3.

Discovery Practice and Procedure in

Federal Courts

Contents
Introduction 57
Procedural framework 57
High Court of Australia 57
Federal Court of Australia 58
Family Court of Australia 64
Federal Magistrates Court of Australia 65
Issues with the process of discovery 66
High Court of Australia 66
Federal Court of Australia 66
Options for procedural reform in the Federal Court 78
Family Court of Australia 110
Federal Magistrates Court of Australia 110

Introduction
3.1 This chapter examines civil practice and procedure for the discovery of
documents in proceedings before federal courts. Issues about the cost of a discovery
process and its proportionality, in terms of the value of the documents sought in the
context of the litigation, are explored in this chapter. In particular, the use of
technology in the process of discovering electronically-stored information is
considered here.

Procedural framework
3.2 This part of the chapter outlines the existing court rules and practices for
discovery of documents in federal courts. It covers the courts’ powers to make orders
for discovery and to enforce those orders, and the processes by which parties are
required to discover documents.
High Court of Australia
3.3 There are no provisions in the High Court Rules 2004 (Cth) setting out a process
for the discovery of documents. Where discovery is necessary in High Court
proceedings, the Court or a judge determines what procedure is to be adopted and may
give directions.1

1 High Court Rules 2004 (Cth) r 6.01.

58 Discovery in Federal Courts

Federal Court of Australia

Pre-discovery practice
3.4 Practice Note CM 5 implies that practitioners are expected to consider carefully
any application for discovery, before approaching the court for orders, with a view to
narrowing the scope of discovery. Practice Note CM 5 expressly states that the court
will expect practitioners to be in a position to answer the following questions when
applying for orders, designed to eliminate or reduce the burden of discovery:
• is discovery necessary at all, and if so for what purpose?
• can those purposes be achieved:
o by a means less expensive than discovery;
o by discovery only in relation to particular issues; or
o by discovery (at least in the first instances) only of defined categories of
documents?
• particularly in cases where there are many documents, should discovery be
given in stages, for example, initially on a limited basis, with liberty to apply
later for particular discovery or discovery on a broader basis?
• should discovery be given in the list of documents (as required by O 15 r 2(2) of
the Federal Court Rules (Cth)) by general description rather than by
identification of individual documents?2
Planning for electronic discovery
3.5 Where discovery involves significant amounts of electronically-stored
information (ESI), Practice Note CM 6 states that before the court will make orders for
electronic discovery the parties are expected to have discussed and agreed upon a
practical and cost-effective discovery plan having regard to the issues in dispute and
the likely number, nature and significance of the documents that might be discoverable
in relation to them.3
3.6 Parties are also expected to reach an agreement on protocols for the management
of electronic documents in litigation.4 Practice Note CM 6 provides a Default
Document Management Protocol which addresses issues such as page number
conventions, document descriptions, file format and media to be exchanged. An
example of an Advanced Document Management Protocol is also provided under the
practice note.
3.7 The court may order the parties to attend a case management conference, called
a ‘pre-discovery conference’, with a judge or registrar to facilitate or mediate

2 Practice Note CM 5: Discovery (Federal Court of Australia), [1].

3 Practice Note CM 6: Electronic Technology in Litigation (Federal Court of Australia), [6].
4 Ibid, [7].
 3. Discovery Practice and Procedure in Federal Courts 59

resolution of any areas of disagreement between the parties concerning their discovery
plan or document management protocol.5
3.8 A checklist of the issues which parties are expected to address at a pre-discovery
conference is annexed to the practice note. These issues include strategies for the
identification, collection, processing, analysis, review and exchange of electronic
documents, as well as a timetable and estimate of costs for discovery.6
3.9 If the court requires a pre-discovery conference, Practice Note CM 6 states that
each party may have up to three representatives—including one representative to act as
a single point of contact for the party in relation to the matters resolved at the
conference, called the ‘Discovery Liaison’. Parties’ representatives at a pre-discovery
conference are expected to have sufficient knowledge and access to information to
address the discovery plan and document management protocol.7 The parties or the
court may also engage an expert or adviser to attend a pre-discovery conference to
facilitate or mediate resolution of any of these issues.8
Application for discovery
3.10 A party may file and serve a notice for discovery, with leave of the court, after a
directions hearing under O 10 of the Federal Court Rules and within any period fixed
by the court for this purpose.9 In practice, the court may expect the parties to indicate at
the first directions hearing or case management conference whether leave for discovery
will be sought.10
3.11 The rules do not explicitly prohibit the giving of a discovery notice before the
close of pleadings. However discovery will not be enforced prior to the close of
pleadings, except where the party seeking discovery can show that it is impossible to
plead without it.11
Orders for discovery
3.12 Practice Note CM 5 states that the court will not order general discovery as a
matter of course, even where the parties have consented to it, and that the court will
fashion any order for discovery to suit the issues in a particular case.12 In this context,
general discovery refers to the broad categories of documents required to be disclosed
under Federal Court Rules O 15 r 2(3).13 However, r 3 subsequently provides that the
court may limit discovery orders to specific documents or classes of documents or in
relation to specific matters in question in the proceeding—to prevent unnecessary

5 Federal Court Rules (Cth), O 10 r 1(2)(i); Practice Note CM 6: Pre-Discovery Conference Checklist
(Federal Court of Australia), [9].
6 Practice Note CM 6: Pre-Discovery Conference Checklist (Federal Court of Australia).
7 Ibid, [9.1].
8 Ibid, [9].
9 Federal Court Rules (Cth), O 10 r 1, O 15 r 1.
10 Practice Note CM 6: Pre-Discovery Conference Checklist (Federal Court of Australia), [1.2].
11 Latec Finance Pty Ltd v Jury (1960) 77 WN (NSW) 674.
12 Practice Note CM 5: Discovery (Federal Court of Australia), [1(a)–(b)].
13 Federal Court Rules (Cth) O 15 r 5; Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 2)
[2006] FCA 1001, [153].
60 Discovery in Federal Courts

discovery.14 Practice Note CM 5 suggests that, in the normal course of events, the court
will only make orders for limited discovery under r 3 and not general discovery under
r 2. The court has confirmed that the basis of ordering discovery in the Federal Court is
that, as a general rule, the Court will not give general discovery.15 In Pasini v
Vanstone, Finn J stated that:
As Practice Note 14 [now Practice Note CM 5] makes plain, general discovery will
not be ordered as of course, discovery commonly being ordered only in relation to
particular issues or defined categories of documents.16

3.13 When making orders for discovery, the court must have regard to s 37M of the
Federal Court of Australia Act 1976 (Cth) which provides that the overarching purpose
of civil practice and procedure is to facilitate the just resolution of disputes:
(a) according to law; and
(b) as quickly, inexpensively and efficiently as possible.17
Serving a list of documents
3.14 Order 15 r 2(2) of the Federal Court Rules requires parties to give discovery by
serving a list of discoverable documents. The list of documents must be accompanied
by an affidavit verifying the list.18 This must be done within the time specified in the
notice for discovery (not being less than 14 days after service), or within such time
designated by the court.19
3.15 The contents of the list must be in accordance with Form 22 prescribed under
sch 1 of the Rules, and conform to the requirements of O 15 r 6 unless the court
otherwise orders. The list must describe each document or group of documents
sufficiently to be identified, state the grounds for privilege claimed over any of the
documents and, for documents no longer in the party’s possession, custody or power,
state when the party parted with the document and what has become of it.20 If the party
is represented by a solicitor, the solicitor must certify that the list and the statements in
it are correct.21
Production of documents
3.16 Order 15 r 11 provides that the court may, subject to any question of privilege,
order a party to produce any document enumerated in their list of discoverable
documents for inspection by any other party at a time and place specified in the order.22
The party to whom a document is produced may make copies at their own expense.23

14 Federal Court Rules (Cth), O 15 r 3.

15 Kyocera Mita Australia Pty Ltd v Mitronics Corp Pty Ltd [2005] FCA 242, [5].
16 Pasini v Vanstone [1999] FCA 1271, [30].
17 Federal Court of Australia Act 1976 (Cth), s 37M.
18 Federal Court Rules (Cth), O 15 r 2(2).
19 Ibid, O 15 r 2(1).
20 Ibid, O 15 rr 6(3),(4),(6).
21 Ibid, O 15 r 6(8).
22 Ibid, O 15 r 11(1).
23 Ibid, O 15 r 12.
 3. Discovery Practice and Procedure in Federal Courts 61

The court may also order the party giving discovery to file and serve on any other party
a copy of the whole or any part of the document.24
3.17 Order 15 r 13 provides that the court may, at any stage in a proceeding, order a
party to produce to the court for inspection any documents in its possession, custody or
control relating to any matter in question, and the court may deal with the document as
it thinks fit.
3.18 In particular, where a question of privilege or any other objection to the
production of discoverable documents between the parties arises, the court may order
that the document be produced to court for inspection to decide the validity of the
privilege claim or objection.25
Producing electronic documents
3.19 The court may order that documents be produced in electronic format, in which
case the party should provide other parties with documents in a useable, searchable
electronic format or in the electronic format in which the documents are ordinarily
maintained.26
3.20 The standard process of discovering electronic documents is set out in the
diagram below, and was established by the Electronic Discovery Reference Model
(EDRM) Project.27

3.21 The following is a simplistic and brief description of the stages in the EDRM.

24 Ibid, O 15 r 11(1)(e).
25 Ibid, O 15 r 14.
26 Practice Note CM 6: Electronic Technology in Litigation (Federal Court of Australia), [5.1].
27 EDRM: The Electronic Discovery Reference Model (2010) <www.edrm.net> at 25 October 2010.
62 Discovery in Federal Courts

Information management
3.22 This is the way in which potential litigants organise their electronic information,
so that documents can easily be found. The obligations on litigants to preserve relevant
documents are considered in Chapter 4.
Identification
3.23 This involves identifying the places or locations to be searched, as well as the
types of documents or information to be searched for. E-discovery might pin-point
certain sites such as a particular employee’s computer terminal or cast a broader net,
for example, over an organisation’s entire email system. Broader still, back-up tapes or
disaster recovery systems may be identified as potential locales of relevant
information.
3.24 The types of electronic documents to be discovered may be identified by
automated searches using keywords appearing in the document or by specifying fields
such as author or recipient. Documents may also be identified by type of data, whether
email, portable document format (pdf) or text file.
Preservation/Collection
3.25 This is the process of transferring information from its original location to a
searchable database of potentially discoverable documents for review, in a way that
does not compromise the integrity of the data. Specialist software and other forensic
tools have been developed to collect electronic documents for discovery.
3.26 A particular issue that may arise at this stage in the e-discovery process is the
preservation of metadata. Metadata is information about an electronic record, such as
how/when/by whom a document was created/amended/sent. These details can be
altered when a document is accessed during the collection phase. Metadata can be
relevant to the issues in dispute in some cases, for example, where the parties disagree
as to which record is the final version of a document. In such cases, technological
measures are available to ensure that the metadata is preserved in its original form.
Processing/Review/Analysis
3.27 Processing is the stage at which the collected documents are tidied up and
culled. This may involve extracting individual files from containers, and converting
files into a format that enables word-searches. It may also involve the process of de-
duplication, which can mean removing additional copies of the same document or
omitting the many links in a chain of emails.
3.28 Analysis, in its simplest form, is the indexing of documents to enable keyword
searching and the production of a contents list. This involves coding each document
according to a list of fields (such as author, recipient or date).
3.29 Review is when documents are perused to assess their discoverability. This can
involve coding each document according to the facts in issue to which the documents
relate, and indicating each document’s level of importance (whether it is relevant
enough to tender in court, provide in a brief to counsel, disclose to an opposing party or
 3. Discovery Practice and Procedure in Federal Courts 63

not relevant enough to include in discovery). The review stage may also involve the
redaction of privileged communications or tagging wholly privileged documents to be
withheld.
Production
3.30 This is the act of disclosing documents to other parties to the proceeding. For
example, electronic documents may be produced on a disk or hosted on a website.
Presentation
3.31 This is when documents are presented to the court. Documents may be presented
on computer screens in electronic format in an e-courtroom, rather than producing
hardcopies of documents from physical files.
Supplementary discovery
3.32 Orders for discovery impose an ongoing obligation on the party giving
discovery. The Federal Court Rules require parties to discover any document not
previously discovered that would otherwise be necessary to comply with court orders.28
Particular discovery
3.33 The Federal Court Rules state that the Court may order at any stage of the
proceeding that a party give discovery of some document or class of documents
relating to any matter in question in the proceeding that—as it appears from the
evidence or from the nature or circumstances of the case or from any document filed in
the proceedings—may be or may have been in the possession, custody or power of the
party.29
Enforcement of discovery obligations
3.34 The court has broad powers to address a party’s non-compliance with orders for
discovery. This includes the case management powers prescribed in s 37P of the
Federal Court of Australia Act, such as the power to disallow or reject any evidence or
dismiss the proceeding in whole or in part. The Federal Court, as a superior court of
record,30 also possesses such inherent power as is necessary to regulate processes such
as discovery and to prevent abuse of process.31
3.35 The Federal Court’s power to award costs may also be used to enforce orders for
discovery. This includes the power to make an award of costs at any stage in a
proceeding and to make different awards of costs in relation to different parts of the
proceeding, such as discovery.32

28 Federal Court Rules (Cth), O 15 r 7A.

29 Ibid, O 15 r 8.
30 Federal Court of Australia Act 1976 (Cth), s 5(2).
31 Riley McKay Pty Ltd v McKay [1982] NSWLR 264.
32 Federal Court of Australia Act 1976 (Cth), s 43 (3)(a), (b).
64 Discovery in Federal Courts

Family Court of Australia

Disclosure procedures
3.36 Chapter 13 of the Family Law Rules 2004 (Cth) imposes an obligation on each
party, from the start of pre-action procedures for a case, to provide to the court and to
the other party full and frank disclosure of all relevant information in a timely
manner.33 In all cases this includes disclosure of relevant documents in the parties’
possession or under their control.34
3.37 The parties to a financial case must make full and frank disclosure of their
financial circumstances.35 This involves filing and serving a financial statement with
the application or response.36
3.38 A party to proceedings before the Family Court must give an undertaking to the
court stating that the party has read parts 13.1 and 13.2 of the Family Law Rules and is
aware of the duty to give full and frank disclosure, and that to the best of his or her
knowledge the party has complied with the duty of disclosure.37 This undertaking must
be filed at least 28 days prior to the first day before a judge.38
3.39 After a case has been allocated a first day before a judge, a party may request
another party to provide a list of documents to which the duty of disclosure applies.39
The list must be provided within 21 days of the request and, subject to a claim of
privilege, the party must produce those documents for inspection on request by another
party.40 The court may make an order directing disclosure of documents by electronic
communication.41
3.40 A party who breaches their disclosure obligations in the Family Court may be in
contempt of court and liable to costs orders.42 A costs order for breach of disclosure
obligations would be a departure from the usual position that parties to proceedings
before the Family Court bear their own costs.43 A breach of disclosure obligations is
also an offence if the party gave an undertaking in relation to disclosure that the party
knew or ought to have known was false or misleading in a material particular.44

33 Family Law Rules 2004 (Cth), r 13.01.

34 Ibid, r 13.07.
35 Ibid, 13.04.
36 Ibid, r 13.05.
37 Ibid, r 13.15. This does not apply to an independent children’s lawyer.
38 Ibid, r 13.16.
39 Ibid, r 13.20. This applies to all Initiating Applications (Family Law) except: an application for an order
that a marriage is a nullity or a declaration as to the validity of a marriage, divorce or annulment; a
maintenance application; a child support application or appeal; and an application seeking interim,
procedural, ancillary or other incidental orders.
40 Ibid, r 13.20.
41 Ibid, r 13.24.
42 Family Law Act 1975 (Cth), ss 112AP, 117.
43 Ibid, s 117 (1).
44 Family Law Rules 2004 (Cth), r 13.15.
 3. Discovery Practice and Procedure in Federal Courts 65

Federal Magistrates Court of Australia

3.41 The Federal Magistrates Court’s jurisdiction overlaps with that of the Federal
Court and the Family Court. Procedures for discovery prescribed in the Federal
Magistrates Court Rules 2004 (Cth) are similar to the processes of the Federal Court.
Similarly, procedures for disclosure in financial matters in the Federal Magistrates
Court’s family law jurisdiction are similar to those applicable in the Family Court.
Discovery procedures
3.42 Part 14 of the Federal Magistrates Court Rules prescribes procedures for the
discovery of documents in all proceedings. Rule 14.02 provides that a declaration to
allow discovery may be made on the application of a party or on the court’s own
motion.45 If a declaration is made, the court may order discovery generally or look to
fashion orders for discovery in relation to particular classes of documents or issues in
the proceeding.46
3.43 The rules require the party ordered to give discovery to file an affidavit of
documents.47 The court may order the party to produce discoverable documents to the
court or to any other party for inspection, subject to any claim of privilege.48
3.44 Rule 14.09 provides that a party who does not discover documents so ordered by
the court is not entitled to put the document in evidence or give evidence of the
contents of the document, unless the court gives leave.49
Disclosure in financial matters
3.45 Part 24 of the Federal Magistrates Court Rules applies to financial matters
under the Federal Magistrates Court’s family law jurisdiction. Rule 24.02 provides that
an applicant or respondent must file and serve a financial statement with their
application or response at the commencement of proceedings.50 In this statement, the
party must make full and frank disclosure of their financial circumstances.51
3.46 In proceedings for maintenance, the respondent must bring particular categories
of documents to the court on the first court date such as tax returns, pay slips and bank
statements.52 In other financial matters, unless the court orders otherwise, the parties
must serve on each other within fourteen days of the first court date specific categories
of documents including tax assessments and business activity statements.53

45 Federal Magistrates Court Rules 2001 (Cth), r 14.02 (1).

46 Ibid, r 14.02 (2).
47 Ibid, r 14.03.
48 Ibid, r 14.05.
49 Ibid, r 14.09.
50 Ibid, r 24.02.
51 Ibid, r 24.03.
52 Ibid, r 24.05.
53 Ibid, r 24.04.
66 Discovery in Federal Courts

Issues with the process of discovery

3.47 This part of the chapter looks at the issues that can arise in the discovery of
documents in proceedings before federal courts, and the current practices and
procedures designed to address them. It also assesses the extent to which civil practice
and procedure effectively deals with discovery issues, and explores directions for
reform of the discovery process in the federal courts.
High Court of Australia
3.48 During initial consultations, the ALRC heard that there have not been any
obvious problems in managing the process of discovery in the High Court. Such
comments were made in light of the fact that the need for discovery of documents
rarely arises in the High Court.
3.49 However, the ALRC is interested in hearing from stakeholders about any issues
encountered in relation to the procedures adopted by the High Court for the discovery
of documents in civil proceedings.

Question 3–1 What issues, if any, have arisen in the procedures adopted
by the High Court for the discovery of documents in civil proceedings?

Federal Court of Australia

3.50 In Managing Justice: A Review of the Federal Civil Justice System, ALRC
Report 89 (2000), the ALRC noted that ‘in almost all studies of litigation, discovery is
singled out as the procedure most open to abuse, the most costly and the most in need
of court supervision and control’.54 The issues of scale, cost and delay that can plague a
discovery process are most likely to arise in complex cases in the Federal Court’s
jurisdiction. This section of the chapter looks at the need for strong case management
on the part of the court, the parties and their lawyers, to control the process of
discovery in Federal Court proceedings.
High and disproportionate costs
3.51 The discovery of documents may be considered a critical element of fact-
finding, truth seeking and decision making in civil litigation.55 The advantages of
discovery are said to include:
fairness to both sides, playing ‘with all the cards face up on the table’, clarifying the
issues between the parties, reducing surprise at trial and encouraging settlement. Any
system of disclosure should have as a broad rationale the just and efficient disposal of
litigation. It is against this broad rationale that any reforms should be considered.56

54 Australian Law Reform Commission, Managing Justice: A Review of the Civil Justice System, Report 89
(2000), [6.67].
55 C Cameron and J Liberman, ‘Destruction of Documents Before Proceedings Commence—What is a
Court to Do?’ (2003) 27 Melbourne University Law Review 273, 274.
56 P Matthews and H Malek, Disclosure (2007), 4, [1.03].
 3. Discovery Practice and Procedure in Federal Courts 67

3.52 However, parties to civil proceedings may find that the benefits of discovery
come at a high cost. Yet, as discussed below, it is not just the amount of money spent
on discovery that causes concern. Rather, it is the low value for money that prompts
criticism of the discovery process—in terms of the cost of discovery relative to the
utility of discovered documents in the context of the litigation.
3.53 The high price of a discovery process was noted in the Victorian Law Reform
Commission’s Civil Justice Review, which found that ‘the objectives of the [discovery]
process are either not being achieved or can only be achieved at great cost’.57 A
number of other commentators have also singled out the discovery process as a major
litigation expense. For example, in its Final Report in Relation to Possible Innovations
to Case Management, the Law Council of Australia stated that discovery ‘is often the
most expensive, or at least one of the most expensive steps’.58
3.54 Moreover, there are concerns that the high costs of discovery are pricing
litigants out of the court system. Chief Justice James Spigelman of the New South
Wales Supreme Court has noted that ‘when senior partners of a law firm tell me, as
they have, that for any significant commercial dispute the flag-fall for discovery is
often $2m, the position is not sustainable’.59 The commercial realities of discovery of
this order may represent a significant barrier to justice for many litigants, as the
Commercial Litigation Association stated in its submission to Lord Jackson’s Review
of Civil Litigation Costs in the United Kingdom (UK) in 2009:
Indeed the realisation must be if the situation is distilled in to the simple question
‘justice or costs?’ costs, commercially, must prevail.60

3.55 Despite such concerns about the high costs of discovery, there has been no
systematic collection of data on discovery costs in Australia. An extensive survey of
the cost of legal representation was undertaken in 1998-99 for Managing Justice. In
particular, the survey asked solicitors to estimate the total legal costs of discovery for
cases in the Federal Court. The results showed that the costs of discovery varied
according to the complexity of the issues involved. For example, the range of costs for
obtaining discovery from another party was $500–$750,000 for applicants and $200–
$311,000 for respondents, while the range of costs for complying with discovery
requests was $200–$400,000 for applicants and $300–$120,000 for respondents.61
3.56 Since 1999 the range of material potentially to be discovered has increased
exponentially through advancing computer technologies—with an attended and
significant increase in discovery costs. Electronic communications can be inherently
expensive to discover, in part due to the cost of specialist service providers with
expertise in computer technologies. For example, Lord Jackson’s Review of Civil

57 Victorian Law Reform Commission, Civil Justice Review, Report 14 (2008), 434.
58 Law Council of Australia, Final Report in Relation to Possible Innovations to Case Management (2006),
[75].
59 J Spigelman, ‘Access to Justice and Access to Lawyers’ (2007) 29 Australian Bar Review 136.
60 Phase 2 Submission, Commercial Litigation Association, cited in R Jackson, Review of Civil Litigation
Costs: Final Report (2009), ch 37, [3.5].
61 T Matruglio, The Costs of Litigation in the Federal Court of Australia (1999), prepared for the Australian
Law Reform Commission.
68 Discovery in Federal Courts

Litigation Costs reported that typical service charges for e-discovery include:
electronic document processing (extracting metadata, text, attachments etc, for use on a
document review system) £250–£1,000 per gigabyte of data, document hosting on a
review system at £20–£150 per gigabyte per month and a user access fee between £10–
£100 per user.62
3.57 E-discovery costs can also include expensive computer software and hardware.
For example, the ALRC heard during initial consultations that the discovery of
information stored on old back-up tapes can require the reconstruction of outmoded
hardware at great expense in order to read the tapes only to discover completely
irrelevant information.
3.58 A number of commentators have noted the distorting effect that technology has
had on discovery costs. This includes Acting Justice Ronald Sackville of the New
South Wales Supreme Court, formerly a judge of the Federal Court of Australia, who
has remarked on the discovery process:
It is here that extraordinary and disproportionate costs are frequently incurred by
parties to litigation. Far too often the search for the illusory ‘smoking gun’ leads to
squadrons of solicitors, paralegals and clerks compiling vast libraries of materials,
much of which is of no significance to the issues in the proceedings. The problem has
been compounded, not alleviated, by the exponential growth of electronic
communications which can be tracked and often reconstructed after deletion.63

3.59 The sheer volume of data that must be managed in modern trade and commerce
can blow out the cost of searching through electronic material for the purposes of
discovery, resulting in costs disproportionate to the value of the documents
discovered—in terms of their use in the litigation. The increasing amount of
information which contemporary litigants must deal with was recently highlighted in
Betfair v Racing New South Wales.64 In this case, one source of discoverable
documents is ‘an electronic data warehouse containing the electronic records of over
2.52 million customers and occupying some 21 terabytes of memory growing at 70
gigabytes per day’.65 One terabyte is said to be the equivalent of 500 million printed
pages.66
3.60 Concerns about the proportionality of discovery costs—in terms of the extent to
which discovered documents are used to facilitate the just disposal of litigation—were
taken up by the Access to Justice Taskforce established by the Australian Government
Attorney-General’s Department, in its report A Strategic Framework for Access to
Justice in the Federal Civil Justice System, which stated that:

62 R Jackson, Review of Civil Litigation Costs: Final Report (2009), ch 40, [6.3].
63 R Sackville, ‘Mega-Lit: Tangible Consequences Flow from Complex Case Management’ (2010) 48(5)
Law Society Journal 47.
64 Betfair v Racing New South Wales [2010] FCA 603.
65 Ibid, [331].
66 C Ball, Expert Explodes Page Equivalency Myth (2007) <www.law.com/> at 8 November 2010.
 3. Discovery Practice and Procedure in Federal Courts 69

The cost of discovery continues to be very high, and often disproportionate to the role
played by discovered documents in resolving disputes.67

3.61 Proportionality in this sense may be difficult to measure. The value of discovery
is not necessarily limited to obtaining documents to tender at trial but may extend to
encouraging settlement and clarifying the issues in dispute. Participants at a discovery
seminar convened by the Australian Institute of Judicial Administration (AIJA) in 2007
suggested that the AIJA should undertake a research project to track how many
discovered documents are in fact used in litigation.68 However, such research has not
been undertaken as far as the ALRC is aware.
3.62 The ALRC has heard that the vast majority of litigation settles before trial but
not until after discovery of documents. The ALRC was also told that, where settlement
is not achieved, parties often abandon certain issues in dispute after discovery is given.
For example, in tax matters, the Commissioner may be content, on the basis of
discovered documents, that a particular transaction will not attract the general
anti-avoidance provisions of the tax law—whereas the lack of knowledge of a
particular transaction prior to discovery may drive disputes over such issues. In these
cases, the time taken at hearing will generally be significantly reduced, in part as a
result of discovery.
3.63 By comparison, a study of discovery practices in the United States (US) in 1997
looked at the cost of discovery relative to the information needs of the case. This
research found that most attorneys surveyed (69%) thought that the discovery
generated by the parties was about the right amount needed for the fair resolution of the
case.69
3.64 In Australia, some weight might be given to obiter dictum in judgment
concerning the futility of discovery as an evidence-gathering process. For instance, in
Baulderstone Hornibrook v Qantas Australia Limited, Finkelstein J explained to the
parties what use the majority of the documents gathered in the conduct of the
proceedings, and tendered in evidence, proved to be in determining their dispute:
BHPL tendered twenty affidavits (which took up three files) and sixteen files of
exhibits. Qantas was not outdone. It tendered two lever arch folders of affidavits and
eight files of exhibits, many of which were copies of BHPL’s exhibits and, to make
matters worse, there was no mechanism to identify which were duplicates. It turned
out that much of the evidence put in by each side was irrelevant to any fact in issue
and should never have been tendered ... Hundreds of pages were never referred to by
counsel. The parties seemed to have assumed that it was my task to read all the
material and make such use of it as best I could. At the outset of this judgment I wish
to record that I have done no such thing. Although I did read most exhibits (including
records of meetings, diaries and albums of photos) I could not understand all the
terminology and abbreviations employed by the authors of the documents and the
relevance of others simply escaped me. To a substantial extent, therefore, I have only

67 Australian Government Attorney-General’s Department Access to Justice Taskforce, A Strategic

Framework for Access to Justice in the Federal Civil Justice System (2009), Rec 8.2.
68 Australian Institute of Judicial Administration, AIJA Discovery Seminar (2007) <www.aija.org.au/> at 8
November 2010.
69 T Willging, J Shapard, D Striensta and D Miletich, Discovery and Disclosure Practice, Problems, and
Proposals for Change: A Case-Based National Survey of Counsel in Closed Federal Civil Cases (1997).
70 Discovery in Federal Courts

considered those exhibits to which I was taken by counsel, although I have no

intention of reviewing the voluminous evidence in detail.70

3.65 Commentary from judges clearly highlights the expense wasted on discovery
when viewed from the bench, in terms of the disproportionately small number of
discovered documents referred to by parties at trial. This concern was voiced by former
Chief Justice of the Federal Court, Michael Black, who considered that courts
need to take a more interventionist role to avoid having trolley loads of documents
being wheeled into court when hardly any of them are likely to be referred to and
when every page will add to the cost of the litigation.71

3.66 The Access to Justice Taskforce surmised that ‘the vast majority of documents
obtained through discovery are not of sufficient relevance to be used in the case’.72
3.67 The ALRC is interested in stakeholder experiences in relation to the value or
utility of the discovery process on the whole, relative to its costs in general. The ALRC
encourages stakeholders to provide examples or illustrations of the degrees to which
discovery costs weigh against the value of the documents sought in the context of the
litigation.

Question 3–2 In general, does the amount of money spent on the

discovery process in proceedings before the Federal Court generate:
(a) too much information;
(b) too little information; or
(c) about the right amount of information
to facilitate the just and efficient disposal of the litigation?
Where possible, please provide examples or illustrations of the costs of
discovery relative to the information needs of the case.

Discovery of electronic documents

3.68 Electronic technologies have proved necessary to manage the large volumes of
hardcopy documents being discovered in Federal Court proceedings. Transforming
hardcopy documents into electronic format made vast amounts of information more
manageable. The history of e-discovery was described as follows:
An early implementation of electronic discovery technology in Australia was to
number the hardcopy documents and manage the index data (eg document number,
author, date, type, title etc.) in a database. The index data could then be exchanged
electronically by the parties. This was similar to records management technologies in
use at that time. In 1990, the $1 billion collapse of the Estate Mortgage Trust led to
complex legal proceedings with 12 parties and 750,000 documents. This spurred the

70 Baulderstone Hornibrook v Qantas Australia Limited [2003] FCA 174, [1].

71 Quoted in M Pelly, ‘Snail’s pace of corporate justice’, The Australian (Sydney), 29 June 2007, 31.
72 Australian Government Attorney-General’s Department Access to Justice Taskforce, A Strategic
Framework for Access to Justice in the Federal Civil Justice System (2009), 105.
 3. Discovery Practice and Procedure in Federal Courts 71

development of the Ringtail software suite where the index database was linked to
images of the documents. Both the index data and the document images were
electronically discovered by the parties in accordance with an exchange protocol.73

3.69 E-discovery has evolved from a hardcopy document management system to the
means by which documents are discovered from source to production in electronic
format. This follows contemporary corporate behaviour whereby 98% of documents
now exist in electronic form only.74
3.70 Electronic discovery has been facilitated by changes to the law. In particular, the
enactment of the Electronic Transactions Act 1999 (Cth) affirmed the legal status of
electronic records. In addition, proof of communications contained in electronic
records was facilitated by amendments to s 161 of the Evidence Act 1995 (Cth).75
3.71 The critical issue that arises in an e-discovery process is whether the conduct of
the search for electronic documents carried out by the party giving discovery, and the
extent of it, was ‘reasonable’.76 This requirement echoes the concerns discussed above
about the need for proportionality in the cost of a discovery process.
3.72 Whether the search satisfies the threshold of ‘reasonableness’—and is ‘good
enough’,77 as described by Lord Jackson—will be assessed by the courts weighing the
cost and inconvenience to the party giving discovery against the value of the
documents sought in the context of the litigation.78 As Mummery J said in Molnlycke
AB v Procter & Gamble Limited (No 3):
The Court takes account of such considerations as the value of the discovery to the
person seeking it and the burden imposed on the party giving it, with a view to
restricting the volume of documents and the labour and expense involved to that
which is necessary for fairly disposing of the issues in the case.79

3.73 For example, in NT Power Generation Pty Ltd v Power & Water Authority,
Mansfield J considered an interlocutory application to restrict discovery to hardcopies
of printed emails. His Honour accepted that it would be a very substantial burden on
the respondent to search for emails stored electronically in computer terminals, servers
and backup tapes. However, Mansfield J ultimately held that those emails were not of
sufficiently insubstantial relevance to warrant simply ignoring them.80
3.74 By comparison, in Leighton Contractors v Public Transport Authority of
Western Australia, Le Miere J found that the burden of giving discovery of deleted
emails would have been disproportionate to the potential probative value of that

73 D McGrath, Australian E-Discovery Industry Grows Up (2010) <http://idm.net.au/> at 9 November 2010.

74 S Byrne, ‘E-Discovery: Where Information Management and Litigation Meet’ (Paper presented at
Institute for Information Management Conference, Melbourne, 27 April 2010).
75 Evidence Amendment Act 2008 (Cth), s 68 commenced 1 January 2009. This provision was recommended
in Australian Law Reform Commission, Uniform Evidence Law, Report 102 (2005), Rec 6–3.
76 Federal Court Rules (Cth) O 15 r 2(3).
77 R Jackson, Review of Civil Litigation Costs: Preliminary Report (2009), ch 40, [3.20].
78 NT Power Generation Pty Ltd v Power & Water Authority [1999] FCA 1623.
79 Molnlycke AB v Procter & Gamble (No 3) [1990] RPC 498, [503].
80 Ibid, [9]-[10].
72 Discovery in Federal Courts

electronic information—had the defendant not already embarked upon the course of
recovering the deleted emails from the backup tapes.81
3.75 A particular issue that can arise in an e-discovery process is the extent to which
it is ‘reasonable’ for a party to search through back-up tapes or disaster recovery
systems. This is a question of fact and degree and, therefore, will depend on the
circumstances of each case—which creates an element of uncertainty for the party
giving discovery. For example, in BT (Australasia) Pty Ltd v New South Wales &
Telstra,82 Sackville J found that Telstra failed to comply fully with its discovery
obligations in relation to electronic documents, in a number of respects including:
First ... Telstra neither disclosed the existence of back-up tapes, nor took any steps to
restore those tapes with a view to ascertaining whether and how discoverable
electronic material could be identified and presented in usable form. I accept and
appreciate that the purpose of making and retaining the back-up was essentially
disaster recovery, rather than archival. Nonetheless, as subsequent events have
demonstrated, it is feasible, albeit difficult and expensive, for the tapes to be restored
and a review process set in place to identify discoverable material.83

3.76 The limits of a ‘reasonable search’ establish a measure of ‘proportionality’ in the

discovery process, in terms of the resources that a party must devote to the discovery of
relevant electronic documents. This may be especially important where litigants store
electronic documents in a vast and complex network of electronic databases located
across a number of countries. However, a proportionate discovery process will not
necessarily provide full and frank disclosure of all relevant material. This was pointed
out by Morgan J of the High Court of England and Wales in Digicel (St Lucia) Ltd v
Cable & Wireless:
The rules do not require that no stone be left unturned. This may mean that a relevant
document, even a ‘smoking gun’ is not found. This attitude is justified by
considerations of proportionality.84

3.77 Therefore the conduct of a discovery process, especially where extensive

electronic material is involved, gives rise to a volatile tension between the parties.
Expansive searches are more likely to uncover greater amounts of relevant information
offering some assistance to the requesting party’s case but carry a substantial costs
burden for the party giving discovery. Reasonable or proportionate searches are more
affordable for the discovering party but will inevitably bypass unknown quantities of
potentially relevant material sought by the requesting party. In his Review of Civil
Litigation Costs in the UK, Lord Jackson described this as the dilemma of the
electronic age:
the existence of a vast mass of electronic documents presents an acute dilemma for
the civil justice system. On the one hand, full disclosure of all electronic material may
be of even greater assistance to the court in arriving at the truth than old style

81 Leighton Contractors Pty Ltd v Public Transport Authority of Western Australia [2007] WASC 65
(22 March 2007).
82 BT (Australasia) v New South Wales & Anor (No 9) [1998] FCA 363.
83 Ibid[20].
84 Digicel v Cable & Wireless [2008] EWHC 2522, [46].
 3. Discovery Practice and Procedure in Federal Courts 73

discovery of documents. On the other hand, the process of retrieving, reviewing and
disclosing electronic material can be prodigiously expensive.85

3.78 While electronic technologies may be responsible for the sheer volume of
potentially discoverable material in modern litigation, technological advances may also
offer some assistance in cleaning up the mess it creates for a discovery process.
Advanced software systems can provide sophisticated means of reducing time and
expense spent on the discovery of electronic documents. The ALRC is interested in
hearing from stakeholders about the technical details of different approaches to
e-discovery that help to save time and costs in the process.

Question 3–3 Are there any particular approaches to the discovery of

electronically-stored information that help to save time and cost in the process?
Do any particular approaches cause inefficiencies or waste?

Limiting discovery by categories or issues

3.79 The Federal Court has sought to prevent unnecessary expense in the discovery
process by limiting discovery obligations in each case to particular issues in dispute or
specific categories of documents. This policy was first stated in Practice Note 14,
issued on 12 February 1999, now replaced by Practice Note CM 5 considered above. In
these practice notes, the court expresses its intention to avoid general discovery and its
expectation that practitioners should limit discovery requests. The adoption of this
approach was followed by amendments to the Federal Court Rules in 2004, to clarify
that the court may limit discovery by orders under O 15 r 3 on its own initiative rather
than on application by a party.86
3.80 The principles that should guide parties when drafting descriptions of
categories—as Lindgren J has pointed out—are found in O 15 of the Federal Court
Rules. His Honour discussed the relationship between discovery by ‘categories of
documents’ and O 15 of the Rules in a number of cases,87 including The University of
Sydney v ResMed Ltd, where Lindgren J stated that:
It may be appropriate for parties to describe categories in terms which do not
expressly incorporate the language of O 15 r 2(3), but that subrule should nonetheless
govern the formulation of the categories. Alternatively, of course, the categories may
be defined so as to incorporate expressly the terms of the subrule. Whatever approach
is taken, it is important to understand that when, as happened in the present case, the
Court orders discovery by categories to be notified by one party to another, the Court
does not intend that the notifying party be at liberty to widen the discovery obligation
beyond the four classes of documents referred to in O 15 r 2(3).88

85 R Jackson, Review of Civil Litigation Costs: Preliminary Report (2009), ch 40, [1.1].
86 Federal Court Amendment Rules 2004 (No 1) 2004 (Cth), item 24.
87 The University of Sydney v ResMed Ltd [2008] FCA 1020; Australian Competition & Consumer
Commission v Advanced Medical Institute Pty Ltd [2005] FCA 366; Aveling v UBS Capital Markets
Australia Holdings Ltd [2005] FCA 415.
88 The University of Sydney v ResMed Ltd [2008] FCA 1020, [40].
74 Discovery in Federal Courts

3.81 In January 2000, shortly after the Federal Court introduced Practice Note 14, the
ALRC’s Managing Justice report noted that:
For these changes to the rules of discovery to work effectively, lawyers and parties
have to spend time determining which documents are to be disclosed and the Court
provide close judicial supervision of discovery. Practitioners have commented to the
Commission that streamlined discovery with categories of documents works well if
parties give time to the formulation of categories.89

3.82 In practice, limiting the scope of discovery requires the parties and their lawyers
to make decisions about what it is specifically that the party wants to discover. It also
requires active judicial case management to ensure that litigants are controlling their
requests for discovery in the interests of keeping the process within manageable
bounds.
3.83 Limited discovery might not have proved as successful as it may have been
wished. There are concerns that in many cases parties and their legal representatives
are not exercising due diligence in narrowing the scope of discovery, instead seeking
overbroad categories of documents. The Law Council of Australia’s 2006 Final Report
in Relation to Possible Innovations to Case Management described this as the ‘gaming’
process of the categories stage in litigation; whereby the requesting party rolls the dice
and hopes for a winner:
It is not uncommon to receive lists of categories sought by a party which are 10 to 20
pages long where parties seek to formulate, in the most minute detail, every
conceivable sort of document which might possibly, on a fine day with a following
breeze, be of remote assistance in the conduct of the litigation (and which almost
inevitably will impose an enormous cost and work burden to the party required to
respond).90

3.84 There are also concerns that the court has abdicated its responsibility for
supervising the parties and managing the development of categories for discovery. The
absence of judicial case management was commented upon by the Intellectual Property
Committee of the Law Council, in the Law Council’s report on case management
innovations:
although not currently a common practice, it is highly desirable that the docket judge
take an active role in working with practitioners in identifying the limits of
discovery.91

3.85 The gaming process that occurs between parties, in the absence of firm judicial
case management, can lead to costly and incidental litigation over the limits of
discovery by categories. Justice Finkelstein, at a workshop on the court’s case
management system in 2008, summarised the current position as follows:
It is also time for the court to admit that the idea of staged category discovery
contained in Practice Note 14, to the extent it has been implemented at all, does not

89 Australian Law Reform Commission, Managing Justice: A Review of the Civil Justice System, Report 89
(2000), [7.180].
90 Law Council of Australia, Final Report in Relation to Possible Innovations to Case Management (2006),
[84].
91 Ibid, [85].
 3. Discovery Practice and Procedure in Federal Courts 75

work. Although the idea was introduced with the goal of saving costs and reducing
burdens, in practice it seems to have the opposite effect ... Parties now incur great
expense in formulating and disputing appropriate categories of discoverable
documents, and a good deal of court time is taken up hearing the disputes. So much
time and cost is involved that there is a view, shared by many, that discovery by
categories is a failure and that it is more efficient to provide for general discovery
rather than engage the Practice Note 14 model.92

3.86 However, the ALRC has also heard that most discovery orders in Federal Court
proceedings are for general discovery in accordance with O 15 r 2—with close to 70%
of discovery orders being made by consent of the parties. This suggests that in most
cases disputes do not arise over the categories of discoverable documents, since the
parties agree to the general categories in O 15 r 2. It also tends to confirm that the court
is not making serious attempts to limit the ambit of discovery to specific documents or
issues in dispute, by orders under O 15 r 3.
3.87 In view of such concerns, the ALRC seeks feedback from stakeholders on the
extent to which limited discovery has been successfully implemented in the Federal
Court and whether this has reduced the burden of discovery.

Question 3–4 Has discovery by categories of documents, or particular

issues in dispute, reduced the burden of discovery in proceedings before the
Federal Court? If not, what has prevented the parties, their lawyers and the court
from cost-effectively limiting the scope of discovery?

Discovery plans and pre-discovery conferences

3.88 The Federal Court has sought to ensure proportionality in the search for
electronically-stored information by imposing an expectation on litigants to discuss and
agree upon a practical and cost-effective discovery plan.93 In addition, the court may
require the parties to attend a pre-discovery conference to address these issues.94 The
former Chief Justice, Michael Black, first issued these directions on 29 January 2009
under a revised Practice Note 17. This followed a comprehensive review of the
practice note starting in 2007, with the assistance of a consultant and in consultation
with litigants, the legal profession and others.95

92 R Finkelstein, Discovery Reform: Options and Implementation (2008), prepared for the Federal Court of
Australia, [9].
93 Practice Note CM 6: Electronic Technology in Litigation (Federal Court of Australia), [6].
94 Ibid, [7]; Practice Note CM 6: Pre-Discovery Conference Checklist (Federal Court of Australia), [9].
95 S Byrne, Formal Update: Federal Court of Australia Practice Note 17 (2008) <www.elitigation.com.au/>
at 9 November 2010.
76 Discovery in Federal Courts

3.89 Similar procedures have been established in other Australian and overseas
jurisdictions,96 aimed at achieving agreement between the parties under the supervision
of the court as to the conduct of an electronic discovery process. In the US, parties are
required to ‘meet and confer’ under r 26 (f) of the Federal Rules of Civil Procedure
2009 (US) to develop a proposed discovery plan. A report outlining the plan must then
be submitted to the court within 14 days of the conference.97 Following receipt of the
report, the court is required to hold a pre-trial conference under r 16 (b) including for
the purposes of issuing a scheduling order setting down a timeframe for carrying out
the discovery plan. At this point, the court may modify the extent of the proposed
discovery or include other appropriate matters.98
3.90 In the UK, Practice Direction 31B issued under the Civil Procedure Rules 1998
(UK) requires the parties to discuss the disclosure of electronic documents before the
first case management conference or even before proceedings are commenced in
complex cases. To assist this discussion, an Electronic Document Questionnaire is
available for the parties to complete and exchange ‘in order to provide information to
each other in relation to the scope, extent and most suitable format for disclosure of
Electronic Documents’.99 The parties are required to submit to the court a summary of
the matters on which the parties agree in relation to disclosure of electronic documents
as well as any areas of disagreement.100 The court may then give directions in relation
to electronic disclosure at the first case management conference.101
3.91 The Federal Court’s practice note was reported to be operating satisfactorily,
shortly after it was revised, when Lord Jackson spoke with Federal Court judges in
March 2009 during his Review of Civil Litigation Costs.102 During initial consultations
in the present Inquiry, the ALRC has heard that parties often attempt to make informal
agreements as to the scope of an electronic discovery process. The ALRC was told that
in some cases the parties may be able to agree on a discovery plan, but in many cases
the parties will disagree as to the appropriate conduct of an electronic discovery
process—with disputes often arising over the expected burden to the discovering party,
and bearing in mind the adversarial nature of litigation. Moreover, the ALRC was
informed that parties typically discuss a discovery plan only after the parties have
established the relevance of their own electronically-stored information through
extensive searches, as parties need to review all of their own documents to draft their

96 See: New South Wales Supreme Court, Practice Note SC Gen 7: Use of Technology (2008)
<www.lawlink.nsw.gov.au/> at 5 November 2010; Practice Direction No 8 of 2004: Electronic
Management of Documents (Qld); Practice Direction No 2.1 of Supreme Court Practice Directions 2006:
Guidelines for the Use of Electronic Technology (SA); Supreme Court of Victoria, Guidelines for the Use
of Technology in Any Civil Matter (2007) <www.supremecourt.vic.gov.au/> at 5 November 2010;
Practice Direction No 2 of 2002: Guidelines for the Use of Technology in any Civil Matter (NT); Civil
Procedure Rule Committee (UK), Practice Direction 31B: Disclosure of Electronic Documents; Federal
Rules of Civil Procedure 2009 (US), r 26.
97 Federal Rules of Civil Procedure 2009 (US), r 26(f)(2).
98 Ibid, r 16(b)(3).
99 Civil Procedure Rule Committee (UK), Practice Direction 31B: Disclosure of Electronic Documents,
[10].
100 Ibid, [14].
101 Ibid, [15].
102 R Jackson, Review of Civil Litigation Costs: Preliminary Report (2009), ch 40, [7.9].
 3. Discovery Practice and Procedure in Federal Courts 77

pleadings and to position themselves in negotiations with other parties as to the

conduct of the discovery process.
3.92 The ALRC also heard that the extent to which judges are actively involved and
interested in resolving disputes between parties as to the conduct of an electronic
discovery process, and determining the existence and appropriateness of a discovery
plan before making orders for electronic discovery, varies between individual judicial
officers as well as court registries. The ALRC was similarly informed that parties
might or might not be required to address the terms of any arrangements for
e-discovery at a directions hearing or case management conference, depending on the
preferences of the particular judge to whose docket the case is assigned. Despite the
expectation stated in Practice Note CM 6 that parties will have discussed and agreed
upon a discovery plan before the Court makes an order for electronic discovery, there
were suggestions that judges are generally reticent to get into the detail of the
mechanics of a discovery process. One stakeholder went so far as to adapt a quote
often attributed to Otto von Bismarck, comparing the discovery process to a sausage
factory, suggesting that ‘judges are happy to eat the sausages but don’t want to know
how they are made’.
3.93 In many cases, the party giving discovery may be doing so with some degree of
uncertainty as to whether its search techniques are legally sound or defensible. The
ALRC has heard that litigants in this situation will often make sure their searches are
more than ‘reasonable’ to avoid challenges from another party and possible rebuke by
the court. However this can result in discovery of more electronic material than is
necessary, which burdens the other party with the task of trawling through masses of
documents, possibly only distantly related to the proceeding—or entirely irrelevant.
This outcome may also be a consequence of time and budgetary constraints on the
parties, as vetting irrelevant documents is a lengthy and costly process, or the result of
simple lack of due diligence on the part of litigants and their lawyers.
3.94 In cases where the requirements of a ‘reasonable search’ have not been
determined in advance, the discovering party’s understanding of its obligations may
fall short of that held by the requesting party and the court. Both parties to Galati v
Potato Marketing Corporation of Western Australia (No 2)103 gave discovery in this
case. However the respondent identified a number of categories of documents for
which it did not search, on the basis that it would be ‘very onerous, time consuming
and expensive’.104 The court was not satisfied that searching for those documents
would have been so burdensome that non-disclosure should be allowed and for that
reason ordered further discovery.105
3.95 In some cases, the party giving discovery might seek court directions to clarify
the extent of its search obligations where no agreement had previously been made with
the requesting party. A recent example of this scenario is Police Federation of
Australia v Nixon.106 In this case, Victoria Police applied for a declaration that

103 Galati v Potato Marketing Corporation of Western Australia (No 2) [2007] FCA 919.
104 Ibid, [11].
105 Ibid, [58]-[61].
106 Police Federation of Australia v Nixon [2010] FCA 315.
78 Discovery in Federal Courts

‘[Victoria Police] is not required to conduct further searches for electronic documents
stored on G Drives’.107 The court made the order sought in this case, as Ryan J was
persuaded that:
the expense and trouble which would be incurred would far outweigh any potential
assistance to the applicants’ case which they might derive from further searches of the
“G drives”. 108

3.96 The time and expense that parties and courts must spend addressing often
extensive side litigation about electronic discovery issues can be significant. So much
so that ‘the mere availability of such vast amounts of electronic information can lead to
a situation of the ESI-discovery-tail wagging the poor old merits-of-the-dispute dog’.109
3.97 The ALRC seeks feedback from stakeholders on the extent to which the model
espoused in Practice Note CM 6 has been successful in guiding the proportionate
discovery of electronic material—in terms of the parties’ obligation to finalise a
practical and cost-effective discovery plan and the court’s use of pre-discovery
conferences to address these issues—before orders for electronic discovery are made.
In particular, the ALRC is interested in hearing from stakeholders whether the
expectations stated in Practice Note CM 6 for parties to exchange their best
preliminary estimate of the cost associated with discovery, and to agree on a timetable
for discovery, are being met in practice.

Question 3–5 Has the creation of discovery plans and use of

pre-discovery conferences helped to ensure proportionality in the discovery of
electronically-stored information in Federal Court proceedings? If not, what has
prevented the court, the parties and their lawyers from establishing practical and
cost-effective discovery plans in advance of the search for electronic
documents?
In particular, are the expectations stated in Practice Note CM 6 for parties to
exchange their best preliminary estimate of the cost associated with discovery,
and to agree on a timetable for discovery, generally being met in practice?

Options for procedural reform in the Federal Court

3.98 In Managing Justice, the ALRC found that ‘badly managed discovery is widely
regarded as the cause of significant cost, delay and unfairness to the parties’.110 This
part of the chapter considers a number of ways to procure better management of the
discovery process. It looks at various options for reform, some developed in previous
reviews of discovery and others suggested by stakeholders during initial consultations
in this Inquiry. It also outlines the ALRC’s preliminary views on directions for reform
of the discovery process.

107 Ibid, [2].

108 Ibid, [33].
109 Moody v Turner (Unreported, SD Ohio 1:07-cv-692, 21 September 2010).
110 Australian Law Reform Commission, Managing Justice: A Review of the Civil Justice System, Report 89
(2000), [7.178].
 3. Discovery Practice and Procedure in Federal Courts 79

Stronger judicial case management

3.99 Stronger judicial control over the scope and process of discovery has been
singled out by a number of commentators as a critical element of any reform in this
area. For example, in its 2006 report on case management innovations in the Federal
Court, the Law Council of Australia recommended that ‘discovery should be dealt with
at the Case Management Conference with the Docket Judge taking an active role in the
speedy resolution of issues as to the scope and timetable for discovery’.111 These
aspirations were taken up by Finkelstein J in 2008 at a workshop on case management
reforms:
The key to discovery reform lies in active and aggressive judicial case management of
the process. The most effective cure for spiralling costs and voluminous productions
of documents is increased judicial willingness to just say no.112

3.100 Other Australian jurisdictions, most recently Victoria, have also tied discovery
reform to stronger judicial case management. The VLRC stated in its Civil Justice
Review report, that ‘increased judicial management of the disclosure process ... will
greatly assist in keeping the scope of disclosure focused and reduce delay and costs’.113
Other nations, too, have concluded that improvements to the discovery process are a
matter for judicial case management. For example, the Hong Kong Chief Justice’s
Working Party on Civil Justice Reform found ‘a broad consensus that the excesses of
discovery ought to be tackled by appropriate case management by the courts’.114
3.101 However, the efficiency and effectiveness of a discovery process does not
necessarily result entirely from the degree of control that individual judges are willing
to exercise in their capacity as case managers. There may be a number of obstacles that
need to be removed—or changes made—to enable stronger judicial control over the
discovery process, including:
• clearer definition of the real issues in dispute, in relation to which discovery
obligations may be limited;
• procedural obligations on the parties and the court to ensure that practice and
cost-effective discovery plans are in place prior to the search for discoverable
documents stored in electronic format;
• clearly delineated case management powers with respect to discovery, including
the power to impose sanctions for discovery abuse or default;
• the employment of a ‘special master’ to case manage the discovery process;

111 Law Council of Australia, Final Report in Relation to Possible Innovations to Case Management (2006),
Proposal 5(a).
112 R Finkelstein, Discovery Reform: Options and Implementation (2008), prepared for the Federal Court of
Australia, [27].
113 Victorian Law Reform Commission, Civil Justice Review, Report 14 (2008), 470.
114 Chief Justice’s Working Party on Civil Justice Reform (Hong Kong), Civil Justice Reform: Final Report
(2004), [500].
80 Discovery in Federal Courts

• the use of costs powers to control discovery requests and voluminous production
of documents, by requiring payment in advance and limiting legal fees for
discovery work; and
• education and training for judges to enhance skills and capabilities in case
management of the discovery process, including the technologies used to
discover electronic documents.
3.102 The potential for reform in these areas is explored below.
Clearer definition of the real issues
3.103 For the court to case manage the discovery process effectively, the issues in a
particular case need to be clearly defined. The responsibility for containing the
discovery process, therefore, lies both on the court and the parties through their legal
representatives. This was recognised at the AIJA’s discovery seminar in 2007, which
reported:
a widely held view from the profession that the courts need to exercise more control
over the discovery process, and a parallel view from the courts that in order to do so,
they need to have more information about the case that would be presented to the
court.115

3.104 Pleadings are supposed to define the issues in each case and, in doing, so limit
the ambit of discovery and the evidence which needs to be prepared for trial.116
However, as the ALRC commented in Managing Justice, pleadings in Federal Court
proceedings are often too general in scope and inadequately particularised so that there
is no narrowing of issues.117 Pleadings couched in broad, vague or general terms, those
which rely on numerous causes of action or defences or plead the case in a number of
alternative ways, have the consequential effect of setting broad boundaries for the
discovery of documents.
3.105 Amendments to pleadings, particularly when introduced late in civil
proceedings, may be another cause of excessive discovery. In an article aptly named
Turning Mountains into Molehills – Improvements to Formal Dispute Resolution,
Andrew Stephenson explained that:
It simply does not pay to be too surgical in removing documents from consideration if
the issues are likely to change. It is better to discover more (perhaps irrelevant
documents) so when the case does change, discovery does not need to be redone.118

3.106 Initial consultations in the present Inquiry revealed a widely held view that in
most cases significant improvements could be made in the discovery process if the real
issues in dispute were more clearly defined beforehand. As Stephenson put it:

115 Australian Institute of Judicial Administration, AIJA Discovery Seminar (2007) <www.aija.org.au/> at 8
November 2010.
116 S Colbran and others, Civil Procedure: Commentary and Materials (4th ed, 2009), 440.
117 Australian Law Reform Commission, Managing Justice: A Review of the Civil Justice System, Report 89
(2000), [7.166].
118 A Stephenson, Turning Mountains into Molehills: Improvements to Formal Dispute Resolution (2010)
unpublished, 16.
 3. Discovery Practice and Procedure in Federal Courts 81

it is important at the outset, before any preparation in relation to discovery is done,

that the scope of the controversy be properly defined.119

3.107 The following sections of this chapter explore a number of ways in which the
core issues in dispute could be more clearly defined, with a view to limiting the ambit
of discovery in Federal Court proceedings, including:
• imposing an obligation on the parties to outline their case at an early directions
hearing or case management conference;
• requiring parties to submit a written statement of the issues in dispute, in relation
to which documents may be discovered; and
• requiring the parties, prior to discovery, to produce an outline of the evidence
and key documents on which they intend to rely at trial.
Initial directions hearing or case management conference
3.108 The Federal Court has introduced specific procedures for matters in its Fast
Track List120 and with respect to tax matters. Both Practice Note CM 8 and Practice
Note Tax 1 impose an obligation on the parties to proceedings in the Fast Track List
and Tax List respectively to outline the issues and facts that appear to be in dispute, at
an initial directions hearing called the ‘scheduling conference’.121
3.109 A similar procedure, called the ‘case planning conference’, was introduced in
the Supreme Court of British Columbia on 1 July 2010.122 This mechanism was
suggested by the Civil Justice Reform Working Group in 2006, which recommended
that the parties should be required to ‘personally attend a case planning conference
before they actively engage the system, beyond initiating or responding to a claim’.123
The Working Group identified key objectives of the case planning conference to
include the narrowing of issues and directions for discovery.124
3.110 The same objectives are sought to be achieved in the US through
‘Pre-Trial Conferences’ under r 16 of the Federal Rules of Civil Procedure. The Pocket
Guide for Judges in the US explains that, ‘the primary objective of the r 16 conference
is for the judge and the lawyers to discern what the case is really about’.125
3.111 In her account of the Fast Track experience, Gordon J explained the profound
effect that the early identification of issues has in relation to discovery:
[t]he users of the list have anecdotally reported a substantial improvement in relation
to discovery with their corporate clients. There are certain questions that members of

119 Ibid, 16.

120 This issue was raised in Ch 2.
121 Practice Note CM 8 Fast Track (Federal Court of Australia), pt 6; Practice Note Tax 1 Tax List (Federal
Court of Australia), pt 5.
122 Supreme Court Civil Rules (BC, Canada), pt 5.
123 British Columbia Justice Review Task Force, Civil Justice Reform Working Group, Effective and
Affordable Civil Justice: Report of the Civil Justice Reform Working Group to the Justice Review Task
Force (2006), Rec 2.
124 Ibid, 10.
125 W Shwarzer and A Hirsch, The Elements of Case Management: A Pocket Guide for Judges (2nd ed,
2006), 5.
82 Discovery in Federal Courts

the legal profession are used to being asked—why do I need to search for those
documents? How can those documents be relevant? In Fast Track, such questions are
more easily answered because they are discussed during the scheduling conference
and the obligations narrowed to only those issues really in dispute. In colloquial
terms, the parties own the result because they are involved in it.126

3.112 While this practice is not as explicitly required outside of the Fast Track List and
Tax List, any party seeking discovery in a Federal Court proceeding is expected to
specify the issues in relation to which discovery is sought. Practice Note CM 5 applies
generally to applications for discovery in the Federal Court and states that parties are
expected to answer the question: is discovery necessary at all, and if so for what
purpose?127
3.113 However, in practice, the parties or their legal representatives might not always
be forthcoming with admissions as to which of the issues in dispute really matter
most—at least not in the interlocutory stages. This was evident in Seven Network Ltd v
News Ltd128 where, according to Mallesons Stephen Jacques partner Roger Forbes,
representing Telstra in this case, the parties did not want to give away ‘points’ too
early:
They would say ‘we’re entitled to run all the points we want to and we don’t have to,
at the outset, decide which are the best ones and which are the bad ones’.129

3.114 During initial consultations, the ALRC was told that, in effect, the judge or
registrar presiding at a directions hearing or scheduling conference is required to
interrogate the parties to determine the crucial issues in dispute. The need for active
judicial participation in this context is noted in the case management pocket guide for
judges in the US:
Detecting the underlying issues in dispute sometimes requires vigorous questioning of
the attorneys by the judge to get beyond the pleadings. Parties may raise assorted
causes of action or defenses that create the impression of a complex lawsuit when,
upon probing, it turns out that the entire case hinges on a straightforward factual or
legal dispute—or no triable issue at all.130

126 M Gordon, ‘The Fast Track Experience in Victoria: Changing and Evolving the Way in Which We
Administer Justice’ (Paper presented at International Commercial Litigation and Dispute Resolution
Conference, Sydney, 27-28 November 2009), 8.
127 Practice Note CM 5: Discovery (Federal Court of Australia), [1].
128 Seven Network Limited v News Limited [2007] FCA 1062.
129 Lawyers Weekly, Excess or Necessity? Lawyers Reflect on C7 Litigation (2010)
<www.lawyersweekly.com.au> at 21 July 2010.
130 W Shwarzer and A Hirsch, The Elements of Case Management: A Pocket Guide for Judges (2nd ed,
2006), 5.
 3. Discovery Practice and Procedure in Federal Courts 83

3.115 The approach which judges in the UK have adopted to achieve a narrowing of
issues was aptly summarised by the Mercantile Judge Simon Brown QC:
What I want to know, is this: what is this case about? Which of the ... issues really
matter in getting to the heart of the dispute? Can we split the case up and limit
disclosure to the subjects which matter, or which matter most?131

3.116 Not all judges in the Federal Court may be entirely comfortable in pressing the
parties or their lawyers to limit the issues in dispute, with a view to focusing tightly the
scope of discovery. In initial consultations, the ALRC heard that varied levels of
effectiveness amongst judges in this regard have prompted some litigants to ‘forum
shop’ between registries—that, on occasion, litigants have sought to commence or
transfer proceedings to a registry where they are less likely to be as restricted on the
matters in relation to which discovery may be sought.
3.117 Therefore there may be concerns that clarifying the obligation on parties to
outline the issues in dispute when seeking orders for discovery would not, itself,
achieve any significant efficiency in the process. Unless the court effectively enforces
this obligation by interrogating the parties as to the nature of their case, such reform
might not result in any meaningful clarification of the issues in dispute. As discussed
below, additional measures may be required to minimise the dependence on judges to
extract a clear definition of the case from the parties and to put the onus to do so more
squarely on the parties to limit their own requests for discovery.
Statement of issues in dispute
3.118 One way to clarify the real issues in a particular case, in relation to which
discovery may be limited, would be to introduce a requirement on the party seeking
discovery to submit a written statement of the issues. This could mean, for example,
filing and serving a statement of issues for discussion at an initial directions hearing or
case management conference as discussed above.
3.119 The statement could set out in narrative form the factual issues that appear to be
in dispute between the parties, as well as any legal issues and the conclusions that the
parties wish the court to draw. To identify which of these issues matters most to the
party seeking discovery, the statement could be tiered in order of importance. This
statement may give a better indication than the pleadings of which are the main facts in
issue and which are subordinate or collateral facts in issue, as well as the essential
ingredients in the cause of action or defence.
3.120 The party seeking discovery could also be required to include in this statement a
description of the specific documents or categories of documents which it expects to
discover from another party. This may indicate how the scope of discovery could be
limited to key documents or expanded to other documents relating to less critical
issues, or indeed whether documents are even necessary to resolve certain issues.

131 Quoted in C Dale, ‘CaseMap Issue Linking in UK Civil Proceedings’ (Paper presented at Second
International Workshop on Supporting Search and Sense Making for Electronically Stored Information in
Discovery, London, 25 June 2008)), [2].
84 Discovery in Federal Courts

3.121 This statement of issues could then form the basis of discussion at an early
directions hearing or case management conference. Under the supervision of the court,
the party requested to give discovery would have this opportunity to confirm whether
the issues so stated are actually in dispute, provide their own views on which are the
critical issues in the proceeding or comment on whether the stated categories of
documents are appropriately fashioned to suit the issues in the case. The presiding
judge or registrar may be guided by the statement of issues, and assisted by discussion
of the core issues at the hearing or conference, to direct the parties in formulating the
range of documents that may be subject to discovery orders.
3.122 An obvious concern with this approach may be the legal costs incurred in
drafting a statement of issues. Significant lengths of time may be required to draft a
clear and considered statement of the case, particularly in complex cases concerning
involved factual and legal issues. While it may eventually help to limit the scope of
discovery and minimise that expense, this mechanism would carry its own cost burden
and might ‘front-load’132 civil proceedings in the Federal Court.
3.123 In practice, litigants and their lawyers might take shortcuts in a statement of
issues to minimise the time and cost burden. In effect, the statement may simply repeat
the pleadings without any narrowing of the controversy. The utility of this statement
might therefore be contingent upon the diligence of legal practitioners to give effect to
its objective of defining the real issues in dispute.
3.124 A separate issue is the effect of this statement on the formal pleadings. Pleadings
play a much larger role in civil litigation than just demarcating the ambit of discovery.
Pleadings provide a record of all the matters involved in the action, and in that way
prevent further actions between the same parties in relation to them.133 There may be
concerns that putting less important issues to one side, for the purposes of limiting
discovery, would prevent a party from seeking judicial determination of the issue.
Production of testimonial and documentary evidence prior to discovery
3.125 Another way to clarify the real issues in dispute, so that discovery can focus on
them, may be to require production of evidence, or at least an outline of the evidence,
prior to discovery of documents. The Fast Track List and Tax List provide models for
such a procedural requirement.
3.126 Practice Note CM 8 and Practice Note Tax 1 state that each party must bring to
the scheduling conference an initial witnesses list with the names of each witness the
party intends to call at trial. The list is to include a very brief summary of the expected
testimony of each witness and, unless it is otherwise obvious, must state the relevance
of the evidence of each witness.134
3.127 Another model for this approach is found in Rule 7–4 of the Supreme Court
Civil Rules (BC). This rule requires parties to proceedings before the Supreme Court of
British Columbia to file and serve on every other party a list of witnesses the party may

132 Lord Woolf, Access to Justice: Final Report (1996).

133 S Colbran and others, Civil Procedure: Commentary and Materials (4th ed, 2009), 440.
134 Practice Note CM 8 Fast Track (Federal Court of Australia), [6.4].
 3. Discovery Practice and Procedure in Federal Courts 85

call at trial.135 The introduction of this rule was recommended by the Civil Justice
Reform Working Group in 2006, which considered that:
in order to encourage the early exchange of information, we recommend that the
parties exchange a list of the witnesses that each party intends to call at the trial of the
action, along with a summary of the evidence that the party believes the witness will
give at trial.136

3.128 Consideration of discovery issues in light of the parties’ evidence—or at least an

outline of any expected testimonial evidence—might result in limiting the need for or
narrowing the scope of discovery. Once the parties and the court have had an
opportunity to consider the evidence, it may become easier to identify the areas where
discovery is necessary and to assess whether relevant documents are likely to be
discovered.
3.129 The idea of producing evidence prior to discovery was considered by the Law
Council in 2006, which generally opposed this idea but conceded that in some cases it
may be useful for parties to file their evidence in chief in support of a claim (and
perhaps cross claim) prior to any discovery:
there was general opposition to the proposition that discovery should be preceded by
either all or some of the evidence in chief. A number of submissions commented that
this was likely to lead not only to a duplication of work on evidence in chief, but also
to delays in the making of genuine discovery. There may be some cases where
although the facts are likely to be substantially uncontentious they may be also
substantially in the knowledge of only one party. It is perhaps possible that in those
cases the parties might find the filing of evidence prior to discovery a useful
process.137

3.130 Whereas the model considered by the Law Council might have involved the
filing of evidence, perhaps in the form of an affidavit, the witness list in Fast Track or
Tax List proceedings requires only an outline of the evidence. Nevertheless, concerns
about the time and expense incurred to draft an outline of testimony might arise in
cases involving large numbers of witnesses or lengthy examination of those witnesses.
3.131 In addition to an outline of testimony, key documents may also be produced at a
scheduling conference in Fast Track and Tax List proceedings. While there is no
express requirement in Practice Note CM 7 or Practice Note Tax 1 for the parties to
produce key documents at a scheduling conference, Gordon J has said that this practice
is often adopted or required in the Fast Track as a matter of course:

135 Supreme Court Civil Rules (BC, Canada), r 7–4(1), came into force on 1 July 2010.
136 British Columbia Justice Review Task Force, Civil Justice Reform Working Group, Effective and
Affordable Civil Justice: Report of the Civil Justice Reform Working Group to the Justice Review Task
Force (2006), 28.
137 Law Council of Australia, Final Report in Relation to Possible Innovations to Case Management (2006),
Proposal 5(c), [94]–[96].
86 Discovery in Federal Courts

core documents relevant to the case are provided to the trial judge at this point. If the
dispute is about the proper construction of a contract, a copy of the contract is
provided to the judge. No more decisions on interlocutory issues in a vacuum.138

3.132 This can already be achieved by the court making orders under O 15 r 13 of
Federal Court Rules, for production of any document in a party’s possession, custody
or power relating to any issue in the proceeding.139 At the same time, a party may
require any other party to produce for inspection any document referred to in a
pleading or affidavit filed by that party.140 However a number of commentators have
suggested that parties should be required to produce the core documents relevant to
their case, without being asked to do so.
3.133 For example, at the AIJA discovery seminar, Peter Gordon of the law firm Slater
and Gordon, suggested that ‘[t]here should be processes to identify and exchange the
critical documents at an early date, which might spare much of the other discovery’.141
In support of such a process, Applegarth J, in his work for the Queensland Supreme
Court’s Better Resolution of Litigation Group, has argued that the early exchange of
key documents between the parties would enhance the delivery of justice:
By the time litigation is commenced, usually after pre-action disputes in which parties
have consulted lawyers and obtained advice, most parties should know the critical
documents upon which they intend to rely at any trial, and also know some, if not
most, of the documents upon which the other party intends to rely and which are
adverse to the first party’s case. If the critical documents are identified and exchanged
in a suitable format at a relatively early stage in litigation then this should facilitate
the early resolution of cases which are capable of settlement, and the supervision of
those that do not settle and which require case management.142

3.134 However, Finkelstein J canvassed a number of practical and theoretical

problems with this approach at the Federal Court’s case management workshop in
2008. In particular, he pointed to a tension with the nature of the adversarial system:
it is hardly to be expected that ... parties will produce documents in such a distilled
manner as to announce for practical purposes, ‘Here is my case and here are the holes
in it’.143

3.135 Justice Finkelstein expected that disputes would inevitably arise over whether
such a rule has been properly complied with, for instance, what documents should be
considered critical.144 In light of his concerns, Finkelstein J considered that ‘there must

138 M Gordon, ‘The Fast Track Experience in Victoria: Changing and Evolving the Way in Which We
Administer Justice’ (Paper presented at International Commercial Litigation and Dispute Resolution
Conference, Sydney, 27-28 November 2009).
139 Federal Court Rules (Cth), O 15 r 13.
140 Ibid, O 15 r 10.
141 Australian Institute of Judicial Administration, AIJA Discovery Seminar (2007) <www.aija.org.au/> at 8
November 2010.
142 ‘The Devil is in the Documents’, Hearsay (online), 1 March 2010, <www.hearsay.org.au/>.
143 R Finkelstein, Discovery Reform: Options and Implementation (2008), prepared for the Federal Court of
Australia, [14].
144 Ibid, [16].
 3. Discovery Practice and Procedure in Federal Courts 87

be real doubt whether mandatory discovery, even of a theoretically limited nature,

would reduce the burden on the court or litigants’.145
ALRC’s views
3.136 The need for clearer definition to the issues in dispute to narrow the scope of
discovery was highlighted in Managing Justice, where the ALRC reported that:
discovery by categories works well if the parties take the time and expense to define
the categories carefully and sort the disclosed documents into the correct categories
and if the issues in dispute are sufficiently well defined that the documents are
amenable to classification.146

3.137 The ALRC’s preliminary view in this Inquiry is that reforms to ensure clearer
definition of the real issues in dispute, prior to discovery, would have the greatest
practical impact on limiting the ambit of discovery and reducing the overall burden of
the discovery process. The following proposal describes a new court procedure aimed
at narrowing the issues in dispute for the purposes of limiting discovery obligations.
3.138 This proposal is prefaced by noting that reforms to the rules on pleadings, to
enhance the clarity with which the issues in a proceeding are presented to the court,
may have the complementary effect of narrowing the scope of discovery. While the
ALRC considers the rules on pleadings generally to be outside its current Terms of
Reference, this area of civil litigation would merit further consideration.
3.139 The ALRC also notes that the procedural reforms proposed below might be best
suited to complex cases involving large-scale discoveries. That is, the resources
required of the parties and the court to implement these procedures could be
unnecessarily burdensome for the discovery of documents in small or straightforward
cases. However, the ALRC’s preliminary view is that a sufficiently large proportion of
discoveries in the Federal Court are of such magnitude to warrant general
implementation of these procedures. The ALRC proposes that the court’s existing
power to waive or vary any of its procedures147 will ensure that more suitable pre-trial
management strategies are adopted in other cases. In small cases, for example, where
the issues are contained and clear, the parties might seek limited discovery by consent
and forego the proposed procedures.
3.140 In cases where the procedures proposed below are applied, the ALRC expects
that proceeding in this fashion will come at a cost to the parties and the taxpayer in
terms of the court resources required. However, the ALRC’s preliminary view is that
these procedures are likely to result in savings to the overall cost of litigation—both
private and public—which would outweigh the expense incurred and at the same time
open up access to justice in a broad sense.

145 Ibid, [17].

146 Australian Law Reform Commission, Managing Justice: A Review of the Civil Justice System, Report 89
(2000), [6.70].
147 Federal Court of Australia Act 1976 (Cth), s 37P (3)(f).
88 Discovery in Federal Courts

Proposal 3–1 Following an application for a discovery order, an initial

case management conference (called a ‘pre-discovery conference’) should be set
down, at a time and place specified by the court, to define the core issues in
dispute in relation to which documents might be discovered. At the pre-
discovery conference, the parties should be required to:
(a) outline the facts and issues that appear to be in dispute;
(b) identify which of these issues are the most critical to the proceedings; and
(c) identify the particular documents, or outline the specific categories of
documents, which a party seeks to discover and that are reasonably
believed to exist in the possession, custody or power of another party.
Proposal 3–2 Prior to the pre-discovery conference proposed in Proposal
3–1, the party seeking discovery should be required to file and serve a written
statement containing a narrative of the factual issues that appear to be in dispute.
The party should also be required to include in this statement any legal issues
that appear to be in dispute. The party should be required to state these issues in
order of importance in the proceedings, according to the party’s understanding
of the case. With respect to any of the issues included in this statement and
concerning which the party seeks discovery of documents, the party should be
required to describe each particular document or specific category of document
that is reasonably believed to exist in the possession, custody or power of
another party.
Proposal 3–3 Prior to the pre-discovery conference proposed in Proposal
3–1, the parties should be required to file and serve an initial witness list with
the names of each witness the party intends to call at trial and a brief summary
of the expected testimony of each witness. Unless it is otherwise obvious, each
party’s witness list should also state the relevance of the evidence of each
witness.

3.141 The ALRC notes that the proposal above would not require the parties to
produce or exchange the core documents relevant to the case. The ALRC’s preliminary
view is that existing procedures under O 15 rr 10 and 13 are sufficient to achieve this
outcome. A notice under r 10 or an order under r 13 is, in the ALRC’s preliminary
view, necessary to limit the production to particular documents which the court or
party considers critical in the proceeding. A general obligation to produce ‘key’
documents in the early stages of proceedings would be too vague and ambiguous to
expect strict compliance and is likely to breed satellite litigation. It would also be
conducive to inefficiencies in cases where each party already possesses a copy of the
core documents, such as the contract in a contractual dispute.
3.142 However, the ALRC is interested in stakeholder views on whether a procedure
requiring the parties to act on their own initiative in identifying and exchanging core
documents early in a proceeding could be successful established. This would be
 3. Discovery Practice and Procedure in Federal Courts 89

distinct from O 15 rr 10 and 13 which require the other party to issue a notice or the
court to make orders. Alternatively, the ALRC welcomes suggestions from
stakeholders on ways to encourage greater use of existing procedures under O 15 rr 10
and 13.

Question 3–6 Should parties be required to produce to each other and the
court key documents early in proceedings before the Federal Court? If so, how
could such a procedural requirement effectively be imposed?
Question 3–7 Are existing procedures under O 15 rr 10 and 13 of the
Federal Court Rules (Cth) adequate to obtain production of key documents to
the court or a party? How could these procedures be utilised more effectively?

Discovery plan and pre-discovery conference

3.143 As discussed above, a number of jurisdictions (including the Federal Court, the
US and the UK) have come to rely on the creation of discovery plans as an effective
way to handle electronic discovery processes.
3.144 In contrast to the ‘meet-and-confer’ obligations on litigants in the US and the
UK, for the purposes of devising a discovery plan, the language of Practice Note CM 6
is more permissive than mandatory. Parties to Federal Court proceedings may be
‘expected’ to have devised a discovery plan before the court makes an order for
electronic discovery.148 The parties might also be expected to inform the court of how
these issues are to be addressed (if the judge asks) at a directions hearing or case
management conference.149 However, there is no positive legal obligation on the
parties to do so, nor is there any prohibition on the court from making orders in cases
without a discovery plan.
3.145 By comparison, litigants in the UK ‘must’ discuss the disclosure of electronic
documents before the first case management conference.150 Parties to proceedings in
the US are ‘jointly responsible ... for attempting in good faith to agree on the proposed
discovery plan, and for submitting to the court within 14 days after the conference a
written report outlining the plan’.151
3.146 The Rules and Directions in these jurisdictions may provide suitable models for
reform to Federal Court procedures, to impose positive and legally enforceable
obligations on the parties to: (a) meet and confer, for the purposes of discussing a
discovery plan; and (b) submit their plan to court for approval or resolution of any
areas of disagreement.

148 Practice Note CM 6: Electronic Technology in Litigation (Federal Court of Australia), [6].
149 Practice Note CM 6: Pre-Discovery Conference Checklist (Federal Court of Australia), [1].
150 Civil Procedure Rule Committee (UK), Practice Direction 31B: Disclosure of Electronic Documents [9].
This practice direction came into force on 1 October 2010 and replaced Practice Direction 31.2A, which
suggested that: ‘The parties should, prior to the first Case Management Conference, discuss any issues
that may arise regarding searches for and the preservation of electronic documents’: [2A.2].
151 Federal Rules of Civil Procedure 2009 (US) r 26(f)(2).
90 Discovery in Federal Courts

3.147 A corresponding obligation on the court to satisfy itself that the proposed
discovery plan is reasonable or proportionate—before making orders for discovery—
could also be introduced. To this end, the court might exercise its existing discretion to
schedule a pre-discovery conference with the parties to inform the judge or registrar of
the issues addressed in the proposed discovery plan. Pre-discovery conferences would
also be available to the court to determine any areas of disagreement between the
parties.
3.148 This process may be assisted by an initial case management conference, as
outlined in Proposal 3–1, where the core issues in dispute are clarified and particular
documents or specific categories of documents relating to those issues are identified.152
The outcome of that procedure may form the basis of plans for limiting the scope of
electronic documents to be discovered.
3.149 A proposed discovery plan, which the parties would be required to develop,
might address such issues as whether and the extent to which the party giving
discovery will search through back-up tapes or disaster recovery systems for particular
classes of electronic documents identified in the plan. In particular, as expected by the
provisions of Practice Note CM 6, a proposed discovery plan may also provide a
preliminary estimate of the cost associated with discovery and a timetable for carrying
out the proposed discovery process.
3.150 The terms of a discovery plan approved by the court may then be entered as
orders for discovery of documents. This means discovery would be limited both in
terms of the scope of documents and the extent of searches. Carrying out the court
approved plan according to its terms would discharge a party of its discovery
obligations.
3.151 The benefits of this approach may be that it promotes certainty and efficiency in
the discovery process by determining in advance what searches will be good enough.
The same objectives are sought to be achieved in the US, as noted in a practitioner’s
guide to planning a discovery process:
By coming together early, defining what is important and what is not, and working
with your adversary, not against them, means less risk, less cost and more certainty.153

3.152 A general concern with this approach may be its impact on the court’s ability to
determine the merits of the case. A rigid and a priori determination of a party’s duty to
search for electronic documents may discard the flexibility of the current Practice Note
CM 6 approach. When Practice Note 17 was revised in January 2009, Seamus Byrne
warned that ‘the Practice Note is not intended to serve as a process to overtake the
outcome’.154 That is, restraining the amount of electronically-stored information
available to the parties and the court should not impede ‘the just resolution of disputes,
according to law’.155

152 See Proposal 3–1.

153 J Rosenthal and M Cowper, ‘A Practitioner’s Guide to Rule 26(f) Meet & Confer: A Year After the
Amendments’ (2008) 783 Practising Law Institute: Litigation 236, 248.
154 S Byrne, ALSP Update (2009) <www.alsponline.org/> at 9 November 2010.
155 Federal Court of Australia Act 1976 (Cth), s 37M.
 3. Discovery Practice and Procedure in Federal Courts 91

3.153 A more commercial concern may be the cost involved in the laborious forward
planning of an e-discovery process. Litigants who possess vast masses of
electronically-stored information across a complex network of electronic databases
might be required to spend considerable time with their lawyers and IT experts to
determine what would amount to a reasonable search. The same concerns have been
raised in the UK, where
lawyers will effectively need to carry out ‘data mapping’ exercises with their clients
and IT experts so that they understand their client’s IT systems and data management
practices.156

3.154 The cost of drafting a discovery plan to file in court would also add to the
up-front expense of litigation. This may be a particularly involved document in
complex cases where sophisticated software is used to search through vast databases of
electronic material. Similar concerns have been raised in relation to lengthy
questionnaires in the UK:
the general form of the complaint is that there is already too much pre-issue and pre-
trial paperwork and that the questionnaire merely adds to the pile.157

3.155 The utility of a discovery plan might therefore depend on litigants and their
lawyers allocating sufficient resources to its development. In practice, economic and
time constraints on a party giving discovery may lead to insufficient consideration of
what searches would be reasonable. An ill-considered or under-developed plan might
simply fall back on broad searches in vague or general terms, and provide little
assistance to the court in overseeing a proportionate and timely electronic discovery
process.
3.156 This has been the experience in the US, at times, where ‘the meet-and-confer is
too often treated as a perfunctory “drive-by” exchange’, which then means that ‘the
Rule 16 conference may accomplish little more than setting a few dates’.158 Judge Paul
Grimm has confirmed that, in his experience, ‘courts seldom receive discovery plans
from the parties that reflect meaningful efforts to drill down on the issues they are
supposed to discuss at the r 26(f) conference’.159 At the same time, legal practitioners
in the US have noted that judges themselves may fail to exercise the broad power that
r 16 gives them to order conferences, control timing, and discourage waste.160

156 D Kavan and T Streeton, ‘A Change in Direction on E-disclosure’, Law Society Gazette (online),
1 October 2010, <www.lawgazette.co.uk/>.
157 C Dale, Over-Estimating Both Costs and Risks in the eDisclosure Practice Direction
<http://chrisdale.wordpress.com/2010/09/28/over-estimating-both-costs-and-risks-in-the-edisclosure-
practice-direction> at 25 October 2010.
158 L Rosenthal, ‘A Few Thoughts on Electronic Discovery After December 1, 2006’ (2006) 116(176) Yale
Law Journal Pocket Part 167.
159 P Grimm, The State of Discovery Practice in Civil Cases: Must the Rules be Changed to Reduce Costs
and Burdens, Or Can Significant Improvements be Achieved Within the Existing Rules?
<http://civilconference.uscourts.gov/> at 25 October 2010.
160 J Barkett, Walking the Plank, Looking Over Your Shoulder, Fearing Sharks Are in the Water:
E-Discovery in Federal Litigation? (2010) <http://civilconference.uscourts.gov/> at 25 October 2010.
92 Discovery in Federal Courts

ALRC’s views
3.157 Commentators on e-discovery universally acknowledge project management as
the key to success. For example, the Sedona Conference emphasises project
management as the first principle of an e-discovery process:
Principle 1. In cases involving ESI [electronically-stored information] of increasing
scope and complexity, the attorney in charge should utilize project management and
exercise leadership to ensure that a reasonable process has been followed by his or her
legal team to locate responsive material.161

3.158 The ALRC’s preliminary view is that the clear expectation laid down in Practice
Note CM 6 for parties to have agreed upon a practical and cost-effective discovery
plan, and to inform the court of how these issues are to be addressed before it makes
orders for electronic discovery, can be an effective means of project managing a
discovery process when fulfilled in practice. However—subject to feedback from
stakeholders—there seems to be reluctance on the part of the court, the parties and their
lawyers to collaborate as project managers of an electronic discovery process, to keep
the costs down and the process as efficient and proportionate as possible.
3.159 In the ALRC’s preliminary view, the introduction of positive procedural
obligations on the parties to develop a discovery plan—and corresponding obligations
on the court to satisfy itself that the proposed discovery plan is proportionate or
reasonable—may help to ensure greater participation by all involved in civil litigation
to manage an e-discovery project.
3.160 The following proposal describes a new court procedure aimed at engaging the
parties, their lawyers and the court in the management of an electronic discovery
process. The objectives of this procedure include limiting the scope of discovery and
instilling certainty in the discovery process, by determining the extent of a ‘reasonable
search’ for discoverable documents stored in an electronic format, as far as possible in
advance of any searches of electronic databases. In particular, greater certainty as to the
scope and conduct of an e-discovery process may improve the predictability of
discovery costs and enable preliminary costs estimates to become more accurate.
3.161 The ALRC does not intend for the proposed procedure to obstruct the
overarching purpose of civil procedure in achieving ‘the just resolution of disputes’.162
Should the adoption of a discovery plan yield an unhelpfully limited amount of
information relevant to the proceeding, the court should not be prevented from making
further orders for discovery where necessary.
3.162 The ALRC expects that the procedures proposed below will require parties to
incur the cost of drafting a discovery plan and attending any court hearing to finalise its
terms. The ALRC also acknowledges that the proposed procedure will require the
expenditure of public resources by involving the court in the management of an
electronic discovery process. However, the ALRC’s preliminary view is that overall

161 The Sedona Conference, Commentary on Achieving Quality in the E-Discovery Process (2nd ed, 2009).
162 Federal Court of Australia Act 1976 (Cth) s 37M.
 3. Discovery Practice and Procedure in Federal Courts 93

the public and private costs of discovery of electronic documents would decrease with
closer management of the process on the part of litigants, their lawyers and the court.

Proposal 3–4 In any proceeding before the Federal Court in which the
court has directed that discovery be given of documents in an electronic format,
the following procedural steps should be required:
(a) the parties and their legal representatives to meet and confer for the
purposes of discussing a practical and cost-effective discovery plan in
relation to electronically-stored information;
(b) the parties jointly to file in court a written report outlining the matters on
which the parties agree in relation to the discovery of electronic
documents and a summary of any matters on which they disagree; and
(c) the court to determine any areas of disagreement between the parties and
to make any adjustments to the proposed discovery plan as required to
satisfy the court that the proposed searches are reasonable and the
proposed discovery is necessary.
If so satisfied, the court may make orders for discovery by approving the parties’
discovery plan.

Special masters, discovery masters and referees

3.163 A number of commentators have expressed a desire for the introduction of
‘special staff to manage discovery issues in large cases’.163 An example often cited is
the role of Masters in American courts under r 53 of the Federal Rules of Civil
Procedure. This section of the chapter considers a number of proposed or implemented
models for the appointment of independent persons to assist the court in case
management of discovery issues.
Rule 53 of the Federal Rules of Civil Procedure
3.164 Under r 53 of the Federal Rules of Civil Procedure, US courts may appoint
masters to perform any duties to which the parties consent, to ‘hold trial proceedings
and make or recommend findings of fact’ in certain circumstances and handle pre- or
post-trial issues that a judge cannot handle in a timely or effective manner.164 Special
masters are appointed by an order of the court that states the master’s duties, any limits
on the master’s authority, the nature of permitted ex parte communications, how the
master’s findings will be reviewed and the terms of the master’s compensation.165 The
compensation must be paid either by the parties or funded by the subject matter of the
action.166 A master may regulate the proceedings and ‘take all appropriate measures to

163 Australian Institute of Judicial Administration, AIJA Discovery Seminar (2007) <www.aija.org
.au> at 8 November 2010.
164 Federal Rules of Civil Procedure 2009 (US), r 53(a)(1).
165 Ibid, r 53(b)(2).
166 Ibid, r 53(g)(2).
94 Discovery in Federal Courts

perform the assigned duties fairly and efficiently’,167 and may also impose a range of
sanctions.168
3.165 Before the court acts on a master’s recommendations, the parties have an
opportunity to object.169 The court reviews findings of fact de novo (unless the parties
have agreed they will be reviewed for clear error),170 reviews findings of law de
novo171 and reviews procedural rulings ‘only for an abuse of discretion’.172
3.166 Rule 53 contemplates the use of masters at all three stages of a trial: pre-trial,
trial and post-trial.173 At these different stages, masters may fill any of a number of
different roles: settlement master; decision-making master; or case management
master.174
3.167 The settlement master attempts to mediate and facilitate negotiation.175 A
decision-making master may decide non-dispositive motions (any motion other than
those in which a party requests that the court dispose of some or all of the claims
asserted in a complaint, petition, counterclaim or cross-claim) usually in the context of
discovery.176 The case management master is less involved with the merits of the
dispute and has no decision-making authority. Instead, a case management master is
like an administrator who establishes or oversees procedures to expedite the case.
Victorian Law Reform Commission
3.168 The VLRC’s 2008 Civil Justice Review recommended the use of special masters
in three contexts:
• as one of a number of options within an alternative dispute resolution
framework;177
• as part of the discovery process;178 and
• in helping self-represented litigants.179
3.169 In the context of alternative dispute resolution, the VLRC discussed a special
master’s role as being similar to that of a special referee under O 50 of the Supreme
Court (General Civil Procedure) Rules 2005 (Vic). Here, ‘the court would retain

167 Ibid, r 53(c)(1).

168 Ibid, r 53(c)(2).
169 Ibid, r 53(f)(1), (f)(2).
170 Ibid, r 53(f)(3).
171 Ibid, r 53(f)(4).
172 Ibid, r 53(f)(5).
173 Ibid, r 53; M Fellows, ‘Federal Court Special Masters: A Vital Resource in the Era of Complex
Litigation’ (2005) 31 William Mitchell Law Review 1269, 1276.
174 M Fellows, ‘Federal Court Special Masters: A Vital Resource in the Era of Complex Litigation’ (2005)
31 William Mitchell Law Review 1269, 1280. See also ‘Special Masters Conference: Transcript of
Proceedings’ (2005) 31 William Mitchell Law Review 1193, 1220–1221 (transcript of a conference where
special masters discuss the difference between working in an ‘adjudicative’ or ‘settling’ role and the role
of ‘managing the case’).
175 Ibid, 1282.
176 Ibid, 1283.
177 Victorian Law Reform Commission, Civil Justice Review, Report 14 (2008), 219.
178 Ibid, 469.
179 Ibid, 573.
 3. Discovery Practice and Procedure in Federal Courts 95

jurisdiction ... and remain responsible for the final adjudication’ but the special referee
or master would make a ‘provisional determination’, if the parties failed to reach a
settlement.180 It is likely that O 72A of the Federal Court Rules, described further
below, would allow for this role for referees in the Federal Court.
3.170 The VLRC also recommended provision for a special master ‘to be appointed by
the court to assist in the case management of discovery issues in complex cases’.181
The VLRC’s model special master would:
• provide court supervised intervention in the discovery aspect of the dispute;
• actively endeavour to case manage and assist in the resolution of any dispute
between the parties in relation to discovery; and/or
• investigate and report to the court on any issue in relation to discovery.182
3.171 The costs of an externally appointed special master under the VLRC’s model
would be set at the discretion of the court and paid for by the parties or ordered by the
court to be costs in the cause.183 When appointing a special master in the Victorian
context, the court would have to consider whether the financial stakes or resources of
the parties justify imposing the expense of managing discovery issues on the parties.184
3.172 Therefore, the VLRC contemplated both the introduction of special masters and
the increased use of special referees. As conceived in the VLRC report, the primary
difference between a referee and a master appears to be the level of intervention in the
discovery process itself. A referee may be able to report on particular discovery issues
when they are referred but a special master could play an ongoing and continuing role,
working with the parties rather than merely as a form of adjudicator. While referees
answer specific questions and ‘are required to give reasons for their determinations and
the principles governing whether such reasons are adequate’,185 special masters could
explain the parties’ duties, investigate and help the parties to identify appropriate
discovery management strategies, facilitate discussion and hear interim applications.186
Adopting the language of r 53 commentators, it appears that a referee can be a
decision-maker but the VLRC’s special master would also be a case manager.
Justice Finkelstein’s proposed O 72A
3.173 At a joint Federal Court/Law Council workshop on case management in 2008,
Finkelstein J outlined a proposal for the introduction of discovery masters in the
Federal Court. This included a draft of proposed amendments to the Federal Court

180 Ibid, 276.

181 Ibid, 469.
182 Ibid, 469.
183 Ibid, 470.
184 Ibid, 470.
185 Ibid, 231.
186 Ibid, 470.
96 Discovery in Federal Courts

Rules, introducing a new O 72A, which Finkelstein J prepared along the lines of r 53 of
the Federal Rules of Civil Procedure.187
3.174 However, there were three differences. First, r 53 allows a master to impose
sanctions188 but the proposed O 72A made no such provision. Secondly, r 53 allows a
party 20 days in which to file objections to a Master’s report,189 whereas Finkelstein J
only allowed 7 days.190 Thirdly, Finkelstein J limited a discovery master’s rulings to
the realm of managing pre-trial discovery.191
3.175 This last distinction about the scope of a master’s powers is most relevant. Rule
53 is broader in allowing a master to be involved at any stage. The VLRC’s proposal is
also broader, in that special masters may play a role in alternative dispute resolution
proceedings. However, within the realm of pre-trial discovery, Finkelstein J would
allow masters to direct the proceedings.192 Like r 53 findings, a discovery master’s
factual findings and legal conclusions would be reviewed de novo (although the parties
may stipulate that factual findings should only be reviewed for clear error).193 Also
consistent with r 53, the costs of a discovery master in a particular case would be paid
for by the parties, rather than the court.194
Federal Court Rules current O 72A
3.176 The Federal Justice System Amendment (Efficiency Measures) Act (No. 1) 2009
(Cth) amended the Federal Court of Australia Act to allow courts to refer ‘a
proceeding ... or one or more questions arising in a proceeding ... to a referee for
inquiry and report’.195 The Second Reading Speech for this amendment affirmed that
the purpose of this provision is to ‘enable the court to more effectively and efficiently
manage large litigation’.196 Contemplated benefits included the ‘procedural flexibility
with which a referee can deal with a question’ and a referee’s ‘technical expertise’,
which may allow a referee to ‘more quickly get to the core of technical issues’.197
3.177 Federal Court Rules O 72A, introduced pursuant to this amendment, allows the
court to make a referral ‘[a]t any stage of a proceeding’ for inquiry and report into
‘questions or issues arising in a proceeding, whether of fact or law or both, and whether
raised by pleadings, agreement of parties or otherwise’.198 The costs of a referee appear
to be paid for by the parties, as the court may make directions for a party to give
security for a referee’s costs or otherwise deal with a referee’s remuneration under the

187 R Finkelstein, Discovery Reform: Options and Implementation (2008), prepared for the Federal Court of
Australia, Annexure E.
188 Federal Rules of Civil Procedure 2009 (US), r 53(c)(2).
189 Ibid, r 53(f)(2).
190 R Finkelstein, Discovery Reform: Options and Implementation (2008), prepared for the Federal Court of
Australia, Annexure E, Rule 6(2).
191 Ibid, Annexure E, Rule 1(1).
192 Ibid, Annexure E, r 6(5).
193 Ibid, Annexure E, r 6(3), (4).
194 Ibid, Annexure E, r 7(2).
195 Federal Court of Australia Act 1976 (Cth) s 54A(1).
196 Commonwealth, Parliamentary Debates, House of Representatives, 3 December 2008, 12296
(R McClelland—Attorney-General), 12296.
197 Ibid, 12296.
198 Federal Court Rules (Cth), O 72A r 1.
 3. Discovery Practice and Procedure in Federal Courts 97

powers of the court as to costs.199 Unless otherwise ordered by the court, the referee
must give his or her opinion in a report which the court may then choose to adopt in
whole, adopt in part, vary or reject.200
3.178 A referee’s determinations are not automatically binding on the parties as ch III
of the Australian Constitution precludes anyone other than a judicial officer from
exercising judicial power.201 While the concept of judicial power is affected by many
variables, which makes it incapable of exhaustive definition, dispensing with discovery
applications in litigation may arguably fall within it.202 In Nicholas v The Queen,
Gaudron J stated that:
The difficulties involved in defining ‘judicial power’ are well known. In general
terms, however, it is that power which is brought to bear in making determinations as
to rights, liabilities, powers, duties or status put in issue in justiciable controversies,
and in making adjustments of rights and interests in accordance with legal
standards.203

Referees as discovery masters

3.179 In the three models of special masters discussed above, each may engage in case
management activities, such as clarifying the issues in dispute and focusing the
discovery process. Justice Finkelstein, for example, describes how a discovery master
could help in ‘crafting discovery orders, creating a confidentiality regime, [and]
monitoring production and compliance’.204
3.180 The VLRC was also of the view that a special master should be able to
investigate and identify appropriate strategies in relation to the management of
discovery, and facilitate discussion between the parties in relation to electronic
discovery.205
3.181 As described by a US judge, a special master can facilitate collaborative tasks
such as preparing parties for meetings, negotiating discovery procedures or developing
search protocols.206
3.182 By contrast, the primary role of a referee in the Federal Court appears to be that
of an adjudicator, rather than case manager. In particular, referees are intended to
adjudicate matters
where technical expertise is required and it is neither cost effective nor an appropriate
use of a judge’s time to gain the necessary in-depth expertise in a particular science or

199 Ibid, O 72A r 5.

200 Federal Court of Australia Act 1976 (Cth) s 54A (3).
201 See Australian Law Reform Commission, The Judicial Power of the Commonwealth: A Review of the
Judiciary Act 1903 and Related Legislation, Report 92 (2001).
202 S Ratnapala, Australian Constitutional Law: Foundations and Theory (2002), 120.
203 Nicholas v The Queen (1998) 193 CLR 173., [70]. See also Huddart Parker & Co v Moorehead (1909) 8
CLR 330., 357.
204 R Finkelstein, Discovery Reform: Options and Implementation (2008), prepared for the Federal Court of
Australia, [41].
205 Victorian Law Reform Commission, Civil Justice Review, Report 14 (2008), 470.
206 S Scheindlin and J Redgrave, ‘Special Masters and E-Discovery: The Intersection of Two Recent
Revisions to the Federal Rules of Civil Procedure’ (2008) 30 Cardozo Law Review 347, 383.
98 Discovery in Federal Courts

trade, or where detailed examination of accounts or other financial records is

necessary to assess damages.207

3.183 Parties are required to cooperate with referees, but their cooperation is aimed
toward ensuring that the referee ‘can form a just opinion’ rather than shape a discovery
process.208 Referees are explicitly freed from evidentiary rules in their adjudicative
role, but this does not appear to be intended to allow them to perform a broader range
of case management functions.
3.184 It is unlikely that existing mechanisms in the Federal Court for referral of
questions or issues to a referee could be used to the same extent as those that allow
special masters to case manage a discovery process. If a position of a special master
was required to manage discovery in Federal Court proceedings, legislative
amendments may be required to introduce this element into the court’s case
management procedures. Models for reform along these lines include amendments to O
72A as proposed by Finkelstein J and the provisions of r 53 in the Federal Rules of
Civil Procedure, on which this proposal is based, as discussed above.
Advantages and disadvantages of discovery masters in the Federal Court
3.185 One US District Court judge identified four primary reasons for a judge to
appoint a special master:209
1. Time commitment—When a party asserts privilege over thousands, sometimes
in the tens of thousands, of pages of material, a special master may review the
documents to determine the validity of the assertion of privilege.
2. Knowledge and expertise—In Re: Seroquel Products Liability Litigation, the
Master supervised the process of discovering electronically-stored information:
No particular discovery dispute was referred to the Master; instead, he was directed to
review all discovery requests and employ his skills to determine ‘where such
information is stored and how it can most effectively be accessed and made
available’.210

3. Resources—Some disputes require a panel of professionals such as

investigators, accountants, economists, and computer experts working in a
coordinated manner to gather information. In such situations, a special master
may act as a ‘project manager’ to coordinate these professionals.
4. Neutrality—A special master may be able to conduct settlement discussions to
avoid the judge losing any appearance of neutrality.211
3.186 Preserving the neutrality of judges was particularly compelling for the VLRC in
its proposal for a special master to manage discovery issues:

207 Explanatory Memorandum, Federal Justice System Amendment (Efficiency Measures) Bill (No 1) 2009
(Cth).
208 Federal Court Rules (Cth), O 72A r 7(7).
209 S Scheindlin, ‘We Need Help: The Increasing Use of Special Masters in Federal Courts’ (2009) 58
DePaul Law Review 479, 481.
210 Re Seroquel Products Liability Litigation (Unreported, M.D. Fla., 5 October 2007), O 1.
211 S Scheindlin, ‘We Need Help: The Increasing Use of Special Masters in Federal Courts’ (2009) 58
DePaul Law Review 479, 486.
 3. Discovery Practice and Procedure in Federal Courts 99

the use of special masters will greatly assist the court to adopt a more interventionist
approach to discovery, without compromising judicial objectivity and
independence.212

3.187 The desire for discovery masters may also be a matter of finding the right person
for the job, as Finkelstein J put it:
the master can be selected with an eye to specialization (prior expertise in the relevant
field of law) and available time (if discovery is expected to be a full-time or expedited
affair, consideration of potential appointees can be limited to retired judges or others
who can guarantee a clear schedule).213

3.188 Another reason for the VLRC to advocate the use of special masters was to save
on public resources, arguing that special masters would
assist to free up judge time, which may otherwise be consumed by complex and
protracted discovery processes.214

3.189 This point was also taken up by Finkelstein J in his arguments for appointing
discovery masters in large or complex cases:
it is unfair to other judges, and to other litigants with cases before that judge, when the
judge must devote a disproportionate amount of time to one case, and even close his
or her docket in extreme cases.215

3.190 The corollary to this, however, is the increase in litigation costs for the parties
who would bear the expense of a discovery master. This is likely to be a higher cost to
the parties than court fees spent on judicial case management, which are essentially a
public cost. A case manager with greater expertise in discovery than the docket judge
may save the parties time and money through more efficient discovery processes but
comes with his or her own set of costs.
3.191 A key concern against the introduction of discovery masters in the Federal Court
may be its impact on the court’s docket management system. In the Federal Court, each
case is allocated to the docket of a judge who is then responsible for managing the case
until final disposition. The docket judge’s familiarity with the case is intended to
promote the just, orderly and expeditious resolution of disputes.216 However,
outsourcing case management to a discovery master may detract from the judge’s
involvement and familiarity with cases in his or her docket. This may undermine the
advantages of the docket system in relation to discovery, which were outlined by
Heerey J in his submission to the ALRC’s Managing Justice report:

212 Victorian Law Reform Commission, Civil Justice Review, Report 14 (2008), 470.
213 R Finkelstein, Discovery Reform: Options and Implementation (2008), prepared for the Federal Court of
Australia, [40].
214 Victorian Law Reform Commission, Civil Justice Review, Report 14 (2008), 470.
215 R Finkelstein, Discovery Reform: Options and Implementation (2008), prepared for the Federal Court of
Australia, [37].
216 Federal Court of Australia, Individual Docket System <www.fedcourt.gov.au/> at 20 October 2010.
100 Discovery in Federal Courts

[t]he docket system will promote (and already has, in my experience) a more
interventionist and practical approach to discovery, tailored to the individual case and
the real issues in dispute.217

3.192 There may also be concerns that discovery masters would add a layer of
inefficiency to the discovery process, in that their decisions would have to be reported
to the court for action and subject to objections from the parties. It may be more
efficient for the docket judge to deal with any objections from the parties at the time of
making orders for discovery.
ALRC’s views
3.193 Subject to feedback from stakeholders, the ALRC’s preliminary view is that
management of the discovery process should be primarily the responsibility of the
judge under the court’s docket system. The use of a discovery master may obstruct
active judicial case management which, in the ALRC’s preliminary view, is required to
control the scale and cost of discovery in the Federal Court.
3.194 The ALRC is also concerned about the additional expense to the parties which
would be incurred by the employment of a discovery master. As discussed in this
chapter, the high cost of discovery has been singled out as a major criticism of this
stage in civil litigation. The ALRC’s preliminary view is that the expected costs of
discovery masters, and the potential impact of this approach on case management by
judicial officers in the Federal Court, render such reform less practical than the reforms
proposed above.
3.195 However, the ALRC welcomes stakeholder views on the merits of special
masters to manage the discovery process in Federal Court proceedings. The ALRC is
interested in stakeholders’ proposals for any particular mechanism to introduce
discovery masters in the Federal Court.

Question 3–8 Should special masters be introduced to manage the

discovery process in proceedings before the Federal Court? If so, what model
should be adopted?

Case management powers

3.196 The VLRC’s Civil Justice Review recommended ‘the introduction of more
clearly delineated and specific powers to facilitate proactive judicial case management
in relation to discovery’.218 Accordingly, the report included draft provisions based in
part on the Rules of the Supreme Court 1971 (WA) and the Supreme Court Civil Rules
2006 (SA). The substance of these provisions was enacted by the Victorian Parliament
in s 55 of the Civil Procedure Act 2010 (Vic). Section 55 provides an extensive but
non-exhaustive list of directions which Victorian courts may give in relation to
discovery.

217 Australian Law Reform Commission, Managing Justice: A Review of the Civil Justice System, Report 89
(2000), [7.181].
218 Victorian Law Reform Commission, Civil Justice Review, Report 14 (2008), 470.
 3. Discovery Practice and Procedure in Federal Courts 101

3.197 This degree of particularisation is not found in the Federal Court’s legislation.
While the Federal Court of Australia Act does not include this level of detail, the
Federal Court does have authority to make such orders in relation to discovery.
However, the source of the Federal Court’s power to make discovery orders is largely
found in subordinate legislation—O 15 of the Federal Court Rules—or in its inherent
jurisdiction.
3.198 The Federal Court of Australia Act was amended to give statutory form to the
court’s case management powers in broad terms.219 These amendments were intended
to ‘provide clear legislative direction and support to judges so that they can confidently
employ active case management powers’.220 While the Act does not specify the kinds
of orders the court may make in relation to discovery, it relevantly provides that the
court may ‘require things to be done’.221
3.199 Greater specification of the court’s case management powers in legislation
would not necessarily increase the court’s authority to control the discovery process, or
create new powers without which it has been ill-equipped to manage discovery. Rather,
the intent would be to raise awareness of the ways in which the discovery process can
be managed and encourage greater and more effective use of case management powers.
As the VLRC reasoned in its Civil Justice Review:
Expanding discovery case management powers should encourage the judiciary and
the parties to be more proactive in confining the scope of discovery and ensuring that
the process assists rather than hinders the administration of justice.222

3.200 The same argument can be made with respect to the court’s power to sanction
non-compliance with discovery orders. The Victorian Civil Procedure Act sets out a
range of orders the court may make, without limiting the court’s power to sanction a
failure to comply with discovery obligations or other conduct amounting to abuse of
the discovery process.223 The VLRC argued that:
More clearly defined sanctions will also encourage parties to work towards the
efficient resolution of discovery issues and discourage the use of discovery as an
adversarial tool.224

3.201 However, there may be doubts as to whether clearer statutory prescription of the
Federal Court’s power to case-manage, including through the use of sanctions, would
itself have much practical impact on the discovery process. Unless the court actually
uses its case management powers or the parties actively petition the court to control the
discovery of documents—and unless the court, on its own initiative, imposes sanctions
on parties abusing the discovery process, or the abused party actively seeks those court
sanctions—the behavioural changes envisaged by the VLRC are unlikely to
materialise.

219 Section 37P of the Federal Court of Australia Act was enacted by the Access to Justice (Civil Litigation
Reforms) Amendment Act 2009 (Cth).
220 Explanatory Memorandum, Access to Justice (Civil Litigation Reforms) Amendment Bill 2009 (Cth), 3.
221 Federal Court of Australia Act 1976 (Cth) s 37P(3)(a), (b).
222 Victorian Law Reform Commission, Civil Justice Review, Report 14 (2008), 471.
223 Civil Procedure Act 2010 (Vic), s 56. See also Federal Court of Australia Act 1976 (Cth) s 37P (6).
224 Victorian Law Reform Commission, Civil Justice Review, Report 14 (2008), 473.
102 Discovery in Federal Courts

ALRC’s views
3.202 The ALRC considers that legislative reforms to clarify and strengthen the
Federal Court’s existing statutory powers to case manage the discovery process are
desirable. The ALRC’s preliminary view is that by setting out in primary legislation
some detail of the court’s case management powers with respect to discovery, it may
encourage the judiciary, the parties and their lawyers proactively to confine the scope
of discovery and reduce the burden of litigation.
3.203 Express statutory authority to direct the conduct of a discovery process, and to
sanction discovery default and abuse, may help to build a culture within the Federal
Court that promotes a focused and efficient discovery process. However, the ALRC
acknowledges that such cultural change takes time to develop and may fail to eventuate
unless the court, litigants and practitioners implement the rationale of such law reform
in practice. Judicial officers may be encouraged and better equipped to utilise
legislative case management powers through education and training, discussed further
below. To this end, clearer statutory prescription of the court’s powers to manage a
discovery process may be
more than motherhood statements if they are used to achieve cultural change. It gives
a basis for the bench to say to people ‘this is how we do litigation.225

Proposal 3–5 Part VB of the Federal Court of Australia Act 1976 (Cth)
should be amended to provide the court with broad and express discretion to
exercise case management powers and impose sanctions in relation to the
discovery of documents, in line with ss 55 and 56 of the Civil Procedure Act
2010 (Vic).

Costs powers
3.204 This section of the chapter considers the use of costs powers to maintain
proportionality in a discovery process. Specifically, the power to order payment of
discovery costs in advance and the power to limit legal fees for discovery are
discussed.
Payment of discovery costs in advance
3.205 One way to ensure that discovery requests are proportionate to the information
needs of the case may be to require payment of costs in advance of discovery by the
requesting party. This approach was recommended by the Access to Justice
Taskforce.226 The court’s existing costs powers, including those prescribed in s 43 of
the Federal Court of Australia Act, already allow judges to order payment of discovery
costs in advance. A number of judges consulted by the ALRC in this Inquiry recalled
cases in which they had made such orders, with the effect of limiting a party’s request

225 Australian Institute of Judicial Administration, AIJA Discovery Seminar (2007) <www.aija.org.au/> at 8
November 2010.
226 Australian Government Attorney-General’s Department Access to Justice Taskforce, A Strategic
Framework for Access to Justice in the Federal Civil Justice System (2009), Rec 8.3.
 3. Discovery Practice and Procedure in Federal Courts 103

for discovery. The Taskforce suggested that there should be a presumption in favour of
making such orders in all cases unless the court exercises its discretion not to do so, for
example, where a meritorious litigant would be denied access to justice through a lack
of capacity to pay for discovery costs.227
3.206 A requesting party could also be denied justice if, having been required to pay
the costs of discovery in advance, it is ultimately successful in the litigation but unable
to recover those costs—whether this is due to the other party’s inability to satisfy a
costs order in favour of the successful party, or because the order for payment of
discovery costs in advance stipulates that such costs cannot be recovered.
3.207 The Taskforce suggested that over-inflated costs estimates, attempting to
intimidate a party not to persist with their discovery request, may be addressed by
judges assessing the reasonable costs of discovery.228 However, in practice, judges
might not be adequately informed to assess the reasonable costs of discovery. This
point was made at the AIJA’s discovery seminar, where the issue of costs capping was
discussed. The seminar concluded that judges often do not have sufficient information
to fix costs caps at an appropriate level.229
3.208 In any event, it appears that the parties are more likely to underestimate the costs
of discovery rather than over-inflate costs estimates. The ALRC was told on separate
occasions in consultations with General Counsel for a large corporation and a litigation
funder that a budget is usually drawn up at the start of a proceeding, including a
component for discovery, but the actual litigation costs will invariably exceed initial
estimates.
3.209 It may also be argued that a presumption in favour of payment in advance for
discovery costs does not reflect the commercial realities faced by most litigants. In the
vast majority of cases, the parties would be denied justice by a lack of capacity to pay
for discovery in advance. In these circumstances, almost all cases would involve an
interlocutory application seeking orders to overturn the presumption of costs on the
requesting party. In this way, the enactment of such a presumption could result in
satellite litigation and an increase in costs.
Limiting the costs of discovery
3.210 The high cost of discovery is often attributed to the army of junior solicitors,
paralegals and clerks required to work through a request for discovery of documents.
The plight of ‘discovery soldiers’ conscripted in Trade Practice Commission v Santos
Limited & Sagasco Holdings Limited230 was later remarked upon by the trial judge,
Heerey J:
Practitioners were recruited into a burgeoning army engaged in discovery, inspecting,
filing, listing, copying, storing, carrying about and otherwise dealing with 100,000
documents which had been accumulated for the purposes of the litigation. An

227 Ibid, 106.

228 Ibid, 105.
229 A Cannon, ‘Discovery Show and Tell Notes’ (Paper presented at AIJA Discovery Seminar, Melbourne,
24 August 2007).
230 Trade Practices Commission v Santos (1992) 38 FCR 382.
104 Discovery in Federal Courts

expression that developed amongst junior practitioners who had been ensnared in the
discovery process was ‘I have been Santossed’.231

3.211 Law firms have been criticised for using an army of employees to generate
profits from the discovery process. The VLRC’s Civil Justice Review explained that:
In some instances, clerks or law students may be engaged to assist in connection with
document review. They may be paid at a relatively low hourly rate (eg, $30 per hour)
but charged to clients at significantly higher hourly rates (eg, between $150 and $250
per hour). It has been suggested that this is one of the major reasons for the very large
costs associated with discovery.232

3.212 The VLRC recommended that Victorian courts be given the power to limit the
costs charged to clients for discovery to the actual cost to the law practice of such
work, including a reasonable allowance for overheads, but excluding a mark up or
profit component being added to the actual costs.233
3.213 Currently, where a party to Federal Court proceedings has concerns about the
amount charged by its lawyers for discovery, the client may apply for taxation of its
lawyer’s fees under the Legal Profession Act of the relevant jurisdiction.234 The
Federal Court Rules also give the court express power to disallow costs as between a
lawyer and their client where the costs are incurred improperly or without reasonable
cause.235
3.214 Introducing costs powers to limit legal fees may be criticised on the basis that
there is no widespread over-charging for discovery in the Federal Court. On the other
hand, if law firms are charging for discovery work without any mark up, then such
costs orders would not have any effect other than to prevent potential overcharging.
3.215 The ALRC heard during initial consultations that some lawyers may charge fees
for discovery work at a fixed or flat rate. This fee structure is commonly used for
certain types of legal services, such as conveyancing or drafting a contract. The costs
of litigation, particularly the discovery stage, may be more difficult to estimate or
quote. However, if procedural reform (such as Proposals 3–2 and 3–3) is able to instil
greater certainty in the discovery process, the costs of discovery may become more
predictable.
ALRC’s views
3.216 The ALRC acknowledges that costs orders can be useful strategies to help limit
the scope of discovery and keep the costs of a discovery process proportionate to the
information needs of the case.

231 P Heerey, ‘Some Lessons from Santos’ (1994) 29 Australian Lawyer 24.
232 Victorian Law Reform Commission, Civil Justice Review, Report 14 (2008), ch 6, 473.
233 Ibid, Rec 90.
234 Legal Profession Act 2004 (NSW) Pt 3.2, Div 11; Legal Profession Act 2007 (Qld) Pt 3.4, Div 7; Legal
Practitioners Act 1981 (SA) Pt 3, Div 8; Legal Profession Act 2007 (Tas) Pt 3.3, Div 7; Legal Profession
Act 2004 (Vic) Pt 3.4, Div 7; Legal Profession Act 2008 (WA) Pt 10, Div 8; Legal Profession Act 2006
(ACT) Div 3.2.7; Legal Profession Act 2006 (NT) Pt 3.3, Div 8.
235 Federal Court Rules (Cth), O 62 r 9.
 3. Discovery Practice and Procedure in Federal Courts 105

3.217 In particular, the power to order payment for discovery in advance may be
utilised by the Federal Court to manage the discovery of documents. The ALRC’s
preliminary view is that such costs powers should continue to be available to the court
and exercised in its discretion in the circumstances of each case. At this stage of the
Inquiry, the ALRC is not inclined to the view that up-front payment should be required
of a party requesting discovery by default, unless the court orders otherwise. The
ALRC expects that such a burden would be unbearable for most litigants and would
typically result in parties incurring additional costs through litigation to overturn that
presumption.
3.218 While the ALRC is not aware of any widespread overcharging for discovery
costs, the ALRC accepts that discovery has the potential to serve as a profit centre for
law firms. However, the ALRC’s preliminary view is that the amount charged to
clients for discovery is generally a matter for cost assessment or review under existing
Legal Profession Acts. Where court orders are necessary to restrict discovery costs to
those actually incurred by the firm for such work, the ALRC’s preliminary view is that
O 62 of the Federal Court Rules adequately equips the court to make those orders.
Firms which inappropriately profit from the discovery process might also be dealt with
under existing disciplinary frameworks, which are considered in Chapter 4.
3.219 The ALRC is, however, interested in stakeholder views on the ways in which
the Federal Court might make greater use of costs powers to ensure proportionality in
the discovery process.

Question 3–9 Should there be a presumption that a party requesting

discovery of documents in proceedings before the Federal Court will pay the
estimated cost in advance, unless the court orders otherwise?
Question 3–10 Should the Federal Court have explicit statutory powers to
make orders limiting the costs able to be charged by a law practice to a client for
discovery, to the actual costs to the law practice of carrying out such work (with
a reasonable allowance for overheads, but excluding a mark up or profit
component)?

Judicial education and training

3.220 As discussed above, the key to discovery reform may lie in more active judicial
case management of the process. Effective case management skills are necessary for
judges effectively to narrow the issues in dispute and control the scope and process of
discovery. The need for judicial education and training in case management skills was
recognised by the Access to Justice Taskforce in recommending that:
The Attorney-General should work with the courts and the National Judicial College
of Australia (NJCA) to ensure that judicial education includes measures aimed at
enhancing the understanding and use of ... case management techniques.236

236 Australian Government Attorney-General’s Department Access to Justice Taskforce, A Strategic

Framework for Access to Justice in the Federal Civil Justice System (2009), Rec 8.5.
106 Discovery in Federal Courts

3.221 A particular issue that needs managing in the discovery process is the use of
computer technologies in the production of electronically-stored information. The need
for effective training for judges managing an e-discovery process was specifically
targeted in the UK by Lord Jackson in his Review of Civil Litigation Costs. In his final
report, Lord Jackson recommended that:
E-disclosure as a topic should form a substantial part of … the training of judges who
will have to deal with e-disclosure on the bench.237

3.222 Currently, there are a number of avenues open to judges for training in case
management skills. The National Orientation Program for new judges conducted by the
NJCA includes a session on case management, examining ‘the role of judges dealing
with busy application lists, the identification of cases requiring management and the
referral of cases for alternative dispute resolution’.238
3.223 Continuing education for judges includes modules on pre-trial case
management, under the national curriculum for professional development for
Australian judicial officers.239 This program covers the challenges and problems that
can arise from discovery and using alternative dispute resolution techniques in the
management of cases, including settlement of cases.240
3.224 While the curriculum includes a module on information and other technologies,
there is currently no inclusion of e-discovery in the national curriculum.241 Programs in
this module are focused on technologies used in the court room (the design of
electronic courtrooms, the use of audio/visual technologies and electronic filing, for
example) and computers as a research tool for writing judgements, rather than those
used in the discovery process.
3.225 Judicial education at a national level may be lacking a particular focus on the
management of large-scale discoveries that involve masses of electronically-stored
information. This might reflect the fact that such discovery processes are largely
confined to the Federal Court, and a few state Supreme Courts, rather than the majority
of jurisdictions. It may also be difficult to take a national approach to this topic, since
each court has its own case management system to deal with discovery issues.
3.226 Professional development specifically for Federal Court judges may be provided
through the Federal Court itself via its Judicial Education Committee or Practice
Committee. The Practice Committee, together with the Law Council of Australia, was
jointly responsible for organising the workshop held in 2008 on the Federal Court’s
case management system—which paid particular attention to the management of
discovery issues.242 The ALRC was told that plans for a further case management
workshop are in train.

237 R Jackson, Review of Civil Litigation Costs: Final Report (2009), Rec 4.1(i).
238 National Judicial Conference of Australia, National Judicial Orientation Program (2010), Session 13B.
239 C Roper, Report: A Curriculum for Professional Development for Australian Judicial Officers (2007),
prepared for the National Judicial College of Australia, Program 2.1.
240 Ibid, Program 2.1.
241 Ibid, Module 7.
242 R Finkelstein, Discovery Reform: Options and Implementation (2008), prepared for the Federal Court of
Australia.
 3. Discovery Practice and Procedure in Federal Courts 107

3.227 From time to time, the AIJA holds conferences and seminars for judicial
officers. In the past, some of these have covered discovery issues; including the use of
computer technologies. In 2008, the AIJA held the 4th AIJA Law & Technology
Conference where several sessions focused on e-discovery.243 Previously, in 2007, the
AIJA held a discovery seminar which canvassed case management and the rise of e-
disclosure.244
3.228 The ALRC has heard that case management, including management of the
discovery process, can be a topic of conversation at regular judges’ meetings in the
Federal Court. This kind of peer-to-peer education may be an effective way to inform
Federal Court judges about the case management needs of the discovery process.
3.229 Another source of information on case management for Federal Court judges is
the court’s Benchbook. It includes a chapter on discovery which covers the general
principles and rules for making discovery orders, as well as sample orders for
discovery of documents. The ALRC understands that this chapter was last updated in
2002. In particular it does not refer to the requirements of Practice Note CM 6—
specifically, the need to agree upon a discovery plan before the court makes orders for
discovery of documents in electronic format—which was in substance issued in
January 2009. Due to the Benchbook falling out of date, the ALRC has heard that it is
not widely used among Federal Court judges.
3.230 However, the ALRC was told that work is progressing in the Federal Court on a
replacement handbook. This may be an opportunity for the dissemination of up-to-date
information across the Federal Court with a particular focus on effective case
management of the discovery process.
ALRC’s views
3.231 As outlined above, there are already many opportunities for Federal Court
judges to develop their case management knowledge and skills (including those
required to effectively manage the discovery process) through education, training and
the information resources of the court. However, the ALRC’s preliminary view is that
existing case management training and education for Federal Court judges should give
greater focus to the issues arising in a discovery process—including the technologies
used to discover electronically-stored information.
3.232 In the ALRC’s preliminary view, there is a particular need for Federal Court
judges to be provided frequent and continuing education in electronic discovery due to
the constant advancement of information and communication technologies. This may
be an especially important aspect of judicial education, if judges are to be more
involved in planning the conduct of an e-discovery process as suggested in
Proposal 3–2.

243 Australian Institute of Judicial Administration, AIJA Law & Technology Conference 2008 [Program]
<www.aija.org.au/> at 8 November 2010.
244 Australian Institute of Judicial Administration, AIJA Discovery Seminar (2007) <www.aija.
org.au/> at 8 November 2010.
108 Discovery in Federal Courts

Proposal 3–6 The Federal Court should develop and maintain a

continuing judicial education and training program specifically dealing with
judicial management of the discovery process in Federal Court proceedings,
including the technologies used in the discovery of electronically-stored
information.

Discovery data collection

3.233 As mentioned earlier in this Chapter, statistical data on discovery costs in
Australia—and research measuring the extent to which discovered documents are used
in the disposal of litigation before Australian courts—has not been collected or
recorded in a systematic or ongoing manner. Consequently, accurate and up-to-date
information as to the proportionality of discovery processes in federal courts—in terms
of discovery costs relative to the utility of discovered documents in the context of the
litigation—is not readily available.
3.234 The collection of such data may provide an informative measure of the concerns
associated with discovery in Federal Court proceedings. Such information may help to
guide the direction of reform in this area of civil litigation. It may also enable a basis
for comparison to measure the effectiveness of the pre-discovery procedures outlined
above, in Proposals 3–1 and 3–2, should they be implemented. Reliable statistics would
be helpful to accurately assess whether these proposed procedures are successful in
achieving the expected goals of reducing litigation expenses overall.
3.235 In particular, data on discovery costs may provide an indication as to whether
the procedures proposed above, if implemented, achieve a greater level of certainty in
the conduct of a discovery process—in terms of planning in advance the types of
searches that are ‘reasonable’. For example, data which allowed a comparison of
estimated discovery costs with the actual costs of discovery may indicate the level of
certainty in a discovery process.
3.236 The collection of accurate and meaningful data on the proportionality of
discovery processes would likely present significant challenges. It may require the
cooperation and input of all those involved in a civil proceeding, including the court,
the parties, their lawyers, any litigation support service providers and financiers such as
insurers or litigation funders. Establishing a central point for the collection of data from
every participant in a civil proceeding, with respect to discovery costs, may present
logistical issues, for example, the protection of confidential information.
3.237 Quantifying the utility of discovered documents may also raise a particular
challenge in the collection of this data. As discussed in this chapter, recording the
number of discovered documents tendered in evidence or relied upon at hearing may
misrepresent the utility of discovery—since the objectives of discovery extend to
clarifying the issues in dispute and testing the strength of the parties’ case. Discovered
documents, therefore, may have value in facilitating settlement of the proceeding or
shortening the length of the trial by encouraging parties to agree on certain issues. This
may suggest that the extent to which discovered documents are actually used in the
 3. Discovery Practice and Procedure in Federal Courts 109

disposal of litigation could only be measured by the impressions of the parties or their
lawyers, rather than exact numerical or monetary terms.
ALRC’s views
3.238 The ALRC’s preliminary view is that accurate and up-to-date data on the costs
associated with discovery in Federal Court proceedings, and the extent to which
discovered documents are used in the resolution of those proceedings, is necessary to
identify and act upon concerns relating to the high and disproportionate costs of the
discovery process. The collection of such data is also, in the ALRC’s preliminary view,
necessary to measure the success of the new court procedures proposed in this Chapter,
if implemented.
3.239 The type of data that may assist to evaluate and track the proportionality of
discovery processes in the Federal Court may include:
• The total litigation costs and the amount of costs associated with discovery, as
well as the items of expenditure on discovery, for example, legal fees and court
filing fees for discovery applications, the cost of time spent at trial considering
discovered documents, the cost of litigation support services in the discovery
process and the cost to the parties of employees engaged in a discovery process.
This may indicate where costs are incurred in discovery, and those aspects
which are most costly, in the context of litigation costs overall.
• The value of what is at stake for the parties in the litigation, for example, the
amount of damages awarded in judgement, the sum of compensation paid by
way of settlement, or the approximate value of non-pecuniary relief such as a
declaration or injunction. This may provide context to discovery costs, as a
proportion of the value of the case.
• The number of discovered documents that are tendered in evidence, and the
number of documents relied upon at trial, as well as the judge’s impression of
the extent to which discovered documents were crucial in determining the
proceeding.
• Whether settlement was achieved after discovery, and the parties’—and their
lawyers’—impression of the extent to which discovered documents were crucial
in resolving the dispute.
• Whether certain issues in dispute were narrowed or agreed upon after discovery,
and the parties’—and their lawyers’—impression of the extent to which
discovered documents were crucial in clarifying or resolving those issues.
3.240 At this stage of the Inquiry, the ALRC considers that the Federal Court would be
best placed to collect such data. However, the participation of the parties, their lawyers
and others involved in the proceeding would be required to effectively gather this data.
The ALRC also acknowledges that the court may require additional funding to
establish and maintain data collection facilities to measure the proportionality of
discovery processes.
110 Discovery in Federal Courts

Proposal 3–7 The Australian Government should fund initiatives in the

Federal Court to establish and maintain data collection facilities, to record data
on the costs associated with discovery of documents, as well as information on
the proportionality of a discovery process—in terms of the costs of discovery
relative to the total litigation costs, the value of what is at stake for the parties in
the litigation, and the utility of discovered documents in the context of the
litigation.

Family Court of Australia

3.241 During initial consultations in this Inquiry, the ALRC heard that disclosure
procedures in the Family Court are generally working well. As mentioned in Chapter 2,
this may be in part due to the nature of family law proceedings, as the issues in family
law matters are relatively contained and largely well-known to the parties. The ALRC
has heard that pre-litigation requirements in family law proceedings also help to clarify
and refine the issues in dispute between the parties. Disclosure in proceedings before
the Family Court, therefore, may have a particularly narrow focus that is amenable to
an efficient disclosure process.
3.242 Based on initial consultations, the ALRC understands that parties are generally
compliant with disclosure obligations in Family Court proceedings. The ALRC is not
aware of any particular issues arising in the process of disclosure in proceedings before
the Family Court. However, the ALRC welcomes feedback from stakeholders on any
difficulties encountered in a disclosure process in Family Court proceedings.

Question 3–11 What issues, if any, arise in the procedures prescribed for
disclosure of documents in proceedings before the Family Court?

Federal Magistrates Court of Australia

3.243 As discussed in Chapter 2, the ALRC is aware of concerns relating to the
operation of s 45 of the Federal Magistrates Act 1999—which prohibits discovery
unless the court declares that it is appropriate in the interests of the administration of
justice. This issue is considered in detail in Chapter 2.
3.244 The ALRC is not aware of any other particular issues arising in the discovery
process in proceedings before the Federal Magistrates Court. The ALRC has heard that
in many cases before the Federal Magistrates Court, the parties will make appropriate,
informal arrangements for the disclosure of documents. This may be possible due in
part to the nature of the smaller, less complex matters which the court is intended to
handle in its jurisdiction.
3.245 In the Federal Magistrate Court’s family law jurisdiction, as in Family Court
proceedings discussed above, the issues in dispute may be sufficiently clear and
contained to facilitate a focussed and efficient disclosure process.
 3. Discovery Practice and Procedure in Federal Courts 111

3.246 Nevertheless, the ALRC welcomes feedback from stakeholders on any issues
arising in the process of disclosure in Federal Magistrate Court proceedings—in
addition to stakeholder views on s 45 issues discussed in Chapter 2.

Question 3–12 What issues, if any, arise in the procedures prescribed for
disclosure of documents in proceedings before the Federal Magistrates Court?