Loss adjuster's reports: when will legal professional privilege be attached?

In brief - Reports prepared for dominant purpose of providing advice in relation to litigation

In the matter of Ensham Resources Limited v AIOI Insurance Company Limited [2012] FCA 710 (Ensham), the Federal Court of Australia has recently reaffirmed the circumstances which attract legal professional privilege in reports by loss adjusters. In Ensham the court found that legal professional privilege attached to the loss adjuster's reports, as it was satisfied that they were prepared for the dominant purpose of providing advice in relation to litigation (at [51]).

Further, the court found that the circumstances surrounding the claim could be recognised as highly conducive to litigation and that litigation was a real possibility in the minds of the solicitors when the loss adjuster was first being retained (at [50]).

Facts

Flooding causes significant damage to coal mine and interruption of business During January 2008 there was heavy rainfall around the flood plain of the Nagoa River in Queensland. The Nagoa River and Old Winton Creek overflowed as a result, breaching levies surrounding various pits of a coal mine owned and operated by Ensham Resources Pty Ltd (Ensham). Ensham suffered significant damage to its property, as well as consequential business interruption.

On 22 January 2008, Ensham gave notice under its industrial special risk insurance policy (the policy) held with insurer AIOI Insurance Co Ltd (the insurer) of a potential claim. Ensham made claims under the policy between 18 August 2008 and 8 April 2010. The insurer did not make any payments under the policy and Ensham commenced proceedings to recover its loss.

Loss adjuster retained by insurer and then by insurer's solicitors The insurer retained a loss adjuster to investigate the claim prior to retaining solicitors. The solicitors who were subsequently retained to provide legal advice recommended on 13 February 2008 that the insurer withdraw its retainer with the loss adjuster to...