13.04.2011

Federal Court

The ALRC’s recommendations with respect to the Federal Court emphasise the gatekeeper role of the Court in regulating discovery and the development of discovery plans and the use of other ‘tools’ that the Court might use to manage it—discovery plans, registrars and referees, costs orders and pre-trial oral-examination. The recommendations focus on clarifying what is expected of the parties and their lawyers, complemented by education and training of both practitioners and judicial officers. The ALRC also acknowledges the limited data available to provide evidence of relevant matters—for example, to assess the proportionality of costs—and therefore recommends initiatives with respect to data collection and evaluation.

Access to discovery

The ALRC considers that a party should only be able to apply for discovery if it is necessary for the just determination of the issues in the proceedings. In Chapter 5, the ALRC expresses support for proposed amendments to the Federal Court Rules that will impose a clear obligation on parties to justify applications for discovery orders and, in turn, ensure that the Court scrutinises the need for discovery in each case. This will improve consistency in the way judges regulate access to discovery in the Federal Court. The ALRC also recommends that Federal Court practice notes should highlight existing mechanisms that enable the production and inspection of documents prior to discovery in proceedings.^[15] The ALRC considers that early disclosure of documents should only occur in cases where the parties or the Court consider it appropriate.

General discovery

The ALRC concludes, in Chapter 5, that broad parameters should remain for general or standard discovery in Federal Court proceedings and that any appropriate limitations or non-standard criteria should be sought by the parties and imposed by the Court on a
case-by-case basis to suit the particular issues in dispute. The ALRC also supports proposed amendments to the Federal Court Rules, to clarify that the ‘direct relevance’ test applies where the Court orders discovery of specific categories of documents, unless such standard criteria is displaced by those orders.

Limited discovery

The ALRC supports, in Chapter 6, the use of limited discovery orders in the Federal Court suited to particular issues in dispute or specific categories of documents. This chapter considers a variety of means by which the crucial issues in dispute might be highlighted in order to assist the categorisation of documents for discovery. The ALRC considers that the parties and the Court should be encouraged, on a case-by-case basis, to adopt appropriate means to clarify the important issues in dispute to focus the scope of discovery in proceedings.

Discovery plans

The ALRC recommends, in Chapter 6, the introduction of procedures in the Federal Court, in suitable cases, for the development of discovery plans setting out the practical steps required of the parties in the process of discovery. This will enable the parties and the Court to consider, in particular, the cost and time implications of discovery processes when seeking and making orders for discovery. It will also create certainty in the discovery process by delineating the extent of the parties’ practical obligations in advance. The ALRC recommends that the Federal Court Rules be amended to provide that, before the Federal Court makes an order for a party to give discovery, a party may apply for an order that the parties file a practical discovery plan setting out the matters on which the parties agree or disagree in relation to the scope and process of any discovery (a discovery plan order).^[16] The ALRC also recommends changes to the Federal Court Rules to provide that, if the Court makes a discovery plan order, the parties must: discuss in good faith and endeavour to agree upon a practical and cost-effective discovery plan having regard to the issues in dispute and the likely number, nature and significance of the documents that might be discoverable in relation to them.^[17]

These changes to the Rules are complemented by recommendations for practice notes concerning: the factors likely to be relevant in an application for a discovery plan order;^[18] and, if the Court makes a discovery plan order, what the Court will expect the parties to do.^[19] The ALRC also recommends that the practice notes be complemented by a detailed set of best-practice guidelines on the formation and content of discovery plans.^[20] The practice notes will provide guidance for the parties as to the circumstances in which it may be appropriate to prepare a discovery plan and, in such cases, the matters that should be addressed in the plan. In addition, best-practice guidelines will provide a valuable resource for judges in scrutinising the proportionality and necessity of the measures proposed in discovery plans.

The ALRC also recommends that the Federal Court should monitor and assess whether the reforms recommended in Chapter 6, if implemented, help achieve the overarching purpose of civil practice and procedure set out in s 37M of the Federal Court of Australia Act.^[21]

Judicial education and training

The recommendations in Chapter 7 are designed to encourage the judiciary to take a more robust approach to the existing powers to control discovery. The Federal Court has extensive case management powers and, building upon this strong base—but also responding to criticism heard throughout the Inquiry—the ALRC recommends that the Federal Court, in association with relevant judicial education bodies, should develop and maintain a continuing judicial education and training program specifically dealing with judicial management of the discovery process in Federal Court proceedings.^[22] The training should encourage judges to manage discovery confidently and robustly, and so facilitate the just resolution of disputes according to law, as quickly, inexpensively and efficiently as possible. The need for training in methods of discovering electronically-stored information was singled out as being particularly pressing, especially so that judges are able to interrogate detailed discovery plans. The ALRC also acknowledges that regular training—properly resourced, of high quality and professionally appropriate—is an essential aspect of long-term cultural change. Accordingly, the ALRC also recommends that all judges are actively encouraged and supported to participate in this training.^[23]

Registrars and referees

As part of the ‘toolkit’ of case management solutions available to Federal Court judges, in Chapter 8 the ALRC discusses the ways in which judges may be supported in relation to discovery matters—in particular through the use of registrars and, in limited circumstances, referees. In some complex cases, the Court and the parties may benefit from the assistance of a person who can engage at length and with a high degree of technical competence in the detail of a discovery process. The occasional and targeted use of such persons need not be inconsistent with active judicial case management.

The ALRC recommends that registrars in each registry of the Federal Court should be trained and equipped to undertake the tasks delegated to them, including preparing and critically interrogating discovery plans and making discovery orders, especially in large or complex proceedings where discovery may prove burdensome by way of cost or delay to the parties.^[24]

The ALRC also recommends that judicial training programs concerning discovery consider the circumstances in which a judge might choose to direct a registrar to hear a discovery application.^[25] A registrar who is highly trained and experienced in the management of discovery issues—in particular, the use of electronic technologies—might provide valuable support for judges dealing with complex discovery matters. Therefore, judicial education and training might alert judges to the potential for such registrars to determine, for example, complex discovery matters that may require discovery of very large quantities of electronically-stored information.

Building on the existing model that allows the appointment of a referee in the Federal Court of Australia Act, the ALRC also recommends that the Act be amended to provide clearly that the Court may refer discovery questions to a referee.^[26] The ALRC suggests that referees should only be used when neither the docket judge nor a trained registrar is able to hear the discovery application and spend the necessary time to ensure discovery is properly managed.

Though registrars and referees may provide support in some matters, the ALRC considers that the docket judge should remain primarily responsible for managing discovery.

Costs

The ALRC also considers, in Chapter 9, how the targeted use of costs orders in the Federal Court might help control discovery.

The chapter first considers costs between the parties, including when the Court might disallow costs that have been improperly, unreasonably or negligently incurred, and how the Court might take into account the failure of parties to conduct proceedings in a manner consistent with the overarching purpose of civil practice and procedure in s 37M of the Federal Court of Australia Act. Judicial training and education should reinforce for judges the need to consider these matters when awarding costs. However, the ALRC also recommends that Federal Court practice notes provide that the Court will expect practitioners to address compliance with s 37M.

Secondly, the ALRC recommends that the Federal Court of Australia Act be amended to provide that, without limiting the discretion of the Court or a judge in relation to costs, the Court or judge may make an order that: some or all of the estimated cost of discovery be paid for in advance by the party requesting discovery; a party requesting discovery give security for the payment of the cost of discovery; or, specifies the maximum cost that may be recovered for giving discovery or taking inspection.^[27] The ALRC considers that such orders may be useful tools for robust case management, serving to focus the scope of discovery and maintain proportionality to the issues in dispute. An order for advance payment, for example, may be a useful order to make when a party requests the discovery of data stored on backup tapes that have been kept for disaster recovery, rather than archival purposes.

Thirdly, the ALRC recommends that Federal Court practice notes should provide that practitioners are expected to address whether such orders should be made, including an outline of relevant circumstances, such as: the parties’ financial resources; the likely cost of retrieving relevant documents; the proportionality of the likely cost to the importance and complexity of the matters in dispute; and the potential for the order to focus the scope of discovery.^[28]

Finally, the ALRC notes that it is open to the Federal Court to disallow discovery costs between lawyers and their clients on the grounds that the discovery costs were incurred without sufficient regard to the need to resolve disputes quickly, inexpensively and efficiently and at a cost proportionate to the importance and complexity of the matters in dispute. Accordingly, the ALRC recommends that Federal Court practice notes should provide that the Court expects practitioners to ensure that they have complied with their duty to assist the parties to give discovery and inspect in accordance with the overarching purpose in s 37M of the Federal Court of Australia Act. The practice notes should also outline how the Court, when awarding costs, may take into account a failure to comply with the duty.^[29]

Pre-trial oral examinations

Another tool in the toolkit that may be useful in limited cases, is pre-trial oral examinations for discovery. Pre-trial oral examinations may assist the discovery process by facilitating the discovery of evidence and the identity of documents, and by promoting settlement and the narrowing of issues in dispute. At present there is uncertainty as to whether the Federal Court has the power to order pre-trial oral examination in respect of discovery. In Chapter 10, the ALRC recommends that the Federal Court of Australia Act be amended to provide expressly that the Court or a judge may order pre-trial oral examination about discovery.^[30] The ALRC considers that a necessary safeguard for the use of pre-trial oral examinations about discovery is that they only be allowed with leave of the Court. Accordingly, the ALRC recommends amendment to the Federal Court Rules to provide expressly the limited circumstances in which the Court or a judge may order pre-trial oral examination about discovery—for example to identify the existence and location of potentially discoverable documents; assess the reasonableness and proportionality of a discovery plan; and resolve any disputes about discovery.^[31] The ALRC is not advocating the use of pre-trial oral examinations at large, nor in all discovery matters. The ALRC acknowledges that any proposal to adopt oral depositions in the broad way that they are used in the United States would be a significant change to Australian legal practice.

Professional and ethical discovery

Chapter 12 focuses on practitioners and considers ways to foster professional and ethical discovery practices. The ALRC recommends the development of discovery-specific commentary to professional conduct rules—to explain the application of the rules to discovery, including electronic discovery and outsourced discovery, and to provide practical examples.^[32]

The chapter also suggests that law firms work to build and reinforce work cultures that actively encourage and promote ethical and responsible discovery practices. By regularly and actively engaging with the professional conduct rules, and considering how they apply to every stage of litigation, law firms can work to temper the aggressive adversarialism that has often been blamed for costly discovery practices.

Finally, the ALRC recommends that providers of continuing legal education and in-house training provide training to legal practitioners on the law, practice and ethics of discovery.^[33] Continuing education is vital to ensure that lawyers are reminded of their ethical obligations and are able to consider and apply these in practice. Education also plays a key role in shaping legal culture. Practitioners will benefit from training directed at their role in facilitating a well-managed, efficient and proportionate discovery process. In particular, and in addition to the broader professional and ethical obligations, practitioners will benefit from practically-focused training on the technologies and practices used to discover electronically-stored information and the preparation of discovery plans.

Data collection

The ALRC acknowledges the need for accurate and meaningful data on the costs associated with discovery in federal court proceedings—as well as the need to evaluate the utility of discovered documents in the context of the litigation—in order to assess concerns about disproportionate discovery costs and to guide future reform in this area. In this regard, the ALRC recommends that the Australian Government should work with the Federal Court and other stakeholders to identify, where possible, relevant data sets, measures and indicators and the means of capturing and reporting relevant data so that an empirical basis is developed in relation to civil litigation costs.^[34] Such information should include data on the proportionality of costs associated with the discovery of documents, in terms of the costs of discovery relative to the total litigation costs, the value of what is at stake for the parties in the litigation and the utility of discovered documents in the context of the litigation.

^[15] Rec 5–2.

^[16] Rec 6–1.

^[17] Rec 6–4.

^[18] Rec 6–3.

^[19] Rec 6–5.

^[20] Recs 6–6 to 6–8.

^[21] Rec 6–9.

^[22] Recs 7–1, 7–2.

^[23] Rec 7–3.

^[24] Rec 8–1.

^[25] Rec 8–2.

^[26] Rec 8–3.

^[27] Rec 9–2.

^[28] Rec 9–3.

^[29] Rec 9–4.

^[30] Rec 10–1.

^[31] Rec 10–2.

^[32] Rec 12–1.

^[33] Rec 12–2.

^[34] Rec 3–1.