Disclosure in Guernsey litigation13 Mar 2013
In any litigation, documents are likely to feature as evidence. Those documents may be significant in their own right or may be crucial in refreshing the memories of witnesses. Disclosure is the legal process pursuant to which the parties to litigation reveal their documentary evidence to each other. This briefing considers in general terms what falls within the definition of "documents"; what documents need to be disclosed; what documents can legitimately be withheld from disclosure; and how to approach the task.
The term "documents" is not restricted to paper material. For the purposes of the disclosure provisions of the Royal Court Civil Rules, 2007 (the "Civil Rules"), it means anything in which information of any description is recorded. In real terms, this would include tape recordings, microfilm, microfiche, computer records, computer files (including voicemails, scanned images and facsimiles), texts and images.
In the case of electronic documents (such as e-mails, word processed documents, voicemails, scanned images, facsimiles, texts and images), it should not be assumed that production of a hard copy represents production of a document itself. Quite often, computer created documents contain "metadata" which can provide far more information than the hard copy. The electronic data itself may be relevant. Whilst considering the extent and parameters of a disclosure exercise, particularly in the context of electronic data, parties must be aware of and consider the extent of the "document universe" (i.e. the servers and locations where relevant data and documents could be stored, including backup tapes and disaster recovery sites).
In Guernsey litigation, the Civil Rules specify the types of document a party must disclose to the other parties. In the case of standard disclosure, the Civil Rules require each party to provide the other parties with a list of documents upon which that party relies; the documents which adversely affect that party's case or another party's case; the documents that support another party's case; and any documents which are required to be disclosed by any relevant practice direction (no such practice directions have been issued to date). The duty to disclose documents extends to all documents which are or have been within a party's control, which means all documents which are or have been in that party's physical possession (in paper or electronic format); all documents which that party has or has had a right to obtain from someone else; and all documents which that party has or has had a right to inspect or take copies of.
The list of documents referred to above must contain a disclosure statement. A disclosure statement sets out the extent of the search that has been made for documents, certifies that the maker understands the duty to disclose documents, and certifies that, to the best of their knowledge, the maker has carried out that duty.
Thereafter, a party will have to permit inspection of the documents disclosed, unless there is a valid claim to privilege. This is usually achieved by providing copies of all the documents to the other parties to the litigation. In the event that documents have been or may have been omitted, applications can be made for specific discovery of specified documents or classes of documents, or for a wider search to be carried out.
The obligation to give discovery is a continuing obligation. If relevant documents come to light in the course of proceedings or after a list of documents has been produced, those documents must be disclosed by way of a supplemental list, verified by a fresh disclosure statement. Similarly, if relevant documents have been lost or destroyed, this fact has to be stated in the disclosure list, together with an explanation of what has happened to the documents and when.
The disclosure obligation is very wide, but is not unlimited in scope. Under standard disclosure, the extent of the search which a party must carry out must be "reasonable". Factors which are relevant in deciding the reasonableness of a search include the number of documents involved; the nature and complexity of the proceedings; the ease and expense of retrieval of any particular document; and the significance of any document which is likely to be located during the search. Where a party does not search for a category of document, on the grounds that to do so would be unreasonable, they must state this in their disclosure statement and identify the category of document.
Moreover, the parties to litigation are under an obligation to preserve all relevant documents. It is not legitimate, once litigation is either instituted or contemplated, for a party or potential party to destroy documents, either deliberately or inadvertently. Accordingly, once litigation is contemplated, any routine document destruction policy should be held in abeyance until specific advice on this issue has been obtained.
In the event that any litigation is instituted or contemplated, it may be appropriate to consider circulating an internal memorandum to all relevant staff in similar terms to the following:
"Litigation has been instituted in relation to [matter x]. As litigation is a possibility, we are obliged to preserve all documents relevant to any issue in that litigation. The duty applies not only to paper documents but also to computer databases, electronic mail, tape recordings and electronic documents, etc. Relevant documents held by directors, employees, subsidiary companies and agents must also be preserved.
It is important that steps are taken to preserve the relevant documentation and ensure that any routine destruction of documents and deletion of tapes and computer records, including electronic mail (whether administered centrally or locally, including system back-ups), is stopped.
It is also important that the creation of new documents relating to the litigation is restricted, in case it may prejudice our position. We must disclose all documents relevant to the matters in dispute to the other side, even if they are harmful to our position. Examples of documents that can cause problems include internal memoranda, e-mails, board minutes, management reports and correspondence with auditors or insurers.
Documents will not, however, have to be disclosed if they are "privileged". The types of documents that are likely to be privileged at this stage are:
- Confidential communications between us and our legal advisers for the purpose of giving or receiving legal advice on what should prudently and sensibly be done in the relevant legal context; and
- Confidential documents produced for contemplated or pending legal proceedings provided that the sole or dominant purpose of such documents is to conduct the litigation.
We need to implement controls on the creation of new documents relevant to this litigation and take steps to ensure that documents are not circulated or copied unnecessarily such that they cease to be privileged or are susceptible to being disclosed inadvertently.
As an initial step, should you see or receive any documents headed "Privileged: Prepared for the Purposes of Legal Advice" in relation to this matter, please do not copy them or circulate them unless you are certain that this action is appropriate. In case of doubt, please speak to [insert appropriate person]."
Although the obligation to give disclosure is far-reaching, there are exceptions to it. Broadly, there are two categories of documents which are protected by privilege and therefore are not required to be produced to any of the other parties to the litigation, although they still need to be identified in general terms in the disclosure list.
The first category concerns those documents subject to "litigation privilege". This protects documentary communications between a client and its lawyer, and between one of them and a third party (for example, a potential witness or expert) provided that the document was created or brought into existence for the dominant purpose of obtaining or giving legal advice in relation to pending or contemplated litigation or collecting evidence to be deployed in such litigation. "Litigation" means adversarial proceedings, usually before a court or in an arbitration, and there must be an actual or contemplated case upon which advice is being sought or given.
The second category concerns those documents which are subject to "legal advice privilege". This is potentially broader in scope, as it does not depend on there being litigation pending or in contemplation. Any documentary communication between a client and a lawyer made for the purpose of obtaining or giving legal advice will be privileged and thus may be protected from disclosure in future litigation which is not at that time pending or contemplated. This type of privilege remains after the occasion for it has passed, unless it is waived (in other words: once privileged, always privileged).
Although these principles may be stated simply, their application can be far from straightforward. For example, in the Three Rivers District Council v Governor and Company of the Bank of England ("Three Rivers") litigation, the English Court of Appeal and the House of Lords had to consider the extent of legal advice privilege on a number of occasions. One of the key issues in upholding a claim for privilege concerns the identity of the "client" in relation to whom legal advice is being sought and whether this encompasses the whole organisation (such as a trust company) or merely specific parts of it (such as a compliance department). In the Three Rivers litigation, the English Court of Appeal decided that, in the case of a large organisation, the client was not the organisation as a whole but, rather, the specific unit or department within that organisation actually instructing the lawyers. Memoranda, communications or documents prepared outside that specific department were not covered by privilege and, therefore, would have to be disclosed.
More recently, in R (on the application of Prudential plc) v Special Commissioner of Income Tax, the UK Supreme Court has had to consider the bounds of legal professional privilege, and in particular whether it should be extended so as to protect tax advice given by accountants. The court held that legal advice privilege should not be extended to communications in connection with advice given by professional people other than lawyers, even where that advice is legal advice which that professional person is qualified to give.
The above decisions are likely to be highly persuasive in Guernsey and, accordingly, consideration needs to be given at a very early stage as to how potentially litigious matters will be dealt with, who is going to be asked to give what advice and for what purpose, and who exactly will comprise the "client" in the event that instructions are required to go to the lawyers.