With some force, counsel for the defendant submitted to us that at first instance on this occasion the judge had indeed allowed his indignation to carry the day. His Honour expressly accepted that this was not a case for punishment for misconduct: his Honour addressed the question whether there was a real risk that the further conduct of proceedings must be unsatisfactory, but in the context of misconduct allegedly occurring before the commencement of the proceeding, not during it."
90 Reference was made to the decision in Arrow Nominees. With respect to Arrow Nominees, the Court of Appeal said at 580 [160]:
"Two things may be said of this. First, this was a case in which, after the commencement of the proceeding, Tobias had deliberately indulged in fraudulent conduct designed to mislead the court by the production in the course of discovery of documents which he knew to be forged and, secondly, he had persisted in that fraudulent conduct during the proceeding. The case therefore says nothing directly about conduct, such as the destruction of documents, before the commencement of the proceeding It was anyway, quite plainly, a case of one party attempting to pervert the course of justice."
91 The Court of Appeal said at 585 [172]:
"The foregoing is sufficient to demonstrate how limited is the nature of the authority available. Nothing governs directly, and there are many questions raised (especially by the cases in England) even where the destruction of documents occurs after the commencement of a proceeding, let alone before it. The judge here was disposed to accept a 'fair trial' as constituting the relevant criterion, but when documents are destroyed before the commencement of a proceeding, that test is less than helpful. After all, what is a 'fair trial'? According to the defendant, there is a fair trial if, according to the rules of court and the obligations of the parties to the court, the court adjudicates upon the documents put in evidence and the oral testimony of the witnesses during the hearing. Of course what is a 'fair trial' must inform any test which is adopted, but it cannot stand in place of one."
92 The Court of Appeal at 586[173] observed that an appropriate balance ought be struck with respect to the defendant's approach to document retention in that case:
"As indicated at the outset, it seems to us that there must be some balance struck between the right of any company to manage its own documents, whether by retaining them or destroying them, and the right of the litigant to have resort to the documents of the other side. The balance can be struck, we think, if it be accepted that the destruction of documents, before the commencement of litigation, may attract a sanction (other than the drawing of adverse inferences) if that conduct amounts to an attempt to pervert the course of justice or (if open) contempt of court, meaning criminal contempt (inasmuch as civil contempt comprises wilful disobedience of a court order [See, for example, Miller on Contempt of Court , 2nd ed, (1989), pp 2-3; Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 106; The Broken Hill Proprietary Company Ltd v Dagi [1996] 2 VR 117 at 169-73] and will ordinarily be irrelevant prior to the commencement of proceedings). Such a test seems to sit well with what has been said in the United States as well as what has been said in England. Whether contempt, even criminal contempt, is possible before any proceeding has been instituted need not be examined on this occasion. (For instance, in James v Robinson [(1963) 109 CLR 593] , which did not involve disobedience of a court order, it was said that that there can be no contempt of court before there is any litigation actually on foot, but, as the majority in the High Court pointed out [at 602] , that case concerned only the narrower type of contempt, namely interference with the fair trial of a particular. Certainly, there can be an attempt to pervert the course of justice before a proceeding is on foot, as R v Rogerson [(1992) 174 CLR 268. See also Meissner v R (1995) 184 CLR 132 especially at 144] demonstrates, and that, we think, provides a satisfactory criterion in the present instance. The standard of proof is the civil rather than the criminal standard, bearing in mind also the seriousness of the allegation as required by Dixon J in Briginshaw v Briginshaw [(1938) 60 CLR 336 at 361-2] (as modified or explained in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [(1992) 110 ALR 449 ; 67 ALJR 170] . Both attempting to pervert the course of justice and contempt of court (in the relevant sense) are criminal offences, but where a civil sanction is sought a civil standard of proof suffices: Helton v Allen [(1940) 63 CLR 691] and Rejfek v McElroy [(1965) 112 CLR 517 compare Logicrose per Millett J [201 CLR 1 at 13]. There is considerable force, we think, in Mr Myers' submission that the rule of law is endangered if intervention by the court, for conduct occurring before the commencement of litigation, were to be grounded otherwise than on illegality, albeit illegality proved to the civil standard."
93 The Court laid down the following principle where one party alleges against another party the destruction of documents before the commencement of the proceedings at 587 [175]:
"Accordingly, there being no authority directly in point, we consider that this court should state plainly that where one party alleges against the other the destruction of documents before the commencement of the proceeding to the prejudice of the party complaining, the criterion for the court's intervention (otherwise than by the drawing of adverse inferences, and particularly if the sanction sought is the striking out of the pleading) is whether that conduct of the other party amounted to an attempt to pervert the course of justice or, if open, contempt of court occurring before the litigation was on foot. We say nothing about the drawing of adverse inferences because that is not raised for consideration on this appeal. Nor, for the reason already given, do we express any opinion at all on whether the conduct which was under challenge in this instance, and which the defendant sought to justify by reference to its document retention policy, did or did not amount to an attempt to pervert the course of justice. That it did was not the case raised and considered below and so for the purpose of this appeal it must be taken that at first instance the court was not entitled to impose any sanction on that ground. More particularly it must follow too, contrary to his Honour's conclusion, that the destruction of documents by the defendant in March-April 1998, and before, was not shown to be in breach of any rules relating to discovery in this proceeding."
94 Although these principles are significant to the resolution of the present application, it must be borne in mind that the present case involves destruction of potential evidence whilst proceedings are on foot and not prior to the commencement of proceedings.
95 The principles emerging from Arrow Nominees and British American Tobacco Services Limited v Cowell were considered by Chesterman J of the Supreme Court of Queensland in Fuji Xerox Australia Pty Limited v Lee [2003] QSC 303.
96 In Fuji, the defendant applied for orders that the plaintiff's claim be struck out or dismissed as an abuse of process or stayed permanently. The grounds advanced in support of the application alleged that the plaintiff had destroyed critical evidence before the commencement of proceedings. It was alleged that the conduct amounted to an attempt to pervert the course of justice and/or contempt of court. The defendant submitted that there could not be a fair trial of the action without the evidence which the plaintiff had destroyed. The claim related to a rental agreement of a photocopier. Following the termination of the agreement, the plaintiff took possession of the photocopier. It was leased to another entity and then returned to the plaintiff. The photocopier was destroyed along with several other machines of an identical type prior to the commencement of proceedings. The fact that the machine had been destroyed did not become known until after the proceedings were on foot. Chesterman J said at paragraph 8:
"I accept the defendant's submission that if it be shown that the photocopier was destroyed in order to deprive him of critical evidence and prevent him advancing a good arguable the case the court would intervene to ensure that the attempt to distort the course of justice did not succeed. The particular order to achieve that end would depend on the circumstances."
97 After referring to British American Tobacco Australia Services Limited v Cowell at paragraphs 173, 175, Chesterman J, at paragraphs 9 and 10, referred to the principles in The Queen v Rogerson:
"[9] According to Brennan and Toohey JJ in R v Rogerson (1991-1992) 174 CLR 268-279:
The course of justice is perverted … by impairing … the capacity of a court … to do justice. The ways in which a court … may be impaired in … its capacity to do justice are various. Those ways comprehend … erosion of the integrity of the court … hindering of access to it, deflecting applications that would be made to it, denying it knowledge of the relevant law or of the true circumstances of the case, and impeding the free exercise of its jurisdiction and powers …
[10] This would seem to be a case of denying the court knowledge of the true circumstances relevant to the determination the court is called upon to make."
98 Chesterman J referred to Arrow Nominees and the facts of the case before him and said at paragraph 14 - 16:
[14] It is not the case that a trial will only be fair if all possible evidence relevant to the issues in dispute is available to the parties. It is common experience that witnesses die or cannot be found, or that documents are lost or that objects or scenes which may help to determine a disputed course of events change or are obliterated. The parties must do the best they can with what is available. A trial in which a witness, even a critical witness cannot be called can still be fair.