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Hong Kong – Court Of First Instance Discusses The New Practice Direction On E-Discovery In Relation To A Specific Discovery Application.

25 August, 2014 


Legal News & Analysis – Asia Pacific – Hong Kong – Dispute Resolution


The recent decision in Chinacast Education Corporation and others v Chan Tze Ngon and others is one of particular relevance as it is the first time the Hong Kong Court has referred to the new Practice Direction PDSL 1.2 on e-discovery. More importantly, the Court applied the general principles contained in the new Practice Direction, which only comes into operation on 1 September 2014. This judgment heralds the start of a new era of electronic discovery in Hong Kong litigation.


The Plaintiffs sought specific discovery of electronic documents, in particular emails from the Defendants’ personal accounts. As this was a specific discovery application, the Court stated that the traditional Peruvian Guano / train of inquiry test was the starting point, but that the Court should narrow the scope of the test to “directly relevant” documents, particularly in cases involving e-discovery. It was apparent that the proposed discovery of the Defendant’s emails was for the Plaintiffs to establish their case of conspiracy. The Court found that as the Plaintiffs did not plead the elements of conspiracy, they could not demonstrate how the personal email accounts of the Defendants contained relevant information. Further, the Plaintiffs did not point to how the emails were necessary for a fair trial or saving costs. Whilst the Plaintiffs only sought discovery of the relevant emails, they failed to define or propose a method to determine which emails were irrelevant, nor did they attempt to discuss with the Defendants what reasonable search should be made to limit the scope and identify the relevant materials. This suggested that the Plaintiffs were undertaking a fishing exercise and, as such, the application for the personal emails was dismissed.


Prior to determining the Plaintiffs’ application, the Court helpfully summarised the legal principles applicable to specific discovery and discovery of electronic documents. The focus of the Court’s judgment was on the need for parties to have strong case management to tailor an appropriate discovery regime for the specific case, which will avoid unnecessary, voluminous discovery. For the purposes of this blog, our focus will be on the discussion of the principles relevant to e-discovery.




The purpose of the Practice Direction is to provide a framework for parties to be reasonable, proportionate and cost-effective during discovery of electronic documents and to encourage parties to co-operate and reach agreement on issues that may arise during the discovery process. Although the new Practice Direction is not yet in operation, the Court considered that it was appropriate to make reference to the practical guidelines and apply the general principles contained therein (see Section C, Paragraph 4 here).


The key principle in relation to e-discovery is co-operation, not just between the parties themselves but also with the Court. When e-discovery is first contemplated, the parties should work together to consider various issues and the new Practice Direction provides a comprehensive list of issues that the parties should discuss before the 1st Case Management Conference, including preservation of documents, the scope and reasonableness of the search, categories of documents, privilege, key-word searches, methods for de-duplication, whether a staged approach should be adopted, presentation of the documents for inspection and at trial and costs to be shared. The Court warned that if a party does not approach e-discovery prudently or abuses the process, that party will be sanctioned by the Court and may be liable for the costs wasted or incurred by the other party.


The Court further set out the relevant legal principles for e-discovery (some of which also apply generally to applications for specific discovery), quoting cases from Hong Kong, the UK and Singapore:


  • Discovery must not be oppressive by making order of voluminous documents;
  • Discovery must be for a fair trial or saving costs;
  • The scope of discovery depends on issues at trial. The Court should discourage satellite litigation and apply the test of proportionality of costs and importance of documents;
  • The documents to be discovered must not only be relevant, but must also be necessary;
  • If a party fails to cooperate with the other side for discovery, he may have to pay the extra costs incurred by the other party to gain access to the electronic documents;
  • The Court has the power to limit discovery for the purpose of managing the case and furthering the underlying objectives;
  • The Court should make an order which is tailored to the particular features of the case, with a view to achieving a just outcome and limiting the costs incurred;
  • Where appropriate, a staged approached may be adopted so that the search is initially made in relation to the electronically stored information of the most important people at the top of the pyramid;
  • In the case of dispute over privileged documents, a special committee can be set up by the Court to handle the issues of sorting out privilege documents from a storage of electronic information;
  • The parties should agree on the appropriate key word search to be applied and parties should, at an early stage, discuss issues that might arise when searching electronic documents;
  • Electronic documents must be de-duplicated and a party who fails to carry out this process may be ordered to pay the costs to the other party.




This decision provides useful guidance on how the Courts will handle electronic discovery following the implementation of the new Practice Direction PDSL 1.2. It is clear that the Courts will be expecting parties to co-operate and discuss the key issues at an early stage, especially given the requirement in the new Practice Direction for discussions between the parties before the 1st Case Management Conference. A party who fails to plan and manage e-discovery with the other side is likely to face cost sanctions. 


The focus of the new Practice Direction is on proportionality and cost-effectiveness and parties must adopt strong case management to ensure that e-discovery is handled appropriately. We wait to see effects of the new Practice Direction when it comes into operation on 1 September 2014.


herbert smith Freehills


For further information, please contact:


Gareth Thomas, Partner, Herbert Smith Freehills

[email protected]


Dominic Geiser, Partner, Herbert Smith Freehills

[email protected]


Julian Copeman, Herbert Smith Freehills

[email protected]


Herbert Smith Freehills Dispute Resolution Practice Profile in Hong Kong

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