Buchanan v TAL Life Limited

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 907 of 2013

JUDGE: EDMONDS J DATE: 6 FEBRUARY 2015 PLACE: SYDNEY

Introduction 1 This is an interlocutory application for an order pursuant to r 30.01 of the Federal Court Rules 2011 that particular questions arising in the proceeding be heard separately from any other questions. 2 The particular questions sought to be heard separately are set out in an annexure marked "A" to an interlocutory application filed 9 September 2014 and are the subject of observations at [16], [17] and [32] below. 3 The hearing of the interlocutory application also ventilated other issues that had arisen between the parties - issues of discovery and claims for privilege of portions of discovered documents, in both cases by the respondent, and these issues are also dealt with in these reasons and are the subject of orders of the Court.

Background 4 The following background facts are taken from the pleadings. Some of the applicant's pleadings are not admitted by the respondent but are nevertheless included in the background; others are denied, and in such cases this is noted. 5 The applicant, Dr Peter Eric Buchanan, is a medical specialist holding Bachelor of Medicine/Bachelor of Surgery (Hons, QLD) ("MBBS"), Bachelor of Science (Pure Mathematics and Biochemistry) ("BSc"), a Fellow of the Royal Australasian College of Radiologists ("FRACR") and Member of The Royal Australian College of General Practitioners ("RACGP"). 6 From 1995 to 2011, the applicant practised his profession on the central coast of New South Wales, relevantly at Erina. The practice was known as Erina Diagnostic Imaging Pty Limited ("EDI"). The applicant also practised his profession remotely at Tweed Heads, Coffs Harbour, Port Macquarie, Sydney and Melbourne. 7 On 18 May 2011, the applicant suffered severe head trauma causing internal diffuse cranial damage, occasioning leakage of brain fluid and meningitis, and vertigo and gross behavioural deficits and disinhibition ("the Event"). 8 The applicant was and is totally disabled for professional practice by reason of the injuries. 9 The applicant was the policy owner and life insured under the following policies (together "Policies") with the respondent: (1) Accelerated Protection Policy, Policy No 1374860 ("IP & BEX Policy"), which amongst other things provided for payment of Income Protection and Business Expenses Benefits in accordance with the relevant policy terms and conditions. It was entered as a Tower Series 29 product; and (2) Accelerated Protection Policy, Policy No 1376872 which provided for payment of Term Life, Trauma and Total and Permanent Disablement ("TPD") benefits in accordance with the relevant policy terms and conditions ("Life & TPD Policy"). It was entered as a Tower Series 30 product rolled back to Series 29. 10 The applicant claims that on 5 August 2011 the respondent formed the opinion that the applicant was totally disabled as a result of the Event, but the respondent denies this. 11 By letter dated 22 December 2011, the respondent informed the applicant that it was entitled, and had elected, to avoid the Policies pursuant to s 29(3) of the Insurance Contracts Act 1984 (Cth) ("the Act") on the grounds that the applicant had failed to disclose relevant matters, notably the applicant's self-prescription of certain medication, and had made misrepresentations in relation to his application for the Policies, notably the applicant's failure to disclose his usage of such medication, as set out in s 29(1) of the Act. 12 By the same letter, the respondent informed the applicant that even if the Policies were not void, the respondent would not consider any claim under them in any event on the basis that any underlying disability giving rise to any claim arises from a condition or conditions which are excluded under the Policies. 13 In this proceeding, the applicant seeks declaratory relief that he is entitled to certain benefits under the Policies; damages constituted by the sum of past entitlements under the Policies which the respondent has allegedly wrongfully failed to pay; and interest. 14 The applicant also claims that the respondent and its officers breached a duty to act in good faith arising from the contracts of insurance and the relationship thereby created between the applicant and the respondent, and claims damages of various kinds, including loss of opportunity damages for the applicant's inability to pursue a patent application for a medical procedure which was the exclusive design of the applicant. 15 The applicant also claims damages of various kinds, including damage pursuant to s 12GF of the Australian Securities and Investments Commission Act 2001 (Cth) ("ASIC Act"), for the respondent's alleged engagement in unconscionable conduct contrary to s 12CA of the ASIC Act.

The Separate Questions 16 The separate questions in annexure "A" to the interlocutory application are framed as follows: 1. Is the applicant entitled to a series of defined benefits under the IPP, BEX and TPD policies issued by the respondent: 1.1 Do the applicant's medical conditions and circumstances satisfy the relevant policy definitions. 1.2 Was the respondent entitled to avoid the IPP, BEX and TPD policies under cover of correspondence 22 December 2011. 1.3 Is the respondent entitled to rely upon a mental health exclusion, in the circumstances of traumatic head injury and event caused disability. 1.4 What is the identity and quantum of the benefits under the IPP, BEX and TPD policies. 17 The chapeau to these questions raises, relevantly, the ultimate issue arising under the Policies for determination by the Court, while the answers to each of the three questions numbered 1.1 to 1.3 inclusive will determine the answer to that ultimate issue. Question 1.4 will not arise if question 1.1 is answered in the negative or if question 1.2 or question 1.3 is answered in the affirmative. The answer to question 1.4 will determine the nature and quantum of the benefits, assuming the ultimate issue under the Policies is answered in the affirmative.

Applicant's Submissions 18 The applicant relied on an affidavit by Mr Dean Groundwater, a director of the law firm acting for the applicant, sworn 8 September 2014 (Ex 1) in support of his application. 19 Mr Groundwater relevantly deposed: 5. The application is based upon a number of grounds, namely: 5.1 The respondent has denied liability on the policy counts. 5.2 Adjudication of the policy counts is capable of giving rise to payment of sums certain, plus interest. By contrast the quantum in the two separate controversies in the proceedings, namely breach of the tort of good faith at common law and loss of opportunity damages for the inability to pursue patent applications, are liability and quantum issues which are at large, extensive and complex. 5.3 The preliminary adjudication of the policy counts allows the remaining questions to be litigated, or not, abiding the outcome of the separate questions. 5.4 If the applicant was unsuccessful in the particular questions which are separated there would be no cause of action arising under the tort of good faith or patent claims. 5.5 If the separate question was resolved in favour of the applicant it would open the way for negotiation of the settlement of the whole of the proceedings. Denial of Liability 6. The applicant's proceedings are based upon a number of policies for personal income protection (IPP), business protection (BEX) and Total and Permanent Disability (TPD). The respondent has admitted the existence of the policies to which it was a party. (Paragraph 1.5 of the [Amended Statement of Claim (ASOC), Paragraph 6 Defence). The terms and conditions of the relevant policies are therefore uncontroversial … IPP Policy 7. The income protection policy claim (IPP claim) has been particularised … (ASOC paragraph 2.4). The respondent has admitted the substance of the policy terms and conditions subject to construction argument (Defence paragraphs 13 and 14). 8. Definitions of [T]otal [D]isability as relied upon by the applicant (paragraphs 2.6 and 2.7 of the ASOC) are matters to which the respondent has pleaded a non-admission (Defence paragraphs 19 and 20). The applicant is confident that this issue will be resolved in his favour in all the policy claims by the substantial medical evidence which is within discovered documents. Extracts of this medical evidence, in various germane disciplines, as well as the various medical reports referred to in the extract, are exhibited behind TAB 2 of DG-1. There is much material and it follows a consensus of opinion, namely that the applicant has been permanently disabled from medical practice. 9. The respondent has provided discovery on two occasions in relation to this particular question. On my reading of the documents discovered on the first occasion there was no medical evidence to the effect that the definitions were not satisfied, save for some discursive commentary from a Dr Dunn, who appeared to be advising the respondent in the background. On the second discovery, on 12 June 2014, the respondent's solicitor advised: The documents referred to in the list were overlooked when discovery was initially provided. I am instructed that the documents listed under the heading "Partner Insurance Portfolio Application" were stored under a separate administration system. 10. In the second discovery the respondent discovered the reports of Drs. Westmore (psychiatric), which was generated in Medical Board processes, and Dr Krishnan (Neurologist), which was prepared for Jenny Nicolaidis of the respondent. These opinions do not appear to suggest that the relevant policy definitions are not established. I exhibit hereto behind TAB 3 of DG-1 the report of Dr Krishnan dated 4 July 2012 and would refer specifically to paragraphs 6 and 7. 11. The respondent has denied the relief claimed under the IPP (ASOC paragraph 12.2; Defence paragraph 25). 12. Payments were initially made. On 29 July 2011 Nick Milroy of MunichRe wrote an email to Celina Ennis which said, in part: Thanks for clarifying that for me. Please proceed with the payment of two months SIB benefit totalling $60,000.00. 13. This related to the IPP policy being two monthly payments of $30,000.00. A copy of this email is exhibited behind TAB 4 of DG-1. 14. The respondent has pleaded positive defences in respect of alleged non-disclosure which will be addressed below, as well as an exclusion clause. The applicant has filed a detailed Reply. BEX policy 15. The applicant also claims under the practice overheads policy (BEX policy) (ASOC paragraph 2.20). The respondent has agitated construction arguments in respect of this policy (Defence paragraphs 14, 16, 18 and 28). 16. The respondent has denied the applicant's entitled under the BEX policy (Defence paragraph 33). The respondent has pleaded positive defences in respect of alleged non-disclosure which will be addressed below, as well as an exclusion clause. The applicant has filed a detailed Reply. TPD Policy 17. The applicant also claims upon a TPD policy (ASOC paragraphs 3.3 and 3.4). These are essentially claims for specified benefits for fracture, meningitis and the like. The respondent has raised construction arguments in respect of the TPD policy (Defence paragraphs 37 and 38). 18. The applicant has alleged satisfaction of the definition of [T]otal [D]isability (ASOC paragraph 3.5). The respondent has pleaded non-admission. The matter will be attended by uncontroversial medical opinion. 19. Independently of the litigation the respondent and MunichRe have been engaged on these single benefit issues, and the medical evidence. On 13 July 2011, Nick Milroy, Senior Claims Management Officer of MunichRe, published an email to Celina Ennis which read, in part: It would appear the IP policy does have an SIB benefit payable for a fractured skull. Clear radiological evidence supports this diagnosis. I am leaning towards admitting this benefit however this will be based upon Dr. Buchanan's response to the above query [regarding Zoloft and Lithocarb]. If he indicates that he has been suffering bi­polar then we should reassess our position concerning this payment. 20. On 22 September 2011, Celina Ennis wrote an email to Nick Milroy enclosing copies of the reports of the neurologist, Dr.Graham, which said in part: Unfortunately I didn't see Peter again after his first visit as he saw Marc Coughlan, the neurosurgeon following an episode of meningitis no doubt related to his CSF leak. And further, obviously we need to be on the look out for meningitis so that if there are any unexplained fevers, stiffness in neck, disorientation then he will require immediate treatment and CSF examination. The MRI scan referred to within those reports recited a conclusion: Significant neuro pneumocephalus indicating interruption of the dural lining. In this case this is most likely at the level of the right middle ear cavity. High resolution CT at the base of the skull suggested if not already performed to define the actual fracture. Dr. John Graham further wrote: It seems very likely that there has been major damage to the right auditory nerve. 21. The applicant has made a claim for substantial quantified benefits under the TPD policy (ASOC paragraph 3.7). The respondent has denied entitlement to those benefits (Defence paragraph 41). Positive Defences 22. The respondent has raised positive defences essentially contending a right to avoid each of the IPP, BEX and TPD policies on the basis of non-disclosure and misrepresentation (Defence paragraphs 92 to 103). There is also reliance upon an exclusion clause. 23. The critical written documents alleged to constitute the material acts and admissions of the applicant have been discovered and are uncontroversial. The applicant has sworn an extensive affidavit in relation to the matters which arise. The respondent has caused three affidavits to be sworn, filed and served respecting the decision to underwrite the IPP, BEX and TPD policies made over a period November 2010 to 7 February 2011. The substance of the respondent's affidavit evidence is that the deponents would have declined to issue the three policies had those alleged acts and omissions on the part of the applicant not occurred. The factual controversy and the legal principles which flow there from would involve the reading of the affidavit of the applicant and a short component of the affidavit evidence of the applicant's wife, cross examination; thence the reading of the respondent's affidavits and cross examination of those officers upon the documents which have been discovered to date including relevant guidelines and protocols. 24. The opinion of Counsel is that the trial upon the separate questions would occupy approximately four to five days hearing time incorporating pre-trial directions that a structure/outline of argument be supplied by both parties; relevant authorities provided to the Court and objections to affidavit evidence be circulated inter-parties. I would also anticipate the service of a Notice to Admit Facts and Authenticity of Documents concerning issues pertaining to the relevant definitions of disability under the policy. Quantification - BEX Policy 25. A complication of the BEX policy is that over its twelve month duration it appears that there are financial adjustment provisions which may affect the monthly entitlement. The starting point is $60,000 per month. To the extent that this controversy exists the applicant would press his plea for a declaration and anticipate further application to the Court for appointment of a referee upon this accounting exercise. 26. There are certain documents which have been produced by MunichRe upon the Court's subpoena which appear to address this matter. One is a document entitled "Accelerated Protection Business Expenses Calculator" under Tower letterhead. This appears to show acceptance of the mathematical outcome of the policy benefits. It is exhibited hereto behind TAB 5 of DG-1. " Extensive and Complex Evidence as to Quantum and Liability 27. Parts 4, 5 and 6 of the ASOC plead that the respondent laboured under a duty in tort to act in good faith and breached same; was bound by the contractual term implied by section 13 of [the Act] as to conduct by participants to an insurance contract stipulated to be in the utmost good faith and breached same; and that conduct was relevantly unconscionable under the ASIC Act 1989. The damages which are alleged to flow from the relevant conduct are pleaded (ASOC paragraphs 4.5 to 4.30; 5.5 and 6.4) as damages essentially on two bases: 27.1 The relevant conduct caused the failure of the applicant's income vehicle, EDI, thereby depriving him of the opportunity to receive director's payments and distributions over his expected professional life; and 27.2 The relevant conduct deprived the applicant of funding to pursue patent applications which (separately from the lost income of the EDI practice), would have generated substantial financial reward to the applicant. 28. EDI failed in the second half of 2011. The locums walked out. The practice assets were taken on behalf of the major creditor. The applicant ceased lawful medical practice on 7 March 2012 after consideration of his disability and his situation by the Medical Council of NSW. 29. The evidence upon the quantum of these two separate claims, so framed, is anticipated to be very extensive and complex. The applicant has engaged with a specialist forensic accountant and a specialist patent expert in order to advance the quantification of these claims. If the applicant does not succeed upon the proposed separate questions upon policy entitlements it will follow that damages as sought in these separate claims would not arise. 30. The applicant has been in funding difficulties in co-ordinating and paying for expert opinion on these two issues. The complexity of the tort of breach of the duty of good faith is anticipated to arise from the fact that this is a developing area of law and hence compensatory damages would likewise be complex, including issues as to punitive damages. The complexity of the loss of the ability to pursue a patent in this country and in the USA is necessarily complex, as involving loss of opportunity damages.

Respondent's Submissions 20 The respondent opposed the application. In written submissions, the respondent said that it "opposes the application for separate trial on the questions of breach of the duty of utmost good faith and the claim for loss of opportunity to pursue the patent application". This really mis-states the application, as I will explain below. 21 In its written submissions, the respondent submitted: 13. The starting point is that in the ordinary course all issues of fact and law should be determined at the one time. The separate determination of the allegations of breach of good faith and the claim for loss of opportunity damages in respect of the patent application are unlikely to contribute to the saving of time and cost, or to the settlement of the litigation. The applicant's credit will be a live issue in the case, and his credit will be relevant both to the issues of non-disclosure and the assessment of the claim for loss of opportunity. It is undesirable for the applicant to be cross-examined twice on credit issues. There is some prospect that Ms Molloy may also be required for cross-examination twice, once in relation to non-disclosure and again in relation to the breach of good faith claim. The likely effect of separate trials will be to delay or prevent the successful mediation of the claim, as the Respondent will not be in a position to assess the strength of the Applicant's claims in relation to breach of the duty of good-faith and the claim for loss of opportunity to pursue the patent applications until the evidence going to those questions has been served. 14. The respondent submits that this is a case in which an order for separate trials is likely to prolong rather than shorten the litigation. 22 In oral submissions, counsel for the respondent submitted that the allegation made against his client in relation to the breach of good faith is essentially one of delay at T 19, 38: What one gleans from that pleading [paragraphs 4.5 and 4.6 of the ASOC] is that after Mr Buchanan had his injury and issued his claim, for a period of approximately four/five months TAL sought further information, financial information, it sought medical information and it didn't reach a decision to pay his claim. 23 Counsel for the respondent went on to say at T 20, 2: Ms Molloy who was the chief underwriter … is the person who will be giving evidence to this court about what TAL did, what its systems are and she will have to give evidence about both those issues. The other way in which the good faith claim is going to be dealt with will be on the documents, because it spans a period of a number of months and your Honour will have at the hearing the emails, the file notes, the underwriting case notes where the TAL claims handlers documents what it is they're doing on a day-to-day basis, what information they're seeking and the correspondence that has generated the information that comes in, coupled with Ms Molloy's evidence about this is why this information is important. Your Honour will need to deal with both the documents that will be relevant to the nondisclosure claim and the documents that will be relevant to the good faith claim. So that is the problem with the overlap between the witnesses and the evidence between those two issues. My short submission, your Honour, is that as a matter of cost effectiveness there is no good reason to deal with it upfront as part of the main hearing. In relation to the patent claim, your Honour, it's a different issue. There the concern is twofold. Firstly, by way of background to explain the respondent's attitude to the separate determination of the patent claim, the commercial problem that that presents my client with is one of cost. My client has to raise a reserve against every claim and at the moment this claim is inchoate. It's not criticism of the applicant, but we just don't want it involves [sic]. It might be it's worth millions. It might be that it's worth very little. We just don't know, and that's going to be an impediment, first of all on reserving, but it's also an impediment on settlement of the action because this matter will I apprehend go to mediation at some point, and my client will be sitting at the table say, well, we can understand your claim in relation to the benefits, but we've got this elephant in the room, and we just can't put a price on it. To the extent that's a relevant consideration that's - that is a fundamental reason why my client has a difficulty with the separate determination as well as the duplication of costs. 24 But counsel for the respondent had to concede, as he properly did, that there was no intersection between the non-disclosure claim of his client against the applicant and the lack of good faith claim of the applicant against the respondent, where potentially Dr Buchanan's credit was in issue. As he said at T 21, 12: The intersection is simply that the way in which the evidence of both issues would proceed in the hearing will involve recalling the defendant's witnesses. 25 Counsel went on to say that: "The more problematic one is really the patent application …". As to this, counsel said at T 22, 26: Now, that's an issue as well because all of these patent applications were held by family trust as I understand it, and so what that then involves is an inquiry as to what Mr Buchanan and his wife would have done with payments coming into and out of the trust, profits of the business. Well, they would have been but for the injury, etcetera, etcetera, so it starts to get complicated, but what - the reason why credit issues arise when it comes to the patent issue as well is because Dr Buchanan is going to have to be cross-examined about what he was doing with his management of the family trust before the injury. After the injury his wife is going to have to be cross-examined about what - about her management of the family trust before and after in order to determine whether or not as a matter of fact this is what he would have done. So, in my submissions, it inevitably if one hives off the patent claim your Honour is going to have to hear from Mr and Mrs - Dr and Mrs Buchanan both - or Dr Buchanan for the non-disclosure case and the patent claim, and certainly for Mrs Buchanan on - potentially on the question of disablement and etcetera, and also on the patent claim, so that's a factor pointing against the separate determination of the patent claim. Your Honour, that's really the fundamental basis upon which I put the opposition to the separate determination on that issue.

Consideration 26 First and foremost, the questions which the applicant is seeking to have heard separately relate to issues arising under the Policies. The applicant is not seeking to "hive off", to use the words of the respondent's counsel, the claim for alleged breach of a duty of good faith on the part of the respondent and its officers, nor some patent claim. Indeed, there is no patent claim, the only other claim being a claim for alleged engagement in unconscionable conduct contrary to s 12CA of the ASIC Act (Pt 6 of the ASOC). The reference to "the patent claim" is undoubtedly a reference to the relief for damages sought for the alleged breach of a duty of good faith in respect of the matters pleaded under both Pt 4 of the ASOC (paras 4.26 to 4.29) and Pt 5 of the ASOC (para 5.4). 27 The principles which govern the exercise of the Court's discretion under r 30.01 are reasonably well settled; it is their application in any given case where difficulties can arise. A summary of those principles was given by Branson J in Reading Australia Pty Ltd v Australian Mutual Provident Society (1999) 217 ALR 495 at [8] (dealing with the predecessor to Rule 30.01): (a) the term "question" in O 29 r 1 includes any question or issue of fact or law in a proceeding. The distinction in the rule between an "issue" and a "question" is the distinction between that which, when resolved, will result in an adjudication in favour of one party or the other, being an "issue", and less decisive matters of dispute being "questions" (Landsal Pty Ltd (in liq) v REI Building Society (1993) 41 FCR 421 at 425; 113 ALR 643 at 647); (b) a question can be the subject of an order for a separate decision under O 29 r 2 even though a decision on such a question will not determine any of the parties' rights (Landsal Pty Ltd (in liq) v REI Building Society at FCR 425; ALR 647); (c) however, the judicial determination of a question under O 29 r 2 must involve a conclusive or final decision based on concrete and established or agreed facts for the purpose of quelling a controversy between the parties (Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334; 161 ALR 399; [1999] HCA 9 at [45]); (d) where the preliminary question is one of mixed fact and law, it is necessary that the question can be precisely formulated and that all of the facts that are on any fairly arguable view relevant to the determination of the question are ascertainable either as facts assumed to be correct for the purposes of the preliminary determination, or as agreed facts or as facts to be judicially determined (Jacobson v Ross [1995] 1 VR 337 at 341, referring to Nissan v Attorney-General [1970] AC 179 at 242-3; [1969] 1 All ER 629 at 663-4 per Lord Pearson; Bass v Perpetual Trustee at [53]); (e) care must be taken in utilising the procedure provided for in O 29 r 1 to avoid the determination of issues not "ripe" for separate and preliminary determination. An issue may not be "ripe" for separate and preliminary determination in this sense where it is simply one of two or more alternative ways in which an applicant frames its case and determination of the issue would leave significant other issues unresolved (CBS Productions Pty Ltd v O'Neill (1985) 1 NSWLR 601 per Kirby P at 606); (f) factors which tend to support the making of an order under O 29 r 2 include that the separate determination of the question may: (i) contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the action; or (ii) contribute to the settlement of the litigation (CBS Productions Pty Ltd v O'Neill per Kirby P at 607); (g) factors which tell against the making of an order under O 29 r 2 include that the separate determination of the question may: (i) give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial (GMB Research & Development Pty Ltd v Commonwealth [1997] FCA 934; (ii) result in significant overlap between the evidence adduced on the hearing of the separate question and at trial - possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding: GMB Research & Development Pty Ltd v Commonwealth; Arnold v Attorney-General (Vic) [[1995] FCA 727)]. This factor will be of particular significance if the Court may be required to form a view as to the credibility of witnesses who may give evidence at both stages of the hearing of the proceeding; or (iii) prolong rather than shorten the litigation (GMB Research & Development Pty Ltd v Commonwealth). 28 More recently, Stone J in University of Sydney v ResMed Limited (No 5) [2012] FCA 232 at [41] said, in the context of Pt VB of the Federal Court of Australia Act 1976 (Cth): [41] In general all issues in proceedings should be determined at the one time: Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141-142; Reading Australia Pty Ltd v Australian Mutual Provident Society (1999) 217 ALR 495 at [7]. That is not invariably the case and in the exercise of its wide ranging powers of case management the Court may determine that consistent with s 37M of the Federal Court of Australia Act 1976 (Cth), the most efficient and inexpensive approach will be to separate some issues or questions for earlier determination: see Olbers v Commonwealth of Australia (No 3) [2003] FCA 651 at [8]. Sometimes the early determination of some issues will substantially narrow the issues to be determined at trial or even lead to partial or total settlement of the proceeding: Novartis Crop Protection Australasia Pty Ltd v Orica Australia Pty Ltd [2001] FCA 1013. 29 Having regard to these principles and the respective submissions of the parties, I am of the view that the most efficient and inexpensive approach to managing this proceeding to finality will be for the questions raised in Annexure "A" to the interlocutory application to be separately determined prior to the issues raised by the other claims in tort and for statutory breach (unconscionable conduct). 30 If the ultimate issue arising under the policies for determination by the Court is answered against the applicant then, effectively, that will determine the proceeding. Certainly the tort claim for an alleged breach of duty to act in good faith could not be pursued, which would put an end to any relief by way of damages for the applicant's inability to pursue his patent application, but it is also difficult to see how his unconscionable conduct claim under s 12CA of the ASIC Act would have any prospect of success. 31 On the other hand, if the applicant is successful in the ultimate issue arising under the Policies for determination by the Court, the prospect of the matter being successfully compromised by agreement or mediation will be greatly enhanced. 32 I therefore propose to grant the interlocutory relief sought by the applicant for separate determination of the relevant questions under the Policies, but before doing so, will direct the parties to bring in draft short minutes of order re-articulating the questions for separate determination so as to remove the rather clumsy way they are presently drafted in Annexure "A" to the interlocutory application. In default of agreement, I will direct each party to bring in such draft short minutes of order and I will subsequently make such orders as I think appropriate.

Discovery 33 During the course of the hearing, counsel for the respondent indicated that the respondent was happy to provide verified discovery in accordance with a document entitled "Draft Discovery Plan" annexed as Annexure "G" to an affidavit by Mr Groundwater sworn 13 November 2014 (Ex 2). Annexure "G" of Ex 2 was put forward on behalf of the applicant with a view to reaching an accommodation with the respondent as to the scope of the respondent's discovery and it seems to have achieved that purpose, subject to the exclusion of what are called "category 6 documents" referable to Helen Lilamand and "category 4 documents referrable to Celina Ennis; Helen Lilamand and two other persons identified as "underwriter" and "senior underwriter". The "Draft Discovery Plan" is a rather cryptic document and rather than make orders by reference to its terms, I propose to direct the parties to bring in draft short minutes of order requiring the respondent to provide verified discovery and inspection consistent with the "Draft Discovery Plan", as amended, by agreed dates, and I will make orders accordingly.

Respondent's Privilege Claims in Respect of Discovered Documents 34 The respondent has claimed privilege over certain portions of discovered documents and has produced these documents for inspection with the portions in respect of which privilege is claimed being redacted. The parties ultimately agreed that I should determine these claims in chambers. The respondent relied on an affidavit of Rukmi Sen sworn 17 November 2014 in support of its claims, to which was exhibited unredacted versions of the relevant documents, with the relevant portions marked to indicate where the redactions were made. Ultimately, all the claims for privilege were not maintained for final adjudication. 35 The applicant filed written submissions challenging the respondent's claims. 36 Relevantly, there are six documents:

First Discovery (1) Document 357. (2) Document 372. (3) Document 373. (4) Document 382.

Third Supplementary Discovery (5) Document 11. (6) Document 12. 37 In respect of the first four documents, the respondent claims legal advice privilege under s 118 of the Evidence Act 1995 (Cth) in respect of the redacted portions:

Document 357 38 This is an email from Megan Garvan to Patrick O'Connor, Luke Banfield and Celina Ennis dated 16 November 2011. Megan Garvan was the respondent's Quality and Assurance Manager. Ms Garvan was sending the email to Patrick O'Connor, who was the Executive Manager - Key Accounts, for a decision in response to the applicant's request to have the payment of his outstanding premiums waived. Ms Garvan became involved in the applicant's insurance claim as she was engaged to provide recommendations into the investigation of the applicant's undisclosed Lithicarb treatment. Celina Ennis was the Senior Case Manager who had day to day responsibility for managing the applicant's claim. 39 It is said that the first redacted portion contains a summary of the instructions given to the respondent's solicitors; in my opinion it does not, but even if it could be so characterised, it does not have the benefit of the privilege conferred by s 118 of the Evidence Act. 40 It is said that the second redacted portion refers to the content of in-house legal advice; in my opinion it does not. It does not have the benefit of the privilege conferred by s 118 of the Evidence Act.

Document 372 41 This is an email from Celina Ennis to Daisy Desa dated 8 December 2011. Ms Desa is a Complaints Resolution Manager employed by the respondent. 42 In my view, the redacted portion is not privileged by s 118 of the Evidence Act. At most, the redacted portion states advice from TurksLegal to the effect that TAL is "in the process of avoiding the policy". The applicant already knows this; adducing it in evidence is not going to disclose anything.

Document 373 43 This is an email from Daisy Desa to Rukmi Sen dated 8 December 2011. 44 Again I am of the view that the redacted portion is not privileged by s 118 of the Evidence Act. It does not disclose any "legal opinion from Turks Legal", merely that TAL is "possibly going to avoid this policy once it has been through the proper claims channels".

Document 382 45 This is a file note prepared by Daisy Desa on 21 December 2011. 46 The redacted portion falls into the same category as the redacted portion of Document 373. It is not privileged.

Documents 11 and 12 47 The respondent maintains electronic claims notes in relation to claims notified which log actions taken in managing a claim. In this case, the respondent produced "Cardio (Retail Claims) File Notes" for Claim 63859 (the applicant's claim in relation to the Practice Overheads Policy) and Claim 63858 (the applicant's claim in relation to the Income Protection Policy). The Claims File Notes are used for TAL's internal purposes only in managing the claim and are said to be confidential. The respondent claims litigation privilege under s 119 of the Evidence Act in respect of the following entries in the document entitled "Cardio (Retail Claims) File Notes" for Claim 63859 (Document 11): Timestamp Creator Page of the Exhibit 07.08.2014 Hilda Kwok 7 02.07.2014 Sumit Dhingra 7 02.07.2014 Sumit Dhingra 7 02.07.2104 Sumit Dhingra 7 30.04.2014 Hilda Kwok 8 31.03.2014 Hilda Kwok 8 20.08.2013 [Blank] 9 29.05.2013 Nerida Cook 9

48 The respondent claims litigation privilege under s 119 of the Evidence Act in respect of the following entries in the document entitled "Cardio (Retail Claims) File Notes" for Claim 63858 (Document 12): Timestamp Creator Page of the Exhibit 07.08.2014 Hilda Kwok 13 02.07.2014 Sumit Dhingra 13 02.07.2014 Sumit Dhingra 13 02.07.2104 Sumit Dhingra 13 30.04.2014 Hilda Kwok 14 31.03.2014 Hilda Kwok 14 23.08.2013 [Blank] 15 16.07.2013 [Blank] 15 29.05.2013 Nerida Cook 15

49 The proceedings commenced by the filing of a Statement of Claim by the applicant on 23 May 2013. The respondent was served with the Statement of Claim on or about 24 May 2013. Each of the entries over which litigation privilege is claimed post-date the commencement of proceedings. 50 The redacted material relates to the approval for payment of legal invoices provided by TurksLegal in these proceedings. In order for the respondent to effect payment of these invoices, it was necessary for a request for approval for payment to be sent to the respondent's accounts department. These requests for payment and the authorisations given in response to those requests are recorded in the redacted material. 51 Alternatively, the respondent says that this information is confidential and not relevant to any issue in the proceedings and the respondent seeks a direction that it be permitted to redact or mask these entries. 52 In my view, the information recorded in these documents is neither privileged nor confidential. Whether it is relevant may be doubted, but that is something that I do not have to decide because the documents containing the relevant portions have been discovered by the respondent. 53 All the claims for privilege must be rejected. The respondent will be ordered to produce the relevant documents for inspection by the applicant unredacted.

Subpoena to Produce Documents 54 During the course of the interlocutory hearing, counsel for the respondent foreshadowed an application for leave to issue a subpoena to Medicare Australia for the production of claims information including specified reports and summaries for the period from 1 January 2004 to 1 August 2006 in respect of the applicant. Subsequently, such an application was made supported by an affidavit of Mr Thomas Lui affirmed 3 December 2014. I propose to grant leave in the terms sought.

Costs 55 The respondent must pay the applicant's costs of the interlocutory application, as agreed or taxed. I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds.