Larocca v Alvarez & Marsal Australia and New Zealand Pty Ltd

[2025] NSWSC 687

Supreme Court

New South Wales

Medium Neutral Citation:

Larocca v Alvarez & Marsal Australia and New Zealand Pty Ltd [2025] NSWSC 687

Hearing dates:

6 March 2025

Date of orders:

1 July 2025
(Limited non-publication order 3 July 2025)

Decision date:

01 July 2025

Jurisdiction:

Equity

Before:

Meek J

Decision:

Finding that there ought to be preliminary discovery substantially in respect of the categories as sought by EY, subject to clarity regarding “potential client(s)”. Provisional views expressed regarding the cost of the proceedings and expenses associated with complying with the proposed discovery.

Catchwords:

PRELIMINARY DISCOVERY — Mass departure of personnel from the Australian professional services partnership conducted by the plaintiffs (EY) including D2-6 (ex-partners), with all being employed by the D1, a global competitor of EY — Remaining partners contend that the ex-partners may have engaged in wrongful conduct and they may be entitled to make claims for relief against D1 and D2-6 — EY seeks preliminary discovery

PRELIMINARY DISCOVERY — Purported ‘Goldilocks’ dilemma — Plaintiffs know enough to be concerned but not enough to make a sensible and informed decision about whether or not to commence substantive proceedings against the defendants

PRELIMINARY DISCOVERY — Elements for enlivening the discretion to order preliminary discovery — The correct test is the “appears to the Court” test — Submissions regarding “reasonable cause to believe” test rejected

EVIDENCE — Inferences — Drawing such inferences where the relationship is between a given fact and a human act

WORDS & PHRASES — Garden Leave

PRELIMINARY DISCOVERY — Costs and expenses — Distinction between the cost of the litigation per se and the costs of actually providing discovery

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Interpretation Act 1987 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Airways Corporation of New Zealand v Present Partners of Price Waterhouse Coopers Legal [2002] NSWSC 521

Arnaout v Arnaout [2019] NSWSC 565

Barnes v Addy (1874) LR 9 Ch App 244

BGC Securities (Australia) Pty Limited v Shillington [2022] NSWSC 611

Browne v Dunn (1893) 6 R 67

Contour Building and Construction Pty Ltd v Kerr [2008] NSWSC 883

Daebo Shipping Co Ltd vThe Ship Go Star (2012) 207 FCR 220; [2012] FCAFC 156

Dallas Buyers Club LLC v iiNet Ltd (2015) 245 FCR 129; [2015] FCA 317

Globe Capital Administration Pty Ltd v Cecil Developments Pty Ltd atf the Cecil Developments Unit Trust (Receivers and Managers appointed) [2023] NSWSC 574

Gooley v Breda Pty Ltd (No 2) [2017] NSWSC 1505

Hatfield v TCN Channel Nine Pty Ltd (2010) 77 NSWLR 506; [2010] NSWCA 69

Health Administration Corporation v Toll Global Forwarding Pty Ltd [2024] NSWSC 285

Jones v Sutherland Shire Council [1979] 2 NSWLR 206; (1979) 40 LGRA 323

KelbushPty Ltd v Australia and New Zealand Banking Group Ltd (2016) 49 WAR 374; [2016] WASCA 14

Liu v The Age Company Limited (2016) 92 NSWLR 679; [2016] NSWCA 115

Malouf v Malouf (1999) 86 FCR 134; [1999] FCA 284

Manildra Laboratories v Campbell [2009] NSWSC 987

Morton v Nylex Ltd [2007] NSWSC 562

Muscat v Qin [2024] NSWSC 113

Nominal Defendant v Manning (2000) 50 NSWLR 139; [2000] NSWCA 80

O’Connor v O’Connor [2018] NSWCA 214

Pethers v Pethers (No 2) [2025] NSWSC 561

Pfizer Ireland Pharmaceuticals v SamsungBioepisAU Pty Ltd (2017) 257 FCR 62; [2017] FCAFC 193

Renton v Kelly [2018] NSWSC 1377

Steffen v ANZ Banking Group [2009] NSWSC 666

St George Bank Ltd v Rabo Australia Ltd [2004] FCA 1360; (2004) 211 ALR 147

Telstra Corporation Ltd v Minister for Broadband, Communications, and the Digital Economy (2008) 166 FCR 64; [2008] FCAFC 7

The Age Company Ltd v Liu (2013) 82 NSWLR 268; [2013] NSWCA 26

The Printers Pty Limited v Hawk Media Group Pty Limited t/as Hawk Print [2025] NSWSC 194

Totalise Plc v The Motley Fool Ltd & Interactive Investor Ltd [2001] EWCA Civ 1897; [2002] 1 WLR 1233

Texts Cited:

Dickens, Charles, Oliver Twist: Volume I (2nd ed, 1838, Richard Bentley)

IMBD, “Spooks Episode #10.1 Quotes” (Webpage) (see endnotes for accessible link)

Macquarie Dictionary, online ed

Oxford Dictionary, online ed

Oxford English Dictionary, “gardening leave: Factsheet” (Webpage) (see endnotes for accessible link)

Southey, Robert, The Doctor, &c (1837, Longman et al)

Category:

Principal judgment

Parties:

David Joseph Larocca / Plaintiff
Alvarez & Marsal Australia and New Zealand Pty Ltd / First Defendant
Adam Woodward / Second Defendant
Andrew Sharp / Third Defendant
Edward Consett / Fourth Defendant
Sean Keegan / Fifth Defendant
Jagmohan Singh / Sixth Defendant

Representation:

Counsel:
M Pesman SC / Plaintiff
D Mahendra with M Wallis / First-Sixth Defendants
Solicitors:
Baker McKenzie / Plaintiff
Cowell Clarke Commercial Lawyers / First Defendant
Maurice Blackburn Lawyers / Second-Sixth Defendants

File Number(s):

2024/302714

Publication restriction:

Certain confidential information has been redacted.

JUDGMENT

Introduction

1. HIS HONOUR: Between 8 June 2023 and 8 August 2024, there was a mass departure of 36 personnel from the Australian professional services partnership conducted by the plaintiffs (EY), 6 of whom were partners including the second-sixth defendants (individual defendants), with all being employed by the first defendant (A&M), a global competitor of EY that had announced intention to operate in Australia from late October 2022.

2. The remaining partners of EY were, in the circumstances outlined below, not happy about the departure both in terms of loss of personnel and potential loss of clients. They contend that the individual defendants have breached partnership regulations and assert they may be entitled to make claims for relief against A&M and one or more of the individual defendants for engaging in wrongful conduct. ^[1]

   1. Court Book (CB) 94 [158]-[164].

3. Fairy tale analogies, much less fairy tale endings, are not generally the vernacular readily invoked in contested litigation involving international tax firms. Yet the “Goldilocks Zone” was parlance deployed ^[2] by EY’s senior counsel to explain a dilemma in the case. Put simply, he contends that EY knows enough to be concerned but not enough to make a sensible and informed decision about whether or not to commence substantive proceedings against the defendants. ^[3]

   2. T 12.5-.31; see also T 11.49, 37.45.

   3. T 12.8-.10.

4. In Goldilocks ^[4] terms, he contends that EY’s knowledge (a word which I note rhymes with porridge) “is just right”, allowing for a fairly broad scope of “temperature”. ^[5] In Southey’s original story, the porridge of Wee Bear being “just right” was a close to ideal state, but did not satiate the old Woman as the little porridge-pot “did not hold enough for her”. ^[6] Unlike Goldilocks, but like the old woman, EY wants more information or knowledge. Pressing the literary porridge theme imperfectly further, essentially EY comes to the Court, a little like Oliver Twist ^[7] saying “Please sir, I want more [gruel]”, ^[8] i.e. here the request is for more knowledge.

   4. Before it became known as “Goldilocks and the three bears”, the short story written by Robert Southey (Southey) was titled “The story of the three bears” (Little, Small, Wee Bear (Wee Bear), Middle-sized Bear and Great, Huge, Bear (Great Bear)) and first appeared in: Robert Southey, The Doctor, &c (1837, Longman et al) at 318 (accessible here: Later versions introduced the character of Goldilocks (rather than the old woman in the original story).

   5. T 12.14-.15.

   6. Leading the old Woman to utter “a bad word about the little porridge-pot”.

   7. Charles Dickens, Oliver Twist: Volume I (2nd ed, 1838, Richard Bentley) (Oliver Twist).

   8. Oliver Twist at 29 – One distinction being that in Oliver Twist the request for more gruel was made by Oliver to the same person who had provided the gruel in the first place, the Master (though served by the master’s assistants). Here the request is made to a third party, namely the Court.

5. Consequently, EY have sought to navigate out of the “zone” by making an application for preliminary discovery to address the lacuna in knowledge and to make an informed decision. Needless to say, EY’s application is opposed.

Parties

6. The plaintiffs are the partners of EY, a professional services partnership, governed by a partnership agreement with places of business in all Australian States and territories, other than Tasmania. ^[9] As at 3 July 2024, EY had 734 partners in Australia. ^[10]

   9. Plaintiffs’ Outline of Submissions (POS) [2] (citing CB 68 [1], Confidential Court Book (CCB) 127-246).

   10. POS [13] (citing CB 69 [4]-[5]).

7. For the purposes of the application before the Court, it was common ground that the partners of EY and relevantly the individual defendants were each bound by the terms of the Firm Partners’ Agreement Australia dated 1 July 2020 (PA) which (without attempting to be precise) imposed contractual obligations inter alia in relation to solicitation of the staff and clients of EY, non-compete clauses in relation to undertaking business the same or similar in nature to the work undertaken while a partner at EY, and prohibitions on use of confidential information belonging to EY. ^[11]

   11. Defendants’ Outline of Submissions (DOS) [9].

8. Pursuant to the PA, the first named plaintiff, David Larocca (Mr Larocca), as the Country Managing Partner, has all powers and responsibilities relating to EY, subject to limited carve-outs. He also has the ability to delegate his powers. ^[12]

   12. POS [70] (citing CB 94-95 [165]).

9. EY is relevantly structured such that there are 5 service lines being relevantly (1) Assurance including Audit; (2) Consulting; (3) Strategy and Transactions; (4) Tax & Law (T&L); and (5) Core Business Services (CBS). The first four service lines are integrated client facing services and the fifth (CBS) performs internal functions. ^[13]

   13. CB 69 [4].

10. In addition to those service lines, EY has an Asia-Pacific Financial Services Organisation (FSO) market segment which provides services to clients in banking, capital markets, insurance, wealth and asset management only. ^[14] FSO operates across all 5 of the above-mentioned service lines. ^[15]

    14. CB 69 [5].

    15. CB 70 [10].

11. Within the T&L service line, there are (or were at the time of hearing) 6 sub-service lines ^[16] being relevantly (1) International Tax and Transactions Services (ITTS); (2) Global Compliance and Reporting (GCR); (3) Indirect Tax; (4) Business Tax services; (5) Law; and (6) People Advisory Services – Tax. ^[17]

    16. POS [14] (citing CB 69-70 [9]).

    17. CB 69 [9].

12. In Australia, within the subservice line ITTS, there are 3 competencies, including one, “Transaction Tax Advisory Services”, which specialises in providing tax advice to clients considering and executing transactions. ^[18]

    18. POS [15] (citing CB 70 [14]).

13. The individual defendants, respectively, Adam Woodward (Mr Woodward), Andrew Sharp (Mr Sharp), Edward Consett (Mr Consett), Sean Keegan (Mr Keegan) and Jagmohan Singh (Mr Singh), were partners within the ITTS competency of EY before they resigned and became employed by the first defendant, A&M. ^[19] Each of Mr Sharp, Mr Consett and Mr Keegan gave notice of their intention to retire from EY on 8 June 2023, Mr Woodward did so on 15 June 2023 and Mr Singh likewise on 3 November 2023. ^[20]

    19. DOS [8] (citing CB 71 [16]); but see also CB 71-73[20]-[22].

    20. POS [22].

14. Overall, 36 individuals resigned and joined A&M. They had been located in T&L (31) and FSO (5). Within T&L, the numbers were 19 personnel from ITTS ^[21] (5 partners, 5 senior managers, 4 managers and 5 senior consultants), 10 personnel from GCR ^[22] (2 associate partners, 3 senior managers, 4 managers and 1 staff) and 2 personnel from Indirect Tax ^[23] (a senior manager and a manager). Within FSO, all from GCR, the 5 personnel were 1 partner, 2 senior managers, and 2 senior consultants. ^[24]

    21. CB 72-73 [22].

    22. CB 72-73 [22].

    23. CB 72-73 [22].

    24. CB 72-73 [22].

15. A&M is a global professional services firm, which according to its website, has offices in 39 countries. It announced the planned opening of offices in Sydney, Melbourne and Perth on 27 October 2022. It now has offices in those cities and in Brisbane. ^[25]

    25. POS [16]-[17] (citing CB 71 [18]-[19], CCB 247-252).

16. As at 8 August 2024, the individual defendants were represented on the A&M website by reference to their tax expertise. ^[26] For the purposes of the hearing, the relief sought against the individual defendants was the subject of some common submissions. However, certain facts attending the circumstances of Mr Singh were distinguished by all counsel and accordingly certain submissions related more particularly to Messrs Woodward, Sharp, Consett and Keegan (D 2-5).

    26. POS [19] (citing CB 71 [19]).

17. It was not relevantly disputed that EY and A&M are competitors with respect to the provision of professional services broadly and, particularly for purposes of the present application, tax advice in relation to consideration and execution of transactions. ^[27]

    27. POS [18]; DOS [10].

Hearing

18. On the hearing, Mr Pesman SC appeared for the plaintiff instructed by Baker McKenzie (BM) and in particular Mr Salgo, and Mr Mahendra with Ms Wallis appeared for the defendants instructed by Maurice Blackburn Lawyers (MBL).

19. The plaintiffs read and relied upon the affidavits of two EY partners, one affirmed by Scott Kenneth Grimley (Mr Grimley) on 8 August 2024 (with Exhibits SG-1, SG-2 and SG-3x) and the other affirmed by Ian Scott (Mr Scott) on 13 May 2024. The defendants read and relied upon an affidavit of Mia Pantechis, the solicitor for the individual defendants (Ms Pantechis) affirmed 2 October 2024. None of the deponents were required for cross-examination.

20. Exhibits SG1 and SG2 were incorporated into the Court Book. The Court Book was divided into two volumes. Pages 63-99 contained the body of the affidavit evidence from Mr Scott, Mr Grimley and Ms Pantechis. Pages 100-672 contained a chronological bundle of materials drawn from the annexures and exhibits to the deponents’ affidavits. However, within that bundle of material certain documents contained in the first Court Book (CB) (under Tab 6D) was nonconfidential material, ^[28] being marked as exhibit P2. The balance, being confidential material was contained within the second (Confidential) Court Book (CCB) and that was marked as Exhibit CP1. ^[29]

    28. Pages 247-252, 259-270, 303-308, 399-428, 430, 445, 558-565, 567-569, 571-606, 629-644, 646-650, 654-671.

    29. T 8.12-9.4.

21. I will cite the evidence in the proceedings, as I already have, by reference to the CB, the CCB, transcript pages (T) and exhibit numbers, and cite the submissions by reference to the plaintiffs’ opening written submissions sent on ^[30] 27 February 2025 (POS), and the defendants’ opening written submissions dated and filed 27 February 2025 (DOS). 

    30. Signed by Mr Salgo. The date at the bottom of the POS reads “27 February 2023” though I infer that was intended to be “27 February 2025.”

Relief sought

22. The relief claimed was in a common form in respect of each of the defendants, with the following being sought: ^[31]

An order pursuant to UCPR 5.3 that the [numbers 1-6] defendant be ordered to provide preliminary discovery to the plaintiffs of documents in accordance with the categories in Annexure [letters A-F] by filing and serving a List of Documents, supporting Affidavit and (if applicable) a solicitor’s certificate in accordance with UCPR 21.3 and 21.4 within 14 days of the date of this Order.

An order that the [numbers 1-6] defendant make the documents discovered pursuant to order [number] available for inspection by the plaintiffs and their legal representatives within 21 days of the date of this order.

31. CB 12-13 (summons pages 2-3).

Categories of discovery claimed

23. For the purposes of the requested discovery, certain definitions were used. The definitions A&M, EY and Individual Defendant are self-explanatory. In addition, the following definitions were specified by EY: ^[32]

“Business Plan” means any Document which contains plans, goals, strategies, targets or actions for: a) obtaining, building or discharging business; and/or b) obtaining or building a workforce to obtain, build, or discharge business.

“Documents” means any record of information, including: a) anything on which there is writing; b) anything on which there are marks, figures, symbols or perforations having a meaning for persons qualified to interpret them; and/or c) anything from which sounds, images or writings can be reproduced with or without the aid of anything else, whether in paper or electronic form, and includes any part of a document and any copy of a document or part of a document.

“EY Personnel” means the Individual Defendants and any person who was at any time in 2023 an employee of EY.

“Partnership Agreement of EY” includes all Documents which appear on their face to be; a) a partnership agreement of EY; b) the Regulations of EY Australia; and c) any annexures or schedules to any Document described at (a) and (b).

“Relevant period” means 1 January 2023 to 15 December 2023.

32. CB 13-14 (summons pages 3-4).

24. In respect of A&M, the categories of discovery sought were: ^[33]

    33. CB 15-16 (summons pages 5-6).

1. Copies of Documents which record or refer to:

(a) an Individual Defendant’s attendance at internal or external meetings with A&M, or with a representative of A&M; including but not limited to Documents which refer to or record the attendance of an Individual Defendant at an office of A&M;

(b) any of the Individual Defendant’s work, business or practice at EY, or the work, business, or practice of other partners at EY, including their clients, and services provided by them;

(c) any Business Plan for any of the Individual Defendants if, or when, employed by A&M,

made or dated during the Relevant period.

2. Copies of Documents received by A&M or any person representing A&M, from then-employees or then-partners of EY referring to or recording to the proposed or actual copying and/or disclosure of Documents or information held by EY to A&M, made or dated since 1 January 2023, including all Documents which contain such information.

3. Copies of Documents which have been prepared for, or sent to, clients or potential clients of A&M in the period 1 July 2023 to date:

(a) which were prepared for, or sent to entities (including agents or representatives of entities) with whom or which, during the Relevant Period:

(i) were entities an Individual Defendant worked with at EY, in the performance of their work at EY; or

(ii) an Individual Defendant had material dealings in the Relevant Period; and

(b) which offer to provide an Individual Defendant’s services to a client or potential client of A&M.

4. Copies of Documents which were prepared for, or sent to, clients or potential clients of A&M in the period 1 July 2023 to date which offered to provide or foreshadowed that it would provide at a future date, an Individual Defendant’s services to a client or potential client of A&M, when at the time the Document was prepared or sent, the Individual Defendant remained a partner of EY.

5. Copies of the Partnership Agreement of EY, and other Documents containing summaries, extracts or parts of the Partnership Agreement of EY, and Documents referring to or recording the date when any such Partnership Agreement or summary or extract or part of it came into A&M’s custody, possession or control.

6. Copies of Documents which record the dates and times of attendance of an Individual Defendant at meetings (whether in person or virtual) with clients or prospective clients of A&M at a time the Individual Defendant remained a partner of EY.

7. Copies of Documents which record or refer to communications between any of the Individual Defendants and any of the persons named at paragraph 22 of the affidavit of Scott Kenneth Grimley affirmed 8 August 2024 (other than the Individual Defendants) (the then EY Associate Partners and Employees) which communication:

(a) occurred prior to the “Termination Date” specified in respect of each respective then EY Partner, Associate Partner and Employee at paragraph 22, and

(b) refers to the actual or possible employment of a then EY Partners, Associate Partner or Employee by A & M

25. In respect of the individual defendants, the categories of discovery sought were common with some exceptions. The common aspects were as follows:

1. Copies of Documents sent by [name of individual defendant (NID)] (or any person acting on his behalf) to, or received by [NID] (or any person acting on his behalf) from, A&M (or any person acting on behalf of A&M) and referring to or recording:

(a) the proposed or actual performance, or possible performance, of work for A&M by [NID] and/or any other EY Personnel; or

(b) the employment or potential employment by A&M of [NID] and/or any other EY Personnel,

which Documents were made or dated during the Relevant Period; including but not limited to Documents which;

(c) refer to or record to [NID]’s attendance, or the attendance of other EY Personnel, at internal or external meetings with or on behalf of A&M, or a representative of A&M;

(d) provide information about [NID]’s work, business or practice at EY, or the work, business or practice of other EY Personnel, and services provided by [NID] or other EY Personnel;

(e) set out information about any clients of EY; or

(f) contain or propose or suggest any Business Plan, or work to be performed for or by [NID] or other EY Personnel, if or when employed by or otherwise providing services to A&M.

2. Copies of Documents sent by [NID] to, or received by [NID] from, any of the other Individual Defendants, Igor Sadimenko or Lisa Cusano, or copying in any of those persons, referring to or recording the proposed or actual:

(a) termination of [NID]’s partnership interest, or the partnership interests of any of them, in EY;

(b) offer of a position at A&M to [NID] or any of them;

(c) acceptance of a position at A&M by [NID] or any of them,

made or dated since 1 January 2023.

3. Copies of Documents sent by [NID] to, or received by [NID] from, then-employees of EY referring to or recording the proposed or actual:

(a) termination, or possible termination, of their employment with EY;

(b) offer, or possible offer, of a position at A&M; or

(c) acceptance, or possible acceptance of a position with A&M,

made or dated since 1 January 2023, other than in the ordinary course of [NID]’s Partnership duties for EY prior to 15 June 2023.

4. Copies of Documents sent to, or received by [NID] from, any EY Personnel referring to or recording the proposed or actual copying and/or disclosure of information held by EY in relation to clients of EY to A&M, made or dated since 1 January 2023, including all Documents which contain such information.

5. Copies of Documents which have been prepared for, or sent to, clients or potential clients of A&M in the period 1 July 2023 to date:

(a) which were prepared for, or sent to entities (including agents or representatives of entities) which, during the period of 13 December 2022 to 13 December 2023 were entities:

(i) [NID] worked with at EY in the performance of [NID]’s work at EY; and/or

(ii) with whom or which [NID] had material dealings; and

(b) which offer to provide [NID]’s services to a client or potential client of A&M.

6. Copies of Documents sent by [NID] to A&M or any person representing A&M containing summaries, extracts or parts or all of the Partnership Agreement and Documents referring to or recording the date when any such Partnership Agreement or summary or extract or part of it was sent to A&M.

7. Copies of Documents which record the dates and times of attendance of [NID] at meetings (whether in person or virtual) with clients or prospective clients of A&M between 1 June 2023 and 15 December 2023.

26. Certain differences in the case of the individual defendants included the following:

1. in the case of Adam Woodward, the period specified in category 1 is “during the Relevant Period”, and the end period specified in category 3 was “prior to 15 June 2023”; ^[34]

2. in the case of Andrew Sharp, the period specified in category 1 is extended to be “to 8 December” so that it read “during the Relevant Period to 8 December ^[35] “ (the year being unspecified), and the end period specified in category 3 was “prior to 8 June 2023”; ^[36] and

3. in the case of each of Edward Consett ^[37] and Sean Keegan, ^[38] the period specified in category 1 was “during the Relevant Period”, and the end period specified in category 3 was “prior to June 2023”.

   34. CB 17-18 (summons pages 7-8).

   35. The words “to 8 December” are underlined for emphasis, which is only viewable on the Caselaw website.

   36. CB 19-20 (summons pages 9-10).

   37. CB 21-22 (summons pages 11-12).

   38. CB 23-24 (summons pages 13-14).

27. In the case of Mr Singh: ^[39]

    39. CB 25-26 (summons pages 15-16).

1. in the first categories 1(a) and 1(b), the concluding words “and/or any other EY Personnel” are not included;

2. the period specified in qualifying words after the first categories 1(a) and 1(b) is “from 1 July 2023 to 30 April 2024” followed by the words:

including but not limited to Documents which:

(a) refer to or record to Jagmohan Singh’s attendance at internal or external meetings with, or on behalf of, A&M, or a representative of A&M; including but not limited to Documents which refer to or record Jagmohan Singh’s attendance at an office of A&M;

(b) provide information about Jagmohan Singh’s work, business or practice at EY;

(c) set out information about any clients of EY; or

(d) contain or propose or suggest any Business Plan or work to be performed by Jagmohan Singh, if or when employed by or otherwise providing services to A&M.

3. in the chapeau to category 2 the names “Igor Sadimenko or Lisa Cusano” are omitted;

4. in categories 2(b) and 2(c) the concluding words “or any of them” are omitted;

5. categories 3 and 4 are omitted;

6. category 5 is Mr Singh’s category 3;

7. category 6 is Mr Singh’s category 4; and

8. category 7 is Mr Singh’s category 5, with the exception that in the first line, following the words “the dates and times”, the words “of planned meetings or” had been inserted and the concluding dates were specified as being “between 1 July 2023 and 30 April 2024”.

Categories of discovery proffered by the individual defendants

28. MBL in a letter dated 1 October 2024, offered, on behalf of the second-sixth defendants as a means of resolution of EY’s claims, to provide a revised form of discovery with relevant coloured changes. For the purposes of this judgment, the underlined ^[40] parts are the categories proffered subject to the qualifications in the bold ^[41] (there being more particular qualifications in the case of Mr Keegan and Mr Singh which I will note below). The proffered discovery was extracted by the representatives for the second-sixth defendants and marked as MFI-1.

    40. Highlighted yellow in MFI-1 (T 10.32-.34, 37.33).

    41. Coloured red in MFI-1 (T 10.32-.34, 37.33).

1. Copies of Documents sent by [name of individual defendant (NID] (or any person acting on his behalf) to, or received by [NID] (or any person acting on his behalf) from, A&M (or any person acting on behalf of A&M) and referring to or recording: ^[42]

42. This paragraph is underlined, which is only viewable on the Caselaw website.

(a) the proposed or actual performance, or possible performance, of work for A&M by [NID] and/or any other EY Personnel; or

(b) the employment or potential employment by A&M of [NID] and/or any other EY Personnel, ^[43]

43. This paragraph is underlined, which is only viewable on the Caselaw website.

limited to the solicitation of EY Personnel as set out at [paragraphs of the Grimley Affidavit being relevantly: [69] in the case of Mr Woodward; [87] in the case of Mr Sharp; [104] in the case of Mr Consett; [121] in the case of Mr Keegan]

which Documents were made or dated during the Relevant Period; including but not limited to Documents which;

(c) refer to or record to [NID]’s attendance, or the attendance of other EY Personnel, at internal or external meetings with or on behalf of A&M, or a representative of A&M;

(d) provide information about [NID]’s work, business or practice at EY, or the work, business or practice of other EY Personnel, and services provided by [NID] or other EY Personnel;

(e) set out information about any clients of EY; or

(f) contain or propose or suggest any Business Plan, or work to be performed for or by [NID] or other EY Personnel, if or when employed by or otherwise providing services to A&M.

2. Copies of Documents sent by [NID] to, or received by [NID] from, any of the other Individual Defendants, Igor Sadimenko or Lisa Cusano, or copying in any of those persons, referring to or recording the proposed or actual:

(a) termination of [NID]’s partnership interest, or the partnership interests of any of them, in EY;

(b) offer of a position at A&M to [NID] or any of them;

(c) acceptance of a position at A&M by [NID] or any of them,

made or dated since 1 January 2023. ^[44]

44. The entirety of paragraph 2 is underlined, which is only viewable on the Caselaw website.

limited to the solicitation of EY Personnel as set out at [paragraphs of the Grimley Affidavit being relevantly: [69]- in the case of Mr Woodward; [87] in the case of Mr Sharp; [104] in the case of Mr Consett; [121] in the case of Mr Keegan]

3. Copies of Documents sent by [NID] to, or received by [NID] from, then-employees of EY referring to or recording the proposed or actual:

(a) termination, or possible termination, of their employment with EY;

(b) offer, or possible offer, of a position at A&M; or

(c) acceptance, or possible acceptance of a position with A&M,

made or dated since 1 January 2023, other than in the ordinary course of [NID]’s Partnership duties for EY prior to 15 June 2023. ^[45]

45. The entirety of paragraph 3 is underlined, which is only viewable on the Caselaw website.

limited to the solicitation of EY Personnel as set out at [paragraphs of the Grimley Affidavit being relevantly: [69] in the case of Mr Woodward; [87] in the case of Mr Sharp; [104] in the case of Mr Consett; [121] in the case of Mr Keegan]

4. Copies of Documents sent to, or received by [NID] from, any EY Personnel referring to or recording the proposed or actual copying and/or disclosure of information held by EY in relation to clients of EY to A&M, made or dated since 1 January 2023, including all Documents which contain such information.

5. Copies of Documents which have been prepared for, or sent to, clients or potential clients of A&M in the period 1 July 2023 to date:

(a) which were prepared for, or sent to entities (including agents or representatives of entities) which, during the period of 13 December 2022 to 13 December 2023 were entities:

(i) [NID] worked with at EY in the performance of [NID]’s work at EY; and/or

(ii) with whom or which [NID] had material dealings; and

(b) which offer to provide [NID]’s services to a client or potential client of A&M. ^[46]

limited to the clients referred to at [paragraphs of the Grimley Affidavit being relevantly: [65] in the case of Mr Woodward; [86] in the case of Mr Sharp; [103] in the case of Mr Consett]

6. Copies of Documents sent by [NID] to A&M or any person representing A&M containing summaries, extracts or parts or all of the Partnership Agreement and Documents referring to or recording the date when any such Partnership Agreement or summary or extract or part of it was sent to A&M.

7. Copies of Documents which record the dates and times of attendance of [NID] at meetings (whether in person or virtual) with clients or prospective clients of A&M between 1 June 2023 and 15 December 2023. ^[47]

limited to the clients referred to at [paragraphs of the Grimley Affidavit being relevantly: [65] in the case of Mr Woodward; [86] in the case of Mr Sharp; [103] in the case of Mr Consett]

46. The entirety of paragraph 5 is struck through, which is only viewable on the Caselaw website.

47. This paragraph is underlined, which is only viewable on the Caselaw website.

29. In the case of Mr Keegan, MBL’s proffer of discovery did not extend to any discovery in categories 4-7.

30. In the case of Mr Singh, only categories 3 and 5 was proffered, limited in each case to the client set out at [128] of Mr Grimley’s affidavit.

31. Mr Mahendra submitted that the above-mentioned proffer of discovery provides what is reasonably necessary for EY to determine whether or not to commence proceedings, citing Globe Capital Administration Pty Ltd v Cecil Developments Pty Ltd atf the Cecil Developments Unit Trust (Receivers and Managers appointed) [2023] NSWSC 574 at [78]-[79] (Globe). ^[48]

    48. T 28.21-.30.

Discovery sought by reference to the claimed and proffered discovery

32. Mr Pesman SC prepared an aide memoire document, marked as MFI-2, which contained four columns which addressed the plaintiffs’ claimed discovery, and the individual defendants’ proffered discovery by reference to the matters which had caused the plaintiffs to believe they were entitled to make a claim for relief and the potential claims. ^[49] To be clear, MFI-2 does not address the claims against A&M. ^[50]

    49. Column 1 being the matters which should cause the plaintiffs to believe they may be entitled to make a claim; column 2 being the potential claim; column 3 being the claimed discovery and column 4 being the discovery proffered by the individual defendants.

    50. T 22.19-.20.

Background

33. On 8 June 2023, as noted, each of Mr Sharp, Mr Consett and Mr Keegan gave notice of their intention to retire from EY. On 13 June 2023, they were placed on “gardening leave”. ^[51]

    51. DOS [10(c)].

34. On 15 June 2023, Mr Woodward gave notice of his intention to retire and was placed on gardening leave on 19 June 2023 with a retirement date of 15 December 2023. ^[52] Mr Woodward’s resignation email was in the following terms: ^[53]

Hi David,

Please take this as formal notification of my intention to retire from the EY Partnership effective immediately.

I appreciate your time chatting earlier this week, and your leadership over the years.

Please let me know in due course how I can assist with the transition of clients/work as required.

Take care, thank you and all the best.

Kind regards,

Adam

52. DOS [10(c)] citing CB 48-49, 269-270.

53. CB 268.

35. On 3 November 2023, Mr Singh gave notice of his intention to retire and was immediately placed on gardening leave. ^[54]

    54. POS [21]; DOS [10(a)&(c)].

36. The individual defendants were required to serve a notice period of 6 months ^[55] (thus Messrs Sharp, Consett and Keegan had retirement dates of 8 December 2023, Mr Woodward had a retirement date of 15 December 2023 and Mr Singh had a retirement date of 3 May 2024). ^[56]

    55. DOS [10(b)].

    56. DOS [10(d)].

37. In August 2023, EY became aware that a number of its employees had received offers of employment from A&M. On 29 August 2023, Mr Grimley spoke with Mr Woodward and inter alia reminded him of his ongoing obligations under the PA and indicated he would receive a deed in accordance with the terms of the PA which he was required to sign. ^[57]

    57. DOS [11] (citing CB 77 [50]).

38. On 29 September 2023, EY became aware of activity by employee Josephine Hong (Ms Hong) whereby between 4 August 2023 and 28 September 2023 she transferred 893 files belonging to EY and which contained confidential client information to her personal Google Drive. ^[58] Ms Hong subsequently resigned and signed an Undertaking in relation to the confidential information. At some later stage, she came to be employed by A&M. ^[59]

    58. DOS [13(a)] (citing CB 76 [38]); POS [26]-[28].

    59. DOS [13(a)] (citing CB 76 [41], [43]); POS [29].

39. On 6 October 2023, EY became aware of activity by employee Eu Kin Lim ^[60] (Mr Lim) whereby between 1 April 2023 and 10 October 2023, he transferred 126 electronic files belonging to EY and which contained confidential client information to his personal Google Drive. ^[61] Mr Lim subsequently resigned and signed an Undertaking in relation to the confidential information. At some later stage, he became employed by A&M. ^[62]

    60. DOS [13(b)] (citing CB 74 [27]-[28]); POS [26]-[28].

    61. DOS [13(b)] (citing CB 75 [32]); POS [26]-[28].

    62. DOS [13(b)] (citing CB 75 [30]); POS [29].

40. On 12 October 2023, EY issued a letter to each of the individual defendants (other than Mr Singh) which each outlined its concerns that each may have solicited EY employees for employment at A&M in breach of their obligations under the EY PA and at law. ^[63]

    63. POS [49] (citing CB 77 [52] and CCB 319-338; CB 81 [76] and CCB 339-358; CB 84 [93] and CCB 359-378; CB 86-87 [112] and CCB 379-398); DOS [14].

41. The letter to Mr Woodward provided in part: ^[64]

    64. CCB 319-320.

Dear Adam

We refer to your conversation with Scott Grimley on 29 August 2023.

Your non-solicitation obligations

Pursuant to the Firm Partners’ Agreement Australia, effective 1 July 2020 (‘Partners’ Agreement’), you are expressly required to comply with a number of obligations, both during your Partnership and following your retirement date. Not least of these obligations is that relating to the non-solicitation of EY personnel contained in Regulation 22.1.3. Regulation 22.1.3 requires that you must:

[terms set out]

Since your discussion with Scott, it has come to our attention that thirteen individuals have resigned from their employment with EY’s tax practice in order to commence a new role in A&M’s tax practice. We understand that A&M’s intended tax leadership is currently entirely made up of EY partners on gardening leave. We consider your acceptance of a role with A&M, the intended composition of A&M’s tax leadership and the offers of employment made to EY employees to be no coincidence. Indeed and we have been made directly aware by one employee who negotiated with and was made an offer by Ed Consett to join A&M. For the avoidance of doubt, each employee you have solicited to join A&M from EY is a breach of your obligations to EY under Regulation 22.1.3 of the Partners’ Agreement.

EY is extremely concerned and disappointed with your conduct and directs that you immediately cease your involvement in any further conduct which would result in a breach or perceived breach of any of your ongoing obligations to EY which arise under the Partners’ Agreement and at law (including the Partnership Act 1963 (ACT) and your fiduciary obligations).

We have also been made aware that in contravention of the direction communicated to you in my letter of 19 June 2023 to not attend any EY office, you have been seen in the EY Sydney office car park. Please refrain from attending EY premises for the duration of your garden leave. ^[65]

In light of the above conduct and in accordance with Regulation 22.6 of the Partners’ Agreement, your monthly draws will be ceased with immediate effect and until further notice.

65. This paragraph was only in the letter to Mr Woodward. It is underlined for emphasis, which is only viewable on the Caselaw website.

42. The letter went on to remind them of their ongoing obligations to EY under the PA including (a) obligations relating to non-solicitation of EY personnel; and (b) their contractual obligations to keep confidential, and not to disclose to any future employer, any confidential information to which they have had access during their employment with EY. The letter advised that EY would take any inducement by them of an EY employee to breach this or any of their other obligations extremely seriously and requested each of them to sign a Deed of Transition and Release, pursuant to regulation 18.2 of the PA, confirming their ongoing obligations to EY.

43. The letters to Mr Sharp ^[66] and Mr Keegan ^[67] were in similar terms to the letter to Mr Woodward with the exception of the underlined part above.

    66. CCB 339-340.

    67. CCB 379-380.

44. The letter to Mr Consett was in similar terms to the letter to Mr Sharp with the exception that after the reference to regulation 22.1.3, instead of the single paragraph that followed in that letter to Mr Sharp, the following two paragraphs appeared: ^[68]

Since sending Our Letter to you it has come to our attention that in breach of Regulation 22.1.3, you have taken an active role in the recruitment of EY people to Alvarez & Marsal Australia and New Zealand Pty Ltd (ABN 82 659 015 335) (‘A&M’). In particular, we have been made aware that you were directly involved in the negotiation and offer of employment to Eu Kin Lim, and that Mr Lim communicated his acceptance of this offer to you, on behalf of A&M.

In addition, EY is aware that twelve other individuals have resigned from their employment with EY’s tax practice in order to commence a new role in A&M’s tax practice. We understand that A&M’s intended tax leadership is currently entirely made up of EY partners on gardening leave. We consider your acceptance of a role with A&M, the intended leadership of A&M’s tax practice and the offers of employment made to EY employees to be no coincidence. For the avoidance of doubt, each employee you have solicited to join A&M from EY is a breach of your obligations to EY under Regulation 22.1.3 of the Partners’ Agreement.

68. CCB 359-360.

45. In the week of 16 October 2023, Mr Scott had a telephone conversation with Mr Singh in which he told Mr Scott that he had received and was considering an offer to Join A&M. Mr Scott had previously spoken to Mr Singh about the possibility of such a move and had been under the impression that he had decided to remain at EY. Mr Scott said to Mr Singh (during the telephone conversation) that he should only come to EY’s Annual International Tax Conference in New York, to be held during the week commencing 23 October 2023, if he planned on staying at EY. ^[69]

    69. CB 65 [12]-[13].

46. On 17 October 2023, Ms Hong signed a statutory declaration stating relevantly as follows: ^[70]

I had possession of documents consisting of precedents and templates that were confidential to EY on my personal Google Drive which have been deleted and permanently removed from the Google Drive. None of these documents or information were disclosed or provided to any other person or entity and no other copies of these files exist.

70. CB 406.

47. On or around 17 or 18 October 2023, Mr Scott had a telephone conversation with Jake Taylor, a director of EY who resigned to go to A&M (Mr Taylor), words to the same effect: ^[71]

I said: “Have you spoken to any of the others about the A&M offer?”

Mr. Taylor said: “I have spoken to Woody, Sharpie and Keegs on an Informal basis”.

71. CB 64.

48. On Sunday 22 October 2023, Mr Scott exchanged text messages with Mr Singh in which Mr Singh told him he was due to arrive in New York on 23 October 2023. ^[72]

    72. CB 65 [14].

49. On 23 October 2023, Mr Lim signed a statutory declaration in much more fulsome terms than that signed by Ms Hong. ^[73]

    73. CB 425-427.

50. On 24 October 2023, when Mr Scott was in New York, he had a telephone conversation with Mr Singh. They discussed a number of matters including the passing of Mr Singh’s partner’s father in San Diego. Mr Scott encouraged Mr Singh to go to San Diego instead of attending the conference. Part of that conversation also included the following, or words to the same effect: ^[74]

Mr Scott said: “Are you staying or are you going, Jag?” (When I said this, I was referring to Mr Singh staying at or leaving EY).

Mr Singh said: “I haven’t made my mind up yet.”

Mr Scott said: “But remember Jag, we said that if you come to New York, it’s on the basis of you staying. Why are you finding it so hard to make a decision?”

Mr Singh said: “I can see that objectively EY is the better opportunity and that I have a lot to learn from you and the people I’m working with. But I worked for Woody for an awfully long time and when I spoke to him the other day he said “I need you at A&M”. That’s causing confusion.”

74. CB 65-66 [15].

51. On 3 November 2023, Mr Scott became aware that Mr Singh had on that day given 6 months’ notice of his intention to retire as a Partner of EY so as to commence employment with A&M. ^[75]

    75. CB 66 [17].

52. On 7 November 2023, EY’s then solicitors, Clayton Utz, sent a letter to Mr Woodward citing information regarding his roles in discussing prospective employment with A&M with Mr Taylor and enticing Mr Singh to move to A&M. ^[76]

    76. POS [50] (citing POS [32] and CB 64 [8] and 65-66 [15]).

53. The letter stated in part: ^[77]

On 15 June 2023 you gave 6 months’ notice of your intention to retire as a Partner of EY. On 19 June 2023, you received correspondence from David Larocca (Chief Executive Officer & Regional Managing Partner Oceania) on behalf of EY, placing you on garden leave from the date of that correspondence until your Termination Date, being 15 December 2023. As such, you remain a Partner of EY.

Our client has reason to believe that you are engaged to provide services to A&M, a competitor of EY, at the conclusion of your garden leave period.

In the correspondence of 12 October 2023, our client set out its concerns that you may be soliciting EY employees for employment at A&M, reminded you of your contractual and legal obligations to EY, and requested that you execute the accompanying Deed of Transition and Release (Deed) in accordance with Regulation 18.12 of the Partnership Agreement by 18 October 2023. You failed to execute the Deed by this deadline, or to otherwise respond to EY’s correspondence.

77. CCB 433.

54. It continued: ^[78]

Our client’s concerns

Further to the concerns outlined in EY’s correspondence of 12 October 2023, we are instructed that EY has obtained further evidence that you have engaged in solicitation in breach of your contractual and legal obligations to EY.

Specifically, we understand that you had at least one conversation with Jagmohan Singh, a Partner in the International Tax and Transaction Services Group, in which you encouraged him to retire from the EY partnership in order to commence employment with A&M. Following this conversation, on 3 November 2023, Mr Singh gave 6 months’ notice of his intention to retire as a Partner of EY so as to join A&M. This solicitation amounts to a breach of your contractual and legal obligations to EY. These obligations are set out in further detail below.

Additionally, our client is concerned that this clear solicitation, together with your lack of response to EY’s correspondence of 12 October 2023, indicates that you intend to continue to breach your obligations to EY moving forward.

78. CCB 434.

55. The letter then made reference to “Your Obligations”, ^[79] (citing provisions under the partnership agreement, fiduciary duties of a partner in a firm, and the tort of contractual interference). It then made reference to remedies available to EY where its contractual and legal rights are infringed. ^[80] Finally under the heading “What is required of you now?”, it requested Mr Woodward to sign an undertaking. ^[81]

    79. CCB 434-435.

    80. CCB 436.

    81. CCB 436-437.

56. According to Mr Pesman SC, this was followed by email correspondence between Mr Woodward and a partner at Clayton Utz in which the Undertakings sought were not given. ^[82]

    82. POS [50] (citing CB 78 [54]; CCB 431-438, 439-444, 446-448).

57. On 13 November 2023, Mr Woodward provided a signed undertaking not to solicit EY partners and employees to provide services in competition with EY. ^[83] Mr Pesman SC submits this undertaking did not fully reflect his obligations under the PA. None of the other individual defendants responded to the correspondence of 12 October 2023. ^[84]

    83. POS [51] (citing CB 78 [56] and CCB 445).

    84. POS [51] (citing CB 77-78 [53], 81 [77], 84 [94], 87 [113]).

58. On or around 1 December 2023, Clayton Utz issued a letter to each of the individual defendants (other than Mr Singh) referring to EY’s previous correspondence and outlining the following: ^[85]

1. that a further 21 employees and 4 partners from EY’s T&L service line, and 1 employee and 4 partners from its Consulting service line, had resigned from EY to join A&M;

2. that EY had reason to believe that each individual defendant was engaged or would be engaged to provide services to A&M, a competitor of EY, and that they had in fact been providing services to A&M during their Garden Leave Periods; and

3. that EY had reason to believe that each individual defendant had solicited, or had been involved in soliciting, one or more employees and/or partners of EY to join A&M.

These letters also contained a further request for the recipients to sign a Deed of Non-Competition and Non-Solicitation along with the Deed of Transition and Release previously issued to them and noted EY’s concern that their failure to sign that Deed indicated their intention to continue to breach their obligations under the EY PA going forward. It further stated that a failure to sign the Deed would be taken as evidence of this intention. No response was received to these letters. ^[86]

85. POS [51] (citing CB 78 [57] and CCB 449-450; CB 82 [78] and CCB 465-467; CB 84 [96] and CCB 496-500; CB 87 [114] and CCB 527-530).

86. POS [53]-[54] (citing CB 78 [58], 82 [79], 84-85 [97], 87 [115]).

59. On 18 December 2023, EY caused to be issued a letter to each of the individual defendants (other than Mr Singh) by their then-solicitors, Clayton Utz, regarding their failure to execute the Deed of Non-Competition and Non-Solicitation and the Deed of Transition and Release as per their obligations under the Partnership Agreement. ^[87]

    87. POS [55] (citing CB 78 [59] and CCB 558-559; CB 82 [80] and CCB 560-561; CB 85 [98] and CCB 562-563; CB 87 [116] and CCB 564-565).

60. On 26 March 2024, EY issued a letter to each of the individual defendants (excluding Mr Singh) which referred to the previous correspondence and outlined that since the last correspondence: ^[88]

    88. POS [56] (citing CB 79 [60] and CCB 577-582; CB 82 [81] and CCB 571-576; CB 85 [99] and CCB 583-588; CB 87 [117] and CCB 589-594).

1. a further 8 employees and 8 partners of EY had left to join A&M;

2. at least two key clients of EY had either terminated their relationship with EY or had otherwise engaged A&M to provide the same or similar services as they previously received from EY;

3. a number of employees of EY who had left to join A&M had downloaded confidential information of EY prior to their departure, including documentation which they did not work on but which related to clients to whom the individual defendants provided services whilst partners of EY;

4. there were instances of conduct by each of the individual defendants which appeared to be in breach of their ongoing obligations to EY;

5. EY had concerns regarding each of the individual defendant’s compliance with their obligations to EY; and

6. EY requested various documents from the individual defendants which would enable EY to make an assessment as to whether any non-compliance had occurred.

61. No response was received to these letters. ^[89]

    89. POS [57] (citing CB 79 [61], 82 [82], 85 [100], 87 [118]); see DOS [17].

62. On 24 April 2024, EY wrote to Mr Singh which (summarised by the defendants’ counsel) asserted he had “breached his contractual and legal obligation inter alia when, while on gardening leave, he attended a meeting with representatives of A&M and a client of EY being [name redacted] for the purpose of providing a pitch to [name redacted] in relation to A&M carrying our compliance work for the company”. ^[90]

    90. DOS [19] citing CCB 612-614.

63. By a Deed of Delegation of Authority dated 18 June 2024, Mr Larocca delegated to a committee consisting of himself, Mr Grimley and Craig Robson (EY Oceania Chief Operating Officer), authority to: ^[91]

    91. POS [71] (citing CB 95 [166]).

1. decide whether EY will commence any:

1. Court application for preliminary discovery, and cause lawyers on behalf of EY to be instructed to bring any such application and in relation to the ongoing prosecution of any such application, if commenced; and

2. any other legal proceeding against any one, some, or all of the defendants and cause lawyers on behalf of EY to be instructed to initiate any such proceeding; and

2. take all other steps necessary or desirable on behalf of EY, including to execute such documents and do all such other acts in connection with or to give effect to the preceding delegated powers.

64. On 1 August 2024, the Committee met and determined that: (a) EY would commence a Court application for preliminary discovery against the defendants and cause lawyers to bring and prosecute that application; ^[92] and (b) it would make a further determination as to whether EY would commence any other legal proceedings against any one, some, or all of the defendants in light of the information available following the preliminary discovery application. ^[93]

    92. POS [72] (citing CB 95 [167]).

    93. POS [72] (citing CB 95 [168]).

65. On 1 October 2024, the individual defendants wrote to the plaintiffs (via their solicitors) and indicated, on a “without admissions” basis, that they would be prepared to produce documents in relation to certain specified categories as sought by way of this application for preliminary discovery (the Limited Categories), provided that the plaintiffs agreed to limit their request for discovery to those Limited Categories. ^[94]

    94. POS [76]; DOS [22].

66. By letter dated 8 October 2025, the plaintiffs (via their solicitors) rejected the invitation to limit the categories for production being sought. However, on 15 October 2025, the plaintiffs requested that that those documents falling within the Limited Categories be produced to the plaintiffs’ solicitors such that only the balance of the documents sought would remain in issue at the hearing of these proceedings. The individual defendants did not respond to this correspondence. ^[95]

Legal principles

95. POS [78].

Preliminary discovery provisions

67. Within the Australian legal system, there are provisions for preliminary discovery. Those provisions are not uniform as between all courts. Specifically, there are differences between the provisions which operate in the Federal Court of Australia (Federal Court) and those which relevantly apply in this Court.

68. The Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provide for three different types of “preliminary discovery”, being discovery: (a) to ascertain prospective defendants’ identity or whereabouts; ^[96] (b) to obtain documents from a prospective defendant; ^[97] and (c) to obtain discovery of documents from other persons. ^[98]

    96. UCPR r 5.2.

    97. UCPR r 5.3.

    98. UCPR r 5.4.

69. An applicant for an order for preliminary discovery to obtain documents from a prospective defendant is required to satisfy the elements in r 5.3(1) of the UCPR, which enliven a discretion to make an order.

70. Rule 5.3(1) of the UCPR provides:

(1) If it appears to the court that—

(a) the applicant may be entitled to make a claim for relief from the court against a person (the prospective defendant) but, having made reasonable inquiries, is unable to obtain sufficient information to decide whether or not to commence proceedings against the prospective defendant, and

(b) the prospective defendant may have or have had possession of a document or thing that can assist in determining whether or not the applicant is entitled to make such a claim for relief, and

(c) inspection of such a document would assist the applicant to make the decision concerned,

the court may order that the prospective defendant must give discovery to the applicant of all documents that are or have been in the person’s possession and that relate to the question of whether or not the applicant is entitled to make a claim for relief.

Nature of preliminary discovery applications

71. Despite preliminary proceedings often being commenced by summons (which gives them the appearance of final orders), the preponderance of authorities is that applications for preliminary discovery are interlocutory in nature and any resulting orders have interlocutory legal effect. ^[99]

    99. Malouf v Malouf (1999) 86 FCR 134; [1999] FCA 284 at [18]-[36] per Beaumont, Lee and Dowsett JJ; The Age Company Ltd v Liu (2013) 82 NSWLR 268; [2013] NSWCA 26 at [104] per Bathurst CJ (Beazley and McColl JJA agreeing at [107] and [108]); Liu v The Age Company Limited (2016) 92 NSWLR 679; [2016] NSWCA 115 (Liu v The Age) at [164]-[167] per McColl JA; Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd (2016) 49 WAR 374; [2016] WASCA 14 at [80] per Mitchell J.

72. Consistent with that understanding, determination of an application for preliminary discovery under r 5.3 of the does not involve determination of the merits of any claim for relief an applicant might propound. ^[100]

    100. O’Connor v O’Connor [2018] NSWCA 214 (O’Connor) at [76] per Simpson AJA (McColl JA at [1], Macfarlan JA at [2] agreeing); Arnaout v Arnaout [2019] NSWSC 565 (Arnaout) at [32(f)] per Lindsay J; DOS [27(a)].

73. It has also been described as being a form of summary procedure which does not involve a form of minitrial, ^[101] and generally (though without being prescriptive) are conducted without any (or any significant) cross-examination. ^[102]

    101. Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (2017) 257 FCR 62; [2017] FCAFC 193 (Pfizer) per Allsop CJ at [2] (concerning the Federal Court rules).

    102. Dallas Buyers Club LLC v iiNet Ltd (2015) 245 FCR 129; [2015] FCA 317 at [6] per Perram J; Health Administration Corporation v Toll Global Forwarding Pty Ltd [2024] NSWSC 285 at [53]-[57] (Health Administration).

74. Being interlocutory, subject to principles regarding abuse of process and repeated interlocutory applications, ^[103] ordinarily there is no bar to a further application, for example, if there is a material change of circumstances.

    103. Liu v The Age; see also Nominal Defendant v Manning (2000) 50 NSWLR 139; [2000] NSWCA 80.

75. Perhaps to dispel any doubt about the applicability of ordinary Court procedures to applications for preliminary discovery, the UCPR expressly contains incidental or ancillary provisions which clarify that the same provisions regarding discovery in ordinary proceedings (specifically provision of a list, verification and certification, ^[104] security for costs ^[105] and privilege ^[106] ) apply to an order for preliminary discovery. Further, there is a specific provision which enables the Court to address costs and expenses associated with preliminary discovery proceedings and orders. ^[107]

    104. UCPR r 5.5 - elaborated below.

    105. UCPR r 5.6.

    106. UCPR r 5.7.

    107. UCPR r 5.8.

Elements for enlivening the discretion to order preliminary discovery

76. As I observed above, the preliminary discovery provisions which apply in the Supreme Court differ to some degree to those that apply in the Federal Court.

77. The proper guide for application of the preliminary discovery provisions under r 5.3 of the UCPR is set out in the decision of the Court of Appeal in O’Connor v O’Connor [2018] NSWCA 214 (O’Connor). Simpson AJA stated that it can be seen from the terms of r 5.3(1) that an order may be made against a prospective defendant where certain things appear to the Court at [21] (McColl and Macfarlan JJA at [1] and [2] agreeing), namely:

(i)   that the applicant may be entitled to make a claim for relief against the prospective defendant;

(ii)   that the applicant has made reasonable enquiries to obtain sufficient information to decide whether or not to commence proceedings;

(iii)   that, having made those enquiries, the applicant is unable to obtain sufficient information to make that decision;

(iv)   that the prospective defendant may have or have had possession of a document or thing that could assist in determining whether the applicant is entitled to make a claim for relief;

(vi)   that inspection of such a document would assist the applicant to make the decision (that is, the decision whether or not to commence proceedings).

78. Overarchingly, the provisions of the rule are “to be beneficially construed, given the fullest scope that its language will reasonably allow, with the proper brake on any excesses lying in the discretion of the Court, exercised in the particular circumstances of each case”. ^[108]

    108. O’Connor at [24] citing St George Bank Ltd v Rabo Australia Ltd [2004] FCA 1360; (2004) 211 ALR 147 (St George Bank) at [26(a)] per Hely J; See also T 11.24-36.

78. Importantly, there is a material difference between the aspect of the provisions applicable in the Federal Court of a “reasonable cause to believe test” and the “appears to the court” chapeau to r 5.3(1) of the UCPR.

79. In considering an appeal of a decision to refuse the preliminary discovery orders sought, Simpson JA in O’Connor emphasised that important difference. ^[109]

    109. O’Connor at [21]-[30].

80. Specifically, her Honour observed that:

77   It also appears to me that, at [30] the wrong test was applied. The primary judge considered that the appellants had failed to establish that there was “reasonable cause to believe” that John O’Connor “was obliged to disclose any approaches from Calibre. But r 5.3 imposes no “reasonable cause to believe” test; nor does it require the applicant to establish that the prospective defendant “was obliged” to do anything. Rather, the test is whether it “appears to the court’ that a cause of action ”may” exist.

78 The “reasonable cause to believe” test appears to have crept into the debate about the construction of r 5.3 because, in Hatfield, the parties accepted the pre-existing jurisprudence in the area, which included the jurisprudence with respect to the analogous Federal Court rules, specifically the propositions stated by Hely J in St George Bank, and adopted, for example, by McDougall J in Steffen.

79   In Hatfield, at [50], McColl JA noted several decisions of the Supreme Court that suggested that the “appears to the court” test is wider than the Federal Court “there is reasonable cause to believe” test. As this demonstrates, close attention needs to be directed to the language of r 5.3.

82. Given the language of r 5.3 and the comments of Simpson JA extracted above, it is clear the relevant threshold is whether it “appears to the Court” that, among other things, the plaintiff “may” be entitled to make a claim for relief.

83. The parties’ outline of submissions addressed caselaw (principally but not exclusively being the Court of Appeal’s decisions in O’Connor and Hatfield v TCN Channel Nine Pty Ltd (2010) 77 NSWLR 506; [2010] NSWCA 69 (Hatfield)) in seeking to explain certain of these elements and provisions under r 5.3 of the UCPR. I address these now.

84. Unfortunately, despite the emphasis in O’Connor that r 5.3 of the UCPR imposes no “reasonable cause to believe” test, both the parties’ written outline submissions in setting out the applicable principles consistently referred to that test rather than the “appears to the court” that a cause of action “may exist” test. ^[110]

    110. POS [11(b)], [11(c)], [11(e)], [31]; DOS [2(a)], [27(a)], [29], [32], [33], [34(e)].

85. Mr Pesman SC (who had not prepared EY’s submissions) did not readily fall into that error. However, Mr Mahendra during his oral submissions often deployed the (incorrect) “reasonable cause to believe” terminology. ^[111] Further, Mr Mahendra by reference to that test made submissions that such belief “requires more than mere assertion and more than suspicion or conjecture”, ^[112] it being “an inclination of the mind towards assenting to, rather than rejecting a proposition”. ^[113] Whilst that is terminology referred to in Hatfield,^[114] it is linked to the “reasonable cause to believe” wording. Notably in O’Connor, in the passage Simpson JA cites from Hely J’s decision in St George Bank Ltd v Rabo Australia Ltd [2004] FCA 1360; (2004) 211 ALR 147 (St George), her Honour expressly omitted reference to a number of the propositions stated by Hely J at [26] including relevantly that:

(d) belief requires more than mere assertion and more than suspicion or conjecture. Belief is an inclination of the mind towards assenting to, rather than rejecting a proposition. Thus it is not sufficient to point to a mere possibility. The evidence must incline the mind towards the matter or fact in question. If there is no reasonable cause to believe that one of the necessary elements of a potential cause of action exists, that would dispose of the application insofar as it is based on that cause of action: John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679; BC200403021 at [13], [14], [17] and [73]

111. T 7.31-.36, 26.32-.35, 26.46-.49, 31.9-.13, 32.8-.10, 34.46-.49, 35.29-.31.

112. T 31.19-.22, 32.1-.13, 33.37, 33.47-.50, 34.6-.9, 35.3-.6, 35.18-.20, 35.29-.31.

113. T 33.11-.16, 33.35-.40, 33.47-.50.

114. Hatfield at [49]; St George Bank at [26(d)].

86. Her Honour stated that she omitted propositions in [26] (c), (d) and (e) of Hely J’s judgment as these deal with one of the differences between the then Federal Court Rule and Rule 5.3. ^[115]  Further, Simpson JA in extracting McColl JA’s summary of the relevant principles in Hatfield again expressly “omitted references to authorities concerning those parts of the Federal Court Rule that impose a test of “reasonable cause to believe” as distinct from the presently applicable “it appears to the court” test. ^[116]

    115. At [25].

    116. At [27].

87. The Court of Appeal in O’Connor does not otherwise refer to the “appears to the court” test by reference to any requirement of a threshold exceeding suspicion or conjecture.

88. I have had regard to the parties’ submissions regarding “reasonable cause to believe” which I have referenced above, including submissions on the circumstances that would satisfy or fail that test. However, having regard to the binding authority of O’Connor, for the purposes of determining the matter, I will apply the rule under r 5.3, being whether it “appears to the Court” that, among other things, the plaintiff “may” be entitled to make a claim for relief and not the “reasonable cause to believe” test.

89. Regarding the first element, a “claim for relief” is to be understood by reference to that expression within the provisions of the Civil Procedure Act 2005 (NSW) (CPA). ^[117] The expression is broad, ranging in content including claims for the recovery of damages or other money, declarations of right and determinations of any question or matter that may be determined by the Court and any other claim (whether legal, equitable or otherwise) that is justiciable in the Court. ^[118]

    117. By Interpretation Act 1987 (NSW) s 11, words and expressions that occur in an instrument, which includes rules of Court, have the same meanings as they have in the primary Act, which in this case is the CPA.

    118. CPA s 3 (definition of "claim for relief").

90. In “order for it to ‘appear’ to the Court that the applicant ‘may be entitled’ to make a claim for relief, it is not necessary for the applicant to show a “prima facie or pleadable case”. ^[119] The “use of the word “may” indicates the court does not have to reach “a firm view that there is a right to relief”. ^[120] Simpson JA in O’Connor states:

30    It may be emphasised that there is no requirement that an applicant for preliminary discovery establish even a prima facie case for relief; nor is it necessary that an applicant specify with precision the cause of action proposed, although it will be necessary, in order to make it “appear to the court” the applicant “may be entitled to make a claim for relief” that the applicant provide some particularisation of the nature of the relief in contemplation. That is so, not only to enable the court to form a view about whether the applicant may be entitled to make a claim for relief, but also to enable the prospective defendant, if an order is made, to determine which, if any, documents in possession are to be discovered.

119. POS [11(a)] citing Hatfield at [47] in turn citing Morton v Nylex Ltd [2007] NSWSC 562 (Morton) at [25].

120. POS [11(d)] citing Hatfield at [49]; Telstra Corporation Ltd v Minister for Broadband, Communications, and the Digital Economy (2008) 166 FCR 64; [2008] FCAFC 7 (Telstra).

91. Regarding the second element, “what amounts to ”reasonable inquiries” is a question of fact to be determined having regard to all the relevant circumstances of the particular case:

1. it does not follow from the mere fact that further inquiries could have been made, and would have been helpful, that the omission to make those inquiries is a failure to make reasonable inquiries; ^[121] and

2. the applicant must place before the court ”all of the evidence already available to it relevant to the sufficiency of the information it possesses to enable a decision to be made whether to commence the proceeding”. ^[122]

   121. See Globe per Slattery J at [37] citing Steffen v ANZ Banking Group [2009] NSWSC 666 (Steffen) per McDougall J at [87] (but see also Steffen [15]).

   122. DOS [27(b)] citing Muscat v Qin [2024] NSWSC 113 (Muscat) per McGrath J at [21(8)].

92. Regarding the third element, as to sufficiency of information, McGrath J stated in Muscat: ^[123]

.. An applicant must show that they are ”lacking something reasonably necessary to make a decision whether to institute proceedings”: Morton at [33]. The test is objective but not purely so, requiring the applicant to disclose what information they already have relevant to making such a decision, to identify what information is lacking and to give clear evidence as to ”the ways the information they have gleaned is insufficient to enable them to decide whether or not to commence proceedings”: Rinehart v Rinehart [2015] NSWSC 1201; 108 ACSR 415, White J at [94]. Meeting the test does not rest merely in the assertion of the applicant or their legal adviser. Pre-action correspondence and notices of claim are significant for the purposes of such an inquiry. The question permits some consideration of the apparent strength or weakness of the applicant’s case yet does not involve a determination of the merits of any claim for relief an applicant might propound. Hence, an applicant may be entitled to preliminary discovery of documents relevant to available defences, or the extent of apprehended breaches, or the likely quantum of damages, as well as of documents which may establish whether there is a cause of action, but a potential claim that is so weak as to be untenable or unarguable will not suffice: St George at [26(f)]; Morton at [33]–[34]; Kevin Young v The Neil Jenman Group Pty Limited [2015] NSWSC 1908, Hidden J at [33]; B & J Hudghton Investments Pty Ltd as trustee for the B & J Hudghton Family Trust v Lakeba Group Limited [2022] NSWSC 830, Rees J at [23]; O’Connor at [70].

123. Muscat at [21(9)].

93. Regarding the fifth element, “[t]he court is entitled to take into account the relationship (if any) between the applicant and the prospective defendant and whether there are other means of obtaining the information. The cost, delay and utility or uncertainty of resorting to those alternative means is also relevant”. ^[124]

    124. DOS [27(b)] citing Muscat at [21(8)].

Discretion

94. Once those matters are established, the Court may order the prospective defendant to give discovery to the applicant of all documents that are or have been in the prospective defendant’s possession and that relate to the question of whether or not the applicant is entitled to make a claim for relief. ^[125]

    125. UCPR r 5.3(1) (chaussette); O’Connor at [22].

Verification of list of documents

95. As mentioned above, the provisions of the UCPR which apply generally to discovery of documents in proceedings, ^[126] being relevantly preparation of a list of documents, ^[127] and verification of discovery, apply to an order for preliminary discovery. ^[128]

    126. UCPR Part 21, Division 1 (rr 21.2-21.8).

    127. UCPR r 21.3.

    128. UCPR r 5.5.

96. An order for preliminary discovery does not require the producing party to disclose any privileged document that could not otherwise be compelled in ordinary proceedings between the parties or by subpoena in proceedings involving the applicant. ^[129]

    129. UCPR r 5.7.

97. The verification obligations relevantly are:

1. an affidavit by the producing party (or officer of the producing party) to the effect that the deponent has made reasonable inquiries as to the documents referred to in the order, and believes that there are no other documents (other than listed excluded or privileged documents) falling within any of the classes specified in the order that are, or that within the last 6 months before the commencement of the proceedings, have been, in the possession of the producing party; ^[130] and

2. (if the disclosing party has a solicitor) by a solicitor’s certificate stating that the solicitor has not only advised the client party as to the obligations arising under an order for discovery but also that the solicitor is not personally aware of any documents within any of the classes specified that, within the relevant time period, have been in possession of the party (leaving aside those documents within the list of excluded documents). ^[131]

   130. UCPR r 21.4(1)(a), (2).

   131. UCPR r 21.4(1)(b), (3).

Partnership Agreement

98. Having set out the legal principles, I will now address the evidence said to bear upon the question of whether the elements explained above are met.

99. Various terms of the PA were referenced in the evidence, including regulations 18.12, 22 and 32. A copy of the PA effective 1 July 2020 is in evidence. ^[132] There is no dispute that the purportedly applicable above-mentioned regulations are accurately set out in that document. ^[133] Further, there is no dispute that the individual defendants had signed Joining Deeds relevantly confirming that they had been supplied with a copy of the PA and acknowledged (or were bound by) the terms therein. ^[134]

    132. CCB 127-246.

    133. T 15.3-.17.

    134. Mr Keegan (6 April 2016) CCB 102-103; Mr Woodward (1 July 2016) CCB 106-107; Mr Sharp (16 January 2017) CCB 111-118; Mr Consett (1 July 2018) CCB 121-126; Mr Singh (1 July 2023) CCB 271-282.

100. Mr Pesman SC referenced various provisions of the partnership agreement including:

1. regulation 8 headed “General obligations of Partners” ^[135] which contains a number of (sub)regulations including relevantly 8.1 “Attention to the Firm”, 8.2 “Duty of honesty and good faith”, 8.3 “Independence, objectivity and integrity” and 8.4 “High standards and objectives”, among various other contractual terms (8.5-8.10).

2. regulation 18 headed “termination of membership” which relevantly includes (sub)regulation 18.12 “Documents to be executed in connection with a Termination”; ^[136]

3. regulation 19 headed “Garden leave”; ^[137]

4. regulation 22 headed “Post-termination obligations and restrictive covenants”; ^[138] and

5. regulation 32 headed “Confidentiality” ^[139] (Mr Pesman SC contended that the PA itself is confidential information by force of the reference in regulation 32.1 to the Firm’s Organisational Documents and the definition of “organisational Documents”: CCB 138). ^[140]

   135. CCB 144-146; T 15.39-.41.

   136. CCB 153; T 15.43-.47.

   137. CCB 156-158; T 16.1-.7.

   138. CCB 163-166; T 16.9-.13.

   139. CCB 169; T 16.15-.20.

   140. T 16.15-.20.

101. Having regard to the emphasis on regulations 18.12, 22.1 and 32.1 it is appropriate to set them out.

102. Regulation 18.12 states: ^[141]

[redacted]

141. CCB 156 (also extracted at CCB 466).

103. Regulation 22.1 of the PA relevantly states: ^[142]

[redacted]

142. CCB 163-164 (extracted at CB 597-598).

104. Regulation 32.1 states: ^[143]

[redacted]

143. CCB 169 (extracted at CB 598).

Garden leave

105. “Garden leave” (also called “gardening leave”) refers to arrangements where an employee is paid to stay away from work, typically during a notice period following termination or resignation. Employment contracts usually define the precise terms of garden leave. Like many contractual provisions, these terms are often defined negatively, leaving open what can be done but recording specifically what cannot be done. Such clauses are negotiated and included to benefit one or more parties to the contract.

106. The Oxford Dictionary (online ed) defines it as “Suspension from work on full pay for the duration of a notice period, typically to prevent an employee from having any further influence on the organization or from acting to benefit a competitor before leaving”.

107. Seemingly, the earliest known use of the noun gardening leave is in the 1980s. ^[144] The etymological basis for the label “garden” or “gardening” leave is not entirely clear. Perhaps gardening was considered as a suitably innocuous activity to portray any form of generic pastime in counterpoint to work. The basis need not be probed. However, one should understand that “gardening” leave is a type of misnomer as “gardening” per se is not generally contemplated by the parties, let alone mandated under the contract. That point was gently parodied or at least highlighted by the fictional character “Sir Harry Pearce” in “Spooks” who, upon his probationary return to work, having been stood down from his position head of “Section D” (the counter-terrorism department) in MI5, in response to Dimitri Levendis’ tentative query “How was your, um .. break,” (Sir Harry) dryly responded, ^[145] “At one particularly dark moment I actually considered gardening”. ^[146]

     144. Oxford English Dictionary, “gardening leave: Factsheet” (Webpage) accessible here:

     145. Sir Harry is known for his dry (and sometimes acerbic) wit often delivered with a straight face.

     146. BBC ‘Spooks’ – Series 10, Episode 1. See IMBD, “Spooks Episode #10.1 Quotes” (Webpage) accessible here:

108. Unsurprisingly, here the restraints of conduct on the relevant partner under the expression “garden leave” is the subject of contractual provision. ^[147]

     147. Regulation 19.

109. Regulation 19.2.1(iii) states:

[redacted]

Conduct of the individual defendants

110. Mr Pesman SC summarised certain of the material parts of the evidence relating to the individual defendants. Whilst inferences to be drawn from the evidence was disputed, the essential summary of facts was not relevantly disputed. Accordingly, without making any particular finding in respect of such facts, I set out below the gist of Mr Pesman SC’s summary, including his suggested inferences in respect of those individuals.

111. In the case of each of Mr Singh ^[148] and the other individual defendants, Mr Pesman SC referenced material indicating they had worked with the other defendant partners and many of the employees who had resigned from EY to move to A&M, including relevantly in the case of:

     148. POS [46] (citing CB 88 [123]).

1. Mr Woodward – 7 employees who worked for many hundreds of hours on client assignments for which Mr Woodward had responsibility ^[149] as well as an associate partner Timothy Frew; ^[150]

2. Mr Sharp – 4 employees and Mr Singh, ^[151] who worked for many hundreds of hours on client assignments for which Mr Sharp had responsibility; ^[152]

3. Mr Consett – 2 employees who worked for many hundreds of hours on client assignments for which Mr Consett had responsibility; ^[153] and

4. Mr Keegan – 5 employees, including Mr Singh, ^[154] who worked for many hundreds of hours on client assignments for which Mr Keegan had responsibility. ^[155]

   149. POS [34] (citing CB 80 [69]).

   150. POS [34].

   151. POS [37] (citing CB 83 [87]).

   152. POS [37] (citing CB 83 [87]).

   153. POS [40] (citing CB 85 [104]).

   154. POS [43] (citing CB 88 [121]).

   155. POS [43] (citing CB 88 [121]).

Mr Woodward

112. Mr Pesman SC contends that the evidence shows that, while remaining a partner of EY, and during his notice period, Mr Woodward had: (a) discussed prospective employment with A&M with Mr Taylor, a director of EY who resigned to go to A&M; ^[156] and (b) played a part in enticing Mr Singh to move to A&M, telling Mr Singh that he (Mr Woodward) needed Mr Singh at A&M. ^[157] Mr Scott gives an account of his conversation with Mr Singh on 24 October 2023. The attempted enticement of Mr Singh to move to A&M occurred very shortly prior to Mr Singh in fact giving notice of his intention to retire from EY, ^[158] by email dated 3 November 2023. ^[159]

     156. POS [35(a)] (citing CB 64 [8]).

     157. POS [35(b)] (citing CB 65 [15]).

     158. POS [35(b)] (citing CB 65 [15]).

     159. POS [35(b)] (citing CB 65 [15]; CB 88 [125]).

177. Regarding a potential claim in respect of solicitation of clients, Mr Mahendra referred to ^[271] material bearing upon Mr Woodward’s ^[272] and Mr Sharp’s ^[273] alleged involvement. Mr Mahendra specifically referred to EY’s claim regarding solicitation of clients which made reference to 3 particular clients said to have taken their tax work from EY connected to Mr Woodward’s departure to A&M. ^[274] He contended that EY have sufficient information to make a determination about whether to commence proceedings in respect of those clients. ^[275] In any event, he says that the individual defendants or more particularly Mr Woodward has proffered documents in respect of this issue. ^[276]

     271. T 30.42-31.5.

     272. CCB 610.

     273. CCB 672.

     274. T 27.13-.23 citing material in CCB 429 and 566.

     275. T 27.25-.30.

     276. T 27.42-28.19.

178. In respect of Mr Singh, Mr Mahendra contended that there is nothing in the evidence suggesting that he was involved in solicitation of employees or partners from EY to A&M. The tenor of his submissions in this regard is that EY have not been sufficiently nuanced or meticulous in distinguishing his situation from the other defendants but rather been unrefined treating “all of the individual defendants as a job lot”. ^[277]

     277. T 31.5-.11.

EY reply

181. Mr Pesman SC submitted (in chief, but essentially in reply) that I should reject the defendant’s submissions that EY had (as in Contour) made an unequivocal decision to commence claims and further that in any event it had not exhausted avenues of enquiry. In this regard, he referred to the comments of Henry J in BGC.

Determination

182. In addressing the issue of the alleged fixed resolve of EY to commence proceedings, Mr Pesman SC submitted that it was not open to the defendants to (reasonably) submit that the application for preliminary discovery should be dismissed on the basis that the Committee had already made a decision to commence (substantive) proceedings against the defendants or any of them. ^[278] I noted that Mr Grimley had not been cross-examined regarding the resolution. ^[279] Mr Mahendra submitted I was not bound to accept what is put by Mr Grimley and that he was not bound (by the rule in Browne v Dunn (1893) 6 R 67) to cross-examine Mr Grimley, if there is (other) objective material demonstrating that there had been a previous decision to commence proceedings based on a certain state of affairs. ^[280]

     278. T 7.22-.24 (by reference to his evidence at CB 94 [168] recited above (“The Committee resolved that it would make a further determination as to whether EY would commence any other legal proceeding against any one, some, or all of the Defendants in the light of information available following the preliminary discovery application”).

     279. T 7.26.

     280. T 7.28-.36.

183. It is not clear to me what other objective material Mr Mahendra was referring to. If he had in mind statements in correspondence from EY and Clayton Utz, I am not sure that such statements conclude the matter. It is relatively common for parties or solicitors to make assertions about litigation intentions in correspondence. The ultimate effect of such statements needs to be considered not merely within the immediate letter but in the broader context of other correspondence on the topic. If later material suggests no definitive decision has been made to commence litigation, or that an initially announced decision has been revised, such material should not be ignored.

184. Mr Grimley was not cross-examined regarding any earlier statements. Whether any earlier statements constitute forensic posturing or genuine intention at the time, the current position remains that EY, according to Mr Grimley, has not unconditionally decided to commence proceedings against A&M, but wishes to consider its position in light of information available following the preliminary discovery application. I am not satisfied that the EY partners have by any earlier decisions (reflected in correspondence with the defendants or their legal representatives or otherwise) acted in such a way as to preclude them from obtaining preliminary discovery relief.

185. In Contour, Barrett J dismissed an application for preliminary discovery on the basis that, on the plaintiff’s own evidence, the threshold condition created by the “unable to obtain sufficient information to decide” was not satisfied. His Honour’s reasoning was based on correspondence that the plaintiff’s solicitors had with each of the defendants indicating unequivocally that, on their assessment, the plaintiff “is entitled to commence” proceedings against them. His Honour considered that “one must infer that the plaintiff has (and has given to its solicitors) information which, upon a proper assessment by the solicitors, is sufficient to support a decision to commence proceedings”. ^[281]

     281. At [12]-[14].

186. In BCG, Henry J did not accept the defendant’s submission that the terms of the correspondence indicated that the plaintiff had, akin to the position in Contour, formed a clear and unequivocal view that it had sufficient information to commence substantive proceedings against the defendant for breach of the contract or other claims for relief (despite the assertion of repudiation). ^[282]

     282. At [84].

187. I reject the submission that the correspondence by EY or Clayton Utz decisively proves EY has determined that it has sufficient information to commence proceedings. It is not unusual for pre-proceeding correspondence to be written in relatively strong or apparently conclusive terms. Properly contextualised, in light of all the circumstances, it seems to me that EY and/or Clayton Utz were, in light of a paucity of information in respect of a very serious matter (departure of a significant number of staff), attempting by brinkmanship or tactical manoeuvre to draw some form of information or hopefully admission or at least concession from the defendants as a form of not merely damage control but to consider what it could do regarding the significant blow to its business.

188. Overall, I do not consider that the correspondence precludes EY from satisfying the threshold of being unable to obtain sufficient information or otherwise precludes it from obtaining some preliminary discovery relief.

189. The individual defendants submit that EY is not properly engaged with them in relation to their offer of limited discovery. ^[283] It is not entirely clear to me what the phrase “not properly engaged” is precisely intended to convey. However, at least for the reason that the offer attempted to preclude or forestall any other request for documentation, I reject the submission as being a basis to decline the making of an order for preliminary discovery.

     283. DOS [3].

190. For essentially the same reasons, I reject the submission that EY is using the preliminary discovery process to build a case that they have “already decided to pursue”.

Possession of documents that could assist

A&M’s submissions

191. A&M submits, ^[284] by reference to Annexure A of the summons, that the documents identified in categories:

1. 1(a) and (c) – do not specify a date range and are vague and not relevant to whether EY may be entitled to make a claim (in circumstances where there is no dispute that the individual defendants were ultimately employed by A&M); ^[285]

2. 1(b) – are not relevant to whether EY may be entitlement to make a claim, given there is no evidence before the Court of the individual defendants contravening their contractual obligations in relation to use of confidential information belonging to EY; ^[286] and

3. 5 – are not relevant to EY’s assessment of an entitlement to bring a possible claim. ^[287]

   284. DOS [34].

   285. DOS [34(a)].

   286. DOS [34(b)].

   287. DOS [34(f)].

192. During oral submissions, Mr Mahendra explained A&M’s resistance to the categories of documents sought by EY (which he submitted ought not to be the subject of any order for discovery). He contended in respect of the categories that they were “broad ranging categories” ^[288] and specifically:

     288. T 32.19-.22.

1. category 1 – does not go to any cause of action concerning inducement of breach and in any event (presumably as a matter of discretion) the offer of documents by the individual defendants gives EY adequate information regarding employment or potential employment by A&M of themselves and or any other EY personnel; ^[289]

2. 2 – as there is no evidence that A&M obtained any documents from EY, the evidence of copying by Ms Hong and Mr Lim is limited and has been explained, ^[290] and in any event they are not parties to the proceedings; ^[291]

3. 3, 4 & 6 – are in extraordinarily broad category, they assume that A&M knows what clients are caught by the category, they go beyond anything that EY has a reasonable belief in respect of (particularly in circumstances where EY knows what clients have been solicited) and are otherwise addressed by the discovery proffered by the individual defendants; ^[292] and

4. 7 – is unnecessary if the documents under category 5 are provided. ^[293]

   289. T 32.28-.32.

   290. Citing CB 305 (Ms Hong) and CB 423 (Mr Lim’s Undertaking).

   291. T 32.34-33.16.

   292. T 34.14-35.1, 35.12-.16.

   293. T 35.18-.20.

193. Further, Mr Mahendra submits that if I were to decide against the submission that EY’s claim against A&M satisfied a threshold of “reasonable belief” then only category 5 of documentation should be made available to it. ^[294] However, he also contended that discovery in respect of category 1 against Mr Woodward would for example catch any copy of the PA or extracts of it provided by Mr Woodward during the course of his recruitment by A&M, and on that basis it would not be necessary to give discovery against A&M.

     294. T 35.3-.10.

Individual defendants’ submissions

194. The individual defendants say that in any event they have proffered some information and that ought to be enough to sufficiently satisfy any legitimate request for information, ^[295] even if it does not entirely satiate EY’s thirst for knowledge.

     295. T 31.13-.19, 35.24-.33.

195. To be clear, the categories of documents being MFI-1 was not merely utilised by the individual defendants as a pre-application offer. Mr Mahendra made reference to MFI-1 at least for the purpose of debating the application and the enlivening criteria for preliminary discovery.

196. Specifically, Mr Mahendra submits that, in relation to Mr Woodward, the bolded limitation in categories 1-3 is justifiable on the basis that the only reasonable basis upon which the Court would infer that he had some little involvement in recruiting or soliciting employees would be if there was evidence that he had some level of responsibility or influence over those employees. ^[296]

     296. T 39.31-.42.

EY reply (to A&M)

197. Mr Pesman SC took particular umbrage to the contention that the categories were broad-ranging. ^[297] He contended that the categories were precisely targeted to eliciting documents regarding what A&M knew and when A&M knew it. ^[298] In any event, he added that “broadness” and “suspicion” are meaningful only by reference to facts. Thus, if the defendants (as they have done) have chosen not to explain what occurred with the departure, leaving a void of facts, it lies ill in their mouth to complain that the category is “too broad”. ^[299]

     297. T 38.8-.10.

     298. T 38.21-.25.

     299. T 38.38-.42.

198. Mr Pesman SC submitted regarding the A&M claim for discovery:

1. contrary to the submission that the documents identified in categories 1(a) and(c) of the summons:

1. did not specify a date range ^[300] – a range is clearly specified by use of the words “during the Relevant period” (defined as being 1 January 2023 to 15 December 2023); ^[301] and

2. are vague ^[302] – there is no suggestion that what is called for is not understood or would be onerous; ^[303] and

2. the complaint that the documents identified in category 1(b) of the summons are irrelevant to whether EY may be entitled to make a claim because there is no evidence of the individual defendants contravening their contractual obligation in relation to use of confidential information merely demonstrates why the application is being made. ^[304] Ms Hong and Mr Lim did end up at A&M and the so-called explanation regarding Ms Hong’s copying of material would not fill the court with confidence. ^[305]

   300. DOS [34(a)].

   301. T 22.13-.33.

   302. DOS [34(a)].

   303. T 22.36-.37.

   304. T 22.43-.45.

   305. T 33.23-.31.

199. In relation to the copying of documents by Ms Hong, I understood the tenor of Mr Pesman SC’s submissions to mean that the evidence of EY’s investigatory meeting does not quell EY’s concerns regarding what information may have arrived at A&M via Ms Hong. ^[306] I note the email report dated 10 October 2023 which sets out a summary of Ms Hong’s responses to a meeting interview states in part: ^[307]

Based upon these answers, I would like to recommend a first and final warning be issued to Josephine. Her reasons for the transfer had changed since from her previous response to Rebecca, and also changed during the course of the meeting. This casts some doubt on her motivation for the transfer, the timing of which aligns with her receiving an offer for A&M.

306. T 33.23-.31.

307. CB 305.

200. Mr Pesman SC stressed that the Relevant Period is “a period ending before while they still based on the last two years but before they go to A & M whether or not they were attending the offices of A & M for the particular purposes”. ^[308]

     308. T 38.14-.19.

201. In respect of category 3, Mr Pesman SC submitted that the period sought (1 July 2023 to date) essentially covers the period in which the individual defendants were on “light duties” (I infer “garden leave”). He maintained that A&M are well capable of working out which clients or potential clients are covered by inquiring of the individual defendants. ^[309]

     309. T 38.27-.33.

EY reply (to the individual defendants)

202. In relation to the categories sought against the individual defendants, Mr Pesman SC noted that:

1. the offer of documents was on terms that the categories of discovery would be limited in the way outlined earlier in this judgment; ^[310] and

2. MBL (as abovementioned) did not respond to or “engage” with BM’s request to have documents produced to it according to the categories as limited and to contain curial dispute to the balance of the documents sought by EY. ^[311]

   310. CB 657.

   311. T 37.15-.20, 38.3-.4; POS [78].

203. Further he submitted that the bolded limitation of documents bearing upon the solicitation of EY personnel would destroy the utility of the offer ^[312] in the case of:

     312. T 37.22-.37, 38.3-.5.

1. Mr Woodward being limited to 9 personnel referenced in Mr Grimley’s affidavit; ^[313]

2. Mr Sharp being limited to 5 personnel referenced in Mr Grimley’s affidavit; ^[314]

3. Mr Consett being limited to 2 personnel referenced in Mr Grimley’s affidavit; ^[315] and

4. Mr Keegan being limited to 6 personnel referenced in Mr Grimley’s affidavit. ^[316]

   313. CB 80 [69].

   314. CB 83 [87].

   315. CB 85 [104].

   316. CB 88 [121].

Determination

The A&M categories

204. There is no suggestion that A&M have no documents potentially falling within any of the categories. Nor, even having regard to Mr Mahendra’s asserted broadness of categories 3, 4 and 6, is there any suggestion that production would be onerous.

205. I accept Mr Pesman SC’s submissions in relation to categories 1(a) and(c).

206. In relation to categories 1(b) and 2, the test is not whether there is any evidence before the court of individuals contravening their contractual obligations regarding use of confidential information belonging to EY. Nor is the test whether evidence of breach of obligations has been explained or whether the individuals who copied information are parties to the proceedings. The category for discovery is directed to A&M, not to the individuals. There is evidence of both Ms Hong and Mr Lim having copied information. Ms Hong made a statutory declaration in very limited terms regarding her use of the copied information, while Mr Lim’s declaration was in much more fulsome terms. I consider the request for documents under 1(b) to be reasonable.

207. In relation to categories 3, 4 & 6, I accept Mr Pesman SC’s reply regarding alleged broadness of the categories and I do not consider the categories to be too broad. Further, as to the objection regarding “which clients” are the subject of category 3, subject to one matter, I accept Mr Pesman SC’s submission that A&M are well capable of working out which clients are covered by inquiring of the individual defendants. The one matter is that the wording “potential client(s)” is not ideal. Accordingly, I invite the parties to discuss that wording and agree on greater precision to identify the class intended to be covered. That also applies to the use of “potential client(s)” in category 4.

208. Essentially for the reason articulated by Mr Pesman SC (prior possession of the PA would have given A&M important awareness of the extent of any constraints as it would affect their ability to conduct their business), ^[317] I reject the defendants’ bold assertion that the category 5 documents are not relevant to EY’s assessment of an entitlement to bring a possible claim.

     317. T 12.45-13.5.

209. I do not regard category 7 as being unnecessary. If for some reason there is a degree of crossover of material then A&M can indicate that.

The individual defendants’ categories

210. Likewise with A&M, there is no assertion that the individual defendants have no documents that fall within each of the categories. Indeed, the proffer of some documents by the individual defendants appears premised on the basis that the defendants “may have” possession of documents that could assist in determining the above question.

211. There is no assertion by the individual defendants that production would be onerous.

212. I have considered carefully the submissions of counsel regarding the bolded limitations regarding the solicitation of personnel.

213. One of the difficulties with Mr Mahendra’s submissions is that the structure of line of authority within EY was not limited to an individual partner.

214. There are some crossover of personnel in categories. Thus, Messrs Woodward, Sharp and Keegan are listed as having had responsibility for Mr Singh and Roma Patel and Messrs Sharp, Consett and Keegan are listed as having responsibility for Mr Lim. That aside, numerically, the vast majority of those persons who had worked in the 2023 financial year on EY engagements with the individual defendants joined A&M. Specifically: (a) 8 of the 9 personnel in the case of Mr Woodward; (b) 4 of the 5 personnel in the case of Mr Sharp including Mr Lim; ^[318] (c) both of the personnel in the case of Mr Consett (again including Mr Lim); ^[319] and (d) all of the 6 personnel in the case of Mr Keegan. ^[320]

     318. CB 83 [87].

     319. CB 85 [104].

     320. CB 88 [121].

215. Further, the tenor of EY’s submissions is that there may have been co-ordinated action as between A&M and one or more of the individual defendants. That admits of the possibility of joint and several liability. ^[321]

     321. Compare in a slightly different context the remarks of Slattery J in Globe at [51].

216. In relation to the contention that soliciting or recruiting conduct could only plausibly occur by someone who had some level of responsibility or influence over other employees, I do not accept that that logically follows.

217. In the above circumstances, I do not consider it to be reasonable to limit the discovery as suggested by the bolded words in respect of solicitation of EY personnel.

218. I do not consider that it is appropriate to limit the discovery in categories 5 and 7 in respect of Mr Woodward, Mr Sharp and Mr Consett to the bolded limitation in respect of clients. However, as I have observed above the wording “potential clients” is not ideal. Accordingly, I invite the parties to discuss that wording and agree on greater precision to identify the class intended to be covered in respect of “potential client(s)” in category 5 and “prospective clients” in category 7.

Inspection would assist

219. EY’s claim was progressed on the basis that it would be assisted by inspection of documents. No specific submissions were made to the effect that inspection would be inutile or of no assistance to EY.

Discretion

220. The defendants did not identify or advance any particular discretionary matter that would inform the decision of the Court in considering whether to make orders for preliminary discovery.

221. In any event, I am satisfied that it is a proper exercise of my discretion to make an order for preliminary discovery.

Conclusion

222. The upshot is that I propose to order that there be preliminary discovery substantially in respect of the categories as sought by EY, with the qualification I have made above regarding the wording “potential client(s)” and “prospective clients”.

223. The defendants seek a costs order against EY. ^[322] I assume that was premised on the basis that the defendants would be successful in their resistance of the application or substantially successful. In any event I should briefly say something at least provisionally regarding the question of costs.

     322. DOS [4].

224. Applications for preliminary discovery are part of the Court’s civil jurisdiction.

225. Decisions made by the Court about the costs of proceedings, like other aspects of the Court’s jurisdiction, are made in accordance with applicable legislation and rules of court having regard to the underlying purposes to be served by those provisions. ^[323]

     323. Pethers v Pethers (No 2) [2025] NSWSC 561 at [22].

226. The purpose and underlying rationale for an award of costs is essentially compensatory in the sense of being awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings. Costs are not awarded by way of punishment of the unsuccessful party. 

227. Notwithstanding the characterisation of the proceedings as interlocutory, judges of this Court have stated that the provisions of s 98 of the CPA, and rr 5.8, 42.1 UCPR are provisions to be considered in respect of the costs of applications for preliminary discovery. ^[324]

     324. Renton v Kelly [2018] NSWSC 1377 (Renton) per Ward CJ in Eq at [55]-[56]; Arnaout per Lindsay J at [28], [69]-[70].

228. In Renton, Ward CJ in Eq proceeded on the basis that, regarding costs, “there is no conventional or usual rule applicable to preliminary discovery applications, which applications depend on the facts of the relevant case”. ^[325]

     325. At [56].

229. Differing views have been expressed regarding whether preliminary discovery applications are adversarial or not. ^[326] Sometimes, general observations may be able to be made regarding whether particular sorts of applications are aptly described as adversarial. However, ultimately, to the extent that that descriptor is relevant to costs, whether proceedings have been conducted in an adversarial way such that they might be appropriately described as being adversarial in nature or at least akin to adversarial litigation is a question of fact. ^[327]

     326. For example, Airways Corporation of New Zealand v Present Partners of Price Waterhouse Coopers Legal [2002] NSWSC 521 (Airways) per Simpson J at [6]-[7] referencing the English Court of Appeal, Totalise Plc v The Motley Fool Ltd & Interactive Investor Ltd (unreported, 19 December 2001); cf Arnaout at [71], [74].

     327. Airways at [11].

230. The jurisdiction to grant preliminary discovery has in some caselaw been described as an extraordinary one. ^[328] On other occasions epithets such as “exceptional” and “indulgence” have been eschewed as informing cost determinations in favour of considerations of reasonableness of conduct and the possibility that there may or may not be further litigation between the parties depending to some degree on the outcome of the application. ^[329] There are some cases including Renton and The Printers Pty Limited v Hawk Media Group Pty Limited t/as Hawk Print [2025] NSWSC 194 (Printers), where other considerations come into play including agreement by the parties as to the provision of discovery leaving the only active issues being the question of costs.

     328. Andrews Advertising Pty Ltd v David Andrews [2011] NSWSC 244 (Andrews) per Ball J at [57].

     329. Arnaout at [72].

231. My provisional view is that the contest over whether there ought to be an order for preliminary discovery was adversarial and that the costs of the litigation per se should ordinarily follow the event.

232. There is a clear distinction however between the cost of the litigation per se and the costs of actually providing discovery.

233. The particular terms of r 5.8(2) of the UCPR identify different types of costs that may occur in the context of an application for an order for preliminary discovery including, quite apart from the cost of the litigation, costs of making and serving in the list of documents and producing such documents.

234. Separately from the terms of r 5.8(2), there is a line of authority to the effect that the costs of the litigation do not include the costs and expenses associated with the location and production of the documents ordered. Those costs have been described as being “comparable with the position of a third party receiving and complying with a subpoena” ^[330] such that the party in whose favour preliminary discovery has been ordered ought to pay the reasonable costs of the producing party in respect of making and serving any list of documents and producing such documents for inspection. ^[331]

     330. Airways at [12].

     331. For example, Airways at [13(4)]; Printers per Brereton J at [16] citing Andrews at [56]-[57] per Ball J and Gooley v Breda Pty Ltd (No 2) [2017] NSWSC 1505 at [13]-[14] per Slattery J.

235. Sometimes some aspects of costs orders and expense orders in respect of preliminary discovery are conditioned or premised on whether, within the fullness of time or perhaps a certain period of time, the parties with the benefit of an order for costs commence the substantive proceedings against one or more of the defendants in which case certain costs are ordered to be dealt with as an expense necessarily incurred by the plaintiff in pursuit of what, by that stage, will have become the substantive proceedings. ^[332]

     332. Arnaout at [79].

236. Provisionally, it seems to me that the costs of the making and serving of any list of documents and producing such documents for inspection would ordinarily be borne by the plaintiff.

237. I hasten to add that I am not inviting the parties to further disputation over the cost of the proceedings or the cost of providing discovery. Indeed, I have expressed the provisional views that I have with the hope of obviating any such dispute.

Orders

238. The orders of the Court are:

1. The parties should bring in short minutes of order to give effect to my findings (1 July 2025).

2. Subject to further order, and noting the parties have had an opportunity to address the Court on the matter, the matters stated in the reasons for judgment as being redacted are not to be published, on the ground of commercial sensitivity (3 July 2025).

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Endnotes

Decision last updated: 03 July 2025