12It is clear from these paragraphs that s 122(2) in its current form is intended largely to adopt the test for waiver at common law as explained by the High Court in Mann v Carnell and that s 122(3) is intended to give some examples of the application of that test.
13I was taken to a number of decisions in which courts have considered the question whether and to what extent privilege in communications between a party's legal advisors and an expert retained by the party, and draft reports prepared by the expert, were waived by service of the expert's report. It is not necessary to refer to them all. However, it is helpful to refer to a number of them.
14The first is the decision of Lindgren J in Australian Securities & Investments Commission v Southcorp Ltd (2003) 46 ACSR 438. In that case his Honour set out the relevant principles in these terms (at [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: (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; BC200300344 (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 Luxat [46].
15Lindgren J was concerned with the position at common law. Moreover, his Honour did not refer to the decision in Mann v Carnell; and for that reason his Honour stated the principle in (4) in terms of fairness rather than inconsistency informed by considerations of fairness. Nonetheless, the principles stated by Lindgren J have been referred to with approval on a number of occasions: see, for example, Integral Energy Australia v EDS (Australia) Pty Ltd (2006) NSWSC 971 at [3] (Einstein J); Ryder v Frohlich [2005] NSWSC 1342 at [10] (Barrett J); Temwell Pty Ltd v DKGR Holdings Pty Ltd [2003] FCA 948 at [7]-[8] (Ryan J) and Gate Gourmet Australia Pty Ltd v Gate Gourmet Holding AG [2004] NSWSC 768 at [28]-[29] (Einstein J); and the principles stated by Lindgren J provide the context for more recent judgments concerning the Act.
16One of those is the decision of White J in New Cap Reinsurance Corporation Ltd (in liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258. In that case, the plaintiffs served a report from an expert accountant, Mr Smith, dealing with the question whether the plaintiff was solvent at a date relevant to the issues in the proceedings. The defendant sought access to draft reports that had been prepared by Mr Smith and submitted to the plaintiffs' lawyers. White J observed that the common law did not apply and that any question of "waiver" was to be determined in accordance with s 122 of the Act as it then was. In his Honour's view, s 122(2) had no application, since disclosure of the final report was not a knowing and voluntary disclosure of the substance of the drafts: at [43]. Nonetheless, his Honour thought that s 122(1) was applicable:
It is now firmly established that consent under s 122(1) includes a consent which will be imputed to a party on the same principle where, at common law, a party will be taken to have waived privilege, even though he or she did not subjectively intend to do so (Chen & Ors v City Convenience Leasing Pty Ltd & Anor [2005] NSWCA 297 at [29]-[33])
White J then went on to state the principle from Mann v Carnell quoted above.
17White J also referred to the principles stated by Lindgren J in Australian Securities & Investments Commission v Southcorp Ltd and continued:
[48] It may be said that the question of whether such privileged documents influenced the content of the expert's report is a matter which the opposite party should be entitled to test. However, questions of privilege inevitably involve the striking of a balance.
[49] ...
[50] As set out earlier in these reasons, Mr Smith, as he is required to do under the Expert Witness Code of Conduct, specified the materials used in support of his opinions. These did not include draft reports, or earlier letters of instruction, or communications with the plaintiffs' solicitors.
His Honour then summarised the position in these terms (at [53]):
The question is not merely whether it could be said that the privileged materials were used in such a way that they could be said to influence the content of the report, but whether it could be said that they influenced the content of the report in such a way that the use or service of the report would be inconsistent with maintaining the privilege in those materials, such as, where it would be unfair for the party to rely on the report without disclosure of those materials. Where an expert's report is submitted to a party's legal advisors so as to be put into a form which will ensure that it is admissible, it can be said that the privileged communications between the expert and the lawyers have influenced the content of the report, in the sense of its form, although not in the sense of the formulation of the substantive opinions expressed by the expert. Likewise, privileged communications between an expert and the party's lawyers whereby material information is provided to the expert in the form of assumptions or documents may well influence the content of the report. However, an expert's report is required to state what material and assumptions are relied on. Use of a final report, which refers to such materials and assumptions, is not inconsistent with maintaining confidentiality in the communications which produced the final product.
Following inspection of the relevant documents, White J concluded that Mr Smith had not used the documents in issue in preparing his report and consequently concluded that privilege in them had not been waived.
18White J's decision was cited with apparent approval by Jerrard JA in Watkins v State of Queensland [2007] QCA 430; [2008] 1 Qd R 564 at [14]-[15]; and in that case Keane JA stated the test of waiver in these terms (at [55]):
It is in the nature of things that a party who enjoys a right to keep information relevant to a forensic contest confidential will also enjoy an advantage over that party's opponent: the mere existence of that advantage cannot be a reason for the abrogation of the right. It is the abuse of the right by conduct apt to confuse or deceive the opponent which is the basis for an imputed waiver of privilege.
19A different approach was taken by Brereton J in ML Ubase Holdings Co Ltd v Trigem Computer Inc [2007] NSWSC 859. It appears that Brereton J was not referred to White J's decision. That case concerned an expert report on Korean law. Counsel for the plaintiff sought access to communications between the defendant's lawyer and the expert relating to the preparation of the report. Again, the question was whether privilege had been lost in those documents by service of the expert report. Like White J, Brereton J pointed out that the issue was now to be resolved by application of the Evidence Act. In relation to s 122 of the Act, his Honour said:
[34] ... Section 122 applies if and only if the evidence for which privilege is claimed has itself or in substance been disclosed. Illustrations of where it may operate are afforded by cases in which one party writes to another asserting that it has legal advice to a particular effect; that discloses the substance of the legal advice, and waives the privilege in it.
[35] There is no suggestion that the substance of the documents, the subject of the present claim for privilege, has been disclosed, and although at one stage Mr Scruby referred to Evidence Act, s 122(4) in connection with the waiver argument, there is no room for the operation of s 122 in respect of the documents the subject of the claim here. However, service of an expert's report does not, without more, disclose the substance of the contents of the letter of instructions. ...
20His Honour then considered whether privilege had been lost under s 126 of the Act which provides:
If, because of the application of section 121, 122, 123, 124 or 125, this Division does not prevent the adducing of evidence of a communication or the contents of a document, those sections do not prevent the adducing of evidence of another communication or document if it is reasonably necessary to enable a proper understanding of the communication or document.
However, his Honour concluded that it was not necessary to obtain access to the documents to which privilege was claimed in order to enable a proper understanding of the report and that consequently the privilege had not been lost.
21It is clear, however, that the approach taken by White J to s 122(1) is now applicable to s 122(2). White J proceeded on the basis that s 122(1) incorporated principles of common law waiver. As I have explained, those principles are now encapsulated in s 122(2). The narrow approach taken by Brereton J to s 122 no longer applies to the section as amended. Although Mr Cotman SC, who appeared for the OMB Parties, took me to a number of other cases, there was no real dispute between the parties that the principles as stated by White J were the principles to be applied in this case.
22Applying those principles, Mr Couper QC, who appeared for the Bank, submitted that it would be inconsistent for the OMB Parties to maintain their claim for privilege in communications with and draft reports of Professor Burton because it is apparent from the material before the court that Professor Burton relied on those communications and on comments on her draft report in reaching her conclusions. In support of that submission, Mr Couper relied on the description of many of the documents in respect of which a claim for privilege is made which make it clear that Professor Burton was communicating with the solicitors and counsel for the OMB Parties concerning the contents of her report. He also relied on the following paragraph from the affidavit prepared by a solicitor for the OMB Parties in support of the claim for privilege:
Of the draft reports of Professor Burton that I reviewed, each contained, variously, highlighting, edits in revision mode made by Professor Burton or the OMB Parties' legal advisors or comments and questions addressed by Professor Burton to the OMB Parties' legal advisors or to Professor Burton by the OMB Parties' legal advisors.
Mr Couper submitted that it was open to Professor Burton to have sworn an affidavit saying that, despite the comments she received, the conclusions reached in the report are her own. She has not done that. In the absence of such an affidavit the court can more readily conclude that the contents of the report have been influenced by the OMB Parties' legal advisors.
23Applying the approach adopted by White J, I am not satisfied that the OMB Parties have lost privilege in the communications their legal advisors had with Professor Burton and in the draft reports prepared by her. There is nothing in the material to which Mr Couper points to suggest that the conclusions stated by Professor Burton are not her own or are based on material other than the material disclosed in her report. It is common for a party's legal advisors to communicate with an expert retained by the party for the purpose of giving instructions and commenting on the form of the expert's report. In some cases, those advisors may test tentative conclusions that the expert has reached and in doing so may cause the expert to reconsider his or her opinion. In some cases, the legal advisors may suggest wording to be included in the report which expresses in admissible form an opinion stated by the expert in an inadmissible form. The court depends heavily on the parties' legal advisors to assist experts to address properly the questions asked of them and to present their opinions in an admissible form and in a form which will be readily understood by the court. Equally, the court depends heavily on the parties' legal advisors to ensure that any opinion expressed by an expert is an opinion the expert holds for the reasons that the expert gives and that the expert otherwise complies with the Expert Witness Code of Conduct. That requirement is reinforced by the acknowledgment that the expert is required to give concerning the code. The fact that legal advisors have communicated with an expert and provided comments on drafts of a report in a way which is consistent with discharging the first obligation is not a reason of itself for supposing that they have failed to discharge the second; and, as I have said, there is nothing else in the material Mr Couper points to suggest that the OMB Parties' legal advisors have failed to discharge that obligation in the case of Professor Burton's report.
24For those reasons, in my opinion, the OMB Parties are entitled to maintain their claim for privilege in relation to the documents contained in packets A to L produced by Professor Burton.