Lewis v Nortex Pty Ltd (in liq) - [2002] NSWSC 1245

CITATION: Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2002] NSWSC 1245

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 3081/97; 1750/02

HEARING DATE(S): 19 and 20 December 2002

JUDGMENT DATE: 20 December 2002

PARTIES :

3081/97
Peter Lawrence Lewis (P)
Lamru Pty Ltd (Applicant)
Kation Pty Ltd (Respondent)
Brian Raymond Silvia (Liquidator)
1750/02
Lamru Pty Limited (P)
Kation Pty Limited (D1)
Peter Lawrence Lewis (D2)
Mark Lewis (D3)
Nortex Pty Ltd (In Liq) (D4)

JUDGMENT OF: Hamilton J

COUNSEL : N A Cotman SC & J T Johnson (Kation P/L & P L Lewis)
S J Motbey (Lamru P/L)
V R Gray (Liquidator & Nortex P/L)
No appearance (M Lewis)

SOLICITORS: Kemp Strang (P L Lewis & Kation P/L)
Lyons & Lyons (Lamru P/L)
Abbott Tout (Liquidator & Nortex P/L)
Corrs Chambers Westgarth (M Lewis)

CATCHWORDS: EVIDENCE [96] - Admissions and declarations - Admissions - Letters and statements without prejudice - General principles - Communications made in furtherance of the commission of a fraud - Document used in mediation.

LEGISLATION CITED: Evidence Act 1995 s 131(1), (2)(j)

CASES CITED: Bruinsma v Menczer (1995) 40 NSWLR 716
Commissioner of Australian Federal Police v Propend Finance Pty Limited (1997) 188 CLR 501
Kang v Kwan [2001] NSWSC 698
Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2002] NSWSC 1192
Telstra Corporation v Australis Media Holdings [No 2] (1997) 41 NSWLR 346
Odgers' Uniform Evidence Law (5th Ed, 2002) lvi - lvii
Oxford English Dictionary

DECISION: Document ruled admissible.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

FRIDAY, 20 DECEMBER 2002

3081/97 PETER LAWRENCE LEWIS v NORTEX PTY LIMITED (In Liq)
1750/02 LAMRU PTY LIMITED v KATION PTY LIMITED & ORS

JUDGMENT - Re Admissibility of Annexure A to Affidavit to R W Lamb sworn 11 April 2002 (T1760)

1 HIS HONOUR: This judgment deals with the admission into evidence of the last words of paragraph 6 of the affidavit of R W Lamb sworn 11 April 2002, "a copy of which is annexed hereto and marked A". The admission of those words would carry into evidence annexure A to that affidavit and that is what is really in contention.

2 Objection is taken to the document on the basis that it is a document which is privileged by virtue of the provisions of s 131 of the Evidence Act 1995 ("the EA") and that its tender is prevented by that privilege. Section 131 of the EA provides, so far as relevant, as follows:

“131 Exclusion of evidence of settlement negotiations

(a) a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute, or

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2002] NSWSC 1245
Decision Date: 20 December 2002

CaseChat Overview and Summary

In the case of Lewis v Nortex Pty Ltd (in liq), the dispute involves the plaintiff seeking to enforce an agreement for the sale of shares in Nortex Pty Ltd, a company that has since entered liquidation. The Federal Court was tasked with determining whether the plaintiff could rely on a document that was marked without prejudice to argue that Nortex had admitted to the validity of the share sale agreement. The central issue was whether the without prejudice communications could be used as evidence in the proceedings, particularly in light of their use during mediation.

The court had to consider the principles governing the admissibility of without prejudice communications. It was necessary to determine whether the communications were made in the genuine course of attempting to resolve the dispute or if they were used to further a fraud. The court also had to assess whether the use of these communications in mediation meant they could be considered part of the settlement negotiations. The court found that the documents were not protected by the without prejudice privilege because they were not made in the genuine attempt to resolve the dispute but were instead used to further a fraud.

In its reasoning, the court emphasised that without prejudice communications are intended to facilitate genuine settlement negotiations and are not intended to cover fraudulent conduct. The court held that the circumstances surrounding the creation and use of the documents indicated a deliberate attempt to deceive, which disqualified them from the protection of the without prejudice rule. Consequently, the court allowed the plaintiff to rely on the document to argue that Nortex had admitted to the validity of the share sale agreement.

The court's decision was that the without prejudice communications were not admissible as evidence to prove the content of the negotiations. However, the court did not preclude the plaintiff from relying on the contents of these documents to argue that Nortex had admitted to the validity of the share sale agreement. The final orders were to be determined by the court, pending further submissions on the specific relief sought by the plaintiff.

Orders