(g) claims for deceit.
15 I said I would come back to the memorandum of understanding and I will now do so. The document is page 33 in the bundle, PX01. The document is six pages long and contains eight headings. It contains various internal inconsistencies.
16 Heading 1 is "Scope" and notes that the parties intend to enter into an agreement whereby the defendant will purchase 704 plasmas with associated software licences etc. Heading 2 is " The MOU hereunder shall be based on the following conditions" and sets out the principles upon which the future purchase agreement will be structured. Heading 3 is "Confidentiality and Publicity". It states the existence and terms and conditions of this MOU are of a confidential nature and there must be prior written consent before disclosure. Heading 4 is "General" and contains the following:
"4.1 Either party may terminate the MOU with 30 days prior written notice signed by a duly authorised representative.
4.2 No rights or obligations shall be created by the MOU with respect to the parties.
4.3 Panasonic and NGAGE will maintain open and honest communications.
4.4 This MOU constitutes the entire understanding and agreement between the parties with respect to the subject matter hereof, and supersedes and cancels all prior or contemporaneous understandings, communications, or agreements, written, oral or otherwise, regarding the subject matter hereof."
17 Other provisions under Heading 4 note that the MOU is not to be modified except in writing, state that the contra proferentem rule is not to apply. Heading 5 makes it clear that the MOU is governed and construed in accordance with NSW law. Heading 6 deals with dispute resolution. Headings 7 and 8 have no relevance to the present problem.
18 Counsel for the plaintiff acknowledge that the MOU is, to use their words, "a curious document" in that it expressly states that it does not create any rights or obligations with respect to the parties (clause 4.2), but it contains a number of provisions which are inconsistent with that provision.
19 Thus at some stage, if there is litigation between the parties, some judge may have to decide whether, despite clause 4.2, the memorandum creates rights and obligations.
20 However, as counsel submit, for the purposes of the present proceedings, all that the plaintiff need show is that the contemplated proceedings are likely to rest on some recognised legal ground and does not necessarily have to show a prima facie or pleadable case so long as there is reasonable cause to believe that the applicant may have a right to obtain relief in the court, its mere assertion that there is such a case being insufficient. The authority for that proposition is Hooper v Kirella Pty Ltd (1999) 96 FCR 1 at 11-12, a decision on comparable rules in the Federal Court.
21 The rule that I am considering was only introduced into NSW law last year. Prior to then, the furtherest that preliminary discovery went was to enable the Court to permit discovery of identity. There was equitable jurisdiction to do much the same and some authority to suggest that the equitable jurisdiction went further. It is not necessary to consider the conflicting authority in view of the new rule.
22 The current rule is, as the heading to it shows, taken from Federal Court Rules Order 15A rule 6. The rules are, however, not identical. The Federal Court rule commences with the words "Where: (a) there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court" whereas, as I have set out, the Supreme Court rule says "If it appears to the court that: (a) the applicant may be entitled to make a claim for relief from the court". The Supreme Court rule would appear to be in wider terms than the Federal Court rule. It would seem that the rule-making authority has deliberately intended to incorporate into NSW court procedure at the very least the power of the Federal Court and that despite any conservative philosophy a judge might hold about the extent of the law of discovery, courts must proceed on the basis that there has been a deliberate policy decision made to extend the rights of potential plaintiffs against potential defendants and to extend them in the way that the Federal Court set out in cases like Hooper v Kirella.
23 I will proceed on that basis.
24 The evidence which I have to date is, of course, only from one side and is untested. However, one would think that a tribunal of fact may very well reach the conclusion that the effective reason why the plaintiff did not obtain the Westfield contract was simply that Westfield being a "big player" was able to demand a $2 million guarantee of performance for anyone who wanted its business. The defendant was unable to satisfy that demand without assistance, it offered the plaintiff the opportunity to provide that assistance as the plaintiff was its preferred supplier, the plaintiff declined, one of the plaintiff's competitors, however, accepted, as a result of which the competitor and the defendant got the contract. On that analysis the tribunal of fact would probably come to the conclusion that the plaintiff was not entitled to any substantial damages for loss of the contract.
25 However, the hypothetical tribunal might also consider that there was quite a bit of suspicion as to whether, before matters came to a head with Westfield's demand for the $2 million guarantee, the defendant had shared confidential information with TCP outside the scope of the proposed contract with the plaintiff. However, it may be that at the time the information was shared it was shared within the permit of the confidentiality agreement, but later that information was used against the plaintiff in TCP and LG obtaining the contract.
26 I must ask myself whether these findings by the hypothetical tribunal would be sufficient to justify an order being made under the rule?
27 Although there is some suggestion in the judgment of Palmer J in Cairns v Unicomb [2005] NSWSC 1279 that a prima facie case has to be shown, it seems to me that the general flow of decision in the Federal Court, see Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728 and Aitken v Neville Jeffress Pidler Pty Ltd (1991) 33 FCR 418, is that what one looks for is to see if there is reasonable cause to believe that the applicant may have a right of action against the respondent.
28 There is also authority in the Federal Court that one should construe the present provision liberally.
29 There are passages in the Federal Court decisions which suggest that the rule is remedial legislation designed to amplify the court's power to penetrate obscurities and uncertainties and ought to be beneficially construed: the Paxus case at 733. I should note that there must be a number of lawyers, myself included, who, with the European lawyers, consider that even traditional discovery may be questionable and it is most questionable whether this "advance" in the rules does what Burchett J said in the Paxus case, but rather alters the whole playing field of litigation. However, whatever a judge's personal feelings are about the matter or his or her philosophy or jurisprudence, this is a collegiate court, the rules are clearly written and I must "go with the flow".
30 Applying the test of "reasonable cause to believe that an applicant may have a right of action", it seems to me that with respect to the confidentiality cause of action there is sufficient here to justify an order.
31 I am less sure about the misleading conduct under the Trade Practices Act allegation. Again, there are suspicious circumstances that the defendant may well have been involved in some tricky conduct before May. That tricky conduct would not, it would seem to me on the material before me (assuming it occurred), lead to damages for loss of bargain, but a small amount of damages might flow from it.
32 Accordingly, when I look at rule 5.3(a) I rule that the plaintiff is a person who may be entitled to make a claim for relief from the court.
33 The next question is whether the plaintiff has made reasonable enquiries, but despite these, it has been unable to obtain sufficient information. The evidence shows that the information has been requested and refused. The next matter is whether the prospective defendant may have possession of documents or things which can assist the determination as to whether the plaintiff is entitled to make a claim for relief. In my view, that is satisfied on the material before me and finally, I am satisfied that inspection of any such documents would assist the plaintiff in making the relevant decision.
34 Accordingly, I should make some order for preliminary discovery.
35 I might add that it would seem to me that the section not only covers information as to the evidence required to prove a cause of action, but also covers material as to the possible worth of the prospective defendant. This is because most sensible people when considering whether to commence action do not usually sue if, even despite assurance by their lawyers of 100% chance of success, the probabilities will be that they will pay out money for legal costs yet make a nil recovery.
36 Counsel have set out in their written submissions reasons why each of the documents in the schedule over which they seek discovery is relevant to breach of confidence or the Trade Practices claim. At this nebulous stage of the litigation their assertions would appear to have justification.
37 I then need to turn to three matters: