The Gazette 1991

a p r i l 1991

g a z e t t e

supervision and discretion of the court. In Holland and Others -v- McGill and Others, 47 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 in Buckinghamshire County Council - v- Moran 48 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. 49 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 of vetoing the effectiveness of the words derives from the inherent discretion of the court. 50

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) 44 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". 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. 45 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. 5. 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. 46 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 4. PROTECTION EXTENDS TO BOTH ORAL AND WRITTEN COMMUNICATIONS

6. 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. 51 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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