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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.
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