Williams v Hull

A communication marked “without prejudice” carries a rebuttable presumption that it forms part of settlement negotiations. The court must assess the communication objectively and as a whole. A negotiating document need not contain an offer or concession, and it may assert the sender’s rights. The unambiguous impropriety exception is narrow. A mere inconsistency between a without prejudice communication and a pleaded case, or a serious risk of perjury, does not suffice. The privilege is lost only in a clear case involving abuse of the privileged occasion.

The defendant appealed against an order of the Central London County Court permitting the claimant to rely at trial on a letter marked “subject to contract and without prejudice”. The underlying dispute concerned the parties’ respective interests in jointly owned property and related assets. The claimant argued that the letter was merely an assertion of rights and, alternatively, that its exclusion would provide a cloak for perjury because it was inconsistent with the defendant’s pleaded case. The central issues were whether the letter was protected by the without prejudice rule and, if so, whether the unambiguous impropriety exception applied.

1. Appeal allowed. The letter was a without prejudice communication and was inadmissible under the rule.
2. An express “without prejudice” label gives rise to a rebuttable presumption that the communication is intended to be part of settlement negotiations. The question is objective and is assessed in the factual circumstances existing when the communication was made. Subsequent events, including the recipient’s response, may assist the assessment.
3. The communication must ordinarily be considered as a whole. It is not appropriate to dissect it into admissible and inadmissible parts unless it deals with clearly distinct subjects. The letter addressed the valuation of the property, other assets, liabilities and the parties’ desire to reach an overall settlement.
4. A negotiating document need not contain a concession or offer. It may contain assertions of the strength of a party’s position, provided those assertions form part of a genuine attempt to negotiate a settlement. Nor is protection dependent on the party having first formulated an open position.
5. The unambiguous impropriety exception applies only in the clearest cases of abuse of the privileged occasion. A serious or substantial risk of perjury is insufficient. Nor is a mere inconsistency between statements in the communication and a pleaded case enough. Telling the truth in settlement negotiations, even if inconsistent with the party’s case, does not itself abuse the privilege.
6. The defendant’s explanation for the apparent inconsistency was not so obviously incredible that it could be rejected without cross-examination. In any event, the alleged inconsistency did not amount to unambiguous impropriety. The judge had erred by failing to give proper weight to the “without prejudice” labels, dissecting the letter and applying an insufficient test.

• Central London County Court: Her Honour Judge Marshall QC ordered that the letter could be adduced in evidence, holding that it was not a without prejudice communication or, alternatively, that the unambiguous impropriety exception applied.
• High Court (Chancery Division): The appeal was allowed. The order permitting admission of the letter was set aside.