Aristocrat Technologies Australia Pty Limited v Ainsworth Game Technology Limited

1. If the prospective applicant commences a substantive proceeding against the prospective respondent within 60 days of the prospective respondent complying with the orders for preliminary discovery made on 18 October 2018 as amended by orders made on 28 March 2019, the costs of the preliminary discovery application be costs in the substantive proceeding.
2. Subject to Order 1, the prospective respondent pay the prospective applicant's costs of the preliminary discovery application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

YATES J: 1 On 18 October 2018, I made orders that the prospective respondent, Ainsworth Game Technology Limited (Ainsworth), give discovery to the prospective applicant, Aristocrat Technologies Australia Pty Limited (Aristocrat): Aristocrat Technologies Australia Pty Limited v Ainsworth Game Technology Limited [2018] FCA 1511 (my earlier reasons). 2 On 28 March 2019, I extended the time for giving discovery and permitted examination of the discovered documents by Mr Stacy Friedman, an independent expert engaged by Aristocrat. I had previously ordered that the inspection of confidential documents produced by Ainsworth under discovery be limited to Aristocrat's external legal advisers and counsel. 3 The question of costs remains to be determined. 4 Aristocrat seeks its costs of the application for preliminary discovery. In written submissions, Aristocrat submitted that Ainsworth had adopted an adversarial and frequently obstructive stance to the application, and that it (Aristocrat) was successful on all matters ultimately in dispute. In this connection, Aristocrat directed my attention to correspondence between the solicitors for the parties which, Aristocrat submitted, showed that Ainsworth had simply failed to address its past conduct (in respect of which Aristocrat believed it might have a right to obtain relief) including that of Mr Prabhu, Ainsworth's former employee. Further, Aristocrat submitted that Ainsworth's adversarial position was not one founded on a sound evidentiary basis. Finally, Aristocrat submitted that, even though Ainsworth made some belated concessions in relation to the production of documents in some categories, those concessions did not save the need for preparation for the hearing and did not avoid the need for a hearing in relation to the other categories of documents, in respect of which Aristocrat was wholly successful in obtaining discovery orders. 5 In its written submissions, Ainsworth submitted that the appropriate order is that the costs of the preliminary discovery application be treated as costs in any substantive proceeding commenced by Aristocrat against Ainsworth within 60 days of Ainsworth complying with the preliminary discovery orders. Ainsworth submitted that if such proceedings are not commenced within that time, the appropriate order is that Aristocrat pay Ainsworth's costs of the preliminary discovery application. 6 Ainsworth disputed Aristocrat's contention that it (Ainsworth) had adopted an adversarial or obstructive stance. Ainsworth further submitted that it had made appropriate concessions with the benefit of Aristocrat's written submissions that had been filed in support of the preliminary discovery application. It submitted that its opposition to giving discovery with respect to the remaining categories of documents was confined and focused. Ainsworth pointed to the fact that Aristocrat itself had substantially narrowed the scope of its original application for preliminary discovery after receiving Ainsworth's responding written submissions. 7 Ainsworth also relied on the fact that the parties are commercial rivals and that some of the categories of documents sought by Aristocrat covered commercially sensitive material. It submitted that it was always necessary for the Court to consider and make orders to protect that confidentiality. 8 As an alternative position, Ainsworth submitted that, if the Court is minded to make a costs order against it, the order should be that Ainsworth pay 50% of Aristocrat's costs of the application. 9 In their respective written submissions, the parties referred me to a number of cases dealing with how the costs burden of an application for preliminary discovery might be borne. However, in the end, the Court's power to award costs is a broad discretionary one that must be exercised having regard to all the circumstances of the particular case. Other cases, while instructive and illustrative, cannot rule the day. 10 I do not accept Aristocrat's contention that a simple order should be made that Ainsworth pay Aristocrat's costs of the application. In the present case, the appropriate order should accommodate Ainsworth's contention that, if Aristocrat commences a substantive proceeding against Ainsworth within 60 days of Ainsworth complying with the preliminary discovery orders, the costs of the preliminary discovery application should be costs in that proceeding. 11 However, if such a proceeding is not commenced, I do not accept Ainsworth's remaining contention that Aristocrat should pay Ainsworth's costs of the preliminary discovery application. I accept that the jurisdiction to make orders for preliminary discovery is an extraordinary jurisdiction of an intrusive nature and that Aristocrat itself ultimately proceeded on an application for preliminary discovery that was more limited than the application it originally brought. I also accept that Ainsworth's opposition to Aristocrat's amended application was limited and focused in the way it has said. I am nevertheless persuaded that Ainsworth should pay Aristocrat's costs. On the evidence before me, there was a clear and irresistible case for preliminary discovery in respect of the remaining disputed categories, particularly having regard to the findings and observations at [59] - [63] and [65] - [70] of my earlier reasons, which could, and should, have been dealt with by Ainsworth without the need for the hearing that eventually took place. 12 Orders will be made accordingly. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates.