Nguyen v Hwang

[2023] NSWSC 782

Supreme Court

New South Wales

Medium Neutral Citation:

Nguyen v Hwang [2023] NSWSC 782

Hearing dates:

7 June 2023

Date of orders:

7 July 2023

Decision date:

07 July 2023

Jurisdiction:

Common Law

Before:

Harrison AsJ

Decision:

(1) The defendants’ notice of motion filed 9 December 2022 is dismissed.

(2) The defendants’ are to pay the plaintiff’s costs.

Catchwords:

CIVIL PROCEDURE – Review of Registrar’s decision – subpoenas – to produce documents or things – application to set aside – whether subpoenas were a fishing expedition – whether subpoenas had forensic value

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW) rr 33.4 and 49.19

Cases Cited:

Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145

Groeneveld v Wollongong City Council (2009) 168 LGERA 260; [2009] NSWLEC 149

Commissioner for Railways v Small (1938) 38 SR (NSW) 564

Category:

Procedural rulings

Parties:

Vo Vien Phuong Nguyen (Plaintiff)
Chiao Ling Hwang (First Defendant).
Vaissade Pty Ltd (Second Defendant).

Representation:

Counsel:

Dr S Baronlevi (Plaintiff)
Mr D Zhao (First and Second Defendants).

Solicitors:

Kerrs law (Plaintiff)
Brightstone Legal (First and Second Defendants)

File Number(s):

2019/00392822-1

Judgment

1. This judgment concerns a review of the Registrar’s decision to set aside sixteen subpoenas to produce in accordance with r 49.19 of the Uniform Civil Procedure Rules 2005 (NSW) (‘UCPR’). On 9 December 2022, the defendants sought to replace the Registrar’s order pursuant to r 33.4 of the UCPR.

2. The plaintiff is Vo Vien Phuong Nguyen. The first defendant is Chiao Ling Hwang. The second defendant is Vaissade Pty Ltd. The second defendant owned the premises on which the pharmacy was operating. S. Baronlevi appeared for the plaintiff. S. Zhao appeared for the defendants. The parties relied upon a joint court book marked Exhibit 1 (‘Ex 1’).

Background

3. The plaintiff and the first defendant are both pharmacists. The first defendant was the previous owner of the pharmacy (‘the Pharmacy’) which operated on the premises owned by the second defendant. Before selling the Pharmacy to the plaintiff in 2015. The second defendant is subject to a lease with the plaintiff.

4. On 25 May 2015, the plaintiff and the first defendant entered a contract for the sale of business (‘the Contract’). Prior to the execution of this contract, the first defendant and/or her agents provided the plaintiff with Dispensing Activity Reports for the 2012, 2013 and 2014 financial years (‘Dispensing Activity Reports’). The Dispensing Activity Reports included the number and breakdown of prescriptions dispensed by the business for those financial years.

5. On 13 December 2019, the plaintiff commenced proceedings on based on allegations that the Dispensing Activity Report provided by the plaintiff in 2014 was untrue, without bases or reasonable bases and either recklessly fraudulent or negligently fraudulent. The first defendant denies these allegations.

6. In 2020, the plaintiff, in her amended statement of claim (‘ASC’), joined the second defendant in order to seek relief in relation to rent paid to it.

7. Paragraph [11] of the plaintiff’s ASC pleads that the Dispensing Activity Reports for the financials years of 2012, 2013 and 2014 show a total of 28, 696; 31,237; and 32,000 prescriptions dispensed respectively.

8. The Dispensing Activity Reports were generated by the first defendant using the Pharmacy's dispensing software at the time, Aquarius (‘the Old Software’).

9. In or around July 2015 and after the sale of the pharmacy, the plaintiff caused the pharmacy's dispensing software to change to Z Dispense Software (‘the New Software’).

The pleading framework

10. Per the paragraph [9] of ASC, the plaintiff pleads that prior to the execution of the contract, the first defendant made representations to the plaintiff that the number and breakdown of scripts dispensed by the business for the 2012, 2013 and 2014 financial years were as set out in the Dispensing Activity Reports (‘the Representation’). That much is common ground, however, the first defendant disputes the accuracy of the data that is now available on the basis that it is not the same as the original data produced prior to the sale of the Pharmacy. The plaintiff pleads that the Representation was: untrue; made without a reasonable basis; and made fraudulently or recklessly or alternatively negligently.

11. The second defendant does not admit the Representation in paragraph [11] as it relates to the claim made against the first defendant.

Procedural background

12. On 13 December 2019, the plaintiff commenced proceedings against the first defendant. On or around 19 June 2020, the plaintiff filed and served her first round of evidence-in-chief. On or around 17 December 2020, the plaintiff filed an amended statement of claim that joined the second defendant. On or around 4 May 2021, the plaintiff served her second round of evidence-in-chief. On 25 June 2021, the plaintiff served her third round of evidence-in-chief. On 18 March 2022, the defendants filed their evidence in response. The plaintiff is now in the midst of preparing her evidence in reply.

13. On 26 April 2021, the plaintiff issued three subpoenas to produce to Dr Dunlop, Dr Chung and Dr Babu, requesting copies of prescriptions they prescribed. The three subpoenas issued are substantially similar and the defendants did not object to the producing parties' providing copies of the prescriptions.

14. The defendants filed a notice of motion in May 2022 seeking to set aside subpoenas issued by the plaintiff to sixteen medical practitioners. Between May 2022 to November 2022, the parties were engaged in settlement discussions. The discussions were not completely unsuccessful, albeit they have not managed to resolve the matter as at the time of these submissions.

15. While there are sixteen subpoenas issued to different medical practitioners, they all seek the same type of information as the two reproduced schedules below. I have anonymised the patients’ names. They are:

“a. the subpoena issued to Dr. Krisnaphong Sae Lee, seeking production of copy of the following prescriptions:

i. 30x Crestor Tab 20mg prescribed to [AAA] on 24 April 2015;

ii. 1 x Systane Eye-Drop prescribed to [AAA] on 24 April 2015;

iii. A duplicate item of 30x Crestor Tab 20mg prescribed to [AAA] on 24 April 2015.

b. The subpoena issued to Dr. Douglas Samuel, seeking the production of copy of the following prescriptions:

i. 30x Omeprazole tablets 20mg prescribed to BBB on 20 February 2015.”

16. On 9 December 2022, the defendants’ notice of motion seeking to set aside the sixteen subpoenas was dismissed by the Registrar.

17. As to whether the schedules seek documents that are relevant to an identified issue in the proceedings, the plaintiff has made prior inquiries into some of the medical practitioners prior to issuing subpoenas to them. I have set out some examples of the inquiries that were made. The inquiries made of Dr Babu were asserted in the plaintiff’s affidavit of 1 February 2021 (‘the plaintiff’s affidavit’) at [33] to [56], which read:

“33. On or around 22 January 2019, I contacted a Doctor by the name of Dr Aravaguthur Babu ('Dr Babu') in relation to the scripts prescribed by him to the Defendant, DDD during the period 30 January 2015 to 24 June 2015. Now produced and shown to me and marked "VVPN13" is a copy of Ms Hwang's Patient History for the period 30 January 2015 to 24 June 2015 (with confidential information redacted for privacy reasons).

34. To the best of my recollection, I had the following conversation with Dr Babu:

Deponent: "Hi Dr Babu, its Vien from St Ives Pharmacy. I am going through the patient history records and wanted to confirm whether you were prescribed any scripts to a patient by the name of DDD between January 2015 and June 2015. Can you please check your records and confirm whether any scripts were prescribed by you to DDD?"

Dr Babu: "I have checked my records and confirm that I did not prescribe anything to Chiao Lin Hwang from January to June 2015."

35. On or around 11 September 2019,1 again contacted Dr Babu in relation to the scripts prescribed by him to various other patients as described in paragraphs 36 to 47 below.

36. I contacted Dr Babu in relation to scripts prescribed to a patient named NNN during the period 5 April 2011 to 2 July 2013. Now produced and shown to me and marked "VVPN14" is a copy of NNN’s Patient History for the period 5 April 2011 to 2 July 2013 (with confidential information redacted for privacy reasons).

37. To the best of my recollection, I had the following conversation with Dr Babu:

Deponent; "Hi Dr Babu, its Vien from St Ives Pharmacy. I am going through the patient history records and wanted to confirm whether you prescribed any scripts to a patient by the name of NNN between April 2011 to July 2013. Can you please check your records and confirm whether any scripts were prescribed by you to NNN?"

Dr Babu: "I have checked my records and confirm that I did not prescribe any scripts to NNN from April 2011 to July 2013. I have no records of any scripts for this patient. This patient does not exist in my records."

38. I contacted Dr Babu in relation to scripts prescribed to a patient named UUU during the period 5 November 2011 to 2 July 2013. Now produced and shown to me and marked "VVPN15" is a copy of UUU’s Patient History for the period 5 November 2011 to 2 July 2013.

39. To the best of my recollection, I had the following conversation with Dr Babu:

Deponent: "Can you please also confirm whether you prescribed any scripts to a patient by the name of UUU between November 2011 and July 2013. Can you please check your records and confirm whether any scripts were prescribed by you to UUU?"

Dr Babu: "I have checked my records and confirm that I did not prescribe any scripts to UUU from November 2011 to July 2013. I have no records of any scripts for this patient. This patient does not exist in my records."

40. I contacted Dr Babu in relation to scripts prescribed to a patient named RRR during the period 6 September 2012 to 2 July 2013.

41. To the best of my recollection, I had the following conversation with Dr Babu:

Deponent: "Can you please also confirm whether you prescribed any scripts to a patient by the name of RRR between September 2012 and July 2013. Can you please check your records and confirm whether any scripts were prescribed by you to RRR?''

Dr Babu: "I have checked my records and confirm that I did not prescribe any scripts to RRR from September 2012 to July 2013. I have no records of any scripts for this patient. This patient does not exist in my records.''

42. I contacted Dr Babu in relation to scripts prescribed to a patient named JJJ on 3 July 2013. Now produced and shown to me and marked "VVPN17" is a copy of JJJ’s Patient History for the period 3 July 2013 to 3 July 2013.

43. To the best of my recollection, I had the following conversation with Dr Babu:

Deponent: "Can you please also confirm whether you prescribed any scripts to a patient by the name of JJJ on 3 July 2013. Can you please check your records and confirm whether any scripts were prescribed by you to JJJ?''

Dr Babu: "I have checked my records and confirm that I did not prescribe any scripts to JJJ on 3 July 2013. I have no records of any scripts for this patient. This patient does not exist in my records.''

44. I contacted Dr Babu in relation to scripts prescribed to a patient named EEE during the period 3 July 2013 to 6 June 2015. Now produced and shown to me and marked "VVPN18" is a copy of EEE's Patient History for the period 3 July 2013 to 6 June 2015 (with confidential information redacted for privacy reasons).

45. To the best of my recollection, I had the following conversation with Dr Babu:

Deponent: "Can you please also confirm whether you prescribed any scripts to a patient by the name of EEE between July 2013 and June 2015. Can you please check your records and confirm whether any scripts were prescribed by you to EEE?"

Dr Babu; "I have checked my records and confirm that I did not prescribe any scripts to EEE between July 2013 and June 2015. I have no records of any scripts for this patient. This patient does not exist in my records."

46. I contacted Dr Babu in relation to scripts prescribed to a patient named JJJ during the period 29 June 2012 to 5 July 2013. Now produced and shown to me and marked "VVPN19" is a copy of JJJ’s Patient History for the period 29 June 2012 to 5 July 2013 (with confidential information redacted for privacy reasons).

47. To the best of my recollection, I had the following conversation with Dr Babu:

Deponent: "Can you please also confirm whether you prescribed any scripts to a patient by the name of QQQ between June 2012 and July 2013. Can you please check your records and confirm whether any scripts were prescribed by you to QQQ?"

Dr Babu: "I have checked my records and confirm that I did not prescribe any scripts to QQQ between June 2012 and July 2013. I have no records of any scripts for this patient. This patient does not exist in my records."

48. On or around 26 August 2019, I again contacted Dr Babu in relation to the scripts prescribed by him to various other patients as described in paragraphs 49 to 54 below.

49. I contacted Dr Babu in relation to scripts prescribed to a patient named SSS during the period 4 April 2013 to 4 June 2014. Now produced and shown to me and marked "VVPN20" is a copy of SSS’s Patient History for the period 4 April 2013 to 4 June 2014 (with confidential information redacted for privacy reasons).

50. To the best of my recollection, I had the following conversation with Dr Babu:

Deponent: "Hi Dr Babu, its Vien from St Ives Pharmacy. I am going through the patient history records and wanted to confirm whether you prescribed any scripts to a patient by the name of SSS between April 2013 to June 2014. Can you please check your records and confirm whether any scripts were prescribed by you to SSS?"

Dr Babu: "I have checked my records and confirm that I did not prescribe any scripts to SSS from April 2013 to June 2014. I have no records of any scripts for this patient. This patient does not exist in my records."

51. I contacted Dr Babu in relation to scripts prescribed to a patient named PPP on or around 23 January 2014. Now produced and shown to me and marked "VVPN21" is a copy of PPP’s Patient History for the period 23 January 2014 to 23 January 2014 (with confidential information redacted for privacy reasons).

52. To the best of my recollection, I had the following conversation with Dr Babu:

Deponent: "Hi Dr Babu, its Vien from St Ives Pharmacy. I am going through the patient history records and wanted to confirm whether you prescribed any scripts to a patient by the name of PPP in January 2014. Can you please check your records and confirm whether any scripts were prescribed by you to PPP?"

Dr Babu: "I have checked my records and confirm that I did not prescribe any scripts to PPP in January 2014. I have no records of any scripts for this patient This patient does not exist in my records."

53. I contacted Dr Babu in relation to scripts prescribed to a patient named ZZZ on or around 10 January 2014. Now produced and shown to me and marked "VVPN22" is a copy of ZZZ's Patient History for the period 10 January 2014 to 10 January 2014 (with confidential information redacted for privacy reasons).

54. To the best of my recollection, I had the following conversation with Dr Babu:

Deponent: "Hi Dr Babu, its Vien from St Ives Pharmacy. I am going through the patient history records and wanted to confirm whether you prescribed any scripts to a patient by the name of ZZZ in January 2014. Can you please check your records and confirm whether any scripts were prescribed by you to ZZZ?"

Dr Babu: "I have checked my records and confirm that I did not prescribe any scripts to ZZZ in January 2014. I have no records of any scripts for this patient. This patient does not exist in my records."

Contact with Dr Esther Kok

55. On or around 26 August 2019, I contacted a Doctor by the name of Dr Esther Kok ('Dr Kok') in relation to the scripts prescribed by her to a patient named OOO and a patient named WWW on or around 17 January 2014. Now produced and shown to me and marked "VVPN23" copy of OOO’s and WWW’s Patient History for the period 17 January 2014 to 17 January 2014 (with confidential information redacted for privacy reasons).

56. To the best of my recollection, I had the following conversation with Dr Kok;

Deponent; "Hi Dr Kok, my name is Vien and I am calling from St Ives Pharmacy. I am going through the patient history records and wanted to confirm whether you prescribed any scripts to patients by the name of OOO and WWW in or around January 2014. Can you please check your records and confirm whether any scripts were prescribed by you to OOO and WWW?"

Dr Kok; “7 have checked my records and confirm that I did not prescribe any scripts to OOO or WWW. I have no records of any scripts for these patients. These patients do not exist in my records."”

18. The plaintiff’s conversation with Dr Dunlop is set out at [76]-[77] of the plaintiff’s affidavit which read:

“76. On or around 18 June 2020, I contacted Dr Dunlop in relation to the scripts allegedly prescribed to Mr Giang.

77. To the best of my recollection, we had the following conversation:

Deponent: “Hi Dr Dunlop, my name is Vien and I am calling from St Ives Pharmacy. I am going through the patient history records and wanted to confirm whether you prescribed any scripts to a patient by the name of HHH on or around 29 April 2015, particularly whether you prescribed any Glivec Tablets. Can you please check your records and, confirm whether any scripts were prescribed by you to HHH? My records show that 90 Glivec Tablets 400mg were prescribed to HHH for $122,228.75".

Dr Dunlop: “I will check my records and get back to you with my findings. Glivec Tablets are usually prescribed as private scripts so it is highly unlikely that I prescribed that medication as I only prescribe Glivec Tablets under Medicare. Under Medicare and taking into account the discount for pensioners, Glivec Tablets cost the patient $6.10. HHH would never have paid an amount of $122,228.75 for the Glivec Tablets. However, I will double check my records and get back to you.””

19. To date, Dr Dunlop has not contacted the plaintiff.

The law

20. Rule 33.4 of the UCPR provides as follows:

33.4   Setting aside or other relief

(cf SCR Part 37, rule 4)

(1)  The court may, on the application of a party or any person having a sufficient interest, set aside a subpoena in whole or in part, or grant other relief in respect of it.

…

21. Both parties acknowledge the recent decision in Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145, where the Court of Appeal determined that in order to demonstrate a legitimate forensic purpose for the issue of a subpoena in civil proceedings, the issuing party needs to demonstrate that the subpoena will materially assist on an identified issue in the proceedings and that the issuing party is not required to show that the subpoenaed documents will materially assist their case.

22. Rule 49.19 of the UCPR provides:

49.19 Review of registrar's directions, certificates, orders, decisions and other acts

If in any proceedings a registrar gives a direction or certificate, makes an order or decision or does any other act, the court may, on application by any party, review the direction, certificate, order, decision or other act and make such order by way of confirmation, variation, discharge or otherwise, as the court thinks fit.

23. In relation to legitimate forensic purpose, both parties agreed that the principles applicable in relation to the exercise of the power of the Court to review a registrar’s decision were articulated by Preston CJ in Groeneveld v Wollongong City Council (2009) 168 LGERA 260; [2009] NSWLEC 149 at [12]-[13];

“12. What will be required to make out a case for intervention will vary depending upon the nature of the registrar’s decision under review, in particular whether it is a decision on practice and procedure or a decision which finally determines or has a decisive impact on a party’s rights. In Tomko v Palasty (No 2) at [8] and [9], Hodgson JA (with whom Ipp JA also agreed) provided guidance as to what might be required for the different types of decisions:

“[8] In the case of a decision on practice of procedure, this will normally require at least demonstration of an error of law, or a House v The King error, or a material change of circumstances, or evidence satisfying the strict requirements for fresh evidence. Even then, a court may not think that the interests of justice require intervention. This could be so, for example, if the error of law is a deficiency of reasons and the result is on its face not an unreasonable one.

[9] In the ease of a decision which finally determines a party’s rights, or which (albeit one of practice or procedure) has a decisive impact on those rights, a court may be more willing to intervene. It may permit further evidence to be led which does not satisfy the strict requirements for fresh evidence, if it is satisfied that the interest of justice require it. It may decide to substitute its own discretionary decision for that of the registrar, even though no House v The King error is shown, again if it is satisfied that the interests of justice require this. To that extent, the review may be considered a de novo hearing.

13. Basten JA also noted that policy factors justifying restraint on interference by a reviewing court may have more weight in the case of decisions on practice and procedure than those determinative of legal rights: see at [47]-[48] and [52(4)].”

The review of the Registrar’s decision

24. I have carefully read the documents that were before the Registrar. Each party relied on one further affidavit at the hearing of the review before me: the affidavit of Shuonan Zhao, solicitor for the first and second defendants dated 3 May 2023 (‘the Zhao Affidavit’). The parties consented to the fresh evidence being admitted. I have taken the evidence into account and set some of it out. Mr Zhao deposes that he issued a subpoena to Simple Retail Pty Ltd, the operator of the Aquarius dispensing software. On 6 March 2023, Mr Zhao received an email from Jerry Perkins that states:

“1. I am a registered pharmacist and contract to Simple Retail to maintain their dispensing system.

2. Simple Retail does not hold, nor has ever held, any data collected by pharmacists or any other person at the St Ives Pharmacy.

3. St Ives Pharmacy no longer uses Simple Retail software, so the Simple Retail programs are non-operational even though the data has been preserved.

4. In response to an email subpoena, I contacted St Ives Pharmacy and arranged to visit when the current owner was present, I have had no previous contact with the current owner.

5. I travelled to the pharmacy where I located the computer with Simple Retail software and copied the relevant files.

6. I converted the data to a patient de-identified version in Excel spreadsheets.

7. In accordance with good practice and Simple Retail policy, I deleted my copy of the pharmacy files.

8. I submitted the Excel files to the court in accordance with the subpoena.

9. Apart from these Excel files neither I, nor Simple Retail, have any other material, either written or as computer files that are pertinent to this matter.”

25. The plaintiff also relies upon the affidavit of Andy Nguyen, the implementation manager in the employ of Z Software Pty Ltd (provider of the New Software) dated 25 May 2023. He was given a USB flash drive containing four Microsoft Excel spreadsheets with data extracted from Z Software system. He explained in his affidavit:

“Extraction of Historic Data in Z-Software from the St Ives Pharmacy

6. On 14 March 2023, I logged into the server at the St Ives Pharmacy by accessing the SQL Server Management Studio (a programs database).

7. I then queried the database and requested for a dump of all the script data that was under the scripts table. On the scripts table, I requested an extract of the scripts, entered a date range and reordered the prescriptions with the dispensed date first.

8. The extracted data comes out in .csv form. I copied the contents of the .csv file into a Microsoft Excel Spreadsheet so that it is readable.

9. I repeated the two preceding steps for the 2012, 2013, 2014 and 2015 calendar years.

10. The Z Software system allows for prescriptions, client data and any other records entered into the system to be edited after the date in which was originally inputted, or the prescription dispensed.

11. Z Software displays these modifications, and it is noticeable to the user in the system. Depending on the alteration, the entry can appear:

a.   Italicised - an alteration to the effective dispensing date.

b.   Red - owing prescriptions.

c.   Grey - deferred prescriptions.

d.   Green - deleted and marked off the owing red prescriptions.

12. Any modifications to a prescription in the Z Software system after the date it was dispensed would also be apparent in the ‘Last Modified’ column of the Z Software spreadsheets located in AN-1. If anything was modified in any way for any prescription in the Z Dispense system, the date shown in the ‘Last Modified’ column would update from the date the script was dispensed to the date it was last modified.”

The Registrar’s decision dated 9 December 2022

26. The relevant portions of the Registrar’s decision are as follows:

“I have considered the affidavits of each party and the written submissions and was also assisted by oral submissions made at the special fixture hearing on 23 November 2022. Having done so, I am not satisfied that the subpoenas are objectionable or lacking legitimate forensic purpose. Irrespective of what software was used by the plaintiff in the preparation of the original statement of claim and the subsequent amended statement of claim, the amended statement of claim pleads the provision of dispensing activity reports for 2012, 2013 and 2014 which the plaintiff claims were over-inflated.

It is alleged that, as such, the first defendant or the broker made representations to the plaintiff which were untrue, were made without any basis or reasonable basis and which were made fraudulently, recklessly or negligently. The plaintiff then relies on her affidavits of 19 June 2020, 4 May 2021 and 25 June 2021 to demonstrate steps taken to investigate what she considered were discrepancies in the data. In her affidavit of 19 June 2020, the plaintiff deposes to her inquiries made of the offices of Dr Babu and Dr Ogborne at paras 33 and 66 of that affidavit in relation to whether those doctors had, in fact, prescribed certain medicines to certain patients.

Further, at para 29 of her affidavit of 4 May 2021, the plaintiff deposes to reconciliations conducted between the data which she claims established that some of the original data prescriptions did not exist. A summary of those prescriptions which she claims not to exist is then annexed at exhibit E to that affidavit. Exhibit E includes reference to the names of the remaining 14 subpoenaed doctors, that is in addition to Drs Babu and Ogborn, as well as to the names of the patients that the data showed they had provided prescriptions to.

I am satisfied that the evidence in the plaintiff’s affidavits shows a clear connection for the bases on which each of the 16 subpoenas has been issued. Each subpoena can be linked back to the paragraphs or annexures of those affidavits and, in my assessment, has a clear legitimate forensic purpose to the pleaded allegations at para 15B of the amended statement of claim and will also materially assist on an identified issue in the proceedings in accordance with the decision of Secretary of Department of Planning Industry and Environment v Blacktown City Council [2021] NSWCA 145.

I do not accept the defendants’ submissions that there is no evidentiary nexus or that the subpoenas are a fishing expedition. The affidavits, combined with the plaintiffs written and oral submissions, clearly establish that the purpose of issuing the subpoenas is to test whether or not the prescriptions were prescribed, a matter which will go towards proving or otherwise the plaintiffs claim. I consider the subpoenas have been purposefully issued with reference to the affidavit evidence and that they are each on their own sufficiently narrow in their scope.

Taking into account the issues in dispute and the likely quantum of the claim, I also do not consider the issuing of the subpoenas to be contrary to the overriding purpose in s 56 of the Civil Procedure Act 2005 (NSW). For all of these reasons, the defendants’ notice of motion ought to be dismissed.”

The defendants’ submissions

27. The defendants seek to set aside the orders of the Registrar and set aside the sixteen subpoenas on the following grounds: firstly, a lack of relevance to the proceedings, secondly, a lack of legitimate forensic purpose and thirdly, the issuance of the subpoenas are a fishing expedition. As these grounds of review are interrelated, I shall deal with them together.

28. The defendants’ contention is that, even on a generous approach to the issue of forensic value, the plaintiff has failed, and the Registrar had erred in determining otherwise, to cross the requisite threshold on the basis that the sixteen subpoenas issued by the plaintiff are incapable of having any forensic. The reasons are as follows for the defendants’ contentions are as follows.

Plaintiff’s Old Software data did not come from the first defendant

29. The defendants refer to the following uncontested facts: first, the plaintiff had commenced proceedings on the basis of the New Software’s data in December 2019; second, the plaintiff sought to remedy this forensic oversight she realised in hindsight from the defendants’ various notices to produce by attempting to generate a set data using the Old Software in 2021, some 7 years after the fact; third, the Old Software’s data generated by the plaintiff is factually inconsistent with what was provided by the first defendant to the plaintiff in 2014, a fact the the plaintiff concedes.

30. It is now a proven fact that the plaintiff’s Old Software data is different from the Dispensing Activity Reports. The business records which the first defendant had provided to the plaintiff in 2014, which are also the basis of these proceedings, were not generated by the plaintiff’s Old Software data and the business records which the first defendant had provided to the plaintiff in 2014, which are also the basis of these proceedings, could no longer be found.

31. In the circumstances, the plaintiff, on her own evidence, has conceded to the that the plaintiff’s Old Software data, in its current form, has been forensically severed from the business records that were provided by the first defendant in 2014. The defendants submitted that the detachment of the plaintiff’s Old Software data from the business records and the fact that the first defendant’s business records could no longer be found, means that it is no longer open to the plaintiff to make any forensic allegations on the basis of the plaintiff’s Old Software data.

32. For those reasons, the defendant submitted that the plaintiff’s Old Software data cannot possibly form the basis of any forensic allegations. Therefore, the defendants submit that the sixteen subpoenas are issued without any bases.

The plaintiff’s ‘New Software case’

33. As briefly mentioned above, the plaintiff, when commencing the proceedings in December 2019, had based the proceedings on the data she had observed in the New Software. This is made clear in light of the plaintiff’s pleadings, where paragraph [16] mentioned that the plaintiff became aware that the patient history reports used to prepare the profit and loss statements were overinflated.

34. The plaintiff’s case at the time was, as the defendant submitted, was misconceived. Patient history reports could only be generated by the New Software. At the time the profit and loss statements were prepared by the first defendant and the Pharmacy was using the Old Software, not the New Software. Thus, the profit and loss statement was prepared using reports generated by the Old Software.

The plaintiff’s ‘Old Software Case’

35. After the defendant had begun requesting for the disclosure of the Old Software’s data and issuing numerous notices to produce, it then became apparent that the plaintiff had realised the defect in her original case and attempted to remedy this forensic oversight by adopting a shift in the direction in which her evidence was prepared.

36. Specifically, the plaintiff’s second and third rounds of evidence-in-chief had begun abandoning references to data and reports from the New Software. Rather, the plaintiff first shifted her focus to emphasise that the data from the New Software was migrated from the Old Software and later she began focusing solely on the data from the Old Software.

37. Hence, it is submitted the only inference the Court is capable of drawing in the circumstances is that these subpoenas were issued at random, were guesses, and were without bases, and that the plaintiff had likely hoped that the information produced under these subpoenas could somehow assist her case, although she does not at present know exactly how they could, or if they could assist her case at all. The defendants submitted this was the very definition of a fishing expedition and that Registrar Jones had erred her decision.

38. The defendants argued that if the Court is to permit these sixteen subpoenas without any clarification, reasons, or bases from the plaintiff, the Court is directly permitting, in principle, the plaintiff to issue 111,127 subpoenas in accordance with the plaintiffs Old Software data without restraints or caveats. The defendants argued this must not be correct and necessitates the Court’s intervention in the interest of justice to set aside the subpoenas.

39. To view the matter from another angle, the defendants asserted that the production of the information sought by the subpoenas, which also happen to be highly sensitive medical information belonging to third-party patients, does not forensically influence the plaintiff’s case in anyway. This is because, until the plaintiff has remedied the inherent defects with the plaintiff’s Old Software data (which the defendants say is no longer possible), the information sought by the subpoenas have no value.

40. To put it simply, the defendants claimed that even if the plaintiff is to subpoena all 111,127 scripts issued by the Pharmacy during the period of 2012 to 2015 as recorded in the plaintiff’s Old Software Data, the plaintiff’s case is not enhanced, nor diminished, in any way because the data did not come from the first defendant, and has nothing to do with the business records that were given to the plaintiff by the first defendant in 2014.

41. Therefore, the defendants contend that the sixteen subpoenas are fishing expeditions to assist the plaintiff in determining if she has a case at all, instead of obtaining documents to support her existing case: see Commissioner for Railways v Small (1938) 38 SR (NSW) 564.

42. Notwithstanding the fact that these proceedings have been on foot since December 2019, the defendants contend that the plaintiff has, in effect, abandoned her old case, and adopted a new case after she had served her second and third rounds of evidence-in-chief.

The plaintiff’s submissions

43. The first defendant has admitted the quantity of the prescriptions dispensed in the Dispensing Activity Reports and both defendants deny paragraph [15B] of the ASC, namely that the representation was untrue, made without any basis or reasonable basis; and made fraudulently or recklessly or alternatively negligently.

44. As a consequence of denying the pleading in paragraph [15B] of the ASC, the plaintiff was obliged to obtain evidence that the prescriptions included in the Dispensing Activity Reports were not prescribed, therefore supporting the plaintiff's pleading that the representation was untrue.

45. The plaintiff submitted that the subject matter of the subpoenas speaks directly to a fact in issue in the proceedings and the materials called for production will add, in one way or another, to the relevant evidence by either supporting the plaintiff's claim or the defendant's defence.

46. In relation to paragraph [13] of the Zhao Affidavit, Ms Wong, a colleague of Mr Zhao, wrote to the plaintiff’s office, Gartree Thomson Lawyers, as it was then known, requesting details as to the forensic value and the relevance of the subpoena. A copy of this email is annexed at pages 11 and 12 of the Zhao Affidavit.

47. On 17 May 2022, Ms Aoude of the Gartree Thomson Lawyers responded to Ms Wong, noting:

“As a consequence of your client's denial, we are required to obtain evidence that the scripts were not issued. Further, the documents sought in these subpoenas are relevant when considered in conjunction with the Aquarius / Z-Software data which your client says is inaccurate. Our client’s position is that the migration of data from Aquarius to Z-Software did not impact the validity of the data and your client alleges that the data is invalid, therefore the data and the scrip[t]s issues are facts in issue. A subpoena for production may be issued if there is a reasonable basis for supporting that the material called will be likely to add in one way or another to the relevant evidence in the matter (Secretary of Department of Planning, Industry and Environment v Biacktown City Council).”

48. It is the plaintiff's position that Ms Aoude's response on 17 May 2022 adequately articulated the relevance of the subpoenas, and the plaintiff rejects the assertion in paragraph [14] of the Zhao Affidavit that the plaintiff's representatives have failed to adequately respond to the queries of the defendants' solicitors.

49. The defendants contended that the data generated by the plaintiff from the Old Software terminal is factually inconsistent with the Dispensing Activity Reports. The plaintiff asserted that while there are slight variations to the data, due to the quantity of information in the data, it is uncommercial at this stage of the proceedings to review every line item of the data. Nearly all of the data is consistent with the total number of prescriptions dispensed with the Dispensing Activity Reports.

50. It is the plaintiff's position that it is not a proven fact that the data is different from the Dispensing Activity Reports, and the data from the Old Software terminal would have been used by the defendant when the Old Software generated the Dispensing Activity Reports.

51. In the interest of evidentiary completeness, the plaintiff issued the subpoenas for the remaining prescriptions identified in annexures VVPN35-D, WPN35-E and VVPN35-F of Ex 1. These prescriptions are the subject matter of the subpoenas, and the plaintiff is requesting production of these prescriptions to determine whether the data is valid and the prescriptions were prescribed.

52. Since the Registrar made her decision, the plaintiff has been provided with data on a USB stick.

53. In the plaintiff’s affidavit of 4 May 2021, she annexed a copy of the data as maintained in the Old Software terminal in a readable excel .cvs file (‘the Data’). The data contained over 111,000 entries and when reviewing the entries, the plaintiff due to her knowledge of dispensing medication suspected that some of the prescriptions shown in the data were inflated in quantity and price; did not exist; or were otherwise inaccurate. The plaintiff annexed summaries of the suspected data to her affidavit.

54. As stated previously, the defendants are alleging that the data is inaccurate as the plaintiff generated it from a terminal that held the Old Software. The defendants objected to the data on the basis that it is inaccurate when compared with the Dispensing Activity Reports. Additionally, the defendants contended that data from the New Software varies from the Dispensing Activity Reports. Given the volume of information in the data, the plaintiff submitted that the variations alleged by the defendants are negligible.

48. The defendants have alleged that data in the New Software may be altered, however, the defendants have not raised any evidence that the data has been tampered with. The plaintiff submitted that there is an original copy of the data, as maintained in the Aquarius terminal, that is, the original terminal, in existence. It was this original data that was handed over by the first defendant to the plaintiff when the plaintiff purchased the system.

49. While there are only slight discrepancies in the dispensing records of the first defendant, there are large discrepancies in the second valuation prepared by Mr Williams as set out in his second valuation. When the plaintiff owned the business, the Pharmacy had a reduced annual sales value of approximately $530,000 annually.

50. The defendants contended that the plaintiff by issuing the subpoenas is engaging in a fishing expedition. However, the plaintiff submitted that she issued the subpoenas to support her claim that the Dispensing Activity Reports, as representations, are untrue, made without a reasonable basis and made fraudulently or recklessly.

51. It is the plaintiff’s case that the subpoenas are not an exercise in fishing. The plaintiff supported this contention by arguing that the producing parties will be unable to produce the prescriptions, furthers the case that the Dispensing Activity Reports were an inaccurate representation made by the defendants to the plaintiff.

52. The plaintiff contended that the purpose of issuing the subpoenas is to demonstrate that the Dispensing Activity Reports are inaccurate, and it is not a true representation of the financial health of the pharmacy at the time the plaintiff purchased the business.

Resolution

60. It is my view that the defendants’ submissions are misconceived. The Registrar referred to the inquiries the plaintiff made to doctors concerning the issue of prescriptions to patients. I have set these two examples in detail earlier in this judgment. There are examples of a number of scripts appearing in the old data which were not prescribed by them to various named patients. The underlying data may be viewed through a different viewing platform, through the Z software viewing platform, but it is the same data. As to whether or not the data has been corrupted, the parties can obtain and rely on IT experts to give their views on the reliability of the old and new data (T16.25-29).

61. The Registrar referred to the plaintiff’s evidence of reconciliation conducted with the data and found the scripts did not exist. It is my view that the plaintiff has demonstrated that these subpoenas would materially assist the identified issue of whether the representations were untrue, made without any basis or reasonable basis or made fraudulently, recklessly or alternatively, negligently. It cannot be said that the sixteen subpoenas issued to the medical practitioners are incapable of having any forensic value at all. This ground of review fails.

62. I am of the view that there is a clear connection between the documents sought in the schedules and the subpoenas issued to the sixteen medical practitioners, as set out earlier, to test the accuracy of the first defendant’s representations made to the plaintiff. The plaintiff pleaded the business records provided to her before contracts were exchanged, were untrue, without reasonable basis, and fraudulent, recklessly fraudulent or negligently fraudulent. The plaintiff has already made telephone inquiries of some medical practitioners subpoenaed and ascertained that the script recorded in the business records were never issued by those medical practitioners. The subpoenas are issued for a legitimate forensic purpose in relation to an identified issue in the proceedings as they would materially assist the plaintiff. That is the heart of the plaintiff’s case. The subpoenas are not issued for the purposes of a fishing expedition. Finally, it is in the interests of justice that the plaintiff be permitted to issue subpoenas in the form she has. For these reasons, I have come to the conclusion that the Registrar’s decision is correct. The Registrar’s order dated 23 November 2022 is affirmed. The defendants’ notice of motion is dismissed.

Costs

63. Costs are discretionary. Costs usually follow the event. The defendants are to pay the plaintiff’s costs.

THE COURT ORDERS THAT:

1. The defendants’ notice of motion filed 9 December 2022 is dismissed.

2. The defendants are to pay the plaintiff’s costs.

**********

Decision last updated: 07 July 2023