Preliminary discovery: Australian Football League v Stadium Operations Limited [2009] VSC 264 (25 June 2009)

June 27, 2009 |

It is a fair bet that there will be a few more entries onto the austlii site in the Australian Football League v Stadium Operations a dispute between the AFL and the owners of Etihad Stadium about use of the stadium, naming rights etc. The opening round, in court at least, was the  decision by Warren CJ regarding a preliminary discovery application.  The AFL was generally successful.

Preliminary discovery is a potent but poorly understood process.  There seems to be a reflexive reluctance to make the application.  Warren CJ has provided a good encapsulation of the main principles. The starting point for her analysis is the articulation of the principles by Hollingworth J in Beston Parks Management Pty Ltd v Sexton.  While Rule 32.05 requires 3 criteria to be met before an order is made Hollingworth set out the approach a court will take.  She stated (with my emphasis):

It is not necessary to show precisely what cause of action the applicant may have, merely that the facts are such from which it may reasonably be believed that the applicant may have a right to obtain relief. The word “may” indicates that the putative belief does not have to amount to a firm view that there is a right to relief. Although some “fishing” enquiry is permitted, a “flimsy foundation” or “mere hunch” will not be sufficient to constitute reasonable cause. An applicant does not have to prove that there will be, only that there may be, a real benefit from making the order. The benefit may be the drawing of an appropriate pleading with proper particulars and the avoidance of substantial amendment after discovery, or, alternatively, the possible avoidance of unnecessary and fruitless litigation. The “reasonable cause to believe” requirement is primarily concerned with whether, as an objective fact, an applicant has sufficient information to decide whether to commence proceedings. So, an application cannot succeed if the applicant has sufficient information (assessed objectively), but where the inability to determine whether to commence proceedings arises, for example, due to an overly indecisive or cautious nature. There is no dispute that there may be a subjective element, in the sense that if there is evidence that the applicant has in fact decided to commence proceedings, that will be fatal to the application.

At par 5 Warren CJ says that where the elements are made out a factor in the exercise of the discretion is where may be a real benefit in making the order . In this context the benefit of avoiding amendments to pleadings is relevant.

What does cause practitioners to take a deep breath when considering a preliminary discovery application are the tricky factual matrix that can arise with:

  • setting out the facts to show there might be a cause of action;
  • where does the line between fishing on the one hand (permissible up to a point) and a flimsy foundation/mere hunch on the other.  Obviously source documents would assist but preliminary correspondence between legal representatives can provide some support;
  • whether the applicant has decided to commence proceedings.  That is not such a simple proposition. A person can wax and wane but also put forward in correspondence a position much more robust than was actually the case.  With correspondence being the lifeblood of applications care in terminolgy is important.

In this case the respondent argued that the preliminary exchange of correspondence showed that the applicant had decided to commence proceedings.  As such the application was fatally flawed.  Warren CJ (taking a broad and benevolent view much as that recommended by Hollingworth)  said that picking through phrases in letters is less helpful than looking at the overall correspodence (par 59).   Moreover she endorsed a prospective litigant being cautious and therefore wanting more information before making a decision (see pars 60 – 61).

As to the question of whether, after making sufficient enquiry, the applicant  lacks sufficient information to make a decision whether to sue Warren CJ endorsed Hollingworth’s analysis (at par 67) that the court will undertake the exercise of:

…. whether it is reasonable for an applicant to be required to make a decision without having the information that would become available from the document or documents of which discovery is sought.   ….this question is to be answered in light of the nature of the cause of action contemplated and the range of information potentially available in respect of a cause of action of that kind.

Warren CJ acknowledged both that even when all the elemants are met it is a question of discretion but that the exercise would normally be made in favour of the application.


The facts in this case were quite involved but the principles quite straightforward. This procedure is very helpful for a potential litigant who is on the cusp of deciding whether to sue or trying to determine who to sue when the facts are confused.  It is important to be careful in correspondence with potential defendants.  In this case the respondent picked its way through the applicant’s correspondence.  Taking a careful and reasonably narrow approach to a defined class of documents will minimise accusations of merely having a hunch.

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