Two recent decisions of the Federal Court and the New South Wales Supreme Court can be of assistance to insurers to avoid providing certain documents to opponents. Some correspondence with witnesses, including expert witnesses, and drafts of reports and statements do not have to be produced if legal professional privilege applies to the documents (i.e. if the documents were created for the dominant purpose of a lawyer providing legal advice or for the purpose of litigation).

In Asahi Holdings (Aust) Pty Ltd v Pacific Equity Partners Pty Ltd (No 1) (Federal Court, 13 May 2014) Bromberg J. confirmed previous decisions, that even when a statement or expert report is served, the drafts of the documents can still be privileged documents.  Relying on the decision of Dawson J in Attorney-General (NT) v Maurice (High Court 16 December 1986, from paragraph 486)the drafts “might disclose the precise character of confidential communications with the solicitor, by showing the alterations made from time to time”.

In Sprayworx Pty Limited v Homag Pty Limited (Supreme Court 24 June 2014) Associate Justice Harrison held that draft reports and some communications with the experts were privileged.   Relying on a decision of White J in New Cap Reinsurance Corporation Limited (in Liq) v Renaissance Reinsurance Ltd (Supreme Court, 26 March 2007, at paragraph 34) “If an expert prepares a draft report, or notes for the report, with the dominant purpose of a draft report (whether the precise draft then prepared by the expert or an intended later draft) being furnished for comment or advice by the lawyer, then it is privileged. If not, it is not

Asahi involved a claim of misleading and deceptive conduct.  The proceedings did not involve Asahi’s insurer, but the relevant issue was whether legal professional privilege was lost (waived) when a copy of the complete report was provided to the insurer.   Only a redacted version had been provided to the respondent. 

Bromberg J held:

92:          A litigant is entitled to be selective as between a draft and the finalised form of a pleading, a witness statement, an affidavit, or a legal submission. As has already been observed, the rationale of litigation privilege is based upon the capacity of one party, in the adversarial process, to keep from the other information that came into existence for the dominant purpose of the litigation and which may be prejudicial. Accordingly, the selective deployment of the contents of a draft document which came into existence for the purposes of the litigation, could not amount to a waiver of the privilege attached to the draft upon the finalised document being filed and served.

However, Asahi had waived privilege by the disclosure of the report to the insurer.  The insurer had not accepted the claim, and therefore, there was no commonality of interests between the insured and insurer -  both the insurer and the respondent had similar interests in avoiding liability to Asahi.

Asahi was decided under the common law (paragraph 31 of the judgment “There is no issue that, at this interlocutory stage of the proceedings, the common law of Australia and not the Evidence Act 1995…governs the current dispute”); whereas Sprayworx was decided under the Evidence Act.

Under the Evidence Act, privilege over a document is not waived if it is disclosed under ‘common interest immunity’ (section 122(65)(c)).  If indemnity is in dispute, then there is no ‘common interest’ and privilege may be lost by the sharing of a document between insurer and insured.

Sprayworx also involved a call for production of drafts of reports which had been served.   The respondent, Homag Pty Limited, accepted that the reports were subject to legal professional privilege, having been created for the dominant purpose of litigation, but argued that the material had been used inconsistently with the maintaining of the privilege, as the final report had been served. Homage also argued that the documents were necessary to understand the served expert reports (s126 of the Evidence Act covers the loss of privilege if the documents are necessary for a proper understanding of other documents).

The solicitor’s correspondence with the expert suggested changes to the report, and Harrison As J considered that those comments could not be said to have  influenced the substance of the report or be inconsistent with the claim for privilege over that correspondence.  The final report could be understood without reference to the other communications.

Conclusions

Legal professional privilege applies to documents created by a lawyer to provide legal advice to a client, or for documents created (not necessarily involving a lawyer) for the dominant purpose of actual or anticipated litigation.

If the report is served on the defendant/ respondent, then usually, the letter of instructions and brief to the expert are discoverable. 

These two decisions assist in resisting orders for the production of documents between the lawyer and the witness and the drafts of the expert reports/witness statements, provided that the court is convinced that the use of the documents or drafts is not inconsistent with the claim for privilege (i.e. that the document has not been provided to another party without a common interest) or that the documents are not necessary for a proper understanding of the served statement or report.