The Hong Kong Judiciary’s pilot scheme for e-discovery in commercial cases comes into effect on 1 September 20141. It is already being referred to for practical guidance by the court. The recent case of Chinacast Education Corp v Chan Tze Ngon2 confirms as much; a decision of the Registrar of the High Court (the head of the High Court Registry). The case and the pilot scheme emphasise the need for parties to identify and preserve relevant electronic documents early on, engage as to the scope of e-discovery and abide by what is reasonable and proportionate in a case.
In brief, the plaintiffs are suing a number of former senior managers for alleged wrongful acts committed against the plaintiff group companies3. The amounts involved run into RMB100 millions and the documents (primarily emails) retrieved by the plaintiffs to date number over 100,000. The plaintiffs are seeking further discovery of some of the defendants’ personal email accounts (eg netvigator.com, gmail.com, hotmail.com etc).
In support of their application for discovery of the defendants’ personal email accounts the plaintiffs allege that the defendants conspired against them. However, importantly, the allegations of conspiracy had not been fully pleaded in the Statement of Claim.
Furthermore, the plaintiffs’ evidence in support of the application appears to have lacked some details as to the nature of the emails sought and within what timeframe.
Such information would have assisted the court in assessing the reasonableness and proportionality of the application. This is important because ultimately it is “necessity” that underpins the exercise of the court’s powers in this context.
Save for a limited amount of financial information (bank statements in one of the defendants’ possession), the application was dismissed with costs against the plaintiffs on the basis that it was largely a “fishing” exercise. In particular, the plaintiffs (according to the court) were not able to reference the relevance of the emails sought to issues raised in the Statement of Claim4.
Furthermore, the court regarded the need for engagement between the parties (for example, concerning the reasonableness of a search for electronic documents) as, in effect, a pre-condition before applying to the court for relief.
The court also noted that e-discovery should be limited to that which is necessary and duplication of electronic documents should be avoided. A party that failed to exercise common sense or who abused the e-discovery process could be sanctioned by the court; for example, adverse costs orders5.
The court directed that going forward if the parties sought further e-discovery they must follow the Practice Direction, even though the case was not formally in the “Commercial List”.
The court’s decision is ultimately an exercise of case management discretion and, therefore, very unlikely to be successfully appealed. Indeed, any further interlocutory skirmishes of this sort are unlikely to help advance the main proceedings which were commenced in 2012.
Although the relevant Practice Direction (providing for the e-discovery pilot scheme) comes into force on 1 September 2014, the court was content to refer to it for practical guidance6. The pilot scheme primarily applies to commercial cases involving amounts in excess of HK$8m and at least 10,000 documents to be searched for (or where the parties agree or the court directs that it should apply).
The decision in the Chinacast Education case is not establishing new principles as to e-discovery. Indeed, the decision applies established case law; its reference to the Practice Direction does no more than apply principles and practice familiar to many commercial litigators pursuant to agreed protocols between the parties (and principles and practice familiar to many litigators in jurisdictions such as Singapore, Australia and England & Wales).
At the outset of an engagement involving a potentially contentious matter, lawyers should work with their clients to find out who knows where and how electronic documents are stored and who can explain this (and the operation of a client’s document retention policy). Such explanations need to be in layman’s terms. Only then can an assessment of the volume and location of electronic documents be made and consideration given to whether a good IT/forensic service provider is needed to help manage and collate the documents.
The court’s warning about abuses of e-discovery (and the importance in pleading a party’s case) is a salutary reminder that discovery is not a “game”. However, get discovery preparations right early on and it can help seize the initiative.
Finally, the court’s reference to the plaintiffs conducting a “fishing” exercise (for emails) is not unlike some other cases that we see; nice looking on the face of it but once probed lacking some substance.