21 I am satisfied that condition 4 is met. The evidence establishes reasonable grounds for believing that LawCover Pty Ltd and SMIF is each likely to have possession of information and documents that may assist in ascertaining the description of insurers against whom the plaintiff wants to take proceedings.

22 The plaintiff's claims against the insurers arise, if at all, under s 51 of the Insurance Contracts Act 1984 (Cth). The solicitors for the defendant, the first potential party and the second potential parties have informed the plaintiff's solicitors that at all material times Mr Fieldhouse held a certificate of insurance issued by SMIF and held excess insurance policies with the second potential parties and that LawCover has granted indemnity in relation to the plaintiff's claim subject to an express reservation in respect of any liability brought about by a fraudulent act or omission of Mr Fieldhouse.

23 There is, or may be, an issue as to the nature of the relationship between Mr Fieldhouse and LawCover and SMIF. In Lee v Phair (Unreported, NSWSC, 31 October 1996) Cohen J held that LawCover, SMIF and the New South Wales Law Society were not insurers under s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) because there was no contract of insurance between the relevant solicitor and the Law Society, LawCover or SMIF.

24 The relevant questions under s 51 of the Insurance Contracts Act are whether Mr Fieldhouse had a contract of liability insurance that provides insurance cover in respect of his alleged liability to the plaintiff. Section 10(1) provides that a reference in the Act to a contract of insurance includes a reference to a contract that would ordinarily be regarded as a contract of insurance although some of its provisions are not by way of insurance.

25 In view of the statements by the solicitors for the defendant, the first potential party and the second potential parties that Mr Fieldhouse held a certificate of insurance issued by SMIF, that LawCover has granted indemnity in relation to the plaintiff's claim subject to the reservation referred to and that Mr Fieldhouse held excess insurance policies with the second potential parties there is sufficient substance to a claim by the plaintiff against the potential parties under s 51 of the Insurance Contracts Act to make it proper to make a discovery order.

26 The defendant and the potential parties submit that condition 3 has not been satisfied. The defendant and potential parties submit that the plaintiff has a sufficient description of the potential parties to enable it to take proceedings against them.

27 I find that the plaintiff, after reasonable enquiries, has not been able to ascertain a description of the potential parties sufficient for the purposes of taking proceedings against them. It appears from the information provided by the solicitors for SMIF and LawCover that SMIF and LawCover provided some form of insurance cover in respect of Mr Fieldhouse's alleged liability to the plaintiff. However, the identity of the insurer is not clear. On the one hand the solicitors for SMIF and LawCover have stated that SMIF issued a certificate of insurance. On the other hand, it is said that it is LawCover that has granted indemnity in relation to the plaintiff's claim.

28 In oral submissions, senior counsel for the potential parties submitted, in effect, that LawCover is the manager of the compulsory indemnity insurance scheme. SMIF does not appear to be a separate legal entity but rather a fund managed by LawCover. Notwithstanding that, senior counsel appeared for SMIF and, as I have said, his instructing solicitors say that they act for SMIF and that SMIF has issued a certificate of insurance. In those circumstances there are reasonable grounds for believing that SMIF has or is likely to have documents that may assist in ascertaining the description of the relevant potential party or parties - that is, the person or entity that has provided the primary level of insurance cover.

29 The solicitors for the potential parties have identified five excess insurers. The first is described as 'Syndicate 657 D R Lowe'. The others are described in a similar fashion. 'Syndicate 657 D R Lowe' does not appear to be a legal entity capable of being sued. Senior counsel for the second potential parties did not submit otherwise. Senior counsel submitted that 'Syndicate 657 D R Lowe' was a sufficient description of the relevant potential party sufficient for the plaintiff to take proceedings against that party because the excess insurers have given instructions that proceedings may be addressed to their nominee, 'D R Lowe, Canopius Syndicate 839' and that a solicitor, Mr Lusk, is authorised to accept service on behalf of the excess insurers.

30 I infer that 'Syndicate 657 D R Lowe' is a syndicate of Lloyds' names who have agreed to insure a proportion of the relevant excess liability. There is no evidence that the syndicate has any legal identity separate from its members. A syndicate description which has no separate legal identity is not a description sufficient for a party to take proceedings against the members of the syndicate. The fact that a solicitor is willing to accept service of proceedings taken against the syndicate in the name of the syndicate does not render the syndicate name a sufficient description of the potential parties against whom the plaintiff wants to commence proceedings.

31 The court's power to order discovery to identify a potential party is discretionary. An applicant must show that the order sought is necessary in the interests of justice: that is, the applicant must show that the making of the order is necessary to provide him with an effective remedy in respect of the actionable wrong of which the applicant complains: John Fairfax & Sons Ltd v Cojuangco [1988] HCA 54; (1988) 165 CLR 346, 357; Hooper v Kirella [1999] FCA 1584; (1999) 96 FCR 1 [34].

32 I have found that the plaintiff, after reasonable enquiries, has not been able to ascertain a description of the potential parties sufficient for the purposes of taking proceedings against them. I have also found that the plaintiff's claim against the potential parties is not merely speculative and it would be reasonable for the plaintiff to take proceedings against them. The action has been on foot since 1995 but the plaintiff's claim against the potential parties arose only upon the death of Mr Fieldhouse on or about 16 November 2007. The plaintiff's solicitors wrote to the defendant making enquiries to ascertain a description of the potential parties on 18 March 2008. There has been no material delay by the plaintiff in seeking discovery to identify the potential parties. In all the circumstances, the court should exercise its discretion to order the potential parties to give discovery to the plaintiff of documents that are or have been in their possession relating to the description of the potential parties.

Discovery from a potential party - Legal principles

33 Order 26A r 4 provides that the court may order a potential party to give discovery of documents that are or have been in the potential party's possession and that may assist the applicant in deciding whether to take proceedings against the potential party if the following conditions are satisfied:

1. The applicant wants to take proceedings against the potential party;
2. The applicant has made reasonable enquiries;
3. The applicant has not been able to obtain sufficient information to enable the decision to be made as to whether to commence or take the proceedings;
4. There are reasonable grounds for believing that the potential party had, has, or is likely to have had or to have, possession of documents that may assist in making the decision whether to take the proceedings.

34 It is common ground that condition 1 is met. I am satisfied that the plaintiff has made reasonable enquiries to obtain information to enable it to decide whether to take the proceedings.

35 The plaintiff must show that it may have a cause of action against the potential party. That condition is similar to, but not the same as, the condition in O 15A r 6(a) of the Federal Court Rules 1979 (Cth) (FCR). The latter condition was discussed by the Full Court of the Federal Court in Telstra Corporation Ltd v Minister for Broadband, Communications and the Digital Economy [2008] FCAFC 7; (2008) 166 FCR 64 [58] where the court said:

Under the first condition in O 15A r 6(a) an applicant must show that there is 'reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description has been ascertained'. The criterion as framed does not require that any person actually hold the requisite belief. Its objective character requires the court to be satisfied that a reasonable person could form a belief on the basis of the material before the court that the applicant 'has or may have the right to obtain relief'. The word 'may' indicates that the putative belief does not have to amount to a firm view that there is a right to relief ... However, mere assertion of a case against a prospective respondent is not enough ... On the other hand a prima facie case for relief does not have to be demonstrated. As Emmett J said in Austrac Operations Pty Ltd v New South Wales [2003] FCA 1013; (2003) ATPR 41-960 [10]:

'The words "where there is reasonable cause to believe that the applicant has or may have the right to obtain relief" are not satisfied by mere assertion. The belief requires more than mere suspicion or conjecture. On the other hand, it is not necessary for an applicant to establish even a prima facie case. It is necessary, however, for the applicant to show objectively that there is reasonable cause for the relevant belief. It is not necessary to demonstrate whether or not the applicant has the belief.'

In Glencore International AG v Selwyn Mines Ltd [2005] FCA 801; (2006) 223 ALR 238 [16] Lindgren J said:

'[W]hile the notion of "reasonable cause to believe that the applicant ... may have the right to obtain relief" ... may be seen to set the threshold "at quite a low level"... there must be some tangible support that takes the existence of the alleged right beyond mere "belief" or "assertion" by the applicant.'

36 Order 26A r 4(1) does not, as FCR O 15A r 6(a) does, require that there be 'reasonable cause to believe' that the applicant may have the right to obtain relief. Nevertheless, the rule should, like FCR O 15A r 6(a), be interpreted to require an objective test. There must be material to establish that the applicant may have a cause of action against the potential party. That requires more than mere suspicion or conjecture but it is not necessary to establish a prima facie case.

(b) after making all reasonable enquiries, the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the court to obtain that relief.

38 That condition is similar to the third condition of O 26A r 4: that is, that the applicant, after reasonable enquiries, has not been able to obtain sufficient information to enable a decision to be made as to whether to commence or take the proceedings. In Telstra Corporation v Minister for Broadband [59], the Federal Court said:

The second condition upon the exercise of the power is that the applicant has made all reasonable enquiries and yet has not sufficient information to enable a decision to be made whether to commence a proceeding to obtain that relief. The question of what constitutes all reasonable enquiries is evaluative, albeit objective. The question whether the applicant has sufficient information to enable a decision to be made whether to commence the proceeding also necessarily involves evaluative, albeit objective, considerations. There is some tension in the cases about the generosity of the criteria by which sufficiency is to be assessed. Absent a contradicter this case is not a vehicle for resolving that tension. We would simply observe that if the criteria are too generously interpreted, preliminary discovery could be available in advance of the commencement of virtually any proceeding. What is 'sufficient' must be read by reference to Order 15A r 6(c) which directs the application of the rule to documents relating to the question whether the applicant 'has the right to obtain the relief'. In the ordinary course it would be expected that such documents would go to issues of liability. Even within that limitation O 15A r 6(b) does not enliven the power to order preliminary discovery so that the applicant may acquire all documents in a prospective respondent's possession which are relevant to its prospective cause of action.

The boundaries of the sufficiency criterion have been discussed in various cases. In Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd [1996] FCA 391, Lindgren J held that O 15A r 6 was not necessarily rendered unavailable by the fact that the applicant already had available evidence establishing a prima facie case for the granting of relief. There might be matters of defence which could defeat a prima facie case. In C7 Pty Ltd v Foxtel Management Pty Ltd [2001] FCA 1864, Gyles J took the view, for the purposes of O 15A r 6(b) that a party was entitled to have more than a 'bare pleadable case' before deciding whether to undertake lengthy and expensive litigation of the kind contemplated in that case. Tamberlin J appears to have misstated this aspect of the reasons of Gyles J in Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2007] FCA 2065 when he suggested that O 15A r 6 was 'no longer appropriate' when an applicant had enough information to meet the threshold of a bare pleadable case. However, as his Honour said, the purpose of preliminary discovery is not to procure documents that would strengthen an applicant's decision to commence proceedings but rather to furnish it with information which is reasonably necessary to enable that decision to be made. In that connection he referred to his earlier decision in Matrix Film Investment One Pty Ltd v Alameda Films LLC [2006] FCA 591.

It is not necessary to resolve such tensions as there are in the decided cases in order to accept that on existing authority an applicant for preliminary discovery may be entitled to discovery in order to determine what defences are available to a respondent and their possible strengths or to determine the extent of the respondent's breach and the likely quantum of any damages award: St Georges Bank Ltd v Rabo Australia Ltd [2004] FCA 1360; (2004) 211 ALR 147.

39 In Glencore International AG v Selwyn Mines Ltd [2005] FCA 801; (2006) 223 ALR 238 [14], Lindgren J said that there is a tension between O 15A r 6(a) and (c). Order 15A r 6(c) is that there is reasonable cause to believe that the person has or is likely to have or has had or is likely to have had possession of any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist in making the decision. Lindgren J said that the stronger the relevant evidence already available to an applicant of its right to obtain relief, the stronger its position under O 15A r 6(a), but the weaker its position under O 15A r 6(c). On the other hand, the weaker that evidence, the weaker the applicant's position under O 15A r 6(a) and the stronger its position under O 15A r 6(c).

40 Order 26A r 4(1) prohibits the court exercising the power to grant preliminary discovery where the court finds that the applicant has already sufficient information to enable a decision to be made as to whether to commence or take the proceedings - as was the case in Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2007] FCA 2065.

41 The plaintiff says that the purpose of its application is to obtain documents to enable it to determine whether there are insurers that might be the subject of proceedings under s 51 of the Insurance Contracts Act on the basis that they have insured the defendant under a contract of insurance. As I have said, the solicitors for the defendant and the potential parties have stated that SMIF has issued a certificate of insurance to Mr Fieldhouse and that there are excess insurance policies with the second potential parties. I find that that is sufficient to satisfy the condition that the plaintiff may have a cause of action against each of the potential parties.

42 The plaintiff seeks documents so that it can consider whether the first potential party is an insurer for the purposes of s 51 of the Insurance Contracts Act. The plaintiff submits that SMIF, by it conduct, may have been acting as an insurer, particularly if it has been issuing certificates of insurance. The plaintiff needs to establish the claims that are covered by the terms of insurance and the extent of cover provided under the contract of insurance. I find that the plaintiff does not have sufficient information to enable a decision to be made as to whether to take proceedings against SMIF.

43 There is no evidence that the second potential parties have agreed to indemnify Mr Fieldhouse. There is no information about the nature and extent of the liabilities for which insurance cover has been provided by those 'excess insurers'. I find that the plaintiff does not have sufficient information to enable a decision to be made as to whether to take proceedings against the excess insurers.

44 I find that the conditions for the exercise of the power under O 26A r 4 are satisfied. The conditions for the exercise of the power having been met, the exercise of the power is discretionary.

45 The defendant and the potential parties submit that the court should not order discovery from the potential parties. Those parties make the following submissions. The plaintiff commenced this action in 1995 knowing, as evidenced in cl 2.7 of the Deed of Release, that it may not recover the whole of the damages it may be entitled to if it succeeds in the action and agreeing that it will not enforce any judgment and costs order beyond that payable by the defendant's insurers. In those circumstances, knowledge of the extent of the defendant's insurance cover would not assist the plaintiff in deciding whether to take proceedings against the potential parties. It is also submitted that the plaintiff has already made the decision to join the potential parties to the action. What the plaintiff is seeking by this application is evidence which it hopes will strengthen its decision to join the potential parties, rather than furnish it with information which is reasonably necessary to proceed against the potential parties.

46 Those matters do not persuade me that the court should not exercise its discretion to order preliminary discovery. The plaintiff commenced this action in 1995 without knowing the extent of the defendant's insurance coverage. In 1998 the plaintiff executed the Deed of Release which had the effect of limiting the recovery that it might make under any judgment it obtained to the amount of the defendant's insurance. The plaintiff then continued with the action for a further 12 years without knowing the extent of that insurance cover. However, things changed significantly when the defendant passed away on or about 16 November 2007. The plaintiff now contemplates taking proceedings directly against the insurers or putative insurers. If the plaintiff takes those proceedings then it will risk the legal costs of those proceedings. Those costs were not at risk whilst the plaintiff's action was against the defendant alone. Those costs are likely to be substantial. The evidence before me does not establish that the plaintiff has decided to take the proceedings against the potential parties in any event.

47 The court must be satisfied that it is appropriate to exercise its discretion to make the order for preliminary discovery. In Optiver Australia Pty Ltd v Tibra Trading Pty Ltd Tamberlin J said:

Orders of preliminary discovery are not intended to convey a forensic or tactical advantage, but rather to clarify whether litigation is warranted. While preliminary discovery will be beneficial to an applicant to the extent it crystallises their cause of action, or in some cases the availability of a defence to an anticipated claim, it should not be oppressive to a prospective defendant. Preliminary discovery is a one-way transaction, in the sense that there is no reciprocal obligation to produce documents. Only the applicant receives documents, which is markedly different to ordinary discovery in the course of a legal proceeding. In practical terms, the handing over of information which may be highly sensitive can be commercially damaging to a business. It is appropriate to exercise caution not to unnecessarily burden a prospective defendant to the point where its unilateral disclosure of information in preliminary discovery injures its commercial position vis-à-vis a competitor, or confers an unfair advantage on that competitor [29].

48 The preliminary discovery sought in this case is to assist the plaintiff to decide whether it is warranted in taking proceedings against the potential parties. There is no evidence that the discovery sought would be oppressive to the potential defendants. There is no evidence that the handing over of the documents sought would cause any commercial or other prejudice to the potential parties. Furthermore, at least in the case of the first potential party, it is relevant that the defence of the defendant to date has been conducted on the instructions of LawCover. That is, LawCover is already involved and engaged in the proceedings. In all the circumstances it is appropriate to order that the potential parties give discovery to the plaintiff of documents that may assist the applicant in deciding whether or not to take the proceedings against the potential parties.

49 For the reasons stated, the potential parties must give discovery to the plaintiff of all documents that are or have been in their possession relating to the description of the potential parties and that may assist the plaintiff in deciding whether or not to take proceedings against the potential parties. The documents nominated in the plaintiff's minute of proposed amended application for pre-action discovery, as further orally amended, fall within those descriptions and it is appropriate to make orders in those terms.