Navigating the Rules of Discovery

Discovery is often the most burdensome and expensive stage of litigation. Parties may be required to review and produce thousands of documents over an expansive period of time, including emails, text messages, electronic files and hard-copy records. Failing to identify and disclose relevant documents can result in adverse costs orders, the exclusion of evidence and, in serious cases, contempt Proceedings.

While the precise rules differ between jurisdictions, the underlying process and obligations are broadly the same: it is a Court ordered process that requires parties to identify, preserve and produce documents relevant to the issues in dispute.

A useful way to approach discovery is to ask four questions of every document:

1. Is it a document?
2. Do I have control of it?
3. Is it relevant?
4. Is it privileged or confidential?

1. Is it a document?

A document is much broader than a paper file. It includes anything that records information (as defined in the Evidence Act 1995 (Cth) in Federal proceedings and Uniform Civil Procedure Rules 2005 in NSW proceedings), such as:

• Emails
• Text and WhatsApp messages
• Electronic files
• Diary or calendar entries
• Handwritten notes
• Spreadsheets and databases

If information is recorded in any form, it may be discoverable.

2. Do I have possession, custody and/or control of the document?

The Court in Psalidis & Anor v Norwich Union Life Australia Limited [2009] VSC 417 have interpreted this to mean that discovery will extend to:

• Documents in physical possession;
• Documents in the custody or possession of an agent. such as accountants, solicitors and any other current or former third-party advisors; and
• Documents in the possession of someone you have the legal right to obtain the document from. This mainly applies to company directors and employees.

For company directors, questions of control can be complex and should be considered carefully with legal advisers, particularly where company records may be relevant to the proceedings.

Company documents are not automatically regarded as being within the director’s personal custody, possession or control and therefore discoverable. However, in circumstances where for example a director is a majority shareholder, it may be inferred in the appropriate case that the company functions as the director’s alter ego and all the company’s documents are discoverable.

Where relevant documents are not in a party’s physical possession, reasonable and proper enquires should be made to obtain them (Re McGorm (1989) 20 FCR 387). This will ordinarily involve contacting the relevant third parties and requesting copies of the document. However, the obligation does not extend to a level that would impose an oppressive burden. The scope of any enquiries must be proportionate, balancing the burden of discovery against the interest and relevance of discovering the documents. Relevant considerations include the likely cost of obtaining the documents, the difficulty of acquisition and the volume of documents involved.

3. Is it relevant?

A document does not need to be produced simply because it exists. It must fall within the scope of the discovery orders or agreed discovery categories.

Typically, relevance will be assessed by reference to:

• The subject matter of the dispute;
• Any relevant time period;
• Particular individuals or entities involved; and
• Identified categories of correspondence or records (unless there is an order for general discovery).

If a document falls outside the agreed categories, it may not need to be produced.

4. Is it privileged or confidential?

Not every relevant document must be disclosed.

Documents protected by legal professional privilege can generally be withheld from production. This commonly includes confidential communications between a client and their lawyers made for the dominant purpose of obtaining legal advice or conducting litigation.

Commercially sensitive information may also attract protection in circumstances where it is still relevantly commercially sensitive, i.e. current pricing information or trade. However, confidentiality alone will not necessarily prevent disclosure, particularly where the information is relevant to the issues in dispute.

For this reason, potentially relevant documents should be provided to your solicitors for review before any production is made. They can assess whether privilege or another basis for withholding production applies or whether a confidentiality regime is appropriate.

How is discovery given?

After you have determined what documents will be produced, the final step is giving discovery to the other party. This begins with collating and serving a list, verified by affidavit that:

• Identifies the documents being produced;
• Describes the categories to which they relate;
• Identifies relevant documents no longer in the party’s possession, custody or control; and
• Lists documents over which privilege is claimed.

Practical Advice:

There are a couple critical practical preparations to help comply with your obligations and provide the right documents. It is important to develop a system or process to help you pragmatically:

1. Identify where relevant documents may be located;
2. Determine a system for searching ; and
3. Determine how relevant documents can be collated and reviewed.

Step 1: Identify where documents are stored

Consider all potential sources of information, including:

• Email accounts;
• Mobile phones and messaging platforms;
• Cloud storage systems;
• Physical files and archived records; and
• Third-party advisers or consultants.

Step 2: Search Systematically

For electronic documents in particular, comprehensive search terms and filters should be drafted and used to discover all relevant documents.

Step 3: Collate and Review

All documents must be brought together in a reviewable format. For electronic documents, this would typically entail extracting files, converting them into searchable formats, renaming and removing duplicate copies. Hard copies should be brought together in one place, whether in a file, folder or boxes. We also recommend making scanned copies with a list of documents, so that they can be tracked appropriately.

Step 4: Obtain legal advice prior to production

Before documents are produced, legal advisers should assess:

• Relevance;
• Scope of discovery obligations;
• Claims for privilege; and
• Any confidentiality concerns.

The review by legal advisers can significantly reduce the risk of inadvertent disclosure.

In summary, whilst discovery can be one of the most burdensome stages in litigation, a clear understanding of your obligations and approach can streamline the process.

McCabes’ Litigation and Dispute Resolution Group is experienced in advising and acting for clients engaged in disputes between trade rivals, proceedings concerning the misuse of confidential information, and contested confidentiality disputes arising out of discovery. 

This article is intended to provide commentary and general information only. You should obtain legal advice specific to your own situation. Please contact us if you require advice on matters covered by this article.

Contributors

Jack Woodall, Paralegal