Looking to commence legal action? What you need to know about Preliminary Discovery Applications in NSW
Preliminary discovery applications are a useful tool in litigation to help determine whether you have a potential claim against another party, or to locate or identify a potential defendant so that you can bring a claim against them. It is an efficient and cost-effective way to answer these questions without bringing proceedings prematurely.
When should you use preliminary discovery?
You should consider bringing an application for preliminary discovery:
if you need to identify or locate the whereabouts of a prospective defendant
if you require information or documents in order to determine whether you should commence proceedings against someone.
What can you obtain from preliminary discovery?
In New South Wales, there are three kinds of applications for preliminary discovery:
1. To identify or determine the whereabouts of a prospective defendant
If you know you have a cause of action against a prospective defendant, and a party holds information or documents that may assist you in determining the identity or whereabouts of that prospective defendant, the court may order a party to provide this information or documents to you under rule 5.2 of the Uniform Civil Procedure Rules 2005 (NSW) (‘UCPR’).
In order to be successful, you must be able to demonstrate to the court that, after having made reasonable inquiries, you have been unable to successfully determine the identity or whereabouts of the prospective defendant in order to commence proceedings against them.
2. To obtain documents or information from a prospective defendant and determine whether you have a claim against them
If you are considering bringing legal action against a prospective defendant, the court may order for that party to produce information and documents to you prior to commencing proceedings under rule 5.3 of the UCPR where:
after having made reasonable inquiries, you cannot obtain sufficient information to determine whether you have a potential claim against a prospective defendant
the prospective defendant may have information or documents that would allow you to determine whether you have a claim
the information or documents would assist in making that determination.
In considering a preliminary discovery application under rule 5.3, the court must not assess the merits of a claim, as was found in O’Connor v O’Connor  NSWCA 214. This case also broadened the scope of what may be ‘discoverable’ to include documents that concern your entitlement to bring a claim, the potential value of that claim, and any potential defences that the prospective defendant may rely upon if you were to bring a claim against them.
3. To obtain documents or information from a non-party and determine whether you have a claim against them
If the documents or information you require are held by someone else, who is not the prospective defendant, the court may issue a preliminary discovery order under rule 5.4 of the UCPR.
Applications under this rule can also be made after proceedings have already commenced.
To bring a successful preliminary discovery application under rule 5.4, you must show that the party may have or may have had possession of documents or information that are relevant to a question in your proceedings. For example, in Kimberley Securities v Byrne  NSWSC 1214, the Supreme Court made orders for preliminary discovery against a company that was related to the prospective defendant.
‘Questions in Proceedings’
A common challenge when bringing preliminary discovery applications under rule 5.4 is establishing the relevance of the requested documents to a "question in the proceedings”, especially when proceedings have not yet commenced. The court may question why you are seeking information from a non-party before having sought information from the prospective defendant themselves.
In Ian Edward Morton & 5 Ors v Nylex Ltd & 1 Or  NSWSC 562, an application under rule 5.4 failed because it did not pertain to a question in the ongoing preliminary discovery proceedings (a rule 5.3 application against the prospective defendant), even though they were likely to relate to a question in future substantive proceedings.
Before making preliminary discovery orders of any kind, the court will consider whether you have made reasonable inquiries to obtain those documents prior to bringing an application. This includes requesting relevant documents from the prospective defendant or other third parties. You should demonstrate to the court that you have made numerous attempts to access the documents or information without success.
Lawyers can assist you by making such inquiries on your behalf.
As with all litigation proceedings, there is a level of risk and expense involved in bringing an application for preliminary discovery. Here are some important things to consider before bringing a preliminary discovery application:
1. Have you chosen the correct kind of application?
The court strongly cautions against “blending” preliminary discovery applications under the UCPR. Recently, in British Airways PLC v Roller Truck Australia Pty Ltd & Anor  NSWDC 112, the District Court rejected an application which had been brought under rule 5.2, on the grounds that it was essentially seeking preliminary discovery under rule 5.3. Abadee J clearly stated that “Rules 5.2 and 5.3 have separate work to do” .
2. What is the scope of your application?
Documents and information requested for the purposes of preliminary discovery must be narrow and cannot be:
a fishing expedition
unduly onerous or costly for the person upon which the orders are sought against
a method to obtain material to strengthen a prospective plaintiff’s position before proceedings have commenced.
If an order for preliminary discovery is sought against a person that is not the prospective defendant, you must pay sufficient conduct money to that person.
As with all litigation, there are costs implications of putting on an application for preliminary discovery. If unsuccessful, you may be ordered to pay the successful party’s costs.
Usually, the court will order for costs to be paid by the unsuccessful party on an ‘ordinary basis’ (also known as party/party costs). Costs on an ordinary basis are often only about 60% to 75% of actual costs incurred.
In special circumstances, the court may order an unsuccessful party to pay costs on an ‘indemnity basis’ (also known as solicitor/client costs), which are usually 85% or greater of actual costs incurred.
Each state or territory may have slightly different rules for preliminary discovery and should be a consideration.
The Federal Court also have a unique set of rules for preliminary discovery which will be explored in our next article on discovery.
Overall, an application for preliminary discovery can be a proactive, expedient, and effective way to determine whether you have a claim against another party. Preliminary discovery may also help you when trying to bring proceedings that are time-sensitive, such as an application for freezing orders. For further information, read our article on issuing freezing orders to maximise your chances of recovering stolen funds.
If you are unsure whether to bring a preliminary discovery application against a prospective defendant or are trying to identify or locate a prospective defendant, please contact our Dispute Resolution & Advisory team.
Authors: Irene Higgins, Adam Cutri & Ellah Glynn Yosef