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Supreme Court of Victoria |
Last Updated: 27 September 2016
AT MELBOURNE
COMMERCIAL COURT
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SUSHI SUSHI REALTY PTY LTD (ABN 69 108 549 417)
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Second Defendant
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JUDGE:
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WHERE HELD:
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Melbourne
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DATE OF HEARING:
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CASE MAY BE CITED AS:
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MEDIUM NEUTRAL CITATION:
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EVIDENCE – Evidence Act 2008 (Vic) s 131 - Settlement negotiation privilege – One party to without prejudice meeting repeated some of the communications at the meeting in a later unprivileged letter to the other parties – Whether that party had thereby waived its privilege – Whether that party had thereby consented to disclosure – Whether the other parties could later consent thereby allowing evidence of the meeting to be given – Discussion of the difference between ‘disclosure’ and ‘adducing evidence’ – Whether the letter between parties was a ‘disclosure’– held: doctrines of waiver or inconsistent action do not apply – Kong v Kang and ors [2014] VSC 28 approved and applied - Parties to the privilege can give their consent to disclosure at different times – But the party writing the letter had not ‘disclosed’ without prejudice communications because the other parties already knew them – Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2008] NSWSC 1070 approved and applied.
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APPEARANCES:
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Counsel
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Solicitors
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For the Plaintiff
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Corrs Chambers Westgarth
Lawyers |
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For the First and Second Defendants
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MST Lawyers
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Introduction
1 This proceeding arises from the termination by the defendants of a franchise and related occupancy licence that they had granted the plaintiff in June 2014. The franchise agreement and licence enabled the plaintiff to operate a sushi retail business in a shopping centre in Melton.
2 The defendants served a termination notice on the plaintiff of both the agreement and the licence on 14 August 2015. The notice alleges that the plaintiff had been ‘fraudulent’ in the operation of the sushi business in that it had ‘failed to record and declare all sales’ of the business and failed to pay the royalties in connection with the undeclared sales. The particulars given in the notice refer to undeclared sales and undeclared revenue received from customers on 3 July 2015 and 11 July 2015. The plaintiff relied on CCTV footage to determine the products they say were sold but not properly entered into the cash register on these two days. The total amount said not to have been properly recorded in sales on 3 July 2015 was $599. The total amount said not to have been properly entered as sales on 11 July 2015 was $468.90.
3 The termination notice recites a provision in the franchise agreement and a provision in the Competition and Consumer (Industry Codes-Franchising) Regulation 2014 to the effect that if a franchisee acts fraudulently in connection with the operation of the franchise, the franchisor may immediately terminate the franchise agreement. The defendants relied on those provisions to terminate both the franchise agreement and the occupancy licence on the date of the notice and retook possession of the business and premises on that date.
4 On the day before the notice was issued and the defendants terminated the agreement and licence, a meeting was held between the directors of the plaintiff (one in person and one on the telephone) and two employees of the defendants (‘the Meeting’). The Meeting was stated by an employee of the defendants to be ’without prejudice’. It is agreed that communications at the Meeting were between persons then ‘in dispute’ and that the communications at the Meeting were ‘in connection with an attempt to negotiate a settlement of the dispute’. In other words, pursuant to s 131(1) of the Evidence Act 2008 (Vic) (‘Evidence Act’, ‘the Act’ or ‘the Victorian Act’) evidence may not be adduced of those communications, unless by reason of one of the exceptions contained within s 131(2) the privilege does not apply.
5 On 18 August 2015 the solicitors for the plaintiff wrote to the defendants and asserted that the notice of termination was invalid; accordingly the defendants had repudiated the franchise agreement and occupancy licence; and the defendants had also acted unconscionably. The letter (‘the Letter’) states that the solicitors for the plaintiff are instructed to commence proceedings against the defendants and asks for the contact details of their solicitors. The Letter contains no proposal directed to negotiating a settlement of the dispute and is not marked ‘without prejudice’. The reasons given in the Letter for asserting that the notice of termination was invalid and that the defendants acted unconscionably include communications between the directors of the plaintiff and employees of the defendants at the Meeting, which the Letter purports to set out in direct speech.
6 The defendants wish to plead and prove certain admissions that they say the directors of the plaintiff made at the Meeting. The defendants pleaded these admissions in an amended defence they filed on 6 June 2016. In that amended defence, the defendants pleaded that the Letter constituted a waiver by the plaintiff of the privilege that would otherwise be attached to statements made at the Meeting.
7 Those portions of the amended defence were subsequently removed by consent and a further amended defence which does not contain them was filed on 30 June 2016. The parties also agreed that:
The question as to whether the without prejudice privilege attaching to the communications between the parties on 13 August 2015 has been waived be referred to an Associate Justice to be set down for hearing.
8 Orders to the effect of the agreement between the parties were made in chambers without appearance by Justice Hargrave on 1 July 2016.
9 The matter came before me on 15 August pursuant to that order.
10 The parties agree that communications between the plaintiff and the defendants at the Meeting are protected by the privilege conferred by s 131(1) of the Evidence Act unless one or more of the exceptions set out in subsection (2) to s 131 applies.
11 The defendants assert, and the plaintiff denies, that the exceptions set out in s 131(2)(b) and/or s 131(2)(c) apply because of the inclusion in the Letter of statements which, according to the plaintiff, were made at the Meeting.
12 Section 131 relevantly provides as follows:
131 Exclusion of evidence of settlement negotiations(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.
(2) Subsection (1) does not apply if—
(a) the persons in dispute consent to the evidence being adduced in the proceeding concerned or, if any of those persons has tendered the communication or document in evidence in another Australian or overseas proceeding, all the other persons so consent; or
(b) the substance of the evidence has been disclosed with the express or implied consent of all the persons in dispute; or
(c) the substance of the evidence has been partly disclosed with the express or implied consent of the persons in dispute, and full disclosure of the evidence is reasonably necessary to enable a proper understanding of the other evidence that has already been adduced; or
(d) the communication or document included a statement to the effect that it was not to be treated as confidential; or
(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
(h) the communication or document is relevant to determining liability for costs; or
(i) making the communication, or preparing the document, affects a right of a person; or
(j) the communication was made, or the document was prepared, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty; or
(k) one of the persons in dispute, or an employee or agent of such a person, knew or ought reasonably to have known that the communication was made, or the document was prepared, in furtherance of a deliberate abuse of a power.
(3) (not relevant)
(4) (not relevant)
(5) In this section—
(a) a reference to a dispute is a reference to a dispute of a kind in respect of which relief may be given in an Australian or overseas proceeding; and
(b) a reference to an attempt to negotiate the settlement of a dispute does not include a reference to an attempt to negotiate the settlement of a criminal proceeding or an anticipated criminal proceeding; and
(c) a reference to a communication made by a person in dispute includes a reference to a communication made by an employee or agent of such a person; and
(d) a reference to the consent of a person in dispute includes a reference to the consent of an employee or agent of such a person, being an employee or agent who is authorised so to consent; and
(e) a reference to commission of an act includes a reference to a failure to act.
(6) In this section, power means a power conferred by or under an Australian law.
13 I first make the preliminary and uncontroversial observation that while it is immediately apparent that s 131(1) is directed on its face to the giving of evidence, by virtue of s 131A, the privilege also applies to interlocutory steps that would otherwise require disclosure of the privileged communications.
14 The only previous decision that the parties were able to locate that analyses s 131 in any detail is the decision of Associate Justice Derham in Kong v Kang and ors[1] (‘Kong’). They each referred to some authority that makes passing reference to the section, to which I will later refer. In the course of preparation of these reasons I identified some further cases that bear on other aspects of the arguments as put, and gave the parties the opportunity to put further submissions if they wished. Each party did so, and I have taken those further submissions into account.
Do principles of waiver or inconsistent action apply?
15 The question identified by the parties, that was then reflected in the order of Hargrave J, is expressed in terms of waiver. The word ‘waiver’ reflects the common law principles that applied to loss of legal professional privilege prior to the Evidence Act. Legal professional privilege is now termed ‘client legal privilege’ by the Act and is conferred by ss 118-120 inclusive. The equivalent principle to waiver is now expressed in s 122(2) of the Act. That subsection provides that:
Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in disclosure of a kind referred to in section 118, 119 or 120.
16 Counsel for the defendants has utilised this concept of acting inconsistently in his submission that the writing of the Letter was ‘inconsistent with the maintenance of confidentiality over the Meeting’.[2]
17 I have reservations about the applicability of the concepts of waiver or inconsistency to loss of the privilege conferred by s 131, which I will call settlement negotiation privilege. My concern is that there is no specific reference to inconsistency or waiver in the exceptions to settlement negotiation privilege, as opposed to client legal privilege. In this regard, I agree with the opinion expressed by Associate Justice Derham in Kong (here extracted without citations) that:
The absence of discretion in the Court and the ‘code like’ specification of the exceptions to the privilege set out in s 131(2) shows that at best there is limited room for the application of the principles relating to waiver ... Those principles are now generally applicable by virtue of s 122 of the Evidence Act to claims of client legal privilege under Division 1 of Part 3.10. It is to be noted that s 122 does not apply to s 131, which is in Division 3 of Part 3.10.Thus, unless the notion of inconsistency referred to in s 122, and derived from Mann v Carnell is relevant to one or other of the exceptions in s 131(2), the submissions... relating to waiver at common law have no application in the circumstances of this case.[3]
18 The view that the exceptions set out in s 131(2) are a code, and that there is no judicial discretion to overcome the privilege in circumstances which do not fall within them is also taken by text writers.[4]
19 Counsel for the defendants took me to the decision of Burchett J in Burg Design Pty Ltd and ors v Wolki and anor[5] (‘Burg’) in which his Honour rejected a submission that certain evidence of a without prejudice meeting should be struck out. He held that because the parties had each already sworn affidavits which had been filed and served giving accounts of the meeting, and one of those parties had been cross examined, ‘any claim to privilege had clearly been waived by the course the parties had taken.’ His Honour added ‘see too Evidence Act 1995 (Cth) s 131(2)’. Section 131 of the Commonwealth Act is in the same terms as s 131 of the Victorian Act. In this decision, Burchett J did refer to conduct amounting to waiver as resulting in the loss of without prejudice privilege and may have suggested, by the use of the word ‘too’, in the second quote extracted above, that this was distinct from the statutory exceptions.[6] If so, I respectfully disagree. His Honour added that he did not consider the evidence to be privileged in any event, as it was not related to any attempt to settle the matter. Accordingly, his comments on the exceptions were obiter.
20 In the absence of compelling authority to the contrary, it seems to me dangerous to apply a concept (acting inconsistently with the maintenance of the privilege) that appears expressly in s 122 in relation to loss of client legal privilege to the exceptions to settlement negotiation privilege conferred by s 131(1) when the concept of acting inconsistently is not used in that section. I accept the submission of the plaintiff[7] that there is good reason for this difference- client legal privilege is a unilateral privilege, whereas the privilege conferred by s 131 is a joint privilege, and so inconsistent action by one party to the communication cannot in itself be enough to cause it to cease to apply.
21 The safer course in my view is to construe the exceptions in s 131(2) having regard to their own terms. As there is no reference in s 131 to acting inconsistently with the maintenance of the privilege, I will not use that concept in my construction of the section. I now turn to that construction.
22 The defendants rely in this application on the exceptions in paragraphs (b) and (c) of s 131(2). Those exceptions turn on consent of the parties to the communication. I analyse them as follows.
23 The exceptions contained in paragraphs (a), (b) and (c) all require the consent of either ‘the persons in dispute’ (paragraphs (a) and (c)) or ‘all the persons in dispute’ (paragraph (b)). Neither party made any submission as to the difference in wording, i.e. the absence of the word ‘all’ in paragraph (c), and I will assume that it is not intended to signify a lessening of the requirement that all the persons in dispute must consent. I am fortified in this conclusion by the contradistinction between ‘any’ and ‘all of the other persons’ in paragraph (a).
24 The defendants submit that the plaintiff’s consent to disclosure is to be implied from a number of matters. These are first the inclusion in the Letter written by its solicitors of communications said to have been made by the directors of the plaintiff and the employee of the defendants at the Meeting. Next, so the defendants assert, it is plain from the Letter that the plaintiff relied on the statements said to have been made at the Meeting to form a basis for the plaintiff’s claim or to arrive at the conclusion that the plaintiff had a cause of action; and, finally, that the plaintiff has not retracted the statements made in the Letter.
25 The defendants submit that they subsequently consented to this disclosure by seeking to rely on the Letter in certain submissions filed 23 October 2015 (which are not before me in this application) and in their amended defence dated 6 June 2016. The amended defence shows their intention to rely on what was said at the Meeting at trial.
Consent to what- disclosure as opposed to giving evidence
26 The plaintiff disputes that it has consented. The plaintiff does not dispute that it consented to inclusion in the Letter of communications that would otherwise be privileged. Properly, it does not assert that the Letter (apart from the repetitions of these communications) attracts the s 131(1) privilege. Plainly it does not, as it is not directed to settlement. What the plaintiff says is that it can make good the allegations in its statement of claim without any reliance on what occurred at the Meeting; it does not intend to rely on what took place at the Meeting at trial; and it does not consent to evidence of the Meeting being adduced in the proceeding.
27 In my view, these submissions conflate two concepts - consent to disclosure of communications at the Meeting, other than in evidence; and consent to evidence of those communications being adduced. The exception in s 131(2)(a) requires consent to the evidence of the communication that would otherwise be privileged ‘being adduced in the proceeding’. The exception in paragraph (b), by contrast, requires that ‘the evidence’ i.e. the evidence of the privileged communication ‘has been disclosed’ with consent. Paragraph (c) adds to the potential confusion by using both concepts. It applies where part of the communication has been ‘disclosed’ with the consent of the persons in dispute, and ‘full disclosure’ of the whole of the communication is reasonably necessary ‘to enable a proper understanding of the other evidence that has already been adduced’. In other words, paragraph (c) seems to imply that both the initial partial disclosure was, and the required later full disclosure is, by way of evidence in the proceeding.
28 The question that arises is whether disclosure is, or may be, a different concept to the adducing of evidence? In other words, can the disclosure of which paragraph (b) speaks occur outside trial or preparations for trial? It is implicit in the submission of the defendants that it can, because they assert that the relevant disclosure occurred in the Letter, which predated the proceeding.
29 The plaintiff submits that the exceptions do not apply because it has not evinced any intention by its statement of claim to rely on the privileged communications and can prove its whole case without reliance on them. I accept that the statement of claim pleads not what was said at the Meeting, but rather the contents of the termination notice and other matters, such as the respective bargaining powers of the parties, that do not turn on the Meeting. If the only form of disclosure that could trigger the exceptions in paragraphs (b) and (c) was disclosure in the course of a proceeding, by evidence of the privileged communication being adduced, then the plaintiff’s submission would be correct.
30 In my view, the plaintiff’s submission is not correct. I consider that the Act envisages that ‘disclosure’ can occur by means other than the adducing of evidence. As noted earlier, paragraph (b) of s 131(2) speaks of disclosure, not the giving of evidence. Further, the extended application of the privilege to interlocutory steps conferred by s 131A clearly uses the word ‘disclosure’ in the phrase ‘disclosure requirement’ to encompass disclosure of information, for example by way of discovery, that may not make its way into evidence. Finally, by virtue of s 122, disclosure other than by way of the giving of evidence can result in the loss of client legal privilege. As will shortly be seen, I consider that the same meaning should be attributed to ‘disclosed’ in s 131 as in s 122.
31 Further, it would appear that the policy behind the section is to encourage frank discussion with a view to settlement. Plainly, frank discussion is inhibited if evidence as to what is said in the course of negotiation can be given in court if the dispute does not settle. It is also inhibited, however, if a party to the dispute can disclose the substance of the negotiations outside the course of the proceeding without the potential sanction of having what was said in the negotiations used against it in court. Protection against disclosure outside the course of the proceeding requires a broad interpretation of ‘disclosure’ that is not limited to the giving of evidence.
32 The plaintiff put the further related submission that the defendants’ subsequent consent is ineffective because the consents must be at the same time. The plaintiff referred me to a ruling by Barrett J in Oliver v Lake Side Resort Development Pty Ltd[8] (‘Oliver’) in support of both propositions- that consent must be to the giving of evidence of the otherwise privileged communication, and that it must accompany that evidence.
33 In that case, the fourth defendant under cross examination gave an answer that disclosed a communication within s 131(1) of the Commonwealth Act and counsel for the plaintiff submitted that that amounted to consent by the defendant and so the privilege was waived, as the plaintiff now also consented. Barrett J rejected the contention, in essence because the answer given by the defendant did not constitute consent by anyone other than himself and ‘consent must be in existence when the otherwise precluded evidence is adduced’. He added that at the time the answer was given there was no consent by anyone other than the fourth defendant and ‘(t)he consent cannot be retrospectively constructed by regarding the answer itself as being an offer to waive the privilege which offer the other parties then become able to accept’.[9] In other words, in that case, the plaintiff could not consent after the evidence had been given.
34 For the same reasons given earlier as to the distinction between disclosure and the adducing of evidence, I do not consider that Oliver limits the occasion for the giving of consent to the giving of evidence. That was the occasion that arose in that case, but the ruling does not purport to exclude any other situation where there may have been consent to disclosure. Nor do I consider that the ruling seen in its context excludes the possibility of consents being given at different times. On its particular facts, the disclosure in question was the adducing of evidence of a privileged communication, and so consent of all persons in dispute was required prior to the evidence being given for it to be admissible. There is obvious sense in this restriction, to avoid unintended loss of the privilege. The ruling does not, however, speak of a situation where one person in dispute has disclosed the privileged communication, and the other persons in dispute later, but before the evidence is given, consent to that disclosure, thereby asserting that evidence of the communication may be given. That is the situation that the defendants here assert.
35 This sort of situation is expressly envisaged, in a different manner but similar as to timing, by the second limb to the exception in paragraph (a). That limb of the exception applies where one person in the dispute has taken an action that disrupts the privilege at an earlier point in time (‘has tendered the communication... in evidence in another ...proceeding’) and the consent of the other persons in the dispute that allows the communication to be adduced in the proceeding between them all is later given.
36 Further, the construction advanced by the plaintiff does not reflect the common practice and reality of necessary consents being given at different times. As is shown by the example identified by counsel for the defendants of the common execution of contractual documents in counterparts, consents often occur consecutively or distinctly and are no less effective thereby.
37 The plaintiff has added to its submission that the consents must be given at the same time in its Supplementary Submissions.[10] Notwithstanding that further submission, which for convenience I will discuss shortly under the topic of ‘Disclosure’, I do not accept the plaintiff’s submission that the consent exceptions cannot apply because the defendant’s consent did not accompany the disclosure.
Conclusion on consent
38 For these reasons, I accept the defendants’ submission that the required consent for the purposes of the exceptions in paragraphs (b) and (c) can be given at different times by the persons in dispute, and I consider that, if the inclusion by the plaintiff in the Letter of the plaintiff’s account of some of the communications at the Meeting was a ‘disclosure’, the plaintiff consented to that disclosure for the purposes of the exceptions. This consent would be sufficient notwithstanding that the plaintiff has not pleaded what was said at the Meeting and does not wish to rely on what was said at the Meeting in the proceeding.
39 To my mind, the critical issue on the applicability of the exceptions in paragraphs (b) and (c) is not consent at all, but the issue of what constitutes disclosure. All that occurred here is that the agents of the plaintiff repeated in the Letter, which was sent to the defendants, the plaintiff’s account of certain of the privileged communications previously made between them at the Meeting. The plaintiff has not disclosed the substance of the communications at the Meeting to any third party.[11] The question that arises is whether inclusion by one person in dispute of earlier privileged communications between it and the other persons in dispute in a later non-privileged communication solely between them constitutes disclosure within the meaning of paragraphs (b) or (c). In other words, is it sufficient to trigger the exception that the ‘disclosure’ in question was only to the other persons in dispute, who were in any event privy to the privileged communications? This was a question that the parties did not raise expressly in these terms, but I put to them in argument.
40 I begin with the words of the section. The exceptions in paragraphs (b) and (c) require disclosure, but do not expressly require disclosure to someone other than a party to the privileged communication. The very use of the concept of disclosure to my mind, however, suggests that it is disclosure to someone other than the parties to the privileged communication. How can a communication of which they were both already aware, because it was between them, be ‘disclosed’ by one to the other by being referred to or repeated in a later and not privileged form?
41 Neither I nor the parties have identified any authority on this question as it arises under s 131(2). There is, however, a similar provision in relation to disclosure in s 122 of the Act dealing with the loss of client legal privilege, and there is authority on the construction of that section. I identified that authority after the hearing, and invited the parties’ further submissions on it.
42 Section 122 of the Act relevantly provides as follows:
122 Loss of client legal privilege—consent and related matters(1) This Division does not prevent the adducing of evidence given with the consent of the client or party concerned.
(2) Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120.
(3) Without limiting subsection (2), a client or party is taken to have so acted if—
(a) the client or party knowingly and voluntarily disclosed the substance of the evidence to another person; or
(b) the substance of the evidence has been disclosed with the express or implied consent of the client or party.
(4) The reference in subsection (3)(a) to a knowing and voluntary disclosure does not include a reference to a disclosure by a person who was, at the time of the disclosure, an employee or agent of the client or party or of a lawyer of the client or party unless the employee or agent was authorised by the client, party or lawyer to make the disclosure.
(5) A client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because—
(a) the substance of the evidence has been disclosed—
(i) in the course of making a confidential communication or preparing a confidential document; or
(ii) as a result of duress or deception; or
(iii) under compulsion of law; or
(iv) if the client or party is a body established by, or a person holding an office under, an Australian law—to the Minister, or the Minister of the Commonwealth, the State or Territory, administering the law, or part of the law, under which the body is established or the office is held; or
(b) of a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person; or
(c) of a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to the proceeding or an anticipated or pending proceeding in an Australian court or a foreign court.
(6) (not relevant)
43 I have noted earlier that the concept of waiver or acting inconsistently that appears in s 122 does not apply to s 131. As Derham AsJ noted in Kong, the reference to acting inconsistently as a reason for loss of client legal privilege in s 122(2) is qualified as applying only to that Division of the Act, and so does not apply to settlement negotiation privilege. Further, the privileges are different, and, in particular client legal privilege is a unilateral privilege while settlement negotiation privilege is a shared privilege. There is, accordingly, the need for care and analysis before applying authority on s 122 to s 131.
44 However, both sections include disclosure of privileged information as a basis by which the privilege with which they are respectively concerned may be lost, or not apply. Sub-section (3) of s 122 does reference sub-section (2), which is stated to apply to that Division only, but in my view sub-section (3) is illustrative, and uses the ordinary meaning of ‘disclosed’. In other words, I do not consider that the meaning of ‘disclosed’ in s 122(3) is limited to that Division only. Provided care is taken to identify any difference that might arise from the different nature of the privileges, I do not see why the meaning of ‘disclosed’ in s 122((3)(b) should not be the same as its meaning in s 131(2)(b) and (c), and vice versa. It follows that, subject to any relevant differences in the nature of the privileges, authority on s 122(3) can be applied by analogy to s 131 (2) (b) and (c).
45 The principle authority on s 122 on which I invited further submissions is Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd[12] (‘Tim Barr’). In that case, Barrett J considered the meaning of ‘disclosed’ in the equivalent provision to s 122 in the Commonwealth Act. At that time, s 122 of the Evidence Act 1995 (Cth) provided as follows:
Loss of client legal privilege: consent and related matters(1) This Division does not prevent the adducing of evidence given with the consent of the client or party concerned.
(2) Subject to subsection (5), this Division does not prevent the adducing of evidence if a client or party has knowingly and voluntarily disclosed to another person the substance of the evidence and the disclosure was not made:
(a) in the course of making a confidential communication or preparing a confidential document; or
(b) as a result of duress or deception; or
(c) under compulsion of law; or
(d) if the client or party is a body established by, or a person holding office under, an Australian law--to the Minister, or the Minister of the State or Territory, administering the law, or the part of the law, under which the body is established or the office is held.
(3) Subsection (2) does not apply to a disclosure by a person who was, at the time, an employee or agent of a client or party or of a lawyer unless the employee or agent was authorised to make the disclosure.
(4) Subject to subsection (5), this Division does not prevent the adducing of evidence if the substance of the evidence has been disclosed with the express or implied consent of the client or party to another person other than:
(a) a lawyer acting for the client or party; or
(b) if the client or party is a body established by, or a person holding an office under, an Australian law--the Minister, or the Minister of the State or Territory, administering the law, or the part of the law, under which the body is established or the office is held.
(5) Subsections (2) and (4) do not apply to:
(a) a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person;
(b) a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to a proceeding or an anticipated or pending proceeding in an Australian court or a foreign court.
(6) This Division does not prevent the adducing of evidence of a document that a witness has used to try to revive the witness's memory about a fact or opinion or has used as mentioned in section 32 (attempts to revive memory in court) or 33 (evidence given by police officers).
46 The section has subsequently been amended to replicate the section as it appears in the Victorian Act. Even at the time of Tim Barr, however, it contained similar provisions to those in the Victorian Act in relation to disclosure as a reason by which the privilege is lost.
47 In Tim Barr, Barrett J held that it would be inconsistent with the ordinary meaning of ‘disclose’ for it to be possible to ‘disclose’ to a person something already known or possessed by that person.[13] He concluded:
Sections 122(2) and 122(4) cannot operate in a case where the content of a privileged document is communicated to a person who is already in possession of that content. This is because that communication is not one that reveals or makes known that content. It therefore does “disclose” the content.[14]
48 In reaching this conclusion Barret J considered prior authority on the point and discounted the submission that this construction would have unintended consequences.[15] Tim Barr has been followed or cited with approval in several subsequent cases.[16]
49 The plaintiff submits that Tim Barr applies with equal force to the meaning of ‘disclosed’ in s 131(2)(b) and (c).[17] It would follow that here there was no ‘disclosure’ in the Letter, and so no basis for the exceptions to apply.
50 The defendants seek to distinguish Tim Barr on the basis of the difference in drafting between s 122 and s 131(2) of the Victorian Act.[18] It is not entirely clear from their submissions whether in this respect they refer to s 122 of the Commonwealth Act as it was at the time of Tim Barr, or s 122 of the Victorian Act. Certainly Barrett J was concerned with s 122 of the then Commonwealth Act, and, as noted, s 122(2) and s 122(4) of that Act at that time each required disclosure ‘to another person’. Similarly, s 122(3)(a) of the Victorian Act, and s 122(3)(a) of the Commonwealth Act as it is now expressed, require that the disclosure is ‘to another person’. There is, however, no such express requirement in the use of disclosure as an exception to settlement negotiation privilege in s 131(2).
51 On analysis, however, I think it is a distinction without a difference. Paragraph (b) of s 122(3) of the Victorian Act does not contain the requirement that the disclosure must be to another person, yet it has the same consequences as disclosure under paragraph (a). I consider that the involvement of another person arises from the very concept of ‘disclosure’, and is not due only to the inclusion of the words ‘to another person’ in paragraph (a).
52 In my view, it is for this reason that the defendants’ contentions fail. They have not shown that the plaintiff has disclosed the privileged communications to anyone who did not already know of them. Accordingly, the exceptions contained in s 131(2)(b) and (c) do not apply by reason of the Letter so as to permit the adducing of evidence of what was said at the Meeting.
53 By way of completeness, I also note and accept the plaintiff’s further submission[19] that this construction of ‘disclosure’ is not inconsistent with the distinction between ‘open’ and ‘without prejudice’ offers. The statement in an open offer that it is ‘open’ means that it falls within the s 131(2)(d) exception. Such an offer can be adduced into evidence even if only communicated prior to that time between the parties (and so not ‘disclosed’ in the sense I have construed that word) because it was not intended to be confidential, not because it has been earlier disclosed.
54 The plaintiff also relies on Tim Barr to further support its contention that the consent of each party to disclosure must be given at the same time for the exceptions to apply. The issue in that case was whether consent to disclosure for the purposes of s 122(4) of the Commonwealth Act could be given after the disclosure, or whether only prior or contemporaneous events could be considered to determine if implied consent was given. Barrett J held that it was the latter i.e. consent could not be inferred from events later in time to the disclosure.
55 The plaintiff quotes the following portion of the judgment in support of their contention that it follows that, in the case of settlement negotiation privilege, the consent of all the parties must be given at the same time, and prior to or contemporaneously with the disclosure:
‘Disclosure’, in the sense to which I have referred, can be made ‘with’ a person’s consent (express or implied) only if the ‘disclosure’ takes place in a factual context which includes either an express giving of consent or elements from which consent may be inferred. The preposition ‘with’ indicates that the consent must in some way accompany or attach to the disclosure.[20]
56 In my view, it is a misapplication to apply this aspect of Tim Barr to the consent of parties other than the discloser in settlement negotiation privilege. First, it is potentially unsafe to do so because of the significant difference between the two privileges as to who holds the privilege. Settlement negotiation privilege is a shared privilege, and so consent to disclosure is required by all parties if the privilege is to be lost, while client legal privilege is a unilateral privilege. Tim Barr is concerned with client legal privilege, and so this aspect of the judgment necessarily applies to consent to disclosure by that sole holder of that privilege. While persons other than that person may have access to the privileged information (plainly at least the lawyer does), only the client can consent to its disclosure, and his or her consent must be prior to or contemporaneous with that disclosure.
57 Secondly, although the phrase ‘disclosed with ...consent’ also appears in s 131(2)(b) and (c), in other respects the sections differ. As noted earlier, s 131(2)(a) contemplates the giving of consent by the discloser at an earlier point in time to the consent of other parties. Thus, to extend the ruling on timing in Tim Barr to the consents of the other parties in settlement negotiation privilege would be inconsistent with the whole of s 131(2). This reading does not deprive the word ‘with’ of meaning. It still has meaning in s 131(2)(b) and (c) by construing it to require that the consent of the other parties must relate to the disclosure.
58 Before concluding, I note that there was discussion in the argument about the possible application of the exception contained within s 131(2)(g), depending on what evidence is adduced in the trial. The paragraph (g) exception is directed to ensuring that the Court is not mislead by evidence already adduced. The nature of that exception is discussed at some length in Apotex Pty Ltd v Les Laboratoires Servier (No 5).[21] Whether that issue arises is to be determined at trial. The parties do not seek that I determine it now, and it would be inappropriate to do so.
Conclusion and orders
59 In answer to the question referred to me, I hold that the exceptions set out in paragraphs (b) and (c) of s 131(2) of the Act do not apply to the communications between the parties at the Meeting by virtue of the inclusion of the plaintiff’s account of some of those communications in the letter from its solicitors to the defendants dated 18 August 2015.
60 I will ask the parties to prepare orders to reflect this determination, which, if possible, should also deal by consent with costs and an adjourned directions date before a judge in the Commercial Court.
[2] Submissions of the Defendants dated 12 August 2016 at [15].
[3] [2014] VSC 28 at [66]- [67].
[4] See, for example, Odgers, Uniform Evidence Law 12th edn at [EA 131.60] p1122.
[6] To the contrary, in Heydon, Cross on Evidence, Lexis Nexis 2013 9th edition at [25395] p 894 Burg is cited as an example of exception by consent, not waiver.
[7] Outline of Submissions of the Plaintiff at [14].
[9] Oliver, at [4].
[10] Supplementary Submissions of the Plaintiff at [9]-[13].
[11] Outline of Submissions of the Plaintiff at [8]. The defendants do not contend to the contrary.
[13] Tim Barr at [19].
[14] Tim Barr at [20].
[15] Tim Barr at [11]-[20].
[16] The Leasing Centre (Aust) Pty Ltd v Rollpress Proplate Group Pty Ltd [2010] NSWSC 877 also per Barrett J at [28]; Apotex Pty Ltd v Les Laboratoires Servier (No 5) [2011] FCA 1282 per Flick J at [40]; Ashby v Commonwealth of Australia (No 2) [2012] FCA 766 per Rares J at [25].
[17] Supplementary Submissions of the Plaintiff at [7].
[18] Further Submissions of the Defendants dated 26 August 2016 at [7].
[19] Supplementary Submissions of the Plaintiff at [7(c)].
[20] Tim Barr at [24].
[21] [2011] FCA 1282 per Flick J.
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