OF PRICE AND PREJUDICE, WAR AND PEACE — THE USE OF “WITHOUT PREJUDICE”CORRESPONDENCE IN APPLICATIONS FOR STRIKING OUT AN ACTION FOR WANT
OF PROSECUTION
INTRODUCTION
Time and again, legal practitioners are reminded that “without prejudice” correspondence in negotiation settlements between litigants are privileged. The principle after all is to encourage parties in litigation to discuss candidly the strengths and weaknesses of their case while they embark on a legal battle without forsaking their search for peace. These discussions are conducted on a tacit understanding that any concessions made by either party cannot be held against them later and hence such communications should not be disclosed to the Court.
Indeed the occasions when the Courts have so jealously guarded the “without prejudice” rule are legion1
. The scope of the rule has also been sufficiently discussed elsewhere2
.
What this article hopes to examine is the recent development in the exceptions to the “without prejudice” rule, in particular the extent of disclosure of “without prejudice” correspondence as evidence in applica-tions to strike out an action for want of prosecution.
THE FACT OF ONGOING NEGOTIATIONS — THE ENGLISH AUTHORITIES
In any application to strike out the Plaintiffs’ action for want of prosecu-tion, the Defendants have to prove to the Court’s satisfaction that the Plaintiffs have been guilty of inexcusable and inordinate delay and that the delay has caused such prejudice to arise that there is a serious risk of a fair trial not being possible3
.
Often, the Plaintiffs may choose to refrain from taking active steps in prosecuting the claim as they could be embroiled in settlement talks with the Defendants. When such Plaintiffs are then taken to task for being slow to proceed with the claim, the Plaintiffs may rely on the settlement negotiations as cause for the delay.
1 2 3
See the discussion of the Court in Rush & Tompkins Ltd v. Greater London Council &
Anor [1989] AC 1280.
See Communications in the Course of Settlement Negotiations and the Rule of Privilege by Jeffrey Pinsler [1992] 1 MLJ xxv.
See Allen v. Sir Alfred McAlpine & Sons Ltd [1968] 2 WLR 366 and Wee Siew Noi v. Lee
Mun Tuck [1993] 2 SLR 232. See also the recent House of Lords decision of Roebuck
Until 1993, the reported English decisions seem to have only allowed the
fact of negotiations having taken place to be admissible as evidence.
In Walker v. Wilsher4
the Court of Appeal was faced with a question as to whether letters or conversations written or declared to be “without prejudice” are admissible as evidence in determining whether the Plaintiffs should be deprived of costs after the action was tried with a result of judgment by consent for the Plaintiffs for an agreed sum.
Lindley L. J. in addressing the issue, decided that5 :–
“No doubt there are cases where letters written without prejudice may be taken into consideration, as was done the other day in a case in which a question of laches was raised. The fact that such letters have been written and the dates at which they were written may be regarded, and in so doing the rule to which I have adverted would not be infringed. The facts may, I think, be given in evidence, but the offer made and the mode in which that offer was dealt with — the material matters, that is to say, of the letters — must not be looked at without consent.”
Bowen L.J. in his judgment, also stated that6 :–
“The facts of those negotiations may ... be given in evidence, but the question whether what was said or done at such negotiations is admissible is a very different one.”
This position appears to be upheld close to a century later in the decision of Simaan General Contracting Co. v. Pilkington Glass Ltd7
. In this case, the Court had to decide whether, in a claim founded in negligence in the supply of goods and the Defendants had applied for security for costs, the Court may take into account evidence of offers in settlement made by the Defendants even if they were made “without prejudice”. This was for purposes of deciding whether the Plaintiffs are likely to succeed in the action and whether it would be just to require them to provide security. Judge Newey QC8 first referred to the general “without prejudice” rule and stated that:–
“To the general rule there are exceptions. In Walker v Wilsher (1889) 23 QBD 335 at 338 Lindley LJ referred to letters written without prejudice being considered in a case in which a question of laches was raised and, at least in my experience, they are referred to freely without protest on applications to strike out for want of prosecution.”
4 5 6 7 8
See Walker v. Wilsher (1889) Q.B. 335. Ibid. at page 338.
Ibid. at page 338. [1987] 1 All ER 345. Ibid. at page 347.
To this, he appears to add a qualification,9:–
“In striking-out applications, it is not the content of “without prejudice” negotiations but the fact that they took place which may be material as excusing delay.”
In deciding the matter at bar, the Court held that the “without prejudice” negotiations were not admissible on summons for security for costs and the relevant passages in the Plaintiffs’ solicitors’ affidavit and the exhibited correspondence were to be disregarded. The Court’s rationale in this case was that10
:–
“To allow one party to give evidence of “without prejudice” communications without the consent of another would be in direct conflict with the general rule excluding such evidence and with the public policy which supports it. Defendants sued by Plaintiffs resident abroad or by companies likely to get into financial difficulties would be deterred from exploring possibilities of settlement and making sensible offers for fear of prejudicing their prospects of being able to obtain security for costs. In particular a defendant who has obtained an order for security intended to relate to preparations for trial only would be most unwilling to take any action which might prevent him from obtaining a second order for security in respect of trial costs.”
Family Housing Association (Manchester) Ltd v. Michael Hyde and Partners — The Turning Point?
In the 1993 Family Housing case11
, the 1st and 3rd Defendants had applied for the Plaintiffs’ action to be struck out for want of prosecution and the Plaintiffs had filed affidavit evidence which included details of “without prejudice” correspondence setting out suggested trial dates and other negotiations between the parties. The affidavit and the exhibits had set out the prices at which settlement offers were made and also referred to settlement offers either precisely quantified or scaled by reference to the quantum of the Plaintiffs’ damages as well as concessions on some controversial issues at stake in the proceedings made for the purposes of negotiations only.
The Court at both first instance and at the Court of Appeal held that these references and the exhibits of the correspondence were admissible as evidence and dismissed the Defendants’ application to have them expunged.
9 10 11 Ibid. at page 348. Ibid. at page 348. [1993] 1 WLR 354.
12 13
Ibid. at page 356. Ibid. at page 356.
The Defendants’ solicitors had submitted that while it is permissible to refer to the fact of negotiations having taken place and the period of those negotiations, it is not permissible to refer to the details of what was offered or said12.
The argument did not find favour with the Court and the official referee’s ratio decidendi which was affirmed by the Court of Appeal is pertinent13
:– “It seems to me, when considering questions of delay and striking out for delay, it is not sufficient just to know there have been negotia-tions. If that is all a judge knows he might well do an injustice either to a plaintiff or to a defendant. To my mind it is sensible in such cases to see what each party was saying to the other, and to see if for instance delay was actively encouraged, whether protests were being made about it, whether both were just letting the action sleep. Such an inquiry would ensure that a judge, who is deciding whether a party should be struck out or not because of delay, would have a full picture before him so that he could meet the full justice of the case without any blindfold. If it be the case that in any such interlocutory application there are matters a trial judge should not know of, then of course the judge making the interlocutory decision sends it over for trial by another judge.”
Comments
The writer submits that the Family Housing case does not necessarily sit uncomfortably together with the earlier English authorities dealing with “without prejudice” correspondence.
The two authorities of Walker’s case and Simaan’s case were not concerned with whether there was inordinate delay on the parts of the litigants and hence justifying the striking out of the action.
In Simaan’s case, the Court recognised a wider public policy in sympathiz-ing with Defendants who have been sued by foreign Plaintiffs who may be trigger-happy in commencing proceedings but against whom it is difficult to enforce an order for costs subsequently.
It is also not clear whether Lindley L.J.’s comments in Walker’s case on offers made in “without prejudice” material were so far-reaching as to be applicable for both questions of laches and costs since it was only the latter that the Court was primarily concerned with in that case.
In fact, Judge Newey in Simaan’s case only stated that it is not necessarily the content but the fact that negotiations took place which may be material as excusing delay where striking out of applications are concerned. The learned Judge did not in any part of his judgment go so far as to say that such “without prejudice” material are not admissible as evidence in striking out applications.
The writer submits that the fact that the negotiations took place are but only half the pieces of the picture which the Court ought rightfully view, in a striking out application.
Often enough, Plaintiffs delay in taking the next step in the progress of a case such as taking out Summon For Directions because the Defendants’ offer of settlement may demand more time than usual for deliberation. Defendants do not necessarily make offers to settle in the mode of cash payments. Sometimes the offers are made in the form of a sale and purchase of the Defendants’ business, commercial or real estate interest. Such offers would obviously demand that the Plaintiffs employ more time in investigating the viability of the offers.
For purposes of striking out applications, it may well be that disclosing to the Court the fact and dates of settlement negotiations alone may not be sufficient in explaining why there was a need for the extended series of negotiations to begin with. Disclosing to the Court the correspondence that relates to the offers and details made at settlement talks may in fact reveal that subsequent settlement meetings were necessary because the parties were pursuing an amicable settlement by proposing and counter-proposing a sum that is acceptable to all the parties.
A mere schedule of dates and periods when negotiations had taken place would not go very far in explaining the delay on the Plaintiffs’ part. Indeed, as the Court recognised in the Family Housing case, there is a preponderant public policy consideration in favour of admitting the evidence in striking out applications14. Some of these consideration as noted by Hirst L.J. are:–
Supra, note 11 at page 363. (i)
(ii)
The admission of such correspondence in striking out applica-tions is for the limited purpose of explaining the passage of time and the conduct of the parties during negotiations. It does not infringe the policy which lies behind the exclusion of such cor-respondence for other purposes and on other issues.
Whilst public policy dictates that, in the majority of cases and in relation to the majority of issues, the details of “without prejudice” discussions cannot be disclosed, there is in a residuum
of cases, a stronger public policy which dictates disclosure. In the present case the prevailing public policy consideration is that of enabling a party to lay all relevant facts before the Court so that the Court has sufficient information to reach a just conclusion in accordance with established precedent.
The writer further submits that admitting such correspondence can cause no extreme prejudice since after ruling that the evidence is admissible at the interlocutory stage, that Judge can be excluded from hearing the arguments at the main trial. Furthermore, it is a practice in our Singapore Courts that if necessary, an order may be made at such applications to expunge reference to “without prejudice” correspondence from the affidavits, declaring that if the Registrar or Judge subsequently decides that the matter should go to trial, the affidavits containing “without preju-dice” material may be sealed so that they are not to be referred to at the main trial. Therefore the affidavits which contain the “without prejudice” correspondence but serving the purpose of painting a full picture for the Court to appreciate why there was a justifiable delay in proceedings, will not be evidence before the Court at the main trial. Hirst LJ. rightly observed that the exposure of the negotiations in this narrow context can hardly be harmful to either side15
.
Supra, note 11 at page 363. (1951) 69 W.N. (N.S.W.) 8. Ibid, at page 10. (1961) 78 WN (NSW) 886 at 889. 15 16 17 18
THE AUSTRALIAN POSITION
In the case of McFadden v. Snow16
, the facts which are not relevant for this article, evidence was given at a stage of the proceedings that no reply had been received to a letter. This was an attempt to establish an admission by silence as to a relevant fact. The Court proceeded to admit a letter described as “without prejudice” that was tendered in disproof of that evidence. Kinsella J. in his judgment remarked17
:–
“The privilege that may arise from the cloak of “without prejudice” must not be abused for the purpose of misleading the court.” This was affirmed in two other reported Australian cases.
In Pitts v Adney18
, Walsh J. recognised that the privilege was not absolute:– “It is of importance that the rule protecting from disclosure, discus-sions taking place in an endeavour to put an end to pending litigation should, in general, be applied. But it is, after all, a rule based upon public policy. It cannot be permitted to put a party into the position
of being able to cause a court to be deceived as to the facts, by shutting out evidence which would rebut inferences upon which that party seeks to rely.”
The Court decided that certain offers made “without prejudice” should be taken into account because it was both relevant and important. However, its admission should have been by a regular and proper procedure. The Federal Court of Australia in Trade Practices Commission v. Arnotts
Ltd and Others19
approved the observations of the court in the aforesaid two cases. It should be noted that in the Arnotts’ case, the court decided to admit the “without prejudice” material based on the fact that the respondent had impliedly waived their right of privilege.
[1989] 88 ALR 69. [1991] 3 MLJ 4.
19 20
Comments
It would appear that since the middle of this century, the Australian Courts have already seen the need to depart from the general principle of privilege if its blind application would result in injustice or a deception of the court. Although the Arnotts’ case was decided based on the implied waiver, the writer submits that even if a litigant had not waived his rights of privilege but if the conduct of the legal proceedings results in the matter being skewed unfairly to one side and there exists “without prejudice” correspondence which would correct that imbalance, such correspondence may be adduced as evidence in the interest of justice. It is submitted that in the striking out application, the Plaintiff should be permitted to adduce “without prejudice” material as evidence to correct any impression of undue delay even if there has been no waiver of privilege.
THE LOCAL POSITION
Until the date of this article, there has been no reported decision of our courts addressing the issue of whether “without prejudice” correspond-ence may be adduced as evidcorrespond-ence in striking out applications. However, it is the writer’s view that the Singapore Court of Appeal decision of Lim
Tjoen Kong v. A-B Chew Investments Pte Ltd20
may lend support to the view that our courts should not decide differently from the Family Housing case.
In A-B Chew’s case, both sets of litigants had in their affidavits referred to negotiations between the parties which had taken place.
When the Defendant took out an application to strike out the privileged parts of the Plaintiffs’ affidavit, the court held that when there is a dispute
as to the nature of the negotiations and the parties thereto, and there was a conflicting version of the negotiations, the evidence becomes admissible because the parties had waived the privilege.
Chan Sek Keong J. as he then was, noted that the rule of privilege was not absolute. The without prejudice material was held as admissible because:– “... to hold otherwise will encourage the suggestion of evidence which may prove what is false and the suppression thereof which may prove what is true. That is not the object of the rule21
.”
Ibid. at page 9.
LLB. (Hons.) (Sing.); Advocate and Solicitor, Supreme Court of Singapore.
21 *
Comments
A-B Chew’s case was of course decided based on waiver of privilege. However, if as the writer submits, the court was applying the guiding principle that the court must not conduct proceedings in such a way that there occurs a suppression of what may be true, then our local courts should, in keeping with the policy raised in the Family Housing case, avail themselves of a true and accurate picture of the steps the parties have taken in legal proceedings and whether there has been inordinate delay or an acquiescence of the delay on the Defendants’ part.
CONCLUSION
One may of course be concerned that the Family Housing case would open the floodgates of privilege. However, the writer submits that for the reasons already discussed, there is no extreme prejudice suffered by the parties when the “without prejudice” material is used only to defend striking out applications. At the time of this article, the writer is aware of applications having been made by Defendants to expunge such material from the Plaintiffs’ affidavit in striking out applications. It is submitted that our local courts should not decide differently from the Family Housing case. It is difficult to envisage how litigants having embarked on war in the court may decide against negotiating a settlement and making peace simply because the material is made available to the court in such a narrow context and for such a narrow purpose.
