Canadian Courts Inject Common Sense into Discovery Process

You’re Entering a Dimension of Imagination…

If a Rod Steiger worshipper out there wants to create a topical, 2010 version of the Twilight Zone, he or needs to look no further than the twisted scenario where companies are being forced to spend upwards of half a million dollars responding to discovery demands for a case that isn’t worth half a million dollars.

Actually, that may not be bizarre enough for the Twilight Zone. But it’s happening all over, and now the courts in Ontario, Canada have taken a stand by introducing the “proportionality principle.”

This new entrant to Ontario’s Rules of Civil Procedure authorizes the court to limit discovery where costs would be disproportionate to what’s at stake in the litigation. It also requires parties to agree on a “discovery plan” that sets out the scope, and takes into account relevance, costs, and important complexity of issues.

Can’t Afford to Fail

This solution is particularly welcome news for small companies, who often waste hundreds of thousands of dollars trying — and failing — to provide the required discovery, since they simply don’t know what’s needed, when it’s needed, why it’s needed, and how to get it. And by the time they realize they don’t know what to do, they’ve already spent more than they can afford. And that’s just the beginning of the nightmare.

The courts aren’t impressed with companies who fail to respond to discovery orders, and have signaled a willingness to impose these gruesome consequences:

• increased litigation costs

• negative inferences by a judge

• default judgment

• civil contempt proceedings

• vicarious liability for senior management

• criminal liability for organizations and individuals

(It’s safe to come up from beneath your desk now, we’re moving on.)

Survival Instincts

On the positive side, one hopes that the “proportionality principle” injects some much-needed common sense into the discovery process – particularly with the massive emergence and complexity of eDiscovery issues.

And just as beneficially, perhaps the threat of utter court-induced obliteration is helping some companies lurch into a state of (gasp) proactive readiness. For example, Bell Canada has started asking their external counsel to take images of their hard drive, sift through it, and a year later produce a list of relevant documents…just in case.