Keith Morris v William Simon Williams

Without prejudice correspondence is generally inadmissible because the rule encourages candid settlement negotiations. The protection is not absolute. Evidence may be admitted where exclusion would cloak perjury, blackmail or other unambiguous impropriety.

The exception is deliberately narrow and is not diluted merely because the issue arises on an interim application. A clear admission that a pleaded personal injury claim was advanced on a fundamentally dishonest basis crosses the threshold. Ordinary negotiation concessions, such as accepting exaggeration or difficulty of proof, do not necessarily do so. Relevant correspondence should not ordinarily be dissected into isolated admissions.

The claimant sought damages for injuries sustained in a road traffic accident caused by the defendant’s admitted negligence. The defendant alleged that the claimant had fundamentally dishonestly exaggerated his injuries and applied for, among other relief, permission to rely on a letter marked “Without Prejudice – save as to costs”.

The letter proposed settlement and stated that the claimant would admit fundamental dishonesty in respect of some representations made in his claim, subject to a non-disclosure agreement. The issue was whether the letter was protected by the without prejudice rule or fell within the unambiguous impropriety exception.

1. Application granted. The letter was admitted as evidence.
2. The without prejudice rule ordinarily excludes negotiations genuinely aimed at settlement. Its purpose is to promote settlement by allowing parties to speak freely and make admissions or concessions without fear that the negotiations will be used at trial.
3. The rule is subject to exceptions. The unambiguous impropriety exception applies only in clear cases and requires more than a possibility of perjury. The test remains one of unambiguous impropriety even when considered on an interim application; the court must not dilute the test or direct a trial merely to resolve a disputed meaning.
4. Without prejudice communications should not ordinarily be dissected to extract individual admissions, since doing so would undermine the protection afforded to the negotiations. That caution did not prevent the court from considering the letter as a whole.
5. The letter contained a clear admission of fundamental dishonesty. Although expressed in the future tense and made in proposed settlement terms, it was substantively no different from the accompanying promises to repay the interim payment and contribute to costs. It went beyond an ordinary concession that injuries had been exaggerated or that aspects of the claim might be difficult to prove.
6. Excluding the letter would allow the claimant to maintain a pleaded case known to be at least partly false. That constituted unambiguous impropriety. In the circumstances, the public interest in preventing the court process being used on a fundamentally dishonest basis outweighed the settlement-protection policy.