“Without Prejudice” and Confidentiality:
Best practice advice to clients on the meaning of these terms.
Your client contacts you as her solicitor regarding an impending settlement meeting. It has not yet been decided whether it will be a mediation or a joint settlement meeting. The issue bothering your client is confidentiality; she is concerned that negotiations will necessarily touch upon matters that are commercially sensitive to her company and she wishes to ensure that these will remain private.
Your main advice in response to this query is quite straightforward. First, whether there is a joint settlement meeting or a mediation there will, as matter of routine, be an agreement that the meeting is “Without Prejudice”. This, of course, would preclude one party telling the judge what happened at the meeting in the event that it did not produce a settlement. Secondly, if the settlement meeting did proceed by way of mediation there would ordinarily be an Agreement to Mediate which would confirm the “Without Prejudice” status of the meeting and also include contractual provisions about confidentiality.
So far, so good. Now, can you tell your client, in light of that advice, to relax? In general terms, you can. The courts have a long history of encouraging settlement discussions on the basis that the parties are free to talk about settlement without having what they say repeated at any later trial. It would be courageous, however, and some would argue negligent, to allow the client to believe that there was confidentiality without limit or exception.
The “Without Prejudice” rule has long been subject to exceptions. See for example those listed by Robert Walker LJ in Unilever ( [2000] 1 WLR 2436 at 2444); they include situations involving estoppel, perjury, blackmail or other “unambiguous impropriety” as well as the need to explain procedural delay or apparent acquiescence. They also include the circumstances where one party’s assertion that “Without Prejudice” discussions led to a firm settlement agreement are contested by the other – see Brown v Rice and Patel [2007] EWHC 625.
Two other cases, Muller v Linsley & Mortimer [1996] P.N.L.R. 74. and Cattley v Pollard [2007] Ch. 353, deal with the situation where there are two actions that are connected in some way and a party in the later action wants to adduce evidence from the first action. This would be the case where, say, there was a personal injury claim but the claimant was dissatisfied with the outcome, sued his solicitor for negligently handling a mediation and therefore wanted the court to consider all the mediation papers. In Muller and Cattley, where the court was faced with similar circumstances to these, disclosure was ordered, notwithstanding the claim that the material was “Without Prejudice”. See, however, Ofulue v Bossert 2009] UKHL 16 where the House of Lords held that “Without Prejudice” negotiations which took place during the first of two actions could not be reviewed by the court in the second action.
So, the “Without Prejudice” rule is not without exceptions or “grey” areas. It may have been thought that a contractually based mediation confidentiality agreement might be more watertight, but there are exceptions to take into account here as well, as can be seen from the recent decision in Farm Assist Limited (in liquidation) v The Secretary of State for the Environment, Food and Rural Affairs (No.2) [2009] EWHC 1102 (TCC). Here the claimant was seeking to set aside a mediated agreement, reached some years before, on grounds of economic duress. Both parties agreed to the court examining mediation material and to calling the mediator. The mediator did not agree to this and sought to set aside the witness summons on a number of grounds, including the confidentiality provisions in the agreement to mediate and the fact that the mediation negotiations were “Without Prejudice”. The court summarised the authorities and gave this guidance:
“(1) Confidentiality: The proceedings (at a mediation) are confidential both as between the parties and as between the parties and the mediator. As a result even if the parties agree that matters can be referred to outside the mediation, the mediator can enforce the confidentiality provision. The court will generally uphold that confidentiality but where it is necessary in the interests of justice for evidence to be given of confidential matters, the Courts will order or permit that evidence to be given or produced.
“(2) Without Prejudice Privilege: The proceedings are covered by without prejudice privilege. This is a privilege which exists as between the parties and is not a privilege of the mediator. The parties can waive that privilege.”
The above does not purport to be a full outline of the law relating to the “Without Prejudice” rule and confidentiality. It perhaps says enough, however, to suggest that best practice on advising clients about settlement meetings and mediations should be couched in careful terms and should be preceded a dialogue to discover whether any of the various exceptions might apply. Statutory provisions such as the Proceeds of Crime Act, the Data Protection Act and the Freedom of Information Act should also be borne in mind.
Clients should not be put off from having confidential discussions, for the reasons mentioned above, but they should be aware that if the court thinks that the public interest may be involved there are circumstances where it may be prepared to lift the veil.
Tim Wallis
Mediator and Solicitor
Chair, Dispute Resolution Committee, Civil Justice Council
North West Mediation Solutions
