Supreme Court New South Wales Medium Neutral Citation: Armstrong Strategic Management and Marketing Pty Limited & Ors v Expense Reduction Analysts Group Pty Ltd & Ors [2012] NSWSC 393 Hearing dates: 1, 23, 28 March 2012 Decision date: 26 April 2012 Jurisdiction: Equity Division Before: Bergin CJ in Eq Decision: Orders for return of documents produced inadvertently. Catchwords: [DISCOVERY] - Motion for return of documents produced allegedly inadvertently - Discovery process involving numerous "reviewers" (including lawyers and law students) of many thousands of documents - Use of electronic data base that provides for categorisation of documents as relevant and/or privileged. [PRIVILEGE] [WAIVER] - Whether documents produced informally and listed in Verified Lists of Documents, disclosed inadvertently or by mistake - Whether listing of documents in non-privileged section of Verified Lists of Documents waived privilege of documents - Where inspection of documents by party [PRACTICE & PROCEDURE] - Practice Note SC Eq 11 Disclosure in the Equity Division - regime for preparation of evidence and confining of ambit of any necessary disclosure additional to documents already in evidence as served. Cases Cited: Armstrong Strategic Management and Marketing Pty Limited & Ors v Expense Reduction Analysts Group Pty Ltd & Ors [2011] NSWSC 704 Meltend Pty Ltd & Another v Restoration Clinics of Australia Pty Ltd & Others (1997) 75 FCR 511 Category: Interlocutory applications Parties: Armstrong Strategic Management and Marketing Pty Limited (1st Plaintiff) Armstrong Consulting Pty Ltd (2nd Plaintiff) Kenneth Armstrong (3rd Plaintiff) Expense Reduction Analysts Group Pty Ltd (1st Defendant) ERA Insurance Services Pty Ltd (2nd Defendant) Expense Reduction Analysts Australasia Pty Ltd (3rd Defendant) Stuart Michael (4th Defendant) Ronald Clucas (5th Defendant) Charles Marfleet (6th Defendant) ERAGICS Limited (7th Defendant) Expense Reduction Analysts International Limited (8th Defendant) Keith Chapman (9th Defendant) Anthony Dormer (10th Defendant) Representation: Mr IR Pike SC/Mr C Bova (Plaintiffs) Mr D Fagan SC/Mr E Hyde (Defendants) Marque Lawyers (Plaintiffs) Norton Rose (4th, 5th, 6th, 9th and 10th Defendants) Dormers Commercial Lawyers (1st, 2nd, 3rd, 7th and 8th Defendants) File Number(s): 2011/76919 Publication restriction: Nil Judgment 1The plaintiffs, Armstrong Strategic Management and Marketing Pty Limited (1st plaintiff), Armstrong Consulting Pty Ltd (2nd plaintiff) and Kenneth Armstrong (3rd plaintiff), commenced proceedings in this Court in April 2011 (transferring proceedings from the District Court of New South Wales commenced in 2010). There are ten defendants against whom the plaintiffs seek damages for loss suffered by reason of, inter alia, alleged breaches of contract, misleading or deceptive conduct, breaches of fiduciary obligations, unconscionable conduct and conspiracy. The conduct alleged relates to circumstances surrounding the entry into and performance of agreements by which the parties established an insurance expense reduction consulting business in Australia in 2004 and a similar global business in the United Kingdom in 2007 and the termination of those agreements in 2009. 2There are five "individual defendants" and five "corporate defendants". The five individual defendants are Stuart Roy Michael (4th defendant), Ronald Clucas (5th defendant), Charles Frederick Marfleet (6th defendant), Keith John Chapman (9th defendant) and Anthony Frederick Dormer (10th defendant). The five corporate defendants are Expense Reduction Analysts Group Pty Ltd (1st Defendant), ERA Insurance Services Pty Ltd (2nd Defendant), Expense Reduction Analysts Australasia Pty Ltd (3rd Defendant), ERAGICS Limited (7th Defendant) and Expense Reduction Analysts International Limited (8th Defendant). 3Marque Lawyers is the firm of solicitors representing the plaintiffs. Norton Rose is the firm of solicitors representing the individual defendants. Dormer Commercial Lawyers is the firm of solicitors representing the 1st and 3rd corporate defendants (and it appears that they may also represent the other corporate defendants who have yet to file List Reponses). Truman Hoyle were the former solicitors for the corporate defendants and their related entities. 4In June 2011 the individual defendants sought orders striking out parts of the plaintiffs' Amended Commercial List Statement. That application was determined on 8 July 2011 and was partially successful: Armstrong Strategic Management and Marketing Pty Limited & Ors v Expense Reduction Analysts Group Pty Ltd & Ors [2011] NSWSC 704. Commercial List Responses were filed on 23 and 24 August 2011. Discovery 5On 22 July 2011, Hammerschlag J made orders requiring the parties to give verified discovery by 21 September 2011, later extended to 7 October 2011. 6Between 4 August 2011 and 19 August 2011, Norton Rose reviewed documents provided by Mr Michael, the 4th defendant. On 16 September 2011 and 27 September 2011, Mr Michael provided Norton Rose with further documents for review. On 23 September 2011, Norton Rose received further documents from Mr Clucas, the 5th defendant, and Mr Chapman, the 9th defendant, together with over 5000 documents from Truman. 7Between 6 October 2011 and 13 October 2011, the Verified Lists of Documents for each of the individual defendants were completed and served. 8On 13 October 2011, Marque Lawyers wrote to Norton Rose in terms that included the following: We note that you have sought to claim privilege over documents numbered 725 to 1162 in the respective verified lists on the grounds of legal advice privilege, litigation privilege and without prejudice privilege. Upon review of the documents over which privileged (sic) is claimed we are concerned that some of the documents would not on their face appear to attract privilege. Specifically, please explain the bases for which your clients claim privilege over the following types of documents. 9The plaintiffs' solicitor advised that their clients 'reserved their rights' to challenge the privilege claims. 10On 19 October 2011, Norton Rose provided disks containing what were believed to be all non-privileged and redacted documents of the individual defendants to Marque Lawyers. On 20 October 2011, Marque Lawyers forwarded these disks to the 3rd plaintiff, Mr Armstrong, for inspection. 11On 24 October 2011, Norton Rose wrote to Marque Lawyers advising that legal advice privilege was claimed over Documents 737, 742 and 746, but that the claim for privilege over Document 823, was no longer maintained. 12On 21 November 2012, Marque Lawyers wrote to Norton Rose in terms that included the following: Neither of these documents [Documents 737 and 742] is a lawyer-client communication. Please identify how your clients maintain their claim for legal advice privilege in circumstances where these communications do not include correspondence with a legal representative. Absent a reasonable basis for any claim for legal advice privilege, we may seek instructions to file an application for production of these documents. 13On 25 November 2011, Ms Marshall, a Senior Associate solicitor at Marque Lawyers, commenced inspection of the defendants' discovered documents and noted that a number of documents appeared to record communications between one or more of the directors of the corporate defendants and legal professionals. On 25 November 2011, Marque Lawyers wrote to Norton Rose in terms that included the following: We have today identified a number of documents in Mr Michael's verified list of documents that appear to relate to one or more of the defendants obtaining legal advice and over which your clients make no claim of privilege. By way of example we refer you to items 867, 868, 901, 903, 904, 909. This is not an exhaustive list. Can you please explain the basis on which your client maintains its claims for legal professional privilege in light of the disclosure of the types of documents identified in Mr Michael's verified list. Claim of inadvertent production 14On 6 December 2011, Norton Rose wrote to Marque Lawyers in terms that included the following: Thank you for bringing to our attention the mistaken production of privileged documents 867 (DIR.001.001.3572), 868 (DIR.001.001.3473), 901 (DIR.001.001.4024) and 903 (DIR.001.001.3889) (the privileged documents). During the review process, through inadvertence on the part of one of the reviewers, the privileged documents were not marked as privileged, when clearly they ought to have been so marked. That resulted in the failure to claim privilege in respect of the privileged documents and their inadvertent disclosure. As you know the list itself comprises 2155 documents and most of the privileged documents you have referred to are not described in the list itself in such a way as to disclose the potential waiver. Further Mr Michael did not inspect the documents listed, but rather relied on our review. Mr Michael did not intend to waive privilege over the privileged documents and Mr Michael maintains his claim of privilege over the privileged documents. We trust that you will return to us all copies that you have of the privileged documents (and any other privileged documents you have identified) and that you will also retrieve from your client and counsel and return to us any copies of the privileged documents which you may have already sent them. We also seek an undertaking from you that you will not use or rely on the inadvertently disclosed privileged documents in these proceedings or otherwise. 15On 12 December 2011, Marque Lawyers wrote to Norton Rose in terms that included the following: In your letter of 6 December, you requested the return of four documents (referred to below as the 6 December Documents), on the basis that those documents had been mistakenly produced. In our view, our client has no obligation to return the 6 December Documents. Any privilege that might have attached to the 6 December Documents has been waived. ... In relation to the other three documents identified in our letter of 25 November, being items 904, 907 and 909 of Mr Michael's verified list, we assume that to the extent that any privilege might have attached to those documents, it is waived. The Motion 16On 23 December 2011 the individual defendants filed a Notice of Motion seeking orders restraining the plaintiffs from making any further use of the documents and for the delivery up of the documents identified in the Schedule attached to the Notice of Motion (the Documents). The plaintiffs filed an Amended Notice of Motion on 24 February 2012 adding further documents to the Schedule (making a total of 32 documents). Subsequently the corporate defendants supported the application of the individual defendants. 17The Motion was heard on 1, 23 and 28 March 2012 when Mr IR Pike SC leading Mr C Bova, of counsel, appeared for the plaintiffs and Mr D Fagan SC leading Mr E Hyde, of counsel, appeared for all defendants. The Documents 18The Documents, the subject of the Motion, are in Exhibit A Confidential. At the request of the parties the Documents were reviewed for the purpose of determining whether they were privileged. That determination was concluded on 1 March 2012 with various rulings that are outlined in the transcript of that date. Document 2 was ruled to be not privileged and was removed from the exhibit (tr 16). The remaining Documents in Exhibit A Confidential are privileged. The Evidence 19On 1 March 2012 the defendants relied upon two affidavits of Stephen Klotz, a partner of Norton Rose, affirmed on 21 December 2011 and 24 February 2012. At the conclusion of the hearing on 1 March 2012 the defendants were granted an adjournment to attempt to deal with a lacuna in their evidence that was identified by Mr Pike in submissions on that day. On 28 March 2012 (after a further adjournment on 23 March 2012 when the defendants indicated they required further time to prepare their evidence) the defendants relied upon further affidavits of: Stephen Klotz affirmed on 20 March 2012; Karen Nicole Spencer (employed as a graduate solicitor with Norton Rose in the period 2 August 2010 to 27 October 2011) sworn on 13 March 2012; Katherine Arnold (a lawyer in Germany, seconded from the Munich office to Norton Rose Australia from 25 July 2011 to 2 September 2011) sworn 19 March 2012; Jarrah Nina Hoffmann-Ekstein (now a practising solicitor but in the period 4 August 2011 to 19 August 2011 employed by Norton Rose as a paralegal for two days per week) affirmed 20 March 2012; Lalarukh Hussain (a Barrister in England and Wales but employed by Norton Rose as a paralegal from 30 September 2011 to early November 2011) affirmed 22 March 2012; Harriet Margaret Dymond-Cate (a solicitor employed by Norton Rose) affirmed 23 March 2012; and Matthew John Hodgkinson (a graduate solicitor employed at Norton Rose between August 2011 to February 2012) affirmed 22 March 2012. Most of the deponents to these affidavits were overseas and/or unavailable for cross-examination. However Ms Dymond-Cate was available and was cross-examined. Mr Klotz was not required for cross-examination. 20The plaintiffs relied upon the affidavit of Hannah Elizabeth Marshall, a Senior Associate solicitor at Marque Lawyers, affirmed on 7 February 2012 who was also cross-examined. 21Mr Klotz gave affidavit evidence about the process that was used and the extent of the discovery. There is really no issue that discovery was a "huge" task involving the review of approximately 60,000 documents. An electronic online database designed to store documents in a centralised and accessible manner, known as "Ringtail", was used to identify and categorise the documents. The core fields within Ringtail include the document identification number, the document date, the document type, the document description and/or title and authors and recipients of emails. The person reviewing the documents coded them for "relevance" and "privilege". In his earlier affidavit, Mr Klotz gave evidence that the "reviewers" included "two paralegals (one being a solicitor admitted in Germany on secondment to Norton Rose, and one being a university student in her final stages of a law degree) and a graduate solicitor of approximately 12 months experience" and "a paralegal employed by Norton Rose (who was a Barrister admitted in England and Wales) and a graduate of approximately 12 to 18 months experience at Norton Rose". 22Mr Klotz said he believed that "each of the document reviewers" was "adequately briefed on the issues in these proceedings and also in relation to the principles of privilege". He also said that, "none of the reviewers had any authority to waive any claims for privilege over any of the documents". It became "near impossible" to determine to which particular defendants the documents belonged and, as a result, the Verified Lists of Documents for the other individual defendants were "identical". 23Mr Klotz also referred to the "audit" process in which the documents in the draft Verified Lists of Documents were "reviewed by a more senior solicitor employed by Norton Rose". His evidence included the following (par 21): This was undertaken by an audit type process. Due to the fact that the auditing of the other defendants' lists of documents had identified no areas of concern as to how discovery had been given (including the methodology of privilege claims made in those lists), a more general audit was undertaken of the fourth defendant's lists of documents. 24Mr Klotz also gave evidence that the audit was not a physical inspection of the 4th defendant's 2155 documents in the Verified List. His evidence was (par 22): As the nature of some of the documents meant that Ringtail did not code all of the relevant fields, some of the documents are not described in the list itself in such a way as to identify whether they may be potentially privileged. 25Mr Klotz referred to some of the Documents in the Schedule to the Motion as "clearly privileged" and gave the following evidence: I can only explain the listing and production of these documents as a matter of clear inadvertence on behalf of the reviewers of these documents. There was certainly no intention on behalf of the fourth defendant to waive privilege in relation to these documents. 26Mr Klotz also referred to the fact that some of the Documents in the 4th defendant's Verified List of Documents over which a claim of privilege was not made were in the other defendants' Lists and were the subject of a claim of privilege. Mr Klotz described the reviewers' failure to make the claim of privilege in respect of the Documents as "inexplicable". He claimed that it is "clearly obvious" that the Documents are privileged and the disclosure had occurred by "clear inadvertence". It is not in issue that the defendants did not instruct Norton Rose to waive privilege. 27The lacuna that was identified in the evidence on 1 March 2012 was the absence of any evidence from the reviewers about their work and/or judgments in respect of any of the Documents. It was submitted that the Court was left only with Mr Klotz' opinion that the disclosure and production of the Documents must have been inadvertent rather than having any evidence from the reviewers that they had, for instance, decided that the Documents were privileged and intended to make such a claim over the Documents, but inadvertently or mistakenly failed to do so. The additional evidence filed on 28 March 2012 was relied upon to overcome this perceived problem. 28Mr Hodgkinson's evidence was limited to the matter of "de-duplicating" documents, that is, removing multiple copies of the same document. However, Mr Hodgkinson annexed to his affidavit documents that record the dates and times that the various reviewers and others had access to the Documents. Each of the other deponents was a "reviewer" of the Documents and each has given evidence of what was done in that process. 29The process in the Ringtail system was described as involving clicking into a document number to review the document that would then be displayed on half of the computer screen. On the other half of the screen there would be a dialogue box with provision for entries to be made in various fields. Each field for completion has a "drop down menu". When the relevant drop down menu is selected, a range of options is presented. If the reviewer forms the view that a document is relevant, the field entitled "Relevant" in the dialogue box is selected and a drop down menu with the words "Yes" or "No" is then displayed. There is a further field in the dialogue box entitled "Privilege". If this is selected the drop down menu displays "Yes" or "Part". If the reviewer selects "Yes" or "Part" the basis of the claim can be entered in the drop down box entitled "Privilege Basis". If a selection to "Yes" or "Part" is not made in the Privilege field drop down box, the default position for Privilege is left as "No". If the Privilege dialogue box is activated for a document it will be recovered in the Privileged section or Part Privileged section of the List of Documents. 30It is possible to select the "Auto Save" function that ensures that the information that has been entered into the fields is saved when the reviewer proceeds to the next document for review. At the conclusion of the review of the documents the selections are all preserved in the database and all of that data is then available to be produced into a report and exported to print the List of Documents. 31Mr Klotz described the "audit" process in his later affidavit as follows: (a) A more senior solicitor checked descriptions of documents in the printed list of documents against the image of the documents on Ringtail to ascertain whether documents had been correctly described and also that claims for privilege were correctly made; (b) This process did not involve checking every document but checking documents throughout the list at random. 32Ms Spencer could not recall specifically the instructions given to her about claiming privilege but she said that she was required to and did identify and categorise documents as privileged if any of the corporate defendants and/or any of the individual director defendants appeared to be entitled to claim a privilege against production. Her understanding was that a second level review for privilege would be undertaken of the documents that she had reviewed. 33Ms Spencer could not recall reviewing Documents 1 and 3 (in the Schedule to the Motion) but when she examined each of them for the purposes of preparing her affidavit, it was apparent to her that each should have been marked as privileged. Her affidavit evidence was that she believed that the reason why the documents did not appear in the privileged section of the 4th defendant's List of Documents "must have been simply an error on my part in omitting to activate the relevant box in the Ringtail system which had the effect that the database defaulted to no privilege claim being made for the document". 34Ms Arnold did not have an independent memory of the documents that she was asked to review. However it appears she reviewed Documents 4 to 22 in the Schedule. Ms Arnold did not believe that she would have determined that the documents were not privileged or that privilege was not to be claimed in relation to the Documents. She believed that the only reason why the Documents did not appear in the privileged section of the 4th defendant's Verified List of Documents "must have been an error on my part in omitting to activate the privilege field to "Yes" in the Ringtail system which had the effect that the database defaulted to no privilege claim being made for the document". 35Ms Hoffmann-Ekstein recalled being instructed by Ms Spencer about the issues in dispute in the proceedings and that she should mark any correspondence and/or documents recording legal advice obtained by or requested from Norton Rose clients as privileged. She was also instructed to identify and categorise documents as privileged if any of the corporate defendants and/or any of the individual director defendants appeared to be entitled to claim privilege against production. She reviewed many documents including Documents 23, 25 and 27 in the Schedule. She no longer has any independent memory of the documents that she reviewed but when re-examining each of them for the purpose of preparing her affidavit, it was immediately apparent to her that the documents should have been marked as "Privileged". She did not believe that she would have determined that the documents were not privileged or that the privilege attaching to them was not to be claimed. Rather she believed that she "simply made an error in omitting to activate the privilege drop down privilege box in the Ringtail system to "Yes" which meant that the default privilege setting was left as "No" and the document was then exported into the non-privilege section of the fourth defendant's list of documents". 36Ms Hussain reviewed a number of documents including Documents 26, 28, 29 and 30 in the Schedule to the Motion. Ms Hussain claimed that she would not have determined that the Documents should not be privileged or that the privilege attaching to them should not be claimed. She said that the only reason why the documents were not marked as Privileged was "simply an error on my part to activate the privilege field drop down box in the Ringtail system to "Yes" which meant that the default Privilege setting was left as "No" and the document was then exported into the non-privilege section of the fourth defendant's list of documents". 37Ms Dymond-Cate referred to Documents 1, 3, 26 and 28 in the Schedule and said that she believed that she would have only accessed each of the documents rather than the additional information recorded in the fields of the Ringtail Platform. She said that she did not believe that when she accessed each of the documents she was determining whether privilege had correctly been claimed. She said that if she had been aware that it was not the subject of a claim for privilege then her failure to request that the privilege be changed from "No" to "Yes" in Ringtail (or undertake the task herself) was a result of "an inexplicable omission" on her behalf. 38In cross-examination, Ms Dymond-Cate was referred to the records showing the times during which she accessed various documents that were produced by way of informal discovery to Marque Lawyers on 29 September 2011. She admitted that the short periods of time during which she accessed the various documents meant she could not have formed a view that the document was privileged (tr 93-95). 39Ms Dymond-Cate said that her role as an "auditor" in the discovery process was that of checking some of the documents on the Lists of Documents to see whether they had been correctly described in some instances or whether privilege claims had been correctly made (tr 99-100). She accepted that it would have been necessary to read the whole of any particular document to assess whether the privilege claim was justified. However she only did that with "some documents" and approached the task on a "sampling" basis (tr 102). She accepted that the small amount of time that she spent accessing the documents suggested that she did not review those documents for privilege claims (tr 102). 40The evidence of Ms Marshall was that she provided the third plaintiff, Mr Armstrong, with the disks that had been provided to Marque Lawyers by Norton Rose. Ms Marshall's evidence was that on 7 November 2011 Mr Armstrong provided his comments on a number of the documents including a number of the Documents in Exhibit A Confidential. Ms Marshall began the review of the individual defendants' discovery on 25 November 2011 by first looking at Mr Armstrong's notes on the Lists and then moving to other documents. Her evidence included the following (par 29): I observed a number of documents apparently recording communications between one or more of the Directors and legal professionals. This was the first occasion on which I saw any such documents in the Defendants' discovery. That day I caused a letter to be sent to Norton Rose querying the basis of the Directors' privilege claims which were inconsistent with the documents over which no claim of privilege had been made. At the time I caused the letter to be written I had not formed the view that the communications recording communications between one or more of the Directors and legal professionals which I had seen had been produced inadvertently or by mistake. 41Ms Marshall also gave evidence that Mr Armstrong had not considered that the Documents had been produced inadvertently or by mistake (par 32). Her evidence in cross-examination included the following (tr 44 -47): Q. And it was immediately apparent to you that there was an inconsistency between that being provided to you, documents of that nature, compared to the extended claims for privilege which you had received up to that point? A. Yes. Q. And that inconsistency I suggest demonstrated to you there had been a mistake made in handing over to you these documents at Tabs 6 and 7 which constituted the disclosure directly of advice? A. No. ... Q. Given the inconsistency that you identified in your letter and the fact that Norton Rose had confirmed in their correspondence to you that they intended to claim the privilege widely by their reaction to particular documents, wasn't it apparent to you that this was a mistake to have released these documents? A. No. Q. Could you think of any reason why it would be that the solicitors for these defendants would be releasing these documents that were advices whereas claiming privilege so extensively elsewhere? A. I could speculate that there may have been some kind of decision to disclose the documents. I had no reason to think that the question of privilege and disclosure had not been considered. ... Q. Wasn't it apparent to you from the response to your letter in which you had queried the extent of privilege claimed, apparent that Norton Rose intended to be claiming the privilege widely? A. What was apparent was that they had given careful consideration to the question of privilege. ... Q. Did it occur to you that somebody in this firm's office who had been given the task of identifying documents had made a mistake? A. There was no obvious mistake to me. ... Q. I presume when you got the letter from Mr Klotz you realised that he was claiming there had been a mistake? A. In relation to those four documents, yes. Q. And at some stage did you come to the view Mr Klotz was claiming that all of them had been produced by mistake? A. I didn't review the other documents until after the documents the subject of the Motion. I didn't see any of those until after the Motion filed. Q. But at that stage you realised he was claiming there had been a mistake? A. Yes. Consideration 42The plaintiffs objected to the evidence of the reviewers who were not available for cross-examination. It was submitted that it was unfair to the plaintiffs to allow the evidence without providing them the opportunity to test it. I am not satisfied that it is unfair to the plaintiffs. None of the deponents claimed to have any memory about the decisions they made in respect of these individual documents in Exhibit A Confidential. Rather, they adopted the position that they now regard the Documents as privileged and worked backwards from there. However, none was willing to claim that at the time they reviewed the Documents, they formed the view that any particular document was privileged. That is perfectly understandable having regard to the enormity of the task upon which these young lawyers and students were embarking. 43The records demonstrate that the time periods during which some of the Documents were accessed were not conducive to allowing a proper analysis of the content of the documents for the purpose of making a proper judgment as to whether they were privileged. Although Ms Dymond-Cate claimed in her affidavit that she undertook the "audit type process" described by Mr Klotz, which of course included ascertaining that "claims for privilege were correctly made" she was driven to candidly admit that she simply would not have had the time to do that when she was accessing these documents. 44One of the matters that the defendants relied upon in support of their submission that it was a simple error in failing to manipulate the Ringtail system properly is the fact that 8 of the 32 Documents in Exhibit A Confidential appear in the privileged section of the other defendants' Verified Lists of Documents. The plaintiffs on the other hand submitted that such circumstances suggest that some reviewers have concluded that the documents were privileged and other reviewers have concluded that the documents were not privileged. 45As is the position in so many cases, some of the Documents include email chains that contain privileged material in the original email. This is then sent on to other persons, whose identity and position it would be necessary to know to make an assessment as to whether this publication amounted to a waiver of privilege in the original email. There is no doubt that when one has numerous reviewers looking at the same or similar documents, it is possible to have an inconsistent outcome. When this is overlayed with a computer system in which a privileged document may be categorised as a non-privileged document by reason of a reviewer's failure to click on the right field or auto-save device, the prospects of inconsistencies are multiplied. 46The plaintiffs claim that the only basis upon which the defendants would be entitled to the orders they seek is if they have established that a decision was made to claim privilege over the Documents in Exhibit A Confidential and that the Documents were inadvertently or mistakenly placed in the non-privileged section of the Verified Lists of Documents and/or sent across informally to the plaintiffs' solicitors on that basis. It was submitted that there is no evidence from any reviewer that at the time the Documents were produced there was an intention to claim privilege over them. It was submitted that this is fatal to the defendants' application. 47In support of these submissions the plaintiffs relied upon Meltend Pty Ltd & Another v Restoration Clinics of Australia Pty Ltd & Others (1997) 75 FCR 511. This was a case involving allegations of misleading or deceptive conduct in relation to the circumstances surrounding the entry into a franchise agreement. There were allegations of false representatives in respect of the income and profitability of the franchise business. Consent Orders for discovery were made and a List of Documents was prepared and served which included a document described as a copy of a facsimile letter from a firm of accountants to an officer of the respondents (the Letter). The Letter was listed in the non-privileged section of the List of Documents. The applicants' solicitors attended the respondents' solicitors' office and inspected numerous documents including the Letter. The applicants' solicitor made notes about the Letter and described it as a "very important document" that "should be obtained". 48The applicants' solicitors subsequently wrote to the respondents' solicitors requesting numerous documents including the Letter (described as document 8.017). The respondents' solicitors responded by indicating that the Letter was included in the List of Documents "by mistake". They subsequently explained that it was a letter from the client's former accountants and that it did not form part of the normal accounting services, but was created for the sole purpose of use in the proceedings. The applicants' solicitors asserted that the Letter had significant bearing on the applicants' case in relation to the respondents' representations prior to the acquisition of the franchise business. 49The applicants filed a Notice of Motion for an order that the respondents provide a copy of the Letter to them. The respondents' solicitor, Mr Jarvis, gave evidence that the List of Documents was originally compiled by a paralegal and that he then considered each document and "settled" the List. Mr Jarvis said that he considered whether individual documents were "relevant" and/or "privileged". His evidence was that the Letter "is privileged" and that it "should not have been discovered". His evidence also included the following: 14. At the time I settled the content of the Respondents' list of documents I did not appreciate that document 8.017 was a privileged document. ... 17. Inclusion of the document numbered 8.017 in the Respondents' list of documents dated 26 November 1996 and the provision of a copy of this document to the applicants solicitors to inspect was a mistake. The document Numbered 8.017 was, in my view, produced for the sole purpose of these proceedings and to facilitate the provision of legal advice. 50Goldberg J was satisfied that the Letter was privileged but that its contents did not point unequivocally to the conclusion that it was a privileged document. His Honour said at 517: What inferences should I draw from the respondents' evidence? Mr Jarvis says that at the time he examined the documents in the list prepared by the paralegal he did not appreciate that the letter was a privileged document. Nevertheless he turned his attention to the issue whether the letter was relevant and/or privileged. He determined that it was relevant and that it was not privileged. Therefore he kept it in Pt 1 of Sch 1, thereby intending it to be discovered and made available for inspection. From an "objective standpoint", to use the language of Slade LJ in Guiness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027; [1987] 2 All ER 716 at 1045; 730-731, Mr Jarvis' intention was to disclose the contents of the letter, thereby waiving any privilege that may have attached to it. 51His Honour said that the critical issue that arose for determination was whether "there is disclosed an intention on the part of the respondents to waive any privilege" attaching to the Letter. His Honour inferred that Mr Jarvis had turned his attention to whether the Letter was privileged and that he had decided that it was not privileged. After referring to Mr Jarvis' claim that the failure to claim privilege over the Letter was a mistake and reviewing the authorities on the topic of inadvertent discovery/disclosure his Honour said at 522: On the basis of these facts it appears that if there was a mistake, the mistake was not that a decision had been made to claim privilege in respect of the document but that inadvertently or by mistake it had been wrongly decided not to claim privilege in respect of the letter he now says he should have done so because having regard to what he now knows he misunderstood the nature of the document. In short Mr Jarvis' intention, on behalf of his clients, was not to claim privilege for the letter. In so far as the letter was privileged Mr Jarvis' action constituted a waiver of that privilege. The principle of waiver involves an intentional act with knowledge: Crane v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 at 326; Commonwealth v Verwayen (1990) 170 CLR 394. But of what matters must there be knowledge? Presumably in this context that knowledge must be the right to claim privilege in respect of the document. Mr Jarvis turned his mind to this issue and was prepared to make a decision. In my view, he must be taken to have known of the contents of the letter and the date upon which it came into existence as he considered each document within the contents of a claim for privilege. It follows, in my opinion that he had the requisite knowledge to enable him to waive privilege. 52After concluding that it would not be unfair for the applicants to have access to the documents his Honour said at 526-527: A party seeking inspection should be entitled to assume that the discovering party has carried out the process of discovery properly and in accordance with the relevant principles. Otherwise parties will be placed in difficult situations if documents can be withdrawn from inspection after an initial inspection with the result that there is an inability to use information properly obtained on discovery. If parties are to be able to change their mind about the privilege attaching to a document after it has been inspected the process of discovery has the potential to become unworkable. In the absence of an obvious mistake apparent to an inspecting party and fraud I consider that the appropriate principle to apply is that once inspection has been allowed of a document listed in that part of an affidavit or list in which privilege from inspection is not claimed, any privilege attaching to that document is to be regarded as waived by being included in that part of the affidavit or list and by being made available for inspection. 53Goldberg J inferred from Mr Jarvis' evidence that he turned his mind to the particular document and that he decided that the particular document was not privileged. That was his mistake. 54The reviewers in the present case claimed that they believed they would not have formed the view that the document was not privileged. I am satisfied that they honestly believed that they must have failed to manipulate the Ringtail system properly and that this was the only reason for the failure to claim privilege over the documents. I am also satisfied that they honestly believed that they would not have fallen into error in deciding that the documents were not privileged. None went on to say that at the time of their review they formed the view that the document was privileged. 55Goldberg J, citing Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027, Attorney-General (NT) v Maurice (1986) 161 CLR 475 and Goldberg v Ng (1996) 185 CLR 83, said at 519 that the issue of waiver "should be determined by reference to the express or imputed intention of the disclosing party". His Honour found that Mr Jarvis' intention, on behalf of his clients, was not to claim privilege over the relevant document. In the present case, Mr Klotz' intention was that any document that was privileged was to have a claim of privilege made over it. However, Mr Klotz did not take part in the review process nor did he "settle" the List. There is no doubt that the reviewers were instructed that any document that was privileged was to be the subject of a claim for privilege. However that is not enough to establish that the production of these documents and their inclusion in the Verified Lists of Documents was inadvertent. The defendants must also demonstrate that the reviewers intended to claim privilege over the Documents but that by inadvertence or mistake the Documents were included in the non-privileged section of the List of Documents and inspection was allowed. 56The untested claims in the reviewers' affidavits are no higher than a "belief" that they would not have formed the view that the document was not privileged. This is not sufficient to show that the defendants intended to claim privilege over the specific Documents that are the subject of the Notice of Motion. However, the fact that duplicates of some of the Documents were categorised by other (or the same) reviewers as privileged in whole or in part, is a basis from which an inference may be drawn that there was an intention to claim privilege over those Documents. 57On the final day of the hearing, the plaintiffs limited their submissions to 'Key Documents' being documents 1, 3, 9 to 12, 19 to 22 and 25 in the Schedule to the Notice of Motion. The Key Documents fall into two categories. The first category is documents, duplicates (or documents with substantially the same content) (the duplicates) of which were listed in the privileged or redacted sections of either or both of the 4th defendant's List of Documents and the other defendants' Lists of Documents. The second category is documents that have not been listed in the privileged or redacted sections in any of the defendants' Verified Lists of Documents. 58The first category of Key Documents consists of documents 1, 3, 12, 20 to 22 and 25. Documents 12, 20 to 22 and 25 were lsited in the non-privileged part of the 4th defendant's List of Documents. Duplicates of these documents were listed in the privileged or redacted parts of the 4th defendant's List of Documents. Duplicates of Documents 1, 3 and 12 were listed in the privileged or redacted parts of the other defendants' List of Documents. While the reviewers of this category of the Key Documents could not recall whether they formed the view that the documents were privileged, the inclusion of the duplicates in the privileged or redacted section of the 4th defendant's or other defendants' Verified Lists of Documents is evidence from which it is reasonable to infer that a decision was made to claim privilege over the documents. 59I am satisfied that the defendants intended to claim privilege over these documents but that they were inadvertently listed in the open, non-privileged section of the 4th defendant's Verified List of Documents and were inadvertently produced to the plaintiffs for inspection. The defendants have not waived their claim of privilege in these documents. 60The plaintiffs submitted that it would be "unfair" to them to have to return the Documents because they had been inspected by the third plaintiff, Mr Armstrong. Although Ms Marshall gave evidence that she did not form the view that there had been an obvious mistake made by the defendants in producing these Documents for inspection, Mr Klotz wrote relatively promptly to Ms Marshall claiming that they had been produced inadvertently. There was no evidence of the dates upon which Mr Armstrong reviewed any particular document and although Ms Marshall gave evidence that Mr Armstrong made notes about various documents, there was no evidence of the detail of those notes. Mr Armstrong was provided with the disks of documents on 20 October 2011. The respective solicitors commenced their communications about privilege claims in some of the Documents at about the same time with Norton Rose maintaining a claim of privilege in certain documents in their letter of 24 October 2011. Notwithstanding that the respective solicitors were at issue about the claims of privilege from this time, it appears that the disks remained with Mr Armstrong. 61There was no evidence to lead me to the conclusion that it would be unfair to the plaintiffs to make the orders sought by the defendants. The fact that the plaintiffs' solicitors allowed the Documents to remain with Mr Armstrong, notwithstanding the defendants' solicitors' maintenance of their claims of privilege and subsequently inadvertent production does not mean that there is any unfairness in requiring the plaintiffs to return the Documents. Something more would be needed to establish unfairness in this case. I am not satisfied that there is any unfairness in requiring the Documents to be returned to the defendants. 62The balance of the Key Documents (documents 9 to 11 and 19), fall into the second category and were reviewed by the same reviewer. While it appears that one of these documents was accessed and reviewed for 21 minutes and 1 second, the remaining documents were reviewed for only 14 seconds, 20 seconds and 31 seconds respectively. These documents did not fall into the sample for the audit process conducted by Ms Dymond-Cate and were reviewed only once prior to inclusion in the defendants' Verified Lists of Documents. As the reviewer failed to claim privilege over the documents and there is no other evidence pointing to the defendants' intention to claim privilege over these specific documents, it is reasonable to infer that the reviewer did not intend to claim privilege. 63On balance, I am not satisfied that the inclusion of these documents in the 4th defendant's Verified List of Documents was inadvertent and I am not satisfied that these documents were produced to Marque Lawyers by inadvertence. The privilege in these documents was waived by their inclusion in the List and their production for inspection. A new regime 64This matter was case managed prior to the commencement of Practice Note SC Eq 11 Disclosure in the Equity Division on 26 March 2012 that requires parties to serve their evidence prior to any application for discovery (now referred to as disclosure). The parties completed their discovery and are only now proceeding with the service of evidence. 65This is an exquisite example of the need for change to the process for preparation for trial that Practice Note SC Eq 11 is aimed at achieving. Under the new regime, the plaintiffs would serve their evidence, including documents upon which they rely, in relation to their cases in chief. The defendants would then serve their evidence, including documents upon which they rely, in their respective cases. If at that time it appears necessary for disclosure of particular documents additional to those that had been relied upon by any of the parties, a consensual regime might be put in place or an application for disclosure of particular documents, or categories of documents, might be made. 66The ambit of that disclosure is confined to the real issues between the parties as defined by not only the pleadings, but also the evidence. This process will require the proofing of witnesses at a very early stage of the litigation with the need for forensic judgments to be made as to the existence of admissible evidence in support of the respective claims. This will of course require the client and/or witnesses to provide the relevant documents to the lawyers in support of the particular claims in their evidence. However it is envisaged that the process will engender a far more disciplined analysis of the need for disclosure by reference to those real issues, compared to the carte blanche gathering in of every document the respective clients have generated in their lengthy relationship for "review" by teams of lawyers and students in the absence of any knowledge of the proposed evidence. 67I make the orders in the Amended Notice of Motion in respect of the Documents in Exhibit A Confidential excluding documents numbered 9, 10, 11 and 19. I will hear the parties on costs if they are unable to agree on a costs order. Should that be necessary, the parties are to contact my Associate to have the matter re-listed on a mutually convenient date. ************** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 April 2012