We look at a recent Court of Appeal decision in relation to GP partnership disputes. The case illustrates the importance of having clarity about the basis on which a partnership conducts its affairs.
Two GPs, A and B, entered a partnership to provide medical services under a GMS contract. The terms of the contract were set out in a signed agreement in April 2016.
Shortly thereafter, they agreed with doctors C, D and E to form a new partnership to provide the service under the GMC contract. They agreed that the new partnership would commence from 1 July 2016. They instructed solicitors to prepare a new partnership agreement which was to include a unanimity requirement for decision-making.
The dispute arises
After 1 July, but before that new partnership agreement was finalised, a dispute arose between doctors A and B. Matters came to a head when Doctor B was prevented from seeing patients and refused access to medical records at the practice.
Doctor B obtained an interim injunction in the High Court. However, matters were not resolved and proceeded to trial. By that time a notice purporting to dissolve the new, five member, partnership with immediate effect had been served on Doctor B.
Doctor B contended that he was a partner with Doctor A under the terms of the April agreement and that doctors C, D and E were not partners as they had not concluded the agreement in respect of a new partnership deed.
Doctor A contended that the partnership with Doctor B, pursuant to the April agreement, had been dissolved on 1 July 2016 and that a new partnership had been created which was a partnership at will. He contended that the notice dissolving the partnership was valid under the terms of the partnership at will. Unanimity is not required to dissolve a partnership at will.
Doctor A succeeded in the High Court. The Court of Appeal considered Doctor B’s appeal and upheld the High Court’s decision.
Court of Appeal decision
The Court of Appeal held that the new partnership was a partnership at will which commenced on 1 July 2016. It noted that the evidence pointed to the conclusion that all of the doctors were looking forward to a new agreement, the terms of which were under negotiation at the time of the breakdown in relationships.
There was insufficient evidence to determine that the partners intended the terms of the April agreement to subsist and apply to all of the members. The Court held that there was no evidence that the new partners intended to be bound by the earlier agreement.
It is most unlikely that any of the parties involved anticipated such a rapid deterioration in relationships when they agreed to enter a new partnership together. The fact that such a deterioration occurred before the terms of a new partnership agreement had been finalised will, no doubt, have come as a surprise to all involved.
Given the significant liabilities and responsibilities associated with GP partnerships, the case serves as a reminder to doctors considering entering into a new partnership to obtain independent legal advice. It is important to ensure there is clarity as to the terms on which the partnership is proceeding. The differences between the terms set out in a partnership deed and those which apply to a partnership at will may be of great significance, as illustrated in this case.