knowledge 18 November 2020 |

Securing your Costs when Making Discovery

Background

In an electronic age, discovery can pose a huge burden on commercial litigants in terms of the time and effort involved in gathering and collating large volumes of material and the costs involved in doing so.  These costs can often form a large proportion of the overall costs of the proceedings.  However, it is open to a party faced with an order for discovery to seek security for the costs of complying with that order be they plaintiff or defendant in the action.  In contrast with the usual position on security for costs at first instance, the remedy is not confined to defendants. 

However, surprisingly, there is only limited evidence of these applications coming before the courts and written judgments are rare.  The recent case of Betty Martin Financial Services Ltd v EBS DAC¹ is one such example. 

In that case, the dispute arose from the alleged wrongful termination by the defendant of certain tied branch agency agreements between it and the plaintiff.  In the context of those proceedings, the plaintiff sought significant discovery from the defendant.  In turn, the defendant brought an application for security for the costs of making that discovery given that it was estimated that the costs involved could run to almost €500,000 depending on the terms of the discovery order though the use of technology assisted review might reduce this cost.  The defendant submitted that it had a strong defence to the claim and that if a costs order was ultimately made in its favour in the proceedings, that the plaintiff would be unable to meet these discovery costs.

Decision of the court

Having reviewed the limited case law in the area, the court granted the order.²  It concluded that:

• The defendant had made out a prima facia defence to the proceedings.

• The uncontested evidence was that the plaintiff would be unable of its own resources to meet an order for the costs of the discovery.

• No case was made that the plaintiff’s inability to meet any such costs was caused by the actions of the defendant complained of in the proceedings.  The plaintiff had previously obtained an injunction to prevent termination of the tied agreements taking effect.

• No other special circumstances justifying the refusal of an order for security for the costs of discovery had been made out.  The court rejected the plaintiff’s argument that issues of major public importance were raised in the proceedings.

• It would be inappropriate to speculate whether there was any prospect that some costs might be awarded to the plaintiff at trial, for example, if it succeeded on some issues although failing on others.  This should not inform the current application. 

• On the issue of whether the claim might be stifled by making the order, there was no evidence before the court either way to demonstrate whether doing so would preclude the plaintiff from pursuing the action to trial, with or without the benefit of the categories of discovery sought. 

Comment

The Supreme Court has recently reiterated the importance of discovery in our legal system.³  However, the fact remains that discovery enables a party to legitimately ask its opponent to potentially undertake significant cost to assist in advancing the case against it.  That case may ultimately prove to be without merit.  Worse still, the party who sought discovery may not be a mark for costs.  In seeking security for the costs of discovery, a party can take positive pre-emptive steps to guard against the eventuality that ultimate victory in the proceedings may be soured by a large discovery bill that remains to be paid.