Actone Holdings Pty Ltd v Gridtek Pty Ltd  NSWSC 991
The Supreme Court has recently had cause to consider the status of legal privilege and its potential waiver in circumstances where there has been service of an expert’s report that referred to the unserved report of another expert. Issues of procedural balance and fairness between the two parties in the context of court case management were considered and applied to the individual circumstances of a case that ultimately refused to deny a party’s claim of privilege.
In October 2001, a fire caused damage to a part of a shopping complex in St Ives, Sydney. The plaintiff, Actone Holdings Pty Ltd (“Actone”) sued the defendant, Gridtek Pty Ltd (“Gridtek”), alleging negligence on the part of the defendant, causing the fire. Experts were qualified by both parties to provide opinion about the issues in dispute.
During the course of the proceedings, by orders made by the Court or consented to by the parties for the service of expert reports, the plaintiff served three reports of Dr Colin Grantham and two of Mr David Plaister, of various dates. Contained in some, though not all, of these reports was reference to the expert report of the late Dr K A Walshe, which had never been served by the plaintiff.
The defendant filed a notice of motion seeking an order that the plaintiff provide it with a copy of Dr Walshe’s expert report. The motion was opposed by the plaintiff on the basis that the report was a privileged document and that privilege had not been waived.
The plaintiff argued the following points in opposition:
- Any report referring to the report of Dr Walshe was provided to Gridtek under compulsion of law so that no waiver of any privilege otherwise attaching to it had occurred;
- The plaintiff had not yet sought to tender any of the reports of Dr Grantham or Mr Plaister that make reference to Dr Walshe’s report so it could not yet be said that the plaintiff had waived any privilege at all.
Given that Dr Walshe’s report fell into the definition under s 119 of the Evidence Act 1995 (NSW), there was no debate as to whether the report was a privileged document.
On the compulsion of law issue however, authority was found in s 122 of the Evidence Act 1995 (NSW):
“122 Loss of client legal privilege: consent and related matters
(5) A client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because:
(a) the substance of the evidence has been disclosed:
(iii) under compulsion of law…”
In determining whether privilege had been waived in these circumstances, Harrison J looked to the case law in Akins and Others v Abigroup Pty Ltd  NSWCA 8; (1998) 43 NSWLR 539 (“Akins”) and Sevic v Roarty (1998) 44 NSWLR 287 (“Sevic”) which had previously dealt with similar issues.
In Akins, the Court of Appeal determined that the disclosure of an otherwise privileged witness statement in accordance with an order of the court was a disclosure under “compulsion of law” within the meaning of s 122(2)(c). Even if the order had been termed a procedural direction, privilege would not have been waived.
The decision of Sevic later that year supported Akins on this point, with Powell JA noting that the waiver is not to be implied or imputed where the document was delivered pursuant to an order of the court or otherwise, under the compulsion of law. However, where the document is later tendered as evidence on hearing or used in a similar fashion, it may then be unfair to the other party not to treat the privilege as having been waived.
Harrison J also noted the doubt expressed by Garling J about the continuing significance of the above decisions in his judgment in Gillies v Downer EDI Ltd  NSWSC 1323 (“Gillies”). Garling J noted that with the subsequent amendments to s 122 and addition of s 131A of the Evidence Act, certain distinctions had been blurred. His Honour interpreted s 131A to effectively require the Court to determine a pre-trial claim for privilege as though the claim was made in the course of adducing evidence at trial. Therefore, insofar as it relates to the question of loss of privilege, there should be no distinction between an expert report served “under compulsion of law” prior to hearing and the calling of witnesses and an expert report relied upon during the hearing once a witness has been called. Garling J considered the application of Sevic to be impractical to the efficient running of litigation and contrary to the principle of “just, quick and cheap” litigation within the court system.
However, Harrison J ultimately followed the decisions of Sevic and Atkins which he interpreted as a representation of the procedural and ideological harmony that can be achieved between the application of case management tools in modern commercial litigation and the adjudication of fairness to the parties in litigation.
On these facts, as neither Dr Grantham nor Mr Plaister purported to rely on Dr Walshe’s report or to incorporate his reasoning into their opinions or the conclusion at which they arrived, there was no inconsistency between reliance upon anything contained in Dr Walshe’s report and the maintenance of privilege. The defendant would not be prejudiced unless or until the plaintiff sought to introduce the reports of Dr Grantham or Mr Plaister into evidence.
Whether or not the plaintiff would have waived the privilege it sought to maintain over Dr Walshe’s report would ultimately depend on whether or not it decided to use or employ any of its expert reports that referred to it at trial.
His Honour also rejected the argument advanced by the defendant that, pursuant to 31.27(1) of the Uniform Civil Procedure Rules 2005, it was not sufficient for the expert reports to simply refer to reports utilised in support of the opinion and that they were required to provide copies of any such materials. His Honour concluded that, as per the parentheses in the provision, an alternative option existed, allowing reference to be made to them in the body of the report.
Harrison J determined that the plaintiff had not waived privilege over the report of Dr Walshe that had been referred to in the reports of Dr Grantham and Mr Plaister and as such, the defendant’s motion was dismissed with costs.
This decision affirms the longstanding position that where a party has served an expert’s report that makes reference to the unserved expert report of another, the question of whether privilege has been waived over the unserved report is to be determined at trial, if and when that party seeks to tender the report.
Notwithstanding this decision, extreme care should always be taken when briefing experts with documents the disclosure of which to other parties is not desired. Where expert reports which are ultimately served purport in any notable way to rely on the unserved report of another expert, debate will inevitably loom over whether the test of fairness has in fact been satisfied in allowing privilege to still be claimed. On a different set of facts that suggest that the bundle of expert reports, both served and unserved, are substantively linked in an inextricable manner, privilege over the unserved reports may very well be placed in jeopardy.
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