Cayman Islands: Trust Disputes In The Digital Age - Part 2

Preparation for discovery in the digital age

The use of back-up tapes is one method of preserving electronic material. Some trust companies rely entirely on back-up tapes as an electronic storage system. The reliability of back-up tapes may depend on how frequently the process is carried out and whether, and how frequently, 'full back-up' is done. The back-up tape system was initially created to aid in the recovery of electronic documents in the event of a disaster and it is arguably no longer adequate for current record management purposes.

The disadvantages of only using a back-up tape storage system can include the following:

An example of what can happen when a party has depended upon the use of a back-up system was the Phen-Fen case.⁴⁶ In that case, Wyeth was required to produce documents for disclosure which had been stored only on back-up tapes. Wyeth reportedly settled with the plaintiff rather than paying the estimated discovery costs of up to US$1.7 million.⁴⁷ Similarly, in Murphy Oil USA, Inc. v. Fluor Daniel, Inc.,⁴⁸ the defendant adduced evidence that it would cost US$6.2 million and would take six months to produce the emails stored on back-up tapes.

The best form of preparation that a trustee or any organisation can undertake prior to any contemplated litigation is to acquire an up-to-date electronic records management system, prior to the commencement, or even anticipation, of litigation.

It is important to ensure that whichever system the trust company chooses to employ, it can also retain and maintain emails even if no separate email retention system has been put into operation. The more prepared a party is for electronic disclosure, the lower the costs and time spent searching for relevant material when litigation is contemplated or commenced.

The four main processes affecting the storage of electronic records are:

1. Accession - placing records in to a storage area on the system.
2. Structure - ensuring that the records are structured to aid any future retrieval and destruction.
3. Security - ensuring that the records will be protected from unauthorised use and from deterioration of file formats or mediums.
4. Retrieval - ensuring that records can easily be accessed.⁴⁹

Further, an email record management system must be able to do the following things in order to maintain the integrity of an email, and thus the weight to be attached to it in evidence:

• Manage emails and their attachments as a single entity. For obvious reasons it is important to view the email in its context and together with any attachments sent;

• Maintain the attributes (e.g. sender, cc, etc) of each email;

• Store the metadata associated with the email so that it can be recorded to an electronic research database; and

• Export emails together with associated attachments and metadata.⁵⁰

In addition to these storage capabilities, an email management system will be significantly more useful for the purposes of discovery if it also contains the following features:

• No user involvement – this will remove the risk of deletion and personal storage styles. That is not to say that individual users will have their email filing methods curtailed, but the underlying system will do the job for them.

• Indexing of all content – this will decrease time spent later searching for related emails.

• Providing the end user with access to archived emails – this allows attorneys to inspect and review the documents without the need for any IT specialists.

• Protection from tampering – the archived emails can be maintained by an external programmer.

• Flexible storage media options – the system can produce documents in acceptable media formats for disclosure.⁵¹

An email archive system, rather than storing emails on back-up tapes, stores the email and related data on quick-retrieval storage systems that can be integrated with existing applications. This system captures and stores all emails going to, from and within the organisation. This avoids the possibility of both deliberate and inadvertent deletion of emails. A large number of the archive systems are able to perform powerful web-based searches and retrievals and provide the retrieved documents in a number of different formats for production.⁵² Archiving systems also allow for storage of emails with large attachments. This can enhance the speed of the server and other applications, while still allowing quick retrieval of the email and attachment when required.⁵³

Whichever electronic records management system is used, it is essential that it is capable of storing authentic documents reliably and accurately. If a party to litigation can show that the document has not been tampered with during migration from one medium to another, or during storage, it can pre-empt the timeconsuming and costly task of authenticating a document at the time of proceedings.^54,55

Imaging and indexing systems can be used by trustees and lawyers in preparation for litigation. These systems index all of the disclosed documents, and the range of the indexing can be customised to each particular case. The indexing will be accompanied by scanning the documents so that they can be easily viewed and documents received electronically should be simple to add. These systems replace the traditional system of boxes of documents being reviewed and manually indexed.⁵⁶

These systems present a considerable initial cost but the amount of time and money saved in the future will be significant. These systems can also be rented for the duration of a case if the up-front cost outweighs the likelihood of the case continuing to trial. Systems can usually be rented for a fixed monthly cost, which may be more convenient and can also be more easily charged as a disbursement in an individual case.⁵⁷

When reviewing the other side's electronic documents it is important to consider carefully whether anything is missing – the metadata of emails or word-processed documents for example could indicate whether there are any gaps in the evidence received. For example, if the metadata of an email shows that this email was sent to a certain person but there is no response from that person, it could mean that some emails have not been produced. It is also an excellent factual resource to prove "who knew what when" arguments. This exercise can only be carried out by viewing such disclosure in an electronic rather than paper-form.

Once documents have been produced by the opposing party, one of the best advantages a litigious team can have is the ability to understand and use the new record management systems. This will produce the greatest value from searching electronic documents. In an unreported UK case "an IT-literate lawyer revealed key evidence that did not appear on the paper copy and resulted in the case settling".⁵⁸

Several digital courts have been created in a number of countries which demonstrate the possibilities for court systems, and the legal system as a whole, in the future. These courts typically include high capacity infrastructure such as plasma display screens for all parties, the judge, witnesses, the public gallery, and where appropriate the jurors. Some courts also offer high speed access to the internet and the ability to provide live TV and video links.⁵⁹

The growth in internet usage around the world has increased significantly in the last five years^60,61 which has enabled a number of jurisdictions to allow parties to file documents electronically.

A small number of UK courts allow for parties to communicate with the court via email, and file documents, which do not require a fee, via email or via an online forms service. A listing of the courts that provide these electronic services is listed on the Court Service website. When the document has been received by the court an email receipt can be sent back to the solicitors involved to confirm receipt and filing of the documents.⁶²

In the UK, some County Courts allow limited electronic filing and correspondence by email with the court. One County Court also allows parties in ongoing proceedings to issue and serve applications by email.

The Employment Tribunals Service now permits complaints and employment tribunal applications to be made online. This service has caused some controversy, particularly when a user submitted an application online that was received by the host of the website, but due to technical difficulties, had not in fact been transferred to the Tribunals' mailbox.⁶³

Evidence systems have been introduced in some Crown courts across the UK but not as yet into the civil courts.

In Australia, the Federal Court and the Magistrates Court of Victoria, numerous Magistrates Courts throughout Queensland and a number of other courts have implemented active e-filing systems.⁶⁴ The Magistrates Court of Victoria has offered e-filing for over a decade.⁶⁵

Canada's Federal Court implemented an electronic filing pilot in October 2005 created specifically for the Canadian court system by LexisNexis Canada Inc.⁶⁶

Singapore is the most advanced in e-filing court systems, with the world's first nation-wide paperless civil court system. It has been compulsory to file documents electronically since March 2000.⁶⁷

Finland has allowed electronic filing since 1993, however the use of these systems elsewhere in Europe has been very low.⁶⁸

In the Cayman Islands, the Court sometimes requests parties' submissions and draft orders to be made available in electronic format.

The British Virgin Islands has enacted procedural rules to permit electronic record/filing of documents but no Practice Direction has yet been introduced.⁶⁹

In future, these filing systems could save courts an enormous amount of time and money. If the documents are filed electronically it will be more efficient to maintain electronic case management systems where documents, video and other forms of media can all be stored and viewed as one bundle of documents. This will also make it possible for the court and the adjoining parties to access certain of the filed documents and track the progress of the case through one online system (with the appropriate security to maintain confidentiality, where appropriate). This will have a number of benefits including:

1. reducing the workload of court registries;
2. narrowing the window for error or loss of documents; and
3. increasing the access to all relevant documents of different types of media.

As cases progress it will also be possible for the electronic case file to be easily transferred to the next court.⁷⁰ Hopefully, this will put an end to the all too familiar cry that "we lost the file".

There is the potential for courts to provide a system for evidence presentation which allows for all those in the courtroom participating in the proceedings to view documents related to the case on screen, in order to ensure that everyone is viewing the same document. This system will also remove the need for multiple paper copies being distributed to counsel (and jurors) in the middle of a hearing.⁷¹ These documents, as well as videos, DVDs and other material, can be added through litigation support systems used by the court and the parties. It is estimated that evidence presentation systems could take 20% off the time it takes to run fraud cases with paper document bundles.⁷²

In-court document cameras can also be used to view additional documents which have not been scanned into the system prior to the commencement of proceedings. Document cameras are now widely sold throughout the world. Although courts in many jurisdictions ban cameras that are designed to record proceedings, there can be no real basis upon which to object to document cameras, used for the specific purpose of viewing documents. Countries where some courts, other than demonstration courts, have installed document cameras include Australia, Scotland, Ireland and the United States of America.

Courts that provide services to file documents electronically will automatically be able to add these documents to the evidence presentation system. These electronically filed documents can be maintained by the court in a computer case management system and then added to the in-court presentation system, thereby eliminating, or at least reducing, the need for documents to be printed.⁷³

Digital courts also feature real-time court reporting using an in-court stenographer. The transcript automatically appears on the screens in the courtroom. The judge is able to take notes directly beside the progressing transcript and parties can use the direct transcript for review and questions during court time. It is possible to code (e.g. by use of colour) evidence given by a particular witness or on a particular subject, issue or even in relation to a particular word to enable quick searching – an invaluable tool for cross-examination. These live transcripts (in open court) can also be projected to legal assistants, clients or other advisers not present in the courtroom via high-speed internet.⁷⁴

Video-conferencing is also available in many courts to allow for people unable to be present to participate in proceedings. This technique is already used in a large number of courtrooms.

The benefits of using electronic litigation support systems are undeniable however, their true potential will not be realised until the court systems catch up with technology.⁷⁵

Courtroom 21 in Williamsburg, Virginia, USA, is a test project for the technological possibilities for court systems in the future. In a test case in April 2005, related to abduction of children, one judge sat at the bench in Courtroom 21 and the other in Monterrey, Mexico. They both listened to evidence and reached a joint decision on the case. Although simply a test case, it is clear that in the future disputes crossing legal systems could be decided in such a way. With the expanding use of the internet and electronic business, a number of disputes arise relating to the jurisdiction of certain business activities. The integration of court systems in the way demonstrated by the Courtroom 21 exercise established many possibilities for future dispute resolution.

This is significant in the context of international trust litigation, in which third party agreements are frequently governed by foreign law and/or the parties themselves are located in different jurisdictions.

Going forward, the potential for change in the trust industry and in our legal systems is immeasurable. Legislation has been changing to accommodate the growth of technology at a relatively slow pace. With the increased use of email and other communication tools such as PDAs and wireless handheld devices, it is becoming increasingly important for users to adapt to and take advantage of new technologies as quickly as possible.

It is impossible to predict which new technological developments will be created and implemented. The only certainty is that internal systems will have to continue to keep pace with new technologies. This will have a direct impact on trust administration and the manner, time and cost of resolving trust disputes. In this digital age, trustees need to focus increasingly on filing and storage of electronic information but above all, how to retrieve it and how best to use it.