Applicant v Respondents

2 The essence of the applicant's grievance is that the venture has not eventuated, and to the extent that any benefit has been received in return for his $15 million contribution, it has been received solely by Mr Qin's corporate alter ego, the seventh respondent, in breach of Mr Qin's agreement with the applicant.

3 The receipt of the $15 million by one or more of the first to sixth respondents is not disputed and no evidence is offered in this application by the seventh respondent to dispute the applicant's account of events, including the alleged oral agreement between the applicant and Mr Qin and Mr Qin's breach of that agreement.

4 Evidence has been filed on behalf of the first to sixth respondents (Hickory Parties) to the effect that none of them have any contract with the applicant, and that is not disputed by the applicant. The evidence from the Hickory Parties is that their only agreement is with the seventh respondent. Pursuant to that agreement, the Hickory Parties contend that Mr Qin or his related entities were to contribute $50 million to a joint venture between him or his entity and the Hickory Parties. The first $30 million of this sum was to be paid to the first respondent by way of four instalments: three initial instalments of $5 million, and a final instalment of $15 million.[1] Their evidence is that the work to be completed in China, pursuant to the agreement between themselves and the seventh respondent, stopped in November 2015 due to a lack of the funding to be provided by Mr Qin.[2] Mr Ma agrees that the work on the factory to be constructed in China ceased at that time, on his account due to his dispute with Mr Qin.[3]

5 The applicant seeks documents from the respondents to assist him to determine whether to commence a proceeding against them. The applicant has not joined Mr Qin personally to this application.

6 For the reasons that I now elaborate I will order discovery of Categories 5-8 of the documents sought as against the first to sixth respondents, and discovery of Category 9 as against the third respondent. I refuse discovery of Categories 1-4 as against the seventh respondent.

7 I apologise for the delay in delivery of these reasons.

8 The applicant sets out what he contends are the background facts in his affidavit sworn 9 February 2018. His solicitor, Mr Peter Cash (Mr Cash), has deposed to other background in his two affidavits. The factual background from the perspective of the first to sixth respondents is contained on information and belief in the affidavit of Ms Poly Kiosses (Ms Kiosses) sworn 26 March 2018. The seventh respondent has not filed any evidence, and so for the purpose of this application only I assume that what Mr Ma says as against the seventh respondent, or its sole director and shareholder Mr Qin, is not disputed by the seventh respondent.

9 Mr Ma and his brother, Mr Ma Fusheng, own and operate a number of businesses in China, principally in Henan Province, as part of the Ma Group. Those businesses employ around 3,000 employees in total. Mr Qin is also a businessman in China, whose son Mr Peter Qin lives, or at the relevant times lived, in Melbourne. In May 2013, Mr Ma visited Mr Qin in Melbourne and they discussed the possibility of investing together 'to acquire building technology suitable for the construction of high-rise buildings, particularly apartment buildings'.[4] Mr Ma wished to expand the Ma Group into more high tech industries.

10 After they had each returned to China, Mr Qin told Mr Ma that he had found a company with technology of this kind, Hickory Group Pty Ltd (Hickory). Hickory is the second respondent. It changed its name as of 1 March 2017 to H Buildings Pty Ltd. Mr Michael Argyrou and Mr George Argyrou, respectively the third and fourth respondents, are the two founding directors of Hickory, and in November 2013 were two of the then four directors. The other directors as at November 2013 were Mr Stavros Stavrou (Mr Stavrou) and Mr Peter Michaltsis, who were each appointed on 3 October 2008. A fifth director, Mr George Abraham, was subsequently appointed, on 15 October 2014. All but Mr Stavrou ceased to be directors on 1 March 2017, although Mr George Argyrou was subsequently appointed a director for the period 8 August 2017 to 5 February 2018. The sole director as at the date of the company search in evidence (dated 7 February 2018) was Mr Stavrou.[5]

11 The other respondents are as follows. The first respondent, Hickory Building Systems Pty Ltd (Hickory Building) was first registered in 2008. It changed its name from Unitised Building (Aust) Pty Ltd to the current one in October 2013. Its founding directors are Mr George Argyrou and Mr Michael Argyrou. Mr Qin and Mr Yonghong Guo, became directors on 20 March 2014. The shareholders are Hickory Group Holdings Ltd and Qin Group Holdings Pty Ltd, the seventh respondent, as a trustee. Qin Group Holdings Pty Ltd (Qin Holdings) was registered on 20 March 2014. Its sole director and beneficial owner is Mr Qin. The fifth respondent, Sync Building Systems Pty Ltd (Sync) was first registered on 18 January 2013. Mr Michael Argyrou and Mr George Argyrou are its founding directors. Two further directors were appointed on 14 November 2014. It is wholly owned by the first respondent. The sixth respondent, SMATA Pty Ltd (SMATA), was registered on 22 August 2013. Its founding directors are Mr George Argyrou, Mr Michael Argyrou and Mr Stavrou. Its shareholding is held by four companies as trustees. Ms Kiosses states that she is general counsel for the Hickory Group, which includes the first, second, fifth and sixth respondents, and that she is authorised by each of the first to sixth respondents, whom she calls the Hickory Parties, to make her affidavit on their behalf.

12 Ms Kiosses deposes that the Hickory Parties had in fact met Mr Qin well before his initial discussions with Mr Ma. In late 2012 he was presented to them as a potential investor in 'Hickory's Unitised Building business (now known as the Hickory Building Systems business)'.[6] She deposes on information and belief from Mr Michael Argryou that he and Mr Qin were in discussions from late 2012 about the possibility of establishing a factory in China to manufacture prefabricated building elements using the Hickory Parties' technology. Mr Michael Argryou was introduced by Mr Qin to Mr Ma, amongst others, in China in 2013.

13 According to Mr Ma, Mr Qin organised a meeting with Hickory in Melbourne in November 2013, which was attended by Mr Ma, Mr Qin, Mr Peter Qin (who acted as interpreter), Mr Michael Argyrou, Mr George Argyrou, the chief financial officer of Hickory and other Hickory staff.

14 After the meeting, according to Mr Ma, he and Mr Qin decided that they wished to proceed with an investment in the use of Hickory's technology to construct modules for new building projects in China. Mr Ma deposes that they agreed that Mr Qin be responsible for the Australian aspects of the venture, including negotiating with Hickory and retaining Australian lawyers, and that he, Mr Ma, would be responsible for operations in China, including identifying land suitable for a factory. Mr Ma deposes that as he does not speak English, he 'left it to Mr Qin to communicate our decision to Michael and George'.[7]

15 There is no dispute that there were three meetings held in China between November 2013 and March 2014 attended by Mr Ma, Mr Qin, Mr Michael Argryou and Mr George Argyou, amongst others, to discuss the building of the proposed factory in China. According to the first to sixth respondents, the meetings were at a high level of generality and all 'robust' discussions about the project were between Mr Michael Argryou and Mr Qin, without the participation of Mr Ma. In relation to Mr Ma's evidence that 'the Hickory representatives' asked Mr Ma detailed questions about the financial position and business activities of the Ma Group, the first to sixth respondents inform their group counsel that Mr Michael Argryou did not ask any such questions. They do not specifically deny that other Hickory representatives did so.

16 Mr Ma deposes that he and Mr Qin had many further discussions between themselves in the period November 2013 and March 2014 in relation to how they would finance and structure their venture with Hickory. On his account, which I assume to be undisputed in this application, they agreed that they would incorporate a joint venture company in Hong Kong as the investment vehicle, in which Mr Qin would hold 51% of the shares, and Mr Ma 49%.

17 A deed entitled 'Heads of Agreement' was prepared by B2BLawyers and signed by Mr Michael Argyrou, Mr George Argyrou and Mr Qin on 21 March 2014. There is a dispute as to for whom B2B Lawyers were acting. Mr Ma deposes that they were engaged on behalf of both himself and Mr Qin.[8] The Hickory Parties contend that B2B Lawyers acted for Mr Qin.[9] B2B Lawyers act for the seventh respondent in this proceeding, and so it would appear that that is Mr Qin's contention as well.

18 The Heads of Agreement is written in both English and a Chinese script. The parties are identified as:

• Michael and George Argyrou, Hickory (now the second respondent), Unitised Building (Aust) Pty Ltd (now known as Hickory Building Systems Pty Ltd and the first respondent- called in the Heads of Agreement 'UBA'), Sync and SMATA (the fifth and sixth respondents), and 'entities yet to be incorporated', collectively described in the Heads of Agreement as 'Hickory'; and

• Ruibin Qin and 'entities yet to be incorporated' collectively described as 'Qin'.[10]

19 Mr Ma is not a party to the Heads of Agreement, and is not a party to any contract with any of the Hickory Parties. His evidence is that the Qin parties in the Heads of Agreement included 'entities yet to be incorporated' because the Hong Kong company to be the Ma/Qin investment vehicle had not yet been incorporated. Mr Ma also says that he was told by Mr Qin's Vice General Manager that 'entities yet to be incorporated' included him.

20 The recitals to the Heads of Agreement describe the building technology owned by Hickory and state that Qin has interests including construction interests in the People's Republic of China. Recital G states as follows:

Both Hickory and Qin believe that there are mutual advantages in setting up joint ventures in Australia and China wherein each party will have cross holdings in Australian Co and China Co with the intention that each of Australian Co and China Co will, in the spirit of joint venture and mutual benefit, have the same philosophy for manufacturing, construction and marketing practices.[11]

21 'Australian Co' is defined in Schedule 2 as the new company to be incorporated in Australia into which the assets, without debt, of UBA, its subsidiary UBF and other technology were to be rolled. 'China Co' is defined as the new company to be incorporated in the People's Republic of China to own the 'China Factory'. The 'China Factory' is defined as the factory with multiple line capacity to be constructed in the city of JiaoZuo, Henan Province.

22 The Project Objectives state that it is proposed that the Australian Co and the China Co will 'enter the global marketplace' and 'compete globally for manufacturing contracts of modular boxes' (clause 2.1). Clause 2.2 states the proposed 'End Holdings' of each of Hickory and Qin in the Australian Co, the SMATA Unit Trust, the China Co and the China IP Co. Clause 2.3 deals with intellectual property licences, and the existence of a China Factory, owned by China Co, as well as the Victorian Factory.

23 Clause 3.1 provides for Qin to invest AUD $50 million (Qin Investment Sum). Clause 3.2 and 3.3 respectively provide that $30 million of this was to be invested by Qin in Australian Co and the SMATA Unit Trust, and 'the remaining AUD $20M invested by Qin will be considered Hickory's investment in China Co'. Clause 3.4 provides that the Qin Investment Sum shall be paid in accordance with the Payment Schedule. The Payment Schedule is Schedule 1 to the Heads of Agreement. Pursuant to that Schedule and clause 4, the first instalment of $5 million was payable by Qin on signing of the Heads of Agreement and some other initial steps. The second instalment of $5 million was payable after a number of further steps, including a visit to China by Hickory to review the proposed factory location site, attendance in Melbourne by the 'China Team', applications for certain approvals, agreement on corporate structures and business plans, and certain corporate restructures. The third instalment of $5 million was to be paid in three sub-instalments (respectively $1.25 million, $1.25 million and $2.5 million). The first of these sub-instalments was due after Hickory staff travelled to China to supervise the set up the manufacturing line; the second after installation of the first manufacturing line; and the third after the first manufacturing line was fully commissioned and operable. The fourth principal instalment of $15 million (i.e. the remaining half of the $30 million Qin Investment Sum) was payable on rollout of modules constructed in China and signed sale contracts for the production of 1000 such modules.

Payment of first two instalments and Transaction Agreement

24 Mr Ma deposes that he paid the first two instalments required under the Heads of Agreement in February and March 2014 (first instalment) and October 2014 (second instalment). The first to sixth respondents agree that amounts totalling these payments were received by them, although they have a different account to Mr Ma as to the dates.[12] The first respondent issued a receipt addressed to Mr Ma at his request acknowledging receipt of $10 million 'received from Qin Group for investment purposes' dated 8 October 2015.[13] The dates and amounts of receipt of funds to which Ms Kiosses deposes do not correspond exactly to this receipt.[14]

25 Ms Kiosses deposes that the Hickory Parties entered into a subsequent agreement with Mr Qin, Qin Group Holdings and 'other entities yet to be incorporated' entitled 'Transaction Agreement' in around October 2014. Mr Ma is not a party to the Transaction Agreement and was unaware of it. His evidence, which is not disputed by any respondent, is that he was not aware of any documents other than the Heads of Agreement concerning the transaction with Hickory until he discovered some such documents accidentally while staying at Peter Qin's house in or around September - October 2015.

26 The parties to the Transaction Agreement differ from those to the Heads of Agreement. The Hickory related parties no longer include 'entities yet to be incorporated'. There is an additional party on Mr Qin's side of the transaction, being the seventh respondent, which was registered on 20 March 2014. In other words, the seventh respondent was in existence at the time of the Heads of Agreement, but was not included as a party in that agreement. The Qin side of the Transaction Agreement continues to include a reference to 'entities yet to be incorporated', now described as 'other entities yet to be incorporated'.

27 The Recitals to the Transaction Agreement recite, amongst other things, that Project Step No 1 pursuant to the Heads of Agreement has occurred; and that the parties seek to vary the Heads of Agreement to implement Project Steps No 2 and No 3 concurrently, and to accelerate Project Step No 4. Clause 2.1(d) confirms that Instalment No 1 was paid to the first respondent. Clause 2.2 sets out that some work has commenced in relation to Project Step No 2, including, in relation to 'China Funding', that 'the funding commitment has been obtained by Qin's Joint Venturers and Financiers in the People's Republic of China' (clause 2.2 (c)(3)). Clause 2.3 sets out the work that has commenced in relation to Project Step No 3.

28 Clause 3 sets out the proposed 'Changes and Clarification' to the Heads of Agreement and Clause 4 incorporates change to the Heads of Agreement indicated by way of mark up. Neither the total amount to be invested by the Qin parties nor the instalment amounts were altered by this mark up. However, Instalment 2 was broken into smaller instalments of $1 million, $2 million and $2 million to be paid respectively by 10 October 2014, 30 November 2014 and 31 December 2014.

29 Clause 3.3 provides that the parties agree that the 'Transactional Documents' (as defined in the Heads of Agreement) shall be 'documented only by way of principal terms' as set out in Schedule 3 to the Transaction Agreement. The mark up to clause 4.4 (c)(2) of the Heads of Agreement provides that 'full versions of Transaction Agreements are not required' and that the listed Transaction Agreements 'shall be sufficiently documented by the key principles set out in Schedule 3 to the Transaction Agreement'.

30 The Transactional Documents there set out include Transactional Document 3.5 - Shareholders Agreement for China Co. This Document recites (under the heading 'Background') that 'China Co is incorporated in the People's Republic of China as an equity joint venture between Qin and Hickory (emphasis added). China Co is incorporated to own the China Factory and to undertake the manufacture and sale of the China Modular Boxes'. 'Qin' is defined in the Transaction Agreement in the same way as in the Heads of Agreement (clause 1 of the Transaction Agreement) 'unless a contrary intention applies'. The Shareholders Agreement for China Co sets out that Qin (or related entities) are to own 80% of the shareholding in China Co, and Hickory (or related entities) to own 20% and contains provisions in relation to the appointment of directors, voting rights and so on.

31 Mr Ma's evidence is that he became aware in August or September 2014 that Mr Qin did not have the funds to make the contribution he had promised to their proposed joint venture. He accepted assurances from Mr Qin that he would obtain those funds in due course, and on that basis paid the second instalment on 13 and 14 October 2014, being the time Mr Qin told him it was due. As noted, the payment schedule for the second instalment was in fact changed by the Transaction Agreement.

32 In mid-2015, Mr Ma and Mr Qin agreed that in lieu of the proposed Hong Kong company, they would use an existing company incorporated by Mr Qin in China, Kuaiyiju. Mr Qin agreed to transfer 55% of the shares in Kuaiyiju to Mr Ma to reflect their respective investments. Immediately after referring to the agreed share transfer, Mr Ma deposes that '(t)his was done in September 2015'[15] and so I infer that the shares were transferred.

33 Mr Ma deposes that he and Mr Qin also agreed that Kuaiyiju would be nominated as the 'entity to be incorporated' as part of the Qin side of the Heads of Agreement, to be the 'sole investor in the project on behalf of both of us'.[16] Mr Ma travelled to Australia to ensure this occurred, received assurances from Mr Qin and B2B Lawyers that this would occur, but it did not. It was during this visit to Melbourne that Mr Ma discovered documents, by which he learnt that the seventh respondent had acquired shares in the first respondent and that Mr Qin had acquired security interests over SMATA units. He confronted Mr Qin with these documents at a meeting between them (together with Mr Peter Qin and an employee of Mr Qin) in Guangzhou, China on 17 October 2015. In the afternoon of that day Mr Ma and Mr Qin met Mr Michael Argyrou (with others). Mr Ma deposes to three aspects of conversation between him and Mr Michael Argyrou as follows:

(i) Michael said he had been told by Mr Qin that Mr Ma had agreed that 'all of our interest in the project would be held by Qin Group Holdings, representing both of us';

(ii) Mr Ma said that he had paid all of the first two instalments, and Mr Qin had paid nothing;

(iii) Michael said that 'the third instalment of AUD 5million was due under the Heads of Agreement and that it needed to be paid. He said that "he had a lot of other partners" in China and that if we did not pay the third instalment, he had many other potential cooperation partners in China'.[17]

34 The Hickory Parties do not dispute the statement identified as i) above. They agree that Mr Ma made the second statement, to which Mr Michael Argryou responded to the effect that he did not know where the money comes from, but they were working under the Transaction Agreement which is with Qin Group Holdings i.e. the seventh respondent. They agree that Michael made the statement identified as iii) above.[18]

35 Mr Ma and the Hickory Parties agree that later again that day, Mr Ma and his brother Mr Ma Fusheng met with Mr Michael Argryou again, at Mr Ma's request, with an interpreter. Mr Ma deposes that he told Mr Michael Argryou he would pay the third instalment to him, provided it was repaid if the project later stopped. The Hickory Parties deny that Mr Ma said this, at that meeting or any time, or that Mr Michael Argryou said it, or agreed to it.

36 Mr Ma deposes that he paid in excess of the third instalment to Mr Michael Argryou's personal bank account on 20 October 2015, with Mr Michael later refunding the surplus. The Hickory Parties do not dispute any aspect of this account, although the receipt that the first respondent later issued for this payment is directed to Mr Peter Qin.[19]

37 Mr Ma and Mr Qin were unable to reach a resolution of their dispute and as a result construction work on the factory halted in about November 2015. Mr Ma's evidence is that he, or his related entities, had been the source of funds for the land on which the factory was to be built and for construction. Mr Ma deposes that he has been unable to reach an agreement with Mr Qin to repay some of the monies he had expended on the venture.

38 In December 2015 Mr Ma and his brother met with Mr Michael Argryou in Melbourne. Mr Ma and the Hickory Parties agree that Mr Ma asked Mr Michael Argryou to arrange for the transfer of the shares in Hickory held by Mr Qin to him or to Kuaiyjiu, and that Mr Michael Argryou declined. They also agree that Mr Ma then asked Mr Michael Argryou to refund the third payment and Mr Michael Argryou declined. They agree that Mr Michael Argryou said that Mr Qin had said that Mr Ma owed him money and that the $5 million was therefore Mr Qin's money. They agree that Mr Ma responded that this was not correct, and said that Mr Qin had not provided any money for the venture. The Hickory Parties contend that Mr Michael Argryou also said that he did not know any specific details of the dealings between Mr Ma and Mr Qin and that he was complying with the Transaction Agreement, which was with Mr Qin.

39 Mr Ma and the Hickory Parties agree that at this meeting, Mr Michael Argryou gave Mr Ma a copy of a letter from the first respondent to B2B Lawyers, dated 14 December 2015. Mr Michael Argryou says that B2B Lawyers requested that he write this letter. The letter encloses a receipt for the payment of $5 million received on 20 October 2015. It states that these monies 'were received from Mr Ma' and that they 'were paid to us in consideration of the promises made by Qin Group Holdings Pty Ltd under the Agreement'. The letter acknowledges that Mr Qin is the sole shareholder of Qin Group Holdings Pty Ltd but states that 'we are [sic] understand from discussions on various occasions over the last 18 months with Messrs Qin and Ma that Messrs Qin and Ma (or their respective entities) have financial interests in Qin Group Holdings Pty Ltd'. For reasons which are unclear, the enclosed receipt is directed to Mr Peter Qin.

40 In June 2017 Mr Ma, through an intermediary, made a further written request by email to Mr Michael Argryou requesting a refund of the third instalment which received no response.

41 The solicitor for Mr Ma, Mr Cash, requested certain information and documents of the first respondent by letter dated 26 September 2017. Ms Kiosses refused that request by letter dated 16 October 2017. In that letter, amongst other things, she states that '(w)e were not aware that your client paid Hickory Building Systems Pty Ltd $15million'. On the basis that the statement that Mr Ma had made these payments was incorrect, she declined to provide the requested information.

42 Mr Cash replied to Ms Kiosses by letter dated 19 October 2017, enclosing the receipt for $10 million addressed to Mr Ma and the letter from Mr Michael Argyrou to B2B Lawyers dated 14 December 2015 confirming receipt from Mr Ma of the third payment of $5 million. Ms Kiosses replied that the position of the Hickory Parties remained the same.

43 On 25 September 2017 Mr Cash made a request of B2B Lawyers for a copy of their file, on the basis that they acted for both Mr Ma and Mr Qin. B2B Lawyers declined the request, stating '(a)t no time were we acting on behalf of your client, Mr Ma Huaisheng'.

44 By letter dated 3 November 2017, Mr Cash made a request of Mr Qin for certain documents, which he also sent to B2B Lawyers. B2B Lawyers replied by letter dated 13 November 2017 to the effect that they had never acted for Mr Ma and are instructed that Mr Qin 'has not acted as an agent in any capacity whatsoever' for Mr Ma.

45 Mr Cash made a request of Qin Group Holdings for various documents by letter dated 20 December 2017, to which it had not replied by the date of Mr Cash's affidavit, being 13 February 2018.

46 Rule 32.05 (Rule) is headed 'Discovery from Prospective Defendant' and provides as follows:

Where -

(a) there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description the applicant has ascertained;

(b) after making all reasonable inquiries, the applicant has not sufficient information to enable the applicant to decide whether to commence a proceeding in the Court to obtain that relief; and

(c) there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had in that person's possession any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist the applicant to make the decision -

the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c).

47 The Rule contains three jurisdictional requirements and confers a discretion on the Court if these requirements are satisfied.

48 Paragraph (a) of the Rule requires the applicant to show that he 'has or may have the right to obtain relief' from a particular respondent.

49 Paragraph (b) has two elements. The first element requires the applicant to satisfy the Court that he has made all reasonable enquiries. The second element requires him to show that notwithstanding those enquiries he 'has not sufficient information' to enable him to decide 'whether to commence a proceeding in the Court' to obtain the form of relief that he has identified may be available to him from that particular respondent.

50 Paragraph (c) of the rule also has two elements. The first element requires the applicant to satisfy the Court that there is reasonable cause to believe that the respondent against whom that relief could be sought has, or is likely to have now, or had, or is likely to have had, in the past, a document 'relating to the question whether the applicant has a right to obtain the relief' (emphasis added). In other words, the document that is sought must relate to the actual or potential right to relief as identified. The second limb requires the applicant to satisfy the Court that inspection of that document would assist him to make the decision whether or not to commence a proceeding to obtain that relief.

51 There is no real dispute before me as to the principles that animate these requirements. They were helpfully summarised by Hollingworth J in Beston Parks Management Pty Ltd & anor v Sexton & anor,[20] in a passage cited with approval by the then Chief Justice, Warren CJ, in Australian Football League v Stadium Operations Ltd (AFL) as follows:

The following general principles are not controversial. The rule should be construed benevolently, because it is intended to assist an applicant who does not have sufficient, precise information to commence a proceeding, and to prevent the bringing of speculative suits. It must be given the fullest scope its language will reasonably allow.

It is not necessary to show precisely what cause of action the applicant may have, merely that the facts are such from which it may reasonably be believed that the applicant may have a right to obtain relief. The word "may" indicates that the putative belief does not have to amount to a firm view that there is a right to relief. Although some "fishing" enquiry is permitted, a "flimsy foundation" or "mere hunch" will not be sufficient to constitute reasonable cause. An applicant does not have to prove that there will be, only that there may be, a real benefit from making the order. 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. The "reasonable cause to believe" requirement is primarily concerned with whether, as an objective fact, an applicant has sufficient information to decide whether to commence proceedings. So, an application cannot succeed if the applicant has sufficient information (assessed objectively), but where the inability to determine whether to commence proceedings arises, for example, due to an overly indecisive or cautious nature. There is no dispute that there may be a subjective element, in the sense that if there is evidence that the applicant has in fact decided to commence proceedings, that will be fatal to the application.[21] (emphasis in original)

52 The outcome in a particular case depends very much on the facts of that case. Elaborations of the principles as applied to the facts of two cases in particular have been of assistance to me in this application: Optiver Australia Pty Ltd v Tibra Trading Pty Ltd and ors (Optiver),[22] a decision of the Full Federal Court overturning a trial judge's refusal of preliminary discover; and AFL, in which Warren CJ granted preliminary discovery notwithstanding some factors militating against it.

53 In Optiver, the trial judge had refused the application on the basis that the applicant already had enough information to 'to meet the threshold of a bare pleadable case'. The Full Court held that this was the wrong test to apply (the Federal Court rule is in equivalent terms to the Rule). The Full Court noted with approval previous authority to the effect that 'an order may be made in favour of an applicant who already has available evidence establishing a prima facie case for the granting of relief'.[23] The Court noted that the test under the Federal Court equivalent of the Rule is whether the applicant has sufficient information to decide 'whether to commence proceedings', not to plead a case. The policy behind the rule is that 'even where there is reasonable cause to believe that a person may have a right to relief, nevertheless that person may need information to know whether the cost and risk of litigation is worthwhile'.[24] The Court gave some examples of where preliminary discovery may be appropriate, notwithstanding that the applicant already has enough information to plead its case as follows (extracted without citations):

A case may be pleadable, and not merely barely so, even if the evidence supporting the pleaded case is dubious, or vulnerable to contradiction. Section 165 of the Evidence Act 1995 (Cth), although concerned with jury trials, provides some examples of categories of evidence which experience has shown to be likely to be unreliable: hearsay, identification evidence, evidence of witnesses affected by age, ill health or injury, evidence of prison informers, etc etc. Quite apart from these categories, the pleader may have evidence of a reputable person which sufficiently supports the pleaded cause of action but, to the pleader's knowledge, there may be equally reputable witnesses who will swear to the contrary. Or there may be a perfectly good plaintiff's pleadable case but potential defences, such as under a contractual provision or problematic or unpredictable issues such as waiver, estoppel or unconscionable conduct. Or there may be real uncertainty as to the quantum of provable damage, such as to throw doubt on the practical wisdom of issuing proceedings. (See, for example, Hughes Aircraft Systems International v Civil Aviation Authority (1995) 217 ALR 303 at 307-308; Western Bulk Carriers (Australia) Pty Ltd v Cosco Bulk Carrier Co Ltd [2002] FCA 1520 at [15]-[22]; Minister for Health and Aged Care v Harrington Associates Ltd [1999] FCA 549.)[25]

54 In AFL, Warren CJ considered Optiver, amongst other authority. The seventh respondent relies in particular on the following paragraphs from her judgment (extracted without citations):

The fact that an applicant feels unable to decide to commence a proceeding because of a lack of information is not sufficient on its own for the purposes of the rule. In this regard, (the respondent in that case) relied on the authorities to submit that the rule cannot be used to obtain material to verify a cause of action which the applicant already knows it has, to verify that belief, or otherwise to ascertain the strength of the case for the right to relief. If the evidence went so far as to show that a particular applicant was already able to decide to commence a proceeding, subparagraph (b) of the rule would not be satisfied. Therefore, the question posed by subparagraph (b) is whether the applicant, as an objective fact, has sufficient information to make a decision whether to commence proceedings.

In Beston, Hollingworth J adopted and applied the decision in Alphapharm. In that case, Lindgren J applied a test of 'reasonable sufficiency' in which the court examines whether it is reasonable for an applicant to be required to make a decision without having the information that would become available from the document or documents of which discovery is sought. Lindgren J observed that this question is to be answered in light of the nature of the cause of action contemplated and the range of information potentially available in respect of a cause of action of that kind.[26]

55 In the course of argument, I queried whether there was an inconsistency between the assertion in the portion of AFL quoted above that preliminary discovery is not available to 'ascertain the strength of the case for relief' and the examples given by the Full Court in Optiver, as earlier quoted, as to when it might be available, which include ascertaining potential defences or contradictory evidence. On analysis, I do not consider there is any necessary tension of principle. Any apparent tension is explicable because the outcome in any particular case will depend very much on the facts of that case.

56 Where the requirements of the Rule are made out, then ordinarily the discretion will be exercised in favour of the grant of preliminary discovery. The discretion will not automatically be exercised in favour of the applicant, however, especially where the applicant does not have a strong case.[27]

57 The applicant filed his application by originating motion and summons on 15 February 2018. In those documents, and also in the affidavit of Mr Cash in support, and in his written submissions, the applicant sought multiple documents from the respondents collectively without attributing particular rights of relief or particular categories of documents to particular respondents.

58 This deficiency was identified in the submissions of the respondents filed in advance of the hearing and on the day of the hearing the applicant sought to meet it by relying on an amended schedule (Amended Schedule). The documents sought by the Amended Schedule are particularised as against particular respondents, being the seventh respondent, the first to sixth respondents, and the third respondent. Senior counsel for the applicant at the hearing also identified potential rights to relief against particular respondents. I was informed by counsel for the first to sixth respondents that they had not before the morning of the hearing been notified of this change to the applicant's case, but no respondent objected to it or sought adjournment.

59 The applicant further amended the documents sought after the luncheon adjournment, while still in the course of his submissions, to more clearly delimit some categories of documents sought.[28] At the conclusion of the hearing, I granted leave to the applicant to further particularise the documents sought by Category 6 by reference to defined terms in the agreements. I did so despite the very late stage for amendment, because I considered that there would be limited prejudice to the first to sixth respondents given that the particularisation would be by reference to defined terms. I also permitted the first to sixth respondents to make further written submissions in opposition to Category 6, which they did. A copy of the final schedule of documents sought (Further Amended Schedule) is attached to these reasons.

60 The applicant seeks as against the seventh respondent four categories of documents in the Further Amended Schedule, which in broad terms relate to:

(i) Records or evidence of payments made in satisfaction of the seventh respondent's obligation to pay the first to third instalments pursuant to the Heads of Agreement or Transaction Agreement;

(ii) Transfers of shares or units to the seventh respondent pursuant to the Heads of Agreement or Transaction Agreement;

(iii) Any transaction pursuant to the Heads of Agreement or Transaction Agreement by which the seventh respondent received an entitlement or an asset; and

(iv) The meeting the applicant deposes he attended at the offices of B2B Lawyers in or about September 2015 at which he asked that Kuaiyiju be nominated as the party for he and Mr Qin under the Heads of Agreement.

61 The applicant seeks four categories of documents as against the first to sixth respondents, which in broad terms relate to:

(i) Execution of the Transaction Agreement by the seventh respondent;

(ii) The terms of further documents to be created pursuant to the Heads of Agreement or Transaction Agreement;

(iii) Any further agreements supplementing, varying, or implementing the Heads of Agreement or Transaction Agreement; and

(iv) Records or evidence of payments made in satisfaction of the seventh respondent's obligation to pay the first to third instalments under the Heads of Agreement or Transaction Agreement.

62 In addition, the applicant seeks a further category of documents from the third respondent, Mr Michael Argyrou, being documents which record or evidence that the third instalment to be paid by the seventh respondent pursuant to the Heads of Agreement or Transaction Agreement was due to be paid by 17 October 2015.

63 The respondents flagged a potential application for security for their respective costs of the application at an early stage. The parties were able to agree on the payment of security, and consent orders were made on 29 March 2018 for the provision by Mr Ma of $40,000 as security for the first to sixth respondents' costs, up to and including the date of hearing of the application, and $45,000 as security for the seventh respondent's costs up to and including the hearing of the application.

64 The applicant's case as put in oral submissions was significantly further developed than his case as exposed to that date. For that reason, the applicant's, and aspects of the respondents', written submissions prior to the hearing are of limited utility, and what I set out below is drawn principally from the arguments as put.

65 Mr Qin is the sole director, secretary and shareholder of the seventh respondent. The seventh respondent does not take any issue in this proceeding in relation to the difference between Mr Qin and his corporate alter ego, the seventh respondent.[29] Nor does the seventh respondent put in issue satisfaction by the applicant of paragraph (a) of the Rule - and indeed its submissions assume satisfaction of that requirement.[30] In other words, the seventh respondent does not dispute that the applicant may have a right to obtain relief against it. Nevertheless, it is appropriate to consider the potential rights to relief identified by the applicant as against the seventh respondent, as the applicant must satisfy the Court that the requirement is satisfied.

66 The applicant identifies three potential causes of action by which he may have a right to obtain relief against the seventh respondent. The first is that by paying the $15 million to the Hickory Parties, Mr Ma satisfied the obligations of the seventh respondent pursuant to the Transaction Agreement, as a consequence of which the seventh respondent has received benefit, and Mr Ma has received no benefit. The applicant submits that in these circumstances, the seventh respondent arguably holds the benefit it received on resulting trust for Mr Ma, or at least that portion that should have been his pursuant to his agreement with Mr Qin.[31]

67 The applicant identifies as an alternative potential right to relief accessorial liability to a dishonest and fraudulent breach of fiduciary duty by Mr Qin in obtaining for himself the sole benefit of the $15 million paid by Mr Ma. The applicant submits that Mr Qin owed him a fiduciary duty by virtue of the agreement between them to establish a joint venture and that Mr Qin breached that fiduciary duty by taking the benefit of the applicant's financial contribution solely for himself.[32] As Mr Qin is the sole shareholder and director of the seventh respondent, the seventh respondent had knowledge of this breach of fiduciary duty.

68 If these potential causes of action were to fail, the applicant submits that he has a default potential right to relief on the basis that the payments must have been by way of loan, because there is no evidence they were to be gifts.[33]

Insufficient information: r 32.05(b) and documents sought will assist: r 32.05(c)

69 In its oral submissions, the seventh respondent opposed the application on two bases only - the second limb of paragraph (b) of the Rule (sufficient information), and paragraph (c) (reasonable cause to believe that inspection of the documents sought would assist the applicant to make the decision whether or not to commence a proceeding).

70 The seventh respondent contends that the applicant already has sufficient information to make the decision whether or not to sue, and the documents sought will not assist him in that regard.

Documents sought from the first to sixth respondents

71 The applicant contends that he may have a right to obtain relief against the first to sixth respondents on the basis that he has paid $15 million to them pursuant to the Heads of Agreement and the Transaction Agreement (if executed) yet that agreement is, or those agreements are, void for uncertainty or lack of completeness. This right to relief would be based in restitution.[34]

72 Senior counsel for the applicant took me to various aspects of both the Heads of Agreement and the Transaction Agreement to make this argument good. I will consider this submission in more detail shortly, but in summary, and assuming the Transaction Agreement was executed by the Qin parties, the submission was that it provided for a number of critical implementation agreements to be subsequently agreed. If they were not so agreed, then, the applicant contends, the Transaction Agreement is invalid for incompleteness or uncertainty.

73 The applicant also submits that the first to sixth respondents would be necessary parties in relation to any action he may bring against the seventh respondent and that a declaration may be sought against them in any such action. He concedes, however, that if that is the only relief that he may be able to seek against the first to sixth respondents it could not be a basis for the documents he seeks from them in this application.[35]

74 The first to sixth respondents do not quarrel with the theoretical availability to the applicant of a right to relief against them if their agreement with the seventh respondent is invalid for incompleteness or invalidity. What they do say, however, is that the applicant would not succeed in obtaining any such relief on the merits, for the following reasons.

75 First, the first to sixth respondents rely on the entire agreement clauses within the Transaction Agreement (clause 12.10) and Heads of Agreement. In the alternative, they submit that to the extent there is any portion of the Transaction Agreement that is void for uncertainty or incompleteness, then the balance of the Transaction Agreement, including the obligations as to payment, is saved by its severability clause, clause 12.4. Further, they contend that any argument about what has transpired subsequent to the entry into the agreement is a dispute about performance or frustration, which would not be available to a nonparty to the agreement.[36]

76 In relation to the requirements of paragraph (b) of the Rule, the first to six respondents do not take any point about reasonable enquiries.[37]

Sufficient information to make decision and documents that would assist: r 32.05(b) second limb and r 32.05(c)

77 They do, however, contend that the applicant already has sufficient information to determine whether or not to commence a proceeding to obtain any relief that may be available to him by virtue of the agreement between themselves and the seventh respondent being void for uncertainty or lack of completeness. They say this is the case because that argument turns solely on the construction of the relevant contracts and does not require any supplementation by any other material.

78 The first to sixth respondents contend that the applicant has not satisfied paragraph (c) of the Rule for the same reason. They submit that inspection of documents recording what may or may not have eventuated following entry into the agreements between them and the seventh respondent cannot assist the applicant to make the decision whether or not to commence a proceeding against them because information relating to events after entry into the agreement is irrelevant to the validity of the agreements.

79 The applicant contends that he has an additional potential right of relief against the third respondent, Mr Michael Argyrou. This potential right to obtain relief is confined to the third payment made by the applicant in the sum of $5 million made by Mr Ma to the third respondent's personal bank account on 20 October 2015. Mr Ma says that he made this payment on the basis of a representation made by the third respondent that the payment was due and needed to be paid and that if it was not paid the first to sixth respondents had 'many other potential cooperation partners in China'.[38] The applicant contends that this representation was false and misleading because under clause 4.5(e) of the Heads of Agreement the third payment was not in fact due.[39] Further he says that he relied upon it to his detriment, and accordingly has suffered loss.

80 The third respondent accepts that Mr Michael Argryou said words to this effect; that Mr Ma then made this payment; and that clause 4.5(e) of the Heads of Agreement is the relevant clause. The third respondent does dispute that the payment was not yet due under that clause.[40] The third respondent also disputes that Mr Ma relied on the representation, and submits that this would be the critical issue in any claim based on the representation.

Reasonable enquiries and insufficient information: r 32.05(b)

81 The third respondent does not make any point about reasonable enquiries, but submits that Mr Ma already has sufficient information to determine whether to commence proceedings against him based on this representation, because the real contest is reliance, and no document in the possession of the third respondent can assist the applicant on that issue.

Documents in possession relating to right to relief: r 32.05(c)

82 The third respondent repeats his submission that no document in his possession can assist the applicant on the question of reliance.[41]

83 No respondent made any submissions in relation to the exercise of discretion against the applicant, if I am satisfied in respect of any category of documents sought that the requirements of the Rule are satisfied.

84 As noted earlier, the seventh respondent does not dispute that the applicant may have a right to relief against it. I agree that the applicant has shown facts that may reasonably give a right to obtain such relief either by way of resulting or constructive trust, or accessorial liability for breach of Mr Qin's fiduciary duty. Accordingly, I consider that the applicant has satisfied r 32.05(a) in respect of its application against the seventh respondent.

85 I do not, however, accept that the facts reasonably support a potential right to relief based on the payments being a loan. There is no evidence to show that this was Mr Ma's intention, and his evidence is entirely to the contrary. On his evidence he intended to invest in a joint venture with Mr Qin, not lend him money.

86 The seventh respondent does not take any point in its oral submissions about the first limb of paragraph (b), reasonable enquiries. It did not respond at all to the request for documents made by Mr Cash by letter dated 20 December 2017, prior to issue of the proceeding, and there is no evidence of any subsequent response. I am satisfied that any further request would have been futile, and accordingly that the applicant has satisfied the first limb of paragraph (b).

87 The real issues turn on the second limb of paragraph (b) and satisfaction of paragraph (c).

88 The seventh respondent contends that the applicant already has sufficient information to know whether or not to commence a proceeding against the seventh respondent deriving from the proposed joint venture between Mr Ma and Mr Qin because he already knows the key facts that could ground it. The seventh respondent identifies these key facts as follows:

(i) The agreement with Mr Qin - on Mr Ma's evidence, this agreement was oral and he does not identify any document likely to be in the possession of the seventh respondent that would further identify or illuminate this agreement;

(ii) The payments made by Mr Ma - the Hickory Parties agree that these were received by them, and were made by Mr Ma;

(iii) The benefits received by the seventh respondent as a consequence.[42]

89 The applicant does not disagree in reply with this characterisation of the key facts. Counsel for the applicant in their oral submissions in chief and in reply address the third, and to a lesser extent, the second of these elements. The documents sought by Category 1 of the Further Amended Schedule relate to the payments, and the documents sought by Categories 2 and 3 to the benefits received by the seventh respondent in return for the first and second payments. The applicant submits that he has insufficient information in relation to what the seventh respondent received (ie. what would be the subject of a trust claim) and the value of those assets.[43]

90 I will first discuss Categories 2 and 3. It is plain on Mr Ma's evidence and the oral submissions of his senior counsel that he already knows that the seventh respondent has received a transfer of shares and units in consideration of the payments.[44] Indeed, he deposes that he has in his possession various documents to this effect, and he exhibits them.[45] These documents are:

• unit certificates, unit transfers and resolutions in respect of the allotment of units in the SMATA Unit Trust to the seventh respondent,

• statements in respect of the registration of a security interest by Mr Qin over units in the SMATA Unit Trust, and

• a share certificate certifying that the seventh respondent is the registered holder of certain shares in the first respondent.

91 The applicant's senior counsel submits that '(t)here may be other transactions that have been entered into as a result of which the seventh respondent has obtained rights or property in the nature of shares or units pursuant to the Transaction Agreement or any agreements that supplement, vary or add to it' (emphasis added).[46] The applicant seeks the second and third categories of documents in the Further Amended Schedule to ascertain the extent of the benefit received by the seventh respondent.[47]

92 I accept that preliminary discovery can be sought to ascertain the extent of a respondent's breach and the quantum of likely recovery.[48] However, the tests as to whether or not the applicant has sufficient information to decide whether or not to commence a proceeding, and whether the respondent has documents that will assist in that regard, are objective. This requires two things: an evidentiary foundation for the relevant assertions and an evidentiary foundation that is more than subjective or speculative. The seventh respondent submits that the agreements between the Hickory Parties and the seventh respondent do not provide for any further benefits.[49] Counsel for the applicant did not dispute this statement in reply, and neither counsel for the applicant (senior counsel in chief, or junior counsel in reply) have taken me to any evidence to support the applicant's contention that the seventh respondent may have received more than the applicant already knows. The submission by the applicant is thus speculative, and with no identified evidentiary foundation.

93 Further, there is evidence to the contrary. Ms Kiosses in her affidavit deposes that 'In performance of their obligations under the Heads of Agreement, as amended by the Transaction Agreement, the Hickory Parties have (done certain things)'.[50] The identified actions are transfer of shares in the first respondent to the seventh respondent; causing the unitholders of the SMATA Unit Trust to enter into the agreement that Mr Ma exhibits; and sending employees to China to assist with the design and planning of the China factory. Ms Kiosses does not depose expressly that these are the only benefits received by the seventh respondent, or supplied by the Hickory Parties in consideration of the payments, but it is for the applicant to establish a reasonable foundation for believing that they are not, or may not be. The applicant has failed to do so. The only point made by counsel for the applicant in reply is that the applicant only knows certain things by virtue of the Kiosses Affidavit. That may be relevant to costs and the commencement of the proceeding, but it does not justify continuance of the application in relation to the documents sought in Categories 2 and 3 of the Further Amended Schedule.

94 For these reasons, I refuse the application for documents sought in Categories 2 and 3 of the Further Amended Schedule.

95 Category 1 of the Further Amended Schedule seeks documents evidencing or recording the payments made in satisfaction of the seventh respondent's obligations. The applicant seeks these documents to ascertain how the seventh respondent has recorded the payments made, in particular to see if there is any admission of a debt or some equity held by Mr Ma.[51] The seventh respondent submits that this goes only to the strength of the applicant's potential case, and on the authority of AFL this is not a permitted basis for preliminary discovery. The seventh respondent submits that as the payments are admitted to have been made by Mr Ma, and received by the Hickory Parties, how they were recorded by the seventh respondent is not relevant to the applicant's potential right to relief.[52]

96 The applicant has not identified any basis on which the documents in Category 1 are reasonably required to assist in a decision as to whether or not to sue the seventh respondent, other than the advantage of a possible admission as to the character of the payment. In other words, the documents are sought to see if the case of which the applicant is already aware is even stronger than he currently knows.

97 Certainly, the strength of the applicant's case is a factor that goes to the 'cost and risk of litigation' in the Optiver sense. There is no bright line between when preliminary discovery will be ordered notwithstanding the applicant already being aware of facts going to all elements of his proposed cause of action, and when it will not. However, in my assessment, documents sought to ascertain any admission is beyond what is reasonably required for the applicant in this case to decide whether to commence a proceeding against the seventh respondent for his proposed causes of action. It is distinguishable, for example, from preliminary discovery to ascertain any potential defence, as was the case in Optiver. I accept the submission of the seventh respondent that seeking to identify if there is further support for a potential right to relief by way of an admission in the records of the respondent is not a basis for preliminary discovery, when the essential facts supporting the right to relief are known. For these reasons, I refuse the application in relation to Category 1 of the documents sought in the Further Amended Schedule.

98 Category 4 relates to the meeting between Mr Ma and B2B Lawyers. The applicant has not identified why these documents in particular are required to assist him in making a decision whether or not to commence a proceeding against the seventh respondent. Indeed, his counsel do not specifically address this category at all in either their written or oral submissions, and nor does Mr Ma in his evidence. I accept the submission of the seventh respondent that it is not enough for the applicant to make the general assertions of principle at paragraph 12 of his written submissions. The applicant must show how the principles support the request for each category of documents sought. The applicant has failed to do so, with the exception of the final sentence of paragraph 18 of the written submissions (which relates to Categories 2 and 3) and his oral submissions relating to Categories 1, 2 and 3. For these reasons, I refuse the application as it relates to Category 4 of the Further Amended Schedule.

99 It follows that the application fails entirely as against the seventh respondent.

Documents sought from first to sixth respondents (the Hickory Parties)

100 The nub of the opposition by the Hickory Parties to the application against them is their assertion that whether the Transaction Agreement is potentially void by reason of being incomplete or uncertain turns on its terms alone. For this reason, so the Hickory Parties contend, the applicant has not shown that he has insufficient information to determine whether or not to commence a proceeding against them, because he now has the Transaction Agreement.

101 For similar reasons the Hickory Parties contend that the applicant has not shown that any of the documents sought are reasonably required to assist him to make that decision. They submit that documents created after the Transaction Agreement can only be relevant to frustration or performance/breach, not validity, and as Mr Ma is not a party to the Transaction Agreement he would have no standing to prosecute a claim for breach or frustration. They also rely on the entire agreement clause that is clause 12.10 in the Transaction Agreement to submit that the subsequently created documents the applicant seeks cannot be relevant to a claim that the Transaction Agreement is void for incompleteness, and for that reason the applicant does not satisfy paragraph (c) of the Rule.

102 The Hickory Parties also submit that the applicant would fail on the merits in the proposed claim. They rely on the severability provision, clause 12.4 in the Transaction Agreement, and similar provision in the Heads of Agreement, in this regard.

103 The severability provision may well be critical if a proceeding is subsequently commenced. I do not, however, consider it relevant to satisfaction of the requirements of the Rule. The applicant does not have to show that he would succeed in his proposed claim for relief, and indeed the Rule is premised on the inability to be so certain. It is only if the prospects of success are so limited that the applicant has failed to show facts that reasonably support a potential right to relief, or in relation to the exercise of the discretion against the applicant, that merits are relevant. I do not consider this to be the case in relation to the requirements of paragraph (a) of the Rule. Whether the applicant's proposed claim would survive the severability provisions in the agreements is a matter for trial. Further, the first to sixth respondents have not put the argument in relation to right to relief, or as a reason for exercising the discretion against the applicant.

104 Counsel for the first to sixth respondents put these submissions in opposition to all the categories of documents sought against the Hickory Parties. On analysis, however, they relate most clearly to the documents sought by Categories 6 and 7. I will deal first with Categories 5 and 8 of the Further Amended Schedule.

105 Category 5 of the Further Amended Schedule seeks documents to show that the Transaction Agreement was executed by the seventh respondent and was received as so executed by the Hickory Parties. The copy of the Transaction Agreement exhibited by Ms Kiosses is executed by the Hickory Parties only. The Hickory Parties do not dispute that if they did not receive a counterpart of the Transaction Agreement executed by the seventh respondent then the applicant may have a right to relief for payments made by him that were dealt with as paid by the seventh respondent pursuant to that Agreement.

106 It emerged in the hearing that the applicant did not seek a copy of the Transaction Agreement executed by Mr Qin or the seventh respondent after he received Ms Kiosses' affidavit, from either the Hickory Parties or the seventh respondent directly. However, the Hickory Parties do not take this point. Nor can their submission about subsequently created documents relate to execution of the Transaction Agreement itself. I consider that documents to show receipt by the Hickory Parties of a copy of the Transaction Agreement executed by the seventh respondent are reasonably required to assist the applicant to decide whether or not to bring a proceeding against the Hickory Parties for invalidity. The applicant has satisfied the requirements of the Rule in relation to Category 5.

107 The documents identified in Category 8 are sought to identify which of the Hickory Parties has the obligation to reimburse the payments made by Mr Ma. I consider that these are reasonably required to assist Mr Ma in deciding which of the Hickory Parties to sue in respect of them. The evidence on that issue is inconclusive, and it is plainly critical to any suit.

108 Mr Ma has two receipts for the payments. The first receipt, for the first two payments, is on letterhead of the first respondent and so on its face suggests receipt by the first respondent alone.[53] However, the second receipt, in respect of the third payment, while also on the letterhead of the first respondent uses the plural to refer to the party or parties acknowledging receipt.[54] Further, the first respondent was not the only Hickory party to the Transaction Agreement; Mr Ma paid the first two instalments to accounts as directed by Mr Qin, not to Hickory accounts; and he paid the third instalment to Michael Argyrou's personal account.

109 The uncertainty is not clarified by the evidence for the Hickory Parties. Ms Kiosses does not identify which of the first to sixth respondents has received the payments, deposing only that the Hickory Parties collectively have received them.[55]

110 The applicant has satisfied the requirements of the Rule for Category 8.

111 Categories 6 and 7 of the Further Amended Schedule seek documents that 'record or evidence' certain documents defined in the Heads of Agreement, as varied by the Transaction Agreement. These documents are the 'Business & Marketing Plan' and the 'Transactional Documents'.

112 'Business & Marketing Plan' is defined in the Heads of Agreement, as varied by the Transaction Agreement, as follows:

Means the business and marketing plans containing the key elements the parties deem necessary based on the Transaction Agreement and which upon agreement be deemed incorporated in the Transaction Agreement.[56]

113 In other words, by the Transaction Agreement, the parties to it agreed to subsequently agree on certain plans, which would then be deemed retrospectively incorporated into the Transaction Agreement. By this first request under Category 6, the applicant seeks documents to identify if this occurred.

114 The defined term 'Business & Marketing Plan' in the Transaction Agreement replaces the defined term 'Business Plans' which previously appeared in the Heads of Agreement at clause 4.4(c), and which referenced a specific, although not exhaustive, list of matters to be agreed. This change was noted in Clause 3.4 of the Transaction Agreement which provides:

The parties agree that the Business Plans shall be varied and shall now comprise of [sic] the Business & Marketing Plan to be agreed by parties and when so agreed, deemed to be inserted into this Transaction Agreement as Schedule 2 and upon agreement and deemed insertion, to be read as an integral part of this Transaction Agreement.

In the event that the Business and Marketing Plan is not agreed within ninety (90) days of this Transaction Agreement, then either party can nominate an independent accountant to prepare the Business and Marketing Plan which will be binding on the parties. The parties agree to provide such information and documentation as may be required by the independent accountant in order for the Business and Marketing Plan to be concluded.[57]

115 The copy of the Transaction Agreement exhibited by Ms Kiosses contains a Schedule 2. It contains two items, headed respectively 'Business Plan - Agreed Corporate Structures' and 'Business & Marketing Plan'. The first contains five sub-items headed 'Proposed Corporate Structure', 'Details of SMATA', 'Details of Australia Co', 'Details of China Co' and 'Details of China IP Co'. The name and ACN of Australia Co; the name and identifier of China Co; and the name, identifier, place of incorporation, type of entity and address of China IP Co are all noted in their respective sub-items as 'to be confirmed'.

116 The second item in Schedule 2, headed 'Business & Marketing Plan' contains these words only:

To be inserted by parties upon agreement.

The parties agree that the detailed items set out in Clause 4.4(c)(1)(i)-(x) of the Heads of Agreement and Project Step No. 2D(ii)(iv) and (v) in the Payment Schedule shall be modified as agreed by parties and that the Business & Marketing Plan to be inserted here will be in substitution of the same.[58]

117 The applicant submits that the Transaction Agreement makes it plain that the Business & Marketing Plan was not then agreed, but that if there are documents that establish that plans were subsequently agreed, or drawn by the independent accountant and accepted, then they may have completed the Agreement or made it certain.[59]

118 The term 'Transactional Documents', which grounds the second request contained in Category 6, is in turn defined in the Heads of Agreement, as varied by the Transaction Agreement, to comprise the 'key elements' of eleven particular agreements set out in Schedule 3 to the Transaction Agreement as follows:

Transactional Documents

Means the key elements of each of the following documents set out in Schedule 3 of the Transaction Agreemnet [sic]:

(a) HBS Indemnity Agreement;

(b) China Co Indemnity Agreement;

(c) Interim HBS (Formerly UBA) and SYNC Shareholder Agreement;

(d) Australian Co Shareholders Agreement;

(e) China Co Shareholders Agreement;

(f) SMATA Unit Holder Agreement;

(g) SMATA Licence to China IP Co;

(h) SMATA Licence to Australian Co;

(i) Transfer of Modular Technology to SMATA;

(j) Rollover Agreement;

(k) Michael Argyrou Service Agreement.[60]

119 Schedule 3 to the Transaction Agreement contains eleven items, reflecting this list, but only ten agreements. The agreement not included is the Michael Argyrou Service Agreement. Schedule 3.11 to the Transaction Agreement states in respect of that document 'Details to be confirmed by parties prior to payment of Instalment No. 4'.[61]

120 The Transaction Agreement varied the definition of 'Transactional Documents' as it had earlier appeared in the Heads of Agreement in a number of respects, including by the insertion of additional agreements and the deletion of some others. Clause 4.4(c)(2) of the Transaction Agreement states:

The parties agree that the full versions of Transaction Agreements are not required and that each of the following Transaction Agreements shall be sufficiently documented by the key principles as set out in Schedule 3 to the Transaction Agreement.[62]

121 The Transaction Agreements there listed are ten of the eleven agreements set out in Schedule 3. The only agreement listed in Schedule 3 not listed in Clause 4.4(c)(2) is the SMATA Licence to Australia Co.

122 The applicant submits that he reasonably requires discovery of the documents sought by Categories 6 and 7 to assist him to decide whether to commence a proceeding for restitution based on invalidity of the Transaction Agreement (assuming it to be executed by the seventh respondent) for uncertainty or incompleteness. Senior counsel for the applicant in his oral submissions referred to two of the Transactional Documents identified in Schedule 3 as examples of potential uncertainty or incompleteness of the Transaction Agreement.

123 The first is the Rollover Agreement.[63] The purpose of this Agreement is identified in the final paragraph in the cell headed 'Background'. It was to roll over the 'Assets', which are defined to include goodwill, plant and equipment, stock, contracts and work in progress, 'Permitted Debt' and existing business of the first and fifth respondents into 'Australia Co'. Pursuant to Transactional Document 3.4 the shareholders of 'Australia Co' were to be the second respondent or related entity as to 80% and the seventh respondent or related entity as to 20%, subject to adjustment as to the value of China Co. I accept the submission of the applicant that for this reason, the Rollover Agreement was a critical component of the joint venture between Hickory and Mr Qin. The applicant submits that the Rollover Agreement as set out in the Transaction Agreement is uncertain because it is dependent on a number of conditions precedent, there set out, some of which were beyond the control of the parties to the Transaction Agreement, yet it does not provide for what is to occur if they are not satisfied.[64]

124 The second Transactional Agreement to which counsel for the applicant refers is the Michael Argyrou Service Agreement.[65] Self-evidently, the terms of this agreement are not agreed in the Transaction Agreement. The applicant seeks discovery of documents that may record or evidence a subsequent agreement that makes this aspect of the Transaction Agreement certain and complete.

125 As noted earlier, the Hickory Parties make the global submission that validity must be determined on the basis of the Transaction Agreement itself, not by consideration of any subsequent development. They further rely on the entire agreement clause in support of this argument. The submission is initially attractive, not least because of its simplicity. However, it glosses over the inbuilt incompleteness of the Transaction Agreement as exhibited. The Hickory Parties have not addressed the particular examples given by the applicant of matters expressly to be subsequently agreed or dependent on later events, or other examples which emerge from my analysis. The Transaction Agreement expressly contemplates that it will later include certain matters once they are agreed. In my view, the applicant has shown that he reasonably requires discovery of any such subsequent agreements to assist him to decide whether or not to commence a proceeding based on incompleteness or uncertainty of the Transaction Agreement. This is particularly the case given the high bar which must be satisfied to succeed in such a claim, as helpfully identified by the Hickory Parties in their oral submissions.[66] By way of completeness, I consider the effect of the entire agreement clause is a matter to be considered at trial. It may be that on its proper construction it cannot exclude subsequent agreements that the Transaction Agreement expressly provides are to form part of it.

126 In their permitted supplementary written submissions, the Hickory Parties repeat this submission that none of the documents sought by Category 6 are necessary or relevant to the question whether the Heads of Agreement or Transaction Agreement is void for incompleteness or uncertainty. They add that the applicant already has ten of the eleven 'Transactional Documents' that ground the request in Category 6(ii) because the definition identifies them as the 'key elements' of the ten agreements that appear in Schedule 3 to the Transaction Agreement. This submission glosses over the fact that some at least of those included Transactional Documents are themselves incomplete or uncertain on their face.

127 In relation to the Michael Argyrou Service Agreement, the Hickory Parties submit that as Instalment No 4 has not been reached, 'there is no reasonable basis to believe that this document is in the first to sixth respondents' possession (or in existence), as required under rule 32.05(c)' (emphasis added). [67] This submission misstates the test under that paragraph. The test extends to include reasonable cause to believe that the document 'is likely' to be, or to have been, in the respondent's possession.

128 The agreed position in the Transaction Agreement in relation to the Michael Argyrou Service Agreement was that it would be agreed at some point prior to Instalment 4. On its face, this could be at any time from the date of the Transaction Agreement itself, October 2014, although a fair inference may be that it was unlikely to be until after payment of Instalment 3. On the Hickory Parties' current case, Instalment 3 could have been due in October 2015, when it was in fact paid. There is no clear evidence as to the stage reached when work pursuant to the Transaction Agreement ceased more than a year later in November 2015. It is entirely possible given this lapse in time, and the absence of evidence as to the stage reached, that the Service Agreement had been prepared by this date. In these circumstances, I consider that the applicant has satisfied the requirements of paragraph (c).

129 For these reasons, the applicant has satisfied the requirements of the Rule for Categories 6 and 7 of the Further Amended Schedule.

130 The sole category of documents sought from the third respondent is Category 9 of the Further Amended Schedule. Category 9 seeks documents evidencing that the third instalment was due to be paid by 17 October 2015 (emphasis added). In other words, this Category seeks to ensure that there is no other document recording an agreement or variation by which the third instalment has become due by 17 October 2015.[68] If there was such a document, then Mr Michael Argryou may have a total defence to the applicant's proposed claim, because that claim is premised on Mr Michael Argryou's representation that the instalment was so due being false. On the authority of Optiver, identifying a possible total defence is a permitted basis on which to seek preliminary discovery.

131 The third respondent disputes that the representation was false, and says there is no evidentiary foundation in the applicant's case to support his contention that the representation was false, or that he requires the documents identified in Category 9 to decide whether or not to commence a proceeding against the third respondent.[69] Further, the third respondent says the real issue in the proposed claim would be reliance, and the Category 9 documents would not assist in that regard.

132 I accept that Mr Ma does not dispute in his evidence that the payment was due. The terms of the Heads of Agreement, which in relation to payment of the third instalment was not altered by the Transaction Agreement, do, however, provide an arguable foundation for the contention that the payment was not due, and so the representation false. I consider the applicant reasonably requires the documents sought by Category 9 to make a decision whether or not to commence a proceeding that would require proof that the instalment was not due for two reasons. First, the first to sixth respondents dispute it. Secondly, whether or not the third instalment was due depends on facts that cannot be ascertained purely by examination of the relevant clause in the Heads of Agreement, which in this respect was not altered by the Transaction Agreement.

133 Clauses 4.5 (e) and (j) of the Heads of Agreement provide:

(e) Instalment No. 3

The parties agree that Instalment No. 3 shall be paid as follow:

Where in this section -

(1) $1.25M paid after Hickory personnel has arrived in China and the services and training as set out in clause 4.5(a)(1)- (1) has commenced and deemed satisfactory;

(2) $1.25M paid upon Completion of Fixing Stage;

(3) $2.5M paid upon completion of Commissioning Stage.

Where in this section -

"Fixing Stage" means the stage when the first manufacturing line is completed, installed and affixed into position in the China Factory.

"Commissioning Stage" means the stage when the first manufacturing line is fully commissioned whereby all operational components of the first manufacturing line has been checked, inspected and tested to effect the safe and orderly handover of the China Factory and its operations from Hickory to Qin, with full guarantees of the China Factory's operability in terms of performance, reliability, safety and information traceability with China Modular Box No. 1 Rollout.

(j) Payment of Instalment Payment No. 3

For the avoidance of doubt, China Modular Box No. 1 Rollout is required to trigger the last payment of Instalment Payment No. 3.

134 The applicant and third respondent agree that some work was undertaken at the China Factory, and that work ceased in November 2015.[70] Counsel for the applicant contends that the instalment was not due because the Factory had not been completed, commissioned and produced one of the modules.[71] In my view this submission goes too far. The evidence does not clearly establish what stage was reached before work stopped, and in particular whether the stages required by clauses 4.5(e) and (j) had been arrived at by October 2015. However, it is not necessary in this application for the applicant to show that they had not; merely that it is possible that they, or all of them, had not, and that he reasonably requires the documents sought in relation to that issue to assist him in deciding whether or not to commence the proposed proceeding. I consider that he has done so.

135 It may be that, as the third respondent submits, the real issue in such a proceeding would be reliance. That submission in this application is, however, a distraction. If the third respondent agreed, or did not dispute that the representation was false, then there may be no basis for preliminary discovery of the Category 9 documents. But he does dispute it; it is a necessary element of the proposed proceeding; the documents sought go directly to it; and the third respondent does not identify any other source by which the applicant can ascertain whether or not the third respondent has a good defence on this issue.

136 For these reasons, the applicant has satisfied the requirements of the Rule for Category 9.

137 The applicant has satisfied the requirements of the Rule for Categories 5-8 as against the first to sixth respondents, and discovery of Category 9 as against the third respondent. Those respondents did not make any submission that nevertheless the discretion to make the order for discovery should be exercised against the applicant, and I do not consider any such basis is shown. I will order discovery by the first to sixth respondents of those Categories.

138 The applicant has not satisfied the requirements of the Rule in respect of the discovery sought of the seventh respondent. I refuse discovery of Categories 1-4 as against the seventh respondent.

139 I ask the parties to prepare orders to give effect to these reasons. Those orders will include at least a timetable for discovery and costs orders relating to the application and costs of compliance, if required. The proposed costs orders should make appropriate provision for the security for the respondents' costs provided by the applicant.

140 In relation to the costs of the application, I make the preliminary observation that although the applicant has been successful against the first to sixth, and third, respondents, he was successful on a case that only emerged on the day of hearing. It may be that in these circumstances he should not recover his costs of the application, or all of those costs, against those respondents. This is, of course, a preliminary observation and is subject to further submissions and any further evidence in relation to costs if the parties cannot agree.

1. All documents which evidence or record payments made in satisfaction of the seventh respondent's obligation to pay the first to third instalments pursuant to the Heads of Agreement which is at pages 1 to 60 of Exhibit MH-1 to the affidavit of Ma Huaisheng affirmed 9 February 2018 (the Heads of Agreement) or the Transaction Agreement which is Exhibit PK-1 to the affidavit of Poly Kiosses sworn 26 March 2018 (Transaction Agreement), and how those payments were recorded in the seventh respondent's books of account.
2. All documents which record, evidence or by which were effected any transfer of shares or units (including any security over any shares or units) to the seventh respondent pursuant to the terms of the Heads of Agreement or Transaction Agreement.
3. All documents which record or evidence any transactions entered into or implemented pursuant to the Heads of Agreement or Transaction Agreement pursuant to which the seventh respondent received an entitlement or asset.
4. All documents which record, evidence or relate to the meeting referred to in paragraph 37 of the affidavit of Ma Huaisheng affirmed 9 February 2018, including any such documents made by the seventh respondent's solicitor, B2B Lawyers.

1. Any documents which evidence that the Transaction Agreement was executed by the seventh respondent and that the first to sixth respondents received the Transaction Agreement executed by the seventh respondent.
2. Any documents which record or evidence the terms of the following documents referred to in the Heads of Agreement and/or Transaction Agreement:
   1. The 'Business & Marketing Plan' - 'Business & Marketing Plan' is defined at Schedule 2 to the Heads of Agreement (as amended) which is Schedule 1 to the Transaction Agreement as 'the business and marketing plans containing the key elements the parties deem necessary based on the Transaction Agreement and which, upon agreement, be deemed incorporated in the Transaction Agreement' [Exhibit PK-1 to the affidavit of Poly Kiosses sworn 26 March 2018, page 80].
   2. The 'Transactional Documents' - the 'Transactional Documents' are defined at Schedule 2 to the Heads of Agreement (as amended) which is Schedule 1 to the Transaction Agreement as 'the key elements of each of the following documents set out in Schedule 3 of the Transaction Agreement' [Exhibit PK-1 to the affidavit of Poly Kiosses sworn 26 March 2018, page 89]:

1. Any documents which record or evidence any agreements which supplement, vary or were entered into in implementation of the terms of the Heads of Agreement or Transaction Agreement.
2. Documents which record or evidence the payments made and received in satisfaction of the seventh respondent's obligations to pay the first to third instalments pursuant to the Heads of Agreement or Transaction Agreement, and how those payments were recorded in the Books of Account of the first to sixth respondents.

1. All documents which record or evidence that the third instalment to be paid by the seventh respondent pursuant to the Heads of Agreement or Transaction Agreement was due to be paid by 17 October 2015.

SMATA PTY LTD (ACN 165 436 573) (as trustee for the SMATA UNIT TRUST)

QIN GROUP HOLDINGS PTY LTD (ACN 168 669 207) (as trustee for the QIN INVESTMENT UNIT TRUST)

[1] Affidavit of Poly Kiosses sworn 26 March 2018 (Kiosses Affidavit) [8]-[10].

[3] Affidavit of Ma Huaisheng affirmed 9 February 2018 (Ma Affidavit) [47].

[5] Affidavit of Peter Edmund Cash affirmed 13 February 2018, Exhibit PEC-1.

[14] She acknowledges this in her affidavit at [22].

[20] [2008] VSC 392.

[21] [2009] VSC 264 [3] (AFL). These statements have been followed in many subsequent cases, including Murdesk Investments Pty Ltd v Secretary to the Department of Business and Innovation [2011] VSC 436 [60]-[61] (Dixon J) and Orora Ltd & ors v Asahi Holdings (Australia)Pty Ltd & ors [2015] VSC 749 [31] (Ierodiaconou AsJ).

[22] 169 FCR 435; [2008] FCAFC 133 (Optiver).

[23] Hooper v Kirella Pty Ltd [1999] FCA 1584; (1999) 96 FCR 1 [40] citing Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd [1996] FCA 1500, quoted in Optiver [32].

[28] Transcript of Proceedings, Ma v Hickory Building Systems Pty Ltd & Ors (Supreme Court of Victoria, S CI 2018 00533, Lanssdowne AsJ, 11 April 2018) 58-61.

[56] Schedule 2 to the Heads of Agreement as varied, which is Schedule 1 to the Transaction Agreement. The Transaction Agreement is Exhibit PK-1 to the Kiosses Affidavit.

[57] Kiosses Affidavit, Exhibit PK-1, 10.

[60] Kiosses Affidavit, Exhibit PK-1, 89.

[66] T 95, citing Ipex Software Services Pty Ltd & ors v Hosking [2000] VSCA 239 [56] (Eames AJA, as the then was).

[67] First to Sixth Respondents, 'Supplementary Written Submissions', Submission in Ma v Hickory Building Systems Pty ltd, S CI 2018 00533, 19 April 2018, [4].

[70] Ma Affidavit [31], [47]; Kiosses Affidavit [7], [15].