DISCLOSING DETAILS OF COSTS INFORMATION PROVIDED FOR MEDIATION : DISCLOSURE ALLOWED: HIGH COURT DECISION
In Savings Advice Limited -v- EDF Energy Customers Ltd  EWHC B1 (Costs) Master Haworth had to consider the issue of admissibility of evidence relating to a mediation.
- Information provided about costs in the run up of a mediation was covered by the confidentiality clauses of a mediation agreement.
- However the claimant was allowed to give evidence of the defendant’s costs estimates. This was a matter of pure fact.
- Costs information in the form of statement of facts can be separated out from other documents and information in mediation and could be referred to in the assessment.
A case settled for £200,000 for each claimant. It settled early, after service of the Statements of Case and had not been budgeted. The bill of costs totalled £587,598.56. £255,963.88 of this related to insurance premiums. The sole issue for determination at the assessment related to the recoverability and quantum of the insurance premiums. The only issue on assessment was the amount of the premiums.
EVIDENCE IN RELATION TO A MEDIATION
A mediation took place. The claimants sought information from the defendant, when preparing for that mediation, of the amount of the defendant’s costs. This was said, expressly, to be for the purpose of calculating an insurance premium.
THE MEDIATION AGREEMENT
“15. All documents or other material (including any form of electronic record) produced for or brought into existence for the mediation will be subject to without prejudice or negotiation privilege and together with evidence of meetings and other oral proceedings in the mediation will be inadmissible as evidence and not be disclosable in any litigation or arbitration connected with the dispute so long as and to the extent that such privilege applies.
16. The Parties, their representatives and advisors and the Mediator agree in relation to all information statements whether written or oral disclosed or made to them in the mediation including any preliminary steps:
a) to keep them confidential (save only as may be required to report to the Court or an arbitrator or arbitrators whether or not has been resolved to professional advisors, HM Revenue and Customs, relevant regulatory bodies or as may be required by law)
b) not to use them for a purpose other than the mediation
c) that the obligation …………
d) that no notes taken by the parties or by the Mediator and no other evidence concerning the conduct of the mediation including oral submissions, oral statements, concessions or admissions of law or fact will be adduced in evidence in any subsequent proceedings in Court or before an Arbitrator or Arbitrators in connection with the Dispute (provided that if they would otherwise and independently of the Mediation have been admissible for such proceedings they should not be rendered inadmissible by reason of having been made during the course of the Mediation).”
THE CLAIMANT’S EVIDENCE
The claimant gave detailed evidence of how the premiums was calculated. The witness statement in support referred to figures provided by the defendant in the run up to the (unsuccessful) mediation.
THE DEFENDANT’S SUBMISSIONS
- Mr Kirby on behalf of the Defendant submitted that the evidence of Mr Philip Burbury in support of the calculation of the premiums and the explanation why the certificate provided by the Defendant’s solicitors that was deemed to be a refusal to provide a certified statement of Opponent’s Costs was inadmissible. Mr Burbury’s evidence in arriving at an approximation of the Defendant’s costs made use of various information including that provided to the Claimants for the purpose of mediation between the parties. The use by Mr Burbury of the information derived from documents within the mediation was contrary to the clear terms of the mediation agreement. The Claimants had no permission to divulge or refer to this privileged information and the Court should not permit that information to be used for the purpose of calculating the premium nor should the same be referred to in evidence. He further submitted that although the insurer (Burford) was not a party to the mediation, it could not ignore the fact that Mr Burbury was making a statement on behalf of the Claimants in relation to their costs. It was argued that even when the breach of confidentiality and privilege was pointed out to Mr Burbury he maintained his stance and did not pretend to be able to justify the figure or calculation of the premium without reference to the confidential information. Mr Kirby submitted that in those circumstances Mr Burbury’s evidence should not be admissible and the consequences were that the Claimants could not demonstrate that the premiums they seek to recover were reasonable in amount. Furthermore Mr Burbury’s conduct was such that it amounts to unreasonable conduct in the assessment proceedings, a consequence of which should be that the ATE premium elements of the Claimants’ costs should not be allowed pursuant to CPR 44.11
THE MASTER’S DECISION
The Master held that the evidence relating to the costs figures given by the defendant was admissible.
Admissibility of evidence
The first question that I have to decide is the admissibility of the evidence of Mr Philip Burbury in support of the calculation of the premiums including information that was provided to the Claimants for the purposes of the mediation between the parties. Were I to rule his evidence inadmissible, it would have a significant impact on the calculation of the multiplicand relating to the Opponent’s Costs.
Clause 15 of the Mediation Agreement signed by the parties on 29th May 2015 makes clear that “all documents or other material produced for or brought into existence for the mediation will be subject to without prejudice or negotiation privilege … not be disclosable in any litigation or arbitration connected with the dispute so long as and to the extent that such privilege applies“. The Defendant’s solicitors made clear their objection to the Claimants, and Mr Burford making use of privileged and confidential information in their letter dated 1st March 2016.
Ramsey J in Farm Assist Limited – v – Secretary of State for the Environment, Food and Rural Affairs  EWHC 1102 (TCC) at paragraph 44 stated:
“Therefore, in my judgment, the position as to confidentiality, privilege and the without prejudice principle in relation to mediation is generally as follows:
(1) Confidentiality: The proceedings are confidential both as between the parties and as between the parties and the mediator. As a result, even if the parties agree that matters can be referred to outside the mediation, the mediator can enforce the confidentiality provision. The court will generally uphold that confidentiality but where it is necessary in the interests of justice for evidence to be given of confidential matters, the Courts will order or permit that evidence to be given or produced.
(2) Without Prejudice Privilege: The proceedings are covered by without prejudice privilege. This is a privilege which exists as between the parties and is not a privilege of the mediator. The parties can waive that privilege.
(3) Other Privileges: If another privilege attaches to documents which are produced by a party and shown to a mediator, that party retains that privilege and it is not waived by disclosure to the mediator or by waiver of the without prejudice privilege.”
The fact that Mr Burbury states as he does in his second witness statement at paragraph 2 that Burford who was not a party to the Mediation Agreement cannot simply disregard information which suggests that the costs figures advanced by the Defendants were a distortion is, in my judgment, immaterial. In making that statement Mr Burbury ignores the fact that he is acting on behalf of the Claimants in their claim for costs. As such, absent waiver of privilege it was argued that the Claimants could not avoid their obligations of confidentiality and the privilege residing in the information and disclosure of that information is in breach of the Mediation Agreement irrespective of whether it is a third party making a statement in support of the Claimants’ costs.
I find as a fact that the information relied on by Mr Burbury and contained in the exchange of emails referred to in paragraphs 9-10, were documents produced for or brought into existence in relation to the proposed mediation. I also find as a fact that the statements referred to in the exchange of emails relating to the extent of the Defendant’s costs were purely factual.
In my judgment it is imperative that when parties enter into a formal mediation or informal negotiations for settlement of a claim that they do so in the full knowledge of their opponent’s costs. The amount of the costs of litigation condition any subsequent negotiations or mediation that may follow. Documents that are brought into existence for the purpose of a mediation or settlement in order to settle the substantive claim should in my judgment be treated as inadmissible in any subsequent litigation in accordance with the judgment of Ramsey J in Farm. It seems to me that “without prejudice privilege” exists to protect the disclosure of admissions or concessions made in negotiations, not to protect statements of pure fact. There is no suggestion in this case by the Defendant that Burford was supplied with the cost information in breach of contract. It is important to separate out the obligation of confidence from privilege. If the obligation of confidence is broken it may give rise to a remedy in other proceedings. However in my judgment it cannot be used to suppress relevant information in an assessment relating to the costs of the substantive claim. Use of confidential information for the purposes connected with the Mediation is permitted by virtue of Clause 16(d) of the Mediation Agreement. The documents referred to in the emails in paragraphs 9-10 headed “without prejudice save as to costs” illustrate in my judgment their admissibility for that purpose. It follows that the statement relating to the Defendant’s costs referred to in the email correspondence was a statement of pure fact and not protected by “without prejudice privilege”. I am reinforced in that view by Clause 16(d) of the Mediation Agreement which states:
“(d) That no notes taken by the parties ………… (provided that if they would otherwise and independently of the Mediation have been admissible in such proceedings they should not be rendered inadmissible by reason of having been made due in the course of the mediation).”
The whole purpose of the mediation was to achieve a settlement. In those circumstances any costs information given in mediation is and must be admissible in order to work out the consequence of any subsequent settlement. In that sense in my judgment, costs information in the form of statements of facts can be separated out from documents or other information that comes into the domain of either party for the purposes of negotiating a settlement of the substantive claim.
For those reasons I am satisfied that the evidence of Mr Burbury in both his first and second witness statements is admissible for the purposes of this assessment.”