The subject matter of the dispute is not important. The parties attended a mediation. No settlement was reached during the mediation, but the claimant believed that a settlement was concluded on the following day. The defendant disputed this and the case proceeded to trial. The issue of whether any settlement had been reached was tried as a preliminary issue2. The main issue was to what extent evidence as to what had taken place in the mediation was admissible to determine the matter.

The justifications for the without prejudice rule are first, that as a matter of public policy, parties should be encouraged to settle their disputes, without fear that the contents of their settlement discussions might be used against them in the litigation; and second, that the parties have expressly or impliedly agreed that their negotiations should not be admissible in evidence in the litigation, if no settlement is reached.

There are exceptions to the without prejudice rule, one being that it does not prevent the admission into evidence of what the parties said or wrote, when there is an issue as to whether the without prejudice discussions have resulted in a concluded settlement.

The judge noted that there is a clear public policy, reflected in the CPR, to encourage mediation and that mediation takes the form of assisted without prejudice negotiation. The fact that those communications take a place in the context of a mediation does not confer on them a status distinct from any other form of without prejudice communication. Nor did the judge accept a submission that nothing done or said in preparation for, or in consequence of, a mediation, which is liable to disclose the nature of the negotiations, can ever be used outside the mediation process. He accepted that the exceptions to the without prejudice rule should be kept within close confines, but that did not mean that where a recognised exception applies (as it did here) all material properly necessary to determine the issue in question should not be considered by the court.

The judge also decided that the terms of the mediation agreement itself did not affect the without prejudice rule or its exceptions. A term in the agreement that any settlement must be reduced to writing did not have the effect of removing the exception to the rule, where the issue is whether or not there has been a concluded settlement. Additionally, although the confidentiality provisions in the agreement bolstered the without prejudice nature of the mediation, those provisions did not prevent the court determining the issue of whether or not a settlement had been concluded.

The defendant also argued for the existence of “mediation privilege”, a privilege distinct from the without prejudice rule, under which it was said that a mediator could not be required to appear as a witness or produce documents, and under which the parties could not waive the mediator’s entitlement not to give evidence in relation to the mediation. Here, the issue was resolved under the existing without prejudice rule and the mediator was not required to give evidence. The question of whether a distinct mediation privilege exists is one which will have to considered at a future date, by the courts or Parliament.