Seamus E. Byrne's - In Pursuit of Relevance

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Australian Securities and Investments Commission v Macdonald [2008] NSWSC 995 (22 September 2008).
Australian Securities and Investments Commission v Macdonald (No 2) [2008] NSWSC 1020 (29 September 2008).
Australian Securities and Investments Commission v Macdonald (No 3) [2008] NSWSC 1099 (20 October 2008).
Australian Securities and Investments Commission v Macdonald (No 4) [2008] NSWSC 1101 (23 October 2008).
Australian Securities and Investments Commission v Macdonald (No 5) [2008] NSWSC 1169 (4 November 2008).
Australian Securities and Investments Commission v Macdonald (No 6) [2008] NSWSC 1175 (6 November 2008).

Preliminary

In recent months, Gzell J has released a number of ex tempore decisions in the on-going James Hardie litigation. This entry outlines notable commentary pertaining to e-trial cost sharing and ASIC's management of electronic evidence.

Second Judgment

• The second judgment focused exclusively on establishing an interim cost sharing model for the electronic courtroom, which has been established for trial.
• Variable costs, not limited to, in-court computer technology, technical support and transcript subscription costs, are to be paid by each party on a "user pays" basis.
• Fixed costs, not limited to <e.law> support staff and courtroom Internet access costs, are to be distributed on a 20/80 basis. That is, ASIC is to pay 20% of the fixed costs, with the remaining 80% to be split equally, in 10% shares, between eight law firms, who collectively represent eleven defendants.
• At [10], His Honour rejected a argument that ASIC, as the only plaintiff, should account for 50% of the fixed costs:

It is certainly not the case that ASIC is likely to use the facilities as much as all of the defendants put together.

Third Judgment

• At [1], His Honour confirmed that he had directed the parties to tender documents as exhibits, represented by electronic images, upon being identified by witnesses.
• ASIC sought to tender additional document groups.
• However, the majority of these requests were rejected due to irrelevance and/or lateness in tendering.
• Further Reading: James Hardie Litigation - "Document Dump".

Fourth Judgment

• Highlighted the issues which may arise when witnesses seek to rely upon documents which have not been previously tendered.

Fifth Judgment

• ASIC engaged Volante to perform keyword and phrase searches of electronically stored information ("ESI").
• This process was initially managed using the "Volante Protocol" which was "brought into existence to protect privileged, confidential and irrelevant [ESI] from disclosure."
• At [2], ASIC subsequently engaged Logica and devised the "Logica Protocol":

When Volante was placed in receivership, ASIC retained Logica. Under its protocol there were two changes from the Volante protocol. Searches were not restricted to key word or phrase and the results of searches did not have to be vetted by any representative of JHIL or JHINV before being provided to ASIC, it acknowledging that it had a duty not to disclose any confidential information.

• ASIC sought to tender four (4) document groups obtained from a search of a second defendant's notebook computer.
• However, His Honour identified that ASIC's process in obtaining documents from the second defendant's notebook computer clearly failed to comply with the Protocol it had devised, and agreed upon with the defendant parties, to discover potentially relevant ESI.
• At [23-24]:

[23] This is not a case of mere breach of contract. Minimum standards that our society should expect of ASIC require it, in exercise of its wide powers of discovery, to ensure that it acts within the terms of any protocol with which it has agreed to comply when given direct access to digitally stored information. Otherwise essential privileges against self-incrimination, client legal privilege and privilege against exposure to penalties are at risk.

[24] This is not a case of minor contravention. The documents were obtained in breach of the protocol where no variation of it had been agreed.

• At [29]:

In my view, the desirability of admitting the 4 documents does not outweigh the undesirability of admitting the evidence. In matters such as this, agreements by ASIC as to the manner in which it may exercise its discovery powers by direct access to digital information while at the same time maintaining the important privileges to which I have referred are highly significant. It is undesirable to admit evidence obtained in contravention of such arrangements.

Sixth Judgment

• ASIC sought to tender additional document groups.
• All requests were rejected due to irrelevance and/or lateness in tendering.
• At [11], His Honour also appeared to question the efficiency of ASIC in dealing with ESI:

ASIC could have had the searches carried out at an earlier time. It had the ability in accordance with the Volante protocol from about August 2005 to provide Volante with key words and phrases for searching across the backup tapes including the laptops.

Update on April 24, 2009 by Seamus Byrne

Justice Gzell's Judgment: ASIC v Macdonald (No 11) [2009] NSWSC 287.