Ensham Resources Pty Limited v AIOI Insurance Company Limited

REASONS FOR JUDGMENT 1 On 20 July 2012 the applicant filed an application for leave to appeal in respect of a decision of Cowdroy J given on 6 July 2012. The primary judge's decision dealt with whether the respondent insurer was entitled to claim legal professional privilege in respect of certain reports prepared by a loss adjuster in respect of loss and damage suffered by the applicant when its open-cut coal mine at Emerald in Queensland was flooded after heavy rain in early 2008. 2 The substantive proceedings are scheduled to be heard by Justice Emmett over several weeks commencing in March 2013. 3 It is common ground that the applicant requires leave to appeal Justice Cowdroy's decision having regard to s 24(1A) of the Federal Court of Australia Act 1976 (Cth) (the Act). 4 In its application for leave to appeal the applicant stated that it wished to have the application dealt with by an oral hearing. It also applied for an order that the application for leave to appeal be heard and determined by a Full Court and that the application for leave to appeal be heard concurrently or immediately before the appeal. 5 The matter came before me as duty judge. I invited the parties to file and serve written submissions on the threshold issue whether or not I should make a direction under s 25(2)(e) of the Act that the application for leave to appeal be heard and determined by a Full Court. Both parties provided helpful written submissions on that issue. These reasons deal only with that issue. 6 Section 25(2) of the Act provides that applications for leave to appeal to the Court must be heard and determined by a single Judge unless, relevantly, under paragraph (e) "a Judge directs that the application be heard and determined by a Full Court". 7 Guidance as to the exercise of the discretion whether or not to give a direction under paragraph 25(2)(e) has been provided in a series of cases, including Davis v Insolvency and Trustee Service Australia [2010] FCA 518, Oswal v Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) [2011] FCA 536, Australian Equity Investors, an Arizona Limited Partnership v Colliers International (NSW) Pty Ltd [2011] FCA 1198, Chan & Naylor Norwest Pty Ltd v CNIP Pty Ltd [2011] FCA 1203 and Generic Health Pty Ltd v Otsuka Pharmaceutical Co Ltd [2012] FCA 412. 8 I respectfully agree with the observation of Robertson J in Australian Equity Investors at [2] that the issue is "largely one of pragmatism in terms of the efficient operations of the Court". That is perhaps simply expressing in another way the relevant question which has been identified in some other cases, such as in Generic Health at [13] where Katzmann J asked whether: … there is "some value, benefit or advantage" in the application being heard by a Full Court… 9 The sorts of matters which have been regarded as relevant to this question include: (a) whether the application for leave to appeal is "not straightforward", suggesting that for reasons of efficiency and cost the application for leave to appeal should be heard and determined by a Full Court (Oswal at [16]); (b) whether it is more efficient for the leave application and appeal to be heard together because the arguments are likely to be duplicated, such as where it is not practicable to separate the question whether the primary judgment is attended by sufficient doubt to warrant a grant of leave from the substantive merits of the appeal itself (Oswal at [16]); (c) whether the subject matter of the proposed appeal relates to matters which might be described as being at the substantive end of the spectrum, rather than dealing with matters of mere practice and procedure (Australian Equity Investors at [4]); (d) whether the proposed appeal raises any issue of principle or of general application or is otherwise of a nature which suggests that it should be considered and determined by a Full Court (Generic Health at [14]); (e) the impact on further rights of appeal, noting that s 33(4B)(a) of the Act appears to operate so that an appeal cannot be taken to the High Court from a judgment of the Court if the judgment is a determination of an application of a kind set out in s 25(2) of the Act (see Australian Equity Investors at [6]). 10 Three grounds are set out in the draft notice of appeal. The first concerns the question whether the respondents discharged their onus of establishing that the dominant purpose for the creation of the loss adjuster's reports was to assist in contemplated litigation, given certain factual findings made by the primary judge. 11 The second ground challenges the primary judge's ruling on the relevance of the fact that the respondent insurers were subject to a duty to act towards the applicant insured with the "utmost good faith" having regard to s 13 of the Insurance Contracts Act 1984 (Cth). 12 The primary judge ruled that the duty of utmost good faith was not relevant to the question whether the loss adjuster's reports were created for the dominant purpose of use in litigation. 13 The third ground of appeal is whether the primary judge erred in finding that the purpose of each loss adjuster's report was to be assessed by reference only to the state of mind of the respondent insurer's solicitor and without reference to the purpose of the loss adjuster or the insurers. 14 In determining whether or not to give a direction under s 25(2)(e) I respectfully agree with the observation of Justice Robertson in Australian Equity Investors at [3] that it is prudent to be circumspect about the merits of the prospective appeal, not the least because I may be called upon to be a member of any Full Court. I have had regard to the written submissions of the parties which address the merits of the prospective appeal and believe that it is sufficient for me to say on that matter that, while the three grounds may not be of equal strength, I cannot say that all of them are self-evidently hopeless or unarguable. 15 Other relevant considerations which in my view point to this being an appropriate case to make a direction under s 25(2)(e) are as follows. First, it probably is more efficient for the leave application and the appeal to be heard together in view of the likely duplication of argument. 16 Secondly, the third ground of appeal appears to me to raise an issue of general principle concerning the correctness of the primary judge's finding, which was said to be based on Hartogen Energy Ltd (in liq) v Australian Gas Light Co (1992) 36 FCR 557, that in determining the dominant purpose of a document in a claim for legal professional privilege, the Court "must inquire into the state of mind of the solicitor for the party claiming privilege, not of the loss adjustor (sic) or the insurer itself" (emphasis in original). I also note that there appears to be a degree of overlap between the first and third proposed grounds of appeal. 17 Thirdly, I consider that the third proposed ground of appeal is properly characterised as being at the substantive end of the spectrum by virtue of the nature of the legal principles at issue and the fact that legal professional privilege is now regarded as being a substantive, and not merely a procedural, right. 18 Finally, assuming that I am correct in considering that an issue of principle and general importance is raised by the proposed third ground (and indirectly by the first ground of appeal), I am also conscious of the fact that the applicant would be denied a right of appeal from any ultimate determination made by a single Judge having regard to the terms of s 33(4B)(a) of the Act. 19 For all these reasons I have determined to direct that the application for leave to appeal be heard and determined by a Full Court and that, subject to any contrary direction of the Full Court, the application for leave to appeal be heard at the same time as any appeal. It appears that the matter requires no more than one day, even if leave is granted and the appeal is also heard. The relevant practice notes concerning appeals to the Full Court will apply. 20 Although the respondent resisted the giving of a direction under s 25(2)(e), I consider that costs should be costs in the appeal generally, bearing in mind that the question whether or not to make such a direction is fundamentally one for the Court having regard to its own assessment of how its operations can most efficiently be conducted. 21 Accordingly, I make the following orders: