Crawley v Vero Insurance Ltd

Objection to tender of letter dated 07/02/06; see transcript p 101 1Objection is taken by senior counsel for the defendants to the tender of a letter dated 7 February 2006 from the firm of solicitors then acting on behalf of LawCover to the plaintiff, Mr Crawley. 2I have described the issues in these proceedings elsewhere, though to some extent, by reason of recent amendments, they are something of a moveable feast. 3At least from LawCover's perspective, it has always maintained that it is not obliged to meet any aspect of the plaintiff's claim if it can be established that his conduct in relation to the matters for which indemnity is sought fall within a dishonesty exclusion in the approved insurance policy respecting his practice as a solicitor. 4In 2003, the parties entered into a deed which governed the funding of the future costs of the principal litigation against Mr Crawley. The deed contained a clause which, at least on one party's case, amounts to a reservation of LawCover's position in the event that the dishonesty exception was invoked. 5The letter to which objection is taken appears to arise out of consideration being given by Mr Crawley and his legal advisors in the principal proceedings to the making of an offer of settlement. The letter appears to be a response to an inquiry by Mr Crawley as to what contribution LawCover would be prepared to make if he, that is Mr Crawley, was to make an offer of settlement in the principal proceedings. The letter is entitled "without prejudice common interest privilege". The reference to common interest privilege can be put aside as it appears to be common ground between the parties that the common interest being referred to was one as between Mr Crawley and LawCover. 6Two bases of objection to the tender of the letter were put forward. The first is relevance. 7Counsel for Mr Crawley, Mr Green, contended that the letter contained a representation to Mr Crawley. It is unnecessary to dwell on this as no representation arising out of this letter is pleaded. However, the letter also includes the following statement: "LawCover does not maintain that you were dishonest. However, it is fair to say that at the mediation held in December last year, senior counsel for the plaintiffs stated that, in his opinion, the plaintiffs would clearly establish dishonesty. While LawCover's review of the plaintiffs' opening submissions served on 3 February 2006 is not complete, the submissions contained numerous allegations of dishonest conduct on your part." 8As I understand it, Mr Crawley will seek to make much of the first sentence of this extract. If the document is admitted, I would expect the defendants to make much of the balance of this extract. 9The objection on relevance is to the effect that this letter really adds nothing to the plaintiff's case, in that LawCover's position was that it always maintained a reservation on providing cover if the dishonesty exception was made out and that this statement is consistent with that. There is considerable force in that, but I am just persuaded that the statement is at least capable of assisting the plaintiff at least in rebutting the allegation of dishonesty on the material that was known to LawCover as at the date of the letter. 10In short, I think that this statement renders the document relevant, although it may be more of assistance to the party opposing its tender than the party seeking its tender. 11The other basis of objection to the document is that it is excluded by s 131(1) of the Evidence Act 1995 (NSW) being evidence of settlement negotiations. To fall within s 131, it needs to be a communication 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 a document that has been prepared in connection with an attempt to negotiate the settlement of a dispute. 12I am not satisfied that the document amounts to, relevantly, a communication made between persons in dispute. While in a broad sense there was significant potential for disagreement about the extent of cover between Mr Crawley and LawCover, as at this point they had reached some sort of interim arrangement concerning their affairs as reflected in the deed. The letter can be best characterised as, in effect, some advice being given to Mr Crawley by LawCover to assist him in connection with his attempt to resolve the dispute with the plaintiffs in the substantive proceedings. 13However, the letter does appear to be a communication between a person in dispute, namely Mr Crawley, and a third party, namely LawCover, in connection with an attempt to negotiate a settlement of dispute, namely the dispute as I have mentioned between Mr Crawley and the principal parties to the proceedings. 14In those circumstances, I am satisfied that the tender is excluded by s 131(1) of the Evidence Act and I reject it.