CANAL TRUST’S ATTEMPTS TO BARGE OVER WITHOUT PREJUDICE RULE IS SUNK WITHOUT TRACE: NO WATERING DOWN OF THE PRINCIPLES
Can a party refer to without prejudice correspondence at interlocutory hearings? The previous post looked at the judgment of Chief Master Marsh in Ravenscroft -v- Canal & River Trust  EWHC 2282 (Ch) in relation to the issue of McKenzie friends. That judgment also considered the circumstances where a party could use without prejudice litigation.
“However, it seems to me that there is no general exception to the exclusionary rule where without prejudice communications are referred to only for the purposes of an interlocutory hearing. Such exceptions to the exclusionary rule as there may be should be kept closely confined to prevent an undesirable watering down to the protection provided to without prejudice communications which fulfil an important role in aiding parties to negotiate freely without the fear of concessions being used against them in the course of litigation, but before the trial of the claim.”
- There was no exception which allowed without prejudice correspondence to be referred to in interlocutory hearings.
- The exceptions that existed to the without prejudice rule should be kept closely confined.
The Canal and River Trust were objecting to a particular McKenzie friend being used by the claimant. As part of their argument they attempted to rely on a piece of without prejudice correspondence.
THE MASTER’S JUDGMENT
The CRT also seeks to rely upon a short extract from without prejudice communications between Mr Moore and the CRT relating to this claim. The communication arose in the course of negotiations seeking terms of settlement and they are undoubtedly subject to with prejudice privilege. Having heard submissions on this point, the extract I was asked to consider was handed up on the basis that if I concluded that it should not be taken into account I would disregard it. Although Mr Ravenscroft, through Mr Moore, said he had no objection to the court considering the without prejudice communication, his agreement to this course of action was conditional upon the court considering all of the without prejudice communications. That was not the approach the CRT wished to adopt and, therefore, I treated the application as being opposed.
Mr Stoner QC submitted that, relying upon the analysis of the principles which underpin without prejudice privilege, as explained by Clarke LJ inSomatra Ltd –v- Sinclair Roche & Temperley  1WLR 2453, the court is permitted to have regard to statements made in without prejudice communications for the purposes of interlocutory hearings. This, he says, does not infringe the public policy requirement that admissions made in without prejudice communications may not be used for the purposes of a trial.
The facts in Somatra Ltd –v- Sinclair Roche & Temperley are some considerable distance from the present case. There was a dispute between the claimant and the defendant firm of solicitors concerning their fees and there were a number of without prejudice meetings and telephone calls between them. At an ex-parte application for a freezing injunction, the solicitors relied on the content of the without prejudice discussion in an attempt to expose the weaknesses of the claimant’s case. The application which was considered by the Court of Appeal concerned whether the solicitors could be ordered to disclose all the documents relating to or arising from the without prejudice discussions on the basis that the solicitors were no longer entitled to rely on the fact that they were without prejudice. The case therefore concerned whether or not there was an entitlement to rely on without prejudice communications at the trial of the claim where they had been deployed on an ex-parte application for a freezing order. The considerations which will apply on such an application, which brings with it a duty to ensure that the court is given all relevant information, is clearly rather different to there being a free standing right to deploy without prejudice correspondence for the purposes of an interlocutory hearing.
Having summarised the relevant legal principles  to  Clark LJ went onto consider whether the principles which restrict a party from relying upon without prejudice material at a trial also apply at an interlocutory application. He referred to the decision of the Court of Appeal in Family Housing Association (Manchester) Ltd v Michael Hyde and Partners  1 WLR 354. In that case the Plaintiffs filed evidence of the contents of without prejudice negotiations in order to resist an application by the Defendants to strike out the action for want of prosecution. The Court of Appeal in the Family Housing Association case considered that reliance upon such without prejudice communications did not infringe, in those particular circumstances, the public policy in favour of exclusion. Hirst LJ described those circumstances as a “narrow context”.
“The infringement in the present case is that Sinclair’s opened up issues on the merits which will be the very questions to be determined by the trial judge. It seems to me that no party who has taken part in without prejudice discussions should be entitled to use them to his advantage on the merits of the case in one context, but then assert a right to prevent its opponent from doing so on the merits at the trial.”
The outcome in that case is perhaps unsurprising given that the solicitors had relied upon the without prejudice communications at the outset of the claim when seeking a freezing order. It would have been unattractive for them to have been able to prevent the same without prejudice communications from being relied upon by other parties at the trial of the claim. Nevertheless there are very real difficulties for an applicant making an ex-parte application in relation to which there may be without prejudice communications which are potentially relevant. Be that as it may, I do not see that the decision in Sumatra Ltd v Sinclair Roche v Temperley provides any support for the application made by Mr Stoner QC. There appears to be an exception to the general principle, which prevents reliance on prejudice communications, where a party seeks to explain the passage of time by reference to without prejudice negotiations based upon the decision in Family Housing Association v Michael Hyde and Partners. What the CRT is seeking to do here is to cherry-pick from one communication made in the course of a series of without prejudice communications for the purposes of opposing Mr Ravenscroft’s application to permit Mr Moore to act as a McKenzie Friend. The boundaries of the exclusionary aspect of the without prejudice rule are not entirely clear. However, it seems to me that there is no general exception to the exclusionary rule where without prejudice communications are referred to only for the purposes of an interlocutory hearing. Such exceptions to the exclusionary rule as there may be should be kept closely confined to prevent an undesirable watering down to the protection provided to without prejudice communications which fulfil an important role in aiding parties to negotiate freely without the fear of concessions being used against them in the course of litigation, but before the trial of the claim. I am satisfied that there is no basis for permitting the CRT to rely upon an extract of a communication from Mr Moore in the course of early negotiations in this claim and I shall not have regard to it.