Investigation reports and litigation privilege in motor vehicle accidents: The case of Douglas v Morgan

Mellor Olsson Lawyers was recently involved in the case of Douglas v Morgan [2019] SASCFC 76. This was a Full Court of the Supreme Court decision which resulted in a significant precedent regarding legal professional privilege in relation to motor vehicle accident claims.

What types of legal privilege are there?

There are two types of circumstances in which privilege can exist – litigation privilege and advice privilege.

Although both are relevant, the case of Douglas v Morgan & Ors dealt specifically with applying litigation privilege to investigation reports obtained by the CTP insurers in motor vehicle accident claims.

What is ‘litigation privilege’?

Litigation privilege protects confidential communications and documents which have been prepared for the “dominant” or primary purpose of actual or anticipated legal proceedings.

The litigation protection applies to communications between a client and their lawyer and may also apply to certain categories of communications between a lawyer and a third party.

The facts of Douglas v Morgan & Ors

In the case of Douglas v Morgan & Ors, the matter was first heard before a Master of the District Court in March 2018. The evidence heard before the Court at that time 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 whilst 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 BAC of 0.076 at the scene of the accident.
• On 21 December, Mellor Olsson sent a letter to Allianz advising that we were acting for the plaintiff and the plaintiff would be seeking medical treatment. We also requested a claim number.
  
• On 27 December 2012, the claims manager handling the claim at that time appointed a firm of investigators to undertake a detailed inquiry into the circumstances of the accident. Amongst other things, the claims manager had asked the investigator to obtain comprehensive statements from all witnesses to the accident and photographs of the scene, along with providing a detailed account of the circumstances of the collision, based on the statements taken from the witnesses and the driver.
  
• On the same day that the report was requested, the claims manager responded to us by letter stating that the insurer was attempting to obtain details regarding the accident, and would communicate further as soon as possible. The letter also requested other information and records about the plaintiff.
• On 18 January 2013 and 21 February 2013, we wrote again to Allianz seeking information as to the status of Allianz’s investigations.
• The claims manager received the report from investigators on 26 February 2013.
• We received a response from Allianz dated 12 June 2013 raising 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.
• In April 2017, Jones Harley Toole filed a List of Documents in Court, asserting legal professional privilege over an investigation report dated 21 February 2013.
• We subsequently sought production of the report, claiming that legal professional privilege did not apply given how early on it had been obtained by Allianz and as such, could not have been obtained for the dominant purpose of anticipated legal proceedings.
• On 26 June 2017, Jones Harley Toole wrote to us claiming litigation privilege over the report and any attached statements and photographs.

In light of Allianz’s position, we filed an application on behalf of the plaintiff seeking production of the report on the basis that litigation privilege did not apply.

We argued on behalf of the plaintiff that litigation was not, and could not, reasonably have been anticipated at the time the investigation report was requested by Allianz and the purpose of the request of the report was to only obtain information about the circumstances of the collision.

This was evidenced by how early the report had been obtained, the date of the request for the report and the details the claims manager included in the request form, which did not mention any purpose of using the report to obtain legal advice or for anticipated litigation.

In response, Jones Harley Toole maintained their argument that the dominant purpose in Allianz requesting the report was for the report to be used in “reasonably anticipated litigation”, and the claims manager had undertaken the proper and usual policies and procedures to request the report.

The defendant specifically relied on two affidavits, one sworn by a current manager at Allianz, and one sworn by the claims manager that requested the report, who no longer worked for Allianz. The affidavit evidence was based on the policies and practices of the insurer and assumed that those procedures had been followed in this case.

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 been under the influence of any substances and
• Requesting the report between Christmas and New Year, which “smacks of importunity”.

Mellor Olsson appealed the Master’s decision.

First Appeal

The appeal was heard by Judge Bochner in the District Court of South Australia.

The Judge found 12 specific errors with the Master’s reasoning in coming to his conclusion, and held that he had placed undue weight on some factors and insufficient weight on others, such as Allianz failing to provide direct evidence for the purpose of the report and elevating Allianz to a position superior to other litigants.

The result of 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, with the Judgement being handed down on 1 July 2019.

Did the Full Court rule that the report was subject to litigation privilege?

No.

The Full Court upheld Judge Bochner’s decision and ruled that:

1. On the evidence, there were two purposes of obtaining the investigation report, with the immediate and first purpose being for Allianz to make a determination as to liability and attempt to resolve the claim; and the secondary purpose being, if resolution could not be achieve, for solicitors to use in litigation.
2. 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.

Allianz have a limited period during which they can seek leave to appeal to the High Court of Australia. It is currently unclear whether they will choose to do so.

If they choose not to proceed with an appeal, Allianz will be required to release the investigation report to us which will assist in progressing the plaintiff’s claim and addressing any issues of liability.

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 or their solicitors, which has placed them in a disadvantaged position from the outset.

This has long been a contentious issue in motor vehicle accident cases in South Australia, with plaintiffs and their lawyers often having to either simply accept that 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 now has the potential to result in many investigation reports previously obtained by insurers in motor vehicle accident claims being sought, and released, to plaintiffs and their solicitors.

This precedent will also drastically change the way CTP insurers request these types of investigation reports in future claims, particularly in regard to the procedure followed when requesting the report, the terminology used in the report request and the timing of when insurers will decide to obtain these types of reports.