New Practice Direction SL1.2
On 1 September 2014, a new Pilot Scheme for Discovery and Provision of Electronically Stored Documents for Commercial List cases (Practice Direction SL1.2) came into effect. It will be reviewed on or before 1 September 2015.
The purpose of the Practice Direction is to provide a framework for reasonable, proportionate and economical discovery and supply of “Electronic Documents”, and encourage and assist parties to reach agreement in relation to the discovery of such documents in a proportionate and cost-effective manner.
Scope of Application
The Practice Direction applies (unless otherwise directed by the Court) to all actions commenced in, or transferred into, the Commercial List on or after 1 September 2014 where either:
- The claim or counterclaim exceeds HK$8m and there are at least 10,000 Documents to be searched for the purposes of discovery; or
- The parties agree to be governed by the Practice Direction; or
- The Court directs the parties to follow the Practice Direction.
The Practice Direction may also apply, on application of a party or when the Court directs that it should apply, to cases that are not in the Commercial List.
What are “Electronic Documents”?
“Document” is defined in the Practice Direction as anything upon which data, information or evidence is recorded in a manner intelligible to the senses or capable of being made intelligible by the use of equipment, and includes Electronic Documents.
“Electronic Document” is defined in the Practice Direction as:
“any data or information held in electronic form, including e-mails and other electronic communications such as text messages and voicemail, word-processed documents and files, images, sound recordings, videos, web-pages, and databases, that are stored on any device, including data or information stored on portable devices such as memory sticks and mobile phones. In addition to data or information readily accessible from computer systems and other electronic devices and media, it includes data or information stored on servers and back-up systems and data or information held in electronic form that has been deleted, but not yet overwritten. It also includes Metadata and other embedded data which is not typically visible on screen or a print out.”
It is important to understand that “Electronic Documents” include documents which have been deleted, but not yet overwritten.
Scope of discovery
The Practice Direction limits the scope of discovery of Electronic Documents to those directly relevant to an issue arising in the proceedings, i.e. those likely to be relied on by any party or which support or adversely affect any party’s case.
“Background” Electronic Documents or Electronic Documents which might lead to a “train of enquiry” with the potential result of directly or indirectly supporting one party’s case or undermining another party’s case do not need to be discovered. However, a party may make an application for specific discovery of “background” or “train of inquiry” Electronic Documents, but only after discovery, supply of electronic copies and service of factual and expert evidence has been completed, unless there are exceptional circumstances necessitating such discovery at an early stage of proceedings.
Further, a party requesting discovery of Metadata (i.e. data about data such as the date and time of creation or modification of a word-processing file, or the author, date and time of sending an email) or forensic image copies of disclosed Electronic Documents must demonstrate that the relevance and materiality of it justifies the cost and burden of producing it.
Preservation of Electronic Documents as soon as litigation is contemplated
An important aspect of the Practice Direction is the obligation placed on legal representatives to notify their clients, as soon as litigation is contemplated, of the need to preserve discoverable Electronic Documents which might otherwise be deleted in accordance with a document retention policy or in the ordinary course of business.
Native Electronic Documents (i.e. Electronic Documents stored in the original form in which they were created by a computer software program) must be preserved, even if the same Electronic Documents are disclosed in another format.
Reasonable search for Electronic Documents
Parties are required to conduct a reasonable search for Electronic Documents. The primary source of discovery will normally be reasonably accessible data. The extent of such reasonable search will depend on the case, bearing in mind:
- The number of Electronic Documents involved;
- The nature and complexity of the proceedings;
- The ease and expense of retrieving any particular Electronic Document;
- The availability of Electronic Documents or contents of the Electronic Documents from other sources; and
- The significance of any Electronic Document which is likely to be located during the search.
Depending on the circumstances, it may be reasonable to search all of the parties’ electronic storage systems, or only a part of them, e.g. only Electronic Documents that came into existence after a particular date, or those stored in a particular place or which fall into a particular category.
Keyword Searches and other automated searches
Where a full review of each and every Electronic Document would be unreasonable, the Practice Direction provides that it may be reasonable to search for Electronic Documents by means of “Keyword Searches” (i.e. software-aided searches for words across the text of an Electronic Document) or other automated methods of searching. The Practice Direction does however point out that parties should consider supplementing Keyword Searches and other automated searches with advanced techniques (e.g. Concept Searching and Data Sampling) and other advanced technologies (e.g. technology assisted reviews), as Keyword Searches alone may fail to find important Electronic Documents or may find excessive quantities of irrelevant Electronic Documents.
Early discussion between parties required
The Practice Direction requires and encourages close cooperation between the parties and their legal representatives, who are required to discuss the scope and extent of the discovery before the first Case Management Conference. In some cases (e.g. heavy and complex cases) it may be appropriate to begin discussions as soon as proceedings are commenced. The Practice Direction sets out the matters which should be included in the discussions, namely:
- The categories of Electronic Documents within the parties' control and computer systems, electronic devices and media on which they may be held, storage systems and document retention policies;
- The scope of the reasonable search for electronic documents;
- Any tools and techniques which should be considered to reduce the cost and burden of discovery;
- The preservation of Electronic Documents, with a view to preventing loss of the same before trial;
- Agreement on the exchange of data relating to Electronic Documents in an electronic format using agreed fields;
- The formats in which the Electronic Documents are to be provided and methods used;
- The basis for charging and sharing the cost of the provision of Electronic Documents; and
- Whether paper documents should be digitized for discovery.
The Practice Direction requires details of the matters agreed and not agreed as a result of these discussions to be included in an Information Sheet for the first Case Management Conference.
Failure to discuss might result in the Court directing the parties to carry out further searches for Electronic Documents or to repeat steps already carried out and such directions might be accompanied by wasted costs orders.
Electronic Documents Discovery Questionnaire
The Practice Direction introduces an Electronic Documents Discovery Questionnaire (EDDQ) in which parties are required to provide information to each other in relation to the scope, extent and formats for discovery. A draft EDDQ has to be served by the Plaintiff with their Statement of Claim and by the Defendant with their Defence. The finalised and signed EDDQ has to be served at least seven days before the first Case Management Conference and must include a Statement of Truth signed by a party, its employee or an electronic discovery specialist or technical specialist in Electronic Documents.
List of Electronic Documents and Production
Discovery is made by a List of Electronic Documents, which the parties can agree to be an electronic file . The Practice Direction sets out the way in which the documents should be listed and also specifies the format in which documents should be produced, namely soft copies are to be provided, although a party may request to inspect the original electronic document at a later stage. The Court will only accede to applications for hard copies of Electronic Documents if good reason is shown.
Effect of Practice Direction
The Practice Direction brings in significant changes for legal practitioners and their clients. It effectively brings the discovery process for Electronic Documents forward to a much earlier stage of proceedings because as soon as litigation is contemplated, parties have to start considering all matters referred to in the EDDQ, to be able to serve a draft of the EDDQ together with their pleadings. It will also call for far greater cooperation and discussion between the parties in relation to discovery, failing which there will be adverse cost consequences for the party failing to cooperate.
Although the Practice Direction is aimed primarily for cases in the Commercial List, it can also apply to non-Commercial List cases (as referred to above). Further, the recent case of Chinacast Education Corporation & Others v Chan Ngon & Others, suggests that the Courts will apply the general principles contained in the Practice Direction to most cases, i.e. whether or not the case is in the Commercial List and whether or not the parties have agreed that it should apply to their case. In that case, the Court applied the principles contained in the Practice Direction to an application for specific discovery of Electronic Documents, even though it had not yet come into effect.
The Practice Direction will probably result in the front loading of legal costs (i.e. more legal costs being incurred before and at an early stage of proceedings). However it should result in savings overall, if the parties cooperate, agree matters and limit the scope of discovery to only that which is necessary.
Even before any litigation is contemplated, it is prudent for businesses to put in place a document management system, including backup and data retention policies and policies for the preservation of Electronic Documents and their collection in the event of the business being involved in any legal proceedings.