OF PRICE AND PREJUDICE, WAR AND PEACE — THE USE OF “WITHOUT PREJUDICE”CORRESPONDENCE IN APPLICATIONS FOR STRIKING OUT AN ACTION FOR WANT OF PROSECUTION

• Citation: (1994) 6 SAcLJ 429
• Date: 01 December 1994
• Published date: 01 December 1994
• Author: DANIEL KOH

INTRODUCTION

Time and again, legal practitioners are reminded that “without prejudice” correspondence in negotiation settlements between litigants are privileged. The principle after all is to encourage parties in litigation to discuss candidly the strengths and weaknesses of their case while they embark on a legal battle without forsaking their search for peace. These discussions are conducted on a tacit understanding that any concessions made by either party cannot be held against them later and hence such communications should not be disclosed to the Court.

Indeed the occasions when the Courts have so jealously guarded the “without prejudice” rule are legion1. The scope of the rule has also been sufficiently discussed elsewhere2.

What this article hopes to examine is the recent development in the exceptions to the “without prejudice” rule, in particular the extent of disclosure of “without prejudice” correspondence as evidence in applications to strike out an action for want of prosecution.

THE FACT OF ONGOING NEGOTIATIONS — THE ENGLISH AUTHORITIES

In any application to strike out the Plaintiffs’ action for want of prosecution, the Defendants have to prove to the Court’s satisfaction that the Plaintiffs have been guilty of inexcusable and inordinate delay and that the delay has caused such prejudice to arise that there is a serious risk of a fair trial not being possible3.

Often, the Plaintiffs may choose to refrain from taking active steps in prosecuting the claim as they could be embroiled in settlement talks with the Defendants. When such Plaintiffs are then taken to task for being slow to proceed with the claim, the Plaintiffs may rely on the settlement negotiations as cause for the delay.

Until 1993, the reported English decisions seem to have only allowed the fact of negotiations having taken place to be admissible as evidence.

In Walker v. Wilsher4 the Court of Appeal was faced with a question as to whether letters or conversations written or declared to be “without prejudice” are admissible as evidence in determining whether the Plaintiffs should be deprived of costs after the action was tried with a result of judgment by consent for the Plaintiffs for an agreed sum.

Lindley L. J. in addressing the issue, decided that5:—

“No doubt there are cases where letters written without prejudice may be taken into consideration, as was done the other day in a case in which a question of laches was raised. The fact that such letters have been written and the dates at which they were written may be regarded, and in so doing the rule to which I have adverted would not be infringed. The facts may, I think, be given in evidence, but the offer made and the mode in which that offer was dealt with — the material matters, that is to say, of the letters — must not be looked at without consent.”

Bowen L.J. in his judgment, also stated that6:—

“The facts of those negotiations may … be given in evidence, but the question whether what was said or done at such negotiations is admissible is a very different one.”

This position appears to be upheld close to a century later in the decision of Simaan General Contracting Co. v. Pilkington Glass Ltd7. In this case, the Court had to decide whether, in a claim founded in negligence in the supply of goods and the Defendants had applied for security for costs, the Court may take into account evidence of offers in settlement made by the Defendants even if they were made “without prejudice”. This was for purposes of deciding whether the Plaintiffs are likely to succeed in the action and whether it would be just to require them to provide security.

Judge Newey QC8 first referred to the general “without prejudice” rule and stated that:—

“To the general rule there are exceptions. In Walker v Wilsher(1889) 23 QBD 335 at 338 Lindley LJ referred to letters written without prejudice being considered in a case in which a question of laches was raised and, at least in my experience, they are referred to freely without protest on applications to strike out for want of prosecution.”

To this, he appears to add a qualification,9:—

“In striking-out applications, it is not the content of “without prejudice” negotiations but the fact that they took place which may be material as excusing delay.”

In deciding the matter at bar, the Court held that the “without prejudice” negotiations were not admissible on summons for security for costs and the relevant passages in the Plaintiffs’ solicitors’ affidavit and the exhibited correspondence were to be disregarded. The Court’s rationale in this case was that10:—

“To allow one party to give evidence of “without prejudice” communications without the consent of another would be in direct conflict with the general rule excluding such evidence and with the public policy which supports it. Defendants sued by Plaintiffs resident abroad or by companies likely to get into financial difficulties would be deterred from exploring possibilities of settlement and making sensible offers for fear of prejudicing their prospects of being able to obtain security for costs...