In a recent decision of the English High Court of Justice Chancery Division1 , the Defendant was criticised for the approach and methodology it had adopted in carrying out its discovery exercise. The criticism meted out by the Court is a salutary reminder to those carrying out discovery exercises in large litigious disputes of the importance of properly planning the discovery at the outset. The case also reminds practitioners that it is vital to keep the Court apprised in relation to the status of the discovery exercise, particularly if difficulties are being encountered.
The case centres on claims made by shareholders or former shareholders of the Defendant that they were allegedly misled into signing up to a rights issue months before the Defendant Bank’s near collapse, allegations which the Defendant denies. The Claimants comprise of five separate groups and the litigation is complex.
The Defendant applied to adjourn the trial date as the disclosure exercise “vastly exceeded all expectations in terms of scale and amount of time and resource required” and this in turn delayed the preparation of the witness statements for the trial.
In considering the application to adjourn the trial date, it was noted by the Court that the Defendant bore the brunt of the difficult task of making full and frank disclosure, in circumstances where it briefing was an extremely large institution. It was also acknowledged by the Court that the disclosure process was enormous, comprising 25 million documents with 10 million documents being classed as “unique”.
Nevertheless, the Defendant was criticised for its response to the disclosure, which was described by the Court as “less than compelling”. The Court found that the Defendant had not sufficiently grasped what was involved at the outset and as a result, was not fully informed as to what was necessary for the orderly conduct of the disclosure process. While the Claimants were found to have contributed to the problems arising in the discovery by insisting on numerous and unwieldy discovery categories, the larger part of the blame was attributed to the Defendant.
The Court “with great reluctance” granted a three month adjournment as it identified that there was a sufficient risk of unfairness to the Defendant in not doing so. However, the Defendant’s approach to the discovery was criticised with the judge commenting that he felt “considerable disquiet” in relation to problems arising with the exercise.
- engaging “vast armies without any sufficient focus”;
- delay in the production of a satisfactory organogram showing responsibility for the document review;
- leaving the process of identifying documents to the solicitors and not providing sufficient assistance or information to them;
- not assessing how the process was working on an on going basis;
- failing to identify the key documents to put to witnesses at an early stage;
- failing to refer the difficulties to the Court earlier;
- providing insufficient detail as to what went wrong and why the task had become a “practical impossibility”.
While ultimately the adjournment application was granted on the basis that a more compressed timetable might lead to a longer or disorganised trial, the Court was left with a less than favourable impression of how the defence was preparing for trial.
Best Practice in Ireland
The importance of running a discovery exercise properly cannot be over emphasised, and the RBS Rights Issues Litigation gives some insight into the kind of problems that can be encountered in large scale discoveries if not properly planned. Discovery obligations are onerous. If a party fails to meet their discovery obligations penalties may include significant costs orders. Ultimately proceedings or a defence can be struck out for non compliance and so there are potentially serious implications arising if the exercise is sub standard.
The Commercial Litigation Association of Ireland’s Good Practice Discovery Guide2 provides good guidance to practitioners and emphasises the importance of the planning phase of a discovery. A sample discovery plan is set out in the guide, which lists eight discovery phases. It is recommended to maintain a detailed plan and record of the approach taken from the outset.
A well run discovery will include the eight phases set out in the guide, with a significant amount of time spent at the outset planning the discovery, which if done correctly, will prevent problems arising and ultimately save costs.
The planning phase of a discovery involves identifying all sources of potentially relevant documents and data, the preparation of a full list of custodian and non-custodian data sources, assessment of the volume of likely data and the consideration of the type of likely data. The document management system, location of where the data is stored and where and how it will be reviewed are important considerations to bear in mind. The task should be supervised by senior solicitors and personnel from the client organisation with the relevant knowledge.
As can be seen from the RBS Rights Issues Litigation, it is imperative in large scale discoveries to keep the Court updated as to the status of the discovery, particularly where the party making discovery encounters difficulties. Seeking direction from the Court at an early stage will often assist and will almost certainly minimise the risk of criticism, or worse, down the line.