Reasonable Expectations
Reasonable Expectations
The Victorian Government’s new Document Destruction Act sends a clear message to business: keep your documents. IDM speaks with Deacons’ Senior Associate, Michael Park to find out what Victoria’s Document Destruction and Document Unavailability Acts means to you.
IDM: What are the implications of this change in legislation for individuals and business?
MP:
Effective from 1 September 2006, two new pieces of Victorian legislation create significant criminal and civil consequences for illegal destruction of documents and evidence. The Crimes (Document Destruction) Act 2006 (Vic) and Evidence (Document Unavailability) Act 2006 (Vic) amend the Crimes Act 1958 (Vic) and Evidence Act 1958 (Vic), respectively. These Acts have, to a certain extent, snuck in under the radar of many companies. It is particularly important for companies to understand their new obligations in relation to the way they store and destroy all documents, including emails and other electronic documents. The consequences for failing to comply are severe and ignorance of the law is no excuse. Successful prosecution for a breach of the Document Destruction Act could result in up to 5 years imprisonment or a maximum fine of approximately $65,000 for individuals and a maximum fine of approximately $320,000 for companies.
IDM: So what exactly does this new legislation entail?
MP:
In response to several high profile cases in Australia and overseas in recent years, the Victorian Parliament has lead the way in Australia in specifically legislating on this issue.
The Document Destruction Act applies to conduct carried out in Victoria. In practical terms, it applies to companies that are resident or do business in Victoria. The Document Unavailability Act applies to civil proceedings conducted in Victoria and commenced on or after 1 September 2006. The Document Unavailability Act will therefore apply to an act of document destruction that took place before 1 September 2006 if it is relevant to proceedings commenced on or after that date.
The Document Destruction Act creates a new criminal offence in relation to the destruction of documents. Where documents are “reasonably likely” to be required in any ongoing or potential future legal proceedings, a person who knows this and destroys or conceals the documents (or authorises or permits another person to do so) with the intention of preventing the documents from being used in a legal proceeding is liable to prosecution for the new offence of document destruction. Both individuals and companies may be prosecuted. For companies, the conduct, knowledge and intention of officers of the company are automatically attributed to the company. The Document Destruction Act also introduces a “corporate culture” test for assessing a person’s intention to prevent a document from being used as evidence, and offers a limited defence of “due diligence”.
The Document Unavailability Act deals with the consequences of documents being “unavailable” in civil proceedings and allows the court to, in effect, reverse the effect of the loss of those documents. The central concept is “unavailability”, which is defined widely to mean a document that was previously in the control of a party and which has been subsequently destroyed or rendered unusable. Unlike the Document Destruction Act, the Document Unavailability Act is not concerned with how the document was destroyed. Similarly, if a copy of the document is available, then the Document Unavailability Act will not apply.
If a document is unavailable in a proceeding, and the court is of the view that the unavailability is likely to cause unfairness to a party, then the court will have the power to make any rulings or orders to ensure fairness to all parties, having regard to the circumstances in which the document became unavailable and its impact on the proceeding. The types of orders include drawing an adverse inference from the unavailability, presuming the fact that would have been proven by the document is true without evidence to the contrary, rejecting the admission of documents where their reliability has been tainted by another document’s unavailability and reversing the burden of proof in relation to the issue being covered by that document. These orders may be so crucial as to determine the overall outcome of the proceeding.
IDM: What should affected businesses do to be prepared for this change?
MP:
Businesses should be proactive in addressing this new legislation. The following checklist should at least be followed:
Become familiar with your legal obligations. The new Victorian legislation is just another layer to the already complex legislative regime for document retention in Australia.
Prepare and implement a legally compliant document retention and destruction policy. In respect of document destruction, this should at least require the identification of which documents are to be destroyed, confirmation that the document destruction will not contravene the policy or any statutory obligations, confirmation that the documents are no longer relevant for any existing or possible future dispute and that the final decision on the document destruction is made at the appropriate management level.
Notify all personnel of the policy and ensure it is enforced.
Ensure that your document management system allows for efficient searching and retrieval of documents and prevents the destruction of documents without first complying with the policy.
IDM: Please clarify what “reasonably likely” to be used in evidence in legal proceedings means?
MP:
The Document Destruction Act does not give any indication of when a document will be “reasonably likely” to be required in any ongoing or potential future legal proceedings. This is a key concept in the Act, and so its meaning is very important in determining how a business should respond when preparing and enforcing its document destruction policy.
The Australian courts have not considered the meaning of “reasonably likely” in the context of this Act, but have considered its meaning in other cases. In essence, unfortunately somewhat unhelpfully, the courts have held that its meaning will depend on the circumstances of each case. We must therefore take a commonsense approach in the case of the Act.
Obviously, if legal proceedings are already commenced, it will be easier to determine whether a particular document is reasonably likely to be required in that proceeding. The real uncertainty arises when legal proceedings are not on foot. An examination is then required of the likelihood of future legal proceedings given the relevant subject matter and whether the document may be, by its very nature, likely to be relevant. Issues such as the litigation history of a particular subject matter may be relevant in determining this, but there is no rule.
In summary, all documents that may be relevant to any existing or possible future dispute should be retained. Given the extreme consequences under the Act, it would be better to err on the side of caution in deciding whether to retain a document.