Canon Finance Australia Limited v Reliance Medical Practice Pty Ltd (No 5)

[2018] NSWSC 1744

Supreme Court

New South Wales

Medium Neutral Citation:	Canon Finance Australia Limited v Reliance Medical Practice Pty Ltd & Ors (No 5) [2018] NSWSC 1744
Hearing dates:	9 November 2018
Date of orders:	15 November 2018
Decision date:	15 November 2018
Jurisdiction:	Common Law
Before:	Campbell J
Decision:	(1) Grant leave to the cross-claimant to issue a Notice to Produce directed to the first cross-defendant in terms of paragraph 4 of Exhibit “SG – 1” attached to the affidavit of Sergey Gorval dated 5 October 2018. (2) Stand the balance of the Notice of Motion filed on 5 October 2018 over to 22 November 2018. (3) Reserve the question of costs.
Catchwords:	CIVIL PROCEDURE – Notice of Motion – whether cross-claimants should be allowed to seek production of documents – 18 categories of document – too broad – relating to, concerning or pursuant to the rental payment agreement – purpose of investigation – no satisfactory or permissible explanation - leave granted to part of Exhibit attached to affidavit
Legislation Cited:	Competition and Consumer Act 2010 (Cth), Sch 2 ss 18, 326
Cases Cited:	Nil
Texts Cited:	Nil
Category:	Procedural and other rulings
Parties:	Reliance Medical Practice Pty Ltd trading as ATF Reliance Medical Practice Trust (First Cross-Claimant) Rodney John Beckwith (Second Cross-Claimant) Voice Print & Data Australia Pty Ltd (First and Third Cross-Defendants) Christian Altenburg (Second Cross-Defendant) BHD Leasing Pty Ltd (Sixth Cross-Defendant)
Representation:	Counsel: G A Moore (Cross-Claimants) A J H Morris QC with I Erskine (First and Third Cross-Defendants) A F Fernon (Second Cross-Defendant) L W Chan (Sixth Cross-Defendant)   Solicitors: Gorval Lynch (Cross-Claimants) Anthony Delaney Lawyers (First and Third Cross-Defendants) O’Neill McDonald Lawyers (Second Cross-Defendant) Holman Webb (Sixth Cross-Defendant)
File Number(s):	2016/362193

JUDGMENT

1. This matter is very substantially part-heard before me. It is listed for further hearing on 22 November 2018. At present the evidence is effectively closed subject to a question about the production of documents.

2. In previous interlocutory judgments I have explained the nature of the case and dealt with some of the evidence led. The hearing before me relates to a cross-claim brought by a medical practice against a number of cross-defendants involved in contracts for the supply of information technology equipment and software and the finance arrangements in relation to that supply. The principal cause of action relied upon is the statutory cause of action for damages under s 326 of Schedule 2 (Australian Consumer Act or “ACL”) of the Competition and Consumer Act 2010 (Cth) (“the Act”) for misleading and deceptive conduct in trade or commerce under s 18 of the ACL. The cross-claimant has consented to judgment against it under the Rental Payment Agreement which was the commercial vehicle for the finance. The sixth cross-defendant’s rights under that agreement were assigned to the plaintiff.

3. There are three written contracts relevant to the cause of action: two subscriber agreements dated 6 October 2015 and the Rental Payment Agreement which is dated 25 November 2015. In fairness, it should be said that the cross-claimant asserts that only the rental payment agreement is relevant. It would characterise the subscriber agreements as written quotations. One subscriber agreement relates to the supply of what is referred to as a Mitel telephony system. The other relates to the provision of software and other services referred to as a LiveOffice WAN.

4. In preparation for trial, the cross-claimant’s solicitors served a Notice to Produce on the first cross-defendant, which is the supplier, dated 11 July 2018 calling, inter alia, for the production of the following documents:

“7. Any document or record relating to any payments made by [the first cross-defendant] in relation to the rental payment agreement contract 88600012 dated 25 November 2015, signed by [the cross-claimant].”

5. When the hearing commenced before me, Mr Moore of Counsel for the cross-claimant indicated that certain documents covered by the Notice of Produce had been produced informally on the business day before the commencement of the trial, but the documents covered by paragraph 7 had not. Upon his call, Mr Morris QC, who appears with Mr Erskine for the first cross-defendant (and the third cross-defendant) announced:

“Morris: Your Honour, we have no documents to produce meeting that description.”

Upon hearing this, Mr Moore said:

“If that can be noted, that solves that issue.”

6. In circumstances I will briefly explain, it is apparent that Mr Moore and Mr Morris took a different view about what documents were covered paragraph 7. Mr Morris took the view that the documents described related to payments under the Rental Payment Agreement. As his client is not a party to that agreement, he formed the view it had no such documents meeting that description in its possession, power, custody or control. I infer that this means no additional documents because documents relating to the payment of the principal sum by the financier under the Rental Payment Agreement were produced.

7. As is explained in earlier, Mr Moore was of the view that the Rental Payment Agreement is the central agreement and that all and any sums paid by the first cross-defendant to its suppliers for equipment and software licences and the like were caught at paragraph 7. For its own forensic purposes the first cross-claimant was content with the answer to the call.

8. That state of contentment altered during the course of the hearing. The brief circumstances are that Mr Benson, an information technology technician who was permitted to give certain expert evidence, gave evidence that after, what I will refer to neutrally as, the cancellation of the supply contract by the cross-claimant, he had improved the performance of the cross-claimant’s existing information technology by, inter alia, the installation of what has been referred to as “[t]he full version of SQL 2008 R2 Server Edition” (419.35T). As I understand the evidence, this was effectively an extended or enhanced licence that expanded the capacity of the cross-claimant’s practice management software known as Best Practice (255.5 - .45T).

9. In re-examination, Mr Benson gave evidence which in fairness went beyond his evidence-in-chief as contained in his affidavit. He was asked to consider by reference to the subscriber agreements whether the software and services therein described would address the inefficiencies that he had identified in the cross-claimant’s operating systems around the time of the cancellation. He said that the full SQL licence would need to be included (264.15 - .45T). By inference it is not referred to expressly.

10. Mr Benson’s evidence was addressed in the subsequent evidence led on behalf of the first cross-defendant. Mr Edwards, the National Sales Manager at the relevant time, said in evidence that the full SQL licence was included in the software described in the contract documentation. He said it was covered by “… the LiveOffice VPS executive, which is a virtual private server” (394.25T).

11. Evidence to the same effect was given by Mr Briggs, a director of the first cross-defendant (419.25 - .35T). Mr Briggs also said that the proposed system had been acquired by the first cross-defendant for installation prior to 14 January 2016 and payment had been made to the suppliers electronically (413.5 - .15T). Moreover, Mr Briggs said that the LiveOffice WAN system which is cloud based “is still live right now … because by agreement with (the financier) I must keep that live for 36 months” (414.15 - .25T). Mr Briggs said that there was “evidence of payment for each and every” item, the subject of the contract.

12. After Mr Briggs’ evidence, the question of the production of documents was re-visited and I granted leave upon the adjournment at the end of the time set aside for the hearing for an application to be brought forward re-ventilating the question of the production of documents. That was done by Notice of Motion filed on 5 October 2018.

13. At the hearing of the motion before me, Mr Moore put forward two prayers in particular. The first revisited paragraph 7 of the original Notice to Produce seeking an order that that notice be complied with. In the alternative, Mr Moore sought leave to issue a fresh Notice to Produce picking up the evidence I have summarised above and seeking the production of documents evidencing the payment for each and every item of software, or software licence, referred to in the subscriber agreements. Mr Morris opposed this relief, as did Mr Fernon for the second cross-defendant and Ms Chan for the sixth cross-defendant. Those latter parties concern related to costs in particular.

14. It is evident that the first question depends upon the meaning of paragraph 7 and the second question depends upon general discretionary considerations viewed through the prism of the evidence given in the case and having regard to the consideration that the application is made late in the day when all other evidence has been led and the tender of further evidence may lead to the need for the first defendant to call supplementary evidence.

Decision

15. The original Notice to Produce sought production of 18 categories of document. The description of a number of them was conditioned by either “relating to the rental payment agreement”, “concerning the rental payment agreement” or “pursuant to the rental payment agreement”. Although the phrases “relating to” or “in relation to” are capable of supporting a meaning which extends to the widest connection between a subject and its object, in the context of the whole of the Notice to Produce, I am of the view that they have a narrower meaning. In my view, an ordinary reader would understand the expression “in relation to the rental payment agreement” as meaning under the Rental Payment Agreement. This is how it was understood by the lawyers for the first cross-defendant. In my judgment that reading was not unreasonable. That is the reading which supported Mr Morris’ announcement that the first cross-defendant had no documents to produce, even if Mr Moore read it differently. In the circumstances, I decline to direct that paragraph 7 of the original Notice to Produce be complied with.

16. Even given the misunderstanding between the parties as to the meaning of paragraph 7, I think that what is proposed in the draft Notice of Motion and the draft Notice to Produce attached to Mr Sergey Gorval’s affidavit of 5 October 2018 is too broad. It seeks six categories of document relating to equipment or software to be provided under the subscriber agreement. Of them the only category which I think should be permitted at this stage is category 4 in the following terms:

“4. All documents and records relating to the purchase, acquisition or supply of “SQL 2008 R2 Server Edition” cf Luke Briggs cross examination line 30 p419 of transcript.”

This relates to the matter which arose during the evidence of Mr Benson. The other broader categories of document relating to the payment of other equipment and software to be provided under the subscriber agreements are too broad because these documents could only relate to the issue sought to be raised by a late amendment to the Statement of Cross-Claim which I disallowed during the hearing (see Judgment No 4). Moreover given the evidence has already fallen from Mr Briggs allowing an investigation of this scope at this time can only be for the purpose of impermissibly impeaching or impugning his credit. I accept the way the evidence has fallen out that the questions relating to the SQL 2008 R2 server edition may be a substantive issue for decision.

17. My orders are:

1. Grant leave to the cross-claimant to issue a Notice to Produce directed to the first cross-defendant in terms of paragraph 4 of Exhibit “SG – 1” attached to the affidavit of Sergey Gorval dated 5 October 2018.

2. Stand the balance of the Notice of Motion filed on 5 October 2018 over to 22 November 2018.

3. Reserve the question of costs.

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