Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd
High Court of Australia · 2013
Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303
A firm lists thirteen privileged documents as ordinary ones because of a default setting in its review database, and the other side keeps them. Has the privilege gone?
In Glencore the High Court (a single joint judgment of seven Justices) said at [36] that Expense Reduction Analysts was a case about documents mistakenly given in discovery, where the court's case management powers were enough to make the orders needed, and that it does not stand for a broader proposition allowing privilege to be asserted to obtain relief in the nature of an injunction. At [34] the Court said that once privileged communications have been disclosed, resort must be had to equity for protection against use of the material, the juridical basis being confidentiality. Read Expense Reduction Analysts as a decision about correcting a mistake in discovery.
What happened?
In 2010 the Armstrong parties sued the ERA parties in the District Court of New South Wales over the ERA parties' conduct in a business they had established together; the proceedings were later transferred to the Supreme Court ([1]). On 22 July 2011 the Supreme Court ordered the parties to give verified, general discovery ([3]). The ERA parties' solicitors, Norton Rose, reviewed about 60,000 documents using an electronic database in which the privilege field defaulted to "No" unless a reviewer selected otherwise, so that a document with no selection appeared in the non-privileged section of the list ([8]). A number of privileged documents, including 13 in dispute, were listed as non-privileged by error ([10]).
Marque Lawyers, for the Armstrong parties, received the disks on 19 October 2011 and began inspecting them on 25 November 2011 ([11]). Norton Rose wrote on 6 December 2011 that the documents had been produced by mistake and that privilege was maintained, and asked for their return ([12]). On 12 December Marque Lawyers replied that any privilege had been waived ([13]). Norton Rose moved for relief on 23 December 2011 ([14]).
Bergin CJ in Eq found nine of the documents were disclosed inadvertently, the intention to claim privilege being evident from duplicates correctly listed as privileged, and was not satisfied as to four ([18]). The Court of Appeal allowed the Armstrong parties' appeal, reasoning that a reasonable solicitor would not have realised the mistake and that privilege had in any event been waived ([25]-[27]).
What did the Court decide?
The High Court allowed the appeal, set aside the Court of Appeal's orders 4 to 10 and ordered that the appeal to that Court be dismissed. It dismissed the application for special leave to cross-appeal, and ordered the respondents to deliver up, return and delete the four documents that remained in dispute ([68]). The reasons were a single joint judgment of French CJ, Kiefel, Bell, Gageler and Keane JJ, beginning at [1].
Proposition
What is the principle?
Waiver. Waiver in its strict sense 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)", and the law may also impute it: "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 joint judgment held that those considerations "apply with equal force" to the statutory question under s 122(2) of the Evidence Act, as made applicable by s 131A to a question of waiver arising on pre-trial discovery ([32]). The statutory question is whether the client or party "has acted in a way that is inconsistent with the client or party objecting to" production ([32]).
Applying that, the Court found inconsistency in the lists, but not one "which clearly suggests abandonment of the privilege" ([33]). Listing nine documents in both sections of the lists was apt to confuse and was "strongly indicative of mistake", and the 6 December letter, sent promptly and before Ms Marshall had fully inspected the documents, conveyed the true position ([33]-[34]). The primary judge had asked whether a reviewer intended to claim privilege for each document at the time of listing. The Court said that was not the intention relevant to waiver, which concerns abandonment ([19]); a continuing intention to claim privilege is relevant, but it was sufficient to prove that the ERA parties intended to maintain their claims and that the reviewers were carrying out their instructions, from which mistake could be inferred ([20]).
Correcting a discovery mistake. The joint judgment said: "where a privileged document is inadvertently disclosed, the court should ordinarily permit the correction of that mistake and order the return of the document, if the party receiving the documents refuses to do so" ([45]). Courts will normally permit correction only if the party acts promptly, and relief may be refused if the receiving party has been placed in a position where return would be unfair ([49]). The power lay in the Supreme Court's supervision of discovery and in Pt 6 of the Civil Procedure Act 2005 (NSW), in particular the power to order amendment of a document in s 64 ([7], [58]).
Why does this case matter?
It is the case a problem question about a mistakenly produced privileged document sends you to, and its facts are narrower than a loose reading suggests: court-ordered discovery, a careful process that failed at one point, a notification within weeks and a receiving party with nothing to show for keeping the documents.
It also shows privilege disputes being governed by court procedure as well as evidence law. The Court treated the fight over these documents as a tangential dispute that should have been avoided ([7], [59]), and it spoke of the professional obligations of the solicitor who receives privileged material ([65]-[67]). That connects the evidence topic to the ethics and procedure topics in the same article.
Exam and application relevance
Identify the setting first: a document handed over under a court's discovery order, or voluntarily outside litigation. The joint judgment's statutory reference is to s 122(2) as made applicable by s 131A in New South Wales ([32]); for another jurisdiction, read that jurisdiction's own provisions rather than assuming the same section number does the same work.
Then ask the questions the Court asked. Was the disclosure inadvertent, and how do you know (the Court inferred mistake from the instructions and the duplicates)? What did the holder do on learning of it, and how fast? Has the receiving party been put in a position where return would be unfair? Was the holder's conduct inconsistent with maintaining confidentiality, in the sense of the passage at [30]?
Use the case for what it decided on a record where the fact of mistake was not disputed ([61], [63]). Where mistake is contested, or the holder delays, the Court's observations at [49] indicate the questions that arise, but the Court did not decide such a case.
Check your understanding
1. On what facts did the joint judgment find no waiver, and which paragraphs record the steps the ERA parties' solicitors took after the mistake was noticed? 2. The primary judge asked whether the reviewers intended to claim privilege for each document. Why did the joint judgment say that was not the intention relevant to waiver? 3. What powers did the Court say the Supreme Court had to deal with the mistake, and why did it say there was no need for an equitable action? 4. Which parts of the judgment are stated in terms of New South Wales provisions, and what would you check before applying them elsewhere?