Pearson Education Ltd v Prentice Hall India Private Ltd

The status of a communication as without prejudice is determined objectively. The court asks whether, viewed in its factual context, it is a negotiating document. The label is important but not conclusive. An offer capable of legal acceptance is unnecessary; exploratory correspondence may qualify.

Evidence of the writer’s private intention cannot ordinarily displace the objective construction. On an application made without notice for permission to serve proceedings out of the jurisdiction, the applicant must disclose the fact of relevant without prejudice correspondence where its omission would create a misleading impression. The contents generally remain protected unless an established exception applies.

Pearson Education Ltd appealed from a decision of Master Foster dated 1 December 2004. The claimant sought to rely on correspondence concerning unpaid royalties and termination of licence agreements. The defendant wished to place two letters before the court on its application under Part 11 to set aside permission previously granted under Part 6 to serve proceedings out of the jurisdiction.

Master Foster ruled that the letters, and references to them, should be removed from the evidence. The appeal concerned whether the letters were without prejudice communications and, if so, whether their existence or contents nevertheless had to be disclosed or could be used on the later application.

1. The appeal was allowed to the limited extent that the claimant should have disclosed the fact and date of receipt of the defendant’s without prejudice letter. The contents did not have to be disclosed.

2. The correct test for determining whether a communication is without prejudice is objective. The question is whether a reasonable recipient would regard the document, in its context, as a negotiating document. The court may consider the factual matrix and other matters properly admissible in construing a written document, but private evidence that the writer did not intend the communication to have that status cannot ordinarily alter the result.

3. The heading without prejudice is not conclusive, but is important evidence of an intention to negotiate. The communication need not contain an offer capable of acceptance in law. An exploratory proposal may be sufficient. The defendant’s letter qualified because it requested documentation, explained why it was sought, and expressed willingness to pay royalties and comply with other requirements if the documentation was supplied.

4. The passage in South Shropshire District Council v Amos suggesting that evidence of a different actual intention could displace the prima facie inference was treated as obiter and was not followed insofar as it introduced a separate subjective test.

5. Although Unilever plc v Proctor & Gamble identified recognised exceptions to the rule, neither estoppel nor unambiguous impropriety was established. The duty of full and fair disclosure on a without-notice application constituted an additional situation in which the existence of without prejudice correspondence might require disclosure. The applicant was not required to disclose the protected contents merely because they might bear on the application.

6. The claimant’s evidence did not falsely state that there had been no response, but paragraphs 14 to 16 created an implication that no response had been received. Disclosure of the existence and date of the letter was therefore necessary to complete the picture. The defendant remained free to rely on the open correspondence when arguing that proceedings had been commenced prematurely.

1. High Court (Queen’s Bench Division): appeal from Master Foster’s decision dated 1 December 2004 allowed in part. The existence and date of the without prejudice letter were to be disclosed, but its contents remained excluded.