Two new Acts of Parliament concerning the destruction and unavailability of documents in legal proceedings were recently enacted in Victoria. They are the Crimes (Document Destruction) Act 2006 (Vic) and the Evidence (Document Unavailability) Act 2006 (Vic). These Acts represent the legislature’s response to the decision of the Victorian Court of Appeal in British American Tobacco Australia Services Ltd v Cowell (2003) 8 VR 571, and the subsequent recommendations made by Professor Peter Sallmann, former Crown Counsel for Victoria.

Two key propositions emerged from the Cowell decision. First, destruction by the defendant of documents potentially relevant to the proceedings was not unlawful as it took place before litigation had commenced. Secondly, judicial action in response to the destruction of documents prior to litigation would be justified only if that destruction amounted to contempt of court, or an attempt to pervert the course of justice.

The state government subsequently commissioned Professor Sallmann to report on the ramifications of the Cowell decision. Professor Sallmann recommended new statutory provisions to apply to document destruction in civil litigation, coupled with a new criminal offence of document destruction.

Document Destruction Act

The Document Destruction Act inserts a new Division 5 “Destruction of Evidence” into the Crimes Act 1958 (Vic). The new division contains the criminal offence of document destruction. Both individuals and corporations can be prosecuted for breach.

The offence

An offence is committed when a person destroys, or expressly, tacitly or impliedly authorises another person to destroy, a document knowing that it is, or is reasonably likely to be, required in evidence in legal proceedings. The person must have destroyed the document with the intention of preventing it being used in evidence in legal proceedings.

An individual who commits the offence of document destruction may be fined over $60,000 or imprisoned for up to five years. A body corporate may be fined in excess of $300,000.

Corporate criminal responsibility

The legislation will apply to a range of circumstances in the corporate environment.

The requisite conduct, knowledge and intention of a body corporate can be drawn from various sources. The legislation allows a court to attribute the conduct and knowledge of ‘associates’ (that is, employees and agents acting within the scope of their employment) to a body corporate. Intention can be attributed from the intentions of officers and the board of directors. An associate’s intention will be attributed too, where a corporate culture exists that directs, encourages, tolerates or leads to the formation of that intention.

A body corporate can commit the offence of document destruction by allowing or permitting a person to destroy a document. Permission can be established by proving that a corporate culture existed within the body corporate that directed, encouraged, tolerated or led to the destruction of the documents.

The legislation will capture situations where not all of the elements of the offence are committed by the same associate of the body corporate. For example, a body corporate will commit an offence if the board of directors develops a policy of document destruction to prevent the use of documents in evidence, and an officer, knowing a particular document might be used in evidence, gives the document to an employee for destruction.

By introducing the concept of corporate culture, the legislature has captured instances where document destruction is expected although no formal policies of document destruction are in place. The term ‘corporate culture’ is defined to include an attitude, policy, rule, course of conduct or practice existing within the body corporate.

Corporate due diligence

If it is proven that an officer commits or authorises the commission of the offence of document destruction, the body corporate is also taken to have committed the offence. This is the case irrespective of whether proceedings have been brought against the officer.

In these circumstances, a limited defence of due diligence may be raised by a body corporate. The body corporate must show that it exercised due diligence to prevent the officer permitting or committing the offence.

What documents should not be destroyed?

The offence of document destruction applies with respect to a legal proceeding, whether the proceeding is one that is in progress or is to be, or may be, commenced in the future. This is a very broad and somewhat ambiguous offence, meaning that it will be left to the courts (or future legislative amendment) to flesh out its meaning. In particular, it will be necessary to establish whether, before destruction becomes an offence, potential future litigation must be a probability (that is, more likely than not), or if it is enough that future litigation is a mere possibility. For the moment, those subject to the Document Destruction Act should assume that the more stringent burden applies.

How does the Document Destruction Act affect you?

The new legislation makes it imperative that businesses formulate and actively pursue document management policies designed to implement the intention of the legislature. An effective document management policy should also help bodies corporate rely on the limited due diligence defence.

Your document management policy should be clear, consistently managed and applied, regularly reviewed and widely disseminated within your organisation. It must clearly state that where litigation has commenced, is anticipated or may commence, all relevant documents must be preserved.

Your policy might also state that should any officer or employee be unsure whether a particular document can be safely destroyed, he or she must consult with in-house counsel. Additionally, it may provide that whenever managers become aware of circumstances that may give rise to litigation, they must take steps to preserve the documents (perhaps by separating the documents and clearly labelling them) and notify in-house counsel (in particular when relevant documents are spread across multiple arms of the business).

Document Unavailability Act

The Document Unavailability Act allows a court to make any orders it considers necessary to correct unfairness to a party as a result of the unavailability of a document. A document is considered to be unavailable when it is no longer in the possession of a party to the proceedings, or it has been rendered illegible.

The Document Unavailability Act does not apply where a copy of the original document is available, nor is it concerned with the identity of those who destroyed the document or the timing of destruction. Instead, the legislation focuses on correcting the unfairness to a party that may result when a document is unavailable.

To correct the perceived unfairness, a court may make any order including:

• that an adverse inference be drawn because the document is not available
• that a fact be presumed to be true if there is no evidence to the contrary
• that certain evidence be rejected
• that all or part of a defence or statement of claim be struck out, or
• that the evidential burden of proof be reversed in relation to a fact in issue.

The new legislation applies to civil proceedings in Victorian courts (and including the Victorian Civil and Administrative Tribunal) that were started on or after 1 September 2006.

The Document Unavailability Act may have significant consequences for the conduct of civil proceedings when documents cannot be produced by a party. Again, a carefully drafted and thoroughly implemented document management policy will ensure documents are available to the court when required, and will minimise the risk that a party will suffer the consequences of court orders adverse to its case.