Optiver Australia Pty Ltd v Tibra Trading Pty Ltd

• Jurisdiction: Australia Federal only
• Judgment Date: 12 October 2007
• Neutral Citation: [2007] FCA 1560
• Court: Federal Court

FEDERAL COURT OF AUSTRALIA

Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2007] FCA 1560

PRACTICE AND PROCEDURE – preliminary discovery – O 15A r 6 of the Federal Court Rules 1979 (Cth) – admissibility of evidence not complying with strict rules of evidence – character of preliminary discovery – applicant’s reasonable cause to believe – application for preliminary discovery is interlocutory – application ancillary to underlying federal ‘matter’ – discretion to waive rules of evidence – undue expense and delay.

WORDS AND PHRASES – “reasonable cause to believe”

Federal Court Rules 1979 (Cth) O 15A r 3, O 15A r 6

Evidence Act 1995 (Cth) ss 75, 190(3)(b)

C7 Pty Ltd v Foxtel Management Pty Ltd [2001] FCA 1864 considered

Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 192 ALR 561 cited

Edmunds-Jones Pty Ltd v Australian Women’s Hockey Association Inc [1999] NSWSC 285 cited

George v Rockett (1990) 170 CLR 104 cited

Hooper v Kirella (1999) FCR 1 considered

Jakiemiec v Buckingham [2007] FamCA 542 cited

John Fairfax & Sons Ltd v Cojuangco (1988) 165 CLR 346 distinguished

John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679 cited

Kendell v Moraitis (unreported, Supreme Court of New South Wales, Hunt CJ, 18 December 1991) cited

Kennedy v Wallace [2004] FCA 332 considered

Levis v McDonald (1997) 75 FCR 36 not followed

London Economics (Aust) Pty Ltd v Frontier Economics Pty Ltd [1999] FCA 932 considered

Malouf v Malouf [1999] FCA 710 cited

Malouf v Malouf (1999) 86 FCR 134 considered

Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 cited

Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2007] FCA 1348 referred to

Quanta Software International Pty Ltd v Computer Management Services Pty Ltd (2000) 175 ALR 536 cited

Sanofi v Parke & Davis Pty Ltd (No 1) (1982) 149 CLR 147 cited

Sony Entertainment (Australia) Limited v Smith [2005] FCA 228 cited

St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147 cited

Stewart v Miller (1979) 2 NSWLR 128 considered

Telstra Corporation Ltd v Minister for Communications, Information Technology and the Arts (No. 3) [2007] FCA 1567 cited

The Herald and Weekly Times Ltd v The Guide Dog Owners & Friends Association [1990] VR 451 considered

Waterhouse v Shelley [2007] FamCA 541 cited

Williams Advanced Materials Inc. v Target Technology Co. LLC (2004) 63 IPR 645 cited

OPTIVER AUSTRALIA PTY LTD (ACN 077 364 366) v TIBRA TRADING PTY LTD (ACN 117 881 759), TIBRA CAPITAL PTY LTD (ACN 120 313 395), TIBRA CAPITAL MANAGEMENT PTY LTD (ACN 124 402 160), TIBRA INTELLECTUAL PROPERTY PTY LTD (ACN 120 338 445), DINESH BHANDARI, GLENN WILLIAMSON, TIMOTHY BERRY, ANDREW KING AND KINSEY COTTON

NSD 1116 OF 2007

TAMBERLIN J

12 OCTOBER 2007

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1116 OF 2007

BETWEEN:

OPTIVER AUSTRALIA PTY LTD (ACN 077 364 366) Applicant

AND:

TIBRA TRADING PTY LTD (ACN 117 881 759) First Respondent TIBRA CAPITAL PTY LTD (ACN 120 313 395) Second Respondent TIBRA CAPITAL MANAGEMENT PTY LTD (ACN 124 402 160) Third Respondent TIBRA INTELLECTUAL PROPERTY PTY LTD (ACN 120 338 445) Fourth Respondent DINESH BHANDARI Fifth Respondent GLENN WILLIAMSON Sixth Respondent TIMOTHY BERRY Seventh Respondent ANDREW KING Eighth Respondent KINSEY COTTON Ninth Respondent

JUDGE:	TAMBERLIN J
DATE OF ORDER:	12 OCTOBER 2007
WHERE MADE:	SYDNEY

THE COURT DIRECTS THAT:

1. The objections to evidence based on the grounds referred to in these reasons are disallowed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1116 OF 2007

BETWEEN:

OPTIVER AUSTRALIA PTY LTD (ACN 077 364 366) Applicant

AND:

TIBRA TRADING PTY LTD (ACN 117 881 759) First Respondent TIBRA CAPITAL PTY LTD (ACN 120 313 395) Second Respondent TIBRA CAPITAL MANAGEMENT PTY LTD (ACN 124 402 160) Third Respondent TIBRA INTELLECTUAL PROPERTY PTY LTD (ACN 120 338 445) Fourth Respondent DINESH BHANDARI Fifth Respondent GLENN WILLIAMSON Sixth Respondent TIMOTHY BERRY Seventh Respondent ANDREW KING Eighth Respondent KINSEY COTTON Ninth Respondent

JUDGE:	TAMBERLIN J
DATE:	12 OCTOBER 2007
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1 These reasons relate to a matter which arose on the hearing of an application for preliminary discovery brought under O 15A r 6 of the Federal Court Rules 1979 (Cth). The issue for determination is whether various objections by the respondents (“Tibra”) to evidence filed by way of affidavit by the applicant (“Optiver”) are sustainable.

2 The background to these proceedings is summarised briefly in my earlier judgment: see Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2007] FCA 1348 at [3]-[4]. I do not propose to repeat that information in these reasons.

3 Tibra advances three broad objections to Optiver’s evidence, each of which arises out of the proposition that the evidence must be in a form which is admissible on a final hearing because an application under O 15A r 6 finally determines the rights of the parties in so far as it resolves the discovery issue, and therefore is not interlocutory but final. The objections are:

(i) all references to the source code of Optiver’s automated securities trading software are inadmissible because they are not substantiated by evidence proving Optiver’s copyright in the source code, which can only be done by tendering the source code itself;

(ii) all references to actions undertaken or comments made by other people are inadmissible hearsay evidence; and

(iii) all references to the beliefs of the deponents of the affidavits are inadmissible opinion evidence in the sense discussed by Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 (“Makita”).

4 In my view, Tibra’s objections should be rejected for three reasons. The first is because the task for the Court on an application under O 15A r 6 is not to determine questions of fact on a final binding basis, but rather to determine whether the applicant has reasonable cause to believe that it has or may have a cause of action against the respondent, and if so to decide whether it will commence proceedings. It is not to decide whether a reasonable cause of action actually exists or whether the claim will ultimately succeed. The second reason is that such an application is interlocutory in nature, and therefore the rules of evidence do not apply in with the same rigidity as they would apply on a final hearing. Thirdly, this is an appropriate case for the application of s 190(3)(b) of the Evidence Act 1995 (Cth) (“the Act”), which allows the Court to dispense with the rules of evidence where they might otherwise cause undue expense or delay.

CHARACTER OF PRELIMINARY DISCOVERY

5 The general principles concerning preliminary discovery were conveniently summarised by Hely J in St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147 at 153-154. An application for preliminary discovery under O 15A r 6 requires the Court to determine whether the applicant has reasonable cause to believe that it has a right to obtain relief from the prospective respondent. In making this determination, the Court need not make any findings of fact. Although the Court will require some evidence to conduct its objective assessment of the applicant’s ‘reasonable cause to believe’, some things, such as the exact nature and significance of the evidence, may be left to surmise or conjecture: see John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679 at [14]; see also George v Rockett (1990) 170 CLR 104 at 115-116.

6 In C7 Pty Ltd v Foxtel Management Pty Ltd [2001] FCA 1864 at [17] (“C7 Pty Ltd”) Gyles J considered an application under O 15A r 6 and observed:

‘… I have not limited myself to considering evidence which is in a form which would be strictly admissible at a final trial. During the hearing I ruled that press reports and other hearsay material were not necessarily excluded on that account. The issue against which the admissibility of evidence is to be tested is whether there is reasonable cause to believe that the applicant may have the right to obtain relief. This does not tender an issue of fact in the usual way.’

7 I agree with this statement as to the issue and its character. His Honour’s observation that the task of the Court on an application for preliminary discovery “does not tender an issue of fact in the usual way” assists in the characterisation of the application. Because it is directed to the grounds of the applicant’s belief, the application does not call for and is not directed to making a determination of fact or entitlement on a final basis. It is therefore not appropriate to strictly apply the laws of evidence as if the application for preliminary discovery involved a final hearing of the issues in the prospective substantive application.

8 An applicant may base a ‘reasonable cause to believe’ on a range of considerations, evidence of which may not be admissible on a final hearing but which may be sufficient to ground his or her belief for the purposes of O 15A r 6. For example, if a solicitor reviews the material surrounding a case and advises his or her client that a reasonable cause of action exists, this examination together with other evidence of a hearsay nature may be sufficient to ground the requisite belief. If a computer scientist expresses an opinion that a prospective respondent could only have achieved certain operational standards by copying or appropriating software from an applicant, this may also...