Privileged documents prepared for the purpose of settlement negotiations: when can they be disclosed in subsequent proceedings?

In brief - NSW Supreme Court allows disclosure of privileged documents prepared for the purpose of settlement negotiations

The recent decision in Martin Patrick Dowling v Ultraceuticals Pty Ltd [2016] NSWSC 386 to allow disclosure of privileged documents prepared for the purpose of settlement negotiations in subsequent proceedings illustrates a situation where the Court did not find a sufficient connection between the subject matter of the original dispute and the subsequent dispute so as to warrant the preservation of the privilege.

Privilege extends where a sufficient connection between the original and subsequent disputes exists

As a matter of policy, the law excludes from evidence admissions by words or conduct made by parties in the course of negotiations to settle litigation (also known as "without prejudice privilege"). The purpose of this is to enable parties engaged in an attempt to settle litigation to communicate freely with each other and without the prejudice that might be caused to them if the negotiations fail and their communication is later used in evidence against them.

As Lord Griffiths stated in Rush & Tompkins Ltd v Greater London Council [1988] UKHL 7, to abolish "without prejudice privilege" would "place a serious fetter on negotiations between other parties if they knew that everything that passed between them would ultimately have to be revealed to...