Douglas v Morgan [2019] SASFC 76

Legal professional privilege may be exercised by clients in a lawyer-client relationship, to protect communications of a confidential nature, which were brought into existence for the dominant purpose of obtaining legal advice, or in anticipation of litigation (“dominant purpose test“).

In a recent decision of the Full Court of the Supreme Court of South Australia (“the Full Court“), legal professional privilege was not ascribed to an investigation report prepared for an insurer as it was held to have not met the requirements of the dominant purpose test. The Court found that the dominant purpose of obtaining the report was not for obtaining legal advice or in anticipation of litigation. Instead, the dominant purpose of the report was said to be within the ordinary course of business, for the determination of liability.

Facts:

On 9 December 2012, whilst crossing the road, the Respondent was struck by a motor vehicle driven by the Appellant. On 20 December 2012, the Respondent’s solicitor contacted the Appellant’s Compulsory Third Party Insurer (CTP Insurer) providing details of the collision and seeking payment of medical expenses incurred as a result of injuries sustained from the collision.

On 27 December 2012, the CTP Insurer’s claims consultant requested that an independent investigation be undertaken to determine the circumstances of the collision by obtaining detailed accounts of the accident from the parties and any witnesses. When making the request, the consultant included in the reasons for the request; “…in order to confirm the accident circumstances and ascertain the insured and claimant’s awareness prior to the accident”.

On 12 June 2013, the CTP Insurer informed the Respondent’s solicitor that it denied liability for the Respondent’s injuries because the Respondent crossed the road into the path of the Appellant’s oncoming vehicle.

The District Court of South Australia:

In November 2015, the Respondent commenced proceedings against the Appellant for personal injury damages caused by negligent driving in the District Court of South Australia.

In September 2016, the CTP Insurer sought legal professional privilege over the report when completing its discovery, and the Respondent sought access to the report.

On the first instance, the District Court of South Australia upheld the Appellant’s claim for privilege on the basis that the dominant purpose of obtaining the report was for obtaining legal advice for reasonably anticipated litigation.

This decision was overturned on appeal by Bochner J, who found that the CTP Insurer’s dominant purpose for requesting the report was to obtain an account of the accident from the parties and witnesses, and to consider the Respondent’s claim.

The Full Court of the Supreme Court of South Australia:

The decision of Bochner J was upheld on appeal to the Full Court of the Supreme Court of South Australia, which found that legal professional privilege did not apply to the report because the dominant purpose of requesting it was to determine liability to the Respondent. This was so despite the secondary purpose being found to have been for the report to be provided to the solicitor of the CTP insurer in anticipating litigation.

Reasons for decision:

The Full Court made this determination based on the following factors:

  1. The CTP insurer clearly identified the purpose of requesting the report when the request was initially made. That intention was clearly to gather the facts surrounding the collision to determine the issue of liability.
  2. There was no mention of whether the report was to be passed onto the CTP insurer’s solicitor for legal advice or in anticipation of legal proceedings.

What to take away from this decision:

There is ongoing tension between legal professional privilege and the interests of justice of obtaining the fullest possible access to the facts which are relevant to the issues in any case. As stated in the High Court decision of Esso Australia Resources Limited v The Commissioner of Taxation [1999] HCA 67 at [35], “Where the privilege applies, it inhibits or prevents access to potentially relevant information…For the law, in the interests of the administration of justice, to deny access to relevant information, involves a balancing of competing considerations”.

When privilege applies, its purpose is to protect the interest of clients in circumstances where they are seeking legal advice or when they are anticipating litigation. Insurers must exercise extra caution when briefing investigators to provide a report to assist in resolving liability disputes. Investigators reports may contain confidential information which could be crucial to the strength or lack thereof of their case if the matter was to proceed to a hearing. Prior to briefing an investigator, insurers ought to therefore consider, determine, and effectively communicate what the dominant purpose of obtaining the report is, in order to avoid waiving their right to legal professional privilege.