New South Wales Supreme Court CITATION : Hyde v NRMA Insurance Ltd & anor [2001] NSWSC 396 CURRENT JURISDICTION: Common Law FILE NUMBER(S) : SC 21431/96 HEARING DATE(S) : 11 May 2001 JUDGMENT DATE : 29 May 2001 Anne Elizabeth Hyde - plaintiff/1st opponent PARTIES : NRMA Insurance Limited - 1st defendant/2nd opponent Woolworths limited - 2nd defendant/Applicant JUDGMENT OF : Registrar Jupp LOWER COURT Supreme Court JURISDICTION : LOWER COURT FILE NUMBER(S) : LOWER COURT JUDICIAL OFFICER : Capelin - applicant/2nd defendant COUNSEL : Webb QC & Wright - 1st opponent/plaintiff Williams - 2nd opponent/1st defendant Phillips Fox - applicant/2nd defendant SOLICITORS : McClellands - opponent1/plaintiff Sparke Helmore - opponent 2/1st defendant CATCHWORDS : Claim for client legal privilege LEGISLATION CITED : Evidence Act 1995 (NSW) ss119, 133 National Employers Mutual General Insurance Association Limited v Waind (1979) 141 CLR 648; CASES CITED : Hronis v Neowhouse (1971) NSW R 468 ACC v Safeway 153 ALR 42 DECISION : 1. Documents produced under subponea by Aspeck Holdings listed 6 to 29 in exhibt A to motion marked as priveleged; 2. Access granted to documents listed as 1 to 5 in Exhibit A; 3. Applicant/2nd Defendant to pay 80% of the plaintiff's and 1st defendant's costs of the motion - 7 - THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION CL 21431/66 REGISTRAR JUPP 29 May 2001 Anne Elizabeth Hyde v NRMA Insurance Limited & Woolworths Limited JUDGMENT: on motion claiming privilege in respect of subpoenaed documents 1 REGISTRAR: By notice of motion filed 9 March 2001 the 2nd defendant seeks an order that documents produced on subpoena by Aspeck Holdings Pty Limited be marked as privileged. 2 These proceedings arise from a motor vehicle accident that occurred on 11 March 1996. The plaintiff was injured in that car accident. The driver of the other car was killed as a result of the accident. The plaintiff commenced proceedings against the 1st defendant, as the insurer of the deceased's vehicle, by statement of claim filed on 10 December 1996. The 2nd defendant was joined to these proceedings on 13 May 1998 and is being sued as the deceased's employer at the time of the accident. It is alleged that the 2nd defendant overworked the deceased and that this contributed to the accident. 3 A subpoena was issued on 4 September 2000 on behalf of the plaintiff. The subpoena was directed to Aspeck Holding Pty Limited (Aspeck). Aspeck is an insurance assessor and investigation company. Aspeck was originally retained by HIH Insurance. HIH were the workers compensation insurer of Woolworths. Subsequently Aspeck has been employed by solicitors acting on behalf of Woolworths in its own right. 4 Aspeck claims to have produced all of the documents sought by the subpoena. These are listed in a schedule annexed to the affidavit of Colin Kench, an employee of Aspeck, sworn 17 April 2001. They are also listed, in more detail, in a letter dated 20 April 2001 from Ebsworths to Sparke Helmore, which was marked as Exhibit A. A packet of documents was produced by Aspeck to the registry on 3 October 2000. This is not the packet that was delivered to Court when I heard this motion. The packet produced in Court for this motion actually claims to be privileged documents produced by HIH Winterthur and while it contains some of the documents noted in the schedule it does not contain all of them. I did however manage to locate another packet within the Registry, which appears to contain the documents the subject of this motion, after hearing the motion. 5 The applicants' claim for privilege is based on section 119 of the Evidence Act. That section provides: Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: (a) a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made, or (b) the contents of a confidential document (whether delivered or not) that was prepared, for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party. 6 There appear to be 2 issues to determine. The 1st is whether some of the documents, the subject of the claim were prepared before proceedings were anticipated. If this is the case then the document or documents cannot be said to have been communicated or prepared for the purpose of legal advice relating to anticipated proceedings. The 2nd is whether there has been a waiver of the privilege. 7 The 1st issue is complicated by the fact that before these proceedings were commenced in the Supreme Court there were proceedings in the Compensation Court relating to the death of the deceased driver. 8 The 1st document in the schedule, and in point of time, is an interim report from Aspeck to HIH dated 14 June 1996. Mr Capelin, counsel for the applicant, states in his written submissions that this document is marked "Strictly privileged and confidential for the use and consideration of legal advisers in connection with anticipated litigation". This marking appears in small print at the bottom of the 1st page of the body of the document (after a cover page and index page). Its inclusion appears to be as part of a letterhead template. Under the circumstances, I do not regard such a statement to be determinative of the issue. The evidence as to the circumstances surrounding the commissioning of this report is sparse. An affidavit of Kenneth John Forrester, a claims manager at HIH at the time, sworn 11 May 2001, is about the closest evidence available. Parts of that affidavit were objected to and not read. Paragraph 6 of that affidavit states that it was Mr Forrester's standard practice to instruct a factual report on all fatal accidents and that results were passed onto panel solicitors to advise on liability. An affidavit of Diana Benk, a solicitor at HIH, sworn 28 March 2001, notes that the claims managers that had dealt with this case had left HIH. Her conclusions, to which I have given limited weight, are based on the file contents. She does note however that it was the usual practice of the claims department to forward the investigator's report to their solicitors for the provision of legal advice as to liability and quatum. 9 From the evidence and the documents themselves it would appear that this report was only prepared in respect of a claim or anticipated claim by the deceased's family against Woolworths' workers compensation insurer. If this was the only claim or anticipated claim I have to consider authorities that suggest that material prepared in these circumstances may not always attract client legal privilege. Mr Capelin sought to distinguish this instance from the circumstances described in National Employers Mutual General Insurance Association Limited v Waind (1979) 141 CLR 648, a leading case regarding the application of client legal privilege to investigation reports, particularly in respect of workers compensation claims. In that case the Court found that various reports from loss assessors were not privileged because litigation was not the necessary or even likely outcome of an insurance claim. Mr Capelin notes that this case was decided before the Evidence Act and was determined according to the sole-purpose test. He also argues that this case is different because the claim or anticipated claim in this case was a "death claim", and that litigation would be required. 10 In Waind, the relevant reports were prepared before any claim for compensation had been made. The High Court confirmed the Court of Appeal and the trial judge, in determining that the first use of the reports was to determine the Workers Compensation Insurer's liability to pay in the ordinary course of its business. The High Court stressed that even a written claim for compensation does not necessarily mean litigation will follow. The evidence in Waind was that ninety percent of claims do not result in litigation. In these circumstances the Court saw the primary role of the reports as allowing the insurer to determine in the first instance whether it will pay compensation or dispute liability. Despite Mr Capelin's submission to distinguish this case, I believe that the general principal remains sound, even if the relevant test is now the dominant rather than the sole purpose test. 11 Mr Capelin drew my attention to the case of Hronis v Neowhouse (1971) NSWR 468. In that case the defendant issued a subpoena against the M.W.S & D Board, a self-insurer for the purposes of Workers Compensation, to produce documents including reports made by the Board's own medical advisers and employees in relation to the claim and injury. In that case Taylor J after examining the relevant documents held that: "… What was being compiled was a record on which the Board's legal advisors might resists a claim for workers compensation when the Board's medical advisors were not prepared to recognise any further incapacity in the plaintiff to do his former work. Clearly in my view these documents were prepared with a view to litigation and in the event of there being litigation, they would have constituted in effect the basis of the Board's brief." Taylor J held that the relevant documents were privileged. 12 The apparent inconsistency between Hronis and Waind could possibly be resolved by the particular circumstances of each case. In Waind Taylor J appears to have formed a view that litigation was anticipated from an early stage. Waind is however a later case and it is clear from that case that I should not assume that litigation is an inevitable consequence of a claim. In this case although a payment for funeral expenses had been made, there is no evidence that any claim had been made on behalf of the deceased. Although the interim report is titled "Workers Compensation Claim" it also notes "Claim No. TBA". 13 Mr Williams, counsel for the plaintiff, referred me to the case of Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd 153 ALR 42. In that case the ACCC claimed privilege in respect of certain investigatory reports and draft statements prepared by one of its officers. Ultimately Goldberg J held that legal proceedings were not reasonably anticipated until it became apparent that there was sufficient evidence to proceed against one of the respondents. As the relevant documents were prepared/communicated prior to the determination to commence proceedings there was real doubt as to whether the proceedings could be said to be anticipated This is a little different to Waind and Hronis in that the party claiming the privilege was the plaintiff to the "anticipated" proceedings, however the reasoning is consistent with that in Waind. In each case the evidence relating to the circumstances surrounding the creation of the relevant documents has to be considered. 14 As I noted above the evidence relating to the state of mind of the persons who created and communicated the documents the subject of the claim for privilege is limited. Although Mr Williams asserted that I could not regard the documents produced as evidence to determine the claim for privilege, I am entitled under section 133 of the Evidence Act to inspect the documents for the purpose of determining the question. In fact Mr Williams requested that I do this for all the documents to ensure that they are properly included the claim, even if I was to uphold the general claim for privilege. I have inspected all the documents, and I have noted any references or suggestions of anticipated litigation. 15 Although the applicant has asserted that litigation was always required for death claims, and that therefore I must conclude that litigation was anticipated right from the start, it does not appear to me that the Workers Compensation Act requires that the Compensation Court needs to become involved, even if a claim is made. In the affidavit of Mr Forrester it is stated that Workcover would not allow insurers to make voluntary death benefit payments, and that all such payments required the approval of the Compensation Court. The logic of such a policy is unclear to me. However, if the only reason the matter is "going to Court" is an approval process, and it is possible that the matter is not a matter of contest between the parties, I am not sure that it should really be classed as litigation. In any event I am not clear that there was even a claim at that stage. 16 Under the circumstances I cannot say, on the balance of probabilities, that documents 1 to 5 in the schedule were prepared in circumstances where litigation was necessarily anticipated. As such I am not prepared to mark those documents as privileged. 17 The rest of the documents in the schedule were prepared over a year later, and after Woolworths had been joined as a party to these proceedings. It is also evident that the deceased's defacto had by then lodged a claim for death benefits. I am of the view that these documents can be said to have been prepared as confidential documents for the dominant purpose of either providing HIH or Woolworths with professional legal advice, either to the Supreme Court or Compensation Court proceedings, or both. 18 There has been a claim by the plaintiff and 1st defendant that even if I find that some of the documents are privileged, that there has been a waiver of that privilege. It appears that at least one document (3 in the schedule) was produced by the Coroners Court in response to a subpoena addressed to it. To the extent that there was no claim for privilege made in respect of that document when it was produced by the Coroners Court, I hold that there has been a waiver of privilege. Otherwise I do not find that there has been a waiver of privilege. The relevant documents were communicated between Aspeck, HIH, Woolworths and the solicitors acting from time to time for Woolworths, or HIH. Although HIH and Woolworths may not have had exactly the same interest, HIH were the insurers of Woolworths at the relevant time. Any entitlement to claim privilege by Woolworths was subrogated to HIH, and has not been subsequently waived by the communications noted. 19 I doubt that the result of this motion will have any effect on the ultimate outcome of these proceedings. As a matter of general policy (see Part 1 rule 3 of the Rules), motions that add to costs but are unlikely to affect the outcome of the substantive proceedings should be discouraged. Parties and their legal advisers should however not be reluctant to make a valid claim for privilege where this is appropriate. Client legal privilege is a right that has been enshrined in litigation for good public policy reasons, and the claim should not be lightly waived. It is nevertheless often difficult for parties seeking access to documents to determine whether a claim for privilege is valid or an ambit claim. In many cases, the claim can only be determined by looking at the actual documents. To avoid unnecessary interlocutory applications and save costs I would encourage parties claiming privilege to be as frank as possible regarding the documents about which they are claiming privilege. In this way the other parties have a better chance of determining, firstly whether the claim is valid, and secondly, whether it is worthwhile arguing. 20 In this case each party has been partly successful. Again, I doubt whether the access or lack of access to the documents will ultimately have any impact on the way the proceedings are conducted. The documents over which I have determined that there is no privilege constitute 5/29ths (about 17%) of the list of documents and approximately 1/3 of the bundle by volume. I note however, that most of the evidence and argument was directed to the question of whether the claim for privilege could be sustained in respect of the 1st 5 documents. In this respect the plaintiff and 1st defendant have been successful. As such those parties are entitled to a costs order in their favour. As they have not been entirely successful I propose to make an order that the 2nd defendant pay the plaintiff and 1st defendant 80% of their costs of the motion. 21 The orders I make then are: (1) Documents produced under subpoena by Aspeck Holdings identified as numbers 6 to 29 in Exhibit A to the motion be marked privileged; (2) Access be granted to those documents produced by Aspeck Holdings identified as numbers 1 to 5 in Exhibit A to the motion; (3) the applicant/2nd defendant pay the 80% of the plaintiff's and 1st defendant's costs of the motion. Last Modified: 05/30/2001 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.