FEDERAL COURT OF AUSTRALIA

Bupa Australia Pty Ltd v iSelect Limited (No 1) [2012] FCA 587

REASONS FOR JUDGMENT

Introduction

1    In the Fast Track proceeding, the parties have agreed on the categories of discovery save for four categories sought by the applicant/cross-respondent, Bupa Australia Pty Ltd (“Bupa”) to which the respondents and cross-claimants, iSelect Limited and iSelect Health Pty Ltd (collectively “iSelect”) object. For the reasons which follow, I consider that the four categories should be discovered.

2    On 4 May 2012, I directed the parties to file and serve brief written submissions on any outstanding discovery categories in dispute which, with the parties’ consent, would be determined on the papers.

3    Bupa relies on written submissions dated 21 May 2012.

4    iSelect relies on:

(a)    written submissions dated 18 May 2012; and

(b)    addendum to respondents/cross-claimants outline of submissions dated 22 May 2012.

5    Rule 20.14 of the Federal Court Rules 2011 (Cth) (“the 2011 Rules”) states:

Standard discovery

(1)    If the Court orders a party to give standard discovery, the party must give discovery of documents:

(a)    that are directly relevant to the issues raised by the pleadings or in the affidavits; and

(b)    of which, after a reasonable search, the party is aware; and

(c)    that are, or have been, in the party’s control.

(2)    For paragraph (1) (a), the documents must meet at least one of the following criteria:

(a)    the documents are those on which the party intends to rely;

(b)    the documents adversely affect the party’s own case;

(c)    the documents support another party’s case;

(d)    the documents adversely affect another party’s case.

(3)    For paragraph (1) (b), in making a reasonable search, a party may take into account the following:

(a)    the nature and complexity of the proceeding;

(b)    the number of documents involved;

(c)    the ease and cost of retrieving a document;

(d)    the significance of any document likely to be found;

(e)    any other relevant matter.

(4)    In this rule, a reference to an affidavit is a reference to:

(a)    an affidavit accompanying an originating application; and

(b)    an affidavit in response to the affidavit accompanying the originating application.

6    In Dennis v Chambers Investment Planners Pty Ltd [2012] FCA 63, Barker J recently discussed the general scheme of discovery under the 2011 Rules. His Honour stated at [14] to [24]:

The first rule in Div 20.2 is r 20.11, which states the basic principle that a party must not apply for an order for discovery unless the making of an order will facilitate the just resolution of a proceeding quickly, inexpensively and efficiently. This principle reflects the overarching purpose of civil practice and procedure of the court stated in s 37M of the Federal Court of Australia Act 1976 (Cth) (FCA Act). See generally Alanco Australia Pty Ltd v Higgins (No 2) [2011] FCA 1063; Coca-Cola Company v Pepsico Inc [2011] FCA 1069 and Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 2) [2011] FCA 1396.

The intent of the Rules to prevent unnecessary discovery is emphasised by r 20.12 which provides that a party must not give discovery unless the court has made an order for discovery.

By r 20.13, a party may apply to the court for discovery and when doing so must state whether it is seeking “standard discovery” or state “the proposed scope of the discovery”.

…

The concept of “standard discovery” is developed in r 20.14(1) of the Rules, which provides that if a party is required to give standard discovery it must give discovery of documents:

(a)    that are directly relevant to the issues raised by the pleadings or in the affidavits; and

(b)    of which, after a reasonable search, the party is aware; and

(c)    that are, or have been, in the party’s control.

(“Control” is defined in the Sch 1 Dictionary to mean “possession, custody or power”.)

By r 20.14(2), “for r 20.14(1)(a)”, (that is the “directly relevant” test) the documents “must meet at least one of the following criteria”:

(a) the documents are those on which the party intends to rely;

(b) the documents adversely affect the party’s own case;

(c) the documents support another party’s case;

(d) the documents adversely affect another party’s case.

Standard discovery, being controlled by the “directly relevant” test, is intended, therefore, to be more limited in scope then [sic] discovery under the “train of inquiry” test derived from the decision of the English Court of Appeal in Compagnie Financiere et, Commerciale du Pacifique v Peruvian Guano Company (1882) 11 QBD 55 (Peruvian Guano).

…

The scope of documents “directly relevant to the issues raised by the pleadings or in the affidavits” under r 20.14(1)(a) is not necessarily a narrow one, or not as narrow perhaps as one might instinctively think it is intended to be if it has been introduced an antidote to the Peruvian Guano “train of inquiry” test. This may be demonstrated by reference to r 58A of the Supreme Court Rules 1987 (SA) (SA Rules), as it applied at material times (see now r 136 and r 139 of the Supreme Court Civil Rules 2006 (SA)), and its subsequent interpretation by the Supreme Court of South Australia.

7    His Honour referred to Channel Seven Adelaide Pty Ltd v Lane & Hurley [2004] SASC 177 in which the Full Court of the Supreme Court of South Australia (Duggan J, with whom Mullighan and Nyland JJ agreed) discussed the notion of “directly relevant to the issues raised by the pleadings” under the analogous r 58A.03 of the Supreme Court Rules 1987 (SA).

8    Duggan J noted and approved the following statements:

• First, what Bleby J said in Southern Equities Corporation Ltd (In Liquidation) v Arthur Andersen & Co (No 5) [2001] SASC 335 at [10], namely:

I doubt whether that qualification [that the documents must be ‘directly relevant’] effectively narrows, for the purposes of discovery, ordinary concepts of relevance for the purpose of admissibility into evidence. In my opinion, it cannot mean, if the document is not itself proof of a fact in issue but is merely a piece of circumstantial evidence tending, along with other evidence, to prove the fact in issue, that it is not discoverable. Many a case is provable and in fact proved by circumstantial evidence, including documents. I note that a similar view was expressed by Demack J in Robson v REB Engineering Pty Ltd (1997) 2 Qd R 102 at 104 - 105 in respect of a similar rule in Queensland. The Rule cannot be allowed to govern in practice the admission of documents into evidence merely because they have not been revealed in the discovery process.

What the qualification does reinforce is the notion of relevance to proof or disproof of a fact in issue, and the unquestionable abolition of the rule which required discovery of a document which might directly or indirectly lead to a train of inquiry or which might, in some other way, otherwise advance the party's case or damage that of the adversary. For example, it would seem that documents going solely to the credit of a witness, unless that witness's credit is an issue raised on the pleadings, would not be discoverable. However, it is inappropriate to attempt to define exhaustively what will and what will not be discoverable under this Rule.

• Secondly, what Doyle CJ said in Quenchy Crusta Sales Pty Ltd v Logi-Tech Pty Ltd [2002] SASC 374; (2002) 223 LSJS 266 in agreeing with Bleby J’s observations and adding at [11]:

It is not wise to attempt to state in comprehensive terms the effect of the requirement that the document be ‘directly relevant’. The adverb ‘directly’ is probably intended to emphasise the requirement of relevance, and to be used in the sense of requiring that the document be directly in point, excluding as sufficient indirect relevance which might be established through another linking circumstance. That is not to say, as I have already said, that a document is not directly relevant if it is merely a piece of circumstantial evidence. The point is that a document will not be directly relevant if, rather than tending to prove an issue on the pleadings, it merely tends to prove something that may be relevant to an issue.

• Thirdly, what Doyle CJ said in Rehn v Australian Football League and Ors [2003] SASC 159; (2003) 225 LSJS 378 (Rehn) at [24]-[26]:

However, as I commented in Quenchy Crusta, it is not possible to state precisely the effect of the adverb ‘directly’ in r58A.03. Indirect relevance to an issue is not enough for the purposes of r58A.03, but distinguishing between direct and indirect relevance is not easy. …

9    The Fast Track Practice Note relating to discovery is expressed in similar but not identical terms to r 20.14 of the 2011 Rules. It states:

Part 7    Discovery

Limited discovery

7.1     Except where expanded or limited by the presiding judge, discovery if ordered in proceedings to which the Fast Track Directions apply will be confined to documents in the following categories:

(a)    documents on which a party intends to rely; and

(b)    documents that have significant probative value adverse to a party’s case.

Reasonable search effort

7.2    Discovery must be provided in accordance with the following:

(a)    Parties must provide discovery of any document within the limited discovery categories mentioned in paragraph 7.1 that a party knows of at the time of the Scheduling Conference, or that the party becomes aware of at a later point in the pre-trial or trial process, or that the party discovers in the course of a good-faith proportionate search of the party’s documents and records.

(b)    A ‘good-faith proportionate search’ is a search undertaken by a party in which the party makes a good-faith effort to locate discoverable documents, while bearing in mind that the cost of the search should not be excessive having regard to the nature and complexity of issues raised by the case, including the type of relief sought and the quantum of the claim.

(c)    A party giving discovery must, if requested to do so by another party, provide a brief description of the steps the party has taken to conduct a good faith proportionate search to locate discoverable documents.

Additional discovery

7.3    A party may require additional discovery in relation to discrete issues, such as the quantification of damages. In that event the judge may make a separate order for that purpose. The order may include a requirement that discovery be given by inspection alone.

10    No decision discussing the relevant provisions of the Practice Note was identified. An obvious difference from r 20.14 is the requirement of “significant probative value” adverse to a party’s case, which while essentially a matter of degree, operates to limit discovery. Further, in contrast to r 20.14, the ability to support another party’s case is not an independent criterion.

The Fast Track claims

11    By an amended Fast Track Statement filed on 8 May 2012, Bupa, a large provider of health insurance products, alleges that iSelect a broker of health insurance products, made certain representations in the course of its advertising campaigns commencing in August 2011, in various media, on its website and in correspondence. Bupa alleges that iSelect’s conduct was misleading or deceptive or likely to mislead or deceive, contrary to ss 18 and 29(1)(g) of Schedule 2 to the Competition and Consumer Act 2010 (Cth) (“the Act”).

12    In the amended Fast Track Statement, the relevant representations are described as the “Savings Representations”, the “Comparison Representations” and the “Waiting Period Representations”.

13    Bupa alleges in relation to the Savings Representations that:

14.    By making each of the representations alleged at paragraphs 10-13 (each a Savings Representation) iSelect impliedly represented that iSelect customers who switched health insurers through iSelect made the average savings that it represented, as alleged in paragraphs 10-13 above, without having to switch to policies with lesser benefits and of lesser value.

15.    In fact, iSelect customers who switched health insurers through iSelect did not make the average savings that iSelect represented, as alleged in paragraphs 10-13 above, unless they switched to policies with lesser benefits and of lesser value.

14    Bupa alleges in relation to the Comparison Representations that:

17.    By the Bupa Letter, iSelect represented that:

(a)    it had undertaken a thorough comparison of health insurers; and

(b)    was, therefore, able to find a policy that better suits a consumer's needs and budgets.

18.    By the Comparison Advertisements, iSelect represented that it compares policies from a whole range of health insurers (collectively, with the representation set out at paragraph 17 above, the Comparison Representations).

15    Bupa alleges that making the Comparison Representations constituted conduct that was false or misleading because iSelect does not, in fact, conduct a thorough comparison of health insurers. In particular, Bupa states that iSelect only products of participating health insurers which, pursuant to agreements, pay iSelect a fee to offer their products. The participating health insurers comprise only about 12 of the 35 registered health insurers, some of which are “restricted access” insurers or not available in every State and Territory through iSelect. Further, the participating health insurers do not include Bupa or Medibank Private, Australia’s largest health insurers. Nor does iSelect offer the full product range of some participating health insurers. Further, by the operation of a quota system, iSelect does not offer the products of some participating health insurers, once it has already sold a certain number of policies during a particular period.

16    Bupa alleges in relation to the Waiting Period Representations that:

25.    By making each of the representations alleged at paragraphs 21-24 (each a Waiting Period Representation) iSelect impliedly represented that a customer switching health insurance through iSelect would obtain the benefit of not re-serving waiting periods for hospital and extras benefits because that customer was switching health insurance through iSelect, and not otherwise.

26.    In fact if a customer switched health insurers through iSelect:

(a)    he or she could be required to serve normal waiting periods for extras benefits with the new health insurer; and

(b)    the benefit of not having to re-serve their waiting period for hospital benefits, did not arise because the customer was switching health insurance through iSelect and not otherwise but because this benefit was a requirement under the PHI Act.

17    By a Fast Track Response dated 13 April 2012, iSelect admits making the alleged advertisements.

18    In relation to the Savings Representations, iSelect admits that it represented that customers save an average of $597 a year by switching health insurance through iSelect, but denies the alleged implicit representation that customers who switched made the average savings without having to switch to policies with lesser benefits and of lesser value. iSelect, by paragraph 15 of the Fast Track Response, alleges that it:

(a)    …. “commissioned Stollznow Research & Insight Advisory Group to conduct a survey of iSelect’s customers to find out how much they saved when they switched their health insurance policy…

(b)    The Savings Representations … were derived from the results of this survey which included those customers who have either transferred to an equivalent level of cover, increased their level of cover or downgraded their level of cover”.

19    iSelect also alleges that it includes prominent statements in the savings advertisements by which readers would be aware that in order to achieve the savings as represented, they may need to include changes to their level of cover.

20    In relation to the Comparison Representations, iSelect denies that it made the alleged representations, and also denies that it does not conduct a thorough comparison of health insurers. iSelect also alleges that it provides links on its websites and telephone recorded messages which disclose various limitations and other details.

21    In relation to the Waiting Period Representations, iSelect denies the alleged representations. It admits that customers switching health insurers through iSelect could be required to serve normal waiting periods for extra benefits with the new health insurer and that the benefit of not having to re-serve a waiting period for hospital benefits was not due to switching through iSelect, but was a requirement under the Private Health Insurance Act 2007 (Cth) (“PHI Act”).

22    iSelect denies that the Waiting Period Representations are misleading or deceptive because:

(a)    The law in relation to waiting period protection under the Private Health Insurance Act 2007 (Cth) (PHI Act) applies only to hospital benefits and not extras benefits waiting periods;

(b)    iSelect’s “$499 Switch Guarantee” applies to both hospital and extras benefits waiting periods;

(c)    iSelect’s Website, television and print media advertisements regarding its “$499 Switch Guarantee” include prominently the following statement:

“Australian law requires health insurers to provide waiting period protection to consumers when changing hospital cover”

and accordingly consumers who read or view the Website, or the television and print media advertisements would understand that the benefit of waiting period protection for hospital cover is protected under statute;

(d)    There is a widespread misconception by consumers in Australia that if they switch health insurers they will have to re-serve waiting periods for both hospital and extras benefits. In this regard independent research results, as reported in the IPSOS Health Care and Insurance Australia 2011 Report, reveals that 26% of Australians surveyed with private health insurance would have switched to another health fund with the equivalent level of cover if they knew they could do so with no loss of benefits or waiting periods. iSelect’s advertising campaign regarding the “$499 Switch Guarantee” seeks to respond to such concerns or misconceptions on the part of consumers by making a clear statement that they will not have to re-serve any relevant hospital or extras waiting periods for equivalent or lower health cover if they switch through iSelect. A copy of the IPSOS Health Care and Insurance Australia 2011 Report is available for inspection at the offices of iSelect's solicitors by prior appointment; and

(e)    The offer of the “$499 Switch Guarantee” by iSelect is that if a consumer does have to re-serve waiting periods for hospital or extras benefits for equivalent or lower health cover if they switch through iSelect, then iSelect will pay the consumer $499.

23    In its Fast Track Cross-Claim dated 13 April 2012, iSelect states:

1.    This dispute concerns the:

(a)    press release issued by the Cross-Respondent (Bupa) at approximately 7.00 pm on 8 March 2012 via its website www.bupa.com.au (Press Release) which related to the subject matter of this proceeding and the issue of this proceeding; and

(b)    the statements made by Richard Bowden of Bupa reported in The Age, Sydney Morning Herald online and at WAtoday.com.au under the byline of Leonie Wood (Reports).

Copies of the Press Release and Reports are available for inspection at the offices of the Cross-Claimants (collectively, iSelect) solicitors by prior appointment.

2.    iSelect contends that certain of the representations in the Press Release and statements of Richard Bowden of Bupa reported in the Reports, were made in the course of trade or commerce and were misleading or deceptive or likely to mislead or deceive contrary to sections 18 and 29(1)(g) of Schedule 2 to the Competition and Consumer Act 2010 (Cth) (Act).

24    In the Fast Track Cross-Claim, iSelect alleges that by the various statements in the press release and by Richard Bowden, Bupa represented:

6.    By making the statements set out in sub-paragraphs 5(a), (b), (h) and (i) Bupa has represented that there has been a determination or that it is an established fact that iSelect has made false and misleading claims about their services and offers in their advertising.

7    By making the statement set out in sub-paragraph 5(c) Bupa has represented that iSelect's conduct is the same as that which was the subject of ACCC undertakings in 2007.

8.    By making the statement set out in sub-paragraph 5(d) Bupa has represented that iSelect claims to be independent.

9.    By making the statement set out in sub-paragraph 5(d) Bupa has represented that iSelect is a commissioned broker of a small range of products and brands.

10.    By making the statement set out in sub-paragraphs 5(e) and (k) Bupa has represented that Australian law mandates that no one has to re-serve waiting periods when they change to an equivalent, or lower level of cover and that iSelect is misleading consumers into believing that if they switch to an equivalent, or lower level of cover they may have to reserve waiting periods.

11.    By making the statement set out in sub-paragraphs 5(f) and (l) Bupa has represented that to achieve the savings in most cases the consumers had to reduce their cover or pay a greater excess to achieve the savings.

12.    By making the statement set out in sub-paragraphs 5(f) and (j) Bupa has represented that the savings are not genuine and that iSelect has contrived the represented savings.

13.    By making the statement set out in sub-paragraph 5(g) Bupa has represented that consumers who use iSelect’s service may not have the cover they need and thereby be faced with very serious long term ramifications

25    In the Fast Track Cross-Claim, iSelect alleges that the Bupa representations were false and misleading, contrary to ss 18 and 29(1)(g) of Schedule 2 of the Act.

26    By a Fast Track Response dated 30 April 2012, Bupa admits the press release and statements by Richard Bowden but denies the Bupa representations save for those alleged in paragraphs 9, 11 and 13 of the Fast Track Cross-Claim.

27    In relation to the Bupa representations alleged in paragraph 7, Bupa states:

Bupa denies the allegation in paragraph 7 of the Cross Claim and says further that:

(a)    in November 2007, the second respondent gave the Enforceable Undertaking, which expired on 7 November 2010;

(b)    the Enforceable Undertaking related to concerns raised by the Australian Competition and Consumer Commission that the second respondent had misrepresented:

(i)    that it compared a significant proportion of health insurance policies available to consumers;

(ii)    the number of health insurance policies which it compared for consumers; and

(iii)    that it compared for consumers all the health insurance covers available to them and could find the best suited policy for a consumer's needs at the lowest price;

(c)    in the circumstances of sub-paragraph (b) above, the Enforceable Undertaking concerned representations made to private health insurance consumers;

(d)    the proceeding concerns, inter alia, the Comparison Representations, which are set out in paragraphs 17-20 of the Fast Track Statement;

(e)    the Press Release states that the proceeding commenced by Bupa (such proceeding having been commenced on 7 March 2012) "follow" court enforceable undertakings, being a reference to the Enforceable Undertaking (such undertaking being given in November 2007); and

(f)    nowhere in the Press Release, or elsewhere, does Bupa represent that the subject of this proceeding is the same as that which was the subject of the Enforceable Undertaking.

28    Bupa further states:

(a)    in respect of sub-paragraph 14(b)(ii) of the Cross Claim, Bupa:

(i)    says that the nature of iSelect’s conduct that is the subject of this proceeding is substantially the same, as that which was the subject of the Enforceable Undertaking given in November 2007;

(ii)    refers to and repeats sub-paragraphs 7(b) and 7(d) above;

tHE DISPUTED CATEGORIES

Category 1(b)

29    In category 1(b), Bupa seeks discovery of documents “recording or referring to the formulation of [the instructions provided to StollzNow Research & Insight Advisory Group by iSelect in respect of the Survey]”.

30    By para 15(a) of the Fast Track Response, iSelect alleges that it commissioned StollzNow Research & Insight Advisory Group (“StollzNow”) to conduct a survey of iSelect customers to ascertain how much they had saved when they switched their health insurance policy. By paragraph 15(b) of the Fast Track Response, iSelect alleges that the Savings Representations were derived from the result of the StollzNow survey, which had surveyed customers who had switched to policies with benefits of the equivalent, less or greater value.

31    In paragraph 14(b)(vii) of the Fast Track cross-claim, iSelect alleges that Bupa’s representation that the savings were not genuine and iSelect had contrived the represented savings was misleading and deceptive because “the savings are genuine and iSelect has not contrived the represented savings”.

32    Bupa submitted that it was apparent from documents produced that iSelect nominated the categories of customers to be surveyed and selected individual customers within these categories. iSelect had indicated that it would call two witnesses to give evidence about the StollzNow survey. Bupa sought discovery of documents in proposed category 1(b) on the basis that iSelect had put both the StollzNow survey and its formulations of instructions for the survey in issue. Bupa was therefore entitled to test iSelect’s decision to survey only two apparently narrow categories to test whether the survey instructions were formulated in a way intended to produce results which meant that the savings representations were not genuine and were contrived.

33    iSelect objected to discovery of documents in category 1(b), on the ground that the documents had no significant probative value adverse to either party’s case, because they were irrelevant to whether the Savings Representations were in fact misleading and deceptive or likely to mislead and deceive.

34    While iSelect’s belief, if established, that the classes of consumers selected for participation in the survey could or would produce a more favourable result would not establish that the result was in fact skewed, in my view the category is directly relevant to issues raised by the pleadings, would have significant probative value adverse to iSelect’s case and is unlikely to require discovery of a large number of documents.

35    In my opinion, category 1(b) is appropriate for discovery.

Category 6

36    In category 6, Bupa seeks discovery of documents “constituting the agreements in operation during the period 1 August 2011 to 7 March 2012 between iSelect and the Participating Health Funds under which iSelect was permitted to market the products offered by the Participating Health Funds.”

37    By the Fast Track Response, iSelect admits that it only compares policies offered by health insurers who have agreements with iSelect allowing it to offer their products to consumers for a fee. iSelect denies, however, that it does not conduct a thorough comparison of health insurers. iSelect alleges a number of means whereby it discloses, inter alia, the limitations which apply to its comparisons and products offered, the way iSelect’s service works and the fees which are paid.

38    Bupa submitted that discovery of the agreements themselves was required, as any contractual obligation to limit iSelect’s searches or terms which required or gave incentives for more favourable treatment of particular funds (which the agreement might contain) was relevant to the issue of whether iSelect conducted a thorough comparison of health insurers.

39    iSelect objected to discovery of category 6 on the ground that the agreements themselves were unnecessary because iSelect had agreed to discover documents including print outs from its computer system revealing all policies available to clients from each participating health fund for the period 1 August 2011 to 15 January 2012 (which date range could be expanded to 7 March 2012). Such documents would reveal whether limitations or restrictions in fact apply to iSelect’s comparisons, as opposed to whether there were theoretical restrictions, which was irrelevant. Further, the agreements were highly commercially sensitive.

40    iSelect also submitted that Bupa does not allege any terms of agreements requiring or giving incentive for differential treatment, so the request was irrelevant to the claims as pleaded and merely fishing.

41    In my opinion, however, documents in category 6 were directly relevant to the pleaded issue of whether a thorough comparison was conducted with potentially significant probative value adverse to iSelect’s case. Therefore, category 6 is appropriate for discovery, on the basis of the undertaking of restricted access proffered by Bupa in paragraph 13 of its submissions.

Category 8

42    In category 8, Bupa seeks “Documents relating to the purpose, intent or objective of iSelect’s advertising campaign regarding the “$499 Switch Guarantee” as alleged in paragraph 26(d) of the Response”.

17.    Bupa has in paragraph 25 of its Fast Track Statement alleged that:

(a)    iSelect’s “Switch Guarantee” advertising represents that consumers would obtain the benefit of not re-serving waiting periods for hospital and extras benefits because thatcustomer was switching health insurance through iSelect, and not otherwise;

(b)     iSelect’s “Switch Guarantee” advertising is misleading and deceptive as:

(i)     the customer could be required to serve normal waiting periods for extras benefits with a new health insurer if they switched insurers through iSelect;

and

(ii)    the benefit of not having to re-serve waiting periods for hospital benefits, did not arise because the customer was switching health insurance through iSelect and not otherwise, but because this benefit was a requirement under the Private Health Insurance Act 2007 (Cth) (PHI Act).

43    In paragraph 26(d) of the Fast Track Response, iSelect alleges a widespread misconception by Australian consumers about the requirement to re-serve waiting periods for both hospital and extras benefits. iSelect alleges that its $499 Switch Guarantee advertising campaign seeks to respond to “such concerns or misconceptions” by making a clear statement that customers will not have to re-serve any relevant hospital or extras waiting periods for equivalent or lower health cover if they switch through iSelect.

44    Bupa submitted that in the light of the above pleading, it was entitled to discovery of documents relevant to the purpose, intent or objective of iSelect’s $499 Switch Guarantee advertising campaign, as otherwise Bupa could not test the allegation that the campaign was directed at correction of misconceptions.

45    iSelect objected to proposed category 8, on the basis that it was too wide, vague and required discovery of irrelevant documents which could have no significant probative value in determining whether the Switch Guarantee advertising was in fact misleading or deceptive or likely to mislead or deceive. iSelect submitted that its underlying intent was not relevant. iSelect proposed instead more limited discovery by both parties, confined to documents comprising the results of consumer research or surveys for the relevant period about the public’s perception or behaviour regarding switching health providers, or the potential loss of hospital and/or extras benefits waiting periods on switching health providers.

46    In my opinion, documents in the proposed category 8 are directly relevant to the question of iSelect’s pleaded purpose of the advertising campaign which it has put in issue, and have potential significant probative adverse value to iSelect’s case. The party giving discovery is obliged to undertake only a “good faith proportionate search”, and in the absence of a cogent indication as to its asserted undue width, category 8 is appropriate for discovery.

Category 9

47    In category 9, Bupa seeks “Correspondence passing between the ACCC and iSelect relating to the conduct that was the subject of the ACCC undertakings provided by iSelect in 2007.”

24.     In the Press Release (as defined in paragraph 1 of the Fast Track Cross-Claim) Mr Bowden is quoted as stating “The proceedings also follow court enforceable undertakings that iSelect had given to the Australian Competition and Consumer Commission in relation to its advertising to private health insurance consumers, which expired in late 2010”. The alleged misrepresentation in paragraph 7 of the Fast Track Cross Claim is that:

By making the statement in sub-paragraph 5(c) Bupa has represented that iSelect’s conduct is the same as that which was the subject of ACCC undertakings in 2007

48    Bupa submitted (referring to paragraph 14(b)(ii)) of iSelect’s Cross-Claim and 14(a)(i) of Bupa’s response) that there was a dispute on the pleadings as to whether iSelect’s conduct the subject of these proceedings is “substantially the same” as iSelect’s conduct which was the subject of the enforceable undertaking that it gave to the ACCC in November 2007.

49    Bupa submitted that discovery of documents in proposed category 9 was necessary in order to understand precisely what conduct was the subject of the 2007 undertaking, as the bare terms of undertaking itself were insufficient. Bupa submitted that the contemporaneous correspondence passing between the ACCC and iSelect about that conduct was relevant to ascertaining its character.

23    Bupa’s request for discovery is only directed at formal correspondence between a regulator and the target of its investigation. Such correspondence would be limited, and presumably only addressed to one or two senior officers of iSelect.

50    iSelect objected to discovery of documents in proposed category 9 on the basis of irrelevance and lack of probative value to the issue in dispute.

51    iSelect submitted that the conduct the subject of its 2007 undertaking to the ACCC was recorded in the publicly available undertaking itself, and any other matters raised in earlier private correspondence between the ACCC and iSelect could not have been known to Mr Bowden. There was thus no prospect that he could have been referring to any conduct but that recorded in the undertaking, which was therefore the only document relevant to the issue.

52    In my opinion, the contemporaneous correspondence between iSelect and ACCC is unlikely to be extensive and directly relevant to ascertaining fully the character of the conduct in question. Category 9 is appropriate for discovery

Associate:

Dated:    6 June 2012