Federal Court of Australia

6.7 In Managing Justice: A Review of the Federal Civil Justice System, ALRC Report 89 (2000) (Managing Justice), the ALRC noted that:

judges play a critical role in case management, case resolution and in assisting to engender compliance with court timetables and orders … This is not to say that all judges are good managers and are effective at securing compliance or in focusing issues in the case. Their skills in these matters vary.^[1]

6.8 The Managing Justice inquiry noted that the development of ‘managerial judging’ had shifted the balance towards judicial rather than lawyer or party control of litigation.^[2] In the present Inquiry, the ALRC examines the role of judges through a ‘facilitative’ model—to take into account the values-based decision-making that occurs in case management, as opposed to the measurements-based approach implied in a ‘managerial’ model.^[3]

6.9 This section of the chapter looks at particular strategies endorsed by the Federal Court through which judges may facilitate the discovery of documents in proceedings. This includes limiting discovery to specific categories of documents, and encouraging parties to agree on practical arrangements for the discovery of electronically-stored information.

Facilitating discovery by categories of documents

6.10 Concerns about the breadth of standard or general discovery obligations applicable in Federal Court proceedings,^[4] in terms of the large amount of irrelevant documents that can be captured and the disproportionate costs that may result, have been raised by a number of commentators and law reform bodies.^[5] Chapter 5 considers the possibility of reform to narrow the parameters of general discovery as one way to contain the volume and cost of discovery in Federal Court proceedings. Another way to avoid discovery of unnecessary volumes of documents and irrelevant documents, and to maintain proportionality in discovery costs is for the Court to tailor discovery obligations in each case to suit the issues that matter most in the litigation.

6.11 The latter approach has been endorsed by the Federal Court through practice notes and Court Rules. Practice Note CM 5 establishes a presumption against general discovery and provides that the Court will fashion discovery orders to suit the issues in a particular case.^[6] In practice, this typically means that orders for discovery will specify particular documents or classes of documents relevant to the issues in dispute. Discovery by categories of documents was introduced into the Federal Court by Practice Note 14,issuedon 12 February 1999, which was replaced by Practice Note CM 5 on 25 September 2009.

6.12 The adoption of a categories-based approach to discovery was followed by amendments to the Federal Court Rules (Cth) in 2004, to clarify that the Court may limit discovery to particular documents or classes of documents or certain issues in dispute, by orders under O 15 r 3 on its own initiative, rather than on application by a party.^[7]

6.13 In January 2000, shortly after the Federal Court introduced Practice Note 14, the ALRC noted in Managing Justice that:

For these changes to the rules of discovery to work effectively, lawyers and parties have to spend time determining which documents are to be disclosed and the Court provide close judicial supervision of discovery. Practitioners have commented to the Commission that streamlined discovery with categories of documents works well if parties give time to the formulation of categories.^[8]

6.14 Subsequent commentary suggests, however, that a categories-based approach has not achieved significant efficiencies in the discovery process. There are concerns that, in many cases, parties and their legal representatives are not exercising due diligence in narrowing the scope of discovery, instead seeking overbroad categories of documents. The 2006 Final Report in Relation to Possible Innovations to Case Management of the Law Council of Australia (Law Council) described this as the ‘gaming’ process of the categories stage in litigation:

It is not uncommon to receive lists of categories sought by a party which are 10 to 20 pages long where parties seek to formulate, in the most minute detail, every conceivable sort of document which might possibly, on a fine day with a following breeze, be of remote assistance in the conduct of the litigation (and which almost inevitably will impose an enormous cost and work burden to the party required to respond).^[9]

6.15 There is also the concern, noted by the Hon Justice Ray Finkelstein with respect to large and complex cases in particular, that ‘the Court has abdicated responsibility [for discovery], resulting in excessive costs for very little return’.^[10] The absence of judicial case management was commented upon by the Intellectual Property Committee of the Law Council:

although not currently a common practice, it is highly desirable that the docket judge take an active role in working with practitioners in identifying the limits of discovery.^[11]

6.16 The gaming process that occurs between parties, in the absence of firm judicial case management, can lead to costly and incidental litigation over the limits of discovery by categories. Justice Finkelstein summarised the current position at a workshop on the Court’s case management system in 2008:

It is also time for the court to admit that the idea of staged category discovery contained in Practice Note 14, to the extent it has been implemented at all, does not work. Although the idea was introduced with the goal of saving costs and reducing burdens, in practice it seems to have the opposite effect … Parties now incur great expense in formulating and disputing appropriate categories of discoverable documents, and a good deal of court time is taken up hearing the disputes. So much time and cost is involved that there is a view, shared by many, that discovery by categories is a failure and that it is more efficient to provide for general discovery rather than engage the Practice Note 14 model.^[12]

Submissions and consultations

6.17 In the Consultation Paper, the ALRC asked whether discovery by categories of documents or particular issues in dispute has reduced the burden of discovery in Federal Court proceedings and, if not, why not.^[13]

6.18 The Law Council pointed out that the use of categories of itself did not burden the discovery process—rather it was the way in which categories are formulated that can add to the burden of discovery.^[14] In line with this view, a number of submissions raised concerns about the way categories were formulated in practice.^[15]

6.19 Some submissions suggested that, on occasion, parties failed to collaborate and instead worked separately to devise categories for discovery.^[16] This may increase the likelihood of disputes between the parties as to the appropriate description of categories.

6.20 When parties do make attempts to discuss and agree on categories, submissions noted a variety of instances where the timing of these discussions can be counter-productive. Sometimes these discussions may be held too early—before the parties have turned their minds to the issues in dispute,^[17] or before the parties have considered the number and types of documents they hold.^[18] On other occasions, these discussions may be held too late—after parties have started to collect and review documents or after a timetable for discovery has been set.^[19]

6.21 The Law Council submitted that categories of documents formulated in terms of relevance to certain issues in dispute do not substantially reduce the burden of discovery, since it still requires parties to review all of their documents to ascertain their relevance.^[20] This approach may introduce an element of subjectivity, which can be compounded by the ‘imprecision or merely the vagueness of the English language so that there is room for argument as to whether particular documents are within or not within the category’.^[21]

6.22 Some submissions suggested that categories were most effective in limiting discovery obligations when formulated with objective criteria, such as where the documents were located, or when the documents were created.^[22]

6.23 Several submissions also suggested that greater judicial involvement in the formulation of categories would reduce the complexity, uncertainty and cost associated with discovery.^[23]

ALRC’s views

6.24 The ALRC considers that, in some cases before the Federal Court, general discovery could be an appropriate way to facilitate the disposal of litigation. The breadth of general discovery obligations might not give rise to significant difficulties or expense in routine or straightforward cases—where a relatively small volume of documents will be relevant to the proceeding.

6.25 However, the Federal Court’s jurisdiction also includes complex cases which require extensive inquiry into numerous issues in dispute, involving large volumes of documents. While these types of cases might represent only a portion of the Federal Court’s overall caseload, it is these cases in particular where the problems associated with discovery can impose serious restrictions on parties’ access to justice—and give rise to major concerns about costs.

6.26 The ALRC considers that, in cases where general discovery would put the parties to considerable expense, it is appropriate for the Court to order limited discovery suited to particular issues in each case. Confining discovery in this way promotes the principles of effectiveness and efficiency.

6.27 An effective justice system is directed towards the resolution of disputes.^[24] Parties may be encouraged to settle their disputes, and judges may be positioned to determine disputes, on the basis of discovered documents that are particularly relevant to the important issues in proceedings. Where general discovery would capture documents of less probative value or documents relating to less crucial issues, this may do comparatively little to facilitate the resolution the dispute.

6.28 An efficient justice system achieves the resolution of disputes at a cost that is proportionate to the issues in dispute.^[25] Targeting discovery at documents relating to particularly important issues in proceedings is conducive to maintaining proportionality in litigation costs. It may avoid or minimise the costs associated with discovery of documents of lesser importance in the proceeding.

6.29 The ALRC is concerned, however, that the intention expressed in Practice Note CM 5 for general discovery to be avoided in cases where orders tailored to the issues in dispute would be more appropriate, is not being carried out in practice. The ALRC understands that most orders for discovery in Federal Court proceedings are for general discovery—with close to an estimated 70% of discovery orders being made by consent of the parties.^[26]

6.30 The ALRC is also concerned that, where discovery orders are limited to certain issues in proceedings, they are not always formulated effectively to reduce the burden of discovery. In practice, the formulation of specific categories of documents requires the parties and their lawyers to decide exactly what the case is about and what needs to be discovered to prove it. It also requires the Court to manage the parties actively in this regard, preventing the expansion of categories of documents beyond manageable boundaries—otherwise, the categories of documents that are identified will do little to narrow the scope of general discovery.

6.31 A number of ways to improve the facilitation of discovery by categories of documents are considered below. These involve clarifying the main facts in issue so that discovery orders can be better fashioned to suit the issues that matter most.

Identifying issues in dispute to focus categories

6.32 For the Court to case manage a discovery process effectively, the parties need to define the issues in the proceedings clearly. This was recognised at the Australian Institute of Judicial Administration’s discovery seminar in 2007, which reported

a widely held view from the profession that the courts need to exercise more control over the discovery process, and a parallel view from the courts that in order to do so, they need to have more information about the case that would be presented to the court.^[27]

6.33 The parties’ role in facilitating judicial case management of a proceeding, by identifying and clarifying the issues in dispute, is described in the Courts (Consolidation and Reform) Bill 2010(Ireland) developed by the Law Reform Commission of Ireland.^[28]Clauses 75 and 76 of the Bill require anyone involved in civil proceedings to comply with ‘case conduct principles’ and impose a corresponding obligation on the courts to engage in ‘judicial case management’. In particular, the Bill states that ‘issues between parties should, at as early a stage as possible, be identified, defined, narrowed (where possible) and prioritised or sequenced’.^[29]

6.34 Similarly, a note to the legal profession issued by the Supreme Court of Queensland about the Court’s Supervised Case List requires parties to ‘identify at an early stage in litigation the real issues in dispute’.^[30] The note also encourages parties to ‘defer disclosure until the real issues in dispute are identified’.^[31]

6.35 Pleadings are supposed to define the issues in each case and, in so doing, limit the ambit of discovery and the evidence that needs to be prepared for trial.^[32] However, as the ALRC commented in Managing Justice, pleadings in Federal Court proceedings are often too general in scope and inadequately particularised so that there is no narrowing of issues.^[33] Pleadings couched in broad, vague or general terms, those which rely on numerous causes of action or defences or plead the case in a number of alternative ways, have the consequential effect of setting broad boundaries for the discovery of documents.

6.36 Amendments to pleadings, particularly when introduced late in civil proceedings, may be another cause of excessive discovery. In an article aptly named ‘Turning Mountains into Molehills—Improvements to Formal Dispute Resolution’, Andrew Stephenson explained that:

It simply does not pay to be too surgical in removing documents from consideration if the issues are likely to change. It is better to discover more (perhaps irrelevant documents) so when the case does change, discovery does not need to be redone.^[34]

6.37 Stephenson argues that, in most cases, significant improvements could be made in the discovery process if the real issues in dispute were more clearly defined beforehand:

it is important at the outset, before any preparation in relation to discovery is done, that the scope of the controversy be properly defined.^[35]

6.38 The following sections of this chapter outline a number of ways in which the crucial issues in dispute could be more clearly identified and defined, with a view to limiting the ambit of discovery by categories of documents in Federal Court proceedings, including:

• imposing an obligation on the parties to outline their case at an early directions hearing or case management conference;

• requiring parties to submit a written statement of the issues in dispute, in relation to which documents may be discovered; and

• requiring the parties, prior to discovery, to produce an outline of the evidence on which they intend to rely at trial.

6.39 The implementation of these procedures in Federal Court proceedings was proposed in the Consultation Paper.^[36] Submissions responding to these proposals are outlined below in relation to each proposal, and conclusions on all of these proposals are drawn together in setting out the ALRC’s views on recommendations for such reform.

Initial directions hearing or case management conference

6.40 The Federal Court has introduced specific procedures for matters in its Fast Track List and with respect to tax matters. Both Practice Note CM 8 and Practice Note Tax 1 impose an obligation on the parties to such proceedings to outline the issues and facts that appear to be in dispute, at an initial directions hearing, called the ‘scheduling conference’.^[37]

6.41 A similar procedure, called the ‘case planning conference’, was introduced in the Supreme Court of British Columbia on 1 July 2010.^[38] This mechanism was suggested by the Civil Justice Reform Working Group in 2006, which recommended that the parties should be required to ‘personally attend a case planning conference before they actively engage the system, beyond initiating or responding to a claim’.^[39] The Working Group identified key objectives of the case planning conference to include the narrowing of issues and directions for discovery.^[40]

6.42 The same objectives are sought to be achieved in the United States (US) through ‘Pre-Trial Conferences’ under r 16 of the Federal Rules of Civil Procedure 2009 (US). The publication, The Elements of Case Management: A Pocket Guide for Judges (Pocket Guide) explains that, ‘the primary objective of the r 16 conference is for the judge and the lawyers to discern what the case is really about’.^[41]

6.43 In her account of the Fast Track experience, the Hon Justice Michelle Gordon explained the profound effect that the early identification of issues has in relation to discovery:

[t]he users of the list have anecdotally reported a substantial improvement in relation to discovery with their corporate clients. There are certain questions that members of the legal profession are used to being asked—why do I need to search for those documents? How can those documents be relevant? In Fast Track, such questions are more easily answered because they are discussed during the scheduling conference and the obligations narrowed to only those issues really in dispute. In colloquial terms, the parties own the result because they are involved in it.^[42]

6.44 While this practice is not as explicitly required in the Federal Court outside of the Fast Track List and Tax List, any party seeking discovery in a Federal Court proceeding is expectedto specify the issues in relation to which discovery is sought. Practice Note CM 5 applies generally to applications for discovery in the Federal Court and states that parties are expected to answer the question: is discovery necessary at all, and, if so, for what purpose?^[43]

6.45 However, in practice, the parties or their legal representatives might not always be forthcoming with admissions as to which of the issues in dispute really matter most—at least not in the interlocutory stages. This was evident in Seven Network Ltd v News Ltd^[44] where, according to Mallesons Stephen Jacques partner Roger Forbes, representing Telstra in this case, the parties did not want to give away ‘points’ too early:

They would say ‘we’re entitled to run all the points we want to and we don’t have to, at the outset, decide which are the best ones and which are the bad ones’.^[45]

6.46 In effect, the judge or registrar presiding at a directions hearing or scheduling conference may be required to interrogate the parties to determine the crucial issues in dispute. The need for active judicial participation in this context is noted in the Pocket Guide in the US:

Detecting the underlying issues in dispute sometimes requires vigorous questioning of the attorneys by the judge to get beyond the pleadings. Parties may raise assorted causes of action or defenses that create the impression of a complex lawsuit when, upon probing, it turns out that the entire case hinges on a straightforward factual or legal dispute—or no triable issue at all.^[46]

6.47 The approach which some judges in the United Kingdom (UK) have adopted to achieve a narrowing of issues was aptly summarised by the Mercantile Judge Simon Brown QC:

What I want to know, is this: what is this case about? Which of the … issues really matter in getting to the heart of the dispute? Can we split the case up and limit disclosure to the subjects which matter, or which matter most?^[47]

Submissions and consultations

6.48 The Consultation Paper proposed that:

Following an application for a discovery order, an initial case management conference (called a ‘pre-discovery conference’) should be set down, at a time and place specified by the court, to define the core issues in dispute in relation to which documents might be discovered. At the pre-discovery conference, the parties should be required to:

(a) outline the facts and issues that appear to be in dispute;

(b) identify which of these issues are the most critical to the proceedings; and

(c) identify the particular documents, or outline the specific categories of documents, which a party seeks to discover and that are reasonably believed to exist in the possession, custody or power of another party.^[48]

6.49 All the submissions that addressed this proposal expressed ‘in principle’ support for the goal of focusing the parties on the crucial issues in dispute to contain the discovery process, in appropriate cases.^[49] For example, the Australian Government Solicitor agreed that ‘reform to ensure clearer definition of the real issues in dispute, prior to discovery, would have the greatest practical impact on limiting the ambit of discovery and reducing the overall burden of the discovery process’.^[50]

6.50 These submissions were also generally supportive of the use of case management conferences, as a means of facilitating stronger judicial control of the parties in considering the scope of discovery obligations.^[51] For example, the Law Council submitted that:

active judicial case management can be useful where there has been an application for discovery under order 15 of the Federal Court Rules. The benefit of case management is likely to be maximised where the parties are required to articulate in some detail and in some order of priority the issues and facts in dispute, as proposed through a pre-discovery conference. Introducing such a measure will allow the case managing judicial officer to adopt an active interventionist role in determining the scope for discovery.^[52]

6.51 The Commissioner of Taxation of the Commonwealth of Australia (Tax Commissioner) confirmed that the proposed pre-discovery conference resonated with the current process under Practice Note Tax 1, and advised that it has been largely successful in taxation litigation.^[53]

6.52 However, a number of submissions suggested that there would need to be a degree of flexibility in this process—particularly in relation to the timing of when pre-discovery conferences were held—to maximise its effectiveness.^[54] Some noted that parties and their lawyers would need adequate time to prepare for a pre-discovery conference;^[55] and one suggested that no less than seven days would be needed.^[56] Others argued that pre-discovery conferences should not be held too early in proceedings when the important issues in dispute have not sufficiently emerged.^[57] For example, Allens Arthur Robinson submitted that:

Ideally, it would always be possible to identify the ‘core issues in dispute’ at an early stage of a proceeding. However, this is not always the case. In many proceedings issues evolve and change over time for legitimate reasons, including as a result of information gathered from the discovery process. It is critical, therefore, that any early identification of issues be seen as a dynamic process, and that it not be used to constrain one or the other party as the proceeding unfolds. Further, the ability of parties to resolve issues at the beginning of a proceeding should not be overestimated. It should be possible to defer pre-discovery conferences if in all the circumstances it would be more productive to do so.^[58]

6.53 The Queensland Law Society also pointed out that a pre-discovery conference should not be held too late, when parties have already undertaken significant document collection.^[59]

6.54 Submissions from public interest advocates noted that increased funding to legal service providers—such as legal aid and community legal centres—would be required to ensure that they have sufficient resources to assist litigants in complying with the requirements of a pre-discovery conference.^[60]

6.55 At the same time, several submissions were opposed to the introduction of pre-discovery conferences in all cases before the Federal Court.^[61] Some expressed the view that, while pre-discovery conferences might be beneficial in large complex cases, the cost of the conference may be greater than its benefits in smaller routine cases.^[62] Similarly, other submissions argued that a pre-discovery conference would be an unnecessary expense in cases where the parties agreed to the scope of discovery, but could be useful where there were disputes surrounding discovery.^[63] The Federation of Community Legal Centres (Vic) submitted that individual litigants, particularly those who were unrepresented or impecunious, were at a disadvantage in litigation against larger corporate entities—such as may occur in public interest cases—and in these circumstances the requirement for a pre-discovery conference should be waived.^[64]

6.56 A number of submissions also expressed the view that, for the purposes of containing discovery obligations, consideration of the important issues in dispute and the correspondingly relevant documents should also take into account practical concerns such as how those documents would be located, collected, reviewed or produced—especially when the documents are stored in an electronic format.^[65] For example, a group of large law firms submitted that more detail about the discovery of electronic records would be beneficial at pre-discovery conferences:

In reality, parties are often making enquires in relation to the existence of the [electronically-stored information] and the process for retrieving and reviewing that information at an early stage of the proceedings in order to assess the costs involved in the discovery process. It would therefore seem sensible for the procedure for obtaining discovery orders to capture that information at an early stage and include a mechanism for having that information put before the Court at the time discovery orders are being considered.^[66]

Statement of issues in dispute

6.57 One way to identify the crucial issues in proceedings, in relation to which the scope of discovery may be limited, is to produce a separate document drawing out key points in dispute from the pleadings. This approach is adopted in the UK’s Commercial Court of the Queen’s Bench Division, where a ‘list of issues’ is filed in proceedings in addition to the pleadings.^[67]

6.58 The claimant, in consultation with other parties, will ordinarily be required to prepare a list of issues, with a section listing important issues that are not in dispute, and provide copies to the Court and other parties prior to the first hearing at which case management directions are made.^[68] The Admiralty and Commercial Courts Guide (the Guide) states that:

At the first case management conference … the court will review and settle the draft list of issues … [which] will be used by the court and the parties as a case management tool as the case progresses to determine such matters as the scope of disclosure.^[69]

6.59 In 2007, a review of the procedures used in the Commercial Court was undertaken by a working party of the Court’s User’s Committee.^[70] The Commercial Court Long Trials Working Party formed serious concerns about the way in which pleadings—referred to as ‘statements of case’—were being used in the Court.^[71] The Working Party reported that:

It is obviously imperative that in any litigation a claimant sets out the case it wishes to make so that the other parties to the litigation can see what issues they have to meet and defendants can set out their defences and counterclaims to the claimant’s points. But the [Working Party] concluded that the length and complexity of statements of case in even ‘average’ cases in the Commercial Court, let alone [heavy and complex cases], had increased, is increasing and ought to be diminished. The prolixity of statements of case means that they become virtually unreadable.^[72]

6.60 In response to these concerns, the Working Party recommended that the list of issues should be used as the keystone for case management and, as such, replace the pleadings as the key working document in Commercial Court cases.^[73] This recommendation and others from the Working Party were adopted in a year-long pilot program running in the Commercial Court from February 2008.

6.61 Concerns with the ‘list of issues’ approach to case management in the Commercial Court have been examined in a number of reviews. Lord Jackson found in his Review of Civil Litigation Costs in 2009 that it was questionable whether a list of issues ‘promotes saving of costs (through better case management) or causes wastage of costs (because lists are expensive to prepare and of little utility)’.^[74]

6.62 Commentary on the pilot program noted that increased reliance on a list of issues in Commercial Court proceedings led to tactical manoeuvring by the parties in preparing the list, which carried an additional cost burden:

The list of issues caused more controversy than any other recommendation during the pilot, because of the amount of time parties were spending on ensuring that it advanced their particular case. This was due in part to the statement in the working party recommendations that, once the list of issues had been produced, the pleadings would have only secondary importance.^[75]

6.63 In light of the concerns raised during the Commercial Court’s pilot program, a modified version of the Working Party’s proposal was implemented in a revised edition of the Guide, as follows:

D6.2(a) The list of issues is intended to be a neutral document for use as a case management tool at all stages of the case by the parties and the court. Neither party should attempt to draft the list in terms which advance one party’s case over that of another.

(b) It is unnecessary, therefore, for parties to be unduly concerned about the precise terms in which the list of issues is drafted, provided it presents the structure of the case in a reasonably fair and balanced way. Above all the parties must do their best to spend as little time as practicable in drafting and negotiating the wording of the list of issues and keep clearly in mind the need to limit costs. …

D6.5 The list of issues is a tool for case management purposes and is not intended to supersede the pleadings which remain the primary source for each party’s case.^[76]

6.64 Despite an attempt to remove adversarial practices from this procedure, Lord Jackson did not recommend that the list of issues procedure be adopted outside the Commercial Court. Rather, he recommended that section D6 of the Guide be reconsidered after 18 months experience under the new provisions.^[77]

Submissions and consultations

6.65 In the Consultation Paper, the ALRC proposed that:

Prior to the pre-discovery conference proposed in Proposal 3–1, the party seeking discovery should be required to file and serve a written statement containing a narrative of the factual issues that appear to be in dispute. They should also be required to include in this statement any legal issues that appear to be in dispute. The party should be required to state these issues in order of importance in the proceedings, according to the party’s understanding of the case. With respect to any of the issues included in this statement, the party should be required to describe each particular document or specific category of document that is reasonably believed to exist in the possession custody or power of another party.^[78]

6.66 Most submissions that addressed this proposal expressed in-principle support for the introduction of ‘issues statements’ in Federal Court proceedings.^[79] For example, the Australian Government Solicitor submitted that:

We agree that such a requirement may be beneficial in helping to crystallise the issues truly in dispute in some cases, particularly those which do not involve pleadings or where the issues may not fully emerge until after pleadings have closed (although in such matters, amendments of pleadings may be possible).^[80]

6.67 The Tax Commissioner supported this proposal, on the basis that a similar document was already being used in taxation litigation—with great effect.^[81] The submission advised that the obligations on the parties arising under Practice Note Tax 1 include the filing of an appeal statement by the respondent Commissioner and the applicant within 28 days and 40 days respectively of the application commencing the proceeding being served on the Commissioner.^[82] The Tax Commissioner observed that:

the appeal statement can be a very useful document to determine the position of each party and informs the Court where the dispute remains.^[83]

6.68 However, many of the submissions in support of this proposal also noted concerns about the costs involved.^[84] For example, the Law Council stated that:

While the Law Council supports the proposals, it does express some caution about the possible impact these measures could have on smaller cases and whether or not it may impose an additional burden.^[85]

6.69 Submissions from public interest advocates noted that increased funding to legal service providers would be required to ensure that they had sufficient resources to assist litigants with drafting a statement of issues.^[86]

6.70 To address concerns about the cost of preparing statements of issues, a number of submissions suggested amendments to the proposed procedure.^[87] Michael Legg recommended that written statements should only be required if the docket judge decided in the circumstances of a particular case that course of action would be warranted for its efficient management.^[88] The Department of Immigration and Citizenship suggested that written statements would not be warranted where the parties were in agreement as to the scope and process of discovery.^[89]

6.71 NSW Young Lawyers recommended that the written statement should be limited to addressing only factual issues in dispute (and related categories of documents for discovery) that are evident from the pleadings.^[90] The submission argued that legal issues are not apparent or easily identifiable until at least the close of pleadings and the service of evidence by the parties.^[91]

6.72 The Law Society of Western Australia proposed that the written statement should only be an outline of submissions to be made at the pre-discovery conference:

identifying the document/classes of documents in respect of which discovery is sought, indicating the issue (factual and/or legal) in respect of which it is said the documents are relevant, identifying how the documents are said to be relevant and stating why it is in the interests of justice that, in the particular case, the documents ought be discovered.^[92]

6.73 The Law Council submitted that, in any event, the written statement should be only four pages—to limit the time and cost to the party preparing the statement, and the burden on the other party reviewing the statement.^[93]

6.74 On the other hand, several submissions suggested that—instead of introducing written statements of issues into Federal Court proceedings—the existing rules on pleadings should be reformed.^[94] For example, Allens Arthur Robinson advised that:

In our experience, failure to identify ‘core issues in dispute’ is usually the result of deficient pleadings. Many pleadings are vague, repetitive, insufficiently particularised and often contain irrelevant material … We consider that this is one area in which the Court might be encouraged to intervene more actively.^[95]

6.75 Allens Arthur Robinson also identified a number of issues with the rules on pleadings which might be considered further:

This is a large issue and we are conscious that it may be outside the scope of the ALRC’s reference but the issues worthy of consideration include:

• encouraging the Court to strike out deficient pleadings on its own motion (that ‘encouragement’ could take the form of a statement of intent of policy in a Practice Note);

• a re-assessment of the rule in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 and s 31A of the Federal Court of Australia Act 1976 (Cth); and

• in conjunction with or separately from that assessment, allowing the Court to take into account the likely effect of the pleading under attack on the other side’s discovery burden. The discovery burden could be taken into account in a manner analogous to the ‘balance of convenience’ in an interlocutory injunction application. A weak or vague pleading that results in an onerous discovery burden ought to be more vulnerable than one which would not have that result.^[96]

6.76 The Australian Government Solicitor submitted that written statements of issues may be superfluous in most cases if a more rigorous pleadings model were adopted, singling out the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) as an example of a more rigorous approach that might be introduced in the Federal Court.^[97] The submission advised that stringent requirements in the UCPR for pleadings of denials and non-admissions were aimed at forcing defendants to plead in a way that positively assisted in narrowing the issues, rather than simply putting a plaintiff to proof:

The theory behind these requirements is that if it is not possible for a defendant to simply ‘not admit’ in the course of pleadings, defendants will be more likely to focus their minds on what can be admitted and what is to be denied, thereby crystallising the issues in dispute.^[98]

6.77 Christopher Enright and Simon Lewis argued that a redesigned system of pleadings should be introduced based on the relationship between the law—in particular, the elements of the cause of action or defence—and the material facts:

The advantage is that the elements, being a generalisation of a material fact, and visibly so, are devices for monitoring pleadings to ensure that they have incorporated the material facts … By this means the pleadings make crystal clear, generally after the first exchange of documents, precisely what are the issues of fact.^[99]

Adducing evidence prior to discovery

6.78 Another way to clarify the crucial issues in dispute—so that discovery can focus on them—may be to require production of the evidence, or at least an outline of the evidence, on which the parties intend to rely at trial, prior to discovery of documents. The Fast Track List and Tax List provide models for such a procedural requirement.

6.79 Practice Note CM 8 and Practice Note Tax 1 state that each party must bring to the scheduling conference an initial witnesses list with the names of each witness the party intends to call at trial. The list is to include a very brief summary of the expected testimony of each witness and, unless it is otherwise obvious, must state the relevance of the evidence of each witness.^[100]

6.80 Another model for this approach is found in Rule 7–4 of the British Columbia Supreme Court Civil Rules. This rule requires parties to proceedings before the Supreme Court of British Columbia to file and serve on every other party a list of witnesses the party may call at trial.^[101] The introduction of this Rule was recommended by the Civil Justice Reform Working Group in 2006, which considered that:

in order to encourage the early exchange of information, we recommend that the parties exchange a list of the witnesses that each party intends to call at the trial of the action, along with a summary of the evidence that the party believes the witness will give at trial.^[102]

6.81 Consideration of discovery issues in light of the parties’ evidence—or at least an outline of any expected testimonial evidence—might result in limiting the need for, or narrowing the scope of, discovery. Once the parties and the Court have had an opportunity to consider the evidence, it may become easier to identify the areas where discovery is necessary and to assess whether relevant documents are likely to be discovered.

6.82 The idea of producing evidence prior to discovery was considered by the Law Council in 2006. The Law Council reported general opposition to this idea but conceded that, in some cases, it may be useful for parties to file their evidence in chief in support of a claim (and perhaps cross claim) priorto any discovery:

A number of submissions commented that this was likely to lead not only to a duplication of work on evidence in chief, but also to delays in the making of genuine discovery. There may be some cases where although the facts are likely to be substantially uncontentious they may be also substantially in the knowledge of only one party. It is perhaps possible that in those cases the parties might find the filing of evidence prior to discovery a useful process.^[103]

6.83 While the model considered by the Law Council might have involved the filing of evidence, perhaps in the form of an affidavit, the witness list in the Fast Track List or Tax List proceedings requires only an outline of the evidence.

Submissions and consultations

6.84 In the Consultation Paper, the ALRC proposed that:

Prior to the pre-discovery conference proposed in Proposal 3–1, the parties should be required to file and serve an initial witness list with the names of each witness the party intends to call at trial and a brief summary of the expected testimony of each witness. Unless it is otherwise obvious, each party’s witness list should also state the relevance of the evidence of each witness.^[104]

6.85 A few of the submissions that addressed this proposal expressed in-principle support for the early production of evidence, to identify and clarify the crucial issues in the proceeding, as a means of narrowing the scope of discovery and expediting the resolution of disputes in general.^[105] These included submissions from public interest advocates, which noted that increased funding to legal service providers would be required to assist litigants prepare a list of witnesses.^[106]

6.86 However, most submissions responding to this proposal opposed the introduction of witness lists as a general requirement in all cases before the Federal Court, on the grounds that, in some cases, the costs of compliance might outweigh any benefits in the litigation.^[107] Several of these submissions commented that, in the early stages of proceedings, it is difficult for parties and their lawyers to identify the witnesses whom they will be likely to call at trial—usually, the identities of witnesses becomes apparent after the parties have examined relevant documents.^[108] For example, the Law Society of Western Australian submitted that it:

does not agree that the identification of witnesses and the summarising of their expected testimony is a matter that will assist (greatly, if at all) issues of discovery. Again, any perceived benefit would be outweighed by the time and costs involved in the process. This is particularly so since the finalisation of the witnesses to be called at trial is only properly done after a party has had an opportunity to inspect the other side’s discovered documents.^[109]

6.87 Submissions argued that if parties were required to provide a summary of witnesses’ testimony, prior to discovery of documents, it would involve additional and overlapping work—inspecting documents and interviewing witnesses—and thereby increase the costs of litigation.^[110]

6.88 The Tax Commissioner advised that, in practice, the witnesses to be called in tax litigation will often be determined at a later stage in proceedings—rather than at the scheduling conference as required by Practice Note Tax 1:

in practice it has often been difficult to identify with any great specificity the person who will be called to give evidence by the time of the scheduling conference. The Court has often been prepared to accept the parties’ initial views as to the general nature of the witnesses to be called (i.e. whether the taxpayer or, if a company, which office holders will be called and whether expert witnesses will be required). This has allowed the Court to determine whether the parties require time to obtain affidavits, including experts’ reports.

It is suggested that should this proposal be adopted, the Court should, in practice, accept that parties may require additional time to determine the witnesses to be called.^[111]

6.89 As an alternative to summarising the testimony of potential witnesses, two submissions suggested that the proposed procedure should require parties to produce only the names of persons who may hold relevant documents.^[112] For example, the Queensland Law Society submitted that:

parties should focus on the types of documents (and their custodians) to be searched bearing in mind the likely issues in the proceedings. There may therefore be a need for parties to identify names of likely custodians, and perhaps to exchange these names.^[113]

6.90 At the same time, several submissions acknowledged that an early indication of the evidence of witnesses to be called in the proceeding may be appropriate in some cases—and the Court may require parties to do so on a case-by-case basis.^[114]

ALRC’s views

6.91 As discussed above, the ALRC considers that discovery by categories of documents can be an effective and efficient way to facilitate the disposal of litigation in some cases. Appropriately formulated categories may target documents of particular importance in proceedings, leading to the resolution of disputes without the expense of pursuing subordinate issues through discovery.

6.92 The ALRC is also of the view that identifying and clarifying the crucial issues in a proceeding may enhance the effectiveness of a categories-based approach to discovery of documents. This was highlighted in Managing Justice, where the ALRC reported that:

discovery by categories works well if the parties take the time and expense to define the categories carefully and sort the disclosed documents into the correct categories and if the issues in dispute are sufficiently well defined that the documents are amenable to classification.^[115]

6.93 An effective justice system should be directed towards the prevention and resolution of disputes.^[116] A clear definition of the issues may help to avoid, or assist the resolution of, disputes between the parties over the appropriateness of proposed categories for discovery. Establishing a clear and shared understanding of the main facts in issue may assist the parties to identify particular documents or categories of documents relevant to those issues. It may also provide the parties with a basis for assessing whether a proposed category of documents is relevant to the important issues in dispute.

6.94 However, the proposed means of clarifying the issues in a proceeding prior to discovery—whether through discussion at a case management conference, in a written statement of issues or an outline of evidence—might not be efficient in every case. The proposed procedures would be an additional expense for many litigants in the Federal Court but not all of these cases would necessarily benefit from taking those steps in the litigation. Large, complex and high-value cases might achieve efficiencies in discovery through the proposed procedures, and at a cost that is proportionate to the issues in dispute.^[117] On the other hand, the cost of complying with these procedures may be disproportionate to small claims in straightforward cases—which might manage an efficient discovery process in any event. The most efficient means of managing discovery in proceedings is not a ‘one-size-fits-all’ approach, and will depend on the circumstances of each case.

6.95 For example, in some complex cases, a case management conference might be a useful way to focus the scope of discovery on the crucial issues in proceedings.
The Hon Chief Justice Robert French of the High Court of Australia, formerly of the Federal Court, often found case management conferences to be a productive working environment:

The case management conference where the judge sits around a table with counsel and solicitors (and sometimes the parties) was the most effective technique which I experienced in relation to pre-trial management of complex litigation. The psychological landscape of the case management conference, as a roundtable meeting of counsel and solicitors (and sometimes clients), presided over by a judge differs significantly from that of a directions hearing with its attendant formalities. It can become a kind of pre-trial procedural negotiation, assisted by the judge. It is a forum in which particular techniques for pre-trial case management can be crafted.^[118]

6.96 However, situations where a pre-discovery conference to focus discovery on crucial issues would be an unnecessary cost might include cases in which parties are in agreement as to the appropriate scope of discovery. This cost might also be overly burdensome in cases involving impecunious litigants.

6.97 A written statement of issues might be an efficient means of drawing out the most important matters from the pleadings—for the purposes of focusing discovery—in cases where the parties are cooperative and willing to utilise this mechanism flexibly. However, experience with lists of issues in the UK’s Commercial Court suggests that it might create inefficiencies in cases where parties are aggressively adversarial and would treat this statement as an opportunity to gain tactical advantage over each other.

6.98 Witness lists might be an efficient means of conducting some cases in the Fast Track or Tax Lists. Similarly, an outline of evidence might be a useful tool in cases where parties have already received some disclosure of relevant documents and identified potential witnesses—for example, through alternative dispute resolution procedures prior to the commencement of proceedings. In other circumstances, however, putting on evidence before discovery of documents could require significant additional work for litigants if the identities of likely witnesses were unknown at that stage in proceedings.

6.99 The ALRC does not, therefore, recommend reform to introduce any of these proposed procedures as general requirements in all Federal Court proceedings. However the ALRC considers that reform is warranted to encourage the Court and parties to adopt appropriate means of clarifying the important issues in dispute to focus the scope of discovery in proceedings—which might involve the use of case management conferences, statements of issues and outlines of evidence in some cases. This is discussed below in the context of discovery guidelines in Federal Court practice notes.^[119]

6.100 The ALRC also considers that, while beyond the scope of this Inquiry, reform of the rules on pleadings may improve the identification and clarification of issues in dispute and, in turn, enhance the efficiency and effectiveness of the discovery process. The ALRC supports further consideration of reform in relation to pleadings, which may form part of current consultations on proposed amendments to the Federal Court Rules.

6.101 In some cases, decisions about the scope of discovery should not be made in isolation from practical issues arising in the discovery process—such as where or with whom those documents are located or held, how the documents are stored and how they may be retrieved. Decisions about the practicalities of discovering relevant documents—particularly in relation to electronic documents—can have a far greater impact on the cost and time involved, than deciding what the relevant documents are. In the ALRC’s view, these cost implications, in particular, should inform decisions about the scope of discovery, or even whether discovery should be given at all. As such, the practicalities of discovering relevant documents need to be considered at the time orders for discovery are made. This is discussed below in the context of electronic discovery.^[120]

Facilitating electronic discovery by agreement of the parties

6.102 Electronic technologies have proved necessary to manage the large volumes of documents being discovered in Federal Court proceedings. Early technologies were used to transform hardcopy documents into electronic format, making vast amounts of information more manageable.^[121] Technologies have evolved to become the means by which documents are discovered from source to production in electronic format, commonly described as ‘e-discovery’. This follows contemporary corporate behaviour whereby 98% of documents are said now to exist in electronic form only.^[122]

6.103 The move towards electronic discovery is evident in proposed amendments to the High Court Rules (NZ) which would require parties to carry out discovery obligations electronically in all cases, with limited exceptions.^[123] That is, only parties who are not represented by a lawyer would be exempt from the obligation to give discovery electronically if a judge decides that it is not practicable or that justice so requires.^[124]

6.104 A key concern that often arises in an e-discovery process is whether the party giving discovery has conducted a ‘reasonable’ search for discoverable documents stored in electronic document management systems or databases.^[125] Whether the search was ‘good enough’, as described by Lord Jackson,^[126] will be assessed by the courts weighing the cost and inconvenience to the party giving discovery against the value of the documents sought in the context of the litigation.^[127] As Mummery J said in Molnlycke AB v Procter & Gamble Limited (No 3):

The Court takes account of such considerations as the value of the discovery to the person seeking it and the burden imposed on the party giving it, with a view to restricting the volume of documents and the labour and expense involved to that which is necessary for fairly disposing of the issues in the case.^[128]

6.105 For example, in NT Power Generation Pty Ltd v Power & Water Authority, Mansfield J considered an interlocutory application to restrict discovery to hardcopies of printed emails. His Honour accepted that it would be a very substantial burden on the respondent to search for relevant emails stored electronically in computer terminals, servers and backup tapes. However, Mansfield J ultimately held that he was not satisfied that the material which might be discoverable in those records was of ‘sufficiently insubstantial moment’ to warrant simply ignoring them.^[129]

6.106 By comparison, in Leighton Contractors v Public Transport Authority of Western Australia, Le Miere J found that the burden of giving discovery of deleted emails would have been disproportionate to the potential probative value of that electronic information—had the defendant not already embarked upon the course of recovering the deleted emails from the backup tapes.^[130]

6.107 Whether it is ‘reasonable’ for a party to search through backup tapes or disaster recovery systems for discoverable documents is a question of fact and degree and will therefore depend on the circumstances of each case. This creates an element of uncertainty for a party giving discovery who might hold relevant documents on backup tapes. For example, in BT (Australasia) Pty Ltd v New South Wales & Telstra,^[131] Sackville J found that Telstra failed to comply fully with its discovery obligations in relation to electronic documents, in a number of respects including:

First … Telstra neither disclosed the existence of back-up tapes, nor took any steps to restore those tapes with a view to ascertaining whether and how discoverable electronic material could be identified and presented in usable form. I accept and appreciate that the purpose of making and retaining the back-up was essentially disaster recovery, rather than archival. Nonetheless, as subsequent events have demonstrated, it is feasible, albeit difficult and expensive, for the tapes to be restored and a review process set in place to identify discoverable material.^[132]

6.108 Another cause for concern sometimes arising in an electronic discovery process is the form in which documents are to be exchanged or produced for inspection by the parties or the Court. For example, in Jarra Creek Central Packing Shed Pty Ltd v Amcor Limited,^[133] the applicant sought orders that documents be produced in portable document format (PDF) format rather than tagged image file format (TIFF), to assist the applicant in reviewing discovered documents. As Tamberlin J explained:

The essential difference between these two formats is that the PDF format is ‘text-searchable’, whereas with the TIFF format each page is scanned as a single image and cannot be text-searched.^[134]

6.109 Some of the respondents in this case did not object to production of documents in PDF format, but other respondents argued that such a requirement would be unduly oppressive and involve substantial extra time and expense—as they were well advanced in preparing discovery using the TIFF format.^[135] In this case, the Court decided not to make an order requiring the conversion of records to PDF format.

6.110 The Federal Court has sought to deal with these issues by encouraging the parties to agree on such matters at the outset of an electronic discovery process. As stated in Practice Note CM 6,‘the Court expects parties to meet and confer for the purpose of reaching an agreement about the protocols to be used for the electronic exchange of documents’.^[136] Similarly, parties are expected to discuss and agree upon a practical and cost-effective discovery plan,^[137] setting out such matters as the scope of discovery, strategies for conducting a reasonable search and a timetable and estimated costs for discovery.^[138] The Court may facilitate agreement on these issues by requiring the parties to attend a directions hearing or case management conference.^[139]

6.111 This approach to electronic discovery commenced in the Federal Court on 29 January 2009.^[140] This followed a comprehensive review of the practice note, starting in 2007, with the assistance of a consultant and in consultation with litigants, the legal profession and others.^[141]

6.112 Similar procedures have been established in other Australian jurisdictions,^[142] aimed at achieving agreement between the parties under the supervision of the court as to the conduct of an electronic discovery process.

6.113 In 2009, the Federal Court’s practice note was reported to be operating satisfactorily, shortly after it was revised.^[143]

Submissions and consultations

6.114 In the Consultation Paper, the ALRC asked whether the directions in Practice Note CM 6—particularly the expectation that parties have discussed and agreed upon a practical and cost-effective discovery plan—have helped to ensure proportionality in the discovery of electronically-stored information and, if not, why not.^[144]

6.115 All of the submissions that addressed this issue expressed support for the model espoused in Practice Note CM 6,but advised that it has not been successfully implemented in practice.^[145] These submissions suggested that litigants rarely discussed and agreed upon the substantive matters that should be included in discovery plans—such as strategies for a reasonable search and estimates of the time and cost involved.^[146]

6.116 Submissions by law firms and law societies argued that discovery plans were not widely used in practice because they were not mandatory, and parties—as adversaries in the proceeding—were generally unwilling to cooperate.^[147] For example, Allens Arthur Robinson submitted that:

Our experience has shown that, due to its advisory nature, CM6 is less effective because parties are disinclined to meet and confer voluntarily early in a proceeding to discuss discovery related issues.^[148]

6.117 The Association of Legal Support Managers (Qld) submitted that there was a ‘lack of enforcement by the courts’ in relation to the use of discovery plans,^[149] and that there was also

an insufficient practical knowledge of technology (both in business and in the practice of litigation) and a lack of familiarity with newer practices and trends in the management of discovery.^[150]

6.118 Some submissions suggested that, while parties were not conferring in relation to the searches to be conducted in discovery, more commonly parties agreed to the terms of ‘document management protocols’.^[151] These protocols typically specify the format in which discoverable documents will be exchanged or produced for inspection by the parties or the Court.^[152]

6.119 On the other hand, Allens Arthur Robinson submitted that inconsistency in the format used to produce electronic documents was widespread and created unnecessary expense in the discovery process:

in most proceedings, the use of technology is governed entirely by the parties themselves with no attempt to negotiate and agree on a consistent process or mode of exchange for discoverable documents. Therefore parties commonly make decisions … that lead to inconsistent treatment of documents as compared with other parties to the proceeding. This, in turn, results in subsequent additional costs being incurred by all parties in an attempt to effectively utilise documents and data which has been provided by others.^[153]

6.120 The reason for the apparent weakness of Practice Note CM 6 was the means by which its requirements are applied to proceedings.^[154] The practice note applies to proceedings in which the Court has ordered that discovery be given of documents in an electronic format.^[155] Allens Arthur Robinson pointed out that, problematically:

parties are required to apply to the Court for an order that CM6 will apply to the proceeding. Such applications are rarely made and are generally reserved only for the very largest matters.^[156]

6.121 As noted by a group of large law firms, this means Practice Note CM 6 only comes into effect after orders for discovery have been made.^[157] The problem with this timing is that discovery obligations are determined without regard to the practical issues that might arise in relation to the discovery of electronic documents, including the time and expense involved:

It is not uncommon for unforeseen difficulties, particularly with discovery of ESI, to arise after discovery orders have been made … Most litigation now involves discovery of ESI. The volume of the electronic documents discovered will differ from case to case, but the issues in relation to them, including whether they exist and any difficulties involved in discovering them, should be considered at an early stage of the proceedings and certainly before discovery orders are made. As it presently stands, parties are not required to consider practical issues in relation to the discovery of ESI until after an order for discovery is made. Reform is needed so that the Court is apprised of all issues relevant to the discovery process before discovery is ordered.^[158]

ALRC’s views

6.122 The time and expense that parties and courts must spend addressing often extensive side litigation about electronic discovery issues can be significant—so much so that ‘the mere availability of such vast amounts of electronic information can lead to a situation of the ESI-discovery-tail wagging the poor old merits-of-the-dispute dog’.^[159]

6.123 The ALRC considers that the intentions of Practice Note CM 6, which aims to establish agreement between the parties as to how electronic discovery issues will be handled before they arise, are consistent with the principle of efficiency—that the justice system should deliver outcomes in the most efficient way possible, noting that the greatest efficiency can often be achieved without resorting to a formal dispute resolution process, including through preventing disputes.^[160] Where parties agree in advance to methods for collecting, processing and producing electronic documents, they can avoid the numerous applications that might otherwise be made to the Court for orders or directions on the technicalities and practicalities of an e-discovery process.

6.124 The ALRC is concerned that, in some cases, parties are not meeting the expectation upon them to discuss and agree on practical issues relating to the process of discovery, especially the strategies used to conduct a reasonable search of electronic databases. Certainty may be compromised where the party giving discovery makes unilateral decisions about the way in which the process is carried out.^[161] For example, there is likely to be a degree of uncertainty as to whether the party’s chosen search techniques are ‘reasonable’.^[162]

6.125 Such uncertainty can prompt some litigants to undertake searches that are more than ‘reasonable’ to avoid challenges from another party and possible rebuke by the Court. This can result in discovery of more electronic material than is necessary, which burdens the other party with the task of trawling through masses of documents, possibly only distantly related to the proceeding—or entirely irrelevant. This outcome may also be a consequence of time and budgetary constraints on the parties, as vetting irrelevant documents can be a lengthy and costly process, or the result of simple lack of due diligence on the part of litigants and their lawyers.

6.126 The ALRC is also concerned that, in some cases, judges are not actively utilising existing case management powers to impose and enforce compliance with the requirement on parties to agree on relevant issues before commencing an e-discovery process or, in other cases, not facilitating an appropriate agreement between the parties. Practice Note CM 6 suggests that judges should, where necessary, require parties to address discovery issues at a directions hearing or case management conference.^[163] However, some judges may be more reticent than others to get into the detail of the mechanics of a discovery process.

6.127 The ALRC is particularly concerned that in many cases the practicalities of the discovery process—how to locate, collect, process, review and produce discoverable documents—are not being considered by the parties and the Court until after discovery orders have been made. This means obligations may be imposed on parties to discover certain documents without any regard to how that might be achieved. Practice Note CM 6 states that parties are expected to consider the matters outlined therein ‘at as early a stage in the proceeding as practicable’,^[164] and ‘to be in a position to inform the Court on how the issues are to be addressed prior to or at the first Directions hearing or case management conference’.^[165] However, in practice it seems that, in many cases, the parties and the Court initially focus on the types of documents to be discovered—in terms of their relevance to proceedings—but do not turn their minds to the practical issues of how those documents will be discovered until later in proceedings, when practical problems arise. The decisions made in relation to such issues—for example, the strategies used to search for discoverable documents or the format in which documents are produced—can have a substantial impact on the time and cost associated with discovery. For example, different search techniques will return different volumes of documents, which will affect how much time and money the parties must spend reviewing the documents.

6.128 The ALRC’s view is that, in certain cases, the time and cost implications of the methods employed in a discovery process can be so significant that they should be taken into account by the parties and the Court when seeking and making orders for discovery. The likely cost is a key consideration for judges in determining whether to order discovery,^[166] and should also inform the scope of any discovery requested by the parties and required by the Court. Considerations of costs must be balanced against another core consideration in relation to discovery, namely, the attainment of justice through fact-finding. Judges need to achieve the just resolution of disputes according to law but must do so as quickly, inexpensively and efficiently as possible.^[167] In some cases, the costs involved with discovery might frustrate the administration of justice. In order for judges to consider time and cost factors when making orders for discovery, and for parties to be in a position to properly inform the Court as to the likely timeframe and cost of discovery, the practicalities of the proposed discovery must be determined at that stage in proceedings.

6.129 In considering the potential for reform to address the concerns expressed above, the following section of this chapter examines the approach taken in other jurisdictions in relation to discovery of documents.

Facilitating the development of discovery plans

6.130 The provisions of Practice Note CM 6 share a number of elements in common with the approach taken in other countries in relation to discovery of documents in litigation—including the US and the UK, as well as that proposed for adoption in New Zealand, as discussed below. This approach includes an element of cooperation between the parties, to reach agreement on the scope and process of discovery, and the facilitative role of courts in ensuring that such agreements are appropriate and sufficient. However, the expression of these requirements in other jurisdictions is noticeably different by comparison with the Federal Court. The expectations placed on the parties and the courts are expressed in clearer and more mandatory terms. This may have consequences in practice for the parties, their lawyers and the court in their approaches towards discovery.

6.131 The Federal Court ‘expects’ parties to have agreed upon a discovery plan and document management protocol.^[168] The obligations on parties are expressed in other jurisdictions in more mandatory terms. Practice Direction 31B (UK), for example, requires that parties ‘must’ discuss the disclosure of electronic documents.^[169] The UK practice direction previously suggested that parties ‘should’ do so, but it was amended in October 2010 to impose a mandatory obligation on parties.^[170] This reform, as explained by Senior Master Whitaker, sought to redress the situation of litigants failing to pay attention to the requirements of the practice direction and also responded to demands from the legal profession for ‘a stronger lead’ from the practice direction.^[171]

6.132 Similarly, the Federal Rules of Civil Procedure 2009 (US) require that parties ‘must’ confer and develop a proposed discovery plan.^[172] The benefits of cooperation between the parties, as required by the Rules, include greater certainty and efficiency in the discovery process—as noted in an American practitioner’s guide to planning discovery:

By coming together early, defining what is important and what is not, and working with your adversary, not against them, means less risk, less cost and more certainty.^[173]

6.133 Likewise, proposed amendments to the High Court Rules (NZ) state that ‘parties must … discuss and endeavour to agree on an appropriate discovery order’.^[174] The reforms in New Zealand would also impose an express requirement on litigants to cooperate generally in relation to discovery:

8.17 Cooperation

(1) The parties must cooperate to ensure that the processes of discovery and inspection are—

(a) proportionate to the sums in issue or the value of the rights in issue; and

(b) facilitated by agreement on practical arrangements.^[175]

6.134 The New Zealand Rules Committee commented that such cooperation is ‘no more than should occur presently in any event’ and will encourage parties ‘to reduce the scope and burden of discovery, achieve reciprocity in electronic format and processes, [and] ensure technology is used efficiently and effectively’.^[176]

6.135 The expectations on parties in these jurisdictions are also expressed in clear terms as to when in the proceedings they are required to discuss discovery issues and reach an agreement. In each of these jurisdictions, prior to the hearing at which orders for discovery will be made, parties are required to: first, discuss and endeavour to agree upon discovery issues; and, secondly, provide an outline of their agreement or areas of disagreement to the court.^[177]

6.136 In the US, for example, parties must confer as soon as practicable—and in any event at least 21 days before a pre-trial hearing—and must submit a proposed discovery plan to the court within 14 days after their conference.^[178] In the UK, the documents submitted to the court in advance of the first case management conference must include a summary of the matters on which the parties agree and disagree in relation to disclosure.^[179] Therefore, parties must discuss disclosure issues before the first case management conference but are encouraged to do so even before proceedings are commenced in complex cases.^[180] Equally, proposed amendments to the High Court Rules (NZ) would require parties to discuss discovery orders not less than 14 days before the first case management conference—when the judge will decide on discovery orders—and file a memorandum setting out the orders sought not less than seven days before that conference.^[181]

6.137 By way of contrast, the Federal Court’s Practice Note CM 6 does not require parties to provide the Court with any account of agreements in relation to the discovery process—at any stage—not least, before orders for discovery are made. Rather, the practice note suggests that the Court will have already made orders for discovery—and subsequently ordered that documents be discovered in electronic format—when the expectation on parties to consider practical discovery issues arises.^[182]

6.138 When considering discovery issues and preparing an agreement on these matters, litigants in the UK are assisted by detailed provisions in Practice Direction 31B that discuss a variety of topics the parties might address—such as the use of keyword and other automated searches for documents, the factors relevant to the reasonableness of searches, including the accessibility of documents, and the disclosure of metadata.^[183] In the course of their discussions, parties can complete and exchange the Electronic Document Questionnaire attached to the practice direction, ‘in order to provide information to each other in relation to the scope, extent and most suitable format for disclosure of Electronic Documents’.^[184]

6.139 The UK’s practice direction was picked up by a sub-group of the New Zealand Rules Committee, comprised of members of the legal profession, which developed a discovery checklist and a detailed exchange protocol.^[185] Under proposed new High Court Rules (NZ), parties must have regard to this checklist of matters when formulating an agreement in relation to discovery orders.^[186]

6.140 The Federal Court’s Practice Note CM 6 also includes a discovery checklist and draft document management protocols.^[187] While these instruments address broadly the same topics as those in the UK and proposed in New Zealand, they are not as detailed as the guidance provided, for example, by Practice Direction 31B (UK).

6.141 Another point of difference between the Federal Court and other jurisdictions is the expression of the court’s responsibility to interrogate the appropriateness of parties’ agreed approach to discovery, and to be an active participant in finalising discovery issues. The facilitative role of judges may be assumed in the Federal Court’s docket system, where judges are responsible for the management of proceedings from start to finish. These expectations of the Court may also be part of the operation of s 37M of the Federal Court of Australia Act.^[188] However, the court’s role in facilitating discovery is expressed more clearly in jurisdictions other than in the Federal Court. In the UK, for example, the court must give directions in relation to disclosure of documents if it considers that the parties’ agreement on the matter is inappropriate or insufficient.^[189] In the US, the court is required to hold a pre-trial conference to consider the parties’ proposed discovery plan, at which point the court may modify the extent of the proposed discovery or include other appropriate matters.^[190]

6.142 In contrast, the Federal Court ‘may’ require parties to attend a hearing to resolve any disagreements.^[191] However, with respect to matters agreed between the parties in relation to discovery, there is no explicit expectation on judges to assess those agreements and make adjustments where appropriate.

6.143 The approaches taken in the US and UK—in terms of the cooperation required of litigants and the active participation of the courts—have attracted some criticism. The introduction of the Electronic Documents Questionnaire in the United Kingdom, for example, raised concerns with the legal profession about the amount of work and cost involved. Lawyers were concerned that, in order to respond to the questionnaire, they would have to get across the structure of their clients’ document management and storage systems:

lawyers will effectively need to carry out ‘data mapping’ exercises with their clients and IT experts so that they understand their client’s IT systems and data management practices.^[192]

6.144 There were also concerns about the expense incurred by parties in completing the questionnaire, and frontloading litigation costs:

the general form of the complaint is that there is already too much pre-issue and pre-trial paperwork and that the questionnaire merely adds to the pile.^[193]

6.145 Concerns in the US largely relate to the way in which parties and courts meet and enforce the expectations upon them in the discovery process. There are reports that ‘the meet-and-confer is too often treated as a perfunctory “drive-by” exchange’, which then means that ‘the Rule 16 conference may accomplish little more than setting a few dates’.^[194] Judge Paul Grimm has stated that, in his experience, ‘courts seldom receive discovery plans from the parties that reflect meaningful efforts to drill down on the issues they are supposed to discuss at the r 26(f) conference’.^[195] At the same time, legal practitioners in the US have noted that judges themselves may fail to exercise the broad power that r 16 gives them to order conferences, control timing, and discourage waste.^[196]

Submissions and consultations

6.146 In the Consultation Paper, the ALRC proposed that:

In any proceeding before the Federal Court in which the court has directed that discovery be given of documents in electronic format, the following procedural steps should be required:

(a) the parties and their legal representatives to meet and confer for the purposes of discussing a practical and cost-effective discovery plan in relation to electronically-stored information;

(b) the parties jointly file in court a written report outlining the matters on which the parties agree in relation to discovery of electronic documents and a summary of any matters on which they disagree; and

(c) the court to determine any areas of disagreement between the parties and to make any adjustments to the proposed discovery plan as required to satisfy the court that the proposed searches are reasonable and the proposed discovery is necessary.

If so satisfied, the court may make orders for discovery by approving the parties’ discovery plan.^[197]

6.147 All submissions that addressed this proposal were in support.^[198] However, a number of submissions suggested that the proposed procedure should not be restricted to discovery of documents in electronic format.^[199] For example, the Queensland Law Society submitted that it:

supports these procedural steps being required in all matters in which discovery is to be given (not simply those matters in which discovery is to occur electronically). The Society recognises that this proposal reflects CM6, but in mandatory terms.^[200]

6.148 Another suggestion for modification to the proposed procedure was made by a group of large law firms, which expressed concerns that this planning process would only commence after the Court had ordered discovery of documents, and only result in directions as to how such documents stored in an electronic format are to be discovered.^[201] The group argued that the matters addressed in a discovery plan should be made known to the Court when making orders for discovery of documents:

the procedure envisages that the Court will make directions in relation to the discovery of ESI before the parties are required to give a proper consideration to the time and cost involved in providing discovery of such documents or have adequate information about their opponents’ documents and storage and retrieval systems, which is one of the downfalls of the current position …

In reality, parties are often making enquiries in relation to the existence of the ESI and the process for retrieving and reviewing that information at an early stage of the proceedings in order to assess the costs involved in the discovery process. It would therefore seem sensible for the procedure for obtaining discovery orders to capture that information at an early stage and include a mechanism for having that information put before the Court at the time discovery orders are being considered.^[202]

6.149 The submission proposed that the outcome of the procedure should be orders for discovery of documents that endorse a plan setting out the process the parties are required to undertake in order to produce those documents, including the agreed reasonable searches that should be undertaken.^[203] The benefit of this approach would be that the Court could consider the costs implications of the parties’ proposed plan for discovering documents when making orders:

This procedure will require parties and the Court to properly consider all aspects of discovery, including the costs and time involved in discovering ESI, before discovery orders are made, rather than orders being made in a vacuum and those issues being addressed only after such orders are made and costs incurred.^[204]

6.150 The group also supported the intention for discovery plans to delineate the entirety of the parties’ discovery obligations—in terms of both the range of documents to be discovered and the process for discovering those documents—so as to avoid the inefficiencies and expense of an ad hoc discovery regime:

Accordingly, in the ordinary course once parties have agreed on the discovery plan and the Court has made orders in accordance with it there should be no departure or modifications arising should further documents be located in the future. This is a key issue for large corporate defendants when dealing with huge volumes of both electronic and hard copy documents. Expansion of discovery categories often requires retrieval processes to be repeated at considerable cost.^[205]

6.151 While supporting this proposal, the Law Council expressed concern about its impact on relatively small cases and suggested that the proposed procedure should only be utilised where the number of documents was expected to be greater than 500.^[206] On the other hand, the Association of Legal Support Managers (Qld) took the view that parties should be required to comply with these procedural requirements in all cases—noting that ‘it is flexible enough to be of little burden to parties in matters where there are few records to be gathered or produced’.^[207] With respect to large-scale litigation, the group of large law firms advised that the proposed procedure ‘may result in costs being incurred by parties before discovery orders are made, [but] we believe it will reduce the overall costs incurred as it will promote a more efficient discovery process’.^[208]

6.152 Importantly, the group dismissed the concern that parties might prepare ill-considered or under-developed plans, pointing out that this was

countered by the fact that there will be an incentive for parties to develop a plan properly where they know it is required by the Court (rather than just expected) and will be actively reviewed by the Court. The purpose of the plan is to ensure that discovery is only provided to the extent that is necessary and reasonable in the context of the proceedings. However, judges will need to be diligent in enforcing these requirements so that parties know that ill-considered plans will not be accepted by the Court.^[209]

6.153 A number of submissions proposed that parties should be required to take certain steps in the process of formulating a discovery plan. For example, some suggested that, as a preliminary step, parties should be required to exchange information about the likely locations and custodians of relevant documents.^[210] Similarly, others suggested that parties should be empowered to hold pre-trial oral examinations of each other as to the existence and likely location of relevant documents.^[211] In addition, there were suggestions made in a number of submissions about particular topics that discovery plans should address, such as: strategies for reviewing potentially discoverable documents;^[212] the timeframe for discovery;^[213] and its likely cost.^[214] These suggestions and proposals are considered further below, in relation to Recommendations 6–5 to 6–7 for guidelines on discovery plans.

ALRC’s views

6.154 Commentators on e-discovery acknowledge cooperation and transparency between the parties as keys to success. For example, the Sedona Conference Commentary on Achieving Quality in the E-Discovery Process recognises that:

Practicing cooperation and striving for greater transparency within the adversary paradigm are key ingredients to obtaining a better quality outcome in e-discovery. Parties should confer early in discovery, including, where appropriate, exchanging information on any quality measures which may be used.^[215]

6.155 The ALRC considers that the Federal Court’s Practice Note CM 6 is broadly consistent with the ideals of cooperation and transparency in the discovery process. The ALRC supports the intentions of the practice note in encouraging parties to discuss and agree upon practical and cost-effective measures for the discovery and production of documents stored in an electronic format.

6.156 However, in the ALRC’s view, reform is necessary to ensure that parties are meeting these expectations and that the Court is enforcing these requirements, in appropriate cases and at a suitable stage in the proceedings. This may be achieved through changes that express, in clearer and more mandatory terms, the expectations of the parties to cooperate and to be transparent in relation to discovery issues, as well as the expectations of the Court to facilitate a cooperative and transparent approach to discovery in litigation.

Specific expectations of the parties and the Court

6.157 The ALRC considers that the expectations of the parties should be that, before orders for discovery are made, the parties should:

• discuss in good faith and endeavour to agree upon a practical and cost-effective plan in relation to the scope and process of any discovery;

• file a draft discovery plan, setting out the matters on which the parties agree and disagree in relation to discovery; and

• attend the Court to resolve any areas of disagreement, or to inform the Court of the reasonableness and proportionality of the proposed discovery plan.

6.158 The ALRC considers that the expectations of the Court should be that, in making orders for discovery, it should:

• resolve any areas of disagreement between the parties as to the scope and process of the proposed discovery;

• assess the reasonableness and proportionality of a proposed discovery plan, making amendments to the plan where necessary; and

• make orders for discovery by endorsing a final discovery plan.

Principles of discovery plans

6.159 The ALRC considers that the development of discovery plans, in appropriate cases, will promote the principle of efficiency—that the costs of discovery should be proportionate to the issues in dispute.^[216] It will ensure that, in appropriate cases, parties and the Court consider the practical aspects of discovery process—including the likely time and costs involved—in addition to the categories of discoverable documents, when seeking and making orders for discovery. A more comprehensive view of discovery, encompassing the cost implications of the whole discovery process, will better inform the parties and the Court on the issue of proportionality.

6.160 In the ALRC’s view, discovery plans, where appropriate, will also promote the principle of accessibility through greater certainty—in that justice initiatives should reduce the net complexity of the justice system.^[217] Complexity in discovery, particularly large-scale discoveries, can often be the result of uncertainty. For example, excessive measures might be taken to make sure a search was ‘reasonable’.^[218] The development of a discovery plan will ensure that, in appropriate cases, orders for discovery specify not only the range of documents to be discovered, but also the process by which those documents will be discovered and produced for inspection. This level of certainty in the discovery process—through judicial determination of parties’ practical obligations, before discovery is carried out—will obviate the need for unnecessarily complex, repetitive or overly stringent discovery techniques. Parties would not be required to do any more or less than what is set out in a court ordered discovery plan.

Empowering parties and the Court to utilise discovery plans

6.161 The ALRC considers that these expectations of the parties and the Court should be made clear in the Federal Court Rules, supported by Federal Court of Australia practice notes to guide the parties on what the Court expects of them.

6.162 The Federal Court Rules should provide that before the 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.

6.163 The ALRC considers that this rule would complement the Court’s existing case management powers that may already be used to make such orders—on its own motion, without an application by the parties. As stated in s 37P of the Federal Court of Australia Act, when making directions about the practice and procedure to be followed in proceedings, the Court may ‘require things to be done’^[219]—such as, require the parties to prepare a discovery plan for electronic documents in accordance with Practice Note CM 6.^[220] The recommended rule is not intended to limit the use of discovery plans to proceedings in which the parties apply for such orders. The Court may, on its own motion, order parties to file a discovery plan in any case.

Providing the opportunity to prepare discovery plans

6.164 The ALRC considers that measures should be put in place to ensure that the Court and the parties turn their minds specifically to the possibility of preparing a discovery plan in each case. The potential benefits of discovery plans will not be realised unless the parties actively seek to use them or the Court requires their use in appropriate cases. Moreover, the utility of discovery plans should be considered as early as practicable in proceedings in order to maximise the potential efficiencies of any discovery plan. The need for a discovery plan should be considered, for example, before the parties carry out extensive searches of their own documents in preparation for discovery—which can occur early in some cases where parties need time to search through large volumes of documents—as those searches might turn out to be unnecessary under an agreed discovery plan. Having the parties address this issue early in proceedings might also assist the Court in scheduling other interlocutory stages of the proceeding.

6.165 The ALRC recommends, therefore, that Federal Court practice notes should draw to the parties’ attention the relevant Rule and provide that the parties will be expected to address, at the earliest practicable stage in proceedings, whether an order for the preparation of a discovery plan is likely to be sought.

Types of cases in which to use discovery plans

6.166 The ALRC considers that reform should ensure that orders to prepare a discovery plan are only sought by the parties and made by the Court in appropriate cases. As such an order would generate costs for all parties, this may not be proportionate to the issues in dispute in every case. Large, complex and high-stakes litigation—only a portion of the Federal Court’s overall caseload—may be able to carry this cost while maintaining proportionality to the issue in dispute, and a discovery plan may generate efficiencies in such litigation. However, in other cases, the costs associated with discovery plans might be disproportionate to the issues in dispute—even though the planning process may be flexible enough to run at a lower cost in more straightforward cases.

6.167 The types of cases in which discovery plans might be appropriate could include cases where the parties should be seeking limited or non-standard discovery.^[221] Large volumes of documents may require a limited scope of discovery to keep the number of documents within manageable bounds, and might also require a discovery plan to ensure a reasonable and proportionate process of discovery. Where parties seek standard or general discovery,^[222] the proceeding should be routine or straightforward so as not to warrant the preparation of a discovery plan. However, in some cases, a discovery plan setting out the process by which a party will provide general or standard discovery may be appropriate.

6.168 While it may be a relevant consideration, the format in which discovery is to be given or in which the documents are stored should not determine whether discovery plans are used in proceedings. The preparation of a discovery plan might create efficiencies and enhance certainty in litigation, whether the documents are in an electronic or hardcopy format.

6.169 The ALRC does not recommend any provisions that will limit the circumstances in which the Court may consider it appropriate for the parties to prepare a discovery plan. While the Court has discretion to determine, in the circumstances of each case, whether to grant an application for an order requiring the parties to prepare a discovery plan, the proposed amendments to the Federal Court Rules will provide expressly that the Court may have regard to the nature and complexity of the proceedings, and deal with them in a manner proportionate to their nature and complexity.^[223]

6.170 To support the operation of these rules in relation to orders for the preparation of discovery plans, the ALRC recommends that Federal Court practice notes should provide the factors likely to be relevant in an application for such orders. This might include, for example: the issues in dispute and the likely number of documents or volume of data that might be discoverable in relation to them; the format in which documents are stored or managed; the format in which documents would be produced; and the methods or technologies that might be used in the discovery process.

Highlighting the expectations of the parties and the Court

6.171 Where the Court orders parties to file a discovery plan, the expectations of the parties in carrying out such orders should be made clear. The ALRC recommends that the Federal Court Rules should provide that, if the Court makes this 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. Such reform would mandate the expectations of parties currently expressed in Practice Note CM 6, in cases where the Court has decided that a discovery plan should be filed. This will ensure that parties are cooperative and their actions transparent, within the context of adversarial litigation, in the development of a discovery plan.

6.172 The ALRC also considers that practice notes should provide additional support for the parties by setting out what is expected of them in conducting good faith discussions and endeavouring to agree on a discovery plan. The ALRC recommends that Federal Court practice notes should provide that the parties are expected to take into account relevant guidelines on the formation and content of discovery plans.^[224]

6.173 The parties may also be expected to attend the Court to resolve any areas of disagreement, or to inform the Court of the reasonableness and proportionality of a proposed discovery plan. These expectations are consistent with the facilitative model of justice which frames this Report, as well as the overarching purpose of civil practice and procedure stated in s 37M of the Federal Court of Australia Act. It would not be possible for the Court or the parties to devise a reasonable and proportionate discovery plan without the assistance of the other. The ALRC recommends that Federal Court practice notes should also highlight these particular expectations of the parties in the development of a discovery plan.

6.174 The ALRC acknowledges that the efficiency and effectiveness of discovery plans will depend, to some extent, on the Court rejecting any plans that are unreasonable, uncertain or would incur disproportionate costs. The ALRC considers that the expectation of judges critically to assess discovery plans and make appropriate amendments is consistent with the operation of s 37M of the Federal Court of Australia Act.^[225] In particular, s 37M of the Act states that the overarching purpose of civil practice and procedure includes ‘the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute’.^[226] In addition, proposed r 20.11 of the Federal Court Rules provides that a party may apply for discovery only if it is necessary for the just determination of issues in the proceedings.^[227]

6.175 The requirement of s 37M of the Federal Court of Australia Act—to interpret and apply the Federal Court Rules in the way that best promotes the overarching purpose of civil practice and procedure—should ensure that judges are consistent in evaluating the adequacy of parties’ discovery plans against this purpose. These provisions highlight the expectation of the Court to assess whether the terms of a discovery plan are proportionate and necessary in the circumstances of each case. The Court would be expected to reject any plan or make amendments to the plan to ensure that any discovery orders are necessary and proportionate. The clear expectation of the Court to scrutinise discovery plans should, in turn, ensure that parties do not present to the Court plans that are ill-considered or under-developed. Parties will be encouraged to plan a proportionate discovery process carefully if they are aware that the Court will take a critical eye to any proposed discovery plan.

Guidelines on the formation and content of discovery plans

6.176 A number of submissions suggested that the use of discovery plans in Federal Court proceedings should be supported by greater guidance about the matters that should be addressed.^[228] There were also suggestions made in several submissions about certain steps the parties should take in the process of developing discovery plans,^[229] which might be included in such guidelines.

6.177 In addition, submissions provided examples of particular approaches to discovery that have proved effective and efficient, as well as certain methods which had caused inefficiencies in proceedings.^[230] Such examples might also be captured in guidelines to inform the parties in relation to the reasonableness and proportionality of discovery plans, enhancing certainty of expectation and, in turn, consistency in practice.

6.178 As pointed out by Legg, the advantage of having these kinds of guidelines in place is that ‘it will avoid matters being overlooked or omitted because of a lack of knowledge or inadvertence’.^[231]

6.179 There is a variety of existing guidelines, checklists, directions and pro-forma documents relating to discovery in Australia and overseas which could be referenced in the development of a discovery plan, including:

• the Federal Court’s Pre-Discovery Conference Checklist and draft Document Management Protocols;^[232]

• the UK’s Practice Direction 31B and Electronic Documents Questionnaire;^[233]

• the Ontario Bar Association’s Checklist for Preparing a Discovery Plan and Annotated E-Discovery Checklist (with suggestions on how to minimize
  e-discovery costs);^[234]

• the US Electronic Discovery Reference Model;^[235] and

• the Practical Discovery Guidelines for Lawyers published by the Association of Legal Support Managers (Queensland).^[236]

6.180 In addition, proposed amendments to the High Court Rules (NZ) would provide a discovery checklist and examples of listing and exchange protocols.^[237]

6.181 The following section of this chapter outlines a number of matters that could be included in guidelines for discovery plans, based on comments in submissions and existing guidance in relation to discovery.

Identification of repositories of documents

6.182 Contributors from a group of large law firms submitted that, as an initial step in the development of a discovery plan, the party giving discovery should provide the party seeking discovery with information about the places that might be searched and any issues with accessing those locations.^[238] The submission proposed that, in respect of a party’s own discovery, the party should be required to set out:

• a summary of the location of potentially discoverable documents (eg archives, computer servers, email accounts, back up tapes) and the relationship between them (ie are the same documents likely to be stored in more than one place);

• a list of individuals, employees, agents or contractors who may hold relevant documents (categories may therefore be framed by reference to the individuals who hold, created or received documents so as to avoid the need for a more extensive and costly search); and

• any difficulties or issues that they foresee arising with the discovery of documents. For example costs, time, confidentiality, accessibility of ESI and any potential gaps in ESI where, for example, emails are deleted after a certain amount of time.^[239]

6.183 Similarly, the Law Society of New South Wales submitted that a ‘search protocol’ should be exchanged between the parties which identifies the possible repositories of discoverable documents:

Such a protocol document would:

• identify each and every database which may contain relevant discoverable material; and

• record detailed information regarding the level of effort in terms of time and cost that would be required in order to retrieve, review and produce discoverable material from each of those identified document repositories.^[240]

6.184 The Law Council also suggested that planning a discovery process should involve ‘identifying the systems used and types of records held by the client, and the physical custodians’.^[241]

6.185 The Law Society argued that such planning would ‘enable the Court to make determinations that reduce costs by ensuring that the parties are only required to undertake reasonable and proportionate searches having regard to a cost/benefit analysis’.^[242]

6.186 As noted by the Law Council and in other submissions, parties might use the Electronic Documents Questionnaire attached to Practice Direction 31B (UK) to identify potential repositories of discoverable documents.^[243] The use of this questionnaire is also recommended in the Practical Discovery Guidelines for Lawyers published by the Association of Legal Support Managers (Queensland).^[244]

6.187 Another way for the party seeking discovery to pinpoint potential repositories of relevant documents might be to conduct an oral examination of representatives of the party giving discovery about their document management systems and record retention policies. Some submissions suggested that the Court and the opposing party should be able to examine a party as to their knowledge and possession of relevant documents.^[245] For example, the Australian Government Solicitor submitted that:

at a theoretical level at least, we can see the use of depositions directed to identifying evidence and documents that an opposing party may hold as a potentially useful adjunct to the discovery process. Depositions may allow a party who is considering seeking discovery to better assess what documents the other party has in its possession and whether it is relevant to a material issues in dispute. This could assist in reducing speculative discovery. One potential advantage of depositions is that answers are given on oath which may give a party seeking discovery the confidence to be more precise in targeting documents to be discovered without fear that potentially relevant documents or classes of documents might be missed.^[246]

6.188 The use of pre-trial oral examinations is discussed further in Chapter 10.

Identification of relevant categories of documents

6.189 The Federal Court’s Pre-Discovery Conference Checklist currently provides that parties should agree on the scope of discovery having regard to Practice Note CM 5,which asks whether discovery should be limited to defined categories of documents.^[247]

6.190 The Law Council submitted that standard discovery in intellectual property disputes should be limited to certain pre-defined categories of documents:

Intellectual property cases often involve the discovery of a large number of technical documents that are not readily transparent to lawyers. It is often the case that such documents were created in foreign jurisdictions and over a long period of time, potentially over 100 years in some copyright cases and typically 15–20 years in patent cases. The use of pre-existing categories will reduce discovery disputes and enable parties to approach litigation with a reliable expectation as to the scope and cost of discovery. Discovery should only be expanded beyond these pre-defined categories if justified by special circumstances.^[248]

6.191 In relation to patent cases, the Law Council referred to the decision in Wellcome Foundation v VR Laboratories (Aust) Pty Ltd, in which Aitkin J commented that:

[D]iscovery should be confined to research and development and experiments before the priority date … [I]f discovery relating to experiments is to be made it should not relate to a period later than the priority date.^[249]

6.192 The Law Council submitted that, within these categories it would expect the following documents to be discovered:

• documents summarising the invention;

• the inventor’s notebooks; and

• minutes of relevant meetings of or with the inventor.^[250]

6.193 In relation to trade mark cases, the Law Council submitted that standard discovery should exclude documents relating to the extent of use of a mark or its commercial success, unless this is a real issue in dispute—for example, in cases under ss 60 or 120(3) of the Trade Marks Act 1995 (Cth).^[251] It also submitted that documents relevant to the quantum of damages in trade mark cases should be excluded from discovery until after a determination of infringement has been made.^[252]

Identification of excluded documents

6.194 The Federal Court’s Pre-Discovery Conference Checklist provides that parties should consider any sources or categories of discoverable documents that are to be excluded from the conduct of a reasonable search.^[253] As discussed in Chapter 5, this might include, for example, documents that were once but have not been in the parties’ control for more than six months prior to the commencement of proceedings.

6.195 The group of large law firms submitted that, unless the Court ordered otherwise, discovery should be limited to data that was ‘reasonable accessible’ in the course of the discovering party’s business.^[254] The group also argued that, if the party seeking discovery requested data that was not ‘reasonably accessible’, it should be required to demonstrate that its discovery was necessary.^[255]

6.196 A similar proposal was made by Allens Arthur Robinson, arguing that a rebuttable presumption should be imposed that certain categories of documents need not be searched or produced in the absence of demonstrated need—such as documents stored on backup tapes.^[256]

6.197 Excluding data on backup tapes from discovery in appropriate cases would be consistent with the approach taken in the US. The Federal Rules of Civil Procedure provide that a party need not discover electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost.^[257] This is in line with the principles for electronic document production, published by the Sedona Conference in the US:

The primary source of electronic data and documents for production should be active data and information purposely stored in a manner that anticipates future business use and permits efficient searching and retrieval. Resort to disaster recovery backup tapes and other sources of data and documents requires the requesting party to demonstrate need and relevance that outweigh the cost, burden, and disruption of retrieving and processing the data from such sources.^[258]

6.198 The group of large law firms also set out a number of relevant factors that the Court might take into account in determining the issue of whether requested documents are ‘reasonably accessible’. The Court might consider, for example:

(a) the purposes for which the data is being held in its current format (eg why has it been stored in this way/for what purpose?);

(b) the party’s historical use of the data (eg do they access it regularly?);

(c) the format of the data (eg data which is stored in such a way as to require forensic expertise to restore it to usable format); and

(d) the method(s) required to access the data and the time and costs involved in accessing the data.^[259]

6.199 When considering whether the discovery of documents that are not ‘reasonably accessible’ is justified in the circumstances, the court might consider, for example:

(a) whether the burden or expense outweighs the data’s likely benefit or relevance;

(b) whether the request is unduly cumulative or duplicative;

(c) the quantity of data involved;

(d) a party’s inability to obtain the same or equivalent information from more accessible sources;

(e) the magnitude of the issues at stake in the litigation; and

(f) the resources of the parties involved.^[260]

6.200 Where the Court decides that discovery should be given of documents that are not ‘reasonably accessible’, it was argued that the Court should consider ‘shifting’ the cost of accessing the data on to the requesting party.^[261] This issue, and the factors which the Court might consider in this regard, are discussed in Chapter 9.

Strategies for reasonable searches

6.201 The Federal Court’s Pre-Discovery Conference Checklist currently provides that parties should agree upon the strategies they will use for conducting a reasonable search to locate discoverable documents.^[262]

6.202 A range of computer software can be used to facilitate a ‘reasonable search’ of electronic databases of documents, as one submission explained:

Advanced concept searching software, and more recently predictive coding technology (which is much more accurate than keyword searching), can quickly process large quantities of data and assist in identifying records relating to particular issues. This can be used not only to eliminate clearly irrelevant material, but can significantly reduce the amount of review time required.^[263]

6.203 A number of submissions suggested that discovery plans should specify the terms or functionality of any automated searches which parties will use to interrogate electronic databases of documents.^[264] For example, Allens Arthur Robinson submitted that, where the use of automated searches is appropriate, the parties should agree upon:

• the grouping of documents by concept and the methodology for such categorisation; and

• the nature of searches which may be carried out.^[265]

6.204 Allens Arthur Robinson also suggested that parties should agree to use a common search engine when carrying out any agreed automated searches for documents. This would ensure that:

the results obtained from parties’ searches are as consistent as is technically possible. This should make parties more confident of the search results and may reduce disputes and related expenses, particularly when used as an exclusionary tool.^[266]

De-duplication of documents

6.205 Allens Arthur Robinson proposed that guidelines should establish standards for the de-duplication of documents, to form a basis for the market to create a uniform method of eliminating duplicate documents from discovery, explaining that:

Currently, de-duplication is carried out using an algorithm such as MD5 or SHAH1. Each electronic file receives a unique value with such values used to identify and eliminate duplicates from a data set. Presently, there are a number of different software applications and methods used to create these unique MD5 and SHAH1 values. The effect of this is that while a party can eliminate duplicates from their own data set, it is generally not possible to eliminate duplicates across other parties’ documents. Therefore, parties may well need to review documents received from an opposing party which are, in fact, duplicates of their own documents.^[267]

6.206 To address this problem, Allens Arthur Robinson proposed that practice notes should prescribe certain fields that should be used to describe documents—such as those listed in sch 8 of the Advanced Document Management Protocol annexed to Practice Note CM 6—as well as the order in which those fields should be used in the process of identifying duplicate documents.^[268] The intention would be:

over time, for software developers to modify their tools so that the prescribed fields are utilised as a matter of course facilitating a consistent de-duplication process across the industry.^[269]

Timetable and estimated costs of discovery

6.207 The Federal Court’s Pre-Discovery Conference Checklist provides that parties should agree on a timetable for discovery and exchange their best preliminary estimate of the costs associated with discovery.^[270]

6.208 NSW Young Lawyers commented that discovery plans should specify, in particular, a timeline for the completion of discovery by the parties.^[271]

6.209 Several submissions supported including estimates of costs in discovery plans.^[272] For example, the Law Council saw value

in the practitioners for a party, with a substantial discovery burden, being required to estimate the cost of discovery at an early stage and not only informing its client but also informing the party seeking discovery of that estimate. These estimates can then be a factor to be considered as to the reasonableness of discovery orders requested and the party seeking discovery cannot later complain if it loses and then finds it having to meet those costs.^[273]

6.210 The Association of Legal Support Managers (Qld) commented that:

arguments as to costs will be significantly reduced if the parties exchange estimates of the costs of discovery at an early stage and before those costs are incurred. By exchanging such details, the parties and the Court will be better informed to make an assessment as to whether the proposed approach is proportionate. The Court could then make an informed decision as to whether costs should borne by the requesting party.^[274]

6.211 The Association also noted that there are tools available which can provide a ‘snapshot’ of the number and types of records held by a party—which can be used to estimate the likely time and cost of discovery.^[275]

ALRC’s views

6.212 The ALRC considers that establishing practical guidelines will enhance the accessibility of discovery plans. The provision of information enables litigants to understand their position, the options they have and to decide what steps to take. Decisions made by parties and the Court as to the terms of discovery plans would have a direct effect on the course of litigation and the resolution of disputes. In addition to helping parties to develop effective and efficient discovery plans, guidelines may also play a role in assisting the Court when evaluating the appropriateness of a proposed discovery plan.

6.213 The ALRC recommends that Federal Court practice notes should provide a detailed set of best-practice guidelines on the formation and content of discovery plans. These guidelines should: highlight particular matters to be addressed in discovery plans; suggest various ways in which those issues could be explored; and provide guidance as to the best practice for addressing those issues.

6.214 For example, guidelines should direct parties to identify, in the early stages of the planning process, repositories or custodians of potentially discoverable documents. The guidelines could also refer to the UK’s Electronic Documents Questionnaire, or the use of pre-trial oral examinations, as particular means by which this might be achieved.^[276]

6.215 The guidelines should also, for example, direct litigants to focus the scope of discovery on particular categories of document relevant to the crucial issues in dispute. In this respect, the guidelines could suggest various procedures through which the parties might determine which issues in proceedings matter most—for example, as discussed above, parties could provide an outline of the evidence on which they expect to rely at trial, or exchange key documents of particular importance in the proceeding.^[277]

6.216 Where possible, these guidelines should identify specific categories of documents that are typically relevant in certain types of cases for litigants to incorporate into discovery plans, including, for example, in relation to patent disputes, research and development documents created before the priority date.^[278]

6.217 At the same time, the recommended guidelines should direct litigants to identify ‘negative’ categories of documents—which will not be searched for or discovered in proceedings.^[279] In this regard, guidelines might encourage parties to identify repositories of documents that are not ‘reasonably accessible’^[280]—for the purposes of including provisions in discovery plans explicitly excluding these repositories of documents from the conduct of a ‘reasonable search’.^[281] This might include, for example, documents stored on backup tapes or data recovery systems.

6.218 The ALRC considers that guidelines will provide assistance to the parties by setting out relevant factors to be taken into account when considering whether documents are ‘reasonably accessible’ and, if not, whether they should be excluded in the conduct of a reasonable search or whether the party requesting discovery should bear the cost of accessing those documents.^[282] These factors might include, for example, the burden on the party giving discovery and the availability of the information from other sources, the relevance of the requested documents and the magnitude of the issues in dispute, and the resources of the parties.

6.219 In particular, the ALRC considers that guidelines should direct parties to specify in their discovery plan the terms of any proposed strategies for conducting a reasonable search, and provide guidance as to the various strategies that parties might use in these endeavours—such as concept searches and predictive coding.

6.220 Guidelines might usefully outline best practice for the de-duplication of documents, to encourage parties to adopt the same practices in their discovery plans and, through that consistency, ensure that duplicate documents are more readily identified and removed.^[283] Similarly, best-practice examples of document management protocols could be provided in new guidelines—building on those annexed to current Practice Note CM 6—to ensure that parties include such protocols in their discovery plans and achieve consistency in the format in which the parties produce or exchange documents.

6.221 Other topics that the guidelines could address in discovery plans include the redaction of privileged documents, the disclosure of metadata and the form in which the party giving discovery will provide a list of documents. As suggested in Chapter 5, the guidelines could direct parties to consider the application of standard discovery criteria. In particular, parties might address whether a particular kind of ‘relevance’ test should be specified in discovery plans, and whether any limitations should be prescribed in discovery plans for documents no longer in a party’s possession, custody or power.

6.222 Importantly, in the ALRC’s view, guidelines should ensure that parties include a timetable and estimate of costs in their discovery plans—as currently suggested in the Federal Court’s Pre-Discovery Conference Checklist.^[284] The ALRC considers that new guidelines could also provide parties with direction as to how time and costs estimates might be formulated—for example, through the use of software to measure the number and types of documents held by a party.

6.223 The recommended guidelines would serve an important educative function in terms of what is best practice in the formation and content of discovery plans. This would not only guide the parties in developing effective and efficient discovery plans but provide a valuable resource for the Court in assessing the reasonableness and proportionality of the parties’ proposals. This would enhance certainty of expectation and, in turn, consistency in practice.

6.224 The development of the recommended guidelines should involve contributions from all persons with an interest in discovery in Federal Court proceedings. That is, establishing these guidelines in practice notes is not a matter for the Federal Court alone—it should involve the legal profession, litigants and the litigation support industry, among others.

6.225 Chapter 8 considers the potential for judges to refer discovery issues to a registrar or an independent referee, which might involve such persons in the development of a proposed discovery plan for the Court’s approval.

Review of discovery reform in the Federal Court

6.226 In responding to the proposal in the Consultation Paper concerning the collection of data on the proportionality of discovery costs,^[285] a number of submissions commented that this would also be necessary to evaluate any reforms to discovery process.^[286] For example, one submission remarked that ‘the collection of data is essential to the accurate assessment of the substantive impact of any scheme, and is a useful process in its own right’.^[287]

6.227 In support of data collection on discovery costs, the Public Interest Advocacy Centre submitted that it:

should be part of a comprehensive and ongoing review of the federal civil justice system as it is important that questions about the cost of discovery be weighed against issues such as equity and perception of justice.^[288]

6.228 Legg suggested that concerns about the costs incurred in the development of discovery plans should be monitored through the collection of relevant data.^[289]

6.229 Enright and Lewis suggested that the impact of any discovery reform needs to be tested and, in doing so, evaluation of the reform should canvass the experiences of judges who utilise proposed procedures, their feedback on the implementation of the reform, and their suggestions for addressing any concerns.^[290]

ALRC’s views

6.230 It is important that the operation of discovery reform is regularly monitored and assessed to determine whether these changes are achieving the overarching purpose of civil practice and procedure—namely, the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible.^[291] In particular, the implementation of Recommendations 6–1 to 6–5 should be assessed to examine whether the use of discovery plans makes litigation more expensive and, if so, whether that additional expense is justified by the efficiencies achieved through this procedure.

6.231 A particular issue to be assessed in relation to discovery plans would be whether parties are actively seeking to use discovery plans—or whether judges are actively exercising discretion to require the use of discovery plans—in appropriate cases. On the one hand, the use of discovery plans in inappropriate cases may impose disproportionate costs on the parties. On the other hand, failing to use discovery plans in appropriate cases might deny the parties efficiencies in the proceedings. An assessment of these issues might inform further consideration of whether prescriptive measures should be introduced to ensure that discovery plans are utilised in suitable cases.

6.232 Ongoing review and revision of the discovery plan guidelines^[292] also seems necessary, to keep pace with developments in technologies used in the discovery of documents and to reflect current best-practice.

6.233 The Federal Court would be an appropriate body to monitor and assess the operation of discovery plans and supporting guidelines. In particular, the experience of judges who have utilised discovery plans in proceedings would be an important measure of these instruments. Monitoring and assessment should also involve the legal profession, litigants and the litigation support industry. The evaluation of discovery plans could also benefit from the collection of relevant data as referred to in Recommendation 3–1.

Effective document management systems

6.234 The Association of Legal Support Managers (Qld) proposed that reform should require corporate litigants to adopt appropriate record management systems.^[293] The Association argued that the ‘root cause’ of problems with discovery is the disorganised manner in which many litigants keep their records:

Perhaps the single greatest challenge in discovery is how to effectively and efficiently deal with the ever increasing volume of records being retained by organisations (noting that, due to email and social networking, many of the records retained may not relate directly to the business at all) … Compounding the difficulties faced when dealing with these increasing number of records is the fact that many organisations do not have in place systems for managing records. Accordingly, when a lawyer wishes to undertake a review of records for the purpose of case preparation or discovery, the lawyer often encounters large numbers of disorganised records and is tasked with having to create a system for managing those records before any consideration can be given to commencing a review.^[294]

6.235 Australian Lawyers Alliance also observed that:

The reality is that most businesses organise their information, electronic or otherwise, in a way that is suitable to them and there is no thought of litigation at the time this is carried out. It is one of the main reasons why the preservation, collection and discovery of documentation is such an onerous process.^[295]

6.236 It noted that ‘it may not be possible for a party (specifically the respondent) to advise how it can produce documents if they are scattered over a number of personal computers without any formal system in place to retrieve them, other than simply going through what they have retained’.^[296]

ALRC’s views

6.237 Effective information management is an essential pre-cursor to an efficient discovery process.^[297] The ALRC supports initiatives aimed at encouraging litigants to adopt functional document management systems, given the potential for consequential benefits in the discovery process.

6.238 However, the ALRC considers that reform imposing requirements on prospective litigants to manage their records effectively, is beyond the scope of the Terms of Reference for this Inquiry.^[298] Such reform would have an impact on corporations and individuals outside the context of litigation in federal courts, by regulating the conduct of everyday business in relation to information management.