Timoney Technology Limited v ADI Limited
[2007] VSC 402
•17 October 2007
f
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL LIST
No. 7883 of 2007
| TIMONEY TECHNOLOGY LIMITED | First Applicant |
| and | |
| TIMONEY RESEARCH LIMITED | Second Applicant |
| v | |
| ADI LIMITED (ACN 008 642 751) | Respondent |
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JUDGE: | HARGRAVE J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 13 and 20 September 2007 | |
DATE OF JUDGMENT: | 17 October 2007 | |
CASE MAY BE CITED AS: | Timoney Technology Ltd & Anor v ADI Ltd | |
MEDIUM NEUTRAL CITATION: | [2007] VSC 402 | |
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Practice and procedure – Discovery before action – Whether requirements of applicable rule satisfied – Whether arbitration agreement a bar to relief under rule – Supreme Court (General Civil Procedure) Rules 2005, r.32.05 – Application dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicants | Mr P Murdoch QC and Mr A Trichardt | TressCox Lawyers |
| For the Respondent | Mr I Martindale SC | Deacons |
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TABLE OF CONTENTS
Parties and Introduction..................................................................................................... 1
The Licence Agreement........................................................................................................... 2
Timoney’s Concerns................................................................................................................. 7
Issues............................................................................................................................................ 16
Is the Arbitration Agreement a Complete Answer to the Application?............. 17
Applicable Legal Principles................................................................................................. 21
Possible Causes of Action................................................................................................... 22
A. Failure to Provide Technical Information..................................................................... 22
B. Failure to Account............................................................................................................. 26
C. Assignment Without Consent......................................................................................... 27
D. Failure to Jointly Promote............................................................................................... 27
E. False or Misleading Conduct........................................................................................... 28
VIII. Conclusion.............................................................................................................................. 29
HIS HONOUR:
I. Parties and Introduction
The applicants, Timoney Technology Limited and Timoney Research Limited (collectively “Timoney”), are Irish companies involved in the design, development, manufacture and marketing of complex engineering products for military applications, including high mobility armoured vehicles.
The respondent, ADI Limited (“ADI”), is an Australian company with considerable experience as a contractor to the Australian and overseas defence forces for equipment and services for military applications on land, in the air and at sea.
Prior to 1 December 1996, Timoney conducted significant design work in relation to a “Bushmaster” armoured infantry mobility vehicle, and had submitted a bid to the Commonwealth of Australia for the production and supply to the Commonwealth of Bushmaster vehicles. It appears that, from 1 December 1996, Timoney and ADI were involved together in the joint development of Bushmaster vehicles.
By a “Co-Operation and Licence Agreement” dated 16 September 1997 and made between Timoney and ADI (“the licence agreement”) Timoney and ADI agreed the terms upon which ADI would become the exclusive licensee of the intellectual property created by Timoney in connection with the Bushmaster vehicle, or any variant or derivative vehicle.
Following a dispute between Timoney and ADI, involving proceedings in the Federal Court of Australia, the parties compromised their differences. As a result, the terms of the licence agreement were varied by agreement dated 30 June 2000 (the “variation deed”). The terms of the licence agreement to which I will refer in this judgment are the terms as varied. I will only refer to the variation deed where it is necessary to do so.
By the terms of the licence agreement, ADI was permitted to sub-licence Timoney’s intellectual property to third parties, to enable third parties to develop, manufacture, market, sell and support Bushmaster vehicles to the Commonwealth of Australia or any other person in any market in the world.
Pursuant to the terms of the licence agreement, ADI has granted a sub-licence to an American company, Oshkosh Truck Corporation (“Oshkosh”).
Timoney has concerns arising out of the sub-licence by ADI to Oshkosh. However, Timoney says that it does not have sufficient information to enable it to decide whether to commence a proceeding against ADI in respect of those concerns. In this context, Timoney has made application to the Court under r 32.05[1] for an order that ADI make discovery of certain documents.
[1]Supreme Court (General Civil Procedure) Rules 2005.
Rule 32.05 is in the following terms:
32.05 Discovery from prospective defendant
Where—
(a)there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description the applicant has ascertained;
(b)after making all reasonable inquiries, the applicant has not sufficient information to enable the applicant to decide whether to commence a proceeding in the Court to obtain that relief; and
(c)there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had in that person's possession any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist the applicant to make the decision—
the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c).
In order to understand the basis of Timoney’s concerns, which are the basis of its application, it is necessary to refer to the terms of the licence agreement in more detail.
II. The Licence Agreement
The licence agreement contains the following definitions:
(1)“Vehicle” is defined to include all variants of the Bushmaster vehicle, as contemplated by certain contracts between ADI and the Commonwealth of Australia, and all vehicles derived from or substantially the same as the Bushmaster vehicle.
(2) “Timoney Background Intellectual Property” is defined to mean Timoney’s intellectual property created by it in connection with the design of the Vehicle up to 1 December 1996.
(3)The “Foreground Intellectual Property” is defined to mean the intellectual property generated by either Timoney or ADI from 1 December 1996 which is embodied in the Vehicle.
(4)“Technical Information” is defined in very broad terms, as follows:
Technical Information means all developed and reproducible:
(a) technical data pack comprising all drawings and all parts list;
(b) design information including all calculations;
(c) approved engineering change proposals;
(d) operating and maintenance manuals or handbooks;
(e)documentation regarding unique production and manufacturing processes that would not be considered public or industry knowledge;
(f) test and trial data;
(g) minutes of design review meetings;
(h) publicity and advertising material;
(i) registered patents or design; and
(j) integrated logistic support data (“ILS”) and CALS;
but does not include:
(i) costed bills of material;
(ii)production routings covering building sequence set up times and process times;
(iii) design information regarding jigs, tooling and fixtures;
(iv)internal ADI information, manuals, processes and procedures which are not exclusively used in relation to the Vehicle or production of the Vehicle;
(v)design and integration information regarding or specifications of customer or third party owned equipment or property or intellectual property; or
(vi)any information, documentation or data which ADI is not lawfully entitled to make available to TIMONEY.[2]
[2]Emphasis added.
By clauses 3.1 and 3.2 of the licence agreement, Timoney granted to ADI an exclusive right and licence, subject to the terms and provisions of the licence agreement, to use and sub-licence the Timoney Background Intellectual Property and its related Technical Information and, to the extent that it is owned by Timoney, the right to use and sub-licence the Foreground Intellectual Property. By these clauses, ADI, and any sub-licensee of ADI, is permitted:
to develop, manufacture (including by sub-contract), market, sell and support (including by sub-contract) the Vehicle (and spare or replacement parts for the Vehicle) in all markets and potential markets world wide and to and for all customers for the Vehicle world wide.[3]
[3]Clause 3.2. The word “market” does not appear in clause 3.1, but nothing seems to turn upon this for present purposes.
By clause 3.4 of the licence agreement, ADI granted Timoney a limited licence back of certain aspects of the jointly owned Foreground Intellectual Property.
Clause 4.3 of the licence agreement obliges ADI to provide Timoney with a copy of all Technical Information relating to the Vehicle in a timely manner. It is in the following terms:
A copy of all Technical Information relating to the Vehicles shall be transmitted to Timoney in a timely manner as generated at intervals of not less than three months so that at a minimum Timoney is provided with Technical Information on a quarterly basis (although ADI is only obliged to provide that Technical Information once).
By clause 6.1 of the licence agreement, Timoney remains the owner of the Timoney Background Intellectual Property and its related Technical Information.
By clause 7.3 of the licence agreement, ADI agrees to pay Timoney:
an amount equal to 2.6% of the Net Selling Price received by ADI in respect of the Vehicle and spare parts for the Vehicle sold by ADI or its sub-licensees to the Commonwealth of Australia or any other customer …
The payment obligation in clause 7.3 is ambiguous in relation to sales by sub‑licensees. The “Net Selling Price” is defined in terms which assume that ADI manufactures the Vehicle which is sold. Further, ADI may not receive any sale price in the event of a sale by a sub-licensee. This application is not the appropriate place to determine the ambiguity. For the purposes of this application, I will assume that a 2.6% royalty is payable under clause 7.3 in respect of any sale by a sub-licensee.
By clause 7.5 of the licence agreement, ADI is obliged to keep records of all sales by ADI or its sub-licensees of Vehicles or components for Vehicles to enable a full accounting of cumulative sales to be made. ADI is obliged to provide Timoney with a quarterly report as to cumulative sales made. If ADI complies with its obligation to provide this quarterly information, ADI is not required to pay any royalty or other amount due in respect of sales made in that quarter until an invoice is raised by Timoney and delivered to ADI.[4]
[4]Clause 7.9.
By clause 7.6 of the licence agreement, Timoney has the right to have the quarterly reports provided by ADI audited by an independent auditor. Clause 7.6 relevantly provides:
TIMONEY shall at TIMONEY’s sole expense have the right, through a mutually agreed independent auditor, to access at ADI’s premises ADI’s relevant accounts, files and records at all reasonable times for the purpose of verifying and vouching the accuracy of all information furnished and data concerning such payments and royalties – but only as absolutely necessary. TIMONEY shall keep and ensure that the independent auditor keeps all such information confidential in accordance with clause 8 below. ADI agrees to make and keep full and accurate books and records in sufficient detail to enable royalties payable to be accurately determined. If an independent auditor appointed in accordance with this clause determines that the cumulative receipts of ADI (based on the Net Selling Price) in respect of all Vehicles and components of the Vehicles sold by ADI in respect of any quarter ending 30 June, 30 September, 31 December or 31 March understates the actual cumulative receipts (based on the Net Selling Price) of ADI in respect of the relevant quarter by more than 2%, ADI must reimburse to TIMONEY its reasonable expenses incurred in engaging the independent auditor to conduct the relevant audit.
By clause 7.12 of the licence agreement, ADI agrees to pay to Timoney, in addition to the 2.6% royalty, the sum of $3,000 for each Vehicle sold by ADI or a sub-licensee, up to a maximum of 484 Vehicles.
Clause 11.1 of the licence agreement provides that “neither ADI nor Timoney shall assign its rights under this Agreement without the prior written consent of the other party which consent shall not be unreasonably withheld.”[5]
[5](Emphasis added).
Clause 13.1 of the licence agreement provides that it shall remain in force in perpetuity unless terminated by mutual agreement or in accordance with its terms.
Clause 18.1 of the licence agreement is an arbitration agreement. It provides:
18.1Any dispute arising out of or in connection with this Agreement shall be settled in accordance with the rules of conciliation and arbitration of the International Chamber of Commerce by a single arbitrator sitting in London, England.
Clause 19.1 of the licence agreement provides that it shall be interpreted in accordance with the laws of the State of Victoria “and the parties agree to submit to the non-exclusive jurisdiction of the Victorian courts.”
Clause 8.4 of the variation deed provides that ADI and Timoney “agree to promote the Bushmaster Vehicle as a joint development of both ADI and the Timoney Companies.”
Clause 14 of the variation deed repeats the arbitration agreement contained in the licence agreement, with one exception which is irrelevant for present purposes.
Curiously, clause 16 of the variation deed provides that it is to be governed by the laws of New South Wales. This is inconsistent with the licence agreement, which provides that it shall be governed by the laws of Victoria. For present purposes, nothing turns upon this difference.
III. Timoney’s Concerns
Based upon the terms of the licence agreement and the variation deed, the fact of the sub-licence by ADI to Oshkosh, ADI’s responses to queries raised by or on behalf of Timoney and certain information appearing on the Internet, Timoney’s solicitor has sworn that he has reasonable cause to believe that Timoney has, or may have, the right to obtain relief in this Court from ADI for breach of the licence agreement or the variation deed. The possible grounds for the alleged right to obtain relief were summarised in the solicitor’s affidavit in the following terms:
(a)a failure to provide Technical Information generated as a result of the [sub-licence] between ADI and Oshkosh;
(b)a failure to account, and pay, to the Timoney Companies fees due to them relating to the [sub-licence] between ADI and Oshkosh;
(c)a possible assignment of the Timoney Companies’ rights under the [licence agreement] to Oshkosh without the consent of the Timoney Companies;
(d)failure to promote the Bushmaster as a joint development of both ADI and the Timoney Companies.
It was also submitted on behalf of Timoney in oral and written submissions that, in addition to the right to obtain relief against ADI in respect of possible breaches of the licence agreement and variation deed, Timoney was entitled to an order that ADI make discovery in relation to a possible right Timoney may have to obtain relief in respect of false and misleading conduct by ADI in connection with the sub-licence agreement with Oshkosh.
The concerns which Timoney has, and upon which it bases its application for discovery from ADI, arise from the following facts and circumstances.
The United States’ Military (“US Military”) has a requirement for armoured vehicles that offer better protection for occupants against explosive devices than the vehicles it currently uses. This requirement is of a high priority, due to the need for armoured vehicles of a high quality in combat zones such as Iraq and Afghanistan. In these circumstances, ADI entered into a sub-licence with Oshkosh, pursuant to which it is intended that Oshkosh will develop, manufacture and endeavour to sell Bushmaster vehicles, or variants thereof, to the US Military to meet its present requirements. The sub-licence is not in evidence.
In 1995, Timoney was informed of the Oshkosh sub-licence. As a result, Timoney sought from ADI a copy of the sub-licence agreement and all Technical Information relating to the Vehicle arising from that sub-licence. This request was refused. The grounds for refusal were as follows:
(1)The sub-licence agreement between ADI and Oshkosh is a confidential document. Further, the refusal stated that “ADI has satisfied itself that the Oshkosh agreement and the [licence agreement] are compatible.”
(2)The Technical Information arising from the sub-licence could not be released due to a change in Australian Defence Regulations, requiring export approval. ADI said that it had applied for the necessary approvals and would keep Timoney informed of the progress of the application. Later, ADI changed the basis of this refusal and relied, instead, upon United States regulations which it contends prevent it from providing the Technical Information sought by Timoney.
Timoney was not easily deflected. It asserted that it was entitled to see a copy of the sub-licence agreement because it has commercial relevance to it and because the sub‑licence “may be a de facto assignment”. In response, Mr Simpson of ADI sent an email to Mr O’Neill of Timoney which, relevantly, stated as follows:
The Oshkosh Agreement has not been finalised however, ADI cannot provide Timoney Technology Limited or its affiliated companies (the ‘TTL Group’) with a copy of its licence agreement with Oshkosh Truck Company (‘OTC’) The licence agreement is confidential and ADI is bound by the terms of a ‘Mutual Confidential Disclosure Agreement’ entered into with OTC. We can advise TTL that the agreement is in the usual form and provides for OTC to manufacture Bushmasters in the U.S. for sale to the U.S. Government (including FMS), Afghanistan and Iraq. If and when any sales are made under the agreement and royalties paid to ADI, TTL will be paid its royalty as provided in the Co-operation and Licence Agreement entered into between ADI and the TTL Group. Further such royalty payments are subject to your right to audit as provided in clause 7.6 thereof. I have discussed this matter with Jimmie and he assures me that the OTC licence Agreement is in no way a de facto or any other kind of assignment and that Timoney’s rights are protected.
ADI asked Oshkosh if it was prepared to allow Timoney to see a copy of the sub‑licence agreement. Oshkosh refused on the basis of commercial confidentiality and offered to speak directly with Timoney representatives. However, this has not occurred.
As a result of the sub-licence agreement, Oshkosh has included on its website a reference to the fact that it is able to supply Bushmaster vehicles to the US Military. The relevant statement on Oshkosh’s website is in the following terms:
Oshkosh Truck, manufacturer of the world’s most reliable tactical wheeled vehicles, is proud to offer the Bushmaster Assured Mobility Vehicle to US forces. Developed over seven years in Australia by ADI, the Bushmaster underwent five phases of reliability …[6]
[6]Emphasis added.
The evidence did not establish when this statement was included on the Oshkosh website. However, in late 2006, Timoney became concerned that ADI may not be promoting the Bushmaster vehicle as a joint development of both ADI and Timoney. In November 2006, ADI wrote to Timoney and re-assured it that it would “make every effort to include on our Bushmaster promotional material and material generated by our licensees, a reference to Timoney as joint developer and the Timoney web address.” Notwithstanding this assurance, the Oshkosh website continues to contain the statement quoted above. That statement makes no reference to Timoney as a joint developer of the Bushmaster vehicle.
In June 2007, Timoney’s solicitors wrote to ADI requesting a copy of the sub-licence agreement between ADI and Oshkosh and Technical Information relating to the activities of Oshkosh pursuant to the sub-licence. The letter stated that a court application would be made in the event that the information was not supplied within seven days.
Shortly before the commencement of this application, ADI wrote to Timoney’s solicitors and repeated its refusal to provide the information sought. With regard to the request for Technical Information, the letter stated that: “Exchanges of technical information between ADI and Oshkosh are subject to US ITAR control which prohibits disclosure to external parties.”
Timoney then commenced this application under r 32.05. In his affidavit in support, Timoney’s solicitor stated that Timoney had no information, save from what is available in the public domain, about the following matters:
(a)the nature of the agreement or agreements between ADI and Oshkosh, that is, whether the agreement or agreements involve a sub-licence or an assignment of the Timoney Background Intellectual Property and its related Technical Information and the Timoney Foreground Intellectual Property and its related Technical Information;
(b)the scope of the agreement or agreements between ADI and Oshkosh, that is, whether the agreement or agreements involve the development manufacture, selling or support, or all of the aforementioned activities in respect, of the Bushmaster (and spare or replacement parts for the Bushmaster), and in respect of which market;
(c)the pricing arrangement between Oshkosh to ADI in respect of the bushmaster under their agreement or agreements in order for the Timoney Companies to determine the fees payable to them pursuant to clauses 7.3 and 7.12 of the Agreement as amended by the Deed of Settlement and Variation;
(d)the protection, if any, stipulated in the agreement or agreements between ADI and Oshkosh in respect of the Timoney Background Intellectual property and its related Technical Information and the Timoney Foreground Intellectual Property and its related Technical Information;
(e)the description of the Bushmaster, that is, whether it was described as a joint development of both ADI and the Timoney Companies;
(f)the Technical Information relating to the Bushmaster generated since the agreement between ADI and Oshkosh.
(g)the manner in which ADI promoted the Bushmaster to Oshkosh, that is whether it was promoted as a joint development of both ADI and the Timoney Companies.
Further, in his affidavit, the solicitor made reference to certain statements relating to Bushmaster vehicles on the “Wikipedia” website. Particular reliance was placed upon the statement on that website that, in late June 2007, “it was reported that the US Army was close to placing an order for 1,500 [Bushmaster] vehicles. This sale did not go ahead, however.” Objection was taken to reliance upon the information contained on this website. Attention was drawn to the statements made by the publishers of “Wikipedia” about the way in which the information contained on the website is capable of corruption by anyone with access to the internet. In particular, reference was made to the publisher’s statements that:
Wikipedia is written collaboratively by volunteers from all around the world. With rare exceptions, its articles can be edited by anyone with access to the Internet, simply by clicking the edit this page link …
In particular, older articles tends to be more comprehensive and balanced, while newer articles may still contain significant misinformation, unencyclopedic content, or vandalism. Users need to be aware of this to obtain valid information and avoid misinformation that has been recently added and not yet removed …
Allowing anyone to edit Wikipedia means that it is more easily vandalized or susceptible to unchecked information, which requires removal. While blatant vandalism is usually easily spotted and rapidly corrected, Wikipedia is more subject to subtle viewpoint promotion than a typical reference work. While Wikipedia articles generally attain a good standard after editing, it is important to note that fledgling, or less well monitored, articles may be susceptible to vandalism and insertion of false information. Wikipedia’s radical openness also means that any given article may be, at any given moment, in a bad state, such as in the middle of a large edit, or a controversial rewrite.[7]
[7] (original emphasis).
Further, reliance was placed upon the decision of a Federal Magistrate rejecting reliance upon statements made in a Wikipedia website entry.[8]
[8]MZXMM v Minister for Immigration & Multicultural Affairs [2007] FMCA 975, [89], [90], [117]-[121].
This case is not the appropriate vehicle to determine whether or to what extent information appearing on a Wikipedia website may be admissible in evidence. This is because the information relied upon is, even if accepted as true, of so little weight that it could not affect the outcome of the application which I must determine. The information amounts to no more or less than a rumoured sale of Bushmaster vehicles to the US Military which did not proceed. The direct evidence given on behalf of ADI as to the extent of sales which have in fact been achieved through the Oshkosh relationship, which is referred to hereafter, should be accepted. It was not challenged.
Timoney’s solicitor also made reference to information contained in an article appearing on the “ninemsn” website The article includes the statement that the potential purchase by the US Military of Bushmaster vehicles has not proceeded and that: “The manufacturers now fear the [Bushmaster vehicle] will be copied and produced by the US as an American design.” As to the quoted statement, counsel for Timoney made reference to concerns of Timoney relating to the possible misuse by Oshkosh or other unspecified persons in the United States of America of the intellectual property associated with Bushmaster vehicles. These concerns are irrelevant to this application. As counsel for Timoney correctly pointed out, the procedure under r 32.05 cannot be used to obtain discovery for the purposes of determining whether the applicant has or may have the right to obtain relief against a third party, in particular an unnamed third party. The procedure is limited to obtaining discovery in respect of a possible right to obtain relief against the respondent to the application.[9]
[9]Glencore International AG v Selwyn Mines Ltd [2005] FCA 801, [11]; Morton v Nylex Ltd [2007] NSWSC 562, [27].
In response to the affidavit sworn by Timoney’s solicitor, ADI relies upon two affidavits. First, an affidavit from Robert Simpson, the General Manager of the relevant division of ADI. Second the affidavit of Andrew McKibbin, the “General Manager Commercial” of ADI.
Mr Simpson described the general circumstances in which the Oshkosh sub-licence was entered into, as discussed above, and gave the following further relevant evidence.
As to the potential royalties payable by ADI to Timoney as a result of the sub-licence to Oshkosh, Mr Simpson gave evidence that:
(1)ADI has implemented a protocol for the remittance of royalties to Timoney arising from the sale of Bushmaster vehicles. That protocol involves ADI providing Timoney with a statement each quarter of money received from sales and the royalty due to be paid. Upon receipt of a quarterly statement, Timoney then invoices ADI for the royalty due.
(2)ADI has supplied 11 armoured hulls for Bushmaster vehicles to Oshkosh. Oshkosh has manufactured two of these hulls into completed Bushmaster vehicles. Oshkosh has sold each of those vehicles to the US Military. The sales occurred in or about July 2007. At the time of the hearing of the application, ADI had yet to invoice Oshkosh for royalties due on the sale of these two vehicles. When that invoice is rendered and paid by Oshkosh, ADI intends to include information in relation to the sales in its next quarterly statement to Timoney. It is expected that this information will be provided in the statement for the quarter ended 31 December 2007.
Mr Simpson gave evidence concerning the provision of Technical Information as follows:
(1)ADI has provided Timoney with all Technical Information in respect of the six variants of the Bushmaster vehicle, with two exceptions. First, no Technical Information has yet been provided in respect of the ambulance variant of the Bushmaster. This is because the relevant information has not yet been finalised. ADI intends to provide that Technical Information to Timoney as soon as it is finalised. No issue concerning this Technical Information arises on the application before me.
(2)Second, ADI has received Technical Information from Oshkosh in respect of Bushmaster vehicles. ADI has not provided this Technical Information to Timoney, and does not intend to do so. This is because ADI considers that this Technical Information is subject to certain restrictions imposed on ADI by the United States International Traffic of Arms Regulations (“ITAR”). Mr Simpson has deposed that he believes the ITAR regulations prevent ADI from providing Technical Information received from Oshkosh in respect of Bushmaster vehicles to Timoney and that, in the event of an order being made for discovery of such information to Timoney, ADI will claim privilege from producing the documents containing such information based upon, amongst other things, public interest immunity.
Mr McKibbin’s affidavit contains further details of the ITAR regulations and deposes as to the commercial effect upon ADI if it is forced to breach those regulations by providing Technical Information emanating from Oshkosh to Timoney. Mr McKibbin has exhibited a copy of the ITAR regulations to his affidavit.
Mr McKibbin has explained in his affidavit the regulatory and commercial environment in which ADI operates in relation to defence projects which are subject to the ITAR regulations. In broad summary, the ITAR regulations apply to agreements between ADI and United States companies such as Oshkosh under which ADI may receive “technical data” in relation to a “defense article” or a “defense service”. Each of these terms is broadly defined in the ITAR regulations. “Technical data” is defined in a manner which includes Technical Information as defined in the licence agreement. “Defense article” is broadly defined to include vehicles such as the Bushmaster vehicle. “Defense services” is broadly defined and includes any assistance to a foreign person (such as ADI) in amongst other things, the design or development of a “defense article” such as the Bushmaster vehicle.
By section 124(1) of the ITAR regulations, approval from the United States Office of Defense Trade Controls must be received before each agreement which involves the furnishing of “defense services”, including agreements such as the licence agreement is entered into. Further, under section 124.8 of the ITAR regulations, every such agreement must contain specified terms. Section 124.8 of the ITAR regulations provides:
124.8Clauses required both in manufacturing license agreements and technical assistance agreements.
The following statements must be included both in manufacturing licence agreements and in technical assistance agreements:
(1)“This agreement shall not enter into force, and shall not be amended or extended, without the prior written approval of the Department of State of the U.S. Government.”
(2)“This agreement is subject to all United States laws and regulations relating to exports and to all administrative acts of the U.S. Government pursuant to such laws and regulations.”
(3)“The parties to this agreement agree that the obligations contained in this agreement shall not affect the performance of any obligations created by prior contracts or subcontracts which the parties may have individually or collectively with the U.S. Government.”
(4)“No liability will be incurred by or attributed to the U.S. Government in connection with any possible infringement of privately owned patent or proprietary rights, either domestic or foreign, by reason of the U.S. Government’s approval of this agreement.”
(5)“The technical data or defense service exported from the United States in furtherance of this agreement and any defense article which may be produced or manufactured from such technical data or defense service may not be transferred to a person in a third country or to a national of a third country except as specifically authorized in this agreement unless the prior written approval of the Department of State has been obtained.”
(6)“All provisions in this agreement which refer to the United States Government and the Department of State will remain binding on the parties after the termination of the agreement.”
By section 127.1 of the ITAR regulations it is unlawful to “export” technical data without first obtaining the written approval of the United States Office of Defense Trade Controls. “Export” is defined, in relation to technical data, to include any form of disclosure (including oral or visual disclosure) or transference of technical data to a “foreign person”.
There are severe penalties for contravention of the ITAR regulations. These include debarment from participation in contracts relating to “defense services” or “defense articles” for a period of three years, civil fines and criminal penalties.
Mr McKibbin has also sworn that ADI has many other contracts with United States companies which are subject to the ITAR regulations and under which it receives technical data. Further, Mr McKibbin has sworn that this data is critical to work performed by ADI for the Australian Defence Forces. Accordingly, there would be adverse effects upon both ADI and the Australian Defence Forces if ADI were to be debarred from participating in contracts with United States companies for the provision of “defense services” or “defense articles” within the meaning of the ITAR regulations. Mr McKibbin estimates that the existing agreements to which ADI is a party and which are covered by the ITAR regulations represent approximately 50 per cent of the annual turnover of ADI and its related companies.
IV. Issues
Timoney seeks preliminary discovery, or “information discovery” as it is sometimes called, of the following documents:
(1)A copy of each agreement between ADI and Oshkosh under which Oshkosh could apply Timoney Background Intellectual Property or Foreground Intellectual Property as defined in the licence agreement.
(2)Any report including the Technical Information which Timoney is entitled to receive pursuant to clause 4.3 of the licence agreement.
(3)Records of all sales by Oshkosh of Bushmaster vehicles or components for Bushmaster vehicles.
ADI resists the application for preliminary discovery on a number of grounds. First, it contends that r 32.05 has no application because of the existence of the arbitration agreements contained in the licence agreement and the variation deed. Second, if r 32.05 applies, Timoney has not satisfied the Court that there is reasonable cause to believe that it has or may have the right to obtain relief in the Court from ADI in respect of the suggested causes of action. Third, Timoney has not made all reasonable enquiries to obtain sufficient information to enable it to decide whether to commence a proceeding in the Court against ADI. Fourth, if Timoney has established that it has reasonable grounds and made reasonable enquiries, it should nevertheless be refused relief on discretionary grounds. Fifth, if r 32.05 does not apply, there is no right in equity to obtain preliminary discovery of the kind sought by Timoney in this application.
V. Is the Arbitration Agreement a Complete Answer to the Application?
The first essential matter which Timoney must establish under r 32.05 is that it has reasonable cause to believe that it has or may have the right to obtain relief from ADI “in the Court”. The reference to “the Court” is a reference to this Court.
It was submitted on behalf of ADI that, even if Timoney is able to establish that there is reasonable cause to believe that it has or may have a right to obtain relief, that relief could not be obtained “in the Court” because the licence agreement contains an “arbitration agreement” within the meaning of the International Arbitration Act 1974 (Cth). Accordingly, it was submitted that if Timoney commenced proceedings in this Court alleging breaches of the licence agreement or other causes of action arising out of or in connection with the licence agreement, Timoney would be acting in breach of the arbitration agreement.
It was submitted on behalf of ADI that the law recognises the importance of international arbitration agreements, and protects the parties to such agreements against any breach, in two ways.
First, s 7(2) of the International Arbitration Act provides for a mandatory stay of proceedings commenced in breach of an arbitration agreement, within the meaning of that Act, upon the party affected by the breach merely making an application. Section 7(2) provides:
(2) Subject to this Part, where:
(a)proceedings issued by a party to an arbitration agreement to which this section applies against another party to the agreement are pending in a court; and
(b)the proceedings involve the determination of a matter that, in pursuance of the agreement, is capable of settlement by arbitration;
on the application of a party to the agreement, the court shall by order, upon such conditions (if any) as it thinks fit, stay the proceedings or so much of the proceedings as involves the determination of that matter, as the case may be, and refer the parties to arbitration in respect of that matter.[10]
[10]Emphasis added.
Second, a court may, in its discretion, restrain a breach of an international arbitration agreement by an anti-suit injunction.[11]
[11]Continental Bank MA v Aeakos Compania Naviera SA [1994] 1 Lloyds Rep 505; The Angelic Grace [1995] 1 Lloyds Rep 87; CSR Ltd v Signa Insurance Ltd (1997) 189 CLR 345.
It was submitted that these statutory and general law protections of the right to have disputes to which an arbitration agreement applies referred to arbitration demonstrate that Timoney cannot have a right to obtain relief in this Court from ADI in respect of any dispute arising out of or in connection with the licence agreement.
In support of this submission, counsel for ADI referred to the judgment of Ormiston JA in Schmidt v Won.[12] In that case, the trial judge dismissed an application for discovery under r 32.05 on the ground that Victoria was, under the test laid down in Voth v Manildra Flour Mills,[13] clearly the inappropriate forum for the determination of the issues raised by the prospective proceeding against the respondent. By implication, the trial judge refused discovery because she was of the view that the prospective proceeding would, as a result of the Voth principle, be stayed when issued.[14]
[12][1998] 3 VR 435.
[13](1989) 171 CLR 538.
[14]Ibid, 455.
Ormiston JA (Charles and Batt JJA concurring) held that the trial judge erred by failing to consider the cross-vesting legislation and the provisions of the Service and Execution of Process Act 1992 (Cth), which have the effect of extending the jurisdiction of State Supreme Courts to all proceedings between residents of Australia. Ormiston JA held that this legislative regime had the effect of rendering the Voth principles irrelevant to proceedings between residents of different States and Territories within Australia. In his Honour’s view, it would be a wholly exceptional case where this Court, on an application under r 32.05, would refuse relief on a forecast of the likely result of a cross-vesting application which may be brought if the prospective proceedings are later commenced in the Court.[15]
[15]Ibid, 456.
Ormiston JA did postulate one example of a situation where relief under r 32.05 might be refused on the ground that the prospective proceeding in the Court would be in the wrong forum. His Honour said:
Only if the proposed action could be seen as an abuse of process, i.e. of a kind where there was no connection with this State, or of a kind which raises title to foreign land, or which otherwise might be characterised as forum shopping, would the Court be obliged to stay the proposed action and, upon that premise, there would be grounds to refuse an application pursuant to r.32.05 because relief could not then be obtained "in the Court".[16]
[16]Ibid, 455-6. (Emphasis added).
Counsel for ADI did not contend that the proposed proceeding in this case, if issued in the Court, would be an abuse of process. Rather, he submitted that this statement by Ormiston JA demonstrates that relief under r 32.05 should be refused where the prospective proceeding is based upon “a wrong”. In this case, the suggested wrong is the commencement by Timoney of the prospective proceeding in breach of the arbitration agreement.
For the following reasons, I do not accept ADI’s submissions in this regard.
First, it is established by authority that r 32.05 “should be construed benevolently because its intention was both to assist claimants without sufficient, precise information to launch an action and to prevent the bringing of speculative suits”.[17]
[17]Ibid, 445. See also St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147, [26]; Plzen Pty Ltd v P & O Wharf Management Pty Ltd [2007] VSC 318, [17].
Second, notwithstanding that it may be a breach of an arbitration agreement to commence proceedings in a court, an arbitration agreement does not oust the jurisdiction of the court.[18]
[18]Doleman & Sons v Ossett Corporation [1912] 3 KB 257; Bulk Chartering & Consultants Australia Pty Ltd v T&T Metal Trading [1993] 31 NSWLR 18; Sutton and Gill, Russell on Arbitration, (22nd ed.), 2-014, 7-005.
Third, the language of r 32.05 requires only that the applicant “may have” the right to obtain relief in the court. If Timoney were to commence a proceeding in this Court against ADI alleging breaches of contract, or false and misleading conduct arising out of or in connection with the licence agreement, ADI may choose to apply under s 7(2) of the International Arbitration Act for a stay. If such an application is made by ADI, the Court would be obliged to stay the proceedings. However, if such proceedings are commenced, there is no certainty that ADI will seek a stay. Mr Simpson has sworn only that if such proceedings are commenced “ADI reserves its right to exercise its rights in relation to the arbitration of any such dispute”. Mr Simpson does not say that ADI will exercise its rights under the arbitration agreement. The careful choice of language demonstrates that ADI is keeping its options open. ADI may, depending on the form of any proceeding, choose to submit to the jurisdiction of this Court by filing an unconditional appearance. This possible choice is not fanciful. The licence agreement is between an Australian company conducting business in Victoria (ADI) and an Irish company (Timoney). The law of the licence agreement is specified as Victorian law. If proceedings are issued in this Court, ADI may well see good reason in litigating the proceedings in this court. In determining its course of action, undoubtedly ADI will take in account such issues as cost, convenience and the rights of appeal available in this Court when contrasted with the limited rights of appeal in respect of an arbitrator’s decision.
These considerations lead me to conclude that if proceedings are issued in this Court by Timoney they will not, as a matter of certainty, be stayed. In this regard, the following statement by Ormiston JA in Schmidt v Won is apposite:
In short, therefore, such facts as might be seen as likely, in due course, to justify a transfer of the proposed proceeding do not[19] deny the right of a plaintiff to invoke this Court's jurisdiction on the present application, at least in the first place. In effect, for present purposes, each Supreme Court has Australia-wide jurisdiction. It would be only if the case for transfer of the proposed proceeding were so transparently clear, such that the plaintiff's action must, on any view of the possible facts likely to be discovered, be certainly transferred under the Cross-Vesting legislation, that the plaintiff's application should be refused. However, none of these considerations were taken into account by the judge and her discretion has clearly miscarried. So far as this court is concerned the appellant has to show only that she "may have" the right to obtain relief in this Court, i.e. that her future action is not certain to be transferred under the Cross-Vesting legislation …[20]
[19]Original emphasis.
[20]Ibid, 456. (Further emphasis added).
Accordingly, I conclude that Timoney is not, by reason only of the arbitration agreement, unable to obtain discovery under r 32.05 if it can otherwise establish the requirements of that rule and there are no discretionary grounds to refuse relief.
I turn to consider whether Timoney has established an entitlement to a discovery order under r 32.05. I will consider the necessary elements which must be established by reference to each of the possible causes of action identified by Timoney as giving rise to a reasonable cause to believe that it has or may have a right to obtain relief from ADI. Before considering each possible cause of action, it is convenient to set out the legal principles concerning applications under r 32.05 and similar rules in other jurisdictions.
VI.Applicable Legal Principles
The relevant principles concerning an application under r 32.05 were summarised by Habersberger J in Plzen Pty Ltd v P & O Wharf Management Pty Ltd,[21] in the following way:
[21][2007] VSC 318.
In my opinion, the authorities relied on by the parties establish the following relevant principles concerning an application such as this:
(a)the rule is to be construed benevolently or beneficially;
(b)its primary object is to advance the administration of justice by enabling a prospective plaintiff to make an informed decision on proper material about whether or not to bring an action;
(c)the test for determining whether the applicant has “reasonable cause to believe” is an objective one;
(d)the test is satisfied if the applicant “may have” the right to obtain relief;
(e)the applicant does not have to show that it has a prima facie case that it has the right to obtain relief;
(f)an application must not be based upon a mere hunch;
(g)“belief requires more than mere assertion and more than suspicion or conjecture”, the “evidence must incline the mind towards the matter or fact in question”;
(h)but the assent of belief is given on more slender evidence than proof and the grounds which can reasonably induce the required inclination of the mind may, depending on the circumstances, leave something to surmise or conjecture;
(i)it is no answer to an application for pre-trial discovery to say that it is in the nature of a “fishing” expedition because that is permitted by the rule if the required conditions are made out;
(j)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;
(k)while uncertainty as to only one element of a cause of action might be compatible with the required “reasonable cause to believe”, uncertainty as to a number of such elements may be sufficient to undermine the reasonableness of the cause to believe;
(l)control of any excesses could be exercised as a matter of the Court’s discretion in the particular circumstances of each case.[22]
VII.Possible Causes of Action
[22]Ibid, [17] (citations omitted, original emphasis).
A. Failure to Provide Technical Information
It was submitted on behalf of Timoney that there is reasonable cause to believe that it may have a right to obtain relief against ADI for specific performance of clause 4.3 of the licence agreement because ADI has breached that clause by failing to provide Timoney with Technical Information generated as a result of the Oshkosh sub‑licence. This is because ADI concedes that technical data generated as a result of the Oshkosh sub-licence exists, and admits that it will not provide that technical data to Timoney.
In response, ADI submits that the relevant technical data is subject to the ITAR regulations and that it is not, in the absence of approval from the United States Office of Defense Trade Controls, lawfully entitled to make that data available to Timoney. Accordingly, in reliance upon paragraph (vi) of the definition of Technical Information in the licence agreement, ADI submits that the technical data falls outside that definition and that it has no obligation to provide that data to Timoney under clause 4.3 of the licence agreement.
It was submitted on behalf of Timoney that ADI has not established that the ITAR regulations apply to all or any of the technical data generated as a result of the Oshkosh sub-licence. Accordingly, there must be a reasonable cause to believe that Timoney has a right to obtain an order for specific performance in relation to at least some of that technical data. In support of this submission, Timoney submitted that ADI has not put before the Court the sub-licence and any other agreements between it and Oshkosh, or any of the technical data which it contends is covered by the ITAR regulations, so as to demonstrate how ADI is prevented by the ITAR regulations from providing the technical data to it. It was submitted that ADI has done no more than refer to the presence of the ITAR regulations as a possible law which might prevent it from providing it with technical data which would otherwise fall within the definition of Technical Information in the licence agreement. In these circumstances, it was submitted that Timoney had established that there is a reasonable cause to believe that it may have the right to obtain relief against ADI for specific performance of the obligation to provide Technical Information.
I accept that the material before the Court does not enable the Court to decide whether all of the technical data generated as a result of the relationship between ADI and Oshkosh is subject to the prohibitions contained in the ITAR regulations. Accordingly, as the evidence presently stands, Timoney may have the right to obtain relief against ADI in respect of at least some of the technical data. However, I do not accept that Timoney does not have sufficient information to enable it to decide whether to commence a proceeding in the Court seeking relief in that regard. Before commencing this application, Timoney knew that ADI was resisting its requests for Technical Information generated as a result of its relationship with Oshkosh on the ground that the information was subject to the ITAR regulations which prohibit disclosure to Timoney. In the final letter from ADI’s solicitors prior to the commencement of the application, this was the sole ground given for refusing to provide the Technical Information which had been requested. In particular, ADI did not refuse the request for Technical Information on the ground that no such information existed.
Timoney’s solicitors did not write back and seek an explanation from ADI as to the content of the ITAR regulations or as to how they prevented ADI from providing the Technical Information. Timoney either refrained from making this inquiry, in which case it did not make all reasonable inquiries before bringing the application, or, as an experienced participant in the marketing of products for military applications, Timoney knew of the content of the ITAR regulations and thus had sufficient information to enable it to decide whether or not to commence proceedings against ADI for specific performance of clause 4.3 of the licence agreement. In any event, it is clear that it has that information now.
However, even if that is not so, the relief which Timoney seeks on this application in respect of the Technical Information would amount to granting it specific performance of ADI’s obligations under clause 4.3, because it seeks to have ADI make discovery of all documents which contain the Technical Information. As a matter of discretion, this should not be permitted. In my view, the appropriate way to resolve the issues relating to Timoney’s entitlement to be provided with Technical Information arising from ADI’s relationship with Oshkosh is in the context of a proceeding commenced by Timoney against ADI seeking specific performance. Timoney knows that the Technical Information exists and the grounds upon which ADI is refusing to provide it. I see no difficulty in Timoney deciding to commence a proceeding alleging no more than the existence of the Technical Information, which has been expressly admitted in Mr Simpson’s affidavit, and then alleging a breach of clause 4.3 of the licence agreement by its non provision. It will then be a matter for ADI to formulate precisely its defence based upon the ITAR regulations, including reliance upon the mandatory provisions which it would appear have been incorporated into the Oshkosh sub‑licence pursuant to section 124.8 of the ITAR regulations.
If the Court was now to order that ADI make discovery of the Technical Information, it is obvious that ADI will object to production of any documents which might be listed. This will raise the issue of the applicability of the ITAR regulations. That issue should, in my view, be determined in the context of a proceeding such as that which I have discussed. It is inappropriate to determine it in the context of a preliminary discovery application under r 32.05.
I have given consideration to whether Timoney requires inspection of the Oshkosh sub-licence and any other agreements between ADI and Oshkosh in order to decide whether to commence proceedings for specific performance of ADI’s obligations under clause 4.3 of the licence agreement. Timoney submitted that it needed to inspect these agreements to consider whether they contain a confidentiality clause which prohibits ADI from providing to Timoney Technical Information generated as a result of the relationship between Oshkosh and ADI. In my view, Timoney does not require this information in order to decide whether to commence a proceeding seeking to enforce clause 4.3 of the licence agreement. As a result of the material produced on this application, Timoney knows that ADI contends that its contractual relationship with Oshkosh contains the mandatory clause specified in section 124.8(5) of the ITAR regulations, which would prohibit ADI from providing the relevant technical data to Timoney.
Furthermore, in respect of Timoney’s desire to see the licence agreement, it is clear that the licence agreement gives ADI unfettered power to sub-licence the relevant technology. The licence agreement casts no obligation upon ADI to provide Timoney with a copy of any sub-licence agreements. The rights which Timoney has in respect of sub‑licensing arrangements are twofold. First, it is entitled to be paid a royalty and a fixed amount in respect of any sales of Bushmaster vehicles by a sub‑licensee. Second, it is entitled to be provided with Technical Information relating to Bushmaster vehicles, including developments and variants to the vehicles arising from a sub-licence. However, the entitlement to Technical Information is expressly limited to information which ADI is lawfully entitled to make available to Timoney.
To the extent that my decision in relation to this issue is based upon the exercise of discretion, I have taken into account the existence of the ITAR regulations and the capacity which a contravention of them has to cause ADI substantial commercial damage, to cause damage to the Australian Defence Forces and to expose ADI to civil and criminal sanctions and penalties.
B. Failure to Account
It was submitted on behalf of Timoney that the evidence establishes a reasonable cause to believe that it may have a right to obtain relief from ADI in respect of a failure to pay royalties due under clause 7.3 of the licence agreement, or the $3,000 payment due in respect of each sale under clause 7.12. The evidence relied upon was the statement in the Wikipedia entry of a report that the US Army “was close to placing an order for 1,500 [Bushmaster] vehicles”. However, the same entry states that the potential sale did not go ahead. To similar effect is the statement in the ninemsn article which was relied upon. Even if this evidence was admissible, it does not evidence any sales in respect of which ADI may have a liability to pay royalties to Timoney, or a reasonable cause to believe that there have been such sales. Furthermore, the direct evidence of Mr Simpson establishes that only two sales have been made by Oshkosh, and that those sales will be the subject of a quarterly report and payment of applicable royalties in the ordinary course of the protocol implemented by the parties. In these circumstances, there is no reasonable cause to believe that Timoney may have the right to obtain relief from ADI in respect of royalties which are due and unpaid in accordance with the licence agreement.
Further and in any event, I am not satisfied that Timoney has made all reasonable enquires to obtain the necessary information to enable it to decide whether to commence proceedings against ADI for any royalties which may be due and unpaid. In my view, Timoney should await the receipt of the quarterly report from ADI in respect of the admitted sales by Oshkosh and then, if it wishes to do so, seek to exercise its audit rights under clause 7.6 of the licence agreement. If the result of the audit does not satisfy Timoney’s concerns, for example because the auditor is denied relevant information, then Timoney will have satisfied the requirement under r 32.05 to make all reasonable enquiries. However, that stage has not yet been reached. In reaching this conclusion, I say nothing about whether, in such circumstances, Timoney will be able to demonstrate a reasonable cause to believe that it may have a right to obtain relief from ADI in respect of any royalties which may be due and unpaid.
C. Assignment Without Consent
I am not satisfied that Timoney has established a reasonable cause to believe that it may have a right to obtain relief against ADI in respect of a possible assignment of rights in breach of clause 11.1 of the licence agreement. The concern expressed by Timoney in this regard amounts to no more than speculation that, in some unspecified way, ADI purportedly assigned Timoney’s rights under the licence agreement to Oshkosh without Timoney’s consent. There are no grounds for such speculation and, in any event, it makes no sense practically or within the confines of clause 11.1. It was not explained in argument how ADI could possibly assign, or purport to assign, the rights of Timoney under the licence agreement to Oshkosh or any other person. The only suggested basis for the concern was that Timoney does not know the terms of the Oshkosh sub‑licence. That is insufficient to establish the necessary reasonable cause to believe that a right to obtain relief may exist. In my view, Timoney has not even established a “mere hunch”. There is no evidence which would give reasonable grounds to its suspicion. It has merely made an assertion of a hypothetical possibility. The same reasoning is also applicable to any assertion that ADI may have assigned its own rights under the licence agreement, without Timoney’s consent.
D. Failure to Jointly Promote
It was submitted on behalf of Timoney that there is reasonable cause to believe that it may have a right to obtain relief in respect of a possible breach by ADI of its agreement in clause 8.4 of the variation deed to promote the Bushmaster vehicle as a joint development of both ADI and Timoney. I do not accept this submission. The only evidence relied upon was negative in character. Timoney points to the fact that the Oshkosh website refers to the development of the Bushmaster vehicle without making any reference to the fact that it was jointly developed by Timoney and ADI. Based upon the omission by Oshkosh of any reference to Timoney as a joint developer of the Bushmaster vehicle, it was submitted that there is reasonable cause to believe that ADI may have failed, in its dealings with Oshkosh, to promote the Bushmaster vehicle as a joint development of both ADI and Timoney.
I do not accept that Timoney has established a reasonable cause for such a belief. In my view, the evidence establishes only that Oshkosh may have made an incomplete and misleading statement as to the persons responsible for the development of Bushmaster vehicles. In circumstances where Mr Simpson has sworn that “ADI has informed [Oshkosh] that the Bushmaster is a joint development of ADI and Timoney”, the concerns of Timoney are in my view no more than unsubstantiated suspicion which appears to have been put forward in an endeavour to justify its desire to obtain discovery of the Oshkosh sub‑licence agreement.
E. False or Misleading Conduct
No reasonable cause to believe that Timoney may have the right to obtain relief from ADI in respect of false or misleading conduct has been established. The evidence demonstrates that the first reference to the possibility of Timoney having a cause of action based in false or misleading conduct in contravention of the Trade Practices Act 1974 (Cth) arose when ADI raised an objection to the application under r 32.05 on the basis of the arbitration agreement. In response to the suggestion that the arbitration agreement deprived Timoney of its rights to obtain relief in the Court, and thus its rights to rely upon r 32.05, the solicitors for Timoney raised the possibility of Timoney having a cause of action which “relates to misrepresentation or other misleading or deceptive conduct”.
In submissions, counsel for Timoney was unable to point to any reasonable basis for a belief that ADI may have engaged in misleading or deceptive conduct which might give Timoney a right to obtain relief against it. Counsel for Timoney could only speculate that:
[ADI] may have made representations to Oshkosh about the nature of its ability to enter agreements, that is, to enter into the licence agreement and the conditions under which it might enter into such licence agreement, for instance, as to whether it needs to acknowledge the role of Timoney, whether it is able to enter into agreements with Oshkosh that would have the effect of limiting its ability to pass relevant technical information to a third party. We simply don’t know … what the terms and conditions of its agreement or agreements with Oshkosh are.[23]
[23]Transcript, 79.
This falls far short of the necessary reasonable cause to believe that Timoney may have the right to obtain relief from ADI in respect of false or misleading conduct.
VIII. Conclusion
Detailed submissions were made on behalf of Timoney in an endeavour to establish that, if the power under r 32.05 was not enlivened because of the existence of the arbitration agreement, there was nevertheless an equitable basis for the granting of the discovery sought by the application. In circumstances where I have determined that the power contained in r 32.05 is enlivened, it is unnecessary to consider these submissions.
For the above reasons, Timoney has not established an entitlement to an order for discovery under r 32.05. The proceeding will be dismissed. I will hear the parties as to costs.
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