DISTRICT COURT OF QUEENSLAND

1. [1]
   This appeal involves a dispute between former directors of Meiklejohn’s Accountants Pty Ltd. The directors, David Coomber and Lynette Meiklejohn, settled insider trading proceedings brought against them by the company’s liquidator, Mr Pearce. The settlement was reached during mediation. Mr Coomber paid the settlement sum in full.

2. [2]
   Later, he commenced proceedings against Ms Meiklejohn in the Magistrates Court. Amongst other allegations, he claimed she agreed to pay him half the settlement sum but failed to honour their agreement. He said they reached an oral agreement during mediation of the liquidator’s claim.

3. [3]
   Ms Meiklejohn applied to strike out Mr Coomber’s pleadings and for summary judgment against him. This would have brought those proceedings to an end without a trial. The basis for both applications was that Mr Coomber had no prospect of making out his claim. She argued that his claim relied entirely on evidence of what transpired at mediation and Mr Coomber was prohibited from leading such evidence by section 114 of the Supreme Court of Queensland Act 1991^[1].

4. [4]
   Although the Magistrate accepted Ms Meikelejohn’s submission on the effect of s 114, both applications were determined largely in Mr Coomber’s favour. Her Honour reasoned that Mr Coomber could well lead other evidence that would support his claim. In reaching that conclusion, the learned Magistrate considered an affidavit from Mr Coomber filed after the hearing. It annexed some documents created after the mediation which are capable of supporting Mr Coomber’s allegation that Ms Meiklejohn had agreed to pay him $100,000 towards the agreed settlement with the liquidator.

5. [5]
   This further affidavit was received over objection by counsel for Ms Meiklejohn and without Mr Coomber having applied either for leave to re-open the hearing or to lead further evidence.

6. [6]
   Both parties appealed. For his part, Mr Coomber appealed the decision to strike out paragraph 5(b)(ii) of his reply to Ms Meiklejohn’s defence. This was the only order made in Ms Meiklejohn’s favour on her application to strike out Mr Coomber’s pleadings. Mr Coomber says the paragraph struck out is an essential allegation for the claim of estoppel made against Ms Meiklejohn.

7. [7]
   Ms Meiklejohn appealed to overturn all her Honour’s orders, except for the order to strike out paragraph 5(b)(ii) of Mr Coomber’s Reply. She argued the learned Magistrate denied her procedural fairness by receiving and acting upon Mr Coomber’s post-hearing affidavit, without giving her the opportunity to be heard on whether she should do so.^[2]

8. [8]
   There is another conflict which bears upon the future conduct of the matter. It relates not to any order made by the learned Magistrate but to her application of s 114 to the evidence led on the applications. The parties agreed that, should I find Ms Meiklejohn was denied procedural fairness, I should rehear Ms Meiklejohn’s original applications.^[3]I am satisfied I have the power to do so.^[4]The costs of the proceedings would be unnecessarily increased for both parties if the applications were sent back to the Magistrates Court for rehearing. It is in the interests of justice to exercise my discretion to rehear them.

9. [9]
   Subject to some objections to Mr Coomber’s post-hearing affidavit, the parties agreed on the material for the rehearing. Ms Meiklejohn’s objections raise questions of confidentiality and privilege, including the same issue dealt with in her Honour’s disputed reasoning: that is, the effect of s 114.

10. [10]
    The issues raised by the parties’ appeals can be dealt with by answering the following questions:

• Was Ms Meiklejohn denied procedural fairness?

• If so, on rehearing the applications are any parts of Mr Coomber’s post-hearing affidavit inadmissible?

• Should Mr Coomber’s pleadings be struck out and judgment entered for Ms Meiklejohn?

1.Was Ms Meiklejohn denied procedural fairness?

11. [11]
    Ms Meiklejohn’s applications were heard on 3 June 2013. When the hearing concluded, the learned Magistrate adjourned the matter to a date to be fixed for decision. She made directions for the filing of written submissions. Neither party sought leave to adduce further evidence.

12. [12]
    Ms Meiklejohn was aware a further affidavit by Mr Coomber was provided with his written submissions. Her counsel objected to receipt of the affidavit in the absence of an application to re-open the evidence, but did not address grounds of objection to the admissibility of the evidence contained in the affidavit. Rather, the written submissions addressed only the evidence placed before the learned Magistrate at the hearing.

13. [13]
    On appeal, Mr Coomber accepted that he had not complied with the rules about service of affidavit material on a summary judgment application.^[5]However, he argued that her Honour was entitled to proceed as she did, in the absence of a request by counsel for Ms Meiklejohn to be heard on her objection.

14. [14]
    Whilst it might have been wise of counsel for Ms Meiklejohn to have requested an opportunity to be heard on objections to the affidavit if her Honour was minded to receive it, the onus did not rest with Ms Meiklejohn. It was for Mr Coomber to seek leave to lead further evidence. It was not unreasonable for counsel for Ms Meiklejohn to assume that, in the face of the objection, and in the absence of an application to re-open, the learned Magistrate would not receive the affidavit without hearing from the parties about that. Particularly, her Honour’s decision to accept the affidavit without further hearing denied Ms Meiklejohn the opportunity to object to particular parts of the affidavit or annexures.

15. [15]
    The application and content of the doctrine of natural justice will depend on the relevant facts and the statutory context applicable in each case.^[6]The entitlement to a fair hearing must be measured by reference to what is reasonably necessary to enable a litigant to have a reasonable opportunity to present his or her case in its best light. This is of particular importance when the complaint about process is that a party has not been heard on whether the evidence of a particular witness should be accepted.^[7]A party to litigation is entitled to a sufficient opportunity "for everything to be said that could be said in his [or her] favour".^[8]

16. [16]
    The learned Magistrate was alive to the issue and noted that she would ordinarily disregard the evidence contained in Mr Coomber’s post-hearing affidavit. Nevertheless, she went on to consider the affidavit, without explaining why she considered it appropriate to do so.

17. [17]
    She applied s 114 to exclude evidence of anything that occurred at the mediation, but did receive evidence of post mediation communications contained in the offending affidavit. Most likely, her Honour was motivated by a desire to proceed in the most efficient manner and perceived no valid ground of objection to the remaining portions of the affidavit. For reasons that follow, I agree with that conclusion.

18. [18]
    Nevertheless, the learned Magistrate did not afford Ms Meiklejohn a hearing on evidence that proved fatal to her applications. In her reasons, the learned Magistrate referred to evidence derived from the post-hearing affidavit that appeared to confirm Ms Meiklejohn had acknowledged an indebtedness of $100,000.^[9]This evidence formed the foundation for her conclusion that Mr Coomber’s statement of claim should not be struck out and that judgment should not be given for Ms Meiklejohn, because she accepted there was some admissible evidence to support Mr Coomber’s allegations.

19. [19]
    Given the importance of that evidence to her Honour’s decisions on Ms Meiklejohn’s applications, I consider she was denied procedural fairness. It is appropriate, therefore, that I proceed to rehear Ms Meiklejohn’s applications.

2.Are any parts of Mr Coomber’s post-hearing affidavit inadmissible?

20. [20]
    Before considering Ms Meiklejohn’s applications, it is necessary to rule what evidence is admissible on rehearing. There are two affidavits from Mr Coomber in issue. The first is his affidavit filed before the hearing, dated 29 May 2013. The second is his post-hearing affidavit, dated 24 June 2013. The objections are made on:

1. (a)
   the parole evidence rule (second affidavit at [3])

2. (b)
   without prejudice privilege at common law (first affidavit at [7]-[9]; second affidavit at [2] [6] [7]),^[10]and

3. (c)
   the prohibition on leading evidence of admissions made or acts done at mediation, pursuant to s 114 of the Supreme Court of Queensland Act 1991(first affidavit at [7]  - [9] and second affidavit at [2]).

(a)parole evidence

21. [21]
    This objection may be dealt with in short compass. The paragraph objected to expresses Mr Coomber’s opinion about the meaning of a term used in the Settlement Deed. That is a matter of construction of the agreement. Mr Coomber did not argue any basis upon which oral evidence of the meaning of the term was admissible in the circumstances. I rule it inadmissible.

(b)without prejudice privilege

22. [22]
    It seemed to be common ground that the passages objected to on this basis related to communications made in the course of discussions to settle a dispute between the parties. A communication made in such circumstances is privileged at common law, but the privilege is not absolute.

23. [23]
    Exceptions to the rule focus attention on its purposes, including promoting settlement of disputes and protecting parties against having their negotiations and concerns used against them at trial.^[11]However this does not prevent the admission of evidence of communications where they have significance for other purposes: such as to ascertain whether an agreement was in fact reached;^[12]or to prove a statement, reliance on which is said to give rise to an estoppel;^[13]or to demonstrate misleading and deceptive conduct in the course of negotiations resulting in an agreement that was impugned.^[14]

24. [24]
    Mr Coomber’s claim against Ms Meiklejohn is made on four bases. Firstly, he relies on the Deed of Settlement between him and Ms Meiklejohn on the one hand and the liquidator on the other.^[15]Secondly, he pleads Ms Meiklejohn has breached an agreement they reached at mediation. Thirdly, he claims she is estopped from denying the agreement because of his reliance on her promise in paying the settlement sum in full. Finally, he alleges she has engaged in misleading and deceptive conduct.

25. [25]
    Mr Coomber seeks to lead evidence about what was said at mediation and afterwards, not as an admission of liability in relation to the liquidator’s claim against them. Rather, he wishes to lead the evidence in order to establish either:

1. (a)
   that they reached an agreement (which she has breached); or

2. (b)
   that she made a statement on which he relied and which she should be estopped from denying; or

3. (c)
   that she engaged in misleading or deceptive conduct.

26. [26]
    To the extent that the evidence is led for any of those purposes, I am satisfied that it falls outside the scope of the common law without prejudice privilegeand may be received.

27. [27]
    In the statement of objections, Ms Meiklejohn did not rely on s 114 in her objection to [6] and [7] of Mr Coomber’s post-hearing affidavit. However, her counsel appeared to argue that point on appeal. For the sake of completeness, I will address that in brief. Those paragraphs, and the associated annexures, relate to a meeting and subsequent email, both of which occurred after the mediation. They include statements attributed to Ms Meiklejohn that imply what she said or did during mediation. Applying the reasoning of Rolfe J in AWA Ltd v Daniels,^[16]her Honour considered this evidence was not prohibited by s 114. Respectfully, I agree. This is direct evidence of things said or done after the mediation and outside the protection of s 114. The evidence is capable of establishing the fact alleged; ie that Ms Meiklejohn agreed to pay the sum of $100,000.

(c)S 114 Supreme Court of Queensland Act 1991

28. [28]
    The remaining objections relate to evidence of what was said or done during the mediation itself. Ms Meiklejohn argues s 114(1) prohibits this evidence being led at trial. It provides:

(1)Evidence of anything done or said, or an admission made, at an ADR process about the dispute is admissible at the trial of the dispute or in another civil proceeding before the Supreme Court or elsewhere only if all parties to the dispute agree.

29. [29]
    Mr Coomber made two arguments on appeal. Firstly, he contended that s 114 did not apply, because the evidence concerns discussions between the directors inter se, not about the dispute referred to mediation, which was the dispute between the directors as co-defendants to a claim by the liquidator.

30. [30]
    Secondly, if s 114 did apply to the discussions between the directors, he submitted it only prevented evidence being led where a written agreement which complied with s 107 of the Act had been reached.

(i)Did the dispute referred to mediation include a dispute between Mr Coomber and Ms Meiklejohn?

31. [31]
    Mr Coomber’s argument depends upon identifying what was the disputein this case, as the term is used in s 114.  Although s 114 does not use this term, a definition of the term ADR dispute appeared in Schedule 2. It was:

ADR dispute means a dispute referred to an ADR process.

The definition of dispute was:

dispute means—

(a)a dispute in a proceeding; or

(b)something else about which the parties are in dispute that may be dealt with in a mediation at the same time as an ADR dispute.

The definition of ADR process was:

ADR process see section 95.

Section 95 defined ADR process as:

(1)An ADR process is a process of mediation or case appraisal under which the parties are helped to achieve an early, inexpensive settlement or resolution of their dispute.

(2)In division 6, an ADR process includes all the steps involved in an ADR process, including, for example—

(a)pre-mediation and post-mediation sessions; and

(b)a case appraisal session; and

(c)joint sessions; and

(d) private sessions; and

(e) another step prescribed under the rules.

32. [32]
    Mr Coomber argued the relevant dispute is the dispute in the proceedings (BS804 of 2008) and, in determining what that dispute was, I should look to the state of the proceedings at the time of referral.

33. [33]
    As the Act then stood, an ADR process about a dispute may have been initiated in one of two ways. Either the parties could file a consent order to refer their dispute to an ADR process^[17]or the Court could, by order, refer the dispute for mediation.^[18]

34. [34]
    Mr Coomber argued the relevant date for determining what was the dispute was 11 September 2009, when Atkinson J reviewed the proceedings and made directions, including some about mediation. At that time the only claim on foot was the claim by Mr Pearce, as liquidator of the company, against Ms Meiklejohn and Mr Coomber.

35. [35]
    Some weeks earlier, Mr Coomber had applied for leave to file and serve third party proceedings, including proceedings against Ms Meiklejohn, but his application had not then been determined. Accordingly, he argued no dispute between Ms Meiklejohn and Mr Coomber could have been referred to mediation as there was no dispute in existence between the two of them at that time. He said this conclusion is also reinforced by the Rules which provide that third party proceedings are distinct from the originating claim, albeit they are allocated the same proceeding number.^[19]

36. [36]
    That argument can only succeed if I accept that her Honour’s directions equated to a referral order. Atkinson J made directions to case manage the proceedings, including directions about hearing the third party application, delivery of further pleadings, disclosure of documents, filing of expert evidence and mediation. Those directions set 23 October 2009 as the date by which the parties were to file a consent order for mediation.

37. [37]
    I do not accept Mr Coomber’s submission that her Honour exercised the court’s power to make a referring order under s 102. Although her Honour’s directions contemplated an ADR process under the Act, they assumed referral by the parties’ consent order, not by an order of the court. There is an approved form for both an ADR Referring Order (form 33) and an ADR Consent Order (form 34). They deal with matters not addressed in her Honour’s directions, including the names of the parties, the name of the mediator, the documents to be provided to the mediator, the period for mediation and the costs of mediation.

38. [38]
    The sequence of matters her Honour directed the parties to attend to is also instructive. It demonstrates a referral order at that stage of proceedings would have been premature. The directions provided for the application about third party proceedings to be heard and the pleadings between the existing parties to be finalised before the consent order was due to be filed. There was good sense in that sequence. Until the third party application was determined, and the pleadings had closed, the parties to the proceedings and the scope of the dispute to be mediated had not been fully articulated.

39. [39]
    There is no evidence about whether the parties did file a consent order and the parties could not assist me on this point.^[20]For the purposes of this appeal, I have assumed that they did not.

40. [40]
    Section 101 allows the parties to a dispute to agree to refer their dispute to an ADR process. Although the parties did not follow the prescribed procedure of filing a consent order (which is then taken to be a referral order), there was no dispute on appeal that they agreed to refer their dispute to mediation. That is also evidenced by the mediation agreement entered into by Mr Pearce, Ms Meiklejohn and Mr Coomber on or about 27 November 2009.

41. [41]
    Further, I am satisfied that the parties agreed that the mediation would be conducted pursuant to the Supreme Court of Queensland Act 1991. That is evidenced by her Honour’s directions which referred to a consent order to be filed by the parties.

42. [42]
    Assuming the parties did not comply with the procedure prescribed by s 101(2), that does not necessarily mean there has not been a valid referral to mediation under the Act. I do not consider it was a purpose of s 101 that an agreement to mediate under the Act has no effect if the parties do not file a consent order.^[21]In reaching that conclusion I have had regard to the language of s 101 as a whole. While it requires the parties to file a consent order, it does not identify any particular consequence for non-compliance. I have also had regard to the objects of Part 8 of the Act, set out in s 94, particularly:

(a)to provide an opportunity for litigants to participate in ADR processes in order to achieve negotiated settlements and satisfactory resolutions of disputes; and…

(c)to provide a legislative framework allowing ADR processes to be conducted as quickly, and with as little formality and technicality, as possible.

43. [43]
    Those objects support an interpretation that gives effect to the parties’ intention to mediate under the Act, despite non-compliance with a procedural requirement.

44. [44]
    Mr Coomber instituted third party proceedings against Ms Meiklejohn on 29 September 2009. In the mediation agreement, signed on or about 27 November 2009, the parties specified as their “Brief description of the Dispute”: Supreme Court of Queensland No BS804 of 2008. By that time, that proceeding number also encompassed Mr Coomber’s third party claim against Ms Meiklejohn.

45. [45]
    Further, the Deed of Settlement is consistent with the reference of the proceedings as a whole to mediation. The definition of proceeding, for the purposes of the Deed, expressly includes any third party proceedings against Meiklejohn. Further, paragraph [3(b)] states the Deed does not operate as a release as between Ms Meiklejohn and Mr Coomber.

46. [46]
    In summary, Mr Coomber had taken steps to bring a third party claim against Meiklejohn when the matter was before Atkinson J, and the terms of the Mediation Agreement and Deed of Settlement are consistent with that claim forming part of the dispute referred to mediation. Accordingly, I find that the dispute the parties agreed to refer to mediation included the third party proceedings between the parties to this appeal.

47. [47]
    (b) Does s 114 only apply if there is a written agreement about their dispute that complies with s 107?

48. [48]
    In essence, Mr Coomber’s argument is that s 114 only applies in the event there is a written agreement that complies with the requirements of s 107. In the absence of such an agreement, he argues s 114 does not apply and common law principles apply. The difficulty with this submission is that s 114 does not expressly contain that limitation. It makes no reference to an agreement being reached, written or otherwise. Further, it does not refer to s 107 & s 110, the two provisions which deal with the requirements for a written agreement and the way in which such an agreement may be enforced.

49. [49]
    It might be thought there is some tension in the statutory regime for enforcement of written agreements (through s 107 and s 110) and the confidentiality preserved by s 114. However, there are sound reasons to require an agreement reached during court annexed mediation to be reduced to writing in order to have access to the enforcement regime. Further, Mr Coomber’s claim is not concerned with the enforcement of a written agreement. Rather, he seeks to enforce an oral agreement, or at least to lead evidence of what was said and done at mediation in furtherance of his claim that an oral agreement was reached.

50. [50]
    The requirement for an agreement to be reduced to writing before it might be enforced under s 110, does not mean that the cloak of statutory confidentiality is only conferred where an agreement is reached. The learned Magistrate rejected this argument.^[22]Respectfully, I see no error in her reasoning and adopt it.

51. [51]
    Her Honour’s conclusion is consistent, also, with the reasoning of the High Court in Harrington v Lowe.^[23]In that case, the court was called upon to construe Order 24 of the Family Court Rules which contained a prohibition expressed in very similar terms.  The Court rejected an argument that O 24 should be read as subject to well established principles which limit the scope of the without prejudice principle. The Court considered this failed to accord proper weight to the plain language and purpose of the rule, read in context. It found it was impossible to read down the very wide language used by the rule-maker so as to permit exceptions beyond those expressly listed in a sub-rule.

52. [52]
    I follow that reasoning in construing s 114. It, too, contains specific exceptions to a prohibition couched in very wide language. It makes no reference to ss 107 & 110 or to agreements, written or oral. It appears in a separate division of the relevant part of the Act. Giving full accord to the ordinary language provides more comprehensive protection than is afforded to without prejudice negotiations at common law. However, that is not inconsistent with the objects for the Part. In context, and having regard to the objects of the Part, I see no basis for reading down the plain language of the section.

53. [53]
    To the extent that Mr Coomber’s affidavits give direct evidence of what was said or done during mediation, I uphold Ms Meiklejohn’s objection.

3.Should Mr Coomber’s pleadings be struck out and judgment entered for Ms Meiklejohn?

54. [54]
    The effect of the rulings that I have made is that the state of the evidence upon a rehearing of the applications is similar to the state in which it was before her Honour, except for an affidavit by Mr Madsen which raises a dispute on the facts (at [8.5]).

55. [55]
    Courts are traditionally reluctant to interfere on appeal with an exercise of discretion which does not determine substantive rights.^[24]On appeal, Ms Meiklejohn’s argument regarding the summary judgment application was confined to the learned Magistrate’s rulings on the evidence. She has not succeeded in excluding any evidence that her Honour had regard to.

56. [56]
    I find no error in her Honour’s identification or application of the relevant principles on a summary judgment application. On rehearing, Mr Madsen’s affidavit reinforces the conclusion that there are disputed issues of fact which cannot be determined on a summary basis. In my view, the circumstances which enliven the court’s discretion to enter judgment on a summary hearing do not arise in this case.

57. [57]
    As to Ms Meiklejohn’s application to strike out Mr Coomber’s pleadings, that application must fail also, given the rulings on the evidence. Mr Coomber appealed her Honour’s decision to strike out paragraph 5(b) of the Reply. The learned Magistrate considered it superfluous and unnecessary. Although I do not agree with that conclusion, Mr Coomber’s counsel conceded at the appeal hearing that reliance is an essential element of the estoppel claim and should have been pleaded in the Statement of Claim, not the Reply. I will not, therefore, disturb her Honour’s order, but will remit the matter for directions as to filing amended pleadings.

Conclusion

58. [58]
    Ms Meiklejohn has succeeded in her argument that she was denied procedural fairness. On rehearing, I dismiss her applications to strike out Mr Coomber’s pleadings and for judgment to be entered in her favour. I will hear from the parties as to costs.

The orders are:

1.Appeal allowed.

2.The decisions of her Honour of 6 August 2013 are confirmed.

3.The matter is remitted for directions regarding filing amended pleadings.