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Sevele v Saulala [2005] TongaLawRp 12; [2005] Tonga LR 250 (28 April 2005)

IN THE SUPREME COURT OF TONGA

Sevele

v

Saulala

Supreme Court, Nuku'alofa
Ford J
CV 105/2002

11-13 April 2005; 28 April 2005

Practice and procedure – verbal settlement of action claimed – not proved

The plaintiff claimed that on or about the 21st day of November 2003 the defamation action was settled out of Court by a verbal agreement between the parties' respective solicitors. The defendant denied that any such agreement was ever reached.

Held:

1. The onus of proof was on the plaintiff to establish his case on the balance of probabilities. The plaintiff failed to persuade the Court that the parties settled the proceeding by an agreement entered into verbally between their respective solicitors on or about the 21st of November 2003, as alleged in the plaintiff's second amended statement of claim.

2. The Court observed that the parties had already encountered problems in October 2003 which resulted in the defendant's application to the Court for an order enforcing a settlement agreement which the plaintiff denied had ever been reached. Against that background, it behoved counsel to take extra precautions the second time around to ensure that all the terms of any settlement were well and truly recorded in writing with the t's crossed and i's dotted before any formal announcement was made that the proceeding had been settled.

3. The plaintiff's action on the settlement failed. His defamation cause of action remained extant. The defendant was entitled to costs to be agreed or taxed.

Case considered:

Allison v KPMG Peat Marwick (1994) 8 PRNZ 128

Counsel for plaintiff: Mr Waalkens QC
Counsel for defendant: Mr Edwards and Mr Kaufusi

Judgment

The Issue

The plaintiff claims that on or about the 21st day of November 2003 this proceeding, which commenced as a defamation action, was settled out of Court by a verbal agreement between the parties' respective solicitors. The defendant denies that any such agreement was ever reached. Whether or not there was such a settlement is the issue before the Court.

The Background

The plaintiff is a prominent businessman in Tonga and at all material times he was the number 2 Peoples' Representative from Tongatapu in the Legislative Assembly. Following the most recent general election in March 2005, the plaintiff was appointed Minister of Labour & Commerce in the newly announced Cabinet. As at the date of delivery of this judgment, he is the acting Prime Minister of Tonga.

The defendant is the owner and, up until recently, was the editor of a weekly newspaper called the "Tonga Star". He is also the manager of the OBN television station.

On the 4th of February 2002 the Tonga Star published a letter to the editor, which the plaintiff alleges was seriously defamatory of him. It is claimed that the statements made in the letter meant that "the plaintiff had committed a felony." The plaintiff instructed a local lawyer, Mr Laki Niu, and the present proceedings were issued on 13 February 2002. The defendant instructed Mr William Edwards as his lawyer and a statement of defence was duly filed denying virtually all of the allegations made in the plaintiff's statement of claim apart from publication.

The case was initially set down for trial before a Judge alone on 25 September 2002 but various interlocutory matters then arose which meant that the September fixture and a subsequent fixture made for July 2003 had to be vacated. The hearing was eventually fixed before a judge and jury for five days commencing 17 November 2003.

"Without Prejudice" Correspondence and Negotiations

At the commencement of this hearing, which was confined to the alleged settlement cause of action, I heard legal argument as to whether the Court was entitled to have regard to correspondence passing between solicitors which was clearly marked "without prejudice" and settlement negotiations that were conducted on a similar basis. I gave a ruling that such evidence was admissible and in my ruling I made reference to the following passage from Cross on Evidence, 7th Australian edition (2004), [25380]:

"Once negotiations have been completed as a result of without-prejudice interviews or letters, a binding contract has been brought into existence and this may, of course, be proved like any other contract. But this does not make the communications which led to the compromise discoverable to other parties nor does it remove the privilege attending to these communications. However, the Court may examine the communications in order to see whether a contract has been arrived at."

Subsequent research has revealed a relevant New Zealand authority in this area of the law and I respectfully adopt the following statement of principle from the judgment of Anderson J in Allison v KPMG Peat Marwick (1994) 8 PRNZ 128, 131:

"The without prejudice rule applies to exclude all negotiations genuinely aimed at settlement whether oral or in writing from being given in evidence. The rule is not absolute and resort may be had to the without prejudice material for a variety of reasons when the justice of the case requires it. One of the exceptions, which is very relevant to the present case, is that without prejudice material will be admissible if the issue is whether or not the negotiations resulted in an agreed settlement."

The First Alleged Settlement

Senior counsel for the defendant, Mr Clive Edwards, is the father of the defendant's original solicitor, William Edwards, and so, to avoid confusion, I will refer to William by his first name and for the sake of consistency, for the most part, I will refer to Mr Niu by his first name, "Laki".

It appears that settlement discussions were first broached in September 2003. On 10 October 2003 Laki wrote a without prejudice letter to William which commenced as follows:

"You will recall that we spoke about settlement of this matter and to leave it to our respective clients to work it out and let us finalise it.

I have spoken to my client about it and he has instructed me to attend to it on his behalf and let him know the outcome for his approval. . . ."

The letter proposed a settlement made up of damages $125,000, costs $12,500, plus an apology.

On 13 October William responded pointing out that "the demands" sought could not be acceded to for several reasons including the fact that the plaintiff had allegedly already personally offered to settle his claim with the defendant in the presence of witnesses without damages for disclosure of the real name of the letter writer, named in the newspaper as "Ate Fulufulu" --(a non de-plume) and payment of his lawyer's costs in the form of free programming time on OBN television to that same value. William indicated that in respect of the apology, "we are open to continued dialogue".

At a Directions Hearing held in Chambers on 5 November 2003, William indicated to the Court that the parties had already settled and that he was proposing to file an application to enforce the settlement. He did so later that same day. The defendant swore a supporting affidavit in which he deposed that the case had settled. Mr Saulala said in part of his affidavit:

"4. In order to embark upon settlement negotiations, I instructed my lawyer to approach Mr Laki Niu, counsel for the plaintiff, outside the Supreme Court and request whether it would be in order for me to speak to his client and to discuss settlement. I was granted permission by Mr Niu to discuss settlement with the plaintiff.

5. I had made inquiries as to the whereabouts of the plaintiff, I initiated settlement negotiations with him when he came down to OBN television to participate in a programme to be broadcast on 23 September 2003.

6. During our conversation we discussed terms and he indicated that he would take care of his own lawyer's costs if I would give him time on OBN television to the amount of his lawyer's costs. I agreed on that and also agreed to publish an apology as well as disclose the name of the author of the article which is the subject of these proceedings. He did not indicate in what amount the lawyer's costs were at that stage. I agreed to give free air time and we both agreed that the lawyers would formulate the terms to be filed in court. I regarded the matter as settled and nothing the plaintiff had said to me indicated that he did not agree with what had been proposed."

In his affidavit, the defendant further alleged that pursuant to the agreement he had already made free airtime available to the plaintiff and his colleagues from the Tonga Human Rights and Democracy Movement and other Peoples' Representatives in the Legislative Assembly.

The plaintiff filed a notice of opposition to the defendant's application to enforce settlement. The stated grounds of opposition were:

"There was never any compromise or agreed settlement at all between the plaintiff and the defendant or as alleged by the defendant in his application dated 5/11/03."

The plaintiff filed a supporting affidavit where he strongly denied that he agreed to settle the case along the lines stated by Mr Saulala. He said that the discussion referred to lasted no longer than "one or two minutes" and that "I clearly stated to Mr Saulala that I definitely wanted the settlement to be negotiated by our two respective lawyers."

The Second Alleged Settlement

As it turns out, the settlement negotiations I have just referred to are not the settlement negotiations upon which the present cause of action is based. The present cause of action is based on subsequent negotiations, which are alleged to have commenced from on or about the 7th of November 2003.

The Court file notes that on Friday 7 November 2003 both counsel appeared in Chambers for a Directions Hearing at 9 a.m. and a further Directions Hearing was then scheduled for Monday 10 November. There was a wide disparity in the evidence as to the events that unfolded as from Friday the 7th of November 2003.

The Plaintiff's Case

Laki told the Court that after the Chambers hearing on the Friday morning he and William talked in the car park outside the Court and later that same morning he received a settlement proposal in a telephone call from William. The offer was:

1. There would be an apology (in the terms of the apology that Laki had apparently earlier drafted);

2. There would be disclosure of the name of the letter writer;