Butterfield Services Pty Limited v Bentley (No 2)
[2013] NSWSC 1187
•30 August 2013
Supreme Court
New South Wales
Medium Neutral Citation: Butterfield Services Pty Limited v Bentley (No 2) [2013] NSWSC 1187 Hearing dates: 26 November 2012 Decision date: 30 August 2013 Jurisdiction: Common Law Before: Adams J Decision: Each party to bear its own costs of and incidental to the notice of motion.
Catchwords: COSTS - subpoenas - where the subpoena cannot be answered in full - subpoena oppressive - categories too wide - refused - unnecessary to quash entire subpoena - both sides substantially successful - each party to bear its own costs Legislation Cited: Health Practitioner Regulation (New South Wales) Regulation 2010 Category: Interlocutory applications Parties: Butterfield Services Pty Limited (Plaintiff/ Respondent)
Jonathan Bentley (Defendant)
DH Beran Pty Limited (Applicant)Representation: Counsel:
C J M Palmer (Plaintiff/ Respondent)
A L Connolly (Defendant)
L Young (Applicant)
Solicitors:
Aubrey F. Crawley & Co (Plaintiff/ Respondent)
TressCox Lawyers (Defendant)
Avant Mutual Group Limited (Applicant)
File Number(s): 2011/26532
Judgment
Introduction
This judgment concerns a dispute about costs arising from motions to quash two subpoenas. On 26 November 2012 I dealt with the applications, in effect requiring production of part of the documents sought by the plaintiff from D H Beran Pty Limited (the applicant), refining also some of the document descriptions and quashing the subpoena issued to the defendant's insurer. As to the latter subpoena I made a contemporaneous order for costs. Further submissions were made in respect of the costs of the applicant's motion. This judgment deals with that controversy.
Background
In January 2011 Butterfield Services Pty Limited as trustee for the Bondi Health Care Centre Trust commenced proceedings against Dr Jonathan Bentley in respect of payments allegedly due under an agreement between them. This provided, in brief, for the grant to the defendant of a license to practice medicine at the plaintiff's medical centre on condition, amongst others that he would collect payments from his patients for medical services and pay to the plaintiff a license fee calculated as a percentage of the gross receipts. It was alleged that the defendant provided medical services and received payment in respect of them of which a proportion was payable to the plaintiff in accordance with the agreement but for which he did not account to the plaintiff.
As to certain payments, the defendant claimed in his defence that these were for medical services provided by him for another medical centre for which he had no obligation to account to the plaintiff. He also pleaded that, by agreement on a number of occasions, the terms of his license were varied as to the receipts for which he was required to account; other new arrangements which were relevant to the financial relations between the parties were alleged to which it is not necessary for present purposes to refer.
The plaintiff seeks to amend the Statement of Claim
The plaintiff sought to amend its statement of claim, a course to which the defendant objected. The amendments alleged sequential variation by one way or another of the terms of the license agreement, including conditions concerning the banking by the plaintiff of all moneys received by the defendant from his patients at the first instance and then deducting the license fee and other specified amounts, and an agreement that the defendant would not carry on practice within a specified distance of the Bondi Health Care Centre for two years. The proposed amendments include expanded dates of breach and loss to comprehend the period from 1 July 1995 to the present, 12 years longer than originally pleaded.
The defendant filed, for the purpose of resisting the proposed amendment, an affidavit of his solicitor which stated, amongst other things, that the defendant was not familiar with the litigation process and found the ongoing claim stressful, had spent a considerable time making enquires into relevant matters and consulting his lawyers which had taken him away from his practice and there was no insurance policy which would indemnify him in the event that he lost the case (the hardship claims).
Subpoenas are issued
The plaintiff issued two subpoenas directed to enabling it to dispute, if possible, the hardship claims and also for the purpose of the substantive claim in the proceedings as presently constituted and also documents relating to the elaborated and expanded case. These subpoenas were issued to the applicant which, under a contract with the plaintiff, provides after hours medical services, and Avant Insurance Limited. The applicant applied to set aside the subpoena addressed to it on the grounds that it is oppressive, whilst the defendant sought to set aside the subpoena issued to Avant Insurance on the basis that no legitimate forensic purpose justified the production sought.
Both applications came before me in the one hearing. I should mention that the hearing commenced with the unusual procedure of the plaintiff calling the defendant for the purpose of cross-examining him as to his involvement in litigation in order, it was claimed, to establish the existence of documents capable of being produced under the subpoena to Avant Insurance. Since Avant Insurance has not objected to production of the documents sought from it, it is difficult to see the utility of cross-examining the defendant as to this matter. Furthermore, it is evident that the purpose of the cross-examination was to traverse the matters raised in relation to the amendment application which was, of course, a distinct proceeding. The matters were, at all events, not significant in relation to the amendment application and I therefore brought the cross-examination to an end when this became clear.
The findings on oppression
It is submitted that the applicant does not have financial records dating back to 1995 and that, since adult medical records are required to be retained only for seven years pursuant to the Health Practitioner Regulation (New South Wales) Regulation 2010, it is likely that the medical records have been destroyed which otherwise would have been available to establish, at least, that the plaintiff knew that the defendant was performing services other than at the centre (for which it is said that he has failed to account) and thus that any cause of action was not fraudulently concealed. It is, apparently, proposed to be submitted on the amendment application that the difficulty with obtaining records dating back for such a period is a ground for refusal of the amendments. Of course, this application is not before me but, since the statement of claim in its first form could have made allegations or claims covering the same period without objection on the ground of prejudice, it is difficult to see how such an objection could now be taken. The reference to fraudulent concealment, I take it, is aimed at expanding the limitation period if it should become necessary to do so. So far the statement of claim in its present form is concerned, the relevant period is from 28 January 2005 (five years before the filing of the statement of claim on 27 January 2011) and 18 December 2009 - although, in terms, the claim is alleged to date from 5 February 2004.
The documents enumerated in the schedule to the subpoena directed to the applicant covered the period from 1 July 1995 to 8 November 2012. It follows from my view about the hypothetical state of the case (which might become real if leave to amend were granted) the subpoena could not, quite apart from other potential difficulties, properly require production of documents for the earlier period. I was not satisfied that there was some other legitimate forensic purpose for seeking production of the documents covering the expanded period comprehended by the amended statement of claim. It is not suggested that any of the documents have been lost or destroyed between 27 January 2011 and the present time. If the plaintiff obtained leave to amend its statement of claim this would of course change the position.
Other objections were taken to one of the identifying features of the documents sought, namely whether it "[bore] the signature of Jonathan Bentley as locum doctor", on the basis that it was not appropriate to require a third party to attempt handwriting identification. Although this might abstractly be an oppressive requirement, unless it were shown (and it was not) that the doctor's signature was difficult to decipher I would not have regarded this identification requirement as oppressive. It was also said that the applicant held something in the order of 15,000 relevant documents with less than a dozen probably meeting the description of some categories and maybe thousands falling into another category. I accept that the work of sifting through the records must be considerable but it must be borne in mind that these are business records and, in the normal course, would be kept in reasonable order. A mere generalisation of the kind relied on here is not sufficient, in my view, to establish oppression. Of course, the party issuing the subpoena must pay the costs of any examination of records for the purpose of answering the subpoena.
Accordingly, although there was not a legitimate forensic purpose for demanding all the documents sought by the subpoena, since the additional period was not presently in issue, I did not strike out the subpoena at this stage since it covered documents presently appropriate to be produced and, it might be, would cover documents appropriate to be produced if leave were granted to amend the statement of claim. Having regard to the terms of the statement of claim (there being at present no limitation defence filed) I ordered production of the specified documents in paragraph 1 of the schedule to the subpoena for the period 1 February 2004 until 31 December 2009 (rounding out the months for simplicity). I made the same order in respect of the documents specified in paragraph 2, limiting the documents there sought to hard copy and, as to data, only that in respect of which appropriate search terms were stipulated. As to the production of documents "containing the terms of any agreement" between specified parties in this respect, I required production only of those documents which specify the terms of any agreement as distinct from a mere reference to the agreement. So far as documents in electronic form were concerned, none were required to be produced until and unless search terms were specified, giving leave to apply in the event that those terms were unfair or too wide. (The requirement as to specification of the search terms applied to five categories of electronic documents.) I did not deal with two other classes of documents to which objection was taken since the defendant accepted that the applicant did not possess documents in the specified categories. Certain other adjustments were made by way of more precise description in respect of other categories of documents. Finally, a category covering "every document recording any agreement or any understanding" was amended by striking out the reference to "any understanding".
Further discussion occurred as to the appropriate costs of identification and collection of the material for production as to which I made certain interim orders, giving the parties leave to apply.
In respect of the subpoena issued to Avant Insurance seeking production of a copy of claim files in respect of policy claims made by the defendant which involved civil disciplinary or criminal proceedings, I was satisfied that there was no legitimate forensic purpose to which such production could be directed and, accordingly, struck out the subpoena, although I noted an agreement by the defendant to produce his professional indemnity policy. For reasons expressed in a ex tempore judgment given during the hearing, I ordered the costs in relation to the Avant Insurance subpoena should be borne by each side.
Costs
So far as the subpoena directed to the applicant is concerned, the result, in substance, was that I did not require production of documents covering the earlier period and, to a greater or lesser extent, qualified the general terms in which other categories were described, requiring production only of the documents fitting the refined descriptions. In this sense, the applicant succeeded on its notice of motion, being excused from production of a large number of documents. At the same time, the respondent sought (and failed) to have the entire subpoena quashed.
The subpoena was filed on 25 October 2012, returnable on 8 November 2012. On 1 November 2012 the solicitors for the applicant wrote to the plaintiff's solicitor setting out in some detail the nature of the documents held by it and the difficulties in answering the subpoena and invited the plaintiff to redefine the scope of the documents sought. Thereafter there was a brief exchange concerning the professional relationship of the applicant's solicitors with Avant Insurance and Dr Bentley which was unnecessary and simply muddied the waters. On 12 November 2012 the applicant's solicitors suggested a meeting with the respondent's solicitors to discuss the subpoena, an offer which was repeated on 14 November 2012, following receipt of the letter offering to qualify the call to which I have already referred. Particular stress is placed by Mr Palmer of counsel for the plaintiff, in connection with costs, that on 13 November 2012 his solicitors wrote to the solicitors for the applicant indicating that it would accept, for the present, a more limited call to be made on the subpoena. The proposed limitations were not, to my mind, substantial and, did not deal with the exclusions which I ultimately directed. On 21 November 2012, somewhat belatedly, the respondent's solicitors agreed to the proposed meeting and suggested that contact be made to arrange it. This offer was, in effect, refused on 23 November 2012 in a letter which sought specific proposals addressing a number of material issues. This approach was rejected by a later letter of the same day and the meeting was again proposed by the respondent's solicitors.
It is unfortunate that the solicitors found themselves unable to discuss the issues connected with subpoena although, in the result I rather think that the parties were so far apart that perhaps no useful outcome was likely.
Conclusion
In the end, I considered that each party obtained substantial success and that, accordingly, each party should bear its own costs of and incidental to the notice of motion.
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Decision last updated: 30 August 2013
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