Australia: Document Retention And Destruction

On 1 September 2006, a package of legislation to address the legal and policy implications arising from the Victorian Court of Appeal Decision in McCabe¹ came into force in Victoria. The new legislation will have widespread implications for how litigation is conducted in Victoria. It will also impact upon the way organisations around the country store their documents (paper and electronic).

The Crimes Document Destruction Act 2006 inserts a new criminal offence of destruction of evidence into the Victorian Crimes Act.

Section 254 of the Crimes Act now provides:

• destroys or conceals the document or thing, or
• expressly, tacitly or impliedly authorises or permits another person to destroy or conceal it,

The person who destroys the document does not necessarily have to be the person with the intention of preventing it being used in a legal proceeding.

For example, if person A knows that a document is reasonably likely to be required in evidence in a legal proceeding and person A authorises person B to destroy the document, then, (if person A has the intention of preventing the document from being used in a legal proceeding,) person A is guilty of the offence of destruction of evidence.

The penalty for this new offence is up to five years imprisonment or a fine of $64,458.

The new criminal offence applies to documents which are reasonably likely to be required in all kinds of legal proceedings including:

• civil court proceedings
• criminal court proceedings
• arbitration proceedings
• commissions of inquiry, and
• proceedings before any person or body which has (by law or agreement of the parties) authority to hear, receive and examine evidence.

One of the most uncertain elements of the new crime is the test of ‘reasonably likely’. Clearly, if proceedings have been commenced, a document which addresses the subject matter of the proceeding could be considered reasonably likely to be required in evidence in those proceedings.

But what if proceedings have not been commenced? Is it ‘reasonably likely’ that a document will be required in evidence if there is a history of litigation, like tobacco litigation? What if there is not a history of litigation but there have been customer complaints? Or an employee has resigned and alleged that they have been harassed in the workplace? Or what if an organisation makes thousands of products and by their very nature, one or two of them are likely to be defective and cause injury?

It is unclear what ‘reasonably likely’ means in the context of this new crime. In the past courts have said that the meaning of the phrase ‘reasonably likely’ will vary depending on its context and there are competing judicial views on the meaning of the phrase.

In Department of Agriculture v Binnie, Justice Marks said that reasonably likely does not require establishment of a greater than 50 per cent chance,² however, in ACCC v Safeway, Justice Goldberg indicated that a 50 per cent chance would be required to satisfy a test of reasonably likely.³

Corporations can also be guilty of the new crime. Principles similar to those in the Commonwealth Criminal Code Act are used to make corporations liable.

The maximum penalty for a corporation guilty of the crime is $322,290. Conduct and knowledge of employees, agents and officers is attributed to corporations for the purposes of the crime.

Intentions of boards of directors and officers are also attributed to corporations. Intentions of employees or agents of corporations are attributed to corporations if there is a corporate culture that directed, encouraged, tolerated or led to the formation of an intention of preventing a document from being used in evidence in a legal proceeding.

‘Corporate culture’ is defined in the Crimes Act as an attitude, policy, rule, course of conduct or practice existing within a corporation. The second reading speech states that the concept of corporate culture is designed to cover situations where, despite the existence of formal document retention policies, noncompliance is expected. Factors relevant to whether a corporate culture exists are:

• whether authority to commit the offence of destruction of evidence has been given by an officer of a company, and
• whether any employee believes on reasonable grounds, or entertains a reasonable expectation, that an officer of the company would authorise or permit the commission of the offence.

The Evidence (Document Unavailability) Act inserts a new Division 9 into the Victorian Evidence Act which provides judges with broad discretionary powers to deal with the unavailability of documents in civil proceedings. Division 9 applies, whether the cause of the unavailability of documents occurs prior to or after commencement of proceedings.

Section 89B of the Evidence Act now provides:

A document is unavailable if the document is or has been in the possession, custody or power of a party and the document has been:

• destroyed
• disposed of
• concealed
• rendered undecipherable, or
• rendered incapable of identification.

The kinds of ruling that a court may make pursuant to section 89B include that:

• an adverse inference be drawn from the unavailability of the document
• a fact in issue between the parties be presumed to be true in the absence of evidence to the contrary
• certain evidence not be adduced
• all or part of a defence or statement of claim be struck out, or
• the evidential burden of proof be reversed in relation to a fact in issue.

Any one of these orders could change the entire outcome of a case.

Before making an order under section 89B the court must have regard to:

• the circumstances in which the document became unavailable
• the impact of the unavailability of the document on the proceeding, including whether the unavailability of the document will adversely affect the ability of a party to prove its case or make a full defence, and
• any other matter that the court considers relevant.

Corporations and individuals may be impacted by the new legislation in many different respects.

The damage to reputation which may result from a conviction under the new crime of destruction of evidence or a judgment giving reasons for an order under Division 9 of the Evidence Act could be extreme and longlasting.

Files that are not intentionally destroyed or rendered undecipherable could contravene the civil legislation. If files are ‘somewhere’ in a warehouse or archiving facility, but cannot be located or identified in the mass of files, they may be ‘unavailable’ for the purposes of the civil legislation.

Finally, while there are criminal provisions relating to destruction of evidence in other jurisdictions,⁴ the new civil legislation is unique to Victoria. There may be similar legislative reforms in other states in the future, but in the meantime the existence of these provisions in Victoria could give rise to plaintiffs issuing proceedings in Victoria so as to gain a strategic advantage from the new provisions.

The pitfalls of this new legislation can be avoided by being prepared:

• formalise your organisation’s document management policy
• be careful about document destruction
• be vigilant about document retention, and
• regularly review your organisation’s document management practices—making sure that policies and staff training are current.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.