EVIDENCE – Without prejudice offers of settlement in prior proceeding between the plaintiff and third parties – Some offers were made in a mediation while others were made after the mediation – Whether evidence of the offers made in the mediation is excluded by Supreme Court Act 1986 (Vic) s 24A – Whether evidence of offers is admissible for the purpose of contradicting or qualifying evidence that may mislead the Court – Evidence Act 2008 (Vic) s 131(1), (2)(g).
Section 131 of the Evidence Act
14 Section 131(1) of the Evidence Act prohibits the adduction of evidence of ‘a communication that is made between persons in dispute … in connection with an attempt to negotiate a settlement of the dispute’. The prohibition in s 131(1) is subject to the exceptions in s 131(2). One of those exceptions is as follows:
(2) Subsection (1) does not apply if –
(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; …
15 Mr Booth has conceded that the fact that s 24A of the Supreme Court Act does not apply to communications that took place at the Mediation does not prevent s 131(1) of the Evidence Act from applying to those communications. Accordingly, it was common ground between the parties that the proposed evidence would be prohibited by s 131(1) unless s 131(2)(g) applies.
16 In Brown v Commissioner of Taxation, Emmett J held that s 131(2)(g) will apply ‘where the court would be likely to be misled as to the existence or contents of an excluded communication or document, where those matters are in issue in the proceeding.’
17 In Mulkearns v Chandos Developments Pty Ltd [No 4], Young CJ in Eq held that evidence of a prior without prejudice offer by the defendant was admissible under s 131(2)(g) because, ‘unless this additional fact is permitted into evidence, the plaintiffs may mislead the Court into thinking their case is one against a greedy defendant who would not give an inch and this would be a factor to go to the Court’s discretion [whether to order the return of the deposit].’
18 In my opinion, the above cases support the application of s 131(2)(g) to the proposed evidence.
19 A key premise in the plaintiff’s case – both in its pleadings and in the evidence of Mrs Maher – is that the breach of retainer and negligence on the part of Riordans in not advising the plaintiff about the Option deprived it of the opportunity to acquire, on 9 July 2001, an apartment that was then worth $600,000, for $210,000. An inference that arises from Mrs Maher’s evidence is that the opportunity to acquire the Apartment for a substantially discounted price was lost forever after 9 July 2001 and that the loss of that opportunity was due solely to the breach of retainer and negligence on the part of Riordans.
20 At this stage of the proceeding, I am unable to say what conclusions, if any, would be open to me on the basis of the proposed evidence. For example, I do not know whether there were any legal or practical impediments to the acceptance of the alleged offers or whether any purported acceptance would have created a legally binding contract. It is clear, however, that if the proposed evidence has the effect contended by Mr Booth, the inability of Riordans to adduce that evidence to contradict or qualify Mrs Maher’s evidence would be likely to mislead the Court on the issues of contributory negligence and mitigation. Exclusion of the proposed evidence would enable the plaintiff to assert a case which was inconsistent with that evidence.
21 It is not necessary for me to deal with Mr Booth’s alternative submission based on implied waiver of the without prejudice privilege.
22 Mr Bailey submitted that s 131(1) was underpinned by strong public policy considerations to which the Court should give effect. There is no doubt that it is in the public interest that parties to a legal dispute should not be discouraged from seeking to settle the dispute due to apprehensions that any statements they make in settlement negotiations may be used against them in litigation. However, it is clear that the Parliament has decided that, where an exception in s 131(2) applies, the public interest in the adduction of evidence of settlement negotiations overrides the public interest in keeping such negotiations confidential.
23 I note, in passing, that Mr Booth has informed me that adduction of the proposed evidence in the current proceeding is unlikely to cause any prejudice to Millennium or to any other party to the prior proceeding because all issues in dispute between the parties to that proceeding have been finally resolved.
24 For the above reasons, I disallow Mr Bailey’s objection and will permit Mr Booth to cross-examine Mrs Maher about the matters set out at  above and about any other matters that give rise to similar considerations.