Pioneer Energy Holdings v Seth

Judgment (ex tempore - revised 27 march 2014) 1HIS HONOUR: This is a summons for relief pursuant to UCPR r 5.3. The plaintiffs seek an order that the defendants give preliminary discovery of eight defined categories of document. The application is opposed. 2The background can be stated shortly. The first plaintiff (PEH) is a joint venture vehicle. The joint venturers are the third plaintiff (Morgan Stanley) and the third defendant (Blue Oil). The purpose of the joint venture was to construct a diesel storage facility in Mackay, in the State of Queensland. 3Morgan Stanley holds 75 percent of the issued shares in PEH. Blue Oil holds the remaining 25 percent. 4The relationship between Morgan Stanley and Blue Oil is governed by a shareholders agreement. 5The second plaintiff (Pioneer Energy) as principal is undertaking the construction work. Pioneer Energy is a wholly opened subsidiary of PEH. It entered into a head contract with the fourth defendant (Blue Diamond) as contractor. 6The construction work was being carried out (I say "was" because Pioneer Energy claims to have terminated the construction contract) through a number of subcontracts. The subcontractors included entities referred to in the evidence as Toptech, Kanon, Chemie-Tech and HMT. It would appear that the principal subcontract was that made between Blue Diamond and Chemie-Tech. 7Blue Diamond retained, to advise it in relation to the project and the subcontracts, a firm of consulting engineers known as Aurecon. 8I have indicated that the head contract was terminated, or purportedly terminated, by Pioneer Energy. Blue Diamond and the other defendants do not accept that the termination was valid. They have commenced proceedings to assert their various claims. 9In addition, Morgan Stanley has terminated (or purported to terminate) the shareholders agreement. Again, as I understand it, Blue Oil and the other defendants do not accept that. 10The basis for the termination of the construction contract (and this is all that is really relevant for present purposes) was relatively narrow. The notice to show cause that Pioneer Energy gave Blue Diamond stated, as facts understood by Pioneer Energy, that Blue Diamond or persons associated with it, including the first defendant Mr Seth, had sought to falsify quotations for an item of variation work submitted by Toptech, and had falsified an invoice prepared by Toptech for the execution of that item of variation work. The amount said to be in issue, some $10,000, is (as was pointed out for the defendants) minuscule compared to the overall value of the contract, exceeding (before variations and exclusive of GST) $42.6 million. 11Nonetheless, Pioneer Energy's position is that the consequences of the conduct that it alleges are so grievous, in terms of the relationship between it and Blue Diamond, that termination was justified. Whether or not that contention is correct is a matter for another time and, one might hope, another judge. 12The application for preliminary discovery is made because the plaintiffs have ascertained, on their view of things, reason to suspect that certain representations said to have been made by Mr Seth on his own behalf or on behalf of, in particular, Blue Oil were false, or that otherwise Mr Seth and the other defendants have been engaged in fraudulent conduct. That suspicion arises as follows. 13The plaintiffs' case is that two relevant representations were made by Mr Seth (I will not continue to say, for himself and Blue Oil) before the contracts were made, with the intention of inducing Morgan Stanley to enter into the shareholders' agreement (and to permit Pioneer Energy to enter into the construction contract), and which did in truth have that consequence. The first of those representations is described as the "no margin representation". The second is described as the "funding representation". 14In substance, the no margin representation is said to be a representation by Mr Seth to officers of Morgan Stanley, to the effect that Blue Diamond would earn only $1 million of gross margin on the contract sum. As I have mentioned, the net contract sum exceeded $42.6 million. Mr Seth is said to have represented, further, that most of that minimal margin would be expended on direct staff costs. Mr Seth said, in those circumstances, that the "risk and work involved alone warrants [sic] a 5 percent free equity" (the quotation comes from an email which could be thought to provide strong evidence of the making of the no margin representation). 15Morgan Stanley's case is that it acted on the no margin representation by agreeing to the inclusion, in the shareholders agreement, of a provision that, on satisfaction of certain conditions, Blue Oil would receive for $1 a further 5 percent of the issued shares in the joint venture vehicle. 16The "funding representation" is said to be a representation by Mr Seth that Blue Oil's commitment towards the funding of the project would be derived from loans or other advances made to it by Mr Seth or by some family trust or other entity associated with him. Morgan Stanley says that this, too, was relevant to its entry into the transaction, because it showed that Mr Seth and the entities that he controls (which include Blue Oil and Blue Diamond) would have, as the vernacular puts it, some "skin in the game". 17There are proceedings between Chemie-Tech and Toptech on the one hand, and Blue Diamond on the other, in the Supreme Court of Queensland. The plaintiffs have obtained access to the Court files in those proceedings. The inspection of documents to which the plaintiffs were given access has revealed, according to their affidavit evidence, that the total value of the Toptech contract is a little under $2 million, whereas the total of the milestone payments to be made in respect of its work under the head contract are a little in excess of $3 million. The difference, in excess of $1 million, is said to represent an effective mark-up of 55 per cent on the actual contract price payable to Toptech. That might seem to be a little more than the minimal percentage mark-up that the sum of $1 million, compared to a contract value of $42.6 million, represents. 18In both dollar and percentage terms, the suggested disparity between the head contract and the amount actually payable to Chemie-Tech under its contract, is even greater. The head contract allows in excess of $40 million as the value of Chemie-Tech's work, payable according to the achievement of various milestones. The amount said to be payable in fact under the Chemie-Tech contract is $22.8 million. The difference is about $17.5 million, or in excess of 76 per cent. Even if that margin is reduced to allow for a factor which it is unnecessary to describe in detail, but which could be thought to represent the asserted $1 million margin, the percentage mark-up, on the plaintiffs' case, would exceed 70 per cent. 19In those circumstances, the plaintiffs suspect that they may have been the victims of fraud. They accept that this would be the proper characterisation of the actions, were their suspicions to be confirmed. 20In respect of the funding representation, the plaintiffs have ascertained, by means that it is unnecessary to recount, that there may be real reason to suspect that in fact Blue Oil did not contribute from its own resources or Mr Seth's the amounts that it was supposed to have contributed. Again for reasons that it is unnecessary to recount, the plaintiffs suspect that Blue Oil in effect used the margin that, they suspect, it skimmed off the Toptech and Chemie-Tech contracts to fund its obligations under the shareholders agreement. 21It is in that context that the plaintiffs seek preliminary discovery. 22Rule 5.3(1) applies where it appears to the Court that an applicant may be entitled to make a claim for relief from the Court against a prospective defendant but, having made reasonable inquiries, the applicant cannot obtain sufficient information to decide whether or not to do so. The rule also requires that it be shown that the prospective defendant have possession of documents or things that might assist in the consideration of the claim. If the conditions of the rule are satisfied, the discretion to order preliminary discovery is enlivened. 23For convenience, I set the rule out, so far as it is relevant: 5.3 Discovery of documents from prospective defendant (cf Federal Court Rules, Order 15A, rules 6, 7 and 9) (1) If it appears to the court that: (a) the applicant may be entitled to make a claim for relief from the court against a person (the prospective defendant) but, having made reasonable inquiries, is unable to obtain sufficient information to decide whether or not to commence proceedings against the prospective defendant, and (b) the prospective defendant may have or have had possession of a document or thing that can assist in determining whether or not the applicant is entitled to make such a claim for relief, and (c) inspection of such a document would assist the applicant to make the decision concerned, the court may order that the prospective defendant must give discovery to the applicant of all documents that are or have been in the person's possession and that relate to the question of whether or not the applicant is entitled to make a claim for relief. 24The approach to an application under r 5.3(1) was summarised by McColl JA in Hatfield v TCN Channel Nine Pty Limited (2010) 77 NSWLR 506 at [47] to [52]. Although Young JA and Sackville AJA gave separate reasons, I remain of the view that I expressed in Shannon v Gadens Lawyers Sydney [2013] NSWSC 417 at [10], that what their Honours said does not detract from what McColl JA said. 25It is convenient simply to set out the six paragraphs in question from the reasons of McColl JA; [47] First, "[i]n order for it to 'appear' to the Court that the applicant 'may be entitled' to make a claim for relief, it is not necessary for the applicant to show a prima facie or pleadable case": Morton v Nylex Ltd (at [25]). [48] Secondly, while "the mere assertion of a case is insufficient ...[i]t will be sufficient if there is reasonable cause to believe that the applicant may have a right of action against the respondent resting on some recognised legal ground": Morton v Nylex (at [25]). [49] Thirdly, "belief requires more than mere assertion and more than suspicion or conjecture. [It] is an inclination of the mind towards assenting to, rather than rejecting a proposition. Thus it is not sufficient to point to a mere possibility. The evidence must incline the mind towards the matter or fact in question. If there is no reasonable cause to believe that one of the necessary elements of a potential cause of action exists, that would dispose of the application insofar as it is based on that cause of action": St George Bank Ltd v Rabo Australia Ltd [2004] FCA 1360; (2004) 211 ALR 147 at 154 , per Hely J, referring in turn to John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679 at [13], [14], [17] and [73], per Emmett J. The use of the word "may" indicates the court does not have to reach "a firm view that there is a right to relief": Telstra Corporation Ltd v Minister for Broadband, Communications and the Digital Economy (2008) 166 FCR 64 at 79 [58]. [50] Fourthly, the requirement that the matters set out in r 5.3 of the Uniform Civil Procedure Rules "appear[s]" to the court to establish an entitlement to an order under the rule may be wider than the requirement in the Federal Court Rules, O 15A, r 6 that there "is reasonable cause to believe": see Panasonic Australia Pty Ltd v Ngage Pty Ltd [2006] NSWSC 399; (2006) 69 IPR 595 at 598 [22] per Young CJ in Eq; Papaconstuntinos v Holmes à Court [2006] NSWSC 945 at [17] per Simpson J; Hornsby Shire Council v Valuer General of NSW [2008] NSWSC 1179 at [33], per Adams J. Nevertheless Hely J's statement in St George Bank (at 154 ) remains apposite, namely that "whilst uncertainty as to only one element of a cause of action might be compatible with the 'reasonable cause to believe' required by subpara (a), uncertainty as to a number of such elements may be sufficient to undermine the reasonableness of the cause to believe". [51] Fifthly, "the question posed by [r 5.3(1)(a)] ... is not whether the applicant has sufficient information to decide if a cause of action is available against the prospective respondent [but] ... whether the applicant has sufficient information to make a decision whether to commence proceedings in the court. Accordingly, an applicant for preliminary discovery may be entitled to discovery in order to determine what defences are available to the respondent and the possible strength of those defences": St George Bank (at 154 ) (emphasis in original); see also Morton v Nylex (at [33]). Thus application of the rule will not be precluded by the fact that the applicant already has available evidence establishing a prima facie case for the granting of relief, as there might be matters of defence which could defeat a prima facie case: Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd [1996] FCA 1500 at [41], per Lindgren J, referred to with approval by the Full Federal Court (French J, Weinberg J and Greenwood J) in Telstra Corporation Ltd (at 80 [60]). [52] Sixthly, as Hely J said in St George Bank (at 153 ), "the rule is to be beneficially construed, given the fullest scope that its language will reasonably allow, with the proper brake on any excesses lying in the discretion of the court, exercised in the particular circumstances of each case". 26In the present case, the defendants (for whom Ms Culkoff of counsel appeared) did not, so far as I could understand their position, suggest that the plaintiffs had not shown that they might be entitled to make a claim for relief against at least three of the defendants (being Mr Seth, Blue Oil and Blue Diamond). On Ms Culkoff's approach, the position in respect of the second defendant, Mr Di Francesco, was somewhat different. 27Accordingly, it is unnecessary for me to deal in any detail with the position as between the plaintiffs and the first, third and fourth defendants. I say that not only because the existence of the entitlement to make a claim for relief (in respect of those three defendants) was not disputed, but because it was Ms Culkoff's primary submission that in fact the plaintiffs had all the information they required to enable them to make the decision whether or not to commence proceedings. 28To the extent that it is necessary for me to do so, I would say that, in respect of the dealings between the plaintiffs and the defendants over the sub-contracts in question, the material that I have summarised in relation to the Toptech and Chemie-Tech subcontracts satisfies me, that in respect of those matters at least, the plaintiffs may well be entitled, in the requisite sense as explained by McColl JA, to make a claim for relief against the first, third and fourth defendants. 29The position of Mr Di Francesco is a little bit different. He was Blue Diamond's project manager. He is a director of PEH and Pioneer Energy (being one of Blue Oil's two nominee directors, along with Mr Seth). There is, contrary to Ms Culkoff's submission, some evidence that he himself was involved in the "no margin" aspect of the complaint. I refer, in particular, to an email emanating from Mr Di Francesco (rather than Mr Seth) whereby he himself made the "no margin" representation. 30Further, in his position as project manager, it could scarcely be thought that Mr Di Francesco would not have known of the alleged inflation of the subcontract values, if indeed that is what has happened. 31Finally, in relation to Mr Di Francesco, his position as a director of the contracting company, Pioneer Energy, and his position on the other side as a representative of Blue Oil, could be thought to put him in such a position of conflict as possibly to engender personal liability for breach of duty as a director, and possibly to engender liability as an accessory to whatever wrongful acts (if any) may be alleged and proved against Mr Seth, Blue Oil or Blue Diamond. 32I turn to the essence of the defendants' opposition, which as I have said is that the plaintiffs (on the defendants' view of the world) have sufficient information to decide whether to commence proceedings. 33In assessing this submission, it is necessary to bear in mind that the question is not just, 'do the plaintiffs know enough to suggest that they may have a cause of action?' Demonstration that they may have a cause of action is one of the elements that enlivens the discretion under the rule. But the question that is relevant is whether the plaintiffs have sufficient information to enable them to commence proceedings in respect of the suggested cause of action. (It seems to me that there is no material distinction between the Rules' expression "claims for relief" and the more common expression "cause of action".) 34Clearly enough, the decision whether or not to commence proceedings requires consideration of whether there is in fact an available cause of action, or claim for relief. But it goes further than that. Even leaving aside the case of fraud, what is required is some analysis of the facts overall, to see if there may be available defences, and to attempt to make some assessment of the strength of those defences. 35A construction of the rule which said that a prospective plaintiff was not entitled to get anything over and above documents necessary to show the existence of a cause of action would, in my view, be unduly restrictive. 36Further, there is clear authority in support of the proposition that the statutory test directs attention not only to the cause of action but also, as I have said, to the assessment of the availability and strength of defences. McColl JA made this clear in Hatfield at [51]. 37In this case, it is necessary to bear in mind that what the plaintiffs are contemplating is an allegation of fraud, or of intentional (and effectively fraudulent) statutory misleading or deceptive conduct. That is a very serious matter. The courts have stressed consistently the necessity of parties and their lawyers, who wish to make such serious allegations, satisfying themselves that there is a proper basis for making them. Again, the satisfaction of that duty goes beyond looking at material that might justify making the allegation. In an appropriate case, it would require assessment of material that might suggest that in fact, despite a somewhat malodorous pile of facts or documents, there is in reality no fraud at all. 38Thus, in the present case, it may well be that there is some obvious (or even difficult to perceive) innocent and non-fraudulent reason to suggest that the apparent disparity between the sub-contract amounts and the amounts in the head contract, have a harmless explanation. That is to say, it may be that there is some explanation of the possible disparities that is entirely inconsistent with the existence of fraud. Particularly when the relevant facts are to a large extent within the knowledge of the defendants, I do not think that it can be said to be outside the purview of r 5.3(1) for plaintiffs who are contemplating making the serious allegation of fraud to wish to satisfy themselves, so far as an application for preliminary discovery might help them to do, that there is no innocent explanation. 39Essentially similar observations apply in respect of the funding representation. Again, if the plaintiff's suspicions prove to be well founded, the funding representations could be thought to have been made when they were not intended to be carried out, and when in fact Mr Seth and others intended to fund the project (to the extent that Blue Oil was required to do) through the excessive and unauthorised profits that, the plaintiffs suspect, it may have garnered under the construction agreement. In that sense, the two are tied together. 40That is enough reason to reject the first (and principal) reason given by the defendants in opposition to the application. 41It is to be noted that in any event the plaintiffs have no information as to what may be the case (in respect of inflation of the subcontract sum) in respect of the subcontracts between Pioneer Energy on the one hand and Kanon or HMT on the other. Nonetheless, it can hardly be said that the inferences that are available from the material before me would not be sufficient to engender at least some suspicion that the same conduct may have been perpetrated in relation to those other subcontracts. 42Ms Culkoff, I think as an addition or supplement to her first and principal submission, submitted that it was clear that the plaintiffs had sufficient information, because they had taken the very serious step of terminating the construction agreement. If I may say so with the greatest of respect, that submission seems to me to overlook entirely the reality. The reality is, as I have said, that the notice to show cause was given in respect of conduct relating to three successive quotations to perform some item of variation work, and the invoice ultimately issued for that work. By definition, variation work is work outside the scope of the original works under the contract. The fact that there was some skullduggery in relation to a particular variation (if that fact be established, and I am not to be taken as saying that I think it has been made out) could not possibly justify the making of the very serious allegations, as to pre-contract fraud, that the plaintiffs are considering. 43In this context, Ms Culkoff relied upon the decision of Bergin CJ in Eq in Murray v Wheeler [2013] NSWSC 137. That was a case where, before the application for preliminary discovery was filed, the plaintiff had said, through its solicitors, that it intended to sue the defendant. It is hardly surprising that, in those circumstances, the Chief Judge inferred that the decision to sue had been made when the letter was written and before the filing of the summons for discovery. Nor is it surprising that her Honour was not satisfied that the applicants lacked information to enable them to make the relevant decision. 44As I have tried to show, the facts of this case are markedly different. I do not think that there is any assistance to be obtained, for the defendants' position, from what Bergin CJ in Eq said in Murray. 45Another case referred to by Ms Culkoff, the decision of Barrett J in Contour Building & Construction Pty Ltd v Kerr [2008] NSWSC 883, is of no assistance, essentially for the same reason. Barrett J concluded, on the basis of correspondence written before the application for preliminary discovery was made, that the decision to sue had been made already. 46Ms Culkoff referred to the fact that the plaintiffs had undertaken due diligence before entering into the transactions in question. She submitted that they had procured sufficient documentation, through that process, to enable them to make the relevant decision. She relied, in particular, on the fact that Mr Seth had sent (according to some correspondence) material of present relevance to Ms Yeung of Morgan Stanley. 47I do not think that this limb of the submissions has been made good. 48The first point is that the plaintiffs' present solicitors have reviewed all documents in the possession of the plaintiffs, including what was obtained during the due diligence process or otherwise from the defendants. The plaintiffs' solicitor has said that the requisite documents, necessary to enable the decision to be made, have not become been available through that process. 49In addition, as Mr Kirk of Senior Counsel (who appeared with Mr Klineberg of counsel for the plaintiffs) submitted, there is reason to believe that some of the documents (including some key ones) said to have been sent by Mr Seth to Ms Yeung were not in fact sent. It appears that Mr Seth claims to have sent those documents through "yousendit". As I understand it, that involves sending documents stored in the "cloud", by some electronic medium which I simply do not understand, by giving the recipient a link that enables the recipient to access the particular documents. 50It is clear, from an email tendered by Ms Culkoff, that Mr Seth's first attempt to send those documents to Mr Ubhi (of Morgan Stanley) failed because Mr Ubhi could not download the file. 51Mr Seth said, in another email, that he had sent the documents to Ms Yeung. However, the document identified by his solicitor as having achieved that is not an email from Mr Seth to Ms Yeung but, somewhat mysteriously, an email from Mr Seth to himself. Quite how Mr Seth could have sent the documents to Ms Yeung by sending them to himself (or how he could have sent the link to Ms Yung by sending it to himself) is not a matter elucidated in the defendants' evidence or in Ms Culkoff's submissions. 52There are other reasons for concluding that the plaintiffs do not have the material. Of some significance is the fact, demonstrated by the affidavit evidence, that the plaintiffs have gone to considerable lengths (before commencing these proceedings) to obtain documents of a kind which, the defendants now submit, the plaintiffs had already, well before they took those steps. It is difficult to understand why the plaintiffs would have gone to the further steps that they took if, as Ms Culkoff submitted, they had the documents already. 53Next, Ms Culkoff submitted, it was open to the plaintiffs to bring their claim, or to advance it, by a cross-claim in the existing proceedings. She submitted, indeed, that the plaintiffs had said, at a directions hearing in those proceedings, that they intended to do so. That latter submission overstates substantially the position that was put. What was said, by counsel then appearing for the present plaintiffs (the defendants in the other proceedings), was that "it is likely that cross-claims will be made". That falls far short of demonstrating a state of satisfaction, or the existence of a decision, analogous to that considered by Bergin J in Murray and Barrett J in Contour Building. 54It is unclear whether Ms Culkoff intended to submit that the rule was not available at all where the possible proceedings would be proceedings by way of cross-claim rather than separate proceedings. If that submission were put at the level of principle, I would reject it. There does not seem to me to be any reason for reading down the rule (which, as McColl JA said in Hatfield at [52], is to be construed beneficially and given the fullest scope that its language will allow) in a way that would confine it artificially. 55However, I think, the point of this particular submission was more that, as a matter of discretion, the court would not order preliminary discovery where the parties were already in dispute and where the present plaintiffs had either decided, or might decide, to bring a cross-claim. For the reasons I have indicated already, I do not think that the evidence shows that the plaintiffs have decided to do that. 56Ms Culkoff submitted that the application for preliminary discovery evidenced "a blatant attempt to circumvent the operation of Practice Note [SC Eq] 11". That Practice Note provides that, in the absence of special circumstances, the court (in proceedings to which the Practice Note applies) will not order disclosure before the parties' evidence is complete. However, to say that the court would not order preliminary discovery, to decide whether to commence proceedings, or to file a cross-claim, appears to me to give the Practice Note a greater force than it could possibly possess. 57Let it be supposed that the present plaintiffs, as defendants, put on a defence and cross-claim in the main proceedings. Let it be supposed, as the plaintiffs' evidence suggests, that they would not, in their present state of knowledge, plead a case of fraud (either in defence or by way of cross-claim) based on the no margin representation and the funding representation. In those circumstances, even once the pleadings had closed and the parties had put on their affidavit evidence, there would be no basis for the court to order disclosure of documents that went to issues that, by hypothesis, were unpleaded. 58I do accept that the Practice Note has to be given respect, and that the court should be slow to allow it to be circumvented. 59One way in which that has been done is by extending the operation of the Practice Note, by analogy, to notices to produce and subpoenas. But it does not follow that the Practice Note can be invoked to prevent the making of an order for preliminary discovery if, otherwise, the basis for making the order is made out. 60In summary, the Practice Note and r 5.3(1) look at entirely different situations. The Practice Note is concerned with obtaining evidence through disclosure in existing proceedings where the affidavit evidence is complete. Rule 5.3(1) is concerned with obtaining material to suggest whether proceedings should even be commenced. The fields of operation are entirely separate. 61In what I think was a related submission, Ms Culkoff said that it would be open to the present plaintiffs, as defendant in the main proceedings, to obtain the documents in question by issuing subpoenas to the various parties who might be thought to have them. I have to say that I did not understand at the time it was made, and still do not understand, how such a submission could properly be put. The issue of subpoenas, not going to any pleaded issue, but for the purpose of finding out whether there may be further issues (claims or whatever) would be the clearest example of fishing that it is possible to imagine. Having regard to what was said in Commissioner for Railways v Small (1938) 38 SR (NSW) 564, it would be an abuse of the Court's processes. I do not understand how it can be said that acting in abuse of the Court's processes could be, in any way, a valid substitute for preliminary discovery authorised by the rules. 62There were subsidiary arguments in respect of some particular classes of document. I think it is necessary to look only at documents relating to a company known as ML Energy Investment Corporation, referred to by the name of its parent "Merrill Lynch". Merrill Lynch had been an investor in the project before Morgan Stanley became involved. One category of documents sought relates to dealings between the various defendants and Merrill Lynch. To the extent that Ms Culkoff submitted that those documents have been obtained in the due diligence process, the evidence does not make good that submission. Nor does the evidence make good the submission that they can be obtained by any other means that does not involve abuse of process. 63Before I make orders dealing with the application, I should note a number of things. One is that, although the defendants (Mr Seth in particular) promised in effect at an earlier stage of the relationship between the parties to give the plaintiffs access to all relevant information relating to subcontracts, in fact Mr Seth and Blue Diamond took exactly the opposite approach. They acted to try and stop the subcontractors from revealing the true state of affairs to Pioneer Energy (this is clear in respect of the particular dealings with Toptech that were recited in the notice to show cause). And they gave direct instructions to Aurecon, on threat of legal proceedings, not to make documents available to the plaintiffs. Aurecon, in fact, asserted that it would not make documents available because it did not want to become embroiled in legal proceedings. 64That obstructive attitude was followed up in correspondence emanating from the defendants' solicitor, marked by evasion of the issue and a failure to answer, in any direct and responsive way, the precise questions that were put to him as to what documents his clients had and their willingness to make them available. 65In all the circumstances, I am satisfied, as I have indicated, that the pre-condition for granting relief under the rule has been made good. I am satisfied that the plaintiffs may be entitled to make a claim for relief against each of the defendants. I am satisfied that, in taking the steps they have (including searching files in the Supreme Court of Queensland), they have made all the reasonable enquiries that are available to them. As I have said, those enquiries were directed, among others, to the defendants. And as I have said, the defendants rebuffed and sought to thwart those enquiries. 66I am satisfied that, in the relevant sense, the plaintiffs have insufficient information to enable them to decide whether or not to commence proceedings. Their solicitor has said that. She was not cross-examined on her affidavit. What she said is not manifestly unreasonable. On the contrary, it seemed to me that what she said reflected both a proper appreciation of the serious allegations that might be able to be made, and her obligations under s 347 of the Legal Profession Act 2004 (NSW). As I have said already, the statutory test does not focus simply on documents that might suggest, or support the existence of, a cause of action. It extends to documents that enable some assessment at least to be made of the viability of the cause of action: of its strength, and of the availability and strength of prospective defences. 67It has not been submitted that the defendants do not have (or have not had) possession of the documents sought. Nor has it been suggested that the categories are so wide as to be, of themselves oppressive. (Contrary to another of Ms Culkoff's submissions, what has been sought cannot possibly be characterised as "general discovery".) In any event, the summons expressly provides that the plaintiffs will submit to an order to pay the reasonable costs of the defendants of giving preliminary discovery. 68Finally, it has not been suggested that the documents may not be relevant to assisting the plaintiff to make up their minds (except in so far as it was submitted that the plaintiffs had such information already; and I have rejected that submission). 69The only submissions directed to discretion generally were those based on the supposed subversion of Practice Note SC Eq 11. I have rejected that submission. There is no other discretionary reason identified why, the grounds for the order having been established, I should decline to make it. 70Accordingly, I make an order in terms of prayer 1 of the summons filed on 20 December 2013, and an order in terms of prayer 3. 71I order the defendants to pay the plaintiffs' costs of the application. 72I reserve liberty to apply on 3 days notice in relation to implementation of the discovery orders. The exhibits are to be handed out.