The Gazette 1991

g a z e t t e

a p r i l 1991

based upon the intention of the

parties, the court may be prepared

to extend the without prejudice

protection to communications

made by third parties which are

connected with the settlement of

the dispute. In

Rabin -v- Mendoza

(1954)

disclosure of a surveyor's

report acquired in aid of settlement

was prohibited.

The conclusion, therefore, must

be that so long as the requisite

intention and reasonably contem-

plated recognition are established,

the use of any precise formula is

not required. Possible alternatives

would be "off the record" or " f or

negotiation purposes only".

PROTECTION EXTENDS TO

BOTH ORAL AND WRITTEN

COMMUNICATIONS

How many times have you spoken

with another solicitor on the

telephone and said "Everything I

say is without prejudice"? A vast

majority of the authorities in this

area focus on written communica-

tions. It is nevertheless clear that

the privilege extends to oral

communications where prefaced

by these words or their equivalent.

Provided the conditions in Part 1 of

this article are fulfilled, there is no

difference between the principles

applicable in respect of the written

and spoken word.

However, from

a practical and evidential point of

view it is clearly in the interests of

" . . . there is no difference

between

the

principles

applicable in respect of the

written and spoken word"

the offeror, who wishes to avail of

the privilege, to have tangible

evidence that he has sought to

invoke this exception to the general

rule, as to admissiblity.

JUDICIAL DISCRETION

As with legal professional privilege

and public policy immunity, the

without prejudice claim cannot be

a unilateral decision of the party

invoking it.

Rather, in all cir-

cumstances in which it is sought to

exclude relevant evidence from the

court, the ultimate decision as to

admissibility will be subject to the

supervision and discretion of the

court. In

Holland and Others -v-

McGill and Others,

Murphy J.

inspected the documents which

were marked "wi t hout prejudice"

and jt was ultimately the court

which decided that the documents

in question were admissible and

that the words would not afford the

protection sought by the user

thereof. On the facts of the

Holland

case, the reason for this inef-

fectiveness was because the court

found that negotiations had ended

at the time the letters were written.

Such an inspection by the court

was

also

undertaken

Buckinghamshire County Council -

v- Moran

and a similar con-

clusion to that of Murphy J was

reached i.e. the letter in question

did not indicate that

its

commun i ca t i on was for the

purpose of negotiation. Slade L.J.

stated:

" . . . it amounted not to an offer

to negotiate, but to an assertion

of the defendant's rights,

coupled with an intimation that

he contemplated taking his

solicitor's advice unless the

Council replied in terms recog-

nising his asserted rights. I

cannot derive from the letter any

indication, or at least any clear

indication, of any willingness

whatever to negotiate."

As has been seen at Part 1 of this

article, not only the stage at which

the words are used (they must be

during the course of negotiations)

but also the subject matter of the

communication so marked (it must

relate to the dispute and be bona

fide) is essential to the effective-

ness of the words. Such informa-

tion can only be ascertained by an

examination of the documents in

question by the court with a view

to the exercise of its ultimate

discretion. Likewise, the protection

is lost if an agreement is reached.

A review of the correspondance,

despite being so headed, may be

essential if it is to be determined

whether or not such agreement

was reached. It was so held in

Cables Ltd.

Thus, it is clearly the case that

the court has a residual discretion

in deciding all these points and,

while not specifically alluded to in

the cases discussed infra., it is

submitted that this judicial power

vetoing the effectiveness of the

words derives from the inherent

discretion of the court.

MODIFICATION ON THE USE

OF THE WORDS "WITHOUT

PREJUDICE"

If the protection afforded by the

courts to documents tending to

facilitate settlement is based upon

the intentions of the parties, then

clearly the courts will give effect to

modifications intended to be placed

upon this protection by the offeror

and known to the offeree. Perhaps

the most important modification on

the traditional use of the words

"without prejudice" has been the

Calderbank letter. Obviously

considerable hardship may be

caused to a party who during

negotiations made a generous and

bona fide offer which the other

party rejected which, it later

transpires, was greater than or

equal to the award made by the

court. The continuation of the

litigation will have been unneces-

sary and expensive. The offeror in

such a situation may, not

unreasonably, feel that it is only fair

that his offer should be admissible

to the court in determining the

issue of costs. This problem is

illustrated by the

Cardl&bsfhk

base

itself.

The court was concerned with a

dispute over matrimonial property.

The settlement offered by the wife

involved the transfer to the

husband of property valued at

£12,000. The husband rejected this

and when the action was even-

tually tried the court ordered

payment to the husband of

£10,000 from the sale of the

matrimonial home. The question of

costs then arose and the court, in

line with the traditional interpreta-

tion of these words, held that the

létter containing the wife's offer,

expressed to be without prejudice,

could not be referred to by the

court.

However, Cairns L.J. suggested a

solution for the future whereby the

benefits of without prejudice

communications could be retained

during the trial but with the

documents becoming admissible

when the issue of costs arose for

determination.

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