Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited (2013) 250 CLR 30
This appeal examines the issue of inadvertent disclosure of documents subject to client legal privilege, during the process of discovery in an action brought by the Respondents against the Appellants.
In July 2011, both parties were ordered to give verified, general discovery by a judge of the Supreme Court of New South Wales.1
After the Appellant’s solicitors served their client’s verified Lists of Documents on the Respondent’s solicitors, letters were exchanged whereby the Appellant’s solicitors claimed that a number of documents, the subject of client legal privilege, ‘had been inadvertently disclosed’.2
The Appellants (through their solicitors) requested the privileged documents be returned3 and that the Respondent solicitors provide an undertaking to not use information gained as a result of the inadvertent disclosure.
The Respondents disputed their obligation to return the documents and give an undertaking, claiming that any privilege associated with the documents had been waived by the disclosure.
The Primary Judge’s approach
At first instance, the matter came before Bergin CJ in Equity in the Supreme Court of New South Wales, where the ERA parties were seeking injunctive and other relief. Her Honour found that nine of the thirteen documents in dispute were disclosed inadvertently. Orders were made for the return of the disks in the possession of the respondent solicitors in order to remove the nine documents in question.
The respondents appealed the decision.
The approach of the Court of Appeal
‘The Court of Appeal allowed the appeal on the basis that the mistakes in disclosing the documents in the discovery process would not have been obvious to a reasonable solicitor and dismissed the ERA parties’ cross-summons seeking leave to cross-appeal with costs.’4
The majority considered the legal principle in Guinness Peat Properties Ltd v Fitzroy Robinson Partnership (‘Guinness Peat Properties’), asking the question of whether ‘a reasonable solicitor in the position … should have realised that the documents had been disclosed by mistake.’5
The Court of Appeal concluded that the test was not satisfied and no obligation of confidence could be imposed on the Respondents concerning the disclosed documents.6 Further, they concluded that privilege over the documents had, in any event, been waived.7
The High Court’s Approach
In consideration of the appeal, the High Court stated that much has changed since Guinness Peat Properties was decided in 1987. ‘The nature of litigation and the complexity of discovery since that time’ has evolved greatly in Australia and England.8
Waiver
The Court noted that the rule concerning waiver in Australia is that found in Craine v Colonial Mutual Fire Insurance Co Ltd, namely that ‘waiver is an intentional act done with knowledge whereby a person abandons a right (or privilege) by acting in a manner inconsistent with that right (or privilege)’.9 It held that a mistake does not amount to an abandonment of privilege, and that any doubts the Respondents had about the Applicant’s claims for privilege were dispelled by the letter from the Appellant’s solicitors promptly advising of the inadvertent disclosure. The Court held that the circumstances were not indicative of an inconsistent position being taken by the Appellants, and that the issue of waiver should never have been raised.10
Discovery Process
The Court briefly commented on the complexity of the modern discovery process, citing Lord Diplock in Harman v Secretary of State for the Home Department:11
[T]he use of discovery involves an inroad, in the interests of justice, upon the right of the individual to keep his own documents to himself.
However, the Court confirmed that it is not intended that discovery affect a person’s ability to maintain confidentiality of documents where the law permits.
It follows that where a privileged document is inadvertently disclosed, the Court should ordinarily permit the correction of the mistake and order the return of the document, if the party receiving the documents refuses to do so.12
It further noted that in the case of inadvertent disclosure, the Courts will only be concerned in instances where dispute arises, which should not often occur.13
Case Management
The Court then addressed the development of case management principles in England and Australia. It cited with approval, Jameel (Yousef) v Dow Jones & Co Inc14 in which the effect of the Civil Procedure Act15 on the conduct of litigation was discussed:
It is no longer the role of the Court to simply provide a level playing field and to referee whatever game the parties choose to play upon it. The Court is concerned to ensure that judicial and Court resources are appropriately and proportionately used in accordance with the requirements of justice.
The Court noted that although in the UK, case management principles may not apply to the return of inadvertently disclosed privileged documents,16 in NSW the principles do apply. It reiterated, ‘the overriding purpose of the CPA and the rules of Court, as stated in s 56(1) of the CPA, is ‘to facilitate the just, quick and cheap resolution of the real issues in the dispute or proceedings.’17
Conclusion
The attitude of the Court is summarised at [59]:
It could hardly be suggested that the pursuit of satellite interlocutory proceedings of the kind here in question in any way fulfils the overriding purpose of the CPA. To the contrary, it is the very kind of conduct which should be avoided if those purposes are to be achieved. It involved a relatively minor issue relating to discovery, the resolution of which appears to have offered little advantage to the Armstrong parties. Its determination went no way towards the resolution of the real issues in dispute between the parties. Instead, it has distracted them from taking steps to a final hearing, encouraged the outlay of considerable expense and squandered the resources of the Court.
The High Court criticised the overly technical approach adopted by the lower courts. ‘The direction which the Supreme Court should promptly have made in this case was to permit Norton Rose to amend the Lists of Documents, together with consequential orders for the return of the disks to enable the privileged documents to be deleted’.18
It further noted that in addition to the duty of the Court under section 64 of the CPA, solicitors themselves have a duty under Rule 31 of the Australian Solicitors Conduct Rules 2012 (Qld) (‘ASCR’), ‘which … deals with the duty of a solicitor to return material, which is known or reasonably suspected to be confidential, where a solicitor is aware that its disclosure was inadvertent.’ The Court referred to a solicitor’s responsibility in these words:
The question for a party to civil proceedings and its legal representatives is not just whether there is any real benefit to be gained from creating a dispute about whether a mistake in the course of discovery should be corrected. The CPA [in Qld the UCPR] imposes a positive duty upon a party and its legal representatives to facilitate the CPA’s [in Qld UCPR’s] purposes. Requiring a court to rule upon waiver and the grant of injunctive relief in circumstances such as the present could not be regarded as consistent with that duty.19
The Court further said that an ethical rule, such as Rule 31 ASCR ‘should not be necessary’.20 Our conduct should be aimed toward assisting ‘the Court to facilitate the overriding purposes of the CPA [in Qld the UCPR]. It is an example of professional, ethical obligations of practitioners supporting the objectives of the proper administration of justice’.21
Orders
The High Court ordered that all documents for which privilege was claimed be returned to the Applicants, that all electronic copies held by the Respondents be deleted, and that the Respondents pay the costs of all actions relating to the mistakenly disclosed documents.
1 Under a power granted by the Civil Procedure Act 2005 (NSW), through the Uniform Civil Procedure Rules 2005 (NSW).
2 (2013) 250 CLR 303, 4.
3 See Australian Solicitors Conduct Rules 2012 (Qld) r 31 for the ethical position in Queensland.
4 (2013) 250 CLR 303, 5.
5 [1987] 1 WLR 1027, 1045-1046 (Slade LJ); [1987] 2 All ER 716, 730-731.
6 (2013) 250 CLR 303, 26.
7 Ibid 27.
8 Ibid 38.
9 (1920) 28 CLR 305, 326.
10 (2013) 250 CLR 303, 35.
11 Harman v Secretary of State for the Home Department [1983] 1 AC 280, 299 (Lord Diplock J).
12 (2013) 250 CLR 303, 45.
13 Ibid 50.
14 [2005] QB 946, 965 [54].
15 Civil Procedure Act 2005 (NSW).
16 DuPont Nutrition Biosciences ApS v Novozymes A/S [2013] EWHC 155 (Pat), [55].
17 (2013) 250 CLR 303, 52. Also note that in the Uniform Civil Procedure Rules 1999 (Qld), rule 5 provides a similar purpose.
18 Ibid 58.
19 Ibid 64.
20 Ibid 66.
21 Ibid 67.