Supreme Court New South Wales Medium Neutral Citation: Macquarie Prestige Developments Pty Ltd v Cavasinni Constructions Pty Ltd [2012] NSWSC 778 Hearing dates: 5 July 2012 Decision date: 05 July 2012 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Directions for service of evidence Catchwords: EVIDENCE - Evidence Act 1995, s 131 - whether settlement communications admissible - settlement communications admissible pursuant to 131(2)(f) as existence of or making of agreement an issue in proceedings Legislation Cited: (Cth) Corporations Act 2001, s 459G(1) (NSW) Evidence Act 1995 s 131, 131(2)(f) Cases Cited: Andi-Co Australia Pty Ltd v Meyers [2004] FCA 1358 Category: Procedural and other rulings Parties: Macquarie Prestige Developments Pty Ltd ACN 146 012 697 (Plaintiff) Cavasinni Constructions Pty Ltd ACN 001 904 525 (Defendant) Representation: Counsel: CP Carter (Plaintiff) D Neggo (Defendant) Solicitors: Doyles Construction Lawyers (Plaintiff) Ghobrial Legal (Defendant) File Number(s): 12 / 82664 Judgment (ex tempore) 1HIS HONOUR: On or about 23 February 2012, the defendant Cavasinni Constructions Pty Ltd served on the plaintiff Macquarie Prestige Developments Pty Ltd a creditors statutory demand. By originating process filed on 14 March 2012, Macquarie claims an order pursuant to (Cth) Corporations Act 2001, s 459G(1), setting aside the statutory demand. The application has been set down for final hearing on 29 August 2012. In response to the application, Cavasinni has served an affidavit of Mr Vittorio Cavasinni affirmed 5 June 2012, paragraphs 12, 13, 14 and 15 of which annex (as annexures D, E, F and G, respectively) correspondence passing between the solicitors for the parties during the period 1 March to 13 March 2012, including an unexecuted Deed of Settlement forwarded under cover of an e-mail from Macquarie's solicitors to Cavasinni's solicitors on 1 March 2012, and a counterpart of that Deed apparently executed on behalf of Cavasinni. Macquarie has indicated that it takes objection to this material, on the basis that they are privileged communications covered by s 131, or by general law without prejudice privilege. Because of a concern that the Judge dealing with the objection would have to read the relevant communications, and that that might pollute the mind of the Judge in connection with the substantive hearing if the material were inadmissible, the objection was set down for prior determination. Accordingly, the present proceeding is concerned with Macquarie's objection to the paragraphs in question, and the annexures to which I have referred. 2Most, though not all, of the correspondence to which I have referred was explicitly marked without prejudice, and although the e-mail that forwarded the draft Deed of Settlement was not, I would readily accept that at Common Law it would nonetheless have attracted without prejudice privilege, and that for the purposes of (NSW) Evidence Act 1995, s 131, it was a communication made in connection with settlement negotiations that would, prima facie, be privileged under that section. 3But Cavasinni submits that, notwithstanding that the material is prima facie privileged, it is admissible pursuant to s 131(2)(f), on the basis that existence of, or making of, an agreement to the effect of that contained in the Deed of Settlement to which I have referred, is an issue in the proceedings. 4As I understand the case that Cavasinni wishes to make, it is that whether or not there was at some stage a genuine dispute as to the indebtedness claimed in the creditor's statutory demand, that dispute was resolved by a compromise between the parties, and encapsulated in the Deed of Settlement, and that as the issue of whether a genuine dispute exists is determined at the hearing of the application, and not at the date of service of the Demand or of any application to set it aside [see Andi-Co Australia Pty Ltd v Meyers [2004] FCA 1358, [16] (Heerey J)], establishing such an agreement would at least tend to show that there was no longer any genuine dispute. 5It is clear that there is a very live issue as to whether any such agreement as that for which Cavasinni contends was ever ultimately reached. The correspondence appears to have contemplated that there would be an exchange of counterparts, which never happened; and though it may well be that each party executed a counterpart, it would seem distinctly arguable that in the absence of the contemplated exchange, no binding agreement was ever concluded. However, that is a matter to be determined on the hearing of the application, and not on the question of admissibility. 6It seems to me that Cavasinni is entitled to endeavour to establish that there was an agreement made after service of the statutory demand, and before the hearing of the application, the effect of which was to extinguish any genuine dispute that previously existed. As I have foreshadowed, that is far from saying that Cavasinni, on the material that I have seen, would succeed on such an application, but that is not a reason for precluding it from arguing it. 7It follows that there is an issue in these proceedings whether an agreement to the effect of the Deed of Settlement to which I have referred was made. In those circumstances, s 131(2)(f) permits the evidence in question to be adduced, notwithstanding that it would prima facie be entitled to privilege under s 131(1). I therefore overrule the objections to paragraphs 12, 13, 14 and 15, and annexures D, E, F and G of the affidavit of Vittorio Cavasinni of 5 June 2012. Orders 8I direct that the time for the plaintiff to serve further evidence, limited to the question of the making and existence of an agreement to the effect alleged, be extended to 11 July 2012. 9I direct that the defendant not be entitled to rely on any affidavit evidence in reply thereto that has not been served by 25 July 2012. 10I adjourn the proceedings for hearing on 29 August 2012. 11As the defendant has succeeded on the voir dire, it seems to me that costs of the proceedings today should be the defendant's costs in the proceedings. I order that the costs of the voir dire be the defendant's costs in the proceedings. ********** 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. Decision last updated: 03 August 2012