Komatsu Marketing Support Australia Pty Ltd v Marsh Pty Ltd

The pleading framework 14Paragraphs 13 to 21 of the third amended statement of claim (3ASC) set out the "Western Australian Claim" as follows: Western Australian Claim 13. In or around July 2004, a fire damages one of the Plaintiff's Products which had been sold by the Plaintiff to, and serviced by the Plaintiff for, Kalgoorlie Consolidated Gold Mines Pty Ltd (KCGM). Particulars The Plaintiff's Product was a PC 8000 shovel. 14. On or about 7 April 2006 the proceedings were commenced by KCGM and others in the Supreme Court of Western Australian against the Plaintiff seeking damages, including damages for property damage to the PC 8000 shovel and consequential loss (the Western Australian Claim). Particulars Supreme Court of Western Australia proceedings No. CIV 1337 of 2006. 15. On or about 28 December 2008 Tokio Marine advised the Plaintiff that the 2003-2004 Policy did not respond to the Western Australian Claim on the basis of the First Exclusion, the Second Exclusion and the Third Exclusion. Particulars Letter dated 28 December 2008 from Lawsonsmith Lawyers, solicitors for Tokio Marine, to Mallesons Stephen Jacques, solicitors for the Plaintiff in the Western Australian proceedings. 16. By cross claim filed in or around January 2009, the Plaintiff joined Tokio Marine and Nippon Insurance to the Western Australian proceedings, seeking indemnity under the 2003-2004 Policy and the Excess Policies. 17. On or around 4 March 2009 Tokio marine and Nippon Insurance filed a defence to the cross-claim by the Plaintiff denying liability to indemnify the Plaintiff under the 2003-2004 Policy and Excess Policies. 18. On or about 12 June 2009 a mediation of the Western Australian Claim took place between the parties to the Western Australian proceedings. Particulars Mediation on 10 and 11 June 2009 in Perth before Mr A Fitzgerald QC. 19. On or about 7 July 2009 the Western Australian Claim was settled, by the Plaintiff agreeing to make a payment to KCGM (and four related companies) of $10 million. [Kalgoorlie Consolidated] Particulars Settlement Deed entered into by KCGM (and four related companies), the Plaintiff, Tokio Marine, Nippon Insurance, Komatsu Mining Germany GmBH (KMG) and Tyco Australia Pty Ltd (Tyco) dated 7 July 2009. 20. The Plaintiff's net contribution to the WA Settlement Amount was $2.1 million (Net Contribution). Particulars (1) Settlement Deed entered into between the Plaintiff, Tokio Marine, Nippon Insurance, KMG and Tyco dated 12 June 2009 (the Defendants' Settlement Deed) (2) The payment to be made by the Plaintiff of $2.5 million pursuant to the Defendants' Settlement Deed was reduced to $2.1 million after contribution between the Defendants for costs. 21. The net Contribution made by the Plaintiff to the WA Settlement Amount was, in the circumstances of the matters pleaded in paragraphs 13 to 18 above, reasonable." 15The defence has admitted paragraphs 13 to 19. Paragraphs 20 to 21 of the defence are not admitted. Thus, Komatsu Australia will have to establish the terms of the settlement and whether the net contribution paid by Komatsu Australia was reasonable.

Review of Registrar's decision 16Rule 49.19 of the Uniform Civil Procedure Rules 2005 ("the UCPR") provides: "49.19 Review of registrar's directions, certificates, orders, decisions and other acts If in any proceedings a registrar gives a direction or certificate, makes an order or decision or does any other act, the court may, on application by any party, review the direction, certificate, order, decision or other act and make such order, by way of confirmation, variation, discharge or otherwise, as the court thinks fit." 17In Tomko v Palasty (No 2) [2007] NSWCA 369 Hodgson JA (with whom Ipp JA agreed). His Honour explained the approach that should be taken in a review from a Registrar's decision (at [6]-[10]): "6 I agree that a review of a decision of a registrar is not an appeal, subject to s 75A of the Supreme Court Act; and that in such a review a court must exercise its own discretion. 7 In my opinion, this discretion extends to a discretion as to whether, and if so how, to intervene; and in my opinion, there is an onus on a person seeking to have a court set aside or vary a registrar's decision to make out a case that the court, in the interests of justice, should exercise its discretion to do so. 8 In the case of a decision on practice or procedure, this will normally require at least demonstration of an error of law, or a House v The King error, or a material change of circumstances, or evidence satisfying the strict requirements for fresh evidence. Even then, a court may not think that the interests of justice require intervention. This could be so, for example, if the error of law is a deficiency of reasons and the result is on its face not an unreasonable one. 9 In the case of a decision which finally determines a party's rights, or which (albeit one of practice or procedure) has a decisive impact on those rights, a court may be more willing to intervene. It may permit further evidence to be led which does not satisfy the strict requirements for fresh evidence, if it is satisfied that the interests of justice require this. It may decide to substitute its own discretionary decision for that of the registrar, even though no House v. The King error is shown, again if it is satisfied that the interests of justice require this. To that extent, the review may be considered a de novo hearing. 10 In my opinion, this approach is consistent with the position that such reviews are not appeals and involve the exercise of discretion by the reviewing body; and with the policy considerations referred to by Jordan CJ in In Re the Will of Gilbert (1946) 46 SR(NSW) 318 at 323. It is also consistent with the general principles concerning interlocutory applications: they do not finally decide matters, and successive applications can be brought for the same orders; but generally, a later application for orders that have previously been refused will be summarily dismissed unless a change of circumstances is shown or there is evidence satisfying the strict requirements for fresh evidence." 18The onus is on Marsh to make out a case that it is in the interests of justice for this Court to exercise my discretion to set aside the Registrar's orders refusing to grant discovery.

Disputed discovery 19On 16 December 2009, the Court ordered the parties to give discovery by agreed categories. A notice of motion seeking discovery was heard by Registrar Bradford on 10 November 2010. Registrar Bradford did not make the orders sought in paragraphs 5, 6 and 7 of the amended notice of motion. 20By amended notice of motion filed 6 January 2011, Marsh seeks a review of the Registrar's decision in relation to the documents sought to be discovered in paragraphs 5, 6 and 7A of the notice of motion. The methodology I will adopt is that I will deal with paragraphs 5, 6 and 7A of the amended notice of motion in turn. I will start with the documents sought to be discovered in that particular paragraph, next the submissions made in relation to the documents sought in that paragraph, then the Registrar's decision and then my decision on review. 21Overall in regard to the Western Australian claim, Marsh submitted that those matters contained in orders 5, 6 and 7A were relevant and went to whether the settlement reached was reasonable. Komatsu Australian claimed privilege and submitted that the issue raised was one of access. 22Under Part 21 of the UCPR the Court has power to order a party to give discovery. Rule 21.2(4) reads: "(4) An order for discovery may not be made in respect of a document unless the document is relevant to a fact in issue." 23Hence, Rule 21.2(4) limits an order for discovery to those documents that are "relevant to a fact in issue." 24The broader proposition that documents which fall within the "train of enquiry" as expressed in Mulley v Manifold (1959) 103 CLR 341 is no longer the law.

Claims of this type 25Both parties referred to Unity Insurance Brokers Pty Limited v Rocco Pezzano Pty Limited (1998) 192 CLR 603. The facts in Unity Insurance are similar. An insurance broker arranged an industrial special risks policy but negligently failed to disclose the insured's claims history fully to the insurer. After the insured's premises were damaged by fire, the insurer refused to pay the full amount which would have been payable under the policy if not for the non-disclosure. The insured brought proceedings against the insurer and the broker in which the insurer paid a lesser sum by way of compromise. The insured claimed the balance from the broker. 26As to the approach that should be taken in claims against an insurance broker it was outlined by Gummow J at [67] - [68] where his Honour stated: "67 The primary judge held (in my view, correctly) that it might reasonably be supposed to have been contemplated at the time of the engagement between the appellant and the respondent "that a failure to exercise due care and skill in the course of disclosing the [respondent's] prior claims history of the intended insurer might result in a later refusal, on the part of the insurer, to admit liability in respect of a claim made under a policy of insurance obtained in those circumstances". I also would accept that it was within the reasonable contemplation of the appellant and the respondent that a serious possibility or not unlikely result of the appellant's breach of its obligations with respect to the brokerage of the policy was that, by the operation of s28 of the Act, there would be a shortfall for the respondent in the amount which otherwise would have been recoverable under a secure policy. 68 As I have indicated, the question then becomes one, in the events that have happened, of finding the amount which represents that shortfall. I would not accept that, in the above sense, it was within the reasonable contemplation of both the appellant (as broker) and the respondent (as insured) that, as between them, this amount would be fixed by reference to a settlement, which was reasonable as between the respondent and the insurer, of a claim made upon and rejected by the insurer. The reasonable contemplation spoken of in the rule in Hadley v Baxendale is that of both parties and the time at which that is assessed is the time when they made the contract. Here, as in other fields of law, hindsight may mislead. It was not within the reasonable contemplation of the broker and the insured that the measure of the liability of the broker to the insured would be determined by the conduct of parties over which the broker had no control, namely the insured and the insurer. The broker had not undertaken to indemnify the insured against any shortfall upon a settlement of litigation between the insured and the insurer." 27Also Hayne J stated at [128] - [130]: 128 In my view, however, the several considerations which I have mentioned, especially the need to encourage settlement of disputes, suggest that a settlement of the dispute between insured and insurer should be given more significance as between insured and broker than simply identifying an amount which may limit the amount of damages recoverable by the insured from the broker for the broker's breach of duty. They are considerations that suggest that the damages recoverable by the insured should be fixed as the difference between what the insured recovered under the settlement (if it was reasonable) and what would have been recovered under the policy which the broker ought to have arranged (together, no doubt, in an appropriate case, with any other costs or expenses incurred by the insured as a result of the broker's breach and taking account of any extra premium that would have been payable). Whether such a rule would, or may, work injustice to the broker is much affected by what is meant by a "reasonable" settlement of the dispute between insured and insurer and it is to that subject that I now turn. 129 Whether the compromise of a claim was reasonable must be judged objectively, not subjectively. Thus whether a party to litigation has received advice to settle may be important in deciding whether that person's conduct in settling the case was reasonable but, standing alone, the fact that a litigant was advised to settle at a particular figure reveals little or nothing about whether the settlement reached was reasonable. This is not to say that evidence may not be led that such advice was given and adopted; it may. But evidence of that kind does not conclude the issue. What will usually be much more important is the reasoning that supported the advice that was given for that will ordinarily reveal why it was thought reasonable to compromise the claim as it was. 130 Next, the question whether the settlement was reasonable must be judged by reference to the material the parties had available to them at the time the compromise was reached. It is not to be judged according to whether material which was obtained later shows that the opposite party could or could not have prosecuted or defended the claim successfully but according to the assessment which could properly be made at the time of settlement of the chances of success or failure." (footnotes omitted). 28Marsh contends that it is entitled to test the reasonableness of the overall settlement of the Western Australian claim, which includes the question of whether Komatsu Australia acted reasonably in compromising the claim with Kalgoorlie Consolidated for $10M and accepting an amount of $2.5M from Komatsu Germany, no contribution from Tyco (as well as $5M from its insurers). Marsh submitted that all of those figures are inextricably linked in the equation that leads to the sum of money that Komatsu seeks to recover from Marsh. 29However, in the 3ASC, Komatsu Australia does not allege that the settlement of the Western Australian claim was reasonable. Kalgoorlie Consolidated's claim against Komatsu Australia pleads only that the net contribution (ie. the sum of $2.1M) to the Western Australian settlement amount was reasonable. So the 3ASC, as currently pleaded, does not put the reasonableness of the $10M settlement sum in issue.

Order 5 30Order 5 of the amended notice of motion seeks that: "5. The defendant be granted access to those documents which fall within the class described in categories 1.4 and 1.5 of the letter from Wotton + Kearney to Baker & McKenzie dated 1 March 2010 in respect of which the plaintiff maintains a claim for privilege, either: a. on the basis of s 118 or 119 of the Evidence Act ; or b. on the basis of s 131 of the Evidence Act ." 31Categories 1.4 and 1.5 are as follows: "1.4 All documents recording, referring or relating to the mediation between the parties to the Western Australian Claim, including the position papers, mediation agreement, settlement terms sheet, etc." 1.5 All documents recording, referring or relating to legal advice received by Komatsu in relation to the Western Australian Claim and the settlement of the claim." 32It is necessary to consider the relevant provisions of the Evidence Act .

The Evidence Act 1995 33The relevant provisions of the Evidence Act are ss 118, 119, 122(2) and 131 and 131A of the Evidence Act . They read: "118 Legal advice Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: (a) a confidential communication made between the client and a lawyer, or (b) a confidential communication made between 2 or more lawyers acting for the client, or (c) the contents of a confidential document (whether delivered or not) prepared by the client, lawyer or another person, for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client. 119 Litigation Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: (a) a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made, or (b) the contents of a confidential document (whether delivered or not) that was prepared, for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party. 122 Loss of client legal privilege: consent and related matters (2) Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120. 131 Exclusion of evidence of settlement negotiations (1) Evidence is not to be adduced of: (a) a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute, or (b) a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute. (2) Subsection (1) does not apply if: ... (g) evidence that has been adduced in the proceeding, or an inference from evidence that has been adduced in the proceeding, is likely to mislead the court unless evidence of the communication or document is adduced to contradict or to qualify that evidence, or ... and 131A Application of Division to preliminary proceedings of courts (1) If: (a) a person is required by a disclosure requirement to give information, or to produce a document, which would result in the disclosure of a communication, a document or its contents or other information of a kind referred to in Division 1, 1A or 3, and (b) the person objects to giving that information or providing that document, the court must determine the objection by applying the provisions of this Part (other than sections 123 and 128) with any necessary modifications as if the objection to giving information or producing the document were an objection to the giving or adducing of evidence. (2) In this section, disclosure requirement means a process or order of a court that requires the disclosure of information or a document and includes the following: (a) a summons or subpoena to produce documents or give evidence, (b) pre-trial discovery, (c) non-party discovery, (d) interrogatories, (e) a notice to produce, (f) a request to produce a document under Division 1 of Part 4.6."

Category 1.4 - Mediation documents 34So far as Category 1.4 is concerned, in February 2009 the parties, in the Western Australia litigation, agreed to mediate. On 11 February 2009, Order 1 of the mediation orders of the Supreme Court of Western Australia required the parties to submit their dispute to mediation. At that stage the parties included Kalgoorlie Consolidated, Komatsu Australia the insurers and Komatsu Germany. It did not include Tyco (who had yet to be joined). Marsh was also not a party and was not permitted to participate in the mediation. 35Paragraph 8 of the mediation orders provided: "Every mediation shall be conducted on a confidential basis. The parties shall not tender in evidence in any proceedings or disclose to any party who did not attend the mediation anything said or done, any communication (whether oral or in writing), or any document made or created in the course of or for the purpose of the mediation except: (a) in regard to the question as to whether or not the parties to the dispute entered into a binding agreement settling all or any of their differences; (b) in regard to any question of costs; or (c) with the express written authority of the mediator or with the express written consent of all of the parties to the mediation." 36In March 2009, the mediation agreement relevantly recorded: "11(a) A person who acquires confidential information, whether oral or documentary, in the course of the Mediation will not disclose or use that information except in accordance with this agreement unless and until disclosure is required by law or the information becomes public knowledge otherwise than by a breach of this agreement. ... 12. Subject to this Agreement and any legal obligation : (a) ... (b) No admission, concession, proposal or other statement or document made, prepared or disclosed in connection with the Mediation other than a binding settlement will be disclosed after the Mediation; and (c) Every admission, concession, proposal and other statement or document made, prepared or disclosed in connection with the Mediation other than a binding settlement will be entirely "without prejudice" and will retain the benefit of any privilege, including legal professional privilege, that would otherwise have applied and will not be disclosed or relied upon or be the subject of a subpoena to give evidence or to produce documents in any arbitral or judicial proceedings." [my emphasis added] 37On 12 June 2009, the parties to the contribution cross claims, Komatsu Australia and the insurers, Komatsu Germany and Tyco entered into a settlement deed. By this deed, the parties agreed to make an offer to Kalgoorlie Consolidated of $10M (to be made by Komatsu Australia, but funded by Komatsu Australia and the cross defendants (in the amounts set out in clause 3.1 of the deed) which, if accepted by Kalgoorlie, would enliven the release set out in the deed (clauses 3 and 4)). Tyco made no contribution to the settlement sum. The agreement to make contribution was made without admission of liability (clause 3.3). 38The confidentiality provision in the deed (clause 7) recorded that: "(a) The parties agree that they may disclose the fact that the Dispute and the Proceedings have been settled; and (b) Each party agree not to disclose, or authorise the disclosure of any terms of the deed to any other person except to the extent (i) the other parties to the deed agreed in writing; (ii) it was necessary to obtain legal or other advice; (iii) it was necessary to enforce a term of the deed; or (iv) it was necessary to comply with legal obligations." 39On 7 July 2009, the Settlement Deed was entered into between Kalgoorlie Consolidated and all other parties, by which the proceedings were settled for a $10M payment by Komatsu Australia to Kalgoorlie Consolidated. Recital M recorded: "M. Taking into account the longstanding commercial relationship between KCGM [Kalgoorlie Consolidated] and KAL, their desire to continue that relationship and in order to resolve the matters the subject of recitals (A) and (L) above (collectively referred to as the Dispute), the parties have agreed to settle the Proceedings on the terms set out in this Deed and without any admission of liability." 40The agreement recorded a payment of $10M to Kalgoorlie Consolidated and related parties, and mutual releases between parties. The confidentiality provision contained in the deed (clause 6) was in a similar form to that in the 12 June 2009 deed, save that it also included two other exceptions, the relevant one being clause 6.2(2) which stated that, " in the case of KAL, for the purposes of Supreme Court of New South Wales action 20298 of 2007 against Marsh Pty Ltd ." 41On 1 July 2010, Komatsu Australia emailed Deacons, the solicitors who acted for Kalgoorlie Consolidated, seeking consent "for Komatsu to waive privilege over the papers and any other information exchanged regarding the settlement to allow discovery of these documents in the Marsh proceedings. On 5 July 2010, Deacons emailed Komatsu Australia advising that their instructions were not to consent to waive privilege but if Marsh did apply to the Court Komatsu Australia would abide by the outcome of that application. 42Additionally, Part VI of the Supreme Court Act (WA) 1935 refers to mediation. Sections 71 relevantly reads: "71 Privilege (1) Subject to subsection (3), evidence of - (a) anything said or done; (b) any communication, whether oral or in writing; or (c) any admission made, in the course of or for the purposes of any attempt to settle a proceeding by mediation under direction is to be taken to be in confidence and is not admissible in any proceedings before any court, tribunal or body. (2) Subject to subsection (3) - (a) any document prepared in the course of or for the purposes of an attempt to settle a proceeding by mediation under direction; (b) any copy of such a document; or (c) evidence of any such document, is to be taken to be subject to a duty of confidence and is not admissible in any proceedings before any court, tribunal or body. (3) Subsections (1) and (2) do not affect the admissibility of any evidence or document in proceedings if - (a) the parties to the mediation consent to the admission of the evidence or document in the proceedings; (b) there is a dispute in the proceedings as to whether or not the parties to the mediation entered into a binding agreement settling all or any of their differences and the evidence or document is relevant to that issue; (c) the proceedings relate to a costs application and, under the rules of court, the evidence or document is admissible for the purposes of determining any question of costs; or (d) the proceedings relate to any act or omission in connection with which a disclosure has been made under section 72(2)(c). ..." 43Section 71 of the Supreme Court Act (WA) stipulates that evidence of anything said or done, communications whether oral or in writing and any admissions made in the course of or for the purposes of any attempt to settle a proceeding by mediation under direction is to be taken to be in confidence and is not admissible in any proceedings before any court. An exception to Rule 71 is where the parties to the mediation consent to the admission of the evidence or document in the proceedings: r 71(3)(a). In my view, "the proceedings" mean the proceedings in the Supreme Court of Western Australia. 44In short, Komatsu Australia submitted that for it to consent to Marsh inspecting these documents would be a breach of Order 8 made by the Supreme Court of Western Australia on 11 February 2009, clauses 11 and 12 of the mediation agreement; and Part VI of the Rules of the Supreme Court of Western Australia. 45Komatsu Australia submitted that some of the documents within category 1.4 were the subject of a claim for privilege and fulfil the requirements of s 131 of the Evidence Act 1995. Further, Komatsu Australia submitted that it is not lawful for it to consent to Marsh inspecting these documents. 46Marsh submitted that pursuant to s 122(2), Komatsu Australia has waived legal professional privilege by making the contentions in 3ASC by claiming from Marsh the "net contribution". According to Marsh given the size of the claim, the fact that indemnity had not been granted by the insurers and the competing interests of the various parties to that litigation, the probability is that legal advice was relevant to whatever state of mind Komatsu Australia held at the time of settling at mediation. Therefore, according to Marsh, it is likely to be an important consideration in deciding if Komatsu Australia's agreement to the various components making up the "net contribution" was reasonable and this is plainly of critical significance to the damages case sought to be maintained. Marsh further submitted, that to the extent that the litigation involved a claim for indemnity from the insurers, the legal advice received, or documents related to it, are also likely to record factual matters that have a bearing on Komatsu Australia's reliance and causation claim. 47In so far as waiver is concerned, Marsh referred to the following passage from Chen & Ors v City Convenience Leasing Pty Ltd & Anor [2005] NSWCA 297 where Gzell J stated at [34] - [39]: "34 It was submitted that decisions relating to ancillary process were of little assistance as they applied the common law principle and not that under the Evidence Act 1995, s 122(1). 35 A number of things can be said of that submission. First, it does not apply to New South Wales decisions on ancillary process since 1 October 1999 because the Supreme Court Rules 1970 imported the provisions of the Evidence Act 1995 into ancillary process. Secondly, as was established in Telstra and referred to in Fort Dodge there is little difference between the two because the common law principle of implied waiver is encompassed within consent for the purposes of s 122(1). Thirdly, United Rural Enterprises concerned an objection to evidence and did not involve ancillary process. 36 In my view the single judge decisions that have followed Telstra have conformed to it and, in particular, have accepted that the Evidence Act 1995, s 122(1) is to be construed as including implied waiver of client legal privilege within consent. 37 In Telstra, the majority held, at 168, that where a party relies on a cause of action an element of which is the party's state of mind, the party is taken to have waived privilege in respect of legal advice that the party had before or at the time of the relevant events material to the formation of that state of mind. Their Honours based this conclusion on fairness. At 166 they said: "A party who initiates an undue influence case puts in issue in the proceeding the quality of his or her consent or assent ( Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 per Deane J at 474). The quality of such consent or assent will ordinarily be affected by relevant legal advice received by the party. The principle that requires that in such circumstances the party not be entitled to maintain the confidentiality of such advice is one of fairness which goes to the integrity of the legal process. To allow a party to put in issue the quality of his or her consent or assent whilst, at the same time, withholding evidence relevant to that issue, would be to allow him or her unfairly to handicap the opposing party to the proceeding, and to comprise the ability of the court realistically to determine the issue." 38 Hodgson CJ in Eq in Wayne Lawrence was of the view that it was not every assertion of belief that gave rise to implied waiver and the significance of the belief to the case, the relevance of the reasonableness of the belief to the case, and the probability of legal advice being relevant to the holding of the belief, or to its reasonableness, must be taken into account. His Honour said at [12]: "Accepting that the decision of the majority in that case correctly interprets and applies s 122(1), it seems to me still that the question of whether the advancing of a person's state of mind is to be taken as consenting to the giving of evidence of confidential communication, or as waiving privilege, is a matter of degree in each case. It does not seem to me that the assertion of a belief must, in all circumstances, be taken as consenting to evidence being led of any legal advice or confidential communication that could be relevant to whether such a belief was held or the reasonableness of such belief. It seems to me that factors relevant to whether that consent is to be considered as having been given, or whether privilege is taken to have been waived, would include the significance of the belief to the case as a whole; the relevance of the reasonableness of the belief to the case as a whole; the probability or otherwise of the legal advice being relevant to the holding of that belief, or being relevant to its reasonableness; and in circumstances where the Court inspects the legal advice in question in order to make a decision, the extent to which the legal advice does in fact bear upon the holding of the belief or its reasonableness, and the extent to which the legal advice relevant to those matters is inextricably bound up with legal advice going to other questions as to which there has been no consent or waiver. It seems to me that, on the basis of all those matters at least, the Court has to make a judgment as to what is reasonable, and what is fair in the particular case." 39 In Mann at [29], the High Court stated the principle of implied waiver in terms of conduct inconsistent with the maintenance of confidentiality: 'Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is "imputed by operation of law" (eg Goldberg v Ng (1995) 185 CLR 83 at 95). This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege.' And later their Honours said: 'What brings about the wavier is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.'" 48Next Marsh drew a distinction between the orders relating to confidentiality and legal professional privilege. I agree that there is a distinction so far as legal professional privilege is concerned and that an undertaking can be made to protect confidentiality. But that is not to the point. Marsh contended that legal professional privilege should be waived because otherwise the evidence that will be adduced at the trial is likely to mislead the Court and relied on the exception contained in s 131(2)(g) of the Evidence Act . While I agree that this section applies to discovery, I cannot see how the Court would be misled. Legal professional privilege has already been waived over the legal advice that Komatsu Australia received in relation to the "net contribution", a fact in issue. 49In relation to category 1.4 Registrar Bradford stated: "... bearing mind the wording of category 1.4 and bearing in mind the provisions of s 131 of the Evidence Act , ... I am of the opinion that such material clearly falls within the provisions of that section. The decision to refuse to make the order sought is further reinforced by the orders made by the Supreme Court of Western Australia and clauses 11 and 12 in the Medication Agreement." 50I agree with Komatsu Australia's submissions that for it to disclose these documents would be a breach of Order 8 made by the Supreme Court of Western Australia on 11 February 2009, clauses 11 and 12 of the mediation agreement; and Part VI of the Rules of the Supreme Court of Western Australia. There has been no waiver of legal professional privilege. So far as Category 1.4 documents are concerned, the Registrar's decision is correct.

Category 1.5 51In so far as category 1.5 is concerned, counsel for Komatsu Australia advised this Court that it had waived privilege to the legal advice it had received in relation to the settlement of its dispute with the insurance companies (the net contribution) and those documents have been disclosed. According to Marsh, evidence that Komatsu Australia was advised to settle at a particular figure does not establish that the settlement was reasonable but rather it is the reasoning that supports the advice given that is important. 52In order to demonstrate its loss from Marsh's failure to act with reasonable care when procuring the insurance policy, Komatsu Australia must show that its settlement with the insurers was reasonable: see Unity Insurance Brokers v Rocco Pezzano at 607-608. 53To show reasonableness of its settlement with the insurers, Komatsu Australia relied upon legal advice received by it about the separate settlement with the insurers. It has accepted that, by do doing, it is not entitled to maintain privilege over documents, which contain legal advice about the separate settlement with the insurers. Komatsu Australia says that it has made all such documents available for inspection by Marsh. A letter from Law Smith to Mallesons dated 28 December 2009 and a letter from Tokyo Marine to Komatsu Australia dated 26 July 2006 have been disclosed. 54However, Marsh seeks access not just to documents which contain advice about the settlement with the insurers, but also documents which record advice on the settlement with Kalgoorlie Consolidated's claim against Komatsu Australia. As previously stated, Komatsu Australia does not allege that the settlement of the Western Australian claim by Kalgoorlie Consolidated against Komatsu Australia was reasonable. It is not a fact in issue. 55However, Marsh further submitted that these documents fall within an exception under s. 131(g) that the evidence that has been adduced in the proceeding is likely to mislead the Court unless evidence of the communication or documents is adduced to contradict or to qualify that evidence. As evidence has not yet been adduced at trial, Marsh then sought to rely upon s 131A. Komatsu Australia submitted that there has been no issue waiver over these additional documents. 56In relation to category 1.5 Registrar Bradford stated: "... with respect to category 1.5, I am of the opinion that the material sought is privileged under ss 118 and 119 of the Evidence Act . The Defendant submits that there has been waiver of that privilege, due to the contention that the settlement was reasonable. The plaintiff contends that the reasonableness relates to the settlement with the insurers and as such it cannot maintain privilege over documents that contain legal advice about the separate settlement with the insurers. What the defendant seeks in category 1.5 relates to documents with respect to advice on the settlement of KCGM claim against the Plaintiff. That was an agreement agreed to by insurers, who were parties to a deed. I accept the Plaintiff's argument in respect of its issue in these proceedings being whether the Plaintiff's agreement with the insurers to contribute $1.2 million to the $10 million settlement was reasonable. Accordingly, I do not believe that there has been waiver." 57So far as order 5, the Registrar decided that there was no waiver and refused to make order 5. I am of the same opinion expressed by the Registrar above. As previously stated, the reasonableness of the $10M settlement has not been put in issue in the pleadings. The net contribution is a fact in issue and Komatsu Australia has waived its claim for privilege over the legal advice it received on that issue. Komatsu Australia has not waived privilege in relation to any other legal advice it has received.

Order 6 58Order 6 seeks that: "6. The plaintiff provide discovery of the following documents in an unredacted form insofar as they relate to the Western Australian Claim ... a. internal memoranda; b. reports to or considered by the board of the plaintiff; c. board minutes or documents recording or referring or relating to communications between members of the plaintiff's board from time to time." 59Komatsu Australia submitted that the Registrar was right to reject Order 6 for any of the three reasons that he gave. 60The Registrar refused to make order 6 on the basis that it was not within the categories agreed to by the parties in April 2010. That may be so but that is not the end of the matter as Marsh may be entitled to seek further discovery. The Registrar further stated: "... Firstly, dealing with Order 6, ... The Order seeks unredacted material; I would have thought that redacted material would be more appropriate so the claim for privilege could be considered. However on the basis of the wording of the Order, I am of the opinion that it is far too wide and lacks specificity with regard to what is sought and I refuse to make such an order." 61The onus is upon Marsh to show that those documents are relevant to a fact in issue. Once again Marsh seeks all the internal memoranda, reports to be considered by the Board and Board minutes or documents relating to communications between the members of the Board from time to time in so far as they relate to the Western Australian claim. (My emphasis added). For the reasons given earlier, not all of these documents are relevant. The category of documents sought is too wide. Marsh submitted that the discovery could not be oppressive because Komatsu Australia has not put on evidence to this effect. But the documents have to be relevant and then the Court considers whether the production of those documents is oppressive.

Order 7A 62Marsh submitted the Court ought to make orders that minimise the effect of any prejudice to it by virtue of the operation of the Supreme Court of Western Australia order, being an order apparently consensually agreed to by Komatsu Australia, by firstly, staying the proceedings until Komatsu Australia has taken all steps reasonably available to it (as a party to the Western Australian proceedings) to vary those orders in a limited fashion so as to enable it to give proper discovery in the present proceedings. .Marsh further submitted that it would represent an appropriate means of attempting to unwind the prejudice to it that has arisen through Komatsu Australia's election to agree to orders without ensuring it was in a position to fully comply with discovery obligations in the present proceedings. 63So far as the email by the solicitors acting for Kalgoorlie Consolidated dated 5 July 2010 stating, " My instructions are not to consent to waive privilege. If Marsh do apply to the Court my client will abide by the outcome of that application ." Marsh submitted this Court should draw the inference that Kalgoorlie Consolidated is not prepared to consensually give up a right it has, but is equally prepared to submit to a court determination, without appearing to influence that determination. I would not draw that inference because it appears that what Kalgoorlie Consolidated is saying is that if an order by this Court is made, it will comply with that order. 64Komatsu Australia submitted that Marsh seeks to have the Court compel it to give up its privilege and to take steps to compel Kalgoorlie Consolidated to give up its privilege under Part VI of the Western Australian Rules, Order 8 made on 11 February 2009 and the mediation agreement. Komatsu Australia submitted that privileges like those arising under s 131 and Part IV exist for good reason and the Court should decline Marsh's invitation to make orders which abrogate those privileges. 65Komatsu Australia further submitted that an order in the terms of Order 7A is unworkable and potentially draconian. It submitted that the unworkability is exacerbated when the order to take unspecified steps is coupled with a stay until those step are taken. According to Komatsu Australia this proposed order is also futile because Part VI, Order 8 and the mediation reveal a coherent regime by which disclosure of privileged material is not possible without the consent of the other parties to the mediation. 66Order 7A seeks that: 7A. In the alternative, an order that: (a) the plaintiff take all reasonable steps, including making application to the Supreme Court of Western Australia to vary the orders referred to at tab 9 of exhibit JTF1 to the affidavit of Joan Therese Fitzhenry sworn 23 September 2010, so as to enable the plaintiff to discover and give access to documents (in an unredacted form) in its possession, custody or power that fall within paragraphs 5, 6 or 7 of the motion; (b) these proceedings are stayed until the plaintiff has taken the steps referred to in sub-paragraph (a) above." 67The Registrar stated: "As to the alternative Order 7A set out in the Amended Motion, I note what is set out in Ms Cox's Affidavit and the reply received by email from the parties not to consent to waive privilege. I note that reference was made by the Defendant to the final line in email dated 5 July 2010, however I do not believe that that really takes the matter any further and do not believe that it is appropriate for me to make the order sought, especially as the other parties have clearly indicated that they do not consent." 68Counsel for Marsh referred to Sabre Corporation Pty Ltd v Russ Kalvin's Hair Care Company (1993) 46 FCR 428, where Lockhart J ordered that Sabre was required to take steps to obtain certain documents from a third party, Joico Laboratories Inc a United States corporation with which Sabre had a close business relationship. I accept that in 2009 Kalgoorlie Consolidated had a long-standing commercial relationship and jointly expressed a desire to continue that relationship. However, it is my view, that this court should not compel Komatsu Australia to seek to vary orders made by another Supreme Court particularly if the other parties have not consented to that course of action and while those steps are being taken stay the proceedings in this Court. Hence, I agree with the conclusion of the Registrar. 69Overall, the conclusion I have reached is that Marsh has not discharged it's onus. I am not satisfied that the decision of the Registrar was incorrect and it follows that it is not in the interests of justice that his decision be set aside. 70I confirm the orders made by Registrar Bradford on 10 December 2010. I dismiss Marsh's notice of motion filed 6 January 2011. 71Costs are discretionary. Costs usually follow the event. The defendant is to pay the plaintiff's costs as agreed or assessed.

The Court orders: (1) The orders made by Registrar Bradford on 10 December 2010 are confirmed. (2) The defendant's notice of motion filed 6 January 2011 is dismissed. (3) The defendant is to pay the plaintiff's costs as agreed or assessed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 May 2011