U.K. Law Update - Without prejudice privilege: When will it apply and how is it considered by the Courts?

March 1, 2016

The recent English Court of Appeal decision in Sang Kook Suh v Mace (UK) Ltd[1] (“Suh v Mace”) considered the issue of without prejudice privilege and, in particular, the circumstances in which the privilege will arise and exceptions to it.[2] The decision reiterates that it will be the circumstances surrounding a communication (whether a meeting or written communication) that determine whether it will be protected by without prejudice privileged, rather than a label attached to the communication. As the Court of Appeal has previously noted it is an “uncontroversial point that “without prejudice” is not a label which can be used indiscriminately so as to immunise an act from its normal legal consequences…”.[3]

The meeting

The decision in Suh v Mace concerned the status of a meeting held between one of the claimants and the solicitor for the respondent. The claimants were, at that time, self-represented and one of them had asked to meet with the solicitor for the respondent indicating that she wanted to know what was happening in the case. The meeting was not expressed to be a without prejudice meeting and, in fact, it seems highly unlikely that the claimant was aware of the concept or the protection it would afford her. During the first part of the meeting the respondent’s solicitor explained the status of the proceeding. During that part of the discussion the claimant made admissions which were detrimental to her case. Following that, the claimant indicated that she no longer wanted to be involved in the proceeding and the respondent’s solicitor explained that it would be possible for her to withdraw and that she may be able to come to some arrangement with the respondent in relation to costs. 

At trial the respondent sought to rely on the admissions made by the claimant during the meeting. The question was whether those admissions were made in the context of a without prejudice discussion and therefore could not be adduced as evidence. At first instance, the Court found that the meeting was not protected by without prejudice privilege and allowed the admissions into evidence. Leave to appeal was sought and granted on the basis that the decision to allow the admissions was “a serious procedural or other irregularity”.[4]

Without prejudice privilege

The rule in relation to without prejudice privilege differs from legal professional privilege in that it is designed to protect communications between parties relating to the potential settlement of a dispute, rather than legal advice given to only one party. As noted by the Court in Suh v Mace the classic statement of the law comes from Lord Griffiths’ speech in Rush v Tomkins v. GLC[5]:

The "without prejudice" rule is a rule governing the admissibility of evidence and is founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a finish ... The rule applies to exclude all negotiations genuinely aimed at settlement whether oral or in writing from being given in evidence… the application of the rule is not dependent upon the use of the phrase 'without prejudice' and if it is clear from the surrounding circumstances that the parties were seeking to compromise the action, evidence of the content of those negotiations will, as a general rule, not be admissible at the trial and cannot be used to establish an admission or partial admission.

Other seminal decisions on the issue have described the privilege as having two justifications: the public policy referred to above; and an implied agreement between parties not to adduce the communications, arising out of the agreement to negotiate.[6] It therefore differs from legal professional privilege in that opposing parties to litigation have knowledge of the communication it is designed to protect. 

Was the meeting a without prejudice meeting?

The question the Court must consider when determining whether a discussion should be afforded the protection of the without prejudice privilege is whether the discussion was or ought to have been seen by both parties as being aimed at settlement.

In Suh v Mace the respondent tried to argue that it was only after the claimant had indicated that she no longer wanted to be involved in the proceeding that the discussions should have been protected by the without prejudice privilege. It argued that as a result the admissions made prior to that indication being given could be adduced in evidence. The Court of Appeal saw “no justification for salami slicing” a discussion in that manner. This is a theme that emerges from other authorities as well in which it has been noted that “[p]arties cannot speak freely at a without prejudice meeting if they must constantly monitor every sentence, with lawyers…sitting at the shoulders as minders.”[7] As such, the authorities suggest that a meeting, such as the one in this case, will be treated as without prejudice in its entirety and cannot be dissected into parts, some of which are not afforded the protection of the privilege. That is not to say that parties cannot conduct a meeting which is in part without prejudice, but it would need to be clear when the discussions were open and when they were on a without prejudice basis.

The Court acknowledged that where a litigant in person is involved it may be harder to determine whether discussions are aimed at settlement, but in this case the question must be asked whether the discussions could have been aimed at anything else. Put another way, why would the claimant have asked to speak to the respondent’s lawyer if she did not want to try and resolve the proceeding? In the view of the Court of Appeal, there was no other reasonable explanation for the meeting.

Exceptions to the without prejudice rule

As with any rule, there are exceptions. Apart from waiver, which we discuss below, there are a number of situations in which the rule that prevents a party from adducing evidence of a without prejudice communication will not apply. In another Court of Appeal decision, Unilever Plc. v The Proctor & Gamble Co.[8], Lord Justice Walker set out some such situations, these include[9]:

1) where the communications are used as evidence to prove whether or not the parties had reached an agreement during the without prejudice discussions;

2) using the communications in support of an argument that an agreement reached in without prejudice communications should be set aside on the basis of misrepresentation, fraud or undue influence;

3) where the communications are used to support an estoppel argument, i.e. where a clear statement was made by one party on which the other party is intended to, and does in fact, act;

4) if the exclusion of the evidence would act as a cloak for perjury, blackmail or other “unambiguous impropriety”;

5) to explain a delay in the proceedings, for example, to defend an application for want of prosecution. In this case the evidence will generally be limited to the fact of the communication and not the content of them; and

6) where the communications are said to have been “without prejudice save as to costs”, they may be used in costs arguments at the conclusion of a trial in the proceeding.

The authorities make it clear that these exceptions should only be applied in clear and obvious cases, otherwise the public policy rationale for the rule would be undermined.

The respondent in Suh v Mace attempted to rely on the exception in relation to “unambiguous impropriety” on the basis that the claimant denied having made the admissions in a later witness statement. The argument was that she was using the cloak of without prejudice discussions to avoid the evidence in her witness statement being contradicted. The Court of Appeal found that this was not a clear case of abuse of the privilege. The decision was based on the fact that the claimant was not dishonest in the manner in which she conducted the original discussion and the Court doubted very much whether the claimant knew what the term without prejudice meant, let alone calculated to use it to her advantage.

Waiver of without prejudice privilege

Due to the nature of without prejudice privilege the issue of waiver is markedly different than it is in respect of legal professional privilege. The privilege attached to a without prejudice communication cannot be unilaterally waived by one party, as it can with legal professional privilege. It is necessary for both parties to waive privilege, i.e. to agree that the communication can be deployed. It will not be uncommon, as was the case in Suh v Mace, for one party to want to adduce evidence of the communication, but that does not mean that the privilege has been waived.

The respondent in Suh v Mace had filed a witness statement exhibiting the notes of the without prejudice discussion and, as such, it had clearly waived its privilege in them, but that is only half of the picture and the Court was required to consider the conduct of the claimants to determine whether the privilege had been waived by both parties. The respondent relied upon the fact that the claimants did not raise the issue of the without prejudice nature of the discussion when the witness statement was served and subsequently agreed that the trial judge should consider the issue as to whether the statement exhibiting the notes could be adduced at trial.

In its consideration of the matter the Court noted that questions of waiver in this kind of situation are concerned with matters of justice and the protection of the privilege itself, rather than solely being concerned with the conduct or intention of the parties. In reaching the view that the privilege had not been waived, the Court found that it would be a violation of the privilege if the claimants’ conduct, which “was not as quick-thinking as it might have been”, was to be held against them and found to amount to a waiver of the privilege.

The importance of the purpose of the privilege

While the decision has not changed the law in relation to without privilege, it is a useful reminder of the importance of it and the parameters in which it operates and, specifically, of the care needed to be taken when dealing with litigants in person on the other side. In particular, it highlights the significance the Court places on the public policy rationale for the privilege; that is to encourage parties to freely discuss settlement in order to try to resolve disputes and avoid lengthy litigation. It is clear that the Courts will, in any decision of this kind, take into consideration the impact of the outcome on that public policy rationale and thus the Court’s consideration will extend beyond just the interests of the parties in that particular case.

[1] [2016] EWCA Civ 4

[2] Without prejudice privilege is similar to settlement discussion privilege recognized under U.S. law

[3] Unilever Plc. v The Proctor & Gamble Co. [2000] 1 W.L.R. 2436 at 2448

[4] see paragraph 8 of the decision

[5] [1989] I AC 1280 at pages 1299-1300

[6] Muller v Lindsey & Mortimer [1996] P.N.L.R 74 at 77

[7] Unilever Plc. v The Proctor & Gamble Co. [2000] 1 W.L.R. 2436 at 2449

[8] [2000] 1 W.L.R. 2436

[9] see pages 2444 to 2445 

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Denis Brock, an O'Melveny partner licensed to practice law in Hong Kong (Solicitor-Advocate), England & Wales (Solicitor-Advocate), Australia, New Zealand and New York, Amanda Beattie, an O'Melveny Counsel licensed to practice law in Hong Kong and New South Wales, Australia, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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