Moran v Moran [No 3] [1999] NSWSC 1326

New South Wales Supreme Court CITATION : Moran v Moran [No 3] [1999] NSWSC 1326 CURRENT JURISDICTION : Common Law Division FILE NUMBER(S) : 20032/98; 21360/95 31/1/2000 1-3/2/2000 7-11/2/2000 HEARING DATE(S) : 14-18/2/2000 21-25/2/2000 28-29/2/2000 1/3/2000 JUDGMENT DATE : 1 March 2000

Kristina Moran (Pl) Douglas John Moran (1D) PARTIES : Greta Richmond Moran (2D) Peter Moran (3D) Moran Health Care Group Pty Ltd (4D) Doug Moran Holdings Pty Ltd (5D) JUDGMENT OF : Kirby J

COUNSEL : P Semmler QC/D E Baran (Pl) I Harrison SC/L McFee (Defs) SOLICITORS : Carroll & O'Dea (Pl) Clayton Utz (Defs) CATCHWORDS : Admissibility of settlement negotiations; Meaning of "dispute" - s131(1) ACTS CITED : Evidence Act, 1995 - s131(1)(a) and (b); s131(2)(g); s135 DECISION : Ref para 17

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

KIRBY J

Wednesday 1 March 2000

20032/98 - Kristina MORAN v Douglas J MORAN & Ors 21360/95 - Kristina MORAN v Douglas J MORAN & Ors

JUDGMENT [No 3] - Re admissibility of settlement negotiations

1 HIS HONOUR: An issue has arisen concerning the admissibility of certain documents which came into existence shortly before Brendan Moran committed suicide on 13 February 1995. 2 Central to the plaintiff's action against the defendants is an assertion that their conduct caused or materially contributed to a major depression from which Brendan Moran is said to have suffered, which, in turn, caused or materially contributed to his suicide. 3 One aspect of the conduct of the fifth defendant, Doug Moran Holdings Pty Limited, identified by the plaintiff, is the commencement of proceedings in the Supreme Court in November 1994 against Brendan Moran and his wife, Kristina Moran (the plaintiff in the present proceedings). The proceedings were to recover what was said to be a debt owed to that company. The first and second defendants, the parents of Brendan Moran, were directors of the fifth defendant. 4 The documents which the defendants have sought to tender are as follows: · First, a Deed of Settlement, undated (apart from the typescript "February 1995") purporting to relate to the litigation commenced by Doug Moran Holdings Pty Limited in November 1994. · Secondly, a letter to Brendan Moran dated 9 February 1995 from Messrs Ebsworth & Ebsworth, solicitors, then acting for him. The letter explains the terms of the Deed. It also cautions him in respect of certain aspects of the proposed settlement. · Thirdly, a letter dated 13 February 1995 from the same firm, Messrs Ebsworth & Ebsworth, to Messrs Norton Smith & Co., solicitors, then acting for Doug Moran Holdings Pty Limited. 5 The Deed of Settlement embodied the proposed terms of settlement. Brendan Moran's signature appears on the Deed, witnessed by a person with whom he was then sharing a house. No other party signed the Deed. It is common ground that, before Brendan Moran's death on 13 February 1995 (a matter of days later), the matter had not settled. Indeed, the litigation continued for some time after his death. The Estate of Brendan Moran was substituted for Brendan Moran, so that the action was then directed against the Estate and Mrs Kristina Moran. That action ultimately settled, although upon terms different from those proposed before Brendan Moran's death. 6 Counsel for the plaintiff objects to the tender of this material. He does so upon the basis of s131(1) of the Evidence Act 1995. That section is in these terms: "s131(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 The prohibition in s131(1) is subject to a number of exceptions, including the following: "s131(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 Unusually, there is no general discretion in respect of material which may otherwise be relevant. If the material is caught by the prohibition, and does not fall within the exceptions, it may not be adduced. 9 The issue arises whether the phrase "persons in dispute" in s131(1)(a), and the word "dispute" in s131(1)(b), are references to the dispute which is before the Court; that is, the dispute being adjudicated at the time the objection is taken, rather than other litigation. 10 Ordinarily, settlement negotiations in respect of other litigation will have no relevance to the matter before the Court. Documents referable to such negotiations will be inadmissible upon that basis. But where, as here, negotiations in other litigation has relevance to issues in the case being tried, are they excluded by the terms of s131(1)? 11 The documents which have been identified are capable of providing insight into Brendan Moran's state of mind. There has been a deal of evidence from Mrs Kristina Moran, Brendan's widow, that the litigation weighed heavily upon him in the period before his death. A number of psychiatrists have been called. They have each identified matters which, in their view, contributed to Brendan Moran's depression, and ultimate suicide. The matters identified have included the action against Brendan Moran and his wife by the fifth defendant. Brendan Moran's state of mind when he subscribed his signature to the Deed, and his belief as to the likely course of the litigation after his death, are matters, in my opinion, which are important to an understanding of the circumstances of his death. 12 I should add that there has already been, without objection, a good deal of evidence from Mrs Kristina Moran concerning attempts to settle the matters in the period between November 1994 and February 1995. Brendan Moran's reactions to various proposals have been described. Evidence has been given, for instance, that Brendan Moran was invited by his family to resign from the family trust and other companies, and forfeit such shareholding as he may have had in such companies as one of the terms of settlement. Mrs Moran said that her husband was reluctant to agree to such a proposal, unless he was first aware of the value of what it was he was giving away. The proposed settlement Deed, to which he ultimately subscribed his signature shortly before his death, deals with the same subject matter. 13 The material, in my view, is therefore relevant. It completes the history in respect of Brendan's state of mind concerning the litigation up to the moment of his death. Were it omitted, the jury would have but part of the picture in respect of that important aspect. 14 The general policy which s131 seeks to promote was described by the Australian Law Reform Commission in these words (ALRC 26 Vol 1 para 891): "In view of the desirability of encouraging settlements, it is proposed that evidence may not be given of the content of communications made in an attempt to settle a civil dispute (including where a party's agent or a mediator is involved in the negotiations). Proposals are advanced, however, to meet deficiencies in the law. The general rule of exclusion extends to materials produced for the negotiations. The proposal in terms prevents evidence being 'given'. This formula is to be preferred to other options - eg not admissible. The rationale requires non-disclosure by the parties to the negotiations unless all of them consent. The embargo will not apply to communications which are of a criminal or tortious nature, or are capable of affecting rights and liabilities (such as - acts of bankruptcy, defamatory statements, illegal threats, the election of alternative courses of action); and open offers of settlement." 15 It is difficult to see how that policy would be placed in jeopardy were the phrase "persons in dispute" confined to persons in dispute in the litigation before this Court, since the other litigation has now been concluded. Nonetheless, one can perhaps imagine that, in respect of litigation which is not yet complete, it may be important to preserve the confidential nature of negotiations, which had been undertaken, but which had been unsuccessful. 16 I prefer to decide the issue by reference to s131(2)(g). The litigation between Doug Moran Holdings Pty Limited and Brendan and Kristina Moran has been given some prominence before the jury. The jury has been given part of the history of attempts at settlement. Were the evidence left there, I believe the jury may be misled as to the relevant state of mind of Brendan Moran in respect of this issue in the days before his death. 17 I do not believe that I should exercise my discretion to exclude the material under s135. The documents identified in para 4 should be admitted. **********