The High Court of Australia (French CJ, Kiefel, Bell, Gageler and Keane JJ) delivered a unanimous judgment yesterday in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited [2013] HCA 46 (www.austlii.edu.au/au/cases/cth/HCA/2013/46.html).
Two principal issues arose for determination. First, whether the mistaken discovery and provision for inspection of obviously privileged documents could amount to a waiver. Secondly, the appropriate procedure for a Court to adopt where a privileged document has been inadvertently discovered. The Court also took the opportunity to remind solicitors of their professional and ethical obligations in the circumstances.
Background
On 22 July 2011, the parties were ordered to give verified, general discovery by a judge of the Supreme Court of NSW.
A number of documents, which were subject to client legal privilege, were mistakenly listed in the non-privileged section of the appellants’ verified lists of documents by their lawyers Norton Rose. Electronic copies of these documents were also inadvertently disclosed to the respondents’ solicitors, Marque Lawyers.
Those lawyers declined to return the documents not because it disputed the assertion of inadvertence but because of its view that any privilege attaching to the documents had been waived. Discovery by Norton Rose alone involved approximately 60,000 documents.
The matter came before Bergin CJ in Eq on a motion for injunctive and other relief. By the time of her Honour's decision, 13 documents remained in dispute. Her Honour found that nine of the documents were disclosed inadvertently and ordered the return of those documents. However, her Honour considered that privilege in the four remaining documents had been waived and therefore declined to order their return.
The Court of Appeal overturned the Supreme Court's decision finding that the Court did not have power to order the return of any of the 13 documents. According to the Court of Appeal, the orders sought could only be granted in the exercise of the Court’s equitable jurisdiction on the basis of the law of confidential information. It found that there was no equitable obligation of confidence upon Marque Lawyers. Further, and in any event, the Court of Appeal also found that privilege in the documents had been waived. Campbell JA said that Norton Rose’s sending of the documents was an intentional act carried out with knowledge that privilege documents may be withheld from production; that act was done in the context of a Court-ordered discovery process where the parties’ Lists of Documents were verified and certified; there was a lapse of time between the disclosure of the documents and the claim of mistake; and the mistake was not obvious.
By grant of special leave, the appellants appealed to the High Court.
Can the mistaken discovery of a privileged document constitute a waiver?
The Court noted that according to its strict legal connotation, waiver is an intentional act done with knowledge whereby a person abandons a right (or privilege) by acting in a manner inconsistent with the right (or privilege). In most cases concerning waiver the area of dispute is whether it is to be implied. The courts will impute an intention where the actions of a party are plainly inconsistent with the maintenance of the confidentiality which the privilege is intended to protect [30]. The Court noted that these considerations, articulated in relation to waiver at common law, apply with equal force in relation to the statutory question posed by s 122(2) of the Evidence Act, and made applicable by s 131A of that Act to the determination of a question of waiver of client legal privilege arising in the context of pre-trial discovery [32].
The Court determined that the issue of waiver should never have been raised. It found that whatever doubts Marque Lawyers had about the claims for privilege were dispelled by a letter from Norton Rose of 6 December 2011 advising that some privileged documents had been incorrectly listed as non-privileged. That letter was sent promptly once Norton Rose became aware that mistakes had been made [34] & [35].
The appropriate procedure for the Court to adopt where there is a claim that documents have been mistakenly discovered
The Court found that it is important to bear in mind that the disks containing the privileged documents only came into the possession of the respondents as a result of the process of court-ordered discovery. When an order for discovery is made under the UCPR the parties ordered to make discovery are obliged to comply with the order by serving a list of documents. Therefore, the discovery process is subject to the supervision of the Court.
Section 64 of the Civil Procedure Act (CPA), empowers the Court, at any stage in the proceedings, to order that any document in the proceedings be amended. Section 64(2) provides that, subject to s 58 (the dictates of justice), “all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings.” The Court further noted that the overriding purpose of the CPA (s 56) and the UCPR is "to facilitate the just, quick and cheap resolution of the real issues in dispute.”
The Court concluded that:
(a) “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 that 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…” respondents [59];
(b) the direction which the Supreme Court should promptly have made, consistent with the overriding purpose of the CPA and the UCPR and having regard to the power in section 64 of the CPA, 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. “Such a direction and orders would have obviated the need to resort to the more complex questions concerning the grant of relief in the equitable jurisdiction.” [58]-[59]; and
(c) In a case where the fact of mistake was not disputed, it was necessary that the mistake be corrected and the parties continue with their preparation for trial [60]-[61].
Solicitors’ responsibilities
The Court noted that 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 imposes a positive duty upon a party and its legal representatives to facilitate the CPA's purposes. Requiring a court to rule upon waiver and the grant injunctive relief in circumstances such as the present could not be regarded as consistent with that duty.” [64]
The Court noted that Rule 31 of the Australian Solicitors’ Conduct Rules (adopted by the Law Council of Australia and also adopted by Queensland and South Australia and proposed to be adopted by the Law Society of NSW) 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. It involves notifying the other solicitor of the disclosures and returning that material [65]. The Court said that such a rule should not be necessary. "In the not too distant past, it was understood that acting in this way obviates unnecessary and costly interlocutory applications. It permits a prompt return to the status quo and thereby avoids complications which may arise in the making of orders for the rectification of the mistake and the return of documents. This approach is important in a number of respects. One effect is that it promotes conduct which will assist the Court to facilitate the overriding purposes of the CPA. It is an example of professional, ethical obligations of legal practitioners supporting the objectives of the proper administration of justice.” [66] & [67]
Conclusion
The appeal was allowed.
The respondents were ordered to pay the appellants’ costs of the appeal to the Court of Appeal, the applications for special leave to appeal and to cross appeal and of the appeal.
The respondents were ordered to deliver up all hard copies of the four documents in their possession, custody or power to the solicitors for the appellants, to return any computer disk containing copies of the documents, to delete all electronic copies of the documents and to provide written confirmation of compliance with this order to the solicitors for the appellants.
