Reported Decision : (2003) ATPR (Digest) 46-235 New South Wales Supreme Court CITATION : IDAMENEO (NO. 123) P/L v. TICCO P/L & ANOR [2003] NSWSC 538 HEARING DATE(S) : 16, 17 & 18/12/02; 12, 13 & 14/02/03 JUDGMENT DATE : 26 June 2003 JURISDICTION: EQUITY JUDGMENT OF : Bryson J at 1 DECISION : Claim dismissed: inquiry ordered on cross-claim. CATCHWORDS : TRADE - restraint of trade by agreement - validity and reasonableness - sale of medical practice - restraint of 5 years and 8 kilometres held valid but not enforced because purchaser repudiated - numerous issues on alleged breaches of contract in complex chain of agreements on sale of medical practice where vendor was to work as Medical Director in practice management organisation conducted by purchaser. LEGISLATION CITED : Trade Practices Act 1974 Restraint of Trade Act 1976 Jones v. Dunkel (1959) 101 CLR 298 CASES CITED : Kone Elevators Pty Ltd v. McNay & Anor (1997) ATPR 14-564 Peters (WA) Ltd v. Petersville (2001) 205 CLR 126 Idameneo (No. 123) P/L - Plaintiff PARTIES : Ticco Pty Ltd ACN 073411506 - First Defendant Ian Lester Organ-Rafter - Second Defendant FILE NUMBER(S) : SC 1738/2002 COUNSEL : G. Burton - Plantiff R. Evans - First Defendant SOLICITORS : Abbott Tout - Plaintiff 1st & 2nd Defendants - McKells Solicitors IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BRYSON J. THURSDAY 26 JUNE 2003 1738/02 - IDAMENEO (NO 123) PTY LIMITED v TICCO PTY LIMITED & IAN LESTER ORGAN-RAFTER JUDGMENT The litigation and the parties. 1 HIS HONOUR: These proceedings were commenced by Summons dated 1 March 2002 and the claims now appear in Amended Summons of 7 June 2002. The Amended Summons has over six pages of claims for orders and alternatives. There were no pleadings, and this caused considerable difficulty as there were many contested issues of fact and the issues were too complex to be readily recognised on reading the parties' affidavits in chief. If I had understood the complexity of the case in advance I would not have allowed it to go to trial without pleadings. For all the written definition of issues I had I might as well have been a District Officer adjudicating ownership of a pig under a tropic palm. Counsel for the plaintiff compounded the difficulties by attempting to pursue discovery of documents by notices to produce delivered during the course of the hearing. It was inappropriate to seek to supplement discovery in this way in the midst of the hearing and without incurring a mutual obligation. 2 The first defendant Ticco is an Incorporated Medical Practice (IMP) company through which the second defendant Dr Rafter carries on medical practice. Doctor Rafter is a medical practitioner of many years standing, and trained as a surgeon and cardiothoracic surgeon. In August 2000 he was conducting a general practice at 298 New South Head Road, Double Bay; he had conducted that general practice for about two and a half years, and had worked long hours in building up the practice in a suburb where there was much competition. The practice was conducted under the business name Corner of Bay Medical Centre. Ticco was formed on 26 March 1996; Dr Rafter and Miss Lemmik became its only directors on 27 March 1996; Ms Tiina Lemmik became its secretary on that day and they still held those offices on 28 February 2002; and they each held one of its two issued shares. 3 The plaintiff is associated with Primary Health Care Ltd, which is listed on the Australian Stock Exchange and controls a number of medical practices and associated activities referred to as the Primary Health Care Group. The principal figure in the Group's affairs is Dr Edmund Bateman, who is a director of the plaintiff. In March 2002 Idameneo conducted a number of medical centres in Sydney Metropolitan locations; Dr Bateman identified medical centres at Warringah Mall Brookvale, Chatswood, Bankstown, Campsie, Fairfield, Ingleburn, Caringbah, Campbelltown, Mt Druitt, Castle Hill, Maroubra, 580 George Street Sydney, Darlinghurst and Leichhardt; and also at Dubbo. After negotiations which extended over about 10 months Idameneo and Ticco entered into a complex array of written agreements on 25 August 2000. These six documents interact in some scheme of incomprehensible and superfluous complexity, and it is difficult to form an overview of how they act together, or of why there were six of them. The agreements must be considered in detail but their general effect included that the general practice at Double Bay was sold to Idameneo and Dr Rafter was to practice medicine in the Primary Health Care Group, as Medical Director at Double Bay, and also at other locations. Dr Rafter had a lease of the premises at 298 New South Head Road, and separate leases of two shops in neighbouring premises at 294-296 New South Head Road. All these leaseholds were sold to the plaintiff. Doctor Rafter had intended to open a cosmetic surgery at 294-296 New South Head Road, but had not done so. 4 The practice continued to be conducted by the plaintiff at 298 New South Head Road, Double Bay. At some time in 2000 the plaintiff purchased another medical practice in Double Bay, called The Double Bay Medical Centre. These two practices were amalgamated into the practice at 298 New South Head Road. Some building work was done at 298 New South Head Road in November 2000 to accommodate the doctors who had previously worked at Double Bay Medical Centre. The plaintiff closed the practice on 23 September 2001 and the operations conducted there were moved to a newly opened medical centre at Darlinghurst. 5 This litigation arose out of the circumstances in which Dr Rafter worked in the Primary Health Care Group organisation from August 2000 until, by a letter of 28 February 2002, he terminated or purportedly terminated the principal written agreements. The plaintiff commenced the proceedings the following day and claimed orders which would establish that the agreements had not been terminated but that the defendants had repudiated them, orders restraining the defendants from conducting competing medical practice and from providing Medical Centre Services, from disclosing confidential information, damages and interest. No claim was made at the hearing before me that Dr Rafter was using confidential information. Idameneo also claims repayment of part of the price for which the Double Bay practice was sold. There are other general claims. The Amended Summons sought to establish in detail, by declarations, many respects in which there had been breaches of the written agreements. 6 I did not find the demeanour of either Dr Bateman or of Dr Rafter of much assistance in deciding whether evidence on any particular matter should be accepted, either when they were in conflict with another witness or with each other, or in claims about facts on which no other witness spoke where I was called upon to decide whether to accept the evidence of one of them. To me both of them seemed to show indications of strong feelings and strong sense of engagement in the controversy. I approach the evidence of both on the basis that they were not objective witnesses. I also had regard to my views about the inherent probability of facts asserted, the capacity of each party to adduce evidence on a particular subject, and, to a greater extent than would be usual if there were some clear sense of the reliability of witnesses, on the onus of proof. 7 On 20 March 2002 the plaintiff obtained an interlocutory injunction restraining the defendants from medical practice and from providing Medical Centre Services in a defined restraint area which covered much of the Sydney Metropolitan Area; the restraint area adopted for the interlocutory injunction do not correspond exactly with any view of the restraints imposed by the contractual provisions. The interlocutory injunction still has effect. 8 Doctor Rafter was not engaged in the Primary Health Group under a contract of employment. Idameneo operates by acquiring existing medical practices or setting up new ones and carrying them on by providing management and logistical services to doctors and medical ancillaries who work in the practices. The general scheme is that the doctor and his IMP company contract with Idameneo for Idameneo to provide support services and logistic services including paramedical, nursing, billing and accounting services. Charges are made to patients who attend at the practice by the doctor himself but fees when paid are received by the plaintiff; in this case the plaintiff retained 55 percent of the fees received plus GST and paid on to the defendants 45 percent less GST. Fees bulk-billed to Medicare form a proportion of the fees dealt with in this way, although a significant proportion was not paid by Medicare. 9 From August 2000 to September 2001 Dr Rafter practised medicine and was the Medical Director at the plaintiff's medical centre at 298 New South Head Road, Double Bay, formerly his own practice. Then in September 2001 Idameneo opened a new medical centre in Darlinghurst at the intersection of Victoria Road and William Street and ceased to operate the medical centre at Double Bay; Dr Rafter then worked at Darlinghurst, where he was not the Medical Director. He also, on about 10 Sundays, worked at the plaintiff's medical centre at Maroubra, and on a number of occasions he worked at a Skin Care Clinic at the plaintiff's medical centre at Warringah Mall, Brookvale. Idameneo seeks injunctions restraining Dr Rafter and Ticco from rendering medical services (and a number of other activities) at any place within a radius of eight kilometres of each of those four medical centres until 25 August 2005, the fifth anniversary of the Sale of Practice Agreement. The areas covered by these circles overlap. The injunctions claimed allow a contractual exception – "unless such activity is the rendering of urgent medical attention as referred to in s.36 of the Medical Practice Act 1992 (NSW)". The Agreements. 10 The Sale of Practice Agreement was made between Idameneo as purchaser and Ticco as vendor; and Dr Rafter incurred obligations to support those of Ticco. The agreement provides for the sale of the goodwill and business of the medical practice and associated assets for $730,000, apportioned $680,000 to goodwill and $50,000 to (unidentified) chattels and leases of chattels. Of the price $530,000 was to be paid on the completion date and $200,000 was treated as the subscription price for shares in Primary Health Care Ltd. The Sale of Practice Agreement referred to and interacted with the Practitioner Contract, the Restraint Deed, the Performance Guarantee and the Medical Director Contract. 11 In the Sale of Practice Agreement the references in cl.16 and elsewhere to New Premises at which Dr Rafter was to render medical services are convoluted and obscure, but they appear to have the effect that Dr Rafter was to work at any other medical centre in the Sydney Metropolitan Area nominated by Idameneo. I have not observed that there is any evidence of such a nomination but the existence of nominations should be inferred from the fact that he in fact worked at three other medical centres in addition to the practice he had formerly owned. 12 Clause 17.2 Performance created practice obligations. So far as now important it provided as follows: The Vendor agrees with the Purchaser that it will, under the Practitioner Contract, conduct its incorporated medical practice and procure the Doctor to: (a) render medical services from the New Premises for at least 5 years from the Commencement Date under the Practitioner Contract. The Vendor agrees with the Purchaser that it will conduct its incorporated medical practice, and procure the Doctor to render medical services, only from the New Premises during that period. This requirement extends the restraint in Clause 22.1 . … [exceptions were stated] (b) render medical services from the New Premises, during those 5 years, for no less than 70 hours per week 48 weeks per financial year. Of those 70 hours per week, the Doctor's time is to be allocated between rendering medical services as a general practitioner, rendering medical services as a surgeon and performing services as a Medical Director under the Medical Director Contract. … The Doctor is entitled to be absent for up to 4 weeks per financial year (1 week of which is permitted only for the purpose of the Doctor attending conferences), … (c) [This subparagraph fixed times at which the part of the work must be performed]. (d) conduct himself in a harmonious way with other practitioners and staff at the New Premises; and (e) use its and his best endeavours to, ethically and professionally, expand the turn-over, profitability, quality and image of the services provided at the New Premises. 13 By cl.17.6 the moneys to which the regime of collection and payment applied included grants from the Commonwealth Government and other bodies including Better Practice Grants and Practice Incentive Payments (PIPs), and Dr Rafter was to do all things necessary in relation to seeking and obtaining grants. 14 Idameneo claims $510,972.00 as liquidated damages under cl.17.7. Although cl.17.7 is headed "Pro-rata repayment" it does not provide for the repayment of anything, but provides that in several events including death, permanent disablement and that: (c) the Vendor otherwise breaches Clause 17.2(a) (other than as a result of termination of the Practitioner Contract by the Vendor under Clause 10.1 of the Practitioner Contract), then: (i) the Vendor must pay to the Purchaser, as agreed and assessed damages, a once only payment equal to $12,166 for each month in the period from the death, permanent disablement or that breach (as the case may be) through to the due expiry of the initial term of 5 years under the Practitioner Contract; (ii) the payment due under paragraph (i) must be made within: (a) 6 months of the death; (b) 3 months of the permanent disablement; (c) 1 month of any other breach; (iii) interest is payable on the amount due, at the rate per annum equal to the then 90 day bank bill rate plus a margin of 3%, as from the expiry of the relevant period in paragraph (ii); (iv) the obligation to pay agreed and assessed damages under paragraph (i) does not limit the right of the Purchaser to take injunctive or other proceedings in respect of any action or event alleged by the Purchaser to be in breach of Clause 17.2(a); and (v) the restraints in Section 22 continue to apply despite any payment under paragraph (i). 15 Clause 18.1 of the Sale of Practice Agreement relates to the expansion of alternative medical practice in these terms: If the parties mutually agree at any time during the term of this Deed, the Vendor must procure the Doctor to assist the Purchaser to introduce into one or more Medical Centres, that part of the Business sold to the Purchaser under this Deed which comprises alternative medical practice. The Chief Executive Officer of the Purchaser may specify at any time the duties to be performed by the Doctor. 16 Clause 18.2 states the duties of the doctor. These are stated very extensively. They include: Clause 18.4 – General. The Doctor must at all times: (a) faithfully and diligently perform his duty and powers; (b) use his best endeavours to promote the interests of the Purchaser; 17 Clause 19 states the objective of the agreement and among other things states: The parties agree that it is fundamental to the transaction recorded in this Deed that: … (b) each of the Vendor and the Doctor commit at least 5 years (from Completion) to the development of the goodwill of the Purchaser at the New Premises … 18 Clause 22.1 deals with restraint in these terms: The parties agree, that given that the Purchaser is acquiring the goodwill of the Business (and the other medical goodwill of the Vendor developed through the Doctor), that the Doctor is to render medical services from the New Premises, and the objective in Clause 19, as a reasonable protection for the business of the Purchaser, each of the Vendor and the Doctor must not during the restraint period: (a) render medical services (or in the case of the Vendor, conduct an incorporated medical practice) at any place within a radius of 8 kilometres of the Business Premises; or (b) render medical services (or in the case of the Vendor, conduct an incorporated medical practice) at any place within a radius of 8 kilometres of each of the New Premises at which the Doctor has rendered medical services at any time during the 2 years prior to the termination of the Practitioner Contract for any reason; or (c) operate or be engaged within a radius of 8 kilometres of the Business Premises either on own account, or in partnership with, or as agent, manager or servant for any other person or entity, or as a shareholder, in any business of the nature of the business conducted by the Purchaser at or from the New Premises; or (d) operate or be engaged within a radius of 8 kilometres of each of the New Premises at which the Doctor has rendered medical services at any time during the 2 years prior to the termination of the Practitioner Contract for any reason, either on own account, or in partnership with, or as agent, manager or servant for any other person or entity, or as a shareholder, in any business of the nature of the business conducted by the Purchaser at or from the New Premises. 19 Clause 22.2 deals with the restraint period and is in these terms: The restraint period under the preceding Clause is the period from Completion until the later to occur of: (a) the 5th anniversary of Completion; or (b) the 3rd anniversary of the date on which the Practitioner Contract terminates for whatever reason. 20 Clause 22.4 deals with breach of restraint and is in these terms: For each time the Doctor renders a medical service in breach of either Clause 22.1(a) the Doctor must pay to the Purchaser, as agreed and assessed damages, 50% of the gross fee payable to the Doctor (or the Vendor, as the case may be( in respect of that medical service. 21 Clause 25 relates to Doctor's guarantee; Dr Rafter guarantees the obligations of Ticco. 22 Clauses 27 and 28 deal with termination. Clause 27.1: The Vendor and the Doctor may terminate this Deed by notice in writing to the Purchaser if the Purchaser commits any breach of any provision of this Deed other than a breach which (being capable of being remedied) is remedied within 7 days of notice given to the Purchaser by the Vendor and the Doctor. Clause 27.3 deals with the effect of termination and preserves the operation of provisions of the Sale of Practice Agreement expressed to operate after termination. Clause 17.7 is not so expressed; nor is clause 22.1 or 22.4. By cl.28 Termination of the Practitioner Contract and of the Sale of Practice Contracts are made interdependent. 23 Clause 10(1) of the Practitioner Contract is to the following effect: [Ticco] may terminate this Deed by notice in writing to [Idameneo] if [Idameneo] commits any breach of any provision of this Deed other than a breach which (being capable of being remedied) is remedied within 7 days of notice given to [Idameneo] by [Ticco]. 24 Clause 29 of the Sale of Practice Agreement relates to the relationship among the parties and excludes partnership and employment. 25 The Sale of Practice Agreement contains provisions about assignment of leases. The things which are the subject of the sale referred to in cl.2 include the unexpired term of the property leases. Clause 6 deals with property leases, identified in Schedule 4; there are very scant details in Schedule 4 but it refers to two leases, one of business premises 298 New South Head Road, Double Bay and one of business premises misdescribed as 298 New South Head Road, Double Bay. In fact there were three: in Exhibit D there is a lease of Shop 1, Ground Floor Level 1, 294-296 New South Head Road and another for Shop 4. The parties treated all three as covered by their agreement. 26 Clause 6.2 created a regime under which from completion until any assignment of a lease the vendor was to pay any rent or other moneys due to the lessor, and indemnify the purchaser in respect of any failure to do so, while Idameneo as purchaser was to provide moneys to enable this to be done, and to perform all other obligations under the property lease. Under cl.6.3 provisions were made for obligations of Ticco with respect to assigning the lease, including obtaining the lessor's consent if Idameneo at any time required an assignment. 27 The Sale of Practice Agreement refers to Ms Tiina Elsa Lemmik-Rafter in Recital: D(3) which states that Dr Rafter is the only director and shareholder of Ticco apart from Ms Lemmik-Rafter. She is mentioned again in Schedule 6 where she is included in the list of employees whose employment Ticco must, under cl.12.1, terminate at the completion date. Here her surname is given as Lemmik. She also took part as a Director of Ticco in executing the documents under seal: and her surname is given there as Lemmik. Her usual surname is Lemmik and the only place at which she has been called Lemmik-Rafter is in Recital: D(3). Dr Rafter said in evidence that Recital D(3) was a mistake. 28 Parties to the Practitioner Contract are Idameneo and Ticco, referred to as the IMP. The contract is headed "Provision of Services to Incorporated Medical Practitioner". According to Recital E Ticco was to conduct its incorporated medical and alternative medical practice from premises extensively defined and Idameneo had agreed to make the premises available for the purpose and to supply extensive services. The services to be provided and the duties of Idameneo are stated, as are obligations of Ticco to conduct its incorporated medical practice and procure that Dr Rafter attends and renders medical services. Clause 6.2 preserves the professional judgement of Dr Rafter as to the manner in which medical services are performed. 29 The plaintiff complains of failure to comply with clauses 6.3, 6.4 and 6.5 which are in these terms: 6.3 The IMP must use its best endeavours to promote the interests and welfare of the Company's business and must, subject to the preceding Clause, diligently observe all the lawful directions of the Company given at any time concerning the operation or management of the Premises and the business conducted from the Premises. 6.4 The IMP must support on appropriate occasions, by word of mouth of the Doctor and appropriate referrals, the medical and paramedical services available at the Premises. Such support must be given insofar as it is professionally, ethically and medically acceptable. If at any time the IMP, through the Doctor, feels it cannot support particular services at the Premises, the IMP must discuss the matter with the Medical Director at the Premises so as to assist the Medical Director in relation to quality control of services at the Premises. If at any time the Doctor is the Medical Director, the IMP, through the Doctor, must discuss the matter with the CEO of the Company. 6.5 The IMP must promptly provide the Company with all such information and documents as the Company may require at any time in respect of any matter which falls within the ambit of this Deed or touches upon its operation. 30 Clause 6.6 relates to medical records and among other things provides that such records remain the property of Idameneo and that Ticco must not make copies or remove them from the premises, while the Practitioner Contract is in effect or after termination. 31 Clause 9 also relates to records and information and cl.9.3 provides: 9.3 The IMP must upon the expiration or termination of this Deed vacate the Premises and deliver up to the Company all of the Company's property (whether owned or leased) and all documents which in any way relate to the business carried on by the Company. Without limiting the generality of this obligation, this includes patient lists, patient records, brochures, manuals and financial records. Idameneo complains that removal of records by Dr Rafter on 27 February 2002, the day before he claimed to terminate the agreement, was a breach of the agreement and further claims that this justifies acceptance by Idameneo of repudiation of the agreement. 32 Clause 7.4 provides for entitlement of Idameneo to an increase of 10 percent of the 55 percent part of moneys received for medical services so as to produce a GST-inclusive price. Clause 7.2 provides: After deduction of the charges due to the Company under Clause 7.1, the Company must remit to the IMP, twice monthly (that is, about the middle of the month and near the end of the month), the other 45% of the moneys referred to in Clause 7.1. 33 The Practitioner Contract contains provisions in cl.10 (which I mentioned earlier) dealing with termination, cl.11 dealing with obtaining compliance by Dr Rafter and cl.12 dealing with the nature of the relationship. 34 A further document of 25 August 2000 is entitled Performance Guarantee: Incorporated Medical Practitioner and contains a covenant by Dr Rafter to Idameneo to procure that Ticco carries out its obligations under the Practitioner Contract. 35 A further document is the Restraint Deed. The parties are Idameneo and Dr Rafter. Clause 3 relates to restraint on providing medical centre services to any medical practitioner, in any of widely defined capacities, anywhere within the Sydney Metropolitan Area and, if Dr Rafter breaches the Medical Director Contract, anywhere within the Melbourne Metropolitan Area. Clause 2.2 provides for a fee of $20,000 in consideration of this restraint. This restraint was to continue after the termination date for a period which it was agreed will end on 25 August 2005. "Providing medical centre services" is extensively defined in cl.1.1 and extends to leasing or sharing premises or equipment and sharing staff or facilities in connection with the conduct of the medical practice. In cl.2 there is an acknowledgement of the reasonableness of the restraint, the restraints are extended in cll.4 and 5 to dealings with clients, suppliers and employees, and there is provision for severability in cl.10. 36 Clause 3.3 provides for exceptions to the restraint. Clause 3.3(a) provides to the effect that the restraint in cl.3.1 does not apply to (a) the rendering of medical services by the Doctor at any place, with the proviso; (but rendering medical services is not restrained). What is restrained is providing medical centre services to any medical practitioner, "Providing Medical centre services" is defined in cl.1.1 elaborately to include "(a) providing any of the services of the nature described as being provided by the Company [Idameneo] pursuant to the Practitioner Contract" and in cl.4 of the Practitioner Contract the services and facilities to be supplied by Idameneo are lengthily enumerated in a way which, consistently with this whole scheme of the documents, does not include rendering medical services by a doctor. At this point the Restraint Deed has lapsed into the absurdity which the scheme of documents approaches at many places. 37 Clause 6 relates to the protection of confidential information. The plaintiff's counsel told me that apart from return of the records removed on 28 February 2002, which took place early in the litigation, the confidentiality claim is not pressed further. There is no evidence that Dr Rafter is using confidential information. 38 A further document is the Double Bay Medical Director Contract. The parties are Idameneo and Dr Rafter. This provides (cl.2.1) for engagement of Dr Rafter as Medical Director of the Double Bay Centre for five years, in cl.3 specifies the duties, in cl.4 provides for availability for not less than 65 hours per week rendering medical services and not less than a further five hours per week serving Idameneo as an employee as part-time Medical Director of the Double Bay Medical Centre. The Double Bay Medical Centre is defined so as to include the premises at 298 and 294 New South Head Road, Double Bay and also other premises in the Sydney Metropolitan Area and the Melbourne Metropolitan Area as nominated. Clause 5 provides that there is to be no remuneration. 39 The sixth document is entitled Assignment of Contractual Rights; the parties are Ticco and Idameneo and by it Idameneo conveys its property and interest in property in an annexed schedule; but there is no schedule. Claim and cross-claim. 40 The many claims in the Amended Summons include claims for declaratory orders establishing (1) that the defendants' purported termination on 28 February 2002 was invalid and repudiated the Sale of Practice Agreement, (2) similarly for the Practitioner Contract, and (3) for the Medical Director Agreement; and (3A) that the plaintiff accepted each repudiation by commencing the proceedings or by amending the Summons to add Claim 3A. 41 Claim 3B claims a declaration that certain conduct constituted a breach of each of those agreements: a fundamental breach, a breach of a fundamental term or a breach of a condition. The conduct referred to is identified at length by reference to breaches asserted in the letters of 18 September 2001, 4 January 2002 and 26 February 2002, the defendants' purported termination, and (E) and (F) desisting from performance, (G) involvement in provision of medical services and medical service centres in contravention of cll.17.2(a), 17.5, 19 and 22.1 of the Sale of Practice Agreement in Cl.3 of the Restraint Deed, (H) many alleged failures to perform cl.17.2(b) and (c) of the Sale of Practice Agreement and cll.3.1, 3.3, 3.4 and 4 of Medical Director Agreement; these failures relate to Dr Rafter's performance in rendering medical services and Medical Director Services with respect to the hours and times at which he attended and in many respects. In (I), failure to perform cl.17.2(b) of the Sale of Practice Agreement by Dr Rafter not conducting himself in a harmonious way with other practitioners and staff, (J), failure to perform cll.17.2(e), 19(b) and (c) of the Sale of Practice Agreement and cll.6.3 and 6.4 of the Practitioner Contract by failing, in many ways, to use best endeavours. In (K), by removing records on Dr Rafter's departure in breach of cl.6.6 of the Practitioner Contract. Then in Claim 3(B)(2) the plaintiff claims a declaration that it terminated each of the agreements referred to by commencing the proceedings or making the amendment. 42 Claim 3(C) claims a declaration that by desisting from performance from 28 February 2002 onwards the defendants had breached cl.17.2(a) of the Sale of Practice Agreement and had become liable to pay money pursuant to cl.17.7(i) of the Sale of Practice Agreement. 43 Claims 4 to 12 are claims for injunctions. Claims 4 to 7 claim injunctions against Ticco. Claim 8 claims an injunction restraining Dr Rafter from rendering medical services and being engaged in various ways in a business of the nature of the plaintiff's business within a radius of 8 kilometres of each of four of the plaintiff's medical centres; the Double Bay Centre, the Darlinghurst Centre, the Maroubra Centre and the Brookvale Centre. Claim 4 claims a parallel restraint against Ticco. The proposed injunction contains an exception for rendering urgent medical attention. Claim 9 claims an order restraining Dr Rafter from providing Medical Centre Services as defined in cl.1.1 of the Restraint Deed in the Sydney Metropolitan Area. There is no such claim for the Melbourne Metropolitan Area. Claim 10 claims an injunction restraining Dr Rafter permanently from revealing to any person any information concerning the organisation, finances or transactions of the plaintiff and various persons related to the plaintiff, with exceptions relating to written consent, requirement of law, public domain and giving effect to the Sale of Practice Agreement. Claim 5 claims to restrain Ticco in similar terms. 44 Claim 11 claims an injunction restraining Dr Rafter from disclosing various classes of information; patient lists and records, financial records relating to patients, stated extensively. Claim 12 claims a mandatory injunction requiring delivery up of the classes of documents referred to in claim 11. Claim 6 claims an order against Ticco paralleling claim 11 and claims 7 claims an order against Ticco paralleling claim 12. 45 The Amended Summons also claims (13) damages, (13A) a sum under cl.17.7(1) of the Sale of Practice Agreement, with interest, (13B), interest on general damages and 13 (bis) costs. 46 By their Cross-claim of 24 May 2002 the defendants cross-claim (1) a declaration establishing that their termination of the Sale of Practice Agreement was lawful; (2) similarly for the Practitioner Contract and (3) for the Medical Director Agreement. They cross-claim (4) a declaration that the Restraint of Trade provision in the Sale of Practice Agreement and the Restraint Deed are void and unenforceable because of the terminations; and also because they are contrary to public policy. In Cross-claim (5) they claim a declaration establishing the liability of each party for payments to the other in consequence of the termination. In Cross-claim (6) they seek an order under s.87 of the Trade Practices Act 1974 avoiding or varying the Sale of Practice Agreement, the Practitioner Contract and the Medical Director Agreement. In Claim (7) they claim a declaration that Dr Rafter is lawfully entitled to render certain services unrestricted by any of the agreements. They also claim (8) accounts or inquiry, (9) damages and (10) costs. 47 It was established in some way, and confirmed by evidence of Dr Rafter (t128-129) that his claims under the Trade Practices Act were based on alleged representations by Dr Edmund Bateman to him, before he entered into the Sale of Practice Agreement and related documents, to the following effects. - that Dr Rafter would have a rise in income. - that Dr Rafter would have shorter hours as a General Practitioner which would enable him to work as a cosmetic or general surgeon up to 20 hours a week. - that Dr Rafter could work wherever was mutually agreed between Dr Rafter and Dr Bateman, and that Dr Rafter did not have to move from Double Bay unless that was by mutual agreement. - that there would be a cosmetic clinic installed at the premises next door to his existing practice at New South Head Road, Double Bay. - that Dr Rafter would be the Medical Director at Double Bay. - that Dr Bateman was interested in integrated medical practice or alternative medical practice which was carried on at Double Bay, where three naturopaths worked with doctors in an integrated manner, and that Dr Bateman was keen to have that system integrated with his other practices by three naturopaths overseen by Dr Rafter. 48 The plaintiff's counsel told me in opening that the plaintiff's essential complaint was that there was a fundamental breach or breach of a fundamental term or breach of condition or repudiation in respect of non-compliance with the obligations in cll.17.2(b) and (c). While there were other complaints by the plaintiff, the principal topics of the plaintiff's complaints relate to: (1) Dr Rafter did not do the work he contracted to do, did not work enough hours, took too much leave, did not comply with rosters; and did not participate appropriately. Failures of participation included not obtaining appropriate accreditation for surgical work. (2) Dr Rafter did not conduct himself harmoniously and did not perform satisfactorily as Medical Director or otherwise in relationships with others in the plaintiff's organisation. (3) Dr Rafter acquired an interest in or was otherwise inappropriately engaged in a rival organisation. 49 The principal claims for relief which counsel referred to in his opening were: The plaintiff asked the Court to determine whether Dr Rafter and Ticco should be restrained from providing medical services within eight kilometres of each of the medical centres at Double Bay, Darlinghurst, Maroubra and Brookvale. The plaintiff further seeks determination of which party is correct in the assertion that the party had a right to termination for breach. The plaintiff seeks a pro-rata refund under cl.17.7 of $510,000, plus interest. The plaintiff complains that Dr Rafter failed to perform the contracted hours of work as required. The plaintiff complains that Dr Rafter was actually concerned in the conduct of a medical practice in Macquarie Street Sydney, within the eight kilometre range of (at least) Double Bay and Darlinghurst. 50 The defendants' primary case as opened was that by reason of the termination of the agreement on the basis of the plaintiff's breach of express covenants, the defendants are no longer liable to perform any obligation under the agreements. A subsidiary argument was that the restraint provisions are bad and should be read down. In the defendants' case, Dr Rafter had the right to terminate as at 27 and 28 February 2002, when he left the practice at Darlinghurst, by reason of non-payment of amounts due to him; and they rely on cl.27.1. The defendants seek an account or inquiry as to the amounts actually owed, and also damages for the loss of bargain for three years which remained of the agreements. Correspondence and communications. 51 A series of communications led up to Dr Rafter's departure on 27 and 28 February 2002 and each side made complaints that there had been breaches of agreements. By a letter of 2 August 2001 from Mr Andrew Duff, Chief Financial Officer of Primary Health Care Limited to Dr Rafter, Mr Duff contended that sums of $4,000 and $3,300 for June and July respectively were not banked in the appropriate manner and this was a breach of the provision of services contract; and repayment within 7 days was requested. Mr Duff said "All mid-month and month end payments to you will be stopped until monies have been received in full." 52 By a letter on behalf of Idameneo dated 18 September 2001 from Dr Bateman to Dr Rafter, Dr Bateman asserted that Dr Rafter was in serious significant on-going breach of contractual obligations and offered him the opportunity to correct the breaches. He went on to assert, but not comprehensively, "Some particular issues that need to be addressed" and these were (and I have given them numbers): (1) You are not doing the minimum number of hours per week contracted by yourself. These were 65 hours a week as a GP/Surgeon, together with 5 hours as a Medical Director, i.e. a total of 70 hours per week. You have not been rostered on this number of hours. You have not even worked the number of hours you have been rostered on to cover. (2) You often have failed to attend at rostered times. This is a major need for the proper running of a centre and care patients. (3) You appeared to have failed to have paid when due rental monies paid to you that were due to landlords. You have not provided us with notice of such monies being paid. (4) You have employed staff without any authorisation. (5) You have terminated an employee without any authority. There was a subsequent cost to the company of more than $15,000 for such termination being wrongfully done. (6) You acquired an interest in a Medical Centre in Macquarie Street allegedly in your partner's name. This, I understand, is in breach of the contract in a number of respects. (7) You have not worked your weekend hourly obligations. (8) You have not made necessary day surgery accreditation application to allow you to work there as a General Surgeon. This is despite several requests by myself and staff to do so. (9) You are not conducting yourself harmoniously with others – "will give you a hard time" said to the Medical Director of the new centre at Darlinghurst. These are similar types of behaviour, and advice have been given to numerous doctors, employees and staff of various levels both at Double Bay, Maroubra and elsewhere. 53 In a conversation at the Darlinghurst Medical Centre on 11 December 2001 Dr Rafter told Dr Bateman that he was not happy on a number of issues and that he would prefer to leave. Dr Bateman asked whether he was prepared to work in Dubbo and after a delay of about an hour Dr Rafter agreed but Dr Bateman said that he had reconsidered it. Dr Rafter said "Well, if that's the case there is no point working for you. The best thing is I leave", Dr Bateman said "All you have to do is to pay me back what you owe me on a pro rata basis" and no arrangement was made. After that no more payments on account of his income were made to Dr Rafter, and there were no more conversations between them. 54 On behalf of Idameneo Dr Bateman sent Dr Rafter a further letter of 4 January 2002. The letter called, in strong terms, for compliance. I have given numbers to some complaints to indicate how they generally correspond with complaints in the letter of 18 September 2001. (9) There have been four separate independent doctor contractors and/or staff who have had numbers of patients that report to them of your "bad mouthing" the centre and/or our business. These matters have been brought to my attention because each of these persons considered the type of reports been given to them by the various patients were such as not to be in the interest of the company. They also felt were not consistent with your obligations. As this is from patients who have come in contact with these people both socially, professionally and/or in other roles, and as they represent at least 12 individual patients, it could be reasonably understood that this is part of a persistent and ongoing behaviour by yourself which is totally unacceptable. (6) It would also appear that you are in breach of restraint clause 22.1. It would appear you are in breach of the Restraint Deed (dated 25.8.00). While I refer to various clauses, these are not exclusive. I would refer you back to the previous notice that I gave you in regard to other breaches. (1) You have also exceeded your contractual availability of leave of 4 weeks per financial year on a pro rata basis. You have had a total of 26 days off up to 31.12.01. The balance available to 30.6.01 is 2 days. That is extremely important in an early stage of a Medical Centre development that staff be available for commitments which are made to meet the developing flow of patients to the centre. While I am in no way limiting our rights of removing any of our rights under the contract, I would ask you as a matter of urgency to cease all breaches under the contracts. I would ask you to account for the amounts involved in the breaches so that we can bring to proper account. I would ask you to desist from the persistent ongoing creation of problems and clear breaches of your agreement that I refer to in this letter and in my previous letter to you. 55 Messrs McKells solicitors for Dr Rafter wrote to Mr Duff for Idameneo on 19 February 2002 giving notice of breaches as follows: 1. Clause 7.2 of Idameneo Pty Ltd has failed to pay The Provision of Services forty five percent (45%) of Income Agreement. Up to end of January. 2. Clause 7.1 of Service Idameneo Pty Ltd has failed to Agreement provide services. 3. Clause 18.5 of Sale of Idameneo Pty Ltd failed to pay five Practice Agreement. percent (5%) of sales from natural therapies. 4. Clause 7.2 of The Provision Idameneo Pty Ltd failed to pay forty of Service Agreement. five percent (45%) of PIP payments. 5. Clause 7.2 of The Provision Idameneo Pty Ltd failed to pay forty of Service Agreement. five percent (45%) of accounts and legal reports received. 6. Clause 6 of Sale of Practice Idameneo Pty Ltd failed to assign Agreement. the leases at 294 New South Head Rd, Double Bay. 56 Some of the supposed breaches were not well grounded but some related to failures of the plaintiff to make payments which the plaintiff in the person of Dr Bateman of course well knew that it had withheld because Dr Bateman had decided to do that. 57 Messrs Abbott Tout solicitors wrote in reply to Messrs McKells solicitors on 26 February 2002 and asserted that proper particulars of the alleged breaches had not been provided and that until they were Idameneo was unable to take any steps to remedy them where appropriate. There was no acknowledgement or explanation of the payments' not having been made, although the importance of the question whether payments had been made, and of the reasons (if there were any) for not paying them must have claimed the attention of the plaintiff and of its solicitors. In the opening paragraphs of the letter of 26 February 2002 Messrs Abbott Tout claimed on behalf of the plaintiff that the plaintiff did not know what the alleged breaches were and could not remedy them. This was a piece of shameless effrontery as the plaintiff was obviously called on, in any communication conducted on an honourable basis, to acknowledge that payments had been withheld and to put forward any explanation which was relied on; there was no legal duty to reply to the letter at all but if a reply was given it was disgraceful to affect not to understand the complaints about withholding payments when the payments had been deliberately withheld. Messrs Abbott Tout compounded their disgrace by addressing Messrs McKells in groundlessly offensive terms, asserting that the letter of 19 February 2002 had been sent in bad faith. Messrs Abbott Tout stated: "We are instructed that the defendants had breached and are continuing to act in breach of both the Sale of Practice Agreement and the Practitioners Contract" and set out 9 specifications of breach, with many variations woven round the theme that Dr Rafter was engaging in practice in a rival organisation and had referred patients to other practices. This corresponded, with more specificity, to Complaint 6 in the letter of 18 September 2001. 58 Messrs Abbott Tout's letter asserted, with gross and inexcusable discourtesy, that Messrs McKells letter had been sent in bad faith. For this reason it is obvious that Messrs Abbott Tout's letter was not a serious attempt to engage in communication. The contents of the letter, and what it does not deal with, also illustrate this. It did not call for serious consideration. The letter did not engage with the substance of the difficulty, which was that although Idameneo had collected fees charged by Dr Rafter it had not paid him any part of those fees for many weeks. The plaintiff did not acknowledge that this had happened, but affected not to understand that there was a difficulty of that kind. The fact was that for many weeks Idameneo had not paid over money belonging to the defendants which it was Idameneo's duty to pay, and this was a result of a deliberate decision by Dr Bateman. Of course, the flow of income to Ticco and Dr Rafter was the life blood of the arrangement and the basic purpose of their engagement in it. By 26 February 2002 Idameneo was not willing to meet its part of this complex scheme of arrangements with Ticco and Dr Rafter on the basis of good faith and honesty by paying over money due to them which Dr Bateman saw advantages in retaining, or by explaining that it was not prepared to do so and giving reasons. The plaintiff used an offensive letter from its solicitors to fend off an obviously justified complaint. 59 On 27 February 2002 Messrs McKells responded by a fax message disputing the letter of 26 February. On 28 February 2002 the defendants purportedly terminated agreements by Notice of Termination sent by fax to the plaintiff with a copy under a covering letter from Messrs McKells to Messrs Abbott Tout; the agreements were the Provision of Service Agreement, the Double Bay Medical Director Agreement and the Sale of Practice Agreement. The ground of termination asserted was "[The] failure … to rectify or take steps to rectify the breaches set out in our letter of 19 February 2001 …". In principle the defendants are not limited to grounds which they actually expressed at the time of termination; in the absence of pleadings however I take the letter of 19 February 2002 as stating the grounds the defendants relied on. The claim that Dr Rafter had an interest in another practice. 60 I will review the material relied on by the plaintiff's counsel in his closing address to show involvement of Dr Rafter in a practice at 139 Macquarie Street, Sydney, in breach of cl.22 of the Sale of Practice Agreement and cl.3 of the Restraint Deed. Counsel contended that the evidence was that the Centre at 139 Macquarie Street was or was to be a cosmetic surgery practice, and that this appeared from evidence of Dr Monk and Dr Rafter about a conversation at Maroubra in early August 2001. Evidence of Dr Monk in his affidavit of 1 March 2002 para.10 dealt with a conversation with Dr Rafter. Dr Rafter responded to this in his affidavit of 14 March 2002. From Dr Monk's para.12, and Dr Rafter's para.5(p) it was contended that the Court should infer from a statement attributed to Dr Rafter that Dr Rafter had some ownership or proprietorial or practice role in the Chase Medical Centre Clinic which would be in clear breach of the restraint. It was contended that whichever of Dr Rafter or Dr Monk is accepted, the finding on the balance of probability should have been that there was some connection between Dr Rafter and the Macquarie Street practice. The association between Dr Rafter and Tiina Lemmik appears in part from Recital D(c) in the Sale of Practice Agreement and the name there given Tiina Lemmik-Rafter. She was Dr Rafter's founding practice manager and had a 50 percent shareholding ownership interest in the Double Bay practice. She was one of the signatories for Ticco when Ticco sealed the contract documents. Dr Rafter could not explain how she came to have a 50 percent ownership interest in the Double Bay practice. I observe that Doctor Rafter denied that he and Miss Lemmik lived as man and wife. On the evidence it is not possible to say clearly what personal relationship existed between Dr Rafter and Ms Lemmik. She remained working in the Double Bay practice until it was absorbed into the Darlinghurst practice in September 2001. 61 Counsel contended that it should be found that that Dr Rafter has or has had a close personal relationship with Miss Tiina Lemmik, his long-standing practice manager; that she has some involvement in owning or operating a practice or clinic at 139 Macquarie Street, and that Dr Rafter has not called her to give evidence. Counsel referred to various exemplifications of close association between Dr Rafter and Ms Lemmik. 62 Counsel also relied on the evidence of Ms Cannings, who was not cross-examined. Counsel contended that the finding for which he argued was supported or corroborated by various respects in which evidence of Dr Rafter in cross-examination was said to show an unsatisfactory position. It was said that the Court should find that there was a close business or personal relationship between Dr Rafter and the Medical Centre at 139 Macquarie Street, and that this made it easier for the Court to accept that there was an ownership interest or a practitioner interest in the Centre. 63 It was contended that material related to Dr Rafter's association with Ms Lemmik supports or reinforces direct evidence of Miss Cannings and Dr Monk that Dr Rafter attempted to practice at 139 Macquarie Street or began a process leading to practice or to establishment of a practice there or owned the practice. Counsel also contended that the findings for which he argued were supported by evidence about the FAX heading on an annexure to the affidavit of Dr Grech and by cross-examination of Dr Rafter about that. 64 The evidence of Dr Monk in his affidavit (of uncertain date but filed on 1 March 2002) is as follows: 10. I recall that one Sunday in or about August 2001 I was working at the Maroubra Medical Centre with the Second Defendant and we had a conversation to the following effect: The Second Defendant said: I don't really have to do this. I shouldn't be here. There is a group of surgeons from Melbourne who wanted to do something with the premises next door to the Double Bay Medical Centre to turn them into a cosmetic surgery. But we're going to do something in Macquarie Street now. I said: Which one? The Chase Medical Centre? The Second Defendant said: Yes. I said: What's going to happen with the doctors already there? The Second Defendant said: We're getting rid of them and changing it to a full cosmetic clinic. I said: Maybe I should go and visit the doctors to see if they would like to practice out of one of our medical centres? The Second Defendant did not make any comment in answer to my question. 11. In or about September 2001 I attended the Chase Medical Centre at 139 Macquarie Street, Sydney to speak to the doctors. I recall that Ms. Lemmik was working there and appeared to be the practice manager. I had separate conversations with two (2) female doctors and two (2) male doctors. Each of those conversations was to the following effect: I said: My name is Dr. Monk. I work with Primary Health. Are you aware that this practice has been sold? The doctor said: Yes. I said: Has it been purchased by a Dr. Rafter? Ian Rafter? The Doctor said: I'm not sure. I have heard the name Rafter mentioned, but I don't know what his exact role is. I said: I would like to offer you the opportunity to practice at our new medical centre to be opened in George Street, Sydney. The Doctor said: I'm going to stay here and see what happens. 12. A few days after I had visited the Chase Medical Centre I had a conversation with the Second Defendant to the following effect: The Second Defendant said: You shouldn't have gone to speak to the doctors at the Chase Medical Centre. you've caused some problems. I never gave you permission to speak to them. I said: Well, you said that you were going to be getting rid of them. The Second Defendant said: I never said anything like that. I said: Well, who owns it then? The Second Defendant said: Some guys from Melbourne. I said: Well, I saw your wife Tiina working there. The Second Defendant said: She's not my wife. I have a wife in Melbourne. I visit her every month. I said: Then, your girlfriend. The Second Defendant said: She's not my girlfriend. She's the Practice Manager. 65 Paragraph 11 was admitted in evidence on a limited basis as a step in showing the significance of the statements attributed to Dr Rafter in para.12, and not on the basis that the facts asserted in para.11 were evidence of the truth of those facts. 66 Doctor Rafter answered these passages in para.5(g) to (q) of his affidavit of 14 March 2002. The effect of his affidavit evidence was as follows. Doctor Rafter admitted that there was a conversation generally as alleged. He said of the opening expression "I don't really have to do this. I shouldn't be here" that "… it was said in the context of having already worked sixty-five to seventy … hours a week for the Plaintiff prior to having been seconded to Maroubra Medical Centre on a Sunday." Doctor Rafter denied saying "But we're going to do something in Macquarie Street now" and his evidence was that he said "They are going to do something in Macquarie Street now." He denied the passage in which Dr Monk said that he asked whether it was the Chase Medical Centre and Dr Rafter said "Yes." It was his evidence that in his belief that Chase Medical Centre had gone into liquidation approximately four years ago. Doctor Rafter denied part of the conversation in which Dr Monk asked what was going to happen with the doctors already there and Dr Rafter said "We're getting rid of them and changing it to a full cosmetic clinic." Doctor Rafter said that Dr Rafter had said "I was going to open a clinic at 294 New South Head Road and a group of surgeons from Sydney and Melbourne are looking at creating a similar facility in Macquarie Street because nothing had happened with the premises 294 New South Head Road" or words to that effect. He confirmed that Dr Monk had said to the effect that he might visit the doctors and see if they would like to practise out of Primary Health Care Medical Centre. 67 "Chase Medical Centre" was the registered business name, registered on 13 March 1996, of a business described as "Administration and medical centre" carried on at Level 1, 44 Martin Place, Sydney. There were several proprietors of the business name, and its proprietor from 26 March 1996 was Macquarie Street Medical Practice Pty Ltd which changed its name back to Lamofern Pty Ltd (which had been its name earlier) on 10 October 2001. Ms Lemmik became a director on 20 August 2001 and the company applied for voluntary deregistration on 13 December 2001. 68 In answer to Dr Monk's para.12 Dr Rafter's affidavit evidence was to the effect that he denied the conversation about problems caused by speaking to doctors at the Chase Medical Centre. Doctor Rafter's evidence in this regard was "I recall a conversation as follows: I'd been rung by one of the doctors asking where I had information from that they were going to be removed. I said in reply to that doctor: I do not know and that if this information came from Dr Monk then it is not correct. Or words to that effect, as I was aware that he has nothing to do with the Macquarie Street Centre." He denied that Dr Monk asked him who owned it and that Dr Rafter said "Some guys from Melbourne". He accepted that there was a conversation generally as given by Dr Monk about Tiina Lemmik being at the Macquarie Street Centre. When challenged in cross-examination neither Dr Monk nor Dr Rafter moved significantly from their affidavit evidence. 69 Ms Anne Cannings, a medical practice manager, gave evidence on affidavit that in or about July 2001, when she was employed by the Macquarie Street practice at 139 Macquarie Street Sydney as a practice manager, she was told by a principal of that business that Dr Rafter would visit to have a look around and that she should show him the consultation rooms and facilities. She gave evidence that he arrived and that she showed him each consultation room, the procedure room and other facilities. He asked questions about the business in some detail. She then gave evidence (para 8): On 9 August 2001 I was called into a meeting between Mr. Keen, Mr. Atgemis, the Second Defendant and a lady who was introduced to me as Tiina Lemmik. I recall that during the course of the meeting Mr Atgemis was discussing in general the doctors' working arrangements, staff hours and pay and retention of staff etc. I was brought into the discussion at that point and told the meeting what the current arrangements regarding the staff were. I then said words to the following effect:- I said:- Well obviously the business has been sold or is about to be sold? Mr. Atgemis said:- Yes It's about to be. I said: When is this to take place? Mr. Atgemis said: The twentieth of this month. I then looked at the Second Defendant and said to him words to the following effect: I said:- Well, where do I stand? The Second Defendant said:- We wish to keep you on. We want you to stay. I said:- That's good as I need a job. Mr Atgemis said:- The doctors will be staying and you will be staying but the practice will be gearing towards cosmetic surgery. The general practice will, however, remain. 70 In response to Ms Cannings' evidence Dr Rafter said in his affidavit of 14 March 2002 para.7, as to the visit and inspection: As to paragraph 6, I do not recall the matters contained therein. I do recall attending the premises at the request of Tiina Lemmik early one morning in June/July 2001. In response to para.8 he admitted attending a meeting on 9 August 2001 and said: I was there at the request of Tiina Lemmik who was interested in acquiring the practice. I do not dispute the conversations alleged in the first part of this paragraph. 7(f) As to the conversation deposed in the second part where the Deponent says, I then looked at the Second Defendant and said to him words to the effect, I said, Where do I stand? The Second Defendant said, 'We wish to keep you on, we want to stay', I dispute that conversation. I said, I think Tiina wants to keep you on and you will have to discuss details with her. Or words to that effect. 71 Doctor Rafter also said: h) To the best of my knowledge it has always been the intention of Tiina Lemmik to open a cosmetic surgery and healthy aging clinic from these premises as she was heavily involved in the development of the cosmetic clinic at 294 New South Head Road, prior to the Plaintiff taking over the premises. 72 Ms Cannings attributes to Dr Rafter that he said, "we wish to keep you on. We want you to stay". She does not say that Dr Rafter took any part in any other business activity at 139 Macquarie Street, and she says that she was dismissed, by a letter signed by Ms Lemmik, and that she left on 16 September; she does not suggest that Dr Rafter had any part in this event. She said that her termination payment was not paid from September until she sent copies of the correspondence to Dr Rafter on 10 December, after which the payment was made within two days. Evidence, including cross-examination of Dr Rafter, does not show that these events were connected. 73 The statements attributed to Dr Rafter by Dr Monk and Ms Cannings if truly recounted by them were statements about what Dr Rafter was to do in the future in some transaction which, as far as can be judged from the limited nature of the statements attributed to him, had not yet taken place. At the highest, Dr Monk says that Dr Rafter talked about "… We're going to do something in Macquarie Street now." Ms Cannings heard a conversation, in Dr Rafter's presence, in which a Mr Atgemis said that the business was about to be sold. There is no substantial evidence that any sale transaction ever did take place, and there is no substantial evidence that Dr Rafter ever did participate in a purchase of the business, in any capacity, or do anything to work in the business, or to manage it, or acted as if he was an owner of it, or otherwise involved himself in business at 139 Macquarie Street. 74 Doctor Rafter gave evidence, which I see no substantial reason to disbelieve, that he spoke to Dr Monk about what other persons, a group of surgeons from Sydney and Melbourne were going to do, and he said that his attendance at the inspection and at the meeting on 9 August 2001 related to an intention of Tiina Lemmik to open a cosmetic surgery and healthy aging clinic at the Macquarie Street premises. If it were true that Dr Rafter in some way involved himself in an actual purchase of the Macquarie Street Medical Centre or in setting up a medical practice or related practice there, there would, it seems to me, certainly have been more and better means of proving his involvement than relying on disputed and disputable references in unrecorded conversations. A purchase of a business suggests the existence of documents and the involvement of persons as principals on both sides, some or all of whom should have been available, under compulsion if necessary, to give evidence that there was in fact some such transaction, who took part in it, and what conduct followed it. The plaintiff came to court equipped with evidence of the names of principals; Ms Cannings refers to Mr Peter Keen and Mr Atgemis who she says were the main two owners of the Macquarie Street Medical Centre and her bosses; Dr Rafter's affidavit attributed interest as a principal to Ms Lemmik. There must also be other persons who have worked at the Macquarie Street Medical Centre who could, under compulsion if necessary, give evidence of Dr Rafter's involvement and events there. There was no such evidence and there was no evidence of Dr Rafter of his having any such involvement; and it was not put to him in a clear way in cross-examination what his involvement was said to have been. 75 Doctor Rafter said (affidavit 14/3/02 para.5(r)) "I deny having any legal interest in the Medical Practice at 139 Macquarie Street, Sydney. To the best of my knowledge and belief this clinic is owned by Tiina Lemmik and I am aware that it has been closed for renovations and at the time of swearing this affidavit remains closed." In my opinion there is no substantial evidence to the contrary of what Dr Rafter says in this passage. 76 Doctor Grech attributes to Dr Rafter (and Dr Rafter does not dispute) that as Dr Rafter was packing boxes on the evening of 27 February 2002 Dr Grech said to him "What's happening? What are you doing?" Dr Rafter said "I'm going. I'm out of here. I'm going to find another job elsewhere. I've got to make a living. I haven't been paid for three (3) months." And that Dr Rafter also said "You guys think that I've got a medical centre elsewhere but I don't." 77 Several witnesses attribute to Dr Rafter that he made statements, never in any detail, indicating that he had or might have some association with another medical centre. The evidence of Natalie Beck was that he said to her "I'm opening up a cosmetic surgery in Macquarie Street." This was given in evidence as a statement in isolation, not part of a conversation with any context which would explain why Dr Rafter might have felt called upon to explain his future course to Ms Beck, who was a part-time Medical Receptionist. Ms Cannings says that in the conversation of 9 August 2001 Dr Rafter spoke in terms as if he was one of the persons who wished her to be kept on in employment after the business was sold; Dr Rafter disputes that he spoke as if he was a principal. Dr Monk also gave evidence, dealing with the conversation at Maroubra Medical Centre in August, of Dr Rafter speaking as if he was going to be a principal of the Chase Medical Centre. Dr Monk said that in a conversation a few days later (which Dr Rafter denies) Dr Rafter spoke to him as if he had some interest or concern about Dr Monk's visit to 139 Macquarie Street. (Dr Monk refers to 139 Macquarie Street as the Chase Medical Centre; Dr Rafter says that a practice under that name closed some years earlier.) The plaintiff's evidence of an association between Dr Rafter and some other practice never rose above slight or passing and incomplete references on occasions of which it is difficult to see what would have moved Dr Rafter to make a statement, adverse to his own interest, about his private or business intentions. The explanations which he gave of the conversations with these witnesses do not seem to me to be in any way improbable. He was cross-examined on the conversations and I do not regard this cross-examination as having discredited his evidence. 78 Comment to the effect that Dr Rafter could well have called Ms Lemmik was correct; he well could have called her, as could the plaintiff, and I do not think that the reasoning associated with Jones v. Dunkel is available against him as I do not regard it having been established that she was at the time of the hearing in any sense in his camp or closely associated with him. A number of pieces of evidence suggest that she had been associated with him in business, and the possibility of a closer personal association was raised, but not established; by the time of the hearing his evidence was that after years of separation he was again living with or associating with his wife, and the view that the evidence of Ms Lemmik was readily available to him at the time of the trial does not appear to me to be well supported. 79 The plaintiff's counsel claimed that there was some significance in the fact that a fax message sent at 16:40 hours on 28 February 2002 by Dr Rafter to Dr Grech was sent from 135 Macquarie Street. The office of Dr Rafter's solicitors was at 135 Macquarie Street; the medical centre with which the plaintiff claims he was associated was at 139 Macquarie Street. The fax message said "I hereby inform you that I am taking leave effective from today". It was almost contemporaneous with the letter of termination which was sent by Dr Rafter's solicitors one minute later from the same fax machine. In my finding, there is no support for any part of the plaintiff's case in the circumstances relating to sending the message by fax to Dr Grech, and there is no implication adverse to Dr Rafter's credit from the terms of the message. One minute after Dr Rafter told Dr Grech he was taking leave, his solicitors told the plaintiff that the contract was terminated. As Dr Rafter had already told Dr Grech face to face to the effect that he was leaving, the exact terms of the fax message cannot have misled him. In my view, the contention that what Dr Rafter told Dr Grech was adverse to Dr Rafter's credit is groundless. 80 Exhibit V is a form of Registration of Business Name. It is signed by Dr Rafter and dated 24 January 2002, and it shows him as the proprietor of a business under the name "Macquarie Street Cosmetic Clinic and Healthy Aging". The precise nature of the business of which was said to be "Minor Cosmetic Procedures". The address was Ground Floor, 139 Macquarie Street, Sydney. The business was to commence on 17 February 2002. The form was lodged by Ms Lemmik at the Department of Fair Trading on 25 January 2002. The business name was registered – Exhibit L. There is no evidence that that business ever was established or that that name was ever used as the name of any business, by Dr Rafter or by anyone else. Dr Rafter's evidence about the registration of the business name and his part in it was not internally consistent, and was not clear or comprehensible. 81 When first taken to the document, Dr Rafter was asked (t.137, l.20):- Q. Do you have any explanation why you were shown as the owner of the business name Macquarie Street Cosmetic Clinic Healthy Aging? A. Yes. I do. Q. What is your explanation? A. Because only a doctor can hold that name. His evidence went on to the effect that a name with the word "Clinic" could only be held by a doctor and he was simply lending his status as a doctor to hold that name for her business. It was his evidence that Ms Lemmik contracted other doctors to operate and carry out procedures or practice at 139 Macquarie Street "only insofar as general practice is concerned". I distinguish general practice of medicine from "minor cosmetic procedures", said in Exhibit V to be the precise nature of the business. Cross-examination returned Dr Rafter to Exhibit V several times. At one point he said to the effect that he signed the form in blank in 2000 when negotiating with someone other than Dr Bateman before entering into agreements with the plaintiff. Dr Rafter may have signed such a form in blank but I do not accept that that explanation applies to Exhibit V, which bears the print mark March 2001. Dr Rafter did not at any point give a clear or acceptable explanation of the events in which he signed Exhibit V, and I am not able to find that he signed Exhibit V in blank or that he did not know its contents. 82 Nonetheless it remains the case that there is no evidence that, apart from signing the form, he was ever involved in a business on the Ground Floor, 139 Macquarie Street Sydney called Macquarie Street Cosmetic Clinic and Healthy Aging, or that there ever was such a business. Exhibit V on its face appears to show, and it is probably true, that on 24 January 2002 Dr Rafter took part in obtaining registration of that business name, purportedly the name of a business of which he was to be the principal, which was to be established soon afterwards. These facts do not establish any of the breaches which the plaintiff alleges. Exhibit V and the terms of Dr Rafter's various explanations of it, which are unclear, show him in a bad light and are adverse to his credit. The plaintiff's counsel said of this evidence that it showed that Dr Rafter was beginning the process leading to medical practice or beginning the establishment of a practice, alternatively that he owned the practice that was being acquired and renovated to commence at some near date. In my finding, Exhibit V and its circumstances are consistent with but do not prove some such state of facts, and do not establish a breach of contract. Even if they did, the breach could not justify termination, and could not be considered repudiatory. Idameneo's failure to make payments. 83 The plaintiff's counsel submitted that the plaintiff's breaches consisting of failures to pay money did not justify termination under clause 10.1 of the Restraint Deed. Clause 27.1 of the Sale of Practice Agreement also comes under consideration. Counsel said that, according to the plaintiff's tax invoices, the amount payable in January was $3,000 to $4,000 and in February was $14,000. Counsel contended that the amounts involved and the circumstances of the breaches have the effect that not paying these moneys was not a serious breach. Counsel contended that Dr Rafter and Ticco owed the plaintiff $510,000. These submissions expressed an altogether wrong view of the importance of the continued failures to pay a portion of the moneys received to the defendants. It is not correct that the defendants owed the plaintiff $510,000; not even arguably was any money payable unless and until the contract was validly terminated; unless and until the plaintiff used the contractual machinery and brought about a termination the plaintiff had no justification for conducting affairs on the basis that it had a large claim consequent on a termination. The plaintiff's contractual obligations to pay a proportion of the moneys received at the times specified were entirely explicit and were not made interdependent with the existence or the plaintiff's belief in the existence of any countervailing claims. The view that it is not a serious breach to withhold the revenue of the defendants is completely wrong. In any event, within cl.10.1 and cl.27.1 that breach did justify the defendants' termination, whatever Dr Bateman's reasons were for deciding to commit the breaches. 84 Until there was a termination the parties were obliged to act on the assumption that the contract was to continue, yet Dr Bateman treated himself as in a position to stop the flow of money to which the defendants were entitled when he was dissatisfied. The sums are significant and the mechanism for making payments twice a month was obviously of central importance for the defendants' participation. The plaintiff did not tell the defendants that it had decided to stop the flow of money or explain its having done so, or indicate any circumstances in which payments would resume. Dr Bateman reinforced his complaints and dissatisfaction with the defendants by using a form of pressure which was unauthorised, unscrupulous and severe. This continued for many weeks, not for a short time. Behaving in this way, without any indication of circumstances in which the plaintiff was prepared to return to compliance, was plainly repudiatory. It also activated the contractual termination machinery. In my opinion the defendants were fully justified in terminating the agreement. 85 Doctor Bateman gave oral evidence (t.54) of his reason for giving instructions in early January 2002 not to make a mid-monthly or end of month payment to Dr Rafter. The reasons he expressed were these: A: It was due to a number of factors. The major factor was that Dr Rafter appeared to have terminated his contract or breached his contract or was leaving us in some manner and in order to arrive at our normal calculations of what people pay the company, we need to know the full facts of the work that has been billed and the income that has come in and there was, I was aware that Dr Rafter was doing some work at his centre that he had set up in Macquarie Street…Additionally I understand that Dr Rafter had taken some records away with him from the centre and I had been told that these were for medical report reasons and which I had no reason to understand there had been any accounting for it at that time. In addition to that, there were, an additional sort of sense of I no longer had any trust in Dr Rafter or anything that Dr Rafter did so it was that combination of factors that made me decide I should stop payment until we knew, a proper balancing out of accounts that were due or not due. 86 It has not been established that, in early January 2002, Dr Rafter had decided to leave the plaintiff in some manner. There was no need for an elaborate calculation to establish what was to be paid to him in January. It was not the case that he was doing work at Macquarie Street or that he had set up a centre at Macquarie Street. Doctor Bateman knew of only one occasion when he was told that Dr Rafter had removed medical records to make medical reports (t55); that event did not happen until late in February, and in January 2002 Dr Rafter had not taken records away. No basis has been shown for thinking that Dr Rafter was charging for medical reports in some way which did not involve the plaintiff. Dr Bateman's sense that he no longer had any trust in Dr Rafter or anything that Dr Rafter did, did not justify a decision to stop making payments which the plaintiff had an explicit contractual obligation to make, out of a stream of revenue which had been earnt by the defendants and had been directed to the plaintiff for purposes which included its further payment on. 87 Doctor Bateman explained his statement that he could not trust Dr Rafter by saying that it was not based on the suspicion that he was involved in another practice, but (t69, l.28): "A. What I had noticed is almost from the beginning there was a dose of dishonesty with anything that he either said or did in relationship from the word – the negotiations up until the time of his departure." As an instance of this he said to the effect that Dr Rafter had said during negotiations that he worked 90 hours a week, they agreed on a reduced number of hours that he wished to work but "When it came to actually doing the hours, he didn't do the hours that he contracted to do which is really a very important part of what it is about." 88 The first breach complained of in the letter of 18 September 2001 refers to this. Dr Bateman said that he spoke about this in discussions with Dr Rafter, and Dr Bateman did not think that Dr Rafter did deny that he worked less hours than he had agreed to. (t.70, l.11) A. No, I don't think he did deny it. That was part of how I lost trust in him. Everything was something less than what it was and this was a typical – he would be short on the hours. He would prevaricate as to what the hours were and yet I knew in fact what, the hours he had worked that he would always have some reason why which, these things one by one don't sound a lot. It is when you add them cumulatively, doing that, I got to this business of trust or no trust. It was not because of any one particular thing. It was multiple things. 89 Doctor Bateman said that another cause of distrust was that Dr Rafter did not tell Dr Bateman during the negotiations that he had a relationship with Ms Lemmik who was the Practice Manager in his practice and remained the Practice Manager after the plaintiff acquired the practice. (t72, l.29) "All I was trying to say, this was part of never quite getting 100 percent of what it is all about from Dr Rafter." Dr Bateman did not claim that during the negotiations he had asked whether there was any personal relationship between Dr Rafter and any staff member. Doctor Bateman's adverse view of not being told of a relationship between Dr Rafter and Miss Lemmik in the course of negotiations was not well founded on any contractual entitlement, on the nature of the relationship, on any adverse consequence of the relationship which has been proved, and was not well based in any other way. 90 Dr Bateman also instanced Dr Rafter's not getting accreditation at a day surgery as a source of his dissatisfaction. He expressed dissatisfaction with non-payment of rent on 294-296 New South Head Road. Dr Bateman expressed dissatisfaction with what he spoke of as referral work from Brookvale Skin Cancer Clinic to his (Dr Rafter's) practice in Macquarie Street (meaning Dr Rafter's conjectural practice as alleged by Dr Bateman to exist.) Dr Bateman stated the basis of his belief that there had been such referrals, and the terms in which he stated the basis show, in my finding that he did not have a reasonable basis for believing that there had been any. This was not one of the matters complained of in correspondence, and persons who Dr Bateman said had informed him that it happened were not called in evidence. In any event a decision to whom to refer a patient is within the professional discretion of each medical practitioner and is not a matter which the plaintiff is in a position to control, either according to terms of any contractual document or according to the plaintiff's theory of the relationship between it and doctors who work in its centre. 91 Another basis for mistrust which Dr Rafter gave in evidence was that the father of a woman who worked at the Darlinghurst centre had told Dr Bateman that Dr Rafter had propositioned her; and Dr Bateman did not tell Dr Rafter of this. He also attributed to Dr Rafter general behaviour which caused disharmony in the practice wherever he went, generally manipulative behaviour and (t80, l.26) "Every time I would have a meeting with him I would loathe going to the meeting because I knew that he would be wanting to get something that was not generally expected of us …". Dr Bateman would not accept that, rather than having a distrust of Dr Rafter, he had an intense dislike of him. In denying this Dr Bateman was either dissembling or he was blind to the reality of his own feelings. When dealing with the reasons for his distrust of Dr Rafter, Dr Bateman spoke rather wildly and passionately and did not appear to be entirely in control of himself. 92 In my finding the primary cause of Dr Bateman's dissatisfaction was that he believed that Dr Rafter was not working the contracted number of hours or attending at rostered times. Beyond that Dr Bateman has a considerable capacity for finding bases for dissatisfaction, some of them objectively slight or non-existent; he has strong personal antipathy for Dr Rafter, sought to make the most of every grievance strong or weak, and is not a reliable or objective source of evidence about the controversy. It should also be said that Dr Rafter appears to be a difficult person to integrate into a co-operative working environment. As his evidence before me showed in some instances, his thoughts and his explanations are not always well integrated or highly concrete. 93 After inconclusive discussions about ending their relationship, Dr Bateman decided to stop payments from being made, and no further payments were made, although there was no actual or asserted contractual justification for stopping the payments. This was plainly repudiatory behaviour on the part of the plaintiff. The amount of income received as shown in the tax invoice attributed to the end of December 2001 was markedly lower than normal, and this is brought under considerable suspicion by the circumstances, but it has not been established whether or not it is accurate, and whether or not any money should have been paid to Dr Rafter at the end of December. The conclusion that the conduct was repudiatory is the same whether or not some money was property accounted for or was withheld at the end of December. In the face of this repudiatory conduct, Dr Rafter was entitled to terminate the relationship when he did on 28 February 2002, whether or not he had exactly followed the contractual machinery relating to termination. In the events that happened he in fact had exactly followed that machinery. 94 The flow of money, at prescribed and regular intervals, being the income of Dr Rafter's professional work, was obviously of central importance to the whole continuing arrangement. Intervention in the flow of income occurred in a contractual context where Dr Rafter was restrained from working anywhere else. Whether or not the conduct was repudiatory has to be appraised in an assumed state of fact in which Dr Rafter went on working under the contract, and his opportunity to work elsewhere than in the restraint areas has no real significance. It could not possibly have been expected by the plaintiff, or by anybody else, that Dr Bateman could cut off the flow of money but that performance of professional services would continue for whatever indefinite period it took for Dr Bateman to take and specify steps or to come to some conclusion about the parties' financial relationship. He did not claim that he took any such steps, or that he told the defendants that payments would resume when any identified problem was solved. The suggestion that the moneys due from the income should be set off against $510,000 repayable on termination has a strong edge of absurdity as there had been no termination, and until there was, the potential for one could not have been sincerely regarded as a justification for withholding contracted payments. Messrs Abbott Tout's letter of 26 February 2002 serves to emphasise the plaintiff's repudiatory intention. Tax Invoices and under-payment. 95 Exhibit B contains monthly tax invoices from the plaintiff to Dr Rafter which account for income received, and, after charges and adjustments, including for a payment made mid-month, show the net amount payable to Dr Rafter at the end of the month. It was Dr Rafter's evidence (t239 to 240) that he received tax invoices dated 31 October 2001 and 30 November 2001, but did not receive the remaining tax invoices dated on the last days of December 2001, January, February and March 2002. There is no evidence to the contrary, and I find that they were not sent. There were earlier tax invoices in the series up to September 2001; they are not in evidence, although some figures from them are. According to the terms of the December 2001 tax invoice, the income received was $9,480.59, there was a mid-month payment of $5000 and no sum was payable at the end of the month, when there was a debit of $3,872.42. The amount shown as income received in December 2001 is very markedly less than the amount shown in any previous month (t37-39). It is less than half that shown in any previous month and a third of that shown in some earlier months. 96 The Tax Invoice for January shows that no mid-month payment was made and that $3,982.58 was payable at the end of the month; this of course was not paid. The tax invoice for February 2002 again shows that there was no mid-month payment and shows that the net amount payable at the end of February 2002 was $14,368.84. Again that amount was not paid. Further, the amount payable at the end of January was not credited, which contrasts with the practice in November, December and January when earlier deficiencies were debited. The total sums due to Dr Rafter at the end of February 2002 and deliberately withheld were $18,351.42. The defendants do not accept that these were the only amounts payable, but have not established that any further sum is payable, although I regard that as an appropriate matter for conducting an inquiry. The invoice for March shows that a further $4,886.32 became payable because of income received, presumably in March after termination. Mr Duff showed in evidence and Dr Bateman's evidence confirmed that the amounts shown on the tax invoices Exhibit B as payable in January, February and March were not paid on Dr Bateman's oral instruction given to Mr Duff early in January 2002. 97 Counsel for the defendants sought to establish that the plaintiff understated the amount shown in the Tax Invoice dated 31 December 2001 in Exhibit B as income received in December 2001, which is the basis of calculation of the service fee to the plaintiff, GST on the service fee and ultimately the amount payable at the end of December 2001. This reflects in part breach No. 1 specified in the letter of 19 February 2002; that breach also reflects the simple failure to pay any sums at all. Defendants' counsel also sought to establish (referable to Breach 4 in the letter of 19 February 2002) that PIP (meaning Practice Incentive Payment) payments had been received in December 2001 but had not been accounted for in the tax invoices in Exhibit B. No substantial evidence was adduced which tends to show positively that the amount received was understated or that PIP payments were received and not accounted for; the plaintiff's evidence was to the contrary effect in each case. The relevant information is peculiarly within the knowledge of the plaintiff. Mr Duff said that Practice Incentive Payments were accounted for separately to the tax invoices. He gave in evidence circumstances relating to delay in payment of Practice Incentive Payments where a new practice is started up and said that receipt of the first quarterly payment for a new practice can be anywhere up to a year from the date of opening the practice. The amount received in December is surprisingly low in comparison with the two earlier months shown in Exhibit B and also with receipts in January and February 2002. I have not been satisfied that there were breaches in these respects but I am satisfied that there is sufficient indication to justify ordering an inquiry into the amounts which in fact were received and should be accounted for. 98 The tax invoices do not purport to deal with the whole of the claims between the parties of which resolution was pending; that is not the nature of tax invoices, and their terms show what it was that they were intended to deal with. Evidence of Mr Steer, an accountant called by the defendants was admitted on a limited basis and can be relied on only to show, as in my opinion it does, that there is a sufficiently substantial need to justify an inquiry to settle accounts between the parties. Leases and rent on 294-296 NSH Road. 99 The premises at 294-296 New South Head Road were Shop 1, Ground Floor, Level 1 leased for four years from 1 May 2000 by Scarfam Corporation Pty Ltd as lessor to Dr Rafter as lessee and Shop 4 by a separate lease which ran from 1 April 2000 to 31 March 2004. 294 and 296 New South Head Road were not occupied by the plaintiff or little used and one was partially set up to put a medical practice into it. At some time, probably months before July 2001, Dr Bateman came to the view that those premises could not be used for cosmetic surgery and medical purposes. He looked at alternative uses including letting to a tenant, whom the landlord would not accept. The lessor terminated or purportedly terminated these leases by taking possession on 12 July 2001 and changing the locks, and the lessor's solicitor sent Dr Rafter a notice dated 12 July 2001 but received only after possession had been retaken – Exhibit H. The lessor claimed that rent was unpaid (and the claim in Exhibit H was that rent due on 1 May, 1 June and 1 July was unpaid and that part of the rent due for April 2001 was unpaid). 100 The obligation of the defendants to keep the rent paid was not conditional on or interdependent with the obligation of the plaintiff to pay the amount of the rent so payable to the defendants. Although the documents in evidence which show payments by the plaintiff to Ticco for Shops 1 and 4 are difficult to follow it was acknowledged by Dr Rafter that by 12 July 2002 the plaintiff had paid to him all payments which the plaintiff should have paid on account of rent for Shops 1 and 4; (see t194, l.16-23 and Exhibits E, G and S). The payment of $8,991.72, recorded in Exhibit E, an extract from the plaintiff's general ledger account as made on 2 July 2001, was the last payment made by the plaintiff in respect of the premises 294-296 New South Head Road. 101 Doctor Bateman gave evidence (t54, l.51-53) that about July 2001 he gave instructions to cease to pay to Ticco sums to be passed on to the landlord in respect of rental at 294-296 New South Head Road, Double Bay. He explained this by saying that a solicitor for the landlord had written to the plaintiff saying that the landlord was threatening to terminate the lease, that he wrote to the solicitor contending that the lease has been terminated unlawfully and that the plaintiff had not been given an opportunity to correct anything, but that he accepted the termination. 102 The plaintiff asserts that the defendants were in breach of the Sale of Practice Agreement by failing to pay the rent; this assertion must be understood to refer to the events up to 12 July. Dr Rafter's explanation at (t194, l.27 to 195, l.12) was to the effect that the agent was difficult to contact, that cheques for rent were available for the agent to collect at the surgery but had not been collected and that one previous cheque had been collected and not banked. Correspondence in Exhibit H between persons representing the lessor and Dr Rafter contains assertions on his behalf that there were no arrears on 12 July and on behalf of the lessor that there were arrears of several months and that $8,991.74 was paid to the lessor's agent at 6 pm on 12 July (which would have been after the termination). I cannot say I prefer one set of assertions in Exhibit H to another. The only evidence on the subject of whether the rent was paid to the lessor is the evidence of Dr Rafter; under the leases rent was payable to the lessor or as the lessor directed and there is no evidence of the terms of any direction; there is no other evidence establishing in detail what happened or failed to happen about payment of rent up to 12 July or on 12 July or what arrangements if any there may have been for the agent to collect cheques. Dr Rafter's evidence about payment of rent does not go to appropriate detail but there is nothing against it except assertions in letters. My finding is that the plaintiff was not established on the balance of probabilities that the defendants failed to pay the rent on Shops 1 and 4, 294-296 New South Head Road up to 12 July 2001. 103 Whether or not termination of the leases was effective, and whether or not, if it was not effective, or even if it was, the plaintiff continued to have an obligation to pay to the defendants the amount of the rent or otherwise to indemnify them in respect of claims by the lessor have not been explored in this litigation and these reasons express no conclusion on them. Pro-rata payment. 104 The observation that a large sum of money was paid for the sale must be qualified because of the potential pro-rata repayment under cl.17.7. Clause 17.7 is not expressed to operate or have effect after termination, so under cl. 27.3 the obligation to make a pro-rata payment does not arise on or after termination by the purchaser. Clause 17.2(a) is not expressed to operate after termination, and in its nature could not operate after termination. Clause 17.7(c) could not operate after termination. Accordingly no circumstances have occurred which have given rise to an obligation to make a pro-rata repayment under cl.17.7. Removing records. 105 In the case presented by the plaintiff Dr Rafter did not ask for and did not obtain permission to remove files for the purpose of working on reports or for any other reason, and the subject was not spoken of. It was Dr Rafter's evidence that about 10 o'clock on 27 February 2002 when Dr Rafter finished his work at the Darlinghurst Medical Centre he packed up his personal property in boxes and he also packed and took away what he says were 6 to 10 files relating to reports which he still had to write; some of the reports were urgent. He said to Dr Grech who was the Medical Director of the Darlinghurst Medical Centre "I am letting you know that I am taking them. Is that all right?" and Dr Grech said "That is fine.". 106 Doctor Grech gave an account of this conversation on affidavit. Among other things he said to the effect that Dr Rafter came into the Medical Centre with one or two large boxes and proceeded to pack a number of items from his office into the boxes. He did not specifically mention packing medical files as something which he had observed. In oral evidence in chief Dr Grech said (t100) that the things packed up were odds and ends, he had no recollection of what they were precisely and no specific recollection of Dr Rafter's packing files into boxes. He had no recollection of conversation to the effect asserted by Dr Rafter in which Dr Rafter requested permission to remove the files to complete medical reports and accounts. He could not deny that something to that effect was said but he did deny giving permission to remove files. 107 In cross-examination Dr Grech said that his denial of having consented to remove the files was (t105, l.51) "… On the basis that it would have been my practice to disallow files to be removed by someone that I thought was leaving the premises on a permanent basis." He agreed that from time to time doctors did take files away from the clinic to prepare reports. Except for the circumstance that Dr Rafter appeared to be leaving finally, there would not have been any difficulty. 108 Ms Becke who was the medical receptionist, gave evidence of observing Dr Rafter bringing empty boxes into the Darlinghurst Medical Centre and later taking the boxes which then appeared to contain a number of personal effects down to his car. He offered her a lift in his car which she accepted and her evidence was that as she got out of the car she saw a number of patient files in and on top of the boxes. Ms Becke was in Canada and leave to read her affidavit was given notwithstanding that she was not available for cross-examination (t102, 108). 109 Doctor Rafter was required to make and made an affidavit early in these proceedings on 7 March 2002 disclosing the medical records which were in his possession: "Some …. which I needed to prepare medical records for patients seen by me at the Darlinghurst Medical Centre and the Skin Clinic at Brookvale" and some "… that had been kept at the Double Bay Surgery as a result of a health insurance inquiry which is not proceeding." I take it from the evidence generally that the former were those which he removed from Darlinghurst on 27 February. All documents were returned to the plaintiff early in the litigation (see Exhibit J). 110 Doctor Bateman accepted that a doctor who left one of the plaintiff's centres when in the process of preparing medical reports for patients had an obligation as a doctor to complete those reports, but said that he should do the medical records at the Centre and complete them there and that it was not normal practice to remove them to do medical reports. He accepted that the reports removed by Dr Rafter were returned. 111 An effect of cl.6.6 of the Practitioner Contract is that all records were the property of the plaintiff and they were not to be removed. Dr Rafter acknowledged in evidence that it would have been improper to remove them without consent. There is in my view no reason on the evidence to find that Dr Rafter removed the files for an improper purpose, or for any purpose other than for preparing reports and accounts. Removal with the consent of the Medical Director for that purpose happened from time to time. The plaintiff proceeded immediately to litigation and on the first return of the Summons Dr Rafter agreed to deliver by 12 March the files and the completed medical reports. It appears that he complied with this, because at the time of the hearing there was no longer any claim for return of medical reports. Dr Rafter took the records and retained them for a short time, for a proper purpose, and to the advantage of the plaintiff as well as of himself. I see no realistic possibility that the plaintiff has suffered any damages thereby. Breach by removal of records would be capable of remedy by returning them, but no notice calling for remedy was delivered before commencing the proceedings. If there had been no consent to the removal of the medical reports, the removal would not in the circumstances including the purpose for which they were removed have been a repudiatory breach of the Practitioner Contract. I see no basis at all for any finding that the records were moved for some inappropriate purpose such as assisting Dr Rafter to divert patients from the plaintiff's organisation. Although the existence of consent to their removal is not completely clear I am of the view that the balance of probability favours, to some degree, a finding that Dr Rafter had Dr Grech's consent to the removal of the files. Irregular dealings with cash collections. 112 In several months in 2001 cash collected at the Double Bay Medical Centre practice was not banked promptly but was handled irregularly. The irregularities included that Dr Rafter retained money for his own benefit out of cash received at the Double Bay Centre and made good the amounts retained later. Some thousands of dollars were involved. One or more other medical practitioners also retained moneys for a time and made up the deficiencies later. Some business expenses were paid out of cash received. These dealings with money were contrary to the Provision of Services Contract cll.5.1 and 5.2 under which the plaintiff was to accept payment of all the defendants' accounts, issue receipts and bank all moneys into an account controlled by the plaintiff and (5.2) Ticco was obliged immediately to deliver without deduction any money received in payment for medical services. Further, as Medical Director it was Dr Rafter's responsibility to see that all moneys received at Double Bay Medical Centre were properly banked to the plaintiff's bank account and were not dealt with in any other way. 113 Irregular dealings are indicated but not clearly recorded in documents from the plaintiff's records in Exhibit C including a note from Ms Lemmik, then Practice Manager at Double Bay to someone called Karen in the plaintiff's organisation, recording among other things that in the period 30 May 2001 to 28 June 2001 Dr Rafter had taken $4000 out of the takings and would put it back before 30 July 2001. Another note in Ms Lemmik's handwriting shows that in the period 29 June 2001 to 30 July 2001 Dr Rafter had taken $3,300 from the cash. A further note says to the effect that Dr Rafter had cleared his debt by depositing $2000 cash on 30 August 2001 and $5,300 by cheque on 7 September 2001. Mr Duff, the plaintiff's company secretary, said on affidavit that the sums totalling $7,300 were repaid in or about October 2001. I see no reason to doubt that as recorded in a note from the plaintiff's file in Exhibit C, the repayments took place on 30 August and 7 September 2001. Dr Rafter maintained in evidence that he had made up the deficiencies, but he was quite unable to explain from his recollection of the transactions or by reference to banking records when or how he had done so. It is to be inferred that the plaintiff, which was alleging breaches of contract, was also unable to give any further evidence explaining these events, as the plaintiff did not do so. Whatever happened in detail, Dr Rafter made it good by 7 September 2001, as the plaintiff's own records in Exhibit C show. 114 It is plain and obvious that the cash takings should not have been dealt with in this way, but the records produced and tendered by the plaintiff in Exhibit C show that the two sums totalling $7,300 taken by Dr Rafter in June and July were fully paid for by deposits made by 7 September 2001. The problem of late banking of takings, whatever exactly it was, was overcome by 7 September 2001 and could not be treated by the plaintiff as repudiatory behaviour or as justifying termination in 2002. 115 There were other transactions about this time, also referred to in Exhibit C. Dr Rafter wrote a cheque in favour of the plaintiff for $7,590 on 28 July 2001; this cheque was deposited to the plaintiff's account on 28 September 2001, dishonoured, marked "refer to drawer" and was still in the plaintiff's hands to tender in evidence as part of Exhibit C. The cheque is stapled to the first page of Exhibit C, copy letter to Dr Rafter of 2 August 2001, and a yellow sticker with some handwritten notes of unexplained significance is also attached to the letter; but these two attachments have no discernible connection with the letter, apart from being attached to it. The plaintiff did not tender any evidence showing on what account $7,590 was paid or attempted to be paid by Dr Rafter to it, but on a whole view of Exhibit C that cheque was not on account of the sums taken from the takings in June and July, because they had been made good by 7 September. A debit for the amount of that cheque was included among a number of debits claimed from Dr Rafter in a letter from Primary Health Care Ltd to him dated 5 October 2001, totalling $12,123.16 and also in Exhibit C. Apart from the letter of 5 October 2001 in Exhibit C the plaintiff's evidence did not include any evidence supporting the debits which produced a claim that $12,123.16 was due from Dr Rafter or any evidence dealing with whether the sum so claimed has been paid or whether it should be: not an iota. The plaintiff did not show what had become of this claim; unlike some other claims against Dr Rafter it was not set off against moneys payable to him under the series of tax invoices in Exhibit B, and as the plaintiff did not take the opportunity to claim it and repay itself in that way, I am left to suppose that it was resolved in some other way. Whether or not it was abandoned or was resolved, it has not been related by evidence to any breach of contract put in issue in these proceedings, and I feel that if the plaintiff had been in a position to prove that it remained unpaid, for example to give some support or justification to Dr Bateman's decision to withhold payments of money under the tax invoices, the plaintiff would have put that in evidence. Dr Rafter's hours of work. 116 The plaintiff's contention that Dr Rafter did not work periods totalling 70 hours per week, including 65 hours rendering medical services and not less than five hours as Medical Director, were supported only by generalised assertions by Dr Bateman who was not in a position to give admissible evidence or to deal at all, on the basis of his own knowledge, with the times of Dr Rafter's attendance. The only records of the plaintiff tendered by it are found in Exhibit Q and are rosters prepared by Dr Grech showing the times at which doctors including Dr Rafter were rostered to attend at Darlinghurst from the week beginning 24 September 2001 to the week beginning 25 February 2002; this does not deal at all with the actual hours of attendance. As the plaintiff and its staff were in charge of management of Darlinghurst Medical Centre and other medical centres, the plaintiff inherently had the power of adduction of evidence in support of its allegation. The only other material produced was a report by Dr Grech to Dr Bateman dated 3 January 2002 which purported to show Dr Rafter's work history at Darlinghurst for a number of weeks from 24 September 2001 onwards; no evidence was led from Dr Grech in support of this. It shows Dr Rafter's attendance as "full" in ten of fifteen weeks, with extra attendances in three of those weeks; days off in five weeks, totalling 19 days of which three were said to be "conference". For two coming weeks beginning 7 January and 14 January 2002 Dr Grech said "Proposes two weeks off" and Dr Rafter's evidence shows that he did take those weeks off and went to England. Dr Rafter's obligation under cl.17.2(b) of the Sale of Practice Agreement and cll.3 and 4 of the Medical Director Agreement was to render medical services for no less than 70 hours per week for 48 weeks per financial year. Dr Rafter said in evidence (t.187, l.33) that his average attendance was exactly 65 hours per week which did not include writing up reports. He referred to documents which do not in a clear way bear this out; but it was not he who bore the onus of proof, employed the staff or maintained the records. 117 It is not easy to apply the provisions of the Sale of Practice Agreement cl.17.2(b) relating to the hours for which professional services were to be rendered to Dr Rafter's position at the Darlinghurst practice where he was no longer Medical Director and the provisions about allocation of not less than five hours of his time per week to performing services as the Medical Director cannot be applied. However there was an overall obligation to render medical services for no less than 70 hours per week for 48 weeks per financial year. I find the records in evidence of little use and the best evidence on the subject available is Dr Rafter's evidence that he worked an average of 65 hours per week, with some additional work writing up reports. This does not constitute substantial breach such as would justify termination. It certainly does not show a repudiatory intention. In any event, the plaintiff did not terminate the contract according to the contractual mechanism. My finding is that the plaintiff has not shown breaches of those obligations which were substantial or amounted to repudiatory conduct so as to justify either termination or repudiation. In any event the plaintiff did not purport to terminate the contracts or accept any repudiation before the defendants did so for cause. Dr Rafter's behaviour. 118 There was no evidence which could be called substantial that Dr Rafter had behaved offensively or disharmoniously towards others working in the plaintiff's organisation, or that he had propositioned a female staff member, and there was no real attempt to set up such a case or support it by cross-examination. If I were to be asked to make adverse findings it would be counsel's duty to put the adverse matters clearly to Dr Rafter: he did not do so, and the allegations were so unclear that counsel could not do so. There was really nothing in evidence on the subject but wild talk from Dr Bateman. There was no procession of insulted and offended witnesses from the plaintiff's staff. My conclusion is that this part of the plaintiff's case has not been shown to have any substance. Validity of 8 km restraint. 119 Evidence from both sides was directed to the question whether the restraint against competition in the Sale of Practice Agreement was reasonable in respect of the area of the restraint. The short effect was that Dr Rafter was not to render medical services at any place within a radius of 8 kilometres of 298 New South Head Road, Double Bay; a similar restraint on Ticco conducting an incorporated medical practice; and similar restraints for a radius of 8 kilometres around each other place at which Dr Rafter rendered medical services. There are extensions for related businesses. Dr Rafter gave evidence that "In my experience as a [General Practitioner] in both Melbourne from 1977-78 and in Double Bay from 1997-2000, only a few patients would travel more than a 5 km radius to my surgery, and most less than 3km radius. Most new patients, once a satisfactory relationship has been established, stay with the new doctor and/or medical practice, particularly when they are bulk billed." Doctor Rafter said (t.169) that patients came from the North Shore, sometimes at 1 o'clock at night because they could not find another doctor, but those patients would make only 5 percent of the patients. He said that about 95 percent came from the Eastern Suburbs, and he indicated that most came from Woollahra, from Rushcutters Bay or east of Rushcutters Bay and to the south most of the pool of patients came from Bondi Junction or Bondi Beach. Dr Bateman said "… In my experience [as General Practitioner] working for 30 years, large numbers of patients will travel 10 to 12 kilometres to see their doctors. Clearly, the further the radius from the side of practice the reduced the number of patients who will travel." Both these statements were expressions of interpretation and experience, not detailed analyses of the addresses and habits of patients. 120 A radius of 8 kilometres from Double Bay includes all the Eastern Suburbs as far south as Maroubra, and suburbs to Sydenham and Mascot in the south west, parts of Petersham, Leichhardt and Rozelle to the west and north west, all of Mosman Municipality and as far as Greenwich and St Leonards in the north west. Of course it includes all the Central Business District of Sydney. As an area of restraint for the effectual protection of goodwill in the sale of a medical practice at Double Bay, which is fairly readily accessible by roads and transport, I do not regard an 8 kilometre restriction as unreasonably extensive. If a patient will go four or five kilometres in one direction to see his doctor, he may well go four or five kilometres in the other direction to see his doctor outside an eight-kilometre restraint area. The restraint has to be considered in the context of the sale of a medical practice in which personal association with the practitioner is characteristically of high importance, where the personal involvement of the practitioner was to continue and the amount paid for the practice was large, although variable in ways difficult to calculate. 121 With respect to duration the restraint was to continue until three years after termination of the Practitioner Contract, but in any event for five years from the date of the contract; that is until 25 August 2005. The effect produced by termination on the time of the restraint is to be understood by reading cl.27.3 of the Sale of Practice Agreement with cl.22.2; by cl.27.3 termination does not affect such of the provisions of the Deed as are expressed to have effect after termination; in cl.22.2 the provision relating to restraint of three years from termination is so expressed but the provision relating to restraint of five years from completion is not; so the restraint of three years has effect after termination so as to operate until 28 February 2005. (Operation until 25 August 2005 was conceded, but I would not act on the concession as it was plainly wrong.) 122 In considering the operation of the restraint clause it is important also to observe that Dr Rafter is not restrained by it from practising medicine anywhere near Sydney outside the 8 kilometre radius. Several million people live near Sydney but outside the restraint area. Nor is he restrained from practising medicine anywhere else in Australia, including in Melbourne where he spent most of his professional career. In my opinion the restraint of 8 kilometres from the Double Bay practice was reasonable in the interests of the parties. 123 There is in my opinion no serious consideration favouring a view that the restraint was unreasonable in the interest of the public, as Dr Rafter's evidence shows that there were many other medical practices in Double Bay, and there is no reason to suppose that the availability of medical services within the restraint area will be materially affected, or affected at all by his exclusion. In my opinion the restraint for 8 kilometres from Double Bay until 28 February 2005 for which the Sale of Practice Agreement in the circumstances provides is valid and effectual. 124 The restraint by reference to areas based on other premises of the plaintiff at which Dr Rafter worked is in an altogether different position. That restraint has only a faint connection with the sale of the medical practice. When the terms of the restraint in its application to what are referred to in the Sale of Practice Agreement as New Premises are considered with the number of premises at which the plaintiff operated and the opportunity to the plaintiff to require Dr Rafter to work at any of them, and at any other medical centres which it might establish, during five years, and when regard is had to how little time it would be necessary for Dr Rafter spend working in any particular place, the restraint clause placed it in the hands of the plaintiff to require Dr Rafter to work at many different places and produce a great number of restraints for many circles of 8 kilometres radius, limited only by the number of medical centres it might establish. There is no relation between the intensity of Dr Rafter's connection with any particular medical centre and the area and duration of the restraint in relation to it; he worked, as he calculates, about 10 Sunday afternoons at Maroubra but work there could produce a restraint of five years duration and 8 kilometres radius. Similarly in its operation in relation to Brookvale the restraint would operate for many Northern Suburbs of Sydney for five years. The restraint calculated by reference to the premises at Darlinghurst would be little more extensive than that calculated by reference to Double Bay and would include a few more areas to the west, north-west and south-west. None of these restraints has any real connection with the sale of the practice at Double Bay or with protection of the goodwill or other subjects of the sale. None can be regarded as reasonable in the interests of the parties for the protection of the interest of the plaintiff in what it bought. If a modification under the Restraints of Trade Act 1976 were undertaken the operation to which these restraints would be modified could be for no more than a few months and a few kilometres in each case; for a period which expired long ago and less extensive than the interlocutory injunction. For these reasons I am of the opinion that the restraints by reference to New Premises are void, and should not be given effect either in their own terms or in any modified form. Validity of the restraint on providing Practice Management Services. 125 Claim 9 in the Summons is a claim for the enforcement by injunction against Dr Rafter of the restraint on providing services to doctors in cl.3 of the Restraint Deed dated 26 August 2000. The injunction claimed would continue until 28 February 2005, which is within the period of operation provided for by cl.3.1(d) and would relate to the Sydney Metropolitan Area within the limits referred to in cl.3.2(c)(i). In cl.3.2(c)(ii) there is also a restraint relating to operations in the Melbourne Metropolitan Area; the sale of practice had nothing to do with Melbourne and this restraint is obviously unreasonable, but the injunction claimed does not relate to the Melbourne Area. It was Dr Rafter's evidence (t.127) that he did not, at the time of giving evidence, intend to operate a medical support service organisation at medical centres of the business structure operated by the plaintiff and that he was not involved in such a structure at the time. The context set by the previous few questions suggests that he was expressing his intentions on the assumption that the contractual restraints operated. He was, of course, speaking at a time when he was subject to interlocutory injunctions. There is in my understanding no substantial evidence that Dr Rafter has threatened or that he intends to engage in Medical Practice Management. On the other hand, when in passages in affidavits he gave evidence of the difficulties which observing contractual restraints would impose on him, he did not include the Practice Management restraint in the subjects of which he gave evidence. It is not enough to ground an injunction that a restraint, even an express negative restraint (as cl.3.1 is substance is) should exist; there must be some ground on which to fear that if not restrained by injunction Dr Rafter would act in breach of the restraint. In my opinion no basis in the threat or fear of breach for the grant of an injunction has been shown. The relatively ready availability of an injunction to enforce an express negative contractual stipulation, upon which Callinan J made observations in Maggbury Pty Ltd v. Hafele Australia Pty Ltd [2001] 76 ALJR 246 paras 102 to 105 does not mean that there is no need for proof of a case of threatened or reasonably feared breach upon which to ground an injunction. 126 The Restraint Deed is one of several documents which in substance embody and give effect to the sale by the defendants of the Double Bay practice on terms of which it was a significant part that Dr Rafter would continue to work as part of the plaintiff's organisation as Medical Director for an indefinite but in the contemplation of the parties lengthy period, during which he would have the opportunity to become familiar with the plaintiff's business techniques and with much confidential information, including personal contacts with patients, other medical practitioners, staff and suppliers. Further the restraint was given in return for the price in the sale of the Double Bay practice and the significant sum of $20,000 paid, in the words of cl.2.2 of the Restraint Deed "For the purpose of expanding the restraints in this Deed beyond what would otherwise have been reasonable …". The defendants including Dr Rafter were in a good position to judge what limits on their future activity it would be appropriate to accept in return for these payments. There is no possible adverse effect on the public interest of keeping Dr Rafter away from operating as provider of Medical Practice Management services for some years; so far as evidence shows he had not done that before August 2000 and he has not done that since 28 February 2002. There are considerations which favour the view that the restraint relating to the Sydney Metropolitan Area is reasonable. 127 Kone Elevators Pty Ltd v. McNay & Anor (1997) ATPR 41-564 shows, in the citations and observations of Sheller JA at 43834 that a restraint cannot validly protect an employer from competition, but can validly protect his trade secrets or his confidential information. The plaintiff's business methods are not trade secrets or confidential information; there is no evidence that they are and there is nothing inherent in them which could place the business methods in either of those categories. The kind of business which the plaintiff operates is not unique to the plaintiff. Skill, experience and effective business operation will have great impact on the success of operating such a model, but the model was not, and was not claimed to be a trade secret. Although taking part in the management of such an organisation would give a person an opportunity to know confidential information special to the particular operation, the protection lawfully available to that interest is restraint of abuse of confidential information, not restraint from competition at all. In my opinion the Restraint Deed cannot be justified, notwithstanding the significant separate payment to Dr Rafter for which it provided. 128 The decision of the High Court in Peters (WA) Ltd v. Petersville Ltd (2001) 205 CLR 126 is that the test stated by Lord Pearce in Esso Petroleum Co. Ltd v. Harpers Garage (Stourport) Ltd [1968] AC 269 at 328, cited in Peters at 24 should not be accepted as Australian law; see in Peters paras 24, 26 and 39. The consequence is that a restraint of trade falls to be tested by the test of reasonableness in the interest of the parties and the interest of the public whether it is directed towards the absorption of the parties' services or whether it is directed towards their sterilisation. In my opinion this holding has no impact on the present case. The restraint on Dr Rafter's conduct after termination was plainly not directed to the absorption of his capacity. It was directed to the sterilisation of his capacity to engage in supply of Medical Practice Services in the Sydney Metropolitan Area, and in the Melbourne Metropolitan Area; and even accepting, as I understood the plaintiff's counsel did, that the restraint for Melbourne, where the plaintiff did not at the time of the contract operate, is indefensible, the reasonableness of the restraint for the Sydney Metropolitan Area, in which Dr Rafter had worked for some years before August 2000, was not established, as the plaintiff's counsel sought to do, by pointing out how much of Australia remains for him to operate in without restraint. Other parts of Australia have not been scenes of his career. 129 The plaintiff's counsel referred to Ashcoast Pty Ltd v. Whillans (Ambrose J 14 October 1996 unreported) in which his Honour granted an interlocutory injunction to enforce a restraint for a period of three years within a radius of seven kilometres of the medical centre owned by the plaintiff at which the defendant obtained a contractual licence to use facilities. The restraint was not associated with sale of a practice. The radius of seven kilometres related to identified premises without, it would seem, any provision corresponding with the provision in the present case which creates a new restraint area around every location at which the defendant works. His Honour said of the restraint that there was nothing patently unreasonable about it. The interlocutory injunction was also grounded on the fact that the defendant had deliberately set about extracting the names of patients and canvassing them, initially by subterfuge. The decision of Ambrose J was an interlocutory decision and was appropriately closely related to the facts of the case before him. It did not purport to establish any general principle. Cross-claim based on misleading or deceptive conduct. 130 Doctor Rafter made in evidence a number of complaints about pre-contractual representations made to him by Dr Bateman. In my understanding these were put in evidence in support of his claim for a remedy under the Trade Practices Act 1974 (C'th) based on alleged misleading or deceptive conduct. At this point as at many other points the absence of pleadings greatly hampers understanding. Doctor Rafter's claims about misleading or deceptive pre-contractual representations suffer from the difficulty that there was a lengthy period of negotiation with exchange of drafts, and the representations which he alleges are not reflected in contractual terms: indeed on the whole they are inconsistent with the contractual terms. These circumstances are adverse to any view that representations of those kinds were relied on in entering into the agreements. The absence of some contemporaneous report of alleged oral representations upon which a claim of misleading or deceptive conduct is based is a recurring difficulty for plaintiffs seeking to rely on such representations, and the difficulties increase significantly when statements alleged were made in negotiations which led to a written agreement which did not reflect them. See Watson v. Foxman (1995) 49 NSWLR 315. 131 Dr Rafter gave affidavit evidence that at the time of signing the agreements he was informed by Dr Bateman to the effect that "Your income would increase significantly. Due to having a nurse doing dressings and ECGs and injections, you can see more patients per hour." Dr Bateman's evidence shows that he said something to the same general effect, and his evidence gives the statement at greater length and with more circumstantial detail, so that it was a statement to the effect that the plaintiff's organisation, with ancillary staff and working methods, would enable Dr Rafter to increase his income if he worked the same number of hours per week and saw patients at the same rate per hour. In my finding the probabilities support Dr Bateman's version, in which Dr Rafter was given an explanation of how the plaintiff's working methods could potentially increase income, not a simple and bare representation that income would be increased. 132 Another representation which Dr Rafter alleged in the context of his case of misleading or deceptive conduct was (affidavit 10 May 2002, para.13 and following) that about April or May 2000 Dr Bateman told him "You'll be able to cut back your hours as a GP to 45, at least 20 hours' surgery and 5 hours as Medical Director." Dr Rafter's evidence is to the effect that at that time he had been working as a general practitioner for two and a half years, working approximately 80 to 90 hours per week, that he was looking for more regular hours doing surgery and cosmetic medicine and he wished to reduce his hours as a consulting general practitioner to 45 hours a week with particular emphasis on alternative medicine, and he wished to work 20 hours per week as a general surgeon or practising cosmetic medicine, giving working time of 65 hours plus 5 hours as Medical Director. It was Dr Rafter's evidence that documents which were not signed but which were prepared for the sale agreement while it was under negotiation provided for him to work 45 hours as a General Practitioner and 20 hours as a surgeon. This apportionment of time is not reflected in the documents which became the parties' agreement. Dr Bateman gave in evidence conversations on these subjects at considerably greater length, including statements to the effect that Dr Bateman was happy for Dr Rafter to do up to 20 hours per week of his total commitment as surgery; in Dr Bateman's account he favoured developing work as a surgeon if the work was available but he did not give any representation that work as a surgeon, or 20 hours' work as a surgeon would be available. The terms of the agreements, after long negotiations, do not reflect any commitment that work as a surgeon would be available. In my finding there was no misleading or deceptive representation on this subject. 133 There was no contractual requirement for Dr Rafter to get accreditation to work as a surgeon, or for the plaintiff to see that he got accreditation. Dr Rafter made a complaint of his not having the opportunity to work as a surgeon for part of the 65 hours of work which he was to perform, but the evidence does not show that he ever took purposeful or realistic measures to qualify to work as a surgeon. An inquiry at the Caringbah Day Surgery produced the response dated 15 May 2001 Exhibit 5 which sent Dr Rafter an Application for Visiting Practitioner Membership of that Day Surgery but said that Caringbah Day Surgery had interim contracts with some health funds but was unable to apply for a contract with MBF until 2002. Dr Rafter did not apply to Caringbah Day Surgery, and did not apply for accreditation with any other day surgery. In my view, Dr Rafter has no grounds for complaint against the plaintiff in respect of his not obtaining the accreditation and working as a surgeon, nor does the plaintiff against the defendants. 134 Doctor Rafter also made a complaint to the effect that there was a representation that practice of cosmetic medicine would be maintained or pursued in the practice at Double Bay after it was purchased by the plaintiff. In my view there is no clear basis in the evidence upon which to consider the claim that there was a representation which was misleading or deceptive on this subject. Again no arrangement on the subject is reflected in the contract documents. 135 Doctor Rafter also complained to the effect that it was represented to him that he would work only at the Double Bay Medical Centre. It was Dr Rafter's evidence that Dr Bateman told him that where he was to work was to be decided by mutual agreement, and that Dr Rafter would have to spend some of his weekends and evenings working at clinics at Darlinghurst or Bondi Junction after they opened, which Dr Rafter was prepared to do. This claim is markedly anomalous in view of the terms of the contract documents, which are quite inconsistent with any such restriction. Dr Bateman gave evidence of pre-contractual discussions which show full contemplation that Dr Rafter would work at other places in addition to work at Double Bay. In view of the nature of the plaintiff's organisation, Dr Bateman's account of the conversations in this respect accords well with the probabilities. 136 My conclusion is that the defendants have not established that they have any entitlement under the Trade Practices Act 1974. Sale of Naturopathic products. 137 Doctor Rafter complained that he had not been paid 5 percent of the proceeds of sale of naturopathic products. He maintained that there was an oral arrangement under which he was entitled to be paid part of the proceeds of sale on that basis. Exhibit 3, letter from Mr Duff to Dr Rafter of 10 April 2001, which relates to crediting Dr Rafter with $4,131.60 being "Estimate of 5 % share of products" does not record or confirm an agreement varying the contractual entitlement to 5 percent of the profits. In my finding it has not been established that there was any such oral arrangement. In any event, the arrangement would be altogether inconsistent with cl.18.5 of the Sale of Practice Agreement, which confers an entitlement to 5 percent of the operating profit fairly attributable to the alternative medical practice. Mr Duff calculated, or estimated that there were no profits, but did not produce a written statement. (t30-31). There is no evidence that there were any such profits. Conclusions. 138 The plaintiff's case is based on repudiation. It cannot be based on termination in accordance with the contract machinery. There is no evidence that the plaintiff purported to terminate in accordance with contract machinery. The plaintiff claims to have accepted a repudiation by issuing the summons on 1 March 2002, or by amending it on 7 June 2002. the plaintiff has not proved any repudiation by the defendants. 139 My conclusion is that the conduct of the plaintiff was repudiatory of the Sale of Practice Agreement, the Provision of Services Agreement and the skein of ancillary agreements. Dr Rafter's conduct on the 27th and 28th of February 2002 including his statement to Dr Grech, his obviously final withdrawal from the plaintiff's organisation and his solicitor's letter constituted an acceptance of that repudiation and disentitle the plaintiff to further performance of any contractual obligations that had not crystallised by that time. Further, the defendants did all that was required to bring about an effective termination in accordance with the contractual machinery. 140 As the defendants' termination was effective, and further the defendants' conduct accepted repudiation by the plaintiff, the plaintiff is not entitled to any of the declarations in Claims 1, 2, 3 and 3A. The matters referred to in Claim 3B(1) of the Amended Summons and alleged to be breaches have not been made out and if they had been would not have grounded termination by the plaintiff. In any event there was no termination by the plaintiff. The plaintiff does not become entitled to a payment of $510,972.00 as claimed in Claim 3C. The plaintiff is not entitled to any of the injunctions and mandatory orders claimed in Claims 4 to 12. Even if the restraint on medical practice continued to have effect after termination I would not have been prepared to enforce it by injunction in view of the circumstances in which termination occurred and the plaintiff's repudiatory behaviour. The plaintiff has no entitlement to damages as claimed in Claim 13, or to interest as claimed in Claims 13A and 13B. 141 The defendants are entitled, on their Cross-claim, to the declarations in Claims 1, 2 and 3 establishing the effectiveness of the termination. The defendants are not entitled to a declaration in terms of Claim 4, which claims that the restraints are void as contrary to public policy. The restraint on medical practice is not void, but it arises under a contract which the plaintiff has repudiated. The restraint on providing Practice Management Services is void and a declaration should be made establishing this. Upon Claim 5 there should be a reference to a Master to inquire and report. Claims 6 which relates to Trade Practices Act 1974 should be dismissed. It is not necessary to deal with Claim 7. The only order for accounts and inquiries which I should make is the order under Claim 5. The Cross-claim claims damages and the reference to the Master should deal with this. 142 I have not yet addressed questions of costs. 143 I make the following orders: (1) Upon the plaintiff's claim give judgment for the defendants. (2) The interlocutory injunction is dissolved. (3) Upon the Cross-claim: (i) declarations as Claims 1, 2 and 3; (ii) declare that the restraint of trade provisions in cl.3 of the Restraint Deed dated 26 August 2000 are void and unenforceable; (iii) order that it be referred to a Master to inquire and report to the Court what payments if any ought to be made by the plaintiff to the defendants as a consequence of the receipt of moneys by the plaintiff in relation to the operation of the Agreements, on account of or arising out of obligations of the plaintiff to the defendants under those Agreements or for damages which ought to be paid by the plaintiff to the defendants arising out of breaches by the plaintiff of those Agreements; (iv) reserve to the Court further consideration of Claims 5, 8 and 9 in the Cross-claim and of the subject matters of the reference to the Master upon having the Master's report; (v) dismiss Claims 6 and 7 in the Cross-claim. ********** Last Modified: 07/23/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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