LAWYERS HANDLE DOCUMENTS ON A DAILY BASIS. In some cases, the documents are produced by the lawyers themselves and include written agreements and memoranda of advice. In other cases, the documents are provided to the lawyers by clients or third parties for various purposes such as due diligence or safe custody pending the completion of a transaction (for a discussion about the circumstances in which lawyers hold documents in escrow, see China Business Law Journal, volume 7 issue 6: Escrow).
The documents may either be in paper or electronic form. In each case, it is usually possible to destroy the documents by shredding them or deleting them from a law firm’s information technology (IT) system. There are various reasons as to why lawyers and their clients may wish to destroy documents. In the case of documents in paper form, the reason may be to reduce the cost of storage and to create additional storage space for other documents. Alternatively, the reason may simply be that the documents relate to old matters and are no longer useful or relevant.
The issue of storage is less significant in the case of electronic documents. However, lawyers may sometimes be asked to destroy documents. This can occur, for example, where a client or a third party provides the lawyer with confidential information (e.g., for the purpose of bidding, for instructions to act in a deal, or for undertaking a due diligence review) on condition that the lawyer will return the documents or destroy the documents upon the request of the client or third party.
The destruction of documents may be problematic for lawyers and law firms. First, the lawyer may have an obligation to retain documents for a certain period of time, either pursuant to the applicable legal rules or the law firm’s own document retention policy. Second, it may be technically difficult or impossible to delete electronic documents from the law firm’s IT system.
Third, it may be unlawful for a law firm or a client to destroy documents that relate to actual, pending or contemplated judicial proceedings, as such action would result in the destruction of evidence. This article examines the circumstances in which it is unlawful for lawyers or their clients to destroy documents that relate to judicial proceedings, and compares the position in common law jurisdictions with the position in mainland China.
COMMON LAW JURISDICTIONS
Traditionally, the legal rule in many common law jurisdictions was that documents could be destroyed except where judicial proceedings had commenced, or had been announced. Today, however, the general rule established by legislation is that documents must be preserved from the time judicial proceedings are contemplated and not from the time judicial proceedings are commenced.
In the state of Victoria in Australia, for example, section 254 of the Crimes Act provides as follows:
Destruction of evidence
(1) A person who
(a) knows that a document or other thing of any kind is, or is reasonably likely to be, required in evidence in a legal proceeding; and
(i) destroys or conceals it or renders it illegible, undecipherable or incapable of identification; or
(ii) expressly, tacitly or impliedly authorises or permits another person to destroy or conceal it or render it illegible, undecipherable or incapable of identification and that other person does so; and
(c) acts as described in paragraph (b) with the intention of preventing it from being used in evidence in a legal proceeding is guilty of an indictable offence and liable to level 6 imprisonment (five years maximum) or a level 6 fine, or both.
(2) This section applies with respect to a legal proceeding, whether the proceeding is one that is in progress or is to be, or may be, commenced in the future.
Similar provisions appear in legislation governing companies. For example, section 450 of the UK Companies Act 1985 provides as follows:
450 Punishment for destroying, mutilating etc., company documents
(1) A person, being an officer of any such body as is mentioned in paragraphs (a) to (d) of section 447(1) or a body other than as there mentioned, being an insurance company to which Part II of the Insurance Companies Act 1982 applies, who—
(a) destroys, mutilates or falsifies, or is privy to the destruction, mutilation or falsification of a document affecting or relating to the body’s property or affairs, or
(b) makes, or is privy to the making of, a false entry in such a document,
is guilty of an offence, unless he proves that he had no intention to conceal the state of affairs of the body or to defeat the law.
In each of the examples above, the intention to destroy or conceal documents is a necessary element that must be satisfied before the offence will be proved.
The position has also been considered by case law in common law jurisdictions. The legislative reform that resulted in section 254 of the Crimes Act in the State of Victoria in Australia (see above) was triggered by the 2002 case of McCabe v British American Tobacco Australia Services Ltd, in which the plaintiff sued the tobacco company for lung cancer as a result of smoking.
Prior to the commencement of legal proceedings, the lawyers acting for a tobacco company advised the company to destroy certain records. At first instance, the court found that the company had subverted the court process by destroying the documents with the deliberate intention of denying a fair trial to the plaintiff.
The appeal court subsequently overturned the decision on the basis that the plaintiff had failed to prove that the company had destroyed the documents with the intention of denying a fair trial, and also on the basis that the legal advice had been given in relation to the use of storage space and not for the purpose of destroying evidence in legal proceedings. However, the decision was significant as it established the principle that documents should not be destroyed where it is contemplated that they could be used in evidence in litigation.
In mainland China, article 306 of the Criminal Law prohibits the destruction of evidence in criminal proceedings and provides as in Citation 1.
引文一 Citation 1
Article 306, PRC Criminal Law
If, in criminal proceedings, a defender or agent ad litem destroys or forges evidence, helps any of the parties to destroy or forge evidence, or coerces or entices witnesses into changing their testimony in defiance of the facts or give false testimony, he or she shall be sentenced to a fixed-term imprisonment of not more than three years or criminal detention; if the circumstances are serious, he or she shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years.
There is no express provision that prohibits the destruction of documents in civil proceedings. However, article 74 of the Civil Procedure Law provides a basis for a party to civil proceedings to apply for an order for the preservation of evidence (see Citation 2).
引文二 Citation 2
Article 74, PRC Civil Procedure Law
In circumstances where there is a likelihood that evidence may be destroyed or lost, or it is difficult to obtain later, the participants in the proceedings may apply to the people’s court for preservation of the evidence. The people’s court may also on its own initiative take measures to preserve such evidence.
There is little information on the practical experience of preservation orders under article 74. Information from Chinese lawyers suggests that to date courts have issued such orders on an infrequent basis, and that they are relatively difficult to obtain.
A former partner of Linklaters Shanghai, Andrew Godwin teaches law at Melbourne Law School in Australia, where he is an associate director of its Asian Law Centre. Andrew’s new book is a compilation of China Business Law Journal’s popular Lexicon series, entitled China Lexicon: Defining and translating legal terms. The book is published by Vantage Asia and available at www.vantageasia.com.