DR 06 Denis Farrar 
17 January 2011

DISCOVERY COSTS QUESTIONNAIRE – ANSWERS
1-1	In which jurisdiction(s) is your experience of discovery of documents in civil litigation largely based?  Please also specify, for example, the particular Courts and Registries.
Answer:
	My practice is almost exclusively family law.  My experience is based on work I have done in the Family Court of Australia and Federal Magistrates Court, Canberra Registry, and to a lesser extent in the Supreme Court of the ACT.  
1-2	In what kinds of litigation or types of proceedings is your experience of discovery largely based?  Please also specify, for example, any particular Court list, such as the Fast Track.  
	Answer:
	In family law discovery normally takes place in financial cases, particularly property settlement matters.  
1-3	In your experience what proportion of the total litigation expense for your client to do discovery costs generally represent?  Where possible, please provide examples or illustrations of discovery costs relative to the total cost of litigation.
`	Answer:
In general discovery costs are not substantial in family law.  Having said that one should distinguish formal discovery in accordance with specific Court Rules with informal discovery or general disclosure, made to comply with the obligations which are imposed on litigants by the provision of the Family Law Rules (Family Court) and Federal Magistrates Court Rules (FMC).  Family Law Rules 2004 introduced a number of concepts which have had the effect of reducing formal discovery and the cost of litigation in that Court.  Those Rules include the requirement for compliance with pre-action procedures (Rule 1.05), and the general duty of disclosure (Rule 13, especially Rule 13.01).  
However as about 80% of matters are litigated in the Federal Magistrates Court the Family Law Rules have become less relevant to the bulk of litigation.  
The Federal Magistrates Court Rules 2001 are far more abbreviated in relation to the provisions for discovery.  There is no obligation for pre-action procedures to be complied with.  There is no general duty of disclosure enunciated in the Rules.  Indeed experience of many practitioners has been that the Federal Magistrates Court is reluctant to compel disclosure by way of discovery, apparently because there is a fear that extensive involvement of documentation is inimical to the object of that Court as set out in Rule 1.03, namely “to assist with the just, efficient and economical resolution of proceedings.”  S.45 of the Federal Magistrates Court Act, combined with Rule 14.02, has generally made it difficult to obtain Orders for Discovery or Disclosure.  Where the subject matter of the litigation is assets of modest value, or assets which, though valuable, are easily identified and valued, discovery is not an important factor.  
Where the property pool involves business assets or complex company/trust structures, discovery plays an important role.  By and large experienced practitioners provide informal discovery on request without difficulty.  Nonetheless, in such matters, the cost of inspection, collation and interpretation of disclosed documents can be substantial, often involving reference to experienced and expensive accountants or other experts.  It is hard to envisage any alternative to these costs for such litigation.
As a general observation the Family Law Courts are reluctant to make extensive analysis of documents possessed by, or relating to the affairs of, third parties, such as family members, trusts or companies which are not the alter-ego of one of the parties to the marriage or defacto relationship.  It is common for such matters to be relevant to the determination of the pool of assets available for division between the parties, or of the financial resources available to the parties from sources which may not represent their assets but nonetheless clearly are a resource upon which they can draw.  
1-4	How do the range and/or complexity of the issues in dispute in a proceeding affect the cost of discovery of documents?
Answer:
See answer to 1-3 above.
1-5	How does the value of what is at stake for the parties in the proceeding affect the cost of discovery of documents?  Where possible, please provide examples or illustrations of the cost of discovery relative to the value of what is at stake for the parties.
Answer:
In property disputes involving small pools which are nonetheless complex, the cost of discovery becomes an important issue to drive settlement.  Competent practitioners advise clients of a range of settlement possibilities taking into account the prospect of continuing the litigation, including discovery, expert fees and lengthy trial.  In all litigation the cost of the proceedings, including the cost of discovery, is balanced against the likely outcome and practitioner’s advise clients as to the cost of and benefit in what they are hoping to achieve.

1-6	In your experience, where the issues in dispute in a proceeding are narrowed or clarified after discovery, what proportion of discovered documents are typically used to resolve some of the issues in dispute, and generally to what extent are the issues in dispute in a proceeding narrowed through the discovery process?
Answer
There is no doubt that many documents are produced on discovery which do not aid the other party in working out the nature of the assets in the property pool, and what is a reasonable outcome.  The Family Law Rules 2004 (Rule 13.07) contains a prescription as to the documents which must be produced in certain types of matters.  That is an attempt to limit disclosure to relevant documents, and is generally successful.  The Federal Magistrates Court Rules do not contain any direct equivalent.  In my experience only a few of the documents produced will be relied upon at trial, but nonetheless the documents not tendered assist in giving a general understanding of the structure and nature of the assets and of their value.  For example in a dispute about the value of a private corporation, the financial statements going back a number of years are generally required in order to demonstrate the trend/s of profitability, expenses, drawings, bank debt, depreciation, etc.  All these aid in determining the value of the business by enabling an expert to form a view as to the level of “maintainable earnings.”  
The analysis of the financial statements of a family trust going back a number of years will demonstrate the pattern of distribution over time to assist in determining whether the Trust should be viewed as “property of the parties.”  
An analysis of bank account statements going back some time may demonstrate patterns of expenditure relevant in maintenance cases, of the salting away of money.  
Probate documents, real estate searches etc will disclose details of inheritances and the manner to which they have been put, all of which are relevant in determining the respective contributions of the parties to the pool of assets they now possess.  
Credit card statements can show whether a party has expended money appropriately or foolishly, factors to be taken into account in determining whether credit card debts should be factored in as a liability.
Access to those types of documents is commonly required in most property settlement cases, depending on the issues involved.
In my experience the issues in a dispute are almost always narrowed through the discovery process.  In my opinion the narrowing of those issues would be aided by a rule permitting a financial enquiry in front of a Registrar where questions concerning the assets, liabilities and financial structures of the parties can be raised with a view to clarifying those matters thereby saving time if there is a trial, and enabling the parties to understand those issues at an early stage thereby enhancing the prospects of settlement.  The old Family Law Regulations contained such a provision but that facility was lost in the Rule Amendments several years ago.
1-7	In your experience, where cases settle after discovery what proportion of discovered documents are usually relied upon during settlement negotiations or other alternative dispute resolution processes, and generally to what extent are those documents influential in the settlement of disputes?
Answer:
See answer to 1-6 above.
1-8	In your experience, where cases proceed to judgment after discovery, what proportion of discovered documents are typically brought before the Court for the determination of a dispute, and generally to what extent are those documents determinative in the Court’s judgment?
Answer:
See answer to 1-6 above.  Whilst there is no doubt that very few of discovered documents are tendered into evidence, inspection of discovered documents enhances an understanding of the value of the pool, and other matters relevant to the Court’s determination of the disputes under the Family Law Act.  Discovery can serve to alleviate lines of argument or enquiry which would be fruitless, as well as illuminate those which have merit.  
Other Comments
Overall it is reasonable to say that the legal profession was sceptical about the introduction of pre-action procedures, including mandatory disclosure of relevant documents, as well as a general duty of disclosure, in the Family Law Rules 2004.  
In my opinion those Rules are successful and should be mirrored in other jurisdictions, and in the Federal Magistrates Court Rules.  With the likelihood of the merger of the two Courts it is hoped that there will be one set of Rules to overcome the differences in approach.  
There is no doubt that the emphasis on disclosure in the Family Law Rules has led to a reduction in expense.  Getting documentation is no longer like “pulling teeth.”  A party who fails to comply with their disclosure obligations is likely to suffer in the final analysis by an adverse Court decision or an Order for Costs or both.