Public Health Action Limited v Tū Ora Compass Health
[2025] NZHC 2001
•18 July 2025
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2025-485-180
[2025] NZHC 2001
BETWEEN PUBLIC HEALTH ACTION LIMITED
Plaintiff
AND
TŪ ORA COMPASS HEALTH
Defendant
Hearing: 18 June 2025 Appearances:
P W Michalik and M E Hubble for Plaintiff L Clark and C J S Robinson for Defendant
Judgment:
18 July 2025
JUDGMENT OF McQUEEN J
Table of Contents
Para Nos
Introduction [1]
Background [6]
The interim injunction decision [19]
Procedural steps to substantive hearing [26]
PHA’s amended claim and Tū Ora’s defence [27]
PHA’s position [35]
Tū Ora’s position [43]
Analysis [48]
Is the Termination Notice subject to the dispute resolution process in cl 14? [54]
Is the Termination Notice a reasonable exercise of rights in accordance
with cl 3.3? [57]
Conclusion and result [92]
Costs [94]
PUBLIC HEALTH ACTION LTD v TŪ ORA COMPASS HEALTH [2025] NZHC 2001 [18 July 2025]
Introduction
[1] The plaintiff, Public Health Action Ltd (PHA), owns a general medical practice in Paraparaumu known as Mātauranga Medical. PHA provides health services under a contracted provider agreement (the Agreement) with the defendant, Tū Ora Compass Health (Tū Ora), a primary health organisation (PHO).
[2] The Agreement includes a provision (cl 15.3) that provides that either party may terminate the Agreement by giving the other six months’ notice. On 22 January 2025, Tū Ora wrote to PHA giving it six months’ notice of its intention to terminate the Agreement with the effect that it will expire on 25 July 2025 (the Termination Notice).
[3] PHA says the Termination Notice is not valid. PHA argues that cl 3.3 of the Agreement requires the parties to exercise their rights under the Agreement in a reasonable manner and Tū Ora’s decision to terminate the Agreement was not reasonable. Tū Ora disagrees, saying its decision was reasonable.
[4] PHA also says that the dispute resolution mechanisms in cl 14 of the Agreement apply to the dispute about whether the decision to terminate is reasonable. PHA seeks injunctive relief to compel the parties to follow those mechanisms. Tū Ora disagrees and says that such relief is not available in the circumstances.
[5]For the reasons below, I dismiss PHA’s claim.
Background
[6] As I will explain in more detail later in the judgment, PHA applied for interim relief, but those applications were dismissed by Boldt J.1 It is convenient here to adopt much of the description of the background to this matter from His Honour’s judgment.
1 Public Health Action Ltd v Tū Ora Compass Health [2025] NZHC 1351.
[7] Mātauranga Medical is a general medical practice in Paraparaumu. It is owned and operated by PHA. PHA’s sole director is Dr Karl Geiringer, who also holds 68 per cent of PHA’s shares.
[8] Mātauranga Medical was established in 2021. It was set up at short notice because an existing Paraparaumu medical practice, Natural Healing Raumati (Natural Healing), was unwilling to conform with the COVID-19 mandates then in force and could not remain open. Mātauranga Medical is part-funded by Tū Ora.
[9] Tū Ora is contracted by Health New Zealand | Te Whatu Ora (HNZ) to deliver subsidised primary health care services throughout the Wellington region. It is one of several Wellington-region PHOs. HNZ funds PHOs, and PHOs then provide subsidies and other services to general practices. In effect, a PHO operates as a bridge between HNZ and individual medical practices. While they may not realise it, patients who are enrolled with a medical practice are also registered with a PHO. If something happens which affects a practice’s ability to provide services to its patients, it is the PHO’s responsibility to ensure the patients have access to ongoing care.
[10] Tū Ora had a contracted provider agreement (sometimes called a Back-to-Back or B2B agreement) with Natural Healing. In November 2021, PHA entered into a Deed of Novation with the practitioner who had been running Natural Healing, meaning PHA assumed Natural Healing’s rights and obligations under the Agreement with Tū Ora.
[11] Since he established Mātauranga Medical, Dr Geiringer has sought to run a health centre which funds its services differently from a conventional general practice. The practice is nurse-led and most patient consultations are with a registered nurse, rather than with Dr Geiringer personally. It has adopted other innovative funding initiatives, such as a membership system, by which patients pay $6 a week and then pay no nurse-led consultation fees, repeat prescription fees or referral fees.
[12] Many of Mātauranga Medical’s patients are vulnerable or from low socio- economic backgrounds, and the practice is designed to reduce cost barriers to primary care. At the beginning of March 2025, 1430 patients were enrolled with the practice.
[13] It is apparent that the relationship between PHA and Tū Ora has not been harmonious. I discuss this in greater detail later in the judgment. For present purposes, I record that on 19 December 2024, an administrator at Mātauranga Medical contacted Tū Ora alleging the practice was unsafe. Tū Ora then issued PHA with a breach notice. On 22 January 2025, Tū Ora issued the Termination Notice.
[14] In the covering email which attached the Termination Notice, Tū Ora’s Chief Executive Officer, Ms Justine Thorpe, indicated she would be happy to meet with Dr Geiringer but would “not be getting into discussions about the notice”. Ms Thorpe offered to discuss how Tū Ora could help Dr Geiringer “to look at the options you have, i.e. another PHO, and also the communication that will need to occur with patients”.
[15] Since January 2025, Dr Geiringer has been attempting to find another PHO which is willing to enter into a contracted provider agreement with PHA. Some progress appears to have been made on such a new arrangement, but to the Court’s knowledge, no contract has been formally concluded.2 If the Agreement expires and PHA cannot secure another source of public funding, it will be unable to provide subsidised care to its patients.
[16] In March 2025, PHA filed proceedings which challenged the validity of the Termination Notice. PHA initially sought an interim injunction on a without notice basis to prevent Tū Ora from contacting Mātauranga Medical’s patients until the underlying dispute regarding the termination was resolved through the dispute resolution procedure in the Agreement. Tū Ora agreed to refrain from contacting Mātauranga Medical’s patients until PHA’s injunction application was resolved.
[17] Various procedural steps followed, leading to the hearing on 20 May 2025 before Boldt J of what was by then two applications by PHA for interim relief. PHA sought injunctions that would restrain Tū Ora from communicating with Mātauranga Medical’s patients until the parties’ underlying dispute is resolved “by the means
2 After the hearing before me, counsel for PHA provided a letter to the Court which shows that Health New Zealand has approved an application by PHA to transfer to another PHO subject to a transition plan which is yet to be approved. The parties’ position is that the letter does not affect the need for a determination of the matters before the Court.
provided in the [Agreement]” and to injunct Tū Ora from acting “in any way” on the Termination Notice “until the termination is resolved by the means provided in the Agreement, or [PHA] succeeds in obtaining an agreement with another [PHO] …”.
[18] Given the way this matter proceeded before me, it is helpful now to set out in some detail the decision of Boldt J.
The interim injunction decision
[19] Justice Boldt first set out the background to the dispute. His Honour agreed with counsel for PHA that an amended statement of claim, setting out PHA’s contention that the Termination Notice was invalid, was an urgent next step in the substantive proceeding. However, Boldt J considered that for the purpose of the interim injunction application, the basis of PHA’s challenge to the termination was clear:
(a)First, PHA contends the Agreement, properly construed, required Tū Ora to articulate the basis of its decision to terminate the agreement. It argues Tū Ora was then obliged to try to resolve the underlying dispute before it had recourse to cl 15.3. In effect, PHA argues the “without cause” termination power in cl 15.3 is subject to cl 14, which sets out how disputes between the parties should be addressed.
(b)Second, PHA argues that the Agreement provides that all decisions taken under the agreement must be made in a reasonable manner and that Tū Ora’s decision to terminate its relationship with PHA was unreasonable.
[20] Justice Boldt then set out the three clauses in the Agreement that had assumed particular importance in argument, namely cls 3, 14 and 15. They relevantly provide:
3. Our obligations and how we will work together
…
3.3 We agree to carry out the roles and responsibilities under this Agreement in a collaborative and co-operative way, and to exercise our rights in a reasonable manner.
14.Dispute resolution
14.1Court or arbitration proceedings: We agree not to commence any court or arbitration proceedings relating to any dispute arising out of this Agreement until we have both complied with the requirements set out in this clause, unless either party considers that proceedings are necessary to preserve its rights.
14.2Resolution by agreement: If a dispute arises under this Agreement:
(a)the party claiming that dispute exists must give notice to the other party of the nature of the dispute; and
(b)we will each act in good faith and use our best endeavours to resolve the dispute by agreement.
14.3Mediation: If the dispute is not settled by agreement within 21 Business Days of receipt of the notice of dispute, unless we agree otherwise in writing, we will participate in mediation…
…
14.4Arbitration: If the dispute is not settled by agreement within 30 Business Days of the appointment of the mediator, unless we agree otherwise in writing, the dispute will be referred to arbitration…
…
14.6 Exceptions: This clause does not apply to:
…
(b) a variation of this Agreement in accordance with clause 2.4 or termination of this Agreement in accordance with clauses 15.1, 15.4(a), 15.4(b), or 15.4(e);
…
15.Termination
15.1If the PHO Services Agreement is terminated for any reason, we agree that this Agreement terminates on the same day as the expiry or termination of the PHO Services Agreement.
…
15.3Either of us may terminate this Agreement by giving the other 6 months notice.
15.4The PHO may terminate this Agreement immediately by notice to the Contracted Provider (or their agent) if:
(a)the PHO is required to terminate this Agreement by the DHB in accordance with the provisions of the PHO Services Agreement;
(b)the Contracted Provider has failed to perform a material obligation set out in this Agreement;
(c)the Contracted Provider has claimed, and been paid, a payment in breach of this Agreement;
(d)the Contracted Provider has failed to perform an obligation in this Agreement other than an obligation described in paragraph
(b) or (c), and the failure is capable of being rectified, or, if it is capable of being rectified, is not rectified within 30 days of the PHO giving the Contracted Provider notice of the failure; or
(e)an Insolvency Event occurs; or
15.5The Contracted Provider may terminate this Agreement immediately by notice to the PHO if:
(a)the PHO has failed to perform a material obligation set out in this Agreement;
(b)the PHO has failed to perform an obligation in this Agreement that is not a material obligation, and the failure is incapable of being rectified, or, if it is capable of being rectified, is not rectified within 30 days of the Contracted Provider giving the PHO notice of the failure; or
(c)an Insolvency Event occurs.
[21] Justice Boldt recorded that PHA’s principal submission was that cl 15.3 may only be exercised if PHA and Tū Ora have first exhausted the dispute resolution mechanisms in cl 14. His Honour noted that the key to PHA’s submission was cl 14.6(b), which provides that cl 14 does not apply to some, clearly specified, terminations under cl 15, implying it does apply to the rest—and cl 15.3 is not among the provisions excluded by cl 14.6(b). PHA argued that this is a case where articulation of the exceptions proves the existence of the rule.
[22] Justice Boldt concluded that cl 15.3 could not sensibly be read in the manner proposed by PHA. His Honour provided the following analysis:
[26] … I agree with Ms Clark that there appears little rhyme or reason to the grounds in cl 15.4 which may be invoked without reference to the dispute resolution provisions. For example, there appears no reason to allow the provider to insist upon dispute resolution if it is accused of claiming and receiving a payment in breach of the agreement (cl 15.4(c)) but not if the PHO alleges it has failed to perform a material obligation under the agreement (cl 15.4(b)). Ms Clark described cl 14.6(b) as an “untidy and unhelpful” provision, and it is hard to disagree.
[27] In any event, all the grounds for termination listed in cl 15.4 represent examples for termination for cause, and some – especially cls 15.4(b), (c) and
(d) – imply the existence of an underlying dispute. Some are then made subject to the dispute resolution provisions, while others are not.
[28] By contrast, termination without cause under cl 15.3 does not imply the existence of a dispute. That clause gives both parties the power to bring the relationship to an end for any reason. As is discussed in more detail below, cl 15.3 must be exercised in a reasonable manner. Nonetheless, there are any number of reasons why a party might decide to terminate the contract. Providers may decide to retire, move to another region, leave general practice or decide another PHO suits their requirements better. None of those reasons implies a dispute, and it would make little sense to hold that the PHO, no matter how disappointed it might be, has the right to challenge the decision to terminate by insisting on recourse to cl 14.
[29] The same analysis applies in reverse. There are many reasons why a PHO might decide to end its relationship with a provider. It must act reasonably in doing so, but termination under cl 15.3 does not necessarily imply the parties are in dispute. Indeed, Ms Clark insists there is no particular dispute here. While the final straw appears to have been (heavily contested) allegations about staffing levels, Ms Clark said that was not why Tū Ora chose to end the agreement. Though there is no direct evidence on this point yet, it appears Tū Ora will simply say it considered its relationship with the practice had become unsustainable and that it no longer wanted the agreement to continue.
[30] I asked Ms Hubble what “dispute” Tū Ora should have referred for resolution before it decided to terminate the agreement. She replied the dispute arose from the decision to terminate the agreement. Even leaving aside the circularity of that analysis, it highlights why cl 14 is not an appropriate vehicle by which a decision to invoke cl 15.3 can be challenged. In effect, it would involve requiring Tū Ora to set out the exact basis of its unhappiness in the relationship, characterising the areas of dissatisfaction as a “dispute”, then utilising cl 14 in an attempt to resolve them. A requirement that Tū Ora provide a detailed account of the reasons it wishes to end the relationship, then engage in dispute resolution, is incompatible with a “no cause” termination provision like cl 15.3.
[23] Justice Boldt went on to observe that despite the breadth of its wording, cl 15.3 is not as unfettered as many provisions which permit termination without cause. His Honour referred to cl 3.3 of the Agreement as a good example. Clause 3.3 expressly binds both parties to exercise their rights under the agreement in a reasonable manner. Tū Ora accepted before Boldt J that cl 3.3 qualifies the otherwise absolute right to terminate the contract under cl 15.3. Boldt J then said:
[33] The problem for Tū Ora, at least as the evidence stands, is that it has not attempted to explain its decision to terminate the agreement. That was a deliberate choice on Tū Ora’s part; it apprehended, whatever justification it advanced, that Dr Geiringer would take issue with it, forcing it to show cause when exercising a power that does not require any reason to be given. While
that approach may pass muster in the absence of a clause such as cl 3.3,3 until Tū Ora explains the termination it risks the finding that it acted unreasonably.
[34] The reasonableness requirement does not set a high bar. It will be very rare for the Court to intervene when an organisation like Tū Ora exercises a right the agreement expressly grants it. The power to terminate is intended to be a broad and flexible one, which recognises the parties may re-evaluate their contractual relationships as time goes by. The six-month notice period is designed to ensure the other party is not taken by surprise and has time to put new arrangements in place.
[35] Tū Ora need not explain its assessment of the relationship between it and PHA in granular detail. Provided it had a rational basis for its decision, acted in good faith, and had proper regard to the interests of Mātauranga Medical’s patients, it is unlikely PHA will be able to characterise the decision as unreasonable. As long as the decision was one a reasonable and responsible PHO could make, it is unlikely the termination will breach cl 3.3.
[36] It would also be advisable for Tū Ora to show it has made arrangements to ensure Mātauranga Medical’s patients will be able to transfer to other nearby practices with minimal disruption, and that none will be left without a suitable provider. As already noted, Mātauranga Medical’s patients are registered with Tū Ora. An obvious factor in assessing a decision that may affect the ongoing viability of a general practice is the steps Tū Ora has taken to ensure continuity of care.
[37] In any event, despite the breadth of the discretion in cl 15.3 there is at present an unanswered allegation that Tū Ora acted unreasonably when it terminated the agreement. I am satisfied there is a serious question to be tried.
[24] Justice Boldt said that the balance of convenience analysis had been simplified by the availability of an urgent fixture “for a ruling about the validity of the termination before the notice period expires on 25 July [2025]”. His Honour concluded that there was no longer any reason for Tū Ora to be prohibited from communicating with PHA’s patients and accordingly Tū Ora should be released from its undertaking not to do so. Justice Boldt also said that there was no need to determine the second injunction (that Tū Ora should be compelled to continue funding PHA after 25 July 2025 if the current proceedings are not resolved) in light of the availability of a prompt fixture (set down for 18 June 2025).
[25] Standing back and considering the case in the round, Boldt J concluded that the overall interests of justice favoured dismissing the applications.
3 Though it would not necessarily do so—as the Court of Appeal observed in Bank of New Zealand v Christian Church Community Trust [2024] NZCA 645, [2024] 3 NZLR 856 at [11], the law governing the introduction of implied limits to discretionary powers is still developing and remains uncertain.
Procedural steps to substantive hearing
[26] Following the delivery of Boldt J’s decision, timetable directions to the substantive hearing were made by consent. This allowed for amended pleadings to be filed and for Tū Ora to file further evidence (which was provided by Ms Thorpe) and for PHA to file evidence in reply (which was provided by Dr Geiringer), all of which occurred.
PHA’s amended claim and Tū Ora’s defence
[27]As anticipated, PHA filed an amended statement of claim dated 29 May 2025.
[28] The claim pleads that on 19 December 2024, the PHA practice manager called Tū Ora and made allegations about Dr Geiringer’s absence from the practice and that the practice was unsafe. Without contacting the practice or Dr Geiringer, Tū Ora sent PHA a breach notice under the Agreement, based on the allegations (the December 2024 breach notice). PHA responded to the allegations on 20 December 2024, stating that they were incorrect. Tū Ora wrongly said in an email dated 24 December 2024 that no response to the breach notice had been received and PHA pointed out its earlier communication. When Tū Ora visited PHA on 24 December 2024, the practice manager made further allegations about how often Dr Geiringer was at the practice. Tū Ora sent the Termination Notice on 22 January 2025, purporting to give notice under cl 15.3.
[29] Correspondence between lawyers for the parties ensued. By letter dated 31 January 2025, PHA gave notice of a dispute under the Agreement in relation to Tū Ora’s actions since 19 December 2024 as a breach of the Agreement, including the issue of the December 2024 breach notice and the Termination Notice. PHA says that the Termination Notice is invalid, and that the Agreement required the parties to attempt in good faith to resolve the dispute and then follow the other resolution processes as necessary.
[30] The claim pleads that in January 2025, the Government published a document entitled “PHO Geographical Expansion Decision Making Framework” which sets out the framework that HNZ applies to making decisions to approve applications by a
PHO to fund a medical practice in a new region, over and above the region in which the PHO already provides funding. The main aim of this framework is to limit general practice movement between PHOs, unless significant benefits to the local population can be demonstrated, while the future role and function of PHOs is still being considered and developed.
[31] While not pleading causes of action as such, the following paragraphs of the amended statement of claim identify PHA’s concerns:
PHA’s Rights to Demand [Tū Ora] Act Reasonably
46.PHA has diligently sought funding from an alternative PHO, but since TOC has had an effective monopoly as the PHO accepted as the sole regional funder for “ordinary” general practices in the Kāpiti region, for PHA to contract with a new PHO requires that new PHO to obtain approval to fund practices in a new region under the “PHO Geographical Expansion Decision Making Framework”, which is expressly aimed at limiting geographical expansion by existing PHOs unless there is a demonstrated unmet local need.
47.As a result of the “PHO Geographical Expansion Decision Making Framework” it is reasonable to expect that entering into a contract with a new PHO to replace TOC under the Contracted Provider Agreement could well take longer than six months, although at the time the terms and conditions of the Contracted Provider Agreement were established, the parties to such agreements would have expected that six months would be ample time to accommodate such a change.
48.In May 2025, after intervention of the Ministry of Health, Health New Zealand – Te Whatu Ora policy on geographical locations of PHOs, as recorded in the PHO Geographical Expansion Decision Making Framework, was loosened again, reopening the possibility for PHOs to apply to fund practices in geographical areas where they do not currently operate.
49.Clause 3.3 of the Contracted Provider Agreement obliges TOC to exercise its powers under the contract reasonably.
50.It is an unreasonable exercise of TOC’s contractual power to terminate under clause 15.3 for TOC to adhere strictly to the six month time limit provided in clause 15.3 under these circumstances, since cancellation without an alternative PHO in place will adversely affect PHA, and the 1400 patients enrolled with PHA’s practice, depriving PHA of the benefit of a patient list worth in excess of the $80,000 at which TOC valued it on transfer to PHA, and on the faith of which PHA has invested significantly in the Mātauranga Medical practice. Applying to Government to make an exception to its policy of geographical restriction and authorise an out-of-area PHO to fund a practice is a lengthy process of indeterminate duration, and a fixed end to the PHO funding of the practice at six months causes
unnecessary and avoidable harm to the interests of patients of the practice if that period ends before a new PHO is authorised to take over. Such rigidity is of no benefit to TOC, which also suffers no loss if required to continue to pass on Government funding for more than the strictly contractual six months.
51.TOC has raised patently irrational concerns over standards of clinical care, that it has alleged arise from the removal of a convicted dishonesty offender from her non-clinical role as practice manager.
52.It is unreasonable under the circumstances for TOC to exercise its powers to cancel the contract under clause 15.3, as it has done so apparently to enable it to deny PHA the right to raise a dispute against it under the Contracted Provider Agreement, and in order to evade its obligations to enter into Alternative Dispute Resolution in respect of that dispute.
53.Given TOC has not provided reasons for its termination, PHA is at a disadvantage in disputing the validity of that termination, having to infer from other conduct and communications as to what TOC’s reasons are, and at this stage infers:
a.That TOC has decided to terminate in retaliation for PHA attempting to correct inaccuracies in the alleged default notice; and/or
b.TOC has decided to terminate to evade its obligations to enter into dispute resolution processes with PHA to resolve the notified dispute with PHA over the matters raised in its default notice, and avoid risking the determination of the matters raised in its default notice against it; and/or
c.TOC has decided to terminate to evade the possibility that PHA might raise a dispute with TOC that would resolve the issues about whether or not PHA’s practice and charging model complies with the PHO Services Agreement, and avoid risking the determination of the matters it has raised in correspondence on that issue against it in a future dispute.
PHA reserves the right to draw other inferences, and/or make other objections or arguments about TOC’s motivation, insofar as more information comes to hand about TOC’s reasons, and/or those reasons are disclosed.
Enforcement of Alternative Dispute Resolution Clauses
54.PHA has a right to require TOC to engage in Alternative Dispute Resolution under the Contracted Provider Agreement, to resolve its dispute.
55.In breach of contract, TOC has failed and refused to engage in the Alternative Dispute Resolution procedures prescribed by the Contracted Provider Agreement with respect to this dispute, taking the position that it is not required to give reasons for its exercise of its clause 15.3 right to terminate on notice.
56.Under Articles 8 and 9 of Schedule 1 to the Arbitration Act 1996, PHA is entitled to ask the Court for interim measures to protect its position ahead of Arbitration proceedings to determine the substance of its dispute with TOC, and has so asked.
57.Under Article 8 of Schedule 1 to the Arbitration Act 1996, PHA is entitled to ask the Court to refer the substance of its dispute with TOC to Arbitration, in terms of the ADR provisions of the Contracted Provider Agreement, and does so ask.
Disputed Matters
58.TOC is obliged to give reasons, and to respond in good faith to the existing dispute, which is:
a.as set out in paragraphs 17 and 18 of the Vida Law letter dated 31 January 2025, and
b.as to whether PHA has failed to comply with Minimum Requirements established by the PHO Services Agreement, as alleged in Dentons’ letter dated 4 March 2025; and
c.as to whether, under the circumstances, TOC’s notice to terminate the Contracted Provider Agreement is valid and effective; and
d.if the notice is valid and effective, what notice period should reasonably have been given, under the circumstances; and
e.if the notice is valid and effective, what communications should be made to patients about the termination, by whom and when?
59.TOC is also obliged to respond in good faith to any further dispute that may arise once its reasons for termination under clause 15.3 are disclosed, including:
a.Undertaking good faith discussions about those reasons;
b.Mediating if the good faith discussions does not result in agreement;
c.Arbitrating, if the mediation does not result in settlement.
[32]The relief sought by PHA, alongside costs, is as follows:
A:An order of injunction requiring the defendant to state the reasons that it has exercised its clause 15.3 right to terminate the Contracted Provider Agreement; and
B: An order of injunction requiring the defendant to accept any dispute notice that it may receive from the plaintiff with respect to that termination, once its reasons are stated; and
C.An order of injunction requiring the defendant to engage in good faith in the dispute resolution process as defined under the Contracted Provider Agreement, with respect to the existing dispute, and any further dispute that it may be notified of, once it has given its reasons for exercising its right to terminate under clause 15.3, and staying the present proceedings under Articles 8 and 9 of schedule 1 to the Arbitration Act 1996; and
D.An order of injunction that until the dispute resolution process is completed, and the parties’ disputes determined,
a.the defendant is not entitled to cancel the Contracted Provider Agreement, but must continue to fund the medical services provided by the plaintiff in accordance with the Contracted Provider Agreement, and such other funding mechanisms as may apply; and
b.the defendant shall not communicate with PHA’s patients about the matters that are the subject of this dispute without either the consent in writing of the plaintiff, or an order permitting such communication from the Arbitrator hearing the parties’ dispute.
[33] Counsel for PHA, Mr Michalik, accepts that Tū Ora has provided its reasons for terminating the contract—a matter addressed in the affidavit from Ms Thorpe filed after the amended statement of claim—so that the order sought to provide reasons is no longer required.
[34] Tū Ora has filed a statement of defence to the amended statement of claim but it is unnecessary to set it out in detail here, other than to note that on critical points, Tū Ora does not accept the claim advanced.
PHA’s position
[35]Mr Michalik articulated the issue for resolution before me as follows:
… In a nutshell, that is whether the 22 January 2025 termination notice given by [Tū Ora] to end the [Agreement] on 25 July 2025 was a breach of [Tū Ora’s] obligations under cl 3.3 of the [Agreement], to “carry out the roles and responsibilities under this Agreement in a collaborative and co-operative way, and to exercise our rights in a reasonable manner”.
[36] Mr Michalik submits that Tū Ora gave the Termination Notice because it sought to evade its obligations under cl 3.3. He argues that cl 14 commits the parties to collaborative dispute resolution processes, including good faith attempts to resolve the dispute by agreement and thus it was bad faith on the part of Tū Ora to give a
cl 15.3 notice and rely on that notice as a reason not to engage in the dispute resolution procedure about the December 2024 breach notice.
[37] Mr Michalik says the fact that the six-month timeframe began to run under the Termination Notice does not excuse Tū Ora from refusing to engage in the dispute resolution procedures under cl 14.
[38] On this basis, PHA seeks relief of an injunctive nature in support of compulsory reference to dispute resolution processes. Mr Michalik relies on Zurich Australian Insurance Ltd v Cognition Education Limited.4 He submits that PHA has not sought substantive relief on the basis that it is only entitled to seek the Court’s assistance by way of injunctive relief, to hold the position, while the parties proceed through their agreed dispute resolution procedures.
[39] Nonetheless, Mr Michalik acknowledges that the interim injunction decision contemplates that this Court would determine the issue of whether or not the Termination Notice was valid. Because of this, PHA also, in the alternative, seeks leave to amend its statement of claim to seek a declaration that the Termination Notice is invalid because it is an unreasonable exercise of Tū Ora’s right to terminate on six months’ notice in breach of its obligations under cl 3.3.
[40] Mr Michalik submits that the discussion by Boldt J of the test for reasonableness is not an exclusive one. So, while he accepts that a reasonable decision would have a rational basis, require Tū Ora to act in good faith and have proper regard to the interests of Mātauranga Medical’s patients in order to ensure continuity of care, beyond that, assessment of reasonableness is context specific. Mr Michalik says here cl 3.3 requires more. The reasonableness of the decision must be assessed objectively not subjectively. The decision must be assessed against what the parties contemplated when they entered the contract and take into account the consequences for each party in the exercise of the termination power under the Agreement.
4 Zurich Australian Insurance Ltd v Cognition Education Ltd [2014] NZSC 188, [2015] 1 NZLR 383.
[41] Mr Michalik acknowledges that Tū Ora has an interest in being able to cancel but says this is not the full commercial freedom of private contracting parties given PHA and Tū Ora are part of a public system for the delivery of primary health care services, acting within a regulated environment. He emphasises that at the time the Termination Notice was given, this environment included a moratorium on granting PHO approval to fund primary health care practices in areas in which those PHOs were not already operating (under the PHO geographical expansion decision-making framework). Mr Michalik accepts that six months would normally be long enough for a practice such as PHA to find another PHO (even if it meant going to an established PHO operating in another geographical area) but this was not the case while the moratorium was in place. As a result, Mr Michalik submits that Tū Ora’s termination of the Agreement would have vastly disproportionate adverse consequences bearing in mind the loss of PHA’s investment in Mātauranga Medical compared to the harm or loss Tū Ora would suffer if it was forced to continue the relationship beyond the six-month notice period.
[42] Mr Michalik says that he would accept that accommodating Tū Ora’s subjective preference to cancel is possible, and could be regarded as reasonable, if such a decision was taken with careful safeguards to ensure that no one with an interest in the decision was adversely affected. On this basis, Mr Michalik submits that the injunctive relief sought requiring Tū Ora to continue to fund the medical services provided by PHA under the Agreement until the parties’ dispute is determined is appropriate.
Tū Ora’s position
[43] Counsel for Tū Ora, Ms Clark, says that the effect of the interim injunction decision was to crystalise the issues to be determined between the parties. She says that this is consistent with the way PHA has framed its concerns from the beginning. Thus, Tū Ora says that the matter for determination before this Court is whether termination of the Agreement was lawful and reasonable.
[44] Ms Clark rejects any suggestion that this proceeding is properly dealing with the December 2024 breach notice issued by Tū Ora. Ms Clark says that notice was
overtaken by Tū Ora’s issue of the Termination Notice, thus superseding whatever other issues exist between the parties. She says that the question of the validity of the Termination Notice is squarely before this Court. PHA is legally represented and being heard on the issue and has taken no steps to stay the proceeding pending completion of dispute resolution processes. Ms Clark says that in these circumstances, PHA has submitted to the jurisdiction of the High Court to determine the dispute. She argues Zurich Australian Insurance Ltd v Cognition Education Limited therefore does not assist here, noting also that arbitration is far away given the prior steps provided for in cl 14.
[45] As for the reasonableness test to be applied, Ms Clark submits that Boldt J was correct in his identification of the matters to be considered in assessing reasonableness. This emphasises that Tū Ora need not explain its assessment of the relationship between it and PHA in granular detail, rather it will be sufficient for it to have a rational basis for its decision, to have acted in good faith and have had proper regard to the interests of Mātauranga Medical’s patients. Ms Clark submits that as Boldt J suggested, as long as a decision was one of reasonable and responsible PHO could make, a termination would be unlikely to breach cl 3.3. Ms Clark accepts that Boldt J was addressing the appropriate approach to reasonableness in the context of considering whether there was a serious question to be tried under the interim injunction test but submits His Honour nonetheless correctly identified the test.
[46] Ms Clark rejects PHA’s suggestion that the reasonableness test must meet an objective threshold. Ms Clark does not accept that the consequences of terminating the contract for parties must be considered nor that the context of the moratorium on transfers outside of geographical areas is relevant. Ms Clark says that the communications between the parties that are before the Court (which are only a selection) tell the tale of the relationship between Tū Ora and PHA, through Dr Geiringer, and demonstrate why Tū Ora came to the view that it had had enough. There was not any single reason for its decision, but overall, the relationship had run its course.
[47] Ms Clark says in the context of the strained history of the relationship it was a rational conclusion for Ms Thorpe, as Chief Executive Officer of Tū Ora, to conclude
that it no longer made sense to remain in a contractual relationship with PHA. Ms Clark says Tū Ora acted in good faith, providing the notice in writing, complying with the necessary six-month notice period, and offering to assist PHA if and when it entered a new funding arrangement with another PHO, bearing in mind the implications of the decision on patients. Ms Clark submits that the actions taken by Tū Ora are rational and reasonable, and those of a reasonable and responsible PHO.
Analysis
[48] While this case has perhaps taken a slightly unusual path, I am satisfied that it is appropriate for the Court to determine the key issue between the parties, which is whether the Termination Notice issued by Tū Ora to PHA is valid.
[49] The matters addressed by Boldt J in the interim injunction decision were questions the Judge needed to consider for the purpose of whether an interim injunction should be made and not for final determination of the issues. Nonetheless, it is recorded in Boldt J’s decision that counsel for PHA informed the Court that an amended statement of claim would be filed that squarely addressed the question of whether the Termination Notice was valid. The amended statement of claim takes a rather circuitous route to this end by relying on PHA’s own notice of dispute given under the Agreement relating to Tū Ora’s actions from 19 December 2024 onwards, alleging that they amount to a breach of the Agreement (and including the December 2024 breach notice and the Termination Notice). And, as already mentioned, PHA also seeks, in the alternative, leave to amend its statement of claim to seek a declaration that the Termination Notice is invalid because it is an unreasonable exercise of Tū Ora’s right to terminate on six months’ notice in breach of its obligations under cl 3.3.
[50] PHA is primarily advancing a claim that the parties should proceed through the dispute resolution process under cl 14 of the Agreement. This reflects its desire to obtain more time to allow PHA to reach a satisfactory arrangement with a new funder without losing access to its funding from Tū Ora, as was recognised by counsel for PHA in their arguments both before Boldt J and at the hearing before me. The amended statement of claim pleads that it is unreasonable for Tū Ora to seek to cancel the
Agreement when it is said to have done so to evade its obligations to enter into dispute resolution processes. While the claim asserts that PHA is at a disadvantage in disputing the validity of the Termination Notice as Tū Ora has not provided reasons, by the time of the hearing before me, Tū Ora’s reasons had been provided through the further affidavit of Ms Thorpe (as had been anticipated in Boldt J’s judgment and in the timetabling directions made to hearing). PHA’s alternative position is to seek a declaration that Tū Ora’s Termination Notice is unreasonable and therefore invalid.
[51] I accept Ms Clark’s submission that the practical effect of PHA’s actions in this proceeding amount to its submission to the jurisdiction of the High Court for resolution of this dispute. To avoid this, it would have been necessary for PHA to seek a stay of the proceeding and not engage with the merits of the question about the validity of the Termination Notice, as it has done so through its application for a declaration that the Termination Notice is invalid, supported by the provision of further evidence from Dr Geiringer and both appearing and making submissions at the substantive hearing before me.
[52] Accordingly, the question before me for determination is whether the Termination Notice is valid. There are two aspects to consider. The first relates to whether the issue of a cl 15.3 default termination notice can be challenged as a dispute to then be resolved in accordance with the dispute resolution process set out in cl 14. The second relates to challenging a cl 15.3 default termination notice on the basis that the notice does not comply with the requirement in cl 3.3 that the parties must exercise their rights under the Agreement in a reasonable manner.
[53] PHA also submits that Tū Ora gave the Termination Notice because it sought to evade its obligation under cl 3.3 to perform its roles and responsibilities under the Agreement with collaboration and cooperation. Tū Ora rejects this argument. Ms Clark also says this point was not advanced at the interim injunction hearing and notes there is no pleading in relation to it. She further submits that such obligations as to role and responsibilities do not relate to exercising rights under the Agreement. I accept this is the case and accordingly disregard PHA’s submission in the circumstances.
Is the Termination Notice subject to the dispute resolution process in cl 14?
[54] It is well-established that commercial contracts commonly include an express power for parties to terminate the contract with or without cause.5 Clause 15.3 of the Agreement expressly provides both parties with the power to bring the relationship to an end for any reason.6 This is a termination without cause clause and does not imply the existence of a dispute before it can be invoked.
[55] As I have already set out, Justice Boldt reasoned in relation to the application of cl 14 to the issue of a termination notice under cl 15.3 that cl 14 is not an appropriate vehicle by which a decision to invoke cl 15.3 can be challenged. In effect, it would involve requiring Tū Ora to set out the exact basis of its unhappiness in the relationship, characterising the areas of dissatisfaction as a “dispute”, then utilising cl 14 in an attempt to resolve them. A requirement that Tū Ora provide a detailed account of the reasons it wishes to end the relationship, then engage in dispute resolution, is incompatible with a “no cause” termination provision like cl 15.3.
[56] I agree with that reasoning. However, Mr Michalik contends that because Tū Ora accepts that the Termination Notice is subject to the reasonableness requirement in cl 3.3, any dispute over reasonableness, as exists here, should be subject to the dispute resolution process in cl 14 because it is “a dispute arising out of [the] Agreement”, to use the language of cl 14. He says this is so despite Tū Ora having used the default termination provision. This illustrates some of the real difficulties with the drafting of the Agreement. But for the reasons I have just discussed, I am satisfied that in this particular case, the dispute between the parties is appropriately determined by this Court. Accordingly, I do not need to reach a more general conclusion about this issue.
Is the Termination Notice a reasonable exercise of rights in accordance with cl 3.3?
[57] Turning to the key issue, I take the view that the reasonableness requirement does not set a high bar, for the reasons given by Boldt J. The power to terminate is
5 Barry Allan and others Gault on Commercial Law (looseleaf ed, Thomson Reuters) at [C11.02].
6 See Bank of New Zealand v Christian Church Community Trust, above n 3, at [103] and [132]– [134].
intended to be a broad and flexible one, recognising that the parties may re-evaluate their contractual relationships as time goes by. The purpose of the six-month notice period is to ensure the other party is not taken by surprise and has time to put new arrangements in place.
[58] Given this, I do not consider that reasonableness in this context must be assessed objectively in the manner advanced by PHA. For example, there is some criticism of Tū Ora for not having filed objective evidence (by which I understand is meant independent evidence) to establish matters such as a comparison between the amount of Tū Ora resource taken to manage the relationship with PHA with the resource taken to manage another general practice. Another example raised is evidence from an independent party as to whether a reasonable and rational PHO would have issued the Termination Notice. Obtaining such evidence is not in my view consistent with the nature of the default provision and assessing what it reasonable under cl 3.3 in the circumstances, and is therefore not required. The focus must remain on the nature of clause 15.3, which enables Tū Ora to act in its own interests to terminate at any time, just as PHA is entitled to.7
[59] Nor am I persuaded by PHA’s arguments as to the relevance of judicial review criteria to the present proceedings. Mr Michalik submits that while the relationship between Tū Ora and PHA is structured as a private contract, there is a significant public interest overlay. As such, he submits that the parties’ decisions taken under the Agreement would be susceptible to judicial review if an action were brought by an affected member of the public. He submits that it is therefore instructive to consider the exercise of the power to terminate, based on its adverse public effects, in assessing what makes an exercise of the power unreasonable. He says that, while accepting not directly relevant to the present action, standard grounds of judicial review inform what the parties must have meant when they promised each other they would act reasonably in the exercise of their contractual powers under the Agreement.
7 At [112].
[60] Rather, I prefer Ms Clark’s analysis that while there is a public aspect of the Agreement in the sense that public money is being spent, it goes no further than that.8 It is readily apparent that this dispute is a private disagreement where PHA, and its principal Dr Geiringer, wish the Agreement to remain in place because of the consequences for the business. This is reinforced by the fact that Dr Geiringer will be content for the Agreement to come to an end if he can enter a new agreement with a different funder. In this context, it would be wrong to import judicial review criteria. Both Tū Ora and PHA are mindful of the importance of ensuring PHA’s patients have ongoing access to appropriate health care, and I do not consider that this (nonetheless important) point operates to favour adopting judicial review criteria in the present case.
[61] I agree with Boldt J that the appropriate elements for assessing reasonableness in the application of cl 3.3 to cl 15.3 are that Tū Ora needed to have a rational basis for its decision, act in good faith and have proper regard to the interests of the patients of Mātauranga Medical. The decision to terminate the Agreement with PHA needed to be one a reasonable and responsible PHO could make. This is essentially a private law claim in breach of contract.
[62] The parties have different views about several events that occurred in the lead up to Tū Ora issuing the Termination Notice. In particular Tū Ora had concerns about PHA’s fee structure, the safety of patients and staff members, and its relationship with PHA, which all culminated in issuing the Termination Notice. PHA contends that the decision to issue the Termination Notice was unreasonable because of Tū Ora’s strict adherence to the six-month time frame when PHA were constrained by the geographical restrictions of PHOs at the time and because Tū Ora raised irrational concerns over standards of clinical care. PHA also says the issues about fees were resolved. Tū Ora relies on the affidavits of its Chief Executive Officer, Ms Thorpe. As mentioned, Ms Thorpe has filed a further affidavit following Boldt J’s decision to
8 See Ririnui v Landcorp Farming Ltd [2016] NZSC 62, [2016] 1 NZLR 1056; Attorney-General v Problem Gambling Foundation of New Zealand [2016] NZCA 609, [2017] 2 NZLR 470 at [41]– [53]; Mary Moodie Family Trust Board (Inc) v Attorney-General [2015] NZHC 365, [2015] NZAR 379 at [71]; and Lab Tests Auckland Ltd v Auckland District Health Board [2008] NZCA 385, [2009] 1 NZLR 776 at [91].
decline interim relief. In support of PHA’s position, Dr Geiringer has filed a further affidavit in reply. I briefly set out this evidence now.
[63] Ms Thorpe says that Tū Ora first started having issues with PHA around December 2022 when they met to discuss concerns with the fee structure at PHA. Dr Geiringer explains that part of PHA’s approach is to offer membership subscriptions, where patients pay a small regular amount, which entitles them to free consultations with nurses, supported by general practitioner advice and assistance. Dr Geiringer considers that this structure was in accordance with what the funding system required. He also emphasises that Tū Ora knew of, and accepted, PHA’s fee structure from the beginning of their relationship. Ms Thorpe says PHA agreed to clarify its fee structure for both HNZ and Tū Ora and also to amend its website for its patients.
[64] In April, July and September 2023 Tū Ora received three complaints about Mātauranga Medical. In around April 2023, Ms Thorpe says that HNZ wrote to PHA with its concerns regarding a complaint from one of PHA’s patients who had been charged for an appointment for a two-year-old child when general practitioner consultations with patients under 14 are non-chargeable.
[65] In July 2023, Tū Ora received another complaint from one of PHA’s patients about charging for pre-school age patients. Ms Thorpe says Tū Ora tried to work with Dr Geiringer in resolving this complaint, but it was difficult to do so as Dr Geiringer refused to accept receiving complaints from Tū Ora and that eventually Tū Ora sent him a letter on 1 September 2023 notifying him that he was in breach of his obligations under the Agreement.
[66] Tū Ora then received a complaint in September 2023 regarding nurses employed at PHA performing outside their scope of practice and Dr Geiringer being absent from the clinic. Tū Ora notified PHA of this complaint. Ms Thorpe says that after that, Tū Ora received further complaints and concerns about Dr Geiringer’s practice.
[67] Dr Geiringer’s position, which he conveyed to Tū Ora, is that he does not accept Tū Ora had the right to bring up patient complaints. Dr Geiringer says that Tū Ora was not entitled to do so, where patients do not take them up themselves. His view is that the Tū Ora policy requires Tū Ora to pass them on, and he invited Tū Ora to sue PHA if it had a different view.
[68] Dr Geiringer contests the April 2023 complaint, and he explains that he thought the issue had been resolved by his explanation to HNZ at the meeting in December 2022 (as he believes this complaint relates to a complaint received in January 2023). He says that although the HNZ letter asserts that PHA had not updated its website, it was in fact done. He suggests that it is possible that the complaint made in January relates to a visiting fee charged before the December 2022 meeting, and the review of the PHA website in charging information. Dr Geiringer expresses puzzlement at the April letter raising the same complaint again. Dr Geiringer also disputes the complaint from July 2023 by saying no such complaint had been made to PHA nor to the Health and Disability Commissioner.
[69] Dr Geiringer accepts that in its September 2023 letter, Tū Ora formally notified PHA that it considered PHA’s fee structures were in breach of the Agreement and that it would withhold funding if PHA did not change its fees. Dr Geiringer explains that on a without prejudice basis, PHA then agreed to discontinue charging any co- payments for consultations including any nurse-led consultations to under 14-year- olds. This was extended by PHA to under 19-year-olds in 2024. However, Dr Geiringer does not accept that there is any basis to the substance of the September 2023 complaint that his absence from the practice left nurses dealing with things they were not trained to deal with and feeling unsafe. He says that the complainant could have notified their concern to the Nursing Council, and this would have been the correct channel for raising and remedying a general concern over competency and patient safety.
[70] In September 2024, another concern was raised with Tū Ora as to the safety of the staff on site due to an allegation that Dr Geiringer physically restricted a staff member from entering the clinic.
[71] Dr Geiringer rejects the allegation that he prevented a staff member from entering the clinic in September 2024. He says what in fact happened was that when Tū Ora staff arrived he met them and explained that the meeting they had scheduled with a particular staff member could not take place as that staff member had been asked to leave the practice that morning. He says that the Mātauranga Medical staff member who had been asked to leave in fact physically prevented him from closing the door to the clinic as he re-entered it. This led to him issuing the staff member with a trespass notice.
[72] Tū Ora was also told that Dr Geiringer had not been in the clinic for two weeks in December 2024. This was of particular concern to Tū Ora as it raised patient and staff safety issues where Tū Ora had been told Dr Geiringer left the clinic in the hands of relatively inexperienced primary care nurses. Dr Geiringer says the allegation of his absence from the practice in December 2024 is untrue as he saw patients in person on 10 December, and while he was away from the practice for a period starting on 11 December he was still available for and took part in triage phone calls and telehealth consultations where required. Dr Geiringer notes that nurse-led appointments were available to patients throughout and it is important to bear in mind that a general practice clinic is not an emergency room such that it can be expected a general practitioner will be on standby for urgent care in the clinic. Dr Geiringer takes the view that Tū Ora has taken on an unjustified role in “policing” the amount of time he spends at the practice.
[73] Tū Ora also says there was an issue in January 2025, following the issue of the Termination Notice, where the Ora Toa immunisation outreach service identified various concerns about Dr Geiringer’s professionalism in relation to vaccinations. Again, this is refuted by Dr Geiringer, who explains the relevant events differently.
[74] Tū Ora had further issues with PHA’s high staff turnover and challenges with PHA receiving the Foundation Standard from the Royal New Zealand College of General Practitioners. The Foundation Standard is a minimum requirement included in the Agreement and outlines a range of operational and clinical governance requirements that a contracted provider such as PHA must meet. Ms Thorpe says it took approximately 18 months for PHA to confirm that it had met the standard. This
made her concerned for PHA’s registered patients’ safety and the difficulty in ensuring it was completed raised red flags for Tū Ora early on.
[75] Dr Geiringer refutes this suggestion. He says that one of the reasons it took so long was due to Tū Ora’s mismanagement of the legacy relationship with Natural Healing. Dr Geiringer says meeting the Foundation Standard is not a minimum for funding and obtaining a clinical risk review is an alternative method to satisfy the PHO that the practice is meeting the standards required in a funding agreement. Dr Geiringer says that Tū Ora commissioned a clinical risk review from a Professor of General Practice, Lynn McBain, whose report dated 25 September 2023 concludes that the practice was performing at an acceptable standard with regard to clinical care. Ultimately, Dr Geiringer accepts that while PHA was slow to achieve the Foundation Standard he does not accept that this gave Tū Ora any reasonable cause for concern and in any event the concerns must have been resolved once the standard was achieved.
[76] Ms Thorpe’s evidence is that the above incidents indicate Tū Ora and PHA have had a fraught and somewhat hostile relationship over many months. She says that each time Tū Ora has notified PHA of a complaint or an issue, it has been fiercely denied and Tū Ora has found it difficult to engage with Dr Geiringer and PHA in any constructive way to resolve issues as they arise. Ms Thorpe concludes that for Tū Ora, it simply no longer made sense to remain in a contractual relationship with PHA.
[77] Dr Geiringer does not accept this and says the issues referred to are minor and have been dealt with, although he acknowledges that his communications have on occasion been “a little testy”. Rather, he says Tū Ora has raised irrational concerns over standards of clinical care. Dr Geiringer’s view is that two patient complaints over fees he says are worth about $250 in total over the period December 2022 to September 2023, neither of which he says were upheld, is not a good reason to cancel a funding agreement covering the funding to about 1500 enrolled patients in January 2025. This is especially so when PHA has invested hundreds of thousands of dollars to establish its practice. He says that the relationship between Tū Ora and PHA should simply be one of funder and primary health practice and that the Agreement was entered into on the basis that this would be an innovative charging model that
would increase access to primary health care for disadvantaged members of the community.
[78] Ms Thorpe’s evidence is that Tū Ora’s decision to terminate the Agreement with PHA was not an easy one but was, however, thought out and not expected to come as a surprise to PHA or Dr Geiringer. While Tū Ora had concerns with PHA over time, none of those concerns on their own are the reason for Tū Ora deciding in January 2025 to terminate the Agreement. Ms Thorpe states that this decision “was really informed by two primary considerations; the safety of PHA’s patients and the amount of resources Tū Ora was expending to manage its relationship with PHA”. Ms Thorpe says that by the time Tū Ora decided to terminate the Agreement in January 2025 “it had become increasingly time consuming and expensive to deal with each complaint or issue in relation given PHA operated a relatively small clinic with one general practitioner … [and] PHA had been consistently losing patients over the previous year”.
[79] Ms Thorpe says that crucial to Tū Ora’s decision to terminate the Agreement is its confidence that PHA’s current patients can be transferred to nearby clinics. She explains that Tū Ora has been tentative about contacting nearby clinics to organise the transfer of patients but since PHA’s applications for interim injunctions were unsuccessful and Tū Ora was released from its commitment not to contact other clinics, Tū Ora has been engaging with nearby clinics to prepare them should the Court decide that Tū Ora has lawfully terminated the Agreement.
[80] Ms Thorpe confirms the availability of three Kāpiti clinics to accept patients from PHA, should that be necessary. These clinics in total can take over 1000 patients. Ms Thorpe says that the remaining 300 or so patients can be allocated based on areas associated with the heat map of registrations since Tū Ora is aware that not all PHA patients live in Kāpiti.
[81] Ms Thorpe also says that the letter to be sent to PHA’s patients advising them of PHA’s exit from the Agreement can be adapted for each patient based on need and location. She says that while the timeline of actions Tū Ora needs to take prior to the termination date is more condensed than as usual, it is confident that it can ensure all
of PHA’s patients will retain access to subsidised general practice care following PHA’s exit from the Agreement. Ms Thorpe also confirms that if PHA were to enter into a funding agreement with another PHO, Tū Ora would assist PHA and that funder with the process of transitioning from Tū Ora.
[82] The evidence shows that the relationship between Tū Ora and PHA, represented by Dr Geiringer, was not an easy one. The parties acknowledge, by and large, the fact of the issues that arose between them. The differences between them are the interpretation of the details of events and, importantly, the significance of the issues. But I am satisfied this is not a case where I should finely analyse the details of the communications between the parties, in order to make factual findings about who is right or wrong in their view of events. This would be inappropriate in assessing the exercise of a default termination clause, given my approach to the requirement of reasonableness under cl 3.3 in the circumstances.
[83] Reasonableness should not be interpreted such that it makes the default termination clause completely ineffective where a party disenchanted with that termination brings a challenge. Rather, I take the view that the evidence shows there were differences between the parties such that Tū Ora, after a considerable period, formed the view that it no longer wished to remain in a contractual relationship with PHA. As already mentioned, contractual parties are entitled to have different perspectives on their relationship and they are able to act in their own interests in a manner that is consistent with the Agreement, including giving notice of termination without cause.
[84] PHA raises various further points about the evidence. As I have explained, I have not adopted PHA’s preferred approach to analysis of reasonableness and therefore do not assess every evidential point in detail. Nonetheless, I make the following comments.
[85] I do not consider that issuing the Termination Notice was unreasonable due to Tū Ora’s strict adherence to the six-month time frame when PHA were constrained by the geographical restrictions of PHOs at the time. Clause 15.3 expressly states that either party may terminate the Agreement by giving the other six months’ notice.
Those were the terms PHA agreed to, and, in any event, the moratorium on transfers was lifted in mid-May 2025 and Dr Geiringer’s evidence illustrates that attempts have been made to secure another PHO. Indeed, as mentioned, a letter has been provided to the Court by counsel for PHA which shows that HNZ has approved an application by PHA to transfer to another PHO subject to a transition plan which is yet to be approved. In addition, the evidence shows Tū Ora’s willingness to continue to support PHA in obtaining another PHO funder to make the process as smooth as possible.
[86] Linked to this point is the further submission by PHA that it has made a considerable financial investment into its general practice business, which Tū Ora was aware of from the entry into the Agreement, and cancellation of the Agreement under the default termination provision is not proportional to the harm that may be caused to PHA. I am satisfied that PHA was also well-aware of cl 15.3 of the Agreement and consider that its business planning at the time should have taken account of the possibility that Tū Ora had the ability to terminate the Agreement without cause but on six months’ notice (as indeed would similarly be the position for Tū Ora).
[87] Further, PHA’s contention that Tū Ora issuing the Termination Notice denied PHA’s right to have its dispute worked out through the dispute resolution process cannot be sustained in light of my conclusion above that, in the circumstances of this particular case, the Termination Notice is not subject to the dispute resolution process set out in cl 14. Nor do I consider that the evidence shows Tū Ora was seeking to avoid the dispute resolution process in any sense other than it was seeking to utilise the default termination clause in the Agreement, which necessarily avoids the dispute resolution process.
[88] I also do not accept PHA’s submission that the Termination Notice was unreasonably issued by Tū Ora as it raised irrational concerns over standards of clinical care. The evidence suggests that there were genuine complaints made and concerns raised with Tū Ora that would bring PHA’s practice into question, although I acknowledge Dr Geiringer’s strong disagreement with how the complaints and concerns are properly understood. This does not amount to irrationality on behalf of Tū Ora. Mr Michalik suggests Tū Ora’s failure to further pursue the issues in the December 2024 breach notice demonstrate the issues raised there are not a reasonable
basis for termination. In my view nothing further was required of Tū Ora following the issue of the Termination Notice. It has acted reasonably in the circumstances. In any event, Ms Thorpe’s evidence illustrates that concerns about the safety of patients and staff was not the sole basis for issuing the Termination Notice. The strained nature of the relationship was also of concern.
[89] Finally, I do not accept the submission for PHA that Tū Ora acted in bad faith in issuing the Termination Notice having also issued the December 2024 breach notice. I accept that the events and communications in December 2024 and January 2025 contributed to Ms Thorpe’s decision to take the question of termination of the Agreement to Tū Ora’s Board. Issuing the Termination Notice represents a decision by Tū Ora that the relationship with PHA, through Dr Geiringer, had become untenable from its perspective. These actions were not irrational nor taken in bad faith.
[90] I am satisfied Tū Ora has acted responsibly in terms of its proposals to make arrangements for Mātauranga Medical’s patients to transfer to other practices as required, to ensure continuity of care, therefore having proper regard to their interests.
[91] Overall, I am satisfied that Tū Ora’s decision to terminate the Agreement with PHA was one a reasonable and responsible PHO could make.
Conclusion and result
[92] I conclude that the Termination Notice issued by Tū Ora dated 22 January 2025 is valid and lawful. In accordance with that notice, the Agreement between Tū Ora and PHA will terminate on 25 July 2025.
[93]PHA’s claim is dismissed.
Costs
[94] In the ordinary course, costs follow the event and category 2B is likely appropriate. I encourage the parties to agree costs.
[95] If the parties are unable to agree costs, Tū Ora may file a memorandum within 15 working days of this judgment with PHA to file a memorandum in response within a further 10 working days. No memorandum is to be more than five pages plus a costs schedule.
[96]I will determine costs on the papers.
McQueen J
Solicitors:
O’Regan Arndt Peters and Evans, Wellington for Plaintiff Dentons, Wellington for Defendant
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