Langley v Age Company Ltd

8. In the end, the defendants right to inspect five documents remained in dispute. They are respectively a Release reflecting resolution of a dispute between the plaintiff and the Uniting Church of Australia concerning what the plaintiff alleged, I shall put it broadly, was his wrongful termination as superintendent of the Wesley Central Parish Mission in September 2000; and four letters and attachments which it may shortly be said do no more than reflect the implementation of the agreement embodied in the Release.

11. Counsel for the defendant has satisfied me that the documents meet the expansive test of relevance described by Byrne J in Yunghanns v Candoora No. 19 Pty Ltd (No. 5)[1]. It is at least arguable that not only the fact that the plaintiff reached a settlement in respect of his allegedly wrongful termination by his former employer, but also the amount of that settlement, could bear upon matters in issue.

14. Paragraph 4 of the plaintiff's further amended statement of claim ("the statement of claim") alleges that the first article, as defined, meant and was understood to mean -

"(a) that the plaintiff, notwithstanding that he was an ordained minister of the church, was devoted to the pursuit of wealth rather than serving God."

18. In his amended synopsis of evidence, filed in accordance with an order of the court, the plaintiff says that he understood the first article to mean, inter alia, the matter alleged by particular (a) to paragraph 4 of the statement of claim.

21. The plaintiff further says that he was completely devastated - that is, by what he understood the article to mean; and that

"The strain placed upon [his] marriage, his family and friends and supporters has caused him to despair. His understanding of the direction and work that God wished him to pursue has been destroyed and has left a devastating void in his life. [He] feels unable to return to the work of a Minister that was his life. He is currently unemployed and is distressed that the litigation continues and that the defendant refuses to apologise and continues to seek to justify its conduct in publishing the articles."

25. Counsel for the plaintiff told me, in answer to my question, that the plaintiff will say, in substance, that his unemployment is related to the subjective hurt that he has suffered by reason of the two defamatory publications upon which he relies.

28. A relevant fact in issue in the proceeding is, no doubt, the presence and extent of hurt subjectively experienced by the plaintiff; and any flow on effect he says that it has had upon him. According to his synopsis of evidence he will say that he was completely devastated by, inter alia, the imputation that as an ordained minister he was devoted to the pursuit of wealth rather than serving God. One possible way of the defendant challenging the plaintiff's assertion that he was devastated might be for the defendant to show, were it the case, that what the plaintiff did so soon as his employment was terminated was to foreshadow a proceeding for wrongful dismissal and then hammer out a financial settlement. In that connection, the amount of any settlement would arguably be pertinent, subject always to it being shown, were the sum substantial, that it represented but a fraction of the amount which the plaintiff might have recovered had he commenced the foreshadowed proceeding and gone to trial.

31. The amount of any settlement might arguably also be relevant, I think, to challenge the plaintiff's intended case that his present unemployment is related to the hurt which he suffered by reason of the allegedly defamatory publications. If the sum was substantial, it could provide an alternative explanation for the plaintiff being unemployed, that is that he is not working because he is financially free not to work.

34. Counsel for the defendant relied upon other parts of the statement of claim and the plaintiff's synopsis of evidence to make out relevance. It is not necessary for me to consider those additional matters.

37. I deal next with an argument pursued for the plaintiff that inspection of the documents should be refused because the subpoena constituted an abuse of process. According to the submission of his counsel, the subpoena had been used as an alternative to seeking particular discovery: see Rule 29.08. An application for particular discovery would have been necessary, I should immediately say, because the plaintiff's affidavits of discovery do not list the Release or any of the other disputed documents.

40. The documents sought by the subpoena almost certainly have been, and still are, in the plaintiff's possession. The defendant could have made application for particular discovery. It had every reason to believe long ago that the plaintiff would have in his possession documents relating to a (prospective) settlement of a wrongful termination claim: see [2000] VSC 378 and the affidavit of Edmond William Coady sworn 18 September 2000 in connection with the return of the order made by Eames J on 15 September 2000 before Smith J on 20 September 2000.

43. Counsel for the plaintiff cited the following cases for the proposition that a subpoena may be set aside where it is used as an alternative to discovery: Finnie v Dalglish[2]; Telstra Corporation v Australis Media Holdings and Others[3] and Belsart Pty Ltd v Man Po Holdings (Australia) Ltd[4].

46. In my opinion, Finnie and Belsart essentially addressed a different situation, that is, one where a person is called upon by way of a subpoena to make discovery. There is a fragment in the judgment of Rath J in Finnie[5] which does, however, support the plaintiff's argument. Telstra is more helpful to the plaintiff's case. So, McLelland J said in a particular connection:

"It seems to me that basic principles concerning the relationship between subpoenas and discovery govern the fate of requirements in the subpoenas to produce that document, and that the machinery of discovery should be applied to the exclusion of the machinery of subpoena. Accordingly, in that respect I would set aside the requirements of the subpoenas."

"My present inclination so far as the PBL deed is concerned, if access to that were to be sought by the plaintiffs, would be at this stage of the proceedings to deny such access on the basis that although the document is produced by a stranger to the proceedings, it nevertheless is a document of which, if it were relevant, the defendants would be required to give discovery and as to which, as I am told, they have taken the view that it is not relevant. It is not ordinarily for the Court to second guess the question of potential relevance of documents where that question in relation to a particular document is dealt with by the discovery process....".[6]

52. In all, there is some support for the plaintiff's submission. That said, there is an important practical circumstance which needs to be considered. The proceeding is fixed for trial on 30 May next. If I was to set the subpoena aside, which I am not asked to do, or was to uphold the objection to inspection, the defendant would doubtless seek an order for particular discovery. Despite the lateness of the application, it might well be granted. The plaintiff would then state, very likely, that he had pertinent documents in his possession, but assert a claim to non-production of the same. Then the substance of the present dispute would be debated. All of this would take time and would involve additional expense. The trial date would surely be at risk. In the particular circumstances, the better course is that the substance of the dispute be now determined.

55. I go to an issue which loomed large in argument. According to the plaintiff's submission, the disputed documents are confidential communications between the solicitors for the plaintiff and the solicitors for the Uniting Church in the course of negotiations with respect to the plaintiff's wrongful termination claim, and so exempt from inspection.

58. According to the defendant's contention, the without prejudice communications rule does not apply to the Release (which is really the key document, and on which I focus attention) because it is "an objective act having legal consequences"[7]

61. To that submission, the plaintiff's response was that the Release embodies without prejudice negotiations. It is a compromise. It is not evidence of an objective fact.

64. The without prejudice communications rule is a rule governing the admissibility of evidence: Rush & Tompkins Ltd v Greater London Council and Another[8]. Nonetheless, it has been pressed into service in disputation concerning the obligation of a party to make discovery[9], the right of a party to subsequent litigation to have inspection of discovered documents[10], and upon an application to set aside a subpoena[11].

67. The purpose of the rule has been clearly stated. It is "to encourage amicable settlement and to protect parties to negotiations for that purpose"[12]. It is founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a finish[13]. It would or might discourage settlement if litigants believed that "statements or offers made in the course of negotiations could be brought before the court of trial as admissions on the question of liability"[14].

70. The rule is not restricted to proceedings between the parties to a proceeding in which negotiations have failed. In this connection its ambit was stated by Lord Griffiths in Rush & Tompkins:

"I would therefore hold that as a general rule the 'without prejudice' rule renders inadmissible in any subsequent litigation connected with the same subject matter proof of any admissions made in a genuine attempt to reach a settlement. It of course goes without saying that admissions made to reach settlement with a different party within the same litigation are also inadmissible whether or not settlement was reached with that party."[15]

74. The authorities point out that the rule is not absolute. So, for example, negotiations may be proved if a question arises whether a settlement was concluded. Moreover, "the admission of an independent fact in no way connected with the merits of the cause is admissible even if made in the course of negotiations for a settlement"[16].

77. The authorities emphasize that the rule makes inadmissible in any subsequent litigation connected with the same subject matter proof of material as previously described. In the present case it was not argued for the defendant that there was a want of relevant connection between the subject matter of the negotiations which culminated in the Release and the subject matter of the present proceeding. Nor was any point made - if it could be made, which I very much doubt - that the negotiations were conducted and settlement reached in the absence of a commenced proceeding.

80. According to the defendant's argument, as I said earlier, the Release is not protected from production and inspection because it stands apart from the without prejudice negotiations which presumably preceded it. It is an "objective act", an "independent fact". Counsel for the defendant relied upon Rush & Tompkins, Quad Consulting[17], Tenstat[18] and Austotel[19].

83. In Rush & Tompkins the present issue did not arise. The plaintiff disclosed to the second defendant, against whom the plaintiff was proceeding, the terms of its settlement with the first defendant[20].

86. Counsel relied upon Quad Consulting for the statement by Hill J of the rationale (and limits) of the without prejudice communications rule. Counsel particularly referred to his Honour's citation of the dictum of Walsh J in Pitts v Adney[21], that the rule

"... cannot be permitted to put a party into the position of being able to cause a court to be deceived as to the facts by shutting out evidence which would rebut inferences upon which that party seeks to rely."

On analysis, the present is not exactly such a case.

91. In Tenstat, McLelland J said obiter dictum that communications could be proved if they were put to show not an express or implied admission, but rather the exercise of an option, an objective act having legal consequences. That proposition was not concerned with the situation of a Release, which, according to the plaintiff's argument, reflects and incorporates, though not necessarily overtly, communications replete with express or implied admissions.

29 Austotel provides, in my opinion, some explicit support for the defendant's argument, albeit that it dealt with a discovery issue. The question there was whether and to what extent documents pertaining to the discontinuance of a proceeding by an applicant against one of two respondents need be discovered by the plaintiff. Burchett, J., referring to the opinion of Lord Griffiths in Rush & Tompkins, said this:

"It should be pointed out that in Rush & Tompkins the terms of the settlement had been disclosed; it was only the correspondence by which those terms had been negotiated, with its express and implied admissions, that was withheld. What Lord Griffiths said should be understood with this in mind. I do not think he was suggesting that an agreement relevant to the extent of the party's loss, the calculation of damages, or questions of mitigation would be privileged from disclosure."[22].

96. His Honour resolved the issue before him this way:

"... it seems to me that the terms of the agreement at which the applicants and Tooheys Limited arrived, at the end of their negotiations, are clearly discoverable, both in the sense that any document in which they are set forth should be included in an affidavit of documents and in the sense that they must be revealed to Allens. In the words of Lord Griffiths in Rush & Tompkins at 1300, 'the justice of the case requires' this. I accept that these words do not have some formless meaning, to be stretched or retracted to take in or leave out a document upon no discernible principle. But I think the conclusion of an agreement with Tooheys Limited must be regarded, in the context of this case, as 'an objective act having legal consequences' within the meaning of the proposition stated by McLelland, J. in Tenstat already cited."

"Viewing the matter more narrowly, from the point of view of the duty to mitigate a loss, there is a general obligation imposed by the law upon the applicants to act reasonably. In my opinion, it is relevant for Allens to know the precise extent to which any claim was abandoned, or any recovery obtained. Only in the light of information on these matters can they make a true assessment of the issues relating to mitigation. They are entitled to know that much, and the policy of the rule which protects admissions in the course of negotiations does not extend so far as to erect a barrier against disclosure of these ultimate results of the negotiations."[23]

102. On analysis, it seems to me that the defendant's position concerning the present issue is correct. The following considerations are pertinent: first, the Release logically stands apart from the negotiations which presumably preceded it. Second, the Release (I have read it) contains no express admissions by the plaintiff and no admissions by him could sensibly be implied. Whether the settlement represents one dollar less than he claimed is really a matter of speculation. Third, the Release constitutes an agreement upon which either the plaintiff or the Uniting Church could sue in the event of breach. That emphasizes its separation from the negotiating stage. Fourth, if the church were one of two defendants to a proceeding and the plaintiff had settled with it, I consider that it is at least very improbable that the plaintiff could refuse to disclose a Release embodying the settlement to the other defendant against whom it was proceeding. In a case where the defendants were joint tortfeasors, the obligation of disclosure would be, I think, irresistible. Given that the parties have accepted a connection between the subject matter of the settlement and the present proceeding, and given the potential relevance to the present proceeding of the amount of the settlement, I think that the present is an analogous situation.

105. I am cognizant of the prospect that inspection of the documents might lead to an attempt by the defendant to get the information contained therein into evidence. If that was to happen, the plaintiff's side might wish to introduce material pertaining to negotiations; to show, for instance, that the plaintiff had accepted a very modest amount in the circumstances, this tending against the suggestion that he was devoted to the pursuit of wealth rather than serving God. If that prospect exists, the plaintiff should consider swearing a further affidavit of documents before trial, although it can be supposed that a without prejudice communications privilege would be claimed.

108. The objections to inspection by the defendant of the documents numbered 1, 5, 6, 7 and 8 in paragraph 2 of the schedule of documents produced by Dr R.B. Johnson in answer to the subpoena for production directed to him and filed 29 April 2000 are disallowed. Confidentiality must, of course, attach to the inspection.

114. It seems to me that the defendant has had a win on one of two points that was principally in dispute. On the other hand, as I said a moment ago, had the case not been so close to trial, I am very inclined to the conclusion that I would have set the subpoena aside. I do not think there is a monopoly of right here. It would be an unusual course, having found in favour of the defendant and against the objections to inspection, to give costs to the unsuccessful party. I do not intend to do so. Each party should bear his or its own costs.

[1] [2000] VSC 505 at paragraphs 12 and 13.

[2] [1982] 1 NSWLR 400 at 405.

[3] McLelland CJ in Eq., Supreme Court of New South Wales, 20 December 1996, unreported, at 3-4.

[4] [1998] VSC 46.

[7] Tenstat Pty Ltd v Permanent Trustee Aust Ltd (1992) 28 NSWLR 625 at 633.

[8] [1988] UKHL 7; [1989] 1 AC 1280 at 1299 per Lord Griffiths.

[9] Examples are Rush & Tompkins and Austotel Management Pty Ltd and Another v Jamieson and Others (1995) 57 FCR 411.

[10] Heron Wood Pty Ltd v Ampol Petroleum (Vic) Pty Ltd [1999] VSC 83 was such a case.

[11] Quad Consulting Pty Ltd v David R Bleakley & Associates Pty Ltd (1991) 27 FCR 86 is an example.

[12] I. Waxman & Sons Ltd v Texaco Canada Ltd (1968) 67 DLR, (2d), 295 at 309, cited in Heron Wood at paragraph 13.

[13] Cutts v Head [1984] Ch 290 at 306, cited in Rush & Tompkins at 1299.

[14] Cutts cited in Rush & Tompkins at 1299

[16] Rush & Tompkins at 1300. The example given by Lord Griffiths was an admission that a document was in the handwriting of one of the parties.

[21] (1961) 78 WN (NSW) 886 at 889.