Morgan v Douglas

[2018] SADC 125

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil: Appeal Against a Master's Decision)

MORGAN & ANOR v DOUGLAS

[2018] SADC 125

Judgment of Her Honour Judge Bochner

5 December 2018

PROCEDURE - INFERIOR COURTS - SOUTH AUSTRALIA - DISTRICT COURT

Appeal from a Master - Legal Professional Privilege.

Held

1. Appeal allowed

Motor Vehicles Act 1959 (SA), referred to.
Jones v Dunkel (1959) 101 CLR 298; Grant v Downs (1976) 135 CLR 674; National Employers Mutual General Insurance Association Ltd v Waind (1979) 24 ALR 86; Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526; Perazzoli v BankSA [2017] FCAFC 204; Mitsubishi Electric Australia Pty Ltd v Victorian Workcover Authority [2000] VSCA 59; Wrightville Operations Pty Ltd (T/As Jarvis Ford) v Lisman [2007] SASC 259; Mocatta v Leal Unreported Supreme Court of South Australia Full Court 27 August 1993 BC 9300355; Cubillo v Commonwealth (2000) 103 FCR 1; Brunswick Hill Apartments Pty Ltd v CGU Insurance Limited [2010] VSC 532, considered.

MORGAN & ANOR v DOUGLAS
[2018] SADC 125

1. On 4 April 2018, a Master of the District Court ruled that a report obtained by the insurer of the defendant in a personal injuries matter was subject to legal professional privilege. The plaintiff has appealed that decision. Throughout these reasons I will refer to the defendant and her compulsory third party insurer individually and collectively as the defendant.

   Background

2. On 9 December 2012, in the early hours of the morning, the plaintiff, while crossing a major road in Adelaide’s central business district, was struck by a car driven by the defendant. The defendant received an alcotest at the scene and was found to have a blood alcohol concentration over the legal limit. The plaintiff was taken from the scene to the Royal Adelaide Hospital, where she was examined and discharged.

3. Allianz, the claims agent for the defendant’s compulsory third party insurer first received notice of the plaintiff’s claim on 14 December 2012, when it received a “Notice of Motor Vehicle Injury Form” from the plaintiff’s general practitioner. The only description of the incident on this form was that the plaintiff “had been hit by car while crossing the road”. [1]

   [1]    FDN 20 at [16.1].

4. On 17 December 2012, Allianz received the police report in relation to the incident. The only additional information contained in the police report (as compared to the report from the plaintiff’s general practitioner) was the time of the incident and that the defendant had returned a positive alcotest.

5. On 21 December 2012, Allianz received a letter from Mellor Olsson, solicitors instructed by the plaintiff. This letter said:

   I advise that I act for Mrs Laura Elizabeth Morgan of [address provided] in relation to her accident claim.

   …

   My client has sustained injuries as a result of this accident and will shortly be seeing her general practitioner with respect to treatment that she might need.

   I will write to you further after my client has seen her general practitioner but in the meantime I ask if you would provide me with a claim number.[2]

   [2]    FDN 15 at exhibit NB 1.

6. On 27 December 2012, the claims consultant dealing with the matter, Ms Dunham, appointed a firm of investigators to undertake a detailed inquiry into the circumstances of the incident. Amongst other things, she asked the investigators to obtain comprehensive statements from all of the witnesses to the incident and photographs of the scene. Ms Dunham received the report on 26 February 2013. I will refer to this report as the investigation report, or the report.

7. It appears that solicitors were not appointed to act on behalf of the insurer until about May 2016.

   The application

8. The defendant claims that the investigation report is protected from production in these proceedings on the ground of legal professional privilege. The plaintiff has sought production of the investigation report and has challenged the claim for privilege.

   The evidence before the Master

9. The plaintiff relied on three affidavits sworn by Ms Budimski, the solicitor with the conduct of this matter on behalf of the plaintiff. In the first of her affidavits,[3] Ms Budimski deposes to the sequence of events leading to the application for disclosure of the investigation report. In particular, it is important to note:

   [3]    FDN 15.

   ·Exhibit NB1 to FDN 15, which is the letter written by Mellor Olsson to Allianz, the relevant parts of which are set out at [5] hereof.

   ·NB2, a letter from Ms Dunham to Mellor Olsson, dated 27 December 2012, in which she said:

   We refer to the above matter and confirm that we are attempting to obtain details of the accident from the participants and will communicate further with you as soon as possible following receipt of these details.

   In the meantime, so that we can give consideration to your client’s claim could you please provide the following information:

   …

   The details sought largely dealt with the plaintiff’s personal circumstances.

   ·On 18 January 2013 and 21 February 2013 Mellor Olsson wrote to Allianz, seeking information as to the status of Allianz’s investigations. These letters are exhibited as NB3 and NB4.

   ·Mellor Olsson received a response from Allianz on 12 June 2013 (exhibited as NB5) in which Allianz raised for the first time the issue of contributory negligence on the part of the plaintiff.

   ·On 26 June 2017, solicitors on behalf of Allianz provided Mellor Olsson with a summary of the contents of the investigation report as follows:

   The investigative report dated 21 February 2013 was commissioned by the compulsory third party insurer shortly after notification from your firm on 20 December 2013 that your client was pursuing a personal injury claim.

   The attachments to the said report consist of witness statements and a series of photographs of the accident location.

   The said report was brought into existence for use in anticipated legal proceedings and therefore attracts litigation privilege.[4]

   This correspondence is found at NB10.

   [4]    FDN 15 at exhibit NB 10.

10. Ms Budimski’s second and third affidavits[5] relate to an application by the plaintiff to cross-examine Ms Dunham. The plaintiff subsequently agreed to withdraw her application to cross-examine Ms Dunham, on the basis of an agreement between the parties that her affidavit would be read on the basis that:

    1.   Paragraphs 3 to 17 are general statements of training, practice, or understanding, only and not a reference to the conduct of Ms Dunham in this matter (being the claim made by Ms Morgan).

    2.   Paragraphs 18 and 19 are recollections of Ms Dunham at the time of swearing the affidavit.

    3.   Ms Dunham only had regard to Exhibit RD1 and to no other document to make her affidavit. (In this paragraph, the reference to Ms Dunham is to her alone and not a reference to information provided to her orally of by way of summary by your firm).[6]

    [5]    FDN 26 and FDN 28 respectively.

    [6]    Exhibit NB2 to FDN 26.

11. The defendant relied on two affidavits, one from Damien Leigh Scholz, filed on 15 December 2017,[7] and one from Ms Dunham, filed on 16 January 2018.[8]

    [7]    FDN 20.

    [8]    FDN 23.

12. Mr Scholz deposed to the following:

    ·He had no direct involvement in the plaintiff’s claim.

    ·He was familiar with Allianz’s practices and procedures.

    ·External investigators are only appointed in the following circumstances:

    ·Where there is doubt as to how the collision occurred;

    ·Where drugs or alcohol are involved;

    ·Where the potential claim appears to be significant;

    ·Where the claimant has engaged a lawyer.

    ·Allianz is of the view that these circumstances have a high potential for dispute and are associated with a greater risk of litigation.

    ·Allianz places emphasis on the importance of early investigation and preservation of evidence. This is to give it and its legal advisers the best chance of successfully defending a claim.

    ·Once a claims consultant identifies a claim that involves any of these circumstances, he or she is directed to request the appointment of investigators. This request is allocated to the Allianz panel of investigators. The request is confidential.

    ·“The primary purpose of this process is to ensure that critical evidence is retained in an appropriate manner, as close as possible to the event, and in an appropriate format to enable Allianz to obtain advice about and defend any legal proceedings that may be instituted in the future.”[9]

    ·At the time that the report was requested, the incident involved circumstances that claims consultants have been trained to identify as being likely to lead to litigation, that is, potential contributory negligence by the plaintiff, the use of alcohol by both the plaintiff and defendant, and the plaintiff’s early retention of solicitors.

    [9] FDN 20 at [11].

13. Ms Dunham deposed that:

    ·She underwent training when she commenced working as a claims consultant with Allianz.

    ·She cannot remember the details of the training, except that she received instruction on features to look for which might indicate the need for further investigation.

    ·Where claims appeared to be less likely to settle, it was important to identify and preserve evidence as early as possible so that it could be used in Court.

    ·Internal investigators were retained where she wanted to “get a feel for a particular issue or needed more background information to enable a determination on liability or the payment of treatment accounts.”[10] As to the appointment of external investigators, she said:

    [10] FDN 23 at [11].

    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.

    In my experience, contributory negligence is an issue that is often challenged by the claimant, which in turns makes negotiating an early settlement more difficult irrespective of whether the claimant is unrepresented or represented, and means that the claim is more likely to go to Court.

    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.

    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

    It was my normal practice throughout my time at Allianz managing my claims to follow this process.[11]

    ·She has no independent recollection of instructing external investigators to investigate the collision between the plaintiff and the defendant.

    ·Having reviewed the instructions that she prepared to the investigators, she believes that it was her assessment at the time that the file required the appointment of external investigators on the basis of her usual practice.

    ·She believes that she followed her usual practice in appointing external investigators to preserve evidence.

    [11] FDN23 at [13]-[17].

14. Ms Dunham’s affidavit exhibited, at RD1, the instructions that she prepared and sent to investigators, to obtain the investigation report. The request is for a “factual” investigation. Under the heading “Reason for Investigation” are the words:

    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 or avoid the collision, where the damages was located. Further with regards to the claimant we wish to confirm which direction he came from, when he was noticed on the road, what other vehicles were around and what clothes he was wearing.

    The argument before the Master

15. The plaintiff argued that litigation was not, and could not reasonably have been anticipated at the time that the report was requested. In the absence of direct evidence as to the purpose for which the report was commissioned, the objective circumstances surrounding its request lead to the conclusion that it was requested as the precursor to formulating a position on liability. Litigation could not have been anticipated, as Allianz had not, at that time, formed an opinion on the topic.

16. The defendant argued that there was sufficient evidence of practice and policy to lead to the conclusion that the dominant purpose for the request of the report was for its use in reasonably anticipated litigation. It argued that it was not required to call direct evidence of intention; the Court is entitled to infer from established practices that certain factors were taken into account when deciding to commission the report. Looked at objectively, the evidence of practice was admissible and of considerable weight, and supported a conclusion that the circumstances of the collision gave rise to the real prospect of legal proceedings.

    The Master’s Decision[12]

    [12] Decision No 3 of 2018.

17. The Master, at [23], noted that there was no dispute between the parties as to the legal principles to be applied. The dispute was as to the application of the law to the facts of the matter. At [24] he confirmed the nature of the onus falling on the party seeking to establish the existence of the privilege. At [28], he set out a statement of the current law. At [29], he said:

    The way in which I approached this matter has been to limit my consideration to the person or authority under whose direction the document is produced or brought into existence (rather that the purpose of the author).

18. From [44], he considered whether there was a reasonable anticipation of litigation at the time that the report was requested. He took into account a combination of factors to reach the finding that it was. The issues that he took into account were:

    ·The role of the defendant as a compulsory statutory insurer;

    ·Judicial notice of the fact that injury is a motivator to bringing a claim which not infrequently leads to litigation;

    ·The plaintiff had retained a lawyer within two weeks of the collision;

    ·The question of pedestrian’s contributory negligence was in issue, which would in all likelihood give rise to issues of “apportionment, contributory negligence and concomitant disputation”;[13]

    ·The consumption of alcohol by the defendant which enlivened “more delicate issues of apportionment vis-à-vis the first plaintiff for the commissioner of the report…”;[14]

    ·The location, date and time of the collision which raised the issue of whether the first plaintiff may have been affected by substance(s);

    ·Requesting the report between Christmas and New Year which “smacks of importunity”.[15]

    [13] Decision No 3 of 2018 at [44].

    [14] Decision No 3 of 2018 at [44].

    [15] Decision No 3 of 2018 at [44].

19. The Master found that there was “more than adequate material in [FDN 20 and FDN 23] to support these matters from a point of view of evidentiary proof.”[16]

    [16] Decision No 3 of 2018 at [46].

20. In his discussion in relation to FDN 20, the Master found that the fact that solicitors were not instructed as at the date of seeking the report was relevant but not decisive. He then said:

    In this type of litigation it is important to undertake the investigations and collect the evidence at a time when matters are fresh in the memory of the salient witnesses and before there is any change in the scenery or locale of the motor accident.

    Such an approach is, in fact, consistent with the dominant purpose of the ensuing report being for use in litigation.[17]

    [17] Decision No 3 of 2018 at [83]-[84].

21. In the Master’s discussion in relation to FDN 23, he found that the statements of general practice were “pertinent but to be given modest weight”.[18] He then found that, in light of the evidence of Mr Scholz, Ms Dunham and RD1, he was prepared to draw an inference that those practices were followed by Ms Dunham in this matter.[19] He found that the weight to be given to the general evidence “is only marginally above modest”.[20] He found that the general evidence of practice, was strengthened when combined with the evidence of the objective facts and circumstances as they were known to Allianz at the time of commissioning the report.

    [18] Decision No 3 of 2018 at [106].

    [19] Decision No 3 of 2018 at [108].

    [20] Decision No 3 of 2018 at [110].

22. As to the agreement between the parties as to the way in which FDN 23 was to be read, the Master said:

    There was some debate before me about the utility of this type of affidavit evidence as contained in the affidavits of both Mr Scholz and Ms Dunham.

    The general remarks are before me without objection to their admissibility and can be assumed to be relevant to the application I am to decide.

    To be relevant, in a general sense, they do apply to this claim of the first plaintiff.

    I take this position which appears contrary to what the parties may have agreed between themselves as to the interpretation of the general statements of training practice and policy of the compulsory insurer. If they do not apply to this claim, then I fail to see that they have any relevance.

    I prefer to treat those general practices as pertinent but to be given modest weight.

    During oral submissions on 15 March 2018, Mr Robertson SC and the Court had the following exchange regarding this topic (transcript pages 2 and 3):

    Mr Robertson: They [the defendant] contend that they are relevant because they demonstrate that there’s a practice and that from the existence of that practice, your Honour can infer certain things about the purpose. We accept that they are admissible. We say they are of very little weight because they don’t actually expose the purpose, but they are the competing contentions. That’s how they become relevant.

    ….

    Master: ….but the inference has to apply to this matter, whereas I thought what you were saying is that they do not refer to this matter…”do not refer to the conduct of Ms Dunham in this matter”

    Mr Robertson: That’s right. And that’s the proposition which the defendant has agreed to. In other words, they are not statements of what she says she did in this matter, but they ask you to draw an inference that because that’s her practice, you can infer a purpose for her seeking reports from that practice.

    Master: In this matter?

    Mr Robertson: In this matter.

    I am prepared, in the context of Mr Scholz’s affidavit and paragraphs 17 and 28 of Ms Dunham’s affidavit, in the light of the Exhibit “RD1”, to draw that inference. Having done so, I consider that the more pertinent issue is the weight to give the evidence.[21]

    [21] Decision No 3 of 2018 at [102]-[108].

1. In relation to RD1, the Master noted that its terms were important in determining whether the report was requested for the dominant purpose of use in reasonably anticipated litigation. He found that the fact the investigation was classified as “factual” rather than “legal” was of no significance, given that questions of negligence are very much grounded in the facts of the matter.[22] He also found that some weight should be given to the fact the request was classified as confidential[23] and the fact that there was no statement that the report was for the use of legal advisors or for use in anticipated litigation as relevant but not decisive.[24]

   [22] Decision No 3 of 2018 at [122].

   [23] Decision No 3 of 2018 at [123].

   [24] Decision No 3 of 2018 at [124].

2. The Master declined to draw a Jones v Dunkel[25] inference from the fact the Ms Dunham was not given the entire claims file to refresh her memory when preparing her affidavit, or from the fact there was no affidavit from the author of the report.[26]

   [25] (1959) 101 CLR 298.

   [26] Decision No 3 of 2018 at [132].

3. The Master found that, based on the combination of the affidavits of Mr Scholz and Ms Dunham, and the terms of RD1, “the approach taken by Ms Dunham…at the time it was taken, had the dominant purpose of procuring a report for use in anticipated litigation and submission to lawyers who would be instructed at an appropriate time.”[27]

   [27] Decision No 3 of 2018 at [143].

4. In finding that the investigation report had been prepared for the dominant purpose of use in reasonably anticipated litigation, he relied on the following:

   ·That external investigators are not retained in all matters, having taken judicial notice of the fact that the compulsory third party insurer is exposed to litigation in a large number of claims;

   ·The contents of RD1 against the background set out in FDN 20 and FDN 23;

   ·The speed with which the report was requested following notice of the claim; and

   ·The request within the report for a “comment on credibility of those interviewed”.

5. He found the circumstances in Grant v Downs[28] and National Employers Mutual General Insurance Association Ltd v Waind[29] (Waind) to be distinguishable from those in the present case. He described the position of the insurer in this matter in the following terms:

   In a sense, [the insurer] is in the business of being sued by claimants on a regular basis and therefore needs to be in a position to evaluate the likelihood of being sued, and, then, to be in the best position to respond to that suit by having procured “evidence” when it is fresh. Objectively, here I find that litigation was reasonably anticipated, and, the purpose of the instructions to the investigators was to “preserve evidence” for that litigation as deposed to by Ms Dunham.[30]

   [28] (1976) 135 CLR 674.

   [29] (1979) 24 ALR 86.

   [30] Decision No 3 of 2018 at [186]

   The grounds of appeal

6. The plaintiff says that the Master should have found that the dominant purpose for the request of the investigation report was as part of the investigation process, and that it was brought into existence to allow the insurer to determine whether it would pay compensation or dispute liability; it was, in effect, a precursor to any reasonable anticipation of litigation. In particular, Mr Robertson SC on behalf of the plaintiff says that the Master made a number of errors in the way he interpreted FDN 23 and his reliance on it, and the weight that he placed on it. He also takes issue with the factors relied on by the Master in reaching his conclusion. Mr Robertson says that the Master erred in his elevation of the position of third party compulsory insurers in litigation, vis-à-vis other litigants.

   The plaintiff’s arguments on appeal

7. Mr Robertson submits, firstly, that the Master erred in finding that the investigation report was obtained for the dominant purpose of obtaining legal advice and for use in reasonably anticipated litigation, and that its subsidiary purpose was for use in pre-litigation processes. Rather, he says, the Master should have found that the report was obtained for the dominant purpose of investigation of the incident. He says:

   ·The objective evidence shows that the report was commissioned to allow Allianz to make a determination whether or not it would accept the plaintiff’s claim.

   ·The mere fact that a compulsory third party insurer is involved does not elevate that purpose of the request for the report, to one being in contemplation of reasonably anticipated litigation. He says, relying on Waind, that an insurance claim is not to be regarded as analogous to the service of a summons or originating process. No litigation can be anticipated until the insurer has made a determination whether or not to accept the claim.

   ·The purpose for which the report is requested is to be assessed objectively, at the time that the request is made. The purpose is to be determined by reference to why it was requested, not by reference to its contents, or the possible uses to which it might be put in the future.

   ·The matters of policy deposed to by Mr Scholz should carry little weight, because there was no evidence of their specific application to this matter; the Master was prepared to rely on an inference that the policy had been adopted in this matter.

   ·The Master placed undue weight on RD1 and in particular, the request contained therein for an assessment of credibility, by regarding credibility as necessarily indicating that litigation was anticipated.

   ·The Master failed to place weight on NB2, which set out the intention of Ms Dunham in requesting the report, namely that she was “attempting to obtain details of the accident”. In fact, he found, incorrectly, that there was no information as to the purpose of the report, save for that contained in FDN 23 and RD1.

   ·The Master attributed undue weight to the fact that the report was requested soon after the incident.

   ·The Master failed to consider the purpose for the report as evidenced by RD1, namely that it was related purely to fact finding, made no reference to its use in contemplated litigation or to obtain legal advice, and did not highlight any “tricky” or unusual features.

8. Thus, in effect, he says that the Master placed undue weight on some factors, such as the evidence of policy and procedure provided by Mr Scholz, the request for an assessment of credibility and the timing of the request for the report, and insufficient, or no weight on other factors, such as NB2, the fact that all of the matters to be investigated were factual matters, and the failure of the defendant to adduce any direct evidence as to the purpose for which the report was requested.

9. Secondly, Mr Robertson says that the Master impermissibly elevated the position of a compulsory third party insurer to a position superior to other litigants in regard to legal professional privilege. In his written submissions, Mr Robertson put it this way:

   [The Master] implicitly concluded that a CTP insurer stands in a different (more favourable) position to all other persons when assessing both the purpose for which it request a report and the degree of likelihood that litigation is reasonably anticipated.[31]

   [31] Summary of Argument of the Appellants (Plaintiffs) received 30/7/18 at [14].

10. The conclusion is that, because a CTP insurer is often involved in litigation, its request for a report must be for the purpose of reasonably contemplated litigation. Mr Robertson says that, not only is this conclusion wrong, the Master impermissibly took judicial notice of a number of factors, relating to the business of a compulsory third party insurer.

11. Mr Robertson also argues that the Master failed to take into consideration s 124(7) of the Motor Vehicles Act 1959 (SA) (the Act) which excludes from production information given by the insured under s 124 of the Act. He argued that as this section expressly excluded some documents but not others, those not excluded were prima facie subject to production.

12. Thirdly, Mr Robertson argues that the Master erred in failing to consider, after inspection of the investigation report, whether it was privileged only in part. In particular, he notes that it is difficult to determine the basis on which photographs of the scene of the location of the incident could be privileged.

13. Finally, he argues that the Master’s analysis of the authorities was misconceived, in that he incorrectly distinguished Grant v Downs and Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd[32] (Safeway) and relied on Perazzoli v BankSA[33] (Perazzoli) and Mitsubishi Electric Australia Pty Ltd v Victorian Workcover Authority[34] (Mitsubishi).

    [32] (1998) 81 FCR 526.

    [33] [2017] FCAFC 204.

    [34] [2000] VSCA 59.

    The defendant’s arguments on appeal

14. Mr Livesey SC on behalf of the defendant argues that the Master made no error of fact or law.

15. Firstly, Mr Livesey says that no evidence was adduced by the plaintiff to lead to the conclusion that the report was requested as part of an investigatory process. Rather, the evidence adduced by the defendant, in addition to the matters of which the Master appropriately took judicial notice, supported his conclusion that the investigation report was subject to legal professional privilege. Mr Livesely says that the Master appropriately considered all of the evidence before him to reach the conclusion that he did, in particular that cases involving pedestrians can cause difficult issues in regard to contributory negligence, the collision was in the early hours of a Sunday morning shortly before Christmas, and the early retention of solicitors. He says that the evidence of Allianz’s standard practice, while weak if taken in isolation, is reinforced by the unusual features of this case that made litigation more likely. He says that the Master correctly applied Perazzoli and Mitsubishi, in particular relying on the finding that:

    The mere 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”[35]

    [35] Respondent’s (Defendant’s) Outline of Submissions received 6 August 2018 at [22].

16. Secondly, Mr Livesey argues that it was appropriate for the Master to take judicial notice of the role of a compulsory third party insurer and as a result, to take into account its experience of the types of claims likely to result in litigation. He says that the reliance on s 124(7) of the Act is misconceived.

17. Thirdly, Mr Livesey says that there is no basis for the contention that the Master failed to consider whether only part of the investigation report was subject to privilege.

    The nature of the appeal

18. This appeal is by way of rehearing.[36] Layton J, in Wrightville Operations Pty Ltd (T/As Jarvis Ford) v Lisman,[37] set out how such appeals should be dealt with:

    [36] Supreme and District Court Civil Rules 2006 Rule 286.

    [37] [2007] SASC 259.

    This is an appeal by way of rehearing. In such an appeal, the principles which govern the approach of an appellate court to the findings of the trial judge, are those discussed by Kirby J in Warren v Coombes (1979) 142 CLR 531 where his Honour said at 551:

    Shortly expressed, the established principles are, we think, that in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge, but, once having reached its own conclusion, will not shrink from giving effect to it.

    As reiterated by Gleeson CJ, Gummow and Kirby J in Fox v Percy (2003) 214 CLR 118, an appellate court is obliged to conduct a “real review” of the trial and of the trial judge’s reasons. Their Honours cited Dearman v Dearman (1908) 7 CLR 549, in saying:

    Appellate courts are not excused from the task of “weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should make due allowance in this respect.”

    These principles were most recently articulated by the High Court in CSR Ltd v Della Maddalena where Kirby J (with whom Gleeson CJ agreed) said:

    ... the appellate court is obliged to conduct a thorough examination of the record and a real rehearing. It is not confined to reconsideration of the record in order to correct errors of law, although that will certainly be encompassed in such an appeal. It is required to consider suggested errors of fact-finding. Experience teaches that many errors of this kind arise at first instance, more perhaps than errors of law. Having concluded a rehearing as so described, the appellate court is obliged to 'give the judgment which in its opinion ought to have been given in the first instance'. This involves, where, as here, there is no jury, conducting a thorough review of the primary judge's reasons and engaging in the tasks of 'weighing conflicting evidence and drawing ... inferences and conclusions'." [Footnotes omitted]

    Accordingly, if having made proper allowances for the advantages of the trial judge, the appellate court concludes that an error has been made, “they are authorised, and obliged, to discharge their appellate duties in accordance with the statute.”

    This appeal therefore requires careful consideration of both the Magistrate’s reasons, and the evidence given before her.[38]

    (footnotes omitted)

    [38] [2007] SASC 259 at [9]-[13].

19. I note that this decision was not made in the exercise of a discretion.

    Did the Master place undue weight on some factors and insufficient weight on others in reaching his decision that the investigation report was subject to legal professional privilege?

20. It is important to note that neither Mr Scholz nor Ms Dunham were in a position to give evidence as to why external investigators were retained in this matter, Mr Scholz because he had no direct involvement in the matter, and Ms Dunham, because she had no independent recollection of making the decision to instruct them. They both describe the practices and procedures in place at Allianz, at the time of the collision. Neither was able to say that those practices were followed in this matter; the Master was asked to draw an inference that this was the case. While he found that the statements of general practice in FDN 23 were “pertinent but to be given modest weight”,[39] and that the weight to be given to the evidence of practice in both FDN 20 and FDN 23 “is only marginally above modest”,[40] he was prepared to draw the inferences sought by the defendant, when this evidence was considered in light of the objective evidence available.

    [39] At [106].

    [40] At [110].

21. I am of the view that the Master was in error in drawing the inference sought by the defendant. This is for the following reasons:

    ·It ignores the agreement between the parties, on the basis of which the plaintiff agreed not to pursue her application to cross-examine Ms Dunham. The parties agreed that Ms Dunham’s description of her training, practice and understanding were no more than that, and were not “a reference to the conduct of Ms Dunham in this matter”.[41] By this I understand the agreement to be that they did not describe matters that Ms Dunham took into account in making the decision to instruct external investigators. In relation to these statements, the Master said:

    The general remarks are before me without objection to their admissibility and can be assumed to be relevant to the application I am to decide.

    To be relevant in a general sense, they do apply to this claim of the first plaintiff.

    I take this position which appears contrary to what the parties may have agreed between themselves as to the interpretation of the general statements of training practice and policy of the compulsory insurer. If they do not apply to this claim, then I fail to see that they have any relevance.

    [41] FDN 23.

22. I understand by these statements the Master to mean that those general statements in fact describe the decision making process undertaken by Ms Dunham when deciding to instruct external investigators, otherwise they would not be relevant to this matter.

23. By treating the statements of training, policy and procedure in this way, the Master denied the plaintiff the benefit of the agreement that she had reached with the defendant, without then giving her the opportunity to cross-examine Ms Dunham. It gave the evidence of general training and procedure greater weight than that agreed between the parties.

    ·The Master appeared to regard as significant the statement of Ms Dunham that she had some memory of the plaintiff’s claim because it had a number of unusual features. She says:

    I recall that the claimant and her husband were crossing North Terrace in the early hours of the morning when the claimant was struck by the insured’s vehicle in the vicinity of the Adelaide Casino. I recall that they had attended a wedding and the insured may have returned a positive alcohol reading.[42]

    [42] FDN 23 at [19].

24. The Master relied on this statement in error, in determining that it was one of the factors that led him to his final conclusion. Not all of these facts were within Ms Dunham’s knowledge at the time that the investigation report was requested. At the time that she requested the report, she had only the SAPOL report, the notification from the plaintiff’s general practitioner, and the letter from Mellor Olsson. The fact that the plaintiff had been at a wedding was not in any of these documents. Thus to place weight on this recollection has led the Master into error.

    ·The Master placed undue weight on RD1 and its contents.

25. Firstly, I am of the view that the Master read far more into the words of RD1 than their objective construction will sustain. As to the plaintiff’s submission that the request was for a “factual” report, and therefore, the dominant purpose for the request of the report was investigative, the Master said:

    The document, on its surface, appears to simply seek information to enable the insurer to ascertain the facts, i.e. what in fact happened.

    This submission ignores the intimate interaction in the law of negligence between the facts and the law: whether a duty of care has been breached is a question of mixed fact and law as is evident from an examination of the cases set out in Annexure “A” to these reasons. The law and the facts go “hand in glove” and it would not be expected that Ms Dunham would reference legal advice, or, law at all in Exhibit “RD1”. When the facts are known, an apportionment range may then become manifest. The legal issues in this type of case do not warrant a defendant seeking an opinion on the duty of care, breach of the duty of care and causation as issues of pure law – the outcome is heavily fact dependent.[43]

    [43] At [139]-[140].

26. This statement reads far more into the request for a “factual” report, than its objective reading will permit. In fact, to interpret the request in this way is to interpret it as a personal injuries lawyer might, not as an objective reader of the statement. To read the request as one for a report to allow the determination of apportionment, or even liability, is to imbue far more meaning into the words than is warranted.

27. Secondly, the Master put undue weight on the request made by Ms Dunham for “comment on the credibility of those interviewed”.[44] He said:

    The notion of “credibility” is one of great importance in the forensic process and in litigation.[45]

    [44] RD1.

    [45] At [157].

28. After a discussion of Grant v Downs, which he distinguished, the Master said:

    For the reasons I have outlined, I do not accept the submissions that use in litigation may have been merely a non-dominant purpose: the nature and extent of what is requested in Exhibit “RD1”, the request for a view on credibility, the contemporaneity of the investigation, all point to one purpose: procure a “mortgage on the facts” for later use in litigation.

1. This emphasis on the request for a comment on credibility, falls, in my view, into the error against which Mukhtar AsJ warned in Brunswick Hill Apartments Pty Ltd v CGU Insurance Limited[46] (Brunswick Hill Apartments) where he said:

   I think it is unconvincing for the defendant to seize upon expressions within ordinary correspondence such as “legal” or “legal costs” or “negligence” as if they necessarily aroused an apprehension of litigation. In their context, those expressions did no such thing. It was a case of the insured claiming the costs that incurred in getting solicitors involved in lodging the claims; the insurer telling the liquidator that legal costs would be incurred by the defendant if the notification was late; and “negligence” not in the context of an adversarial allegation by someone, but understanding what had happened.[47]

   [46] [2010] VSC 532

   [47] [2010] VSC 532 at [33].

2. The request for a comment on credibility, even taken in the context of a request for an investigation into the factual issues surrounding a collision, does not necessarily lead to the inference that litigation is reasonably contemplated.

3. Similarly, the Master placed undue weight on paragraph 28 of FDN 23, where Ms Dunham says:

   …I have no reason to believe that I did not follow my usual practice in arranging external investigators to preserve evidence.

4. The Master said:

   It is important, using the words at paragraph 28 of the affidavit of Ms Dunham, to “preserve evidence”.

   Locales change. Witness memories fail. Contemporaneous statements, plans, records are a great advantage in the smithy of the trial court.

   Mr Robertson SC, as regards that particular part of the affidavit, submitted that preserving evidence may not necessarily be for use in court or in litigation – see page 42 of the transcript. It could be obtained and preserved for multiple purposes. For example, for use in a mediation, or, alternative dispute resolution.

   Whilst that might be so, clearly the most important use of “evidence” - and a process in which “evidence” is intimately connected – is, of course, the court process, i.e. litigation.

   The other uses referred to by Mr Robertson SC constitute subsidiary or non-dominant purposes. The letter from Messrs Mellor Olsson dated 20 December 2012 enlivened the prospect of such a non-dominant purpose.[48]

   [48] At [151]-[ 155].

5. Later he says:

   … the only information before me is that the report was to be procured for the purposes of fact ascertainment and “evidence” – paragraph 28 of Ms Dunham’s affidavit and the terms of Exhibit “RD1”.[49]

   [49] At [175].

6. As with the emphasis that the Master put on the request for a comment on credibility, I am of the view that he has, impermissibly, treated the use of this word as if it must, necessarily, “arouse an apprehension of litigation”, to use the words of Mukhtar AsJ. It must be remembered that the request was made by a layperson to a layperson. The word “evidence” is used in many different contexts by laypeople, and not all of them, in fact perhaps very few of them relate to litigation. The assumption that the use of the word “evidence” and the clause “to preserve evidence” must only be in the context of litigation is erroneous.

7. Thirdly, the Master placed undue weight on the timing of the production of RD1. He said:

   …the making of the request in the period between Christmas Day and New Years Day on 278 December 2012 smacks of importunity and that importunity has a flavour beyond merely investigating facts for a mundane settlement of a motor accident claim in due course (this is an inference not supported by affidavit evidence but I think it is obvious).[50]

   [50] At [44].

8. He expanded on this later in his reasons, when he said:

   If litigation were not objectively in contemplation, and, I add, the dominant purpose of the exercise, then there was no need to action the request with the swiftness it was initiated, and, in the period between Christmas Day and New Year’s Day on 27 December 2012.

   Of course, the affidavit of Ms Dunham does not depose to her workload at the time.

   Nonetheless, the timing of the request – during the holiday period for most citizens – suggests an urgency which has a purpose beyond merely investigating facts for a mundane settlement, and, more for the purpose of preserving evidence with the advantage of contemporaneity – as deposed to by Ms Dunham.[51]

   [51] At [167]-[169].

9. The Master says that this is obvious. This is not the case. Many businesses do not close between the Christmas and New Year period and during this time, those employees who are not on annual leave simply carry on their normal business. The mere fact that the request was made between Christmas and New Year says nothing as to the purpose for which it was made. It may be an indication that Ms Dunham treated the matter as urgent and so made the request at that time; equally, it may be that Ms Dunham was working during that period, and making the request was simply the next task in her work schedule. In the absence of any evidence on this point, no inference can be drawn from the timing of the request.

10. Finally, I consider that the Master placed undue weight on the early retention of solicitors by the plaintiff. He said, when outlining the objective facts on which he relied:

    by virtue of receipt of the letter from Messrs Mellor Olsson before 27 December 2012, the defendant was then aware, to use the words of Mr Livesey QC (who appeared with Mr James for the defendant), that the first plaintiff had “lawyered up” and done so within two weeks of the motor accident without any prior direct contact with the insurer - lawyers are often associated with litigation [the affidavit of Ms Budimski in (FDN 15) in fact reveals that Mellor Olsson were instructed on 13 December 2012 (see paragraph 5)].[52]

    [52] Decision 3 of 2018 at [44(3)].

11. He then said:

    The particular letter in this case from Ms Demosthenous does bear similarity to that which is referred to in the second paragraph (paragraph [34]) of the extract I have quoted above. It is a very “soft” letter in the sense that it simply seeks a claim number. (The significance of the letter of 20 December 2012 is set out in the defendant’s original submissions – (FDN 22) - at page 3.)

    However, that letter is only part of the context upon which I base my decision. There are the other matters which I have identified and which were known as at 27 December 2012.[53]

    [53] Decision 3 of 2018 at [55]-[56].

12. I am of the view that the Master should have headed the warning of Mukhtar AsJ in Brunswick Hill Apartments, where he said:

    Nor is it correct, I think, to characterise the plaintiff’s solicitors letter on 5 March 2009 as being a letter of demand as if it were a precursor to litigation. Nothing in the letter could be characterised as a “demand”, nor is it otherwise expressed in threatening or minatory tones. The letter is doing no more than lodging a claim form and stating some relevant facts. At no stage was there a threat of litigation or facts to show that one party was ready to pursue litigation. At no stage did Messrs Ginnakopoulos intensify the claim or threaten litigation, nor is there evidence that the defendant had retained solicitors protectively or for advice throughout the course of the investigations.[54]

    [54] [2010] VSC 532 at [34].

13. There is nothing in the letter from Mellor Olsson to Allianz which indicated that litigation was anticipated, reasonably or otherwise. The fact that the plaintiff retained solicitors to assist her with her claim does not give rise to an inference that proceedings would be instituted.

14. Given these matters, I am of the view that the Master erred in drawing the inference that the practices and policies were followed by Ms Dunham in this matter. When dealing with institutions such as insurers, the warning given by Mukhtar AsJ in Brunswick Hill Apartments should be remembered:

    When it comes to corporations or large organisations such as an insurer who might be said is a loss bearing entity and for whom litigation is not uncommon as a target, a number of considerations arise. First, as I said at the outset, documents are not privileged merely because one of their intended destinations is the desk of a lawyer: see Esso Australia Resources v FCT. Nor is it enough that reports are commissioned or steps are taken because of established corporate or bureaucratic procedures and the report is made as a result of instructions being followed. Nor is it enough that reports are commissioned merely because litigation is a contingent possibility.[55]

    (citations omitted)

    [55] [2010] VSC 532 at [29].

15. Even if it can be inferred that Ms Dunham followed the policies and practices of Allianz when she requested the investigation report, there was nothing in the material before the Master to suggest she was doing more than that: following instructions and established corporate procedures. The matters relied on by the Master do not lead to a conclusion that she turned her mind to the question of whether litigation was reasonably anticipated.

16. I am of the view that the Master failed to place sufficient weight on other evidence before him. When considering the purpose for which the report was procured, the Master said:

    …the only information before me is that the report was to be procured for the purposes of fact ascertainment and “evidence” – paragraph 28 of Ms Dunham’s affidavit and the terms of Exhibit “RD1”.[56]

    [56] At [175].

17. The Master has failed to take into account NB2, a letter from Ms Dunham to the plaintiff’s solicitors. In this letter, she says:

    We…confirm that we are attempting to obtain details of the accident from the participants and will communicate further with you as soon as possible following receipt of these details.

    In the meantime, so that we can give consideration to your client’s claim could you please provide the following:

    …[57]

    [57] Exhibit NB2 to FDN 15.

18. This statement, in fact, explains the purpose for which the report was obtained; that is, to obtain an account of the accident from those involved, to allow Allianz to consider the plaintiff’s claim. This letter was written on the same day as RD1; it is clear that at that time, no decision had been made to reject her claim. When this letter is taken into consideration, it makes it less likely that the dominant purpose for which the report was requested was for use in reasonably anticipated litigation. As the claim was still being “considered”, litigation could not have been reasonably anticipated.

19. I am also of the view that the Master placed insufficient weight on the failure of the defendant to adduce any direct evidence as to the purpose for which the report was requested. In relation to this failure, the Master said:

    Given the interval between December 2012 and the inception of this argument in late 2017, it is not unreasonable that the defendant cannot now produce more specific affidavit evidence regarding the purpose for the preparation of the investigative report above and beyond that which has been filed.[58]

    [58] At [70].

20. Given the lapse of time, it may not be unreasonable to be unable to adduce direct evidence as to purpose; nonetheless, the fact is that no such evidence was adduced, and this must tell against the defendant. The lapse of time cannot be used to excuse or otherwise “explain away” this failure. Nor can it be used to allow a more generous interpretation (in favour of the defendant) of the circumstances surrounding the request, in light of the fact that litigation did subsequently eventuate.

    Did the Master impermissibly elevate the position of a compulsory third party insurer to a position superior to other litigants in regard to legal professional privilege?

21. In my view he did. He made the following statements:

    …the relevant entity is a compulsory statutory insurer obliged to meet the third party liability of the defendant in this case, and, by virtue of the statutory scheme, all motor accident claims for which it is the compulsory insurer[59]

    The compulsory insurer in this matter is in a very different position. In a sense, it is in the business of being sued by claimants on a regular basis and therefore needs to be in a position to evaluate the likelihood of being sued, and, then, to be in the best position to respond to that suit by having procured “evidence” when it is fresh. Objectively, here I find that litigation was reasonably anticipated, and, the purpose of the instructions to the investigators was to “preserve evidence” for that litigation as deposed to by Ms Dunham.[60]

    [59] At [44].

    [60] At [186].

22. It is clear that the Master considered that the defendant was in a special position when it came to assessing the purpose for which the report was obtained. He relies on its status as an objective fact to support his conclusion. He finds that litigation was reasonably anticipated because the defendant was in the business of being sued on a regular basis. This is not the test. No doubt the defendant is in the business of being sued on a regular basis. That does not mean that every investigation that it requests is for the purpose of anticipated litigation. The defendant could equally be described as being in the business of settling claims; this would not result in every report that is requested being for the dominant purpose of settlement of a claim. What it means is that every request must be carefully evaluated to determine its dominant purpose. Indeed, it seems to me that the Master has, in fact, at [186], described a two stage process:

    …[the defendant] therefore needs to be in a position to evaluate the likelihood of being sued, and, then, to be in the best position to respond to that suit by having procured “evidence” when it is fresh.

23. Thus, the Master says that the first step is to evaluate the likelihood of being sued. It seems to me that that describes the dominant purpose of the request for the report. Until that evaluation has occurred, litigation cannot be reasonably anticipated, simply by virtue of the role of the defendant.

    Did the Master incorrectly distinguish Grant v Downs, Waind and Safeway, and rely on Perazzoli and Mitsubishi?

24. The Master distinguished Grant v Downs and Safeway on their facts. He distinguished Grant v Downs on the basis that the person requesting the report deposed to three different purposes for its request, and that there was an important public policy question involved, unlike in this matter.[61] While it is clear that Grant v Downs is factually different, I am of the view that it was inappropriate to distinguish it simply on this basis; Grant v Downs is not confined to its facts and its principles are of universal application. Indeed, the Master seems to suggest that the fact that Ms Dunham did not depose to any purpose, leads to the conclusion that it must have been for the dominant purpose of reasonably anticipated litigation:

    In my view, the situation confronting me is far different to that which was applicable in Grant v Downs. That is because the person requesting the report in that matter had sworn in the affidavit as to at least three specific purposes for the preparation of the report. There is nothing like that in this case.[62]

    [61] At [159]-[164].

    [62] At [162].

25. It is hard to see what other meaning this paragraph might have. On the basis of the evidence before the Master, I am of the view that this conclusion is erroneous.

26. I am of the view that the Master fell into similar error when considering Waind. To confine Waind to its facts, is to read it too narrowly. Additionally, I am of the view that the Master “over-interprets” the facts in this case:

    Here, the defendant insurer is proceeding under the dominant, if not the complete, shadow of anticipated litigation – not an existing payer-payee relationship like in Waind.[63]

    [63] At [177].

27. While the facts of this matter are clearly distinguishable, the universal principles set out by both Grant v Downs and Waind are applicable. Barwick CJ in Grant v Downs said:

    …a document which was produced or brought into existence either with the dominant purpose of its author, or of the person or authority under whose direction, whether particular or general, it was produced or brought into existence, or using it or its contents in order to obtain legal advice or to conduct or aid in the conduct of litigation, at the time of its production in reasonable prospect, should be privileged and excluded from inspection.[64]

    [64] (1976) 135 CLR 674 at 677.

28. In Waind, Mason J said:

    In this instance again, documents are brought into existence to enable the appellant to decide what it will do. In this situation, if the appellant decides to discontinue payments, litigation is likely to ensue. Although there is a greater likelihood that documents of this class will be submitted to solicitors for use in litigation, the primary function for which they are called into existence is, as the trial judge said, to enable the appellant to make a decision in the ordinary course of its business. Only when the appellant has made a decision to discontinue payment will the document be submitted to solicitors for us in the subsequent litigation.[65]

    [65] (1979) 141 CLR 648 at 655-656.

29. Once these statements are taken into account, the factual dissimilarities become irrelevant.

30. Similarly, I am of the view that Safeway should not have been distinguished. In relation to Safeway, Master said:

    I do not think this case has application to this matter and the remarks of Goldberg J cannot be read out of context.

    In the situation confronting Goldberg J, the ACCC was charged with certain public duties to undertake investigations, and, if appropriate, institute legal proceedings in a proactive manner.

    It is a prosecuting type authority with the wider duties inherent in such a role.

    The compulsory insurer in this matter is in a very different position.[66]

    [66] At [183]-[186].

31. By concentrating on the factual differences between the cases, I am of the view that the Master fell into error. The statements of principle of Goldberg J are universally applicable:

    Whether legal proceedings are reasonably anticipated requires a consideration of the existing state of facts taken in conjunction with the subject‑matter which gives rise to the context in which the document comes into existence or the communication is made. Where legal proceedings are in existence the relevant relationship between the proceedings and the document or communication is clear. Where the legal proceedings are anticipated one needs more than speculation as to the possibility of such proceedings; one needs a probability or likelihood that such proceedings will commence. It is putting it too highly, in my view to say that a decision must have been made by the moving party or authority that such proceedings will be commenced. It is sufficient in my view, that the moving party or authority has made a decision, for example, that subject to being satisfied as to the strength of the case, proceedings be issued or that, short of such decision, it can be reasonably anticipated on the facts as known, that legal proceedings are likely. 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.[67]

    [67] (1998) 153 ALR 393 at 424.

32. While a number of judges has disagreed with Goldberg J that it must be more probable than not that litigation will be commenced, the balance of this statement has been endorsed. [68]

    [68] See for example Batt JA in Mitsubishi at [17] and the Full Court of the Federal Court of Australia in Perazzoli at [107].

33. Thus, it was inappropriate to distinguish these cases on their facts.

34. I am also of the view that the Master inappropriately applied the decisions in Mitsubishi and Perazzoli, where he said:

    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 satisfy this aspect required to make out the privilege: see Mitsubishi Electric Australia Pty Ltd v Victorian Workcover Authority (2002) 4 VR 332 at [22]. That authority also establishes that litigation need not be more likely than not to satisfy this requirement. That is a 50% chance or less is enough. This is a generous test.[69]

    [69] At [49].

1. He then extracts part of the decision in Perazzoli at [112] to [118] and highlights the following words:

   The claims of litigation privilege were upheld because there was a real prospect of litigation “of some kind or kinds” by reason only of the happening of an event of a kind that, in common experience, very often leads to litigation.[70]

   (emphasis added by the Master)

   [70] At [57] of the Master’s decision and [118] of Perazzoli.

2. He appears to reach the view that circumstances such as that involving the plaintiff in this matter "in common experience, very often lead to litigation”. He says:

   …the nature of the litigation in prospect involved issues of pedestrian’s negligence which are notoriously amenable to apportionment, contributory negligence and concomitant disputation: see the table of cases annexed to these reasons as “Annexure A” demonstrating the variability of outcomes and all that goes with that - I remind myself that in the area of motor vehicle accidents, there are some types of collisions where the outcome is fairly well-known and litigation may be a remote or unlikely prospect (eg. rear end collisions where the lead vehicle has been stationary at a set of red traffic lights for a long period cf. Robertson v Headland (1989) 149 LSJS 336; Paglia v Trice (unreported judgment of Senior Judge Brebner dated 5.10.90: library number 1774); Cochrane v Brooks [2006] SADC 128; Freeleagus v Nominal Defendant [2007] QCA 116; and, obiter dicta in Grace v Sheppard Wine Tankers Pty Ltd And Schmidt (1978) 18 SASR 541)

3. He bases this conclusion on the following:

   ·The statement of Mr Scholz that:

   6. In general terms, investigators are only appointed in situations which include where there is doubt about how the motor accident occurred, drugs or alcohol are involved, the potential claim appear to be very significant, or where the claimant has engaged a lawyer.

   7. The explanation given to the claims consultants is that these scenarios have a high potential for dispute and are associated with a greater risk of litigation in the future, in connection with which Allianz will need to seek legal advice and representation in proceedings.[71]

   ·The statement of Ms Dunham that:

   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.

   …

   12. For those matters which I considered were a little more tricky or unlikely to settle quickly, I would use external investigations. [72]

   ·A collection of cases, compiled by the Master, and without input or submission from the parties which in his view demonstrates that:

   …the nature of the litigation in prospect involved issues of pedestrian’s negligence which are notoriously amenable to apportionment, contributory negligence and concomitant disputation…[73]

   [71] FDN 20 at [6]-[7].

   [72] FDN 23 at [7]-[12].

   [73] At [44].

4. He says that this conclusion is supported by the affidavits of Mr Scholz and Ms Dunham.[74]

   [74] At [46].

5. Thus, the Master reaches the conclusion that the circumstances of this case are such that in common experience very often lead to litigation on the basis only of Mr Scholz’s statement that such claims are associated with “a greater risk of litigation” and Ms Dunham’s statement that such cases were “tricky” and “less likely to settle at an early stage”, and a review of some 42 cases decided between 1938 and 2014 (a period of 76 years).

6. The Master’s conclusion is not supported by the evidence. Mr Scholz talks of a greater risk of litigation; he does not say a greater risk than what. This could be a greater risk than no risk at all, or it could be something else. While using a comparative adjective, he does not explain what his comparator is. As for Ms Dunham, in her general description of the procedure she followed, she does not talk in terms of the likelihood of litigation at all. She talks about the likelihood of settling quickly. In relation to contributory negligence, she does say that a claim where an allegation of contributory negligence is made is more likely to go to Court.[75] However, as with Mr Scholz, she does not set out what her comparator is. The assumption must be that it is more likely to go to Court than one where such an allegation is not made; this is not the same as saying that litigation is reasonably anticipated. One may make an allegation of contributory negligence and still not reasonably anticipate that litigation will ensure. Ms Dunham makes a similar statement in relation to the retention of solicitors, where she says that “claims involving legally represented claimants were usually more difficult to resolve and more likely to go to Court”.[76] Again, all this means is that claims where the plaintiff is legally represented are more likely to go to court than those where the plaintiff is not represented. It does not elevate the case to one where there is a real prospect of litigation.

   [75] FDN 23 at [14].

   [76] FDN 23 at [27].

7. In my view, it was also inappropriate to rely on Annexure A, without giving the parties an opportunity to consider it and make submissions on it.

8. In light of these conclusions, I am of the view that the Master’s reliance on Perazzoli and Mitsubishi was misplaced. There was no evidence to support the finding that the circumstances of the plaintiff’s claim were such that litigation was inherently a real prospect.

   Did the Master err in failing to take into consideration s 124(7) of the Act?

9. Given my findings above, I do not need to deal with this ground of appeal. I deal with for completeness. Section 124(7) provides as follows:

   (1)Where an accident caused by, or arising out of the use of, a motor vehicle results in the death of, or bodily injury to, any person, written notice must be given as soon as practicable to the person who is the insurer under a policy of insurance in respect of the vehicle stating in detail—

   (a)     the fact of the accident;

   (b)     the time and place at which it occurred; and

   (c)     the circumstances of the accident; and

   (ca)   the name, date of birth and address of the driver of the motor vehicle at the time of the accident; and

   (d)     the name and address of any person killed or injured in the accident; and

   (e)     the names and addresses of any witnesses of the accident.

   (2)Where notice is not given as required by subsection (1), the owner, the person in charge, and the driver, of the motor vehicle at the time of the accident are each guilty of an offence.

   Maximum penalty: $1 250 or imprisonment for 3 months.

   (3)     It is a defence to a prosecution under subsection (2)—

   (a)     that the defendant did not know of the accident, or gave the requisite notice as soon as practicable after the accident came to the defendant's knowledge; or

   (b)     that the defendant believed upon reasonable grounds that the requisite notice had been given; or

   (c)     if the defendant has not given notice of a particular detail as required by subsection (1)—that the defendant, having made reasonable inquiries, complied with the requirements of subsection (1) to the best of the defendant's knowledge, information and belief.

   (3a)A person who at the time of an accident of a kind referred to in subsection (1) was the owner, the person in charge, or the driver, of the motor vehicle must co-operate fully with the insurer in respect of a claim made in respect of the accident.

   Maximum penalty: $5 000.

   (3b)The duty to co-operate under subsection (3a) will include, in the case of the owner, a duty to give the insurer access to the vehicle, and, if required, possession of the vehicle, or part of the vehicle, on reasonable terms and conditions.

   (4)Where a claim is made upon an insured person in respect of an accident of a kind referred to in subsection (1), the insured person must as soon as practicable give notice of the claim to the insurer and furnish the insurer with such information in relation to the claim as the insurer may reasonably require.

   Maximum penalty: $750.

   (5)     The insurer may, by notice in writing, require—

   (a)     the driver of the motor vehicle at the time of the accident to produce the licence or permit in pursuance of which the driver was driving the motor vehicle, for the inspection of the insurer; or

   (b)     the owner of the motor vehicle at the time of the accident to produce prescribed documents relating to the motor vehicle, for the inspection of the insurer,

   and if a person of whom such a requirement has been duly made fails to comply with the requirement the person is guilty of an offence.

   Maximum penalty: $750.

   (6)A person must not give any notice or information under this section that is, to the person's knowledge, false or misleading in any material particular.

   Maximum penalty: $50 000 or imprisonment for one year.

   (6a)Where a claim is made in respect of an accident of a kind referred to in subsection (1), a person must not give the insurer, or someone known by the person to be engaged by the insurer in connection with the claim, any information that the person knows is material to the claim and is false or misleading.

   Maximum penalty: $50 000 or imprisonment for one year.

   (6b)   If—

   (a)     an amount has been paid to the claimant in connection with a claim in respect of an accident of a kind referred to in subsection (1); and

   (b)     the claimant has been found guilty of an offence against subsection (6) or (6a) in connection with the claim,

   the person who made the payment is entitled to recover from the claimant the amount of any financial benefit that the claimant gained from the commission of the offence together with any amount that the court considers appropriate in respect of costs incurred in connection with the claim.

   (7)A notice or information given under this section is privileged from production or disclosure in any legal proceedings except proceedings under this Part.

10. Mr Robertson says that, because s 124(7) expressly excludes from production information provided by an insured provided pursuant to that section, it follows that, in accordance with the maxims expressio unius est exclusion alterius and expressum facit cessare tacitum, the disclosure of other information provided to the insurer is not excluded. Mr Livesey, on the other hand, says that s 124 has no application to the situation in this case as it only deals with the situation where there is subsequent action between the insurer and the insured. In this regard, he relies on the case of SGIC v Paneros[77] (Paneros).

    [77] (1989) 51 SASR 213.

11. In Paneros, the insurer (SGIC) settled a claim made by a claimant, and then issued proceedings against its insured, pursuant to s 124A of the Act, seeking to recover from him the amount paid to the claimant on the basis that the defendant was intoxicated at the time of the accident, and so had breached his policy of insurance. Prior J said:

    The proceeding’s instituted by the plaintiff re plainly proceedings under Part IV of the Act. The information can therefore be used by the plaintiff against the defendant. I agree with the submission put by counsel for the plaintiff that the provisions within Pt IV of the Act, particularly in ss 124 and 125 make it plain that the insurer’s solicitors are to disclose the information they obtain form an insured person to the insurer. The defendant is require to give information. He cannot subject it to a reservation or restriction upon its use inconsistent with what is expressly referred to in (7) of s 124. The subsection makes it plain that the information can be used in legal proceedings under Pt IV.[78]

    [78] (1989) 51 SASR 213 at 227.

12. It is clear from this, and from the express words of s 124(7) itself, that the information provided by an insured to an insurer pursuant to the insured’s obligations under s 124 is privileged from disclosure, except in proceedings such as those commence by the insurer in Paneros. However, I do not accept the arguments put to me as to the broader operation of s 124(7) by either Mr Robertson or Mr Livesey.

13. I do not accept Mr Robertson’s argument that the maxim expressio unius applies, so as to lead to the conclusion that, because information provided under s 124 is expressly privileged from production, other information obtained by the insurer is not privileged. Section 124 is dealing only with the obligations of an insured under his or her policy of insurance. Thus the operation of s 124(7) is confined to information provided pursuant to s 124, and does not have a wider application. It says nothing about general disclosure obligations and privilege in relation to information other than that provided under s 124 by an insured.

14. I also do not accept Mr Livesey’s argument. Section 124 provides that information provided by an insured pursuant to s 124 is privileged from production except in proceedings brought by an insurer against an insured. Thus, s 124 has broader application than an action between insurer and insured, but is confined to information provided pursuant to it.

15. The Master did not err in failing to have regard to s 124 of the Act. It has no application in the circumstances of this case.

    Did the Master err in failing to draw a Jones v Dunkel inference in relation to Ms Dunham’s not being provided with the entire Allianz file for the purpose of making her affidavit?

16. In preparing her affidavit, Ms Dunham had reference only to RD1. She was not provided with the entirety of the file to refresh her memory before making her affidavit. Mr Robertson asked the Master to draw a Jones v Dunkel inference against the defendant for this failure. He also asked the Master to draw a Jones v Dunkel inference against the defendant for failure to call evidence from the author of the report. The Master declined to draw the inference in either case. The Master said:

    In wider submissions, Mr Robertson SC invited a Jones v Dunkel (1959) 101 CLR 298 inference from the failure to provide to Ms Dunham the claims file to refresh her memory for the purposes of her affidavit. Nor is there an affidavit from the author of the investigation report itself: see page 9 of the transcript.

    Mr Livesey QC responded to this line of submission by referring to a decision of Cox J in Mocatta v Leal (BC9300355 delivered 27/8/1993 as part of the Full Court) where his Honour ruled that no adverse inference should be drawn by the failure of a party to put before the court material that was itself the subject of legal professional privilege. His Honour referred to Wentworth v Lloyd (1864) 10 HLC 589, 11 ER 1154.

    It would be perverse to require a party to waive privilege in order to protect the very same privilege.

    In any event, the operation of the rule in this type of application is not straightforward because the rule only applies to the absence of evidence requiring an answer and the first plaintiff, naturally, has little to put forward on the issue before me which involve the internal activities of the defendant. The failure to produce evidence has no probative significance unless, in the usual case, it is to answer positive evidence from the first plaintiff: compare Schellenberg v Tunnel Holdings Pty Ltd (2000) 200 CLR 121 at 142‑143. I have misgivings about applying this principle simply because the defendant has the burden of proof and may not have produced every scrap of evidence upon the point to be proven. The rule does not require a party to give cumulative evidence. It does not compel time to be wasted in producing unnecessary witnesses: Cubillo v Commonwealth (No 2) (2000) 103 FCR 1 at 120.

    For these reasons, I do not think a Jones v Dunkel inference is available or pertinent to the application before me.[79]

    [79] Decision No 3 of 2018 at [128]-[132].

17. Before me, Mr Robertson argued that such an inference should have been drawn in relation to the failure to provide Ms Dunham with the entirety of the file; he says the failure to do so should lead to the inference that there was no further information within the file which would assist the defendant to make out its claim for privilege. He says that the Master’s reliance on Mocatta v Leal[80] (Mocatta) is misplaced as it deals with very different circumstances, in that the inference was sought where the witness who was not called was the former solicitor of one of the parties. In that matter, it was held that the principle of legal professional privilege is paramount and that the rule in Jones v Dunkel gives way to any claim for legal professional privilege.[81] This has no application in this matter, as the evidence in question here is not of a solicitor or former solicitor of the defendant, but its own claims file.

    [80] Unreported Supreme Court of South Australia Full Court 27 August 1993 BC 9300355.

    [81] Unreported Supreme Court of South Australia Full Court 27 August 1993 BC 9300355 at 13 – 14.

18. Mr Livesey, on the other hand, argues that no error was made by the Master. He says that the Master was correct in concluding that such an inference was neither “available [n]or pertinent”.[82]

    [82] At [132].

19. I am of the view that the Master was correct in reaching this conclusion although for different reasons. I do not consider that the rule in Jones v Dunkel is available in the circumstances of this case. In particular, I refer to the summary of the rule, set out by O’Loughlin J in Cubillo v Commonwealth,[83] where he said:

    [83] (2000) 103 FCR 1.

    [353] A party who, without explanation, fails to call, as a witness, a person whom he or she might reasonably be expected to call, can attract the application of the principle enunciated by Windeyer J in Jones v Dunkel (1959) 101 CLR 298. Both the applicants and the Commonwealth seek to invoke the rule as a result of the absence of witnesses who were said to be material witnesses. Whilst it is possible to state the rule in general terms, its application must be considered with regard to each situation in which a witness is alleged to be absent; the rule is not to be used to complete gaps in the evidence or to convert conjecture into inference. The rule is that the unexplained failure of a party to give evidence may, in appropriate circumstances, lead to an inference that the uncalled evidence would not have assisted that party's case, so entitling a court the more readily to draw an inference against that party which might otherwise fairly be drawn from the evidence which was adduced. In essence, an inference may be drawn contrary to the interests of a party who, although having it within his or her power to provide or give evidence on some issue, declines to do so.

    [354] That principle has recently been succinctly stated by the High Court in RPS v R [2000] 168 ALR 729 at 737:

    "In a civil trial there will very often be a reasonable expectation that a party would give or call relevant evidence. It will, therefore, be open in such a case to conclude that the failure of a party (or someone in that party's camp) to give evidence leads rationally to an inference that the evidence of that party or witness would not help the party's case: Jones v Dunkel (1959) 101 CLR 298 at 312 per Windeyer J and that 'where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstance that the defendant disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference.'"

    [355]  In Cross on Evidence, Butterworths, [4th Ed] D Byrne, JD Heydon, vol 1 at [1215] it is said:

    "[t]he rule [in Jones v Dunkel] only applies where a party is 'required to explain or contradict' something. What a party is required to explain or contradict depends on the issues in the case as thrown up in the pleadings and by the course of evidence in the case. No inference can be drawn unless evidence is given of facts 'requiring an answer'." (footnotes omitted)

    That passage from Cross on Evidence was quoted with approval in the joint judgment of Gleeson CJ and McHugh J in Schillenberg v Tunnell Holdings Pty Ltd [2000] 170 ALR 594 at 608-609.

    [356] The rule cannot be applied to the non calling of a witness unless it would be natural for the party to call the witness, or the party might reasonably be expected to call the witness: O'Donnell v Reichard [1975] VR 916 at 929; or as Glass JA said in Payne v Parker [1976] 1 NSWLR 191 at 201-202:

    "the missing witness would be expected to be called by one party rather than the other, ... is also described as existing where it would be natural for one party to produce the witness: Wigmore, para286, or the witness would be expected to be available to one party rather than the other or where the circumstances excuse one party from calling the witness but require the other party to call him, or where he might be regarded as in the camp of one party, so as to make it unrealistic for the other party to call him, or where the witness' knowledge may be regarded as the knowledge of one party rather than the other, or where his absence should be regarded as adverse to the case of one party rather than the other. It has been observed that the higher the missing witness stands in the confidence of one party, the more reason there will be for thinking that his knowledge is available to that party rather than to his adversary. If the witness is equally available to both parties, for example, a police officer, the condition, generally speaking, stands unsatisfied." (footnotes omitted)

    However, the rule has no application if the failure to call the witness is explained. For example a reasonable explanation for non attendance is illness or other unavailability, or by loss of memory or refusal to waive privilege: Payne v Parker. Any explanation must be established by evidence and is not merely to be presumed from the passage of time: West v Government Insurance Office NSW (1981) 148 CLR 62 at 70. Furthermore, the onus of establishing unavailability is on the party against whom the rule in Jones v Dunkel operates: Smith v Samuels (1976) 12 SASR 573. Thus I was satisfied, as a result of the medical evidence that was presented by the Commonwealth, that illness prevented Mr Harry Giese from giving evidence. As the Director of Welfare at the time of Peter Gunner's removal, he had the potential to be a most important witness. In the normal course of events, one would have expected the Commonwealth to call him as a witness in their defence.

    [357] The unexplained failure by a party to call witnesses may, not must, in appropriate circumstances, lead to an inference that the uncalled evidence would not have assisted that party's case: Jones v Dunkel at 308, 312 and 320-321. See also Brandi v Mingot (1976) 12 ALR 551 at 559-560 and Spence v Demasi (1988) 48 SASR 536. But such failure would rarely give rise to a positive inference that any evidence would necessarily have been adverse to the party failing to call that evidence. The appropriate inference to draw is a question of fact to be answered by reference to all the circumstances of the case and perhaps no adverse inference at all may be appropriate: Spence v Demasi and Packer v Cameron (1989) 54 SASR 246.

    [358] The significance to be attributed to the fact that a witness did not give evidence will, in the end, depend upon whether, in the circumstances, it is to be inferred that the reason why the witness was not called was because the party who was expected to call him feared to do so. But there may be circumstances in which such an inference is not available or, if available, is of little significance. For example the party "may not be in a position to call the witness. [H]e may not be sufficiently aware of what the witness would say to warrant the inference that, in the relevant sense, he feared to call him": Fabre v Arenales (1992) 27 NSWLR 437 at 449-450.

    [359] In summary, the authorities indicate that one cannot normally infer that absent evidence would necessarily have been adverse to a party, but may infer that it would not have assisted that party's case. Nevertheless, the rule does not prevent an inference that is favourable to the party who has failed to call the witness from being drawn, as other evidence may justify the drawing of the inference: Flack v Chairperson, National Crime Authority (1997) 150 ALR 153 at 164 per Hill J.

    [360]  There are two further aspects of the rule that are of relevance to this matter. First, in Cross on Evidence at para[1210] it is remarked that the rule does not operate to require a party to give merely cumulative evidence, such that if five people attended a relevant meeting, and some are called, no Jones v Dunkel inference can normally arise in respect of those who are not. Essentially, the rule does not compel time to be wasted by calling unnecessary witnesses. However, that statement by no means provides a shield against a justifiable criticism that a party deliberately kept less favourable witnesses from testifying. A further aspect of the rule is that the evidence of the missing witness must be such as would have elucidated a matter, in that the witness must have some knowledge of the event or issue. This characteristic of the rule was explained by Glass JA in Payne v Parker at 202:

    "... the condition is made out when the witness is presumably able to put a true complexion on the facts, might have proved the contrary, would have had a close knowledge of the facts, or where it appears that he had knowledge. I would think it insufficient to meet the requirements of principle that one party merely claims that the missing witness has knowledge, or that, upon the evidence, he may have knowledge. Unless, upon the evidence, the tribunal of fact is entitled to conclude that he probably would have knowledge, there would seem to be no basis for any adverse deduction from the failure to call him." (footnotes omitted)

    [361]  Finally, it must be remembered that the principle in Jones v Dunkel may apply to both parties. That being so, the operation of the principle is not that the failure of one party excuses the failure of the other. The position is that competing inferences that the uncalled evidence would not have assisted either side arises and the trier of fact must then consider the evidence that is before it in the light of those inferences: Brandi v Mingot.

    [362]  In my opinion, to use the failure to call a witness against a party, I must be satisfied before drawing an inference, that the witness was there to see or hear something of which he or she can give evidence and that the witness was available in the sense that his or her absence has not been satisfactorily explained. However, even though I am satisfied about the availability of a witness and even though there has been no explanation for his or her absence, I may, but I am not bound to draw an inference adverse to the relevant party.[84]

    [84] (2000) 103 FCR 1 at [353]-[362].

1. Firstly, O’Loughlin J makes it clear that the rule applies to the failure to call a witness; here, we are dealing with the failure to provide certain documents to a witness prior to the preparation of her affidavit. Secondly, he makes it clear that the rule only applies where the failure to call a witness occurs in a situation where the party might be reasonably expected to call that witness.  In the circumstances of this case, I assume that the plaintiff’s submission is that the defendant would reasonably be expected to provide the entirety of its file to Ms Dunham. Firstly, I do not consider that Jones v Dunkel, in its traditional formulation, applies to the facts of this matter. Secondly, the plaintiffs’ contention has not been made out. Consequently, I am of the view that the rule in Jones v Dunkel has no application in this matter.

2. As to the Master’s reliance on Mocatta, while I am of the view that his reliance may have been misplaced in the circumstances of this matter, this is not a question in relation to which I need to reach a firm conclusion given my conclusion on the application of Jones v Dunkel.

   Part-privilege

3. The plaintiff says that the Master erred in failing to consider whether the investigation report was privileged in part. Given my conclusions, I do not consider this ground of appeal.

   Conclusion

4. Having concluded that the Master erred in relation to his finding that report was subject to legal professional privilege, this appeal must be allowed. Once the proper weight is placed on the various factors in this case, including the contents of FDN 20 and FDN 23, RD1, and NB2, as well as the timing of the request, I am of the view that the defendant has not discharged the onus of showing that legal professional privilege attaches to the report.

5. I note that the Master inspected the report after preparation of his reasons. I have not done so. Having concluded that the defendant has not made out a basis for her claim for legal professional privilege, I do not consider that I have a reason to inspect the report.

6. The appeal is allowed. I will hear the parties on the question of costs.