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Focus: ALRC recommends major changes to discovery

30 May 2011

In brief: The Australian Law Reform Commission has released a report containing policy recommendations that, if implemented, could have a major impact on discovery in federal courts and, in particular, the Federal Court of Australia. Partner Ross Drinnan (view CV) and Senior Associate Georgia Steele report. 

How does it affect you?

  • Managing Discovery: Discovery of Documents in Federal Courts (the report) makes 27 policy recommendations aimed at improving the practical operation and effectiveness of discovery in federal courts.
  • The report proceeds on the basis that discovery orders should not be a routine step in litigation, and recommends new approaches to the allocation of the costs of discovery.
  • Key recommendations include that the Federal Court has the power to order that:
    • parties file 'discovery plans' to manage the process, if there is to be a dispute about the nature or scope of discovery;
    • costs of discovery be paid in advance by the party requesting discovery, and that a cap on the maximum costs that may be recovered be imposed; and
    • pre-trial oral examinations are conducted to assist with the discovery process.

Background

On 1 January 2010, an 'overarching purpose' provision was introduced into the Federal Court of Australia Act 1976 (Cth) (the Act). This provision states that the overarching purpose of the civil practice and procedure provisions of the Act is to facilitate the just resolution of disputes according to law, and as quickly, inexpensively and efficiently as possible. This overarching purpose is a theme running through the report, and was the background against which the Federal Attorney-General requested that the Australian Law Reform Commission (the ALRC) identify law reform options to improve the practical operation and effectiveness of discovery in federal courts.

Some of the key recommendations are set out below.

Discovery plans

The ALRC considers that a party should only be able to apply for discovery if it is necessary for the just determination of the issues in the proceedings, and expresses support for amendments to the Federal Court Rules that impose a clear obligation on parties to justify applications for discovery orders and, in turn, ensure that the court scrutinises the need for discovery in each case.

The report recommends the introduction of procedures in the Federal Court for the development of discovery plans (Recommendation 6-1). It is envisaged that, prior to the court making an order for discovery, a party may apply for an order that the parties file a practical discovery plan setting out the matters on which they agree or disagree in relation to the scope and process of any discovery. The plan would also set out the practical steps required of the parties during discovery including, in particular, the cost and time implications of discovery orders.

The report also recommends that the Federal Court Rules require the parties to discuss in good faith, and endeavour to agree on, a practical and cost-effective discovery plan, having regard to the issues in dispute, and the likely volume, nature and significance of the documents that might be discoverable.

Costs

The ALRC's recommendations in relation to costs are aimed at permitting the use of targeted costs orders in the Federal Court to control discovery. The report considers the circumstances in which it might be appropriate for judges to disallow costs that have been improperly, unreasonably or negligently incurred, particularly if there has been a failure by the parties to take into account the 'overarching purpose' of civil practice and procedure.

The report recommends (recommendation 9-2) that the Act be amended to provide that the court may make orders:

  • that some or all of the estimated costs of discovery be paid for in advance by the party requesting discovery;
  • that a party requesting discovery give security for the payment of the cost of discovery; and
  • specifying the maximum cost that may be recovered for giving discovery or inspection.

As a corollary, the report recommends (Recommendation 9-3) that practitioners be expected to address whether discovery orders should be made, in light of such factors as the parties' financial resources, the likely cost of document retrieval and the proportionality of the cost of discovery to the matters in dispute.

Pre-trial oral examinations

The report suggests that pre-trial oral examinations may assist the discovery process, by facilitating the identification of documents, promoting settlement and narrowing the issues in dispute. The report accordingly recommends that the Federal Court Rules be amended to provide for limited circumstances in which the court may order pre-trial oral examination about discovery, in order to, for example:

  • identify the existence and location of potentially discoverable documents;
  • assess the reasonableness and proportionality of a discovery plan; and
  • resolve any disputes about discovery.

What next?

The Federal Court announced on 16 May 2011 that it will introduce a new set of Court Rules, which, it is anticipated, will commence on 1 August 2011. It will be interesting to see whether any of the report's recommendations are incorporated in the new Rules. It certainly seems possible they will be, given that four current Federal Court judges were ALRC Commissioners involved in the preparation of the report.

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