The discovery Sought by the Respondents
33 In relation to the discovery sought by the respondents, the respondents' motion, as argued, was more confined than foreshadowed by their notice of motion. The respondents' submissions were directed to documents falling within two broad groups of documents referred to in a schedule headed "Proposed narrowed categories for discovery", forming part of Annexure MTL-5 to the affidavit of Michele Tomoko Langtry sworn 15 February 2011.
34 The first broad group of documents was comprised in categories 4(n) and 7(n) of the schedule. The documents sought in those categories were essentially "high level" documents in the sense that they were limited to certain kinds of documents placed before meetings of the board of directors of the first applicant within a defined period (category 4(n)) and certain kinds of documents placed before meetings of the board of directors of the second applicant within a defined period (category 7(n)). During the course of submissions the applicants accepted the significance of this limitation and, on that basis, maintained no substantial opposition to discovery being given according to these categories. I am satisfied that it is appropriate to order that discovery be given in relation to categories 4(n) and 7(n) of the schedule.
35 The second broad group of documents was comprised in categories 4(v) and (w), 7(v) and (w), 23 and 27 to 30 of the schedule. Discovery of documents in these categories remained in contention. These categories were directed to the discovery of documents which might show a change in business of the first applicant. They ranged from so-called "high level" documents (namely documents placed before the board of directors of the first applicant or the board of directors of the second applicant) to business plans, competitor analysis reports and documents relating to the development, features and new releases of the software.
36 The applicants' principal objection to giving discovery in respect of these categories was on the basis of relevance. The respondents supported the necessity for discovery on the basis that the documents related to the question of damages. Specifically, on the question of damages, the respondents contended that an issue would arise as to what the Forty Two EBIT would have been for the 2008 and 2009 financial years had the arrangements originally agreed under the Share Purchase Agreement run their course and not been cut short by the Exit Agreement. The respondents argued that the question of damages could not be considered properly without regard to this counterfactual, which would or might have a flow-on effect to the issues of: (a) whether the second applicant would have been entitled to a Clawback Amount (which the respondents disputed), and (b) whether, correspondingly, the respondents would have been entitled to an Earn Out Price for 2008 and 2009 (which the respondents raised as a possibility).
37 In this connection the respondents indicated that they proposed to adduce evidence at trial that prior to the Exit Agreement being entered into, the forecast EBIT for the first applicant for the 2008 and 2009 years was significantly higher than the actual results that were achieved. The respondents submit that it will be their case that this "shortfall" was because the second applicant effected a change in the nature of the first applicant's business. They submit that their case will be that the second applicant did not take steps to develop or promote the software, but rather promoted other software products "owned" by other entities within the second applicant's group of companies. The respondents drew attention to a number of covenants in the Share Purchase Agreement limiting the entitlement of the second applicant to claim a Clawback Amount where the second applicant has acted in a way that has materially prejudiced the first applicant's EBIT, and requiring the second applicant to ensure that the first applicant's business would be conducted during the Earn Out Period in a certain manner, including in a way that would not adversely affect the ability of the first applicant to achieve the highest level of EBIT. I should add that the proper construction and effect of these provisions is not currently a matter for me to decide. The existence of provisions of this kind does, however, assist the respondents in laying a foundation for the discovery they seek.
38 The difficulty which faces the respondents, however, is the fact that, beyond their bare denial of damage having been suffered as alleged, their joint amended defence does not articulate any such case.
39 The respondents did place particular reliance on paragraph 6ZJ of their defence in which they assert that the applicants bear an onus of pleading and proving certain matters (namely, that the respondents themselves would not have taken certain steps or done certain things with respect to the operation of the first applicant's business absent the Licence Agreement with CMUK). I do not think that this paragraph of their defence assists their application for discovery. Whether the applicants bear any such onus is not a matter which I need decide on the present motion because it seems to me that, for present purposes, paragraph 6ZJ of the defence raises a false issue (what the respondents would not have done) that distracts attention from the fact that what the respondents seek by way of discovery are documents showing what the applicants (and, more specifically, the first and second applicants) did, in fact, do.
40 In the absence of an appropriate articulation of the respondents' proposed case in their defence, the issue they raise in submissions is essentially speculative or hypothetical. Apparent or adjectival relevance is addressed by considering, primarily, the issues raised by the pleadings: F Hoffmann-La Roche AG v Chiron Corporation (2000) 171 ALR 295 at [2]-[3]; Bailey v Beagle Management Pty Ltd (2001) 105 FCR 136 at [28]; McIlwain v Ramsey Food Packaging Pty Ltd (2005) 221 ALR 785 at [35]; Dorajay Pty Ltd v Aristocrat Leisure Limited [2005] FCA 588 at [34]; Campaign Master (UK) Ltd v Forty Two International Pty Ltd (No 4) (2010) 269 ALR 76 at [40]. The fact that the respondents have traversed the applicants' allegations by simple denial that the second applicant has suffered loss or damage does not of itself justify the ordering of the particular discovery they now seek in that regard.
41 I would add that, had such a case been articulated in their defence, I would have been disposed to grant, at least in the first instance, some of the discovery the respondents seek by reference to categories 4(v) and (w), 7(v) and (w), 23 and 30 of the schedule.
42 The respondents sought this discovery on the additional basis that the applicants proposed to adduce evidence at trial from Mr Puckrin, the Financial Controller of the second applicant, of what the first applicant's EBIT would have been in the absence of the Exit Agreement and in the absence of the Licence Agreement with CMUK. They submit that this evidence proceeds on the counterfactual that, if the Exit Agreement and the Licence Agreement were taken out of the picture, the other financial results of the first applicant would remain unchanged. They submit that this is unlikely to be a sound reflection of what would have happened and are entitled to discovery to test whether Mr Puckrin's evidence should be accepted. However, I do not know whether Mr Puckrin's evidence is unlikely to be a sound reflection of what would have happened. All that has been put before me to justify that conclusion is, once again, the speculative possibility advanced in submissions by the respondents that the second applicant knowingly effected a particular material change to the first applicant's business. To merely raise this possibility, by way of argument, without more, and without that issue having been otherwise articulated in the pleadings, does not, in my view, provide a sufficient basis to order the particular discovery that is sought by the respondents in this regard.
43 For these reasons, I will not make orders providing for the giving of discovery in relation to the second broad category of documents.