FEDERAL COURT OF AUSTRALIA

Dr Michael Van Thanh Quach v MLC Life Limited (No 2) [2019] FCA 1322

ORDERS

THE COURT ORDERS THAT:

1.    The respondent’s claims for legal professional privilege in respect of the Legal Referral Form and Legal Opinion dated 11 July 2019, together with a copy of the Legal Referral Form, are upheld.

2.    There be no order as to costs.

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

REASONS FOR JUDGMENT

(REVISED FROM THE TRANSCRIPT)

GRIFFITHS J:

1    These proceedings relate to the respondent’s claim for legal professional privilege in respect of two documents which have been produced by the respondent in answer to a subpoena dated 2 May 2019.

Summary of background facts

2    The substantive proceedings were commenced by the filing of an originating application dated 19 March 2019. It was accompanied by a statement of claim dated 19 March 2019. An amended statement of claim was filed on 14 May 2019. Dr Quach is dissatisfied with MLC Life’s handling of his claim made under an income protection policy he had with the company. He complains that he was verbally abused by an employee of MLC Life. He also complains that MLC Life has breached its duty of “the utmost good faith” under the Insurance Contracts Act 1984 (Cth) (Insurance Contracts Act). He further complains that MLC Life demanded access to information relating to a matter in the New South Wales Court of Appeal without first obtaining the Court’s leave. Dr Quach seeks compensatory damages.

3    MLC Life has filed a defence, in which it denies all the claims made against it. MLC Life accepts that it entered into a life insurance policy (168-88009N) with effect from 25 November 2005 with Dr Quach. It also admits that on 18 November 2015 Dr Quach lodged a claim for the payment of benefits under the policy in relation to “Impairment” and “Narcissistic Personality Disorder”. MLC Life asserts that Dr Quach has not cooperated with all of its requests for information in relation to his claim.

4    It is also relevant to note, by way of background, litigation between the Health Care Complaints Commission and Dr Quach in both the Civil and Administrative Tribunal of New South Wales (NCAT) and, subsequently, in the Court of Appeal of the Supreme Court of New South Wales. This litigation provides some context for Dr Quach’s claim against MLC Life under his income protection plan policy. On 5 February 2015, NCAT found that Dr Quach had engaged in conduct which was both unsatisfactory professional conduct and professional misconduct. The conduct included charging excessive amounts, misdiagnosis and inappropriate treatment regimes, as well as a finding that Dr Quach had a mental impairment, disability, condition or disorder (a narcissistic personality disorder) which detrimentally affected his capacity to practice medicine. Dr Quach’s registration as a medical practitioner was cancelled and he was prevented from applying to have that cancellation of his registration reviewed for a period of seven years. The history of Dr Quach’s proceedings in the Court of Appeal is outlined in Quach v New South Wales Health Care Complaints Commission [2016] NSWCA 10. The proceedings in the Court of Appeal were by way of judicial review for jurisdictional error. Dr Quach was unsuccessful in the Court of Appeal and was ordered to pay costs.

MLC Life’s claims for legal professional privilege

5    In support of its claims for privilege, MLC Life relied upon an affidavit dated 7 August 2019 by its instructing solicitor, Mr Alphonse Edwards. The affidavit did not describe the two documents or state in any detail why they attracted legal professional privilege. MLC Life also tendered, however, over Dr Quach’s objection, a copy of the Schedule of Documents which described the two relevant documents and several other documents in respect of which MLC Life no longer pressed its claim for privilege. In brief, the claims for privilege are now pressed on the following two documents only.

(a)    As to a document entitled “Legal Referral Form”, MLC Life claims that it is a confidential document prepared for the dominant purpose of having a lawyer provide legal advice to it and in anticipation of legal proceedings.

(b)    As to the other document entitled “Legal Opinion”, together with a copy of the Legal Referral Form, similar dual claims for privilege are made on the basis that this document was created by Suzanne Oliver (MLC’s Senior Legal Counsel) on or around 11 July 2019. The document was prepared in response to the Legal Referral Form.

6    MLC Life has the onus of establishing the basis for its privilege claims. This has implications for the quality of the evidence which must be adduced, as is reflected in Brennan CJ’s observations in Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3; 188 CLR 501 at 513-4:

When a claim of privilege attaching to a document seized under a warrant comes to be determined judicially, the court must ascertain for itself whether the document was brought into existence solely for a privileged purpose … In determining the claim of privilege, the court is not reviewing judicially an executive action but is determining a distinct controversy between the person who seeks to inspect the seized document and the person who seeks to maintain its immunity from inspection on the ground of legal professional privilege. To determine that controversy, the court must act upon admissible evidence, not upon hearsay.

7    MLC Life contends that the Legal Referral Form and Legal Opinion are privileged on the basis that they were created for the dominant purpose of it obtaining legal advice in relation to anticipated legal proceedings. It contends that it reasonably anticipated that Dr Quach would bring such proceedings because of the contents of his letter dated 4 June 2018. This letter was written in the context of MLC Life’s consideration of Dr Quach’s insurance claim dated 18 November 2015. Dr Quach lodged a complaint about the assessment of his claim in a letter dated 30 April 2018, to which MLC Life responded in a letter dated 28 May 2018. This in turn led to Dr Quach sending his letter dated 4 June 2018 where, in the context of Dr Quach claiming that MLC Life was not entitled to access documents relating to the proceedings in the Court of Appeal, he said that his claim should be paid immediately. He then added:

If need be, I will seek Court Orders to prohibit MLC Limited from embarking on a “fishing expedition” and for immediate payment of overdue imcome (sic) protection claim.

8    It is insufficient merely to assert a claim of privilege — facts must be proven which demonstrate that the claim is properly made. As White J recently pointed out in Martin v Norton Rose Fulbright Australia [2019] FCA 1101 at [54], the requisite evidence must reveal the relevant characteristics of each document in respect of which privilege is claimed and do so by admissible direct evidence, not hearsay. Approving what Brereton J had said in Hancock v Rinehart (Privilege) [2016] NSWSC 12, White J also stated that the Court’s power to inspect a document where there is a claim for privilege is not to facilitate proof by a claimant of facts which are required to make good the claim, but rather to provide a means of enabling that claim to be scrutinised and tested. I respectfully agree with those views.

9    It is well settled that the relevant time at which a claim for privilege is to be determined is at the time when the document came into existence (Barnes v Commissioner of Taxation (Cth) [2007] FCAFC 88; 242 ALR 601 at [5]). The relevant question is whether the document came into existence for the dominant purpose of seeking legal advice or assistance or in anticipation of legal proceedings. If the advice given by a legal advisor is predominantly for a financial, personal or commercial purpose, as opposed to a purpose of seeking legal services or assistance, it will not attract privilege (Barnes at [8]). This was pointed out by Dr Quach in opposing MLC Life’s claims for privilege.

10    As to copy documents, privilege attaches to a copy document provided to a lawyer if the copy was made for the purpose of obtaining legal advice or for use in legal proceedings (Barnes at [9]). It is necessary to show that the copy document was created for the dominant purpose of seeking legal advice or assistance. Thus an original document which is not created for the relevant dominant purpose and is not privileged may become privileged if a copy of it is created for the relevant purpose (Barnes at [11]).

11    MLC Life originally relied upon ss 118 and 119 of the Evidence Act 1995 (Cth) in support of its claims for legal advice and litigation privilege respectively. As was pointed out at a case management hearing on 1 August 2019 this was misguided. Those provisions apply to proceedings where evidence is adduced at trial. The common law principles apply to pre-trial stages, which include producing documents under a subpoena (see Esso Australia Resources Limited v Commissioner of Taxation of the Commonwealth of Australia [1999] HCA 67; 201 CLR 49 at 59-63 and Barnes at [4]).

12    At common law, litigation privilege attaches to confidential communications between a legal advisor or client and a third party if made for the dominant purpose of use in, or in relation to, litigation which is then on foot or is reasonably anticipated (Trade Practices Commission v Sterling (1979) 36 FLR 244). Litigation will be “reasonably anticipated” where there is a real possibility of litigation, as distinct from a mere possibility, but that does not mean that it has to be more likely than not (Visy Industries Holdings Pty Ltd v Australian Competition and Consumer Commission [2007] FCAFC 147; 161 FCR 122 at [24]-[33] and [68]-[69]). This issue is to be determined objectively.

Determination

13    Having regard to the description of the two documents in the Schedule of Documents, which became Exhibit 1, I find that legal professional privilege does prima facie attach to both documents. During the course of the hearing, and over Dr Quach’s objection, I inspected the two documents with a view to scrutinizing and testing MLC Life’s claims. I am satisfied that the claims have been properly made. Having regard to Dr Quach’s threat to litigate if his insurance claim was not immediately paid, I accept MLC’s submission that the Legal Referral Form is a confidential document the dominant purpose of which is to seek legal advice and/or obtain legal advice in anticipation of Dr Quach commencing legal proceedings. The Legal Opinion attracts the same privilege because it was prepared in response to the request in the Legal Referral Form, and the copy of the Legal Referral Form, a copy of which is attached.

14    Ms Oliver is described in the Schedule of Documents as “Senior Legal Counsel”. I can reasonably infer that she holds a practising certificate. Having inspected the two documents, I am satisfied that Ms Oliver’s legal opinion is accurately described as such and does not contain material which otherwise would not attract legal professional privilege.

15    Dr Quach opposed MLC Life’s claims for privilege on the basis that they were inconsistent with its alleged duty of the utmost good faith under s 13 of the Insurance Contracts Act. That contention is rejected. It fails to appreciate that it is well settled that legal professional privilege is a rule of substantive law and not merely a rule of evidence (see The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; 213 CLR 543 at [9] and [10]). As an important common law immunity it is also well settled that “statutory provisions are not to be construed as abrogating important common rights, privileges and immunities in the absence of clear words or a necessary implication to that effect” (Daniels at [11]). Section 13(1) of the Insurance Contracts Act falls far short of manifesting a clear intention to abrogate legal professional privilege where it exists.

Conclusion

16    For these reasons, the claims for privilege in respect of the Legal Referral Form and the Legal Opinion, are upheld. In view of the substantial narrowing of MLC Life’s claims for privilege, there should be no order as to costs.

Associate:

Dated:    20 August 2019