The Ten Commandments of E-Discovery

 


By Seamus E. Byrne, Australian Lawyer and Computer Forensics Expert


Originally published on February 7, 2009


Australian courts have been dealing with electronic documents, and e-discovery, for over a decade.
Seamus Byrne highlights 10 facts about e-discovery in Australia that you should know, derived from actual decisions that have helped shape our e-discovery landscape.



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Edited by Bill Dawes, Image and Data Manager ("IDM") is the only magazine in the Asia-Pacific region which covers knowledge and information management technologies. This article appears in the January-February 2009 issue.


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"Litigation is not a game, or a point scoring exercise. It is the means by which our society allows disputes to be resolved authoritatively and impartially by judges and juries applying the law to the facts that each party brings forward as relevant to their dispute."
- Justice Rares in
Intel Corporation v Unwired Group Ltd (2008).


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Litigation through the courts is the most public method of dispute resolution. In recent times, it has also been widely criticised, even by judges, as "too complex, slow and expensive". Discovery is a pre-trial litigation process, and continuing obligation, to identify and disclose relevant documents for inspection and production.


The concept of electronic discovery ("e-discovery") is interpreted with two distinct meanings:
(a) Traditional E-Discovery – The management of discoverable paper documents by conversion to electronic form; and
(b) Modern E-Discovery – The management of discoverable electronic documents in electronic form.


There is a widespread perception that the Australian legal system has lagged behind the embrace of technological advances in email, messaging and electronic document management by Australian business and government organisations. Due to this perception, strong interest has surrounded the release of recently revised practice notes dealing with e-discovery. This has been a specific focus for the two courts that hear the majority of Australia’s commercial litigation, the Supreme Court of New South Wales and the Federal Court of Australia.


However, practice notes merely serve as a guide to supplement existing procedure, or to concisely espouse principles originating from earlier decisions. From the 10 cases I have highlighted for this article, we can derive some important facts about the evolving e-discovery landscape in Australia.


1. You will be penalised for failure to comply with a Search Protocol.


Case: Australian Securities and Investments Commission v Macdonald (2008)
The ongoing James Hardie litigation involves a significant volume of discoverable documents. Similar to the Sony Music litigation (see below), independent computer experts were appointed to facilitate a search protocol. The terms of the search protocol were agreed between all parties, including the Australian Securities and Investments Commission ("ASIC").


However at trial, ASIC sought to tender a number of previously undiscovered documents obtained from a forensic image of a company director’s notebook computer hard drive. Due to a clear failure to comply with the search protocol, ASIC was subsequently unable to tender the documents and rely upon them as evidence. This event highlights the critical need for lawyers, their clients and independent computer experts, to fully understand, and comply with any agreed protocols, at all times.


2. Proactively use a Document Management Protocol to prevent unnecessary conflict.


Case: Jarra Creek Central Packing Shed v Amcor (2006)
The ongoing Amcor and Visy class action arose from an earlier Australian Competition and Consumer Commission ("ACCC") investigation and litigation into cartel conduct in the packaging industry. It is significant to note that the ACCC litigation, which at the time, had commenced some months earlier, raised identical issues of fact and law.


In the ACCC litigation, of which Amcor and Visy were involved, a document management protocol ("DMP") had already been agreed upon, and discovery was "well-advanced". Jarra Creek, as representative for the class action, applied for the discoverable documents to be produced in a different format to the DMP in the ACCC litigation.


A DMP is also traditionally referred to as a "document protocol". A DMP essentially specifies the form in which discoverable documents, and associated metadata fields, are to be produced for discovery.


For example, a DMP involving the production of e-mails will typically include:
(a) the production format (e.g. native, electronic form and/or electronic image format, e.g. text-searchable TIFF or PDF);
(b) the metadata fields (e.g. To, From, CC, Subject, Date Sent) to be extracted from the e-mail and the method that such metadata will be populated into an electronic list or database of documents;
(c) the method of numbering discoverable e-mails;
(d) the method of preserving the relationship between an e-mail and any attachments;
(e) the method of identifying and/or removing duplicate e-mails; and
(f) the metadata to be populated into an electronic list or database of documents to identify an e-mail as privileged or otherwise confidential.


Unfortunately for Jarra Creek, their application to use a new DMP was dismissed in the interests of avoiding "unnecessary discovery" at the time. Notwithstanding, this case highlights the need to proactively agree upon a DMP, with all other parties. Ensure that you fully understand the protocol, and its implications. Further, be prepared to offer to pay the costs to other parties if you require anything above or beyond the DMP to ensure that your lawyers can efficiently review discoverable documents.


3. Reasonable searches must be reasonable.


Case: Galati v Potato Marketing Corporation of Western Australia (2007)
A number of common law jurisdictions have introduced the concept of a "reasonable search". A reasonable search is not a search of all documents within your possession, custody or control, but rather one which takes into consideration:
(a) the nature and complexity of the proceedings;
(b) the number of documents involved;
(c) the ease and cost of retrieving a document;
(d) the significance of any document likely to be found; and
(e) any other relevant matter.


Both parties gave discovery. However, the Potato Marketing Corporation had identified a number of categories of documents which it had not searched. Galati applied to the Court to seek that the Potato Marketing Corporation be ordered to give further discovery of documents in the initially excluded categories.


The CEO of the Potato Marketing Corporation advised that the party had not undertaken a search due to the burden arguably imposed by searching approximately 100,000 documents. Further, the CEO advised that he believed a search for those documents would be "very onerous, time consuming and expensive".


Due to the apparent admission that no reasonable search had been performed, and that the categories of documents likely to be discovered were of significance, the Court ordered further discovery by the Potato Marketing Corporation. This case highlights that a "reasonable search" varies upon circumstances and that an organisation is best positioned to proactively seek external expertise if they consider discovery to be burdensome.


4. Be prepared to explain and justify your reasonable search, thoroughly!


Case: Slick v Westpac Banking Corporation (2006)
The majority of cases settle out of court. Often not before significant time and cost is spent on discovery. This was such a case involving an American investor, an A$18M failed investment and a wholly owned subsidiary of Westpac, Quadrant.


Both parties gave discovery. However, during the relevant time, Quadrant only discovered a very small number of e-mails and no electronic calendar entries. Quadrant had upgraded their technology infrastructure, including e-mail server, during the relevant time.


Unfortunately, Quadrant's CFO, as representative, was unable to explain their searches and clarify the impact of the migration on their electronic documents, specifically whether any documents could have been potentially deleted or no longer reasonably accessible as part of the process.


By coincidence or otherwise, the case settled the day after further discovery was produced.


5. Manage your expectations in light of the "proportionality" of your request.


Case: Leighton Contractors v Public Transport Authority of Western Australia (2007)
This case involved a significant claim between a construction company and a government agency in relation to progress payments for a railway extension project, subject to the adjusted cost of various materials during the relevant time.


Leighton Contractors argued that the Public Transport Authority should give discovery of deleted e-mails. However, the Public Transport Authority had already undertaken significant discovery in relation to electronic documents. Further, the Court held that it was ultimately unlikely that any discovered deleted e-mails would support the real issue of the case.


This case reaffirmed the NT Power principle that the burden of discovery must be proportional to the potential value of the electronic documents sought. Further, that time, cost and inconvenience are to be considered in the context of the litigation and financial resources available to the party.


The Court also confirmed that the burden and obligation of discovery is greater for a large organisation due to the volume of electronic documents they manage. While discovery for a large corporation may be onerous, proportionality should ensure that it is not oppressive.


6. Be very wary of the unintended consequences of inadvertent disclosure.


Case: GT Corporation v Amare Safety (2007)
Privilege is the fundamental pillar of the law that serves to protect certain communications from public disclosure, and their use in evidence. In Australia, privilege is largely restricted to communications between a lawyer and their client within the context of anticipated or actual litigation.


Unfortunately, the independent consultants engaged by Amare, without the knowledge of Amare’s solicitors, failed to remove documents identified as privileged, prior to production of their discoverable documents consisting of over 150,000 electronic documents.


The Court highlighted that the actions of Amare’s consultants gave rise to significant problems due to "inadvertent disclosure" and ultimately ended in GT Corporation being forced to engage new members of their legal team, to replace those who had obtained knowledge from the privileged documents.


This case is a strong reminder to remain diligent when you are involved in a discovery process, particularly if you are dealing with any volume of electronic documents.


7. Electronic documents are discoverable, diligently manage them – or else!


BT (Australasia) v State of New South Wales & Telstra (1998)
BT responded to the New South Wales' "whole of government" request for tender ("RFT") to provide a telecommunications network. Following the RFT, an agreement between BT and the NSW Government was reached in 1992. Telstra became involved as the agreement relied upon a specific Telstra service, which was subsequently discontinued and replaced with a new service, to which BT’s access was restricted. BT commenced litigation in 1995 claiming Telstra had breached the Trade Practices Act.


Following Telstra’s initial discovery efforts in early 1998, BT claimed that Telstra failed to comply with their discovery obligations in relation to electronic documents. More damning, that Telstra had failed to take appropriate steps to prevent destruction of discoverable documents.


During the relevant time, Telstra's information management practices involved the storage of electronic documents from computer, directly to backup tape, primarily for the purpose of disaster recovery. However, at no time did Telstra adequately disclose this practice, nor the existence of any backup tapes. Further, Telstra continued to destroy potentially relevant electronic documents by recycling backup tapes. Telstra was ordered to undertake a costly exercise to produce discoverable documents within a strict "rolling" schedule.


8. As society embraces technology, the law appreciates its relevance.


Case: NT Power Generation v Power and Water Authority (1999)
This case is notable for providing a reflection on the shift in the information management practices of electronic documents, including e-mail.


The Court refused to limit discovery of electronic documents to those that had been converted to paper. The Power and Water Authority subsequently interviewed employees as to their information management practices. During the relevant time, it was revealed e-mails were generally archived to a hard-copy file.


The Court considered the employees' evidence. However, the Court again refused the application on the basis that such a limitation was not in the interests of a fair trial and that the likelihood of identifying relevant electronic documents, in their electronic form, was not disproportionate to the burden (i.e. time, cost and inconvenience of restoring and reviewing the contents of backup tapes).


This guiding principle has continued to evolve and ensure that the discovery of electronic documents is proportionate to the circumstances. See: Leighton Contractors.


9. Document destruction is part of every document retention policy; just remember your legal obligations.


Case: British American Tobacco Australia Services v McCabe (2002)
This high profile tobacco litigation led to the inclusion of specific civil and criminal penalties for document destruction in Victoria.


However, the case has also been widely referenced throughout Australia and other common law jurisdictions, for affirming the principle that a party may only destroy a document before litigation commences, if such destruction is not an attempt to pervert the course of justice or in contempt of court.


In order to mitigate the risk of poorly defending such claims, many organisations have implemented enterprise content management ("ECM") systems that include a "legal hold" feature. "Legal hold" facilitates the ability to proactively identify, and subsequently preserve, potentially discoverable documents, pending an order for discovery.


10. Be aware of the importance of Search Protocols and a well-documented technology infrastructure.


Case: Sony Music Entertainment (Australia) v University of Tasmania (2003)
An investigation revealed that multiple Australian universities were hosting Web sites that made available a number of popular copyrighted sound recordings. Copyright owners sought orders for preliminary discovery to confirm their investigation findings, with a view to better identifying the apparent parties involved.


Independent computer experts were appointed, and subject to confidentiality obligations, were instructed to inspect computers and other electronic storage mediums controlled by the University of Tasmania and perform searches to identify potentially relevant documents, under a search protocol designed to maintain any claim of privilege prior to the discoverable documents being produced.


In addition, unlike Telstra in the BT Australasia litigation, the University proactively disclosed its routine procedures in relation to archival and backup. Consequently, pending a request from the copyright owners, the University was able to maintain its operational routine.


Labels: E-Discovery
Comments
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