Suh and another v Mace (UK) Ltd [2016] EWCA Civ 4

Summary

The Court of Appeal has provided guidance on the application of without prejudice privilege and the circumstances in which this will arise. In this case, a party sought to rely on an apparent admission of guilt made by its unrepresented opponent, which had not been described as without prejudice. However, the Court confirmed that use of the “without prejudice” label will not conclusively establish that a communication is privileged from disclosure to the Court. Equally, the absence of this label will not preclude a communication from being made on a without prejudice basis, particularly if the party is not aware of the relevant rules. Instead, where disputes arise on this point, the Court must look at the purpose of the communication, and whether this can be described objectively as a genuine attempt to negotiate a settlement.

The facts

The substantive issues between the parties concerned restaurant premises in New Malden, Surrey, that were let to Mrs & Mr Suh (the “Tenants”) by Mace (UK) Limited (the “Landlord”). In August 2010, the Landlord purported to forfeit the Tenants’ lease by peaceable re-entry, alleging non-payment of the rent. The Tenants subsequently issued proceedings against the Landlord, claiming damages arising from the Landlord’s alleged wrongful forfeiture of the lease.

After proceedings had been issued, two meetings were held between Mrs Suh and the Landlord’s solicitor. It was alleged that Mrs Suh had admitted at these meetings that she and her husband had failed to keep up with the rental payments due under the lease. The Landlord sought to rely on these statements in its evidence to justify its decision to forfeit the lease.

At the start of the trial in the County Court, the Tenants argued that the Landlord should not be entitled to rely on the statements made by Mrs Suh, as these were made on a without prejudice basis. However, the Judge dismissed this argument, on the basis that the purpose of the meetings could not be described as a genuine attempt to compromise the issues in dispute. The consequence of this was to allow evidence to be admitted that was highly prejudicial to the Tenants’ case, and judgment was given in the Landlord’s favour.

The legal issues

Following the County Court judgment, the Tenants were granted permission to appeal, on the ground that there had been a serious procedural irregularity, which had enabled Mrs Suh’s “admissions” to be admitted in evidence.

In response to the Tenants’ appeal, the Landlord argued that:

  • the meetings with Mrs Suh were not without prejudice because their purpose was not to negotiate a settlement;
  • even if they had been without prejudice, privilege should not be extended to enable the Tenants to commit perjury; and
  • any privilege was waived by the Tenants, who had entered into correspondence concerning the admissions and had therefore treated them as open to disclosure.

The decision

The Court of Appeal held that the determining factor when deciding if the content of a meeting could be regarded as without prejudice related to the purpose of the meeting, rather than the content. If the meetings had been set up with the genuine purpose of settling the dispute, the meetings would be without prejudice and it would not matter whether this was agreed beforehand or confirmed at the time. The Court therefore considered the background to the meetings and the circumstances in which they had been arranged. In summary, the Court found that the meetings had been set up by Mrs Suh to find a way for her to extract herself from the case, which she was worried she would lose.

Where litigants in person are involved, they may not be aware of the without prejudice rules, so determining whether or not a discussion is without prejudice may be more difficult. However, in this case the Court took the view that the meetings were unlikely to have had any other purpose. The discussions needed to be viewed objectively and in the round, and the only purpose of the meetings appeared to be to find a way to end the proceedings. Mrs Suh was not avoiding perjury, as she had been forward about her position and there was no evidence to suppose that she knew what the term “without prejudice” actually meant.

Responding to the Landlord’s assertion that the Tenants had waived privilege concerning the alleged admissions, the Court held that there could be no waiver in these circumstances. Adopting an objective view of Mrs Suh’s conduct in the round, it would be unjust to deprive the Tenants of the privilege they relied on. Although they had referred to the alleged admissions in correspondence with the Landlord’s solicitors, they had done so in response to the Landlord’s attempt to introduce privileged material in open correspondence.

Our comments

Communications are frequently labelled or described as “without prejudice” but this case confirms that the purpose of the communications in question will be vital when ascertaining whether without prejudice privilege actually applies. Even in circumstances where a litigant is unaware of the without prejudice concept, this will not prevent the privilege applying.

Reviewing this decision, it could be argued that the Court took a sympathetic view of the Tenants’ position, in view of the fact that they had not had the benefit of legal advice. Extra care will therefore be required when dealing with litigants in person. However, the key principles are generic to litigation, so parties must use privilege carefully, and regard “admissions” with care.