PRE-ACTION DISCOVERY MECHANISM UNDER ORDER 11, RULE 11 OF THE RULES OF COURT 2021
This week’s blog covers Gillingham James Ian v Fearless Legends Pte Ltd and others [2023] SGHCR 13, an interesting decision on the pre-action production mechanism under Order 11 Rule 11 of the Rules of Court 2021.
Facts. The application for pre-action discovery was filed by Mr Gillingham James Ian (the “Applicant”) against four respondents, Fearless Legends Pte Ltd (“Fearless Legends”), Mr Christopher David Mansfield (“Mr Mansfield”), Mr Plaskocinski Thomas Andre (“Plaskocinski”) and Mr Liam Patrick Jones (“Mr Jones”).
The Applicant was a founding shareholder and director of Fearless Legends and served as its CEO from March 2021 before being dismissed on 8 April 2022, allegedly without being afforded a reasonable opportunity to defend himself before the board of directors or shareholders of Fearless Legends.
The Applicant suspected that there was a scheme to take control of Fearless Legends’ resources and to divert these to another entity – possibly OneX LLC, a US company which is a direct competitor to Fearless Legends.
This suspicion was premised on the following:
The Applicant’s allegedly abrupt and baseless removal as CEO and director of Fearless Legends;
The ostensible diversion of Fearless Legends’ main assets (i.e. intellectual property used by Fearless Legends to set up a cryptocurrency platform) to OneX LLC;
The alleged poaching of Fearless Legends’ employees; and
The suspected approaches made to Fearless Legends’ customers, encouraging them to terminate their business relationship with Fearless Legends and to transfer their accounts to OneX LLC.
The Applicant thus filed an application for pre-action production of documents and information, seeking a total of 64 sub-categories of documents and information, in relation to two claims:
A claim for minority oppression under section 216 of the Companies Act 1967; and
A claim under the tort of lawful and/or unlawful conspiracy.
This blog will briefly cover the principles relating to the pre-action discovery set out by the High Court (the “Court”) in this case.
Law on pre-action production / discovery. The Court noted that the pre-action production mechanism is aimed at saving judicial costs and time, as well as ensuring efficient management of court processes, by helping to avoid litigation where the applicant realises that his / her suspicions are unfounded or to help the applicant identify the real issues in dispute (at [14]).
Referring to the Court of Appeal in Ching Mun Fong v Standard Chartered Bank [2012] 4 SLR 185, the Court reiterated the Court of Appeal’s observations on there being some tension in the provisions under the old Rules of Court 2014 concerning whether pre-action disclosure should be ordered.
On one hand, an applicant is expected to demonstrate the relevance of his request for documents. The applicant must be able to at least set out the core substance of his complaint to be granted pre-action disclosure and cannot use the pre-action mechanism to go on a fishing expedition (at [15]).
On the other hand, the applicant must demonstrate that the requests are necessary for him to plead his intended cause of action (at [15]).
Crucially, the Court noted that this touchstone of “necessity” (a requirement for pre-action production / discovery under the old Rules of Court) is now replaced with that of “materiality” under the new Rules of Court 2021 (at [16]), which differs from the necessity touchstone as “materiality” connotes a “higher level of importance to the case at hand” (at [16]).
Thus, the Court held that the pre-action production mechanism is generally intended for an applicant who “has some basis” (emphasis in original) for believing that he / she has a viable cause of action, but is unable to properly plead his / her claim due to needing certain further documents and information to cover “critical gaps” in the intended claim (at [17]).
Scope of production / discovery rooted in interests of justice. The Court also held that the discretion to order pre-action production is ultimately rooted in the broader exercise of achieving the interests of justice and set out a non-exhaustive list of six factors as listed below:
The need to guard against requests of a “fishing and roving nature”;
The seriousness of the injury and or the loss and damage;
The reasonable expectations of non-parties in maintaining confidentiality and privacy;
The need to avoid unnecessarily inconveniencing, embarrassing or prejudicing non-parties;
The danger that such orders for pre-action production can increase the expense of resolving disputes; and
The nexus between the intended claim and Singapore.
Decision. The Court considered that both the Applicant’s claims are viable claims for the purposes of pre-action production.
The Court assessed the background of the Applicant’s allegations and was satisfied that there was a basis to his claims.
However, on a holistic assessment of the “interests of justice”, the Court held that the Applicant’s wide-ranging requests for 64 sub-categories of documents must be significantly narrowed in the interests of justice.
In addition to narrowing the substantive scope of the Applicant’s requests for documents, the operative timeframe for the requests was also narrowed (e.g. the Applicant requested for documents spanning 1 year before the Applicant’s dismissal, the court ordered production of documents spanning six months prior instead).
Significance. This is an interesting decision because the Court sheds light on the factors that the Court considers in the “interest of justice” assessment in relation to the pre-action production mechanism under Order 11 r 11 of the Rules of Court 2021.
In this regard, it is important to note that as part of the “holistic assessment”, the Court can reduce the substantive scope of the documents requested as well as the operative timeframe of the request.
Another interesting point of this decision is the Court’s statements that the touchstone of “necessity” has been replaced by the touchstone of “materiality”. To recap, the Court in Gillingham pointed out that materiality differs from necessity in that information that is material connotes a “higher level of importance to the case at hand” and that if a document is material to an issue its production is “obviously necessary” (at [16]).
While it is true that there are overlaps between materiality and necessity, the consideration of whether a pre-action production request is necessary requires the court to take into account facets such as “notions of proportionality, the availability of alternative avenues to obtain … information” and the intrusiveness of the pre-action production requests. This was stated by the Court of Appeal in Dorsey James Michael v World Sport Group Pte Ltd [2014] 2 SLR 208 at [47].
If so, would, e.g., the availability of alternative avenues to obtain information be relevant under a materiality analysis? Or does a “materiality” analysis focus only on whether the document or information requested for is important to the plaintiff’s action?
The Court in Gillingham, while rightly pointing out that materiality is the new touchstone under the current pre-action production mechanism under the Rules of Court 2021, missed the opportunity to clarify on whether the other facets of necessity continue to remain relevant under the materiality analysis.
For now, it seems to be more straightforward for an applicant to obtain a pre-action production request under the new Rules of Court as compared to the old Rules of Court.
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