Oops! That document was privileged!

13 November 2013 Topics: Insurance

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

A recent judgment of the High Court of Australia has unanimously held that a party’s inadvertent disclosure of privileged documents did not amount to a waiver of privilege.

The solicitors for Expense Reduction Analysts (ERA) inadvertently disclosed a number of documents that were the subject of client legal privilege. The documents had been mistakenly added to the disclosed list of documents and copies were provided to the other party’s solicitors.

Once notified, the solicitors for ERA stated their clients maintained their claim of privilege, sought the return of the documents and requested an undertaking the documents would not be relied upon in the proceedings or otherwise.

The solicitors for Armstrong responded stating they had no obligation to return the documents and any privilege attaching to them had been waived. They declined to return the documents or give the undertaking sought by the solicitors for ERA.

The trial judge considered it necessary for ERA to show they had actually intended to claim privilege over each of the documents, and that a mistake had caused them to be disclosed. Her Honour held that 9 of the 13 documents in dispute had been inadvertently disclosed and a valid claim of privilege attached to these documents.

On appeal, the Court focussed on the question of whether there was power to make an order for return of the documents. The Court held that the law of privilege did not give courts a positive power to make such orders, and that the circumstances did not warrant imposing an obligation of confidentiality because the solicitors who received the documents could not be taken to be aware that they had been mistakenly disclosed.

The Court of Appeal also concluded that privilege in the documents had been waived. It was found the sending of the documents was an intentional act carried out with knowledge that privileged documents may be withheld from production during discovery. In considering the lapse of time between the disclosure of the documents and the claim of mistake, the court found it would be inconsistent for the solicitors for ERA to contend the documents were privileged.

On further appeal, the High Court unanimously held that privilege was not waived in respect of all the documents. ERA and its solicitors had not acted in a way that was inconsistent with claiming the privilege. The Court placed particular emphasis on the fact that ERA’s solicitors informed Armstrong’s solicitors as soon as they became aware of the mistake.

The High Court further went on to consider the Civil Procedure Act 2005 (NSW) and was of the opinion that the broad case management powers given under that Act meant that the Court had power to rectify the problem.

The High Court ordered that the hard copies of the documents be delivered back to the solicitors for ERA, and that all digital copies in the possession of the solicitors for Armstrong be destroyed.

This decision is consistent with rule 31 of the Australian Solicitors Conduct Rules, which requires documents that have been inadvertently disclosed to be returned to the party who provided the documents if the solicitor who received the documents knows or reasonably suspects they are confidential.

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