Canon Finance Australia Limited v Reliance Medical Practice Pty Ltd & Ors - [2020] NSWSC 554 - NSWSC 2018 case summary — Zoe

NSWNSWSC

Canon Finance Australia Limited v Reliance Medical Practice Pty Ltd & Ors

[2020] NSWSC 554

Supreme Court of NSW|2018-08-31|Before: Campbell J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2018-08-31

Before

Campbell J

Catchwords

[2013] HCA 54 Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2005) 221 CLR 568
[2004] HCA 60 Campbell Backoffice Investments Pty Ltd (2009) 238 CLR 304
[2004] FCAFC 34
Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41

Source

Original judgment source is linked above.

Catchwords

[2013] HCA 54 Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2005) 221 CLR 568[2004] HCA 60 Campbell Backoffice Investments Pty Ltd (2009) 238 CLR 304[2004] FCAFC 34Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41[1931] HCA 53 Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594[1986] HCA 3 Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 Jones v Dunkel (1959) 101 CLR 298[1959] HCA 8 Pappas v Soulac Pty Ltd (1983) 50 ALR 231 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191[1982] HCA 44 Quikfund (Australia) Pty Ltd v Airmack Consolidators Pty Ltd (2014) 222 FCR 13[2014] FCAFC 70 Sweeney v Boylan Nominees Pty Ltd (2006) 226 CLR 161[2006] HCA 19 Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177(1982) ATPR 40-303 Travel Compensation Fund v Tambree (2005) 224 CLR 627[2005] HCA 69 Vairy v Wyong Shire Council (2005) 223 CLR 422[2005] HCA 62 Watson v Foxman (1995) 49 NSWLR 315 Yorke v Lucas (1985) 158 CLR 661

Judgment (53 paragraphs)

[1]

Introduction

These proceedings arise out of a dispute about a contract for the supply of information technology goods and services by VPD to RMP, involving hardware, software, and ongoing technical support. VPD and Messrs Altenburg and Edwards were each involved in the formation of the contract. BHD facilitated the finance funding the transaction. The transaction was structured as a commercial lease between BHD as (undisclosed) agent (Rental Payment Agreement, 25 November 2015, CB 779; 783 (cl 2.8)) for the financier (Canon; Strategic Alliance Agreement, CB 601) and RMP, with a single capital payment to be made to VPD in advance covering the total cost of all of the goods and services to be provided by VPD, including the ongoing service agreement for its term. BHD's lease to RMP was assigned to Canon which provided the finance, and to which company RMP was liable for the ongoing instalments.
After the various contractual documents had been executed on behalf of RMP, including a guarantee by Dr Beckwith, and VPD had been paid (on 15 December 2015; CB 831), RMP repudiated the contracts (by emails between 14 January 2016 and 25 February 2016: CB 850-876), clearly evincing an intention to no longer be bound by them. Notwithstanding VPD's clearly stated intention to maintain the contract (to say nothing of the intervention of Canon's rights) RMP refused to pay for, and declined to go through with the project. By then, hardware, consisting of equipment for a Mitel telephony system, had been delivered, VPD was persisting with attempts to make arrangements for its installation and the software agreed to be supplied had been installed on VPD's remote server for the dedicated use of RMP. Canon and the cross-defendants refused to accept the cross-claimants repudiation.

[2]

Relief sought

The RMP parties seek declarations that each of VPD and Mr Altenburg engaged in conduct in contravention of s 18 of Sch 2 (the Australian Consumer Law), Competition and Consumer Act 2010 (Cth) ("the ACL"). They also claim that Mr Edwards was a "person involved" in such misleading or deceptive conduct. As against BHD, RMP relies on s 12DA Australian Securities and Investment Commission Act 2001 (Cth) ("ASIC Act"). They seek damages under s 236 of the ACL and orders setting aside various agreements under s 243(a) of the ACL. They say that by reason of the alleged misleading or deceptive conduct, RMP entered into the agreements which it was forced to repudiate, resulting in it incurring liability to Canon.
For the reasons that follow, I have concluded that the RMP parties Second Further Amended Statement of Cross-Claim filed in court on 8 March 2019 must be dismissed with costs.

[3]

A need for an IT upgrade

RMP operates a number of general medical practices located in various places on the Central Coast of New South Wales.
In 2015, RMP sought to upgrade its scanning and IT equipment as its then current system was proving slow and inefficient as the practice expanded. Dr Beckwith was then also dissatisfied with the practice's IT services provider.
A function of RMP's existing IT system was to allow RMP's patient medical files to be stored electronically in its practice management software, known as "Best Practice". RMP began experiencing problems in the efficiency of its data processing requirements particularly relating to the speed of processing complex material. These inefficiencies accompanied RMP's expansion and involved its document management system. The increasingly slower speeds were inefficient because they necessitated staff manually scanning-in individual documents and recording document details (Exhibit B; Affidavit, Dr Rodney John Beckwith, 19 October 2017, CB 133 at [15]-[17]). This resulted in longer than necessary doctor-patient consultations.
Dr Beckwith had a conversation with Mr John Henderson, the manager at RMP responsible for on-line technologies, as well as Mr Phil Dimond (RMP's Finance and Administration Manager) in early June 2015 in relation to a possible system upgrade. According to Mr Henderson Dr Beckwith wanted a new system that was (159T): "… cloud-based … high speed, with fibre optics links. It must be able to process large data files, particularly medical images quickly. It must also allow for video conferencing. … The new system needs to allow a chiropractor taking an image of a patient in the West Gosford practice, to quickly share that image and other patient data files with any other location and have a video conference as well."
I interpolate that Dr Beckwith disputes Mr Henderson's recollection (108.5-35T) because he took issue with Mr Henderson's use of the word "must". He said (108.34-35T): "I am not saying that we didn't have an interest in those kind of outcomes, but to say "must" and to say, "must have the cloud", was not true." This seems to me to be no more than a difference in emphasis. Dr Beckwith was not inflexible about compliance with these specifications.
Mr Dimond suggested that he would contact a person he knew who "works at Fuji Xerox" and who might be able to help. Dr Beckwith told Mr Dimond to get in touch with his contact and to ask for their suggestions (Exhibit B; Affidavit, Dr Rodney John Beckwith, 19 October 2017, CB 134 at [18]).

[4]

Discussions and meetings about the IT upgrade

There is some disagreement in the evidence about how many meetings took place between VPD and RMP, and who attended them. I explain my resolution of this issue below.

[5]

19 June Meeting

Mr Dimond arranged for a meeting to take place on 19 June 2015. In attendance from RMP's side was James Beckwith (Dr Beckwith's son, who was involved in the administration of RMP) and Mr Dimond himself. On VPD's side were Mr Luke Briggs, a director of VPD, and Mr Altenburg who was introducing VPD to RMP ("the 19 June Meeting").
Mr Briggs gave a presentation in the form of a sales pitch, with some occasional input from Mr Altenburg. There was conflicting evidence as to what was said and by whom at this meeting and during the presentation. Generally, the presentation focused on VPD's core offering, which was a cloud-based IT service called LiveOffice Wide Area Network ("LiveOffice WAN").
I interpolate a brief explanation of the nature of the services offered to RMP. RMP's existing IT system was wholly run and operated from a server owned by RMP and located at its West Gosford site. Its entire IT network and medical practice software ("Best Practice") were managed from that single location. Other RMP practice sites would login remotely to access the software.
What VPD was offering was, in effect, a complete overhaul and replacement of RMP's existing IT system. The range and breadth of the equipment, software and services offered had been set out in Mr Briggs's Affidavit of 21 August 2018 (CB 332-337 at [58]) which in the end was not read at the hearing (365.15T). Accordingly I put it to one side. Other evidence establishes that, broadly speaking, the LiveOffice WAN is a dedicated computer and storage service hosted in three separate data centres around Australia. The system was to be accessible by up to 86 of RMP's users simultaneously. This cloud-based system was to be located in a remote server in one data centre and backed-up in the other two data centres, so that if one data centre went offline, another would immediately take over. The idea was, essentially, that RMP would be able to install its Best Practice software (and indeed any other software) on VPD's server, and access it remotely with near-certain reliability.
A particular dispute arose during hearing about whether the particular system ultimately proposed for RMP included "[a] dedicated SQL server" and "Windows SQL licences". It was common ground that SQL software was necessary for running RMP's "Best Practice" management system. I will deal with this issue separately below. I will say now that the issue emerged almost by accident out of the re-examination of Mr Chris Benson, an expert called by RMP (264.15-265.15T). Mr Benson's role is explained later in these reasons.

[6]

15 July Meeting

A second meeting took place on 15 July 2015. VPD was represented by Mr Edwards, the National Connected Services Manager for VPD, and Mr Altenberg attended ostensibly to maintain what he regarded as his client contact with RMP. I interpolate, it transpired that unbeknownst to RMP he had been promised a commission if VPD secured the contract (Affidavit, Christian Altenberg, 2 March 2018, CB 418 at [80]; 327.41-328.20T). RMP were represented by Mr Henderson, Mr Dimond and James Beckwith ("the 15 July Meeting"). Mr Edwards gave another presentation of the system VPD had to offer.
At this meeting Mr Henderson specified RMP's requirements in accordance with instructions given by Dr Beckwith, by saying: "[The system], must be cloud based. It must be high speed, with fibre optic links. It must be able to process large data files quickly. It must also allow for video conferencing" (Affidavit, John Henderson, 6 March 2018, CB 169 at [45]). One example of required data processing given was the capacity to rapidly share medical imaging between different practice locations.
Mr Henderson reported back to Dr Beckwith on the meeting. He said that he explained to Dr Beckwith that Fuji Xerox were unable to assist, but that "another IT service provider, VPD" had been brought in and they would be providing a quote (Affidavit, John Henderson, 6 March 2018, CB 170 at [46]).
The quote in the form of further proposed subscriber agreements was received by Mr Dimond on 31 July 2015. This quote was discussed at a regular weekly meeting involving Dr Beckwith and Mr Henderson in early August 2015 when it was decided to obtain quotes for similar services from other providers. Dr Beckwith was not interested in dealing with either Optus or Telstra, but, despite his reluctance, agreed a quote should be obtained from RMP's then current and continuing service provider, CCTS of which Mr Benson was a principal (Affidavit, John Henderson, 6 March 2018, CB 170 at [47]).
This task fell mainly to Mr Dimond who then began making enquiries of other providers, including Mr Benson of CCTS, about the cost of a cloud-based hosting service similar to that proposed by VPD. Mr Benson provided a basic costing of such a service. He did not regard such a system as necessary for RMP's needs and did not put a lot of effort into developing a proposal. I should add there is a question about when alternative quotes, other than from CCTS, were sought but I am of the view that Mr Henderson is generally accurate and I accept that this was done following RMP's August meeting. It is unlikely it was undertaken before the receipt of the updated 31 July quote from VPD. In the case of CCTS, Mr Henderson's recall for the chronology is probably out. It seems clear that Mr Dimond took it upon himself to sound out Mr Benson about a system to that described by Mr Briggs in the early part of July 2015, and made a written request for a proposal on 15 July 2015, I infer probably after the meeting, to which Mr Benson responded on 24 July 2015 (CB 528-529).

[7]

30 September Meeting

A third meeting between RMP and VPD took place on 30 September 2015 involving Dr Beckwith, James Beckwith, Mr Henderson, Mr Dimond, Mr Altenburg, and Mr Edwards ("the 30 September Meeting"). Although it is clear that Mr Henderson understood the system was to be provided by VPD and not "Fuji Xerox" his reminder to Dr Beckwith about the meeting referred to the latter not the former. I interpolate there can be no question about Mr Dimond's understanding, he knew from the outset that the proposal was VPD's (see Exhibit XD2.2; Affidavit, Phillip James Dimond, 18 July 2018, CB 231 at [12]-[15]) and as the main point of contact at RMP carried on the negotiations with VPD on its behalf (see email from Mr Edwards to Mr Dimond, 8 October 2015, CB 620). However it does seem that the matter was referred to in-house at RMP as the Fuji proposal or in similar terms.
The purpose of the 30 September meeting was to further discuss VPD's proposal for the benefit of Dr Beckwith who had not been present at prior meetings. That meeting was the first meeting about the proposal Dr Beckwith attended. This was the first time he had met Messrs Altenburg and Edwards. The latter again gave a presentation that was not dissimilar to the presentations previously given by himself and Mr Briggs separately. He and Mr Altenburg fielded questions from Mr Dimond, Mr Henderson and Dr Beckwith.
On or about 1 October 2015, Dr Beckwith instructed Messrs Dimond and Henderson to negotiate terms with VPD, at the same time continuing to make enquiries of other potential suppliers as to alternative IT solutions. Dr Beckwith was not happy with either the monthly payment or the five year term. He wanted a better price and a three year term.
Following further negotiation, Mr Edwards emailed Mr Dimond on 13 October 2015 (CB 622). The subject was "QUOTE FINALISATION". The body of the email opened "see attached final Recommendations as we have discussed". The email went on to describe what VPD regarded as the advantages of their system, which included a new Mitel telephony system, upgrading RMP's existing system, as well as the LiveOffice WAN system and providing calculations on costs savings VPD said RMP was likely to make compared to the "current bill from the phone provider". Among the attachments were a further two proposed "Subscriber Agreements". Contract ID GE5641 related to the Mitel telephony; and contract ID GE5691 to the LiveOffice WAN. Mr Dimond wrote back at 11:51 am referring to an apparent omission in GE5691 (Email from Mr Dimond to Mr Edwards, 13 October 2015, CB 655). Mr Edwards responded immediately correcting that omission (CB 654).

[8]

Agreements are struck

On 15 October 2015, Dr Beckwith authorised acceptance of what was in fact VPD's, not Fuji Xerox's, offer and RMP entered into the two Subscriber Agreements with VPD for the supply of equipment and services ("the Subscriber Agreements") which were signed on its behalf by Mr Dimond whose signature was witnessed by Mr Henderson (CB 658-661).
When Mr Edwards had dispatched the Subscriber Agreements, so styled, dated 13 October 2015, he described them as quotations. That said, they were signed and accepted by the authorised officer of the cross-claimants, Mr Phil Dimond, on 15 October 2015. On their face these documents appear to be binding agreements, and I so find. Above Mr Dimond's signature, under the heading "Subscriber acknowledgement, important declaration" were the following words: "By signing this Agreement, you agree to be bound by this Agreement, including this Schedule and the Terms of Service attached to this Schedule ... this is a "Contract" for Services. "(Original delineation.)
I repeat: the first Subscriber Agreement, GE5641, related to the Mitel telephony system; and the second Subscriber Agreement, GE5691, related to the LiveOffice WAN system. Dr Beckwith accepted that Mr Dimond and Mr Henderson had his express authority to sign the Subscriber Agreements (59.24-35T).
Each Subscriber Agreement identified the parties as VPD and RMP, described the services to be provided under it, fixed the "minimum term" as 36 months from the commencement date, identified in summary form the basis upon which the price was calculated, and fixed the payment due for each billing period and the amount of GST. Only the commencement date was left blank but previous discussions were to the effect that installation should occur before the IT industry shut-down, or the "embargo", period over Christmas and January holidays.
On Thursday 29 October 2015, Zoe Pitchers emailed Mr Dimond introducing herself as VPD's project co-ordinator for RMP's project and suggesting a conference call to discuss the elements of the project. Mr Dimond replied the following day confirming 3 November 2015 as a suitable time for the conference call at which he, Mr Henderson and James Beckwith would be available. I infer the call took place (see Email from Ms Pitchers to Mr Dimond, 6 November 2015, CB 721). Following this, probably on 9 November 2015, Ms Pitcher forwarded a "Project Scope Document" which she had prepared on 3 November 2015 (CB 710-719). The document referenced the Subscriber Agreement GE5691 for the LiveOffice WAN. It referred specifically to both the LiveOffice WAN requirements and "the Telephony component" (VPD Project Scope Document, CB 714). In relation to the "Live Office" the document stated: "This environment will be designed to support the company's unique applications, such as Best Practice for imaging and Front Desk application." (CB 714) (My emphasis.)

[9]

Finance arrangements

It seems always to have been contemplated at least by Mr Henderson and Mr Dimond, if not Dr Beckwith, on behalf of RMP and by VPD that RMP would require finance for the acquisition of the new IT services and related telephony upgrade. As I explain below, Dr Beckwith, on a subjective level appears not to have appreciated that the project was to be financed by a loan structured as a commercial lease. This appears genuine. But the contrary would have been apparent to anyone reading the document and paying attention to the details of the negotiations. I accept that Mr Henderson informed him that the lease would be backed by a finance company (Affidavit John Henderson dated 6 March 2018 at [65]; 167.24-.45T; 173.10-.29T). I also accept Mr Dimond's evidence that he liaised with Dr Beckwith to obtain necessary financial information for the credit application (Exhibit XD2.2 at [20]-[23]). And it seems that BHD had entered into a non-exclusive agency with Canon on 8 October 2015, to arrange finance programs for suitable customers and equipment vendors (Strategic Alliance Agreement, CB 601-617).
On 11 November 2015, VPD and BHD had entered into a "Business Terms Agreement" ("BTA") which had the effect of engaging BHD to facilitate finance for eligible subscriber agreements (CB 727-737). It is unnecessary to summarise the contents of the BTA. However, the recitals ("Background") to the agreement describe in general terms the relationship between BHD and VPD (CB 728): A. "[BHD] is a specialist asset finance and payment solutions provider focusing on the information, communications and technology … business sector. B. VPD is in the business of providing ICT products and services to their customers … in the form of a service contract …. C. [BHD] has developed a range of payment solutions which comprise using the Service Contract to finance the capital and upfront costs … D. VPD at its own discretion will ask [BHD] to provide a Payment Solution in relation to the sale, provision and/or use of equipment, software and/or services by it and/or an associate or related body corporate under a Service Contract with a Customer …" It is also pertinent background that under this agreement VPD was required to work with a customer to provide necessary financial documentation required by BHD for credit assessment. BHD in the course of conducting "verification, background and credit checks" was entitled to contact the customer, but was required to do this under the "banner" of VPD (BHD Finance Business Terms Agreement, CB 729).

[10]

Attempted performance by VPD and RMP's repudiation

I summarised some of the salient features of the evidence dealing with RMP's repudiation of the contract in my earlier decision of Canon Finance Australia Limited v Reliance Medical Practice Pty Ltd & Ors (No 4) [2018] NSWSC 1379.
As it happened, both Messrs Dimond and Henderson left RMP soon after the finance was finalised. Mr Dimond "finished up" with RMP on or about 4 December 2015 (CB 803). Mr Henderson left at about the same time (Affidavit, John Henderson, 18 July 2018, CB 225 at [3]). Dr Beckwith said he terminated Mr Henderson's employment on notice on 6 December 2015 and there is no reason to question his evidence in this regard (Exhibit B; Affidavit, Dr Rodney John Beckwith, 19 October 2017, CB 151 at [101]). Their responsibilities seem to have been largely taken over by Mr Leif Arnebark and Ms Lisa Lord (Email from Mr Dimond to Ms Pitchers, 27 November 2015, CB 803; Exhibit B; Affidavit, Dr Rodney John Beckwith, 19 October 2017, CB 152 at [105]).
Dr Beckwith deposed that RMP's IT problems had largely been resolved with the IT system provided by CCTS and RMP decided to "cancel" the contract (Exhibit B; Affidavit, Dr Rodney John Beckwith, 19 October 2017, CB 152 at [105]-[112]). For reasons I am about to explain I do not accept this explanation.

[11]

Preparatory works

By arrangement between Mr Dimond and Ms Pitchers, a VPD network engineer had carried out a site survey at RMP's premises on 27 November 2015 (Email from Mr Dimond to Ms Pitchers, 25 November 2015, CB 770; Site Survey Notes, CB 797-802). And necessary equipment, mainly relating to the Mitel telephony network, was delivered on 2 December 2015 (Email from Mr Dimond to Ms Pitchers, 2 December 2015, CB 821).
Email correspondence passing between officers of RMP and VPD in early December make no mention of RMP's IT problems having been resolved (CB 815-818). Indeed they are concerned with preparatory steps for the installation of VPD's networking equipment.
By at least mid‑December 2015, after the finance had been arranged and advanced, Mr Edwards and Ms Pitchers contacted officers of the cross‑claimants on several occasions in order to implement not only the installation of the Mitel telephony system, but also the LiveOffice WAN system. Indeed, I will quote from an email of Mr Edwards of 16 December 2015 where he said this (CB 833): "As we move through the different silos of the project (WAN, Network, Telephony, Desktop Environment) we will add the project lead and team member (ie Mitel Engineer; Transitional Services Manager for DaaS, etc) to the chain and remove once the project for that particular product is finalised and handed over to [RMP]." From then on there are several emails from either Ms Pitchers or Mr Edwards arranging for persons to attend RMP's premises to implement the contracts, or at least attempting to make those arrangements. The documents which appear at CB 835-836 are of some significance, because they are drafts of authorities to enable VPD to, as it were, take over the conduct and control of RMP's existing systems as the new provider of IT services for RMP. I interpolate that there is no limitation of the authority sought to installers of telephony services only.
These efforts were in fact thwarted by Dr Beckwith. During cross-examination about the omission of the LiveOffice WAN from the Rental Payment Agreement the following evidence emerged (45.15-.40T): "Q. So, beyond what you've been told by the IT guy if we can call them that, you have no personal knowledge as to whether the equipment supplied in December 2015 was limited to the telephone system or extended to the WAN system? A. I'd like to say yes with a comment, that the WAN system, the WAN links could never have been installed because we never allowed access to the rest of our system to do so." I emphasise "we never allowed access to the rest of our system". The evidence continued (see 45.22-.41T): "Q. Yes, we understand that. You prevented any installation of the WAN system? A. I did. Q. Yes, now that was your decision? A. Mine. Q. No‑one from VPD suggested that they weren't willing to go ahead and install the WAN system? A. That's correct. Q. Indeed they offered to go ahead and install the WAN system? A. That's correct. Q. But you refused? A. I did. Q. But you still maintain a belief that the rental agreement you signed was limited to the telephone agreement? A. I do maintain that belief." Leaving aside that last question and answer, about which topic I make comment below under the heading, "An alternative claim", these statements from Dr Beckwith are very amply supported by the contemporaneous documents contained in the court book. They clearly establish that RMP repelled VPD's attempts to perform its contract with RMP from an early stage in its implementation.

[12]

Repudiation of the contract

On 6 January 2016 there was an internal management meeting of RMP's officers at which, inter alia, the financial position of the organisation was discussed. A minute was recorded of concerns in relation to the contract with VPD and a resolution passed to attempt to vary the payments in relation to it (CB 841-843).
On 13 January 2016, Mr Benson provided access details "to everything". Although the codes were provided by him the requested written authorisation for VPD to utilise them did not materialise (Email from Mr Benson to Mr Cooper (of VPD), 13 January 2016, CB 845). On the same day Ms Lord emailed Ms Pitcher to inquire when the first payment was due (CB 847).
The next day, 14 January 2016, at 8:43 am Ms Lord emailed Ms Pitchers and Mr Edwards in these terms (CB 850): "I have been provided instruction from the Director of Reliance Medical to inform you that we wish to halt any further installation of the IT and telecommunications and to cease any future payments, including this months expected payment." (My emphasis.) I understand "the Director" to be a reference to Dr Beckwith. On the same day at 1:37 pm, Dr Beckwith himself emailed Mr Edwards stating that the RMP "is reconsidering this contract" and explaining why that was so (CB 852): "The problem for [RMP] is that our business has had a significant set back over the past 2 months, which was finally fully disclosed to me in the past few days. It is with deep regret that I find that [RMP] is simply unable to afford this project. Our cash flow forecast leads me to believe that the project cannot be afforded for at least 6 months. … I realise that [VPD] has rights under the contract with [RMP]. I think that enforcing those rights would be unproductive as [RMP] would then have no possibility of ever being a future … customer. The best position I can hope for is to defer the project for 12 months, and re-evaluate our needs at that time. Reasonable costs of deferring the project can probably be met. [RMP] is, however, taking multiple measures to recover financial stability in the face of our cash flow difficulties. As regards telephone conversations, I prefer emails so that we have a paper trail. If you can think of any other ways that we can work around this, I would be very pleased to consider them. … This has not been an easy decision for me to take. One outcome is that [VPD] could sue [RMP] for the contract value, with serious repercussions for the business and for me personally. That would be devastating. In addition, one of my core values is integrity - and it pains me not to be able to do what I have said I will do. My response in the face of that is to clean up the mess as well as I can. Taking this decision now, before substantial costs have been incurred is a lot better than failing in 6 months with all the infrastructure in place. I apologise to you and to [VPD] for the problem I have created."

[13]

Conclusions on Dr Beckwith's evidence with respect to the repudiation of the contract

I do not accept this explanation. It is apparent to me on the evidence I have recited that Dr Beckwith's decision on behalf of RMP to repudiate the contract with VPD was for the reasons explained in his emails of January and February 2016. That is to say, that following his review of RMP's financial position with his new leadership team after the contracts had been entered into, Dr Beckwith decided that RMP could not comfortably afford the ongoing financial commitment he had taken on. His apparent high-handedness may well be explained by his initial failure to appreciate that RMP had entered into a loan agreement to fund the acquisition of the IT services and equipment and his related mistake that the $24,000 per month commitment was an ongoing fee for the provision of services rather than, effectively, a loan repayment. He seems to have proceeded on the belief, at least initially, that the contract could be "cancelled" with only limited legal and financial implications.

[14]

The evidence of Mr Chris Benson

It is convenient to deal with Mr Benson's evidence-in-chief at this juncture. Four affidavits of Mr Benson were read in the proceedings: 18 October 2017, 28 June 2018, 14 August 2018 and 30 August 2018 (filed in Court). Mr Benson said that RMP became a client of CCTS in about 2013. After successfully quoting for the work, CCTS supplied all hardware, server equipment, networking equipment, telephone handsets, computer desktops and everything else that was necessary for RMP's IT and telecommunications requirements for its West Gosford practice. CCTS continued to be RMP's IT provider up to and after the period I am concerned with in this case. RMP's IT system is completely run and operated from a server located at its West Gosford site. It continues to operate from this location servicing the other sites.
Mr Benson confirmed that "in or around July 2015" he, at Mr Dimond's request, provided a quote for a cloud based system notwithstanding his own view that such an approach was unnecessary for RMP's needs (Affidavit, Chris Benson. 18 October 2017, CB 249-250 at [26]-[32];). Because of his view he did not put a lot of effort into the quote which he provided on 24 July 2015 (see Affidavit, Chris Benson, 18 October, CB 528-529 at [27]). He contacted Mr Dimond about the quote after his return from holidays in October 2015 and was informed that RMP "decided to go with another provider, sorry" (Affidavit, Chris Benson, 18 October, CB 250 at [30]).
CCTS continued to provide IT services to RMP during the period of late 2015 to early 2016 when VPD were supposed to be taking over the work.
In his first affidavit Mr Benson says that he was contacted by RMP about the scanning issue (Affidavit, Chris Benson, 18 October, CB 248 at [19]). He does not say when in this affidavit. He said that upon review of the system he diagnosed that the error was being caused by the Best Practice software itself and that a solution would be to require an upgrade to the SQL software installed on RMP's server when Best Practice was originally installed. RMP was running on a free version of Microsoft SQL. He also states that CCTS provided its own paid licence to RMP to show that the problem was not related to any equipment, but rather the shortcomings of the free product. The scanning issue, after consultation with the providers of Best Practice, was resolved by reducing the resolution on the scanners. Again he does not say in this affidavit when that occurred, but I would have inferred from his discussion about upgrading the SQL licence in this context that it was done after January 2016 following the repudiation of VPD's contract.

[15]

The pleaded case of misleading or deceptive conduct

[16]

The claim against VPD and Mr Altenburg, the first and second cross-defendants

The parties are agreed that Mr Altenburg was a Fuji employee, or perhaps contractor, throughout 2015. From about March/April 2016, Mr Altenburg became an employee of VPD. The parties are also agreed that VPD is not associated with Fuji, and BHD is not a related company of Fuji (Statement of Agreed Facts, CB 1239).
The RMP pleads that throughout the period 19 June 2015 to 25 November 2015 (the day the Rental Payment Agreement was entered into), Mr Altenburg, on his own behalf and on behalf of VPD, held himself out as the Accounts and Business Development Manager of Fuji Xerox, and as a person who was acting on behalf of and in the interests of Fuji Xerox (Second Further Amended Statement of Cross-Claim, at [17]). RMP says this holding out arises from Mr Altenburg's conduct in: 1. Providing to them a business card that described him as an employee of Fuji in the role of Business Account Manager; 2. Communicating with them through an email registered on a domain belonging to Fuji; and 3. Appending to emails sent to them a footer containing Fuji's logo and a description of his role as Business Account Manager at Fuji.
The core of RMP's claim however is pleaded at [18]-[21] of the cross claim. It is not necessary to set those paragraphs out in full here; a summary will suffice. The allegation made in those paragraphs is that throughout the period July to 25 November 2015, Messrs Altenburg and Edwards, on their own behalf and on behalf of VPD, represented to RMP, Dr Beckwith, and Messrs Henderson and Dimond, that: 1. The equipment, software, and services to be provided by VPD would address RMP's current IT system's inefficiencies; and 2. VPD's products and services would address RMP's concerns about the shortfall in its IT and printing systems; and 3. The VPD product would be quicker and more efficient than the current system (which relied on a physical server in RMP's office). [1]
The RMP avers that as a matter of fact, the representations summarised in the immediately preceding paragraph were not correct and that Messrs Altenburg and Edwards failed to advise RMP and its key personnel of that (as distinct from representing that a state of affairs exists or a product fulfils some function where in fact it does not) (Second Further Amended Statement of Cross-Claim, CB 35 at [19]-[20]). RMP pleads that the representations, conduct, and failure to advise described contravene s 18 of the ACL (Second Further Amended Statement of Cross-Claim, CB 36 at [22]).

[17]

Actions taken in reliance on pleaded misleading or deceptive conduct

The RMP pleads that by reason of or in reliance on the misleading or deceptive conduct and other matters alleged to have been engaged in by VPD, Mr Altenburg and Mr Edwards RMP entered into, and Dr Beckwith acted as guarantor under, the Subscriber Agreements and the Rental Payment Agreement (Second Further Amended Statement of Cross-Claim, CB 36 at [24]-[26]).

[18]

The claim against BHD, the sixth cross-defendant

RMP also pleads (Second Further Amended Statement of Cross-Claim at [27]) that BHD leased and provided equipment services to RMP for a period of 36 months, and "if BHD terminated the contract" RMP would be required to pay all monthly payments for the entire period. By [28] it averred that by entry into the Rental Payment Agreement "BHD/Canon" paid the lump sum to VPD. It was alleged that Mr Altenburg and Mr Edwards represented, inter alia, on behalf of BHD that it was VPD's "financial arm providing lease finance to prospective customers" (at [29]). And by [30] that the Rental Payment Agreement contained on each page "a prominent header" referring to VPD.
By these means it was alleged that BHD made the following representations (Second Further Amended Statement of Cross-Claim at [31]): 1. BHD was the financial arm of VPD; and 2. VPD, by itself, its servants and agents "was entitled to speak, act and conduct itself on behalf of BHD with respective lessees." It is also alleged that by this conduct BHD induced RMP to enter into the Rental Payment Agreement by reason of which RMP suffered loss and damage.
As against BHD, RMP seeks a declaration that it engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s 12DA(1) ASIC Act; an order that the Rental Payment Agreement and associated arrangements be declared void ab initio; and in the alternative damages under s 236 of the ACL. It may be taken that damages are actually sought under s 12GF ASIC Act.

[19]

The accessorial claim against Mr Edwards, the third cross-defendant

At [23] of their pleading, which deals with Mr Edwards' accessorial liability RMP pleads that "Mr Edwards … was a person involved in the contraventions of s. 18 [of the ACL] by [VPD, Mr Altenburg and BHD]". So far as BHD is concerned the reference to the ACL is erroneous, given s 131A Competition and Consumer Act 2010 (Cth). The reference should be to s 12DA ASIC Act. Accessorial liability as a person involved arises directly from the language of s 12GF ASIC Act which creates the statutory cause of action in damages.

[20]

An alternative claim

For completeness I add that an issue arose between the parties as to whether the cross-claimants might make out their case of misleading or deceptive conduct by reference to the fact that the Rental Payment Agreement omitted any mention of the LiveOffice WAN system. This issue was the subject of my ruling in Canon Finance Australia Limited v Reliance Medical Practice Pty Ltd & Ors (No 3) [2018] NSWSC 1378, where I held that the cross-claimants were precluded by their pleadings from running the case on this basis. From time to time I refer to this alternative case because it tended to feature some of the evidence led and submissions advanced notwithstanding my ruling. I refused the cross-claimants leave to amend to advance the alternative case in Canon Finance Australia Limited v Reliance Medical Practice Pty Ltd & Ors (No 4) [2018] NSWSC 1379. No case was sought to be advanced which was founded on Dr Beckwith's unilateral mistake about the Rental Payment Agreement involving a substantial loan. I am not suggesting such a case would have been in any way tenable, especially given my acceptance of the evidence of Mr Henderson and Mr Dimond on that matter.

[21]

When did the meetings take place and who attended?

There was, as mentioned, differences in the evidence of various witnesses about precisely who attended which meeting. I have already indicated my findings as to this issue above. In this section I set out in more detail the reasons for those findings.
In their joint statement of agreed facts, the parties agreed that (CB 1240 at [12]-[19]): 1. The 19 June Meeting was attended by James Beckwith and Messrs Altenburg, Briggs, Dimond and "possibly Mr Henderson". 2. The 30 September Meeting was attended by Dr Beckwith, James Beckwith, Messrs Altenburg, Edwards, Dimond, and Henderson. This was the first occasion on which Dr Beckwith met Messrs Altenburg and Edwards.
Mr Henderson's evidence as to the meetings he attended was imprecise. He deposed that the first meeting he ever attended took place "[i]n approximately mid-2015" (Affidavit, John Henderson, 6 March 2018, CB 169 at [43]). He was able to recall that Messrs Altenburg, Dimond and Edwards were present, and that Dr Beckwith was not. If this is so, this is obviously the 15 July Meeting because Mr Edwards was not present at the 19 June Meeting and Dr Beckwith only ever attended the 30 September Meeting. Mr Henderson also denied ever meeting Mr Briggs (155.32-.33T).
However, Mr Briggs gave evidence that Mr Henderson was present at the 19 June Meeting, and that he could not recall whether James Beckwith was there (Affidavit, Luke Samuel Briggs, 8 March 2017, CB 273). This latter issue is of no moment as the parties were agreed that James Beckwith was present. As to the former, Mr Briggs' evidence is inconsistent with the evidence of Mr Altenburg (who relevantly made no mention of Mr Henderson's presence at the 19 June Meeting) (Affidavit, Christian Altenburg, 2 March 2018, CB 412 at [42]) and possibly James Beckwith (who could not recall whether or not Mr Henderson was present) (Affidavit, James Beckwith, 6 May 2018, CB 218 at [18]). It is also inconsistent with Mr Henderson's own evidence that he has never met Mr Briggs.
On balance the preferable conclusion is that Mr Henderson attended the 15 July and 30 September Meeting, but not the 19 June Meeting.
This detail of primary fact is of some small importance given the particulars that the representations were made at the 19 June and 30 September meetings.

[22]

Review of the evidence concerning the representations relied on by RMP

[23]

Dr Beckwith's evidence

Dr Beckwith initially erroneously recalled that he was present at the 19 June Meeting (Exhibit B; Affidavit, Dr Rodney John Beckwith, 19 October 2017, CB 135 at [24]-[25]). This error was addressed in his second affidavit dated 6 May 2018 prepared after much of the evidence of the responding parties had been served (Exhibit B; CB 203 at [3]-[6]). Indeed much of the detail in the first affidavit was withdrawn or recast. Dr Beckwith's reliability was, unsurprisingly called into question because of this and on demeanour grounds. Dr Beckwith now accepts that he was only ever present at the 30 September Meeting. It is clear that the need for Dr Beckwith to substantially recast his evidence after reviewing other evidence as it became available affects my assessment of the reliability of his recall. It also demonstrates that his final account is characterised by a relatively high degree of reconstruction which likewise tarnishes its acceptability, always accepting human recall may commonly involve some degree of reconstruction. I did not regard Dr Beckwith as in any way dishonest, nor did I understand such a submission to have been advanced by any responding party. Although Mr Fernon submitted aspects of his evidence were "unbelievable".
The impression I formed from seeing and hearing his evidence, confirmed by my review of the transcript, was that when these events took place Dr Beckwith was a successful, busy medical practitioner of an entrepreneurial bent. He was the head of a growing multi-disciplinary practice on the brink of expanding into additional sites. His professional and executive responsibilities left him little time for the minutiae of business administration which he left in the hands of the managers he had employed for that purpose. He oversaw the work of these managers at an executive level but he was at least once or twice removed from the day to day implementation of his directions and their practical ramifications. Mr Henderson and Mr Dimond were the managers to whom the resolution of the IT issues had been delegated. They, of course, frequently reported back to Dr Beckwith for final instructions, which he gave. But they enjoyed a fair degree of autonomy in the day to day pursuit of the tasks assigned to them, acting, when they did, with Dr Beckwith's full authority.
This business structure explains why at times Dr Beckwith was short on, or mistaken about, some of the important details of the negotiations and the legal structure of the deal when it was struck. A prominent example is his failure to fully read the Rental Payment Agreement and his resulting failure to appreciate it effectively embodied a commercial loan requiring monthly repayment instalments rather than a service agreement, as he apparently thought, involving payment of a fee for services from month to month. Anyone with a degree of business acumen, which Dr Beckwith must have in large measure, would have appreciated its true legal effect. Additionally anyone who had involved himself or herself in direct oversight of the various phases of the implementation of the decision which Dr Beckwith made to acquire VPD's IT solution would have been in no doubt about its proposed business and legal structure.

[24]

Mr Henderson's evidence

Mr Henderson swore two affidavits in the proceedings, the first dated 6 March 2018 and the second, 18 July 2018 (CB160-183; CB 224-228). The latter was read into evidence by Mr Moore (153.40T). The former was not read in evidence but was utilised in part by Mr Fernon (for Mr Altenburg) in cross-examination and tendered as Exhibit XD2.3.
Mr Henderson deposed to his understanding at the time of the 15 July Meeting that Mr Altenburg was an employee of Fuji and that Mr Edwards was a representative of VPD (Affidavit, John Henderson, 18 July 2018, CB 226 at [9]-[10]). In cross-examination he made clear that at no point (during the 15 July Meeting or afterwards) was he under the impression that Mr Edwards represented any company other than VPD (155.35-156.10T), nor did he ever tell anyone from RMP that Mr Edwards was from Fuji Xerox or that VPD was part of Fuji Xerox.
In cross-examination, Mr Henderson further added that he wasn't precisely clear on the nature of the relationship between Fuji and VPD at the time of the 15 July Meeting, but that by the 30 September Meeting that issue had been clarified so he understood VPD was entirely independent of Fuji Xerox and that the latter company would not be involved in the provision of the proposed IT services (156.43-157.2T). He did not perceive Mr Dimond to be labouring under any confusion as to their relationship by the time the 30 September Meeting took place.
He deposed that he understood that the 19 June Meeting had gone ahead and that it was focused on the communications and IT system, as distinct from the scanning system (Affidavit, John Henderson, 18 July 2018, CB 226 at [9]), and that Messrs Altenburg and Edwards were specifically told of the requirements of the system Dr Beckwith envisaged (160.22-.31T).
As for the 30 September Meeting, Mr Henderson deposed that a conversation to the following effect took place between himself and Mr Altenburg in the presence of Dr Beckwith (Affidavit, John Henderson, 18 July 2018, CB 226 at [13]; 163.47-164T): "Me: Given that VPD are proposing the system, could you please indicate why you, that is Fuji, are here? Christian: We want to maintain the customer relationship in case we can do more business in the future."
Mr Henderson gave evidence that during the 30 September Meeting, Mr Edwards drew an explanatory diagram on a board in order to illustrate the system VPD was offering to provide. Mr Henderson's evidence is to the effect that the word Fuji was not written on the whiteboard (165.37-166.10T). Mr Henderson recalled an indicative quote being circulated during the meeting.

[25]

Mr Dimond's evidence

Mr Dimond was not called as a witness. However, Mr Fernon sought to rely on an affidavit sworn by Mr Dimond on 18 July 2018 in limited respects. That affidavit became Exhibit XD2.2. In it, Mr Dimond recalls the presentation given by Mr Briggs (clearly during the 19 June Meeting). Mr Dimond's recollection was as follows (Exhibit XD2.2 at [12]): "I recall Luke outlined the operation of the type of system we were looking for. I recall that he described how the cloud worked, which was to the effect that data was to be transferred via the Internet from on-site users to a secure data centre in Australia, consistent with Australian Regulations and Standards. He described how this would be done via high speed optic fibre. He also described the Integrated voice systems which involved VOIP supplied by a business known as MITEL. Although similar to our current system, this VOIP system was different in that it was managed by VPD directly. Luke described how VPD would be a one stop shop for all of these services and how they could provide service and technical support."
It was submitted that a Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 inference ought to be drawn from the cross-claimants' failure to call Mr Dimond. I am not persuaded that such an inference is either necessary or warranted. There was ample evidence as to what occurred at both relevant meetings. Given the tender of his affidavit, albeit tendered by Mr Fernon, the evidence he would have given about matters in issue was relatively clear even though he was not cross-examined or questioned about other specific matters arising in the course of the evidence generally. His evidence does not support RMP's argument that VPD and Mr Altenberg represented that the proposal was propounded by Fuji Xerox or a company associated with it.

[26]

James Beckwith's evidence

James Beckwith was in many ways an important witness. He gave clear and succinct evidence which was not the subject of any real challenge. In some respects, he contradicted the evidence of his father, or at least gave different evidence from him. These matters demonstrated his independence from his father's view of the case which, to my mind, enhanced the reliability of his evidence. Further, James Beckwith was the only witness called on RMP's side who attended each of the relevant meetings.
James Beckwith deposed that in mid-2015 he was employed at RMP in a managerial role relating to IT. One of his tasks was finding a solution to the scanning retrieval problem (Affidavit, James Beckwith, 6 May 2018, CB 217 at [10]). James Beckwith, like Mr Henderson, maintained a distinction between the scanning problem RMP was experiencing on the one hand, and the more global issue pertaining to the efficiency of the document management process on the other. He recalled that Messrs Dimond and Henderson were displeased with CCTS because of delays in finding a solution to the file retrieval problem (Affidavit, James Beckwith, 6 May 2018, CB 217-218 at [13]-[14]).
He was able to locate an email from Mr Dimond scheduling the meeting to take place on 19 June 2015. The email described the first meeting as a meeting "with Fuji" (Affidavit, James Beckwith, 6 May 2018, CB 218 at [16]).
James Beckwith gave the following evidence as to what happened at the 19 June Meeting. He recalled Mr Altenburg introducing Mr Briggs as "someone … who understands and can explain all the technical stuff much better than me" (Affidavit, James Beckwith, 6 May 2018, CB 218 at [20]).
James Beckwith said that the reason he thought that the meeting was with Fuji was because Mr Dimond had advised him as such. On his recollection of both subsequent meetings with Messrs Altenburg and Edwards, he said that neither of them ever mentioned Fuji (187-188T). However, he said they didn't mention VPD either. In cross-examination, he confirmed that neither Mr Briggs (on the 19 June Meeting) nor Messrs Altenburg and Edwards (on either latter occasion) said that VPD had any relationship with Fuji (188.5-188.39T).
He deposed to the following exchange of words during the presentation given on 19 June (Affidavit, James Beckwith, 6 May 2018, CB 219 at [22]): "Mr Briggs: There is no downtime with the cloud system, full scale redundancy is used on the network which means that if one server for any reason goes down the other servers take on the load and re-route traffic to them and your information is available 24/7. Mr Dimond: And will this fix our scanning problems? Mr Briggs: The scanning problem is a subset of the bigger problem and that's the inefficiencies of your current server and set up. If you move the system over to the cloud, there will be undoubtable increases in efficiency and data transfer which will resolve your scanning issues. Mr Altenburg: The scanning problems are symptoms of the larger issues at play."

[27]

Mr Altenburg's evidence

Mr Altenburg deposed that the relationship between VPD and Fuji Xerox was limited to the consideration that from time to time VPD would provide Fuji products to its clients as part of a system set up by VPD.
So far as the 19 June Meeting was concerned, Mr Altenburg recalled introducing Mr Briggs using words to the following effect (Affidavit, Christian Altenburg, 2 March 2018, CB 412 at [44]): "This is Luke Briggs, who is a director of [VPD]. I brought him along to this meeting as he may be able to assist you further in ways that Fuji Xerox cannot."
Mr Altenburg recalled Mr Briggs then giving a presentation that provided an overview of VPD's general proposal. He recalled Mr Briggs inquiring as to the IT issues specifically facing RMP, and addressing the specific ways in which VPD's networking, telephone, and cloud solutions could be used in RMP's medical practices, focussing in particular on the LiveOffice WAN system (CB 412-413).
Mr Altenburg formed the view during that meeting that RMP's problems were not limited to just scanning but rather were of a more general networking nature; specifically relating to RMP's ability to store and access patient information (CB 413-414).
So far as the 30 September Meeting was concerned, Mr Altenburg recalled introducing Mr Edwards to Dr Beckwith as a representative of VPD, not Fuji Xerox. He denied that he ever used the words "Fuji Xerox" or words to the effect that "Fuji will provide" or "we will provide" during that meeting, or indeed at all (Affidavit, Christian Altenburg, 27 August 2018 at [8]). He denied giving a presentation that revolved around "Fuji's" cloud system (Affidavit, Christian Altenburg, 27 August 2018 at [9]). He said this was impossible because Fuji did not have such a system (Affidavit, Christian Altenburg, 27 August 2018 at [9]). He also deposed that the majority of the presentation at the 30 September Meeting was given by Mr Edwards and that he barely said anything (Affidavit, Christian Altenburg, 27 August 2018 at [9]).
Mr Altenburg said that Mr Edwards made clear during the presentation that the products and services being offered to RMP were VPD's products and services, not Fuji's (Affidavit, Christian Altenburg, 27 August 2018 at [9]). He explicitly denied drawing any diagrams on the whiteboard (Affidavit, Christian Altenburg, 27 August 2018 at [9]). He denied that the word "Fuji" was ever written on the whiteboard at any time (Affidavit, Christian Altenburg, 27 August 2018 at [9]). He said that it was in fact Mr Edwards who drew diagrams on a whiteboard and that those diagrams contained VPD's name and main support phone number (Affidavit, Christian Altenburg, 27 August 2018 at [9]).

[28]

Mr Briggs' evidence

As previously state Luke Briggs is a director of VPD. Two affidavits, the first of 18 March 2017 and the second of 21 August 2018 were filed in the proceedings. Of the first limited passages only were read. And the second was not read at all.
Mr Briggs confirmed that he was invited to attend the 19 June meeting by Mr Altenburg. As he had other meetings in the same area he agreed to attend what he regarded as an informal meeting (Affidavit, Luke Samuel Briggs, 8 February 2018, CB 273 at [26]-[28]). As stated already, he is probably wrong in saying that Mr Henderson was present at that meeting, but Mr Dimond and Mr Altenburg were. Dr Beckwith was not. Although not mentioned by Mr Briggs, James Beckwith, I have already found, was at that meeting.
Mr Briggs said Mr Altenburg introduced him as a director and co-founder of VPD; that Mr Altenburg pointed out that VPD "are not associated with Fuji Xerox"; and also said (Affidavit, Luke Briggs, 8 February 2018, CB 273 at [35]): "I have asked [Mr Briggs] to attend the meeting as I believe that his company might be able to assist you. Whether you do any business with VPD is a matter for you." Mr Briggs said that neither Altenburg nor himself held VPD out as having any association with Fuji Xerox.
In cross-examination, Mr Briggs said the decision to obtain finance to fund the supply of the goods and services was made by RMP, not VPD: "it's entirely up to the customer" (400.37T). Mr Briggs referred RMP to BHD "but they could have used their own bank or another funder of" VPD (400.44T). Mr Briggs said he only became aware that Canon Finance was the actual financier after the proceedings commenced (401.4T). He did not personally check the payment when it was received in December 2015. That was a matter for VPD's administrative staff. He was aware that BHD was "not a bank" and that they would source the finance required by RMP from a third party (404.7T). But he was unaware at the time of who that third party might be. VPD have no commercial relationship with Canon (403.40-404.8T).
Mr Briggs said that the necessary software and other matters referrable to the LiveOffice WAN provision set out in the relevant Subscriber Agreement had been acquired, and paid for, by VPD prior to 14 January 2016 from "multiple different sources" (412.45-413.17T). Mr Briggs explained that because RMP "wanted to be live by 2 February" 2016 it was necessary to put the arrangements in place during December "because Telstra and all the carriers cannot do services over" the Christmas and January holiday period, "There's always a backlog" (413.40T). He added: So it's always imperative to get your order in early in order to be able to do that. What VPD does in the background is pre-negotiate the pricing for both (sic) the WAN connections, the VM ware, the anti-virus [and other necessary software]". (413.40T) All of these steps would have been attended to during the period immediately following the payment or provision of the finance on 15 December 2015. When this evidence was given on 4 September 2018, Mr Briggs said, "the actual service is still live right now" (414.20T). Mr Briggs maintained that all of the equipment and services the subject of each of the Subscriber Agreements has been paid for by VPD and "is in place".

[29]

Mr Edwards' evidence

Mr Edwards' evidence was similar to Mr Altenburg's. Again only a very limited amount of his two affidavits filed were read by Mr Morris QC (365.48-366T). Mr Edward's first affidavit was not read at all. And only six paragraphs of the second 57 paragraphs were read (CB 398-9 [8]-[13],).
Mr Edwards denied ever suggesting that VPD was part of or associated with Fuji Xerox (Affidavit, Grant Edwards, 22 August 2018, CB 398 at [8]). He denied that he was introduced as a Fuji representative at any meeting with RMP (Affidavit, Grant Edwards, 22 August 2018, CB 398 at [10]). He denied ever promoting Fuji products or "Fuji's Cloud System" to RMP (Affidavit, Grant Edwards, 22 August 2018, CB 398 at [9]). And he denied that such products, if any, were ever promoted at the meetings (Affidavit, Grant Edwards, 22 August 2018, CB 398 at [9]-[10]). He also deposed that were it ever suggested to him that VPD was part of or associated with Fuji, he would have corrected that misapprehension (Affidavit, Grant Edwards, 22 August 2018, CB 399 at [13]).
A large portion of Mr Edwards' cross-examination by Mr Moore focused on his participation in the creation of the various Subscriber Agreements and their interaction with the Rental Payment Agreement. Given my earlier ruling preventing RMP from proceeding on the basis that the representations were misleading or deceptive by reason of the Rental Payment Agreements' omission of the LiveOffice WAN system, most of this evidence is of limited relevance. There is no doubt that the Rental Payment Agreement omitted that matter. There is equally no doubt that VPD were legally bound to, and also intent on, supplying it.
Mr Edwards was cross-examined about the 15 July Meeting. He recalled being introduced to Messrs Dimond and Henderson by Mr Altenburg (381.18T). He gave evidence that Mr Altenburg did not speak much save for introducing him briefly, and that he recalled introducing himself as being from VPD (381T). He could not recall how Mr Altenburg introduced himself (382.4-.5T). He agreed that he gave a presentation at the meeting but the detail of the presentation was not explored in any further depth (382.30-.33T).
As for the 30 September Meeting, Mr Edwards confirmed that it was the first occasion on which he met Dr Beckwith (382.9T). He gave evidence that he met Dr Beckwith subsequently to that meeting in 2016, but could not remember the exact dates (382.11-.15T). Mr Edwards' evidence was that what occurred on the 30 September Meeting was a "presentation for the doctor" (382.50T). He said that it was a conversational presentation in that he was often asked questions which he would then answer (383.1-.10T).

[30]

Expert evidence

I have already referred to some of the evidence of Mr Benson above, and I make reference to more of his evidence below. RMP also relied upon the evidence of Mr Michael Goodwin whose affidavit of 27 July 2018 was read. Mr Goodwin was also put forward as an expert in the field of information technology. He is the Managing Director of Loyal IT Solutions Pty Ltd, a provider of IT goods and services to small and medium businesses. He holds a diploma in electrical engineering and has been involved in the IT field in various capacities since 1989. He has run his own business since November 2002.
It must be said that the main thrust of Mr Goodwin's evidence related to the alternative case concerning the Rental Payment Agreement which I have ruled is not available to RMP on the pleadings. His opinion was, having studied the relevant documents to which he was referred that (Affidavit, Michael Goodwin, 27 July 2018, CB 265 at [19]): The Rental Payment Agreement however does not make any mention for provision of equipment, services or software that is in any way related to Live Office and WAN provision [as referred to elsewhere in the documentation I have seen].
In cross-examination he agreed that he had not seen VPD's scoping document (193.37T); or the Subscriber Agreements (193.41-.47T). He was asked (194.25T): Mr Morris QC: "Q. So the bottom line is that your evidence comes down to this, that you have been shown a financing document and from looking at that financing document you have expressed an opinion as to what services and equipment are covered in that financing document? Mr Goodwin: A. That's correct."
Mr Goodwin was recalled to give some evidence in relation to the SQL issue to which I will return below.

[31]

The evidence about the "emergent" SQL Licence

A case arose during the course of the hearing that the full suite of equipment, software and services, the subject of both Subscriber Agreements was inadequate to address the inefficiencies that RMP was experiencing in the operation of its existing information technology system as at the latter part of 2015 because it did not include a full SQL licence. This case was not expressly pleaded or particularised in any version of the Statement of Cross Claim; the subject of further and better particulars provided before trial; or the subject of an expression of expert opinion by either Mr Benson or Mr Goodwin in their affidavits filed and served before trial. Having said that, as I have pointed out above, in his affidavit of 18 October 2017 Mr Benson deposed that he had advised RMP at the beginning of 2016 "that a full version of SQL was needed to resolve Best Practice issues" (CB 253 at [52];). It will be recalled that Best Practice was RMP's principle professional operating system. It will also be recalled that the thrust of the opinion of each of Mr Benson and Mr Goodwin was that the equipment, software and services listed in the schedule to the Rental Payment Agreement related only to the Mitel telephony and not to the LiveOffice WAN System.

[32]

Mr Benson

During cross-examination by Mr Morris QC for RMP, Mr Benson was shown the Subscriber Agreements (CB 710 and 714; 253.1-.30T). He was asked to assume that the Subscriber Agreements "are the documents which govern the contractual relationship" between VPD and RMP (253.35T). As I have pointed out above, the thrust of his evidence was that he was unable to say one way or the other whether the matters listed in the Subscriber Agreements would have addressed the inefficiencies in RMP's IT system; whether they would have addressed the concerns and shortfalls of the IT and printing systems; or whether the technology shown in the Subscriber Agreements would be quicker and more efficient than RMP's existing systems.
He was then asked about the Best Practice management software, including whether he was aware that "the supplier of that software required a full SQL system to host that software" (255.10T). Mr Benson was unsure whether at the time of its installation the system required the full SQL licence. He said that the free version is packaged with the Best Practice software (255.44T), but he agreed that RMP's business grew to the point where the free version was not good enough and a "full SQL platform" was required (255.46-256.9T).
In re-examination, Mr Benson was asked to consider by reference to the Subscriber Agreement whether the software and services described therein would address the inefficiencies he had identified in RMP's operating systems around the time of RMP's repudiation of the contracts. He said that the full SQL licence would need to be included (264.15-.45T). An inspection of the Subscriber Agreements shows that the "full SQL licence" is not expressly referred to. However, this evidence from Mr Benson in re-examination initiated what might be referred to as a trial within a trial about the question of whether VPD were proposing to supply the full version of the SQL licence under the LiveOffice WAN Subscriber Agreement.

[33]

Mr Edwards

The topic was next visited during Mr Edward's evidence when he was asked about the scanning issues. The following exchange took place (383.35-.45T): "Q. What did they say at the September meeting about that matter? A. I can't remember specifically. Just that I do, they had issues with it, it was slow. Q. And what did you believe was the solution to that? A. There's any number of ways you could fix what they had as an issue there, as in an example, just putting an SQL licence on to the server may or may not fix the issue, it's a multi faceted issue which would need a multi faceted approach to fix it."
When asked whether VPD's offering included an SQL licence, Mr Edwards was taken to the LiveOffice Subscriber Agreement. He said that the third entry in the agreement, "LiveOffice - VPS - Executive" "includes or can include" an SQL licence (394-395T): "Q. What do you say was provided? A. That would be the Q. Or was to be provided? A. It'd be the LiveOffice VPS executive, which is a virtual private server. HIS HONOUR Q. Which one's that, can you just tell me where it A. That's the third line down, your Honour. MOORE Q. The VPS executive and the idea there was going to be one of them, is that what you're referring to? A. Yes. Q. And how do you derive from that third line that in the case of Best Practice Software, that that line is providing an SQL license? A. Because the VPS includes or can include and (sic) SQL license, but just not limited to that either. Q. You said it does include or can include? A. Mm hmm. Q. What do you say happened here, do you have any direct knowledge of what was being provided here? A. An SQL license. Q. How do you know that, from this document or do you know it independently of this document? A. From the conversations in the scoping. Q. Conversations with whom? A. Our technical staff. Q. And are you able to name any such person? A. It was three years ago. Off the top of my head, no, I can't. There was multiple people involved. Q. So your evidence is there were three technical staff persons of VPD and you don't recall their names but you have a clear recollection that one or more of them recommended the need for an SQL license, is that your evidence? A. We were supplying an SQL license as a part of this VPS."

[34]

Mr Briggs

Mr Briggs was cross-examined about whether VPD had paid for the equipment and software it was obliged to supply including "payments relating to the inventory referred to in the LiveOffice WAN provision" (415.45T). Upon receiving an answer in the affirmative, Mr Moore of counsel for RMP called "for that information" (415.48T). The matter was not produced because it was not in Court (416.5T). An argument ensued about whether it was appropriate at that stage of the trial for a call to be made for those documents when issues concerning the production of documents had been visited at the outset and apparently resolved. During this argument, Mr Moore said (417.45T): We are particularly interested to know what was acquired as part of the LiveOffice and WAN provision because it goes to the question of whether anything acquired there would resolve a potential problem being experienced by my clients at the time. The question of the production of documents was then unresolved and subject to its resolution Mr Moore indicated he had no further questions for Mr Briggs. However, he reserved his position lest there be any further questions if I granted leave for a subpoena or Notice to Produce to be issued for the production of these documents.
Allowing for the possibility that there would be no further cross-examination, I invited Mr Morris to re-examine. Mr Briggs gave the following evidence (419.25-.35T): Q. Secondly, the only other matter I wanted to touch in re‑examination, you said that pursuant to your agreement with [BHD] the system is 100% live and ready to be used? A. Correct. Q. Does that or does it not include SQL? A. Yes, it does. Q. And what version of SQL? A. The full version of SQL 2008 R2 Server Edition.

[35]

Mr Briggs recalled

The cases for the cross-defendants were closed at the conclusion of proceedings on 4 September 2018, and the matter was set down for final addresses on 22 November 2018. In the meantime I heard an application by RMP for leave to issue a further Notice to Produce requiring the production of VPD's records evidencing payments for the various components, software and any relevant services, the subject of each Subscriber Agreement. For reasons given in Canon Finance Australia Limited v Reliance Medical Practice Pty Ltd & Ors (No 5) [2018] NSWSC 1744, I limited the notice to documents "relating to the purchase, acquisition or supply of "SQL 2008 R2 Server Edition"". In response to that Notice to Produce VPD produced a bundle of documents, later tendered as Exhibit XD1 and Mr Briggs was further cross-examined in relation to them as well as in relation to a document, which I initially marked as MFI 7. After cross-examination on these matters and further legal argument, I granted leave to RMP to re-open their case to tender MFI 7 and to read [1]-[9] of a further affidavit of Dr Beckwith of 22 November 2018 explaining how he came by MFI 7: Canon Finance Australia Limited v Reliance Medical Practice Pty Ltd & Ors (No 6) [2018] NSWSC 1809.
When the hearing resumed on 7 March 2019, Mr Morris made clear that Exhibit XD1, "was in fact not a genuine document and we now accept that that's the case" (501.50-502.1T). In my view, although Mr Briggs was recalled to give further evidence on 7 March 2019, it must follow from the disavowal of reliance on Exhibit XD1 that the evidence he gave on 22 November 2018, which at best was the product of a mistaken belief on his part, is not relied upon either. That being so, it is sufficient if I summarise what happened on 22 November 2018 by reference to my earlier judgment (Canon Finance Australia Limited v Reliance Medical Practice Pty Ltd & Ors (No 6) [2018] NSWSC 1809 at [5]-[6]): Mr Briggs was called to give evidence by AVL at 2:00pm. He was cross-examined carefully on the documents that had been produced and admitted as Ex 1D1. Mr Moore then commenced to cross-examine him on a document which I marked as MFI 7, upon his undertaking to tender it. This document appears to be an invoice bearing the same identifying numbers from the wholesale supplier of the SQL software as a different invoice from the same supplier in a partially redacted form, which forms part of Ex 1D1. MFI 7 appeared to be dated April 2013 and the invoice in Ex 1D1, in December 2015. Both documents were apparently issued to the same company related to the [VPD]. Both included the supply of SQL software. All of the identifying details on each invoice, issued two and a half years apart, including their invoice number, appeared to be identical. However, the description of the goods supplied and their total value were not. Mr Briggs was unable to explain the apparent contradiction. At the end of the cross-examination, Mr Moore elicited this evidence (474.45T): "Q. I want to put to you Mr Briggs, that the true tax invoice GGQQ300887, in relation to customer reference number 800909, from Synnex Australia to Now IT Solutions is [MFI 7] … and not what is produced under the notice to produce and is … [Ex 1D1]? A. That's not correct." It was not expressly put that Ex 1D1 was fake or fabricated, but that was the implication. This was clearly understood by Mr Morris QC because he clarified the matter in re-examination (476.30T): "Q. My learned friend's final question if he didn't put it explicitly in these terms, implied that … [MFI 7] is the genuine invoice and those [that make up Ex 1D1] are fake documents intended to mislead the Court. What would you say to that suggestion? A. I would say that's totally incorrect."

[36]

Mr Briggs recalled again

Mr Briggs was recalled on 7 March 2019 and his further affidavits of 11 February 2019 and 6 March 2019 were read without objection.
I record that Exhibit 1D1 purports to show that the SQL server software installed on VPD's server on behalf of RMP had been supplied by Synnex Australia Pty Limited. Annexed to the affidavit of 11 February 2019 were a series of documents including a document entitled Reliance GP Server Build Sheet and a series of screen shots documenting the various steps in the installation of the SQL software for the benefit of RMP. The version installed is set to be Microsoft SQL Server 2014 standard, and not the 2008 version to which reference had been made in earlier evidence. The screen shots of the installation demonstrate that the SQL Server Software was installed on RMP's server at VPD's databank on 6 January 2016 at 5:27 pm.
Mr Briggs said that the Server Build Sheet and the SQL Install printout were not filed in their usual place and he did not discover them until after the hearing on 22 November 2018 (Affidavit, Luke Samuel Briggs, 11 February 2019 at [12]). He also attached an additional copy of the Project Scope Document of 30 November 2015 (CB 710-719) and, like Mr Edwards's previous evidence, identified the reference to "a Virtual Private Server" in section 2 of that document as including an SQL Licence (Affidavit, Luke Samuel Briggs, 11 February 2019 at [13]). Mr Briggs went on to proffer, "the only plausible explanation [he could] provide" as to the common features the documents in Exhibit XD1 and MFI 7 (Affidavit, Luke Samuel Briggs, 11 February 2019 at [30]). He regarded it as plausible that an authorised person within VPD generated a further purchase order by adapting a previously utilised online order form without updating the purchase order number (Affidavit, Luke Samuel Briggs, 11 February 2019 at [30]). However, he was unable to explain why the supplier, Synnex Australia, had not produced corresponding documents under subpoena which would support this explanation (Affidavit, Luke Samuel Briggs, 11 February 2019 at [31]).
In his affidavit of 6 March 2019, Mr Briggs detailed further steps he had undertaken and enquiries he had made in an attempt to verify his hypothesis that two genuine orders, 2 and a half years apart, utilising the same purchase order number were lodged with Synnex for the same software. His attempts were unsuccessful. He said that he had also read the affidavit of his colleague, Jason Michael Wade of 6 March 2019 and deposed: "I … must now concede that I was in error as to my previously genuinely held beliefs" (Affidavit, Luke Samuel Briggs, 11 February 2019 at [34]). I assume those beliefs relate to the hypothesis based upon the regeneration of the same order number in respect of different orders.

[37]

Mr Wade

Mr Wade's affidavit of 6 March 2019 was read without objection. He is a director of VPD and also of Now IT Solutions Pty Ltd. He is the CEO of both entities. His office is located at a different site from Mr Briggs's office.
After Synnex Australia failed to produce counterparts to Exhibit 1D1 on 4 March 2019, Mr Wade carried out his own searches. He said that Mr Briggs does not have access to the Microsoft Volume Licencing Service Centre portal for Now IT (Affidavit, Jason Michael Wade, 6 March 2019 at [4]). He exhibited a screenshot relating to an SQL licence. He also annexed a purchase order requesting two licences at $4,238.07 each. He also annexed a printout of an email of 5 May 2016 confirming permission to access the Microsoft Volume Licencing Service Centre, an invoice of 4 May 2016 and a bank statement showing payment, I infer for various matters, to Ingram Micro on 14 June 2016. Mr Wade set out a screenshot from Now IT's internal accounts showing that part of the funds transferred to Ingram Micro included payment for the invoice of 4 May 2016 (Affidavit, 6 March 2019 at [11]).
Mr Wade said that Now IT's arrangement with Microsoft, "means that users do not need to be individually licenced" (Affidavit, Jason Michael Wade, 6 March 2019 at [8]). He confirmed that there is a trial or evaluation period of 180 days after installation (Affidavit, Jason Michael Wade, 6 March 2019 at [8]). Mr Wade expressed his confidence that the SQL licence relates to RMP because that "was the only entitlement for a single SQL order" (Affidavit, Jason Michael Wade, 6 March 2019 at [17]), I infer at that time.
In oral evidence in chief, by leave (551.40T), Mr Wade explained that in regard to the SQL licence: Microsoft have a minimum order quantity of 4 cores, which is the or the core count for the [central processing unit, the processor of the server]. So to order 4 cores, they come in licence packs of 2. So we need to order 2 of those licences … it's not a matter of [the second licence being] utilised or not utilised or installed, it's just those - they're applied to - that instant that's operating for that customer. So, that covers the use of that for that customer. So, you don't have, you don't order the 2 and only use one. It's a minimum order quantity of 2 and I believe in this case a 4 - core processor was used. So, the coverage would have been wholly for that customer. (551.50-552.15T).

[38]

Mr Tonna

To my mind the most significant evidence led on behalf of VPD during this trial within a trial was that of Mr Stephen Tonna. Mr Tonna has been the Chief Technical Officer of Now IT Solutions since December 2018. Before then he was employed as its infrastructure manager between January 2016 and December 2018 and as a Senior Systems Engineer between July 2014 and December 2016. His affidavit of 11 February 2019 was read without objection.
As the Senior Systems Engineer, Mr Tonna says he was responsible, "inter alia, for the installation, implementation and administration of IT Systems to customers of Now IT, and its associated entities including VPD" (Affidavit, Stephen Tonna, 11 February 2019 at [5]). He was the person who installed the SQL Service software on the server set aside by VPD for use by RMP.
Mr Tonna annexed to his affidavit a document entitled "SQL Server 2014 Step by Step: Installation". This bundle included a series of screenshots illustrating, or recording rather, the process of actual installation carried out by him "of the SQL server software on the server set aside by VPD for use by RMP from late 2015 onwards" (Affidavit, Stephen Tonna, 11 February 2019 at [12]). He confirms that he was the technician that undertook the installation and that the work was done on 6 January 2016 (Affidavit, Stephen Tonna, 11 February 2019 at [14] and [16]).
Mr Tonna's position as Chief Technical Officer allows him access to the servers built for customers of Now IT and VPD and to the programs installed on them. He swears that the "server constructed for RMP - although never activated for use by RMP, is still able to be accessed by him" (Affidavit, Stephen Tonna, 11 February 2019 at [18]). Prior to making his affidavit he reviewed that server and confirmed that the SQL server software was installed on 6 January 2015: "ST-1", p.25.
In cross-examination Mr Tonna said he had an actual recollection of building a server and installing SQL server software for RMP. He installed the 2014 version not the 2008 version (509.35T). His recollection was informed by the review he had recently carried out (509.50-510.1T).
He said the date of installation is generated by the computer on installation (510.12T).
Initially Mr Tonna said that there was no way to backdate that date of installation, at least so far as he was aware (510.20T). He said the date and file name are "time stamped at the day when you have - at the live time" (510.45T). In later cross-examination Mr Tonna agreed that it was theoretically possible to, my expression, "wind back the clock" on the computer and produce identical screenshots to those attached to his affidavit retrospectively (511.15-.25T). Mr Tonna disagreed with the proposition that a more authoritative way of confirming the date of installation and the identity of the end user was to obtain information downloaded from the Microsoft Volume Licencing Centre (511.27T). He said that there is no record on that site on when anything was downloaded or who it was downloaded for (512.15T). Mr Tonna's evidence was that the "winding back of the clock", if it were done, would have to be done at the time of installation. It could not be done retrospectively (512.25T).

[39]

Mr Goodwin recalled

RMP recalled Michael Goodwin on this issue. Mr Goodwin's affidavit of 6 March 2019 was read without objection. The first part of his affidavit related to his experience as the director of Loyal IT Solutions Pty Ltd in ordering and purchasing software for clients from Synnex Australia Pty Ltd. Given Mr Morris' concession, it is unnecessary to cover that ground. The second part of his affidavit concerned installation of software. Mr Goodwin agrees that the screenshots attached to Mr Tonna's affidavit which he refers to as a "log file of the installation" indicates that installation occurred on 6 January 2016 (Affidavit, Michael Goodwin, 6 March 2019 at [16]). However, he said that in his experience, the date and username can be changed "when performing the installation" (Affidavit, Michael Goodwin, 6 March 2019 at [17]); what I have referred to as "winding back the clock". However, the change needs to be made prior to installing the software to achieve the result that the backdate is recorded on the installation log (Affidavit, Michael Goodwin, 6 March 2019 at [18]). He could not say whether or not Mr Tonna had done that (Affidavit, Michael Goodwin, 6 March 2019 at [18]). He said information downloaded from the Microsoft Volume Licencing Service Centre would provide a more accurate indication of the date of installation (Affidavit, Michael Goodwin, 6 March 2019 at [19]).
In supplementary evidence-in-chief, he also confirmed that he had dealt with "thousands of transactions over the last 16 years" (569.35T). In his experience it was necessary to include the end user details in the purchase order for it to be processed by Ingram Micro (569.37T). He was asked to inspect the purchase order attached to Mr Wade's affidavit and said he would have expected to see the customer's name on the form (570.49T). He was also asked to consider the screenshot from Microsoft Volume Licencing Service Centre attached to the same affidavit. Likewise he would have expected to see the customer's name (570.40-571.18T). In cross-examination, Mr Goodwin said that the clock would have to be wound back on the system "prior to the installation" (573.29T). Mr Goodwin also said, however, that he did not know how the "clock" could be "wound back" in VPD's environment (575.43T). Mr Goodwin said that he was unaware of the arrangements between VPD or Now IT and Microsoft or other suppliers (576.35T).

[40]

The ACL

Section 18(1) of the ACL is in the following terms: 18 Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
Section 2(2)(a) of the ACL provides that 'engage in conduct' is: a reference to doing or refusing to do any act, including: (i) the making of, or giving effect to a provision of, a contract or agreement; or (ii) the arriving at, or the giving effect to a provision of, an understanding; or (iii) the requiring of the giving of, or the giving of a covenant …
The definition of "involved" in s 2 of the ACL is in the following terms: "involved: a person is involved, in a contravention of a provision of this Schedule or in conduct that constitutes such a contravention, if the person: (a) has aided, abetted, counselled or procured the contravention; or (b) has induced, whether by threats or promises or otherwise, the contravention; or (c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or (d) has conspired with others to effect the contravention."
Section 236 creates the statutory cause of action for damages for contravention, inter alia, of s 18 and is expressed in the following terms (1) If: (a) a person (the claimant) suffers loss or damage because of the conduct of another person; and (b) the conduct contravened a provision of Chapter 2 or 3; the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention.
In Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594; [1990] HCA 17 at 604 speaking of the now-repealed s 52 Trade Practices Act 1974 (Cth) Mason CJ, Deane, Dawson and Gaudron JJ defined the term 'in trade and commerce' as conduct, being in the form of activities or transactions that "of their nature, bear a trading or commercial character". There is no question that the impugned transactions in the case at hand bear that character.
Conduct may be properly regarding as misleading or deceptive if it "has a tendency to lead a person into error": Campbell v Backoffıce Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 at [25] (French CJ); cited in ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54 at [49]; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191; [1982] HCA 44 at 198 (Gibbs CJ); Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177; (1982) ATPR 40-303 at 202. Conduct will be likely to mislead or deceive "if there is a real or not remote chance or possibility of it doing so": Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 87; Australian Securities and Investments Commission v Wealth & Risk Management Pty Ltd (No 2) [2018] FCA 59 at [82].

[41]

The ASIC Act

Section 12DA of the ASIC Act is expressed in the following terms: A person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive.
Section 12BAB(1) broadly defines 'financial services' as including a person who provides "financial product advice" or "deal[s] in a financial product".
Section 12GF deals with actions for damages and is expressed in the following terms: A person who suffers loss or damage by conduct of another person that contravenes a provision of Subdivision C (sections 12CA to 12CC) or Subdivision D (sections 12DA to 12DN) may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.
Section 12DA ASIC Act is in "essentially the same terms" as s 18 of the ACL: Quikfund (Australia) Pty Ltd v Airmack Consolidators Pty Ltd (2014) 222 FCR 13; [2014] FCAFC 70 at [29]; Cassidy v Saatchi & Saatchi Australia Pty Ltd (2004) 134 FCR 585; [2004] FCAFC 34 at [35] and [44]. Accordingly, the principles applicable to s 18 of the ACL are the same as those which apply to s 12DA: Cassidy v Saatchi & Saatchi Australia Pty Ltd at [44].

[42]

Finding on the SQL Issue

I find that VPD's LiveOffice WAN was always intended to include the full SQL software licence. I accept Mr Tonna's evidence that he installed the SQL software on the server dedicated to RMP's use in VPD's data centre. I found him on the whole to be a straightforward witness. Although, he accepted that it was "theoretically possible to "wind back the clock" on a computer prior to the installation of software to manipulate the recording of the date of installation, I accept his evidence that he had never done such a thing and did not do it on this occasion. I also infer from his answers in cross-examination that he was doubtful about whether, what he regarded as the necessary degree of "isolation" to change the date could be achieved in the type of set up operated by VPD and Now IT. And it is notable in this regard that Mr Goodwin could not say with certainty or even confidence that the process of backdating the record of installation that he was speaking of could be achieved in VPD's setup.
I acknowledge that in written submissions Mr Moore called Mr Tonna's reliability and frankness into question. It was submitted that he demonstrated a lack of recall for even recent events. And his initial statement that it was not possible to alter the date of installation which he later recanted showed lack of frankness. I do not accept these submissions. I am of the view that he had an actual recall of being involved in the installation of the software for RMP's LiveOffice WAN on the computer within VPD's datacentre. To my mind his initial denials about changing the date related to attempted changes after installation. He regarded it as theoretically possible to "wind back the clock" before the process of installation commenced. Again I thought his evidence was quite clear about the screen shots. The images depicted are created on the computer at the time of installation. They were printed out by him only recently for use with his affidavit. I did not understand Mr Goodwin to challenge this process.
Moreover, I accept the evidence of Mr Edwards about this issue. First his reference to an SQL licence at 383.35-.45T, when speaking in a different context demonstrates he was familiar with that software and I would infer given his intimate involvement in formulating the proposal for RMP was cognisant of the need for that software to operate with the Best Practice management software. But more importantly I accept that when asked about the SQL licence directly by reference to the LiveOffice Subscriber Agreement, Mr Edwards said quite spontaneously that the LiveOffice VPS executive includes or can include an SQL licence. I was impressed by the spontaneity and firmness of his response. He said, "We were supplying an SQL licence as part of this VPS". There was not the slightest hesitation in his responses to the questions which I have set out above.

[43]

The Fuji Xerox representation

It is difficult to know whether RMP continues to advance reliance upon a representation that VPD is a "Fuji Company" as a ground founding a claim of misleading and deceptive conduct contrary to s 18 ACL. As I point out at [88] above such a claim to some extent continues to be articulated in the Second Further Amended Statement of Cross-Claim in [14].a and [17]. On the other hand, it is notable that [14].b & c have been deleted from the Second Further Amended Statement of Cross-Claim. Those sub-paragraphs had averred that Mr Altenburg represented that the IT needs of RMP could be met by "Fuji's products and services". In the same iteration of the pleading, 18 averring that VPD was in a business relationship with Fuji Xerox Australia Pty Ltd is withdrawn; as is the corresponding averment in 19 and 20. Moreover, the written submissions of Mr Moore on behalf of RMP argue that Dr Beckwith has maintained the position that he entered into the Rental Payment Agreement and the guarantee because he believed VPD to be a "Fuji company". A belief which Mr Moore submitted "is hardly unreasonable" (written submissions at [21]).
At the same time learned counsel (both in opening the case and in final submissions) relied upon Mr Henderson's evidence set out at [13] of his affidavit sworn on 18 July 2018 about the conversation he had with Mr Altenburg at the 30 September 2015 meeting. Mr Henderson deposed that the conversation was to the effect that Mr Altenburg was at that meeting because "[Fuji] want[ed] to maintain the customer relationship in case [it] can do more business (with RMP) in the future".
RMP relies upon this evidence notwithstanding that the statement was said to have been made in the presence of, inter alia, Dr Beckwith who in oral evidence categorically denied more than once that the exchange deposed to by Mr Henderson occurred: 111.30T; 112.45T-113.25T; 116.25-.46T. And notwithstanding other concessions made by Dr Beckwith in cross-examination by Mr Fernon, Dr Beckwith maintained his position that he would not have entered into the Rental Payment Agreement had he known, inter alia, that "VPD was not Fuji Xerox" (Exhibit B at 80). I interpolate that, perhaps paradoxically, Dr Beckwith agreed that at no time had he said to Mr Henderson or Mr Dimond that he would proceed only if Fuji Xerox were providing the necessary equipment, software and services: 126.10-.30T.

[44]

Conclusions as to representations by VPD and Mr Altenburg

The core allegations are those summarised at [89] above. For convenience I will repeat them. The representations are as follows: 1. The equipment software and services to be provided by VPD would address RMP's current IT system's inefficiencies; 2. VPD's products and services would address the concerns and shortfalls of RMP's IT and printing systems; and 3. The VPD product (and by implication services) would be quicker and more efficient than the current system which relied on a physical server in the office. Although printing systems is referred to there is no evidence about any problem with RMP's "printing system". I would take this to be a reference to the scanning issue.
It's to be borne in mind that [18] of the Second Further Amended Statement of Cross-Claim avers that these representations were made by both Mr Altenburg and Mr Edwards on behalf of themselves and of VPD during the period between July 2015, presumably referring to 15 July meeting, and 25 November 2015 when the Rental Payment Agreement was signed.
I am satisfied that in substance each of the representations relied upon was made by Mr Edwards on behalf of VPD. The detailed evidence really relates to what was said at the 30 September meeting. I bear in mind that the context here is the dissatisfaction of Dr Beckwith and his management team with RMP's existing IT system in the early part of 2015. As I have recounted above at [15], Dr Beckwith instructed Mr Henderson as to the specifications the new system should comply with. Although there is some difference between Dr Beckwith and Mr Henderson on this point, as I have indicated at [16] above, on this particular topic I prefer Dr Beckwith. As I have said already, the only difference is one of emphasis and I am persuaded that Dr Beckwith was not inflexible about the attributes he would obviously prefer the new system to possess. As Mr Henderson described it, he would prefer a cloud based system, which was high speed, had fibre optic links, the ability to process large data files involving medical imaging quickly and a video conferencing facility.
Contact was made with Mr Altenburg and because Fuji Xerox could not supply what Mr Dimond was seeking, Mr Altenburg in turn contacted Mr Briggs and a meeting was organised for 19 June 2015. This meeting is outside the scope of the pleading and nothing turns on it.

[45]

Were the representations misleading or deceptive

I have accepted that Mr Edwards, on behalf of VPD made the representations alleged. The question then arises in terms of [19] of the Second Further Amended Statement of Cross-Claim whether: 1. The equipment and services to be provided by VPD would not address the inefficiencies of RMP's then current system; 2. The VPD products and services would not address RMP's concerns and shortfalls about its IT and (scanning) systems; and 3. The VPD product (and services) would not be quicker or more efficient than RMP's current system relying on a physical server in the office.
The necessary factual premise that must be established by RMP before the alleged representations are capable of being misleading or deceptive is that what VPD was offering was necessarily either inferior to RMP's existing system or was incapable of remedying RMP's IT problems. In my judgment the cross-claimants have failed to establish either alternative.
I have already summarised the evidence of Mr Benson at various places above. At [176] I have summarised the effect of his evidence relevant to this topic. For present purposes I consider it worthwhile to set that passage of evidence out in full (253.35-255.5T): "Q. … proceed on the assumption which may or may not prove to be true, that the documents I've just shown you are the documents which govern the contractual relationship between VPD on the one hand and [RMP] on the other hand. Do you understand the assumption I am asking you to make? A. Yes. Q. On that assumption, Mr Benson, would it be … accurate to say that those facilities being offered by VPD would be appropriate to address any inefficiencies in the current system enjoyed by [RMP] as at the second half of 2015? So specifically form (sic) July to November 2015? A. What inefficiency are you referring to? Q. Well that's a very good question. Were you aware of any inefficiencies? A. Yes. Q. Right, and would it have addressed the inefficiencies of which you are aware? A. I can't conclude that from this document. Q. You can't give evidence one way or the other as to whether it would or would not have done so? A. Well, no. Q. Okay. Are you aware of what are described as concerns and shortfalls of the IT and printing system operated by [RMP] during the period I've mentioned? … A. Yes. Q. Would the technologies identified in the documents I've taken you to address those concerns and shortfalls? A. I can't say yes. Q. And you can't say no? A. No. Q. Would the technologies shown in the documents to which I have drawn your attention, be quicker and more efficient than the current system enjoyed by [RMP] in the period that I have mentioned which was based on a physical server situated in the office? A. No. Q. Why would it not be quicker and more efficient? … A. Because servers are based on resources and this doesn't stipulate resources based on comparing the two together. So a hosted solution does not necessarily mean that it will be any quicker than a solution that is on site. Q. Do I interpret your answers as meaning this, that to say yes or no as to whether it would be quicker or more efficient you'd need to know the capabilities of the LiveOffice system that was being offered? A. I'd need to know all the particulars. Q. Yes, and you don't have that information? A. No. Q. So you can't either confirm or deny the proposition that it would be more efficient than the current system or quicker than the current system? A. It would be an assumption only, no."

[46]

The failure to advise averment

At [20] of the Second Further Amended Statement of Cross-Claim RMP avers that Mr Altenburg and Mr Edwards on behalf of themselves and VPD failed to advise RMP, Mr Dimond and Mr Henderson that the equipment and services to be provided would not address the inefficiencies, concerns and shortfalls in RMP's existing system and would not be quicker and more efficient than it. Given my decision in relation to [19] these averments must fail. It's not clear to me how this obligation is said to arise in the context of s 18 of the ACL absent proof that the representations I have found Mr Edwards made were known to be misleading or deceptive to each of Mr Altenburg and Mr Edwards. As I have found that they were not misleading or deceptive, or likely to mislead or deceive, the averments in [20] must be rejected for very substantially the same reasons given in relation to the averments in [19]. Clearly if the factual premise underpinning [20], ie that the performance of the equipment, software and services promised did not live up to what was represented, have not been made good that can be no occasion to advise RMP that that this was so. If it is necessary to say so, given my findings so far no question arises about the state of knowledge of Mr Altenberg and Mr Edwards.
It is also pointless to make contingent findings on this topic lest my decision on the [19] issue is incorrect. If the performance of what was to be supplied would not have matched what was represented this ground would not matter much to the outcome of the case as against VPD. Of course it may have some effect on the personal liability of Mr Altenberg and Mr Edwards but only if knowledge of the falsity or material inaccuracy of the representations were proved.

[47]

Causation

The statutory cause of action upon which RMP relies is that created by s 236 of the ACL which, as I have set out above at [222], has the effect that if a person suffers loss or damage because of the conduct of another person which contravenes, inter alia, s 18 of the ACL, the first person may recover the amount of that loss or damage by action against the second person or any other person involved in the contravention.
Like the cause of action for the tort of, say, negligence, damages is of the gist of the statutory cause of action created by s 236 ACL. And it is clearly an element of the statutory cause of action that the plaintiff prove the contravention relied upon caused the loss or damage alleged to have been suffered: ACCC v TPG Internet Pty Ltd at [39]; Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd at 241-242; Pappas v Soulac Pty Ltd (1983) 50 ALR 231 at 238; Butcher v Lachlan Elder Realty Pty Ltd at [37].
In a great number of cases relying upon a contravention of s 18 as an element of the statutory cause of action it will be necessary for the plaintiff to show he, she or it suffered loss or damage by relying on the defendant's conduct said to constitute the breach of s 18: ACCC v TPG Internet Pty Ltd at [39]; Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd at 241-242; Pappas v Soulac Pty Ltd at 238; Butcher v Lachlan Elder Realty Pty Ltd at [37]. That is to say, very frequently reliance will be a factor which governs questions of causation. Frequently, as here, the plaintiff's case may consist of entering into what is said to be an unfavourable contract in reliance upon an inaccurate or false representation which constitutes the asserted contravention of s 18.
Travel Compensation Fund v Tambree (2005) 224 CLR 627; [2005] HCA 69 involved a claim for loss suffered by misleading or deceptive conduct under s 42 Fair Trading Act 1987 (NSW). The statutory cause of action created by s 68 of the State Act is to the same legal effect as s 326 of the ACL. Gleeson CJ pointed out that question of causation "commonly involve normative considerations" (at [28]). His Honour also said: In the context of considering an issue of causation under the [ACL], the statutory purpose is the primary source of the relevant legal norms. His Honour stressed that the normative considerations that have a role to play in judgments to be made about causation do not "invite judges to engage in value judgments at large" (at [29]). His Honour said: The relevant norms must be derived from legal principle. In this case, the primary task of the Court is to apply the legislative norms to be found in the [ACL] …

[48]

The question of loss

VPD, Mr Altenburg and Mr Edwards also argue that RMP has failed to prove any loss or damage caused by the alleged contravention of s 18 of the ACL. In particular, it is argued the entry into the settlement with Canon "does not constitute proof of loss or damage caused by the alleged contravention" (Mr Fernon's written submissions [41]; Mr Morris' written submissions [57]).
I accept that in at least most cases the compensatory principle relevant to the measure of a plaintiff's loss is the "tort principle" which has "the object of placing the plaintiff in the position in which he would have been had the tort not been committed (similar to Reliance loss)": Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1; [1986] HCA 3 at 12 and 14.
The argument mounted on behalf of RMP is that by reason of the representations made by Mr Edwards, they were induced to enter into the Rental Payment Agreement and as a result of entering into that transaction RMP is worse off by the full amount it had to pay to settle Canon's claim against it. RMP says this is the amount of the prejudice or disadvantage it has suffered in consequence of altering its position under the inducement of the representations in contravention of s 18 of the ACL made by VPD, Mr Altenburg and Mr Edwards. Effectively RMP is seeking to be indemnified for the amount of its liability to Canon.
I am not satisfied that this is the amount of its loss. It is clear that before the first presentation by Mr Briggs in June 2015, RMP was dissatisfied with its IT and scanning services and was seriously looking for an upgrade. I accept it was also disenchanted with CCTS as an IT provider. If one assumes contravention of s 18 for present purposes, had that contravention not occurred it is likely that RMP would have selected one of the other options available to it from another supplier providing similar equipment, software and services at a similar price. At the time the decision was made there was no contemplation of either accepting CCTS's 24 July 2015 quotation or continuing with CCTS and the existing system. The probabilities are that it still would have required a commercial loan to finance the acquisition of those IT goods and services.
Its position would have in the end been much the same given that those managing RMP, including Dr Beckwith, were then taking an optimistic view of its ongoing profitability and were unaware of the cash flow issues which caused the change of heart in January 2016 after the change in middle management at RMP

[49]

The claim against BHD

I confess to having difficulty understanding the case presented against BHD by RMP. The gravamen of the allegations against BHD are as I have summarised at [96] to [98] above. The representations said to contravene s 12DA(1) ASIC Act are those averred at paragraph [30] of the Second Further Amended Statement of Cross Claim and set out at [97] above. For convenience I will repeat them: 1. BHD was the financial arm of VPD; and 2. VPD by itself, its servants and agents "was entitled to speak, act and conduct itself on behalf of BHD with prospective lessees" (my emphasis). No claim of misleading or deceptive conduct involving representations separate from or independent of VPD, Mr Altenberg or Mr Edwards was articulated against BHD. However, Ms Chan expressed her understanding of RMP's claim as a case that BHD "was knowingly concerned" in the misleading or deceptive conduct of VPD. And that may be so, although it's not expressly averred that BHD is "a person involved" in contraventions of the ACL by VPD. I am more inclined to think that RMP's case as pleaded is more consistent with an assertion of vicarious liability on the basis of agency of the type discussed in Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41; [1931] HCA 53. If this is correct, then the claim must fail for the reasons already given rejecting the cases against the other cross-defendants. For there is no liability, or wrongful conduct, of others to be attributed to BHD.
I am prepared to proceed on the basis that RMP is alleging that BHD induced it to enter into the Rental Payment Agreement by "authorising" VPD to make the representations complained of in [18] of the Second Further Amended Statement of Cross-Claim. I accept that even the language of authority falls well short of Ms Chan's phrase "knowingly concerned" drawn from the definition of "involved" in s 2 of the ACL. I accept also the force of Ms Chan's argument that there is simply no evidence that anyone on behalf of BHD had any awareness of anything that was said by Mr Edwards on behalf of VPD, or Mr Altenburg for that matter, when he was pitching VPD's solution to RMP. Nor is there even any evidence that BHD authorised VPD or Mr Edwards to speak "on its behalf".
I also interpolate that if there was a representation that BHD was a financial arm of VPD, as its put in of the Second Further Amended Statement of Cross-Claim, it hardly matters. VPD and BHD had entered into the Business Terms Agreement on 11 November 2015, prior to Dr Beckwith signing the Rental Payment Agreement. To that extent there was some "connection", my word, between them. In any event Ms Chan relies upon the evidence of Dr Beckwith that he did not have anything to do with BHD or Canon (48.32-.33T). She submits that there is no suggestion that BHD ever represented to RMP that BHD was the financial arm of VPD.

[50]

The accessorial liability of Mr Edwards

There is no need to expound on this topic. As I am not satisfied that any contravention of s 18 of the ACL, or for that matter s 12DA ASIC Act on the part of BHD, has been established no question arises about whether Mr Edwards is a "person involved". There is certainly no evidence that at any time he intended to mislead or deceive RMP by any of his conduct relating to the supply of VPD to RMP of the IT equipment, software or services the subject of the Subscriber Agreements which supply was intended to be financed pursuant to the Rental Payment Agreement.

[51]

Conclusions

The cross-claim must be dismissed. Had the claims been made good, no question could arise about avoiding the Rental Payment Agreement or the Subscriber Agreements. As to the former, the settlement with Canon would preclude that. As to the latter, the term of them has now expired. The only remedy available in my judgment would have been damages, but as I have said RMP has not proved any loss.

[52]

Orders

My orders are: 1. The first cross-claim is dismissed; 2. Judgment in favour of each of the first, second, third and sixth cross-defendants as against the cross-claimants; 3. The cross-claimants are to pay the costs of each of the first, second, third and sixth cross-defendants; 4. Any party wishing to apply for a special order for costs is to do so by Notice of Motion supported by affidavit and written submissions not exceeding 3 pages in length filed in the Registry within 14 days; 5. Any opposing party is to file any affidavit and written submissions not exceeding 3 pages upon which he, or it wishes to rely within a further period of 14 days; 6. The question of whether a special costs order should be made is to be determined on the papers in chambers without the need for the appearance of any party.

[53]

Endnote

The ambit of the claim was originally much wider. However, over the course of the hearing, Mr Moore confined the scope of the cross-claimants' claim to only these grounds (7.43-.50T, 18.17-.22T). DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 May 2020

Dr Beckwith then deposed to the following exchange of words during the meeting between himself and Messrs Altenburg and Edwards. Given the paucity of direct evidence as to what was said during this meeting from other witnesses, I will set the exchange out in full (Exhibit C; Affidavit, Dr Rodney John Beckwith, 6 May 2018, CB 206-207): "[Dr Beckwith]: Does this mean that all the information on the servers would be live to all our sites? Mr Edwards: Absolutely, and because you will not be required to maintain physical servers on site. The cloud system will be more efficient and quicker in linking up all the medical practices as the information will is [sic] stored in the cloud and will be accessible from anywhere with an internet connection. You are not restricted by your server limits. We are offering you a one stop solution that will not only address the scanning issues [RMP] is experiencing but will resolve all the problems and issues you have been encountering with using a physical server on site. Mr Dimond: What happens if the business grows and we establish more sites? Mr Edwards: The cloud system will not rely on a physical server which means that you will be able to scale or wind back the number of users in real time based on the demands and needs of your business, this system is designed to respond to immediate demands without the need to invest in hardware infrastructure. [Dr Beckwith]: [H]ow does the cloud operate? Mr Edwards: [W]e employ 3 different server locations to which you connect through the cloud which means that if one ever goes down, the other two will continue to run and you will never experience any downtime. Additionally, we will handle all your IT needs and will provide you with live support should any issues arise. So instead of you having to deal with 3 different providers for support, you will only need to deal with us for all matters relating to your IT system moving forward, your internet, phones and data will all be managed by us so there's only 1 person to call if you have any issues with anything. Mr Edwards: What we are offering is a complete IT cloud solution system that will be installed and maintained on Fuji on its servers. This means that the system will be entirely redundant thereby you will never have any downtime as the servers would automatically switch over in the event that one server goes offline for whatever reason. Mr Altenburg: [T]his system will be a platform for various other features that [you] would want in your business. Mr Edwards: [Y]es, for instance we can integrate into the IT system an interactive video platform that you will be able to stream to different practices and use as an educational platform for your patients. There's endless possibilities with the cloud system." (My emphasis.)

I have referred above to the evidence Dr Beckwith gave that he regarded the Rental Payment Agreement as a "supply agreement". In further cross-examination about the Rental Payment Agreement he gave the following evidence (79.8-80.15T): MORRIS "Q. Like any businessman, and I don't mean to insult you by describing you as a businessman but as well as a member of a very honourable profession you also run a business, as any businessman knows if you agree to pay $24,000 a month or any other significant sum of money and it turns out you can't pay it, you are going to be in financial trouble. A. I understood that. Q. You understood that. A. Yes Q. No doubt you would primarily blame Mr Henderson and Mr Diamond for not alerting you to your company's financial position before Ms Lord brought it to your attention in early January. A. That's a good point. Q. No doubt if you had been informed of your company's financial position you wouldn't have agreed to upgrade your information technology and data retrieval system at a cost of $24,000 a month for 36 months? A. True. Q. But you did agree to that and that was your own decision. A. Yes. Q. It wasn't influenced by anything that my client or any of the other cross‑respondents encouraged you to think this would be a good idea even if you couldn't afford it? A. I am not sure what you are saying now. Q. You made, as a businessman, the commercial decision to take on this commitment? A. True. Q. Neither my clients or any of the other cross‑respondents said anything to help you arrive at that commercial judgment? A. No, they didn't. Q. It is that commercial judgment which you would agree cost you a large amount of money. A. It was my decision to terminate the contract, yes. Q. It was that decision which created your liability to Canon? A. Unbeknown to me. Q. Which has now been agreed at $1.4 million odd? A. 1.1, still a lot of money. Q. Still a lot of money. Because, and solely because, you entered into a rental agreement for equipment that you couldn't afford? A. The nature of the agreement was not clear to me. Q. Whether it was clear to you or not, you knew the extent of your obligations? A. As $24,000 a month, yes. Q. You couldn't afford them? A. No. Q. It was signing up to that when you couldn't afford it that has put you in your present financial position. A. That is a ‑ that's part of it." And at 87.20-.40T: "Q. Were you of the understanding that having signed up to a contract, you could unilaterally decide to terminate the contract? Was that your state of mind? A. I had some thoughts about it, so as far as I was concerned there would be costs of breaking the contract. Q. Moving on, if you go to page 783, you will see a document described as "Terms and Conditions General," in respect of the rental payment agreement? Have you found that? A. Yes. Q. Did you see that document at the time that you signed the rental payment agreement? A. I did. Q. I assume that you didn't read every word of it? A. You assume correctly. Q. You knew that there were written terms and conditions that you were signing up to? A. Yes."

In his affidavit of 19 October 2017 Dr Beckwith had explained his decision to enter into the Rental Payment Agreement in the following terms (Exhibit B at [80]): By the end of October 2015, following my discussions with Mr Henderson and Mr Dimond, a decision had been made to proceed with the Fuji IT Cloud System that was offered by Mr Altenburg and Mr Edwards. In coming to the decision, however, I was not aware of certain facts that had I known at the time, I would not have proceeded in signing the rental agreement in November. These included: (a) VPD was not Fuji Xerox and had no relationship to Fuji Xerox; (b) The Fuji IT Cloud System was being financed by a completely separate entity; (c) CCTS could and was capable of supporting and servicing Reliance's IT system at approximately a third of the cost of the proposed Fuji Cloud System; (d) That if there was future growth for Reliance and establishing additional medical practices, CCTS could provide for that; (e) Mr Henderson told me that he had checked and reviewed the proposal and that Reliance could not do better or obtain IT services from anyone else; (f) It was a necessity of Reliance to require Fuji Xerox IT system. Dr Beckwith was cross-examined about this matter by Mr Fernon when the following evidence emerged (141.33-142.16T): "Q. Well, sir, you've made the statement that you would not have entered into this agreement had you known that BHD or Canon was not associated with Fuji. I'm assuming it must follow, therefore, that you would have done the deal if it was in fact related to Fuji? A. That would have been one of the criteria. Q. And notwithstanding the fact that BHD, as an independent company, or a company associated with Canon, was offering you exactly the same finance deal that a Fuji related company would be offering you? A. I never understood that it was finance. Q. So, really, in paragraph 80(b) of your affidavit, sir, is an irrelevancy, isn't it, because if you didn't understand it was a finance company, paragraph 80(b) has no role to play in your case at all then, does it? A. I think that 80(b) could be better said as ending at the word "financed." Q. Right, okay. So that's another change to your affidavit, is it, that we should record? Should we delete the words in paragraph 80(b), "by a completely separate entity"; is that what we should do? A. I'm just trying to explain myself to you. Q. Well, I'm asking you, is that correct, should we delete from paragraph 80(b) the words, "by a completely separate entity"? A. I would agree with that. Q. All right. I'll strike through those lines on MFI 1. Now, the other matters that you raise in paragraphs 80(c) to 80(f), you agree, have nothing at all to do with either VPD or Mr Altenburg or BHD? A. That seems correct. Q. So the only matters that you say you rely upon in relation to entering into the rental agreement, insofar as it relates to the cross‑respondents, are that in paragraph 80(a) and 80(b) as you've just amended; is that right? A. I think I agree." (My emphasis.)

He then gave the following evidence about what he said at the meeting in relation to the scanning problems and VPD's solution (383-384T): "Q. And what did you understand on that day, 30 September, to be the matters that [RMP] was hoping could be addressed by Voice Print Data? A. I mean there's a long list but they wanted scalability, they wanted… Q. No, just pause, we'll take it one at a time? A. Yes. Q. So scalability, who said they wanted scalability, do you recall? A. Phil Dimond, from memory I think they basically was all the discussion was around the scalability of the practice itself and creating more and more sites between all parties. Q. And so scalability was one matter, were there any others? A. Their current phone system provider, I mean, recently just before that meeting they had lost the phones for two or three days, which affected their practice as well, they had issues with getting responsive support from their current provider, which they wanted to address, I mean they wanted to be able to make sure they had a flexible and scalable solution to be able to sort of work in hand with their business objectives which was growth and yeah, growth. Q. At the September meeting, did they say anything about problems with scanning? A. Yes. Q. What did they say at the September meeting about that matter? A. I can't remember specifically. Just that I do, they had issues with it, it was slow. Q. And what did you believe was the solution to that? A. There's any number of ways you could fix what they had as an issue there, as in an example, just putting an SQL licence on to the server may or may not fix the issue, it's a multi-faceted issue which would need a multi-faceted approach to fix it. Q. Was…do you specifically recall that being discussed at the 30 September meeting during that one hour where you were doing a lot of presenting, but, a certain amount of answering questions as well? A. It fell as part of the conversation yes. Q. What's your best recollection of who said what on that specific point? A. Specifically, I would have spoken about the wider area network being able to assist with the scanning issues, the local area network with the switches which is forming a part of the Mitel telephony scope, would have fixed and rectified a lot of their local scanning issues as well. Yeah. Q. What did you have to say if anything about the greater speed available if your IT is in the cloud versus the server on site? A. I can't recall. Q. Did you say anything? A. What was the question again sorry? Q. Did you say anything about the merits of having an IT cloud solution versus having servers on site in Gosford as it related to speed? A. Yes. Q. What did you say? A. The same thing I did to most customers in their position that being able to put their applications onto Enterprise grade gear, which is what we had in our data centres versus their small business service that they had on site, the wider area network being able to dovetail into that, in essence basically running a blue cable from their site back to the data centre and then throw over the top of that the support all from VPD, meaning speed [and] efficiency and support calls, so if anything did go wrong, which in IT things can, having a responsive support structure where there's no blame game." (My emphasis.)

Canon Finance Australia Limited v Reliance Medical Practice Pty Ltd & Ors

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