New South Wales Supreme Court CITATION : NSI Group Pty Ltd v Mokas [2006] NSWSC 1077 HEARING DATE(S) : 25/09/06 JURISDICTION : Equity Division JUDGMENT OF : Young CJ in Eq EX TEMPORE JUDGMENT DATE : 09/25/2006 DECISION : "Without prejudice" material admitted under exceptions to section 131 of Evidence Act 1995. CATCHWORDS : EVIDENCE [96]- Admissions- Without prejudice statements- Correspondence abandoning alleged settlement agreement- Dispute as to whether agreement to settle was abandoned- Without evidence court would be likely to be misled- Evidence admitted- Evidence Act 1995, section 131(2)(f) and (g). LEGISLATION CITED : Evidence Act 1995, ss 131, 134 CASES CITED : Tenstat Pty Ltd v Permanent Trustee Australia Ltd (1992) 28 NSWLR 625 NSI Group Pty Limited (P1) Sarahton Pty Limited (P2) PARTIES : Nader & Ishak Holdings Pty Limited (P3) Petros Mokas (D1) Themistocles Mokas (D2) FILE NUMBER(S) : SC 3426/06 COUNSEL : N Cotman SC (P) P H Blackburn-Hart SC (D) SOLICITORS : Dibbs Abbott Stillman (P) Solari Legal (D) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION YOUNG CJ in EQ Monday 25 September 2006 3426/06 – NSI GROUP PTY LTD v MOKAS JUDGMENT 1 HIS HONOUR: These reasons concern the admissibility of a number of pieces of correspondence which is marked "without prejudice". In my view the material is admissible. Briefly put, s 131 of the Evidence Act 1995, read together with s 134, makes inadmissible communications between parties to settle a dispute. That usually encompasses letters between the solicitors marked "without prejudice". 2 I have not yet looked at the material objected to, but have assumed that it bears that character and that it is all marked "without prejudice". 3 The case before me seems to be that an original agreement was reached between the parties, which I will call the first agreement. There is a dispute as to the construction of that agreement and that dispute extends to an application to rectify that agreement. 4 The plaintiffs say and the defendants deny that there was an agreement to settle the dispute, by what I will call the second agreement. The defendants then say that if there was a second agreement it was abandoned and that abandonment came about as a result of the correspondence which is marked "without prejudice". 5 "Abandonment" is a convenient tag for an implied contract between parties to terminate or rescind their previous contract. Thus I have called the implied agreement to abandon (if it exists) the third contract. 6 The question is whether or not the material relied on by the defendants with respect to the third contract is within the exceptions to s 131(1) of the Evidence Act 1995 set out in s 131(2) of the Act. The problem is that section 131(2) seems not to be as broad as the previous existing law. Under the previous existing law, one could usually, if it were relevant, get in evidence of "without prejudice" communications which often resulted in a contract being reached. One could also get in such communications where they were relied on, to quote the words of M McLelland J in Tenstat Pty Ltd v Permanent Trustee Australia Ltd (1992) 28 NSWLR 625 at 633: "Statements relied on, not as an express or implied admission, but as an objective act having legal consequences." 7 The question then is whether these matters are now comprehended within s 131(2) of the 1995 Act. The possibly relevant paragraphs are (e), (f), (g) and (i), which are: "(e) the evidence tends to contradict or to qualify evidence that has already been admitted about the course of an attempt to settle the dispute; or (f) the proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons in dispute to settle the dispute, or a proceeding in which the making of such an agreement is in issue; or (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; or (i) making the communication, or preparing the document, affects a right of a person." 8 In so far as the evidence set up the third agreement, that is the agreement to abandon, it would seem to me that (f) covers it. 9 Mr Cotman SC, who appears for the plaintiffs, says that this is not a proceeding to enforce an agreement between persons in dispute to settle the dispute. Rather it is the reverse. It is to show that an agreement to settle the dispute was abandoned. However, in my view, (f) is not to be so narrowly construed and so long as the subject matter of the suit in which the evidence is sought to be adduced is a suit involving the matter, then evidence can be brought in which shows that the possible settlement was aborted or abandoned. If not, it would seem to me that it comes within (g). 10 Mr Blackburn-Hart SC, who appears for the defendants, submits that in any event there is a problem about estoppel and the material would also have to be admitted on that issue, otherwise the Court would be likely to be misled; via paragraph (g). 11 In my view the material is admissible and so I will admit the paragraphs of Mr Mokas' evidence which were objected to together with the bundle of disputed documents, which will be exhibit DX101 to 110. ********************* DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.