Settlement Negotiations Privilege
Settlement negotiations privilege means that communications made for the purpose of reaching a settlement cannot be admitted as evidence: s 131 of the Evidence Act 1995 (NSW).
- The question is whether the communication was ancillary enough to the settlement negotiations that it was protected: Field v Commissioner for Railways
- Exceptions detailed in s 131.
- Privilege may be waived by agreement of the parties.
- No judicial discretion to determine whether privilege attaches to documents.
- Communications during court-annexed mediation given an extra protection: s 30 of the CPA:
This topic is within Resolving Civil Disputes.
Dorne Boniface, Miiko Kumar and Michael Legg, Principles of Civil Procedure in NSW (2d ed 2012) Thomson Reuters, [13.370]-[13.410].
 Settlement negotiations privilege protects all communications between parties which were made for the purpose of settling a dispute (similarly to client legal privilege. It is given legislative force in s 131 of the Evidence Act 1995 (NSW).
- There are a long list of exceptions to the rule in s 131.
- The parties may consent for waive settlement negotiations privilege.
- There is no judicial discretion to determine whether privilege attaches to documents.
The idea behind settlement negotiations privilege is similar to the idea behind client legal privilege - to allow parties to explore avenues of settlement freely without worrying about effectively incurring liability as a result of the discussions.
Settlement negotiations privilege was discussed in Field v Commissioner for Railways:
- Facts: the plaintiff was injured while disembarking from a train. He claimed the train suddenly started moving when he was disembarking, causing his injury, whilst the defendant claimed that he began disembarking when the train was already moving. During the dispute, the defendant attempted to negotiate a settlement, and got the plaintiff to attend a doctor, who later testified that the plaintiff admitted to disembarking when the train was moving. The plaintiff argued that the testimony was prohibited because it was a part of settlement negotiations and thus protected.
- Held: settlement negotiation privilege is directed against express or implied admissions, it is not concerned with objective facts which may be ascertained during the course of negotiations. In addition, it depends on what formed part of settlement negotiations, and not expectations of parties.
- The question in this case was whether the admission was ancillary enough to the settlement negotiations that it was protected. In this case, it would be too much to say that it was ancillary to the settlement negotiations - there was no real connection between that admission to the settlement of the action.
And also in Azzi & Ors v Volvo Car Australia, which also dealt with mediation communications:
- Facts: the plaintiff sued the defendant but lost, and an ordinary costs order was given. The defendant sought costs on an indemnity basis because the plaintiff refused a settlement offer which was made during mediation. The plaintiff alleged that the evidence was protected by settlement privilege even as to costs. The defendant claimed that an exception is made under s 131 (2) (h) of the Evidence Act for purposes of costs.
- Held: evidence of offers made at mediation not admissible by law, even to determine issue of costs.
- Exception in s 131 (2) (h) does not mean that every offer of settlement is admissible for the purposes of costs - it simply removes the bar set by s 131 (1). The bar set by s 30 (4) of the CPA remains intact.
- In addition, mediation is not the same as a Calderbank offer and in this case in particular, there was no genuine offer and no real attempt to compromise. The evidence was inadmissible and costs are awarded on an ordinary basis.
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BKL refers to Dorne Boniface, Miiko Kumar and Michael Legg, Principles of Civil Procedure in NSW (2d ed 2012) Thomson Reuters.
FDR refers to Michael Legg (ed), The Future of Dispute Resolution (2013) LexisNexis.