This decision reflects a tendency of the courts to encourage settlement discussions by protecting the privilege attaching to them, as illustrated by the decision of the Court of Appeal in Suh and Suh v Mace (UK) Limited [2016] EWCA Civ 4 earlier this year.
Here is a little background to the two cases…
Without prejudice communications and interlocutory hearings
In Ravenscroft v Canal & River Trust [2016] EWHC 2282 (Ch), Chief Master Marsh considered an application by the claimant for permission for a named individual to act as his McKenzie friend. The defendant sought to rely on an extract from without prejudice communications between the proposed McKenzie friend and the defendant. It argued that the court is permitted to consider statements made in without prejudice communications for the purpose of interlocutory hearings. Chief Master Marsh rejected this argument and refused to have regard to the extract. He said:
“The boundaries of the exclusionary aspect of the without prejudice rule are not entirely clear. However, it seems to me that there is no general exception to the exclusionary rule where without prejudice communications are referred to only for the purposes of an interlocutory hearing. Such exceptions to the exclusionary rule as there may be should be kept closely confined to prevent an undesirable watering down to the protection provided to without prejudice communications which fulfil an important role in aiding parties to negotiate freely without the fear of concessions being used against them in the course of litigation, but before the trial of the claim.”
A broader view of the without prejudice rule
Earlier this year, in Suh and Suh v Mace (UK) Limited [2016] EWCA Civ 4, the Court of Appeal overturned a judge’s decision to permit reliance on the contents of discussions which took place between one of the claimants and the defendant’s solicitors. Lord Justice Vos found that the judge had taken a narrow view of the kind of discussions that constitute “negotiations genuinely aimed at settlement” so as to attract without prejudice privilege and that “a broader view is now authoritatively required”.
He found:
“The discussions must be regarded objectively and in the round. The only sensible purpose for such a meeting must have been to seek some kind of solution to the litigation for Mrs Suh. That is what a settlement is, and what both parties here must objectively be regarded as having genuinely been seeking. There is no justification for salami slicing the interviews into parts that were open and parts that were without prejudice. Such an approach would contravene the broad view required by the authorities which I have described.”
The Court of Appeal went on to find that the privilege had not been abused by the claimant or waived. It found that the admissions were inadmissible at trial and ordered a re-trial.
Being alive to without prejudice communications
It is important to be alive to without prejudice communications and to the effect of a document attracting this type of privilege. In Suh, reliance on privileged communications caused a three-day trial to require re-hearing.
The inadvertent inclusion of a privileged document in a hearing bundle could lead to a judge refusing to hear the application or claim, with costs or wasted costs consequences. Such draconian consequences may be rare but given their potential severity, the risk is best avoided.
As a minimum, it would be wise to take a pragmatic approach to what constitutes negotiations genuinely aimed at settlement and to bear in mind that the use or otherwise of the words “without prejudice” is not determinative.