Discovery and legal professional privilege – all is not lost when disclosure is accidental

Expense Reduction Analysts Group Pty Ltd & Ors v Armstrong Strategic Management & Marketing Pty Ltd & Ors [2013] HCA 46

In Expense Reduction Analysts Group Pty Ltd & Ors v Armstrong Strategic Management & Marketing Pty Ltd & Ors [2013] HCA 46 the High Court has confirmed that accidental disclosure of documents over which legal professional privilege is claimed will not amount to a waiver of such privilege.  The appropriate course, in accordance with good practice management, will normally be for the recipient of the documents to return them to the solicitor of the party claiming privilege, and for that party to seek leave to amend its List of Documents.  Failing to take such a pragmatic approach and raising technical legal points may in the circumstances be a breach of a party’s and its legal representatives’ obligations under the NSW Civil Procedure Act (and, it follows, the Victorian Civil Procedure Act).

In large or complex litigation it is not uncommon for documents to be stored electronically.  In this case, Norton Rose (as it was then called) had its relatively inexperienced solicitors review the 60,000 or so documents stored on its database.  The process involved clicking a ‘yes’ or ‘no’ instruction as to relevance, and ‘yes’ or ‘no’ in respect of whether a document was privileged.  This enabled the compiling of the List of Documents, which was subsequently verified.

Unfortunately but familiarly a handful of documents were included in the non-privileged section of the List of Documents accidentally.

Upon receipt of the List of Documents and the database, Marque Lawyers acting for the opposing party found some of those documents and almost immediately recognised that legal professional privileged could have been claimed.  The solicitor with conduct of the file, after consulting with her responsible partner, wrote to her counterpart at Norton Rose advising of the disclosure.  He in turn advised that such disclosure was inadvertent, and reasserted the claim for legal professional privilege.  He sought the immediate return of the documents.  This was resisted.

Norton Rose sought an injunction.

No waiver

Because both the trial judge and the New South Wales Court of Appeal determined the matter by considering whether privilege had been waived (and found that it had – for example Campbell JA reasoned that Norton Rose’s client had waived privilege because the documents had been sent knowing that privileged documents might be withheld from production, and that the List of Documents had been verified), the High Court reviewed the law of waiver in these circumstances.

In a unanimous decision the Court confirmed that for privilege to have been waived there must be an inconsistency between the action of disclosure and the maintenance of the privilege.[1]  There may be an inadvertent waiver of privilege, but the intentional conduct must be plainly inconsistent with the maintenance of privilege in a manner that is unfair.  In this case, it was readily apparent that the disclosure was accidental, notwithstanding the verification of the List of Documents.  Marque Lawyers had not fully inspected the documents at the time when Norton Rose advised that the disclosure was mistakenly made.

After briefly reviewing English authorities, the Court found it necessary to emphasise that since the implementation of the civil procedure reforms, tangential disputes such as these ought not to have been raised.  In particular, the documents over which privilege was claimed had no obvious benefit to Marque Lawyers’ clients.  And further:

‘ […] in reality, there was no question of waiver sufficient to be agitated before the Court.  The documents disclosed during the discovery process were privileged, and Norton Rose’s claim that disclosure occurred by mistake was not disputed.  Any allegation of waiver was going to turn on a legal, technical argument tangential to the main proceedings, and should not have been made’.[2]

Applying the NSW Civil Procedure Act

The High Court – it would appear on its own initiative – had regard to the positive duty a party and its legal representatives have to give effect to the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in dispute:

‘That purpose may require a more robust and proactive approach on the part of the courts.  Unduly technical and costly disputes about non-essential issues are clearly to be avoided.  However, the powers of the court are not at large and are not to be exercised according to a judge’s individualistic idea of what is fair in a given circumstance.’[3] 

The Court referred to and relied on sections 58 and 64 of the Civil Procedure Act 2005 (NSW), which permit courts to order the amendment of any court document in giving effect to the overriding purpose.  In the premises, the Court held that Norton Rose’s client’s List of Documents ought to be amended so as to properly claim privilege.  Had the NSW Supreme Court made such orders immediately, this ‘complex’ dispute over privilege and the assertion of waiver would have been avoided.  Having made such order itself, the High Court further ordered that Marques Lawyers’ clients pay the costs of the Notice of Motion, the appeal to the Court of Appeal, and the application for special leave and the High Court appeal and cross-appeal.

Application to Victorian Courts

There is no provision equivalent to sections 58 and 64 in the Victorian Civil Procedure Act.  Whilst undoubtedly the broad powers of case management within the Act (for example section 9) are such that similar orders could readily be made, the Act has a proscriptive focus (see for example Part 2.3 and the sanctions set out in Part 2.4).

However, having regard to the Court’s decision, it is to be expected that Victorian courts will take a similarly pragmatic approach to similarly tangential disputes so as to maintain the court’s focus on the real issues in dispute.

Clive Madder – CommBar profile