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Text Message Ruled Admissible: Are Statements in Negotiations now Admissible Evidence?

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Background

There are some provisions of the Evidence Act 1995 (Cth) that are excluded from some Family Law proceedings. However, when drafting an affidavit, legal practitioners still need to consider the operation of a number of provisions of the Evidence Act, including Section 131(1).

Section 131(1) provides that evidence of communications made in connection with an attempt to negotiate a settlement of a dispute cannot be adduced (i.e. introduced in evidence). These are deemed to be privileged or confidential and, therefore, not admissible as evidence, should the negotiations fail and the matter goes before the Court.

There are several exceptions to this general rule. The exceptions in common law are largely codified in Section131(2) and include:

“(g) evidence that has been adduced in the proceeding, or an inference from evidence that has been adduced in the proceeding, is likely to mislead the court unless evidence of the communication or documentation is adduced to contradict or to qualify that evidence”.

The meaning of this subsection was recently considered in Phe & Leng (2019) FamCAFC 17 by the Full Court of the Family Court of Australia who considered that the policy objectives of the legislation are to encourage settlement negotiation but also encourage genuine representations during the negotiations.

Key Facts

At trial, the judge had determined that the asset pool, in consideration of a property settlement, included a loan from the husband’s father to the husband of $145,000. However, the wife denied there was a loan despite there being considerable evidence to support that there was indeed a loan, including bank statements, records of payments and the evidence of the husband and his father. In particular, there was the evidence of a text message, adduced by the husband, sent by his wife to his sister acknowledging the loan.

In the subsequent appeal, the wife objected to the admissibility of the text message. She claimed that the text message had been sent in the context of trying to persuade the husband’s family, who were in Taiwan, to return their eldest child back to Australia. It was argued that it should have been considered “privileged” as it was a statement made in connection with the attempt to negotiate a settlement of the dispute between the husband and wife.

The Full Court found that the exclusion of the text message as evidence might have misled the trial judge. Although the trial judge noted that the husband was an honest witness, his memory for dates and figures did not appear to be of the same standard as that of the wife. For example, he had previously been inconsistent in statements concerning the amount and source of the loan. Notwithstanding all the other evidence provided by the husband, the trial judge may well have accepted the statements given by the wife had it not been for the evidence of the text message.

Key Issues

The case raised several questions. Are statements made during negotiations ever admissible? When is confidentiality of a settlement communication lost? And in what circumstances is legal privilege lost?

The Full Court reviewed the considerable case law on the meaning and interpretation of Section 132(2)(g) on which there have been differing views. In essence, there is the broad view and the narrow view.

The Full Court stated that the narrow view of the clause has to be “read as applying only to cases where the privilege in Section 131(1) could enable a party to mislead the court about the course of an attempt to settle a dispute where that matter was an issue in the proceedings and the privileged communication contradicted or qualified evidence which had been admitted about that issue”.

The broader view of the clause “applies where the existence or the contents of otherwise privileged communication contradicts or qualifies existing evidence or an inference from that evidence and the court is otherwise likely to be misled unless the communication is adduced”.

What Does It Mean?

If the Full Court had taken the narrow view the message and subsequent cross-examination of the wife would have been inadmissible. However, the Full Court chose to adopt the broad view of the interpretation of Section 131(2)(g).

The exception in Section131(2)(g) would apply because the wife's evidence about the text message contradicted what she wrote in an otherwise privileged message. Whilst it was accepted that parties should be free to negotiate genuinely and realistically when attempting to resolve disputes,  the Full Court stated "it is not sound public policy to permit a party to assert something is 'white' when attempting to negotiate a settlement and then give sworn evidence that it is 'black', without the court knowing the witness had previously said that it was 'white' and the witness being exposed to being tested upon the assertion made during the settlement negotiations".

The decision has considerable relevance to the conduct of mediation. It is in the public interest that negotiations are not inhibited, but they should be conducted "genuinely and realistically". Care needs to be taken when making statements during the course of negotiations if later it is intended to deny or contradict those statements in court when under oath. The court is bound to treat any evidence made during settlement negotiations carefully but nevertheless may still accept such evidence where one of the exceptions under Section131(2) applies.

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