Applicants v Respondents

1 By originating motion filed 23 December 2020, the Applicants seek orders from the Court pursuant to r 32.05 of the Supreme Court (General Civil Procedure) Rules 2015 ('Rules') that the Respondents provide preliminary discovery of certain categories of documents to them. By notice filed 14 April 2021, the Second Applicant (Newco Car Sales Pty Ltd) withdrew from the application for preliminary discovery and so the proceeding is continued by the First Applicant (Brighton Automotive Holdings Pty Ltd) and the Third Applicant (Tynan Motors Pty Ltd) only.[1]

2 Until recently, the Applicants operated businesses as authorised Honda dealers pursuant to dealership agreements they each had with the First Respondent, Honda Australia Pty Ltd. The Second Respondent, Honda Motor Company Ltd, is incorporated in Japan and is the parent company of the First Respondent.

3 This decision concerns the Applicants' application for preliminary discovery against the First Respondent only ('Application'). There is an interlocutory application filed by the Second Respondent which is to be heard after 11 October 2021. Pursuant to orders made by me on 30 July 2021, the application against the First Respondent is proceeding separately from the application against the Second Respondent. It must therefore be emphasised, at the outset, that this decision and reasons solely concern the application against the First Respondent.

4 The Applicants rely on the affidavit of Evan Anthony Stents sworn 23 December 2020 ('Stents Affidavit') in support of the Application. Mr Stents is a partner of the firm HWL Ebsworth Lawyers ('HWLE'), the solicitors for the Applicant. The First Respondent opposes the Application and has not filed any affidavits.

5 Both parties have provided helpful and comprehensive written outlines of submission: the Applicants filed an outline dated 6 August 2021 ('Applicants' Outline'); and the First Respondent filed an outline dated 27 August 2021 ('First Respondent's Outline').

6 For the reasons which follow, the Application will be granted, with a modification to the scope of the documents to be discovered.

7 The relevant background facts are not in contest and can be shortly stated as follows:

(a) Until January 2021, the Applicants were authorised Honda dealers pursuant to written dealer agreements with the First Respondent ('Dealer Agreements').[2]

(b) The Dealer Agreements authorised the Applicants to sell new Honda motor vehicles and parts, and to operate authorised Honda service centres.[3]

(c) The Dealer Agreements:[4]

(i) had a commencement date of 1 July 2018, were for a term of five years, and had an expiry date of 30 June 2023;

(ii) contemplated that the First Respondent may extend them for a further five year term or execute new dealer agreements with the Applicants; and

(iii) did not contain a 'termination for convenience' provision.

(d) On or about 23 March 2020, the First Respondent sent a written notice to each of the Applicants purporting to terminate the Dealer Agreements with effect from 30 June 2021 ('Termination Notices').[5] In so doing, the First Respondent repudiated the Dealer Agreements (the 'Repudiation'), which repudiation was accepted by the Applicants, giving rise to contractual damages in favour of the Applicants.[6]

(e) The Repudiation was preceded by an announcement ('Announcement') at a Honda dealer conference on 8 and 9 May 2019 by an executive of the First Respondent, in a meeting open to all the Honda dealers in attendance at the conference, that the First Respondent was undertaking a strategic review of its dealer network in Australia ('Strategic Review').[7]

8 The Applicants say that the First Respondent did not disclose to them, prior to entering into the Dealer Agreements, that it was undertaking or contemplating the Strategic Review.[8] They say that had it disclosed the existence of the Strategic Review or that it was contemplating a strategic review of its dealer network during the term of the Dealer Agreements ('Non-Disclosed Matters'), the Applicants would not have entered into the Dealer Agreements and would instead have pursued other commercial opportunities in the automotive industry.[9]

9 In the Application, the Applicants sought preliminary discovery from the First Respondent of three categories of documents, as follows:

1. Documents prior to 1 July 2018 recording or evidencing any consideration by Honda Australia Pty Ltd (Honda Australia) or any Related Body Corporate of:

(a) a strategic review of Honda's Australian operations;

(b) restructuring the business of Honda Australia;

(c) right sizing' [sic] the business of Honda Australia;

(d) Honda Australia selling a narrower model range and significantly reducing Honda Australia's over all [sic] national sales volume;

(e) reducing the number of owners in Honda Australia's existing dealer network;

(f) realigning the Prime Market Areas (PMAs) in Australia;

(g) transitioning to a new operating model for new vehicle sales in Australia;

(h) the strategic review announced at the National Honda Dealer Business Meeting in Brisbane, Australia on 8 and 9 May 2019.

2. Documents prior to 1 July 2018 recording or evidencing any:

(a) terms of reference for;

(b) review; [sic]

(c) outcome of review;

(d) decision taken to do,

any of the matters set out in paragraph 1 above or any matter in connection with those things.

3. Documents prior to 31 March 2018 recording or evidencing the likely developments in the operations of the Honda Australia Group and the expected results of those operations in future financial years that is said to likely result in unreasonable prejudice to the Group as referred to in paragraph 9 of the Financial Statements and Reports Honda Australia lodged with the Australian Securities & Investments Commission for the financial years ending 31 March 2017 & 2018.

10 The Applicants no longer press Category 3, in light of the First Respondent's submissions that such a statement has been included in its financial reports every year since at least FY08.

11 Rule 32.05 of the Rules provides for discovery from a prospective defendant, as follows:

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

12 In Vestas - Australian Wind Technology Pty Ltd v Lal Lal Wind Farm Nom Co Pty Ltd,[10] Delany J summarised the three components that must be satisfied by the applicant before an order for preliminary discovery will be made:[11]

(a) first, there is reasonable cause to believe the applicant has or may have the right to obtain the relief;

(b) second, after making all reasonable inquiries, the applicant does not have sufficient information to enable it to decide whether to commence a proceeding to obtain that relief;

(c) third, there is reasonable cause to believe the respondent has or is likely to have documents the inspection of which by the applicant would assist the applicant to make the decision.

13 In the instant case, the First Respondent does not contest that the Applicants have made out the second and third of these requirements. Accordingly, only the first requirement, being the one set out in r 32.05(a), is in contest. I am satisfied from the Stents Affidavit that the Applicants have made out the second and third requirements.[12] If r 32.05(a) is satisfied, then also in contest is whether the Court should exercise its discretion to order preliminary discovery and, if so, what the scope of that discovery should be.

14 Further, the parties were in substantial agreement as to the applicable principles. It was the application of those principles to the instant case where the parties were in disagreement. I will explore the applicable principles in more detail later in this ruling.

15 In addition to the factual matters set out in paragraphs 7 and 8 above, Mr Stents exhibits an article published on 10 M[13]ch 2020 by GoAutoNews,13 which he describes as one of the leading online automotive industry publications in Australia. He says that this article describes the First Respondent's new operating model as an agency model, and he sets out an extract from [14]at article as follows:14

HONDA Australia is poised to reduce the size of its national dealer network and adopt an agency sales model borrowed from New Zealand.

The company has called dealer meetings to outline the radical plan. These are set to be held within two weeks.

GoAutoNews Premium has been told that the first meeting on March 23 is expected to reveal a smaller franchise network, a centralised distribution program and even a possible move by Honda Australia to itself operate some showrooms.

It will also change the relationship between the franchisee and the OEM with an agency model under which Honda owns the demonstrator cars and showroom stock supplied to dealers, removing floorplan costs from the dealership debit column.

Honda New Zealand first introduced the agency model in 2000.

Under the system dealers received commissions for selling the cars on behalf of Honda. The base commission was four per cent rising to seven per cent if the dealers met various KPIs and targets

Parts are also owned by Honda which paid dealers a delivery fee for trade sales.

The system included centralised sales and service booking for all dealers and a Honda dealer management system provided at no cost by Honda. It provided national access for all dealers to details and sales and service histories of all NZ customers.

A key element of the NZ program was the Honda Price Promise in which cars were priced at what had proven to be the actual transaction price rather than RRP and therefore priced below the competition for an equivalent car. The price was guaranteed to stay the same for the life of the model with only accessories being added along the way to keep interest from buyers.

The Price Promise was promoted as a program that would maintain equity, transparency, consistency and value for Kiwis buying new Hondas. Customers report favourably about the fixed-price and haggle-free car buying process and because the price is the same across NZ, it has proven to keep resale value high. Honda NZ reports customer retention at above 80 per cent.

But it may come at a cost. Sources indicate that in Sydney alone, the number of Honda dealers will be reduced from 12 to three.

GoAutoNews Premium learnt from one retail source that the March 23 meeting with dealers will announce the end of some of them as Honda franchisees.

The dealer source also said that a second meeting will be held on March 26 between Honda Australia and those dealerships selected to continue as franchisees.

Honda dealers approached by GoAutoNews Premium said they were unaware of the radical change to their business.

One said a recent change in the management of a Honda dealership meant the incoming dealer principal was required to take equity, and said there would be concern that if this dealership was axed it would represent a considerable personal loss by the new manager.

The agency model is said to follow that of Honda New Zealand's 'Price Promise' which in 2000 moved to an agency to maximise dealer profits and ensure a single price of its cars across the country.

16 Mr Stents deposes that he believes the Applicants may have the right to obtain relief against the First Respondent pursuant to s 236 or s 237 of the Australian Consumer Law ('ACL') in respect of misleading or deceptive conduct in contravention of s 18 of the ACL and/or unconscionable conduct in contravention of s 21 of the ACL ('Putative Claims').[15]

17 Mr Stents says that an issue in respect of the Putative Claims is whether, at the time the Dealer Agreements were entered into with the Applicants, the First Respondent had commenced the Strategic Review or was at least contemplating a strategic review of its dealer network in Australia during the term of the Dealer Agreements ('Requisite Knowledge').[16]

18 In a paragraph of his affidavit which the First Respondent described as the linchpin of the Application, Mr Stents deposes that he believes the First Respondent may have the Requisite Knowledge in the circumstances he has outlined, including having regard to:[17]

(a) the fact that the Announcement was made less than 12 months after the Dealer Agreements were entered into;

(b) the timing of the Termination Notices, coming less than 11 months after the Announcement, which he says "suggests to me that the Strategic Review was completed or well advanced by that time";

(c) the Strategic Review "appears to me" to be likely to have been a long-term project which took more than one year to complete, particularly in light of the nature and extent of the First Respondent's business operations in Australia and the fact that it has entered into long-term Dealer Agreements with dealers in Australia; and

(d) the following statement made by the First Respondent in its financial statements and reports lodged with ASIC for the financial years ending 31 March 2017 and 2018 ('Statement in Financial Reports'):

9. Likely Developments

Information as to likely developments in the operations of the Group and the expected results of those operations in future financial years has not been included in this report because in the opinion of the Directors of the Company it would be likely to result in unreasonable prejudice to the Group.

19 Of the Statement in Financial Reports, Mr Stents says that he believes that there is a strong inference that the likely developments which were not included in the financial reports is the First Respondent's decision, plans or consideration to adopt an agency model.[18]

20 Mr Stents says that he believes that if the First Respondent had the Requisite Knowledge, then its failure to disclose the Non-Disclosed Matters prior to the Dealer Agreements being entered into may constitute misleading or deceptive conduct (in contravention of s 18 of the ACL) and/or unconscionable conduct (in contravention of s 21 of the ACL).[19] He says that the nature of the Putative Claims and the factual and legal basis for them is further set out in a letter dated 19 October 2020 sent by HWLE to Arnold Bloch Leibler ('ABL'), the solicitors for the First Respondent ('HWLE Letter').[20]

21 Mr Stents states that another issue in respect of the Putative Claims is whether the Applicants have suffered loss and damage because of misleading or deceptive and/or unconscionable conduct of the First Respondent.[21] In this regard, he deposes that if the First Respondent had disclosed the Non-Disclosed Matters, then the Applicants would:[22]

(a) not have entered into their Dealer Agreements; and

(b) have instead pursued other automotive dealership opportunities with respect to their premises or attempted to sell their interests in their Honda dealerships (which the Applicants value in the millions of dollars).

22 Mr Stents deposes that without discovery of the documents sought in this Application, he is not able to give informed advice to the Applicants as to whether they have a proper basis to commence a proceeding against the First Respondent in respect of the Putative Claims.[23]

23 Based on the way in which the Application was argued, there are three principal issues for consideration. These are:

(a) Whether there is reasonable cause to believe that the Applicants have or may have a right to obtain relief. In other words, whether the requirements of r 32.05(a) have been satisfied;

(b) If there is reasonable cause, then whether the Court should exercise its discretion to order preliminary discovery; and

(c) If preliminary discovery is to be ordered, the scope of that discovery.

24 It is convenient to consider each of these issues in turn. In doing so, for each issue I will first set out the applicable principles, then the parties' submissions, followed by my analysis.

Is there reasonable cause to believe that the Applicants have or may have a right to obtain relief?

25 In Pandolfo v Finadri & Ors,[24] Derham AsJ summarised the relevant principles governing the application of r 32.05(a), as follows:[25]

The principles relevant to the first criterion are as follows:

(a) the applicant is not required to show it that has a prima facie case that it has a right to relief;

(b) it is also not necessary to show precisely what cause of action the applicant may have; such a requirement would defeat the object of the rule;

(c) rather, it merely needs be shown that the facts are such that it may reasonably be believed that the applicant may have a right to obtain relief;

(d) the test for determining whether the applicant has 'reasonable cause to believe' is an objective test;

(e) the word "may" indicates that the applicant's belief does not have to amount to a firm view that there is a right to relief.

26 Riordan J observed in Alex Fraser Pty Ltd v Minister for Planning that:[26]

The proper test is revealed by the words of r 32.05(a). What is required is the following:

(a) There is cause for a belief in the relevant proposition - a belief being an inclination of the mind towards assenting to a proposition.

(b) The relevant proposition is (on the second limb) that there 'may be the right' to relevant relief. The use of the word 'may' bespeaks possibility. Given the purpose of the Rule is to advance the administration of justice, r 32.05 should be interpreted as requiring a real (as opposed to a fanciful or remote possibility). However, even a real possibility may be highly improbable.

(c) The test is qualified by a requirement that the cause for the belief in the proposition must be reasonable. It is trite to say that what is reasonable in a particular case will depend upon all of the circumstances of the case.

27 In setting this out, his Honour accepted that a 'fishing expedition' is permitted. In considering what is meant by 'belief', his Honour referred to a number of ways some authorities had described what was not sufficient, that is, a 'mere hunch', 'flimsy foundation', 'assertion', 'suspicion' or 'conjecture'.[27] Riordan J rejected that approach, saying that:[28]

... for my part I do not find the antonyms of 'suspicion or hunch' useful because they are not mutually exclusive with a 'reasonable cause to believe'. In my opinion, the authorities that draw the distinction with suspicions etc are merely emphasising that a belief is not sufficient - there must be reasonable cause for the belief.

28 Riordan J also stated the following in Alex Fraser:[29]

The critical element of the test is reasonableness rather than whether the circumstances would cause a belief as opposed to a suspicion or some other hypothetical state of mind. A reasonable belief may incorporate elements of each of these putative antonyms. As the High Court stated in George v Rockett:

Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition and the grounds which can reasonably reduce that inclination of the mind may, depending on the circumstances, leave something to surmise or conjecture.

In fact, conjecture is by definition 'an opinion without sufficient evidence for proof'. Further, a suspicion can be on reasonable grounds, which can give rise to powers to arrest and other serious consequences. Accordingly, a reasonable suspicion, conjecture or assertion may each fall within the ambit of a reasonable belief.

29 It is important to note, as Riordan J said in Alex Fraser, that the jurisdictional threshold in relation to an order for preliminary discovery under r 32.05 is low.[30] His Honour went on to note that:[31]

This is consistent with the following:

(a) The primary purpose of the rule is to advance the administration of justice by allowing a prospective plaintiff to make an informed decision on proper material about whether or not to bring a claim. The importance of this rule to the advancement of the administration of justice has been accentuated by the certification requirements on filing of civil proceedings under Part 4.1 of the Civil Procedure Act 2010. It is well established that the rule should be interpreted benevolently.

(b) It would be incongruous if the jurisdiction to order preliminary discovery could not be enlivened because of the lack of evidence, which is the very cause of the application. The purpose of the Rule is to allow an applicant, who has inadequate proof of any cause of action, to discover whether or not evidence is available that will impact (positively or negatively) on the possible proceeding.

30 The Applicants' Outline deals with the putative unconscionable conduct claim in some detail. However, at the hearing, the Applicants relied on their putative misleading or deceptive conduct claim and made no specific oral submissions about the former. While not resiling from the unconscionable conduct claim, senior counsel for the Applicants effectively acknowledged that the threshold for establishing an unconscionable conduct claim was higher than that required for a misleading or deceptive conduct claim. Senior counsel stated that the Applicants were content for me to deal with the Application through the putative claim in respect of misleading or deceptive conduct.[32] That being the way the Application was put, I am content to follow that approach.

31 Section 18(1) of the ACL provides:

[Misleading or deceptive conduct prohibited] A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

32 The Applicants submit that it is well-settled that the failure to disclose information may, depending on the circumstances, amount to misleading or deceptive conduct in contravention of s 18 of the ACL. Whether 'silence' amounts to misleading or deceptive conduct depends on whether the circumstances give rise to a reasonable expectation that if a particular matter exists, it will be disclosed.[33] The existence of a reasonable expectation depends on all the circumstances of the case, including the relationship between the participants[34] and the materiality of the information.[35]

33 In this instance, the Applicants submit that where a 'silence case' is identified, whether it is likely to mislead or deceive (ie likely to lead into error) requires having regard to all of the relevant circumstances, including the fact of the entry into the Dealer Agreements.

34 The Putative Claims are based on the proposition that as at the time the Dealer Agreements were entered into, the First Respondent had commenced or was at least contemplating the review of its dealer network in Australia and did not disclose that to the Applicants. The essential issue, submit the Applicants, is whether there is a reasonable belief in that proposition so that it may give rise to a damages claim against the First Respondent.

35 The Applicants spent some time in oral submissions going to the authorities, as summarised above, to elaborate on the legal principles regarding 'reasonable cause to believe'.

36 The Applicants rely on Alex Fraser for the definition of 'belief' as an inclination of the mind towards assenting to a proposition.[36] In this case, the belief is an inclination of the mind towards assenting to the proposition that as at 1 July 2018 the First Respondent had commenced or was at least contemplating a strategic review of its dealer network in Australia. In other words, the relevant proposition is the Requisite Knowledge.

37 The Applicants rely on the three factors identified by Mr Stents, as set out in paragraphs 18(a) to (c) above, to say that there is reasonable cause to believe that the First Respondent may have had the Requisit[37]Knowledge.37

38 In addition, the Applicants rely on the following two matters:

(a) the analysis and information set out in the GoAutoNews Article, specifically that Honda New Zealand had introduced an agency model in New Zealand in 2000, and the statement that "Globally, Honda has adopted changes in its dealer network over the past 12 months", giving changes in India and the UK by way of example; and

(b) ABL's response dated 27 October 2020 ('ABL Response') to the HWLE Letter,[38] which the Applicants submit is telling in terms of what it does not say - the ABL Response states that the Applicants' allegations rely on a mere suspicion, but does not say that the First Respondent does not have any documents showing that the Strategic Review had not commenced or been in contemplation as at 1 July 2018.[39] This is said to add to the reasonableness of the belief that the First Respondent had commenced or contemplated the Strategic Review as at 1 July 2018.

39 Based on the matters identified in the previous two paragraphs, the Applicants submit that there is reasonable cause to believe that the First Respondent may have engaged in misleading or deceptive conduct in contravention of s 18 of the ACL by having the Requisite Knowledge and failing to disclose the Non-Disclosed Matters before the Applicants entered into the Dealer Agreements. On that basis, it is said, the circumstances gave rise to a reasonable expectation that First Respondent would disclose the Non-Disclosed Matters.

40 The Applicants submit that it is reasonable to be inclined to think that the Strategic Review must have commenced or been in contemplation before the Announcement. The question is for how long, which is why the Applicants are seeking preliminary discovery. It is said that it is a reasonable inclination of the mind to think that it was earlier, that is, prior to entry into the Dealer Agreements. It is also said that the factors in paragraph 18(b) and (c) above give rise to a reasonable belief that the Strategic Review had commenced or been in contemplation by the time the Dealer Agreements were being negotiated.

41 A contravention of s 18 or s 21 of the ACL gives rise to a claim for relief, being either the recovery of loss or damage suffered because of another person's conduct (s 236 of the ACL) or a compensation order (s 237 of the ACL). This is the relief the Applicants say they may have a right to obtain, based on the matters set out in paragraph 21 above.

42 The Applicants emphasise the wording of r 32.05(a), in terms of a reasonable belief that they have, or may have, a right to obtain relief (emphasis added). They contend that this is a clear case for preliminary discovery, as there is reasonable cause for the belief that they may have the right to obtain relief, but they lack information on the critical proposition of whether the First Respondent had commenced or contemplated the Strategic Review as at 1 July 2018. They say that this information is needed so that they can decide whether to commence a proceeding against the First Respondent.

43 As noted above, the First Respondent describes paragraph 20 of the Stents Affidavit as the linchpin of the Applicants' 'reasonable cause' evidence. The First Respondent submits that Mr Stents' inferences that it had the Requisite Knowledge as at 1 July 2018 rise no higher than pure speculation and lack any reasonable foundation, as:

(a) the First Respondent informed dealers that it was undertaking a strategic review in May 2019, nearly a year after the Dealer Agreements were executed. It is not apparent to the First Respondent how that fact forms the basis of a conclusion that it had even conceived of such a review a year earlier. Rather, the fact that the First Respondent executed five-year agreements only a year before tells against such a conclusion, as does the fact that the terms of those Dealer Agreements did not entitle the First Respondent to terminate the Dealer Agreements for convenience, or otherwise enable the First Respondent to terminate in the event of a restructure of its business operations;

(b) similarly, it is beyond the comprehension of the First Respondent how the Termination Letters being issued in March 2020 - coming up to two years after the Dealer Agreements were executed - give rise to an inference that the Strategic Review was contemplated at the time the agreements were executed;

(c) the basis for Mr Stents' opinion as to how long he considers the Strategic Review is "likely" to have taken is left to the imagination. Mr Stents does not depose to having expertise in the development of strategic plans, nor in the automotive industry. It might equally be a matter of judicial notice that business decisions in the car industry need to be made quickly in a dynamic market; and

(d) the inclusion of the paragraph in the First Respondent's financial statements concerning withholding information which may result in "unreasonable prejudice" is unremarkable: that paragraph - provided for by s 299(3) of the Corporations Act 2001 (Cth) - has been included in the First Respondent's financial statements in every financial year since at least FY08.

44 It is submitted that, in those circumstances, the Applicants' inference is unadulterated conjecture and is the very 'mere hunch' the courts have said will not satisfy the 'reasonable cause for belief' requirement in r 32.05(a). The foundation for the Applicants' beliefs as to their right to relief is not only flimsy but is utter speculation.

45 The First Respondent acknowledged that the Applicants no longer rely on the Statement in Financial Reports, but they say that is because the inference sought to be drawn from it is demonstrably groundless. The First Respondent says that this underscores how tenuous the Applicants' reasoning is.

46 The First Respondent acknowledged that the legal principles applicable to the Application are not in dispute. It says that the cases referred to all underscore that while r 32.05 represents a benevolent approach and indicates that some degree of 'fishing' is acceptable, the party seeking preliminary discovery cannot just take a stab in the dark. As the Court of Appeal made clear in Scarletti Pty Ltd v Millwood Printing Co Pty Ltd,[40] a 'mere hunch' is insufficient and a 'flimsy foundation' for the belief cannot constitute reasonable cause within the meaning of the Rule.[41] However, the First Respondent indicated that it did not take issue with Riordan J's statement in Alex Fraser that "a reasonable suspicion, conjecture or assertion may each fall within the ambit of a reasonable belief."[42]

47 The First Respondent referred extensively to the decision of Mukhtar AsJ in Bougainville Copper Ltd v RTG Mining Inc & Anor,[43] where his Honour recognised the benevolent purpose of r 32.05 for which there is a "rather low threshold", such that the applicant does not have to identify a cause of action or establish a prima facie case. Rather, the applicant merely has to show reasonable cause to believe that it may have a right to obtain relief, 'may have' denoting a possibility, signifying "some degree of tentativeness."[44] The First Respondent relied on his Honour's description of reasonable cause to believe as:[45]

... a significant limiting condition, the satisfaction of which is not per se a matter of discretionary judgment. An applicant must adduce evidence of the objective facts by which an applicant claims there is reasonable cause to believe in a right to obtain relief. That is why, for the purposes of the rule, something more than a mere assertion of a belief is required, and a hunch or flimsy foundation is not enough.

48 The First Respondent also emphasised the following passages from Bougainville Copper, where Mukhtar AsJ stated that:[46]

The perceived benevolence of rule 32.05 should not be misunderstood as allowing it to be used by an applicant as a broad investigative tool to explore someone's documents to find out 'what happened' and see if there is a cause of action available at all. Rather, the rule concerns itself with the situation where an applicant can show that there is already 'reasonable cause to believe' that it may have a case, but having made reasonable enquiries, it does not have sufficient information to decide whether or not to take the consummate step of deciding to actually commencing legal proceedings. That is usually because the applicant is lacking some particular information or type of document that is necessary to enable a decision to be made whether or not to take the step of suing. In that situation, and assuming the scope of documents sought is not extravagant or too invasive, generally speaking, it will be seen by a Court as just and convenient to compel a respondent to produce the telling document because it is in the interests of the administration of justice to enable a decision whether or not to sue to be made responsibly and on sufficient factual grounds. In that sense, and only where reasonable cause to believe is shown, the rule is 'tolerably straightforward' and it can be said generally when speaking of the rule's benevolence, that the tendency is for the arc of justice to lean towards allowing a disclosure of facts and documents as being the constructive course.

But it would certainly be unjust, under a banner of benevolence or an ethic of disclosure, to allow the rule to be used by an applicant to embark on an expedition to fossick through someone's documents looking for information to remedy deficiencies in satisfying the primary preconditions of the rule. That is, it would be unjust to compel production of documents under the rule to enable an applicant to see if it can thereby find grounds for a 'reason to believe'. That is critical to an understanding of the rule's proper operation.

49 In Bougainville Copper, Mukhtar AsJ concluded that the applicant's case proceeded not on a belief but a hypothesis, and that it was using r 32.05 to obtain documents to try and prove or disprove a hypothesis, which his Honour concluded was not a legitimate use of r 32.05.[47] The First Respondent submitted that Mr Stents' evidence about the timing of the commencement of the Strategic Review is nothing more than an unreasonable hypothesis.[48]

First Respondent's submissions - prospects of success

50 The First Respondent noted that Riordan J held in Alex Fraser that the prospects of success were a relevant consideration for the Court in exercising its discretion to make an order under r 32.05. I will come to this aspect later in these reasons.

51 The First Respondent submits that the prospect of success is also relevant to the question of whether r 32.05(a) is satisfied at all: if there is no prospect of success, it cannot be said that the belief in question is capable of founding a 'reasonable cause,' and the matter does not reach the stage of requiring the Court to exercise its discretion under the rule.

52 While the First Respondent accepts that it is not appropriate for the Court to undertake an extensive analysis of the merits of the Applicants' case, it submits that it should at least satisfy itself that the Putative Claims are reasonable.

53 In respect of the s 18 claim of the Putative Claims, for a claim for damages under either ss 236 or 237 of the ACL to succeed, a plaintiff must demonstrate a causal link between the misleading and deceptive conduct and the damage.[49] The Applicants define the Non-Disclosed Matters as being either the existence of the Strategic Review or its contemplation.

54 To the extent that the Applicants contend that the First Respondent engaged in misleading conduct by failing to disclose a contemplated review that had not yet been approved or commenced, the First Respondent contends that such a claim simply has no prospect of success.[50]

55 Even discounting that aspect of the Putative Claims, the First Respondent submits that the Applicants' assertion that they would not have entered into the Dealer Agreements had the Non-Disclosed Matters been disclosed defies credibility (or, at the very least, reasonableness). The Applicants suggest that had they known that a review was being contemplated (or undertaken) - but with no knowledge as to the nature or scope of the review, the consequences of the review for them (if any) and whether it would manifest during the term of their impending Dealer Agreements - they would not have entered into the Dealer Agreements (in circumstances where each of the Applicants had been pre-existing dealers under agreements with the First Applicant). The mere fact of a review however (in the absence of any decision or timing for such a decision) in circumstances where each of the Applicants was a pre-existing Honda dealer, cannot credibly or reasonably be said to be likely to have influenced a decision to enter into the Dealer Agreements.

56 The First Respondent submits that taken at its highest, the evidence relied upon by the Applicants cannot provide a reasonable basis for believing that they may have a right to relief from the Court.

57 The First Respondent submits that if the Applicants are right, it would require the parties to disclose anything which may impact upon the performance of the contract. They say that the Applicants' case requires the following four steps in the reasoning process:

(a) the Announcement implies that the Strategic Review was known as at 1 July 2018;

(b) the sending of the Termination Notices means that the Strategic Review had been underway for a long time;

(c) the First Respondent had an obligation to disclose the mere fact of a review; and

(d) the Applicants would not have entered into the Dealer Agreements had the Strategic Review been disclosed to them.

58 The First Respondent contends that paragraph 25 of the Stents Affidavit,[51] representing the counterfactual, is hearsay and cannot be tested.

59 Further, the First Respondent notes that the Applicants are already entitled to contractual damages, and asks rhetorically what loss is compensable here that is not part of the contractual damages.[52]

60 The First Respondent goes on to consider the prospects of success of the s 21 claim. Noting the Applicants' position as set out in paragraph 30 above, it is necessary for me to shortly summarise what the First Respondent says about this in the context of prospects of success. This is because the First Respondent pressed its submissions in this regard, after being informed of the Applicants' position.

61 Section 21 of the ACL prohibits conduct that is, in all of the circumstances, unconscionable. The First Respondent submits that the term unconscionable is not defined in the ACL, and while courts have counselled against seeking to constrain the term by applying any specific definition to it,[53] it has also been recognised that unconscionability must have a characteristic that conveys something greater than unfairness or unjustness.[54]

62 In the context of a claim alleging a contravention of s 21 of the ACL arising from the breaching of a contract, the First Respondent submitted that the Victorian Court of Appeal held that (in the context of s 51AC of the Competition and Consumer Act 2010 (Cth), which now appears as s 21 of the ACL):[55]

A decision may be taken to break a contract because, upon rational commercial considerations, the burden of performance may be greater and more onerous than the liability to be incurred if the conduct amounts to breach. The party committing the breach may know that it will deliver to the opposite party an opportunity to exercise rights both under and outside the contract that flow from the breach, and that the opposite party has the means to exercise and enforce those rights. Those rights may include seeking injunctive relief to restrain the breach, accepting a repudiation of the contract so as to terminate executory obligations and seeking damages, or keeping the contract on foot and merely seeking damages. There may be nothing offensive to conscience in a commercial participant taking such a commercial decision in given circumstances. Whether or not it amounts to unconscionable conduct does not simply flow from it being a deliberate breach; it must be evaluated in 'all the circumstances'.

63 The First Respondent submits that neither of the Non-Disclosed Matters does any more than provide a basis for asserting that the First Respondent entered into the Dealer Agreements in circumstances where it contemplated (or had commenced) a strategic review. It is said that on no view of the evidence can that be a basis for a conclusion that the First Respondent would even repudiate the Dealer Agreements, let alone act unconscionably. Further, even if the First Respondent had completed the Strategic Review (which is not alleged as one of the Non-Disclosed Matters) and even if a determination had been reached to terminate the Dealer Agreements, this would still fall short of the type of conduct contemplated by s 21 of the ACL.

64 The Applicants rejected the First Respondent's submission regarding contractual damages.[56] They say that contractual damages are not the same as the relief contemplated here, as the damages are different. Contractual damages are said to be forward‑looking - putting the Applicants in the position they would have been in had the contract been fulfilled; whereas damages for misleading and deceptive conduct are backward‑looking, and this is said to be evident from paragraph 25 of the Stents Affidavit.

65 The Applicants emphasised that the Announcement was that the First Respondent "was undertaking" a Strategic Review, but this tells us nothing about when it was first commenced or contemplated. They say that the First Respondent's submissions are predicated on the notion that the Applicants have to identify an inference that the Strategic Review had been started or contemplated, but it is not an inference that they have to demonstrate but a belief as defined in Alex Fraser. The Applicants say that what they do have to identify is the belief and the facts by which they say it is a reasonable belief. The Applicants submit that they have identified the facts relied upon, being the matters referred to in paragraphs 18 and 38 above, such that it is not a hypothesis without facts.

66 In this regard, the Applicants also referred to Bougainville Copper, where Mukhtar AsJ, referring to Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd,[57] said as follows: [58]

... on a preliminary discovery application, a degree of speculation is unavoidable or is inevitable because the application is inherently allowed to be based on a belief that there 'may' be a right to obtain relief. Thus, as stated by Perram J in Pfizer:

In practice, to defeat a claim for preliminary discovery it will be necessary to show that the subjectively held belief that there may be a right to relief does not exist, or, if it does, that there is no reasonable basis for thinking that there may be (not is) such a case. Showing that some aspect of the material on which the belief is based is contestable, or even arguably wrong, will rarely come close to making good such a contention. Many views will be held with which one disagrees, perhaps even strongly, but this does not make such a view one which is necessarily unreasonably held. Nor will it be an answer to an application for preliminary discovery to say that the basis relied upon may involve a degree of speculation. Where the language of FCR 7.23 relates to a belief that a claim may exist, a degree of speculation is unavoidable. The question is not whether the belief involves some degree of speculation (how could it not?); it is whether the belief resulting from that speculation is a reasonable one.

It is a question of degree. As Perram J went on to observe:

[T]he concept of speculation operates on a broad spectrum. There will, obviously enough, be cases where the prospective applicant's claims are so speculative as to warrant the dismissal of the preliminary discovery application. But what must be shown by the prospective respondent to defeat the application in such cases is not the existence of speculative reasoning on the part of the prospective applicant, but rather that the applicant's belief that there may be a right to obtain relief in the circumstances is a belief not reasonably held.

67 The Applicants emphasised the conclusion of Mukhtar AsJ in this regard, that "the point of focus is whether the belief resulting from a degree of speculation is a reasonable one" (emphasis in original).[59]

68 Of the First Respondent's submission questioning why it would have entered into the Dealer Agreement if it was doing or contemplating the Strategic Review, the Applicants say that this is a bald assertion and that it is not known whether the review had been commenced or contemplated. In the absence of evidence on that from the First Respondent, the Applicants describe this as a "bootstraps" argument.

69 In respect of the First Respondent's criticism that there is a lack of detail regarding the Putative Claims, the Applicants point out that they do not need to detail the Putative Claims with precision.

70 In my view, the proposition that the First Respondent may have already commenced or contemplated conducting a strategic review into its operations and dealer network in Australia prior to 1 July 2018 gives rise to there being reasonable cause to believe that the Applicants may have the right to obtain relief, being damages or compensation arising from a breach of s 18 of the ACL.

71 I consider the belief to be reasonable, noting that the relevant test is an objective one and not subjective, such that the Applicants' own beliefs are not pertinent. The belief is reasonable based on the matters referred to in paragraphs 18(a) to (c) and 38(a) above. I accept the Applicants' submission that these matters mean that it is reasonable to be inclined to think that the Strategic Review must have commenced or been in contemplation before the Announcement and that it is a reasonable inclination of the mind to think that it was commenced or in contemplation prior to entry into the Dealer Agreements. I do not accept that the matter referred to in paragraph 38(b) above provides a basis for the reasonableness of the belief, as I accept the First Respondent's observation that it is not obliged to tell the Applicants anything about what documents it does or does not have, or give information about the Applicants' propositions, unless ordered to do so in an application such as this. However, in light of my acceptance of the matters referred to in paragraphs 18(a) to (c) and 38(a) above as providing the basis for the reasonableness of the belief, my view about paragraph 38(b) is of little moment.

72 True it is that it is equally possible that the Strategic Review did not commence or was not in contemplation until after 1 July 2018. But that does not render a belief that it was commenced or contemplated before that date unreasonable. The relevant test is whether there is 'reasonable cause to believe' that the Applicants 'have or may have' a right to obtain relief: it speaks, as the authorities say, of a reasonable belief in the possibility of the right to relief, and it does not require an inference that the right to relief is more likely to exist than not. The Applicants are certainly not required to have evidence that the Strategic Review was commenced or contemplated at the time the Dealer Agreements were entered into; after all, the fact that they do not have that evidence is the purpose of the Application. What is required is evidence to support the reasonableness of the belief that the Strategic Review had been commenced or contemplated at that time.

73 The various authorities canvassed by the parties and in this ruling are useful in terms of eliciting and elucidating the tests to be applied. However, and it is trite to say it, what really matters is the application of those tests to the facts in this case and the authorities are of very limited assistance or use in that regard. The particular factual matrix in each case is what determines the reasonableness of the belief, and so findings in other factual circumstances are of limited utility. It all comes down to the reasonableness of the belief in the circumstances of the case at hand.

74 The First Respondent's contention that the content of the Announcement cannot give rise to a reasonable belief as the words used were "was undertaking" not "had undertaken" or "had completed" is rejected. The words "was undertaking" merely imply that the Strategic Review was on foot at the time of the Announcement, and says or implies nothing other than it must have started prior to the Announcement. The critical question is 'when', and that is what is not known. It is reasonable to believe it may have been before 1 July 2018 and it is also reasonable to believe it may have been after that date. That there are two possibilities does not make a belief in one of them unreasonable.

75 I do not accept the First Respondent's submission that all the Applicants have here is an unreasonable hypothesis.[60] The First Respondent did not proffer a definition of 'hypothesis'. If 'hypothesis' is defined as an assumption or idea proposed for the purpose of testing its truth,[61] then I accept that this does not constitute reasonable cause to believe. On the other hand, if 'hypothesis' is defined as "a supposition or proposed explanation made on the basis of limited evidence as a starting point for further investigation",[62] then provided that supposition or proposed explanation is reasonable, then this may be reasonable cause to believe. The First Respondent's reliance on the term 'hypothesis' without stating what definition is relied upon is not helpful. Depending on the definition, in some ways 'hypothesis' is merely a synonym for other expressions used when discussing r 32.05, such as 'suspicion', 'hunch', 'assertion' or 'conjecture' which, as noted above, on their own do not advance the analysis. Rather, the Court must assess whether there is 'a reasonable cause to believe'.

76 The First Respondent also complains that the Applicants themselves (presumably through their directors) have not gone on affidavit in respect of the posited counterfactual, being what they would have done had the Non-Disclosed Matters been disclosed. In this regard, a plaintiff in an application for preliminary discovery does not need to establish a subjective belief that it has or may have a right to obtain relief: what is required is reasonable cause for a hypothetical belief.[63] Hearsay evidence in an application of this type is admissible.

77 I accept that in some cases, the prospects of success may be relevant to the question of whether there is reasonable cause to believe there may be a right to obtain relief. If there are no prospects of success, then it is difficult to see that the belief is reasonable.

78 Given the "rather low threshold"[64] required to be met in order for the jurisdiction to order preliminary discovery to be invoked, in my view there would have to be no prospect of success for r 32.05(a) not to be satisfied. This is the way that the First Respondent put it.

79 I do not think it can be said in this instance that the Applicants have no prospects of success, for the reasons I have already set out when considering 'reasonable cause to believe' more broadly. If the Applicants can establish that the First Respondent had commenced or contemplated the Strategic Review which may have a significant effect on the Applicants during the term of the Dealer Agreements prior to entering into those agreements such that this should have been disclosed to them and that had it been they would not have entered into the agreements, then they may have a right to obtain relief. I do not consider that there is no prospect of the Applicants succeeding in that regard. I accept the proposition that the prospects of succeeding on a s 21 claim may well be lower than on a s 18 claim, but the prospects are not nil.

80 In this regard accept the Applicants' submission that they may have had a reasonable expectation that matters (including a review) known by the First Respondent prior to entering into the Dealer Agreements that may significantly affect those agreements during their term would be disclosed to them prior to them doing so. The First Respondent's submissions in this regard, as set out at paragraph 54 above, rest on a particular premise, being the failure to "disclose a contemplated review that had not yet been approved or commenced" (emphasis i[65]original).65 That is not something which is in evidence: we simply do not know whether a review had been approved or commenced at the relevant time. The First Respondent goes on to make submissions that do not rely on that premise, as set out in paragraph 55 above, however those submissions rest on a different premise, being that what would have been disclosed was the mere fact of a review. To contend, as the First Respondent does, that disclosure of the mere fact of a review means that it cannot reasonably be said that the Applicants would not have entered into the Dealer Agreements, is to posit the wrong question. The disclosure of the mere fact of a review may or may not be sufficient for the Applicants to succeed in their later proceeding, but preliminary discovery of what review (if any) was underway or in contemplation and the content of it may well assist in the Applicants determining whether to commence such a proceeding.

81 Once the jurisdictional threshold has been reached, being the three requirements set out in r 32.05, the question then becomes whether the Court should exercise its discretion to make an order preliminary discovery. Noting, however, that:

Where each element of the rule is satisfied, the Court will ordinarily exercise its discretion in favour of the applicant.[66]

82 In considering the principles relevant to the exercise of the Court's discretion in respect of r 32.05, Riordan J stated in Alex Fraser that:[67]

Although the jurisdictional threshold is low, its satisfaction only empowers the Court to exercise its discretion. In the exercise of its discretion, the Court can control any excesses; and assess whether there may be real benefit in making the order. It will be entitled to weigh the full range of relevant matters in determining whether an order is in the interests of justice - including the following:

(i) The level of inconvenience and cost that will be caused to the respondent.

(ii) Whether discovery may cause commercial or other damage to the respondent.

(iii) Whether the respondent will be reimbursed for its costs.

(iv) Whether an order would be inutile because the documents are privileged.

(iv) The prospect of the documents sought providing the information required by the applicant.

(v) Whether the fact that there is no real prospect of success is apparent or discovery will not serve any useful purpose. However, delving extensively in the merits of the existence of a possible cause of action will usually not be appropriate.

83 In Pandolfo, Derham AsJ stated that:[68]

An applicant does not have to prove that there will be a real benefit in making the order, but simply that there may be some benefit. The benefit may be the preparation of an appropriate pleading and the avoidance of substantial amendments following discovery. Alternatively, the avoidance of unnecessary litigation.

84 The Applicants submit that the factors identified in paragraph 54(c) of Alex Fraser are directed to controlling any excesses and determining whether there is any real benefit in making the order. Of the factors therein identified, the Applicants submitted that:

(a) there has been no suggestion that there is any cost or inconvenience to the First Respondent associated with making the order, that ordering discovery will cause any commercial or other damage to the First Respondent, or that the order will be inutile because the documents are privileged;

(b) whether or not the First Respondent will be reimbursed for its costs will be deal with by the Court;

(c) the prospect of the documents sought providing the information sought by the Applicants is self-evident; and

(d) whether it is apparent that there is no prospect of success or that discovery will serve no useful purpose: the Applicants said that this was the only factor identified by the First Respondent, in response to which they rely on Riordan J's comment that in assessing this it is usually not appropriate for the Court to delve extensively into the merits of the possible cause of action.

85 In respect of this last factor, the Applicants say that the First Respondent's submission that contemplating a Strategic Review as at 1 July 2018 is not enough, is not correct. They say that if it was contemplated as at that date and not disclosed, that is enough to say that the Applicants may have a right to relief.

86 Of the First Respondent's contention that the notion that if the Applicants had been informed of the Strategic Review they would not have entered into the Dealer Agreements lacks credibility, the Applicants submit that this is a matter for the trial judge.

87 At paragraphs 50 to 63 above, I have set out the First Respondent's submissions regarding the prospects of success of the Putative Claims.

88 Relying on those submissions, the First Respondent submits that the Court should decline to exercise its discretion to make an order for preliminary discovery, as there is no useful purpose in doing so as the Putative Claims have low prospects of success.

89 The jurisdiction to order preliminary discovery having been enlivened, I consider that the Court should exercise its discretion to so order.

90 I accept the Applicants' submissions in this regard.

91 I do not consider that there is no useful purpose in ordering preliminary discovery. It is apparent that the Applicants do not have the evidence they need in order to determine whether to commence proceedings, and it is also apparent that discovery is likely to reveal whether there is any such evidence. Whether there is no real prospect of success is a relevant discretionary factor, as identified in Alex Fraser.[69] This is not the same question as considered above, since that was whether there was no prospect of success. Here, it is whether there is no real prospect of success. Nonetheless, I do not accept that there is no real prospect of the Applicants succeeding on the Putative Claims, for the same reasons as set out in paragraphs 79 and 79 above. Riordan J expressed the view in Alex Fraser that although he did not consider the appellant's prospects of success in a later proceeding as strong, "the interests of justice favour the making of an order for preli[70]nary discovery."70 In my view, in this instance the interests of justice favour an order for preliminary discovery.

92 Accordingly, preliminary discovery will be ordered.

93 It is convenient to begin with the First Respondent's submissions in respect of the scope of the documents sought, noting of course that the First Respondent's primary position is that no preliminary discovery should be ordered.

94 The First Respondent submits that if preliminary discovery is to be ordered, then Category 1(a) should be limited so that it reads as follows ('Amended Category 1'):

Documents prior to 28 June 2018 recording or evidencing any consideration by Honda Australia Pty Ltd (Honda Australia) or any of its subsidiaries of the strategic review of Honda's Australian operations which formed the basis for the decision to repudiate the [Dealer Agreements].

95 The First Respondent submits that the Categories sought are excessive and the categories should necessarily be limited to material relating to the Non-Disclosed Matters and the Putative Claims.

96 It says that as presently drafted, Category 1 would (for example) capture every 'strategic review', 'restructure', or 'right sizing' ever 'considered' by the First Respondent over the course of more than 50 years of operating in Australia, no matter whether it related to or gave rise to the transition to the agency model which is the subject of the present proceeding. Whether or not the First Respondent has historically undertaken strategic reviews of its business is irrelevant. What is notionally relevant is whether the review in question - being the review that resulted in the decision to repudiate the Dealer Agreements - was contemplated or had been commenced as at late June 2018.

97 For the purposes of the Applicants' Putative Claims and the Non-Disclosed Matters, the First Respondent submits that Amended Category 1 should be more than sufficient to inform the Applicants of the matters necessary to determine whether or not they should commence proceedings,[71] the question being whether the Strategic Review giving rise to the repudiation of the Dealer Agreements was underway or contemplated before 1 July 2018. It is also said that having regard to the Putative Claims, the balance of the subparagraphs in Category 1 represent no more than an extensive trawling expedition in search of other possible causes of action in the absence of any 'reasonable cause to believe' and they should be deleted.

98 The First Respondent contends that the change of "related body corporate" to "subsidiaries" in Category 1 is justified as the First Respondent cannot control its parent company, and the Applicants' wording does not limit the documents to be discovered to those documents in the possession custody or control of the First Respondent.

99 The First Respondent contends that Category 2 should be deleted, as any relevant documents sought by that category will be captured by Amended Category 1.

100 The Applicants submit that Categories 1 and 2 are all limited in time, being prior to 1 July 2018. The documents sought are limited to the Strategic Review and particular aspects of it.

101 Of the changes proposed by the First Respondent, the Applicants submit that a proper basis for rejecting their Categories has not been identified. In particular, the Applicants submit that:

(a) The limitation of documents to the strategic review which 'formed the basis for the decision to repudiate' the Dealer Agreements (emphasis added) is not justified and could well defeat the purpose of ordering preliminary discovery. It is said that such a limitation could give the First Respondent an opportunity to characterise documents as relating to a different review and then not discover them. Further, even if some review had been commenced or contemplated, the First Respondent could discover nothing on the basis that it was not the exact review which led to the decision to repudiate.

(b) The remainder of Category 1, being sub-paragraphs (b) to (h), are not necessarily captured by the Amended Category 1.

(c) The basis for the change from "related body corporate" to "subsidiaries" is misconceived, as the obligation to make discovery rises no higher than documents the First Respondent has in its possession, custody or control.

(d) Although they have not identified a start date, neither has the First Respondent.

(e) Categories 1 and 2 have been framed by reference to the First Respondent's own description of the Strategic Review, as set out in the Announcement.

(f) The First Respondent has not adduced any evidence of any burden or oppression associated with Categories 1 and 2.

102 I accept some of the First Respondent's criticisms of Category 1, in particular that it is too broad. This is because it could conceivably pick up any review or restructure conducted at any time prior to 1 July 2018, possibly going back some 50 years.

103 However, I do not think that this criticism justifies the significant changes to the scope of the discovery which would occur by adopting Amended Category 1. I accept the Applicants' criticism of this change. In particular, Amended Category 1 would likely confine the discovery in a way which may well leave out documents which may be important. To accept Amended Category 1 requires the Court to accept the First Respondent's premise or framing of what is at issue. I do not accept the First Respondent's characterisation of the issue as being whether the Strategic Review that led to the Repudiation was underway or contemplated as at 1 July 2018 (emphasis added). This is far too narrow.

104 Rather, the scope of the preliminary documents is to be determined by considering what documents it is that the Applicants say they need in order to decide whether to commence proceedings against the First Respondent. They say that they need documents which indicate whether or not a strategic review of the First Respondent's operations in Australia was underway or in contemplation as at 1 July 2018. It seems to me that in particular, this includes a review which may result in significant changes for the Applicants during the term of their Dealer Agreements. To confine the preliminary discovery to the narrow question of the review leading to the Repudiation is to artificially narrow the question and the scope of the documents.

105 It is not known the ways in which the Strategic Review changed over the period in which it was conceived, contemplated and conducted, and there are a range of outcomes of that review which may affect whether or not the Applicants decide to commence proceedings. Therefore, I consider that the purpose of granting preliminary discovery is best achieved by not narrowing the scope of discovery in the manner contended for by the First Respondent.

106 I think that the excessive breadth complained of by the First Respondent, mainly being that historical and irrelevant reviews would be caught by Category 1, can be best dealt with by including a start date for such documents. Choosing such a start date is necessarily an arbitrary exercise, given that there is no evidence as to when the Strategic Review began or was first contemplated. That is not a criticism; after all, it is the very reason why the Applicants need the preliminary discovery. It seems to me that a start date of 1 January 2016 is unlikely to impose an undue burden on the First Respondent and is likely to cover those documents sought by the Applicants. As I said, this is clearly an arbitrary date for me to select, however I have done so on the basis that a period of approximately two years ought to ensure that the purpose of ordering preliminary discovery is achieved.

107 I do not accept the First Respondent's change from "related body corporate" to "subsidiaries". Clearly, in complying with the order, the First Respondent's obligations extend, as the Applicants submitted, no further than documents which are in its possession, custody or control. If the First Respondent has in its possession, custody or control any documents of its parent company about the First Respondent's review or any documents of its parent company considering a review which respond to Category 1, then they are likely to be relevant and there is no impediment to them being discovered by the First Respondent.

108 It is possible, perhaps even likely, that documents in Category 2 may be caught by Category 1, however I see no vice in including Category 2 to ensure that such documents are discovered, as they would be relevant. Category 2 should be amended to include the same time period as for Category 1.

109 Accordingly, the scope of the preliminary discovery to be ordered will be in the form of Category 1 and Category 2, save that the start of each category will read "Documents between 1 January 2016 and 30 June 2018" instead of "Documents prior to 1 July 2018" in each instance.

110 As neither party made submissions about a particular start date, if either party wishes to contend for a different start date, I will entertain short submissions of no more than three pages on that question before making final orders in respect of the Application against the First Respondent.

111 It follows from the above reasons that preliminary discovery will be ordered and that the documents to be discovered will be those contained in Categories 1 and 2, with the addition of a start date of 1 January 2016 or such other start date as I may be persuaded to order as set out in the preceding paragraph.

112 The parties are to confer as to a form of orders to give effect to this ruling, including as to costs. If agreement is reached, then proposed consent orders should be sent to my Chambers (along with the short submissions as to a different start date, if appropriate) by 6 October 2021. If agreement is not reached, then by the same date the parties are to send their preferred form of orders to my Chambers along with the short submissions as to a different start date (if appropriate) and short submissions as to why their preferred form of orders should be accepted. If the latter applies, then the proceeding will be listed for 8 October 2021 for the making of orders.

BRIGHTON AUTOMOTIVE HOLDINGS PTY LTD (ACN 150 926 480)

[1] For convenience, I will refer to the First and Third Applicants as the Applicants, unless it is necessary to differentiate between them.

[4] Stents Affidavit, [8]; Exhibit EAS-3.

[10] [2020] VSC 554 ('Vestas').

[12] In respect of the second requirement, I accept the evidence relied upon, being the Stents Affidavit, [26]‑[29]; in respect of the third requirement, I accept the evidence relied upon, being the Stents Affidavit, [30]-[31].

[13] Exhibit EAS-4 ('GoAutoNews Article').

[20] Stents Affidavit, [23]. A copy of the HWLE Letter is at Exhibit EAS-7.

[22] Stents Affidavit, [25]. Mr Stents says that he was informed of this by Ron Klein, director of the First Applicant, and by Daniel Tynan of the Third Applicant.

[24] [2018] VSC 211 ('Pandolfo').

[25] Pandolfo, [20] (citations omitted); followed in Vestas, [27].

[26] [2018] VSC 391 ('Alex Fraser'), [53] (citations omitted).

[29] Alex Fraser, [51]-[52] (citations omitted).

[31] Alex Fraser, [54(a)-(b)] (citations omitted).

[32] Transcript, 8 September 2021, 7.8-21.

[33] Demagogue Pty Ltd v Ramensky [1992] FCA 557; (1992) 39 FCR 31 at 32, 41. Applied in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357 at 369 [19], [20].

[34] Rafferty v Madgwicks [2012] FCAFC 37; (2012) 203 FCR 1 at 69 [279].

[35] Australian Securities and Investments Commission v PFS Business Development Group Pty Ltd [2006] VSC 192; (2006) 57 ACSR 553 at [362].

[37] Noting, as I have earlier explained, that they no longer rely on the matter set out in paragraph 18(d) above.

[38] The ABL Response is Exhibit EAS-10.

[39] Transcript, 8 September 2021, 21.29-22.6.

[40] SC (Vic) App Div, 28 July 1994, Unreported ('Scarletti').

[43] [2021] VSC 231 ('Bougainville Copper').

[46] Bougainville Copper, [10]-[11] (citations omitted).

[48] Transcript, 8 September 2021, 50.11-15.

[49] Relying on Haros v Linfox Australia Pty Ltd [2011] FCA 699; [2012] FCAFC 42.

[50] The First Respondent contends that this proposition stands as a matter of logic. While the First Respondent is not listed on the Australian Stock Exchange, useful guidance on this issue, more generally, can be drawn from the logical endorsement of this proposition in Chapter 5 of the ASX's Guidance Note 08 Continuous Disclosure, which provides that the continuous disclosure obligation does not apply to information that concerns an incomplete proposal.

[51] See paragraph 21 above.

[52] Transcript, 8 September 2021, 56.12-18.

[53] See, for example, the observations of Allsop CJ in Paciocco v Australia & New Zealand Banking Group Ltd (2015) 236 FCR 199 at [262].

[54] See, for example, ACCC v Woolworths Ltd [2016] FCA 1472 at [130] per Yates J; see also Attorney General of New South Wales v World Best Holdings Ltd [2005] NSWCA 261; (2005) 63 NSWLR 557 at [121], where Spigelman CJ stated that to apply the concept of unconscionability as if it were the equivalent of what is fair or just would mean that commercial relationships could be transformed in a manner not intended by parliament. While an earlier part of that paragraph requiring "moral obloquy" as an element of unconscionable conduct has since been rejected, it is submitted that the observations in relation to fairness or just behaviour remain valid.

[55] Body Bronze International Pty Ltd & Ors v Fehcorp Pty Ltd [2011] VSCA 196; (2011) 34 VR 536 at [92] per Macaulay AJA, with whom Harper and Hansen JJA agreed.

[56] See paragraph 59 above.

[57] [2017] FCAFC 193 ('Pfizer').

[58] Bougainville Copper, [202]-[203] (citations omitted).

[60] See paragraph 49 above.

[61] Hypothesis is defined this way in the Merriam-Webster dictionary, for example.

[62] As it is defined in the Oxford dictionary.

[65] First Respondent's Outline, [36].

[66] Pandolfo, [23], referring to Australian Football League v Stadium Operations Limited [2009] VSC 264 [76] (Warren CJ) ('AFL v SOL').

[67] Alex Fraser, [54(c)] (citations omitted).

[68] Pandolfo, [19], referring to Beston Parks [2008] VSC 392, [53] and to AFL v SOL, [3].

[71] This would automatically cover, for example, category 1(h).