Federal Court of Australia

BCI Media Group Pty Ltd v Corelogic Australia Pty Ltd [2020] FCA 1556

ORDERS

THE COURT ORDERS THAT:

1.    On or before 2 November 2020 the prospective applicant is to provide minutes of order reflecting the reasons for judgment published today and proposing:

(a)    the time by which and manner in which the prospective respondents are to give discovery of the documents; and

(b)    the time by which and manner in which the prospective respondents are to produce the documents for inspection.

2.    On or before 9 November 2020 the prospective respondents are to advise the applicant whether the proposed orders are opposed and, if so, the reasons for opposition.

3.    In the event that the prospective applicant’s proposed orders are opposed, there be a further hearing in relation to remedy at 10 am on 12 November 2020, such hearing to be conducted by web conference.

4.    In the event that the prospective applicant’s proposed orders are agreed, the prospective applicant is to provide minutes of order by way of email to associate.charlesworthj@fedcourt.gov.au, not later than 5pm on 11 November 2020.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

CHARLESWORTH J

1    The prospective applicant, BCI Media Group Pty Ltd, applies for preliminary discovery orders under r 7.22 and r 7.23 of the Federal Court Rules 2011 (Cth).

2    BCI supplies a building and construction information service to subscribers by way of project summary sheets accessible via a database known as LeadManager. Subscribers to LeadManager may access the service using a unique username and subscriber ID. Subscribers are subject to contractual terms and conditions governing their use of the service, including the use of their usernames and ID’s.

3    The first to third prospective respondents are CoreLogic Australia Pty Ltd, RP Data Pty Ltd and Cordell Information Pty Ltd (the CoreLogic respondents). They form part of a group of companies operating a business in direct competition with BCI. The precise roles of each of the CoreLogic respondents in the conduct of that business is presently unclear.

4    The fourth prospective respondent, Gingold Investments Limited, is a former subscriber to LeadManager. Public records suggest that Gingold conducts a business as a timber merchant from premises situated in an Adelaide suburb. One of its directors is the fifth prospective respondent, Mr Angelo Colangelo.

5    In summary, BCI asserts that it is the owner of copyright subsisting in (at least) the project summary sheets contained in the LeadManager database. It claims that one or more of the CoreLogic respondents have used the username and ID allocated to Gingold in order to retrieve information from LeadManager by an automated process known as data scraping. For the purposes of this application BCI asserts a belief that it may have a right of action against the CoreLogic respondents for infringement of its copyright in respect of the works they have accessed. It also asserts a belief that Gingold may have breached the terms of the contract by enabling one or more of the CoreLogic respondents to use its username and ID for an unauthorised purpose, and that the prospective respondents may have misused its confidential information. It asserts a further belief to the effect that it may have a right to relief against Mr Colangelo to the extent that he assisted or authorised Gingold or the CoreLogic respondents in the infringement of BCI’s rights.

6    BCI seeks orders for the discovery of eight categories of documents which it claims will assist it to make a decision about whether to start a proceeding against one or more of the prospective respondents.

7    The application is opposed on a narrow basis giving rise to two questions:  whether BCI already has sufficient information in its possession and, relatedly, whether the categories of documents sought on the application is too broad to make a decision to sue.

FACTS

8    The following findings should be understood as a summary of the facts asserted by BCI for the purposes of this application. They are based on evidence contained in the affidavits of BCI’s Chairman and CEO (Mr Matthias Krups), its Chief Information Officer (Mr Nikhil Roy), its solicitor (Mr Michael Williams) and a computer forensic expert (Mr Rodney McKemmish). The deponents were not cross-examined and the prospective respondents adduced no evidence of their own. For the limited purpose of this application, I accept that the events have occurred as BCI has asserted in its affidavits.

9    The present focus is on the information presently in BCI’s possession and the steps it has taken to obtain it.

10    I will deal separately with BCI’s subjective beliefs later in these reasons.

BCI’s business

11    BCI is an operating company within Australia and the ultimate holding company of other entities responsible for carrying on a business internationally. The business involves the provision of information services concerning construction projects across 14 countries. Its clients include construction and architecture firms, product suppliers and manufacturers.

12    BCI reports on up to 2,500 construction projects each week in Australia. The reports are provided by way of web and mobile based applications. One such application is LeadManager. It is a digital platform that allows suppliers and manufacturers in the building and construction industry to obtain information from a single location by way of project summary sheets. LeadManager is provided to BCI’s clients on a fee for subscription basis. Subscription prices vary depending on the number of users and the nature of the subscriber’s use. A basic subscription of the kind under consideration in this case costs in excess of $30,000 per annum.

13    As BCI’s CEO, Mr Krups is the relevant decision-maker and is responsible for deciding whether to start a proceeding against the prospective respondents. He asserts that BCI:

…  owns all intellectual property rights in LeadManager and associated documents and materials accessible by subscribers to the service, including project descriptions, leads, research reports, training programs, underlying spreadsheets and any underlying source code for LeadManager, the BCI Australia logo, all visual images on LeadManager and the underlying artwork for those images, graphs and charts on LeadManager …

14    Mr Krups asserts that some of the information concerning the operation and design of LeadManager is confidential information. He asserts that subscribers are bound by Subscriber Terms and Conditions and by BCI’s Fair Usage Policy.

15    Clause 2.1 of the Fair Usage Policy provides that a subscriber must not allow the subscription to be used by another person without BCI’s consent, and must not use the services in a manner not intended by BCI, including “using web crawlers for any purpose”. Clause 2.3 contains prohibitions against the infringement of any person’s intellectual property rights when using the services, and against any attempt to derive the source code for BCI’s products. The Subscriber Terms and Conditions contain an acknowledgment that the content in LeadManager may be protected by copyright (among other things), together with requirements that the subscriber:

(1)    keep the subscriber’s password confidential;

(2)    use the service for the subscriber’s needs only;

(3)    not copy, modify, edit, reproduce or create derivative works of the materials provided by the service, including code and software, for any party not directly associated with the subscriber or the subscriber’s company.

Gingold’s subscription

16    Between September 2017 and September 2019, Skill Tech Consulting Pty Ltd was a fee paying subscriber to LeadManager. In relation to the subscription, BCI dealt mostly with Ms Tanya George (who identified herself as a consultant for Skill Tech) and occasionally with Skill Tech’s director, Mr Graham Hooper. LeadManager was accessed under that subscription via two usernames and IDs:  “stc_graham” (subscriber ID: 206645005) and “stc_tanya” (subscriber ID: 206594005).

17    An online LinkedIn profile indicates that between January 2012 and March 2018 Ms George was also working as a consultant for CoreLogic Australia.

18    On or around 11 September 2018, BCI reissued the Skill Tech subscription to Gingold on Ms George’s request. Two weeks after the reissue of the subscription, Ms George requested that the username for Mr Hooper be transferred to Mr Colangelo. When the Gingold subscription became due for renewal, a BCI account manager noticed that there appeared to have been excessive access to the database via the Gingold account. The account manager sent an email to Ms George on 16 September 2019 following up the subscription renewal paperwork and stating that the account was “getting a huge amount of use from the system”. The account manager spoke with Ms George on 26 September 2019 by telephone after a number of unsuccessful attempts to contact her. In their conversation, Ms George said “[Gingold was] getting uni students to log in [to LeadManager] and find the info”.

19    Ms George said that “Cordell [the third prospective respondent] were also chasing her”.

20    Mr Krups’ evidence is that he is aware of attempts being made since at least 2014 by Cordell to contact clients of BCI and provide comparison figures to convince them to change services. It is asserted that any comparison data used for that purpose could only have been obtained by accessing LeadManager. Mr Krups believes Ms George’s statement in the telephone call to be a reference to an attempt by BCI’s competitor, CoreLogic, to secure Gingold as a client.

21    Gingold entered into an agreement for a renewed LeadManager subscription for a further 12 months. The renewed agreement appears to have been executed by Mr Colangelo.

22    BCI made attempts to contact Gingold to follow up payment for the renewal. On 17 October 2019, the BCI account manager spoke with Ms Carmela Tavasci, who said that she had replaced Ms George as the contact person for the Gingold account.

23    The renewed account was suspended when no payment was received. A part payment toward the subscription fee in the amount of $25,000 was received from Gingold in November 2019 and the account was then reinstated in late November 2019 on Ms Tavasci’s request. The subscription was reinstated on the condition that the balance of the fee was to be paid by 31 January 2020. On 28 and 29 November 2019 respectively, the usernames assigned to the Gingold account were changed from “stc_tanya” (Ms George) to “GGI_Carmela” (Ms Tavasci) and from “stc_graham” (Mr Hooper) to “GGI_AngeloC” (Mr Colangelo). The passwords for these usernames were re-issued.

24    A BCI account manager (Mr Alex Evans) telephoned Mr Colangelo on 18 February 2020 when the balance of the subscription fee remained unpaid. Mr Krups reports the content of that conversation as follows:

…  On this call, Mr Colangelo stated that he was unaware there was an active subscription and thought that Gingold’s LeadManager subscription had been cancelled several years ago. Mr Colangelo also appeared to be surprised that his username ‘GGI_AngeloC’ had significant activity associated with it. He confirmed that Ms Tavasci worked at Gingold until December 2019 but was unfamiliar with Ms George’s name and indicated that she had not worked for Gingold. Mr Colangelo also stated that he did not think Ms Tavasci would have had authority to make the $25,000 part payment of the subscription fee in November 2019. Mr Evans indicated he would contact Mr Colangelo if anything was needed to sort the situation out.

25    Following that conversation BCI engaged Mr McKemmish to investigate the use or misuse of the Gingold account. Mr Roy provided Mr McKemmish with spreadsheets containing information about user activity on the account, including log files generated from the database. On the basis of the spreadsheets, Mr McKemmish identified “anomalous” activity involving the usernames issued to Ms George, Ms Tavasci and Mr Colangelo. The activity included the use of automated queries which resulted in a large quantity of data and commercial information being extracted from the LeadManager database. Mr McKemmish states that the activity occurred across at least 71 different internet protocol (IP) addresses, each IP address suggesting the use of a specific computer or computer network. On the basis of public registers, BCI has identified that two of the IP addresses are registered to RP Data. Those two addresses alone were used to make more than 31,000 search requests between 25 February 2019 and 26 February 2020. Mr McKemmish expresses the view that the activity is consistent with a process known as “data scraping”, an automated process for the retrieval of information using a coded script.

26    On 27 March 2020, BCI’s solicitor wrote to each of the prospective respondents outlining its concerns about the use of the Gingold account and the suspected data scraping activity. By those letters, BCI requested that the prospective respondents provide documents falling within categories similar to those now claimed on this application. No response was received.

27    Three days later, Gingold was informed by email that its account had been suspended “due to failure to pay the full agreed subscription cost and suspected breach(es) of the terms and conditions of our Agreement and Fair Usage Policy”.

28    Mr Colagnelo responded “All good I haven’t seen anything from Bci for 10 years”.

29    On 31 March 2020, Mr Williams had a telephone conversation with Mr Colangelo in which Mr Colangelo said words to the effect that he wanted his access to the service restored. Mr Williams said that would not happen unless Mr Colangelo provided the information that had been sought about the use of the account. Mr Colangelo asked if he should get a lawyer. Mr Williams said that he should.

30    The CoreLogic respondents otherwise provided no substantial response to BCI’s allegations and no documents or information were provided in response to BCI’s requests. BCI followed up with a further letter on 8 April 2020. Lawyers for the CoreLogic respondents sent a brief response to the effect that instructions were being sought. A further letter from BCI’s lawyers repeated the request for documents and information and otherwise foreshadowed these proceedings. Lawyers for the CoreLogic respondents responded to the effect that the matter was not urgent.

31    On 21 April 2020 Mr Williams telephoned Mr Colangelo, during which Mr Colangelo said “you should have heard from my lawyers by now”. Mr Colangelo said he would call his lawyers and have them contact Mr Williams.

32    On 22 May 2020 Mr Williams had a telephone conversation with Mr Colangelo to the following effect:

Mr Williams:    ‘You told me yesterday that I would receive a letter from your lawyer. Nothing has come through. Do you have a lawyer?’

Mr Colangelo:    ‘I cannot afford one.’

Mr Williams:    ‘Did you mean when you said I would be getting a letter from your lawyer that I would get a letter from CoreLogic’s lawyers?’

Mr Colangelo:    ‘Yes.’

Mr Williams:    ‘We did receive a letter from them and it is very short. It says nothing about Gingold or that they are acting for Gingold. Do you understand that they are not acting for your company and that it is having to fend for itself?’

Mr Colangelo:    ‘When I got the letter I sent it off to CoreLogic.’

Mr Williams:    ‘And did they say they would deal with it?’

Mr Colangelo:    ‘Yes.’

Mr Williams:    ‘But they haven’t and you are now on your own. The fact that CoreLogic has a lawyer is no help to you. You need your own lawyer. BCI is willing to give you a chance to cooperate before filing against your company, an opportunity to provide the information we want.’

Mr Colangelo:    ‘What information?’

Mr Williams:    ‘It is in the letter.’

Mr Colangelo:    ‘I didn’t read the letter – I just sent it to CoreLogic. They said they would respond.’

Mr Williams:    ‘This is your chance to respond to the letter.’

Mr Colangelo:    ‘I have nothing to respond to.’

Mr Williams:    ‘You can tell us what happened.’

Mr Colangelo:    ‘I don’t know what happened.’

Mr Williams:    ‘But you do – the subscription account was used and we have computer experts saying it was used by CoreLogic.’

Mr Colangelo:    ‘They asked me to pay for it.’

Mr Williams:    ‘Who at CoreLogic did that?’

Mr Colangelo:    ‘I don’t know anything.’

Mr Williams:    ‘You know plenty of things – who asked you to pay the subscription, who asked you to maintain it, you have records of the payment being wired to you – you know all of this. You need to read the letter.’

Mr Colangelo:    ‘I will.’

Mr Williams:    ‘After you do that, please call me back tomorrow.’

Mr Colangelo:    ‘I will call you in the morning.’

Mr Williams:    ‘Ok. But if I haven’t heard from you by lunchtime I will be calling you.’

33    On 23 April 2020 lawyers for the CoreLogic respondents advised BCI that they also acted for Gingold and Mr Colangelo. The prospective respondents had otherwise provided no substantive response to BCI’s requests at the time that this application was commenced. BCI remains unaware of the prospective respondents’ substantive response to the allegations made against it.

ISSSUES

34    It is appropriate to focus principally on the application for orders under r 7.23. It provides:

7.23 Discovery from prospective respondent

(1)    A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant:

(a)    reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and

(b)    after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and

(c)    reasonably believes that:

(i)    the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent’s control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and

(ii)    inspection of the documents by the prospective applicant would assist in making the decision.

(2)    If the Court is satisfied about matters mentioned in subrule (1), the Court may order the prospective respondent to give discovery to the prospective applicant of the documents of the kind mentioned in subparagraph (1)(c)(i).

35    The prospective respondents do not dispute that the requirements of r 7.23(1)(a) are fulfilled, although there is an issue as to how far that concession goes. They submit that the evidence adduced by BCI supports an inference that BCI believes that it does have claims against the respondents, not that it may have such claims. Accordingly, they submit, BCI already has sufficient information to decide whether to start a proceeding and, accordingly, the Court cannot be satisfied that the criterion in r 7.23(1)(b) is met. They submit that BCI is using the rules in connection with preliminary discovery for the purpose of making an assessment of its prospects of success and the quantum of any remedy, or otherwise to assess the costs and risks of its intended litigation. It is submitted that is not a permissible purpose for a preliminary discovery order.

36    Relatedly, the prospective respondents submit that on the evidence BCI has adduced, there is nothing to prevent it from commencing the contemplated proceedings and that the rules in relation to discovery between parties should then apply on their terms. It is submitted that BCI may, if necessary, amend its pleaded case in the event that documents discovered at the pre-trial stage shed a different light on the facts as now known.

37    Resolution of these arguments turns in large part on the proper construction of r 7.23.

THE LIMITS OF RULE 7.23

38    The following observations may be made about the rule:

(1)    The Court must be satisfied of each of the matters in subparas (1)(a), (b) and (c).

(2)    The criteria in subpara (1)(a) and (c) have subjective and objective aspects. The prospective applicant must be shown in fact to have the beliefs there referred to. The reasonableness of the beliefs is to be assessed objectively.

(3)    The “right to obtain relief” may be singular or plural in the sense that the prospective applicant may contemplate more than one cause of action, each giving rise to a discrete right to relief. There may be different degrees of certainty attaching to each of them.

(4)    Much will depend on the nature and source of the right, the essential factual or legal elements to be proven and the extent to which the evidentiary material in the prospective applicant’s possession is capable of demonstrating that each element is fulfilled.

(5)    Whether or not there is a right to obtain relief may also turn on the existence of any substantive defences.

(6)    The relief to which subpara (a) refers is the same relief referred to in subpara (b) and (c). Accordingly, the subject matter of the belief asserted for the purposes of subpara (a) necessarily defines the remaining enquiries.

(7)    Subparagraph (b) requires an objective assessment to be made as to whether or not the prospective applicant has sufficient information “to decide whether to start a proceeding in the Court to obtain” the relief.

(8)    On an application joining several prospective respondents, the contemplated claim against each of them must be considered separately.

(9)    In such cases, it is relevant to consider the information presently available to the prospective applicant relating to the role that each prospective respondent has played in the events giving rise to the right to relief. Consistent with my analysis below, the rule may be utilised in cases where a prospective applicant is aware that a right giving rise to a claim for relief has been infringed, but unaware of the acts or omissions attributable to each prospective respondent in connection with the infringement.

(10)    The power to make an order for preliminary discovery is both conferred and confined by r 7.23(2). It is significant that the documents subject to the order must be “of the kind mentioned in subparagraph (1)(c)(i)”, namely, documents “directly relevant to the question whether the prospective applicant has a right to obtain the relief”.

39    For BCI it is submitted that the rule may be invoked to obtain information that would assist it to ascertain matters such as the existence of a cause of action, the extent of infringement, the nature of likely defences, the prospect of the proceeding succeeding and the likely monetary outcome. BCI submits that all matters relevant to the costs and risks of the proceeding may legitimately form the basis of the enquiry under subpara (b). BCI submits that any document that may reasonably inform the decision to sue may be the subject of an order for preliminary discovery, whether or not the document relates solely to the likely monetary value of the ultimate award. BCI’s submissions find support in a body of authority that (at least until recently) has not been called into question.

40    The predecessor to r 7.23 was O15A r 6 of the Federal Court Rules 1979 (Cth) (the old rule). It was expressed in the following terms:

6    Discovery from prospective respondent

Where:

(a)    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;

(b)    after making all reasonable inquiries, 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; and

(c)    there is reasonable cause to believe that that 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;

the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c).

41    In Quanta Software International Pty Ltd v Computer Management Services Pty Ltd [2000] FCA 969; 175 ALR 536, Sackville J rejected the proposition that documents relating to quantum were necessarily irrelevant in determining whether a prospective applicant has satisfied the requirements of O 15A r 6(b). His Honour said (at [33]):

…  The question posed by the subrule is not whether an applicant has sufficient information to enable it to decide if a cause of action is available against the prospective respondent. The question is whether the applicant has sufficient information to enable a decision to be made whether to commence a proceeding in the court to obtain relief from an ascertained person. The extent to which copyright has been infringed, for example, may be highly material to a decision to commence a proceeding in respect of infringement of copyright. A trivial claim may not be worth pursuing and might prove to be a waste of the time and resources not only of the applicant but of the court.

(original emphasis)

42    His Honour went on to say at [34]) that it was not to be implied that the rule can be used “as a matter of course to obtain preliminary discovery of documents relevant to the quantum of a particular claim” and that each case must depend on its own circumstances. There may be cases, his Honour said, in which an applicant, after making reasonable enquiries, has insufficient information relating to quantum to enable it to make a decision whether to start a proceeding. An insufficiency of information of that kind might in some cases satisfy the requirements of subr 6(b) of the old rule.

43    In Optiver Australia Pty Ltd v Tibra Trading Pty Ltd (2008) 169 FCR 435, Heerey, Gyles and Middleton JJ concluded that the primary judge in that case had erred in concluding that an order for preliminary discovery under the old rule should be refused where the prospective applicant had sufficient information to sustain a “bare pleadable case”. Their Honours said:

35    … there may be a perfectly good plaintiff’s pleadable case but potential defences, such as under a contractual provision or problematic or unpredictable issues such as waiver, estoppel or unconscionable conduct. Or there may be real uncertainty as to the quantum of provable damage, such as to throw doubt on the practical wisdom of issuing proceedings.  …

36    The concept of a ‘bare pleadable case’ is not only a gloss on the text of the rule but is fundamentally inconsistent with its purpose. The policy behind the rule is that even where there is a reasonable cause to believe that a person may have a right to relief, nevertheless that person may need information to know whether the cost and risk of litigation is worthwhile. As Hely J pointed out in St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147 at [26], the question does not concern the right to relief but rather ‘whether to commence proceedings’. Inspection of documents in the possession of the proposed defendant may enable a properly informed decision to be made whether to commence a proceeding to obtain the relief. The ‘bare pleadable case’ approach diverts attention from the true purpose of the rule. A person may have a pleadable case, but still not sufficient information upon which to decide whether to embark upon litigation.  …

(emphasis added)

44    It is unclear whether the passage I have emphasised went specifically to an issue concerning the construction of the old rule that the Full Court was required to decide.

45    The Full Court in Hooper v Kirella Pty Ltd (1999) 96 FCR 1 said (at [40]) that an order “may be made in favour of an applicant who already has available evidence establishing a prima facie case for the granting of relief” (citing Lindgren J in Alphapharm Pty Limited v Eli Lilly Australia Pty Limited [1996] FCA 391).

46    Authorities decided after the repeal of the old rule and the introduction of r 7.23 contain statements capable of supporting BCI’s submission that documents going solely to quantum may be the subject of an order under r 7.23(2).

47    In Objectivision Pty Ltd v Visionsearch Pty Ltd [2014] FCA 1087; 108 IPR 244 Perry J said (at [30]):

Overall, in considering the application for preliminary discovery, it is important to bear in mind the policy underlying r 7.23. That policy remains the same as that of its predecessor, O 15A r 6 of the Federal Court Rules 1979 (Cth) (FCR 1979), namely that ‘even where there is a reasonable cause to believe that a person may have a right to relief, nevertheless that person may need information to know whether the cost and risk of litigation is worthwhile:  Optiver Australia Pty Ltd v Tibra Trading Pty Ltd (2008) 169 FCR 435; 249 ALR 495; [2008] FCAFC 133 (Optiver) at [36]; see for example AstraZeneca AB v Alphapharm Pty Ltd [2014] FCA 9 (AstraZeneca v Alphapharm) at [35] per Besanko J; EBOS Group Pty Ltd v Team Medical Supplies Pty Ltd (No 3) (2012) 199 FCR 533; [2012] FCA 48 (EBOS (No 3)) at [29] per Katzmann J. Given its beneficial purpose, it has been held that the rule ‘should be given the fullest scope its language will reasonably allow. The proper brake on any excesses in its use is the discretion of the court, which is required to be exercised in the particular circumstances of each case’:  Optiver at [43] (quoting with approval Burchett J in Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728 at 733; 20 IPR 79 at 85 (Paxus Services)).

48    See also ED Oates Pty Ltd v Edgar Edmondson Imports [2012] FCA 356 at [26], where Kenny J said that a prospective applicant “may be entitled to discovery in order to determine what defences are available to the respondent and the possible strength of those defences, or to determine the extent of the respondent’s breach and the likely quantum of any damages award” (emphasis added).

49    The prospective respondents submit that the above statements no longer apply because of what the Full Court said in Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (2017) 257 FCR 62 (at [107]). In that case, Perram J held that preliminary discovery was not available “where sufficient information is available to allow the commencement of a proceeding” (at [101]). His Honour went on to say (at [108]):

As I have noted already, it is not the requirement of this rule that there be a reasonable belief that there is a right to obtain relief. This is an important qualification and it colours necessarily the analysis involved in assessing the reasonableness of the belief.  FCR 7.23(1) is not about giving preliminary discovery to those who believe they do have a case. Its wording unequivocally shows that it is about those who do not know that they have a case but believe that they may. In terms, it authorises what traditionally have been referred to as fishing expeditions; that is to say, evidentiary adventures in which the goal is not to find proof of a case already known to exist, but instead to ascertain whether a case exists at all.

(original emphasis)

50    On the basis of those passages, the prospective respondents maintain that in determining whether a prospective applicant has sufficient information to decide whether to start a proceeding, the Court is to disregard information that might assist the prospective applicant to determine whether the costs and risks of the contemplated litigation would be worthwhile, which would include information going only to the likely quantum of relief. They submit that the Full Court should be understood to have identified a difference in the operation of r 7.23 and its predecessor justifying a departure from the reasoning of the Full Court in Optiver (decided as it was under the old rule). It was submitted that the Full Court in Pfizer had impliedly overruled or disapproved of more recent cases such as Objectivision to the extent that they construed r 7.23 in a way that would authorise preliminary discovery of documents relevant only to the quantum of relief.

51    I do not accept the prospective respondents’ submissions concerning the effect of the various judgments in Pfizer.

52    As Allsop CJ said (at [7]), the Explanatory Statement to the Rules did not explain the change in wording as being the result of a desire to vary the operation of the old rule. Having said that, his Honour emphasised that the words of r 7.23 were to be “attended to without paraphrase and redefinition”. His Honour continued (at [8]):

It is important to approach the task with the fundamentals of the rule in mind. There have been a large number of cases now (both at first instance and Full Court) dealing with and explaining the relevant rule. Those authorities should not be utilised to form a complex matrix of sub-rules for the operation and application of a tolerably straightforward provision. Whilst there was no submission that any of these cases was wrongly decided, there does appear to have been a tendency to create an overly abstracted conceptualisation of refined states of mind which, if the words of the rule are not kept in mind, can lead in application to a misstatement of the essence of the rule, focused as it is upon what may be the position.  …

(original emphasis)

53    His Honour’s focus was on the issue that arose on that appeal, namely whether the primary judge had asked himself the wrong question or misapplied the rules of evidence in determining whether the prospective applicant’s undisputed belief under subpara (1)(a) of the rule was reasonably held. Allsop CJ made no findings about the proper construction of subpara (1)(b) or subpara (1)(c), nor as to how the three criteria might interrelate.

54    Perram J said (at [99]):

An important part of the context in which Div 7.3 appears is the requirement of FCR 16.01 that in cases which proceed by way of a pleading, the name of the person preparing the pleading must be stated and, where that person is a lawyer, that lawyer must certify that there is a proper basis ‘for each allegation in the pleading’. So too, where a case proceeds by way of an originating application accompanied by an affidavit, the affidavit must set out the material facts on which the case is based:  FCR 8.05(2). In either case, the rules contemplate that a proceeding may only be commenced where a proper basis exists for the making of the allegations. Preliminary discovery is a procedure, therefore, which necessarily exists in a domain where that level of certainty has not been reached.

55    Perram J went on to identify some differences in wording between the old rule and r 7.23. His Honour said (at [103]):

It is apparent that the drafter of FCR 7.23, in an attempt to put the rule in plainer English, has reasoned that where there is a reasonable cause to believe, there must also be a person who holds that belief. Further, whilst the former rule required the belief to relate to a case which did or might exist (‘has or may have the right to obtain relief’) the new rule only requires the belief to relate to a claim which may exist. This was perhaps done on the basis that if the rule was simplified so that it required only a belief which related to a claim which ‘may’ exist, this would necessarily include within its scope that narrower class of case where the belief related to claims which did exist.

(original emphasis)

56    His Honour’s reasoning formed a part of an analysis leading to a conclusion that, for the purposes of subpara (1)(a), “the prospective applicant must prove that it has a belief that it may (not does) have a right to relief” (at [120]). The reasoning is to be understood in a context in which the primary judge was said (and ultimately found) to have directed himself to apply a higher threshold than subpara (1)(a) required. His Honour’s reasoning should not be read out of this context.

57    The grounds of appeal in Pfizer did not concern the proper construction of subpara (1)(b) and the Full Court drew no binding conclusions as to the matters that may permissibly be taken into account in the application of that criterion. No member of the Full Court dealt with the question of what factors ought not to be taken into account in determining whether the prospective applicant has sufficient information to decide to start a proceeding. Upon upholding the ground of appeal, the Full Court exercised the discretion under r 7.23 for itself, without any apparent controversy attending the remaining criteria. No occasion arose for the Full Court to disapprove of the statements of principle in Optiver, Quanta or Objectivision or any other earlier case to which I have referred. As Allsop CJ said, no party to the appeal in Pfizer had submitted that any of the prior authorities were wrongly decided.

58    The prospective respondents’ arguments take the reasoning of Perram J out of context and should be rejected for that reason:  see also John Bridgeman Ltd v National Stock Exchange of Australia Ltd (2019) 139 ACSR 244 at [70].

59    The fundamental principle to be drawn from Pfizer is the importance of adherence to the plain words of the rule, without excessive restatement or confinement drawn from previously decided cases.

60    Turning then to the text of the provision, there is some force in the submission that r 7.23 does not include a power to compel the disclosure of every species of document that might assist a prospective applicant to decide whether to start a proceeding. More specifically, it appears doubtful that the rule was enacted for the purpose of equipping the prospective applicant with information other than that which bears directly on the question of whether there is a right to relief. What follows should be understood as my preliminary observations on that question.

61    It is helpful to consider two classes of information, both of which are capable of assisting a prospective applicant to decide whether to start a proceeding. The first class of information is that which is directly relevant to the question of whether the prospective applicant has the right to obtain the particular relief forming the subject matter of the reasonable belief mentioned in subpara (1)(a). The second class is that which is not directly relevant to the existence of that right, but which may otherwise assist the prospective applicant to make a prudent commercial assessment as to whether the cost and risk of the contemplated litigation would be worthwhile.

62    The first class of information may be disclosed in documents that tend to prove or disprove the acts or omissions that fulfil the elements of the cause of action from which the relevant right to relief would flow. It may also be disclosed in documents that tend to prove or disprove a substantive defence that would deprive the prospective applicant of the right to relief he or she might otherwise be in a position to establish. Information in this class assists in the enquiry as to whether the prospective applicant has the right to relief or not. Of its nature, that information will also bear on the strength of the applicant’s claim and the strength of any defence and so will be relevant to an assessment of the risks of the contemplated proceeding.

63    The criterion in subpara (1)(b) falls to be considered in circumstances where it has already been established that the prospective applicant may have a right to relief. It operates within the domain of uncertainty to which Perram J referred in Pfizer. As his Honour said, for the purposes of subpara (1)(b), a prospective applicant would not have sufficient information to decide to commence a proceeding if he or she does not know enough about what each prospective respondent has done in order to prepare initiating documents that comply with the Court’s rules as to the sufficiency of pleadings.

64    This first class of information clearly informs the decision as to whether or not to start a proceeding, but it is not concerned with the commercial worth of the claim or the likely costs of pursuing it to judgment.

65    Documents containing the second class of information may enable an assessment to be made of such thing as to the net commercial worth of the proceeding. In my view, those considerations do not bear on the question of whether the prospective applicant has a right to relief, but they are capable of informing an assessment as to whether to start a proceeding for the enforcement of the right.

66    As can be seen, both classes of information are capable of informing the question as to whether the costs and risk of the litigation are worthwhile and so fall within the text of subpara (1)(b) as construed by the Full Court in Optiver and the line of authority discussed earlier in these reasons.

67    It is accepted that the rule “should be given the fullest scope its language will reasonably allow”: Optiver at [43]. However, I consider subpara (1)(c)(i) to be worded in a way that permits of only one meaning. It is concerned with information contained in documents “directly relevant to the question whether the prospective applicant has a right to obtain the relief”. It is not concerned with a wider class of document that might assist the prospective applicant in making an assessment as the likely quantum of damages or the costs to be expended in obtaining it.

68    Critically, the power of this Court to make an order under r 7.23(2) is expressly confined to documents of the kind mentioned in subpara (1)(c)(i). It does not pick up all documents that might fill the gap in information of the kind that subpara (1)(b) is concerned with. On that construction it would follow that the Court is not empowered to make an order for the discovery of the documents that do not contain any information that is directly relevant to establishing the prospective applicant’s right. It may be that documents ordered to be produced under r 7.23(2) incidentally contain information that is not directly relevant in the requisite sense but that otherwise inform the decision as to whether or not to commence a suit. In my view discovery of that material is not the purpose of the rule.

69    My analysis is inconsistent with Sackville J’s reasoning in Quanta concerning documents going only to quantum. His Honour’s reasoning has not been overruled or disapproved in any of the authorities to which the parties referred. The circumstance that Quanta was decided under the old rule does not provide a sufficient basis to distinguish it. The relevant textual components of the old rule remain intact in r 7.23. The reasoning in Quanta has been applied in at least one case decided under r 7.23 and otherwise referred to with approval since the rule was enacted. The reasoning is not plainly wrong and it is appropriate that I follow it:  Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at [135].

APPLICATION OF THE RULE

Beliefs held in fact

70    Mr Krups deposes to a belief that BCI may have a right to obtain relief against the prospective respondents for infringement of copyright subsisting in literary and artistic works (including compilation works), misuse of confidential information, breach of contract, tortious inducement and contraventions s 18 and s 29 of the Australian Consumer Law. His belief is informed by the evidence of Mr McKemmish and Mr Williams.

71    Mr Krups states that he requires further information in order for him to decide, on BCI’s behalf, whether to commence proceedings in relation to the causes of action because he does not currently know whether in fact BCI’s intellectual property and confidential information has been misused, nor can he ascertain the extent of any such misuse. He further asserts that documents would assist him to make an assessment of the cost and risk of commencing proceedings against any one or more of the prospective respondents. He further asserts a belief that the materials sought on this application would assist him to make an assessment of the nature and extent of the losses BCI may have suffered.

72    Mr Williams asserts that BCI is unable to identify what works have been reproduced, adapted and/or disseminated by the prospective respondents nor to determine the nature and extent of the infringements nor to determine which of the prospective respondents were involved in any infringement and their respective roles. He asserts that BCI is unable to determine whether confidential information has been accessed or downloaded by a data scraping process so as to properly formulate a claim founded in an equitable breach of confidence or other causes. He further asserts that BCI is unable to identify the extent to which Gingold has permitted or authorised its subscriber ID or password to be used or misused by the CoreLogic respondents, nor has BCI been able to identify the extent of any involvement by Mr Colangelo in any breach of BCI’s rights that may have been committed by Gingold or the CoreLogic respondents. It is asserted that BCI cannot properly formulate a claim founded in misleading and deceptive conduct because it does not know which of the CoreLogic respondents has (for example) used Gingold’s account in a way that amounts to a representation that it is a valid subscriber, nor can it ascertain the extent of Gingold’s involvement in any such contravention. As the solicitor having responsibility for preparing any pleading, Mr Williams asserts that he has insufficient information to prepare a statement of claim against each prospective respondent in a way that would comply with the pleadings rules.

73    Subject to relevance, the unchallenged evidence as to the subjective fact of BCI’s beliefs should be accepted.

74    As has been mentioned, the prospective respondents conceded that the criterion in subpara (1)(a) was satisfied, and yet at the same time they argued that BCI’s belief was not that it may have a right to relief, but that it did have a right. It is difficult to reconcile the concession with the submission.

Reasonableness of the beliefs

75    Given the material presently in its possession, BCI’s belief that it may have a right to obtain relief against each of the prospective respondents is objectively reasonable. The prospective respondents did not seriously advance any submission to the contrary. Nor did they advance any submission that there was no reasonable basis to believe that they did not have in their possession, documents of the kind mentioned in subpara (1)(c). As there is no real contest in respect of how the information presently in BCI’s possession suggests the existence of the contemplated causes of action, I do not consider it necessary to parse analysis on the point. The known facts as I have narrated them suggest the existence of rights to relief of the kind to which BCI’s deponents have referred.

Subparagraph 7(1)(b)

76    What is or is not “sufficient information” is for the Court to determine. The Court may have regard to circumstances peculiar to the prospective applicant in making that assessment.

77    For BCI it was submitted that the Court should afford greater weight to the opinions expressed by its deponents as to the additional information it requires because the decision to sue was one for it, and it alone, to make. Whether that argument is correct is unnecessary to decide. I consider the criterion in subpara (1)(b) to be satisfied whether or not weight is to be given to BCI’s views on the question.

78    I am satisfied that the information presently in BCI’s possession is insufficient to enable a decision to be made as to whether to start a proceeding. That is so notwithstanding that the evidence obtained by BCI shows that the usernames and ID’s issued to Gingold have been used by persons other than Gingold itself, so as to amount to a contravention of the terms and conditions of its subscription. If the legal proceeding under contemplation was confined to an action founded in breach of contract against Gingold as sole respondent, BCI might have had some difficulty succeeding on this application.

79    Without being exhaustive, BCI has insufficient information to enable it to commence a proceeding properly founded on known facts going to the following issues:

(1)    whether Mr Colangelo was involved in any breach of contract by Gingold;

(2)    whether any such breach of contract was induced by any one of the CoreLogic respondents (and, if so, which of them);

(3)    which works were copied by the process of data scraping identified by Mr McKemmish (and by whom) and whether such copying occurred in circumstances amounting to an infringement of any copyright subsisting in the works;

(4)    whether any works copied in the process of data scraping were subsequently copied or adapted in a way that would amount to further infringements of copyright subsisting in them;

(5)    whether any of the works copied or used by any one of the CoreLogic respondents contained confidential information that has been disclosed or misused in a manner that would constitute a breach of any equitable obligation of confidence;

(6)    whether Gingold or Mr Colangelo committed any act or omission that would constitute authorisation of any copyright infringement or otherwise give rise to secondary liability;

(7)    whether Gingold (by the agency of Mr Colangelo or otherwise) contravened the Australian Consumer Law by making false or misleading statements about its subscription and the use of it; and

(8)    whether any one of the CoreLogic respondents was knowingly involved in a contravention of the Australian Consumer Law by Gingold or Mr Colangelo (and if so how).

80    The prospective respondents submit that BCI has the benefit of the opinions of Mr McKemmish which, it was submitted, were fully formed and able to be acted upon by BCI. I reject that submission.

81    The evidence of Mr McKemmish, under the heading “Further analysis which could be undertaken” was that he would need certain further information “in order to complete my analysis and confirm my opinion as to how, when, where and by whom the data access and scraping activity on LeadManager occurred” (emphasis added). That evidence was not challenged and I accept it. If it was to be submitted that Mr McKemmish was in a position to (and had in fact) formed a settled opinion as to the specific acts attributable to each prospective respondent, that is a proposition that ought to have been put to Mr McKemmish.

82    The prospective respondents then submit that BCI was presently in the position to prepare a pleading that complied with the Rules. It is submitted that could be done by naming all of the respondents and articulating claims against each of them in all combinations and permutations of involvement. On the material before me I consider such a pleading would have an insufficient factual foundation and may be liable to be struck out as embarrassing.

83    It is then submitted that BCI may improve on its pleading after the process of discovery between the parties was complete. The difficulty with that submissions is that any orders for discovery that may be made in the proceeding would occur upon the closure of pleadings and identification of the issues in dispute. It wrongly assumes that the speculative (and therefore defective) pleading postulated by the prospective respondents would not be liable to be struck out at an early stage. With the exception of a breach of contract by Gingold, I am satisfied that BCI is presently unable to identify and plead a discrete claim against each respondent as the pleading rules require.

DOCUMENTS

84    The documents sought by BCI are described in Schedule A to the originating application as follows:

1    Documents (including system, network and user logs) recording access to LeadManager using the Subscriptions from 3 October 2017 to the present, including system, network and user logs identifying the individuals, their locations, their IP addresses, and computers used to access LeadManager.

2    Documents recording all IP addresses registered to or used by CoreLogic, Gingold and Angelo Colangelo, from October 2017 to present.

3    A copy of the computer program or computer script used by CoreLogic to download data from LeadManager using the Subscriptions, and any Document summarising the functionality of the program or script.

4    Copies of BCI Materials downloaded from LeadManager using the Subscriptions including BCI Materials stored on any network, storage device or cloud service operated by or on behalf of CoreLogic, Gingold and/or Angelo Colangelo, from October 2017 to the present.

5    Documents created or prepared by CoreLogic, Gingold and/or Angelo Colangelo using information from BCI Materials downloaded from LeadManager using the Subscriptions, from October 2017 to present.

6    Documents recording communications between CoreLogic, Gingold, Angelo Colangelo, Carmela Tavasci, Tanya George, Graham Hooper and any person concerning the use of the Subscriptions to access LeadManager, including to download BCI Materials, from October 2017 to present.

7    Documents recording or referring to the use and disclosure (or intended use and disclosure) by CoreLogic, Gingold and/or Angelo Colangelo of BCI Materials downloaded from LeadManager using the Subscriptions, from October 2017 to present.

8    Documents recording or referring to any benefit, including financial benefit accruing to or received by CoreLogic, Gingold and/or Angelo Colangelo from the use or disclosure of BCI Materials downloaded from LeadManager, from October 2017 to present.

85    For the purpose of subpara (1)(c)(i), there is a reasonable basis for BCI’s belief that the prospective respondents have or are likely to have the documents in their control. With the exception of the documents described in category 8, I am also satisfied that the documents are directly relevant to the question of whether BCI has a right to obtain relief against each prospective applicant.

86    I consider category 8 to bear solely on the question of the value of any monetary award that might be achieved by BCI should it succeed in any claim (particularly a claim founded in copyright infringement). Notwithstanding that observation, for the reasons given earlier, I will proceed on the basis that there is power to make the order and return to the topic in the course of exercising the discretion.

87    There is a reasonable basis for BCI’s belief that inspection of the documents would assist it to make a decision as to whether to start a proceeding, not least of all because the documents will enable an assessment to be made as to the rights BCI has as against each respondent. That is especially so in connection with the question of whether BCI’s asserted copyright has been infringed and, if so, in relation to which work. Infringement of copyright subsisting in each work may give rise to a separate right to relief. Moreover, the extent of the infringement (including its commercial purpose) legitimately informs the question of whether BCI has a right to an award of additional damages under s 115(4) of the Copyright Act 1968 (Cth).

DISCRETION

88    The prospective respondents have not put forward any evidentiary basis for a submission that the order for preliminary discovery would be onerous.

89    In the circumstances, I consider the discretion should be exercised in BCI’s favour in respect of categories 1 to 7.

90    Category 8 stands in a different category for four reasons. First, I consider the description of documents to be worded in a way that gives rise to difficulty in assessing whether a particular document would fall within it. Benefits accruing to or received by the prospective respondents from any infringement may be intangible or otherwise difficult to define. There is an unacceptable risk that an obligation expressed in those terms would be productive of argument as to whether or not the prospective respondents have complied with the Court’s order.

91    Second, I consider it likely that if BCI were to inspect the remaining categories of documents, then any benefits flowing to them from any infringement would become apparent.

92    Third, in proceedings of the kind that might be commenced by BCI, it is not unusual for the Court to order the trial of separate issues concerning liability on the one hand and remedies on the other:  Fleming’s Nurseries Pty Ltd v Hannaford [2008] FCA 591 at [18]; Graham’s Factree Pty Ltd v Oak Enterprises (No 1) [2012] FCA 1033 at [9] – [10]; Reading Australia Pty Ltd v Australian Mutual Provident Society (1999) 240 FCR 276 at [9]. In the ordinary course, discovery of documents that are relevant only to the question of quantum may be deferred to another time. In that procedural context, I do not consider that an inability to inspect documents of that kind prior to the commencement of the action would materially inhibit BCI’s ability to decide whether to sue.

93    The case is such that any commercial benefit flowing from any infringement may be measureable in accordance with the “springboard doctrine”:  IPC Global Pty Ltd v Pavetest Pty Ltd (No 3) [2017] FCA 82; 122 IPR 445 at [194] – [196]; Zomojo Pty Ltd v Hurd (No 2) [2012] FCA 1458; 299 ALR 621 at [201] – [202]; RLA Polymners Pty Ltd v Nexus Adhesives Pty Ltd [2011] FCA 423; 280 ALR 125 at [70] and [73]. To the extent that BCI seeks to know the possible value of any damages award, it may make a fair assessment by reference to its own records relating to the research and development, financial investment and human effort expended in creating the works.

RULE 7.22

94    BCI did not focus its submissions on the alternative basis for preliminary discovery under r 7.22. It has not been shown that BCI has any real difficulty ascertaining the proper description of any prospective respondent. Argument under r 7.23 proceeded from the assumption that the relevant descriptions had in fact been ascertained (as the text of the rule contemplates).

ORDERS

95    The parties will be heard on the form of the Courts’ orders, particularly the time by which discovery is to be given and the manner in which the documents are to be produced for inspection.

Associate:

Dated:    26 October 2020

SCHEDULE OF PARTIES