Savings & Investment Bank Ltd. v Fincken

The unambiguous impropriety exception to without prejudice privilege is confined to a clear abuse of the privileged occasion. An admission made in genuine settlement discussions does not lose privilege merely because it conflicts with an earlier sworn statement or may expose past or future dishonesty.

Permission for a late amendment is assessed on a sliding scale. The later the amendment, the more compelling its justification must be. An amendment based on material long available, which introduces substantial new inquiries and causes the loss of a trial date, may properly be refused under the overriding objective.

Savings & Investment Bank Ltd. v Fincken concerned a liquidator’s claim to rescind a settlement deed for alleged non-disclosure of assets. Shortly before trial, the bank sought to add allegations that Mr Fincken had failed to disclose shares and a director’s loan connected with Westminster Property Holdings plc.

Patten J permitted the amendment after holding that an admission made at a without prejudice meeting fell within the unambiguous impropriety exception: [2003] 3 All ER 1091. The proposed pleading ultimately omitted the admission itself.

On appeal, the issues were whether the admission was admissible, whether the judge’s discretion could stand, and whether the Court of Appeal should permit the amendment independently on public documents.

1. Appeal allowed. The Court held that the admission made during the without prejudice meeting was privileged. The unambiguous impropriety exception applies only where the privileged occasion or its protection has itself been unequivocally abused. It does not apply merely because an admission may be inconsistent with an earlier affidavit, pleading or stated position, or may reveal past dishonesty.

2. Per Rix LJ, whose judgment Carnwath LJ agreed with, the public interest in candid settlement discussions was decisive unless there were truly exceptional circumstances. Treating an ordinary admission as impropriety would undermine the without prejudice rule, deter frank negotiations, and make allegations of fraud or dishonesty difficult to settle. The admission should therefore never have been before Patten J.

3. The foundation of Patten J’s exercise of discretion consequently failed. The Court exercised the discretion anew and refused the amendment. Once the privileged admission was disregarded, the proposed allegations depended on public documents which the liquidators had, or could have obtained, long before the imminent trial.

4. The fact that an amendment has some prospect of success may suffice at an early stage, but a late amendment requires a progressively stronger justification. These allegations introduced a new inquiry into the company’s affairs and valuation, required the loss of the trial date, and prolonged already lengthy litigation. Applying the overriding objective in Civil Procedure Rules 1998, CPR 1.1, the balance of fairness, proportionality, expedition and court resources required refusal of the amendment.

• Court of Appeal (Civil Division): Allowed Mr Fincken’s appeal and refused the claimant’s proposed re-amendment.
• High Court, Chancery Division (Patten J): Held that the without prejudice admission fell within the unambiguous impropriety exception and granted permission to re-amend: [2003] 3 All ER 1091. That order was overturned.