Leximed Pty Ltd v Morgan

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SUPREME COURT OF QUEENSLAND

CITATION:

Leximed Pty Ltd v Morgan [2015] QSC 318

PARTIES:

LEXIMED PTY LTD
ACN 128 557 200

(applicant)

v
DAVID ALLAN FREDERICK MORGAN

(respondent)

FILE NO/S:

SC No 1507 of 2015

DIVISION:

Trial Division

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

12 November 2015

DELIVERED AT:

Brisbane

HEARING DATE:

10 August 2015; 11 August 2015; 13 August 2015

JUDGE:

Philip McMurdo J

ORDER:

1.    Pursuant to Uniform Civil Procedure Rules 1999, r 505(1)(a), the court accepts the answers of the special referee, appointed by order of the court on 23 April 2015, in his report dated 25 May 2015, to the questions defined by that order save for his answer to the question for the calendar year 2014.

2.    The application for the special referee to provide a further report or an explanation or for the question originally referred to him to be remitted for further consideration, is refused.

3.    The Originating Application is dismissed.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – PARTIES – GENERAL PRINCIPLES – – dispute between the owners of the applicant company which was in the business of providing medico-legal opinions, conducted as a trustee of two trusts, each controlled by one owner of the applicant company – where the relevant written agreement for the conduct of the applicant business was in the form of a partnership agreement between the two trusts – whether the respondent was a party to the partnership agreement – whether the respondent was under an obligation to provide information and documentation regarding the number of medico-legal appointments in relevant periods where the partnership agreement did not impose any contractual obligation upon the respondent

CORPORATIONS – MANAGEMENT AND ADMINISTRATION – DUTIES AND LIABILITIES OF OFFICERS OF A CORPORATION – whether the respondent was obliged to provide information and documentation by reason of his duties as a director of the applicant company – whether the respondent breached his duties as a director by causing the applicant company to enter the partnership agreement – where the information sought be the applicant had already been provided in the form of a special referee’s report - where no breach of duties was established

EQUITY – TRUSTS AND TRUSTEES – POWERS, DUTIES, RIGHTS AND LIABILITIES OF TRUSTEES – MISCELLANEOUS OTHER POWERS, DUTIES AND LIABILITIES – OTHER PARTICULAR CASES – dispute between the owners of the applicant company which was in the business of providing medico-legal opinions, conducted as a trustee of two trusts, each controlled by one owner of the applicant company – where the applicant company contracted the respondent to provide medico-legal opinions and the respondent was permitted to provide medico-legal services outside the business, subject to a qualification that the number of appointments for medico-legal opinions should not rise by more than 10 per cent per year – whether the respondent was under an obligation to provide information and documentation regarding the number of medico-legal appointments in relevant periods – where the relevant written agreement for the conduct…

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Details
Case
[2015] QSC 318
Decision Date

CaseChat Overview and Summary

Leximed Pty Ltd v Morgan concerned a dispute between the owners of Leximed, a company involved in providing medico-legal opinions, which was conducted as a trustee of two trusts controlled by the company’s owners. The dispute centred on the obligations of the respondent, Dr. Morgan, who was contracted to provide medico-legal opinions. The key issues were whether Dr. Morgan was a party to the partnership agreement governing Leximed's operations and whether he was obligated to provide information and documentation regarding the number of medico-legal appointments during certain periods. Additionally, the case examined whether Dr. Morgan’s duties as a director imposed any obligation on him to provide the requested information.

The court found that Dr. Morgan was not a party to the partnership agreement and, therefore, was not contractually bound by its terms, including the requirement to provide specific information about medico-legal appointments. The court also concluded that there was no basis to imply a term that would require Dr. Morgan to provide such information regardless of whether the 10% limit on medico-legal appointments had been exceeded. The court further held that Dr. Morgan did not breach his duties as a director by causing Leximed to enter the partnership agreement, and there was no evidence to support that he had done so. The information sought by Leximed had already been provided in a special referee's report, though the report had a minor error regarding the number of appointments for 2014.

The court accepted the special referee’s findings except for the number of medico-legal patient appointments for the calendar year 2014. The application for the special referee to provide a further report or explanation was refused, and the originating application was dismissed.

Orders

Orders of the court

1. Pursuant to Uniform Civil Procedure Rules 1999, r 505(1)(a), the court accepts the answers of the special referee, appointed by order of the court on 23 April 2015, in his report dated 25 May 2015, to the questions defined by that order save for his answer to the question for the calendar year 2014.

2. The application for the special referee to provide a further report or an explanation or for the question originally referred to him to be remitted for further consideration, is refused.

3. The Originating Application is dismissed.

Background

Background to the litigation

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Evidence

Evidence Before The Court

To discuss that second reason, it is necessary to detail the events by which information as to Dr Morgan’s practice, most relevantly the number of his medico-legal appointments over the relevant years, has now been provided. That information has been provided by the evidence, both in affidavit and oral form, of Ms Bowker, an employee in Dr Morgan’s practice, and by a special referee appointed by the court to assess the number of appointments, year by year, over the subject period. As I will discuss, the evidence of Ms Bowker substantially corresponds with the report of the referee. Ms Bowker’s evidence Ms Bowker has been Dr Morgan’s private secretary over several periods: from 1988 to 1992, from 1995 to 2011 and from October 2012 to the present. She is responsible for making appointments, including medico-legal appointments, booking surgical procedures to be undertaken by Dr Morgan, typing his medico-legal reports, invoicing patients and medico-legal clients and generally managing his practice. In her affidavit dated 6 March 2015, she describes the task which she undertook, at the request of Dr Morgan, of calculating the number of medico-legal patient appointments in his practice between 2007 and 2014. By such an appointment, she means a “consultation by a person with Dr Morgan, meaning that an appointment to see Dr Morgan is made for the person and then the person sees him for a medical consultation”. No issue was taken as to this being an accurate understanding of what constitute “patient appointments” within cl 19.2(b). According to her affidavit, she calculated the following numbers of patient appointments which she said were correct:2007 - 4322008 - 4532009 - 4202010 - 4412011 - 4532012 - 4692013 - 4802014 - 487 The process by which she made these calculations was explained in her first affidavit and in her oral evidence as follows. This was not simply a matter of going to appointment diaries and counting the number of scheduled appointments. What had to be identified were the appointments for which the person to be assessed did attend for the assessment, the purpose of which was for Dr Morgan’s medico-legal work, as distinct from treating a patient. Instead, Ms Bowker had to start with the invoices for medico-legal work performed by Dr Morgan, followed by the identification of those for which there had been an appointment, as distinct from, for example, some “follow up” or supplementary reports for which it had not been necessary for Dr Morgan to again examine the subject of the report. Until 2010, scheduled appointments were recorded in a hard copy diary. But as she explained, simply totalling the appointments from that diary would not have yielded the total number of relevant appointments for each year. In the hard copy diaries, there was a notation indicating whether the appointment was for a medico-legal purpose. If an appointment was cancelled ahead of the scheduled day, the cancellation would be marked in the diary. However, if the appointment was cancelled on the day, or the subject of the appointment simply failed to attend, that would not be revealed by the appointments diary. Therefore, Ms Bowker had to go to other records.

Decision

Reasons for decision

The other suggested omission is in respect of “consultations associated with a report”. But the billing for the report itself would be made under another item code such as 100150, 100211 or 100802. Therefore, by counting that report as representing a patient appointment there would be included any appointment which was the subject of item codes 100279 or 100293. Therefore, the absence of a reference to these item codes in the referee’s report could not be consequential. Conclusion on the referee’s report The methodology of the special referee was logical and sound. (Mr Vile said that a like process followed by Ms Bowker appeared to be “prudent”.) Moreover, the referee had regard to the GST records of the practice to confirm that he had begun his work with a consideration of every potentially relevant billing. The various steps which the referee then took in order to exclude irrelevant billings are well explained and have no apparent flaw. I must infer that there was an omission by the referee to consider the small number of billings, all within the 2014 year, under the item code 100802. But the number of appointments which might have been overlooked in that respect could not be consequential and could not justify a direction from the court that the referee consider them. Under r 505(1)(a), I accept the special referee’s findings in answer to the question for his determination, save for his finding as to the number of medico-legal patient appointments for the calendar year 2014. It follows that the application for orders which would require further some consideration of the question by the referee should be refused. Disposition of the proceeding The relief sought by the Originating Application was said to be available upon many legal bases. The first was that upon the proper construction of the Partnership Agreement, both Ms McCosker and Dr Morgan are parties to it so that he is bound by cl 18.1(b) of the agreement to provide the information and produce the documents which are sought by the Originating Application. As I have held, they are not parties to the Partnership Agreement and Dr Morgan is not contractually bound by cl 18.1(b). Further, the obligation within cl 18.1(b)(i) is to provide full information and truthful explanations of all matters relating to the affairs of the Partnership. If, in fact, the 10 per cent limit was not exceeded in any year, the information as to Dr Morgan’s own practice could not be relevant in the conduct of the affairs of the Partnership. Such information could only be relevant if, because the 10 per cent limit was exceeded, cl 19.3(b) were engaged. And there is no basis for the implication of a term by which Dr Morgan would have to provide such information regardless of whether the 10 per cent limit had been exceeded. This would not be necessary to give the agreement business efficacy. And in this contract, the implication would be excluded by the fact, which is established by Dr Morgan’s third affidavit, that in the negotiations of the Partnership Agreement the parties agreed not to include a draft term in the form of this sentence at the end of cl 19.2(b): [58]“For the purposes of this clause 19.2(b), Medicolegal will procure the Consultant to disclose to the Partners the number of patient appointments in the previous year at a partners meeting and annually thereafter.” [58] Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, 352- 353; Retirement Services Australia (RSA) Pty Ltd v 3143 Victoria Street Doncaster Pty Ltd (2012) 37 VR 486, 502.

Ratio Decidendi

Legal Principle Established

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