Citation : TSALLIS -v- SCHOFIELD [2012] WASC 231

Practice and procedure - Without prejudice communications - Whether document made for purpose of attempting to compromise a dispute - Relevant principles - Whether court be mislead if document not admitted into evidence - Document put into evidence in earlier proceedings with different party - Whether waiver of privilege

Barrett Property Group Pty Ltd v Dennis Family Homes Pty Ltd (No 2) [2011] FCA 276

Bentley v Nelson [1963] WAR 89

Field v Commissioner of Railways (NSW) [1957] HCA 92; (1957) 99 CLR 285

Harrington v Lowe (1996) 190 CLR 311

JA McBeath Nominees Pty Ltd v Jenkins Development Corporation Pty Ltd [1992] 2 Qd R 121

Lohar Corporation Pty Ltd v Dibu Pty Ltd (1976) 1 BPR 9177

Mitchell v Schofield [2007] WASC 303

Ofulue v Bossert [2008] EWHC 438; [2009] 1 AC 990

Pihiga Pty Ltd v Roche [2011] FCA 240; (2011) 278 ALR 209

Pitts v Adney (1961) 78 WN (NSW) 886

Re Daintrey; Ex parte Holt [1893] 2 QB 116

Rodgers v Rodgers [1964] HCA 25; (1964) 114 CLR 608

Rush & Tompkins Ltd v Greater London Council [1988] UKHL 7; [1989] 1 AC 1280

Somatra v Sinclair Roche & Temperley (a firm) [2000] EWCA Civ 229; [2000] 1 WLR 2453

Unilever Plc v Procter v Gamble Co [1999] EWCA Civ 3027; [2000] 1 WLR 2436

Wilson v Metaxas [1989] WAR 285

Wing Luck Foods v Lay Choo Lim [1989] WAR 358

1 JUDGMENT OF THE COURT: This is an appeal against a decision of Kenneth Martin J in which his Honour held that three documents prepared by the respondents were without prejudice communications and therefore the subject of privilege.

2 As the appeal is from an interlocutory order, leave to appeal is required: s 60 (1)(f) of the Supreme Court Act 1935 (WA). On 10 August 2012, Pullin JA ordered that the application for leave to appeal be referred to the hearing of the appeal.

3 The relevant material facts were not in dispute. The respondents were the proprietors of a property located at Lot 9 Cheriton Road, Gingin, which they intended to subdivide. The respondents engaged a local real estate agent, Mr Cabassi of Roy Weston Cabassi Realty (Roy Weston), to facilitate sales of lots in the proposed subdivision. In the period 2004 to 2006 the respondents entered into contracts of sale with some 60 or more purchasers of lots. The appellants were among the purchasers.

4 The appellants entered into the contract of sale with the respondents on 16 February 2005. The purchase price of the proposed lot was $50,000 and settlement was due on the issue of a certificate of title. The contract was on a standard form offer and acceptance approved by the Real Estate Institute of Western Australia. It expressly incorporated the 2002 Joint Form of General Conditions for the sale of Land. Clause 13.3 of the General Conditions provided (relevantly):

(a) The Contract is also conditional on the following:

(1) The Planning Commission endorsing approval of a Subdivision Plan within 6 months after approval by the Planning Commission for subdivision.

(2) The Subdivision Plan being in order for dealing within 3 months after the endorsement of approval by the Planning Commission in accordance with subclause (1).

(1) Any condition specified in this clause is not satisfied within the time specified for satisfaction of that condition;

...

subclause (b) will apply.

(a) Where subclause (a) applies, the following apply:

(1) The Deposit, and any money paid by the Buyer under the Contract, must be promptly repaid to the Buyer;

...

(2) Subject to subclause (1) ...no Party will have any claim or right against the other arising from the termination, except in respect to any matter which arose before the termination.

6 The appellants plead that there were written variations to the contract of sale on two subsequent occasions. By a written agreement dated 12 July 2005, the period for the endorsement of Planning Commission approval under cl 13.3(a)(1) was extended from 6 months to 8 months and, by a written agreement dated 20 December 2005, the period was extended to 14 months (SOC, par 19). As it turned out, the Planning Commission's endorsement was not obtained within the extended time.

7 On 25 May 2006, a letter dated 17 March 2006, signed by the first-named respondent (Mr Schofield) and addressed 'To whom it may concern', was sent by Roy Weston to each of the purchasers of lots in the proposed subdivision, including the appellants. In the letter, Mr Schofield said that the Planning Commission had not endorsed its approval on the sub-division plan within the time specified in the contract and accordingly the contract was at an end. He went on in the letter to say that:

Upon further clarification from the [Planning Commission] we may re-offer the lots in [the proposed subdivision] for sale in due course.

8 It seems the letter caused widespread discontent among the purchasers. In evidence before the primary judge, Mr Cabassi said that in the days following delivery of the letter a number of purchasers contacted him personally, by telephone or in writing to express their discontent. Mr Cabassi produced some 43 written communications from purchasers, dated between late May and 7 June 2006, indicating their dissatisfaction with the respondents' action, many saying that they would be seeking legal advice. One of the communications was an email from the first appellant asking Mr Cabassi to retain the deposit until he received further instructions from him. A further three letters from purchasers were received shortly after 7 June 2006. Having regard to the dates and terms of the various letters, they have the appearance of a co-ordinated response by the purchasers concerned.

9 On 7 June 2006, a meeting of some 53 purchasers (representing 39 lots) took place at the Gingin Town Hall. Representatives of two law firms attended the meeting and made presentations with a view to representing the purchasers. Mr Grocke, one of the purchasers and apparently an organiser of the meeting, gave evidence before the primary judge that it was agreed at the meeting that one of those firms, Lavan Legal, should be instructed to provide advice to the purchasers, including advice on:

a possible approach to [the respondents] to investigate [the respondents] attitude towards a negotiated settlement before serious legal proceedings are entered into.

10 Mr Grocke, who described himself as the spokesperson for the meeting, said that the following morning, 8 June 2006, he instructed Mr Coyle of Lavan Legal accordingly.

11 Mr Grocke gave evidence that later that morning Mr Cabassi called upon him at his home and said that the respondents were willing to negotiate with the purchasers with a view to reaching agreement on a revised purchase price (ts 48).

12 An affidavit of the respondent's solicitor, Mr Miller, went into evidence. Mr Miller was not cross-examined on it. In his affidavit, Mr Miller says that on 8 June 2006 he received a telephone call from Mr Coyle who told him that he (Mr Coyle) expected to receive instructions to act for 50 to 60 purchasers in proposed legal action against the respondents. According to Mr Miller, there was then a discussion of several issues in relation to the proposed proceeding including, it would appear, some discussion of the merits. In the course of the conversation Mr Coyle said that the purchasers by whom he expected to be instructed to act did not want to get involved in litigation and a negotiated outcome of the dispute may be possible.

13 Mr Miller then telephoned Mr Schofield and told him of the conversation, including Mr Coyle's statement that the purchasers may be interested in a commercial settlement as an alternative to litigation. It is not clear whether those conversations occurred before or after the conversation between Mr Cabassi and Mr Grocke on the same day.

14 In any event, that evening, 8 June 2006, Mr Cabassi sent to Mr Grocke an email accompanied by an excel spreadsheet (ts 26) (together, exhibit 4). The email was headed 'Conversation: new price list' and was in the following terms:

Terry

I have been inendated [sic] with calls to see if Schofield would come to the table and negotiate.

This is a verbal agreement that Schofield would let current contract holders take an option on their Lots subject to him receiving all clearances from Water Corp.

Regards

Tom

15 Although the spreadsheet is not referred to in the email, it was common ground before the primary judge and on the appeal that it accompanied the email. The spreadsheet contained four columns. The first column listed the various lots in the proposed subdivision. The second, third and fourth columns then listed against each lot the contract price, the 'new price' and the 'market price' respectively. In respect of lot 370, which the appellants had agreed to purchase, the spread sheet recorded the contract price as $50,000, the 'new price' as $99,000 and the 'market price' as $140,000. The 'new price' was the price for which the respondents were willing to sell lot 370 to the appellants and the 'market price' represented the respondents' view as to the market price of the lot as at June 2006. The respondents say that the email and spread sheet were part of 'without prejudice' negotiations and are privileged. That is disputed by the appellants.

16 On 9 June 2006, Mr Grocke sent exhibit 4 by email to a number of purchasers in the proposed subdivision. Mr Grocke added to the spreadsheet a further column containing his calculation of the percentage increase the 'new' price represented over the contract price in respect of each lot. Mr Grocke's email (exhibit 6), which was addressed to some 43 purchasers, including the first appellant, and copied to Mr Coyle of Lavan Legal, was in the following terms:

Attached is a revised price list from Tom Cabassi. See his comments below.

I have added a few calculations to the price list - see the yellow shaded area.

The new price list suggests increases from 25 to 52 per cent. Average increase is 37.6 per cent.

Overall revenue from sales is up by $3 million.

NOTE: Tom phoned a few minutes ago to make sure everyone understands that it was he, Tom, who approached Schofield and asked for a revised price list. Tom says he did this because he was approached by 'several buyers following our meeting'

17 The respondents say that exhibit 4 remained a privileged document, regardless of its attachment to exhibit 6.

18 Following receipt by Mr Coyle of a copy of exhibit 6 there was a telephone conversation between Mr Coyle and the respondents' solicitor, Mr Miller, later on 9 June 2006. In his affidavit, Mr Miller said Mr Coyle told him that Mr Cabassi was distributing a price list for the lots. Mr Miller replied that his instructions were that the price was the one at which purchasers who were interested in resolving their claims against the respondents could purchase the lots they had previously contracted to buy. The conversation then turned to other matters.

19 On 21 July 2006, a letter signed by Mr Schofield was sent by Mr Cabassi to purchasers of lots in the proposed subdivision. It appears to have been sent to all of the purchasers, rather than just those who had resolved at the meeting on 7 June 2006 to instruct Lavan Legal, although it is not clear whether the appellants received a copy of it. The letter (exhibit 3) was in the following terms:

TO WHOM IT MAY CONCERN

To purchasers who's [sic] contracts have expired

I refer to Roy Weston's revised computation on the price of plots for the above estate.

These computations were given to Mr T Grocke, the chairman of the group, on 8th June 2006.

The prices shown on that computation are substantially discounted from the present valuation.

This offer has only been made to purchasers who's [sic] contracts have expired.

We advise that this generously discounted offer will be withdrawn as of 1st August 2006. [original emphasis]

20 The respondents say that exhibit 3 was a without prejudice communication and accordingly that it is privileged.

21 The claims against the respondents by the appellants and a number of other purchasers were not resolved and the latter subsequently commenced legal proceedings. On 6 October 2011, consent orders were made for the appellants' action to be heard effectively as a 'test case'. The other actions were stayed pending the determination of the appellants' action.

22 It is unnecessary to describe the appellants' claim in detail. In substance, the appellants, having pleaded the contract and the notice of termination, plead (relevantly) that the respondents were required to use their best endeavours to comply with the conditions of the Planning Commission's approval (par 26). They plead that, by reason of the matters alleged in par 29 of the statement of claim, the respondents failed to do so (par 29C, 30) and they were thereby in breach of the contract (par 30A). The matter alleged in par 29 as constituting a failure by the respondents to use their best endeavours involve the failure to appoint necessary consultants either at all or at appropriate times, and a failure to ensure that timely information and assistance was provided to the Water Corporation.

23 It is then pleaded (par 30D) that as at the date of termination, 17 May 2006:

(a) the appellants had requested the respondents to agree to an extension of time for the endorsement of Planning Commission approval;

(c) the market price of the blocks or their equivalent had risen substantially;

(d) to the respondents' knowledge, termination of the contract would as a result of the increase in the market value be substantially prejudicial to the appellants;

(e) apart from the requirements of the Water Corporation, all of the work required to be done to obtain Planning Commission approval had been completed before 17 May 2006;

(f) final clearance by the Water Board was issued by mid-November 2006.

24 (We note in passing that, contrary to the pleading, particular (f) was not a matter that existed or could have been known as at 17 May 2006.)

25 Particulars are given of the respondents' knowledge of the increase in the market value of the lots, pleaded in par 30D(d). The appellants allege that the appellants were informed of the increase in the market value of the lots by the respondents by an undated table provided by the respondents to Mr Grocke as representative of the appellants. The document referred to is the excel spreadsheet, part of exhibit 4.

26 In par 30E to 33, the appellants allege both that the respondents were in breach in terminating the contracts, and that as the respondents were in default they were not entitled to terminate with the result that the termination was ineffective and the contracts remained on foot. Those pleas are not expressed to be, but we take them to be, in the alternative.

27 The appellants go on to plead, further or alternatively, (among other things) a claim for relief against forfeiture (par 243 - 251). That plea is to the effect that the respondents knew that the value of the lot had increased substantially and therefore elected to terminate the contract rather than extend the time to obtain Planning Commission approval, thereby reaping a substantial windfall and causing the appellants to suffer a substantial loss.

28 In their prayer for relief, the appellants claim an order for specific performance of the contract, alternatively a declaration they are entitled to relief against forfeiture and an order for specific performance, alternatively damages or equitable compensation.

29 The question of privilege was argued before the primary judge and decided by his Honour on the basis that the documents were relevant to the claim for relief against forfeiture. (On the appeal, counsel for the appellant conceded that that claim may not be sustainable and relied solely upon the plea that the respondents failed to use reasonable endeavours to obtain Planning Commission approval (ts 3, 10)).

30 The primary judge found that exhibit 4 was a settlement proposal sent by Mr Cabassi, on behalf of the respondents, to Mr Grocke in his capacity as agent of the purchasers [78]. His Honour rejected the appellants' argument that the communication was not in truth a proposal to resolve any dispute over the termination of the existing contract but simply an offer to resell the lot to the respondents at an increased price. He considered it was not to the point that the communication did not leave open the possibility of the termination of the previous contract being reversed and that it indicated only a preparedness to negotiate a new price. The fact that it sought to negotiate on such a basis did not preclude it from being a genuine settlement proposal [92]. His Honour found that having regard to the fact that exhibit 4 was sent in the context of the various discussions on 8 June 2006 which had referred to the possibility of a commercial settlement, it was properly to be regarded as a without prejudice communication [93].

31 His Honour rejected an argument that if evidence could not be adduced at trial about exhibit 4 and Mr Schofield cross-examined about it, the court would be misled in relation to whether reasonable endeavours had been made by the respondents to obtain Planning Commission approval and in relation to the claim for relief against forfeiture. His Honour concluded, in effect, that those issues were equally capable of being explored at trial without exhibit 4 [98].

32 The primary judge also rejected the appellant's contention that privilege had been waived because exhibit 3 had gone into evidence, without objection by the respondents, in earlier separate proceedings against them by two other purchasers: Mitchell v Schofield [2007] WASC 303. His Honour considered that the question of waiver involved the determination of whether, having used exhibit 3 in Mitchell, the respondents in seeking to exclude the use of exhibit 3 or the documents referred to in it (notably exhibit 4) in this action were adopting an inconsistent position which would manifest unfairness [103].

33 His Honour concluded that there was no inconsistency or unfairness. In Mitchell, the issue to which exhibit 3 was relevant had been whether the Mitchells had been informed of the termination of their contract by the respondents. There was no such issue in this action. His Honour found that while there was in that case a waiver of privilege as against the Mitchells, there was not a waiver for all purposes and there was no inconsistency or unfairness in the respondents maintaining privilege in this action [106].

34 The primary judge accordingly found that the three disputed documents were without prejudice communications and were not admissible in evidence.

35 There were three grounds of appeal. They were (omitting the particulars) as follows:

1. The learned trial judge erred in law in finding that Mr Cabassi's email of 8 June 2006 to Mr Grocke was a without prejudice settlement proposal made on behalf of the respondents for the consideration of purchasers whose contracts had been terminated.
2. The learned trial judge erred in law alternatively in law and fact in finding that the Court would not be misled if evidence of the relevant documents could not be adduced at trial.
3. The learned trial judge erred in law in finding that the respondents' reliance on the relevant documents in related proceedings did not comprise a waiver of without prejudice privilege as to those documents.

36 The relevant principles are well-established. The grant of leave involves the exercise of a broad discretion but ordinarily the court must be satisfied that the decision below is wrong or attended with sufficient doubt to justify a grant of leave, and that a substantial injustice would be done if the decision remains unreversed: Wilson v Metaxas [1989] WAR 285, 294; Wing Luck Foods v Lay Choo Lim [1989] WAR 358, 360.

37 We would refuse leave. Apart from any other consideration, we are not persuaded that a substantial injustice would be done if the decision of the primary judge remains unreversed.

38 As mentioned, on the appeal counsel for the appellant conceded that the appellants' claim for relief against forfeiture may not be sustainable and put the appellants' argument on the basis that the documents in issue were relevant to the plea that the respondents had failed to use reasonable endeavours to obtain Planning Commission approval. As we understood the argument, it was contended that exhibit 4 was relevant to whether the respondents had in fact used their best endeavours or whether, having concluded that they could resell the lots at a substantially higher price, they had not done so but had instead chosen to allow the time period to elapse so that the existing contracts could be terminated. It was submitted that the latter inference could be drawn from the 'market value' figures contained in exhibit 4, which must have been known to the respondents before the approval period expired.

39 Counsel for the appellant was unable, however, to explain how the respondents' knowledge that the value of the lots had increased was relevant to the appellants' plea that the respondents had, in the respects alleged, failed to use reasonable endeavours to obtain Planning Commission approval. More importantly, he conceded that the appellants could prove by other evidence that prior to the termination of the appellants' contract the respondents were aware that the lots had increased substantially in value (ts 9). It was not suggested that it would be unduly burdensome or costly to adduce that other evidence.

40 It follows that the appellants will not be substantially disadvantaged if the documents in question are not admissible at trial and for that reason the application for leave to appeal should be dismissed.

41 Furthermore, the appellant has failed to persuade us that the decision of the primary judge was wrong or attended with sufficient doubt to justify a grant of leave. It is appropriate to say something more about that by reference to the grounds of appeal.

42 The appellant submitted, in effect, that the primary judge should have found that exhibit 4 was not a proposal to resolve a dispute in respect of the termination of the sales contracts, but simply a proposal to sell the lots to the original purchasers at a higher price. It was not, therefore, a 'without prejudice' communication and accordingly no privilege attached to it.

43 The classic and oft-cited description of this category of privilege was set out in the judgment of the High Court in Field v Commissioner of Railways (NSW) [1957] HCA 92; (1957) 99 CLR 285:

As a matter of policy the law has long excluded from evidence admissions by words or conduct made by parties in the course of negotiations to settle litigation. The purpose is to enable parties engaged in an attempt to compromise litigation to communicate with one another freely and without the embarrassment which the liability of their communications to be put in evidence subsequently might impose upon them. The law relieves them of this embarrassment so that their negotiations to avoid litigation or to settle it may go on unhampered. This form of privilege, however, is directed against the admission in evidence of express or implied admissions. It covers admissions by words or conduct. For example, neither party can use the readiness of the other to negotiate as an implied admission. It is not concerned with objective facts which may be ascertained during the course of negotiations. These may be proved by direct evidence. But it is concerned with the use of the negotiations or what is said in the course of them as evidence by way of admission (291 - 292).

44 It is accepted, however, that the rule is not confined to admissions but extends to all bona fide statements, made for the purpose of attempting to compromise a dispute, which touch upon the strengths or weaknesses of the parties' cases or place a valuation on a party's rights: Unilever Plc v Procter v Gamble Co [1999] EWCA Civ 3027; [2000] 1 WLR 2436, 2448 - 2449; Rush & Tompkins Ltd v Greater London Council [1988] UKHL 7; [1989] 1 AC 1280; Ofulue v Bossert [2008] EWHC 438; [2009] 1 AC 990 [89]; Pihiga Pty Ltd v Roche [2011] FCA 240; (2011) 278 ALR 209 [81].

45 It is trite law that a communication does not have to be expressed to be 'without prejudice' for the privilege to apply. Where a dispute has arisen the privilege will attach to communications which are genuine negotiations with an intention to compromise a dispute in order to avoid litigation or to settle existing litigation, whether or not they are accompanied by such an express statement: Rodgers v Rodgers [1964] HCA 25; (1964) 114 CLR 608, 614; Harrington v Lowe (1996) 190 CLR 311, 323. Equally, however, the label 'without prejudice' is not a panacea and does not protect a communication which is not for the purpose of a genuine negotiation intended to resolve a dispute: Re Daintrey; Ex parte Holt [1893] 2 QB 116; Bentley v Nelson [1963] WAR 89, 93. In any particular case, in determining whether a communication is protected it is necessary to have regard to substance, not form.

46 In support of the contention that exhibit 4 was simply a proposal to enter into a fresh contract of sale, not a proposal to settle a dispute about the terminated contract, counsel for the appellants referred to JA McBeath Nominees Pty Ltd v Jenkins Development Corporation Pty Ltd [1992] 2 Qd R 121. It is necessary to turn to that case. In JA McBeath, the respondent was the lessee of certain premises in a shopping centre owned by the appellant. The respondent agreed to sell its business to a third party and sought the consent of the appellant to an assignment of the lease. The lease contained the usual term that such consent would not unreasonably be withheld. The appellant refused its consent on the ground that, in view of the third party's high level of borrowings, it considered the third party may not be able to operate the business, pay interest expenses and rental, and have a reasonable margin of profit. The respondent then informed the appellant that proceedings for a declaration that consent had unreasonably been withheld would be instituted unless consent was given by 5 pm the next day. Later on the same day a telephone conversation took place between the solicitors for the appellant and respondent. The appellant's solicitor stated at the outset that the conversation was 'without prejudice'. He then said that the appellant would consent to the assignment on the basis of an increase in the rent and changes to the rent review provisions. Those terms were not accepted and the respondent then commenced the threatened legal proceedings.

47 At first instance, it was held that evidence of the offer put by the respondent in the telephone conversation was admissible in the proceedings. An appeal against that decision was, by a majority, dismissed. Macrossan CJ, in dissent, considered that the evidence was not admissible. His Honour considered that the privilege applied, the terms on which the appellant would consent to the assignment having been offered in the course of negotiations dealing with a demand that consent be given and against a threat to sue if it was not given. It was reasonable for the appellant to take the view that it would give consent for what it regarded as a financially risky assignee if it could negotiate an offsetting financial advantage.

48 The views of the majority differed on this point. Ryan J considered that the appellant's terms were offered in the course of negotiations to resolve a dispute as to whether consent had unreasonably been withheld. They therefore fell within the rule excluding evidence of 'without prejudice' negotiations. However, his Honour concluded that the evidence was admissible because the appellant was attempting to mislead the court by asserting that it had refused consent for the reasons it gave initially, whereas the telephone conversation showed it had done so in order to obtain a collateral advantage outside the terms of the lease.

49 Kelly SPJ, on the other hand, held that the evidence did not fall within the rule. His Honour considered that once the appellant had refused consent there was no dispute between the respondent and the appellant which remained unresolved and the subject of further negotiations. The telephone discussion was not entered into for the purpose of negotiating a settlement of a dispute between the respondent and the appellant but to propose a new lease on certain terms.

50 The decision in McBeath ultimately turned on its particular facts. In any event, it does not assist the appellant. Two of the three members of the court found that the evidence in question fell within the rule excluding evidence of 'without prejudice' negotiations.

51 In our respectful view, the primary judge has not been shown to be wrong in finding that exhibit 4 was a 'without prejudice' settlement proposal and therefore privileged [94]. The respondents had already been put on notice that a large, although not precisely defined, group of purchasers was contemplating legal action against them in relation to the termination of their contracts. It had also been made clear that the purchasers concerned were amenable to a commercial settlement of the claim they were contemplating bringing. That was evident from the discussions between Mr Cabassi and Mr Grocke on 8 June 2006, in which they had discussed the possibility of settling the dispute over the contract terminations by negotiating a small price increase, and the discussion between the solicitors on the same day. Subsequently, exhibit 4, notably headed 'Conversation: new price', was sent by Mr Cabassi to Mr Grocke, as agent of the purchasers who had attended the meeting on 7 June 2006 and agreed to instruct lawyers. It was then sent by Mr Grocke to those purchasers, attached to exhibit 6.

52 In the circumstances, it is not to the point that exhibit 4 did not invite discussion but simply proposed new contracts at an increased price. The fact that the proposal was couched in that way does not mean that the proposal was not an offer to settle the dispute. Whether a communication is a genuine attempt to settle a dispute depends upon the nature of the communication and its context. The fact that a proposal is put on a 'take it or leave it' basis does not mean that it cannot constitute a genuine attempt to settle the dispute: see Barrett Property Group Pty Ltd v Dennis Family Homes Pty Ltd (No 2) [2011] FCA 276 [33].

53 In this case, it was open to the primary judge to find that exhibit 4 was a proposal to resolve the dispute as to the respondents' legal entitlement to terminate the contracts, put on the basis of what the respondents evidently maintained was compromise on both sides, the purchasers paying an increased price for the lots but acquiring them at substantially below market price, and the respondents receiving an increased, but nevertheless below market, price for them.

54 The rule protecting without prejudice communications is founded on public policy and does not allow a party to maintain a claim of privilege if to do so would cause the party to mislead the court as to the facts: see Pitts v Adney (1961) 78 WN (NSW) 886, 889; Lohar Corporation Pty Ltd v Dibu Pty Ltd (1976) 1 BPR 9177, 9182 - 9183; McBeath, 134.

55 It was submitted on behalf of the appellants that if the documents could not be adduced in evidence the court may be misled as to whether the respondents had used their best endeavours to obtain the endorsement of Planning Commission approval.

56 There is no substance in that. Counsel for the appellant conceded that whether the court would be misled by the non-disclosure of exhibit 4 would depend on how matters unfolded at trial, and in the event that the court would be misled by the respondent's maintenance of privilege, the issue could be raised before the trial judge (ts 9 - 10). That concession was rightly made. At this stage the issue is entirely speculative.

57 This ground of appeal was argued before the primary judge and on appeal on the basis that the principles to be applied to a waiver of privilege in relation to without prejudice communications are the same as those applied in relation to a waiver of legal professional privilege. It is unnecessary to address that question.

58 For present purposes, the parties agreed that the issue in this case was whether there is inconsistency between the conduct of the respondents in putting the documents into evidence in Mitchell and the maintenance of the privilege which excludes the appellants from putting them into evidence in these proceedings.

59 In support of the proposition that privilege had been waived, counsel for the appellants referred to Somatra v Sinclair Roche & Temperley (a firm) [2000] EWCA Civ 229; [2000] 1 WLR 2453. There the respondent had relied upon 'without prejudice' communications in support of an application for a mareva injunction. The Court of Appeal held that the respondent could not resist the appellants subsequently using the same material at trial. Having used the 'without prejudice' communications to advance its own case on the merits when seeking a mareva injunction, the respondent could not assert a right to prevent the appellants from using it on the merits at the trial [34], [36], [49].

60 In this case, the respondents did not use any without prejudice communication in any litigation with the appellants. Rather, in other litigation between the respondents and the Mitchells, the respondents tendered the letter of 21 July 2006 (exhibit 3 in this matter) to prove the fact that the letter had been sent to and received by the Mitchells. That fact was relevant to an issue which had arisen in that other litigation in relation to termination. The Mitchells evidently consented to the tender of the letter in that litigation and it was the Mitchells who were, relevantly, the other holder of the privilege in that without prejudice communication. The letter was not tendered as evidence of any communication with the present appellants in that other litigation. In these circumstances we are not persuaded that the primary judge was wrong in finding that the maintenance of privilege in the current proceedings would not be inconsistent with the use to which, with the consent of the Mitchells, the letter of 21 July 2006 was put in that other litigation.

61 We would refuse leave to appeal and dismiss the appeal.