Rush & Tompkins Ltd v Greater London Council

Genuine settlement negotiations are protected by the without prejudice rule whether or not the communications bear that label. The protection does not end because the negotiations succeed. Admissions made to achieve settlement are inadmissible in later litigation connected with the same subject matter, including litigation involving another party.

Although relevance ordinarily governs discovery independently of admissibility, the same public policy protects without prejudice communications from production to third parties. Their limited forensic value does not outweigh the harm that compulsory disclosure would cause to candid settlement negotiations. The rule remains subject to established, narrowly confined exceptions where justice requires use of the material.

Rush & Tompkins Ltd v Greater London Council arose from a building project on which Rush and Tompkins was the main contractor and P. J. Carey Plant Hire (Oval) Ltd was a subcontractor. Rush and Tompkins sued the G.L.C. and Careys concerning responsibility for the subcontractor's loss and expense. It later concluded a global settlement with the G.L.C. and discontinued the claim against it.

Careys continued its counterclaim and sought specific discovery of correspondence generated during the settlement negotiations. The correspondence related to the valuation of Careys' claim. The official referee refused discovery because the documents were protected by the without prejudice rule. The Court of Appeal reversed that decision and ordered discovery, holding that the protection ended once settlement had been achieved: [1988] 2 W.L.R. 533.

The central issues were whether a concluded settlement ends without prejudice protection and whether communications protected from admission at trial may nevertheless be discovered by another party to the litigation.

1. Disposition. Lord Griffiths delivered the leading speech. Lord Bridge, Lord Brandon, Lord Oliver and Lord Goff expressly agreed with his reasons. The House unanimously allowed the appeal, set aside the Court of Appeal's order and restored the official referee's refusal of discovery.
2. Foundation and scope of the rule. Lord Griffiths held that the without prejudice rule rests on the public policy of encouraging settlement. As explained in Cutts v Head [1984] Ch 290, parties must be free to negotiate frankly without fearing that statements or offers will later be used as admissions. The rule applies to all negotiations genuinely directed towards settlement, whether oral or written and whether or not expressly labelled “without prejudice”.
3. Effect of a concluded settlement. Lord Griffiths rejected the view that protection disappears when negotiations succeed. He explained that Walker v Wilsher (1889) 23 QBD 335 did not establish such a proposition. As a general rule, admissions made in a genuine attempt to settle remain inadmissible in subsequent litigation connected with the same subject matter. The rule also protects admissions made when negotiating with a different party in the same litigation.
4. Admissibility and discovery. Lord Griffiths accepted, consistently with O'Rourke v Darbishire [1920] A.C. 581, that discoverability does not ordinarily depend on admissibility. Relevant documents are generally discoverable even if they cannot be admitted at trial. Nevertheless, Rabin v Mendoza & Co. [1954] 1 W.L.R. 271 showed that documents produced solely for without prejudice negotiations may be protected from production even between the negotiating parties.
5. Production to third parties. Lord Griffiths held that the public policy underlying inadmissibility also protects genuine settlement negotiations from discovery by other parties to the same litigation. Compulsory disclosure would seriously inhibit candid written negotiations, particularly in multi-party disputes. Any insight the documents might give into an opponent's valuation or negotiating position was of limited value and did not outweigh the harm to settlement practice.
6. Exceptions. Lord Griffiths emphasised that the rule is not absolute. Without prejudice material may be used, among other things, to determine whether a settlement was concluded, to establish an act of bankruptcy or a threat, and in some circumstances when costs are determined after judgment. Admission of an independent fact remains exceptional and must not erode protection for factual or legal concessions made to achieve compromise.

1. House of Lords: Unanimously allowed the appeal in [1989] AC 1280. The House set aside the Court of Appeal's order, restored the official referee's order, awarded Rush and Tompkins its costs in the Court of Appeal and House of Lords, and remitted the cause to the Queen's Bench Division.
2. Court of Appeal: Reversed the official referee and ordered discovery of the without prejudice correspondence, holding that the protection ended when settlement was achieved: [1988] 2 W.L.R. 533.
3. Official referee: Judge Esyr Lewis Q.C. refused Careys' summons for specific discovery of the settlement correspondence.