Looking to commence legal action? Part 2: What you need to know about Preliminary Discovery Applications in the Federal Court

Preliminary discovery applications are a useful tool in litigation to help determine whether you have a potential claim against another party, or to ascertain a description of a potential respondent so that you can bring a claim against them. 

In our previous article, we looked at what is required to bring a successful preliminary discovery application in the New South Wales jurisdiction. 

If you are considering commencing proceedings in relation to a Federal Court matter, you may need to make an application for preliminary discovery within the Federal jurisdiction. Federal Court matters may relate to administrative law, bankruptcy, corporations law, consumer law, intellectual property or other areas covered by Federal Law.

Whilst these types of applications for preliminary discovery are similar to those described in our previous article, the Federal Court has different requirements that must be satisfied in order to successfully bring an application for preliminary discovery. Further, it is important to remember that any such application should only be brought after all reasonable efforts have been made to gather the required documents and information from other sources, as is the case in the New South Wales jurisdiction.

1.  An application to ascertain the description of the respondent – where the applicant wishes to ascertain the description of a respondent, an application can be brought under rule 7.22 of the Federal Court Rules 2011 (Cth) (FCR). To be successful, the applicant must demonstrate that: 

1. there may be a right for the applicant to obtain relief against a prospective respondent;
2. the applicant is unable to ascertain the prospective respondent’s description; and
3. another person knows or is likely to know the prospective respondent’s description or has or is likely to have a document that would assist in ascertaining their description. 

The scope of documents or information requested by the applicant in this kind of application must be reasonable. In the matter of Khan v Google LLC [2023] FCA 785, the Court found that the information requested by an applicant cannot  go “beyond what [was] reasonably required to assist [the applicant] to ascertain the description of the [prospective respondent]” [35].  

2. Application to ascertain whether there is a claim to be made – where the applicant wishes to determine whether there is a claim to be made against the prospective respondent, an application can be brought under rule 7.23 of the FCR. To be successful, the applicant must demonstrate that: 

1. the applicant reasonably believes that they have a right to obtain relief from the prospective respondent; and 
2. after making reasonable inquiries, the applicant does not have sufficient information to determine whether or not to commence proceedings to obtain that relief; and 
3. the applicant reasonably believes that the prospective respondent has or is likely to have documents that are directly relevant to the question of whether there is a right to obtain relief; and 
4. inspection of those documents would assist the applicant in making that decision. 

The test for whether an order for preliminary discovery should be made is an objective test of whether the application may have a right to relief and whether a person in the same position as the applicant would reasonably believe that they may have a right to obtain relief (Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193 [180]). 

The scope of the documents and information that an applicant may be entitled to under rule 7.23 of the FCR is limited to what is sufficient to allow an applicant to “know whether the cost and risk of litigation is worth the candle” (Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (No 3) [2021] FCA 1428 [49]). This scope includes documents and information that will assist with understanding the liability, quantum and costs considerations relevant to the prospective matter.

In Pfizer v Samsung (No 3), the Court noted that the purpose of preliminary discovery is not to strengthen or enhance an applicant’s decision to commence proceedings if a decision to commence proceedings could reasonably be made on existing material [50].

3. Costs 

Security for Costs 

Prior to the preliminary discovery application being heard, the prospective respondent may seek orders that the prospective applicant pay money to the Court as a security for the prospective respondent’s costs and expenses. 

Order for Costs

Ordinarily, costs are awarded to the successful party on a party-party basis, meaning that the successful party is entitled to have their costs paid by the unsuccessful party subject to taxation of those costs.  

In special circumstances, such as a party’s failure to comply with preliminary discovery orders, the Court may order that a party pay costs of the application on an indemnity basis 

Conclusion

As in New South Wales Courts, an application for preliminary discovery in the Federal Court is an effective way to determine whether you have a viable claim against another party before deciding to commence proceedings after all other reasonable enquiries have been made. Often, bringing such an application will focus the opposing party’s attention on the real issues in dispute and provide an opportunity to resolve the matter before substantive proceedings are commenced, and the incurrence of the associated time and cost.

If you are unsure whether you have a basis to commence legal proceedings against an individual and think that a preliminary discovery application may be of assistance, please contact our Dispute Resolution & Advisory team. 

Authors: Gavin Stuart, Irene Higgins and Ellah Glynn-Yosef