More than 50 joint venture partners have launched a High Court legal action to prevent Medivet taking what they say equates to £1 million a month from UK practice profits to cover its own operating costs.
According to lawyers acting for the joint claimants, the imposition of the disputed costs threaten to destroy the profitability of some partner practices.
Some 52 practice partners – understood to represent 43 individual practices across the UK – have put their names to a claim against Medivet, which has been lodged in the High Court of Justice in London.
Claim
Brief details of the claim state: “The partnerships between the Claimants and the relevant Defendant [Medivet] are subject to a written Deed of Partnership by which each partner is entitled to share in the partnership’s Net Profits, being Gross Turnover less Operating Costs (as defined).
“Since April 2018, Medivet has imposed a deduction on the partnerships in their monthly management accounts entitled ‘Allocation of Operational Costs’. The Claimants contend that these costs which constitute this charge are in fact Medivet’s own operational business expenses and that none of them fall within the definition of Operating Costs in the Deeds. The Claimants, therefore, seek declaratory relief that the relevant expenses are not payable by the partnerships to Medivet, are not Operating Costs (as defined) and are not deductible from the partnership’s Gross Profit. The Claimants also seek an account of their partnership’s net profits from April 2018 and thereafter.”
Statement
When approached for comment by Veterinary Times, Medivet issued the following statement: “This is a disagreement about the allocation of costs for the business. We’ve been investing in new systems to strengthen support for our branches, and a minority of our branch partners have disagreed with the contribution we’ve allocated to them, based on our understanding of the partnership agreement and what we’ve done in the past.
“We’ve made these investments to support stability, growth and better profitability, but also ensuring clinical standards are maintained, investment in equipment and infrastructure is sufficient, and staff are well cared for and rewarded.
“It’s unfortunate we’ve been unable to reach an amicable agreement with the claimants, but we’re happy the matter will be heard and a resolution reached.”
- Read the full story in the 29 July issue of Veterinary Times.