Issues with the process of discovery

3.47 This part of the chapter looks at the issues that can arise in the discovery of documents in proceedings before federal courts, and the current practices and procedures designed to address them. It also assesses the extent to which civil practice and procedure effectively deals with discovery issues, and explores directions for reform of the discovery process in the federal courts.

High Court of Australia

3.48 During initial consultations, the ALRC heard that there have not been any obvious problems in managing the process of discovery in the High Court. Such comments were made in light of the fact that the need for discovery of documents rarely arises in the High Court.

3.49 However, the ALRC is interested in hearing from stakeholders about any issues encountered in relation to the procedures adopted by the High Court for the discovery of documents in civil proceedings.

Federal Court of Australia

3.50 In Managing Justice: A Review of the Federal Civil Justice System, ALRC Report 89 (2000), the ALRC noted that ‘in almost all studies of litigation, discovery is singled out as the procedure most open to abuse, the most costly and the most in need of court supervision and control’.^[54] The issues of scale, cost and delay that can plague a discovery process are most likely to arise in complex cases in the Federal Court’s jurisdiction. This section of the chapter looks at the need for strong case management on the part of the court, the parties and their lawyers, to control the process of discovery in Federal Court proceedings.

High and disproportionate costs

3.51 The discovery of documents may be considered a critical element of fact-finding, truth seeking and decision making in civil litigation.^[55] The advantages of discovery are said to include:

fairness to both sides, playing ‘with all the cards face up on the table’, clarifying the issues between the parties, reducing surprise at trial and encouraging settlement. Any system of disclosure should have as a broad rationale the just and efficient disposal of litigation. It is against this broad rationale that any reforms should be considered.^[56]

3.52 However, parties to civil proceedings may find that the benefits of discovery come at a high cost. Yet, as discussed below, it is not just the amount of money spent on discovery that causes concern. Rather, it is the low value for money that prompts criticism of the discovery process—in terms of the cost of discovery relative to the utility of discovered documents in the context of the litigation.

3.53 The high price of a discovery process was noted in the Victorian Law Reform Commission’s Civil Justice Review, which found that ‘the objectives of the [discovery] process are either not being achieved or can only be achieved at great cost’.^[57] A number of other commentators have also singled out the discovery process as a major litigation expense. For example, in its Final Report in Relation to Possible Innovations to Case Management, the Law Council of Australia stated that discovery ‘is often the most expensive, or at least one of the most expensive steps’.^[58]

3.54 Moreover, there are concerns that the high costs of discovery are pricing litigants out of the court system. Chief Justice James Spigelman of the New South Wales Supreme Court has noted that ‘when senior partners of a law firm tell me, as they have, that for any significant commercial dispute the flag-fall for discovery is often $2m, the position is not sustainable’.^[59] The commercial realities of discovery of this order may represent a significant barrier to justice for many litigants, as the Commercial Litigation Association stated in its submission to Lord Jackson’s Review of Civil Litigation Costs in the United Kingdom (UK) in 2009:

Indeed the realisation must be if the situation is distilled in to the simple question ‘justice or costs?’ costs, commercially, must prevail.^[60]

3.55 Despite such concerns about the high costs of discovery, there has been no systematic collection of data on discovery costs in Australia. An extensive survey of the cost of legal representation was undertaken in 1998-99 for Managing Justice. In particular, the survey asked solicitors to estimate the total legal costs of discovery for cases in the Federal Court. The results showed that the costs of discovery varied according to the complexity of the issues involved. For example, the range of costs for obtaining discovery from another party was $500–$750,000 for applicants and $200–$311,000 for respondents, while the range of costs for complying with discovery requests was $200–$400,000 for applicants and $300–$120,000 for respondents.^[61]

3.56 Since 1999 the range of material potentially to be discovered has increased exponentially through advancing computer technologies—with an attended and significant increase in discovery costs. Electronic communications can be inherently expensive to discover, in part due to the cost of specialist service providers with expertise in computer technologies. For example, Lord Jackson’s Review of Civil Litigation Costs reported that typical service charges for e-discovery include: electronic document processing (extracting metadata, text, attachments etc, for use on a document review system) £250–£1,000 per gigabyte of data, document hosting on a review system at £20–£150 per gigabyte per month and a user access fee between £10–£100 per user.^[62]

3.57 E-discovery costs can also include expensive computer software and hardware. For example, the ALRC heard during initial consultations that the discovery of information stored on old back-up tapes can require the reconstruction of outmoded hardware at great expense in order to read the tapes only to discover completely irrelevant information.

3.58 A number of commentators have noted the distorting effect that technology has had on discovery costs. This includes Acting Justice Ronald Sackville of the New South Wales Supreme Court, formerly a judge of the Federal Court of Australia, who has remarked on the discovery process:

It is here that extraordinary and disproportionate costs are frequently incurred by parties to litigation. Far too often the search for the illusory ‘smoking gun’ leads to squadrons of solicitors, paralegals and clerks compiling vast libraries of materials, much of which is of no significance to the issues in the proceedings. The problem has been compounded, not alleviated, by the exponential growth of electronic communications which can be tracked and often reconstructed after deletion.^[63]

3.59 The sheer volume of data that must be managed in modern trade and commerce can blow out the cost of searching through electronic material for the purposes of discovery, resulting in costs disproportionate to the value of the documents discovered—in terms of their use in the litigation. The increasing amount of information which contemporary litigants must deal with was recently highlighted in Betfair v Racing New South Wales.^[64] In this case, one source of discoverable documents is ‘an electronic data warehouse containing the electronic records of over 2.52 million customers and occupying some 21 terabytes of memory growing at 70 gigabytes per day’.^[65]One terabyte is said to be the equivalent of 500 million printed pages.^[66]

3.60 Concerns about the proportionality of discovery costs—in terms of the extent to which discovered documents are used to facilitate the just disposal of litigation—were taken up by the Access to Justice Taskforce established by the Australian Government Attorney-General’s Department, in its report A Strategic Framework for Access to Justice in the Federal Civil Justice System, which stated that:

The cost of discovery continues to be very high, and often disproportionate to the role played by discovered documents in resolving disputes.^[67]

3.61 Proportionality in this sense may be difficult to measure. The value of discovery is not necessarily limited to obtaining documents to tender at trial but may extend to encouraging settlement and clarifying the issues in dispute. Participants at a discovery seminar convened by the Australian Institute of Judicial Administration (AIJA) in 2007 suggested that the AIJA should undertake a research project to track how many discovered documents are in fact used in litigation.^[68] However, such research has not been undertaken as far as the ALRC is aware.

3.62 The ALRC has heard that the vast majority of litigation settles before trial but not until after discovery of documents. The ALRC was also told that, where settlement is not achieved, parties often abandon certain issues in dispute after discovery is given. For example, in tax matters, the Commissioner may be content, on the basis of discovered documents, that a particular transaction will not attract the general
anti-avoidance provisions of the tax law—whereas the lack of knowledge of a particular transaction prior to discovery may drive disputes over such issues. In these cases, the time taken at hearing will generally be significantly reduced, in part as a result of discovery.

3.63 By comparison, a study of discovery practices in the United States (US) in 1997 looked at the cost of discovery relative to the information needs of the case. This research found that most attorneys surveyed (69%) thought that the discovery generated by the parties was about the right amount needed for the fair resolution of the case.^[69]

3.64 In Australia, some weight might be given to obiter dictum in judgment concerning the futility of discovery as an evidence-gathering process. For instance, in Baulderstone Hornibrook v Qantas Australia Limited, Finkelstein J explained to the parties what use the majority of the documents gathered in the conduct of the proceedings, and tendered in evidence, proved to be in determining their dispute:

BHPL tendered twenty affidavits (which took up three files) and sixteen files of exhibits. Qantas was not outdone. It tendered two lever arch folders of affidavits and eight files of exhibits, many of which were copies of BHPL’s exhibits and, to make matters worse, there was no mechanism to identify which were duplicates. It turned out that much of the evidence put in by each side was irrelevant to any fact in issue and should never have been tendered … Hundreds of pages were never referred to by counsel. The parties seemed to have assumed that it was my task to read all the material and make such use of it as best I could. At the outset of this judgment I wish to record that I have done no such thing. Although I did read most exhibits (including records of meetings, diaries and albums of photos) I could not understand all the terminology and abbreviations employed by the authors of the documents and the relevance of others simply escaped me. To a substantial extent, therefore, I have only considered those exhibits to which I was taken by counsel, although I have no intention of reviewing the voluminous evidence in detail.^[70]

3.65 Commentary from judges clearly highlights the expense wasted on discovery when viewed from the bench, in terms of the disproportionately small number of discovered documents referred to by parties at trial. This concern was voiced by former Chief Justice of the Federal Court, Michael Black, who considered that courts

need to take a more interventionist role to avoid having trolley loads of documents being wheeled into court when hardly any of them are likely to be referred to and when every page will add to the cost of the litigation.^[71]

3.66 The Access to Justice Taskforce surmised that ‘the vast majority of documents obtained through discovery are not of sufficient relevance to be used in the case’.^[72]

3.67 The ALRC is interested in stakeholder experiences in relation to the value or utility of the discovery process on the whole, relative to its costs in general. The ALRC encourages stakeholders to provide examples or illustrations of the degrees to which discovery costs weigh against the value of the documents sought in the context of the litigation.

Discovery of electronic documents

3.68 Electronic technologies have proved necessary to manage the large volumes of hardcopy documents being discovered in Federal Court proceedings. Transforming hardcopy documents into electronic format made vast amounts of information more manageable. The history of e-discovery was described as follows:

An early implementation of electronic discovery technology in Australia was to number the hardcopy documents and manage the index data (eg document number, author, date, type, title etc.) in a database. The index data could then be exchanged electronically by the parties. This was similar to records management technologies in use at that time. In 1990, the $1 billion collapse of the Estate Mortgage Trust led to complex legal proceedings with 12 parties and 750,000 documents. This spurred the development of the Ringtail software suite where the index database was linked to images of the documents. Both the index data and the document images were electronically discovered by the parties in accordance with an exchange protocol.^[73]

3.69 E-discovery has evolved from a hardcopy document management system to the means by which documents are discovered from source to production in electronic format. This follows contemporary corporate behaviour whereby 98% of documents now exist in electronic form only.^[74]

3.70 Electronic discovery has been facilitated by changes to the law. In particular, the enactment of the Electronic Transactions Act 1999 (Cth) affirmed the legal status of electronic records. In addition, proof of communications contained in electronic records was facilitated by amendments to s 161 of the Evidence Act 1995 (Cth).^[75]

3.71 The critical issue that arises in an e-discovery process is whether the conduct of the search for electronic documents carried out by the party giving discovery, and the extent of it, was ‘reasonable’.^[76] This requirement echoes the concerns discussed above about the need for proportionality in the cost of a discovery process.

3.72 Whether the search satisfies the threshold of ‘reasonableness’—and is ‘good enough’,^[77] as described by Lord Jackson—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.^[78] 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.^[79]

3.73 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 emails stored electronically in computer terminals, servers and backup tapes. However, Mansfield J ultimately held that those emails were not of sufficiently insubstantial relevance to warrant simply ignoring them.^[80]

3.74 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.^[81]

3.75 A particular issue that can arise in an e-discovery process is the extent to which it is ‘reasonable’ for a party to search through back-up tapes or disaster recovery systems. This is a question of fact and degree and, therefore, will depend on the circumstances of each case—which creates an element of uncertainty for the party giving discovery. For example, in BT (Australasia) Pty Ltd v New South Wales & Telstra,^[82] 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.^[83]

3.76 The limits of a ‘reasonable search’ establish a measure of ‘proportionality’ in the discovery process, in terms of the resources that a party must devote to the discovery of relevant electronic documents. This may be especially important where litigants store electronic documents in a vast and complex network of electronic databases located across a number of countries. However, a proportionate discovery process will not necessarily provide full and frank disclosure of all relevant material. This was pointed out by Morgan J of the High Court of England and Wales in Digicel (St Lucia) Ltd v Cable & Wireless:

The rules do not require that no stone be left unturned. This may mean that a relevant document, even a ‘smoking gun’ is not found. This attitude is justified by considerations of proportionality.^[84]

3.77 Therefore the conduct of a discovery process, especially where extensive electronic material is involved, gives rise to a volatile tension between the parties. Expansive searches are more likely to uncover greater amounts of relevant information offering some assistance to the requesting party’s case but carry a substantial costs burden for the party giving discovery. Reasonable or proportionate searches are more affordable for the discovering party but will inevitably bypass unknown quantities of potentially relevant material sought by the requesting party. In his Review of Civil Litigation Costs in the UK, Lord Jackson described this as the dilemma of the electronic age:

the existence of a vast mass of electronic documents presents an acute dilemma for the civil justice system. On the one hand, full disclosure of all electronic material may be of even greater assistance to the court in arriving at the truth than old style discovery of documents. On the other hand, the process of retrieving, reviewing and disclosing electronic material can be prodigiously expensive.^[85]

3.78 While electronic technologies may be responsible for the sheer volume of potentially discoverable material in modern litigation, technological advances may also offer some assistance in cleaning up the mess it creates for a discovery process. Advanced software systems can provide sophisticated means of reducing time and expense spent on the discovery of electronic documents. The ALRC is interested in hearing from stakeholders about the technical details of different approaches to
e-discovery that help to save time and costs in the process.

Limiting discovery by categories or issues

3.79 The Federal Court has sought to prevent unnecessary expense in the discovery process by limiting discovery obligations in each case to particular issues in dispute or specific categories of documents. This policy was first stated in Practice Note 14,issuedon 12 February 1999, now replaced by Practice Note CM 5 considered above. In these practice notes, the court expresses its intention to avoid general discovery and its expectation that practitioners should limit discovery requests. The adoption of this approach was followed by amendments to the Federal Court Rules in 2004, to clarify that the court may limit discovery by orders under O 15 r 3 on its own initiative rather than on application by a party.^[86]

3.80 The principles that should guide parties when drafting descriptions of categories—as Lindgren J has pointed out—are found in O 15 of the Federal Court Rules. His Honour discussed the relationship between discovery by ‘categories of documents’ and O 15 of the Rules in a number of cases,^[87] including The University of Sydney v ResMed Ltd, where Lindgren J stated that:

It may be appropriate for parties to describe categories in terms which do not expressly incorporate the language of O 15 r 2(3), but that subrule should nonetheless govern the formulation of the categories. Alternatively, of course, the categories may be defined so as to incorporate expressly the terms of the subrule. Whatever approach is taken, it is important to understand that when, as happened in the present case, the Court orders discovery by categories to be notified by one party to another, the Court does not intend that the notifying party be at liberty to widen the discovery obligation beyond the four classes of documents referred to in O 15 r 2(3).^[88]

3.81 In January 2000, shortly after the Federal Court introduced Practice Note 14, the ALRC’s Managing Justice report noted 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.^[89]

3.82 In practice, limiting the scope of discovery requires the parties and their lawyers to make decisions about what it is specifically that the party wants to discover. It also requires active judicial case management to ensure that litigants are controlling their requests for discovery in the interests of keeping the process within manageable bounds.

3.83 Limited discovery might not have proved as successful as it may have been wished. 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 Law Council of Australia’s 2006 Final Report in Relation to Possible Innovations to Case Management described this as the ‘gaming’ process of the categories stage in litigation; whereby the requesting party rolls the dice and hopes for a winner:

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).^[90]

3.84 There are also concerns that the court has abdicated its responsibility for supervising the parties and managing the development of categories for discovery. The absence of judicial case management was commented upon by the Intellectual Property Committee of the Law Council, in the Law Council’s report on case management innovations:

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.^[91]

3.85 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, at a workshop on the court’s case management system in 2008, summarised the current position as follows:

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.^[92]

3.86 However, the ALRC has also heard that most discovery orders in Federal Court proceedings are for general discovery in accordance with O 15 r 2—with close to 70% of discovery orders being made by consent of the parties. This suggests that in most cases disputes do not arise over the categories of discoverable documents, since the parties agree to the general categories in O 15 r 2. It also tends to confirm that the court is not making serious attempts to limit the ambit of discovery to specific documents or issues in dispute, by orders under O 15 r 3.

3.87 In view of such concerns, the ALRC seeks feedback from stakeholders on the extent to which limited discovery has been successfully implemented in the Federal Court and whether this has reduced the burden of discovery.

Discovery plans and pre-discovery conferences

3.88 The Federal Court has sought to ensure proportionality in the search for electronically-stored information by imposing an expectation on litigants to discuss and agree upon a practical and cost-effective discovery plan.^[93] In addition, the court may require the parties to attend a pre-discovery conference to address these issues.^[94]The former Chief Justice, Michael Black, first issued these directions on 29 January 2009 under a revised Practice Note 17. 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.^[95]

3.89 Similar procedures have been established in other Australian and overseas jurisdictions,^[96] aimed at achieving agreement between the parties under the supervision of the court as to the conduct of an electronic discovery process. In the US, parties are required to ‘meet and confer’ under r 26 (f)of the Federal Rules of Civil Procedure 2009 (US) to develop a proposed discovery plan. A report outlining the plan must then be submitted to the court within 14 days of the conference.^[97] Following receipt of the report, the court is required to hold a pre-trial conference under r 16 (b) including for the purposes of issuing a scheduling order setting down a timeframe for carrying out the discovery plan. At this point, the court may modify the extent of the proposed discovery or include other appropriate matters.^[98]

3.90 In the UK, Practice Direction 31B issued under the Civil Procedure Rules 1998 (UK) requires the parties to discuss the disclosure of electronic documents before the first case management conference or even before proceedings are commenced in complex cases. To assist this discussion, an Electronic Document Questionnaire is available for the parties to complete and exchange ‘in order to provide information to each other in relation to the scope, extent and most suitable format for disclosure of Electronic Documents’.^[99] The parties are required to submit to the court a summary of the matters on which the parties agree in relation to disclosure of electronic documents as well as any areas of disagreement.^[100] The court may then give directions in relation to electronic disclosure at the first case management conference.^[101]

3.91 The Federal Court’s practice note was reported to be operating satisfactorily, shortly after it was revised, when Lord Jackson spoke with Federal Court judges in March 2009 during his Review of Civil Litigation Costs.^[102] During initial consultations in the present Inquiry, the ALRC has heard that parties often attempt to make informal agreements as to the scope of an electronic discovery process. The ALRC was told that in some cases the parties may be able to agree on a discovery plan, but in many cases the parties will disagree as to the appropriate conduct of an electronic discovery process—with disputes often arising over the expected burden to the discovering party, and bearing in mind the adversarial nature of litigation. Moreover, the ALRC was informed that parties typically discuss a discovery plan only after the parties have established the relevance of their own electronically-stored information through extensive searches, as parties need to review all of their own documents to draft their pleadings and to position themselves in negotiations with other parties as to the conduct of the discovery process.

3.92 The ALRC also heard that the extent to which judges are actively involved and interested in resolving disputes between parties as to the conduct of an electronic discovery process, and determining the existence and appropriateness of a discovery plan before making orders for electronic discovery, varies between individual judicial officers as well as court registries. The ALRC was similarly informed that parties might or might not be required to address the terms of any arrangements for
e-discovery at a directions hearing or case management conference, depending on the preferences of the particular judge to whose docket the case is assigned. Despite the expectation stated in Practice Note CM 6 that parties will have discussed and agreed upon a discovery plan before the Court makes an order for electronic discovery, there were suggestions that judges are generally reticent to get into the detail of the mechanics of a discovery process. One stakeholder went so far as to adapt a quote often attributed to Otto von Bismarck, comparing the discovery process to a sausage factory, suggesting that ‘judges are happy to eat the sausages but don’t want to know how they are made’.

3.93 In many cases, the party giving discovery may be doing so with some degree of uncertainty as to whether its search techniques are legally sound or defensible. The ALRC has heard that litigants in this situation will often make sure their searches are more than ‘reasonable’ to avoid challenges from another party and possible rebuke by the court. However 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 is a lengthy and costly process, or the result of simple lack of due diligence on the part of litigants and their lawyers.

3.94 In cases where the requirements of a ‘reasonable search’ have not been determined in advance, the discovering party’s understanding of its obligations may fall short of that held by the requesting party and the court. Both parties to Galati v Potato Marketing Corporation of Western Australia (No 2)^[103] gave discovery in this case. However the respondent identified a number of categories of documents for which it did not search, on the basis that it would be ‘very onerous, time consuming and expensive’.^[104] The court was not satisfied that searching for those documents would have been so burdensome that non-disclosure should be allowed and for that reason ordered further discovery.^[105]

3.95 In some cases, the party giving discovery might seek court directions to clarify the extent of its search obligations where no agreement had previously been made with the requesting party. A recent example of this scenario is Police Federation of Australia v Nixon.^[106] In this case, Victoria Police applied for a declaration that ‘[Victoria Police] is not required to conduct further searches for electronic documents stored on G Drives’.^[107] The court made the order sought in this case, as Ryan J was persuaded that:

the expense and trouble which would be incurred would far outweigh any potential assistance to the applicants’ case which they might derive from further searches of the “G drives”. ^[108]

3.96 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’.^[109]

3.97 The ALRC seeks feedback from stakeholders on the extent to which the model espoused in Practice Note CM 6 has been successful in guiding the proportionate discovery of electronic material—in terms of the parties’ obligation to finalise a practical and cost-effective discovery plan and the court’s use of pre-discovery conferences to address these issues—before orders for electronic discovery are made. In particular, the ALRC is interested in hearing from stakeholders whether the expectations stated in Practice Note CM 6 for parties to exchange their best preliminary estimate of the cost associated with discovery, and to agree on a timetable for discovery, are being met in practice.

Options for procedural reform in the Federal Court

3.98 In Managing Justice, the ALRC found that ‘badly managed discovery is widely regarded as the cause of significant cost, delay and unfairness to the parties’.^[110] This part of the chapter considers a number of ways to procure better management of the discovery process. It looks at various options for reform, some developed in previous reviews of discovery and others suggested by stakeholders during initial consultations in this Inquiry. It also outlines the ALRC’s preliminary views on directions for reform of the discovery process.

Stronger judicial case management

3.99 Stronger judicial control over the scope and process of discovery has been singled out by a number of commentators as a critical element of any reform in this area. For example, in its 2006 report on case management innovations in the Federal Court, the Law Council of Australia recommended that ‘discovery should be dealt with at the Case Management Conference with the Docket Judge taking an active role in the speedy resolution of issues as to the scope and timetable for discovery’.^[111] These aspirations were taken up by Finkelstein J in 2008 at a workshop on case management reforms:

The key to discovery reform lies in active and aggressive judicial case management of the process. The most effective cure for spiralling costs and voluminous productions of documents is increased judicial willingness to just say no.^[112]

3.100 Other Australian jurisdictions, most recently Victoria, have also tied discovery reform to stronger judicial case management. The VLRC stated in its Civil Justice Review report, that ‘increased judicial management of the disclosure process … will greatly assist in keeping the scope of disclosure focused and reduce delay and costs’.^[113] Other nations, too, have concluded that improvements to the discovery process are a matter for judicial case management. For example, the Hong Kong Chief Justice’s Working Party on Civil Justice Reform found ‘a broad consensus that the excesses of discovery ought to be tackled by appropriate case management by the courts’.^[114]

3.101 However, the efficiency and effectiveness of a discovery process does not necessarily result entirely from the degree of control that individual judges are willing to exercise in their capacity as case managers. There may be a number of obstacles that need to be removed—or changes made—to enable stronger judicial control over the discovery process, including:

• clearer definition of the real issues in dispute, in relation to which discovery obligations may be limited;

• procedural obligations on the parties and the court to ensure that practice and cost-effective discovery plans are in place prior to the search for discoverable documents stored in electronic format;

• clearly delineated case management powers with respect to discovery, including the power to impose sanctions for discovery abuse or default;

• the employment of a ‘special master’ to case manage the discovery process;

• the use of costs powers to control discovery requests and voluminous production of documents, by requiring payment in advance and limiting legal fees for discovery work; and

• education and training for judges to enhance skills and capabilities in case management of the discovery process, including the technologies used to discover electronic documents.

3.102 The potential for reform in these areas is explored below.

Clearer definition of the real issues

3.103 For the court to case manage the discovery process effectively, the issues in a particular case need to be clearly defined. The responsibility for containing the discovery process, therefore, lies both on the court and the parties through their legal representatives. This was recognised at the AIJA’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.^[115]

3.104 Pleadings are supposed to define the issues in each case and, in doing, so limit the ambit of discovery and the evidence which needs to be prepared for trial.^[116] 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.^[117] 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.

3.105 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.^[118]

3.106 Initial consultations in the present Inquiry revealed a widely held view that in most cases significant improvements could be made in the discovery process if the real issues in dispute were more clearly defined beforehand. As Stephenson put it:

it is important at the outset, before any preparation in relation to discovery is done, that the scope of the controversy be properly defined.^[119]

3.107 The following sections of this chapter explore a number of ways in which the core issues in dispute could be more clearly defined, with a view to limiting the ambit of discovery 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 and key documents on which they intend to rely at trial.

Initial directions hearing or case management conference

3.108 The Federal Court has introduced specific procedures for matters in its Fast Track List^[120] and with respect to tax matters. Both Practice Note CM 8 and Practice Note Tax 1 impose an obligation on the parties to proceedings in the Fast Track List and Tax List respectively to outline the issues and facts that appear to be in dispute, at an initial directions hearing called the ‘scheduling conference’.^[121]

3.109 A similar procedure, called the ‘case planning conference’, was introduced in the Supreme Court of British Columbia on 1 July 2010.^[122] 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’.^[123] The Working Group identified key objectives of the case planning conference to include the narrowing of issues and directions for discovery.^[124]

3.110 The same objectives are sought to be achieved in the US through
‘Pre-Trial Conferences’ under r 16 of the Federal Rules of Civil Procedure. The Pocket Guide for Judges in the US 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’.^[125]

3.111 In her account of the Fast Track experience, Gordon J 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.^[126]

3.112 While this practice is not as explicitly required 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?^[127]

3.113 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^[128] 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’.^[129]

3.114 During initial consultations, the ALRC was told that, in effect, the judge or registrar presiding at a directions hearing or scheduling conference is 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 case management pocket guide for judges 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.^[130]

3.115 The approach which judges in the 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?^[131]

3.116 Not all judges in the Federal Court may be entirely comfortable in pressing the parties or their lawyers to limit the issues in dispute, with a view to focusing tightly the scope of discovery. In initial consultations, the ALRC heard that varied levels of effectiveness amongst judges in this regard have prompted some litigants to ‘forum shop’ between registries—that, on occasion, litigants have sought to commence or transfer proceedings to a registry where they are less likely to be as restricted on the matters in relation to which discovery may be sought.

3.117 Therefore there may be concerns that clarifying the obligation on parties to outline the issues in dispute when seeking orders for discovery would not, itself, achieve any significant efficiency in the process. Unless the court effectively enforces this obligation by interrogating the parties as to the nature of their case, such reform might not result in any meaningful clarification of the issues in dispute. As discussed below, additional measures may be required to minimise the dependence on judges to extract a clear definition of the case from the parties and to put the onus to do so more squarely on the parties to limit their own requests for discovery.

Statement of issues in dispute

3.118 One way to clarify the real issues in a particular case, in relation to which discovery may be limited, would be to introduce a requirement on the party seeking discovery to submit a written statement of the issues. This could mean, for example, filing and serving a statement of issues for discussion at an initial directions hearing or case management conference as discussed above.

3.119 The statement could set out in narrative form the factual issues that appear to be in dispute between the parties, as well as any legal issues and the conclusions that the parties wish the court to draw. To identify which of these issues matters most to the party seeking discovery, the statement could be tiered in order of importance. This statement may give a better indication than the pleadings of which are the main facts in issue and which are subordinate or collateral facts in issue, as well as the essential ingredients in the cause of action or defence.

3.120 The party seeking discovery could also be required to include in this statement a description of the specific documents or categories of documents which it expects to discover from another party. This may indicate how the scope of discovery could be limited to key documents or expanded to other documents relating to less critical issues, or indeed whether documents are even necessary to resolve certain issues.

3.121 This statement of issues could then form the basis of discussion at an early directions hearing or case management conference. Under the supervision of the court, the party requested to give discovery would have this opportunity to confirm whether the issues so stated are actually in dispute, provide their own views on which are the critical issues in the proceeding or comment on whether the stated categories of documents are appropriately fashioned to suit the issues in the case. The presiding judge or registrar may be guided by the statement of issues, and assisted by discussion of the core issues at the hearing or conference, to direct the parties in formulating the range of documents that may be subject to discovery orders.

3.122 An obvious concern with this approach may be the legal costs incurred in drafting a statement of issues. Significant lengths of time may be required to draft a clear and considered statement of the case, particularly in complex cases concerning involved factual and legal issues. While it may eventually help to limit the scope of discovery and minimise that expense, this mechanism would carry its own cost burden and might ‘front-load’^[132] civil proceedings in the Federal Court.

3.123 In practice, litigants and their lawyers might take shortcuts in a statement of issues to minimise the time and cost burden. In effect, the statement may simply repeat the pleadings without any narrowing of the controversy. The utility of this statement might therefore be contingent upon the diligence of legal practitioners to give effect to its objective of defining the real issues in dispute.

3.124 A separate issue is the effect of this statement on the formal pleadings. Pleadings play a much larger role in civil litigation than just demarcating the ambit of discovery. Pleadings provide a record of all the matters involved in the action, and in that way prevent further actions between the same parties in relation to them.^[133] There may be concerns that putting less important issues to one side, for the purposes of limiting discovery, would prevent a party from seeking judicial determination of the issue.

Production of testimonial and documentary evidence prior to discovery

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

3.126 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.^[134]

3.127 Another model for this approach is found in Rule 7–4 of the Supreme Court Civil Rules (BC). 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.^[135] 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.^[136]

3.128 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.

3.129 The idea of producing evidence prior to discovery was considered by the Law Council in 2006, which generally opposed 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:

there was general opposition to the proposition that discovery should be preceded by either all or some of the evidence in chief. 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.^[137]

3.130 Whereas 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 Fast Track or Tax List proceedings requires only an outline of the evidence. Nevertheless, concerns about the time and expense incurred to draft an outline of testimony might arise in cases involving large numbers of witnesses or lengthy examination of those witnesses.

3.131 In addition to an outline of testimony, key documents may also be produced at a scheduling conference in Fast Track and Tax List proceedings. While there is no express requirement in Practice Note CM 7 or Practice Note Tax 1 for the parties to produce key documents at a scheduling conference, Gordon J has said that this practice is often adopted or required in the Fast Track as a matter of course:

core documents relevant to the case are provided to the trial judge at this point. If the dispute is about the proper construction of a contract, a copy of the contract is provided to the judge. No more decisions on interlocutory issues in a vacuum.^[138]

3.132 This can already be achieved by the court making orders under O 15 r 13 of Federal Court Rules, for production of any document in a party’s possession, custody or power relating to any issue in the proceeding.^[139] At the same time, a party may require any other party to produce for inspection any document referred to in a pleading or affidavit filed by that party.^[140] However a number of commentators have suggested that parties should be required to produce the core documents relevant to their case, without being asked to do so.

3.133 For example, at the AIJA discovery seminar, Peter Gordon of the law firm Slater and Gordon, suggested that ‘[t]here should be processes to identify and exchange the critical documents at an early date, which might spare much of the other discovery’.^[141] In support of such a process, Applegarth J, in his work for the Queensland Supreme Court’s Better Resolution of Litigation Group, has argued that the early exchange of key documents between the parties would enhance the delivery of justice:

By the time litigation is commenced, usually after pre-action disputes in which parties have consulted lawyers and obtained advice, most parties should know the critical documents upon which they intend to rely at any trial, and also know some, if not most, of the documents upon which the other party intends to rely and which are adverse to the first party’s case. If the critical documents are identified and exchanged in a suitable format at a relatively early stage in litigation then this should facilitate the early resolution of cases which are capable of settlement, and the supervision of those that do not settle and which require case management.^[142]

3.134 However, Finkelstein J canvassed a number of practical and theoretical problems with this approach at the Federal Court’s case management workshop in 2008. In particular, he pointed to a tension with the nature of the adversarial system:

it is hardly to be expected that … parties will produce documents in such a distilled manner as to announce for practical purposes, ‘Here is my case and here are the holes in it’.^[143]

3.135 Justice Finkelstein expected that disputes would inevitably arise over whether such a rule has been properly complied with, for instance, what documents should be considered critical.^[144] In light of his concerns, Finkelstein J considered that ‘there must be real doubt whether mandatory discovery, even of a theoretically limited nature, would reduce the burden on the court or litigants’.^[145]

ALRC’s views

3.136 The need for clearer definition to the issues in dispute to narrow the scope of discovery 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.^[146]

3.137 The ALRC’s preliminary view in this Inquiry is that reforms 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. The following proposal describes a new court procedure aimed at narrowing the issues in dispute for the purposes of limiting discovery obligations.

3.138 This proposal is prefaced by noting that reforms to the rules on pleadings, to enhance the clarity with which the issues in a proceeding are presented to the court, may have the complementary effect of narrowing the scope of discovery. While the ALRC considers the rules on pleadings generally to be outside its current Terms of Reference, this area of civil litigation would merit further consideration.

3.139 The ALRC also notes that the procedural reforms proposed below might be best suited to complex cases involving large-scale discoveries. That is, the resources required of the parties and the court to implement these procedures could be unnecessarily burdensome for the discovery of documents in small or straightforward cases. However, the ALRC’s preliminary view is that a sufficiently large proportion of discoveries in the Federal Court are of such magnitude to warrant general implementation of these procedures. The ALRC proposes that the court’s existing power to waive or vary any of its procedures^[147] will ensure that more suitable pre-trial management strategies are adopted in other cases. In small cases, for example, where the issues are contained and clear, the parties might seek limited discovery by consent and forego the proposed procedures.

3.140 In cases where the procedures proposed below are applied, the ALRC expects that proceeding in this fashion will come at a cost to the parties and the taxpayer in terms of the court resources required. However, the ALRC’s preliminary view is that these procedures are likely to result in savings to the overall cost of litigation—both private and public—which would outweigh the expense incurred and at the same time open up access to justice in a broad sense.

3.141 The ALRC notes that the proposal above would not require the parties to produce or exchange the core documents relevant to the case. The ALRC’s preliminary view is that existing procedures under O 15 rr 10 and 13 are sufficient to achieve this outcome. A notice under r 10 or an order under r 13 is, in the ALRC’s preliminary view, necessary to limit the production to particular documents which the court or party considers critical in the proceeding. A general obligation to produce ‘key’ documents in the early stages of proceedings would be too vague and ambiguous to expect strict compliance and is likely to breed satellite litigation. It would also be conducive to inefficiencies in cases where each party already possesses a copy of the core documents, such as the contract in a contractual dispute.

3.142 However, the ALRC is interested in stakeholder views on whether a procedure requiring the parties to act on their own initiative in identifying and exchanging core documents early in a proceeding could be successful established. This would be distinct from O 15 rr 10 and 13 which require the other party to issue a notice or the court to make orders. Alternatively, the ALRC welcomes suggestions from stakeholders on ways to encourage greater use of existing procedures under O 15 rr 10 and 13.

Discovery plan and pre-discovery conference

3.143 As discussed above, a number of jurisdictions (including the Federal Court, the US and the UK) have come to rely on the creation of discovery plans as an effective way to handle electronic discovery processes.

3.144 In contrast to the ‘meet-and-confer’ obligations on litigants in the US and the UK, for the purposes of devising a discovery plan, the language of Practice Note CM 6 is more permissive than mandatory. Parties to Federal Court proceedings may be ‘expected’ to have devised a discovery plan before the court makes an order for electronic discovery.^[148] The parties might also be expected to inform the court of how these issues are to be addressed (if the judge asks) at a directions hearing or case management conference.^[149] However, there is no positive legal obligation on the parties to do so, nor is there any prohibition on the court from making orders in cases without a discovery plan.

3.145 By comparison, litigants in the UK ‘must’ discuss the disclosure of electronic documents before the first case management conference.^[150] Parties to proceedings in the US are ‘jointly responsible … for attempting in good faith to agree on the proposed discovery plan, and for submitting to the court within 14 days after the conference a written report outlining the plan’.^[151]

3.146 The Rules and Directions in these jurisdictions may provide suitable models for reform to Federal Court procedures, to impose positive and legally enforceable obligations on the parties to: (a) meet and confer, for the purposes of discussing a discovery plan; and (b) submit their plan to court for approval or resolution of any areas of disagreement.

3.147 A corresponding obligation on the court to satisfy itself that the proposed discovery plan is reasonable or proportionate—before making orders for discovery—could also be introduced. To this end, the court might exercise its existing discretion to schedule a pre-discovery conference with the parties to inform the judge or registrar of the issues addressed in the proposed discovery plan. Pre-discovery conferences would also be available to the court to determine any areas of disagreement between the parties.

3.148 This process may be assisted by an initial case management conference, as outlined in Proposal 3–1, where the core issues in dispute are clarified and particular documents or specific categories of documents relating to those issues are identified.^[152] The outcome of that procedure may form the basis of plans for limiting the scope of electronic documents to be discovered.

3.149 A proposed discovery plan, which the parties would be required to develop, might address such issues as whether and the extent to which the party giving discovery will search through back-up tapes or disaster recovery systems for particular classes of electronic documents identified in the plan. In particular, as expected by the provisions of Practice Note CM 6, a proposed discovery plan may also provide a preliminary estimate of the cost associated with discovery and a timetable for carrying out the proposed discovery process.

3.150 The terms of a discovery plan approved by the court may then be entered as orders for discovery of documents. This means discovery would be limited both in terms of the scope of documents and the extent of searches. Carrying out the court approved plan according to its terms would discharge a party of its discovery obligations.

3.151 The benefits of this approach may be that it promotes certainty and efficiency in the discovery process by determining in advance what searches will be good enough. The same objectives are sought to be achieved in the US, as noted in a practitioner’s guide to planning a discovery process:

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.^[153]

3.152 A general concern with this approach may be its impact on the court’s ability to determine the merits of the case. A rigid and a priori determination of a party’s duty to search for electronic documents may discard the flexibility of the current Practice Note CM 6 approach. When Practice Note 17 was revised in January 2009, Seamus Byrne warned that ‘the Practice Note is not intended to serve as a process to overtake the outcome’.^[154] That is, restraining the amount of electronically-stored information available to the parties and the court should not impede ‘the just resolution of disputes, according to law’.^[155]

3.153 A more commercial concern may be the cost involved in the laborious forward planning of an e-discovery process. Litigants who possess vast masses of electronically-stored information across a complex network of electronic databases might be required to spend considerable time with their lawyers and IT experts to determine what would amount to a reasonable search. The same concerns have been raised in the UK, where

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.^[156]

3.154 The cost of drafting a discovery plan to file in court would also add to the
up-front expense of litigation. This may be a particularly involved document in complex cases where sophisticated software is used to search through vast databases of electronic material. Similar concerns have been raised in relation to lengthy questionnaires in the UK:

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.^[157]

3.155 The utility of a discovery plan might therefore depend on litigants and their lawyers allocating sufficient resources to its development. In practice, economic and time constraints on a party giving discovery may lead to insufficient consideration of what searches would be reasonable. An ill-considered or under-developed plan might simply fall back on broad searches in vague or general terms, and provide little assistance to the court in overseeing a proportionate and timely electronic discovery process.

3.156 This has been the experience in the US, at times, where ‘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’.^[158] Judge Paul Grimm has confirmed 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’.^[159] 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.^[160]

ALRC’s views

3.157 Commentators on e-discovery universally acknowledge project management as the key to success. For example, the Sedona Conference emphasises project management as the first principle of an e-discovery process:

Principle 1. In cases involving ESI [electronically-stored information] of increasing scope and complexity, the attorney in charge should utilize project management and exercise leadership to ensure that a reasonable process has been followed by his or her legal team to locate responsive material.^[161]

3.158 The ALRC’s preliminary view is that the clear expectation laid down in Practice Note CM 6 for parties to have agreed upon a practical and cost-effective discovery plan, and to inform the court of how these issues are to be addressed before it makes orders for electronic discovery, can be an effective means of project managing a discovery process when fulfilled in practice. However—subject to feedback from stakeholders—there seems to be reluctance on the part of the court, the parties and their lawyers to collaborate as project managers of an electronic discovery process, to keep the costs down and the process as efficient and proportionate as possible.

3.159 In the ALRC’s preliminary view, the introduction of positive procedural obligations on the parties to develop a discovery plan—and corresponding obligations on the court to satisfy itself that the proposed discovery plan is proportionate or reasonable—may help to ensure greater participation by all involved in civil litigation to manage an e-discovery project.

3.160 The following proposal describes a new court procedure aimed at engaging the parties, their lawyers and the court in the management of an electronic discovery process. The objectives of this procedure include limiting the scope of discovery and instilling certainty in the discovery process, by determining the extent of a ‘reasonable search’ for discoverable documents stored in an electronic format, as far as possible in advance of any searches of electronic databases. In particular, greater certainty as to the scope and conduct of an e-discovery process may improve the predictability of discovery costs and enable preliminary costs estimates to become more accurate.

3.161 The ALRC does not intend for the proposed procedure to obstruct the overarching purpose of civil procedure in achieving ‘the just resolution of disputes’.^[162] Should the adoption of a discovery plan yield an unhelpfully limited amount of information relevant to the proceeding, the court should not be prevented from making further orders for discovery where necessary.

3.162 The ALRC expects that the procedures proposed below will require parties to incur the cost of drafting a discovery plan and attending any court hearing to finalise its terms. The ALRC also acknowledges that the proposed procedure will require the expenditure of public resources by involving the court in the management of an electronic discovery process. However, the ALRC’s preliminary view is that overall the public and private costs of discovery of electronic documents would decrease with closer management of the process on the part of litigants, their lawyers and the court.

Special masters, discovery masters and referees

3.163 A number of commentators have expressed a desire for the introduction of ‘special staff to manage discovery issues in large cases’.^[163] An example often cited is the role of Masters in American courts under r 53 of the Federal Rules of Civil Procedure. This section of the chapter considers a number of proposed or implemented models for the appointment of independent persons to assist the court in case management of discovery issues.

Rule 53 of the Federal Rules of Civil Procedure

3.164 Under r 53 of the Federal Rules of Civil Procedure, US courts may appoint masters to perform any duties to which the parties consent, to ‘hold trial proceedings and make or recommend findings of fact’ in certain circumstances and handle pre- or post-trial issues that a judge cannot handle in a timely or effective manner.^[164] Special masters are appointed by an order of the court that states the master’s duties, any limits on the master’s authority, the nature of permitted ex parte communications, how the master’s findings will be reviewed and the terms of the master’s compensation.^[165] The compensation must be paid either by the parties or funded by the subject matter of the action.^[166] A master may regulate the proceedings and ‘take all appropriate measures to perform the assigned duties fairly and efficiently’,^[167] and may also impose a range of sanctions.^[168]

3.165 Before the court acts on a master’s recommendations, the parties have an opportunity to object.^[169] The court reviews findings of fact de novo (unless the parties have agreed they will be reviewed for clear error),^[170] reviews findings of law de novo^[171] and reviews procedural rulings ‘only for an abuse of discretion’.^[172]

3.166 Rule 53 contemplates the use of masters at all three stages of a trial: pre-trial, trial and post-trial.^[173] At these different stages, masters may fill any of a number of different roles: settlement master; decision-making master; or case management master.^[174]

3.167 The settlement master attempts to mediate and facilitate negotiation.^[175] A decision-making master may decide non-dispositive motions (any motion other than those in which a party requests that the court dispose of some or all of the claims asserted in a complaint, petition, counterclaim or cross-claim) usually in the context of discovery.^[176] The case management master is less involved with the merits of the dispute and has no decision-making authority. Instead, a case management master is like an administrator who establishes or oversees procedures to expedite the case.

Victorian Law Reform Commission

3.168 The VLRC’s 2008 Civil Justice Review recommended the use of special masters in three contexts:

• as one of a number of options within an alternative dispute resolution framework;^[177]

• as part of the discovery process;^[178] and

• in helping self-represented litigants.^[179]

3.169 In the context of alternative dispute resolution, the VLRC discussed a special master’s role as being similar to that of a special referee under O 50 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic). Here, ‘the court would retain jurisdiction … and remain responsible for the final adjudication’ but the special referee or master would make a ‘provisional determination’, if the parties failed to reach a settlement.^[180] It is likely that O 72A of the Federal Court Rules, described further below, would allow for this role for referees in the Federal Court.

3.170 The VLRC also recommended provision for a special master ‘to be appointed by the court to assist in the case management of discovery issues in complex cases’.^[181] The VLRC’s model special master would:

• provide court supervised intervention in the discovery aspect of the dispute;

• actively endeavour to case manage and assist in the resolution of any dispute between the parties in relation to discovery; and/or

• investigate and report to the court on any issue in relation to discovery.^[182]

3.171 The costs of an externally appointed special master under the VLRC’s model would be set at the discretion of the court and paid for by the parties or ordered by the court to be costs in the cause.^[183] When appointing a special master in the Victorian context, the court would have to consider whether the financial stakes or resources of the parties justify imposing the expense of managing discovery issues on the parties.^[184]

3.172 Therefore, the VLRC contemplated both the introduction of special masters and the increased use of special referees. As conceived in the VLRC report, the primary difference between a referee and a master appears to be the level of intervention in the discovery process itself. A referee may be able to report on particular discovery issues when they are referred but a special master could play an ongoing and continuing role, working with the parties rather than merely as a form of adjudicator. While referees answer specific questions and ‘are required to give reasons for their determinations and the principles governing whether such reasons are adequate’,^[185] special masters could explain the parties’ duties, investigate and help the parties to identify appropriate discovery management strategies, facilitate discussion and hear interim applications.^[186] Adopting the language of r 53 commentators, it appears that a referee can be a decision-maker but the VLRC’s special master would also be a case manager.

Justice Finkelstein’s proposed O 72A

3.173 At a joint Federal Court/Law Council workshop on case management in 2008, Finkelstein J outlined a proposal for the introduction of discovery masters in the Federal Court. This included a draft of proposed amendments to the Federal Court Rules, introducing a new O 72A, which Finkelstein J prepared along the lines of r 53 of the Federal Rules of Civil Procedure.^[187]

3.174 However, there were three differences. First, r 53 allows a master to impose sanctions^[188] but the proposed O 72A made no such provision. Secondly, r 53 allows a party 20 days in which to file objections to a Master’s report,^[189] whereas Finkelstein J only allowed 7 days.^[190] Thirdly, Finkelstein J limited a discovery master’s rulings to the realm of managing pre-trial discovery.^[191]

3.175 This last distinction about the scope of a master’s powers is most relevant. Rule 53 is broader in allowing a master to be involved at any stage. The VLRC’s proposal is also broader, in that special masters may play a role in alternative dispute resolution proceedings. However, within the realm of pre-trial discovery, Finkelstein J would allow masters to direct the proceedings.^[192] Like r 53 findings, a discovery master’s factual findings and legal conclusions would be reviewed de novo (although the parties may stipulate that factual findings should only be reviewed for clear error).^[193] Also consistent with r 53, the costs of a discovery master in a particular case would be paid for by the parties, rather than the court.^[194]

Federal Court Rules current O 72A

3.176 The Federal Justice System Amendment (Efficiency Measures) Act (No. 1) 2009 (Cth) amended the Federal Court of Australia Act to allow courts to refer ‘a proceeding … or one or more questions arising in a proceeding … to a referee for inquiry and report’.^[195] The Second Reading Speech for this amendment affirmed that the purpose of this provision is to ‘enable the court to more effectively and efficiently manage large litigation’.^[196] Contemplated benefits included the ‘procedural flexibility with which a referee can deal with a question’ and a referee’s ‘technical expertise’, which may allow a referee to ‘more quickly get to the core of technical issues’.^[197]

3.177 Federal Court Rules O 72A, introduced pursuant to this amendment, allows the court to make a referral ‘[a]t any stage of a proceeding’ for inquiry and report into ‘questions or issues arising in a proceeding, whether of fact or law or both, and whether raised by pleadings, agreement of parties or otherwise’.^[198] The costs of a referee appear to be paid for by the parties, as the court may make directions for a party to give security for a referee’s costs or otherwise deal with a referee’s remuneration under the powers of the court as to costs.^[199] Unless otherwise ordered by the court, the referee must give his or her opinion in a report which the court may then choose to adopt in whole, adopt in part, vary or reject.^[200]

3.178 A referee’s determinations are not automatically binding on the parties as ch III of the Australian Constitution precludes anyone other than a judicial officer from exercising judicial power.^[201] While the concept of judicial power is affected by many variables, which makes it incapable of exhaustive definition, dispensing with discovery applications in litigation may arguably fall within it.^[202] In Nicholas v The Queen, Gaudron J stated that:

The difficulties involved in defining ‘judicial power’ are well known. In general terms, however, it is that power which is brought to bear in making determinations as to rights, liabilities, powers, duties or status put in issue in justiciable controversies, and in making adjustments of rights and interests in accordance with legal standards.^[203]

Referees as discovery masters

3.179 In the three models of special masters discussed above, each may engage in case management activities, such as clarifying the issues in dispute and focusing the discovery process. Justice Finkelstein, for example, describes how a discovery master could help in ‘crafting discovery orders, creating a confidentiality regime, [and] monitoring production and compliance’.^[204]

3.180 The VLRC was also of the view that a special master should be able to investigate and identify appropriate strategies in relation to the management of discovery, and facilitate discussion between the parties in relation to electronic discovery.^[205]

3.181 As described by a US judge, a special master can facilitate collaborative tasks such as preparing parties for meetings, negotiating discovery procedures or developing search protocols.^[206]

3.182 By contrast, the primary role of a referee in the Federal Court appears to be that of an adjudicator, rather than case manager. In particular, referees are intended to adjudicate matters

where technical expertise is required and it is neither cost effective nor an appropriate use of a judge’s time to gain the necessary in-depth expertise in a particular science or trade, or where detailed examination of accounts or other financial records is necessary to assess damages.^[207]

3.183 Parties are required to cooperate with referees, but their cooperation is aimed toward ensuring that the referee ‘can form a just opinion’ rather than shape a discovery process.^[208] Referees are explicitly freed from evidentiary rules in their adjudicative role, but this does not appear to be intended to allow them to perform a broader range of case management functions.

3.184 It is unlikely that existing mechanisms in the Federal Court for referral of questions or issues to a referee could be used to the same extent as those that allow special masters to case manage a discovery process. If a position of a special master was required to manage discovery in Federal Court proceedings, legislative amendments may be required to introduce this element into the court’s case management procedures. Models for reform along these lines include amendments to O 72A as proposed by Finkelstein J and the provisions of r 53 in the Federal Rules of Civil Procedure, on which this proposal is based, as discussed above.

Advantages and disadvantages of discovery masters in the Federal Court

3.185 One US District Court judge identified four primary reasons for a judge to appoint a special master:^[209]

1. Time commitment—When a party asserts privilege over thousands, sometimes in the tens of thousands, of pages of material, a special master may review the documents to determine the validity of the assertion of privilege.

2. Knowledge and expertise—In Re: Seroquel Products Liability Litigation, the Master supervised the process of discovering electronically-stored information:

No particular discovery dispute was referred to the Master; instead, he was directed to review all discovery requests and employ his skills to determine ‘where such information is stored and how it can most effectively be accessed and made available’.^[210]

3. Resources—Some disputes require a panel of professionals such as investigators, accountants, economists, and computer experts working in a coordinated manner to gather information. In such situations, a special master may act as a ‘project manager’ to coordinate these professionals.

4. Neutrality—A special master may be able to conduct settlement discussions to avoid the judge losing any appearance of neutrality.^[211]

3.186 Preserving the neutrality of judges was particularly compelling for the VLRC in its proposal for a special master to manage discovery issues:

the use of special masters will greatly assist the court to adopt a more interventionist approach to discovery, without compromising judicial objectivity and independence.^[212]

3.187 The desire for discovery masters may also be a matter of finding the right person for the job, as Finkelstein J put it:

the master can be selected with an eye to specialization (prior expertise in the relevant field of law) and available time (if discovery is expected to be a full-time or expedited affair, consideration of potential appointees can be limited to retired judges or others who can guarantee a clear schedule).^[213]

3.188 Another reason for the VLRC to advocate the use of special masters was to save on public resources, arguing that special masters would

assist to free up judge time, which may otherwise be consumed by complex and protracted discovery processes.^[214]

3.189 This point was also taken up by Finkelstein J in his arguments for appointing discovery masters in large or complex cases:

it is unfair to other judges, and to other litigants with cases before that judge, when the judge must devote a disproportionate amount of time to one case, and even close his or her docket in extreme cases.^[215]

3.190 The corollary to this, however, is the increase in litigation costs for the parties who would bear the expense of a discovery master. This is likely to be a higher cost to the parties than court fees spent on judicial case management, which are essentially a public cost. A case manager with greater expertise in discovery than the docket judge may save the parties time and money through more efficient discovery processes but comes with his or her own set of costs.

3.191 A key concern against the introduction of discovery masters in the Federal Court may be its impact on the court’s docket management system. In the Federal Court, each case is allocated to the docket of a judge who is then responsible for managing the case until final disposition. The docket judge’s familiarity with the case is intended to promote the just, orderly and expeditious resolution of disputes.^[216] However, outsourcing case management to a discovery master may detract from the judge’s involvement and familiarity with cases in his or her docket. This may undermine the advantages of the docket system in relation to discovery, which were outlined by Heerey J in his submission to the ALRC’s Managing Justice report:

[t]he docket system will promote (and already has, in my experience) a more interventionist and practical approach to discovery, tailored to the individual case and the real issues in dispute.^[217]

3.192 There may also be concerns that discovery masters would add a layer of inefficiency to the discovery process, in that their decisions would have to be reported to the court for action and subject to objections from the parties. It may be more efficient for the docket judge to deal with any objections from the parties at the time of making orders for discovery.

ALRC’s views

3.193 Subject to feedback from stakeholders, the ALRC’s preliminary view is that management of the discovery process should be primarily the responsibility of the judge under the court’s docket system. The use of a discovery master may obstruct active judicial case management which, in the ALRC’s preliminary view, is required to control the scale and cost of discovery in the Federal Court.

3.194 The ALRC is also concerned about the additional expense to the parties which would be incurred by the employment of a discovery master. As discussed in this chapter, the high cost of discovery has been singled out as a major criticism of this stage in civil litigation. The ALRC’s preliminary view is that the expected costs of discovery masters, and the potential impact of this approach on case management by judicial officers in the Federal Court, render such reform less practical than the reforms proposed above.

3.195 However, the ALRC welcomes stakeholder views on the merits of special masters to manage the discovery process in Federal Court proceedings. The ALRC is interested in stakeholders’ proposals for any particular mechanism to introduce discovery masters in the Federal Court.

Case management powers

3.196 The VLRC’s Civil Justice Review recommended ‘the introduction of more clearly delineated and specific powers to facilitate proactive judicial case management in relation to discovery’.^[218] Accordingly, the report included draft provisions based in part on the Rules of the Supreme Court 1971 (WA) and the Supreme Court Civil Rules 2006 (SA). The substance of these provisions was enacted by the Victorian Parliament in s 55 of the Civil Procedure Act 2010 (Vic). Section 55 provides an extensive but non-exhaustive list of directions which Victorian courts may give in relation to discovery.

3.197 This degree of particularisation is not found in the Federal Court’s legislation. While the Federal Court of Australia Act does not include this level of detail, the Federal Court does have authority to make such orders in relation to discovery. However, the source of the Federal Court’s power to make discovery orders is largely found in subordinate legislation—O 15 of the Federal Court Rules—or in its inherent jurisdiction.

3.198 The Federal Court of Australia Act was amended to give statutory form to the court’s case management powers in broad terms.^[219] These amendments were intended to ‘provide clear legislative direction and support to judges so that they can confidently employ active case management powers’.^[220] While the Act does not specify the kinds of orders the court may make in relation to discovery, it relevantly provides that the court may ‘require things to be done’.^[221]

3.199 Greater specification of the court’s case management powers in legislation would not necessarily increase the court’s authority to control the discovery process, or create new powers without which it has been ill-equipped to manage discovery. Rather, the intent would be to raise awareness of the ways in which the discovery process can be managed and encourage greater and more effective use of case management powers. As the VLRC reasoned in its Civil Justice Review:

Expanding discovery case management powers should encourage the judiciary and the parties to be more proactive in confining the scope of discovery and ensuring that the process assists rather than hinders the administration of justice.^[222]

3.200 The same argument can be made with respect to the court’s power to sanction non-compliance with discovery orders. The Victorian Civil Procedure Act sets out a range of orders the court may make, without limiting the court’s power to sanction a failure to comply with discovery obligations or other conduct amounting to abuse of the discovery process.^[223] The VLRC argued that:

More clearly defined sanctions will also encourage parties to work towards the efficient resolution of discovery issues and discourage the use of discovery as an adversarial tool.^[224]

3.201 However, there may be doubts as to whether clearer statutory prescription of the Federal Court’s power to case-manage, including through the use of sanctions, would itself have much practical impact on the discovery process. Unless the court actually uses its case management powers or the parties actively petition the court to control the discovery of documents—and unless the court, on its own initiative, imposes sanctions on parties abusing the discovery process, or the abused party actively seeks those court sanctions—the behavioural changes envisaged by the VLRC are unlikely to materialise.

ALRC’s views

3.202 The ALRC considers that legislative reforms to clarify and strengthen the Federal Court’s existing statutory powers to case manage the discovery process are desirable. The ALRC’s preliminary view is that by setting out in primary legislation some detail of the court’s case management powers with respect to discovery, it may encourage the judiciary, the parties and their lawyers proactively to confine the scope of discovery and reduce the burden of litigation.

3.203 Express statutory authority to direct the conduct of a discovery process, and to sanction discovery default and abuse, may help to build a culture within the Federal Court that promotes a focused and efficient discovery process. However, the ALRC acknowledges that such cultural change takes time to develop and may fail to eventuate unless the court, litigants and practitioners implement the rationale of such law reform in practice. Judicial officers may be encouraged and better equipped to utilise legislative case management powers through education and training, discussed further below. To this end, clearer statutory prescription of the court’s powers to manage a discovery process may be

more than motherhood statements if they are used to achieve cultural change. It gives a basis for the bench to say to people ‘this is how we do litigation.^[225]

Costs powers

3.204 This section of the chapter considers the use of costs powers to maintain proportionality in a discovery process. Specifically, the power to order payment of discovery costs in advance and the power to limit legal fees for discovery are discussed.

Payment of discovery costs in advance

3.205 One way to ensure that discovery requests are proportionate to the information needs of the case may be to require payment of costs in advance of discovery by the requesting party. This approach was recommended by the Access to Justice Taskforce.^[226] The court’s existing costs powers, including those prescribed in s 43 of the Federal Court of Australia Act, already allow judges to order payment of discovery costs in advance. A number of judges consulted by the ALRC in this Inquiry recalled cases in which they had made such orders, with the effect of limiting a party’s request for discovery. The Taskforce suggested that there should be a presumption in favour of making such orders in all cases unless the court exercises its discretion not to do so, for example, where a meritorious litigant would be denied access to justice through a lack of capacity to pay for discovery costs.^[227]

3.206 A requesting party could also be denied justice if, having been required to pay the costs of discovery in advance, it is ultimately successful in the litigation but unable to recover those costs—whether this is due to the other party’s inability to satisfy a costs order in favour of the successful party, or because the order for payment of discovery costs in advance stipulates that such costs cannot be recovered.

3.207 The Taskforce suggested that over-inflated costs estimates, attempting to intimidate a party not to persist with their discovery request, may be addressed by judges assessing the reasonable costs of discovery.^[228] However, in practice, judges might not be adequately informed to assess the reasonable costs of discovery. This point was made at the AIJA’s discovery seminar, where the issue of costs capping was discussed. The seminar concluded that judges often do not have sufficient information to fix costs caps at an appropriate level.^[229]

3.208 In any event, it appears that the parties are more likely to underestimate the costs of discovery rather than over-inflate costs estimates. The ALRC was told on separate occasions in consultations with General Counsel for a large corporation and a litigation funder that a budget is usually drawn up at the start of a proceeding, including a component for discovery, but the actual litigation costs will invariably exceed initial estimates.

3.209 It may also be argued that a presumption in favour of payment in advance for discovery costs does not reflect the commercial realities faced by most litigants. In the vast majority of cases, the parties would be denied justice by a lack of capacity to pay for discovery in advance. In these circumstances, almost all cases would involve an interlocutory application seeking orders to overturn the presumption of costs on the requesting party. In this way, the enactment of such a presumption could result in satellite litigation and an increase in costs.

Limiting the costs of discovery

3.210 The high cost of discovery is often attributed to the army of junior solicitors, paralegals and clerks required to work through a request for discovery of documents. The plight of ‘discovery soldiers’ conscripted in Trade Practice Commission v Santos Limited & Sagasco Holdings Limited^[230] was later remarked upon by the trial judge, Heerey J:

Practitioners were recruited into a burgeoning army engaged in discovery, inspecting, filing, listing, copying, storing, carrying about and otherwise dealing with 100,000 documents which had been accumulated for the purposes of the litigation. An expression that developed amongst junior practitioners who had been ensnared in the discovery process was ‘I have been Santossed’.^[231]

3.211 Law firms have been criticised for using an army of employees to generate profits from the discovery process. The VLRC’s Civil Justice Review explained that:

In some instances, clerks or law students may be engaged to assist in connection with document review. They may be paid at a relatively low hourly rate (eg, $30 per hour) but charged to clients at significantly higher hourly rates (eg, between $150 and $250 per hour). It has been suggested that this is one of the major reasons for the very large costs associated with discovery.^[232]

3.212 The VLRC recommended that Victorian courts be given the power to limit the costs charged to clients for discovery to the actual cost to the law practice of such work, including a reasonable allowance for overheads, but excluding a mark up or profit component being added to the actual costs.^[233]

3.213 Currently, where a party to Federal Court proceedings has concerns about the amount charged by its lawyers for discovery, the client may apply for taxation of its lawyer’s fees under the Legal Profession Act of the relevant jurisdiction.^[234] The Federal Court Rules also give the court express power to disallow costs as between a lawyer and their client where the costs are incurred improperly or without reasonable cause.^[235]

3.214 Introducing costs powers to limit legal fees may be criticised on the basis that there is no widespread over-charging for discovery in the Federal Court. On the other hand, if law firms are charging for discovery work without any mark up, then such costs orders would not have any effect other than to prevent potential overcharging.

3.215 The ALRC heard during initial consultations that some lawyers may charge fees for discovery work at a fixed or flat rate. This fee structure is commonly used for certain types of legal services, such as conveyancing or drafting a contract. The costs of litigation, particularly the discovery stage, may be more difficult to estimate or quote. However, if procedural reform (such as Proposals 3–2 and 3–3) is able to instil greater certainty in the discovery process, the costs of discovery may become more predictable.

ALRC’s views

3.216 The ALRC acknowledges that costs orders can be useful strategies to help limit the scope of discovery and keep the costs of a discovery process proportionate to the information needs of the case.

3.217 In particular, the power to order payment for discovery in advance may be utilised by the Federal Court to manage the discovery of documents. The ALRC’s preliminary view is that such costs powers should continue to be available to the court and exercised in its discretion in the circumstances of each case. At this stage of the Inquiry, the ALRC is not inclined to the view that up-front payment should be required of a party requesting discovery by default, unless the court orders otherwise. The ALRC expects that such a burden would be unbearable for most litigants and would typically result in parties incurring additional costs through litigation to overturn that presumption.

3.218 While the ALRC is not aware of any widespread overcharging for discovery costs, the ALRC accepts that discovery has the potential to serve as a profit centre for law firms. However, the ALRC’s preliminary view is that the amount charged to clients for discovery is generally a matter for cost assessment or review under existing Legal Profession Acts. Where court orders are necessary to restrict discovery costs to those actually incurred by the firm for such work, the ALRC’s preliminary view is that O 62 of the Federal Court Rules adequately equips the court to make those orders. Firms which inappropriately profit from the discovery process might also be dealt with under existing disciplinary frameworks, which are considered in Chapter 4.

3.219 The ALRC is, however, interested in stakeholder views on the ways in which the Federal Court might make greater use of costs powers to ensure proportionality in the discovery process.

Judicial education and training

3.220 As discussed above, the key to discovery reform may lie in more active judicial case management of the process. Effective case management skills are necessary for judges effectively to narrow the issues in dispute and control the scope and process of discovery. The need for judicial education and training in case management skills was recognised by the Access to Justice Taskforce in recommending that:

The Attorney-General should work with the courts and the National Judicial College of Australia (NJCA) to ensure that judicial education includes measures aimed at enhancing the understanding and use of … case management techniques.^[236]

3.221 A particular issue that needs managing in the discovery process is the use of computer technologies in the production of electronically-stored information. The need for effective training for judges managing an e-discovery process was specifically targeted in the UK by Lord Jackson in his Review of Civil Litigation Costs. In his final report, Lord Jackson recommended that:

E-disclosure as a topic should form a substantial part of … the training of judges who will have to deal with e-disclosure on the bench.^[237]

3.222 Currently, there are a number of avenues open to judges for training in case management skills. The National Orientation Program for new judges conducted by the NJCA includes a session on case management, examining ‘the role of judges dealing with busy application lists, the identification of cases requiring management and the referral of cases for alternative dispute resolution’.^[238]

3.223 Continuing education for judges includes modules on pre-trial case management, under the national curriculum for professional development for Australian judicial officers.^[239] This program covers the challenges and problems that can arise from discovery and using alternative dispute resolution techniques in the management of cases, including settlement of cases.^[240]

3.224 While the curriculum includes a module on information and other technologies, there is currently no inclusion of e-discovery in the national curriculum.^[241] Programs in this module are focused on technologies used in the court room (the design of electronic courtrooms, the use of audio/visual technologies and electronic filing, for example) and computers as a research tool for writing judgements, rather than those used in the discovery process.

3.225 Judicial education at a national level may be lacking a particular focus on the management of large-scale discoveries that involve masses of electronically-stored information. This might reflect the fact that such discovery processes are largely confined to the Federal Court, and a few state Supreme Courts, rather than the majority of jurisdictions. It may also be difficult to take a national approach to this topic, since each court has its own case management system to deal with discovery issues.

3.226 Professional development specifically for Federal Court judges may be provided through the Federal Court itself via its Judicial Education Committee or Practice Committee. The Practice Committee, together with the Law Council of Australia, was jointly responsible for organising the workshop held in 2008 on the Federal Court’s case management system—which paid particular attention to the management of discovery issues.^[242] The ALRC was told that plans for a further case management workshop are in train.

3.227 From time to time, the AIJA holds conferences and seminars for judicial officers. In the past, some of these have covered discovery issues; including the use of computer technologies. In 2008, the AIJA held the 4th AIJA Law & Technology Conference where several sessions focused on e-discovery.^[243] Previously, in 2007, the AIJA held a discovery seminar which canvassed case management and the rise of e-disclosure.^[244]

3.228 The ALRC has heard that case management, including management of the discovery process, can be a topic of conversation at regular judges’ meetings in the Federal Court. This kind of peer-to-peer education may be an effective way to inform Federal Court judges about the case management needs of the discovery process.

3.229 Another source of information on case management for Federal Court judges is the court’s Benchbook. It includes a chapter on discovery which covers the general principles and rules for making discovery orders, as well as sample orders for discovery of documents. The ALRC understands that this chapter was last updated in 2002. In particular it does not refer to the requirements of Practice Note CM 6—specifically, the need to agree upon a discovery plan before the court makes orders for discovery of documents in electronic format—which was in substance issued in January 2009. Due to the Benchbook falling out of date, the ALRC has heard that it is not widely used among Federal Court judges.

3.230 However, the ALRC was told that work is progressing in the Federal Court on a replacement handbook. This may be an opportunity for the dissemination of up-to-date information across the Federal Court with a particular focus on effective case management of the discovery process.

ALRC’s views

3.231 As outlined above, there are already many opportunities for Federal Court judges to develop their case management knowledge and skills (including those required to effectively manage the discovery process) through education, training and the information resources of the court. However, the ALRC’s preliminary view is that existing case management training and education for Federal Court judges should give greater focus to the issues arising in a discovery process—including the technologies used to discover electronically-stored information.

3.232 In the ALRC’s preliminary view, there is a particular need for Federal Court judges to be provided frequent and continuing education in electronic discovery due to the constant advancement of information and communication technologies. This may be an especially important aspect of judicial education, if judges are to be more involved in planning the conduct of an e-discovery process as suggested in
Proposal 3–2.

Discovery data collection

3.233 As mentioned earlier in this Chapter, statistical data on discovery costs in Australia—and research measuring the extent to which discovered documents are used in the disposal of litigation before Australian courts—has not been collected or recorded in a systematic or ongoing manner. Consequently, accurate and up-to-date information as to the proportionality of discovery processes in federal courts—in terms of discovery costs relative to the utility of discovered documents in the context of the litigation—is not readily available.

3.234 The collection of such data may provide an informative measure of the concerns associated with discovery in Federal Court proceedings. Such information may help to guide the direction of reform in this area of civil litigation. It may also enable a basis for comparison to measure the effectiveness of the pre-discovery procedures outlined above, in Proposals 3–1 and 3–2, should they be implemented. Reliable statistics would be helpful to accurately assess whether these proposed procedures are successful in achieving the expected goals of reducing litigation expenses overall.

3.235 In particular, data on discovery costs may provide an indication as to whether the procedures proposed above, if implemented, achieve a greater level of certainty in the conduct of a discovery process—in terms of planning in advance the types of searches that are ‘reasonable’. For example, data which allowed a comparison of estimated discovery costs with the actual costs of discovery may indicate the level of certainty in a discovery process.

3.236 The collection of accurate and meaningful data on the proportionality of discovery processes would likely present significant challenges. It may require the cooperation and input of all those involved in a civil proceeding, including the court, the parties, their lawyers, any litigation support service providers and financiers such as insurers or litigation funders. Establishing a central point for the collection of data from every participant in a civil proceeding, with respect to discovery costs, may present logistical issues, for example, the protection of confidential information.

3.237 Quantifying the utility of discovered documents may also raise a particular challenge in the collection of this data. As discussed in this chapter, recording the number of discovered documents tendered in evidence or relied upon at hearing may misrepresent the utility of discovery—since the objectives of discovery extend to clarifying the issues in dispute and testing the strength of the parties’ case. Discovered documents, therefore, may have value in facilitating settlement of the proceeding or shortening the length of the trial by encouraging parties to agree on certain issues. This may suggest that the extent to which discovered documents are actually used in the disposal of litigation could only be measured by the impressions of the parties or their lawyers, rather than exact numerical or monetary terms.

ALRC’s views

3.238 The ALRC’s preliminary view is that accurate and up-to-date data on the costs associated with discovery in Federal Court proceedings, and the extent to which discovered documents are used in the resolution of those proceedings, is necessary to identify and act upon concerns relating to the high and disproportionate costs of the discovery process. The collection of such data is also, in the ALRC’s preliminary view, necessary to measure the success of the new court procedures proposed in this Chapter, if implemented.

3.239 The type of data that may assist to evaluate and track the proportionality of discovery processes in the Federal Court may include:

• The total litigation costs and the amount of costs associated with discovery, as well as the items of expenditure on discovery, for example, legal fees and court filing fees for discovery applications, the cost of time spent at trial considering discovered documents, the cost of litigation support services in the discovery process and the cost to the parties of employees engaged in a discovery process. This may indicate where costs are incurred in discovery, and those aspects which are most costly, in the context of litigation costs overall.

• The value of what is at stake for the parties in the litigation, for example, the amount of damages awarded in judgement, the sum of compensation paid by way of settlement, or the approximate value of non-pecuniary relief such as a declaration or injunction. This may provide context to discovery costs, as a proportion of the value of the case.

• The number of discovered documents that are tendered in evidence, and the number of documents relied upon at trial, as well as the judge’s impression of the extent to which discovered documents were crucial in determining the proceeding.

• Whether settlement was achieved after discovery, and the parties’—and their lawyers’—impression of the extent to which discovered documents were crucial in resolving the dispute.

• Whether certain issues in dispute were narrowed or agreed upon after discovery, and the parties’—and their lawyers’—impression of the extent to which discovered documents were crucial in clarifying or resolving those issues.

3.240 At this stage of the Inquiry, the ALRC considers that the Federal Court would be best placed to collect such data. However, the participation of the parties, their lawyers and others involved in the proceeding would be required to effectively gather this data. The ALRC also acknowledges that the court may require additional funding to establish and maintain data collection facilities to measure the proportionality of discovery processes.

Family Court of Australia

3.241 During initial consultations in this Inquiry, the ALRC heard that disclosure procedures in the Family Court are generally working well. As mentioned in Chapter 2, this may be in part due to the nature of family law proceedings, as the issues in family law matters are relatively contained and largely well-known to the parties. The ALRC has heard that pre-litigation requirements in family law proceedings also help to clarify and refine the issues in dispute between the parties. Disclosure in proceedings before the Family Court, therefore, may have a particularly narrow focus that is amenable to an efficient disclosure process.

3.242 Based on initial consultations, the ALRC understands that parties are generally compliant with disclosure obligations in Family Court proceedings. The ALRC is not aware of any particular issues arising in the process of disclosure in proceedings before the Family Court. However, the ALRC welcomes feedback from stakeholders on any difficulties encountered in a disclosure process in Family Court proceedings.

Federal Magistrates Court of Australia

3.243 As discussed in Chapter 2, the ALRC is aware of concerns relating to the operation of s 45 of the Federal Magistrates Act 1999—which prohibits discovery unless the court declares that it is appropriate in the interests of the administration of justice. This issue is considered in detail in Chapter 2.

3.244 The ALRC is not aware of any other particular issues arising in the discovery process in proceedings before the Federal Magistrates Court. The ALRC has heard that in many cases before the Federal Magistrates Court, the parties will make appropriate, informal arrangements for the disclosure of documents. This may be possible due in part to the nature of the smaller, less complex matters which the court is intended to handle in its jurisdiction.

3.245 In the Federal Magistrate Court’s family law jurisdiction, as in Family Court proceedings discussed above, the issues in dispute may be sufficiently clear and contained to facilitate a focussed and efficient disclosure process.

3.246 Nevertheless, the ALRC welcomes feedback from stakeholders on any issues arising in the process of disclosure in Federal Magistrate Court proceedings—in addition to stakeholder views on s 45 issues discussed in Chapter 2.