Reed Executive Plc & Anor v Reed Business Information Ltd & Ors

Wholly without-prejudice negotiations remain inadmissible when the court determines costs unless every party agrees to disclosure. The court cannot compel disclosure merely because the negotiations may illuminate whether a successful party unreasonably refused alternative dispute resolution. Nor may it draw an adverse inference from a party’s reliance on confidentiality.

A party wishing to preserve costs arguments should make an open offer or an offer expressly without prejudice save as to costs. Whether refusal of ADR was unreasonable must be assessed from the admissible circumstances. Relevant considerations include the timing of the proposal, the merits and novelty of the dispute, the parties’ negotiating positions and the apparent prospects of settlement.

After the Court of Appeal had given its principal judgment in trade mark and passing-off proceedings, the parties could not agree the consequential order. Disputes remained about the declaration, interest on an interim costs payment and the allocation of costs.

The principal preliminary question was whether the court could compel disclosure of wholly without-prejudice negotiations when deciding whether a successful party should be penalised in costs for refusing mediation. The respondents also contended that the appellants’ refusal to use the Court of Appeal mediation scheme was unreasonable. A further hearing would be required to settle the remaining costs issues and any application for permission to appeal.

1. Disclosure refused. The rule in Walker v Wilsher remained good law. Wholly without-prejudice negotiations could not be disclosed for the purpose of deciding costs without the agreement of all parties. Nothing in the Civil Procedure Rules, including Rule 44.3(4), displaced that rule. The reference to all the circumstances meant all admissible circumstances.

2. Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 did not abrogate the rule. Halsey treated the integrity and confidentiality of ADR as requiring the court neither to know nor investigate why settlement had failed. Its approval of court orders expressly preserving privilege further assumed that without-prejudice protection continued when costs were determined.

3. The Calderbank procedure reconciled confidentiality with costs scrutiny. A party could make an open offer of ADR or an offer expressly without prejudice save as to costs. The other party could respond on the same basis and explain why ADR would serve no useful purpose. Those admissible communications could then inform the costs discretion.

4. No adverse inference could be drawn from a party’s refusal to waive confidentiality. Such an inference would exert indirect pressure to disclose and would undermine the basis on which wholly without-prejudice negotiations occurred. Even if a discretion to order disclosure existed, it should not have been exercised while quantum and related proceedings remained unresolved.

5. On the open material, the appellants’ refusal to mediate was reasonable. The proposal came late, after substantial costs had been incurred and after the respondents had obtained a strong first-instance position. The appellants reasonably pursued an appeal involving novel issues, had justified confidence in its merits, faced disputes in other jurisdictions and confronted a wide disparity between the parties. ADR was therefore irrelevant to the costs decision.

6. Interest on repayment of the £350,000 interim costs payment was to run at the commercial rate rather than the statutory judgment rate. The final allocation of costs and any permission to appeal remained for a further hearing. Auld and Rix LJJ agreed with Jacob LJ.

1. Court of Appeal (Civil Division): Following its principal appellate judgment, the court refused to compel disclosure of wholly without-prejudice negotiations, held that refusal of ADR was not relevant to costs on the open material, and adjourned the remaining consequential issues.

2. High Court, Chancery Division: Pumfrey J had determined the trade mark and passing-off claims, made a substantial costs order and ordered an interim costs payment of £350,000. No citation for those decisions is stated.