High Court visits waiver of privilege by inadvertent disclosure
The inadvertent disclosure of privileged documents can be expected more often as courts pressure lawyers to move large commercial cases quickly to trial. In its first consideration of the problems resulting from inadvertent disclosure, the High Court has emphasised modern case management principles and obligations, and rejected an approach of applying equitable doctrines of confidentiality.
In a proceeding in the District Court of NSW, the parties exchanged lists of documents and disks pursuant to an order for general discovery. The appellants’ (ERA parties) discovery process involved reviewers combing an electronic database of some 60,000 documents and tagging each document for relevance and privilege: . After the exchange, Norton Rose Australia, solicitors for the ERA parties, claimed that a number of documents had been inadvertently disclosed contrary to its clients’ instructions, and that the documents were the subject of a claim for legal professional privilege: .
Marque Lawyers, solicitors for the Armstrong parties, declined to return the documents or give an undertaking not to use them. The Armstrong parties accepted that the disclosure had been inadvertent, but asserted that privilege had been waived: . The ERA parties commenced a proceeding in the Supreme Court for injunctions and other relief.
Earlier approaches to inadvertent disclosure
Before the High Court’s decision, three approaches were discernible in judicial decisions on the problem of inadvertent disclosure.
In all cases, it was relevant to determine whether privilege had in fact been waived by the inadvertent disclosure.
In some cases, courts explored a disciplinary dimension to the use of documents disclosed inadvertently. They considered whether by reason of the use made of the documents in breach of equitable or other duties, lawyers should be restrained from acting in the proceeding in the exercise of courts’ supervisory jurisdiction: See GT Corporation Pty Ltd v Amare Safety Pty Ltd  VSC 123; Kallinicos v Hunt (2005) 64 NSWLR 561, 582-583 (Brereton J); H Stanke & Sons Pty Ltd v Von Stanke  SASC 308,  (White J).
In a number of cases, the equitable doctrine of breach of confidence was explored as a basis for orders restraining use of inadvertently disclosed material. This was the approach taken by the NSW Court of Appeal: Armstrong Strategic Management v Expense Reduction Analysts  NSWCA 430.
Approach taken in the High Court
The High Court’s principal emphasis was on the case management dimensions of the case.
In a unanimous judgment it found that there had been no waiver. Waiver, it said, is a matter of the conduct of the person said to have waived: . This was no more than an application of principle laid down in the Court’s earlier judgments on waiver of legal professional privilege: see Mann v Carnell  HCA 66 at ; Osland v Sectretary, Department of Justice  HCA 37 at  and see s 122(2) of the uniform Evidence Acts. The list of documents indicated a mistake or confusion about the position taken by the ERA parties: .
The Court said that inadvertent disclosure should not often lead to waiver. Discovery required abrogation of a litigant’s right to keep documents confidential, but only to the extent necessary to achieve justice: . It was not intended to affect a person’s entitlement to maintain the confidentiality of documents: . So where a privileged document was inadvertently disclosed, the court ‘should ordinarily permit the correction of that mistake and order the return of the document, if the party receiving the document refuse[d] to do so’: .
A feature of the judgment is the Court’s rebuke of the parties for allowing the dispute over the documents to get so large. Action in the equitable jurisdiction of the Supreme Court, it said, was unnecessary – that Court had the inherent power to deal with the correction of the disclosing party’s mistake: . In large commercial cases, it said, mistakes in discovery are now more likely to occur . The Supreme Court should promptly have made orders amending the list of documents and for the return of the disks to enable the privileged documents to be deleted: . As to the disciplinary dimension, the High Court observed it should not be necessary to tell solicitors they are promptly to notify the other side if they receive by inadvertent disclosure documents known or reasonably suspected to be confidential: .
The High Court clearly took a dim view of the proportions the dispute over the disclosed documents had assumed in the matter before it. Modern case management principles, (such as those found in the Civil Procedure Act 2005 (NSW) (CPA) and its equivalents in other jurisdictions) require parties to get quickly and with the minimum of expense to the resolution of the real issues in dispute: . Satellite litigation, the Court said, was ‘the very kind of conduct which should be avoided if [the purposes of the CPA] are to be achieved’: .
Considerations of case management and doing justice were not in tension with each other. The terms of the Civil Procedure Act, the Court said, ‘assume that its purpose, to a large extent, will coincide with the dictates of justice’: . The correct approach to interlocutory proceedings is to have regard to the wider objects of the administration of justice: .
Other features relevant to discovery
The High Court’s judgment appears to approve a practical approach to discovery. It observed that parties ought to be able to rely on discovery and that every reasonable effort should be taken to ensure the accuracy of verified lists of documents: . But the High Court’s approach accepts that mistakes will happen. The Court did not criticise the process of discovery followed by Norton Rose – which involved the use of relatively inexperienced reviewers and in which mistakes admittedly occurred. Rather, it referred to it as ‘a careful process of discovery’: .