Appellant v Respondent

Appellant v Respondent - [2020] VSC 762 - VSC 2020 case summary — Zoe

[9]

5 Many issues were debated before Associate Justice Derham, and at great length. In the end, his Honour held that Redfield should be given preliminary discovery by the Commission of most of the categories of documents in question, but that VTF was not entitled to any preliminary discovery. Under r 32.05, preliminary discovery is available where, in short, (i) there is reasonable cause to believe that the applicant may have the right to obtain relief in the Court from a person; (ii) the applicant needs more information to decide whether to commence a proceeding to obtain that relief; and (iii) there is reasonable cause to believe that the person has relevant documents that would be of assistance to the applicant in making the decision. The applicants had submitted to Associate Justice Derham that they may have the right to obtain (among other things) declaratory relief against the Commission in relation to the impugned conduct of the Commission. Upon being requested by his Honour to indicate in writing the form or terms in which such declaratory relief might be granted, they put forward six suggested forms of declaration. However, his Honour ultimately determined that VTF (as distinct from Redfield) would not be accorded standing to seek any of the suggested declarations in any proceeding. In addition, his Honour considered that the suggested declarations would be refused to both VTF and Redfield for want of foreseeable consequences for the parties, save that a modified form of one particular suggested declaration might be available to Redfield (as distinct from VTF). However, his Honour considered that such a declaration could only be available to Redfield as relief incidental to another claim suggested to be available to Redfield, namely a claim for damages for negligence. Further, in relation to some, but not all, of the suggested forms of declaration, his Honour was of the view that the applicants did not need any documents to decide whether or not to pursue them.

[14]

10 The Commission appeals against so much of the order as required the Commission to make preliminary discovery to Redfield. Redfield has filed a notice of contention in the Commission's appeal. It states on its first page that Redfield 'does not seek to cross-appeal from any part of the judgment'.[4] However, it also states, in paragraph 8 under 'Grounds',[5] that his Honour 'ought to have ordered that the [Commission] discover the documents in Annexure A to Redfield's Original Motion [sic], identified in paragraph 1, 2 and 8'. The reference in the notice of contention to paragraph 8 of Annexure A to the originating motion must be a mistake, because the terms of that paragraph were in fact reproduced in the annexure to his Honour's order, as paragraph 6 thereof, i.e. as describing a category of documents to be discovered by the Commission to Redfield. So far as the complaint about omitting to order discovery of the documents listed in paragraphs 1 and 2 of the annexure to the originating motion is concerned, the appeals appeared to proceed, at least initially, on a tacitly agreed basis that both Redfield and VTF were (procedurally) free to challenge the determination of the Associate Judge not to include those categories in the documents to be discovered. The matter appeared to be so proceeding notwithstanding that, in the notice of appeal filed by VTF, the description of the orders sought suggested that VTF, for its part, was content to have discovery of only the documents that had been described in annexure A to his Honour's judgment.[6] In any event, in his written and oral submissions, counsel for the applicants submitted from time to time, in effect, that the original categories 1 and 2 were proper subjects for preliminary discovery. Counsel for the Commission did not object to those submissions being made. However, on the last day of the oral hearings, after relevant discussions, I said to counsel for the applicants that I could not, at that time, see what categories 1 and 2 had to do with anything. In response, counsel said: 'Well, I don't seek to press that, Your Honour.'[7] That appeared to amount to an abandonment by the applicants of categories 1 and 2. Despite this, in a certain post-hearing written submission,[8] counsel for the applicants made reference, directly[9] and indirectly,[10] to categories 1 and 2. It is not clear to me whether counsel was saying or implying that, as far as his clients were concerned, categories 1 and 2 were still in dispute. Out of an abundance of caution, I will assume that those categories are (legitimately) still in dispute. Accordingly, I will assume that they form part of the subject matter of VTF's appeal and the whole of the subject matter of a de facto cross-appeal by Redfield. Ultimately, however, as will be seen, I have concluded that the documents in categories 1 and 2 are not required to be discovered to either of the applicants.

[27]

23 As mentioned above, on the second day of the oral hearing before me senior counsel for the Commission suggested that r 32.05 may not be applicable where the putative claim relied on was a claim for purely declaratory relief.[21] It was said that the point was being raised by counsel 'as officers of the Court'. There was no application to amend the Commission's notice of appeal. It was said that the critical words in r 32.05(a) were 'relief from a person' and that those words 'may not embrace declaratory relief'. Reference was made to the nature of a declaratory judgment as expounded in paragraph 1-02 of Zamir & Woolf: The Declaratory Judgment,[22] namely that a declaratory judgment does not require a defendant to do something or not do something; that it pronounces upon a legal relationship but does not contain any order which can be enforced against the defendant. According to counsel, that supports the proposition that, properly understood, a declaration is not relief 'from a person'. It is relief. It is obtained from the Court. But it is not relief 'from' a person. It was said that a contrast could be drawn with other rules that use the language of obtaining relief in the Court against a person, or simply the language of obtaining relief in the Court. Rule 32.06 was suggested as an example, but no other suggested examples were nominated. It was said that such a difference 'may' be deliberate. Counsel acknowledged being unaware of any other case in which an argument to this effect had been advanced. Counsel also fairly acknowledged that there was (binding) authority to the effect that r 32.05 should be interpreted beneficially (or benevolently).[23] On the other hand, counsel said, a beneficial or liberal interpretation does not justify an interpretation that is 'unreasonable and unnatural'.[24] I inquired of counsel about the source of r 32.05. I noted that in Williams, Victorian Civil Procedure,[25] it is said that the procedure under the rule is derived from the procedure for preliminary discovery established in England. Counsel were given leave to return to the history of the rule at a later time. For the next hearing, the Commission produced a document which contained some additional detail about the corresponding English provisions.[26] However, this threw no new light on the proper interpretation of the rule. Counsel for the Commission said no more about the jurisdictional point. Counsel for the applicants submitted that the point should be rejected.[27] He submitted that the suggested interpretation would be quite out of line with the approach to r 32.05 taken by countless judges since it was introduced in 1986, and that, contrary to s 35 of the Interpretation of Legislation Act 1984 (Vic), the suggested interpretation would not promote the purpose or object underlying the Rules as a whole or underlying r 32.05 in particular.

[49]

(a) the onus is on the applicants to make it appear to the Court that, having made reasonable inquiries, they are unable to obtain sufficient information to decide whether or not to commence proceedings;[55]

(b) that the applicant first make all reasonable inquiries prescribes an objective assessment of whether an applicant has reasonably exhausted alternative sources of information and having done so demonstrates that they have insufficient information to enable a decision to be made to commence a proceeding. The applicant must disclose what information they already have to make a decision whether to commence a proceeding in court and identify what information is lacking;[56]

(c) unless the applicant is lacking something reasonably necessary to make a decision whether to institute proceedings, it is not entitled to preliminary discovery;[57]

(d) the requirement is primarily concerned with whether, as an objective fact, an applicant has sufficient information to determine whether to commence proceedings.[58] The fact that an applicant for preliminary discovery already has enough evidence to establish a prima facie case against the respondent does not mean that the applicant has sufficient information to enable it to decide whether to commence a proceeding.[59] An applicant in that position may nevertheless 'need information to know whether the cost and risk of litigation is worthwhile'.[60] For example, an applicant with sufficient information to plead a prima facie case may prudently wish to obtain preliminary discovery about 'what defences are available to the respondent and the possible strength of those defences, or to determine the extent of the respondent's breach and the likely quantum of any damages award';[61]

(e) it is for the Court to determine whether an applicant has sufficient information available to it; the applicant's own assertion that it does not is neither determinative nor strictly necessary;[62]

(f) accordingly, an application cannot succeed if the applicant has sufficient information (objectively assessed) but is unable to determine whether to commence proceedings due to subjective factors, for example, an overly cautious nature;[63]

(g) courts have, however, approved litigants taking a cautious, conservative or prudent approach by applying for preliminary discovery under the rule.[64] This approach is consistent with the policy underlying the rule.[65] It is also consistent with the policy underlying the Civil Procedure Act 2010 (Vic) ('CPA') generally, and the 'proper basis certification' requirements in s 42 of the CPA in particular;[66]

(h) if there is evidence that an applicant has in fact decided to commence proceedings, the application must fail.[67] In determining whether an applicant has in fact already decided to commence a proceeding, irrespective of the outcome of the application, the Court should not give too much weight to posturing in correspondence prior to the making of the application, particularly correspondence alleging the existence of a strong case but nevertheless seeking preliminary discovery by letter prior to making a formal application to the Court;[68] and

(i) what constitutes 'reasonable inquiries' is a question of fact, to be considered in all the circumstances of the particular case.[69]

[53]

33 Significantly for the present appeals, it emerges from the authorities referred to by his Honour that r 32.05 should be construed 'benevolently';[73] that although applications must not be based on 'mere hunches' or 'flimsy foundations', the very purpose of the rule is to permit an enquiry of a 'fishing' nature;[74] that the rule must be given the fullest scope its language will reasonably allow;[75] that it is not necessary to show precisely what cause of action the applicant may have;[76] that the word 'may' in r 32.05(a) indicates that the putative belief does not have to amount to a firm view that there is a right to relief;[77] that an applicant does not have to prove that there will be, only that there may be, a real benefit from making the order;[78] that the benefit may be the drawing of an appropriate pleading with proper particulars and the avoidance of substantial amendment after discovery, or, alternatively, the possible avoidance of unnecessary and fruitless litigation;[79] that a reasonable suspicion, conjecture or assertion may each fall within the ambit of a reasonable belief;[80] that the word 'may' bespeaks possibility;[81] that the purpose of the rule is to advance the administration of justice;[82] that the rule should be interpreted as requiring a real (as opposed to a fanciful or remote) possibility;[83] that even a real possibility may be highly improbable;[84] that the cause for belief in the proposition must be reasonable;[85] that what is reasonable in a particular case will depend on all the circumstances of the case;[86] that the jurisdictional threshold under r 32.05 is 'low';[87] that it would be incongruous if the jurisdiction to order preliminary discovery could not be enlivened because of a lack of evidence, which is the very cause of the application;[88] that the purpose of the rule is to allow the applicant, who has inadequate proof of any cause of action, to discern whether or not evidence is available that will impact (positively or negatively) on the possible proceeding;[89] that delving extensively into the merits of a possible cause of action will usually not be appropriate;[90] and that where each element of the rule is satisfied, the Court will ordinarily exercise its discretion in favour of the applicant.[91]

[61]

38 During the second day of the oral hearing before me, senior counsel for the Commission came to deal with Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd ('Dartberg').[99] He acknowledged that Middleton J had not cited any authority for the proposition that, if the potential cause of action would not survive an application for summary judgment, then discovery ought not be ordered.[100] I then noted that the words omitted from the footnoted quote from Dartberg referred to an application for summary judgment 'pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth).' I inquired as to the form that s 31A of the Federal Court of Australia Act 1976 (Cth) had taken at the time when Dartberg was decided in 2007. Senior counsel was not able to say immediately. He was not sure whether s 31A set out a test for summary dismissal that corresponded with the more modern test set out (for Victoria) in s 63 of the Civil Procedure Act 2010 (Vic), or whether, rather, it corresponded with the traditional test referred to in Dey v Victorian Railways Commissioners.[101] However, senior counsel made a particular point of saying to the Court that, regardless of what s 31A of the Federal Court of Australia Act 1976 may have provided for in 2007, the Commission did not contend that an application for preliminary discovery should be rejected if the putative claim upon which it was based would only be summarily dismissed under the more modern test set out in the Civil Procedure Act 2010 (Vic) or under some equivalent test. I do not attribute to senior counsel any concession as to the location of the burden of persuasion or proof in this respect.[102] However, senior counsel told me that the Commission accepted that the traditional test referred to in Dey v Victorian Railways Commissioners would be applicable.[103] Senior counsel expressly confirmed that the position of the Commission was that it would only be if the putative substantive claim was hopeless or doomed to fail that it could not be made the basis of an order for preliminary discovery.[104]

[63]

40 Notably, however, the Commission did not expressly say in that document that it wished to resile from anything its senior counsel had said on its behalf on the second day in relation to Dartberg or in relation to the applicable test under r 32.05(a). Nor did counsel for the Commission say any such thing on the next day (the third day of hearing). Counsel did not mention the topic at all. Hence I understand that the Commission's position remains as originally stated, that is, that any analogy with applications for summary dismissal would only be appropriate if the analogy were with the traditional 'hopeless' or 'bound to fail' test for summary dismissal. I would accept that position. However, the outcome of this case would be the same even if it were appropriate to apply an analogy with the 'no real prospect of success' test under s 63 of the Civil Procedure Act 2010 (Vic). Differences between the tests do exist, but the gap between them is not huge.[106] In any event, it may not be appropriate to draw an analogy with summary dismissal applications at all. As already indicated, there is apparently no authority for the proposition that the Court should do so other than the one line in Dartberg which was not accompanied by any reference to other authority. Usually, applications for summary judgment fall to be considered against a pleaded claim or defence. An applicant under r 32.05 is usually not obliged to produce a pleading or draft pleading in order to test the application. No pleading or draft pleading was filed in this case. The nearest thing was the set of six forms of declaration that the applicants filed after the conclusion of the oral hearings before Associate Justice Derham. His Honour had initially invited the applicants to identify nine forms of declaration - one to match each of the nine categories of documents originally sought, or fewer in the event of overlap.[107] Importantly, however, the invitation was, expressly, to identify such forms of declarations only 'in the rough'.[108] There was no suggestion that anything more precise, or any statement of facts or any draft pleading, was needed or sought.

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