Impact Healthcare Pty Ltd v St Vincent’s Private Hospitals Ltd [2025] QSC 117
Summary
The Supreme Court of Queensland determined that a commercial agreement which had been on foot for nearly 25 years contained an implied right for the principal to terminate the agreement without cause by the giving of reasonable notice.
Background
Impact Healthcare Pty Ltd (consultant) provided management services to an emergency department operated by St Vincent’s Private Hospital Ltd (principal) under a written agreement.
The agreement had no end date and contained express terms permitting termination by mutual agreement and termination for whatever reason by the consultant on the giving of 6 months’ notice. However, there no similar express provision existed in favour of the principal and the consultant sought to argue that this was a deliberate feature of the agreement and consistent with the parties’ intention at the time it was entered into.
A dispute arose when St Vincent’s withheld consent to a proposed change of control of the consultant. That dispute was determined in favour of the consultant with the Court finding that the principal had unreasonably withheld its consent to the sale.[1]
The dispute the subject of the decision arose when the principal alleged it had an implied right to terminate the agreement on the giving of reasonable notice. The prospective buyer of Impact Healthcare refused to proceed with the transaction whilst the principal maintained this position.
Parties’ positions
The consultant alleged that the agreement was perpetual and could not be terminated by the principal giving reasonable notice because:
- the express terms on termination were exhaustive;
- the agreement was not the type which could imply a right to terminate by giving reasonable notice; and
- a term could not be implied in fact because it did not meet the test in BP Refinery v Hastings[2].
The principal maintained its implied right to terminate the agreement by giving of reasonable notice, having regard to the nature of the agreement and in fact because it met the BP Refinery test.
Courts reasoning
Justice Hindman noted that ‘[T]he types of contracts where an implied term allowing termination of the contract on the giving of reasonable notice has been implied in law are often ones where the contract relies upon trust and confidence between the parties, personal relations between the parties, or co-operation between the parties. Contracts that tend to have such features often involve partnerships or joint ventures, agency or service/employment’.
The Court considered that it was most unlikely in the circumstances that the parties intended that the agreement be perpetual save for its express rights of termination and observed that to not permit the principal to terminate without cause would be inconsistent with the parties’ objectively ascertained intentions.
The Court concluded that on a proper construction of the agreement there was a term implied by law and in fact that the agreement was terminable by the principal on giving reasonable notice.
The Court agreed with the principal that without the implied term, the principal would not have any means of redress in case of significant breakdown in trust and confidence between the parties or if the principal had valid reasons to be unhappy with the choices made by the consultant in providing services under the agreement.
Ultimately, the Court declined to determine what would constitute a reasonable notice period in the circumstances.
Key takeaways
This decision provides a useful summary and reminder of the principles courts apply in construing commercial agreements including where extrinsic evidence is and is not admissible to inform the proper construction, and of the importance of clear and concise contractual drafting in avoiding the uncertainty and expense associated with litigation.
This article was prepared with the assistance of Valerie Dalleau, Lawyer.
[1] Impact Healthcare Pty Ltd v St Vincent’s Private Hospitals Ltd [2024] QSC 62.
[2] BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266.
