Settlement Discussions: Admissable if Part of Factual Matrix

The Supreme Court has in Oceanbulk Shipping & Trading SA v TMT Asia Ltd & Ors held that without prejudice negotiations which form part of the factual matrix leading to a settlement agreement will be admissible as evidence to assist in the interpretation of that settlement agreement.

Statements made in the course of genuine settlement negotiations are subject to without prejudice privilege and evidence of those statements are only admissible evidence in court in limited circumstances, such as where there is a dispute whether a settlement was reached.  The rationale for this rule is to encourage the parties to openly discuss in order to settle a dispute without having to worry about admissions made in the negotiations being used against them in court.