Whether joint without prejudice privilege attaches to first offer
The defendants wished to contest the claimants’ entitlement to its costs (following judgment in the claimants’ favour) and, in doing so, to refer to an exchange of letters marked “without prejudice” (but not, crucially, “without prejudice save as to costs”). It was suggested that these letters demonstrated a “certain attitude of mind on the part of the Claimants” towards settlement negotiations. The judge, Ian Purvis QC, doubted the relevance of the correspondence, given that it was already clear from the evidence that the claimants had never made any admissible offers and had not responded to Part 36 offers (which they went on to beat). However, the defendants did not question the relevance, but only the admissibility, of the letters.
Despite earlier caselaw to the contrary, the judge noted that it is now established that “without prejudice” negotiations are not generally admissible on the question of costs (as well as not being admissible on questions of liability). The defendants raised two arguments though:
- The privilege only applies to communications which are genuinely aimed at settlement and the claimants here had not made any genuine attempt to settle. That argument was rejected by the judge: “Once a party has made a without prejudice offer, the recipient of the offer is plainly free to make a without prejudice response” which “may be simply to reject the offer outright. He may even choose to ignore the offer completely. All those responses are protected by privilege”.
Nor could it be said that the initial “without prejudice” offer was not in fact subject to joint privilege at all, but rather to a unilateral privilege belonging to the writer of the letter. There was no authority to support that argument and, furthermore, it would mean that a failure to reply would never be protected because the writer of the first offer would be able to waive his privilege.
- Nor could it be argued that the claimants had impliedly waived privilege by making a claim to indemnity costs, since that claim was based on the defendants’, and not the claimants’, conduct in the litigation. The position would be different, though, had the claimants been seeking to rely on some aspect of the defendants’ conduct in the without prejudice discussions.