FEDERAL COURT OF AUSTRALIA Barrett Property Group Pty Ltd v Dennis Family Homes Pty Ltd (No 2) [2011] FCA 276 Citation: Barrett Property Group Pty Ltd v Dennis Family Homes Pty Ltd (No 2) [2011] FCA 276 Parties: BARRETT PROPERTY GROUP PTY LTD (ACN 088 015 267) and SRS PROPERTY HOLDINGS PTY LTD (ACN 096 513 218) v DENNIS FAMILY HOMES PTY LTD (ACN 056 254 249) File number: VID 1244 of 2005 Judge: BROMBERG J Date of judgment: 25 March 2011 Catchwords: EVIDENCE – Admissibility – whether communication excluded by s 131 of the Evidence Act because made in an attempt to negotiate a settlement – meaning of "negotiate a settlement" – whether an assertion of a person's rights or position can constitute an attempt to negotiate a settlement – whether exclusion in s 131(2)(g) attracted – purpose of s 131(2)(g) – s 131(2)(g) only attracted where exclusionary rule in s 131(1) would operate to allow a party which has adduced evidence, to use the exclusionary rule as an instrument for misleading the court. Legislation: Evidence Act 1995 (Cth) ss 131, 131(1), 131(1)(a) and (b), 131(2), 131(2)(g) and 131(5) Cases cited: Austotel Management v Jamieson (1995) 57 FCR 411 Barrett Property Group Pty Ltd v Dennis Family Homes Pty Ltd [2011] FCA 246 Bhagat v Global Custodians Ltd [2002] NSWCA 160 Bloss Holdings Pty Ltd v Brackley Industries Pty Ltd [2005] NSWSC 756 Brown v Commissioner of Taxation (2001) 187 ALR 714 Buckinghamshire County Council v Moran (1989) 3 WLR 152 Chandler v Water Corporation [2004] WASC 95 DTC No 1 Pty Ltd v Matthew [2009] NSWSC 1280 Kalambaka Ptd Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 [2009] NSWLEC 57 Korean Air Lines Co Ltd v Australian Competition and Consumer Commission (No 3) [2008] FCA 701 Lohar Corporation Pty Ltd v Dibu Pty Ltd (1976) [1] BPR 97,00014 Moran v Moran (No 3) [2000] NSWSC 151 Mulkearns v Chandos Developments (No 4) (2005) 12 BPR 22,993 Pitts v Adney (1961) 78 WN (NSW) 886 Silver Fox Co Pty Ltd v Lenard's Pty Ltd (No 3) (2005) 214 ALR 621 South Shropshire District Council v Amos [1987] 1 All ER 340 Date of hearing: 31 March 2010 Date of order: 16 April 2010 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 58 Counsel for the Applicants: Mr C Golvan SC Solicitor for the Applicants: Middletons Counsel for the Respondent: Mr P Wallis Solicitor for the Respondent: Phillips Ormonde Fitzpatrick IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 1244 of 2005 BETWEEN: BARRETT PROPERTY GROUP PTY LTD (ACN 088 015 267) First Applicant SRS PROPERTY HOLDINGS PTY LTD (ACN 096 513 218) Second Applicant AND: DENNIS FAMILY HOMES PTY LTD (ACN 056 254 249) Respondent JUDGE: BROMBERG J DATE OF ORDER: 16 April 2010 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The applicant's notice of motion of 11 March 2010 is dismissed. 2. The Court rules that the following evidence is inadmissible at trial: (i) Paragraphs 8-11 of the Affidavit of Anthony John Roberts sworn 21 December 2009; and (ii) Exhibits AJR16, AJR17 and AJR18 to the Affidavit of Anthony John Roberts sworn 21 December 2009. 3. Costs of and incidental to the notice of motion be reserved. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 1244 of 2005 BETWEEN: BARRETT PROPERTY GROUP PTY LTD (ACN 088 015 267) First Applicant SRS PROPERTY HOLDINGS PTY LTD (ACN 096 513 218) Second Applicant AND: DENNIS FAMILY HOMES PTY LTD (ACN 056 254 249) Respondent JUDGE: BROMBERG J DATE: 25 March 2011 PLACE: MELBOURNE REASONS FOR JUDGMENT introduction 1 The first applicant is a designer, builder and retailer of residential homes. It trades as "Porter Davis Homes". The first and second applicants claimed ownership of the copyright in particular house plans which are built and sold as Porter Davis Homes. The applicants alleged that the respondent builder has infringed their copyright. 2 The applicants' claims for relief were heard and determined by Dodds-Streeton J: Barrett Property Group Pty Ltd v Dennis Family Homes Pty Ltd [2011] FCA 246. Prior to the commencement of the trial, the applicants sought an order that they be permitted to rely upon particular evidence at trial. That evidence was paragraphs 8 to 11 and Exhibits AJR-16, AJR-17 and AJR-18 to the affidavit of Anthony John Roberts sworn 21 December 2009 ("the disputed evidence"). 3 There was a controversy between the parties as to whether the disputed evidence was admissible or was to be excluded by reason of the operation of s 131 of the Evidence Act 1995 (Cth) ("the Evidence Act"). That controversy, raised by the applicants' notice of motion of 11 March 2010 was referred to me on the basis that it was preferable that the trial judge not consider the evidence in question unless its admissibility was confirmed. 4 On 16 April 2010, I determined that the disputed evidence is excluded by s 131(1) of the Evidence Act. That is so because the disputed evidence is evidence of communications made and documents prepared in connection with attempts to negotiate a settlement of a dispute and thus within the scope of s 131(1) of the Evidence Act. I further determined that the exclusion found in s 131(2)(g) of the Evidence Act, and relied upon by the applicants, was not applicable. 5 I made orders excluding the use of the disputed evidence. As these reasons for judgment reveal the content of the disputed evidence, I determined that the publication of my reasons should await the final resolution of the proceeding by Dodds-Streeton J. That event having now occurred, these reasons for judgment have today been published. section 131 of the evidence act 6 Section 131(1) of the Evidence Act provides: (1) Evidence is not to be adduced of: (a) a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute; or (b) a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute. 7 Section 131(2) provides that subs (1) does not apply in particular circumstances. Relevantly, the applicants' rely on the exclusion found in paragraph (2)(g) which is in the following terms: (2) Subsection (1) does not apply if: …. (g) evidence that has been adduced in the proceeding, or an inference from evidence that has been adduced in the proceeding, is likely to mislead the court unless evidence of the communication or document is adduced to contradict or to qualify that evidence. 8 Section 131(5) provides that the reference in s 131(1) to a dispute is a reference to a dispute of a kind in respect of which relief may be given in an Australian or overseas proceeding. the relevant facts 9 In support of their notice of motion, the applicants relied on an affidavit of Anthony Brooke Watson of 11 March 2010. In that affidavit, Mr Watson exhibits an affidavit of Anthony John Roberts of 21 December 2009 ("the Robert's affidavit"). The Robert's affidavit was intended to be relied upon by the applicants at trial. 10 In opposition to the notice of motion, the respondent relied upon an affidavit of Albert George Dennis of 24 March 2010 ("the Dennis affidavit"). 11 In the course of argument I was referred to other affidavit evidence which was intended to be relied upon at trial. That evidence was: The affidavit of Jodie Wilson of 3 December 2008 ("the Wilson affidavit"); An affidavit of Kelvin Rowley of 23 December 2008 ("the first Rowley affidavit"); and An affidavit of Kelvin Rowley of 6 April 2010 ("the second Rowley affidavit"). 12 No deponent was cross-examined. On the basis of the evidence to which I have referred, the following facts and matters appear to be germane to the issues which I have determined. 13 On 4 July 2005, the applicants' solicitors sent a letter of demand to the respondent. The letter asserted that the respondent had breached the applicants' copyright in relation to Porter Davis Homes known as "Seattle", "Memphis" and "Aberdeen". The alleged infringements were said to have occurred in relation to a home marketed and sold by the respondent under the name "Executive Range – Grange". The letter alleged that the Grange plans were created by reproducing substantial parts of the plans and copyright owned by the applicants. In particular, the letter suggested that the infringement related to a key feature of the applicants' homes being - that the alfresco dining area of those homes is located at the rear of the home, in an open area incorporating the kitchen, family room, dining/meals area and, in some circumstances, an adjoining lounge and dining room, as well as a rumpus room at the rear. 14 The letter of demand included demands that the respondent provide undertakings that it would refrain from further infringement and provide a statutory declaration detailing the number of Grange houses that it had built, sold or had orders for. The letter reserved the applicants' rights in relation to the recovery of damages suffered or the recovery of profits made. It concluded by warning that a failure to comply with the demands made in the time specified would result in the issue of legal proceedings. 15 By letter of 13 July 2005, the respondent's solicitors wrote to the applicants' solicitors expressing their client's denial of any infringement of the applicants' copyright. Correspondence between solicitors of 15 July and 18 July 2005 confirmed the respective positions of the parties and addressed the issue of service of anticipated legal proceedings. 16 Albert Dennis is a director of the respondent. Mr Dennis deposed that he reviewed a copy of the letter of demand shortly after it was received. Having reviewed the letter, Mr Dennis had initial enquiries made of a number of employees of the respondent. On the basis of the information provided to him, Mr Dennis formed the view that the allegations made in the letter of demand by the applicant were misconceived. 17 On 19 July 2005 Mr Dennis made two communications which the applicants wanted to rely upon at trial and which form part of the disputed evidence. The order in which those communications occurred is not apparent and the content of the telephone communication is somewhat disputed. 18 Mr Dennis sent a facsimile which is Exhibit AJR-16 to the Robert's affidavit. The facsimile contained a single page of a brochure for a home called "Carrington" with a picture and floor plan. On the brochure appears a handwritten message from Mr Dennis directed to Mr Daniel Stutterd, a director of the applicants at that time. The facsimile was marked "without prejudice". It was addressed to "Danny" and signed by "Bert". In a series of short dot points, the hand written message gave a potted explanation of the origin of the Grange design. The explanation suggested that the plan for the Grange emanated from an evolution of the respondent's earlier house plans including the plan for the "Carrington", which had been purchased by the respondent in 1996 from "Executive". 19 Mr Roberts deposes in his affidavit that Mr Dennis telephoned him on 19 July 2005. He alleged that Mr Dennis told him that the respondent had purchased the plan used to create the Grange from Executive Homes Pty Ltd in 1996. That conversation was said by Mr Roberts to be recorded in a typed note which was exhibited as AJR-17 to his affidavit. Mr Dennis disputed the content of AJR-17 but did not give his account of the conversation. 20 Mr Dennis explained that he made the telephone call and sent the facsimile in order to explain to Mr Roberts and Mr Stutterd why he considered that the allegations made in the letter of demand were misconceived, and in the hope of persuading the applicants not to commence the proceeding threatened in the letter of demand. Mr Roberts said that in the conversation of 19 July 2010, Mr Dennis asked him to attend a meeting at the respondent's offices in order to show him the derivation of the Grange plan. 21 A meeting occurred on 25 July 2005 between Mr Dennis and Mr Roberts. The meeting was also attended by Mr Levinge, Mr Kelvyn Rowley and Mr Michael Sheehy of the respondent. No solicitors were present at the meeting. Mr Roberts said that there were no discussions regarding settlement of the dispute. He said that he was taken to the respondent's boardroom and shown a whiteboard with various plans affixed. He further said that Mr Dennis repeated the statement set out in Exhibit marked AJR-17 when pointing at the whiteboard. He said Mr Dennis told him that he had never been to Porter Davis' display homes and it was a company policy of the respondent that it does not copy. 22 Mr Dennis' account of the meeting was that during the meeting he explained to Mr Roberts his understanding of the development of the Grange design with a view to persuading Mr Roberts that the Grange design was independently conceived by an employee of the respondent's Shepparton office, without reference to the applicants' plans or houses. Mr Dennis deposed that he hoped to persuade Mr Roberts not to commence the proceedings threatened in the letter of demand. He said that at the conclusion of the meeting, Mr Roberts told him that he would consider the applicants' position in light of the matters discussed at the meeting and get back to him. 23 As Mr Roberts did not get back to Mr Dennis in the days following the meeting, Mr Dennis deposed that he wrote the letter dated 1 August 2005 which is exhibited to Mr Roberts's affidavit as AJR-18. That letter also forms part of the disputed evidence. 24 The letter of 1 August 2005 was addressed to Mr Roberts and was marked "without prejudice". It began by expressing disappointment that Mr Roberts had not "come back" to the applicant as he said he would at the meeting on Monday 25 July. Mr Dennis stated that that failure had caused the respondent to further check its position and "harden our attitude". 25 The letter went on to say that a formal interview had occurred with the respondent's employee in Shepparton who designed the Grange. It stated that before creating the design, the employee had not visited any of the applicants' displays nor seen the applicants' brochures or plans. It further asserted that the employee had no discussions with anybody about the applicants' design, the copying of that design or features of that design. Further, Mr Dennis stated that the respondent's Melbourne office had not sought to influence the Shepparton employee in the creation of the design. It was asserted that the design was an amalgamation of the best selling features of the respondent's houses dating back to 1993. 26 Thereafter the letter went on the attack. It noted that Mr Roberts had himself been formerly employed by the respondent and asserted a range of similarities between the respondent's house designs and some of those of the applicants. The letter demanded that the applicants end their threat of legal action and satisfy the respondent that they had not used the respondent's plans, concepts or philosophies in developing their "Aberdeen" and "Heywood 29" designs. The letter threatened that in the absence of compliance with its demands, the respondent would commence legal proceedings. 27 Mr Dennis deposed that he considered that the respondent had a claim against the applicant and that he wrote the letter of 1 August 2005 with a view to achieving settlement of the entire dispute between the parties, including the applicants' allegations against the respondent and the respondent's allegations against the applicants, on the basis that the parties would each walk away, rather than engage in litigation against each other. 28 Mr Roberts responded to Mr Dennis' letter of 1 August 2005 by a letter of 9 August 2005 marked "Private & Confidential". The letter commences by referring to the "without prejudice" letter of 1 August 2005. The letter stated that nothing in Mr Dennis' letter had changed the applicants' view about its allegations. It further denied the respondent's allegations that the applicants had copied the respondent's plans and stated that it was not concerned about any cross-claim that the respondent may bring. Mr Roberts rejected the respondent's demands made in its letter of 1 August 2005 and concluded: If you wish to meet again to try and sensibly resolve the issue which is really at stake here which is your Grange plan I am more than happy to do so. Our aim is not to seek retribution or damages. We want the copying to stop and wish to protect the hard work and substantial expenditure and investment we have made in coming up with innovative designs. We are totally committed to this goal. If however we have to do that through litigation then so be it. We regard it as yet further investment in our original designs. If however you are prepared to discuss terms under which DFC agrees to stop building any further Grange homes then it is worth us meeting, otherwise we will be wasting each others time and may as well simple leave it to the lawyers. reasoning Is the disputed evidence within the scope of s 131(1)(a) or (b)? 29 The applicants contend that the disputed evidence is not evidence which s 131(1) of the Evidence Act excludes. The applicants say that the communications made by Mr Dennis were no more than assertions of the respondent's rights aimed at making the applicants restrain from issuing proceedings. It is contended that the disputed evidence exhibits no conciliatory characteristics and contains no offer of compromise. Accordingly, the applicants argue that the impugned communications were not made or prepared "in connection with an attempt to negotiate a settlement of the dispute": s 131(1)(a) and (b). 30 The fundamental question is whether each of the impugned communications were connected with an attempt to negotiate a settlement of the dispute. 31 Whether or not there was an attempt to negotiate a settlement involves an analysis of the communications made, taking into account the content of each communication and the context in which each was made. The starting point, however, is what s 131(1) means by the phrase "negotiate a settlement". For that purpose, reference should be made to the purpose and policy objectives of s 131. 32 In Silver Fox Co Pty Ltd v Lenard's Pty Ltd (No 3) (2005) 214 ALR 621, Mansfield J explained at [36] the purpose of s 131(1) of the Evidence Act as follows: Section 131(1), subject to its exceptions, gives effect to the policy of ensuring the course of negotiations – whether private or by mediation – are not adduced into evidence for the purpose of influencing the outcome on the primary matters in issue. Clearly, it is in the public interest that negotiations to explore resolution of proceedings should not be inhibited by the risk of such negotiations influencing the outcome on those primary issues. It is equally in the public interest that negotiations should be conducted genuinely and realistically. 33 It is in the public interest that disputes be quelled or resolved. A dispute may be resolved through one or both parties compromising their positions. Equally, a dispute may be resolved by one party fully conceding the claim of the other including by the claimant withdrawing its claim. Resolution of a dispute does not necessarily require compromise by each party. Disputes are regularly resolved without any compromise, including by a claimant withdrawing its legal proceeding or the threat thereof. 34 Section 131(1) speaks of an attempt to negotiate a settlement. It does not require an attempt to negotiate a compromise in which some middle ground is found. The applicants emphasise the word "negotiate", as though it necessarily connotes a willingness by every party to the dispute to compromise. In the context of the phrase "in connection with an attempt to negotiate the settlement of the dispute", the word "negotiate" simply means to arrange for or bring about a settlement: see Macquarie Dictionary (5th ed, 2009). 35 That construction is consistent with a number of authorities. In Bhagat v Global Custodians Ltd [2002] NSWCA 160, Spigelman CJ (with whom the other members of the court agreed) observed at [29], that a demand for surrender may constitute an attempt to negotiate a settlement. In Korean Airlines Co Ltd v Australian Competition and Consumer Commission (No 3) [2008] FCA 701, Jacobson J at [73], relying upon the effect of the authorities at common law, emphasised that it is not necessary that an offer to negotiate include an offer capable of acceptance. In South Shropshire District Council v Amos [1987] 1 All ER 340, the English Court of Appeal held that the common law privilege was not limited to documents which are offers. Nor is it necessary for there to be a specific proposal for compromise for the protection of the without prejudice rule to be attracted. As Hasluck J said in Chandler v Water Corporation [2004] WASC 95 at [56]: It is true that the Veersma letter does not contain a specific proposal for compromise. However, the letter contains assertions bearing upon the strength of the plaintiffs' case and is clearly directed to the plaintiffs' wish to settle along the lines adopted in settlement discussions with other plaintiffs. This gives a degree of specificity to the letter which is sufficient to attract the protection of the without prejudice rule. 36 The applicants relied upon Buckinghamshire County Council v Moran (1989) 3 WLR 152, where the English Court of Appeal held that a particular communication did not amount to an offer to negotiate, but simply to an assertion of the defendant's rights. However, the judgment is not to be read as suggesting that an assertion by a person of its rights or an expression of its position, can never amount to an attempt to negotiate a settlement. Any suggestion of that kind would defy both common sense and common experience. 37 As Spigelman CJ observed in Bhagat at [29], much depends upon context and characterisation. A communication denying or dismissing a claim may invite litigation rather than settlement. The letter from the respondent's solicitors of 13 July 2005 is an example of a communication which asserted the respondent's rights and or its position but did not contemplate any kind of negotiation at all. 38 Conversely, the impugned communications accompanied the assertion of the respondent's rights and its position with an invitation to negotiate. That is, an invitation to arrange for or bring about a settlement. 39 The communications in question involved a without prejudice letter, followed up on the same day with an invitation to attend a meeting; the meeting of 25 July 2005; and a further without prejudice letter. Whilst not conclusive, the presence of the words "without prejudice" on written communications is prima facie evidence that the communication was intended to be a negotiating document: Amos at [344]. That prima facie position has not been dispelled by any other evidence. To the contrary, that what was contemplated was a negotiation is confirmed by the other evidence. That evidence includes the invitation to attend and the participation of the parties in the meeting of 25 July. Additionally, the personal nature of the communications, occurring as they did, between clients on a personal level and without their respective lawyers, is an added indicator that settlement, rather than litigation, was in contemplation. 40 For those reasons, I regard the communications made by Mr Dennis as communications which contemplated negotiation and thus were made in connection with an attempt to negotiate a settlement of the dispute. Section 131(1) was thereby attracted. Is Section 131(2)(g) attracted? 41 In support of its reliance on the exclusion contained in s 131(2)(g), the applicants referred to some of the affidavit evidence the respondent had filed and intended to rely upon at trial. In particular, the respondent referred to the Wilson and Rowley affidavits and the accounts given in those affidavits as to the derivation of the respondent's Grange designs. 42 The applicants submitted that Wilson's and Rowley's accounts reveal an alternative story of how the Grange design was created to that given by Mr Dennis and recorded in the disputed evidence. Furthermore, the applicants asserted that there is inconsistency between the account given in the first Rowley affidavit and that in the second Rowley affidavit. The applicants contended that there were now 3 inconsistent accounts given by the respondent of the matters leading to the making of the impugned plans. They contended that it would be misleading for the Court to proceed to a trial without reference to the respondent's account of derivation provided in 2005 by the disputed evidence. The applicants contended that without the capacity to rely on the disputed evidence, they would be precluded from establishing that there was an account given in 2005, then further different accounts given by evidence filed in 2008 and 2009. 43 In those circumstances, the applicants contended that s 131(2)(g) is attracted and that the applicants should be permitted to introduce the disputed evidence, because in the absence of that evidence there is a real risk that the Court would be misled by the evidence of Ms Wilson and Mr Rowley adduced at trial by the respondent. 44 The respondent disputes that there is a material difference between the account of the creation of the Grange design given by Mr Dennis in the disputed evidence and that given in the evidence upon which the respondent intended to rely at trial. For reasons that will become apparent, it is not necessary for me to determine the extent of inconsistency, if any, between Mr Dennis' account and that of Ms Wilson or Mr Rowley. I will proceed on the assumption that the accounts given are materially inconsistent. 45 It is apparent that the applicants seek to use the disputed evidence to show that agents of the respondent have made prior inconsistent statements to those to be relied upon at trial. The applicants contend that without reference to the disputed evidence the Court will likely be misled into accepting the accounts as to the derivation of the Grange designs given by Ms Wilson or Mr Rowley. 46 The difficulty for the applicants is that the construction of s 131(2)(g) contended for by them pays insufficient regard to the context in which the words utilised in s 131(2)(g) are found and fails to properly take into account the origin of the provision and its intended purpose. 47 It is of particular importance in the context of a qualification or exception, such as that contained in s 131(2)(g), to identify the mischief which the provision is concerned to address. Section 131(2)(g) identifies a number of limited qualifications to an exclusionary rule which protects privileged settlement communications from being used at trial. In that context, paragraph (g) should be understood to be dealing with the non-applicability of the privilege or protection provided by s 131(1) because, unless that is done, the court is likely to be mislead. That suggests that paragraph (g) is addressing the need to ensure that reliance upon the privilege or protection is not the source of or reason for the court being misled. In other words, the privilege afforded by s 131(1) is not to be abused by allowing a party that has adduced evidence to use the privilege to hide the truth and mislead the court. That is the mischief to which the paragraph is directed. 48 That contextual analysis is confirmed by the likely origin of the provision in what has been referred to as the principle in Pitts v Adney. 49 In Pitts v Adney (1961) 78 WN (NSW) 886, Walsh J at 889 said: It is of importance that the rule protecting from disclosure, discussions taking place in an endeavour to put an end to pending litigation should, in general, be applied. But it is, after all, a rule based upon public policy. It cannot be permitted to put a party into the position of being able to cause a Court to be deceived as to the facts, by shutting out evidence which would rebut inferences upon which that party seeks to rely. In McFadden v Snow evidence was given on behalf of one party that no reply had been received to a letter. Thus it was sought to establish an admission by silence as to a relevant fact. Kinsella J admitted a letter headed "without prejudice" tendered in disproof of that evidence. He said "The privilege that may arise from the cloak of "without prejudice' must not be abused for the purpose of misleading the court". With respect, I state my emphatic agreement with that observation. If one applies it to the situation which I have postulated, as that which could have arisen if these proceedings had followed a more formal course, the result would have been that claim of privilege could not have been used to mislead the Court into acting on the erroneous belief that no offer of 5,300 had been made by the lessee, or communicated to the lessor, before the making of the order of 27 July. 50 As is apparent from that passage, the limitation upon the exclusionary privilege at common law is based upon a causal connection between a party's reliance upon the privilege and the court being misled. 51 In Austotel Management v Jamieson (1995) 57 FCR 411, Burchett J at 415-416 referred to the principle in Pitts v Adney and to its affirmation by the Court of Appeal of New South Wales in Lohar Corporation Pty Ltd v Dibu Pty Ltd (1976) [1] BPR 97,00014. 52 In Brown v Commissioner of Taxation (2001) 187 ALR 714, Emmett J explained that the source of exceptions to the general law exclusionary principle recognised under the general law are concerned with reprehensible behaviour and impropriety. His Honour observed that it is appropriate to consider the exceptions listed in s 131(2) in the light of the general law: at [183]. Emmett J also acknowledged the link between the principle in Pitts v Adney and s 131(2)(g) in the following passage at [184]-[185]: I consider that s 131(2)(g) is designed to deal with the sort of circumstances that arose in Pitts v Adney (1961) 78 WN (NSW) 886. Evidence of a "without prejudice" communication was admitted in that case in order to prove the fact of and the nature of the communication. It was not tendered in order to contradict evidence as to the matters in issue, or as an admission. It is not appropriate to attempt an exhaustive exposition of the effect of s 131(2)(g). However, I consider that it will not be attracted simply because evidence to which s 131(1) applies contradicts or qualifies evidence that has already been adduced. Section 131(2)(g) will apply where the court would be likely to be misled as to the existence or contents of an excluded communication or document, where those matters are in issue in the proceeding. 53 The construction of s 131(2)(g) applied by Emmett J in Brown was adopted by Hamilton J in Bloss Holdings Pty Ltd v Brackley Industries Pty Ltd [2005] NSWSC 756. In Korean Airlines, Jacobson J referred to Brown at [78] without apparent dissent. 54 A number of decisions of courts in New South Wales have adopted a broader construction of s 131(2)(g) than that applied in Brown: Moran v Moran (No 3) [2000] NSWSC 151; DTC No 1 Pty Ltd v Matthew [2009] NSWSC 1280; Kalambaka Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 [2009] NSWLEC 57; and Mulkearns v Chandos Developments (No 4) (2005) 12 BPR 22,993 at [66]-[67]. Other than Mulkearns none of those decisions appear to have considered Brown. Whilst Young J referred to Brown in Mulkearns at [66]-[67], it is not apparent whether and if so why, the construction applied in Brown was not followed. 55 I respectfully agree with the analysis of Emmett J at [185] in Brown and his Honour's conclusion that s 131(2)(g) is not attracted simply because evidence to which s 131(1) applies, contradicts or qualifies evidence that has already been adduced. I would respectively add that s 131(2)(g) is only attracted where the exclusionary rule in s 131(1) would operate to allow a party which has adduced evidence, to use the exclusionary rule as an instrument for misleading the court. 56 That construction serves the policy objectives which s 131 seeks to protect. Nothing could be more calculated to undermine settlement discussions, than the prospect of statements made in the course of those discussions being used to discredit evidence adduced at trial, should settlement negotiations fail. The construction contended for by the applicants, would replace the exclusionary cloke of s 131 with a thin veil behind which little would ever be said or done in pursuit of the amicable settlement of a dispute. 57 There was nothing before me to suggest that, in this case, s 131(1) would operate as an instrument of deception and harbour the mischief that s 131(2)(g) is directed at addressing. This was a case in which the applicant sought to attract s 131(2)(g) simply because evidence to which s 131 applied was said to contradict or qualify evidence which was to be adduced. On the basis of the construction which I have adopted, s 131(2)(g) is not attracted. conclusion 58 For all of those reasons, I determined that the disputed evidence ought not be admitted at trial and made orders to that effect. In accordance with the position taken by all parties, I reserved the costs of the applicants' notice of motion. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bromberg. Associate: Dated: 25 March 2011