Investigation reports and litigation privilege in motor vehicle accidents: Douglas v Morgan  SASCFC 76
15th Aug 2019
Historically, CTP insurers in South Australia have been able to assert privilege over reports obtained early on in a motor vehicle accident claim, and ultimately make a decision on liability based on those reports.
This has long been a contentious issue in motor vehicle accident cases in South Australia. Plaintiffs and their lawyers have often had to either simply accept the insurer’s position on liability or, alternatively, obtain their own investigation reports in order to challenge an investigation report that they cannot inspect because these reports were covered by privilege.
There are two types of circumstances in which privilege can exist: litigation privilege and advice privilege.
Litigation privilege exists when the communication, or document containing the communication, was created for the main purpose of providing instructions or advice in existing, or reasonably anticipated, legal proceedings.
The applicable procedural rules that implement the principles of privilege are set out in the identical rules of rr136(6)-(7) and of the Supreme Court (Civil) Rules 2006 and r140(7) of the District Court (Civil) Rules 2006.
Rules 136(6) and (7) state:
‘(6) Unless the Court otherwise directs, the following documents need not be disclosed:
(a) an investigative film made for the purpose of the action;
(d) correspondence between a party and the party’s lawyer or notes of oral communications between a party and the party’s lawyer;
(e) opinions of counsel;
(7) If a party required to disclose a document claims that the document is privileged from production, the list must state the nature of the privilege and the ground on which it is claimed.’
Rule 140(7) also provides, ‘A party is not required to produce any document which is subject to privilege from production.’
Although both litigation privilege and advice privilege are relevant, the Full Court of the Supreme Court of South Australia has recently delivered a significant decision in the case of Douglas v Morgan & Ors  SASCFC 76, which dealt with applying litigation privilege to investigation reports obtained by the CTP insurers in claims for personal injuries sustained from a motor vehicle accident. Mellor Olsson Lawyers was involved in this case, representing the plaintiff.
The facts of the case
When the matter was first heard before a Master of the District Court in March 2018, the evidence was:
- A collision occurred in the early hours of 9 December 2012 when the plaintiff, who was a pedestrian, was struck by the defendant driver’s car while crossing North Terrace, Adelaide.
- On 14 December 2012, the compulsory third party insurer, Allianz Australia Limited (Allianz), received a Notification of Injury Form from the plaintiff’s general practitioner. The notification stated that the plaintiff ‘had been hit by a car while crossing the road’.
- On 17 December 2012, Allianz received a copy of the police vehicle collision report. The report stated that the defendant returned a positive Blood Alcohol Concentration (BAC) of 0.076 at the scene of the accident.
- On 21 December, Allianz received a letter from Mellor Olsson, the lawyers acting on behalf of the plaintiff, stating:
‘I … act for Mrs … Morgan … in relation to her accident claim … My client sustained injuries as a result of this accident and will shortly be seeing her general practitioner with respect to treatment that she might need. I will write to you further after my client has seen her general practitioner but in the meantime I ask if you would provide me with a claim number.'
- On 27 December 2012, the Allianz claims manager handling the claim at that time appointed a firm of investigators to undertake a detailed inquiry into the circumstances of the accident. Among other things, the claims manager had asked the investigator to obtain comprehensive statements from all witnesses to the accident and photographs of the scene. The request specifically sought:
‘… detailed account of the accident from the insured, witnesses and claimant if possible, in order to confirm the accident circumstances and ascertain the insured and claimant’s awareness prior to the accident. We ask that you also please comment on the credibility of those interviewed.’
- On the same day that the report was requested, the claims manager responded to Mellor Olsson by letter stating that the insurer was attempting to obtain details regarding the accident, and would communicate with the lawyer as soon as possible. The letter also requested other information and records relating to the plaintiff.
- On 18 January 2013 and 21 February 2013, Mellor Olsson wrote to Allianz seeking information as to the status of Allianz’s investigations.
- The claims manager received the report from Mellor Olsson on 26 February 2013.
- Mellor Olsson received a response from Allianz dated 12 June 2013 which raised, for the first time, an allegation of contributory negligence on the part of the plaintiff.
- Solicitors, Jones Harley Toole, were appointed to act on behalf of Allianz in approximately May 2016.
- On 26 June 2017, Jones Harley Toole wrote to Mellor Olsson claiming:
‘The investigation report dated 21 February 2013 was commissioned by the compulsory third party insurer shortly after notification from your firm on 20 December 2013 that your client was pursuing a personal injury claim. The attachments to the said report consist of witness statements and a series of photographs of the accident location. The said report was brought into existence for use in anticipated legal proceedings and therefore attracts litigation privilege.’
Mellor Olsson subsequently filed an application in 2017 seeking the production of the report on the basis that litigation privilege did not apply in the circumstances.
District Court hearing
The matter was heard before a Master of the District Court in 2018.
We argued on behalf of the plaintiff in our application that litigation was not and could not reasonably have been anticipated at the time the investigation report was requested.
In the absence of any direct evidence as to the purpose of the report, we argued that the objective circumstances led to the conclusion that the report was requested as a precursor to formulating a position on liability and to decide whether or not to accept the claim.
To support our arguments, we relied on how early the report had been obtained, the date of the request for the report and the details the claims manager had included in the request form, which did not mention that the report would be used to obtain legal advice or for anticipated litigation.
In response, the defendant argued that there was sufficient evidence, which had been provided to the Court, of Allianz’s practice and policy, leading to the conclusion that the dominant purpose for requesting the report was for use in reasonably anticipated litigation. The defendant further argued that it was not required to provide any direct evidence of this intention because the Court was entitled to infer from the established practices that certain factors had been taken into account when deciding whether to commission the report.
The defendant specifically relied on two affidavits, one sworn by a current manager at Allianz, and one sworn by the claims manager who had requested the report and who no longer worked for Allianz. Those affidavits were based on the policies and practices of the insurer and assumed that those procedures had been adhered to in this case.
Jones Harley Toole maintained its argument that the dominant purpose for requesting the report was for it to be used in ‘reasonably anticipated litigation’, and that the claims manager had undertaken the proper and usual policies and procedures to request the report.
Initially, we filed an application to cross examine the first claims manager who had provided affidavit evidence regarding her usual practices and procedures. However, we subsequently agreed to withdraw it when the defendant agreed that the evidence of policy and practice in the affidavit was to read as ‘general statements of training, practice or understanding only’ and was not a reference to the actual conduct of the claims manager in this instance.
The decision of the Master
In the first instance, the Master found in favour of Allianz, and was persuaded that at the time the report was requested there was a reasonable anticipation of litigation.
The Master also found that as Allianz is ‘in the business of being sued’ by claimants, Allianz was preserving evidence by instructing external investigators, which would be used in reasonably anticipated litigation. As such, the ‘dominant purpose’ in relation to anticipated legal proceedings had been satisfied.
In coming to this decision, the Master placed significant weight on the following aspects:
- the role of Allianz as the compulsory statutory insurer;
- litigation can be or is a frequent feature of motor vehicle accidents claims;
- the plaintiff retained Mellor Olsson within two weeks of the accident;
- the alcohol level of the defendant driver;
- the location, date and time of the collision, which raised the issue of whether the plaintiff had also be under the influence of any substances; and
- the report was requested between Christmas and New Year, which ‘smacks of importunity’.
Mellor Olsson appealed the Master’s decision.
The appeal was heard by Judge Bochner in the District Court of South Australia.
Judge Bochner found 12 specific errors with the Master’s reasoning in coming to his conclusion; namely, that he had placed undue weight on some factors and insufficient weight on others, such as:
- Neither the claims manager nor the manager was in a position to give evidence as to why external investigators were retained in this matter. Both simply described in their affidavit evidence the practices and procedures of Allianz, but neither was able to say that those practices were followed in this case.
- The Master denied the plaintiffs the benefit of the agreement reached with the defendant by not giving the plaintiffs the opportunity to cross examine the claims manager.
- The Master relied on a particular statement of the claims manager about the plaintiff crossing North Terrace and attending a wedding, when at the time she requested the report, the claims manager had not actually been aware that the plaintiff had attended a wedding prior to the accident.
Judge Bochner found that the Master had placed undue weight on:
- the contents of the written request for the report;
- the use of the phrase ‘preservation of evidence’ by the claims manager in the report request, treating those terms as though they conveyed anticipation of litigation;
- the time of the request for the report; and
- the early retention of solicitors by the plaintiff.
Judge Bochner also determined that the Master placed insufficient weight on:
- the failure of the defendant to produce direct evidence of the purpose of the report; and
- a letter from Allianz to Mellor Olsson which was dated the same date (27 December 2012) as the request for the report.
Ultimately, Judge Bochner found that the Master erred by elevating Allianz to a position superior to other litigants, incorrectly distinguished some authorities and incorrectly relied on and applied those authorities.
The appeal ultimately reversed the decision of the Master on the basis that the Master had erred in his finding that the report was subject to litigation privilege, and the judge made orders for the release of the report to us.
Allianz subsequently appealed Judge Bochner’s decision to the Full Court of the Supreme Court of Australia (the Full Court), with the judgment being handed down on 1 July 2019.
Did the Full Court rule that the report was subject to litigation privilege?
The Full Court upheld Judge Bochner’s reasoning and decision and ruled that:
- On the evidence, there were two purposes of obtaining the investigation report. The immediate and first purpose was for Allianz to make a determination as to liability and attempt to resolve the claim; and the secondary purpose was, if resolution could not be achieved, for solicitors to use the report in litigation.
- There was no evidence produced by Allianz and no basis to find that the secondary purpose was the dominant purpose.
The Full Court held that the investigation report was not the subject of legal professional privilege and that Judge Bochner was correct in finding that it was not. By describing the dominant purpose test as being a ‘subjective test with objective overtones’, the Court has adopted a subtle but significant change in language from previous authorities that insurers had relied on in asserting litigation privilege of these reports.
Allianz has not sought leave to appeal to the High Court of Australia. As a result, Allianz will now be required to release the investigation report to Mellor Olsson, which will assist in progressing the plaintiff’s claim.
Why is this decision so significant?
Historically, CTP insurers have been able to assert legal professional privilege over reports obtained early on in a motor vehicle accident claim, and make determinations on liability based on those investigation reports, without having to actually provide the report to plaintiffs, thus putting plaintiffs at a disadvantage from the beginning.
This has long been a contentious issue in motor vehicle accident cases in South Australia, with plaintiffs and their lawyers often having either to simply accept that the insurers wouldn’t release the reports or, if they intended to challenge the position, obtain their own reports, often at significant expense.
The case of Douglas v Morgan & Ors has directly challenged this issue, and could potentially result in the release of many investigation reports that have been previously obtained by insurers in motor vehicle accident claims to plaintiffs and their solicitors.
This decision will also make it significantly harder for CTP insurers to assert legal professional privilege over these types of reports unless the clear and dominant purpose of the request for the reports is for anticipated litigation. It will drastically change the way CTP insurers request the reports in future claims, particularly in relation to the procedure, terminology and timing of the report requests.
Natasha Budimski is a Senior Associate at Mellor Olsson Lawyers, where she has been an indispensable member of their Motor Vehicle Accident and Personal Injury team since 2015. She was admitted to practice as a barrister and solicitor of the Supreme Court of South Australia in 2009 after graduating from the University of Adelaide with a Bachelor of Laws and International Studies. Natasha has gained a varied body of experience, working in both private practice and community legal centres, specialising in the areas of motor vehicle accidents, public liability, workers' compensation matters and family law. During this time, she has focused on building strong relationships with her clients to deliver the best possible outcomes in their matters. Natasha is a member of the Law Society of South Australia, the Law Council of Australia and sits on the Australian Lawyers Alliance Committee SA branch, as well as being on the Board of Family Violence Legal Service Aboriginal Corporation.
The views and opinions expressed in these articles are the authors' and do not necessarily represent the views and opinions of the Australian Lawyers Alliance (ALA).