Bolt v Bolt

[2023] WASC 162

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   BOLT -v- BOLT [2023] WASC 162

CORAM:   VANDONGEN J

HEARD:   21 FEBRUARY 2023

FURTHER WRITTEN SUBMISSIONS ON 3, 10 & 21 MARCH 2023

DELIVERED          :   22 MAY 2023

FILE NO/S:   CIV 1337 of 2022

BETWEEN:   STEVEN LYLE BOLT

Plaintiff

AND

PHILIP ROSS BOLT

First Defendant

LYNETTE BARBARA BOLT

Second Defendant

PHILIP ROSS BOLT AND LYNETTE BARBARA BOLT AS TRUSTEES FOR THE PR & LB BOLT FAMILY TRUST

Third Defendant

CLAYPANS HOLDINGS PTY LTD AS TRUSTEE FOR THE CLAYPANS SUPERANNUATION FUND

Fourth Defendant

SL & SL BOLT PTY LTD AS TRUSTEE FOR THE BOLT NO. 1 PROPERTY TRUST

Fifth Defendant

SL & SL BOLT PTY LTD AS TRUSTEE FOR THE BOLT NO. 2 PROPERTY TRUST

Sixth Defendant

PHILIP ROSS BOLT AND LYNETTE BARBARA BOLT AS TRUSTEES FOR THE PR & LB BOLT FAMILY TRUST

Plaintiff by counterclaim

STEVEN LYLE BOLT

Defendant by counterclaim

Catchwords:

Practice and procedure - Application to strike out parts of the statement of claim pursuant to O 20 r 19(1) of the Rules of the Supreme Court 1971 (WA) - Application for extension of time - Abuse of process - Whether certain communications are subject to without prejudice privilege - Whether litigation was or might reasonably have been contemplated - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA) O 20 r 19

Result:

Application for extension of time granted
Application to strike out dismissed

Category:    B

Representation:

Counsel:

Plaintiff	:	Mr P G Donovan
First Defendant	:	Mr W C J Zappia & Ms L J Bracewell
Second Defendant	:	Mr W C J Zappia & Ms L J Bracewell
Third Defendant	:	Mr W C J Zappia & Ms L J Bracewell
Fourth Defendant	:	Mr W C J Zappia & Ms L J Bracewell
Fifth Defendant	:	Mr W C J Zappia & Ms L J Bracewell
Sixth Defendant	:	Mr W C J Zappia & Ms L J Bracewell
Plaintiff by counterclaim	:	Mr W C J Zappia & Ms L J Bracewell
Defendant by counterclaim	:	Mr P G Donovan

Solicitors:

Plaintiff	:	MDS Legal
First Defendant	:	Clayton Utz
Second Defendant	:	Clayton Utz
Third Defendant	:	Clayton Utz
Fourth Defendant	:	Clayton Utz
Fifth Defendant	:	Clayton Utz
Sixth Defendant	:	Clayton Utz
Plaintiff by counterclaim	:	Clayton Utz
Defendant by counterclaim	:	MDS Legal

Case(s) referred to in decision(s):

Alan Ramsay Sales & Marketing Ltd v Typhoo Tea Ltd [2016] 4 WLR 59

Australian Competition and Consumer Commission v NSW Ports Operations Hold Co Pty Ltd [2020] FCA 1232

Barnetson v Framlington Group Ltd [2007] 3 All ER 1054

Barrett Property Group Pty Ltd v Dennis Family Homes Pty Ltd (No 2) [2011] FCA 276; (2011) 193 FCR 479

Brown v Barber [2020] WASC 84

Chang v Legal Profession Complaints Committee [No 2] [2020] WASCA 208 (S)

CMA Assets Pty Ltd Formerly Known as CMA Contracting Pty Ltd v John Holland Pty Ltd [No 4] [2013] WASC 77

Commonwealth Director of Public Prosecutions v Citigroup Global Markets Australia Pty Limited (No 3 - Privilege Claims) [2021] FCA 1208

Dowling v Ultraceuticals Pty Ltd [2016] NSWSC 386

English v Vantage Holdings Group Pty Ltd [2021] WASCA 47

Field v Commissioner for Railways for New South Wales [1957] HCA 92; (1957) 99 CLR 285

Harrington v Lowe [1996] HCA 8; (1996) 190 CLR 311

Hodgkinson & Corby Ltd v Wards Mobility Services Ltd [1997] FSR 178

Insurance Commission of Western Australia v Woodings as Liquidator of Bell Group Ltd (in Liq) (No 2) [2017] WASC 372

Morgan v Whanganui College Board of Trustees [2014] NZCA 340; [2014] 3 NZLR 713

Oceanbulk Shipping & Trading SA v TMT Asia Limited [2011] 1 AC 662

Old Papa's Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11

Pigozzo v Mineral Resources Ltd [2022] FCA 1166

Re QRD Development Company No. 3 Designated Activity Company [2022] IEHC 498

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

Saffari v Western Australia Police [2022] WASC 200

Samnakay v Schofield [2013] WASCA 138

South Shropshire District Council v Amos [1987] 1 All ER 340

Unilever Plc v The Procter & Gamble Co [2000] 1 WLR 2436

Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398

Verge v Devere Holdings Pty Ltd [2009] FCA 832; (2009) 258 ALR 464

Woodings as liquidator of The Bell Group Ltd and the Bell Group Finance Pty Ltd v WA Glendinning & Associates Pty Ltd [2019] WASC 54

Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd (No 13) [2021] WASC 214

Yokogawa Australia Pty Ltd v Alstom Power Ltd [2009] SASC 377; (2009) 262 ALR 738

VANDONGEN J:

Introduction

1. In these proceedings the plaintiff seeks declaratory and other relief against both of his parents, as well as against various trustee companies, based on claims of proprietary estoppel that are made in relation to an established family-run farming business based in Corrigin.

2. The first to fourth defendants (Defendants) have applied, pursuant to O 20 r 19(1) of the Rules of the Supreme Court 1971 (WA), for orders that certain paragraphs of the plaintiff's statement of claim be struck out on the ground that they are an abuse of process because they purport to disclose the content of several without prejudice communications (Application).

3. The Application was heard by me to ensure that the judge who may hear the trial of this matter would not be privy to the communications that are said to be subject to without prejudice privilege if the Application is allowed.

4. After the hearing was completed, both parties filed further written submissions. These addressed several issues that were raised both during and after the conclusion of the hearing.

5. The Defendants require an extension of time to bring the Application because it was filed approximately 80 days out of time.[1]  For the following reasons, while I would grant an extension of time, I am not persuaded that any of the paragraphs of the statement of claim should be struck out and so I would dismiss the Application.   

   [1] Rules of theSupreme Court 1971 (WA) O 20 r 19(3).

The pleadings

1. The plaintiff is the second youngest child of the first and second defendants.  He claims that he is entitled to declarations that certain parcels of land on which a farming business has been carried out by the Defendants for many years, and the farming business itself, are held on trust for him by one or more of the first to sixth defendants.  He also seeks orders that the land and the farming business be transferred to him.  In the alternative, he seeks an order that he be awarded equitable compensation.  The plaintiff says that these orders should be made based on two distinct claims of proprietary estoppel.[2]

   [2] Both claims of proprietary estoppel are based on estoppel by encouragement and on estoppel by acquiescence; as to which, see Brown v Barber [2020] WASC 84 [212] - [234].

2. The plaintiff pleads that a farming business began in or around 1967 when his grandfather purchased a block of land in Corrigin and then began farming with his three sons - the first defendant and his two brothers - over the course of the next 15 years or so.[3] 

   [3] Statement of claim [12].

3. It is pleaded that in or about 1983 the original farming business was effectively split into three parts.  The first and second defendants then conducted their own farming business, which comprised their share of the original business, for several years through various trusts, corporate entities and partnerships.

4. The plaintiff was born in 1977.  He pleads that prior to 1996 he worked on the farms and actively participated in the farming business in various ways.  He also pleads that between 1996 and 2006 he worked full-time on the farm, other than when he was away shearing for about 4 months of each of those years.  During those months, the plaintiff would work weekends at the farm.

5. It is against this background that the plaintiff pleads facts that are intended to support his two claims of proprietary estoppel. 

6. The first of those claims rests upon a contention that between about 2006 and 2015, the plaintiff held a number of assumptions about the timing of the retirement of the first and second defendants, and about how the farming business would be owned and operated from that point in time.  Those pleaded assumptions included assumptions about when, how and on what conditions the plaintiff would become the owner of the farming business.[4]

   [4] Statement of claim [20].

7. The plaintiff pleads that from 1996 until mid-2015, the first and second defendants acted to induce, encourage, and acquiesce in those assumptions.  A large number of facts that are alleged to have constituted those acts are also pleaded.[5]  In the statement of claim these assumptions are called the '2006 Assumptions'.  I will adopt that terminology.

   [5] Statement of claim [21] - [54].

8. The plaintiff then pleads that three conversations occurred between himself and the first defendant in or about 2015, in which the plaintiff alleges that the first defendant indicated, in effect, that he was not going to act in accordance with the 2006 Assumptions. 

9. The first and second defendants do not seek to strike out any of these pleadings.

10. The second proprietary estoppel claim is based on another set of assumptions that the plaintiff pleads he held between about 2016 and March 2020.  In the statement of claim these assumptions are referred to as the '2016 Assumptions'.  I will also adopt this term.

11. Those assumptions are pleaded in the following terms:

    58.Between in or around 2016 and March 2020, Steven held assumptions that, prior to the deaths of Philip and Lynette:

    58.1.such of the Farmland that would enable Steven to conduct a viable farm would be transferred to Steven;

    58.2. control of the PR & LB Bolt Family Trust would be passed to Steven; and

    58.3. Steven and Philip and Lynette would enter into an arrangement whereby:

    (a)reasonable provision would be made for Philip and Lynette's retirement; and

    (b)the provision to be made for Philip and Lynette's retirement would be an amount that the Farm could afford while still remaining a viable business.

12. At par 59 of the statement of claim, the plaintiff pleads that from about 2016 until March 2020, the first and second defendants acted to induce, encourage and acquiesce in those assumptions.  Those acts are specified at pars 60 - 63, 64 - 69, 71, and 73 - 78 of the statement of claim.  In each of pars 65, 66, and 68 - 72, the plaintiff pleads various oral and written communications that are said to have taken place between the plaintiff and the first and/or the second defendant (or their agents) between 2 November 2017 and 2 June 2020.

13. Finally, the plaintiff pleads at par 82 of the statement of claim that by reason of various matters, and in certain circumstances, the first and second defendants have sought to resile and depart from the 2006 Assumptions and the 2016 Assumptions.  The matters and circumstances relied on, which comprise two letters dated 19 March 2020 (19 March 2020 Letter) and 2 June 2020 (2 June 2020 Letter) that were sent to the plaintiff by lawyers who were acting for the first and second defendants at the time, are pleaded at par 83 and 84 of the statement of claim. 

1. The Application is concerned only with the pleas at pars 65, 66, 68 to 72, 83 and 84 of the statement of claim (Impugned Paragraphs).  Those paragraphs are set out in full later in these reasons.

2. The Impugned Paragraphs refer to the following documents, which the Defendants allege are subject to without prejudice privilege, and which are discussed in detail later in these reasons:

   (1)the 19 March 2020 Letter;

   (2)the 2 June 2020 Letter;

   (3)an email from Mr Wayne Cox to Ms Judy Snell dated 2 November 2017 (2 November 2017 Email);

   (4)a heads of agreement document presented to the plaintiff at a mediation on or about 30 November 2017 (2017 Heads of Agreement); and

   (5)an amended version of the 2017 Heads of Agreement presented to the plaintiff at some point in late December 2017 or early January 2018 (Amended 2017 Heads of Agreement).

Evidence

1. The Defendants rely on an affidavit of Alistair Ronald Fleming, sworn 29 September 2022, (Fleming Affidavit) in support of the Application.  However, the contents of that affidavit are relevant only to the question of whether leave should be granted to bring the Application out of time.

2. The plaintiff did not rely on any evidence.

3. By agreement, the parties provided the Court with copies of the various documents that are referred to in the Impugned Paragraphs in advance of the hearing of the Application.  Although those documents were not formally tendered in evidence at the hearing, I have taken them into account in arriving at my decision, as I was referred to them by counsel during their oral submissions without any objection.  In any event, the contents of each document are the subject of detailed pleas.

Extension of time

1. The principles to be applied in determining whether to exercise the discretion to extend time were conveniently summarised by Acting Master Strk (as her Honour then was) in Saffari v Western Australia Police [2022] WASC 200[6] - [7]:

   An application to strike out a pleading pursuant to the RSC O 20 r 19(1) must be made within 21 days of the service of the pleading. In Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd (No 13) [2021] WASC 214 [154], Le Miere J succinctly outlined the principles that apply when exercising the discretion to extend time in the following terms:

   'When exercising the discretion to extend time, the court will take into account the principles of positive case flow management.  The discretion to extend time will be exercised where the interests of justice or efficient case management require it, because, for example, of an irreparable prejudice to the applicant or a prejudice to the trial process or the efficient utilisation of the resources of the parties and of the court.  Such prejudice might be established by showing that the disputed pleading would unnecessarily protract either the time to be taken in preparation for trial or the conduct of the trial itself by reason of the inclusion of an allegation which had no reasonable prospect of success.'

   The principles that apply to an extension of time are, generally, that delay in bringing an application should be justified.  Irrespective of whether the delay can be justified, time should be extended if it can be established that the interests of justice require that extension because of, for example, irreparable prejudice to a party or prejudice to the trial process, or the efficient utilisation of the resources of the parties and of the court. (citations omitted)

2. In my view an extension of time is warranted in the circumstances of this case.  I am satisfied that the lengthy delay has been adequately explained in the Fleming Affidavit.  The Defendants' solicitors have experienced some practical difficulties in obtaining instructions due to the complexity of this matter, and because the first and second defendants live in Corrigin.  Further, some of the delay can be explained by counsel unavailability and by the time that was taken to undertake conferral before the Application was filed.

3. I am also satisfied that the plaintiff would not suffer any specific prejudice over and above any general prejudice associated with delay.  In that regard, I note that the plaintiff did not suggest that he would suffer any prejudice if an extension of time was granted.  Further, in the Defence that was filed on 15 August 2022 (over a month before the filing of the Application on 29 September 2022) the Defendants identified those paragraphs of the statement of claim that were said to disclose without prejudice communications.

4. However, as I will explain in the balance of these reasons, the Application should be dismissed.

Principles relating to strike out applications

1. The principles that are to be applied in the context of an application to strike out pleadings were comprehensively summarised by Smith J in Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398 [60].[6]  It is unnecessary to set out those principles in full because the Defendants' only contention is that the Impugned Paragraphs should be struck out on the ground that they are an abuse of process.[7]  More specifically, the Defendants contend that the Impugned Paragraphs are an abuse of process because they purport to disclose the content of several without prejudice communications.[8]

   [6] See also English v Vantage Holdings Group Pty Ltd [2021] WASCA 47 [55].

   [7] Rules of theSupreme Court 1971 (WA) O 20 r 19(1)(d).

   [8] First, Second, Third and Fourth Defendants' Submissions in Support of their Strike Out Application dated 14 November 2022 [18].

2. A court has the power to strike out pleadings as an abuse of process where they disclose privileged communications.  This was recently confirmed in Pigozzo v Mineral Resources Ltd [2022] FCA 1166 [25], where Feutrill J said:

   A pleading may also be struck out as embarrassing if it is plain that the pleading party cannot lawfully call any evidence at the hearing to substantiate the pleading. Such a pleading may also be struck out under r 16.21(1)(b) (frivolous or vexatious) or 16.21(1)(f) (abuse of the process) on the ground that the allegations are foredoomed to fail if they are not able to be proved. (citations omitted)

3. Further, I note that in Insurance Commission of Western Australia v Woodings as Liquidator of Bell Group Ltd (in Liq) (No 2) [2017] WASC 372 [48] - [60] (Woodings (No 2)), Pritchard J dealt with an application to strike out certain paragraphs in a statement of facts, issues and contentions (which was treated as equivalent to a statement of claim) on the basis that if it referred to communications that were the subject of without prejudice privilege then those paragraphs were liable to be struck out as an abuse of process.

4. Consistent with what was said in Pigozzo, and with the approach that was taken in Woodings (No 2), before striking out a pleading in this case I would need to be satisfied that the plaintiff could not lawfully call any evidence to substantiate the pleading because the only relevant evidence available to the plaintiff is inadmissible evidence of communications that are subject to the protection of without prejudice privilege. 

Relevant principles relating to without prejudice communications

1. In Old Papa's Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11 [91] - [95], McLure J made the following observations that conveniently summarise many of the relevant principles relating to without prejudice privilege:

   Statements made without prejudice in an attempt to settle a dispute or action are privileged.  Without prejudice privilege is a joint privilege and thus cannot be waived without the consent of the negotiating parties.  The mere fact that a document is or is not marked "without prejudice" is not decisive.  The test is whether the communication was part of a genuine attempt to settle a dispute.  If so, the whole course of the negotiations is privileged. …

   The authorities establish that the without prejudice rule is not absolute and resort may be had to without prejudice material for a variety of reasons when the justice of the case requires it.

   Thus, without prejudice negotiations may be "pleaded into evidence" in such a way that the privilege is no longer available, by analogy with the rule concerning legal professional privilege.  The principle is not confined to the case where the party seeking to assert privilege raises a positive case. [9] (citations omitted)

   [9] See also, Woodings as liquidator of The Bell Group Ltd and the Bell Group Finance Pty Ltd v WA Glendinning & Associates Pty Ltd [2019] WASC 54 [121] ‑ [122].

2. Although the protection given to without prejudice communications can extend to protection from disclosure, it is well settled that the contents of such communications cannot be adduced in evidence without the consent of the parties to the communications.[10]  Further, while protection against the proof of admissions against interest is the most important practical effect of the rule, it is now accepted that certain other statements made for the purpose of attempting to settle a dispute are also protected.[11]  The protection 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.'[12]

   [10] Field v Commissioner for Railways for New South Wales[1957] HCA 92; (1957) 99 CLR 285, 291 - 292 (Dixon CJ, Webb, Kitto and Taylor JJ).

   [11] Chang v Legal Profession Complaints Committee [No 2] [2020] WASCA 208 (S) [15].

   [12] Samnakay v Schofield [2013] WASCA 138 [44]. See also, Oceanbulk Shipping & Trading SA v TMT Asia Limited[2011] 1 AC 662.

1. A communication does not have to be expressed as being 'without prejudice' to be protected by the privilege.  Further,

   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.  In any particular case, in determining whether a communication is protected it is necessary to have regard to substance, not form.[13]

   [13] Samnakay [45] (citations omitted).

2. A question was raised at the hearing of the Application about the degree of proximity that is required between a communication that is said to be protected by without prejudice privilege and the proceedings in which the protection is sought to be invoked.  That question arises in this case because all the communications pleaded in the Impugned Paragraphs are alleged to have occurred before, and in some cases well before, the plaintiff commenced proceedings. 

3. There is no question that the privilege can apply to communications that take place before litigation has commenced or before it has even been threatened.  So much was made clear by the High Court in Rodgers v Rodgers[1964] HCA 25; (1964) 114 CLR 608, 614, and in Harrington v Lowe [1996] HCA 8; (1996) 190 CLR 311, 323.

4. Both parties made written submissions that suggested that although a claim of privilege cannot turn on purely temporal considerations, the critical feature of proximity is the subject matter of the dispute.[14]  It was submitted that without prejudice privilege should protect against the admission into evidence of communications between parties to litigation where the litigation is connected with the same subject matter as the negotiations in which those communications took place. 

   [14] First, Second, Third and Fourth Defendants' Submissions in Support of their Strike Out Application dated 14 November 2022 [23] - [26]; Plaintiff's Submissions and List of Authorities in Response to First to Fourth Defendants' Strike Out Application dated 12 December 2022 [13] - [16]; First, Second, Third and Fourth Defendants' Reply Submissions in Support of their Strike Out Application dated 23 January 2023 [18] - [23].

5. However, the authorities that were relied on in support of that submission, namely Yokogawa Australia Pty Ltd v Alstom Power Ltd [2009] SASC 377; (2009) 262 ALR 738 and Dowling v Ultraceuticals Pty Ltd [2016] NSWSC 386,[15] are cases that were concerned with the question of whether the protection afforded by without prejudice privilege extends to prevent disclosure of protected communications to third parties in subsequent litigation.  The issues raised by the Application are concerned with an anterior question; namely, whether certain communications are privileged at all.

   [15] See also, Verge v Devere Holdings Pty Ltd [2009] FCA 832; (2009) 258 ALR 464.

6. The question of how proximate unsuccessful negotiations between parties in dispute must be to litigation involving the same parties to attract the protection of without prejudice privilege was commented upon in Rodgers, and then later in Harrington.  In those cases, the High Court said that negotiations undertaken between spouses to try to reconcile or to reach a financial agreement are taken to be 'without prejudice' negotiations whether or not they are parties to current litigation or are contemplating such proceedings.

7. In Glengallan Investments Pty Ltd v Arthur Andersen [2001] QCA 115 [29]; (2001) 1 Qd R 233 Williams JA, with whom McPherson JA and Ambrose J agreed, referred to both Rodgersand Harrington and observed although it was clear that without prejudice privilege operates even when litigation has not yet commenced, he was not convinced that the without prejudice rule applies to negotiations where litigation is not contemplated.  His Honour also said that he could see no justification for extending the operation of the rule beyond attempts to settle a dispute which would otherwise result in litigation if not resolved.

8. Similarly, in Dowling at [25], Hammerschlag J said that without prejudice privilege prevents the admission into evidence of settlement negotiations between parties when litigation between them is 'in contemplation'.

9. The question of exactly how proximate unsuccessful negotiations must be to attract the 'without prejudice' rule was also considered by the Court of Appeal (England and Wales) in Barnetson v Framlington Group Ltd [2007] 3 All ER 1054. In that case, Auld LJ, with whom Longmore and Toulson LJJ agreed, said the following at [32] - [34]:

   The question remains, how proximate, if at all, must unsuccessful negotiations in a dispute leading to litigation, be to the start of that litigation, to attract the 'without prejudice' rule. Must there be, as Mr Oldham contended, an express or implied threat of litigation underlying the negotiations, or, failing any such threat, some proximity in time to the litigation eventually begun?  In answering that question, the courts are logically driven back, as Mr Nicholls submitted, to the public policy interest behind the rule, of encouraging parties to settle their disputes without 'resort' to litigation or without continuing it until the needless and bitter end. If the privilege were confined to settlement communications once litigation had been threatened or shortly before it is begun, there would be an incentive on both sides to escalate their dispute with threats of litigation and/or to move quickly to it, before they could safely start talking sensibly to each other. That would be a slippery slope to mutual hardening of positions and commencement of litigation-hardly the encouragement to settle their disputes without resort to litigation that Oliver J had in mind in Cutts' case.

   On the other hand, the ambit of the rule should not be extended any further than is necessary in the circumstances of any particular case to promote the public policy interest underlying it. The critical question for the court in such a case is where to draw the line between serving that interest and wrongly preventing one or other party to litigation when it comes from putting his case at its best. It is undoubtedly a highly case sensitive question, or put another way, the dividing line may not always be clear. The various judicial pronouncements in the leading cases to which I have referred do not provide any precise pointers, and there are seemingly no other authorities directly in point.

   However, the claim to privilege cannot, in my view, turn on purely temporal considerations.  The critical feature of proximity for this purpose, it seems to me, is one of the subject matter of the dispute rather than how long before the threat, or start, of litigation it was aired in negotiations between the parties.  Would they have respectively lowered their guards at that time and in the circumstances if they had not thought or hoped or contemplated that, by doing so, they could avoid the need to go to court over the very same dispute?  On that approach, which I would commend, 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.  Confining the operation of the rule, as the judge did, to negotiations of a dispute in the course of, or after threat of litigation on it, or by reference to some time limit set close before litigation, does not, with respect, fully serve the public policy interest underlying it of discouraging recourse to litigation and encouraging genuine attempts to settle whenever made. (emphasis added)

10. As can be seen, to the extent that Auld LJ referred to the need to consider whether the parties to pre-litigation negotiations contemplated litigation if they could not agree, that approach is consistent with what was said in each of Rodgers, Harrington, Glengallan and Dowling.  However, the 'crucial consideration' formulated by Auld LJ appears to go further, as it suggests that it may also be relevant to have regard to whether the parties to pre-litigation negotiations 'might reasonably have contemplated litigation if they could not agree.'  

11. It is clear from the passage quoted above that it was the public policy interest of encouraging parties to settle disputes without resorting to the courts that drove the Court of Appeal's formulation of the 'crucial consideration'.  It is readily understandable how that public policy objective would be met by extending the protection afforded by without prejudice privilege to communications made before the commencement of litigation where litigation is contemplated by the parties.  However, it is not clear (to me at least) how the settlement of disputes, and the avoidance of litigation, would be encouraged by the prospect that negotiations might later be found by a court to have been conducted on a without prejudice basis even though the parties to the negotiations never actually contemplated litigation.

12. Barnetson is yet to be the subject of any detailed judicial consideration in Australia.  It was referred to by Wigney J in Australian Competition and Consumer Commission v NSW Ports Operations Hold Co Pty Ltd [2020] FCA 1232 [51] - [54], and then again a short while later in Commonwealth Director of Public Prosecutions v Citigroup Global Markets Australia Pty Limited (No 3 - Privilege Claims) [2021] FCA 1208 [115]. However, the approach that was taken in Barnetson was not the subject of any detailed consideration in either case.

13. The 'crucial consideration' test referred to in Barnetson has been applied in cases subsequently decided in the United Kingdom[16] and in New Zealand,[17] and has been referred to in learned texts,[18] without any apparent criticism.  Further, at the hearing of the Application both counsel submitted that I should apply the test in Barnetson in determining whether the Impugned Paragraphs should be struck out as an abuse of process.[19] 

    [16] See, for example, Alan Ramsay Sales & Marketing Ltd v Typhoo Tea Ltd [2016] 4 WLR 59 [22]; Re QRD Development Company No. 3Designated Activity Company [2022] IEHC 498 [26].

    [17] Morgan v Whanganui College Board of Trustees[2014] NZCA 340; [2014] 3 NZLR 713 [13].

    [18] Passmore, Privilege, 4^th ed (2020) 1066 - 1069; Thanki, The Law of Privilege, 3^rd ed (2018) 135, 315; Desiatnik, Without Prejudice Privilege in Australia, 1^st ed (2010) 19, 22 - 23.

    [19] Transcript 46, 94.

14. Dr Ronald Desiatnik, in his book Without Prejudice Privilege in Australia, 1^st ed (2010) 19, suggests that for without prejudice privilege to exist there must be the following 'elements':

    (a)a dispute over which litigation might reasonably be contemplated;

    (b)in which communications take place between the parties to that dispute;

    (c)that are genuinely aimed at negotiating a settlement of that dispute or a part of it; and

    (d)whether or not those communications are expressly stated to be 'without prejudice'.

15. In my view, given the way in which the Application was argued, those 'elements' sufficiently capture what I must decide in the circumstances of this matter to determine the Application.  However, in dealing with the first of those elements I will also consider whether, at the time of each relevant communication, there was a dispute over which the parties contemplated litigation, having regard to the various authorities that I have referred to above.

16. There are several recognised exceptions to the without prejudice rule.  For the purposes of this matter, it is enough for me to briefly refer to one of those exceptions, which is known as the estoppel or unconscionability exception.  It is generally accepted that this exception is based on what was said by Neuberger J in Hodgkinson & Corby Ltd v Wards Mobility Services Ltd [1997] FSR 178, 191, namely, that

    if a clear and unambiguous statement is made by one party in 'without prejudice' correspondence, and the statement is acted on, and reasonably acted on, by the other party, an objection of the first party to the correspondence being put in evidence by the second party in order to justify the step taken by the second party would be plainly unconscionable and would not be upheld by the court.[20]

    [20] See also, Unilever Plc v The Procter & Gamble Co [2000] 1 WLR 2436, 2442 (Walker J).

1. Finally, it is relevant to note in the context of the party's arguments that the rule that communications that are protected by without prejudice privilege is not a legal norm that is absolute in nature, and it may be waived.[21]  As all parties to a dispute are able to take advantage of the without prejudice rule, the consent of each party is required before it can be waived.  However, waiver can arise by reason of an inconsistency perceived by the court between the conduct of a party claiming privilege and the maintenance of the privilege.[22]

   [21] Chang [15].

   [22] CMA Assets Pty Ltd Formerly Known as CMA Contracting Pty Ltd v John Holland Pty Ltd [No 4][2013] WASC 77 [8] - [12].

2. I will now deal with the Defendants' strike out application by, firstly, dealing with pars 65, 66, and 68 - 72 of the statement of claim, and the documents and conversations that are the subject of those pleas.  Secondly, I will deal with the pleas at pars 83 and 84, which concern the 19 March 2020 Letter and 2 June 2020 Letter.

3. In each case I will set out the text of the relevant paragraphs, briefly summarise the submissions each party made in relation to those paragraphs, and then set out my reasons and conclusions on that part of the Application.

Should any of the Impugned Paragraphs be struck out?

Paragraphs 65, 66 and 68 - 72 of the statement of claim

1. I will deal with pars 65, 66 and 68 - 72 of the statement of claim together because the Defendants submit that all those pleas concern communications that occurred between the plaintiff and the first and second defendants, in the context of a mediation that took place on or about 30 November 2017 (2017 Mediation).  According to par 68, the plaintiff, his wife (Sandra), the first and second defendants, and the plaintiff's older brother (Andrew) were all at the 2017 Mediation.  Three other people were also in attendance, namely, Ms Judy Snell (an accountant), Mr Stephen Park (a lawyer), and Mr Wayne Cox (the accountant for the farming business).

2. As will be seen, the plaintiff's case is that the 2 November 2017 Email was sent shortly before the 2017 Mediation.  At the 2017 Mediation the first defendant read from the 2017 Mediation Letter.[23]  At the conclusion of the 2017 Mediation the plaintiff was presented with the 2017 Heads of Agreement.[24]  I was advised by counsel at the hearing of the Application that the 2017 Heads of Agreement was signed, although the copy that I was provided with was unsigned.[25]

   [23] Statement of claim [68.2].

   [24] Statement of claim [68.11].

   [25] Transcript 57. 

3. The Amended 2017 Heads of Agreement was presented to the plaintiff in late December 2017.

4. Paragraphs 65 and 66 of the statement of claim are in the following terms:

   65.On or about 2 November 2017, Mr Wayne Cox, on instructions from Philip and Lynette, sent an email to Ms Judy Snell, an accountant engaged by the parties to assist with succession-planning, which set out some of the details of what Philip and Lynette proposed by way of succession (2 November 2017 Email).

   66.The terms of the 2 November 2017 Email included that:

   66.1.any further negotiations regarding the transfer of control of the farming entity and/or any land as part of succession were to be put on hold until further notice;

   66.2.Steven was to run and manage the operational side of the Farm exactly as he had been as Philip and Lynette were extremely happy with this part of the business;

   66.3.Steven's drawings from the Farming Business were to be increased from $2,500 to $6,000 a month;

   66.4.all Farm vehicle costs would continue to be paid by the Farming Business;

   66.5.all of Steven's phone and house utilities would continue to be paid by the Farming Business;

   66.6.private health insurance would to be paid [sic] by the Farming Business;

   66.7.Steven and Sandra's current level of life was is to be paid for by [sic] the Farming Business;

   66.8.all tax bills would to be paid [sic] by the Farming Business;

   66.9.all loan/expenses for a property purchased by Steven and Sandra at 6 Howell Court, Guildford (Guildford Property) would be funded by Steven and Sandra;

   66.10.all family tax/Centrelink payments received by Steven and Sandra would remain the property of Steven and Sandra;

   66.11.all Farm Management Deposits (FMDs) in Steven and Sandra's names currently and going forward are to be the property of the Farming Business and any cash-outs were to go back into the Farm's bank account;

   66.12.any superannuation contributions for Steven and Sandra were to be paid at the option of Philip and Lynnette in consultation with Mr Wayne Cox;

   66.13.Steven was to roll his current superannuation balance out of the Claypans Superannuation Fund into a fund of his choice and resign as a trustee and member of the Claypans Superannuation Fund;

   66.14.Philip and Lynette would help support the ongoing education expenses of Steven and Sandra's children on the following conditions:

   (a)Sandra was to work and her wages were to be quarantined and used only to pay school fees; and

   (b)Steven and Sandra were to do all things necessary to improve and maintain the personal relationship with Philip and Lynette.

5. Paragraphs 68 and 69 of the statement of claim are in the following terms:

68.On or about 30 November 2017, at a mediation which took place at Ms Judy Snell's RSM office at which Steven, Sandra, Philip, Lynette, Andrew, Ms Judy Snell, Mr Stephen Park of Pacer Legal and Mr Wayne Cox attended (2017 Mediation), at which:

68.1.Ms Judy Snell said that the objective of the day was for the parties to negotiate a non-binding heads of agreement that would be drawn up by Pacer Legal;

68.2.Philip read from a handwritten letter (2017 Mediation Letter). The 2017 Mediation Letter will be referred to at trial for its full terms and effect;

68.3.Philip said to Steven that he could not believe Steven and Sandra had purchased the Guildford Property and that he and Lynette had been about to start transferring land to Steven but decided not to when Steven purchased the Guildford Property;

68.4.Steven said that he needed to have some security and to take over the Farming Business as had been promised;

68.5.Steven said that the succession plan had already been agreed in 2006 but that Philip and Lynette had walked away from that agreement;

68.6.Steven said it was not possible for Philip and Lynette to have an additional $1 million in superannuation plus a more expensive house and have the Farm lose Joe's Block as the Farm could not afford it;

68.7.Lynette said that Andrew would be getting Joe's Block and that it was already in the Will;

68.8.Steven said that Mr Wayne Cox had said that Philip and Lynette own everything on the Farm and that Steven is only a worker for them;

68.9.Philip said that Mr Wayne Cox would not have said such a thing;

68.10.Ms Judy Snell suggested that the Farming Business have a 20-year lease of Joe's Block at a peppercorn rent;

68.11.Philip and Lynette caused Steven to be presented with a heads of agreement (2017 Heads of Agreement);

68.12.Philip, Lynette, Steven and Sandra signed the 2017 Heads of Agreement.

69.The 2017 Heads of Agreement included the following terms:

69.1.an off-farm house would be purchased for Philip and Lynette to the value of between $700,000 and $800,000, with the Farming Business paying 20% of the purchase price as a deposit and the balance in a 20-year loan, paying both principal and interest (Clauses 4.1 and 4.2);

69.2.Philip and Lynette would transfer Clapps, Claypans and Waltons to Steven or his nominated entity for nil consideration after an off-farm residence has been purchased for them and the net asset position of the Claypans Superannuation Fund reached $2,000,000 (Clause 5.1);

69.3.Philip and Lynette would ensure that Joe's Block was gifted to Andrew (Clause 5.1(a));

69.4.Philip and Lynette would grant the PR & LB Bolt Family Trust a lease of Joe's Block for 20 years from 1 January 2018 for a peppercorn rental, the terms of which would include a first right to purchase granted to Steven (Clause 5.2(b));

69.5.Philip and Lynette would execute binding death benefit nominations gifting land owned by the Claypans Superannuation Fund to Steven and Sandra upon the death of the last survivor of Philip and Lynette (Clause 5.3);

69.6.Philip and Lynette would immediately appoint Steven and Sandra as joint trustees, guardians and appointors of the PR & LB Bolt Family Trust (Clause 6.1);

69.7.Philip and Lynette would retire as trustees, appointors and guardians of the PR & LB Bolt Family Trust after an off-farm residence had been purchased for them and the net asset position of the Claypans Superannuation Fund reached $2,000,000 (Clause 6.2);

69.8.Steven would be granted immediate access to the Rabobank trading account and granted authority to effect banking transactions (Clause 8); and

69.9.Steven would retire as a trustee of the Claypans Superannuation Fund and the parties agree to roll out his member balance (Clause 9).

1. Paragraph 70 of the statement of claim is in the following terms:

   70.On or about 1 December 2017, Philip and Lynette advised Ms Judy Snell that they did not propose to proceed with the 2017 Heads of Agreement.

   Particulars

   This advice was provided in a telephone call from Philip and Lynette to Ms Judy Snell.

2. Paragraphs 71 and 72 of the statement of claim are in the following terms:

71.On or about 27 December 2017, Philip and Lynette caused Steven to be presented with an amended heads of agreement (Amended 2017 Heads of Agreement), which included the following amendments to the 2017 Heads of Agreement:

71.1.it was agreed that Philip will continue to work on the Farm with Steven for as long as Philip wishes to (Clause 3(d));

71.2.an off-farm house would be purchased for Philip and Lynette to the value of between $700,000 and $800,000, with the Farming Business paying 20% of the purchase price as a deposit and the balance paid in full within 5 years (Clauses 4.1 and 4.2);

71.3.Philip and Lynette would transfer Clapps and Waltons to Steven or his nominated entity for nil consideration after an off-farm residence had been purchased for them and the net asset position of the Claypans Superannuation Fund reaches $2,000,000. Claypans would be leased to Steven or its trading entity and gifted to Steven on the death of the last survivor of Philip and Lynette (Clause 5.1); and

71.4.Philip and Lynette would immediately appoint Steven (but not Sandra) as joint trustee, guardian and appointor of the PR & LB Bolt Family Trust (Clause 6.1).

…

72.In or around late 2017, after having received the Amended 2017 Heads of Agreement, Steven advised Ms Judy Snell that the terms of the Amended 2017 Heads of Agreement were not acceptable to him and would put the Farming Business in a position where it would not be viable.

Particulars

These statements were made in a telephone conversation between Steven and Judy Snell which took place in or around late December 2017.

The parties' submissions

1. The Defendants submit that communications that were entered into in connection with the 2017 Mediation establish that the parties were in dispute and that they were attempting to negotiate a settlement of that dispute.  This, they submit, includes any reasonably incidental[26] communications and any documents that are the subject of the pleas at pars 65, 66 and 68 - 72 of the statement of claim.  On that basis, it is submitted, those communications are protected from admission into evidence by without prejudice privilege.

   [26] Field 292.

2. The Defendants refer to several recitals and clauses in the 2017 Heads of Agreement and submit that they establish that the parties to this litigation were in dispute, and that the dispute related to the 'transfer of assets and entitlements between the parties',[27] which the Defendants say is what these proceedings are about.  The Defendants also refer to the fact that the 2017 Heads of Agreement was prepared at a mediation conducted with the assistance of an independent third party, Ms Snell, and that they were drawn up on the same day by a lawyer, Mr Park, suggesting that the parties were making a genuine attempt to settle a dispute. 

   [27] First, Second, Third and Fourth Defendants' Submissions in Support of their Strike Out Application dated 14 November 2022 [30].

3. In their written submissions the Defendants argue that both the 2017 Mediation (and the 2017 Heads of Agreement) and these proceedings concern the same parties and the same subject matter.  Accordingly, the Defendants submit, relying on the principles expressed in Yokogawa, that because without prejudice privilege 'applies in cases where a litigation has a connection with the same subject matter as a negotiation(s) … without prejudice privilege applies to communications and materials prepared for and in connection with the 2017 Mediation.'[28]

   [28] First, Second, Third and Fourth Defendants' Submissions in Support of their Strike Out Application dated 14 November 2022 [32].

4. Similarly, in relation to the 2 November 2017 Email pleaded at par 65, the Defendants submit that it should be inferred that it is a document that was 'reasonably incidental' to the negotiations that occurred at the 2017 Mediation, and that it is therefore also protected by without prejudice privilege.

5. The plaintiff submits that the communications pleaded at pars 65, 66 and 68 - 72 of the statement of claim are not protected by without prejudice privilege because they did not form part of an attempt to settle any dispute, including the dispute the subject of these proceedings.  The plaintiff argues that the subject matter of the 2017 Mediation was the implementation of a succession plan, which is different to the subject matter of these proceedings, namely claims for proprietary estoppel. 

6. The plaintiff further contends that there is nothing to suggest that any of the parties to these proceedings had a legitimate expectation that the communications the subject of pars 65, 66 and 68 - 72 would not be able to be used against them in legal proceedings in which the plaintiff was asserting legal rights by way of proprietary estoppel.

7. The plaintiff also appeared to argue, in his written submissions, that nothing had been pleaded in relation to communications made in the context of the 2017 Mediation that would amount to express or implied admissions, which meant that those communications were not protected by without prejudice privilege.  However, at the hearing of the Application the plaintiff's counsel said that he was not contending that the protection afforded by without prejudice privilege was limited to evidence of express or implied admissions made by a party.

8. In respect of the specific documents referred to in the pleadings, the plaintiff submits that the 2 November 2017 Email cannot be protected by without prejudice privilege because it does not refer to negotiations that have occurred or may occur, and it does not refer to any mediation or other similar meeting that is to take place.  The plaintiff referred in particular to the final bullet point in the email, which says that any further negotiations regarding the transfer of control of the farming business as part of a succession plan were to be 'put on hold until further notice.'

9. The plaintiff says that the 2017 Mediation Letter referred to at par 68.2 of the statement of claim gives some insight into what occurred at the 2017 Mediation.  It is submitted that this document demonstrates that the mediation was not concerned with settling or compromising a dispute, but that it was about the airing of complaints.

10. In relation to the 2017 Heads of Agreement and 2017 Amended Heads of Agreement that are referred to at pars 68 and 71 of the statement of claim, the plaintiff submits that in considering whether those documents evidence an attempt to settle a dispute on a without prejudice basis, it is telling that although a lawyer was involved, the lawyer did not appear to be acting for any one of the parties.  Further, the plaintiff drew attention to the fact that the documents do not contain any releases from claims and demands, and there are no references to a compromise having been reached or to any claims being abandoned.  The plaintiff also submits that there are no references in either of the documents to any legal rights being held by any of the parties to these proceedings.

11. I pause here to note that the recitals to the 2017 Heads of Agreement record that the first and second defendants wished to facilitate a change in control of the farming enterprise[29] to the plaintiff and his wife, but that they wanted to ensure that their other children were looked after upon their deaths.  Further, the recitals note that:

    (a)the parties to that agreement, being the plaintiff, his wife, and the first and second defendants, 'are in dispute about the succession arrangements for the farming enterprise';

    (b)the parties met on 30 November 2017 in an attempt to formulate a succession plan by mediation; and

    (c)the parties wanted to record the non-binding resolutions made during the mediation within the Heads of Agreement, which were subject to the parties obtaining independent legal advice.

    [29] The farming enterprise is described in recital A as a farming enterprise in Corrigin, known as 'Claypans Farm'.

12. The various terms of the 2017 Heads of Agreement then make provision for, amongst other things:

    (a)the purchase of a residential property for the first and second defendants to facilitate their retirement from the farming enterprise, using funds sourced from a trust connected with that enterprise;

    (b)the transfer of some of the land on which the farming enterprise was being operated to the plaintiff and his wife for no consideration after a residential property had been purchased for the first and second defendants, and after the net asset position of their self-managed superannuation fund had reached a certain amount;

    (c)testamentary and other provision for the first and second defendants' three other children by the first and second defendants;

    (d)drawings by the first and second defendants from a trust that operated the farming enterprise; and

    (e)a life-tenancy for a home for the first and second defendants to live in on the farm.

13. The Amended 2017 Heads of Agreement is in similar terms, but some minor amendments have been made.  It was not suggested by any of the parties that the amendments affected the nature or scope of the dispute that was the subject of the negotiations at or immediately following the 2017 Mediation.

14. Finally, the plaintiff submits that there is no evidence that litigation was contemplated at the time the communications occurred, or that litigation might reasonably have been contemplated by any of the parties.

Analysis

1. In my view, based on the pleaded facts and on the materials before me, none of the communications that the plaintiff wishes to rely on to prove the material facts pleaded at in pars 65, 66 and 68 - 72 of the statement of claim are protected by without prejudice privilege.

2. Some care must be taken with the Defendants' submission that without prejudice privilege applies to dealings between negotiating parties when litigation that is later commenced is connected with the same subject matter as the negotiations.  This is because the authority relied on by the Defendants for that proposition (Yokogawa [83]) was concerned only with the question of whether without prejudice privilege extends to prevent the disclosure of dealings between negotiating parties to third parties involved in litigation with one of the negotiating parties. That case was not concerned whether without prejudice privilege will protect against the use of evidence of pre-litigation negotiations by one party to those negotiations as evidence in proceedings against another party to the same negotiations.

3. Whether the communications said by the Defendants to have been prepared for, or in connection with, or which occurred at, the 2017 Mediation are protected by without prejudice privilege is not to be determined by just conducting a comparison between the parties and the subject matter of the negotiations, with the parties and the subject matter of these proceedings, with a view to seeing whether there is some sort of a connection between them.  While the subject matter of pre-litigation negotiations of a dispute is the critical feature of proximity for the purposes of determining whether they attract without prejudice privilege, consistent with what was said by Auld LJ in Barnetson the question is whether the subject matter of the dispute was such that the parties contemplated or might reasonably have contemplated litigation if they could not settle. 

4. It can be accepted that in 2017 there were various disagreements between the plaintiff and the first and second defendants.  There is no need for me to descend into the details of all those disagreements, particularly when the pleadings demonstrate that there are likely to be extensive factual disputes about many of those matters that will need to be resolved at a trial.  However, expressed at a high level, it seems to be common ground that at the relevant time there were several difficulties of a personal nature between the plaintiff and the first and second defendants.  There were also issues relating to how various financial matters should be settled, as well as disagreements about the terms of the succession arrangements for the family farming business and for the retirement of the first and second defendants.  It also seems uncontroversial that the mediation was arranged in a genuine effort to resolve the various disagreements that had arisen between the plaintiff and his parents.

5. However, there is nothing in the material before me that establishes that while they were engaging in the pleaded communications that took place in November and December 2017,[30] the parties were genuinely attempting to negotiate a settlement of a dispute over which litigation was contemplated. 

   [30] Or in January 2018, which is the date recorded within the Amended 2017 Heads of Agreement pleaded at [71] and [72] of the statement of claim.

6. While the 2017 Mediation was attended by a lawyer, there is no evidence that he was acting for any one of the parties, or if instead he was simply there to assist with drafting an agreement if one could be reached.  It is significant to note, in that regard, that the recitals of the 2017 Heads of Agreement and the Amended 2017 Heads of Agreement provide that the non-binding resolutions made during the mediation 'are subject to each party obtaining independent legal advice'.

7. It is also important to appreciate that despite receiving input from a lawyer, none of the materials relating to the 2017 Mediation contain any express or implied reference to the possibility of legal proceedings being commenced by any of the parties.  Further, neither the 2017 Heads of Agreement nor the Amended 2017 Heads of Agreement contain any releases or discharges from liability.  There are also no references to the legal rights of the parties, or to a compromise having been reached, or to any claims being abandoned, as might be expected if litigation was contemplated by any of the parties to these proceedings.   

8. In short, there is nothing before me that would suggest that litigation was contemplated by the plaintiff or by any of the Defendants at the relevant time.

9. I am also of the view that there is no basis for reaching a conclusion that, in the context of the 2017 Mediation, the parties were genuinely attempting to negotiate a settlement of a dispute over which litigation might reasonably have been contemplated if the plaintiff and the first and second defendant could not agree to resolve their difficulties. 

10. It is common ground that there were disputes between the parties.  However, it is critical to understand the scope and the nature of the disputes which they evidently sought to resolve at the 2017 Mediation.  This is because an understanding of the scope and nature of those disputes is necessary to resolve the question of whether litigation might reasonably have been contemplated.

11. Taking the approach that was adopted by the Defendants in both their written and oral submissions, the nature and scope of the dispute between the parties in the context of the 2017 Mediation is largely informed by what is contained in the 2017 Heads of Agreement.  Although that agreement is expressed to be 'non-binding and subject to further documents being prepared and executed',[31] its significance is not concerned with it having any contractual effect. 

    [31] Clause 2.1.

12. It can be seen from the recitals to the 2007 Heads of Agreement, which I have referred to above, that although the parties were in dispute, in the words chosen by the parties to that agreement it was a dispute about 'the succession arrangements for the farming enterprise'.  Further, the terms of the 2017 Heads of Agreement, as well as contents of the 2017 Mediation Letter, make it clear that the first and second defendants wished to retire from the farming business and wanted to hand their control of it to the plaintiff while they were still alive.  However, they did not simply want to transfer the business to the plaintiff without also ensuring that they retained some involvement in the running of the business during a transitional period.  They were also keen to make sure that they obtained some financial security for their retirement, and that their other children were also adequately provided for out of the farm assets. 

13. In my view, none of this supports a conclusion that the dispute between the plaintiff and the first and second defendants was a matter over which they might reasonably have contemplated litigation.  The first and second defendants had effective control over the farming business.  They were free to make their own plans about how, and to set their own terms on which, that control would be transferred to the plaintiff during their lifetimes.  The plaintiff may have disagreed with their plans, and there were negotiations to try to resolve the disagreements, but the disagreements were not ones over which litigation might reasonably have been contemplated.

14. In oral submissions, counsel for the Defendants suggested that in the circumstances of the 2017 Mediation a party might reasonably have considered it to be appropriate to commence proceedings if they did not reach agreement at the mediation.  However, the nature of those proceedings was not identified with any real particularity, other than to suggest that a party, presumably the plaintiff, may 'come up with' a proprietary estoppel claim.[32]

    [32] Transcript 58.

15. In my view there is no evidence that such a claim (or any of the elements of such a claim) was ever the subject of the dispute that existed at that time.  The parties were not negotiating to avoid the need to take their disagreements to court, far less to avoid the possibility of a claim of proprietary estoppel by the plaintiff, and there is no basis to conclude that they might reasonably have contemplated litigation of that nature.  As I have already mentioned, the parties were seeking to negotiate the terms on which the first and second defendants were willing to transfer control of the farming business to the plaintiff during their lifetime, but they were not trying to compromise or settle disagreements about their respective legally enforceable rights and obligations.

16. Before proceeding to deal with the remaining paragraphs of the statement of claim that are the subject of the Application, I will make two final points about the 2 November 2017 Email specifically, which also support the conclusion that I have reached that this communication in particular is not protected by without prejudice privilege.

1. Firstly, the 2 November 2017 Email sets out a series of proposals made by the Defendants relating to the ongoing management of, and financial arrangements concerning, the farming enterprise.   There was also a proposal that related to the provision of financial support for educating the plaintiff's children.  However, it is by no means clear whether any or all of these proposals were the subject of a dispute between the parties.  I note in that regard that most of the proposals did not find their way into the 2017 Heads of Agreement, and they do not form the basis of any of the claims made in these proceedings.

2. Secondly, to the extent that there were any issues about the future control of the family farm in late 2017, the final paragraph of the 2 November 2017 Email expressly provided that '[a]ny further negotiations regarding the transfer of control of the farming entity and/or any land as part of succession is put on hold until further notice.'  Accordingly, it is very difficult to see how it could be concluded that the 2 November 2017 Email was a communication that was genuinely aimed at negotiating a settlement of that dispute.

3. It follows that the Defendants' submission that the documents and other communications that are the subject of the pleadings at 65, 66 and 68 - 72 of the statement of claim are protected by without prejudice privilege cannot be accepted.  As a result, those pleadings are not an abuse of process and the Defendants' application to strike out those paragraphs must be dismissed.

Paragraphs 83 and 84 of the Statement of Claim

1. As I have already mentioned, the plaintiff pleads that by reason of various matters, and in certain pleaded circumstances, the first and second defendants have sought to resile and depart from the 2006 Assumptions and the 2016 Assumptions.[33]  Amongst those circumstances are those pleaded at pars 83 and 84 of the statement of claim, which are in the following terms:

   [33] Statement of claim [82].

   83.On or around 19 March 2020 on instructions from Philip and Lynette, Valenti Lawyers (who then acted for Philip and Lynette) sent Steven a letter (19 March 2020 Letter). The 19 March 2020 Letter stated that Philip and Lynette had the following expectations:

   83.1.the purchase of an off-farm residence in Perth for Philip and Lynette to the value of up to $1,000,000 with the deposit and obligations for repayment to be paid by the Farming Business;

   83.2.for the Farming Business to make contributions to Philip and Lynette's superannuation fund so that the fund balance reaches $2,000,000; and

   83.3.for Philip and Lynette to receive a set monthly drawing from the Farming Business.

   …

   84.On or around 2 June 2020, on instructions from Philip and Lynette, Valenti Lawyers sent Steven a letter (2 June 2020 Letter). The 2 June 2020 Letter stated that:

   84.1.Philip and Lynette were prepared to commence the process of the transition of control of the Farming Business and Farmland to Steven over an agreed period of not less than 5 years on the following terms and conditions:

   (a)Steven advise, in writing, of the actions or statements or behaviour of Philip and Lynette that have caused such a serious breakdown of family relationships since 2006;

   (b)Steven and Sandra immediately improving the way they treat Philip and Lynette;

   (c)the balance of the Claypans Superannuation Fund being increased to $2,000,000 by the end of the period;

   (d)Philip and Lynette being the owners of an unencumbered off-farm residence to the value of approximately $1,000,000 by the end of the period;

   (e)Joe's Block being transferred to Andrew subject to a lease back to Steven for a reasonable period of time, the terms of which Steven is to negotiate with Andrew;

   (f)Philip and Lynette receiving not less than $10,000 per month from the Farming Business until they retire from the Farming Business;

   (g)Steven's annual drawings being in such amount as the Business can reasonably afford from time-to-time in light of all material circumstances;

   (h)the cost of education and boarding of Steven and Sandra's children being met by Steven and Sandra from the drawings they receive from the Farming Business;

   (i)all Steven and Sandra's private expenditure being paid by Steven from his drawings from the Farming Business; and

   (j)no personal expenses being incurred by Steven or Sandra be debited or charged to the Farming Business without the prior written consent of Philip and Lynette until they retire from the Farming Business; and

   84.2.If Steven did not agree to the terms and conditions set out in the 2 June 2020 Letter, Philip and Lynette would proceed to place the Farmland and Farming Business on the market as soon as reasonably prudent and provide Steven with 25% of the net proceeds of sale in consideration of the contribution he has made to the Farming Business over the previous 20 years.

The parties' submissions

1. As I have already indicated above, the Defendants submit that the 19 March 2020 Letter and the 2 June 2020 Letter are protected by without prejudice privilege and, as a result, they would be inadmissible at any trial of these proceedings.  

2. The Defendants place some reliance on the fact that the 2 June 2020 Letter is marked 'without prejudice', and on the fact that its contents suggests that a 'without prejudice' meeting took place between the first and second defendants' lawyers and the plaintiff and his wife on 13 March 2020.

3. Counsel for the Defendants also submitted that I should find that the meeting that took place on 13 March 2020, referred to in both of the letters, was conducted on a without prejudice basis.  It was also submitted, by extension, that the 19 March 2020 Letter constituted a without prejudice communication even though the words 'without prejudice' do not appear in the letter. 

4. Counsel also separately submitted that I should make those findings because the plaintiff had failed to contradict the statements made in the 2 June 2020 Letter that those communications had been conducted on that basis. 

Analysis

1. The fact that the 2 June 2020 Letter is marked with the words 'without prejudice' does not conclusively establish that it is protected by without prejudice privilege, although it can constitute prima facie evidence that it was intended to be a negotiating document,[34] particularly as it was written by a lawyer.  However, the question of whether the 2 June 2020 Letter is a without prejudice communication is a question of substance, and the test remains whether the communication was part of a genuine attempt to settle a dispute.[35]

   [34] South Shropshire District Council v Amos [1987] 1 All ER 340 [344]. See also Barrett Property Group Pty Ltd v Dennis Family Homes Pty Ltd (No 2) [2011] FCA 276; (2011) 193 FCR 479 [39].

   [35] Old Papa's [91].

2. It is clear from the contents of both letters, and from all of the materials, that at the time those letters were written the plaintiff and the first and second defendants were still in disagreement about several matters.  By this stage, not only had their family relationship broken down, but they had different expectations about the way in which the farming business should be operating at that time.  The first and second defendants were also unhappy about several financial decisions that they believed the plaintiff had made, and although the first and second defendants still wished to eventually transfer control to the plaintiff, he did not agree with their terms and conditions.

3. However, there is nothing in either of the letters, or in any of the materials that I have been provided with, that demonstrates that the parties contemplated that litigation over any of those disputes would be commenced if they were not resolved by negotiation.  Further, I am of the view that there is no basis on which to conclude that their dispute was something over which litigation might reasonably have been contemplated.

4. It is the case, of course, that both letters were written by lawyers who had been engaged by this time to act on behalf of the first and second defendants.  However, it is significant that those lawyers made no express reference in either of their letters to the fact that any of the parties were contemplating litigation if their disagreements were not resolved, and there is nothing in what was written in either of the letters from which it could be inferred that litigation was contemplated by anyone.  The mere fact that the 2 June 2020 Letter was marked 'without prejudice', or that it refers to a 'without prejudice meeting' on 13 March 2020, does not affect that reality.

5. It is also significant that the plaintiff did not appear to have legal representation at the time these letters were sent, and there is no evidence before me that he was represented when he attended at the 13 March 2020 meeting with the lawyers then acting for the first and second defendants.  Given that it could only sensibly be suggested that litigation might be contemplated by the plaintiff in these circumstances, the fact that he was not represented by a lawyer at these times strongly suggests that recourse to litigation was not contemplated by him.

6. Although the 2020 letters were written more than two years after the Amended 2017 Heads of Agreement were presented to the plaintiff in December 2017, there is nothing that suggests that the circumstances had changed in any significant way during that period such that in March 2020 the parties were by then negotiating to avoid the need to litigate the issues about which they were in dispute.  Instead, the negotiations about the future control of the farming enterprise appear to have stalled in 2018 and 2019, before they then recommenced in early 2020.  At that time the first and second defendants still retained control over the farming enterprise, and they still wanted to retire.  Furthermore, they still they wanted to hand control of most of the farming enterprise over to the plaintiff upon their retirement.  However, they only wanted all this to occur on their terms.  

7. While the terms that the first and second defendant set out in the 2020 letters were not identical to the terms that they had insisted upon in late 2017, they were very similar in nature and scope. Clearly, the parties were in dispute about those terms in or about March 2020, and the 19 March 2020 Letter demonstrates the differences in their respective expectations.  However, to the extent they were in dispute, there is nothing in the materials before me that demonstrates that it was a dispute over which litigation was contemplated. 

8. Further, for essentially the same reasons that I have set out above in relation to the other Impugned Paragraphs, the parties were not in a dispute over which litigation might reasonably have been contemplated if it was not resolved. 

9. I am also not prepared to conclude that the meeting that took place on 13 March 2020, or the 19 March 2020 Letter, were communications that the first and second defendants intended would be made on a without prejudice basis, grounded only on a suggestion that the plaintiff failed to contradict statements made in the 2 June 2020 Letter.  The hearing of the Application was conducted on the pleadings and the documents that were expressly referred to in the Impugned Paragraphs, and nothing else.  The absence of any contradictory evidence might be explained on that basis.  Further, the submission that I could draw a conclusion based on a suggestion that the plaintiff had failed to contradict something that appears in the 2 June 2020 Letter was not the subject of any written submission made in advance of the hearing and so the plaintiff did not have prior notice that I might be invited to adopt such a line of reasoning.  This is also a possible explanation for any failure to contradict the assertions that were made in the 2 June 2020 Letter.

10. It follows that I am of the view that neither the 19 March 2020 Letter nor the 2 June 2020 Letter are inadmissible because they are protected by without prejudice privilege.  Accordingly, the pleadings at pars 83 and 84 of the statement of claim are not an abuse of process, and there is no basis for them to be struck out.

Exceptions to without prejudice privilege

1. In light of my conclusions, it is strictly unnecessary for me to deal with the plaintiff's arguments that even if proof of the material facts pleaded in the Impugned Paragraphs depends on evidence of without prejudice communications, that evidence is admissible because an exception to the protection afforded by the privilege applies in this case.  It is also unnecessary for me to deal with the plaintiff's contention that the first and second defendants have waived without prejudice privilege because they have pleaded the defence of laches.  However, I will very briefly deal with both of those arguments.

2. As I have already noted above, there are several recognised exceptions to the without prejudice rule.  During the hearing of this matter the Court raised with the parties whether the plaintiff was relying on any of those exceptions.  Submissions were then made in relation to what is known as the estoppel exception, which applies where a party to without prejudice negotiations reasonably acts on a clear and unambiguous statement made by one party in 'without prejudice' correspondence.  In those circumstances an objection to the correspondence being put in evidence to justify a step taken by the second party would be unconscionable and will not be upheld by the court.[36]

   [36] Hodgkinson 191.

3. The plaintiff does not, on the pleadings, rely on any of the communications referred to in the Impugned Paragraphs as amounting to clear and unambiguous statements in order to justify his own actions.  Instead, his case is that he held certain assumptions, and that these were formed because the first and second defendants acted in the various ways pleaded at pars 60 - 69, 71, and 73 - 78 of the statement of claim to induce, encourage and acquiesce in those assumptions.  It is not possible to reconcile the idea that the plaintiff came to hold assumptions in this way with a contention that the first and second defendants made clear and unambiguous statements, which they positively intended the plaintiff should act on, and on which he did so act.

4. For those reasons, if, contrary to my conclusions above, any of the relevant communications are protected by without prejudice privilege, the 'estoppel exception' does not apply to those communications

5. At par 98 of the Defence the defence of laches is raised.  It is pleaded that it would be unjust to grant at least some of the relief sought by the plaintiff because, in part, the Defendants would have acted differently since mid-2006 had the plaintiff raised his claims at an earlier time.

6. The plaintiff submits that it would be inconsistent and unfair for the Defendants to be allowed to attack his case by relying on the defence of laches when the communications that are the subject of the Impugned Paragraphs 'go to justifying his conduct and underpin the 2016 Assumptions'.[37]  On that basis he argues that if any of those communications are protected by without prejudice privilege, the Defendants have waived that privilege.

   [37] Plaintiff's Submissions and List of Authorities in Response to First to Fourth Defendants' Strike Out Application Filed on 29 September 2022 dated 12 December 2022 [26].

7. In my view there is nothing inconsistent or unfair about the Defendants being allowed to object to the relevant communications while at the same time being permitted to rely on the defence of laches.  The Defendants have clearly pleaded in the Defence that the relevant communications are subject to without prejudice privilege.  Further, the plea of laches, does not refer to any of those communications expressly or by implication. 

8. In any event, despite the submission that the communications justify any delay, this is not the subject of any plea in the Reply.  In circumstances in which, on the pleadings, the plaintiff seeks to rely on the relevant communications for a different purpose, namely, to support his two claims of proprietary estoppel, I am unable to see how evidence of the contents of the communications can presently be taken into account in relation to the defence of laches. 

9. Finally, during the hearing of the Application I raised with counsel a question about whether it was appropriate, or possible, for me to determine the Application in advance of the trial without the benefit of having heard evidence about the circumstances in which the various communications between the parties occurred.  The parties filed written submissions after the hearing that dealt with that question.

10. Given my conclusions, based on the materials that were before me, that the Impugned Paragraphs should not be struck out and that the Application should be dismissed, it is unnecessary for me to deal with that question.

Conclusion

1. The Application should be dismissed. 

1. I will hear the parties as to the appropriate orders that should be made to reflect these reasons.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

TS

Secretary

23 MAY 2023