Watson & Co Superannuation Pty Ltd v Dixon Advisory and Superannuation Services Ltd (No 3)

In the case of Watson & Co Superannuation Pty Ltd v Dixon Advisory and Superannuation Services Ltd (No 3), the primary dispute involved an application for the production of documents used in connection with mediation. The Federal Court was tasked with determining whether it was necessary and appropriate to order the production of documents that bore on whether the settlement of the litigation was fair and reasonable. The applicant, Watson, sought to adduce without prejudice communications and financial information that had been provided during the mediation process. The respondent, Dixon Advisory and Superannuation Services Ltd, objected to the admissibility of these communications, arguing they were protected under the settlement privilege provisions of the Evidence Act 1995 (Cth) and the Federal Court of Australia Act 1976 (Cth).

The court examined the legal issues surrounding the admissibility of the communications made during mediation and the duty to participate in mediation in good faith. It concluded that the evidence sought by Watson was excluded from admissibility by s 131(1) of the Evidence Act and s 53B of the Federal Court of Australia Act. The court rejected the adduction of the evidence as it would have amounted to a disclosure of communications made during the mediation, contrary to the prohibition in s 53B. The court also noted that even if the evidence was admissible, it would have exercised its discretion to exclude it on the grounds of unfairness to the party opposing the application.

Given the bona fide dispute between the parties about the financial information provided during the mediation, the court found no real need to receive the evidence at that point in time. It dismissed the interlocutory application and decided to reserve the issue of costs for consideration at the hearing of any settlement approval application or at the conclusion of the proceeding. The court also ordered that the mediation be reconvened and concluded only when the mediator reported that it had no realistic prospects of success.