Supreme Court New South Wales Medium Neutral Citation: Stellar Vision Operations Pty Ltd v Hills Health Solutions Pty Ltd [2022] NSWSC 144 Hearing dates: 19 – 21 and 26 – 29 April 2021 Date of orders: 23 February 2022 Decision date: 23 February 2022 Jurisdiction: Equity Before: Ward CJ in Eq Decision: 1. Dismiss the plaintiff's claim with costs. Catchwords: EQUITY — Trusts and trustees — Express trusts — Where no declaration of trust — Whether benefit of contract pr plaintiff's alleged interest therein held on trust — Whether defendant acquired interest in contract subject to any interest of the plaintiff therein or "subject to the equities" EQUITY — Fiduciary duties — Partners and joint venturers — Where plaintiff negotiating with a third party company to enter into a joint venture agreement — Where business of that company purchased by defendant prior to conclusion of formal joint venture or partnership agreement — Where undertaking by defendant to "honour the intent of previous discussions" — Whether sufficient to give rise to fiduciary duties and breached when defendant obtained for itself benefit of contract in respect of which "joint" tender for installation of patient entertainment systems had been lodged CONTRACTS — Formation — Whether binding contractual undertaking to "honour the intent of previous discussions" —Whether agreement to agree, or agreement to negotiate — Whether undertaking breached ESTOPPEL — Proprietary estoppel — Promissory estoppel — Conventional estoppel — Whether defendant estopped from resiling from undertaking Legislation Cited: Civil Procedure Act 2005 (NSW), s 100 Conveyancing Act 1919 (NSW), s 12 Cases Cited: ADM v FDGK [2018] NSWSC 442 Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495 Ammon v Consolidated Minerals Ltd (No 3) [2007] WASC 232 Antov v Bokan [2018] NSWSC 1474 Ashton v Pratt (2015) 88 NSWLR 281; [2015] NSWCA 12 Austin v Hornby [2011] NSWSC 1059 Bahr v Nicolay (No 2) (1988) 164 CLR 604; [1988] HCA 16 Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11 Barnes v Addy (1874) LR 9 Ch App 244 Barnes v Forty Two International Pty Ltd (2014) 316 ALR 408; [2014] FCAFC 152 Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 Berry v CCL Secure Pty Ltd (2020) 381 ALR 427; [2020] HCA 27 Biala Pty Ltd v Mallina Holdings Limited (No 4) (1994) 13 WAR 11 Brambles Holdings Limited v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 Broadway Plaza Investments Pty Ltd v Broadway Plaza Pty Ltd; In the matter of Combined Projects (Arncliffe) Pty Ltd [2020] NSWSC 1778 Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26 Calverley v Green (1984) 155 CLR 242; [1984] HCA 81 Canadian Aero Service Ltd v O'Malley (1973) 40 DLR (3d) 371; [1974] SCR 592 Canny Gabriel Castle Jackson Advertising Pty Limited v Volume Sales (Finance) Pty Limited (1974) 131 CLR 321; [1974] HCA 22 Carter v Brine [2015] SASC 204 Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36 Clark v Macourt (2013) 253 CLR 1; [2013] HCA 56 Cockell v Taylor (1852) 15 Beav. 103; (1852) 51 ER 475 Commissioner of State Revenue (Vic) v Snowy Hydro Limited (2012) 43 VR 109; [2012] VSCA 145 Concrete Pty Limited v Parramatta Design and Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55 Disctronics Ltd v Edmonds [2002] VSC 454 Duffy Bros Fruit Market (Campbelltown) Pty Ltd v Gumland Property Holdings Pty Ltd [2007] NSWCA 7 Edmonds v Donovan (2005) 12 VR 513; [2005] VSCA 27 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55 Fraser Edmiston Pty Ltd v AGT (Qld) Pty Ltd (1988) 2 Qd R 1 G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 Galafassi v Kelly (2014) 87 NSWLR 119; [2014] NSWCA 190 Gibson Motorsport Merchandise Pty Ltd v Forbes (2006) 149 FCR 569; [2006] FCAFC 44 Gould v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490; [1916] HCA 81 Hadid v Lenfest Communications Inc [1999] FCA 1798 Hastie Group Ltd (in liq) v Bourne [2017] NSWSC 709 Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41; [1984] HCA 64 HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54 Hungry Jack's v Burger King [1999] NSWSC 1029 In the matter of Tresdar Pty Ltd [2019] NSWSC 179 Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 73 NSWLR 653; [2008] NSWCA 206 Jasmin Solar Pty Ltd v Trina Solar Australia Pty Ltd [2020] FCA 1018 John Alexander's Clubs Pty Limited v White City Tennis Club Limited (2010) 241 CLR 1; [2010] HCA 19 Johnson v Perez (1988) 166 CLR 351; [1988] HCA 64 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Kizbeau Pty Ltd v WG & B Pty Ltd (1995)184 CLR 281; [1995] HCA 4 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61 Korda v Australian Executor Trustees (SA) Limited (2015) 255 CLR 62; [2015] HCA 6 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623; [1989] HCA 23 Management Service Australia Pty Ltd v PM Works Pty Ltd [2017] NSWSC 1743 Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72 McCrohon v Harith [2010] NSWCA 67 Meehan v Jones (1982) 149 CLR 571; [1982] HCA 52 Moore v Aubusson [2020] NSWSC 1466 Moratic Pty Ltd v Gordon [2007] NSWSC 5 Natural Extracts Pty Ltd v Stotter (1997) 24 ACSR 110 News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410; [1996] FCA 870 Nguyen v Phan (No 2) [2015] VSC 634 Pavan v Ratnam (1996) 23 ACSR 214 Payne v Parker (1976) 1 NSWLR 191 Phipps v Boardman [1967] 2 AC 46 Redman v Permanent Trustee Co of NSW Ltd (1916) 22 CLR 84; [1916] HCA 47 Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 Reitano v Reitano [2012] NSWSC 1127 Rydledar Pty Ltd t/as Volume Plus v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65 Sanrus Pty Ltd v Monto Coal 2 Pty Ltd (No 7) [2019] QSC 241 Scammell (G) & Nephew Ltd v Ouston [1941] AC 251 Shevill v Builders Licensing Board (1982) 149 CLR 620; [1982] HCA 47 Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 Sinclair, Scott & Co v Naughton (1929) 43 CLR 310; [1929] HCA 34 Southern British National Trust Ltd v Pither (1937) 57 CLR 89 Southern Cross Mine Management Pty Ltd v Ensham Resources Pty Ltd [2004] QSC 457 Swiss Bank Corporation v Lloyds Bank Ltd [1979] Ch 548 TMA Australia Pty Ltd v Indect Electronics & Distribution GmbH [2015] NSWCA 343 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107; [1988] HCA 44 Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278; [2006] HCA 6 United Dominions Corporation Limited v Brian Pty Limited (1985) 157 CLR 1; [1985] HCA 49 Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429; [1968] HCA 8 Vines v Australian Securities and Investments Commission (2007) 73 NSWLR 451; [2007] NSWCA 75 Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18 Zugic v Vesuvius Australia Pty Ltd [2020] NSWSC 106 Texts Cited: Heydon and Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) Young, Croft and Smith, On Equity (2009, Thomson Reuters) Seddon and Bigwood, Cheshire and Fifoot Law of Contract (11th Australian edition, 2017, LexisNexis) Category: Principal judgment Parties: Stellar Vision Operations Pty Ltd (Plaintiff) Hills Health Solutions Pty Ltd (Defendant) Representation: Counsel: C Bova SC with J Burnett (Plaintiff) R Newlinds SC with T Epstein (Defendant) Solicitors: Corrs Chambers Westgarth (Plaintiff) King & Wood Mallesons (Defendant) File Number(s): 2016/00284725 Publication restriction: Nil Judgment 1. HER HONOUR: This matter involves a dispute arising out of arrangements entered into in 2013-2014 for the supply of "patient entertainment systems" (or PESs) to the Western Sydney Local Health District (WSLHD) following a tender process conducted by WSLHD. 2. In essence, the complaint by the plaintiff, Stellar Vision Operations Pty Ltd (Stellar Vision), is that the defendant, Hills Health Solutions Pty Ltd (Hills Health Solutions), wrongly appropriated for itself (to the exclusion of Stellar Vision) the benefit of a contract entered into with WSLHD in December 2014 for the supply of those PESs (the WSLHD Contract) following that tender process. In that regard, Stellar Vision contends that it tendered jointly (albeit that the response was solely in the name of the named tenderer, Questek Australia Pty Ltd (Questek)) with Questek for the supply of the PESs to WSLHD; that in February 2014, the joint tender was successful; that in April 2014 Hills Health Solutions acquired Questek's assets and, prior to so doing, acknowledged and agreed that it would split the profits of the WSLHD project with Stellar Vision; and that Hills Health Solutions has not done so. 3. Stellar Vision alleges in summary that, in the circumstances, a 50% interest in the benefit of the WSLHD Contract was held on trust for it by Hills Health Solutions; that Hills Health Solutions has breached fiduciary duties and contractual obligations owed to Stellar Vision; and that various estoppels (proprietary estoppel, promissory estoppel and conventional estoppel) arise in its favour, such that Hills Health Solutions is liable to it for the relief here sought (which includes damages and equitable compensation). 4. Hills Health Solutions denies each of the alternative claims brought against it. However, in the event that it is held that there was a contract between the parties, Hills Health Solutions contends that Stellar Vision repudiated that contract on the basis that Stellar Vision was not ready, willing and able to perform the contract in December 2014; and Hills Health Solutions says that thereafter, by its conduct, Hills Health Solutions validly terminated any such contract. 5. Further, if liability is established, there is a significant dispute between the parties as to the methodology to be used in the calculation of the alleged loss and the quantum of damages. 6. Stellar Vision claims a 50% interest in the value of the WSLHD Contract (that being a 10 year contract with a 5 year optional extension). Hills Health Solutions says that Stellar Vision's expert (Mr Eversgerd) has been instructed to value the contract on the basis of a broad range of hypothetical assumptions that reflect how Stellar Vision claims the WSLHD Contract would have performed, had Stellar Vision been involved in its management. Complaint is made by Hills Health Solutions (which I address in due course) that the counterfactuals upon which Stellar Vision's expert has formed his opinion as to the value of the WSLHD Contract are unpleaded and have no factual foundation in the terms of the alleged contract (or in the admissible lay evidence adduced by Stellar Vision). Further, Hills Health Solutions says that, insofar as the true measure of a plaintiff's loss (for breach of contract) is the loss of the value of the alleged contract at the time of the breach, the actual opinion of both parties at that time (recorded in contemporaneous business records) was that the value was in the order of $1,322,166; and hence it is submitted that Stellar Vision's loss (assuming liability is established) is no more than 50% of that amount. Background Relevant entities Stellar Vision 1. Stellar Vision is associated with the Stellar group of companies, which group specialises in in-flight entertainment. Stellar Vision is not a wholly-owned subsidiary of Stellar Group Pty Ltd (Stellar Group) but has some common directors and shareholders. Stellar Vision was established in July 2012 with the intention of providing a product similar to an in-flight entertainment system for "fly-in-fly-out" workers in the mining industry. 2. During 2013, Stellar Vision commenced the development of applications for entertainment systems outside of the mining industry, including, relevantly, in hospitals (where PESs are installed both for the use of patients and to provide access to medical records and health education resources). In the period from 2013-2014, Stellar Vision was in the business of supplying software and content for PESs. 3. Stellar Vision's PES is designed to operate with a terminal with a pre-loaded operating system, known as "thick client architecture" (rather than "to boot" from a server and load an operating system from the server), which as I understand it (and as explained by Stellar Vision's Chief Technical Officer, Dr Abul Rahman) means in practical terms that the terminals using Stellar Vision's PES require sufficient storage capacity to load the operating system and applications. (This is of some relevance when considering the allegations of repudiation which I address in due course.) 4. The relevant personnel at Stellar Vision at the relevant times were: Mr Brendan McCarthy, the Chief Executive Officer of Stellar Vision; Mr Peter McLaughlin, the Chief Executive Officer of the Stellar group; Mr Rob Lynch, the Chairman of the Stellar group; Dr Abul Rahman (referred to above). Also, Mr Bryan Curtin was engaged as a consultant to the Stellar group in around October 2013; was a director of Stellar Group from September 2014 to March 2016, and was a director of Stellar Vision from December 2015. Questek 1. Questek, on the other hand, specialised in providing nurse call systems and, at the relevant time, had installed a nurse call customer base in a number of hospitals. Questek was owned by Brighton Technology Group Pty Ltd (Brighton Technology Group), a company owned by Mr Darren Brighton. Questek formed part of a group of companies that also included Brighton Technologies Pty Ltd (Brighton Technologies), and Questek Infotainment Pty Limited (Questek Infotainment). 2. As at October 2013, Questek was in the business of developing and implementing PESs for hospitals. 3. The relevant personnel at Questek at relevant times were: Mr Darren Brighton (referred to above); Mr Daniel Rhodes, the General Manager of Questek; Mr Daniel Linderman, the Technical Sales Manager of Questek at the relevant time (who subsequently became Operations and Sales Manager for Hills Health Solutions – see below). 4. In around April 2014, Hills Health Solutions, as Buyer, entered into a Business Purchase Agreement for the purchase of assets from Brighton Technologies, Questek and Questek Infotainment (the sale completing on the same day). After completion of the Business Purchase Agreement, Mr Linderman commenced employment with Hills Health Solutions. Hills Health Solutions 1. Hills Health Solutions is a wholly owned subsidiary of Hills Limited (Hills), an ASX-listed company. In the period from September 2013, Hills Health Solutions acquired various businesses in the healthcare industry, including the business of Merlon Health Communications and Hospital Television Rentals (HTR) in or around September or October 2013, and the business of Questek in April 2014. 2. The relevant personnel at Hills and Hills Health Solutions at the relevant times were: Mr Edward Pretty (known as Ted), the Chief Executive Officer of Hills; Mr David Starkey, who from September 2013 to October 2016 was the Divisional Commercial Finance Manager for Hills Health Solutions; Mr Mark White, the director of Mergers and Acquisitions at Hills during 2014; and Ms Peta Jurd (an employee of Hills from January 2013 to April 2015, who became the head of Hills Health Solutions). Also employed in the business as a consultant was Mr Janarthanan Rajasingam. 3. Mr White and Ms Jurd together conducted Hills Health Solutions' due diligence in respect of Questek prior to the acquisition of its business by Hills Health Solutions. 4. As noted above, Mr Linderman became Operation and Sales Manager for Hills Health Solutions after it acquired Questek's business in April 2014. He resigned in February 2015. Chronology of Events Initial discussions between Stellar Vision and Questek 1. In mid-February 2013, Mr McCarthy (as noted above, the Chief Executive Officer of Stellar Vision) was approached by Mr Linderman (then the Technical Sales Manager of the entity which owned Questek) as to the possibility of Stellar Vision and Questek working together to provide PESs to hospitals. 2. As noted above, at around that time, Questek specialised in providing "nurse call systems" for use in hospitals. In 2013, Questek won a tender for the new Brisbane Children's Hospital (also known as Lady Cilento Children's Hospital), (to which I will refer as QCH), which was operated by Queensland Children's Health, for a combined nurse call system and PES. Questek did not have its own PES product. Mr Linderman requested Stellar Vision's assistance in providing a working model of a PES for demonstration at QCH. 3. From April 2013, representatives of Stellar Vision and Questek commenced discussions regarding the possibility of a joint venture between Stellar Vision and Questek. In essence, what was contemplated was that Questek (which had the reputation and experience working on government contracts and hardware installation in hospitals) would provide the hardware and Stellar Vision would provide the content and software for the PES (at that stage, the relevant PES being that which was required for the work for the QCH tender). Outline of Agreement dated 23 May 2013 (Outline of Agreement) 1. Following an initial meeting on 10 April 2013, representatives of Stellar Vision and Questek negotiated a form of agreement to govern the work being undertaken for QCH and the proposed ongoing relationship between Stellar Vision and Questek. 2. On 3 May 2013, Stellar Vision sent to Questek a document entitled "Draft Outline of Contract for Discussion". On 6 May 2013, Questek provided a revised version of that document to Stellar Vision. The main issue in the negotiation appears to have been the extent to which Stellar Vision would be required to provide Questek with exclusive use of its software. 3. On 14 May 2013, representatives of Stellar Vision and representatives of Questek attended a meeting at which the terms of the draft agreement were discussed. The outcome of that discussion was that it was agreed that Stellar Vision would guarantee exclusivity for a period of one year from the date of the agreement. 4. On 23 May 2013, Stellar Vision and Questek executed a document entitled "Outline of Agreement" (the Outline of Agreement), which dealt with the services to be provided under the QCH project, as well as ongoing cooperation between the parties. (This is one of what Hills Health Solutions identifies as the two critical documents for the purposes of the present proceeding, the other being an Undertaking executed in March 2014 – see below.) 5. Relevantly, the Outline of Agreement included the following terms. 6. Under the heading "StellarVision's Obligations" the following appeared: StellarVision will provide: • Software for the server and Client terminals including all Client software to enable the functionality of specifications in Schedule B – Functionality Brief; • Unlimited use of the initial software for the life of the terminals; • Remote monitoring of the entertainment system; • Initial installation testing and ongoing support of the software for the Defect and Liability Period (DLP) of 2 years; • Onsite installation and commissioning of software as required until DLP expires; • Supply Questek with service faults via email to Questek support. 1. Under the heading "Questek's Warranties" the following appeared: Questek warrants that: • it has the capacity to support the warranties; • StellarVision will have continued remote access to the system subject to the Hospital Networks Security requirements; • it will not attempt to reverse engineer StellarVision's software systems or processes; • it is StellarVision's fiduciary with respect to the technical know-how and intellectual property which StellarVision is allowing Questec to use; • it will supply StellarVision with a SLA if the hospital takes up the opportunity; otherwise all service after the 2 year DLP will be a chargeable item; • the system will, when used, not breach the intellectual property rights of any other party; • the system will not be used to commit a criminal offence; • the system will not be used to breach any defamation laws 1. By a clause titled "Scope of Agreement" the Outline of Agreement provided that it did not create a partnership. 2. The Outline of Agreement included a "Future Cooperation Clause", which provided: Between the signing of the agreement and 31 Dec 2013 both parties agree to enter into bona fide discussions to develop the concept of working exclusively with each other on a project-by-project joint venture arrangement for mutual benefit. This clause is not intended to create any legal obligation between the parties. 1. Pausing here, Hills Health Solutions accepts that the Outline of Agreement contemplated (as indeed it expressly provided for) bona fide discussions to be entered into and the possibility of further agreements but contends (and I agree) that the Outline of Agreement had no contractual force (other than as to the agreement to enter into bona fide discussions and in respect of the QCH project; a breach of neither of which is here suggested). Hills Health Solutions further maintains that the Outline of Agreement could not have created some equity in favour of Stellar Vision. 2. Stellar Vision nevertheless points to Mr McCarthy's evidence that, as at the date on which the Outline of Agreement was signed, he understood that the Outline of Agreement would form the basis upon which Stellar Vision and Questek would conduct future tenders, in the form of co-operation and engaging in bona fide discussions. (Mr McCarthy's understanding would not be relevant to whether there was a binding contract or its terms; at most it would be relevant to the estoppel claims.) Stellar Vision demonstration at QCH – 11 June 2013 1. As noted above, Questek had been successful in winning a tender to provide PESs at QCH and had requested Stellar Vision's assistance in providing a working model of a PES for demonstration at QCH. Between April and May 2013, representatives of Questek and representatives of Stellar Vision exchanged emails regarding the demonstration; and Mr McCarthy and Dr Rahman worked together to complete the work in time for the on-site demonstration in Brisbane. 2. On 11 June 2013, Mr McCarthy, Mr Linderman and Dr Rahman conducted an on-site demonstration of the Stellar Vision PES at QCH. It appears that the demonstration was successful in that, from then, Stellar Vision continued to work with Questek in respect of the QCH project. Discussions as to joint tenders and joint venture proposal – June-September 2013 1. Between June 2013 and September 2013 (as contemplated by the Outline of Agreement), representatives of Stellar Vision and Questek engaged in discussions regarding other requests for tender and the possibility of entering into a joint venture. 2. On 13 June 2013, Mr Linderman sent to Mr McCarthy a request for tender for PES as part another project, of the Box Hill Hospital Redevelopment Project, for which Questek wanted to tender, with a covering email that included: Please have a look at the requirements of the attached project can you please have a quick look at it as we are going for it and as discussed it's a short time frame. Please also have a think about the best way to manage the project from the Questek/Stellar view as discussed the more risk the bigger the return. Now you have seen the QCH project that should give you a good idea of what's required. 1. Mr McCarthy's evidence (see his affidavit sworn 12 July 2017 at [31]) is that at around that time he had a conversation with Mr Linderman to the following effect: Mr McCarthy: If we are actually putting in for a fresh tender here, without yet having a joint venture company in place, we have to make sure we brand all submissions with both Stellar and Questek logos. The bulk of the work will be done by you and me anyway. We just have to make sure the various hospitals know that. Mr Linderman: Of course, mate, of course. 1. Pausing here, it is evident from the above exchange that, as at mid-June 2013, Stellar Vision (i.e., Mr McCarthy) did not consider there to be a joint venture (at least formally) in place between itself and Questek. 2. On 27 June 2013, there was a meeting between representatives of Stellar Vision and Questek at which the work required to submit joint tenders was discussed; each project being described as a "bucket", with each party to contribute to that bucket. 3. On 6 July 2013, Mr McLaughlin sent an email to Mr Brighton, in which he set out the items that Stellar Vision would contribute to the "bucket", Stellar Vision's contribution there said to include: software, networks, headend streamers, media servers, data storage, "DRM", content, project management, business development and maintenance. Mr McLaughlin there said: … As I said this is a starting point if Daniel [Linderman] could progress from your end and the [sic] both he and Brendan [McCarthy] work this up where we can agree on all the items that would be great. We are currently evaluating a number of models for joint ventures that we have been involved with and once we have all the information we can progress. I want to point out that it is our intent to try and work this through to a satisfactory conclusion for both parties. Also we want to keep it as simple as possible. … 1. At around this time, it appears that Questek received a 'buyout offer' from Hills (with which at that stage it decided not to proceed) because, on 8 August 2013, Mr Linderman (of Questek) responded to Mr McLaughlin's 6 July email, saying: Sorry for the delay, as you know Darren [Brighton] was offered a buyout from Hills Holdings three weeks ago for Questek with an offer to [sic] good to refuse looking at. Halfway through due diligence Darren decided it was not going to be the best option for the company as a group at this time and he is now back on track and motivated more than ever. At the time we felt it was best to sit tight with the Infotainment deal with Stellar to save any confusion if a deal was to go ahead with Hills. … Questek / Stellar & Joint Venture "The Bucket" "The bucket" – being a joint venture between Stellar Vision and Questek. Using the strong name of Questek in the healthcare market as the lead into the projects and the power of the Stellar Group coming into the game as one of the world's largest inflight content providers. Uniting the two companies to take to the QCH project and now bring one of the largest PES backed ventures with a combined backing of over 150 employees worldwide and an annual turnover of over 100 million dollars combined. Both companies are Australian owned and operated from Sydney Australia. … After hearing many options I propose 2 only. Both options need Stellar and Questek to commit to each other under an agreement that they will not sell to any reseller or potential client in the described market. This includes Aged Care Facilities, Hospitals & Aged Care at Home. This would also need to include our overseas offices and Australian resellers within this market place [sic]. Options 1. We create a job by job deal where we ask for a quote from Stellar to supply its services and software as required. Questek quotes its installation and management costs. And both parties split the cost of all hardware for the project and split the profit from the product. (if either party over price [sic] then both parties don't get the project and cannot go to competitors) Both parties can discuss each other's pricing as required to ensure we all have the best opportunity to win the project. 2. A joint venture – Create a middle company "HOSCOM" this would use the services and market power of both parties and grow to the point where it could stand on its own. It would have access to all Stellar content / services and Questek services and pay a % for the services or a commission on the projects if Questek was the lead-in on the project. Both parties wold [sic] fill the bucket with their "Bucket attributes" (as supplied by Peter & Daniel – Below). Until the bucket could found [sic] itself and services could be funded from with the bucket. The bucket would share accountants till the point where it could fund its own internal personnel. Doing it as a joint venture would also allow both parties to be heavily involved in the sale to ensure we win the project and would ensure both parties have the same intentions. (to fill the bucket within money and keep as much in it at the end of the project) … [The email went on to identify the items that Questek would contribute to the "bucket".] 1. Stellar Vision's evidence is that, at this time, Stellar Vision was working on the basis that it would contribute the items listed in its "bucket" (as identified in the emails referred to above) in respect of the projects on which Stellar Vision and Questek were jointly working (at that stage, the Box Hill project, in respect of which Stellar Vision prepared the technical specifications for the tender response; and the QCH project, in respect of which Stellar Vision was converting the demonstration platform into a fully functioning production system). 2. Pausing here, it is evident that, as at August 2013, there was still no formal joint venture agreement in place; the two options then being put forward for consideration by Mr Linderman (then at Questek) being a "job by job" deal (where Stellar Vision would supply services and software "as required" and Questek would quote its installation and management costs; both the cost of hardware and the profits would be split; and there would be some form of restraint if the tender was not successful) and the creation of a joint venture "middle company" in which both parties would seemingly have an equal interest. Further, although Mr McLaughlin's email had suggested that Stellar Vision's contribution to the "bucket' would include "project management" Mr Linderman's response suggested that management would be provided by Questek. 3. During September 2013, Stellar Vision and Questek continued to discuss the nature of their proposed ongoing relationship. During this period, it appears that one proposal advanced was that Stellar Vision acquire an interest in Brighton Technology Group (Questek's parent company) because, on 2 September 2013, Mr McLaughlin sent an email to Mr Brighton, stating that "[l]ast week you put an equity proposal on the table. We view this as a possible solution and would like to explore further". 4. On 5 September 2013, Mr McLaughlin sent a further email to Mr Brighton, stating "[w]hen I return lets [sic] get together to nail out the path forward so we can undertake a JV or equity swap". According to Mr McCarthy, these communications confirmed Stellar Vision's desire to "move things forward with Questek". 5. On 23 September 2013, Stellar Vision held a board meeting in which the status of negotiations with Questek was discussed. Mr McCarthy's evidence refers to discussions at that board meeting about the most recent suggestion from Questek, namely that Stellar Vision purchase equity in Questek's parent company. WSLHD Request for Proposal – September 2013 1. On 25 September 2013 (by which time there had still been no agreement reached between Stellar Vision and Questek as to the form of any joint venture arrangement between them – an equity arrangement still being under discussion at least from Stellar Vision's perspective), HealthShare NSW (an incorporated State Government body which I understand acts as the procurement arm of the NSW Department of Health) issued a Request for Proposal (RFP) for the provision or supply of a PES for WSLHD. An addendum to the RFP subsequently was issued on 18 October 2013. Mr Linderman forwarded both the RFP and the addendum to Mr McCarthy, at the time each was issued. October 2013 communications in relation to proposed Questek/Stellar Vision joint venture 1. On 1 October 2013, a discussion took place between Mr McLaughlin and Mr Linderman, to which Mr Linderman made reference in an email sent on 2 October 2013 to Mr McLaughlin: Thanks for the catch up yesterday, as discussed Darren [Brighton] has advised me that we will not be able to do an equity share in Questek at this stage. Following on from that we would like to still look to a joint venture for Healthcare & Aged Care (StellaQuest) with the details discussed yesterday: 1. Stellar Group to supply StellaQuest with software code/system based around the QCH supplied project to build off. 2. Allow StellaQuest to operate in all countries that the parent companies operate in. 3. Allow StellaQuest to build the code and system for the Aged and Healthcare & Home Care market. 4. Stellar Group and Questek to supply Programming services as required according to StellaQuest requirements at lowest agreed rate. 5. Questek to supply Marketing, Sales, Art Work, [sic] Installations and Project management services to StellaQuest at lowest agreed rate. There are also other points you will need to add but this should be a good start. 1. On 9 October 2013, Mr McLaughlin (Stellar Vision) responded: Thanks for your note. I wish to point out that our greater interest would be for Stellar Entertainment to acquire an equity stake in Questek. We believe this is the best option and have engaged someone to evaluate this as our preferred option [it seems that this was Mr Curtin who had been engaged as a consultant in or around October 2013]. Is this totally off the table? As I see it, the sticking issue for a JV is around our IP. From our point of view this is not a negotiable item it stays with the company that owns it, and that is Starplex. StellarVision licenses any software from this company and we would only enter into an arrangement where the software is licensed. We have tried since Sept 5 to move forward on your proposed equity position with no reply till your phone call of Oct 1. We feel as though we are going around in circles. If any equity position is not on the table and based on our position that the IP for the software is not part of any JV deal, is there any point in pursing [sic] a JV relationship? Our position at this stage is to quote purely as a supplier and if an equity position is on the table then let's have a discussion. [my emphasis] 1. By this stage, therefore, Stellar Vision is questioning whether there is any point in pursuing a joint venture (due to "the sticking issue" of its intellectual property; is pressing for an equity deal; and is proposing simply to "quote as a supplier" (presumably of its licensed software)). 2. Somewhat inconsistently with the position advanced in Mr McLaughlin's email (that Stellar Vision's position at that stage was to quote "purely as a supplier", Mr McCarthy's evidence is that on the same day (9 October 2013), he and Mr Linderman discussed the way in which Stellar Vision and Questek should respond to the RFP (in the absence of an incorporated joint venture vehicle or any written agreement other than the Outline of Agreement in terms that suggested that at least on Questek's part what was contemplated was a joint venture). Mr McCarthy's evidence is that he had a conversation with Mr Linderman which included words to the following effect: Mr Linderman: You'll note on the tender application forms that you can only submit a proposal under the banner of one party, right? Well, until such time as we have a joint venture company up and running, we should just list Questek as the nominee party for our joint venture because we have all the proper accreditations and experience with hospitals. All the procurement people know us so it will just be easier to smooth over any speed-bumps which crop up during the bidding process. We'll brand everything with both Stellar Vision and Questek logos, we'll obviously share the workload in drafting the response and you and I will attend the meetings and do the actual presentation to the procurement people. I'll leave them in no doubt whenever I speak with them that this is a joint Stellar Vision and Questek bid and should be treated as such. We'll just substitute the joint venture company in at a later date. For now, we just have to put Questek on the application form to give us the best chance. [Emphasis as per Stellar Vision's submissions] Mr McCarthy: Well, provided that everyone at the procurement end knows who we are, knows what we do and knows what our stake is in this bid, then that should be ok with us. 1. On 11 October 2013, Mr Brighton responded to Mr McLaughlin's email, stating that "I'm unable to offer equity right now and would reconsider in 12 months time. Re moving forward, were [sic] happy to proceed with a simple Licensing agreement to sell our combined solution to the market as a Stellaquest brand for infotainment to our customer base. We would like to discuss some form of protection such as exclusivity for our markets…". Again, this is not consistent with a contemplated joint venture; rather the discussion seems to have been as to a licensing agreement. Position regarding the RFP 1. On 21 October 2013, Mr McLaughlin sent an email to Mr Brighton, in which he advised that Stellar Vision intended directly to tender for the WSLHD project: As I said our preferred position was an equity stake. …. The proposition below still requires a lot of detail and will take time to flesh out. The most pressing thing at the moment is the NSW hospital tender. Given we have not been able to agree on a path moving forward I need to inform you we will tender for this direct. As I said previously I feel we have gone around in a circle as it is our intent to have an agreement. However what is table [sic] needs a lot more discussion as it not what we are looking for. However happy to keep discussions going. 1. Mr McCarthy's evidence is that he understood that, by taking this position, Stellar Vision would "put some pressure on Questek to move forward with a joint venture". (Again, however, this makes clear that Stellar Vision did not understand there to be any formal joint venture in place at this stage insofar as it considered it was free to tender separately for the WSLHD project) 2. Mr Rhodes (of Questek) responded to this email on the same day, stating: I have been working with both Darren Brighton and Daniel Linderman to build a "go to market" plan with the Stellar Entertainment solution (that we have installed into QCH), both nationally and Internationally. It seems from your view, that the planned negotiations to work together for this market are failing, thus you perceive the best step forward is to quote installations into our agreed market yourselves. I ask that you honor [sic] our current agreement [presumably a reference to the Outline of Agreement which provided for bona fide discussions – see above] and work with me to conclude our negotiations within the next 7 days. … 1. The 21 October 2013 email from Mr Rhodes identified three options: an "exclusivity agreement", a "joint venture" (using a new entity with a 50/50 share agreement); and an equity purchase (though, as noted above, Mr Brighton had previously made clear that an equity purchase was "off the table"). 2. There was some discussion internally within Stellar Vision as to how to respond to this proposal. On 22 October 2013, Mr Lynch (of Stellar Vision) wrote to Mr McCarthy, stating that "[m]y feeling is that we go it alone on this current tender…In the absence of a long term deal we thought it best wee [sic] do this one alone until we can conclude a deal , [sic] it could then be rolled into the deal if we are successful". Mr Lynch subsequently wrote that "[o]ur best chance is to do a joint bid but [presciently as it turned out] not until we have a tight shareholders agreement in place". Mr McCarthy responded that "I am working on the notion that the tender process [is] the beauty parade and if [we] get in front of them the more commercial discussions can be had. […] Agree joint bid higher probability". 3. On 24 October 2013, Mr McLaughlin wrote to Mr Rhodes, responding to his email of 21 October 2013, stating: Also can you confirm which of the three options, or if all three you have listed below are on the table. As mentioned our preference is to explore an equity position in Questek as offered by Darren. From our point of view it does feel as though we are going back over some ground we have covered on the three options, we are encouraged that you agree the discussions need to be concluded in a defined time frame to enable both of us to make plans moving forward. I think the parties agree that a formal agreement and structure needs to be in place before tendering for contracts. Our move to quote direct on the NSW hospital tender was a result of our frustration in [not] getting the right engagement on the subject of a formal agreement which we believe must be in place for both parties benefit. To show good faith and our desire to work with Questek, we will not respond directly to the current NSW hospital tender this week and will support Questek's submission as principle. [sic] … In the meantime have asked Brendan [McCarthy] and his team to engage with Daniel Linderman, to give our full support to Questek's tender submission by Friday. 1. Mr McCarthy then wrote to HealthShare NSW on 25 October 2013, advising that Stellar Vision would not be submitting a tender as principal. Preparation of response to RFP 1. It is not disputed that Stellar Vision and Questek worked together in preparation of the response to the RFP. In particular, Mr McCarthy and Mr Linderman exchanged emails in respect of the RFP, and Mr Linderman was provided with shared access to the technical specifications document that Mr McCarthy and Dr Rahman were preparing in response to the RFP. Stellar Vision points to Dr Rahman's evidence (in his affidavit sworn 10 July 2017 at [20]) that "there were no secrets between Stellar Vision and Mr Linderman" in the process of preparing the response to the WSLHD tender and that Stellar Vision and Questek "shared every bit of information". That evidence was not the subject of any challenge (but is also not inconsistent with Stellar Vision simply taking the commercial risk that negotiations for a joint venture or other arrangement would not be concluded but wishing to be part of the "beauty parade"). Response to RFP – October 2013 1. On 25 October 2013, the response to the RFP was submitted. It is not disputed that it was in Questek's sole name (a sole tenderer being a requirement of the RFP). Stellar Vision says that it was primarily responsible for preparing the technical specifications forming part of the response; and that Questek was primarily responsible for the corporate and compliance parts of the response, and the executive summary. 2. The executive summary included in the response to RFP was provided on a letter bearing the logos of both Questek and Stellar Vision. Stellar Vision says that the text of the executive summary made it clear that the response to the RFP was a joint response from Stellar Vision and Questek, noting that there was extensive reference to both Questek and Stellar Vision, including reference to their "combined resources" and a description of the companies as a "truly unique partnership", as follows: Our submission combines the resources of two leading Australian companies from Healthcare and Entertainment. Questek is an Australian owned company with over 30 years experience in providing healthcare communication solutions… … Stellar Entertainment (Stellar) is also an Australian owned company with over 30 year of [sic] experience in Entertainment content, systems, software and solutions. … … The combined resources offer a truly unique partnership, leaders in Australian healthcare and entertainment technology and solutions, developers not integrators of hardware and software, direct access to the largest Hollywood studios, entertainment programming, and knowhow and a shared focus to provide simple, cost effective solutions that deliver the best experience for you and your patients. The combined resources also mean the support of over 60 dedicated staff and over $60 million in revenue per year. 1. The response included reference to the resources, experience and turnover of both Questek and Stellar Vision; financial information concerning the Stellar group; references provided to the Stellar group by Virgin Australia, Garuda Indonesia and Malaysia Airlines; and a document entitled "StellarVision PES Packages", which identified the available content and functions in respect of each identified package. The response also included images of PES terminals branded "StellarVision". 2. The response did not include any references or financial statements in respect of Questek. Mr McCarthy's evidence is that he included that material in respect of the Stellar Group in the response because he understood that was a requirement of submitting a compliant tender. (The relevance of this understanding is moot.) November 2013 presentation 1. On 7 November 2013, Mr Linderman received an email inviting him to make a presentation in respect of the proposal. Mr McCarthy's internal report following receipt of this notification was that "Questek as principle [sic] (and thus StellarVisionas [sic]) have been short listed [sic] and move to the next round of the WSLHD Tender". Mr McCarthy and Mr Linderman worked together to prepare the presentation. 2. On 11 November 2013, Mr Linderman and Mr McCarthy attended the presentation at Westmead Hospital. Mr Linderman made the formal presentation and Mr McCarthy was involved in answering the questions that followed. Mr McCarthy's evidence was that, during the presentation, Mr Linderman said words to the effect: Questek and Stellar Vision are two companies with related and complementary strengths. While Questek, as you know, has over 30 years' experience in nurse call, Stellar Vision brings over 30 years of experience in content and entertainment. In coming together to make this joint bid and combining our individual strengths, we are confident we provide to you a unique made-in-Australia offering. 1. The PowerPoint slides used at the presentation featured the Questek and Stellar Entertainment logos (giving each equal prominence); included a slide headed "benefits of using Stellar / Questek"; and included images of PESs labelled "StellarVision" and "Questek Australia". Hills' due diligence regarding Questek – November 2013 to April 2014 1. From November 2013 until April 2014 (when Hills Health Solutions acquired Questek's business), Hills conducted due diligence in respect of Questek and Stellar Vision. (Stellar Vision emphasises that this due diligence occurred in the context of Questek and Stellar Vision having submitted a "joint response" to the WSLHD tender, and in the context of Stellar Vision and Questek negotiating entry into a proposed formal joint venture agreement.) Ongoing joint venture discussions 1. On 12 November 2013, Mr Curtin attended a meeting with representatives of Questek to discuss the options identified in Mr Rhodes' 21 October 2013 email (see above). At that meeting, Mr Curtin identified that the Stellar group was likely to favour a joint venture. Mr Curtin's understanding at the meeting was that Questek would consider that preference and would communicate its view to Mr Curtin. 2. On 19 November 2013, Mr Rhodes sent an email to Mr Curtin confirming Questek's position, which provided: Thank you again for your time last week to discuss the future of Stellar and Questek (BTG) moving forward. After our discussions, Darren [Brighton] and I have agreed that the best way forward, with the best outcome for each company, is a Joint Venture. Can you please start drafting what the JV would look like and the roles and responsibilities of each company? 1. By this stage, therefore, it seems that both parties had at least argued that the option best for each would be a joint venture but there was hardly an agreement as to how it was to be structured or the like. Status of WSLHD tender in November 2013 1. On 25 November 2013, Mr Linderman sent an email to Mr McCarthy regarding the status of the WSLHD tender, referring to "Questek/Stellar": Re: WSLHD I spoke to Margaret from WSLHD today, The committee group have made their decision and have forward the details to the Head board to assess the "final decision" on who they wish to go with for the 1200 bed PES tender. This is a good thing at this stage I believe the running will now be out of [sic] Healthvue and Questek/Stellar. All going well she will be back to us by the 15th December 2013. Note: When I asked her how our tender was progressing she replied they had forward [sic] it on to the board. Stellar Vision informed of Hills' offer for Questek 1. On 27 November 2013, Mr Curtin attended a further meeting with representatives of Questek to discuss the joint venture. During this meeting, Mr Curtin confirmed that drafting of a joint venture agreement was underway; and Mr Rhodes communicated that Hills had made an offer for Questek, and that Questek and Hills were likely to reach an agreement. 2. Mr Curtin sent an email to Mr Lynch on 28 November 2013 advising that: You may have heard that I met yesterday with Questek to discuss the terms of a Joint Venture. The discussion went well and we are in full agreement on the broad terms to be included in an agreement. The important news is that Hills are in discussions to purchase Questek and Hills are aware and in agreement with the JV with Stellar which will be part of the purchase. This should be of great benefit to StellarVision giving us a significantly stronger JV partner with prospects of more rapid market penetration given Hills [sic] customer base. I will discuss drafting of the JV Agreement with Wade today. 1. Hills Health Solutions points out (and I accept) that at this stage there were still ongoing discussions about arrangements other than a joint venture; noting that on 28 November 2013, Mr McLaughlin wrote to Mr Lynch, advising that "I got a call from Darren Brighton today confirming what Bryan [Curtin] has said. He went on to ask if we were interested in an equity stake in his business. My reply was that since the initial proposal we have moved on as we thought it was off the table. However we are more than happy with the JV and our commitment there". Discussion regarding the documentation of joint venture agreement 1. On 2 December 2013, Mr Brighton sent an email to Mr Curtin stating: Thanks for your time last week, I believe we have the foundations for a great business JV and would like to ask of you to provide a timetable for the process to get this JV agreement done ASAP, based on our current opportunities My thoughts would be to make a simple one pager letter of intent to have a new JV agreement between Questek and Stella Group? and the following key points:- Name of the new Venture to be agreed by both parties (Questel or TED – Television Entertainment Distribution, as an example of some names) Shareholding to be equal between both investment Initial investment of $250k per partner Daniel Linderman and Brendan McCarthy to be paid equal base salary with commission structure based on set KPI If you would like to get together to discuss the next step, I'm keen to get this agreement tied up ASAP, as to have a clear picture moving forward. 1. A "JV template" was sent by Stellar Vision's lawyers on 3 December 2013 to Stellar Vision, and circulated to Questek. Discussions as to the proposed deal between Hills and Questek 1. On 3 December 2013, Mr Brighton emailed Mr Curtin and Mr Rhodes, stating: Can I suggest we kick off the JV for 3rd February as the planned settlement for hills is February, unless your [sic] happy to get it done and started for Jan 1st and my funds will go in February and I simply pay Daniels salary until 3rd February. As soon as I get the agreement, I will pass to my lawyer for advice and hopefully we can get a heads of agreement signed prior and subject to legals being completed 1. Stellar Vision says that, by this time, it was apparent to it that Hills Health Solutions would be purchasing the assets of Questek. 2. On 24 December 2013, Mr McCarthy sent an email to Mr Curtin (and others): Dan [Rhodes] is telling me that the Questek / Hills commercials have been agreed again and some due diligence for them to do on some technology on nurse call side and then he feels the deal will be signed. Dan feels Darren [Brighton] received an extra $600-750k in his total price for the JV to be included in his deal. Previously Hills did not want to include any value for our JV and Darren advised he would do on his own and compete. Ted P [Pretty; CEO of Hills] came back to him and advised he does want the JV. Darren is thus keen for an update on where our JV agreement is at ? Bryan/Peter could you please send Darren an update on where agreement is at. [Emphasis as per Stellar Vision's submissions] 1. Mr Curtin's evidence is that, after receiving that email, he had a conversation with Mr Brighton during which they discussed the status of the joint venture agreement between Stellar Vision and Questek and Mr Brighton informed Mr Curtin that "[a]s Hills will be buying the communications assets, they will have input into the joint venture agreement". The content of this conversation was recorded in an internal email sent on 24 December 2013 by Mr Curtin to Mr McCarthy, Mr McLaughlin and Mr Lynch: I have spoken to Darren [Brighton] this morning. He confirmed he has now signed a Heads of Agreement with Hills with targeted finalisation date of 28 February 2014. We had already agreed to move forward on the JV Agreement which I have yet to send [to] him. After a hiatus following advice that the Hills deals was [sic] off or deferred, I am now marking up the template for Wade to amend after his Christmas break. Darren explained that Hills increased the price to include "the Communications assets" that Questek is including in the sale. He advised that Hills will have input into the JV Agreement. … 1. Emails between Mr Linderman and Mr McCarthy on 13 January 2014 indicated that Stellar Vision's solicitor had delayed in sending through the joint venture document but that Stellar Vision was aware that Hills Health Solutions needed the draft agreement for its due diligence. January 2014 preliminary meeting between Stellar Vision, Questek and Hills 1. On 21 January 2014, representatives of Stellar Vision, Questek and Hills attended a preliminary meeting, seemingly as part of Hills' due diligence in respect of its acquisition of Questek. At this meeting, Ms Jurd seems to have requested a demonstration of Stellar Vision's PES system (see below). Draft "Shareholders Agreement" 1. On 23 January 2014, Mr Curtin sent a copy of a draft "Shareholders Agreement" to Mr Brighton (this apparently being what was then contemplated to be the joint venture agreement); and Ms Jurd was provided with a copy of this draft agreement around that time. Schedule 1 to the draft agreement set out the proposed respective obligations of Stellar Vision and Questek (subject to further negotiation): 1. Stellar's Obligations 1.1. In order to facilitate the proper conduct of the Business, Stellar will do all things necessary to ensure that provides [sic] to the Company [i.e., the proposed joint venture company] the following: (a) A Licence in the form attached … for the use of the Proprietary Software for the operation of a Patient Entertainment System as per the specifications outlined … 1.2 In order to facilitate the proper conduct of the Business, Stellar will provide to the Company, the following: (a) Initial installation of the Proprietary Software. (b) Initial testing of the Proprietary Software and the PES as a functioning network. 2 Questek's Obligations In order to facilitate the proper conduct of the Business, Questek will provide to the Company the following: (a) A transfer of all Questek's existing rights under the contract between Questek Australia Pty Ltd and the Queensland Children's Hospital [insert specifics of contract ie: precise entities and execution dates]. (b) [insert clause obligating Questek to refer all other potential contracts to the JV Company?] (c) Access to all Client premises as and when required for the initial installation and testing of the Proprietary Software and PES. (d) All relevant knowledge which may be required by the Company for the initial installation and test of the Proprietary Software and the PES in a hospital or aged care environment. … Draft confidentiality agreement 1. On 28 January 2014, Ms Jurd sent an email to Mr McCarthy in respect of the proposed demonstration that had been scheduled for 30 January 2014. That email, which attached a draft form of confidentiality agreement, stated: Please find attached a mutual Confidentiality Agreement to cover both Hills and Stellar in relation to our discussions on Thursday. If you could execute before Thursday that would be great. Mark White and I would like to chat with you, and whomever else you believe is relevant, before the larger group joins on Thursday. We would like to understand what Stellar is looking to achieve from the JV with Questek and, along with Hills [sic] objectives, ensure that the structure is the most appropriate for both parties going forward. We are excited by what we heard last week and are looking forward to seeing the system live on Thursday. 1. Pausing here, it is clear from this that Ms Jurd did not understand that there was any binding agreement at that stage in relation to a joint venture between Stellar Vision and Questek since she is referring to ensuring that the "structure is the most appropriate for both parties going forward". (This is relevant in light of the submissions made by Stellar Vision as to the knowledge gleaned by Hills Health Solutions from its due diligence.) 2. The confidentiality agreement was not in fact signed before the demonstration (although it was subsequently executed by Stellar Vision, on 31 January 2014, and by Hills). The "Approved Purpose" was defined in the confidentiality agreement as: [T]o assist the [party receiving the confidential information] to assess the commercial feasibility of entering into a joint venture with respect to the provision of patient entertainment systems in the health and aged care industry sectors in Australia. 1. On 30 January 2014, prior to the meeting at which the demonstration was given, Mr Linderman emailed to Ms Jurd the Outline of Agreement, describing it as "the current agreement that Questek and Stellar are operating under". 2. On 28 January 2014, Mr McCarthy wrote to Mr Curtin, stating that "[a]s expected they [presumably Hills] are looking at options other than a JV eg license [sic] agreement only or some other structure". Mr Curtin responded, stating that "[i]t is not surprising that Hills are exploring an alternative structure. We anticipated Hills may want to eventually take all the direct relationship business with the hospitals and simply pay to licence the software. Questek took the view that we should pool our resources in a JV and not compete directly in the hospital market". There is no suggestion in this internal email that Stellar Vision understood there to be some binding joint venture arrangement already in place with Questek; or that Hills might not be free to negotiate its own terms for any ongoing arrangement with Stellar Vision. Demonstration on 30 January 2014 1. On 30 January 2014, at Stellar Vision's offices in Glebe, Dr Rahman demonstrated to representatives of Hills and Questek including Ms Jurd and others the software that Stellar Vision had been developing to meet the WSLHD tender requirements. This included a full demonstration on an Android terminal. It is noted by Stellar Vision that no complaint was then made about any deficiencies with the demonstration. 2. Mr McCarthy's evidence is that Mr Fiorini (of Hills Health Solutions) and Ms Jurd said words to the following effect at the demonstration: Mr Fiorini: We previously reviewed Android players but we have found that they crash after a few minutes. It is quite impressive that you have been able to resolve this technical issue – this is the first one I have seen work. Ms Jurd: Yes, I agree. I have seen a few platforms both here and overseas and your one is the most impressive. 1. During that meeting, Ms Jurd discussed the status of the joint venture negotiations between Questek and Stellar Vision; and the WSLHD Contract. Ms Jurd indicated that she had reviewed the draft joint venture agreement; that Hills could not agree to the proposed exclusivity provisions given Hills' other businesses; and that Hills had a general policy against joint ventures. 2. Following the meeting, Mr White sent an email to Mr Curtin and Mr McCarthy: Thanks Bryan and Brendan for your time today. Peta and I will come back to you with suggested next steps re the workshop we mentioned to further discuss the market opportunity and potential GTM [go to market] options… ie JV, licencing [sic] etc Tender request for information 1. On 3 February 2014, Ms Margaret Edwards Sutcliffe of HealthShare NSW sent an email to Mr Linderman raising a series of questions in respect of the WSLHD tender, including: Installation timeframe if Questek / Stellar International were successful for this business would be three (3) months 1. Mr McCarthy and Mr Linderman discussed the response to that request for further information. (Stellar Vision points out that HealthShare was there referring to "Questek / Stellar".) February 2014 joint venture discussions 1. On 4 February 2014, Mr McCarthy sent Mr Linderman an email, asking: Is it worth both you and I sitting down with Peta [Jurd] to talk through the JV, how it came about, how we have been operating over the past 6 months as we worked towards its formalisation, and what our aim and plans where for it once formalised ? 1. Mr Linderman responded to this the same day that: I will ask her tomorrow. Tomorrow is not just based around stellar. Its more about the HTR business and what we are doing with it and we will discuss what they want out of stellar to ensure it fits in with there [sic] objectives. I will ensure you get the opportunity to talk with her prior to any direction being finalized [sic]. WSLHD tender awarded – 5 February 2014 1. On 5 February 2014, the WSLHD tender was awarded (in its terms, to Questek). On the same day, Hills Health Solutions was informed that the tender had been awarded. 2. On 5 February 2014, Mr McCarthy sent an email to Mr Lynch, Mr Curtin and Mr McLaughlin: As discussed please see attached the Letter of Offer in relation to the Tender Submission the JV participated in. I have also attached the Executive Summary from the RFP Response. This is a great result as it demonstrates the JVs [sic] ability and potential to compete with the biggest names in the industry. The timing in light of Hills discussions a positive as well … We have some serious work ahead of us. This is a super contract to have in hand. 1. Mr Curtin's reference to the "JV" can only be to his understanding of the arrangements between Stellar Vision and Questek since it is abundantly clear that at that stage there was no joint venture agreement (formal or otherwise) with Hills Health Solutions. However, the joint venture arrangements had been finalised with Questek. 2. On 6 February 2014, Mr Linderman sent an email to Mr White, attaching a "workout doc" used during the tender process for the WSLHD tender. Hills Health Solutions notes that the attached spreadsheet made no reference to a profit share with Stellar Vision. 3. On 23 February 2014, Mr Lynch sent an email to Mr McLaughlin, stating that "[s]poke to Darren [Brighton] just now. He wanted to know how we felt about Western Sydney deal. I said we are just waiting on the sidelines to see what he does but we are relaxed either way, we can see the benefits of both options and are happy to fit in with his decision". (This seemingly refers to the two options being whether Questek proceeded with the Hills' buy-out or did not.) Meetings in respect of the WSLHD project 1. On 26 February 2014, there was a meeting attended by representatives from NSW Health (Mr Noone and Mr Burnett), Mr McCarthy and Mr Linderman. Mr McCarthy's evidence is that, during this meeting, the following exchange took place with Mr Noone (from WSLHD): Mr McCarthy: As you know, our tender bid was a joint submission and we will need to change the tender entity from Questek to the joint venture entity when it is formed. How do we go about arranging to change their name on the contract for the tender? Mr Noone: This isn't usually a problem – we have done it in the past. Once you are ready, you will need to discuss this with HealthShare NSW as they look after the contract side of things. 1. Following this meeting, Mr McCarthy sent an email on 27 February 2014 to Mr Linderman stating that: The feedback we received yesterday from our initial WSLHD meeting was that we should raise any contractual points, such as an entity change to the incorporated joint venture (no real change to what we are and have been doing just formalizing). They did not appear to have any real issue around an entity change. The second main point on contract start date they also felt was reasonable. Again the earlier we flag the better as they suggested. Bryan [McCarthy] and I will have an intense read of the deed/contract draft previously supplied and mark up any sections for our discussions. We should get together to compare markups and communicate these back to Health Services. The sense I got was we should be looking to get this back to Margaret before they issue contract from there [sic] end. 1. Mr Linderman's response to Mr McCarthy the same day was that: Yes it was a great meeting. I think this will begin the Rollin effect for a great future together. At this stage I cannot ask to change the contract details without having any details to change it to. We are all keen to change it and move ahead with the JV but until hills [sic] are in or out we will need to sit tight. I will have a chat with Darren [Brighton] and Daniel [Rhodes] tomorrow morning and see what our options are to action the JV based around even just the current projects at hand and tendered ones. Darren believes that hills [sic] will be more than happy to do the deal between Stellar / Questek-Hills as first planed [sic]. Again this will be cleared up over the next 2 weeks. At this stage we should focus on the hardware and software delivery options to them and as Matthew mentioned they would be happy to transfer details on the contract at a latter [sic] date if required. We understand your concerns / frustrations to lockup the deal with WSLHD but after yesterday's meeting I feel we have about 4 to 5 weeks of contract talk with WSLHD and in this time we can amend the documents to the JV details once finalized. 1. Thus, as at 27 February 2014, it was apparent that Mr Linderman's understanding was that what would happen in relation to the WSLHD Contract (and the proposed joint venture) depended on Hills' position (i.e., whether it was "in or out"). Meeting 13 March 2014 1. On 13 March 2014, there was a meeting attended by Mr Linderman (still at Questek), Ms Jurd and Mr White (of Hills) and Mr Curtin (of Stellar Vision). Mr Curtin's evidence is that during that meeting, there was a conversation to the following effect: Mr White: What makes you think you have an interest in the Western Sydney tender? Mr Curtin: Stellar Vision submitted the tender jointly with Questek under an agreement that the contract would be entered into by the joint venture. This was in compliance with the Outline of Agreement reached with Questek under which Stellar and Questek agreed to work together in a project-by-project joint venture arrangement. Stellar Vision in fact wrote the tender response based on Stellar Vision's software, and the tender has Stellar Vision's name all over it. Questek's [sic] simply acted as a facilitator given its existing relationship with the client. Ms Jurd: Instead of a joint venture, we will put in a structure where Stellar Vision gets the same financial outcome. We are about to finalise the deal with Questek and are completing the final legal documents. As part of this we need you to sign this letter which I will give you in draft form to review and come back to us. 1. Stellar Vision says that, while Hills or Ms Jurd may have wished to put in place a structure other than a joint venture in which Stellar Vision obtained the same financial outcome, this was not a possible outcome (in the absence of agreement from Stellar Vision), in light of the relationship between the parties in respect of the WSLHD tender. That, however, appears to be predicated on Stellar Vision's trust claims succeeding, since the Outline of Agreement did not contain a concluded agreement as to how Stellar Vision and Questek would work together on future projects. In any event it is noted that such statements pre-date the signing of the Undertaking (see below). More significantly, my view is to note that Stellar Vision is not suing on any representation by Hills that it would "put in a structuring" where Stellar Vision got the same financial outcome as a joint venture. 2. Hills Health Solutions says that the above conversation did no more than put Hills Health Solutions on notice of what it already knew, namely, that the WSLHD tender was understood by Stellar Vision to be a "joint tender" and, consistent with the documents that had been provided to Hills Health Solutions at that date, that Stellar Vision and Questek were working towards some form of agreement (which may or may not ultimately have been a "joint venture" of some sort). I agree. The draft letter provided at the meeting on 13 March 2014 (with amendments) was ultimately executed on 24 March 2014 (the Undertaking). Draft 13 March 2014 letter 1. The 13 March 2014 letter provided to Stellar Vision at the meeting on that date took the form of a draft undertaking and in effect sought confirmation that Stellar Vision would continue to supply the software for the QCH contract on the same terms as contained in the Outline of Agreement, and any open purchase orders, tenders and/or requests for proposal jointly submitted by Questek and Stellar Vision. The letter, which underwent a number of iterations, in its first version sought the following consent and undertaking from Stellar Vision: 1) Consent to assignment Stellar consents to the [assignment/novation] of the QCH Outline of Agreement dated 23 May 2013 between Stellar and Questek Australia to Hills with effect from completion of the Questek acquisition. 2) Undertaking in regards to future contracts Stellar acknowledges that Questek Australia have jointly submitted Tenders and Pitches. Stellar undertakes to Hills that if there is a successful Tender and/or Pitch, Stellar will supply to Hills the software for the Questek entertainment products which are the subject of that Tender and/or Pitch on the terms set out in the Tenders and Pitches or any additional terms which are necessary to reflect any final awarded contract arising from Tenders and Pitches. 1. In submissions, Hills Health Solutions points out (see T 347.9-10) that the consent sought to the assignment of the "QCH Outline of Agreement" was for the benefit of Hills Health Solutions in that it was seeking to ensure that when it acquired the Questek business it did so with the software provider (Stellar Vision) to continue on the same terms to provide the PES software. 2. Mr Curtin's evidence is that he was concerned that the draft undertaking characterised Stellar Vision as the "software and content" supplier to Hills Health Solutions, rather than as a joint venture partner with Questek, and that the letter did not identify all the joint projects (Annexure A to the draft letter being blank). As such, Stellar Vision says that the draft undertaking letter is appropriately characterised as Ms Jurd's attempt to create a different arrangement that did not involve any joint venture between Hills and Stellar Vision in respect of existing tenders (including the WSLHD tender) or more generally. It is said (consistent with Hills Health Solutions' submissions) that it was directed to protecting Hills Health Solutions' position to ensure the involvement of Stellar Vision in relation to, inter alia, the WSLHD project post-acquisition. 3. Pausing here, at the very least, the provision of a draft undertaking by Hills Health Solutions in relation to further contracts suggests that Hills Health Solutions did not understand that there was an already binding contract or other relationship between Stellar Vision and Questek in relation to those future contracts. Nor did Stellar Vision suggest this at the time (other than the reference to the Outline of Agreement – see the conversation on 13 March 2014 above). Revisions to Draft Undertaking 1. Following the meeting on 13 March 2014, Mr Linderman sent an email to Ms Jurd, identifying all the projects that were joint Questek and Stellar Vision projects, and the status of those projects as follows: The following are the projects as discussed: - Queensland children's hospital – Project under progress - Western Area Health – Won - Nepean Area Health – Tender in progress - Caboolture Public Hospital – Won - Northern Beaches – Tender in progress - Perth children's = Under discussion / awaiting Bart to arrange demo - Able Tasman – Aged care potential demo site to release aged care platform - Dubbo Base Hospital- Under discussion / awaiting meeting after NC installation … VCCC Melbourne 1. On or about 13 or 14 March 2014, Mr Curtin and Ms Jurd had a discussion during which Mr Curtin indicated that the draft 13 March undertaking did not adequately address the WSLHD tender (amongst other things). Mr Curtin's evidence is that he and Ms Jurd had a conversation to the following effect: Mr Curtin: There are still some things missing from the letter. The bids and tenders need to be added in, for example the Western Sydney tender and the Northern Beaches tender. Ms Jurd: I will send you a revised letter shortly. 1. On 14 March 2014, Ms Jurd sent a revised version of the draft undertaking to Mr Curtin. The covering email stated: Attached is a revised Undertaking document which has been updated following our meeting yesterday to better reflect [sic] Western Sydney. Based on the information that Daniel [Linderman] has provided to us we are proposing that the following contracts would be included in the attachment. - Queensland children's hospital – Project under progress - Western Area Health – won - Nepean Area Health – Tender in progress - Caboolture Public Hospital – Won - Northern Beaches – Tender in progress Would you be able to provide some feedback to us on Monday please so we can progress with the Questek transaction. … 1. The revised draft undertaking contained the following additions in respect of the WSLHD tender (that were not included in the original draft): … In connection with the acquisition, Hills seeks confirmation from you that Stellar will continue to supply the software for the Questek patient entertainment system under: … (b) the tender for the Western Sydney Local Health District ("WSLHD") on the terms set out in the WSLHD Request for Proposal or on any additional terms which are necessary to reflect and final awarded contract; … … With respect to WSLHD, Hills acknowledges that Stellar will seek to be named as a party in any final awarded contract relating to WSLHD. If WSLHD does not agree to Stellar being named as a party or if Stellar is not named as a party to the final awarded contract relating to WSLHD, Stellar undertakes to Hills that Stellar will continue to supply Hills the software for the Questek patient entertainment system that is the subject of such final awarded contract. … 2) Undertaking in regards to WSLHD Stellar acknowledges that Questek Australia has been selected as a preferred supplier of the WSLHD tender for patient entertainment systems. Stellar undertakes to Hills that if this tender is awarded to Hills, Stellar will supply to Hills the software for the Questek entertainment products which are the subject of that tender on the terms of the Request for Proposal or any additional terms which are necessary to reflect any final awarded contract. … 1. It may be noted that this draft thus contemplates that Stellar Vision might not be named as a party to the final awarded WSLHD Contract. It does not refer to the contract being held for the benefit of, or on trust for, Stellar Vision in those circumstances; rather it contains an undertaking that in those circumstances Stellar Vision would supply to Hills the software on the terms of the RFP "or any additional terms which are necessary to reflect any final awarded contract". 2. During the course of the negotiations in respect of the draft undertaking, on 18 March 2014, Mr Linderman sent Ms Jurd an email in respect of the arrangements between Questek and Stellar Vision, stating: Attached is the bases [sic] that Darren [Brighton] and myself have been going on from prior discussions with Brendan McCarthy regarding the Western Sydney style projects and current tenders. Our main projects being WSLHD & Nepean Blue Mountains are the main concern for Brendan, regarding all other projects they are still in the early to mid-stages of discussions and are not documented as official quotes or tenders that 100% involve them, I am still keen to have their involvement in the other projects that we are looking at but as discussed with you tonight I'm more than happy to develop from scratch if required. My advice to the situation would be to create a basic document to offer WSLHD and the Nepean Projects to them at a 50/50 deal based around some of the details attached. And to also offer to reconvene within the next 4 to 6 weeks to finalize a deal that suits both parties for a long term relationship. Please note this document is a record that I was working on prior to and after the Hills offer to purchase Questek as I had a feeling this may come up. I had sent it to Brendan to agree and to add details as required but they wanted to:- "see what Hills comes back with" … 1. Stellar Vision emphasises the difference in that email between the reference to the "main projects" (the WSLHD and Nepean projects) and all "other projects" that "are not documented as official quotes or tenders that 100% involve them [i.e., presumably, Stellar Vision]", the suggestion there made by Mr Linderman being to document an offer of a 50/50 deal in relation to the WSLHD and Nepean projects and then to reconvene to finalise a deed "that suits both parties for a long term relationship"; (i.e., says Hills Health Solutions, to discuss the concept of an overarching long term joint venture – see T 392.1-4). Again, I note that there is no reference here to there being a binding agreement as to these arrangements at that stage (and that Mr Linderman's perception was that Stellar Vision wanted to see what "Hills comes back with" which understanding is consistent with earlier internal Stellar Vision documents). 2. The 18 March 2014 email from Mr Linderman contained an attachment titled "Outline of Agreement" which documents, under the heading "Object of Agreement", that Stellar Vision and Questek "agree to enter into any upcoming PES tenders or sales leads on a 50/50 split share agreement". Under the heading "Conditions Precedent to Agreement" the Outline provides that "[b]oth parties will contribute 50% of all labour & material costs for each project" and further that "[a]ll software pricing will be built into any sale requiring software & revenue from the sale will be split 50/50 (based on the gross revenue from the software)". 3. Stellar Vision says that the form of Draft Undertaking that Mr Curtin received on 18 March 2014 was still unacceptable to Stellar Vision because it did not acknowledge the terms of the joint venture between Questek and Stellar Vision. (Pausing here, there was at that stage no formal joint venture agreement as such that had been documented between Stellar Vision and Questek.) Therefore, Mr Curtin can only be referring to his understanding of the earlier discussions with Questek as had been contemplated by the Outline of Agreement. 4. Mr Curtin's evidence is that he had a conversation with Ms Jurd on 20 March 2014: Mr Curtin: Thank you for the revised letter. There's still nothing in there to acknowledge the terms of the joint venture agreement Stellar has with Questek. Ms Jurd: I will send you a further draft this afternoon. 1. On 20 March 2014, Ms Jurd sent a further revised version of the draft undertaking (i.e., the third version by this stage) to Mr Curtin by email stating: Further to our conversation earlier today I have redrafted a proposed letter to be signed by Stellar which I hope addresses your concerns. Given the need for this document to be signed before the Questek acquisition can proceed I would appreciate it if you could provide some feedback on this draft tomorrow. Our team, including Mallesons, are available at any time to discuss the letter further if required. 1. The form of the letter attached to Ms Jurd's email included reference to the parties splitting the profits from the WSLHD tender, namely that "both parties will split the net profit 50/50 from all projects & any ongoing services (hospital commissions will be paid from gross revenues unless stated otherwise within tender documentation)". Some deletions were made by Ms Jurd, including the reference to Stellar Vision seeking to be named as a party and deletion from the undertaking in [2] by Stellar Vision in relation to future contracts. This draft includes a reference to Hills Health Solutions and Stellar Vision acknowledging and agreeing that in relation to future contracts the details in Annexure A (which had been blank in the second version) the intention of the previous discussions between Questek and Stellar Vision will be honoured, going on to say "specifically, …" and adding the bullet points appearing under the heading "Conditions Precedent to Agreement" in the Outline of Agreement sent by Mr Linderman to Ms Jurd on 18 March 2014. Stellar Vision says that the long-term relationship cooperation clause at the conclusion is clearly different from the acknowledgement and agreement that appears in the Outline of Agreement, under the heading "Future Cooperation", insofar as the cooperation clause in the Outline of Agreement envisaged finalisation of "an appropriate long term deal for all parties" whereas the clause in Ms Jurd's further draft letter of 20 March 2014 merely contemplated the commencement of "negotiations in good faith" to "draft an agreement … for a long term relationship". 2. On 21 March 2014, Mr Curtin provided to Ms Jurd a revised version of the letter (being the fourth version). The amendments by Mr Curtin in the fourth version of the letter included an acknowledgement that tenders had been submitted as "joint tenders" between Questec Australia and Stellar Vision; and that Stellar Vision undertakes to provide services identified in the Outline of Agreement. There is an amendment in relation to the licence of software and an amendment to change "net profit" to "split gross profit" and a further amendment to reference to gross profit being gross income less hospital income. 3. Stellar Vision says that there were were some further minor amendments made to the form of the draft undertaking on 21 March 2014 (by Mr Linderman). On 24 March 2014, Hills Health Solutions circulated a fifth version of the undertaking. The amendments include reference to operational costs and sales commissions. Stellar Vision points out that the reference to splitting the gross profit was retained. Ms Jurd's earlier email of 21 March 2014 made reference to the version having been referred to in-house lawyers to "make sure what Stellar have added [sic] hasn't changed the intent of the document". 24 March 2014 Undertaking 1. On 24 March 2014 (shortly prior to entry into the Business Purchase Agreement on 3 April 2014 – as to which timing Stellar Vision attaches some significance), Stellar Vision and Hills Health Solutions signed the written undertaking (Undertaking), which provided, relevantly: We acknowledge that Stellar and Questek Australia entered into negotiations which were summarised in the document entitled "Outline of Agreement" and dated 23 May 2013. Negotiations between the parties were undertaken as envisaged under the heading "Financial Cooperation" which negotiations were suspended at the request of Questek Australia in late 2013. We are aware that the time span envisaged in the document "Outline of Agreement" has in part expired and in part will expire in May of this year. It is our understanding that discussions with Stellar [sic] that Stellar is prepared to honour the spirit and intent of the document "Outline of Agreement" in respect to: (a) The Queensland Children's Hospital; and (b) Its intent outlined in Annexure A hereby for all the tenders that have been issued. We acknowledge that such tenders [which I interpose to note must be a reference to the tenders referred to in (b) above] have been submitted as joint tenders between Questek Australia and Stellar. [I also note here that this was inserted in the document at Stellar Vision's request – and Stellar Vision emphasises the acknowledgement of "joint tenders"] Stellar undertakes: (a) In relation to Queensland Children's Hospital to provide the service identified in the Outline Agreement. (b) Hills and Stellar acknowledge and agree that in relation to future contracts detailed in Annexure A the intent of the previous discussions between Questek Australia and Stellar will be honoured, specifically: 1. both parties, Hills and Stellar, will each contribute 50% of all contract implementation costs including labour, materials & ongoing operations costs for each project; 2. Stellar will licence [sic] the end user to utilise the software for the Term of the contract; This will not apply to any vendor owned systems e.g. WSLHD / NBMLHD tenders 3. both parties acknowledge that a core part of the value that the parties are contributing to this arrangement is, for Hills, access to the Questek customer base and for Stellar, access to the Stellar software and related support services; 4. both parties will split the gross profit 50/50 from all projects & any ongoing services (hospital & Sales commissions will be paid from gross revenues unless stated otherwise within tender documentation) (gross profit being gross income less hospital & Sales Commission); and 5. Both parties will have open access to all project & financial information as required. Hills undertakes to, within 4 weeks of settlement of the Questek Transaction, commence negotiations in good faith with Stellar to draft an agreement that suits both parties for a long term relationship. 1. The WSLHD tender was included in Annexure A to the Undertaking. 2. Pausing here, the chapeau preceding the second iteration of cll (a) and (b) is unfortunate, to say the least, since it literally reads as an undertaking by Stellar Vision but (b) is phrased as an acknowledgement and agreement by both Stellar Vision and Hills Health Solutions (though, as I apprehend it, Hills Health Solutions does not rely on this seeming contradiction in its construction of the Undertaking). 3. Stellar Vision says that this document has contractual force and that it applies to the WSLHD Contract (in essence binding Hills Health Solutions to the terms in the five numbered points appearing below the second paragraph (b) on the second page of the Undertaking in relation to the WSLHD project). Hills Health Solutions says that it only has contractual force in relation to the QCH project and that the balance was not intended to be binding. (I interpose to note that even if the second paragraph (b) is intended to be binding it is phrased as an acknowledgment and agreement to honour the "intent" of previous discussions between Questek and Stellar Vision, which carries with it to my mind a degree of ambiguity.) Business Purchase Agreement – 3 April 2014 1. On 3 April 2014, Hills Health Solutions, Brighton Technology Group, Questek and others entered into a Business Purchase Agreement (the purchase being completed on that date). 2. The "Assets" transferred under the Business Purchase Agreement included the "Contracts" and "all other property and assets of the Sellers connected with the Business". The term "Contracts" was defined as: (a) the contracts and commitments entered into by a Seller in the ordinary course of conducting the Business; and (b) any rights under a tender which, upon acceptance, have or will give rise to a purchase order, contract or other commitment of, or related to the Business. (Stellar Vision says that those rights in relation to WSLHD were subject to its rights in relation to the joint tender.) 3. The Business Purchase Agreement also included as a condition precedent that "Key Contracts" be novated to Hills Health Solutions (cl 3.1(b)). The Outline of Agreement between Stellar Vision and Questek was identified as a "Key Contract". On the date of the Business Purchase Agreement, however, Hills Health Solutions waived this condition precedent. 4. Stellar Vision places emphasis on the fact that the due diligence material identified in the Business Purchase Agreement (Schedule 10) contained material relating to Stellar Vision and the WSLHD project. In particular, the due diligence material referred to in the Business Purchase Agreement included a document entitled "Current Relations with Stellar & Questek Infotainment", which included the following: Western Area Health – Won – Final details of start dates are being confirmed with health share. Stellar and Questek will be on the contract if a JV agreement is not finalized at this stage. [emphasis as per Stellar Vision's submissions] ASX Announcement 1. At the time Hills announced its acquisition of Questek, the ASX announcement media release in respect of the acquisition attributed the following statement to Ms Jurd: This is another great strategic fit for our health solutions business … It is the market leader in wireless nurse call solutions, has respected, long-term customer relationships, and a new solution in entertainment through a partnership with Stellar Entertainment. 1. Stellar Vision says that it had not asked to be included in the ASX release and that it amounts to an acknowledgement of the partnership between Questek and Stellar Vision (see at T 304.13-14). 2. Ms Jurd forwarded the ASX announcement to Mr Curtin by email on 4 April 2014, stating: I am very pleased to advise that the Hills acquisition of Questek has completed. Thanks again for your assistance in making that happen. 1. Stellar Vision says that Mr Curtin's assistance in making the acquisition happen was through the Undertaking. Position regarding Lincor 1. In October 2013, representatives of Hills had been in contact with Lincor in respect of the WSLHD Contract (in the context of HTR's ultimately unsuccessful bid for the WSLHD project). Stellar Vision's complaint is that, almost immediately after Hills Health Solutions acquired Questek's business, Hills Health Solutions started to consider the possibility of replacing Stellar Vision with Lincor. 2. Stellar Vision maintains that, at the same time as it was undertaking work on the WSLHD tender, Hills Health Solutions determined to exclude Stellar Vision from the WSLHD tender and to replace Stellar Vision with Lincor; and that this was not communicated to Stellar Vision. Stellar Vision says that this was due to Hills Health Solutions' relationship with Lincor and to Hills Health Solutions' dissatisfaction with Stellar Vision's conduct at QCH, and in particular to certain supposed ethical issues in Stellar Vision "going behind Hills Health Solutions' back" (to which I refer shortly). (In the absence of any evidence from Ms Jurd or Mr Linderman, Stellar Vision says that those inferences may be readily drawn.) 3. It certainly seems that Stellar Vision had some concern at the time as to the position of Lincor since, on 4 April 2014, Mr McCarthy wrote to Mr Curtin stating "[a]s we have discussed it feels like they [Hills Health Solutions] will now want to see our product installed and working at QCH as a first step as [their] view is [that] it is unproven and untested. Hills are still in talks with Lincor in relation to software and at this stage are looking to keep that option and line open". 4. On 7 April 2014, Mr Curtin emailed Ms Jurd, stating "We look forward to further discussions with you to reach agreement on how we work together in the future". 5. On 28 April 2014, Mr Linderman (by then at Hills Health Solutions) sent an email to Ms Jurd which stated: I have been reviewing the Lincor documents and can see it will be great to work with them but as Ted [Pretty] has already seen we really will need to be able to ether [sic] influence their design path or preferably own the path... I have reviewed the pricing for SCUH and there is diffidently [sic] some money to work of it. Unfortunately it looks like the system is designed using VMware that will have an oncost in licence fees for ever [sic] (to be confirmed). What I was after is some documentation on the back office and any documentation relating to design platforms and billing reporting & usage reports. Also If they have a product development path / along with standout features? E.g. Web RTC technologies for web based video conferencing. It would also be nice to know: If they are open to setting up an aged care platform (Something we need to invest into - maybe with them) Content Security? (Foxtel & VOD Content). 1. Pausing there, it is not necessarily the case that this was related to the WSLHD Contract (see reference to SCUH). In any event, Stellar Vision says that the possibility of replacing Stellar Vision with Lincor was raised again in an email from Mr Linderman to Ms Jurd on 12 May 2014, which stated: Current Major IP PES projects. - WSLHD 1600 bed PES rental 10+5yrs- Due to attend meeting regarding delivery delays to the [W]estmead site and to discuss a workaround the [sic] building works in 2018. Looking to start Auburn 90 beds before EFY Meeting Tuesday with Stellar regarding the Hills / Stellar relationship moving forward and options. I feel if we are not to continue a relationship with stellar [sic] we should work away [sic] out of doing this project with them. I am also confident I can get a Lincor option over the line as long as Lincor are happy to work with us on some re design [sic] options. 1. That email to my mind is more revealing in that it indicates a possibility that Hills (or Hills Health Solutions) might not continue a relationship with Stellar Vision (i.e., a long term relationship) and if so would want to work a way out of doing the WSLHD payout with Stellar Vision. 2. On 27 May 2014, Mr Linderman sent an email to Ms Jurd and Mr Starkey in which Stellar Vision says he revealed a plan on the part of Hills to deprive Stellar Vision of its interest in the WSLHD Contract (some 7 months prior to the time at which Hills Health Solutions claims it made this decision). That email states: … I have planted the seed in Brendan [McCarthy]'s head that we (HILLS) may be interested in purchasing their share of the contract from them. But as Dave S mentioned do we really need to do that from a legal point? Peta, I would like you to arrange a meeting with Stellar in the coming weeks regarding a Go To market [sic] product where we will review the Stellar product with me on the other side of the table to outline that hill [sic] is not prepared to install an incomplete product. And if they cannot show how the product will work from a maintenance point not just a functional [sic]. And we will also outline when we mean maintenance we are not referring to a cisco certified engineer team being required to manage the product on a day to day bases [sic] . If they are interested in the Buyout I would not want to lock them in to being the software provider for the project unless the product was serviceable and comparable to Lincor and approved by Hills as it's our Name on the line [sic]. I have also started to prepare some product feature documents that I will send to Lincor for review regarding VidCon services and some of the QCH features. 1. Mr Starkey's affidavit affirmed 10 May 2018, Mr Starkey deposed that he did not have any specific recollection of the comment attributed to him in the above email. At the very least, this seems to suggest a concern on Mr Linderman's part as to whether the Stellar Vision product was "serviceable" though it is not clear when or why such a concern had arisen. QCH project unpaid invoices 1. Meanwhile, on 7 and 22 April 2014, Mr Curtin emailed Ms Jurd regarding Stellar Vision's unpaid invoices in respect of the QCH project. (The outstanding invoices were paid on 17 July 2014.) Continued work on the WSLHD tender 1. Following Hills Health Solutions' acquisition of Questek's business, Stellar Vision continued to work on the WSLHD tender. Stellar Vision says that this work occurred in the context of Stellar Vision seeking to discuss with Hills Health Solutions a more formal agreement as contemplated by the Agreed Undertaking. 2. In particular, Stellar Vision points to the fact that, throughout the period from April 2014 until at least November 2014, Dr Rahman and others from Stellar Vision worked to develop the software architecture, system design and services architecture for the WSLHD project; during the second half of 2014, Mr McCarthy and Mr Linderman worked together to source hardware in respect of the project, including Android terminals; and Dr Rahman's development team at Stellar Vision spent an estimated 80% of its time on customisation of Stellar Vision's core software for use on the WSLHD project. Dr Rahman has deposed (see at [30]) that he continued working on the customisation portal until the end of December 2014 and Stellar Vision says that he continued to work on the WSLHD project until late February 2015. 3. On 30 April 2014, Mr McCarthy emailed a "to do" list to Mr Linderman, one of which was "Update on WSLHD contract process. Request Dan to include and copy StellarVision in on all correspondence with WSLHD going forward". 4. On 1 May 2014, Mr Linderman responded to the above by annotating Mr McCarthy's 30 April 2014 email. The annotation for the WSLHD item was "Currently awaiting a call back from Mathew re Westmead renovation issues that may interfere with contract terms. (still yet to receive Risk based terminal from Advantech.)" 5. That same day, Mr McCarthy responded by further annotating the email: "Okay. As StellarVision are part of and carry risk on the contract we would like to be involved in any and all discussions and correspondence in relation to it. Bryan [Curtin] will handle the contract side from our end". May 2014 1. On 13 May 2014, a meeting took place between Stellar Vision and Hills Health Solutions. Mr Curtin's evidence is that the purpose of the meeting was to fulfil the requirement in the Undertaking to commence negotiations on a formal agreement documenting the long term relationship between the parties within six weeks of the completion of Hills Health Solutions' acquisition of Questek. His evidence is that, at the meeting, Ms Jurd stated that "there is no rush to formalise the agreement between Hills and Stellar Vision while we are still waiting for the WS Contract to be signed. The obligations that each company is responsible for in the WS Contract will need to be incorporated into the agreement between Hills and Stellar Vision anyway. So once that is signed we can then do our agreement quickly". (This is inconsistent, at least on one view, with it being understood that there was already an agreement in place between the two companies.) Meeting with WSLHD representatives – 16 May 2014 1. On 16 May 2014, Mr McCarthy and Mr Linderman attended a meeting with Mr Noone and Mr Burnett. During this meeting, the delayed start for Westmead hospital was discussed, and Mr Burnett proposed the concept of "total number of bed days" as a means of addressing this delay. This proposal was recorded in a discussion paper prepared for WSLHD on 26 May 2014 (and was subsequently incorporated into the final WSLHD Contract). Hills Health Solutions' withdrawal from the QCH project 1. In early June 2014, representatives of Hills Health Solutions attended QCH and observed Stellar Vision's PES in operation at QCH, following which Ms Jurd emailed Mr McCarthy on 5 June 2014 to "to thank you and your team for the support you have been giving us on the QCH site" noting that "[i]t is a challenging project for all of us so the extra effort your team has been putting in is appreciated". 2. However, not long after this (during July 2014), Hills Health Solutions withdrew from the QCH project. (Stellar Vision says that this formed part of the factual background to Hills Health Solutions' pretext for excluding Stellar Vision from the WSLHD tender (see below) but it may be noted that it was some months after Mr Linderman had already recorded concerns as to the serviceability of Stellar Vision's product.) 3. Relevantly, the head contractor at the QCH project was Lendlease, which had subcontracted part of the work to Allied Technologies Pty Ltd (Allied), an electrical contractor which had in turn subcontracted part of the work to Questek. 4. On 12 June 2014, Allied issued a "show cause" notice to Hills Health Solutions (on the basis that Questek's subcontract with Allied had been novated to Hills Health Solutions). As I understand it, Allied asserted that Hills Health Solutions was fully liable for any failure of performance of the sub-contract. After receipt of the "show cause" notice, Hills Health Solutions ceased work in respect of the QCH project. (Pausing here, the position of Hills Health Solutions was that the contract had not been novated – see below.) 5. Stellar Vision says that, at that time, there were substantial problems on site (as identified in part in the show cause notice), including installation of nurse call systems in locations where cabling was not present, and a failure rate of approximately 30% for over door lights (which it says were issues related to Questek's nurse call system, rather than Stellar Vision's PES). Lincor exclusive distribution agreement 1. On 5 June 2014 (Stellar Vision says this was shortly after the plan to seek to remove Stellar Vision from the WSLHD Contract and replace it with Lincor was identified – seemingly referring to the 27 May 2014 document above), Hills Health Solutions entered into an exclusive distribution agreement with Lincor Inc and Lincor Solutions Ltd. The agreement provided that: Hills Health Solutions would pay Lincor a "Right-To-Use Licence Fee" of US$1,500,000; Hills Health Solutions would pay a "Platform Licence Fee" of A$0.50 per bed per day; and the payment of the "Platform Licence Fee" would be offset against the "Right-To-Use Licence Fee" until an amount equal to US$1,500,000 had been offset. 2. Stellar Vision says that this agreement provided a commercial incentive for Hills Health Solutions to replace Stellar Vision on the WSLHD project, because engaging Lincor on the WSLHD project would allow Hills Health Solutions to start to recoup the "Right-To-Use Licence Fee" at no additional cost to Hills Health Solutions up to a value of US$1.5 million. Request for name change on contract 1. On 3 July 2014, Stellar Vision sent an email to HealthShare NSW, requesting that the WSLHD Contract include both Questek and Stellar Vision as parties to the deed. 2. Stellar Vision says that this was consistent with previous discussions between the parties, and the position disclosed to Hills Health Solutions at the time of the Questek acquisition, where the document titled "Current Relations with Stellar & Questek Infotainment" regarding the status of the WSLHD project included the statement that: Stellar and Questek will be on the contract if a JV agreement is not finalized [sic] at this stage. 1. On 15 July 2014, Stellar Vision received an email in response to that request: Thank you for your email enquiry. In response, as the tender bid for Patient Entertainment & Information systems was solely in the name of Questek, we are unable to change this without advice from this company. I have approached Daniel Linderman from Questek and received advice that the Deed will remain in their name alone. 1. Mr McCarthy's evidence is that following receipt of the email of 15 July 2014 responding to the name change enquiry, he and Mr Linderman had a conversation during which Mr Linderman reassured Mr McCarthy and said words to the effect that it was "normal for Hills to front end the contract and the joint venture to operate behind it as we have discussed" and that "we will cover this off when the agreement is done". Relevantly, Mr McCarthy's evidence is that he had a conversation with Mr Linderman during which they said words to the following effect: Mr McCarthy: Dan why did you instruct HealthShare to not include our name along with Questek? You know this was part of our agreement from the start. You did not raise any concerns in conversations with Noone and Burnett. Mr Linderman: Once the email arrive from HealthShare I had to have the request cleared internally and was instructed not to add Stellar Vision's name but to change it to Hills. There was nothing I could do. Mr McCarthy: That is bullshit. On the phone you say you're in agreement if the request comes and then fuck me over. Mr Linderman: This is normal for Hills to front the contract and the joint venture to operate behnd it as we have discussed. I think Hills want it in their name to get board approval and so they can book the revenue numbers. You know how these big companies work, as long as they can book the revenue and show the headlines no one sees what they pay out the back-end. We will cover this off when the agreement is done. Mr McCarthy: And when are we going to get that done? Mr Linderman: As Peta said there is no rush as we have not signed the contract with the government yet. This is the first draft stage and Hills will no doubt pass this around their internal legal. It could take a few months. Hills Health Solutions ceases work on QCH project 1. On 21 July 2014, Stellar Vision was informed (apparently by HTR) that Hills Health Solutions had stopped work on the QCH project. Mr Curtin sent an email to Ms Jurd which stated: We received advice this morning from Michael Hezlett, Senior Project Manager at Merlon Technologies that "we have removed all labour from site at QCH." Could we please meet with the agenda to include: 1. The implications of this advice in regard to the completion of the QCH Project; 2. Stellar's residual obligations to Hills Health Solutions in respect of the undertaking given by Stellar to Hills in relation to Queensland Children's Hospital; 3. Hill's [sic] undertaking regarding an agreement for a long term relationship. We look forward to a meeting at your earliest convenience. 1. On 21 July 2014, Ms Jurd sent in an email to Mr Curtin, which stated: Hills does not currently have a contract with Allied so we could not continue to do any more work without a commercial agreement in place. We expect that Lend Lease will step in to resolve this if Allied don't come to their senses. I am happy to meet next week and we will keep you posted on any developments. 1. Stellar Vision says that Hills Health Solutions did not take steps formally to novate the contract with Allied (it is suggested that this was on the basis that it wished to avoid potential exposure to liquidated damages though nothing turns on this), but that, notwithstanding that Hills Health Solutions had not novated the contract at QCH (and notwithstanding that Ms Jurd was asserting that Hills Health Solutions did not have a contract with Allied in respect of QCH), it may be inferred from the above email that Hills Health Solutions wished to continue to work on the QCH project, (and had withdrawn from the site in order to place commercial pressure on Allied). I understand that, in due course, compensation was agreed between Allied and Hills Health Solutions which involved a percentage rate in Allied's favour up to a specific sum (of $1.3 million) see Exhibit 4 Post Fact Audit – HTR, Merlon, and Questek – ARCC Report dated June 2015 (an internal post acquisition report of Hills which refers to the decision not to novate the contract from Questek and to walk off the QCH project to protect Hills' exposure). Draft WSLHD Contract 1. On 25 July 2014, Mr Linderman forwarded a copy of the draft WSLHD Contract to Mr McCarthy. In that draft contract, Questek had been replaced by Hills Health Solutions as the "Contractor". Stellar Vision points out that the technical specifications contained in the draft WSLHD Contract were the same as those prepared by Stellar Vision and submitted with the response to the WSLHD RFP. 2. The draft WSLHD Contract had specified a Planning Commencement Date for Auburn Hospital of 1 August 2014. The Planning Commencement Date was the date on which the planning for the deployment of the PESs at the hospital was due to commence. The deployment of PESs at a WSLHD Hospital was to commence on the Installation Commencement Date, being five weeks after the Planning Commencement Date. By five weeks after this date, on the Service Commencement Date, the PESs devices were due to commence operation. 29 July 2014 meeting 1. There was a meeting about the QCH project between representatives of Stellar Vision and Hills Health Solutions (referred to in the 21 July 2014 email above) on 29 July 2014, which was attended by Mr Curtin and Mr McCarthy for Stellar Vision, and Ms Jurd, Mr Starkey and Mr Linderman for Hills Health Solutions. During that meeting, the QCH and WSLHD projects were discussed. 2. As to the WSLHD project, there was reference to a financial model for the project. The evidence of Mr Curtin and Mr McCarthy is that Ms Jurd described the model as one in which "Hills will take care of the capital costs and Stellar Vision will provide the software". 3. As to the QCH project, their evidence is that Ms Jurd said words to the effect that "Stellar Vision has no obligations to Hills" in respect of the QCH project (i.e., Stellar Vision had no obligation to continue to perform the QCH project – apparently on the basis that the Questek contract in relation to this project had not been novated to Hills Health Solutions – see below) and that "Hills would view it unfavourably" if Stellar Vision continued to work on the QCH project. 4. Shortly after the meeting, Mr Curtin prepared a memorandum of the meeting, which recorded the following: The purpose of the meeting was discuss the status of the contract negotiations with WSLHD and the financial model for the project. However, Hills had recently withdrawn their project team from the QCH project. Stellar Vision had delivered the PES software for the Project and been paid in full. I had reviewed the Outline of Agreement dated 23 May 2013 between Stellar Vision Operations Pty Limited & Questek Australia Pty. [sic] Limited, and wished to establish the residual obligations of Stellar Vision in respect of the QCH contract. Peta Jurd of Hills stated that Stellar Vision had no obligations to Hills in respect of the QCH contract as the novation of the QCH Agreement was never completed owing to unacceptable requirements by the Prime Contractors in respect of the Deed of Novation. Hills had purchased the assets of Questek but never took the contractual obligations of Questek. Stellar Vision, therefore, had no obligation to Hills. Given this unexpected reply I raised the question that if Stellar Vision had no contract with Hills with regard to work invoiced to and paid by Hills, with which party was Stellar Vision contracted. Hills replied that it could only be with Questek. However, in the Sale Agreement to Hills, Questek agreed to a covenant not to participate in the Health Care sector for a period of five years. The implication of this was that Questek was incapable of fulfilling the contract, and that any obligations Stellar Vision may have had to Questek had therefore ceased. Financial model for WSLHD project 1. On 6 August 2014, Mr McCarthy and Mr Curtin were provided with a copy of the financial model discussed at the 29 July 2014 meeting by Mr Starkey. Mr Starkey's covering email stated: … We need to still finalise the expected installation cost for each site and agree the budget operating P/L. The P/L is at this stage based on rough numbers and we need to critically assess the expected cost for each line. Also, I have not calculated the profit sharing % at this stage, rather just trying to ascertain the NPV of the contract. … 1. On 16 September 2014, Mr Curtin sent an email to Mr Starkey which attached a revised version of the financial model that Hills Health Solutions had provided to Stellar Vision (the September Model). The revised model contained an additional item for Stellar Vision's Software Licensing fees. Mr Curtin's evidence is that those fees were included as a means of demonstrating the value which Stellar Vision was providing to the joint venture for the purpose of future discussions with Hills. (They are, however, arguably inconsistent with the five numbered points in the Undertaking (see (b)(2)) which provide that Hills Health Solutions and Stellar Vision "acknowledge and agree in relation to future contracts [that] … the intent of the previous discussions between Questek Australia and Stellar will be honoured, specifically" that "Stellar will licence [sic] the end user to utilise the software for the Term of the contract; This will not apply to any vendor owned systems" and the points which follow). Mr Curtin agreed with Mr Starkey's "suggestion of a line by line audit of the costs estimates", referring to Mr Starkey's 6 August 2014 email. 2. Stellar Vision says that it is clear that Mr Curtin understood Mr Starkey's reference to "we" in the email sent on 6 August 2014 as being a reference to "Stellar Vision and Hills Health Solutions", which Stellar Vision says explains Mr Curtin's reference to undertaking a "line by line audit". While Mr Starkey could not recall whether the "we" was a reference to "Stellar Vision and Hills Health Solutions" or the collective Hills Health Solutions management team, Stellar Vision says that, on either view, the model was not a "final" model, and was certainly not an "agreed" model as between Hills Health Solutions and Stellar Vision. (This issue is of relevance insofar as the experts have taken the September Model as the starting point for the discounted cash flow methodology when calculating the value of the WSLHD Contract – which I discuss in due course.) Review of draft WSLHD Contract 1. Meanwhile, Stellar Vision's representatives were involved in the review of the draft WSLHD Contract. 2. On or around 5 August 2014, Mr Linderman and Mr McCarthy had a discussion about the Fair Use rights in the WSLHD Contract, which Mr McCarthy documented in an email to Mr Linderman on 6 August 2014, including a statement to the effect that "[a]n approach around "Fair Use" would be inline [sic] with discussions we have had and our Tender submissions". 3. On 14 August 2014, Mr Linderman sent an email to Ms Annerly Squires (the in-house lawyer at Hills), attaching Stellar Vision's review of Schedule 2: Please find attached the details that Brendan and I had minor concerns with. Other than the attached Stellar happy to deliver as tendered. Please review the changes in alien [sic; presumably line] with the front end of the contract and points that we reviewed already. Once that is done we will arrange for Brian [sic] (Stellar) review [sic] your points to ensure he is happy as they will be required to deliver the head contract under the sub contract. 1. It is noted that the attached document directly copied from Mr McCarthy's email from 6 August 2014 regarding Fair Use. 2. On 28 August 2014, Mr Linderman provided Mr McCarthy and Mr Curtin with a copy of Hills Health Solutions' comments on the draft WSLHD Contract, with a request that Mr McCarthy and Mr Curtin "review today". 3. On 2 September 2014, Mr Curtin responded thereto that: We have reviewed the draft [WSLHD] Agreement in conjunction with the comments prepared by Hills. Generally, Stellar Vision's interests align with Hills in respect of the contract terms. We note that Hills has requested removal of Clause 14.1.1 on the basis that Hills did not prepare the tender. Stellar Vision, however, did sign off on the Proposal. We believe this will be a significant issue for [WSLHD]. In effect Hills is arguing that it acquired the assets of [WSLHD], including the contract award by WSLHD], but is not prepared to stand behind the Proposal submitted by Questek and Stellar Vision, which was the basis of the award of the contract, in effect creating the asset acquired. In the expectation that the remaining contract issues with WSLHD will be resolved, we look forward to finalising an agreement between Hills and Stellar Vision in respect of the PES System for the WSLHD contract. 1. On 2 September 2014, Mr Linderman replied to Mr Curtin's email stating that he was "somewhat concerned regarding that point as well" (presumably the removal of cl 14.1.1) and that "I am looking forward to getting our agreement in place with Stellar and hopefully truly show the stellar visions [sic] true potential to Hills and WSLHD". QCH project 1. On 4 September 2014, Stellar Vision sent letters to Hills Health Solutions and Questek in respect of the QCH project. The letter to Questek stated that: At a meeting with Hills Health Solutions Australia Pty Ltd on Tuesday 29th July we were advised that Stellar has no obligation to that company in respect of the Queensland Children's Hospital Contract as the novation of that contract pursuant to a Business Purchase Agreement dated on or about March 2014 between Hills Health Solutions Australia Pty Ltd (ACN 21 100 173 715), Brighton Technologies Pty Limited (ABN 23 123 014 040), Questek Australia Pty. [sic] Limited (ABN 22 001 898 504), was never completed. This letter is to formally terminate any agreement that may exist between Stellar Vision Operations Pty Limited and Questek Australia Pty. [sic] Limited in respect of the Queensland Childrens [sic] Hospital Contract. 1. The letter to Hills Health Solutions attached a copy of the letter to Questek, and stated: Following Hills Health Solutions Australia Pty Limited (Hills Health Solutions) departure from the Queensland Children's Hospital Project and the meeting between our two companies on Tuesday, 29 July 2014, this letter is to formally acknowledge Hills Health Solutions statement that Stellar Vision no longer has any obligation to Hills Health Solutions in respect of or in relation to the Queensland Children [sic] Hospital Contract. For good order sake [sic], attached is a copy of a letter of even date forwarded to Questek Australia Pty Limited. Stellar Vision confirms that that there is no outstanding claim by either Stellar Vision against Hills Health Solutions nor Hills Health Solutions against Stellar Vision relating to that project. You may be aware that as Chairman of Stellar Entertainment, I made a donation of entertainment content and associated services to the Children's Hospital Foundation in support of Stellar Vision's sale of an end user licence to the Queensland Children's Hospital. I fully intend to meet this obligation and provide any services required by the hospital in support of the end user licence from Stellar Vision. 1. Stellar Vision says that the above correspondence occurred in light of Hills Health Solutions withdrawing from the QCH project and Ms Jurd's express statements to Stellar Vision that it no longer had any obligations to Hills Health Solutions in respect of the QCH project. Stellar Vision says that this correspondence has no bearing on the arrangements between Hills Health Solutions and Stellar Vision in respect of the WSLHD project (although, as already noted Stellar Vision seems to rely on the QCH correspondence as the cause of dissatisfaction that it contends led to Hills Health Solutions seeking to exclude it from the WSLHD Contract). Ultimately, Stellar Vision was retained to provide the software for the PESs for the QCH by Allied Technologies and Stellar Vision completed the QCH project in November 2014 (installing some 460 PES units and 150 televisions). 2. Stellar Vision says that a series of emails between Mr Linderman and Mr McCarthy on 5 September 2014 make plain that Hills Health Solutions was seeking to continue to work on the QCH project and that Mr Linderman was upset that Stellar Vision had been assisting Allied Technologies in respect of the project. Those commenced with an email sent on 5 September 2014 by Mr Linderman to Mr McCarthy: We have been in discussions with Allied this week regarding the PES offering to complete the project. I just want you to confirm for me that you are not still involved with the system installation on any aspect locally or remotely? … 1. Mr McCarthy responded to that email the same day saying: FYI our Chairman yesterday sent a letter to Ted Pretty accepting the position that Hills outlined to us regarding QCH. A copy of this letter was sent to Peta [Jurd]. As you know we have no contract with Hills regarding QCH. 1. Mr Linderman then responded: This doesn't answer the question I asked. Yes or No is fine with me mate. to which Mr McCarthy's response was: Its is [sic] not a Yes or No answer. I will update you Monday when we meet for WSLHD. WSLHD Contract 1. On 8 September 2014, Mr McCarthy, Mr Starkey and Mr Linderman attended a meeting at Cumberland Hospital with Ms Lyn Packer, the Director of Information Technology Services at WSLHD. That meeting was organised at the request of Ms Packer. Mr McCarthy's evidence is that, during that meeting, Ms Packer expressed some concern that the WSLHD Contract had not been finalised; and that he and Mr Linderman confirmed that Stellar Vision and Hills Health Solutions were ready and committed to the project respectively. 2. Mr Curtin's evidence is that, at or around the end of September 2014, he left a voicemail message for Ms Jurd, asking her to give him a call in respect of the agreement between Stellar Vision and Hills Health Solutions. Mr Curtin sent an email recording the content of his message on 30 September 2014: I was unable to speak to Peta but finally left a message to the effect that we are aware that: 1. the contract negotiations are nearing finalization [sic] 2. [WSLHD] wish to proceed without delay with implementation 3. We have been told Hills will prepare a draft of an agreement between Hills and Stellar Vision 4. We do not wish to be the cause of any delay so are ready proceed [sic] give this our immediate attention I also left a message that I would be overseas and that she should contact me by email. 1. Mr Curtin's evidence is that in the first week of October 2014, he left a voicemail message for Ms Jurd, stating "we still haven't made any progress on the agreement. Can you give me a call?". 2. On 7 October 2014, Ms Jurd sent an email to Mr Curtin, stating that: Sorry I missed your call last week. It's been a mad rush to the end of quarter and I've just got your message. Hills [sic] Legal team are now in the final stages of negotiation with the LHD and all going well we will be ready to move forward shortly. To ensure we can get the final contract approved with the Hills [sic] CEO, CFO and Legal our team will require a review of the software package you are proposing. Once we have internal approval granted we will then be able to complete our offering to Stellar that David Starkey and yourself have been working on. … 1. Before responding to that email, Mr Curtin and Mr McCarthy exchanged internal emails in which Mr Curtin stated that "[o]ur software proposal has already been accepted by the client" and that Ms Jurd "seems to be overlooking that this is a Joint Venture". Mr McCarthy stated that Ms Jurd "is also overlooking the document both parties signed acknowledging our interest in WSLHD and other already submitted Tender re Nepan [sic] Blue Mounts and Norther [sic] Beaches". Stellar Vision says that those internal emails are only consistent with Mr Curtin and Mr McCarthy's understanding being that there was an agreement in place with Hills Health Solutions in respect of the WSLHD tender (i.e., that "this is a joint venture"), and that Ms Jurd's email was inconsistent with their understanding of the position. (The relevance of understanding within Stellar Vision as to the position can seemingly only go to the estoppel claims.) 2. On 9 October 2014, Mr Curtin responded to Ms Jurd's email, saying that: First, however, we need to re-address the legal basis of the relationship between Hills and Stellar Vision. I refer to the last paragraph of the Undertaking and Consent between our two companies. In the absence of any agreement, our legal position is that StellarVision remains in a 50/50 Joint Venture with Questek in respect of the WSLDH [sic] contract. While Hills may have acquired Questek's interest in the contract, and StellarVision has indicated a readiness to restructure our arrangements given Hill's [sic] stated position that it does not wish to proceed in a Joint Venture, there is still no agreement in place. The software package is that jointly proposed by Questek and StellarVision to meet the functional requirements of WSLDH [sic], and is the basis on which the contract was awarded. We understand that Hills will need to conduct due diligence if it is to restructure the arrangements currently in place and take on the contract obligations as a prime contractor. However, we need to understand the legal framework Hill's [sic] is proposing, document the commercial arrangements and understand the obligations to be undertaken by StellarVision. It would be beneficial if a draft document setting out Hill's [sic] proposal could be available prior to any meeting. [my emphasis] 1. Hills Health Solutions says this email is consistent with how Mr Curtin described his understanding of the Undertaking in his affidavit, namely that it had been provided on the basis that "if there was to be no joint venture agreement, [Hills Health Solutions] would propose an alternative arrangement with an equivalent financial outcome for Stellar Vision". Stellar Vision maintains that the reference to "no agreement in place" must be understood as a reference to the overarching or long term joint venture and must be read in the context of the statement that in the absence of an agreement, Stellar Vision remained in a 50/50 joint venture with Questek. (As to the first of those propositions, that may well have been intended to be a reference to an overarching joint venture but the relevant point to my mind is that there is no assertion of any agreement as between Hills Health Solutions (or Hills) and Stellar Vision.) 2. Mr Linderman sent a draft response to that email to Ms Jurd and Mr Starkey on 10 October 2014 (which does not appear to have been sent to Stellar Vision), stating: My reply would be aggressive at this stage. E.g. Dear Bryan, Hills is happy to still work with Stellar on the WSLHD project in a JV fashion as discussed prior but it has been bought to our attention that the software proposed to be installed is not a proven solution. According to your staff you have only been supplying content to the airline industry and not delivery platforms. It is imperative to Hills and WSLHD that the system being installed is tried and tested in a market place prior to taking on a 1200 bed rollout. It has been noted that Stellar has now requested to have an upfront license [sic] along with an ongoing daily license [sic]. In the spirit of the agreement stellar [sic] was to gain its revenue based on patient rentals on an agreed % not both Bryan [Curtin]. This change at such a late stage is not going to be accepted along with any sales commission changes that had been agreed prior to tendering for the project. The 3% sales commission was outlined to Brendan [McCarthy] by Darren Brighton that it must be part of the deal and that as Stellar was to bring software and Questek to manage the sale / install based on the fact they had the team to do so. Please arrange for Brendan to setup a demonstration system for review this coming week to ensure this deal can proceed. 1. On 11 October 2014, Mr Starkey replied to Mr Linderman's email, stating: I couldn't see the letter between Stellar and Hills referred to by Bryan. Can you send this to me? Also, have we replied to their letter re QCH on the 4th of September (I'm not aware of anything). I think we need to assess the implications of that on the initial undertakings. 1. It does not appear that any response was sent to Mr Curtin's email at that time. Mr Curtin sent a follow up email to Ms Jurd on 27 October 2014. 2. Ms Jurd responded to Mr Curtin's 9 October 2014 email on 3 November 2014; apologising for the delay, which she said was a result of "Daniel and I hav[ing] both had a number of opportunities underway that have taken our attention". Ms Jurd's email said that: The contract with WSLHD is progressing so we would like to arrange a demonstration this week if possible. Once that has occurred we can resume the commercial discussions in accordance with the intent of the agreement between Stellar and BTG. Demonstrations of the PES software 1. As adverted to above, Stellar Vision says that, from around September 2014, Hills Health Solutions established a pretext to exclude Stellar Vision from the WSLHD project, which culminated in a demonstration on 22 December 2014 which Hills Health Solutions contended had failed. (Stellar Vision says that, in fact, Hills Health Solutions had already determined to exclude Stellar Vision from the WSLHD project and replace it with Lincor.) 2. Stellar Vision maintains that the circumstances of the demonstrations did not demonstrate that Stellar Vision was unable to meet the requirements of the WSLHD tender. 27 November 2014 demonstration 1. The 27 November 2014 demonstration took place at Hills Health Solutions' office in Pitt Street. During this meeting, Dr Rahman demonstrated the current version of Stellar Vision's PES software. Stellar Vision says that the demonstration was limited as there was no access to a network and preconfigured servers. Mr Linderman made a request for a "cash collection feature" to be incorporated into the software and Dr Rahman stated that this could be incorporated if Hills Health Solutions provided him with the specifications. 2. Following that meeting, on 1 December 2014, Mr Linderman sent an email to Dr Rahman containing the specifications for the "cash collection" facility. 2 December 2014 communication 1. Stellar Vision says that, for reasons that appear to be related to seeking to establish a basis to exclude Stellar Vision from the WSLHD Contract, on 2 December 2014, Ms Jurd forwarded to Mr Linderman a copy of Stellar Vision's letter dated 5 September 2014 to Hills Health Solutions in respect of the QCH project. 2. On 3 December 2014, Mr Linderman sent an email to Ms Jurd in response to that letter: No it is not asking a question it is stating there [sic] position and thoughts. At the time this letter was offered to us we where [sic] still looking to go back to QCH and complete the PES for Free. (With Stellar) Looking back on this now this is the clear reason we where [sic] not allowed back as Stellar was not supporting Hills (As they signed to do in [M]arch 2014 for QCH, Northern Beaches & NBMLHD ) but yet they chose to get to the customer on the first day and under cut the situation and offer to complete the project for free. Along with that they where [sic] also asking questions of me to help them. I personally would like legal prepare [sic] a letter to Stellar stating this and outline that they breached the original agreement of supporting Hills Health causing further relationship breakdown between Allied and [Hills Health Solutions] and not allowing negotiations to be completed between [Hills Health Solutions] and Allied. Note we also don't know what other influences Stellar had whilst in the ear of Daniel Willis. This also would have helped Allied in there [sic] thoughts of moving away from Hills Nurse Call and going with Rauland Aust. If you recall Brendan [McCarthy] did enter the site on the week we left and had a meet up with Daniel Willis. I hope [Hills Health Solutions] is not planing [sic] to pay Allied a single cent in light of this as to me it looks like they may have been in cahoots the whole time and played Hills all the way. In light of this i [sic] feel it is in our right to cancel any further relations with stellar [sic]. I would also thing [sic] that it would not be out of the question to also request the loss of income and damages (service contract on the PES was $300K PA @ 5 + 5 contract) I would also like to state at this time that we should not be attending any further demos with Stellar as their business ethics is [sic] clearly gone south. The above may sound aggressive but they will play hard when it comes down to it and i [sic] feel we need to as well. 1. Stellar Vision says that this email makes plain that Mr Linderman was motivated to terminate Hills Health Solutions' relationship with Stellar Vision on the basis of what had occurred at the QCH project. (Pausing here, the thesis, as I understand it, is that Hills Health Solutions had withdrawn from the QCH project but wished to continue to provide services under that contract; that this was frustrated when Stellar Vision itself completed the contract; and that Hills Health Solutions then was placed in the position where it had to negotiate a commercial settlement of the claim by Allied.) Certainly, it is clear from Mr Linderman's email that there was no love lost by this stage between he and Stellar Vision. However, it does not indicate to my mind that a decision had been taken at that stage to terminate the relationship (whatever it may have been in legal terms) with Stellar Vision. 2. On 5 December 2014, Mr Linderman forwarded Lincor's response to the WSLHD Schedule 2 requirements to Mr Starkey. Stellar Vision says that it is clear that Hills Health Solutions had already engaged with Lincor in respect of the WSLHD project. Stellar Vision says that this is entirely consistent with Hills Health Solutions having made the decision to exclude Stellar Vision from the WSLHD project well in advance of the demonstration on 22 December 2014. (It might equally be consistent with Mr Linderman seeking to have a fall back if the relationship with Stellar Vision ultimately soured.) Arrangements regarding the December 2014 demonstration 1. Mr Curtin's evidence is that, during the first week of December 2014, he and Ms Jurd had a telephone conversation during which Ms Jurd expressed concern that a PES terminal was not available for a demonstration of Stellar Vision's software. Mr Curtin gave evidence to the effect that he told Ms Jurd that it was not Stellar Vision's responsibility to procure the terminal, as this was originally Questek's responsibility. 2. Between 7 December 2014 and 19 December 2014, representatives of Stellar Vision and representatives of Hills exchanged emails to arrange a "demonstration" of the functionality of Stellar Vision's software. On 7 December 2014, Mr Linderman sent an email to Mr Curtin which stated: Can you please confirm the demo time tomorrow and that you have the terminal your service are required to operate on as confirmed with Peta last week. 1. On 9 December 2014, Mr Curtin responded to that email, saying that: Although we had pencilled in the 8th, we had been awaiting confirmation of the terminal delivery before confirming. There has been further delay in delivery of the terminal … As this is primarily an exercise in confirming software functionality against the deliverables in the Tender Response, we can proceed without the new terminal. Can we confirm a date of early next week, Monday 15th or Tuesday 16th? Hills Health Solutions – internal request for execution of WSLHD Contract 1. On around 10 December 2014, Mr Linderman prepared a draft document entitled "Document Request for Execution" in respect of the WSLHD project, seemingly an internet requirement for approval in advance of formal execution of the agreement; which stated: As at the Commencement Date, [Hills Health Solutions] will deliver services which are currently providing in the existing HTR business. Over time, the business will roll-out other specifications to the system (outlined in the Agreement) in consultation with the Principal. As with the majority of HTR contracts, the business will provide and install the equipment (comprising the PES system) at its expense and will derive revenue from patients directly. A commission is paid to the Principal in consideration for [Hills Health Solutions] being granted the exclusive right to provide the services. … Business Review Questek entered the WSLHD project in August 2013 with Stellar Vision providing the software. It was the intention that a JV be incorporated to run this project - Questek managing the install and Stellar managing the software.-Due to the acquisition of Questek Australia Pty Ltd this was no longer viable and the intention was to maintain a JV outcome between Hills and Stellar as a profit share model. Hills (formerly Questek Australia Pty Ltd) being the contracting party is required to deliver a proven solution. Despite requests for demonstrations it is clear that Stellar do not have a complete demonstration with the proposed solution and as such we do not feel comfortable installing this solution. As such it is proposed to deliver this project using the Lincor solution. Lincor has the ability to deliver the "core services" as outlined within the contract and have supplied all documentation to their system along with supporting documentation that they will be able to deliver the required services with minimal development if required. We are confident that this change can be managed with the customer as their focus has been on functionality which Lincor can deliver. 1. The draft document recorded as a "key assumption" a "Lincor cost of $0.5 per bed per day". Stellar Vision says that the preparation of this draft board paper on 10 December 2014 is only consistent with Hills Health Solutions having already determined to exclude Stellar Vision from the WSLHD Contract, and to replace it with Lincor. It is certainly consistent with that being a possibility under consideration. 2. On 16 December 2014, Mr Linderman sent an email to Ms Jurd, stating: As they still don't have the proposed terminal and in light of the ethical issues what would we like to do from a legal point? to which Ms Jurd responded: Once we align with WSLHD we will terminate our association with Stellar. We can't risk them going behind our back again. 1. Stellar Vision says (and I would accept) that Mr Linderman's reference to "ethical issues" in the email chain above must be understood as a reference to Stellar Vision's continued work on the QCH project (asserting that it could have nothing to do with the software being developed by Stellar Vision for the WSLHD project). 2. Stellar Vision complains that, despite those internal emails, whereby it was clear that Hills Health Solutions had already determined to exclude Stellar Vision from the WSLHD project, externally Hills continued to go through the process of organising the demonstration. (Nothing as far as I can see turns on this particular complaint.) December demonstration 1. On 16 December 2014, Mr Curtin sent a further email to Mr Linderman which stated: If we wish to meet before Christmas to check of [sic] the software functionality against the deliverables in the Tender Response, we should meet this week as Stellar is in partial close down from Friday. Please advise whether Hills is available to meet this week and we can schedule a time. 1. Mr Linderman responded to this on the same day that: Hills was hoping to see the system operational on hardware as we will be required to order this equipment prior to Xmas. Is there any hope that the terminal will arrive this week? 1. Mr Curtin then sent an email on 17 December 2014: The latest is that Brendan [McCarthy] has been told that the sample hardware will be arriving from China next week. However, previous delivery commitments have not been met so we can only wait and see. I understand from Brendan you were also following up various hardware options with your suppliers. Did you make any progress with the suppliers you were in contact with? 1. Mr Curtin's evidence is that he agreed to proceed with the demonstration prior to Stellar Vision being able to obtain a terminal. Email from Mr Linderman to Mr Starkey 1. Meanwhile, on 16 December 2014, Mr Linderman had sent an email to Mr Starkey containing "some notes", as follows: Stellar Entertainment is a Sydney based content provider that Questek commissioned to supply the Queensland children's hospital Patient entertainment software solution. Due to Programmed and Hills not being able to negotiate a contract to complete the project Hills was unable to stay on the site. In light of this Hills had paid Stellar for the complete works for the QCH project and Stellar was to support Hills in getting back onto the QCH project as committed to prior to the acquisition of Questek in April 2014. Unknowingly [sic] to Hills the Stellar Group was also in discussion with Programmed to complete the QCH project without informing any Hills representatives. In late November 2014 Stellar accidentally let slip that they had been completing the system at QCH. Questek entered the WSLHD project in August 2013, Due [sic] to the ongoing relationship with stellar [sic] at this time it was fitting that Questek and Stellar would work together again on this project. Many discussions had taken place on how we would enter into the project from a JV to Questek managing the install and Stellar managing the software. The decision was made that Questek would be taking all the risk on and should manage the contract to ensure they could manage it accordingly. As Questek was the contract manager it was their responsibility to deliver a proven solution. It has now been outlined by Stellar that they do not have their solution ready that was being proposed in 2013. Stellar are still yet to install this solution into a facility in the world and still yet to deliver any project or complete demonstration with the proposed solution. It is in my opinion that in light of the above details Hills should be using the Lincor solution that has a proven product in over 30,000 beds in operation in over 20 countries. Along with a proven product they also manage all development and support in house offering a complete managed product from beginning to end. I believe Stellar will push back on Hills decision to go with Lincor but Hills is in the strongest position and managed all dealing with Stellar in an honest and ethical manner at all times. Stellar have been unable to deliver a demonstration on the proposed equipment along with a complete operational demonstration prior to Hills committing to sign the 15 year contract. Lincor have supplied all documentation to there [sic] system along with supporting documentation that they will be able to deliver the required services with minimal development if required. … 1. Stellar Vision says that the preparation of this note is only consistent with Hills Health Solutions having determined to exclude Stellar Vision from the WSLHD project prior to the demonstration on 22 December 2014 (emphasising the prominence given in this note to the QCH project, from which it is said that it may be inferred that the reason for exclusion is unrelated to Stellar Vision's performance in respect of the WSLHD Contract). Again, it is certainly consistent with this being a course under active consideration at the time but I am not persuaded that Mr Linderman was the relevant decision-maker and it is clearly expressed as being his "opinion". Hills Health Solutions – request for execution 1. On 18 December 2014, the final "Document Request for Execution" form (which had been prepared in draft on 10 December 2014) was prepared. That document was in substantially the same form as the draft, and stated: As at the Commencement Date, Hills Health Solutions will deliver agreed "core services" and over time, the business will roll-out other specifications to the system (outlined in the Agreement) in consultation with the Principal. … Business Review Questek entered the WSLHD project in August 2013 with Stellar Vision providing the software. It was the intention that a JV be incorporated to run this project - Questek managing the install and Stellar managing the software. Due to the acquisition of Questek, this was no longer viable and the intention was to maintain a JV outcome between Hills and Stellar as a profit share model. Hills Health Solutions being the contracting party is required to deliver a proven solution. Despite requests for demonstrations it is clear that Stellar do not have a complete demonstration with the proposed solution and as such we do not feel comfortable installing this solution. As such it is proposed to deliver this project using the Lincor solution. Lincor has the ability to deliver the "core services" as outlined within the contract and have supplied all documentation to their system along with supporting documentation that they will be able to deliver the required services with minimal development if required. We are confident that this change can be managed with the customer as their focus has been on functionality which Lincor can deliver. … 1. Stellar Vision says that reference to "core services" must be understood as a reference to the "Core Services" identified at Item 19 of Schedule 1 of the WSLHD Contract, being the services to be provided initially in respect of the WSLHD project. December 2014 demonstration 1. On 19 December 2014, after leaving a voicemail message, Mr Curtin sent an email to Ms Jurd which stated: I called at 4:30 and left a message to advise that we can demonstrate the software on Monday provided we are supplied with a compatible terminal, today if possible. Can you make arrangements to supply the proposed terminal for testing purposes today or over the weekend, or failing that first thing on Monday? For your information the cash receipt functionality discussed for the first time at our meeting on 27 November and which was not part of the Tender Response Deliverables has been completed in accordance with the requirements advised by Daniel. 1. An email from Ms Jurd to Mr Curtin at around the same time stated: Thanks for your message. Daniel [Linderman] is currently arranging to get the terminal to Adul [Rahman]. Give the customer's timeframe, our expectation on Monday is to be able to see all functionality required in the specification [sic] and the functionality we require to manage the system; eg cash reconciliation. There can be no further delays. 1. Stellar Vision says that the email's reference to "all functionality required in the specification[s]" was inconsistent with Schedule 2 of the WSLHD Contract, which required only the "Core Services" initially. 2. The terminal for the demonstration was collected on 19 December 2014. Hills Health Solutions says that there is no evidence that Stellar Vision provided Hills Health Solutions with the specifications required for the terminal prior to Hills Health Solutions providing the terminal on 19 December 2014. (This is of some relevance to part of the explanation given by Stellar Vision in response to complaints made about the demonstration.) Draft letter over which privileged is claimed 1. On 19 December 2014, a draft letter to Stellar Vision was prepared (over which Hills Health Solutions has claimed privilege), bearing the document identification number "158398.1"; which is the same document identification number as on the letter subsequently sent by Ms Jurd following the December 2014 demonstration. Stellar Vision invites the inference that, on 19 December 2014, Hills Health Solutions was preparing a version of the letter ultimately sent to Stellar Vision on 31 December 2014, which Stellar Vision maintains is only consistent with Hills Health Solutions having made a decision to exclude Stellar Vision from the WSLHD project prior to the 22 December 2014 demonstration. (Pausing here, I do not draw that inference. It seems to me equally consistent with the chronology of events that Hills Health Solutions, or whoever at Hills Health Solutions or its lawyers prepared the letter, had in mind the possibility that the demonstration would prove unsatisfactory and was contemplating the possibility that in that event one course that might be taken would be to cease to work with Stellar Vision in relation to the project. It does not seem to me that the fact that a draft letter of some kind had been prepared at that stage means that there had necessarily been a decision made at this point to do so.) Stellar Vision preparation for the demonstration 1. Stellar Vision says that there were a number of problems with the terminal that had been provided by Hills Health Solutions for the demonstration. First, that the terminal was not one that had previously been proposed to Dr Rahman as a possible terminal for the Stellar Vision PES (in particular, the terminal provided only had storage space of 8GB, whereas the samples that Dr Rahman had previously tested all had storage space of at least 32GB). Second, that the terminal did not have an operating system loaded onto it; it had been configured to boot off a server and operate as part of a network environment (that is, a "thin client" system, rather than a "thick client" system). Third, that the terminal was password protected and Hills Health Solutions did not provide the password to Stellar Vision until nearly 7:00pm on the evening of Saturday, 20 December 2014. (It is noted, this perhaps being a Freudian slip, that the password was "L1nc0r".) Fourth, that when "booted up", the terminal showed the "Lincor" logo. Fifth, that the terminal did not have drivers loaded that would have enabled Dr Rahman to configure the terminal to the network. It is said that the information about the terminal provided by Mr Linderman did not provide any details regarding the drivers. Stellar Vision says that as the Stellar Vision PES was built on the Android operating platform, the Stellar Vision PES could not operate on the terminal provided in the absence of all the peripherals and device drivers being provided by the manufacturer. 2. Dr Rahman's evidence is that he worked over the weekend of 20-21 December 2014 to prepare for the demonstration. His evidence is that, in light of the issues identified above, it was not possible to do a complete demonstration of the Stellar Vision PES on the terminal provided at short notice. 3. On 21 December 2014, Dr Rahman sent an email to Mr McCarthy which identified a number of these issues: I got all the USB ports, network and sound working. Only thing missing is Graphics card driver. It is now using a generic driver and hence there is no hardware acceleration. It is also running in a non standard resolution (1600X1200 @ 256 DPI). As there is no hardware acceleration (therefore, no OpenGL) video playing is jittery. 2nd problem is disk space. Android 4.4 itself requires 10GB space. So I couldn't install all the features of Android. I couldn't install all our software too. I only installed an older version of our software which is the home screen only. 1. At the same time as Dr Rahman was preparing for the demonstration, Stellar Vision says that Ms Jurd and Mr Linderman were taking steps to ensure that they were prepared to maintain the appearance that the decision to exclude Stellar Vision from the WSLHD project had not already been made. 2. On 21 December 2014, Mr Linderman sent Ms Jurd an email with the subject "Questions for PJ to ask at Stellar", which stated: Just a few trigger questions for you to ask just incase [sic]. • How many sites are currently running this solution. • What is the largest site your system is currently running on. • What testing has the system been put through in real life network configuration with multiple terminals in operation at any one time using the intel processor. • How many Airlines are running this solution along with your content. • What is your current Software support procedure when required to come to site within 4 hours. • How many meal ordering or clinical systems have you integrated with. • How do you expect Hills to move forward with a first time to market product on a 1200 bed project. 1. Stellar Vision says that this email reinforces that the decision to exclude Stellar Vision from the WSLHD Contract was pre-meditated and had been made prior to the 22 December 2014 demonstration. It is said that the suggestion that Ms Jurd required "trigger questions" is inconsistent with the demonstration scheduled for 22 December 2014 being a genuine assessment of Stellar Vision's software. 2. It is noted that, at the same time, Hills Health Solutions had been corresponding with Lincor to proceed with the WSLHD Contract. On 20 December 2014, Ms Sheila Sheehan of Lincor sent an email to Mr Linderman which stated "Just trying to confirm the quantities of hardware required for the projects in Western Sydney and elsewhere". The email asked Mr Linderman to review and advise on a table which provided specific details as to exact quantities of hardware needed, exact types of hardware needed, expected installation dates, planned activities of Mr Linderman in respect of site visits, and numbers of beds per hospital. Again, Stellar Vision says that this email is entirely consistent with a decision to replace Stellar Vision with Lincor having already been made prior to the 22 December 2014 demonstration. 3. The scheduled demonstration occurred on 22 December 2014 at Stellar Vision's office. Prior to the demonstration commencing, the Stellar Vision representatives identified the reasons why it was not possible to demonstrate the whole of Stellar Vision's PES software on the terminal that had been provided. 4. Dr Rahman then demonstrated the Stellar Vision PES. Stellar Vision says that, during the demonstration, Dr Rahman demonstrated: a cash collection feature; live TV; credit card capability; making and receiving phone calls; and launching third party applications. 5. Hills Health Solutions says that the demonstration was not satisfactory. The day after the demonstration, Ms Jurd emailed Hills Health Solutions' in-house counsel (Ms Squires) setting out her concerns about the software. A further email from Mr Linderman the following day elaborated on the issues, as did an email from Ms Jurd on 27 December 2014. These issues included the following matters. 6. First, Stellar Vision's hardware solution had not been built and was at least six weeks away; components had been tested but a complete unit had not been made available for testing; Stellar Vision had redesigned the handset but did not have a prototype available; the new terminal being developed by Stellar Vision was at an early stage, and Stellar Vision only presented Hills Health Solutions with three pictures in respect of the terminal. 7. Second, the TV stations were not loaded and catch-up TV was not available for display. Hills Health Solutions says that this indicated that the software had not gone through extensive testing and was not capable of managing the services required. 8. Third, the sound on the channel that was demonstrated was "out of sync" with the video image. 9. Fourth, that the only billing facility was for Paypal or cash, not credit card; the billing system was not functional as, once a payment had been made, the credit did not appear in the system. 10. Fifth, that there was no content on the audio books. 11. Sixth, that there were no magazines loaded and Dr Rahman's comment had been that "content can be downloaded but it's still a development terminal". 12. Seventh, that there was no USB phone available and Stellar Vision was unable to demonstrate a fully functional phone system. It is said that Stellar Vision was also unable to demonstrate a phone billing platform (to manage all phone calls and call rates). (Stellar Vision says the ability to make outgoing calls was demonstrated and the issue in demonstrating the ability to receive incoming calls related only to whatever numbers had been assigned or registered to the PES at that stage – see T 324.41-44). 13. Eighth, that Stellar Vision was unable to demonstrate how the Android applications would be updated, and this appeared to be the subject of discussion between Mr McCarthy and Dr Rahman. 14. The concerns noted in Ms Jurd and Mr Linderman's emails as to Stellar Vision's state of readiness are consistent with file notes taken by Ms Jurd at the December 2014 demonstration. Ms Jurd's notes refer to a number of outstanding items, including "bigger hard drive", "USB HID handset", "USB audio handset", "Payments currently using PayPal or cash", "Catch up TV – not installed today", "Movie – scheduled looping movie channel not developed", "No content on audiobooks", "No magazines loaded", and "Abul can be locked down but it's still a development terminal", "meal ordering – no integration". The final note states "4-6 weeks / 6 weeks commercial release". 15. On 24 December 2014, Mr Curtin wrote to Ms Jurd in relation to the demonstration. Hills Health Solutions notes that, while Mr Curtin referred to the mismatch between the terminal provided by Hills Health Solutions and Stellar Vision's software, there was no reference to Stellar Vision being able to demonstrate the software on a different terminal. Mr McCarthy also stated that Stellar Vision's "offer" to demonstrate the software "was conditional on provision of a compatible terminal for the demonstration" (a clear indication, according to Hills Health Solutions, that Stellar Vision did not have its own terminal on which to perform the demonstration). There is a live issue between the parties as to the status of the demonstration (and as to who was responsible for any failure satisfactorily to demonstrate the software). Mr Curtin's letter referred to a reservation of Stellar Vision's rights but confirmed a willingness to work with Hills Health Solutions moving forward. Execution of WSLHD Contract – 23 December 2014 1. Meanwhile, on or around 23 December 2014, Hills Health Solutions executed the WSLHD Contract. How Hills Health Solutions came to be named as a party to the contract seems to have been that, in the course of proposed amendments to the draft contract, WSLHD was provided with the Business Purchase Agreement (which referred to the purchase of the assets of Questek and the assignment of rights in relation to tenders) (see the email from Mr Linderman to Mr McCarthy and Mr Curtin on 28 August 2014 as to receipt of the first draft of the contract which attaches a "Table of Comments & Amendments" which suggests the inclusion of a recital as to this acquisition of assets from Questek). 29 December 2014 letter from Hills Health Solutions 1. On 31 December 2014, Ms Jurd sent via email to Mr Curtin and Mr McLaughlin, copying in Ms Squires, Mr Linderman and Mr Starkey, a letter dated 29 December 2014, which stated that: … While no agreement had been reached as to which party is to be responsible from a cost perspective for the provision of the equipment, Stellar has recently been involved in the development of a prototype to support the requirements of its proposed software. As previously discussed, the intended functionality of the proposed terminal (which Hills has only seen drawings of) does not meet the requirements of the customer and is cost prohibitive for this project. There have been significant delays in the manufacture and delivery of a protype and once received, it will require components to be installed and tested. We understand that there have been issues with components overheating in early testing stages. It is also not clear whether the prototype will be delivered with appropriate certifications having been completed. … 1. In the 29 December 2014 letter, Ms Jurd referred to the fact that "Stellar was aware that the customer was desirous of having the new PES system and services rolled-out from August 2014. Despite having the benefit of the delays in finalising the contract, Stellar has made no major developments since its demonstration to Hills in March 2014". 2. Hills Health Solutions stated in the letter that it was clear that Stellar Vision did not have a product that was ready for the WSLHD project and, in the circumstances, Hills Health Solutions had no alternative but to look to another supplier. 3. Following receipt of the 29 December 2014 letter, Stellar Vision and Hills Health Solutions exchanged some correspondence during late December 2014 and early January 2015. However, Stellar Vision says that it did not have any ongoing involvement in the WSLHD project from that time. Resignation of Mr Linderman 1. Mr Linderman resigned from Hills Health Solutions as of 13 February 2015. This is of relevance in relation to the issue of delay in completion of the WSLHD project and also as to the terms of the fact that he was not called to give evidence in the proceedings notwithstanding that he had signed a document obliging him to provide assistance to Hills following his resignation – see below. Letter dated 10 March 2015 1. In a letter dated 10 March 2015, Hills Health Solutions' solicitor said that at the December demonstration it was not demonstrated that a range of functionalities were operating automatically, and that Dr Rahman had manually to make changes or instructions in the system to seek to cause required functions to be performed. These were the matters identified as being relied on as demonstrating the inability of Stellar Vision to meet the requirements of the WSLHD (the Functional Deficiencies). (See the discussion of these matters in due course below.) Lincor 1. Ultimately, Hills Health Solutions utilised the services of Lincor, an alternative supplier of PES software, in fulfilling the WSLHD Contract. Lay evidence 1. Stellar Vision adduced evidence from each of Mr McCarthy, Mr Curtin and Dr Rahman. 2. Hills Health Solutions, although having served affidavit evidence of Ms Jurd, ultimately did not call Ms Jurd. It adduced evidence from Mr Starkey, Mr Rajasingam, and Mr Osborne (formerly the Head of the Health Business at Hills Health Solutions, and current Chief Executive Officer of a business competitor of Hills). Jones v Dunkel inferences 1. Stellar Vision invokes the rule in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 (Jones v Dunkel) in relation to the failure of Hills Health Solutions to call evidence from any of Ms Jurd, Mr White or Mr Linderman (those persons being identified as the Hills Health Solutions' officers and key decision-makers involved in the matters the subject of the present proceeding). 2. Stellar Vision contends that the evidence of those persons would clearly have had a bearing on the matters the subject of the dispute; and says that the failure to call these witnesses is unexplained (noting that affidavits of Ms Jurd were served but not read and that Hills Health Solutions places reliance on her file notes and correspondence). 3. As to Ms Jurd, Stellar Vision says that it can be inferred that her evidence would not have assisted Hills Health Solutions on the issue as to the alleged pretext for excluding Stellar Vision from the WSLHD Contract (i.e., the failure of the demonstration). 4. As to Mr White, it is said that he was present at critical meetings and led the due diligence process. 5. Particular emphasis is placed on the position of Mr Linderman (who it is said is a relevant witness and could not be said to be in the plaintiff's camp) because of the fact that Mr Linderman was a party to a Deed of Settlement, Release and Restraint entered into with Hills on 12 March 2015, under which Mr Linderman was obliged (see cl 7(a)) to "co-operate with, and provide all reasonable assistance required by" Hills or member of the Group in, inter alia, any legal proceedings "relating to the period in which he was an employee of the Group". Under the Deed, Hills was obliged to meet the reasonable costs of Mr Linderman providing such co-operation or assistance. 6. The assistance contemplated (as per cl 7(b)) included Mr Linderman's agreement "within 30 days of the Deed, [to] make himself available at the Company's registered office on such occasions as is reasonably required by [Hills] for the purpose of providing a witness statement and sworn affidavit" with respect to matters with which Mr Linderman had been involved during the course of his employment with Hills Health Solutions. The Deed also provided (see cl 7(c)) that, unless compelled by law and subject at all times to Mr Linderman complying with his obligations under this Deed, Mr Linderman would not "provide any assistance whatsoever to any Dispute Party in relation to a claim, legal proceedings, demand or otherwise which that Dispute Party intends to bring against [Hills] or its Related Bodies Corporate and/or its representatives". Stellar Vision says that it would fall within the term "Dispute Party" , being a party that had been in dispute with Hills or its related bodies corporate (which includes Hills Health Solutions) at any time within two years before the "End Date" (being 13 February 2015). In that regard, it is said that, although the proceeding was not commenced until 2016, by early 2015 there was an expectation that claims would be made in relation to the WSLHD project (referring to Ms Jurd's email to in-house counsel Ms Squires dated 27 December 2014 which noted that the "next letter" should be drafted by, and come from, external solicitors; the communication in early January between Stellar Vision and Hills Health Solutions in emails dated 4, 6 and 8 January 2015; and the involvement of EMB Legal for Hills in the letter of 10 March 2015). 7. Stellar Vision says that, in light of the terms of the Deed, Mr Linderman is properly characterised as being in Hills Health Solutions' "camp" for the purpose of drawing inferences in accordance with the rule in Jones v Dunkel; noting that, despite being contractually obliged to assist Hills, Mr Linderman did not give evidence. 8. Stellar Vision goes further and submits that a stronger inference may be drawn by reason of the failure of Mr Linderman to give evidence in circumstances in which he was contractually prohibited from assisting Stellar Vision. Stellar Vision submits that, in light of Hills' deliberate attempt to prevent Mr Linderman from assisting Stellar Vision, an analogy may be drawn to the principles that apply where a party destroys documents (referring by way of example to Austin v Hornby [2011] NSWSC 1059 at [113]-[116]). It is said that such an analogy arises in circumstances in which it may be inferred that Hills Health Solutions has obtained an (undisclosed) witness statement or affidavit from Mr Linderman. It is suggested that in such a circumstance it may be appropriate to draw the inference that Mr Linderman's evidence would have harmed Hills Health Solutions' case. (I disagree; and I do not see that the analogy as here sought to be drawn is apt. Mr Linderman's evidence was not destroyed or put beyond the reach of the Court. Had he been subpoenaed by Stellar Vision, for example, he could have been compelled to give evidence despite the contractual restraints vis-à-vis Hills. That said, I accept that Mr Linderman is someone who would fall more naturally in Hills Health Solutions' camp (although to the extent that there was an acrimonious departure that might be a factor tending against such a conclusion).) 9. Stellar Vision argues that in the absence of evidence from any witness from Hills Health Solutions in respect of the key events relating to the claim against Hills Health Solutions, the factual findings for which Stellar Vision contends (see below) may more readily be made and inferences drawn in respect of those matters on the basis that none of the evidence of Ms Jurd, Mr White or Mr Linderman would have assisted Hills Health Solutions. 10. The position of Hills Health Solutions in respect of the Jones v Dunkel inferences here sought is to note that it does not challenge any of the oral conversation evidence given by Stellar Vision as to its discussions with Questek; and that usually evidence of subjective beliefs in relation to the contractual position or as to whether there was a trust could not be relevant (such that evidence from Mr White and others would not assist). It was accepted that such evidence would be relevant to the estoppel claims (or at least the conventional estoppel case) but it is said the estoppel case fails at the level of proof that the plaintiff held the relevant assumption (so that the defendant's intention is irrelevant). As to the damages case, it is said that neither Mr Linderman nor Ms Jurd could say anything relevant (Mr Linderman, and I am told Ms Jurd, having left the company before performance of the WSLHD Contract). Determination 1. As is well known, the so-called rule in Jones v Dunkel may apply to permit an adverse inference to be drawn where there is an unexplained failure by a party to adduce evidence (for example, by calling witnesses or tendering documents or other evidence) in order to contradict a matter which arises upon the issues in the proceedings. As to whether such an inference should be drawn, the missing witness must be someone who would be expected to be called by one party rather than the other; the evidence that would be expected to have been called would elucidate a particular matter; and the absence of the witness must be unexplained (see Payne v Parker (1976) 1 NSWLR 191 at 200-2 per Glass JA; and more recently Broadway Plaza Investments Pty Ltd v Broadway Plaza Pty Ltd; In the matter of Combined Projects (Arncliffe) Pty Ltd [2020] NSWSC 1778 at [737]; [741]). The inference that may be drawn in appropriate circumstances is that the uncalled evidence would not have assisted the party. The inference does not permit the filling of gaps; nor does it allow an inference that the missing evidence would positively damage that party's case. Furthermore, the "rule" only becomes relevant if there are competing available inferences. 2. As to Mr White, the knowledge of Hills Health Solutions of what was in the data room for the purposes of due diligence does not seem to be disputed and so recourse does not need to be had to the rule in Jones v Dunkel on this issue. 3. As to Ms Jurd (whether or not she is still at the company – there being no evidence I can recall as to this), again there is no need to resort to this "rule". Ms Jurd's file notes record her contemporaneous observations of matters (such as the demonstrations) and her interpretation of them would not assist. 4. As for Mr Linderman, I do not accept that his absence from the witness box enables a positive damaging inference properly to be drawn. It simply enables me more comfortably to draw otherwise available inferences from the contemporaneous documents and evidence (if there be competing available inferences). In my view there is sufficient material in the contemporaneous documents to establish Mr Linderman's dissatisfaction with Stellar Vision and his contemplation of pursuing the project without Stellar Vision to make it unnecessary again to rely on a Jones v Dunkel inference. Expert evidence 1. Expert accounting evidence was adduced on the issue as to the quantification of loss. 2. Mr John-Henry Eversgerd of FTI Consulting, who was called by Stellar Vision, provided a number of expert witness reports (the first being dated 5 September 2017, followed by a second report dated 14 August 2019 and an addendum report dated 13 November 2019, a third report dated 27 April 2020 and a fourth report dated 8 April 2021). 3. Mr Eversgerd was instructed to quantify the loss of economic benefit as at 23 December 2014 of a 50% interest in the WSLHD Contract and other lost opportunities resulting from the alleged breach by Hills Health Solutions of fiduciary and contractual obligations. In his second and successive reports he provided updated calculations reflecting revised instructions and assumptions (including as to operating expenditure (OPEX)), taking into account financial documents with which he was provided and commenting on the reports of the defendant's expert. 4. Mr Campbell Jackson of Ernst & Young, who was called by Hills Health Solutions, provided an expert witness report dated 18 May 2018, opining on the value of a 50% share of the WSLHD Contract as at September 2014 and on the methodology and conclusions of Mr Eversgerd. Mr Jackson provided a second report dated 5 March 2020 in response to the second and addendum Eversgerd reports. 5. The experts met in conclave and prepared a joint report dated 23 April 2021 (during the course of the hearing). They gave evidence concurrently during the hearing. 6. In summary, based on differing scenarios, Mr Eversgerd assessed the loss of economic benefit of a 50% interest in the WSLHD Contract as at various dates as being in the range from roughly $12.48 million to $5.75 million or $11.71 million to $5.197 million; and Mr Jackson assessed the loss (depending on whether Stellar Vision would have the benefit of existing hardware or not) again on different scenarios in ranges from $1.26 million to $3.992 million (the "benefit" scenarios) to $1.22 million to $3.952 million (the "no benefit" scenarios). 7. There was broad agreement between the experts as to various matters, including that the discounted cash flow methodology (DCF) is appropriate to calculate loss; and both experts relied on the September Model (see above) with adjustments. The experts were also agreed that the September Model represented the best contemporaneous information as to what net profits were expected to be generated from the WSLHD Contract. While the experts noted that their methodologies "did not align" ("based on instructions") the experts generally agreed that each other's calculations were "mathematically correct" (see the joint report at [18]). 8. The areas of disagreement between the experts were itemised in a table included in the joint report and I address those in due course. There was some agreement reached between the parties as to certain items. Ultimately, I was invited to rule on the remaining disputed items to be taken into account on the respective scenarios (on the basis that it would then be a relatively simple arithmetical exercise for the experts to factor those items into their models and produce an agreed quantum of loss). Evidentiary objections 1. Rulings on evidentiary objections were largely dealt with at the hearing (and, indeed, Hills Health Solutions did not press its objections as to relevance in relation to evidence concerning the QCH project). However, Hills Health Solutions did press its objection to evidence going to the assertion by Stellar Vision (and reflected in the assumptions given to its expert) that, had Stellar Vision been involved in performing the WSLHD Contract, the financial outcome of the WSLHD Contract or its performance would have been different. Objection was taken on the basis that the evidence was not relevant to the plaintiff's pleaded case; and that there is no evidence (nor any factual or legal basis to infer) that Stellar Vision would have been involved in performing the WSLHD Contract other than by way of providing software. I deferred ruling on that objection and provisionally admitted the evidence to which objection was taken. I therefore now address that objection. 2. Stellar Vision served an affidavit sworn by Mr Curtin on 25 September 2019 (Mr Curtin's second affidavit) in which Mr Curtin asserts that, had Stellar Vision been involved in the performance of the WSLHD Contract, the contract would have been more profitable. This is put on several bases, including that: particular costs would not have been incurred; higher revenue would have been received; and delays would not have occurred had Stellar Vision been involved in providing the PES. In this regard, Mr Curtin has set out details of Stellar Vision's performance as the PES supplier in respect of other projects. It is said that this evidence has informed Mr Eversgerd's valuation of the WSLHD Contract (and in turn that is referenced in the particulars of loss). 3. Hills Health Solutions complains that the counterfactuals upon which Mr Eversgerd has based his valuation are unpleaded (and have no factual foundation) and accordingly should be rejected. It is said that there is nothing in Stellar Vision's pleaded claim of breach and damage that suggests that the counterfactuals raised in Mr Curtin's second affidavit found an inherent part of Stellar Vision's claim. Hills Health Solutions says that the fact that the WSLHD Contract was less profitable because of Hills Health Solutions' delay in performing the contract or the way in which private patients were invoiced is not the "necessary and immediate consequence" of the alleged breaches (see below as to Barnes v Forty Two International Pty Ltd (2014) 316 ALR 408; [2014] FCAFC 152 (Barnes v Forty Two) at [121]). Thus, it is said that the counterfactual case should be rejected and the objections to the relevant parts of the evidence upheld. Pleading issue 1. As to the pleading issue, Hills Health Solutions says that the entirety of Stellar Vision's allegation of loss and damage, arising from the alleged breaches of trust and/or fiduciary duty and contract, is to be found at [42] and [44] of the further amended statement of claim, which paragraphs have been supplemented by further particulars provided on 9 December 2020 (to which Hills Health Solutions similarly takes objection). 2. It is submitted that the pleading does not disclose any material fact as to how Hills Health Solutions performed the WSLHD Contract nor how Stellar Vision would have performed the WSLHD Contract differently. It is thus said that how the WSLHD Contract was run, managed or performed is not a fact in issue; that no counterfactuals are pleaded that would properly put in issue the profitability of the WSLHD Contract by suggesting that the WSLHD Contract could have generated more profits had it been differently managed; and that Stellar Vision has not pleaded causation (i.e., how it is said that the WSLHD Contract would have been performed differently had Stellar Vision been involved in its management). Hills Health Solutions says that this is particularly relevant given that the terms of the Undertaking limit Stellar Vision's involvement in the supply of PES to the provision of software, whereas Mr Curtin's second affidavit makes broad ranging claims about Stellar Vision's hypothetical performance of the contract that are unrelated to the provision of software. Accordingly, Hills Health Solutions says that it is not apparent how the performance of the WSLHD Contract would have been any different had the alleged breach of contract not occurred. 3. Hills Health Solutions notes the requirement that a party's pleadings state with sufficient clarity the case that must be met; and the recognition that particulars, even those that are clear and unambiguous, cannot supply a deficiency in pleadings; nor can evidence perform the function of pleadings (citing Hastie Group Ltd (in liq) v Bourne [2017] NSWSC 709 at [241] (Hastie), the issue there being a failure to plead the material facts making clear the causal nexus between the allegations of breach and the losses that had been claimed). 4. It is further noted that, where a party pleads a cause of action of which causation is an essential element, it is necessary to plead the material facts which are said to give rise to the causal connection (citing Hastie; and referring to Southern Cross Mine Management Pty Ltd v Ensham Resources Pty Ltd [2004] QSC 457 at [15]; as well as Berry v CCL Secure Pty Ltd (2020) 381 ALR 427; [2020] HCA 27, where Gageler and Edelman JJ reiterated (at [72]) the principles set out in Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11 at 286 (Banque Commercial) and explained that a plaintiff is expected to plead all material facts on which the plaintiff relies to constitute the statutory cause of action, including any counterfactual on which that plaintiff relies to establish the requisite causal link between identified loss or damage and the alleged wrongdoing. 5. It is submitted that, by arguing a damages claim based upon an assertion that, had the breach not occurred, Stellar Vision would have somehow caused Hills Health Solutions to perform the WSLHD Contract in a different way, Stellar Vision is articulating a loss of opportunity or loss of chance case. It is noted that where a party relies upon "loss of opportunity" or "loss of chance" damages, the material facts that give rise to the elements of causation and damage must be pleaded. Reference is made in this regard to Barnes v Forty Two, where the Full Court of the Federal Court made clear that generalised prefatory words such as "the plaintiff suffered loss and damage" are insufficient to plead a loss of opportunity claim (see at [79]-[81]; [121]-[122]); and that the plaintiff must plead an express allegation of causation (Beach J, Siopis and Flick JJ agreeing, at [83)]. 6. Reference is also made to Jasmin Solar Pty Ltd v Trina Solar Australia Pty Ltd [2020] FCA 1018 at [85]-[88] (where Derrington J recognised the requirements for the plaintiff to plead the specific counterfactuals on which it relied to allege the loss) and Sanrus Pty Ltd v Monto Coal 2 Pty Ltd (No 7) [2019] QSC 241 at [21]-[25], [34], [57] (where Bond J accepted that, where a party's causation hypothesis depends on establishing a particular counterfactual scenario to establish the alleged causal link between breaches of contract and the loss which it is said would have eventuated if the conduct which the party impugns had not occurred, that counterfactual scenario must be pleaded and particularised in accordance with the rules of pleading). 7. Hills Health Solutions relies on the above authorities as establishing that Stellar Vision was required to plead the specific counterfactuals upon which it relies, in order explicitly to disclose the damages case it puts. It is noted that the further amended statement of claim contains the same generalised prefatory words ("the plaintiff has suffered loss and damage") criticised in Barnes v Forty Two at [79]. Hills Health Solutions says that it does not follow (from the case as pleaded) that the profits of the WSLHD Contract would have differed from the profits (or loss) actually realised by Hills Health Solutions; and that the inclusion of particulars that refer to Stellar Vision's performance of the WSLHD Contract cannot remedy a deficiency in the pleadings. Moreover, it is said that even the particulars to the further amended statement of claim fail to identify the material facts that give rise to the elements of causation and loss. In those circumstances, Hills Health Solutions says that it is not open to Stellar Vision to claim damages on the basis of the hypothetical profits of the WSLHD Contract had it been managed differently. 8. Stellar Vision does not accept that the issue was not pleaded (referring to [42] of the pleading which it is said is a direct reflection of Mr Eversgerd's report). Stellar Vision says that all that needs to be pleaded is loss or damage which is then particularised by reference to the experts' reports; and Stellar Vision maintains that it is entitled to say that the management of the contract would have been different had it been involved. Hills Health Solutions' complaint in this regard is that Mr Eversgerd's report is based on instructed assumptions and does not say how these would be achieved. 9. Stellar Vision also says that the case has been conducted on the basis that this counterfactual is in issue, pointing to the discovery that was ordered (albeit over the opposition of Hills Health Solutions) and the evidence adduced by Mr Osborne and Mr Rajasingam. Hills Health Solutions' response to the above submission is that it has consistently objected to this issue being raised (both in relation to discovery and the evidence) on the basis that it was not part of the pleaded case (see T 340ff), referring in this context to a 21 October 2019 letter from its solicitors objecting to any expansion of the pleading to include any complaint about the way the WSLHD Contract had been performed. 10. Hills Health Solutions' complaint is that what is not pleaded is what it is said by Stellar Vision would have happened in the counterfactual universe for which it contends, so that there can be a proper assessment of the causal link between the alleged breach and the alleged damage (see T 344.7-13). 11. Stellar Vision's response to the complaint made in October 2019 was a letter dated 9 December 2019 referring to its expert's report. There, it is said that the issue did not have to be pleaded but, if it did, particulars were provided (so that there could be no surprise) and that the case was then conducted on basis of the evidence and by reference to the discovered documents (see T 349-350). 12. Stellar Vision says this is a causation point (not a question of damages per se which should have been pleaded) emphasising that it is all premised on Stellar Vision being involved in the day-to-day management of the project. Further, it is said that no prejudice has been suffered and again, that there has been no surprise since everyone has been aware of the issue. Factual foundation? 1. As to whether there is a factual foundation for the postulated counterfactual, Hills Health Solutions notes that damages are to put the party in the position it would have been in but for the breach; and says that that position would be that governed by the terms of the Undertaking. It is said that each counterfactual assumes that Stellar Vision would have had a role in the management of the WSLHD Contract but that the basis for this assumption cannot be found in the terms of the Undertaking (which refers to Stellar Vision's role as the provider of software), nor in any communication between Stellar Vision and Questek or Stellar Vision and Hills Health Solutions. It is noted that Mr Curtin conceded in cross-examination that there was nothing in the terms of the Undertaking that would give Stellar Vision a management role in respect of the WSLHD Contract. Stellar Vision says that a contrary assumption cannot be adopted. 2. It is said that, to the contrary, the documentary evidence establishes that Stellar Vision's role was always envisaged to be as software provider, whereas Questek or Hills Health Solutions would be responsible for the installation of the PES devices and management of the contract generally. This is said to be established by the following documents: the 6 July 2013 email from Mr McLaughlin to Mr Brighton, describing what he saw as Stellar Vision's contribution to any joint project (which included "project management from a software and integration perspective"); the 8 August 2013 email from Mr Linderman to Mr McLaughlin, describing the options for collaboration between Stellar Vision and Questek; and the 11 November 2013 presentation to HealthShare NSW in respect of the WSLHD tender (the slides referring to Questek being responsible for "installation, project management and service", whereas Stellar Vision was responsible for "content, software, services"). It is noted that there is no suggestion that Stellar Vision would be involved in discussions with the WSLHD about installation of the PES devices (including the timetabling of installation) or invoicing the hospitals for PES use. 3. Hills Health Solutions submits that there is no basis for concluding that Stellar Vision would have been able to influence management decisions in a way that would have resulted in the counterfactuals alleged in Mr Curtin's second affidavit and therefore that Stellar Vision has failed to establish the element of causation as between the alleged breach (being termination of the contract) and the damage alleged. Determination 1. I am troubled by the fact that the case was not pleaded on the basis of the counterfactual posed by the assumptions given to Mr Eversgerd and I cannot accept that Hills Health Solutions has acquiesced in the conduct of such an (unpleaded) case (cf the position in Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 73 NSWLR 653; [2008] NSWCA 206 at [415]-[525] (Ingot)). In Ingot, McDougall J implicitly recognised that in some circumstances the parties might, by the way in which they conduct the case, acquiesce in the widening of the pleaded case (noting that there had been no express widening in that case nor could it there be inferred). On appeal, as to the circumstances where a party would be allowed at trial to depart from its pleaded case, Ipp JA accepted that there may be a departure from the pleadings where adherence to them would be unjust or unfair, quoting the following passage from Banque Commerciale per Mason CJ and Gaudron J at CLR 286-7: The function of pleadings is to state with sufficient clarity the case that must be met … In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party's right to this basic requirement of procedural fairness. Accordingly, the circumstances in which a case may be decided on a basis different from that disclosed by the pleadings are limited to those in which the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities. … Ordinarily, the question whether the parties have chosen some issue different from that disclosed in the pleadings as the basis for the determination of their respective rights and liabilities is to be answered by inference from the way in which the trial was conducted. It may be that, in a clear case, mere acquiescence by one party in a course adopted by the other will be sufficient to ground such an inference. … 1. Ipp JA further noted the passage quoted by Dawson J in Banque Commerciale (at 293) from Gould v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490; [1916] HCA 81 at 517 per Isaacs and Rich JJ: But pleadings are only a means to an end, and if the parties in fighting their legal battles choose to restrict them, or to enlarge them, or to disregard them and meet each other on issues fairly fought out, it is impossible for either of them to hark back to the pleadings and treat them as governing the area of contest. 1. Ipp JA summarised (at [424]) the relevant propositions as being that: the rule that, in general, relief is confined to that available on the pleadings secures a party's right to a basic requirement of procedural fairness; apart from cases where the parties choose to disregard the pleadings and to fight the case on additional issues chosen at the trial, the relief that may be granted to a party must be founded on the pleadings; it may be that, in a clear case, mere acquiescence by one party in a course adopted by the other will be sufficient to ground an inference that the parties have chosen a different basis to the pleaded issues for the determination of their respective rights and liabilities; acquiescence giving rise to a departure from the pleadings may arise from a failure to object to evidence that raises fresh issues (and it is in that sense that "cases are determined on the evidence, not the pleadings"); and that while cases are to be decided upon a basis that embraces the "real controversy" between the parties, the real controversy has to be determined in accordance with the principles stated. 2. Amongst the factors that his Honour considered (at [456]) would have weighed on the making of a discretionary decision whether to allow the plaintiffs in that case to depart from their case as pleaded were that the appellants, in opening their case, had asserted that they proposed to establish a case based on the particular argument in question (the "smoothing cover" argument); that several parties had adduced evidence directly relevant to that argument; that there was much cross-examination on this evidence, the appellants in closing had presented lengthy submissions based on the smoothing cover argument; and that the respondents, generally, had responded in their closing submissions to the merits of that argument. However, his Honour went on to say (at [457]): The principal factors contrary to such a decision [included that] … [t]he appellants were required to plead the elements of the smoothing cover argument, including the element of materiality. ... They did not, however, plead these matters either expressly or impliedly. … …The respondents did not know that that evidence was being adduced in connection with the smoothing cover argument. … [relevantly for the present case], the respondents did not agree to or acquiesce in the appellants advancing the smoothing cover argument. … [My emphasis] 1. Of relevance was that, had the particular argument there been pleaded, the case for the respondents might have been conducted in a different way. 2. In Vines v Australian Securities and Investments Commission (2007) 73 NSWLR 451; [2007] NSWCA 75 at [57], Spigelman CJ stated the test as being whether the parties "have chosen to fight the case on a different basis" (applying what had been said by Mason CJ and Gaudron J in Banque Commerciale at 286). 3. While I see a distinction between the complaint made in October 2019 that there was no allegation as to issues in relation to Hills Health Solutions' performance of the contract, and the way in which this now seems to be put (i.e., as to how Stellar Vision would better have performed the contract) both arguments suffer from the problem that a positive case of material facts going to the manner of performance of the contract was not pleaded. I do not consider that the provision of particulars by reference to Mr Eversgerd's report adequately put Hills Health Solutions on notice of how it is contended that a better performance would have been achieved. (Mr Eversgerd simply proceeded on the basis of instructed assumptions in this regard.) 4. On the basis that Stellar Vision should be held to its pleaded case, I have concluded that this evidence should not be admitted. 5. Further, Stellar Vision has in essence claimed as its loss the loss of a 50% interest in the WSLHD Contract (or the loss of an opportunity to share in 50% of the profits of the WSLHD Contract). There is no basis on which properly to infer that, had Hills Health Solutions not excluded Stellar Vision (wrongfully, as Stellar Vision says it did) from participation in the contract, Stellar Vision would have had a management role in the project or would have been able to dictate the course pursued in relation to the project. Its role (as revealed in the contemporaneous documents) was as a software provider (consistent with the fact that one of the proposed options being discussed at the outset was simply a licensing arrangement). True it is that, had the "joint venture" proceeded amicably, it might be expected that Stellar Vision would have had some input into decisions in relation to the project. However, it is pure speculation as to what that might have been and what might then have occurred. 6. Thus, I reject the evidence identified as pertaining to "damages" in the document headed Defendant's Objections to Evidence filed by Hills Health Solutions. In any event, on the findings I have reached, nothing turns on this. Stellar Vision's submissions 1. As noted above, Stellar Vision's claim is put in various ways: in trust; for breach of fiduciary obligations (arising either as a result of the alleged trust or generally by reference to the circumstances of the case); for breach of contractual obligations (the Undertaking); or by the invocation of various principles of estoppel. Key factual propositions for which Stellar Vision contends 1. At the outset of its submissions Stellar Vision contends for a number of what it identifies as key factual propositions, which I will deal with in sequence. 2. The first proposition is that Stellar Vision and Questek submitted a joint response to the WSLHD tender (albeit one which solely named Questek as the respondent). Stellar Vision relies on the fact that the tender was submitted in circumstances in which Questek had undertaken to act in the interests of both parties, pointing to the matters referred to in the chronology of events above (including the circumstance that Stellar Vision was persuaded not to submit its own direct tender) and to the contents of the response that was submitted to the WSLHD tender. Stellar Vision contends that the tender was therefore a "joint tender". 3. Stellar Vision says that the proposition in Mr McLaughlin's 21 October 2013 email (see above) to the effect that Stellar Vision was intending to respond to the RFP directly, while continuing discussions, is properly characterised as commercial pressure rather than any intention to abandon the relationship with Questek. Stellar Vision points to Mr McCarthy's evidence in cross-examination in this respect (see T 106.13-22): Q. Right and you understood that the email that you were sent from Mr Rhodes was a plea to Stellar to "reconsider its position regarding a sole bid and to commit to a joint tender with Questek at least in relation to WS tender", do you sed [sic] that? A. Yes. Q. But you say that was the position in any event? A. It was and I, I think the idea of putting a joint - of telling Questek we were in a position and could put a, a tender in on our own was, was an exercise to try to expediate formalising the full joint venture agreement. 1. Stellar Vision says that, following Mr McLaughlin's 24 October 2013 email (see above), Stellar Vision and Questek worked together to finalise a joint response to the RFP, on the basis discussed by Mr McCarthy and Mr Linderman (i.e., that is, that the tender would be submitted in the name of Questek, but on behalf of both Stellar Vision and Questek); and to references in the emails between Mr McCarthy and Mr Linderman to the response as being the "Questek/Stellar" response. 2. Stellar Vision says that Mr McCarthy's evidence in cross-examination to the effect that there was no "formalised" agreement between Questek and Stellar Vision at that time is properly to be understood as a being a reference to there being no formal joint venture agreement (in the form of the creation of an incorporated joint venture vehicle or a formalised "equity swap"). Stellar Vision argues that this is not the same as there being an absence of an agreement or common understanding in respect of the basis on which the WSLHD tender was submitted. It is noted that, when asked about the position of the WSLHD tender in particular, Mr McCarthy's evidence was (at T 101.29-45): Q. Then there was a discussion, was there not, about who would be the tenderer on any tender applications? A. Well, it was on a project by project basis, but on this tender application, yes, there was a discussion. Q. And are we discussing the Western Sydney one at the moment, initial discussion? A. Yes, yes, we are. Q. And the discussion was, well, it can only have one tendering party? A. That was a requirement on the tender documentation, that you couldn't put two entities in. Q. That is how the tender was put in, Questek was the tenderer, correct? A. No, it was agreed between the two parties that Questek's name would appear on the tender, that Questek was doing that on behalf of Stellar Vision and Questek. 1. Stellar Vision says that that position was consistent with the position in respect of the WSLHD tender as communicated to Hills Health Solutions at the time it acquired Questek's business. Stellar Vision says that Mr McCarthy's evidence consistently drew a distinction between ongoing negotiations in respect of a broader joint venture agreement, compared to the agreed position in respect of the submission of the WSLHD tender. 2. Hills Health Solutions does not cavil with the description of the tender as a "joint tender", as such, but argues that nothing turns on this. 3. I accept that the tender response was submitted on the basis that Questek and Stellar Vision had, between themselves, agreed that they were jointly to be responsible for the provision of services required for the fulfilment of the contract if awarded (and to that extent it was a joint tender). I note that the tender was undoubtedly submitted only in the name of Questek (for reasons solely referable to the requirements of WSLHD) and hence, on acceptance of the tender, the only entity that would have been in a position contractually to enforce the tender arrangements as against WSLHD would surely have been Questek. That said, I have no difficulty with acceptance of the proposition that, as between Questek and Stellar Vision, the former had led Stellar Vision to believe that it would be permitted to participate in the project and to share in the profits of the project; and hence it would surely not have been open to Questek (absent something in the arrangements with Stellar Vision or the circumstances at the time that otherwise permitted it to do so) unilaterally to exclude Stellar Vision from participation in the project. In saying this, however, I do not make any finding that the benefit of the project was held on trust for Stellar Vision (an issue to be determined in due course). I am simply concluding, in relation to the first proposition for which Stellar Vision contends, that the tender was submitted as part of a joint exercise by Questek and Stellar Vision and in that sense lodged on behalf of both entities. 4. The second proposition for which Stellar Vision contends is that, between around November 2013 and February 2014, Hills Health Solutions conducted due diligence in respect of Questek and Stellar Vision (that due diligence occurring in the context of Questek and Stellar Vision having submitted a joint response to the WSLHD tender, and in the context of Stellar Vision and Questek negotiating entry into a formal joint venture agreement). 5. Stellar Vision relies upon the matters set out in the chronology of events above as to the due diligence carried out in respect of Questek and Stellar Vision. Relevantly, it emphasises that the due diligence material specifically identified, in respect of the WSLHD tender, that "Stellar and Questek will be on the contract if a JV agreement is not finalised at this stage". Stellar Vision says that this is consistent with the basis on which the response to the WSLHD tender had been submitted by Questek and Stellar Vision. 6. Stellar Vision says that there is no inconsistency between Stellar Vision and Questek seeking to negotiate a joint venture agreement (involving the incorporation of an incorporated joint venture vehicle and a shareholders' agreement) and the parties having already reached an agreement in respect of the WSLHD tender. It says that one component of the agreement in respect of the WSLHD tender (that if no joint venture vehicle was incorporated by the time of the signing of contracts, both Questek and Stellar Vision would be on the contract) is only consistent with the possibility that a formal long-term joint venture agreement may not be finalised; and that this is wholly consistent with the documents provided to Hills Health Solutions during its due diligence into Questek. 7. Stellar Vision further says any concerns held by Ms Jurd (as discussed at the 30 January 2014 meeting) as to the structure of the joint venture arrangement or the potential difficulty Ms Jurd identified at this stage by reference to exclusivity provisions that might operate if Hills Health Solutions entered into a joint venture agreement which involved an incorporated joint venture vehicle (as contemplated by the draft shareholders agreement between Questek and Stellar Vision), have no bearing on the possibility of Hills Health Solutions working on a project-by-project basis (in respect of which exclusivity provisions would not be a concern) and could have no bearing on any commercial relationship that was already in existence in respect of a particular project in which Questek was participating. 8. Further, it is noted that the draft confidentiality agreement between Hills and Stellar Vision, that Ms Jurd requested Stellar Vision sign in advance of the meeting, identified the purpose as being "to assess the commercial feasibility of entering into a joint venture with respect to the provision of patient entertainment systems in the health and aged care industry sectors in Australia". Stellar Vision says that any statements made by Ms Jurd to the effect that Hills Health Solutions had a "policy against joint ventures" cannot be construed as an absolute bar on Hills Health Solutions agreeing to be bound by a joint venture-like arrangement, particularly on a project-by-project basis. It is said that Ms Jurd's statements also have to be considered in light of the express agreement and acknowledgment contained in the Agreed Undertaking (which post-dated this meeting). 9. Stellar Vision also notes that, at the time, HTR, which had been acquired by Hills Health Solutions (or Hills), had tendered for the WSLHD project, and that Ms Jurd had been directly involved in that process. It is said that, for that reason, Ms Jurd was acutely aware of the potential of the WSLHD project. 10. Hills Health Solutions does not appear to cavil with the proposition that due diligence was carried out by it; nor with the information there provided as to the basis on which the tender had been submitted by Questek, but again argues that this does not assist Stellar Vision. 11. Leaving aside the arguments raised above by Stellar Vision as to whether there was a subsisting commercial relationship at this time, I have no difficulty accepting the proposition that Hills Health Solutions carried out due diligence in respect of Questek prior to acquiring its business – and that this would have disclosed to Hills Health Solutions the matters identified in the due diligence material referred to above. 12. The third factual proposition contended for by Stellar Vision is that, in February 2014, Stellar Vision and Questek were awarded the WSLHD tender. I do not accept that this proposition has been established. The fact is that the tender was submitted in Questek's name alone (for the reason adverted to above) and the acceptance by WSLHD was directed to Questek alone. This is reinforced by the fact that, when Stellar Vision asked for the name on the contract to be changed, WSLHD's response was that this required the company's (i.e., Questek) consent. 13. The fact that Stellar Vision's internal communications regarding the successful tender indicate a clear understanding that this was a joint tender that had been won by Questek and Stellar Vision is not to the point; nor is the fact that it appears that WSLHD would not have been averse to amending the WSLHD Contract to include Stellar Vision as a contracting party had Questek (apparently mistakenly relying on Mr Linderman as speaking for Questek) agreed. 14. I find that the WSLHD tender was awarded to Questek. Whether Questek had certain obligations vis-à-vis Stellar Vision in relation to the benefit of the contract is a different issue. 15. The fourth proposition for which Stellar Vision contends (which appears to me in fact to encompass two propositions) is that Hills Health Solutions was aware that Stellar Vision and Questek were awarded the WSLHD tender; and was aware of the basis on which Stellar Vision and Questek had submitted the joint tender. 16. As to the first, there is no doubt that Hills Health Solutions was aware of the fact that the tender submitted by Questek had been successful (though I do not accept that Hills Health Solutions should be held to have been aware of something that was not in fact the case – i.e., that the tender had been awarded to both entities). I do accept that Hills Health Solutions was aware from the due diligence as to the basis on which the tender had been submitted by Questek. 17. The fifth proposition for which Stellar Vision contends is that, prior to signing the Business Purchase Agreement, Stellar Vision and Hills Health Solutions executed a written undertaking which, inter alia, acknowledged that the WSLHD tender was a joint tender and acknowledged that the intent of the previous discussions between Questek and Stellar Vision would be honoured in respect of the WSLHD tender, including that gross profits would be split 50/50. This is a reference to the Undertaking (see as extracted earlier). 18. There is no dispute as to the fact that Stellar Vision and Hills Health Solutions executed the Undertaking prior to the Business Purchase Agreement was entered into by Hills Health Solutions. The proper construction of the Undertaking is something that I address in due course. 19. I simply note here that Stellar Vision emphasises the following features of the 18 March 2014 email from Mr Linderman to Ms Jurd: first, that it identifies that other projects do not "100% involve" Stellar Vision (and, by implication, it is said that the identified projects (including WSLHD) did "100% involve" Stellar Vision); and, second, the recommendation to offer the "WSLHD and the Nepean Projects" to Stellar Vision at a 50/50 deal, and also offer to meet to discuss a long term relationship, which Stellar Vision says is consistent with the final form of Undertaking, which distinguishes between the position in respect of certain identified projects (including WSLHD) where the profits were to be split 50/50, and the possibility of future negotiations to agree a long term arrangement separate from the position in respect of those projects. It is noted that substantial portions of the Outline of Agreement attached to that email of this document were subsequently incorporated into the final form of Undertaking. 20. The sixth proposition is that, on 3 April 2014, Hills Health Solutions acquired Questek's assets, including Questek's interest in the WSLHD tender. There is no dispute that Hills Health Solutions acquired Questek's assets. Whether an interest in a tender is a proprietary asset does not appear to be disputed. As between Hills Health Solutions and Questek, the parties accepted that Hills Health Solutions was in effect to stand in Questek's shoes if the tender were to be awarded to Questek. (How the WSLHD Contract came to be in Hills Health Solutions' name is not clear). 21. The seventh proposition is that, following Hills Health Solutions' acquisition of Questek's business, Stellar Vision continued to work on the WSLHD tender. Again, this is not disputed. 22. Stellar Vision says that this work occurred in the context of Stellar Vision seeking to discuss with Hills Health Solutions a more formal agreement as contemplated by the Undertaking, which I accept; and that such discussions were not inconsistent with there being in place an agreement in respect of existing tenders (including the WSLHD tender) as set out in the Undertaking (which I accept in principle but which begs the question as to whether there was an agreement in respect of the WSLHD tender, which I consider in due course). 23. The eighth proposition is more contentious. It is that, following Hills Health Solutions' acquisition of Questek's business, and at the same time as Stellar Vision was undertaking work on the WSLHD tender, Hills Health Solutions determined to exclude Stellar Vision from the WSLHD tender. 24. As adverted to above, Stellar Vision says that this was due to dissatisfaction with Stellar Vision's conduct at QCH, and in particular supposed ethical issues in "going behind Hills Health Solutions' back". Further, it is said that circumstance arose by reason of Hills Health Solutions' relationship with Lincor. (As already noted, Stellar Vision says that in the absence of any evidence from Ms Jurd or Mr Linderman, those inferences may readily be drawn.) Pausing here, as already noted, it is not necessary to draw an adverse inference as to Mr Linderman's state of dissatisfaction with Stellar Vision as to its conduct in relation to the QCH project. That emerges readily enough from the contemporaneous documents to which I have referred. (The theory as explained above appears to be that Hills Health Solutions was not able to negotiate a better settlement outcome with Allied because Stellar Vision came into the project and assisted Allied; so that Allied no longer needed Hills Health Solutions (see Exhibit 4).) 25. Again, as noted earlier, Stellar Vision says the plan was revealed by Mr Linderman in the 27 May 2014 email. Further, Stellar Vision says that the contract name change had been approved by Mr Matthew Noone from WSLHD and the reason why the change was not implemented was because of the information provided by Mr Linderman, (who was identified by Ms Sullivan (Contracts Supervisor for the Department of Health) as being "from Questek", although by this stage Mr Linderman was an employee of Hills Health Solutions). 26. Stellar Vision says that the fact that Stellar Vision continued to work on QCH notwithstanding that Hills Health Solutions had withdrawn from the site appears to have upset Mr Linderman and Ms Jurd (as outlined further below), and appears to have formed part of the decision on the part of Ms Jurd and Mr Linderman to exclude Stellar Vision from the WSLHD Contract (referring to the 5 September 2014 emails). Stellar Vision says that it is clear from this email exchange that Mr Linderman considered that Stellar Vision's continued involvement at QCH (notwithstanding that Stellar Vision had been informed that it did not owe any further obligations to Hills Health Solutions in respect of QCH) was adversely affected Hills Health Solutions' desire to recommence work at QCH. 27. I do not consider that the evidence establishes that a decision had been made, at or about the time of the acquisition of Questek's business, to exclude Stellar Vision from the WSLHD tender or Contract. 28. I accept that Mr Linderman, from a relatively early stage, was raising concerns as to the "serviceability" of the Stellar Vision product or software and that Mr Linderman appears to have taken badly the stance of Stellar Vision in relation to the QCH project (his email as to Stellar Vision going behind Hills Health Solutions' back, for example, is emotive in its terms). Further, I accept that Mr Linderman (and perhaps also Ms Jurd) may have been happy by at least 10 December 2014 to look for, and act on, any (legitimate) excuse or reason to cease involvement with Stellar Vision. However discussions with Lincor and Mr Linderman's refusal to agree to a name change on this contract are consistent with Mr Linderman waiting to see what would eventuate with the Stellar Vision relationship. Moreover, as noted above, I am not persuaded that Mr Linderman was the relevant decision maker. Indeed his departure from Hills Health Solutions not long after these events would perhaps suggest otherwise. Thus, while I can readily accept that Mr Linderman might have been happy to "set up" Stellar Vision for failure, I do not consider that a decision had been made at this stage to exclude Stellar Vision (and there is no complaint here made as to some breach of a duty of good faith in relation to this issue – of the kind raised in Hungry Jack's v Burger King [1999] NSWSC 1029 per Rolfe J (Hungry Jack's v Burger King) for example. 29. The ninth proposition is that, during July 2014, Hills Health Solutions withdrew from the QCH project (which, it is said, forms part of the factual background to Hills Health Solutions' pretext for excluding Stellar Vision from the WSLHD tender). 30. There is no doubt that, during July 2014, Hills Health Solutions stopped work on the QCH project (following the issue by Allied of the show cause notice). The significance of this is disputed. 31. The tenth proposition for which Stellar Vision contends is that (having determined, after acquiring Questek's business, to attempt to exclude Stellar Vision from the WSLHD project) from around September 2014, Hills Health Solutions established a pretext to exclude Stellar Vision from the WSLHD project, which culminated in a demonstration occurring on 22 December 2014 that Hills Health Solutions contends Stellar Vision "failed". Stellar Vision says that, by this time, Hills Health Solutions had already determined to exclude Stellar Vision from the WSLHD project and replace it with Lincor. 32. Stellar Vision emphasises the following from the 9 October 2017 email from Mr Curtin: first, the reference to the "absence of any agreement" and "no agreement being in place" which it is said is clearly a reference to the absence of any long term joint venture agreement (or alternative but equivalent arrangement), rather than the absence of any agreement in respect of WSLHD (noting that the email positively asserts the existence of an agreement in respect of the WSLHD project – that it is a "50/50 Joint venture"); second, that the email expressly acknowledges that Hills Health Solutions had proposed a "restructure" of the arrangement. 33. It is submitted that a "restructure" can only be understood as a reference to a change to the existing structure; i.e., that Hills Health Solutions had indicated that it might propose a change to the 50/50 arrangement contained in the Undertaking, but as at 9 October 2014 no such "restructure" had been proposed. In the circumstances, it is said that the 9 October 2014 email can only be seen as an affirmation of the position as set out in the Undertaking. 34. It is noted that Mr Curtin was cross-examined about the 9 October 2014 email in the context of the statement in his affidavit that Ms Jurd had provided the Agreed Undertaking "on the basis that if there was to be no joint venture agreement, Hills Health Solutions would propose an alternative arrangement with an equivalent financial outcome for Stellar Vision". Stellar Vision argues that the cross-examination of Mr Curtin on this point conflated the concepts of a long-term joint venture agreement with Mr Curtin's understanding of the position in respect of the WSLHD project. To the extent that Mr Curtin was asked any questions that specifically related to the position in respect of the WSLHD project, Stellar Vision says that his evidence was that there was an agreement with Hills Health Solutions in respect of that project. 35. I do not accept that, prior to the December 2014 demonstration, a decision had been made to exclude Stellar Vision from the WSLHD project and replace it with Lincor, although I accept that this was a possible course that was then under consideration. As to Mr Curtin's understanding of the position (i.e., whether there was an agreement already in place and what was meant by a "restructure") is ultimately not to the point (unless perhaps it is intended to dispel an argument that this was an admission by Mr Curtin; though even then one would look at what objectively his statements would have conveyed to a reasonable reader). The question is what objectively is to be drawn from the relevant documents and events. 36. Insofar as the tenth proposition suggests that there was a decision to "set up" Stellar Vision (which is not expressly stated – and which is not pleaded) I do not accept that the evidence shows this. Rather, the evidence suggests that Mr Linderman armed Ms Jurd with questions that may well have been designed to reveal (perhaps anticipated) problems or deficiencies in the software – but it is by no means clear that there were unreasonable or not legitimate requests. 37. The eleventh proposition is that (even leaving aside the pretext), the circumstances of the demonstration did not demonstrate that Stellar Vision was unable to meet the requirements of the WSLHD tender. 38. It is noted that the demonstration was not identified as a formal industry test. As to matters relied upon by Hills Health Solutions as demonstrating the inability of Stellar Vision to meet the requirements (the Functional Deficiencies set out in the letter dated 10 March 2015), Stellar Vision says that there is no direct evidence to support those matters; noting that by this time, Stellar Vision had installed a functioning PES at the QCH. 39. It is said that any perceived deficiencies in the performance of Stellar Vision's software was a result of the inadequate hardware provided by Hills Health Solutions for the demonstration. It is said that there is no doubt that Mr Linderman, at least, was aware that the hardware being provided would be inadequate; noting that Mr Linderman had been involved in sourcing hardware with Mr McCarthy, and was in regular contact with Dr Rahman regarding the development of the software. Stellar Vision says that Mr Curtin's evidence to the effect that the demonstration was unsatisfactory must be understood in light of the matters identified above. 40. Stellar Vision says that the only technically proficient person present at the demonstration was Dr Rahman; and that Dr Rahman's evidence establishes that the software was capable of performing all the required functions. It is noted that there is no evidence from any Hills Health Solutions witness present at the demonstration (being Ms Jurd and Mr Linderman), let alone any evidence from a technical expert. 41. Dr Rahman's evidence was that Stellar Vision had undertaken all testing that would ordinarily be undertaken in a lab environment. The testing that had not been done was testing that was required to occur at the client's premises (that is, at the hospital). 42. Each of the alleged "functional deficiencies" is addressed below. Allegation of no hardware 1. Stellar Vision emphasises that the discussions between Stellar Vision and Questek (and then Hills Health Solutions) had been on the basis that sourcing hardware was the responsibility of Questek and, subsequently, of Hills Health Solutions (and says that Ms Jurd expressly recognised that this was not her "stronger argument", because the hardware was Hills Health Solutions' responsibility). Allegation that functionalities not demonstrated 1. Stellar Vision says that it was not possible to demonstrate all functionalities automatically, because: it was a demonstration environment and not a "live" environment; and the terminal had insufficient storage and no drivers. Allegation of inability to demonstrate incoming calls 1. Stellar Vision says that Dr Rahman demonstrated outbound phone calls and incoming phone calls from within the phone network to which the device was connected. It is said that Dr Rahman was cross-examined (at least in part) based on an erroneous assumption that no incoming call was demonstrated, whereas it was only an incoming call from an external number that was not demonstrated. Stellar Vision says that, as explained by Dr Rahman, it was not possible to demonstrate incoming calls for an external number without the purchase and registration of a new telephone number. Allegations regarding billing system capabilities 1. Stellar Vision says that the contention that there was no deduction for a movie that was ordered does not demonstrate any deficiency in the Stellar Vision software, because the demonstration was conducted in a test environment. It is said that Dr Rahman's evidence on this point was not challenged, which was to the effect that the test was conducted on a system known as the "Sandbox" system, which has full functionality but where payments do not actually get charged (which it is said makes it ideal for testing). Stellar Vision points out that, to the extent telephone billing was not demonstrated, Dr Rahman's evidence was that Stellar Vision had a billing system, but it was not possible to demonstrate billing capability for phones (because it was not clear whether the billing system would be integrated into the hospital's existing phone system, or a new phone server). Allegation relating to inability to demonstrate closed captioning 1. Stellar Vision says that Dr Rahman was given no notice of the requirement to demonstrate closed captioning. It is said that, had he been notified of this, this could have been demonstrated by installing a third-party application. In any event, it is noted that according to Dr Rahman the alleged problem appears to have been that the closed captioning could not be operated from the handset (although it could otherwise be operated). 2. Stellar Vision says that this is not a deficiency in Stellar Vision's software. Further and in any event, it is said that this was not one of the "core services" to be provided by the Commencement Date under the WSLHD Contract. Allegation relating to inability to demonstrate document reader 1. Stellar Vision says that Dr Rahman was given no notice of the requirement to demonstrate a document reader. It is said that, had he been notified of this, this could have been demonstrated by installing a third-party application. Stellar Vision says that Dr Rahman could show one magazine, but had not downloaded further titles. Further, Stellar Vision says that this was not one of the "core services" to be provided by the Commencement Date under the WSLHD Contract. Allegations regarding inability to demonstrate content management systems, Citrix or web interface, "service & system management" procedures and "catch-up" TV 1. Stellar Vision says that none of these matters was one of the "core services" to be provided by the Commencement Date under the WSLHD Contract. Allegation regarding inability to demonstrate multiple TV channels 1. Stellar Vision says that it was not possible to demonstrate multiple TV channels simultaneously, because in order to do so it would be necessary to have more than one head-end server. It is said that this was explained by Dr Rahman at the time of the demonstration; and that in order to demonstrate all channels simultaneously would have required five servers. Allegation regarding inability to demonstrate functionality for automatic update 1. Stellar Vision says that this was not required as part of the WSLHD requirements and, in any event, that it is undesirable for practical reasons because it would require an update of all the software and modules every time the operating system was upgraded. Allegation regarding no system quality assurance 1. Stellar Vision says that the system had been tested prior to the 22 December 2014 demonstration; but that it was not possible to do so in an operational environment. Allegation regarding inability to demonstrate USB security lockdown 1. Stellar Vision says that this was not demonstrated because there were two possibilities for the USB system that were yet to be decided (and neither was difficult to achieve). It is noted that Dr Rahman did not consider that there was any need to demonstrate lockdown functionality; however, if provided with notice of this requirement, it could have been arranged (and had been achieved on the QCH project). Allegation regarding inability to demonstrate a survey satisfaction form 1. Stellar Vision says that the form had not been provided by the client; but that the functionality (although not the content) was demonstrated by Dr Rahman. Allegation regarding inability to demonstrate "productized software solution" 1. Stellar Vision complains that this does not appear to be specific alleged defect, but is rather just a general descriptive term without any specific technical meaning. 2. As to the above matters, I consider in due course Dr Rahman's evidence. However, the difficulty I have in concluding that the December 2014 demonstration was or was not a failure (at least in Hills Health Solutions' eyes) is that to a large extent that this seems to have been a matter of perception and of mis-matched expectations (one might say that the parties' expectations were as ships passing in the night). Certainly, there was a degree of confusion in the oral evidence as to what precisely had or had not gone wrong in the course of the demonstration. Its only relevance for present purposes goes to the question of repudiation (which I consider in due course). 3. For present purposes, I simply note that the evidence establishes that there was dissatisfaction on the part of the Hills Health Solutions' representatives at the demonstration but I am not persuaded that it demonstrated that Stellar Vision was or would have been (within a time acceptable to WSLHD) unable to perform the requirements of the WSLHD tender. 4. Finally, the twelfth proposition contended for by Stellar Vision is that, following the demonstration on 22 December 2014, Hills Health Solutions appropriated to itself the WSLHD project to the exclusion of Stellar Vision. 5. Stellar Vision says that in the correspondence exchanged during late December 2014 and early January 2015 Stellar Vision indicated a willingness to perform, and to fulfill its obligations under the Undertaking so as to implement the WSLHD Contract within the timeframe contemplated by the parties. 6. There is no doubt that, from 31 January 2015, Hills Health Solutions had determined not to proceed with Stellar Vision. In that sense, it has taken the whole of the benefit of the WSLHD Contract. Whether it has wrongfully done so is the issue here to be determined (and will be addressed in due course). Hills Health Solutions' submissions 1. Before turning to the specific claims made, it is useful here to expand on Hills Health Solutions' overall position in relation to the dispute. In summary, from the contemporaneous documentary records, Hills Health Solutions says that it is apparent that there was no agreement at all, let alone a "joint venture", as between Questek and Stellar Vision in respect of the WSLHD tender. It says that, to the contrary, negotiations were continuing and that no final bargain had been reached, nor had the structure of a joint venture even been settled on, by the time of the acquisition by it of the assets of Questek. 2. Hills Health Solutions says that it is equally apparent that, consistent with the stage at which the negotiations were at, Hills Health Solutions was not advised that there was any concluded agreement between Questek and Stellar Vision. Further, it is said that Stellar Vision itself recognised that Hills Health Solutions was now the party with which it needed to negotiate, given that no agreement had been reached with Questek. 3. Hills Health Solutions contends that the Outline of Agreement, while it contemplated the possibility of further agreements, had no contractual force (other than in respect of the QCH project); noting that Stellar Vision had decided not to tender in its own capacity in order to "show good faith and our desire to work with Questek" (not, I interpose to add, because of some contractual arrangement then in place that would have precluded it from so doing). 4. As to the tender, Hills Health Solutions emphasises that it was submitted solely in Questek's name (it being a requirement of HealthShare NSW that tenders be submitted solely in the name of one party), albeit that it accepts that Stellar Vision was involved in preparing the technical specifications for the tender (and that the tender made reference to Stellar Vision and included its logo); and that it may be described in some sense as a "joint tender". 5. Hills Health Solutions says that, between the date of the Outline of Agreement and the sale of Questek's assets to Hills Health Solutions on 3 April 2014, while there was extensive negotiation between Questek and Stellar Vision with a view to reaching an agreement as to the nature of their relationship in the event that the tender was successful, the contemporaneous documentary record demonstrates that (despite the best intentions of both parties) no agreement was ever reached. 6. Hills Health Solutions characterises the Undertaking (sent in the context of discussions between Hills Health Solutions and Stellar Vision about future arrangements between the two companies upon Hills Health Solutions' purchase of the Questek business), as central to Stellar Vision's claim and says that it does not amount to, or is inconsistent with, the existence of a binding agreement; and it says that the parties' conduct following the Undertaking provides objective confirmation that the parties did not intend for that document to constitute a contract. 7. Reliance is placed in this regard on the 9 October 2014 email from Mr Curtin to Ms Jurd in which he acknowledged that there was an "absence of any agreement" between Stellar and Hills Health Solutions, and instead sought to rely upon a "50/50 Joint Venture with Questek in respect of the WSLHD contract". 8. Hills Health Solutions says that, following the acquisition by Hills Health Solutions on 3 April 2014 of Questek's business, there were discussions between Stellar Vision and Hills Health Solutions about their relationship (including discussions about whether to enter into a joint venture or another model such as a licensing agreement or a revenue share arrangement) and that, as late as 21 October 2014, the correspondence shows that neither party considered itself to be in a binding relationship with the other that created any legal or equitable obligations (other than in relation to the QCH project) (cf Stellar Vision's case that there had in fact been a binding contract since the Undertaking – a state of affairs which Hills Health Solutions says was entirely lost on both parties during this period). 9. Hills Health Solutions' position is that in late November 2014 it formed the view that the demonstration by Stellar Vision of the software it had been developing for the WSLHD Contract was not satisfactory and that Stellar Vision did not have the capability of rolling out PES software within the timeframes required under the WSLHD Contract. It is said that the further demonstration on 22 December 2014 gave rise to further concerns on the part of Hills Health Solutions about Stellar Vision's ability to perform the requirements of the WSLHD Contract. Hills Health Solutions says that the oral evidence at the hearing established that this demonstration was unsatisfactory, and that even Mr Curtin accepted that it was a failure. Further, it says that the event also exposed a level of confusion or mismatched expectations between the parties as to who was responsible for the hardware. 10. In the event a contract is found, Hills Health Solutions characterises the failed December 2014 demonstration as repudiatory conduct by Stellar Vision and relies on its letter of 31 December 2014 as an acceptance of that repudiation, bringing any contract which might have existed to an end. 11. Turning then to the issues for determination, I address those (and the parties' submissions) as follows. Trust claim Stellar Vision's submissions 1. Stellar Vision puts its trust claim in two alternative ways. 2. First, it says that, by reason of the circumstances of the relationship between Questek and Stellar Vision, Questek held its interest in the WSLHD project (and ultimately the WSLHD Contract) on trust for itself and Stellar Vision and that, when Hills Health Solutions acquired Questek's assets, it acquired those assets subject to the trust in favour of Stellar Vision. Stellar Vision emphasises that this is not a claim based on the first (knowing receipt) limb of Barnes v Addy (1874) LR 9 Ch App 244; and Stellar Vision expressly disavows any allegation of breach of fiduciary duty by Questek (thus it is also not pursuing any claim based on the second (knowing assistance) limb (see T 289.17-24). Rather, the first way in which the trust claim is brought is one based on Hills Health Solutions taking its interest in the tender subject to Stellar Vision's rights. It is said in oral submissions (T 289.29-30) that the tender was submitted by Questek as "agent" or joint tenderer on behalf of both parties. 3. Second, and in the alternative, Stellar Vision says that, by reason of the circumstances of the relationship between Stellar Vision and Hills Health Solutions (and in particular the acknowledgment in the Undertaking) Hills Health Solutions held its interest in the WSLHD project on trust for itself and Stellar Vision. Stellar Vision says the Undertaking makes plain that Hills Health Solutions "took with notice" that the tender was a joint tender and that, in the event that no joint venture agreement was negotiated between Questek and Stellar Vision, then both names would be "put on the contract". 4. As to the first way the trust claim is put, Stellar Vision relies on the principles which apply when determining the existence of a trust in the absence of an express declaration of trust (see Bahr v Nicolay (No 2) (1988) 164 CLR 604; [1988] HCA 16 per Mason CJ and Dawson J at 618-619 (Bahr v Nicolay); Korda v Australian Executor Trustees (SA) Limited (2015) 255 CLR 62; [2015] HCA 6 at [3]; [10] per French CJ (Korda)), to which I refer in due course. Stellar Vision notes that the relevant intention is to be a manifested (and not private nor subjective) intention ascertained by "all the relevant circumstances" (citing Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26 at [54] per Gummow and Hayne JJ; and referring to Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495 at [147]); that it is not necessary that the parties use the language of trust, or that the creator of the trust should know that the particular relationship intended is a trust (referring to Reitano v Reitano [2012] NSWSC 1127 at [26] per Pembroke J); and that the relevant intention can be established by words or conduct (referring to In the matter of Tresdar Pty Ltd [2019] NSWSC 179 at [148] per Rees J (Tresdar); Heydon and Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) at [5-02]). 5. Stellar Vision also notes that the relevant intention may be ascertained by reference to the parties' "acts and declarations before or at the time of the [transaction], or so immediately after it as to constitute a part of the transaction" (citing Calverley v Green (1984) 155 CLR 242; [1984] HCA 81 at 262 per Mason and Brennan JJ, as their Honours then were; and referring, inter alia, to Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278; [2006] HCA 6 at [65]-[67]). Reference is also made to the decision of the Court of Appeal of the Supreme Court of Victoria (Maxwell P, Redlich JA and Robson AJA) in Commissioner of State Revenue (Vic) v Snowy Hydro Limited (2012) 43 VR 109; [2012] VSCA 145 at [83]). 6. As to the second way in which the trust claim is put (i.e., that Hills Health Solutions acquired Questek's interest in the WSLHD project subject to Stellar Vision's interest), while reference is made to the authorities dealing with the circumstances in which a bona fide purchaser without knowledge may take legal title free of prior equitable interests (Stellar Vision here referring to Swiss Bank Corporation v Lloyds Bank Ltd [1979] Ch 548 at 566 and Young, Croft and Smith, On Equity (2009, Thomson Reuters) at [2.550]) (Stellar Vision noting that notice in this context may be actual or constructive), Stellar Vision goes on to observe that the "bona fide purchaser without notice" principle does not apply to an assignment of a chose in action, where the assignee acquires its interest subject to the equities (citing Redman v Permanent Trustee Co of NSW Ltd (1916) 22 CLR 84; [1916] HCA 47 at 91 per Griffith CJ and Barton J (Redman v Permanent Trustee)). It is noted that a legal assignment of a chose in action is also "subject to the equities" (s 12 of the Conveyancing Act 1919 (NSW)). 7. Stellar Vision notes that the concept of an assignment being "subject to the equities" encompasses two concepts (Southern British National Trust Ltd v Pither (1937) 57 CLR 89 at 108-110 (Pither)), the first relating to the rights as between the assignee and the obligor; the second relating to the title of the assignor (and the assignee) (as to which reference is made to the explanation given by Dixon J in Pither at 110; and the passage there cited from Sir John Romilly MR in Cockell v Taylor (1852) 15 Beav. 103; (1852) 51 ER 475). 8. As to the application of those principles to Questek, in the first of the ways its trust claim is put, Stellar Vision submits that the circumstances of the relationship between Stellar Vision and Questek were such that the objective intention of the parties was that any rights in respect of the WSLHD project were held by Questek on trust for Stellar Vision and itself; and hence that Questek was not entitled to the whole of the benefit of the WSLHD project. It is said that when Hills Health Solutions acquired Questek's interest in the WSLHD project, it therefore did so subject to Stellar Vision's (equitable) interest. 9. Reliance is placed on the following circumstances at the time of the submission of the response to the RFP: first, the existence of the Outline of Agreement (which included: a warranty by Questek that it was Stellar Vision's "fiduciary with respect to technical know-how and intellectual property"; second, Stellar Vision granting Questek exclusive use of its software for up to 12 months after the date of the Outline of Agreement; a promise to enter into "bona fide discussions to develop the concept of working exclusively with each other on a project-by-project joint venture arrangement for mutual benefit"); third, the agreement by representatives of Questek and Stellar Vision that any submission would be branded jointly with Stellar Vision and Questek logos, and their discussion of the contributions that would be made to any joint projects by each of Questek and Stellar Vision; fourth, the fact that, from September 2013, Stellar Vision and Questek worked jointly on preparing a response to the RFP (in the course of which the project was referred to as a "Questek/Stellar" project and it was agreed that Questek would be the nominee for lodging the response to the RFP because it had the necessary accreditations; fifth, the response to the RFP would be branded with both Stellar Vision and Questek logos and a joint venture company would be substituted at a later date; sixth that Stellar Vision did not submit its own response to the RFP (because of its participation with Questek), and communicated this to both Questek and HealthShare NSW; seventh, the content of the jointly prepared response to the RFP (as referred to earlier), including the references to the "combined resources" of Stellar Vision and Questek, and its offering a "truly unique partnership; and finally, the joint presentation to HealthShare NSW and collaboration between Questek and Stellar Vision (including exchange of financial information) in respect of the WSLHD project. 10. Stellar Vision points out that, throughout the period until Questek entered into the Business Purchase Agreement with Hills Health Solutions, Questek continued to refer to the WSLHD as a joint project with Stellar Vision, in which the profits were to be split 50/50 and, in the absence of a joint venture company being incorporated, that Stellar Vision's name was to be included on the contract with WSLHD. In particular, reference is made to: statements by representatives of Questek that Questek and Stellar Vision "can amend the documents to the JV details once finalised"; the preparation by Questek of a draft agreement which referred to Stellar Vision and Questek splitting the profit from all projects; and statements to the effect that the WSLHD was "won" by Questek and Stellar Vision, and that "Stellar and Questek will be on the contract if a JV agreement is not finalised at this stage". 11. Stellar Vision submits that, in all the circumstances, the objective intention of both Questek and Stellar Vision was that Questek would hold any interest in the WSLHD project on trust for Stellar Vision and itself; and that Questek was not entitled to the whole of the benefit of the WSLHD project. Stellar Vision says that, while the parties did not use the formal language of an express declaration of trust, their words and the conduct of Questek and Stellar Vision before, at the time of and after, the submission of the response to the WSLHD RFP are only consistent with the existence of a trust over the rights in the WSLHD project for the benefit of Stellar Vision. 12. As to the application of the principles in the second way in which the trust claim is put, Stellar Vision says that, when Hills Health Solutions acquired Questek's interest in the WSLHD project, it did so subject to Stellar Vision's interest, either because Hills Health Solutions acquired Questek's interest "subject to the equities" (which included Stellar Vision's interest) or because Hills Health Solutions acquired Questek's interest with notice of Stellar Vision's interest. 13. To the extent that notice is required, Stellar Vision points to the following: first, that, during the course of conducting due diligence, representatives of Hills Health Solutions, Questek and Stellar Vision referred to the "JV" between Questek and Stellar Vision, including that profits were to be split 50/50; second, that Hills Health Solutions was provided with a draft joint venture agreement prepared by Stellar Vision, which was reviewed by representatives of Hills Health Solutions; third, that Hills Health Solutions was provided with a draft agreement prepared by Questek recording terms of a joint venture; fourth, that Hills Health Solutions was provided with the executive summary of the joint Stellar Vision and Questek response to the RFP; fifth, that Hills Health Solutions was informed that certain projects other than WSLHD were "not documented as official quotes or tenders that 100% involve" Stellar Vision (thus implying that the WSLHD project was an "official quote or tender" that "100% involved" Stellar Vision); sixth, that Hills Health Solutions was provided documents which identified that the WSLHD was a "joint" project; and last, that the Undertaking was provided by Hills Health Solutions and signed on behalf of Stellar Vision (which acknowledged that the response to the RFP had been submitted as a "joint tender" between Questek and Stellar Vision, and that the intent of the previous discussions between Stellar Vision and Questek included that profits would be split 50/50 for the WSLHD project). Thus, it is said that Hills Health Solutions had notice of Stellar Vision's interest in the WSLHD project at the time it acquired Questek's assets. 14. As to the position in relation to Hills Health Solutions, focus is placed by Stellar Vision on the circumstances of the relationship between Stellar Vision and Hills Health Solutions; and primarily on the terms of the Undertaking. In this regard, Stellar Vision again emphasises that, in the Undertaking, Hills Health Solutions acknowledged that the response to the RFP was submitted as a joint tender between Questek and Stellar Vision; and acknowledged and agreed that the intent of the previous discussions between Questek and Stellar Vision in respect of that tender would be honoured. 15. It is said that the specific features of the relationship between Stellar Vision and Questek which were to be honoured by Hills Health Solutions, as set out in the Undertaking, included an acknowledgment and agreement that the parties would split gross profit 50/50. Stellar Vision says that, after it had entered into the Undertaking and the Business Purchase Agreement, Hills Health Solutions continued to acknowledge those features of the relationship, including by: referring to its "partnership" with Stellar Vision in the Hills' ASX announcement in relation to the Questek acquisition; providing a financial model of the WSLHD to Stellar Vision and discussing it with Stellar Vision (including reference to the "profit sharing %"); and requesting that Stellar Vision review the draft WSLHD Contract. Stellar Vision also relies on Hills Health Solutions' internal emails which referred to Stellar Vision having a "share" in the contract and that Hills "may be interested in purchasing [Stellar Vision's] share of the contract from them". It is noted that when Stellar Vision's name was not included on the draft contract, Stellar Vision was reassured that this did not affect the arrangements as between Stellar Vision and Hills Health Solutions. 16. Stellar Vision says that, in light of the words and conduct of the parties, the objective intention of Hills Health Solutions (and Stellar Vision) was that Hills Health Solutions would hold the benefit of the WSLHD Contract on trust for Stellar Vision and itself. It is said that the Undertaking was confirmatory of the position that applied beforehand (being an acknowledgment) but alternatively it gave rise to a trust, emphasising that the words "submitted as joint tenders" were inserted at Stellar Vision's request (see T 290.8-9). 17. Insofar as Hills Health Solutions treats the trust claim as being equivalent to the contract claim (and maintains that there was a repudiatory breach of contract), Stellar Vision says that the primary way it puts its case is not dependent on there being a contract and that Hills Health Solutions' contention is no answer to the trust claim (or the breach of fiduciary duty claim). Breach of fiduciary duty claim Stellar Vision's submissions 1. The breach of fiduciary duty claim turns principally on the proposition that Hills Health Solutions held the benefit of the WSLHD Contract on trust for Stellar Vision and itself; and hence owed fiduciary duties to Stellar Vision in its capacity as trustee. However, Stellar Vision maintains that even if the trust claim is unsuccessful, Hills Health Solutions owed fiduciary obligations to Stellar Vision (referring to authorities as to the incidence and nature of fiduciary relationships such as Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36 at 195 per Deane J (Chan v Zacharia); Pavan v Ratnam (1996) 23 ACSR 214 per Beazley JA (as Her Excellency then was) with whom Meagher JA agreed, at 224-225; John Alexander's Clubs Pty Limited v White City Tennis Club Limited (2010) 241 CLR 1; [2010] HCA 19 at [87], per French CJ, Gummow, Hayne, Heydon and Kiefel JJ (John Alexander's Clubs); Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41; [1984] HCA 64 at 96-97 per Mason J (as his Honour then was) (Hospital Products); United Dominions Corporation Limited v Brian Pty Limited (1985) 157 CLR 1; [1985] HCA 49, per Mason, Brennan and Deane JJ at 10-12 (United Dominions Corporation); and News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410; [1996] FCA 870, per Lockhart, von Doussa and Sackville JJ at 538 (News Limited v Australian Rugby)). 2. Reference is also made to Gibson Motorsport Merchandise Pty Ltd v Forbes (2006) 149 FCR 569; [2006] FCAFC 44 at [8] per Finn J; [75] per Sundberg and Emmett JJ (Gibson Motorsport); Finn J there identifying two features characteristically present where one party's conduct prior to the expected finalisation of a business arrangement has been found to constitute a breach of fiduciary duty. Those being: first, that "the particular relationship being bargained for, and in relation to which anticipatory action may have been taken, was itself (or would have been) one having fiduciary characteristics"; and, second, that "the factors in the projected relationship which would have authored those fiduciary characteristics were themselves prefigured in, and hence coloured, the relationship as it evolved". It was there noted that, to the extent that the relationship is fiduciary, the duty of loyalty imposed on the negotiating parties will have obliged them to act in their mutual interests to the exclusion of their several interests. Stellar Vision also refers to the discussion in Fraser Edmiston Pty Ltd v AGT (Qld) Pty Ltd (1988) 2 Qd R 1 (where a partnership agreement was negotiated but not concluded) per Williams J at 9-11; to which reference was made in Disctronics Ltd v Edmonds [2002] VSC 454 at [152]-[153] per Warren J (as her Honour then was) (Disctronics). Finally, in this context, Stellar Vision refers to the decision in Hungry Jack's v Burger King at [369]; [372]. 3. Having noted that the term "joint venture" is not a technical one with a settled common law meaning (see United Dominions Corporation per Mason, Brennan and Deane JJ at 10-12), Stellar Vision points to the circumstances in which a "joint venture" arrangement will include fiduciary obligations (referring to Management Service Australia Pty Ltd v PM Works Pty Ltd [2017] NSWSC 1743 per McDougall J at [188], where his Honour considered that, where parties enter into a contract to pursue a mutual aim for the achievement of their joint interest, this may be one reason why parties to a contract that may properly be described as one of "joint venture" have been found to owe fiduciary obligations to each other). 4. It is noted that, in determining that fiduciary obligations arise within a joint venture, principles of partnership are often applied either directly or by analogy (reference being made to Canny Gabriel Castle Jackson Advertising Pty Limited v Volume Sales (Finance) Pty Limited (1974) 131 CLR 321; [1974] HCA 22 at 326-327 per McTiernan, Menzies and Mason JJ (as his Honour then was); United Dominions Corporation at 11; Hadid v Lenfest Communications Inc [1999] FCA 1798 at [776]-[777] per Lehane J; Ammon v Consolidated Minerals Ltd (No 3) [2007] WASC 232 at [324] per Martin CJ; Concrete Pty Limited v Parramatta Design and Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55 at [15] Gummow ACJ; [124] per Hayne J; and [156] Callinan J). 5. Stellar Vision emphasises that it is the nature of the relationship, rather than any label attached to it by the parties, that gives rise to a fiduciary relationship (pointing to the observation to that effect by Ipp J, as his Honour then was, in Biala Pty Ltd v Mallina Holdings Limited (No 4) (1994) 13 WAR 11 at 57). 6. Stellar Vision contends that the relationship between Stellar Vision and Hills Health Solutions was fiduciary in nature, referring again to the terms of the Undertaking and the work required in respect of the WSLHD project (including the sharing of costs and profits) which it says necessarily requires mutual trust and confidence between Hills Health Solutions and Stellar Vision. 7. Stellar Vision refers to the following circumstances as relevant to the characteristics of the relationship between it and Hills Health Solutions: first, the nature of the pre-existing relationship between Stellar Vision and Questek (which it is said Hills Health Solutions must be taken to have adopted as governing its future relationship with Stellar Vision, having regard to the Undertaking, at least so far as concerned the WSLHD project); second, that the ability of Hills Health Solutions to obtain the benefit of the WSLHD project was the result of work that had been undertaken by Stellar Vision and the characteristics of Stellar Vision's business as disclosed in the response to the RFP (including the technical specifications that were prepared by Stellar Vision, the financial capacity, technical expertise and experience of the Stellar group and industry references for the Stellar group); third, that Stellar Vision and Hills Health Solutions had undertaken to work together in respect of the WSLHD to seek to maximise the profit available to both parties (again referring to the terms of the Undertaking, which it is said provided for an arrangement that necessarily involved a substantial degree of mutual trust and confidence); fourth, that Stellar Vision was in a position of vulnerability in respect of the WSLHD project (not being named as a respondent to the tender and WSLHD not being willing to name Stellar Vision as a party to the WSLHD Contract without the consent of Questek (or Hills Health Solutions)) such that Hills Health Solutions was in a position to exercise substantial control over the relationship and the form of the contract with WSLHD, to the detriment of Stellar Vision. Further, Stellar Vision points to the fact that, to the extent that Hills Health Solutions was able to exclude Stellar Vision, it stood to benefit from that exclusion. 8. Although the negotiations contemplated by the Undertaking for a "long term relationship" were not completed, Stellar Vision says that the absence of such concluded negotiations does not alter the terms of the Undertaking so far as it concerns the WSLHD project; and notes that a fiduciary relationship can arise notwithstanding a formal agreement is never executed. In the present case, Stellar Vision says that, by reason of the Undertaking, the parties had clearly progressed beyond "mere negotiation". 9. Thus, it is submitted that the relationship between Stellar Vision and Hills Health Solutions was fiduciary in character; and that Hills Health Solutions is therefore required to account to Stellar Vision for any benefit or gain: which has been obtained or received in circumstances where a conflict or significant possibility of conflict exists between the fiduciary duty and a personal interest in the pursuit or possible receipt of such benefit or gain; or which was obtained or received by use or by reason of the fiduciary position or of an opportunity or the knowledge resulting from it (citing Chan v Zacharia at 198-199 per Deane J). 10. Stellar Vision says that the conduct of Hills Health Solutions in excluding Stellar Vision from the WSLHD Contract and appropriating for itself the whole of the benefit of that contract is a breach of the fiduciary obligations owed to it (and is conduct not dissimilar to the actions of the defaulting fiduciaries in Disctronics as described at [147]; the finding of fiduciary duty there being upheld on appeal (Edmonds v Donovan (2005) 12 VR 513; [2005] VSCA 27 at [55]-[61] per Phillips JA, Winneke P and Charles JA agreeing). 11. Reference is also made to the well-known authorities to the effect that, where a defaulting fiduciary takes advantage of a corporate opportunity, it does not matter that the other party could not have obtained the benefit of the opportunity itself (citing Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134; Phipps v Boardman [1967] 2 AC 46; Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18 at 558 (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ) (Warman v Dwyer) and noting that a fiduciary cannot discharge its duties by ending the relationship, particularly in circumstances where the cessation of the relationship was prompted or influenced by a desire to pursue an opportunity identified before the cessation of the relationship (citing Natural Extracts Pty Ltd v Stotter (1997) 24 ACSR 110 at 141 (Hill J), applying Canadian Aero Service Ltd v O'Malley (1973) 40 DLR (3d) 371; [1974] SCR 592 at 607 (Laskin J)). 12. Stellar Vision says that, to the extent that Hills Health Solutions contends that the relationship between Hills Health Solutions and Stellar Vision had come to an end prior to Hills Health Solutions' entry into the WSLHD Contract the last-mentioned principle is relevant in this case (and is encompassed within the pleading). Stellar Vision says that Hills Health Solutions sought to "terminate" its relationship with Stellar Vision: in circumstances in which it had no entitlement to do so (and where Hills Health Solutions' fiduciary obligations to Stellar Vision cannot be "terminated"); and that it did so on a pretext and for the purpose of retaining the whole benefit of the WSLHD Contract for itself. 13. Thus, it is contended that Hills Health Solutions breached its fiduciary obligation by excluding Stellar Vision from the WSLHD Contract and appropriating for itself the whole of the benefit of that contract. Again, it is said that any alleged repudiatory breach of contract has no bearing on Stellar Vision's claim based on breach of fiduciary duty. Breach of trust and joint venture claim Hills Health Solutions' submissions 1. Although, in its outline of submissions Hills Health Solutions characterised Stellar Vision's claim against it, based on the alleged trust between Questek and Stellar Vision, as a knowing recipient of trust property claim within the first limb of Barnes v Addy (perhaps because Stellar Vision has contended that Questek held its interest or rights in the WSLHD project on trust in part for Stellar Vision and that Hills Health Solutions acquired its interest in the project from Questek with notice of and subject to Stellar Vision's interest or rights), as noted above, Stellar Vision was at pains to disavow such a claim and hence it is not necessary here to deal with Hills Health Solutions' submissions in relation to that issue. 2. As did Stellar Vision, Hills Health Solutions refers to the principles applicable in relation to the creation of an express trust, noting that where parties to a contract have refrained from contractual use of the terminology of trust, an intention to create a trust will be imputed to them only if, and to the extent that, a trust is the legal mechanism which is appropriate to give legal effect to the relationship between the parties or between a party and a third party, as established or acknowledged by the express or implied terms of the contract (referring to Korda at [109] (Gageler J), his Honour citing Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107; [1988] HCA 44 at 147-149 and Bahr v Nicolay at 618-619). 3. Hills Health Solutions submits that the ongoing discussions with Questek about the WSLHD tender, which resulted in a submission by Questek which incorporated specifications prepared by Stellar Vision and a tender which bore both Stellar Vision and Questek's logo, does not support any kind of "joint venture", fiduciary or trust relationship for the following reasons. 4. First, it contends that there is no basis to conclude that Stellar Vision had some sort of "beneficial interest" in Questek's rights vis-à-vis the WSLHD tender. To the contrary, it is said that there was no concluded agreement as between Stellar Vision and Questek (at the time of the WSLHD tender or at the time that Hills Health Solutions acquired Questek's assets) and that discussions about the form of the arrangement between them continued after the submission of the WSLHD tender. It is said that, in contrast to the Outline of Agreement that governed the parties' arrangements with respect to the QCH project, there was no final agreement reached in respect of the WSLHD tender. Hills Health Solutions maintains that, without some form of express or implied agreement between Stellar Vision and Questek, the trust and joint venture claims must fail. 5. Hills Health Solutions does not appear to cavil with the proposition that there was something that can be described as a "joint tender" submitted by Questek and Stellar Vision in respect of the WSLHD Contract (as it accepts is established by the fact that Stellar Vision's name and product is featured in the WSLHD tender, and that both parties jointly gave a presentation to HealthShare NSW in respect of the tender). However, it says (and I agree) that the term "joint tender" does not connote, let alone create, any particular legal or equitable relationship. Hills Health Solutions argues that a trust is not the appropriate legal mechanism to give legal effect to the relationship that existed between Stellar Vision and Questek. 6. In that regard, Hills Health Solutions points out that not only is a "joint tender" equally consistent with other forms of legal relationships, it is also consistent with both parties taking a commercial risk that their negotiations would lead to no agreement. It is said that there is nothing about a "joint tender" that necessitates a conclusion that the parties both intended to hold the profits (of the project assuming the tender be accepted) on trust for the other in equal shares. 7. Hills Health Solutions notes that Mr McCarthy accepted in cross-examination that there was no "formalised" joint venture concluded as between Questek and Stellar Vision; and that, at the time of the WSLHD tender, the terms of the joint venture remained under discussion. Insofar as Mr McCarthy initially seemed to suggest that there had been discussions which established an agreement as to how "each tender would work that we submitted jointly", Hills Health Solutions says that there is no evidence of any such discussion. 8. Hills Health Solutions points to Mr McCarthy's affidavit evidence of a discussion with Mr Linderman on 14 May 2013 in which Mr Linderman stated "I know there are quite a few tenders coming up, so we both want to ensure we have certainty going into those that we won't leave each other high and dry. The Outline of Agreement will be the basis on how things go with all other Aussie tenders" but that the Outline of Agreement (which was executed on 23 May 2013), ultimately did not incorporate any agreement such as to how future tenders would be managed. 9. Hills Health Solutions notes that the sole reference in Stellar Vision's pleaded case to a conversation with Questek of relevance is a discussion between Mr McCarthy and Mr Linderman on 21 October 2013 (in which Mr Linderman said words to the effect: Look, we have to respect the Outline of Agreement we have executed. We both signed that. Questek knows the ins and outs of these hospital tenders. They can get very chaotic and messy and we know how to handle them. We have prior accreditation from NSW Health to partake in all of them so you don't have to worry about Stellar [Vision] going through a god-awful lengthy approval process. I'm working on Darren [Brighton]. I promise, if you in with us for Western Sydney, we will have a proper written agreement done and dusted by December this year. Just treat this as a done deal. 1. Hills Health Solutions says that those words are not capable of giving rise to a trust relationship between Stellar Vision and Questek; that they demonstrate nothing more than a non-contractual promise to negotiate towards some unidentified final agreement at some point in the future. Assessed objectively, it is said that there is nothing in the nature of this conversation from which it could be inferred that the parties intended to create a trust. 2. It is noted that, from an early stage, Stellar Vision and Questek discussed a number of alternatives to govern their relationship (one of which was a "joint venture") including: arrangements such as a "job by job deal" whereby Stellar Vision would supply its services and software to Questek as required; an arrangement whereby Stellar Vision would acquire an equity stake in Questek; and a licensing agreement which would enable Questek to sell a combined solution to the market were also discussed. Hills Health Solutions notes that Stellar Vision itself indicated some reluctance to enter into a "joint venture" with Questek due to a concern about the protection of its intellectual property. 3. Hills Health Solutions says that when, on 22 October 2013, Mr McCarthy received the email from Mr Rhodes, Mr McCarthy understood this to be a "plea" to Stellar Vision not to submit a sole bid and to commit to a joint venture with Questek in respect of the WSLHD tender. Hills Health Solutions says (and I see force in this submission) that if it were the case that Mr McCarthy considered there to be a binding agreement in place as at this date (and indeed one that gave rise to a trust), then there would be no basis for Stellar Vision submitting a sole bid. It is noted that Mr McCarthy states in his affidavit that by taking this position, Stellar Vision would "put some pressure on Questek to move forward with a joint venture", a statement that Hills Health Solutions says is entirely inconsistent with there being a trust relationship already in place. Hills Health Solutions argues that Mr McCarthy's attempt in cross-examination to explain Stellar Vision's position as simply an "exercise to try to expedite formalising the full joint venture agreement" does not withstand scrutiny having regard to the chronology of negotiations (as to which see the chronology above). 4. Pausing here, I do not see that there is necessarily an inconsistency between an understanding that there was some form of joint venture already in place and an attempt to put pressure on the other party to the joint venture proceeding to formalise it in writing. However, it seems to me that it is certainly inconsistent with there being an existing joint venture in the terms propounded and an apparent assertion by Stellar Vision (whether for the purpose of asserting commercial pressure or otherwise) of an entitlement simply to proceed with a competing tender in its own right. 5. In any event, Hills Health Solutions says that Mr McCarthy's acceptance that, by the time of the submission of the WSLHD tender, there was no agreement, either "formal" or "informal", in place with Questek has the result that the fact of there being a "joint tender" does not give rise to any enforceable right vis-à-vis Questek. 6. Hills Health Solutions says that, as at 25 October 2013 (the date of the WSLHD tender), Stellar Vision and Questek were continuing to discuss the various alternatives; and that they had reached no agreement as to their ongoing relationship other than as to the QCH project (which was recorded in the Outline of Agreement). 7. Hills Health Solutions says that there are no further discussions described in Mr McCarthy's affidavit after the date of the submission of the WSLHD tender that could give rise to an agreement of any kind, noting that (while Mr McCarthy stated that from November and December 2013 it was Mr Curtin and Mr McLaughlin who were continuing discussions with Questek about a joint venture) Mr Curtin's evidence was that he was not a party to any conversation with Questek giving rise to an oral agreement and that his understanding that there was an agreement in place in respect of the WSLHD tender came from discussions with Mr McCarthy and Mr Linderman (none of which are pleaded). It is noted that Mr McCarthy gave no evidence as to such a conversation. 8. Thus it is submitted that Stellar Vision had no beneficial interest in the WSLHD tender of which Hills Health Solutions could have been on notice at the date of its acquisition of Questek's assets. Furthermore, it is said that the communications between Hills Health Solutions and Stellar Vision representatives (see chronology above) make clear that Hills Health Solutions did not consider Stellar Vision to hold a beneficial interest in the WSLHD tender, and that discussions continued, after Hills Health Solutions' acquisition of Questek's assets, about formalising their legal arrangement. 9. Hills Health Solutions says that the only formal agreement provided to it that governed the relationship between Stellar Vision and Questek was the Outline of Agreement (which it says did not create any rights or obligations in respect of the WSLHD tender). It is noted that, although Hills Health Solutions was also provided with what Mr Curtin described as the "incorporated joint venture agreement" (being the document headed Shareholder's Agreement identified in the chronology above) that agreement was unsigned. 10. It is submitted that the fact that Hills Health Solutions was on notice of there being a "joint tender" does not establish that it had knowledge that a trust existed between Stellar Vision and Questek in respect of the WSLHD tender (or that Questek had misapplied trust property) and thus the basis on which Stellar Vision asserts that it held a 50% interest in Questek's rights to the WSLHD tender is misconceived. 11. Hills Health Solutions says that in late December 2013, Questek and Stellar Vision were still discussing the form of their arrangement, with Stellar Vision indicating that Hills Health Solutions (which was at that time finalising its purchase of Questek) wanted to have input into any eventual joint venture agreement between Stellar Vision and Questek. 12. Second, Hills Health Solutions says that it is apparent from the evidence that it had no knowledge of any purportedly binding arrangements between Stellar Vision and Questek. It is said that the communications between Hills Health Solutions and the Stellar Vision representatives make clear that Hills Health Solutions did not consider Stellar Vision to hold a beneficial interest in the WSLHD tender, and (again) it is noted that discussions continued after Hills Health Solutions' acquisition of Questek about formalising their legal arrangement. Reference is made to the fact that Hills Health Solutions informed Stellar Vision that it would not be entering into a joint venture; and that it preferred other forms of legal arrangements; and that internal Stellar Vision communications noted that it was "as expected" that Hills Health Solutions was exploring alternative structures, and that Hills Health Solutions might simply want to pay to license its software. 13. Hills Health Solutions says that there are no circumstances here giving rise to a trust or "joint venture" but that, even if a "joint venture" existed, the description of that arrangement as a "joint venture" does not have any particular legal consequence nor does it, of itself, render that relationship fiduciary for some or all purposes. It is submitted that there is nothing about the relationship between Stellar Vision and Questek (nor between Stellar Vision and Hills Health Solutions) that would necessitate a conclusion that the relationship was a fiduciary one, let alone that Hills Health Solutions had any form of notice of such a relationship. 14. Insofar as Stellar Vision alleges that, independently of what had occurred with Questek, Hills Health Solutions held its interest in the WSLHD project on trust for itself and Stellar Vision in equal shares by reason of the circumstances of the relationship of those two parties, premised on the Undertaking, Hills Health Solutions says (though as adverted to above Stellar Vision cavils with this) that this aspect of Stellar Vision's trust claim rises no higher than its contract claim and turns upon whether the Undertaking can be construed as a binding contract. (Pausing here, as submitted by Stellar Vision, I do not accept that the second of the alternative ways in which Stellar Vision's trust claim is put turns on whether the Undertaking is construed as a binding contract but I address this in due course.) In any event, Hills Health Solutions says that the Undertaking cannot be construed as a binding contract (for the reasons that I will come to when considering the contract claim). 15. Insofar as Stellar Vision relies upon statements in cases such as United Dominions Corporation to support its claim that, independent of any agreement between Hills Health Solutions and Stellar Vision or its knowing recipient claim, Hills Health Solutions owed fiduciary obligations to Stellar Vision, Hills Health Solutions says that, properly understood, that case is authority for no more than the proposition that, if parties contemplating entering into a joint venture/partnership arrangement have actually embarked upon the conduct of the partnership venture before the precise terms of the partnership have been settled so that it can be found that there was an "informal agreement", then those persons will owe each other fiduciary obligations. Hills Health Solutions says that those duties and obligations only arise when the prospective partners have reached an informal arrangement to assume such a relationship and have proceeded to take steps involved in its establishment or implementation (referring to what was said by Gibbs CJ at 7-8; and by Mason, Brennan and Deane JJ at 11-12). It is noted that, on the facts of that case, there was an express, but informal, understanding between the parties, which would later be elevated to a formal agreement, that gave rise to the fiduciary relationship (referring to Gibbs CJ at 7; Mason, Brennan and Deane JJ at 12). 16. Hills Health Solutions says that simply because parties have embarked upon negotiations (one of the potential outcomes of which might be a joint venture or partnership), does not mean that, from the moment those negotiations commence, they are in fact joint venturers or partners (and submits that, to suggest to the contrary would mean that all such negotiations and final agreements are a complete waste of time). 17. Hills Health Solutions says that in the present case, one is left with negotiations which failed to reach any concluded bargain (informal or formal). It says that the conduct of the parties relied upon by Stellar Vision (the so called "joint tender") is wholly explicable by both party taking a commercial risk that the negotiations might come to nothing. It is said that such conduct is not enough to justify a finding that it was done in furtherance of the very joint venture the subject of the negotiations. 18. Pausing here, the difficulty I see as to the position between Questek and Stellar Vision is that the negotiations with Questek, prior to the acquisition of its assets by Hills Health Solutions, while not reaching any form of concluded agreement as to the nature of the arrangements that were being contemplated, nevertheless led to a very clear representation to Stellar Vision that although the tender was being submitted in Questek's sole name, Stellar Vision would have the opportunity to participate in the project and to share in the profits of the project. 19. Hills Health Solutions emphasises that in the dealings between Stellar Vision and Questek (and later between Stellar Vision and Hills Health Solutions), a joint venture was but one of a number of different commercial outcomes under the contemplation of the parties. Indeed, Hills Health Solutions points out that, as between Stellar Vison and Hills Health Solutions, whatever else was the subject of negotiation, the notion of a joint venture had been entirely ruled out. Moreover, Hills Health Solutions says that, insofar as a "joint venture" was contemplated by the parties, that does not in itself establish a fiduciary relationship between the parties (noting the authorities that establish that describing an arrangement as a "joint venture" does not have any particular legal consequences, nor does it of itself render that relationship fiduciary for some or all of its purposes). 20. Further, even if there were some fiduciary obligations in existence between Stellar Vision and Questek (or between Stellar Vision and Hills Health Solutions), Hills Health Solutions emphasises that it is necessary to focus on the content of those duties and obligations. Hills Health Solutions accepts that the obligation of a fiduciary includes the duty not to make a personal profit or to expropriate a business opportunity. However, it is said that this is not a case (such as United Dominions Corporation) in which money had been contributed for the acquisition of an asset by the joint venture, in respect of which the fiduciary was then required to account. Hills Health Solutions says that in the present case Stellar Vision and Hills Health Solutions had not reached a concluded agreement as to the terms on which any profit from the WSLHD Contract would be shared. Although the Undertaking referred to a framework in which profits would be split 50/50, it is said that, absent a finding that the Undertaking amounts to a binding agreement, there is no way of giving content to the alleged fiduciary obligation in the way contended by Stellar. 21. Hills Health Solutions maintains that there is no evidence that it was aware of the asserted fiduciary relationship between Questek and Stellar Vision. It says that it was operating on the information provided to it, which amounted to no more than an assertion by Stellar Vision that the WSLHD tender was a "joint tender" (and that there was no concluded agreement between Stellar Vision and Questek). Determination 1. Reference has been made by both parties to the applicable principles relating to the existence of a trust in the absence of an express declaration of trust and it is not necessary here to repeat them in detail (see above) (reference being made in Bahr v Nicolay per Mason CJ and Dawson J at 618-619; Korda at [3] per French CJ; and to the observations in Jacobs' Law of Trusts in Australia at [5-02] to which reference was made in Tresdar by Rees J that: A court cannot hold that an express trust exists unless it is satisfied that there was an intention to create such a trust. The question will be whether there is language or conduct which shows a sufficiently clear intention to create such a trust. No formal or technical words are required; any apt expression of intention will do. The conclusion that the intention existed may be drawn as an inference from the available evidence. In order to infer intention, the court may look to the nature of the transaction and the whole of the circumstances attending the relationship between the parties and known to them, including commercial necessity. … 1. As noted by Elliott J in Nguyen v Phan (No 2) [2015] VSC 634 at [237] (there noting a distinction between commercial transactions and family dealings): In order to find an express trust was created, it is not necessary for the plaintiffs to prove the parties specifically and formally turned their minds to the fact that a trust was being created; no special or technical language needs to be used; it is sufficient if the intention to create a trust may be ascertained from what the parties actually agreed or said. The intention is imputed when manifest in what is expressly agreed or declared. That intention must be clear from the language used, as objectively understood in the relevant circumstances of the case, including the relationship of the parties. More than once, Gummow J has observed that the precision that might be expected in arms-length commercial transactions is not to be expected in private family dealings. [Footnotes omitted] 1. In Korda at [53], French CJ made clear that there is a distinction between the ascertainment of an express trust with the imposition of a constructive trust and that the two should not be conflated. 2. I am unable to discern from the negotiations between Questek and Stellar Vision prior to the submission of the WSLHD tender an objective intention on the part of Questek to hold the benefit of any contract that might be awarded in its favour on trust as to a 50% interest for Stellar Vision (even leaving aside the interesting question as to whether that would be a trust of future property since the tender had not been awarded at that stage – an issue on which Stellar Vision relied by way of analogy on the position in relation to mining tenements). Rather, there was clearly a representation that the tender would be on a "joint" basis, with both parties to share in some (as yet precisely to be defined) way in the participation and profits of the contract (if awarded); and a promise or representation that if a joint venture agreement could not be reached, then Questek would arrange for Stellar Vision's name to be on the contract. To my mind, that is inconsistent with a manifested objective intention on the part of Questek to hold the contract on trust for Stellar Vision. 3. The contract was not to be held on trust; rather Questek was promising or representing that something would be done to give Stellar Vision contractual entitlements (and impose on it contractual obligations in its own right). To my mind, the suggestion that Stellar Vision acquired a 50% beneficial interest in the WSLHD Contract when it was awarded (as a result of the matters referred to by Stellar Vision) is an approach that (in the words of French CJ in Korda) risks conflating the ascertainment of an express trust with the imposition of an express trust. 4. Thus the first way in which the trust claim is put is not made good. 5. As to the second way that the trust claim is put, this turns on what knowledge Hills Health Solutions had of an equitable interest on the part of Stellar Vision in the WSLHD project when it acquired Questek's "interest" or rights in that project. 6. Stellar Vision says notice is not relevant where there is an assignment of a chose in action (where the assignee acquires its interest subject to the equities) citing Redman v Permanent Trustee at 91 (per Griffith CJ and Barton J). 7. However, this requires that Stellar Vision establish an "equity" in the WSLHD project or Contract. I am not persuaded that a claim or potential claim against Questek for, say, unconscionable conduct (if it resiled from the promise or representation as to putting Stellar Vision's name on the contract if a joint venture was not agreed), or a claim based on the purposes of estoppel to preclude Questek denying such a promise/representation, amounts to an equitable interest or equity to which an assignee of Questek's "rights" or interest in the project would be subject. 8. Indeed, in this regard, what happened seems to me to reinforce that difficulty. Hills Health Solutions was not party to any novation of the WSLHD Contract as such. Rather, it simply was allowed by WSLHD to have its name substituted for that of Questek on the WSLHD Contract when ultimately signed. I do not see this as a case where there was an assignment of a chose in action under which an assignee takes "subject to the equities". 9. Thus, the second way that the trust claim is put is not made good. 10. As to the allegation that the circumstances gave rise to fiduciary obligations, this raises the vexed question of the nature of a "joint venture" (and whether such an arrangement in any particular case is of a fiduciary nature). 11. It is well known that in United Dominions Corporation, Mason, Brennan and Deane JJ stated at 10-12 that: The term "joint venture" is not a technical one with a settled common law meaning. As a matter of ordinary language, it connotes an association of persons for the purposes of a particular trading, commercial, mining or other financial undertaking or endeavour with a view to mutual profit, with each participant usually (but not necessarily) contributing money, property or skill. Such a joint venture (or, under Scots' law, "adventure") will often be a partnership. The term is, however, apposite to refer to a joint undertaking or activity carried out through a medium other than a partnership: such as a company, a trust, an agency or joint ownership. … The most that can be said is that whether or not the relationship between joint venturers is fiduciary will depend upon the form which the particular joint venture takes and upon the content of the obligations which the parties to it have undertaken. If the joint venture takes the form of a partnership, the fact that it is confined to one joint undertaking as distinct from being a continuing relationship will not prevent the relationship between the joint venturers from being a fiduciary one. In such a case, the joint venturers will be under fiduciary duties to one another, including fiduciary duties in relation to property the subject of the joint venture, which are the ordinary incidents of the partnership relationship, though those fiduciary duties will be moulded to the character of the particular relationship (see, generally, Birtchnell v. Equity Trustees, Executors and Agency Co. Ltd. (1929) 42 CLR 384, at pp 407-409). 1. Whether fiduciary obligations arise requires "examination of the detail of what the parties have agreed and done" (John Alexander's Clubs at [44] per French CJ, Gummow, Hayne, Heydon and Kiefel J (as her Honour then was); see also News Limited v Australian Rugby per Lockhart, von Doussa and Sackville JJ at 538; Gibson Motorsport at [8] per Finn J; [75] per Sundberg and Emmett JJ. 2. The difficulty I have is that Stellar Vision and Hills Health Solutions never really progressed beyond "mere negotiation". I accept that the parties had a mutual aim of working together in relation to the WSLHD project and other ventures but it is clear that they were not agreed as to the form that relationship should take. I do not accept that there was the mutual confidence in their relationship necessary to give rise to a fiduciary obligation. 3. In John Alexander's Clubs at [87] the plurality approved the identification by Mason J in Hospital Products at 96-97 of the critical feature of a fiduciary relationship being that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense (from which power or discretion comes the duty to exercise it in the interests of the person to whom it is owed). That feature is missing in the present case. 4. Hence the fiduciary claim also fails. Breach of contract claim Stellar Vision's submissions 1. In the alternative to the claim for breach of fiduciary duty, Stellar Vision makes a claim for breach of contract, based on the Undertaking, noting the principles for construction of such documents and that the legal rights and obligations arising under the Undertaking are to be determined by what the words and conduct of the parties would reasonably be understood to convey (and referring to Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55 at [34] per Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ). 2. Stellar Vision says that the Undertaking contained promises from both Stellar Vision and Hills Health Solutions. In the case of Stellar Vision, it is said that it promised, amongst other things, to provide services in respect of the QCH Project, to contribute 50% of contract implementation costs in respect of the projects identified in Annexure A of the Undertaking, which included the WSLHD project; and to split the gross profit from those projects. In the case of Hills Health Solutions, it is said that it promised to contribute 50% of contract implementation costs in respect of those projects, and to split the gross profit from those projects. 3. Stellar Vision contends that the language of the Undertaking is only consistent with an objective intention on the part of Stellar Vision and Hills Health Solutions to be bound by the mutual promises contained in the Agreed Undertaking, including the use of the word "undertakes" and the phrase "acknowledge and agree". Stellar Vision says that, from Hills Health Solutions' perspective, the Undertaking would not have achieved its commercial objective (at least as identified by Ms Jurd) of ensuring that Stellar Vision would continue to supply Hills Health Solutions in respect of the QCH project if it did not impose any contractually binding obligations on the parties. (It is noted that Hills Health Solutions accepts that the Undertaking was binding at least in part.) 4. Stellar Vision says that the Undertaking contains an express obligation on the parties to honour the intent of the previous discussions between Questek and Stellar Vision including, specifically, that the gross profit from the WSLHD project would be split between Stellar Vision and Hills Health Solutions. Although the Undertaking also contained an obligation on Hills Health Solutions to "commence negotiations in good faith with Stellar Vision to draft an agreement that suits both parties for a long term relationship", Stellar Vision says that obligation does not detract from the binding nature of the obligations otherwise contained in the Agreed Undertaking. 5. First, Stellar Vision says that the obligation in respect of "good faith" negotiations was in respect of a "long term relationship"; whereas it says that the obligations otherwise contained in the Undertaking relate to existing projects (including, relevantly, the WSLHD project). Thus, it says that there is no inconsistency between the parties making a binding agreement in respect of existing transactions on a "project-by-project" basis, and simultaneously agreeing to enter into good faith negotiations in respect of a long term agreement of general application. 6. Second, Stellar Vision says that even if the parties contemplated entry into a more complete agreement, that would not otherwise impact on the binding nature of the obligations contained in the Undertaking, arguing that the agreement would fall into the so-called "fourth category" Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72 (Masters v Cameron) agreement (see Knox CJ, Rich and Dixon JJ in Sinclair, Scott & Co v Naughton (1929) 43 CLR 310; [1929] HCA 34 at 317) as one in which the parties "were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms". Reference is made in this context to G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 634 (McHugh JA, Kirby P and Glass JA agreeing), affirming the decision of McLelland J in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628. 7. Stellar Vision says that the fact that the Undertaking was short form in nature does not preclude a finding that it was binding, submitting that its terms are straightforward (and that the essential terms are that costs will be shared and profit will be split). It is noted that Questek and Stellar Vision had entered into the Outline of Agreement, which was also a short form agreement governing the relationship between Stellar Vision and Questek in respect of QCH (amongst other things); and it is said that Stellar Vision, to Hills Health Solutions' knowledge, had a history of entering into short form agreements. Stellar Vision says that the short form nature of the Undertaking is also explicable by reason of the urgency with which it was executed (Ms Jurd requiring execution in advance of the Questek transaction completing, and placing pressure on Stellar Vision to ensure the undertaking was agreed and signed). 8. To the extent that Hills Health Solutions' contention amounts to an argument that the Undertaking is unenforceable for uncertainty, Stellar Vision refers to the authorities to the effect that such a principle only has operation where the instrument is "so obscure and so incapable of any definite or precise meaning that the Court is unable to attribute to the parties any particular contractual intention" (citing Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429; [1968] HCA 8 at 437 per Barwick CJ, quoting Scammell (G) & Nephew Ltd v Ouston [1941] AC 251; and noting that courts strive to avoid the conclusion that a provision of an agreement is uncertain – see Meehan v Jones (1982) 149 CLR 571; [1982] HCA 52 at 578 per Gibbs CJ, Murphy J agreeing and 589 per Mason J). Stellar Vision says that any uncertainty in respect of the Undertaking falls short of that which would be required for the Undertaking to be unenforceable by reason of uncertainty. 9. As to Mr Curtin's 9 October 2014 email, where Mr Curtin's refers to there being "no agreement in place", Stellar Vision says that this is clearly a reference to the negotiations contemplated by the last paragraph of the Undertaking not being concluded, noting that Mr Curtin's email specifically refers to the last paragraph and that he otherwise affirms that Stellar Vision remains as a 50/50 joint venturer in the WSLHD with Questek (whose interest was acquired by Hills Health Solutions). 10. Further, and in any event, Stellar Vision says that the parties' post-contractual conduct is not admissible for the purpose of construing the provisions of a written contract (citing Brambles Holdings Limited v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 at [25]-[26] (Heydon JA as his Honour then was)). 11. Stellar Vision says that there is no serious argument that the Undertaking is not binding; rather, the only question is whether it is binding only in respect of QCH or whether it is also binding in respect of WSLHD. 12. Stellar Vision maintains that the Undertaking is binding in respect of WSLHD. It says that the Undertaking contains an express obligation on the parties to honour the intent of the previous discussions between Questek and Stellar Vision including, specifically that the profit from the WSLHD project would be split between Stellar Vision and Hills Health Solutions; and that, when Hills Health Solutions appropriated for itself the whole benefit of the WSLHD Contract and excluded Stellar Vision from the WSLHD project, this constituted a breach of the Agreed Undertaking. 13. As to the allegation by Hills Health Solutions that Stellar Vision repudiated the Undertaking (because Stellar Vision had failed to demonstrate that it was able to supply the software, entertainment media and patient entertain system), Stellar Vision says that the matters relied upon by Hills Health Solutions do not demonstrate any inability on the part of Stellar Vision to provide suitable software. 14. Stellar Vision says that insofar as the contention is based on an alleged failure to demonstrate PES software this is not based on the express terms of the Undertaking but depends on Hills Health Solutions' contention that there was an implied term that Stellar Vision demonstrate to Hills Health Solutions that it could supply a "software, entertainment media and patient entertainment system to support the Questek patient entertainment system". Stellar Vision says that there is no basis for the implication of such a term in the Undertaking. It is said that the "Implementation Date" identified in the proposed contractual term was a date that could not have been known at the time of the Undertaking in any event. That conclusion is said to be reinforced by the context of the Undertaking, which recorded obligations in respect of "joint tenders". It is said that while the Undertaking records that Stellar Vision is "contributing to this arrangement … access to the Stellar software and related support services", Stellar Vision's acknowledgement does not import any obligation to demonstrate suitability of Stellar Vision's software (in circumstances in which the joint tender had already been submitted, and won, on the basis of Stellar Vision's software). 15. Second, Stellar Vision says that Hills Health Solutions failed to meet the "Implementation Date" in any event and that this raises the question whether Hills Health Solutions was itself ready, willing and able to meet its essential obligations under the Undertaking. Stellar Vision says that there is a serious question as to whether Hills Health Solutions would have been entitled to terminate the Undertaking given its potential inability to perform any obligations in respect of the WSLHD project (reference being made in this context to what is said in Seddon and Bigwood, Cheshire and Fifoot Law of Contract (11th Australian edition, 2017, LexisNexis) at [21.26]). 16. Third, and in any event, it is said that any breach of the obligation as alleged by Hills Health Solutions could only be characterised as an "anticipatory breach". Stellar Vision maintains that it did not, by its words of conduct, evince an unwillingness or inability to perform any of its obligations (citing Galafassi v Kelly (2014) 87 NSWLR 119; [2014] NSWCA 190 at [62]-[64] per Gleeson JA. It is noted that at [64], his Honour, with whom Bathurst CJ and I agreed, said that: So far as factual inability to perform is concerned what needs to be shown is that the party in question has become wholly and finally disabled from performing the essential terms of the contract altogether: Rawson v Hobbs [1961] HCA 72; 107 CLR 466 at 481; Almond Investors Ltd v Kualitree Nursery Pty Ltd [2011] NSWCA 198 at [62] (Bathurst CJ; Giles JA and Handley AJA agreeing). It is well accepted that factual inability must be proved "in fact and not in supposition": Universal Cargo Carriers Corporation v Citati at 50. 1. It is noted that the relevant time identified by Hills Health Solutions as to when Stellar Vision was to comply with the "Supply Obligation" is expressed to be by the "Implementation Date". Stellar Vision says there is some artificiality in this argument, given: Hills Health Solutions says the breach occurred by 22 December 2014 (being the date of the demonstration); and the "Implementation Date" is said to arise from the WSLHD Contract, which was signed by Hills Health Solutions on 23 December 2014. In any event, Stellar Vision says that, as at 22 December 2014, the time for performance of any "Supply Obligation" was in the future (noting that there is no "Implementation Date" under the WSLHD Contract). It is said that under the executed WSLHD Contract there were several relevant times: a "Planning Commencement Date", which was different for each Hospital, being: Auburn Hospital – 1 January 2015; Blacktown Hospital – 1 February 2015; Mt Druitt – 1 March 2015; Westmead – 1 September 2017; an "Installation Commencement Date", being 5 weeks after the corresponding "Planning Commencement Date"; and a "Service Commencement Date", being 5 weeks after the corresponding "Installation Commencement Date". 2. Stellar Vision maintains that, in those circumstances, Stellar Vision did not demonstrate an inability or unwillingness to provide software by the "Service Commencement Date" (which, on the basis of the WSLHD Contract in fact executed, was still more than two months in the future for the first hospital). Hills Health Solutions' submissions 1. As to the breach of contract claim, Hills Health Solutions says that the Undertaking cannot be construed as a binding contract (other, I interpose, than in relation to the QCH contract) for at least the following reasons. 2. First, as Stellar Vision accepts, the Undertaking must be read and understood as a whole. Hills Health Solutions says that, by the Undertaking, Hills Health Solutions did no more than seek Stellar Vision's confirmation that it would continue to provide services in the event that Hills Health Solutions acquired Questek's business. It is submitted that the words used do not evince an intention by Hills Health Solutions to be bound by any promise. 3. Hills Health Solutions says that the letter is not an offer from Hills Health Solutions capable of acceptance (but, rather, a request from Hills Health Solutions for Stellar Vision's consent and undertaking to continue to provide the said services on the same basis they had been provided to date). It is said that it is confirmatory of the position established by the Outline of Agreement but goes no further. 4. Hills Health Solutions argues that the notion of "honouring" the "intent of previous discussions" is far from consistent with a contractual promise. It is said that the reference to the "previous discussions" can only be to the Outline of Agreement, which in terms was expressly stated not to create any legal obligations in relation to future contracts. Therefore, Hills Health Solutions says that, at best, by the Undertaking there was a promise to honour the provisions of the Outline of Agreement (which itself is merely an agreement to agree in relevant part). It is said that the Outline of Agreement was relevantly non-contractual and so must be the Undertaking. 5. Second, that to the extent that Stellar Vision focusses on the (two) paragraphs numbered (b) on the second page of the Undertaking (see as extracted earlier), the final paragraph of the letter can only relate back to the paragraphs numbered (b). It is said that every other part of the letter is clearly referable to the Outline of Agreement; and that the final paragraph does not speak in terms of documenting an agreement recorded in the letter (rather it speaks of an agreement that "suits both parties"). 6. The last paragraph of the letter (which states that "Hills undertakes to, within 4 weeks of settlement of the Questek Transaction, commence negotiation in good faith with Stellar Vision to draft an agreement that suits both parties for a long term relationship") is said to be an arrangement that falls squarely within the third category described in Masters v Cameron, namely one in which the parties did not intend to make a binding agreement at all unless and until they executed a formal contract. It is said to be clear from this last line of the letter that entering into a binding relationship was conditional upon the parties agreeing to an "acceptable form" for their long-term relationship. 7. Hills Health Solutions says that this was not a case in which the parties had finalised the terms of their agreement and agreed to be bound regardless of any further documentation; rather, they were doing no more than agreeing to seek to come to terms that were "acceptable" to both of them (i.e., that this was in the nature of an agreement to agree). 8. Hills Health Solutions accepts that it agreed to negotiate in good faith and that this agreement to do so might be enforceable (but points out that that is not Stellar Vision's case). Moreover, it is said that if the true position was that there was a binding agreement, which simply needed to be documented more fulsomely, there would be no need for the concept of "good faith" to play any part in that process (nor, it is said, is the concept of an agreement that "suits both parties" consistent with a presently binding agreement). 9. Third, that the second paragraph (b) itself, even if read in isolation, is no more than an "acknowledgment of previous discussions". Again, it is submitted that this can only refer back to the Outline of Agreement and does not, in terms, purport to create any binding relationship. 10. Fourth, that the final paragraph refers to a "long term relationship", which it is said mirrors the arrangement contemplated with the WSLHD (a long-term relationship of 10 years plus an optional extension of 5 years). Accordingly, it is said that the final paragraph must be objectively understood as referring to the tenders in Annexure A, which include the WSLHD tender. 11. Fifth, that for what was a very significant, valuable, complicated, long-term deal, it is highly improbable that the parties intended the five bullet points in the middle of the second page of their letter to govern such a relationship. It is said that the Undertaking stands in stark contrast to the detail and formality contained in the draft joint venture agreement that was exchanged between Stellar Vision and Questek, a copy of which was provided to Hills Health Solutions. 12. Sixth, that those five numbered points which appear under the second paragraph (b) are, on their own, incapable of describing or governing the full complexities of the relationship. It is noted that the letter was written prior to any contract between Questek and the WSLHD being formalised; and before Hills Health Solutions had committed to purchase any such contract from Questek. Accordingly, it is said that the suggested contract formed by the Undertaking might not have been capable of performance by either party. It is accepted that this might be cured by the existence of some implied term, but it is noted that none is pleaded. 13. Further, Hills Health Solutions says that the damages exercise in this proceeding demonstrates the lack of specificity as to who (between Stellar Vision and Hills Health Solutions) would be liable for what costs and responsible for what services, and in particular that what would or would not amount to "ongoing operation costs" in the first numbered point under paragraph (b) is so vague as probably to be unenforceable (but in any event, it does not sit comfortably with an intention of the parties to be immediately bound). 14. Seventh, it is said that the conduct of Stellar Vision and Hills Health Solutions following the 13 March 2014 Letter (and thus the Undertaking) provides objective confirmation that the parties did not intend that document to constitute a contract. It is noted that, as late as 9 October 2014, Mr Curtin's email to Ms Jurd stated that there was an "absence of any agreement" between Stellar Vision and Hills Health Solutions; and instead Mr Curtin sought to rely upon a "50/50 Joint Venture with Questek in respect of the WSLHD [C]ontract". Emphasis is placed by Hills Health Solutions on this 9 October 2014 email. That it should be read in this way is said to be confirmed by [59] of Mr Curtin's affidavit sworn 10 July 2017 (which in cross-examination he accepted reflected his understanding at the time of the Undertaking). (Hills Health Solutions says that in cross-examination, Mr McCarthy also accepted that the Undertaking was not binding, although it is said he sought to later resile from that concession). 15. Hills Health Solutions notes that post-contractual evidence is admissible to determine whether particular conduct or writing amounts to a contract and that it is also permissible to have regard to the conduct of the parties as constituting an admission of the state of the parties' rights. It is said that Mr Curtin's statement in the 9 October 2014 email provides cogent evidence of the absence of a contract between Hills Health Solutions and Stellar Vision. It is said that neither party thought that there was a contract; and that the allegation that there was a binding enforceable contract arising out of the Undertaking is a legal construct divorced from the commercial reality of what the parties were doing at the time. Repudiation 1. If, however, it is found that the Undertaking did constitute a binding agreement, then Hills Health Solutions contends that, by failing to demonstrate PES software capable of performing the requirements of the WSLHD tender in November and December 2014, Stellar Vision repudiated that contract. 2. It is noted that repudiation of a contract occurs when a party is objectively not ready, willing and able to perform the requirements of a contract (see Shevill v Builders Licensing Board (1982) 149 CLR 620; [1982] HCA 47 at 626 per Gibbs CJ (Shevill)); and that whether conduct is repudiatory is not decided by reference to the party's subjective intention, but by reference to how it would appear to a reasonable person in the position of the other contracting party (referring to Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623; [1989] HCA 23 at 657-8 per Deane and Dawson JJ; Duffy Bros Fruit Market (Campbelltown) Pty Ltd v Gumland Property Holdings Pty Ltd [2007] NSWCA 7 at [195] per Giles JA). 3. It is noted that the specifications included by Questek in the WSLHD tender were prepared with the assistance of Stellar Vision; and that those specifications were incorporated into the draft WSLHD Contract, which was provided to Stellar Vision on 25 July 2014 (see chronology above). 4. Although the 1 August 2014 Planning Commencement Date in the draft contract was not the date ultimately incorporated into the final WSLHD Contract, Hills Health Solutions says that it was objectively clear that it was necessary for Stellar Vision to have functioning software by this point in time. The Planning Commencement Date for Auburn Hospital contained in the executed WSLHD Contract was 1 January 2015, with Blacktown and Mt Druitt Hospitals following shortly after on 1 February and 1 March 2015 respectively. Accordingly, it is said that Hills Health Solutions was required to commence deployment of the PES at Auburn Hospital by early February 2015 and at Blacktown Hospital by early March 2015. 5. Hills Health Solutions says that, by October 2014, Hills Health Solutions was receiving pressure from NSW Health to commence supplying the PES (as acknowledged by Mr Curtin in the 30 September 2014 email in which he referred to the fact that the WSLHD "wish to proceed without delay with implementation"; and that, by this time, the only demonstration of Stellar Vision software that had occurred was on 30 January 2014 when Hills Health Solutions was first introduced to Stellar Vision (which demonstration did not include live functionality). It is said that Stellar Vision subsequently acknowledged in May 2014 the need to demonstrate to Hills Health Solutions its capabilities as a "presentable package". 6. Mr McCarthy stated in cross-examination that he was aware that there was a "deadline date" of 1 February for Auburn Hospital. Moreover, it is noted that on 1 December 2014, Dr Rahman was advised by Mr Linderman that Hills Health Solutions needed to review the complete PES system in line with the tender specifications, which included a demonstration of the full functionality of the phone system and a live television demonstration with live TV playing on all local channels; and that this was confirmed by Mr Curtin in an email dated 9 December 2014 to Mr Linderman, where he described the demonstration as "primarily an exercise in confirming software functionality against the deliverables in the Tender Response". 7. Hills Health Solutions says that in those circumstances, there can be no doubt that Stellar Vision was aware that the rollout of the PES at the WSLHD Hospitals was imminent; and that it was entirely reasonable for Hills Health Solutions to require a demonstration of the PES software. 8. It is noted that when, on 7 October 2014, Ms Jurd emailed Mr Curtin in respect of the negotiations for an agreement between Hills Health Solutions and Stellar Vision, Ms Jurd made clear that, in order to finalise any contract between Hills Health Solutions and Stellar Vision, "our team will require a review of the software package you are proposing". Ms Jurd sent another request for a demonstration on 3 November 2014. An initial demonstration took place on 27 November 2014 and a subsequent demonstration on 22 December 2014. 9. Hills Health Solutions says that, prior to the December 2014 demonstration (which it is said followed an entirely unsatisfactory November 2014 demonstration), Mr Linderman informed Stellar Vision that Hills Health Solutions would need to review the complete Stellar Vision system in line with the WSLHD tender specifications, including full functionality of the phone system and a full live television demonstration. It is said that, at that demonstration, Stellar Vision was unable to demonstrate key functionalities; and that the evident problems included that the phone system was not fully functional, the billing system was not functional, there was no back end management system, Stellar Vision could not demonstrate more than one channel at a time, and Stellar Vision had no hardware available. 10. It is said that, on Stellar Vision's evidence, there is an admission that it was not in a position to provide all of the requirements set out in the WSLHD tender as at the November and December demonstrations, but that Stellar Vision seeks to justify this by claiming that only certain functionality was required to be rolled out initially. Emphasis is placed on Stellar Vision's acceptance that it was not able to demonstrate all of the "Core Services" required under the WSLHD Contract at the December demonstration insofar as Stellar Vision accepted that all free to air television stations could not be demonstrated through the PES software as of 22 December 2014, nor could inbound calls be made to the PES system from an external phone number. 11. The WSLHD Contract required that the deployment of PES for the first hospital (Auburn Hospital) commence by five weeks after 1 January 2015. Hills Health Solutions says that therefore it ought be seen as crucial to the performance of that contract that, by the end of December 2014, Hills Health Solutions (and therefore its software provider) be in a position to deliver a fully functional PES by early February 2015. It is said that Stellar Vision could not do this and that Stellar Vision therefore repudiated any contract between it and Hills Health Solutions at the November and December 2014 demonstrations by being unable to perform fundamental obligations under the WSLHD Contract. 12. Hills Health Solutions says that any submission by Stellar Vision that it was "set up to fail" by Hills Health Solutions providing a PES terminal for the demonstrations that was not fit for purpose, or that Hills Health Solutions had already chosen Lincor to replace Stellar Vision as the software provider, is merely an attempt to deflect from Stellar Vision's own inability to perform. Hills Health Solutions disputes those contentions but says that in any case they do not alter Stellar Vision's acceptance of the fact that it was not in a position to provide all of the functionality required by the specifications in the WSLHD tender. It is said that, even though Hills Health Solutions did not believe there was a contract on foot, if there was a contract on foot then Hills Health Solutions was entitled to terminate it (which it did by its letter of 31 December 2014). 13. Hills Health Solutions says that it is common ground, and ought be found, that the demonstrations that took place in November and December 2014 were failures. Mr McCarthy stated in cross-examination that it was not possible to satisfy a customer (before doing an installation) that the product which was about to be installed works. Hills Health Solutions disputes this and says that it was entitled to a demonstration which showed a working product at a time so proximate to the installation of the PES at the hospitals. 14. As to Dr Rahman's evidence was that the software was fully functional and he "demonstrated everything" on the day of the December demonstration, Hills Health Solutions says that it is apparent that Dr Rahman's understanding of what constituted a successful demonstration is in stark contrast to the expectations of Hills Health Solutions set out in subsequent correspondence, as well as the evidence given by Stellar Vision's own witnesses. It is noted that Mr Curtin stated in his affidavit that "Dr Rahman was unable to demonstrate the Stellar Vision PES on the terminal provided by Hills Health Solutions" and conceded the following in cross-examination (see T 157.29-50): Q. You think that Stellar passed the test with flying colours, do you? A. No, I don't. Q. It didn't do very well, let's be frank, did it? A. No, it was - there was a mismatch between the software and the equipment provided. Q. Correct. Really it comes down to whose fault was that, doesn't it? Ms Jurd had said, "I want to see a demonstration to see if this thing works." Someone from Stellar had said to someone at Hills, "Can you bring a terminal?" without telling them what type; correct? A. I'm not, not aware of what specification were given. Q. They turn up with what is said to be an unsatisfactory terminal; correct? A. Yes. Q. The demonstration fails? A. Yes. Q. It wouldn't be unreasonable for someone like Ms Jurd to say, "Well, I'm not satisfied with that demonstration," would it? A. That would, no, not be unreasonable. 1. Reference is made to the letter dated 10 March 2015 from Hills Health Solutions' solicitor in which it was said that at the December demonstration it was not demonstrated that a range of functionalities were operating automatically, and that Dr Rahman had manually to make changes or instructions in the system to seek to cause required functions to be performed. It is said that Dr Rahman's affidavit evidence accepts that this was the case, however justifies this on the basis that it was a "demonstration environment and not a live environment", as well as issues in relation to the hardware (discussed further below) (see generally T 174). 2. In cross-examination, Dr Rahman similarly sought to rely upon the fact that the demonstration was not occurring at the client's premises, and therefore, according to him, not all functions could be demonstrated (again, see T 174). 3. Hills Health Solutions points to contemporaneous records of Hills Health Solutions that record the problems perceived with Stellar Vision's software at the December demonstration (see the emails from Ms Jurd to Ms Squires the day after the demonstration and the further emails from Mr Linderman and Ms Jurd). Hills Health Solutions says that the concerns raised in the contemporaneous documents also reflect Dr Rahman's evidence about what occurred at the December demonstration. 4. The concern recorded by Hills Health Solutions was that the Stellar Vision software was not ready for installation in four weeks' time. It says that this was a legitimate concern in circumstances where Hills Health Solutions was required to commence the installation of the PESs by early February 2015. 5. As adverted to earlier, there is a dispute as to the responsibility for the terminal on which the demonstration occurred on 22 December 2014 (and Hills Health Solutions says that there is a discrepancy in Stellar Vision's evidence in this regard). I have referred in the chronology of events to the circumstances in which: the November demonstration had been deferred at the request of Mr Curtin on the basis that delivery of the terminal had been delayed; on 9 December 2014, Mr Curtin had emailed Mr Linderman, requesting that the December demonstration be delayed as there had been a further delay in the delivery of the terminal but that Stellar Vision could proceed without the new terminal; the communications between Mr Linderman and Mr Curtin on 16 and17 December 2014 in relation to the terminal; and the request made by Mr Curtin to Ms Jurd on 19 December 2014 as to the supply of a compatible proposed terminal for testing purposes before the demonstration. As noted earlier, Hills Health Solutions says that there is no evidence that Stellar Vision provided Hills Health Solutions with the specifications it required for the terminal prior to Hills Health Solutions providing the terminal on 19 December 2014. 6. Hills Health Solutions notes that, in contrast to the above evidence, Dr Rahman seems to suggest that he demonstrated the Stellar Vision software on a terminal other than the one supplied by Hills Health Solutions in the days before the demonstration. Hills Health Solutions says that this is at odds with the evidence given by Mr Curtin, and the documentary record of the December demonstration (including the 24 December 2014 letter from Mr Curtin). 7. Hills Health Solutions says that Dr Rahman's evidence was internally inconsistent and otherwise inconsistent with the evidence of other Stellar Vision witnesses. In this regard, it is said that (while Dr Rahman stated in cross-examination that the Stellar Vision software worked on any Android device), significant parts of his affidavit evidence are devoted to explaining why the Stellar Vision software could not work on the terminal provided by Hills Health Solutions. Moreover, it is said that Dr Rahman's statement that the Stellar Vision software had been tested and worked on eight different terminals is entirely inconsistent with Mr Curtin's request to Hills Health Solutions for a terminal on which it could demonstrate the software. If it was the case that Stellar Vision had a terminal on which it could demonstrate its software, there is no logical reason why it was necessary to request a terminal from Hills Health Solutions for the purpose of the demonstration. 8. Thus, Hills Health Solutions contends that it cannot be concluded that Stellar Vision had identified a suitable terminal on which to load its software. It is said that, whether or not the ultimate responsibility for ordering the hardware to be supplied to the hospitals fell to Stellar Vision or Hills Health Solutions, it must be accepted that Stellar Vision (as the software designer) was required to identify a terminal on which its product could be run. However, it is said that by December, Stellar Vision accepts that it had not yet struck on a particular terminal that was to be used. As to the 24 December 2014 letter from Mr Curtin, it is said that Stellar Vision cannot rely upon an assertion that Hills Health Solutions was responsible for sourcing the hardware as a way of excusing its failure to satisfactorily perform at the demonstration. Further, Hills Health Solutions says that the matters raised in Ms Jurd's 29 December 2014 letter (see above) are not answered by Stellar Vision's evidence. 9. Hills Health Solutions contends that, objectively, a reasonable observer would think that, given the proximity to the date on which Hills Health Solutions was required to deploy the PESs at the WSLHD hospitals, it was crucial to the performance of the WSLHD Contract that, by the end of December 2014, Hills Health Solutions (and therefore its software provider), was in a position to deliver fully functional PESs by early February 2015. It is said that, viewed objectively, Stellar Vision could not do this, as Mr Curtin frankly admitted in cross-examination. 10. That being the case, Hills Health Solutions says that Stellar Vision was not in a position to perform the contract and therefore repudiated any contract between it and Hills Health Solutions at the November and December 2014 demonstrations by being unable to perform fundamental obligations under the WSLHD Contract. It is said that any submissions by Stellar Vision that it was "set up to fail" by Hills Health Solutions providing a terminal for the demonstrations that was not fit for purpose, or that Hills Health Solutions had already chosen Lincor to replace Stellar Vision as the software provider, are merely attempts to deflect from its own inability to perform. Those assertions are refuted, but in any case Hills Health Solutions says that they do not alter Stellar Vision's acceptance of the fact that it was not in a position to provide all of the functionality required by the specifications in the WSLHD Tender. It is thus said that, even though Hills Health Solutions did not believe there was a contract on foot, if there was, Hills Health Solutions was entitled to terminate any contract in place between it and Stellar Vision, which it did by its letter of 31 December 2014 (see above). Determination 1. As to the contractual claim, the difficulty I have with the Undertaking (leaving aside the infelicity of some of its drafting – to which I have referred above) is that the second paragraph (b) is expressed to be an acknowledgment and agreement (by, relevantly, Hills Health Solutions) to honour the "intent" of the previous discussions between Questek and Stellar Vision. Those discussions involved a variety of arrangements – none finally agreed; and left much of the working out of any joint venture still to be agreed. The word "specifically" focusses attention on the content of the five numbered points (and I accept that this objectively intended to set out "specifically" what the parties understood the "intent' of the discussions to be) but it does not seem to me to be objectively intended to amount to a binding and enforceable obligation to enter into a joint venture on those terms (and I consider them on their own to be largely unworkable). 2. The difficulty facing Stellar Vision is that which it faced in the previous discussions – that while a joint venture was contemplated (in which they would share 50/50 in the gross profits of the project), how they would do so remained to be agreed. I accept there may be a distinction between the last paragraph and the preceding bullet points but ultimately I consider that Stellar Vision's recognition that, absent a joint venture agreement, it was left with a "50/50 joint venture" with Questek is the nub of the problem. Unfortunately, that proposed joint venture arrangement was never finalised with Questek and certainly not with Hills Health Solutions. 3. I have much sympathy for the position of Stellar Vision, which has obviously worked in good faith in the expectation that an agreement would be concluded within the spirit or intent of the previous discussions, but I consider that this is a risk faced by all parties engaged in commercial negotiations which ultimately may not come to fruition. 4. The contractual claim therefore fails. That makes it strictly unnecessary to consider the repudiation defence. Had it arisen for consideration I would have held that the demonstration (unsatisfactory as it may have been in Hills Health Solutions' eyes) was not such a failure as to meet the very high test for repudiation. See, for example, Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61 at [44] per Gleeson CJ, Gummow, Heydon and Crennan JJ: … The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it. … Secondly, it may refer to any breach of contract which justifies termination by the other party. … There may be cases where a failure to perform, even if not a breach of an essential term (as to which more will be said), manifests unwillingness or inability to perform in such circumstances that the other party is entitled to conclude that the contract will not be performed substantially according to its requirements. This overlapping between renunciation and failure of performance may appear conceptually untidy, but unwillingness or inability to perform a contract often is manifested most clearly by the conduct of a party when the time for performance arrives. In contractual renunciation, actions may speak louder than words. 1. In this regard there was certainly confusion in the evidence given by Dr Rahman in cross-examination as to the demonstration that took place in December 2014; and I accept that meeting the timing under the WSLHD Contract was problematic (to say the least) as at the end of December 2014 but it seems to me that Stellar Vision was evincing a willingness to perform and I do not consider there was a demonstrated inability to do so (particularly given the mismatch of expectations and requirements for the demonstration). 2. In Shevill it was said (at 626 per Gibbs CJ) that: … if one party, although wishing to perform the contract, proves himself unable to do so, his default in performance will give the other party a right to rescind the contract, if the breach goes "so much to the root of the contract that it makes further commercial performance of the contract impossible". … 1. I do not accept that this was such a case. Claim based on proprietary estoppel 1. Reference is made to the summary in Carter v Brine [2015] SASC 204 per Blue J as to the elements of estoppel by encouragement (at [326]), which I do not here repeat (though I consider them to be a useful guide see ADM v FDGK [2018] NSWSC 442 at [912] albeit not to be applied in a mechanical fashion). 2. The relevant representation here identified (based on the terms of the Undertaking), which is said by Stellar Vision to be clear and unequivocal, is to the effect that Stellar Vision would continue to have a 50% interest in the WSLHD Contract. Stellar Vision says that the representation induced it to adopt the assumption that it would have a 50% interest in the WSLHD Contract. 3. Stellar Vision also points to the conduct of Hills Health Solutions following the date of the Undertaking, including: the reference to the "partnership" with Stellar Vision contained in the ASX announcement in relation to the Questek acquisition; Hills Health Solutions' provision of a financial model of the WSLHD to Stellar Vision (following its request for review and feedback"), and the parties' discussion of that model including reference to the "profit sharing %" (which it is said is consistent only with Stellar Vision having an economic interest in the profits from the WSLHD Contract). It is noted that Hills Health Solutions requested that Stellar Vision review the draft WSLHD Contract, (said to be consistent with Stellar Vision having an interest in that contract) and that, when Stellar Vision's name was not included on the draft contract, Stellar Vision was reassured that this did not affect the arrangements as between Stellar Vision and Hills Health Solutions (which was relied upon by Mr McCarthy). 4. Stellar Vision's assumption is said to be further reinforced by the matters of detrimental reliance to which it points. It is noted that, following the date of the Undertaking, Stellar Vision: undertook work in respect of the WSLHD project in the form of developing the software architecture, system design and services architecture for the WSLHD project; and otherwise expended time and resources in respect of the WSLHD by attending meetings, reviewing documents, including the WSLHD Contract, and working collaboratively with representatives of Hills Health Solutions to source hardware for the WSLHD project. 5. Mr McCarthy's evidence is that this work was being undertaken because of a belief that there was an agreement in place in respect of WSLHD, not based on any hope or expectation that such an agreement would come into existence. It is noted that Mr Curtin agreed with the proposition that he caused Stellar Vision to continue with the work because he "thought that it was a good thing to do" but it is said that this evidence is consistent with that work being done by reason of a belief that there was an agreement or arrangement in place. It is noted that Dr Rahman was not cross-examined on this issue. Thus, it is said that Stellar Vision relied to its detriment on the relevant assumption. Claim based on promissory estoppel 1. As to the claim based on promissory estoppel reference is made to the summary of the relevant principles set out in Antov v Bokan [2018] NSWSC 1474 at [484]-[486], which again I do not propose here to set out. Insofar as it has been said that a promissory estoppel must be negative in substance, and cannot be relied upon to acquire some positive interest or right (see, for example, in Zugic v Vesuvius Australia Pty Ltd [2020] NSWSC 106 at [269]), Stellar Vision points to the acknowledgement by Bathurst CJ in Ashton v Pratt (2015) 88 NSWLR 281; [2015] NSWCA 12 at [138] that there is significant dicta contrary to this limitation. 2. Stellar Vision says that, in the present case, the relevant consequence of the promissory estoppel in this case is not to permit Stellar Vision to acquire some positive right; but rather that the promissory estoppel operates negatively in preventing Hills Health Solutions from denying that its legal relationship with Stellar Vision is governed by the terms of the Undertaking. Stellar Vision relies upon the same factors identified in respect of the claim based on proprietary estoppel for its claim based on promissory estoppel. Claim based on conventional estoppel 1. As to the claim based on conventional estoppel, reference is made to the outline of the elements of conventional estoppel by Brereton J, as his Honour then was, in Moratic Pty Ltd v Gordon [2007] NSWSC 5 at [32], approved by the Court of Appeal in TMA Australia Pty Ltd v Indect Electronics & Distribution GmbH [2015] NSWCA 343 at [115] per Meagher JA, Macfarlan JA and Bergin CJ in Eq agreeing and Rydledar Pty Ltd t/as Volume Plus v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65 at [200] per Tobias JA, Mason P and Campbell JA agreeing. 2. Stellar Vision says that the Undertaking sets out the assumptions made by the parties as to their legal relationship; and that, following the Undertaking, until the end of December 2014, at least in respect of their public communications and those made with each other, Stellar Vision and Hills Health Solutions conducted their relationship on the basis of that assumption. The conduct relied upon is similar to that relied upon above in respect of the equitable estoppels. 3. For the same reasons as submitted in respect of the equitable estoppels, it is said that departure from this assumption would occasion detriment to Stellar Vision. Estoppel Claims – Hills Health Solutions' submissions 1. Hills Health Solutions says that Stellar Vision's pleaded case in respect of these claims relies upon the terms of the Undertaking (see pleading at [44A] and [44H]); and that this claim can therefore rise no higher than the breach of contract claim. It is said that, without a contract there can be no unequivocal representation. (I do not accept that as a matter of principle that is the case.) 2. Hills Health Solutions says that the suggestion that Stellar Vision was ever operating on the assumption of some binding promise is fanciful in light of its own contemporaneous documents, and in particular the 9 October 2014 email from Mr Curtin which it is said clearly demonstrates that Stellar Vision considered there to be no binding agreement as at that date. 3. Moreover, Hills Health Solutions says that Stellar Vision's estoppel claims cannot succeed as Stellar Vision has failed to establish that it acted to its detriment in reliance upon any represented or assumed state of affairs. It is said that there is no evidence that Stellar Vision changed its position by reference to any representation or other conduct of Hills Health Solutions, or that it acted to its detriment upon an assumption as to the basis of its relationship with Hills Health Solutions. To the contrary, it is said that the documentary evidence (see chronology above) demonstrates that Stellar Vision continued to attempt to negotiate a binding agreement with Hills Health Solutions until at least the November 2014 demonstration. It is said that this is the opposite to the alleged assumption. It is said that there is no evidence that Stellar Vision altered its state of affairs on the basis of the Undertaking, rather than simply continuing to pursue a business opportunity as it would have done in any event. Determination 1. As to the estoppel claims, I accept there was a representation that Hills Health Solutions would honour the intent of the previous discussions but in circumstances where Stellar Vision was well and truly on notice of the fact that it had not yet reached agreement as to the terms under which it would participate in the WSLHD project (beyond the five numbered points in the Undertaking said specifically to comprise the "intent" of those previous decisions), I am not satisfied that it could reasonably have assumed an entitlement to participate in the WSLHD project on any particular terms. 2. I find that Stellar Vision's actions were taken in reliance on the anticipation that terms would be able to be agreed but not in reliance on a representation that it would have any particular interest in a joint venture on particular terms). 3. Hence the estoppel claims are not made good. Relief sought by Stellar Vision 1. In light of the failure of each of Stellar Vision's claims, the below consideration of the question of relief arises only in the event that my conclusions with respect to the trust claim, the breach of fiduciary duty claim, the breach of contract claim, and the various estoppel claims are erroneous. 2. As to the breach of trust claim, Stellar Vision claims an entitlement to equitable remedies including equitable compensation or an account of profits. A similar claim for equitable relief is made as to the breach of fiduciary duty claim (either because the benefit of the WSLHD Contract is held on trust for Stellar Vision, or because the relationship between Hills Health Solutions and Stellar Vision is fiduciary in character). Reference is made to the statement in Warman v Dwyer at 559 (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ) that "the cardinal principle of equity [is] that the remedy must be fashioned to fit the nature of the case and the particular facts". It is noted that, in appropriate circumstances, that may result in the imposition of a constructive trust, an account of profits or the payment of equitable compensation. 3. As to the breach of contract claim, Stellar Vision claims damages (to be assessed in accordance with the principle that damages should put Stellar Vision in the same situation as it would have been in had Hills Health Solutions performed the contract) (reference in this context being made to Clark v Macourt (2013) 253 CLR 1; [2013] HCA 56 at [106]). Stellar Vision says that the relevant obligation not performed was splitting the gross profit of the WSLHD Contract in accordance with the Undertaking. 4. It is noted that while the general rule is that damages are assessed at the date of breach, the rule is not universal (see Johnson v Perez (1988) 166 CLR 351; [1988] HCA 64 at 355-356 per Mason CJ (Johnson v Perez)), and that, even if the loss is assessed at the date of the breach, it will be permissible to take into account events that have occurred since the date of breach in assessing that loss (HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54 at [39] (Gleeson CJ, McHugh, Gummow, Kirby and Heydon JJ)). In that context, I note that in Kizbeau Pty Ltd v WG & B Pty Ltd (1995)184 CLR 281; [1995] HCA 4 the High Court earlier said at 291: In an action for damages for deceit for inducing a person to enter a contract of purchase, which is an action that is closely analogous to an action for damages for breach of s 52 the courts have consistently held that the proper measure of damages is the difference between the real value of the thing acquired as at the date of acquisition and the price paid for it. Nevertheless, although the value is assessed as at the date of the acquisition, subsequent events may be looked at in so far as they illuminate the value of the thing as at that date. A distinction is drawn, however, between subsequent events that arise from the nature or use of the thing itself and subsequent events that affect the value of the thing but arise from sources supervening upon or extraneous to the fraudulent inducement. Events falling into the former category are admissible to prove the value of the thing, those falling into the latter category are inadmissible for that purpose. [Citations omitted; emphasis added] 1. Stellar Vision says that any difference between: an assessment of equitable compensation as at the date orders are made, having regard to events that occurred up to the date of the order; or an assessment of damages for breach of contract as at the date of breach, having regard to subsequent events that have a bearing on quantification of that loss, is more apparent than real. 2. As to the various estoppel claims, it is noted that where an equitable estoppel is established, the ordinary measure of relief is the substantial fulfilment of the assumptions induced (reference being made to the authorities cited in support of that proposition in Moore v Aubusson [2020] NSWSC 1466 at [359]) and referring to Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 at [85] per French CJ, Kiefel, Bell and Keane JJ. Stellar Vision says that in the present case the injustice suffered by it requires that Hills Health Solutions account to it for the benefit of the WSLHD Contract. 3. As to the conventional estoppel claim, Stellar Vision says that Hills Health Solutions is prevented from denying that the relationship between Stellar Vision and Hills Health Solutions is governed by the terms of the Undertaking. Quantum 1. Stellar Vision says that, irrespective of the way in which the claim is characterised, the benefit to Hills Health Solutions or the loss to Stellar Vision is largely the same. Stellar Vision argues that (whether Hills Health Solutions is required to: account for the benefit of trust property which it has misappropriated; provide an account of profits; pay equitable compensation; or pay damages for breach of contract) in each case attention is directed towards valuing a 50% interest in the WSLHD Contract. In other words, it is said that in substance what Stellar Vision lost (a 50% interest in the WSLHD Contract) and what Hills Health Solutions gained (the whole of the benefit of the WSLHD Contract short of Stellar Vision's 50% interest) are the same. 2. As referred to earlier, both parties have served expert evidence seeking to quantify the value of a 50% interest in the WSLHD Contract; and both experts adopt a discount cashflow valuation; the differences in calculations primarily being the result of different variables that the experts have used in their respective discounted cashflow models, and different approaches to inflation and discounting cashflows. 3. As I read the Table at [14] of the experts' joint report dated 23 April 2021, Stellar Vision's expert (Mr Eversgerd) valued the 50% interest in the WSLHD Contract (see the Table at [14] of the joint report dated 23 April 2021) at the upper end in a range between $5,750,052 and $12,482,619 (on the "no delay scenarios") and $5,197,501 to $11,714,276 (on the "delay scenarios") (with a range in lesser sums for those scenarios depending on the discount rate and assumption as to length of contract); whereas Hills Health Solutions' expert (Mr Jackson), values the loss in the range between $1,262,639 to $3,992,256 (on the "benefit scenarios") (although on some assumptions it is negative) and in the range between $1,223,114 to $3,952,730 (on the "no benefit scenarios") (with one assumption producing a negative figure) (again with differences depending on different variables). 4. Stellar Vision says that Mr Eversgerd has valued additional revenue of between $1,506,699 to $1,749,676 (depending on the discount rate) which would have been paid to Stellar Vision had it participated in the WSLHD Contract. (Presumably that is included in the total loss figures in Table 4.) 5. Stella Vision says that Mr Eversgerd's valuation proceeds by reference to the actual performance of the WSLHD Contract, adjusted to take into account the improved performance that the WSLHD Contract would have had, had Stellar Vision participated in the performance of the contract (in order appropriately to compensate Stellar Vision for what it has lost). This of course depends on the counterfactual assumptions being adopted. 6. Stellar Vision says that Mr Eversgerd has also valued the 50% interest in the WSLHD Contract solely by reference to the actual performance of the WSLHD Contract (that is, without taking into account improved performance by reason of Stellar Vision's participation in the contract). On that basis, Stellar Vision's expert has valued the 50% interest in the contract up to $5,333,785 and has quantified the cumulative value of additional net positive adjustments to the valuation (referable to the actual performance of the WSLHD Contract) up to $775,494. 7. An Addendum to the joint report dated 27 April 2021 was prepared in which Mr Eversgerd valued Stellar Vision's loss between $5,038,698 and $6,902,914 depending upon the discount rate applied and the scenario adopted (see figures in the Addendum to the joint report dated 27 April 2021 at 3); and Mr Jackson valued Stellar Vision's loss between $1,223,114 and $2,632,506 depending on the discount rate and scenario adopted. (It is fair to say that there have been numerous different amounts put forward based on the different assumptions and variables but the key points of distinction between the two experts appear to be related to the instructions given to the experts – as noted in their joint report.) 8. In this regard Hills Health Solutions criticises Stellar Vision's approach to damages, saying that the exercise has turned into a "rolling inquiry" as to the ongoing performance of the WSLHD Contract on different assumptions; and, as noted earlier, it objects to the counterfactual analysis insofar as it is based on an assumption that the WSLHD Contract would have been performed differently had Stellar Vision been involved. 9. The principal differences between the approaches of the experts are said by Hills Health Solutions to be that Mr Jackson relies upon Hills Health Solutions' historical financial performance of the WSLHD Contract to value the future cash flows for the remainder of the contract period; whereas Mr Eversgerd values the WSLHD Contract on the assumptions as to how it would have been performed had Stellar Vision been involved in providing the PES. 10. The joint report identifies helpfully the areas of agreement between the experts and lists 17 itemised areas of disagreement (which I address below). However, perhaps ironically, one of the issues on which the experts were agreed (see the joint report at [19]) was that the September Model was the best contemporaneous information regarding what net profits were expected to be generated from the WSLHD Contract: a post-tax NPV of ($153,818) (with a free cash flow of $1,536,488) for the WSLHD Contract after 10 years and an NPV of $1,322,116 (with a free cash flow of $6,089,596) if the optional extension of five years was included (see [58] of Mr Jackson's second report); and on a pre-tax basis, an NPV of $740,881 (with a free cash flow of $3,091,667) for the WSLHD Contract after 10 years and an NPV of $2,561,786 (with a free cash flow of $8,699,423) if the optional extension of five years was included (see [38] of Mr Jackson's second report). It is relevant at the outset, however, to note the dispute as to the use of the September Model in calculating loss. September Model 1. Hills Health Solutions points to the September Model, which valued the WSLHD Contract as at that date, based upon a discounted cash flow model which both parties believed was reasonable, at $1,322,166. It is said that, if Stellar Vision is entitled to 50% of that, then Stellar Vision's claim is worth approximately $750,000 (although it is noted that, at Stellar Vision's insistence, this model provided for Stellar Vision to receive licence fees, which Hills Health Solutions says is entirely inconsistent with the contract on which it now sues). Hills Health Solutions says that, properly understood, Stellar Vision's case is for loss of the value of the contract that it says it had (i.e., loss of bargain damages) and, that contract having been lost in December 2014, it is at that date that the value of the contract should be analysed. It is said that this follows the general principle that damages should be assessed at the time of breach (referring to Johnson v Perez at 355-356 per Mason CJ). 2. Hills Health Solutions accepts that the September Model is based upon assumptions, but says that this was all that was known to the market and therefore the proper basis for valuation as at that date. Alternatively, if the loss is valued on the basis of the valuations provided by the experts based on the actual performance of the WSLHD Contract (as well as any counterfactual established on the evidence), Hills Health Solutions says that this is properly characterised as a loss of a chance which will need to be discounted. 3. Stellar Vision says that Hills Health Solutions' contention that the quantum of Stellar Vision's loss should be assessed by reference to the "September Model" is flawed as a matter of fact and legal principle. 4. As a factual matter, it is said that the September Model does not reflect an "agreed position". It is said that Mr Curtin agreed with Mr Starkey's "suggestion of a line by line audit of the costs estimates" (referring to Mr Starkey's 6 August 2014 email) but that the evidence does not disclose any "line-by-line" review. It is noted that, while Mr Starkey could not recall whether he had proposed a line-by-line audit with Stellar Vision, he accepted that the model was based on estimates and would change as those assumptions became more certain. Stellar Vision maintains that in the absence of evidence of a line-by-line audit (and agreement thereon), the only inference to be drawn is that the September 2014 model was an early model prepared by Hills Health Solutions which was never more than an estimate based on assumptions and guesswork. 5. Second, as a matter of principle, Stellar Vision says that it is not correct that assessment of a loss for breach of contract requires regard only to evidence available at the date of breach (and in any event says that it is certainly not the position in respect of Stellar Vision's equitable claims where regard may be had to all matters up to the date of judgment). Reference is made to what was said by McColl JA (Campbell JA and Handley AJA agreeing) in McCrohon v Harith [2010] NSWCA 67 at [54]-[61] in this regard. 6. Further, it is said that Hills Health Solutions' breach is ongoing, since at no time has it accounted to Stellar Vision for the benefit of the WSLHD Contract. Areas of disagreement between the experts 1. Turning to the itemised areas of disagreement between the experts, I propose to address them sequentially. I note that Stellar Vision has grouped them differently, identifying the "inputs" for the model as falling into two broad categories: first, factual inputs which require determination as to the current revenue and expenses under the contract as it has been performed by Hills Health Solutions (referring to the disputed "scenarios" and items 10-17 and the issue of hospital commissions); and, second, counterfactual inputs which require determination as to what the position would have been had Stellar Vision been jointly involved in the contract with Hills Health Solutions (relating to items 1, 4, 6, 7- 9 and 11-15). (Hills Health Solutions maintains an objection to the counterfactual inputs on the basis that the material facts in relation thereto were not pleaded.) For present purposes I consider it convenient to refer to the parties' submissions on each itemised area of disagreement. Item 1 – Contract performance 1. The first area of disagreement (item 1) is the issue of contract performance. Mr Eversgerd has been instructed that the performance of the WSLHD Contract would have been different had Stellar Vision been involved in the management of that Contract (see Mr Eversgerd's second report at [2.4.6]). Mr Jackson's opinion is that there is no evidence that contract revenue would have been substantially higher and the costs substantially lower if Stellar Vision was jointly managing the contract (see Mr Jackson's second report at [144]). 2. Thus, item 1 (which Stellar Vision describes as a counterfactual input) is based on assumptions as to how the contract would have been performed had Stellar Vision jointly operated the contract with Hills Health Solutions. Stellar Vision addresses these assumptions in more detail in relation to Items 4, 6, 7, 8, 9 and 11, emphasising that each assumption is separate and distinct. 3. Insofar as Mr Jackson's position (as noted in the joint report) as to lack of evidence is concerned, Stellar Vision says that this is not a matter for expert evidence but is a matter for the Court. 4. Stellar Vision maintains that, as a general matter, had Stellar Vision not been excluded from the WSLHD Contract by Hills Health Solutions, and had it been permitted to participate jointly in the project, then Stellar Vision (and its officers) would have been directly involved in the process. It says that, as a matter of commercial common sense, a party contributing 50% of the costs and with an entitlement to 50% of the profits would have an interest in the management of the project. Further, it points to Mr Curtin's evidence of the way in which Stellar Vision, even if only characterised as a software supplier for the purpose of the WSLHD project, would be involved in a project in such a capacity. It is said that, to the extent that Stellar Vision was able to manage the project more effectively, there is no reason why Hills Health Solutions (acting rationally) would not accept that assistance. 5. As noted above, this is the counterfactual assumption with which Hills Health Solutions takes issue (both on the basis that it is unpleaded and, as I understand it, on the basis that the counterfactual postulated by Stellar Vision is premised on the Undertaking, which did not ascribe a management role to Stellar Vision). 6. I also note that, to the extent that it was put to Mr Rajasingam that he did not act diligently and prudently in his work in respect of the WSLHD Contract, Hills Health Solutions says that this is wholly inconsistent with correspondence received from Stellar Vision's legal representatives on 1 November 2019 where it is stated that no criticism was made of the conduct of Hills Health Solutions at all, rather, the proposition was no more than that things would have been different had Stellar Vision been involved. Item 2 – Loss Date 1. Mr Eversgerd was instructed to calculate loss as at 23 December 2014 (see Mr Eversgerd's first report at [30]). Mr Jackson adopted an "Ex-Post discounting approach and calculated the value of a 50% share of the WSLHD Contract using actual cash flows prior to 31 January 2021 and the present value of future cash flows after that date discounted to 31 January 2021 (though he had also prepared a calculation on the "Ex Ante" discounting approach). 2. Stellar Vision accepts the "Ex Post" discounting approach adopted by Mr Jackson is the correct method. This issue therefore does not arise. Item 3 – Overall Methodology 1. Mr Eversgerd calculated loss as the sum of: 50% of the WSLHD Contract (excluding revenue from service and maintenance and licence fees) and 100% of Stellar Vision's revenue from service and maintenance and licence fees (and was instructed to provide calculations assuming there was a delay under alternative scenarios where Stellar Vision either did or did not receive compensation payments (see Mr Eversgerd's second report at [2.3.2])). Mr Jackson calculated the value of a 50% share in the WSLHD Contract assuming equal cost and revenue sharing (and was instructed to apply different assumptions for licence fees and CAPEX; as well as to calculate loss on two different scenarios – as to whether Stellar Vision would or would not gain the benefit of existing hardware under a previous contract at Mt Druitt Hospital (see Mr Jackson's second report at [17])). 2. As to this item, Stellar Vision says that nothing turns on this as it is answered by every other issue. 3. Hills Health Solutions notes that the experts (Mr Eversgerd and Mr Jackson) are agreed upon the methodology for calculating loss (a discounted cash flow methodology) and have agreed that it is appropriate to use a 12-month average to forecast future performance of the WSLHD Contract (see the joint report at [18](i)). Item 4 – Contract Delay 1. Mr Eversgerd was instructed to assume that, had Stellar Vision performed the contract with Hills Health Solutions jointly there would have been no delay during the Installation Period as defined in the WSLHD Contract (and provided an alternative scenario in which there would have been a delay to the roll out of the PESs (Annexure A to Mr Eversgerd's second report)). Mr Jackson adopted the approach whereby the estimated number of beds available was aligned with the actual available beds achieved under the WSLHD Contract (see Mr Jackson's second report at [98](D)(iii)). 2. Stellar Vision says that the "no delay" scenario modelled by Mr Eversgerd should be adopted pointing to Mr Curtin's evidence in respect of the manner in which Stellar Vision would have managed the WSLHD project so as to avoid delays. 3. Stellar Vision points out that the WSLHD Contract recorded the following Planning Commencement Dates for each hospital – for Auburn: 1 January 2015; Blacktown: 1 February 2015; Mt Druitt: 1 March 2015; and Westmead: 1 September 2017. Stellar Vision says this means that, under the WSLHD Contract's definition of "Installation Commencement Date" and "Service Commencement Date", those dates for each hospital are: for Auburn: 5 February 2015 and 12 March 2015; Blacktown: 8 March 2015 and 12 April 2015; Mt Druitt: 5 April 2015 and 10 May 2015; and Westmead: 6 October 2017 and 10 November 2017. However, it is noted that the Monthly Uptake Report, which Hills Health Solutions relies on as evidence for revenue, shows that Blacktown and Auburn only became live in September 2016; Westmead only became live in November 2017; and Mt Druitt only became live in April 2018. 4. Stellar Vision says that it is evident that these significant delays in Hills Health Solutions' performance (in the case of Blacktown, Auburn and Mt Druitt, of between 17 months and up to nearly three years) of the WSLHD Contract have a deleterious consequence on revenue generation. 5. Insofar as Hills Health Solutions, through the evidence of Mr Osborne, suggests that any delay was caused by a failure of the WSLHD to give Hills Health Solutions access to the relevant hospitals, Stellar Vision says that no documentary evidence is provided to support the contention that the WSLHD did not allow Hills Health Solutions to access to any part of Blacktown, Auburn and Mt Druitt Hospitals for between 17 months to three years. It is said that such a contention is inconsistent with the contemporaneous documents which state that hospitals were "desperate" for installation to occur. 6. Stellar Vision says that the cross-examination of Mr Osborne and documentary records make clear that the cause of the delay was twofold: first, a deliberate decision to preserve working capital during the 2016 financial year resulting in a spending freeze; and second, that Hills Health Solutions was in effect "starting from scratch" as a result of both replacing the software solution at the last minute with the Lincor PES (which did not have the requisite functionality under the contract) and of Mr Osborne being brought in at the last minute to make sure the project did "not fail" and to "reassemble the project". 7. As to Mr Osborne's evidence in general, Stellar Vision says that it may be characterised as advocacy aimed at defending his work on the WSLHD project and the Lincor software; and that it is inconsistent with the documentary record. (Pausing here, I did not consider Mr Osborne to be unduly defensive of his position – certainly no more so than Dr Rahman was defensive of his demonstration of the Stellar Vision PES.) 8. Turning to the two alleged causes of the delay, Stellar Vision makes the following submissions. Slowing down of project to preserve working capital in FY16 1. Stellar Vision says that the contemporaneous documents show that Hills Health Solutions made a deliberate decision in respect of the WSLHD project to "slow down delivery to preserve working capital" in the 2016 financial year. 2. Reference is made in this regard to: a May 2016 "Business Review" of Health, that records in the "Head of Health Summary" that "WSLHD -The delivery of the project continues and our focus remains to slow down delivery to preserve working capital in FY16"; a June 2016 "Business Review" of Health, that similarly records "WSLHD - The delivery of the project continues and our focus was to slow down delivery to preserve working capital in FY16 … [w]e expect to ramp these up in early FY17"; and an email dated 16 December 2016 from Mr Osborne (then of Hills Health Solutions) to the Chief Executive Officer of Lincor responding to questions from the Lincor Chief Executive Officer as to whether Western Sydney "is live and a paying customer" to the effect that "in short yes. We have all of Auburn finished and billing. The new CSB building at Blacktown is finished and billing. The old main building at Blacktown and the last ward at Mt Druitt are close to being completed. We were put on a spend freeze earlier in the year and could [not] order the stock. That is what they are not complete at this time". The "not" was as clarified by Mr Osborne in cross-examination. 3. Stellar Vision also points to an email dated 13 October 2016 from Lincor's Chief Executive Officer to Hills Health Solutions, which stated: We need to figure out what the plan is for payment to Lincor Inc. for hardware with the W Sydney (I believe) order. There are some deadlines coming this Friday that need to be met to assure [sic] order and delivery timelines. Obviously everyone is aware of cash and working capital so if that is connected to the decisions about payment for the items, lets discuss so we are all on the same page as to the what, why and impact of not paying or delaying payment - as well as other options such as Hills paying the vendor directly. 1. Stellar Vision says that Hills Health Solutions' eventual solution to the cash shortage was to obtain a financing facility with Macquarie Bank, but that this was not implemented until the delays had already been incurred. Reference is made in that regard to an email dated 14 October 2016 from Hills Health Solutions' Chief Financial officer to Lincor (in response to an email asking about payment terms) stating: Yes [the Purchase Orders are] for Western Sydney and so we definitely need to keep things moving so that Hills Health Solutions can meet its delivery deadlines on this project. The facility with Macquarie Bank is now up and running but I don't think it would be ready to draw against for the purposes of this first batch of Western Sydney kit just yet. In the meantime we will pay 65% of the invoice 2622 via EFT today so that things are not held up for the delivery schedule and then we will work on getting Macquarie finance on this asap after which Hills Health Solutions will then transfer ownership in the kit to Macquarie and get its funds back from this prepayment. Starting from scratch and "reassembling" the project 1. As to the second of the asserted reasons for the delay, Stellar Vision says that it is evident that Hills Health Solutions was in effect starting from scratch as a result of both replacing the software solution at the last minute with the Lincor PES and changing critical personnel at the last moment, referring in this regard to the following documents. 2. First, an email dated 25 February 2015 from Mr Osborne to Lincor that stated: Sheila - Sorry for the confusion. … It would seem in the absence of Daniel [Linderman] we are still finding our way with where he was with regards to the Western Sydney project. Maybe it would be better if you were to send me what he has ordered. With that, we will work it out in reverse. Sorry to look so unprofessional but the handover information is limited. 1. Second, an email dated 10 February 2015 from Mr Jon Maloney of Hills Health Solutions to Mr Starkey and Mr Tom Sykes, stating that: … After discussions with you this evening. I went and re-visited the documents Daniel L sent through to me (attached). The most immediate concern is that Daniel has sold a Stellar system not a Lincor system. Daniel's previous descriptions of the Stellar system include features such as multi user teleconferencing, Concierge, local shop purchase, environmental control and soft Nurse Call buttons. I'm [sic] don't believe that Lincor currently has these features. There may be further R&D before the Lincor system matches the job specifications." [Emphasis as per submissions] 1. Third, an email dated 16 February 2015 from Mr Osborne to Mr Gordon Timmins of NSW Health, which stated: I am new to Hills as you will see by my email address and have been brought in to ensure the project does not fail. Daniel Linderman has resigned from Hills as of Friday. That said, I apologise for coming in so late; however, I will work diligently to make the project a success for all parties. As I am coming late, I will have some questions that I am sure may have been asked earlier. My apologies again but I would like to build up the documentation to best deliver the end product. 1. Fourth, an email dated 19 March 2015 from Mr Osborne to Mr Peter de Robillard of NSW Health, stating: … We are working hard to reassemble the project in lieu [sic] of Daniel Linderman leaving. In the background, we have been very busy getting the finer points down on paper along with the stock and equipment … 1. Fifth, an email dated 31 March 2015 from Mr Maloney of Hills Health Solutions to Lincor, stating: This is the first I've seen of these project documents. I think some of the handover I got from Daniel was a little light. Is there anything else you guys have for the Western Sydney Project? … 1. Sixth, an email dated 26 November 2015 from Lincor to Hills Health Solutions attaching a list of queries regarding the "Western Sydney Projects". Stellar Vision says that many of these queries are so basal to the project that it is surprising that the software partner of Hills Health Solutions was asking at such a late stage (such as "Confirm the name and address to which all hardware should be delivered" and "Has a project plan been issued?"). 2. Stellar Vision says Mr Osborne's evidence in cross-examination (that the above two reasons were not causative of Hills Health Solutions' delay) is self-serving, in light of his vested interest in "defending" the Lincor PES. Stellar Vision says that there is no factual foundation for Hills Health Solutions' contention that access was not granted for the 18 months that the WSLHD Contract actually took to commence. It is submitted that Mr Osborne's credibility should be discounted in light of the express contradiction of his evidence on the issue of "HL7" automation by Mr Rajasingam (see below). Moreover, it is said that the fact that Mr Osborne would not accept that the delay was even in part due to the above reasons set out in the documentary record, reflects poorly on his credibility and that little weight should be given to his assertion that access was the main cause of the delay. 3. As noted above, Hills Health Solutions complains that the material facts on which this counterfactual as to Stellar Vision's performance of the contract but for the alleged wrongful conduct were not pleaded. However, it also says that, in any event, the claim fails at a factual basis. Insofar as damages are aimed at putting the party in the position in which it would have been but for the breach, Hills Health Solutions says that this position would be governed by the terms of the Undertaking and that nothing in that document gives Stellar Vision any role in the management of the WSLHD Contract (and that Stellar Vision's evidence of what would have happened is mere speculation and should be given no weight. Indeed, Hills Health Solutions complains that the apparent complexities in the damages evidence are a direct result from Stellar Vision's unprincipled approach to damages (which it characterises as a rolling inquiry as to the ongoing performance of the WSLHD Contract, with different assumptions on a regular basis). Furthermore, it is said that many of the debates between the experts are as a direct result of the impossibly vague terms contained in the alleged contract, and of Stellar Vision's view that if it had been involved in providing the software, the contract would have been managed better. 4. As to the delay issue, i.e., the assertions to the effect that, had Stellar Vision been involved in the performance of the WSLHD Contract, there would have been no delay in PES devices going "live" at the hospitals as compared to the dates set out in the WSLHD Contract, with the result that the WSLHD Contract would have generated revenue earlier (which results in Mr Eversgerd's "No Delay" scenario), it is noted that an example of this is to be found at [116] of Mr Curtin's second affidavit sworn 25 September 2019: Given we knew that there would be delays in contract commencement at Westmead, if Stellar Vision had been responsible for the WSLHD as part of the joint venture, it would have developed a Project Implementation Plan, subject to the agreement of the WSLHD, to complete all structured cabling installation prior to beds becoming available in October 2017 which should have permitted an earlier uptake and revenue than that disclosed by Hills Health Solutions. 1. Hills Health Solutions points out that no delays in respect of any other hospital are addressed in the affidavit. 2. In response, Hills Health Solutions relies upon the evidence of Mr Osborne. It is noted that, in cross-examination, Mr Osborne was questioned about delays arising from a "spending freeze" and was criticised for not referring to delays relating to access to wards at other hospitals in his affidavit. Hills Health Solutions says that this exemplifies the issue of which Hills Health Solutions complains: that it was simply not on notice of the extent of the plaintiff's damages case, and has had to respond to the piecemeal allegations raised in Mr Curtin's second affidavit without an understanding of how they are said to relate back to the damages case (and in particular how the breach is said to have caused the loss). (Understood in this way, it is said that the cross-examination of both Mr Osborne and Mr Rajasingam was most unfair.) 3. It is noted by Hills Health Solutions that (at [276]-[277] of Mr Curtin's second affidavit) Mr Curtin asserts that had the "Joint Venture" been responsible for performing the WSLHD Contract, there would have been less delays in implementing the PESs at the WSLHD Hospitals. Mr Eversgerd has therefore been instructed to assume there was no delay during the "Installation Period" as defined in the WSLHD Contract (scenario 1). Mr Eversgerd also provides an alternative scenario in which there would have been a delay to the roll out of the PES devices. In contrast, Mr Jackson adopts the approach whereby the estimated number of beds available is aligned with the actual available beds achieved under the WSLHD Contract (see the joint report at 9, item 4). 4. Hills Health Solutions says that the assertion that there would have been no delay had Stellar Vision been involved in the WSLHD Contract is mere conjecture and should be rejected. It is said that why Stellar Vision's involvement would have made a difference is a "pleading and evidentiary mystery". Mr Osborne's evidence was that WSLHD dictated the installation timeline for the Hills Health Solutions PESs across the WSLHD Hospitals, and Hills Health Solutions would then have to work within that program to install equipment and infrastructure relating to the PESs. This timeline was based upon a number of factors including a priority set by WSLHD. 5. Further, it is noted that Mr Osborne explained in cross-examination that the installation timeline was governed by access to hospital and other matters that were outside the control of Hills Health Solutions. For example, at Auburn Hospital (a new hospital), a delay arose as a result of the builder installing the wrong mounts, which then had to be redone; and at the old Blacktown Hospital, Hills Health Solutions was waiting for access to the hospital, which required the hospital to empty rooms and was a "long drawn out installation". Insofar as Hills Health Solutions made decisions about when to order stock, it is said that this was a matter that was subject to Hills Health Solutions' commercial judgement. 6. Hills Health Solutions says that, ultimately, the timeline of installation of the PES devices was not something wholly within the control of Hills Health Solutions. While Mr Curtin asserted in cross-examination that Stellar Vision would have sought to work with Hills Health Solutions to rectify any issues that arose in respect of the WSLHD Contract, it is noted that he also accepted that this was just speculation. Hills Health Solutions says that Stellar Vision has failed to explain how it would have practically implemented a system and influenced the management of the WSLHD hospitals in a way that would have resulted in an earlier installation timetable. Item 5 – Scenarios 1. Mr Eversgerd was instructed to prepare his model under various alternative scenarios: a 15 year term with and without delay; a 10 year term assuming no extension with and without delay (see Annexure A of Mr Eversgerd's second report). 2. Mr Jackson was instructed to apply three different assumptions for licence fees and two different assumptions for CAPEX, resulting in 6 alternative outcomes. Mr Jackson summarised the alternative scenarios (see Mr Jackson's second report at [17]) as being the Benefit and No Benefit Scenarios. 3. Under the Benefit scenarios, Stellar Vision would gain the benefit of existing hardware at Mr Druitt hospital and only incur the incremental hardware costs required. It is noted that for any additional beds installed after 30 April 2019, the cost per bed would be the same as the historical cost. On the No Benefit scenarios, Stellar Vision would not gain the benefit of the existing hardware at Mr Druitt and, accordingly, for Mt Druitt would incur the weighted average cost of hardware per bed for Auburn, Blacktown and Westmead, which Mr Jackson calculated to be $2,479 per bed applicable to Mt Druitt absent any existing CAPEX. On each scenario the various assumptions were: no software licence fees; licence fees of $0.33 per bed per day and perpetual licence fee of $300 both payable to Stellar Vision; and licence fees incurred as reflected in the schedule of Lincor licence costs. 4. In summary, therefore, this issue as to the appropriate "scenarios" involved valuation by the experts of several different scenarios including: whether or not the WSLHD Contract will last 10 years or 15 years; whether or not Stellar Vision and Hills Health Solutions would get the benefit of the existing hardware at Mt Druitt Hospital; whether or not there was a delay; and whether or not a licence fee was payable and if so, to whom. 5. As to the term of the WSLHD Contract, Stellar Vision says that the value of the WSLHD Contract should be assessed on the basis that it would continue for 15 years. It points to the evidence of Mr Curtin and Mr Starkey that the contract is likely to be extended by the hospitals for the additional five years because, under cl 14.5.2 of the WSLHD Contract, liability for a compensation payment would be incurred if a requisite number of "bed days" is not met (and the requisite number of bed days will not be met if the contract is not extended). 6. As to the "benefit"/"no benefit" scenarios, Stellar Vision says that Hills Health Solutions advances a counterfactual to the effect that Stellar Vision would not "gain the benefit" of the hardware at Mt Druitt Hospital and therefore that Stellar Vision and Hills Health Solutions would have incurred the weighted average cost of the additional hardware. Stellar Vision says that this scenario should be rejected as unrealistic and uncommercial as, in practical terms, it amounts to the suggestion that Hills Health Solutions would have required both parties to buy new hardware for Mt Druitt Hospital (the cost of which Mr Jackson has then modelled on instruction) rather than to use the extant hardware. 7. Stellar Vision further says that there is no evidence that Stellar Vision and Hills Health Solutions would have incurred further costs to replace the Mt Druitt screens. Stellar Vision says that, consistent with the position taken by it in relation to item 17 below, in determining the cost of the hardware for the WSLHD Contract the relevant input should be the capital expenditure recorded and historically incurred by Hills Health Solutions. To the extent that any amount for existing hardware is incurred, it is said that it should be the value of the hardware at the time (i.e., capital cost less depreciation). However, Stellar Vision says that there is no evidence of the value of the hardware at the time. 8. As to the delay and licence fee issues (the third and fourth scenarios), reference was made to item 3 above and item 11 below). 9. As to Item 5 (and Mr Jackson's alternative scenarios), Hills Health Solutions submits as follows. 10. Mr Jackson also calculates loss on the basis of two alternative scenarios, the "Benefit" and "No Benefit" scenario. Mr Rajasingam explained that in 2013, Hills Health Solutions acquired an entity called HTR, which had an existing contract with Mt Druitt Hospital for the provision of television equipment and services. There were 30 fixed rental fixed televisions at Mt Druitt Hospital from the previous HTR contract, which Hills Health Solutions utilised under the WSLHD Contract. Accordingly, it is said that Hills Health Solutions gained a benefit of existing infrastructure and equipment from the HTR contract from Mt Druitt. 11. Mr Jackson's "Benefit" scenario represents the scenario in which Stellar Vision would gain the benefit of the existing hardware at Mt Druitt and only incur any incremental hardware costs required. The "No Benefit" Scenario refers to the opposite scenario in which Stellar Vision would not gain the benefit of the existing hardware from the previous HTR contract (see the joint report at 9-10, item 5). 12. Hills Health Solutions submits that the "No Benefit" scenario should be adopted as there is nothing in the terms of the Undertaking which would entitle Stellar Vision to the benefit of the hardware purchased from HTR by Hills Health Solutions. Item 6 – Number of Beds 1. Mr Eversgerd was instructed to assume a particular number of beds for the respective hospitals (see Item 6, Schedule 1 of the WSLHD Contract, WSLHD Data, and the Monthly Uptake Report) and was instructed in relation to the "activated" bed rate to use the Planning Commencement, Installation Commencement and Service Commencement Dates in the WSLHD Contract, assuming no delay during the Installation Period. Mr Eversgerd adopted those numbers for the 2015 financial year to 2021 financial year period. Mr Eversgerd was instructed to adopt the updated bed numbers pursuant to a Deed of Variation of the WSLHD Contract dated 7 October 2020 and adopted those numbers for the forecast period from the 2022 financial year. (See Mr Eversgerd's third report Annexure A and noting updated instructions were provided during the conclave process.) 2. Mr Jackson adopted the actual historical number of beds live as contained in the Monthly Uptake Reports up to January 2021. As to the forecasted number of beds, Mr Jackson was also instructed to adopt the updated bed numbers pursuant to the Deed of Variation (updated instructions during conclave). 3. Stellar Vision notes that item 6 concerns both the historical number of PES enabled beds and the forecast of PES enabled beds. In respect of the historical number of PES enabled beds, Stellar Vision says that this issue will be determined by the delay issue (i.e., that, if Stellar Vision's submissions on delay are accepted then the number of beds historically achieved would have been achieved without delay; and if Stellar Vision's submissions on that issue are not accepted, then the historic number of beds should be the actual historic number of live beds as contained in the Monthly Uptake Reports up to January 2021). 4. Otherwise, it is said that the experts are agreed and that the evidence discloses that the number of beds going forward should be the number of beds in the variation to the WSLHD Contract dated 7 October 2020. 5. As to Item 6, Hills Health Solutions submits as follows. Mr Eversgerd has been instructed to assume that a certain number of beds were equipped with PES devices, those being the numbers set out in the WSLHD Contract. In contrast, Mr Jackson relies upon the actual historical number of beds live as contained in the Monthly Uptake Reports (MURs). Both experts also rely upon a Deed of Variation to the WSLHD Contract dated 7 October 2020 in respect of future bed numbers (see the joint report at 10, item 6). 6. Hills Health Solutions notes that this is one of a series of counterfactuals in which Mr Eversgerd has been instructed to assume facts that differ from the actual data reported by Hills Health Solutions in respect of the WSLHD Contract. Hills Health Solutions submits that, as a general proposition, the actual data is preferable to any assertions contained in Stellar Vision's evidence as to how the WSLHD Contract would have performed had it been involved in its management. 7. By way of example, it is submitted that the bed numbers that Mr Eversgerd has been instructed to assume (94 for Auburn, 457 for Blacktown, 100 for Mt Druitt and 620 for Westmead) reflect overall a higher number of beds than that provisioned for by the WSLHD in the Variation to the WSLHD Contract (86 for Auburn, 452 for Blacktown, 96 for Mt Druitt and 828 for Westmead) (see the joint report at 10, item 6). That Hills Health Solutions installed less PES than was initially provisioned for in the WSLHD Contract is said to be clearly reflective of the commercial realities of the operation of the contract, which was subsequently reflected in the Variation Deed. It is said that Stellar Vision's assertions about how the contract should have been performed are purely speculative. Item 7 – Private Patient Utilisation 1. Mr Eversgerd was instructed to assume that the utilisation rate for private patients was 100% (see Mr Eversgerd's third report at Annexure A). Mr Jackson adopted the actual historical utilisation rate for private patients as contained in the Monthly Uptake Reports up to January 2021 (which was the most recent month for which both actual revenue and cost information was available) (see Mr Jackson's second report at [98](B)). In the joint report it is noted that, in calculating forecast private patient utilisation, Mr Jackson did not explicitly use the utilisation rates in calculating forecast revenues but that the utilisation rates were implicitly included in his calculations. 2. The joint report notes that the difference of applying average revenue per unit at historical utilisation versus 100% utilisation (that Mr Eversgerd was instructed to use) is shown in the $10.4 million difference in the graphical representation of the key differences in free cash flows between the two experts' models. Mr Jackson noted that he had been provided with no evidence to suggest that the 100% utilisation by private patients was achievable. 3. This item is related to item 8 (see below). 4. Stellar Vision points out that, under the WSLHD Contract, the contractor is entitled to charge revenue for each private patient. Reference is made to the evidence of Mr Osborne which Stellar Vision says makes clear that "Hills were very keen holistically [to] bill the hospital for every, every patient registered as a private patient". 5. This raises what may be referred to as the HL7 issue. Stellar Vision says that, in order to charge for every private patient, it is necessary to know the number of private patients, as well as when they are admitted and discharged. 6. Stellar Vision says that it has (on other projects) automated this information gathering process by utilising "Health Level 7" or "HL7" information standard for the transfer of clinical and administrative data. Stellar Vision says that, by connecting with a given hospital's HL7 protocols, Stellar Vision is provided with information about the admission of every patient (public and private) and to which bed the patient is admitted; and that this allows Stellar Vision automatically to provide PES terminal access for each private patient and to invoice the hospital for each private patient, for the PES device provided. It is noted that the only challenge to Mr Curtin's evidence on this point was the suggestion put to him that WSLHD could have taken issue with this proposed approach and not consented thereto, or that there may have been an alternative agreement between Hills Health Solutions and WSLHD. 7. Stellar Vision says that no documentary evidence has been adduced by Hills Health Solutions to suggest that there was any objection by WSLHD or that any agreement was made between the WSLHD and Hills Health Solutions not to automate private patient billing. 8. Stellar Vision notes that, at WSLHD, Hills Health Solutions did not automatically provide PESs to, and charge for, every private patient; instead, Hills Health Solutions was reliant on the WSLHD sending through a PDF list of private patients on a daily basis and manually inputting that data for each hospital, sometimes up to three times a day. Stellar Vision points out that Mr Osborne accepted that this process of private patient PES provision "absolutely" caused "leakage" in the generation of revenue, and that Mr Rajasingam accepted that automated billing would fix this problem with revenue collection. It is noted that Mr Rajasingam also accepted that this process of private patient PES provision and billing resulted in complaints from patients arising out of delays to access. 9. Accordingly, Stellar Vision says that Hills Health Solutions wanted to achieve automatic billing via HL7 for every private patient noting that Mr Rajasingam accepted that this would also result in improvements to the "manual errors and patient complaints", save time for WSLHD's private patient liaison officer, and "improve the efficiency of the manual system and to therefore decrease the high number of complaints". 10. It is said that, unlike Stellar Vision (in other hospitals), Hills Health Solutions was unable to implement billing using the HL7 system, despite identifying that this was a mechanism that would allow Hills Health Solutions to capture more revenue. Stellar Vision notes that Mr Rajasingam accepted that there were "practical problems" and "practical implications" for Hills Health Solutions to implement automated billing through HL7. It is said that Hills Health Solutions came to this realisation about its practical difficulties after trials at other hospitals. Mr Rajasingam accepted that the necessary "remediation works" for the HL7 automation process were not complete during his time at Hills Health Solutions. By 14 April 2020, there was still no HL7 automation at the WSLHD. 11. Stellar Vision says that Mr Rajasingam's account is supported by the documentary record which shows that: as early as October 2016, Hills Health Solutions was trying to implement HL7 automation to fix the "time-consuming" nature of private patient information collection; Hills Health Solutions acknowledged in an email to Lincor in June 2017 that the problems with the "HL7 feed" were "affecting our revenue"; Hills Health Solutions suggested to WSLHD in July 2017 that it was looking to "to make changes to the billing engine provided by the Lincor system to improve the uptake by simplification, automation and multiple payment methods"; and Hills Health Solutions had noted in an email dated January 2019 to WSLHD both the higher prospect of errors with the current private patient billing process used by Hills Health Solutions and the attendant complaints with this manual. It is noted that the January 2019 email was later followed by an email from Mr Rajasingam stating that "[w]e are exploring how we can automate private patient recognition through HL7 feed and will come back as soon as we have something concrete". 12. Stellar Vision points out that Hills Health Solutions continued to have concerns about more complaints arising out of the HL7 issue, referring to a June 2019 email exchange between Mr Rajasingam and Mr Weis Lu of WSLHD, in which Hills Health Solutions proposed to WSLHD private patient automation as an upgrade to its billing practices but that Mr Rajasingam concluded the email exchange by noting "[p]lease note the trial we did at other hospitals were not 100% successful, and therefore we do not recommend this automation for WSLHD now" and that they would need to investigate, fix, and test the automation. It is also noted that Mr Rajasingam said that "[c]urrently we do not have an ETA on the remediation work on HL7/private patient automation". It is noted that, following requests by Mr Lu, Mr Rajasingam provided further detail about "where it faltered". 13. Stellar Vision says that this is contrary to Mr Osborne's assertion that Hills Health Solutions was capable of doing automated billing through HL7 but was prevented by WSLHD which wanted a manual billing process. It is said that Hills Health Solutions has produced no documentary evidence for Mr Osborne's assertion, or any other explanation as to why it did not implement automated private patient billing; that Mr Osborne's account is inconsistent with both Mr Rajasingam's evidence and the internal Hills Health Solutions emails referred to above; and that Mr Osborne's evidence is self-serving in that he has a current distribution agreement with Lincor and would not accept the technical difficulties posed by its PES. 14. This is another instance in which complaint is made as to the raising of this unpleaded counterfactual. Hills Health Solutions says that there was extensive cross-examination of Mr Osborne and Mr Rajasingam was directed towards the issue of invoicing the WSLHD for private patients, a matter in respect of which Stellar Vision also criticises Hills Health Solutions. It is noted that the suggestion appears to be that, had Stellar Vision been involved in providing the software for the PESs, an automated invoicing process would have been followed. Hills Health Solutions answers this criticism by Mr Osborne's evidence, namely that he had had ongoing discussions with the WSLHD about the implementation of HL7 during his time at Hills Health Solutions, but that the WSLHD was not willing to allow Hills Health Solutions holistically to bill all private patients solely by reference to HL7 data, and required Hills Health Solutions to continue a manual invoicing process. 15. Complaint is made that the precise nature of the allegation made by Stellar Vision is unclear. It is noted that Mr Curtin's second affidavit claims that, had Stellar Vision been involved in the WSLHD Contract, the utilisation rate for private patients (being the percentage of private patients who use or are invoiced for the use of a PES device) would have been 100% because Stellar Vision would have relied upon a clause of the WSLHD Contract that it claims entitled Hills Health Solutions to invoice for each and every patient who was in a bed at a hospital that was fitted with a PES device, whether or not the patient in fact used the device. It is on this basis that Mr Eversgerd has been instructed to assume a private patient utilisation rate of 100% (see the joint report at 11, item 7). 16. Hills Health Solutions notes that this allegation is substantially different to an allegation that the absence of an automated billing system led to "leakages", being a disparity between the private patients for whom invoices could have been issued and the amount in fact invoiced, a topic to which cross-examination was directed. It is said that this again demonstrates the deficiency in the pleadings. Complaint is made by Hills Health Solutions that it should not be expected to meet a constantly evolving case that is not disclosed on the pleadings and of which it has no notice. 17. As to Private Patient Utilisation and Revenue (Items 7 and 8), Hills Health Solutions submits as follows. 18. A significant difference between the experts is the utilisation rate for private patients (being the percentage of private patients who utilise a PES). Mr Eversgerd has been instructed to assume the utilisation rate for private patients is 100%. In contrast, Mr Jackson adopts the actual historical utilisation rate for private patients as contained in the MURs up to January 2021 (being the most recent month for which both actual revenue and cost information is available) (see the joint report at 11, item 7). 19. It is said that the instruction to Mr Eversgerd to assume a utilisation rate for private patients of 100% is founded upon an erroneous interpretation of the terms of the WSLHD Contract. Clause 6.1.1 of the WSLHD Contract states "the Principal shall … pay the Contractor the Fees for the use of PES Devices where they are used by private patients of the Hospitals as set out in Table B of Schedule 3 (Fees, Fee Variation Mechanism and List of Services (Private Patient Usage Fees)), in accordance with this clause 6". In cl 1.1 of the WSLHD Contract, "private patient usage" means "the number of days in a calendar month in which a PES Device was provided to a private patient". 20. At [185] of Mr Curtin's second affidavit, Mr Curtin asserts that Hills Health Solutions was entitled to charge the WSLHD for each and every patient who occupies as PES enabled hospital bed, as a PES device has been "provided" to them. Hills Health Solutions says that this assertion should be rejected. First, the terms of the WSLHD Contract do not support the assertion that Hills Health Solutions is entitled to invoice each and every patient who is in a bed fitted with a PES device. It is said that the plain reading of cl 6.1.1 is that Hills Health Solutions may invoice the hospitals for those private patients who in fact utilise PES devices. Second, the evidence establishes that this is in fact what occurred. Mr Osborne's affidavit sets out the process followed by Hills Health Solutions in invoicing for private patients at the WSLHD hospitals. The invoices issued by Hills Health Solutions to the WSLHD for use of PES devices by private patients only reflect those patients who actually use the PES, and did not include, for example, patients who did not or were unable to watch television, including those patients who were blind or too ill to watch television. It is noted that Mr Curtin accepted in cross-examination that he could not really say that the invoicing system would have been any better had Stellar Vision been involved, and that it was a matter of commercial judgement in the circumstances as to whether a party in Hills Health Solutions' position would seek to press for a different interpretation to the WSLHD Contract to that insisted upon by the hospitals. 21. Mr Curtin also asserts, and there was much cross-examination to the effect that, had Stellar Vision been involved in the performance of the WSLHD Contract, it would have automated the invoicing system for private patients via the use of the HL7 standard. This aspect of the case seems to go nowhere as the experts have only modelled a 100% utilisation rate and the actual invoiced utilisation rate. 22. In addition to the utilisation rate issue, Mr Eversgerd has been instructed to assume private patient revenue in the amount of $13.90 (GST inclusive) per day per patient, as per the schedule of the costs in the WSLHD Contract. In contrast, Mr Jackson has adopted the historical revenue data in the Monthly Uptake Reports to calculate the average revenue per unit used by a private patient for each hospital (see the joint report at 12, item 8). Hills Health Solutions submits that Mr Jackson's approach is the correct one. Private patient revenue should be calculated as per the amount actually paid by the WSLHD, rather than an assertion about the amount that Hills Health Solutions was otherwise entitled to invoice the hospital. In any case, it is said that very little turns on this as the average amounts adopted by Mr Jackson seem closely to reflect the actual amounts for which Hills Health Solutions was entitled to charge pursuant the WSLHD Contract. Item 8 – Private Patient Revenue 1. Mr Eversgerd was instructed to assume a particular revenue ($13.90 GST inclusive) per day per private patient (referring to Table B, Schedule 3 of the WSLHD Contract) (see Mr Eversgerd's third report at Annexure A); whereas Mr Jackson had adopted the historical revenue data in the MURs for the 12 months prior to 28 February 2021 to calculate average revenue per unit used by a private patient for each hospital (GST inclusive) which produced varied rates from $13.40 per unit in Blacktown up to $14.19 in Auburn (see Mr Jackson's second report at [98](A); [98](B)). Mr Jackson's forecast revenue for private patients was based on the historical prices per unit for each hospital. He calculated the combined average revenue per unit per day (private and public combined) for the four hospitals. Mr Jackson also noted that although the averages were shown as GST inclusive, the revenue amounts used in his model to determine the "alleged loss estimate" were GST exclusive. 2. In respect of item 8, Stellar Vision emphasises that the revenue figure permitted to be charged for each private patient is $13.90. It is said that this is the amount that, as revealed by Hills Health Solutions' internal financial documents, Hills Health Solutions has in fact been charging for each private patient. Item 9 – Clinical Revenue 1. Mr Eversgerd was instructed to assume clinical revenue at $1.25 per unit and assumes a clinical utilisation rate of 100% in respect of all patients (both public and private) limited for each hospital on any one day by the number of "activated" beds for that hospital on that day. Reference is made by Mr Eversgerd to Mr Starkey's affidavit at [46](b) in this regard, where Mr Starkey deposed to his recollection that WSLHD had responded positively (albeit without commitment) to a proposal for $1.25 per terminal per day for clinical revenue) which proposal was going to senior management of WSLHD (third report Annexure A). 2. Mr Jackson did not include clinical revenue on the basis that historically it had been zero for all hospitals (which he had confirmed with instructing solicitors). Mr Jackson noted that in the September Model the clinical revenue utilisation rate was assumed to be zero percent and the September Model included no such revenue (see Mr Jackson's first report at [87](C)(i) and second report at [98](C)(i)). Mr Jackson's position is that a proposal without commitment (as referred to in Mr Starkey's affidavit) is an insufficient basis to include any clinical revenue in his analysis (particularly given that it was not forecast in the September Model and historical information for the contract shows zero clinical revenue for all hospitals (see Mr Jackson's second report at [98](C)(v)). The joint report notes (at [15]) that the impact of including (versus excluding) clinical revenue is shown in the $9.6 million difference depicted in the graphical representation of the sources of key differences in free cash flows between the respective experts' models. 3. Stellar Vision notes that, under the WSLHD Contract, the Statement of Requirements included clinical applications. It is noted that Hills Health Solutions and WSLHD considered a figure of $1.25 per bed per day for Hills Health Solutions to charge WSLHD for access to those clinical functions. Stellar Vision says that WSLHD repeatedly asked Hills Health Solutions for information about this functionality, and by March 2019, Les Forest of WSLHD was recorded as asking Hills Health Solutions, in respect of a Blacktown Clinical Trial of this clinical access, "to start this project back up". 4. It is said that Stellar Vision has implemented, and charged, for clinical access at other hospitals at which it is a service provider; and has charged for a clinical revenue fee for each terminal (i.e., 100% utilisation). It maintains that there was an opportunity for the contractor under the WSLHD Contract to generate clinical revenue from WSLHD; noting that Mr Rajasingam accepted at that this was a potential source of revenue for Hills Health Solutions and accepted that it would have been "prudent" and "diligent" to follow up the WSLHD, but could not remember doing so. 5. By reason of those matters, Stellar Vision says that, in quantifying its claim, it is appropriate to include revenue for clinical functions based on revenue of $1.25 per terminal per day. It is submitted that, in the same way that Stellar Vision generates clinical revenue on other hospitals, and given that clinical access was contemplated in both the WSLHD tender and the WSLHD Contract, Stellar Vision (as a diligent and prudent operator) would have pursued the opportunity to generate clinical revenue in the way that Hills Health Solutions did not. 6. In any case, Stellar Vision says that even though no clinical revenue has been generated to date, this does not mean that clinical revenue may not be generated in the future, and that Stellar Vision's compensation should not be reduced because of the lack of prudence or diligence of Hills Health Solutions. It is said that any risk that clinical revenue would not eventuate under Stellar Vision's involvement should be reflected in a higher discounting rate (as noted below under the heading "Loss of Chance"), not its removal entirely. 7. As to clinical revenue (Item 9), Hills Health Solutions submits as follows. 8. Clinical revenue is revenue that could be derived from charging the hospitals for the use of the PES devices for clinical services. 9. Mr Eversgerd has been instructed to assume that clinical revenue is $1.25 per unit and assumes clinical utilisation rate of 100% in respect of all patients (public and private). In contrast, Mr Jackson does not include clinical revenue since, historically, it has been zero for all hospitals (see the joint report at 14, item 9). 10. It is said that the reliance by Stellar Vision upon [46](b) of Mr Starkey's affidavit should be rejected as, again, it does not reflect the way in which the WSLHD Contract has actually been performed. Mr Rajasingam stated that, during his employment at Hills Health Solutions, WSLHD had expressed interest in trialling the use of PES devices for clinical functions. However, despite discussions between Hills Health Solutions and WSLHD, WSLHD did not proceed with the option of trialling the clinical functions. As reflected in the financial records relied upon by Mr Jackson, there has been no clinical usage of the PES at any of the WSLHD Hospitals and no revenue derived from Hills Health Solutions from clinical usage under the WSLHD Contract. 11. Hills Health Solutions says that in those circumstances there is no basis for Stellar Vision to assert that had it been involved in the performance of the WSLHD Contract, the revenue derived under that contract would have been greater as clinical revenue would have been earnt. Item 10 – Facility Rental and TV Refunds Revenue 1. Mr Eversgerd was unclear as to how to treat this potential revenue source, noting that his instructions were updated to reflect 50% of the Facility Rental revenue as at February 2020. Mr Eversgerd calculated the NPV of facility rental revenue to be $818,548 and $749,522, discounted at 10% and 13% respectively, using Mr Jackson's discounting methodology (third report at [2.3.9](c)). 2. Mr Jackson relied on the revenue amounts from the MURs and costs from the Income Statements up to 31 January 2021, as summarised in Appendix C to his second report, for the actual performance of the WSLHD Contract at all four hospital locations (taking into consideration later in his report the licence fee expenditure – referring to [103H] of the report) but did not attempt to reconcile the various financial statements (second report at [58]). 3. Stellar Vision says that the documentary evidence reveals that Hills Health Solutions had agreed with WSLHD that WSLHD would pay for "fixed rental" (referring to an email sent on 7 January 2019 from Hills Health Solutions to WSLHD to the effect that "where the hospital pays a fixed fee to Hills, and the PES is provided free of charge to the patients"); and noting that in that email it was said that "[t]he current fixed fee for PES at WSLHD sites is $3.90 per day per bed plus GST". Stellar Vision says the evidence is replete with references to WSLHD's willingness to pay for fixed fee rental, apparently on a ward-by-ward basis. It is noted that, by 9 October 2019, Mr Rajasingam recorded that WSLHD had "agreed to continue fixed rental arrangement for the 48 beds in renal and cancer wards at $3.90 per day per bed (plus GST)". Stellar Vision says that invoices produced on discovery by Hills Health Solutions for the period October 2019 to February 2020 show that this was labelled "Facility Rental", and that those invoices alone show that the service was provided for "Renal Dialysis", the "Infusion Suite" and Ward 1A, and a fixed price per day per terminal. 4. In any case, Stellar Vision says that the Income Statements of Hills Health Solutions (on which Hills Health Solutions and Mr Jackson rely as an accurate record of Hills Health Solutions' costs of the WSLHD Contract – referring to items 13 and 15 below) record a separate line item for revenue called "Facility Rental". Stellar Vision says that this, consistent with the invoices, shows that (irrespective of the formal status of any variation of the WSLHD Contract by Hills Health Solutions and WSLHD) WSLHD did in fact pay Hills Health Solutions the agreed "fixed rental" or "facility rental" income. It is said that there is no suggestion that this is a revenue stream outside the WSLHD Contract and, as such, any assessment of the WSLHD Contract's value should take into account the facility rental revenue stream. 5. As to Facility Rental and Refunds TV revenue (Item 10), Hills Health Solutions submits as follows. This category relates to a line item of revenue in Hills Health Solutions' Income Statements and the MURs. The evidence is silent as to what this category of revenue entails. 6. Mr Jackson has relied upon the revenue amounts recorded in Hills Health Solutions' financial records in order to ascertain the revenue stream from this source of income (see the joint report at 14, item 10). In contrast, Mr Eversgerd has been instructed to add this revenue to the revenue otherwise recorded in Hills Health Solutions' records in respect of the WSLHD Contract. Hills Health Solutions says that this approach should be rejected. It says that there is no apparent basis for adding this source of revenue to the revenue recorded in Hills Health Solutions' books and records; and nothing in the evidence establishes that this is appropriate. It is said that, to adopt this approach would be to double count this revenue stream. Item 11 – Licence Fee 1. This item (so far as it relates to the Lincor licence fee) does not arise in light of concessions made by Hills Health Solutions (though it does arise in relation to a Stellar Vision licence fee). 2. Mr Eversgerd was instructed to assume licence fee costs of $600 payable to Stellar Vision (a perpetual licence) and that Stellar Vision incurred no marginal costs in relation to that revenue stream (see Mr Eversgerd's third report at Annexure A). 3. Mr Jackson was instructed to assume three scenarios in relation to licence fees under the WSLHD Contract: that no expenses were incurred under this category of software licence fees; that licence fees were incurred and payable to Stellar Vision ($0.33 per day per bed for each hospital and a perpetual licence fee of $600 per terminal payable at the time the PES is initially activated; or that licence fees were incurred as reflected in a Lincor schedule (this last no longer arising) (see Mr Jackson's second report at [17]). 4. Stellar Vision notes that Mr Curtin's evidence (in his second affidavit, at [290]-[293]) is that, if Stellar Vision had jointly operated the WSLHD Contract with Hills Health Solutions, Stellar Vision would have charged fees comprising: $0.33 per bed per day for 'software support' services; and a $600 per terminal licence fee. Stellar Vision points out that this scenario was expressly modelled in the September Model (on which Hills Health Solutions puts primary focus) and that it was only removed from the September Model by Mr Starkey due to the removal of Stellar Vision from the project (when it was changed to a licence fee payable to Lincor). 5. Stellar Vision seeks a finding that Stellar Vision would have generated this software support and licence fee revenue stream had it not been removed from the WSLHD project (even if the September Model were to be used as being wholly determinative of Stellar Vision's loss). 6. As to the issues relating to the licence fees (Items 11, 12 and 15 and Mr Jackson's alternative scenarios), Hills Health Solutions says as follows. 7. Mr Eversgerd was instructed to assume that, if Stellar Vision had been involved in the performance of the WSLHD Contract, Stellar Vision would have received licence fees of $600 per terminal and derived income from maintenance and service costs of $0.336 (GST inclusive) per bed per day for each hospital, of which $0.33 is payable to Stellar Vision (see the joint report at 15, item 11; and at 16-17, item 15). These instructions are premised upon assertions in Mr Curtin's second affidavit that these fees would have been payable to Stellar Vision had it been involved in the WSLHD Contract (at [289]-[294] and [203]-[303]). 8. In contrast, Mr Jackson has been instructed to calculate licence fees under one of three scenarios identified above. It is noted that Mr Jackson also adopts the actual historical maintenance and service costs as reported in the Income Statements from the commencement of the WSLHD Contract to 31 January 2021 (see the joint report at 16-17, item 15). It is further noted that Hills Health Solutions has withdrawn the tender of the Schedule of Lincor licence fees and does not press the third scenario. It follows that Item 12 of the joint report is no longer of any relevance. 9. The Undertaking excludes the payment of licence fees to Stellar Vision for the WSLHD Contract (see item 2 on the second page of the letter – "Stellar will licence [sic] the end user to utilise the software for the Term of the contract; This will not apply to any vendor owned systems eg WSLHD/NBMLHD tenders"). It is said that this was apparent from Mr McCarthy's evidence, in which he accepted in cross-examination that Stellar Vision would not have charged the hospitals a licence fee under the WSLHD Contract and that licence fees were only added to the September Model to demonstrate the value of the software. 10. If Stellar Vision's case is based on the Undertaking, it is said that the valuation exercise should be conducted on the basis of there being no licence fees payable to Stellar Vision (i.e., scenarios 1 and 4 of Mr Jackson's model). Item 12 – Exchange Rate adopted in the schedule of Lincor licence costs 1. Again, this item does not arise in light of concessions made by Hills Health Solutions. Item 13 – Content, broadband and VoIP cost 1. This item does not arise as Stellar Vision accepts that the approach taken by Mr Jackson (in using the costs as actually incurred by Hills Health Solutions and recorded in the Income Statements) is the correct approach. Item 14 – Sales Commission 1. Mr Eversgerd was instructed that the inclusion of the sales commission payable to Mr Linderman in the September Model was inconsistent with the terms of the Undertaking to share costs and profits equally and excluded this cost from his analysis (see Mr Eversgerd's second report at [3.4.21]). 2. Mr Jackson's opinion is that it is not reasonable to eliminate the cash flow associated with this cost as it represents a cash flow of the contract. Mr Jackson was provided with the sales commission amortisation schedule which detailed the upfront payment of a lump sum sale commission of $220,713 from Hills Health Solutions and he adopted this at [92](I)(vi) of his first report as an upfront payment (see Mr Jackson's second report at [71] and [103]). 3. Stellar Vision says that no sales commission should be included as a factual input as it is not supported by the evidence. Stellar Vision points out that the Deed of Settlement, Release and Restraint between Hills (not Hills Health Solutions) and Mr Linderman does not provide for a sales commission in relation to the WSLHD Contract or at all. It is noted that, pursuant to cl 2.1 of that Deed, Hills agreed to pay to Mr Linderman the "Settlement Sum" (defined as (figure redacted)). Recital H records that the Settlement Sum was paid to "settle all outstanding matters between [Mr Linderman and Hills]". Pursuant to cl 4.1 Mr Linderman released Hills and other defined parties against any "Claim" he had and may at any time have against those parties. Stellar Vision says that no reference is made in the Deed to the WSLHD contract. 4. Further, it is noted that the document relied upon by Hills Health Solutions is consistent with this (as it records the payment to Mr Linderman as being (figure redacted) and is described as "To record prepaid severance payment for DL"). 5. As to Item 14, Hills Health Solutions argues that Mr Linderman's commission represents a cash flow associated with the cost of the WSLHD Contract. Hills Health Solutions says that Mr Curtin's evidence (see his second affidavit at [304]-[305]) is mere conjecture and that there is nothing in the terms of the Undertaking that would enable Stellar Vision to exclude this cost. 6. Pausing here, the difficulty I see with this submission is that the payment in question is not described in the Deed as payment of sales commission to Mr Linderman. It appears to be recorded as a severance payment. If so, I would not conclude that it was an expense relating to the WSLHD project. Item 15 – Software Maintenance and Service Costs 1. Mr Eversgerd was instructed to assume maintenance and service costs of $0.336 (GST inclusive) per bed per day for each hospital, of which $0.33 per bed per day is payable to Stellar Vision (the $0.33 per bed per day figure is addressed at item 11 above) and to assume that Stellar Vision incurred no marginal costs in relation to this revenue stream (see Annexure A of Mr Eversgerd's third report). Mr Jackson adopted the actual historical costs as reported in the Income Statements from commencement of the contract to 31 January 2021 (see Mr Jackson's second report at [103](G)). 2. Stellar Vision accepts that the approach taken by Mr Jackson, in using the costs as actually incurred by Hills Health Solutions and recorded in the Income Statements, is the correct approach to value any Software Maintenance and Service Costs additional to the $0.33 per bed per day (that figure being dealt with at item 11 above) and hence it says that this issue does not arise. Item 16 – Operating Expenditure (OPEX) 1. Mr Eversgerd was instructed to determine an appropriate OPEX rate based on his analysis of the most recent financial information and based his opinion of the most reliable OPEX rate on that which was reported by Hills Health Solutions for the period 1 July 2017 to 30 June 2018, the resulting weighted average OPEX rate being $0.281 (see Mr Eversgerd's third report at [3.3.22]-[3.3.26]) (although in the joint report and Stellar Vision's submissions this figure was reported as $0.295). 2. Mr Jackson was instructed to adopt the assumptions in the September Model to determine OPEX costs, on advice from Hills Health Solutions that the OPEX data in the Income Statements was not representative of total OPEX (see Mr Jackson's second report at [17]). 3. Stellar Vision thus notes that Mr Eversgerd calculated the operating expenditure of the WSLHD Contract by reference to operating expenditure actually incurred by Hills Health Solutions as recorded in Hills Health Solutions' Income Statements (using a six month sample of the most recent Income Statements that record Hills Health Solutions' actual operating expenditure to calculate an appropriate "OPEX" rate of $0.295 per bed per day (according to the joint report) or $0.281 per bed per day (according to Mr Eversgerd's third report) to be applied across the life of the WSLHD Contract). Stellar Vision says that this calculation should be used. 4. Stellar Vision says that there is no basis to rely on the assumptions as to OPEX contained in the September Model as they are estimates. Further, it is said that, even if a previous forecast assumption is to be used in substitution for the actual financial costs incurred by Hills Health Solutions, the cross-examination of Mr Starkey makes it clear that his assumptions that underlie his July 2015 Model are more accurate than the assumptions in his August 2014 Model, and were updated in circumstances where he had "more certainty on assumptions" and because his understanding as to the WSLHD Contract had improved over that period of time. It is noted that Mr Starkey accepted that he believed in July 2015 that he was in a better position to estimate those operating expenditure assumptions, whereas he accepted that the expected costs for each line in the September Model were "relatively rough". 5. Stellar Vision says that the reason why Hills Health Solutions seeks to rely on the OPEX assumptions in the September Model is that it has not proved the OPEX of the WSLHD Contract; rather, the evidence it relies on is the belief of Mr Rajasingam that it is not possible to provide an estimate of the portion of operating expenditure incurred at the Hills Health Solutions business level that relates specifically to the WSLHD Contract or specific WSLHD Contract. Stellar Vision says this belief is irrelevant and incorrect. 6. In any event, insofar as Hills Health Solutions has not sought to prove the OPEX, Stellar Vision says that this is presumably because it is only nominal. In this respect, it is said that, given that Hills Health Solutions manages contracts for approximately 100 hospitals across Australia, it can only be assumed that the operating expenditure incurred by Hills Health Solutions at a business level that can be apportioned to the four hospitals of the WSLHD Contract is too marginal to be worth the effort for Hills Health Solutions to prove. 7. Hills Health Solutions' submissions as to Item 16 (OPEX) are as follows. 8. Mr Eversgerd was instructed to determine an appropriate OPEX rate based on his analysis of the most recent financial information. Hills Health Solutions says that Mr Eversgerd based his opinion of the most reliable OPEX rate to apply in his analysis on the OPEX reported by Hills Health Solutions over the most recent six-month period it was recorded, being 1 July 2017 to 30 June 2018. In contrast, Mr Jackson was instructed to adopt the assumptions in the September Model to determine OPEX costs, on the advice of Hills Health Solutions that OPEX data in the Income Statements is not representative of total OPEX (joint report at 17, item 16). 9. Hills Health Solutions says that the evidence of Mr Rajasingam establishes that the WSLHD Income Statements generated by Hills Health Solutions only reflect operating costs which are "directly" attributable to a specific WSLHD hospital. It is noted that the usual practice for the Hills Health Solutions business is to record costs at the Hills Health Solutions business level, and not to allocate OPEX costs to each of the specific contracts delivered by Hills Health Solutions. As such, all "indirect" OPEX costs which relate to the hospitals are excluded from the WSLHD Income Statements, as these costs are instead allocated to the OPEX of the whole of the Hills Health Solutions business. Indirect operating costs excluded from the WSLHD Income Statements include the costs incurred by Hills Health Solutions that relate to technician and engineering services; marketing and business development services; and accounting and insurance services. 10. Hills Health Solutions says that if, as established by the unchallenged evidence of Mr Rajasingam, the Income Statements generated by Hills Health Solutions do not properly reflect the entirety of the OPEX incurred for the WSLHD hospitals, it is appropriate that the valuation of the contract reflects an estimate of the OPEX incurred. It is said that, as the parties had agreed that the September Model was an appropriate estimate of the cost to be incurred in respect of the WSLHD Contract, that model provides the appropriate basis for estimating OPEX in determining Stellar Vision's loss. Item 17 – Cost of Hardware 1. Mr Eversgerd was instructed to adopt a series of assumptions in relation to capital expenditure (CAPEX) (see third report [3.3.27]-[3.3.28]) and adopted the USD/AUD rate provided by the Reserve Bank at the date of service commencement for each hospital to derive a CAPEX cost per terminal in AUD for each hospital. 2. Mr Jackson adopted the actual historical CAPEX costs under the WSLHD Contract from commencement to 31 January 2021. For his forecasts, Mr Jackson adopted the assumptions in the September Model as to the cost of terminal replacement during the WSLHD Contract ($1,200 per terminal) and that there was a terminal replacement rate of approximately 10 per year for Auburn and Mr Druitt Hospitals, 20 per year for Blacktown and 30 per year for Westmead (see Mr Jackson's second report at [17], [58]-[59]; joint report at 17-18, item 17). 3. Insofar as this item relates to the capital expenditure incurred by Hills Health Solutions to date, Stellar Vision says this item does not arise, as Stellar Vision accepts that the input used by Mr Jackson, in relying on Hills Health Solutions' records of the capital expenditure actually incurred in the capital expenditure schedule, is the correct input to adopt. 4. However, in respect of the capital expenditure regarding the replacement of PES terminals in the future, it is noted that Mr Jackson has again adopted the assumptions in the September Model. Apart from the criticisms accepted by Mr Starkey of his cost estimates in the September Model, Stellar Vision says that Mr Starkey's own affidavit accepts that his choice of figures for how many terminals required replacement was "more in the nature of guesswork than evidence-based estimate", noting that he could not recall how he estimated the figures. 5. Further, Stellar Vision says that Mr Jackson's calculation of Software Maintenance and Service Costs (at Item 15, is based on the Income Statements) already incorporates a line item for a cost called "Service Parts". Stellar Vision says it would be double counting of expenses to include both Mr Starkey's forecast replacement expenditure (as per the September Model) as part of the Item 17 Costs of Hardware and Mr Jackson's inclusion of the Service Parts expense in Item 15 (Software Maintenance and Service Costs). 6. As to the counterfactuals as to costs of sales, it would appear that the only aspect of this Item 17 (the cost of hardware) that remains in issue is whether there is a double counting in relation to the component of spare parts (a matter that I am not able to assess on the material to which I was taken) or as to the basis on which the forecast cost for future replacement of terminals should be assessed. Hills Health Solutions' submissions in relation to the issue of cost of hardware were largely directed to the rejection of the counterfactuals put forward in Mr Curtin's second affidavit. Hospital Commission 1. In addition, Stellar Vision notes that the experts have adopted a "flat rate" of hospital commission rather than a "progressive rate". Stellar Vision says that there is no explanation by the experts for this and points out that under cl 6.1.4 of the WSLHD Contract, the Contractor is to pay the Principal (i.e., WSLHD) a Commission calculated on a monthly basis, by reference to Table 2.0 in Schedule 3. That table sets a progressive rate, where a higher rate of utilisation results in a higher percentage of revenue to be paid by the Contractor. Stellar Vision says that this has the effect that in a month of low utilisation by patients, there is a lower percentage, whereas if the same hospital in the following month has a higher utilisation rate, then the Contractor is to pay a higher percentage of the Commission payment. 2. The experts instead have adopted a "flat rate", i.e., a single commission rate across the entire WSLHD Contract, rather than a rate that varies on a month to month basis. Stellar Vision notes that Hills Health Solutions' internal documents recording its summary calculation of the commissions payable evidences a commission rate that varies from quarter to quarter, consistent with a progressive rate, rather than being a flat percentage rate. 3. It is noted that the experts accept that adopting progressive rates, as the WSLHD Contract contemplates (which Stellar Vision notes is the basis on which Hills Health Solutions has paid commission under the contract) ,would have the effect of lowering the expenses of the contract. It is submitted that the actual calculation of hospital commission costs under the WSLHD Contract should be done by way of a progressive rate. Loss of Chance 1. Hills Health Solutions says that if the loss is valued on the basis of the valuations provided by the expert witnesses based upon the actual performance of the WSLHD Contract, as well as any counterfactual that is established on the evidence, then this is properly characterised as a loss of chance which will need to be discounted. 2. Stellar Vision accepts that it may be appropriate to apply a discount to take into account the chance of the counterfactuals described at items 1, 4 and 6, 9, and 11 and 15 not occurring (it is said that the remaining items, being factual Inputs, are not counterfactual assumptions that would potentially require any such discounting). Stellar Vision says that such a discount should not necessarily be applied in a uniform manner but, rather, assumption-by-assumption to reflect the determination of the relevant likelihood of each counterfactual assumption eventuating. It says that any discount to any given assumption should only apply to the amount that comprises the numerical difference between, on the one hand, how Stellar Vision's loss would be valued if the counterfactual assumptions were adopted and, on the other hand, how Stellar Vision's loss would be valued if the counterfactual assumption were not adopted. 3. Hills Health Solutions submits that, properly understood, the way Stellar Vision is putting its case is indeed for a loss of a chance, yet Stellar Vision assumes that the chance was 100% assured. It is submitted that a further discount of say 50% should be applied to take into account the chance of the counterfactuals not eventuating. Discount rate 1. Stellar Vision points out that the appropriate discount rate to be adopted in the discounting cash flow model is not identified as an area of disagreement in the joint report. It is said that it is not necessary to have recourse to expert opinion as to the appropriate discount rate, where the evidence is that Mr Starkey, who prepared the September Model considered that 9% was an appropriate discount rate at the time and that it reflected Hills Health Solutions' assessment of the weight of average costs of capital as at both August 2014 and July 2015. It is said that it is therefore unnecessary to consider expert opinion to determine an alternative discount rate, especially where the experts have not had the benefit of Mr Starkey's evidence as to the reasoning behind the choice of a 9% discount rate. 2. Hills Health Solutions notes that the experts are agreed that a discount rate between 10-13% is reasonable in assessing loss (see the joint report at [18](k)). Thus, it is said that the higher valuation of loss provided by Mr Eversgerd (in the vicinity of $11-12 million) should be disregarded as it represents a "risk free" scenario with a 2.9% discount rate. 3. Alternatively, if Mr Starkey's discount rate of 9% is not accepted, then Hills Health Solutions submits that 10% should be adopted as the appropriate discount rate, which reflects the choice of discount rate in the range agreed by the experts, which is the closest in number of Mr Starkey's original choice of discount rate. 4. Taking a pragmatic approach, Hills Health Solutions submits that 11.5% (see T 436.14) is a reasonable discount rate to adopt (subject to the further discount to reflect the assessment of loss of chance). Pre-Judgment Interest 1. Stellar Vision notes that the experts agree that neither expert has included court interest in their models. Stellar Vision contends that its loss should include pre-judgment interest under s 100 of the Civil Procedure Act 2005 (NSW) from when they were excluded from the WSLHD Contract, being December 2014. Summary of Proposed Instructions to Expert 1. In summary, Stellar Vision submits that the following findings should be made for the purpose of informing directions necessary to finalise quantification of Stellar Vision's claim: that Stellar Vision's claim is to be quantified by reference to a discounted cash flow model with the features as agreed between the experts as set out at [18](a)-(d), (f)-(j), (l), (n)-(q) of the joint report, and with the following additional features: a discount rate of 10%; applying a progressive rate for hospital commission percentages in accordance with cl 6.1.4 of the WSLHD Contract; and calculation of pre-judgment court interest on Stellar Vision's loss from December 2014; and that the inputs into the discount cash flow model should reflect the resolution set out in its submissions (which I do not here set out but have addressed in summary form below, in my determination as to quantum) to the areas of disagreement identified by the experts in the joint report. Determination 1. Liability not having been established I will be brief as to the relief that would have been ordered had Stellar Vision succeeded in any of its claims. Other than the dispute as to whether the lost opportunity (i.e., the chance to participate in a joint venture in relation to the WSLHD Contract) should be assessed at the date of the relevant breach or with hindsight having regard to the actual performance of the contract, the principles do not appear to be in dispute. Rather, the dispute is as to the "inputs" into the financial models prepared by the respective experts when assessing the value of a 50% share in the WSLHD Contract. 2. Proceeding on the basis that Stellar Vision says in effect that the loss on any of the claims would be assessed as being the value of a 50% share in the economic benefit of the WSLHD Contract, and that all I was ultimately invited to do was to rule on the disputed "inputs", I set out below the findings I would have made had the issue arisen for determination. However, I reiterate my conclusion that the exercise cannot be based on the counterfactual postulated by Stellar Vision that, had it participated in the management of the WSLHD Contract, the financial performance of the contract would have been enhanced: first, because I consider that the material facts on such a counterfactual should have been pleaded (and I do not accept that Hills Health Solutions has acquiesced in an expansion of the pleaded case in this regard) and, second, because (even apart from the fact that the Undertaking does not make clear that Stellar Vision would have been operating in a managerial role in the contract) it seems to me no more than speculation that Stellar Vision could have produced a better result. 3. Stellar Vision accepts the "Ex Post" discounting approach (used by Mr Jackson (see item 1)) and there is no dispute as to overall methodologies. Thus, had quantification been required I would have held that Stellar Vision's claim was to be quantified by reference to a discounted cash flow model with the features as agreed between the experts as set out at [18](a)-(d), (f)-(j), (l), (n)-(q) of the joint report and, as to the remaining disputed "inputs" into the financial models (noting that it appears to be accepted that the following items are no longer in dispute: item 2, item 3 (in that it is answered by other items) items 11 and 12 (so far as they concern the scenario in relation to the schedule of Lincor licence fees), item 13, and items 15 and 17 (other than a claimed double counting of "service parts" and forecast future terminal replacement do not appear to arise)), I would have determined as follows. 4. First, that a discount rate of 11.5% should be adopted (that being the pragmatic solution proffered by Hills Health Solutions), noting the agreed range by the experts was between 10% and 13% and that the 9% rate adopted by Mr Eversgerd comes from the September Model (the use of which was much criticised by Stellar Vision on the basis that it was a rough estimate at the time and not agreed as such). 5. As to Item 1, I have already rejected reliance on the counterfactual postulated by Stellar Vision and in any event I am not satisfied that it has been established that the performance of the contract would have been different had Stellar Vision been involved in the management of the WSLHD Contract as it contends, noting that the Undertaking did not provide for Stellar Vision to have control of the WSLHD project or to be involved in its management as such. 6. For item 2, as now agreed between the parties I would have concluded that the model should adopt an Ex-Post discounting approach and calculate the value of Stellar Vision's loss using actual cash flows prior to 31 January 2021, and the present value of future cashflows after this date discounted to 31 January 2021. 7. For item 4, apart from the difficulty with the counterfactual as posed, I do not accept that it has been established that no delay would have occurred during the Installation Period as defined within the WSLHD Contract had Stellar Vision been involved. 8. For item 5, I would accept that the appropriate scenario to be modelled would be a 15 year contract term (on the basis that it is not commercially likely that the contract would not have been extended given the compensation payment that would have been required if the contract was not extended – and hence any discount for this occurring would be small). As to whether Stellar Vision would or would not have the benefit of the existing hardware at the Mt Druitt hospital, that seems to me more problematic in that it does not seem to me that all the possible scenarios have necessarily been explored. In that regard, I note that Stellar Vision made much of the proposition that Hills Health Solutions was to provide the hardware. If so, and if the existing hardware remained in place, that would presumably be a contribution by Hills Health Solutions to the "joint venture" and in those circumstances it is not clear to me how if at all that might need to be accounted for in the overall scheme of things (which rather highlights the point made by Hills Health Solutions as to the impossibly vague terms of the alleged contract ). 9. As to item 6, on the basis that I do not accept Stellar Vision's submissions on delay, then the historic number of beds should be the actual number recorded in the MURs up to January 2021 and thereafter (as both experts have modelled) the number of beds in the October 2020 variation to the WSLHD Contract. 10. For item 7, I would not accept that it can be assumed that the utilisation rate for private patients is 100% (and I do not accept the counterfactual based on the HL7 assumption). (In particular, I consider that there is force to the proposition that the manner in which the patient utilisation was monitored or recorded depended on input from the hospital and that Hills Health Solutions was not in a position to control that). Therefore, I consider that Mr Jackson's approach should be adopted. As for item 8, I consider that the actual revenue should be used in the calculations to reflect what has in fact happened (and would adopt Mr Jackson's approach in that regard). 11. For item 9, I would again accept the position adopted by Mr Jackson on the basis of the actual historical position rather than a figure that was the subject of a "positive response" but no actual commitment by the hospital. 12. For item 10, again I consider that the model should reflect the actual revenue amounts as recorded in MURs with costs as recorded in the Income Statements up to 31 January 2021 and projected forward as Mr Jackson has modelled. 13. For items 11 and 15, I have difficulty with the proposition that it can be assumed that Stellar Vision would have been in a position to charge software licence fees as it maintains (having regard to the terms of the Undertaking) and I would accept the approach of Mr Jackson in adopting actual historical maintenance and service costs. I am not in a position to comment on the allegation of double counting in relation to service parts (as noted earlier) but ultimately nothing turns on this. 14. Item 12 is now noted as not relevant and item 13 has been agreed. 15. For item 14, I accept Stellar Vision's submissions. I am not satisfied that the payment to Mr Linderman under the Deed of Settlement, Release and Restraint is a cost of the WSLHD Contract (as opposed to a severance payment). 16. I have dealt with item 15 above. 17. For item 16, I have difficulty with the proposition that the September Model should be used for OPEX (even though it is the most contemporaneous document) as it was not ever finalised as far as I can see. I would be more inclined to adopt Mr Eversgerd's analysis of the most recent financial information available to him. 18. For item 17, as adverted to above, I would adopt the actual historical CAPEX costs up to 31 January 2021 and then adopt the assumptions in the September Model as to the likely time of terminal replacements (since there does not appear to be anything else that can usefully be relied upon to forecast future terminal replacements) and I do not accept the counterfactual based on Stellar Vision's performance in other hospitals. 19. As to the discount to be applied to the loss of a chance for particular inputs, I am by no means persuaded that I have the relevant information in order to be able to form a considered view as to how likely it is that any particular input would or would not be achieved. In those circumstances, where there is nothing to assist me to differentiate between "inputs", I consider that a broad brush approach to what is ultimately an evaluative exercise seems to me to be warranted and I would be inclined to apply, say, a 20% discount as to the contingencies on which the various inputs depend. 20. In any event, in view of the conclusions reached as to liability, this issue does not arise. Conclusion 1. In summary, while there was clearly an informal joint endeavour between Questek and Stellar Vision (which might well be termed a "joint venture") there was no binding joint venture agreement between the two entities and I am not persuaded that their relationship gave rise to a trust or any beneficial interest on the part of Stellar Vision in whatever rights or interest Questek had (or expected to have) in the WSLHD project. I accept that as between itself and Stellar Vision, Questek could not have taken the exclusive benefit for itself of the joint WSLHD project (and it would likely have been unconscionable for it relevantly to do so) but no claim is here made against it (and any breach of fiduciary duty by it has been expressly disavowed). 2. I have found that there was no trust relationship (no objectively manifested intention to create a trust and no agreement to hold any rights obtained as a result of the tender on trust). The parties were still negotiating at all relevant times. There was an understanding that Stellar Vision would be involved and would share the benefit of any contract obtained as a result of the joint venture (in some fashion) but this was not a concluded agreement. It may well have been case that Questek would not have had all the benefit of the contract but this would said only in a claim against Questek. 3. At the time of the due diligence (and acquisition of Questek's business) Hills Health Solutions was on notice that Questek and Stellar Vision were in negotiations for a proposed joint venture agreement (which had not been concluded) and had jointly prepared Questek's tender response on the understanding that Stellar Vision would participate in that project and share the benefits of the project in some fashion (and perhaps as co-tenderer named on the contract) but the terms of this as between Questek and Stellar Vision were not finalised. As Stellar Vision emphasises, Hills Health Solutions knew from the due diligence that there was an understanding (or agreement) between Questek and Stellar Vision that, if they could not agree a joint venture agreement then Stellar Vision's name would be put on the contract. Stellar Vision says that what Hills Health Solutions knew was that Questek accepted it did not have an entitlement to be on the contract in its own name (see T 342.11-18). The difficulty I have with this is the proposition that this in some way put Hills Health Solutions on notice that Stellar Vision had a "50% beneficial 'undivided' interest" in the WSLHD Contract. It seems to me that Hills Health Solutions' understanding at the time is more accurately reflected by the statement made in the course of negotiations to the effect that it would ensure that Stellar Vision had the same financial outcome as the "joint venture" intent of the previous discussions. That is a very different concept from an undivided beneficial interest in the contract itself. 4. I do not accept that Hills Health Solutions was in a fiduciary relationship with Stellar Vision. They were commercial entities negotiating as to the basis on which they might engage in joint projects (be that project-by-project or by an overarching joint venture or other agreement). Hills Health Solutions certainly acknowledged and agreed, by the Undertaking, that it would honour the intent of the previous discussions in relation to WSLHD – the "specific" intent of those previous discussions being summarised in the five numbered points in the Undertaking. However, I am not persuaded that objectively there was an intention to constitute an immediately binding obligation for a 50/50 joint venture in relation to the WSLHD project. I consider that it was at most an agreement to negotiate terms for participation in that project along the lines set out in the five numbered points (which represented the intent of the previous discussions) (and that this is consistent with the parties' understanding at the time and subsequent discussions). 5. Insofar as it is said that the Undertaking (whether a contract or not) is sufficient to impose a trust and to give rise to fiduciary duties (see closing submissions) I disagree. Absent contractual force it is simply an acknowledgment of there being a joint tender and a representation (and agreement in that context) of an intention to honour the intent of previous discussions. Indeed the very fact that Hills Health Solutions was seeking an undertaking from Stellar Vision (so that Hills Health Solutions could confidently proceed with the acquisition knowing it had the support of the proposed software provider referred to in the tender) seems to me inconsistent with there being some form of trust arrangement already on foot whereby Questek held the benefit of the tender (or yet to be awarded contract) on trust for itself and Stellar Vision. 6. Steller Vision, however, says that the Undertaking shows that the parties thought that there was a binding agreement between Stellar Vision and Questek in relation to WSLHD, whereby at least in relation to the WSLHD Contract it had a binding right to 50% of the profits (see, for example, T 41.25-28). I do not consider it goes that far. 7. I accept that the Undertaking must objectively have been seen as a document that would at least bind the parties' conscience (since it was formally signed as an undertaking) and that the second paragraph (b) was framed in terms of an "acknowledgement and agreement". However, it was in essence an agreement to agree – an agreement to honour the "intent" of the previous discussions (indicating in the five numbered points specifically what the intent of those discussions then comprised); which left unresolved the precise form of the parties' relationship and how it was to operate from a practical perspective. That this is the case is reinforced by the difficulties identified by Hills Health Solutions the damages case. 8. Accordingly, the claim by Stellar Vision fails. Orders 1. For the above reasons, I make the following order: 1. Dismiss the plaintiff's claim with costs. ********** Amendments 02 March 2022 - Amounts at [685] and [686] redacted DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 March 2022