Paying discovery costs in advance

9.26 Another way to limit the cost of discovery may be for the Court to order a party requesting discovery to pay the estimated cost in advance. The Access to Justice Taskforce recommended that the Attorney-General’s Department ‘develop options by which courts may order that the estimated cost of discovery requests would be paid for in advance by the requesting party’.^[23] The Taskforce considered that requiring up-front payment

would assist to ‘reality test’ discovery requests, to encourage proportionate behaviour, and to reduce the burden of carrying the costs of discovery until the end of the hearing.^[24]

9.27 The Taskforce suggested that over-inflated costs estimates that attempted to intimidate a party not to persist with their discovery request may be addressed by judges assessing the reasonable costs of discovery.^[25] It would not apply in all cases, but ‘could be a presumption’:

The Court would need to exercise discretion before making such an order to ensure that parties with a meritorious case were not denied justice through a lack of capacity to pay for reasonable discovery, without which the case would not be able to proceed. Equally, willingness to pay for discovery should not be sufficient to justify that discovery taking place if it is not otherwise reasonably necessary for the conduct of the litigation.^[26]

Submissions and consultations

9.28 In the Consultation Paper, the ALRC asked whether there should be a presumption that a party requesting discovery of documents in proceedings before the Federal Court pay the estimated cost in advance, unless the Court orders otherwise.^[27]

9.29 Nearly all submissions that addressed the question were opposed to the introduction of such a presumption.^[28] It was suggested that being required to pay some costs in advance would prevent some parties from obtaining discovery, and obstruct access to the Court and access to justice.^[29] The Department of Immigration and Citizenship submitted that, while it would ‘dramatically narrow the scope of discovery’ and so ‘may have merit where litigation is conducted between a Government agency and a legal person, or between two legal persons’, it would not be suitable ‘where individuals are concerned’.^[30] The Public Interest Advocacy Centre stated that

many litigants, particularly those who are self-represented, legally aided or otherwise disadvantaged, simply could not afford to pay the estimated costs of discovery in advance and this could mean that for many ordinary individuals such interlocutory costs orders could prevent them from vindicating their legal rights, irrespective of the merits of the proceedings.^[31]

9.30 There was also concern that parties might give an inflated estimate of costs, either deliberately or because the costs of discovery were difficult to estimate, and that courts might struggle to assess the reasonableness of such estimates.^[32] For example, the Australian Government Solicitor expressed concern about ‘the potential that inflated cost estimates, which may be hard to dispute, could be used to scare off an opposing party from seeking discovery’.^[33]

9.31 Other objections to the presumption included that it would ‘likely result in satellite litigation seeking to rebut the presumption or dispute the amount of any estimate’,^[34] and it would add ‘another layer of interlocutory disputation between the parties, therefore making the proceedings more costly, lengthy and cumbersome’.^[35] The Australian Corporate Lawyers Association anticipated that ‘the cases in which the requirement would be waived are those in which the party is most unlikely to pay (eg the litigant in person) and so would limit the effectiveness of the requirement’.^[36]

9.32 However, some submissions suggested that although there should be no such presumption, the Court should have the discretion to order advance payment in some circumstances.^[37] Advance payment might be ordered, for example, for discovery of data that was not ‘reasonably accessible’,^[38] or for documents that would not be discovered under ‘specific disclosure’ under the Civil Procedure Rules (UK).^[39] Concerning the circumstances in which the cost of retrieving data that was not ‘reasonably accessible’ should be shifted to the requesting party, a group of large law firms noted that the following factors were considered in a case before a United States District Court:

• the extent to which the request is specifically tailored to discover relevant information;

• the availability of such information from other sources;

• the total cost of production, compared to the amount in controversy;

• the total cost of production, compared to the resources available to each party;

• the relative ability of each party to control costs and its incentive to do so;

• the importance of the issues at stake in the litigation; and

• the relative benefits to the parties of obtaining the information.^[40]

ALRC’s views

9.33 The ALRC considers that there should not be a presumption that parties requesting discovery pay the likely costs in advance. Such a presumption might obstruct many litigants’ access to justice—the burden may be onerous and many would incur additional costs seeking to overturn the presumption. If parties who were ordered to pay the costs in advance were ultimately successful in the litigation, they might later find that they were unable to recover those costs—perhaps because the other party was unable to pay or because the order stipulated that such costs cannot be recovered.

9.34 Whether and to what extent litigants might deliberately inflate the estimated cost of discovery as a strategy to deter parties seeking discovery is unclear. The ALRC understands that actual litigation costs often exceed initial estimates. This may suggest that parties are more likely to underestimate the costs of discovery. Even so, given the high costs of discovery in some litigation, an estimate of future discovery costs might be considerable—and disproportionate to the issues in dispute—even if it later proves lower than the actual cost.

9.35 While the ALRC is not convinced of the merit of introducing this presumption, it might be appropriate for the Court to order advance payment of discovery costs in some circumstances. For example, some or all of the costs of extracting or retrieving data that is not ‘reasonably accessible’ might be borne by the party requesting the data. This may be a useful order to make when a party requests the discovery of data stored on backup tapes that have been kept for disaster recovery, rather than archival purposes. The Court may also make such an order if, for example, the party requesting discovery has extensive financial resources and the Court considers that an order for advance payment might narrow the scope of discovery to reasonable proportions. An order for advance payment may, therefore, be another useful tool that a judge might use as part of robust case management in relation to discovery.

9.36 While the Court’s existing costs powers may already allow judges to make such orders, the order is not clearly prescribed in s 43(3) of the Federal Court of Australia Act. The ALRC therefore recommends that the Federal Court of Australia Act be amended to provide expressly that the court or a judge may make an order that some or all of the estimated costs of discovery be paid for in advance by the party requesting discovery, and that a party requesting discovery give security for the payment of the cost of discovery. This recommendation is made below, after a consideration of orders to cap the costs that may be recovered for discovery work.