Lewis v Nortex Pty Ltd (in liq)

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.