Natuna Pty Ltd v Cook

Natuna Pty Ltd v Cook - [2006] NSWSC 1367 - NSWSC 2006 case summary — Zoe

[17]

6 There is divergence in the authorities as to whether draft expert reports, or the communications therein, are privileged. A negative answer was given, at least in the context of common law legal professional privilege, in Australian Securities and Investments Commission v Southcorp Ltd (2003) 46 ACSR 438 at 441 - 442 at [21] and cases that have followed it. An affirmative answer to the question has been given in Re Southland Coal Pty Ltd (rec and mgrs apptd) (in liq) (2006) 59 ACSR 87 at [16] - [20], Linter Group Ltd (in liq) v Price Waterhouse (a firm) [1999] VSC 245 at [16] and Filipowski v Island Maritime Ltd [2002] NSWLEC 177 at [22]. In ASIC v Southcorp Ltd Lindgren J at [21] propounded the following principles which, however, were not contested before him: [21] I will apply the following principles which I did not understand to be in dispute: (1) Ordinarily the confidential briefing or instructing by a prospective litigant's lawyers of an expert to provide a report of his or her opinion to be used in the anticipated litigation attracts client legal privilege: cf Wheeler v Le Marchant (1881) 17 Ch D 675; Trade Practices Commission v Sterling (1979) 36 FLR 244 at 246; Interchase Corp Ltd (in liq) v Grosvenor Hill (Qld) Pty Ltd (No 1) [1999] 1 Qd R 141 (Interchase) at 151 per Pincus JA, at 160 per Thomas J. (2) Copies of documents, whether the originals are privileged or not, where the copies were made for the purpose of forming part of confidential communications between the client's lawyers and the expert witness, ordinarily attract the privilege: Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501; 141 ALR 545; 91 A Crim R 451 (Propend); Interchase, per Pincus JA; Spassked Pty Ltd v Cmr of Taxation (No 4) (2002) 50 ATR 70 at [17]. (3) Documents generated unilaterally by the expert witness, such as working notes, field notes, and the witness's own drafts of his or her report, do not attract privilege because they are not in the nature of, and would not expose, communications: cf Interchase at 161 - 2 per Thomas J. (4) Ordinarily disclosure of the expert's report for the purpose of reliance on it in the litigation will result in an implied waiver of the privilege in respect of the brief or instructions or documents referred to in (1) and (2) above, at least if the appropriate inference to be drawn is that they were used in a way that could be said to influence the content of the report, because, in these circumstances, it would be unfair for the client to rely on the report without disclosure of the brief, instructions or documents; cf Attorney-General (NT) v Maurice (1986) 161 CLR 475 at 481; 69 ALR 31 at 34 per Gibbs CJ, CLR 487-8; ALR 38-9 per Mason and Brennan JJ, CLR 492-3; ALR 42-3 per Deane J, CLR 497-8; ALR 46-7 per Dawson J; Goldberg v Ng (1995) 185 CLR 83 at 98; 132 ALR 57 at 66 per Deane, Dawson and Gaudron JJ, CLR 109; ALR 75 per Toohey J; Instant Colour Pty Ltd v Canon Australia Pty Ltd [1995] FCA 870; BC9506842; Australian Competition and Consumer Commission v Lux Pty Ltd [2003] FCA 89; BC 200300344 (ACCC v Lux) at [46]. (5) Similarly, privilege cannot be maintained in respect of documents used by an expert to form an opinion or write a report, regardless of how the expert came by the documents; Interchase at 148-50 per Pincus JA, at 161 per Thomas J. (6) It may be difficult to establish at an early stage whether documents which were before an expert witness influenced the content of his or her report, in the absence of any reference to them in the report: cf Dingwall v Commonwealth of Australia (1992) 39 FCR 521; Tirango Nominees Pty Ltd v Dairy Vale Foods Ltd (No 2) (1998) 83 FCR 397 at 400; 156 ALR 364 at 366; ACCC v Lux at [46].

[18]

7 ASIC v Southcorp was approved by Ryan J in Temwell Pty Ltd v DKGR Holdings Pty Ltd [2003] FCA 948, Einstein J in Gate Gourmet Australia Pty Ltd v Gate Gourmet Holding AG [2004] NSWSC 768 and Barrett J in Ryder v Frohlich [2005] NSWSC 1342. In the latter case, Barrett J concluded that a draft expert report did not attract the common law privilege and said at [11] - [12]: 11 Lindgren J's item (3) refers to the judgment of Thomas J in Interchase Corporation Ltd v Grosvenor Hill (Queensland) Pty Ltd (No 1) [1999] 1 Qd R 141. It is pertinent to quote from his Honour's judgment (at p.162): We are concerned in this case with discovery and production of documents. A necessary basis for privilege to attach to anything - document or otherwise - is that it records a communication. The material in categories B, C, D and E has remained in Richard Ellis's [sic] possession, and has not been the subject of any communication with the solicitors, or for that matter anyone else. The basis upon which privilege was claimed for these documents is confined to the claim that they were 'brought into existence by Richard Ellis solely for use in this litigation since its commencement and have been kept confidential.' (my italics). The italicised words draw attention to what is missing, and expose a deficiency in the claim. The documents consist mainly of working papers and valuations of other properties, and lack the quality of confidentiality. There is no reason to think that the documents were made for any confidential purpose. The other deficiency is that they were not communicated or intended to be communicated to anyone. In Commissioner of Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501, 552, McHugh J underlined the fundamental point that the subject matter of privilege is communications . This point, however trite it may seem, is fundamental to the determination of the present appeal. Much of the confusion present in the case law arises from a failure to apply it. Legal professional privilege is concerned with communications, either oral, written or recorded, and not with documents per se. In the present matter, shortly put, the documents in no way make or record communications, let alone confidential communications. I would hold that in general, when an expert is engaged by a solicitor for the purpose of giving evidence in a case, documents generated by the expert and information recorded in one form or another by the expert in the course of forming an opinion are not a proper subject for a claim of legal professional privilege. Privilege may however be claimed in relation to communications between the expert and the solicitor (both ways) when such communication is made for the purpose of confidential use in the litigation. Beyond this there is no sufficient reason why any material relevant to the formation of the expert's opinion should be subject to a claim of legal professional privilege. It is as well to add that an expert or solicitor may not artificially manufacture privilege by, for example, the expert sending in his or her file to the solicitor. Documents of this kind simply are not confidential. 12. The point made here is that privilege can only attach to documents which embody communication between the expert and the litigant by whom the expert is retained (or the litigant's lawyer). A draft report prepared by the expert is not, of its nature, such a communication. It may be that the draft report is, in fact, given or sent by the expert to the litigant or the litigant's lawyer, but that does not change its character as something prepared by the expert which is not intended to be a means of communication with the litigant or lawyer. ( emphasis added )

[21]

10 Whether or not that is correct, in my opinion a draft expert report is a confidential "document" which is privileged from production by operation of s 119(b). Section 119(b) goes outside the area of communications with which both s 119(a) and common law concepts of privilege are concerned. It applies to "documents". This was recognised in Re Southland Coal Pty Ltd (rec & mgrs apptd) (in liq) (2006) 59 ACSR 87 at [16] - [20] by Austin J who held that a draft witness statement prepared for the requisite dominant purpose is privileged under the Evidence Act 1995, as well as at common law: 16 The QBE Parties submitted that legal professional privilege protects communications, not documents as such. They cited the observation of Dawson J in Commissioner Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 515, that to say that a document is privileged is merely a shorthand way of saying that the communication constituted by the document is privileged (see also Toohey J at 525, Gaudron J at 543, McHugh J at 552 and Gummow J at 569; and see AWB Ltd v Cole , at [102] per Young J). Propend was a case arising under the search warrant provisions of s 10 of the Crimes Act 1914 (Cth), rather than in circumstances governed by the Uniform Evidence Act. AWB Ltd v Cole arose under the Royal Commissions Act 1902 (Cth) (see at [25] to [59]), again a situation not governed by the Uniform Evidence Act. 17 The legal propositions in these decisions must be received with circumspection in cases where the Evidence Act applies. Both s 118 and s 119 literally protect not only certain confidential communications, but also the contents of certain confidential documents (whether delivered or not). If, therefore, a document satisfies the requirements of either section - if, that is, it is a confidential document that was prepared by the requisite person for the requisite dominant purpose - the contents of the document are not to be disclosed, regardless of whether those contents have been or are to be communicated. To say that the statutory provisions protect the " communication constituted by the document ", rather than the document as such, is correct only in the sense that the privilege attaches to the information contained in the document (whether communicated or not) rather than to the piece of paper upon which that information is recorded. 18 This difference in content or emphasis, between the Evidence Act provisions and the observations in Propend and AWB Ltd v Cole , may have no significant practical consequences. Take two examples. First, a confidential draft pleading or draft witness statement prepared for the requisite dominant purpose is protected from disclosure under both the Evidence Act and the general law, whether or not the draft reflects some communication that has occurred or is a wholly uncommunicated draft . Under the Evidence Act the result flows from the simple application of the statute, which applies to the contents of the confidential document whether delivered or not . Under the general law, as propounded in Propend and AWB Ltd v Cole , the contents of the document are protected if their disclosure would reveal (or allow the reader to infer) the content or substance of a privileged communication that has been incorporated into the draft ( AWB Ltd v Cole at [132]). Arguably the contents are also protected if the confidential draft, having been prepared for the purpose of legal advice or proceedings, is intended to be communicated in pursuit of that purpose. 19 The second example relates to copies of documents. Under the general law, legal professional privilege can attach to copies of non-privileged documents, if the copy is brought into existence for the dominant purpose of providing legal advice or providing professional legal services relating to proceedings or anticipated proceedings ( Propend , at 507 per Brennan CJ, 544 per Gaudron J, 553-4 per McHugh J, 571 per Gummow J, and 587 per Kirby J; AWB Ltd v Cole at [103] per Young J). Under the Evidence Act, if the copy is made by the client or the lawyer for the requisite dominant purpose, its contents are protected from disclosure provided the document is confidential , a requirement probably satisfied where the copy is made for the purpose of obtaining confidential legal advice. 20 In the present case, the principal significance of the distinction between communications and documents is that some of the disputed documents are e-mails exchanged between officers of QBE or between an officer of QBE and a third party. The issue to be addressed is not whether those e-mails, per se, are privileged, but whether the grant of access to them would result in disclosure or privileged communications such as the provision of legal advice by Wotton & Kearney to their client QBE. ( emphasis added )

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