FEDERAL COURT OF AUSTRALIA Sites N Stores Pty Ltd v Whirlpool.Net.Au Pty Ltd [2015] FCA 1474 Citation: Sites N Stores Pty Ltd v Whirlpool.Net.Au Pty Ltd [2015] FCA 1474 Parties: SITES N STORES PTY LTD (ACN 131 691 266) and ANDREW GREGORY DOOLAN v WHIRLPOOL.NET.AU PTY LTD (ACN 166 773 511), SIMON WRIGHT and PHILLIP SWEENEY File number(s): VID 742 of 2015 Judge(s): MOSHINSKY J Date of judgment: 23 December 2015 Catchwords: DISCOVERY – preliminary discovery – identity discovery – application under r 7.22 of Federal Court Rules 2011 (Cth) Legislation: Competition and Consumer Act 2010 (Cth), Sch 2, Australian Consumer Law, s 18 Corporations Act 2001 (Cth), ss 182, 183 Federal Court Rules 2011 (Cth), r 7.22 Federal Court Rules 1979 (Cth), O 15A, r 3 Cases cited: Dallas Buyers Club LLC v iiNet Limited (2015) 112 IPR 1 Hooper v Kirella Pty Ltd (1999) 96 FCR 1 Date of hearing: 3 December 2015 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 29 Counsel for the Prospective Applicants: Mr J O'Sullivan Solicitor for the Prospective Applicants: Streeterlaw Counsel for the Prospective Respondents: Mr J Castelan Solicitor for the Prospective Respondents: South East Lawyers (Croydon) Pty Ltd IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 742 of 2015 BETWEEN: SITES N STORES PTY LTD (ACN 131 691 266) First Prospective Applicant ANDREW GREGORY DOOLAN Second Prospective Applicant AND: WHIRLPOOL.NET.AU PTY LTD (ACN 166 773 511) First Prospective Respondent SIMON WRIGHT Second Prospective Respondent PHILLIP SWEENEY Third Prospective Respondent JUDGE: MOSHINSKY J DATE OF ORDER: 23 DECEMBER 2015 WHERE MADE: MELBOURNE THE COURT ORDERS BY CONSENT THAT: 1. By 4.00 pm on 29 January 2016, Whirlpool.Net.Au Pty Ltd (Whirlpool) give discovery to the prospective applicants of all Documents and Electronic Communications that are or have been in its control that identify the name, address, email address, telephone number, fax number, IP address and location (whether physical or electronic) (Contact Details) of each of the persons using the Whirlpool usernames: (a) NotBarryG or Notbarry G; (b) Your2Dads; (c) outtasight_outtamind; (d) PlasticMan123; (e) enbeee; (f) SNSLeaks; (g) scumless; and (h) RogerW. 2. By 4.00 pm on 29 January 2016, Whirlpool give discovery to the prospective applicants of all Documents and Electronic Communications that comprise applications for username or user accounts on the Whirlpool forums at www.whirlpool.net.au received by Whirlpool from Martin Harrington, Mitchel Mizerak, Xavier Buckley, Jaimin Piggott, Duncan Edwards, Tony Mayo, Steve Smiles, Laura Wind, Chris Backman, Richard Waldron, Shevantha Wanigatunga, Brendan Nguyen, John Balazs, Brighid Murphy, Asanga Abeywickrama, Blair Panozza, Jignesh Vagadiya, Kiel Barber and Andrew Kelly, if they posted on one of the Whirlpool threads contained in Annexure E to the affidavit of Andrew Gregory Doolan sworn 26 October 2015, and the Contact Details for those persons who have so applied. 3. In the above paragraphs, "Documents" means "documents" as defined in the Dictionary to the Evidence Act 1995 (Cth) and "Electronic Communications" means "electronic communications" as defined in s 5 of the Electronic Transactions Act 1999 (Cth) and include but are not limited to account or username sign-up information, the log-in name, password, screen name (as displayed on the form), public email (seen publicly on the Whirlpool forum), time zone of post (such as "Victoria"), full name of user, email address, IP address, logs of dates and times, HTTP request commands and any other identifying information about the device connecting which, amongst other things, indicates the electronic address of the user or the nature of the web browser used by the user. 4. Liberty to apply in relation to discovery ordered under paragraph 2. FURTHER, THE COURT ORDERS THAT: 5. Pursuant to r 7.22 of the Federal Court Rules 2011 (Cth), by 4.00 pm on 29 January 2016, Whirlpool give discovery to the prospective applicants of all documents (as defined in the Federal Court Rules) that are or have been in its control relating to the description of the persons using the following names: (a) Redskull 22; and (b) QWERTYUIOX. 6. Pursuant to r 7.22 of the Federal Court Rules 2011 (Cth), by 4.00 pm on 29 January 2016, Whirlpool give discovery to the first prospective applicant of all documents (as defined in the Federal Court Rules) that are or have been in Whirlpool's control relating to the description of the persons using the following usernames: (a) TypeG; (b) phonic4; and (c) TISM85. 7. The prospective applicants pay Whirlpool's costs of and incidental to the proceeding including reserved costs, to be taxed if not agreed. 8. The prospective applicants pay Whirlpool's costs of giving discovery, to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 742 of 2015 BETWEEN: SITES N STORES PTY LTD (ACN 131 691 266) First Prospective Applicant ANDREW GREGORY DOOLAN Second Prospective Applicant AND: WHIRLPOOL.NET.AU PTY LTD (ACN 166 773 511) First Prospective Respondent SIMON WRIGHT Second Prospective Respondent PHILLIP SWEENEY Third Prospective Respondent JUDGE: MOSHINSKY J DATE: 23 DECEMBER 2015 PLACE: MELBOURNE REASONS FOR JUDGMENT Introduction 1 This is an application for preliminary discovery brought by the first prospective applicant (Sites N Stores), which carries on a business of building websites for small to medium-sized businesses, and the second prospective applicant, Mr Andrew Doolan, who is the principal of Sites N Stores. The party named as the first prospective respondent (Whirlpool) runs an internet discussion forum for technology-related matters. 2 Over a period of time, a number of people have anonymously posted negative comments about Sites N Stores on the Whirlpool online forum. Sites N Stores believes that it may have causes of action against the people who posted those comments, and seeks preliminary discovery from Whirlpool of documents to help identify those people. 3 Sites N Stores' application is brought under r 7.22 of the Federal Court Rules 2011 (Cth) which enables a prospective applicant to apply to the court for preliminary discovery where: the prospective applicant may have a right to obtain relief against a prospective respondent; the prospective applicant is unable to ascertain the description of the prospective respondent; and another person (referred to in the rule as the "other person") knows or is likely to know the prospective respondent's description, or has or is likely to have control of a document that would help ascertain the prospective respondent's description. 4 In the present case, Sites N Stores seeks preliminary discovery from Whirlpool on the basis that: Sites N Stores may have a right to obtain relief from the people who posted the negative comments on the online forum; Sites N Stores is unable to ascertain the identity of those people; and Whirlpool knows or is likely to know the identity of those people, or has or is likely to have control of documents that would help ascertain the identity of those people. 5 Although Whirlpool is named as "prospective respondent" in the title to this proceeding, in fact the prospective respondents for the purposes of this application are the people who posted the negative comments on the online forum rather than Whirlpool. The reason why Whirlpool is named as "prospective respondent" in the originating application is that this seems to reflect the requirements of the applicable form. However, for the purposes of r 7.22, Whirlpool is the "other person" rather than the prospective respondent. 6 Sites N Stores' application seeks discovery in relation to 17 usernames used by people to post comments on the online forum. At the hearing before me, Whirlpool consented to an order being made with respect to eight of those usernames. 7 Whirlpool also agreed to provide discovery of a particular category of documents, subject to a variation being made to the wording of the category. That variation was acceptable to Sites N Stores. It follows that orders should be made by consent for discovery in relation to the eight usernames and for discovery of the agreed category. 8 In relation to the balance of the usernames, Whirlpool submitted, in summary, that the evidence was insufficient to establish that Sites N Stores may have a right to relief against the people who posted the comments on the online forum. 9 For the reasons that follow, in my view, in some of those cases Sites N Stores has established that it may have a right to obtain relief against the people who posted the negative comments on the online forum, and that an order should be made requiring Whirlpool to give discovery of documents relating to the description of those people. Factual overview 10 In support of the application, the prospective applicants relied on an affidavit of Mr Doolan. The affidavit provided copies of the negative posts on the Whirlpool online forum which are the basis for this application. 11 In response to a request for particulars, the prospective applicants prepared a detailed document which set out in table format, for each of the relevant posts, the username, the page in the evidence, the text of the post, and the potential cause of action. The particulars comprise some 49 items. They relate to 17 different usernames. As indicated above, with respect to eight of the usernames, Whirlpool consented to an order for discovery being made. 12 It is apparent from the text of the posts that they contain disparaging comments about Sites N Stores and Mr Doolan. Some of the comments criticise the working conditions at the company; other comments are critical of the quality of service provided by Sites N Stores; others contain criticisms of Mr Doolan. In some cases, the comments are expressed in language which is harsh and extreme. It is not necessary for present purposes to quote the negative comments. 13 Mr Doolan in his affidavit states that in his experience in the internet industry, professionals in the industry are aware that they can post comments about competitors' businesses anonymously on the Whirlpool website and may be inclined to use the forum to denigrate competitors' businesses, whether through fabricated grievances or genuine grievances gratuitously exaggerated. 14 Mr Doolan states that he strongly disagrees with the content of the negative posts. He expresses his belief that the authors of the negative posts are associated with Sites N Stores' trade competitors. He states his belief that the posts have caused and will continue to cause Sites N Stores to lose business. This is because, he says, whenever clients or potential clients use the Google search engine to search for "Sites N Stores", the Whirlpool forum appears in the search results so the negative posts are readily accessible. 15 In his affidavit, Mr Doolan refers specifically to some of the discussion 'threads' that have been started on the Whirlpool forum which contain disparaging comments about Sites N Stores. Mr Doolan explains why he believes some of these threads have been started by ex-employees of Sites N Stores who may now be working for competitors. Mr Doolan's affidavit also exhibits correspondence which indicates the steps that were taken prior to issuing this proceeding to try to ascertain the identity of those who posted the negative comments. Applicable principles 16 Rule 7.22 of the Federal Court Rules 2011 (Cth) provides as follows: Order for discovery to ascertain description of respondent (1) A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant satisfies the Court that: (a) there may be a right for the prospective applicant to obtain relief against a prospective respondent; and (b) the prospective applicant is unable to ascertain the description of the prospective respondent; and (c) another person (the other person): (i) knows or is likely to know the prospective respondent's description; or (ii) has, or is likely to have, or has had, or is likely to have had, control of a document that would help ascertain the prospective respondent's description. (2) If the Court is satisfied of the matters mentioned in subrule (1), the Court may order the other person: (a) to attend before the Court to be examined orally only about the prospective respondent's description; and (b) to produce to the Court at that examination any document or thing in the person's control relating to the prospective respondent's description; and (c) to give discovery to the prospective applicant of all documents that are or have been in the person's control relating to the prospective respondent's description. Note 1: Control and description are defined in the Dictionary. Note 2: For how discovery is to be made, see rule 7.25. (3) The prospective applicant must provide the person with sufficient conduct money to permit the person to travel to the Court. Note Conduct money is defined in the Dictionary. 17 In the present case, only paragraph (c) within r 7.22(2) is relevant. 18 The word "description" is defined in the Dictionary in Sch 1 to the Federal Court Rules 2011 (Cth) as follows: description means: (a) for a person who is an individual – the person's name, residential or business address and occupation; (b) for a person that is not an individual: (i) the person's name; and (ii) the address of one of the following: (A) the person's registered office; (B) the person's principal office; (C) the person's principal place of business. 19 The scope and operation of the predecessor to r 7.22 under the Federal Court Rules 1979 (Cth) was considered by a Full Court of this Court in Hooper v Kirella Pty Ltd (1999) 96 FCR 1. I note that, unlike the predecessor provision (O 15A, r 3), r 7.22 does not refer to the prospective applicant having made reasonable inquiries. In Hooper, the Full Court (Wilcox, Sackville and Katz JJ) said of the former provision: [31] An applicant for relief under O 15A r 3 must show that, after having made reasonable inquiries, he or she is unable to ascertain the description of a person sufficiently for the purpose of commencing a proceeding against that person. Order 15A, r 3 plainly contemplates that the applicant needs to ascertain the identity of the relevant person in order to institute a proceeding in the Court against him or her. [32] Secondly, the applicant must show that "some person" has or is likely to have knowledge of facts, or the possession of documents, tending to assist in identifying the prospective respondent. The rule is therefore available even if relief is sought against a person who is in no way implicated in the wrongful conduct of which the applicant complains. In other words, relief is available against a "mere witness" or bystander: Stewart v Miller [1979] 2 NSWLR 128 (Sheppard J), at 135 (a decision on the New South Wales rule). To this extent, the rule differs from the equitable bill of discovery. [33] Thirdly, the applicant is not required to demonstrate the existence of a prima facie case against the prospective respondent: Levis v McDonald (1997) 75 FCR 36 at 41, 44; Stewart v Miller at 139-140. Nonetheless, the power conferred by O 15A, r 3 is not to be used in favour of a person who intends to commence "merely speculative proceedings": Stewart v Miller at 140; Levis v McDonald at 44. A material factor in the exercise of the Court's discretion is the prospect of the applicant succeeding in proceedings against the person he or she wishes to sue: Exley v Wyong Shire Council (unreported, Supreme Court, NSW, Master Allen, 10 December 1976); noted Ritchie's Supreme Court Procedure (NSW) par [13,004]. [34] Fourthly, the High Court has emphasised that an applicant under a rule in the form of O 15A, r 3 must show that the order sought is necessary in the interests of justice. That is, the applicant must show that: "the making of the order is necessary to provide him with an effective remedy in respect of the actionable wrong of which he complains." John Fairfax & Sons Ltd v Cojuangco (1988) 165 CLR 346 at 357. These observations emphasise the link between identity discovery and the applicant's complaint that he or she has suffered from an actionable wrong. 20 Notwithstanding some changes in the wording of the rule, I proceed on the basis that these principles are applicable to r 7.22. I note that in Dallas Buyers Club LLC v iiNet Limited (2015) 112 IPR 1 at [67]-[70], Perram J concluded that the slightly different wording of r 7.22 (as compared with O 15A, r 3) was not intended to effect a change in meaning of the rule. Application of principles to the present case 21 There was no issue before me concerning the requirements of r 7.22(1)(b) and (c). That is, it was not disputed that the prospective applicants are unable to ascertain the description of the people who posted the negative comments. Further, it was not disputed that Whirlpool has or is likely to have control of a document or documents that would help ascertain the description of those people. I gather that, as part of the application to Whirlpool to obtain a username, certain identifying details need to be provided. 22 The issue before me concerned the requirement in r 7.22(1)(a), namely whether the prospective applicants are able to satisfy the Court that they may have a right to obtain relief against the people who posted the negative comments. 23 Sites N Stores and Mr Doolan contended that they may have a number of causes of action in relation to the authors of the negative comments, namely: (a) breach of confidence; (b) breach of contract; (c) defamation; (d) a right to seek an injunction or compensation for breach of s 182 or 183 of the Corporations Act 2001 (Cth); and (e) a right to seek an injunction or compensation for misleading and deceptive conduct in contravention of s 18 of the Australian Consumer Law (ACL), being Sch 2 to the Competition and Consumer Act 2010 (Cth). 24 Whirlpool did not contest that, in respect of eight of the usernames, Sites N Stores may have a right to seek relief in respect of at least one of the posts made by the person using that username. The usernames which were not in dispute were: (a) NotBarryG or NotbarryG; (b) Your2Dads; (c) outtasight_outtamind; (d) PlasticMan123; (e) enbeee; (f) SNSLeaks; (g) scumless; and (h) RogerW. 25 However, in relation to the other nine usernames, Whirlpool submitted that there was insufficient material to establish that Sites N Stores or Mr Doolan may have a right to relief against the person using that username. The remaining usernames are: (a) Redskull 22; (b) Onlyemirates; (c) Liquidwitch; (d) JohnMelb; (e) TypeG; (f) phonic4; (g) TISM85; (h) QWERTYUIOX; and (i) Sendelf. 26 I now consider each of the usernames in respect of which a dispute exists as to whether discovery should be made. (a) Redskull 22 – The text of the relevant post supports an inference that the author is a former employee of Sites N Stores. I am satisfied that Sites N Stores may have a right to seek relief on the basis that the author, as a former employee, breached the duties applicable to employees under s 183 of the Corporations Act 2001 (Cth). The author may have improperly used information obtained as an employee of Sites N Stores to cause detriment to the company. Further, if it transpires that the author works for a competitor, the competitor may have engaged in misleading and deceptive conduct in trade or commerce contrary to s 18 of the ACL and the author may be a person involved in any such contravention. Although there is no specific evidence that the author works for a competitor, in my view this is a real possibility given the disparaging content of the post and also viewing this post in the context of the whole series of negative posts. Given the number, tone and content of the negative posts, I consider it a real possibility that at least some of them have been posted by employees of competitors. In the circumstances, I am satisfied that Sites N Stores may have a right to obtain relief against the author using the username "Redskull 22". Further, in relation to Mr Doolan, I consider that he may have a right to obtain relief for defamation, arising from the same set of facts and thus forming part of the one dispute. (b) Onlyemirates – The passage extracted in the particulars does not, on its face, seem sufficient to ground a cause of action. I was taken to the full post which appears in the evidence. Even having regard to this, I am not satisfied that the prospective applicants may have a right to obtain relief based on that post. The post amounts to a complaint about working conditions at Sites N Stores. The complaint may or may not be justified. The prospect of a proceeding being commenced for breach of confidence or breach of s 183 of the Corporations Act 2001 (Cth) seems remote given the tone and content of these comments. Finally, none of the comments relate to Mr Doolan specifically. (c) Liquidwitch – In my view, the post made under this username falls in the same category as "Onlyemirates". (d) JohnMelb – The text of the relevant post does not indicate whether the author is a former employee of Sites N Stores. In any event, in my view the content of this post is too insubstantial for me to be satisfied that Sites N Stores may have a right to obtain relief against the author. Further, the comments do not relate to Mr Doolan specifically. (e) TypeG – It is apparent from the text of the relevant post that the author is a former employee of Sites N Stores. In my view, for the same reasons as in relation to "Redskull 22", I am satisfied that Sites N Stores may have a right to obtain relief against the author. However, the post does not refer specifically to Mr Doolan, and I am not satisfied that he may have a right to obtain relief. (f) phonic4 – It is apparent from the text of the relevant post that the author is a former employee. For the same reasons as in relation to "Redskull 22", I am satisfied that Sites N Stores may have a right to obtain relief against the author. However, I am not satisfied that Mr Doolan may have such a right. (g) TISM85 – It is apparent from the text of the relevant post that the author is a former employee. For the same reasons as in relation to "Redskull 22", I am satisfied that Sites N Stores may have a right to obtain relief against the author. Although there is a reference to Mr Doolan at the end of the post, it seems insufficient in my view to be satisfied that he may have a right to obtain relief. (h) QWERTYUIOX – In my view, the post by the person using this username falls in the same category as "Redskull 22". For the same reasons, I am satisfied that both Sites N Stores and Mr Doolan may have a right to obtain relief. (i) Sendelf – The text indicates that the author worked (or works) at Sites N Stores. I am not satisfied that Sites N Stores may have a right to obtain relief against the author. The post contains a disparaging remark about Mr Doolan, but I am not satisfied that it is substantial enough to conclude that he may have a right to relief. 27 In the cases where I have concluded that there may be a right to relief, I consider it appropriate to order preliminary discovery. Other matters 28 The persons named as the second and third prospective respondents are individuals. It is not clear why they were joined to the proceeding and the argument proceeded on the basis that discovery was sought only from Whirlpool. I have therefore not included them in the orders for discovery. 29 In relation to costs, in my view the prospective applicants should pay Whirlpool's costs of and incidental to the proceeding, including Whirlpool's costs associated with making discovery. Although the prospective applicants have been largely successful in obtaining the discovery sought, there was no obligation upon Whirlpool to provide the documents prior to the proceeding being commenced. Once it was commenced, Whirlpool appropriately sought particulars from the prospective applicants. Following receipt of these particulars, Whirlpool acted reasonably in consenting to discovery in respect of many of the usernames. To the extent to which Whirlpool did dispute discovery, it raised reasonable arguments and was partially successful. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moshinsky. Associate: Dated: 23 December 2015