Charles Steven Bond & Anor v Denise May Webster & Ors

Without prejudice privilege is displaced for unambiguous impropriety only in the clearest and most exceptional cases. The evidence must be rigorously scrutinised, and a merely probable impropriety is insufficient. Where accounts of an unrecorded meeting materially differ, the court should not determine the issue solely on the disputed account of one participant. It should assess whether the alleged conduct fell within the permissible ambit of settlement discussions. A party may offer cooperation to resolve a genuine financial or tax problem in return for concessions in related litigation, and may emphasise the risks of failing to reach agreement. The position is different where the party has created or concocted the problem and then seeks to exploit it.

The claimants applied to strike out passages in witness statements prepared for a probate trial. The passages referred to a without prejudice meeting between solicitors for the parties concerning a challenge to a will and codicil, the exercise of share-sale options, and a potential Inheritance Tax liability. The third and fourth defendants alleged that the claimants’ solicitor had used the tax liability as an improper threat to induce them to abandon their challenge. The central issue was whether the alleged conduct amounted to unambiguous impropriety, so that without prejudice privilege should be disapplied.

1. The application was allowed. The passages concerning the without prejudice meeting were to be struck out, and the witness statements re-served in suitably redacted form.
2. The without prejudice rule is protected for compelling public-policy reasons. The exception for unambiguous impropriety is available only in very clear and truly exceptional cases. Evidence relied upon to establish the exception must be rigorously scrutinised. A probable impropriety is insufficient. Cases involving an unrecorded meeting, where the participants cannot agree what was said, are likely to be rare.
3. The accounts of the meeting differed radically. One account described an offer to take steps to assist with a genuine Inheritance Tax problem; the other suggested that the executors would determine the contents of the IHT 400 according to whether the will challenge continued. The court could not properly resolve the application on the disputed account alone.
4. Ferster v Ferster [2016] EWCA Civ 717 was distinguishable. In that case the alleged threats were recorded in writing and there was no factual dispute. Here, the court had to consider whether the account of the offer advanced by the claimants’ solicitor was permissible in the context of contested litigation.
5. The Inheritance Tax problem was genuine and had not been created by the claimants. Offering possible assistance in resolving it in return for abandonment of the will challenge was a permissible settlement quid pro quo. Strongly emphasising the tax risk did not, in the circumstances, amount to impropriety. The position would have been different if the claimants had concocted the problem and then sought to exploit it.

First-instance decision. No prior appellate decision is stated in the judgment.