Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority
[2002] VSCA 59
•10 May 2002
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No.8269 of 2001
| MITSUBISHI ELECTRIC AUSTRALIA PTY. LTD. | |
| Appellant | |
| v. | |
| VICTORIAN WORKCOVER AUTHORITY | Respondent |
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JUDGES: | CHARLES, CALLAWAY and BATT, JJ.A. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 19 February 2002 | |
DATE OF JUDGMENT: | 10 May 2002 | |
MEDIUM NEUTRAL CITATION: | [2002] VSCA 59 | |
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PRACTICE AND PROCEDURE – Discovery – Inspection – Legal professional privilege – Whether reports of loss assessors and engineers to party’s solicitors were commissioned when litigation reasonably anticipated and for dominant purpose of such litigation.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr. J.H.L. Forrest Q.C. with Mr. W.R. Clancy | Hunt & Hunt |
| For the Respondent | Mr. P.N. Vickery Q.C. with Mr. G.P. Colquhoun | Wisewoulds |
CHARLES, J.A.:
Having had the advantage of reading the reasons for judgment prepared by Batt, J.A., I agree that this appeal should be allowed and orders made as proposed in paragraph 26, for the reasons given by his Honour.
I accepted the invitation of the appellant to inspect the documents in dispute. Like Batt, J.A., that inspection did not lead me to alter my opinion.
CALLAWAY, J.A.:
I also agree with Batt, J.A., except that I did not find cases on s.55(4) of the Evidence Act 1958 and cognate legislation of assistance and I did not find it necessary to inspect the reports. The letter of 20th March 1996 from Mr Utiger to Mr Skelly, together with the circumstances in which it was written, show that they were commissioned for the dominant purpose of being used in, or in relation to, litigation arising out of the injury sustained by Mr Vellios. That litigation had to be more than a mere possibility but it did not have to be more likely than not. There had to be a real prospect of litigation but, in my opinion, there was.
BATT, J.A.:
This is an interlocutory appeal, by leave, from part of an order made by a County Court judge on 29 October 2001. In the relevant paragraph of that order the judge ordered the appellant, the first defendant below, to produce for inspection by the respondent, the plaintiff below, seven documents for which privilege had been claimed in the appellant's affidavit of documents. The documents ordered to be produced were five reports of Thomas Howell Group (Australia) Pty. Ltd. (“Thomas Howell”), international loss adjusters, addressed to Hunt & Hunt, the appellant’s solicitors, and bearing various dates from 7 August to 8 December 1996, together with two reports of Russell Lee Pty. Ltd., consulting forensic and electrical engineers, the first described as addressed to and commissioned by Thomas Howell on
instruction from Hunt & Hunt Lawyers and the second as addressed to and commissioned by Hunt & Hunt Lawyers. The first of those reports is dated 9 July 1996 and the second, 15 May 1997.
The order was made in a proceeding brought by the respondent against the appellant and another defendant, not party to this appeal, for indemnity pursuant to s.138 of the Accident Compensation Act 1985. In its statement of claim the respondent alleged that George Vellios was a worker employed by Vellios Electrical Contractors Pty. (“the employer”); that the employer was engaged by Snedden and Kingston Plastics Pty. Ltd. to build and install a new switchboard at the latter’s premises in Preston; that electrical circuit breakers which were used in the switchboard works were manufactured, assembled and/or supplied for re-supply by the appellant; that on 11 January 1996, when the switchboard works had been completed and the worker was present on site, the circuit breakers were activated and an explosion occurred; that the explosion was caused by a faulty circuit breaker in the switchboard; and that as a result of the explosion the worker was injured. The respondent alleged that the worker’s injuries were caused by the negligence of the appellant and its co-defendant or one of them and further or alternatively as a result of the breach by one or other or both of them of one or more statutory duties or warranties under the Trade Practices Act 1974 (Cth.). The statement of claim concluded by alleging that the worker was injured in circumstances where a legal liability was created in the respondent and its co-defendant or one of them; that the authorised insurer (all of whose rights, obligations and liabilities the respondent assumed) had paid and would continue to pay compensation to the worker; and that by virtue of s.138 abovementioned the respondent claimed indemnity from the defendant and its co-defendant or one of them for the compensation that had been paid and would be paid.
The facts relating to the documents in question and to the claim made for legal professional privilege in relation to them are scant. I do not set out or summarise the grounds on which privilege was claimed in the affidavit of documents because the relevant paragraph, particularly by employing the expression “and/or”, is so poorly drawn that the only possible applicable ground for the privilege, as discussed below, is not shown necessarily to apply to any of the documents nor does that ground state a purpose expressed to be dominant. However, in an affidavit sworn on 24 October 2001 Peter Willy Utiger, a member of Hunt & Hunt, the firm of solicitors acting for the appellant, swore that he caused to be forwarded to Mr. Glenn Skelly of Thomas Howell a letter dated 20 March 1996 asking him to carry out factual investigations into the circumstances surrounding the injuries sustained by Mr. Vellios and that he understood and believed that in response to that letter Thomas Howell forwarded to his firm five factual investigation reports addressed to the firm bearing the relevant dates. He further swore that as part of the investigation carried out by Thomas Howell at his firm’s request Mr. Russell Lee was qualified to prepare a report which was forwarded to the firm as an enclosure in the report of Thomas Howell dated 7 August 1996. (The affidavit does not in terms deal with the report of Russell Lee Pty. Ltd. dated 15 May 1997, though the respondent made no point of this.) The appellant and Mitsubishi Electric Corporation of Japan had, before 20 March 1996, conducted two internal investigations into the cause of the explosion, each of which resulted in a report. Mr. Utiger annexed to his affidavit the letter of 20 March 1996 to Mr. Skelly. So far as material, it reads:
“PRODUCT LIABILITY – MITSUBISHI ELECTRIC AUSTRALIA PTY LIMITED
THIRD PARTY: GEORGE VALIOS [sic]
We refer to the telephone conversation of our Mr Glenn Wright with your Mr Glenn Skelly and confirm that we act on behalf of Mitsubishi Electric Australia Pty Limited, instructed by the Tokio Marine & Fire Insurance Co Limited (Claim No.64/33365).
We enclose for your information copies of the following documents:
1.Facsimile transmission from Minette [sic] Australia Limited to the Tokio Marine Fire & Insurance Co Limited [sic] dated 2 February 1996.
2.Document entitled ‘Comments from Paul’.
We would be pleased if you would fully investigate the circumstances surrounding the injuries sustained by Mr George Valios [sic].
Please ascertain and fully identify the circuit breaker which was involved in the accident and seek to ascertain the reasons for the circuit breaker failing.
We advise that The Tokio Marine & Fire Insurance Co Limited have instructed us to advise on the question of liability, indemnity and quantum upon receipt of your report.
...”
The documents referred to in the numbered items of the letter were not in evidence before the judge.
The following excerpts from his Honour’s reasons for judgment contain the basis of his decision:
“In my view, when these reports were first requested, that is by the letter of 20 March 1996, from Hunt & Hunt, no litigation was pending and, as in all these sorts of incidents, one can say that there was contemplation of litigation, but I think at that stage, it was fairly remote. ...
It seems to me, from [Mr. Utiger’s] affidavit of 24 October, and the letter from Hunt & Hunt, that really what the solicitors were doing at that stage, was just trying to engage a third party to conduct inquiries to find out what had happened.... But at this stage it seems to me the inquiry was very much in its preliminary stages. For those reasons, I don’t think that these documents are covered by legal professional privilege.”
Before us both parties accepted that the only ground by reference to which the claim for privilege could be justified, if at all, was that confidential communications[1] passing between a legal adviser or client and third parties that are not agents of the client need not be given in evidence or otherwise disclosed by the client and, without the consent of the client, may not be given in evidence or otherwise disclosed by the legal adviser if made for the dominant[2], if not sole, purpose of use in, or in relation to, litigation (including criminal proceedings) then existing or anticipated (or in contemplation).[3] This aspect of legal professional privilege has been called litigation privilege. In Trade Practices Commission v. Sterling[4] Lockhart, J. expressed the subject matter of litigation privilege in two paragraphs which have subsequently been cited with approval more than once. The first applies where the other party to the communication by or to the third party is the client’s solicitor and the second where the other party is the client. The first reads:
“(e)Communications and documents passing between the party’s solicitor and a third party if they are made or prepared when litigation is anticipated or commenced, for the purposes of the litigation, with a view to obtaining advice as to it or evidence to be used in it or information which may result in the obtaining of such evidence.”[5]
As is apparent from the reasons in Wheeler v. Le Marchant and as was emphasised by Wood, J. in Nickmar Pty. Ltd. v. Preservatrice Skandia Insurance Ltd.[6], the element essential to this aspect of privilege, being a privilege for communications to and from third parties, is that there be litigation either pending or in contemplation and, I would add, that the communication come into existence for use in or in relation to the litigation.[7] That purpose must of course be the sole or dominant purpose. The rationale for litigation privilege is, as it seems to me, that the communications to the solicitor are, as Cotton, L.J. said in Wheeler v. Le Marchant[8], the brief in the litigation, and the communications by the solicitor are for the purpose of preparing that brief.[9] The privilege is, thus, a corollary of the common law mode of trial.[10]
[1]It is the communicating of the reports which attracts the privilege (if any) rather than their existence for the stated purpose: Australian Competition and Consumer Commission v. Australian Safeway Stores Pty. Ltd. (1998) 81 F.C.R. 526 at 556 and 557-558 and cases there cited.
[2]Esso Australia Resources Ltd. v. Commissioner of Taxation (1999) 201 C.L.R. 49 especially at 73 and 107. Where the communication is documentary the purpose is not necessarily that of its author. See paragraph [14] below.
[3]Cross on Evidence, Australian loose-leaf edition, 25099 and 25101, paras.[25210] and [25225]; Williams, Civil Procedure – Victoria, 3802.6 to 3802.8, paras.[29.01.620] to [29.01.630]; Wheeler v. Le Marchant (1881) 17 Ch.D. 675 at 681 and 682 per Jessel, M.R. and 684-685; Anderson v. Bank of British Columbia (1876) 2 Ch.D. 644 at 649 per Jessel, M.R. at first instance (the doubt about the result in that case which was expressed in Ventouris v. Mountain [1991] 1 W.L.R. 607 at 612 does not affect the authority of the passage now cited); O’Sullivan v. Morton [1911] V.L.R. 70; Grant v. Downs (1976) 135 C.L.R. 674 at 677; and Guardian Royal Exchange Assurance of New Zealand Ltd. v. Stuart [1985] 1 N.Z.L.R. 596 at 602 per Cooke, P. The meaning of the last four words in the text is considered later in these reasons.
[4](1979) 36 F.L.R. 244 at 246.
[5]This paragraph is misquoted in Hartogen Energy Ltd. v. Australian Gaslight Co. (1992) 36 F.C.R. 557 at 570, where the insertion of the word “or” before the phrase “for the purposes of the litigation” changes the meaning by making that purpose merely an alternative.
[6](1985) 3 N.S.W.L.R. 44 at 53, 54 and 55. (That decision, so far as it related to copy documents, was disapproved in Commissioner of Australian Federal Police v. Propend Finance Pty. Ltd. (1997) 188 C.L.R. 501.)
[7]Grant v. Downs (1976) 135 C.L.R. 674 at 683; O’Sullivan v. Morton at 73; Ventouris v. Mountain; Cross, op. cit. 25105, para.[25235].
[8]At 685. Compare Woolley v. North London Railway Co. (1869) L.R. 4 CP 602 at 610 per Bovill, C.J.; Anderson v. Bank of British Columbia at 656 per James, L.J., a passage approved by Lord Simon of Glaisdale and Lord Edmund-Davies in Waugh v. British Railways Board [1980] A.C. 521 at 537 and 542 respectively; Lyell v. Kennedy (No.2) (1883) 9 App.Cas. 81 at 86-87; and Dingle v. Commonwealth Development Bank (1989) 23 F.C.R. 63 at 66.
[9]Compare more generally Attorney-General (Northern Territory) v. Maurice (1986) 161 C.L.R. 475 at 490-491 per Deane, J.
[10]Waugh at 536; and Williams, op.cit., 3802.12, para.[29.01.670], citing Susan Hosiery Ltd. v. Minister of National Revenue [1969] 2 Ex CR 27 at 33-34 and Hickman v. Taylor 329 US 495 (1947) at 516.
The other aspect of legal professional privilege has been called advice privilege, but it is not available where one of the parties to the communication is a third party who is not the agent of the client for the purpose of the communication. That aspect of the privilege was relied on by the appellant below and in its outline of argument, but, rightly in my view, was not pursued in oral argument.
In its ordinary meaning “dominant” indicates that purpose which was the ruling, prevailing, or most influential purpose.[11] Barwick, C.J., whose view in Grant v. Downs propounding the test of dominant purpose has now been adopted by the majority decision in Esso Australia Resources, distinguished “dominant” from “primary” and “substantial”[12]. Lord Edmund-Davies in Waugh[13], in adopting the test propounded by Barwick, C.J., was of the view that the element of clear paramountcy should be the touchstone. That, as it seems to me, shows the meaning of “dominant”.
[11]FCT v. Spotless Services Ltd. (1996) 186 C.L.R. 404 at 416.
[12]At 678.
[13]At 543.
Where a question of legal professional privilege arises, the onus is on the party claiming it to make it out by evidence or argument, even though it is the other party that has applied for relief by way of an order for production for inspection or otherwise: Grant v. Downs[14]; Waugh[15].
[14]At 689.
[15]At 541G.
For the appellant Mr. Forrest accepted that he had to satisfy the court that the primary judge should have found that at the relevant time (which the respondent submitted, I think correctly, was in the circumstances of this case when the reports were commissioned) litigation arising out of the explosion on 11 January 1996 was reasonably anticipated or in contemplation; that the reports were, relevantly, for use in relation to such prospective litigation and in particular in the furnishing of legal advice about it; and that that purpose was the dominant purpose of the solicitors in commissioning the several reports.
On the appeal the respondent, after objection was taken for the appellant, did not pursue an argument foreshadowed in its written outline, but not put below, to the effect that, the documents having been called into existence by the Tokio Marine insurance company, the relevant dominant purpose was that of Tokio Marine; that that had been to ascertain facts that it needed to know in order to decide whether it was obliged to indemnify the appellant; and that, until a decision was made that Tokio Marine was obliged to do so, any litigation purpose could only have been contingent and secondary. Rather, the respondent’s argument before us was that the appellant had failed to discharge the onus of proof that lay upon it with regard to the purpose of the reports. It submitted in particular that a main deficiency of the letter of 20 March 1996 was that it failed to disclose in a comprehensive way the purpose of the appellant, which it said was the relevant purpose. The court should be sceptical about finding the alleged purpose. There was no evidence to say what the appellant’s purpose was and one could only speculate as to a number of purposes it might have had if it was the party commissioning the report. One such purpose was finding out what was wrong with the mass-produced circuit breaker which had exploded for the broader purposes of public safety and quality control. In argument below the respondent had submitted that as a matter of fact that was the primary purpose even though it was not mentioned in the material before the judge. I did not take Mr. Vickery to make that positive assertion before us, but rather took him to say that one could not exclude various purposes including that one. In addition to the foregoing, Mr. Vickery contended that at the relevant time litigation was not reasonably anticipated or in contemplation and he relied particularly on the discussion of that question by Goldberg, J. in Australian Safeway Stores Pty. Ltd.[16] and especially his Honour’s statement[17], “the concept of anticipated proceedings involves the notion that there is a reasonable probability or likelihood that such proceedings will be commenced – not that they will be but rather that more probably than not they will be.”
[16]At 558-560.
[17]At 559.
I consider first the dominant purpose of the communicating of the reports. As summarised by Gummow, J. in Hartogen Energy[18] by reference to High Court decisions, the purpose, that is the intended use, for which a document is brought into existence is a question of fact. Ordinarily the purpose will be that of the maker of the document, but that will not always be the case, as where some other person, such as a solicitor commissioning the provision of a technical report, calls the document into existence. In that case the relevant intention will not be that of the author but the solicitor: Hartogen Energy[19]. Likewise, in his statement of principle in Grant v. Downs[20] Barwick, C.J. included the dominant purpose of the person under whose direction, whether particular or general, the relevant document was produced or brought into existence[21].
[18]At 568.
[19]At 568-569.
[20]At 677.
[21]Followed in Guinness Peat Properties Ltd. v. Fitzroy Robinson Partnership[1987] 1 W.L.R. 1027 at 1036-7; [1987] 2 All E.R. 716 at 723-4. Compare Esso Australia Resources at 66, para.39.
The reports from Thomas Howell were commissioned by the solicitors, Hunt and Hunt, by their letter of 20 March 1996. Accordingly, I turn to the letter. There is nothing unusual about the essential features of the letter. It demonstrates, for interlocutory purposes, that the appellant had made a claim on its liability insurer and had done so at least as early as 2 February 1996; that the solicitors were receiving their instructions from the insurer; and that, on the instructions of the insurer, they were, at least for the time being, acting on behalf of the appellant. They requested and authorised Thomas Howell to investigate the circumstances surrounding the injuries to Mr. Vellios, to identify the circuit breaker involved in the accident, and to try to ascertain the reasons for its failure. The latter request and authorisation impliedly authorised the loss adjusters to obtain expert opinion, which they did from Russell Lee Pty. Ltd. Finally, the solicitors’ statement that the insurer had instructed them to advise “on the question of liability, indemnity and quantum” and to do so upon receipt of Thomas Howell’s report made it clear that the report was for use in the preparation of that advice. The question referred to was multi-partite. The report was a pre-requisite for the advice. It would disclose the circumstances of the incident, on which the advice would be based. This case is to be distinguished from Grant v. Downs,National Employers’ Mutual General Insurance Association Ltd. v. Waind[22], Waugh, Victor Melik & Co Ltd. v. Norwich Union Fire Insurance Society Ltd.[23], and Australian Safeway Stores, in each of which the party, or the insurer, itself procured the documents. The presence of the solicitors here makes it clear that the report was required for the carrying out of legal work. Although the letter uses the singular “report”, no doubt it authorised the rendering of more than one report, particularly in light of the practice of loss adjusters of rendering, when occasion requires, interim and supplementary reports. There is no evidence of any other purpose that the report was to serve. As regards the suggestion of broader purposes of public safety and quality control, whilst one is permitted to know, and indeed it was, I think, conceded, that the appellant is a subsidiary of a very large Japanese corporation and that the circuit breaker in question was the product of mass-manufacture, it is significant that the reports were commissioned by the solicitors and not by their nominal client. Public safety and quality control were unlikely to be of more than peripheral, if any, concern to the solicitors, certainly when their instructions were as they stated them to be.
[22](1979) 141 C.L.R. 648.
[23][1980] 1 Lloyd’s Rep. 523.
I therefore conclude that the dominant purpose, if not the sole purpose, of the reports commissioned by the solicitors acting on behalf of the appellant was for use in the preparation of confidential legal advice. The question then is whether that advice was in relation to or as to litigation which was at the relevant time reasonably anticipated or in contemplation. I have adopted the expression “reasonably anticipated or in contemplation” to convey the sense in which the authorities speak of the requisite prospective litigation where there is in fact no litigation pending at the relevant time. The cases in fact reveal a variety of expressions to describe the prospective litigation. Thus, in Grant v. Downs, Barwick, C.J. used “in reasonable prospect”[24] and “in reasonable contemplation”[25], Stephen, Mason and Murphy, JJ. used “reasonable anticipation”[26] and Jacobs, J. spoke of litigation that was “likely”, “in fact expected” and “proposed or threatened”[27]. In Baker v. Campbell[28] Deane, J. used “anticipated”[29]. In Wheeler v. Le Marchant Jessel, M.R. spoke of litigation which was “in contemplation”[30] or “threatened”[31], Brett, L.J. referred to litigation “contemplated”[32] and Cotton, L.J. used “in contemplation of some litigation”[33]. In Collins v. London General Omnibus Co.[34] Charles, J. said that the litigation “may either be reasonably apprehended, or threatened, or actually begun.” The foregoing is only a selection of the expressions used, though it covers most of the main cases. Although there is thus some variation in expression, there is, I think, no variation in substance. But there has over time been some change in interpretation. In Collins v. London General Omnibus Co. Wills, J.[35] considered that the requirement of prospective litigation was satisfied where he described an action as being “as near a dead moral certainty as anything could be” and said the circumstances were such that “no reasonable person could doubt that an action would follow”, whilst Charles, J.[36] spoke of reasonable apprehension of litigation as being “when there is a high probability, amounting almost to a certainty, that an action will ensue”. It may be that at least Wills, J. was merely saying that it was sufficient that an action be a dead moral certainty, rather than that was necessary, though Charles, J. seems to have said the latter. In any event, it appears to me that Sholl, J. in Warner v. The Women’s Hospital[37] took the latter to be the principle laid down by the English Divisional Court and applied it as the law in Victoria. However, I agree with Goldberg, J. in Australian Safeway Stores[38] that that requirement is too strict and not consistent with passages in Grant v. Downs[39]. Nor, I would add, is it consistent with later English cases on legislation in a cognate area referred to in the next paragraph. Of course, “a mere vague apprehension of litigation” is insufficient: Laurenson v. Wellington City Corporation[40].
[24]At 677.
[25]At 678.
[26]At 689.
[27]All at 690, with “proposed or threatened” also used at 694.
[28](1983) 153 C.L.R. 52.
[29]At 112.
[30]At 681.
[31]At 682.
[32]At 683.
[33]At 684.
[34](1893) 68 L.T. 831 at 833. (The text of the judgment in the report in (1893) 63 L.J.Q.B.N.S. 428 is by no means the same.)
[35]At 832.
[36]At 833.
[37][1954] V.L.R. 410.
[38]At 559.
[39]At 682-3 and 689.
[40][1927] N.Z.L.R. 510 at 511.
In essence, litigation is reasonably anticipated or in contemplation if its initiation is likely or reasonably probable. In Jarman v. Lambert & Cooke Contractors Ltd.[41] the Court of Appeal was concerned, not, as this Court is, with a judge-made rule, but with the English forerunner of s.55(4) of the Evidence Act 1958, whereby nothing in the section is to render admissible “any statement made by a person interested at a time when proceedings were pending or anticipated ...”. But, as Denning, L.J. pointed out[42], the words “pending or anticipated” are the words habitually used in connexion with legal professional privilege. Accordingly, I consider that the decision is of assistance. Sir Raymond Evershed, M.R., having pointed out that the word “anticipate” was used loosely for “expect”, stated[43] that he was prepared to accept the view, for which, he pointed out, some authority was to be found in Robinson v. Stern[44], that by “proceedings were anticipated” was meant “proceedings were regarded as likely”, or even “reasonably probable”. Denning, L.J.[45] stated that anticipation was a state of mind whereby someone considered that something was likely to happen. There must be a likelihood of them. Hodson, L.J.[46] thought it right to accept the meaning put upon the word by Scott, L.J. in Robinson v. Stern. As a matter of ordinary language the word “likely” imports only that the occurrence under consideration “is a real chance or possibility, not that it is more likely than not”: Marks v. GIO Australia Holdings Ltd.[47] and cases there cited; Boughey v. The Queen[48]; and see Czarnikow Ltd. v. Koufos[49] (a case concerning “reasonable contemplation” of damage). In Australian Safeway Stores[50] Goldberg, J. concluded that the concept of anticipated proceedings involved the notion of a reasonable probability or likelihood that such proceedings would be commenced, but it will be apparent that I respectfully disagree with his Honour’s elucidation of that notion as being that “more probably than not they will be [commenced]”.
[41][1951] 2 K.B. 937.
[42]At 946.
[43]At 942.
[44][1939] 2 K.B. 260. In that case Scott, L.J. at 260 had been inclined to think that the word “anticipated” should be construed as including “likely”.
[45]At 946.
[46]At 947.
[47](1998) 196 C.L.R. 494 at 505.
[48](1986) 161 C.L.R. 10 at 18-23.
[49][1969] 1 A.C. 350 at 383 and 410-411.
[50]At 559.
In its supplementary submissions relating to reasonable anticipation of litigation the first of two alternative submissions by the appellant was that such anticipation was made out on the basis of the possibility of litigation and reliance was placed on the use of the word “possibility” rather than “probability” by Clauson, L.J. in Robinson v. Stern[51]. But that was expressly disapproved by Evershed, M.R., if not also by Denning and Hodson, L.JJ., in Jarman v. Lambert & Cooke Contractors Ltd.[52]. Moreover, a mere possibility does not satisfy the requirement of reasonable probability or likelihood: no one would say that an occurrence is likely simply because it is possible. As the passage quoted from Marks v. GIO Australia shows, a “real possibility”, in the sense of a substantial possibility, may suffice.
[51]At 68.
[52]At 945.
In summary, then, as a general rule at least, there must be a real prospect of litigation, as distinct from a mere possibility, but it does not have to be more likely than not.
Although under s.55(4) of the Evidence Act 1958 and cognate legislation it may be that whether proceedings were anticipated is to be determined by reference to the state of mind of the maker of the statement or, perhaps, the supplier of the information[53], the question whether, at the time the reports for which legal professional privilege is here claimed were commissioned, litigation was reasonably anticipated is to be determined by the court, viewing objectively the circumstances existing at that time: Grant v. Downs[54]; Nickmar[55]; and Australian Safeway Stores[56].
[53]See, for example, Jarman v. Lambert & Cooke Contractors Ltd. at 946 per Denning, L.J. and the discussion in Cross, op.cit., 35,053, para.[35100].
[54]At 682-683.
[55]At 55-56.
[56]At 558.
There is, I think, much to be said in favour of the assertion made by counsel appearing below for the appellant to the County Court judge after he had given his decision, and the submission made for the appellant on appeal, that counsel for the respondent had proceeded on the footing that litigation was reasonably anticipated and thereby had conceded that element of the appellant’s proofs. But I do not finally decide that point, for, even if that were so, I consider that, in the circumstances of this case, including the terms of his Honour’s decision, the respondent was entitled on appeal to withdraw any admission and dispute this element, as it did.
Reviewing the circumstances objectively, I am of opinion, for the reasons which follow, that at the time the reports were commissioned litigation was reasonably anticipated or in contemplation: there was a real prospect of it. First, the nature of the incident with the circuit breaker was inherently such as to make litigation of some kind or kinds likely according to the ordinary course of human affairs. Mr. Vellios might well at that early stage have sought to make a common law claim. He almost certainly would have made a claim for accident compensation, which might well have resulted in litigation, including a proceeding against the appellant for indemnity under s.138 abovementioned. A proceeding might well have been brought in the name of the employer for damages for business interruption. Snedden and Kingston Plastics Pty. Ltd. might well have sued for damage to its switchboard and premises. To adapt Williams,[57] the occurrence of an event of a kind that, in common experience, very often leads to litigation may found a sufficient anticipation of litigation to attract privilege: Collins v. London Omnibus Co.[58]; Birmingham and Midland Motor Omnibus Co. Ltd. v. London and North Western Railway Co.[59]; Ankin v. London & North Eastern Railway Co.[60]; The Hopper No.13[61]; Westminster Airways Ltd. v. Kuwait Oil Ltd.[62]; Cataldi v. Commissioner for Government Transport[63]; and Nickmar[64]; compare Grant v. Downs[65]. Secondly, solicitors were instructed and instructed early. That is an indication that litigation was expected and that the insurer desired to be forearmed with legal advice, based on the true facts, with regard to it. It was not, as I understand it, suggested that the engagement of the solicitors was a colourable device, and in any event I would not find that it was. The topics on which the solicitors were to advise – liability, indemnity and quantum – at least suggested that there was an expectation of a claim or claims, whether the word “indemnity” is to be read as referring to indemnity under the insurance policy or under s.138. Thirdly, the appellant’s resort to its insurer indicates at the least the expectation of a claim or claims, followed, if unsatisfied, by litigation. Reference, as in other cases, to the instruction of solicitors and resort to insurers does not offend the requirement of an objective viewing of the circumstances; for it is not done to obtain, by hearsay, evidence of the subjective views of the insurer or the insured but to show the atmosphere then existing as regards the likelihood of litigation.
[57]Op.cit., 3802.7, para.[29.01.625].
[58]At 832.
[59][1913] 3 K.B. 850 at 861.
[60][1930] 1 K.B. 527 at 535.
[61][1925] P 52 at 56-57.
[62][1951] 1 K.B. 134 at 146.
[63][1970] 1 N.S.W.R. 65 at 67-68.
[64]At 55-56.
[65]At 678, 682 and 689.
It is necessary to consider a particular passage in Australian Safeway Stores on which the respondent placed considerable reliance in relation to the present question. The passage[66] reads
“The process of investigation is logically anterior to, and a precursor to, the point at which it may be said that proceedings are prospective or reasonably anticipated. If evidence is required for proceedings it can be expected that until that evidence gathering process is well advanced, a view will not be able to be formed that proceedings are prospective or reasonably anticipated. That is a reason why it is difficult to ascribe a dominant purpose to the preparation of the anticipated proceedings before the evidence gathering process is well advanced and the evidence has been evaluated.”
It was submitted that in the present case the solicitors had merely put in train an evidence gathering process. But in my view the circumstances of the two cases are quite different. The documents in question in Australian Safeway Stores had been prepared by an investigator of the Commission and, if litigation was to occur, it would only occur at the suit of the Commission. Here, an incident had occurred and the appellant was a potential defendant at the suit of others. Investigation on behalf of such a potential defendant may well begin after litigation has become likely or even indeed after it has been commenced. In any event I respectfully think that the passage quoted, whilst apt to the circumstances of that case, is too widely stated. There must be many cases where it can be said that litigation is likely before the evidence gathering process has even begun. In this context reference should also be made to Guinness Peat Properties[67], where Slade, L.J., with whom the other members of the Court of Appeal concurred, agreed that there was a distinction between the purpose of obtaining advice in anticipated litigation and that of obtaining information as to an occurrence which may lead to litigation. In the present case, however, in my opinion, whilst information was being sought as to an occurrence, it was being sought for the purpose of obtaining advice in respect of litigation that was at the time it was sought reasonably anticipated. Significantly, although an enquiry as to the facts was being commissioned, the results of it were to be given directly to lawyers for their advice.
[66]At 545-546.
[67]At (W.L.R.) 1037; (All E.R.) 724.
I conclude, therefore, that the advice was to be in relation to and for the purposes of litigation that was reasonably anticipated.
After consideration I accepted the invitation of senior counsel for the appellant to inspect the documents in dispute.[68] That inspection does not lead me to alter the views set out above.
[68]Under R.29.13 of the County Court Rules, as available pursuant to R.64.22(1) of the Supreme Court (General Civil Procedure) Rules 1996. Such a course has been suggested, indeed recommended, by the High Court in Esso Australia Resources at 70 and Grant v. Downs at 689.
For the foregoing reasons I consider that the reports are privileged from production for inspection. In particular, I do not consider that the reports lack legal professional privilege either for the reasons advanced for the respondent or for those assigned by his Honour, the latter being that litigation, although in contemplation, was remote and that the inquiries were as to what had happened and were in their preliminary stages. I would allow the appeal, set aside paragraphs 1, 2 and 7 of the order made on 29 October 2001 and substitute an order in substance dismissing the respondent’s application for inspection[69]. I would hear the parties as to costs, including costs below.
[69]The summons sought production for inspection by the court, but in argument production for inspection by the respondent was sought.
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