Fermiscan Ltd v James

[2009] NSWSC 462

CITATION:	Fermiscan Limited v Veronica Jean James [2009] NSWSC 462
HEARING DATE(S):	25/05/09, 26/05/09, 27/05/09, 28/05/09, 29/05/09
JURISDICTION:	Equity Commercial List
JUDGMENT OF:	McDougall J at 1
EX TEMPORE JUDGMENT DATE:	25 May 2009
DECISION:	See paragraph [15] of the judgment.
CATCHWORDS:	EVIDENCE - privilege - settlement negotiations - whether proceedings are "to enforce an agreement... to settle" prior dispute.
LEGISLATION CITED:	Evidence Act 1995
CASES CITED:	Asciak v Australian Secured and Managed Mortgages Pty Limited (2008) 66 ACSR
PARTIES:	Fermiscan Limited (First Plaintiff) Fermiscan Australia Pty Limited (Second Plaintiff) Fiberscan Pty Limited (Third Plaintiff) Veronica Jean James (First Plaintiff)
FILE NUMBER(S):	SC 50044/08
COUNSEL:	A S Martin SC / S Wells (Plaintiffs) C D Wood (Defendant)
SOLICITORS:	Piper Alderman (Plaintiffs) Middletons (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

McDOUGALL J

25 May 2009 (ex tempore – revised 25 May 2009)

50044/08 FERMISCAN LIMITED & ORS v VERONICA JEAN JAMES

JUDGMENT - on admissibility of evidence; see p 40

1 HIS HONOUR: The plaintiffs make a number of claims against the defendant. One group of claims relates to a deed of release and settlement made between the plaintiffs and the defendant in December 2006. As the recitals to that deed make clear, it was intended to settle certain proceedings commenced by the plaintiffs (as applicants) against the defendant (as respondent) in the Federal Court of Australia.

2 The claims that the plaintiffs make include the claims advanced by prayers 10 and 11 of the summons filed on 26 March 2008. Prayer 10 claims an order restraining the defendant from disparaging, or making statements or taking actions which tend to injure or damage, the reputation, standing, trade, business, or diagnostic tests of one or other of the plaintiffs or the abilities of their respective directors, officers and employees. Plainly enough, that claim is referable to cl 5 of the deed of release and settlement: a clause that has been referred to in an earlier ruling that I gave on admissibility of evidence.

3 Prayer 11 of the summons claims payment of the sum of $700,000. Plainly enough, that is referable to cl 2.3 of the deed of release and settlement. By that clause, the defendant agreed to pay two of the plaintiffs jointly that sum ($700,000) on certain conditions.

4 The defendant wishes to read an affidavit sworn by the solicitor who acted for her back in 2006, Mr McCowan. Mr McCowan seeks to give evidence of certain discussions that took place between him and the plaintiffs' solicitor at the time, Mr Toltz, and Mr Carr of the plaintiff. The plaintiffs object, on the ground that if the evidence were admitted, it would be in contravention of s 131(1) of the Evidence Act 1995: That subsection prohibits, among other things, the adduction of evidence of a communication between persons in dispute in connection with an attempt to negotiate a settlement of that dispute. There is no doubt that the material of which Mr McCowan seeks to give evidence falls within s 131(1).

5 However, Mr Wood of counsel, for the defendant, points to s 131(2)(f). Section 131(2) provides that subs (1) does not apply in certain circumstances. One of those is described in paragraph (f):

“The proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons in dispute to settle the dispute, or a proceeding in which the making of such an agreement is an issue.”

6 Mr Wood submits that in these proceedings the plaintiffs are seeking to enforce, against the defendant, those provisions of the deed of release and settlement to which I have referred. In my view, that is plainly correct, as the prayers for relief to which I have referred make plain. In case, for some reason, it is not plain from those prayers for relief, reference may also be made to the Amended Commercial List Statement. That document refers, under the statement of the nature of dispute, to the deed of release and settlement. It says that the current proceedings "concern further breaches by the defendant of..." that deed. The statement of the issues likely to arise includes:

(1) Has the defendant breached any terms of the deed? (para 6);

(2) Is the defendant liable to pay the plaintiffs $700,000? (para 7); and

(3) What loss have the plaintiffs suffered by reason of the alleged breaches of the deed? (para 9).

7 Mr Wells of counsel, for the plaintiffs, submits that para (f) does not apply. He submits that it applies only where there is a question as to whether an agreement to settle the dispute was made. In support of that submission, he referred to the decision of Goldberg J in Asciak v Australian Securedand Managed Mortgages Pty Limited (2008) 66 ACSR 298.

8 Asciak concerned an agreement to resolve proceedings in the Family Court. Effect was given to that agreement. The plaintiff sought to set aside the consent orders giving effect to it. He wished to say that his consent had been procured on the basis of misrepresentations. In the course of the case, the question arose as to whether evidence of settlement negotiations was admissible. Goldberg J said at 304 [31] that for the paragraph to apply, "the proceeding which the plaintiff proposes to bring in the Family Court must be a proceeding to enforce the settlement agreement between Ms Asciak and himself or a proceeding in which the making of the settlement agreement is in issue". I respectfully agree. His Honour then said that the plaintiff was not seeking to enforce or put in issue the making of the settlement agreement; on the contrary, he was seeking to set it aside. Thus, his Honour held, para (f) was of no relevance.

9 If I may say so, I respectfully agree with his Honour's analysis. However, I do not agree with Mr Wells that it has any relevance to the present case. In contrast to the proceeding with which Goldberg J was concerned, this is a proceeding in which, as I have sought to show, the relief claimed by the plaintiffs includes relief that can only be described as enforcement of certain of the provisions of the deed. That includes primary enforcement (injunctive relief and an order for the payment of money) and secondary enforcement (an order for the payment of damages).

10 In my view, the present case falls within s 131(2)(f).

11 I add that quite strange results would follow if the paragraph were to be given the narrow construction for which Mr Wells contended. It is well settled that, in construing an agreement, the court is entitled to have regard to what is often called the factual matrix. The effect of Mr Wells' submission would be to deny such evidence to the court in any dispute that concerned the construction of an agreement made to settle litigation. I do not accept that the legislature intended to bring about this strange consequence.

12 What I have just said should not be taken as foreclosing any view on whether the evidence in question ought in fact to be regarded as "factual matrix" evidence.

13 In the circumstances, it is unnecessary to refer to Mr Wood's alternative argument based on para (g).

14 It is accepted that the reasons I have just given, in relation to paragraph 7 of Mr McCowan's affidavit, apply equally to paragraphs 8 to 16. Although there is an objection as to relevance, I do not propose to decide the relevance of the material on a question of objection to evidence: it is not a clear-cut case.

15 Equally, to the extent that objection is taken to paragraph 7 on the basis of form, I admit it because the documents to which it refers are in evidence.

**********