The Gazette 1991

g a z e t t e

april

1991

of " a separate and severable

question".

(ii)

THIRD PARTIES

Negotiations wh i ch have taken

place between A and B on a

" w i t h o ut prejudice" basis may

have resulted in the settlement of

their differences. However, one or

both of these parties may continue

t o be in d i s p u te w i t h C in

connection w i th the same subject

matter and negotiations w i th C

may have been un s u c c e s s f ul

resulting in resort to litigation. Will

w i t hout prejudice communications

made for the purpose of com-

promise in the settled action be

discoverable and admissible by C in

litigation against either A or B or

vice versa?

This was discussed in

Rush and

Tompkins Ltd. -v- Greater London

Council and Another

(1988).

The

plaintiff builders entered into a

construction contract w i th the first

named defendant. The second

named defendant, P.J. Carey Plant

Hire (Oval) Limited, was a sub-

contractor. A dispute arose bet-

ween the parties in that the sub-

contractor sued the plaintiff for loss

and expense suffered due to delay

and disruption.

The plaintiff contended that they

were entitled to have these sums

reimbursed by the first defendant

(GLC). Negotiations having failed,

the plaintiff commenced proceed-

ings in order that the amount due

to the second named defendant

might be established and also

sought a declaraction as to their

right to be reimbursed by the first

named defendant. Prior to the

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hea r i ng, a c omp r om i se was

reached between the plaintiff and

the first-named defendant on the

basis of negotiations wh i ch had

been undertaken " w i t h o ut pre-

j u d i c e " . The s e c o nd n amed

defendant, convinced that these

negotiations must have disclosed

matters relating to the valuation of

their claim, sought discovery of

these settlement documents and

this was contested by the plaintiffs

who argued t hat the w i t h o ut

prejudice nature of the documents

protected them from discovery. The

House of Lords first addressed the

admissibility of such documents in

the litigation w i th the second

named defendant and, in deciding

this issue, had to balance the public

policy of encouraging amicable

settlement of disputes against the

requirement t hat evidence be

admitted where the justice of the

case so requires.

The House of Lords (overruling

the Court of Appeal) decided in

favour of the plaintiff contractor,

Lord Griffiths holding that

" . . . as a general rule the

w i t hout prejudice rule renders

inadmissable in any subsequent

litigation connected w i th the

same subject matter proof of

any admi ss i ons made in a

genuine attempt to reach a

settlement. It of course goes

w i t hout saying that admissions

made to reach settlement w i th

a different party within the same

litigation are also inadmissible

whether or not settlement was

reached w i th that pa r t y " .

2 5

In reaching such a conclusion,

the House of Lords clearly favoured

the public policy objective of

u n i n h i b i t ed o p p o r t u n i t i es for

dispute settlement

" . . . the general public policy

that applies to protect genuine

negotiations f r om being ad-

missible in evidence should also

be extended to protect those

negotiations from being dis-

coverable to third parties".

It is submitted that this decision

does not amount to a deviation

from the principle that the w i t hout

prejudice protection disappears

once settlement is reached; rather

it redefines that principle so as to

remove the protection only

inter

partes.

Clearly there has been no

such settlement between the third

party and the party to the settle-

ment against wh om he is still in

contention and so, in relation to the

dispute between these parties, the

" . . . the House of Lords clearly

favoured the public policy

objective

uninhibited

opportunities for dispute

se t t l emen t . . ."

without prejudice protection should

remain.

What, therefore, is the signifi-

cance of the removal of the without

prejudice label following settlement

if it only applies as between the

parties to that settlement? First, as

illustrated in

Bentley -v- Nelson

(1963),

this rule prevents a party

to the settlement from taking legal

action in contradiction to the terms

of the settlement and thereafter

relying on these words to prevent

the terms or the fact of the

settlement being disclosed to the

court. Secondly, the continuation

of the w i t hout prejudice protection

as against third parties may in itself

be of limited extent, Lord Griffiths

confining it to

" . . . any subsequent litigation

c o n n e c t ed w i t h

the

same

subject

matter"

As such, his Lordship envisaged

that in litigation involving different

subject matter, the "w i t hout pre-

judice" protection might well be lost.

(d)

STATEMENTS

MUST

RELATE TO THE DISPUTE IN

HAND.

Cross

states

" . . . the statement in respect

of wh i ch privilege is claimed

must have some bearing on

negotiations for a settlement".

TURKS AND CAICOS

ISLANDS AND

THE ISLE OF MAN

Samuel McCleery

Attorney - at • Law and Solicitor of PO Box

127 in Grand Turk.Turks and Caicos Islands,

British West Indies and at 1 Castle Street,

Castletown, Isle of Man will be pleased to

accept instructions generally from Irish

Solicitors in the formation and administration

of Exempt Turks and Caicos Island

Companies and Non - Resident Isle of Man

Companies as well as Trust Administration

G. T Office:-

Tel: 809 946 2818

Fax: 809 946 2819

I.O.M.Office:-

Tel: 0624 822210

Telex : 628285 Samdan G

Fax: 0624 823799