L Pearse & Co v ELI-ANN Nominees Pty Ltd
[2023] WADC 62
•16 JUNE 2023
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: L PEARSE & CO -v- ELI-ANN NOMINEES PTY LTD [2023] WADC 62
CORAM: REGISTRAR JEYAMOHAN
HEARD: 8 MARCH 2023 (APPLICATION AMENDED 30 MAY 2023)
DELIVERED : 16 JUNE 2023
FILE NO/S: CIV 3835 of 2018
BETWEEN: L PEARSE & CO
Plaintiff
AND
ELI-ANN NOMINEES PTY LTD
Defendant (Applicant)
CNH INDUSTRIAL AUSTRALIA PTY LTD
Third Party (Respondent)
Catchwords:
Practice and procedure - Defendant's application for orders pursuant to O 23 of the Rules of the Supreme Court 1971 (WA) - Preliminary issue - Whether without prejudice except as to costs communications are admissible on question of costs - Whether without prejudice privilege is a joint privilege
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Preliminary issue determined in favour of defendant
Representation:
Counsel:
| Plaintiff | : | No appearance |
| Defendant (Applicant) | : | Mr J T Schombee |
| Third Party (Respondent) | : | Mr S M Davies & Mr M A MacLennan |
Solicitors:
| Plaintiff | : | Not applicable |
| Defendant (Applicant) | : | McCabes |
| Third Party (Respondent) | : | Bennett & Co |
Case(s) referred to in decision(s):
CMA Assets Pty Ltd Formerly Known as CMA Contracting Pty Ltd v John Holland Pty Ltd [No 4] [2013] WASC 77
Cutts v Head [1984] Ch 290
Field v Commissioner for Railways for New South Wales [1957] HCA 92; (1957) 99 CLR 285
Ford Motor Co of Australia v Lo Presti (2009) 41 WAR 1
Garratt v Saxby [2004] 1 WLR 2152
Giannarelli v Wraith (1991) 171 CLR 592
Gogo v Attorney‑General (Cth) [2022] FCA 70
McClure v The Mayor and Councillors of the City of Stirling [No 3] [2009] WASC 247
Millenstead v Grosvenor House (Park Lane) Ltd [1937] 1 KB 717
Naidoo v Williamson [2008] WASCA 179
Old Papa's Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11
O'Neill v Mann [2000] FCA 1680
Pihiga Pty Ltd v Roche [2011] FCA 240; (2011) 278 ALR 209
Re Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622
Rush & Tompkins Ltd v Greater London Council [1989] AC 1280
Stewart v Atco Controls Pty Ltd (in liq) [No 2] [2014] HCA 31
Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96
Unilever plc v Procter & Gamble Co [2000] 1 WLR 2436
West's Process Engineering Pty Ltd v Westralian Sands Ltd (1998) 144 FLR 340
REGISTRAR JEYAMOHAN:
Introduction and summary
By chamber summons dated 15 November 2022 the defendant seeks leave to discontinue the third party proceedings with no order as to costs in the third party proceedings (Application). The third party does not oppose the discontinuance of the third party proceedings but seeks an order for payment of its costs on a party/party basis.
At the hearing of the Application on 8 March 2023, the defendant took issue with the admissibility of evidence sought to be relied by the third party in response to the Application, specifically the affidavits of Mark Alan MacLennan sworn 21 February 2023 (MacLennan Affidavit) and Colin Timothy Bignell affirmed 19 March 2021 (Bignell Affidavit).
On hearing from the parties, the preliminary issue for determination in the context of the Application is as follows:
1.whether without prejudice except as to costs communications can be relied on where an outcome was not reached following a trial; and
2.whether without prejudice privilege is a joint privilege and thus cannot be waived without the consent of the negotiating parties.
The Application was originally brought pursuant to Rules of the Supreme Court 1971 (WA) (RSC) O 19 r 7 and r 12. The defendant sought leave on 30 May 2023 to amend the Application to an application for leave to discontinue the third party proceedings with no order as to costs under O 23. Leave to amend the Application in the terms sought was granted on 31 May 2023. Neither party sought leave to provide any further submissions in respect of the determination of the preliminary issue or the Application.
For the reasons that follow I find that it is not open to the third party to rely on the without prejudice except as to costs and Calderbank communications forming part of the MacLennan Affidavit in the context of this Application. As the third party is not a party to the concluded outcome as between the plaintiff and the defendant, the possibility of the matters as between the defendant and the third party progressing to trial remains.
Further, as the without prejudice privilege is a joint privilege, it cannot be waived unilaterally by the third party without the consent of the defendant. Given no such consent is provided, it follows that privilege over the relevant without prejudice communications remains for the purposes of the Application.
On the third party's own submission the critical allegation against the third party was that it failed to send the service bulletin to the defendant. The third party, in seeking to rely on the Bignell Affidavit in the context of the submissions made at, par 17.6 ‑ 17.8 of the third party's outline of submission filed 27 February 2023, requires this court to delve into the strength and merits of this case in the context of a discontinuance application. This position therefore goes to the heart of the merits of the third party proceedings. In these circumstances, par 17.6 ‑ 17.8 of the third party's outline of submission filed 27 February 2023 ought properly be disregarded in the context of the Application.
Procedural background
On 9 March 2020 the defendant filed a third party notice and statement of claim. On 5 June 2020, the defendant filed a defence to the third party statement of claim. On 27 August 2020, the defendant filed an amended third party statement of claim. A further amended statement of claim was filed by the defendant against the third party on 30 April 2021.
The third party filed an amended defence to the further amended third party statement of claim dated 30 April 2021 on 23 June 2021 and a re‑amended defence to the further amended third party statement of claim dated 30 April 2021 on 9 July 2021.
The proceedings between the plaintiff and the defendant were concluded on 29 December 2022 following consent orders filed with the court to which the third party was not a party to. Those proceedings were concluded without the matter progressing to a trial.
The third party does not oppose the discontinuance of the third party proceedings but seeks an order for payment of its costs on a party/party basis. In response to the Application, the third party relies on the MacLennan Affidavit which attaches copy correspondence between the parties in respect of Calderbank offers and without prejudice except as to costs communications. The third party also relies on the Bignell Affidavit in support of its position that a critical allegation raised by the defendant against the third party was 'tenuous at best'. The defendant objects to the admissibility of this evidence.
As a result, the preliminary issue for determination by agreement as between the parties, is as follows: whether without prejudice except as to costs communications can be relied on where an outcome was not reached following a trial; and whether without prejudice privilege is a joint privilege and thus cannot be waived without the consent of the negotiating parties.
Legal principles
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.[1] Statements made without prejudice in a genuine attempt to resolve a dispute are ordinarily not admissible without the consent of the parties to the litigation. This rule protects not only admissions in the form of an offer to settle, but also communications between the parties generally in respect to issues in the dispute including assertions made of the strength and weakness of a party's case or an opponent's case.[2]
[1] Field v Commissioner for Railways for New South Wales [1957] HCA 92; (1957) 99 CLR 285, 291 - 292 (Dixon CJ, Webb, Kitto & Taylor JJ).
[2] Pihiga Pty Ltd v Roche [2011] FCA 240; (2011) 278 ALR 209 [81].
The rule is partly based on public policy, being to 'enable parties engaged in an attempt to compromise litigation to communicate with one another freely and without the embarrassment which the liability of their communications to be put in evidence subsequently might impose upon them'.[3] It also rests on a further foundation, being the express or implied agreement of the parties that the communications between them should not be admissible in evidence if those communications do not lead to settlement.[4]
[3] Field v Commissioner for Railways for New South Wales (291); see also Cutts v Head [1984] Ch 290, 306 (Oliver LJ).
[4] Pihiga Pty Ltd v Roche [83] - [86].
However, the rule is not absolute and is subject to exceptions.[5] One of those exceptions is for an offer expressly made without prejudice save as to costs - known as a Calderbank offer - by which the parties expressly or impliedly agree that their communication will not be admissible except in the context of determining costs.[6] An offer of compromise made under RSC O 24A may similarly be disclosed to the court for the purpose of determining costs pursuant to RSC O 24A r 7(2).
[5] See Unilever plc v Procter & Gamble Co [2000] 1 WLR 2436, 2448 - 2449 (Walker LJ).
[6] Unilever plc v Procter & Gamble Co (2445).
RSC O 24A r 7 provides for a general prohibition on the disclosure of an offer to the court. The purpose of the rule is to ensure that the trial judge is not made aware of the fact of an offer having been made until after their decision on liability and quantum has been delivered. At that stage, the trial judge may be made aware of such matters in connection with the determination of an appropriate costs order.[7] The prohibition on disclosure in RSC O 24A r 7(1) has been described as directory not compulsory.[8] There is no express provision for the event of an infringement of the rule. The consequence of infringement is in every case a matter for the trial judge to determine having due regard to the object for which the rule was made.[9]
[7] West's Process Engineering Pty Ltd v Westralian Sands Ltd (1998) 144 FLR 340, 342.
[8] West's Process Engineering Pty Ltd v Westralian Sands Ltd (343); see also Millenstead v Grosvenor House (Park Lane) Ltd [1937] 1 KB 717, 739 (Slesser LJ), 740 (Scott LJ).
[9] Garratt v Saxby [2004] 1 WLR 2152 [18]; Millenstead v Grosvenor House (Park Lane) Ltd (739) (Slesser LJ), (740) (Scott LJ).
The privilege which attaches to mediations is set out under RSC s 71. Section 71 provides that evidence of anything said or done, any communication and any admission made in the course of, or for the purposes of, an attempt at settlement of a case by way of court-ordered mediation is inadmissible in any proceedings and, further, that any document prepared in the course of, or for the purposes of, an attempt to settle a case by way of court-ordered mediation is confidential.
The evidence in issue
The MacLennan Affidavit is filed on behalf of the third party in opposition to the defendant's Application and includes attachments MAM-1 - MAM-10 being a series of copy correspondence between the solicitors of the parties to the action.
The defendant's position
Attachments MAM-1 to MAM-8
The defendant objects to the admissibility of attachments MAM‑1 ‑ MAM-8 on the basis that the correspondence is marked 'without prejudice except as to costs' except that MAM‑4 bears a manuscript annotation 'without prejudice'. The defendant points to the following communications between the parties' legal representatives:
1.Correspondence from the third party's solicitors to the defendant's solicitors dated 20 July 2020 marked 'without prejudice save as to costs'.[10]
2.Correspondence from the third party's solicitors to the defendant's solicitors dated 25 June 2021 marked 'without prejudice save as to costs'.[11]
3.Correspondence from the third party's solicitors to the defendant's solicitors dated 27 September 2022 marked 'without prejudice save as to costs'.[12]
[10] MacLennan Affidavit; Attachment MAM-1; page 11.
[11] MacLennan Affidavit; Attachment MAM-3; pages 18 and 19.
[12] MacLennan Affidavit; Attachment MAM-9; page 29.
The defendant submits that these communications are part of the chain of 'without prejudice save as to costs' correspondence and are therefore 'inadmissible as being covered by settlement privilege where no occasion for lifting the privilege has occurred. The defendant's position is that such lifting could only occur if the matter had gone to trial, and in respect of orders for the costs of the trial, once the trial result was known. The defendant submits that this flows from the nature of the correspondence and also the express terms of offers made therein.
The defendant submits that attachment MAM-7 is further objectionable because it refers to 'without prejudice' discussions in a conference call and at a mediation which are covered by settlement privilege.
Attachments MAM-9 to MAM-10
The defendant objects to the admissibility of attachments MAM‑9 ‑ MAM‑10 on the basis that these letters are marked 'without prejudice except as to costs'. The defendant submits that the settlement privilege applies a fortiori to these communications as they are Calderbank offers in the current Application itself. The defendant's position is that these communications could only become admissible once the outcome of the Application is known.
Bignell Affidavit
At the hearing on 8 March 2023, the defendant also made mention of the affidavit of Colin Timothy Bignell affirmed 19 March 2021 (Bignell Affidavit), which the defendant objects to on the basis that it is irrelevant.
That affidavit was affirmed by Mr Bignell for purposes other than specifically in respect of this Application. I make mention of the Bignell Affidavit given the third party, in its submissions in respect of the primary aspects of the Application seeks to rely on that affidavit in support of its position that a critical allegation raised by the defendant against the third party was 'tenuous at best'. The critical allegation against the third party was that it failed to send the service bulletin to the defendant. The defendant's position is that par 17.6 ‑ 17.8 of the third party's outline of submission filed 27 February 2023 be disregarded.
The defendant refers to the Federal Court decision of Gogo v Attorney-General (Cth)[13] where at [27]; and then at [29] ‑ [30] Wigney J made the following observations:
27In Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681, the plaintiff company commenced proceedings against the defendants (a former employee and his associates) alleging that the employee had taken the company's confidential information. Interim orders were made against the defendants. Those interim orders led to the inspection of the defendants' electronic devices and the destruction of any of the company's information found on those devices. The plaintiff company subsequently abandoned its claim for compensation and the balance of the proceeding was resolved by consent save as to costs. The consent orders included orders permanently restraining the defendants from using the relevant information, though there was no determination as to whether that information was confidential or had been used by the former employee or his associates.
29Payne JA, with whom Basten and Meagher JJA agreed, referred to Lai Qin and some subsequent authorities and summarised the principles in the following terms (at [30]):
If both parties to a proceeding which has been settled without a hearing on the merits have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.
30Payne JA found that the approach taken by the primary judge was contrary to the principles espoused in Lai Qin and subsequent cases. In particular, his Honour found (at [54]) that the case was not one where the plaintiff company 'could make good its claim that, without addressing the merits, the primary judge could be satisfied that it would have succeeded in any event' or that it was a case where 'without addressing the merits, it was clear that [the plaintiff company] had acted reasonably in commencing and prosecuting the claim and [the defendants] had acted unreasonably in defending the claim'. Payne JA also noted that a number of the factual findings made by the primary judge were not available or could not be made 'on the papers' and without cross-examination. That was because the facts were in issue and (at [47]) 'permitting the cross-examination of witnesses to determine costs issues in a case determined other than on the merits, is antithetical to the principles explained in Lai Qin'.
[13] Gogo v Attorney‑General (Cth) [2022] FCA 70 (Gogo).
The defendant points to Wigney J's observations in Gogo at [60] on the resolution of the question of costs:
For the applicants to establish that an order for costs should be made in their favour in the particular circumstances of this case, they must essentially demonstrate either that they would almost certainly have succeeded in their judicial review applications, that the Attorney‑General effectively capitulated, or that they acted reasonably in commencing the proceedings and the Attorney-General acted unreasonably in defending the proceedings. Moreover, the applicants must be able to demonstrate one or more of those matters without requiring the Court to review large swathes of evidence, resolve disputed facts 'on the papers', or address the merits of the judicial review applications.
The defendant's submission is that one should not go into the merits and that this court cannot make findings in relation to contested matters where there has been no cross‑examination. It is in that context that the defendant objects to the third party's reliance on the Bignell Affidavit. The defendants submit that that evidence is inadmissible because 'that goes to the strength of the case, whether it's been proved or not'.
Joint privilege
The defendant's position is that a joint privilege was created when the defendant received the without prejudice except as to costs communication from the third party. The defendant relies on McLure J's findings in Old Papa's Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd[14] in support of the proposition that it is not open to the third party to waive the joint privilege in the circumstances where at [91] her Honour observed:
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: Rodgers v Rodgers (1964) 114 CLR 608 at 614. If so, the whole course of the negotiations is privileged: South Shropshire District Council v Amos [1987] 1 All ER 340.
[14] Old Papa's Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11 (Old Papa's)
The third party's position
The third party's position is that 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: Rush & Tompkins.[15] The third party relies on Stewart v Atco Controls;[16] Ford Motor Co of Australia v Lo Presti[17] and the Court of Appeal's decision in Strzelecki v Jorgensen.[18] In its submissions, counsel for the third party made reference to Strzelecki v Jorgensen and the number of facts the court would consider whether the rejection of a Calderbank offer was unreasonable.
[15] Rush & Tompkins Ltd v Greater London Council [1989] AC 1280, 1300 (Lord Griffiths).
[16] Stewart v Atco Controls Pty Ltd (in liq) [No 2] [2014] HCA 31.
[17] Ford Motor Co of Australia v Lo Presti (2009) 41 WAR 1 [16] - [32].
[18] Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96.
The third party's position is that there is nothing in the decision of Giannarelli v Wraith[19] that supports the defendant's contention that without prejudice communications of this type can only be referred to if there is a hearing on the merits.
[19] Giannarelli v Wraith (1991) 171 CLR 592, 601.
The third party submits that the Old Papa's case does not assist the defendant in the proposition that this court can only look at the without prejudice except as to costs communications once there has been trial. Further, that the Old Papa's decision is in effect distinguishable from the present matter given the without prejudice communications the third party wishes to rely on in the MacLennan Affidavit includes a carve out for costs which is the very issue the subject of the Application, in circumstances where the discontinuance is not opposed by the third party save for the question of costs.
On the question of privilege, the third party's position is that even if there was privilege, there has been a clear waiver in this case by the defendant. The third party points to the affidavit of Hugh Mark O'Sullivan sworn 15 November 2022 (First O'Sullivan Affidavit) and further affidavit of Hugh Mark O'Sullivan sworn 12 December 2022 (Second O'Sullivan Affidavit) in support of the Application. Reliance is placed on the matters attested to at pars 6 and 7 of the First O'Sullivan Affidavit. The third party's position is that to the extent the defendant's submission is that it conducted the litigation against the third party on a reasonable basis, as is submitted by the defendant in par 3 of its written submissions dated 10 January 2023, then the propositions put by the defendant to the court on matters to do with the costs that ought to be ordered in the event of a discontinuance, amounts to a wavier by the defendant of any entitlement to maintain a claim of privilege over the without prejudice communications.
The third party does not press for the inclusion of MAM‑7 to the extent that communication refers to matters that occurred at a mediation conference.
Analysis
I have carefully considered the submissions made by counsel at the hearing on 8 March 2023 in respect of this preliminary issue for determination.
The primary proceedings as between the plaintiff and the defendant has resolved and on the face of it, all that presently remains standing in the litigation is this unresolved third party action as between the defendant and the third party. That is, the defendant now seeks nothing from the third party in terms of relief but does not agree to paying the third party any costs and proposes that each party in effect 'walk away' from the third party proceedings bearing and wearing their own legal costs. On that sole basis, the defendant seeks leave to discontinue. This is opposed by the third party in circumstances where the third party seeks its costs on a party/party basis as the 'price' of such a discontinuance.
MacLennan Affidavit
In simple terms, the required analysis distils down to a question of whether or not the court can have regard to the without prejudice save as to costs communications attached to the MacLennan Affidavit in the context of the Application in circumstances where the third party proceedings have not proceeded to a contested hearing and leave to discontinue the proceedings is now being sought by the defendant pursuant to RSC O 23 r 2(3).
The third party in its written submissions dated 27 February 2023 makes mention at par 10.6 of the following:
It was open and at all times remained open to the defendant on a resolution of the plaintiff's claim against it, to continue its third party claim against CNH [the third party] had it wished to do so.
The suggestion put by the third party is that:
The defendant is precluded from doing so not by operation of any law, but merely by an obligation to the plaintiff it voluntarily assumed as part of the settlement arrangements with the plaintiff. But for the defendant voluntarily assuming that obligation, the defendant's right to pursue that claim, and CNH's entitlement to defend that claim and vindicate its defence to the third party claim would each have remained extant.
At par 12 the third party in its written submissions distinguishes the present matter from that in Lai Qin[20] by observing that:
The present case is not a case where the relevant parties (the defendant and the third party) have by settlement or some extra curial action, avoided the litigation in the sense described in Justice McHugh in Lai Qin. There has been not settlement between the defendant and the third party, nor any curial action by the parties that brings the litigation to an end. To the contrary, this is a case where the defendant, by this application, seeks the Court's leave to discontinue and to do so on certain terms.
[20] Re Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 (Lai Qin).
The third party's submission being that 'this case should properly be treated as a surrender by the defendant…'.
Mention of the Calderbank offers attached to the MacLennan Affidavit is made at pars 19 and 20 and is relied on by the third party at par 21 in the context of the defendant purportedly having failed to take the opportunity to discontinue against the third party sometime prior on the same basis for which it now seeks leave.
In Lai Qin, McHugh J set out principles 'which govern an application for costs when a party elects not to pursue an action because he or she has achieved the relief sought in the action either by settlement or by extra-curial means' (624). That is not the case here.
I am equally mindful that the Supreme Court of Western Australia, while acknowledging its importance, has stated that upholding without prejudice privilege is not as central to the administration of justice as legal professional privilege.[21] For example, there are instances where, despite the existence of without prejudice negotiations, the court will allow the admission into evidence of what one of the parties said or wrote. The English decision of Unilever plc sets out the following examples of when without prejudice privilege may not be applied:[22]
1.if the without prejudice communication is evidence of a concluded compromised agreement;
2.if an agreement reached through without prejudice communications should be set aside due to misrepresentation, fraud or undue influence;
3.if during without prejudice communications a party makes a representation which the opposing party acts upon, the communication may be admissible as giving rise to evidence of estoppel;
4.if the without prejudice communication is evidence of an abuse of a privilege such as blackmail or another unambiguous impropriety;
5.if the without prejudice communication will be admissible to explain delay in commencing or prosecuting litigation; and
6.if the parties have agreed to alter the application of the rule either by extending or limiting its reach.
[21] CMA Assets Pty Ltd Formerly Known as CMA Contracting Pty Ltd v John Holland Pty Ltd [No 4] [2013] WASC 77 [9] (Allanson J).
[22] Unilever plc, (792) and (793).
The difficulty I have in the present matter is that none of these exceptions have been enlivened here. Further, the consequence of marking an offer 'without prejudice save as to costs' is that the document and its contents are treated as being without prejudice for the determination of the substantial issues between the parties - that is, they are privileged. But they may be used after these issues are determined, for the purpose of deciding the incidence of costs.[23] In the present matter, there has been no such determination, and as the third party notes in its submissions, it remains open to the defendant to pursue its third party claim as against the third party.
[23] Lexis Nexis, Cross on Evidence, 'without prejudice save as to costs' Vol 1 (222-09-22) [25360].
In my opinion, having regard to the conduct of the parties in respect of the efforts made by the parties to settle the third party proceedings is a necessary part of this process of evaluation. However, that is not the same as requiring the court to interfere with the without prejudice rule in circumstances where it remains open to the defendant to pursue its third party claim as against the third party as the third party notes in its submissions. This is not a matter where reliance is being placed on without prejudice save as to costs communications after the determination of the substantial issues between the parties. In these circumstances, the without prejudice communications and Calderbank correspondence attached to the MacLennan Affidavit remain privileged and that privilege is a joint one.
Bignell Affidavit
The defendant objects to the third party's reliance on the Bignell Affidavit and submits that first, this court should not go into the merits, and secondly, that this court cannot make findings in relation to contested matters where there has been no cross‑examination.
The Bignell Affidavit was relied on by the defendant in support of the defendant's position in the primary proceedings that it had not received a copy of the service bulletin. The defendant's submission is that Mr Bignell is an IT expert, and his affidavit was provided in the context of the solicitors for the plaintiff in this action requesting emails received and sent from September 2015 ‑ December 2015 to a number of specified email addresses. The defendant's position is that to allow the third party to refer to the Bignell Affidavit in the context of this Application would have the effect of this court being required to delve into the strength and merits of the case. Reliance is placed by the defendant's on the Gogo decision in this context, and the submission made, that in deciding the question of costs, it is simply not relevant what the evidence was at that stage.
I note here the decision of Beech J in McClure v The Mayor and Councillors of the City of Stirling [No 3][24] and his Honour's analysis of the applicable principles in respect of discontinuance, in particular, the general principles his Honour discusses at [26] - [29] by reference to the Lai Qin test as articulated by McHugh J. Whilst not the subject of this preliminary determination, it is convenient here to note that RSC O 23 r 2(3) provides that the court may order an action to be discontinued 'upon such terms as to costs … as may be just'. The court can exercise its discretion to make any costs order which is required by the justice of the case. The conduct of the parties in the proceedings and the reasons for the discontinuance can bear heavily on the exercise of the discretion as to costs: O'Neill v Mann.[25] The court's discretion as to costs is very wide. See, in the context of s 37 of the Supreme Court Act 1935 (WA) and RSC O 66 r 1, Naidoo v Williamson.[26]
[24] McClure v The Mayor and Councillors of the City of Stirling [No 3] [2009] WASC 247.
[25] O'Neill v Mann [2000] FCA 1680 [13].
[26] Naidoo v Williamson [2008] WASCA 179 [39].
The defendant in its written submission dated 10 January 2023 makes reference to the outcome reached with the plaintiff in 'what has been a complex and long running case, which was heading towards a trial of at least 10 days with its attendant costs risks'. In the context of the third party proceedings, the defendant's submission is that 'extended negotiations with the third party's solicitors on cost issues proved fruitless. Hence this application'.
The third party in its outline of submission filed 27 February 2023 relies on the Bignell Affidavit at par 17.6 ‑ 17.8 in support of the submissions made at par 17.9 ‑ 17.10 to invite this court to form a view that:[27]
To the extent that the merits of the competing positions may be relevant in relation to the issue of costs, the position is that the defendant's denial of receipt of the Service Bulletin would have failed at trial, and in any event was without merit.
[27] Third party's outline of submissions filed 27 February 2023, par 18.
On the third party's own submission the critical allegation against the third party was that it failed to send the service bulletin to the defendant. The third party, in seeking to rely on the Bignell Affidavit which was produced for purposes other than the Application, requires this court to delve into the strength and merits of this case in the context of a discontinuance application. This position therefore goes to the heart of the claim as between the defendant rather than the conduct of the parties in the proceedings and the reasons for the discontinuance.
In these circumstances, par 17.6 ‑ 17.8 of the third party's outline of submission filed 27 February 2023 ought properly be disregarded in the context of the Application.
Conclusion
As the third party is not a party to the concluded outcome as between the plaintiff and the defendant, the possibility of the matters as between the defendant and the third party progressing to trial remains. I can only speculate about these matters given this court is not privy to the terms of the concluded outcome reached as between the plaintiff and the defendant, but this court has been made aware in the context of this Application, that the third party is not a party to that concluded outcome.
In all of the circumstances, I find that it is not open to the third party to rely on the without prejudice except as to costs and Calderbank communications forming part of the MacLennan Affidavit in the context of this Application. Further, as the without prejudice privilege is a joint privilege, it cannot be waived unilaterally by the third party without the consent of the defendant.
The third party, in seeking to rely on the Bignell Affidavit in the context of the submissions made at par 17.6 ‑ 17.8 of the third party's outline of submission filed 27 February 2023, requires this court to delve into the strength and merits of this case in the context of a discontinuance application. As this position goes to the heart of the merits of the third party claim, par 17.6 ‑ 17.8 of the third party's outline of submission filed 27 February 2023 ought properly be disregarded in the context of the Application.
Orders
In these circumstances, the defendant's application that leave to discontinue pursuant to RSC O 23 r 2(3) should proceed on the basis that the without prejudice except as to costs and Calderbank communications forming part of the MacLennan Affidavit be excluded and the submissions made at par 17.6 ‑ 17.8 of the third party's outline of submission filed 27 February 2023 be disregarded.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
TS
Court Officer
16 JUNE 2023
17
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