Herbert Smith’s e-bulletin commences:
‘Supreme Court confirms new exception to the ‘without prejudice’ rule
In its judgment handed down on 27 October 2010 in Oceanbulk Trading & Shipping SA v TMT Asia  UKSC 44, the Supreme Court added a new exception to the ‘without prejudice’ rule. It held that facts communicated between parties in the course of ‘without prejudice’ negotiations should be admissible, if they would otherwise be admissible as part of the ‘factual matrix’ to aid contractual construction.’
The contract the construction of which was contemplated was a settlement agreement. The Supreme Court is now the foremost Court in England, following the demise of the House of Lords.
Simply Irresistable Pty Ltd v Couper  VSC 505 is a ruling in a solicitor’s negligence case decided under the Evidence Act, 2008 about an objection to the adduction of evidence as to offers made in a previous proceeding. A company is suing its former lawyers for negligence in the Supreme Court at the moment. They are defending on bases that include that the company caused its own losses, and alternatively failed to mitigate them. A woman gave evidence for the company. An inference arising from the evidence is that the company’s former lawyers were the sole cause of the loss of an opportunity to exercise an option pursuant to which they could have acquired for about $200,000 an apartment then worth $600,000. The company says the lawyers negligently failed to advise her to exercise the option, so that she lost about $400,000, plus additional amounts representing the increase in value in the property since then.
The woman had previously sued her solicitor before the defendants commenced to act for her, as well as the person from whom they could have purchased had they exercised the option (Maher v Millennium Markets  VSC 174). In that earlier proceeding, there was a mediation. According to the solicitor defendants in the present matter, the defendants in the earlier proceeding offered to settle on the basis that the woman could purchase the apartment for $250,000. Their counsel intimated a desire to cross-examine the woman in order to establish that fact. The woman’s counsel objected on the basis that the offer was made at a Court-ordered mediation and was without prejudice. Continue reading “Evidence of offers at mediation admitted into evidence”
Update, 9 August 2010: See also Forsyth v Sinclair (No 2)  VSCA 195 where Justices of Appeal Neave and Redlich and Acting Justice of Appeal Habersberger held that the Evidence Act, 2008‘s ‘relevant to costs’ exception to the s. 131 rule that without prejudice communications are inadmissible is trumped by the Supreme Court Act, 1986 provision that anything said or done at a Court-ordered mediation may not be adduced in evidence. So, one party’s counsel said to another at the mediation that the very costs consequences which the Court ended up making would flow if the other party did not accept an offer. That was relevant to the question of costs, but it was inadmissible because of s. 24A of the Supreme Court Act, 1986.
Original post: In Alexander v Australian Community Pharmacy Authority (No 2)  FCA 467, a judge of the Federal Court in Melbourne admitted a ‘without prejudice’ letter (which was not expressed to be ‘without prejudice except as to costs’) into evidence at a post-trial costs hearing. His Honour noted that the parties paid no attention in argument to the Evidence Act, 2005 (Cth) which governed the issue, and that communications which otherwise attract negotiation privilege are admissible if they are relevant to costs. Victorian lawyers are obviously going to have to get used to the new regime, because the Evidence Act, 2008 (Vic.) is to the same effect. Based on this decision in relation to legal professional privilege (now called ‘client legal privilege’ at least in those circumstances where the Evidence Act, 2008 applies), it is likely that the new regime will apply to the adduction even of letters written prior to the commencement of the new Act. Treat every without prejudice letter as a Calderbank letter, in other words. Continue reading “Without prejudice privilege and the Evidence Act, 2008”
It has never been clear to me that anyone was entitled in a disciplinary prosecution to refer to statements made ‘without prejudice’ unless the joint privilege holders (the disputants on whose behalf the communication was made, and made to) waived it. Now I have found an authority on the question in Legal Practitioners Complaints Committee v David F  WASAT 352, a disciplinary prosecution of a lawyer who allegedly made misleading comments during a negotiation. Western Australia’s State Administrative Tribunal held that without prejudice statements could be adduced in evidence against him: Continue reading “Waiver of without prejudice privilege in disciplinary prosecutions of lawyers”
I reckon Dr Desiatnik is unlucky with the timing of his texts. The first edition of Legal Professional Privilege in Australia was finished when the High Court changed the test for the privilege from a sole purpose to dominant purpose and restated the law of implied waiver. I have always shuddered about the story one of my law lecturers recounted of a Canadian academic who devoted a decade to a text on death taxes only to see the parliament abolish them on the eve of the launch. I hope the story is apocryphal. This time around, Dr Desiatnik — a lovely man with a quirkily old fashioned text writing style — has finished a whole book devoted to negotiation privilege, which is about to be published, and the House of Lords has come along and put out a major judgment on the subject. Fortunately, Ofolue v Bossert  UKHL 16 does not seem to revolutionise the law. Here is The Times‘s account of the decision.
Update, 14 November: here’s an English firm’s note about Vaseghi and another case involving without prejudice privilege in an employment dispute context.
Original post: You don’t often see cases about waiver of without prejudice privilege, whereas forests fall at an alarming rate in relation to nice questions like whether ‘fairness’ or ‘inconsistency’ is the right touchstone for imputed waiver of legal professional privilege. Here’s one, though, from the English Court of Appeal: Vaseghi v Brunel University  EWCA Civ 482. I have reproduced below the little precis of the law of negotiation privilege in the judgment, which emphasises that the privilege is a joint privilege ‘owned’ by each party to the communication and cannot be unilaterally waived by one party. Meanwhile, VCAT’s Senior Member Vassie has allowed evidence to be tendered in a professional negligence claim of what went on in a mediation in the underlying litigation, at the instance of one participant (who was suing his lawyer) without the consent of the other participant: Louis v G&O’B  VCAT 1997 refusing to follow an earlier decision dead on point of a fellow Senior Member. Continue reading “Settlement offers aren’t confidential after all if one party sues their solicitor”
CMS Cameron McKenna, an English firm, has noted a new English case on the availability of without prejudice privilege — otherwise known as negotiation privilege — over negotiations which take place long before litigation is commenced or even a reasonably certain prospect. In Framlington Group Limited v Barnetson  EWCA Civ 502, an unlawful termination of employment case, the Court of Appeal said ‘the crucial consideration would be whether in the course of negotiations the parties contemplated or might reasonably have contemplated litigation if they could not agree’. The relevant passage is: Continue reading “Without prejudice privilege and negotiations long before litigation”