“After notice to terminate Lancer’s appointment as the Claimants’ property asset managers was served in September 2016, the Claimants discovered that from April 2006 at the latest Lancer and its directors had been complicit in a substantial fraud perpetrated on the Claimants by their own appointed representative, Dr Al Ahbabi, in dishonest breach of fiduciary duty.”
“The true purpose for this increase was to provide a funding source from which Al Ahbabi (through Becker and Reilly) could make a profit for himself and for Lancer also. The Claimants infer that Lancer and its directors knew or suspected that entering into the Side Letter was a breach of Dr Al Ahbabi’s fiduciary duties to the Claimants.”
“Further and in any event, the Claimants knew (and, insofar as necessary ratified or affirmed) independently of Sheikh Khalifa more than 6 years ago (a) that Lancer had paid millions of pounds to Becker by reason of the payment of sums to Lancer; and (b) of the terms set out in, and the contractual nature of, the Side Letter, the March 2011 Amendment, and the two 2012 Deeds. In particular: (1) Representatives of each Claimant (including at least Eversheds LLP, a Dr [Elgaili Abbas], the personal lawyer to Sheikh Khalifa, [Dr Al Ahbabi and Mr Ismail]) knew, because Lancer informed them of these facts in its mediation position papers prepared in connection with the negotiation and settlement of Lancer’s Capital Performance Bonus Claim: (a) by not later than5 September 2012 , that Lancer had made payments to “HE Mubarak’s [Dr Al Ahbabi’s] company, Becker Services Limited” in the sum of the “difference between the fees in the 2005 Agreement and the Side Letter”; and (b) by not later than17 September 2012 , that Lancer had paid at least£27.04 million to Becker. (2) Subsequently, with that knowledge and (as admitted in the [Part 18 Response] at 13) following the receipt of legal advice from Eversheds LLP (the same or predecessor limited liability partnership as the Claimants’ current solicitors), the Claimants proceeded to enter into the November 2012 Deed of Variation and the November 2012 Deed of Settlement. (3) Accordingly, those two 2012 Deeds were duly executed by the Claimants with knowledge of the facts which they assert, at paragraph 7 of the Particulars of Claim and in the [Part 18 Response] at 3-4, they first learned of only after the termination of Lancer’s engagement.”
“Accordingly, the fundamental premise for this substantial claim – the allegation of fraud that lay undiscovered until recently – is, as the Claimants must know, misplaced and wrong.”
“Prior to the mediation, the Claimants and/or their representatives were clearly informed in writing of the matters set out at paragraph 1.C.IV above [i.e. of Dr Al Ahbabi’s interest in Becker and of the substantial payments to Becker: see para 27 above]. A reasonable party in the position of Lancer would expect the Claimants, acting honestly and responsibly, to inform them if Dr Al Ahbabi and Becker were not authorised to receive the Becker payments. In the premises, the Claimants represented by their silence that Dr Al Ahbabi and Becker were authorised to receive the Becker payments and that the Side Letter was valid and approved by the Claimants. Further or alternatively, that representation reflected the shared assumption of the parties. The Defendants reasonably relied on and/or acquiesced in that representation and/or assumption to their detriment by (amongst other things) refraining from seeking a formal written ratification from the Claimants and/or by continuing to make payments to Becker and/or deal with Dr Al Ahbabi. In the circumstances it would be unjust, unfair and/or inequitable for the Claimants to resile from that representation and/or assumption.”
“In addition to the wording of the Capital Uplift Bonus, the Side Letter also records the uplift in management fees applicable under Schedule 3 of the 2005 Agreement, the difference between the fees in the 2005 Agreement and the Side Letter respectively representing the sums to be paid to HE Mubarak’s company, Becker Services Limited.”
“The sum of£27.04 million has been paid pursuant to the terms of the Side Letter. The entirety of this sum has been paid to Becker…”
“4. Every person involved in the Mediation – 4.1 will keep confidential all information arising out of or in connection with the Mediation, including the fact and terms of any settlement, but not including the fact that the Mediation is to take place or has taken place or where disclosure is required by law to implement or to enforce the terms of settlement or to notify their insurers, insurance brokers and/or accountants; and 4.2 acknowledges that all such information passing between the Parties, the Mediator ad/or CEDR Solve, however communicated, is agreed to be without prejudice to any Party’s legal position and may not be produced as evidence or disclosed to any judge, arbitrator or other decision-maker in any legal or other formal process, except where otherwise disclosable in law.”
“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 in the judgment of Oliver LJ 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…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.””
"Some of the decisions on the without prejudice rule show a fairly mechanistic approach, but the recent cases, most notably the decisions of this court in Cutts v Head[1984] Ch 29 0, and the House of Lords in Rush & Tompkins Ltdv Greater London Council[1989] AC 1280 are firmly based upon an analysis of the rule's underlying rationale. Cutts v Head shows that the rule has two justifications. First, the public policy of encouraging parties to negotiate and settle their disputes out of court and, secondly, an implied agreement arising out of what is commonly understood to be the consequences of offering or agreeing to negotiate without prejudice. In some cases both of these justifications are present; in others, only one or the other. So, in Cutts v Head the rule that one could not rely upon a without prejudice offer on the question of costs after judgment was held not to be based upon any public policy. It did not promote the policy of encouraging settlements because as Oliver LJ said: "
“The essence of [the public policy basis of the WP rule] 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.”
“… the rule is not absolute and resort may be had to “without prejudice” material for a variety of reasons when the justice of the case requires it.”
“As a matter of principle, I would not restrict the without prejudice rule unless justice clearly demands it.”
“Nevertheless, there are numerous occasions on which, despite the existence of without prejudice negotiations, the without prejudice rule does not prevent the admission into evidence of what one or both of the parties said or wrote. The following are among the most important instances. (1) As Hoffmann LJ noted in Muller’s case, when the issue is whether without prejudice communications have resulted in a concluded compromise agreement, those communications are admissible. Tomlin v Standard Telephones and Cables[1969] 1 WLR 1378 is an example. (2) Evidence of the negotiations is also admissible to show that an agreement apparently concluded between the parties during the negotiations should be set aside on the ground of misrepresentation, fraud or undue influence. Underwood v Cox(1912) 4 DLR 66 , a decision from Ontario, is a striking illustration of this. (3) Even if there is no concluded compromise, a clear statement which is made by one party to negotiations, and on which the other party is intended to act and does in fact act, may be admissible as giving rise to an estoppel. That was the view of Neuberger J in Hodgkinson & Corby v Wards Mobility Services[1997] FSR 178 , 191, and his view on that point was not disapproved by this court on appeal. (4) Apart from any concluded contract or estoppel, one party may be allowed to give evidence of what the other said or wrote in without prejudice negotiations if the exclusion of the evidence would act as a cloak for perjury, blackmail or other "unambiguous impropriety" (the expression used by Hoffmann LJ in Foster v Friedland,10 November 1992 , CAT 1052). … But this court has, in Foster v Friedland and Fazil-Alizadeh v Nikbin, 1993 CAT 205, warned that the exception should be applied only in the clearest cases of abuse of a privileged occasion. (5) Evidence of negotiations may be given (for instance, on an application to strike out proceedings for want of prosecution) in order to explain delay or apparent acquiescence. Lindley LJ in Walker v Wilsher(1889) 23 QBD 335 , 338, noted this exception but regarded it as limited to "the fact that such letters have been written and the dates at which they were written". But occasionally fuller evidence is needed in order to give the court a fair picture of the rights and wrongs of the delay. (6) 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 LJ 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.”
“…I consider that this court should, in determining this appeal, give effect to the principles stated in the modern cases, especially Cutts v Head, Rush & Tompkins and Muller.… Lord Griffiths in Rush & Tompkins noted (at p.1300c), and more recent decisions illustrate, that even in situations to which the without prejudice rule undoubtedly applies, the veil imposed by public policy may have to be pulled aside, even so as to disclose admissions, in cases where the protection afforded by the rule has been unequivocally abused.”
“No sensible line can be drawn between admitting without prejudice communications in order to resolve the issue of whether they have resulted in a concluded compromise agreement and admitting them in order to resolve the issue of what that agreement was. This can be seen most clearly where the alleged agreement is oral but, in my opinion, must equally apply where the agreement is partly oral and partly in writing and where the agreement is wholly in writing but the issue is whether it reflects the common understanding of the parties.”
“For these reasons I would hold that the interpretation exception should be recognised as an exception to the without prejudice rule. I would do so because I am persuaded that, in the words of Lord Walker in Ofulue (at para 57), justice clearly demands it. In doing so I would however stress that I am not seeking either to underplay the importance of the without prejudice rule or to extend the exception beyond evidence which is admissible in order to explain the factual matrix or surrounding circumstances to the court whose responsibility it is to construe the agreement ….”
“In my judgment an exception can only be allowed where it is of the same character as one already established or where it is an incremental but principled extension of an existing exception, as was the exception in Oceanbulk v TMT.”
“It cannot be right that without prejudice communications can be referred to in order to undermine an apparently valid compromise, but not to uphold it.”
“As a matter of principle, it seems to me that, even where a party can in principle rely upon correspondence being “without prejudice” on contractual as well as public policy grounds, the court will not allow him to do so if it is satisfied that it would be unconscionable.”
“… there is, to my mind, a powerful argument for saying that if a clear and unambiguous statement is made by one party in “without prejudice” correspondence, and the statement is acted on, and reasonably acted on, by the other party, an objection by the first party to the correspondence being put in evidence by the second party in order to justify the step taken by the second party would be plainly unconscionable and would not be upheld by the court.”
“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 discouraging settlements…”
“In my judgment the plaintiffs cannot both assert the reasonableness of the settlement and claim privilege for the documents through which it was reached. They are relevant because the plaintiffs rely not only on the fact of settlement, but also on the reasonableness of it.”
“Different considerations apply because it is the litigants who were engaged in the previous without prejudice negotiations and have themselves put their own conduct in issue. In paragraph 17 of their statement of claim, the plaintiffs allege that they have made a reasonable attempt to mitigate their damage. Accordingly, they have alleged in settling their proceedings for the sum that they accepted, they acted reasonably. It is the plaintiffs who have brought the reasonableness of their conduct in issue. As Mr Sher QC [counsel for the defendants] rightly submitted, that allegation made by the plaintiffs would in reality not be justiciable without the court having sight of the Without Prejudice negotiations and correspondence. By bringing their conduct into the arena, and putting it in issue, the plaintiffs have, in my judgment, waived any privilege attached to Without Prejudice negotiations and correspondence.”
“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.”
“… I have concluded that, to echo Lord Walker in Ofulue v Bossert and Lord Clarke in the Oceanbulk case, 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 ….”
“iv) It is hard to see how EMW's claim would be justiciable without disclosure of Class A Documents. EMW and the Court would both, on the face of it, be in the dark as to, for example, what any payments Savage Hayward have made related to, how they came to be made on that basis, why nothing has been paid in respect of other items of costs and, should it prove to be the case that no settlement has been concluded, why not; v) 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;…”
“Aon disputes in particular that it was "closely" involved or that there was close liaison in such matters. There is, however, no dispute that Aon were involved to some extent with the way in which the negotiations with the representative beneficiaries were being conducted: some of the communications between Gowling and Aon's lawyers are open and will be admissible to prove a degree of liaison and involvement.”
“75. In both Muller and EMW Law, the without prejudice negotiations involved third parties and related to a different claim, albeit a claim that had some connection with the proceedings before the court. In Muller the negotiations had been concluded and the claim against the third party had been resolved. In EMW Law, there was no finding that the dispute with the third party had been resolved. The orders for disclosure made in neither case included without prejudice communications about the claim that was before the court. 76. What is distinctive about this case is that there is one claim against different parties: Aon – who, unless they have waived it, have the benefit of privilege in the without prejudice communications with the Claimants – and the Lawyer Defendants, who acted for and advised the Claimants in those negotiations and who wish to rely on the privileged material. The case is unusual in that related without prejudice communications between the Claimants and the representative beneficiaries will be in evidence at trial. The Claimants have waived privilege by suing their former solicitors and Counsel in relation to the conduct of those negotiations and the representative beneficiaries have confirmed their agreement to those negotiations being disclosed. But the Lawyer Defendants seek to put in evidence the content of separate without prejudice communications made in an attempt to settle this claim at the same time as the Approved Settlement was being negotiated with the representative beneficiaries' lawyers.”
“98. It is significant that all three Lords Justices in the Muller case considered it to be material that the plaintiff had put in issue the reasonableness of his negotiations with the shareholders and that that issue would not be justiciable without disclosure of the negotiations. Similarly, in EMW, Newey J considered it to be material that Mr Halborg had referred to the content of his without prejudice negotiations with BLM and that it was hard to see how EMW's claim would be justiciable without disclosure of the negotiations. Lewison LJ observed in Avonwick that it was hardly surprising that the court ordered disclosure of the negotiations in Muller given that the plaintiff had put that matter directly in issue. 99. In this light, the general principle that bringing a claim or making an allegation does not disentitle a party to rely on without prejudice privilege may well be qualified where an issue is raised that is only justiciable upon proof of without prejudice negotiations. Indeed, in cases where the Muller exception has been applied, the judges have emphasised that the claim would otherwise be non-justiciable. A claimant (or defendant) cannot at one and the same time raise an issue to be tried and rely on without prejudice privilege to prevent the court from seeing the evidence that is needed to decide it. However, this exception has not previously been held to apply in the case of without prejudice negotiations in the very claim that is before the court. 100. I consider that there are a number of facets to the socalled Muller exception, which go beyond the fact that the negotiations have some independent relevance as a fact apart from the truth or falsity of anything stated in them. That is no doubt a necessary condition for any exception applying, otherwise the policy underlying the without prejudice rule would be directly infringed, but it is not a sufficient condition for the application of the Muller exception. This appears to me to depend on the necessity of admitting the material to resolve an issue raised by a party to without prejudice negotiations, in circumstances in which the legitimate protection given to the parties to the negotiations is not adversely affected. 101. It is clear, on authority, that there is no exception to the without prejudice rule merely because justice can be argued to require one on the facts of a particular case. In EMW Law, Newey J did not conclude that disclosure should be given because justice required it: he concluded that it was just to regard an established exception to the without prejudice rule, whether the Muller exception or a comparable one, as applying on the facts of that case. The facts of EMW Law were somewhat different from Muller, in that there was no evidence of a concluded settlement with Savage Hayward on costs, therefore there was a possibility of prejudice from disclosure of the negotiations. However, given that the family's and Savage Hayward's rights were not being adjudicated by the court in that claim, the court felt able to protect them in a different way. The outcome was the same: the legitimate interests of neither party to the without prejudice communications would be prejudiced by their being available to be referred to at trial.”
“108. In my judgment, the issue of causation pleaded by Aon is far from being non-justiciable in the absence of the content of the without prejudice negotiations. The fact of Aon's involvement to some degree in discussing the basis of the Approved Settlement emerges from the open correspondence. What on a fair analysis the Lawyer Defendants seek to establish by relying on the without prejudice communications is, first, a greater degree of involvement in discussions that may emerge from those communication (such as to justify their pleading that Aon was "closely involved"), and secondly some colour derived from statements and assertions in that correspondence, which they hope will make it less credible for Aon to argue that the failure to identify the Participating Employer Argument was grossly negligent. 109. I accept that the fact of the without prejudice communications and the content of some of them is relevant, but it is far from necessary to refer to them in order to have a fair trial of the issues of gross negligence and break in the chain of causation. Even in the absence of the content of the without prejudice communications, Aon cannot mislead the court by making untrue assertions about the extent of any involvement, and (for reasons I give in the final part of this judgment) the Lawyer Defendants will be entitled to refer to the fact of without prejudice discussions with the Claimants at the time of the appeal and Approved Settlement. It should also be borne in mind that the Lawyer Defendants' primary defence is that they were not negligent because, as the trustees were advised in November 2011 by a different Leading Counsel, the Participating Employer Argument would fail. 110. I therefore do not accept that by pleading a new intervening act defence Aon has disentitled itself to rely on the privilege attaching to the contents of its without prejudice communications with the Claimant. Some relevant material will be excluded from evidence, but that is often the case where legal professional privilege or without prejudice privilege is invoked. Once the fact (rather than the content) of the without prejudice communications is admitted, there is relatively little of any substance that will be excluded.”
“It is the plaintiffs who have brought the reasonableness of their conduct in issue…. [T]hat allegation made by the plaintiffs would in reality not be justiciable without the court having sight of the without prejudice negotiations and correspondence.”
“In my judgment that philosophy is antagonistic to treating an admission in without prejudice negotiations as tantamount to an impropriety unless the privilege is itself abused. That, it seems to me, is what Robert Walker LJ meant in Unilever when he repeatedly spoke in terms of the abuse of a privileged occasion, or of the abuse of the protection of the rule of privilege: see at 2444G, 2448A and 2449B. That is why Hoffmann LJ in Forster emphasised that it was the use of the privileged occasion to make a threat in the nature of blackmail that was, if unequivocally proved, unacceptable under the label of an unambiguous impropriety. And that is why Peter Gibson LJ in Berry Trade suggested, without having to decide, that talk of "a cloak for perjury" was itself intended to refer to a blackmailing threat of perjury, as in Greenwood v. Fitt, rather than to an admission in itself. It is not the mere inconsistency between an admission and a pleaded case or a stated position, with the mere possibility that such a case or position, if persisted in, may lead to perjury, that loses the admitting party the protection of the privilege (see the first holding in Fazil-Alizadeh, described in para 47 above). It is the fact that the privilege is itself abused that does so. It is not an abuse of the privilege to tell the truth, even where the truth is contrary to one's case. That, after all, is what the without prejudice rule is all about, to encourage parties to speak frankly to one another in aid of reaching a settlement: and the public interest in that rule is very great and not to be sacrificed save in truly exceptional and needy circumstances.”
“It is of course distasteful for this or any court to avert its eyes from an admission which, subject to any point about value, appears to incriminate Mr Fincken in lying in a sworn document. However, in the tension between two powerful public interests, it seems to me that that in favour of the protection of the privilege of without prejudice discussions holds sway – unless the privilege is itself abused on the occasion of its exercise.”
“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.”
“In my view there must indeed be a significant danger that allowing in evidence of admissions of "independent facts" would undermine the effectiveness of the rule as an encouragement to parties to speak freely when negotiating a compromise of their dispute. As was said many years ago, "If the proper basis of the rule is privilege, is there any logical theory under which the court can, by methods akin to chemistry, analyze a compromise conversation so as to precipitate one element of it as an offer of settlement and the other as an independent statement of fact? Would not the layman entering into a compromise negotiation be shocked if he were informed that certain sentences of his conversation could be used against him and other sentences could not?" See J E Tracy, "Evidence - Admissibility of Statements of Fact made during Negotiation for Compromise" (1935-1936) 34 Michigan Law Review 524, 529.”
“It is unnecessary to consider that exception here, since the letter of14 January 1992 was undoubtedly connected with the possession proceedings that the parties were trying to settle.”