Whether a communication was protected by without prejudice privilege
It is a well-established principle of English law that the “first shot” in settlement negotiations will be protected by without prejudice privilege (even though it might be said that, at that point, negotiations are not yet under way). In this case, the defendants sent a letter headed “potential claims” to the claimants, and attached a “preliminary draft complaint”. The defendants declined to negotiate and a year later a complaint was filed in a New York court.
Blair J held that the issue of whether the document is privileged is to be determined by English, and not New York, law. The claimants argued that the draft complaint was not privileged, but was instead a letter before action. Blair J rejected that argument.
He held that it did not matter that the draft complaint was materially different from the eventual complaint. The fact that statements made in negotiations are inconsistent with a party’s case is not a reason for admitting them in evidence. The judge also confirmed the principle that all parts of negotiating correspondence may attract privilege, even if they contain no specific offer or concession.
Here, the draft complaint was sent in advance of initiating litigation, in order to provide an opportunity for the parties to resolve their dispute by negotiation instead. It was therefore the “first shot” in settlement negotiations and hence was privileged.