Deciding whether or not to commence legal proceedings can often be a difficult decision for your clients and one which they may seek to involve you in, so far as their financial ability to fund it and take the risk is concerned. Whilst going to Court can indeed result in victory, the flip-side can sometimes have significant negative ramifications, such as adverse costs orders.
One way in which you might assist clients with this decision if they are uncertain, in addition to recommending they seek legal advice, is to suggest they consider preliminary discovery (if it’s appropriate in the circumstances). When used effectively, it can be a relatively quick and effective way to obtain critical information.
Your client may be eligible to seek preliminary discovery if they reasonably believe they may have a case against a prospective defendant, but they do not have sufficient information to decide whether to commence proceedings. If the prospective defendant is likely to have documents that would assist your client in making that decision, preliminary discovery may be an effective path for them to take.
In 2017, the Full Court of the Federal Court of Australia held that the relevant test to be applied in determining an application for preliminary discovery is whether a prospective applicant subjectively believes they may have a right to obtain relief against a prospective defendant and that belief is reasonably open on the evidence; that is, it is not unreasonable, untenable or baseless. 
Decisions such as this on the Federal Court rule help to provide guidance in the interpretation of the NSW based rule.
The purpose of preliminary discovery is not to enable a party to:
- obtain material to strengthen its position before commencing proceedings it has already decided to commence; or
- fish for information if no genuine belief is held, on the available evidence, that a claim may exist.
Whilst the Supreme Court of NSW earlier suggested that preliminary discovery may be used as a tool to ascertain a prospective defendant’s financial means prior to commencing proceedings,  in 2014 the Supreme Court determined that such purpose would be improper and hence ground to exercise the discretion to refuse the application.
Tips for making an application:
Prior to making an application for preliminary discovery, it is advisable that your client makes reasonable inquiries seeking to obtain the information necessary to enable them to make the decision of whether or not to commence proceedings. If they have not made such inquiries by the time the Court hears the application, it will result in the application for preliminary discovery being unsuccessful. Whilst these inquiries can be made after filing the application, but before the hearing, it is logical to make the inquiries before filing the application – as this may obviate the need to file the application and thereby save your client time and legal costs.
‘Reasonable inquiries’ may include sending a written request to the prospective defendant asking to inspect or be provided with copies of relevant documents, or sending a written request to any third party whom they believe may hold documents relevant to the dispute. Coleman Greig Lawyers strongly recommends that alternative means of gathering the desired information also be explored, as the more evidence of attempts that can be provided to the Court in any subsequent application, the greater prospects of success the application will have.
If your client has made reasonable inquiries but has been unable to gather sufficient information, they may proceed to file the preliminary discovery application with the relevant Court, setting out the specific documents or categories of documents that they seek discovery of. Categories of documents may be used when your client is unable to clearly identify the specific document or thing they are seeking discovery of, but know a general description within which it might fit, if it exists. For example:
- All correspondence between Jack Smith and Joanne Jones between 1 January 2018 and 1 March 2018;
- All advertisements published by Sell My Property Pty Ltd in relation to the property situated at 100 George Street, Parramatta, NSW from 1 January 2018 to the present time; or
- All product specification reports and/or testing results in relation to Chemical X, manufactured by Bio Products Pty Ltd, between 1 June 2017 and 31 December 2017.
Coleman Greig Lawyers strongly recommends that any category of discovery be kept as narrow in scope as is reasonably possible and to avoid broad requests, which would be unduly and unnecessarily onerous on the prospective defendant.
As to the question of which Court is the relevant Court to file the application in, at a basic level, the relevant Court is generally determined by the monetary amount of the substantive claim your client proposes to bring, however, it would be prudent to seek legal advice prior to filing any application.
Important points to remember:
When considering whether it is appropriate to make an application for preliminary discovery, it would be prudent for you to remind your client to:
- consider the limitation period applicable to the claim they may subsequently bring. If the end of limitation period is imminent, you should advise and encourage your client to seek legal advice, as there may not be sufficient time for a preliminary discovery application; and
- be mindful that as with most litigation, legal costs generally follow the event, which means if the preliminary discovery application is wholly or partly unsuccessful, your client may be ordered to pay the other party’s legal costs in addition to their own.
 The power to order preliminary discovery within NSW Courts is conferred in rule 5.3(1) of the Uniform Civil Procedure Rules 2005 (NSW). The Federal counterpart of this rule is found in rule 7.23 of the Federal Court Rules 2011 (Cth).
 Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd  FCAFC 193, Allsop CJ at .
 Matrix Film Investment One Pty Ltd v Alameda Films LLC  FCA 591 FCA, Tamberlin J at .
 Panasonic Australia Pty Ltd v Ngage Pty Ltd  NSWSC, Young CJ at .
 Papaconstuntinos v Holmes A Court and Anor  NSWSC 945 NSWSC, Simpson J at .
The information in this article is general in nature and is not advice. If you would like advice or have a client who would like advice concerning a preliminary discovery application or concerning a dispute or debt recovery matter generally, please contact: