Litigation 101: Discovery – Understanding the process and obligations

Discovery is an important interlocutory procedure and arguably, one of the most important stages of litigation. It is the process that ensures that all relevant documents are available to the parties, and to the Court, so that no one is taken by surprise at trial. In this article, we explain the basics of discovery and provide some key takeaways for organisations, to ensure compliance with discovery obligations in a seamless and cost-effective manner.

What is “discovery”?

Discovery (referred to as disclosure in certain jurisdictions, including Queensland) is an interlocutory procedure whereby a party obtains from their opponent the discovery and subsequent production of documents which are relevant to issues in the proceeding. Discovery can also be ordered:

• before proceedings have been commenced (preliminary discovery); and
• from a non-party (non-party disclosure).

The specific rules for discovery are heavily jurisdiction dependent. For example, in Queensland, disclosure is as of right, whereas in Federal Court, and a number of other States, a party must apply for disclosure.

The obligation to provide discovery under each Australian jurisdiction generally extends to all of the documents in a party's "possession, custody or power".

Collecting material for discovery – What is a "document"?

For the purposes of discovery, the definition of "document" is broad – generally, it will cover any record of information. This includes:

• anything on which there is writing;
• anything on which there are marks, figures, symbols or perforations having a meaning for persons qualified to interpret them;
• anything from which sound, images or writings can be reproduced with or without the aid of anything else; or
• a map, plan, drawing or photograph.

Once it is apparent that proceedings may be contemplated or expected, it is important not to destroy any documents. Any automated processes which destroy documents will need to be suspended.

When collecting hard copy or electronic documents, it is always best to collect whole ‘stores’ such as physical folders, electronic folders or file servers and mailboxes, rather than attempting to cherry pick documents from the original location. Our Forensic & Technology Services team can assist in the collection exercise, regardless of the document management system implemented (whether sophisticated or otherwise).

What do I need to discover?

The answer to this question depends on the jurisdiction. For example, in Queensland, you are required to disclose those documents that are directly relevant to an issue on the pleadings – that is, where the relevant defendant has either denied, or not admitted an allegation.

Where the jurisdiction requires an application for discovery or disclosure, it is ordinarily the practice to seek categories of discovery or disclosure, or specific documents. Documents falling within those categories must be disclosed, subject to any claims for privilege.

In the Federal Court, parties may seek “standard discovery”, whereby parties must disclose all documents that are directly relevant to an issue raised by the pleadings or affidavits, which the party is aware of after a reasonable search, and which must be documents that:

• the party giving discovery intends to rely on;
• adversely affect that party’s case;
• support another party’s case; or
• adversely affect another party’s case.

You are not obliged to discover documents that are subject to a relevant privilege - whether that is legal professional privilege, without prejudice privilege, or the privilege against self-incrimination. However, if only a section of a relevant document is covered by such a privilege, you will be required to disclose that document in redacted form. A good example is a board paper, which may include a summary of legal advice received; that section may be redacted, with the rest of the paper left unmasked.

Discovery is by way of delivery of a list of documents to be discovered to your opponent. They are then able to request production of that material.

The obligation to disclose documents that are directly relevant (in Queensland), or that fall into a relevant category (other jurisdictions) continues to the end of the proceeding.

Can I destroy material that’s bad for my case?

In short – no.

Once a proceeding has been commenced, the obligation to disclose documents in your “possession, custody or power” kicks in. If you are found to have destroyed relevant material, you will be in breach of the relevant procedural rules, given that, at the time the litigation commenced, you held that material. Depending on the probative value of the material destroyed, this can have significant consequences, including potentially a relevant pleading being struck out, a negative inference being taken in respect of an issue to which the material relates and even, in serious cases, an order for contempt.

While the rule is not as bright prior to proceedings having been commenced, in the event that the party destroying material was aware that litigation was pending, similar consequences can apply.

What about confidential, or commercial in confidence material?

Documents that are confidential or commercial in confidence may also be discoverable.

In some circumstances, a Court will intervene to protect the rights of a party compelled to produce documents which the Court accepts are confidential or commercial in confidence. This is in recognition of the fact that discovery involves a "very serious invasion of the privacy and confidentiality of a litigant's affairs", a consideration that is outweighed only by the "public interest in securing that justice is done between the parties".

There is no specific formula which specifies how access to confidential documents will be restricted. There are several options available to assist courts in balancing the competing interests of parties. As a starting point, the court may only allow access to confidential or commercial in confidence documents upon the signing of a confidentiality undertaking, and also order for confidential or irrelevant sections of a document to be masked. The court may also restrict access to these materials to solicitors and experts, and specific client representatives only, rather than employees of the party.

Production of confidential documents becomes more complex when the party seeking the documents is a competitor. In such cases, it is nonsensical to impose upon the competitor an obligation to forget the information contained within the confidential material. Effectively, the confidentiality of the material is destroyed. A similar concern arises where expert witnesses who advise generally in the industry are reviewing the material and may advise competitors. In such cases, courts are prepared to make orders which either restrict access to confidential documents, or which provide copies of the confidential documents with the irrelevant or confidential material masked.

Given the demonstrable uncertainty in orders which may be made by a court to preserve commercial in confidence information, as a starting point, it is always best to try and negotiate confidentiality with other parties.