Disclosure and Without Prejudice Privilege Hand-Out€¢ The Court may have to balance Art 6 and Art 8 rights Disclosure before ... EWHC 2018 Ch 21 Three Rivers DC v. Bank of England

Disclosure and Without Prejudice Privilege

Hand-Out

(This Hand-Out deals only with multi-track cases.)

1. DISCLOSURE - GENERAL UPDATE/REMINDER

The Principles

• The Duty of the Court and of the parties is to further the overriding objective –

ensuring Disclosure is limited to what is really necessary in individual cases

• The abolition of “automatic” Discovery of non specified documents

• The responsibility to only seek Disclosure when it is justifiable to do so

• The necessity of a co-operative, constructive and sensible approach

• The danger of adverse awards of costs if the above principles are not applied

The Necessity Principle

• Standard disclosure – 31.5 & 31.6 - documents on which a party relies or

which to a material extent undermine his case or support another party’s case

• Extra disclosure – determined by the procedural Judge

The Duty to disclose

• It is by stating that a document exists or has existed – 31.2

• “Document” means anything in which information is recorded – 31.4

• “Copy” – means anything onto which information recorded in the document

has been copied by whatever means and whether directly or indirectly

• The Duty of Search – 31.7 - factors in deciding reasonableness:

o No of docs involved

o Nature and complexity of the proceedings

o Ease and expense of retrieval

o Significance of any doc likely to be located

© David Christie 2009 2 7 Bedford Row

• In large organisations recommended use of a supervising officer1

• Duty limited to documents which are or have been in a party’s “control” – 31.8

o Physical possession

o Has or had right to possession

o Has or had right to inspect or take copies

• No duty to disclose more than one copy unless material obliteration, marking

or other feature – 31.9

• List in a convenient order and manner and as concisely as possible – 31.10

• Includes the Disclosure statement -31.10 (5) – (7) – must set out extent of

search made to locate documents2

• Statement can include – will not permit inspection of a document on grounds

that it would be disproportionate

• Duty continues throughout the proceedings – 31.11

• Standard Disclosure often ordered at first CMC but parties can proceed with

consensual disclosure and this may be sensible if it is hoped to mediate the

case

• Public authorities have to have regard to ECHR Art 6 (1) as a failure can

amount to breach of right to a fair trial though any party so alleging should

first seek specific disclosure3 - Art 8 may also be relevant

• Standard Disclosure - 31.6

o Documents on which the party relies

o Documents which adversely affect his own case, or adversely affect

another party’s case, or which support another party’s case

o Documents of which disclosure is required by a relevant practice

direction

• Abolition of the rule in the Peruvian Guano case

• Intention that only a reasonable search be carried out – 31.7

• Power for the Court to dispense with or limit standard disclosure – or parties

may agree - 31.5

The Right to Inspect

• 31.3- Any document disclosed except where:

o No longer in the control of the party disclosing it – 31.8

o The party has a right or a duty to withhold inspection -31.19

• If a party considers it disproportionate to the issues in the case to permit

inspection of documents disclosed:

o Not required to permit inspection of document(s) in that class

o Must state above in disclosure statement

1 Woolf Report – Access to Justice (1996) Ch 12 para 4.1

2 Party in Commercial Court must state this in the case management information sheet – Guide E3.2

3 McGinley & Egan v United Kingdom [1999] 27 EHRR 1


• Can be ordered to take place in stages – 31.13

• Documents referred to in statement of case, witness statement/summary,

affidavit, expert reports4 etc – 31.14

• Test in 31.14 (“mentioned in”) is no different from the test of direct allusion –

i.e. a specific or direct reference as in Dubai Bank v Galadari No 2 [1990 1

WLR 7315; reference by inference is indirect and insufficient

• Formalities – 31.15

• Requires written notice – within 7 days recipient must permit

• Court can order disclosure and inspection to take place at the same time

• Interim orders often seek advance disclosure – but may be refused6

• No rule governing where – office of solicitor or usual place of custody

• Extends to examining electronic, audio or visual recordings – see below

• May request a copy – recipient must supply in 7 days

• No obligation to supply a translation if in a foreign language but if translation

in existence position may be different7

• ? No obligation to provide transcription where a poor quality recording8.

Specific Disclosure

• 31.12 (1) – the Court may make an order for specific disclosure and specific

inspection - to

o Disclose documents or classes of documents specified in the order

o Carry out a search to the extent indicated in the order

o Disclose documents located as a result of the search

• Parties are obliged to give access to those documents which will assist the

other’s case9

• Court has a discretion – as to time – can be before standard disclosure – e.g.

where before Defence would assist D to plead the Defence10

• Court has to be satisfied as to the relevance of the docs and that they are or

there is a prima facie case that they are or have been in the other party’s

control

4 But 35.10.(4) experts instructions not privileged but specific disclosure will not be ordered unless reasonable

grounds to consider inaccurate or incomplete 5 Expandable Ltd v Rubin [2008] EWCA Civ 59

6 CPR 25.1 (1) (a) – (p) gives no entitlement to this relief See Parker v C S Structured Credit Fund [2003]

EWHC 391 (Ch) and Nucleus Information Systems v. Palmer & Others[2003] EWHC 2013

7 Sumitomo v Credit Lyonnais Rouse [2001] EWCA Civ 1152

8 Paddick v Assoc Newspapers [2003] EWHC 2991

9 Commsn’r Inland Revenue v Exeter City AFC [2004] BCC 519

10 Dayman v Canyon Holdings [2006] Lawtel AC9501271


• Analysis should be by reference to the factual issues in dispute on the

pleadings11

• Where the case turns on particular documents there is a stronger case for an

order to be made12

• Lateness in making an application can undermine a contention that

documents are necessary for forthcoming proceedings13

• The Court may have to balance Art 6 and Art 8 rights

Disclosure before proceedings start

• 31.16 (1) – where application made under any Act

• Must be supported by evidence 31.16 (2)

• Court can only make an Order where:

o Respondent likely to be a party to subsequent proceedings14- i.e may

well be a party if subsequent proceedings are issued

o Applicant also likely to be a party

o R’s duty standard disclosure would extend to the documents sought

o Disclosure before proceedings start desirable

� to dispose fairly of anticipated proceedings

� to assist the dispute to be resolved without proceedings

� save costs

• S 33(2) SCA 1981 refers to “possession, custody or power” – Cf 31.8 “control”

– doubtful if any difference between the tests15

• Documents sought should be carefully circumscribed and application limited

to what is strictly necessary

• Rule can apply as against a foreign corporation which has submitted to the

jurisdiction

• Desirability requires a 2 stage process

o Jurisdictional – ? test low16

o Discretion – on all the facts and not merely in principle but in detail17

• Consideration of the relative positions of the parties as regards possession of

documents important in exercising the discretion18

• If applicant possesses sufficient material to plead a claim less likely to be

desirable19

11

Harrods Ltd v Times [2006] EWCA Civ 294 12

Chantry Vellacott v Convergence Group (2006) Lawtel AC9100857 13

Harris v Society of Lloyds [2008] EWHC 1433 14

Black v Sumitomo Corp [2001] EWCA Civ 1819 15

Mathews & Malek Disclosure 3rd

Ed’n 5.39 et seq 16

Mitsui v Nexen Petroleum UK [2005] EWHC 625 (Ch) 17

Black v Sumitomo (ibid) para 81 18

Birse Construction v. HLC Engenhario E Gestao de Projectos [2006] EWHC 1258 (TCC) 19

First Gulf Bank v Waschovia Bank National Assoc [2005] EWHC 2827 (Comm)


• Costs may be saved by obviating at pre-action disclosure the need to amend

at a later stage of the proceedings20

2. NON-PARTIES

Orders for disclosure against non-parties – CPR 31.17

• Application must be supported by evidence

• Documents sought must be likely to support the case or adversely affect the case of another party

• Viz “they may well do so” as opposed to more probable than not21

• Disclosure must be necessary to dispose of claim fairly/save costs

• Manner and extent of disclosure may be subjected to strict conditions e.g. in the balancing exercise between the public interest of maintaining the confidentiality of those who make statements to the police in the course of a criminal investigation and the public interest of ensuring that the courts try civil claims on the basis of all the relevant material with a view to achieving a fair and just result. Frankson v. Sec of State for Home Dep’t [2003] 1 WLR 1952

• The principle in Marcel v. Commsnr of Police for the Metropolis [1992] 2 WLR 50 that justice requires that all relevant evidence be before the civil court and D would have been obliged to produce the documents anyway if they had remained in his possession or copies if the police in accordance with the PACE code had provided them to him would seem to apply.

• It seems that an investigating authority is not entitled voluntarily to supply to a private individual for the purposes of other litigation material obtained through the exercise of its statutory powers.

Witness Summons to produce documents

• CPR 34.3(2) (b) - permission of the Court required to issue witness summons for production of documents at a date other than the date fixed for trial

• Often convenient to use a Khanna v Lovell White Durrant [1995] 1 WLR 121 hearing but less necessary now Orders for non party disclosure can be obtained

• Where witness has no evidence to give other than proving the authenticity of the documents he produces

Norwich Pharmacal Claims for Disclosure/Production

• CPR 31.18 specifically preserves the principle but does not modify it22

20

Hands v Morrison Construction Services [2006] EWHC 2018 Ch 21

Three Rivers DC v. Bank of England (No 4) [2002] EWCA Civ 1182


• D through no fault of his own “got mixed up” in the tortious acts of others so as to facilitate their wrong-doing - duty to assist person wronged by giving him full information and disclosing the identity of the wrong-doers

� Wrong must have been carried out or arguably carried out, by an ultimate wrongdoer

� An order must be needed to enable an action to be brought against the ultimate wrongdoer or just and convenient in the interests of justice23

� The person against whom the order is sought must be mixed up o so as to have facilitated the wrongdoing o be able or likely be able to provide information to

enable the ultimate wrongdoer to be sued24

• Remedy of last resort – if applicant knows the identity of the wrongdoer and has sufficient information to start an action may be refused25

• Procedure - application under either CPR Part 7 or 8

• Fruits of this disclosure can be used in an action against a fraudster

• Can lead to an application under CPR 31.19 for an order to withhold inspection or disclosure

• C has to pay the blameless D’s costs and expenses

• Court has a residual discretion – if by analogy documents would have been disclosable under CPR 31.16 - that is relevant26

S 7 Bankers Books Evidence Act 1879 (BBEA)

• Can be combined with a gagging order to enable further applications to be made - for example to reveal assets of which further application to freeze is then made and to prevent party being investigated being tipped off - Court will balance freedom of press against public interest

• BBEA overcomes confidentiality owed by Banks to their customers

• Allows inspection/taking of copies

• Not limited to bank statements includes ledgers, day books, cash books account books and other records used in ordinary course of business such as share portfolios, telegraphic transfers, credit and debit cards

• Cross-undertaking in damages

• C must pay all or any reasonable expenses to which the bank or third party is liable in giving disclosure

• Evidence so obtained can only be used for the purposes of the proceedings

• Conferences with bankers will not be included under S 7 of the BBEA but may fall within CPR 31.17

• Orders will not usually be made against foreign banks outside the jurisdiction concerning business transacted outside the jurisdiction

22

Mitsui & Co v Nexen Petroleum (ibid)_ 23

President Equitorial New Guinea v Royal Bank of Scotland International [2006] UKPC 7 24

Mitsui (ibid) at para 21 25

Niktin v Butler LLP [2007] EWHC 173 (QB) 26

BNP Paribas v TH Global Ltd [2009] EWHC 37 (Ch)


• Party attending witness summons will be entitled to costs of dealing with witness summons and attending Court

Use of Collateral Material gained through exercise of coercive powers

– viz: DTI Enquiries; PACE; SFO (Criminal Justice Act, 1987 s 2(4); Inland

Revenue (TMA 1970 s 20BA–20D) and Customs and Excise (PACE in relation

to assigned matters and CEMA 1979 s 118C–D) etc

• This type of material can be highly relevant to a civil fraud action

• The general position seems to be that once obtained by C it is usable in civil proceedings against D

• This does not apply where the answers were given in a section 2 interview conducted by the Serious Fraud Office.

• The general position, however, is that if the material (generally documents or computer records) was obtained by the exercise of coercive powers it will not be passed to C as a private litigant without a court order – usually under CPR 31.17 or 34.

3. ELECTRONIC DISCLOSURE – see Matthews & Malek Disclosure 3rd Ed’n

Chapter 7

• Since 2005 has been dealt with specifically in the PD and in the standard form

for Disclosure – para 2A and Annexe

• Subject report of a committee chaired by Cresswell J27

• 31.4 defines “document” widely

• For electronic disclosure purposes “the document” is:

o the database on which information is stored

o E-mail

o Word processed documents

o imaged documents

o metadata

o can include documents “deleted”

27

Electronic Disclosure: a report of a working party chaired by Mr Justice Cresswell 6.10.04


o includes electronically recorded communications

o activities such as:

� instant messaging

� Voice-mail

� On-line systems

� Multi-media files

• Whether on computer, hard disk, CD Rom, PDA, Blackberry, i-phone etc

• Categories:

o Active or on-line data (usually directly accessible on a desktop/laptop

computer/server) – on hard drive, filed documents, inbox and sent

items in an e-mail system

o Embedded data- not normally visible – formulae in spreadsheets and

programmed calculations which do not usually print out – can include

the person who edited a word-processing file (the Properties File)

o Metadata- data about data – date and time data files created, edited or

printed and by whom – also usually not visible on printing

o Replicant data – temporary files automatically created by the computer

– automatic back-up creates and periodically saves copies as user

works on the document – for automatic recovery on malfunction etc –

includes automatic saves of draft documents, temporary copies open

e-mail attachments, recovered files following malfunction and

temporary cache of visited web pages

o Back-up data – held in a storage system – viz offline storage through

basic magnetic tape retrieval system or disks/PDA to removable optical

disk – all of which can be stored on a shelf

o online systems through use of third party web sites where material may

be compressed making it more difficult and costly to retrieve

o Residual data – material deleted from the user’s active file and then

stored elsewhere on the hard drive where it can become fragmented

but still retrievable with sufficient expertise and time – albeit some


programmes are designed to make it impossible to retrieve “deleted”

data28

• Important to recognise the substantial differences between electronic

disclosure and paper documents

o Huge volume potentially

o Searching and reviewing can be extremely time consuming and

costly29

o More easily duplicated – computers produce many copies of the same

document or what may to all intents and purposes be the same

document for disclosure purposes

o Often not stored in any order – at least discernible to a party

considering Disclosure

o Businesses have different retention policies – e.g. some mobile phone

records – 6 months

o Review must be undertaken with care to avoid alteration of metadata

o Deletion of an electronic document could be a contempt of court once

an order for disclosure made30

o Electronic documents can be manipulated – deliberately or accidentally

o Risk unauthorised hacking into computers and interception of

messages31

o Risk re: privileged/irrelevant material

• Duty of search:

o 31PD 2A.4 reasonableness includes

� No of docs involved

� Nature and complexity of proceedings

� Ease and expense of retrieval of any particular document:

28

Prest v Marc Rich & Co Investment AG [2006] EWHC 927 (Comm) 29

Hands v Morrison Construction [2006] EWHC 2018 (Ch_ Briggs J declined order for electronic disclosure

despite applicant offering to meet cost on ground excessively burdensome 30

Alliance & Leicester B Soc v Ghahremani (1992) 32 RVR 198 + Prest v Marc Rich (ibid) 31

Ashton Investments v Rusal [2006] EWHC 2545 (Comm)


• Taking into account alterations or developments in

hardware or software systems used by disclosing party

and/or available to access such docs

• Their location

• The likelihood of locating relevant data

• The cost of recovery

• The cost of disclosing and providing inspection

• The likelihood of material alteration in the course of

recovery, disclosure and inspection

� The significance of any document likely to be located during the

search

• Key word searches may be appropriate and should be agreed between the

parties if possible

• 31PD 2A.5 + Commercial Court Guide 7th Ed’n para E3.11(e)

• Many parties limit their electronic search to active data

• Handing over the computer is unlikely to be a viable option due to irrelevant,

privileged or confidential material on it

• Prior to the first CMC the issues should be discussed between the parties

o The categories of electronic documents in the party’s control

o Their computer systems and software

o Electronic documents and media on which relevant documents likely to

be stored

o Storage systems in place

o Document retention policies

o If key words are to be used it is important to decide what types of

search are required – viz should back-up data and deleted data be

searched – should particular e-mail accounts or document holder

folders be searched

o And what timeframe should be utilised

o It may be cost-effective to adopt a staged approach


o In case of difficulty it should be referred to a judge for directions at the

earliest practical date – 31PD 2A.2

• Form of Disclosure

o The Disclosure Statement itself now provides for electronic disclosure

o the List Group32 have prepared guidance and protocols – see List Data

Exchange Protocol Parts 1 and 2 –

http:/www.listgroup.org/publications.htm

o Can be helpful to prepare the list in a manner which enables the list to

be imported to a documents database

• Inspection

o Derby & Co v Weldon No 9 [1991] 2 All ER 901

o Need to screen out

o Problem of access while computer in daily use

o Need for safeguards

o Court can order disclosing party to provide facilities for the documents

to be read

o Provision imaged version of database – only if necessary and

proportionate

o Access only by an independent expert subject undertakings to protect

interests of disclosing party

4. SOME CASES ON ELECTRONIC DISCLOSURE

• In Sony Music Entertainment (Aus) Ltd v University of Tasmania [2003] FCA

532 an electronic search used specified words

• A temporal limit may be useful to limit the burden - Nichia Corpn v. Argos Ltd [2007] EWCA Civ 741 , [2007] Bus. L.R. 1753 – a patent case

• In Digicel (St Lucia) Ltd v Cable & Wireless [2008] EWHC 2522 (Comm) C

sought an order

32

Litigation Support Technology Group


o (1) that D restore relevant back-up tapes for the purpose of searching

for the e-mail accounts of certain former employee - "the application for

restoration of the back-up tapes" and

o (2) so far as electronic documents already identified by Ds together

with the further electronic documents that may be identified in

accordance with (1) that D carry out a further search across those

documents by reference to a set of additional key words/phrases as

identified by C - "the application for additional search terms".

o Morgan J held: � A decision as to what was a reasonable search rested in the first

instance with the solicitor in charge of the disclosure exercise. � However CPR PD 31 made clear that some parts at least of the

process ought to be discussed with the opposing solicitor with a view to achieving agreement so as to eliminate, or at any rate reduce, the risk of later dispute.

� If a solicitor, whose decision as to what was a reasonable search was later challenged on a specific disclosure application, the court might well be influenced in the solicitor's favour if it saw that the solicitor was very fully informed as to the issues arising in the case, and had made a fully considered decision applying all the factors in CPR r. 31.7 and CPR PD 31 para. 2A.4.

� However, even if the court could, in a proper case, be favourably influenced by the diligence and conscientiousness of an individual solicitor, the task of deciding what was required by a reasonable search was one given to the court by the wording of the CPR, Nichia Corp v Argos Ltd (supra) considered

� That task could be carried out by the court, either in advance of the search being done, or with hindsight.

� There was no warrant in the language of the CPR r. 31or CPR PD 31 for the suggestion that the standard of review should be a judicial review standard of irrationality, or the standard adopted by an appellate court reviewing the exercise of a discretion.

� In the instant case D had not carried out a reasonable search, as they omitted to search for, and within, the e-mail accounts of the specified individuals to the extent that those e-mail accounts might have existed in the identified back-up tapes which had survived, and had failed to carry out an adequate keyword search.

� It was inappropriate to make a simple order that D restore the back-up tapes so far as necessary to identify and search the e-mail accounts in question.

� An order in those terms would not address the possibility that restoration might not be possible, or that it might emerge that restoration was only possible at an utterly prohibitive level of cost.


� Accordingly, the parties' solicitors were ordered to meet to discuss how best the restoration of the back-up tapes could be done.

� Such a meeting was to be followed by a restoration of the back-up tapes as soon as was reasonably practicable

• Abela v Hammond Suddards 2008 WL 5130206 Ch – The rule did not require that no stone should be left unturned and the court, not the disclosing solicitor, was ultimately the decision-maker as to what was reasonable in the circumstances, Digicel (supra) applied. The width of the search of electronic records for which X contended was potentially very onerous and not reasonable. However, some form of search was to be undertaken, and counsel were invited to make further submissions on the question of how electronic disclosure was to be approached.

• Wasted Costs – see Hedrich v Standard Bank [2008] EWCA Civ 905 o the Bank lost its appeal against a refusal by the Judge at first

instance to make a wasted costs Order against a solicitor (Z). o He stated on disclosure that document had been lost. In fact they

had been retrieved by an expert and placed on a CD Rom 9 months before the trial and 5 months before Disclosure.

o The solicitor had been told of the existence of the CD then but he did not receive a copy until shortly before trial and did not then examine it

o He did not realise that it contained relevant documents and disclose them until the 3rd day of the trial.

o The CA held that the issue was whether Z was clearly and obviously in breach of his duty to the court to ensure that the client properly discharged his duty to give proper disclosure

o Given the difficulties in reading the CD ROM and given the reasonable expectation that it contained nothing which was material, it was not negligent to have left this unopened until information at trial made its relevance plain.

o By then all the costs had been incurred and thus causation was not established.

5. PRIVILEGE and CONFIDENCE

• The CPR 31 principles

o A Right to refuse to grant inspection – 31.3 (1) (b)

o Can apply without notice for an order permitting him to withhold

disclosure on ground of damage to public interest – 31.19


o A privileged document of which inspection inadvertently permitted –

the party who inspected may only use it or its content with the

permission of the Court 31.20

o Confidence not usually a ground to refuse Disclosure/Inspection

• Common Interest privilege – see below under Without Prejudice rule

• Legal Professional Privilege

o Legal Advice Privilege

o Litigation Privilege

• In Dadourian Group International Inc v Simms [2008] EWHC 1784 (Ch) D applied for permission to use some documents in its possession to

assist its case in a related CPR Pt 24 application. R applied for injunctions restraining the use of those documents. D had been involved in a claim for damages based on deceit and fraudulent conspiracy arising out of a contractual dispute. The instant application arose out of the disclosure to D of a large number of documents belonging to a company (C) which had been downloaded by one of C's former directors (E) and then handed to D via its solicitor. C had been set up by D1 to the main action (S) who had acted as the solicitor to D3 and D4 prior to being struck off following disciplinary proceedings. The documents belonged to C, and were confidential to S and D3 and D4. Their removal was unlawful. C issued proceedings seeking mandatory orders requiring the documents to be delivered up. An order was made by consent requiring E to deliver up all the documents that she had taken. However the order came too late to prevent E handing over the documents in issue in the instant proceedings to D. D was not a party to the consent order. D wished to use some of the documents to assist in its related Part 24 application. S argued that the documents were covered both by legal advice privilege, litigation privilege and in some instances common interest privilege and should not be disclosed. D challenged the claim to privilege in respect of each of the documents and additionally relied on fraud as justifying the disclosure of all the documents. D also argued that S's conduct in trying to mislead the court justified the release of all the privileged material under consideration on the instant applications on the basis that to do otherwise would give rise to a substantial risk of injustice. Patten J granted the application and refused to grant the injunctions – he held:

o The general rule was that when a party chose to deploy privileged material in litigation the opposing party must be given the opportunity of satisfying themselves that they had the whole of the material relevant to the issue in question.

o In practice that meant that the party introducing the privileged material would be required to disclose the whole of the


document unless it was severable in terms of its subject matter, R. v Secretary of State for Transport Ex p. Factortame Ltd (Discovery) (1997) 9 Admin. L.R. 591 QBD applied.

o R must be taken to have waived any privilege in the documents and legal professional privilege had been waived by disclosures made by R.

o There were some documents that might have been covered by legal professional privilege as they had been produced by S in his advice to the D3 and D4.

o However there was no evidence on which the court could base a finding that D3 and D4 had continued to believe that S was a qualified lawyer after he was struck off.

o The documents emanating from S were not covered by legal professional privilege.

o If fraud by a client and solicitor was established then the privilege in their communications was lost.

o Where, as in the instant case, the fraud was alleged to have taken place in relation to the litigation itself then the application of the fraud exception would destroy privilege in relation to all the relevant legal advice obtained in the action itself, Chandler v Church Independent, April 30, 1987 Ch D applied.

o The evidence in relation to certain of the documents raised a strong prima facie case of fraud relating to the forgery of documents and false evidence.

o D had satisfied the test for disclosure set out in Kuwait Airways Corp v Iraqi Airways Co (No.6) [2001] 3 W.L.R. 1117 CA (Civ Div) in relation to those documents.

o That conclusion was fortified by some of the documents which had not been held to be covered by legal professional privilege on account of waiver.

o Even if the court was wrong about that it would have ordered disclosure of those documents based on the fraud exception.

• In Farm Assist (in liquidation) v Sec of State for Environment and

Rural Affairs [2008] EWHC 3079 the Sec of State’s application for

disclosure of documents comprising legal advice given to C where C sued

to set aside an agreement reached at a mediation on grounds of economic

duress was rejected – Ramsey J held that Paragon Finance v Freshfields

[1999] 1 WLR 1183 CA had overruled the whole of Hayes v Dowding

[1996] PNLR 578 Ch and the commentary in Mathews and Malek -

Disclosure 3rd Ed’n 11-64 was wrong. In these circumstances there was

no implied waiver of legal advice privilege.

• In Brennan v Sunderland City Council 2008 WL 5453608 the EAT

refused an application for Disclosure of documents subject to legal advice

privilege and ruled that something more than the effect of legal advice had

to be disclosed before waiver could take place.


• In Ashley v Chief Constable of Sussex [2008] EWHC 3151 (QB) Eady J

in a case involving the shooting of an unarmed civilian by a police officer

held that any rights on privacy and confidentiality grounds to refuse

inspection of the personnel files of the officer who did the shooting were

outweighed by the fundamental importance of a fair and just outcome of

important litigation and inspection was ordered.

• Documents tending to incriminate or expose to a penalty (not

covered)

• Documents privileged on grounds inspection (or disclosure)

injurious to the public interest (not covered other than as below)

6. RECENT CASES ON THE WITHOUT PREJUDICE RULE

• Starting point usually decision of H of L in Rush & Tomkins Ltd V GLC

[1989] AC 1280 and judgment of Oliver LJ in Cutts v Head [ 1984] Ch.290

• However Unilever PLC v Procter & Gamble Co [2000] 1 WLR 2436 is a

good starting point for recent cases in which Robert Walker LJ surveyed 8

exceptions to the without prejudice rule

(1) when the issue is whether without prejudice communications have resulted in a concluded compromise agreement, communications are admissible33.

(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.

(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 estoppel34.

(4) 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" - this exception should be applied only in the clearest cases of abuse of a privileged occasion.

33

Tomlin v. Standard Telephones and Cables Ltd. [1969] 1 W.L.R. 1378 34

Hodgkinson & Corby Ltd. v. Wards Mobility Services Ltd. [1997] F.S.R. 178,


(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.

(6) Where 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 L.J. 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 waiver35.

(7) The exception (or apparent exception) for an offer expressly made "without prejudice except as to costs". (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

• He stated at 2248:

“Whatever difficulties there are in a complete reconciliation of those cases, they make clear that the without prejudice rule is founded partly in public policy and partly in the agreement of the parties. They show that the protection of admissions against interest is the most important practical effect of the rule. 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] A.C. 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.”

• A powerful defence of without prejudice privilege was also given by Rix LJ in SIB v Fincken [2003] EWCA Civ 1630. In this case the CA considered the unambiguous impropriety exception in which C sought to plead an admission allegedly made in WP discussions which was

35

Muller v. Linsley & Mortimer [1996] P.N.L.R. 74, C.A.


inconsistent with D’s pleaded case.

• Para 57 – “It is not an abuse of the privilege to tell the truth, even where the truth is contrary to one's case. That, after all, is what the without prejudice rule is all about, to encourage parties to speak frankly to one another in aid of reaching a settlement: and the public interest in that rule is very great and not to be sacrificed save in truly exceptional and needy circumstances”.

• Para 58 - “It may be said ... that even if the mere possibility of future perjury does not suffice to destroy the privilege, the admission which demonstrates that perjury has been committed in the past ... is or should be different and that no authority suggests otherwise .... There is indeed a substantial case to be made that the courts should not pass by such proof of perjury with indifference. There is a clear public interest in the discouragement of perjury. Nevertheless, on balance I do not think that the courts should adopt such a position. If they did, the very serious and criminal charge of perjury would fall to be debated, without the protection which should be available to the accused party, on an interlocutory outing (as here) or even at trial, with the potential of derailing the trial by the exposure of without prejudice material to the trial judge”.

• In Pearson Education Ltd v Prentice Hall India Private Ltd [2005] EWHC 636 (QB) D wished to rely on 2 letters, one sent on their behalf and C’s reply, both of which were headed “Without Prejudice”. D argued that to determine whether the letters were within the scope of the privilege required the application of an objective and a subjective test, the latter involving evidence as to the actual intentions of the writer and as to whether he meant to send a WP communication. Crane J rejected the application of a subjective test36:

o If a party or a solicitor could simply assert that a letter that was objectively clearly to be interpreted as without prejudice was not in fact intended to be, there would be great pressure so to assert and a danger of the court being faced with disputes that were only resolvable by oral evidence and cross-examination. It seems to me that that would be a highly regrettable and indeed novel situation.

• In Bradford & Bingley v Rashid [2006] 1 W.L.R. 2066 H of L B & B sought to get over a more than 12 year between sale of a mortgaged property and pursuing D for the shortfall by relying on 2 letters sent WP by an advice centre in Bradford. They argued that a debtor could not claim WP protection for a letter when the only purpose of that claim was to

36

Para 20


prevent the Court deciding whether the letter was an acknowledgement for purposes of S29 Limitation Act 1980. They lost at 1st instance and in the CA but the H of L agreed with them:

• Per Lords Walker, Brown & Mance - without prejudice privilege did not apply to apparently open communications designed only to discuss the repayment of an admitted liability rather than to negotiate and compromise a disputed liability; that (per Lord Hoffmann) in so far as the without prejudice rule was based on general public policy, it did not apply to the use of a statement as an acknowledgment for the purposes of section 29(5) of the 1980 Act; that (per Lord Hope of Craighead) it did not apply to clear admissions or statements of fact that did not form part of an offer to compromise; and that the advice centre's letters, which had not been written in the context of any dispute regarding the debt or any attempt to compromise any such dispute but had contained express and unequivocal admissions of the existence of debt, did not attract the privilege.

• Lord Mance said at para 87: “it is wrong to assimilate the express use or effect of the phrase "without prejudice" in a context where there is no dispute or attempt to compromise a dispute with the significance of the "without prejudice" rule which applies, or of the "privilege" which exists, where there is an attempt to compromise a dispute. I am unable therefore to agree with my noble and learned friend Lord Brown's statement in para 63 that "generally speaking" communications marked "without prejudice" will "attract the privilege even without the public policy justification of encouraging parties to negotiate and settle their disputes out of court". It is not open to a party or parties to extend at will the reach of the "without prejudice" rule or of the "privilege" it affords as regards admissibility or disclosure”.

• In Wilkinson v West Coast Capital [2005] EWHC 1606 (Ch) an unsuccessful attempt in s 459 proceedings was made to get around Robert Walker LJ’s judgment in Unilever (approved in B & B v Rashid above). Mann J struck out passages in witness statements that attempted to separate out those aspects which might amount to admissions by carefully not giving any details of the negotiations themselves. Mann J held at para 16:

o Protecting against admissions against interest in a narrow sense is not the only thing to be achieved. A more general freedom to negotiate


is also part of the same package....it is important that things going beyond technical admissions should be caught by the bars imposed by the without prejudice principles. In my view, that will extend to who it was who broke off negotiations and who decided not to go through with an apparently agreed deal (albeit subject to contract). That seems to me to be all part of the freedom of negotiation under the umbrella. It may even be that one could analyse the breaking off of negotiation as being one of the admissions against interest which the breaker is entitled to have protected, and if necessary I would so hold.

Mediations

• Matters stated at Mediations have been the subject of a good deal of litigation:

o Hall v Pertemps [2005] EWHC 3110 (Ch) B sued A alleging that in breach of express or implied terms of a mediation agreement, A had stated to third parties that certain threats had been made against him at or shortly after the mediation – Lewison J accepted that in the “ordinary way” allegations of threats made in the course of a mediation are protected by the WP rule

� But that does not, in my judgment, mean of itself that the conduct of the mediation is a no go area. One example I gave in argument was that of an assault which takes place in the course of a mediation. But in most cases the kind of event that takes place in a mediation into which the courts will inquire would be quite irrelevant to the underlying dispute. It seems to me that the more relevant to the underlying dispute the events are the more likely they are to be covered by the without prejudice protection.

� It is also I think possible to conceive of a case in which threats made in the course of mediation so frightened one party to litigation that he wanted to bring the process to a halt irrespective of the merits of his claim. In such a case it is possible, although I do not say that this is necessarily the case, that the court would inquire, but that is not this case.

o In Aird v Prime Meridian Ltd [2006] EWCA Civ 1866 P appealed

against a ruling that an expert joint statement ordered for the purpose of mediation could not be used for any other purpose. The judge had ordered that C and P instruct experts and for the experts to prepare a joint statement for the mediation. CA held the order should have been construed objectively and the judge's view of the order and C's intentions were immaterial. The statement was a joint statement made pursuant to CPR r. 35.12 and was not privileged. It did not acquire without prejudice status because it was used in mediation.

.


o In Waste Cumbria Management Limited, Lakeland Waste Management Limited v. Baines Wilson (A Firm) [2008] EWHC 786 (QB) HH Judge Frances Kirkham sitting as a High Court Judge rejected Ds attempt to obtain Disclosure of documents relating to 2 mediations between C and DEFRA – She was not persuaded that the disclosure sought fell within the exception referred to in Unilever at (6) above – the Muller case – as the disclosure sought related to confidential documents of a 3rd party who, as in the instant case, might have a public interest in maintaining the confidentiality of the mediations, further she considered that mediation where there were express confidentiality terms governing should be an exception to the general rule that confidentiality is not a bar to disclosure of documents ... but the court will only compel such disclosure if it considers it necessary for the fair disposal of the case: see ... British Steel Corporation v Granada Television Ltd [1981] AC1096

Other cases

• In Carman v Cronos Group SA [2006] EWHC 1324 C applied for evidence contained in witness statements of the liquidator (L) to be struck out as inadmissible as they referred to WP negotiations in S 213 (fraudulent trading) proceedings issued by L. C had purchased the debts of the Co’s and sought an Order requiring L to discontinue. The application was refused because while the WP material could not be relied on during, or even in relation to the costs of, the s. 213 proceedings they were admissible in relation to the directions hearing. In seeking directions, L was entitled to put before the court everything that he would have been entitled to put before the court if the assignments to C of all claims in the liquidation had not been made. The court, in giving directions, would want to be placed, and was entitled to be placed, in the best position to decide what to permit L to do.

• In Chaudhary v Secretary of State for Health [2006] EWCA Civ 1648 the sec of state sought an order to prevent C from adducing a WP communication between him and his legal representatives as evidence in an appeal involving him and a third party (B). C submitted that the without prejudice rule did not extend to protecting third parties unconnected with the settlement of negotiations. Held that the rule's object of preventing disclosure was to prevent the without prejudice communication from being taken as an admission once it was in a bundle placed before the court hearing that application, that would be its effect in practical terms. Notwithstanding the course which C intended to take, the document had to be treated in exactly the same way as an admission for the purposes of the without prejudice rule. Thus, it carried the protection conferred by that rule and could not be deployed before the court.

• In Brown v Rice [2007] EWHC 625 (Ch) trial of a preliminary issue whether an application by an applicant trustee in bankruptcy B under the Insolvency Act 1986 s. 339 in relation to a sale of property by the first respondent's wife R to the second respondent P had been settled at a mediation involving the


intervener G. Held (1) The fact that the communications took place in the context of a mediation did not provide the communications with a special status exempting them from that exception to the without prejudice rule, Reed Executive Plc v Reed Business Information Ltd (Costs: Alternative Dispute Resolution) [2004] EWCA Civ 887, [2004] 1 W.L.R. 3026 considered. (2) Whilst P might only have been considering putting forward the offer he had not made that clear to G or R and therefore P had objectively made an offer to settle the litigation within 28 days but the offer was incomplete and accordingly no settlement had been reached.

• In Stax Claimants v Bank of Nova Scotia Channel Islands Ltd [2007] EWHC 1153 (Ch) B applied for disclosure of documents arising out of a meeting between the lawyers of the respondents S and lawyers representing IFAs. S had sued B for losses incurred as the result of the transfer of S's benefits under approved occupational pension schemes to an offshore scheme. B denied liability. One of B's defences was that there had been no reliance on B and that S had relied on their own IFA, but in case it was wrong, B brought Part 20 claims against many of S's IFAs. In the course of the litigation, S's solicitors and junior counsel met with lawyers representing some of the IFAs. B subsequently sought disclosure of the agenda of that meeting, of all correspondence between S's solicitors and the IFAs and their legal representatives or both relating to the meeting, and of all attendance notes of the meeting. S contended that the meeting was WP but that was rejected by the Court.

• In Brunel University v Vaseghi [2007] EWCA Civ 482 The CA held that the EAT had been justified in concluding that there had been a bilateral waiver of privilege in respect of without prejudice negotiations constituting a grievance meeting. In most cases, where a grievance meeting took place in the usual way, internally, there would be no question of waiver if the parties mentioned matters covered by the without prejudice privilege. But in the particular and unusual circumstances of the instant case, where the grievance proceedings had in effect been a trial of the victimisation issues by an independent panel and where both parties had given or called evidence of the previous negotiations, privilege had been bilaterally waived. By referring to the without prejudice discussions in their ET1s and witness statements, V had made it plain that they intended, unless prevented, to waive privilege. By pleading its responses as it had and by attaching the grievance panel's report to the ET3s, B had made it plain that it too had intended to waive privilege. Had B applied to amend its pleading shortly after filing it, the application might have had a good chance of success. However, where, as in the instant proceedings, an application to amend had not yet even been made and where the application to withdraw references to the without prejudice discussions would have a radical effect on those proceedings, it was far too late for B to retrieve the position.

• In Barnetson v Framlington Group Ltd[2007] EWCA Civ 502 the judge held


that the relevant passages did not offend the without prejudice rule, because the exchanges to which they referred took place before the commencement of litigation and before the commencement of any basis for potential litigation. CA held for the without prejudice rule to give full effect to the public policy underlying it, namely discouraging recourse to litigation and encouraging genuine attempts to settle, a dispute could engage the rule notwithstanding that litigation had not yet begun – appeal allowed.

• In Cowen v Rentokil Initial Facility Services (UK) Ltd 2008 WL 576835 the EAT held in a case where negotiations had taken place after C had been successful at an ET which was contemplating an order for re-engagement that a failure to declare documents or negotiations to be without prejudice did not make them open, Brunel University v Vaseghi followed. The meeting was clearly part of WP negotiations. Privilege did not apply only to liability. Waiver had to be consensual. Whether there had been waiver by C was a factual matter to be re-determined by the tribunal. If no bilateral waiver had taken place then the tribunal should not have been referred to it.

• In Galliford Try Construction Ltd v Mott MacDonald Ltd [2008] EWHC 603 (TCC) M applied to strike out references to negotiations in witness statements and documents. M had asked for the initial meeting to be WP. Both parties treated the meeting as WP. G was seeking to rely on admissions against interest. The disclosure of a letter and the notes of a meeting in lists and the offer of those documents for inspection did not amount to a waiver. The new procedure under the CPR did not mean that the inclusion of a document in a list rendered it admissible in evidence, Smith Group Plc v Weiss Unreported March 22, 2002 Ch D followed.

• In Ofulue v. Bossert [2008] EWCA Civ 7 the CA rejected an attempt in an adverse possession case by the registered owners when D had obtained possession in 1981 to rely on a without prejudice letter sent in 1992. Arden LJ concluded that the letter did contain an implied acknowledgement but as the letter was sent in an attempt to settle an ongoing dispute the without prejudice rule should apply. May LJ and Sir Martin Nourse agreed.

DAVID H. CHRISTIE 7 Bedford Row London WC1R 4BS 5.2.09