Douglas v Morgan

Case [2019] SASCFC 76

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court: Civil)

DOUGLAS v MORGAN

[2019] SASCFC 76

Judgment of The Full Court

(The Honourable Justice Kelly, The Honourable Justice Blue and The Honourable Justice Nicholson)

1 July 2019

EVIDENCE - ADMISSIBILITY - EXCLUSIONS: PRIVILEGES - CLIENT LEGAL PRIVILEGE

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OF DOCUMENTS - PRODUCTION AND INSPECTION OF DOCUMENTS - GROUNDS FOR RESISTING PRODUCTION - PRIVILEGE - CLIENT LEGAL PRIVILEGE - FOR PURPOSES OF OR IN CONTEMPLATION OF LITIGATION

Appeal against a decision by a Judge of the District Court who held, on appeal against a contrary finding by a Master, that legal professional privilege did not exist in an investigator’s report commissioned by the defendant’s insurer, Allianz, following an incident in which her car collided with the first respondent.

On 20 December 2012 solicitors for the first respondent wrote to Allianz making a claim for personal injuries on her behalf. On 27 December 2012 Ms Dunham of Allianz sent a request for investigation to Verifact Investigations seeking a detailed account of the accident in order to confirm the accident circumstances. She also wrote to the first respondent’s solicitors confirming that Allianz was attempting to obtain details of the accident from the participants and would communicate further as soon as possible following receipt of these details.

On 25 February 2013 Ms Dunham telephoned the first respondent’s solicitors and said that Allianz’ liability investigations had not yet been completed and a copy of Ms Morgan’s blood alcohol certificate was required before any determination of liability could be made.

On 26 February 2013 Allianz received the investigation report. On 8 May 2013 Ms Dunham reviewed the liability status of the claim and formulated a position on liability based on the available evidence.

On 12 June 2013 Ms Dunham wrote to the first respondent’s solicitors in regards to liability, alleged that the first respondent failed to take reasonable care when crossing the road and made a settlement offer or referred to settlement in terms which invoked settlement privilege.

The primary question raised on appeal is whether, on the evidentiary material before the Master, the investigator’s report was commissioned by the insurer for the dominant purpose of submission to lawyers for use in any legal proceedings instituted by the first respondent.

Held per Blue J (Kelly and Nicholson JJ agreeing):

1. On the evidence before the Master there were two purposes of obtaining the investigation report, the immediate purpose being for Allianz to make a determination as to liability and attempt to resolve the claim and the secondary purpose being, if this could not be achieved, for provision to solicitors for use in litigation (at [74]-[82]).

2. There was no evidence adduced by Allianz and no basis to find that the secondary purpose was the dominant purpose (at [87]).

3. The investigation report was not the subject of legal professional privilege. The Master erred in finding that it was. The Judge was correct…

Continue reading Douglas v Morgan

Sign in free to access the full text

Details
AGLC
Douglas v Morgan [2019] SASCFC 76
Case
[2019] SASCFC 76
Decision Date

CaseChat Overview and Summary

Ms Douglas appealed to the Full Court of the Supreme Court of South Australia against a decision concerning the discoverability of an investigator's report. The dispute arose from a motor vehicle collision on North Terrace, Adelaide, on 9 December 2012, in which Ms Morgan, a pedestrian, was struck by a car driven by Ms Douglas. Ms Morgan subsequently lodged a claim with Ms Douglas's compulsory third-party insurer, Allianz Australia Insurance Limited. Allianz engaged Verifact Investigations Pty Ltd to prepare a report on the circumstances of the collision. Ms Morgan sought production of this report, but Allianz resisted on the grounds of client legal privilege.

The central legal issue before the Full Court was whether the investigator's report was commissioned by Allianz for the dominant purpose of submission to lawyers for use in anticipated legal proceedings. This required the court to consider the criteria for establishing client legal privilege, particularly in the context of an insurer commissioning an investigation into a motor vehicle accident claim. The court had to determine if the evidence demonstrated that the primary motivation for obtaining the report was its use in litigation, rather than for general claims management or assessment purposes.

The court reasoned that for client legal privilege to apply to the investigator's report, it must have been created for the dominant purpose of obtaining legal advice or for use in litigation. While the insurer's claims consultant, Ms Dunham, stated it was her practice to commission external investigations for claims that appeared "tricky" or unlikely to settle, and that such evidence would be preserved for court, the court found that Allianz had failed to establish the requisite dominant purpose. The court noted that while there was a reasonable anticipation of litigation, this alone was not sufficient. The appeal was dismissed, upholding the decision that the Investigation Report was not privileged.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Ms Douglas appeals, by permission, to this Court against the judgment of the Judge. The primary question raised on appeal is whether, on the evidentiary material before the Master, the investigator’s report was commissioned by the insurer for the dominant purpose of submission to lawyers for use in any legal proceedings instituted by Ms Morgan.Background On 9 December 2012 at about 1.47am Ms Morgan was crossing North Terrace Adelaide when a car driven by Ms Douglas collided with her. Police attended. Ms Morgan was taken to the Royal Adelaide Hospital. The police administered an alcotest to Ms Douglas and a subsequent breathalyser test indicated that her blood alcohol reading was 0.076 per cent. The police created a Collision Report (the Police Report). It narrated the circumstances summarised above. It included the names and contact details of Ms Douglas, Ms Morgan, her husband (the second respondent Brendan Morgan) and other witnesses. It included the following under the heading “Description of Collision”:Unit one travelling east in LHL of three on North Tce Adelaide. Unit two (pedestrian) walking from southern side of North Tce towards the north side and collision occurred with unit one. Unit two then collided with parked unit three and landed on the ground. Allianz Australia Insurance Limited (Allianz) was the claims agent for Ms Douglas’ Compulsory Third Party insurer. On 14 December 2012 Ms Morgan’s general practitioner, Dr Nguyen, submitted to Allianz a standard form Allianz “Notification of motor vehicle injury”. It stated that Ms Morgan had suffered soft tissue injuries to her left lower leg and neck and back as a result of being “hit by car while crossing the road”. The standard form contained a statement by Allianz that it would pay the doctor’s invoice for the clinical consultation and submission of the form and would endeavour to advise the doctor and patient within five business days whether the cost of any further treatment would be paid by the Compulsory Third Party scheme on a without prejudice basis. On 17 December 2012, as a result of receiving Dr Nguyen’s Notification form, Allianz obtained a copy of the Police Report. On 20 December 2012 Mellor Olsson, solicitors acting for Ms Morgan, sent a letter to Allianz providing details of the collision and requesting a claim number (the Initial Claim). Allianz assigned management of the claim to Rebecca Dunham, a Claims Consultant at Allianz. On 24 December Ms Dunham read the Initial Claim. On 27 December 2012 (the next working day) she sent a standard form request for investigation to Verifact Investigations Pty Ltd (SA) (the Investigation Request). The Investigation Request attached a copy of the Police Report and the Initial Claim. It requested that statements be taken from Ms Douglas, Ms Morgan, Mr Morgan and an independent witness. It included the following under the heading “Reason for investigation”:We wish to obtain a detailed account of the accident from the insured, witnesses and claimant if possible in order to confirm the accident circumstances and ascertain the insured and claimant’s awareness prior to the accident. We ask that you also please comment on the credibility of those interviewed.We would like a full description of the circumstances leading up to the event, during and after including exactly where the accident occurred (distances from kerb, lanes, objects etc), the speed that the vehicle was travelling at prior to the accident, whether the insured attempted to break [sic] or avoid the collision, where the damage was located. Further with regards to the claimant we wish to confirm which direction he [sic] came from, when he was noticed on the road, what other vehicles were around and what clothes he was wearing.

Evidence

Evidence Before The Court

In March 2018 the Master heard argument on Ms Morgan’s application and in April delivered reasons for judgment upholding the claim of privilege. In August the Judge heard the appeal and in December delivered reasons for judgment allowing the appeal and determining that the Investigation Report was not privileged.[1][1] Morgan v Douglas [2018] SADC 125.The affidavit evidence Mr Scholz said in his affidavit that Ms Dunham had the conduct of the claim on behalf of Allianz and commissioned the Investigation Report. Ms Dunham was no longer employed by Allianz and it is apparent from a later affidavit sworn by Ms Douglas’ solicitor that Ms Dunham had not been located by Allianz when Mr Scholz swore his affidavit. Mr Scholz described steps taken by Ms Dunham on the file by reference to correspondence that he exhibited and file notes made by her which he narrated. He also described Allianz’ policies in relation to investigations, which description was superseded by Ms Dunham’s description when her affidavit was filed. Ms Dunham in her affidavit said that the only recollection she had of Ms Morgan’s claim was that, after attending a wedding, Ms Morgan and her husband were crossing North Terrace in the early hours of the morning when she was struck by the insured’s vehicle in the vicinity of the Adelaide Casino and the insured may have returned a positive alcohol reading. She had no other recollection of the specific details of the matter, including of appointing external investigators. She had no reason to believe that she did not follow her normal practice which she described in the following terms:5.Generally I endeavour to resolve claims informally with the claimant direct or with their solicitors. However, I was also aware that if the claim could not be resolved the next stage for those claims was to proceed to Court (including going to trial where the judge would hear evidence from the claimant, insured and any witnesses and then make a ruling).6.I was aware that the evidence gathered in the early stages of the claim would be used in the Court process.7.Certain claims appeared tricky from the outset and looked less likely to settle at an early stage, and therefore it was important to identify and preserve any relevant evidence whilst it existed and was still fresh in everyone’s mind so that it could be used in Court.8.In accordance with my training, upon receiving notification of a claim, I would generally make preliminary telephone contact with the claimant, insured and any known witnesses to confirm the accident circumstances, explain the claims process to the claimant, discuss the payment of any excess with the insured and to obtain any other information needed to manage the claim, such as determining whether treatment accounts should be paid on a without prejudice basis.9.In the majority of matters, this would allow me to accept the claim and try resolving the matter quickly.10.In matters where I was unable to make contact or I required further preliminary information to assess the claim and try to resolve the matter quickly, I would use the internal investigators available to Allianz to make contact.11.Internal investigations would often be considered where I wanted to get a feel for that particular issue or needed more background information to enable a determination on liability or the payment of treatment accounts. In these cases, the investigator would prepare a short report of no more than 1-2 pages summarising the enquiries conducted, what they discovered and the “read” of the matter.12.For those matters which I considered were a little more tricky or unlikely to settle quickly, I would use external investigations.13.The appointment of external investigations is a much more formal process. It is the step I took when there was something not quite right about the claim, such as possible alcohol involvement, a suggestion that the claimant may not have been wearing a seatbelt, or conflicting versions or unusual circumstances regarding the accident such as the time or location of the accident. I would also use external investigators when contribution from the claimant was likely to be sought. The early appointment of solicitors for the claimant would also be a factor that I take into account.14.In my experience, contributory negligence is an issue that is often challenged by the claimant, which in turn makes negotiating an early settlement more difficult irrespective of whether the claimant is unrepresented or represented, means that the claim is more likely to go to Court.15.I would appoint external investigators when I believed the evidence needed to be preserved for court. By that I mean, witness statements should be taken as quickly as possible after the accident while the events are still fresh in the mind or photographs are taken while the area is still like it was at the time of the accident.16.I knew and expected the external investigators would undertake comprehensive and detailed enquiries including obtaining a plan of the accident scene, photographs of damage and transcribed witness statements.17.It was my normal practice throughout my time at Allianz managing my claims to follow this process.

Decision

Reasons for decision

For the reasons given above, it is not clear what would be the rationale or doctrinal basis for this additional element of legal professional privilege. However, it is unnecessary to further consider this question because Allianz failed to establish that the Investigation Report was obtained for the requisite dominant purpose. For the sake of completeness, if there were an independent element that there be a reasonable anticipation of litigation eventuating, I consider that this element would have been satisfied.Conclusion The appeal should be dismissed. NICHOLSON J: I agree with Blue J.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.