Deutsche Bank AG v Chang Tse Wen and others

Yeong Zee Kin SAR:

[1] This is an application by the Defendant under Practice Direction No 3 of 2009 (“PD 3/2009”) for an order that parties comply with an electronic discovery protocol when general discovery of documents is given in this case. The Plaintiff’s objections to this application may be summarised in the following manner: First, PD 3/2009 applies during general discovery only where parties have agreed to adopt an electronic discovery protocol and allows parties to refer any disputes over terms in the protocol to the court for resolution. Since parties in this case have not agreed to adopt an electronic discovery protocol for the purposes of general discovery, there is no basis for this application. Further, the Plaintiff objects to adoption of such a protocol as it would unfairly prejudice them since they are ready to proceed with general discovery by providing a list of documents and photocopies of documents disclosed in the list in the traditional manner.

[2] The underlying claims in this matter may be summarised as follows. The Defendant was a customer of the Plaintiff bank. The Defendant owes about USD 1.8 million under a loan facility granted by the Plaintiff. The Plaintiff commenced action by writ filed on 27 August 2009 and sued for recovery of the outstanding sums under the loan facility. In its defence and counterclaim filed on 2 September 2009, the Defendant counterclaimed against the Plaintiff and (in an amendment filed on 3 November 2009) its employee, the Plaintiff’s former relationship manager, for misrepresentation and breaches of fiduciary duties and duties of skill and care. The Plaintiff’s reply and defence to counterclaim was filed on 19 October 2010.

[3] The issue of electronic discovery was first raised by the Defendant during pre-trial conference (“PTC”) on 23 October 2009. The court’s record shows that Defendant’s solicitors had suggested that parties proceed with electronic discovery in this case and sought directions for parties to discuss and agree to an electronic discovery protocol. Plaintiff’s solicitors are recorded to have said that they did not think that electronic discovery was necessary and they would need to take instructions on this matter. The court directed that parties update the court during the next PTC as to whether parties are amenable to proceeding with electronic discovery. Further, directions were given for lists of documents to be exchanged by 29 January 2010 and for inspection to be completed by 26 February 2010.

[4] Subsequent to this, there were telephone discussions between counsel on 5 and 6 January 2010, ahead of the PTC on 8 January 2010. There is some dispute over the content of the telephone discussions. The Defendant’s solicitors’ account is that they raised again the issue of electronic discovery during these telephone discussions and sought opposing solicitors’ agreement to defer electronic discovery issues to a subsequent PTC to be fixed before me. The Plaintiff’s solicitors’ recollection is that the discussions focused mainly on agreeing to an adjournment of the 8 January 2010 PTC as there were pending interlocutory applications at that time. A PTC briefing note tendered by the Defendant’s solicitors during PTC on 8 January 2010, which is as near to a contemporaneous record of these telephone discussions as is available to me, records that the Defendant’s solicitors had broached the issue of electronic discovery during these telephone conversations and sought to have a PTC fixed before me to explore how parties may collaborate on electronic discovery issues in accordance with PD 3/2009. It is also recorded that the Plaintiff’s solicitors communicated their view that there is no scope for discussion and they would object to moving the PTC; further, they had requested that a formal application for electronic discovery be made.

[5] The PTC on 8 January 2010 dealt mainly with pending interlocutory matters and an interlocutory appeal. During this PTC, pending discovery directions were ordered to be held in abeyance as parties were directed to make a decision as to whether they would proceed with electronic discovery under PD 3/2009. In particular, the Defendant was directed to write to the Plaintiff with a proposed electronic discovery protocol by 22 January 2010 and the Plaintiff was directed to reply by 5 February 2010. The Defendant was further directed to write in by 12 February 2010 to request for a PTC to be fixed before me if they wish to discuss electronic discovery issues.

[6] Eventually, several PTCs were held on 18 February, 3 and 8 March 2010 before me to explore the possibility of adopting an electronic discovery protocol for the conduct of general discovery. Parties were not able to agree, hence this application before me.

[7] During submissions, the following issues were raised. First, whether PD 3/2009 applies in a situation where parties had not reached an agreement to adopt an electronic discovery protocol during general discovery; in other words, whether PD 3 2/2009 applies during general discovery only if parties have already agreed to adopt an electronic discovery protocol but were not able to agree on some of its terms subsequently.

[9] Third, if parties are to comply with an electronic discovery protocol for general discovery, should the Plaintiff be required to provide the categories of documents described as well as conduct a reasonable search based on the key words set out in Part I of the draft electronic discovery protocol. I shall now deal with these issues in turn.

[10] The Plaintiff’s preliminary objection to this application is that PD 3/2009 does not apply to a situation where parties have not reached a prior agreement to adopt an electronic discovery protocol during general discovery. The Plaintiff argues that the opt-in nature of PD 3/2009 means that, insofar as its applicability during general discovery is concerned, both parties must first agree to adopt an electronic discovery protocol before PD 3/2009 applies during general discovery. This argument turns on a construction of PD 3/2009 that, stated briefly, amounted to the following:

[11] The Defendant’s argument is that the court has extensive powers to order compliance with protocol during discovery. This is either part of the court’s inherent powers (preserved under Order 92, rule 4) or derived from the specific provisions in Order 34A, which is the source of the court’s powers to make appropriate directions for the just, expeditious and economical disposal of a matter. Counsel cites the cases of Alliance Management SA v Pendleton Lane P and another and another suit [2007] 4 SLR(R) 343 and Fermin Aldabe v Standard Chartered Bank [2009] SGHC 194 as authorities for his proposition that the courts have the power to order discovery of electronic documents and in so doing, order that parties comply with a protocol. Both of these cases were decided before PD 3/2009 came into effect.

[12] The Plaintiff’s preliminary objection arises from the construction of the phrase “If parties are unable to agree on an electronic discovery protocol” in paragraph 43B of PD 3/2009. The Plaintiff seeks a construction of this phrase to mean “If parties having agreed to adopt an electronic discovery protocol are unable to agree on some of the terms in the electronic discovery protocol”. The Plaintiff argues that this gives effect to the opt-in nature of PD 3/2009: in other words, both parties must agree to opt-in before PD 3/2009 applies. The Defendant seeks a broader construction for this phrase to include both situations where parties are unable to agree to adopt an electronic discovery protocol or, having agreed to adopt one, there are disputes over some of its terms. Under this construction, the opt-in framework operates either by agreement of parties or when one party (in this case the Defendant) opts into PD 3/2009 by making an application thereunder.

[13] In determining the proper construction to be adopted, it is necessary to commence with an appreciation of the nature of practice directions. I can do no better than to quote Professor Jeffrey Pinsler’s Singapore Court Practice (2003 Edition), at § 1/1/6, on the role and function of practice directions:

[14] PD 3/2009 does not set out to change the law on discovery; it merely sets out procedures which parties have to comply with when dealing with discovery of electronically stored documents. Where the court already has powers to order that parties comply with a protocol when discovery of electronically stored documents is given, PD 3/2009 does not subtract from these powers. However, any failure to comply with the requirements of PD 3/2009 may be relevant when the court has to exercise its discretion.

[15] It is not disputed that the court has powers to order compliance with a protocol where one is necessary. Protocols are no more than procedures intended to guide conduct of parties; and an electronic discovery protocol is no more than a label applied to a protocol for the discovery of electronically stored documents which parties agree to for the purpose of conducting general discovery. In the context of electronic discovery, a protocol will set out the procedures for, inter alia, safeguards against unauthorised trawling (see above, Alliance Management SA v Pendelton Lane P), inspection of electronic documents and provision of copies of discoverable electronic documents (see above, Fermin Aldabe v Standard Chartered Bank). Bearing in mind that the court already has the power to order that parties comply with a protocol, I do not think that the construction of paragraph 43B(3) put forth by the Plaintiff should be adopted. To do so would amount to saying that whereas before PD 3/2009 was issued, the court could make an order for parties to comply with a protocol during discovery, it can no longer do so now in a situation where parties cannot agree to adopt one. This tantamounts to elevating PD 3/2009 to a rule-making function with the effect of removing the court’s power to order compliance with a protocol in a situation where there is no pre-existing agreement between parties to adopt one. Further, the opt-in framework would operate differently at different stages of litigation under the Plaintiff’s construction: during general discovery, paragraph 43B operates only by mutual consent, but for applications for further or specific discovery, paragraph 43C operates by both mutual consent or the election of one party. To my mind, such inconsistency in the application of PD 3/2009 is undesirable and should be eschewed when an alternative construction capable of avoiding such internal inconsistencies is available.

[16] I prefer the construction put forth by the Defendant. PD 3/2009 in effect establishes a procedure whereby parties are required to make attempts to collaborate in good faith by engaging in discussions of electronic discovery issues before an application may be made under paragraph 43B. The opt-in nature of PD 3/2009 allows both parties to agree not to apply these procedures whether expressly or tacitly by conduct. Where one party wishes to make an application under PD 3/2009, he must comply with the procedures set forth therein and he must support his application with an affidavit providing an account of efforts made in good faith collaboration as well as include a draft electronic discovery protocol with his application. This construction does not subtract from the court’s power to order compliance with a protocol when discovery of electronically stored documents is ordered. It also gives effect to the opt-in nature of PD 3/2009: unlike other practice directions which apply to all cases, PD 3/2009 applies either on mutual agreement of parties or when one party opts into the electronic discovery framework by making an application thereunder.

[17] Additionally, the construction put forth by the Defendant accords with the plain reading of paragraph 43B(3). The phrase “If parties are unable to agree on an electronic discovery protocol”, to my mind, is sufficiently broad to deal with both situations: the situation where there is a pre-existing agreement to adopt an electronic discovery protocol but disputes remain over some of its terms, as well as the situation where parties are unable even to agree to adopt an electronic discovery protocol. Under the Defendant’s construction, the opt-in framework operates consistently both during general discovery and when applications for further or specific discovery are made:

[18] The Plaintiff also objects to an electronic discovery protocol on the ground that the Defendant’s delay in commencing good faith discussions prejudices it. The Plaintiff’s submission is that during the PTC on 23 October 2009, the Defendant’s solicitors stated that they were considering electronic discovery. However, the Plaintiff’s solicitors did not understand this to mean that the Defendant was definitely proceeding with electronic discovery, but merely considering it as an option. During the telephone discussions on 5 and 6 January 2010, there were (according to Plaintiff’s solicitors) no substantive discussions about electronic discovery as parties were discussing a possible adjournment of the PTC on 8 January 2010 in light of other pending interlocutory applications and an interlocutory appeal. There was some discussion for the adjournment of the PTC on 8 January 2010 and for the adjourned PTC to be fixed for hearing before me for the purpose of discussing electronic discovery issues, but there were no substantive discussions of electronic discovery issues. As far as the Plaintiff’s solicitors were concerned, the first time that they knew that the Defendant was indeed pursuing electronic discovery was when they received a letter from the Defendant’s solicitors on 22 January 2010 on this issue.

[19] The Defendant’s version is that their solicitors first raised the issue of electronic discovery during PTC on 23 October 2009. Further, although the court gave directions for the filing of lists of documents during the PTC, parties were directed to discuss whether an electronic discovery protocol should be adopted and to update the court at the next PTC on 8 January 2010. According to the Defendant’s solicitors, one of the topics discussed during the telephone conversations between counsel on 5 and 6 January 2010 was for the possibility that the upcoming PTC on 8 January 2010 be adjourned to be heard by me for the purpose of discussion electronic discovery issues. During the telephone conversations, the Plaintiff’s solicitors had requested that a formal application for electronic discovery be made.

[20] The court’s record reflects that Plaintiff’s solicitors had consistently raised the issue of electronic discovery from the first PTC on 23 October 2009 onwards: see paragraphs 3 to 5 above for a summary of the history of exchanges on the issue of electronic discovery during PTCs. Further, the record shows that the Plaintiff’s solicitors had been consistently non-committal and that they had requested for a formal application under PD 3/2009.

[21] Paragraph 43B of PD 3/2009 establishes the timeframe for parties to commence discussion of electronic discovery issues for the purpose of general discovery: this is to take place “immediately after the close of pleadings”. In this case, the Reply and Defence to Counterclaim was filed on 19 October 2009. When the issue of electronic discovery was first raised during PTC on 23 October 2009, pleadings had not yet closed. Evidently, there has been no delay on the part of the Defendant at all.

Whether an order for compliance with an electronic discovery protocol for the purposes of general discovery should be ordered

[22] I turn now to consider whether the facts of this case merit an order for the adoption of an electronic discovery protocol during general discovery. Paragraph 43D enumerates a list of factors which the court has to consider during the exercise of its discretion as to whether an order for discovery or inspection of electronically stored documents should be made under the framework for electronic discovery in PD 3/2009. The list is not exhaustive and is intended to be inclusive: some of the factors may be relevant some of the time, but not all of them all of the time.

[23] During submissions, it was made clear that the volume of documents in this case, though not trivial, is not exactly voluminous either. The majority of the documents reside with the Plaintiff. The Plaintiff had printed all the relevant documents and these amounted to about 9 arch lever files, out of which 5–6 were comprised of e-mails, which form the majority of discoverable documents. It was submitted on behalf of the Plaintiff that the benefits of electronic discovery lie in the ability to access metadata information, the ease of management of voluminous documents and the ability to conduct key word searches. Since the extent of discoverable documents in this case is not voluminous, the Plaintiff submitted that the benefits of management and key word searches would not be reaped. It was further submitted that since metadata information is not relevant to the issues in this case, there was no reason left to consider electronic discovery.

[26] The Plaintiff’s claim is one for the straightforward repayment of a loan. The crux of this case lies in the Defendant’s counterclaim against the Plaintiff which raises issues of breaches of fiduciary duties, breaches of duty of care and misrepresentation against the Plaintiff; and breaches of warranty of authority and misrepresentation against his relationship manager, an employee of the Plaintiff whom the Defendant joined as a defendant in the counterclaim.

[27] During submissions, it became clear that this case had international dimensions: although the account was maintained in the Plaintiff’s branch in Singapore, the Plaintiff’s key employees who are involved in this matter reside in Hong Kong and the Defendant is a Taiwanese resident. Most of the documents to be given during discovery lie with the Plaintiff. E-mails form the majority of electronic documents which are discoverable (6 out of 9 arch lever files). The original e-mails of the Plaintiff’s key employees and its electronic customer records are held in Hong Kong. The Defendant’s e-mails are held in Taiwan. The originals of the electronic documents are therefore outside jurisdiction.

[28] The Plaintiff appears to have operated under the assumption that by providing printed copies of electronic documents for inspection, it would have discharged its obligations to give inspection of the electronic documents. This assumption needs to be examined. The obligation lies on a litigant to provide the best evidence and where the original is available, to produce the original in evidence and, a fortiori, for inspection. Per Belinda Ang J in Alliance Management SA v Pendleton Lane P and another and another suit [2008] 4 SLR(R) 1, at [35]:

Hence, where electronic documents are available, inspection should be given of the original and not merely a printed copy. In this case, where e-mails are accessible from either the e-mail servers in Hong Kong or the employees’ personal computer or notebook computer, the originals should be produced for inspection unless there is good reason not to do so. Where authenticity is not disputed, it would not be desirable to incur the costs of inspecting such originals if a reasonable substitute may be given. Such reasonable substitute may have been printed copies in days past, but given the level of technology and connectivity today, the feasibility of providing a soft copy in the native format should be considered in preference to printed copies.

[30] The Plaintiff’s claim is for USD 1.8 million, while the Defendant’s counterclaim is for USD 48 million. The Plaintiff is an international bank and the Defendant, its former private banking customer. Both parties have appointed solicitors in well-resourced firms. I do think that neither the value of the claim nor the financial position of either party get in the way of electronic discovery.

[32] To my mind, the workflow between solicitor and client and how they choose to manage documents passing between them should not be held up as a hurdle to the discovery process. In present times where a significant number of commercial transactions are conducted over e-mails and electronic documents are accepted for commercial transactions (see Joseph Mathew and another v Singh Chiranjeev and another [2010] SLR 338, where the contract to grant an option to purchase land was made over e-mails; and SM Integrated Transware Pte Ltd v Schenker Singapore (Pte) Ltd [2005] 2 SLR(R) 651, where a lease over warehousing space was similarly concluded over e-mails), the fact that solicitor and client chose to print all electronic documents alone, without more, cannot deprive a litigant of his entitlement at law to inspection of the original electronic documents and to take a soft copy. Further, as observed in paragraphs 3–5 and 18–20 above, the Defendant had raised the issue of electronic discovery within the time frame set forth in paragraph 43B of PD 3/2009: there was no delay on his part. As such, if there was any party that is at risk of unfair prejudice, it would be the Defendant, if the Plaintiff and its solicitors’ chosen method of managing electronic documents was permitted to become an obstacle to electronic discovery.

[33] The Plaintiff further objected to producing e-mails in native format because the Plaintiff and its solicitors were on different e-mail systems. The Plaintiff uses the Lotus Notes e-mail platform while its solicitors use the Microsoft Outlook e-mail platform. In both systems, e-mails are not stored in individual files but in a composite file akin to a miniature database. It is possible to copy selected e-mails (including attachments) into a single composite file for the very purpose of providing copies of these selected e-mails and attachments. The Plaintiff’s solicitors argued that it did not have the software to access the composite files in .nsf format produced by Lotus Notes platform used by its clients; and it raised concerns that conversion of composite Lotus Notes e-mail files into Microsoft Outlook’s .pst composite file format may lead to the loss of metadata information. In support of these concerns, the Plaintiff relied on two articles downloaded from the Internet and notes of a general telephone inquiry its solicitors had with an electronic discovery service provider. These were subsequently enclosed as exhibits in a supplemental affidavit.

[34] The Defendant had previously, by letter dated 16 March 2010, suggested a method of converting a .nsf composite Lotus Notes e-mail file to a .pst composite Microsoft Outlook e-mail file. In an affidavit filed by Mr Mohamed Musthafa Kalander Mohideen, the Assistant Director of the Defendant’s solicitors’ Information Technology department and an IT professional with 16 years experience, detailed steps were laid out to show how this conversion may be carried out without the need for additional software apart from software available as part of the Lotus Notes and Microsoft Outlook e-mail platforms.

[36] Before leaving this point, I wish only to make the observations that any difficulties in accessing e-mails produced in the native Lotus Notes .nsf format lie with the Plaintiff’s solicitors. Both the Plaintiff and the Defendant’s solicitors use the Lotus Notes e-mail platform and face no such difficulties. I find it unacceptable that Plaintiff’s solicitors should raise objections to electronic discovery that is essentially premised on their (and not the Plaintiff’s) lack of the requisite software programme.

[37] Based on the factors traversed hereinbefore, I am of the view that an order ought to be made for parties to comply with an electronic discovery protocol for the purpose of general discovery and do so order. However, I am mindful of the fact that the Plaintiff has ready a draft list of documents. The question I turn to consider is whether the Plaintiff should be required to provide the categories of documents described as well as conduct a reasonable search based on the key words set out in Part I of the draft electronic discovery protocol.

[39] Had the Plaintiff responded to the Defendant’s attempt at good faith collaboration in the right spirit, it should have put forward a similar list. Parties could then have worked out an agreement on what will be disclosed during general discovery and the categories for which it will object to disclosure. In a suitable case with voluminous electronic documents, parties may even agree to conduct general discovery in stages by, for example, using agreed sets of keywords to conduct reasonable searches on the e-mails, computers or notebooks of a group of identified persons whom parties consider to be central to the issues in dispute. After disclosure has been given of electronic documents identified in this stage, parties may then explore the extent of discovery which may be required in subsequent stages. A handy summary of discovery in stages is provided by the Senior Master Whitaker in Goodale & Ors v The Ministry of Justice & Ors [2009] EWHC B41 (QB), at [22]:

Unfortunately, there was no attempt to collaborate on this aspect of the electronic discovery protocol.

[42] In paragraph 2 of Part II of the draft electronic discovery protocol, the Defendant had set forth the information which the list of documents should contain:

[44] I therefore grant an order in terms of the Defendant’s application with the attached draft electronic discovery protocol modified to the extent set out above; that copies of electronic documents be provided in their native format at the same time as the exchange of the list of documents; and that provision of electronic copies be in lieu of inspection of the original electronic documents in the Plaintiff’s possession, custody or power, except that this order shall not prevent the Defendant from making a request for inspection at a later stage should inspection become necessary.