Off the record?

By Neal Morris07 March 2008

Donald Rumsfeld may have been right when he said, “With the press, there is no ‘off the record',” but in civil proceedings in the English Courts ‘without prejudice privilege' is well established. The term means that communications made between parties to a dispute with the aim of reaching a settlement cannot usually be admitted in evidence or made the subject of a disclosure order in any subsequent proceedings.

Why?

There are two justifications for this. The first is that by protecting such communications from disclosure, parties are more likely to make concessions. They have the peace of mind of knowing any discussions will not be subsequently used in evidence against them.

The second is based on the express or implied agreement of the parties themselves that what passes between them during the course of negotiation should not be admissible as evidence if a settlement cannot be reached. A common example is a mediation agreement.

However, the mere inclusion of the words ‘without prejudice' in communications does not necessarily mean that without prejudice privilege will apply. Mr Justice Drake in Dixons Stores Group Ltd v Thames Television plc (15 July 1992, Queens Bench Division) put it succinctly when he said, “The mere fact of heading a letter ‘without prejudice' is not in the least decisive as to whether or not the letter is in fact privileged.”

Limits

Two recently-decided cases highlight some of the limits of the without prejudice rule. In Brown v Rice (14 March 2007, Chancery Division) the court had to decide as a preliminary issue whether or not a settlement had been reached during mediation.

However, the mere inclusion of the words'without prejudice' in communications does not necessarily mean that without prejudice privilege will apply.

The court held that privilege did not apply in this case – where the dispute was about whether a settlement had been reached. The fact that communications took places as part of a mediation did not mean they had special status.

In the second case, Stax Claimants v Bank of Nova Scotia Channel Islands Ltd (15 May 2007, Chancery Division), Stax had sued Nova Scotia and others for losses. During the course of the litigation Stax and its advisers met to discuss the proceedings generally. Nova Scotia made an application to the court for disclosure of all documents and records of the meeting.

Stax invited the court to extend the scope of without prejudice privilege to discussions concerning the proceedings generally, including comments on the strengths and weaknesses of Stax's claims and Nova Scotia's defences, tactics and case management issues.

The court declined. It reaffirmed that discussions or communications must be focused on avoiding litigation to attract without prejudice privilege, and protection was therefore rejected.

However, it appears the courts are prepared to adopt a broad approach on the question of privilege as long as communications are made with the genuine aim of attempting to settle a dispute.

In Framlington Group Ltd v Barnetson (24 May 2007, Court of Appeal), Framlington sought the deletion of certain passages in a witness statement of Barnetson on the grounds that they referred to matters that were without prejudice. The Court of Appeal made clear that without prejudice privilege could arise even though litigation had not yet begun. It said both parties had been aware of the potential for litigation if they could not reach a settlement. Negotiations were therefore covered by the without prejudice rule even though they had taken place long before any formal dispute arose.

These cases demonstrate that parties should take care when seeking to communicate on an ‘off the record' basis. Marking a document ‘without prejudice' will not necessarily render it confidential or immune from disclosure, if it is not made as part of a genuine attempt to negotiate a settlement!

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