Category Archives: Evidence

What does ‘attempt to negotiate’ mean? Opening salvos and staking out boundaries

What used to be called ‘without prejudice’ privilege is now covered in Australia by Section 131 of the Evidence Act 2008.  It is designed to ensure that people in dispute can try to negotiate settlements without fearing that evidence what they have said or written will be used against them in Court if the matter continues without settling.  Questions sometimes arise as to whether or not specific communications were part of an attempt to negotiate settlement or not.  These questions can be the subject of heated argument, as one side may think the particular communication will be a great help to their argument in the proceeding (and will argue it is not privileged), whilst the other is very keen to keep it private (arguing that it is).

A recent NSW decision has helpfully set out some relevant principles to consider.

Section 131(1) of the Evidence Act 2008 states:

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”.

There are exceptions set out in subsection (2).

In Mordecai v Attorney General of NSW (2013) NSWSC 1307 there was a dispute as to whether a letter written by Mordecai to the other parties in the earlier proceeding (which Mordecai was seeking leave to appeal) was covered by S131 privilege.   Mordecai argued that the letter was covered by the privilege: that he had written it in an endeavor to settle the earlier proceeding.  His opponents argued that it was not an attempt to negotiate settlement and they should now be able to rely on it.

Justice Garling rejected tender of the letter. In a discussion at paragraphs [20-25] of his judgment, His Honour reiterated that it is now ‘beyond argument’ that the mere insertion of, or use of the words ‘without prejudice’ on a document is not, without more, determinative of the issue of whether a communication is ‘in connection with a settlement’: GPI Leisure Corporation (In Liq) v Yuill (1997) 42 NSWLR 225 at 226G per Young, J.  However, it will be some evidence of an intention that the communication is made for the purpose of attempting to negotiate a settlement of a dispute: Barrett Property Group Pty. Ltd. v Dennis Family Homes Pty. Ltd. [2011] FCA 276.

His Honour went on to consider what ‘attempt to negotiate a settlement’ means, and said it was appropriate to keep in mind what  Bromberg J said in Barrett Property at [33] to [34]: ‘It does not require an attempt to negotiate a compromise in which some middle ground is found’.

Quoting Spigelman CJ in Bhagat v Global Custodians Ltd [2002] NSWCA 160 at [29], ‘a demand for surrender may constitute an attempt to negotiate a settlement, even though no compromise is offered.’  There does not have to be an offer capable of acceptance: it is sufficient that the communication can be described as an ‘opening shot’ in negotiations: GPI Leisure v Yuill. Applying these principles to the letter in question, His Honour found that it was privileged under s131, amounting to a genuine attempt to negotiate a settlement of the proceedings.  This was not altered by the fact that it referred to and made a demand about extraneous subject matter (not part of the proceedings in question), nor that it did not clearly specify what settlement was proposed.  He pointed out that ‘staking out’ what boundaries a party wants to negotiate within is common in negotiations.  He also held that ‘the fact that an offer includes one term, which may be impossible to accept, does not mean that the entire offer is not a genuine attempt to resolve the position’ [42].  An opening letter in settlement negotiations or a ‘shot across the bows’ may still be a genuine attempt to negotiate a settlement [45].

Joining the dots: Court of Appeal clarifies when inference of reliance can be drawn

Winning a case requires being able to have necessary evidence given and accepted, and then showing how the applicable law means the result you argue for is the correct one.  But sometimes the evidence given by your client is not quite enough to allow all the dots to be joined.  In the heat of giving evidence, a witness may forget to say something important to your case, or they may put it differently than they had previously to you in conference.   Either way, you are left with a missing – essential – piece of your proof.   What then?

In certain situations, the court will infer that a particular fact must have occurred for your client to act a certain way.

Yesterday judgment in one of my* cases was handed down, clarifying one of the times such an inference can be made.  It was  a statutory misrepresentation case (a plea of misleading and deceptive conduct).  To succeed on that claim, a plaintiff must show the necessary casual connection between a misrepresentation being made and the loss he suffered.  Direct evidence of relying on the misrepresentation would show the causal connection.  But in this case, the evidence given by the plaintiff  about reliance was not accepted by the Court as being enough to show the causal connection.  The Court was asked by the plaintiff to infer that (on the basis of the facts that were proved)  the plaintiff must have relied on the misrepresentation, and that led to the loss (the Gould v Vaggelas test (1985) 157 CLR 215).  Amongst other things, the defendant argued that as some direct evidence of reliance was given but not accepted by the Court, an inference could not be drawn (differentiating this from cases where no direct evidence of reliance was given at all).

The Victorian Court of Appeal (Weinberg and Tate JJA and Vickery AJA)  confirmed the circumstances in which such an inference can be drawn.  In particular, it held that in applying the Gould v Vaggelas principles, the drawing of the inference is not  per se precluded because some direct evidence is given, even if the thrust of that evidence is rejected.  In each case the totality of the evidence in its context, including any possible inference to be drawn when assessed against the effect of any direct evidence, needs to be examined.

In this case it upheld the trial judge’s decision.  (He had inferred that the misrepresentations found to have been made about a land sale were relied on by the purchaser in entering into the purchase, and led to his loss.)

For more details see: Lord Buddha Pty. Ltd. v Harpur [2013] VSCA 101.


*  Barristers and solicitors often refer to a court case as ‘my case’ when we have worked on it.    Of course any case it is first and most importantly the client’s case – but after working hard on it we can feel quite a sense of ownership!  In this case I was instructed by Ms Chantal Reigo of Mills Oakley Lawyers, and my junior counsel was Ms Kathleen Foley.