Discovery in civil proceedings in Hong Kong

Transcription

1 Discovery in civil proceedings in Hong Kong

2 Further information If you would like further information on any aspect of this note, please contact a person mentioned below or the person with whom you usually deal. Contact Allan Leung T allan.leung@lovells.com Mark Lin T mark.lin@lovells.com January 2007 Rebrand: June 2009 This note is written as a general guide only. It should not be relied upon as a substitute for specific legal advice.

3 Contents 1. INTRODUCTION 1 2. PURPOSE OF THIS NOTE 1 3. DISCOVERABLE DOCUMENTS 1 4. RELEVANCE 1 5. POSSESSION, CUSTODY OR POWER 2 6. PRESERVATION OF DOCUMENTS 2 7. DUTY TO SEARCH FOR DOCUMENTS 2 8. LIST OF DOCUMENTS 3 9. INSPECTION PRIVILEGE WITHOUT PREJUDICE DOCUMENTS CONTINUING OBLIGATION MISUSE OF DOCUMENTS SANCTIONS 6

4 Lovells Dispute Resolution 1 Discovery in civil proceedings in Hong Kong This note contains information on the obligations of parties to litigation in Hong Kong to preserve and disclose relevant documents during the course of the proceedings. It also advises on the limited extent to which documents obtained from others during the course of the proceedings can be used, and on the sanctions for misuse. This note deals with the obligations of discovery in general terms. Advice should always be taken on the application of the general principles to any given case. Please read this note carefully and ensure that it is retained. You will need to refer to it again as the proceedings progress. For your convenience, we have also prepared a separate summary of this note. INTRODUCTION 1. Discovery is the term given to the stage of the litigation procedure when each party is required to disclose to the other the existence of all documents relevant to the issues in the litigation, regardless of whether those documents support the case of the party disclosing them. In cases where large numbers of documents are involved, discovery is likely to be a lengthy exercise involving a significant amount of management time. The cost of that time will not normally be recoverable from the other party. It is nonetheless essential that it is carried out conscientiously since it can determine the success or failure of a party s case and the parties solicitors are under a duty to the court to ensure that it is done properly. 2. It is frequently only when discovery has taken place that lawyers are in a position to give firm advice on the likely result of the litigation. The prospect of discovery may compel a party to explore an early settlement before his opponent sees his documents. In many cases there is a settlement shortly after discovery has taken place. PURPOSE OF THIS NOTE 3. The purpose of this note is to explain in practical terms what discovery entails and the problems most often encountered. Guidance is also given on ensuring that, once litigation is envisaged, the number of discoverable documents then created is kept to a minimum and, so far as possible, steps are taken to ensure that documents are privileged and therefore need not be shown to the other party (see paras 24 to 34). 4. The rules of discovery in High Court proceedings are contained mainly in Order 24 of the Rules of the High Court. The rules of discovery in District Court proceedings are governed by Order 24 of the Rules of the District Court. This note summarises the points of main interest to clients. DISCOVERABLE DOCUMENTS 5. Each party is required to disclose the existence of those documents which are, or have been, in his possession, custody or power (see paras 10 and 11) and which relate to the matters in question in the action (see paras 7 to 9). It should be noted that there is a requirement to disclose the existence of all relevant documents. It matters not that a document is prejudicial to a party s case: it must still be disclosed if it is relevant. A party cannot choose which documents to disclose. 6. In the context of discovery, documents, in addition to writings on paper, include photographs, plans, drawings, video and sound recordings, micro-filmed records, computer tapes and print-outs. A computer s hard disk or database containing the information from which a print-out is taken is also a document as are s and voic recordings. The definition of documents also extends to cover documents stored on servers and back-up systems, electronic documents that have been deleted and metadata, for example, information stored and associated with electronic documents. RELEVANCE 7. A document is relevant if it relates to a matter in question in the action, that is an issue raised in the pleadings. Relevance is widely construed and documents that might not ordinarily be thought relevant often have to be disclosed. A document is relevant if it may assist one or other of the parties, however slightly, to advance his own case or damage his opponent s in relation to any issue, or if it may lead to a train of enquiry which may (indirectly) have that result. Note that such a result need not be inevitable: if disclosure of the document may have that result, disclosure must be made. 8. There are limits on which documents will be considered relevant. The matters in question in the action are those defined in the pleadings. So, a plaintiff cannot seek discovery from a defendant of documents relating to an allegation against the defendant that does not appear in the Statement of Claim or subsequent pleadings. That would

5 Lovells Dispute Resolution 2 be to fish for documents in the hope of finding sufficient grounds for mounting a claim he has not been prepared to put forward formally. Such fishing expeditions are not permitted. 9. Documents which shed light on the amount of damages claimed should also be disclosed. So, where in a claim for breach of contract, expenses have been incurred in consequence of the breach of contract, all documents evidencing those expenses (receipts, timesheets, etcetera) should be preserved and disclosed. POSSESSION, CUSTODY OR POWER 10. A party must disclose all documents that are or have been in his possession, custody or power in Hong Kong or anywhere else in the world. This means that documents must be disclosed if a party has physical possession of them (whether or not he has a right to possess them), or if he could obtain them by enforcing some right to possession. For documents to be in the power of a party, the party must have an immediate and enforceable right to them. Thus, the documents of a party s agent (such as an insurance broker) which the agent can be compelled to release must be disclosed. But documents of an associated company may not have to be disclosed and this should be checked with a lawyer before such documents are collected. 11. The discovery obligation extends to the disclosure of documents that used to be in a party s possession, custody or power. So, if documents have been lost or have been disposed of in the course of routine destruction of files prior to litigation, those documents must be described and an explanation given of the circumstances in which they were lost or disposed of. PRESERVATION OF DOCUMENTS 12. It is important to preserve intact all relevant documents from the time litigation is contemplated. If a party has a routine procedure for destruction of documents, such as the deletion of computer back-up files or s, this should be stopped until the documents have been examined by lawyers and confirmed to be non-discoverable. Documents of any possible relevance to a pending action (including manuscript notes) must not be destroyed. It is important to ensure that all persons within an organisation who have a responsibility for documents are aware of this. Deliberate destruction of relevant documents is likely to be a contempt of Court. DUTY TO SEARCH FOR DOCUMENTS 13. There is a positive duty to search for all relevant documents. Parties should remember that the search should encompass electronic data so that active data on computer hard drives, including databases and systems should also be searched. 14. Care should be taken to ensure that all documents of possible relevance to the proceedings are identified and located at the earliest opportunity. A party s credibility may be seriously weakened if it transpires that he has destroyed or failed to disclose a relevant document, whether or not his omission was deliberate. Papers damaging to a party s case should not be destroyed or withheld under any circumstances. 15. The following are pointers towards ensuring that all relevant documents are disclosed: if a company operates from more than one place, each location should be checked for documents if relevant files have been put into storage, these should be retrieved if in addition to, or instead of, a central filing system, staff or management keep files of their own, those people should be asked to make their files available where a document is recorded as having been distributed to a number of people within the organisation, all the copies should be located; manuscript notes on copies are frequently important where meetings have taken place, several people may have made their own notes of the meeting and these should be located diaries kept by staff or management should be located. 16. It is sometimes convenient for the lawyer who is to be responsible for a party s discovery to visit his client s offices as soon as litigation appears likely. This enables a full appraisal of the documents to take place. It also affords the lawyer an opportunity to discuss with the relevant personnel the client s filing system and document retention policy (if any). In this way, the risk of relevant documents emerging at some later stage is reduced. The

6 Lovells Dispute Resolution 3 lawyer can also advise whether any documents of an associated company must be disclosed. 17. It often assists in attributing undated or unsigned documents such as manuscript notes if it is known where in the file the document in question was located. So files should not be rearranged unless careful notes are kept to show which documents have been removed or placed elsewhere. LIST OF DOCUMENTS 18. A party s discoverable documents must be set out and identified in a List of Documents. The List is in a prescribed form. The List is usually exchanged for the other party s List after the pleadings have been completed. Only a short time is allowed by the rules for the exchange of Lists but usually that time can be extended by agreement between the parties or by the Court. 19. The List will give each document a reference number, will specify its date and will give a short description (for example, 14. Copy letter, Smith to Jones, ), distinguishing between originals and copies. One question which regularly arises is whether costs can be saved by not itemising individual documents in the List of Documents. Unfortunately, in the absence of agreement with the other side, the answer is generally no. However, where there are a great many similar documents (such as invoices), the rules permit such documents to be bundled and paginated without being individually described. 20. Another question frequently arising is whether costs can be saved by computerising discovery. In appropriate circumstances and in particular in larger litigation, computerisation, which can take many forms, can result in huge savings in time and therefore cost. At Lovells we have considerable experience in dealing with the databasing of large volumes of documentation for discovery purposes and this is something we would be happy to discuss with you further. INSPECTION 21. Documents whose existence are disclosed in Schedule 1 Part 1 of the List, that is those documents which a party now has in his possession, custody or power and which are not privileged (see paras 24 to 34) will normally be subject to inspection by the other side. In exceptional circumstances, where documents contain highly confidential material, such as technical secrets, inspection may be restricted to a party s legal advisers or an independent expert. It may be possible to agree with the other party or to obtain permission from the Court that working copies of a party s documents made for it or its witnesses or lawyers will not be subject to inspection. 22. Inspection normally takes place immediately following the exchange of Lists. Each party is entitled to inspect the originals and the copies of the other party s documents which have been disclosed in Schedule 1 Part 1 of the List and to ask for copies of them. For this reason, a party s lawyer should, when possible, hold the discoverable documents including original documents (where applicable). In cases where this is impractical, inspection can be arranged to take place where the documents are located. In practice, parties will often forgo inspection of the original documents and only request copies of the relevant documents. Where electronic copy documents are to be provided on inspection, the parties should co-operate at an early stage as to the format in which this should be done. 23. In the case of a large computer database, the Court will only permit access to it after agreement between the parties or receiving expert evidence as to what information is or could be made available and how far it is necessary for the database to be inspected or copied. The provision of print-outs or hard copies may be sufficient. PRIVILEGE 24. Certain documents, although relevant, may be kept from the other party on the ground of privilege. They will be referred to in Schedule 1 Part 2 of the List. Whether or not a document is privileged can be a matter of contention between the parties. It is often necessary for lawyers to give careful consideration to whether particular documents are privileged. For present purposes, it is sufficient to say that there are two broad categories of legal professional privilege: legal advice privilege and litigation privilege. Legal advice privilege 25. The main example of documents which are subject to legal advice privilege is correspondence and other written communications between a client and his lawyers, whether or not connected with the

7 Lovells Dispute Resolution 4 litigation, which are confidential and written for the dominant purpose of giving or receiving legal advice. This includes correspondence with in-house lawyers, unless it relates to administrative matters and not legal advice. 26. Documents which will usually be covered by legal advice privilege will include: presentational advice draft submissions and statements of case documents which reflect the use of legal skills in implementing legal advice as now broadly defined. 27. Communications which are subject to legal advice privilege are privileged whether or not litigation was contemplated or pending at the time they were generated. However, note that documents recording factual information, even if generated by a client for the purpose of seeking legal advice (even if sent to lawyers) when litigation is not contemplated will not be privileged. On the other hand, a party s lawyers file notes, drafts, instructions and briefs to counsel and counsel s opinions and notes will be privileged where they were generated for the dominant purpose of litigation or for giving legal advice. 28. As mentioned in paragraph 25, legal advice privilege only attaches to communications between a client and his lawyers. For these purposes, only those employees of an organisation expressly or impliedly tasked with obtaining or receiving legal advice can properly be classified as the client. In other words, it cannot be assumed that all the employees within a client organisation can themselves be classified as the client. Accordingly, communications between an organisation s lawyers and its non-client employees will not attract legal advice privilege. It is important that clients consider carefully with their lawyers which employees constitute the client at the outset of a matter and as the matter progresses and take care that privileged communications do not cease to be privileged as a result of copying them to others within the organisation who are not the client. Litigation privilege 29. Litigation privilege protects correspondence and other written communications between a party or his lawyers and a third party (including a non-client employee ) where the dominant purpose of the communication is made either for the purpose of obtaining or giving advice; or to aid in the conduct of the litigation. For these purposes, the litigation must have already commenced or there must be at least a real likelihood of litigation at the time the communication is made. 30. Documents which would be subject to litigation privilege include: notes of meetings or telephone conversations between the client or his lawyer and the client s employees for the purpose of gathering information in connection with the litigation experts reports and witness statements prepared in connection with the litigation (unless and until disclosed to the other side). Documents not covered by privilege 31. The following documents will not be privileged: notes regarding the litigation prepared by the party for internal purposes, unless for the purposes of seeking information requested by lawyers for the purposes of the litigation as referred to in paragraph 29 above board minutes recording discussion of the proceedings unless for the purposes described in paragraph 29 above notes to the published accounts concerning the litigation and any provision for the proceedings in the accounts (whether or not privilege ever existed, it will have been waived by inclusion in the published accounts) and related correspondence with accountants written communications between a party and outsiders (such as the police and other authorities and professional advisers other than the party s own lawyers), or written notes recording such communications, unless such documents came into existence for the purposes as referred to in paragraph 29 above. 32. Sometimes a party may claim privilege for part only of a document or only part of the document may be relevant. In such a case, the privileged or irrelevant part of the document may usually be blanked out on inspection.

8 Lovells Dispute Resolution Some general rules emerge from these examples: internal notes and memoranda are not privileged just because they are internal documents are not privileged just because they contain confidential information making documents as privileged or confidential may be a useful thing to do for other purposes (see below), but it does not determine whether in fact those documents are privileged it should not be assumed that, once legal proceedings are begun, all documents that then come into existence are privileged. Great restraint should be exercised in creating documents relating to the proceedings once the matter has become (or looks likely to become) litigious. Wherever possible, communications with outsiders should be made orally or through lawyers. Where such documents have to be created, they should be for the purpose of assisting the lawyers to conduct the litigation in the manner referred to in paragraph 29 above. It may then be helpful to mark such documents privileged so as to keep them distinct and thus reduce the risk of their being disclosed by accident great restraint should be exercised in obtaining documents or copies from third parties for use in the litigation. They may not be privileged. Collecting such documents should ordinarily be left to lawyers it is possible to waive privilege in a document unintentionally by disclosing it (or part of it) to third persons (which may include employees within the client organisation) care should be taken in communications with expert witnesses and should, where possible, be through lawyers. WITHOUT PREJUDICE DOCUMENTS 34. Documentation, particularly correspondence, which arises in connection with settlement negotiations, will normally be, and ought to be, marked without prejudice. This means that it cannot be produced to the Court by either side before judgment (unless the parties have agreed to production or settlement has been reached). The presence or absence of a without prejudice marking on a document does not determine its status: that depends on whether it is genuinely part of settlement negotiations. Ideally, a party should not enter into any such negotiations without first consulting his lawyers. CONTINUING OBLIGATION 35. The obligation to disclose relevant documents to the other party continues after the List is served until the proceedings are concluded. Sometimes, relevant documents do come into existence, or are found, after the List is served, such as those relating to the amount of damages claimed (for example, the final account in a building contract, where the claim is for the cost of remedial works). A party should notify the opposing party as soon as such documents come to his notice. Such documents are normally disclosed in a Supplemental List or in a letter to the opposing party s lawyers. MISUSE OF DOCUMENTS 36. Save in very exceptional circumstances, documents and information derived from documents obtained from an opponent on discovery are to be used only for the purpose of the proceedings. They must not be shown or given to persons unconnected with the proceedings or used to assist in developing a party s own business or for any other extraneous purpose. It is essential that this warning is brought to the attention of all members of staff who have any involvement with the proceedings or to whom documents obtained on discovery (or information derived from them) may be communicated. Misuse, even if unintentional, may amount to contempt of Court. This rule applies equally to documents and information obtained from an opponent or from a third party at any stage in the proceedings as a result of a court order requiring the production of documents. The rule ceases to apply once a document has been read or referred to in open court, unless the court orders otherwise.

9 Lovells Dispute Resolution 6 SANCTIONS 37. If a party is dissatisfied with the extent of his opponent s discovery, he can press him for further documents. If necessary, an appropriate order can be obtained from the Court requiring a party to give further discovery and/or verify the accuracy of his List on affidavit. Failure to comply with such an order can amount to contempt of court and may have serious consequences including dismissal of a party s claim or judgment in default being entered against him.

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