Following determination of a contested issue at a hearing, Judges are regularly confronted with submissions based on discussions and/or correspondence in an attempt to persuade the court that a costs order ought to be made in favour of one party or the other in light of the content of that letter or discussion.
That issue came before the Court of Appeal recently in Cammack v Ashby (2016) CA 01/03/2016. The Judge was referred to a note of what C claimed were discussions outside court leading to a compromise of the dispute, save for the issue of costs. On the basis of the content of the Note the Judge determined that D should bear C’s costs after that point.
The issue on appeal was privilege and whether it had ever attached to the document at all (C claimed it was ‘without prejudice save as to costs) and if so, whether that privilege had been waived.
The CA was uncompromising; where the privilege applied, there was no general discretion to admit it into evidence and communications made for the purpose of a genuine attempt to compromise a dispute could not be admitted into evidence. The CA upheld the long-established rule that privilege attached to such communications, irrespective of whether the words ‘without prejudice’ were used or not.
Privilege could be waived, but only with the consent of both parties. In this instance there was no such agreement, either to it being adduced or even to the content. The CA accordingly overturned the decision on costs at first instance.
The CA has said on more than one occasion that a failure by the parties to agree costs may mean that the court declines to approve a compromise at all, and the action must proceed: see Hutchin v Grant (2016) and BCT Software Solutions Ltd v C Brewer & Sons Ltd .
Privilege as regards offers is nonetheless a slightly moveable feast, in certain instances. A Part 36 offer is not to be disclosed to the trial judge (r.36.16) but may be disclosed to a (different) Judge at an interlocutory hearing. The size of a Part 36 offer may indicate what percentage of an interim payment on account of damages is reasonable; and even whether a denial of liability is realistic or simply tactical. A Protocol Offer, by distinction, may not be communicated ‘to the court’ until after determination of the claim and any other offer to settle cannot be communicated to the court at all (r.26.28).