Federal Court of Australia

Outback Stores Pty Ltd v Smith [2020] FCA 1785

ORDERS

THE COURT ORDERS THAT:

1.    The application is dismissed.

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

REASONS FOR JUDGMENT

WHITE J:

1    Rule 7.23 of the Federal Court Rules 2011 (Cth) (the FCR) permits a person (a “prospective applicant”) who believes he or she may have right to obtain relief against another to apply to the Court in specified circumstances for an order that that person (the “prospective respondent”) give discovery of specified documents.

2    This judgment concerns an application by Outback Stores Pty Ltd (OBS) as a prospective applicant for an order under r 7.23 that two prospective respondents, Mr Steven Smith and Aboriginal Investment Group (AIG), give discovery of specified documents. The Originating Application of OBS indicated that it also sought an order under r 7.22 of the FCR but that part of the application was not pursued.

3    For the reasons which follow, the application is dismissed.

Factual setting

4    OBS is a company wholly owned by the Commonwealth of Australia which manages and supplies supermarkets in approximately 40 remote Aboriginal communities. Mr Rathore is its Chief Financial Officer.

5    The second named prospective respondent, AIG, is in fact a registered business name of Northern Aboriginal Investment Corporation Pty Ltd (NAIC). The first prospective respondent, Mr Smith, is the Chief Executive Officer of NAIC. He is also the Chief Executive Officer of North Australian Aboriginal Corporation.

6    AIG currently operates three community stores in remote Aboriginal communities in the Northern Territory, these being at Barunga, Yarralin and Wirib. It also assists in the supply of products to the Wirrimanu Community Store at Balgo in northeast Western Australia. Each of the stores at Wirib and Barunga had previously been managed by OBS. So also had the Wirrimanu Community Store.

7    In managing and supplying remote supermarkets, OBS enters into agreements with suppliers (Supplier Agreements). Those agreements may require suppliers to pay a percentage-based rebate on the price paid for their products by OBS.

8    Mr Rathore has deposed (and I accept) that, since at least 2017, OBS has generated taxation invoices electronically for the rebates payable by suppliers to it (Rebate Invoices). They are sent to the relevant supplier by email and saved by OBS on its computer system as a PDF file. They are not stored in hard copy. The Rebate Invoices may set out the rebate percentages.

9    Mr Rathore has also deposed (and I accept) that OBS regards the Supplier Agreements and Rebate Invoices as commercially sensitive and that it keeps them confidential. It is concerned that, if its competitors learned of the details of the Supplier Agreements and of the rebates which it has negotiated with suppliers, they would have a commercial advantage should they seek to obtain supplies of products from the same suppliers. Accordingly, it limits those of its own staff who have access to the hard copy Supplier Agreements and to the electronic copies of the Rebate Invoices.

10    In Action NTD34/2019 commenced in this Court on 23 October 2019, Wirrimanu Community Stores Aboriginal Corporation (WCSAC) alleged that OBS, which until 1 September 2015, had managed the Wirrimanu Community Store at Balgo, had engaged in unconscionable conduct by not disclosing to it, or at least not explaining, at the time it had entered into agreements concerning the management of the Store, its receipt of rebates. It sought relief by way of an account or compensation, and a declaration that its 2015 Management Agreement with OBS was void. OBS denied those allegations and cross-claimed against WCSAC. It is not necessary for present purposes to detail that cross-claim.

11    On 3 March 2020, this Court made orders by consent in Action NTD34/2019 requiring the parties to make discovery of documents within specified categories. Subsequently, on 25 May 2020, and again by consent, the Court made a confidentiality order with respect to certain documents to be discovered by OBS. The confidentiality order was in the following terms:

The following documents are to be provided only to the solicitor, counsel and expert appointed by the Applicant and are not to be provided to any other person without the prior written consent of the Respondent, or a further order of this Court:

(a)    the documents to be discovered by the Respondent in accordance with paragraphs 4(g), 4(h), 4(l), 4(m), 4(w) and 4(x) of the Discovery Protocol attached to the orders made 3 March 2020;

(b)    the expert report being obtained by the Respondent.

12    On the following day, 26 March 2020, OBS filed and served its list of the documents in Action NTD34/2019. The list included:

(a)    a bundle of documents being Rebate Invoices issued by OBS to British American Tobacco Australia (BAT); and

(b)    Supplier Agreements which referred to rebate percentages.

13    Mr Rathore deposed, and I accept, that these discovered documents were in the categories of documents which were the subject of the Court’s confidentiality order made on 25 May 2020.

14    On 21 August 2020, following a mediation, the proceedings between WCSAC and OBS settled on confidential terms. The proceedings were discontinued on 24 August 2020.

15    Earlier, I referred to the role of AIG in managing or supplying the community stores at Barunga, Yarralin and Wirib. OBS is concerned that AIG should not be able to use the information relating to the rebates which it (OBS) received in connection with the Wirrimanu Community Store to negotiate more favourable rebates for itself, and to encourage other communities to use AIG’s management in preference to its management.

The Aikman article

16    On 16 July 2020, The Australian published an article under the bi-line of Amos Aikman, its Northern correspondent, under the headline “‘Eat-Healthy’ firm pockets smokes rebate” (the Aikman Article). The article referred to the receipt by OBS of rebates and continued:

1.    In correspondence with The Australian, former Australian Competition & Consumer Commission investigator Steve Smith accused OBS of misleading the [Indigenous Affairs Standing Committee]. Mr Smith now heads Aboriginal Investment Group, an arm of the Northern Land Council, and has been campaigning to expose allegedly unethical OBS practices.

2.    “We believe rebates disadvantage the most vulnerable because rebated items have a higher shelf price than unrebated items,” he said. “AIG argues rebates contribute to failed targets for Closing the Gap because high prices make buying quality, healthy food (which is always going to be more expensive than junk food) less attractive.”

3.    Mr Smith said AIG could demonstrate that OBS received rebates ranging from 1.5 per cent to 25 per cent of wholesale prices, with tobacco the most lucrative.

4.    He cited a 900g tin of baby formula that sold for $33.70 at Balgo store in Western Australia when OBS was in charge but dropped to $24 after AIG took over.

5.    Mr Smith attributed the price difference to AIG not accepting rebates, adding that OBS ought to be cheaper due to economies of scale.

6.    “Rebates are a two-tier problem,” he said.

7.    “One is you limit your supplier base so you can’t negotiate the best price; and the other is the compound effect of the rebate.”

17    The paragraph numbering has been added for ease of later reference.

18    The Aikman Article also set out an extract from a “cigarette company invoice” relating to supplies in the period between January and March 2017 (the Cigarette Invoice), although it did not identify either the issuer or the recipient of the invoice. It showed the rate at which the rebates were calculated and the amount payable by way of the rebates. In the context in which it was published, including the headline to the Aikman Article, the natural inference was that the Cigarette Invoice was a Rebate Invoice issued by OBS. The submissions on the application of OBS proceeded on the assumed basis that that was so.

19    Mr Rathore deposed to inquiries he has made within OBS to satisfy himself that OBS was not itself the source of the invoice extracted in the Aikman Article. BAT has assured Mr Rathore that it has not provided any Rebate Invoices of OBS to any third parties.

20    At the request of OBS’s solicitors, the solicitors who acted for WCSAC have given an assurance that they have complied with their obligations with respect to the receipt of the discovered documents, as has the expert retained by them in Action NTD34/2019.

Rule 7.23 of the FCR

21    Rules 7.22 and 7.23 of the FCR permit orders to be made for two forms of discovery before the commencement of substantive proceedings. Rule 7.22 permits preliminary discovery for the purpose of identifying a prospective respondent. Although the originating application of OBS included an application under r 7.22, it did not pursue that claim.

22    By r 7.23, the Court may order that a prospective respondent give discovery of documents which are or have been in its possession and which may assist the prospective applicant to decide whether to institute proceedings against the prospective respondent. 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).

23    The terms “prospective applicant” and “prospective respondent” are defined in r 7.21 to mean:

prospective applicant means a person who reasonably believes that there may be a right for the person to obtain relief against another person who is not presently a party to a proceeding in the Court.

prospective respondent means a person, not presently a party to a proceeding in the Court, against whom a prospective applicant reasonably believes the prospective applicant may have a right to obtain relief.

24    The term “control” used in r 7.23 is defined in the Dictionary to the FCR to mean in relation to a document “possession, custody or power”.

Relevant principles

25    Rule 7.23 of the FCR is the counterpart of O 15A r 6 in the Federal Court Rules 1979 (Cth). However, as counsel for OBS noted, there are two important differences:

(a)    rule 7.23 requires that the prospective applicant have a reasonable belief. That is to say, the test is now both subjective and objective – the prospective applicant must itself hold a belief and that belief must, objectively speaking, be reasonable; and

(b)    the documents which the Court may order the prospective respondent to discover to the prospective applicant are only those which are “directly relevant to the question whether the prospective applicant has a right to obtain the relief”.

26    The elements of the entitlement to preliminary discovery for which r 7.23 provides are:

(a)    the prospective applicant believes that it may have the right to obtain relief in this Court from a prospective respondent (subr (1)(a));

(b)    that belief is reasonable (subr (1)(a));

(c)    the prospective applicant has made reasonable inquiries with a view to obtaining sufficient information to decide whether to start a proceeding in the Court to obtain that relief (subr (1)(b);

(d)    having made those inquiries, the prospective applicant still lacks sufficient information to make the identified decision (subr (1)(b)):

(e)    the prospective applicant believes that the prospective respondent has or has had, or is likely to have or have had, documents in its control which are directly relevant to the question of whether the prospective applicant has a right to obtain the relief (subr (1)(c)(i));

(f)    that belief is reasonable (subr (1)(c)(i));

(g)    the prospective applicant believes that its inspection of the documents of the prospective respondent would assist it in making the decision (subr (1)(c)(ii)); and

(h)    that belief is reasonable (subr (1)(c)(ii).

27    Each of these elements must be satisfied. Even when they are, the Court retains a discretion to refuse to make the orders (r 7.23(2)).

28    The prospective applicant must provide evidence to establish its own subjective belief of elements (a), (e) and (g) (EBOS Group Pty Ltd v Team Medical Supplies Pty Ltd (No 3) [2012] FCA 48; (2012) 199 FCR 533 at [28]-[32]) and point to material indicating that its belief about each of those matters is reasonable.

29    The elements listed above have now been discussed in numerous authorities, including Quanta Software International Pty Ltd v Computer Management Services Pty Ltd [2000] FCA 969, (2000) 175 ALR 536 at [36]; Reeve v Aqualast Pty Ltd [2012] FCA 679 at [66], and the principles concerning their application are settled. A detailed review of the authorities is not necessary for the disposition of the present application. It is, however, convenient to refer to Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193; (2017) 257 FCR 62 in which the Full Court addressed matters bearing on the belief required of the prospective applicant. Allsop CJ said, at [8], of r 7.23(1)(a):

… The foundation of the application in r 7.23(1)(a) is that an applicant (a person or a corporation) reasonably believes that he, she or it may have a right to relief. The belief therefore must be reasonable (expressed in the active voice that someone reasonably believes) and it is about something that may be the case, not is the case. It is unhelpful and likely to mislead to use different words such as “suspicion” or “speculation” to re-express the rule …

(Emphasis in the original)

30    To similar effect, Perram J (with whose reasons Allsop CJ generally agreed) said 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.

(Emphasis in the original)

31    Following a review of several of the authorities, Perram J noted at [120], the following propositions about the evidence required in applications for preliminary discovery to prove the requisite belief in the first of the identified elements:

(i)    the prospective applicant must prove that it has a belief that it may (not does) have a right to relief;

(ii)    it must demonstrate that the belief is reasonable, either by reference to material known to the person holding the belief or by other material subsequently placed before the Court;

(iii)    the person deposing to the belief need not give evidence of the belief a second time to the extent that additional material is placed before the Court on the issue of the reasonableness of the belief. That belief may be inferred;

(iv)    the question of whether the belief is reasonable requires one to ask whether a person apprised of all of the material before the person holding the belief (or subsequently the Court) could reasonably believe that they may have a right to obtain relief; and

(v)    it is useful to ask whether the material inclines the mind to that proposition but very important to keep at the forefront of the inclining mind the subjunctive nature of the proposition. One may believe that a person may have a case on certain material without one’s mind being in any way inclined to the notion that they do have such a case.

(Emphasis in the original)

32    Perram J went on to elaborate the requirement that the prospective applicant have a belief that it may (and not does) have a right to relief by saying:

[121]    In practice, to defeat a claim for preliminary discovery it will be necessary either to show that the subjectively held belief does not exist or, if it does, that there is no reasonable basis for thinking that there may be (not is) such a case. Showing that some aspect of the material on which the belief is based is contestable, or even arguably wrong, will rarely come close to making good such a contention. Many views may be held with which one disagrees, perhaps even strongly, but this does not make such a view one which is necessarily unreasonably held. Nor will it be an answer to an application for preliminary discovery to say that the belief relied upon may involve a degree of speculation. Where the language of FCR 7.23 relates to a belief that a claim may exist, a degree of speculation is unavoidable. The question is not whether the belief involves some degree of speculation (how could it not?); it is whether the belief resulting from that speculation is a reasonable one. Debate on an application will rarely be advanced, therefore, by observing that speculation is involved.

33    In his separate reasons in Pfizer, Nicholas J said, at [170], that r 7.23 requires the prospective applicant to have the requisite belief at the time of making the application. His Honour also suggested at [177] that the prospective applicant must establish a belief going beyond “a mere possibility” that the prospective respondent may have engaged in conduct which, if proven, would entitle the prospective applicant to relief.

34    Finally, in Pfizer both Allsop CJ and Perram J noted that applications for preliminary discovery are summary applications and are not to be conducted as mini-trials, at [2] and [126].

The proposed causes of action

35    In the principal affidavit in support of the application of OBS, Mr Rathore deposed to his belief that OBS “may have a number of causes of action against Mr Smith and AIG”, namely:

(a)    misleading or deceptive conduct contrary to s 18 of the Australian Consumer Law (the ACL) (Sch 2 to the Competition and Consumer Act 2010 (Cth);

(b)    breach of confidence at common law; and

(c)    defamation.

36    As will be seen, this manner of expression gave rise to an issue at the hearing as to whether OBS had provided evidence of even the first element for a r 7.23 order.

The preliminary discovery sought by OBS

37    OBS pursues claims for discovery of six categories of documents. It is convenient to address these in turn.

Documents recording or evidencing representations made by Mr Smith and/or AIG to Mr Aikman and/or Nationwide News Pty Ltd in relation to Mr Aikman’s article

38    A number of matters indicate that OBS has not established an entitlement to preliminary discovery of these documents.

39    First, Mr Rathore has not deposed to a belief that OBS may have a right to obtain “relief” in this Court from either Mr Smith or AIG. He deposes only that OBS “may have a number of causes of action” (being those identified above) without indicating the relief to which he believes OBS is entitled if those causes of action be established. As was noted by Katzmann J in EBOS Group, r 7.23(1)(a) does not speak in terms of a belief in the existence of a cause of action but of a belief concerning a right to relief. Satisfaction of this element requires identification of the nature of the relief which is the subject of the belief: EBOS Group at [31]; Telstra Corporation Ltd v Minister for Broadband, Communications and the Digital Economy [2008] FCAFC 7, (2008) 166 FCR 64 at [58].

40    More specifically in the present application, in relation to the misleading or deceptive conduct cause of action, Mr Rathore does not identify any remedy for which Pt 5-2 of the ACL provides to which he believes OBS may have a right in the event that it does establish misleading or deceptive conduct by the prospective respondents. A claim for damages pursuant to s 236 of the ACL is of course a remedy commonly provided in the case of proving misleading or deceptive conduct. However, the award of damages depends upon the applicant having suffered loss or damage. Proof of actual loss or damage is a necessary element of the cause of action based on s 236: Wardley Australia Ltd v State of Western Australia [1992] HCA 55, (1992) 175 CLR 514 at 525; Sexpo Pty Ltd v Collective Shout Ltd [2018] FCA 544 at [18]. Mr Rathore does not depose to any belief that OBS has suffered loss or harm as a result of the alleged misleading or deceptive conduct.

41    As counsel for the prospective respondents submitted, mere identification of the relief generally to which proven misleading or deceptive conduct may entitle a successful applicant, is not sufficient. Further, the prospective applicant should state a belief in the existence of the harm for which the relief to which the prospective applicant believes it may have a right may provide a remedy: Sexpo at [25].

42    Counsel for OBS submitted that Mr Rathore had deposed to a belief that OBS may have a right to injunctive relief. However, that submission is not borne out on a reading of Mr Rathore’s affidavits. He does no more than depose to some circumstances which could indicate that injunctive relief may be available, if it is sought.

43    In relation to the cause of action in defamation, Mr Rathore refers to the statements in paras 1 and 2 in the Aikman Article and deposes to his belief that they are untrue. He then deposes to a belief that they are defamatory of OBS and were designed to damage, and have damaged, the reputation of OBS.

44    It is noteworthy that Mr Rathore does not depose to a belief that OBS may have a right to damages or any other form of relief in respect of the postulated defamatory matters. Amongst other things, he does not address the question of whether OBS is an “excluded corporation” within the meaning of s 8 of the Defamation Act 2006 (NT) and its counterparts in the Uniform Defamation Acts, so as to be a corporation which is able to bring an action in defamation.

45    The parties provided supplementary submissions directed to the question of whether OBS is an “excluded corporation” for the purpose of s 8. As I consider that the application for preliminary discovery fails for other reasons, it is not necessary to address that question.

46    A final matter bearing on the first difficulty in the application of OBS, is the second of the elements identified above. As noted, that element requires the Court to be satisfied that the subjective belief of the prospective applicant that it may have the right to obtain relief in this Court from a prospective respondent is reasonable. That will usually require the Court to be satisfied that each of the elements necessary for a cause of action may be established (but not that they do in fact exist): Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2008] FCAFC 133, (2008) 169 FCR 435 at [48]; Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd [2007] FCA 1215, (2007) 164 FCR 450 at [44]. It is difficult for the Court to make that assessment in respect of a belief to which the relevant deponent does not depose.

47    Secondly, Mr Rathore does not depose to OBS lacking sufficient information “to decide whether to start a proceeding in this Court” to obtain identified relief. He deposes to no more than that OBS seeks information “to establish whether it has a cause of action” against the prospective respondents for (relevantly) contraventions of s 18 of the ACL or defamation and that OBS requires the information “in order to properly formulate [its] potential claims”.

48    As counsel for the prospective respondents submitted, r 7.23 does not contemplate preliminary discovery being provided in order that a prospective applicant may better plead its case. The preliminary discovery is ordered in order to assist the prospective applicant in making the decision whether to start a proceeding in the Court to obtain identified relief.

49    Thirdly (and related to the second matter), OBS has not established that it lacks “sufficient information” to make the required decision. On the contrary, the matters to which Mr Rathore himself deposes suggest that OBS does have sufficient information. It has the statements which Mr Aikman attributes to Mr Smith as they are set out in the articles published in The Australian. They are in the form of direct quotations: not paraphrases. That should add to the confidence of OBS that the statements attributed to Mr Smith were in fact made by him. OBS also has information as to the, or least a, source of those statements as Mr Aikman identifies it as correspondence from Mr Smith. Those matters provide a basis upon which a legal practitioner could, in accordance with FCR 16.01, certify that there is proper basis “for each allegation in the pleading”: cf Pfizer at [99] (Perram J).

50    Counsel submitted that OBS was entitled to be “sure” that Mr Smith had in fact made the statements attributed to him and that for this purpose, it was appropriate for it not to proceed on the basis that Mr Aikman’s attribution was accurate. On this basis, it could accordingly be concluded, so the submission ran, that OBS lacks sufficient information with which to decide whether to start a proceeding. However, that submission faces its own difficulties:

(a)    if that be the concern of OBS, it has not established that it has made the “reasonable inquiries” required by subr (1)(b) with a view to obtaining confirmation that Mr Smith did make the statements attributed to him by Mr Aikman. There is, for example, no evidence that it has adopted the simple expedient of requesting Mr Smith to confirm that he made the statements attributed to him by Mr Aikman. Nor has it provided evidence indicating a basis upon which it would have been reasonable for OBS to consider that such a request would have been pointless;

(b)    Mr Rathore does not in any event depose to confirmation of Mr Smith’s authorship of the statements as being the additional information which OBS needs in order to decide whether to start an action based on misleading or deceptive conduct or defamation in this Court; and

(c)    Mr Rathore does not depose to a belief that, having the documents sought, would assist OBS to make the decision about whether to commence proceedings.

51    Accordingly, the application by OBS for preliminary discovery of the first category of documents must be rejected.

Documents recording or evidencing the basis for the representations made by Mr Smith and/or AIG of information as to rebates paid or payable to OBS by certain of its suppliers

52    In my view, the application of OBS for preliminary discovery of this category of documents fails for similar reasons as does the first.

53    While Mr Rathore identifies three of the statements attributed to Mr Smith as misleading or deceptive or defamatory, he does not depose to a belief that OBS needs documents recording or evidencing “the basis” for the representations made by Mr Smith to Mr Aikman. Even if he had, it is difficult to see how such a belief could be characterised as reasonable or that the Court could conclude that OBS lacks sufficient information to decide whether to commence proceedings. In relation to claims based on misleading or deceptive conduct, it is well established that the character of the conduct (whether it is misleading or deceptive) is assessed objectively. It does not depend upon the subjective state of mind of the person engaging in the conduct: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191 at 198-9. Likewise, in a claim for defamation, the question of whether the impugned statements were defamatory is assessed by reference to the understanding of the ordinary reasonable listener or reader: Nationwide News Pty Ltd v Rush [2020] FCAFC 115; (2020) 380 ALR 432 at [70]. The “basis” on which the prospective respondent made the representations does not bear upon those issues. Counsel did not suggest that knowing the basis for the representations was necessary for this purpose.

54    Perhaps more importantly, Mr Rathore does not depose to a belief that knowing the basis for the representations made by Mr Smith would assist OBS in making the decision whether to commence proceedings. Further, and in any event, OBS has not established that such a belief (if held by Mr Rathore) is reasonable.

55    A further matter indicating that OBS does not need the information sought, in order to decide whether Mr Smith’s statements are misleading or deceptive or defamatory, is that Mr Rathore not only deposes to his belief that three statements of Mr Smith were “false and misleading”, he gives reasons why that is so. Those reasons are based upon matters already known to OBS and which it is now in a position to prove. That being so, any belief by OBS that its inspection of documents recording or evidencing the basis for Mr Smith’s representations would assist in deciding whether to commence proceedings cannot be regarded as reasonable.

56    Accordingly, the application by OBS for preliminary discovery of the second category of documents must be rejected.

The claimed confidential documents

57    It is convenient to consider together the third, fourth, fifth and sixth categories of documents sought by OBS by way of preliminary discovery (collectively, the Confidential Information). They are:

(i)    documents recording or evidencing receipt by Mr Smith and/or AIG of information as to rebates paid or payable to OBS (OBS Confidential Information) by certain of its suppliers;

(ii)    the invoice from which the extract published in Aikman article was taken (the Invoice) and any supplier agreements entered into between OBS and its suppliers (collectively the OBS Documents);

(iii)    documents recording or evidencing provision of any of the OBS Confidential Information and/or OBS documents by Mr Smith and/or AIG to any other person; and

(iv)    information provided to Mr Smith and/or AIG about the confidentiality of the OBS Confidential Information and the OBS Documents.

58    These four categories of documents relate to the proposed cause of action of OBS based on breach of confidence. Although expressed as “breach of confidence at common law” it can be taken to refer to the protection afforded by equity to wrongful use of confidential information.

59    The requirements for the equitable obligation of confidence are well known. An applicant must identify “with specificity, and not merely in global terms” what the information is and show that:

(a)    the information has the necessary quality of confidence;

(b)    the information was received by the respondents in circumstances importing an obligation of confidence; and

(c)    there is an actual or threatened misuse of that information, without the consent of the applicant.

See Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 22 FCR 73 at 87; EBOS Group at [33].

60    OBS did not pursue some aspects of its application for preliminary discovery with respect to the Confidential Information. Further, having regard to s 16(3) of the Parliamentary Privileges Act 1987 (Cth), it did not seek to rely upon the written submissions made by Mr Smith to the House of Representatives Standing Committee on Indigenous Affairs on 13 and 23 July 2020 respectively. This meant that it relied only on inferences to be drawn from the Aikman Article.

61    In my view, the application of OBS for preliminary discovery in respect of the confidential documents should be rejected, for a number of reasons.

62    First, Mr Rathore does not depose (in the manner indicated by Allsop CJ in Pfizer at [8]) that he believes that OBS may have a right to relief in respect of the Confidential Information. That is left to inference.

63    Secondly, Mr Rathore does not depose to a belief that the Confidential Information was received by the prospective respondents in circumstances importing an obligation of confidence. Again, that is left to inference. Even if it be inferred that Mr Rathore does have such a belief, its reasonableness is not self-evident. There are readily available explanations for Mr Smith’s statement that “AIG could demonstrate that OBS received rebates ranging from 1.5 per cent to 25% of the wholesale prices, with tobacco the most lucrative”, which do not depend on Mr Smith or AIG having possession of, or access to, OBS’s Supplier Agreements or Rebate Invoices. It is to be remembered in this regard that AIG has taken over the management of two stores previously managed by OBS. It may well have acquired information through that circumstance. Of course, the fact that there may be alternative “innocent” explanations for Mr Smith’s statements would not of itself deny the reasonableness of Mr Rathore’s belief, but it does underscore the significance of this having been left to inference.

64    Thirdly, Mr Rathore does not depose to a belief that, if OBS could inspect the documents held by Mr Smith and AIG, it would assist it to make the decision about whether to commence proceedings in this Court.

65    A final difficulty is that Mr Rathore does not identify the particular information which OBS considers it needs in order to “assist it in making the decision” as to whether to start a proceeding in the Court to obtain identified relief. All that Mr Rathore deposes to, after stating that the statements attributed to Mr Smith and AIG in the Aikman Article suggest that they are in possession of at least a copy of the BAT invoice and confidential information as to OBS rebate agreements, is that:

In order to formulate its claim that Mr Smith and AIG have breached its confidence, I believe Outback Stores requires information as to precisely what, of its confidential information, they have.

(Emphasis added)

66    As already noted, r 7.23 does not contemplate the provision of preliminary discovery in order that a prospective applicant may better plead its case.

67    For these reasons, I am not satisfied that OBS has shown an entitlement to preliminary discovery in respect of the third, fourth, fifth and sixth categories.

Conclusion

68    For the reasons given above, the application of OBS fails.

69    This conclusion makes it unnecessary to consider the submission of the prospective respondents in reliance on Apache Northwest Pty Ltd v Newcrest Mining Ltd [2009] FCAFC 39; (2009) 182 FCR 124 at [8]. That was that, if it is not apparent that the jurisdiction of this Court may be “regularly invoked” by reference to a cause of action based on misleading or deceptive conduct, it would not be appropriate for an order for preliminary discovery to be made. In particular, it is unnecessary to say anything about the circumstances in which the jurisdiction of this Court is “regularly invoked” – as to which see Rana v Google Inc [2017] FCAFC 156; (2017) 254 FCR 1 at [15]-[24]. It is, however, appropriate to add that an assumption on which the prospective respondents’ submission may have been based (that an action in defamation by OBS would not otherwise be within the jurisdiction of this Court) is not sound – see Crosby v Kelly [2012] FCAFC 96; (2012) 203 FCR 451.

70    The application of OBS is dismissed. I will hear from the parties as to costs.

Associate:

Dated:    11 December 2020