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[2025] QSC 117
This case concerned the construction of a written agreement for the operation of a private emergency department. The case turned on whether the agreement contained an implied term permitting the respondent to terminate the agreement by providing reasonable notice to the applicant. The agreement was for an indefinite term and contained some express provisions dealing with termination, an entire agreement clause, as well as a number of other relevant clauses. Hindman J examined the relevant clauses and inferred from them that the parties did not intend for the express rights of termination to be exhaustive. Her Honour concluded that the alleged term was implied in law, or alternatively, implied in fact.
Hindman J
26 May 2025
The applicant and the respondent’s predecessor (whose rights were subsequently assigned to the respondent) entered into a written agreement (agreement) for the operation of a private emergency department. [11]–[12]. The agreement was a commercial contract with no end date. Relevantly, the agreement contained cl 2.2, which provided that the applicant shall be deemed to have been engaged on a certain date and shall continue unless terminated as provided by other clauses, and that the parties could terminate the agreement by mutual agreement or if the applicant wished to terminate by giving certain notice. Clause 2.2 also acknowledged the volatility existing in the healthcare industry at the time and permitted the parties to renegotiate certain clauses in the event of major changes in that industry. [19]. The agreement also contained other clauses for termination on the happening of certain events. [22], [28]. The agreement contained no express term for the respondent to terminate the agreement on the giving of reasonable notice, or without some form of cause. [84].
This case turned on a narrow issue: whether the agreement contained a term implied in law or in fact, permitting the respondent to terminate the agreement by giving reasonable notice to the applicant. [1]. The applicant argued that the agreement was perpetual, that is, it could not be terminated by the respondent on the giving of reasonable notice and that the express terms in the agreement dealing with termination were exhaustive termination rights. [7]–[8].
Despite the existence of express provisions dealing with termination and an entire agreement clause, Hindman J concluded that on the proper construction of the agreement there was a term implied in law permitting the respondent to terminate the agreement on the giving of reasonable notice. [92]–[93]. Her Honour considered that the agreement, despite being a comprehensive commercial contract, required: a high degree of trust and cooperation between the parties to fulfil its objectives; contained some high level and generalised terms; was intended to operate over an extended period of time; and acknowledged the possibility of changes impacting the agreement over time. [95]–[96].
Additionally, her Honour considered that cl 2.2 did not purport to exclusively set out the ways in which the agreement could be brought to an end, and that other clauses did not foreclose the possibility of the alleged implied term. Her Honour reached that conclusion having regard to the matters above, the fact that other clauses of the agreement provided for termination, and the fact that the agreement did not contain express clauses dealing with repudiation or frustration etc. Her Honour also considered that cl 2.2 was merely silent on the issue of termination by the respondent without cause and without mutual agreement, and that cl 2.2 was not inconsistent with the existence of the alleged implied term. [98]–[101].
In that context, Hindman J considered it unlikely that the parties intended that the agreement be perpetual save for its express rights of termination, or that those rights were intended to be exhaustive. [102]–[104]. Her Honour therefore concluded that the alleged implied term was implied into the agreement in law. [106].
Her Honour also separately considered whether the alleged implied term is implied in fact, in the event that her Honour was wrong about the conclusion that the term was implied in law. Her Honour concluded that the term was implied in fact, having regard to the five-point test in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266. [107]–[147].
In the result, her Honour found that on the proper construction of the agreement, there was a term implied in law (or alternatively in fact) that the agreement is terminable by the respondent on the giving of reasonable notice, with a declaration to that effect to be made upon the parties bringing in a form of orders giving effect to that declaration. [148]–[149].
A Lukacs