Tailored Discovery in the Family Court?

The case of Fisher v Fisher [2015] NZHC 2693 was a case which came to the High Court on appeal from the Family Court. One of the applications associated with the appeal was for a stay of execution of orders for discovery.

The Judge, Nation J, pointed out that pursuant to the Family Court Rules, the Judge has a discretion as to whether to make discovery orders.

Although the rules require an order for discovery to be in a certain form, a Family Court Judge could, in his or her discretion, give directions as to the particular discovery required to enable the Court and the parties to more speedily and economically resolve the actual issues which are before the Court. (See Rules 141(3) and 16. Dixon v Kingsley [2015] NZHC 2044.)

The Judge observed that a good deal of discovery had been made both formally and informally by the parties before the wife applied to the Family Court for an order that the husband make discovery. Even although both parties had cooperated to some extent in enabling an accountant engaged for Mr Fisher to have relevant documents and to obtain documents from banks and Mr Fisher’s counsel had made it clear that those documents were available for inspection, nevertheless there was considerable mutual distrust between the parties.

One the matters that the husband wished to address was the setting aside of a settlement agreement partially on the basis he was not adequately informed as to the true nature and extent of the property at issue. It was thus understandable that the Judge required Mr Fisher to verify, by way of affidavit, what documents he held personally and particularly what documents he had in his possession at the time the settlement agreement was entered into.

Mrs Fisher claimed that Mr Fisher had been responsible for removing a considerable collection of relevant business documents from where they were normally kept, while later in the proceedings she had found relevant documents. There was no evidence as to the particular circumstances in which that had happened.

On this basis the Family Court Judge had decided to make full Peruvian Guano discovery (See Compagnie Financière et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55, (CA).   However, since that order had been made counsel for the parties had the benefit of considering the decision of Kos J in Dixon v Kingsley [2015] NZHC 2044. In that case His Honour noted that the Peruvian Guano approach to discovery had been “shovelled out the door in 2012”, as far as the High Court was concerned. While there had not been a change to the Family Court Rules to reflect the discovery regime in the High Court and the District Court, given the discretion that the Family Court had to make discovery orders, a tailored approach was permissible and desirable.

Counsel had recognised that some discovery would be appropriate but on a much more tailored basis than the original Family Court orders. Counsel had not settled the way in which discovery should be made but it was agreed that the appeal about discovery should be allowed.

The Judge made orders for both parties to provide discovery as to particular documents held by them in terms to be agreed between counsel. Within 21 days of this judgment, counsel were required to file a memorandum setting out the scope of discovery which is required and a timetable for inspection of those documents. Leave was reserved to either party to seek further directions as to discovery if that becomes necessary.

It is clear from this decision that the themes of reasonableness and proportionality that underpin the High Court Rules on discovery have been adopted by the Judges in considering discovery in the context of relationship property. The measured and relevance based approach of tailored discovery means that discovery in relationship property cases, where often there is an inequality of financial ability to fund extensive discovery, is more focussed and relevant. It is encouraging to see that the High Court in two cases has delineated the approach to discovery in relationship property cases. What is also significant is that the parties recognised their responsibilities in this regard and the Court was content to allow counsel to agree upon the scope of discovery.

What augurs well for the future is that a tailored approach to discovery in relationship property cases will be considered in the event that there are e-discovery issues to be addressed. While it is unlikely that large datasets of documents will be at issue that require a TAR approach, nevertheless the ground rules are set. And this can only be for the benefit of the parties in these fraught and often highly charged cases.

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Relationship Property and Discovery in the New Zealand Family Court

The discovery regime in the Family Court is governed by r 141(1) Family Courts Rules.  Rule 141 provides as follows:

141    Order for discovery after proceedings commenced

(1)     If a notice of defence or a notice of intention to appear has been filed, a party may apply to the court for an order for discovery of documents—

(a)        that are, or have been, in the possession of another party to the proceedings; and

(b)        that relate to a matter in question in the proceedings.

(2)     An application under subclause (1) must be accompanied by an affidavit specifying—

(a)        the extent of the discovery required; and

(b)        the reasons for the discovery.

(2A)   On receipt of an application made in accordance with subclauses (1) and (2), the court may order the party referred to in subclause (1)(a) to file an affidavit stating—

(a)        whether certain documents or classes of documents are or have been in that party’s possession, custody, or power; and

(b)        if the party had the documents or classes of documents but has now parted with the documents or classes of documents, when the party did so and what became of the documents or classes of documents.

(3)     An order for discovery—

(a)        must be in form G 15 (order for discovery of documents); and

(b)        must be served by the applicant on the party against whom the order is made.

(4)     A party against whom an order for discovery is made must, within 10 working days after the service of the order or any further time the court may allow on an interlocutory application for the purpose,—

(a)        file an affidavit of documents in form G 16 (affidavit of documents); and

(b)        serve a copy of the affidavit of documents on every other party to the proceeding who has filed an address for service.

(5)     If the proceedings are under the Child Support Act 1991, nothing in this rule limits the application of the secrecy provisions of that Act or the Tax Administration Act 1994.

Because of the way in which the rule is structured, discovery in the Family Court is something of an anomaly when compared with discovery in the High Court or in the District Court.  To put it simply, the Peruvian Guano approach is still applicable and the rule gives statutory validity to the Peruvian Guano “train of enquiry rule”.  Essentially, the “train of enquiry rule” is that documents must be discovered which may directly or indirectly enable a party to advance his or her own case or to damage the case for his or her adversary.  The Peruvian Guano case was decided in 1882 and the rule developed and has remained in place, at least as far as the Family Court is concerned, notwithstanding the development of electronic communications and copying and the digital transmission and retention of material that may be of marginal relevance.

The continued existence of the Peruvian Guano approach allows for potential abuses in the course of proceedings to take place.  Relationship property cases often involve efforts by a wealthier or better informed spouse to confine access to information by the poorer or more poorly informed spouse.  Wide ranging discovery obligations with associated opportunities for interlocutory proceedings and appeals may create a risk of injustice by precluding or limiting the prompt disposition of the substantive issue before the Court.  Discovery applications can be used by a “deep pockets” litigant to disadvantage one who is financially stretched, using a strategy of litigation by attrition. In addition, Peruvian Guano type obligations may be additionally onerous where the assets available are limited.

The Peruvian Guano approach, therefore, runs head to head with the discovery reforms that were incorporated into the High Court rules and subsequently into the District Court rules in 2012 and 2014 respectively.

These rules basically provide that initial disclosure must be given alongside pleadings.  Counsel must attempt to agree an appropriate discovery order prior to a first case management conference.  Cooperation between counsel is the order of the day.  The old tactic of holding one’s cards close to one’s chest are now over.  Two forms of discovery order may be made: standard or tailored.  A standard order for discover is narrower than the previous Peruvian Guano test.  The scope of disclosure is confined to documents which:

(1)        Are relied on by the party;

(2)        Adversely affect that party’s case;

(3)        Adversely affect another party’s case – which may be covered by the first category; or

(4)        Support another party’s case.

It is described as an “adverse documents” rule rather than a more wide ranging “relevance based” rule.

Tailored to discovery involves making specific or bespoke orders for discovery which may be wider or narrower than standard discovery.  There is a presumption in favour of tailored discovery in cases:

(1)        Involving allegations of fraud or dishonesty;

(2)        Where the total value of assets or sums in issue exceeds $2.5 million; or

(3)        If the cost of standard discovery would be disproportionately high in comparison to matters at issue in the proceeding.

The 2012 High Court Rules amounted to an overall reform of the entire discovery process.  Although the rules refer to the use of technology and there are provisions in the High Court rules relating to technology use and the definition of the various means by which technology assisted review may take place, the rules reform the entire approach to discovery.  In some jurisdictions discovery reforms, particularly in the field of electronic discovery, are governed by Court devised protocols or practice notes.  Discovery regimes in Australia, Singapore and Hong Kong provide examples.  Rule based changes to discovery regimes are present in England and Canada.

In a Dixon v Kingsley [2015] NZHC 2044 (27 August 2015), Kos J addressed the Family Court discovery regime.  He observed that the reforms provided in the High Court Rules have passed the Family Court by.  He observed that the Peruvian Guano approach “still holds court” under the Family Court Rules.  However, he did observe that the breadth of r 141(1) and the discretion imported by r 141(2A) allows for closer inquiry by the Family Court into the scope of discovery that should be ordered.  He focused upon the words “the Court may order”.  He then considered that because of this it does not follow that a broad relevance based Peruvian Guano type discovery should be ordered and that a tailored approach is permissible and desirable.

He then went on to observe that in the case of J v P [2013] NZHC 557 three qualifying principles for discovery in relationship property cases were identified:

(a)        Relevance to the issue in the proceeding;

(b)        Reasonable discovery;

(c)        That discovery should not be unduly onerous.

Taking these general principles and utilising the wide discretion contained in r 141, Kos J articulated some essential principles governing discovery in relationship property litigation:

(1)        He considered that a robust approach should be taken to discovery consistent with the purposes and principles of the Act.  Those purposes and principles include the need for a just decision but, importantly, require an inexpensive and efficient access to justice.

(2)        That discovery should not be unduly onerous.

(3)        That discovery should be reasonably necessary at the time sought.

(4)        That the scope of discovery should be tailored to the need of the Court to disclose, justly and efficiently, of relationship property issues under the Act.

(5)        More substantial discovery may well be ordered by the Court where it has reason to believe that a party has concealed information or otherwise sought to mislead either the other party or the Court as to the scope of relationship property.  But even in such a case scope of discovery should be limited only to what is required for the Court to fairly and justly determine relationship property rights.

Although the Judge did not specifically state that the principles of reasonableness and proportionality together with counsel cooperation that underpin the 2012 High Court Rules changes, it is clear that he was of the view that at least the spirit of those rules may apply in modified form in relationship property discovery cases.  Although the discovery process involving the development of a discovery plan prior to a case management conference and the utilisation of checklists is neither provided nor stated it seems, at least to this commentator, that such an approach would not be amiss if informally adopted by counsel.  It is recognised that difficulties could well arise given much of the emotional heat and adversarialism that accompanies relationship property cases.  The absence of a specific rule structure for discovery, such as is present in the High Court rules, would make it difficult for counsel to advise or persuade aggressive or contentious clients that a cooperative approach should be adopted, but the decision of Kos J does seem to dilute the potential difficulties accompanying what may appear to be at first glance a very wide and potentially oppressive Peruvian Guano approach.

In the case before him, Kos J had four classes of documents in respect of which discovery was sought.  In one class he made a tailored discovery order, limiting the nature of discovery sought to documents of specific relevance.  In the other cases what was sought were too wide or amounted to non-party discovery by stealth and in one case it was considered, because of difficulties underlying the pleadings, that it was not ripe to make a discovery order.

The decision is particularly helpful because it demonstrates the utilisation of discretionary powers to import a modern approach to discovery involving relevance, reasonableness and proportionality to override the wide scope of discovery that would otherwise be applicable arising from the Peruvian Guano rule.  The case, in the view of this commentator, will be an essential tool available in the Family Court to prevent the oppressive use of discovery in relationship property cases. What will be interesting in future will be the approach of the Court in cases where discovery of large amounts of electronic information is sought and whether Kos J’s “tailored order” approach will be modified to deal with relationship property e-discovery.

17 October 2015

E-Discovery and Asia Legal Big Data

I had the privilege of being invited to take part in the Asia Legal Big Data Symposium held at the Conrad Hotel in Hong Kong on 29 – 30 April 2014, and to share a place on a panel which included Registrar Lung Kim Wan of the Hong Kong High Court, Senior Assistant Registrar Yeong Zee Kin from the Singapore Supreme Court and Stephen Yu from Alix Partners. The focus of the Conference was upon the imminent release of a Practice Direction for the Hong Kong Courts addressing E-Discovery. Although the present Hong Kong Rules are sufficiently wide to deal with E-Discovery in a broad sense, and more focussed approach is proposed.

The panel in which I participated dealt with existing rules and how they work in Singapore and New Zealand, and how the general shape of the Hong Kong direction may appear. Stephen Yu was able to bring valuable technical knowledge into the mix in considering some of the tools and technological solutions that may be utilised in the E-Discovery process.

The Symposium itself was an abundance of riches and as is so often the case, there were times when a difficult choice had to be made between which session to attend. Some of the sessions on data and information management within organisations were very interesting and helpful, emphasising the importance of how proper information management systems and policies can be helpful when a litigation hold is notified. Of particular interest was the way in which such policies may be used to resist spoliation allegations. A proper, principled inmjformation management policy may offer a reasonable explanation for why data is not immediately available or why it is no longer in existence.

It was also a pleasure to meet again Chris Dale from the E-Disclosure Information Project. I first met Chris in Singapore at a Conference a couple of years ago and we have kept in touch. Indeed I owe a debt to Chris for it was he who recommended my participation to the Conference organisers. Chris, as always, played a valuable part of the Hong Kong Conference, sharing his experiences and insights in the E-Discovery field and often was able to point out some of the shortcomings in the way in which E-Discovery Rules are working. One observation that he made was in the context of E-Discovery as a process.

The process starts often before litigation actually begins – when in fact it is contemplated. Parties should start considering their E-Discovery obligations at this time. The various stages of the process (reflected in the EDRM diagram – EDRM means Electronic Discovery Reference Model) continue through the the presentation of documents at Court. I think I should point out that I do not consider the E-Discovery process to be of the “tick the boxes” type of process, nor one which involves a slavish adherence to a set step by step approach. In my view the process is in the form of a journey which carries on throughout the life of the litigation and which involves a number of steps or stages together with an on-going obligation on the part of counsel to meet, confer and co-operate and a requirement by the Court by way of Case Management Conferences to ensure that discovery is reasonable and proportionate. The Court can keep a steady guiding hand on the wheel as the parties continue on the E-Discovery journey. Chris’s criticism of “E-Discovery as a process” was in the context of a slavish adherence to a step by step “plan” and I agree with that. But my view is that a process may have within it a certain flexibility. For example, a staged approach to electronic review may mean that different options become apparent as the review continues, allowing for modifications as review continues.

A copy of my paper delivered to the Symposium may be found below, along with a copy of my presentation.

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Presentation

Technology and the Courts – CTC 2013 – Baltimore Day 2 – Judging E-Discovery Disputes

This is a paper that I prepared to provide some background for a presentation that I shared with Daniel Garrie at Courts Technology Conference 2013 in Baltimore on Wednesday 18 September 2013.

It has been the main focus of my attention during Day 2 of CTC 2013 although I have spent a fascinating morning checking out some of the software solutions demonstrated by vendors in the very large and impressive exhibitors hall. Most of the solutions deal with evidence recording and presentation, AVL systems and case management systems. What I would consider to be trial management solutions for judges seem to be absent which is something of a surprise. There was nothing on show about e-discovery although to be fair, that is of more interest to lawyers than court administrators and judges.

The paper considers aspects of E-Discovery from a judicial perspective. It argues that in the quest to resolve E-Discovery disputes between parties requires an informed and pro-active approach by judges. It suggests that the first objective should be to try and avoid a disputed E-Discovery hearing, utilising proper case management techniques based not only on the requirements of the law but an understanding of how modern technology may be applied to achieve rule-based goals. But overall, judicial involvement at whatever stage in the discovery process involves aspects of judging disputes.

The approach of this paper is largely a generic one and draws on the E-Discovery rules in England, the United States and New Zealand. When one examines these rules it is clear that some common themes become apparent. It is within the context of these themes that the discussion will take place, although from time to time examples from specific jurisdictions will be given. For example, England and New Zealand use a form of menu for counsel to assist them in approaching their discovery obligations. In England this takes the form of a questionnaire. In New Zealand the checklist is incorporated into the High Court Rules. Regardless of the name applied or where it may be located, the common theme is that of a menu approach that will serve as a foundation for an E-Discovery inquiry.

The discussion will first consider the nature of digital information and why it is that E-Discovery poses a paradigmatic difference from what could be termed “traditional” discovery. I then consider some of the ways in which “traditional” discovery is challenged by new information systems and adopts the suggestion that, from a judicial perspective, a holistic approach to the processes that lie behind E-Discovery must be adopted, starting with the obligation by organisations and businesses to have a proper Electronically Stored Information (ESI) policy and the need for a Court to be aware of that when it comes to considering issues such as information destruction. I then move to a consideration of document review and discuss the need for a new mindset on the part of lawyers and judges based on the need for consultation and co-operation between the parties and a recognition that E-Discovery must be based upon what is reasonable and proportional to the case.

I then consider the obligations of the parties within the context of this mindset and then move to an examination of the process, using the New Zealand discovery checklist as an example of the menu based approach to discovery process and obligations.

I then move to discuss the approaches to E-Discovery using technology and discuss the need for proper education in the use and abilities of technology in discovery both on the part of lawyers and the judiciary. I argue for active judicial involvement and discuss the rationale for this approach. Once again the themes of reasonableness and proportionality underpin judicial activity. I argue that judicial activity should not be restricted to the courtroom and in the context of deciding a particular case should be present throughout the entire process. Creative and effective use of E-Discovery case conferences is as important as the resolution of disputes in the courtroom. With proper case conferencing, any “in-court” discovery disputes should be of limited and focussed scope.

I then move to consider the E-Discovery process and give some examples of how judicial involvement may take place within the context of considering document retention policies, examining issues surrounding document custodians and issues surrounding keyword searching within the area of Early Case Assessment. Examples of the use of technology within these stages of the examination will be considered. I close the consideration of how judges get involved with a discussion of some of the matters that may form an agenda for a case management conference.

The preparation of this paper has been greatly aided by my co-presenter Daniel Garrie, a Senior Managing Partner at Law & Forensics, an e-Discovery, cyber security, and electronic forensic consulting firm with offices nationwide. Mr. Garrie is also General Counsel of Pulse Advisory, a venture Development firm.

Mr. Garrie has served as an Electronically Stored Information Liaison, Neutral or  Expert for the L.A. Superior Courts, 2nd Circuit, 3rd Circuit, 7th Circuit, New York Supreme Court, and Delaware Supreme Court. In 2009, the Daily Journal recognized Mr. Garrie as a “Rising Star,” and in 2011 featured Mr. Garrie as a Special Master and thought leader in E-Discovery. In addition, due to his outstanding reputation in the emerging industry of E-Discovery and computer forensics, Mr. Garrie was one of a handful of individuals appointed to the E-Discovery Special Master Pilot Program for the U.S. District Court of Western Pennsylvania  out of a national pool of candidates.

Mr. Garrie is on the editorial board of the Journal of Legal Technology and Risk Management, Journal of Law & Cyber Warfare, and Beijing Law Review.  He has published over 90 articles spanning many topics. His articles have been featured in the University of San Diego Law Review, ABA International Law Journal and Suffolk Law Review. Mr. Garrie also authored the text book E-discovery and Dispute Resolution published by Thomson Reuters in the Summer of 2013 2nd Edition and Software and the Law, fall of 2013.

Mr. Garrie is admitted to practice law in Washington, New York, and New Jersey.

I am also indebted to not inconsiderable assistance from Andrew King of E-Discovery Litigation Solutions, a litigation support firm, specialising in E-Discovery. Andrew very kindly read an earlier draft  of this paper and I am very grateful to him for his suggestions. I must also acknowledge the helpful suggestions made by Chris Dale of the E-Disclosure Information Project. Chris took time out from his very busy schedule to make some very helpful comments about the judicial stance to e-discovery, and I am grateful to him for sharing his expertise.

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