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No finders keepers: When Privileged Documents are Discovered by Mistake

Feature Articles

Cite as: April 2014 88 (04) LIJ, p.34

The High Court has found that courts should ordinarily permit the return of privileged documents that are inadvertently produced – and that disputes over such peripheral issues should be rare. 

By Peter Sise


Until the decision of Expense Reduction Analyst Group Pty Ltd & Ors v Armstrong Strategic Management & Ors (2013) 303 ALR 199 (ERA Discovery Proceeding), the High Court had never considered how privileged documents mistakenly produced to the opposing side during a court-ordered discovery should be dealt with. This is perhaps surprising given the vast number of discoveries that have been conducted. On another view it is unsurprising since it is perhaps a waste of resources to litigate such a matter to the highest court. The latter was the view of the High Court, which in a unanimous decision of five justices concluded that the ERA Discovery Proceeding “squandered the resources of the Court” and “went no way towards the resolution of the real issues in dispute”. The High Court concluded that if a document is inadvertently disclosed during court-ordered discovery, the court should ordinarily order its return. The overriding message that comes from the High Court’s decision is that disputes such as the ERA Discovery Proceeding should not arise if solicitors are committed to efficiently resolving the real issues in dispute rather than pursuing “satellite interlocutory proceedings”.

The facts

The ERA Discovery Proceeding arose from a large, electronic discovery conducted by solicitors acting for five parties (the ERA Parties). Approximately 60,000 documents were reviewed by a six-person team comprised of graduate solicitors, paralegals and one fully qualified solicitor. Several thousand documents were produced by the ERA Parties’ solicitors to the opposing solicitors. Through inadvertence, these documents contained documents that were subject to client legal privilege. The ERA Parties’ solicitors sought the return of the privileged documents, but the opposing solicitors refused on the basis that privilege had been waived. This resulted in an application to the Supreme Court of New South Wales by the ERA Parties, which ultimately focused on 13 privileged documents.

The decision of the Supreme Court of New South Wales

At first instance, the application was heard by Bergin CJ in Eq [[2012] NSWSC 393]. None of the six persons who reviewed the 60,000 documents (the reviewers) had any recollection of reviewing the 13 privileged documents. The reviewers gave evidence that (i) they believed that they would not have concluded the documents were non-privileged and (ii) the only reason the documents were listed as non-privileged was a failure to correctly “manipulate” the electronic document database so as to list the documents as privileged.

Bergin CJ concluded that if the 13 privileged documents were to be returned, the ERA Parties must establish that the particular reviewer formed an intention to claim privilege at the time he or she reviewed the particular document but through inadvertence listed the document as non-privileged. Since none of the reviewers could recall forming such an intention at that time, a claim of privilege could not be established on the evidence of the reviewers alone. This led Bergin CJ to consider other evidence – namely, the listing of duplicates of some of the 13 documents. Nine of the 13 privileged documents had duplicates or other documents with substantially the same content. For these nine documents, either the duplicate (or the substantially similar document) had been listed as privileged by another reviewer or the same reviewer. On the basis of these inconsistent listings, Bergin CJ inferred that the reviewers intended to claim privilege over these nine documents at the time of the review and that their disclosure was inadvertent. Hence, these nine documents had to be returned to the ERA Parties. The remaining four documents were listed as non-privileged and hence privilege had been waived in relation to them.

The decision of the New South Wales Court of Appeal

The reasons of the Court of Appeal [(2012) 295 ALR 348] were delivered by Campbell JA, with whom Sackville AJA and Macfarlan JA agreed. Campbell JA found that the law of privilege, whether it be at common law or under the Evidence Act 1995 (NSW), allows a party to resist the production of a document but does not compel the return of a document once it has been produced. The law of confidential information, however, permits an order compelling the return of privileged documents. Campbell JA concluded that an order for the return of a privileged document should only be made if (i) the recipient of the document realised it was confidential and had been produced by mistake or (ii) a reasonable solicitor in the position of the recipient should have so realised. Campbell JA said that a reasonable solicitor would not have realised that the 13 documents were produced by mistake and hence none of the 13 documents need be returned. Campbell JA added that if he was mistaken and orders should be based on the law of waiver of privilege rather than the law of confidential information, he would conclude that privilege had been waived over all 13 documents.

The decision of the High Court

The High Court took a different approach to that of both Bergin CJ in Eq and Campbell JA. The five justices, who were in agreement, appeared concerned that a dispute about a mistake made during discovery had been litigated over three days before Bergin CJ in Eq and led to lengthy reasons from the Court of Appeal, when the documents in question did not appear to be of any benefit to the party seeking to retain them.

The High Court found that, where a privileged document has been inadvertently produced during a court-ordered discovery, the court should ordinarily permit that mistake to be corrected and order the document’s return. However, relief may not be granted if (i) a party fails to act promptly or (ii) the party to whom the documents have been disclosed has been placed in a position, due to the disclosure, where it would be unfair to order the return of the documents. In making these observations, the High Court said that the ability of a party (and its lawyers) to put aside knowledge gained from documents received in error should not be viewed narrowly, and that such a view should be adopted in complex litigation unless the documents are of particular importance.

The High Court concluded that, to establish an intention to claim privilege, it was sufficient to prove that the ERA Parties intended to claim privilege and that the reviewers were carrying out the ERA Parties’ instructions. It was unnecessary to establish that the reviewer formed an intention to claim privilege over each document at the time of its review (contrary to Bergin CJ in Eq). In this case, the five justices concluded that an intention to claim privilege existed and that the listing of duplicates as both privileged and non-privileged simply proved that there were mistakes in the listing of documents. Accordingly, the High Court found that there had been no waiver of privilege and, further, the issue of waiver should never have been raised. In this regard, the inconsistent listing of documents as privileged and non-privileged did not suggest abandonment of privilege but, rather, a mistake and confusion. This mistake and confusion was then clarified by the solicitors for the ERA Parties advising the opposing solicitors that privileged documents had been mistakenly produced.

The High Court did not address Campbell JA’s analysis of the law of confidential information but instead focused on the obligations of solicitors under the Civil Procedure Act 2005 (NSW) (NSW CPA). The justices noted that the NSW CPA establishes an “overriding purpose” to facilitate the just, quick and cheap resolution of the real issues in dispute. The ERA Discovery Proceeding did not in any way fulfil the “overriding purpose” but instead distracted the parties from proceeding to a final hearing, led to considerable expense and “squandered” court resources. The justices concluded that the Supreme Court of New South Wales should have used its powers under s64 of the NSW CPA, which permits the court to amend a document so as to determine the real questions in dispute or correct an error, to amend the list of documents and order the return of the 13 documents.


The approaches taken by the three courts are quite different. Bergin CJ in Eq concluded that privilege had been waived over the 13 documents unless a reviewer could demonstrate that they formed an intention to claim privilege over each document at the time of its review. This was so even though the ERA Parties intended to claim privilege, the reviewers had been instructed to claim privilege and the reviewers had acted on these instructions. As acknowledged by Bergin CJ in Eq, it is understandable that a reviewer could not recall reviewing a particular document in a large discovery. In the author’s respectful opinion and as decided by the High Court, it should be sufficient to prove that the client intended to claim privilege and the reviewers were carrying out the client’s instructions. If a reviewer cannot recall reviewing a document, there is unlikely to be any reliable evidence that the reviewer intended to claim privilege at the time of the review. A reviewer could perhaps contemporaneously make a file note for each document over which they intend to claim privilege, but in a discovery of thousands of documents, this may be impractical. Further, the facts from which Bergin CJ in Eq drew an inference that an intention was formed at the time of review were perhaps unreliable. In this regard, Bergin CJ in Eq inferred an intention to claim privilege where a duplicate of one of the 13 documents was marked as privileged. During the review, a member of the review team was assigned the task of removing duplicates of documents, apparently without regard to whether the document was privileged or not. Clearly, this task was not completed because duplicates remained with some marked as privileged and others as non-privileged. According to Bergin CJ in Eq’s approach, if the duplicate marked privileged was deleted, there would be no intention to claim privilege, but if the duplicate marked as non-privileged was deleted, the opposite result would be reached. Hence, intention would be at least partly determined by the random deletion of documents.

The decision of Campbell JA focused on the conduct of the recipients of the documents, while Bergin CJ in Eq focussed on the conduct of the reviewers. With respect, it is submitted that Campbell JA’s approach is preferable, given that there was no suggestion that the review process was inappropriate or inadequate. Campbell JA based his decision on the law of confidential information. The length of Campbell JA’s reasons and the number of authorities referred to illustrates the complexity of the application of this area of law to accidental discovery. The High Court, however, focused on an overarching aim of efficiently progressing to a trial of the real issues in dispute rather than complex and technical areas of law, such as confidential information and waiver. At an interlocutory stage, this is perhaps preferable.

The approach taken by Campbell JA was not specifically criticised by the High Court. This is perhaps because the principles referred to by the High Court and Campbell JA partly overlap. Campbell JA concluded that documents should be returned if the recipient solicitor realised (or should have realised) that the documents were confidential and produced by mistake. In its reasons, the High Court considered the responsibilities of solicitors under Rule 31 of the Australian Solicitors’ Conduct Rules, which provides that a solicitor to whom material known or reasonably suspected to be confidential is disclosed by another solicitor must return that material if they are aware that the disclosure is inadvertent, unless otherwise permitted or compelled by law. This rule is similar to the principle stated by Campbell JA. The High Court said that Rule 31 avoids complications that arise from mistakes and is an example of professional, ethical behaviour consistent with the NSW CPA. One might wonder when a solicitor would not realise that the production of privileged information was inadvertent. An example may be where the privileged information is deliberately produced by a party to obtain an evidentiary advantage or where privilege has been waived over certain documents due to the nature of the case pleaded.

Victorian solicitors should take note of the decision of the High Court because the Civil Procedure Act 2010 (Vic) imposes similar obligations to those of the NSW CPA. In relation to the Australian Solicitors’ Conduct Rules, the Professional Conduct and Practice Rules 2005 (Vic) do not contain an equivalent to Rule 31. However, at the time of the High Court’s decision, no such rule existed under the professional conduct rules of New South Wales. Further, the High Court said that such a rule should be unnecessary as it is “an example of professional, ethical obligations of legal practitioners supporting the objectives of the proper administration of justice”.


The decisions of the ERA Discovery Proceeding illustrate that, when privileged documents are mistakenly produced, lengthy and technical disputes can result. The High Court has now made it clear that disputes over the inadvertent disclosure of privileged documents should seldom arise and that parties and their lawyers should instead focus on the real issues in dispute rather than satellite interlocutory proceedings. This approach is underscored by the Civil Procedure Act 2010 and the Australian Solicitors’ Conduct Rules.

PETER SISE is a senior associate in the litigation department of Clayton Utz.


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