Discovery in Cayman Islands
By Phillip Kite, Ian Mann, David Butler and Jayson Wood From Harneys
When does an obligation arise?
What has to be discovered and when?
How is discovery given?
Who is responsible for discovery?
In this guide Harneys considers the scope of a party’s duties with respect to the discovery of documents in Cayman Islands litigation.
“Discovery”, the process by which documents that are relevant to the issues raised in a dispute are provided by one party to their opponent, is a fundamental component of litigation in most civil justice systems.
Documents tell their own story and the provision of them avoids surprises and permits the strengths and weaknesses of the parties’ respective cases to be tested at trial and often before a trial.
This brief guide sets out the basics of the discovery framework which exists under the Cayman Islands’ rules of court, the obligations with which parties to litigation in the Cayman Islands must comply and the sanctions for non-compliance. It also highlights useful things which may be done in the early stages of litigation to ensure that discovery happens without causing too much pain or embarrassment later in the proceedings.
In what proceedings does an obligation to give discovery arise?
Wherever a case commenced in the Cayman Islands court involves a disputed question of fact an obligation will arise to give discovery. Thus most claims brought by one commercial actor against another will require the discovery of documents at some point.
A claim that involves a disputed question of fact will be begun by writ.
Where the court is just being asked to decide what the law is on a given set of facts that are uncontroversial as between the parties discovery obligations do not usually arise. Discovery obligations also do not automatically arise in winding-up proceedings brought against Cayman structures in the Cayman court, but orders for discovery are available in certain types of winding-up proceedings (for example winding-up proceedings which are in substance disputes between shareholders or which involve allegations of management impropriety).
What is a document?
The definition of a document is extremely broad. It includes the obvious – information which is recorded on paper, whether that be in the form of writings, pictures or plans. It also includes audio, video and other analogue or digital recordings, information stored on microfiche, electronic versions of documents, email and information sent over services such as Bloomberg and also the content of portable devices (such as SMS and information communicated over instant messaging services).
It also includes, in the case of digitised documents, metadata to the extent that the metadata is relevant to the issues in proceedings.
A document which is an altered version of an original is a separate document. For example a memo is a document, and a copy of the memo that someone has made notes on is a different document. Depending on the contents of the notes which have been made, the annotated memo may also be discoverable.
Preservation of documents
Once litigation is contemplated a party should take such steps as are necessary to preserve the documents which may be relevant to the potential dispute. Routine document destruction should be put on hold, and if there is a document destruction policy in place those with responsibility for the implementation of it should be informed of the potential litigation to ensure that appropriate action is taken to preserve documents.
It is also sensible for the party to start thinking at this stage about the people within the organisation who were involved in the matters which have given rise to the dispute and to contact those people to let them know that they should also preserve such documents as they may have – for example the contents of portable devices – which will not necessarily be caught by the suspension of a document destruction policy.
What has to be discovered and when?
Once the parties have pleaded out their respective cases they are obliged to discover those documents that are or have been in their “possession, custody or power” which are relevant to the matters in question in the litigation. The rules contemplate that discovery will be given two weeks after the pleadings close; in practice this rarely occurs and there will usually be case management hearings in court to determine among other things a timetable for the further conduct of the proceedings, including when discovery is to be given.
Possession, custody or power
Generally being in physical possession of a document (irrespective of whether the party has any right to possess the document) means it has to be discovered. ‘Possession’ is broadly possessing the document and having the right to do so; custody means being in possession without a right permanently to possess. Power, in relation to a document, means the party has a presently enforceable legal right to call for the document. So where an accountant or a broker holds a document which the party can require the accountant or broker to produce to him, that document will be discoverable.
Interesting and sometimes difficult questions can arise where discoverable documents belong to a subsidiary or affiliated company within a group or to a trustee where the party is a beneficiary of the trust.
Non-compliance
Parties are often tempted not to discover documents which are unhelpful to its case or which help the opponent’s case. This is rarely sensible. In addition to being a breach of the rules for which there are sanctions, parties rarely get away with it and it often leads to unhelpful surprises and distractions during the proceedings and can be a source of considerable embarrassment to the party.
A party who tries to avoid giving full discovery may be subject to applications for further and better lists, specific discovery or requests that the accuracy of the list be verified on affidavit. In addition, a party’s witness may often be ordered while giving evidence at the trial to conduct further searches for documents, or subjected to cross-examination as to the non-discovery of documents which can seriously undermine the witness’s (and thus the party’s) credibility.
A party who wilfully destroys documents after the commencement of litigation may commit the offence of perverting the course of justice and may also find that their claim or defence of the claim is brought to a peremptory end because of that conduct. In most cases the failure or refusal to discover documents or the destruction of them will not automatically result in the party being prevented from advancing or defending a claim, but it may do so if the court takes the view that the failure or refusal to discover or the destruction of the document means that it is not possible to have a fair trial of the litigation. A failure to comply with discovery obligations can also lead to the court making orders for costs against the defaulting party. In addition, if the court is satisfied that relevant documents have not been disclosed it may draw inferences against the party in default as to the content of those documents and/or the party’s credibility. Losing the case because of a failure to give discovery of documents (which might not actually have been that important or relevant or which could have been dealt with if they had been known about by a party’s lawyer in advance) tends to defeat the object.
Discovery from third parties and discovery overseas, pre-action discovery
Third parties resident within the Cayman Islands can be made the subject of a subpoena for the production of relevant documents and testimony by a party to litigation. A party can also apply to the court for an order requiring a deposition to be taken from a person who is within the Cayman Islands in a case when the court is satisfied that it is in the interests of justice to do so.
Where a person is not resident in the Cayman Islands the court may also issue letters of request to the court of the country or place where the person resides asking that court to require that person to provide evidence that is relevant to the dispute.
The Cayman court has confirmed that in exceptional circumstances, domestic and foreign depositions may be taken without the need for the court to issue a letter of request if they are deemed necessary to assist with preparation of the case for trial.
Section 1782 of Title 28 of the US Code permits a party to legal proceedings outside of the United States to apply to a US court to obtain documents and evidence for use in the non-US proceeding. An applicant for such an order must satisfy the court that he is an “interested party” involved in proceedings which are before a foreign tribunal and the person from whom the evidence is sought is in the district of the court before which the application has been filed. A party to Cayman civil litigation seeking documents and testimony in the US would meet these criteria.
The Cayman court has upheld the right of a party to avail itself of the 1782 procedure, although it is cautious to ensure that the taking of such foreign depositions does not amount to oppressive or abusive conduct in the context of the Cayman Islands litigation. In particular a party will not likely be allowed to use evidence obtained from an opponent under 1782, and a party may well be restrained from seeking that relief by the Cayman court, if the purpose of the exercise is to cross-examine in advance of a trial in the Cayman litigation a witness who intends to come and give evidence at the trial.
Discovery against parties or non-parties before the formal commencement of proceedings is not generally permitted, but the court has the power to make orders against persons within its jurisdiction for the production of documents where it can be shown that that person has become mixed up, innocently or otherwise, in wrongdoing.
Use of documents discovered by an opponent
A party may not use for any purpose other than the litigation a document, or information which can be gained from a document, which the opponent provides by way of discovery. The obligation not to use the document for a purpose outside of the litigation continues after the conclusion of the case, unless during the course of the proceedings the document is read to or by or referred to in court. Even when a document is read or referred to in court the court can order that any such document cannot be used for any further purpose.
A party who uses a discovered document for a purpose unconnected with the litigation commits a contempt of court.
For more information please contact:
Phillip Kite
+44 207 842 6081
London
Ian Mann
+852 3195 7236
Hong Kong
David Butler
+345 815 2908
Cayman Islands
Jayson Wood
+345 815 2904
Cayman Islands
The foregoing is for general information only and not intended to be relied upon for legal advice in any specific or individual situation.
© Harneys, May 2014
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