Fairhead v West Australian Newspapers Ltd  WASC 368
"if the expert has not noted the assumptions of fact upon which the opinion is based the privilege will be lost with the delivery of the report, but where the assumptions of fact are set out the privilege is not waived"
Solicitors should think carefully before disclosing sensitive information to experts in an instruction letter. This judgment demonstrates that if an expert fails to set out the assumptions of fact on which his or her opinions are based, the client legal privilege over the information may be waived.
Alan Fairhead, a real estate agent in Donnybrook, Western Australia, advertised a farm for sale in 2002. The West Australian newspaper published an article alleging that his sales tactics were misleading. According to the article, Mr Fairhead greatly exaggerated the number of apples on the farm, implying a higher value than its actual worth; and his employers at Donnybrook Real Estate knew of this.
Mr Fairhead and Donnybrook Real Estate sued for defamation, claiming that the article cost the agency customers and damaged its reputation. After years of interlocutory proceedings and delays, they engaged a valuation expert to prepare an expert report as to the value of the farm.
The expert's report set out the expert's instructions, and the assumptions of fact on which his opinion was based, but did not attach the instruction letter.
At trial, a controversy emerged: the letter of instruction contained some sensitive information which the newspaper's lawyers wished to use. It would have formed key evidence in the trial. Mr Fairhead's solicitors claimed that the instruction letter was subject to client legal privilege.
When does client legal privilege apply?
Under the uniform Evidence Acts, client legal privilege generally prevents the content of communications between parties and their legal representatives (such as letters, emails, and verbal conversations) from being produced as evidence. This allows parties to have full and frank discussions with their representatives in confidence. Privilege extends to communications with third parties (including expert witnesses) where the 'dominant purpose of the communication is promoting the client's cause and providing advice'.1
However, waiver of privilege can be imputed where a party knowingly and voluntarily discloses part of a privileged communication. Justice Martin cited a 1999 High Court decision which called this the 'inconsistency' principle: if a party discloses part of an otherwise privileged communication, this is inconsistent with the assertion that the whole of the communication is privileged.2
Justice Martin noted that determining 'inconsistency' should be informed by considerations of 'fairness', citing a 2003 Federal Court decision from Justice Lindgren:
The newspaper argued that the Court should apply the inconsistency principle and impute waiver of privilege over the instruction letter. Mr Fairhead argued that privilege should be maintained, since the expert's report set out what his instructions were, and the basis of his assumptions.
Justice Martin cited a New South Wales Supreme Court decision which established that:
In this instance, Justice Martin found that:
Justice Martin therefore agreed with Mr Fairhead's solicitors, and found that privilege over the letter was not waived.
In some jurisdictions this issue can never arise because it is mandatory for experts to attach the letter of instruction to their report.5
However, the principles established in Makita6 require that so far as an expert opinion is based on facts, either observed, assumed or instructed, those facts must be identified (by the expert) and somehow proved. This requirement has been formalised in the rules for experts in most jurisdictions.7
Solicitors should therefore always think carefully before disclosing information to experts. Given that the expert's conduct could cause privilege to be waived, as a general rule nothing should be given to an expert or provided in a final letter of instruction that solicitors wouldn't like the other side to see.
Our Expert Matters article from November 2015 covered a similar case in which the NSW Supreme Court held that communications with an expert to suggest changes of form and admissibility do not, in themselves, constitute an automatic waiver of privilege: Expert Matters: Are communications with experts legally privileged?
1 Evidence Act 1995 (Cth) ss 118 and 119.
2 Mann v Carnell (1999) 201 CLR 1 at 29.
3 Australian Securities & Investments Commission v Southcorp Ltd  FCA 804 at 441-442.
4 Kentish Council v Bellenjuc Pty Ltd  TASSC 58 at 52.
5 The Supreme Court of South Australia requires a party to provide copies of written communications and details of any oral communications relevant to the preparation of an expert's report between the party or representatives of the party and the expert, at the request of the other party (South Australia Supreme Court Rules 2006, s 160(5)(c)). The Administrative Appeals Tribunal requires the letter of instruction or details of the questions or issues the person was asked to address, either in the body of the report or as an annexure (see the Administrative Appeals Tribunal's Persons Giving Expert and Opinion Evidence Guideline, rule 4.1(b)).
6 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705.
7 Schedule 7 of the UCPR states that "An expert's report must (in the body of the report or in an annexure to it) include the following... the facts, and assumptions of fact, on which the opinions in the report are based (a letter of instructions may be annexed)". Practice Note CM 7 in the Federal Court requires that an expert's report must "set out separately each of the factual findings or assumptions on which the expert's opinion is based".
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.