Medici Clinics (Australia) Pty Ltd and Medici Clinics Pty Ltd v Patel [2014] ACTSC 29

1. Before me today are two applications, one is an application which seeks, amongst other things, an order that a separate question be ordered to be determined. That is an application brought by the defendant in the proceedings. The application also seeks orders striking out various aspects of the latest version of the Statement of Claim but that latter matter was not agitated before me today. The other matter is a request that further directions be made to, in effect, compel compliance with an order made by consent by Higgins CJ in July last year relating to the provision of particulars by the defendant.

2. Those two matters were before Murrell CJ on 3 February 2014. The matter was previously docketed to Higgins CJ. When the matter was before Murrell CJ, whilst there was some debate and questioning before her Honour as to the appropriate course to be adopted, no formal orders were made. The matter was referred to me to hear and determine the respective applications and, in particular, to decide whether or not it was appropriate to order that a separate question be determined, and, if so, to make appropriate directions for that to occur.

3. By the time the matter came back to me, having regard to what was said by her Honour in relation to the availability of hearing dates, and in the light of that her indications of the attractions of the ordering of a separate question, the plaintiff had adjusted its position so as to consent to an order directing a separate question to be determined, although, there was an issue about precisely what that separate question should be.

4. The principal affidavits before me were the affidavit of Mr Patrick of 29 January 2014 and the affidavit of Mr Moran of 12 February 2014. There was an earlier affidavit of Mr Moran which quite blatantly was in the form of written submissions.

5. The question sought to be decided by the defendant was whether:

upon the proper construction of the Sale of Business Agreement and the Service Agreement between the Defendant and [the party identified as] the CoPlaintiff, both dated 20 April 2006, and in particular clause 1.1(d)(2) (Sale of Business agreement) and the definition of "Business" in clause 1 (Service Agreement):

(i) The term "any patients... seen by the Practitioner in the public health system" has the meaning "Any patient receiving care and/or treatment from the Practitioner in respect of which the patient is eligible for a Medicare rebate to cover the whole or part of the cost for the care and/or treatment provided by the Practitioner"; or some other and, if so what meaning.

6. The formulation provided by the plaintiff at today's hearing was instead that the Court determine the proper construction of clause 1.1(d)(ii) and did not go beyond that. During the course of this morning, the position of the plaintiff changed, undoubtedly as a consequence of the approach that I was apparently taking, so as to promote, instead of the determination of a separate question, the listing of the matter for hearing.

7. I will deal with the two issues separately. First, I will deal with the question of whether or not a separate question should be directed to be determined, and then I will deal with the issue of particulars.

8. There is no doubt that in the current climate of litigation and judicial administration there is an increased emphasis on intervention and a willingness on the part of courts to take measures to shorten hearings, narrow issues and facilitate settlement. However, the measures to be taken in any particular case are matters for judgment and are very sensitive to the particular circumstances of the case. As early as 1985 in the decision of CBS Productions Pty Ltd v O'Neill (1985) 1 NSWLR 601 at 607, President Kirby said:

it is my view that the court should be facultative in the manner of separate decisions on questions arising in the course of the trial. The rules now provide for it. Where the exceptional circumstances exist that make it sensible to do so (and no reason exists to suggest the contrary) the procedure can be beneficial. It can contribute not only to the prompt disposal of crucial issues in the litigation (sometimes resulting in disposal of the whole of the action and even judgment for a party). It can also contribute to the saving of time and costs where an authoritative decision narrows the issues for trial substantially, excluding the necessity to explore factual matters which, on one determination of the preliminary question, are entirely unnecessary.

9. His Honour goes on to refer to the possibility that an authoritative determination will assist in the settlement of the remaining disputes between the parties. That was a case where both parties had agreed before the first instance judge that it was appropriate for a separate question to be determined as to the interpretation of a contract but in the Court of Appeal, there was a change in the articulation of the question.

10. However, notwithstanding that courts have recognised the benefits of such a process, they have also recognised that in many cases great care must be taken with any order for a separate determination of questions to ensure that they indeed do simplify matters, narrow disputes and do not extend the time for final determination. Particular caution must be taken in relation to the generation of an opportunity for interlocutory appeals and the possibility of evidence being given by the same witnesses and subject to crossexamination on multiple occasions.

11. The starting point for any such determination is that in the ordinary course all issues of fact and law should be determined at one time; see Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141 and 142.

12. A party seeking to depart from the ordinary procedure needs to point to some perceptible benefit to be gained from such a course: see Energy Australia v Australian Energy Ltd [2001] FCA 1049 at [5]. The relevant legal principles were summarised by Branson J in Reading Australia Pty Ltd v AMP [1999] FCA 718; (1999) 217 ALR 495 at 499:

Ultimately the issue for the court to determine when consideration is being given to the making of an order under O 29 r 2 is whether it is "just and convenient" for the order to be made.

13. It would not be appropriate to order a separate a question if it would not permit or involve a conclusive or final judicial decision that is based on concrete facts, either established or agreed, for the purposes of quelling the controversies between the parties: see Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334 at 355, 357; Reading Australia Pty Ltd at 498. In Bass Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ said at 357:

As the answers given by the Full Court and the declaration it made were not based on facts found or agreed, they were purely hypothetical. At best, the answers do no more than declare that the law dictates a particular result when certain facts in the material or pleadings are established. What those facts are is not stated nor can they be identified with any precision. They may be all or some only of the facts. What facts are determinative of the legal issue involved in the question asked is left open. Such a result cannot assist the efficient administration of justice. It does not finally resolve the disputes or quell the controversy. Nor does it constitute a step that will in the course of the proceedings necessarily dictate the result of the proceedings. Since the relevant facts are not identified and the existence of them is apparently in dispute, the answers given by the Full Court may be of no use at all to the parties and may even mislead them as to their rights. Courts have traditionally declined to state - let alone answer - preliminary questions when the answers will neither determine the rights of the parties nor necessarily lead to the final determination of their rights. The efficient administration of the business of the courts is incompatible with answering hypothetical questions which frequently require considerable time and cause considerable expense to the parties, an expense which may eventually be seen to be unnecessarily incurred.

14. The comments of the Court in Bass, while occurring in a somewhat different context to the present question, emphasise the need for the making of decisions on separate questions in the context of clearly found facts. It is clear that caution should be exercised against too ready separation of issues. In Idoport v National Australia Bank [2000] NSWSC 1215, Einstein J said at paragraph 7 that:

the separate determination of an issue will rarely be an appropriate procedure where:

(c) there is a possibility that the resolution of the separate issue will not finally determine the issue but will merely result in an appeal from that decision in relation to that separate issue, creating a multiplicity of proceedings, interruption to the court and undesirable fragmentation of the proceedings

The experience of courts suggests that the separation of proceedings often does not result in the quicker and cheaper resolution of proceedings as anticipated, but often has the reverse effect, merely causing added delay and expense to the resolution of the litigation. Thus, before an issue is to be separately determined, it must be possible to clearly see that it will facilitate the quicker and cheaper resolution of the proceedings.

16. Similar remarks were made by Kirby and Callinan JJ in Tepko v Water Board [2001] HCA 19; (2001) 206 CLR 1 at [168]:

The attractions of trials of issues rather than of cases in their totality, are often more chimerical than real. Common experience demonstrates that savings in time and expense are often illusory, particularly when the parties have, as here, had the necessity of making full preparation and the factual matters relevant to one issue are relevant to others, and they all overlap.

there is an additional potential for further appeals to which the course of the trial on separate issues may give rise. ... Single-issue trials should, in our opinion, only be embarked upon when their utility, economy, and fairness to the parties are beyond question.

18. The defendant has submitted that, in the present case, the central issue of dispute between the parties is the interpretation of the exclusions to the definition of "business" in the agreements between the parties. It is submitted that issues in relation to the scope of discovery would be substantially resolved by a separate determination of the scope of those carve out provisions. It is submitted that the evidence necessary to be given for the purposes of the separate determination would be narrow in compass and that the plaintiff had not drawn to its attention any controversial issues of fact which would mean the possibility of parties giving evidence for the purposes of the separate question would count against the discretionary decision to order one.

19. Counsel for the defendant emphasised the limited circumstances that could be relevant to the interpretation of the contract. He indicated that the evidence that would be called by the defendant was limited to tendering of some documents from government websites and legislative provisions relating to the meaning of particular terms and the reading of the affidavit of Mr Patrick, which provided some extensive, albeit hearsay, context for the making of the agreements. He submitted that the determination of the question in a manner favourable to the defendant would have the effect of avoiding the necessity at the hearing to embark on a case by case examination of the facts of each of the, approximately 200 patients whose treatment is put in issue by the plaintiff.

20. The plaintiff submitted that if a separate question was ordered, then it should cover the broader question of the meaning of the exclusion clauses generally. Mr Moran indicated that it was likely that three lay witnesses, including the director of the plaintiff and an expert witness, would be likely to give evidence for the purposes of determination of the separate question. He submitted that whatever the outcome of the separate question, other pleaded issues would remain for determination. They involve allegations of breach of the service or sale agreements alleged in paragraphs 12, 16, 17, 17(a) and 18 of the current version of the Statement of Claim. He submitted that if the separate question was determined in an amount favourable to the defendant, then a claim for misleading and deceptive conduct against the defendant would be strengthened because almost all of the business which was represented to be sold would be within the carve out provisions.

21. I interpose that this submission was inconsistent with the manner in which the misleading and deceptive claim is currently pleaded, but accept that there may be a basis for pleading a new allegation if the separate question was determined in the manner contended for by the defendant.

22. In my view, notwithstanding the fact that the interpretation of the exclusion clauses in the agreements is an important issue in the determination of the matter, the issues attaching to the determination of the separate question are such that it is safer and will, in the long run, involve better use of resources of the parties and the Court, not to determine a construction of the clause separately from the trial of the proceedings.

23. In summary, my reasons for that are as follows:

(a) While I initially contemplated that the parties might be able to agree on a set of facts which would permit the determination of the construction of the contract, having regard to the submissions that were made to me, the possibility of that occurring is remote, therefore, evidence on each side will be needed. While I accept that the scope of that evidence is limited by the decisions of the High Court in cases such as Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337 and Toll (FCGT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, there is, nevertheless, a considerable amount of evidence that will need to be considered and findings of fact made for the purposes of determining the separate question. That evidence will not be without its complexity. I think it is unlikely that the defendant would ultimately rely upon the affidavit of Mr Patrick insofar as it contains hearsay statements of the factual context for the agreement. I do not understand how that material could be admitted for the purposes of determining the separate question, given its hearsay nature, if objection, as is likely, was taken. I think that it is most likely that witnesses on both sides will need to give evidence about the circumstances surrounding the entry into the agreement insofar as they disclose matters that might be relevant context known to both sides. The likelihood is that witnesses will need to be crossexamined. I cannot confidently say at this point that that process will be limited or that it will not involve findings as to credit of witnesses, particularly Ms Tozer and, if the defendant gives evidence, the defendant.

(b) The resolution of the separate question will not resolve the proceedings in their entirety, although it might make some aspects of the proceedings easier to resolve if the separate questions were determined favourably to the defendant. On any view of it, some aspects of the plaintiff's claim will remain, and if the question is answered in a way other than the way contended for by the defendant, a fullscale trial would still need to occur. Contrary to the submissions of the defendant, I do not agree that the decision of the Court of Appeal in CBS Productions promotes the determination of a separate question in circumstances where only if it is resolved one particular way will it lead to a substantial shortening of the matter or limitation of the issues in dispute.

(c) The determination of the separate question may be subject to appeal prior to any final hearing. While it is not possible to predict the willingness of the parties to appeal from a decision of either a judge of the Court or of the master, there is a real risk of the fragmentation of the overall proceedings by reason of such an appeal. That possibility must be weighed against the capacity of the Court to hear and determine all of the matters in dispute on a final basis, which whether determined by a judge or the master, will allow a dissatisfied party to appeal directly to the Court of Appeal.

24. As a consequence, I am not satisfied that I should make any order requiring the separate determination of an issue in these proceedings.

25. In relation to particulars, the plaintiff seeks an order requiring the defendant to comply with the orders of the Court made on 11 July 2013. On 31 August 2013, the plaintiff provided particulars of paragraph 13 of its further amended Statement of Claim. In a letter dated 11 September 2013, the solicitors for the defendant argued that the particulars were inadequate and said, "Our client is simply unable to respond." No application was made to the Court in relation to the adequacy of the particulars provided by the plaintiff, nor was there any application to vary the orders made by the Court. The plaintiff submitted that the particulars provided were adequate, having regard to the limitations on access to documents of the defendant either arising from a loss of some of those records or as a result of the refusal of the defendant to provide the plaintiff with access to those records. Counsel for the defendant said that the particulars provided were ambiguous and not able to be understood having regard to the defendant's interpretation of the contract. His submissions largely mirrored the argument put in the letter dated 11 September 2013.

26. There is often a dispute between parties as to particulars. Plaintiffs are often unwilling or unable to particularise their claim to an extent that will satisfy defendants. Defendants are often in the position of gaining a forensic benefit from requiring a plaintiff to particularise narrowly, and in detail, the allegations against them. So far as the Court is concerned, the aim of the exercise and the orders that it must make are those expressed in rule 21, namely the just resolution of the real issues in civil proceedings with minimum delay and expense. Parties have a duty to assist the Court in that goal. Sometimes the forensic position taken by the parties mean that the only resolution of issues like this is by the court making prescriptive directions, which compel the parties to comply with their duties under rule 21, notwithstanding the forensic forces which pull them in the other direction. In relation to the 221 patients listed in schedule 1 to the letter of 30 August 2013, in my view, the particulars provided by the plaintiff are sufficient to enable the defendant to understand the case that is put against it and to oblige the defendant to provide particulars of its defence. The orders made by the Chief Justice by consent on 11 July 2013 were not very specific and I think that, having regard to the level of disputation between the parties, some more specific directions about particulars will need to be made.

27. As a consequence, I propose to list the matter for hearing and to make some directions both in relation to that matter and in relation to the determination of the aspect of the defendant's application which, as yet, remains undetermined, namely the strike-out application.

28. Before identifying the dates on which I will list the matter, I will go through the framework of the orders that I propose to make and hear any submissions of the parties before finalising those orders and directions.

[There was discussion with counsel and his Honour made the orders set out below].

1. The defendant's application for the determination of the separate question under rule 1521 is dismissed.
2. The applications are listed for hearing with an estimate of 10 days commencing on 4 August 2014.
3. Evidence-in-chief at the final hearing shall be by way of affidavit.
4. The defendant is to file and serve, no later than 17 March 2014 a schedule providing in relation to each of the patients identified in the plaintiff's letter dated 30 August 2013, the following particulars:
   • (a) the name of the client;
   • (b) an identification of which element of the exclusion from the definition of "business" that the defendant says is applicable; and
   • (c) identifying the factual basis for the application of that exclusion.
5. The defendant's application to strike out portions of the further amended Statement of Claim is listed for hearing on 4 April 2014 at 11 am.
6. The defendant is to file and serve an outline of submissions of not more than five pages by 20 March 2014.
7. The plaintiff is to file and serve an outline of submissions limited to not more than five pages by 31 March 2014.
8. The defendant is to file and serve any outline of submissions in reply limited to not more than three pages by 2 April 2014.
9. Each party is to file copies of no more than five authorities to which they intend to take the Court in submissions by 2 April 2014.
10. The plaintiff is to prepare a comprehensive set of directions that need to be made in relation to the preparation of the matter for hearing, including but not limited to:
    • (f) the filing and service of affidavits;
    • (g) the identification of issues that need to be determined by the Court;
    • (h) any interlocutory issues necessary for categorising the 221 particularised patients;
    • (i) the preparation of a common bundle of documents that are to be referred to in the affidavits; and
    • (j) accommodating a further mediation within the month prior to the hearing.
11. The plaintiff is to provide proposed directions to the defendant no later than 27 March.
12. The parties are to consult and attempt to agree on the directions necessary. If there is agreement, the plaintiff is to provide the proposed directions by email to my associate by 2 April 2014. If not agreed, the plaintiff and the defendant are to provide competing directions by email to my associate by 2 April 2014.
13. There is liberty to apply to have the matter relisted in the event of noncompliance with the directions by emailing my associate, who will cause the matter to be relisted at a date available to the Court and not necessarily at the convenience of the parties.
14. Costs are reserved.

I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master.

Counsel for the first and second plaintiff: P M Moran

Solicitors for the first and second plaintiff: Norton Gledhill