Implied contract terms: Court of Appeal confirms no implied right for hospital to terminate long term emergency services agreement

Macpherson Kelley’s Brisbane Litigation team has achieved another positive result in Court, underlying the importance of explicit and well-drafted contract terms in long-term commercial agreements.

Successfully representing Impact Healthcare Pty Ltd before the Queensland Court of Appeal, Principal Lawyer Daniel Wignall and Senior Associate Lachlan Yule contested the claim that a long-term agreement between Impact Healthcare and St. Vincent’s Private Hospital contained an implied right to terminate on reasonable notice (despite no such express term appearing in the agreement).

In Impact Healthcare Pty Ltd v St Vincent’s Private Hospitals Ltd [2026] QCA 21, the Court of Appeal allowed our client’s appeal, dismissed the respondent’s cross‑appeal, and declared that the long‑standing agreement governing the operation of Brisbane Northside Emergency was not subject to any implied term permitting the hospital to terminate on reasonable notice.

Primary judgment considers whether there an implied right to terminate on reasonable notice

The dispute centred on a comprehensive agreement first executed in 2001 between Impact Healthcare (Dr Phillip Kay’s company) and the then‑operator of what is now called the St Vincent’s Private Hospital Northside in Chermside. The agreement appointed Impact to establish, manage, and operate the emergency centre at the hospital. It was deliberately structured as an indefinite, long‑term arrangement, reflecting the hospital’s need for Dr Kay’s specialist expertise and Impact’s need for security to recruit emergency medical specialists and make substantial upfront investments.

More specifically, the agreement:

• commenced on 1 October 2000
• had no end date
• imposed extensive operational obligations on Impact Healthcare, and
• contained specific, detailed termination rights, including termination for breach, insolvency events and certain changes of control.

In 2019, the hospital’s rights and obligations were assigned to the respondent, St Vincent’s Private Hospitals Ltd. A dispute later arose when the hospital asserted that the agreement contained an implied right to terminate on reasonable notice, despite no such express term appearing in the agreement.

At first instance, the Supreme Court accepted the hospital’s argument—either by law or in fact. Impact Healthcare appealed.

Term not implied: Impact Healthcare successful in appeal

The Court of Appeal (Bowskill CJ, Bond JA and Sullivan J) unanimously allowed the appeal and dismissed the hospital’s cross‑appeal. The Court held, that:

• no term permitting termination on reasonable notice was implied by law,
• no such term was implied in fact, and
• the hospital’s alternative, broader implied term—which would have allowed either party to terminate on reasonable notice with additional qualifications—also could not be sustained.

Key findings in Impact Healthcare Pty Ltd v St Vincent’s Private Hospitals Ltd [2026] QCA 21

The Court of Appeal found that the right to terminate on reasonable notice was not implied, both in fact and by law.

1. No basis for implication by law

The Court rejected the hospital’s proposition that “commercial contracts of indefinite duration” form a recognised class of contract into which a right of termination on reasonable notice is implied as a legal incident.

The Court emphasised a number of key points:

• Implication by law requires a specific, established class of contract, such as employment or landlord tenant relationships.
• No authority supports the creation of a new class encompassing all commercial contracts of indefinite duration.
• The agreement in question was capable of effective performance without the implied term, and the rights conferred would not be invalid.

2. No basis for implication in fact

Applying the well‑known BP Refinery criteria, the Court held that the proposed term failed multiple limbs of the test.

• Not necessary for business efficacy
  The agreement was detailed, comprehensive, and contained multiple express termination mechanisms. The hospital also retained significant oversight and control rights.
• Not so obvious as to go without saying
  The evidence showed that Dr Kay expressly rejected proposals for rolling fixed terms and insisted on long‑term security to recruit specialist staff and justify substantial capital investment.
• Contradicted express terms
  Clause 2.2(1) provided that the agreement would continue unless terminated under specific clauses. Clause 2.2(3) gave Impact Healthcare, not the hospital, a unilateral right to terminate on six months’ notice.

The Court held that implying a reciprocal right, in favour of the hospital, would contradict the parties’ deliberate allocation of rights and obligations.

3. Rejection of the hospital’s broader implied term

The hospital’s cross‑appeal sought to imply an even broader termination regime, including minimum notice periods and restrictions on early termination. The Court found no basis, either in law or fact, to support such an implication.

4. Outcome

The Court of Appeal:

• allowed the appeal
• dismissed the cross‑appeal
• set aside the declaration made by the primary judge
• declared that the agreement is not subject to any implied term allowing the hospital to terminate on reasonable notice,
• ordered the hospital to pay Impact Healthcare’s costs at first instance and on appeal.

Significance of the decision in regards to commercial contract terms

This judgment reinforces several important principles for commercial contracting:

• Courts will not readily imply termination rights into long term agreements where the parties have deliberately omitted them.
• Detailed, lawyer drafted contracts are less likely to attract implied terms, particularly where express termination mechanisms exist.
• Commercial context and negotiation history remain relevant to construction, especially where they demonstrate a conscious rejection of alternative contractual structures.

The Court’s reasoning reinforces that courts will not rewrite commercial bargains or imply terms simply because they may appear reasonable in hindsight. Where parties have negotiated detailed termination mechanisms, those mechanisms will govern the parties’ contractual relationship.

For organisations entering long-term service arrangements, particularly those involving substantial investment or specialised expertise, this decision underscores the importance of carefully considering and expressly documenting termination rights at the outset.

For more information or advice on defending claims of implied contract terms in court, contact Macpherson Kelley’s talented Litigation team for advice.

The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.