Techfarm Pty Ltd v AXA Insurance Australia Ltd
[2004] WASC 166
TECHFARM PTY LTD -v- AXA INSURANCE AUSTRALIA LTD & ANOR [2004] WASC 166
| Link to Appeal : | [2005] WASCA 151 |
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2004] WASC 166 | |
| Case No: | CIV:2264/2000 | 17 MAY 2004 | |
| Coram: | MASTER NEWNES | 30/07/04 | |
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Application for inspection dismissed | ||
| B | |||
| PDF Version |
| Parties: | TECHFARM PTY LTD AXA INSURANCE AUSTRALIA LTD (ACN 007 214 155) OAMPS INSURANCE BROKERS LTD (ACN 005 543 920) |
Catchwords: | Practice and procedure Discovery Application for inspection Claim of legal professional privilege Turns on own facts |
Legislation: | Insurance Contracts Act 1984 (Cth) |
Case References: | Beneficial Finance Corporation v Price Waterhouse (1996) 68 SASR 19 Brambles Holding Ltd v WMC Engineering Services Pty Ltd (1995) 14 WAR 239 Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49 Grant v Downs (1976) 135 CLR 674 Mann v Camell (1999) 201 CLR 1 McIlwraith McEacham Operations Ltd & Anor v CE Heath Underwriters and Insurers (Australia) Pty Ltd & Ors (1995) 1 Qd R 363 Nickmar Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44 Waterford v Commonwealth (1987) 61 ALJR 350 Lovell v Western Australian Police Union & Anor, unreported; SCt of WA; Library No 930387; 30 June 1993 Microsoft Corporation & Ors v Ben Zhong Fan (2003) FCA 1026 Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
AXA INSURANCE AUSTRALIA LTD (ACN 007 214 155)
First Defendant
OAMPS INSURANCE BROKERS LTD (ACN 005 543 920)
Second Defendant
Catchwords:
Practice and procedure - Discovery - Application for inspection - Claim of legal professional privilege - Turns on own facts
Legislation:
Insurance Contracts Act 1984 (Cth)
(Page 2)
Result:
Application for inspection dismissed
Category: B
Representation:
Counsel:
Plaintiff : Mr G R Hancy
First Defendant : Mr R J L McCormack
Second Defendant : No appearance
Solicitors:
Plaintiff : Cahill Billington
First Defendant : Srdarov Richards Burton
Second Defendant : No appearance
Case(s) referred to in judgment(s):
Beneficial Finance Corporation v Price Waterhouse (1996) 68 SASR 19
Brambles Holding Ltd v WMC Engineering Services Pty Ltd (1995) 14 WAR 239
Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49
Grant v Downs (1976) 135 CLR 674
Mann v Camell (1999) 201 CLR 1
McIlwraith McEacham Operations Ltd & Anor v CE Heath Underwriters and Insurers (Australia) Pty Ltd & Ors (1995) 1 Qd R 363
Nickmar Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44
Waterford v Commonwealth (1987) 61 ALJR 350
Case(s) also cited:
Lovell v Western Australian Police Union & Anor, unreported; SCt of WA; Library No 930387; 30 June 1993
Microsoft Corporation & Ors v Ben Zhong Fan (2003) FCA 1026
Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332
(Page 3)
1 MASTER NEWNES: This is an application by the plaintiff for production for inspection of certain documents in respect of which the first defendant has claimed legal professional privilege.
2 The matters in issue in the proceedings are relatively straightforward. The plaintiff owned and operated a nursery. The first defendant is an insurer. The plaintiff says that, on or about 2 April 1997, it obtained a cover note for an ISR policy from the defendant to cover the period 21 March 1997 to 21 May 1997. By the cover note the first defendant agreed that, if the plaintiff's property at the nursery was lost or destroyed in that period, the first defendant would indemnify the plaintiff against that loss or damage by reinstatement, replacement or payment of the value of the lost property up to a maximum amount of $7.414 million and against loss of gross profit for a period of up to 12 months to a maximum of $3,985,000.
3 The defendant says the cover note was an interim cover note, based on a "nil" claims history and subject to the nature of the risk being investigated by the first defendant. That was varied on about 28 April 1997 by an agreement between the second defendant, on behalf of the plaintiff, and the first defendant. It was agreed that the cover note would expire on 29 April 1997 and a policy of insurance would be issued to take effect on 29 April 1997 for a period of 12 months. The agreement was subject to a condition that the plaintiff would provide a written proposal for the policy.
4 The plaintiff alleges that, on about 7 May 1997, approximately 70 per cent of the plaintiff's potted plants at the nursery were found to be dead or dying. The plaintiff says its loss is in the order of $1,457,515.
5 On about 12 May 1997, the plaintiff notified the first defendant of the alleged damage and claimed indemnity. On 5 September 1997, the first defendant denied liability and said it was cancelling the policy.
6 The plaintiff says the first defendant is liable to indemnify it under the policy and seeks a declaration to that effect and damages for breach of contract.
7 The first defendant denies that it is liable to indemnify the plaintiff and alleges the plaintiff failed to disclose to it before the contract of insurance was entered into certain facts that were, and which the plaintiff knew, or should have known, were material to the first defendant's decision to accept the risk. The first defendant says had it known of the undisclosed matters, it would not have entered into the policy.
(Page 4)
8 The first defendant says it was therefore entitled to, and did, avoid the policy on the ground that the plaintiff was in breach of its duty of utmost good faith to the first defendant.
9 In the alternative, the first defendant says that if it was not entitled to avoid the policy, the losses suffered by the plaintiff were within the mortality rate accepted for plants of the nature concerned.
10 The plaintiff denies any material non-disclosure on its part.
11 The first defendant has given discovery in the action. In Pt 2 of the first schedule to the list of documents, the first defendant has claimed privilege, in par 5, in respect of 10 investigation reports which it says "came into existence in anticipation of this litigation or once this litigation had commenced and for the dominant purpose of legal advice and use in these legal proceedings". It has also claimed privilege, in par 6, in respect of reports by Mr Don McDougall of Agricultural Loss Management Group dated 11 June 1997, Eileen Reed of Agriculture WA dated 21 May 1997, 17 June 1997 and 18 July 1997, P M Wood of Agriculture WA dated 24 July 1997, G F Ebell of the Chemistry Centre dated 12 June 1997 and Mr Tim Enright dated 23 June 1997, 29 June 1997 and 4 August 1997. It says the reports were "commissioned by the defendant, the defendant's solicitors or the defendant's insurers [and] came into existence in anticipation of this litigation or once this litigation had commenced and for the dominant purpose of legal advice and for use in these legal proceedings".
12 The plaintiff, by an application dated 14 November 2003 made to a case management Registrar, has sought an order that the first defendant produce for inspection all of the reports referred to in par 5, apart from two specific reports, and all of the reports referred to in par 6. By an amended application dated 16 April 2004, the plaintiff has also sought orders for inspection of "all documents on the file of Srdarov Richards Burton identified in paragraph 2 of the affidavit of Byron Winburn-Clarke, sworn 27 November 2002".
13 The affidavit of Mr Winburn-Clarke, a solicitor employed by the first defendant's solicitors, Srdarov Richards Burton, was filed in response to the plaintiff's application of 14 November 2003. In par 2 of that affidavit, Mr Winburn-Clarke says:
"I have reviewed the file contained at the offices of [Srdarov Richards Burton] and from a consideration of the contents
(Page 5)
- thereof make the statements of fact contained herein to the best of my knowledge, information and belief."
- Mr Winburn-Clarke then goes on to say that Srdarov Richards Burton (the "first defendant's solicitors") received instructions from the first defendant on about 16 May 1997, at which time the first defendant "advised that they suspected there had been non-disclosure in relation to the obtaining of the insurance policy and further that they suspected wilful damage of the insured property". Mr Winburn-Clarke mentions that legal proceedings were anticipated and refers to the instructions that the firm then gave to assessors to investigate the facts and prepare reports to be provided to the first defendant's solicitors, so they could provide legal advice to the first defendant. There is annexed to the affidavit a letter from the first defendant's solicitors to the assessors, Robertson & Co, to that effect and instructing Robertson & Co to liaise with a Tom Arkley and a Paul Garnett for that purpose.
14 In an affidavit sworn 12 November 2003, a director of the plaintiff, Mr Joseph Charbonneau, says that he first learned of the damage to the plants on 7 May 1997. He notified the plaintiff's insurance broker that day. On 16 May 1997, a Mr Atkinson of Robertson & Co came to the nursery to inspect the damage to the plants. Mr Charbonneau says he believes from discussions with him that Mr Atkinson had been appointed by the first defendant. Mr Charbonneau says that, on 3 June 1997, Mr Cook from Garnett & Associates came to the nursery and Mr Charbonneau gave him a statement. Mr Charbonneau says he believes from his discussions with Mr Cook that Mr Cook had been appointed by the first defendant. Mr Charbonneau says he had a further discussion with Mr Atkinson at the nursery that evening.
15 Mr Charbonneau says he believes he signed a claim form on behalf of the plaintiff on 6 June 1997.
16 On 9 June 1997, Mr Charbonneau received a facsimile from Mr Atkinson in which Mr Atkinson said Robertson & Co had been asked to carry out "without prejudice" inquiries by the insurer's solicitors. In the facsimile, Mr Atkinson said that a Mr Enright would be attending the nursery each day to maintain and report on the activities the plaintiff was undertaking to revitalise the plants, and a Ms Reed of the Agricultural Department had been asked to attend weekly to conduct random samples of plants and discarded soil. Mr Atkinson said that Ms Reed was also to act as the insurer's expert in dealing with the plants in accordance with the policy cover. Mr Charbonneau says Mr Atkinson told him that Robertson & Co's report had been issued to insurers and reports were awaited from
(Page 6)
- Ms Reed and Mr McDougall from Agricultural Loss Management. As soon as the reports were to hand, they would be submitted to the first defendant.
17 On 11 June 1997, the plaintiff received a further facsimile from Robertson & Co, among other things, dealing with certain matters raised by Ms Reed relating to the treatment of the plants and advising that any destruction of plants had to be monitored by Mr Enright.
18 According to Mr Charbonneau, a representative of the Agricultural Department came to the nursery in June and advised on the best way to treat the plants.
19 On 22 July 1997, in response to a facsimile from Mr Charbonneau, the first defendant wrote to say that it was awaiting final reports from the Agricultural Department and expected to be able to let the plaintiff have a decision in respect of the claim within 14 days of receiving the Agricultural Department's final report. The first defendant, apparently in response to a complaint by the plaintiff about advice the plaintiff had been given by the Department, said that the Department was employed as an independent consultant and that any concerns by the plaintiff as to their procedures should be conveyed to them. The facsimile went on, "we are satisfied as to the expertise and knowledge of the persons engaged on our behalf".
20 Mr Charbonneau says that, on 5 September 1997, he received through his insurance brokers a letter from the first defendant's solicitors alleging there had been material non-disclosure, in respects which were set out in the letter, when the policy cover was obtained and advising that the first defendant had elected to avoid the policy. Mr Charbonneau says this was the first occasion on which it had been suggested to the plaintiff that the first defendant would not indemnify the plaintiff under the policy or that there was any dispute as to the plaintiff's entitlement to indemnity.
21 The first defendant's solicitors were first instructed in the matter on 16 May 1997. The circumstances in which that came about are set out in an affidavit of Dawn Dorotich, a claims manager employed by the first defendant. Ms Dorotich says that, on 8 May 1997, she received a telephone call from the plaintiff's insurance broker to advise of circumstances concerning a possible claim by the plaintiff for "wilting orchids". Ms Dorotich says she was aware that the first defendant did not normally indemnify risks relating to growing plants. She therefore reviewed the cover and found that the policy had only been issued from
(Page 7)
- 29 April 1997 and that a proposal form had not yet been completed. Ms Dorotich says that as it was an unusual risk, it was outside the risks the first defendant usually covered, the first defendant had only been on risk for a very short time and the claim could be very large, as an experienced claims officer "alarm bells sounded". Ms Dorotich says she anticipated that she would need to take immediate steps to investigate the claim, including obtaining evidence for the defendants' lawyers so the first defendant could obtain legal advice in case her suspicions were not allayed or were borne out.
22 On 8 May 1997, Ms Dorotich engaged Mr Atkinson to go to the nursery and investigate the matter. Ms Dorotich told Mr Atkinson that the first defendant had only recently provided cover and it was an unusual risk for the first defendant to cover; that she had "alarm bells ringing".
23 Mr Atkinson rang Ms Dorotich on 16 May 1997 and told her that he had just left the nursery. Ms Dorotich says that, as a result of what Mr Atkinson told her, she had very serious concerns about the claim and considered she would need to instruct the first defendant's solicitors to advise and assist in relation to it. According to Ms Dorotich, as a result of what Mr Atkinson told her, she believed there was a real issue as to whether there had been non-disclosure of material facts when the plaintiff obtained the cover and she was fairly sure that any claim made by the plaintiff under the policy would be denied and legal proceedings would ensue. Ms Dorotich says that, in those circumstances, she prepared a note of her telephone conversation with Mr Atkinson with the intention of seeking legal advice on the proposed claim.
24 Ms Dorotich says she then telephoned the first defendant's solicitors that day. Ms Dorotich spoke to a Mr Freeman of that firm and informed him that the first defendant had provided insurance cover to the plaintiff, the occurrence needed to be investigated as she suspected there had been material non-disclosure when the policy was obtained. Ms Dorotich says she had concerns the matter would be the subject of litigation and wished the solicitors to engage loss adjusters to investigate the matter.
25 Mr Freeman says he then opened a file and that day wrote to Mr Atkinson of Robertson & Co, instructing him to investigate the circumstances of the claim so Srdarov Richards Burton could provide legal advice to the first defendant. A copy of that letter was annexed to the affidavit of Mr Winburn-Clarke.
(Page 8)
26 Mr Freeman says all the steps he took in the matter were on the basis that the dominant purpose was to provide legal advice to the first defendant.
27 Ms Dorotich says that all communications with the first defendant's solicitors were for the dominant purpose of obtaining legal advice and all documents which she created or caused to come into existence, including assessors and expert reports, were created with the intention that they be confidential and were for the dominant purpose of obtaining legal advice and assistance in relation to the proposed claim, which she anticipated would be declined and lead to litigation. It was her intention that all such communications and documents would be provided to the first defendant's lawyers to obtain legal advice and to gather evidence and information for that purpose.
28 The relevant legal principles were not seriously in dispute. Legal professional privilege attaches to communications and documents passing between a party's solicitor and third parties if made or prepared in anticipation of litigation, for the purposes of that 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: Grant v Downs (1976) 135 CLR 674 per Stephen, Mason and Murphy JJ at 688. The documents must come into existence for the dominant purpose of giving advice or for use in legal proceedings: Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49 at 73. The purpose for which the documents were brought into existence is a question of fact which may be revealed by the contents of the documents themselves, which the Court may inspect for that purpose: Grant v Downs (supra) at 689; Waterford v Commonwealth (1987) 61 ALJR 350 at 354 per Mason and Wilson JJ.
29 A party may challenge a claim for prejudice by adducing evidence that is capable of supporting the conclusion that the claim for privilege is mistaken or unfounded: Brambles Holding Ltd v WMC Engineering Services Pty Ltd (1995) 14 WAR 239 at 247. When a claim for privilege is so challenged, the onus lies on the party asserting the privilege to demonstrate that privilege exists: Grant v Downs at 689; McIlwraith McEacham Operations Ltd & Anor v CE Heath Underwriters and Insurers (Australia) Pty Ltd & Ors (1995) 1 Qd R 363 at 371.
30 The Court must look at all the circumstances objectively to determine whether privilege exists: Grant v Downs at 682 - 3. The Court is not bound by assertions made after the event that documents were
(Page 9)
- brought into existence for the purpose of obtaining legal advice or by any other verbal formulae or incantations: Grant v Downs at 689.
31 It is obvious that a document may come into existence for more than one purpose. Indeed that is implicit in the principle that the dominant purpose must be the giving of legal advice for use in legal proceedings. A loss adjustor's report, for instance, may have been created to find out what happened or for some other purpose associated with the routine commercial assessment or handling of the claim under the policy. In that connection, counsel for the plaintiff referred by way of illustration to Nickmar Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44, where part of a document of the kind normally prepared and communicated to the insurer for ordinary commercial purposes in connection with the assessment and management of the claim was held not to be privileged, although the maker had been instructed to investigate the matter through solicitors and part of the document was privileged. The privileged part was not available for inspection.
32 The plaintiff submitted that the evidence tended to contradict the first defendant's contention that the dominant purpose for which the reports were prepared was the provision of legal advice in connection with any contemplated litigation. Counsel for the plaintiff submitted that there was no evidence that, prior to 16 May 1997, the insurer possessed any evidence that objectively would give rise to a reasonable prospect of litigation. When Mr Atkinson of Robertson & Co attended at the nursery on 16 May 1997, he said he had been appointed by the insurer, not by solicitors. The letter of that date from the first defendant's solicitors to Robertson & Co did not suggest there was any reasonable prospect of litigation and the instructions were not confined to investigating particular issues in respect of which there might be a reasonable prospect of litigation.
33 It was argued on behalf of the plaintiff that the various experts had been appointed to carry out tasks which were routine tasks in the normal assessment and management of a claim of this nature. Thus, Ms Reed was engaged as an expert to declare plants dead in accordance with the policy cover and Mr Enright was instructed to attend the nursery and report, monitor and record activities undertaken to revitalise plants. That appears by a facsimile from Robertson & Co of 9 June 1997. Robertson & Co also referred in that facsimile to reports of Dr Arkley and to awaiting reports from Ms Reed and Mr McDougall, and gave no indication that the reports were required for any purpose other than the ordinary assessment of the claim.
(Page 10)
34 Counsel also drew attention to a facsimile of 11 June 1997 from Robertson & Co to Mr Charbonneau which referred to discussions with Ms Duffal and Ms Reed of the Department of Agriculture in connection with disease, and the monitoring of plants by Mr Enright, in the context of what might or might not be covered under the policy. Counsel pointed out that that facsimile was copied to the insurer and the broker, but not to the first defendant's solicitors. Nothing in it suggested that Robertson & Co was doing anything more than assessing the plaintiff's claim so the insurer could make a decision on indemnity.
35 Counsel for the plaintiff also relied on letters from Ms Dorotich to the plaintiff of 22 July and 22 August 1997 in which, once again, there was no suggestion of contemplated litigation, but rather it was suggested that the inquiries and reports that were being made were simply for the purpose of enabling the insurer to make a decision about the claim. Counsel also argued that Ms Dorotich's affidavit of 13 March 2001 was consistent with the fact that the investigations and inquiries were being conducted not only to obtain legal advice in relation to contemplated litigation, but also for the purposes of the normal assessment of the claim.
36 It was, therefore, submitted on behalf of the plaintiff that no litigation was in contemplation when the first defendant's solicitors engaged Robertson & Co on 16 May 1997 and that Robertson & Co had already been engaged by the insurer to inquire into the facts generally and for all relevant purposes. It was argued that it was also the case that any advice sought from the first defendant's solicitors was not confined to advice connected with the contemplated litigation. It was submitted that, to the extent reports were prepared for the purpose of obtaining advice that was not related to contemplated litigation, they fell outside the claim for privilege.
37 Counsel for the plaintiff argued that the first defendant was attempting to use a claim for privilege to claim blanket protection against disclosure of almost all of the information it acquired in the ordinary process of assessing the claim. Only the material that was actually created for the dominant purpose of being submitted to legal advisers for advice connected with the contemplated litigation was privileged and the rest had to be produced for inspection.
38 I did not understand counsel for the plaintiff to press the issue of inspection of the file of Srdarov Richards Burton. In any event, in my view there was no evidence adduced which was capable of displacing the claim for privilege for that material and there had been no waiver of
(Page 11)
- privilege by the first defendant by the reference to the file in Mr Winburn-Clarke's affidavit of 27 November 2003.
39 Nothing that has been put before me suggests that there are documents on the solicitor's file in respect of which the claim for privilege is mistaken or unfounded.
40 I do not consider that any question of waiver arises. The claim for waiver in the present case would appear to be a claim of an implied waiver as described in Mann v Camell (1999) 201 CLR 1 at 13. Such a waiver arises where a party who is otherwise able to claim legal professional privilege has engaged in conduct which is inconsistent with the maintenance of confidence in relation to the privileged documents.
41 The affidavit of Mr Winburn-Clarke was prepared and put forward for the purpose of resisting the plaintiff's application for inspection. Nothing in the conduct of the first defendant in filing and serving that affidavit is inconsistent with the confidentiality of the documents on the solicitor's file. No unfairness arises by denying the plaintiff access to the documents on the file. In my view, the affidavit does not open the way for the plaintiff to inspect the documents on the first defendant's solicitors' file. To hold otherwise would be to place unreasonable obstacles in the path of a party seeking to resist an application of this sort: see generally Beneficial Finance Corporation v Price Waterhouse (1996) 68 SASR 19.
42 Turning now to the application in respect of the specific documents for which legal professional privilege has been claimed, the first defendant submitted that the fact that the plaintiff did not realise that the first defendant considered there may be litigation arising out of the claim was irrelevant. It was similarly irrelevant that none of the assessors or agents appointed by the first defendant's solicitors mentioned the prospect of litigation to the plaintiff. The general statements by Garnett & Associates and Mr Atkinson as to the purpose of their inquiries were of no relevance.
43 It was submitted that the evidence clearly established that, by 16 May 1997, the first defendant contemplated the prospect of litigation over the claim. It was in the light of that contemplation that solicitors were instructed who, in turn, engaged the assessors and other experts to advise them so that they were in a position to provide legal advice to the first defendant. The contemplation of litigation by the first defendant was reasonable in circumstances where it was potentially a large claim, it
(Page 12)
- arose from a risk which the first defendant did not normally insure against and the claim arose only some nine days after the policy had been obtained and when no proposal had yet been completed.
44 I do not consider that prior to 16 May 1997 the first defendant had a reasonable contemplation of litigation. I accept that from the outset the first defendant, by Ms Dorotich, had suspicions about the claim and it was for that reason Mr Robertson was asked to go to the nursery to investigate the matter and to report back to Ms Dorotich.
45 I consider, however, that from 16 May 1997 there was a reasonable contemplation of litigation on the part of the first defendant. On that day, Ms Dorotich had a telephone conversation with Mr Robertson who had by then been to the nursery. In that conversation Mr Robertson informed Ms Dorotich of matters that suggested, among other things, there may have been material non-disclosure by the plaintiff that would entitle the first defendant to avoid the policy. I accept that, following the telephone conversation with Mr Robertson, Ms Dorotich believed there was a real issue as to whether there had been material non-disclosure by the plaintiff, and particularly given her suspicions about the claim, that it was likely indemnity would be refused, leading to litigation. In view of the amount of the claim alone, the prospect of litigation if the claim were refused was clearly a reasonable one.
46 It was in those circumstances Ms Dorotich instructed the first defendant's solicitors and asked them to engage Robertson & Co to arrange an investigation of the claim so that she could obtain legal advice on it. The reports over which privilege were claimed in par 5 of Pt 2 of the list of documents were subsequently prepared by Robertson & Co and submitted to the first defendant's solicitors, and the reports referred to in par 6 of Pt 2 were commissioned either by Robertson & Co for the purposes of their reports or by the first defendant's solicitors direct.
47 The issue of non-disclosure, of course, potentially raised, apart from the question of whether or not there had in fact been material non-disclosure by the plaintiff, possible defences of the plaintiff to any denial of indemnity on that ground arising under the provisions of the Insurance Contracts Act 1984 (Cth).
48 While it is the case that the prospect of litigation was not raised with the plaintiff by the first defendant or its solicitors, or any of those engaged to assist in the investigation of the claim, I do not consider that that is necessarily inconsistent with the reasonable contemplation of the first
(Page 13)
- defendant that the claim would be refused and that litigation would follow.
49 I was provided by counsel for the first defendant with copies of the documents over which privilege is claimed so that if I considered it appropriate to do so, I could inspect the documents. Counsel for the plaintiff urged that I should not be reluctant to do so and referred to Grant v Downs (supra) at 689 where Stephen and Mason JJ said:
"The court has power to inspect the documents for itself, a power which has perhaps been exercised too sparingly in the past, springing possibly from a misplaced reluctance to go behind the formal claim of privilege."
50 Counsel for the first defendant argued that I should only look at the documents once I was satisfied the plaintiff had adduced evidence which was capable of displacing the claim for privilege.
51 I accept that no purpose would be served by inspecting the documents in a case where no credible challenge had been made to the claim for privilege. If no evidence capable of displacing the claim for privilege is adduced, that is the end of the matter and there would be no point in the Court inspecting the documents.
52 It was submitted on behalf of the plaintiff first, that a credible challenge had been made and secondly, that it appeared at least part of the work that some of the experts had been required to undertake was of a relatively routine claims handling nature and to the extent their reports contained material dealing with such matters that material was not privileged from production. Counsel referred, for instance, to a facsimile from Robertson & Co of 9 June 1997 from which it appears that Ms Reed was engaged as an expert to declare plants dead in accordance with the policy cover and Mr Enright was instructed to attend the nursery and report, monitor and record activities undertaken to revitalise plants. Those activities were not directed to matters touching upon any contemplated litigation. As I understood the submission, it was to be inferred that the reports submitted by Ms Reed and Mr Enright dealt, at least in part, with such matters.
53 In my view, whilst from 16 May 1997 the first defendant had a reasonable contemplation of litigation, it does not necessarily follow that all of the reports subsequently produced in connection with the claim are subject to legal professional privilege, even where those reports were commissioned by the first defendant's solicitors. The question in each
(Page 14)
- case is whether the dominant purpose for which the document came into existence was the giving of legal advice or for use in legal proceedings. I also accept that where a document otherwise prepared for such a purpose contains discrete, severable material, the dominant purpose of which was not the provision of legal advice or for use in legal proceedings, that part of the document would not be the subject of legal professional privilege, even if it were obtained by solicitors advising the insurer in respect of the claim. Accordingly, production for inspection should be ordered of the non-privileged part. It should not, however, be ordered where the non-privileged material cannot readily be segregated from the privileged material.
54 In the circumstances, I considered it appropriate that I review the documents for which privilege has been claimed. The reports by Robertson & Co are in each case addressed to the first defendant's solicitors and deal with matters that, in my view, are relevant to advice in connection with the contemplated litigation. The reports enumerated in par 6 of Pt 2 of the first defendant's list of documents are in each case addressed to Robertson & Co, as was clearly contemplated by the arrangement that the latter would co-ordinate the investigation. The reports are variously referred to and relied upon in the reports by Robertson & Co to the first defendant's solicitors. I do not consider that the content of the documents for which privilege has been claimed goes outside material that is properly the subject of legal professional privilege.
55 I consider that the claims for privilege by the first defendant are made out and accordingly I would refuse the plaintiff's application.
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