Legal Principles
10 Order 15 r 8 of the Federal Court Rules empowers the Court to order a party to provide discovery of documents 'relating to any matter in question in the proceeding'. It is clear that r 8 provides a right of a different and additional kind from that right available by way of general discovery as it is now understood under the Federal Court Rules.
11 In Seven Network Ltd v New Ltd (No 5) (2005) 216 ALR 147 Sackville J held that the test to be applied in determining whether r 8 particular discovery should be ordered was whether the documents sought were 'reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case'. However it is also then stressed by Gray J in Independent Cement & Lime Pty Ltd v Australian Cement Ltd & Ors [1988] FCA 749that pure speculation that the documents might exist is not a sufficient ground for the making of an order of the kind contemplated by r 8.
12 In Spyer v Cuddles 'N' Mum (Franchise) Pty Ltd (No 3) [2002] FCA 1563, Lindgren J outlined the developments which have occurred in the Federal Court Rules providing a more restricted ambit of discovery in relation to a notice of discovery required by O 15 r 2. However, he then pointed to the fact that the expression 'relating to any matter in question in the proceeding' under r 8 did, import the Peruvian Guano test. It followed that there was a disconformity between the narrower and more demanding test of discoverability under O 15 r 2(3) and the Peruvian Guano test. Indeed as his Honour described it, the test under r 8 was much broader than under the prescribed notice for discovery Form 21. Notwithstanding that the threshold is not high, his Honour observed that the word 'may' where it appears for the second time in that rule gives the court an overriding discretion not to make an order even if the power given by the rule to make one is enlivened.
13 Foremost in the exercise of a discretion in this case will be the question of whether part or all of the additional specific discovery sought by Ferguson Corporation can be said to be a fishing expedition. Is it merely speculative that such documents exist which may assist its case and the case of the respondents? Ferguson Corporation contends that as Mr Kowalewski has already attempted but failed on a motion to strike out the Ferguson Corporation pleadings, there is a strong indication that Ferguson Corporation has established sufficient a case on its pleading (and which is supplemented by affidavit material supporting the pleading) that it would be difficult to conclude that the documents it seeks are within the category of documents which are necessary to establish a case in the first place.
14 Lindgren J, in Trade Practices Commission v CC (NSW) Pty Ltd (No 4) (1995) 58 FCR 426 at 437-438 said:
It remains to consider the submission that discovery should not be ordered because the Commission seeks to use it as a "fishing expedition". It has often been said to be a ground on which discovery (and interrogatories) will not be ordered, that the purpose is to carry out a "fishing expedition": see, for example, Hennessy v Wright (No 2) (1890) 24 QBD 445n at 448n; Russell v Stubbs Ltd [1913] 2 KB 200n at 204n; Rofe v Kevorkian [1936] 2 All ER 1334 at 1337-1338; Associated Dominions Assurance Society Pty Ltd v John Fairfax & Sons Pty Ltd (1952) 72 WN (NSW) 250 at 254; Latec Finance Pty Ltd v Jury [1960] NSWR 321 at 323; Melbourne Home of Ford Pty Ltd v Trade Practices Commission (1979) 36 FLR 450 at 459-460; WA Pines Pty Ltd v Bannerman (1980) 41 FLR 175 at 181-182, 190-191; Lloyd v Costigan (1983) 62 ALR 284 at 292; Australian Securities Commission v Dalleagles Pty Ltd (unreported, Federal Court, French J, 27 February 1992) at p 14; and cf E Bray, The Principles and Practice of Discovery (1885), p 13.
What does the reference to a "fishing expedition" mean? After all, ex hypothesi, the giving of discovery will often, if not always, reveal documents of which the other party was not previously aware (similarly, the administering of interrogatories will often, if not always, reveal information of which the other party was not previously aware). What is meant is that discovery must not be used for the purpose of ascertaining whether a case exists, as distinct from the purpose of compelling the production of documents where there is already some evidence that a case exists: see, for example, Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 575; Associated Dominions Assurance Society Pty Ltd v John Fairfax & Sons Pty Ltd; WA Pines Pty Ltd v Bannerman; Barbarian Motor Cycle Club Inc v Koithan (1984) 35 SASR 481 at 486; Nestle Australia Ltd v Commissioner of Taxation (1986) 10 FCR 78 at 82-83; Mobex Pty Ltd v Comptroller-General of Customs (unreported, Federal Court, Foster J, 18 May 1994), at p 18. In WA Pines Pty Ltd v Bannerman at 181, Brennan J said that what is required is that "sufficient is shown to ground a suspicion that the party applying for discovery has a good case proof of which is likely to be aided by discovery". On the facts of particular cases, the application of the distinction between "fishing" and "non-fishing" may well be difficult.
15 Similar concepts were canvassed in WA Pines Pty Ltd v Bannerman (1980) 41 FLR 175 at 190-191per Lockhart J:
However, among the well-established limitations upon the power to interrogate and to discovery of documents is the rule that this power cannot be used for the purpose of "fishing".
In Hennessy v. Wright (No. 2) (1888) 24 Q.B.D. 445 (reported as a note to Parnell v. Walter (1890) 24 Q.B.D. 441) Lord Esher M.R. said: "In other words, the plaintiff wishes to maintain his questions, and to insist upon answers to them, in order that he may find out something of which he knows nothing now, which might enable him to make a case of which he has no knowledge at present. If that is the effect of the interrogatories, it seems to me that they come within the description of 'fishing' interrogatories, and on that ground cannot be allowed.
The moment it appears that questions are asked and answers insisted upon in order to enable the party to see if he can find a case, either of complaint or defence, of which at present he knows nothing, and which will be a different case from that which he now makes, the rule against 'fishing' interrogatories applies" [(1888) 24 Q.B.D., at p. 448.].
In Lane v. Gray (1873) L.R. 16 Eq. Cas. 552 Sir Richard Malins V.C. held that the court's power to make an order for discovery was a discretionary power to order production when it shall appear to the court to be right to do so. His Lordship refused the application until the case had proceeded further and the plaintiff made out a prima facie case in support of her claim. The plaintiff had brought a suit claiming to be entitled to a share in the estate of an intestate as an alleged next of kin. It appears that discovery was refused because all that the plaintiff had done at that stage of the case was to allege that she was next of kin of the intestate and there was no evidence to support her assertion. The estate of intestates were frequently claimed by persons of whom many had no foundation for their claims; but by obtaining on discovery production of documents belonging to the intestate they obtained information by means of which fresh fictitious cases were in many instances manufactured.
In Associated Dominions Assurance Society Pty. Ltd. v. John Fairfax & Sons Pty. Ltd. (1952) 72 W.N. (N.S.W.) 250, Owen J. said: "A 'fishing expedition', in the sense in which the phrase has been used in the law, means, as I understand it, that a person who has no evidence that fish of a particular kind are in a pool desires to be at liberty to drag it for the purpose of finding out whether there are any there or not" [(1952) 72 W.N. (N.S.W.), at p. 254]. See also Bray on Discovery (1885), pp. 13, 16, 98 and 461.
16 The respondents rely heavily on the vagueness of the allegations in the re-amended statement of claim. When these issues were considered on the strike out motion (Ferguson Corporation Pty Ltd v Kowalewski [2007] FCA 789), Nicholson J held that the pleading should stand. His Honour held at [13] that the respondents did not complain about any difficulty responding to the pleading in respect of the quotations and the drawings. Those documents were particularised, that is, they were described with sufficient particularity in the pleadings. There was a further complaint about par 5.3 and the reference to 'other information' to which the complaints of the respondents were directed. In relation to the other information, his Honour held that it was importantly constrained by the words that the documents were taken by the employee. It was not a case in which there was a completely opened ended pleading even by reference to the 'other information' in par 5.3. His Honour continued:
First of all the discovery must disclose the documents which were taken. Unless that fact appears prima facie on the discovery, then there can be no 'other information'. If it does appear on the discovery, then the issue is at large in relation to it. In my view, reading par 5 as a whole and viewing par 5.3 in the context of pars 5.1 and 5.2 referring to 'the quotations' and 'the drawings', this is a pleading which is not embarrassing even if care and sensitivity would be required ultimately to the application of par 5.3.
17 The respondents rely on the judgment of Warren J (as her Honour then was) in Creative Brands Pty Ltd v Franklin [2001] VSC 338 at [16]-[18] and [22] in which it was said:
16 It is appropriate to identify the relevant principles with respect to the pleading of confidential information and competition cases. First, as a general proposition the courts are reluctant to permit a previous employer to use a generally worded claim to stifle the right of an employee to use the skill and experience of that employee sometimes called "know-how" as distinct from an ex-employer's "secrets". Second, confidential information and competition cases call for specificity in the pleading of material facts to overcome the bringing of actions that are speculative in character. The latter view was expressed by Templeman J in John Zinc & Co Limited v Lloyds Bank Limited (1975) RPC 385; also, by Whitford J in Reinforced Plastics Applications (Swansea) Limited v Swanswea Plastics & Engineering Co Limited (1979) FSR 182; and by Mummery J in Ixora Trading Incorporated and anor v Jones and anor (1990) FSR 251.
17 In Ixora Trading Mummery J cited the remarks of Whitford J in Reinforced Plastics. The remarks of Whitford J are instructive:
"It is, I think, a matter of great concern in relation to confidential information cases that actions should not be brought which are no more than speculative in character. It is altogether too easy when employees leave and are employed by a rival firm to harass that rival firm upon the basis that the employees who have left the plaintiffs and joined them have taken away trade secrets of great value, and to bring an action which may involve the expenditure of an enormous amount of time and money and include disclosure of information which is going to be alleged to be confidential on either side with consequent troubles and worries. It is not really to be contemplated that proceedings of this kind should be allowed to go forward on nothing more than a speculative basis; and, unless the plaintiff can show that he has some basis for a reasonable believe (sic) in his assertion that the defendants are making use of his confidential information, then the action can only be characterised as speculative and fishing, and ought not, in my judgment, to be allowed to proceed. There must be something more than a mere assertion."
18 In Balstone Limited v Headline Filters Limited (1987) FSR 330 Scott J at 351 made general comments about actions against former employees. In that case there were allegations both of breach of confidence after termination of employment and breach of duty of good faith whilst still in employment. Scott J observed:
"This case is, in my view, yet another example of an attempt by an employer to use the doctrine of confidential information to place fetters on the ability of ex-employees to compete. Technologically based industries abound. All have what they regard as secrets. Employees, particularly those employed on the scientific or technical side of the manufacturing business, necessarily acquire knowledge of the relevant technology. They become associated with technological advances and innovations. Their experience, built up during their years of employment, naturally equips them to be dangerous competitors if and when their employment ceases. The use of confidential information restrictions in order to fetter the ability of these employees to use their skills and experience after determination of their employment to compete with their ex-employer is, in my view, potentially harmful. It would be capable of imposing a new form of servitude or serfdom, to use Cumming-Bruce LJ's words, on technologically qualified employees. It would render them unable to practice to leave their employment for want of an ability to use their skills and experience after leaving. Employers who want to impose fetters of this sort on their employees ought in my view to be expected to do so by express covenant. The reasonableness of the covenant can then be subjected to the rigorous attention to which all employee covenants in restraint of trade are subject. In the absence of an express covenant, the ability of an ex-employee to compete can be restricted by means of an implied term against use of disclosure of trade secrets. But the case must, in my view, be a clear one. An employee does not have the chance to reject an implied term. It is formulated and imposed on him subsequently to his initial entry into employment. To fetter his freedom to compete by means of an implied term can only be justified, in my view, by a very clear case. The present is, to my mind, a long way from that."
18 Similarly, in Liberty Financial Pty Ltd v Scott [2004] VSC 414, Harper J said at [6]-[8]:
6 It was not submitted that the plaintiffs can identify any document, whether stored electronically or otherwise, in which this information can be identified. Rather, the plaintiffs submitted that at trial they will, if discovery is properly made, demonstrate that by comparison with the first plaintiff's modus operandi in 1999 against the second defendant's modus operandi when it first commenced business and in the two years thereafter, one will be able to see such similarities as to infer that confidential information was passed by the first defendant to the second defendant.
7 If I have accurately described the submissions of the plaintiffs on this point, then their position is that they have no evidence at present to substantiate what they anticipate will be the proper inference to draw from a comparison of the several modus operandi of respectively the first plaintiff and the second defendant. They suspect that discovery, if properly made, will disclose that the comparison they seek to make can be made and, when made, will lead to the inference to which I have referred.
8 If that, again, is an accurate summary of the plaintiffs' argument on this point, then it seems to me that the plaintiffs are essentially engaged in a fishing expedition. The rules concerning discovery do not permit discovery for the purposes of creating a case. There are of course special rules concerning discovery before action is commenced, where the plaintiff or putative plaintiff can demonstrate a real likelihood that a suspected case will be substantiated by inspection of documents not available without resort to that rule. That is not this case. Again, with the caveat that I have accurately summarised the plaintiffs' submissions, it seems to me that this application is one that can be properly described as fishing in the pure sense.
19 It is common ground that the claim for Ferguson Corporation is largely inferential. In the context of these applications for further specific discovery, it is essential to resolve the question of whether or not the primary claim is just based on a suspicion with little or no support - in which case further specific discovery may be an unjustifiably intrusive fishing expedition. Or does common sense suggest that there is enough on the face of matters in the material supporting the claim to entitle the orders sought? It is not possible to form a view on that topic unless the evidence in support of the claim as well as that in response is examined. While it is not appropriate to attempt to reach any clear view as to the ultimate quality of the evidence at this stage, it may be that if the claim is no more than speculation, so much would be clear. Each party has filed several affidavits. I will refer to some of the material without recording it all at this interlocutory stage.