Pre-Action Discovery Applications - a Brief Explanation and Guide

When a client seeks advice regarding a potential claim, but they do not have sufficient information to allow for meaningful advice to be given, obtaining pre-action discovery against the potential respondent is a useful way to obtain the relevant information to allow for an informed decision as to whether or not to commence proceedings.

What is pre-action discovery?

Order 26A rule 4 of the Rules of the Supreme Court (WA) 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.

This rule at first glance will be likely to fill potential applicants with a sense of excitement, and potential respondents with equal parts fear and frustration. But before getting carried away, we need to look at how the rule has been applied and interpreted by the Court to understand what the likely prospects and scope of an application may be.

The case of Optiver Australia Pty Ltd v Tibra Trading Pty Ltd (2007) 247 ALR 199 provides an indication of how the Courts are likely to deal with pre-action discovery applications:

“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 to not unnecessarily burden a prospective defendant to the point where its unilateral disclosure of information in preliminary discovery injures its commercial position vis-a-vis a competitor, or a confers an unfair advantage on that competitor.”

The above quote clearly states the Court’s position that pre-action discovery orders are not intended to give an advantage to an applicant. However, collateral benefits may arise from bringing such an application. For example, the fear of being on the receiving end of a unilateral document disclosure exercise, particularly where some of the documents disclosed are viewed as damaging to the potential defendant’s position, might bring them to the negotiating table earlier.

How do I get pre-action discovery?

The following criteria must be satisfied in order for discovery from a potential party to be ordered pursuant to Order 26A rule 4:

  1. the applicant must establish that it “may have a cause of action”;
  2. that the potential cause of action is against a person whose description has been ascertained;
  3. that it either wants to commence proceedings against the potential party or wants to take proceedings against the potential party in the cause of action to which the person is a party;
  4. if after “reasonable enquiries” it has not been able to obtain sufficient information to decide whether or not to commence proceedings;
  5. as a necessary concomitant to paragraph 4, at the time of making the application the plaintiff has not reached a decision about whether or not to take proceedings;
  6. there are reasonable grounds for believing that the potential party has, in its possession, documents that may assist in making the decision; and
  7. the application must be supported by an affidavit which is served on the potential party.

(GLR Injection Technologies Pty Ltd v Forton Automotive Treatments Pty Ltd [2009] WASC 131)

General discretion

It is important to note that even if the requirements of the rule are satisfied, the Court still retains the discretion to refuse to make the order (Glowatzky v Insultech Group Pty Ltd (1997) 39 IPR 215). Various factors may be taken into account such as:

  1. the likelihood that a cause of action of the kind suggested will be found to exist, as well as the nature and significance of that potential cause of action;
  2. the likely effect on the person against whom discovery is sought of the making of an order of the kind contended for;
  3. the nature and confidentiality of the documents proposed to be obtained;
  4. whether the applicant is able to compensate the potential party for its costs of complying with the order; and
  5. whether there is any evidence of bad faith on the part of the applicant.

What will be provided under a pre-action discovery order?

The intention of an order for pre-action discovery is not to convey an advantage upon the potential applicant. Therefore, it should be no wider than necessary to obtain the documents relevant to a cause of action (McCarthy v Dolpag Pty Ltd [2000] WASCA 106). The application must identify the categories of documents sought. An application will have a greater chance of success if the documents or categories of documents are more precisely identified.

What is the next step?

There are a number of factors to take into account when considering whether or not to make an application for pre-action discovery. The general discretion of the Court to refuse to make an order means that you should take time to consider your basis for making such an application. We recommend contacting EMS Legal for clarification and specific advice on pre-action discovery applications.