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  4. Village/Nine Network Restaurants & Bars Pty Ltd v Mercantile Mutual Custodians Pty Ltd - [1999] QCA 276

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Village/Nine Network Restaurants & Bars Pty Ltd v Mercantile Mutual Custodians Pty Ltd[1999] QCA 276

Reported at [2001] 1 Qd R 276

Village/Nine Network Restaurants & Bars Pty Ltd v Mercantile Mutual Custodians Pty Ltd[1999] QCA 276

Reported at [2001] 1 Qd R 276

 

IN THE COURT OF APPEAL

 

SUPREME COURT OF QUEENSLAND

 

Appeal No. 9315 of 1998

 

Brisbane

 

BETWEEN: 

MERCANTILE MUTUAL CUSTODIANS

PTY LTD  (ACN 008 508 496)

(Plaintiff) Respondent

 

AND:

VILLAGE/NINE NETWORK RESTAURANTS

& BARS PTY LTD (ACN  061 400 799)

(First Defendant) First Appellant

 

AND:

VILLAGE ROADSHOW LIMITED

(ACN 010 672 054)

(Second Defendant) Second Appellant

 

AND:

PUBLISHING AND BROADCASTING LIMITED

(formerly NINE NETWORK AUSTRALIA LIMITED)

(ACN 009 071 167)

(Third Defendant) Third Appellant

 

 

 

McMurdo P

Pincus JA

Byrne J

 

 

Judgment delivered 12 October 1999

 

Separate reasons for judgment of each member of the Court, each concurring as to the order made

 

 

APPEAL DISMISSED WITH COSTS

 

 

CATCHWORDS:

PRACTICE - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OF DOCUMENTS - PRODUCTION AND INSPECTION - GROUNDS FOR RESISTING PRODUCTION - OTHER GROUNDS - without prejudice privilege - application by A against B for disclosure of documents in mediation between B and C - whether documents protected against disclosure by without prejudice privilege - scope of privilege - validity of distinction between admissions and assertions - whether privilege available against third party - whether documents sought relevant to issues raised in suit between A and B

Barden v Barden (1921) 21 SR(NSW) 588

Compagnie Financiere du Pacifique v Peruvian Guano Co (1882) 11 QBD 55

Field v Commissioner for Railways (NSW) (1957) 99 CLR 285 Harrington v Lowe (1996) 190 CLR 311

Hong Kong Bank of Australia Ltd v Murphy (1992) 28 NSWLR 512

Permanent Finance Corporation Limited v Europacific (Plant Hire) Pty Ltd (No 2) [1971] Qd R 302

Rabin v Mendoza & Co [1954] 1 WLR 271

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

Tenstat Pty Ltd v Permanent Trustee Aust Ltd (1992) 28 NSWLR 625

Waldridge v Kennison (1794) 1 Esp 143;  170 ER 306

Supreme Court Rules,  O 35, r 4(1)(b)

Uniform Civil Procedure Rules,  rr 5 and 211(1)(b)

Counsel:

Mr S K Wilson QC and Miss C F McMillan for the first, second and third appellants

Mr D J S Jackson QC and Mr P Freeburn for the respondent

Solicitors:

Herbert Geer & Rundle for the first, second and third appellants

R W T Mann & Partners for the respondent

Hearing Date:

2 August 1999

 

  1. McMURDO P: I have read the reasons for judgment of Pincus JA and agree that the appeal should be dismissed with costs for the reasons he has given.
  2. I have also read the reasons for judgment of Byrne J and wish to note my general agreement with those reasons.
  3. PINCUS JA: This is an appeal from an order made by Moynihan J dismissing an application for disclosure of documents. The documents of which disclosure was sought were generated for the purposes of a mediation conducted by Mr K Hinds which resulted in settlement of a dispute between the respondent which is the plaintiff in this action ("Mercantile Mutual") and a company called Concrete Constructions Group Pty Ltd; the mediation produced a settlement of the dispute. The issues raised before this Court were the extent to which the documents I have mentioned were protected on the basis that they came into existence for the purpose of "without prejudice" discussions to settle a dispute and, secondly, whether the documents sought are relevant to the issues raised in this suit.
  4. In 1994 Mercantile Mutual made an agreement with the first defendant in the suit, now the first appellant ("Village/Nine Network") under which Village/Nine Network was to take a lease of part of the Queen Adelaide Building in central Brisbane. Under the agreement work was to be done on that building for Mercantile Mutual, and Village/Nine Network was ultimately to take a lease of a substantial part of the building from Mercantile Mutual. On 16 February 1996 Mercantile Mutual purported to rescind the agreement and shortly after that brought the action in which this question of disclosure is raised. It sued Village/Nine Network and also sued the second and third appellants, as guarantors. Mercantile Mutual's case is that it was entitled to rescind the agreement because of a prior repudiation by Village/Nine Network and it has pleaded that as a result of that repudiation it suffered loss, flowing from the failure of Village/Nine Network to take a lease as the agreement contemplated. It appears that that alleged loss consists principally in the difference between the rental Mercantile Mutual would have received under the lease to Village/Nine Network and the rental it has received and will receive from substitute tenants. Further, the plaintiff says it is entitled under the agreement to "differential costs of construction", being extra building costs incurred by Mercantile Mutual as a result of the failure of Village/Nine Network to carry out the agreement. Concrete Constructions Group Pty Ltd had contracted with Mercantile Mutual to do work on the Queen Adelaide Building being that contemplated by Mercantile Mutual's contract with Village/Nine Network.
  5. The mediation to which I have referred had to do with payment for that work and dealt, according to an affidavit of Mr R W T Mann dated 21 July 1999, with issues set out in certain documents identified in that affidavit. It was suggested in argument on behalf of the appellants that perhaps there are documents in existence identifying the mediation issues, other than those mentioned in Mr Mann's affidavit, but the deponent swears in para 6 of that affidavit that the documents referred to in it describe the issues the subject of the mediation. There being no reason advanced to reject what Mr Mann says, the appeal must be decided on the basis that all the documents describing the issues in the mediation are set out in Mr Mann's affidavit and more particularly in Exhibit RWTM 4 to that affidavit. That exhibit consists of copies of the relevant documents.
  6. As I have explained, there were two questions argued before us, one being relevance and the other the "without prejudice" point. The matter was argued below on the foundation that only the "without prejudice" point would be decided, the question of relevance being left to be decided, if necessary, later. But before us Mr D J S Jackson QC, who led Mr Freeburn for the respondent, made submissions on the question of relevance and they were answered in the reply of Mr S K Wilson QC, who led Ms McMillan, for the appellants. It was contended for the appellants that further discovery might well bring to light documents other than those identified by Mr Mann's affidavit, evidencing the scope of the mediation. However, the affidavit is sufficient answer to that contention. Mr Wilson also argued that there might be other documents, among those used in the mediation process, which would assist the Village/Nine Network case.
  7. At the time of the hearing below the scope of disclosure was governed, so far as relevance is concerned, by O 35 r 4(1)(b) of the Supreme Court Rules which restricted disclosure to documents "directly relevant to an allegation in issue in the cause"; that was so because the writ was issued after 1 May 1994. Rule 211(1)(b) of the Uniform Civil Procedure Rules 1999 makes provision to the same effect as O 35 r 4(1)(b). The law in this State differs from that laid down by Brett LJ in Compagnie Financiere du Pacifique v Peruvian Guano Co (1882) 11 QBD 55, in that if a document is not "directly relevant" to an allegation in issue it need not be disclosed. It is not enough, to justify an order for disclosure, to hold the opinion that "it is reasonable to suppose [that the document] contains information which may - not which must - either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary". Nor, if a document sought is not directly relevant to an allegation in issue, does it matter whether or not it "is a document which may fairly lead [the party requiring discovery] to a train of inquiry, which may have either of these two consequences": see per Brett LJ at 63.
  8. No doubt this deliberate narrowing of the obligation to provide disclosure makes it all the more important that practitioners and their clients earnestly fulfill their obligations under the rules relating to the topic; but drawing attention, as Mr Wilson does, to a chance that a particular category of undisclosed documents may help one side's case will not necessarily provide a basis for an order for further disclosure.
  9. Mr Wilson argued that the undisclosed mediation documents might reveal how the amount agreed to be paid by Mercantile Mutual under the settlement, $1.8M, was arrived at. He said that by this means the appellants could be placed in a position to raise valid arguments about the damages claimed, either to show that the sums claimed in this suit include amounts which have, by a set-off, already been recovered by Mercantile Mutual, or to assist the appellant's case with respect to mitigation of loss. As to the former point, it would not accord with the practice of the Court to make an order for further disclosure merely because of the possibility that the disclosure already made is insufficient. As to the latter, it is pointed out on behalf of the respondent that the particulars delivered by the appellants relating to failure to mitigate loss include no allegation that the respondent was at fault in respect of its dealings with Concrete Constructions.
  10. Mr Wilson argued further, more generally, that the mediation process might well have produced documents containing assertions of fact which could assist the cause of the appellants. No doubt that is so; a mediation document could possibly record that the respondent put forward a proposition inconsistent with, or difficult to reconcile with, one advanced by it in the present action. But this suggestion is not enough, in my view, to show relevance. The former inflexible approach to applications for further discovery (see Permanent Finance Corporation Limited v Europacific (Plant Hire) Pty Ltd (No 2) [1971] Qd R 302 at 315) is no longer necessarily appropriate, under the current disclosure system, and because of the notions expressed in r 5 of the Uniform Civil Procedure Rules. If it appeared, for example, that an order for further disclosure would be likely to "facilitate the just and expeditious resolution of the real issues", that would enable and perhaps require the making of such an order. But there must, at least in the ordinary case, be something more than mere suspicion, to justify granting relief to a party complaining of incomplete disclosure.
  11. On the arguments presented to us, then, it does not appear that the appellant could succeed on the issue of relevance - i.e. on the issue whether there was ground for thinking that disclosable documents, privileged or not, had not been disclosed. Despite the course which matters took at the hearing before us, however, I am of opinion that it might be unfair to the appellants to dispose of their appeal on that ground. The case was argued below on the assumption that, subject to the question of privilege, there were documents which would require disclosure, the correctness of that assumption being left for later determination; if the appeal were to be dismissed solely on the ground that there was no reason to think that there are undisclosed relevant documents, the appellants might well think themselves to have been ill used. However, the question of relevance is related to that of privilege, for reasons I shall try to explain.

Privilege

  1. I turn to the question whether the respondent's claim of privilege, upheld below, should have the same fate here. Mr Wilson, for the appellants, urged upon us the view that none of the documents relating to the mediation were privileged, because the relevant sort of privilege - "without prejudice" privilege - is not available other than against a party to the dispute which led to the "without prejudice" communications. Mr Wilson said that if that was rejected, he relied on the narrower argument that only documents constituting admissions should be held subject to privilege.
  2. As the law has developed, "without prejudice" privilege is not absolute, but subject to exceptions. The basic principle is that negotiations to settle disputes are "without prejudice" and therefore protected from disclosure; documents forming part of the negotiations need not be disclosed, nor may evidence be led about them. The main reason for this rule is to encourage compromises: Field v Commissioner for Railways (NSW) (1957) 99 CLR 285 at 291, Harrington v Lowe (1996) 190 CLR 311 at 323. It has I think been said that privilege is a sensitive bird which when abused takes flight; but the exceptions to the rule go further than the metaphor implies. Various suggestions are to be found in the cases as to the fundamental basis of the exceptions, the most prominent being that statements that are relevant simply because made, irrespective of their truth, are not protected: Muller and Muller v Linsley and Mortimer, as partly reported in D Foskett "The Law and Practice of Compromise", 4th ed, Sweet & Maxwell, 1996 at pp 157 and 158; see also the reference to "an objective act having legal consequences" in Tenstat Pty Ltd v Permanent Trustee Aust Ltd (1992) 28 NSWLR 625 at 633. Secondly, there is the distinction between admissions and assertions, on which the appellants rely.
  3. Authority exists which supports the latter proposition, the chief of which is Field v Commissioner for Railways (NSW) (above) at 291-292:

"This form of privilege, however, is directed against the admission in evidence of express or implied admissions.  It covers admissions by words or conduct.  For example, neither party can use the readiness of the other to negotiate as an implied admission.  It is not concerned with objective facts which may be ascertained during the course of negotiations.  These may be proved by direct evidence.  But it is concerned with the use of the negotiations or what is said in the course of them as evidence by way of admission".

  1. This tends to give plausibility to the appellants' contention that the privilege is confined absolutely to documents which constitute admissions, but the passage should not necessarily be given that effect. It was held in Field that evidence could be adduced against a plaintiff, in a claim for damages for personal injuries, of a statement made to a doctor as to how the plaintiff suffered his injury. Perhaps surprisingly, the court took the view that such a statement, made in the course of a medical examination for the purpose of "without prejudice" negotiations, was not "fairly incidental to the purpose of the negotiations". (293) The case has, as to its outcome, some broad resemblance to Waldridge v Kennison (1794) 1 Esp 143; 170 ER 306, a warning against the extension of which was given in Rush & Tompkins Ltd v Greater London Council [1989] AC 1280 at 1300. A better case than Field for use of the Waldridge v Kennison doctrine was Barden v Barden (1921) 21 SR(NSW) 588, where the admission made in the course of negotiations had no relevance to the subject matter of the dispute. If the scope of protection of negotiations from disclosure is confined to admissions, and the protection of admissions has such a narrow scope as the result of Field's case suggests, then negotiators are at greater risk of having these communications disclosed than is usually assumed to be the case. But it is not in my opinion necessary, in the present case, to determine whether there is any scope for the protection as privileged of statements which are not admissions.
  2. The appellants ask for an order to be made excepting from the scope of the privilege all material containing such statements. But if it is not an admission express or implied - i.e. a statement of fact, express or implied, which can be used against the respondent - then the statement need not be disclosed, because it must be irrelevant. This is not a case in which the appellants assert that any of the statements made in the course of negotiations are likely to be relevant other than as admissions, for example as relevant simply because made, irrespective of their truth, as discussed above.
  3. The remaining and broadest point taken is that, so it is said, there is no privilege whatever, since the appellants were not parties to the dispute to resolve which the negotiations took place. The only reasonably clear authority on the point to which we were referred is a statement made in the New South Wales Court of Appeal in Hong Kong Bank of Australia Ltd v Murphy (1992) 28 NSWLR 512 at 523. Gleeson CJ, with whom the other members of the Court of Appeal agreed, quoted from Rush & Tompkins Ltd v Greater London Council [1989] AC 1280 at 305, a passage including the following:

"I have come to the conclusion that the wiser course is to protect 'without prejudice' communications between parties to litigation from production to other parties in the same litigation . . . [i]n my view the general public policy that applies to protect genuine negotiations from being admissible in evidence should also be extended to protect those negotiations from being discoverable to third parties".

His Honour remarked:

"The last sentence in the passage from the speech of Lord Griffiths quoted above is to be read in the light of the first sentence in the same passage.  The issue . . . was the matter of multi-party litigation.  It was in that context that his Lordship referred to the matter of discoverability to third parties".

I respectfully agree.  But from the proposition that negotiations between A and B, to settle their part of a dispute involving A, B and C, are not discoverable at the instance of C, it does not follow that C is entitled to have discovery of the negotiations if they relate only to a dispute between A and B.  All that had to be solved in Rush & Tompkins Ltd was the former problem;  the latter did not arise in that case, nor did it in Hong Kong Bank of Australia v Murphy.  There the issue was whether in an examination of persons connected with a corporation, to be made under s 597 of the Corporations Law, questions could be objected to on the ground of "without prejudice" privilege.  In support of claims to privilege attention was directed to the expression "discoverable to third parties" in the second sentence quoted from Rush & Tompkins Ltd.  The view expressed in Hong Kong Bank of Australia v Murphy does not provide an answer in the present case, where the issue is not whether material has to be disclosed in a statutory examination under the Corporations Law, but the very different question whether the privilege protects negotiators against disclosure of their negotiations, in an action between one of the negotiators and a person who was neither involved in negotiations nor party to the dispute which gave rise to them.

  1. One looks to the purpose of the privilege, which is as mentioned above to encourage compromises - or, more fully:

" . . . to encourage compromises by sparing the parties the embarrassment which might be caused to them if the negotiations fail and later their communications are liable to be put in evidence".  (Harrington v Lowe (1996) 190 CLR 311 at 323)

The embarrassment is not necessarily less if the suit in which the communications go into evidence is one in which the disputes and disputants are different from those involved in the negotiations.  It is true that one generally thinks of the privilege as being directed against disclosure of the negotiations by a party to them;  but that is so because it will but seldom occur that the content of negotiations will become known to a person who, although not a party to them, happens to be able to make good use of their content, in relation to another dispute altogether.

  1. There are two English cases from about a century ago, confining the privilege to instances in which disclosure is sought by a party to the negotiations; but these cases are dealt with in Rush & Tompkins Ltd (at 1301-1302) in such a way as not to encourage one to treat them as authoritative.
  2. One can understand rational arguments being advanced, as a matter of policy, against too great an extension of the privilege, one being that it can be a cloak for dishonesty. But that can be so whether or not the person damaged by application of the privilege is a party to the negotiated dispute. There is no sound basis for holding that the basic purpose of protecting negotiations is sufficiently served if one allows the negotiators to be exposed to the risk that what they privately say, to settle their dispute, may be broadcast to the world at the instance of any person who can make use of it in litigation, unless that person is a party to the dispute being negotiated.
  3. It follows that the appeal must be dismissed with costs.
  4. BYRNE J: The respondent submitted to an order to make disclosure of documents Awith respect to≅ its mediation with Concrete Constructions. Thirteen classes were identified. These included Asubmissions≅ by the respondent and by Concrete Constructions, correspondence between solicitors, conference minutes written by the mediator, notes and calculations used in producing the submissions, and internal memoranda. The order required the respondent to state the basis of any privilege. The affidavit contended for Awithout prejudice≅ privilege, founding the claim on an assertion that the documents had Acome into existence for the purposes of≅ the mediation.
  5. The judge=s order resulted from an arrangement which, unusually, required disclosure of documents related to the mediation even if they did not matter. Usually, the duty to disclose is restricted to documents that are both within the possession or control of the party and Adirectly relevant to an allegation in issue≅.[1] Here the parties concluded an understanding whereby, if the privilege claim fails, arguments about relevance remain to be decided under a procedure yet to be determined. Nonetheless, some of the arguments touch upon relevance. The appellants contend that statements by the respondent about its claims against Concrete Constructions contained in its submissions, and in its responses to cross-claims, could bear upon the damages. However, in view of the way the parties have approached the contest, the decisive issue now is the correctness of the conclusion that no part of the documents is susceptible of an order compelling production.
  6. The appellants= main contention is that the documents are not privileged[2] for the reason that the appellants did not participate in the mediation. An alternative proposition is that communications contained in the documents can only be privileged to the extent to which they constitute admissions; that is, statements on behalf of the respondent which are detrimental to its interests in the action.
  7. The general law affords a measure of protection against compulsory disclosure of information imparted in confidence. Curial procedures, for example, can be adapted to ensure that trade secrets are not revealed more widely than is necessary to determine the dispute;[3] disclosure of a journalist=s source Awill not be required unless ... necessary in the interests of justice≅;[4] and some other confidences (e.g. between priest and penitent) usually will not be overridden unless Athere is held to be a stronger public interest in disclosure≅.[5] Judicial discretion often serves to respect reasonable expectations of privacy. But the law is reluctant to shield confidences completely; for costs are associated with absolute protection from disclosure, prominent among them the risk posed to accuracy in fact-finding.[6] Some communications, however, are protected by privilege.
  8. Communications in confidence between lawyer and client made for the purpose of giving or receiving advice are shielded by privilege, as, in general, are communications between lawyer and client or either of them and a third party made for use in existing or anticipated litigation. Both these limbs of legal professional privilege are Amore than an aspect of civil and criminal procedure and more than a rule of evidence≅.[7] They function as substantive rules of law barring[8] Acompulsory process for the obtaining of evidence≅, such as search warrant, subpoena, interrogatories, or an order to testify, Arather than as a rule of inadmissibility≅.[9] No weighing of competing public interests is involved in their application, and no discretions intrude. The privileges are themselves Athe product of a balancing exercise between competing public interests≅.[10] Necessity explains their recognition. Attaching privilege to confidential communications for legal advice encourages Atrust and candour in the relationship between lawyer and client≅ and is based on A... the need of laymen for professional assistance in the protection, enforcement or creation of their legal rights≅.[11] Litigation privilege finds its primary justification in the ramifications of adversarial procedures.[12] Necessity also supplies the rationale for the protection accorded to communications in negotiating towards the compromise of an existing dispute.
  9. Although Aas a means of resolution of civil contention litigation is certainly preferable to personal violence ... it is not intrinsically a desirable activity≅.[13] Compromise fosters substantial public and private benefits: the disputants avoid the uncertainties, trouble and expense of trials; they, their witnesses and the wider community are spared the opportunity costs of the diversion of human and other resources from more useful activities into litigation; public funding for courts is reduced; and, less tangibly, social harmony is promoted. It is in the public interest that civil disputes be settled without resort to judicial decision.[14]
  10. In recognition of the significance of candid discussion about facts, as well as about interests and concerns, to the chances of resolving the dispute, compromise negotiations are typically conducted against the background of a shared expectation that communications incidental to the process will not be disclosed without consent. Occasionally the participants stipulate for this: sometimes the cloak of confidentiality is tacitly accepted. If, however, the participants were left to anticipate that their negotiations might afterwards be used to their detriment, many would Afeel constrained to conduct themselves in a cautious, tight-lipped, non-committal manner more suitable to poker players in a high-stakes game than adversaries attempting to arrive at a just resolution of a civil dispute≅.[15] And such an approach would often diminish the prospects of concluding a compromise, especially in complex disputes.
  11. The plainest risk of detriment consequent upon a breach of the confidentiality of compromise negotiations is that statements adverse to the interests of a participant made to facilitate a compromise might, if the negotiations proved inconclusive, be put into evidence by the recipient of the information. This eventuality is so inimical to the chances of concluding compromises that there has for years been a rule that Awithout prejudice≅ communications - as a matter of right, not discretion - are not admissible to prove an admission. Such communications, if Amade in the course of genuine negotiations with intent to compromise an existing dispute≅,[16] are protected by an Aevidentiary privilege≅.[17] The privilege is Aconcerned with the admissibility of evidence at trial after the failure of negotiations≅.[18] It exists Ato encourage compromises by sparing the parties the embarrassment which might be caused to them if the negotiations fail and later their communications are liable to be put in evidence≅.[19]
  12. But if the law were to accord no greater protection than this against compulsory disclosure of communications incidental to compromise negotiations, the considerations that sustain the privilege would be in some jeopardy. Such a limitation would mean that the information could be revealed to non-participants through, for example, interrogatories, and then used in litigation.[20] And if the privilege operated only to deny the admissibility of admissions in litigation between negotiants, its limited effect would scarcely conduce to an atmosphere calculated to encourage candid exchanges, appropriate concessions, and the creative exploration of options in the negotiations. As it is, the Awithout prejudice≅ evidentiary privilege Adoes not provide a legal norm which is absolute in nature≅.[21] Exceptions abound,[22] and compromise discussions must either be conducted with regard to the problems they present or else under the umbrella of broader statutory protections.[23]
  1. As with all other confidential communications, except those relating to lawyer and client, the general law might have confined the available protection to the recognition of a judicial discretion not to require disclosure in the absence of a more compelling public interest. But that is not how the Awithout prejudice≅ rule operates evidentially. So it is not surprising that there is authority acknowledging the existence of a privilege against compulsory disclosure of information incidental to compromise negotiations.
  2. Rabin v Mendoza & Co[24] concerned an attempt to compel production of a report brought into existence during an interval in discussions about a dispute alleging negligence against surveyors. Privilege from production was claimed: the document was said to have been made pursuant to Awithout prejudice≅ discussions. No mere Aevidentiary privilege≅ could stand in the way of an order for production; for, as Denning LJ said,[25] it is an Aundoubted proposition that production can be ordered of documents even though they may not be admissible in evidence≅. Nevertheless, production was refused. Denning LJ based his decision on a Aprinciple≅ that production should not be ordered of documents brought into existence under a tacit agreement Athat they should not be used to the prejudice of either party≅,[26] apparently treating the obstacle to production as discretionary. Romer LJ considered that the Adiscretion≅[27] should be exercised against ordering production, holding that because the sole object for which the report was created was to advance the negotiations, it would be Amonstrous≅to allow the use of the document, Awhich is entitled to the protection of [28] for the altogether different, seemingly unanticipated, purpose of subsequent litigation.
  3. Although the Rabin judgments are couched in terms of a discretion to withhold production, not explicitly acknowledging a litigious privilege against compulsion, the case has since been regarded in the House of Lords as deciding Athat even as between the parties to [29] By this, Lord Griffiths[30] means, it seems, that the general rule is that production cannot, rather than may not, be compelled. His Lordship also considered that the privilege impacted upon persons who were not participants in the negotiations, saying:[31]

AThe general public policy that applies to protect genuine negotiations from being admissible in evidence should also be extended to protect those negotiations from being discoverable to third parties.≅

  1. The recognition of such a privilege depends on a conviction, necessarily essentially intuitive, that the effectiveness of compromise negotiations will commonly be jeopardized if the participants apprehend that strangers might, through compulsory process in later litigation, gain access to the confidences exchanged and use them to the participants= disadvantage. Otherwise there would be no justification for contributing to the Apossibility of distorting the truth determination process≅[32] through denial to tribunals of knowledge of material information. In the view of Lord Griffiths,[33] Adamage ... would be done to the conduct of settlement negotiations if ... what was said and written between≅ participants were to Abecome common currency available≅ to strangers. This perception is shared by Wigmore=s editor,[34] as well as by me. And the inhibitions which rejection of such a privilege would likely engender assume special importance when the great popularity of compromise is recalled.[35]
  2. There is a privilege protecting against production through a civil court=s compulsory process of communications made for the purpose of compromise negotiations (including, of course, those facilitated by a mediator); and it affects strangers to the negotiations. There are, it is true, passages in the speech of Lord Griffiths which refer to protection against disclosure to other parties to extant litigation.[36] These should be understood in context: viz that a party to the litigation had sought access to the documents. This is the impression of the British Columbia Court of Appeal, which treats the speech as showing that communications in settlement negotiations are, in general, Aprivileged≅ Aboth from production to other parties to the negotiations and strangers≅.[37] The same view has been taken in England: Hobhouse J considered that the House of Lords decided that the privilege Aaffects not only the party who received the communication but also any other party≅ to subsequent litigation.[38] This must be correct. The policy that underpins the privilege is not served only where access is sought by another party to pending litigation in which the negotiators happen to be parties. To restrict its reach to parties to litigation would be to render the privilege capricious in operation. Its availability would then depend upon such inconsequential variables as whether proceedings were already on foot and the identity of the particular parties who had been joined when the negotiations took place.
  3. The appellants= alternative case is that the privilege cannot justify declining to compel production of communications incidental to the mediation except those capable of being used against the respondent at the trial as an admission.[39]
  4. The documents might contain information that is Adirectly relevant≅ although not an admission - principally material suggesting strengths in the respondent's case. Probably this kind of information could not be adduced in evidence in chief during presentation of the respondent=s case. At this stage, however, the question is not one of admissibility; it concerns the extent to which production can be compelled pre-trial. And, generally speaking, Adirectly relevant≅, unprivileged documents must be produced for inspection even if they relate solely to that party's own case and in no way tend to impeach that case or to support the case of an opposing party.[40]
  5. The notion that the ambit of the privilege should be confined to communications which might be put into evidence as an admission has some attraction.[41] Such a limitation would be consonant with the rationale supporting the Awithout prejudice≅ evidentiary privilege and its scope. But what good would it do? Occasionally, access to information which did not amount to admissions could supply a preview of the adversary=s assessments of the strengths of its case,[42] or identify previously unknown potential witnesses, or expose adventitious lines of enquiry. Such opportunities are sometimes presented to parties who try to resolve civil disputation amicably; and the Awithout prejudice≅ evidentiary privilege presents no obstacle to taking advantage of them.[43] Yet though there could be gains in restricting the privilege to communications capable of being adduced in evidence as admissions, there would be costs too.
  6. Apart from discouraging productive negotiations, and the bother of contests about whether a particular communication is or is not an admission,[44] other costs potentially inhere in the proposed restriction. The privilege will be shared by at least one other negotiant who, as in this case, might not be party to the litigation. Skirmishes about access to negotiation documents clearly could prejudice the joint[45] negotiation privilege, and might therefore involve a stranger to the litigation in inconvenience or expense that usually will not be fully recompensed through costs orders.
  7. The economic and social burdens that would attend acceptance of the suggested qualification far outweigh the limited benefits of admitting it.
  8. The appeal should be dismissed with costs.

Footnotes

[1] RSC O 35 r  4(1), which, as the interlocutory decision appealed from was made before 1 July 1999, is the material rule: see UCPR 765(2).

[2] at common law, as no statute or subordinate legislation is presently germane.

[3] Magellan Petroleum Australia Limited v Sagasco Amadeus Pty Ltd [1994] 2 Qd R 37, 38‑41.

[4] John Fairfax & Sons Ltd v Cojuangco (1988) 165 CLR 346, 354; cf Hodder v Queensland Newspapers Pty Ltd [1994] 1 Qd R 49, 56; Hancock v Lynch [1988] VR 173, 177-178.

[5] W v Egdell [1990] Ch 359, 419 per Bingham LJ; cf R v Secord [1992] 3 NZLR 570, 572.

[6] Carter v The Managing Partner Northmore Hale Davey & Leake (1995) 183 CLR 121, 128, 133-4; Jaffee v Redmond 135 L ed 2d 337, 344, 350 (1996); A M v Ryan [1997] 1 SCR 157, 170-171; R v Young [1999] NSW CCA 166, paras 72-76.

[7] Commissioner of Australian Federal Police v Propend Finance Pty Limited (1997) 188 CLR 501, 564 per Gummow J.

[8] Absent a sufficiently clear, contrary statutory provision or valid subordinate legislation.             

[9] Propend at 566 per Gummow J.

[10] Propend at 583 per Kirby J; cf Paragon Finance PLC v Freshfields [1999] 1 WLR 1183, 1193A-B.

[11] Attorney-General (NT) v Maurice (1986) 161 CLR 475, 487, per Mason and Brennan JJ; see also ADevelopments in the Law - Privileged Communications≅, (1985) 98 Harvard Law Review 1450, 1501-1509.

[12] G Watson & F Anu, ASolicitor-Client Privilege and Litigation Privilege in Civil Litigation≅, (1998) 77 Canadian Bar Review 315, 326-330; Trade Practices Commission v Ampol Petroleum (Victoria) Pty Ltd (1994) 53 FCR 578, 582-585; United States v Nobles 422 US 225, 238-239 (1975). This head is under stress: Interchase Corporation Limited (in liq) v Grosvenor Hill (Queensland) Pty Ltd (No 1) [1999] 1 Qd R 141.

[13] The Ampthill Peerage [1977] AC 547, 575E per Lord Simon of Glaisdale.

[14] Ventouris v Mountain [1991] 1 WLR 607, 611.

[15] Lake Utopia Paper Ltd v Connelly Containers Inc 608 F 2d 928, 930 (CA2 1979). Generally as to the importance of confidentiality to mediations, see L Boulle, Mediation Principles Process Practice, (1996) pp 281, 290-291; J W Hamilton, AProtecting Confidentiality in Mandatory Mediation: Lessons from Ontario and Saskatchewan≅, (1999) 24 Queen=s Law Journal 561, 567-572; and A Kirtley, AThe Mediation Privilege=s Transition from Theory to Implementation: Designing a Mediation Privilege to Protect Mediation Participants, the Process and the Public Interest≅, (1995) Journal of Dispute Resolution 1, 8-10, 16-18.

[16] Harrington v Lowe (1996) 190 CLR 311, 323 per Brennan CJ, Dawson, Toohey, Gaudron, McHugh and Gummow JJ; cf In Re D (Minors) [1993] Fam 231, 237G.

[17] Harrington at 325.

[18] Harrington at 325-326.

[19] Harrington at 323.

[20] Risk of other detrimental use is reduced by the implied undertaking not to use information obtained pursuant to compulsory process for collateral purposes (Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316, 321; Welfare v Birdon Sands Pty Ltd (1997) 79 FCR 220, 232-233), and by the equitable jurisdiction to restrain breaches of confidence.

[21] Harrington at 326.

[22] Harrington at 326; cf at 339; see also Rush & Tompkins Ltd v Greater London Council [1989] AC 1280, 1300.

[23] Such as those created by ss 36(4), (5) Dispute Resolution Centres Act 1990, and s 114 Supreme Court of Queensland Act 1991; cf s 131 Evidence Act 1995 (Cth).

[24] [1954] 1 WLR 271.

[25] at 273.

[26] at 273.

[27] at 274.

[28] Ibid.

[29] at 1304A-B.

[30] With whom Lords Bridge of Harwich, Brandon of Oakbrook, Oliver of Aylmerton and Goff of Chieveley agreed.

[31] at 1305E.

[32] The New Wigmore A Treatise on Evidence, (1996), 3.7.1, at 3.65.

[33] Rush at 1305D-E.

[34] Professor Leonard, in The New Wigmore 3.7.1, at 3:67, makes the point that compromise takes at least two, neither of whom should be deterred from entering into discussions.             

[35] cf S R Gross & K D Syverud, AGetting to No: A Study of Settlement Negotiations and the Selection of Cases for Trial≅, (1991) 90 Michigan Law Review 319, 320, who say of the American experience: AA trial is a failure. Although we celebrate it as the centrepiece of our system of justice, we know the trial is not only an uncommon method of resolving disputes, but a disfavoured one. With some notable exceptions, lawyers, judges and commentators agree that pre-trial settlement is almost always cheaper, faster, and better than trial. Much of our civil procedure is justified by the desire to promote settlement and avoid trial.≅

[36] at 1305B.

[37] Middelkamp v Fraser Valley Real Estate Board (1992) 96 DLR (4th) 227, 232-233.

[38] Prudential Assurance Co. Ltd v Fountain Page Ltd [1991] 1 WLR 756, 771A-E; see also Heron & Wood Pty Ltd v Ampol Petroleum (Vic) Pty Ltd [1999] VSC 83.

[39] It is otherwise unnecessary to try to define the boundaries of the privilege, as to which see J W Hamilton, supra, pp 583 et seq; and National Conference of Commissioners on Uniform State Laws Discussion Draft Uniform Mediation Act, American Bar Association, Section of Dispute Resolution, June 1, 1999, www.pon.harvard.edu/guests/uma.  Incidentally, it was not suggested that notes recording proceedings at the mediation and the respondent=s Ainternal memoranda≅ are not privileged Acommunications≅.

[40] s 14(2) Evidence Act 1977.

[41] S McNicol, Law of Privilege, (1992), p 471 fn 240, calls it a Asensible approach≅.

[42] cf Lord Griffiths in Rush, at 1305C: AIf the party who obtains discovery of the

[43] Field v Commissioner for Railways for New South Wales (1957) 99 CLR 285, 291. This is not the time to consider whether equity will restrain such a use of information if it were imparted on a common understanding that it was to be used only for the negotiation; nor whether there is a discretion to decline to admit evidence derived from such revelations. (Practical problems are canvassed in Williamson v Schmidt [1998] 2 Qd R 317, 335-336.)

[44] in Unilever v The Procter & Gamble Company, [1999] 1 WLR 1630, 1640 (para 30) in the Awithout prejudice≅ privilege context, Laddie J discusses problems in distinguishing admissions from assertions.

[45] Re Turf Enterprises Pty Ltd [1975] Qd R 266, 267G.

Close

Editorial Notes

  • Published Case Name:

    Village/Nine Network Restaurants & Bars Pty Ltd v Mercantile Mutual Custodians Pty Ltd

  • Shortened Case Name:

    Village/Nine Network Restaurants & Bars Pty Ltd v Mercantile Mutual Custodians Pty Ltd

  • Reported Citation:

    [2001] 1 Qd R 276

  • MNC:

    [1999] QCA 276

  • Court:

    QCA

  • Judge(s):

    McMurdo P, Pincus JA, Byrne J

  • Date:

    12 Oct 1999

Litigation History

EventCitation or FileDateNotes
Primary JudgmentNA--
Appeal Judgment (QCA)[2001] 1 Qd R 27612 Oct 1999Appeal dismissed with costs (Pincus JA, McMurdo P agreeing; Byrne J issuing separate reasons for concurring with the orders)
Special Leave Refused (HCA)[2000] HCATrans 373-refused

Appeal Status

Appeal Determined - Special Leave Refused (PC/HCA)

Cases Cited

Case NameFull CitationFrequency
A.M. v Ryan [1997] 1 SCR 157
1 citation
Jump To
Cite 1 - [1997] 1 SCR 157
Ampthill Peerage case [1977] AC 547
1 citation
Jump To
Cite 1 - [1977] AC 547
Attorney-General ( N.T.) v Maurice (1986) 161 CLR 475
1 citation
Jump To
Cite 1 - (1986) 161 CLR 475
Barden v Barden (1921) 21 S.R. (N.S.W.) 588
2 citations
Jump To
Cite 1 - (1921) 21 S.R. (N.S.W.) 588
Cite 2 - (1921) 21 S.R. (N.S.W.) 588
Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121
1 citation
Jump To
Cite 1 - (1995) 183 CLR 121
Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501
3 citations
Jump To
Cite 1 - (1997) 188 CLR 501
Cite 2 - (1997) 188 CLR 501
Cite 3 - (1997) 188 CLR 501
Compagnie Financiere et Commerciale du Pacifique v The Peruvian Guano Co (1882) 11 QB.D 55
2 citations
Jump To
Cite 1 - (1882) 11 QB.D 55
Cite 2 - (1882) 11 QB.D 55
Field v Commissioner for Railways (NSW) (1957) 99 CLR 285
5 citations
Jump To
Cite 1 - (1957) 99 CLR 285
Cite 2 - (1957) 99 CLR 285
Cite 3 - (1957) 99 CLR 285
Cite 4 - (1957) 99 CLR 285
Cite 5 - (1957) 99 CLR 285
Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316
1 citation
Jump To
Cite 1 - (1998) 19 WAR 316
Hancock v Lynch [1988] VR 173
1 citation
Jump To
Cite 1 - [1988] VR 173
Harrington v Lowe (1996) 190 CLR 311
9 citations
Jump To
Cite 1 - (1996) 190 CLR 311
Cite 2 - (1996) 190 CLR 311
Cite 3 - (1996) 190 CLR 311
Cite 4 - (1996) 190 CLR 311
Cite 5 - (1996) 190 CLR 311
Cite 6 - (1996) 190 CLR 311
Cite 7 - (1996) 190 CLR 311
Cite 8 - (1996) 190 CLR 311
Cite 9 - (1996) 190 CLR 311
Heron Wood Pty Ltd v Ampol Petroleum (Vic.) Pty Ltd [1999] VSC 83
1 citation
Jump To
Cite 1 - [1999] VSC 83
Hodder v Queensland Newspapers Pty Ltd [1994] 1 Qd R 49
1 citation
Jump To
Cite 1 - [1994] 1 Qd R 49
Hong Kong Bank of Australia Ltd v Murph (1992) 28 NSWLR 512
2 citations
Jump To
Cite 1 - (1992) 28 NSWLR 512
Cite 2 - (1992) 28 NSWLR 512
Interchase Corporation Ltd (in liq) v Grosvenor Hill (Queensland) Pty Ltd (No 1) [1999] 1 Qd R 141
1 citation
Jump To
Cite 1 - [1999] 1 Qd R 141
Jaffee v Redmond 135 L Ed 2d 337 (1996)
1 citation
Jump To
Cite 1 - 135 L Ed 2d 337 (1996)
John Fairfax & Sons Ltd v Cojuangco (1988) 165 CLR 346
1 citation
Jump To
Cite 1 - (1988) 165 CLR 346
Lake Utopia Paper Ltd v Connelly Containers Inc 608 F 2d 928
1 citation
Jump To
Cite 1 - 608 F 2d 928
M (H) v M (K) (1992) 96 DLR 4
1 citation
Jump To
Cite 1 - (1992) 96 DLR 4
Magellan Petroleum Australia Ltd v Sagasco Amadeus Pty Ltd[1994] 2 Qd R 37; [1993] QSC 11
1 citation
Jump To
Cite 1 - [1994] 2 Qd R 37
Paragon Finance Plc v Freshfields [1999] 1 WLR 1183
1 citation
Jump To
Cite 1 - [1999] 1 WLR 1183
Permanent Finance Corporation Ltd v Europacific (Plant Hire) Pty Ltd (No 2) [1971] Qd R 302
2 citations
Jump To
Cite 1 - [1971] Qd R 302
Cite 2 - [1971] Qd R 302
Prudential Assurance Co. Ltd v Fountain Page Ltd [1991] 1 W.L.R. 756
1 citation
Jump To
Cite 1 - [1991] 1 W.L.R. 756
R v Young [1999] NSW CCA 166
1 citation
Jump To
Cite 1 - [1999] NSW CCA 166
R. v Secord [1992] 3 NZLR 570
1 citation
Jump To
Cite 1 - [1992] 3 NZLR 570
Rabin v Mendoza & Co. (1954) 1 WLR 271
5 citations
Jump To
Cite 1 - (1954) 1 WLR 271
Cite 2 - (1954) 1 WLR 271
Cite 3 - (1954) 1 WLR 271
Cite 4 - (1954) 1 WLR 271
Cite 5 - (1954) 1 WLR 271
Re D (Minors) [1993] Fam 231
1 citation
Jump To
Cite 1 - [1993] Fam 231
Re Turf Enterprises Pty Ltd [1975] Qd R 266
1 citation
Jump To
Cite 1 - [1975] Qd R 266
Rush & Tompkins Ltd v Greater London Council [1989] AC 1280
9 citations
Jump To
Cite 1 - [1989] AC 1280
Cite 2 - [1989] AC 1280
Cite 3 - [1989] AC 1280
Cite 4 - [1989] AC 1280
Cite 5 - [1989] AC 1280
Cite 6 - [1989] AC 1280
Cite 7 - [1989] AC 1280
Cite 8 - [1989] AC 1280
Cite 9 - [1989] AC 1280
Tenstat Pty Ltd v Permanent Trustee Aust Ltd (1992) 28 NSWLR 625
2 citations
Jump To
Cite 1 - (1992) 28 NSWLR 625
Cite 2 - (1992) 28 NSWLR 625
Trade Practices Commission v Ampol Petroleum (Victoria) Pty Ltd (1994) 53 FCR 578
1 citation
Jump To
Cite 1 - (1994) 53 FCR 578
Unilever Plc. v The Procter & Gamble Co. [1999] 1 WLR 1630
1 citation
Jump To
Cite 1 - [1999] 1 WLR 1630
United States v Nobles 422 US 225 (1975)
1 citation
Jump To
Cite 1 - 422 US 225 (1975)
Ventouris v Mountain [1991] 1 WLR 607
1 citation
Jump To
Cite 1 - [1991] 1 WLR 607
W. v Egdell [1990] Ch 359
1 citation
Jump To
Cite 1 - [1990] Ch 359
Waldridge v Kennison (1794) 1 Esp 143
2 citations
Jump To
Cite 1 - (1794) 1 Esp 143
Cite 2 - (1794) 1 Esp 143
Waldridge v Kennison (1794) 170 ER 306
2 citations
Jump To
Cite 1 - (1794) 170 ER 306
Cite 2 - (1794) 170 ER 306
Welfare v Birdon Sands Pty Ltd (1997) 79 FCR 220
1 citation
Jump To
Cite 1 - (1997) 79 FCR 220
Williamson v Schmidt [1998] 2 Qd R 317
1 citation
Jump To
Cite 1 - [1998] 2 Qd R 317

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BSO Network Inc v EMClarity Pty Ltd [2020] QSC 186 3 citations
Central Queensland Mining Supplies Pty Ltd v Columbia Steel Casting Co Ltd [2011] QSC 183 6 citations
Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd (No 11) [2017] QLC 592 citations
Collection House Limited v Mbuzi [2008] QDC 601 citation
Company Solutions (Aust) Pty Ltd v Keppel Cairncross Shipyard Ltd (in liq) [2004] QSC 3792 citations
Conias and Anor v Brisbane Basketball Inc [2011] QCAT 4151 citation
Department of Natural Resources and Mines v ISPT Pty Ltd [2003] QLC 741 citation
Department of Natural Resources and Water v Buckler & Anor [2009] QLC 21 citation
Department of Natural Resources, Mines and Water v Stockland Development (Qld Holdings) Pty Ltd & Anor [2006] QLC 442 citations
Department of Natural Resources, Mines and Water v Surfers Paradise Beach Resort Pty Ltd [2006] QLC 151 citation
Earthtec Pty Ltd v Livingstone Shire Council [2023] QSC 22 1 citation
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2000] QSC 3551 citation
Gibson v The Minister for Finance, Natural Resources and the Arts [2012] QSC 122 citations
Glengallan Inv P/L v Arthur Andersen[2002] 1 Qd R 233; [2001] QCA 1158 citations
Gogolka and Anor v Queensland Building Services Authority [2012] QCAT 3081 citation
Golden Vision Gold Coast Pty Ltd v Orchid Avenue Pty Ltd & Anor [2022] QSC 491 citation
Haug v Jupiters Limited[2008] 1 Qd R 276; [2007] QCA 1993 citations
Integrated Medical Technology Pty Ltd v Gilbert (No 2) [2015] QSC 1244 citations
IVI Pty Ltd v Baycrown Pty Ltd[2007] 1 Qd R 428; [2006] QCA 4615 citations
Lamb v Department of Natural Resources and Mines [2005] QLC 191 citation
Lifetime Securities (Australia) Pty Ltd v Formula Properties (Qld) Pty Ltd [2003] QSC 4122 citations
Linc Energy Ltd v Chief Executive, Department of Environment and Heritage Protection [2015] QLC 422 citations
Lippiatt & Co v Wain [2003] QCA 4111 citation
Liu v Chan [2020] QCA 25 3 citations
Magic Millions Sales Pty Ltd v Thexton [2004] QDC 4511 citation
Mohr-Edgar v Legal Aid Queensland [2023] ICQ 254 citations
Mullins v Workers' Compensation Regulator; Ex parte Drake International Pty Ltd (No 2) [2020] QIRC 32 citations
Oranville Pty Ltd v Plum Property Pty Ltd [2022] QSC 1191 citation
Parmar v State of Queensland (Queensland Health) [2024] QIRC 1171 citation
Peninsula Shipping Lines Pty Ltd v Adsteam Agency Pty Ltd [2008] QSC 3173 citations
Perpetual Nominees Limited & Ors v Department of Natural Resources, Mines and Energy [2004] QLC 581 citation
Pickering v McArthur (No 2) [2010] QDC 901 citation
Pingel v Toowoomba Newspapers Pty Ltd [2010] QCA 175 5 citations
Queensland Local Government Superannuation Board v Allen [2016] QCA 3254 citations
Queensland Nurses and Midwives' Union of Employees v State of Queensland (Queensland Health) [2025] QIRC 2382 citations
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Rooskov v Laconholme Pty Ltd [2002] QDC 2172 citations
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Seymour v Watling Roche Lawyers (A Firm) [2001] QDC 3542 citations
Skalski v Brown [2008] QDC 2631 citation
Skyreach Pty Ltd v Morrison [2014] QDC 2142 citations
Slater v Appleton [2011] QLC 311 citation
Smith & Sherlock v State of Queensland (Queensland Health) (No. 5) [2024] QIRC 1211 citation
Smith v State of Queensland (Queensland Health) (No. 4) [2024] QIRC 671 citation
Smith v Workers' Compensation Regulator [2025] QIRC 1052 citations
South East Queensland Water Corporation Limited v Department of Natural Resources, Mines and Energy [2004] QLC 161 citation
Sovereign Homes Qld Pty Ltd v Edwards [2016] QCAT 4612 citations
Stariha v Commissioner for Railways [2007] QLC 382 citations
State of Queensland (Queensland Police Service) v Workers' Compensation Regulator [2025] QIRC 2032 citations
Stephan v NRMA Insurance Limited [2001] QDC 23 citations
Surie v MacDonald [2024] QCA 254 1 citation
Thomas v Neilson [2011] QCAT 4711 citation
Tynan v Filmana Pty Ltd (No 2) [2015] QSC 3672 citations
WorkCover Queensland v Amaca Pty Limited [2011] QSC 2822 citations
Xstrata Queensland Ltd v Santos Ltd [2005] QSC 323 2 citations
Zarin Amavand v Kanjini Co-Op Ltd [2025] QIRC 862 citations
1

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