Azmin Firoz Daya v CX Reinsurance Company Limited [2012] NSWSC 1621

The witness has been asked a question as to her state of mind on a date in 2005. For present purposes, I assume that the basis for the question is sourced in a communication made between the parties in the course of making arrangements for a mediation between them, expressly on the basis that it was for the purposes of the mediation

Ruling 2

7

Although it may be that, in the events that preceded it, the letter of 20 September 2005, VD 104, might be susceptible of a different construction, I proceed on the basis that it was intended to, and in effect did communicate, an intention that the statement in question be without prejudice for the purposes of the mediation only. In my view, the effect of such a caveat is that the statement, that is the document, cannot be used, both pursuant to Evidence Act, s 131, and pursuant to the Civil Procedure Act,because of the context in which it was delivered.

8

But there is a distinction between the statement itself and information or knowledge gained from it. It is unrealistic to expect that lawyers acting for parties in a mediation or settlement negotiations exclude from their minds, or could exclude from their minds, for the purpose of the conduct of the proceedings generally, what they learn in the course of those negotiations. What transpires in those negotiations is privileged and cannot be revealed, at least without consent, but that is a different concept from saying that knowledge gained as a result of them cannot be used. Indeed, mediations are not infrequently embarked on by some parties for the purpose, inter alia, of learning more about their opponent's case, even though the communications that provide the information cannot later be used. This is consistent with the position at common law, that evidence of what a doctor observes during a medical examination is not privileged, even though the medical examination itself was undertaken in connection with an attempt to negotiate a settlement of the dispute between the plaintiff and the defendant [Field v Commissioner for Railways for New South Wales [1957] 99 CLR 285, 291; and, under the Evidence Act, Airtourer Co-operative Ltd v Millicer Aircraft Industries Pty Ltd[2004] FCA 948, in which Justice Beaumont held that a statement by a party to the effect that, because it was insolvent, it could not even consider settlement, was not privileged, because it was not an admission but an objective fact ascertained during the course of negotiations].

9

It seems to me that, although the source of the knowledge that underlies the present question was apparently a privileged communication, that does not preclude lawyers from using that knowledge in the subsequent conduct of the proceedings, even though it precludes them from using the communication in question.

10

In my judgment, the question should be allowed.