Forrest and Forrest v Insurance Australia Limited t/as NRMA Insurance [2012] ACTSC 47
Introduction
In Forrest and Forrest v Insurance Australia Limited t/as NRMA Insurance [2012] ACTSC 47, the ACT Supreme Court considered an application for an order under rule 651 of the Court Procedure Rules 2006 to grant the applicants access, by way of preliminary discovery, to the report of a forensic fire expert engaged by the respondent.
Summary of the facts
On 25 October 2010, a house fire destroyed the contents of a property rented by the applicants which they had insured under a home contents insurance policy issued by the respondent. The applicants made a claim under the policy which was refused by the insurer on the grounds that the applicants had not been truthful in statements made in relation to the claim and had knowingly made false statements in support of it.
The letter from the insurer notifying the applicants of its decision specified that it had engaged the services of a forensic fire expert to determine the cause of the fire. Portions of the report were quoted in the letter. The insurer indicated that the report had given it reason to conclude that the fire had been deliberately lit. The applicants sought a copy of the report to assist them in deciding whether they would have reasonable prospects of success if they commenced proceedings against their insurer.
On the question of whether the reports were protected by privilege, the ACT Supreme Court affirmed the concession made by the insurer, that the reports were not privileged as the dominant purpose of the reports was to decide whether or not to meet the insurance claim, rather than any litigation. Indeed, at the time the reports were commissioned, litigation was not contemplated. Nevertheless, had the reports been privileged, the privilege would have been waived by the insurer's letter to the applicants disclosing significant portions of the report.
The insurer relied on two arguments:
- The applicants already had sufficient information to decide whether to start a proceeding against the insurer, and accordingly rule 651 was not available to them.
- The court should exercise its discretion not to require production of the reports pursuant to the principles developed in Markus v Provincial Insurance Co Limited (1983) 25 NSWCCR 1 (the "Markus discretion").
Decision
Master Harper of the ACT Supreme Court held that the applicants had sufficient information to decide whether to start a proceeding against the insurer. Therefore, the circumstances did not meet the requirements for the application of rule 651 and the court did not have the power to order the respondent to produce the reports. However, Master Harper noted that if he had the discretion to order production of the report, he would have been minded to do so despite the submission regarding the Markus discretion since the insurer had disclosed the existence of the report and quoted portions from it in a letter to the applicants.
Implication
The decision in Forrest and Forrest v Insurance Australia Limited is a salient reminder of the importance of refraining from disclosing any part of a loss assessment report in communications with the insured should the insurer seeks to invoke the Markus discretion in the future. Whilst the insurer was successful on this occasion because proceedings had not yet been issued, in the event of proceedings being issued, the assessor's report would likely be discoverable.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
