C v M

[2011] WASC 175

C -v- M [2011] WASC 175

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2011] WASC 175
Case No:	SUPPRESSED:0/0	Heard:	24 & 26 MAY 2011 AND ON THE PAPERS
Coram:	KENNETH MARTIN J	Delivered:	22/07/11
No of pages:	30	Judgment Part:	1 of 1
Result:	Application granted
Category:	A
PDF Version

Parties:	C M O PTY LTD
Catchwords:	Practice and procedure Court ordered mediation by Registrar Confidentiality Email disclosure to third parties by defendant Remedial orders for breach
Legislation:	Interpretation Act 1984 (WA) Supreme Court Act 1935 (WA), Part VI
Case References:	789TEN v Westpac Banking Corporation [2004] NSWSC 594 AWA Limited v Daniels (1992) 7 ACSR 463 AWA Limited v Daniels (Unreported, NSWSC, 18 March 1992) Calderbank v Calderbank [1975] 3 All ER 333 Esso Australia Resources Limited v Plowman (1994-1995) 183 CLR 10 Field v Commissioner for Railways for New South Wales [1957] HCA 92; (1957) 99 CLR 285 Hennessy v The Broken Hill Proprietary Company Limited (1926) 38 CLR 342 Herijanto v Refugee Review Tribunal [2000] HCA 16 Pihiga Pty Ltd v Roche [2011] FCA 240 Rajski v Tectran Pty Ltd [2003] NSWSC 476 Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 Williamson v Schmidt [1998] 2 Qd 317 Zanatta v McCleary (1976) 1 NSWLR 230

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : C -v- M [2011] WASC 175 CORAM : KENNETH MARTIN J HEARD : 24 & 26 MAY 2011 AND ON THE PAPERS DELIVERED : 22 JULY 2011 FILE NO/S : [Suppressed] BETWEEN : C

Plaintiff

AND

M
First Defendant

O PTY LTD
Second Defendant

FILE NO/S : [Suppressed] BETWEEN : C

Plaintiff

AND

M
Defendant

Catchwords:

Practice and procedure - Court ordered mediation by Registrar - Confidentiality - Email disclosure to third parties by defendant - Remedial orders for breach

(Page 2)

Legislation:

Interpretation Act 1984 (WA)

Supreme Court Act 1935 (WA), Part VI

Result:

Application granted

Category: A

Representation:

[Suppressed]

Counsel:

Plaintiff : Mr T Retallack
First Defendant : Mr N J Draper
Second Defendant : Mr N J Draper

Solicitors:

Plaintiff : Maxim Litigation Consultants
First Defendant : Granich Partners
Second Defendant : Granich Partners

[Suppressed]

Counsel:

Plaintiff : Mr T Retallack
Defendant : Mr N J Draper

Solicitors:

Plaintiff : Maxim Litigation Consultants
Defendant : Granich Partners

(Page 3)

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

789TEN v Westpac Banking Corporation [2004] NSWSC 594
AWA Limited v Daniels (1992) 7 ACSR 463
AWA Limited v Daniels (Unreported, NSWSC, 18 March 1992)
Calderbank v Calderbank [1975] 3 All ER 333
Esso Australia Resources Limited v Plowman (1994-1995) 183 CLR 10
Field v Commissioner for Railways for New South Wales [1957] HCA 92; (1957) 99 CLR 285
Hennessy v The Broken Hill Proprietary Company Limited (1926) 38 CLR 342
Herijanto v Refugee Review Tribunal [2000] HCA 16
Pihiga Pty Ltd v Roche [2011] FCA 240
Rajski v Tectran Pty Ltd [2003] NSWSC 476
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129
Williamson v Schmidt [1998] 2 Qd 317
Zanatta v McCleary (1976) 1 NSWLR 230


(Page 4)

KENNETH MARTIN J:

Introduction

1 In February 2011 two actions case managed in the CMC List were referred to mediation to be conducted before a Registrar of the Supreme Court, pursuant to Part VI of the Supreme Court Act 1935 (WA).

2 A joint mediation in both actions (involving essentially the same parties) was conducted before Registrar C Boyle, initially on 2 February, resuming on 24 February 2011.

3 The plaintiff and defendant (Mr C and Mr M respectively) personally attended each mediation session. They were accompanied by teams of legal representatives. The legal representatives attending for the plaintiff included senior counsel and Mr Retallack (who appeared as counsel for the plaintiff on this application). Senior counsel's clerk also attended the mediation. With the consent of Mr M, Mr C's business manager, Mr L, attended. On behalf of the defendants, their legal representatives included Mr Granich and Mr Draper. Mr Draper appeared as counsel for the defendant on this application.

4 The February 2011 mediation did not result in a settlement of either action. Arising out of the aftermath of the mediation an issue has arisen which has occasioned the case manager of the actions in the CMC List to refer the contested issue to me for resolution. The controversy arises from email communications forwarded to five parties by Mr M, immediately subsequent to the mediation hearing of 24 February 2011.

5 In resolving this application, it is necessary for me to deal with some matters which should not be before the trial judge. Because of that I have at points used abbreviations, acronyms or given a broad and sanitised summary of documents.

Mediations conducted under Part VI of the Supreme Court Act

6 Of core importance to resolution of the present controversy is s 71 of the Supreme Court Act, which was introduced by the Courts Legislation Amendment Act 2000. That amendment delivered a new Part VI to the Supreme Court Act. Within Part VI, s 71(1) and s 71(2) deal with the related and intersecting concepts of confidentiality and admissibility in evidence. They provide:

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(1) Subject to subsection (3), evidence of -

(a) anything said or done;

(b) any communication, whether oral or in writing; or

(c) any admission made,

in the course of or for the purposes of an attempt to settle a proceeding by mediation under direction is to be taken to be in confidence and is not admissible in any proceedings before any court, tribunal or body.


(2) Subject to subsection (3) -

(a) any document prepared in the course of or for the purposes of an attempt to settle a proceeding by mediation under direction;

(b) any copy of such a document; or

(c) evidence of any such document,

is to be taken to be subject to a duty of confidence and is not admissible in any proceedings before any court, tribunal or body.

(my emphasis in bold)

7 Subsection 71(3), to which s 71(1) and s 71(2) are made subject, lists four scenarios in which evidence is excluded from the inadmissibility regimes under s 71(1) or s 71(2). The wider notion of 'confidentiality' is not explicitly addressed by s 71(3) other than in qualifications made to the admission into evidence of documents or information that would otherwise be inadmissible before a court. But the concept and reach of the principle of confidentiality extends well beyond the bounds of the courtroom. Subsection 71(3) provides:

(3) Subsections (1) and (2) do not affect the admissibility of any evidence or document in proceedings if -

(a) the parties to the mediation consent to the admission of the evidence or document in the proceedings;

(b) there is a dispute in the proceedings as to whether or not the parties to the mediation entered into a binding agreement settling all or any of their differences and the evidence or document is relevant to that issue;

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(c) the proceedings relate to a costs application and, under the rules of court, the evidence or document is admissible for the purposes of determining any question of costs; or

(d) the proceedings relate to any act or omission in connection with which a disclosure has been made under section 72(2)(c).

[Section 72(2)(c) deals with when a mediator may disclose information in circumstances of potential danger or injury to a person or to property].

8 The phrase 'mediation under direction' as used in s 71(1) and s 71(2) is a defined term (s 69) within Part VI. It means, 'mediation carried out by a mediator under a direction of the Court under and subject to the rules of court'. The present case concerns a 'mediation under direction' conducted before a Registrar of the Court, acting as the mediator.

9 By s 72 (also within Part VI), a mediator is afforded the protections and immunities of a Judge. Accordingly, the mediator in so acting could not be sued for negligence and would not be a compellable witness amenable to subpoena, as regards any activity associated with mediation work, see particularly s 71(4).

10 The scope of judicial privilege is well established at common law. In Hennessy v The Broken Hill Proprietary Company Limited (1926) 38 CLR 342, Knox CJ, Duffy and Starke JJ at (349) stated:

Even judges are competent witnesses, though they may not be compellable to testify as to matters in which they have been judicially engaged; but their evidence has been received upon matters which did not involve the exercise of their judicial discretions and powers [citations omitted]. Arbitrators, too, are competent as witnesses, though they cannot be compelled to testify as to the reasons which influenced them in the exercise of their discretionary powers or to explain, vary, contradict or extend their awards.

11 The same concept was adopted by the New South Wales Court of Appeal in Zanatta v McCleary (1976) 1 NSWLR 230. The case concerned a person injured in a motor vehicle accident who sought a new trial on the basis that the trial judge had taken into account matters not in evidence. In support of the application the solicitor and barrister who had acted for the plaintiff in the original proceedings swore affidavits that purported to recount a conversation between the deponents and the trial judge after the trial. The Court of Appeal held that the plaintiff was not entitled to call the trial judge to give direct evidence with respect to the adjudication process. In that regard, Samuels JA stated at (238):
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To my mind, the general principle which governs the present case is found in Duke of Buccleuch v Metropolitan Board of Works, where the question was whether an arbitrator might be called as a witness in a legal proceeding to enforce his award. It seems to me that the headnote accurately summarises the nature of the advice tendered by the judges, that is, that an arbitrator may be asked a question as to what passed before him, and as to what matters were presented to him for consideration. But no questions can be put to him as to what passed in his own mind when exercising his discretionary power on the matters submitted to him. …

The Duke of Buccleuch's case concerned the evidence of arbitrators; but their privileges cannot be greater than those of judges. Hence, in my opinion, the principle is this: A judge of a court of record cannot be compelled to testify to the considerations which led him to his decision, or to the manner in which he has exercised his judicial powers.

12 In Herijanto v Refugee Review Tribunal [2000] HCA 16, a matter concerning interrogatories administered to members of the Refugee Review Tribunal, Gaudron J stated at between (382) and (383):

It has been settled law … that judges cannot be compelled to answer as to the manner in which they have exercised their judicial powers. In Hennessy v BHP Co Ltd, the immunity was said to be such that judges cannot be compelled 'to testify as to matters in which they have been judicially engaged'. …

In Sirros v Moore, a case concerned with the immunity from civil suit, Lord Denning MR suggested that the reason underlying that immunity was to ensure that 'judges may be free in thought and independent in judgment'. And on that basis, I see no reason why a judge might not be compelled to disclose that record upon which he or she has acted. However, that is subject to the qualification that disclosure of the record cannot be compelled if it would also reveal some aspect of the decision making process … the immunity is immunity from disclosing any aspect of the decision making process.

13 Rules of court that apply to mediations under direction are found in O 4A of the Rules of the Supreme Court 1971 (WA); see particularly O 4A r 8. Moreover, Consolidated Practice Direction (CPD) 4.2 provides by cl 5 thereof:

Mediation conferences are conducted pursuant to Part VI of the Supreme Court Act 1935. Section 71 of the Act sets out the privilege attaching to mediations. Section 72 of the Act sets out the obligation of confidentiality that binds the mediator.

Consolidated Practice Direction 4.2 cl 9 mentions a court produced booklet entitled 'Mediation Programme - A Guide for Litigants'. It is the

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practice of this Court to direct legal practitioners to provide a copy of this booklet to their clients following the making of mediation orders. Additionally, I note Supreme Court common form 82 (mediation order).

Some factual background

14 The present dispute originates from an email sent by Mr Draper as solicitor to his client, Mr M, on 24 February 2011. The email was sent to Mr M in the aftermath of a mediation conference conducted before Registrar Boyle earlier that day, which both Mr M and Mr Draper attended in person. Mr Draper's email report to his client about the mediation conference was sent to Mr M at 3.05 pm. The subject matter of the email to Mr M was marked on the email, 'Subject: Private and Confidential; C v M: [Action A] and [Action B]'.

15 No criticism is made of Mr Draper in these proceedings in respect of his email communication to his client Mr M, reporting about that day's 'short mediation conference'. Heavy controversy arises however over Mr M's subsequent on-forwarding of his solicitor's email report to him, to at least five other identified persons variously located in the Marshall Islands, Austria, South Africa, or (possibly) elsewhere.

16 Bearing in mind the unresolved state of two presently pending civil actions in this Court which underpin this interlocutory application, I cannot set out the content of the forwarded email verbatim. By way of sterilised summary however, I observe that Mr Draper's email to Mr M reported upon a number of matters said to have arisen during the mediation on 24 February 2011. Issues covered included:

(a) what was described as an opening tactical attack at the outset of the mediation on Mr M's credibility by Mr C, an attack the Registrar was said to have deflected to keep the mediation on track;

(b) terms of a settlement offer put by the plaintiff, Mr C, to Mr M, involving shares in a South African corporation (which I will refer to as SA Co) that was involved in a proposed goldmining venture in that country;

(c) views expressed at the mediation by Mr C about the (negative) prospects of SA Co's goldmining venture in South Africa;

(d) a rejection by Mr M of Mr C's settlement offer;

(Page 9)

(e) terms of a counteroffer put by Mr M, involving shares in another foreign corporation (that I will refer to as the Marshall Islands Co);

(f) comments reportedly made by the mediator to Mr M and his team, in the absence of the C parties;

(g) Mr Draper's expressed perception as to the mediator's demonstrated pessimism about prospects of any settlement being reached that day, due to a perceived inflexibility against considering the defendants' (self-assessed, as reasonable) counteroffer;

(h) the suggested adjournment of the mediation by the mediator to allow some more time for Mr C to further consider the merits of the defendants' counteroffer, rather than having the counteroffer most likely be rejected outright then;

(i) beliefs expressed by Mr Draper over prospects of the SA Co's goldmining project including speculative observations about Mr C's possible motivations and an asserted overall unreasonableness of Mr C's conduct - that had negatived the prospects of reaching a mediated outcome that day, so it was asserted.

Needless to say this privileged solicitor/client communication by Mr Draper to his client Mr M, the defendant, was heavily slanted towards the defendant's position, as one might expect.

17 The communication to the defendant by his solicitor was never intended for the plaintiff to know of, let alone receive. The email couched in robust terms by Mr Draper to his client was obviously unflattering to the plaintiff as the adverse party (Mr C). Given its privileged and private nature as a solicitor/client communication, that is hardly surprising or concerning vis-a-vis Mr Draper as author. Mr M, his client, had of course been personally present at the mediation earlier that morning, so he was in a position to assess the content of the email from that unique perspective.

18 Confidentiality concerns do arise however as a result of the subsequent emailed on-forwarding that day of the email by Mr M to at least five other persons at overseas locations in South Africa, Austria or elsewhere. Mr M admits to electronically on-forwarding the email that Mr Draper sent to him. But the conduct of Mr M is sought to be justified,

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explained and rationalised as not constituting any breach of the confidentiality attaching to the mediation.

19 Recipients of the on-forwarded email by Mr M included the Chief Financial Officer (also a director) of the Marshall Islands Co (who I will refer to as RK); a second director of the Marshall Islands Co (an attorney, who I will refer to as AK); two employees of the SA Co based in South Africa (that I will refer to as DR and SB); and one further person in South Africa (who I will refer to as Z). Z is an alternate director and representative of a 26% mandated South African government interest shareholder in SA Co.

20 The on-forwarded email did not contain any further facts, explanation or commentary by Mr M going beyond the original content of Mr Draper's email. It displayed only the subject heading used by Mr M, 'FW: Private and Confidential; C v M: [Action A] and [Action B] for your info'. I note reference to 'Private and Confidential' in the heading. But the issues of confidentiality of the information in the email is not otherwise addressed than by that heading.

21 RK, a recipient in South Africa, then further on-forwarded the email on 10 March 2011. RK forwarded the email to a Dr WS, an Austrian investor, who holds an investment and shareholder interest in the Marshall Islands Co.

22 In March 2011, Dr WS made contact with Mr C's business manager, Mr L, by an email thereby now bringing the email to the plaintiff's attention for the first time. According to Mr L, Dr WS, having read the on-forwarded email's report of the Perth mediation (forwarded to him by RK), sought clarifications from Mr L about the email's contents.

23 Mr L has sworn an affidavit in these proceedings. It provides in part:

26. … I spoke again with [Dr WS] who told me that he had received a written report of the matters discussed at the mediation from [Mr M]. I told him that he should not have been provided with such a report as the mediation was supposed to be confidential.

27. Subsequently, [Dr WS] provided me with a copy of the email that he had received, and clarified that it had in fact been received via [RK].

28. I have been told by [Dr WS], and believe, that he received a copy of [Mr M's] email by email from [RK] on or about 10 March 2011. …

(Page 11)

29. I have also been told by [Dr WS], and believe, that [RK's] email was unsolicited and appeared to [Dr WS] to have been sent by [RK] as a general update to him as well as other Austrian investors in [Marshall Islands Co].

(my emphasis in bold)

[The last-mentioned reference to other Austrian investors suggests that the original email may have been circulated even more widely than to the currently known named recipients from Mr M].

24 On-forwarding to others electronically of Mr Draper's email, at minimum to five disclosed overseas recipients, followed by the further on-forwarding of the email to Dr WS (by RK), is now strongly complained of by Mr C. His grievance raises squarely an important issue over an alleged serious violation of the regime of confidentiality that is applicable to a court ordered mediation.

25 Such mediations are a vital component of the civil litigation process in Western Australia. Almost every unresolved civil action in the Supreme Court as a matter of course will, prior to going to trial, experience some form of pre-trial mediation. In recent times, less than 3% of the total civil actions filed in the Supreme Court of Western Australia actually do proceed to a resolution at a trial. Court ordered mediations as a recognised process of dispute resolution within the fabric of the litigation process render an indispensible service to the quelling of civil disputes in this State.

26 Mr C complains that the confidentiality of the mediation process has been violated to his very considerable prejudice. He contends, from his perspective as plaintiff, that the content of the Draper email is incomplete, inaccurate and (unsurprisingly perhaps, given its origin) biased. Mr C says his business interests have been hurt by the email's unauthorised circulation to six persons currently known about, as well as possibly to others (for instance, to unnamed Austrian investors mentioned in Dr WS's communication to Mr L).

27 Mr C, by this application, seeks the approved opportunity to communicate to all known (and unknown) recipients of the on-forwarded email (from Mr M) Mr C's own version of events at the mediation on 24 February 2011 (as well as to any other persons to whom recipients have forwarded the Draper email, such as, for instance, Dr WS). Mr C (correctly) recognises that for him to take such a step unilaterally would violate the confidentiality of the mediation - contrary to s 71 of the Supreme Court Act. So he brings this application seeking that the court

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approve his communication to such persons, as he would seek, to set the record straight, as he would see it.

28 The specific relief sought by Mr C on this application is:

(a) confirmation (by declaration, presumably) that Mr M has in fact violated the confidentiality of the mediation before Registrar C Boyle by electronically on-forwarding Mr Draper's email;

(b) if the contention under (a) is established, Mr M is required to provide to the court an affidavit to be sworn by Mr M which discloses all known recipients of the on-forwarded Draper email and any presently known identified recipients; and

(c) a release by the court for Mr C from his own present obligation of confidentiality, so that Mr C would be permitted to personally contact all recipients known or disclosed (as a result of (b)) of the Draper email, so as to put to them Mr C's own (rival) version of events at the mediation, in order to set the record straight and to counteract what Mr C asserts is the harm caused to his interests by the unlawful on-forwarding by Mr M of his solicitor's email.

Further background: Pleadings in the two actions that went to mediation

29 As it is relevant to arguments that Mr M raises in defence to the core challenge that he has breached s 71 of the Supreme Court Act, it is first necessary to examine the pleadings in the two actions with some care to identify the issues that are raised and relevant, as well as persons and entities that the pleadings mentions.

30 Although the plaintiff moved for these orders only in one action (Action B), I need to set out the background facts in both actions which went to mediation together, which can be seen to have an underlying overlap of parties and issues.

ACTION A

31 This action was commenced by writ of summons on 8 September 2010. The plaintiff is Mr C and Mr M is first defendant. A corporation, O Pty Ltd, is named as second defendant. Both defendants are represented by the same solicitors.

32 The action was admitted to the CMC List on 2 November 2010, for judicial case management. A statement of claim was indorsed to the writ. Essentially, it raises an asserted debt claim against Mr M, based upon a

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written loan agreement of 20 July 2009, for the amount of $250,000 plus interest. The claim is brought by Mr C as lender against Mr M as borrower. The second (corporate) defendant is said to be a surety in respect of the loan to Mr M.

33 The statement of claim asserts that $250,000 was advanced to Mr M by Mr C in July 2009. That sum was due to be repaid on or before 20 October 2009 and that Mr M has breached that loan agreement as the sum was not repaid on time. The statement of claim pleads a demand over two motor vehicles the subject of alleged security arrangements as specified in the loan agreement. It is contended that, notwithstanding demands for delivery up of the vehicles to the plaintiff as security for the unrepaid loan, the second defendant refused to deliver up possession of the vehicles in August 2010. By notice given in September 2010, the loan agreement was said to have been terminated, followed by demand being made for the amount of $250,000 which remains due and owing by Mr M.

34 On 9 November 2010, the case manager gave directions, in accord with a minute of proposed orders that contained the standard Supreme Court mediation orders. Order 18 of those directions provided:

The matter be referred (along with [Action B]) to mediation pursuant to Pt VI of the Supreme Court Act 1935.

Order 20 provided for the solicitors for the parties to give to their clients a copy of a court booklet entitled 'Mediation Programme - A guide for litigants'.

35 On 28 October 2010, the defendants filed a joint defence and counterclaim admitting the loan amount had not been paid but seeking to excuse the breach on the basis of facts then set out under pars 12 - 23. The defendants essentially deny the loan agreement was validly terminated by the plaintiff. Paragraphs 12 through 23 refer to a heads of agreement entered between the plaintiff and the first defendant of March 2008, pursuant to which they each agreed to make contributions to (the South African corporation) SA Co, for the purpose of that corporation applying for prospecting rights over a designated area in South Africa, in order to seek a grant of prospecting rights.

36 It is contended by the defence that Mr C and Mr M were each to contribute a maximum amount of $2 million each to SA Co in order to achieve a grant of prospecting rights. A further foreign parent corporation was to be incorporated elsewhere. The essence of arrangements raised in the defence appears to be that Mr M would cause his then 100%

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shareholding in SA Co to be transferred to a new parent corporation (in a 'suitable jurisdiction'), on the basis that the new parent would be owned as to 50% each by Mr M and Mr C.

37 Reference is made in the defence to an allegedly agreed funding arrangement to accommodate a South African Department of Minerals and Energy as to proof of funds available. This was to be done, it is pleaded, by Mr C, up to a certain US dollar limit measured in millions of dollars. It is contended that the $250,000 loan as advanced to Mr M by Mr C was merely an advance in anticipation of Mr C providing proof of funding, so as to enable Mr M to meet obligations under the heads of agreement. It is said, in effect, that the $250,000 advanced to Mr M was advanced on a basis that the loan would not be repayable until such time as Mr C had provided proof of funding, at the level agreed.

38 Mr M also contends in his defence that certain representations were made by Mr C relating to proof of funding arrangements that were false and misleading. As a result, statutory relief is sought by the defendants against Mr C under the Fair Trading Act 1987 (WA), s 9 and s 10. In addition, relief varying the terms of the loan agreement under s 77 of the Fair Trading Act is sought.

39 By counterclaim, Mr M alleged further that he had not been reimbursed by Mr C his reasonable costs and expenses incurred in carrying out duties as manager of the goldmining project pursued in South Africa. Mr M counterclaims $730,414.59, along with other statutory relief.

40 By a reply and defence to counterclaim filed on 29 November 2010, Mr C joins issue over numerous matters raised in the defence and counterclaim. Mr C denies that the reimbursable amounts claimed by Mr M were properly reimbursable pursuant to the heads of agreement governing the project arrangements. Mr C denies that any monies are due to Mr M.

ACTION B

41 These proceedings were also commenced by writ of summons issued by Mr C on 8 September 2010. The sole defendant is Mr M. Each of the parties are represented by the same solicitors acting on the record in Action A. This action was also admitted to the CMC List to be judicially case managed on 2 November 2010.

(Page 15)

42 The writ of summons contains a general indorsement indicating that Mr C's grievances relate to a written heads of agreement entered between himself and Mr M of 7 March 2008 and a 'subsequent incorporation of a Marshall Islands based corporation'. (This is Marshall Islands Co, to which I earlier referred).

43 Mr C contends that Mr M has breached representations made to him, or, alternatively breached the terms of the heads of agreement, or, alternatively breached fiduciary or other obligations, by failing to make capital contributions to the SA Co and by Mr M failing to transfer shares in the SA Co to the Marshall Islands Co, or failing to ensure that issued shares in the Marshall Islands Co came to be owned by Mr C and Mr M in proportion to their respective capital contributions to the SA Co. Mr C also complains of Mr M's sale, assignment or transfer of ownership of his interest in Marshall Islands Co to other parties, without first offering that interest to Mr C.

44 Relief is sought for an account in respect of capital contributions, injunctive orders and declaratory relief, in addition to specific performance and statutory relief.

45 A statement of claim was filed on 20 October 2010 explaining the basis for relief and dealing particularly with the establishment of Marshall Islands Co, on or about 18 September 2008.

46 On 9 November 2010 the case manager made directions pursuant to the plaintiff's minute of proposed orders and directions, including standard orders (20 - 25) referring the matter to mediation pursuant to Part VI of the Supreme Court Act (jointly with Action A).

47 An amended statement of claim issued on 15 November 2010 narrowing the scope of relief sought, essentially to alleged breaches of fiduciary obligations asserted to be owed by Mr M to Mr C but as well, complaining of misleading and deceptive conduct in relation to share issue representations relating to the shares in Marshall Islands Co.

48 Mr M filed a defence and counterclaim of 6 December 2010. Similar assertions as regards (non) funding the SA Co and the (non) establishment of proof of funding satisfactory to the South African Department of Minerals and Energy are once again raised by Mr M against Mr C.

49 Mr M counterclaims for statutory relief under the Fair Trading Act, concerning representations said to have been falsely made by Mr C as regards proof of funding not being provided in a form acceptable to the

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relevant South African department. A like counterclaim in respect of a claimed reimbursement of asserted costs and expenses of Mr M, in the same amount of $730,414.59, is again made.

50 On 11 January 2011, a reply and defence to counterclaim was filed on behalf of Mr C. It essentially joins issue over the alleged funding representations, which are rejected. Mr M's claim for reimbursement is also again refuted.

51 That was the state of the pleadings when these two actions proceeded to their common mediation in February 2011.

Evidence on the application

52 The parties each relied on affidavits read on this application - which materials have been isolated, sealed and kept apart from the other materials found on the court files for these two actions. These application affidavits and the parties' written submissions on this application, shall by my order, be placed in a sealed envelope and then to be accessed only on my order or on the order of another CMC judge, who is not the case manager or the trial judge.

53 On the application, the plaintiff relies on the affidavit of Mr L of 4 May 2011, to which I have referred. There is also a short affidavit by Mr C's solicitor of record Mr Retallack, sworn 13 May 2011. Mr Retallack's affidavit contains correspondence passing between the respective parties' solicitors in March and April 2011. This correspondence was exchanged in the wake of Mr C learning (through Mr L, via Dr WS in March 2011 it would appear) that the email reporting what was discussed at the February 2011 mediation was in circulation, wider than the attendees at the mediation.

54 By Mr Retallack's letter to Mr M's solicitors of 29 March 2011, reference was made to the content of s 71 of the Supreme Court Act, then to the prejudice it was asserted Mr C had sustained by breach of the confidentiality regime applicable to mediations under direction in the Supreme Court (particularly by ultimate receipt of the content of Mr Draper's email, by Dr WS). Mr Retallack's letter proposed remedial steps, voluntarily requested of Mr M, in terms:

1. [that Mr M] refrain from any further breach of his confidentiality obligations in respect of the mediation proceedings; and

2. within seven days [Mr M] disclose the identity and contact details of any third party, other than [RK] and/or [Dr WS], to whom he has

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sent the email letter (or made any other report in respect of the mediation proceedings) - in which case he provide a copy or (if not in writing) details of the substance of that communication; and

3. [Mr C] be released from his confidentiality obligations in relation to the mediation in order that he may (either personally or through our office) respond directly to [Dr WS's] query and/or furnish an explanatory note to any third party identified by your client in accordance with paragraph 2 above.

55 It will be seen that the remedial steps voluntarily sought under this letter broadly mirror the relief formally sought to be ordered, upon this contested application.

56 As already seen, Dr WS on 10 March 2011 told Mr L that he was 'curious to know' how Mr C will respond to points made in the Draper email. Dr WS said to Mr L: 'I want to know if the offer you made during mediation is true and would have left [the Marshall Islands Co] and me as a shareholder with less than 10%?' (Mr L's affidavit annexure SL1).

57 Mr Retallack's affidavit then attaches the ensuing (negative) response from Mr M's solicitors of 6 April 2011 (raising some issues which are no longer pressed). Essentially, the response refuted Mr C's complaints as meritless. It rejected calls for steps by way of voluntary redress by Mr M. Mr Draper's response, undoubtedly sent on Mr M's instructions, said, in part:

Confidentiality in this instance prohibits the parties to the mediation revealing the content of the mediation to the court. It does not prohibit revealing the substance of the process to third parties. It is trite that those third parties cannot give evidence of the substance to the Court, say in the event the adviser was also a witness.

The letter continues:

It is unreasonable (and incorrect) for your client to suggest that our client is not entitled to take advice from various interested parties regarding the proposals made during the conferences due to an alleged breach of confidence. Most especially when your client was permitted by our client to have his adviser [presumably referring to Mr L] attend the mediation to benefit the process.

(my emphasis in bold)

58 No authority is referred to in Mr M's response to support the rebuff stance then communicated. In the passing correspondence following between the solicitors, both sides threatened the other with indemnity costs orders.

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59 For the defendants on this application, Mr M swore an affidavit of 20 May 2011. It deals with issues such as (pre February 2011) non solicitor settlement negotiation communications then passing between the parties directly. It mentions Mr M's consent to Mr L attending the mediation. Mr M provides some background information about SA Co and Marshall Islands Co. He briefly explains shareholdings and interests of various persons in the overseas corporations. Mr M provides the details, to which I have already referred, about the five disclosed direct recipients of the forwarded email, namely RK, AK, DR, SB and M.

60 Mr M asserts that these persons all held an 'interest' in receiving the information in the email. Because of that, it was (as Mr M would have it) legitimate for him to forward them the email, as he did.

61 Mr M's solicitors' response (preceding written submissions) took a stance that, in effect, asserted that communications passing at a mediation conference were only covered by without prejudice privilege. Accordingly, it was accepted that the documents and information exchanged at the mediation would not be admissible in evidence at any ultimate trial of the actions. Otherwise however, the defendants' position then expressed, was that what had passed between the participants at the mediation, including comments by the mediator, were, apart from their inadmissibility at a trial, otherwise fully amenable to being communicated without any constraints to virtually anyone, and particularly to anyone who happened to qualify as an 'interested' third party.

62 This confidently expressed negative response (now no longer advanced) was offered up at the time (it would seem) without any supporting basis in case precedent or authority to support it. In my assessment the response demonstrated a careless and unprincipled disregard to the words used in s 71(1) and (2). True it is that s 71(1) and (2) do make express reference to things said and done, and to oral or written communications or admissions, not being admissible in proceedings. That obviously does render documents and communications subject to without prejudice privilege. But the section clearly goes much further. It expressly renders such matters to be in confidence (s 71(1)). As regards documents, the same matters arising in documents are 'subject to a duty of confidence' (s 71(2)).

63 The construction of s 71, articulated in the defendant's solicitors' correspondence (prior to written submissions) relied heavily on the word 'and' used in each of s 71(1) and s 71(2). The word 'and' was used to read s 71 down so as to provide only one (conjunctive) element of protection,

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namely, the evidentiary inadmissibility of the information or documents in proceedings. In other words, mediator communications were accepted to be governed by without prejudice privilege, as against their subsequent admissibility in evidence, but to no more. As to without prejudice privilege concerning the inadmissibility in evidence of admissions, see Field v Commissioner for Railways for New South Wales [1957] HCA 92; (1957) 99 CLR 285, still the leading Australian authority on the subject.

64 Without prejudice privilege is obviously enjoyed by parties in a settlement negotiation. As a privilege enjoyed mutually by the parties in a bilateral negotiation, that feature necessarily inhibits the amenability of the privilege to unilateral assertions of waiver by merely one of the parties to negotiations. A Calderbank communication (see Calderbank v Calderbank [1975] 3 All ER 333) however, is an example of without prejudice privilege in a communication being unilaterally expressly reserved for future possible waiver, as regards the limited issue of costs, at the completion of proceedings.

65 Section 71(1) uses the word 'confidence'. Section 71(2) uses the expression 'duty of confidence'. An expression involving 'duty' suggests that what is delivered by s 71 goes beyond merely specifying evidentiary inadmissibility in the information or document to a court at any ensuing trial. The defendants' solicitors' constrictive construction of s 71(1) and s 71(2) does not go far enough. A wider obligation of overarching confidentiality, applicable to all proposed participants in the mediation is imposed. The imposition of confidentiality rests beyond narrower inadmissibility constraints. Dual protections arising from confidentiality as well as inadmissibility deliver protections to the mediation process and participants going wider than simply imposing a constraint against subsequent use of information or a document in evidence at a trial. Some limited relaxations then seen under s 71(3) as regards admissibility do not affect or undermine the residual confidentiality protection that is delivered.

66 To the extent that there could be some doubt over the correct construction of s 71, it is wholly resolved by recourse to extrinsic (parliamentary) material: see Interpretation Act 1984 (WA), s 19(1)(a) and (b). In the Second Reading Speech to the Courts Legislation Amendment Bill 1999, moved in the Legislative Council on 21 June 2000, the Hon Attorney General Peter Foss QC said:

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Mediation in the Supreme Court: It is proposed to insert a new part VI into the Supreme Court Act dealing with court annexed mediation in the Supreme Court. The amendments give statutory force to the principle of confidentiality and the 'without prejudice' evidentiary privilege which are the cornerstones of the mediation process. Mediation conferences were introduced in the Supreme Court in 1993 as part of the case management initiatives designed to reduce delays and costs to litigants, and are now an integral component of the court's case flow management program. Mediation is a highly developed and successful avenue for resolving disputes in the court and an important step in the process by which a matter proceeds to trial. It has brought substantial benefits to the parties to litigation in earlier settlements and the savings of legal costs. It has also brought benefits in saving court trial days, estimated at 670 days in 1998. Currently, the confidentiality of the mediation process and its 'without prejudice' status have been underpinned by the Rules of Court and by the terms of the common form mediation order. This is now seen to be problematic, as recent cases indicate that these matters cannot be adequately addressed other than by amendments to the Supreme Court Act.

The amendments will reinforce the integrity of the mediation process in the Supreme Court by, first, imposing on parties and/or mediators a statutory obligations of confidence; secondly, clearly defining and extending the scope of the 'without prejudice' basis of the mediation; thirdly, conferring on mediators who conduct mediation conferences under the director [sic] of the court, the obligations, privileges and immunities of a judge; and, fourthly, making clear the scope of the court's rule-making powers in respect of mediation. These are non-contentious amendments derived substantially from model legislation drafted by the Law Council of Australia and endorsed by the Standing Committee of Attorneys General.

(my emphasis in bold)

67 Reference may be seen to be made in the above extracts to both confidentiality and without prejudice evidentiary privilege as being cornerstones of the mediation process (i.e. rather than merely to one cornerstone).

68 The second Hansard paragraph cited carries express reference to obligations of confidence reposed upon the mediator (s 72 deals with that issue specifically). It then refers, in the context of confidentiality, to 'parties' as well as to mediators. A 'statutory obligation of confidence' is clearly distinguished as a first and distinct aspect underlying the integrity of mediations conducted in the Supreme Court. Confidentiality is clearly expressed here as a stand alone condition.

69 Confidentiality then is applicable above and beyond the related but conceptually distinct aspect of protection, delivered by without prejudice

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privilege made applicable to communications and documents and thereby rendering those matters inadmissible at a trial.

70 The clarifications and confirmation provided by the Hansard material was readily accessible. It should have been accessed by Mr M's solicitors before they bluntly rejected the confidentiality complaints raised by Mr C's solicitors. In an absence of any direct case authority bearing upon the bounds of s 71, the extrinsic material rendered it clear that a stance seeking to limit s 71 merely to without prejudice privilege was wholly unsustainable.

71 So much was effectively conceded in the argument of the defendants on the application. A very late appreciation by the defendants that their once confidently expressed position was untenable will be relevant to the ultimate costs disposition for this application.

72 The parties exchanged detailed written submissions. The defendants' written submissions of 20 May 2011 essentially raised two matters. One argument raised a contention of waiver by the plaintiff of confidentiality. This was based around a contention that, prior to the two mediation hearings during February 2011, there had been efforts by Mr C (or Mr L) to directly negotiate a settlement with various persons holding interests in the SA Co and Marshall Islands Co, including Mr M. Communications from Mr C's side had been earlier directed, it was said, towards a resolution at a wider level, that would, if reached, carry over to a resolution of the two actions in the Supreme Court of Western Australia. So much may be accepted. But earlier settlement communications passing directly between parties could hardly constitute a viable basis for a waiver of confidentiality subsisting in negotiations that occurred later - in the context of a subsequently conducted mediation under s 71 of the Supreme Court Act.

73 During argument I was told from the bar table of the existence of pending litigation involving Mr C and Mr M on foot in the Marshall Islands. But no more detail than that was provided about that foreign litigation.

74 The defendants' waiver arguments, by reference to conduct by Mr C occurring prior to the two mediations under direction of February 2011, is conceptually untenable. So much, in the end, was accepted by Mr Draper who did not press his waiver argument any further once its chronological deficiency was pointed out. That was the correct (albeit late) course, in my assessment.

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75 Waiver arguments aside, the defendants' written submissions contain essentially only one argument that requires serious evaluation resisting the asserted breaches of confidentiality in defence of Mr M's conduct by reason of his forwarding Mr Draper's email of 24 February 2011. He drew in support, observations of Brennan J (as he then was) in Esso Australia Resources Ltd v Plowman (incorrectly cited in the written submissions by reference to the report as page 4) and Toohey J (also incorrectly cited in the defendants' written submissions by reference to the report of this case). The proper citation should have been from the Commonwealth Law Reports - the authorised reports for reported High Court decisions - as was his obligation, see Esso Australia Resources Limited v Plowman (1994-1995) 183 CLR 10.

76 It was submitted that a confidentiality obligation or duty under s 71 and applicable to the participants in a Part VI mediation (confidentiality now being accepted) nevertheless did not inhibit a disclosure (by Mr M) to third parties who were 'interested' in the litigation. Referring to the scope of issues emerging from the pleadings as regards SA Co and Marshall Islands Co in both actions (which I have summarised earlier), it was contended that the five identified overseas recipients of the email (on-forwarded by Mr M) were either employees, directors, shareholders or investors in SA Co, or the Marshall Islands Co. Therefore, it was argued that such persons held a legitimate interest in having the content of the email communication forwarded to them by Mr M.

77 In the defendants' written submissions the following appears:

3. [Annotated] Mr M has a duty of care to DR and SB on behalf of their employer (Marshall Islands Co). The outcome and progress of settlement negotiations will, in one way or another, have consequences on the employment of DR and SB and on their ability to decide whether or not they wish to be employed by Marshall Islands Co.

'A party may be under a duty, not necessarily a legal duty, to communicate documents or information to a third party who has an interest in the progress or outcome of the arbitration' per Brennan J in Esso Resources Limited v Plowman [1995] HCA 19 (Esso) at para 4 [sic]'.

78 The correct citation in the Esso Resources decision of the passage referred to from Brennan J appears at page 36 of the authorised report. It appears that (retrospectively) the publishers or hosts of the website have sought to insert paragraph numbers in past High Court decisions, albeit they were decisions given at a time prior to introduction
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of media neutral citation. The paragraph numbering technique in the report of Esso Resources does not follow sequential cumulative numbering across the sets of reasons provided in that case by five Justices.

79 As I mentioned, the citation relied upon by Mr Draper is found at page 36, in the reasons of Brennan J. Earlier, starting at page 35 his Honour said:

Where a party is in possession of a document or information and is under a duty at common law or under statute to communicate the document or information to a third party, no contractual obligation of confidentiality can prohibit the performance of that duty (referring to Parry-Jones v Law Society [1969] 1 Ch 1 at 9, cited in AVB Bank [1993] QB 311 at 322-323).

80 After the extract relied on in the defendants' written submissions, Brennan J continued:

Moreover, a party may be under a duty, not necessarily a legal duty, to communicate documents or information to a third party who has an interest in the progress or outcome of the arbitration. To take an example, it could not be supposed, in the absence of clear contrary indication, that a party which is a wholly owned subsidiary of a holding company intended to keep confidential from its holding company documents or information relating to the matter in dispute in the arbitration.

81 From the complete citation it will be seen that Brennan J's observations were made in a context of a private arbitration. They were also made by reference to the limits of a contractual obligation of confidentiality. The passages referred to in Brennan J's reasons say nothing about any derogation from a regime of confidentiality imposed by statute.

82 Further observations in Esso by Toohey J, were relied upon. On this point, the defendants' written submissions read:

4. Furthermore the disclosure of the information has not had an adverse consequence on the Plaintiff in Court or arbitration and the information has not been used for any purpose other than in relation to the litigation itself.

[I would note in passing however, that this bland assertion as to the extent of dispersal of the information in the email is unsupported by the evidence put before me on this application. Certainly it is not supported in the defendants' materials which comprised the affidavit of Mr M only.]

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Consequently, there is no obligation on the Defendant to retain confidentiality in this instance.

Per Toohey J in Esso (at [15] and following) [sic].

83 Again, it has been necessary to track down the precise passage in the reasons for decision of Toohey J that are relied upon by reason of the citation of an unauthorised electronic report from the website. What is referred to as par 15 of Toohey J's reasons is in fact locatable at page 44 of the (authorised) CLR report in a paragraph that reads:

In this regard it does not advance the matter to refer to such situations as a party to an arbitration over the building of his house, being asked by his wife 'How did it go?'. It is not hard to visualise situations in which disclosure by a party may be incidental and of no consequence. But the issue is whether there is a principle of confidentiality upon which one party may rely to restrain the disclosure by the other party of information given at the arbitration which the first party wishes to protect from disclosure. Ordinarily, that party will only seek to do so where the disclosure may have some adverse consequence.

84 The reliance apparently put upon this part of Toohey J's reasons seems to stem from the concluding two words in the paragraph cited above, namely, 'adverse consequence'. Apart from an obvious starting point that the defendants' evidence is deficient as regards such a bland assertion, the core problem is that again the passage has been cited completely out of context. Toohey J's observations have nothing to do with the scenario of statutory confidentiality imposed under s 71 of the Supreme Court Act. Moreover, his Honour's ultimate conclusion (see par 47) that he would find an obligation of confidentiality attaching to documents and information emanating from an arbitration - on the basis of a term, implied as a matter of law in commercial arbitrations - was a minority opinion in that decision.

85 In the end then, the passages invoked in support by the defendant from the reasons for decision of Brennan and Toohey JJ in Esso, on analysis, do not assist its argument.

86 So, as I understood this submission, Mr M it is said, had every right to unilaterally forward the email to these persons because of their interest, as assessed by him. Mr M, it was suggested, was effectively unconstrained as regards communications concerning this mediation to interested persons. A confidentiality obligation attaching to Mr M (now accepted) from s 71 was, it was said, not absolute. So, it did not apply to disclosures of documents or information by Mr M made to anyone he

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assessed to be 'interested'. It is said that a review of the pleadings confirms these persons' respective interests.

87 Mr M's on-forwarding of what in part looks to contain legal advice to him from his solicitor Mr Draper would likely amount to a waiver of the legal professional (or client legal) privilege he otherwise held in his solicitor's professional communication to him. Mr M's waiver of his own client privilege however, is not the point as regards the distinct issue of confidentiality covering what was said or done at the mediation.

88 Reliance by Mr Draper on Esso Resources Limited v Plowman is misplaced. Those proceedings concerned an arbitration, conducted in private. A majority of the High Court was of a view that no implied term imposing confidentiality over information emerging in the private arbitration could be made good. Observations by Toohey J in his minority reasons are relied upon by Mr Draper concerning an asserted limited degree of confidentiality his Honour was prepared to acknowledge in arbitration proceedings. But those observations do not support the defendants' position. The observations by Brennan J at (35) and Toohey J at (44) in Esso v Plowman are cited out of context. That context is wholly unrelated and distinct to the express application of the regime of confidentiality detailed under s 71(1) and (2) of the Supreme Court Act.

89 Nor is the defendants' position in any way assisted by the fact that Mr M consented to Mr C's business adviser, Mr L, being present during the mediation.

90 During argument, as regards the defendant's asserted entitlement to make unilateral disclosure to someone he considered an interested party, reference was made to a decision of McDougall J in 789TEN v Westpac Banking Corporation [2004] NSWSC 594. That decision concerned a private mediation conducted before a Queen's Counsel. Each participating side in that mediation had signed a contractual mediation agreement. The mediation agreement (see [9] of the reasons) contained an elaborate cl 12, which was express in addressing a basis upon which disclosures to third parties of communications, statements or admissions at the privately conducted mediation could be made.

91 By cl 12, communications to 'interested parties' were allowed, but that was expressly on a basis that such persons first held a direct interest and then upon the mediating party who made disclosure to such a person ensuring that the interested party expressly agreed to keep confidential and treat as privileged, any disclosed mediation information. Any third

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parties receiving disclosed information under the cl 12 regime in 789TEN needed to promise not to disclose, rely upon, or cause to be issued any subpoena to give evidence or to produce documents concerning disclosed information or documents from the (private) mediation.

92 In comprehensive reasons, McDougall J canvassed prior Australian case authority concerning limits to confidentiality arising out of a private mediation (usually contractual), particularly as regards the position applying to a disclosure of a purely objective fact that is learned during a mediation - in contrast to the use of a document or a statement, or an admission at the mediation made by a participant.

93 In 789TEN, McDougall J applied an earlier decision of Rolfe J in AWA Limited v Daniels (Unreported, NSWSC, 18 March 1992). That decision was subsequently followed in Queensland by Lee J in Williamson v Schmidt [1998] 2 Qd 317, 332 - 336. McDougall J preferred this line of authority, as regards the non-confidentiality of objective facts learned of at a mediation, over (obiter) contrary observations made by Rogers CJ in another AWA decision, AWA Limited v Daniels (1992) 7 ACSR 463.

94 It is not necessary in the present application for me to enter the issue over a key differentiation McDougall J recognised (following Rolfe J) in 789TEN, as between non use of statements, admissions or communications (written or oral) at a mediation, in contrast to a use of purely objective factual information, learned at a mediation (see [29] of his Honour's reasons). His Honour's analysis on that issue is, with respect, compelling. I do observe here that s 71(1)(a), (b) and (c) of the Supreme Court Act are express in terms of subject matters covered under a s 71 confidentiality obligation, in terms of evidence (not) being given as to things said or done, or as to the non use of communications (whether oral, or in writing) or of admissions made; and see Rajski v Tectran Pty Ltd [2003] NSWSC 476 [16] (Palmer J).

95 789TEN, dealing with a contractual mediation agreement, provides no sustenance towards the defendants' position upon this application about disclosure to an interested person, once regard is had to matters canvassed under Mr Draper's email to Mr M. That email communication does not deal merely with objective facts. It reports as to the content of offers and exchanges passing from parties at the mediation and even words used by the mediator himself.

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Evaluations and orders

96 To the extent that Mr M contends that the five named overseas recipients held an 'interest' in receiving the on-forwarded emailed information, that - only for the purpose of evaluating arguments made in this application - may be accepted. Even so, it would in my view be no answer, justification or excuse for what was unilaterally done by Mr M.

97 In the present case, I find that the obligation of confidentiality attaching to Mr M as a participant in the mediation has been disregarded and violated by the on-forwarding of the email to the five identified overseas recipients.

98 Had Mr M wished to provide some report or take in the input of these persons as to what occurred at the s 71 mediation, clearly his obligation behoved him to make that clear at the mediation in express terms. He could then seek to obtain the adversary party's consent to any disclosures, together with the mediator's consent as well. If that was not given, the court might be approached to approve a partial disclosure - before it happened, if that were thought to be necessary in the interests of justice.

99 This Court as the controller of its own processes would clearly have the power to grant a dispensation in appropriate circumstances. Care would need to be taken however so that inappropriate material was not put before the ultimate trier of fact.

100 In the present case, Mr M took it exclusively upon himself to on-forward Mr Draper's email - containing its detailed report as to exchanges, assertions of settlement proposals made (including statements or comments by the mediator) during the mediation. It was not for Mr M to arrogate solely to himself a decision as to who may or may not receive such confidential information. He was seriously in error in on-forwarding this email without first obtaining the adversary party's consent or the court's approval before doing so.

101 The statutory obligation of confidentiality attaching to mediations by direction is intended to promote an open, protected environment for parties to frankly and freely attempt to reach the resolution of their civil disputes, if they possibly can. That event frequently and overwhelmingly occurs, but not always so. But irrespective of a settlement or not, the protection of confidentiality over what passes back and forth in a mediation will remain. That is so unless there is a fully consensual release by the parties, or under an order of the court. Here Mr M's

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unilateral disclosure by the forwarded email, in my view, was a violation of an indispensible protective component of the court's processes. It would also likely be a contempt of court, as I would see it, although argument was not heard on that point and the plaintiff does not press for any ruling or sanction in that respect.

102 As a result of the now clearly established inexcusable violation by Mr M of the confidentiality of the mediation, there should follow in my view, first an order requiring Mr M to provide the nominated affidavit, in the terms sought by the plaintiff, so as to clarify precisely who else may have received from Mr M the information in this email. Mr Draper, in argument before me, did not resist such an affidavit order being made regarding Mr M, if I were to reach an adverse conclusion to his position, as I do.

103 But I am not prepared to make an order unilaterally permitting Mr C to make an unsupervised responsive communication to recipients of Mr M's email communications. The court of course has inherent power to control and deal with abuses of its process, as well as to regulate its procedures. But countenancing two wrongs is not a scenario that would usually be approved. One confidentiality violation, by Mr M, is more than enough.

104 At the hearing, I discussed with counsel a possibility of a tailored communication prepared by Mr C's solicitors and then submitted to the court for its prior approval - essentially explaining Mr C's concerns over the content of the communicated Draper email (it being allegedly biased, as well as factually inaccurate) which if approved, would then be distributed by email by Mr C on a basis that the court has approved this responsive communication. That presents as a proportional response in circumstances where sanctioning another unsupervised breach of confidentiality for this mediation presents as unacceptable.

105 Subsequent to the hearing of the application before me, the plaintiff's solicitors circulated, with a view to obtaining the court's approval, a proposed draft email communication, proposed to be sent by Mr C to all ascertained recipients of the email. There followed, on 31 May 2011, a proposed draft letter, explanatory note and proposed orders, sought to be approved by the court, in the event of the plaintiff's application being successful.

106 The proposed draft letter is in order subject to the addition of these words:

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It needs to be appreciated that what is now communicated is Mr C's version of events, given from his point of view. The Court does not express any views about the merits of what Mr C says in these communications.

107 On 8 June 2011, the defendants' solicitors responded on instructions raising only two objections as regards the draft proposed explanatory note. The first point, by reference to page 5 subpar (d), requested the removal of a quotation with a statement as to Mr C 'putting money into Mr M's pockets'. An exchange followed between solicitors thereafter, seeking to support the quote. In my view, the quotation does go too far. Its deletion will not affect the overall responsive tenor of what is otherwise proposed to be communicated by Mr C by email.

108 A second objection concerned the penultimate paragraph of point 2 of the note on page 6, as regards use of the terminology 'financial management of (the Marshall Islands Company)'. The request was made for the word 'financial', seen used prior to the word 'management' in lines 4 and 5 to be removed. The position of Mr C's solicitors was to seek to defend use of the word 'financial' on the basis that it was 'intended to make a distinction from general management and so, it reflects the nature of concerns described (in the mediation)'. In my view, proposed reference in the terminology to 'financial management' does not go too far, bearing in mind the plaintiff's solicitors' explanation for its use. I would approve the penultimate paragraph in its proposed form without deletions. Those two objections now being resolved, I would approve the draft proposed communication of the letter and explanatory note to be sent on behalf of Mr C.

109 The exchange between the solicitors also indicates that the parties are in disagreement over the extent of costs orders which should be made in the event of the plaintiff's success on this application. I will deal with that at the end.

110 Appended to the parties' hard copies of these reasons provided only to the parties as attachment A will be the approved draft letter and explanatory note which I approve and permit Mr C to despatch, bearing in mind all that has occurred, with a view to redressing his position.

111 Finally, I observe that the ambit of confidentiality made applicable to a Part VI mediation cannot be wholly absolute. Indeed s 71(3) recognises some limits as regards protections from admissibility. I mention in this regard, a decision by Lander J in the Federal Court concerning a private mediation agreement - Pihiga Pty Ltd v Roche [2011] FCA 240. In that

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decision arguments arose concerning alleged misleading and deceptive conduct during a mediation - arising out of (mis)representations made at the mediation. This led to a deed of settlement, entered as a result of the mediation being impugned as void in fresh proceedings.

112 In Pihiga, Lander J comprehensively reviewed case authority developments concerning without prejudice privilege. In other jurisdictions, of course, without prejudice privilege has to some extent been codified by s 131 of the Evidence Act (Cth), and by parallel provisions in the Evidence Act (NSW). Lander J's reasons in Pihiga provide considerable insights towards a fragile nature of the confidentiality regime applicable during a mediation, especially in a private mediation.

113 In present circumstances, the confidentiality applicable to this mediation was clearly violated. It is essential that the parameters of the regime of statutory confidentiality applicable to a mediation by direction be well understood by legal advisers. They must then clearly and carefully communicate and explain to their clients what obligation this carries when a mediation is conducted.

114 Where communications are proposed to be made about what has occurred or been said at a mediation, particularly by an email communication, the modern day potential for the on-forwarding of email communications to become 'viral' in seconds must be recognised. Appropriate care must be taken to preserve the regime of confidentiality which is permanently attached to mediation communications.

Costs and orders

115 In the Court of Appeal decision of Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129, Pullin JA and I discussed principles applicable to circumstances where a court may make an order for the payment of indemnity costs. This matter presents to me prima facie as a scenario where for this plaintiff, to be effectively vindicated, as well as for the court to indicate its disapproval of what has transpired, for an indemnity costs sanction. I will hear the parties about that and costs orders generally, if necessary.

116 The parties should confer upon an agreed minute of orders in line with these reasons. The reasons are published in abbreviated format, without the confidential annexures which embody Mr C's proposed email response - now approved by the court.