Are Draft Reports Protected by Legal Professional Privilege? Courts Still Uncertain

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The recent case of Malone v La Playa Nominees Pty Ltd [2021] VSC 271 shows that some courts are more likely to consider reports privileged when explicitly attached to written communication with lawyers. This finding flies in the face of conventional wisdom that lawyers should avoid written communication about expert reports for the protection of legal privilege.  

This blog covers the Supreme Court of Victoria’s findings with respect to privilege in various kinds of documents and discusses the Court’s rationale for maintaining the privilege of communicated draft expert reports.

Background

The Plaintiff and the Defendant owned adjacent properties at number 6 and number 8 Shandford Avenue, Brighton. The Plaintiff had contracted Mr Racovalis and his company to make renovations to the plaintiff’s property in 2017 and 2018, including to a wall adjoining the two properties.

A dispute arose concerning the portions of land to which the plaintiff and defendant were entitled, and the extent of each party’s ownership of the wall. The plaintiff called upon Mr Racovalis as a lay as well as expert witness. Mr Racovalis produced an expert report detailing his observations and the history of the boundary’s construction.

The defendant filed a subpoena for various documents, in particular “all correspondence including emails and attachments to such emails between solicitors at the law firm Nicholson Ryan and [the expert]”. [2] The plaintiff claimed privilege over these documents which it particularised in a “Disputed Documents List”.

The Doctrine of Privilege

The court found that Common Law, not the Evidence Act 2008 (VIC), should apply since the person claiming privilege in the documents is not the same person subject to the subpoena (the solicitor rather than the expert).

The court therefore looked to the principles of the “dominant purpose test” outlined in Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Limited (No 4) [2014] FCA 796:

  1. The relevant issue is whether the documents or communications were created for the dominant purpose of the litigation (for example, with a view to obtaining legal advice or evidence for use in the litigation);
  2. The plaintiff bears onus of claim to privilege regarding each factual element;
  3. The relevant time for ascertaining privilege is at the time of the original communication;
  4. The relevant purpose depends on the context: it may be determined according to the will of the author or the initiator of the communication;
  5. Purpose is objective: can be determined from the content of the document;
  6. The purpose must be the predominate one, rather than one of many;
  7. All or parts of the document may be privileged; and
  8. The content of a document may make the document privileged, even where the document itself does not satisfy the dominant purpose test.

Findings on the documents

Communications about the subpoena and how to respond to it:

  • Not Privileged as the documents do not go to the dominant purpose of the litigation, and do not affect the substance of Mr Racovalis’ evidence.

 

‘Administrative’ documents, e.g. communications about meetings:

  • Privileged even if only ‘administrative’ in nature since they relate to meeting Mr Racovalis to discuss his report. The communications were therefore produced predominately in connection with the litigation.

 

Draft reports never attached to communications between expert and solicitor:

  • Not privileged as the documents were produced unilaterally by the expert for their own purposes and never communicated to the solicitor. [98]

 

Draft expert report attached to communications with solicitors:

  • Privileged since the draft was communicated to the solicitor for their comment and therefore for the dominant purpose of litigation. [97]

 

Email between solicitor and expert about the 3D designer who provided drawings for the expert’s report:

  • Privilege waived since the confidentiality of lawyer-solicitor communications is inconsistent with the report’s reliance on the communications. The privileged status of the communications in other words has been compromised by the fact that they “underpin or influence the Racovalis Report”.

Legal Uncertainty

The issue of waivers of privilege with respect to materials associated with the final expert report comes from the principles in New Cap Reinsurance Corp Ltd (in liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258 and Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 7) (2008 FCA 323. These cases consider the fairness to litigators of obscuring information that is “reasonably necessary to understanding the report”.

If the court can thoroughly comprehend the report without further reference to associated documents, then the associated documents maintain their privileged status. [77] If documents subject to a privilege claim are required to understand the final report, then those documents will lose or waive their privileged status. For example, draft reports communicated to the solicitor may form a key part of understanding the final report and so may lose their privileged status— “to maintain privilege in such communications is inconsistent with the party relying on the expert report”. [79]

In this matter, the court did not find that privilege in the communicated draft reports had been waived due to their significance to the final Racovalis Report but instead upheld their privileged status. The question of privilege in communicated draft expert reports therefore continues to be a point of uncertainty or at least a question requiring case-by-case examination (i.e. whether the drafts in a particular instance are required to understand the final report).

For a fuller discussion of this issue read our Short Guide to Privilege in Expert Witness Reporting.

Takeaways

This case demonstrates that recorded lawyer-expert communications about reports and materials may in fact prevent the disclosure of those documents.

Nevertheless, lawyers should ensure that experts understand the rules of privilege surrounding the production of their report, particularly the risk that they may have to produce all their report drafts and materials for examination in court. This is a particularly significant step given the uncertainty of the law on the privilege status of draft reports.

The rationale of the Victorian Supreme Court in this matter suggests that future consideration of whether communicated draft expert reports are privileged may fall on either side depending on whether the drafts are critical to understanding the final report, i.e. on a case-by-case basis.

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