Mornington 2000 LLP (t/a Sterilab Services) & Anor v The Secretary of State for Health and Social Care

The without prejudice rule does not automatically protect an independent report commissioned from a third party merely because its commissioning was discussed during without prejudice negotiations. The public policy justification protects communications and admissions made in negotiations aimed at settlement. It does not extend to everything done during that process.

A third-party report may nevertheless be protected where the parties expressly or impliedly agree to extend the rule. Such agreement must be established objectively. One party cannot impose the extension unilaterally. A sole-purpose requirement is not an essential condition for finding an implied agreement, although multiple purposes may make such an agreement harder to establish.

The claimants and the defendant were engaged in proceedings concerning the supply and rejection of lateral flow testing devices and alleged procurement breaches. During without prejudice negotiations, the defendant commissioned Intertek to audit the Chinese manufacturing facility and produced the Intertek Audit Report.

The claimants applied for a declaration that the report and associated documents were not protected by without prejudice privilege. The central issues were whether the report fell within the public policy justification for the rule and, alternatively, whether the parties had expressly or impliedly agreed that it would be protected.

1. Application granted. The Intertek Audit Report and associated documents, except pre-existing documents in the third category identified by the claimants, were not protected by without prejudice privilege and were ordered to be disclosed.
2. The without prejudice rule is founded principally on public policy encouraging settlement and protecting parties who speak freely in negotiations. It normally excludes negotiations genuinely aimed at settlement, including communications and admissions made in that process. The rule does not automatically protect all acts or documents connected with negotiations.
3. An independent report commissioned from a third party was not itself a statement or offer made during negotiations, a record of negotiations, or a document concerning admissions. It therefore did not fall within the public policy justification absent agreement. The broad formulation in Willers v Joyce that the rule covers what was said or done during negotiations was rejected as an unsafe shorthand.
4. The parties may extend or restrict the rule by express or implied agreement. The existence of without prejudice negotiations, agreement to an audit, or permitting access to the premises did not objectively establish agreement that the resulting report would be privileged. Privilege is joint and cannot be imposed unilaterally.
5. The court rejected the contention that the report’s sole purpose had to be use in settlement negotiations. Sole purpose may be relevant to whether an implied agreement exists, but it is not an essential requirement. The court did not need to decide the burden of proof or several additional factual arguments.