Request for ‘without prejudice’ communications
Section 7(2)(c)(ii) LGOIMA applied—obligation of confidence in respect of ‘without prejudice’ communications exchanged in an attempt to settle a legal dispute—release would be likely to damage the public interest in encouraging parties to settle their disputes without resorting to litigation—public interest had been met by release of summary information
A requester sought information about the resolution of a legal dispute between a developer and Tasman District Council about the Council’s decision to levy development contributions. The Council withheld certain information, including communications with the developer’s lawyers on a ‘without prejudice’ basis, under section 7(2)(c)(ii) of the Local Government Official Information and Meetings Act (LGOIMA). The requester complained to the Ombudsman.
The Ombudsman considered whether the confidentiality withholding ground applied to the ‘without prejudice’ communications.
Section 7(2)(c)(ii) of the LGOIMA applies when releasing information that is ‘subject to an obligation of confidence’ would be likely to ‘damage the public interest’.
The information at issue came into being as part of settlement negotiations between the Council and the developer, who had instructed lawyers to commence judicial review proceedings in relation to the Council’s decision.
This brought into play the doctrine of privilege that allows parties to negotiate ‘without prejudice’ during settlement negotiations. The privilege enables the parties to engage in open discussions, thus providing a forum conducive to the generating of options upon which they could agree to settle. If the negotiations fail and the matter continues to the court for determination, the information generated during the ‘without prejudice’ negotiations cannot be used in evidence against either party. ‘Without prejudice’ privilege extends to any information documenting the terms of the settlement.
The Ombudsman accepted that the communications at issue were exchanged on a ‘without prejudice’ basis, and that an obligation of confidence attaches to such communications. The next issue to consider was whether release would be likely to damage the public interest.
The Council was confronted with the prospect of costly and time consuming litigation against it. It is in the public interest that agencies (such as the Council), should be encouraged to settle disputes to avoid litigation, which is ultimately funded at taxpayer or ratepayer expense. The ability to so on a ‘without prejudice’ basis encourages them in their efforts to achieve a favourable settlement. It was in the public interest that the Council entered negotiations to achieve a settlement, which was in fact achieved. Release would be likely to damage the public interest because parties to a dispute may choose to go straight to the court to resolve the dispute, rather than enter open settlement negotiations.
The Ombudsman concluded that section 7(2)(c)(ii) of the LGOIMA applied.
Section 7(2)(c)(ii) is subject to a public interest test. This means the need to withhold must be balanced against the countervailing public interest in release. If the countervailing public interest weighs more heavily, the information must be released. If not, it can be withheld.
The complainant argued that release was in the public interest because the Council appeared not to have followed the established process for considering objections to development contributions, and to have treated this developer differently from others.
The Ombudsman agreed that the Council is accountable for all expenditure of public money, and the public has an interest in knowing whether it is entering into agreements with certain developers that advantage them over and above others. However, the agreement between the Council and the developer was not unlawful, and the question was whether the general public interest in accountability should prevail over the public interest in encouraging agencies to enter settlement negotiations.
The courts and Parliament have recognised a high degree of public interest in the maintenance of ‘without prejudice’ privilege, which is codified in section 57 of the Evidence Act 2006. Consequently, in order to outweigh the public interest in parties being able to settle legal disputes without prejudice, a correspondingly greater public interest must be seen as better served by the disclosure of the information.
The Ombudsman concluded that the public interest in encouraging parties to conduct negotiations to settle potential lengthy and costly legal disputes (in appropriate circumstances, such as in this case, where there was no indication of impropriety), represented a stronger public interest.
It was significant that the Council had agreed to release a summary of the outcome of its negotiations, which identified unique features pertaining to the developer that set it apart from others. This helped to address the general public interest in accountability for the Council’s handling of the dispute.
The Ombudsman formed the opinion that section 7(2)(c)(ii) of the LGOIMA provided good reason to withhold the ‘without prejudice’ communications.
This case note is published under the authority of the Ombudsmen Rules 1989. It sets out an Ombudsman’s view on the facts of a particular case. It should not be taken as establishing any legal precedent that would bind an Ombudsman in future.