FEDERAL COURT OF AUSTRALIA

Ensham Resources Pty Limited v Aioi Insurance Company Limited

[2012] FCAFC 191

THE COURT ORDERS THAT:

1.    The application for leave to appeal against the orders of Cowdroy J made 6 July 2012 be refused.

2.    The applicant pay the respondents’ costs of the application.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

LANDER AND JAGOT JJ:

1    This is an application for leave to appeal from an interlocutory order made by a judge of this Court dismissing the applicant’s application to inspect documents for which the respondents had claimed legal professional privilege.

2    This proceeding, which is for indemnity under a contract of insurance, was started on 24 September 2010.

3    The loss which was occasioned by the applicant occurred between 17 and 20 January 2008 when its mine site was flooded.

4    On 22 January 2008, the applicant notified the respondents of a potential claim. The contract of insurance under which the claim was made identified “Crawford & Company” (Crawford) as the usual loss adjuster “to assess and report on the Insured’s claim to both the lead (insurer’s) office and the brokers”.

5    Also on 22 January 2008, Crawford provided a report to the first respondent in relation to the loss occasioned by the applicant. That report has been discovered and been made available for inspection.

6    On 1 February 2008, Mr Satoshi Kodaira, the first respondent’s manager, emailed Mr Peter Stockdale of King & Wood Mallesons (Mallesons) retaining Mallesons and Mr Stockdale to work on matters relating to the Ensham flood.

7    On 7 February 2008, Mr Stockdale emailed his letter of retainer to Mr Kodaira.

8    On 12 February 2008, Mr Kodaira emailed Mr Stockdale advising that “[o]ur urgent assignment is to set up a reserve for our fiscal year end. i.e. March”.

9    On 13 February 2008, Mr Stockdale spoke to Mr Bickle, a loss adjuster employed by Crawford. On the same day, Mr Stockdale made a file note of that conversation:

I spoken (sic) to Greg Bickle.

He said there were a number of issues arising:

1.    He thinks the removal of debris clause is the only one which attaches to the risk. It is significant, however, whether the inflow of water was caused by damage to insured property. The relevant insured property would have the breach at the levy bank but it is very unclear whether this caused the water to flow into the mine or, rather, whether it broke after the water had flooded in the mine in which case it was not the cause of the damage.

2.    Moreover, it seems that the levy bank is not itself on the asset register and therefore part of the insured property.

3.    Next he noted that there was [a] sub limit of $5 million on the removal of debris clause. The cost of “de-watering” the mine will cost something in the order of $10 million and to remove the mud which has accumulated at the bottom of the mine will cost at least another $50 million. In all likelihood, therefore, even on the removal of debris head of claim the loss will be something in the order of $60 million of which only $5 million will be covered.

4.    Perhaps in response to Marsh [the applicant’s insurance broker] in Melbourne [Ensham] have argued that the loss is actually a section 2 loss and that the costs of empting (sic) the mine and clearing it up fall in as part of the “increased cost of working”. Greg has some difficulty with this because he says that there is no material damage to the coal which remains in situ albeit under water.

5.    On the basis of these problems in Greg’s view it was necessary for any reporting issue to be the subject of privilege and I therefore agree to recommend to our client that his retainer from the client be terminated and replaced by one from the firm.

…

10    Also on 13 February 2008, Mr Stockdale emailed Mr Kodaira:

Whilst the facts are much too uncertain to draw any even preliminary conclusions … You will still, of course, receive (the loss adjuster’s) report but it will technically be addressed to us.

11    That same day, Mr Kodaira emailed Mr Stockdale:

As I wrote in my previous email, our current theme is to set up a reserve …

12    On 18 February 2008, Mr Stockdale emailed Mr Kodaira attaching a letter of retainer for Mr Bickle. In that email, he wrote:

The letter is written to refer to the possibility of litigation. Whilst we would obviously hope this can be avoided, the retainer needs to outline this as a possibility in order to maximise the prospects of establishing a claim for privilege.

13    On 19 February 2008, Mr Stockdale sent the letter of retainer to Mr Bickle. Mr Stockdale’s evidence was that at that time he had formed the view that litigation was likely.

14    On 5 March 2008, Mr Stockdale received a second report from Crawford for which the respondents claimed legal professional privilege.

15    On 12 March 2008, Mr Stockdale received a third report for which a claim of legal professional privilege was made but not pressed.

16    On 9 April 2008, Mr Stockdale received a fourth report for which legal professional privilege was claimed.

17    On 22 April 2008, 22 May 2008 and 7 July 2008, Mr Stockdale received the fifth, sixth and seventh reports, respectively, for which a claim of legal professional privilege was made but not pressed.

18    On 1 September 2008, Mr Stockdale received Crawford’s eighth report for which a claim for legal professional privilege has been made in part. On 3 September 2008, a ninth report was provided for which a claim for legal professional privilege has been made. On 26 September 2008, Crawford provided their last report, the tenth report, for which legal professional privilege has been claimed in part.

19    Between 20 January 2008 and 2 June 2010, the applicant had submitted 21 progress claims to the respondents, the last of which was submitted on 2 June 2010.

20    On 21 September 2010, the respondents declined to indemnify the applicant. On 24 September 2010, the applicant started this proceeding.

21    On 16 November 2011, the applicant filed an interlocutory application seeking to inspect the documents listed in Part 2 of the List of Documents filed on 30 August 2011, so that the Court could decide the validity of the respondents’ objection to production based upon the respondents’ claim that the documents were privileged from production.

22    The applicant also sought an order that the applicant be granted access to each of the documents listed in Part 2 of the List of Documents for the purpose of inspection and copying.

23    The application was opposed.

24    The respondents said that at a directions hearing on 1 February 2012, before Emmett J, who is to be the trial judge but was not the judge who made the orders of which complaint is made, an issue was raised whether all of the Crawford reports were responsive to Mr Stockdale’s instructions. The respondents’ senior counsel undertook to have the reports reviewed to see if any of the reports or parts of the reports were non-responsive.

25    On 6 February 2012, the respondents wrote to the applicant advising of the reports and parts of the reports for which the claim of legal professional privilege in the communications contained in those reports was no longer pressed.

26    During the hearing of this application for leave to appeal, there was some debate as to why the respondents had claimed and abandoned a claim for legal professional privilege for some of Crawford’s reports and some parts of Crawford’s other reports.

27    The respondents did not waive legal professional privilege. They abandoned, in part, their claim. The respondents’ conduct was entirely proper. By abandoning the claims in respect to some communications they thereby narrowed the issues before the primary judge. Such conduct is consistent with a party’s obligations in litigation in this Court: s 37N of the Federal Court of Australia Act 1976 (Cth).

28    Nothing can be inferred from the respondents’ conduct and indeed, to be fair to the applicant, nothing was sought to be inferred.

29    The applicant could not, and did not, claim that by not claiming legal professional privilege in respect of part of the document, legal professional privilege could not be maintained in respect of the other part of the document. That is because legal professional privilege relates to the communications in a document, not to the document itself.

30    Professor Dal Pont writes in “Lawyers’ Professional Responsibility”, 5th edition, in Chapter 11 at 369 [11.70];

Legal professional privilege applies to “communications”, not to documents as such, although the typical communication is in written form. It covers notes, drafts, charts, diagrams, photographs, spreadsheets and the like prepared by a client as a way of marshalling information to be the subject of confidential communication to her or his lawyers. Privileged communications may be oral or mechanically, electronically or video recorded, provided they meet the other requirements of the privilege. The definition of “document” for the purposes of the uniform evidence law is similarly wide.

(Footnotes omitted)

31    In Baker v Campbell (1983) 153 CLR 52, Gibbs CJ said at 60:

The nature of legal professional privilege is described as follows in Halsbury’s Laws of England (4th ed.), vol. 13, par. 71:

“… communications made to and from a legal adviser for the purpose of obtaining legal advice and assistance are protected from disclosure in the course of legal proceedings, both during discovery and at the trial. … Any other communications as are reasonably necessary in order that the legal advice may be safely and sufficiently obtained are also protected, but in the case of communications to or from a non-professional agent or third party, such as a person who witnessed some event, the privilege only arises if litigation is threatened or contemplated.”

32    Justice Deane said at 112:

This privilege, ordinarily described as legal professional privilege, protects a person from disclosure of oral or written confidential communications, between himself and his solicitor or barrister, made or brought into existence for the sole purpose of seeking or giving advice or for the sole purpose of use in existing or anticipated litigation (see Grant v. Downs; O’Reilly v. State Bank of Victoria Commissioners and, as to the absence of any requirement that advice be in the course of or anticipation of litigation, Foster v. Hall; Greenough v. Gaskell; per Brett M.R. in Pearce v. Foster). It is the privilege of the client and protects him from being compelled to make disclosure of such communications either in testimony or by the production of documents for inspection.

(Footnotes omitted)

33    Justice Dawson said at 122:

Legal professional privilege attaches only to communications made for the purpose of giving or receiving advice or for use in existing or anticipated litigation. Moreover, if the communication in question is in the form of a document submitted by a client to his solicitor for use in existing or anticipated litigation, privilege will attach to it only if it comes into existence solely for that purpose.

34    It does not matter whether legal professional privilege is based on advice or litigation privilege. The privilege attaches to the communication.

35    When the communication is contained in a document and the document is brought into existence for the dominant purpose of anticipated legal proceedings, the document will be subject to legal professional privilege. In some cases, the whole of the document will be the communication; for example, if a solicitor requisitions an expert’s report from an expert in relation to an issue in litigation that is reasonably anticipated, the whole of that report will be privileged. That is because the document is the communication. Sometimes the document might not be the whole of the communication, but the communication will be included in the document. In that case, the party seeking to rely on legal professional privilege must confine the claim to the relevant communication in the document. When a document that has been brought into existence for the dominant purpose of anticipated litigation is subsequently discovered in that litigation and legal professional privilege is claimed, it is usually assumed the whole document was brought into existence for that dominant purpose. But if it is only certain communications in the document that satisfy that purpose, it is only those communications that are protected.

36    It does not matter in this application, because it was not argued by the applicant that the respondents’ conduct in writing the letter of 6 February 2012 meant that other of the Crawford reports or parts of the Crawford reports lost their protection. Nor was it suggested that any inference could arise from that conduct. The respondents’ conduct represented in the letter of 6 February 2012 meant only that the primary judge’s inquiry was narrowed.

37    On 19 June 2012, the first day of the hearing before the primary judge, the applicant served a notice to produce upon the respondents (incorrectly dated 19 June 2011) seeking the following documents:

(1)    All documents recording communications between Mallesons Stephen Jaques and the respondents (through their servants, agents or otherwise) between about 1 February 2008 and about 19 February 2008 in relation to:

(a)    terminating the previous appointment made on about 22 January 2008 of Mr Greg Bickle of Crawfords Loss Adjusters;

(b)    concerns held by Mallesons Stephen Jaques that there were coverage issues emerging in the period from about 1 February 2008 and about 19 February 2008;

(c)    the scope of the retainer between Mallesons Stephen Jaques and the respondents.

38    At the hearing before the primary judge, the documents for which legal professional privilege was claimed were the second, fourth, eighth, ninth and tenth reports, and in respect of the eighth and tenth reports only part.

39    Those reports were provided to the primary judge who read them and set out generally their contents in his reasons at [30]-[42]:

Report No 2

Report No 2 is dated 5 March 2008 and refers to preliminary advice of 22 January 2008, saying that Crawford is now in a position to report comprehensively on the matter, notwithstanding the difficulties that arise through the uncertainty as to the damage that has been sustained to Drag Line 1 (‘DL1’). The report begins by describing the physical situation of the mine, referring to the Nagoa River, the levee banks constructed to contain the flow of the river during periods of flood and the fact that the Nagoa River is fed by two catchment areas, being the Theresa Creek system, north-west of Ensham, and the Fairbairn Dam catchment, west of Ensham.

Report No 2 sets out a relatively detailed description of the mechanism of the flooding, including conjectures as to its timing. It states that the timeline for the event was still being pieced together. Views are expressed as to whether there is causal connection between levee bank failure and the flooding of Pit B and Pit C.

Report No 2 observes that, in connection with the initial advice of 22 January 2008, Crawford had been given information as to whether the levee banks around Pits B, C and D were included in the asset register as earthworks for the Nagoa River causeway. It states that the policy documents appear silent on the extent of property insured and in particular the property listed within the asset schedule.

Report No 2 says that until such times as Pit B has been dewatered to a sufficient extent to enable an inspection of DL1, the full extent of the damage and the time necessary to reinstate it can be no more than an estimate.

Report No 2 refers to Appendix H, a document produced by Ensham for the purposes of a presentation to the Environmental Protection Agency for the purposes of seeking approvals for the discharge of water from the open cut pits into the Nagoa River. Report No 2 says that the document is a summary of matters already digested and assumption as to what might be found after dewatering. It contains estimated costs of dewatering.

Report No 2 further states that mining consultants have been instructed and instructions were being sought as to the appointment of a hydrologist.

Report No 4

Report No 4 is dated 9 April 2008 and advises the current position with regard to the recovery of DL1, together with other issues raised by Mallesons.

Section 2 of Report No 4, which is headed GROSS PROTECTION DECLARATION, refers to paragraphs of Report No 2 that reflected upon an expected change in the value of gross product as compared with the declared value for gross profit. An email from Ensham is attached providing an explanation as to the differences.

Section 3 of Report No 4, which is headed MATERIAL DAMAGE, states that the pumping activities have continued to lower the water level within Pits A and B. Access to DL1 will assist in the assessment as to the extent of damage and the time frame to reinstate DL1, which could be influenced by the level of silt built up.

Section 4, which is headed GENERAL, says that a copy of the current recovery plan for the mine is expected within a week and that, on its receipt, Crawford will be in a position to comment on the appropriateness of the intended activities and may be in a position to make a further estimate of the Section 2 loss. A brief report from Mine Planning & Management Pty Ltd is attached to Report No 4.

Report No 8

Report No 8 is dated 1 September 2008 and reports on the current position with the reinstatement of DL1, it having been recovered from Pit B where it was flooded. Report No 8 refers to the dewatering of Pit B so as to expose DL1 as having been ‘progressive but aggressive activity’, involving the procurement and installation of numerous pumps and waterlines. It deals specifically with dewatering and DL1 Recovery. It attaches a number of photographs and contains a commentary on those photographs.

Report No 9

Report No 9 is dated 3 September 2008 and it is entirely redacted apart from the heading BUSINESS INTERRUPTION RESERVE. In broad terms, the report considers the various elements of loss that the applicant has suffered as a result of the flood.

Report No 10

Report No 10 is dated 26 September 2008. In broad terms, the report discusses the steps taken to get the mine back into production and the costs associated with those steps. There is discussion about the costs of arranging various replacement components.

(Emphasis in original)

40    The primary judge found that the reports were prepared when litigation was reasonably anticipated. He also found that the documents were prepared for the dominant purpose of providing assistance or advice in relation to those anticipated proceedings: Esso Australia Resources Limited v Commissioner of Taxation of the Commonwealth of Australia (1999) 201 CLR 49 (Esso).

41    The applicant on this application for leave to appeal has filed a draft notice of appeal in accordance with rule 35.12(2)(d) of the Federal Court Rules 2011.

42    The draft notice of appeal identifies the following grounds of appeal:

1.    The trial judge erred in finding that the respondents had discharged their onus of proving that the dominant purpose for the creation of the reports was to assist in contemplated litigation in circumstances where:

a.    it was the insurers who originally retained the loss adjuster, and commissioned the loss adjuster’s reports in the first instance (Judgment, [5], [14]);

b.    the primary judge ought to have found that the loss adjuster’s reports would have been produced whether or not the respondents’ solicitors requested them;

c.    the contemporaneous correspondence between the solicitor, the insurers and the loss adjuster “reveals a deliberate attempt by the solicitors for the insurer to attract legal professional privilege to the … reports … particularly evident … in the email from [the solicitor to the insurer that] explains the reasons for replacing [the insurers] retainer of [the loss adjuster] with that of [the solicitor]” (Judgment, [45]).

2.    The primary judge erred in ruling that the fact that the respondent insurers were subject to a duty to act towards the applicant insured with the utmost good faith is not relevant to the question of whether each loss adjuster’s report was created with the dominant purpose of use in litigation and therefore whether each report is privileged from inspection: see Transcript, 19 June 2012, page 21 line 18 to page 22 line 14.

3.    The primary judge erred by determining the purpose of each loss adjuster’s report solely by reference to the state of mind of the respondent insurers’ solicitor and without reference to the purpose of the loss adjuster or the insurers.

(Emphasis in original)

43    The grounds of appeal limit the applicant’s complaint to the primary judge’s conclusion that the dominant purpose for the creation of the reports was to assist in contemplated litigation.

44    There is no complaint about his Honour’s finding that the reports were prepared in contemplation of litigation. The complaint is limited to the question of purpose.

45    Legal professional privilege was founded in the common law, the purpose of which is to protect confidential communications made between a legal practitioner and the legal practitioner’s client and in some circumstances between third parties.

46    The privilege applies to communications that are oral, written or electronically or mechanically recorded and stored, and the privilege extends to copies of such documents: Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 (Propend).

47    The privilege exists for the benefit of the client, not the lawyer: Propend at 570.

48    The Evidence Act 1995 (Cth) (Evidence Act) recognises a privilege, which it describes as “client legal privilege”: Part 3.10, Division 1.

49    The Evidence Act, however, has no application in relation to this application, but the issues on this application must be determined in accordance with the common law: Esso per Gleeson CJ, Gaudron and Gummow JJ at 59.

50    The aspect of legal professional privilege with which this application is concerned is litigation privilege, which covers certain confidential communications passing between a client and the client’s lawyer or a third party, or the client’s lawyer and a third party.

51    The privilege exists when the communication sought to be protected was created, or a document containing such a communication was created, for the dominant purpose of use in existing or reasonably anticipated judicial or quasi-judicial proceedings: Esso.

52    Whether or not litigation is reasonably contemplated is a question of fact to be determined objectively: Grant v Downs (1976) 135 CLR 674 at 692 (Grant v Downs); Nickmar Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44 at 55.

53    In a determination whether litigation was reasonably anticipated, the subjective views of the parties may well be relevant, but they are not determinative. The question is to be assessed by reference to all of the surrounding circumstances: Visy Industries Holdings Pty Ltd v Australian Competition and Consumer Commission (2007) 161 FCR 122.

54    There is no decision of the High Court as to what “reasonably anticipated” or “reasonably contemplated” means in the context of a claim for legal professional privilege. In Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526 (ACCC v Safeway) at 559, Goldberg J stated that “reasonably anticipated” meant that such proceedings will more probably than not be commenced.

55    In Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332 (Mitsubishi Electric), Batt JA said that the test was that “there must be a real prospect of litigation, as distinct from a mere possibility, but it does not have to be more likely than not”: at [19].

56    The decision in Mitsubishi Electric has been followed by a number of judges in this Court: Microsoft Corporation v Ben Zhong Fan [2003] FCA 1026; Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd [2005] FCA 503; Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 2) (2011) 283 ALR 299; Australian Competition and Consumer Commission v Prysmian Cavi E Sistemi Energia SRL (formerly Pirelli Cavi E Sistemi Energia SPA) (No 2) (2012) 287 ALR 760. It has also been followed by a judge of the Supreme Court of New South Wales in Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380.

57    In our opinion, the test propounded by Batt JA should be followed by this Court.

58    The circumstances in which leave to appeal could be granted from an interlocutory decision are well known: Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 (Decor). The applicant must establish that the decision at first instance is attended with sufficient doubt to warrant it being reconsidered by the Full Court and that substantial injustice would result if leave were refused supposing the decision at first instance to be wrong. Both limbs must be satisfied.

59    The Court is cautious about granting leave to appeal in what are matters of practice and procedure: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 citing with approval In re the Will of FB Gilbert (deceased) (1946) 46 SR(NSW) 318 at 323.

60    For the reasons that follow, in our opinion, the applicant has not made out either limb of the test in Decor and the application for leave to appeal must be refused.

61    The applicant complained on this application and before the primary judge that Mr Stockdale had deliberately attempted to attract legal professional privilege by terminating the retainer between the respondents and Crawford, and replacing that retainer with a retainer from Mallesons.

62    The primary judge accepted that contention. He described the solicitors as indulging in “self-serving statements referring to a potential claim for privilege contained in the email from Mr Stockdale to Mr Kodaira dated 18 January 2008 (sic)”.

63    We accept that Mr Stockdale took steps to put in place a regime which would maximise the respondents’ claim for legal professional privilege in respect of communications emanating from Crawford, but that, in our opinion, does not assist in determining whether the particular reports under consideration were created for the dominant purpose of providing advice to the respondents in respect of reasonably anticipated litigation. That will be determined objectively.

64    The applicant contended that these reports were prepared for purposes other than for the purpose of the respondents obtaining legal advice. The applicant contended that the primary judge was wrong to rely upon the evidence of Mr Stockdale as to the reason why the reports were commissioned. The applicant contended that regard should have been made to the respondents’ purpose in the creation of the reports, as well as the solicitor’s purpose. In that respect, it was argued that the insurers’ commissioning of the reports was for the purpose of the insurers setting an estimate on potential liability under the contract of insurance and for conducting their business.

65    In those circumstances, it could not be said that the documents were created for the dominant purpose of the respondents obtaining legal advice.

66    Further, the applicant contended that the primary judge erred in ruling during the currency of the application that the respondents’ duty to act towards the applicant with the utmost good faith, as required by the Insurance Contracts Act 1984 (Cth) (Insurance Contracts Act), was not relevant to the question whether each loss adjuster’s report was created with the dominant purpose of use in litigation.

67    The last point can be disposed of very quickly. It is right, as the applicant contended, that a contract of insurance is a contract based on the utmost good faith and there is implied in such a contract an obligation, which requires each party to the contract of insurance to act towards the other, in respect to any matter arising under or in relation to it, with the utmost good faith: s 13 of the Insurance Contracts Act.

68    That obligation continues to operate upon the party in any litigation arising under the contract of insurance: Silbermann v CGU Insurance Ltd (2003) 57 NSWLR 469 at 482.

69    The applicant contended that if the respondents reasonably anticipated a legal proceeding as early as February 2008, the respondents were under an obligation to inform the applicant.

70    We do not agree that an insurer has to advise an insured that indemnity may be declined before the insurer decides to refuse indemnity, but where the insurer considers that there is a probability that the insurer will decline indemnity. In other words, an insurer is not under an obligation to advise the insured that the insurer is considering declining indemnity.

71    But even if we are wrong about that, the submission, it seems, takes the matter nowhere. If the insurer is under such an obligation and has failed to do so, it does not follow that the proceedings could not be objectively said to be reasonably anticipated at any particular time.

72    The applicant has not shown the primary judge to have been wrong in ruling that the question, which he disallowed, was irrelevant.

73    In Grant v Downs, Barwick CJ said at 677:

[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, of 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.

74    In AWB Ltd v Cole (2006) 152 FCR 382 (AWB v Cole), Young J said at 412, in following a decision of Federal Commissioner of Taxation v Pratt Holdings Pty Ltd (2005) 60 ATR 466 (FCT v Pratt), that the evidence of the intention of the document’s creator or the person who authorised or procured the creation of the document was not necessarily conclusive of the purpose. He said, after referring to a range of authorities:

As these cases make clear, it may be necessary to examine the evidence concerning the purpose of other persons involved in the hierarchy of decision-making or consultation that lead to the creation of the document and its subsequent communication.

75    Goldberg J reasoned similarly in ACCC v Safeway at 545.

76    In Hartogen Energy Ltd (in liq) v The Australian Gaslight Company (1992) 36 FCR 557, Gummow J said at 568-569:

The purpose for which a document is brought into existence is a question of fact … The purpose will ordinarily be that of the maker of the document, but this will not always be the case. In Laurenson v Wellington City Corporation [1927] NZLR 510, Skerrett CJ looked to the person who “calls into existence documents in the bona fide belief that litigation will probably ensue …”. And the phrase I have emphasised … is apt to describe the situations where, for example, solicitors commission the provision of a technical report; the relevant intention will not be that of the author but the solicitor.

77    It may be accepted, as the applicant contended, that the purpose for which a document is created may not be divined solely by reference to the person who sought the creation of the document. It may be that other purposes are relevant in determining whether the dominant purpose for the creation of the document was for use in litigation that was reasonably anticipated. That is always a matter of fact. Once the purpose or purposes for the creation of the document have been established, the inquiry must be as to whether the stated purpose by the relevant witness can be accepted because, as Young J said in AWB v Cole and Kenny J said in FCT v Pratt, the evidence of the person whose purpose is relevant is not necessarily conclusive of that purpose. Whether that purpose is as the person claims, will be determined not only by that person’s evidence but all of the relevant surrounding facts and circumstances.

78    In this case, however, the evidence supported his Honour’s finding that the relevant purpose was that of Mr Stockdale. There was no evidence that the respondents played any part in commissioning the reports or had any purpose for the creation of the reports other than the purpose identified by Mr Stockdale.

79    Nor is there any evidence that Crawford or Mr Bickle had any purpose in creating the reports other than for the purpose which was told to them by Mr Stockdale.

80    We can see no error in the way in which his Honour approached this inquiry on the facts which were before his Honour, and his Honour was right to determine objectively on the evidence of Mr Stockdale and the other facts and circumstances whether the purpose for which these documents were created was that stated to be by Mr Stockdale.

81    The respondents identified in their written submissions the uncontested evidence about the commissioning of the Crawford reports, which was:

(a)    Mr Stockdale was initially retained by the insurers on about 1 February 2008 to assist them in forming a view, along with Mr Bickle, about an accurate estimate of the exposure they had to the claim by the end of March 2008 (T11 lines 13-20, in these submissions all transcript references are to the transcript of 19 June 2012 at Appeal Book Part B, tab 57);

(b)    By mid-February Mr Stockdale had a real apprehension that there would be a dispute about the terms of the policy, and the extent to which it responded to a very significant claim, and that led to his conclusion that there was a reasonable prospect of litigation resulting between the parties (T23 lines 26-32);

(c)    By 19 February 2008, after conversations with Mr Bickle, Mr Stockdale formed the view that litigation was likely (T12 lines 6-10, lines 16-21, lines 38-36 and lines 46-47; T14 lines 11-14; T15 lines 7-10; T16 lines 21-22 and lines 29-30; T20 line 43-T21 line 5; Mr Stockdale’s file note of discussions with Mr Bickle on 13 February 2008 (Appeal Book Part B, Tab 32) and email of 18 February 2008 (Appeal Book Part B; tab 31);

(d)    Mr Stockdale advised his clients that it seemed likely that there would be significant coverage issues (T16 lines 37-43 and Mr Stockdale’s emails to Mr Kodaira dated 13 February 2008 and 18 February 2008 (Appeal Book Part B Tabs 31 and 33) and sought instructions from his clients as to the revised scope of his retainer so as to consider policy issues (T13 lines 7-15);

(e)    In light of the likelihood of dispute about the matters set out above, Mr Stockdale advised his clients that he retain Mr Bickle directly (T16 lines 37-43 and Mr Stockdale’s emails to Mr Kodaira dated 13 February 2008 and 18 February 2008 (Appeal Book Part B, tabs 31 and 33));

(f)    In accordance with his instructions, on 19 February 2008, Mr Stockdale retained Mr Bickle (letter of instruction being Appeal Book Part B, tab 24). That letter refers to issues that are likely to be contentious between the parties and that (sic) the likelihood of litigation; and

(g)    From 19 February 2008, following the 19 February 2008 letter, Crawford was acting as an investigation agent for KWM. Mr Bickle was informing KWM of the issues relating to quantum so that KWM could provide advice to the respondents (T29 line 45-T30 line 2; T34 lines 8-16).

82    In our opinion, the applicant has not demonstrated any error.

83    In our opinion, the applicant has not made out the first limb of Decor and established that his Honour’s decision is attended with sufficient doubt to warrant the decision being reconsidered by the Full Court.

84    For that reason, we would refuse the application for leave to appeal.

85    However, in case we are wrong about that, we should also deal with the second limb.

86    We have had the opportunity of reading the documents for which legal professional privilege has been claimed.

87    We are not satisfied that if the applicant could make out the first limb of Decor that the applicant would suffer substantial injustice if leave were refused supposing the decision at first instance to be wrong.

88    In our opinion, the application for leave to appeal should be refused.

89    The applicant should pay the respondents’ costs of the application.

Associate:

Dated:    21 December 2012

REASONS FOR JUDGMENT

BUCHANAN J:

The nature of the application

90    This application for leave to appeal concerns a claim for privilege over documents which were asserted to have been provided to a solicitor by a third party “in reasonable anticipation of litigation”. The privilege relied on in the present case is often referred to as “litigation” privilege to distinguish it from “advice” privilege, which I shall refer to as client legal privilege (as it does not only concern the seeking or provision of advice as such but extends generally to confidential communications between lawyers and their clients). By contrast with client legal privilege, where the emphasis is on communications between lawyers and their clients, in claims about litigation privilege, as the discussion in the cases referred to hereunder shows, the emphasis is frequently on documents, often reports of one kind or another, sometimes from experts. In the present case the claim for litigation privilege which was upheld by the primary judge concerned reports provided by an insurance loss adjuster.

91    The interlocutory ruling of the primary judge which upheld the claims for privilege finally pressed is the main subject of this application for leave to appeal.

Background

92    On 19 and 20 January 2008 floodwaters entered the open cut mine operated by the applicant in central Queensland. They flooded the mine and submerged a dragline. The mine, and at least certain of its equipment, was insured by the respondents (I shall refer to the respondents and the insurers interchangeably in these reasons). Insurance cover for property damage and business interruption was $759,370,000 for any one loss, or series of losses, arising out of any one occurrence but sub-limits were established by the policy.

93    Very shortly after the mine flooded, Mr Greg Bickle of Crawford & Company (Australia) Pty Ltd (“Crawfords”) was appointed by the insurers as loss adjuster pursuant to the policy, in respect of the claim which had, by that time, been foreshadowed to the insurers. Mr Bickle provided a preliminary report on 22 January 2008. Shortly thereafter Mr Peter Stockdale of the firm then known as Mallesons Stephen Jaques was retained by the insurers to provide advice to them. Mr Stockdale deposed that he was retained on 1 February 2008. On or around that day he reviewed the policy. By letter dated 7 February 2008 Mr Stockdale provided a letter of offer to be appointed by the insurers upon terms there set out. The offer was open to acceptance by continuing instructions.

94    On 13 February 2008 Mr Stockdale prepared a file note on the basis of a conversation with Mr Bickle. The file note recorded Mr Bickle’s view that there were a number of issues arising from his investigations to that date which included the likely circumstance that the loss involved in removal of debris resulting from the flooding would be in the order of $60,000,000 of which, on one view of the policy, only $5,000,000 would be covered. Other issues were also referred to. Mr Stockdale recorded:

5.    On the basis of these problems in Greg’s view it was necessary for any reporting issue to be the subject of privilege and I therefore agree to recommend to our client that his retainer from the client be terminated and replaced by one from the firm.

95    On the same day Mr Stockdale sent an email to the insurers referring to an issue about whether a levee bank which collapsed was an insured asset and whether the collapse of the levee bank caused the damage, being ingress of water, or whether the levee bank collapsed after the damage had occurred. Mr Stockdale’s email contained the following statement:

Mr Bickle believes, as I understand it, that the brokers will be taking a view that the loss falls under section 2 of the policy – a view which Mr Bickle does not support at the moment.

Whilst the facts are much too uncertain to draw any even preliminary conclusions at this stage – and I certainly have no information on which I could express a view – it does seem that there may be some significant issues concerning coverage. That being the case it would be prudent to ensure (to the extent possible) that Mr Crawford’s [sic] next report is covered by legal professional privilege. You will still, of course, receive Mr Bickle’s report but it will technically be addressed to us. To the extent possible this will mean that we have no obligation to disclose Mr Bickle’s report to the insured unless we chose to do so.

He has therefore suggested that:

1.    your retainer of Crawford and Co be withdrawn;

2.    we retain Mr Bickle of Crawford and Co to assist us with advice to you.

(Emphasis added.)

96    There is no reason to think that the precautionary steps Mr Stockdale had in mind were thereafter intended to be limited to only the next report from Mr Bickle and in practice they were not. Mr Bickle’s retainer from the respondents was, shortly thereafter, terminated. It was replaced by a retainer from Mallesons Stephen Jaques.

97    On 18 February 2008 Mr Stockdale forwarded to the insurers, for their approval, a letter of retainer for Mr Bickle. Mr Bickle was provided with a retainer in that form on 19 February 2008. The letter to him was in the following terms:

We act on behalf of Aioi Insurance Company in relation to a claim made by Ensham arising out of recent flooding of their mine site near Emerald in Queensland. Aioi are the lead insurers on an industrial special risks policy (“Policy”) held by Ensham. We understand that you have been provided with a copy of the Policy and the relevant asset schedule.

We have been instructed to advise our client in relation to the policy response and to deal with certain issues that, we understand, are likely to be contentious between the parties.

As a result of the very limited information we have on the flood and the resultant damage, you are instructed to investigate the claim made by Ensham and prepare a full report addressed to ourselves. Your report should deal with the circumstances giving rise to the claim, the damage suffered, the potential exposure of Aioi and the extent to which the Policy may respond to enable us to be in a position to provide advice to Aioi on the claim and indemnity issues.

We are instructed to meet your usual fees in respect of the work to be undertaken. To the extent that you require the assistance of any expert third parties to provide us with your reports these may be engaged with our prior approval.

Even from the limited information we have available, it would seem to us that this could be a significant claim. There seem to be a number of issues which, subject to your factual conclusions are likely too [sic] lead to a dispute over the extent to which the Policy responds. Given the likely amounts involved, any dispute over the extent to which the Policy responds is likely to result in litigation. Your report should therefore be prepared on a privileged and confidential basis and in anticipation of future litigation.

If you have any queries concerning these instructions, please do not hesitate to contact me. Otherwise, I will look forward to receiving your report as soon as possible.

(Emphasis added.)

98    Mr Bickle subsequently provided nine reports to Mr Stockdale. In the meantime he went about his investigations. It does not appear that the change in Mr Bickle’s retainer was advised to the applicant.

99    At a relatively early stage, solicitors for the applicant, Freehills (as it then was), became concerned that requests being made of their client, and by Mr Bickle in particular, went further than the ordinary responsibility of the applicant to co-operate with its insurers. Freehills raised these matters with solicitors for the respondents in May and June 2008. In response, solicitors for the respondents said on 10 June 2008:

We are responding to your letters of 19 May and 2 June 2008.

First, we have been instructed to express our client’s extreme disappointment with the position your client has taken. Whilst the matters set out in our letter of 7 May 2008 may raise, as you say, “serious coverage issues”, your client’s effective withdrawal from the work which was being undertaken in conjunction with Mr Bickle will not only substantially delay the adjustment of any claim your client eventually makes (assuming policy cover is confirmed) but, in a practical sense, is entirely unworkable. That is demonstrated in no small measure by the matters now raised in your letter of 2 June 2008.

In response to that letter we should make it quite clear that it is on no view appropriate to deal with what appear to be very significant issues by “a telephone conference”. What you have raised will require Mr Bickle’s attendance at your client’s mining site and, no doubt, detailed discussion as to the various issues which need to be considered. As your client will be well aware, that cannot be done over the telephone.

We invite your client to consider, forthwith, restoring the working relationship which has been established with Mr Bickle so that the adjustment of any claim your client makes can proceed in a proper and businesslike way. Your recourse to the strict words of the policy is of little assistance in a practical sense.

Insofar as your client has concerns that Mr Bickle is using his position as the adjustor appointed to deal with any claim your client proposes to make under the policy to investigate issues which go to the question of coverage, we are quite happy to instruct him to confine himself to the adjustment issues to defer those concerns. Insofar as your client has suggested to Mr Bickle direct that he was in fact the author of the matters set out in our letter of 7 May, we are also quite happy to confirm that is not the case.

We request that you confirm that normal working relations in relation to the prospective adjustment of any claim your client may seek to make be restored forthwith. To the extent that your client declines to do so, and the inevitable consequence follows that your client’s claim (if accepted) is not efficiently managed, we expressly reserve our client’s position.

As regards the information requested by Mr Bickle referred to in your letter of 19 May, this should be sent through to him direct.

Insofar as a response to our letter of 7 May is concerned, it would be of assistance if you would let us know when that will be forthcoming. Our client will be in Australia on 19 and 20 June and it would be an efficient use of their time if your client’s response could be provided by then.

(Emphasis added.)

100    The matters I have emphasised suggest that Mr Bickle’s role continued to be concerned with adjustment of the claim under the policy. The letter set out to dispel the notion that he was using his position, as the adjuster appointed to deal with any claim, to investigate issues which might go to the question of the coverage of the policy itself – i.e. issues of the kind Mr Stockdale had pointed out to his clients in his email of 13 February 2008 were ones making it prudent to ensure that Mr Bickle’s reports became privileged, and issues of the kind which Mr Bickle’s written retainer explicitly asked him to address.

101    An amended statement of claim filed by the applicant in the proceedings which were later commenced recorded that the applicant commenced to claim progress payments under the policy on 18 August 2008. The final property damage and business interruption claims were submitted on 2 June 2010. The final claim made was $535,933,000. Mr Bickle submitted six reports (in addition to his first report) before the first progress payment claim was made. Shortly thereafter, during September 2008, he submitted a further three reports. In all, including the first report, ten reports were provided by Mr Bickle. The first report was submitted to the respondents pursuant to Mr Bickle’s retainer from them. The second to tenth reports were provided to Mr Stockdale pursuant to the new retainer.

102    On 21 September 2010 the insurers declined the applicant’s claim. The applicant commenced proceedings in this Court on 24 September 2010.

The claim for privilege

103    In the judgment under appeal the primary judge recorded:

14    On 18 February 2011, the Court directed Ensham and the Insurers to provide discovery in relation to certain issues raised by the Defence. One of the Insurers discovered a report dated 22 January 2008 by Mr Bickle. The report was entitled ‘First Report – Levee Bank Failure/Flood Damage Claim’ and was addressed to the respondents and Ensham’s broker. Ensham thereafter required the respondents to produce all reports made in the period from 22 January 2008 to 31 December 2008 by Mr Bickle to any of the respondents in relation to the incident that is the subject of the proceeding. On 26 July 2011, the Insurers indicated to the Court that there were no documents to produce other than loss adjustor’s reports (Mr Bickle’s reports), which were addressed to the Insurers’ solicitors and were the subject of a claim for privilege. These reports are the subject of the present interlocutory proceedings.

15    There are 10 reports in all. The whole of the first has been discovered. The whole of the third, fifth, sixth and seventh reports have been discovered. Parts of the eighth report and the tenth report have been discovered. The Insurers maintain their claim for privilege in respect of the whole of the second, fourth and ninth report and the balance of the eighth and tenth reports that have not been discovered.

104    It appears therefore that initially a claim for privilege was made over each of the second to tenth reports. Subsequently the contents of some reports were disclosed. The circumstances in which that occurred received little attention on the appeal. I shall refer later, in brief terms, to the reports later released. They deal with matters which really stand aside from the matters over which the claim for privilege has been maintained.

105    The primary judge commenced by examining whether the respondents had discharged an onus of demonstrating that there was a reasonable anticipation of litigation when the reports were commissioned under the new retainer, which was more than two years before litigation actually commenced or the claim had been denied. The primary judge later stated his conclusions about that issue as follows (at [50]):

50    To paraphrase the decision in Mitsubishi Electric, the circumstances in February 2008 were of the kind that human experience (and the expertise of lawyers) would recognise as being highly conducive to litigation. The Court also accepts the evidence of Mr Stockdale that he formed such a view in February 2008 as a result of his conversations with Mr Bickle and from the information that Mr Bickle provided to him and such conclusion resulted in the alteration to Crawford’s retainer. The possibility of litigation was clearly evident at this early stage.

106    The next question examined by the primary judge concerned Mr Stockdale’s dominant purpose in giving Mr Bickle his instructions which sought his further reports pursuant to his altered retainer. In his discussion of the apparent purpose in seeking the reports the primary judge said (at [24] and [28]):

24    In addition to establishing that the documents were prepared in the light of reasonably anticipated litigation, a party claiming privilege must establish that the documents were prepared for the dominant purpose of providing assistance or advice in relation to the anticipated proceedings: Esso Australia at [62]. In determining the dominant purpose of the document, the Court must inquire into the state of mind of the solicitor for the party claiming privilege, not of the loss adjustor or the insurer itself: Hartogen Energy Ltd (in liq) v Australian Gas Light Co (1992) 36 FCR 557 at 568.

…

28    Where an insured has made a claim on its liability insurer, and solicitors are acting for the insured and the solicitors state that the insurer had instructed them to advise on the question of liability, indemnity and quantum upon receipt of a report from a particular third party, it would be open to conclude that the dominant purpose, if not the sole purpose, of the report commissioned by the solicitors acting on behalf of the insured was for the use in the preparation of confidential legal advice (Mitsubishi at [15]-[16]).

(Emphasis in original.)

107    On the appeal, the applicant accepted that the primary judge had correctly identified the need for a dominant purpose formed in reasonable anticipation of litigation. No challenge was made to the finding that in February 2008, objectively assessed, there was a reasonable anticipation of litigation.

108    The applicant did, however, challenge the statement in [24] that the purpose of the insurer was not relevant to an examination of dominant purpose. As will be seen, that principle was not stated in Hartogen Energy Ltd (In Liquidation) v The Australian Gas Light Company (1992) 36 FCR 557 (“Hartogen”). That challenge may be put to one side for the moment although, as will be seen, in my view it was well-founded. The applicant did not otherwise challenge the identification by the primary judge of the relevant principles to be applied. The challenge was to the way they were applied.

109    When the primary judge, having made the finding set out earlier at [50], stated his conclusions about dominant purpose, he did not ultimately do so by reference only to Mr Stockdale’s asserted purpose. The primary judge examined Mr Bickle’s reports and stated his conclusions by reference to the content and character of the parts of the reports over which privilege was claimed.

110    The primary judge said (at [51]):

51    With respect to the question of dominant purpose, the Court is satisfied, having read the unredacted copies of the reports, that they have been prepared for the dominant purpose of providing advice in relation to litigation. Reference is made within some of the reports to potential legal issues arising between Ensham and the insurer arising from the policy. As to the position of the applicant on some of the issues in relation to the insurer’s liability. Dialogue between the loss adjustor and the solicitors for the insurer concerning the reasonableness of various expenditures necessary for dewatering the mine is also contained in the reports. Such matters would also be generally relevant to a contentious issue in these proceedings. Although the information in the reports would have been of interest to the insurers generally and would have provided them with necessary information to factor in the cost of the potential claim against them, the reports primarily provide the insurer’s solicitors with information relevant to the potential litigation.

Litigation privilege

111    It is obviously important that evidence in a proper form be provided to the Court fully and fairly disclosing the basis for a claim for privilege. This requirement is not confined to claims about litigation privilege. The Court should not normally be asked to fill gaps in the disclosed case for a claim for privilege by inspecting documents which are kept from other parties. In the present case, the evidence in support of the claim for privilege is open to criticism of this kind, but the point was not taken on the application and I will put it aside in the discussion which follows.

112    For reasons which appear more fully in the discussion which follows, in a case such as the present, where the question is whether documents should be withheld from inspection by another party on the basis of litigation privilege, I think normally the primary focus should be on the entirety of the document rather than the possibility that it might contain communications capable of independent identification as privileged ones. In most cases I doubt that it is useful or appropriate to go behind the purpose for which the document, as such, was brought into existence to examine separately whether some parts only might be privileged.

113    Because the present issues arise in connection with obligations to give discovery of documents they do not concern the operation of the Evidence Act 1995 (Cth) (see Esso Australia Resources Limited v Commissioner of Taxation (1999) 201 CLR 49 (“Esso”) at [16] – [17]).

114    Mann v Carnell (1999) 201 CLR 1 (decided on the same day as Esso) is the decisive authority in Australia on the doctrinal foundation of legal professional privilege and when waiver of that privilege at common law has occurred. At [28] the High Court said:

Legal professional privilege exists to protect the confidentiality of communications between lawyer and client. It is the client who is entitled to the benefit of such confidentiality, and who may relinquish that entitlement.

115    Earlier, the High Court pointed out at [16] that privilege attaches to “communications, not to the pieces of paper on which they were written”.

116    The distinction between communications, and documents which contain communications, is an important one to bear in mind. However, in some instances provision of a document, particularly a report, may represent a communication in its own right. The present case is not one which concerns communications between a lawyer and the lawyer’s client. It concerns the question of whether documents are privileged having regard to the purpose for which they were created. Before Esso was decided the authoritative statement about those matters was generally regarded to be the one found in the judgment of Stephen, Mason and Murphy JJ in Grant v Downs (1976) 135 CLR 674. Their Honours there upheld the “sole purpose” test in relation to litigation privilege which was later displaced in Esso in favour of a “dominant purpose” test, which was the test applied by the primary judge. At 682 their Honours posed the following question:

What then are the relevant principles of law governing the privilege which attaches to communications and materials submitted by a client to his solicitor for the purpose of advice or for the purpose of use in existing or anticipated litigation, in particular when the materials have been called into existence to serve more than one purpose, submission to the solicitor being only one of the purposes? It is a question more easily asked than answered, despite all that is to be found in the decided cases and all that has been said in the learned articles.

A little later their Honours said (at 682-3):

It has been accepted that documents brought into existence after an accident pursuant to a standing instruction previously given may be privileged (Collins v. London General Omnibus Co.; The Hopper No. 13; Ankin v. London and North Eastern Railway Co.; Ogden v. London Electric Railway Co.). Although to sustain the privilege it is not necessary that the document has been brought into existence on the advice of the solicitor, it is essential that the circumstances are such that the court can subsequently conclude, viewing them objectively, that litigation can be reasonably anticipated—see Feuerheerd v. London General Omnibus Co. Ltd.; Cataldi v. Commissioner for Government Transport —and this at the time when the preparation of the document is undertaken. However, the fact that the document is brought into existence in anticipation of litigation is not sufficient, without more, to attract privilege; the document must be called into being for use in litigation or for advice and it is the extent to which this purpose is intended to be served by the preparation of the document that is in question.

(Emphasis added. Footnotes omitted.)

117    Two important points should be emphasised. First, anticipation of litigation is insufficient. It is only part of the foundation for the privilege. More is needed. Secondly, it may not be thought that their Honours did not bear in mind that privilege attaches to communications, rather than simply to pieces of paper. It is evident that, in the context under discussion, the relevant communication over which privilege was claimed was the provision of a report for a particular purpose. Assessment of the purpose, therefore, in such cases involves examination of the purpose of a communication by way of provision of a document in the form of a report. That examination does not concern the individual components of the document itself except so far as that might bear on the question of the purpose for which the document was brought into existence.

118    In a passage in the judgment of Barwick CJ, later approved in Esso, the following was said:

Having considered the decisions, the writings and the various aspects of the public interest which claim attention, I have come to the conclusion that the Court should state the relevant principle as follows: 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, of 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.

In the application of this principle, the fact that the person who produced, or the person or authority who or which directed the production of the document, had in mind other uses of the document will not preclude that document being accorded privilege, if it were produced with the requisite dominant purpose.

119    In Hartogen, Gummow J (then a member of this Court) considered the application of the sole purpose test. His Honour said (at 568-9):

That brings me to the question of whether the legal professional privilege claim has indeed been made out. There was much debate as to the operation of the “sole purpose” test propounded in Grant v Downs (supra). It was submitted for the respondents that the transcript and associated documents were brought into existence for “multiple purposes” and that no privilege existed.

The purpose for which a document is brought into existence is a question of fact: Grant v Downs at 692 (Jacobs J); Waterford v Commonwealth (supra) at 66 (Mason, Wilson JJ), 78 (Brennan J). In Grant v Downs (at 692) Jacobs J said:

“[T]he question the court should pose to itself is this — does the purpose of supplying the material to the legal adviser account for the existence of the material? I use the purpose here in the sense of intention — the intended use.”

The purpose will ordinarily be that of the maker of the document, but this will not always be the case. In Laurenson v Wellington City Corporation [1927] NZLR 510, Skerrett CJ looked to the person who “calls into existence documents in the bona fide belief that litigation will probably ensue … ” [emphasis supplied]. And the phrase I have emphasised was employed by Stephen, Mason, Murphy JJ in Grant v Downs (at 682-683). It is apt to describe the situations where, for example, solicitors commission the provision of a technical report; the relevant intention will not be that of the author but the solicitor.

(Emphasis added.)

120    The contents of such a report are confidential because of the purpose for which the report was sought. In my view, it is clear that his Honour did not have in mind that a technical report called into existence at the instance of a solicitor to provide legal advice for the purpose of litigation would be liable to some form of dissection. His Honour went on to refer to Waterford v Commonwealth (1987) 163 CLR 54 (“Waterford”) (to which I shall return) saying (at 569):

In Waterford, Mason, Wilson and Brennan JJ held that the evidence showed that the documents in question had been brought into existence for the sole purpose of seeking or giving legal advice to government and hence were exempt from production on the ground of legal professional privilege. Deane and Dawson JJ dissented from that result. Mason and Wilson JJ (at 66) said that the sole purpose test “looks to the reason why a document was brought into existence” so that if its sole purpose was to seek or to give legal advice in relation to a matter, the fact that it contains extraneous matter will not deny to it the protection of the privilege.

As this suggests, the division of opinion between the majority and minority in Waterford particularly was concerned with the operation of the sole purpose test where a document appeared to contain both privileged and non-privileged material, the latter dealing with government policy.

(Emphasis added.)

121    The passage which I have emphasised suggested, in my view, that on this test a document was not rendered partially privileged because it served more than one purpose or contained different kinds of material. That feature of a document was to be taken into account in assessing the purpose for which it was produced. The adoption in Esso of a dominant purpose test did not, in my view, serve either to subject reports commissioned from third parties, for use in advice about anticipated legal proceedings, to scrutiny upon the footing that the reports might be partially privileged and partially not privileged. In Esso Gleeson CJ, Gaudron and Gummow JJ said, at [36]:

36    Like the present case, and the leading English case of Waugh v British Railways Board, Grant v Downs was about discovery and inspection of documents in pending litigation. Although privilege, where it applies, attaches to communications, not to pieces of paper, discovery is concerned with documents, and privileged communications are frequently in writing. If a written communication is made for the sole purpose of seeking or giving legal advice, or obtaining or providing legal services, the problem of present concern does not arise. It arises where the documentary communication comes into existence for some purpose or purposes in addition to the legal purpose.

(Emphasis added.)

and at [39]:

39    At the time Grant v Downs was decided at first instance, the law, both in Australia and England, as to the test to be applied in such cases had not been determined by any court of ultimate authority, but the prevailing view was that it was sufficient to attract privilege to such reports if one purpose of their preparation was to obtain legal advice or assistance. In some cases it was said that the purpose had to be substantial, or appreciable, but the weight of authority was against the view that the existence of another purpose, or other purposes, in addition to obtaining legal advice or assistance, resulted in loss of the privilege. It was well settled that it was the purpose of the report, not the motive of the individual who made it, that mattered.

(Emphasis added.)

122    Their Honours exposed what appears, in my respectful view, to be an aspect of the use of the dominant purpose test when dealing with an argument by counsel for the respondent about the operation of the sole purpose test saying (at [58]):

Whilst seeking to uphold a sole purpose test, they submitted that “if a document is created for the purpose of seeking legal advice, but the maker has in mind to use it also for a subsidiary purpose which would not, by itself, have been sufficient to give rise to the creation of the document, the existence of that subsidiary purpose will not result in the loss of privilege”. That appears close to a dominant purpose test. If the only way to avoid the apparently extreme consequences of the sole purpose test is to say that it should not be taken literally, then it loses its supposed virtue of clarity.

123    In my respectful view, it follows from the adoption of the dominant purpose test, in preference to the sole purpose test, that a document which is privileged in its entirety might have been brought into existence for more than one purpose and be directed at more than one issue. As a result of the adoption of the dominant purpose test, privilege attaches to the document despite that circumstance. There does not arise some further occasion for examination of a document so that the scope of the claim for privilege is reduced to what appears, at some later point in time, to be the parts of the document which appear to match the purpose.

124    In Trade Practices Commission v Sterling (1979) 36 FLR 244 (“Sterling”) Lockhart J considered the application of the test in Grant v Downs as it applied to obligations of discovery. His Honour identified, as one category of documents protected by legal professional privilege, communications between a party and his professional legal adviser provided certain conditions were met. Also protected were communications between various legal advisers of the client. A separate category was (at 246):

(e)    Communications and documents passing between the party’s solicitor and a third party if they are made or prepared when litigation is anticipated or commenced, for the purposes of the litigation, with a view to obtaining advice as to it or evidence to be used in it or information which may result in the obtaining of such evidence.

125    Lockhart J embraced within this category both communications and documents. Documents which consist of reports commissioned from third parties are obviously included within it. The matters included within the “purposes of the litigation” are obviously broad. They are matters which do not yield a ready answer on inspection of a particular document. Provided a report responds faithfully to a request arising from a relevant dominant purpose I see little scope for a suggestion that there is any entitlement to subject such a report to closer scrutiny about its content.

126    In Mitsubishi Electric Australia Pty Ltd v Victorian Workcover Authority (2002) 4 VR 332 Batt JA, with whom Charles and Callaway JJA agreed, referred to the observations of Lockhart J in Sterling and to the category to which I have referred. His Honour also referred to the observations of Gummow J in Hartogen. His Honour said (at [14]):

14    I consider first the dominant purpose of the communicating of the reports. As summarised by Gummow J in Hartogen Energy by reference to High Court decisions, the purpose, that is the intended use, for which a document is brought into existence is a question of fact. Ordinarily the purpose will be that of the maker of the document, but that will not always be the case, as where some other person, such as a solicitor commissioning the provision of a technical report, calls the document into existence. In that case the relevant intention will not be that of the author but the solicitor: Hartogen Energy. Likewise, in his statement of principle in Grant v Downs Barwick CJ included the dominant purpose of the person under whose direction, whether particular or general, the relevant document was produced or brought into existence.

and, later in [15]:

15    … The presence of the solicitors here makes it clear that the report was required for the carrying out of legal work. Although the letter uses the singular “report”, no doubt it authorised the rendering of more than one report, particularly in light of the practice of loss adjusters of rendering, when occasion requires, interim and supplementary reports. There is no evidence of any other purpose that the report was to serve. …

127    Here again, in my respectful opinion, the emphasis was correctly placed on the purpose a report was to serve. If a report is to serve a different purpose, inconsistent with maintenance of the privilege, that puts into question the whole foundation for the claim of privilege, not just protection of individual parts of a report. In the present case, for example, if the claim for privilege is to be sustained it must be because the reports from Mr Bickle were commissioned pursuant to the letter of retainer of 19 February 2008 for the dominant purpose of the provision of advice in relation to reasonably anticipated litigation. A complicating feature in the present case is the fact that privilege was later surrendered over some reports. I do not think consideration of that circumstance can be altogether avoided. However, as will be seen, that circumstance is ultimately a distraction from the primary question, which should remain focussed on why the reports were called into existence in the first place.

128    In Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 136 FCR 357 Finn J dealt directly with the possibility of a distinction between communications and documents in relation to privilege of the kind claimed in this case. His Honour said at [19]:

19    Before turning to precedent, such as it is, there are two additional principles relating to documents that ought be noted. The first is that a document attracts the privilege if it was prepared with the dominant purpose of its being used as a communication with a legal adviser to obtain legal advice notwithstanding that it has not in fact been, and may never be, so used: Southwark & Vauxhall Water Co v Quick (1878) 3 QBD 315; Trade Practices Commission v Sterling (1979) 36 FLR 244 at 245. This principle, while obviously falling within the rationale of the privilege, qualifies to this extent the general proposition that legal professional privilege does not protect documents, as such, but protects communications between lawyer and client: Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 [“Propend Finance”] at 543.

(Emphasis added.)

129    Finn J’s reference to Propend Finance was to a statement by Gaudron J at 543 in the following terms:

In Carter v Northmore Hale Davy & Leake, Deane J spoke in terms of a “privileged communication or document”. However, a document which is brought into existence solely for the purpose of obtaining legal advice or solely for use in litigation and which is then provided to a lawyer for that purpose is, itself, a communication with the lawyer and, in accordance with the decision of this Court in Grant v Downs, a privileged communication.

(Emphasis added.)

130    In Waterford, Mason and Wilson JJ referred to an issue of this character, but were less definite, saying (at 66):

The appellant's submission fails to appreciate that the sole purpose test is a test that looks to the reason why the document was brought into existence. If its sole purpose was to seek or to give legal advice in relation to a matter, then the fact that it contains extraneous matter will not deny to it the protection of the privilege. The presence of matter other than legal advice may raise a question as to the purpose for which it was brought into existence but that is simply a question of fact to be determined by the Tribunal and its decision on such a question is final. It may also be appropriate in a particular case for the Tribunal to require those parts of the document which do not bear the necessary relation to legal advice to be disclosed. The doctrine of legal professional privilege allows room for questions of fact and degree such as these to fall for decision.

and (at 67):

If a communication satisfies the description of a document brought into existence for the sole purpose of enabling a confidential professional communication between a client and his legal adviser in connexion with pending or anticipated legal proceedings then in our opinion it follows that it is an exempt document within the meaning of s. 42 of the Act. In such a case it is not to the point that the document may contain advice which relates to matters of policy as well as of law. It is the connexion between the document and legal proceedings that establishes its character and thus attracts the privilege.

(Emphasis added.)

131    I take it from those statements that a document brought into existence for the requisite purpose will be privileged in its entirety, prima facie at least, even though it contains other material. The adoption of a dominant purpose test cannot have altered this fundamental position. The facility suggested by their Honours whereby parts of a document are required to be disclosed, notwithstanding that a proper claim for privilege is available over the whole of the document does not, in my view, alter the position. Privilege exists to protect confidentiality. In the case of client legal privilege where confidentiality is attached to actual communications the character of the communication is decisive. In the case of litigation privilege, on the other hand, purpose is decisive. Once the requisite purpose is established a response to it is regarded as confidential and privileged without the need to demonstrate that all the content of a document sought and obtained pursuant to a privileged purpose is independently privileged.

132    The reason I have spent some time on this issue is to record a reservation about any general proposition that it will normally be necessary to examine reports of the character with which the present case is concerned in order to determine whether they are privileged. I accept that it was necessary to do so in the present case because of particular findings made by the primary judge. However, generally speaking it might be impossible to know how a particular part of a report might be used in preparing for litigation. Furthermore, it should not normally be the case that any part of a report prepared for such a purpose would be available to another party to use forensically.

133    In the present case, the starting point must be that all Mr Bickle’s reports were alleged to be sought pursuant to a privileged purpose. If doubt arises about that, as was suggested, that puts the question of the stated purpose itself in issue.

Evidence and argument before the primary judge

134    In written submissions to the primary judge the applicant submitted that the respondents had not discharged their onus of showing that Mr Bickle’s reports were not obtained in, and for, the ordinary course of business. The submissions argued that the respondents, through Mr Stockdale’s affidavit evidence, had failed to displace the inference arising from the correspondence referred to earlier in May/June 2008 “that the reports were created as part of an insurer’s normal investigation into an insured’s claim”.

135    No evidence was filed from Mr Bickle to indicate whether his reports responded to a request for confidential advice in anticipation of litigation or represented statements made in the ordinary course of loss adjusting. Crawford and Company was the loss adjuster identified by the policy itself and Mallesons Stephen Jaques’ letter of 10 June 2008 (written apparently by Mr Stockdale) had emphasised the need for Mr Bickle to continue in his loss adjusting role. The applicant, in its written submissions to the primary judge referred to those matters. The submissions also pointed out the ultimate disclosure of all of the third, fifth, sixth and seventh reports, except redactions referring to provision for reserves. Those particular redactions were said by the insurers (apparently) to have been made on the grounds of relevance, not privilege. The applicant’s written submissions to the primary judge argued that disclosure of the whole of four reports (except for redactions on the grounds of relevance) was consistent with the applicant’s thesis that Mr Bickle was getting on with the ordinary business of a loss adjuster, rather than primarily pursuing a commission to provide confidential advice in anticipation of litigation. Further written submissions which were filed after Mr Stockdale had given oral evidence pursued the arguments.

136    Two affidavits were filed from Mr Stockdale. In Mr Stockdale’s first affidavit sworn on 31 January 2012 he referred to the instructions given to Mr Bickle on 19 February 2008, which Mr Stockdale swore were given to enable him (Mr Stockdale) to give advice to the respondents, and in anticipation of litigation. At the time of this affidavit privilege was claimed over the whole of each of the second to tenth reports. Mr Stockdale’s second affidavit was sworn on 3 May 2012. In it Mr Stockdale sought to explain Mr Bickle’s other activities, but maintained his position that the whole of Mr Bickle’s services were sought and provided in order to “assist [Mr Stockdale] in advising the respondents as to the claim in the context of anticipated litigation”. However, by then there had been partial disclosure of a number of the reports, leading to the submission by the applicant referred to earlier. In his oral evidence, as he had in his second affidavit, Mr Stockdale suggested, notwithstanding the terms of Mr Bickle’s retainer on which he relied in his first affidavit, that Mr Bickle had not been given any role to advise on coverage of the policy, or its meaning.

137    In his first affidavit Mr Stockdale said:

On or around 1 February 2008, I reviewed the bespoke Policy. Shortly thereafter, I reviewed the 2007-2008 Declared Asset Schedule of the Policy. Based on my review of these documents, it became apparent to me that there would be some significant coverage issues, which were likely to be contentious.

On this basis, on or around 19 February 2008, I retained Mr Greg Bickle of Crawford & Company (Australia) Pty Limited (“Crawfords”) to investigate the claim made by Ensham and prepare a full report for me dealing with the circumstances giving rise to the claim, the damage suffered, the potential exposure of the Respondents and the extent to which the Policy may respond.

(Emphasis added.)

138    What I have emphasised reflects what was said in Mr Bickle’s written retainer and Mr Stockdale’s email to the insurers on 13 February 2008.

139    Mr Stockdale’s second affidavit said Mr Bickle had no role regarding policy response, which was not within the scope of his retainer. The tension between the two assertions led to this exchange:

MS COCHRANE: Thank you, your Honour.

In the third line of that paragraph [paragraph 6 in the second affidavit], where you refer to:

This figure had no regard for the policy response, which was not within the scope of Mr Bickle’s retainer.

?--- Correct.

Mr Stockdale, are you saying that the policy response was not within the scope of Mr Bickle’s retainer; is that what those words mean? ---Correct.

And so by that do you mean that Mr Bickle was not retained to report to you on the extent to which the policy may respond to any claims suffered by Ensham; is that what that means?---No, the section in paragraph 6 refers to the fact that we had taken out of Mr Bickle’s retainer any role in relation to the determination of the way in which the claims that were made related to the particular clauses in the policy – the exclusion clauses and conditions of the policy.

…

MS COCHRANE: So, Mr Stockdale, to the extent that Mr Bickle in his reports deals with the policy and response issue, that’s beyond the scope of your retainer with him?---Insofar as it relates to the interpretation of the clauses in the policy which determine the policy response, yes. Insofar as it goes to the quantum of the claim under the policy, that was very much within what we had asked Mr Bickle to determine.

Yes. Thank you. Now, if we could go back to your first affidavit?---Yes.

Paragraph 11?---Yes.

Mr Stockdale, do you need to re-read that?---No, no. I’m familiar with that.

So the first sentence of that paragraph says:

    Mr Bickle was retained to prepare a full report dealing with the damage suffered and the extent to which the policy may respond.

Is that right?---Yes. That’s what the words say, and by that I mean the quantum issues.

Okay. So any reference to the extent to which the policy may respond, his Honour is to understand that means quantum only?---It’s by reference to the damage suffered, as in the line above.

And so it’s not to involve any interpretation of the meaning of the policy?---The policy itself; that’s right.

…

My question was, so is it right to say that paragraph 6 of your 3 May 2012 affidavit is a more accurate characterisation of the scope of Mr Bickle’s retainer than paragraph 11 of the 31 January affidavit?---That’s correct.

140    In his oral evidence Mr Stockdale agreed that his discussions with Mr Bickle on 8 and 13 February 2008 revealed two issues about the coverage of the policy that were likely to become contentious. One concerned the cost of dewatering the mine and the other was whether the levee banks were insured. Those issues provoked the decision to terminate Mr Bickle’s then existing retainer as loss adjuster from the respondents and replace that retainer with one from Mallesons Stephen Jaques. Mr Stockdale’s explanation of that to the primary judge was:

By 13 February, Mr Bickle had raised those concerns with me. I then spoke to my client and I explained what was happening on the site, and I explained my concerns that there were coverage issues emerging, and I provided advice that in the context of those, we should terminate Mr Crawford’s retainer or the insurer should terminate Mr Crawford’s retainer, and we should retain him, so that he could be our arms and legs, as it were, on the site, acting for us as the lawyers for the insurers.

141    A little later Mr Stockdale said:

In my view, by mid February there was a real apprehension that there would be a dispute about the terms of the policy, and the extent to which it responded to a very significant claim, and in my view, that led to the conclusion that there was a reasonable prospect of litigation resulting between the parties, whilst those issues were resolved.

142    Mr Stockdale explained the difference between Mr Bickle’s first retainer directly from the respondents and his second replacement retainer from Mallesons Stephen Jaques, as follows:

Loss adjusters are commonly used by insurers to adjust claims. That’s their job. They also have, or may have, a second role, which is to act as, as it were, investigation agents for lawyers who are retained by insurers. The two retainers here reflect my common understanding of the two different roles that loss adjusters, as a profession, may perform.

143    Finally, Mr Stockdale emphasised again Mr Bickle’s confined role:

MS COCHRANE: Mr Stockdale, one of the purposes of the reports was to provide the loss adjuster’s analysis of the potential claim?---The quantum of the claim, yes.

HIS HONOUR: What was your response, Mr Stockdale?---The quantum, your Honour. Yes. Not the policy coverage issues.

144    It was not necessary, having regard to the adoption of the dominant purpose test, that all parts of Mr Bickle’s reports be addressed to the question of reasonably anticipated litigation, provided that was the dominant purpose for which his reports were sought. However, Mr Stockdale’s evidence raises some serious questions. It was the coverage issues, first raised by Mr Bickle himself, which led to the attempt to shield his further reports with a claim of privilege. However, Mr Stockdale’s evidence was, finally, that these were not matters for report by Mr Bickle. The parts of Mr Stockdale’s evidence to which I have referred certainly provided a foundation from which to debate the question of the purpose for which Mr Bickle’s reports were sought. In my view, it was apparent that there were serious questions, arising from the actual passage of events, about the purpose and scope of Mr Bickle’s retainer. Those were legitimate matters for the applicant to explore.

145    The reports (and parts of some reports) over which no claim for privilege was ultimately pressed shed little light on matters. Three such reports (the third, fifth and sixth) simply sought approval for payment of invoices from another company asked by Crawfords to carry out some work. The amounts were modest. Parts in other reports (seventh, eighth and tenth) for which a claim for privilege was not pressed concerned some expedited freight arrangements for electrical components to repair the damaged dragline, along with some consequential matters. Those issues all post-dated the events leading to the claim.

Issues on the appeal

Mr Stockdale’s purpose

146    The onus of making good a claim for privilege lay on the respondents. The claim for privilege either faithfully reflected the foundation for it, or it did not. The primary judge apparently felt that Mr Stockdale’s statements about his purpose were insufficient to provide a foundation for the claims for privilege. The primary judge said at [45]-[47]:

45    The correspondence between Mr Stockdale, Mr Kodaira and Mr Bickle reveals a deliberate attempt by the solicitors for the insurer to attract legal professional privilege to the Crawford reports. This is particularly evident in self-serving statements referring to a potential claim for privilege contained in the email from Mr Stockdale to Mr Kodaira dated 18 January 2008. The email explains the reasons for replacing Mr Kodaira’s retainer of Crawford with that of Mallesons.

46    Despite such attempts to attain the status of privileged communication, the Court does not find such statements persuasive. As Marks J stated in Protean at p 6:

It is clear that a studious cast of verbiage cannot work the alchemy of transforming what would be otherwise unprivileged into privileged documents.

47    The Court must consider objectively whether the reports were privileged.

147    If two purposes are held in equal priority then one will not be dominant over the other (Commissioner of Taxation (Cth) v Pratt Holdings Pty Ltd (2005) 225 ALR 266 at [30](8); AWB Ltd v Cole (2006) 152 FCR 382 at [106]). If the correct view of what happened was that Mr Stockdale simply set out to throw the cloak of privilege over the whole of Mr Bickle’s communications, perhaps thinking that he could reserve to himself the right to decide which might ultimately be released, that would clearly not have sufficed to support the claims for privilege.

The insurers’ purpose

148    The applicant argued on the appeal that, whatever may have been Mr Stockdale’s purpose, the insurers had a different purpose concerning Mr Bickle’s reports. The applicant argued that: as Mr Bickle’s first (unprivileged) report was clearly preliminary and foreshadowed the need for a subsequent report(s); as Mr Bickle remained the loss adjuster for the claim; and as it was evident that the insurers would require reports from its appointed loss adjuster in order to continue to carry out its ordinary business of assessing the claim, regardless of any possibility of litigation, the respondents had not discharged their onus of showing that Mr Bickle’s second and subsequent reports had come into existence pursuant to a dominant purpose arising from the reasonable anticipation of litigation.

149    Counsel for the applicant summarised her argument by saying:

… at the time of their creation, these reports had multiple purposes, and given that the proper inquiry includes the purposes of the insurers, our friends have not discharged their onus of establishing that the dominant purpose was litigation …

150    Counsel for the respondents accepted during argument on the appeal, on instructions, that under the policy the insurers had an obligation to investigate the claim and respond to it. However, she would not accept that Mr Bickle’s reports were directed to that end after the first report. In my view that approach does not accord with the matters urged by Mallesons Stephen Jaques in their letter to Freehills of 10 June 2008. I think it is clear on the evidence that Mr Bickle was going about the business of loss adjusting. The only reasonable inference is that his reports were, at least in part, directed to that purpose also. If that is accepted, as in my view it should be, the remaining question is whether the respondents discharged their onus of establishing as a dominant purpose the provision of reports in the reasonable anticipation of litigation. Resolution of that question could not leave out of account the insurers’ purpose represented by Mr Bickle’s ordinary loss adjusting activities.

151    Unlike Lander and Jagot JJ, I would be prepared to give some weight in the present case to the insurers’ purposes, independently of Mr Stockdale’s motivation. Consideration of such a matter was, in my respectful view, not excluded by the application of any principle stated by Gummow J in Hartogen and was clearly appropriate in the present case on the evidence, including the evidence of Mr Stockdale to which I referred earlier.

152    I accept in principle that there is no reason why solicitors should not take prudent steps to ensure that they can prepare for litigation and give advice to their clients with respect to reasonably anticipated litigation in a way which preserves the confidentiality of the material which they will seek from third parties for that purpose. However, in the present case, it is quite apparent that Mr Bickle was also at work on his loss adjustment role. In my view, the remarks of the primary judge towards the end of [51] (set out earlier) appear to reflect the reality of that conclusion. It cannot be the case that mere interpositioning of a solicitor between an insurer and a loss adjuster engaged in the ordinary course of business can have the effect of quarantining the reports of the loss adjuster, at the discretion of the insurer or its solicitors.

153    In my view, the applicant established on the present application that the primary judge made an error of principle by excluding consideration of the purpose of the insurers as irrelevant. If the purpose of the insurers, as revealed by the objective circumstances, was not a subordinate purpose, the proper conclusion (given the findings in [45]-[47]) would be that the respondents had failed to discharge their onus of showing that any of the reports were privileged. However, if the purpose of the insurers was subordinated to Mr Stockdale’s purpose the claim for privilege was sound.

The contents of the reports

154    The objective material in which the primary judge found a sufficient foundation for the claim for privilege was his examination of the actual content of those parts of the reports over which a claim for privilege was pressed. The matter was approached that way in order to examine more objectively the circumstances addressed by Mr Bickle’s reports, and whether they appeared to satisfy the purpose of responding to his letter of retainer. In my respectful view, in the particular circumstances of the present case that was an appropriate course to take.

155    In Esso, Callinan J said (at [172]):

Whether a purpose is a dominant purpose, is, in my view, a matter to be objectively determined but the subjective purpose will always be relevant and often decisive.

156    The finding by the primary judge in which he referred to Mr Stockdale’s actions as a “deliberate attempt” to create a privileged occasion and to his statements at the time as “self-serving” was potentially destructive of the claim about dominant purpose. The undoubted purpose of the insurers in having the claim properly assessed was also a factor to be borne in mind.

157    However, in my view, it was open to the primary judge to conclude (having examined them ) that Mr Bickle’s reports, over which a claim for privilege was maintained, were brought into existence to respond to his letter of retainer and for the dominant purpose (assessed objectively) of reasonably anticipated litigation. It is also clear, from parts of reports over which privilege was claimed, that Mr Bickle deferred to his instructors on questions about policy coverage.

158    The reports, and parts of reports, over which a claim for privilege was abandoned, related to events after the flooding. Those reports and parts of reports did not respond directly to the letter of retainer. I agree that withdrawing any claim about them did not amount to a waiver of privilege.

159    I agree, therefore, that in the present case no error was ultimately shown in the assessment by the primary judge of the dominant purpose for Mr Bickle’s reports over which privilege was claimed.

Other matters

160    I agree that the ruling made by the primary judge, disallowing questions about an obligation of good faith, should not be disturbed. Even if the insurers’ purpose is taken into account, as I accept it may be, that would not provide a reason to disturb the ultimate finding of the primary judge that the claim for privilege should be upheld.

Orders

161    In my view, the applicant made out a sufficient case to obtain leave to appeal. I would grant leave to appeal but dismiss the appeal. Costs should follow the overall result.

Associate:

Dated:    21 December 2012