C J Redman Constructions Pty Ltd v Tarnap Pty Ltd [2006] NSWSC 173

New South Wales Supreme Court

CITATION : C J Redman Constructions Pty Ltd v Tarnap Pty Ltd [2006] NSWSC 173

HEARING DATE(S) : 9 March 2006

JUDGMENT DATE : 9 March 2006

JURISDICTION : Equity

JUDGMENT OF : Campbell J

EX TEMPORE JUDGMENT DATE : 03/09/2006

DECISION : Evidence not privileged

CATCHWORDS : EVIDENCE - facts excluded from proof - "without prejudice" privilege under section 131 Evidence Act 1995 - rationale of the privilege - construction of "in connection with" in section 131(1) Evidence Act 1995 - nature of the connection between the communication or document, and the attempt to negotiate a settlement of a dispute

LEGISLATION CITED : Evidence Act 1995

CASES CITED : Wonall Pty Ltd v Clarence Property Corporation Ltd (2003) 58 NSWLR 23

PARTIES : C J Redman Constructions Pty Limited - Plaintiff Tarnap Pty Limited - Defendant

FILE NUMBER(S) : SC 4793/05

COUNSEL : N A Confos - Plaintiff S A Wells - Defendant

SOLICITORS : Trisley Kilmurray - Plaintiff Christopher C Freeman & Co - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION DUTY JUDGE LIST

CAMPBELL J

THURSDAY 9 MARCH 2006

4793/05 C J REDMAN CONSTRUCTIONS PTY LIMITED v TARNAP PTY LIMITED JUDGMENT – Ex Tempore 1 HIS HONOUR: The application which I am hearing is an application as though on an ex parte basis, for a Mareva order. Objection was taken to the tender of a letter which passed between the solicitors for the parties. 2 The letter in question is one written on 9 December 2005. It is headed "Without Prejudice Save as to Costs". The text of the letter is as follows: "We refer to previous correspondence in the above matter and our telephone conversation of 7 December 2005. We note in that conversation you indicated the possibility of a global resolution to all outstanding matters and indicated that you would obtain your client's instructions in that regard. We also indicated our client's instructions to proceed to amend the Supreme Court proceedings to seek a Mareva Injunction in relation to this distribution of any funds raised as a result of the sale of the Lemon Tree Passage property, noting that the Defendant is a Trustee Company. We shall refrain from seeking any amendment to the summons until such time as we have heard from you in relation to your client's instructions. However, you will appreciate that we cannot delay this application for any length of time. Therefore, we would appreciate if you could obtain your client's instructions on the global resolution by 5.00 pm Wednesday 14th December, failing which we believe we will have no choice but to lodge the Notice of Motion to amend the Summons. Alternatively, we seek your consent to amend the Summons in that regard. If you do not believe the matter can be resolved on a global basis, we would appreciate if you could obtain your client's instructions to deposit $80,000.00 into your Trust Account pending the Local Court order in relation to the debt sum and the Plaintiff's anticipated costs. If your client is not minded to accept this proposal we will have no choice but to proceed with the Mareva Injunction. In the circumstances, we will be seeking leave to have the motion to amend and the Mareva Injunction heard together. We shall be tendering this letter in support of the application for indemnity costs from today's date. We look forward to your reply by 5.00 pm Wednesday 14th December; we apologise for the short timeframe." 3 Even though the matter is being heard as though on an ex parte basis, the legal representatives of the defendant are in Court, and the objection was made by them. The objection is made on the basis of the without prejudice privilege. 4 The prohibitory portion of section 131 Evidence Act 1995 is: "(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." 5 It will be apparent that the letter alludes to there being settlement discussions on foot, but gives no detail of those settlement discussions, and, most importantly, does not involve the writer of the letter either making an admission on behalf of his client concerning the matter of the settlement discussion, or attributing any admission to the recipient of the letter. While the letter alludes to it having been the addressee of the letter who had "indicated the possibility of a global resolution to all outstanding matters", I do not see that as involving any admission – it is possible for a person to want to resolve a dispute which he or she regards as totally unmeritorious. 6 The letter is one which one would not be within the rationale of the common law concerning legal professional privilege. That rationale is that people should be free to explore settlement of disputes, and make admissions in the course of those discussions, safe in the knowledge that any admissions which they make will not be tendered against them later in Court, if the negotiations break down. The wording of section 131(1) is capable, on one reading of the expression "in connection with", of extending wider than did the common law. There is, in one sense of it, a connection between this letter and the settlement negotiations, because the letter talks about the settlement negotiations. 7 However, the expression "in connection with", while sometimes capable of referring to a connection of any kind between two subject matters, does not always have that reference: cf Wonall Pty Ltd v Clarence Property Corporation Ltd (2003) 58 NSWLR 23 at 44-45. It is necessary to look to the context in which the expression occurs to determine its particular meaning, in that particular context. In the particular context of section 131, it seems to me that the expression "in connection with" does not extend to any connection of any kind whatever. Rather, the expression needs to be construed by reference to the purpose of the without prejudice privilege. I see no basis for concluding that the rationale of the without prejudice privilege under section 131 of the Evidence Act is any different to the common law. There are some exceptions to the privilege, in section 131(2), which go wider than the exceptions to the privilege at common law, but I see no basis for concluding that the fundamental prohibition contained in section 131(1) has any different rationale to the common law on the topics. 8 Reading section 131(1) in that way, there is not here the relevant type of connection between the letter and any attempt to negotiate a settlement of the dispute. For that reason I overrule the objection. **********