“Aon’s lawyers were kept closely informed about the issues and arguments raised in the Part 8 proceedings (on the basis that Aon would be sued for any losses in relation to the Scheme consequent on the Part 8 proceedings) and liaised closely with Gowling and Leading Counsel about the issues and arguments raised in the Part 8 Proceedings, including during the negotiations leading to the Approved Settlement.”
“At no point did Aon, CMS or Mr Short QC [Counsel for Aon at that time] themselves raise the Participating Employer Argument.”
“It is to be inferred that [Aon’s] legal advisers (who also had specialist pensions expertise) were of a similar mind [as regards the weakness of the Participating Employer Argument], because the Participating Employer Argument (as defined in paragraph 84) was never raised by [Aon] at any time prior to the Part 8 hearing or in the lead up to the Approved Settlement, notwithstanding the information and evidence that had been provided to them and the opportunities that were afforded to them to provide their input on the issues to be put before the court … and on the arguments to be taken in the context of an appeal and in respect of a settlement …”
“…the involvement of [Aon] in the Part 8 Proceedings and their failure to make any allusion to the Participating Employer Argument is highly relevant in a different respect. It provides strong support to the proposition advanced by the Lawyer Defendants, and by the Claimants as their primary case, that the New Intervening Act Defence is bad in law because there remained at all times a close connection between the negligence of [Aon] and the totality of the losses resulting from the Approved Settlement.”
“The ‘without prejudice’ rule is a rule governing the admissibility of evidence and is founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a finish. It is nowhere more clearly expressed than in the judgment of Oliver L.J. in Cutts v. Head[1984] Ch.290 , 306: ‘That the rule rests, at least in part, upon public policy is clear from many authorities, and the convenient starting point of the inquiry is the nature of the underlying policy. It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. They should, as it was expressed by Clauson J. in Scott Paper Co. v. Drayton Paper Works Ltd. (1927) 44 R.P.C. 151 , 156, be encouraged fully and frankly to put their cards on the table.... The public policy justification, in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability.’ ……… Nearly all the cases in which the scope of the ‘without prejudice’ rule has been considered concern the admissibility of evidence at trial after negotiations have failed. In such circumstances no question of discovery arises because the parties are well aware of what passed between them in the negotiations. These cases show that the rule is not absolute and resort may be had to the ‘without prejudice’ material for a variety of reasons when the justice of the case requires it. It is unnecessary to make any deep examination of these authorities to resolve the present appeal but they all illustrate the underlying purpose of the rule which is to protect a litigant from being embarrassed by any admission made purely in an attempt to achieve a settlement. Thus the ‘without prejudice’ material will be admissible if the issue is whether or not the negotiations resulted in an agreed settlement, which is the point that Lindley L.J. was making in Walker v. Wilsher (1889) 23 Q.B.D. 335 and which was applied in Tomlin v. Standard Telephones & Cables Ltd. [1969] 1W.L.R. 1378.The court will not permit the phrase to be used to exclude an act of bankruptcy: see In re Daintrey, Ex parte Holt[1893] 2 Q.B. 116nor to suppress a threat if an offer is not accepted: see Kitcat v. Sharp (1882)48L.T.64. In certain circumstances the ‘without prejudice’ correspondence may be looked at to determine a question of costs after judgment has been given: see Cutts v Head[1984] Ch. 290 .There is also authority for the proposition that the admission of an ‘independent fact’ in no way connected with the merits of the cause is admissible even if made in the course of negotiations for a settlement. Thus an admission that a document was in the handwriting of one of the parties was received in evidence in Waldridge v. Kennison (1794) 1 Esp. 142 . I regard this as an exceptional case and it should not be allowed to whittle down the protection given to the parties to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purpose of establishing a basis of compromise, admitting certain facts. If the compromise fails the admission of the facts made for the purpose of the compromise should not be held against the maker of the admission and should therefore not be received in evidence.” ‘That the rule rests, at least in part, upon public policy is clear from many authorities, and the convenient starting point of the inquiry is the nature of the underlying policy. It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. They should, as it was expressed by Clauson J. in Scott Paper Co. v. Drayton Paper Works Ltd. (1927) 44 R.P.C. 151 , 156, be encouraged fully and frankly to put their cards on the table.... The public policy justification, in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability.’ Nearly all the cases in which the scope of the ‘without prejudice’ rule has been considered concern the admissibility of evidence at trial after negotiations have failed. In such circumstances no question of discovery arises because the parties are well aware of what passed between them in the negotiations. These cases show that the rule is not absolute and resort may be had to the ‘without prejudice’ material for a variety of reasons when the justice of the case requires it. It is unnecessary to make any deep examination of these authorities to resolve the present appeal but they all illustrate the underlying purpose of the rule which is to protect a litigant from being embarrassed by any admission made purely in an attempt to achieve a settlement. Thus the ‘without prejudice’ material will be admissible if the issue is whether or not the negotiations resulted in an agreed settlement, which is the point that Lindley L.J. was making in Walker v. Wilsher (1889) 23 Q.B.D. 335 and which was applied in Tomlin v. Standard Telephones & Cables Ltd. [1969] 1W.L.R. 1378.The court will not permit the phrase to be used to exclude an act of bankruptcy: see In re Daintrey, Ex parte Holt[1893] 2 Q.B. 116nor to suppress a threat if an offer is not accepted: see Kitcat v. Sharp (1882)48L.T.64. In certain circumstances the ‘without prejudice’ correspondence may be looked at to determine a question of costs after judgment has been given: see Cutts v Head[1984] Ch. 290 .There is also authority for the proposition that the admission of an ‘independent fact’ in no way connected with the merits of the cause is admissible even if made in the course of negotiations for a settlement. Thus an admission that a document was in the handwriting of one of the parties was received in evidence in Waldridge v. Kennison (1794) 1 Esp. 142 . I regard this as an exceptional case and it should not be allowed to whittle down the protection given to the parties to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purpose of establishing a basis of compromise, admitting certain facts. If the compromise fails the admission of the facts made for the purpose of the compromise should not be held against the maker of the admission and should therefore not be received in evidence.”
“If this is a correct analysis of the rule, then it seems to me that the without prejudice correspondence in this case falls outside its scope. The issue raised by paragraph 17 of the statement of claim is whether the conduct of the Mullers in settling the claim was reasonable mitigation of damage. That conduct consisted in the prosecution and settlement of the earlier action. The without prejudice correspondence forms part of that conduct and its relevance lies in the light it may throw on whether the Mullers acted reasonably in concluding the ultimate settlement and not in its admissibility to establish the truth of any express or implied admissions it may contain. On the contrary, any use which the defendants may wish to make of such admissions is likely to take the form of asserting that they were not true and that it was therefore unreasonable to make them. I do not think that interpreting the rule in this way infringes the policy of encouraging settlements. It may of course be said that a party may be inhibited from reaching a settlement by the thought that his negotiations will be exposed to examination in order to decide whether he acted reasonably. But this is a consequence of the rule that a party entitled to an indemnity must act reasonably to mitigate his loss. It would, in my judgment, be inconsistent to give the indemnifier the benefit of this rule but to deny him the material necessary to make it effective.”
“Without in any way underestimating the need for proper analysis of the rule, I have no doubt that busy practitioners are acting prudently in making the general working assumption that the rule, if not ‘sacred’ (Hoghton v. Hoghton (1852) 15 Beav. 278, 321), has a wide and compelling effect. That is particularly true where the ‘without prejudice’ communications in question consist not of letters or other written documents but of wideranging unscripted discussions during a meeting which may have lasted several hours.”
“In Muller's case (which was a decision on discovery, not admissibility) one of the issues between the claimant and the defendants, his former solicitors, was whether the claimant had acted reasonably to mitigate his loss in his conduct and conclusion of negotiations for the compromise of proceedings brought by him against a software company and its other shareholders. Hoffmann L.J. treated that issue as one unconnected with the truth or falsity of anything stated in the negotiations, and as therefore falling outside the principle of public policy protecting without prejudice communications. The other members of the court agreed but would also have based their decision on waiver.”
“It is apparent that none of the exceptions to the public policy rule involves the disclosure of admissions bearing on the subject matter in dispute, at any rate unless the expression ‘admission’ is given a substantially wider meaning than it usually has in the law of evidence. (I disregard the old case of Waldridge v. Kennison (1794) 1 Esp. 143, which Lord Griffiths in the Rush & Tompkins case [1989] A.C. 1280, 1300, regarded as exceptional.) Conversely, however, I respectfully doubt whether the large residue of communications which remain protected can all be described as admissions (again, unless that expression is given an unusually wide meaning). One party's advocate should not be able to subject the other party to speculative crossexamination on matters disclosed or discussed in without prejudice negotiations simply because those matters do not amount to admissions.”
“Whatever difficulties there are in a complete reconciliation of those cases, they make clear that the without prejudice rule is founded partly in public policy and partly in the agreement of the parties. They show that the protection of admissions against interest is the most important practical effect of the rule. But to dissect out identifiable admissions and withhold protection from the rest of without prejudice communications (except for a special reason) would not only create huge practical difficulties but would be contrary to the underlying objective of giving protection to the parties, in the words of Lord Griffiths in the Rush & Tompkins case [1989] A.C. 1280, 1300: ‘to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purpose of establishing a basis of compromise, admitting certain facts.”
“Sometimes letters get headed ‘without privilege’ in the most absurd circumstances, as Ormrod J observed in Tomlin v Standard Telephones & Cables Ltd[1969] 1 WLR 1378 , 1384. But where the letters are not headed ‘without prejudice’ unnecessarily or meaninglessly, as he went on to say at p 1385, the court should be very slow to lift the umbrella unless the case for doing so is absolutely plain. The principle which the court should follow was that expressed by Romilly MR in Jones v Foxall (1852) 15 Beav 388, 396. If converting offers of compromise into admissions of acts prejudicial to the person making them were to be permitted no attempt to compromise a dispute could ever be made. The basis for the rule has been explained more fully by Oliver LJ in Cutts v Head[1984] Ch 290 , Lord Griffiths in Rush & Tomkins Ltd v Greater London Council[1989] AC 1280 and Robert Walker LJ in Unilever plc v The Procter & Gamble Co[2000] 1 WLR 2436 . With the benefit of those explanations it may be re-stated in these terms. Where a letter is written ‘without prejudice’ during negotiations with a view to a compromise, the protection that these words claim will be given to it unless the other party can show that there is a good reason for not doing so. I think that the public policy basis for not allowing anything said in the letter to be used later to her prejudice provides Ms Bossert with all she needs to defeat the argument that the implied admission that it contains can be used as an acknowledgement against her in these proceedings. The essence of it lies in the nature of the protection that is given to parties when they are attempting to negotiate a compromise. It is the ability to speak freely that indicates where the limits of the rule should lie. Far from being mechanistic, the rule is generous in its application. It recognises that unseen dangers may lurk behind things said or written during this period, and it removes the inhibiting effect that this may have in the interests of promoting attempts to achieve a settlement. It is not to be defeated by other considerations of public policy which may emerge later, such as those suggested in this case, that would deny them that protection.”
“Over the years the courts have recognised certain exceptions to the privilege which are made when the justice of the case requires it. They were helpfully summarised in the judgment of Robert Walker LJ in Unilever plc v The Procter & Gamble Co[2000] 1 WLR 2436 , 2444–2445. As Lord Griffiths noted in Rush & Tompkins[1989] AC 1280 , 1300 d-g, there is also some authority to the effect that an admission of an ‘independent fact’, lying outside the area of the offer to compromise, is admissible. That approach has been developed in the Court of Session in cases which were discussed by my noble and learned friend, Lord Hope of Craighead, in Bradford & Bingley plc v Rashid[2006] 1 WLR 2066 , 2075–2077, paras 26–30. Undoubtedly, it would be possible to carve out an exception along those lines. The question is whether creating such an exception would be consistent with the overall policy behind the rule. Pretty clearly, Lord Griffiths thought not. In Rush & Tompkins[1989] AC 1280 , 1300 f-g, he went out of his way to emphasise that the exception in Waldridge v Kennison (1794) 1 Esp 143 ‘should not be allowed to whittle down the protection given to the parties to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purpose of establishing a basis of compromise, admitting certain facts.’ Despite the difficulties, I would be prepared to assume that the law could make the distinction favoured by Lord Hoffmann. But should it do so? His argument, that it should, really depended on his view that the main purpose of the privilege is ‘to prevent the use of anything said in negotiations as evidence of anything expressly or impliedly admitted …’: Bradford & Bingley plc v Rashid[2006] 1 WLR 2066 , 2072, para 16. While that may well be the commonest application of the rule in practice, its rationale appears to be wider: it is that parties and their representatives who are trying to settle a dispute should be able to negotiate openly, without having to worry that what they say may be used against them subsequently, whether in their current dispute or in some different situation.”
“Quite apart from this, it appears to me that, save perhaps where it is wholly unconnected with the issues between the parties to the proceedings, a statement in without prejudice negotiations should not be admissible in evidence, other than in exceptional circumstances such as those mentioned in the Unilever case[2000] 1 WLR 2436 , 2444d -2445g . It is not only that the offer contained in the relevant sentence of the letter was connected with the issue between the parties in the earlier proceedings. It is also that the title to the property was in issue in the earlier proceedings in the sense that the Ofulues claimed the unencumbered freehold, whereas the Bosserts were contending that the freehold was subject to their legal or equitable interest. Bearing in mind the point made in the passage quoted above from Robert Walker LJ[2000] 1 WLR 2436 , 2448–2449, it seems to me that it would set an unfortunate precedent if your Lordships held that an admission of the claimants' title in a without prejudice letter was sufficiently remote from the issues in a possession action relating to the same land as to be outside the rule. I leave open the question of whether, and if so to what extent, a statement made in without prejudice negotiations would be admissible if it were ‘in no way connected’ with the issues in the case the subject of the negotiations. That point was mentioned by Lord Griffiths in the Rush & Tompkins case[1989] AC 1280 , 1300, where he referred to Waldridge v Kennison (1794) 1 Esp 143, in which a without prejudice letter was admitted solely as evidence of the writer's handwriting. That was a factor wholly extraneous to the contents of the letter, and Lord Griffiths described it as ‘an exceptional case [which] should not be allowed to whittle down the protection given to the parties to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purpose of establishing a basis of compromise, admitting certain facts.’” ‘an exceptional case [which] should not be allowed to whittle down the protection given to the parties to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purpose of establishing a basis of compromise, admitting certain facts.’”
“Despite the very great respect I have for any view expressed by Lord Hoffmann, and the intellectual attraction of the distinction which he draws, I am inclined to think that it is a distinction which is too subtle to apply in practice; I consider that its application would often risk falling foul of the problem identified by Robert Walker LJ in the passage quoted above. In any event, the observation appears to be limited to the public policy reason for the rule, and says nothing about the contractual reason, which plainly applies here… Since preparing this opinion, I have had the privilege of reading in draft the characteristically trenchant opinion of my noble and learned friend, Lord Scott of Foscote, in which he comes to a different conclusion. I entirely agree with my noble and learned friend, Lord Rodger of Earlsferry, whose opinion I have had the benefit of reading in draft, that it is open to your Lordships to create further exceptions to the rule, and in particular the sort of admission identified by Lord Hoffmann in the Rashid case[2006] 1 WLR 2066 , para 13 and by Lord Scott in this case. However, I also agree with him, and indeed with Lord Hope and Lord Walker, that it would be inappropriate to do so, for reasons of legal and practical certainty. To uphold such an exception in this case would run counter to the thrust of the approach of Lord Griffiths in the Rush & Tompkins case[1989] AC 12 80and of Robert Walker LJ in the Unilever csae[2000] 1 WLR 2436 , and would severely risk hampering the freedom parties should feel when entering into settlement negotiations.”
“That was a case in which the plaintiff asserted that a settlement that he had made was a reasonable settlement and the defendant asserted that it was not. The reasonableness of the settlement was therefore directly in issue and it was the plaintiff who had put it in issue. It is hardly surprising that in those circumstances the court ordered disclosure of the negotiations leading to the settlement. The general rule however is still that stated in Rush& Tompkins Ltd v Greater London Council & Another[1989] AC 1280 , namely that without prejudice negotiations once privileged remain privileged even after settlement. Moreover, Hoffmann LJ's reasoning in Muller which distinguished between an admission and other statements was disapproved by The House of Lords in Ofulue (see Lord Neuberger at paragraph 95 with whom the other Lords agreed).”
“In the circumstances, I ought, as it seems to me, to proceed on the basis that Muller v Linsley & Mortimer was correctly decided on its facts. Further, I do not think that the case can be satisfactorily explained as one of waiver. Although Leggatt and Swinton Thomas LJJ suggested that the decision could be justified in that way, (a) they also both agreed with Hoffmann LJ and (b) it is hard to see how there can have been waiver since the authorities indicate that the benefit of the without prejudice rule cannot be waived by just one party to the negotiations. The correct inference must, in my view, be that (as is suggested in Thanki, "The Law of Privilege") there is an exception to the without prejudice rule that encompasses the facts of the Muller case.” and at para 64: “I have concluded that, to echo Lord Walker in Ofulue v Bossertand Lord Clarke in the Oceanbulkcase, justice clearly demands that an exception to the without prejudice rule (whether that encompassing the facts of the Muller case or another, comparable, exception) should apply even aside from the question of whether an agreement has been reached with Savage Hayward”
“I see no likelihood that recognising that an exception to the without prejudice rule applies would deter parties from seeking to settle. Those undertaking negotiations will, if well informed, already be aware that the without prejudice rule will not apply if there is a dispute about whether they have reached agreement and that the facts of the Muller case have been held to fall within another exception. The existence of the Muller exception, moreover, means that communications otherwise protected by the without prejudice rule may become disclosable and admissible because the other party to negotiations unilaterally chooses, for reasons of his own, to put forward a case about the negotiations in litigation with a third party”
“…the issue of waiver in the circumstances of this case requires an objective evaluation of the tenants’ conduct, in the context of the purpose of the without prejudice privilege. That evaluation should be aimed at determining whether it would be unjust, in the light of the tenants’ conduct, for them to argue that the admissions made in the interviews were privileged from production to the court at the trial.”
“The essential point in a case like the present case is, in my judgment, that it would be unjust to allow one party to deploy the material for its benefit on the merits in one part of the litigation without allowing the other to do so too in another.”
“The solution may well lie in the fact that, in a three-party situation such as that at issue in Muller – where the person seeking to use the without prejudice communications was not a party to the negotiations so that the implied contract basis for the protection could not apply – the public policy basis will not necessarily require the consent of both parties to the negotiations before the communications can be examined. If one party to the negotiations has chosen to put in issue against a third party an aspect of his own conduct in those negotiations, he can hardly at the same time rely upon the confidentiality of those negotiations. The interests of the other party to the negotiations can if necessary be protected in other ways, for example by redaction; and the fact that the use of the documents might involve a breach of an implied contract is unlikely to be determinative. If necessary, therefore, I would take the view that Muller can be supported by reference to the waiver rationale …”
“The present case of course is concerned with the position as between the parties to the communications and other entities related or connected to them, rather than with complete outsiders. At one pont Mr Watson sought to rely on the fact that the F-A-F parties were not party to any implied contract arising from the without prejudice communications and were therefore not bound by it. Wisely he withdrew from that position since they had come into possession of the documents by receiving them from Eversheds, acting on behalf of Denny Bros. who, if there was any such contract, were clearly parties to it and bound by it.”
“The present dispute arises between persons who either were parties to the original communications or have obtained the documents from persons who were such parties, and, to the extent that it be relevant, are commercially and corporately connected with such parties. If there was an implied agreement the persons before me are either bound by it as parties or must be taken to be subject to it by reason of the source of the documents in their hands. In my judgment it is very strongly arguable, and indeed probable, that the without prejudice communications are indeed governed by an implied agreement that they will not be used in the current or any subsequent litigation between the same or related parties. That contract would give way to the circumstances identified in Robert Walker L.J.'s eight exceptions if any were relevant. As I say, none of them are relevant to this application.”
“If the non-causative factor also involves a breach of duty relied on in the action the more likely it is to be a relevant factor for the purposes of section 2(1).”
“It thus appears that the fact that in the present case the Defendant is not seeking to embarrass SBM with admissions made in the course of its negotiations with Talisman is not by itself a good reason for concluding that the negotiations are not protected by the without prejudice privilege. They are protected by that privilege so long as the use to be made of what was said in the negotiations is not covered by an existing exception. No existing exception covers the present case and I am not persuaded that the exception recognised in Oceanbulk can properly be extended to the present case. That exception concerned the construction of the settlement agreement. In the present case no such question arises. Instead, the Defendant simply wishes to use statements made by SBM to advance its case that the cause of the topside damage to the MOPUstor was not the defective grouting but SBM's own preference to bring the MOPUstor project to an end. That would be, in my judgment, a new exception quite different from that which has so far been recognised. Mr. Schaff complains that SBM is seeking to prevent the Defendant and the court from fully understanding the full background to the termination of the contract between SBM and Talisman and to the abandonment of the project. I agree that it is. But that is the effect of claiming without prejudice privilege. It is not a reason for denying that privilege.”
“there is no privilege over the fact that such communications have occurred, rather the privilege is limited to the contents of such communications”