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FEATURE |
Advising Clients of Their Duty to
Preserve Documents for
Discovery in Litigation
This article sets out guidelines drafted by the Law Society’s Civil Practice Committee to advise clients of their duty to preserve documents for discovery in litigation.
I Introduction
The recent High Court decision of K Solutions Pte Ltd v National University of Singapore (“K Solutions”)1 restated the principles governing the duties of litigants to preserve documents for discovery. In that case, the High Court emphasised the duty of a litigant to preserve documents relevant to the issues in litigation and the consequences of failing to observe this duty. The K Solutions decision serves as a timely reminder to practitioners of their professional obligation to advise their clients of the duty to preserve documents for discovery.
To assist practitioners, the Civil Practice Committee of the Law Society has drafted guidelines for practitioners to advise clients of their duty to preserve documents for discovery in litigation, upon being instructed to act in a matter which may become litigious. These guidelines, which have been approved by the Council of the Law Society, are incorporated in the Law Society’s updated sample letter of engagement appended to this article. The Committee’s guidelines can be found at para 10 of the sample letter of engagement.
Part II of this article briefly summarises the key aspects of the K Solutions decision relating to the guidelines, while Part III gives an overview of the common law position concerning a solicitor’s duty to advise their clients of their obligation to preserve documents for discovery in litigation. Part IV of this article appends the Law Society’s updated sample letter of engagement.
This article is the first in a series of three articles by the Law Society to remind practitioners of their professional duties concerning discovery, client management, advice on fees, compliance with the Legal Profession (Professional Conduct) Rules and “know-your-client” obligations. Practitioners are encouraged to look out for the remaining two articles in subsequent issues of the Singapore Law Gazette this year.
II The K Solutions Decision Facts
The plaintiff company, K Solutions Pte Ltd (“KS”), contracted with the National University of Singapore (“NUS”) to supply an integrated web-based student information system and hardware architecture. However, a dispute arose between the parties and NUS eventually terminated the contract due to various alleged defaults by KS. KS commenced litigation against NUS for wrongful termination and claimed damages, while NUS counterclaimed for damages and various other specific sums for breach of contract.
In the course of litigation, NUS applied to strike out KS’ statement of claim and defence to counterclaim on the basis, inter alia, that KS had destroyed or suppressed relevant documents and continued to do so. NUS also sought judgment for damages to be assessed and judgment for the specific sums. The assistant registrar, at first instance, granted NUS’ application. KS then appealed against this decision.
Holding
The High Court dismissed the appeal and affirmed the judgment in favour of NUS for certain sums. The key aspects of the High Court decision were as follows: (1). Although the Rules of Court did not specifically prohibit “any party from destroying relevant documents in his possession, custody or power”, the party’s duty to preserve documents is “implicit in the scheme of discovery”, namely, the disclosure of relevant documents.(2)
2. If a litigant had destroyed documents but did not disclose that he once had them, he would be in breach of para 3 of Form 37 which required a party making discovery to include documents which he “has had, but has not now, in his possession custody or power”. Paragraph 4 of the Form further required that party to state when the documents he no longer had were last in his possession, custody or power and what had become of them.(3)
3. There were three stages in which documents may be destroyed: a. Before commencement of the action;
b. After commencement of the action but before discovery is ordered; and
c. After commencement of the action and after discovery is ordered.(4)
4. In all the three stages, the Court might make such order under O 24 r 16 of the Rules of Court as it thought just, including an order that the action be dismissed or, as the case might be, an order that the defence be struck out and judgment be entered accordingly.(5) However, if O 24 r 16 did not apply, the Court nevertheless had an inherent jurisdiction that would enable the Court to impose the appropriate sanction to a deliberate destruction of documents.
5. It is important to contrast “deliberate” with “intentional”. The word “intentional” does not mean accidental but only that there is no intention to put the documents out of reach of the other party. By “deliberate”, “the destroyer intends to put the documents out of reach of the other party in pending or anticipated litigation”.(6)
6. After surveying the relevant authorities, the Court was of the view that there was no reason in principle to distinguish between pre-action and post-action destruction where it was established that the destruction was deliberate.(7) In deciding whether a striking out should be ordered, all circumstances, in addition to the intention behind the destruction, had to be considered.(8) Where there is only deliberate destruction, striking out may not be ordered if, for example, there is other evidence of the document destroyed.(9) On the other hand, a striking out may be ordered even if a fair trial was still possible.(10) However, where there is both deliberate destruction and a fair trial is no longer possible, the appropriate sanction would appear to be a striking out.(11)
7. On the evidence before the Court, KS had anticipated litigation some time before its action was filed and that there were instructions for KS staff to back up the e-mail in their NUS and KS e-mail accounts. In the circumstances, it was unbelievable that all of KS’ internal e-mail was deleted without backup. Thus, KS had deliberately suppressed relevant documents (as well as the audio recordings of the meetings between the parties) and had lied about it.(12)
III English Position
Like the Singapore position, the Civil Procedure Rules contain no express obligation requiring a party to retain documents.(13) However, a solicitor has a severe burden under the common law “to ensure that his client is aware of the precise scope of the obligation to make full and proper disclosure in any ensuing litigation”.(14) In a Practice Note issued by the English Chancery Division following the decisionin Rockwell Machine Tool Co Ltd V E P Barrus (Concessionaries) Ltd,(15) Megarry J expressed his concerns with two matters arising from the case where discovery prima facie fell below the requisite standard. Firstly, it appeared from the testimony of a witness for one of the defendants that relevant documents had not been disclosed in time for the trial. Secondly, it appeared from the defendants’ evidence that documents had been destroyed as part of a routine exercise between the commencement of the proceedings and the hearing.(16)
In this regard, Megarry J’s observations are worth setting out in full:
... In preparing for trial solicitors bear a great responsibility and heavy burden. Not the least of these burdens is that of discovery. This is of especial weight in a complex case of passing off such as this was. Many litigants (and not least corporate litigants) have little appreciation of the scope of discovery, and the duty of making full disclosure. So often they neither know nor appreciate the requirement that they must search for and disclose to their adversary any document which ... “may fairly lead him to a train of inquiry” which may either advance his own case or damage his opponent’s.
Accordingly it seems to me necessary for solicitors to take positive steps to ensure that their clients appreciate at an early state of the litigation, promptly after writ issued, not only the duty of discovery and its width but also the importance of not destroying documents which might by possibility have to be disclosed. This burden extends, in my judgment, to taking steps to ensure that in any corporate organisation knowledge of this burden is passed on to any who may be affected by it.(17)
For a detailed explanation of the English position on advising clients of their duty to preserve documents, practitioners should refer
to the relevant English texts, for example, Documentary Evidence by Christopher Style and Charles Hollander.
IV Law Society’s Updated Sample Letter of Engagement
The Law Society has published two sample letters of engagement in the Singapore Law Gazette for the guidance of practitioners to date: 1. “How to Meet the Standards of Adequate Professional Service with a Letter of Engagement” (March 2003); and
2. “Letter of Engagement or Warrant to Act of a Law Practice” (March 2008) (which modified the 2003 sample letter of engagement to insert appropriate clauses to explain to clients the anti money laundering and prevention of terrorist financing practice measures lawyers must undertake to comply with the r 11D of the Legal Profession (Professional Conduct) Rules and the accompanying Practice Direction dated 15 January 2008).
The Committee’s guidelines to advise clients of their duty to preserve documents for discovery in litigation modifies the March 2008 version of the Law Society’s sample letter of engagement by the insertion of para 10, as appended to this article. The Committee’s guidelines are only intended to be a starting point for practitioners to develop their own advice to clients and practitioners should be mindful of their further duty to advise their clients of any statutory provisions which prohibit the destruction of documents.(18)
Alvin Chen*
Director, Representation and Law Reform
The Law Society of Singapore
E-mail: alvin@lawsoc.org.sg
Law Society’s Sample Letter of Engagement (June 2010 version)
Dear Sirs,
SUBJECT MATTER: SALE/PURCHASE /SUIT NO 123 OF 2002 LETTER OF ENGAGEMENT
1 We refer to the meeting on _____________ between the undersigned and your Mr _________ .
2 Once again we thank you for instructing us in this matter.
(Establish client identity of an individual)
3 From 15 August 2007 law practices in Singapore are required by the Law Society to check the identity of their client before they act for them.
Thank you for producing your original identity card/passport/driver’s licence to the practice to establish your full name and address
OR
(Establish identity of an individual client who instructs the practice from abroad) From 15 August 2007 law practices in Singapore are required by the Law Society to check the identity of their client before they act for them.
As you live abroad the easiest way for the law practice to check your identity is for you to show your original identity document to establish your full name and address to a lawyer or other professional in your country or a notary public to have him certify a copy of your identity document as true and forward the same directly to our law practice.
OR
(Establish client identity of a corporate client)
4 From 15 August 2007 law practices in Singapore are required by the Law Society to check the identity of a client before acting for them. To verify the identity of the company we will conduct a search with the Accounting and Corporate Regulatory Authority of Singapore to obtain the company’s incorporation particulars and the names and addresses of all directors and shareholders for the company.
As the company is instructing a director to give instructions to us on this matter we will also need to have evidence of the authority of the director to give us instructions on behalf of the company and have sight of his original identity document
OR (Establish client identity of a foreign corporate client)
From 15 August 2007 law practices in Singapore are required by the Law Society to check the identity of a client before acting for them. To verify the identity of the company in …, we require sight of a true copy or certified copy of the certificate of incorporation evidenced by an accountant, lawyer or other professional in your country, which shows the company’s registered address, the list of names of and addresses of its directors and principal shareholders (that is who own more than 25% of the company’s shares).
5 We are also required by the Law Society’s Rules of Practice to inform you of the principal terms of our engagement as your solicitors/counsel* in Singapore.
Scope of our services
6 The lawyer/Director /Partner in charge of your matter will be Mr/Ms/Dr/Mrs ____. She/He will be assisted by Mr and Ms _____ who are secretaries/legal executives/ paralegal staff in our law practice.
7(1) During the course of the matter, we shall keep you advised on the progress of your matter on a regular basis either by telephone, electronic mail or fax or letter enclosing copies of relevant correspondence. You can of course contact us for a progress report at any time. The respective lawyers you can contact are __________ at (65) __________ and paralegal staff are __________ at (65) _________ and their e-mail addresses are ___________ and _____________.
7(2) During the course of the matter where applicable we will explain to you any proposals of settlement or other offers made or positions taken by other parties which affect your case. We will also where appropriate evaluate with you if a course of action requested by you justifies the risk or expense involved.
8 The scope of our services which we foresee following our first meeting will extend to the following: 8.1 Advising you on matters of Singapore law related to the dispute which has arisen between you and XYZ Pte Ltd or acting for you in the purchase and mortgage of the property known as __________ OR 8.2 Representing you in legal proceedings brought in Singapore (if it is determined to be the appropriate jurisdiction) in connection with the foregoing.
8.3 Doing all things as may be required or necessary and/or incidental in connection with the foregoing.
9 This letter countersigned by you constitutes your Warrant to Act in favour of us with respect to representing you
generally in Singapore in connection with the above matter and no further warrant to act will be necessary for compliance
with Order 64 Rule 7 of the Rules of Court.
Information on discovery of documents
10 It is our duty to advise you that you must not deliberately destroy documents (including electronic documents) relevant to the issues in this matter that are in your possession, custody or power. Documents that are “relevant” to the issues in this matter include documents that do not support or adversely affect your case, or are confidential or informal. A party “deliberately” destroys relevant documents if he intends to put these documents out of reach of the other party in pending or anticipated litigation. If a party is found to have deliberately destroyed relevant documents, the Court may strike out that party’s claim (if he is the Plaintiff) or defence (if he is the Defendant), even if a fair trial is still possible. It may therefore be necessary for you to suspend any corporate document destruction programme immediately. From now on, you should not destroy any document which could conceivably be relevant, however unimportant it may appear to you.
If you have already destroyed relevant documents before instructing us in this matter, you are still required by the Rules of Court to disclose to your opponent that these documents were once in your possession, custody or power. As stated above, the Court has the power to impose severe sanctions if the destruction was deliberate. Your obligation to preserve evidence continues until this matter is finally resolved. The same obligation applies to your opponent. After action is commenced, you will in due course have to list, and then produce for your opponent’s inspection, relevant documents that are not privileged (including new documents that you create through internal discussion or otherwise) and which are in your possession, custody or power. We would therefore wish to be involved in the formulation of anything relevant to this matter which you may wish to commit to writing.
Please ensure that every individual in your organization who may be affected by your discovery obligations in this matter is made aware of the need to preserve relevant documents, whether or not those documents are privileged. If you have any questions
about this advice or any other discovery-related topic not covered by this advice, please feel free to contact our
Mr ____________ or Mr ____________.
Information on our professional fees
11 Our legal fees will be based on the actual time spent in connection with this matter by the lawyers having conduct of your matter, including the time spent in meetings with you, including any telephone conversations, emails to or from you, letters and others; preparing, reviewing and working on matter, preparing papers including correspondence; making and receiving telephone calls and others on your behalf ; preparing for and attending court on your behalf; travelling and waiting; and the overall management of this matter.
Hourly rate
12 The hourly rates of the lawyers who will be handling your matter are as follows: The hourly rate of the partner/director is S$_______________ per hour; our junior partners/director is S$_____________ per hour and that of our associates is S$_______________ per hour. We are mindful of the need to keep your costs under control, and will endeavour to do so by ensuring that all work is done at the appropriate levels of seniority with the requisite degree of supervision.
We keep our hourly rates constantly under review and will notify you of any changes to them.
OR
12 Our fixed fee for acting for you to complete the purchase of your property and mortgage as agreed shall be _______________ The sum will be paid_______________ days before completion of your purchase after we issue you our bill of costs. As we have agreed to undertake your work on a fixed fee basis the bill will be rendered to you with a list of disbursements incurred or to be incurred by the practice before completion of your sale/purchase which is fixed under your contract of sale and purchase on_______________ or redemption of your mortgage by _______________.
Please note this fixed fee agreed excludes disbursements and GST. We anticipate disbursements for the stamping of documents and all necessary legal searches to be about $_______________If there is a substantial increase in the estimate of our disbursements our practice will advice you of the same.
These disbursements include postage charges, telephone charges, photocopying charges, court fees and the costs of airfare and/or hotel accommodation for any travel outside Singapore relating to this matter by our lawyers. A list of disbursements will be provided in bill and a further itemised list of disbursements can be provided upon request.
Payment of deposit of fees
13 It is normal practice for law firms to require clients to pay sums of money from time to time on account of anticipated professional fees and disbursements. We will therefore require an initial deposit of S$_______________ (approximately Singapore Dollars ______________________) before we can start work on your matter. As you have advised the deposit will be remitted via telegraphic transfer in Singapore Dollars to our bank account, the details of which are as follows:
Please quote our file reference in your instructions to your bankers to assist us in tracing your remittance.
14 As your matter progresses, we reserve the right to ask for further deposits from you of a quantum commensurate with the anticipated professional fees and disbursements at that stage of the matter. If such a further deposit is requested, remittance of that deposit will be a condition of our continuing to act for you.
15 Please note that these sums are deposits only, and the total amount of professional fees and disbursements payable to us may exceed or fall below the total amount of deposits remitted to us.
16 We will hold all deposits remitted to us in our client account for your benefit. Unless you give us specific instructions, it shall be in our discretion whether or not to place such monies on interest-bearing deposit. We are entitled to set off the monies standing to your credit in our client account and any interest accrued thereon against legal fees and disbursements due to us. We will not, however, effect any set-off against our legal fees and disbursements unless we have rendered a bill to you or other written note of costs and notified you in writing to your last known address of our intention to effect the set-off and carry out the set off with 2 days of our bill or note to you. For the purpose of exercising such set-off, we shall have the right to uplift any of your monies placed on interest-bearing deposit by us, whether at or prior to the time of maturity of the deposit and regardless of any penalty which may be imposed for early withdrawal.
Further information on costs for a litigation matter
17 A dispute such as the present one, if it proceeds to trial, can take up to _____days in open court at a total cost, exclusive of disbursements, of between S$_________ and S$_________. If the matter is settled before trial, as happens in many litigious matters, our fees will be correspondingly lower. Please note that this estimate of likely fees is provided for your guidance only, and that our invoiced charges will in any event be based on the actual time spent by the lawyers handling this matter.
Information on party and party and solicitor and client costs
18 You will be personally responsible for the payment to us of our legal fees, disbursements and GST in full whether or not you succeed and whether or not the Court makes an order that your opponent pay your legal fees.
In the event that you are unsuccessful, you are likely to be ordered to pay your opponent’s legal fees, and you will have to pay these legal fees in addition to the legal fees due to us.
Even if you succeed in the litigation the Court may not order your opponent to pay your legal fees or not order your opponent pay the full amount of the legal fees actually payable by you to us or your opponent may not in fact be capable of paying what has been ordered against him. Fees of experts or third parties (if applicable)
19 If we instruct experts, translators or other third parties on your behalf and with your approval, you will be responsible for paying their fees directly to them upon presentation of their invoices.
If GST is payable
20 As we are a business registered under Singapore’s Goods and Services Tax Act, our legal fees and certain disbursements will be subject to a 7% Goods and Services Tax (‘GST’) to be borne by you.
Ceasing to act for you
21 We are entitled to terminate our engagement to act for you on the grounds set out in Rule 42 of the Law Society’s Professional Conduct Rules and this includes where you have been in breach of our agreement on payment of fees set out in this agreement.
At the time of termination, we are entitled to exercise a lien (a right of possession) over all documents and monies held on your account until full payment is received. In the event if you decide to appoint new law practice, we will as required by the Law Society’s Rules release all documents to them only upon receipt of an undertaking from your new lawyers to protect our right over your documents handed over to them for outstanding legal costs.
22 Please sign and return to us the attached copy of this letter and the enclosed Warrant to Act.
23 Please do not hesitate to contact our Mr ____________ or Mr ____________ if you require any clarification on any of the above matters or for any other purpose as this matter progresses.
Yours faithfully,
WARRANT TO ACT
I, ______________________ (NRIC No _______________) hereby agree to engage the services of M/s_________________ on the terms and conditions set out above and hereby grant that firm my Warrant to Act for me in Singapore in connection with legal proceedings relating to ___________________________.
Signed on the day of 2003. ________________________________
Name: NRIC No:
Note This is merely a sample Letter of Engagement and not a Law Society approved format. It is to help law practices to develop their first engagement letter. You may adapt this letter as may be appropriate to suit the manner in which you practise or how you wish to charge your client. What is important is that you do not insert any terms in your Warrant to Act or Letter of Engagement in breach of the Rules, the Legal Profession (Solicitors’ Accounts) and the Legal Profession (Deposit Interest) Rules.
* The author thanks Ms Desiree Lee Shuian Chii, Ms Simren Kaur Sandhu and Ms Samantha See Hui Jia, interns with the Law Society’s Vacation Internship Program 2010, for their assistance in preparing Part II of this article.
Notes
1 [2009] 4 SLR(R) 254.
2 Ibid at [106].
3 Ibid at [102] and [107].
4 Ibid at [105].
5 Ibid at [107] – [109].
6 Ibid at [107].
7 Ibid at [111]-{125}.
8 Ibid at [126].
9 Ibid.
10 Ibid.
11 Ibid at [127].
12 Ibid at [131] – [137].
13 Christopher Style & Charles Hollander, Documentary Evidence (Tenth Edition, 2009) p 213, para 10-04.
14 Ibid at 4, para 1-04.
15 [1968] 1 WLR 693.
16 Ibid.
17 Ibid at 694.
18 Jeffrey Pinsler, “Destruction of Evidence Prior to the Commencement of Civil Proceedings: How is a Court to Respond?” (2004) SJLS 20 at 36.