The recent Supreme Court of Victoria decision of Perry v Powercor Australia Limited provides warnings on the evidence required to maintain a claim for privilege where the dominant purpose of the communication or document is in question.
The two Plaintiffs in these proceedings brought representative proceedings on behalf of a class of property owners in the area around Coleraine against Powercor claiming damages for breaches of statutory duties and general duties of care in relation to loss and damage to property as a result of the Black Saturday bush fires. The Plaintiffs allege that a faulty Powercor power line which passed over a farming property started the bush fire and that Powercor was negligent in its maintenance of the power lines.
Powercor discovered and claimed privilege over a number of reports in relation to the cause of the fire at Coleraine. The Plaintiffs sought production of those reports on the basis that Powercor had failed to discharge its onus in establishing that the reports were protected by a legal professional privilege on the basis that they came into existence for the dominant purpose of provision of legal advice and/or in contemplation of legal proceedings.
At the heart of the proceedings were four reports over which privilege had been claimed:
- Report of Robin Hartrick entitled “Fire Investigation Report, Coleraine Fire 7 February 2009” (incorporating transcript of a report by Dennis Clarke)
- Report of Donald Bainbridge entitled “Asset Failure Investigation Tie Wire Coleraine SWER” dated 10 March 2009, amended 24 June 2009
- Supplementary report of Dennis Clarke entitled “Additional Calculations on an Effect of Unbalanced Span Length on Tie Behaviour”, and
- Draft report of Ken Woolhouse entitled “SWER Line Tie” dated 22 July 2009.
In support of its claim for privilege over the four reports, Powercor relied upon an affidavit of its in-house solicitor, Ms Rands. Ms Rands deposed to the content of her responsibilities as legal counsel for Powercor, including a requirement for her to commission and obtain reports to assist her in formulating her legal advice and for the purpose of providing such reports for the use of lawyers who are engaged to act on behalf of Powercor both in litigation and when providing legal advice to Powercor. Her evidence was that she formed the view on 8 and 9 February 2009 that litigation against Powercor would ensue from the fires. It was her further evidence that she discussed the legal implications of the fire with Powecor’s CEO. Her evidence was that the CEO asked her to arrange for an investigation into the fire so that she could give him legal advice on Powercor’s overall exposure given the allegations that the source of the ignition of the fires had involved Powercor’s assets. Ms Rands’ evidence was that on 12 February 2009, she instructed Mr Hartrick to investigate the fire at Coleraine and that as part of his work, Mr Hartrick instructed Dennis Clarke to conduct an examination of the Tie Wires and to prepare a report. Those wires are relevant to the allegations as to how the fire started. It was her further evidence that Mr Bainbridge prepared a report for the purpose of giving Mr Hartrick information in preparation of his investigator’s report. Finally, Ms Rands gave evidence that she was advised that in June 2009, Powercor’s solicitors had instructed Mr Woolhouse to prepare a report with respect to the Tie Wire. There was no other evidence about that report.
Powercor did not arrange for any evidence to be given by the CEO as to his meeting with Ms Rands or his purpose in seeking an investigation. That decision was a fatal one in terms of the outcome of the privilege claim.
The factual context of the reports
At the time of the Black Saturday fires, Powercor had in place a written procedure for reporting and investigating asset failures. Pursuant to that procedure, if a failed item required investigation, an investigator was to be assigned to the task. His Honour, Justice Robson found that the prescribed internal procedure required reporting to many individuals within the Powercor organisation for further action.
Powercor was also obliged to report the incident to Energy Safe Victoria and WorkSafe pursuant to obligations it had under the Electricity Safety Act, 1998. Those requirements include to report into the cause of the fire.
Powercor had notified Energy Safe Victoria on Sunday, 8 February 2009 of the fire and stated that the cause of the incident was under investigation. Powercor notified its liability insurers on 9 February 2009. That same day, the Royal Commission into the bushfires was announced by the Premier of Victoria.
Three days later, Mr Hartrick was instructed to investigate the cause of the fire.
Powercor’s evidence at the Royal Commission made reference to and relied upon the four reports the subject of the privilege claim.
The arguments of the parties
The Plaintiffs conceded that at the time the reports were sought and prepared, legal proceedings against Powercor were anticipated by it. However, they argued that the reports were prepared for a number of purposes and that Powercor has not demonstrated the dominant purpose for the creation of the reports was for the provision of legal advice or for use in anticipated or contemplated litigation. They submitted that in addition to the purpose described in Ms Rands’ affidavit, there were at least three other purposes for obtaining the reports, including for Powercor to comply with its reporting requirements under the Electricity Safety Act, 1998, informing Powercor’s management if its electrical distributing system had caused the fire so that Powercor could take whatever steps necessary as a part of its normal business operations to deal with that, and to assist Powercor to deal with the issues that would be raised in the Royal Commission.
Powercor accepted that they had a number of statutory obligations to comply with but argued that the reports came into existence in order for it to obtain legal advice to address any number of legal issues arising from the fire. It argued that the dominant purpose was satisfied by recognising from all the facts and circumstances that legal advice would be needed by Powercor for a multiplicity of different legal purposes, including satisfying its statutory obligations.
His Honour referred to a number of authorities to the effect that the dominant purpose must be determined by the Court and determined objectively, and that the evidence of the intention of the maker of the report or the person who procured it is not necessarily conclusive. His Honour cited with approval comments made by the High Court in Esso Australia Resources Limited v Federal Commissioner of Taxation and by Justice Young in AWB v Cole to the effect that it may be necessary to examine evidence concerning the purpose from persons in the hierarchy of decision making in order to identify the purpose or purposes for which reports are prepared.
Here the failure by Powercor to call the CEO to give evidence was significant. Justice Robson found that the failure of the CEO to give evidence in circumstances where it was central to the establishment of the privilege gave rise to an inferences that the evidence would not have assisted Powercor’s claim to privilege. His Honour noted that the Plaintiffs sought to draw inferences from the surrounding evidence that Powercor needed the information for a number of purposes, not just to facilitate legal advice from Ms Rands and because the CEO, who requested Ms Rands to procure the reports, had failed to give evidence to rebut those inferences, the Court was entitled to more readily draw those inferences.
Ultimately, His Honour inferred that the reports were intended to be the source of information that Powercor used for its normal business purposes including obtaining legal advice, providing information to the Royal Commission, satisfying its obligations under the Electricity Safety Act, 1998, providing information to its insurer, complying with its internal reporting requirements and reviewing its maintenance program.
In those circumstances, and in the absence of evidence from Powercor’s CEO, His Honour found that Powercor had not satisfied the onus of establishing that the privileged purpose of the commission of the reports was the dominant purpose and therefore ordered that the reports be produced to the Plaintiffs.
The decision serves as a warning about the evidence necessary to discharge the onus of demonstrating a dominant privileged purpose. Parties trying to resist the production of documents on the grounds of privilege may need to consider preparing multiple affidavits in support of the privilege claim, including from those high up in the hierarchy of decision making within the organisation.