by the plaintiff.  He argued in his submissions that the expert reports “contain no proof of the fact that the loss has actually been suffered”.
  6. This submission, however, overlooks the fact that Mr Vincent’s reports were prepared by reference to (literally) reams of primary financial data sourced from the plaintiff’s books and accounts, and that all of that source documentation was tendered and forms part of the evidence before me.  Mr Vincent’s reports contain clear statements of the assumptions and facts on which his opinions are based, and cross-reference those matters either to the source documentation or to documents (such as the Sale Agreement and the Practitioner Contract) which were put into evidence before me. 
  7. There was no challenge to Mr Vincent’s expertise.  Nor was there any challenge to the source documentation on which his reports were premised.  Mr Vincent’s reports contain a clear exposition of the methodology he applied for the purpose of calculating lost profits, and that methodology was not challenged.  His lost profit calculations included deductions of “variable cost savings” as a result of the plaintiff losing the defendant’s service fees.  His assessment of those variable cost savings was derived from his review of the plaintiff’s records, particularly the historical profit and loss statements for the Springfield centre.  All of that source documentation was cross-referenced in his reports, and was in evidence before me.  None of this was challenged.
  8. I am satisfied, in all the circumstances, that it is appropriate for me to have regard to Mr Vincent’s opinions for the purpose of determining the nature and extent of the loss suffered by the plaintiff. 
  9. As I have said, the plaintiff’s claim is for lost profits.  It is necessary, however, to pay careful attention to the period for which the plaintiff may properly claim to have suffered lost profits by reason of the defendant’s breach. 
  10. Even in its final submissions, the plaintiff persisted in an expansive claim:[11]

“115.Idameneo’s loss consists of the lost service fee revenue that it would have earned had Dr Zahedpur rendered medical services in accordance with the terms of the Sale Deed and the Practitioner Contract: that is, for no less than 50 hours per week for 48 weeks in each financial year (and pro rata for the financial years ending 30 June 2011 and 30 June 2016) from the Commencement Date (29 July 2010) to the intended end date of 28 July 2015.”

  1. The first issue that arises on this formulation is that the plaintiff seems to want to recover lost profits not merely from 20 February 2012 (when the defendant stopped providing his services), but also to reach back into previous periods when the plaintiff would contend the defendant failed to provide his services for 50 hours per week for 48 weeks per financial year.  That is certainly the basis on which Mr Vincent appears to have been initially instructed to prepare his expert reports, and is reflected, for example, in Table 7 (para 7.1) of the report dated 5 March 2014, and the updated version of Table 7 annexed to the report dated 6 April 2015. 
  2. The insuperable difficulty for a claim for lost profits which predates 20 February 2012, is that no such claim for loss was properly advanced as part of the plaintiff’s case.  The 3ASOC pleads one, and only one, breach by the defendant, namely the defendant’s failure to attend from 20 February 2012.  So much is clear from para 21 of the 3ASOC:

“The defendant:

(a)on 20 February 2012, by letter, informed the plaintiff that he would no longer attend at the Springfield Premises and would instead see patients at Medicross Greenbank, at the corner of Teviot Road and Pub Lane, Greenbank, Queensland;

(b)did not return to the Springfield Premises thereafter;

(c)by his conduct referred to in (a) above, failed to render medical services in accordance with his roster, which:

(i)caused disruption at the Springfield Premises as the medical centre had to operate without the services of the defendant and other medical practitioners had to cover the defendant’s shifts;

(ii)caused disharmony amongst the medical practitioners and staff; and

(iii)was disruptive to the operation and management of the Springfield Premises;

(d)in the circumstances, acted in breach of the terms pleaded in paragraphs 15 to 20 above;

(e)further, by his conduct referred to in (a) and (b) above, the defendant:

(i)evinced his intention not to be bound by, nor to act in accordance with, the Sale Deed or the Practitioner Deed;

(ii)repudiated each of the Sale Deed and the Practitioner Deed.”

  1. There is simply no plea that the defendant breached the Practitioner Contract by failing to render services for the required hours at any time prior to 20 February 2012, and alleged losses referable to that prior period cannot form any part of the plaintiff’s claim.
  2. In that regard, I note that the latest updated version of Table 7 provided by Mr Vincent (part of Exhibit 14) has 20 February 2012 as the starting date for the calculation of “loss of profits attributable to lost service fees”. 
  3. The next issue is whether the plaintiff is entitled, as it seeks to do, to claim for lost profits until 28 July 2015, i.e. the date on which the Practitioner Contract would have expired. 
  4. As at 20 February 2012, the defendant was one of 13 doctors practising from the Springfield centre.  After he left, there were 12 practising from the Springfield centre until the plaintiff recruited another doctor for that centre.  That doctor commenced at the Springfield centre in July 2013.[12]
  5. Ms Ward, who is PHC’s Chief Operating Officer and who was the plaintiff’s State Manager of Queensland for about two years from November 2009, described the plaintiff’s business in operating medical centres as follows:

“So there’s nurses, practice managers, administrators.  So Idameneo is a service provider.  So we provide the services of administration, nursing, practice managers, facilities, so the running of the medical practice, the facilities in – stock, so consumables in the treatment room, equipment used in the medical centres.”

  1. She described there being 14 practitioner rooms at the Springfield centre, and during her time as State Manager, there were 13 doctors rendering services.  That was not the “maximum capacity” of the facility.  She said that one could “probably recruit another three GPs into that practice”. 
  2. Ms Ward said that the Springfield centre had never been filled to maximum capacity in terms of general practitioners, nor had the Forest Lake centre.  In fact none of the plaintiff’s facilities had ever been filled to maximum capacity.  She said that the plaintiff had never had to reduce the numbers of doctors in its centres due to lack of patient demand.  On the contrary, the plaintiff continued to recruit doctors into the practices because the more doctors it recruited, the more patients it had passing through the practice.  Ms Ward said:[13]

“Well, the practice grows with the more GPs that we put in, because the – the – we can’t seem to keep up with the amount of patients that come into our practices.  So we are continually – to – we always look at getting more GPs into the practice to keep up with the patient demand.”

  1. She confirmed that this was the case at Springfield from 2009, and it continued to be the case.
  2. Ms Ward said that, in her experience, the demand for doctors in Australia was very high, and she did not think there were enough GPs “to actually look after the amount of patients that we currently have in our medical centres”.[14]  She said this was also the position between 2010 and 2012.  Her evidence was that the plaintiff encouraged doctors to leave their current practices and to come and practice from the plaintiff’s centres; the plaintiff was currently looking at contracting about 125 doctors per year.  She said this number was needed “[t]o be able to ensure that we’ve got enough GPs in our medical centres that we currently have”.[15]  She said that the plaintiff has capacity to hold more general practitioners in all of its medical centres, and this has always been the case. 
  3. In relation to the Springfield centre, Ms Ward confirmed that there were 14 rooms, and that the plaintiff could have 17 doctors working from that centre.  She confirmed that none of the plaintiff’s centres in Australia had a “full capacity” of doctors, and that the occupancy rate of doctors at the Springfield centre (i.e. 12 doctors in circumstances of a “full capacity” of 17 doctors) was not strikingly different from the situation at the plaintiff’s other centres.
  4. The plaintiff also led evidence from Mr Nicholas Aitken, a medical recruitment consultant who has been providing recruitment services to the plaintiff for 13 years.  He said that demand for recruitment of doctors for the plaintiff had never ceased, and there had never been an instance when he had been told to stop recruiting for the plaintiff.[16]  He described the physical limits of individual centres by reference to the finite number of rooms within each centre, and also described the manner in which the plaintiff seeks to recruit more doctors to a centre than the number of rooms because the plaintiff’s centres are typically open for 103 hours a week, while individual doctors typically work 50 hours per week.
  5. Against that background, the plaintiff argued that it was entitled to be compensated for lost profits up to the final day on which the defendant was supposed to be rendering services.  This was despite the fact that another doctor was recruited and commenced providing medical services at the Springfield centre in July 2013.  The plaintiff sought to justify this claim with the following submissions:

“116.Idameneo lost those service fees from Dr Zahedpur notwithstanding that, about 16 months after Dr Zahedpur left the Springfield Centre, Idameneo engaged another doctor to practise from that centre and, presumably, commenced earning fees from that doctor.  That is because that doctor did not replace Dr Zahedpur: Idameneo would have appointed another doctor to the centre in any event – that is, even if Dr Zahedpur and every other doctor had still being practising there.  Idameneo is always seeking to recruit new doctors and to appoint them to centres where there is a need or where the doctor wishes to practice, and its experience is that, when a new doctor is appointed to a centre, it leads to an overall increase in patient numbers and therefore increased income for the doctors and for Idameneo: exhibit 13 tab 99 and TS 1-65 ln 27 and 37, TS 1-68 ln 31, TS 1-79 ln 14 and 24, TS 1-90 ln 32, TS 1-95 ln 18.

  1. It cannot be said that Idameneo’s ability to engage another doctor at the centre was caused by Dr Zahedpur’s departure and that therefore the profits from the contract with that doctor must be deducted from the loss of profits from service fees generated from Dr Zahedpur’s practice, or that the new doctor ought be treated as having replaced Dr Zahedpur and thus having stopped the loss of profits that Idameneo would have made under its contract with him. That would only have been the case if, at any stage during the intended term of Dr Zahedpur’s contract, the Springfield centre had operated to capacity (in the sense that it could fit in no more doctors). In that case, the appointment of the last doctor who took the centre to capacity would only have been possible because of Dr Zahedpur’s departure and would have stopped the loss. But the Springfield centre was never operated at full capacity in that sense.”
  1. I do not accept the plaintiff’s arguments.  In my view, the proper end date for calculation of the profits lost by deprivation of the defendant’s service fees is the time when the new doctor commenced at the Springfield centre in July 2013. 
  2. The plaintiff itself was not in the business of providing medical services; as described by Ms Ward, it was in the business of providing administration and facilities to the doctors who themselves provided the medical services.  The plaintiff derives its income, and hence its profits, from the doctors to whom it provides its services.  When the defendant was at the Springfield centre, the plaintiff derived its income, and thereby earned its profits, from 13 doctors.  When the defendant left, that income and profit stream dropped back to 12 doctors until July 2013, when it returned to 13 doctors.
  3. There was nothing unique about the defendant as a source of income for the plaintiff.  This was not a case, for example, in which the defendant was providing highly specialised or unique services.  As a profit-generating source for the plaintiff, the defendant was interchangeable with other general practitioners.  This must necessarily have been the case in the “walk in” model adopted by the plaintiff, and because he was not unique as a profit source for the plaintiff, the defendant was completely replaceable. 
  4. The plaintiff’s contentions founder on the notion, as expressed in para 117 of its submissions, that the plaintiff’s ability to engage another doctor was caused by the defendant’s departure.  That is not what occurred.  What happened was that the defendant’s departure caused the plaintiff’s income source to be reduced from a pool of 13 doctors to 12 doctors.  It is not to the point that the plaintiff could always have engaged an extra doctor or doctors, regardless of whether the defendant was there or not.  Engagement of further doctors would simply have increased the size of the pool, and in that event the plaintiff’s income, and consequential profit, would have increased.  The loss suffered by the plaintiff in this case was the drop in its profits as sourced from the service fees paid by a pool of 12 doctors in the centre rather than 13 doctors.  The presence or absence of the defendant does not affect this equation – the profits earned are simply a product of the number of doctors in the pool.
  5. The plaintiff sought support for its position from the following statements by Nielson DCJ in Idameneo (No 123) Pty Limited v Fox (No 2):[17]

“10 The objection which could be taken but has not been taken is that the plaintiff could have engaged another medical practitioner to replace the defendant and thereby would have lost no money.  However, there is a wealth of evidence before me that there is a shortage of general practitioners and it is difficult to obtain staff to join the workforce at the Darlinghurst Medical Centre and similar medical centres established by the plaintiff, and that the more medical practitioners there are at any particular medical centre, the more members of the public attend upon that centre to seek treatment.

14.. I therefore accept that it would be fallacious to reduce the plaintiff’s claim because of an argument that the plaintiff could have engaged another medical practitioner to do the work which the defendant failed to do.  Any additional recruiting would end up with there being additional clients attending the plaintiff’s medical centres.

  1. That case, however, was dealing with the question whether the damages claimed by the plaintiff should be reduced in any event to account for the prospect of engagement of another medical practitioner.  That is not the case here.  It is not suggested that the lost profits should be discounted to reflect the possibility of engagement of another medical practitioner.  Rather, the situation here is to fix the point of time at which the plaintiff ceased suffering a loss of profits as a consequence of the defendant’s breach.
  2. Counsel for the plaintiff also argued that another way of looking at the plaintiff’s situation is that the defendant’s departure caused a loss of opportunity for the plaintiff to expand the practice at the Springfield centre.  That argument cannot be accepted for several reasons.  First, and fundamentally, the plaintiff’s case was never pleaded or advanced as a loss of opportunity case.  Secondly, on the plaintiff’s own evidence it cannot be said that the defendant’s departure was causative of the loss of any opportunity for the plaintiff to engage any general practitioner.  The plaintiff’s witnesses said that the plaintiff was always seeking to recruit further medical practitioners, and that it always had space available to accommodate those medical practitioners.  The departure of the defendant in no way impacted on that, or caused any loss of opportunity to engage any further medical practitioners.
  3. Accordingly, I have reached the view that the appropriate period for the calculation of lost profits is from 20 February 2012 until 30 June 2013.  (I was not provided with a precise date in July 2013 when the new doctor commenced at the Springfield centre). 
  4. Accepting as I do the accuracy of Mr Vincent’s calculations, as set out in the most recent version of Table 7 (in Exhibit 14), the net profits which the plaintiff lost during that period as a consequence of being deprived of the income sourced from the defendant were:

20 February 2012 – 30 June 2012              $50,608

1 July 2012 – 30 June 2013              $148,713

Total              $199,321

  1. Having regard to the evidence Mr Vincent gave in relation to official interest rates since 20 February 2012,[18] I have decided to allow interest on that sum at the rate of five per cent since 20 February 2012, i.e. for 3.5 years, yielding $34,881. 

Conclusion

  1. There will therefore be judgment for the plaintiff against the defendant for $234,202, inclusive of interest to date.
  2. I will hear the parties as to costs.

Footnotes

[1] Evidence of Aitken at T 2 – 37.

[2] 7AD, para 21(d)(iii-1).

[3] 7AD, para 21(d)(iv)(A).

[4] 7AD, para 21(d)(iv)(B).

[5] 7AD, para 21(d)(iv)(C).

[6] 7AD, para 21(d)(iv)(D).

[7] 7AD, para 21(d)(v).

[8] 7AD, para 21(d)(vii) – (x).

[9] T 2 – 29.

[10] T 2 – 22.

[11] Plaintiff’s final submissions, para 115.

[12] See the evidence of Ward at T 1 – 68-69 and Exhibit 13, document 99.

[13] At T 1 – 66.

[14] T 1 – 68.

[15] T 1 – 68.

[16] T 2 – 35.

[17] [2014] NSWDC 209 at [10] and [14].

[18] T 4 – 17.

Close

Editorial Notes

  • Published Case Name:

    Idameneo (No 123) Pty Ltd v Zahedpur

  • Shortened Case Name:

    Idameneo (No 123) Pty Ltd v Zahedpur

  • MNC:

    [2015] QSC 255

  • Court:

    QSC

  • Judge(s):

    Daubney J

  • Date:

    03 Sep 2015

Litigation History

Event Citation or File Date Notes
Primary Judgment [2015] QSC 255 03 Sep 2015 -
Notice of Appeal Filed File Number: 9215/15 15 Sep 2015 9836/12
Appeal Determined (QCA) [2016] QCA 134 24 May 2016 -

Appeal Status

{solid} Appeal Determined (QCA)