We are all used to seeing pop-up warnings when we go to delete electronic documents, although the pop-ups don’t usually warn us about things like “contempt of court” or “abuse of process”. However, the destruction of documents can have serious consequences in litigation. A recent case in the Supreme Court of New South Wales has confirmed that document preservation issues need to be considered even before orders for discovery are made (and in some cases, even before proceedings are commenced).
The plaintiff in the case was a company which had previously employed the defendant. Prior to leaving his employment, the employee had copied certain confidential information of the company onto the employee’s personal Google Drive account. In late August 2015, the solicitors for the company wrote to the former employee foreshadowing proceedings and demanding that the former employee not “destroy, remove and/or tamper with any documents/files in your possession, custody or control that may be the subject of anticipated litigation”. That letter also warned that “Non adherence may result in contempt of Court”. (Non-adherence, of course, can also be described as “coming unstuck”, which turned out to be a rather prophetic description of what was to about to occur for the former employee).
The company commenced proceedings in early September 2015. On the day that the former employee became aware of the proceedings (and also became aware that orders would be sought requiring the delivery up of computers containing the company’s confidential information), the former employee deleted relevant documents from a Surface Pro laptop. Documents were also deleted from the former employee’s Google Drive account, although it was not possible to say with as much precision when this deletion had occurred.
The company sought orders punishing the former employee from criminal contempt of court in respect of both deletions. The Court convicted the former employee in relation to the Surface Pro deletion, finding beyond reasonable doubt that the deletion occurred at a time when the former employee was aware that the Surface Pro would have to be produced for inspection in the proceedings. Although the former employee remains to be sentenced for the contempt charge, the finding did mean that former employee was ordered to pay the company’s costs on an indemnity basis.
On the second charge, however, the Court could not find beyond reasonable doubt that the deletion of the Google Drive documents had occurred after the date on which the employee was aware of the proceedings. Thus, the former employee avoided a contempt finding in relation to this deletion, but that was not the end of the matter.
The second remedy sought by the company was the striking out of a significant part of the former employee’s defence, because it would be an abuse of process to allow the former employee to advance particular defences having destroyed the electronic documents necessary to assess whether those defences could be established.
For example, the company pleaded that the former employee had breached his statutory duties under the Corporations Act, which the former employee denied in his defence. However, as the denial could only be tested by examining what use the former employee had made of the company’s confidential information (an examination which was now impossible, due to the deletion of the information) the employee’s denial was struck out.
The consequence of the strike out, one would expect, is that the company will succeed on the statutory duties claim. To establish abuse of process, it was only necessary for the company to show that legal proceedings against the former employee were “reasonably anticipated” when the documents were deleted. It was not necessary to show that the former employee had knowledge of proceedings being commenced, as was necessary to establish the charges of contempt.
The main lesson from this case is that there are a number of steps which should be taken to prepare for litigation where electronic evidence is likely to be important. From a plaintiff’s perspective, one of the most important steps is a letter to the potential defendant setting out, with as much particularity as possible, the electronic documents which the defendant should take steps to preserve. This is especially important where the electronic documents cannot easily be recovered if deleted (for example, social media posts on platforms such as Facebook or Twitter) or where the electronic documents may, in the absence of notice, be innocently overwritten (for example, cloud based back-ups, or electronically recorded CCTV footage). In the present case, the letter written by the company’s solicitors in late August 2015 dealing with these matters was the foundation of the company’s successful claims.
For defendants, it is important to understand the serious effect of the striking out of defences – even apparently incriminating documents may be susceptible of explanation, but if the documents have been destroyed, the opportunity for the defendant to explain may be entirely lost. Finally, one can learn from the defendant in this case that it is not a good idea to conduct Google searches for methods of deleting documents from a computer which will be later handed over for inspection. Such a search will not only be incriminating, but is unlikely to produce any helpful warning, such as (as was the case here), “Are you sure you want to delete your chances of successfully defending this litigation?”