Samnakay v Schofield

Case [2013] WASCA 138

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT  :   THE COURT OF APPEAL (WA)

CITATION:   SAMNAKAY -v- SCHOFIELD [2013] WASCA 138

CORAM:   NEWNES JA

MURPHY JA

HEARD:   1 FEBRUARY 2013

DELIVERED          :   5 JUNE 2013

FILE NO/S:   CACV 79 of 2012

BETWEEN:   IQBAL SAMNAKAY

First Appellant

NEELAM ISMAIL SAMNAKAY
Second Appellant

AND

VERNON SCHOFIELD
First Respondent

CHRISTINE SCHOFIELD
Second Respondent

ON APPEAL FROM:

Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA

Coram  :KENNETH MARTIN J

Citation  :TSALLIS -v- SCHOFIELD [2012] WASC 231

File No  :CIV 1483 of 2007

Catchwords:

Practice and procedure - Without prejudice communications - Whether document made for purpose of attempting to compromise a dispute - Relevant principles - Whether court be mislead if document not admitted into evidence - Document put into evidence in earlier proceedings with different party - Whether waiver of privilege

Legislation:

Nil

Result:

Application for leave to appeal refused
Appeal dismissed

Category:    B

Representation:

Counsel:

First Appellant              :     Mr P MacMillan

Second Appellant          :     Mr P MacMillan

First Respondent           :     Mr M G Pendlebury

Second Respondent       :     Mr M G Pendlebury

Solicitors:

First Appellant              :     Stables Scott

Second Appellant          :     Stables Scott

First Respondent           :     Culshaw Miller Lawyers

Second Respondent       :     Culshaw Miller Lawyers

Case(s) referred to in judgment(s):

Barrett Property Group Pty Ltd v Dennis Family Homes Pty Ltd (No 2) [2011] FCA 276

Bentley v Nelson [1963] WAR 89

Field v Commissioner of Railways (NSW) [1957] HCA 92; (1957) 99 CLR 285

Harrington v Lowe (1996) 190 CLR 311

JA McBeath Nominees Pty Ltd v Jenkins Development Corporation Pty Ltd [1992] 2 Qd R 121

Lohar Corporation Pty Ltd v Dibu Pty Ltd (1976) 1 BPR 9177

Mitchell v Schofield [2007] WASC 303

Ofulue v Bossert [2009] 1 AC 990

Pihiga Pty Ltd v Roche [2011] FCA 240; (2011) 278 ALR 209

Pitts v Adney (1961) 78 WN (NSW) 886

Re Daintrey; Ex parte Holt [1893] 2 QB 116

Rodgers v Rodgers (1964) 114 CLR 608

Rush & Tompkins Ltd v Greater London Council [1989] 1 AC 1280

Somatra v Sinclair Roche & Temperley (a firm) [2000] 1 WLR 2453

Unilever Plc v Procter v Gamble Co [2000] 1 WLR 2436

Wilson v Metaxas [1989] WAR 285

Wing Luck Foods v Lay Choo Lim [1989] WAR 358

  1. JUDGMENT OF THE COURT:    This is an appeal against a decision of Kenneth Martin J in which his Honour held that three documents prepared by the respondents were without prejudice communications and therefore the subject of privilege.

  2. As the appeal is from an interlocutory order, leave to appeal is required: s 60 (1)(f) of the Supreme Court Act 1935 (WA). On 10 August 2012, Pullin JA ordered that the application for leave to appeal be referred to the hearing of the appeal.

Background

  1. The relevant material facts were not in dispute.  The respondents were the proprietors of a property located at Lot 9 Cheriton Road, Gingin, which they intended to subdivide.  The respondents engaged a local…

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Samnakay v Schofield [2013] WASCA 138
Case
[2013] WASCA 138
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CaseChat Overview and Summary

In Samnakay v Schofield, the appellants, who were purchasers of lots in a proposed subdivision, challenged the lower court's decision that three documents were privileged under the without prejudice rule. The respondents, the proprietors of the land, had entered into contracts of sale with the appellants and other purchasers, but the Planning Commission did not endorse the approval of the subdivision plan within the extended time specified in the contracts. The respondents notified the purchasers that the contracts were terminated and that the lots might be re-offered for sale. The appellants sought to have the respondents' communications with them prior to the termination notice admitted as evidence, arguing that they were not protected by without prejudice privilege. The primary judge held that the communications were without prejudice and therefore privileged.

The legal issue before the court was whether the communications were made for the purpose of attempting to compromise a dispute and therefore privileged, or whether they were made for another purpose, such as proposing a new contract of sale, and therefore not privileged. The court considered the relevant principles and authorities on the without prejudice rule, including the case of JA McBeath Nominees Pty Ltd v Jenkins Development Corporation Pty Ltd, where the court held that an offer made in the course of negotiations to resolve a dispute was privileged, even if the offer was made to obtain a collateral advantage. The court also considered whether the respondents had waived their privilege by putting one of the documents into evidence in earlier proceedings with a different party.

The court held that the communications were without prejudice and privileged. The court found that the respondents' letter of 17 March 2006, which notified the appellants of the termination of the contract, was not a compromise of a dispute but rather a statement of fact. The court also held that the respondents had not waived their privilege by putting one of the documents into evidence in earlier proceedings. The court found that the respondents had not intended to relinquish their privilege and that the document had not been relied upon by the other party in the earlier proceedings.

The court dismissed the appeal and affirmed the lower court's decision that the communications were privileged. The court held that the appellants had not shown that the privilege should be disregarded in the interests of justice. The court did not make any orders as to costs.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

JUDGMENT OF THE COURT: This is an appeal against a decision of Kenneth Martin J in which his Honour held that three documents prepared by the respondents were without prejudice communications and therefore the subject of privilege. As the appeal is from an interlocutory order, leave to appeal is required: s 60 (1)(f) of the Supreme Court Act 1935 (WA). On 10 August 2012, Pullin JA ordered that the application for leave to appeal be referred to the hearing of the appeal. The relevant material facts were not in dispute. The respondents were the proprietors of a property located at Lot 9 Cheriton Road, Gingin, which they intended to subdivide. The respondents engaged a local real estate agent, Mr Cabassi of Roy Weston Cabassi Realty (Roy Weston), to facilitate sales of lots in the proposed subdivision. In the period 2004 to 2006 the respondents entered into contracts of sale with some 60 or more purchasers of lots. The appellants were among the purchasers. The appellants entered into the contract of sale with the respondents on 16 February 2005. The purchase price of the proposed lot was $50,000 and settlement was due on the issue of a certificate of title. The contract was on a standard form offer and acceptance approved by the Real Estate Institute of Western Australia. It expressly incorporated the 2002 Joint Form of General Conditions for the sale of Land. Clause 13.3 of the General Conditions provided (relevantly):(a)The Contract is also conditional on the following:(1)The Planning Commission endorsing approval of a Subdivision Plan within 6 months after approval by the Planning Commission for subdivision.(2)The Subdivision Plan being in order for dealing within 3 months after the endorsement of approval by the Planning Commission in accordance with subclause (1). Clause 13.7 provided (relevantly):(a)If:(1)Any condition specified in this clause is not satisfied within the time specified for satisfaction of that condition;…subclause (b) will apply.(a)Where subclause (a) applies, the following apply:(1)The Deposit, and any money paid by the Buyer under the Contract, must be promptly repaid to the Buyer;…(2)Subject to subclause (1) …no Party will have any claim or right against the other arising from the termination, except in respect to any matter which arose before the termination. The appellants plead that there were written variations to the contract of sale on two subsequent occasions. By a written agreement dated 12 July 2005, the period for the endorsement of Planning Commission approval under cl 13.3(a)(1) was extended from 6 months to 8 months and, by a written agreement dated 20 December 2005, the period was extended to 14 months (SOC, par 19). As it turned out, the Planning Commission's endorsement was not obtained within the extended time. On 25 May 2006, a letter dated 17 March 2006, signed by the first‑named respondent (Mr Schofield) and addressed 'To whom it may concern', was sent by Roy Weston to each of the purchasers of lots in the proposed subdivision, including the appellants. In the letter, Mr Schofield said that the Planning Commission had not endorsed its approval on the sub‑division plan within the time specified in the contract and accordingly the contract was at an end. He went on in the letter to say that: Upon further clarification from the [Planning Commission] we may re‑offer the lots in [the proposed subdivision] for sale in due course.

Ratio Decidendi

Legal Principle Established

In support of the contention that exhibit 4 was simply a proposal to enter into a fresh contract of sale, not a proposal to settle a dispute about the terminated contract, counsel for the appellants referred to JA McBeath Nominees Pty Ltd v Jenkins Development Corporation Pty Ltd [1992] 2 Qd R 121. It is necessary to turn to that case. In JA McBeath, the respondent was the lessee of certain premises in a shopping centre owned by the appellant. The respondent agreed to sell its business to a third party and sought the consent of the appellant to an assignment of the lease. The lease contained the usual term that such consent would not unreasonably be withheld. The appellant refused its consent on the ground that, in view of the third party's high level of borrowings, it considered the third party may not be able to operate the business, pay interest expenses and rental, and have a reasonable margin of profit. The respondent then informed the appellant that proceedings for a declaration that consent had unreasonably been withheld would be instituted unless consent was given by 5 pm the next day. Later on the same day a telephone conversation took place between the solicitors for the appellant and respondent. The appellant's solicitor stated at the outset that the conversation was 'without prejudice'. He then said that the appellant would consent to the assignment on the basis of an increase in the rent and changes to the rent review provisions. Those terms were not accepted and the respondent then commenced the threatened legal proceedings. At first instance, it was held that evidence of the offer put by the respondent in the telephone conversation was admissible in the proceedings. An appeal against that decision was, by a majority, dismissed. Macrossan CJ, in dissent, considered that the evidence was not admissible. His Honour considered that the privilege applied, the terms on which the appellant would consent to the assignment having been offered in the course of negotiations dealing with a demand that consent be given and against a threat to sue if it was not given. It was reasonable for the appellant to take the view that it would give consent for what it regarded as a financially risky assignee if it could negotiate an offsetting financial advantage. The views of the majority differed on this point. Ryan J considered that the appellant's terms were offered in the course of negotiations to resolve a dispute as to whether consent had unreasonably been withheld. They therefore fell within the rule excluding evidence of 'without prejudice' negotiations. However, his Honour concluded that the evidence was admissible because the appellant was attempting to mislead the court by asserting that it had refused consent for the reasons it gave initially, whereas the telephone conversation showed it had done so in order to obtain a collateral advantage outside the terms of the lease. Kelly SPJ, on the other hand, held that the evidence did not fall within the rule. His Honour considered that once the appellant had refused consent there was no dispute between the respondent and the appellant which remained unresolved and the subject of further negotiations. The telephone discussion was not entered into for the purpose of negotiating a settlement of a dispute between the respondent and the appellant but to propose a new lease on certain terms.