BP Australia Limited v Ampol Limited

[1990] TASSC 152

Serial No B75/1990
List "B"

COURT:                 SUPREME COURT OF TASMANIA

CITATION:            BP Australia Limited v Ampol Limited [1990] TASSC 152; B75/1990

PARTIES:  BP AUSTRALIA LIMITED
  v
  AMPOL LIMITED

FILE NO/S:  259/1989
DELIVERED ON:  7 December 1990
JUDGMENT OF:  Crawford J

Judgment Number:  B75/1990
Number of paragraphs:  8

Serial No B75/1990
List "B"
File No 259/1989

BP AUSTRALIA LIMITED v AMPOL LIMITED

REASONS FOR JUDGMENT  CRAWFORD J

RULING DURING COURSE OF TRIAL  7 December 1990

1. The plaintiff seeks to tender into evidence four letters, being a letter dated 17 November 1988 from the plaintiff's solicitors to the defendant, a letter in reply dated 1 December 1988, a further letter from the plaintiff's solicitors to the defendant dated 22 December 1988 and a letter in reply dated 9 January 1989. The defendant objects to the admission of the letters upon the basis that they are privileged, forming part of negotiations between the parties conducted on a without prejudice basis.

1. The first letter from the plaintiff's solicitors was entitled "without prejudice". It could not be privileged on its own however, for its contents contain no offer to settle but instead simply demand payment of the full amount of the plaintiff's claim. No desire to negotiate is expressed in the letter. However the second letter dated 1 December 1988, being a reply by the defendant, does on its face contain a bona fide offer to negotiate. It denied liability and maintained that the original offer upon which this contractual action is based was not accepted within a reasonable time. It then offered $9,000.00 to settle the matter. I have no hesitation in concluding that that letter, written as it was in response to a letter from the plaintiff's solicitors entitled "without prejudice", was subject to the claimed privilege. That privilege extended not only to the offer contained in the letter but to the entire contents. I apply as a sufficient statement of principle what was said by the majority in the High Court in Field v Commissioner for Railways (1957) 99 CLR 285 at p291 and 292. I also adopt what is said in the textbook The Law and Practice of Compromise by Foskett (Sweet and Maxwell) at p110:–

"The starting point for considering the question must be the underlying policy behind permitting the privilege in the first place. This has been stated recently thus:

'... parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. They should ... be encouraged fully and frankly to put their cards on the table.'

This statement of the policy and its consequence indicates that nothing said in 'without prejudice' negotiations is admissible subsequently. It has always been clear that a 'without prejudice' offer can never be referred to provided it is bona fide. Broadly speaking, it appears the same applies to all admissions made in the course of 'without prejudice' negotiations provided that any such admission is directly relevant to the subject matter of the action the parties are endeavouring to compromise or is reasonably incidental to the negotiations."

1. The next letter from the plaintiff's solicitors dated 22 December 1988 was again written under the "without prejudice" label. No negotiation or offer is contained in it. The final letter dated 9 January 1989 in reply from the defendant related entirely to matters in dispute and extended the time for accepting the offer of $9,000.00 previously made. For the reasons I have already expressed all of its contents were covered by the privilege.

1. However, the matter does not rest there. Interrogatories were delivered by the plaintiff and in the answers dated 14 April 1989 the defendant made certain Admissions. Interrogatory 5 and its answer were in the following terms:–

"5     Did the Defendant ever make an offer to              Yes

       

purchase the tanks situated at O'Briens BP

       

Brighton Service Station on the Midlands

       

Highway in Tasmania and, if yes, state in

       

relation to each and every such offer:

(a)     its date;  1st December 1988.

(b)    its terms;  the sum of $9,000.00

  

was offered

(c)     its method of communication;  letter

(d)    any terms stipulating any time                   the offer was to

             

limitation for acceptance;  remain open until 31st

  

December 1988.

(e)     any revocation of it.  not applicable."

1. That answer revealed some of the contents of the letter of 1 December 1988 without any claim to the protection of the privilege being made. Order 33 r11(1) of the Rules of Court provides that a party may, at the trial, use in evidence an answer to an interrogatory. There is no doubt that waiver of privilege can occur. The question which arises is if a party reveals in answers to interrogatories a communication which is common to the knowledge of both parties in any event whether privilege in relation to that communication is thereby waived, but it is not necessary for me to answer that question because of what has occurred during this trial.

1. At the outset of the trial, the plaintiff's counsel tendered the defendant's answers to interrogatories as evidence. There was no objection from the defendant and so the answers became part of the evidence. It is my opinion that in providing the answer that it did to Interrogatory No 5 and by allowing that answer to become evidence at the trial without objection, the defendant waived any entitlement to privilege in relation to the contents of the letter. I say this in relation to all of the contents of the letter because by allowing some of the contents to become evidence at the trial, the result is that all of the contents lose the protection of privilege. That is my understanding of the position where there is a waiver of privilege in relation to the contents of otherwise protected communications; see eg General Accident Fire & Life Assurance Corporation Limited v Tanter [1984] 1 WLR 100 at p114. There may be cases where parts of a document can be severed from each other so that privilege is waived in relation to one part but not in relation to another, but in my opinion this is not a case where such a result should apply. The second letter contains argument why the plaintiff's claim for $14,147.80 should fail followed by the offer of $9,000.00 in settlement, all of which was entitled to the protection of privilege as being part of bona fide without prejudice negotiations for settlement. No reservation of privilege in respect of part of the letter was expressly made. By waiving privilege concerning the making of the offer there is no reason why it should not be concluded that privilege was also waived in respect of the balance of the contents of the letter.

1. The conclusion I come to is that the first two letters are therefore not subject to any remaining right to privilege. However there has not been any waiver of privilege in relation to the fourth letter, that is the letter from the defendant dated 9 January 1989, and I rule that it cannot be referred to, nor can it be admitted if the present state of affairs continues.

1. The result is that I will permit cross examination of Mr Cameron to include references to the first two letters but not to the fourth, and I will admit the first two letters into evidence. I am not sure that the third is subject to any privilege but that may not be a question which requires an answer.