A recent decision of the Victorian Supreme Court emphasises that a party asserting client legal privilege over an expert report bears the onus of proof in relation to that claim. 

Courts will not maintain unsupported assertions of privilege, and will require sworn evidence to establish the claimed purpose of the report.  In particular, parties will be expected to give detailed testimony about any non-legal purposes to which a third party report has been (or may be) put so as to establish that the purpose for which privilege is claimed is the dominant purpose.  In the absence of such evidence, adverse inferences may be drawn. 

This is precisely what happened in Perry v Powercor Australia Ltd [2011] VSC 308 (affirmed Powercor Australia Ltd v Perry [2011] VSCA 239).  Reinforcing earlier judgments on the question, this decision serves as a timely reminder of the precautions a corporation should take in commissioning expert reports in circumstances where it may want the protection of client legal privilege, and the need to adduce the appropriate evidence to establish its privilege claim.

This case was decided under the Uniform Evidence legislation in force in Victorian courts (as well as federal, NSW, ACT and Tasmanian courts), but the principles discussed in the decision are equally applicable to common law privilege claims.


In February 2009, the Black Saturday bushfires swept through large areas of Victoria, including parts of Western Victoria where Powercor is an electricity distributor.  Shortly after the fires, Powercor commissioned a series of expert reports into whether its infrastructure had been involved in starting the Coleraine blaze.

The applicants brought proceedings against Powercor as a representative (class) action.  They alleged that Powercor breached statutory and general duties of care by being negligent in the maintenance of a power line and that a fault in that line started the bushfire. 

At issue in the interlocutory hearing was whether the reports commissioned by Powercor after the fire were subject to client legal privilege and, if privilege did exist, whether that privilege had been waived.

The test - dominant purpose

The test for assessing client legal privilege is whether the document was prepared for the dominant purpose of providing legal advice or legal services in relation to existing or anticipated litigation.

Assessing the dominant purpose involves two steps:

1. Determining the subjective purpose(s) of the person(s) making or commissioning the communication 

Ordinarily, in the case of an expert report commissioned from a third party, this will be the purpose of the party commissioning the report.  However, where a report is commissioned on behalf of a corporation, the purpose of officers and employees of high authority in the corporation, while they may not have directly commissioned the report, will also be relevant, while the purpose of the “controlling mind” of the corporation will be important.

2. If the communication was made for multiple purposes ( at least one of which was a “privileged” purpose), determine whether the privileged purpose was the dominant purpose. 

The determination of dominant purpose is a matter for the Court and must be objectively assessed.  Dominance of purpose means a “clear paramountcy of purpose”. Where no purpose can be said to be the dominant purpose, then privilege will not attach to the document.

Multiple purposes

The applicants sought inspection of the expert reports as part of discovery in the class action, arguing that the reports were brought into being for a multiplicity of purposes, none of which was dominant and not all of which attracted client legal privilege.  They submitted that, fundamentally, Powercor “needed to know” what had caused the fire as part of its normal business operations, as well as to comply with several reporting and investigation obligations.

Powercor did not deny that the reports were commissioned for a number of purposes.  However, it contended that a number of the purposes for which the reports were commissioned attracted client legal privilege as the legal advice was sought and investigations were undertaken for the purpose of allowing Powercor prudently and sensibly to assess how it might properly deal with the likely litigation.  Powercor submitted that, when combined, these purposes formed the dominant purpose for commissioning the reports.

Justice Robson did not accept this argument, concluding that Powercor had not shown that obtaining legal advice was the dominant purpose for commissioning the report.  He found - and the Court of Appeal upheld - that there were various purposes for the commissioning of the expert reports:

  • obtaining legal advice;
  • providing information to the regulator under the Electricity Safety Act 1998 (Vic);
  • providing information to Powercor’s insurer;
  • providing information for Powercor’s internal Powercor Asset Failure Reporting & Investigation Procedure; and
  • reviewing its maintenance program and the continued use of the type of equipment that failed at Coleraine.

As such, he concluded that the expert reports “were and were intended to be the source of information that Powercor used and intended to use for its normal business purposes”.  Key to this finding was the lack of evidence led by Powercor.  In particular, Justice Robson noted that Powercor did not provide evidence on:

  • Powercor’s internal procedures that would have required or made use of the report;
  • the requirements Powercor had for the information, other than legal advice;
  • Powercor’s reporting obligations under the Electrical Safety Act, WorkCover or the Coroners Act;
  • the variety of uses to which the information would be put and why it was needed; or
  • the need for its officers to have the information within the report in order to perform their duties under the Corporations Act.

His Honour specifically noted the lack of direct evidence from Powercor’s CEO as to his purposes when he instructed in-house counsel to commission the reports, despite the fact that he had prepared a witness statement for the purposes of the Royal Commission.  Absent such evidence, Justice Robson drew a Jones v Dunkel inference that the evidence would not have assisted Powercor’s claim for client legal privilege.  As such, the Court could more readily draw the inference contended for by the applicants, that there was no dominant purpose of seeking legal advice.  On appeal, the Court of Appeal confirmed that relevant purpose was the purpose of the corporation, and the failure of the “controlling mind” of that corporation - the CEO - to give evidence meant that rational inferences could be drawn.

The issue of third party reports being commissioned with a multiplicity of purposes is not novel, nor is the result reached in Powercor:

  • In Sydney Airport Corporation v Singapore Airlines [2005] NSWCA 27, in-house counsel for Sydney Airport commissioned a report into a malfunctioning aerobridge which damaged an aircraft door.  While the purpose of the in-house counsel was to prepare for litigation, the company was found to have three additional purposes for the report which were not privileged - understanding the incident, addressing the concerns of the Airline Operations Committee and for Sydney Airport’s own operational reasons to ensure the incident did not happen again.  In addition, the report had actually been used to allay the fears of the AOC and had been delivered to management as well as legal counsel.  Sydney Airport was unable to establish that the legal purpose was paramount over the other three purposes combined, and inspection of the report was ordered.
  • In Priest v State of New South Wales [2006] NSWSC 1281, the defendant claimed privilege in relation to a report prepared by a solicitor within the legal services section of the NSW Police, was described as a legal review of an internal investigation. The Court concluded that the dominant purpose for the preparation of the report was an administrative or process review, and not the provision of legal advice.   

What this means

Justice Robson’s decision reinforces that parties seeking the protection of client legal privilege will be expected to provide detailed evidence as to the uses to which an expert report has been or might have been put.  It may require evidence to be led from senior employees who can attest to the potential purposes of the report, and provide detail of any obligations the corporation has which may require information similar to that contained in the contested communication.  Absent such evidence, courts are prepared to draw an inference that third party expert reports serve several purposes, and as such were not prepared for the relevant dominant purpose.

More generally, the decision emphasises that privilege issues should be considered from the outset and at every stage of any internal investigation