About the Author
Carole Smith
Barrister
Carole is an experienced litigator, mediator and negotiator with a special interest in trusts (including relationship property disputes involving trusts) and estates. She is also interested in equitable areas of law, and how negotiation and/or mediation may be used to align with the underlying concept of fairness in equity.
23 www.nzdrc.co.nz
The defendants relied on an established exception to the WP rule, which provides that evidence of WP negotiations is admissible to show that an agreement apparently concluded between the parties during the negotiations should be set aside on the ground of misrepresentation, fraud or undue influence.
The court held that it would be “contrary to principle” if parties could rely on this exception to admit WP material into evidence to prove misrepresentation, fraud or undue influence, but could not admit such material to defend themselves against these allegations and uphold the agreement concluded between the parties. The WP material was therefore admissible under the established exception, or a “small and principled extension of it in the interests of justice”.
The decision acts as a reminder that the protection afforded by the WP rule is not absolute, and suggests that the fraud exception may extend further than previously understood.
Background
The underlying dispute concerns a fraud claim brought by Berkeley Square Holdings and others (the “Claimants”) against the manager of their London property portfolio (“Lancer”) and its directors and holding company (together the “Defendants”).
The Claimants allege that the Defendants were “complicit in a substantial fraud perpetrated on the Claimants by their own appointed representative” (the “Representative”), through an arrangement whereby Lancer’s management fees were significantly increased and part of those fees were paid to a company owned and controlled by the Representative. A major area of dispute between the parties is whether those payments were authorised by, and known to, the Claimants.
The High Court has held that statements made in a “without prejudice” (WP) mediation paper were admissible as they were to be used to rebut allegations of fraud, by showing that the claimants had known about, and approved, the transactions said to constitute the alleged fraud: Berkeley Square Holdings v Lancer Property Asset Management Ltd [2020] EWHC 1015 (Ch).
By Antonia Brindle
Case in Brief
ReSolution | Dec 2020
High Court finds "without prejudice" statements contained in mediation paper were admissible to defend against allegation of fraud