Ensham Resources Pty Limited v Aioi Insurance Company Limited [2012] FCAFC 191 | Case summary

LANDER AND JAGOT JJ: 1 This is an application for leave to appeal from an interlocutory order made by a judge of this Court dismissing the applicant's application to inspect documents for which the respondents had claimed legal professional privilege. 2 This proceeding, which is for indemnity under a contract of insurance, was started on 24 September 2010. 3 The loss which was occasioned by the applicant occurred between 17 and 20 January 2008 when its mine site was flooded. 4 On 22 January 2008, the applicant notified the respondents of a potential claim. The contract of insurance under which the claim was made identified "Crawford & Company" (Crawford) as the usual loss adjuster "to assess and report on the Insured's claim to both the lead (insurer's) office and the brokers". 5 Also on 22 January 2008, Crawford provided a report to the first respondent in relation to the loss occasioned by the applicant. That report has been discovered and been made available for inspection. 6 On 1 February 2008, Mr Satoshi Kodaira, the first respondent's manager, emailed Mr Peter Stockdale of King & Wood Mallesons (Mallesons) retaining Mallesons and Mr Stockdale to work on matters relating to the Ensham flood. 7 On 7 February 2008, Mr Stockdale emailed his letter of retainer to Mr Kodaira. 8 On 12 February 2008, Mr Kodaira emailed Mr Stockdale advising that "[o]ur urgent assignment is to set up a reserve for our fiscal year end. i.e. March". 9 On 13 February 2008, Mr Stockdale spoke to Mr Bickle, a loss adjuster employed by Crawford. On the same day, Mr Stockdale made a file note of that conversation: I spoken (sic) to Greg Bickle. He said there were a number of issues arising: 1. He thinks the removal of debris clause is the only one which attaches to the risk. It is significant, however, whether the inflow of water was caused by damage to insured property. The relevant insured property would have the breach at the levy bank but it is very unclear whether this caused the water to flow into the mine or, rather, whether it broke after the water had flooded in the mine in which case it was not the cause of the damage. 2. Moreover, it seems that the levy bank is not itself on the asset register and therefore part of the insured property. 3. Next he noted that there was [a] sub limit of $5 million on the removal of debris clause. The cost of "de-watering" the mine will cost something in the order of $10 million and to remove the mud which has accumulated at the bottom of the mine will cost at least another $50 million. In all likelihood, therefore, even on the removal of debris head of claim the loss will be something in the order of $60 million of which only $5 million will be covered. 4. Perhaps in response to Marsh [the applicant's insurance broker] in Melbourne [Ensham] have argued that the loss is actually a section 2 loss and that the costs of empting (sic) the mine and clearing it up fall in as part of the "increased cost of working". Greg has some difficulty with this because he says that there is no material damage to the coal which remains in situ albeit under water. 5. On the basis of these problems in Greg's view it was necessary for any reporting issue to be the subject of privilege and I therefore agree to recommend to our client that his retainer from the client be terminated and replaced by one from the firm. … 10 Also on 13 February 2008, Mr Stockdale emailed Mr Kodaira: Whilst the facts are much too uncertain to draw any even preliminary conclusions … You will still, of course, receive (the loss adjuster's) report but it will technically be addressed to us. 11 That same day, Mr Kodaira emailed Mr Stockdale: As I wrote in my previous email, our current theme is to set up a reserve … 12 On 18 February 2008, Mr Stockdale emailed Mr Kodaira attaching a letter of retainer for Mr Bickle. In that email, he wrote: The letter is written to refer to the possibility of litigation. Whilst we would obviously hope this can be avoided, the retainer needs to outline this as a possibility in order to maximise the prospects of establishing a claim for privilege. 13 On 19 February 2008, Mr Stockdale sent the letter of retainer to Mr Bickle. Mr Stockdale's evidence was that at that time he had formed the view that litigation was likely. 14 On 5 March 2008, Mr Stockdale received a second report from Crawford for which the respondents claimed legal professional privilege. 15 On 12 March 2008, Mr Stockdale received a third report for which a claim of legal professional privilege was made but not pressed. 16 On 9 April 2008, Mr Stockdale received a fourth report for which legal professional privilege was claimed. 17 On 22 April 2008, 22 May 2008 and 7 July 2008, Mr Stockdale received the fifth, sixth and seventh reports, respectively, for which a claim of legal professional privilege was made but not pressed. 18 On 1 September 2008, Mr Stockdale received Crawford's eighth report for which a claim for legal professional privilege has been made in part. On 3 September 2008, a ninth report was provided for which a claim for legal professional privilege has been made. On 26 September 2008, Crawford provided their last report, the tenth report, for which legal professional privilege has been claimed in part. 19 Between 20 January 2008 and 2 June 2010, the applicant had submitted 21 progress claims to the respondents, the last of which was submitted on 2 June 2010. 20 On 21 September 2010, the respondents declined to indemnify the applicant. On 24 September 2010, the applicant started this proceeding. 21 On 16 November 2011, the applicant filed an interlocutory application seeking to inspect the documents listed in Part 2 of the List of Documents filed on 30 August 2011, so that the Court could decide the validity of the respondents' objection to production based upon the respondents' claim that the documents were privileged from production. 22 The applicant also sought an order that the applicant be granted access to each of the documents listed in Part 2 of the List of Documents for the purpose of inspection and copying. 23 The application was opposed. 24 The respondents said that at a directions hearing on 1 February 2012, before Emmett J, who is to be the trial judge but was not the judge who made the orders of which complaint is made, an issue was raised whether all of the Crawford reports were responsive to Mr Stockdale's instructions. The respondents' senior counsel undertook to have the reports reviewed to see if any of the reports or parts of the reports were non-responsive. 25 On 6 February 2012, the respondents wrote to the applicant advising of the reports and parts of the reports for which the claim of legal professional privilege in the communications contained in those reports was no longer pressed. 26 During the hearing of this application for leave to appeal, there was some debate as to why the respondents had claimed and abandoned a claim for legal professional privilege for some of Crawford's reports and some parts of Crawford's other reports. 27 The respondents did not waive legal professional privilege. They abandoned, in part, their claim. The respondents' conduct was entirely proper. By abandoning the claims in respect to some communications they thereby narrowed the issues before the primary judge. Such conduct is consistent with a party's obligations in litigation in this Court: s 37N of the Federal Court of Australia Act 1976 (Cth). 28 Nothing can be inferred from the respondents' conduct and indeed, to be fair to the applicant, nothing was sought to be inferred. 29 The applicant could not, and did not, claim that by not claiming legal professional privilege in respect of part of the document, legal professional privilege could not be maintained in respect of the other part of the document. That is because legal professional privilege relates to the communications in a document, not to the document itself. 30 Professor Dal Pont writes in "Lawyers' Professional Responsibility", 5th edition, in Chapter 11 at 369 [11.70]; Legal professional privilege applies to "communications", not to documents as such, although the typical communication is in written form. It covers notes, drafts, charts, diagrams, photographs, spreadsheets and the like prepared by a client as a way of marshalling information to be the subject of confidential communication to her or his lawyers. Privileged communications may be oral or mechanically, electronically or video recorded, provided they meet the other requirements of the privilege. The definition of "document" for the purposes of the uniform evidence law is similarly wide. (Footnotes omitted) 31 In Baker v Campbell (1983) 153 CLR 52, Gibbs CJ said at 60: The nature of legal professional privilege is described as follows in Halsbury's Laws of England (4th ed.), vol. 13, par. 71: "… communications made to and from a legal adviser for the purpose of obtaining legal advice and assistance are protected from disclosure in the course of legal proceedings, both during discovery and at the trial. … Any other communications as are reasonably necessary in order that the legal advice may be safely and sufficiently obtained are also protected, but in the case of communications to or from a non-professional agent or third party, such as a person who witnessed some event, the privilege only arises if litigation is threatened or contemplated." 32 Justice Deane said at 112: This privilege, ordinarily described as legal professional privilege, protects a person from disclosure of oral or written confidential communications, between himself and his solicitor or barrister, made or brought into existence for the sole purpose of seeking or giving advice or for the sole purpose of use in existing or anticipated litigation (see Grant v. Downs; O'Reilly v. State Bank of Victoria Commissioners and, as to the absence of any requirement that advice be in the course of or anticipation of litigation, Foster v. Hall; Greenough v. Gaskell; per Brett M.R. in Pearce v. Foster). It is the privilege of the client and protects him from being compelled to make disclosure of such communications either in testimony or by the production of documents for inspection. (Footnotes omitted) 33 Justice Dawson said at 122: Legal professional privilege attaches only to communications made for the purpose of giving or receiving advice or for use in existing or anticipated litigation. Moreover, if the communication in question is in the form of a document submitted by a client to his solicitor for use in existing or anticipated litigation, privilege will attach to it only if it comes into existence solely for that purpose. 34 It does not matter whether legal professional privilege is based on advice or litigation privilege. The privilege attaches to the communication. 35 When the communication is contained in a document and the document is brought into existence for the dominant purpose of anticipated legal proceedings, the document will be subject to legal professional privilege. In some cases, the whole of the document will be the communication; for example, if a solicitor requisitions an expert's report from an expert in relation to an issue in litigation that is reasonably anticipated, the whole of that report will be privileged. That is because the document is the communication. Sometimes the document might not be the whole of the communication, but the communication will be included in the document. In that case, the party seeking to rely on legal professional privilege must confine the claim to the relevant communication in the document. When a document that has been brought into existence for the dominant purpose of anticipated litigation is subsequently discovered in that litigation and legal professional privilege is claimed, it is usually assumed the whole document was brought into existence for that dominant purpose. But if it is only certain communications in the document that satisfy that purpose, it is only those communications that are protected. 36 It does not matter in this application, because it was not argued by the applicant that the respondents' conduct in writing the letter of 6 February 2012 meant that other of the Crawford reports or parts of the Crawford reports lost their protection. Nor was it suggested that any inference could arise from that conduct. The respondents' conduct represented in the letter of 6 February 2012 meant only that the primary judge's inquiry was narrowed. 37 On 19 June 2012, the first day of the hearing before the primary judge, the applicant served a notice to produce upon the respondents (incorrectly dated 19 June 2011) seeking the following documents: (1) All documents recording communications between Mallesons Stephen Jaques and the respondents (through their servants, agents or otherwise) between about 1 February 2008 and about 19 February 2008 in relation to: (a) terminating the previous appointment made on about 22 January 2008 of Mr Greg Bickle of Crawfords Loss Adjusters; (b) concerns held by Mallesons Stephen Jaques that there were coverage issues emerging in the period from about 1 February 2008 and about 19 February 2008; (c) the scope of the retainer between Mallesons Stephen Jaques and the respondents. 38 At the hearing before the primary judge, the documents for which legal professional privilege was claimed were the second, fourth, eighth, ninth and tenth reports, and in respect of the eighth and tenth reports only part. 39 Those reports were provided to the primary judge who read them and set out generally their contents in his reasons at [30]-[42]: Report No 2 Report No 2 is dated 5 March 2008 and refers to preliminary advice of 22 January 2008, saying that Crawford is now in a position to report comprehensively on the matter, notwithstanding the difficulties that arise through the uncertainty as to the damage that has been sustained to Drag Line 1 ('DL1'). The report begins by describing the physical situation of the mine, referring to the Nagoa River, the levee banks constructed to contain the flow of the river during periods of flood and the fact that the Nagoa River is fed by two catchment areas, being the Theresa Creek system, north-west of Ensham, and the Fairbairn Dam catchment, west of Ensham. Report No 2 sets out a relatively detailed description of the mechanism of the flooding, including conjectures as to its timing. It states that the timeline for the event was still being pieced together. Views are expressed as to whether there is causal connection between levee bank failure and the flooding of Pit B and Pit C. Report No 2 observes that, in connection with the initial advice of 22 January 2008, Crawford had been given information as to whether the levee banks around Pits B, C and D were included in the asset register as earthworks for the Nagoa River causeway. It states that the policy documents appear silent on the extent of property insured and in particular the property listed within the asset schedule. Report No 2 says that until such times as Pit B has been dewatered to a sufficient extent to enable an inspection of DL1, the full extent of the damage and the time necessary to reinstate it can be no more than an estimate. Report No 2 refers to Appendix H, a document produced by Ensham for the purposes of a presentation to the Environmental Protection Agency for the purposes of seeking approvals for the discharge of water from the open cut pits into the Nagoa River. Report No 2 says that the document is a summary of matters already digested and assumption as to what might be found after dewatering. It contains estimated costs of dewatering. Report No 2 further states that mining consultants have been instructed and instructions were being sought as to the appointment of a hydrologist. Report No 4 Report No 4 is dated 9 April 2008 and advises the current position with regard to the recovery of DL1, together with other issues raised by Mallesons. Section 2 of Report No 4, which is headed GROSS PROTECTION DECLARATION, refers to paragraphs of Report No 2 that reflected upon an expected change in the value of gross product as compared with the declared value for gross profit. An email from Ensham is attached providing an explanation as to the differences. Section 3 of Report No 4, which is headed MATERIAL DAMAGE, states that the pumping activities have continued to lower the water level within Pits A and B. Access to DL1 will assist in the assessment as to the extent of damage and the time frame to reinstate DL1, which could be influenced by the level of silt built up. Section 4, which is headed GENERAL, says that a copy of the current recovery plan for the mine is expected within a week and that, on its receipt, Crawford will be in a position to comment on the appropriateness of the intended activities and may be in a position to make a further estimate of the Section 2 loss. A brief report from Mine Planning & Management Pty Ltd is attached to Report No 4. Report No 8 Report No 8 is dated 1 September 2008 and reports on the current position with the reinstatement of DL1, it having been recovered from Pit B where it was flooded. Report No 8 refers to the dewatering of Pit B so as to expose DL1 as having been 'progressive but aggressive activity', involving the procurement and installation of numerous pumps and waterlines. It deals specifically with dewatering and DL1 Recovery. It attaches a number of photographs and contains a commentary on those photographs. Report No 9 Report No 9 is dated 3 September 2008 and it is entirely redacted apart from the heading BUSINESS INTERRUPTION RESERVE. In broad terms, the report considers the various elements of loss that the applicant has suffered as a result of the flood. Report No 10 Report No 10 is dated 26 September 2008. In broad terms, the report discusses the steps taken to get the mine back into production and the costs associated with those steps. There is discussion about the costs of arranging various replacement components. (Emphasis in original) 40 The primary judge found that the reports were prepared when litigation was reasonably anticipated. He also found that the documents were prepared for the dominant purpose of providing assistance or advice in relation to those anticipated proceedings: Esso Australia Resources Limited v Commissioner of Taxation of the Commonwealth of Australia (1999) 201 CLR 49 (Esso). 41 The applicant on this application for leave to appeal has filed a draft notice of appeal in accordance with rule 35.12(2)(d) of the Federal Court Rules 2011. 42 The draft notice of appeal identifies the following grounds of appeal: 1. The trial judge erred in finding that the respondents had discharged their onus of proving that the dominant purpose for the creation of the reports was to assist in contemplated litigation in circumstances where: a. it was the insurers who originally retained the loss adjuster, and commissioned the loss adjuster's reports in the first instance (Judgment, [5], [14]); b. the primary judge ought to have found that the loss adjuster's reports would have been produced whether or not the respondents' solicitors requested them; c. the contemporaneous correspondence between the solicitor, the insurers and the loss adjuster "reveals a deliberate attempt by the solicitors for the insurer to attract legal professional privilege to the … reports … particularly evident … in the email from [the solicitor to the insurer that] explains the reasons for replacing [the insurers] retainer of [the loss adjuster] with that of [the solicitor]" (Judgment, [45]). 2. The primary judge erred in ruling that the fact that the respondent insurers were subject to a duty to act towards the applicant insured with the utmost good faith is not relevant to the question of whether each loss adjuster's report was created with the dominant purpose of use in litigation and therefore whether each report is privileged from inspection: see Transcript, 19 June 2012, page 21 line 18 to page 22 line 14. 3. The primary judge erred by determining the purpose of each loss adjuster's report solely by reference to the state of mind of the respondent insurers' solicitor and without reference to the purpose of the loss adjuster or the insurers. (Emphasis in original) 43 The grounds of appeal limit the applicant's complaint to the primary judge's conclusion that the dominant purpose for the creation of the reports was to assist in contemplated litigation. 44 There is no complaint about his Honour's finding that the reports were prepared in contemplation of litigation. The complaint is limited to the question of purpose. 45 Legal professional privilege was founded in the common law, the purpose of which is to protect confidential communications made between a legal practitioner and the legal practitioner's client and in some circumstances between third parties. 46 The privilege applies to communications that are oral, written or electronically or mechanically recorded and stored, and the privilege extends to copies of such documents: Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 (Propend). 47 The privilege exists for the benefit of the client, not the lawyer: Propend at 570. 48 The Evidence Act 1995 (Cth) (Evidence Act) recognises a privilege, which it describes as "client legal privilege": Part 3.10, Division 1. 49 The Evidence Act, however, has no application in relation to this application, but the issues on this application must be determined in accordance with the common law: Esso per Gleeson CJ, Gaudron and Gummow JJ at 59. 50 The aspect of legal professional privilege with which this application is concerned is litigation privilege, which covers certain confidential communications passing between a client and the client's lawyer or a third party, or the client's lawyer and a third party. 51 The privilege exists when the communication sought to be protected was created, or a document containing such a communication was created, for the dominant purpose of use in existing or reasonably anticipated judicial or quasi-judicial proceedings: Esso. 52 Whether or not litigation is reasonably contemplated is a question of fact to be determined objectively: Grant v Downs (1976) 135 CLR 674 at 692 (Grant v Downs); Nickmar Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44 at 55. 53 In a determination whether litigation was reasonably anticipated, the subjective views of the parties may well be relevant, but they are not determinative. The question is to be assessed by reference to all of the surrounding circumstances: Visy Industries Holdings Pty Ltd v Australian Competition and Consumer Commission (2007) 161 FCR 122. 54 There is no decision of the High Court as to what "reasonably anticipated" or "reasonably contemplated" means in the context of a claim for legal professional privilege. In Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526 (ACCC v Safeway) at 559, Goldberg J stated that "reasonably anticipated" meant that such proceedings will more probably than not be commenced. 55 In Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332 (Mitsubishi Electric), Batt JA said that the test was that "there must be a real prospect of litigation, as distinct from a mere possibility, but it does not have to be more likely than not": at [19]. 56 The decision in Mitsubishi Electric has been followed by a number of judges in this Court: Microsoft Corporation v Ben Zhong Fan [2003] FCA 1026; Australian Competition and Consumer Commission v Liquorland (Australia) Pty Ltd [2005] FCA 503; Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 2) (2011) 283 ALR 299; Australian Competition and Consumer Commission v Prysmian Cavi E Sistemi Energia SRL (formerly Pirelli Cavi E Sistemi Energia SPA) (No 2) (2012) 287 ALR 760. It has also been followed by a judge of the Supreme Court of New South Wales in Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380. 57 In our opinion, the test propounded by Batt JA should be followed by this Court. 58 The circumstances in which leave to appeal could be granted from an interlocutory decision are well known: Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 (Decor). The applicant must establish that the decision at first instance is attended with sufficient doubt to warrant it being reconsidered by the Full Court and that substantial injustice would result if leave were refused supposing the decision at first instance to be wrong. Both limbs must be satisfied. 59 The Court is cautious about granting leave to appeal in what are matters of practice and procedure: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 citing with approval In re the Will of FB Gilbert (deceased) (1946) 46 SR(NSW) 318 at 323. 60 For the reasons that follow, in our opinion, the applicant has not made out either limb of the test in Decor and the application for leave to appeal must be refused. 61 The applicant complained on this application and before the primary judge that Mr Stockdale had deliberately attempted to attract legal professional privilege by terminating the retainer between the respondents and Crawford, and replacing that retainer with a retainer from Mallesons. 62 The primary judge accepted that contention. He described the solicitors as indulging in "self-serving statements referring to a potential claim for privilege contained in the email from Mr Stockdale to Mr Kodaira dated 18 January 2008 (sic)". 63 We accept that Mr Stockdale took steps to put in place a regime which would maximise the respondents' claim for legal professional privilege in respect of communications emanating from Crawford, but that, in our opinion, does not assist in determining whether the particular reports under consideration were created for the dominant purpose of providing advice to the respondents in respect of reasonably anticipated litigation. That will be determined objectively. 64 The applicant contended that these reports were prepared for purposes other than for the purpose of the respondents obtaining legal advice. The applicant contended that the primary judge was wrong to rely upon the evidence of Mr Stockdale as to the reason why the reports were commissioned. The applicant contended that regard should have been made to the respondents' purpose in the creation of the reports, as well as the solicitor's purpose. In that respect, it was argued that the insurers' commissioning of the reports was for the purpose of the insurers setting an estimate on potential liability under the contract of insurance and for conducting their business. 65 In those circumstances, it could not be said that the documents were created for the dominant purpose of the respondents obtaining legal advice. 66 Further, the applicant contended that the primary judge erred in ruling during the currency of the application that the respondents' duty to act towards the applicant with the utmost good faith, as required by the Insurance Contracts Act 1984 (Cth) (Insurance Contracts Act), was not relevant to the question whether each loss adjuster's report was created with the dominant purpose of use in litigation. 67 The last point can be disposed of very quickly. It is right, as the applicant contended, that a contract of insurance is a contract based on the utmost good faith and there is implied in such a contract an obligation, which requires each party to the contract of insurance to act towards the other, in respect to any matter arising under or in relation to it, with the utmost good faith: s 13 of the Insurance Contracts Act. 68 That obligation continues to operate upon the party in any litigation arising under the contract of insurance: Silbermann v CGU Insurance Ltd (2003) 57 NSWLR 469 at 482. 69 The applicant contended that if the respondents reasonably anticipated a legal proceeding as early as February 2008, the respondents were under an obligation to inform the applicant. 70 We do not agree that an insurer has to advise an insured that indemnity may be declined before the insurer decides to refuse indemnity, but where the insurer considers that there is a probability that the insurer will decline indemnity. In other words, an insurer is not under an obligation to advise the insured that the insurer is considering declining indemnity. 71 But even if we are wrong about that, the submission, it seems, takes the matter nowhere. If the insurer is under such an obligation and has failed to do so, it does not follow that the proceedings could not be objectively said to be reasonably anticipated at any particular time. 72 The applicant has not shown the primary judge to have been wrong in ruling that the question, which he disallowed, was irrelevant. 73 In Grant v Downs, Barwick CJ said at 677: [A] document which was produced or brought into existence either with the dominant purpose of its author, or of the person or authority under whose direction, whether particular or general, it was produced or brought into existence, of using it or its contents in order to obtain legal advice or to conduct or aid in the conduct of litigation, at the time of its production in reasonable prospect, should be privileged and excluded from inspection. 74 In AWB Ltd v Cole (2006) 152 FCR 382 (AWB v Cole), Young J said at 412, in following a decision of Federal Commissioner of Taxation v Pratt Holdings Pty Ltd (2005) 60 ATR 466 (FCT v Pratt), that the evidence of the intention of the document's creator or the person who authorised or procured the creation of the document was not necessarily conclusive of the purpose. He said, after referring to a range of authorities: As these cases make clear, it may be necessary to examine the evidence concerning the purpose of other persons involved in the hierarchy of decision-making or consultation that lead to the creation of the document and its subsequent communication. 75 Goldberg J reasoned similarly in ACCC v Safeway at 545. 76 In Hartogen Energy Ltd (in liq) v The Australian Gaslight Company (1992) 36 FCR 557, Gummow J said at 568-569: The purpose for which a document is brought into existence is a question of fact … The purpose will ordinarily be that of the maker of the document, but this will not always be the case. In Laurenson v Wellington City Corporation [1927] NZLR 510, Skerrett CJ looked to the person who "calls into existence documents in the bona fide belief that litigation will probably ensue …". And the phrase I have emphasised … is apt to describe the situations where, for example, solicitors commission the provision of a technical report; the relevant intention will not be that of the author but the solicitor. 77 It may be accepted, as the applicant contended, that the purpose for which a document is created may not be divined solely by reference to the person who sought the creation of the document. It may be that other purposes are relevant in determining whether the dominant purpose for the creation of the document was for use in litigation that was reasonably anticipated. That is always a matter of fact. Once the purpose or purposes for the creation of the document have been established, the inquiry must be as to whether the stated purpose by the relevant witness can be accepted because, as Young J said in AWB v Cole and Kenny J said in FCT v Pratt, the evidence of the person whose purpose is relevant is not necessarily conclusive of that purpose. Whether that purpose is as the person claims, will be determined not only by that person's evidence but all of the relevant surrounding facts and circumstances. 78 In this case, however, the evidence supported his Honour's finding that the relevant purpose was that of Mr Stockdale. There was no evidence that the respondents played any part in commissioning the reports or had any purpose for the creation of the reports other than the purpose identified by Mr Stockdale. 79 Nor is there any evidence that Crawford or Mr Bickle had any purpose in creating the reports other than for the purpose which was told to them by Mr Stockdale. 80 We can see no error in the way in which his Honour approached this inquiry on the facts which were before his Honour, and his Honour was right to determine objectively on the evidence of Mr Stockdale and the other facts and circumstances whether the purpose for which these documents were created was that stated to be by Mr Stockdale. 81 The respondents identified in their written submissions the uncontested evidence about the commissioning of the Crawford reports, which was: (a) Mr Stockdale was initially retained by the insurers on about 1 February 2008 to assist them in forming a view, along with Mr Bickle, about an accurate estimate of the exposure they had to the claim by the end of March 2008 (T11 lines 13-20, in these submissions all transcript references are to the transcript of 19 June 2012 at Appeal Book Part B, tab 57); (b) By mid-February Mr Stockdale had a real apprehension that there would be a dispute about the terms of the policy, and the extent to which it responded to a very significant claim, and that led to his conclusion that there was a reasonable prospect of litigation resulting between the parties (T23 lines 26-32); (c) By 19 February 2008, after conversations with Mr Bickle, Mr Stockdale formed the view that litigation was likely (T12 lines 6-10, lines 16-21, lines 38-36 and lines 46-47; T14 lines 11-14; T15 lines 7-10; T16 lines 21-22 and lines 29-30; T20 line 43-T21 line 5; Mr Stockdale's file note of discussions with Mr Bickle on 13 February 2008 (Appeal Book Part B, Tab 32) and email of 18 February 2008 (Appeal Book Part B; tab 31); (d) Mr Stockdale advised his clients that it seemed likely that there would be significant coverage issues (T16 lines 37-43 and Mr Stockdale's emails to Mr Kodaira dated 13 February 2008 and 18 February 2008 (Appeal Book Part B Tabs 31 and 33) and sought instructions from his clients as to the revised scope of his retainer so as to consider policy issues (T13 lines 7-15); (e) In light of the likelihood of dispute about the matters set out above, Mr Stockdale advised his clients that he retain Mr Bickle directly (T16 lines 37-43 and Mr Stockdale's emails to Mr Kodaira dated 13 February 2008 and 18 February 2008 (Appeal Book Part B, tabs 31 and 33)); (f) In accordance with his instructions, on 19 February 2008, Mr Stockdale retained Mr Bickle (letter of instruction being Appeal Book Part B, tab 24). That letter refers to issues that are likely to be contentious between the parties and that (sic) the likelihood of litigation; and (g) From 19 February 2008, following the 19 February 2008 letter, Crawford was acting as an investigation agent for KWM. Mr Bickle was informing KWM of the issues relating to quantum so that KWM could provide advice to the respondents (T29 line 45-T30 line 2; T34 lines 8-16). 82 In our opinion, the applicant has not demonstrated any error. 83 In our opinion, the applicant has not made out the first limb of Decor and established that his Honour's decision is attended with sufficient doubt to warrant the decision being reconsidered by the Full Court. 84 For that reason, we would refuse the application for leave to appeal. 85 However, in case we are wrong about that, we should also deal with the second limb. 86 We have had the opportunity of reading the documents for which legal professional privilege has been claimed. 87 We are not satisfied that if the applicant could make out the first limb of Decor that the applicant would suffer substantial injustice if leave were refused supposing the decision at first instance to be wrong. 88 In our opinion, the application for leave to appeal should be refused. 89 The applicant should pay the respondents' costs of the application. I certify that the preceding eighty-nine (89) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Lander and Jagot.

Ensham Resources Pty Limited v Aioi Insurance Company Limited

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Judgment (24 paragraphs)

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Cited By (9)