A SCHEME SETTING UP COMPENSATION FOR VICTIMS IS NOT SUBJECT TO WITHOUT PREJUDICE PRIVILEGE

May 6, 2021 · by · in Civil evidence, Disclosure

There are many procedural issues considered in the judgment of TVZ & Ors v Manchester City Football Club Ltd [2021] EWHC 1179 (QB). Here I want to look at one – whether the trial judge should be informed of the existence of a compensation scheme set up by the defendant.

 

“it is clear that any privilege that the Defendant might have enjoyed in this regard has been lost because of the publicity that has been given to the scheme. The very fact that this material is in the public domain means, in my view, that any privilege that might once have existed, has been lost.”

THE CASE

The claimants all bring actions on the basis that they suffered abuse by the coach of youth football teams. The defendant admits that the abuse took place but denies vicarious liability.  The defendant applied for an order that certain information not be placed before the trial judge.  One of the matters that the defendant did not want to be disclosed was documents that showed the existence of a scheme it had set up to provide compensation to victims of sexual abuse. That scheme had been widely publicised, including on the defendant’s own website and was very much in the public domain.

THE SCHEME

The defendant had set up a Scheme whereby potential claimants were invoted to apply for compensation enclosing evidence that they had suffered abuse from the perpetrator. If it was accepted that applicants had been then a redress offer was made.

THE DEFENDANT’S APPLICATION THAT DETAILS OF THE SCHEME NOT BE DISCLOSED

The defendant applied for an order that the existence of the scheme not be disclosed to the trial judge.

 

(1) Admissibility of the Scheme. The Defendant submits that the trial judge, Lambert J, should not be informed of the existence of the Scheme, and should not be shown the Scheme documents. The Defendant also seeks excision of passing references to the Scheme in two witness statements filed on behalf of the Claimants. The Claimant disagrees, and submits that there is no reason why the existence of the scheme should be kept from the trial judge or why the Scheme documents should not be included in the hearing bundle.

 

THE JUDGE’S DECISION: THE SCHEME IS ADMISSIBLE AS EVIDENCE

The judge did not accept the defendant’s contentions.  Firstly the scheme was not subject to any of the rules relating to privilege, secondly the wide publicity the defendant had afforded the scheme meant that, if any privilege existed, it had been waived.

Discussion
    1. As I understand it, the form of privilege relied upon by the Defendant in support of the contention that the trial judge should not be told about the Scheme, or shown its Rules or FAQs, is without prejudice privilege. There is no wider type of privilege, of which I am aware, which has the effect of requiring that material should be withheld from the trial judge because it would be embarrassing to one of the parties in the case. The Defendant does not rely upon legal professional privilege.
    1. The key issue, therefore, is whether the Scheme and its documentation is protected by without prejudice privilege. It is necessary to approach this issue in two stages. First, in principle, does information about the existence of the Scheme, and its documentation, attract without prejudice privilege, and secondly, if so, has that privilege been lost (or waived) because the privileged material has been placed in the public domain by the Defendant? In my judgment, however, the extent to which the material has been made public is relevant to both stages of the analysis, because the degree of publicity that the party seeking to rely on without prejudice privilege has given to the material may affect the question as to whether the material is privileged in the first place, as well as the second question of whether the privilege has been lost.
    1. As for the first question, the nature of, and the policy behind, without prejudice privilege are well established. They are helpfully summarised in Phipson on Evidence, 19th Ed, at paragraph 24-13, as follows:
“24-13
Written or oral communications which are made for the purpose of a genuine attempt to compromise a dispute between the parties may generally not be admitted in evidence. The policy behind the rule has been described as follows:
“It is that parties should be encouraged as far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much a failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. They should … be encouraged fully and frankly to put their cards on the table … the public policy justification, in truth, essentially rests with the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the Court of trial as admissions on the question of liability.”
The juridical basis of the rule is part contract and part public policy. In part it depends upon the court implying an agreement by the parties to the effect that what is said in settlement negotiations will not subsequently be relied upon in court. But it cannot be wholly explained on this basis. The first letter passing between the parties marked “without prejudice” will be protected by without prejudice privilege even though it was unsolicited and thus there cannot be said to be any implied agreement between the parties. And the three party situation, where without prejudice letters written between A and B may be inadmissible in proceedings between A and C, has nothing to do with implied contract. It has been said that it cannot be explained purely on public policy either, as there is no public policy basis in refusing to let the judge see without prejudice material on issues of costs. It is relevant to have in mind the two different juridical bases as the circumstances in which without prejudice correspondence may be admissible may depend on which ground is engaged.”
    1. In the present case, there is no question of the claim of without prejudice privilege being underpinned by contract. The Claimants did not agree to take part in the Scheme or to negotiate with the Defendant under the auspices of the Scheme. The question, therefore, is whether without prejudice privilege applies because, as a matter of public policy, or the public interest, the existence and terms of the Scheme should be kept from the trial judge.
    1. In my judgment, in the circumstances that arise in this case, the answer is “no”. It is true, of course, that an unsolicited offer (the “first letter”) can, and often does, attract without prejudice privilege. The letter from Pinsent Masons to Bolt Burdon Kemp of 11 March 2019, inviting Bolt Burdon Kemp’s clients to take part in the Scheme was, in effect, a “first letter” inviting them to engage in negotiations. However, it is not always the case that a “first letter” enjoys without prejudice privilege. Sometimes, the party making the first approach wants to make an open offer. They may do so, for example, because they feel that an open offer, which can be placed before the trial judge, will increase the pressure on the Defendant. If an open offer is made, it does not attract without prejudice privilege. In my view, the question whether a “first offer” enjoys without prejudice privilege depends on all of the facts and circumstances.
    1. In this case, the facts and circumstances point towards the conclusion that the invitation to the Claimants to consider taking part in the Scheme was not intended to be without prejudice, and that there are no wider public policy or public interest considerations why the nature and terms of the Scheme should be treated as covered by without prejudice privilege. There is nothing in the text of the Scheme Rules or the FAQs to suggest that they were intended to be privileged or without prejudice. Indeed, clause 1.4 of the Scheme Rules states that a Redress Offer will be without prejudice save as to costs, but this carries with it the implication that the Scheme was not without prejudice from the outset. The letters to victims’ solicitors enclosing the Scheme Rule were not stated to be without prejudice. I accept Mr Kent QC’s submission that the absence of the words “without prejudice” in a document are not fatal to the argument that it is, in fact, without prejudice, but the factual background in which this correspondence was sent indicates that it was not sent without prejudice. If the sending of the Scheme Rules and the invitation to take part in the Scheme was an offer, or more accurately an invitation to treat, it was an open one.
    1. Moreover, from the very beginning, the Defendant took steps itself to make the existence of the Scheme public, and took no steps to prevent anyone who was provided with a copy of the Rules and FAQs from making them public. The existence of the Scheme was announced on the Defendant’s official website on 12 March 2019 and, at about the same time, the Defendant made a statement to the press about it. The Defendant made a further public statement about the Scheme on 17 March 2021, the day when the Mulcahy Review and Sheldon Reports were published.
    1. In this circumstances, in my view, the Defendant was making it clear that it was happy for the Scheme and its terms to be public and, indeed, that it suited the Defendant’s own interests to do so. This is the equivalent of a party to proceedings choosing to make an offer on an open basis rather than a without prejudice basis. Having done so, I do not think that there are considerations of public policy or the public interest which mean that the Defendant is entitled to withhold information about the Scheme from the trial judge. The fact that the announcement of the Scheme was part of an attempt at Alternative Dispute Resolution does not mean that the Scheme itself attracts without prejudice privilege. All open offers are a form of Alternative Dispute Resolution, and yet they are not protected by without prejudice privilege.
    1. In addition, it is impossible to know whether or not Lambert J already knows about the Scheme. She may well have come across it, given the wide publicity that has been given to it. By choosing to publicise the Scheme, the Defendant has assumed the risk that the trial judge might find out about it, and in those circumstances, I do not think that public policy supports the deletion of all references to the Scheme in evidence or the hearing bundle, just in case the judge is not already aware of it. Moreover, what would happen if, part-way through the trial, it turns out that, notwithstanding that it is not in the bundle, Lambert J is already aware of the Scheme? Does that mean that the trial would have to be abandoned, and then started again with a different judge, in the hope that she is unaware of the existence of the Scheme? That would be ridiculous, and very distressing and expensive for the Claimants.
    1. It is understandable that the Defendant is reluctant for the judge to be shown the terms of the Scheme and the FAQs. The Scheme was designed on the footing that compensation would be offered by the Defendant to those who were playing for certain teams, on the basis that those teams were MCFC Feeder or MCFC Related teams, and that compensation would be offered even in relation to abuse that took place in a period after the period when Bennell says that he ceased to be a local scout for the Defendant. Mr Counsell QC has made clear that the Claimants will argue that this runs counter to the position that the Defendant has taken in this litigation, both in terms of the extent (if any) of the connection between the Defendant and the youth teams, and in terms of the period during which Bennell had a connection, however, slight, with the Defendant.
    1. However, in my judgment, this does not give rise to a public policy reason why the existence and terms of the Scheme should be withheld from the trial judge, especially in light of the considerations that I have already referred to. In a normal case in which a party chooses to make an open “first offer”, this will leave open the possibility that the other party will try to exploit the existence of the offer at trial as an admission against interest. That does not mean that, as a matter of public policy, all “first offers” are automatically privileged, even if the party making the offer wishes it to be open. In any event, in my view, the prejudicial effect of knowledge on the part of the trial judge of the Scheme and its terms will be very limited, if there is any at all. The Scheme Rules and the FAQs make clear that the offers are not being made on the basis of admission of liability, and the Defendant itself has made clear that the aim, at least in part, is to compensate survivors without worrying about whether or not the Defendant is legally liable to the Claimants. It is clear, in my view, that part of the aim was to minimise adverse publicity for the Defendant club. The Scheme is not, on any view, an admission of liability by the Defendant, or a formal concession that the Defendant is legally liable for the abuse perpetrated by Bennell at the named Feeder and Related Clubs during the specified period. In my judgment, the chances of an experienced judge like Lambert J being prejudiced by the existence of the Scheme are effectively non-existent. She will decide the case on the basis of the evidence before her, not on the basis of any inferences to be drawn from the fact that the Defendant provided a compensation Scheme for Bennell’s victims. It is no doubt for this reason that the Schemes are given only very brief, and passing, mentions in two witness statements on behalf of the Claimants.
    1. For all of these reasons, I do not accept that the Scheme, its terms, or the FAQs are covered by without prejudice privilege.
    1. In any event, however, even if I am wrong about that, in my view it is clear that any privilege that the Defendant might have enjoyed in this regard has been lost because of the publicity that has been given to the scheme. The very fact that this material is in the public domain means, in my view, that any privilege that might once have existed, has been lost. It is a prerequisite to a claim to privilege that the document is confidential in the sense that it is not in the public domain: see Great Atlantic Insurance v Home Insurance Co. [1981] 1 WLR 529 (CA), at 537H, per Templeman LJ, Attorney-General v Guardian Newspapers (No 2) [1990] 1 AC 109 at 282, per Lord Goff; and Oxford Gene Technology v Affymetrix Inc (No 2) [2001] RPC 18 (CA), at paragraph 27, per Aldous LJ.
    1. In his oral submissions, Mr Kent QC said that the argument based on the Scheme being in the public domain misses the point, because the Defendant is not arguing that the Scheme is confidential, but is merely challenging the use of the Scheme in these proceedings. However, in my view this draws a distinction without a difference. In order successfully to challenge the use of the Scheme in these proceedings, the Defendant must persuade the Court that the Scheme and its documents are privileged and that this privilege has not been lost. The question whether the Scheme is in the public domain is of central importance to these issues. The position is all the clearer where it is the party which is seeking to rely on privilege which was responsible for putting the material in the public domain.
    1. Furthermore, the Defendant has consented to the waiver of any privilege it might have had. The Defendant chose, for its own purposes, to publicise the Scheme on its website, both in March 2019 and again in March 2021, and to make statements to the press about it. The Defendant has done nothing to keep the Scheme confidential. I do not accept the submission that the privilege, if it exists, should be preserved because the efforts of the Defendant to publicise the scheme were a necessary incident of the aim of making offers to victims of Bennell’s abuse. The publicity was not merely undertaken with a view to ensuring that as many victims as possible were made aware of the Scheme. It was also undertaken with a view to improving the Defendant’s public image by notifying the general public that the Defendant was voluntarily taking steps to compensate victims.
    1. However, the facts of this case do not fit neatly into the waiver of privilege principle. Where without prejudice privilege exists, waiver requires the consent of both parties. As I have said, the Defendant, by its actions, has waived privilege, and the Claimants also waive privilege. However, if, contrary to my view, the Scheme is privileged, the question arises if it is also privileged vis a vis other victims who are not Claimants in these proceedings but to whom the invitation to consider applying under the Scheme was made. The question would arise, therefore, as to whether these other potential Scheme Claimants would have to waive privilege (which they have not been asked to do). The very fact that this question would arise, if the Scheme attracted without prejudice privilege, serves to reinforce the conclusion that the Scheme was not privileged in the first place.
  1. For these reasons, I reject the Defendant’s application to withhold the Scheme and its terms and FAQs from Lambert J, and I reject its application to delete the two passing references to the Scheme in the witness statements filed on behalf of the Claimants.

 

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