Suh & Anor v Mace (UK) Ltd [2016] EWCA Civ 4 (15 January 2016)

We welcome again Mr Anis Waiz, solicitor and Head of Commercial Litigation at Curtis Law Solicitors as he continues his critical review of current case law.

This case raised the often misunderstood applicability of the “without prejudice” privilege rule in respect of discussions between one tenant and the landlord’s solicitor. It serves as a very useful aide memoir as to the rule and its scope.

One of the issues in the case was the admissibility of a witness statement by the landlord’s solicitor, which exhibited two attendance notes of two meetings in January 2014 between the solicitor and one of the tenants Mrs Suh (“the Meetings”). During one such meeting it was alleged that Mrs Suh admitted that there had been rent arrears when the landlord re-entered the premises.

Background

The tenants Mr and Mrs Suh held a 20-year business lease of restaurant premises in New Malden, Surrey. The tenants operated the restaurant until August 2010, when their landlord, Mace (UK) Limited, re-entered the premises and forfeited the lease.

In January 2012, Mr and Mrs Suh issued proceedings against Mace seeking damages in respect of the landlord’s alleged wrongful forfeiture of the lease. At first instance the Judge the dismissed the tenants claim and granted judgment for the landlord on its counterclaim in respect of outstanding rent and interest

As noted above, one of the issues was the admissibility of a witness statement and more crucially the attendance notes of the Meetings. The tenants alleged the statement contained without prejudice matters and as such privilege prevented the same from being disclosed. Thus the tenants argued the statements should not be before the court.

The trial Judge decided the question of admissibility of the statements and held that the Meetings were not without prejudice meeting given they were not for the purpose of a genuine attempt to compromise a dispute between the parties.

The Issues

The tenants were granted permission to appeal to the Court of Appeal on the issue as to whether the judge erred in ruling that the alleged ‘admissions’ by Mrs Suh were not protected by the without prejudice privilege and were therefore admissible at the trial.

The landlord raise a number of arguments in opposition to the appeal namely:

1. The Meetings were not without prejudice because their purpose was not to negotiate a settlement of the proceedings. (“the Without Prejudice Rule”).

2. If the Meetings were without prejudice, privilege should be denied to the tenants because they were using it for perjury or unambiguous impropriety. (“the Abuse Exception”)

3. Any such privilege was waived by the tenants in a number of events (see below) (“the Waiver Issue”).

The Evidence

The key factual material to determine whether the Meetings were without prejudice related to the purpose of the meeting rather than the contents. The reader is referred to the judgment for a detailed examination of the circumstances in which Mrs Suh attended the Meetings. However in brief summary the parties’ evidence was as follows:

The solicitor for the landlord noted in her witness statement that:

1. “As Mrs Suh has no legal representation and is therefore acting as a litigant in person I believed I was able to meet with her and so a meeting was arranged for 4pm on Monday 6th January 2014.

2. The first question I asked Mrs Suh was what the purpose of the meeting was. Mrs Suh explained that she wanted to know what was happening with the case and how it was progressing.”

In the meeting that followed, the landlord solicitor took Mrs Suh through a number of court documents and noted down Mrs Suh’s admissions as to the existence of arrears of rent and the fact that she had not personally signed certain court documents.

Mrs Suh made a detailed witness statement in which she stated that the purpose of the visit to the landlord’s solicitor was to, “find out about the case whether it was true that we were going to lose for certain. I did not think that it would affect my case just to speak to the other solicitor.

…, she asked me what the purpose of my visit was. I told her that I wanted to know the present situation of the proceedings and whether it was true that there was 100% certainty that I would lose…”

Mrs Suh denied having made admissions to the landlord solicitor. However at first instance the Judge rejected the denial

The Without Prejudice Rule

As to the rule, the Court of Appeal noted the following:

1. The classic statement of law was set out by Lord Griffiths in Rush & Tomkins v. GLC [1989] 1 AC 1280.

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 … The rule applies to exclude all negotiations genuinely aimed at settlement whether oral or in writing from being given in evidence.

2. The Court was required to consider the circumstances of the communications from an objective standpoint.

3. Where there are litigants in person it may, be more difficult to determine objectively whether the discussions were negotiations genuinely aimed at settlement.

4. A key point when any court is considering whether a statement should be excluded from the rule was stated in Unilever plc v The Procter & Gamble Co … [2000] 1 WLR 2436. Robert Walker LJ said (… [2000] 1 WLR 2436 at 2448-2449) that the cases ‘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.

The Abuse Exception

The issue for the Court of Appeal was whether one of the exceptions to the Without Prejudice Rule namely perjury or unambiguous impropriety applied.

In Unilever Plc. v The Procter & Gamble Co. the court noted that 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 Waiver Issue

The Court of Appeal helpfully noted that the test of waiver of the Without Prejudice Rule was not the same as for legal professional privilege (see Forster v. Friedland unreported 10th November 1992).

In this case the question was whether the tenants’ conduct, in the context of the purpose of the without prejudice privilege itself, constituted a waiver of it? To consider that required an objective evaluation of the tenants’ conduct, in the context of the purpose of the without prejudice privilege.

The Court would thus need to determine whether it would be unjust, in the light of the tenants’ conduct, for the tenant to argue that the admissions made in the interviews were privileged from production at the trial

The Decision

In very brief summary the Court of Appeal held:

1. As to the Without Prejudice Rule Mrs Suh’s comments during one of the Meetings was to say that “she no longer wanted any part in these proceedings”. Accordingly the court noted the discussions must be regarded objectively and the only sensible purpose for such a meeting must have been to seek some kind of solution to the litigation for Mrs Suh. In other words a settlement. Both parties must objectively be regarded as having genuinely been seeking a settlement. There was no justification for cutting the interviews into parts that were open and parts that were without prejudice. Such an approach would go against the broad view required by the case law.

2. As to the Abuse Exception, Mrs Suh was alleged to be using the cloak of “without prejudice” discussions for what the Judge found to be lies contained in her own (Mrs Suh ‘s) statement. However the Court of Appeal held there was no evidence that Mrs Suh even knew what the term “without prejudice” meant, or that she used the rule to tell lies. Mrs Suh was, on any analysis innocent.

3. As to the Waiver Issue the type of waiver here was unlike a landlord’s waiver of a right to forfeit a lease. The waiver here concerned justice and with the protection of the without prejudice privilege itself. However in this case once it is noted that the admissions in the Meetings were covered by the without prejudice privilege, it would, be a violation of that privilege to hold that the tenants’ conduct amounted to a waiver by which they were bound. The reader is referred to the Judgment for the full facts.

4. Thus the Tenant’s appeal was allowed. The Court of Appeal order that the admissions, relied upon by the landlord recorded in the attendance notes and in the solicitor’s statement, were inadmissible at trial as being covered by an un-waived without prejudice privilege. The Court ordered a re-trial of the substantive issues between the parties before a different judge.

Conclusion

This important decision is a very useful reminder as to the key issues in identifying and applying the Without Prejudice Rule.

It is remarkable how the rule is simply misunderstood in practice by parties simply adding the words “without Prejudice”

It is worth recounting Lord Griffiths’ speech in Rush & Tomkins v. GLC [1989] 1 AC 1280:

“The application of the rule is not dependent upon the use of the phrase ‘without prejudice’ and if it is clear from the surrounding circumstances that the parties were seeking to compromise the action, evidence of the content of those negotiations will, as a general rule, not be admissible at the trial and cannot be used to establish an admission or partial admission.”

It is also worth noting Lord Neuberger in Ofulue v. Bossert [2009] 1 AC 990:

..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 … “to speak freely about all issues in the litigation …” Parties cannot speak freely at a without prejudice meeting if they must constantly monitor every sentence, with lawyers … sitting at their shoulders as minders.’

Do NOT follow this link or you will be banned from the site!
X