The High Court has held that inter-solicitor correspondence about the possibility of engaging in ADR was not properly to be regarded as “without prejudice” (WP) despite being marked as such. The court could therefore have regard to it in considering the appropriate costs order following judgment: Jones v Tracey [2023] EWHC 2256 (Ch).
The decision illustrates that the question of whether or not a communication benefits from WP protection depends on the true nature of the communication and how it would be understood by a reasonable recipient. While a marking of WP (or WP “save as to costs”) will be taken into account, it will not be determinative if the context and/or content of the correspondence objectively indicates a contrary intention.
The decision is also of interest for the court’s observation that, while ADR processes will generally be conducted on a WP basis, the same is not necessarily true for correspondence about the possibility of engaging in ADR. The court considered that such correspondence is “more likely to be open than without prejudice”, as the parties will often wish to be able to rely on it later – though typically such reliance is likely to be in relation to costs issues, and so corresponding on a WP save as to costs basis may equally achieve that aim.
Outside the costs context, previous authorities have held that the WP rule protected the fact of an offer to mediate and any refusal/non-response in the same way that it would protect the making or refusal of a substantive settlement offer (see for example R (on the application of Wildbur) v Ministry of Defence [2016] EWHC 821, discussed here). But of course each case will turn on its facts.
The court’s approach in the present case might be seen as reflecting the growing acceptance of ADR as a standard element of mainstream civil procedure which parties are expected to engage in – such that a proposal of ADR cannot in itself be prejudicial to their case. Accordingly, there may be no need for such correspondence to be protected by the WP rule. That is consistent with the approach taken in the recent Civil Justice Council report on Pre-action Protocols (considered here), which proposes that the court should be able to see communications regarding proposals to engage in a pre-action dispute resolution process, and evidence of the fact that the process took place, but not anything that discloses the substance of the negotiations.
Background
Following judgment for the claimant in a contested probate dispute, an issue arose as to whether an inter-solicitor letter dated 7 June 2023, which was marked “without prejudice”, was properly to be regarded as WP. The defendant’s solicitors, who had sent the letter, contended that it was not in fact WP despite its marking and sought to rely on it to argue that the claimant’s costs should be reduced because of failure to engage with ADR. The claimant’s solicitors, who received the letter, contended that it was WP and therefore inadmissible including in relation to costs.
The 7 June letter stated:
“We refer to your letter dated 27th April 2023 with regard to your client offering to engage with alternative dispute resolution without moving the trial date. We sent an email on 3rd May 2023 that our client was in agreement to attending alternative dispute resolution.
We understand there are several forms resolving issues before a final hearing but would invite you clarify why your client was unwilling to attend mediation given that we agreed not to move the trial date. Further the offer was some two months before the final hearing.” [sic]
Neither the 27 April letter nor the 3 May email were marked WP. The claimant’s solicitors did not respond to the 7 June letter.
Decision
The High Court (Master Marsh, sitting in retirement) held that the 7 June letter was not in fact WP and was therefore admissible. He reached that conclusion because, in summary:
- The court’s starting point was the manner in which the letter was drafted. A WP marking will normally be taken to indicate the writer’s intention, but if it is clear from the context that a letter was intended to be open, or WP, or WP save as to costs, it will be treated as such.
- Where a letter falls within a chain of communications of a particular type, it will normally be treated as of the same type unless the opposite intention is obvious.
- The true nature of the communication must be established objectively, by reference to a reasonably minded recipient, without regard to evidence of subjective intention.
- Although the 7 June letter formed part of a chain of communications dealing with the possibility of ADR, all those communications were open and were obviously intended to be so. Communications about the possibility of engaging in ADR do not need to be WP and will ordinarily be open as it will usually be preferable for both parties to be able to rely upon such communications.
- The 7 June letter did not contain an offer and did not relate to communications about a specific offer. It would have been obvious to the reasonably minded recipient that it was not intended to be WP.
Having found that the letter was admissible, Master Marsh went on to conclude that it did not in fact warrant a reduction in the costs awarded to the claimant. Although the claimant’s failure to engage more positively with ADR was surprising, he had made offers to settle well before the claim was issued to which there had been no substantive response, the defendant’s conduct of the claim was unsatisfactory in a number of respects, and the merits of the claim weighted heavily in the claimant’s favour. On the particular facts, it could not be said that the claimant’s silence in response to the 7 June letter amounted to a refusal to undertake ADR.
Master Marsh awarded the claimant his costs on the standard basis until 21 days after the claimant had made a well-judged pre-action Part 36 offer, and on the indemnity basis thereafter, together with interest on those costs at 4% above base rate and an additional sum of 10% of the assessed costs.
For further information, please contact:
Jan O’Neill, Herbert Smith Freehills
jan.oneill@hsf.com
