Contents

Chapter 10
Privilege and confidentiality

Privilege for settlement negotiations and mediation

Introduction and background

10.34 Settlement negotiations and mediation are an alternative to the court process for parties to resolve the disputes between them. Settlement involves parties conferring and bargaining with a view to reaching agreement.640  Mediation is a similar process that involves an intermediary who assists the process.641  These processes rely on full and frank discussion by the parties of their respective cases. Accordingly, the common law recognised the ability of parties to enter into “without prejudice” negotiations. Anything said or done in such negotiations would be without prejudice to the speaker’s right to pursue or defend litigation as if the statement had not been made.

10.35The privilege for settlement negotiations – formerly known as the “without prejudice” rule – is contained in s 57 of the Act:

57 Privilege for settlement negotiations or mediation

(1) A person who is a party to, or a mediator in, a dispute of a kind for which relief may be given in a civil proceeding has a privilege in respect of any communication between that person and any other person who is a party to the dispute if the communication—
(a) was intended to be confidential; and
(b) was made in connection with an attempt to settle or mediate the dispute between the persons.
(2) A person who is a party to a dispute of a kind for which relief may be given in a civil proceeding has a privilege in respect of a confidential document that the person has prepared, or caused to be prepared, in connection with an attempt to mediate the dispute or to negotiate a settlement of the dispute.
(3) This section does not apply to—
(a) the terms of an agreement settling the dispute; or
(b) evidence necessary to prove the existence of such an agreement in a proceeding in which the conclusion of such an agreement is in issue; or
(c) the use in a proceeding, solely for the purposes of an award of costs, of a written offer that—
(i) is expressly stated to be without prejudice except as to costs; and
(ii) relates to an issue in the proceeding.
10.36In its preliminary paper on privilege, the Law Commission stated that it considered the without prejudice rule to be a “useful and well-justified legal doctrine”, but that the process of its codification was not without problems.642  Two problems related to the extent of the privilege.
10.37The first issue was that the privilege had only been used in civil proceedings to date, but that its application to “plea bargaining” in criminal proceedings was less clear.643  At the time of the review, although plea bargaining was common in the United States, it was not formally recognised in New Zealand criminal procedure. The Law Commission believed that it would be inappropriate to include provisions relating to it in a New Zealand evidence code until practice changed.644
10.38The second problem was how the various public interest limits on the privilege should be accommodated in a code provision.645  The common law recognised that there were circumstances when the privilege could be overridden. In the Law Commission’s preliminary paper it noted that the state of the law was unclear as to what these circumstances were. On the one hand, in Rush and Tompkins v GLC, Lord Griffiths said “resort may be had to the ‘without prejudice’ material for a variety of reasons when the justice of the case requires it”.646
10.39On the other hand, attempts had been made to spell out those circumstances in more specific detail. The Law Commission noted that the most comprehensive example could be found in the legislation proposed by the Australian Law Reform Commission, which was (in substance) introduced into the Federal Parliament in 1991.647  Section 131 of the Evidence Act 1995 (Cth) now sets out the following “exceptions” to the settlement negotiation privilege:
(a) the persons in dispute consent to the evidence being adduced in the proceeding concerned or, if any of those persons has tendered the communication or document in evidence in another Australian or overseas proceeding, all the other persons so consent; or
(b) the substance of the evidence has been disclosed with the express or implied consent of all the persons in dispute; or
(c) the substance of the evidence has been partly disclosed with the express or implied consent of the persons in dispute, and full disclosure of the evidence is reasonably necessary to enable a proper understanding of the other evidence that has already been adduced; or
(d) the communication or document included a statement to the effect that it was not to be treated as confidential; or
(e) the evidence tends to contradict or to qualify evidence that has already been admitted about the course of an attempt to settle the dispute; or
(f) the proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons in dispute to settle the dispute, or a proceeding in which the making of such an agreement is in issue; or
(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 document is adduced to contradict or to qualify that evidence; or
(h) the communication or document is relevant to determining liability for costs; or
(i) making the communication, or preparing the document, affects a right of a person; or
(j) the communication was made, or the document was prepared, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty; or
(k) one of the persons in dispute, or an employee or agent of such a person, knew or ought reasonably to have known that the communication was made, or the document was prepared, in furtherance of a deliberate abuse of a power.
10.40More recently, the United Kingdom Supreme Court has listed the exceptions as follows:648
  • Where there is a dispute as to whether the without prejudice communications have resulted in a concluded compromise agreement.
  • Where there is an argument that the agreement apparently concluded between the parties during the negotiations should be set aside on the ground of misrepresentation, fraud or undue influence.
  • Where even if there is no concluded compromise, a clear statement is made by one party on which the other party is intended to act and does in fact act – here the evidence may be admissible as giving rise to an estoppel.
  • Where exclusion of the evidence would act as a cloak for perjury, blackmail or other “unambiguous impropriety”.
  • Where there is a need to explain delay or apparent acquiescence (for instance, on an application to strike out proceedings for want of prosecution).
  • Where there is an issue as to whether a party had acted reasonably to mitigate his or her loss in his or her conduct and conclusion of negotiations.
  • In the case of offers expressly made “without prejudice except as to costs”.
  • For the purposes of rectification of an agreement made by way of settlement.
10.41 In the Law Commission’s preliminary paper, it preferred the view that the law on the scope of the privilege was too fluid to permit the enactment of a firm rule with a series of defined exceptions. Instead, it recommended a “qualified privilege” and suggested a formulation of the provision that would deal with the matter “more broadly, leaving it to the court to determine whether, in the circumstance of the particular case, the need for the evidence in court proceedings outweighs the policy reasons for excluding it.”649  The Law Commission suggested the following draft provision:

Privilege for settlement negotiations

(1) A person who is a party to a dispute of a kind for which relief may be given in a civil proceeding has a privilege in respect of:
(a) any communication between that person and any other person who is a party to the dispute if the communication was
(i) intended to be confidential; and
(ii) made in connection with an attempt to settle the dispute between the persons; and
(b) a confidential document that contains the terms of an agreed settlement of the dispute.
(2) A person who is a party to a dispute of a kind for which relief may be given in a civil proceeding has a privilege in respect of a confidential document which that person has prepared, or caused to be prepared, in connection with an attempt to negotiate a settlement of the dispute.
(3) Notwithstanding subsection (1) and (2), a court may order the disclosure in a proceeding of a communication or document for which a person has a privilege under those subsections if the court considers that, in the interests of justice, the need for the communication or document to be disclosed in the proceeding outweighs the need for the privilege.

[emphasis added]
10.42However, as outlined above, the Law Commission was subsequently persuaded by submissions to recommend an “absolute privilege” for settlement negotiations in its Evidence Code. The explanation for this change was a wish for the provision to be “in keeping with [the Law Commission’s] approach to legal professional privilege”.650  The Law Commission favoured an absolute privilege in that area because “giving the courts the power to override the privilege would be likely to result in interlocutory applications as a matter almost of routine in litigation of any size, with resulting delay and added expense.”651
10.43 The settlement privilege provision was intended to state the existing law652  and contained two situations where the privilege did not apply:
  • where an agreement settling the dispute has been concluded; or
  • in a proceeding where the conclusion of such an agreement is in issue.
10.44The commentary to the Evidence Code stated that these exceptions were articulated to remove doubt:653

If the parties reach agreement, there is then a contract on which either party may sue. In that litigation, it must of course be possible to refer not only to the agreement made, but also – if, for example, one party alleges that the agreement was induced by mistake or misrepresentation – to the communications relied on to support that allegation.

10.45The commentary makes no mention of whether the Law Commission intended that the courts should be able to employ the other pre-existing “exceptions” to the privilege, although arguably the discussion set out at paragraph 10.41 above and the Law Commission’s aim of codification implies that the draft section was intended as an exhaustive statement of the privilege.

10.46In its final report, the Law Commission also made the following comment on the issue of mediation privilege:654

The Law Commission considers that the provision as it stands provides adequate protection for communications between parties involved in mediation. The presence of a third party as mediator is not a bar to invoking the privilege. Such communication would also be protected under the general discretion to protect confidential communications in s 67.

10.47 The Justice and Electoral Committee recommended the following changes to the settlement and mediation privilege provision:

  • References to mediation / mediator were inserted into the heading and each subsection, to expressly provide that the privilege would apply in mediation and to mediators.
  • The wording of subsection (3)(a) was altered so that the section would only not apply to the terms of an agreement settling the dispute, as opposed to it not applying in the situation where an agreement settling the dispute had been concluded.
  • A third paragraph was added to subsection (3), namely where a written offer is expressly stated to be “without prejudice as to costs” and relates to an issue in the proceeding.

10.48There was no discussion of the reason for these changes in the Committee report or departmental report. The Bill was passed without further amendment to this section.

Scope of privilege and exceptions

10.49Section 57(3) sets out the circumstances when the privilege does not apply. There are two potential views of the subsection. One view is that s 57(3) does not preclude the pre-existing common law exceptions. This view was taken by Keane J in New Zealand Institute of Chartered Accountants v Clarke.655  He considered that s 57(3) relates to the scope of the privilege. For Keane J, it sets out only the “obvious formal boundaries” of the privilege but does not prevent the court from referring back to the other circumstances when the common law allowed the admission of evidence of settlement negotiations.656  Asher J adopted the same approach in Consolidated Alloys v Edging Systems (NZ) Ltd.657
10.50 In slight contrast, the Court of Appeal in Sheppard Industries Ltd v Specialized Bicycle Components Inc viewed s 57(3) as containing “exceptions” to the privilege, but it also considered that “[p]lainly, however, there are other recognised exceptions to the “without prejudice” rule.”658  It too concluded that s 57 is not a definitive statement of the privilege. This view is shared by the authors of Cross on Evidence:659

Generally speaking, the common law exceptions may be best seen as examples outside the true scope of the privilege, rather than as exceptions to it. Seen in this light, they exemplify instances outside the statutory without prejudice privilege in the same way.

10.51On the other hand is the view held by Richard Mahoney and others that: “The common law recognised other exceptions to the privilege. However, the effect of codification is that there is little room to argue for the continued existence of these earlier exceptions”.660
10.52 Heath J’s comments in Jung v Templeton support this view.661  He cites with approval the Mahoney view that with each of the privilege provisions it is important to inquire whether the material in question comes within the scope of the particular privilege. The question in relation to s 57 is whether the privilege protects everything arising in the context of settlement negotiations / mediations, bar in the situations in s 57(3), or whether there is still scope for the court to determine the breadth of the privilege.662  In Heath J’s view, s 57 as enacted leads to the former result. However, he is not sure whether that conclusion represents Parliament’s will or is an unintended consequence.663

10.53We consider that the original Law Commission material clearly supports the view of Richard Mahoney and Heath J. The Law Commission’s recommendation was for an absolute privilege and no express issue was taken with that through the parliamentary process.

10.54However, given the current difficulties with s 57, we suggest that the Law Commission’s original recommendation should be reconsidered. We prefer the view put forward in the Law Commission’s preliminary paper. In our view, there will continue to be legitimate circumstances outside those in s 57(3) where the interest in admitting evidence from settlement negotiations will outweigh the interest in upholding the privilege. The limited “exceptions” set out in s 57(3) have, we suggest, inappropriately broadened the reach of the privilege. This situation has proven unsatisfactory to the courts and so they have sought ways to get around the limits of s 57. It is relevant that one of the methods they have employed arguably puts an incorrect interpretation on ss 10 and 12 which inappropriately expands their effect (discussed above at paragraph 2.35).

10.55Also, we do not consider that an “absolute privilege” is needed so that it is “in keeping with [the Law Commission’s] approach to legal professional privilege”.664  In contrast to the without prejudice privilege, the pre-Act common law position was that legal professional privilege was absolute. Although there were some narrow exceptions, the received view was that information protected by the privilege could not be divulged, no matter how important the information may be to an issue before the court. The recognised exceptions were narrower than those for the without prejudice rule and thus lent themselves more readily to statutory statement. They are set out in ss 65–67 of the Act. Also, the policy behind legal professional privilege, which differs from that for settlement negotiations, better justifies its broader reach.
10.56We suggest that s 57(3) be amended to better reflect the appropriate policy balance between the admissibility and exclusion of evidence of settlement negotiations. We are faced with the same options as the Law Commission considered in its preliminary paper: that is, either attempt to spell out each of the exceptions or make provision along the lines that:665

[A] court may order disclosure in a proceeding of a communication for which a person has a privilege under [this section] if the court considers that, in the interests of justice, the need for the communication to be disclosed in the proceeding outweighs the need for the privilege.

10.57There is a risk in adopting the latter option. Enabling the court to assess admissibility where the “interests of justice” favour it might invite litigation in areas outside the pre-existing recognised exceptions to the privilege. Nevertheless, we favour that option. We consider there is a greater risk in seeking to spell out the exceptions. There is a difficulty in adequately capturing them in statutory form. In addition, a provision that unwittingly introduces limits on or differences with the pre-existing law may continue to invite courts to seek to employ other sections of the Act to circumvent the provision. In our view it is better that the Act acknowledge the courts’ role in setting the boundaries of the privilege. But it will be important that the courts describe clearly and adhere to those boundaries. Our recommendation is set out following paragraph 10.94.

Termination of the privilege

10.58It is unclear on the face of the provision whether the privilege contained in s 57 (and the litigation privilege contained in s 56) terminates and, if so, when it does.

10.59 It was well-recognised at common law that, in terms of solicitor-client privilege (what is now legal advice privilege under s 54 of the Act), the adage “once privileged, always privileged” applied.666  However, the position with respect to litigation privilege (what is now s 56) and without prejudice privilege (what is now s 57) was always less clear.667
10.60 Shortly before the Act was passed, the Supreme Court of Canada determined, in Blank v Minister of Justice, that litigation privilege comes to an end once the litigation that created the privilege terminates.668 In terms of s 56, the decision in Blank was noted by the New Zealand Court of Appeal in A v Attorney-General, which described it as raising an “interesting question”, but found that it did not need to consider the issue.669  Subsequently, leave to appeal to the Court of Appeal was granted in Reid v New Zealand Fire Service Commission on the question: “Does litigation privilege come to an end when the proceeding that gave rise to it and any related proceedings are complete?”670  However, there is no record of the substantive appeal being heard.
10.61 Regarding s 57, the issue was addressed, in obiter, by the High Court in Jung v Templeton.671  Heath J concluded that, had he been obliged to apply the section, he would have concluded that the privilege did not terminate despite settlement having been reached.672  This was because, despite the Law Commission’s apparent intention that the privilege would end once a settlement had been reached,673  the wording of subs (3)(a) was changed by the Justice and Electoral Committee prior to the Second Reading of the Evidence Bill.674
10.62The question of when the privileges in both ss 56 and 57 terminate has not yet been resolved in New Zealand. We have considered what the appropriate position might be under each of the provisions. Our initial view is that the policy balance differs between them. The two privileges serve different purposes. Litigation privilege is about protecting the adversarial process. Once that need has been exhausted, ie once the litigation has concluded, it may well be that there is no need for the privilege to endure. However, the boundaries of this are very difficult to draw. The solution in Blank was that:675

The privilege may retain its purpose and its effect where the litigation that gave rise to the privilege has ended, but related litigation remains pending or may be reasonably be apprehended. This enlarged definition of litigation includes separate proceedings that involve the same or related parties and arise from the same or related cause of action or juridical source. Proceedings that raise issues common to the initial action and share its essential purpose would qualify as well.

10.63In practice, then, assessing when the privilege should end would be difficult.

10.64 The settlement negotiation privilege, on the other hand, is intended to encourage settlement and avoid unnecessary trial. Things may be said and positions taken in a free and frank settlement exchange that a party may never want to be made public. Parties may not make certain offers or concessions if they thought there was a later chance of publicity. The argument for an enduring privilege may therefore be greater in this area. On the other hand, this concern may be adequately met by the use of confidentiality agreements.

10.65To date, we are not aware that this issue has caused problems in practice. Additionally, it seems to us that it would be difficult to neatly encapsulate the idea of “termination” in legislation as this is likely to be driven by the facts in any given case. We think it appropriate to leave the matter of when a privilege under s 56 or s 57 terminates to be determined by the courts. We propose to monitor the interpretation of these provisions and, if they prove problematic, reconsider this issue in the next five year review.

R21 We recommend that the termination of the privileges contained in ss 56 and 57 be kept under review with any problems identified to be considered at the next five year review.

Mediation

10.66 The Court of Appeal’s decision in Sheppard Industries Ltd v Specialized Bicycle Components Inc has caused concern about the application of the provision to mediation.676  The concern is that s 57, and the interpretation placed on it in that case, does not appropriately recognise the special nature of mediation. The need for confidentiality in mediation, it is suggested, differs from that in normal settlement negotiations, and mediation may therefore require separate treatment.

10.67In Sheppard Industries Ltd, proceedings had been filed and the parties went to mediation in an attempt to settle them. The mediation agreement, at least on one reading, required written agreement for settlement to occur. There were also standard confidentiality provisions requiring neither side to divulge what happened at the mediation unless compelled by law.

10.68No written settlement agreement transpired and Specialized wished to proceed with the litigation. However, Sheppard contended that the dispute had been settled orally at the mediation and wished to lead evidence from the mediation in support of this. This was refused at first instance.677

10.69On appeal, the Court of Appeal held that the exception in s 57(3)(b) applied even if the parties had agreed: (i) not to seek to introduce any communication from the mediation as evidence in any proceeding; and (ii) that settlement could only be reached by written agreement. The Court added that a prior mediation agreement requiring any settlement agreement to be in writing did not prevent the Court enquiring into whether an alleged (but disputed) oral settlement agreement had been reached, as the “no settlement unless in writing” requirement may have been orally varied or waived in the course of the mediation.

10.70The Court couched the confidentiality provisions as having the effect of illegitimately “contract[ing] out of s 57(3)(b)”.678  Even if that were possible, the Court thought, that agreement would not necessarily be effective given the parties’ ability to vary or waive its terms.
10.71 Leave was granted to Specialized Bicycle Components to appeal to the Supreme Court on the ground of “whether the respondents are precluded by the terms of the mediation agreement and / or the confidentiality agreement from adducing the disputed evidence”,679  but the parties settled the dispute shortly before the substantive hearing.
10.72 Both the Arbitrators’ and Mediators’ Institute of New Zealand (“AMINZ”) and LEADR have concerns that the decision does not adequately distinguish between privilege and confidentiality. AMINZ describes the problem as follows:680

Privilege is a creature of the law of evidence, and governs when certain types of communications may be admissible before a court. Confidentiality is a creature of the law of contract, and governs what rights may be enforced between parties to an agreement.

10.73The former, they suggest, governs what material a court may receive; the latter governs what a party may adduce. However, AMINZ considers that a number of comments in the Court of Appeal judgment suggest that privilege rules abrogate contractual rights:681

… there is nothing in them [s 57(3)(a) and (b)] which indicates that parties may agree that the exceptions they contain should not apply to them. Moreover, if the parties did attempt to contract out of s 57(3)(b) in their mediation agreement, it is difficult to see how they could exclude the possibility of waiver, variation or a collateral contract arising.

We therefore consider that Sheppard is entitled to argue that the parties did reach an oral settlement agreement at the conclusion of the mediation, which Sheppard has in part performed, and is entitled to lead evidence of what occurred at the mediation to support that contention.

10.74AMINZ also notes that it was on this question that the Supreme Court gave leave:682

The approved ground is whether the respondents are precluded by the terms of the mediation agreement and / or the confidentiality agreement from adducing the disputed evidence.

10.75Both AMINZ and LEADR suggest that the Court of Appeal’s interpretation of s 57(3) dramatically undermines the private nature of mediation. They suggest that the result will be the erosion of the effectiveness of New Zealand mediations since parties will know that, whatever protections they agree to, anything they say may later be called as evidence in court to prove an alleged unwritten settlement agreement. AMINZ notes a number of matters:683
  • The common law without prejudice rule was developed in the context of direct negotiations. As a result, some of the common law exceptions that have been developed for settlement negotiations may not be appropriate in a mediation context.
  • The usually structured nature of mediation demands a policy balance that weighs privacy considerations more heavily than for less structured direct negotiations.684
  • The international trend is, increasingly, for their separate treatment. The Commonwealth of Australia and some states have enacted separate mediation privilege provisions with more limited exceptions.685Such provisions also exist in Hong Kong, some American states and two Canadian provinces.686 Commentators in the United Kingdom have argued that mediation and negotiation privilege should be dealt with separately because of the different policy concerns.687Also, the European Union has issued a Directive calling for states to respect the confidentiality of the mediation process, and establishing a qualified mediator’s privilege with limited exceptions.688

10.76AMINZ suggest two options for addressing the asserted difference between standard settlement negotiations and mediation. They suggest either:

  • a separate provision dealing with mediation privilege; or
  • the addition of a subsection to s 57 to clarify that confidentiality agreements made in respect of mediation are enforceable.689

Are there grounds for treating mediation separately?

10.77There are two ways of addressing this issue. One is that it is a question of the enforceability of confidentiality clauses. The second, which we prefer, is to treat it as a question of the appropriate scope of the privilege. We do not think there is any doubt that legislation can set a bar for when confidentiality clauses can be overridden. And we suggest that it is better that the fundamental policy balance be set in that manner.

10.78The difficulty, however, is in defining in legislation the circumstances when they should be overridden. The question is whether and how mediation differs from standard settlement negotiations, and whether the scope of the privilege, or range of “exceptions”, should differ.

10.79As AMINZ observe, the two are treated differently under some Australian statutes. For instance, while s 131 of the Evidence Act 1995 (Cth) sets out the numerous “exceptions” to the settlement negotiation privilege, it has been accepted that the provision is subject to s 53B of the Federal Court of Australia Act 1976.690  Section 53B provides:

Admissions made to mediators

Evidence of anything said, or of any admission made, at a conference conducted by a mediator in the course of mediating anything referred under section 53A is not admissible:
(a) in any court (whether exercising federal jurisdiction or not); or
(b) in any proceedings before a person authorised by a law of the Commonwealth or of a State or Territory, or by the consent of the parties, to hear evidence.

10.80While there are other international moves toward recognising a mediation privilege, the approaches to it differ. For example, in contrast to the Australian approach, the United States Uniform Mediation Act recognises that evidence from mediation may need to be admitted in certain circumstances including where:

  • There is an intention to inflict bodily injury, commit a crime or to conceal an ongoing crime or ongoing criminal activity.
  • It is needed to prove or disprove a claim or complaint of professional misconduct or malpractice filed against a mediator; a mediation party or their representative.
  • To prove or disprove abuse, neglect, abandonment, or exploitation in a proceeding in which a child or adult protective services agency is a party.
10.81The main United Kingdom commentator takes a nuanced approach to the privilege. He acknowledges the value of the recognised exceptions to “without prejudice” negotiations in the mediation context. His focus is on separate treatment for “mediator secrets” – communications by parties to the mediator about their views, hopes and fears about the mediation which might assist the mediator to source a solution but which the party does not want the other party to know – rather than the whole mediation process per se.691

10.82We suggest that the concern with Sheppard Industries Ltd is not so much the result in that case; there is an argument that the general “without prejudice” rule was not being subverted since what was being admitted was evidence that the (oral) agreement was concluded, rather than evidence as to the substantive merits of the case. But the case signals the court’s willingness to override a confidentiality clause, leading to uncertainty as to when in future circumstances it will do so again. That uncertainty is driven by the questions surrounding the scope and import of s 57(3), described above.

10.83The same problem arises. It would be difficult to adequately provide in legislation for all the circumstances where a privilege relating to mediation should be overridden. In keeping with our approach above, we suggest that this is an area that should be left to the courts to develop, taking into account the importance of mediation in settling disputes.

10.84As an aside, we note that s 69 of the Act (discussed further below) provides further protection for mediation. It gives the court an overriding discretion as to confidential information. There is no doubt that communications during and in preparation for mediation would fall within the scope of that section which protects “confidential communications” and “any confidential information”. Section 69 was not relied upon in Sheppard Industries Ltd.

Criminal proceedings

10.85As stated above, the Law Commission’s intention was that s 57 would not apply to what is known as “plea bargaining” in criminal proceedings, on the basis that this was not, then, a recognised practice in New Zealand. By the time the Act came into force, however, this was no longer the case. The process of “plea discussions” is now effectively formalised by the Prosecution Guidelines692  and is given further recognition by the Criminal Procedure Act 2011.693  There is therefore a question of whether the provision should be changed to apply expressly to plea discussions.694  The arguments in favour of the extension of s 57 have been well made by Justin Harder.695  He notes on the one hand the significant value for the administration of justice offered by plea discussions as set out in the Prosecution Guidelines:
  • relieving victims of complainants from the burden of the trial process;
  • releasing court and judicial time, prosecution costs, and legal aid resources; and
  • providing a structured environment in which the defendant may accept any appropriate responsibility for offending that may be reflected in any sentence.
10.86 On the other hand, he notes the risks posed by a lack of express protection around such discussions. First, as Richard Mahoney and others note, the current situation may not be appreciated by many operating in criminal practice.696  They comment that “it is common for defence lawyers who are seeking to resolve criminal charges before trial to communicate with the police or Crown counsel on a ‘without prejudice’ basis” and that this is done “on the assumption that no evidence could be given of their contents.”697
10.87Second, as noted, there is now more formal recognition of plea discussions, particularly since the introduction of status hearings and the enactment of the Criminal Procedure Act 2011. For example, the Act provides for the courts to give a sentence indication,698  the request for which is not admissible in evidence in any proceeding.699  Another example is the case management provisions, which require the defendant to record certain matters in a memorandum, such as whether they intend to change their plea.700  It is arguable that such a signal, if it is not followed through with, would be admissible against the defendant as an admission against interest.701
10.88Justin Harder cites three cases from the United Kingdom as illustrating the risks posed by a lack of recognition of privilege for such discussions. In R v Hayes, the Court of Appeal admitted evidence of a letter the defendant’s solicitor wrote to the Crown suggesting the defendant might plead guilty to a lesser offence.702  The Court noted that the letter was relevant to the defendant’s credibility in the same way that a defendant might be cross-examined about an alibi notice or a defence statement of issues made at a case management hearing.703
10.89In R v Adams the Court ruled that a hearsay statement which was the sole evidence against the defendant was reliable and therefore admissible because it was consistent with an oral statement made by counsel at callover intimating that supply but not possession of ecstasy would be disputed at trial.704  In addition, in R v Newell the defendant’s lawyers had written “no possession” on a memorandum at a case management hearing in relation to charges of possession and supply of cocaine.705  The Crown sought to make use of the memorandum to challenge the defendant’s credibility on the basis that the defendant’s plea to possession was inconsistent with counsel’s memorandum. The Court of Appeal refused, noting that the application of Hayes and Adams in this way had led to an understandable reluctance on the part of the defence bar to engage frankly in case management hearings and that this would have an impact on the administration of justice.

10.90 At best, these cases illustrate the need for counsel to be circumspect in their plea discussions, but at worst the lack of express protection could inhibit effective plea discussions and significantly diminish the benefits for the administration of justice.

10.91There is an argument that s 57 already protects negotiations in some criminal proceedings. This argument goes as follows:706

Under s 57, the privilege exists as long as the dispute is “of a kind for which relief may be given in a civil proceeding”. Many disputes which routinely end up in a criminal court could, in theory, support a civil proceeding (eg, for battery, conversion, or deceit). Section 57(1) does not require that any civil proceeding is ever actually launched. All that is needed is that the dispute could, in theory, follow that path. In this way, negotiations in many criminal proceedings may still be protected under s 57(1).

10.92Whether or not this is correct, we consider that, in the interests of clarity, express provision should be made for disclosures made in plea discussions to be privileged. This could be achieved by the amendment of s 57 or by a separate plea discussion provision.

10.93The same arguments arise as those canvassed in relation to mediation above. The policy basis for privilege for plea discussions differs from that for settlement negotiations in civil disputes and for mediation. There may be circumstances where communications made in such discussions should be admitted that differ from the other two forms of negotiation. And, again, we suggest that there is a risk in seeking to set out, exhaustively, in legislation what those exceptional circumstances might be.

10.94 We therefore favour a provision which leaves the matter for development by the courts. The disadvantage of this approach might be thought that, given the broad approach taken by the United Kingdom courts and the scant existing New Zealand case law on the matter, the courts will have a blank sheet on which to frame exceptions which make the privilege ineffective. However, ultimately, the dicta of the English Court of Appeal in Newell showed that Court’s sensitivity to the countervailing interest of the administration of justice.

R22 We recommend amending s 57 to apply expressly to criminal proceedings, and adding a paragraph to s 57(3) that allows a court to order disclosure if the court considers that, in the interests of justice, the need for the communication or document to be disclosed in the proceeding outweighs the need for the privilege, taking into account the particular nature and benefit of settlement negotiations, mediation or plea discussions as the case may be.

640Stephen Hooper, Peter Spiller and Ian Macduff “Negotiation” in Peter Spiller (ed) Dispute Resolution in New Zealand (Oxford University Press, Victoria, 1999) 23 at 23.
641Paul Hutcheson and Stephen Hooper “Mediation” in Peter Spiller (ed) Dispute Resolution in New Zealand (Oxford University Press, Victoria, 1999) 57 at 57.
642Law Commission Privilege, above n 608, at 67.
643At 67.
644At 67. We also noted that the “broader topic may fall for consideration under the Commission’s reference on criminal procedure.”
645At 68.
646Rush and Tompkins v GLC [1989] AC 1280 at 1300 (emphasis added).
647Australian Law Reform Commission Evidence (ALRC R38, 1987).
648Oceanbulk Shipping and Trading SA v TMT Asia Ltd [2010] UKSC 44, [2010] 4 All ER 1011 at [32].
649Law Commission Privilege, above n 608, at 68.
650Law Commission Evidence: Volume 1, above n 611, at 73. The Commission still did not intend it to apply to criminal proceedings, for the same reasons as set out earlier.
651At 70.
652 Law Commission Evidence: Volume 2, above n 616, at 153.
653At 153.
654Law Commission Evidence: Volume 1, above n 611, at 73.
655New Zealand Institute of Chartered Accountants v Clarke [2009] 3 NZLR 264 (HC).
656 At [48].
657Consolidated Alloys v Edging Systems (NZ) Ltd [2012] NZHC 2818.
658Sheppard Industries Ltd v Specialized Bicycle Components Inc [2011] NZCA 346, [2011] 3 NZLR 620 at [15] [Sheppard Industries Ltd].
659Donald Mathieson (ed) Cross on Evidence (online looseleaf ed, LexisNexis) at [EVA57.9].
660Richard Mahoney and others The Evidence Act 2006: Act & Analysis (1st ed, Brookers, Wellington, 2007) at [EV57.09].
661Jung v Templeton HC Auckland CIV-2007-404-5383, 30 September 2009.
662At [61].
663At [64].
664Law Commission Evidence: Volume 1, above n 611, at 73. We still did not intend it to apply to criminal proceedings, for the same reasons as set out earlier.
665Law Commission Privilege, above n 608, at 54.
666Richard Mahoney and others The Evidence Act 2006: Act & Analysis (2nd ed, Brookers, Wellington, 2010) at [EV67.06].
667Richard Mahoney “Evidence” [2006] NZ Law Rev 717 at 725.
668Blank v Minister of Justice [2006] SCC 39, [2006] 2 SCR 319.
669A v Attorney-General [2009] NZCA 490 at [27].
670Reid v New Zealand Fire Service Commission [2010] NZCA 133, (2010) 19 PRNZ 923.
671Jung v Templeton, above n 661.
672At [64]. His Honour was unsure as to whether this was Parliament’s will or an unintended consequence.
673Law Commission Evidence: Volume 2, above n 616, at 153 (set out at paragraph 10.45 above).
674Jung v Templeton, above n 661, at [60].
675Blank, above n 668 (headnote).
676Sheppard Industries Ltd, above n 658.
677Specialized Bicycle Components Inc v Sheppard Industries Ltd [2011] 2 NZLR 242 (HC).
678Sheppard Industries Ltd, above n 658, at [52].
679Specialized Bicycle Components Inc v Sheppard Industries Ltd [2011] NZSC 123.
680Letter from Deborah Hart (Executive Director of AMINZ) to Law Commission regarding the review of the Evidence Act 2006 (1 June 2012).
681Sheppard Industries Ltd, above n 658, at [44]–[45].
682Specialized Bicycle Components Inc v Sheppard Industries Ltd, above n 679, at [B] (emphasis added).
683Letter from Deborah Hart (Executive Director of the AMINZ) to Law Commission, above n 680.
684At 4.
685At 7. 
686At 8-9.
687At 8. 
688At 8.
689They propose the following wording: “Nothing in this section prevents the Court from enforcing, as a matter of contract law, the terms of any mediation or confidentiality agreement entered into between parties to a mediation.”
690Pinot Nominees Pty Ltd v Commissioner of Taxation [2009] FCA 1508.
691Justice Briggs “Mediation Privilege: Part Two” (2009) 159 NLJ 55.
692Crown Law Prosecution Guidelines (January 2010).
693Criminal Procedure Act 2011, ss 60–65.
694We say “expressly” because there is an argument, referred to below at paragraph 10.91, that s 57 could be interpreted as already applying to criminal proceedings.
695Justin Harder “Plea discussions and statements of disputed issues” [2012] NZLJ 269.
696Mahoney and others, above n 666, at 269.
697At 269.
698Criminal Procedure Act 2011, s 61.
699Criminal Procedure Act 2011, s 65.
700Criminal Procedure Act 2011, Part 3 Subpart 3. (Not in force.)
701Evidence Act 2006, s 27. However, we note that such evidence may be ruled inadmissible pursuant to the general exclusion in s 8 or the specific exclusions in ss 28 to 30.
702R v Hayes [2004] EWCA Crim 2844.
703At [23].
704R v Adams [2007] EWCA Crim 3025, [2008] 1 Cr App R 35.
705R v Newell [2012] EWCA Crim 650, [2012] 2 Cr App R 10.
706Mahoney and others, above n 666, at 269. We note that the authors also suggest other arguments, involving ss 30 and 69, could be run.