Managing eDiscovery in New Zealand

Update 25 Feb 2013: All speaker slides are now available at this link.

Last week I presented at the Ernst & Young / E-Discovery Consulting “Managing eDiscovery in New Zealand” conference in Auckland.

The slides for my presentation, “Document Review: Getting, preparing & reviewing data under the new High Court Discovery Rules” are here:

Judge David Harvey gave the keynote presentation, and has also put up his slides:

Handling confidential documents in discovery

By its nature, discovery often involves disclosing confidential documents, or documents containing confidential information.

Confidentiality is usually not grounds for withholding (i.e. not disclosing) a discoverable document. Documents can be withheld on the grounds of privilege (either as codified in the Evidence Act 2006, or the residual common law privileges) or irrelevance, but there is no privilege for “commercial sensitivity” or other such aspects of confidentiality (see ss 68-70 of the Evidence Act for other grounds).

But this does not mean that confidential documents need to be handed over without restriction.

The starting point is relevance, under the “adverse documents” test. If a document is not required to be discovered, then issues of handling confidential information in that document should not arise.

If a document is discoverable, then High Court Rule 8.15(2)(f) permits the producing party to propose “restrictions … to protect the claimed confidentiality of any document”. Rule 8.28(3) then permits the producing party to produce those documents subject to the proposed restrictions. If the receiving parties wish to challenge the proposed restrictions, they may do so pursuant to Rule 8.25.

There are several important points to note:

  1. The confidential documents must be listed as confidential documents in the affidavit of documents (usually ‘part 3’).
  2. The proposed restrictions on the confidential documents must be stated in the affidavit of documents itself.
  3. The producing party is free, within reason, to propose whatever restrictions they consider appropriate, though this should be read subject to the duty to co-operate.
  4. It is up to the receiving party to challenge the restrictions, if they wish. This will usually require an interlocutory application or a memorandum seeking directions (a party that inappropriately claimed confidentiality, or proposed inappropriate conditions, would likely have to pay costs).

What restrictions can be applied?

While rule 8.30(4) limits the use of discovered documents to the purposes of the proceeding only, and prevents extra-judicial disclosure, the producing party still may wish protect the confidentiality of certain information.

The producing party is at liberty to propose appropriate restrictions. Common restrictions include:

  • Redacting documents. While relevant information cannot be withheld on the grounds of confidentiality, non-relevant confidential information could be redacted, making the resulting document discoverable with redactions (“DWR”; the same can apply to privileged documents). For example, a document may be commercially sensitive because it contains sales figures or name of other customers. If sales figures or customer names are not relevant to the dispute, a redacted version of the document omitting that information could be provided (as a Part 1 document).
  • Limiting inspection. Confidential documents are sometimes provided on an “attorney’s eyes only” basis that limits inspection to the receiving party’s lawyers and experts only. This is usually supported by an undertaking from the receiving party’s solicitor.
  • A combination of the above, where redacted versions are made available to the receiving party themselves (without restrictions), and the full versions are available for the receiving party’s lawyers (with undertakings) to inspect in order to confirm the legitimacy of the redactions.

Common sense should prevail

Care should be taken not to claim confidentiality over-zealously. Rule 8.30(4) provides a reasonably robust level of protection to all discovery documents, and it is not necessary (nor appropriate) to claim confidentiality across tracts of documents without an “elevated” need to do so. A robust case should be made.

In practice, most discovery issues of this nature can and should be resolved between the parties on a common sense basis – which is supported to some extent by the duty to co-operate that the new rules impose.

When will New Zealand get e-filing?

Non-lawyers may be surprised, even shocked, to know that New Zealand courts still require manual, paper-based filing of court documents (I am happily unfamiliar with criminal proceedings, so I limit my comments to civil proceedings).

With only limited exceptions, documents must be printed and then physically delivered by post, courier or hand, to the relevant court. Even the form of paper is specified in detail: “medium weight and good quality … of international size A4 … clearly typewritten, printed, or produced in permanent form by photocopying … a margin of at least one-quarter of the width of the paper must be left on the left-hand side of each pageall sheets of a document must be securely fastened together“.

(Limited exceptions include certain types of memoranda that can be filed by email, and a friendly case officer will also occasionally make exceptions. Likewise with fax.)

So if you want to file a two page application in the High Court, you must print it out and deliver it to the High Court building. If you need to urgently file documents in a court in another town or city, a “claytons e-filing” is sometimes performed, where you email the document to another lawyer in the relevant city or town and ask them to print it out and run it along to the court for you (yes, seriously).

And I’m not just talking about small documents. If, for example, you have a case in the Court of Appeal, you are required to physically deliver 4 printed multi-volume sets of evidence and pleadings (often thousands of pages) to Wellington. This can involve freighting large archive boxes full of paper to Wellington. And of course, having thousands of pages of text in printed form is very user-unfriendly (not to mention carbon-footprint unfriendly), when almost any other business or organisation would request it electronically so it can be searched, stored efficiently, etc, although that is a separate topic in itself.

The benefits of e-filing are apparent. Minister for Courts, Chester Borrows, recently commented:

The ability to lay charges in a court without typing out paperwork, driving to a courthouse, signing, swearing and filing the paperwork every time a person is arrested will save police and court staff huge amounts of time. It is estimated that an electronic operating model implemented in this country will save 93,000 man hours per year for police officers’ and courts’ staff time.

But for now, e-filing is not yet a reality in New Zealand. There have actually been basic provisions for e-filing in the High Court Rules for some years, however these have not been activated as they are dependent on the necessary IT infrastructure being implemented.

The good news is that progress is underway. Various announcements of initiatives have been made in recent years, and some progress is apparently happening. The Rules Committee of the High Court reported last year that steps were being taken:

… which would significantly move forward the timeline for when e-filing could be realistically implemented. At this stage, phase two is expected to be deployed 2014/15.

In the meantime New Zealand’s court system, remains heavily paper-based. I would wager that the court system is, at present, the most technologically backward area of Government in this regard. I hasten to add that none of this is a criticism of court personnel, who generally do a fantastic job with the rules they have been given and will always be essential to the smooth running of the courts.

We are not alone. A Canadian judge, after experiencing problems with his court system’s paper-based document management system, engaged in some wistful thinking in a judgment delivered earlier this year:

[13] The real solution? Consign our paper-based document management system to the scrap heap of history and equip this Court with a modern, electronic document system.

[14] A warm, sunny day like today perhaps allows one to dream a bit. What if our Court had an electronic case management system which recorded, as a matter of course and without the need for extraordinary judicial direction, that certain documents had been filed and sealed in a proceeding, so that when the matter returned for further hearing an electronic flag would pop up alerting court staff that sealed documents might be required for a hearing?

[15] And what if our Court had a system under which documents were filed electronically and accessible to judges and others through a web-based system, with sealed documents specially encrypted to limit access to judges only?

[16] Yes, Virginia, somewhere, someone must have created such a system, and perhaps sometime, in an another decade or so, rumours of such a possibility may waft into the paper-strewn corridors of the Court Services Division of the Ministry of the Attorney General and a slow awakening may occur.

Wouldn’t it be nice if a local judge expressed similar views?

But, like any transition, moving to e-filing isn’t guaranteed to go smoothly. The UK has just ditched its latest attempt at an e-filing system:

The Electronic Working System, designed to speed up cases in the Royal Courts of Justice, was ditched in March after what HM Courts & Tribunals Service called ‘serious issues with the quality of the core system’ …

The eWorking system was implemented in 2009 to improve the flow of information from court users across the Royal Courts of Justice by allowing them to submit files electronically. HMCTS said the system was designed in-house with the help of a ­number of specialist freelance contractors. Initial good progress was made, but over the final 18 months of the project take-up fell dramatically, with less than 1% of cases filed electronically in the first half of 2011.

Here’s hoping we learn from such mistakes, and get a good e-filing system sooner rather than later.

Accreditation risk

A recent case involved a software firm suing the Government for setting accreditation criteria that allegedly put it out of business.

In Integrated Education Software Limited v Attorney General [2012] NZHC 837. The plaintiff company, IES, had provided school management software since the 1980s. By the 2000s, it was one of a number of software providers to New Zealand schools.

Around this time, the Ministry of Education decided to implement interoperability standards for school management software. As the judgment notes:

The overall market was … very fragmented. There were 37 software vendors providing software to the compulsory education market. Most were small. Some were one-man back shed operations. The school software market had grown organically over the decade since 1989 and, although it was almost entirely state-funded, there were no uniform standards or other controls in place to ensure product quality.

… there was also concern within MoE about the variable quality of software packages and after-purchase support. Lack of technical expertise at school management level meant school leaders were often unable to make good choices. Ultimately it was felt that this represented a risk to government in terms of wasted expenditure where software was not up to spec or the vendor company failed.

So the MoE decided to set an accreditation model whereby software packages that met certain requirements would be accredited. A financial incentive would be put in place for schools that used an accredited package.

After some refinement and teething problems with the accreditation criteria, testing was carried in 2005. Seven vendors received accreditation, but IES did not. Users of IES’s software began to migrate to other, accredited vendors.

As a result, IES claimed that the accreditation process had damaged its business:

Although MoE argues that IES was in fact losing clients before the second accreditation round, there can be no doubt that IES’ failure to achieve accreditation did have a significant impact on that company’s fortunes. This occurred at two levels. First, it made it harder for IES to retain existing clients in the face of monetary incentives to change and MoE’s aggressive change campaign. Second, and for the same reasons, it made it more difficult for IES to attract new clients from the pool of 300 schools hunting for a new provider.

IES brought claims against the Government for:

  • Negligence, on the basis that the accreditation process was misconceived and poorly carried out; and
  • Bias / breach of natural justice (s 27 Bill of Rights Act).

Both of these claims (and another) were rejected.

On the negligence claim, the Court found that MoE’s adoption of an accreditation model was a policy matter, in which Courts are traditionally reluctant to intervene:

 The means by which the government is to fund the provision of SMS services to schools so as to ensure proper interoperability and appropriate standards in an era of widespread computer usage is a policy matter… These are questions for officials and politicians not Judges.

It also found that the MoE had no duty of care to IES in formulating and carrying out the accreditation process (it is worth noting that the Court suggested that the “proper footing” for a claim of this nature would have been misfeasance in public office), and considered that key facts were not made out.

On the bias claim, IES pointed to evidence it said showed that the MoE’s accreditation criteria favoured another vendor. The Court disagreed, saying there was no evidence to support an allegation of bias.

Lessons

The case provides an example of regulatory risk for IT vendors, and confirms that the Government has a broad (though not unlimited) ambit to implement standards, accreditation regimes and other policies without judicial interference. It is logical and sensible for a Government agency such as MoE to implement baseline standards (e.g. interoperability requirements) for state-funded schools, and accredit providers meeting the standard to allow schools to make an informed choice. It is unfortunate that IES, for whatever reason, could not or did not get accredited in time (in 2005).

The case does not explain why IES could not alter its software to meet accreditation. Software development is often an expensive and time-consuming process, and many vendors would face financial or resource constraints to significantly update what may be a “legacy” package to meet new requirements (which they may consider to be flawed or inapplicable).

But if IES had been able to update its software before or during the accreditation process (over a period of some months and years), presumably it could have reduced it alleged losses. Whether this could have been alleviated by a different contracting model or business model is unknown.

E-discovery – redacting electronic documents

More information is coming soon on New Zealand’s e-discovery solution – the electronic discovery solution developed right here in New Zealand to support the new discovery rules taking effect on 1 February 2012 (see this earlier post).

One feature is the ability to safely redact PDF documents directly in a web browser.

Redaction is increasingly important in New Zealand civil litigation, given the volume of documents and the propensity for sensitive and/or privileged information to be mixed with other discoverable information. The High Court Rules (current and new) allow redaction of certain information on the grounds of confidentiality and/or privilege. Conditions can be proposed by the disclosing party to protect confidential information – for example, the provision of certain documents (redacted or not) may be made on an “attorney’s eyes only” basis (to adopt the US parlance; in practice it often extends to experts too). Other parties can challenge the proposed restrictions, however this requires them to bring an application to do so, and in practice such issues can usually be resolved without the Court’s intervention.

The new High Court Rules will generally mean that documents must be redacted electronically, in PDF format. In practice, there are 3 key challenges to doing so:

  1. Making it easy – ideally, the lawyer will be able to make their own redactions directly on each PDF while viewing it anywhere and any time, without the need to install separate standalone software and without any fuss. In particular, this avoids the  inefficient and obsolete process of printing documents, manually redacting them, and then re-scanning them.
  2. Making the redactions permanent and secure – there are many real-world examples of unsafe, or non-permanent, redactions, where an apparently redacted document still allows the underlying text to be easily retrieved (read about a recent example – by a judge! – here).
  3. Handling duplicates – there is no point redacting one version of a document, only to have a duplicate produced in original form.

Safe and easy PDF redaction (via the browser) is one of the features of the New Zealand developed e-discovery solution that will be announced soon. Stay tuned for more information in coming weeks.

A new Electronic Discovery solution, coming soon…

A pre-announcement:

New High Court Rules (and District Court Rules) promoting the use of electronic discovery come into force on 1 February 2012. Key features of the “default” regime under the new rules include the following:

  • Discovered documents must be exchanged electronically.
  • Parties must provide a standardised list of discovered documents.
  • Documents must be provided in PDF format (unless not possible for particular file types), with the document number as the filename.
  • Native files must be provided if requested.
  • Parties must take reasonable steps to exclude duplicates.
  • Emails and attachments are to be listed separately but sequentially on the document list.

These changes reflect the ever-increasing volume of data (in particular, electronic data) in modern litigation, and the need to effectively and efficiently handle the discovery process.

A New Zealand solution

This new regime requires a new solution. Stay tuned for an announcement of a new web-based electronic discovery system developed right here in New Zealand, that supports the new rules on electronic discovery as well as providing early case assessment and detailed review capabilities. This system has been locally developed over the past several years.

Key features include:

  • New Zealand designed and developed system, cognisant of the new High Court Rules on electronic discovery
  • Fully managed, web-based solution – no software to install or maintain, and can be accessed on any computer, notebook, or tablet
  • Handle projects ranging from a few dozen, up to hundreds of thousands of documents
  • Securely access, review and upload project documents anywhere, anytime
  • Track discoverability, privilege, confidentiality, and other document attributes
  • View common document formats in any standard web browser without the need to install Office software
  • Powerful search and analysis capabilities across the document repository
  • Generate discovery lists and electronic bundles of documents (native format or converted to PDF, stamped with document numbers)
  • Automated handling and de-duplication of Outlook email archives and common document types
  • Single-user or collaborative multi-user options (including the ability for clients to upload their own documents)
  • Fully locally supported
  • Customisable by a local development team
  • And much more!

Check back for more information in coming months.

(features described are subject to change before the system is publicly launched)