Avonwick Holdings Ltd v Webinvest Ltd & Anor

The without-prejudice rule requires both a genuine dispute and a genuine attempt to resolve it. Marking correspondence “without prejudice” is a strong indication of that status, but is not conclusive. Negotiations directed only to restructuring or arranging payment of an admitted liability are not privileged. The court must assess the substance of the dispute objectively, including the parties’ conduct and the correspondence as a whole. A later assertion of a dispute cannot retrospectively confer privilege on earlier communications. Where no genuine dispute existed, correspondence concerning repayment terms was admissible at trial.

Avonwick Holdings Limited sought a ruling at a pre-trial review that correspondence exchanged with Webinvest Limited and Mikhail Shlosberg in April and May 2014 was admissible. Most of the correspondence was marked “without prejudice and subject to contract”.

The defendants contended that the correspondence formed part of negotiations concerning a disputed liability. Avonwick argued that the liability under the loan agreement and guarantee had always been admitted, and that the negotiations concerned only restructuring and repayment. The application also concerned the late service of further evidence about the correspondence.

1. Without-prejudice requirements. The privilege applies only where there is a genuine dispute and a genuine attempt to resolve it. A dispute must concern a liability capable of compromise, rather than merely the timing or method of payment. The court applied the approach in Bradford & Bingley plc v Rashid, [2006] 1 WLR 2066; [2006] UKHL 37.
2. Effect of the rubric. Expressly marking correspondence “without prejudice” is highly material and strongly indicates a genuine dispute and negotiation. It is not conclusive. The court followed the approach stated by Lord Mance and supported by South Shropshire District Council v Amos, [1986] 1 WLR 1271, Unilever Plc v T V Procter & Gamble Co, [2000] 1 WLR 2436, and Williams v Hull, [2009] EWHC 2844 (Ch).
3. Application. The evidence and correspondence showed that the parties proceeded on the basis that Webinvest and Mr Shlosberg were liable, while negotiating security, extensions and other restructuring terms. The alleged “pay when paid” term was not raised until the witness statement of 29 May 2014. The later assertion could not retrospectively make earlier communications privileged. The correspondence was therefore admissible.
4. Late evidence. Applying the approach in Denton v T H White Ltd, [2014] EWCA Civ 906, the court permitted Avonwick’s further witness statements to be relied on. The defendants could respond and the trial would not be delayed.