A recent Commercial Court decision reiterates the importance of giving early and careful consideration to discovery obligations as objections later on may well be too late.

A number of recent court decisions have emphasised the need for parties to litigation to properly prepare for the rigours of discovery. This applies in the context of both seeking and making discovery. See our briefings here and here. This issue came up again in the recent case of Meridian Global VAT Services Ltd v Lindelauf Consultancy BV.1

In that case, the Commercial Court made an order for discovery against the defendants in respect of a category of documents that the defendants had resisted on grounds that it was disproportionate. Those defendants then applied to revisit the terms of that order pursuant to Order 31 rule 12 (11) RSC, which permits a person to apply to vary the terms of a discovery agreement or order. The court may do so where it is satisfied, amongst other things, that the discovery originally ordered or agreed is unreasonable having regard to the cost or other burden of providing discovery.

In bringing the application, the defendants argued that compliance with the disputed category of discovery ordered had proved to be significantly more burdensome than was appreciated at the time the discovery order was made. In addition, certain technical limitations had arisen that had not been foreseen earlier on. The defendants now estimated that it would cost them approximately €710,000 to review documents in order to comply with the order and that this was disproportionate. They said that this was a “good reason” for the court to revisit the order and grant their application. They also made proposals offering more targeted discovery and inspection to address the information deficit created by their failure to comply with the original discovery order.

Decision of the court

McDonald J refused the application. Citing Hireservices Ltd v An Post,2 he said that although the court always had jurisdiction to revisit an interlocutory order, this would only arise on an exceptional basis and could not be regarded as something which parties could pursue as a matter of course. A party should have a “good reason” to seek to re-open an interlocutory matter such as discovery. He said that a party generally had one chance to seek discovery. Equally, it followed that a party generally had one chance to resist an order for discovery and was expected to make its case for resisting such an order in full at that time. There was a public interest in the efficient disposal of litigation.

McDonald J went on to say that this applied especially in commercial proceedings. It also applied especially in the context of discovery hearings where very considerable guidance was available to the parties for some time now from the case law as to the issues relevant to the ambit of discovery to be made. This included the issue of proportionality and also the obligations of the parties in commercial cases where the extent of the discovery sought was likely to be substantial.

In this regard, he said that in Thema v HSBC,3 the court had identified the four stages of discovery, namely (a) retrieval, (b) uploading and deduplication, (c) search and (d) review. The court had also taken the view that a party had an obligation to use its best endeavours to progress stages (a) and (b) before the terms of discovery were finally determined.

The defendants had not fully undertaken these preliminary steps before the discovery application was heard. Had they done so, they would have been able to address the issues now raised. No “good reason” was provided as to why this had not occurred and there was no “good reason” for raising the matter now. A failure to take a step which the defendants were obliged to take could not plausibly amount to good reason within the meaning of the Hireservices test. Oversight was also insufficient here.

Finally, in case he was wrong on this point, McDonald J went on to consider whether the alternatives to the ordered discovery proffered by the defendants were a sufficient substitute in the circumstances. He concluded that they were not and that the original order was not disproportionate.

Commenting on the cost of the discovery, he said that if the defendants successfully defended their claim, they could seek their costs against the plaintiff. There was no suggestion that the plaintiff was not a mark for these costs.

Comment

This case emphasises the need to act early when preparing to meet discovery. Leaving over preparatory steps in commercial litigation may result in additional costs down the road. It also illustrates the importance of familiarity with and adherence to the principles laid down in the case law, particularly in commercial matters.

In particular, the case emphasises the courts’ expectation that parties will conduct retrieval, uploading and deduplication prior to the finalisation of the terms on which discovery is to be made. This may be unattractive to a party that is resisting discovery of a category or categories, but it is clear that the scope to revisit any order made will be severely limited if those steps have not been taken as a preparatory measure.