Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority [2002] VSCA 59

Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority [2002] VSCA 59 - VSCA 2002 case summary — Zoe

[21]

On the appeal the respondent, after objection was taken for the appellant, did not pursue an argument foreshadowed in its written outline, but not put below, to the effect that, the documents having been called into existence by the Tokio Marine insurance company, the relevant dominant purpose was that of Tokio Marine; that that had been to ascertain facts that it needed to know in order to decide whether it was obliged to indemnify the appellant; and that, until a decision was made that Tokio Marine was obliged to do so, any litigation purpose could only have been contingent and secondary. Rather, the respondent's argument before us was that the appellant had failed to discharge the onus of proof that lay upon it with regard to the purpose of the reports. It submitted in particular that a main deficiency of the letter of 20 March 1996 was that it failed to disclose in a comprehensive way the purpose of the appellant, which it said was the relevant purpose. The court should be sceptical about finding the alleged purpose. There was no evidence to say what the appellant's purpose was and one could only speculate as to a number of purposes it might have had if it was the party commissioning the report. One such purpose was finding out what was wrong with the mass-produced circuit breaker which had exploded for the broader purposes of public safety and quality control. In argument below the respondent had submitted that as a matter of fact that was the primary purpose even though it was not mentioned in the material before the judge. I did not take Mr. Vickery to make that positive assertion before us, but rather took him to say that one could not exclude various purposes including that one. In addition to the foregoing, Mr. Vickery contended that at the relevant time litigation was not reasonably anticipated or in contemplation and he relied particularly on the discussion of that question by Goldberg, J. in Australian Safeway Stores Pty. Ltd.[16] and especially his Honour's statement[17], "the concept of anticipated proceedings involves the notion that there is a reasonable probability or likelihood that such proceedings will be commenced - not that they will be but rather that more probably than not they will be."

[23]

The reports from Thomas Howell were commissioned by the solicitors, Hunt and Hunt, by their letter of 20 March 1996. Accordingly, I turn to the letter. There is nothing unusual about the essential features of the letter. It demonstrates, for interlocutory purposes, that the appellant had made a claim on its liability insurer and had done so at least as early as 2 February 1996; that the solicitors were receiving their instructions from the insurer; and that, on the instructions of the insurer, they were, at least for the time being, acting on behalf of the appellant. They requested and authorised Thomas Howell to investigate the circumstances surrounding the injuries to Mr. Vellios, to identify the circuit breaker involved in the accident, and to try to ascertain the reasons for its failure. The latter request and authorisation impliedly authorised the loss adjusters to obtain expert opinion, which they did from Russell Lee Pty. Ltd. Finally, the solicitors' statement that the insurer had instructed them to advise "on the question of liability, indemnity and quantum" and to do so upon receipt of Thomas Howell's report made it clear that the report was for use in the preparation of that advice. The question referred to was multi-partite. The report was a pre-requisite for the advice. It would disclose the circumstances of the incident, on which the advice would be based. This case is to be distinguished from Grant v. Downs, National Employers' Mutual General Insurance Association Ltd. v. Waind[22], Waugh, Victor Melik & Co Ltd. v. Norwich Union Fire Insurance Society Ltd.[23], and Australian Safeway Stores, in each of which the party, or the insurer, itself procured the documents. The presence of the solicitors here makes it clear that the report was required for the carrying out of legal work. Although the letter uses the singular "report", no doubt it authorised the rendering of more than one report, particularly in light of the practice of loss adjusters of rendering, when occasion requires, interim and supplementary reports. There is no evidence of any other purpose that the report was to serve. As regards the suggestion of broader purposes of public safety and quality control, whilst one is permitted to know, and indeed it was, I think, conceded, that the appellant is a subsidiary of a very large Japanese corporation and that the circuit breaker in question was the product of mass-manufacture, it is significant that the reports were commissioned by the solicitors and not by their nominal client. Public safety and quality control were unlikely to be of more than peripheral, if any, concern to the solicitors, certainly when their instructions were as they stated them to be.

[24]

I therefore conclude that the dominant purpose, if not the sole purpose, of the reports commissioned by the solicitors acting on behalf of the appellant was for use in the preparation of confidential legal advice. The question then is whether that advice was in relation to or as to litigation which was at the relevant time reasonably anticipated or in contemplation. I have adopted the expression "reasonably anticipated or in contemplation" to convey the sense in which the authorities speak of the requisite prospective litigation where there is in fact no litigation pending at the relevant time. The cases in fact reveal a variety of expressions to describe the prospective litigation. Thus, in Grant v. Downs, Barwick, C.J. used "in reasonable prospect"[24] and "in reasonable contemplation"[25], Stephen, Mason and Murphy, JJ. used "reasonable anticipation"[26] and Jacobs, J. spoke of litigation that was "likely", "in fact expected" and "proposed or threatened"[27]. In Baker v. Campbell[28] Deane, J. used "anticipated"[29]. In Wheeler v. Le Marchant Jessel, M.R. spoke of litigation which was "in contemplation"[30] or "threatened"[31], Brett, L.J. referred to litigation "contemplated"[32] and Cotton, L.J. used "in contemplation of some litigation"[33]. In Collins v. London General Omnibus Co.[34] Charles, J. said that the litigation "may either be reasonably apprehended, or threatened, or actually begun." The foregoing is only a selection of the expressions used, though it covers most of the main cases. Although there is thus some variation in expression, there is, I think, no variation in substance. But there has over time been some change in interpretation. In Collins v. London General Omnibus Co. Wills, J.[35] considered that the requirement of prospective litigation was satisfied where he described an action as being "as near a dead moral certainty as anything could be" and said the circumstances were such that "no reasonable person could doubt that an action would follow", whilst Charles, J.[36] spoke of reasonable apprehension of litigation as being "when there is a high probability, amounting almost to a certainty, that an action will ensue". It may be that at least Wills, J. was merely saying that it was sufficient that an action be a dead moral certainty, rather than that was necessary, though Charles, J. seems to have said the latter. In any event, it appears to me that Sholl, J. in Warner v. The Women's Hospital[37] took the latter to be the principle laid down by the English Divisional Court and applied it as the law in Victoria. However, I agree with Goldberg, J. in Australian Safeway Stores[38] that that requirement is too strict and not consistent with passages in Grant v. Downs[39]. Nor, I would add, is it consistent with later English cases on legislation in a cognate area referred to in the next paragraph. Of course, "a mere vague apprehension of litigation" is insufficient: Laurenson v. Wellington City Corporation[40].

[25]

In essence, litigation is reasonably anticipated or in contemplation if its initiation is likely or reasonably probable. In Jarman v. Lambert & Cooke Contractors Ltd.[41] the Court of Appeal was concerned, not, as this Court is, with a judge-made rule, but with the English forerunner of s.55(4) of the Evidence Act 1958, whereby nothing in the section is to render admissible "any statement made by a person interested at a time when proceedings were pending or anticipated ...". But, as Denning, L.J. pointed out[42], the words "pending or anticipated" are the words habitually used in connexion with legal professional privilege. Accordingly, I consider that the decision is of assistance. Sir Raymond Evershed, M.R., having pointed out that the word "anticipate" was used loosely for "expect", stated[43] that he was prepared to accept the view, for which, he pointed out, some authority was to be found in Robinson v. Stern[44], that by "proceedings were anticipated" was meant "proceedings were regarded as likely", or even "reasonably probable". Denning, L.J.[45] stated that anticipation was a state of mind whereby someone considered that something was likely to happen. There must be a likelihood of them. Hodson, L.J.[46] thought it right to accept the meaning put upon the word by Scott, L.J. in Robinson v. Stern. As a matter of ordinary language the word "likely" imports only that the occurrence under consideration "is a real chance or possibility, not that it is more likely than not": Marks v. GIO Australia Holdings Ltd.[47] and cases there cited; Boughey v. The Queen[48]; and see Czarnikow Ltd. v. Koufos[49] (a case concerning "reasonable contemplation" of damage). In Australian Safeway Stores[50] Goldberg, J. concluded that the concept of anticipated proceedings involved the notion of a reasonable probability or likelihood that such proceedings would be commenced, but it will be apparent that I respectfully disagree with his Honour's elucidation of that notion as being that "more probably than not they will be [commenced]".

[30]

Reviewing the circumstances objectively, I am of opinion, for the reasons which follow, that at the time the reports were commissioned litigation was reasonably anticipated or in contemplation: there was a real prospect of it. First, the nature of the incident with the circuit breaker was inherently such as to make litigation of some kind or kinds likely according to the ordinary course of human affairs. Mr. Vellios might well at that early stage have sought to make a common law claim. He almost certainly would have made a claim for accident compensation, which might well have resulted in litigation, including a proceeding against the appellant for indemnity under s.138 abovementioned. A proceeding might well have been brought in the name of the employer for damages for business interruption. Snedden and Kingston Plastics Pty. Ltd. might well have sued for damage to its switchboard and premises. To adapt Williams,[57] the occurrence of an event of a kind that, in common experience, very often leads to litigation may found a sufficient anticipation of litigation to attract privilege: Collins v. London Omnibus Co.[58]; Birmingham and Midland Motor Omnibus Co. Ltd. v. London and North Western Railway Co.[59]; Ankin v. London & North Eastern Railway Co.[60]; The Hopper No.13[61]; Westminster Airways Ltd. v. Kuwait Oil Ltd.[62]; Cataldi v. Commissioner for Government Transport[63]; and Nickmar[64]; compare Grant v. Downs[65]. Secondly, solicitors were instructed and instructed early. That is an indication that litigation was expected and that the insurer desired to be forearmed with legal advice, based on the true facts, with regard to it. It was not, as I understand it, suggested that the engagement of the solicitors was a colourable device, and in any event I would not find that it was. The topics on which the solicitors were to advise - liability, indemnity and quantum - at least suggested that there was an expectation of a claim or claims, whether the word "indemnity" is to be read as referring to indemnity under the insurance policy or under s.138. Thirdly, the appellant's resort to its insurer indicates at the least the expectation of a claim or claims, followed, if unsatisfied, by litigation. Reference, as in other cases, to the instruction of solicitors and resort to insurers does not offend the requirement of an objective viewing of the circumstances; for it is not done to obtain, by hearsay, evidence of the subjective views of the insurer or the insured but to show the atmosphere then existing as regards the likelihood of litigation.

At a glance

Court

Decision date

Before

Source

Judgment (69 paragraphs)

Parties

Legislation Cited (2)