FEDERAL COURT OF AUSTRALIA Ensham Resources Pty Limited v AIOI Insurance Company Limited [2012] FCA 710 Citation: Ensham Resources Pty Limited v AIOI Insurance Company Limited [2012] FCA 710 Parties: ENSHAM RESOURCES PTY LTD v AIOI INSURANCE COMPANY LIMITED File number: NSD 1256 of 2010 Judge: COWDROY J Date of judgment: 6 July 2012 Corrigendum: 6 July 2012 Catchwords: PRIVILEGE – reports provided by loss adjustor to solicitor for insurer – whether reports subject to legal professional privilege – whether litigation reasonably anticipated – whether reports have the dominant purpose of litigation advice Legislation: Insurance Contracts Act 1984 (Cth) s 21 Cases cited: Australian Competition and Consumer Commission v Australian Safeway Stores (1998) 81 FCR 526 Australian Competition and Consumer Commission v Prysmian Cavi e Sistemi Energia SRL (No 2) (2012) 287 ALR 760 Brunswick Hill Apartments v CGU Insurance Ltd [2010] VSC 532 Commissioner of Taxation (Cth) v Pratt Holdings Pty Ltd (2005) 225 ALR 266 Esso Australia Resources v Federal Commissioner of Taxation (1999) 201 CLR 49 Grant v Downs (1976) 135 CLR 676 Hartogen Energy Ltd (in liq) v Australian Gas Light Co (1992) 36 FCR 557 Mitsubishi Electric Pty Ltd v Victorian Workcover Authority (2002) 4 VR 332 National Employers' Mutual General Insurance Association Ltd v Waind (1979) 141 CLR 648 Nickmar Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44 Protean (Holdings) Limited v American Home Assurance Company (Marks J, Supreme Court Victoria, 5 September 1985) Rio Tinto Ltd v Commissioner of Taxation (2006) 235 ALR 127 Trade Practices Commission v Sterling (1979) 36 FLR 244 Wheeler v Le Marchant (1881) 17 ChD 675 Date of hearing: 19, 20, 22 June 2012 Date of last submissions: 22 June 2012 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 52 Counsel for the Applicant: Ms C Cochrane with Mr A Flecknoe-Brown Solicitor for the Applicant: Freehills Counsel for the Respondent: Ms V Whittaker with Mr D Klineberg Solicitor for the Respondent: King & Wood Mallesons FEDERAL COURT OF AUSTRALIA Ensham Resources Pty Limited v AIOI Insurance Company Limited [2012] FCA 710 CORRIGENDUM 1. In paragraph [37], delete 'GROSS PROTECTION' and substitute 'GROSS PROFIT'. 2. In paragraph [37] line 3, delete 'gross product' and substitute 'gross profit'. 3. In paragraph [45] second sentence, delete '18 January 2008' and substitute '18 February 2008'. 4. In paragraph [49], delete '18 February' and substitute '13 February'. I certify that the preceding four (4) numbered paragraphs are a true copy of the Corrigendum of the Honourable Justice Cowdroy. Associate: Dated: 6 July 2012 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1256 of 2010 BETWEEN: ENSHAM RESOURCES PTY LTD Applicant AND: AIOI INSURANCE COMPANY LIMITED Respondent JUDGE: COWDROY J DATE OF ORDER: 6 JULY 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 5. The application be dismissed. 6. The Applicant pay the costs of the interlocutory application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1256 of 2010 BETWEEN: ENSHAM RESOURCES PTY LTD Applicant AND: AIOI INSURANCE COMPANY LIMITED Respondent JUDGE: COWDROY J DATE: 6 JULY 2012 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The applicant, Ensham Resources Pty Limited ('Ensham'), owns and operates an open-cut coal mine ('the mine') on the flood plain of the Nagoa River near Emerald in Queensland. Heavy rain fall between 17 and 20 January 2008 caused the Nagoa River and Old Winton Creek to overflow and breach earth levies surrounding Pit B, Pit C and Pit D of the mine, with consequent inundation of those pits by water on 19 and 20 January 2008. There was resultant loss and destruction of, and damage to, certain of Ensham's property and consequent interruption of its business. Ensham suffered loss and damage as a consequence. 2 On 22 January 2008 Ensham gave notice to the respondents ('the Insurers') of a potential claim under a policy of industrial special risk insurance entered into between Ensham and the Insurers ('the Policy'). Between 18 August 2008 and 8 April 2010, Ensham made claims under the Policy. No payments have been made by the Insurers. 3 On 24 September 2010, Ensham commenced this proceeding for recovery of loss alleged to be suffered as a consequence of the Insurers failure to indemnify Ensham under the Policy. 4 A number of issues will become relevant in the primary proceedings. These include whether Ensham complied with the duty of disclosure set out in s 21 of the Insurance Contracts Act 1984 (Cth) ('the Act'). Another issue is whether certain of Ensham's property, particularly a levee which possibly failed in the flood, was a risk that the insurance policy covered and the consequences for any property damage claimed as a result of the possible failure of the levee. A third issue is whether certain policy limits apply to prevent Ensham from claiming the full cost of dewatering the flooded pits. Inevitably these issues will be explored in much greater depth in the primary proceedings. THE CLAIM FOR PRIVILEGE 5 On 1 February 2008, Mr Satoshi Kodaira, a manager of the respondent, emailed Mr Peter Stockdale of King and Wood Mallesons ('Mallesons') to retain him and his firm to work on matters relating to the Ensham flood. Mr Stockdale is currently the partner with carriage of this matter for the respondent. By the time Mr Kodaira emailed Mr Stockdale, Mr Kodaira had retained Mr Greg Bickle of Crawford & Company (Australia) Pty Ltd ('Crawford') to work as a loss adjustor. This agreement was formalised in a costs agreement offer from Mallesons to Mr Kodaira on 7 February 2008. 6 Mr Stockdale spoke with Mr Bickle regarding the claim. On 13 February 2008 Mr Stockdale wrote a file note where he wrote, inter alia: I spoke 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 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 emptying 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 problem's 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. 7 On 13 February 2008, Mr Stockdale wrote to Mr Kodaira and recommended that Mr Kodaira withdraw his retainer of Crawford and that Mr Bickle be retained thereafter by Mallesons directly. On 18 February a draft retainer was prepared and sent by email from Mr Stockdale to Mr Kodaira. From this point, Mr Bickle was retained by Mallesons directly. Mr Stockdale prefaced the retainer of Mr Bickle by stating: 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. 8 The terms of the retainer stated, inter alia: 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. 9 The retainer letter continued: 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. 10 Mr Stockdale gave evidence at the hearing. He stated that the reference to 'the extent to which the Policy responds' meant that Mr Bickle's remit did not extend to him interpreting the clauses in the policy that might determine the policy response. Initially Mr Bickle was to determine the quantum of the claim under the policy. However, in the course of discussions between Mr Bickle and Mr Stockdale which took place prior to 19 February 2008, Mr Stockdale formed the view that there were "significant policy coverage issues". 11 The first issue was related to the cost of dewatering and whether any provisions of the policy limited the amount that could be claimed. Mr Stockdale testified that this issue was apparent to him from 8 February 2008. Mr Stockdale gave evidence that in his view, the costs of dewatering were limited by the policy to $5,000,000 and such sum had already been spent by February 2008. 12 The other issue was whether the levee bank was insured property and the implications arising from the determination of this issue. Mr Stockdale gave evidence of his opinion that the levee bank was not included in the list of declared assets and that the levee bank was accordingly not covered by the insurance policy. As a result, the policy would not indemnify any business interruption loss suffered as a result of a failure of the levee. Given that the size of the claim was likely to be very substantial, Mr Stockdale considered that this would be an issue of dispute. ENSHAM'S APPLICATION 13 Ensham has applied by interlocutory application for orders that the Insurers produce certain reports prepared by Mr Bickle to the Court for inspection to enable the Court to decide the validity of the Insurers' claim that they are subject to legal professional privilege. The interlocutory application also seeks an order that Ensham be granted access to each of the reports. 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. PRINCIPLES 16 Legal professional privilege protects the confidentiality of communications made in connection with giving or obtaining legal advice or the provision of legal services, including representation in proceedings in a court: see Esso Australia Resources v Federal Commissioner of Taxation (1999) 201 CLR 49 ('Esso Australia') at [35]. Litigation reasonably contemplated 17 To establish the existence of such privilege, the person claiming the privilege bears the onus of establishing that at the time the document was produced, litigation was reasonably contemplated: see Nickmar Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44 at 54 ('Nickmar'); National Employers' Mutual General Insurance Association Ltd v Waind (1979) 141 CLR 648; Trade Practices Commission v Sterling (1979) 36 FLR 244; Wheeler v Le Marchant (1881) 17 ChD 675. 18 The question of whether litigation is reasonably contemplated is an objective one: Nickmar at 55, Grant v Downs (1976) 135 CLR 676 at 682-683. As Goldberg J stated in Australian Competition and Consumer Commission v Australian Safeway Stores (1998) 81 FCR 526 ('Australian Safeway') at 558: Whether proceedings are anticipated must be determined by reference to objective criteria and not simply by reference to the subjective statements of a participant in the relevant information gathering or litigation preparing process. A document or communication cannot be given protection from production by the creator of the document or the person propounding it in the form of a communication uttering the litany – I brought it into existence for the purpose (be it sole or otherwise) of legal proceedings. Nor is it sufficient, in my view, for the person to say – I anticipated proceedings would be brought at the time I brought the document into existence and the purpose for which I did so was those proceedings. 19 A reasonable person in the position of the relevant solicitor need not believe that litigation was absolutely certain for privilege to attach to the documents in question. In Australian Safeway at 559, Goldberg J stated: Where the legal proceedings are anticipated one needs more than speculation as to the possibility of such proceedings; one needs a probability or likelihood that such proceedings will commence. It is putting it too highly, in my view to say that a decision must have been made by the moving party or authority that such proceedings will be commenced. It is sufficient in my view, that the moving party or authority has made a decision, for example, that subject to being satisfied as to the strength of the case, anticipated on the facts as known, that legal proceedings are likely. The concept of anticipated proceedings involves the notion that there is a reasonable probability or likelihood that such proceedings will be commenced – not that they will be but rather more probably than not they will be. 20 Batt JA in Mitsubishi Electric Pty Ltd v Victorian Workcover Authority (2002) 4 VR 332 ('Mitsubishi Electric') at 341 disagreed with Goldberg J's view that the proceedings must be more likely than not before it could be said that such proceedings were reasonably anticipated. Mitsubishi Electric was subsequently followed on this issue by Lander J in Australian Competition and Consumer Commission v Prysmian Cavi e Sistemi Energia SRL (No 2) (2012) 287 ALR 760 at [26]. 21 The occurrence of an event which, in common experience, very often leads to litigation may lead to the conclusion that litigation is reasonably anticipated and therefore give rise to a valid claim of privilege: see Mitsubishi Electric at [22]; Allen v State of Queensland [2010] QSC 442 at [22]. In Mitsubishi Electric at [22] Batt JA stated: Reviewing the circumstances objectively, I am of opinion, for the reasons which follow, that at the time the reports were commissioned litigation was reasonably anticipated or in contemplation: there was a real prospect of it. First, the nature of the incident with the circuit breaker was inherently such as to make litigation of some kind or kinds likely according to the ordinary course of human affairs… To adapt Williams, the occurrence of an event of a kind that, in common experience, very often leads to litigation may found a sufficient anticipation of litigation to attract privilege: Collins v London Omnibus Co; Birmingham and Midland Motor Omnibus Co Ltd v London and North Western Railway Co; Ankin v London & North Eastern Railway Co; The Hopper No 13; Westminster Airways Ltd v Kuwait Oil Co Ltd; Cataldi v Commissioner for Government Transport and Nickmar; compare Grant v Downs. Secondly, solicitors were instructed and instructed early. That is an indication that litigation was expected and that the insurer desired to be forearmed with legal advice, based on the true facts, with regard to it. It was not, as I understand it, suggested that the engagement of the solicitors was a colourable device, and in any event I would not find that it was. The topics on which the solicitors were to advise – liability, indemnity and quantum – at least suggested that there was an expectation of a claim or claims, whether the word indemnity is to be read as referring to indemnity under the insurance policy or under s 138. Thirdly, the appellant's resort to its insurer indicates at the least the expectation of a claim or claims, followed, if unsatisfied, by litigation. [Footnotes omitted] 22 However, Mukhtar AJ in Brunswick Hill Apartments v CGU Insurance Ltd [2010] VSC 532 at [5] stated that Just because an insurance company is not unaccustomed to being on the receiving end of litigation, or, just because the matter may one day end up on the desk of a lawyer does not make documentation privileged. 23 His Honour's observation provides a warning that claims of privilege, to be upheld, require careful scrutiny. Dominant purpose 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. 25 'Dominant purpose' is defined as the purpose that was the ruling, prevailing or most influential purpose: see Mitsubishi Electric at [10]. The dominant purpose has greater importance than any other purpose: see Rio Tinto Ltd v Commissioner of Taxation (2006) 235 ALR 127 at [38]. If two or more purposes of equal significance are extant in the document, then the document cannot be said to have a dominant purpose: Commissioner of Taxation (Cth) v Pratt Holdings Pty Ltd (2005) 225 ALR 266 at [30]. 26 The fact that material states on its face that it has to be sent to solicitors for the purpose of enabling the solicitors to advise will not be determinative of the question. It is necessary to make an objective assessment of the purposes of the material in question and whether, viewed objectively, it was brought into existence in circumstances where litigation was reasonably anticipated or in contemplation. 27 If, on inspection of the disputed material, the Court is not satisfied that the dominant purpose for its creation was submission to solicitors for the purposes of legal advice, the material will not be privileged if the contents of the material and the surrounding circumstances indicate other purposes. The purpose of an insurer's conducting its insurance business, which may include placing an amount in money terms on its contingent liability, formulating its attitude to future business relations with the insured, informing head office to obtain necessary instructions or decisions and complying with reporting requirements, is not sufficient to attract the privilege: see Protean (Holdings) Limited v American Home Assurance Company, Supreme Court Victoria, 5 September 1985 ('Protean') at p 10. 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]). THE CRAWFORD REPORTS 29 The Court has been provided with both copies of redacted and unredacted reports. I shall describe those portions of the reports in respect of which privilege is claimed in general terms so as to preserve the confidentiality of the documents. Report No 2 30 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. 31 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. 32 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. 33 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. 34 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. 35 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 36 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. 37 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. 38 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. 39 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 40 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 41 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 42 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. SUBMISSIONS 43 Ensham contends that the respondent has failed to establish that each of the Crawford Reports was created with the dominant purpose of being used in contemplated litigation. It says that an inference is open that the reports were brought into existence as part of the Insurers' normal investigation into Ensham's claim and for one of the following purposes: • to enable the Insurers to determine whether to accept or reject Ensham's claim; • for the purpose of placing an amount in money terms on the Insurers' contingent liability; • so as to formulate an attitude to the future business relations between the Insurers and Ensham; or • to forward information to the officers of the Insurers in Japan for the purpose of obtaining any necessary instructions or decision and to comply with any reporting requirements. 44 Ensham further submits that the reports were prepared at a time when the facts were still unknown and when the respondent could not possibly have come to a view as to whether the claim should be paid out. FINDINGS 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. 48 Irrespective of the statements referring to privilege in the email referred to above, the Court considers that by the time the various reports in the series were being prepared (i.e. from March 2008), there existed a real prospect of litigation and that such litigation was foreseen by the respondent's solicitors. This conclusion is reinforced by the fact that the consequences of the flood on the mine were catastrophic and entailed massive damage to the applicant's business and property. Very costly remedial measures were known to be required to dewater the mine and there was a very real possibility that the cost of those measures would well exceed the applicable policy limits. 49 Furthermore, the Court finds that at least since 18 February 2008, when Mr Stockdale wrote his file note, the question whether the levee bank was included as an insurable item of property under the policy was a contentious issue. This question alone could found a reasonable view that there was a real prospect of litigation, since a substantial portion of the applicant's insurance claim would be directed towards the business loss it suffered as a result of the apparent failure of the levee. As Mr Stockdale's evidence made clear, the fact that the levee bank was not included on the list of insured property raises a significant issue in respect of the applicant's possible, and now actual, claim. 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. 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. 52 For these reasons, the applicant's application must be dismissed. I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy. Associate: Dated: 6 July 2012