Slea Pty Ltd v Connective Services Pty Ltd
[2017] VSC 232
•4 May 2017
| IN THE SUPREME COURT OF VICTORIA AT MELBOURNE | Not Restricted |
COMMERCIAL COURT
COMMERCIAL LIST
S CI 2011 04332
| SLEA PTY LTD (ABN 16 081 276 811) | Plaintiff |
| v | |
| CONNECTIVE SERVICES PTY LTD (ACN 107 366 496) | First defendant |
| CONNECTIVE OSN PTY LTD (ACN 106 761 326) | Second defendant |
| MILLSAVE HOLDINGS PTY LTD (ACN 115 160 097) | Third defendant |
| CONNECTIVE GROUP PTY LTD (ACN 162 397 060) | Fourth defendant |
| CONNECTIVE BROKER SERVICES PTY LTD (ACN 161 731 111) | Fifth defendant |
| CONNECTIVE LENDER SERVICES PTY LTD (ACN 161 731 460) | Sixth defendant |
| CONNECTIVE FUNDER SERVICES PTY LTD (ACN 161 732 645) | Seventh defendant |
| CONNECTIVE GROUP IP HOLDINGS (NO 1) PTY LTD (ACN 165 282 084) | Eighth defendant |
| CONNECTIVE GROUP IP HOLDINGS (NO 2) PTY LTD (ACN 165 281 925) | Ninth defendant |
| MARK SEAMUS HARON | Tenth defendant |
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JUDGE: | ALMOND J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 8 December 2016 |
DATE OF RULING: | 4 May 2017 |
CASE MAY BE CITED AS: | Slea Pty Ltd v Connective Services Pty Ltd & Ors |
MEDIUM NEUTRAL CITATION: | [2017] VSC 232 |
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EVIDENCE – Exclusion of evidence of settlement negotiations – Evidence Act 2008 (Vic) ss 131(1)(a), 131(2)(g) – Statements made by solicitor at mediation – Whether statements made ‘in connection with an attempt to negotiate a settlement of the dispute’ – Objective or neutral facts – Whether statements necessary to contradict or qualify evidence that has been adduced that is likely to mislead the court.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M O’Bryan QC Ms K Foley | Arnold Bloch Leibler |
| For the First to second and fourth to ninth defendants | Mr A Myers QC Mr B Quinn QC Mr D Guidolin Mr E Gisonda | Quinn Emmanuel Urquhart & Sullivan |
| For the Third defendant | Mr S Hay | HWL Ebsworth |
| For the Tenth defendant | Mr W Forrester | Obst Legal |
HIS HONOUR:
Background
By summons filed 17 August 2016 in this proceeding (the oppression proceeding) the plaintiff, Slea Pty Ltd (Slea), seeks an advance ruling that evidence proposed to be adduced by the Connective company defendants (collectively, Connective) and contained in:
(a) paragraph 215 of the witness statement of Glenn Andrew Lees dated 16 May 2016;
(b) paragraph 64 of the witness statement of Graham Edward Maloney dated 13 May 2016; and
(c) paragraph 14 of the affidavit of Marcel John (Beau) Deleuil dated 13 June 2016,
is inadmissible.[1] Slea seeks consequential orders requiring excision of the relevant paragraphs.
[1]Pursuant to s 192A of the Evidence Act 2008 (Vic).
Slea contends that communications recorded in the above paragraphs were made between persons in dispute (in a separate proceeding) in connection with an attempt to negotiate a settlement of that dispute and, pursuant to ss 131 and 134 of the Evidence Act2008 (Vic) (Act), ought not to be permitted to be adduced in this proceeding or in related proceeding S ECI 2016 001168 (the pre-emptive rights proceeding).
In response, Connective contends that:
(a) the disputed communications were merely neutral or objective statements of fact not made in connection with an attempt to negotiate a settlement of the dispute, so cannot attract the protection of the privilege under s 131(1) of the Act; and
(b) even if the disputed communications do attract the statutory privilege, they ought to be admissible as an exception under s 131(2)(g) of the Act.
The disputed communications consist of three short statements made during a mediation of proceeding S CI 2011 2114 (the Haron proceeding). Many of the parties in this proceeding were parties in the Haron proceeding.[2]
[2]Slea, Millsave Pty Ltd, Mark Haron and first and second Connective company defendants were parties to the Haron proceeding, but the fourth to ninth Connective company defendants were not.
The trial of the Haron proceeding commenced before Judd J on 21 October 2016. On 22 October 2016, during the second day of the trial, Judd J referred the parties to mediation before Wood AsJ to commence at 12.15pm.[3] Shortly after his Honour’s referral the parties commenced mediating in rooms at the court with Wood AsJ acting as mediator. The parties mediated throughout the day until they were informed that the court would be shortly closing. The parties wished to continue to mediate their dispute and, as a consequence, relocated to the offices of Arnold Bloch Leibler to continue the mediation during the evening.[4] The proceeding was settled later that day at the offices of Arnold Bloch Leibler.
[3]Affidavit of Justin Taede Vaatstra sworn 17 August 2016, [63]; Affidavit of Justin Taede Vaatstra sworn 1 December 2016, [12]; T 103.22-24 of the transcript of the trial of the Haron proceeding before Judd J, set out at Exhibit JTV-1 to the affidavit of Justin Taede Vaatstra sworn 1 December 2016.
[4]Affidavit of Justin Taede Vaatstra sworn 1 December 2016, [13].
The impugned evidence was set out in the affidavit of Justin Taede Vaatstra sworn 1 December 2016 as follows:
7. Paragraph [215] of the G Lees Statement states:
On 22 October 2013, after opening submissions concluded, the Court ordered that the parties participate in a mediation. The mediation started at the Court and moved to Arnold Bloch Leibler’s offices later the same day. I believe that Sof was present throughout the negotiations at both locations. At one stage during the discussions at the offices of Arnold Bloch Leibler, Geoffrey Kozminsky (then a lawyer at that firm) said to all of those present in the room: “I need to ring my client for instructions”. I responded to Mr Kozminsky’s remark with words to the effect of “is Sof not here anymore?” and he said words to the effect of ”no he’s in the room next door”. I remember this exchange distinctly, because it confirmed the impression which I had formed by that time, that any conversation or discussion I had with Sof and/or Slea was effectively with Liberty, and that Sof was not really in control of Slea.
8. Paragraph [64] of the Maloney Statement states:
I met with the parties to the mediation at Arnold Bloch Leibler’s offices, where the terms of a potential settlement were being negotiated by those present. At some stage during those discussions, after I had arrived, Geoffrey Kozminsky from Arnold Bloch Leibler said words to the effect that he had to ring his client for instructions. I then heard Glenn say words to Geoffrey to the effect of “no he’s in the room next door”. I cannot recall whether I heard the entirety of this exchange myself, or whether an account of the words were relayed to me by someone else present. However, I clearly recall that I was aware of the substance of Geoffrey’s words while I was in the room on that day, and that it was the subject of discussion between everyone else present.”
9.Paragraph [14] of the Deleuil Affidavit quotes paragraph [215] of the G Lees Statement.[5]
[5]Affidavit of Justin Taede Vaatstra sworn 1 December 2016, [7]-[9].
Connective seeks to rely on the statements as evidence that the solicitor for Slea was receiving instructions from a person other than Slea. This is argued, in turn, to contradict earlier statements made by the representative for Slea that he would not have agreed to waive Slea’s pre-emptive rights at the mediation had he known certain information.[6]
[6]Witness statement of Sofianos Tsialtas dated 26 October 2015, [251].
The provisions of the Act
Section 131(1) of the Act provides:
131 Exclusion of evidence of settlement negotiations
(1) Evidence is not to be adduced of—
(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
(b)a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.
Section 131(2)(g) of the Act relevantly provides by way of exception:
(2) Subsection 1 does not apply if —
…
(g)evidence that has been adduced in the proceeding, or an inference from evidence that has been adduced in the proceeding, is likely to mislead the court unless evidence of the communication or document is adduced to contradict or to qualify that evidence.
Section 134 provides:
134 Inadmissibility of evidence that must not be adduced or given
Evidence that, because of this Part, must not be adduced or given in a proceeding is not admissible in the proceeding.
For present purposes it is not contested that the disputed communications constitute ‘communications’ for the purposes of s 131(1)(a), or that those communications were made ‘between persons in dispute’.[7]
[7]T 89.9-11.
Matters for determination
The two matters for determination by the court are:
(a) whether the disputed communications were made ‘in connection with an attempt to negotiate a settlement of the dispute’; and, if so
(b) whether evidence (which will be adduced in the proceeding) is likely to mislead the court unless evidence of the disputed communications is adduced to contradict or qualify that evidence.
Question one: were the disputed communications made ‘in connection with an attempt to negotiate a settlement of the dispute’ such that the s 131(1)(a) privilege attaches to the disputed communications?
Slea’s submissions
Slea submits that the disputed communications were made in connection with an attempt to negotiate a settlement of the dispute in light of the following contextual factors:
(a) the statements were made at a court-ordered mediation;
(b) the solicitor in question was in attendance and made the statements in a professional capacity as a solicitor for one of the parties to the dispute;
(c) the solicitor made the statements in the course of the settlement negotiations (i.e. not during a break or afterwards); and
(d) the content of the statements was connected to the mediation (concerning the need to obtain instructions).[8]
[8]Slea’s submissions on its objections to evidence of without prejudice discussions dated 6 December 2016, [7].
Further, Slea submits that the words ‘in connection with an attempt to negotiate a settlement of the dispute’ are of very broad import and reflect, at the very least, the common law position that statements are required to be ‘reasonably incidental to’ or ‘directly connected to’ the negotiations.[9] Slea says that the test however framed is satisfied by reference to the above facts.
[9]Ibid, citing Field v Commissioner for Railways (NSW) (1955) 99 CLR 285, 291, 292-293 (‘Field’); Biovision 220 Pty Ltd v CGU Insurance Ltd [2010] VSC 589, [32]-[35]; see also [38].
Connective’s submissions
Connective makes several inter-related submissions.
As a starting point, Connective submits that s 131(1)(a) does not contain the words ‘mediation’ or ‘meeting’ or ‘process’ but refers exclusively to communications made in connection with an attempt to negotiate a settlement.[10] Connective says the correct approach is therefore not to consider the occasion at which the statement is made but the quality of the statement itself, and that the court must examine each statement on its own merits and consider whether the particular communication had the necessary connection to negotiation of the settlement in order to enjoy the benefit of the privilege.[11]
[10]T 105-106.
[11]T 103.29-104.1; T 104.6-8; T 105.31-106.3.
Next, Connective submits that although the test imported by s 131(1)(a) may be broader than that of the common law, it does not protect everything said or done at a mediation. Connective says the provision does not protect communications in the nature of ‘neutral statements of fact’ or ‘objective facts’;[12] for example, the fact that the mediation occurred, the location of the mediation or who was present.[13] In this regard, Connective relies on Field to support the proposition that objective facts ascertained during the course of negotiations are not covered by the privilege.[14] Connective says the disputed communications are merely objective statements of fact that do not contain an offer or concession, reveal instructions, suggest a method of compromising the dispute or refer to the relevant subject matter of the dispute.[15] Connective also says there is no evidence of the stage at which the statements were made, why they were made or the impact or consequence of the statements. For these reasons, it is submitted that the statements cannot be connected with any attempt to settle a dispute.
[12]Connective companies’ submissions on objections to evidence dated 7 December 2016, [10], [12] (Connective submissions).
[13]T 102.8-26; Field (1955) 99 CLR 285, 291; Connective submissions, [10].
[14]Field (1955) 99 CLR 285, 291.
[15]Connective submissions, [10].
Further, Connective submits that any connection the disputed communications have with negotiation of a settlement must relate to settlement of the dispute in respect of which the mediation is taking place.[16] Connective says that the purpose of the Act is to encourage free and frank discussions on the issues in the case the subject of the dispute, not issues that arise at large.[17] In this regard, Connective says that to the extent the disputed communications do have any probative value, such value only exists in respect of the oppression proceeding, not the Haron proceeding, and that the statements are entirely innocuous in the context of the Haron proceeding.[18]
[16]Ibid [12], citing s 24A of the Supreme Court Act 1986 (Vic).
[17]T 110.2-13.
[18]T 103.20-24; T 104.11-15; T 109.11-110.17; Connective submissions [13].
Disposition
I am satisfied that the disputed communications were made ‘in connection with an attempt to negotiate a settlement of the dispute’ and therefore attract the operation of s 131(1)(a).
In my view, the content of the disputed communications in the context in which they were made leads inescapably to this conclusion. The disputed communications were made by a solicitor representing a party at a court-ordered mediation. The relevant paragraphs of the witness statement, particularly paragraph [64] of the Maloney statement, indicate that they were made whilst the parties were still engaged in negotiating the terms of a potential settlement and during settlement discussions. I infer that a substantive matter was raised by representatives for Connective during the settlement discussions because the matter required the solicitor for Slea to take instructions. Had the matter merely concerned a ‘neutral statement of fact’ or ‘objective facts’ such as the fact that the mediation occurred, the location of the mediation or who was present or, as counsel for Connective suggested, ‘I would like to have a cup of tea now’,[19] the solicitor would not have needed to take instructions. These contextual matters considered in conjunction with the words allegedly spoken sufficiently demonstrate that the disputed communications were made in connection with an attempt to negotiate a settlement of the dispute. The words ‘in connection with’ are to be construed broadly.[20]
[19]T 103.2-4.
[20]First Capital Partners Pty Ltd v Sylvatech Ltd (2004) 186 FLR 266, 271-2; Biovision 2020 Pty Ltd v CGU Insurance Ltd [2010] VSC 589, [38].
The proposition as stated in Field is confined to objective facts and is not apposite here. In this case, the alleged statements are neither objective nor neutral statements of fact. They comprise communications which include qualitative and subjective elements, such as the solicitor’s perception that he needed to take instructions (arising from something which had arisen during the settlement discussions) and the solicitor’s subjective belief as to the whereabouts of an attendee for the Slea interests at the mediation.
Connective submits through its counsel that ‘of course [the solicitor] needed to obtain instructions’ and ‘couldn’t have done anything… without instructions’.[21] So stated, the proposition is trite. But the fact that obtaining instructions was a necessary step does not determine the question of characterisation, namely whether the statements were communications made in connection with an attempt to negotiate a settlement of the dispute.
[21]T 102.27-31.
Nor does it necessarily matter that the relevant statements are about or may include statements of (purported) fact or statements of an innocuous kind, provided they answer the description of a ‘communication made in connection with an attempt to negotiate a settlement of the dispute’ as required by s 131(1)(a).
It is important to emphasise that these sections of the Act further the public interest that parties engaged in an attempt to compromise litigation (for example, at a mediation) feel free to communicate openly and honestly with one other without the risk of subsequent embarrassment or liability.[22] To overly dissect or disaggregate statements made at a mediation to determine whether particular statements were made in connection with an attempt to negotiate a settlement would undermine this purpose. This case is an example where context is crucial to the analysis.[23]
[22]Field (1955) 99 CLR 285, 291; Humphreys v Humphreys [2016] VSC 637, [63].
[23]Biovision 2020 Pty Ltd v CGU Insurance Ltd [2010] VSC 589, [49].
I also do not accept that s 131(1)(a) of the Act confines the prohibition on adducing evidence to the proceeding in which the attempt to negotiate settlement of the dispute occurred. There are several reasons for this.
First, had the legislature intended to confine the prohibition to the proceeding in which the attempt to negotiate settlement of the dispute occurred, one would expect the opening words of the section would confine the reach of the prohibition to that proceeding.[24]
[24]E.g. s 24A of the Supreme Court Act 1986 (Vic) is expressly confined to ‘the proceeding’.
Second, it is implicit from the s 131(2)(a) exclusion (which contemplates that the consent of all of the persons in dispute is required if the evidence of such communications is to be used in another Australian or overseas proceeding) that the s 131(1) protection is not confined to the proceeding in which the attempt to negotiate settlement of the dispute occurred.[25]
[25]See also the exclusion under s 131(2)(f).
Third, if it were otherwise, the protection for such communications could be easily circumvented by the commencement of new proceedings.
For all of these reasons, I am satisfied that the disputed communications engage s 131(1)(a) and s 134 of the Act. Evidence of the disputed communications is not admissible and is not to be adduced in either the pre-emptive rights proceeding or the oppression proceeding unless an exclusion under s 131(2) applies.
Question two: Is evidence before the court likely to mislead the court in the absence of evidence of the disputed communications?
In this proceeding, Sofianos Tsialtas (on behalf of Slea) proposes to give evidence that he would not have agreed to waive Slea’s pre-emptive rights at the mediation of the Haron proceeding had he known certain matters at the time.[26]
[26]Amended statement of claim dated 1 July 2014, [64]-[65]; Reply dated 8 December 2014, [6]; Witness statement of Sofianos Tsialtas dated 26 October 2015, [247], [251].
Relevantly, the witness statement of Mr Tsialtas states:
247When the Settlement Deed was agreed, I understood that the Connective Companies still owned and controlled the Connective Business. At this time, no one told me the purpose of the recent incorporation of subsidiaries as required by court order. I therefore also understood that Slea would continue to hold a 33 1/3 % interest in the Connective Business, as it had since the establishment of the Connective Companies and that a new investor would need to comply with the pre-emptive rights regime in the Connective Companies’ constitutions….
…
249At no stage was I told of the objectives of the new subsidiaries or of the purpose behind their incorporation. I was not aware that this was part of a corporate restructure that involved the transfer of the Connective Business. I was entirely unaware at the time of the settlement that the Connective Companies had agreed to sell, or were negotiating to sell, a substantial interest in the Connective Business to Macquarie notwithstanding the order of the Honourable Associate Justice Daly on 20 February 2013 that required discovery by Mr Haron and the Connective Companies and production by Glenn and Murray Lees and Millsave of documents relating to the actual or possible sale of the Connective Companies.
250I was given no reason to suspect that, without my knowledge, steps had been taken to restructure the Connective Business or sell an interest in it to Macquarie…
251Had I been aware of the details of the restructure of the Connective Companies or any proposed or actual sale of any shares in the Connective group of companies or any part of Connective’s business to Macquarie, I would not have agreed to waive Slea’s pre-emptive rights in respect of the transfer of shares from Millsave to Mr Haron…
Connective submits that:
(a) implicit in Mr Tsialtas’ proposed evidence is the assumption that Mr Tsialtas is the person who made the decision (on behalf of Slea) whether to waive Slea’s pre-emptive rights in settlement of the Haron proceeding, and that his knowledge was relevant to whether the Haron proceeding would be settled;
(b) Mr Tsialtas’ proposed evidence is likely to mislead the court as to the identity of the relevant decision-maker in the Haron proceeding and the relevance of Mr Tsialtas’ knowledge; and
(c) the disputed communications will prove that Mr Tsialtas was not the relevant decision-maker in the Haron proceeding, and the disputed communications should therefore be adduced (in order to contradict or qualify evidence to the contrary).[27]
[27]Connective submissions [15]; T 113.29-114.28.
Slea submits that in this case there is too great a disconnect between Mr Tsialtas’ proposed evidence and the disputed communications.[28] Slea says the notion that Mr Tsialtas was not the relevant decision-maker is simply a ‘case theory’ or a ‘submission’ that Connective wishes to advance, and that s 131(2)(g) does not allow a party to rely on a communication made in settlement negotiations just because it might bolster a case theory.[29] Slea submits the court cannot be misled by Mr Tsialtas’ (proposed) evidence because the evidence merely concerns Mr Tsialtas’ account of what he would have done i.e. whether he would have agreed to waive Slea’s pre-emptive rights had he known of particular matters, and the disputed communications do not bear on that issue.[30] Further, Slea submits the evidence upon which Connective wishes to rely is not sufficient to demonstrate that the evidence that Mr Tsialtas proposes to give is likely to mislead the court.[31]
[28]T 98.23-31.
[29]T 98.2-11.
[30]T 98.17-22.
[31]T 98.12-22.
In Galafassi v Kelly,[32] Gleeson JA (Bathurst CJ and Ward JA agreeing) helpfully distilled the authorities on s 131(2)(g) including reference to varying views which have been expressed as to the breadth of the section. His Honour said:
[32](2014) 87 NSWLR 119 (‘Galafassi’).
Section 131(2)(g) applies where the Court would be likely to be misled as to the existence or contents of an excluded communication or document, where those matters are in issue in the proceedings: Barrett Property at [52], citing Brown v Commissioner of Taxation[2001] FCA 596; (2001) 187 ALR 714 at [184]- [185] per Emmett J.
Varying views have been expressed as to the breadth of s 131(2)(g). In Brown Emmett J at [183] rejected a broad construction that s 131(2)(g) applies where the evidence sought to be adduced simply contradicts or qualifies evidence that has already been adduced. Emmett J gave a brief exposition of the effect of s 131(2)(g) and at [185] said:
“... However, I consider that it will not be attracted simply because evidence to which s 131(1) applies contradicts or qualifies evidence that has already been adduced. Section 131(2)(g) will apply where the court would be likely to be misled as to the existence or contents of an excluded communication or document, where those matters are in issue in the proceeding. ...”;
In Mulkearns v Chandos Developments Pty Ltd (No 4) [2005] NSWSC 511 at [66]- [67] Young CJ in Eq referred to the brief exposition of Emmett J in Brown and held, in relation to a claim by a purchaser for a return of the deposit, that a without prejudice offer made by the vendor to the purchaser in full settlement of the dispute was admissible because unless this additional fact was permitted into evidence, the purchaser may mislead the Court into thinking their case is one against a greedy vendor who would not give an inch, and this would be a factor to go to the court’s discretion.
Subsequently this Court in Nader v Sutherland Shire Council[2008] NSWCA 265 at [50]- [52] per Young CJ in Eq (Beazley JA and Sackville AJA agreeing) noted that a prime example of a situation where, if the evidence were not admitted, other material before the Court was likely to mislead the Court, was provided by Kinsella J in McFadden v Snow (1952) 69 WN (NSW) 8 at 10, where it was put that a tenant had not replied to a letter sent by the landlord. There had in fact been a reply, but in a without prejudice letter. His Honour held that if the without prejudice letter were not admitted it would mislead the Court into thinking that there had been no reply to the landlord’s letter and thus an implied admission. At [51] Young CJ in Eq said that to qualify under the exception in s 131(2)(g) the relevant material must be presented where otherwise the Court is likely to be misled by the existing evidence.
In Barrett Property at [52]-[55], Bromberg J reviewed the authorities including Brown and Mulkearns, but not Nader v Sutherland Shire Council. His Honour agreed with the analysis of Emmett J at [185] in Brown in preference to a number of first-instance decisions in New South Wales including Mulkearns, which his Honour considered had adopted a broader construction of s 131(2)(g) than applied in Brown. Subsequent first instance decisions in New South Wales have followed the approach in Brown: see Atlas Financial International Ltd v Nortbale Pty Ltd [2011] NSWSC 815 at [85] per Einstein J; Payne v Rowe [2012] NSWSC 685 at [45] per Ball J.
It is unnecessary to consider whether the approach of Emmett J in Brown is in reality narrower than the approach in Mulkearns and Nader v Sutherland Shire Council. In the present case the two emails do not merely contradict or qualify evidence that had already been adduced by the Vendor relating to the Purchasers’ conduct prior to the institution of the proceedings.[33]
[33]Ibid 147-148 [135]-[140].
Galafassi concerned a contract for sale of a property. On the date of settlement under the contract, the purchasers indicated to the vendor that they did not have sufficient funds to complete. Several weeks later, the vendor commenced proceedings seeking an order for specific performance of the contract (i.e. the vendor initially elected to affirm the contract). The purchasers sent emails to the vendor in which they expressed a hope that the proceeding could be resolved without mediation. The vendor subsequently sought to terminate the contract. An issue arose as to whether there had been any further repudiatory conduct by the purchasers after the commencement of the proceedings.
Gleeson JA held that unless the emails were admitted into evidence, the court would likely be misled into thinking there had been no further repudiatory conduct by the purchasers after the commencement of the proceedings.[34]
[34]Galafassi (2014) 87 NSWLR 119, 148. Neither the court at first instance nor the Court of Appeal held that the emails attracted the privilege. However, considering the alternative, the courts (both at first instance and on appeal) held that the exception in s 131(1)(g) would have applied.
Both Galafassi and McFadden v Snow (to which reference is made in the passage quoted above) clearly illustrate situations which s 131(2)(g) is intended to address.
For present purposes, I have before me the proposed evidence in Mr Tsialtas’ witness statement and the disputed communications upon which Connective seeks to rely to further a contention that a party other than Mr Tsialtas was directing Slea’s decisions. I am not satisfied on the basis of this material that the disputed communications will contradict or qualify the evidence proposed to be given by Mr Tsialtas or that the evidence proposed to be given by Mr Tsialtas is likely to mislead the court unless evidence of the disputed communications is adduced. In my view, the s 131(2)(g) exception (which would allow evidence of the disputed communications to be adduced) does not apply.
Connective’s submission is put at its highest in its written submissions (that the disputed communications will prove that Mr Tsialtas was not the relevant decision maker in the Haron proceeding) and less emphatically in oral submissions (that the evidence will contradict the position that Mr Tsialtas was in control of Slea when it entered into the settlement agreement and agreed to waive Slea’s pre-emptive rights).[35]
[35]T 114.22-27.
The relevant paragraphs of the Tsialtas’ witness statement consist of evidence of Mr Tsialtas’ state of knowledge and understanding at a point in time (at the time the settlement deed was agreed), and an expression of belief that he would not have agreed to waive Slea’s pre-emptive rights had he been aware of the details of the restructure of the Connective companies or any proposed or actual sale of any shares in the Connective companies or any part of Connective’s business to Macquarie.
The statements alleged to have been made by the solicitor to another party at the mediation do not contradict or qualify Mr Tsialtas’ expressed state of knowledge and understanding at the relevant time, or his expressed belief. Mr Tsialtas does not purport to say that he was the only person involved in the decision making at the relevant time.
As a director of Slea at all relevant times,[36] Mr Tsialtas would be expected to be involved in the decision making on behalf of Slea. If he was the sole director at the relevant time,[37] he would had to have been involved in the decision making.
[36]Amended statement of claim dated 1 July 2014 [3N(a)]; Defence to the amended statement of claim dated 4 September 2014 [3N(a)].
[37]Witness statement of Sofianos Tsialtas dated 26 October 2015, [1].
Nothing the solicitor allegedly said establishes that Mr Tsialtas was not a relevant decision maker. A possible inference is not sufficient to contradict or qualify Mr Tsialtas’ evidence. I accept Slea’s submission to the effect that Connective’s submission appears to be a contention based on a case theory. If and to the extent that it is a case theory, I express no opinion on its merit at this stage.
Further, I am not satisfied that Mr Tsialtas’ proposed evidence is likely to mislead the court unless evidence of the disputed communications is adduced to qualify or contradict it. There was some discussion by counsel from both sides as to whether a narrow or broad approach to s 131(2)(g) ought to be taken.[38] It is not necessary to resolve this issue for the purposes of this application, though my preference is for the view of Emmett J in Brown that the exclusion will not be attracted simply because evidence to which s 131(1) applies contradicts or qualifies evidence that has already been adduced (or, in this case, is proposed to be adduced). On the present facts, the outcome would be the same whether a narrow or broad approach is taken, as Connective fails to establish that the disputed communications contradict or qualify the proposed evidence of Mr Tsialtas.
[38]Brown v Commissioner of Taxation (2001) 187 ALR 714 (‘Brown’). Cf Mulkearns v Chandos Developments Pty Ltd (No 4) [2005] NSWSC 511; Nader v Sutherland Shire Council [2008] NSWCA 265. See also Galafassi (2014) 87 NSWLR 119, 147-148 [135]-[141].
Conclusion
For the reasons given above, I will grant the relief sought by Slea in paragraph 3 of its summons of 17 August 2016. I am satisfied that:
(i) paragraph 215 of the witness statement of Glenn Andrew Lees dated 16 May 2016;
(ii) paragraph 64 of the witness statement of Graham Edward Maloney dated 13 May 2016; and
(iii) paragraph 14 of the affidavit of Marcel John (Beau) Deleuil dated 13 June 2016,
are inadmissible. I propose to make the consequential orders sought in the summons.
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