Increasingly, documents and correspondence are being created, stored and exchanged electronically. As a result, electronically stored information (ESI) forms a greater part of documentary discovery in civil proceedings, while traditional hard copy documents are becoming less prevalent. The recovery, review and provision of ESI raise issues not relevant to traditional discovery. The Hong Kong court has the power, particularly since Civil Justice Reform (CJR) came into effect on 2 April 2009, to force parties to address these issues at an early stage in the proceedings. However, lawyers in Hong Kong seem reticent to acknowledge the issues surrounding and advantages of electronic discovery.

At the same time, recent developments in other jurisdictions have demonstrated that the courts in those jurisdictions are well aware of the complexities and issues involved with e-discovery, and are willing to take a stance on the role of parties and the use of technology in the discovery of ESI. These developments highlight the need for Hong Kong to catch up and for the Hong Kong court to use the powers available to it to ensure the appropriate treatment of ESI.

Issues with ESI

The issue of the potential quantity of ESI was highlighted in a recent case in the New Zealand High Court. In Avowal Administrative Attorneys Ltd v Commr of Inland Revenue (HC, Auckland CIV 2006-404-7264, 22 December 2008, unreported), Venning J observed that the ESI removed by the Commissioner of Inland Revenue from the premises of one of eight parties to proceedings, ‘if printed, would create a tower 36 kilometres high’ which would take ‘some months, if not years’ to review. In addition to the sheer quantity of ESI that is now created and stored, problems associated with the collection of ESI include, among other things, the ability of businesses to apply search criteria across their own systems, the removal of data responsive to search terms but irrelevant to the case, the relevance of associated ‘metadata’ (data about the data, such as email recipients and document creation dates), and the most effective method of reviewing the ESI and capturing the product of that review.

The law in Hong Kong

Since the coming into force of CJR, the Rules of the High Court (RHC) have imposed on the Hong Kong court a duty, and not merely a power, to give effect to the underlying objectives (O 1A r 2(1)) and to manage cases actively (O 1A r 4(1)). The underlying objectives include to ‘increase the cost-effectiveness of any practice and procedure to be followed in relation to proceedings before the Court’, ‘ensure that a case is dealt with as expeditiously as is reasonably practicable’, and ‘promote a sense of reasonable proportion and procedural economy in the conduct of proceedings’: O 1A r 1(a)–(c). Actively managing cases includes ‘encouraging the parties to cooperate with each other’, ‘considering whether the likely benefits of taking a particular step justify the cost of taking it’, and ‘making use of technology’: O 1A r 4(2)(a), (h) and (k) respectively.

Under Order 24 rule 1, the default position is that a party must discover documents which are or have been in its possession, custody or power, and relate to matters in question in the action. The Court may limit the extent of such discovery on the application of any party: O 24 r 2(5). Under the new Order 24 rule 15A, the Court may also limit the scope of discovery, specify the manner in which discovery is to be given, or order inspection of discovered documents to take place in a specific manner, where such order is ‘for the purpose of managing the case’ and furthering any of the underlying objectives.

At present, in Hong Kong, there is no Practice Direction specifically relating to e-discovery. However, it is clear that the RHC give the Court a broad discretion as to how to approach discovery generally. In addition, the Court of Final Appeal confirmed in CSAV Group (Hong Kong) Ltd v Jamshed Safdar (2007) 10 HKCFAR 629 that the principles governing discovery set out in Order 24 apply equally to electronic documents as to hard copy documents.

Despite this, there have been few cases in Hong Kong that deal specifically with e-discovery and the issues arising from it. In Deacons v Kevin Richard Bowers [2008] HKCU 600, Au DJ held that a party in a District Court action should ‘take all reasonable steps and best endeavours to discover all relevant documents’, which might include retrieving automatically deleted emails where they could be reasonably retrieved by proper techniques employed by computer forensics technicians. This is unlikely to be proportionate in every case and it would be surprising if such a general rule is followed after the introduction of CJR. In Liquidators of Moulin Global Eyecare v Ernst & Young [2008] HKCU 981 Kwan J ordered that the defendant pay the wasted costs of the plaintiff, where the plaintiff had been prevented from getting full access to and properly managing documents disclosed to it, as a result of the defendant using incorrect extraction software. The defendant was also criticised for using inappropriate search terms that captured too many irrelevant documents and too few relevant ones. On 8 June 2010, Barma J handed down a judgment in Moulin Global Eyecare Holdings Ltd v KPMG [2010] HKCU 1251 which related to an application for further discovery of specific categories of documents, including ESI. Barma J applied general principles of discovery to both the hard copy documents and the ESI, and emphasised that the relevance of the documents in question is important in determining whether to order discovery of ESI, as it is for hard copy documents. Barma J refused to grant the application in relation to one category of documents, being a specific electronic folder maintained by the defendant, whereas to order otherwise would have been ‘tantamount to requiring the defendants to turn over the contents of their filing cabinets (in this context, electronic ones) for the plaintiffs to rummage through’. Despite these cases, there has been little guidance in Hong Kong on how best to approach e-discovery and minimise the costs associated with the discovery of ESI, whether by Practice Direction or through active case management.

Common law jurisdictions

In contrast to the Hong Kong position, several common law jurisdictions have recently made significant efforts to tackle the issues surrounding e-discovery.

England and Wales
In England and Wales, e-disclosure (as it is called there) is covered by the standard rules on disclosure contained in Part 31 of the Civil Procedure Rules (CPR). The CPR also specifically addresses e-disclosure in para 2A of the Practice Direction to Part 31. In particular, para 2A.2 provides that, prior to the first case management conference, the parties should discuss any issues that may arise regarding searches for and the preservation of electronic documents, including the categories of ESI, ‘the computer systems, electronic devices and media’ on which such ESI may be held and the storage systems and document retention policies of the parties. In addition, where inspection of discloseable documents will be given in electronic form, the parties are expected to cooperate ‘at any early stage’ in relation to the format in which such documents will be provided. Under these rules, the English courts have sanctioned parties that have failed to address e-disclosure in an appropriate manner: Digicel (St Lucia) Ltd v Cable & Wireless [2008] EWHC 2522 (Ch); [2008] All ER (D) 226 (Oct) and Earles v Barclays Bank PLC [2009] EWHC 2500; [2009] All ER (D) 179 (Oct).

These existing rules are currently under review. A working party on e-disclosure chaired by Senior Master Whitaker has produced a draft e-disclosure Practice Direction, including an ESI Questionnaire, which was submitted to the Civil Procedure Rule Committee for consideration in July 2009. Lord Justice Jackson has also dedicated a section of his 21 December 2009 Review of Civil Litigation Costs: Final Report to the issue of e-disclosure. The report recommends, among other things, the use of the draft Practice Direction and ESI Questionnaire and the giving of e-disclosure in native form. The report also recommends that e-disclosure training form a ‘substantial part’ of the continuing professional development for solicitors and barristers and of judges’ training.

The new Practice Direction and ESI Questionnaire are scheduled to become part of the CPR in October 2010. In the meantime, Senior Master Whitaker has handed down a judgment on 5 November 2009 attaching the draft ESI Questionnaire and putting it into the public domain, and suggesting that litigants use it to discuss meaningfully the scope of e-discovery. In the words of Senior Master Whitaker, Gavin Goodale v The Ministry of Justice [2009] EWHC B41 (QB) ‘concerns a serious practical problem for the case management of disclosure which is now occurring on a regular basis’, being ‘how the parties, and (if disputed) the court determines what the scope of [the] search for ESI should be, how it is going to be made proportionate and how it is going to be carried out correctly [the] first time, without the court having to order it to be done again’. Goodale contains an excellent review of the problems associated with e-discovery and suggestions for how to address such problems, including the use of prioritisation software and active case management.

Australia
In Australia, on 25 September 2009, Federal Court Practice Note CM6 Electronic Technology in Litigation replaced Practice Note No 17 The Use of Technology in the Management of Discovery and the Conduct of Litigation. CM6 sets out the procedural rules that apply to federal cases in which the Court has ordered that discovery be given of electronic documents, or a hearing be conducted in an electronic format. The key principle behind CM6 is ‘the just resolution of disputes as quickly, inexpensively and efficiently as possible’: CM6 s 3 (which is reminiscent of the Hong Kong underlying objectives). CM6 also requires the parties to use a Document Management Protocol where discoverable documents are expected to exceed 200. The Supreme Court of New South Wales also introduced a similar Practice Note (Practice Note No SC Gen 7) in July 2008.

On 10 May 2010, the Australian Attorney-General referred to the Australian Law Reform Commission (the ‘ALRC’) the issue of discovery, including limiting the overuse of discovery, reducing the expense of discovery and the impact of technology on the discovery of documents. The ALRC is instructed to have regard, among other things, to the role of the courts in managing discovery and the experiences of other jurisdictions. The ALRC is to report its findings no later than 31 March 2011 and its report should provide interesting reading.

Singapore
The Singapore courts have also demonstrated their willingness to tackle e-discovery issues. In addition to the standard discovery rules contained in Order 24 of the Singapore Rules of Court, a new Practice Direction 3 of 2009 on Discovery and Inspection of Electronically Stored Documents came into effect on 1 October 2009. PD 3/2009 contains detailed guidance on how parties should approach e-discovery, including a draft e-discovery protocol which may be adopted by the parties. In addition, on 26 April 2010, Senior Assistant Registrar Yeong Zee Kin handed down a judgment addressing the application of the draft protocol. Deutsche Bank AG v Chang Tse Wen [2010] SGHC 125 involved a failure by the parties to engage in any meaningful dialogue as to how to tackle discovery of ESI. Yeong SAR pointed out that Practice Directions and e-discovery protocols provide guidance to parties on how procedural rules will apply in certain situations but alter neither the substantive procedural rules with which the parties must comply nor the Court’s powers. The judgment involved a detailed consideration of e-discovery and a statement that ‘the premise that electronic discovery is only beneficial for cases where documents are voluminous needs to be re-examined’.

Canada
In January 2008, a working group of Canadian lawyers, judges and technologists published The Sedona Canada Principles: Addressing Electronic Discovery (the Principles). The Principles are designed to provide a set of ‘fundamental concepts’ for e-discovery based on proportionality that can be applied in any Canadian jurisdiction. The Principles have been approved by judges in Alberta and Ontario. On 1 January 2010, the Ontario Rules of Civil Procedure were updated to adopt certain of the Principles and to require (at r 29.1.03(4)) that in preparing a ‘discovery plan’ parties consult and have regard to the Principles. The Principles derive from The Sedona Principles e-discovery guidelines published by American law and policy think tank The Sedona Conference, which contributed to the 2006 amendments to the United States’ Federal Rules of Civil Procedure.

Sending a message
The approaches taken by other jurisdictions differ but each jurisdiction mentioned above has taken substantive steps to provide guidance to litigants on what is expected of them with respect to potentially discoverable ESI. In each case, the key message has been that the courts will require more cooperation between the parties through open and meaningful discussions on how best to approach e-discovery. It is the courts’ role to assist parties through active case management and to tackle any failure to comply with discovery obligations in respect of ESI.

Assistance from technology

As well as presenting challenges to litigants, the nature of ESI actually creates opportunities for more intelligent and efficient review strategies. Lawyers can use computers’ processing power to reduce data volumes, improve review speed and organisation, and to arrive more quickly at the key facts and issues in a case.

ESI recovered from litigants will generally include system files and multiple copies of duplicate documents. After processing, software can automatically remove these files to substantially reduce the total volume of data. Keyword filtering can further reduce total data volume by collating only those documents containing chosen search terms, although Senior Master Whitaker in Goodale acknowledged that using keywords is a ‘slightly now old-fashioned way of dealing with searching’.

Data prioritisation permits faster case assessment and more intelligent and efficient review workflows. With traditional review techniques, a review team might spend months of billable time reviewing emails, word processing files and PDFs. Using data prioritisation, one key reviewer might spend two or three days ‘teaching’ the software by making ‘yes’ and ‘no’ relevance calls on progressive batches of documents selected by the software for their likely responsiveness or otherwise. The software then ranks the entire data set by likely relevance. Lawyers can focus their initial review on the documents with the highest relevance score and assign those documents with lower relevance scores to more junior lawyers, paralegals or document review outsourcing companies (subject to client agreement).

Electronic review platforms, with ESI stored in a central database, allow reviewers to access documents remotely by removing the need for a physical data room. Review workflows can be customised according to each reviewer’s expertise. Foreign language documents 07 • 2010 17 can be identified automatically and assigned according to reviewer language skills, and documents across the whole data set can be assigned to specific reviewers by time period. Keeping all data in one location enables the entire data set to be searched and manipulated by keyword, date range, custodian and file type among other things. This in turn facilitates the subsequent assembly of witness proofing, counsel and court bundles.

Other powerful analytic techniques are possible when handling ESI. ‘Email threading’ uses text analysis to organise email conversations into sequential threads, allowing reviewers to avoid reading earlier emails repeatedly. ‘Near-duplicate identification’ groups all documents with similar content, permitting more efficient review and comparison of documents such as pro-forma corporate records and successive versions of contracts. ‘Categorisation’ allows a reviewer to locate documents similar to a specific example document and ‘concept clustering’ groups documents into semantic clusters, allowing reviewers to obtain an idea of the themes across the data range and the types of data with which they will be dealing.

Such technology is not only useful in cases with very large numbers of documents. In addition to Yeong SAR’s statement in Deutsche Bank AG v Chang Tse Wan, the New South Wales Supreme Court Practice Note SC7 Gen 7 imposes an expectation that parties will consider the use of technology to discover and inspect documents that are not ESI when the number of such documents exceeds only 500.

The techniques described above can also be applied very effectively in the context of regulatory reviews and other internal and external investigations, which require the analysis, review and production of documents at short notice.

Giving discovery

The courts in jurisdictions other than Hong Kong are tending towards requiring parties to produce ESI in its native format by the delivery of a single external hard drive, USB drive, or DVD, or through the use of a shared document management platform. Lawyers familiar with e-discovery may find this challenging while still striving to put their client’s case in the best possible light. For lawyers unfamiliar with e-discovery, this presents numerous pitfalls such as how to redact privileged and irrelevant information and metadata from native documents. The safer option of producing read-only electronic images of discoverable documents may no longer be acceptable to courts in other jurisdictions, except with the express agreement of both sides.

Conclusion

There is a trend in the courts of common law jurisdictions to guide parties in their discovery obligations for ESI, to sanction noncompliant parties and to require discovery to be given in electronic form. The recent change in mind set includes a recognition that almost all cases now include ESI and that the evidential value and status of ESI is equal to that of hard copy documents. It may no longer be feasible to expect parties to review physically every document, although, in cases involving an allegation of fraud, a more thorough review may be required.

Since the introduction of CJR, the Hong Kong court is under a duty to ensure that proceedings are conducted in the most costeffective, expeditious and proportionate manner possible, making use of technology, while ensuring the just resolution of disputes. At a conference on CJR in April 2010, members of the Hong Kong judiciary commented that they are willing to take action to implement CJR including in relation to discovery. Lawyers must assist the Court to further the underlying objectives by adopting techniques to arrive at the most important documents for the lowest cost, and by cooperating to remove the tactical element of the e-discovery process. To ensure that parties do not avoid their obligations, the Hong Kong court should actively manage cases and demonstrate that it is serious about reducing costs and increasing efficiency through the use of effective e-discovery techniques. To understand the consequences of the orders they give, judges should first obtain a thorough understanding of the issues relating to ESI and of the technology that can assist with those issues. It is time for Hong Kong to catch up.

Jonathan Crompton
Registered Foreign Lawyer (England & Wales)
Allen & Overy

Aaron Bleasdale
Director, E-Discovery Solutions
Epiq Systems
Hong Kong solicitor

Epiq Systems and Allen & Overy have been working with leading members of the judiciary to develop the field of e-discovery. Discussions have been planned for early July 2010 between members of the Hong Kong and overseas judiciary and parties involved in developing e-discovery in other jurisdictions, including Epiq Systems and Allen & Overy.