SC v YD

The without prejudice rule protects communications made in a genuine attempt to compromise a real dispute capable of settlement. A document need not be labelled “without prejudice”, and litigation need not already have begun. However, relationship breakdown or the prospect of future litigation is insufficient by itself. The court must examine all the surrounding circumstances, including what both parties contemplated and the subject matter of the proposed compromise. The inquiry is highly fact-sensitive. Where a document is merely a proposal about future arrangements, made before any real dispute or contemplated litigation had crystallised, it is not privileged as a settlement communication.

The father sought permission to appeal against an order permitting the mother to rely on an unsigned draft agreement in pending financial and property proceedings. The father claimed that the document was a privileged offer of settlement prepared to avoid future litigation. The Deputy District Judge held that the parties were not in dispute, that there was no actual or impending litigation, and that the document recorded proposed arrangements rather than concessions made to settle a dispute.

The central issue was whether the February 2013 agreement had been produced in contemplation of an actual or impending dispute capable of compromise and was therefore protected by without prejudice privilege.

1. Permission threshold. Under Part 52.3(6) of the Civil Procedure Rules, permission could be granted only if the proposed appeal had a real prospect of success or there was some other compelling reason for it to be heard. The issue decided below was one of law, rather than a discretionary case-management decision: the document was either privileged or it was admissible.
2. Without prejudice principle. The rule exists to encourage settlement of disputes. It applies according to substance, not the label placed on a document. The essential requirements are a real dispute capable of compromise and an attempt to compromise it. Existing litigation is unnecessary, but a mere possibility of future litigation is insufficient.
3. Case-sensitive inquiry. The court must draw the line between protecting genuine attempts to compromise future litigation and preventing a party from presenting its case fully. All surrounding circumstances must be considered. The subject matter of the dispute is more important than the mere timing of the communication. The court must consider what both parties contemplated, including whether they foresaw a real dispute leading to sufficiently proximate legal proceedings.
4. Application. The February agreement was an unsigned proposal responding to the mother’s request for an explanation of possible financial arrangements. Its terms contemplated continued shared use of the family home and did not show that either party was seeking to compromise actual or pending litigation. The parties therefore had no real dispute capable of compromise. The Deputy District Judge had applied the correct principles and was neither wrong nor plainly wrong.
5. Permission to appeal was refused because the appeal had no real prospect of success and there was no other compelling reason for it to be heard.

The application sought permission to appeal from an order made by Deputy District Judge Bassett Cross on 10 March 2014. The High Court (Family Division) refused permission.