Raymond Steve Woods by his tutor June Marie Woods v Abdul Latif Abdulrahman & Or

The Evidence

1. The affidavit of Mr Mackic, solicitor on behalf of the plaintiff, established that the plaintiff had suffered severe injuries in an incident on 6 October 2012. The plaintiff was riding a motorised bicycle in an easterly direction along Riley Street Lurnea when he was struck by a vehicle driven by the first defendant which had been parked facing in an easterly direction, but had commenced a u-turn to proceed in a westerly direction. As a result of that collision the plaintiff was thrown from his bicycle and landed on the west-bound carriageway on Riley Street. Shortly thereafter, a vehicle driven by the second defendant, heading in a westerly direction, collided with the plaintiff within that carriageway. Medical evidence establishes that the plaintiff suffered a severe traumatic brain injury and has been left with permanent impairments of cognition. He has no recollection of the incident. He has also been accepted into the Lifetime Care and Support Scheme.
2. Solicitors on behalf of the first defendant responded to the plaintiff's subpoena for production by letter dated 13 August 2014, advising that a claim for privilege was made in respect of a factual investigation report and colour photographs.
3. The affidavit also annexed a s 81 Notice addressed to the plaintiff's solicitors dated 27 March 2013, denying liability and alleging contributory negligence in the alternative in respect of the plaintiff's claim. That letter went on to state: "If your client wishes to proceed with the claim, your client can refer the matter to the Claims Assessment and Resolution Service (CARS) at the Motor Accidents Authority for an Exemption from the CARS process to enable legal proceedings to be commenced."

The evidence of the first defendant

1. The affidavit of Mr Steven Kwok, affirmed on 20 April 2015, deposed that he was in 2013 the Technical Adviser of a team within the New South Wales CTP claims department of AAMI. The plaintiff's personal injury claim form was received on 7 January 2013 and allocated to him for its day to day management. That claim form set out the circumstances of the accident and Mr Kwok deposed that after an initial review, he "felt that either liability for the claim would be declined or that more than 25% contributory negligence would be alleged", in which case the claim would be exempted from CARS and he expected that the plaintiff would commence legal proceedings. A file note prepared by Mr Kwok on 8 January 2013 recorded his summary of the claim and outlined the steps that had to be taken. It was from that file note that he had refreshed his memory before giving his evidence. Relevantly, the file note contained the following: "ACTION (incl. STRATEGY TO RESOLUTION) (1) Write to Shine Lawyers, acknowledge receipt and reject claim form for procedural breach (med cert); (2) Instruct MACS to carry out factual investigation; (3) Instruct Moray & Agnew for early legal advice and once investigative rpt is received, forward onto solicitor; (4) Request Shine Lawyers provide a complete copy of all existing police records held in their possession including the first 3 pages referred to in their cover letter as well as the claim form; (5) Request copy of file from LTCSA; (6) Request Summary of Injuries from Liverpool Hospital; (7) Request authority for the release of Liverpool Hospital clinical notes from Shine Lawyers; (8) Request ambulance report; (9) Write to insured notifying him of factual investigation; (10) Determine whether sharing applies after receipt of investigative report and legal advice; (11) Defer requesting Medicare notice until claimant's injuries have sufficiently recovered; (12) Create initial estimate; and (13) Finally, the strategy in this claim is to firstly determine liability once investigations and legal advice is to hand."
2. On the same day, Mr Kwok requested the subject investigative report, and also wrote to Messrs Moray & Agnew, Lawyers. That letter appears at annexure D and includes the following: "Please accept our instructions to act on behalf of the Insurer. We anticipate legal proceedings will be ultimately commenced in this matter and as a result, we have instructed Motor Accident Claims Services to carry out a factual investigation in this matter. Upon receipt of their report, we will forward a copy of same to your office for your expert advices. You may wish to liaise with Mr Carl Hayes in the meantime to discuss any additional enquiries that you may consider necessary. We enclose a copy of our file and look forward to receiving your advice. …"
3. On 7 March 2013, Mr Kwok received the subject investigative report and forwarded it to Messrs Moray & Agnew. He received a letter of advice dated 25 March 2013 on 26 March 2013, and on 27 March 2013 issued the s 81 Notice referred to above.
4. Mr Kwok was cross-examined by learned Senior Counsel for the plaintiff.
5. Mr Kwok acknowledged that he was experienced in the CTP industry, and in 2013 had a senior role with AAMI, which included knowledge of the insurer's requirements for compliance with the Motor Accidents Compensation Act 1999 ("MACA") and its licenced conditions as a CTP insurer. He understood that a s 81 Notice was a matter involving the licenced conditions for a CTP insurer.
6. Once he received the plaintiff's claim form on 7 January 2013, there was limited factual material available to him, and he needed to know more about the facts. For that reason, he commissioned a factual investigation. He did not seek legal advice about obtaining the factual investigative report, but rather, relied on his own skills and knowledge.
7. Mr Kwok wrote to Mr Kelly of Messrs Moray & Agnew on 8 January 2013, but could not recall speaking to him at all that day. His letter was annexure D, and he agreed that it was instructing those solicitors to do work in the future and that he would forward the factual investigative report to them.
8. Mr Kwok did not agree with the proposition that he needed the investigative report irrespective of obtaining legal advice in the future. Rather, he said the reason that the factual investigative report was required was that the circumstances of the plaintiff's injury were very complex and he needed legal advice because proceedings would be commenced.
9. One purpose of obtaining the investigative report was to perform his role, another part was to seek legal advice. He agreed that another purpose was that it was needed so that his employer could comply s 81(1) MACA.
10. It was put to Mr Kwok that the factual investigative report was required in respect of three matters: 1. For his own understanding of the facts for his role. 2. For his desire to obtain professional legal services, and 3. For compliance with the insurer's obligations, for example s 81.
11. Mr Kwok said that was partly correct, however, legal advice was required because he believed that litigation was likely. When it was put to Mr Kwok that he would have sought the factual investigative report irrespective of the question of obtaining legal advice, he answered, "I don't know how to answer that question."

The plaintiff's submissions

1. The plaintiff provided a comprehensive written outline of submissions in respect of AAMI's claim for privilege pursuant to s 119. Due to the statutory requirement for the insurer to issue a Notice under s 81 of MACA, it was submitted that the required dominant purpose was not established. Rather, Mr Kwok's decision to engage lawyers was incidental to his decision to obtain the investigative report.
2. It was submitted, on behalf of the plaintiff, that what occurred was in the nature of "warehousing" or "letter-boxing", namely, the retaining of a firm of solicitors for the provision of professional legal services to be provided at some time in the future. This would not provide the basis of a claim for privilege pursuant to s 119.
3. Further, because a claim needed to be exempted pursuant to s 92 of MACA, before court proceedings could be commenced, for the purposes of s 119, there was no "Australian or overseas proceedings" because the tribunal process under MACA does not satisfy the definition of Australian court in the Evidence Act.
4. Learned Senior Counsel submitted that the oral evidence of Mr Kwok established that the report was obtained for three purposes, and the final answer given by Mr Kwok, as referred to in [20] above, meant that the court could not be satisfied that the dominant purpose of obtaining the report was for the purpose of obtaining legal advice, relying on Sexton v Homer [2013] NSWCA 414.
5. It was submitted that the insurer's obligation to comply with s 81 would deny the existence of a dominant purpose so as to enliven a claim for privilege pursuant to s 119.
6. In relation to the definition of "Australian Court", learned counsel distinguished the Federal Court decision of Epeabaka v Minister for Immigration & Multicultural Affairs (1997) 150 ALR 397, for the reason that the tribunal process under MACA meant that at the end of the CARS process there was a deemed settlement offer by the insurer pursuant to s 95. If that offer was accepted then there would be no legal proceedings and the CARS process, to which the laws of evidence do not apply, could not come within the definition of "Australian Court" in the Evidence Act.
7. In defining "dominant purpose", the plaintiff relied on the judgment of Branson J in Sparnon v Apand Pty Limited (1996) 68 FCR 322 where her Honour said at 328: "Plainly, if two purposes were of equal weight, one would not dominate the other. If the decision to bring the document into existence would have been made irrespective of any intention to obtain professional legal services, I am inclined to doubt that the purpose of obtaining professional legal services could be regarded as the dominant purpose for the making of the document. It seems to me that, seen in the light of the reasons for judgment of Barwick CJ in Grant v Downs, the choice of the expression 'dominant purpose' rather than 'sole purpose' in s 119 of the Act is intended to bring within the scope of client legal privilege a document brought into existence for the purpose of a client being provided with professional legal services, notwithstanding that some ancillary use of the document was contemplated at that time."
8. That test was adopted by the Court of Appeal in Westpac Banking Corporation v 789TEN Pty Limited [2005] NSWCA 321, where the court held that it is a question of objective fact as to whether one purpose dominated the decision to bring a document into existence: see, Tobias JA (with whom Basten JA and Campbell AJA agreed) at [57], where his Honour quoted the above passage from Branson J's judgment.
9. The plaintiff submitted that there was an evidential necessity in determining a dominant purpose, relying on New South Wales v Jackson [2007] NSWCA 279. It was common ground that the question of the existence of the required "dominant purpose" is a question to be determined objectively.
10. The plaintiff relied on the Court of Appeal's judgment in Smalley v Motor Accident Authority of New South Wales (2013) NSWLR 580 in respect of the obligations on a CTP insurer to issue a s 81 Notice. At [42], Leeming JA (with whom Meagher and Garrett JJA agreed) said in relation to the construction of s 81: "It is convenient to make two general observations about the legislative regime as a whole: it is clear that it is a narrowly prescriptive, and replete with obligations compliance with which is to take place in a short time frame, and non-compliance with which by the insurer is a breach of a condition of its licence. Moreover, the obligations upon an insurer are pecuniary: to make a reasonable offer of settlement within two months of receiving relevant particulars, and to make payments in respect of hospital, medical, pharmaceutical and rehabilitation and other expenses. In short, it will be seen that unless the insurer "wholly denies" liability, it will become obliged to make actual payments and to make a reasonable offer of settlement very rapidly after a claim has been made."
11. Learned Senior Counsel for the plaintiff submitted that as s 81 imposed an early post‑claim obligation on a CTP insurer to comply with s 81, this pointed to an absence of the required "dominant purpose" in s 119 in respect of the investigative report. Thus, the decision to obtain that report was made irrespective of any intention to obtain legal professional services, notwithstanding that a decision to obtain those services was made at the same time. It was submitted that the evidence of Mr Kwok could not be relied upon by the insurer as pointing to a dependency upon obtaining legal advice to the commissioning of the factual investigative report. The fact was, and remains, that the proposed legal services were engaged after the investigative report was received.
12. It was submitted that for the purposes of s 119, there had to be a substantive connection, and satisfaction of, the material elements of the section, namely: 1. "The 'confidential communication' and 'the contents of a confidential document'; 2. The 'dominant purpose of the provision of 'professional legal services'; and 3. Relating to 'anticipated or pending proceedings'" All three requirements are needed to be satisfied to enliven the section. Here, the claims officer had identified his view that there may be proceedings, but that was not enough to make the privilege flow to all that is done before the s 81 Notice was issued. It was submitted that there was no evidence that "professional legal services" were provided prior to the s 81 Notice, and "professional legal services" were not supplied to result in the commission of the factual investigation.
13. It was further submitted that there was no evidence relied on by AAMI that documents were "confidential", as defined by s 117. It could not be said that a witness statement was confidential.
14. The plaintiff submitted that the decision of the Court of Appeal in Sexton v Homer, supra, could be distinguished from the present case. There the court had held that the dominant purpose for obtaining the document was for use in legal proceedings and the evidence of Mr Kwok (the same witness as in the present case) supported that conclusion. At [108], the court pointed out that he was not directly challenged in his evidence that the document was produced for the dominant purpose of obtaining advice about contemplated litigation. That was not the case here where Mr Kwok was directly challenged on that very issue, and could offer no response.
15. The plaintiff also submitted, and confirmed by way of a supplementary note, that express words were needed to abrogate common law rights, relying on the judgment of McHugh J in Gifford v Strang Patrick Stevedoring Pty Limited (2003) 214 CLR 269 at [36]. See also Daly v Thiering (2013) 249 CLR 381 and Adco Constructions Pty Limited v Goudappel [2014] HCA 18.

The first defendant's submissions

1. The first defendant, by its learned Counsel, submitted first that Mr Kwok's evidence that he anticipated litigation in this case should be accepted. He formed the view upon review of the file on 8 January 2013, that contributory negligence of greater than 25% would be alleged or that there would be a denial of liability. His anticipation of litigation was therefore reasonable.
2. It was further submitted that the obligation on the insurer to make a decision pursuant to s 81, within a three months period could never be a dominant purpose.
3. Given that Mr Kwok only had the claim form on 8 January 2013, his assessment of a claim for contributory negligence of greater than 25% was not unreasonable. Secondly, there was a clear dispute in respect of the first defendant as to whether there was a light on the bike. He therefore formed a reasonable view that he needed legal advice, and took steps to obtain an investigative report, upon which, he could obtain legal advice.
4. It was submitted that the fact that there were ancillary purposes for obtaining the report (for example s 81), did not mean that the immunity contained in s 119 did not attach to the report. Mr Kwok's subjective view that he required advice in anticipation that there would be litigation, was relevant, relying on the judgment of Tobias JA in Westpac Banking Corporation v 789TEN Pty Limited, supra.
5. It was submitted that s 81 gave rise to no more than a requirement for the insurer to make a decision quickly as to whether to deny the claim or to make payments. It was an important gateway to achieving the objects of the Act.
6. Counsel for the first defendant submitted that all of the elements of s 119 were made out. The first defendant's fall-back position was that by seeking the advice of Mr Kelly in respect of s 81 and anticipated litigation in the matter, Mr Kwok was seeking the privilege that arises under s 118 in respect of legal advice, and so much was made out by his letter to Messrs Moray & Agnew dated 8 January 2013 (annexure D).
7. In reply, learned Senior Counsel submitted that s 118 was directed towards legal advice and could not apply to the investigative report which is the subject of this claim.

Determination

1. Section 119 of the Evidence Act provides as follows: "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 proceedings before the court), or an anticipated or pending Australian or overseas proceedings, in which the client is or may be, or was or might have been, a party."
2. Section 117 contains the following definitions: "Confidential Communication means a communication made in such circumstances that, when it was made; (a) The person who made it; or (b) The person to whom it was made; was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law. Confidential Document means a document prepared in such circumstances that, when it was prepared; (a) the person who prepared it; or (b) the person for whom it was prepared; was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law."
3. The question to be determined pursuant to s 119 is whether that report was a confidential document obtained for the "dominant purpose" of the insurer being provided with professional legal services relating to an anticipated or pending "Australian or overseas proceeding" in which the insurer "is or may be" a party. The plaintiff submits that it was not, for the reasons outlined above. It was obtained merely for a number of purposes, one of which was to obtain legal advice, but not in relation to an anticipated Australian proceeding. Further, it was submitted that it was obtained irrespective of any intention to obtain legal services.
4. This question has to be assessed objectively. Therefore, the opinion of Mr Kwok as to whether it was a dominant purpose or not is not binding on the court. The plaintiff submits that the Court of Appeal's judgment in Sexton v Homer, supra, may be distinguished.
5. I do not accept that submission. The Court of Appeal made it clear that the report in that case was plainly a confidential communication as defined by the Evidence Act. It was prepared as a consequence of the contractual relationship between the third party insurer and the investigator, which was a relationship of principal and agent, and such a contract would ordinarily carry with it obligations of confidence. Viewed objectively, the investigations were being carried out "to establish the exposure of the insurer and the degree of fault of the respective parties" and there could be little doubt that the results of such investigations were intended to be confidential (see Sexton at [106]). The investigative report, the subject of this application, is a confidential document as defined by the Act. It was prepared at the request of an insurer, and one of the purposes for that request was to obtain legal advice from solicitors to be retained by that insurer.
6. In my view, the dominant purpose of obtaining the report here was for the insurer to be provided with professional legal services. It was clear to the claims officer, on receipt of the claim form, that there were complex issues relating to both the plaintiff's contributory negligence, and the liability of the second defendant and questions of proportionality arising between the insurers. Whilst s 81 of MACA imposed an obligation on the insurer to make an expeditious decision whether to deny liability or make payments, and such decision may impact on its licence, that was not the dominant purpose of obtaining the report. Rather, it was obtained so that the solicitors retained by the insurer could properly provide legal professional services to the insurer in respect of the claim. It was also anticipated at that time that the professional legal services would relate to an anticipated Australian proceeding.
7. I am drawn to that conclusion for the following reasons: 1. Mr Kwok's file note made it clear that the investigative report was to be forwarded onto the insurer's solicitors once it was received and that liability was to be determined once the investigations and legal advice was received. 2. The letter to Messrs Moray & Agnew dated 8 January 2013 made it clear that the insurer anticipated that legal proceedings would be commenced and for that reason, the investigative report had been requested. The insurer was instructing those solicitors to provide advice on that report. 3. Immediately upon receiving that report, the insurer forwarded it to Messrs Moray & Agnew, who provided their advice on it, following which, the insurer issued the s 81 Notice denying liability. 4. The insurer's letter to the plaintiff's solicitors enclosing the s 81 Notice referred those solicitors to the process of exemption from the CARS process to enable the legal proceedings to be commenced.
8. In the circumstances, it could not be held that the report was commissioned "irrespective of any intention to obtain legal professional services", as submitted by the plaintiff.
9. The expression "Australian or overseas proceeding" is defined in the dictionary to the Evidence Act as meaning "a proceeding (however described) in an Australian Court". The term "Australian Court" is further defined in the dictionary as meaning: "(a) The High Court; or (b) A Court exercising Federal jurisdiction; or (c) A Court of a state of territory; or (d) A Judge, Justice or Arbitrator under an Australian law; or (e) A person or body authorised by an Australian law; or by consent of the parties to hear, receive and examine evidence; or (f) A person or body that, in exercising a function under an Australian law, is required to apply laws of evidence."
10. Here, the fact that there were machinery provisions pursuant to MACA which had to be met prior to proceedings being commenced, namely, by way of exemption of the claim from the CARS process, does not mean that there could not be anticipated proceedings in an Australian Court, meaning the District Court of New South Wales or the Supreme Court. Part 4.4 of MACA is headed "Claims Assessment and Resolution". Division 2 deals with the assessment of claims and s 92 defines claims that are exempt from assessment under that Part. Section 95, however, deals with the status of assessments made under that Part, and s 95(2) makes it clear that an assessment of the amount of damages under that Part is binding on an insurer but not on a claimant, unless the claimant accepts the assessment. I do not accept the plaintiff's submission that the presence of s 95 must mean that there could be no anticipated legal proceedings in the present circumstance. Rather, it is clear that Mr Kwok did anticipate legal proceedings, both when he retained lawyers to act on behalf of the insurer and when he issued the s 81 Notice to the plaintiff's solicitors. As such, proceedings would necessarily be conducted in either the District Court or the Supreme Court. I do not accept the plaintiff's submission that the Federal Court's decision in Epeabaka v Minister for Immigration and Multicultural Affairs, supra, can be distinguished.
11. Nor do I accept the plaintiff's submission that there is an abrogation here of the plaintiff's common law rights. Once the plaintiff received the s 81 Notice denying liability, the provisions of MACA made it clear that he was entitled to apply for exemption from the CARS process and to commence legal proceedings. I am of the opinion that the investigative report and photographs were obtained for the dominant purpose of the insurer being advised in respect of those proceedings and therefore, the report and photographs were subject to client legal privilege, and could not be adduced pursuant to s 119 of the Evidence Act.
12. Section 118 of the Act clearly does not apply to the current situation. That section relates to legal advice, and provides immunity by way of privilege to confidential communications produced for the dominant purpose of a lawyer providing legal advice to a client, which it not the situation here.

Conclusion

1. The claim for privilege pursuant to s 119, in respect of the investigative report and photographs should be upheld. For that reason, I make the following orders: 1. The plaintiff's Notice of Motion is dismissed. 2. The plaintiff is to pay the first defendant's costs of the Notice of Motion. 3. I return to the first defendant's solicitor the envelope containing the relevant documents which was marked for identification "MFI #1".

Amendments 24 September 2015 - Amendment to paragraphs 27 and 28 to include direct quote from Judgment of Branson J in Sparnon v Apand Pty Limited (1996) 68 FCR 322 24 September 2015 - Punctuation error deleted paragraph 27 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: 24 September 2015