On 30 May 2006, the Evidence (Document Unavailability) Bill 2006 was introduced into the Victorian Parliament. The Bill will amend the Evidence Act 1958 (Vic) and the Victorian Civil and Administrative Tribunal Act 1998 (Vic). It broadens the sanctions the courts and VCAT can impose where a party to a civil proceeding has destroyed relevant documents.
The amendments will take effect on 1 September 2006 unless the Bill is enacted and proclaimed earlier. They will apply to civil proceedings commenced after that time regardless of when the document was destroyed.
The Bill complements the Crimes (Document Destruction) Act 2006 which created a new criminal offence of destroying documents that are, or are reasonably likely to be, required as evidence in existing or potential legal proceedings (see our earlier alert Document Destruction: Victoria introduces new criminal offence for more details).
Sanctions
The Bill applies in a civil proceeding where it appears to the court or VCAT that a document is unavailable, that no reproduction of the document is available in place of the original document and that the unavailability of the document is likely to cause unfairness to a party to the proceeding. In those circumstances the court or VCAT, on its own motion or on a party’s application, will have a discretion to make any ruling or order it considers necessary to ensure fairness to all parties to the proceeding including 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
- the evidential burden of proof be reversed about a fact in issue.
Meaning of unavailable document
When the Bill is enacted, new section 89A of the Evidence Act will define a document to be unavailable if it either is, or has been but is no longer, in the possession, custody or power of a party to the civil proceeding and either before or after the commencement of the proceeding it has been:
- destroyed
- disposed of
- lost
- concealed, or
- rendered illegible, undecipherable or incapable of identification.
Matters to be considered by the court or VCAT
Before making an order, the court or VCAT must consider:
- the circumstance in which the document became unavailable
- the impact of the unavailability of the document on the proceeding, including whether it will adversely affect the ability of a party to prove its case or make a full defence, and
- any other matter the court or VCAT considers relevant.
According to the Explanatory Memorandum, the other matters that the court or VCAT might consider include:
- whether litigation was contemplated or should reasonably have been anticipated at the time a document was rendered unavailable
- the reasons a document is unavailable
- whether a party knew, or could reasonably have known, that the document contained, or may have contained, evidence of legal wrongdoing or a breach of legal obligations
- the nature of the relevant party’s activities, its size and mode of operation, organisational sophistication and its litigation history.
New risks created
While the position is not entirely certain, it appears the more severe sanction of striking out a statement of claim or defence will only be imposed at common law if documents are destroyed when litigation exists or is anticipated. On the other hand, the drawing of an adverse inference at common law may not require that litigation exist or be anticipated at the time of destruction.
The Bill extends the common law by making it clear that the power of the court or VCAT to impose any of the sanctions is not restricted to circumstances where litigation existed or was anticipated at the time documents were destroyed. Whether litigation exists or is anticipated at the time a document is destroyed is simply a relevant factor in the exercise of the court’s or VCAT’s discretion rather than a pre-condition to the exercise of that discretion. This has real implications for a company’s document retention policies and, in particular, the time period for which it decides to retain particular documents over and above any statutory requirements.
The Bill is likely to make it easier for a party to challenge a pleading where a document is unavailable in a civil proceeding. This may result in more parties to civil proceedings having to defend an application to strike out their pleading, merely because a document is unavailable for production in the civil proceeding due to the passing of time.
Moreover, a company’s document retention policies and procedures are likely to come under close scrutiny as part of the court’s or VCAT’s inquiry into the circumstances in which the document became unavailable. If, in light of its activities, size, sophistication and, most importantly, litigation history, the company’s document retention policies and procedures are found to be unreasonable, the court or VCAT may be willing to draw adverse inferences or strike out the pleading even though the document had been destroyed, lost or become undecipherable well before proceedings had been commenced or were reasonably anticipated.
Ultimately, the court and VCAT have to ensure fairness to all parties. However, the Bill potentially makes it more difficult for large companies when determining their document retention policies in light of budgets and storage constraints. Depending on the circumstances, a decision to destroy documents even when no legal proceedings are anticipated and there is no improper motive may nevertheless ultimately result in the court or VCAT making adverse inferences, rulings or orders. The fact that the Bill will have retrospective operation because the new law will apply irrespective of whether documents were destroyed before or after the commencement of the new law, is of particular concern.