Re: Mercantile Mutual Custodians P/L v Village Nine Network Rest. & Bars P/L - [1998] QSC 295

IN THE SUPREME COURT
OF QUEENSLAND
Brisbane No.1823 of 1996
Before the Hon. Mr Justice Mackenzie
[re: Mercantile Mutual Custodians P/L v Village Nine Network Rest. & Bars P/L & Ors]
BETWEEN:
MERCANTILE MUTUAL CUSTODIANS PTY LTD
(ACN 008 508 496)
Plaintiff

AND:
VILLAGE NINE NETWORK RESTAURANTS
& BARS PTY LTD (ACN O61 400 799)
Defendant
AND:

VILLAGE ROADSHOW LIMITED
(ACN 010 672 054)
Second Defendant
AND:

PUBLISHING AND BROADCASTING LIMITED
(formerly NINE NETWORK AUSTRALIA LIMITED)
(ACN 009 071 167)
Third Defendant
JUDGMENT - MACKENZIE J.

Judgment delivered 23 December 1998
CATCHWORDS: DISCOVERY AND INTERROGATORIES - writ of non-party discovery - disclosure of documents - whether documents in arbitration between the plaintiff and the non-party should be disclosed.
Quad Consulting Pty Limited v David R Bleakley & Associates Pty Limited (1991) 27 FCR 86
AustoTel Management Pty Limited & Anor v Jamieson & Ors (1995) 57 FCR 411

Counsel:Mr S.K. Wilson QC for the first, second & third defendants
Mr D.J.S. Jackson QC with him Mr P.A. Freeburn for the applicant

Solicitors:Lees Marshall Warwick as town agents for Herbert Kneer & Rundle for the first, second and third defendants
Corrs Chambers Westgarth for the applicant

Hearing date: 3 December 1998

IN THE SUPREME COURT
OF QUEENSLAND
Brisbane No.1823 of 1996
Before the Hon. Mr Justice Mackenzie
[re: Mercantile Mutual Custodians P/L v Village Nine Network Rest. & Bars P/L & Ors]
BETWEEN:

MERCANTILE MUTUAL CUSTODIANS PTY LTD
(ACN 008 508 496)
Plaintiff

AND:
VILLAGE NINE NETWORK RESTAURANTS
& BARS PTY LTD (ACN O61 400 799)
Defendant

AND:
VILLAGE ROADSHOW LIMITED
(ACN 010 672 054)
Second Defendant

AND:
PUBLISHING AND BROADCASTING LIMITED
(formerly NINE NETWORK AUSTRALIA LIMITED)
(ACN 009 071 167)
Third Defendant

JUDGMENT - MACKENZIE J.
Judgment delivered 23 December 1998

This is an application by Concrete Constructions Group Limited (Concrete Constructions) that a writ of non-party discovery issued by the defendants be set aside. Concrete Constructions was head contractor in a project for the plaintiff in the action on a building in the central business district. A dispute between Concrete Constructions and the plaintiff resulted in a successful mediation occurring. The writ of non-party discovery required the following documents:-
1.All documents which record the claims, defences, counterclaims and particulars of loss and damage in the mediation of the dispute between Mercantile Mutual Custodians Pty. Ltd. (“MM”) and Concrete Constructions Group Ltd (“CC”), in respect of the building work undertaken by CC on behalf of MM at the Queen Adelaide Building site, pursuant to a contract made between CC and MM and dated 18 November 1994.
2.All documents recording the submissions made to the mediator of the dispute between CC and MM in respect of the building work undertaken by CC on behalf of MM at the Queen Adelaide Building site, pursuant to a contract made between CC and MM and dated 18 November 1994.
Service of the writ was effected after Moynihan SJA had refused an application by the defendants against the plaintiff for disclosure of documents with respect to the mediation between the plaintiff and Concrete Constructions on grounds of without prejudice privilege and legal professional privilege. The former basis is the ground upon which the present application to set aside the writ is pursued.
By way of background the plaintiff sued the defendants for breach of an agreement for a lease under which it was lessor and the defendants lessees. The plaintiff claims that the defendants failed to proceed expeditiously in planning obtaining necessary approvals and effecting alterations in fitting out the premises to be occupied by the plaintiff.
There has been an appeal against the decision of Moynihan SJA, but it is yet to be heard. After the decision was given correspondence ensued first with the solicitors for the plaintiff and then with the solicitors for Concrete Constructions about disclosing documents relevant to the points of claim and defence in the mediation.
There was a reply to the effect that there were submissions to the mediator but not documents fitting the description of points of claim in defence. Concrete Constructions declined to provide the documents and the writ of non-party discovery was then issued.
The stance was taken that the documents which did exist were brought into existence solely for the purpose of mediation between the plaintiff and Concrete Constructions and were therefore privileged, that they were utilised in the mediation for the purposes of the mediation, and were subject to an express agreement as to confidentiality of the mediation. It was also advanced that because Moynihan SJA had decided that the plaintiff was entitled not to disclose the documents relating to the mediation the issue of the writ was an abuse of process.
The response to this, in correspondence was that the writ had been issued on the basis of para.16 of Moynihan SJA’s judgment, which is as follows:
“It remains to note that as Quad and Austo Tel illustrate the privilege under consideration here is limited to admissions which are truly concerned with negotiation and settlement. As I understand it I am not concerned with the application of that restriction to the documents the subject of the claim.”
In preceding paragraphs Moynihan SJA had discussed the authorities of Quad Consulting Pty Limited v David R Bleakley & Associates Pty Limited (1991) 27 FCR 86 and AustoTel Management Pty Limited & Anor. v Jamieson & Ors (1995) 57 FCR 411, as well as other authorities. He observed that Quad and AustoTel were cases where a party to the action not participating in negotiations sought access for the purpose of trial preparation to material generated in compromise negotiations but was refused. He said that result was consistent with the policy with protecting a party from what would otherwise be the consequences of an admission and so encouraging negotiation and compromise. It was submitted that in para.16, Moynihan SJA had left a small window of opportunity for the defendants to require disclosure of the documents described in the writ. This notion was strongly resisted by Concrete Constructions.
It was submitted by senior counsel for the defendants that before Moynihan SJA the issue was whether documents arising from the mediation between the plaintiff and the non-party should be disclosed. In the present application the limited question involved was whether documents defining the dispute between the plaintiff and Concrete Constructions fell within the privilege. It was submitted that para.16 provided the window of opportunity in that regard. What were being sought were the documents recording the claim in the mediation and defining the ambit of the settlement.
It was submitted that the defendants were entitled to know what the claims were in the mediation. It was conceded that it would be necessary to bring the case within what was submitted to be the exception in Moynihan’s SJA’s reasons. It was submitted that documents fitting the description in the writ were not concerned with negotiation and settlement in the necessary sense and that para.16 of the judgment was intended to convey that specific documents not truly concerned with negotiation and settlement could be obtained.
It was submitted that there was evidence that documents relating to the claim existed and that it was incumbent on Concrete Constructions to provide at least parts of documents articulating the claims and cross-claims in the mediation. The defendants were entitled to know what claims had been released as a result of the mediation.
It was submitted on behalf of Concrete Constructions that the defendants had sought discovery of the same classes of documents from the plaintiff by way of disclosure and had been unsuccessful on the grounds of without prejudice privilege. The present writ was sought for an improper purpose, namely to avoid the consequences of the unsuccessful application for further disclosure in respect of the same documents from the plaintiff and to go behind the plaintiff’s witnesses oath as to the classes of documents which were in the plaintiff’s possession.
There was also another issue as to whether in dealing with a solicitor representing Concrete Constructions the effect of Moynihan SJA’s decision had been misrepresented. It was submitted that the “documents the subject of the claim” in para.16 of Moynihan SJA’s reasons were the extension of time claims made by Concrete Constructions as builder against the plaintiff as proprietor. To suggest that para.16 meant that the submissions in the mediation were not the subject of the dispute about privilege or that Moynihan SJA determined that the defendants were entitled to those documents was grossly misleading. It was submitted that Concrete Constructions was entitled in the same fashion as the plaintiff to claim the benefit of without prejudice privilege in respect of the production of the documents.
While the words which are said to create the window of opportunity are somewhat cryptic, in my view the documents which are acknowledged to exist are not ones which differ materially from those which were unsuccessfully sought against the plaintiff. The writ appears to proceed on the assumption that there will be discrete documents of the kind set out in the schedule to the writ. This does not accord with the evidence as to what documents are in existence in connection with the mediation. There is, as Mr Jackson QC submitted, no obligation on a person served with a writ to launder or do a “scissors and paste” exercise upon documents to excise undoubtedly privileged material from that which may, it it stood alone in a document, be not subject to privilege.
The writ was issued on the basis of what was said to be a perceived exception in Moynihan SJA’s reasons. It is unnecessary, having regard to the conclusion reached, to explore the other issues which were argued before me. Suffice it to say, in view of the acknowledgement by senior counsel for the defendants that the statement said to convey the misrepresentation was not well expressed, that it is essential that statements which are expressed in a way which can justifiably lead to misunderstanding be avoided, particularly where the material is to be dealt with in affidavit form without cross-examination of the deponent.
It is ordered that the writ of non-party discovery issued by the defendants on 21 October 1998 be set aside. It is further ordered that the defendants pay the applicants costs of and incidental to the application to be taxed.