EMW Law LLP and Mr Scott Halborg  EWHC 1014 (Ch) is the case in review. The rule on without prejudice communications.
EMW Law LLP and Mr Scott Halborg  EWHC 1014 (Ch) Before Mr Justice Newey. At para 34 stated that, “The “without prejudice” rule operates to render evidence inadmissible. In general, “[t]he rule applies to exclude all negotiations genuinely aimed at settlement whether oral or in writing from being given in evidence” (Lord Griffiths in Rush & Tompkins Ltd v GLC  1 AC 1280, at 1299).”
At Para 35 as follows, “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  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).”
THE EFFECT AND APPLICATION OF THE WITHOUT PREJUDICE RULE.
At para 36, Without prejudice negotiations will normally be inadmissible in their entirety.
Para 37, The without prejudice rule can continue to apply even after a compromise has been agreed. In the Rush & Tompkins case, Lord Griffiths said (at 1301):
“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.”
In Avonwick Holdings Ltd v Webinvest Ltd  EWCA Civ 1436, Lewison LJ (with whom Sharp and Burnett LJJ agreed) said (at paragraph 22):
“The general rule however is still that stated in Rush & Tompkins Ltd v Greater London Council & Another …, namely that without prejudice negotiations once privileged remain privileged even after settlement.”
THIRD PARTIES ARE BOUND BY THE RULE.
At para 38,The implications of the without prejudice rule are, moreover, capable of extending beyond the parties to the relevant negotiations. In the Rush & Tompkins case, Lord Griffiths said (at 1301):
“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.”
“The decision is important because it establishes that not only the parties to the correspondence, but third parties also, are prevented from making use of the contents of without prejudice correspondence.”
THIRD PARTIES ARE FURTHER BOUND.
At para 44, it is opined that, “In the course of the hearing before me, there was some debate as to whether a party to without prejudice negotiations can properly show a third party documents relating to the negotiations without obtaining the consent of his counterparty. The authorities show both that the without prejudice rule can be waived only with the consent of both parties and that the rule protects communications within its scope from disclosure. Does it follow that relevant documents can be shown to a third party only if both parties to the negotiations agree?”
And at 45, that, “The answer, I think, must be “No”. 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.”
WAIVER OF THE PRIVILEGE.
At para 39, 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: see Avonwick Holdings Ltd v Webinvest Ltd, at paragraph 21.
ANALYSIS OF THE RULE; IN CONTEXT OF THE RULE ON ADMISSIONS AND HEARSAY.
Hoffmann LJ in Muller v Linsley (30 November 1994, 139 SJ LB 43) where the learned Judge said,
“If one analyses the relationship between the without prejudice rule and the other rules of evidence, it seems to me that the privilege operates as an exception to the general rule on admissions (which can itself be regarded as an exception to the rule against hearsay) that the statement or conduct of a party is always admissible against him to prove any fact which is thereby expressly or impliedly asserted or admitted. The public policy aspect of the rule is not in my judgment concerned with the admissibility of statements which are relevant otherwise than as admissions, ie independently of the truth of the facts alleged to have been admitted.
Many of the alleged exceptions to the rule will be found on analysis to be cases in which the relevance of the communication lies not in the truth of any fact which it asserts or admits, but simply in the fact that it was made. Thus, when the issue is whether without prejudice letters have resulted in an agreed settlement, the correspondence is admissible because the relevance of the letters has nothing to do with the truth of any facts which the writers may have expressly or impliedly admitted. They are relevant because they contain the offer and acceptance forming a contract which has replaced the cause of action previously in dispute. Likewise, a without prejudice letter containing a threat is admissible to prove that the threat was made. A without prejudice letter containing a statement which amounted to an act of bankruptcy is admissible to prove that the statement was made; see Re Daintrey  2 QB 116. Without prejudice correspondence is always admissible to explain delay in commencing or prosecuting litigation. Here again, the relevance lies in the fact that the communications took place and not the truth of their contents. Indeed, I think that the only case in which the rule has been held to preclude the use of without prejudice communications, otherwise than as admissions, is in the rule that an offer may not be used on the question of costs; a rule which, as I have said, has been held to rest purely upon convention and not upon public policy.
This is not the case in which to attempt a definitive statement of the scope of the purely convention-based rule, not least because, as Fox LJ pointed out in Cutts v Head at p 316, it depends upon customary usage which is not immutable. But the public policy rationale is, in my judgment, directed solely to admissions. In a case such as this, in which the defendants were not parties to the negotiations, there can be no other basis for the privilege.”
EXCEPTIONS TO THE RULE.
At para 40; There are, however, exceptions to the without prejudice rule. Robert Walker LJ provided a list of some of “the most important instances” in the Unilever case, at 2444-2445. Two of those he identified are particularly relevant to the present appeal:
(1) As Hoffmann LJ noted in the first passage set out above, 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  1 WLR 1378 is an example.
(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  FSR 178, 191, and his view on that point was not disapproved by this court on appeal.
(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.
(5) 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. Lindley LJ in Walker v Wilsher (1889) 23 QBD 335, 338, noted this exception but regarded it as limited to “the fact that such letters have been written and the dates at which they were written”. But occasionally fuller evidence is needed in order to give the court a fair picture of the rights and wrongs of the delay.
(6) In Muller (which was a decision on discovery, not admissibility) one of the issues between the claimant and the defendants, his former solicitors, was whether the claimant had acted reasonably to mitigate his loss in his conduct and conclusion of negotiations for the compromise of proceedings brought by him against a software company and its other shareholders. Hoffmann LJ treated that issue as one unconnected with the truth or falsity of anything stated in the negotiations, and as therefore falling outside the principle of public policy protecting without prejudice communications. The other members of the court agreed but would also have based their decision on waiver.
(7) The exception (or apparent exception) for an offer expressly made ‘without prejudice except as to costs’ was clearly recognised by this court in Cutts v Head, and by the House of Lords in Rush & Tomkins, as based on an express or implied agreement between the parties. It stands apart from the principle of public policy (a point emphasised by the importance which the new Civil Procedure Rules, Part 44.3(4), attach to the conduct of the parties in deciding questions of costs). There seems to be no reason in principle why parties to without prejudice negotiations should not expressly or impliedly agree to vary the application of the public policy rule in other respects, either by extending or by limiting its reach. In Cutts v Head Fox LJ said (at p.316) “what meaning is given to the words ‘without prejudice’ is a matter of interpretation which is capable of variation according to use in the profession. It seems to me that, no issue of public policy being involved, it would be wrong to say that the words were given a meaning in 1889 which is immutable ever after”.
(8) In matrimonial cases there has developed what is now a distinct privilege extending to communications received in confidence with a view to matrimonial conciliation: see Re D  2 AER 693, 697, where Sir Thomas Bingham MR thought it not
“fruitful to debate the relationship of this privilege with the more familiar head of ‘without prejudice’ privilege. That its underlying rationale is similar, and that it developed by way of analogy with ‘without prejudice’ privilege, seems clear. But both Lord Hailsham and Lord Simon in D v National Society for the Prevention of Cruelty to Children  1 All ER 589 at 602, 610  AC 171 at 226, 236 regarded it as having developed into a new category of privilege based on the public interest in the stability of marriage.”
THE RULE ON WITHOUT PREJUDICE IS NOT SETTLED.
At para 42, the learned judge pointed out that, “The list of exceptions to the without prejudice rule is not closed. In Ofulue v Bossert, Lord Neuberger (with whom Lords Hope, Rodger and Walker expressed agreement) said (at paragraph 98) that it was open to the House of Lords to create further exceptions to the rule, while also expressing the view that it would be inappropriate to do so on the facts of that case. In Oceanbulk Shipping and Trading SA v TMT Asia Ltd  UKSC 44,  1 AC 662, 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”.
Lord Clarke (with whom the other members of the Court agreed) said (at paragraph 46):
“I would hold that the interpretation exception should be recognised as an exception to the without prejudice rule. I would do so because I am persuaded that, in the words of Lord Walker in the Ofulue case  AC 990, para 57, justice clearly demands it. In doing so I would however stress that I am not seeking either to underplay the importance of the without prejudice rule ….”
IMMUNITY FROM DISCOVERY.
At para 43, it’s stated that, “While “[n]early all the cases in which the scope of the ‘without prejudice’ rule has been considered concern the admissibility of evidence at trial after negotiations have failed” (Lord Griffiths in the Rush & Tompkins case, at 1300), it can also render documents immune from disclosure. In the Rush & Tompkins case, Lord Griffiths noted (at 1304) that Rabin v. Mendoza & Co  1 W.L.R. 271 “shows that even as between the parties to ‘without prejudice’ correspondence they are not entitled to discovery against one another” and went on to explain (at 1305):
“I have come to the conclusion that the wiser course is to protect ‘without prejudice’ communications between parties to litigation from production to other parties in the same litigation. In multi-party litigation it is not an infrequent experience that one party takes up an unreasonably intransigent attitude that makes it extremely difficult to settle with him. In such circumstances it would, I think, place a serious fetter on negotiations between other parties if they knew that everything that passed between them would ultimately have to be revealed to the one obdurate litigant. What would in fact happen would be that nothing would be put on paper but this is in itself a recipe for disaster in difficult negotiations which are far better spelt out with precision in writing.”
A little later, Lord Griffiths said (at 1305):
“In my view the general public policy that applies to protect genuine negotiations from being admissible in evidence should also be extended to protect those negotiations from being discoverable to third parties.”
The analogy with common interest privilege
Thanki, “The Law of Privilege”, 2nd ed. summarises the law relating to common interest privilege in these terms (at paragraph 6.16):
“[C]ommon interest privilege arises where one party (party A) voluntarily discloses a document which is privileged in its hands to another party (party B) who has a common interest in the subject matter of the communication or in litigation in connection with which the document was brought into being. In such circumstances, provided disclosure is given in recognition that the parties share a common interest, the document will also be privileged in the hands of party B.”
Thanki, “The Law of Privilege”, (at paragraph 6.17) is apposite here:
“It is worth noting at the outset that common interest privilege properly so-called does not give party B the right to obtain disclosure of otherwise privileged documents from party A and … it is misconceived to refer to common interest privilege as a ‘sword’ (over and above it acting as a ‘shield’). The effect of common interest privilege is that, notwithstanding that he is not obliged to do so, in circumstances where party A voluntarily discloses an otherwise privileged document to party B, privilege will not be lost provided that a common interest exists between them at the time of disclosure.”
The rule of without prejudice and common interest privilege are two different rules. The former concerns negotiations, the latter goes beyond negotiations to include other parties who have a joint interest in a document shared to them. The former concerns both documents and oral conversations, the latter deals with documents only.
Finally, the rule on without prejudice conversations has been developed and is still growing. It is fair to say that it is not fully settled.
Ugandan cases that applied the principle.
East African Underwriters v. Civil Aviation Authority, C.A.C.A No.08 of 2002.
Katumba Ronald v. Kenya Airways, S.C.C.A. No.9 of 2008