Litigation Privilege And Insurer-commissioned Expert Reports: A Recent Reaffirmation

Introduction

A recent High Court judgment has reaffirmed the protection afforded by litigation privilege to expert reports commissioned by insurers in the context of pending litigation. The case concerned an application to compel the disclosure of a preliminary report prepared by an agricultural loss adjuster, which had been commissioned by the respondent’s insurer to assess the merits of a counterclaim. The court dismissed the application, holding that the report was protected from disclosure.

The main issue

The applicant sought to compel the respondent to produce a preliminary expert report for inspection. The report had been compiled by a loss adjuster following an inspection of the applicant’s farming premises. The respondent refused disclosure, claiming that the report was privileged as it had been prepared in contemplation of litigation.

The central question before the court was whether the report attracted litigation privilege and was therefore protected from disclosure.

The court’s findings

The court applied the well-established two-fold test for litigation privilege. First, the document must have been obtained with the dominant purpose of submitting it to a legal adviser for legal advice or for use in litigation. Second, litigation must have been pending or contemplated as likely at the time the document was brought into existence.

On the facts, the court found both requirements to be satisfied. The report had been commissioned by the respondent’s insurer, through its attorneys, for the express purpose of assessing the merits of the applicant’s counterclaim, advising on whether it should be defended, and providing tactical litigation advice. This was corroborated by the written letter of instruction. Furthermore, the counterclaim had already been launched several months before the report was commissioned — litigation was therefore clearly pending.

The court further confirmed that litigation privilege is not confined to communications between a litigant and their own attorney. It extends to communications between a litigant’s legal adviser and third parties — including expert witnesses, loss adjusters, and investigators — provided those communications were made for the dominant purpose of pending or contemplated litigation.

Importantly, the court rejected the argument that the factual content of the report could be separated from the privileged purpose for which it was prepared. The factual findings were held to be embedded in, and inseparable from, the privileged forensic exercise for which the report was commissioned.

Additionally, the court noted that the report was expressly marked as a preliminary report prepared in contemplation of litigation. Since the respondent had confirmed it did not intend to call the expert as a witness at trial, there was no obligation to disclose the report under the rules governing expert evidence.

Finally, the court found that the applicant had failed to establish the relevance of the report — no explanation had been provided as to why the report was required to advance the applicant’s case or to undermine the respondent’s case.

Conclusion: importance for the insurance industry

This judgment is a welcome reaffirmation of the principles that protect insurer-commissioned expert reports from disclosure.

Where an insurer instructs a loss adjuster or expert through its attorneys, for the purpose of evaluating the merits of a claim or counterclaim in pending or contemplated litigation, the resulting report will attract litigation privilege. An opposing party cannot circumvent the privilege by arguing that only the “factual” portions of a report should be disclosed. Where facts are gathered and expressed for the dominant purpose of a privileged forensic exercise, they form part of the privileged communication.

The decision also underscores the importance of proper documentation. The court placed weight on the written letter of instruction, which clearly articulated the litigation purpose. Insurers should ensure that instructions to experts are documented in terms that clearly record the dominant purpose of the engagement. Similarly, the express marking of a report as a preliminary, privileged document prepared in contemplation of litigation reinforces its protected status and remains good practice.

In an industry where expert reports are routinely commissioned to inform claims decisions and litigation strategy, this judgment provides reassurance that such reports — when properly commissioned and documented — will remain shielded from disclosure.