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Client Update: Landmark changes to discovery in the NSW Supreme Court

1 May 2012

In brief: In March of this year, the Supreme Court of New South Wales announced major changes to its approach to discovery that are likely to profoundly alter the conduct of commercial disputes in that court. On 30 April 2012, the Chief Justice and key judges of the court's Equity Division addressed practitioners to further explain and clarify aspects of the new approach. Partner Richard Harris and Lawyer Elnaz Nikibin report on the changes, some of the matters being emphasised by the court and some similar themes emerging in the Federal Court.

Background

The revised approach to discovery (which is limited to matters in the Court's Equity Division) is set out in the Court's Practice Note titled Disclosure in the Equity Division SC Eq 11 (the Practice Note).

In essence, the Practice Note provides that, other than in exceptional circumstances, the court will not permit discovery of documents until after the parties have prepared and exchanged their written witness statements.

The standard practice for many years has been for discovery to be completed first and for the parties to then prepare their evidence having regard to both their own and the other party's relevant documents. Discovery will no longer be provided as a matter of course at any time in the proceeding and any party seeking discovery will now need to make a formal application that addresses, at least, the specific need for the documents and provides an estimate of the likely costs that will be incurred in the process.

The changes reflect a desire on the court's part to reduce the costs of litigation and improve the evidentiary value of the written evidence filed.

Key outcomes from the new approach will mean:

  • plaintiffs will need to disclose their entire case and the evidence upon which it is based before seeing the defendant's documents;
  • discovery, if ordered at all, will likely be much narrower in scope and more deliberately confined to the key issues in dispute;
  • costs of discovery will likely be the subject of increased scrutiny by the court and may represent a basis to avoid discovery of an overly burdensome or expensive nature; and
  • there will be material uncertainty around what discovery a party will be entitled to after the provision of witness statements until current proceedings have progressed to a point where those matters are addressed by the court.

In addressing practitioners on the changes last night, the Chief Justice and key judges from the Equity Division have confirmed that:

  • the reforms will be pursued diligently by the Equity Division judges and that the court would take very seriously the Practice Note's requirement that discovery before evidence will only be permitted in 'exceptional' circumstances. 'Exceptional' was said to be a higher requirement than, for instance, 'special';
  • the note will apply to processes such as preliminary discovery, subpoenas and notices to produce and the court will not permit the use of those processes to circumvent the general policy; and
  • any discovery following evidence is likely to be much more confined than it has been in the past. Having said that, the judges confirmed that they did not regard the policy as precluding the discovery of documents relevant to testing the accuracy of the written evidence given by a witness.

Federal Court changes

The Practice Note follows amendments to the Federal Court Rules 2011 (Cth) earlier this year, which require parties seeking discovery in matters in the Federal Court to make a formal application addressing how discovery will facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible. The Practice Note is also, in many respects, consistent with a practice note issued by a single judge of the Federal Court, Justice Perram, in January of this year. Justice Perram's practice note states that orders for discovery will generally not be made until the pleadings are closed and all lay evidence is exchanged.

How does it affect you?

  • The Practice Note applies to all new and existing matters in the Court's Equity Division.
  • The changes are likely to significantly alter the way in which commercial litigation is conducted and will affect a number of strategic considerations for both plaintiffs and defendants.
  • For plaintiffs, it will be even more important to ensure that any claim is justifiable on the basis of known facts at the time of commencement. Less reliance can be placed on an assumption that aspects of the case will be made out on the basis of the defendant's documents.
  • Defendants will have an opportunity to consider the merits of the plaintiff's case in much greater detail prior to incurring material costs (other than those associated with the preparation of a defence). In many cases there may be a reduced impetus on parties to settle disputes early simply out of a desire to avoid discovery costs.
  • As discovery will still be permitted in narrower circumstances following the exchange of written evidence, it will still be necessary for all litigants to have a detailed understanding of their own documents to ensure their evidence is accurate and the credibility of their witnesses is not damaged.
  • On any view, the court has provided the clearest indication in many years of a desire to reign in the size and costs associated with discovery which have materially increased over recent years due to the advent of email and electronic storage.

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