Litigation 101: Provenance of company records: litigation record-keeping reminder

Emily Tranter, Matthew Edwards & Kate Deans
18 Aug 2023
Time to read: 3 minutes

If you wish to rely on the records of a company during litigation, it will be necessary to authenticate the document by proving the document's provenance. Failure to prove the provenance of the document could be fatal to the success of the litigation.

During litigation, it will be necessary for a party to provide its legal team with the documents that substantiate its claim or defence. Those documents may be disclosed or tendered as evidence in the trial. Section 1305(1) of the Corporations Act 2001 (Cth) allows a document kept by a body corporate to become evidence of any matter stated in the document, regardless of whether the document would be inadmissible according to the rules of evidence (eg. hearsay). However, in the absence of evidence as to the provenance of the document, the court may exclude the evidence, which could be fatal to the success of the litigation.

Admissibility of business records

Section 1305(1) of the Corporations Act 2001 (Cth) allows a "book" that is "kept by a body corporate under a requirement of this Act" to be admissible as evidence of any matter stated or recorded in it.

This section was introduced to expedite legal proceedings where books are to be used in evidence, as it removes the need to call witnesses to prove that books constitute books of the corporation when that fact is not in issue or to prove transactions recorded in a company's books when those matters are not in dispute. Were it not for this section, litigants would need to call direct evidence from the creator of a document.

What are "books" and how are they kept?

The definition of "books" in section 9 of the Corporations Act is broad. It includes a register; any record of information; financial reports or financial records; or a document.

Financial records extend to invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers; documents of prime entry; working paper or other documents needed to explain the methods by which financial statements are made up and any adjustments made in preparing the financial statements.

A document may be a record of a business even if it is a draft, or otherwise appears to be a document produced “along the way” to completion of a final document.

In relation to a company in liquidation or administration, the records of the business of a company also include records kept by the administrator or liquidator about the company’s affairs, including copies of an external administrator's reports to creditors.

A document is “kept” if it is retained or held. The courts have adopted a wide definition of the meaning of "kept", holding that a book is kept by a company if it is simply retained, and also if it is maintained systematically and periodically.

Where a book is kept by mechanical or electronic means, any written production of the matters so recorded or stored is prima facie evidence of those matters.

The statutory presumption can be displaced

Section 1305(2) of the Corporations Act gives rise to a rebuttable presumption that extends to both elements in section 1305(1), that is:

  1. that the books are "kept"; and
  2. that is the books are so kept "under a requirement of [the] Act".

This means the court has a discretion to exclude the book and not admit it into evidence if the provenance of the document is not proved. Therefore, if a document is important to the litigation, it would be prudent to authenticate the document by proving the document's provenance.

Authenticity of a book of a company may be proved, at its simplest, by the provision of evidence of a person who participates in the conduct of the business and who compiled the document, found it among the records of the business or is able to recognise it as a book of the business.

Key takeaways for record-keeping

When collating documents for litigation, it is important to diligently record details concerning the provenance of the documents.

For example, a company should keep notes as to:

  • who compiled the relevant document or documents;
  • who found the document among the records of the business and where those documents were located; and
  • who was able to recognise the document or documents as a record of the business and the basis on which the document or documents were so recognised.

In terms of proving the provenance of a document when a company is in a liquidation the liquidator's team should keep good notes as to where the documents were found within the books and records of the company in liquidation. This includes:

  • how were the electronic and hard-copy records stored;
  • how was the server secured and restored; and
  • who provided the documents to the solicitor and in what form.

By taking the above steps, if and when it becomes necessary to file evidence with the Court proving the provenance of documents, that evidence will be able to be promptly and effectively prepared and filed. The keeping of those records avoids inefficiencies associated with seeking to identify persons who took certain steps (such as extracting documents from servers) at a much later date.

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