Dogo Media Ltd v Tempest Tech Ltd (Approved)

Factual and Procedural Background

Company A and Company B entered into a Search Distribution Agreement on or about 24 July 2023. Company A distributed search products through Company B’s monetisation platform and was entitled to a contractual share of resulting revenues. The dispute concerns Company B’s refusal to pay the full November and December 2023 invoices, based on allegations of invalid, non-compliant or fraudulent traffic. Company B denies liability and counterclaims for contractual breaches and liquidated damages. [1][2][3][4]

The proceedings began as summary proceedings seeking approximately USD 84,868.33. Summary judgment was refused, and the proceedings were directed to continue as a plenary action. The present judgment concerns applications to exclude or strike out the Counterclaim, obtain further particulars, and obtain discovery. [5][6][7][8][9][10][11][12]

Legal Issues Presented

1. Whether the Counterclaim was precluded by the order converting the proceedings to plenary proceedings or should otherwise be excluded or struck out. [13][14][15]
2. Whether either party was entitled to further and better particulars. [16][17]
3. Whether the relevant pleadings, including paragraph 24 of the Statement of Claim, should be struck out. [18][19]
4. Whether the parties’ proposed categories of discovery were relevant, necessary and proportionate. [20][21][22][23]

Arguments of the Parties

Company A’s Arguments

• Company A alleged that it generated valid traffic and that Company B wrongfully withheld revenue, relying on generalised allegations of non-compliance and fraud. [24][25]
• It challenged the enforceability of the liquidated-damages clause as an unlawful penalty. [26]
• It argued that the conversion order precluded the Counterclaim and sought particulars and discovery concerning the alleged traffic defects, Company B’s decision-making, Company A’s dealings with Company B, and Company B’s relationship with Company C. [27][28][16][29][30]

Company B’s Arguments

• Company B contended that the Agreement entitled it to withhold payment, terminate the relationship and claim liquidated damages where traffic was invalid, fraudulent or non-compliant. [31][32]
• It alleged that Company A used unauthorised traffic sources and generated traffic below applicable quality standards, exposing Company B’s relationship with Company C to risk. [33][34]
• It argued that many requests for particulars sought evidence or legal argument rather than clarification of pleaded facts, and that discovery requests were excessively broad or disproportionate. [35][36][37][38]

Table of Precedents Cited

Court's Reasoning and Analysis

The Court held that the order converting the proceedings to plenary proceedings did not preclude the Counterclaim. It addressed case progression, did not determine the merits, and contained no express restriction on the Counterclaim. The parties’ later agreement providing for a Defence to Counterclaim was also inconsistent with such a restriction. [40][42][43][44]

The Counterclaim was not struck out because it substantially overlapped with the Defence. Both relied on the same alleged traffic deficiencies and contractual provisions. The Counterclaim used those allegations to seek affirmative relief, rather than merely as a defence. The Court found that it could conveniently be tried with the main action and that the exceptional strike-out jurisdiction was not justified. [28][45][46][47]

On particulars, the Court distinguished between material facts and evidence. Particulars must identify the broad factual case to be met, but cannot be used to obtain documents, technical data, evidence, legal argument or premature cross-examination. Most of Company A’s requests therefore failed, but Company B was directed to clarify the factual acts or traffic characteristics said to constitute non-compliance with the Guidelines. [48][49][50][51][52][53][54][17]

The Court refused to strike out paragraph 24 of the Statement of Claim. Although inadequately particularised, it was not wholly speculative and was relevant to allegations that Company B exercised contractual powers improperly, arbitrarily, in bad faith or for an improper purpose. Further particulars were to follow discovery. [55][56][57][58][19][59][60][61]

For discovery, the Court applied relevance, necessity and proportionality. Relevance alone was insufficient, and categories had to be confined to pleaded issues rather than collateral investigations. Company A obtained narrowed discovery concerning communications with Company C, contractual arrangements, traffic-quality methodology, Company A’s traffic, decision-making, liquidated damages, and traffic-quality communications. Some categories were refused as duplicative, overly broad or insufficiently connected to the pleaded issues. [21][62][63][64][65][66][67][68]

Company B obtained discovery concerning the source, origin and quality of Company A’s traffic and documents supporting Company A’s pleaded allegation of a general policy of withholding revenue shares. Other requests concerning general monitoring procedures, receipt of Guidelines and traffic supplied to unrelated third parties were refused because necessity or proportionality had not been established. [69][70][71][72][73][74][75][76][77]

Holding and Implications

APPLICATIONS DETERMINED IN PART. The Counterclaim was permitted to proceed, and the application to strike it out was refused. Most of Company A’s requests for further particulars were refused, subject to a direction concerning the factual basis of alleged non-compliant traffic. Paragraph 24 of the Statement of Claim was not struck out, but further particulars were required after discovery. [47][54][19][61]

Discovery was ordered in narrowed and reformulated terms for both parties, while broader or duplicative categories were refused. The matter was to be listed for final orders after 14 days, with the parties invited to agree their form. The judgment applied the existing distinction between pleading the issues and proving them; it did not purport to create a new precedent. [78][79]