Sidameneo (No 456) Pty Ltd v Plint
[2015] WASC 243
•06/07/2015
SIDAMENEO (NO.456) PTY LTD -v- PLINT [2015] WASC 243
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WASC 243 | |
| 06/07/2015 | |||
| Case No: | CIV:1972/2015 | 30 JUNE 2015 | |
| Coram: | BEECH J | 3/07/15 | |
| 16 | Judgment Part: | 1 of 1 | |
| Result: | Interlocutory injunction granted | ||
| B | |||
| PDF Version |
| Parties: | SIDAMENEO (NO.456) PTY LTD IDAMENEO (NO.123) PTY LTD CHRISTOPHER PLINT |
Catchwords: | Contract Sale of medical practice Restraint of trade clause Seller in breach of restraint of trade clause Whether interlocutory injunction should be granted |
Legislation: | Nil |
Case References: | Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101 Angel-Honnibal v Idameneo (No 123) Pty Ltd [2003] NSWCA 263 Bedshed Franchising Pty Ltd v Battersby [2015] WASC 224 Butt v Long (1953) 88 CLR 476 Cream v Bushcolt Pty Ltd [2004] WASCA 82 Emeco International Pty Ltd v O'Shea [2012] WASC 282 Idameneo (No 123) Pty Ltd v Butterworth [2013] NSWSC 357 Idameneo (No 123) Pty Ltd v Deady [2013] VSC 740 Lindner v Murdock's Garage (1950) 83 CLR 628 McHugh v Australian Jockey Club [2014] FCAFC 45 Peters (WA) Ltd v Petersville Ltd [2001] HCA 45; (2001) 205 CLR 126 Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 Tullett Prebon (Australia) Pty Ltd v Purcell [2008] NSWSC 852 Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
IDAMENEO (NO.123) PTY LTD
Second Plaintiff
AND
CHRISTOPHER PLINT
Defendant
Catchwords:
Contract - Sale of medical practice - Restraint of trade clause - Seller in breach of restraint of trade clause - Whether interlocutory injunction should be granted
Legislation:
Nil
Result:
Interlocutory injunction granted
Category: B
Representation:
Counsel:
First Plaintiff : Mr G D Cobby
Second Plaintiff : Mr G D Cobby
Defendant : Mr S Harben
Solicitors:
First Plaintiff : Seyfarth Shaw Australia
Second Plaintiff : Seyfarth Shaw Australia
Defendant : Clayton Utz
Case(s) referred to in judgment(s):
Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101
Angel-Honnibal v Idameneo (No 123) Pty Ltd [2003] NSWCA 263
Bedshed Franchising Pty Ltd v Battersby [2015] WASC 224
Butt v Long (1953) 88 CLR 476
Cream v Bushcolt Pty Ltd [2004] WASCA 82
Emeco International Pty Ltd v O'Shea [2012] WASC 282
Idameneo (No 123) Pty Ltd v Butterworth [2013] NSWSC 357
Idameneo (No 123) Pty Ltd v Deady [2013] VSC 740
Lindner v Murdock's Garage (1950) 83 CLR 628
McHugh v Australian Jockey Club [2014] FCAFC 45
Peters (WA) Ltd v Petersville Ltd [2001] HCA 45; (2001) 205 CLR 126
Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169
Tullett Prebon (Australia) Pty Ltd v Purcell [2008] NSWSC 852
Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429
- BEECH J:
Introduction
1 The defendant (Dr Plint) sold his medical practice to the first plaintiff. The terms of the sale agreement included a clause restraining Dr Plint from practicing medicine within a specified geographical area for a specified period. Dr Plint has now taken up practice in breach of that clause. The plaintiffs seek an interlocutory injunction restraining Dr Plint from acting in breach of the restraint of trade clause pending a trial of this action.
2 I heard the application on 30 June 2015. On 3 July 2015 I announced that I would grant the interlocutory injunction sought by the plaintiffs, and publish my reasons later. These are my reasons.
The facts
3 The facts are not in any substantial dispute.
4 Dr Plint conducted a medical practice (the Practice) at 122 Spencer Street, Bunbury (the Premises). By an instrument entitled 'Sale of Practice' (the (Sale of Practice Deed) made between the first plaintiff and Dr Plint dated 29 April 2010, Dr Plint sold the Practice for $550,000. Of that amount, $450,000 was attributed to the goodwill of the Practice.
5 The Sale of Practice Deed contemplated that Dr Plint would continue to provide medical services at the Practice, and that contracts to that effect would be executed. The parties executed a contract entitled 'Provision of Services to Medical Practitioner' (the Practitioner Contract), by which the first plaintiff agreed to allow Dr Plint to use sufficient space at the Premises to provide medical services, and to provide associated administrative services, staffing and equipment. In return, Dr Plint agreed to pay 50% of his gross receipts to the first plaintiff.
6 As also contemplated by the Sale of Practice Deed, on 29 April 2010, Dr Plint entered into an additional agreement (the Lead Independent Doctor Deed) with the first plaintiff by which he agreed to act as the lead independent doctor for the Practice. His duties under that agreement included ensuring that the Practice operated efficiently during its advertised opening hours. Dr Plint also entered into an associated 'Restraint Deed'. As the plaintiffs rely only on the restraint clause in the Sale of Practice Deed, cl 5, it is not necessary to say anything more about the Restraint Deed.
7 Clause 5.1 of the Sale of Practice Deed provides as follows:
Given that:
(a) the [first plaintiff] is acquiring the goodwill of the practice; and
(b) [Dr Plint] is to render medical services from [the Premises or any new premises of the Practice].
the parties agree that as a reasonable protection for the business of the [first plaintiff], [Dr Plint] must not during the restraint period:
(i) render medical services at any place within a radius of 15 km of [the Premises]; or
(ii) render medical services at any place within a radius of 15 km of [any new premises of the Practice].
Note 1: In this clause 'render medical services' is not restricted to setting up, or being part of, a medical practice, and includes rendering a medical service to one patient.
Note 2: The parties considered what a reasonable restraint was in the light of a number of matters, but primarily relevant population figures, patient following, and demand for medical services.
8 Clause 5.2 provides that the restraint period under cl 5.1 is the period from completion until the later to occur of:
(a) the fifth anniversary of completion; or
(b) the third anniversary of the date on which the Practitioner Contract terminates for whatever reason.
9 Clause 5.3 provides that the restraint in cl 5.1 is suspended from time to time in certain situations, including, by sub-paragraph (c), so as to permit Dr Plint to enter into and carryout the terms of the Practitioner Contract.
10 Clause 5.4 provides that for each time Dr Plint renders a medical service in breach of cl 5.1 he must pay to the first plaintiff, as agreed and assessed damages, 50% of the gross fee payable to Dr Plint in respect of that medical service.
11 Dr Plint entered into a revised Lead Independent Doctor Deed and associated Restraint Deed in 2013. I will say something more about that later in these reasons.
12 By email of 20 April 2015, Dr Plint terminated the Practitioner Contract, with effect from 22 May 2015.1
13 Thus, by operation of cl 5.2, the restraint period ends on 22 May 2018.
14 By their solicitors' letter of 12 May 2015, the plaintiffs expressed their concern that Dr Plint intended to commence practising at a location in Australind within the restraint area in cl 5.1. The letter requested that Dr Plint refrain from rendering medical services in breach of cl 5.1 and sought an undertaking that he would not do so.2
15 There was no response to that request.
16 Solicitors for the plaintiffs sent a further letter seeking written undertakings from Dr Plint.3 Again, there was no response.
17 On 26 June 2015, the plaintiffs commenced these proceedings claiming an injunction restraining Dr Plint from rendering medical services within 15 km of 122 Spencer Street Bunbury until 22 May 2018, with immaterial qualifications.
18 By this application, the plaintiffs seek an interlocutory injunction in the same terms until the trial of the action.
19 The role of the second plaintiff in the action is far from clear. Only the first plaintiff was a party to the Sale of Practice Deed, on which the claim is founded.
Interlocutory injunctions - principles
20 I apply the principles recently stated in Bedshed Franchising Pty Ltd v Battersby:4
The principles were explained by Gummow and Hayne JJ in Australian Broadcasting Corporation v O'Neill. Their Honours stated that the relevant principles are those stated in Beecham Group Ltd v Bristol Laboratories Pty Ltd. In Beecham, the two main inquiries were said to be whether the plaintiff had made out a prima facie case and whether the balance of convenience favours the grant of the injunction. The phrase 'prima facie case' does not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed. It is sufficient that the plaintiff show a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending the trial. How strong the probability needs to be depends upon the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the orders the plaintiff seeks. The apparent statement by Lord Diplock in American Cyanamid Co v Ethicon Ltd that, provided the court is satisfied that the plaintiff's claim is not frivolous or vexatious, there will be a serious question to be tried, is not to be followed. The governing consideration is that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory orders sought.
The strength of the plaintiff's case and the balance of convenience are to be considered together. As the apparent strength of the applicant's case diminishes, the balance of convenience moves against the making of an order. Where the balance of convenience weighs strongly in favour of an injunction, a prima facie case that is not particularly strong may nevertheless sustain the granting of an interlocutory injunction.
However, even an overwhelming balance of convenience in favour of an injunction cannot overcome the absence of a prima facie case. In Perron Investments Pty Ltd v Tim Davies Landscaping Pty Ltd Newnes JA (McLure and Pullin JJA agreeing) explained the position in the context of a caveat. In that context, his Honour observed that:
The potential seriousness of the consequences of refusing relief must not, however, distract attention from the obligation that lies on a party seeking to maintain a caveat to show a sufficient likelihood of success to justify in the circumstances the maintenance of the caveat. A party who fails to show any likelihood of success does not overcome that by showing that they would suffer very severe consequences if relief were refused.
The same applies to a party seeking an interlocutory injunction.
The authorities favour the position that the question of adequacy of damages is not an independent requirement, but rather is best considered as part of the balance of convenience.
The grant of an injunction involves balancing the injustice which might be suffered by the defendant if the injunction is granted and the plaintiff later fails at trial, against the injustice which might be suffered by the plaintiff if the injunction is not granted and the plaintiff later succeeds at trial.
While the court takes into account the apparent strength of the plaintiff's case, the court does not undertake a preliminary trial or attempt a forecast of the ultimate result. Moreover, an application for interlocutory injunction is not an occasion to determine contested questions of fact and conflict in affidavit evidence.
21 From this statement of principles it can be seen that the major considerations are whether the first plaintiff has a prima facie case, and where the balance of convenience lies. These two considerations are related. Adequacy of damages is best considered as an element of the assessment of the balance of convenience.
22 I will outline the legal principles relevant to enforceability of clauses in restraint of trade, before turning to the question of whether the first plaintiff has demonstrated a prima facie case.
Restraint of trade clauses - general principles
23 The law's general respect for freedom of contract is qualified by the principle of freedom of trade. The conflict between these two freedoms has been resolved by the adoption of a 'clear rule' by which restraints of trade will be held void unless they can be justified as reasonable.5
24 The party who seeks to enforce a restraint of trade clause in a contract carries the burden of proving that the restraint is reasonable as between the parties.6 In order to be reasonable, the clause must afford no more protection than is reasonably required to protect the interests of the party in whose favour it is imposed.7
25 In order to be valid the restraint must also be reasonable having regard to the interests of the public.8 The onus of showing that a contract in restraint of trade is injurious to the public lies on the party making that allegation.9
26 A restraint may be imposed more readily and more widely upon the vendor of a business in the interests of the purchaser than upon a former employee in the interests of the employer.10
27 The following passage from the judgment of Dixon CJ in Butt v Long11was cited with approval by Malcolm CJ in Cream v Bushcolt.12
A distinction is drawn between the position of the purchaser of the goodwill of a business taking a covenant in restraint of trade from his vendor and the case of the owner of a business taking such a covenant from his servant or apprentice. The goodwill of a business is immune from the danger of the owner exercising his personal knowledge and skill to its detriment and if the purchaser is to take over such goodwill with all its advantages it must in his hands remain similarly immune. Without, therefore, a covenant on the part of the vendor against competition, a purchaser would not get what he is contracting to buy, nor could the vendor give what he is intending to sell. The covenant against competition is therefore reasonable if confined to the area within which it would in all probability enure to the injury of the purchaser – Herbert Morris Ltd v Saxelby [1916] 1 AC 688, 708, 709 (Lord Parker).
28 In considering whether a covenant in restraint of trade is reasonable as between the parties, the amount of the purchase price paid, particularly the amount paid for goodwill, is relevant to the question of reasonableness, but is not decisive.13
29 The validity of the restraint is to be decided as at the date of the contract.14 In assessing what is reasonable, the court may take into account future probabilities that could have been foreseen at that date. Facts that occur afterwards may, but need not, throw light on circumstances existing at the relevant date.15
30 Whether a restraint is reasonable is a question of law for the court to decide. The assessment of the parties to the contract is, therefore, not determinative. However, it is not irrelevant, especially where competent parties contract at arms-length by reference to their commercial assessments and interests.16
31 In assessing the reasonableness of the duration of a restraint in the context of the sale of a business, it has been held that the most important consideration is the time required for severing the relationship between the vendor and those clients who would patronise the business after the sale.17
Is there a prima facie case?
32 It is not in doubt that Dr Plint is rendering medical services in breach of cl 5. So if cl 5 is enforceable, the first plaintiff will succeed at trial. For the reasons that follow, I am satisfied that the first plaintiff has demonstrated a prima facie case that the restraint imposed by cl 5 of the Sale of Practice Deed is reasonable and enforceable.
33 The restraint imposed by cl 5 applies within a radius of 15 km of the Premises in Spencer Street, Bunbury. Spencer Street is in the centre of Bunbury. A reasonable geographic area of restraint is an area in which a competing business would be reasonably accessible by patients of the Practice. I am satisfied that there is a prima facie case that the geographic scope of the restraint imposed by cl 5 is reasonably necessary to protect the first plaintiff's interest in the goodwill of the Practice. I note that the submissions on behalf of the defendant did not press any argument to the contrary.
34 The restraint imposed by cl 5 has a substantial duration. The parties contractually contemplated that Dr Plint would continue to provide further services to the Practice for five years after the first plaintiff acquired it, and for longer unless one of the parties terminated the Practitioner Contract. The effect of cl 5.2(b) is that, in that event, the restraint would operate for eight years (or longer if the Practitioner Contract was not terminated after five years). Within the five year term of the Practitioner Contract, cl 5 would operate to preclude Dr Plint from rendering medical services anywhere within a 15 km radius of the Practice, with the exception of the Practice itself. The contractual scheme contemplated that when the Practitioner Contract was terminated, Dr Plint would be precluded from rendering medical services within a radius of 15 km of the Practice for a further three years.
35 In my view, the first plaintiff has established a serious question to be tried as to the reasonableness of the restraint as regards its duration. As at the date of the Sale of Practice Deed, Dr Plint had been working at the Practice for five years. The parties contractually contemplated that he would continue to work there for at least a further five years. Consequently, by the time the period of a further three years contemplated by cl 5.2(b) arose, Dr Plint would have been working at the Practice for ten years. The parties would have contemplated that he would, by then, have close and strong relationships with his patients. In assessing the reasonableness of the duration of a restraint, a primary focus is the time required for the severing of the relationship between the seller of the business and the clients of that business who would patronise it after its sale.18 The relationship between doctor and patient is a close and confidential one. There is evidence that about half of patients visit their GP no more than three times a year, and almost two thirds visit no more than five times a year.19 In the circumstances there is a seriously arguable case that, tested as at the time the Sale of Practice Deed was entered into, a restraint for three years after Dr Plint ceased providing medical services at the Practice was reasonably necessary to enable the first plaintiff to sever the relationship between Dr Plint and the patients of the Practice who had seen him, and who the first plaintiff would seek to retain as patients of the Practice.
36 Further, some weight can be given to the fact that Dr Plint agreed that the restraint was reasonable and, according to Note 2 to cl 5.1, when doing so took into account matters including patient following and demand for medical services.
37 Dr Plint submits that a restraint operating for eight years is in excess of what is reasonably necessary to protect the first plaintiff's investment in purchasing the goodwill of the Practice. Dr Plint submits that this can be seen by reference to the amount that the first plaintiff has earned as a result of fees paid to Dr Plint in the five years since settlement of the sale of the Practice. Dr Plint suggests that on the evidence it is open to conclude that the 50% service fee paid by Dr Plint to the first plaintiff as the first plaintiff's share of his gross revenue totalled about $1.3 million. Thus, Dr Plint submits, the first plaintiff has recovered more than adequate revenue to protect its purchase of the goodwill of the Practice for $450,000.
38 Several points can be made in response to these submissions. First, the reasonableness of the restraint is to be tested as at the date of the Sale of Practice Deed. Secondly, the parties contractually contemplated that Dr Plint would continue to provide services at the practice for five years after its acquisition by the first plaintiff. For the purposes of an interlocutory injunction application, it is at least reasonably arguable that the first plaintiff was nevertheless entitled to protect its investment in the goodwill of the Practice in the period following Dr Plint ceasing to provide medical services there. Thirdly, more generally, the matters raised on behalf of Dr Plint are matters for argument at trial. The existence of such an argument does not detract from the conclusion that the plaintiffs have established a prima facie case that the restraint imposed by cl 5 is reasonable as between the parties.
39 Dr Plint further submits that the restraint in cl 5 is not enforceable because it is contrary to the public interest. He submits that there is some evidence of a shortage of GPs in Bunbury. There are currently nine GPs at the Practice, and there is capacity for three more, but there have been difficulties in finding GPs to fill those positions.20 Further, Dr Plint points to evidence that he is very popular and sees a large number of patients. Consequently, he submits, it would be contrary to the public interest and the safety of patients to prevent him from providing medical services to the people of the greater Bunbury and Australind region for a period of three years.
40 The onus of showing that a contract in restraint of trade is injurious to the public lies on the party making that allegation.21 Once it has been shown that a restraint clause is reasonable in the restraining party's interest, that onus is not easily discharged.22
41 The evidence currently before the court falls well short of establishing that there are any risks to patients in the Bunbury and Australind region of being unable to access medical help. Further and in any event, whether the restraint in cl 5 is unenforceable on the ground that it is contrary to the public interest is a matter that can be advanced by Dr Plint at the trial of this action. On the material before me, the existence of such an argument does not detract from the conclusion that the first plaintiff has demonstrated a prima facie case that cl 5 is enforceable.
42 Dr Plint's other major contention is that cl 5 is void for uncertainty. He submits that the clause is 'fatally uncertain' in that it is impossible to determine how it operates in light of the further instruments executed by the parties in 2013. Dr Plint's argument is as follows:
(1) Clause 5.2 provides that the restraint period is the period from completion until the later to occur of the fifth anniversary of completion or the third anniversary of the termination of the Practitioner Contract.
(2) 'Completion' is not defined in the Sale of Practice Deed.
(3) Clause 4.1(c) of the Sale of Practice Deed provides that on completion, the first plaintiff must, on behalf of both parties, insert the date of completion in cl 1.1 of the executed Practitioner Contract, the executed Lead Independent Doctor Deed dated 29 April 2010 and the executed Restraint Deed dated 29 April 2010.
(4) None of those three instruments contained a definition of 'completion' or 'date of completion' in cl 1.1, but each defined its 'Commencement Date' as 3 May 2010.
(5) On 29 October 2013, the parties executed two new instruments, namely the Lead Independent Doctor Deed of 29 October 2013 and the Restraint Deed dated 29 October 2013 (the 2013 Instruments). The 2013 Instruments replaced and superseded the corresponding 2010 instruments. Each of the 2013 Instruments stated its 'Commencement Date' was 29 October 2013.
(6) The effect of this is that the date of completion for the purposes of cl 4.1(c) of the Sale of Practice Deed, and thus for cl 5.2 of the Sale of Practice Deed is either 3 May 2010 or 29 October 2013. That gives rise to an irreconcilable uncertainty.
43 I do not consider that there is any merit in this submission. In particular, I do not think there is any force in the last step in Dr Plint's argument. In effect, Dr Plint contends that there was no uncertainty in the Sale of Practice Deed when it was executed in 2010, but it became uncertain when the 2013 instruments were executed. That could only be so if the 2013 Instruments varied or altered the Sale of Practice Deed. There is nothing in the 2013 Instruments that reveals or suggests any intention to affect the Sale of Practice Deed. The 2013 Instruments simply replaced their respective corresponding 2010 instruments.
44 Dr Plint contends that the effect of cl 4.1(c) of the Sale of Practice Deed is that the change in the commencement date of the Lead Independent Doctor Deed and the Restraint Deed means that there is or may be a change in the date of completion of the Sale of Practice Deed. The language of cl 4.1(c) provides no support for that contention. It makes the dates in the other instruments dependent on the date of completion of the Sale of Practice Deed, not vice versa. Moreover, it seems to me that the operation of cl 4.1(c) was spent in May 2010.
45 In my view, the proper construction of cl 5.2 of the Sale of Practice Deed was not affected in any relevant way by the 2013 Instruments. In particular, the proper construction of 'completion' in cl 5.2 was not affected by the 2013 Instruments.
46 Further, the existence of a question of construction is not to be equated with contractual uncertainty rendering a contract or provision void.23
47 For these reasons, in my view Dr Plint's uncertainty argument is without merit. In any event, even if it has some arguable merit, that is a matter for trial and does not detract from the existence of a prima facie case for the purposes of an interlocutory injunction application.
The balance of convenience
48 For the reasons that follow, I find that the balance of convenience distinctly favours the grant of the injunction.
49 Assessing the balance of convenience requires weighing the prejudice and injustice to the plaintiff that would result if an interlocutory injunction was not granted, but the plaintiff ultimately succeeded at trial, against the prejudice and injustice to the defendant that would result if an interlocutory injunction was granted, but the plaintiff failed at trial.
50 The duration of any interlocutory injunction is a consideration to be taken into account in assessing where the balance of convenience lies.
51 At this stage it would seem that the action will be limited in compass, the trial will occupy only a few days, and the action should be able to be progressed to trial within two to three months.
52 Dr Plint's submissions and evidence gave little attention to the balance of convenience. Dr Plint's affidavit does not deal with what he would do if the injunction were granted. He does not say whether he would return to the Practice, work elsewhere outside the restraint area, or not work at all. In these circumstances, it is difficult to assess the prejudice to Dr Plint that would flow from the grant of the injunction if, at trial, the plaintiff were to fail.
53 There is no evidence or submission that Dr Plint would suffer financially if the injunction was granted. He is free to work elsewhere, outside the restraint area. Moreover, the plaintiffs have made it clear that he is welcome to return to work at the Practice. In any event, it is to be remembered that the plaintiffs have given an undertaking as to damages.
54 Dr Plint's evidence is that he understood that at the completion of the five year term of employment required under the Sale of Practice Deed there would be no restraint on him providing medical services at Australind, where he resides.24 There is no evidence as to whether Dr Plint read cl 5.2, and if so how he interpreted it to mean that at the end of his five years of service at the Practice there would be no restraint imposed on him. In any event, Dr Plint's subjective belief as to the meaning of the Sale of Practice Deed is not relevant to its proper construction, and misunderstands the clear effect of cl 5.2.
55 Dr Plint says that, being 57 years of age, he is 'getting older' and does not feel comfortable driving 'long distances' frequently.25 The evidence is that the drive from Australind to Spencer Street, Bunbury is about 15 minutes.26
56 In my view, Dr Plint's preference to avoid driving what he considers long distances to and from work does not weigh heavily in the assessment of the balance of convenience.
57 There is a substantial risk of serious prejudice to the first plaintiff if an interlocutory injunction is not granted, and if at trial cl 5 is found to be valid and enforceable. Dr Plint was in high demand with the patients of the Practice. From 2010 - 2011 onwards he was generally booked for about a week in advance. He was rarely available to see a patient who simply walked in without an appointment. Most of his patients specifically asked to see him.
58 Between 22 June and 25 June 2015, 32 patients requested that their medical records be transferred from the Practice to the Australind practice. The majority of those patients live in Bunbury.27
59 In these circumstances, in my view there is a strong likelihood that if no injunction is granted, many of Dr Plint's former patients at the Practice will see him at the Australind practice. If that occurs and the first plaintiff succeeds at trial there is likely to be significant doubt as to how many patients would return to the Practice.
60 An injunction to restrain a breach of a negative covenant is not usually declined on the grounds that damages are an adequate remedy.28 Reasons why damages are often inadequate include the difficulty of detecting breaches, the difficulty of establishing causation between a breach and any loss of business on the part of the plaintiff, and the difficulty of calculating the quantum of loss.
61 The Sale of Practice Deed contains an agreed damages clause, cl 5.4, providing that each time Dr Plint renders a medical service in breach of cl 5 he must pay to the first plaintiff, as agreed damages, 50% of the gross fee payable to him in respect of that medical service.
62 The presence of that clause is relevant to the assessment of where the balance of convenience lies. In one case, the presence of an identical clause was a major factor in the decision to refuse an interlocutory injunction restraining a breach of a not dissimilar restraint of trade clause.29 In that case, the defendant gave an undertaking that he would keep records, including names and gross fees of all patients to whom he rendered medical services, and that he would not approach or cause anyone to approach any patient of the plaintiff's practice. In this case, Dr Plint offered no such undertakings. In another case, the court granted an interlocutory injunction to restrain breach of an almost identical restraint of trade clause notwithstanding the presence of cl 5.4 as an agreed damages clause.30 In that case, T Forrest J cited with approval a statement by Brereton J in Tullett Prebon (Australia) Pty Ltd v Purcell31to the effect that, although a liquidated damages provision was relevant to the question of inadequacy of damages, it did not make it just for the defendant to escape from his contractual obligations at the price of paying damages; equity favours holding parties to their agreements, rather than allowing them to escape from them at the price of damages.32
63 In this case, Dr Plint's financial arrangements at the Australind practice are not known. Further, and in any event, the first plaintiff may suffer other losses, including the loss of the provision of other ancillary medical services. A patient may follow Dr Plint to the Australind practice but ultimately be unable to see him, and so see another doctor at that practice. Further, there will remain difficulties in proving and quantifying losses arising from the loss of future business of patients who leave the Practice in favour of following Dr Plint to Australind.
64 If an interlocutory injunction is not granted, but an injunction is ultimately granted in favour of the first plaintiff at trial, in my view it will be difficult to undo the resulting prejudice to the first plaintiff. Apart from anything else, there would be considerable uncertainty as to the extent to which patients who had left the Practice and followed Dr Plint to Australind would return to the Practice.
65 For these reasons, in my view the balance of convenience distinctly favours the grant of an injunction.
Conclusion
66 For the reasons that I have given, I granted the first plaintiff an interlocutory injunction in the terms sought by the plaintiffs.
1 Affidavit of Rodney Rudling sworn 25 June 2015, Annexure RR2.
2 Affidavit of Marion Bailey sworn 26 June 2015, Attachment MB14.
3 Affidavit of Marion Bailey sworn 26 June 2015, Attachment MB17.
4Bedshed Franchising Pty Ltd v Battersby [2015] WASC 224 [65] - [71] (footnotes omitted).
5Peters (WA) Ltd v Petersville Ltd [2001] HCA 45; (2001) 205 CLR 126 [37] (Gleeson CJ, Gummow, Kirby and Hayne JJ).
6Lindner v Murdock's Garage (1950) 83 CLR 628, 633 (Latham CJ); McHugh v Australian Jockey Club [2014] FCAFC 45 [4] (Perram J, Griffiths and White JJ agreeing).
7Cream v Bushcolt Pty Ltd [2004] WASCA 82 [20] (Malcolm CJ, Miller and McKechnie JJ agreeing); Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 [8] (McLure JA, Buss JA agreeing); McHugh v Australian Jockey Club Ltd [4] (b)(i).
8Smith v Nomad [6]; McHugh v Australian Jockey Club [4](b)(ii).
9McHugh v Australian Jockey Club [4](e).
10Cream v Bushcolt [24].
11Butt v Long (1953) 88 CLR 476, 486 (Dixon CJ, Webb and Fullagar JJ agreeing).
12Cream v Bushcolt [21].
13Cream v Bushcolt [23].
14Smith v Nomad [7]; McHugh v Australian Jockey Club [4](c).
15McHugh v Australian Jockey Club [4](g) - (h).
16Smith v Nomad [17].
17Cream v Bushcolt [53].
18Cream v Bushcolt [53].
19 Affidavit of Marion Bailey sworn 26 June 2015, Annexure MB13.
20 Affidavit of Rodney Rudling sworn 25 June 2015 [8].
21McHugh v Australian Jockey Club [4](e).
22Angel-Honnibal v Idameneo (No 123) Pty Ltd [2003] NSWCA 263 [27] (Young CJ, McColl J and Forster AJA agreeing).
23Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429, 436 (Barwick CJ, McTiernan, Kitto and Windeyer JJ agreeing); Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101 [30] - [32] (Ipp J, Pidgeon J agreeing).
24 Affidavit of Christopher Plint sworn 30 June 2015 [12].
25 Affidavit of Christopher Plint sworn 30 June 2015 [13].
26 Affidavit of Marion Bailey sworn 26 June 2015 [33].
27 Affidavit of Marion Bailey sworn 26 June 2015 [37].
28Emeco International Pty Ltd v O'Shea [2012] WASC 282 [20] - [21] (Edelman J).
29Idameneo (No 123) Pty Ltd v Butterworth [2013] NSWSC 357.
30Idameneo (No 123) Pty Ltd v Deady [2013] VSC 740.
31Tullett Prebon (Australia)Pty Ltd v Purcell [2008] NSWSC 852 [102].
32Idameneo (No 123) v Deady [26].
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