Civil practice and procedure – Evidence – Privilege – “Without prejudice” correspondence – Admissibility — Dispute arising over business proposal — Claimant applying to admit documents marked “without prejudice” in evidence – Claimant arguing no dispute as to liability – Whether genuine dispute and attempt to resolve dispute existing – Application granted
As part of a business proposal, the claimant company agreed to make a loan of US$100m to the defendants to enable them to make a total advance of US$200m to a sub-borrower. A dispute arose about the defendants’ willingness to provide security for the loan and the claimant served demands on the defendants in accordance with the written terms of the Loan Agreement and the guarantee. Some of the following correspondence between the parties was marked “without prejudice and subject to contract”.
In subsequent legal proceedings, the claimant applied for disclosure of the without prejudice correspondence. The question for determination was whether communications made at a time when there was no dispute could, with retrospective effect, be made subject to the without prejudice privilege by subsequently raising a dispute.
Held: The application was granted.
For a document to be inadmissible on the grounds that it was without prejudice, it had to form part of a genuine attempt to resolve a dispute. If there was no dispute about a liability, but only a negotiation as to how and when it should be discharged, the negotiations, and documents produced in the course of them, were not covered by the “without prejudice” exception to the admissibility of relevant evidence: see Bradford & Bingley plc v Rashid [2006] UKHL 37; [2006] PLSCS 166.
It was an important difference from the circumstances in the Bradford & Bingley case that the relevant communications in the present case were marked “without prejudice”. Moreover, it was the claimant and its solicitors that first marked the documents “without prejudice”. The express marking of documents as without prejudice was a highly material factor in determining their status, but it was not conclusive: see South Shropshire District Council v Amos [1986] 2 EGLR 194 and Unilever plc v TV Procter & Gamble Co [2000] 1 WLR 2436.
At first blush, one might assume that communications expressly marked “without prejudice” between parties, starting on the same date as the service of a contractual demand and continuing after the service of statutory demands, would attract the privilege. The claimant’s case was that at the time of those communications there was no dispute at all about the liability of the first defendant to repay the loan, and hence no dispute as to the liability of the second defendant under his guarantee. It was clear that at the time of the relevant communications there existed no genuine dispute. Communications made at a time when there was no dispute could not, with retrospective effect, be made subject to the without prejudice privilege by subsequently raising a dispute. On the evidence no dispute existed between the parties as the liability of the defendants. The negotiations were directed entirely at attempting to agree a restructuring of an admitted liability. It followed that the relevant communications were not covered by the without prejudice privilege and were admissible as evidence at the forthcoming trial: Denton v TH White Ltd [2014] EWCA Civ 906 applied.
Steven Berry QC, Tom Smith QC and Henry Phillips (instructed by Dechert LLP) appeared for the claimant; Philip Marshall QC and Matthew Morrison (instructed by Fladgate LLP) appeared for the defendants.
Eileen O’Grady, barrister
Click here to read transcript: Avonwick Holdings v Webinvest
