In a victory which extends to parties involved in complex, document intensive litigation, the Supreme Court of Victoria on Friday, 2 December 2016, endorsed the use of predictive coding in discovery. This marks the first time the technology has ever been approved in Australia in a Court process, and will potentially lead to big changes in the way parties conduct discovery in major matters in the future.

Predictive coding is software that is able to determine the relevance of a document by using the attributes of documents that have previously been coded as relevant by a lawyer. In a sense the lawyer will 'train' the software by marking documents as relevant and irrelevant in a sample provided to them until the software is able to establish relevance on its own.

The case in question is McConnell Dowell Constructors v Santam Ltd & Ors1, an insurance coverage dispute in connection with a large claim that arose from the design and construction of a natural gas pipeline in Queensland.2 In an underlying arbitration concerning a dispute about the construction contract, approximately 4 million documents were discovered. The judgment of his Honour Justice Vickery concentrated on how discovery should be managed in document-heavy circumstances such as these (with large construction projects ordinarily being accompanied by masses of documentation) so as to comply with the principles of proportionality, and the overarching purpose of a 'just, efficient, timely and cost effective resolution of disputes', that are contained in the Civil Procedure Act 2010 (VIC) (CPA).

Whilst the Plaintiff was able to reduce the number of documents down to 1.4 million in the insurance case following a process of de-duplication, the Court estimated it would take a junior solicitor approximately 583 working weeks to review the remaining documents. This estimate did not include the time that it would take for a senior solicitor to conduct a review of the junior solicitor's work, and for the other parties in the matter to then inspect and review the same documents. Vickery J found that this process would neither be proportionate or cost effective, as required by the CPA.

After a special referee was appointed to facilitate discovery, the use of predictive coding technology (also known as Technology Assisted Review or TAR) was recommended to the parties.

In affirming the use of predictive coding for this case, Vickery J cited both international case law and Australian Court practice notes that support the technology. In the Australian context, Vickery J noted a Practice Note set to be published in 2017 for general use in the Supreme Court of Victoria:

In larger cases, ordinarily technology assisted review will ordinarily be an accepted method of conducting a reasonable search in accordance with the Rules of Court. It will often be an effective method of conducting discovery where there are a large number of electronic documents to be searched and the costs of manually searching the documents may not be reasonable and proportionate. In such cases, the Court may order discovery by technology assisted review, whether or not it is consented to by the parties.

Vickery J indicated that the technology could have a potentially wide application, and should not be confined to use in engineering and construction cases, or even those cases in which all the parties have agreed to participate in the process. In cases where the parties cannot agree, Vickery J stated that a single party could employ the software to conduct a review of its own documents.

This decision recognises that deploying manual discovery techniques in cases where technology has already facilitated the creation of millions of documents is illogical, and demonstrates that Australian Courts are embracing legal technology that makes discovery in big litigation a more efficient and less expensive process for everyone involved.