EWHC 786 (QB)
Disclosure, Without Prejudice, Confidentiality and Litigation
The Defendant had acted as Solicitor for the Claimants in connection with the drafting and negotiation of an agreement between themselves and DEFRA for the provision of waste management services during the foot and mouth epidemic in 2001.
The Claimants and DEFRA were in dispute as to the sums owning pursuant to that agreement.
Settlement of that dispute took place after a series of 'without prejudice' correspondence and two mediations.
The action before the Court was brought by the Claimants against the Defendant (their original solicitors) for negligence in relation to the initial negotiation and drafting of the agreement and thus the shortfall in the sums they contend that they were entitled to under the original agreement and those recovered from DEFRA following the mediations.
The Agreement to Mediate in the case of each mediation contained clauses as to the confidentiality and without prejudice nature of the mediation.
Whether the Defendant (the original solicitor) was entitled to disclosure of documents arising out of or in connection with the two mediations between the Claimants and DEFRA.
The Defendant contended:
1. That there is no principle of English Law which means documents are protected from disclosure by reason of confidentiality alone;
2. Whilst without prejudice documents are prima facie protected from disclosure on the basis that they are privileged, the Claimants waived that privilege when they pleaded the case on the basis that the settlement with DEFRA was reasonable and thus claimed the shortfall;
3. In order to assess the reasonableness of the Claimants’ conduct, the Defendant needed to know what that conduct was and that included conduct at the mediations.
DEFRA were not a party to the proceedings but had been permitted to make representations pursuant to CPR 31.19(6)(b) and resisted the application.
The Claimants were neutral as to the application.
The Law of privilege was reviewed. It exists because:
a. There are public policy reasons for encouraging parties to attempt settlement of their disputes by means of without prejudice discussions without fear that any statements made therein would be used within litigation; and
b. The express or implied agreement between the parties that the communications within the course of their negotiations should not be admissible in evidence should a contested hearing ensue.
The only exception of relevance was noted to be where a former client sues his former solicitor and an issue arises as to whether he has acted reasonably to mitigate his losses in his conduct and conclusion of negotiations with a compromise of proceedings brought against him (See: Muller v Lindsay & Mortimer  1 PNLR 74). The Claimants had sought to deny disclosure of the without prejudice material without success. It was held that the issue of the truth (or otherwise) of anything stated in the negotiation was unconnected with the issue and therefore, it fell outside the principle of public policy protecting without prejudice communication.
The instant case was distinguished from the exception in Muller. This case involved consideration of whether the without prejudice material of a third party (DEFRA) should be disclosed. The privilege belonged not only to the Claimant but to DEFRA as well. There were public policy reasons why DEFRA should be entitled to assert privilege.
There was an express agreement (within the Agreement to Mediate) that the without prejudice rule should apply. DEFRA were entitled to protect themselves from disclosure of material that may embarrass them. Here, the truth or otherwise of what was said at the mediation would or could be at issue.
The CPR encouraged without prejudice communication and mediation and thus the Court should be slow to find exceptions to the general rule. The Defendant was not within the Muller exception and thus the application failed on that basis.
In addition, whilst confidentiality is not necessarily a bar to disclosure, DEFRA were party to a confidentiality agreement within the Agreement to Mediate. DEFRA wished that agreement to be honoured and thus the Court should support the mediation process (which was encouraged by the CPR) in refusing, in normal circumstances, to Order disclosure of documents and communications within a mediation. In particular, the Court should be very slow to Order disclosure of documents held by a mediator. Mediators should be able to conduct mediations confident that, in normal circumstances, their papers should not be seen by the parties or others.
This case reinforces the purpose and importance of the Agreement to Mediate and the fact that, if there was a risk of disclosure being Ordered (absent abnormal circumstances) the process would be undermined.