In Australia, as a general rule, where there is a reasonable prospect of litigation occurring or investigations being undertaken by regulatory authorities, a business should take all necessary steps to ensure that it can meet its obligations to retain any relevant or potentially relevant documents which would be disclosable in these circumstances.

In addition, there are around approximately 80 pieces of legislation at both a State and Federal level which regulate the extent to which documents and corporate records are required to be maintained. For example, employee records have to be maintained for seven years after termination of employment as do certain financial records for business purposes.

On the other hand, the

requires that insofar as personal information is obtained, to the extent that it is no longer required the records must be either destroyed or permanently de-identified.

There is, therefore, a tension between a business appropriately retaining documents and the legitimate destruction of documents in accordance with a document management system or law as opposed to the deliberate destruction of documents aimed at removing documents which otherwise might fall within the jurisdiction of the court. It is important to note that a party found guilty of destroying relevant documents can be prosecuted for contempt of court or perverting the course of justice. Some states have embodied into legislation criminal sanctions against the wrongful destruction of documents (for example,

).

Unlike the position in the United States, there is no equivalent of the 'litigation hold' embodied in legislation at either a federal or state level in Australia. However, where litigation is anticipated or commenced there are procedures available to access relevant documents, such as:

1. Pre-trial discovery - a court may order preliminary discovery against a prospective defendant or against a third party who may have documents that relate to issues in anticipated proceedings. Generally this is preceded by a request to the other party to produce such documents which, if denied, will form the basis for making an application for the costs to be in favour of the party whose request is successful;
2. Discovery - a process which occurs during the course of litigation whereby parties to the proceedings assemble a list of 'documents' relevant to any fact in issue in the proceedings and to produce these documents or make them available for inspection. 'Documents' has a very broad meaning and often the scope of documentation both electronic and written can be extensive.  Notwithstanding, the burden and expense of meeting discovery requirements can be substantial.  The extent to which a litigant has preserved evidence at the time of the incident can be invaluable in managing this requirement. There is a general tendency for courts to encourage that discovery be given electronically.
3. Subpoena for production - where proceedings have been commenced, subpoenae can be issued to third parties for the production of documents and other evidence.  A subpoena can only be issued for a legitimate forensic purpose and can be challenged on the basis of amounting to an abuse of process, being irrelevant or amounting to a fishing expedition.  Nonetheless, an entity who may for example be an intermediary in a dispute may be called upon to produce information regardless of it not being a party to litigation. 

In addition, it is not unusual following an incident to receive correspondence from parties who may be considering commencing legal proceedings, issuing warnings to interested parties to ensure that any relevant evidence, particularly electronic records which are deleted on a periodic basis such as CCTV footage and radio communications, be retained. In New South Wales, for example, solicitors are required by their legal professional rules that they must not advise clients to destroy or be a party to the destruction of documents that are of relevance to current or anticipated litigation.

The Australian Law Reform Commission is conscious of the US 'legal hold' arrangements and is currently inviting submissions to consider whether the discovery process is effective or open to abuse. Companies who take an active approach to ensuring retention of relevant documents, suspending corporate destruction policies and disabling any automatic document deletion systems following an incident likely to give rise to a claim would be best placed to meet their discovery obligations.

We hope that you have found the above interesting. If you would like further information, or have any comments, please email us, or take this opportunity to forward to any colleagues who you may feel would be interested.

We look forward to hearing from you.

Peregrine Storrs-Fox

Risk Management Director, TT Club