M7: Without prejudice communications

Inadmissibility rule applies in the tribunals

“It is common ground that industrial tribunals as a result of [the Industrial Tribunal Rules] are not bound to apply the strict rules of evidence as they apply in court. Equally it is common ground that that does not mean that they may not apply the rules of evidence. The ‘without prejudice’ privilege, if it is correctly so described, is one that is founded on a very clear public policy that it is desirable that parties should be free to try to settle their differences without the fear of everything that they say in the course of negotiations being used in evidence thereafter. We can see no reason in principle why an industrial tribunal should adopt a different attitude with regard to the admissibility of ‘without prejudice’ material from the proper attitude to be adopted by a court.” (Independent Research Services Ltd v. Catterall [1993] ICR 1, Knox J).

“It is equally clear that without prejudice material (subject to certain exceptions) cannot be allowed in evidence in any proceedings relating to the dispute in question (see in particular Unilever Plc v the Proctor & Gamble Co [2000] 1 WLR 2436)… The general rule therefore is that material arising from any ADR process cannot be used in relation to subsequent proceedings before the Tribunal.” (Ritchie v. HMRC [2016] UKFTT 509 (TC), §§75 - 76).

Inadmissibility rule applies in the tribunals

Justification for rule

“…the without prejudice rule is founded partly in public policy and partly in the agreement of the parties.” (Unilever Plc v. The Procter & Gamble Company [1999] EWCA Civ 3027, §35, Robert Walker LJ)

“One justification for the rule can be found in "the express or implied agreement of the parties themselves that communications in the course of their negotiations should not be admissible in evidence if, despite the negotiations, a contested hearing ensues" (Robert Walker LJ in Unilever plc v Procter & Gamble Co [2000] 1 WLR 2436, at 2442). The rule is also "founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a finish" (Lord Griffiths in the Rush & Tompkins case, at 1299).” (EMW Law LLP v Halborg [2017] EWHC 1014 (Ch), §35, Newey J).

Justification for rule

Must be communication genuinely aimed at settlement

“The rule applies to exclude all negotiations genuinely aimed at settlement whether oral or in writing from being given in evidence." (Rush & Tompkins Ltd v Greater London Council [1989] AC 1280 at 1299, Lord Griffiths)

“The without prejudice rule applies to exclude all negotiations genuinely aimed at settlement, whether oral or in writing, from being given in evidence…Having reviewed the correspondence, I consider that, on balance, the letter of 22 November 2011 should be regarded as a without prejudice communication. I take account of the fact that the correspondence took place during the period when the first appeal was stayed to enable the parties to discuss matters to narrow or resolve the issues in the appeal. Specifically, the letter was in response to HMRC’s offer, in their letter of 27 October, to engage in further discussions and “discuss a framework to avoid litigation”. The letter of 22 November was stated to be without prejudice and, while setting out the facts and the Appellants’ case, was clearly aimed at determining “genuine areas of agreement, difference and misunderstanding” with a view to “resolving this dispute”. I understand the letter to be an ‘opening shot’ in negotiations.” (N Brown Group Plc v. HMRC [2016] UKFTT 445 (TC), §§24(1)…38).

But need not be an offer

“A communication may be protected by the ‘without prejudice’ rule even if it is the ‘opening shot’ in negotiations and the rule is not limited to offers, but extends to all documents which form part of negotiations, whether or not they are themselves offers.” (N Brown Group Plc v. HMRC [2016] UKFTT 445 (TC), §24(9)).

Mere assertion of rights/case not protected

“A communication which is not a negotiating document, but is merely an assertion of a party’s rights, is not protected by the ‘without prejudice’ rule…The question is whether the communication merely asserts the strength of the case or whether it does so as part of a negotiation with a view to settlement.” (N Brown Group Plc v. HMRC [2016] UKFTT 445 (TC), §24(4), (5)).

William v Hull [2009] EWHC 2844 (Ch) at [37]

Buckinghamshire County Council v Moran [1990] Ch 623

Assessed objectively at date of communication

“Whether a particular communication is a without prejudice communication is a question which must be assessed objectively as at the date of the communication having regard to the relevant factual circumstances…To determine whether or not a communication is bona fide intended to be part of or to promote negotiations, the court must ascertain what, on a reasonable basis, the intention of the author was and how it would be understood by a reasonable recipient.” (N Brown Group Plc v. HMRC [2016] UKFTT 445 (TC), §24(6), (8))

ADR is privileged

“In litigation generally, it is accepted that ADR proceedings constitute, at the very least, some form of without prejudice discussions (see Reed Executive Plc v Reed Business Information Ltd [2004] 4 All ER 942).” (Ritchie v. HMRC [2016] UKFTT 509 (TC), §74).

Must be communication genuinely aimed at settlement

Expert meetings

Discussions leading up to joint report are privileged

"[47] The basic provision, as is apparent from the provisions of the CPR (35.12(4)), PD (paragraph 9.2) and guidance (paragraph 78) and as confirmed in Robin Ellis is unquestionably that the discussions between experts and the various drafts of a joint statement are subject to WPP. The finally agreed joint statement is not. As with the individual expert reports the joint statement ultimately becomes part of the sworn testimony of the experts but what led to whatever is ultimately agreed or not is not a matter which can, prima facie, be referenced at trail." (Wired Orthodontics Limited v. HMRC [2020] UKFTT 290 (TC), Judge Amanda Brown)

Expert meetings

Declarations of privilege

Failure to declare documents or negotiations to be without prejudice does not make them open

“Nor is it necessary for documents or discussions to be headed ‘without prejudice’ in order to engage the principle. If there is a dialogue with a view to the compromise of a dispute, then the privilege arises irrespective of the presence or absence of a heading.” (Brunel University v. Vaseghi [2007] EWCA Civ 482, §20, Smith LJ).

Declarations of privilege

Scope of inadmissibility

Purpose is to prevent use of communications as evidence of admissions in order to advance a case at trial

“The underlying principle is not in dispute. It is that where discussions are held without prejudice, neither party is entitled to rely upon the contents of those discussions to prove an admission or admissions made by the other party in order to advance its case at trial…[T]he concept of admissions must be given a wide meaning in this context so as in effect to include all matters disclosed or discussed in the without prejudice discussions concerned.” (Somatra Ltd v. Sinclair Roche & Temperley 2000 WL 1027017, §22)

Admissible to establish the fact of statements having been made, independently of their truth (unclear ambit)

“First, it is well established that without prejudice correspondence is admissible to establish the fact of statements having been made, independently of their truth…” (R (oao The Prudential Assurance Company Ltd) v. HMRC [2017] EWHC 1484 (Admin), §6, Sir Ross Cranston).

However

"I turn to the argument that the offer in the Letter is admissible because it is being relied on to establish that an admission was made as a matter of fact, as opposed to the truth of the admission. In other words, it is said that the offer is admissible as evidence that the Bosserts acknowledged the Ofulues' title to the property, although it would not be admissible as evidence of the fact that the Ofulues were the owners of the property…Despite the very great respect I have for any view expressed by Lord Hoffmann, and the intellectual attraction of the distinction which he draws, I am inclined to think that it is a distinction which is too subtle to apply in practice …. In any event, the observation appears to be limited to the public policy reason for the rule, and says nothing about the contractual reason, which plainly applies here." (Ofulue v. Bossert [2009] UKHL 16, §94…95, Lord Neuberger).

Not privileged at interim applications unless merits are relevant

“It does not seem to me to be just to allow the first party to obtain an advantage by relying on the without prejudice material in one part of the litigation, as here on an application for Mareva relief, where the merits are relevant, and to rely upon the without prejudice nature of the communications when the other party wished to rely upon, say, an admission made in the same without prejudice discussions at the trial, where the merits are of course also relevant.” (Somatra Ltd v. Sinclair Roche & Temperley 2000 WL 1027017, §37).

"[56] ... Whilst strictly the application is an interlocutory one its focus is ultimately to rely on the material disclosed at trial if it substantiates the Appellants’ concern of undue influence. It is the fact and content of the admissions allegedly made and reversed on which the Appellants wish to rely in order to limit the weight placed on Mr Orrock’s evidence at the substantive hearing. Mr Thornhill QC’s assertions to the contrary cannot be accepted." (Wired Orthodontics Limited v. HMRC [2020] UKFTT 290 (TC), Judge Amanda Brown)

Not privileged in other unrelated proceedings

“Litigation privilege does not protect documents created for the purpose of settling litigation and provided to the other party. To be clear, where such communications are expressed to be 'without prejudice' (as most of the Disputed Documents were) and are made as part of negotiations in an attempt to compromise the proceedings, they will usually be subject to privilege from disclosure by either party to the court adjudicating those proceedings. Such documents are not privileged from disclosure in other, unrelated proceedings.” (Lewis v. HMRC [2013] UKFTT 722 (TC), §10, Judge Sinfield).

Mere fact of negotiations not privileged (evidence to explain delay)

“Evidence of negotiations may be given (for instance, on an application to strike out proceedings for want of prosecution) in order to explain delay or apparent acquiescence.” (Unilever Plc v. The Procter & Gamble Company [1999] EWCA Civ 3027, §29(5), Robert Walker LJ)

“the existence of ‘without prejudice’ in any negotiations is not cloaked by the privilege and it would be entirely proper in our view for the Industrial Tribunal to be aware of the existence as opposed to the terms of ‘without prejudice correspondence…” (Independent Research Services Ltd v. Catterall [1993] ICR 1, Knox J).

Scope of inadmissibility

Not to be used as the basis of speculative cross-examination

“It is important to mention a further point referred to by Robert Walker LJ in Unilever [at 2446B] that: “One party’s advocate should not be able to subject the other party to speculative cross-examination on matters disclosed or discussed in without prejudice negotiations simply because those matters do not amount to admissions.”” (Ritchie v. HMRC [2016] UKFTT 509 (TC), §77).

Not to be used as the basis of speculative cross-examination

Privilege may extend beyond use by the parties to the negotiation

"It of course goes without saying that admissions made to reach settlement with a different party within the same litigation are also inadmissible whether or not settlement was reached with that party." (Rush & Tompkins Ltd v GLC [1989] 1 AC 1280 at 1301, Lord Griffiths).

Privilege may extend beyond use by the parties to the negotiation

Inadmissible even after settlement (subject to exceptions)

"…as a general rule the 'without prejudice' rule renders inadmissible in any subsequent litigation connected with the same subject matter proof of any admissions made in a genuine attempt to reach a settlement." (Rush & Tompkins Ltd v GLC [1989] 1 AC 1280 at 1301, Lord Griffiths).

Proving that settlement agreement was reached

“(1) As Hoffmann L.J. noted in [Muller v Linsley & Mortimer], when the issue is whether without prejudice communications have resulted in a concluded compromise agreement, those communications are admissible. Tomlin v. Standard Telephones and Cables Ltd. [1969] 1 W.L.R. 1378 is an example.” (Unilever Plc v. The Procter & Gamble Company [1999] EWCA Civ 3027, §29(1), Robert Walker LJ)

Providing context for construing settlement

“In Oceanbulk Shipping and Trading SA v TMT Asia Ltd [2010] UKSC 44, the Supreme Court concluded that there should be an exception under which: "facts identified during without prejudice negotiations which lead to a settlement agreement of the dispute between the parties are admissible in evidence in order to ascertain the true construction of the agreement as part of its factual matrix or surrounding circumstances".” (EMW Law LLP v Halborg [2017] EWHC 1014 (Ch), §42, Newey J).

Undermining validity of agreement or establishing estoppel

"[23]...(2) Evidence of the negotiations is also admissible to show that an agreement apparently concluded between the parties during the negotiations should be set aside on the ground of misrepresentation, fraud or undue influence. Underwood v Cox (1912) 4 DLR 66, a decision from Ontario, is a striking illustration of this.
(3) Even if there is no concluded compromise, a clear statement which is made by one party to negotiations, and on which the other party is intended to act and does in fact act, may be admissible as giving rise to an estoppel. That was the view of Neuberger J in Hodgkinson & Corby v Wards Mobility Services [1997] FSR 178, 191, and his view on that point was not disapproved by this court on appeal." (Unilever Plc v. The Procter & Gamble Company [1999] EWCA Civ 3027, §23(2), (3), Robert Walker LJ)

Third party entitled to rely on concluded agreement exception (even if both parties deny there is an agreement)

“The more serious objection to applying the concluded agreement exception is, I think, that no one involved in the without prejudice correspondence is alleging that an agreement has been reached…On any view, the concluded agreement exception means that he runs the risk of the correspondence becoming admissible because his opponent alleges that the negotiations resulted in an agreement. The extent of the risk arising from the exception does not seem to me to be significantly increased if it is understood as allowing not merely a party to the negotiations, but someone else with a legitimate interest in their outcome, to rely on it.” (EMW Law LLP v Halborg [2017] EWHC 1014 (Ch), §§55…56, Newey J).

Entitled to show other persons

“The voluntary provision of a document has, as it seems to me, to be distinguished from compulsory disclosure. The fact that a party to without prejudice negotiations is entitled to withhold communications within their scope on disclosure cannot mean that he is not free to show them to someone else if he so chooses, at least if there is a legitimate reason for doing so. Were the position otherwise, a litigant might find himself unable to provide relevant documents to, say, an expert unless and until the other side agreed, which would be absurd.” (EMW Law LLP v Halborg [2017] EWHC 1014 (Ch), §45, Newey J).

Entitled to show other persons

Inadmissible even after settlement (subject to exceptions)

Applies to whole communication / no dissection unless clearly distinct parts

"But to dissect out identifiable admissions and withhold protection from the rest of without prejudice communications (except for a special reason) would not only create huge practical difficulties but would be contrary to the underlying objective of giving protection to the parties, in the words of Lord Griffiths in the Rush & Tompkins case [1989] AC 1280, 1300: 'to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purpose of establishing a basis of compromise, admitting certain facts.' Parties cannot speak freely at a without prejudice meeting if they must constantly monitor every sentence, with lawyers or patent agents sitting at their shoulders as minders." (Unilever Plc v. The Procter & Gamble Company [1999] EWCA Civ 3027, §35, Robert Walker LJ)

“Without prejudice negotiations will normally be inadmissible in their entirety.” (EMW Law LLP v Halborg [2017] EWHC 1014 (Ch), §36, Newey J).

“In assessing whether a communication is protected by the rule, it is necessary to consider the communication as a whole and it should not be dissected into parts unless it is concerned with clearly distinct subjects.” (N Brown Group Plc v. HMRC [2016] UKFTT 445 (TC), §24(7))

Applies to whole communication / no dissection unless clearly distinct parts

Waiver of privilege

Waiver must be bilateral (even in respect of correspondence sent by party seeking to rely on it)

“It is not enough for one party to seek to open up the privileged communication. Waiver must be consensual. If one party seeks to adduce evidence of a privileged discussion the other party may agree to this course of conduct or may object.” (Brunel University v. Vaseghi [2007] EWCA Civ 482, §20, Smith LJ).

“It is not open to one party to without prejudice negotiations to waive the privilege unilaterally. The privilege is a joint one and so can be waived only with the consent of both parties…” (EMW Law LLP v Halborg [2017] EWHC 1014 (Ch), §39, Newey J).

Walker v. Wilsher (1889) 23 QBD 335 at 336 - 337

Waiver in relation to part is waiver in relation to the whole

“The deliberate introduction by the plaintiffs of part of the memorandum into the trial record as a result of a mistake made by the plaintiffs waives privilege with regard to the whole document. I can see no principle whereby the court could claim to exercise or could fairly and effectively exercise any discretion to put the clock back and undo what has been done” (Great Atlantis Insurance Co v. Home Insurance Co [1981] 1 WLR 529, 537G, Templeman LJ).

Waiver of privilege

Revoking waiver

May be possible to revoke waiver if done in time

“either side could have applied to amend its pleading so as to remove all reference to the ‘without prejudice’ material. If the University had sought permission and if permission had been granted, it would have been possible for the waiver to be withdrawn.” (Brunel University v. Vaseghi [2007] EWCA Civ 482, §40, Smith LJ).

“We note, however, that in principle it may be possible for a party to revoke a waiver provided that it is done in time…” (Cowen v. Rontokil Initial Facility Services (UK) Ltd 2008 WL 576835, §32, Elias J).

Revoking waiver

Loss of privilege: unambiguous impropriety

“All four authorities in this court, while allowing the existence of an exceptional rule to cover cases of unambiguous impropriety, have stressed the importance of the public interest which has created the general rule of privilege and have cautioned against the too ready application of the exception.” (Savings & Investment Bank Ltd v. Fincken [2003] EWCA Civ 1630, §53).

(4) Apart from any concluded contract or estoppel, one party may be allowed to give evidence of what the other said or wrote in without prejudice negotiations if the exclusion of the evidence would act as a cloak for perjury, blackmail or other "unambiguous impropriety" (the expression used by Hoffmann LJ in Foster v Friedland, 10 November 1992, CAT 1052). Examples (helpfully collected in Foskett's Law & Practice of Compromise, 4th ed, para 9-32) are two first-instances decisions, Finch v Wilson (8 May 1987) and Hawick Jersey International v Caplan (The Times 11 March 1988). But this court has, in Foster v Friedland and Fazil-Alizadeh v Nikbin, 1993 CAT 205, warned that the exception should be applied only in the clearest cases of abuse of a privileged occasion." (Unilever Plc v. The Procter & Gamble Company [1999] EWCA Civ 3027, §23(4), Robert Walker LJ)

Fraud or blackmail

“The sort of case where this exception has traditionally been applied is where there has been fraud or blackmail.” (Cowen v. Rontokil Initial Facility Services (UK) Ltd (2008) WL 576835, §37, Elias J).

But not lying/perjury

“It is, of course, distasteful for this or any court to avert its eyes from an admission which, subject to any point about value, appears to incriminate Mr Fincken in lying in a sworn document. However, in the tension between two powerful public interests, it seems to me that that in favour of protection of the privilege of ‘without prejudice’ discussions holds sway – unless the privilege is itself abused on the occasion of its exercise.” (Savings & Investment Bank Ltd v. Fincken [2003] EWCA Civ 1630, §62).

Not improper attempt to influence joint expert report

"[87] In this context the Tribunal determines that the unambiguous impropriety exception applies where the act of impropriety is a conscious use of WPP discussions for an abusive purpose. WPP will therefore be overridden where a WPP meeting or negotiation is used to threaten or, as in the case of BNP Paribas, where the meeting itself was the forum in which the impermissible behaviour was played out so as to do so in circumstances in which it was known that the behaviour would be shielded.

[88] By reference to the review of the email exchanges between Mr Brice and Mr Orrock the Tribunal is unable and unwilling to determine that Mr Orrock deliberately behaved in a way that abused the WPP nature of the discussions. It was, in the Tribunal’s view permissible to share the joint statement with the solicitor at least for information purposes. What then followed was, as stated above, on its face and without knowledge of the detail, improper but after much consideration the Tribunal cannot conclude that it was, in and of itself, abusive of WPP." (Wired Orthodontics Limited v. HMRC [2020] UKFTT 290 (TC), Judge Amanda Brown)

Loss of privilege: unambiguous impropriety