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Lords bolster protection for 'without prejudice' negotiations


The House of Lords has confirmed that negotiations conducted on a 'without prejudice' basis should not be brought up in court unless under very unusual circumstances. The Lords confirmed that there was a good public policy reason for the protection.

When two people or organisations are in a legal dispute about an issue they may choose to try to settle it by discussing the issue 'without prejudice' to any court case. That means that concessions they make to the other person's position in an attempt to find a compromise cannot be used against them in court.

The Lords were ruling on a property dispute over whether a person had title to a piece of land or whether ownership passed to another person by virtue of their having lived on it for so long.

The Lords had to decide if a letter from the resident offering to buy the property from the owner 15 years previously was to be excluded from the hearings because it was protected as being a 'without prejudice' offer.

The Lords said that it should be excluded, and underlined that the protection is important if people are to be encouraged to settle disputes before they reach the courts.

"The court should be very slow to lift the umbrella unless the case for doing so is absolutely plain," said Lord Hope in his judgment. "If converting offers of compromise into admissions of acts prejudicial to the person making them were to be permitted no attempt to compromise a dispute could ever be made."

Lord Hope said that it is not appropriate when considering 'without prejudice' communications to try to weed out the parts that deserve protection and the parts that do not.

"To dissect out identifiable admissions and withhold protection from the rest of without prejudice communications would not only create huge practical difficulties but would be contrary to the underlying objective, founded partly in public policy and partly in the agreement of the parties, of giving protection to the parties so that they could speak freely about all issues in the litigation when seeking compromise," he said. "These comments show that this is not a situation in which arguments that resort to procedural or linguistic technicalities are appropriate."

"The essence of it lies in the nature of the protection that is given to parties when they are attempting to negotiate a compromise," said Lord Hope. "It is the ability to speak freely that indicates where the limits of the rule should lie."

"Far from being mechanistic, the rule is generous in its application. It recognises that unseen dangers may lurk behind things said or written during this period, and it removes the inhibiting effect that this may have in the interests of promoting attempts to achieve a settlement. It is not to be defeated by other considerations of public policy which may emerge later, such as those suggested in this case, that would deny them that protection," he said.

Lord Scott disagreed with the other Lords in his ruling, saying that the letter in question in the case was not a part of the current proceedings and negotiations so should not be protected as such.

"This case is important because the without prejudice rule is one of the most important protections for parties to any dispute," said John Mackenzie, a litigation specialist at Pinsent Masons, the law firm behind OUT-LAW.COM.

"Without that protection parties would not be willing to engage in a free flowing discussion about creative ways of finding a solution," he said. "This case is important because it reinforces the sanctity of this rule."

Mackenzie said, though, that while the Lords did strengthen the 'without prejudice' rule they also acknowledged that it is not absolute. It cannot, for example, be used to hide blackmail or perjury, they said.

"The court made it clear that not everything is protected by the 'without prejudice' tag," said Mackenzie. "Clear admissions of fact not connected with the settlement discussions may be admitted by the court and so parties still need to be careful about what is said in any settlement discussions."

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