Privilege without Prejudice

Mediation Case Law Update

Mediators always reassure parties that what happens in a mediation remains inaccessible to a court, both if the claim does not settle, but also when it does. Without Prejudice (WP) privilege applies automatically to what transpires during mediations, as it does to any genuine settlement discussions.

The privilege belongs to the parties only and the mediator has no right to prevent parties from choosing to waive that. Some case law has suggested that contractual confidentiality created when a mediation agreement is signed also protects mediation exchanges from exposure in court (and anywhere else) and that the mediator too can invoke a remedy for breach besides the parties.

Recent cases in the Business and Property Court have revisited the limits of without prejudice protection. One – Willers v Gubay decd and others [2019] EWHC 937 (Ch) looks specifically at the aftermath of an unsettled mediation, though it only considers privilege and does not consider the possible effect of confidentiality as contracted in the mediation agreement.

The other decision – Briggs v Clay and others [2019] EWHC 102 (Ch) – is not about a mediation, but the decision still has some relevance to mediation. As a caution to lawyers, both of these cases involved litigation not just between lay parties, but also against solicitors and counsel who had been involved earlier and who were now being sued for negligence.

Waiving Mediation Privilege

Willers was part of a lengthy saga, with two failed mediations and a claim of a malicious prosecution over a civil claim by Gubay. Correspondence passed between lawyers after the first mediation, but before the malicious prosecution trial, to explore whether it was worth reconvening the mediation, in the course of which divergent accounts of the first mediation were given by each side. To start with, letters were marked simply “without prejudice”, and the mediation was conducted under the automatic privilege afforded to all settlement discussions. However, exchanges segued into letters marked “without prejudice save as to costs” (WPSAC) from both parties.

The judge was asked to decide whether this meant that the parties had effectively waived WP about offers and exchanges made during and after the mediation. She found that the WPSAC rubric on the key correspondence had amounted to agreement between the parties that they could both use otherwise privileged mediation material in evidence at any costs hearing.

This allowed evidence to be given of a conversation about settlement terms shortly after the mediation which had been specifically made WP.
The limitation on use of such material was that it could only be used in relation to costs issues, as the rubric obviously states, but if deployed in that restricted context there were no limitations on what could be used, presumably for each party to try to satisfy the costs judge of the reasonableness of their stance.

Necessary Mutual Agreement

Briggs v Clay and others, decided a few months earlier in 2019, concerned a claim against a pension provider (Aon) and the claimants’ former lawyers. Aon did not waive privilege but the lawyers argued that the evidence was admissible as an exception to WP privilege. Fancourt J refused to permit WP material to be introduced. He said:

In my judgment, treating the contents of the without prejudice communications between Aon and the Claimants as admissible, even for the purpose of proving the extent and nature of Aon’s involvement in discussions about the appeal and Approved Settlement, would create an exception with a considerably different character, namely a broad exception where the interests of justice in a particular case can be said to require evidence to be admitted and privilege overridden.
He agreed that reference could be made at trial to the fact that WP communications had occurred, evidenced in open correspondence, but emphasised that the lawyers could not adduce any of the content of such conversations.

What Next for Mediation

The unanimity between the judges over the nature of WP privilege is striking. There had always been some controversy between a narrow approach to its scope, as only protecting admissions against interest, or whether it offers a broader degree of protection. It now seems absolutely clear that the modern view affords a broad interpretation of WP protection, subject only to limited exceptions and only waived if there is clear evidence of mutual agreement.

Mediators will be pleased to find judges taking the broad view, as otherwise it might be argued that mediation material which did not constitute an admission against interest might get admitted at a trial, which would seriously undermine the secure environment which encourages parties to explore settlement.

A version of this Article first appeared in the New Law Journal on 20 June 2019 and was written by Tony Allen, Solicitor and CEDR Chambers Mediator.