Applicant v Respondent

2 For the purposes of the application, it is accepted that reasonable enquiries have been made. They were made of Mr McGuane under threat of an application for preliminary discovery of documents and an oral examination. The issue is whether First National has met the standard of proof for the making of an order under rule 32.03.

3 The rule does not state that the applicant has to show a prima facie case against the person to be identified, or to state grounds for a belief that it may have the right to obtain relief or remedy for a wrongdoing. That may be compared with the frequently used rule 32.05 which concerns pre-action discovery of documents from a person whose identity has been ascertained, and against whom an applicant has 'reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court...' Under that rule, if the applicant has insufficient information to decide whether to sue, the Court may order the known prospective defendant to discover documents to assist the applicant to decide whether to sue.

4 The applicant contends that like rule 32.05, this rule is meant to have a benevolent operation. I would agree procedural justice calls for a beneficent exercise of discretion in aid of identifying a wrongdoer to enable proceedings to be brought. But the beneficence has to be first attracted. In that regard, First National contends that the hurdle under rule 32.03 is lower than rule 32.05 because, unlike rule 32.05, there is no requirement to show 'reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court...' The applicant says, relying on Primrose Textiles Pty Ltd v Kollnner[1] the rule is taken to require, as is the unstated case under rule 32.05, something more than a mere hunch, suspicion or hope.

5 This is not a case about 32.05 but I agree that authorities concerning rule 32.05 certainly establish that mere hunch, suspicion or hope is not enough to prove 'reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court...'[2] The submission here, facing what I regard as weak evidence to show wrong doing against this plaintiff (as distinct from a wrongdoing personal to its Chief Executive Officer) seemed to be that: as long as there was more than a mere hunch suspicion or hope then the applicant need not justify a belief that it may have the right to obtain relief, especially as these applications are attended with beneficence.

6 I see a point of principle here concerning rule 32.03. I do not accept the test as couched by the applicant, and I do not think Primrose Textiles Pty Ltd v Kollnner is authority for it. Although it is not stated in terms, I would hold that there is under rule 32.03 an implicit requirement that evidence must point sufficiently to the existence of a case for relief to make it proper, in the interests of justice that discovery be given or that oral examination be allowed so that a proceeding for relief can be brought.[3] The requirement is implicit textually and, I think, born of necessity having regard to the purposes of the rule as a tool of justice. Rule 32.03(1)(a) addresses, in terms, the predicament of an applicant who (with my emphasis) '...is unable to ascertain the description of a person sufficiently for the purpose of commencing a proceeding in the Court against that person...' I am not to rewrite the rule, but that language to my mind presupposes a belief that a wrongdoing has occurred to the applicant by someone unknown or not identified, and something plausible in support of that. The utility of this rule as a tool of justice is plain: if a wrongdoing has occurred then the Court should lend its aid to enabling a prospective plaintiff to elicit the identity of the wrongdoer. This is why authorities refer to Order 32 as having a beneficent operation. The limitation, which comes to play an important part in this case, is that orders cannot be sought on a flimsy foundation or on a mere hunch that a wrongdoing has occurred.

7 On that approach, this application will be refused wholly. The evidence in support is quite limited. It appears that any sense or perception of wrongdoing is not that of First National but its Chief Executive Officer. But he is not the applicant. When closely analysed, the applicant here has not adduced any evidence of a wrongdoing to it, but, by an association that its Chief Executive Officer naturally has with the applicant, it seeks I think to use 32.03 in an overreaching way to in effect conduct an early cross examination of Mr McGuane to try and elicit names from which to see if, by description, a case for wrongdoing might be able to be made out by First National against people as named. Thus, it is not a case of an applicant saying 'I have a case for relief but cannot identify the wrongdoer without the Court's help'. Rather it is a case of the applicant saying 'I do not present some facts to show my grievance or a wrongdoing to me, but I seek the Court's help to obtain names to see if I have a case against those people as identified depending on who they are and what laws apply to them.' In my judgment, beneficent as this rule is, this is not the purpose of the rule. But in any case, as a matter of discretion I would refuse it because the evidence does not go far enough and much is left to speculation. Out of deference to the arguments I expose the facts from which I make that determination.

8 The facts are not at all elaborate, which is part of the problem for the applicant. The affidavit in support is sworn by Alan Wallace Read, a director of the solicitors acting for the applicant. The Chief Executive Officer of First National is Ray Ellis. The material does not tell the Court precisely who or what First National is, but in the visible and advertised world of the real estate industry the name 'First National' is recognisable as a business name or trademark by which real estate agents conduct business throughout Australia. I can only suppose First National is a peak marketing or organising body of a real estate network which has a board of directors and has as its membership a network of individual 'First National' agencies (or maybe franchisees) that conduct real estate businesses throughout Australia. I do not know if First National itself is a trading corporation and if so, precisely how and in what way it is active in trade or commerce. I do not know how many employees it has or whether the objects for which it is formed do or do not include obtaining financial gain for its members or its corporators ― they being factors that might enable a corporation to sue for defamation under the Defamation Act, which is the germen of this matter.

9 The deponent Mr Read says that on about 24 March last year, the CEO Mr Ellis gave him a copy of a letter signed by Mr McGuane sent to a Mr Joe Cimino, who was a former Victorian council member of the First National, and himself a director of a First National agency in Albert Road, Melbourne. I will assume that Mr McGuane, is either a current or a past member of the applicant, running his own First National Real Estate agency. From the materials, he says he 'holds the brand in high regard' and is dissatisfied with the performance and integrity of the CEO and with the management or governance or affairs of First National. He is leading or part of a movement within the members of First National that have formed a reform group of sorts. The letter to Mr Cimino said this:

Hi Joe,

Hoping Christmas, New Year and Australia Day have been great for you and yours to enjoy some downtime and refresh and that you are back into 2016 with vigor [sic] and tracking for success personally and for the City Residential team.

Joe a number of current and past First National Members and some staff have indicated to me there may be worth in some discussion with you as I understand from a number of persons that you and some others are now committed to seeing through what I and others regard as overdue reformation at First National by firstly removing the Board.

In conversation and communications dating back as far as 12 months and more I had in response to some questions provided some information, thought as to what I believed may be required in contingency planning if reformation was to be undertaken.

In some of those communications I had indicated I was happy for you and some others to be privy to my thoughts. I am unsure if this has been passed on to you so have taken the liberty of inclusion with this letter of that information direct to you and also some other documentation over time which now dates back before the beginning of 2014. I am sure you will be aware of some of the documentation.

I have been advised of the consultancy appointment by some members of Nunzio Giunta and had a brief telephone discussion with him some weeks ago after I was referred his contact number.

I have advice as to increasing support for a reform campaign but with others have a concern for the long term strength and viability of the First National Network if investigations and process spans thru [sic] till May/June 2016. It seems clear to me that in particular the current and the previous national Board is/has been unwilling to act in Member interest or are just incompetent and not representative of a broad membership view ... at this point I recall a leopard and it's spots fable.

Revelations alleged as to incompetence, abuse of position/s and in my view misappropriation seem to continue and I believe are likely to do so as long as Ray Ellis and some other personnel and the current Board are in place at First National.

I would value a discussion. Coffee, at your convenience?

10 The information to which the letter refers is contained in a body of material attached to the letter which is 37 pages, most of which has no ascertainable author or provenance. It is not possible to say whether this body of information has been taken by Mr McGuane and transposed into a body of materials or whether he received the information in this form. It looks like the former, as the type face is uniform and I suppose he wishes to keep his supporters of informant anonymous. For present purposes, what matters is that it purports to be McGuane's account of information he has received from other like-minded disaffected members. I do not see what I will call proprietary corporate documentation. The narrative is the language of denouncement, some of it sensational and allusive, but to be fair is not gratuitously foul, but couched in terms of what the author saw as the best interests of the network. I think it could be productive of legal embarrassment or greater dissatisfaction for Mr Ellis if I went into great detail about the content of the document but some general reference has to be made to it in order to properly judge this application.

11 The most conspicuous feature of the material is that it is directed at Mr Ellis. The gist of the material seems to be that there was sufficient according to the author to warrant a further investigation and a forensic analysis of Ellis' conduct as there was a concern it was of a continuing nature. The object seems to be to remove the current board and the CEO and some staff. The complaint seems to be based upon incompetence, negligence and, I will say, financial matters. There is a zeal about the material. There is even a call that Mr Alan Read, the applicants solicitor in this application be replaced immediately as an office holder.

12 If the material is to be taken seriously, then the person who would have the greatest cause for concern and a desire to consider taking action or to issue 'cease and desist' warnings would be the CEO, Mr Ellis in an action for defamation. I say nothing about the merits or sustainability of such steps. I confine myself to saying that for the purposes of ascertaining a wrongdoer under r 32.03, Mr Ellis already has an identification of the hypothetical wrongdoer, namely Mr McGuane. It is he who has published the information to Mr Cimino concerning Mr Ellis. Those who have provided information to McGuane as part of the collective dissatisfaction with against Ellis and First National, might, I suppose, have published defamatory statements to Mr McGuane, but questions would arise whether within the circle of reformers with a common view about Mr Ellis such statements were defamatory. The point is this: had Mr Ellis, in contemplation of a defamation action, brought an application under rule 32.03 to identify the defamer, it would have failed and Mr Ellis cannot seek names for the sake of First National on the basis of some perceived wrongdoing to it. This was conceded by counsel for First National.

13 That immediately leads to the curious feature of this application. It is brought by First National about whom this Court has been told little to nothing. If the remarks about Mr Ellis in Mr McGuane's letter are thought to spread to the competence or integrity of the Board and the business of the plaintiff (if it is in business), then what comes reflexively to mind are actions under the law of torts for malicious falsehoods, or economic torts, or injuries to its trading reputation (if it is trading). I repeat, I am not to be taken as give credence or stimulation to any possible claim. I say no more than this: if First National had in mind taking action on the letter, then it already has the identity of the publisher, namely, Mr McGuane. It appears that First National has its sights on the persons who have been talking to Mr McGuane or giving him information, lest they be officers or employees of First National who are under duties at law and equity to First National. I have no evidence at all about the staffing of First National. There is no evidence at all from First National demonstrating the information referred to by McGuane must have had it source as confidential or proprietary information of First National. He says it was all in the 'public domain'.

14 Mr Read's affidavit though shows perseverance by the plaintiff to ascertain the identity of Mr McGuane's informants; that is, those with whom he has been speaking and whose views and statements form part of the 37 pages attached to his letter to Mr Cimino. This is made plain in a letter sent on 21 June 2016 to Mr McGuane in which he is asked:

1. Were you the sole author of the 38 pages comprising the Correspondence?
2. Were you the sole compiler of the 38 pages comprising the Correspondence?
3. If not, please identify the authors/compilers of those portions of the Correspondence of which you are not the author/compiler and specify those portions of the Correspondence authored/compiled by those persons.
4. To whom have you published or delivered the Correspondence, in whole or part, other than Mr Cimino?
5. To whom were you referring when you stated that you were unsure if certain 'communications' had been passed on to Mr Cimino? Who was in possession of the 'communications' and may have passed on those materials to Mr Cimino?
6. Are these 'communications' wholly contained within the Correspondence?
7. If not, to what additional 'communications' were you referring?
8. Were you the author of these additional 'communications'?
9. To the extent you were not the author of these additional 'communications', who was?
10. Where you refer to Mr Cimino being 'aware of some of the documentation':

(a) to which documentation were you referring?

(b) were you the author of that documentation?

(c) if not, who authored of [sic] that documentation?

It is apparent from your correspondence that you have, or are likely to have, knowledge of the information requested above or are likely to have, or have had, in your possession documentation or material that would assist in ascertaining that information.

Please be advised that should you fail to provide the required information, we are instructed to institute proceedings pursuant to Order 32.03 of the Supreme Court (General Civil Procedure) Rules to have you attend before the Court to be orally examined in relation to the identity of the person(s) concerned and, if applicable, to make discovery in accordance with Order 32.03(2)(b).

Please provide your response within 14 days.

15 On 24 October 2016, Mr McGuane gave this response:

Dear Alan,

'Without Prejudice'

I currently hold statements from Darren Moon and others (you may be surprised) which will be released and available to [sic] all FN members and the Media should you proceed.

This will damage all concerned and there is no benefit in that happening.

I hold the brand in high regard despite some challenges and occurrences.

Information provided by me and accepted, agreed and confirmed 'IN CONFIDENCE' to the Reform Group is (those separate documents) signed by me. Breach of that agreed and accepted 'confidence' by Mr Marcus Rayner has occurred.

Other documentation (various) as is sent to and received by me by surface mail over time spanning some years.

I neither co-ordinated or organised anything against FN. All the materials I had have been lost because of a rogue virus in past weeks ago totally destroying all my computer hard drive records recording scans of surface mail records. I do not keep or have paper copies.

These documents (various) were sent to me by unknown and unidentified persons which I presume are current & former members and employees. I am now aware many others received information and documents over a period of years.

This material was out in the public domain.

I did and hold nothing special and organised nothing.

16 If that letter be truthful, then it appears that an order for discovery of documents will result in Mr McGuane swearing that he has no documents or the documents he once had no longer exist. Information received might not have been in document form. That likelihood explains the primary application for an oral examination in Court.

17 The material evidence in support of the application is Mr McGuanes' letter and no more. In support of the application, Mr Denton of counsel emphasised the beneficent operation of the Rule. I have said enough about the ethos of the rules. The Court was taken to Australian Football League v Stadium Operation Ltd[4] for a statement of principles concerning r 32.05. That rule has attracted much judicial attention to the point where I think enough has been said by judges to establish that under r 32.05, the applicant does not have to prove that there will be real benefit in making the order but simply that there may be some benefit. Authorities in that area also show that there is no need to establish a prima facie case, nor is it necessary to show precisely what cause of action the applicant may have. Rather, the gist of the authorities is that no more need be shown than facts from which it may be reasonably be believed that the applicant may have a right to obtain relief. It does not have to be a firm view but it carries the beneficence of what is sometimes called 'the two mights'. That is, the defendant might have documents which might assist an applicant to decide whether to bring proceedings against a known defendant.

18 I think too much attention was given to rule 32.05. But as a statement of what might be said to be an ethos in order 32, I look to the statement in Schmidt v Won,[5] in which Ormiston JA, with whom Charles and Batt JJA agreed, that the purpose of and the Court's approach to the rule was as follows:

The rule, first introduced in 1986, should be construed benevolently because its intention was both to assist claimants without sufficient, precise information to launch an action and to prevent the bringing of speculative suits. Applications, however, must not be based upon 'mere hunches' or such flimsy foundations as will not satisfy the requirement that 'reasonable cause' should be shown for the necessary belief. That is not to say, however, that some form of 'fishing' inquiry is not justified under the rule: indeed it is the very purpose of the rule to permit an inquiry of this kind, if the required conditions are made out.

19 Mr Denton urged that although the letter and its attachment was directed to complaints about Mr Ellis, the proceeding for which First National might wish to ascertain the description of the person would be directed to those who gave the information concerning the applicant's affairs. That letter says he had received information 'in confidence' to the reform group and the information was sent over time spanning some years. He also said that some of the documents were sent to him by unknown and unidentified persons which he presumed were current and former members and employees. Thus, Mr Denton submits that the informants could come from a number of sources. It could have been a past or existing: (i) employee of the plaintiff; (ii) officer of the plaintiff; (iii) member of the plaintiff; (iv) or a stranger. If it was an employee, then thought would be given to bringing a case against an employee for breach of a duty of loyalty or containment of confidential information or other cognate legal duties on an employee to an employer. If it was a company officer, then it could be a case of a breaches of statutory obligations under the Corporations Act. If it was a member, then there could be a case in contract based upon the relationship between members and First National. If it was a stranger, it could be an action for defamation. The submission posed the following test: does Mr McGuane have documents or undocumented information to show who compiled the materials and the correspondence from which he has compiled his lengthy letter to Cimino?

20 On that submission First National sought the following documents:

(a) The following as referred to in the Correspondence (being annexure AWR-1 of the affidavit of Alan Read 7 November 2016):

(i) any source documentation used to author or compile the attachments to the Correspondence;

(ii) the advice as to increasing support for a reform campaign that he has received;

(iii) the communications dating back as far as 12 months and more he has engaged in regarding the reform campaign;

(b) The following as referred to in the email of 24 October 2016 (being annexure AWR-5 of the affidavit of Alan Read 7 November 2016):

(i) the 'statements from Darren Moon and others' in his possession;

(ii) information provided 'in confidence' to the Reform Group, including those Mr McGuane describes as being 'signed by me';

(iii) documents evidencing an alleged breach of agreed and accepted 'confidence' by Mr Marcus Rayner;

(iv) the other documentation (various) is as sent to and received by me by surface mail over time spanning some years;

(v) evidence as to the alleged 'rogue virus' that his software has recently suffered.

21 On the order sought for oral examination, the application was to put questions on these topics:

(a) The contents of the documents produced in accordance with the above order;

(b) As regards to the Correspondence, in addition to the questions posed in paragraph 7 of this affidavit;

(i) The current and past members and some staff of the Applicant that he has discussed the contents of the Correspondence with;

(ii) The provenance of each of the attachments of the Correspondence; and

(iii) The source of information contained within the attachments of the Correspondence.

(c) As regards to the email of 24 October 2016;

(i) the details of him now aware many others received information and documents over a period of years;

(ii) the material he refers to that was out in the public domain.

22 These are extensive orders. I think they go too far. The application to administer question according to topics arouses immediate concern about an exercise resembling a trial within a trial. Counsel for Mr McGuane, Mr Nixon submitted that the application really amounted to a crossexamination on a multitude of topics, and that if an order was made it ought be limited to discovery and not to an oral examination. But as I have said, it seems unlikely there is going to be any documents produced judging by the evidence from Mr McGuane.

23 To my mind this application ought be determined, as submitted by Mr Nixon, according to a greater principle concerning the standard of proof under rule 32.03. I have held that implicit in the rule is a requirement that the applicant adduce evidence that points sufficiently to a case for relief. The question is, as was submitted by Mr Nixon, has the plaintiff by evidence satisfied the Court to the requisite standard that it has a case for relief? In my opinion it certainly has not, and that cannot be overcome by appealing to the beneficence of the rule. On the evidence I think this application is predicated on hunch or speculation, or impermissible fishing. If at a broad descriptive level, the case for relief is pitched now at reputational damage caused by others (that is, not Mr McGuane) there is no evidence at all about First National's corporate function, its affairs in trade and commerce, whether it is capable of suing in defamation, or what the perceived or apprehended damage to its reputation or good will might be. If at another broad descriptive level, the wrongdoing is levelled at employees or officers, there is no evidence forensic or otherwise to show indicatively at least what corporate information or documents appear to have been given by the plaintiff's employees and officers and how or in what way such information was unlawfully given. How is it to be judged whether things said by informants was possibly in breach of legal obligations or as attracting some relief or remedy?

24 The plaintiff does not know if it has a case for relief. It is making an application on the basis that it needs to know the names of the informants before it can see if it has grounds for relief, or to use the words of rule 32.03: to see if it can commence a proceeding. But rule 32.03 works the other way around. It looks to the case for relief, and compels discovery of acts and documents to identify the wrongdoer. In my view the applicant is inverting rule 32.03.

[1] [1999] VSC 69, [14] (Warren J, then).

[2] See for example Plzen Pty Ltd v P & O Wharf Management Pty Ltd [2007] VSC 318.

[3] See Williams, Civil Procedure Victoria Vol 1 [32.03.30].

[5] (1998) 3 VR 435 at 445.