Key Points:

A clear objective is to radically reduce the need for the court to make discovery orders and end parties' expectations that a routine order for discovery will be made before evidence is served, or at all.

Discovery will be much harder to get in NSW's Equity Division and parties will have to serve their evidence before any order for discovery, since the Practice Note, Disclosure in the Equity Division SC Eq 13, commenced on 26 March 2012.

This follows a recent trial in the Supreme Court in which the Commercial List judges directed parties to litigation to serve evidence before seeking a discovery order.

The new Practice Note has formalised this, reversing the normal timeline of litigation in which parties usually serve their evidence after the discovery process. A clear objective is to radically reduce the need for the court to make discovery orders and, moreover, end parties' expectations that a routine order for discovery will be made before evidence is served, or at all.

What will be the effect on litigation in New South Wales?

Changes to discovery and exchange of evidence orders

Parties who run their proceedings in the Equity Division – that includes the Commercial List, the Technology and Construction List, the Corporations List and Revenue List (amongst others) – will have to prepare and exchange their evidence early.

If parties consider that they will need an order for "disclosure" they must apply to the court and provide evidence of "exceptional circumstances necessitating disclosure". There will need to be compelling reasons why classes of documents need to be disclosed in order to resolve the "real issues in dispute in the proceedings", along with evidence of the likely cost of the "disclosure" sought.

We understand that disclosure will only be ordered if the parties are able to satisfy the threshold test justifying its need, and not as a matter of course. The Practice Note concept of disclosure is sufficiently broad to include both the discovery process and the subpoena for production of documents process. Parties will need to seek leave of the court to issue a subpoena before evidence is served.

Even if disclosure is ultimately ordered, it will only happen after the parties have put on their evidence, which will likely (if attended to properly) have the effect of narrowing the issues in dispute and thereby reducing the scope for disclosure.

The Practice Note does not distinguish between lay and expert evidence; we now understand that the intention is that both lay and expert evidence is to be served.

What will this mean for existing cases?

The new Practice Note applies to all new matters listed as and from 26 March as well as to those matters already on foot. That implies that where existing cases are already subject to case management orders, for example, under the Commercial List case management provisions, parties should expect some re-consideration of those orders in line with the new provisions for disclosure under SC Eq 11.

In our view, where a matter is well-advanced and discovery orders already provided for, it is extremely unlikely that those orders will be reviewed. In matters where discovery has not yet been embarked upon, parties should expect to have to address the need for a disclosure order and be prepared to serve their evidence earlier as will be directed by the relevant List judge and with reference to SC Eq 11.

What will this mean for litigation in NSW?

There will be several practical results of these changes.

First, parties will have to attend to the preparation of their lay and expert evidence much earlier, and without having reviewed and considered the opposition's and third parties' documents. The alternative is to apply for discovery of specific documents rather than categories of documents, as the court will not wish to neuter the new Practice Note. The same applies to applications for leave to issue subpoenas, which leads to the second result.

Under Part 33 of UCPR, subpoenas do not always require the leave of the court, and there is often a forensic advantage to issuing a subpoena before discovery to get relevant third parties' documents which can assist in driving what categories of documents are sought by way of discovery. This forensic advantage will be lost, as it seems clear that parties will now need to seek leave of the court before issuing a subpoena if they wish to do so before having served their evidence in the Equity Division.

Thirdly, an earlier exchange of evidence will lead to the Court considering the parties' evidence well ahead of trial as it seeks to determine the relevance of discovery parameters by reference to the real issues as exposed by the evidence. Parties will need to ensure their evidence is admissible, given that early Court consideration of the evidence and contests on relevance are inevitable. Court contests on what categories of documents must be disclosed are inevitable and affidavits deposing to the need for such documents may well be required if the need is not self-apparent.

Fourthly, early exposure of the competing cases in evidence is in turn, likely to lead to earlier settlement attempts through negotiation or referral to mediation which will lead to the costs savings sought by the Chief Justice.

Finally, cases should be prepared faster and trial dates should come earlier if the changes are properly embraced by the profession, leading to lower legal costs.

Want to hear more?

The Chief Justice is planning on hosting a forum on 30 April at the Supreme Court, and we understand the Chief Judge in Equity is planning on speaking to a number of professional bodies in relation to these developments over the course of the next few weeks. We hope to follow up this article with a more in-depth analysis of the impact of the changes shortly thereafter.