The Receivers' "concession"
42 In their written submissions, the Receivers said that they were "prepared to concede that the court could reasonably infer that the actual communications from Mr Wotton, Mr Chylek and Mr John Marshall SC (but not any interpretation or summary of, or commentary on, such communication by others) are privileged from production." The QBE Parties referred to this at the hearing of the privilege claims as a "concession" by the Receivers, and handed up a table purporting to identify documents which were privileged on the basis of the concession.
43 The wording of the Receivers' submission makes it clear that they were not intending to concede that all communications by Mr Wotton, Mr Chylek and Mr Marshall SC are ipso facto privileged. Their point was that the court may infer that the elements of privilege are present in respect of those documents merely on the basis of inspection.
Facts
44 In their written submissions, the QBE Parties set out a series of matters, based partly on the findings in my 30 June 2006 judgment (at [4)-[23]) and partly on the affidavit evidence of Mr Hammond, which they described as "the surrounding circumstances and factual matrix in which the documents were created and the communications, sought to be protected from disclosure, [were] made". Their statement of the relevant factual matters was not challenged by the Receivers at the hearing of the privilege issues, and I am content to adopt it for the purposes of the present judgment. The statement is in substance as follows:
(a) on 23 December 2003, there was a "spontaneous combustion incident" at the coal mine. Although no lives were lost, valuable mining equipment was destroyed and the economic consequences of the explosion and fire were catastrophic. The Department of Mineral Resources made orders to seal the mine on 27 December 2003. QBE was notified of the closure of the mine on that day (judgment at [7]; Hammond 14 July 2006 at [5]);
(b) on the day of the incident Southland notified insurers of the spontaneous combustion incident which it was said was likely to occasion loss, destruction or damage (Hammond 14 July 2006 at [6]; Exhibit BTH 1 p 30);
(c) QBE instructed Wotton & Kearney on 2 January 2004 to advise with respect to the investigation of the spontaneous combustion incident and indemnity issues that might arise under the policy (judgment at [9]; Hammond 14 July 2006 at [21]). Wotton & Kearney were also appointed to act on behalf of London Insurers who had underwritten 30% of the risk;
(d) on 4 January 2004 Wotton & Kearney met with Messrs Bart and Raynal of Crawford (an insurance loss adjuster). At that meeting they identified a number of "policy issues" that would need to be resolved before Wotton & Kearney could advise QBE whether an indemnity was available for anticipated claims (judgment at [10]; Hammond 14 July 2006 at [23]). At that stage there were a number of "live policy" issues and it was agreed at that meeting that the range of issues that were likely to arise in the claim could be controversial;
(e) on the following day, Wotton & Kearney wrote to Crawford withdrawing QBE's instructions and telling Crawford to take their instructions from the firm (judgment at [10]; Hammond 14 July 2006 at [21.3]; Exhibited BTH 1 pp 19-20);
(f) an initial advice was sent by Wotton & Kearney to QBE on 9 January 2004. This was the first of many advices sent by Wotton & Kearney to the insurers. Subsequently Wotton & Kearney gave many advices, and had almost daily dealings with the consultants (Hammond 14 July 2006 at [26]). Wotton & Kearney spent 884 hours of solicitors' time on the matter up to February 2005 (judgment at [9]);
(g) Wotton & Kearney retained Mr McKensey of McKensey Mining on 14 January 2004 to provide expert advice on the conduct of the investigation and matters relevant to the policy (Hammond 14 July 2006 at [24]; Exhibit BTH 1 pp 21-22);
(h) on 22 January 2004 Thiess and Thiess Southland indicated by a letter of that date that they intended to make a claim under the policy (Hammond 14 July 2006 at [27.3]; Exhibit BTH 1 pp 28-35);
(i) on 29 January 2004, Mr Raynal and Mr McKensey travelled to the mine to inspect documents which were to have been made available. They were met by a solicitor from Freehills, acting for the receivers, who handed them a confidentiality undertaking to be signed before the documents were reviewed. That led to rather lengthy debate in correspondence about the terms of the confidentiality undertaking, before an acceptable form was finally settled on about 18 February 2004 (judgment at [15]);
(j) on 17 February 2004 Wotton & Kearney retained Mr Gallagher of International Mining Consultants Pty limited to work with Mr McKensey and Mr Raynal in the investigation and to provide Wotton & Kearney with advice relevant to the cause of the spontaneous combustion incident and matters on which Wotton & Kearney were required to advise the insurers relevant to the indemnity issues in the policy (Hammond 14 July 2006 at [29]; Exhibit BTH 1 pp 41-43);
(k) on 20 February 2004 Wotton & Kearney received an interim claim submission from MSM Loss Management, claims preparers instructed on behalf of Thiess (Hammond 14 July 2006 at [31], Exhibit BTH 1 page 63);
(l) on 24 February 2004 Wotton & Kearney caused a preliminary brief to advise to be sent to Mr Marshall SC. Further briefs to him were sent during the course of 2004 and 2005 (Hammond 14 July 2006 at [32]);
(m) from March 2004 to the end of 2004 there was a substantial quantity of correspondence between the solicitors canvassing many issues. A summary of those issues is set out at [21] of the judgment;
(n) Crawford and McKensey interviewed mine personnel in the period from February 2004 to June 2004 (judgment at [18]);
(o) Southland made a further interim claim on the insurers on 31 May 2004. The claim was made on a "constructive total loss" basis for over $35 million and its claim under the "recovery and repair option" was nearly $68 million (judgment at [17]);
(p) on 3 September 2004 Wotton & Kearney received a second interim claim submission from MSM on behalf of Thiess (Hammond 14 July 2006 at [35]; Exhibit BTH 1);
(q) Allens Arthur Robinson on behalf of the Thiess parties wrote to Wotton & Kearney and Freehills on 16 September 2004 and again on 6 October 2004, asserting that unless Wotton & Kearney communicated the insurer's decision on the indemnity within a certain period, they anticipated receiving instructions to commence proceedings against insurers on behalf of the Thiess parties (Hammond 14 July 2006 at [36]; Exhibit BTH 1 pp 71, 76);
(r) on 24 December 2004 Allens served a summons commencing proceedings by the Thiess parties in the Commercial List of this court (Hammond 14 July 2006 at [37]; Exhibit BTH 1 p 77);
(s) shortly after the commencement of the Thiess proceedings, Moray & Agnew were instructed to represent the interests of the London Insurers. Up to that time Wotton & Kearney represented the London Insurers to advise on the spontaneous combustion incident and relevant indemnity issues which might arise under the policy. Wotton & Kearney retained Crawford and McKensey on 5 January 2004 and 14 January 2004 respectively on behalf of both QBE and the London Insurers (Hammond 14 July 2006 at [38]-[40]).
45 It should be noted that in the Court of Appeal, Basten JA considered the facts relating to the retainer of experts and held that each of the experts who were retained to assist the insurer was an agent of the insurer, for the purpose of carrying out such investigation as was required for it to obtain advice (at [124]-[127]).
46 These factual matters are significant for several reasons. First, they indicate the nature and scope of the retainer of Wotton & Kearney for QBE and the London Insurers, and shed light on the correct characterisation of the communications in the disputed documents.
47 The QBE Parties submitted that the facts had displaced any inference that the communications between Wotton & Kearney and QBE, which are disclosed in the contested documents, were about commercial matters made in "the ordinary course of business". They said it was plain from the facts that communications by Wotton & Kearney both with QBE and with the expert consultants who reported to the firm were made pursuant to Wotton & Kearney's retainer. They asserted that the dominant purpose of the retainer was for Wotton & Kearney to provide legal advice with respect to the investigation of the spontaneous combustion incident and indemnity and quantum issues that might arise under the policy, and to provide legal services in relation to the anticipated proceedings to be brought by the insured parties for indemnity under the policy. I agree that this was purpose of the retainer. I also agree that the facts that I have set out generally weaken any inference that the communications in the disputed documents were commercial communications in the ordinary course of business. But it is still necessary to assess the documents one by one.
48 The QBE Parties submitted that in light of the facts, the court should infer that litigation was anticipated, or had become a real prospect, by about February 2004, and in any case no later than May 2004. In the earlier chapter of this litigation, described in my judgment of 30 June 2006, Young J held at first instance (Re Southland Coal Pty Ltd [2005] NSWSC 259) that the point may have been reached when litigation was a real prospect some time after January 2004, though it was most likely not as early as January 2004. The Court of Appeal (at [80]-[81]) rejected a submission that his Honour had found that the relevant communications "could not be privileged" within the meaning of s 119, but found it unnecessary to give further consideration to that section.
49 The question whether legal proceedings are "anticipated" within the meaning of s 119 requires the court to consider whether there was, at the relevant time, a real prospect of litigation, as distinct from the mere possibility (Mitsubishi Electric Australia Pty Ltd v Victorian Workcover Authority [2002] 4 VR 335). In my view, the correct inference from the facts is that legal proceedings between Southland and the insurers (QBE and the London Insurers) were "anticipated" as from late February 2004, when Wotton & Kearney received the interim claim submission from MSM Loss Management and caused a preliminary brief to advise to be sent to Mr Marshall SC. If I were wrong in that view, then it would at least be clear that there were anticipated proceedings from the end of May 2004, when Southland made its further interim claim for a very large amount. I have reached these conclusions taking into account the catastrophic nature of the spontaneous combustion incident, and its serious economic consequences; Southland's early notification of the likelihood of a claim in circumstances where the amount of the claim would obviously be great; the recognition, as early as the meeting of 4 January 2004, that issues had arisen that were bound to be controversial; the structuring of the advisory relationships so that advisers were required to report to the solicitors; the significance of the interim claim submission by MSM Loss Management on behalf of the Thiess parties in February 2004; and Southland's requirement for the advisers to give confidentiality undertakings.
Document 3
50 This is an e-mail chain including an e-mail from Mr Hatz (Technical Claims Manager, Property of QBE based in Melbourne) to Mr Nicholls (National Claims Manager of QBE) dated 6 January 2004. According to Exhibit BTH 2, privilege has been claimed over part of it under s 118. However, on 17 July 2006 the solicitors for the QBE Parties wrote to the solicitors for the Receivers informing them that no privilege was claimed in relation to Document 3, and that the only objection to the production of the document was to those parts of the document containing information as to provisions and/or reserves (Annexure D to the affidavit of Mr Hammond dated 28 August 2006). The ground appears to be, as Mr Hammond said in his affidavit of 14 July 2006, that these matters are outside the scope of the orders for production.
51 Literally construed, para 3 of the schedule to the orders for production would include the whole of Document 3, especially having regard to the wide definition of the word "Report". But the orders for production must be construed in light of their history. As I explained in my judgment of 30 June 2006 (at [61]), the text of the proposed orders for production underwent several revisions. In the form in which they stood when exhibited to Mr Atkins' affidavit of 1 March 2006, the proposed orders required production of all documents recording or referring to QBE's valuation of the claims and any provisioning made by QBE in respect of the claims. But by the time of the hearing on 23 March 2006, the claim for an order in those terms had been withdrawn. It seems to me that, consistently with the withdrawal of that claim, it is appropriate for the QBE Parties to exclude from production the parts of the e-mail chain that relate to provisioning and reserves, and any process of recording the claim and establishing an authority in connection with provisioning.
52 Mr Hammond's evidence about Document 3, that the excluded part contains communications between officers of QBE relating to the provisioning of the claims and the establishment of reserves, is sufficient to ground the claim that Document 3 is outside the proper scope of the orders for production. It is obvious from his description that he bases his evidence on his perusal of the e-mail chain. His evidence on Document 3 does not suffer from the "Common Deficiencies". I have inspected the unredacted document and I am satisfied that Mr Hammond's description of the part that has been excluded is correct.
Documents 5 and 5A
53 Document 5 is an e-mail from Mr Holland to Mr Meteyard (QBE's General Manager, Corporation Division) dated 9 July 2004 attaching Mr Holland's file note "summarising the current position". Document 5A is the same e-mail and file note but the e-mail contains some handwriting and the file note displays some underlining and ticks. Privilege is claimed in respect of part of the file note, but not the handwriting or the ticks on the file note. It could not plausibly be contended that disclosure of the handwriting and the ticks constitutes waiver of any otherwise privileged material.
54 According to Mr Hammond (14 July 2006 at [44]) the handwriting and marks were made by Mr Hatz. He said in his affidavit of 28 August 2006 (at [4]) that it was apparent from the files and file notes of Wotton & Kearney that the parts of Mr Holland's file note for which privilege is claimed contain confidential communications recording legal advice provided by Wotton & Kearney in discussions between Mr Holland and Mr Chylek of Wotton & Kearney on 9 July 2004 and legal advice provided by Wotton & Kearney in discussions between Mr Holland and Mr Wotton on 25 June 2004.
55 Mr Hammond's evidence on Documents 5 and 5A in his August affidavit does not suffer from the "Common Deficiencies". He has identified the source for his evidence by referring to Wotton & Kearney's files. He does not put the claim for privilege on the basis of the dominant purpose of Mr Holland in preparing his file note, but rather on the basis that the file note communicates privileged legal advice. In my opinion his description is sufficient to establish the claim for privilege, unless perusal of the document suggests that Mr Hammond's description is inaccurate.
56 I have perused the unredacted Documents 5 and 5A. There is nothing in Mr Holland's file note itself to refer to any meeting between Mr Holland and either Mr Chylek or Mr Wotton. Further, except for the last paragraph, the file note is about procedural and timing matters to do with the claims rather than about legal advice in the narrow sense. However, my view is that all of the excluded parts of the file note fall within the broad notion of "legal advice" explained in the Balabel case (discussed above), as long as they were provided by a lawyer to his or her client in a professional capacity. Mr Hammond's evidence, taken from Wotton & Kearney's files, asserts that the excluded material communicates advice provided to Mr Holland by lawyers in their professional capacity. Privilege has been established.
Document 6
57 This is an e-mail from Mr Holland to various representatives of the London Insurers, Messrs Mitchell, Schramm, Perry and Proctor, dated 19 August 2004. The QBE Parties propose to exclude the whole of it except for the introductory paragraph, in which Mr Holland explained that he was writing to the recipients in his capacity as the responsible claims representative at QBE and noted that 30% of the risk had been placed with various London-based insurers and syndicates.
58 According to Mr Hammond (14 July 2006, at [45]), the parts of the e-mail in respect of which objection is taken disclose confidential legal advice provided by Wotton & Kearney to the insurers (at [45.1]), and disclose the contents of confidential communications with QBE's loss assessors and mining consultants prepared on the instructions of Wotton & Kearney for the purpose of enabling the firm to provide legal advice to the insurers, advice which has in fact been provided (at [45.2]).
59 On its face, Mr Hammond's evidence at [45.1] seems to be based on his reading of the e-mail itself. If it were tendered as a categorisation of the whole of the excluded material, it would be sufficient to establish a case of privilege. But his evidence at [45.2] contains an assertion that the communications of the experts were prepared on the instructions of the solicitors for the purpose of enabling the solicitors to provide legal advice. He does not specify the source of his assertion that the experts were acting on instructions of the solicitors, or the source of the assertion that the purpose of the instructions was to enable the solicitors to provide legal advice. Therefore his evidence at [45.2] would, if taken alone, be insufficient to establish a case of privilege. Mr Hammond has provided two characterisations of the excluded material, without making it clear whether each subparagraph is intended to describe the whole of the excluded material, or one of them is intended to apply to part and the other is to apply to the remainder of the excluded material. I would not regard his evidence as sufficient to make out a claim for privilege in the absence of my inspection of the material.
60 Having inspected the excluded material, I have reached the clear conclusion that access to it should be denied under s 118. In my opinion the excluded material is entirely a summary of confidential legal advice evidently, on its face, provided by Wotton & Kearney with the assistance of expert input from consultants. That part of the material that describes the consultants' work is part of the summary of the legal advice, in my view, and not an extraneous commercial communication to be excluded from the claim for privilege.
61 The Receivers submitted that, on the face of the redacted document, there has been a knowing and voluntary disclosure to another person of the substance of the legal advice, and therefore according to s 122(2) of the Evidence Act, privilege is no longer available. But it is plain from my outline of the facts that, at the time when the e-mail was written, Wotton & Kearney were instructed by both QBE and the London Insurers, who had 30% of the risk. Wotton & Kearney retained the expert consultants on behalf of QBE and the London Insurers. Therefore, in terms of s 122(5), disclosure by Mr Holland on behalf of QBE to the London Insurers was disclosure concerning a matter in relation to which, at the time, the same lawyer was providing professional legal services to both QBE and the London Insurers. Additionally, having regard to my finding that legal proceedings were anticipated well before August 2004, it was disclosure to a person with whom QBE had at that time a common interest relating to an anticipated proceeding by Southland for indemnity under the policy. Consequently there was no waiver of privilege under s 122(2) because of the application of s 122(5).
Document 8
62 This is an e-mail from Mr Holland to Mr Meteyard and others at QBE dated 30 September 2004. According to Mr Hammond (14 July 2006 at [46]), the parts in respect of which objection is taken disclose communications between officers of QBE relating to the provisioning of the claims and the establishment of reserves, and therefore fall outside the scope of the orders for production. He also deposed that those parts disclose the contents of confidential communications with QBE's loss assessors which were prepared on the instructions of Wotton & Kearney for the purpose of enabling the firm to provide legal advice to QBE, which has in fact been provided.
63 For the reasons I have given with respect to Document 3, communications relating to provisioning of the claims and the establishment of reserves fall outside the scope of the orders for production, on their proper construction, having regard to the history of their drafting. Mr Hammond's evidence that the document discloses communications relating to provisioning and reserves does not suffer from "Common Deficiencies", and it is sufficient to exclude the parts of the e-mail relating to those matters, unless on perusal it appears that the excluded parts cover other matters as well. I have perused the unredacted Document 8. All of the excluded material relates to provisioning and reserves. Therefore access to that material should be denied on that ground. It is unnecessary to deal with Mr Hammond's evidence concerning privilege.
Document 9
64 This is a series of e-mails and attachments, namely:
Document (i): an e-mail from Mr Chylek to Mr Holland dated 20 October 2004 at 9:34 a.m., with attachments;
Document (ii): an e-mail from Mr Holland to Messrs Nicholls and Hatz dated 20 October 2004 at 10:17 a.m., copied to Mr Chylek and Mr Wotton, attaching Document (i) and attachments; and
Document (iii) an e-mail from Mr Hatz to Mr Holland dated 20 October 2004 at 1:06 p.m.
65 Privilege is claimed over the whole of this material, under both s 118 and s 119 (the latter on the ground that by October 2004 legal proceedings were clearly anticipated).
66 According to Mr Hammond (14 July 2006 at [47.1]), Document 9(i) and its attachments disclose confidential legal advice provided by Wotton & Kearney to QBE in relation to the claims and in relation to legal proceedings anticipated at the suit of Southland, Thiess Southland and Thiess (at 47.1). His evidence is that they also disclose the substance of a report of mining consultants, Mr Gallagher and Mr McKensey, which was prepared on the instructions of Wotton & Kearney for the purpose of enabling the firm to provide legal advice to QBE, which has in fact been provided (at 47.1).
67 In my view this evidence suffers from the same difficulties as Mr Hammond's evidence with respect to Document 6. The description at 47.1 would be sufficient to establish privilege (this time under both s 118 and s 119), if it were intended to apply to the whole of the excluded material. The description provides a characterisation of the e-mails, from which the dominant purpose of the making of the communication and the preparation of the documents can be inferred, in this case for the purposes of both s 118 and s 119. But the description at 47.1 is defective, because the sources of Mr Hammond's assertions that instructions were given to the experts by the solicitors, that the experts' report was prepared for the purposes of legal advice, and that legal advice was in fact given, are not specified and are left ambiguous. It is not clear whether Mr Hammond intended both descriptions to apply to all of the excluded material, or for each description to apply to only part of it. In these circumstances, the evidence is too unclear and I would not regard it as sufficient to make out a claim for privilege in the absence of my inspection of the material.
68 I have inspected the unredacted Document 9(i) and the attachments to it. In my view it is plain on the face of these materials that the experts' report is governed by the solicitors' instructions in such a way that it is appropriate to infer that the whole of the report was, indeed, prepared on the instructions of the solicitors for the purpose of enabling them to provide legal advice and to provide professional legal services in relation to the anticipated proceedings, and it was communicated to the client by the solicitor as part of that process. Therefore I find Document 9(i) to be protected by s 118 and s 119, upon inspection rather than upon the basis of the evidence of the QBE Parties.
69 According to Mr Hammond (14 July 2006 at [47.2]), Document 9(ii) discloses the confidential legal advice contained in Document 9(i), the e-mail from Mr Chylek to Mr Holland (at 47.2), and records a confidential communication between QBE and Wotton & Kearney for the dominant purpose of Wotton & Kearney providing legal advice in relation to the claims, and legal services in relation to the proceedings anticipated at the suit of Southland, Thiess and Thiess Southland (at 47.2). This evidence raises the same problem as I have identified in relation to Mr Hammond's evidence at [47.1] about Document 9(i). For the same reasons, I would not regard the evidence as sufficient to establish privilege in the absence of my inspection of the document.
70 I have inspected Document 9(ii) in its unredacted form. It attaches Document 9(i) and its attachments, and provides a brief summary of the agenda for a proposed meeting with the lawyers. The e-mail confirms that the correct characterisation of Document 9(i) is confidential legal advice. Document 9(ii) is likewise a privileged communication both under s 118 and under s 119. Indeed, it is crystal clear from the contents of the e-mail that litigation was well and truly anticipated by that time. I find that Document 9(ii) is privileged upon inspection rather than upon the basis of the evidence of the QBE Parties.
71 According to Mr Hammond (14 July 2006 at [47.3]), Document 9(iii) is a confidential document prepared by Mr Hatz for Mr Holland concerning matters to be raised with Wotton & Kearney for two dominant purposes. The first is the dominant purpose of Wotton & Kearney providing legal advice in relation to the claims. The second is the dominant purpose of Wotton & Kearney providing legal services in relation to the anticipated proceedings. But Mr Hammond's evidence does not specify, from amongst the choices he provides in para 3 of his affidavit of 28 August 2006, the source for his assertions about the two alleged dominant purposes. I do not regard his evidence as sufficient to prove privilege, absent inspection.
72 I have inspected the unredacted Document 9(iii). The first two paragraphs of the e-mail add to the list of items for discussion with the lawyers at the forthcoming meeting. To disclose them would be to give rise to an inference as to the subject matter of advice obtained from the lawyers at the meeting. Just as Document 9(ii) is privileged under both s 118, and s 119, equally the first two paragraphs of Document 9(iii) are privileged on the same grounds. The last paragraph of Document 9(iii) relates to some proposed steps which, taken in isolation, might be regarded as commercial matters in the ordinary course of QBE's insurance business. But when that paragraph is read in the context of the other two paragraphs of the e-mail, it seems to me that what is under discussion is a course of action to be considered or reviewed by the lawyers at the forthcoming meeting. Therefore the last paragraph is privileged on the same grounds. In summary, Document 9(iii) is privileged upon inspection rather than upon the basis of the evidence of the QBE Parties.
Document 10
73 This is an e-mail from Mr Nicholls to Mr Holland dated 20 December 2004, copied to Mr Hatz and Mr Chylek, attaching an e-mail dated 7 December 2004 from Mr Wotton to Mr Holland, which in turn attaches a long letter of the same date from Wotton & Kearney to Mr Holland. Privilege is claimed over the whole of this material, under ss 118 and 119.
74 According to Mr Hammond (14 July 2006 at [48.1]) the e-mail from Mr Wotton to Mr Holland and the attached letter disclose confidential legal advice provided by Wotton & Kearney to QBE in relation to the claims, and in relation to proceedings anticipated at the suit Southland, Thiess and Thiess Southland. In my opinion this evidence is sufficient to establish privilege, unless inspection of the document shows that the description is faulty or that there is extraneous material. I have inspected the e-mail and letter of advice. It is very clearly a privileged communication of legal advice and the provision of professional legal services for the purposes of s 118 and s 119 respectively. There is no extraneous material. The QBE Parties have proved their claim for privilege, by Mr Hammond's evidence, which is confirmed upon inspection.
75 According to Mr Hammond (14 July 2006 at 48.2), the e-mail from Mr Nicholls to Mr Holland copied to Wotton & Kearney discloses the substance of confidential legal advice provided by Wotton & Kearney to QBE which was the subject of the e-mail from Mr Wotton to Mr Holland. That is sufficient to establish privilege, since the description appears on its face to be intended to be a complete description of the communication. Therefore the QBE Parties have established that the e-mail is privileged. Inspection confirms this conclusion. In the e-mail Mr Nicholls does nothing else but comment to Mr Holland on matters directly related to and arising out of Wotton & Kearney's legal advice. Mr Hammond also advanced a second ground to support a claim for privilege (at 48.2), in which he makes assertions about dominant purposes without identifying sources. It is unnecessary for the QBE parties to rely on this part of Mr Hammond's evidence, which would not be sufficient in itself to establish privilege, for the same reasons as I gave in relation to Document 9(iii).
Document 12
76 This is a short e-mail dated 5 January 2005 from Mr Holland to Mr Meteyard, Mr Hatz, Mr Isgro and Mr Nicholls of QBE. Privilege is claimed over the whole e-mail, under ss 118 and 119. According to Mr Hammond (14 July 2006 at [50]), privilege is claimed on the basis that the e-mail:
· discloses confidential legal advice provided by Wotton & Kearney to QBE in relation to the claims;
· discloses the content of confidential communications with QBE's loss assessors prepared on the instructions of Wotton & Kearney for the purpose of enabling Wotton & Kearney to provide legal advice to QBE; and
· discloses the substance of confidential communications between Wotton & Kearney and QBE for the dominant purpose of Wotton & Kearney providing legal services in relation to the Thiess proceedings.
77 In my opinion Mr Hammond's evidence is not sufficient, in itself, to establish the claim for privilege. The second and third parts of his assertions cannot be established on the face of the documents themselves, and he has not adequately identified the sources for his assertions, out of the various sources disclosed in his affidavit of 28 August 2006. However, my inspection of the e-mail makes it plain that it is a summary of various matters arising out of a meeting with legal advisers. Although some of the matters appearing in the summary would, taken in isolation, be regarded as commercial matters in the ordinary course of QBE's insurance business, in their context they reflect legal advice of the broad kind described in the Balabel case. In my opinion, Mr Hammond's evidence does not prove that Document 12 is privileged, but my inspection reveals that the whole of the document is privileged.
Documents 13 and 13A
78 Document 13 is a series of e-mails beginning with an e-mail dated 5 January 2005 from Sue Turnbull on behalf of Martin Miller of Crawford to Mr Chylek, followed by an e-mail dated 12 January 2005 from Mr Wotton to Mr Holland, attaching Mr Miller's e-mail, and an e-mail dated 17 January 2005 from Mr Holland to Mr Nicholls of QBE. The QBE Parties seek to exclude the whole of the contents of the first two e-mails and one single-sentence paragraph of the final e-mail, under ss 118 and 119. Document 13A is the same as Document 13 except that parts of the e-mails are underlined (by Mr Hatz, according to Mr Hammond) and there are some ticks in the right-hand margin of the e-mails. The QBE Parties do not seek to exclude the ticks and they exclude the underlining only where they seek to exclude the text that is underlined. In these circumstances it is not necessary to deal separately with Document 13A.
79 According to Mr Hammond (14 July 2006 at [51]) the e-mail from Mr Wotton which attaches the e-mail from the Miller discloses
(a) confidential legal advice provided by Wotton & Kearney and Mr Marshall SC to QBE;
(b) the contents of confidential communications with QBE's loss assessors which were prepared under the instructions of Wotton & Kearney for the purposes of enabling the firm to provide legal advice to QVC which has in fact been provided; and
(c) confidential legal advice provided by Wotton & Kearney and Mr Marshall SC in relation to the Thiess proceedings and the proceedings anticipated at the suit of Southland.
80 Subparagraph (b) contains the same deficiencies as paras [45.2], 47.1 and [50.2] of Mr Hammond's affidavit. Further, Mr Hammond does not indicate whether each of the three subparagraphs is intended to apply to the whole of the e-mail and its attachment and if not, the parts to which each description applies. Therefore, for the reasons given earlier, Mr Hammond's evidence is not sufficient to establish the claim for privilege. However, on inspection it is plain that Mr Wotton's e-mail and its attachment are privileged, under both s 118 and s 119. Mr Miller's e-mail seeks legal advice from Wotton & Kearney in the circumstances that it sets out. Mr Wotton provides legal advice to Mr Holland about the matters raised by Mr Miller, the whole of the e-mail being "legal advice" in the Balabel sense, and some of it being legal advice in the narrowest sense. There is no extraneous material. In summary, the whole of the e-mails by Mr Miller and Mr Wotton is privileged, but Mr Hammond has not established the grounds for that conclusion.
81 As to the e-mail from Mr Holland to Mr Nicholls, Mr Hammond says (14 July 2006 at [51.2]) that the excluded sentence discloses confidential communications between Mr Holland and Wotton & Kearney for the purpose of Wotton & Kearney providing legal advice to QBE in relation to the claims, and for the purpose of legal advice in relation to the Thiess proceedings and the anticipated proceedings by Southland. That evidence is adequate to establish the privilege and inspection confirms that the description is accurate.
Document 15, 15A and 15B
82 Document 15 comprises two e-mails. The first, dated 16 February 2005, is from Mr Wotton to Mr Holland. The second, bearing the same date, is from Mr Holland to Mr Nicholls, copied to Mr Hatz and Mr Meteyard, attaching Mr Wotton's e-mail. The QBE Parties seek to exclude the whole of Mr Wotton's e-mail, and part of Mr Holland's e-mail. Document 15A is a copy of Document 15 in which there are underlinings and ticks (by Mr Hatz, according to Mr Hammond) on Mr Holland's e-mail. The QBE Parties do not seek to exclude the underlining and ticks except where the underlining relates to excluded material. Document 15B is another copy of Document 15, this time bearing some handwritten notes on Mr Holland's e-mail, which are by Mr Nicholls, according to Mr Hammond's evidence. The QBE Parties do not seek to exclude these handwritten notes. In the circumstances it is sufficient to deal with Document 15 alone.
83 According to Mr Hammond (14 July 2006 at [53.1]) the e-mail from Mr Wotton discloses confidential legal advice provided by Wotton & Kearney to QBE, and discloses the substance of a confidential communication made by Wotton & Kearney to QBE for the purpose of the firm providing legal services in relation to the Thiess proceedings in the anticipated Southland proceedings. In my view the proper construction of Mr Hammond's evidence at [53.1] is that his description of the e-mail is intended to cover the whole of its contents, and to characterise the e-mail as legal advice, including a communication in relation to the proceedings. On that basis, his evidence is sufficient to prove that the e-mail is privileged. Inspection confirms that the whole of Mr Wotton's letter is legal advice, most of it in the narrowest sense and some of it in the broader Balabel sense.
84 As to Mr Holland's e-mail, Mr Hammond says (14 July 2006 at [53.2]) that the e-mail discloses the subject matter of one of the topics of the confidential legal advice provided in Mr Wotton's e-mail, and the substance of a confidential communication made by QBE to Wotton & Kearney for the purposes of the firm providing further legal advice in relation to the claims and in relation to the actual and anticipated proceedings. Here Mr Hammond is quite specific evidence about the excluded material. He does not say that his description applies to the whole of the excluded material, but in my view that is a reasonable inference from his evidence. His evidence is sufficient to establish privilege. Inspection confirms that the whole of the excluded material is as described by Mr Hammond and is privileged.
Document 16
85 This comprises an e-mail dated 15 February 2005 from Mr Wotton to Mr Holland, copied to Mr Hatz, Mr Nicholls and Mr Chylek, which attaches a lengthy report by Wotton & Kearney, and an e-mail dated 16 February 2005 from Mr Holland to Mr Meteyard copied to Mr Hatz, attaching Mr Wotton's e-mail and its attachments. Privilege is claimed over the whole of the contents of Mr Wotton's e-mail and attachment and over part of Mr Holland's e-mail, under ss 118 and 119.
86 According to Mr Hammond (14 July 2006 at [54]), the e-mail from Mr Wotton with the attached report discloses confidential legal advice provided by Wotton & Kearney to QBE in relation to the claims, and discloses the substance of a confidential communication made by the firm to QBE for the purpose of the firm providing legal services in relation to the actual and anticipated proceedings. This evidence is the same as Mr Hammond's evidence with respect to Mr Wotton's e-mail which is part of Document 15, and establishes privilege for the same reasons. Inspection confirms that Mr Hammond's evidence is accurate and that the whole of the e-mail and the attached report are privileged under s 118 and s 119.
87 As to the excluded part of Mr Holland's e-mail, Mr Hammond says (at [54.2]) that it discloses the substance of confidential legal advice provided in Mr Wotton's e-mail and report, and is a confidential document prepared by Mr Holland for Mr Meteyard as to the matters raised with Wotton & Kearney, for the dominant purpose of the firm providing further legal advice in relation to the claims and the proceedings. It appears to me reasonable to infer from Mr Hammond's evidence at [54.2], in the context provided by [54.1], that the source of his assertion about the dominant purpose of the excluded material is the excluded material itself. On that basis, his evidence is sufficient to establish the privilege. Inspection confirms that his description is accurate and that the excluded material is privileged under ss 118 and 119.
Documents 17 and 18
88 Document 17 is a memo dated 24 February 2005 from Mr Nicholls to Raymond Jones (Managing Director of QBE) and Mr Wotton headed "Southland Coal - Claim: NW1627758". The QBE Parties seek to exclude only part of one sentence of the memo, under ss 118 and 119. Document 18 includes a further copy of Mr Nicholls' memo endorsed by handwriting of Mr Jones. The QBE Parties do not seek to exclude Mr Jones' endorsement
89 There are several attachments to the memo, described in the memo itself as advice from Wotton & Kearney and a memorandum from Mr Marshall SC. The QBE Parties seek to exclude the whole of the contents of Mr Wotton's e-mail dated 24 February 2005 to Mr Holland, copied to Mr Hatz, Mr Nicholls and Mr Chylek, and the attached e-mail from Mr Marshall dated 23 February 2005 and attachments.
90 According to Mr Hammond (14 July 2006 at [55] and [56.1]), the excluded part of Mr Nicholls' memo discloses the substance of confidential legal advice provided by Wotton & Kearney to QBE in relation to the claims and in relation to the Thiess proceedings and the anticipated Southland proceedings. That is sufficient to establish the privilege. Inspection confirms that Mr Hammond's description is correct.
91 As to the attachments to the memo, Mr Hammond says (at [56.2]) that they disclose confidential legal advice provided by Wotton & Kearney and Mr Marshall SC to QBE in relation to the claims and in relation to the Thiess proceedings and the anticipated Southland proceedings. That is sufficient to establish the privilege under ss 118 and 119. Inspection confirms that the description is correct.
Conclusions
92 The Receivers have failed to overcome the claim for privilege in respect of any of the disputed documents or parts of documents, and therefore they will not obtain orders for access to any documents that have not already been provided to them. In the case of the following documents or parts of documents, the evidence of the QBE Parties has established their privilege claim: 5, 5A, 10 (both the e-mail from Mr Wotton and the e-mail from Mr Nicholls), 13 and 13A (e-mail from Mr Holland), 15, 15A and 15B (both the e-mail from Mr Wotton and the e-mail from Mr Holland), 16 (in respect of both e-mails), 17 and 18. In addition, the evidence on behalf of the QBE Parties is sufficient to establish that the excluded material in Documents 3 and 8 is outside the scope of the orders for production. In the case of the following documents, the evidence of the QBE parties has been insufficient to establish the privilege claim, but I have concluded that privilege has been made out upon inspection of the documents: 6, 9 (in respect of each of the three e-mails), 12, 13 and 13A (e-mail from Mr Wotton).
93 As to the question of costs, the Receivers' failure to gain access to any of the disputed documents or parts of documents is sufficient to deny them any costs order in their favour. The QBE Parties succeeded in resisting the access claims, but the evidence upon which they relied was, in part, deficient for reasons generally in accordance with the submissions made on behalf of the Receivers. I do not agree with the submission made on behalf of the QBE Parties to the effect that Mr Hammond's evidence was the best that could be done without compromising the confidentiality of the privileged documents. I have identified specific matters that could and should have been addressed, without any effect on the confidentiality of the documents. The success of the QBE Parties arose, where their evidence was deficient, from my inspection of the documents. They should not have the benefit of an order for costs to the extent that they failed to establish privilege by their own evidence.
94 The QBE Parties succeeded in proving privilege in respect of roughly two-thirds of the disputed documents or parts of documents, but that does not mean, in my view, that they should have two-thirds of their costs. Their failure to prove privilege for the remaining documents made a contest inevitable, and a substantial part of the preparation and hearing time was taken up in establishing the principles to be applied, a task that would have been necessary even if the Receivers had conceded privilege in all cases where I have held that the QBE Parties' evidence was sufficient.
95 In submissions on costs, senior counsel for the Receivers contended that as a result of their application for access, Mr Hammond's second affidavit was served, containing the removal of redaction of some documents. I do not regard that outcome as being of any significance on the question of costs. As senior counsel for the QBE Parties pointed out, during the process of dispute over the scope of the orders for production and privilege issues, the Receivers also made some concessions. Concessions of these kinds are typical where a contest about access to documents is sharpened and refined in preparation for the hearing.
96 Doing the best I can to weigh up these matters, I have decided to order the Receivers to pay one half of the QBE Parties' costs, as agreed or assessed.
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