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Timing ‘critical’ in unusual contempt of court ruling

Timing ‘critical’ in unusual contempt of court ruling

Scales of Justice

A recent case could have interesting implications for contempt of court rulings, according to a Ferrier Hodgson partner.

In a NSW Supreme Court hearing on Wednesday, chief judge in equity Julie Ward held a defendant in contempt of court for destroying evidence, even though it was destroyed before the commencement of court proceedings. She ordered his defence to be struck out as an abuse of process.

The defendant is a former director of healthcare technology company Mirus Australia Pty Ltd. Mirus alleged that the defendant deleted a large volume of material in three separate instances from computer devices in his possession, at least some of which contained information confidential to Mirus.

The original dispute was over a non-competition clause in the defendant’s employment contract.  

Michael Khoury, who leads the forensic IT practice at financial advisory and restructuring firm Ferrier Hodgson, was the computer forensic expert in the case. He told Lawyers Weekly it was unusual for someone to be held in contempt of court for destroying evidence before proceedings commenced.

“Timing in this case was critical,” he said.

“This judgment sets a precedent that a party can be found guilty of contempt even in circumstances where legal proceedings have not commenced, but are merely anticipated.

“The decision demonstrates that no matter how sophisticated the method of destruction, it doesn’t escape the courts reach.”

Mr Khoury said the defendant did, in this case, take quite sophisticated steps to destroy the evidence, including using secure file-shredding tools and conducting online research into the most effective ways to delete information.

“The argument being made by the defendant at one stage was that the court cant be satisfied beyond a reasonable doubt that the deletions took place after the making of the orders, which were made on 8 September 2015,” Mr Khoury said.

“There were a number of deletions that occurred, but the primary ones ... occurred on 7  September, the day before.

“While that was accepted by the Court, Her Honour Justice Julie Ward further commented by saying ... by his own admissions, [the defendant] at least accepts that the deletions were intentional, and that he believed that by deleting the data – which occurred before, in particular, PC04 [one of the devices] was put up for inspection – this would result in the deletions flowing down to all his other synchronised devices, which is what he was hoping to achieve, and that obviously didnt work.”

Mr Khoury said the case also implied that failure to disclose all electronic and cloud-based storage repositories in response to formal court orders can lead to a strike-out of a defendant’s defenses, and that conduct of this nature can constitute an abuse of process and an interference with the administration of justice in circumstances where the other party’s capacity to prosecute its claim is significantly prejudiced by the conduct of the defendant.

The defendant’s sentencing hearing has been postponed.

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