BCI Media Group Pty Ltd v Corelogic Australia Pty Ltd

1. The application by the Prospective Respondents that they be excused from further compliance with Orders 1 and 2 of the 12 November 2020 orders is refused.
2. The application by the Prospective Respondents for the vacation of Orders 2-7 and 10 made on 15 March 2021 is refused.
3. The time within which the First, Second, Third and Fifth Prospective Respondents are to comply with Order 1 made on 12 November 2020, as extended by orders made on 26 November 2020 and 15 March 2021, be extended further to 4 pm (AEST) on 29 April 2021.
4. The Prospective Respondents are to pay the Prospective Applicant's costs of and incidental to today's hearing.
5. There be liberty to apply. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

WHITE J: 1 Rule 7.23 of the Federal Court Rules 2011 (Cth) (the FCR) empowers the Court, when satisfied of certain preconditions, to order prospective respondents to a proceeding in the Court to give discovery of documents to a prospective applicant. The preconditions include the Court's satisfaction that, having made reasonable inquiries, the prospective applicant does not have sufficient information to decide whether to start a proceeding in the Court to obtain relief from a prospective respondent to which the prospective applicant reasonably believes it may have a right (r 7.23(1)(b)). 2 On 12 November 2020, on the application of BCI Media Group Pty Ltd (BCI), Charlesworth J made orders pursuant to r 7.23 requiring the prospective respondents in these proceedings to make discovery of specified documents by 30 November 2020 and to produce the documents so discovered for inspection by the same date. Her Honour's orders indicated that the preliminary discovery was to be made in the manner required by rr 7.25 and 20.17 of the FCR. 3 In addition, Charlesworth J made orders providing for the costs of the application for preliminary discovery, with the content of those orders varying according to whether BCI commenced a substantive proceeding within 90 days of the making of the orders. 4 The orders of 12 November 2020 followed a disputed hearing and gave effect to the judgment of Charlesworth J delivered on 26 October 2020: BCI Media Group Pty Ltd v Corelogic Australia Pty Ltd [2020] FCA 1556. The evidence in the proceedings before Charlesworth J indicated that BCI and the first three prospective respondents are competitors in the business of providing information to subscription customers about aspects of the construction industry, including information about forthcoming construction contracts, project management opportunities and research reports. 5 The 12 November 2020 orders required discovery of seven categories of the documents. The first was: Documents (including system, network and user logs) recording access to LeadManager using the Subscriptions from 3 October 2017 to the present, including system, network and user logs identifying the individuals, their locations, their IP addresses, and computers used to access LeadManager. 6 The 12 November 2020 orders were varied subsequently by orders made on 26 November 2020, 9 March 2021 and 15 March 2021. Relevantly, the time within which the prospective respondents were to make the discovery ordered on 12 November was extended progressively to 15 April 2021, the time for production of the discovered documents extended to 29 April 2021, and the 90 day period for the institution of substantive proceedings extended to 20 May 2021. The orders on 15 March 2021 were not made in respect of the fourth prospective respondent as the Court was informed that day that it had, since the making of the orders on 12 November 2020, been deregistered. 7 I have referred to the orders of 15 March 2021 as involving extensions of the time for the making of discovery and production of documents, and that was the effect of Orders 2 and 3. By reason of a dispute which had become apparent on 15 March 2021, Charlesworth J also made orders specifying more particularly the documents which were to be discovered in accordance with the orders of 12 November 2020 (Order 4), and orders requiring the officer verifying the list of documents to depose to additional matters, being the steps which had been taken by the prospective respondents to locate and produce documents in Category 1 of the 12 November 2020 orders, and the steps taken to search for materials required by Category 4 of the 12 November 2020 orders (Order 5). Order 6 also was directed to the verification of the list of documents in accordance with rr 20.17 and 20.22 of the FCR. 8 On 31 March 2021, BCI commenced substantive proceedings, being Action NSD285/2021, against the first, second, third and fifth prospective respondents and against an additional entity, CoreLogic Inc. In those proceedings, BCI alleges that the corporate respondents had accessed its database unlawfully and have thereby obtained access to its confidential information. 9 After hours on 6 April 2021, the solicitors for the prospective respondents sent an email to the Chambers of Charlesworth J seeking a relisting of the matter "at the earliest opportunity" on the basis that "an urgent matter" had arisen in respect of the orders made by her Honour on 15 March 2021. In an email to the Associate of Charlesworth J on the following day, the solicitors for the prospective respondents gave a two-fold explanation for the urgency: (a) although the prospective respondents have already made some discovery pursuant to the Court's orders, they had recently ascertained that there may be a substantial number of logs relating to internet access held on the backup servers of a third party storage owner, that access to those logs would necessitate recovery of approximately 10 million "lines of access logs", and that that process could not be completed before 15 April 2021 in time to comply with her Honour's orders; and (b) BCI's commencement of Action NSD285/2021 meant that it could be concluded that BCI no longer requires further discovery from the prospective respondents in order to determine whether to commence proceedings. 10 By reason of Charlesworth J being on leave, the prospective respondents' request for an urgent listing was referred to me as Duty Judge in South Australia. 11 The prospective respondents have not filed an interlocutory application but have provided minutes of the orders they seek, being: 1. The prospective respondents be excused from further compliance with paragraphs 1 and 2 of the orders made 12 November 2020. 2. The orders made on 15 March 2021 be vacated. 3. The prospective applicant pay the respective respondents' costs of the hearing. 12 Counsel identified the orders made on 15 March 2021 which the prospective respondents seek to have vacated as being Orders 2 to 7 inclusive and Order 10. The prospective respondents seek these orders pursuant to r 39.05(c) of the FCR which empowers the Court to vary or set aside an interlocutory order. 13 In support of the application, the prospective respondents' solicitor deposed in his affidavit of 8 April 2021 that two types of logs have been identified as possible sources of relevant information (I infer documents) in Category 1 of the 12 November 2021 orders and that this material is held on servers controlled by a third party storage owner. The solicitor also deposed that the third party storage owner charges a significant premium on the recovery of data from its servers, estimated to be in the order of $10,000 to $15,000, and that the recovery of the data may take two weeks. 14 As is evident from what I have recounted so far, the matter giving rise to the urgency is that the time fixed by the orders made on 15 March 2021 within which the prospective respondents are to make the discovery, will expire this Thursday, 15 April 2021. 15 The principal submission made by counsel for the prospective respondents in support of the orders is that the commencement of Action NSD285/2021 means that the underlying purpose for the making of orders for preliminary discovery, identified at the commencement of these reasons, is no longer extant. In effect, the prospective respondents submit that there has been a material change in the circumstances on which the Court based the 12 November 2020 orders. Their counsel referred to authority (Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46) indicating that a material change of circumstance is a recognised basis upon which the Court will set aside one of its interlocutory orders, even an interlocutory order of a substantive kind made following a contested hearing. 16 BCI opposes the making of the orders sought by the prospective respondents, contending that there has not been compliance to date by the prospective respondents with the orders made on 12 November 2020 as elaborated on 15 March 2021 and within the extended periods of time allowed to the prospective respondents for that compliance. 17 BCI also submits that the 12 November 2020 orders, as varied, continue to have utility as discovery of documents in accordance with those orders may result in early amendments to the statement of claim in Action NSD285/2021, or the joinder of further respondents, and that the discovery of the material is likely to be required in any event by an order of the Court in Action NSD285/2021. 18 It would be very material to the exercise of the Court's discretion to excuse the prospective respondents from further compliance with the preliminary discovery orders and to vacate the orders made on 15 March 2021 if it was satisfied that those orders have ceased to have any point and that the prospective respondents would thereby be put to needless expense. That circumstance would exist, for example, if the prospective applicant had indicated, before complete compliance with the orders, that it did not intend in any event to commence substantive proceedings. However, that is not the present case. 19 To my mind, a number of matters indicate that it is not appropriate, in the exercise of the Court's discretion, to make the orders sought by the prospective respondents. In no particular order I list these matters as follows. 20 First, there is no suggestion that the preliminary discovery orders were not appropriate when made on 12 November 2020. As I have said, the making of those orders followed a contested hearing and were made to give effect to the considered judgment by Charlesworth J on 26 October 2020. There has been no appeal against those orders, nor any application to Charlesworth J to have them set aside. 21 Secondly, the orders were varied from time to time so as to extend the time for compliance because of the failure by the prospective respondents to comply with the orders within the times originally fixed and later extended. I do not wish to be understood by use of the word "failure" to convey implicitly a finding of culpability by the prospective respondents. Not having the familiarity of a docket Judge with the matter, I am not in a position to express any view about culpability and I do not intend to do so. I am using the word "failure" instead to indicate that it is the fact that the prospective respondents have required considerably more time than was originally allowed which has in part led to the circumstances now before the Court. There is a sense in which the prospective respondents seek to benefit from their non-compliance in a timely manner with the obligations established by the Court's orders. 22 Thirdly, I am not satisfied that the orders of 12 November 2020, as varied, lack utility by reason of BCI's commencement of proceedings on 31 March 2021. That is so even though one of the bases on which they were originally made has ceased to exist. I consider that it reasonable for the Court to proceed on the basis that the present prospective respondents, other than the fourth, are likely to be ordered to discover the very same documents in Action NSD285/2021 with the consequence that this is not a case in which the making of the preliminary discovery will be pointless. In fact, if Action NSD285/2021 had already been allocated in accordance with the Court's allocation protocols, it is possible that the docket Judge would think it appropriate at this point to order the respondents in Action NSD285/2021 to make the discovery ordered by Charlesworth J in this action. 23 In saying that, I am not overlooking the submission of counsel for the prospective respondents to the effect that, given that there has been no defence yet filed in Action NSD285/2021, the issues in those proceedings have not yet crystallised. This had the consequence, counsel submitted, that in the event that the respondents in Action NSD285/2021 make admissions of matters relevant to the issues to which the discovery is directed, there would be no order for discovery, in which event the inconvenience and expense of the making of the discovery would be wasted. This is an argument available to the prospective respondents in the abstract. However, having regard to the evident differences, if not antagonism, evident in the litigation to date and in some of the correspondence between the parties and/or the solicitors, the present prospect of admissions of the kind to which counsel referred seems remote. 24 Further, even if there were admissions that does not necessarily meant that the discovery will be unnecessary. That is because there are circumstances in which, even when there has been a relevant admission on the pleadings, discovery of documents relating to that matter may still be necessary in order for the Court to make an appropriate assessment of the significance of the conduct in question and/or its consequences. Whether or not that will be so in the present case is not a matter which I am presently in a position to judge. 25 The next matter is that the Court is entitled to proceed on the basis that, since the solicitor's email of 6 April 2021, the prospective respondents have embarked upon the process of retrieving the logs from the third party storage owner. That is so because it would have been presumptuous of the prospective respondents not to have taken by now all the steps they reasonably could to obtain the documents so as to comply with the Court's orders. The Court is entitled to expect that its orders have been respected, and that the prospective respondents would have understood that merely asking for the matter to be brought on at short notice did not relieve them of the obligation to take the necessary steps to comply with the Court's orders. 26 Counsel for BCI referred to an additional matter making the vacation of the orders made on 15 March 2021 inappropriate. That is, that during the course of the hearing on 15 March 2021, the prospect of at least one of the prospective respondents being in contempt of the Court's orders was raised. I accept that it would be inappropriate now for the Court to set aside orders which might have the effect that issues of that kind cannot be pursued in the future. 27 The final matter, which to my mind has some significance, is that the matter of urgency upon which the prospective respondents rely can be addressed appropriately by a further extension of the time. BCI has indicated that it does not oppose an extension of time for another 14 days or so. 28 For these reasons, I am not satisfied that it is appropriate to excuse the prospective respondents from further compliance with Orders 1 and 2 of the orders made on 12 November 2020, or to vacate the orders made on 15 March 2021. On the contrary, I think there is good reason for those orders to be maintained. However, given the evidence which the solicitor for the prospective respondents has provided concerning the time necessary to retrieve the documents from the third party storage owner, I will grant an extension of the time for compliance with Orders 1 and 2 made on 12 November 2020. 29 The orders of the Court will be: (1) The application by the prospective respondents to be excused from further compliance with Orders 1 and 2 of the 12 November 2020 orders is refused. (2) The application by the prospective respondents for the vacation of Orders 2-7 and 10 made on 15 March 2021 is refused. (3) The time within which the first, second, third and fifth prospective respondents are to comply with Order 1 made on 12 November 2020, as extended by orders made on 26 November 2020 and 15 March 2021, be extended further to 4 pm (AEST) on 29 April 2021. (4) The prospective respondents are to pay the prospective applicant's costs of and incidental to today's hearing. (5) There be liberty to apply. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice White.