Belverdere Pty Ltd v Idameneo (No 123) Pty Ltd

1. [1]

   HER HONOUR: This is a claim for damages for breach of contract. The plaintiff, Belverdere Pty Ltd, is an incorporated medical practice providing specialist IVF services through its sole director and shareholder, Dr Julie Lukic. The defendant, Idameneo (No 123) Pty Ltd, is a large national operator of medical centres and a subsidiary of Primary Health Care Ltd.

2. [2]

   The defendant conducted a business called “Primary IVF” on behalf of Primary Health Care. The plaintiff, defendant and Dr Lukic signed a contract for the doctor to provide medical services to Primary IVF for seven years. Dr Lukic became the defendant’s highest billing IVF specialist. But four years later, the defendant terminated the contract on the basis that, in its “reasonably held opinion”, the doctor had “committed an act which if true would” adversely affect the defendant’s reputation or business. The defendant did so after a series of staff and patients’ complaints, accompanied by negative patient reviews posted online.

3. [3]

   The plaintiff now seeks some $3.8 million in damages. There are four issues. What were the circumstances in which the defendant was entitled to terminate the contract? Did those circumstances exist? If not, what damages is the plaintiff entitled to? Finally, did the plaintiff act reasonably in mitigation, where it took the doctor almost three years to resume medical practice?

4. [4]

   It should be said at the outset that there is no suggestion that Dr Lukic is other than an able clinician. Not only did Dr Lukic’s patients lack qualifications to opine on her clinical competence, but most of the negative reviews focussed on more ephemeral matters such as how she made them feel and whether she made them wait or was rude. Staff complaints were not about clinical skills either. Given the terms of the contract, it is also not necessary to determine whether each of the matters about which patients or staff complained, in fact, occurred. This case is simply about whether the requirements of the particular clause were satisfied, being whether the defendant had a “reasonably held opinion” that the doctor had “committed an act which if true would” adversely affect the defendant’s reputation or business.

Witnesses

1. [5]

   The plaintiff relied on the evidence of Dr Lukic. The defendant relied on the evidence of (in order of increasing seniority):

2. [6]

   Competing submissions were made on the credibility of Dr Lukic, who was cross-examined at length. The doctor is obviously a highly intelligent person. Broadly, Dr Lukic did not accept that any patient complaints may have ‘had a point’. That said, the doctor also gave explanations which seemed reasonable. She was, on occasion, candid, accepting that there was a problem with a lack of medical notes on a couple of occasions. It was squarely put to Dr Lukic on more than one occasion that she was lying. Dr Lukic was clearly shocked at this suggestion. She became upset on occasion. That was understandable in the circumstances. Dr Lukic barely held her temper on other occasions.

3. [7]

   There is a limit to which a trial judge should rely on demeanour, as opposed to “contemporary materials, objectively established facts and the apparent logic of events”: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [31] per Gleeson CJ, Gummow and Kirby JJ. As Lander J observed in Brookfield v Yevad Products Pty Ltd [2004] FCA 1164 at [416]:

4. [8]

   I have reviewed the contemporaneous records first and then re-visited Dr Lukic’s evidence. Dr Lukic’s historical response to patient and staff complaints was not dissimilar to her response in the witness box. Broadly, Dr Lukic accepted that, on occasion, she was rude or did yell at people. But the doctor justified her actions on the basis that she was, variously, advocating for her patient’s welfare, redressing the clinical errors of others, seeking to improve poor business operations by Primary IVF, or simply behaving in a manner that was true to her personality or cultural heritage.

5. [9]

   I think the doctor’s evidence reflected her genuinely held views on this subject. That is, the doctor was not lying. That said, the doctor may lack insight. A simple example is that Dr Lukic said that she was “rarely late”, whilst the most common complaint made about her by patients and staff was that she was routinely very late. One qualification to this assessment is that the doctor professed no recollection of most of the complaints, nor Primary IVF’s efforts to address those complaints with Dr Lukic in meetings and correspondence. I expect that an experienced professional such as Dr Lukic would remember – at least – Primary IVF’s stern communications with her in the years leading up to termination. That is, the doctor’s recollection was selective, recalling what accorded with her perception and rejecting discordant information.

6. [10]

   The plaintiff was critical of Mr Simpson’s veracity as a witness, submitting that he sought to minimise any evidence he perceived to be unhelpful and emphasised any evidence he perceived helpful. His evidence was said to be evidently impacted by a desire to vindicate his decision. Mr Simpson’s evidence was described as “wholly incredible” and “comprehensively undermined by the contemporaneous evidence”.

7. [11]

   I disagree. Mr Simpson was a solid witness who gave evidence in a perfectly fair and open manner. Nor do I accept the invitation to prefer Dr Lukic’s evidence to that of Mr Simpson in the event of conflict between them. On the contrary, I have preferred Mr Simpson’s evidence. Mr Simpson carefully planned for their meetings, including preparing speaking notes. Dr Lukic made no notes. Further, what was said at these meetings appears to have come as something of a surprise to Dr Lukic. As she put it, “I was horrified. I was shocked. I was scared. I had never in my whole career anywhere been subjected to this. [It] was very frightening for me.” Dr Lukic’s recall of their meetings may have been affected by the stressors she described.

8. [12]

   That said, and as the quote from the doctor’s cross-examination illustrates, Dr Lukic did over-state things from time to time. Or, as Mr Simpson put it, the doctor was “probably slightly dramatic”. This is not a criticism of Dr Lukic but a note that, on occasion, I have found it necessary to pare back the doctor’s observations.

Primary IVF

1. [13]

   In 2014, Primary Health Care established “Primary IVF”, making IVF services available to couples with almost all costs covered by Medicare. The defendant conducted that business, operating IVF laboratories and providing facilities and services to specialists and health care professionals who provided IVF fertility services. The defendant promoted its offering on the internet, stating “Primary IVF is the only IVF clinic (that we are aware of) that provides Medicare bulk-billed IVF”. Dr Lukic said that the offering at the practice “was the first of its kind in Australia”.

2. [14]

   Dr McDonald was the first fertility specialist engaged by Primary IVF. She established a clinic in George Street, Sydney. Dr McDonald became the Medical Director. By July 2014, the defendant had also opened a day surgery and laboratory in Darlinghurst. Primary IVF later opened premises in Victoria, Queensland and Western Australia.

3. [15]

   Dr Lukic was then practising in Bondi Junction through her company, The Conception Zone Pty Ltd. Dr Lukic was the second fertility specialist recruited by Primary IVF. As Dr Lukic put it, “Without my joining, and Dr McDonald, there would be no Primary IVF.”

4. [16]

   Dr Lukic incorporated the plaintiff to enter into contracts with the defendant. On 28 July 2014, contracts were signed. The parties executed three deeds: “Sale of Practice” between the plaintiff, the defendant, the doctor and The Conception Zone (Sale Deed); “Provision of Services to Incorporated Medical Practitioner” between the plaintiff and defendant (Services Deed); and “Performance Guarantee: Incorporated Medical Practitioner” between the defendant and the doctor. The relevant provisions of the Sale Deed and Services Deed are the same.

5. [17]

   Under the Sale Deed, the defendant agreed to buy Dr Lukic’s practice, including goodwill, from The Conception Zone for $1.4 million: cl 2.1. The plaintiff agreed to ensure that Dr Lukic provided medical services from the George Street and Darlinghurst premises for at least seven years, and to provide medical services only from those premises: cl 4.2(a), Sale Deed; cl 2.1, Services Deed. The Sale Deed included a restraint such that the doctor was obliged to work exclusively for the defendant during the seven-year term. A restraint also applied for three years after the Services Deed was terminated for whatever reason: cl 5. During that period, the doctor could not render medical services within 8 kms of her former Bondi Junction practice or 5 km of the George Street or Darlinghurst premises.

6. [18]

   The doctor was to provide medical services for no less than 50 hours a week for 46 weeks of the year: cl 4.2(b), Sale Deed. The plaintiff also agreed to procure that the doctor “act in a harmonious way with the other practitioners and staff” at the George Street and Darlinghurst premises: cl 4.2(c), Sale Deed; also cl 5.3(c), Services Deed. (The defendant relied on the latter obligation in its alternate case, in the event that it was not entitled to terminate the contract on the basis that it did.)

7. [19]

   For its part, the defendant was obliged to supply the plaintiff with suitable space, administrative services, clerical staff, facilities, plant and equipment necessary for the plaintiff to conduct its incorporated medical practice from the George Street and Darlinghurst premises: cl 3. These services included collecting fees on behalf of the doctor: cl 3.2, Services Deed. In return, the plaintiff agreed that the defendant could retain a portion of the medical fees collected on behalf of Dr Lukic: cl 6, Services Deed.

8. [20]

   The doctor was not an employee, servant or agent of the defendant: cl 11, Sale Deed; cl 11, Services Deed. The defendant was not entitled to tell the doctor how to perform medical services, but the doctor was obliged to follow the defendant’s directions concerning the operation or management of the clinics and the business there conducted: cl 5.2 and 5.3, Services Deed.

9. [21]

   Clause 9 of the Sale Deed and Services Deed concerned termination. Relevantly, cl 9.2 provided:

10. [22]

    Clause 9.2(b) is the critical provision, while cl 9.2(a) is relied on in the alternative. Termination of one contract led to termination of the other: cl 10.1, Sale Deed. I will return to the termination clause in detail at [199].

11. [23]

    Dr Lukic began practising from George Street and Darlinghurst. Doctors in the George Street clinic were supported by reception and support staff. There were also a number of fertility GPs, nurses and day surgery nurses at the Sydney and Darlinghurst clinics. Primary IVF used a “shared care model”: a patient may initially consult one specialist but then, when further procedures were done, be seen by another specialist.

12. [24]

    Mr Simpson said that Primary IVF clinics had a high volume of patients, consistent with its reputation and market position as an affordable and leading bulk-billed IVF provider. The George Street clinic was a very busy clinic. Dr Lukic worked five days a week and every second Saturday and approximately 8 to 10 hours a day. She was the only specialist who worked full-time. Dr McDonald observed that Dr Lukic’s practice was busy from the outset. Dr Lukic said that she typically consulted between 10 to 15 patients a day. As Dr Lukic put it, “I was basically seeing the same number of patients as all the other practitioners combined”.

13. [25]

    Dr Lukic agreed that one of the main drivers for the viability, profitability and growth of Primary IVF was its ability to attract patients, where low-cost IVF was “only profitable through numbers”. Dr Lukic said that the initial appeal of Primary IVF to patients was the low cost, but accepted that attracting patients also depended on the reputation of the clinic for “patient-centred care”. Dr Lukic agreed that the reputation of the clinic was also closely tied to the reputation of the practitioners who worked there.

14. [26]

    As for the patients of Primary IVF, there was general consensus that IVF patients were a unique cohort that needed to be ‘handled with care’. As Dr Lukic put it, IVF patients were often extremely emotional due to the issues they were facing in attempting to become pregnant, “IVF fertility treatment is a very stressful process for all couples.” Further, “IVF patients [are] unlike other patients. … we fill them with hormones, they have unreasonable expectations, they blame themselves, their partners blame the wives, the wives blame the husband … and when things … don't go right, they get very upset”.

15. [27]

    Given the context in which patients were receiving care, Mr Simpson said that one of his priorities was to ensure that those working at Primary IVF clinics treated patients and other staff in a respectful, professional and sensitive manner. Or as the Head of Fertility Services at Primary IVF, June Wong, put it at the time of these events, “As we are all aware, patients are very emotional and their perception on anything can be misconstrued so … think about what and how to deliver.”

Staff and patient complaints

1. [28]

   Many of the complaints which follow pre-dated the defendant’s termination of the contracts (in August 2018) by some years. Although Mr Simpson only joined Primary IVF in February 2018, he had access to earlier information stored on an internal network drive of the business. Mr Simpson reviewed historical information held in the defendant’s records about Dr Lukic before terminating the contracts. He said, “I read all information I knew to be held by the business at the time concerning feedback or complaints relating to Dr Lukic. I did this because I wanted our decision-making processes to be undertaken having regard to all such available information.”

2. [29]

   In addition to the defendant’s internal records, Primary IVF and each of its doctors were the subject of patient ‘reviews’ posted on social media and a website called “RateMDs”. I say at the outset that Dr Lukic received favourable reviews from time to time. (Also in evidence are a large number of cards sent by grateful new parents to the doctor, expressing their gratitude for her care during their fertility journey, leading to the arrival of their baby.) As to the accuracy of these reviews, Dr McDonald agreed “Patients can embellish.” Dr Lukic put it much more strongly: “Online trolling for most IVF specialists is quite common.” (This is one of the doctor’s comments that I have pared back.)

3. [30]

   The contemporaneous records indicate that Primary IVF had difficulty with Dr Lukic’s behaviour from the outset. As mentioned, the doctor began working from the George Street and Darlinghurst clinics after contracts were signed on 28 July 2014. On 8 August 2014, three incidents occurred. As later described by Primary Health’s National Manager Operations Improvement, Linda Alvares, there was reason for Dr Lukic to be annoyed or upset on each occasion, “What was different about Dr Lukic is the way she handled the upset – it was loud, emotional outbursts. Dr Lukic is softly spoken in general. To picture the impact, you have [to] picture her seeing red …”.

4. [31]

   In August 2014, Dr Lukic’s dealings with IVF Clinic Manager, Laura Minutillo, also proved difficult. Ms Alvares reported that, when Dr Lukic discovered that a letter had not been posted to a patient, “it was rage against Laura”. This was followed by “mini outbursts at Laura” leading up to “a major incident” such that the receptionist “felt bullied by Dr Lukic”. Mr Ayres was asked to log an incident report. Ms Alvares understood that Mr Ayres spoke to Dr Lukic and “her response was that she wasn’t aware it had such a huge impact on Laura and was going to make it better in the future.”

5. [32]

   On 20 August 2014, one of Dr Lukic’s patients encountered difficulty when presenting for Imaging. Ms Alvares reported that Dr Lukic “pushed past patients that were waiting to be seen by imaging, abused the girl at Imaging in front of patients, and stormed back to her office”. Dr Lukic did remember an incident in front of the patient where their cycle had been “mucked up” as their appointment did not go ahead and the patient did not have her scan, “So we were protecting the patient … it didn’t happen in the way that you are implying.”

6. [33]

   On 21 August 2014, Dr Lukic arrived almost an hour after a patient’s appointment. Ms Alvares reported, “This happened on more than one occasion.” In the week of 25 August 2014, the Head of Fertility Services at Primary IVF, Ms Wong, began work at Primary IVF and, in her first week, “had also spoken to Dr Lukic”. I infer from Ms Alvares’ memorandum that Ms Wong raised the matters about which staff had complained to that point.

7. [34]

   On 15 September 2014, Dr Lukic received a favourable review on “RateMDs”, describing the doctor as “fantastic”. On 31 October 2014, Dr Lukic received a ‘1 star’ review, “Devastated that I used her, she was terrible and had a shocking bedside manner. Went on leave for 3 weeks before I was due despite telling me she would be here. Always ran 1 hour late”. Another patient rebutted this poor review, commending Dr Lukic’s clinical skills, “She’s not overly fluffy with her personality but I liked that. She got down to business and it was perfect … she was worth the wait. Highly highly recommend her”.

8. [35]

   On 4 November 2014, Ms Wong met with Dr Lukic to discuss “outburst heard”. According to Ms Wong’s detailed note, “I advised Dr Lukic that loud & aggressive conversation was overheard”. (Dr Lukic agreed that this would be damaging to the reputation of Primary IVF – “if it happened” – but did not remember the particular incident.) Ms Wong asked Dr Lukic to explain the reasons for the outburst. Ms Wong’s note records that Dr Lukic expressed frustration in respect of a number of ‘teething difficulties’ in transferring her patients from her Bondi Junction practice to Primary IVF, including the new receptionist and reception rooms, a lack of administrative support in closing her Bondi Junction practice, becoming familiar with Primary Health’s systems and a reduction in earnings.

9. [36]

   Ms Wong informed Dr Lukic “the outbursts towards staff is unprofessional & not accepted … Having such frustrations & dissatisfaction on issues displayed with outburst behavio[u]r, loud vocal displays, and inappropriate language is not acceptable and must be recognized to ensure that improvement takes place to all work towards a goal of harmoniously working together”. The note concluded:

10. [37]

    Ms Wong discussed the problems raised by Dr Lukic with her further on 5 and 11 November 2014.

11. [38]

    In January 2015, Primary IVF received complaints from two new mothers about Dr Lukic’s delivery of their babies. These complaints were communicated to Dr Lukic. Both mothers intended to take the matter further. Whether they did so is not known. By contrast, a favourable review was posted on RateMDs the same month, “Excellent Dr”.

12. [39]

    Also in January 2015, Primary IVF’s office staff appear to have taken the apparently disorganised state of patient records in Dr Lukic’s room into their own hands. Two staff members spent seven hours sorting the records by patient, and leaving notes with no patient name for Dr Lukic to sort. The purpose of doing so was to scan the medical records into a document storage system. When Dr Lukic arrived at rooms the next day, the office staff told her what they had done, “At this point, [Dr] Lukic was extremely agitated that [we] touched her things. I explained to her that it was extremely concerning that she had patients in her care with no notes who needed to see the nurses. Dr Lukic started to rant and rave that she had her own system of where things are kept and we had disrupted her … filing system. … She continued to rant and rave and yell and pacing up and down her room. As she continued getting increasingly agitated, I asked her how I can assist her now that we have collated her documents …”. Dr Lukic asked for an expanding folder to be used for her to file patient notes alphabetically. The office staff complied, albeit they also continued to scan the records into Primary IVF’s system.

13. [40]

    Dr Lukic said that the notes belonged to the patients from her previous Bondi Junction practice. She had asked repeatedly for filing cabinets to store the notes, but these were not provided. Dr Lukic said she was told to leave the notes in the corner of her room. Dr Lukic agreed that she did become upset when staff members went through her documents without her permission. Dr Lukic agreed that she was “not happy” but said that she did not get aggressive and objected to the suggestion that she was ranting and raving. The fact that staff came into her office without her permission and started working with her notes was not something that she had ever seen in her medical career before.

14. [41]

    Dr Lukic agreed that staff raised with her concerns about her note keeping on a couple of occasions but “the computer system was very difficult initially to negotiate. It took us a long time to learn how to do it properly”. Dr Lukic also agreed that, on a couple of occasions, “The odd patient got through without me competing the notes in time, yes.” Dr Lukic did not accept, however, that her interaction with staff in relation to this matter affected the reputation of Primary IVF as it was “a private matter that was behind closed doors in a private office.” Dr Lukic was also critical of the staff member involved, who she said was non-medical and “roped in” to help out “because Primary IVF became so big so quick, they did not have enough staff to cope … It was bedlam.” (The reference to “bedlam” was probably an over-statement).

15. [42]

    In March 2015, Primary IVF received a detailed complaint from a patient who had undergone three unsuccessful IVF cycles with Dr Lukic. The patient complained about a range of matters, including Dr Lukic’s manner. In October 2014, the patient was at a laboratory for a blood test. The person taking bloods called Dr Lukic to confirm what was required and commented that “he had never spoken to someone so rude”. After an unsuccessful egg collection in November 2014, Dr Lukic told the patient, “that was a waste of time”. While the doctor said she would return, she did not. Against this, the patient described Dr Lukic’s advice in respect of a third cycle as “reasonable”. Primary IVF printed off the clinical notes, which appear to have been reviewed and discussed with staff, including Dr Lukic. The notes record, “Dr [Lukic] – bedside manner quite clinical – comments quite personal”.

16. [43]

    In March 2015, Dr Lukic also received complaints from two patients via a private health insurer. Dr Lukic responded to the complaints, which did not relate to her specifically, in a professional manner. Dr Lukic pointed out the ‘teething difficulties’ inherent in opening the new clinics, particularly in light of the overwhelming response to the service.

17. [44]

    Primary Health Care brought in Karen Montague to support the Primary IVF business and investigate the issues and challenges which Dr Lukic had raised. Ms Montague prepared a file note of her work undertaken from 25 to 27 March 2015. Ms Montague recorded, “[Ms Wong] … was concerned that [Dr Lukic] was not well and had possibl[y] not been home as [she] was wearing the same clothes as the previous day and her car appeared as if [she] had possibly been sleeping in it”. Dr Lukic did not recall the matters set out in the file note but denied that she had ever slept in her car.

18. [45]

    On 26 March 2015, Ms Montague noted:

19. [46]

    On 27 March 2015, Dr Lukic met with Ms Montague and Ms Wong and discussed her dissatisfaction with the financial benefits of the contractual arrangements. Dr Lukic sought approval to work outside Primary IVF. Ms Montague said that she would ask Henry Bateman of Primary Health Care. Dr Lukic did not recall this meeting.

20. [47]

    On 31 March 2015, a patient posted an unfavourable review on “RateMDs”: “She is has a very abrasive manner and really doesn’t seem that interested in her patients. … Her bedside manner is terrible.”.

21. [48]

    On 7 April 2015, Ms Alvares emailed Ms Montague with a collection of incidents involving Dr Lukic and staff in August 2014, as earlier described. Ms Alvares also noted that Dr Lukic’s “rage” was one of the reasons that a member of staff had left the clinic within one week of starting. Ms Alvarez added, “There were incidents that happened along the way that I relayed … by phone as they happened, and [Mr Ayres] was asked to log them / document them / speak with Dr Lukic along the way. If you need me to list these from memory, do let me know and I can do so …”. Ms Alvares’ email was fairly expressed, setting out countervailing considerations where applicable.

22. [49]

    On 7 April 2015, the defendant wrote to Dr Lukic, responding to the various financial concerns raised at her meeting with Ms Montague on 27 March 2015, “It is also an opportunity for the company to outline concerns that it has about your practice”. The defendant declined to permit Dr Lukic to work elsewhere. Further, the defendant raised concerns in respect of unprofessional conduct. The defendant set out various instances of such conduct in August and November 2014, as earlier described, “We do not wish to escalate this matter but you must understand that we cannot and will not tolerate any such behaviour going forward”. The defendant also outlined problems with Dr Lukic’s medical records and her resistance to using its electronic medical records, “We are also very concerned about a number of recent complaints from your patients ranging from allegations of negligence to inadequate hand over.” The doctor was asked to immediately modify and monitor her behaviour going forward.

23. [50]

    The letter was presented to Dr Lukic at a meeting on 8 April 2015 with Ms Montague and the defendant’s Chief Clinical Officer, Dr John Houston. The agenda for the meeting recorded that Dr Lukic’s “angry outbursts” had “much improved since November 2014 but cannot be tolerated”. A detailed file note of the meeting records that a wide range of Dr Lukic’s concerns with Primary IVF were discussed, as well as Dr Lukic’s “previous outbursts being intimidating to staff”. Dr Lukic explained that her outbursts were due to anger when she felt that patient care was, or might be, compromised. The doctor was asked to raise such matters with management in their office.

24. [51]

    Dr Lukic does not recall receiving this letter and believes she would have remembered if it had been provided to her. More likely, the letter was given to Dr Lukic, as recorded in the contemporaneous file note and I so find. Of these early incidents, Dr Lukic said:

25. [52]

    On 20 April 2015, both Primary IVF and Dr Lukic were the subject of an unfavourable review on RateMDs: “Primary IVF and Julie Lukic were always late, often rude and seldom pleasant to deal with. My files were lost in a sea of unmarked boxes on Julie’s office floor”. The patient waited for almost two hours but received no acknowledgement of the delay when seen by the doctor. The patient attended for a procedure but was not told that a doctor other than Dr Lukic would be performing the procedure, “If Primary IVF and Julie Lukic didn’t bulk bill, I can’t imagine they would have a business. I’ve certainly taken mine elsewhere”.

26. [53]

    In July 2015, Primary IVF began to keep a log of complaints in respect of Dr Lukic. Most of the entries relate to a lack of medical records.

27. [54]

    On 28 September 2015, Ms Minutillo received a “very distressed phone call” from one of Dr Lukic’s patients, who made a formal complaint. A detailed file note records:

28. [55]

    Primary IVF made arrangements to change the patient’s treating doctor. It was explained to the patient, however, that Dr Lukic may still perform some of the IVF procedures given the ‘shared care’ arrangements at the clinic. The patient “stated that this made her feel incredibly anxious.” Ms Minutillo agreed to raise the patient’s concerns with the new treating doctor. Dr Lukic did not recall any of the matters in this file note being discussed with her and denied having called a patient or their partner a “drunk”.

29. [56]

    On 29 September 2015, the defendant’s complaint log records, “Discussion re multiple complaints from patients. Patient last Friday said JL was rushed and abrupt. Other patients have complained on social media about JLs communication skills. JL informed of these complain[t]s. JL says she is too busy to spend enough time with each patient and we suggested she has reduced numbers of patients in the diary. She declined, saying her income will drop if that is done”.

30. [57]

    On 30 September 2015, Ms Wong passed on some positive feedback from a patient to Dr Lukic. According to Ms Wong’s file note, Dr Lukic commented on their meeting the previous day “and stated that we need not worry as she will be giving us her resignation.” Ms Wong said this was not a resolution nor what the defendant was seeking. Rather, the defendant made her aware of negative feedback in order to achieve positive change. Further:

31. [58]

    Whilst Dr Lukic agreed that she had told the patient that she had a plane to catch, Ms Wong advised that it may be better not to mention her plane trip, “As we are all aware, patients are very emotional and their perception on anything can be misconstrued so going forward think about what and how to deliver.”

32. [59]

    Later that day, Ms Minutillo and Ms Wong met with Dr Lukic again in relation to “her yelling” towards an employee who had commenced with Primary IVF that week. Ms Minutillo’s note records:

33. [60]

    Dr Lukic did not recall the matters set out in this file note.

34. [61]

    On 28 October 2015, Dr McDonald sent an email to Dr Lukic and colleague Dr Susan George, checking whether the practitioners were doing the correct proportion of procedures according to their contracts. Dr McDonald advised that she was “doing too many procedures and [Dr Lukic] is doing too much consulting.” Dr Lukic replied as follows:

35. [62]

    Dr McDonald responded politely, suggesting that Dr Lukic should discuss the matter with someone from administration, as the problem was that “we are paid very poorly for procedures, so in effect, we are doing extra procedures for your patients”. More relevant for present purposes is Dr Lukic’s terse communication to her colleague.

36. [63]

    On 29 October 2015, it appears that the issues raised by Dr McDonald and Dr Lukic were discussed further and a decision made. On 30 October 2015, Dr Lukic came into the clinic and started packing her boxes to take home. Ms Wong and Ms Minutillo listened to Dr Lukic outline her concerns regarding the defendant and how the medical centre was being run. There is no evidence as to how Dr Lukic’s issues were addressed, save that Dr Lukic continued to work at the George Street and Darlinghurst clinics.

37. [64]

    On 3 May 2016, a one-star review was posted in respect of Dr Lukic on RateMDs, “Terrible, don’t go there. Plenty of better doctors around.”

38. [65]

    On 19 May 2016, IVF Practice Manager, Shivanthi Jayamaha, emailed Ms Wong, noting that a few patients wanted to change specialists “as they are tired [of] waiting for more than 2 hours for Dr Julie Lukic appointments”. The patients complained that other specialists did not have such long wait times and Dr Lukic had a reputation for always being late. Ms Wong was asked to speak to Dr Lukic about her appointment book. Ms Wong forwarded the email to Dr McDonald, “We will need to discuss and strategise as to how to bring up this topic.”

39. [66]

    On 26 May 2016, a couple complained to the defendant of a “bad experience” with Dr Lukic that day. The couple said that they were “disrespected” and the doctor’s attitude and ethics was bad. The couple complained that the doctor was “not friendly” and “looked unhappy and upset”. The wife then mentioned at a subsequent consultation that she had a thyroid problem. According to the patient, Dr Lukic raised her voice and asked “Why didn’t you tell me” and “gazed at me in a scary way”. The patient then did a blood test but heard nothing as to the result before returning with her husband, when Dr Lukic was “upset with me and raised her tone and blamed me why I didn’t call the nurse when I didn’t receive any news. We had a little bit of an argument and my husband mentioned to her not to be impolite … Her behaviour shows that she doesn’t want to assist us”. The couple changed specialists and thanked Primary IVF for making this possible, “Honestly we already have a bad impression because of this with Primary IVF but you change our mind.” Dr Lukic did not recall this patient or the consultation.

40. [67]

    The same day, likely the same couple posted a one-star review of Dr Lukic on RateMDs:

41. [68]

    Ms Wong discussed this complaint with Dr Lukic and reported to Primary Health Care’s Chief Clinical Officer, Dr Kevin Bullen, that Dr Lukic “felt that the consultation went well”, that her attitude and ethics during the consultation were fine and professional and the consultation proceeded as normal. Ms Wong then discussed the matter with Dr McDonald, who considered that the behaviour, if verified, was likely triggered by recent family issues for Dr Lukic. Dr Lukic does appear to have been having significant pressure from dependent members of her family. (On 12 August 2016, the doctor advised the practice that she was running late as an ambulance had not arrived to take her mother to respite care.)

42. [69]

    On 7 June 2016, a couple asked to change specialists from Dr Lukic as “whilst she has been good … our appointments with her have often brought additional stress to us. She has been quite forward with her recommendations and has not really shown us the understanding based on our situation and circumstances.” The couple advised that they have “nothing against Dr Julie” but felt that a change would be the right step for them. Dr Lukic did not recall this patient or any consultation with them.

43. [70]

    On 21 June 2016, Dr Lukic complained to Ms Wong, “Due to recent changes enforced on me by Darlinghurst Day Surgery regarding the way I perform egg retrievals, I must respect[fully] decline from performing any more procedures on medico legal grounds. … I do not understand why Primary IVF feel qualified to challenge a method of egg retrieval which is accepted by the majority of IVF clinics throughout Australia and the rest of the world. I do not enforce my techniques on the other doctors. I deserve the same respect in return.” Dr McDonald replied that the change related to infection control; she had asked the registered nurse to follow this up with her. The rights and wrongs of the clinical issue are not known. Dr Lukic’s abrasive email to her colleagues is noteworthy.

44. [71]

    Dr Lukic said that Ms Wong only spoke to her once about patient complaints. On that occasion, Ms Wong referred to a thread of complaints online but did not provide specifics. The contemporaneous records indicate that Ms Wong spoke to Dr Lukic more than once. By my count, Ms Wong documented such interactions on four occasions.

45. [72]

    On 23 June 2016, a one-star review was posted in respect of Dr Lukic on RateMDs:

46. [73]

    On 15 July 2016, a patient complained about Dr Lukic, who was said to be “very rude in her approach” and made the patient feel “quite stupid and worthless … Dr Lukic has been quite cold. … Dr Lukic’s conduct was not right or fair to couples … We both left feeling depressed, foolish and now angry”.

47. [74]

    On 22 July 2016, a patient made a complaint about Dr Lukic, describing her manner as “very abrupt, bordering on rude” and not forthcoming with information. The patient said that, on leaving consultations “I walk out feeling like I have been a naughty school child leaving the principal’s office”. The patient found Dr Lukic’s tone to be dismissive and unhelpful. When advised that the patient wanted her GP to take over the care of her pregnancy, Dr Lukic picked up her referral pad and threw it to the back of her desk. The doctor was also consistently late to appointments.

48. [75]

    On 10 August 2016, a patient complained about Dr Lukic’s “bedside manner” in consultations the previous year, adding that she had “spoken to numerous other patients and they all feel that Dr Lukic is abrupt and rude. … I feel that she treated us like a number and didn’t have any empathy towards what we were going through.”

49. [76]

    In February 2017, Vanessa Raggio began to work at the George Street clinic as Nurse Manager. On the third day of her job, Ms Raggio was talking to Mr Ayres about her work history. Dr Lukic emerged from her office and yelled, “I don’t know who you think you are, but we aren’t Genea and we do things differently around here.” Dr Lukic stormed back into her room, collected her bag and left. Mr Ayres followed Dr Lukic to the carpark in an attempt to calm her down. There were patients still waiting to see the doctor, but she did not return (nor the next day) and all appointments had to be cancelled. Ms Raggio later advised Mr Simpson that she came to learn that this was a normal pattern of behaviour. Sometimes Dr Lukic apologised a few days later, usually accompanied with a “but” such as “you need to communicate with me more” or “we need to work as a team.”

50. [77]

    Dr Lukic said she did not yell at Ms Raggio but agreed that she said “this is not Genea” as Primary IVF’s premises were low-cost clinics which operated under different protocols so that low-cost practices could be run more efficiently. Dr Lukic did not recall, but did not deny, storming out and not returning to work the next day. Dr Lukic said that she complained to Mr Ayres about Ms Raggio soon after she started with the defendant. From then on, “Ms Raggio was not kindly towards me.” Dr Lukic believed that mistakes by nursing staff occurred more frequently after Ms Raggio began. (In answering some complaints, Dr Lukic criticised the competence or clinical skills of other health practitioners. I am in no position to, and make no finding in respect of, the competence or clinical skills of others.)

51. [78]

    On 19 May 2017, a patient made a complaint to Ms Jayamaha, describing Dr Lukic as “aggressive and rude”. The couple complained that, when they were called, Dr Lukic was “angry and no greeting at all … Dr Lukic did not listen to us and said our questions improperly [so] that I needed to repeat my question several times.” The patient complained that no patient should be treated this way. Ms Jayamaha reported that the patient was “quite upset” when they called. Dr Lukic did not recall the patient or the consultation.

52. [79]

    By contrast, on 25 May 2017, Dr Lukic received a five-star review on RateMDs. The patient described Dr Lukic as “wonderful” and “super supportive”, where the patient's excess weight prevented her from undertaking treatment. Dr Lukic “never made me feel bad about my weight but made sure I understood that getting my weight down is the only way this will work. I am looking forward to losing weight and returning to see her!”

53. [80]

    On 9 July 2017, Dr Lukic received a two-star review on RateMDs. Dr Lukic was 90 minutes late, pressed the patient to have a caesarean at the outset, rushed the induction, was “impatient and unsympathetic … Unprofessional … Never again.” On 31 July 2017, Dr Lukic received a one-star review on the same site, “She is beyond rude. So insensitive and talks to you like you’re completely and utter[ly] stupid. Always late and wouldn’t even acknowledge or apologise. You’re time doesn’t matter! I’m glad I’ve found this out before I got too far into my pregnancy. She will NOT be my obstetrician”.

54. [81]

    In August 2017, a patient complained to Primary IVF in respect of Dr Lukic, advising that they had “decided to contact the media and [had] an emergency [appointment] with [their] lawyer … to discuss what we can do to ensure others are treated fairly and not thrown away as easily as we were.” After a third unsuccessful IVF cycle, Dr Lukic had advised that the patient could not do another cycle based on the patient’s results. The patient complained, “She is so quick to just throw us away after 3 cycles when I know women who are older than me with more issues than I have and yet they are able to cycle as many times as they would like.” (I have included this complaint as it was one reviewed by Mr Simpson; the doctor’s conduct was otherwise unremarkable.)

55. [82]

    On 9 October 2017, Dr Lukic received a five-star rating on RateMDs, described as “fantastic” and offering the couple a fresh approach with helpful knowledge and insight. On 16 October 2017, a less favourable rating was posted, concurring with other reviews about Dr Lukic’s abrasive manner and lack of bedside manner or empathy. Dr Lukic was said to be “scathing and unapologetic” in the couple’s first appointment, leaving the patient “devastated and crying”. Subsequent appointments “confirmed her lack of caring for her patients and general insensitivity. I would recommend avoiding her.” On 17 October 2017, a similar review was posted, “She is beyond rude!! [Dr Lukic] always runs late, speaks to you like you’re an idiot. … She is shit. … Wouldn’t see her again. Fuck you Dr Lukic!”.

Change of management

1. [83]

   In September 2017, Dr Parmenter became the managing director and CEO of Primary Health Care. He said, “As a business, [Primary Health Care] probably had more of a focus on revenue and profitability than it did on the quality of the services that it provided”. Dr Parmenter’s objective was to try to bring the focus back to a quality operation. He recruited Mr Beattie and Mr Simpson, with whom he had worked previously, to assist him to achieve that objective.

2. [84]

   In November 2017, Mr Beattie began work at Primary Health Care as Chief Executive – Day Hospitals, IVF and Specialist Clinics. He had operational responsibility for IVF clinics including Primary IVF. Mr Beattie reported to Dr Parmenter. On commencing work with Primary Health Care, Mr Beattie visited the Primary IVF clinic in George Street to meet the doctors, including Dr Lukic. Mr Beattie became aware that various staff and patients had made complaints about Dr Lukic and that adverse commentary about her had been posted by patients on the internet. (Mr Beattie’s practice at the time was to look at websites such as RateMDs to read feedback posted online.) Mr Beattie was informed by Mr Ayres that Dr Lukic required “careful management”.

3. [85]

   On 11 November 2017, Dr Lukic received a one-star rating on RateMDs website, “She is very very rude and talks down to you, very unprofessional, she brings Primary IVF and the rest of the staff (who we found to be very nice), into disrepute.”

4. [86]

   On 15 November 2017, Primary IVF’s records record that shouting was heard coming from Dr Lukic’s room. A patient came out crying and sat down. The patient’s partner was “visibly angry, and quite aggressive due to an escalation within the consultation … shouting remarks like … ‘you should not be a doctor’”. Of this, Dr Lukic said:

5. [87]

   In December 2017, the George Street and Darlinghurst clinics closed for refurbishment and expansion. It appears that Dr Lukic was also providing medical services from Primary IVF’s Victorian clinic. On 18 December 2017, a couple from Victoria made an extensive complaint to Primary IVF in respect of Dr Lukic, expressing concern over her “lack of many things”:

6. [88]

   On 19 December 2017, a review was posted on RateMDs, almost certainly by the same couple, “Dr Lukic is in [the] wrong field. Zero bedside manner. … Absolutely unprofessional and zero care factor. Shocking. … She has no people skills at all. Do not recommend.”

7. [89]

   On 30 January 2018, a review was posted in respect of Dr Lukic on RateMDs, “Horrible woman. Left me in tears. Total lack of empathy, she shouldn’t be allowed around people. I’ve had more empathy from a dog than her. … She[‘s] judgemental to the point she looks disgusted … Wouldn’t even let me try IVF”.

8. [90]

   In February 2018, Mr Simpson started work as the General Manager of Primary IVF. He reported to Mr Beattie. Dr Parmenter, Mr Beattie and Mr Simpson met regularly to discuss the Primary IVF business. Dr Parmenter said that Dr Lukic’s conduct was a topic regularly discussed in meetings with Mr Beattie and Mr Simpson.

9. [91]

   In March 2018, the George Street and Darlinghurst clinics re-opened after renovations. The closures caused problems for patients and health professionals alike. Dr Lukic said that, after the premises re-opened, there were more nurses and embryologists but no increase in operating times. This led to delays in patients being able to start an IVF cycle. Another doctor complained that clinicians had received very little income for three months, apart from a small advance against future income.

10. [92]

    On 10 April 2018, IVF Billing Administrator and receptionist, Kyleen Fiasco, reported an incident to Ms Jayamaha. Dr Lukic had entered the administration room at the George Street clinic and yelled at staff, complaining that she was not receiving as many initial consultations as her colleagues. When told that the staff were trying to find Dr Lukic initial consultations, the doctor yelled back, “No you are not”. At this point [Dr Lukic] storms off in a huff [and in] the reception area [the doctor] slams her hand down to pick up her next patients.” Ms Fiasco reported that this had been “going on” and had “escalated over the past few months”. One of Ms Fiasco’s colleagues became tearful and said “No one likes to be yelled at” whilst another said “You can’t do anything to please her [but] I’m used to getting yelled at.”

11. [93]

    Dr Lukic did not recall this incident but agreed that she had spoken to the front desk a few times about overloading her with patients, which caused her to run late. I note that this is the opposite of what the contemporaneous record indicates, which is that Dr Lukic wanted to see more patients; see likewise [56].

12. [94]

    Ms Jayamaha promptly reported the incident to Mr Simpson: (emphasis added)

13. [95]

    As Ms Jayamaha noted in her incident report, Primary IVF patients were invited to complete a patient feedback survey. The surveys were on display at the front counter. The surveys allowed patients to provide optional anonymous feedback for the purpose of monitoring performance. Primary IVF periodically summarised and presented the results of this feedback in a table format. (Dr Lukic said she was unaware of this.) Some 28 surveys are in evidence, of varying legibility, completed from December 2017 to April 2018. Dr Lukic is specifically referred to in eight surveys as follows:

14. [96]

    Mr Simpson asked Ms Jayamaha for records of the social media reviews referred to in her incident report. Mr Simpson also sought advice from the Head of People and Employment Law, Corporate at Primary Health Care, Kit Yap.

15. [97]

    On 11 April 2018, Mr Yap suggested either an ”informal” or “formal” approach for “dealing with Julie’s behavioural issues which are negatively affecting staff and patients”. The “informal” approach was to have a discussion with Dr Lukic in relation to the negative feedback received about her from patients and staff. Mr Yap also outlined the “formal” approach, which was to set out these matters in a letter, giving Dr Lukic 14 days in which to remedy the breach or risk termination of the contract with the plaintiff. The letter would also include an undertaking requiring that Dr Lukic do certain things, for example, cease shouting at staff or otherwise treating them in an inappropriate manner. Whilst the defendant was considered to have grounds to immediately take the “formal” approach, Mr Yap noted that commercial concerns – “for example, the lack of action taken by previous management” – may persuade Mr Simpson to take the “informal” approach.

16. [98]

    The reviews on RateMDs in respect of Dr Lukic were printed on 12 April 2018. Mr Simpson read the reviews for Dr Lukic and also for Primary IVF, to make sure that he had proper context for the reviews.

17. [99]

    Mr Simpson reviewed historical information relating to Dr Lukic, reading all the information that was held by the business concerning feedback or complaints relating to the doctor. This included the log of complaints commenced in July 2015: see [53], [56]. He specifically considered the letter of 7 April 2015 (which set out various instances of conduct in August and November 2014, see [49]), the patient complaint of 28 September 2015 (see [54]), Ms Wong’s file notes of meetings with Dr Lukic on 30 September 2015 (see [57] – [58]) and the complaint of August 2017 (see [81]). Where some of the complaints pre-dated his employment at Primary IVF, Mr Simpson spoke to personnel, including Ms Jayamaha and Dr McDonald, and sought to verify the historical complaints. Based on what was conveyed to him, Mr Simpson believed that the complaints had a proper factual basis.

18. [100]

    Mr Simpson conferred with Mr Beattie. Mr Simpson conveyed that his view was that there was substance in the complaints. (Mr Beattie relied on Mr Simpson in that regard.) Mr Beattie discussed how best Dr Lukic might be convinced to change her behaviour such that the complaints would cease. Mr Simpson was of the view that an “informal” approach should be adopted, seeking a verbal acknowledgement and acceptance from Dr Lukic that her behaviour was not meeting her contractual commitments, together with a commitment to remedy the issues raised. They agreed to take the “informal” approach.

19. [101]

    On 12 April 2018, another patient made a complaint in respect of Dr Lukic, who was said to have “berated” the patient for not telling her that her husband was on testosterone, “Dr Lukic used harsh tone and scolded patient and called the patient’s endocrinologist an ‘idiot’ … Patient started crying … The recovery nurse was left to console/comfort”. Dr Lukic did speak to the patient after the incident in a much calmer way.

20. [102]

    Dr Lukic recalled this incident but denied using a harsh tone towards the patient or scolding her husband. Dr Lukic did not recall calling the husband an idiot and said that she would not have done so as it would have been unprofessional and she always maintained a professional relationship with her patients and their partners.

21. [103]

    On 13 April 2018, Primary Health Care received another complaint about Dr Lukic from a GP, whose patient had been treated by Dr Lukic. The patient claimed that Dr Lukic had been “angry and verbal[ly] abusive to both partners since the start”. The treatment was said to have been inappropriate by the subsequent treating specialist. The GP emailed, “If substantiated, the behaviour and management are completely unacceptable, grounds for severe professional misconduct and possibly even deregistration. It also presents as a significant risk [to] the reputational status of the Centre. … The doctor is highly likely to require counselling and possibly mental health intervention.”

22. [104]

    Mr Simpson immediately investigated the complaint and was informed by a clinician that Dr Lukic’s treatment of the patient “look[s] pretty standard.” Mr Simpson reported to Mr Beattie. Mr Beattie said the complaint from the GP was significant to him, as GPs often referred their patients to Primary IVF. Whilst the GP’s complaints were broadly consistent with the complaints about Dr Lukic of which Mr Beattie was aware, the GP’s email added a further level of seriousness to the complaint: Dr Lukic’s behaviour was negatively affecting the perception of general practitioners, who provided important referral work for Primary IVF.

23. [105]

    Dr Lukic said she did not recall the patient or know the GP and the complaint was never raised with her. Dr Lukic considered the GP’s email was slanderous. Dr Lukic denied becoming angry or abusive with this patient, “I’m never verbally abusive to any of my patients.” Dr Lukic said “This was investigated, looked into and totally exonerated.” This was a significant over-statement by the doctor. When asked what led her to this conclusion, Dr Lukic said “Because … well I’m still working, there was no [H]CCC complaint, … there was no medical legal issue and no one in the clinic actually accused me that I used the inappropriate hormones. … So whoever this person is making these claims against me, is … slanderous.”

A warning

1. [106]

   By now, Mr Simpson said he had “very concerning comments” from anonymous patient surveys, “very concerning comments” from RateMDs, details of a staff incident that took place less than a week ago and two concerning complaints that he received on 12 and 13 April 2018. What the patients had said in some of these materials suggested that the way in which Dr Lukic provided care was “entirely inappropriate at times”. Mr Simpson considered that he had a reasonable basis to go and speak to Dr Lukic about concerns with her behaviour and professional conduct, “My view was that I had an obligation as the CEO of the company based on the information I’ve just gone through to have a meaningful conversation with Dr Lukic about that.”

2. [107]

   On 16 April 2018, Mr Simpson telephoned Dr Lukic and informed her that a meeting had been arranged the next day in her rooms, where he would be joined by Mr Beattie. Also on 16 April 2018, Primary Health Care’s in-house counsel provided Mr Simpson and Mr Beattie with draft talking points for the meeting. Whilst in-house counsel suggested that Mr Simpson review the negative feedback and comments collated, it was not recommended that Dr Lukic be provided with the written survey results or documents in respect of the most recent complaint “as the survey contains feedback also adverse to [the defendant] and the emails disclose individuals and [Dr Lukic] may well retaliate against those individuals.” In-house counsel further suggested that screen shots from the website should only be provided if Dr Lukic asked for it, and if her demeanour was considered appropriate.

3. [108]

   Primary Health Care’s in-house counsel also provided a draft notice of serious breaches. The notice itemised the following instances of negative feedback from patients, patient complaints and staff complaints:

4. [109]

   The draft letter repeatedly stated that Primary Health Care had recently become aware of these matters. Where all matters referred to in the letter post-dated the change of management, I infer from the careful wording of the letter that the defendant was concerned to address any suggestion that it should have taken action before and could not now do so.

5. [110]

   Attached to the letter was an undertaking to be given by Dr Lukic, acknowledging that she had acted in the manner described in the notice and, in doing so, had acted in breach of the plaintiff and her obligations under the Sale Deed and Services Deed. It was proposed that the doctor, on behalf of herself and the plaintiff, would undertake that she would not engage in the conduct again or in any conduct towards staff or patients which, in the reasonable opinion of the defendant, was inappropriate or unprofessional. Further: (emphasis added)

6. [111]

   On 17 April 2018, Mr Simpson amended the talking points and prepared a ‘snapshot’ of the patient feedback surveys to share with Dr Lukic. In-house counsel approved the amendments and the snapshot, save that the patient’s comment, “Dr Lukic traumatised me – clinic did nothing about it”, should be shortened to refer only to “Dr Lukic traumatised me”. In-house counsel advised that this reduced the risk that Dr Lukic would argue that Primary IVF knew about, and in some way condoned or accepted, her behaviour. Mr Simpson actioned that advice.

7. [112]

   On 17 April 2018, Mr Simpson and Mr Beattie met with Dr Lukic in her rooms. There was considerable focus on what was said by the defendant’s representatives at the meeting with Dr Lukic on 17 April 2018 because, in the alternative, the defendant contended that it was entitled to terminate the Sale Deed under cl 9.2(a). This required the defendant to give a notice “calling for that [serious] breach to be remedied”.

8. [113]

   Mr Simpson said the meeting took about one hour. During the meeting, he closely followed the talking points. He looked back to the talking points for reference while he was talking. Mr Simpson also brought a bundle of reference material, including patient comments and feedback, to show Dr Lukic during the meeting. Mr Beattie recalled that Mr Simpson was very conscientious and well-briefed and spoke consistently with the talking points. Mr Beattie said that Mr Simpson spoke cautiously.

9. [114]

   Dr Lukic said the meeting lasted for only 15 to 20 minutes. Dr Lukic did not take notes of the meeting but said that the meeting "was emblazoned on my mind because I had never been subjected to anything like that in my life." Dr Lukic denied Mr Simpson’s version of the conversation at this meeting.

10. [115]

    For reasons earlier given, I have generally preferred Mr Simpson’s evidence as to what occurred. Mr Simpson had spent some time preparing for the meeting, including liaising with in-house counsel in respect of talking points. Mr Simpson clearly anticipated that this may be an uncomfortable and potentially volatile conversation. In the circumstances, it is likely that Mr Simpson followed the talking points.

11. [116]

    The talking points contained a number of options, depending on how the meeting unfolded. Having regard to the witnesses’ recall as to how the meeting progressed, and using the talking points as a guide, it is likely that Mr Simpson said the following: (Mr Simpson’s handwriting on the talking points is underlined)

12. [117]

    Mr Simpson gave Dr Lukic the ‘snapshot’, which extracted the following comments from the patient feedback surveys on a single page:

13. [118]

    In preparing this document, Mr Simpson said that he selected the worst examples from the surveys, as they were relevant to the conversation that he wanted to have with the doctor that day. Dr Lukic was invited to respond “but we didn’t delve into detail about specific individual comments.” He focussed on the behaviour that led to the comments rather than the comments themselves. Mr Simpson said that Dr Lukic rejected the substance and validity of the complaints and was dismissive.

14. [119]

    Dr Lukic agreed that Mr Simpson shared with her various examples of negative feedback and complaints. Dr Lukic responded that she did not know the patients who had made the complaints, as they were not named. Even so, the doctor did not believe that there was any substance in the complaints, “when you work with patients with infertility issues you are often dealing with highly emotional patients who in some cases have high expectations that are not capable of being met. When those expectations are not met, the patient can become upset and often the doctor becomes the focus of their anger and frustration.” The doctor also responded that, as Primary IVF was unique in offering a fully Medicare-funded service, some patients felt entitled to an IVF cycle regardless of age, medical conditions, weight or chances of success. Patients could become frustrated and emotional when they were told that they could not have the treatment they wanted because they were overweight or were too old. But Dr Lukic said that she did not abuse patients.

15. [120]

    According to Dr Lukic, Mr Simpson replied “Nevertheless, I don’t want to hear any more complaints.” Dr Lukic responded that it was unreasonable to expect that, as all staff had had complaints, “you can’t run an IVF clinic of this nature without it happening.” Dr Lukic pointed out that she had not had any medico-legal issues regarding the treatment of any of her patients for more than four years, even though she had seen hundreds of patients. Dr Lukic had received many compliments and thanks from patients over the years.

16. [121]

    Mr Simpson broadly agreed with Dr Lukic’s evidence of her response to the patient complaints. But Mr Simpson then said to Dr Lukic that the overwhelming number of complaints received, where a doctor was identified as being the subject of the complaint, were about her.

17. [122]

    Mr Simpson also showed the doctor printed copies of the Primary IVF feedback surveys and explained that her conduct was said to be rude, hostile, impersonal, angry and lacking in empathy. Mr Simpson said “I do recall actually showing the surveys just so that Dr Lukic could physically see what I was referencing”. Dr Lukic denied that Mr Simpson showed her the surveys. Where I have preferred Mr Simpson’s evidence, I find that he did.

18. [123]

    Dr Lukic said she also told Mr Simpson and Mr Beattie of the various problems being experienced at Primary IVF due to poor practice management. She considered that this was a cause of patient dissatisfaction. Mr Simpson said that he did not want to hear about those matters. Dr Lukic said that Mr Beattie also “wouldn’t listen to anything I tried to say.”

19. [124]

    Mr Simpson and Mr Beattie agreed with this. Mr Simpson said that Dr Lukic wanted to talk about a number of issues with the management of Primary IVF, but he focussed on the specific behavioural concerns that he had come to discuss, “I had a very deliberate objective in mind for that meeting, and getting into a discussion about operational matters I would consider a distraction from that objective.” Mr Beattie recalled that Dr Lukic was dismissive and wanted to talk about other things such as staff. Mr Beattie said this was something of a distraction as it was not the point of the meeting, which was more about her behaviour.

20. [125]

    The talking points continued: (notes emphasised by Mr Simpson’s handwriting are underlined)

21. [126]

    Mr Simpson recalled showing Dr Lukic screenshots from the RateMDs reviews. Mr Simpson agreed that he did not focus on favourable reviews, “It was about focussing in on the behaviour and the comments that suggested there was some very concerning things that were probably more important than talking about the favourable reviews.”

22. [127]

    Dr Lukic denied that Mr Simpson showed her screen shots from the RateMDs website. Dr Lukic said, “Mr Simpson came in and accused me of these things, and when I asked for the proof and the evidence, I was not shown any proof or evidence. I was not given any names. I was not given any numbers. … I can categorically tell you yes, I did not see these things.”

23. [128]

    Where Mr Simpson appears to have been having some difficulty persuading Dr Lukic of the seriousness of the matters he raised, as opposed to the problems with the management of Primary IVF which Dr Lukic wanted to talk about, Mr Simpson may well have shown Dr Lukic the printout of the RateMDs reviews. Where I have generally preferred his evidence, I accept that he did, notwithstanding Dr Lukic’s emphatic evidence to the contrary.

24. [129]

    The talking points continued:

25. [130]

    Mr Simpson recalled that, at this point, Dr Lukic went silent. Dr Lukic agreed that Mr Simpson may have discussed a complaint made by a staff member “but he did not show me any official complaint”. Dr Lukic also said that Mr Simpson “raised the issue of m[e] being loud in the corridors.”

26. [131]

    The talking points continued:

27. [132]

    Consistently with the talking points, Mr Simpson said he told Dr Lukic that, in the company’s opinion, the conduct not only adversely affected the reputation and business of the company, but also created a risk to the health and safety of its staff members and of others including patients. Her conduct towards patients and staff was not acceptable and had to stop immediately. If her conduct did not stop, the company would be required to take more formal action against her under its contract with her. He did not recall making any reference to rectifying any breach.

28. [133]

    Mr Beattie’s recollection of this meeting was not strong. Mr Beattie did not recall whether a statement was made at the meeting that notice was being given under the deeds. Mr Beattie recalled that Mr Simpson said there was a real problem that needed to stop, as it was having a negative impact on patients and staff. But if things did not improve, then Dr Lukic was told that further steps would be taken by Primary Health Care, although he did not recall any discussion about what those further steps might be.

29. [134]

    Against this, Dr Lukic said that it was not clear that she was said to be in breach of anything “it was just to inform me what was being written.” Dr Lukic denied that she was told that the business had serious concerns about her conduct. Nor did Mr Simpson accuse her of damaging the reputation of the business. Nor was it said that, if her conduct did not improve, then further steps would be taken by the defendant. No formal warning was provided.

30. [135]

    Dr Lukic said, “the meeting was to just accuse me of many things, most of it anonymous, nothing specifically ‑ no specific complaint, … nothing about how they were going to investigate this or prove this or who these people are. So at the end of the meeting, there was nothing to suggest that … it was causing that kind of problem.” Dr Lukic added, “I’ve never seen this kind of horrifyingly personal attacks on doctors in any of the clinics I’ve worked [in] both here and in Australia against me or anybody else.” Dr Lukic said the complaints were “nothing more than slanderous trolling … In my whole career I think I’ve only had two [H]CCC complaints, and both were cleared.” Further, “I was accused and tried and judged on very little.”

31. [136]

    The talking points continued:

32. [137]

    Mr Simpson said that Dr Lukic’s response during the meeting was “a case of denial, there was a case of deflection. Then there was an acceptance, and then, finally an acknowledgement.” Further, “Dr Lukic did admit there was substance to some of those complaints by the end of the meeting and gave Mr Beattie and I an undertaking that she would address that. … There was an acknowledgement from her to address her behaviour at the end of that meeting.” Given this, Mr Simpson decided not to provide the notice of serious breaches that he had brought to the meeting, nor the proposed undertaking. Mr Simpson agreed that he did not refer to the letter, although the contents of the letter “included components of the conversation that took place”.

33. [138]

    Mr Beattie recalled that Dr Lukic was jumping between topics and was defensive. The doctor talked about personal issues. His impression was that Dr Lukic sought to deflect the concerns which Mr Simpson had raised. At some point, however, Dr Lukic said that she would take on board the matters that Mr Simpson had raised. Mr Beattie said “we came away hoping, I guess, that she’d said enough, thought enough about it to change some behaviour. … she indicated she would take it on board … so we sort of [went] away thinking, ‘okay, well we’re going to give that a go.’” But Mr Beattie did not believe that Dr Lukic agreed with any of the complaints.

34. [139]

    Dr Lukic agreed that Mr Simpson made it clear to her that the organisation expected her behaviour to improve going forward. The doctor agreed that she undertook to improve her behaviour. Dr Lukic said, “I didn’t want see this happen anymore … I did try”. The doctor said “I agreed to improve my behaviour, because it was the way to move forward from this thing.” Dr Lukic also said that Mr Simpson set her a target of zero complaints “which was setting me up for failure because there wasn’t a doctor in that clinic that hadn’t received complaints. … the clinic was notoriously receiving complaints.” (Again, this was something of an over-statement).

35. [140]

    According to an email from Mr Simpson to Mr Yap sent two months’ after this meeting, Mr Simpson indicated to Dr Lukic, using the examples referred to in the draft breach notice, that “she was in breach of her obligations”. (Mr Simpson clarified in his affidavit that he had actually referred Dr Lukic to the examples listed in the ‘snapshop’, rather than the breach notice.) Further, Dr Lukic “did provide some acknowledgement of these incidents / behaviour hence she was not asked to formally sign the letter.”

36. [141]

    The legal issue – to which I will return – is whether the defendant gave a notice to Dr Lukic at the meeting in April 2018 which conformed with the requirements of cl 9.2(a), in particular, calling for a serious breach to be remedied. Where Mr Simpson did not give Dr Lukic the letter giving notice of serious breaches and accompanying draft undertaking, the factual issue is what Mr Simpson and Mr Beattie said. There are three evidentiary sources: contemporaneous records; affidavits by the participants more than five years later, and cross-examination of the participants more than seven years later. The contemporaneous documents are likely to give the most accurate indication of what was said, being both the talking points prepared for the meeting and Mr Simpson’s email to Mr Yap immediately after the meeting.

37. [142]

    It is clear that this was an important meeting. Mr Beattie attended the meeting to convey his concern at the Primary Health Care executive level about the complaints that had been made about her. I expect that Mr Beattie’s attendance would have signalled to Dr Lukic that the subject of the meeting was serious.

38. [143]

    It is also clear from the evidence of all participants that Dr Lukic did not readily accept what Mr Simpson was telling her. Where the object of the meeting was not accomplished at the outset, or in its early stages, it is likely that Mr Simpson continued to progress through the talking points. This would have been necessary to achieve the purpose of the meeting, for which purpose Mr Beattie had travelled from head office to the George Street clinic.

39. [144]

    It is apparent from Mr Simpson’s contemporaneous email to Mr Yap that he indicated to the doctor that “she was in breach of her obligations”. Further, Dr Lukic’s recollection that Mr Simpson said he did not want to hear any more complaints, or set her a target of zero complaints was, I think, a recollection of Mr Simpson having sought an undertaking from the doctor along the lines of the draft undertaking attached to the notice of serious breaches. As mentioned, the draft undertaking included an acknowledgement that “if another complaint or instance of negative feedback is received” then the defendant was entitled to terminate the Sale Deed and Services Deed without further notice. This suggests that Mr Simpson got to the end of the talking points and, further still, conveyed the substance of the draft undertaking.

40. [145]

    Where I have generally preferred Mr Simpson’s evidence of what was said to that of Dr Lukic, and having regard to the talking points and the later email from Mr Simpson to Mr Yap, I find that Mr Simpson did tell Dr Lukic that the defendant considered her to be in breach of the contracts, given her behaviours about which patients and staff had complained. Further, he gave notice to Dr Lukic in accordance with the talking points, that is, “if any and all inappropriate or unprofessional conduct by you towards patients and staff members does not cease immediately, the Company will have no alternative but to take more formal action per the deeds it has entered into with you and your company.”

After the warning

1. [146]

   The same day as the warning was given, a post was made on Instagram suggesting that “Dr L was horrible. Be prepared she made me feel shit about myself. Even though at this point it was #malefactorhubby … she said I was too overweight … I said I have struggled to lose weight. … She ROLLED HER EYES!! She told me I should try starving myself!!” On returning after having lost weight and when eating only one meal a day, the doctor said, “what is your one meal McDonalds??”.

2. [147]

   Mr Simpson agreed that there was a GP at the Primary IVF practice called Dr Lenehan and the reference to “Dr L” could have been to her, “I think you can safely assume” that the reference was to Dr Lukic. He did not ask Dr Lukic whether the complaint referred to the GP. Dr Lukic did not know who the patient was that made this complaint but said she had never told a patient that they should try starving themselves nor asked whether their one meal of the day was McDonalds.

3. [148]

   On 27 April 2018, a review was posted on RateMDs in respect of Dr Lukic, noting that a couple had had “such an unpleasant experience with her. She was just awful. For what should be a stress free and lovely process has turned into a upset, crying and angry situation.”

4. [149]

   Three weeks after the warning, on 9 May 2018, there was an incident between Dr Lukic and a nurse. Mr Ayres met with Dr Lukic, who said that the nurse’s training was inadequate, the nurse gave her “attitude” and she reacted. Mr Ayres emailed Nurst Unit Manager Karina Bosetti and Ms Raggio advising, “I would be confident [that the nurse’s] communication of the comments made are correct. I think [this] matter needs to be escalated to [Mr Simpson]”.

5. [150]

   Ms Raggio provided Mr Ayres with further details of the incident, having spoken to the nurse and Dr Lukic at length. The nurse was extremely upset and sobbing, stating that she had never been treated like that by anyone else ever in her whole working life. The nurse said that she had tried very hard to please Dr Lukic and was upset that the doctor thought she was disrespectful and uninterested in what she had to say as the opposite was true, “[the nurse] feels constantly belittled and is struggling with her confidence now due to this.”

6. [151]

   Ms Raggio reported that she had advised Dr Lukic that her actions with nurses was degrading their confidence and contributing to their mistakes; it was for Ms Raggio to address any gaps in training. Ms Raggio advised Mr Ayres that Dr Lukic “must develop insight into her behaviours and it needs to be shown that steps have been taken by Primary to do this – it’s risk management if nothing else.”

7. [152]

   According to Ms Raggio’s later note to Mr Simpson on this incident, Dr Lukic was known to be “hard on nurses that were learning”. Ms Raggio had been directed to always sit with this particular nurse and another staff member that had been working in the clinic for 14 months, when they went through results with Dr Lukic. During such sessions, Ms Raggio observed that Dr Lukic would ask the nurses “multiple questions that she knows they will probably not know the answer to. When they don’t know the answer she becomes aggressive and angry and asks them more difficult questions until they start to become anxious until it gets to the point that the communication has broken down.”

8. [153]

   On this occasion, the tension was rising but Ms Raggio had to leave the room for a short time and, on her return, Dr Lukic was yelling at the nurse “how dare you be so disrespectful, I have never seen a nurse so disrespectful, you are just like … nurse!”. Ms Raggio advised, “From that moment on I was instructed not to let this doctor be alone with … two [particular] nurses”.

9. [154]

   Dr Lukic said she did not abuse the nurse in any way and Ms Raggio’s description of the incident was false. After the matter with raised with her, Dr Lukic said she refused to have the nurse in her office without someone else present and left her office door open so that there were no allegations of misconduct. Dr Lukic regarded Ms Raggio’s description of the incident as “slanderous to me as a reputable senior physician … And if you’re looking for more things that could damage … an IVF clinic, it’s a dead patient.”

10. [155]

    Dr Lukic said the issue which led to this incident was that the nurse had missed a severe case of ovarian hyperstimulation. This complication can lead to death. The nurse did not check with Dr Lukic before sending the patient away. Dr Lukic then treated the patient for ovarian hyperstimulation when she returned to the clinic four days later. The doctor said, “she’s made up … this whole story that I attacked her … when no one was looking. I can’t fight this kind of stuff … and I was not even privy to any of this until afterwards”. Dr Lukic added, “It's all deflected that it's all me, me, me and the act ‑ and it's totally ignoring the ‑ the bigger issue of the fact that we had a lot of inexperienced, untrained staff in the clinic at that time.”

11. [156]

    On 21 May 2018, a one-star review of Dr Lukic was posted on RateMDs, “Don’t waste your time and money with Dr Lukic. I had a horrible experience … she was so rude and aggressive”. The next day, a one-star review was also posted, “I agree with ALL reviewers who have marked 1 star.”

12. [157]

    On 20 June 2018, Mr Simpson emailed Primary IVF clinicians, advising of changes in the management structure of the fertility clinics, including by the introduction of an IVF Operations Manager in each clinic and the appointment of clinical directors. Dr Lukic ‘replied all’ with some strongly worded criticisms of the delays being experienced by patients in getting a nursing appointment. Dr Lukic said she inadvertently selected “reply all”, rather than replying to Mr Simpson only.

13. [158]

    A colleague privately endorsed Dr Lukic’s comments. Dr McDonald also agreed with Dr Lukic’s observation, asking Mr Simpson whether he had any ideas as to how to reduce the bottleneck at nurse interview level. Mr Beattie was less impressed, asking Mr Simpson whether he wanted Mr Beattie to chastise Dr Lukic and suggest that “in the context of a very positive email to the business, having her reply all with her comments is simply not the way it should be done”. In cross-examination, Mr Beattie said that Dr Lukic had a right to raise these points “probably, obviously, more directly with us.” Mr Beattie said, however, that he did not then form the view that the plaintiff’s contract should be terminated at that point.

14. [159]

    Mr Simpson said he was disappointed to receive the ‘reply all’ email. He accepted that the closure of the Darlinghurst clinic, which turned out to be longer than expected, caused problems, albeit Dr Lukic’s email was “probably slightly dramatic”. But Mr Simpson said the ‘reply all’ email had no bearing on the decision to terminate, relative to the other matters he was confronted with.

15. [160]

    The next day, on 21 June 2018, Mr Simpson emailed Mr Beattie and general counsel, Yvette Cacchia, advising that he had spent time reflecting on the matter overnight. He had formed the view that it was time to end the association with Dr Lukic. (Mr Simpson said the fact that he had reflected on the matter overnight indicated that he considered the magnitude of that decision.) He completely disagreed with the suggestion, repeatedly put, that the ‘reply all’ email prompted the termination. I accept Mr Simpson’s evidence in this regard. Further, Mr Simpson emailed:

16. [161]

    At 10.30 am, Mr Beattie, Mr Simpson and Ms Cacchia met for some 30 minutes to agree on a course of action in relation to Dr Lukic. According to Mr Simpson’s email sent to Mr Yap shortly after the meeting, they formed the view that Dr Lukic was in breach of her contract for repeated incidents of poor behaviour and conduct over an extended period of time and proposed to terminate her contract.

17. [162]

    After the meeting, the contracts with the plaintiff were collated and the financial impact of the termination was assessed. Mr Beattie said that they were weighing up the financial implications for Primary Health Care of terminating the contracts with Dr Lukic. Mr Simpson emailed Mr Yap, advising that it was proposed to conduct a face to face meeting with Dr Lukic the following week to notify her of the decision to terminate; his assistance was sought to prepare the necessary documentation. Mr Simpson advised Mr Yap that further problems had continued since the meeting on 17 April 2018, with “more recent negative customer feedback … further incidents involving intimidation of staff” and Dr Lukic’s email to all clinicians and staff which was said to be “clearly inappropriate”.

18. [163]

    On 22 June 2018, Ms Raggio provided further information at the request of Mr Simpson. In a detailed note, Ms Raggio expressed concern about Dr Lukic’s treatment of nursing staff, in particular, new and junior staff. Dr Lukic was said to consistently berate and complain about the abilities of nursing staff, saying things like “you are non-existent to me” and “take her out of my face”. Further:

19. [164]

    Ms Raggio acknowledged that Dr Lukic did, on occasion, apologise to staff but did not change her behaviour. Further, the doctor would explain that her behaviour was “for their own good” and only “because they care”. The nurses’ view was that there had been a culture of acceptance of this behaviour to that point. Primary Health Care’s in-house counsel sought further details from Ms Raggio, which were duly provided on 24 June 2018.

20. [165]

    On 25 June 2018, Mr Simpson met with Ms Jayamaha to discuss a proposed course of action with Dr Lukic. There were a number of decisions to be made concerning patient consent, billings and guidance to be given to clinicians and staff. Mr Beattie said there were not many IVF specialists who were capable of doing the role or interested in doing the role in a bulk-billing practice, “So it was a consideration as to what we would do to continue the service or keep the service being provided at the level that it was, if she was to stop working with us.”

21. [166]

    On 26 June 2018, Mr Simpson emailed Mr Yap, suggesting that it was necessary to include Dr McDonald ahead of the meeting with Dr Lukic. They needed to explain the rationale for the decision to terminate Dr Lukic’s contract and involve Dr McDonald in the decision making as to what would happen after Dr Lukic’s departure. Mr Simpson requested a meeting with Mr Yap later that week to clarify the process and timelines, “I don’t want to delay this too long but I am conscious of the fact that we need to be prepared to manage any fall-out which will require some preparation.” That is, although it had been initially planned to terminate the plaintiff’s contract in the course of that week, logistical considerations delayed matters for, as will be seen, six weeks.

22. [167]

    Also on 26 June 2018, Ms Raggio provided Mr Simpson with a letter of complaint received that day, with a patient asking to change her treating specialist from Dr Lukic to another doctor. The patient complained:

23. [168]

    On 29 June 2018, Mr Simpson, Mr Beattie, Ms Cacchia, Mr Yap and in-house counsel met to discuss the proposed decision to terminate the plaintiff’s contract. On 6 July 2018, preparation continued. Primary Health Care calculated Dr Lukic’s earnings for the past two years, being $1,245,188 for the 2017 financial year and $1,193,821 for the 2018 financial year. A meeting was held to “regroup” and finalise the approach, including documentation, financial settlement and a meeting plan. Primary Health Care prepared projected earnings for the remainder of the plaintiff’s contract, based on the past 48 weeks (excluding when the laboratory was closed). The projected loss of income to Primary Health Care was some $6.8 million, while the estimated loss of earnings to Dr Lukic was some $3.8 million.

24. [169]

    In late July 2018, the defendant compiled patient feedback on Dr Lukic from Primary IVF’s customer feedback surveys, on-line reviews and patient letters. Mr Simpson saw that additional adverse reviews had been added since April 2018.

25. [170]

    On Friday, 3 August 2018, Mr Simpson met with Dr McDonald, Ms Jayamaha and Mr Beattie to discuss the termination of Dr Lukic. It was proposed to meet with Dr Lukic’s colleagues on Wednesday, 8 August 2018, to advise them of the proposed course of action. It was then proposed to call Dr Lukic to request a meeting with her the following morning and, on 9 August 2018, to meet with Dr Lukic and a support person.

26. [171]

    It is convenient to set out Dr McDonald’s observations of Dr Lukic. Her evidence was relevant on the alternative case, to establish a serious breach of the plaintiff’s obligation to procure that Dr Lukic acted “in a harmonious way with the other practitioners and staff”: cl 4.2(c), Sale Deed; cl 5.3(c) Services Deed. The defendant did not have the benefit of Dr McDonald’s evidence when forming any opinion under cl 9.2(b). Dr McDonald was a fair witness.

27. [172]

    Dr McDonald and Dr Lukic had adjoining rooms at the George Street clinic. Two days a week, the doctors were both in their rooms. On other days, they alternated at the Darlinghurst day surgery. Dr McDonald observed that Dr Lukic frequently arrived late to work. Dr McDonald saw that Dr Lukic’s patients were often left waiting in the waiting room for long periods of time; the patients often looked stressed and irritated. Dr Lukic denied this and said she was “rarely late”.

28. [173]

    Dr McDonald said she observed Dr Lukic being irritable and cranky at least once a week, raising her voice at staff or storming out of the clinic and leaving her patients waiting in the waiting room. These incidents became more frequent and more intense. Dr McDonald saw Mr Ayres “pacify” Dr Lukic on occasion, speaking calmly to her, removing her from the environment and sometimes taking her away for coffee. Dr McDonald also said she heard raised voices at times, “I did hear Julie shout at people, on occasion. … it was fairly regular. A couple of times a week.” This included Dr Lukic shouting at nursing and administration staff, “I heard it, witnessed it directly.” Dr Lukic denied this.

29. [174]

    According to Dr McDonald, staff encountered difficulty working with Dr Lukic, who often became visibly and / or audibly frustrated when her preferences were not adhered to. Dr McDonald was told by nursing staff, anaesthetic staff and laboratory staff at the Darlinghurst day surgery from time to time that they wanted to avoid being in an operating room with Dr Lukic as she would frequently become angry and raise her voice at them. Dr McDonald did not see this for herself, as the doctors worked in the day surgery on alternate days.

30. [175]

    Dr McDonald noticed a deterioration in Dr Lukic’s behaviour and level of personal care in 2018. Dr Lukic looked dishevelled in her appearance and clothing at times and often short-tempered. Dr Lukic denied that she was dishevelled but agreed that she occasionally expressed her frustration to Dr McDonald about what was occurring at Primary IVF, in an attempt to improve matters.

Termination

1. [176]

   On Sunday, 5 August 2018, Mr Simpson circulated some documents to Mr Beattie and Mr Yap for input in respect of “the proposed separation with Dr Lukic”, including a notice of termination. On Tuesday, 7 August 2018, Mr Beattie commented that he was “slightly concerned” about the degree to which they could point to Dr Lukic’s behaviour continuing since their meeting in April 2018, “It looks like there are instances, but if we can just confirm the patient comments are more recent, that will confirm our position.”

2. [177]

   Mr Beattie said, “I guess I was asking, ‘do we have evidence?’ … we needed to actually have a case for termination … Has she actually changed her behaviour? This was much more a judgement call we were making on whether or not this individual was capable of changing her behaviour so that they could be a … well-functioning part of our business.” Mr Beattie added, “So you have [Mr Simpson], who was … saying, ‘well, listen, I can’t make this work in my business. I don’t believe she has the necessary capacity to adjust’, and I was involved in speaking with lawyers and [Mr Simpson] on whether or not we also had a legal position to match that.”

3. [178]

   Mr Simpson said there was evidence of complaints between 17 April 2018 and when the decision was made to terminate Dr Lukic, as well as historical complaints, which were taken into account. He agreed that he did not definitively examine the complaints received after 17 April 2018 to ascertain whether the underlying conduct had occurred.

4. [179]

   On Wednesday, 8 August 2018, a discussion guide was prepared for the meeting with Dr Lukic’s colleagues. The note records that the defendant had to confront a significant volume of negative and concerning feedback and complaints in respect of Dr Lukic. It was proposed to provide the document summarising some of this material. Problems had also been occurring with staff for a long period of time and it was proposed to terminate her contract. Whilst it was acknowledged that Dr Lukic carried out a “magnitude of work”, this short term benefit was not in the long term interests of Primary IVF, patients or staff.

5. [180]

   Later that evening, Mr Simpson tried to contact Dr Lukic twice and then sent an email informing her of the meeting the next morning at 9.30 am to discuss her contract. Dr Lukic was invited to bring a support person. Dr Lukic says that, on receipt of the email, she called Mr Simpson to ask what the meeting was about but was not told anything more than what was in the email.

6. [181]

   On 9 August 2018, Dr Lukic met with Mr Simpson, Mr Beattie and Ms Cacchia. According to Mr Simpson, either he or Mr Beattie opened the meeting by referring to the April 2018 meeting, the purpose of which was to share a series of negative comments and feedback from patients and staff. They had then emphasised that the pattern of behaviour was unacceptable. The doctor had undertaken to address this behaviour. Unfortunately, despite that undertaking, Primary IVF had continued to receive negative feedback and complaints about the doctor. They were therefore of the opinion that she was not able to modify her behaviour and would be providing a notice of termination after the meeting.

7. [182]

   Mr Beattie and Mr Simpson showed Dr Lukic some examples of patient comments from surveys. Mr Beattie agreed that the complaints were not specifically put to Dr Lukic, nor was she asked if there was substance to the complaints, “I mean, based upon our assessment of her historical response to complaints, I guess we’d run to the point where we weren’t going to have a reasonable answer from that.” The doctor did not say much in response. Mr Simpson agreed that the decision to terminate having been made, it did not matter what Dr Lukic might have said in the meeting.

8. [183]

   Mr Beattie recalled that Dr Lukic raised a number of matters that she wanted to talk about, which were unrelated to the decision to terminate or otherwise sought to justify the conduct that gave rise to the termination. Mr Simpson sought to bring the conversation back to the topic of termination.

9. [184]

   According to Dr Lukic, she asked what the meeting was about and Mr Simpson said there had been another complaint against her. Dr Lukic said that this was the first she had heard of it. Ms Cacchia said there had been a thread online about her behaviour. Dr Lukic asked what that meant. Mr Simpson gave her a letter of complaint from a patient, complaining that the doctor had advised her that she should consider losing weight before her next cycle of treatment. Dr Lukic responded that the clinical advice given was appropriate but, without the patient’s file, she could not comment any further.

10. [185]

    Dr Lukic also said, “Are you all aware that there was a new death scenario on the operating table yesterday due to the fact that the patient was overweight? It was not a patient of mine but a patient of one of the other IVF specialists. Is this the only complaint?”. According to Dr Lukic, Mr Simpson said “One is all I needed. You are not to return to Primary IVF’s premises today, even to collect your things. They will be packed and sent to you. We will send you a formal termination notice later today.” (Mr Simpson denied that he said “One is all I needed”. Mr Beattie agreed.) Mr Beattie also said that they would be in contact with her over the next few days “to discuss damages”. Dr Lukic was in shock and left the meeting.

11. [186]

    After the meeting, Mr Simpson emailed the notice of termination to Dr Lukic. The letter repeated the incidents referred to in the notice of serious breaches prepared for the April 2018 meeting (see [108]), said in the letter to have been discussed at that meeting. In addition, the letter referred to subsequent material being: adverse online reviews dated 17 April 2018, 27 April 2018, 22 May 2018 and 26 July 2018; the written complaint of 26 June 2018; and the instances of behaviour described by Ms Raggio vis a vis junior nursing staff.

12. [187]

    In the letter, Mr Simpson advised that, as a result of Dr Lukic’s behaviour, Primary IVF staff and patients had felt anxious, threatened and fearful of potential reprisals by the doctor against them should they notify Primary IVF of her behaviour. The doctor’s behaviour was said to be entirely unacceptable and, as a result, the defendant held serious concerns for the ongoing health and safety of its employees and patients. The defendant was therefore said to be of the reasonably held opinion that the doctor had committed acts which would adversely affect “and have in fact adversely impacted” its reputation or business conducted from George Street and Darlinghurst. The Sale Deed was terminated with immediate effect under cl 9.2(b) and, as a consequence, the Services Deed was terminated too: cl 10.1(b).

13. [188]

    The defendant also reminded Dr Lukic of the restraints in the Services Deed. Finally, the defendant said it had suffered losses of $7,501,343 as a result of the termination. The defendant requested that the plaintiff pay this sum by 22 October 2018 and provided its bank details.

14. [189]

    Before receiving this letter, Dr Lukic said that no notice was given to her that the defendant was considering terminating the contract.

Dr Lukic’s response

1. [190]

   It is convenient to set out Dr Lukic’s response to the complaints made by patients and staff, before turning to whether the defendant was entitled to terminate the contracts having regard to those complaints. Of the patient complaints, Dr Lukic said “These are patients’ opinions. … but that does not automatically mean that you should believe them over me. Dr Lukic said she had never been given the patient notes or any opportunity to clear herself in respect of patient allegations and accusations, “I’ve just been accused.” Dr Lukic said, “I know that every appointment I have with patients goes well”. Dr Lukic added:

2. [191]

   Dr Lukic put the complaints down to how the defendant ran Primary IVF. Dr Lukic understood that the practice operated on the basis that it would make profit based on the high volume of patients. The low-level return on each patient meant that the practices operated on a tight budget. Due to its method of charging, patients with medical issues who would not normally attempt to go through IVF elsewhere became patients. Many people from ethnic minorities came for treatment. Dr Lukic believed that this led to communication issues, particularly when the interpreters engaged by the defendant incorrectly translated information to the doctor. Dr Lukic believed that there was more demand than the practice could handle.

3. [192]

   Due to the Medicare charging method, the practices expanded rapidly and Dr Lukic believed that the defendant did not have sufficient staff to support the rapidly expanding practices. Dr Lukic believed that most of the people that worked at the George Street practice were overworked; tiredness caused issues with harmony between staff. Dr Lukic said that, with the rapid expansion of the practice, the number of nurses who had to work in a small room increased from three to six. Some nurses were inexperienced in IVF and Dr Lukic believed they had difficulties interpreting results and relaying these results to patients.

4. [193]

   Dr Lukic said that a patient who wanted to see a specialist at Primary IVF was required by the defendant to see a general practitioner at least twice before being referred to the specialist. Dr Lukic observed that this caused patients to become frustrated by the delay before seeing her.

5. [194]

   Dr Lukic said that the IVF journey is very difficult, particularly if the patient has issues with their weight. From time to time, Dr Lukic had to deliver information about weight management to patients going through IVF, which was usually a stressful and emotional time for them. Dr Lukic tried to deliver this information professionally and sensitively however, even when so delivered, it was often not well received by the patient. It involved the patient accepting that their conduct with regards to food intake and exercise was a contributing cause to difficulties becoming pregnant. This was difficult information for patients to receive and process.

6. [195]

   Dr Lukic explained that her role involved speaking to people about their sperm count, smoking, eating too much, drinking too much and being too old. Often people did not like being confronted with these realities. This could cause tension between the doctor and the patient which, in turn, could cause issues for the practice.

7. [196]

   Of staff complaints, Dr Lukic accepted that at times she did become frustrated with the defendant’s management of the George Street and Darlinghurst practices and that she vented her frustrations to management and others, either verbally or by email. Dr Lukic said she did this with a view to improving some of the problems that she and other staff encountered.

8. [197]

   Dr Lukic believed that the George Street rooms were not big enough to cope with the rapid expansion of the practice. Dr Lukic said there were problems with heating and air-conditioning and every few months, with sewerage. Staff were uncomfortable and frustrated. The receptionists were very young and inexperienced and did not know how to manage patients’ expectations if a doctor was running late. As the practice was busy, there was often no time for lunch breaks, which caused issues for staff and, in turn, for patients as staff were overworked and unprofessional to those patients.

9. [198]

   Dr Lukic said “I tend to be loud even when not stressed.” Dr Lukic agreed that there were other sources of stress in her life at the time including financial stress and strains in her personal life, where she was caring for an elderly mother who had severe Alzheimer’s and supporting a sibling financially. Dr Lukic denied, however, that she took out her frustration and stress on staff and patients. Dr Lukic agreed that her frustrations with how the clinic was being run caused her on occasion to raise her voice or yell at staff “but it was not a daily event.”

Entitlement to terminate

1. [199]

   The first issue is what were the circumstances in which the defendant was entitled to terminate the contract. This turns on the proper construction of the relevant clause. As to the basis on which the defendant purported to terminate the contract, the plaintiff accepted that cl 9.2(b) did not require the defendant to prove that the relevant “act” actually occurred before exercising its rights. The words “if true” made it clear that the truth of the acts need not be proved; a reasonable basis for concluding the acts occurred was sufficient. But the clause obliged the defendant to investigate whether an “act” had occurred.

2. [200]

   The plaintiff submitted that cl 9.2(b) required the defendant to afford natural justice to the doctor. The valid exercise of the termination power in cl 9.2(b) depended on the “reasonably held opinion” of the defendant. This required a reasonable basis for the opinion and, where it permitted the exercise of a discretion adverse to the counterparty, natural justice: EFG Australia Ltd v Kennedy [1999] NSWSC 922 at [57]; Bartlett v Australia & New Zealand Banking Group Ltd (2016) 92 NSWLR 639; [2016] NSWCA 30 at [47], [49]; Bupa HI Pty Ltd v Chang [2019] FCAFC 180 at [58]-[59], [72]; Doust v Riveaux Holdings Pty Ltd [2024] NSWSC 1434 at [5], [36]. Reasonableness was required in respect of both the process and the result.

3. [201]

   The defendant submitted that cl 9.2(b) did not require it to conduct an investigation into the “acts”; this was said to be contrary to the express language. The defendant merely had to hold an opinion that the act had been committed, noting the use of the words “if true”. This contrasted with other provisions in the contract which applied to conduct which had been committed, such as cl 9.2(c), which applied where the plaintiff or doctor were guilty of misconduct.

4. [202]

   The defendant submitted that the suggestion that cl 9.2(b) required that Dr Lukic be afforded an opportunity to respond was not supported by the text or context of the Sale Deed. While other termination powers specifically referred to providing notice of a breach and an opportunity to remedy that breach, cl 9.2(b) did not: see cl 9.1, cl 9.2(a). The text was in contrast to that considered in Bupa HI Pty Ltd v Chang [2019] FCAFC 180 at [34].

5. [203]

   In the alternative, the defendant contended that it was entitled to terminate the contract in any event under cl 9.2(a) given the plaintiff’s failure to remedy serious breaches, of which notice was said to have been given at the meeting of 17 April 2018. The plaintiff contended that, as the defendant did not give Dr Lukic written notice at that meeting, no right to terminate arose. What was required was a notice specifying the breach and requiring the doctor to remedy the breach within seven days. Clause 9.2(a) requires that the notice must identify the serious breach and call for “that breach” to be rectified.

6. [204]

   As mentioned, cl 9 of both the Sale Deed and Services Deed concerned termination and was in the same terms. The first sub-clause concerned the plaintiff’s right of termination. Clause 9.1 provided:

7. [205]

   Noteworthy, the right to terminate could only be exercised after giving “notice in writing”. Clause 9.2 concerned the defendant’s rights of termination and provided:

8. [206]

   Unlike the sole right of termination in cl 9.1, cl 9.2 continued to list further rights of termination beyond termination on notice for failure to remedy a breach. Many of the “events” enumerated in sub-cll 9.2(b) to (h) were serious in nature, but not all. The imposition of a condition on the registration of the Doctor under sub-cl 9.2(g) may be minor, requiring the Doctor to, for example, undertake a course in medical recordkeeping, or more major, requiring the Doctor to only practice under supervision. Similarly, the petition for the winding up of the plaintiff under sub-cl 9.2(h) may result from failure to pay a supplier’s bill in a timely manner or something more serious. But what each of these “events” have in common is that they pose an existential threat to the arrangements between the parties, either because the Doctor can no longer practice medicine for practical purposes or at all, the plaintiff ceases to trade or, in the case of sub-cl 9.2(b), the continuation of the arrangement will be destructive to the defendant’s reputation or business.

9. [207]

   While the chapeau to cl 9.2 provides that the Purchaser “may” terminate the Sale Deed on the happening of any of the events which are then described, I do not consider that this gives rise to a discretionary element in the defendant’s decision-making, beyond the fact that it will be necessary, on the happening of any of these events, to decide whether to terminate the Sale Deed (or Services Deed) or affirm the contract and move on. Using sub-cl 9.2(g) as an example, if conditions were imposed on the Doctor’s registration, the defendant may consider that the conditions can be readily satisfied and removed from the registration, or the Doctor can continue to provide medical services notwithstanding the condition, such that the defendant chooses not to exercise its rights.

10. [208]

    While the plaintiff contended in its pleading that the defendant’s power to terminate under cl 9.2 must be exercised reasonably and in good faith, this being a term implied by law, this was not agreed, nor the subject of the plaintiff’s closing submissions. I take this not to have been pressed.

11. [209]

    The first sub-clause is relied on by the defendant in the alternative. Clause 9.2(a) can be seen as the corresponding provision to the plaintiff’s right of termination in cl 9.1. While cl 9.1 required the plaintiff to give “notice in writing” to the defendant, cl 9.2(a) only requires the defendant to give “a notice”. Reference to “a notice” may suggest an object, item or thing, which may suggest a written notice. But the clause does not say so. Where cl 9.2(a) follows immediately from sub-cl 9.1, the absence of a requirement for notice “in writing” is obvious and presumably intentional. On the plain meaning of the words, oral notice will suffice. As Dixon CJ observed in Ballas v Theophilos (No 2) (1957) 98 CLR 193; [1957] HCA 90, where a partnership deed contained an option but no express provision as to how to exercise it, “any definitive communication … would suffice” so long as the communication expressed clearly and unequivocally that the partner was exercising that right: at 196.

12. [210]

    Whether the defendant gives notice orally or in writing, the notice must conform to the requirements of cl 9.2(a), in particular, calling for the serious breach to be remedied. For example, in Idameneo (No 123) Pty Ltd v Ticco Pty Ltd [2004] NSWCA 329, the defendant sent a letter alleging that the doctor had breached the contract. But Santow JA (Mason P and Hodgson JA agreeing) concluded that no notice was given in the terms of the clause, “Rather there was at most an allegation of breach … namely that ‘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’.” The doctor was simply urged “to promptly correct, and maintain all your obligations under your contract”: at [99].

13. [211]

    Clause 9.2(b) is the critical provision. The parties’ submissions raised, essentially, two issues: the extent to which the defendant needed to investigate “an act” and, further, to afford natural justice to the doctor. Resolving these issues largely turns on the particular provisions of this contract. Guidance on the relevant principles is also provided by judicial consideration of similar contracts in the authorities referred to by the parties, to which this judgment now turns.

14. [212]

    In EFG Australia Ltd v Kennedy [1999] NSWSC 922, a contract of employment provided that the employer could terminate the contract forthwith and without notice if, in the reasonable opinion of its board, the employee was guilty of negligence, dishonesty, misconduct or incompetence. Obiter, Hodgson CJ in Eq was not prepared to imply a requirement to give notice but added, at [57]:

15. [213]

    EFG Australia has been applied outside the employment context: Bupa HI Pty Ltd v Chang [2019] FCAFC 180 at [64] (Gleeson, O’Callaghan and Jackson JJ); Doust v Riveaux Holdings Pty Ltd [2024] NSWSC 1434 at [5] (Hammerschlag CJ in Eq).

16. [214]

    Natural justice was not mentioned in Interstar Wholesale Finance Pty Ltd v Integral Home Loans Pty Ltd (2008) 257 ALR 292; [2008] NSWCA 310, where a finance company terminated a contract with its mortgage originator on the basis that it considered that the mortgage originator had engaged in deceptive activity in relation to loan applications. Their contract provided that the finance company “may terminate this Agreement immediately upon the happening of any of the following events … (c) where the Originator … has engaged in any proven deceptive or fraudulent activity in relation to an Application or a Settled Loan or [the finance company] considers, in its reasonable opinion, that the Originator … has engaged in deceptive or fraudulent activity in relation to an Application or a Settled Loan.” Allsop P (Giles and Ipp JJA agreeing), considered at [96]:

17. [215]

    The President added that the provision rested upon “the existence of an opinion which must be reasonable, and so must have a reasonable foundation”: at [140]. But that the finance company had formed the opinion reasonably did not mean that the mortgage originator had been deceptive or fraudulent, “There may have been a misunderstanding, matters may not be as they reasonably seem. … The kind of evidence to found fraud, and the kind of evidence to found an opinion that fraud has occurred may well be of a quite different character”: at [140].

18. [216]

    Interstar was not followed in Bartlett v Australia & New Zealand Banking Group Ltd (2016) 92 NSWLR 639; [2016] NSWCA 30, as the contractual provisions were different. In Bartlett, a contract of employment provided:

19. [217]

    ANZ terminated the plaintiff’s employment without notice after an investigation found that he had sent a confidential internal document to a journalist. Macfarlan JA (Meagher and Simpson JJA agreeing) concluded that the precondition for the bank taking disciplinary action under cl 13 was a failure to comply with the employment agreement. Satisfaction of the precondition depended upon an actual breach of the employment contract, not on the bank’s opinion as to whether such a breach had occurred: at [30]. In these circumstances, Interstar was not applied as, to construe the bank’s entitlement to immediately terminate without notice as permitting termination where there had in fact been no misconduct or other breach, but only the opinion of the bank that that had occurred, would be inconsistent with cl 13: at [31]. To avoid this conflict, his Honour construed the required opinion of the bank as referable to the seriousness of the misconduct or breach, not as to its existence. Macfarlan JA considered that adoption of this approach also paid due regard to the severe consequences that would flow on summary termination of employment: at [32].

20. [218]

    His Honour further concluded that, in forming an opinion under cl 14.3(b), the bank was “obliged to act reasonably, at least in the Wednesbury sense and at least so far as its process, as distinct from the result, was concerned”: at [49]. That is, the decision would be invalid if it was so unreasonable that no reasonable decision-maker would ever have come to it. Further, the clause required “a reasonable as well as honest state of satisfaction” on the part of the bank: at [49], citing Service Station Associated Ltd v Berg Bennett & Associates Pty Ltd (1993) 45 FCR 84; (1993) 117 ALR 393 at [40] (Gummow J).

21. [219]

    The Court concluded that ANZ acted unreasonably as it undertook a limited investigation, did not provide the employee with a copy of a handwriting expert report, did not give him the opportunity to obtain advice about the expert report or an opportunity to respond to it. The bank failed to follow its own policy in relation to evidence that it treated as fundamental to its enquiry. That policy required the bank to afford procedural fairness to an employee facing serious disciplinary action, to have a reasonable opportunity to respond to the allegations made against them and to respond to any evidence that may be relied on to make a finding by providing evidence of their own: at [54].

22. [220]

    Most recently, in Bupa HI Pty Ltd v Chang [2019] FCAFC 180, a private health insurer de-registered an ophthalmologist from its Bupa Medical Gap Scheme. Practitioners who were part of the scheme were effectively held out by Bupa to its members as being Bupa’s trusted and preferred providers. Dr Chang was giving his patients a Xanax tablet before a procedure but claimed for an anaesthetic service. Bupa considered that the doctor was claiming benefits under the wrong Medicare item number, costing the insurer some $520,000.

23. [221]

    Bupa could de-register a practitioner from the Bupa Medical Gap Scheme under the terms of its contract with the practitioner, which provided:

24. [222]

    The Court considered that, on the proper construction of the contract, it was for the doctor to establish on the balance of probabilities that Bupa’s opinion was not arrived at reasonably, and that the opinion was not reasonably based on available material, following EFG: at [64]. Further, the contractual terms required that Bupa hold the reasonable opinion when giving written notice of deregistration: at [65]. At [66]:

25. [223]

    Further, the standard of reasonableness was necessarily informed by the fact that deregistration was for a minimum period of six months. To deprive the practitioner of significant benefits during this period was a serious step. As such, an opinion on Bupa’s part would not be reasonable “if it were based on insubstantial grounds”: at [67]. Where Bupa reached its decision based on the advice of a GP and the views of an employee who was not herself a doctor, without first asking an ophthalmologist or anaesthetist about the matter, the contractual requirements were not satisfied. The fact that an expert witness at trial later expressed an agreement with Bupa’s opinion was of no moment “once it is understood that, properly construed, the clause requires the process – not merely the result – to be reasonable”: at [72]. The later expert opinion was something that Bupa did not know at the time and was not disclosed to the practitioner as a reason for deregistration.

26. [224]

    Whilst these authorities considered distinct contractual provisions, the following contractual indicia may point to an obligation to accord natural justice to the counterparty before exercising a right of termination:

27. [225]

    Beyond this, it may not matter whether the contract requires the opinion to be “reasonable”, as the requirement of reasonableness may be implied in any event: Bartlett v ANZ at [49]. The onus of proving that the defendant’s opinion does not comply with the contractual provision likely rests on the plaintiff: Bupa HI v Chang at [64]. Finally, a defendant cannot rely on matters which came to its attention after it was required to form the requisite opinion, to justify that that opinion was reasonable: Bupa HI v Chang at [72]. Much turns on the terms of the particular contract, to which this judgment now turns.

28. [226]

    As to any requirement for notice to be given, by sharp and immediate contrast with the immediately preceding sub-clause, cl 9.2(b) does not require the defendant to give a notice to the plaintiff or the Doctor, calling for any “act” to be remedied. Indeed, there is no requirement that “an act” amounts to a breach, or even a serious breach, of the Sale Deed or Service Deed. This indicates that the parties intended that no notice need be given, so long as the Purchaser held the relevant opinion on the relevant basis, before exercising its right to terminate. The sub-clause is drafted for use without the need to attend to the formal requirements of notice or notice periods, to enable the defendant to prevent damage to the defendant’s assets, being its reputation or business, in the specified circumstances.

29. [227]

    As to the nature of the contract, the relationship between the defendant and Dr Lukic was not an employment relationship. The Sale Deed is a commercial contract. The defendant paid a substantial sum to acquire the doctor’s practice. That said, terminating the contract would likely have significant financial consequences for the plaintiff and the doctor. Not only will the plaintiff and the doctor lose revenue that would have been enjoyed under the remainder of the term of the contract, but the doctor will be restrained from providing medical services in the surrounding area for some time. In these circumstances, an opinion may not be reasonable “if it were based on insubstantial grounds”: Bupa at [67].

30. [228]

    As to any procedures required by the contract, the three deeds do not prescribe a procedure for informing the doctor that the defendant is considering taking steps under this provision or giving the doctor an opportunity to make submissions before reaching a final opinion: see Bupa HI v Chang. Nor, so far as the evidence reveals, were there policies in place which required the defendant to afford procedural fairness to the doctor in the circumstances, as in Bartlett v ANZ.

31. [229]

    That is, none of these contractual indicia point directly to an obligation on the defendant to accord natural justice to the plaintiff or the doctor. But this obligation may arise indirectly, given the contractually prescribed “events” which must happen before the defendant is entitled to terminate the contract under cl 9.2(b). There are two “events”: an anterior event, being the doctor’s “act”, and the formation of a particular opinion by the defendant.

32. [230]

    As to the required attributes of the defendant’s opinion, cl 9.2(b) requires the defendant to have a “reasonably held opinion” that the doctor has committed an act which, if true, will have certain consequences. The words “if true” make plain that the Purchaser does not have to be satisfied that the doctor has in fact committed the act: Interstar at [96], [140]. But the defendant can only hold the required opinion on this matter if it is “reasonably held”. A reasonable opinion has been variously described as “an opinion arrived at reasonably, as well as reasonably based on available material” (EFG) or an opinion for which there are “sufficient grounds” or a “reasonable foundation” (Interstar). This requires a considered assessment of the likelihood that the doctor has committed the act, before turning to consider its implications.

33. [231]

    When making this assessment, it may be necessary to tell the doctor about “the act” and seek their response in order to form the requisite opinion notwithstanding that cl 9.2(b) does not make it mandatory to present the alleged acts to the plaintiff or the doctor for response. As Henry J noted obiter in Maven Dental Group Pty Ltd v S&M England Pty Ltd [2018] QSC 220 in respect of a similar clause, at [31]:

34. [232]

    That is, in forming a “reasonably held” opinion that the doctor has committed acts, “if true”, the purchaser may well enquire of the doctor as to whether the act occurred or not and, if so, whether the act was justified in the circumstances. In some circumstances, it may not be possible for the purchaser to form a “reasonably held” opinion without so doing. In other circumstances, it may not be necessary or practicable to get the doctor’s version of events before the relevant opinion may be able to be formed. The touchstone is not whether the defendant investigated the “act” or afforded natural justice to the plaintiff or the doctor but whether, in the circumstances, the defendant formed a “reasonably held opinion”.

35. [233]

    Turning to the implications of the doctor’s conduct, cl 9.2(b) requires that the acts, if true, “would … adversely affect the reputation or business of the Purchaser” conducted from the George Street and Darlinghurst premises. “Would” is often used in the place of “will”; by using these words, “one is elevated from possibilities – perhaps into the world of probabilities” F v National Crime Authority (1998) 83 FCR 99; (1998) 154 ALR 471 at 481 (O’Loughlin J). More recently in Australian Olympic Committee, Inc v Telstra Corporation Ltd (2017) 258 FCR 104; [2017] FCAFC 165, the Court considered legislation which prohibited the use of the Olympic symbol to promote goods or services where it “would suggest” that the promoter was a sponsor of the Olympic Games. The Court (Greenwood, Nicholas and Burley JJ) considered, “The use of “would” instead of “could” precludes the construction that rests upon a mere suggestion or some likelihood. … Taken together, “would suggest” may be understood to mean that the relevant meaning is more likely than not to be brought to mind”: at [100].

36. [234]

    That is, the defendant must be satisfied to a requisite degree of certainty that the consequence of the doctor’s acts “would” adversely affect its reputation and business, rather than “may” or “could” affect its reputation or business. The defendant must hold a reasonable opinion that it is probable or more likely than not that the doctor’s act will have that result. But cl 9.2(b) repeats that the defendant’s opinion on this subject is just that – an opinion – emphasising that the defendant does not need to be satisfied that, in fact, it will have that effect.

Was termination effective?

1. [235]

   The second issue is whether the “events” described in cl 9.2(b) had happened as at 9 August 2018. The plaintiff submitted that the defendant did not hold the requisite opinion at the time as the opinion was not reasonably based and there was a failure to afford natural justice to Dr Lukic. The person who held the opinion was the one who made the decision, who was said to be Mr Simpson. The plaintiff accepted that Mr Simpson was of the opinion that Dr Lukic had “committed an act which if true would, in the opinion of the Purchaser, adversely affect the reputation or business of the Purchaser conducted” from the relevant premises. But how Mr Simpson had arrived at that opinion was said to be misconceived.

2. [236]

   The plaintiff submitted that negative reviews posted by patients were not enough to form the view that the defendant’s business or reputation would be adversely affected. The investigation of the “acts” was inadequate. Mr Simpson simply compiled complaints but did not investigate the substance of the complaints and whether the “acts” had occurred. Further, it was unclear what Dr Lukic did, that is, what was “the act” that gave rise to some of the vitriolic surveys and reviews. It was clear from the doctor’s evidence that she still had no idea what prompted those reviews and nor did the defendant, where it never engaged with Dr Lukic on the topic. The fact, if it be a fact, that Dr Lukic received more complaints than the other doctors was said to be explicable on the basis that Dr Lukic saw more patients.

3. [237]

   The plaintiff submitted that Mr Simpson did not direct his attention to the “acts” underlying the complaints but concluded that there was a theme emerging from the complaints as to rudeness and insensitivity. He relied on that theme to conclude that the acts had occurred. Further, Mr Simpson proceeded on the basis that the words “if true” permitted him to ignore whether the acts occurred. Mr Simpson regarded it as sufficient that the act was alleged. These misconceptions infected his opinion such that was not reasonably held. The process followed by the defendant in exercising its discretion was said to be infected by Wednesbury unreasonableness and ought not to have been exercised in the way that transpired.

4. [238]

   The plaintiff submitted that Dr Lukic’s ‘reply all’ was “manifestly the catalyst” for Mr Simpson’s decision to forthwith terminate the contracts “and to manufacture a case for doing so”. It was said that the defendant decided to terminate the Sale Deed on 21 June 2018 and what followed was “an attempt by Idameneo to justify that decision, and an attempt to provide a contractual basis for that decision.” I reject this submission. The plaintiff was effectively submitting that the defendant was acting in bad faith when purporting to rely on cl 9.2(b). That should have been specifically pleaded and particularised and was not.

5. [239]

   While the letter of termination referred to 14 complaints or negative reviews, the plaintiff submitted that the defendant could only rely on the complaints that were presented to Dr Lukic and to which she was invited to respond. It was a fundamental requirement of natural justice that a decision maker identify the matters relied on and invite the affected party to respond to those matters. In any event, the 14 complaints referred to in the letter did not amount to a “hill of beans”. The patient complaints were anonymous and unreliable. Some of the complaints related to waiting times, over which the doctor had little control. Other complaints were said to be nonsensical. Further, if a complaint was not referred to in the letter of termination, then the defendant was not entitled to rely on that complaint to support termination under cl 9.2(b).

6. [240]

   As to the alternative basis of termination, the plaintiff further submitted that, given the defendant’s decision to take an ‘informal’ approach at this meeting, as opposed to the formal approach described by in-house counsel of “providing [Dr Lukic] with 14 days’ notice to remedy the breach or risk termination”, the Court should find that neither Mr Simpson or Mr Beattie gave any ‘notice’ to Dr Lukic that she was in breach of contract, nor that the doctor needed to rectify the breach, nor that the defendant would terminate the contract absent rectification.

7. [241]

   Finally, the plaintiff submitted that, even if such notice could have been given orally, it was incumbent on the defendant to tell Dr Lukic that cl 9.2(b) permitted it to terminate the contract based on certain acts, the defendant had formed a view that an act had occurred, and to ask her what she said about it. (This submission, I think, muddies the requirements of cl 9.2(a) and cl 9.2(b).) What Mr Simpson and Mr Beattie told Dr Lukic at that meeting went nowhere near this. Precious few acts were identified in the material that was provided to Dr Lukic at this meeting. It comprised a one-page document that had four customer surveys and a generic reference to staff complaints.

8. [242]

   The defendant submitted that the opinion formed for the purposes of exercising the termination power under cl 9.2(b) was reasonable, having regard to the continuum of complaints, concerns and feedback it considered. If any of this conduct had truly been engaged in by Dr Lukic, such conduct would have adversely affected the reputation or business of defendant vis a vis patients and staff. Dr Lukic accepted as much.

9. [243]

   The defendant submitted that there was a body of complaints that were not isolated but occurred over a sustained period of time, from when Dr Lukic first began to work for Primary IVF in 2014 until, and after, the April 2018 meeting. The doctor’s problematic conduct was in respect of patients and their partners, on the one hand, and with doctors and other staff members of the clinic on the other hand. The complaints came from a number of sources: staff members about their interactions with Dr Lukic, staff members reporting on Dr Lukic’s interaction with other staff members, patients, the GPs for those patients, patient surveys collected by Primary IVF and patient reviews posted online. There was a high degree of commonality across this material.

10. [244]

    The defendant submitted that there was no basis to limiting the “acts” to those referred to in the letter of termination. There was no basis for such a limitation in the contract. The question was what the decision-maker had in fact relied upon in arriving at their decision. There was no reason to doubt Mr Simpson’s evidence as to the matters to which he had regard.

11. [245]

    The defendant accepted that there were teething problems when the George Street and Darlinghurst clinics were established, and other stressors on staff working in the practice. But all staff were enduring the same problems. It was Dr Lukic’s reaction to those difficulties which made her a “complete outlier” in the practice. The defendant accepted that some of the patients’ complaints may reflect unrealistic expectations of a ‘Rolls Royce’ service being delivered for a Medicare price. But such complaints were minor in the scheme of things; the body of the complaints was about being treated in a humane manner and with respect.

12. [246]

    The defendant submitted that the clinic’s ability to attract both patients and staff was critical to its operational success. The ability to attract and retain staff was particularly important, where good people were hard to find, recruit and retain at the time. Further, in order for its business to survive and thrive, the defendant’s workforce needed to be motivated, with high morale rather than low. The doctor’s conduct was capable of having a deleterious impact in that regard. If staff morale is low, then staff were harder to retain and was harder to recruit new staff in the marketplace. Whilst the doctor’s unsatisfactory interactions with other staff may have happened behind closed doors, staff talk. News spreads. There was a very real prospect that the defendant’s reputation may be damaged in this regard.

13. [247]

    The defendant further submitted that it provided a combined offering to patients at the George Street and Darlinghurst clinics, including fertility GPs, nurses and laboratory services conducted by embryologists. All of these services were marketed together. The defendant could not distinguish between services provided by Primary IVF, on the one hand, and services provided by Dr Lukic on the other. But the reputation of the fertility specialists was always going to be important to the success of the clinics.

14. [248]

    To the extent that it was suggested that the plaintiff should have been accorded natural justice, the defendant maintained that it was not obliged to do this but, in any event, the termination in August 2018 was the culmination of many occasions on which Dr Lukic’s conduct had been raised with her directly including from a letter sent to Dr Lukic soon after beginning work at Primary IVF and including the April 2018 meeting.

15. [249]

    As to the alternative basis of termination, the defendant submitted that Mr Simpson’s evidence as to what was discussed at this meeting in April 2018 should be accepted. It was consistent with the “overall logic of events” that Mr Simpson did the very thing at the meeting that he had prepared to do. That was to raise, fairly and squarely, his concerns with the doctor, to show her examples of those concerns, to explain to her that whatever had gone before in terms of how her conduct had been treated was not going to continue into the future: Fox v Percy. The plaintiff, through Dr Lukic, was given notice of the conduct constituting a serious breach of this obligation on 17 April 2018. Dr Lukic was informed about the complaints that had been made in relation to the manner in which she had interacted with staff. The doctor was informed of the defendant’s view of such conduct and informed in no uncertain terms that the conduct had to cease immediately. It was clear from the further staff incident in May 2018 that the plaintiff failed to remedy the breach.

16. [250]

    The defendant contended that the plaintiff breached the obligation to procure that Dr Lukic act in a harmonious way with other practitioners and staff. Dr McDonald saw Dr Lukic shouting at nursing staff and administrative staff on at least a weekly basis, and these incidents only got worse over time. Staff working at the day surgery reported to Dr McDonald that they wanted to avoid being in an operating room with Dr Lukic, because she would frequently become angry and raise her voice at them.

17. [251]

    Had the “events” described in cl 9.2(b) happened such that the termination on 9 August 2018 was valid? What was the “act” that the doctor had committed? I agree with the plaintiff that patient complaints and online reviews were not an “act” within the meaning of cl 9.2(b). The “act” was the doctor’s conduct which prompted the complaint or review. Whether the “act” occurred, either at all or as specifically described by the patient, could not be known for sure. Nor did the clause require that level of certainty. The defendant’s reasonably held opinion was in respect of whether “the Doctor has committed an act which if true would” have specified consequences.

18. [252]

    Dr Lukic did not accept the patient complaints unless they were proven before, say, the Health Care Complaints Commission. Dr Lukic effectively equated the disciplinary framework applicable to medical practitioners with the contractual framework. Whilst that analysis is understandable, given the doctor’s long career in the medical profession, the contractual requirements are different. It was not necessary for the defendant to determine whether each of the matters about which patients or staff complained, in fact, occurred.

19. [253]

    The same can be said in respect of staff complaints. I do not accept the plaintiff’s submission that a staff complaint was not an “act” absent the staff member giving evidence at trial. The defendant’s right to terminate a contract in order to protect its reputation or business cannot have been understood by the contracting parties as conditional upon a formal hearing.

20. [254]

    As to which “acts” were considered by the defendant at the time, I do not agree that the defendant was limited to the “acts” referred to in the letter of termination. Where cl 9.2(b) did not oblige the defendant to provide a notice at all, it can hardly be said that events or acts not referred to in the letter of termination cannot be relied upon as forming the basis of the required opinion. But the fact that an act of the doctor was not referred to in the letter of termination may indicate that it was not in fact relied upon at the time when the opinion was said to have been formed.

21. [255]

    As earlier noted, the defendant’s in-house counsel who prepared the letter of termination appears to have been alive to the fact that the previous management had not done anything about Dr Lukic’s behaviour, and perhaps should have. I infer that the correspondence was limited to acts which had occurred after the change of management for that reason. But Mr Simpson said he relied on patient and staff complaints that were not referred to in the letter of termination. I accept his evidence.

22. [256]

    As to which of the defendant’s officers can be said to reflect the opinion of the corporate defendant, the test for attribution of a state of mind to a company will always depend upon context, and the purpose for which that attribution is sought; the “directing mind and will” test is not a universal rule SSABR Pty Ltd v AMA Group Ltd [2024] NSWCA 175 at [151]. It may be more than one person. In Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563; [1995] HCA 68, the corporate state of mind was considered to depend on the evidence of three people, of whom only one had given evidence. At 582-583:

23. [257]

    The plaintiff contended that Mr Simpson alone held the relevant opinion, which was said not to be reasonably held. But the evidence indicates that Mr Simpson, Mr Beattie and Dr Parmenter were all involved in the decision to terminate. As such, whether the defendant held a reasonable opinion is to be determined by reference to the state of mind of Mr Simpson, Mr Beattie and Dr Parmenter rather than Mr Simpson alone.

24. [258]

    In deciding to terminate the contract, Mr Simpson understood that he had to be satisfied that the complaints relied upon were true. That said, Mr Simpson felt he had a reasonable basis to refer to patient complaints “without needing to verify completely.” He considered the entire body of evidence collected from 2014 to 2018, including patient feedback surveys, social media commentary and staff complaints. Mr Simpson said the complaints reviewed by this time overwhelmingly concerned Dr Lukic.

25. [259]

    Mr Simpson also undertook a very detailed review of online reviews for the other doctors at the practice, the outcome of which was that “there were clearly different comments pertaining to Dr Lukic … than that of the other doctors”. He was focussed on the commentary to see whether there was something consistent across all of the doctors or isolated to one or more doctors. “It was clear that there was some disturbing commentary and single star ratings that stood out as part of my overall analysis across all doctors.” Mr Simpson also considered the possibility that some of the RateMDs may have been made by the same aggrieved patient, or were bogus reviews.

26. [260]

    Based on the patient surveys, RateMDs reviews and staff complaints, Mr Simpson considered that this was suggestive of behaviour, language and interactions that were not appropriate. Mr Simpson said the combined picture of the material reviewed indicated language and behaviour by a doctor which was rude, hostile and lacking empathy, “there was ample suggestion that that was concerning behaviour.”

27. [261]

    Mr Simpson said that, based on the information he had seen regarding complaints and comments about Dr Lukic, and her ‘reply’ email, he was of the view that the defendant needed to end its association with her. He formed this view because of the actual and potential reputational damage he saw that she had been causing or was liable to cause at both a local level and more broadly. This was due to the publicly available social media coverage about her, the complaints received from patients and her treatment of staff across the business. Mr Simpson was also concerned that he would lose his nurse manager and a number of Dr Lukic’s team in Sydney who appeared, from Ms Raggio’s document, to be intimidated by Dr Lukic. Mr Simpson’s view was that these matters had already caused reputational damage and the defendant needed to prevent further reputational risk.

28. [262]

    Mr Simpson considered that there was an unacceptable level of poor behaviour and conduct by Dr Lukic over a sustained period of time that presented a risk to staff and threatened the reputation of the defendant’s IVF business. He considered that it was appropriate to terminate the contract. Mr Simpson said the decision was not taken lightly.

29. [263]

    Mr Beattie gave evidence in a fair and open manner. Mr Beattie said that he was of the view that Dr Lukic had not adjusted her behaviour after it was raised at the meeting in April 2018. He formed this view based on the contents of the draft termination letter, which he considered indicated a pattern of consistent unchanged behaviour. He considered that the conduct of Dr Lukic continued to have a negative impact on patients and staff and was affecting Primary IVF’s business in a negative manner. As Dr Lukic had not adjusted her behaviour since it was raised with her in April 2018, Mr Beattie believed that she was not ready, willing or able to do so.

30. [264]

    Mr Beattie said this had particular implications for Primary IVF, as it was a national brand that was seeking to open new clinics in other states of Australia. The target market was women aged in their late 20s to early 40s. To Mr Beattie’s observation, women in this age bracket regularly reviewed and posted in online forums.

31. [265]

    Mr Beattie was also concerned to ensure ongoing work for Primary IVF’s business as well as maintaining highly-engaged staff and a safe workplace. As a bulk-billing fertility specialist, Mr Beattie’s impression was that it would have been difficult to replace Dr Lukic as he was aware that not all fertility specialists would agree to bulk-bill. But the concerns he had about Dr Lukic outweighed his concern about the loss of revenue generation. Whilst Dr Lukic’s engagement generated significant revenue for Primary IVF, Mr Beattie believed that the broader implications of her conduct on the business generally justified the decision to terminate the contracts.

32. [266]

    Mr Beattie said that the decision to terminate the plaintiff’s contract was considered a material decision for Primary Health Care as the plaintiff and Dr Lukic generated a substantial portion of revenue for the Primary IVF business. As such, where the decision had the potential to materially impact revenue of Primary IVF, it required the approval of Dr Parmenter. Mr Beattie discussed the financial impact of Dr Lukic leaving the Primary IVF business with Dr Parmenter, indicating his view that the financial impact was outweighed by the commercial need to maintain the reputation of the business and given the company’s duties to employees. Dr Parmenter indicated that he agreed.

33. [267]

    Dr Parmenter was a candid and fair witness. Dr Parmenter was aware that Dr Lukic was a “high-volume IVF doctor”, that is, she saw more patients than most, if not all, of the other doctors at Primary IVF. Dr Lukic was a significant source of revenue for the Primary IVF business. Dr Parmenter had been briefed by Mr Beattie after the meeting with Dr Lukic in April 2018. Dr Parmenter was told that there were reports that Dr Lukic was putting patient satisfaction at risk with her approach to consultations and there were complaints from staff about her behaviour. Further, Dr Lukic was resistant to making any type of change.

34. [268]

    Dr Parmenter was asked to approve the decision to terminate Dr Lukic’s engagement and did so on the recommendation of Mr Beattie and Mr Simpson. Dr Parmenter said the proposed termination was an important topic. The reasons given to support the termination were the volume of negative feedback about Dr Lukic’s interactions with staff and patients and their negative impact on the reputation of the Primary IVF business and the practice generally, where the view was that Dr Lukic was not willing or able to adjust her behaviour. Dr Parmenter was told that Dr Lukic was unwilling to address the issues that had been raised on multiple occasions and that the business had reached the point where separation was considered to be the only solution. Dr Parmenter was aware that the recommendation to terminate Dr Lukic had been reviewed by Mr Yap and Ms Cacchia.

35. [269]

    Dr Parmenter formed the view that the Primary IVF business would not achieve the quality of service objectives that he was pursuing if Dr Lukic was to continue practising at Primary IVF. Further, the reputation of the business would be jeopardised by Dr Lukic’s conduct if she stayed on. He approved the recommendation to terminate Dr Lukic’s engagement. He did so despite Dr Lukic’s high-volume practice and the revenue that would be foregone by terminating her contract, due to the concerns he had at the time regarding the impact of Dr Lukic’s conduct on the reputation of the Primary IVF business and the ability of Primary IVF to achieve its quality of service objectives.

36. [270]

    I consider that the opinion arrived at by the defendant, through its officers, Mr Simpson, Mr Beattie and Mr Parmeter was arrived at reasonably. Mr Simpson proceeded in a considered and thorough manner. He collated a substantial body of staff complaints, patient complaints and online reviews over a four year period. He consulted with staff who were working for Primary IVF about “acts” that pre-dated his arrival. From this, it was apparent that Dr Lukic had struggled, when joining Primary IVF, to interact with staff in a manner that was considered acceptable. Dr Lukic had been spoken to on this subject on several occasions by a number of people. Dr Lukic’s behaviour does not appear to have improved over time and, if anything, got worse. There was a steady stream of patient complaints and online reviews which, overall, indicated that Dr Lukic was interacting with patients, with some frequency, in a manner which was not conducive to the sensitivities of the IVF patient cohort.

37. [271]

    Whilst Mr Simpson undertook the detailed work, he conferred with Mr Beattie, who obtained approval from Dr Parmenter. Mr Simpson’s work was also reviewed by in-house counsel, including Mr Yap and general counsel, Ms Cacchia. Dr Parmenter placed store in the fact that Mr Simpson’s work had been reviewed by others. Each of Mr Simpson, Mr Beattie and Dr Parmenter were concerned to ensure that the defendant’s reputation and business was not damaged by Dr Lukic’s “acts”. By April 2018, there were indications that Dr Lukic’s behaviour was having that effect, where Ms Jayamaha reported to Mr Simpson that patients were asking to see a specialist other than Dr Lukic given her “bedside manner”. Further, “Most patients were also reading reviews online with regard to [Dr Lukic] and insist that we do not allocate her as their treating [doctor].” Further, given the shared care model, Ms Jayamaha advised that patients were not making complaints but were reporting their observations on the patient feedback surveys. A review of those surveys gave a concerning insight into patients’ experiences of the doctor.

38. [272]

    I consider that the opinion in respect of the implications of the doctor’s acts on the defendants’ reputation and business was one for which there were sufficient grounds and a reasonable foundation. Dr Lukic agreed that the conduct described in the various patient and staff complaints would be damaging to the reputation of Primary IVF “if it was true”. This concession was appropriate given: the particular features of the IVF patient cohort; that the profitability of the Primary IVF model was based upon its ability to attract patients; and that attracting patients depended not only on its low cost but on the clinic’s reputation for “patient-centred care” and the reputation of its specialists: see [25].

39. [273]

    Not only were the “acts” something that would probably affect the defendant’s reputation and business, there were indications that this had already begun. Patients were asking to see doctors other than Dr Lukic. Some support staff appear to have left the defendant’s employ already as a consequence of the doctor’s behaviour: see [48]. Dr Lukic’s interactions with junior nursing staff continued to be problematic, with a further incident occurring three weeks after the warning given in April 2018. The nursing staff at Primary IVF appear to have been generally discontented with how Primary IVF was addressing the doctor’s behaviour towards them. The defendant was now concerned with risk management.

40. [274]

    As to natural justice, it would have been easy for the defendant to speak to Dr Lukic about each of the “acts” before the notice of termination was given. There was plenty of time between when the decision to terminate was made and when that decision was implemented. While the defendant was not obliged to consult with Dr Lukic or afford her natural justice, the question is whether its failure to do so has the consequence that the defendant’s opinion was not “reasonable”. In the circumstances, I do not think this is fatal, for two reasons.

41. [275]

    First, some of the “acts” had already been put to Dr Lukic for response at the meeting in April 2018. The defendant was aware of her position on those “acts”. Second, the defendant was also aware of Dr Lukic’s overall attitude to patient and staff complaints, which was dismissive and deflecting responsibility back to Primary IVF. Indeed, the doctor continued to view the “acts” the same way at trial.

42. [276]

    In these circumstances, it was reasonable for the defendant to proceed on the basis that putting each of the “acts” to Dr Lukic for response would not add any new information to their assessment as to whether the “acts” had occurred and what the implications of those “acts” would be on the defendant’s reputation and business. In sum, I conclude that the “events” described in cl 9.2(b) had happened as at 9 August 2018 and the defendant’s termination of the contracts was valid.

43. [277]

    If I am wrong about this, the plaintiff agreed to procure that Dr Lukic acted in a harmonious way with the other practitioners and staff at the George Street and Darlinghurst clinics: cl 4.2(c), Sale Deed; cl 5.3(c), Services Deed. Having regard to the contemporaneous documents and the evidence of Dr McDonald, I am satisfied that the doctor was not acting in a harmonious way with her colleagues and staff. Dr Lukic’s interactions were regularly abrasive and upsetting to those with whom she worked. I do not suggest that the doctor intended to have this effect on her colleagues, but her approach could not be described as harmonious. The frequency and severity of these disharmonious interactions, notwithstanding being ‘spoken by’ the defendant from time to time on the subject, amounted to a serious breach of this contractual obligation.

44. [278]

    The issue is whether the defendant gave a notice to Dr Lukic at the meeting in April 2018 which conformed with the requirements of cl 9.2(a), in particular, calling for the serious breach to be remedied. It is accepted that the defendant did not give Dr Lukic the letter giving notice of serious breaches and accompanying draft undertaking. But oral notice was sufficient as long as it was expressed clearly and unequivocally, calling for a serious breach to be remedied.

45. [279]

    As to whether what Mr Simpson said to Dr Lukic was enough to meet the requirements of cl 9.2(a), I have already found that Mr Simpson told Dr Lukic at that meeting that the defendant considered her to be in breach of contract and gave notice that “if any and all inappropriate or unprofessional conduct by you towards patients and staff members does not cease immediately, the Company will have no alternative but to take more formal action per the deeds it has entered into with you and your company.” Further, whilst Mr Simpson did not recall making any reference to rectifying any breach, he effectively told Dr Lukic the same thing, where rectifying the serious breach would be achieved by immediately ceasing to engage in the conduct complained of.

46. [280]

    Clause 9.2(a) did not specifically require the defendant to notify the doctor that, absent rectification of the breach, the defendant would terminate the contract. But, in any event, the indication that the defendant would “take more formal action per the deeds” would likely have been understood by the doctor as a reference to bringing the contractual arrangements to an end. In the result, I consider that the defendant is also entitled to succeed on its alternative case as the defendant gave notice in conformity with the requirements of cl 9.2(a): Idameneo (No 123) Pty Ltd v Ticco.

Afterwards

1. [281]

   If I am wrong about this, then it is necessary to consider the defendant’s claim for damages. To do so, it is necessary to describe what happened after 9 August 2018. Shortly after the meeting, Dr Lukic emailed a medical recruiter, who had earlier enquired whether the doctor was available for locum work. Dr Lukic advised, “I have changed jobs” and may be interested in such work; she asked whether there was anything available.

2. [282]

   On further reflection, however, Dr Lukic concluded that she could not take up a locum position as a general obstetrician and gynaecologist. The doctor said that was very different to working as an IVF specialist which, by that time, she had done for a long time. Dr Lukic had not worked as a general obstetrician and gynaecologist for 14 years and did not believe that she had the skills to take locum positions. Dr Lukic said “I might have sent that first email in a moment of panic after that meeting, but the reality of it was … I had got through [my whole career] without any … major clinical event and then, to suddenly at my age put myself in deliberate situations where I knew my skills were not up to it. I had not been to any obstetric conferences in over 12 years. I had not done any of the latest certificate that were being required. I had done none of that.” Dr Lukic said that IVF specialist jobs did turn up on locum positions but “I needed to find a permanent job.” Dr Lukic said she put out feelers to two major clinics but received no reply.

3. [283]

   On 13 August 2018, the plaintiff’s solicitor sent a holding letter, refuting the allegations in the notice of termination. On 5 October 2018, the plaintiff’s solicitor responded in detail to the letter of termination, contending that the termination was invalid and of no effect. The plaintiff purported to accept the defendant’s repudiatory conduct, terminating the contracts. The plaintiff and Dr Lukic sought damages of $4 million.

4. [284]

   Dr Lukic said that, between 10 August 2018 and February 2019, the parties’ solicitors were engaged in settlement negotiations. Dr Lukic was concerned that the defendant would commence proceedings against her if she practised within the restraint area during the restraint period described in the contracts and would seek the damages referred to of $7 million. The doctor proceeded with caution.

5. [285]

   In November 2018, Dr Lukic discussed the possibility of practising with an IVF specialist in the Rocks, Sydney. But the doctor interested in setting up this clinic had no real plans and made no offer. In December 2018, Mr Ayres told Dr Lukic that he was thinking of starting an IVF clinic and would consider Dr Lukic for a position after she sorted out her problems with the defendant. In February 2019, Dr Lukic met with Mr Ayres to discuss the matter further, as Mr Ayres was in the process of negotiating funding for the new clinic. Dr Lukic expressed interest.

6. [286]

   In May 2019, Dr Lukic accepted the role of Medical Director at Connect IVF. Dr Lukic expected to resume practice in about six months but, for various reasons, this did not happen. Dr Lukic said “I never thought I would be out of work for so long, but … I gave [Mr Ayres] a verbal agreement, so in my mind, I was now part of this, yes, we expected to start work.” In June 2019, Mr Ayres sent Dr Lukic a proposed shareholders agreement and doctors agreement for the new business. Negotiation of the shareholders agreement took two months. In July 2019, Dr Lukic incorporated a new company for this purpose. In August 2019, discussions with the investors in the new practice broke down and new investors had to be found.

7. [287]

   In September 2019, Dr Lukic sold her Bellevue Hill home as she did not have sufficient income to meet mortgage repayments. Meetings with new investors began. In November 2019, Connect IVF agreed to lease premises in Crows Nest for a day surgery and laboratory. In December 2019, heads of agreement were signed with the investors. In March 2020, new corporate entities were incorporated for the Connect IVF venture. Dr Lukic signed contracts on 9 March 2020. Dr Lukic was concerned at the delay in opening the new IVF clinic, advising that “Things are now serious for me and I need some certainty”. A business plan was completed.

8. [288]

   The transaction was further delayed by Covid-19 lockdowns. Dr Lukic was stranded in Victoria, when visiting a family member. Dr Lukic remained in Victoria until the lockdown was lifted in November 2020. Meanwhile, Connect IVF submitted a development application in May 2020, the progress of which was also delayed by council staff working from home and building inspections being delayed. Development consent was given in January 2021. Building began. In May 2021, Dr Lukic began practising at Connect IVF in Sydney.

Damages

1. [289]

   The plaintiff seeks damages for the loss of profits that it would have earned during the remainder of the seven-year term of the contracts. The plaintiff sought damages in the amount of loss earnings estimated by the defendant, when considering the financial implications of termination, being $3,494,772. Damages of $3,778,986 were sought.

2. [290]

   The defendant submitted that the best source of evidence for the plaintiff’s loss was its tax returns, not an undated spreadsheet prepared by an unidentified author for another purpose. Nor did the plaintiff’s claim for damages account for expenses incurred by the company, but only income. Where the contracts were on foot for a total of 1,473 days, the defendant calculated that, on average, the plaintiff earned $1,973 in net income each day. Where the plaintiff claimed loss from 9 August 2018 until Dr Lukic commenced work for Connect IVF on 1 May 2021, this was a period of 996 days. Using the average daily net income, the plaintiff’s loss was $1,965,108.

3. [291]

   The plaintiff submitted that Dr Lukic’s salary should not be deducted from the plaintiff’s revenue before calculating loss, although it was not explained why. In reply, the plaintiff submitted that, if salary paid to Dr Lukic had to be deducted to arrive at net income, then the figures for the 2018 financial year should be used, being $877,550. Where the George Street and Darlinghurst clinics experienced ‘teething problems’, the figures from earlier years provided no reliable indication of likely income after 9 August 2018. If this approach was taken, then the damages were $2,394,384 (after dividing $877,550 by 365 (to give a daily rate of $2,404) and multiplying this by 966 days.)

4. [292]

   However, the plaintiff submitted that the 2018 figures should be adjusted to allow for the closure of the Darlinghurst clinic for renovations for three months. The contemporaneous documents indicated that the closure had a depressant effect on doctors’ earnings. I accept this. Using the defendant’s spreadsheet of the doctor’s gross billings, the plaintiff submitted that Dr Lukic’s average monthly billings were $352,540 for the nine months when the Darlinghurst clinic was open but only an average of $31,332 for the three months when the clinic was closed. That is, gross billings of $963,623 were lost. As Dr Lukic would have received (at least) 35% of that amount (under cl 6 of the Services Deed), that is a loss to the doctor of $337,268 due to the closure. If that were added to the 2018 figure of $877,550, the annual figure becomes $1,214,818 and the relevant daily rate becomes $3,328. Across 966 days, the plaintiff’s damages are $3,215,108. Alternatively, the FY18 figure could be increased by 25% to allow for the effective loss of 3 months. This gives an annual figure of $1,096,937, a daily rate of $3,005 and damages of $2,902,830.

5. [293]

   An initial question is whether the plaintiff is entitled to an award of damages reflecting its gross receipts from the defendant or its net profit after paying expenses, including Dr Lukic’s salary. The general measure of contractual damages is the amount, so far as money can provide, necessary to put the plaintiff in the position they would have been if the contract had been performed: Wenham v Ella (1972) 127 CLR 454; [1972] HCA 43 at 460 (per Barwick CJ). The prima facie measure of contractual damages is net profit rather than gross income: Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54 at 81 (Mason CJ and Dawson J) 100 (Deane J), 152-153 (Gaudron J) and 160 (McHugh J).

6. [294]

   Where a company has a contract to provide services to a defendant, and where those services are provided by the company’s directors or shareholders, the company’s contractual damages for breach of contract remain its net profits and not what the company’s directors or shareholders would have been paid by the company if the contract had been performed: Hadoplane Pty Ltd v Edward Rushton Pty Ltd [1996] 1 Qd R 156. There, Pinkus JA (Thomas J agreeing) declined to lift the corporate veil. At 162:

7. [295]

   His Honour rejected the notion that the company was entitled to damages based on gross receipts lost, without regard to expenses incurred. Similarly, Thomas J observed at 164-165:

8. [296]

   Hadoplane v Edward Rushton was distinguished in Bacchus Corp Pty Ltd v Grapes of Australia Management Ltd [2003] VSC 29 on the facts, albeit Habersberger J nonetheless accepted that “one has to assess the loss of net profits, not the loss of gross income, of the contracting party”: at [46].

9. [297]

   Here, the plaintiff is Belverdere Pty Ltd. Whilst Dr Lukic was a party to the contracts, she is not a party to the proceedings. The measure of loss is the company’s net profits which it would otherwise have enjoyed if the contract had remained on foot for the remainder of its term, not the gross receipts which would have been paid by the defendant to the plaintiff.

10. [298]

    The plaintiff’s tax returns for 2015 to 2019 financial years reported total income of $12,292,913 but nett income of $2,906,632. Although the 2015 to 2019 financial years do not precisely align with the life of the Sale Deed and Services Deed, being from 28 July 2014 to 9 August 2018, I agree that it is appropriate to include all income. Dr Lukic said that the plaintiff “was only set up for Primary IVF, it was never meant to be an ongoing entity under any other circumstance.” The plaintiff did not undertake any other business, either before or after providing services to Primary IVF. The company’s only source of income was that generated by the incorporated medical practice that Dr Lukic conducted. Any expenses were in relation to that practice.

11. [299]

    The defendant’s calculation of loss probably understates the plaintiff’s loss as it does not account for the significant drop in income for three months in 2018 when the Darlinghurst clinic was closed for renovations. The plaintiff’s calculation of loss probably overstates the plaintiff’s loss for two reasons. First, the doctor’s fees in the months after the Darlinghurst clinic re-opened may have been higher than usual, as the doctor endeavoured to perform a backlog of procedures. Second, whatever the rights and wrongs of it, there is some evidence that the doctor was becoming less popular with patients, who were asking to see another specialist. The doctor’s fees may have been negatively affected by this in the remaining three years of the term of the contract.

12. [300]

    In arriving at a measure of damages, I have ignored the nett income for the 2015 financial year to allow for any ‘teething difficulties’. I have ‘normalised’ nett income for the 2018 financial year to allow for the closure of the clinic. I have done so by increasing the net income for the 2018 financial year by 20% to $1,053,060. As adjusted, the nett income for the 2016 to 2019 financial years is $2,717,709 over 1,136 days, which is a daily rate of $2,392. Using that daily rate over the remaining 996 days of the term of the contract, the plaintiffs’ loss was $2,382,780. The remaining question is the extent to which this figure should be discounted for any failure to mitigate.

Failure to mitigate

1. [301]

   The defendant submitted that any loss should be limited by reason of the plaintiff’s failure to mitigate to three or six months of lost net income. For three months, the loss was $177,570 and, for six months, $351,140. Six months was said to be extremely generous. No reasonable steps were taken to secure another contract that would allow it to conduct an incorporated medical practice for several years. Further, Dr Lukic never intended to use the plaintiff in the new Connect IVF venture in any event, but incorporated a new corporate vehicle. The plaintiff was left to “wilt on the vine” with no attempt to mitigate any loss that it had suffered.

2. [302]

   The defendant submitted that Dr Lukic maintained her fellowship with the Royal Australian and New Zealand College of Obstetricians and Gynaecologists at all times, which required her to complete continuing professional development. Dr Lukic gave warranties under the new contractual agreements entered into in May 2021 that she had specialist registration in obstetrics and gynaecology. It was open to Dr Lukic to enquire with the recruiter, who routinely emailed her, as to whether they had any other form of work available which she was qualified to perform. She made no such enquiries with the recruiter or with any other recruitment agencies, hospitals or clinics.

3. [303]

   The plaintiff submitted that Dr Lukic acted reasonably in seeking to mitigate her loss. There was a sustained and consistent effort to obtain a replacement position as an IVF specialist. Mitigation does not require a person to move interstate in order to find a placement position, especially in circumstances where it seemed that a position would be available with Connect IVF in relatively short order. Unfortunately, various matters delayed Dr Lukic’s commencement with Connect IVF such as disputes between investors and Council approvals. IVF specialist positions were said to be rare, even when one could be found outside of the areas prohibited by the restraints.

4. [304]

   In assessing loss for breach of contract, “loss which is due to unreasonable or improvident actions of the plaintiff is generally disregarded by application of the rules of mitigation of loss”: Cessnock City Council v 123 259 932 Pty Ltd (2024) 281 CLR 39; [2024] HCA 17 at [120] (per Edelman, Steward, Gleeson and Beech-Jones JJ).

5. [305]

   What is reasonable for a person to do in mitigation of damages is a question of fact in the circumstances of each case: Payzu v Saunders [1919] 2 KB 518 at 589 (per Bankes LJ); British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673; [1911-13] All ER Rep 63 at 688–9; Regional Development Australia Murraylands and Riverland Inc v Smith [2015] SASCFC 160 at [139].

6. [306]

   Where it is contended that a plaintiff should have taken steps by way of mitigation, the onus of proof is on the defendant: Cessnock City Council v 123 259 932 at [121], citing TC Industrial Plant Pty Ltd v Robert’s Queensland Pty Ltd (1963) 180 CLR 130; [1963] HCA 57 at 138 (Kitto, Windeyer and Owen JJ).

7. [307]

   One of Mr Simpson’s responsibilities was specialist recruitment. In his experience, fertility specialists had multiple options in selecting their place of work, as there was a high degree of competition and demand for qualified fertility specialists. In the recruitment undertaken in his role, fertility specialists could ‘pick and choose’ and it was challenging for clinics to attract and retain specialists due to high demand.

8. [308]

   Dr Lukic agreed the reality was that huge growth in demand for IVF had not been met by a similar growth of medical professionals providing such services. Consistently with this, it will be recalled that Primary IVF paid Dr Lukic $1.4 million to join their business, albeit in 2014. In 2018, the defendant was also concerned as to how it would replace Dr Lukic after the contracts were terminated.

9. [309]

   It is a little surprising in these circumstances that it took Dr Lukic nearly three years to resume medical practice. I do think it was unreasonable for her to wait until she had secured a new business venture and to exclude a temporary, part-time or employed position until that venture came to fruition. Where, according to Mr Simpson, there was a high demand for fertility specialists, it is likely that Dr Lukic would have been able to secure such work and the associated income if she had chosen to do so.

10. [310]

    I do note, however, that the doctor remained subject to a restraint for three years after termination of the contracts and could not render medical services in a large part of the Sydney metropolitan area: see [17]. I note also that the plaintiff’s legal representatives were in negotiations with the defendant’s legal representatives for six months. Those negotiations likely focussed on who would pay what sum to who, but also where the doctor could work given the restraint. If that was not a subject of negotiations, it could easily have been raised.

11. [311]

    Absent the restraint, I would have considered that the timeframes posited by the defendant were reasonable and allowed a loss of six months net income, being $425,000. But, given the restraint, and the additional uncertainties about the relaxation of that restraint, I would have allowed a loss of 12 months net income, being $850,000.

Orders

1. [312]

   For these reasons, I make the following orders:

   1. (1)

      Dismiss the Summons with costs.

   2. (2)

      In the event that a special costs order is sought, direct the party seeking the order to serve any affidavits and submissions (limited to three pages) by 24 November 2025, with any affidavits in reply and submissions (limited to three pages) to be served by 1 December 2025 and the application to be determined on the papers.

   3. (3)

      Direct the parties to notify any errors or omissions by 24 November 2025.