Building contract — Disruption and delay — Claim by main contractor settled — Main contractor left to settle subcontractor’s claim — Subcontractor seeking discovery of documents showing basis of settlement — Documents required to show valuation of subcontractor’s work in settlement — Documents “without prejudice” — Whether “without prejudice” documents admissible in evidence in litigation with third party — Whether such documents discoverable
The appellants, Rush & Tompkins Ltd, entered into a building contract with the Greater London Council in 1971. In 1973 the appellants engaged the second respondents, PJ Carey Plant Hire (Oval) Ltd, as subcontractors for the ground work. The building work was the subject of delays and the second respondents submitted a claim to the appellants for loss and expense; the Greater London Council refused to agree this and other claims. In 1981 the appellants and the GLC settled all claims between them on the basis that the GLC would pay the appellants £1,200,000 subject to the latter settling the second respondents’ claim, which was eventually put in at £150,582.
The second respondents believed there were documents between the appellants and the GLC which would show the basis of the valuation of the second respondents’ claim within the global settlement sum; the appellants admitted there were such documents but refused to disclose them, on the basis that they were protected from discovery by the “without prejudice” rule. The appellants appealed from a decision of the Court of Appeal, who had held that the protection given by the “without prejudice” rule ceased once there had been a settlement of a dispute.
Held The appeal was allowed as the documents are protected by the rule. The “without prejudice” rule is a rule governing the admissibility of evidence and is founded upon the public policy of encouraging litigants to settle rather than litigate. The rule applies to exclude all negotiations protected by the words “without prejudice” whether oral or in writing.
The “without prejudice” rule renders inadmissible in any subsequent litigation connected with the same subject-matter proof of any admissions made in a genuine attempt to reach settlement. The admissions made to reach a settlement with a different party within the same litigation are also inadmissible whether or not settlement is reached with that party. Accordingly the “without prejudice” documents between the appellants and the GLC were not admissible to establish any admission as to the second respondents’ claim.
However, the right to discovery and production of documents does not depend upon the admissibility of the documents in evidence. The general rule is that a party is entitled to discovery of all documents relating to the matters in issue irrespective of admissibility. But in multi-party litigation the rule should be modified. The general public policy that applies to protect genuine negotiations from being admissible in evidence should also be extended to protect those negotiations from being discovered to third parties.
John Dyson QC and Charles Hollander (instructed by McKenna & Co) appeared for the appellants; and Richard Fernyhough QC and Rosemary Jackson (instructed by Summers & Co, of Beaconsfield) appeared for the second respondents. The first respondents did not appear and were not represented.
