In Octogan Overseas Ltd and others v Circus Apartments Ltd [2022] UKUT 302 (LC); [2022] PLSCS 188 the Upper Tribunal (Lands Chamber) was asked to determine whether a disputed text message was covered by “without prejudice” privilege.
The Canary Riverside Estate is a mixed-use residential and commercial development containing four tower blocks situated in Canary Wharf, E14. The respondent, Circus Apartments Ltd (CAL), was a long lessee of apartments contained in one of the towers. The first appellant, Octagon Overseas Ltd (OOL), was the owner of the freehold. The second appellant, Canary Riverside Estates Management (CREM) was granted headleases of both residential and commercial parts of the estate by OOL. In 2018 CREM transferred some of those interest to the third appellant, Riverside CREM 3 Ltd.
The backdrop to the appeal concerned an application to the First-tier Tribunal made by the appellants for the variation of the terms of the appointment of a manager. The initial management order was made by the FTT in 2016 following an application made by the long leaseholders of the flats under section 24 of the Landlord and Tenant Act 1987. CAL was not a party to the original application to appoint a manager, but was identified in the schedule to that order as one of the “commercial tenants” rather than a “residential tenant”. In 2021, CAL sought to remove any references to it as a commercial tenant in the schedule because it believed that it was potentially prejudicial to its interest. CAL subsequently applied to the FTT pursuant to section 24(9) to vary the management order to remove any such reference.
The appeal, which the UT described as a “distant satellite, orbiting an application in the [FTT],” arose out of an application by CAL to exclude the contents of a text message contained in a witness statement filed on behalf of the appellants in response to its application for a variation of the management order. CAL argued that the communication was covered by “without prejudice” privilege. The FTT agreed.
On appeal to the UT, the appellants argued that the text message was not covered by privilege on two grounds. First, because the text message did not concern a relevant dispute requiring a ruling from a court or tribunal. The subject matter of the text message concerned a purely commercial negotiation. Second, the content of the text message was exempt from “without prejudice” privilege because it involved “unambiguous impropriety” namely an improper threat intended to coerce and frighten the appellants into conceding a right to CAL which it had no right to enjoy.
The UT gave short shrift to both grounds of appeal. Relying on Oceanbulk Shipping SA v TMT Ltd [2011] 1 AC 662, the UT observed that the “without prejudice” rule, with exceptions, extended to exclude from evidence all oral and written communication genuinely aimed at settlement. The public policy aim behind the same was to encourage parties to settle their disputes without resort to litigation. In the present case, the UT found that the appellants’ interpretation of the rule was too narrow. The content of the text message did not only concern commercial negotiations, but also matters that had been the subject of past litigation between the parties in the county court and the current application to vary the management order.
In respect of the appellants’ second ground of appeal, the UT found that the alleged threats did not meet the threshold required for the “unambiguous impropriety” exception.
Elizabeth Dwomoh is a barrister at Lamb Chambers
