PROTECTION OF ADMISSIONS IN SETTLEMENT DISCUSSIONS Omar Qureshi and Kushal Gandhi
Settlement discussions regarding disputes are protected from disclosure by ‘without prejudice’ privilege. The rule applies to exclude from being given in evidence all negotiations genuinely aimed at settlement, whether oral or in writing. It also protects against disclosure of admissions made by one party during the course of the settlement discussions. The privilege is founded on the public policy of encouraging litigants to settle their differences rather than litigate them to a finish.
In the recent decision in Sang Kook Suh and anr v Mace (UK) Limited, the Court of Appeal has confirmed that admissions made in a meeting with the other side’s lawyer should not have been disclosed to the court during trial. The decision illustrates the breadth of ‘without prejudice’ privilege and the English court’s wide application of the rule.
Background
The case related to forfeiture of a lease by the Defendant, Mace (UK) Limited, of restaurant premises it had leased to the Claimants, Mr and Mrs Suh. Mr and Mrs Suh claimed against Mace for wrongful forfeiture of the lease. A key issue in the case was whether there had been rent arrears justifying the forfeiture.
While the proceedings were ongoing, Mr and Mrs Suh separated. Mrs Suh subsequently met with Mace’s lawyer to discuss the case; she was not separately represented at that meeting. During the course of that meeting Mrs Suh admitted that there had been rent arrears. Mace sought to submit in the proceedings its lawyer’s statement setting out her discussion with Mrs Suh as evidence of its right to forfeit the lease. Initially, Mace made an application for directions concerning this evidence, but did not specifically refer to the possibility that the evidence might be privileged. Mr and Mrs Suh’s advisers did not immediately raise a privilege argument, instead arguing that the matter would best be determined by the trial judge at the beginning of trial. However, at trial Mrs Suh sought to rely on the ‘without prejudice’ rule to argue that Mace should not be entitled to admit evidence in relation to her meeting with Mace’s lawyer and sought to retract the admission.
Mace argued that Mrs Suh should not be entitled to rely on ‘without prejudice’ privilege because:
(a) the purpose of her meeting with Mace’s lawyer was not to negotiate a settlement; Mrs Suh had visited Mace’s lawyer to find out what was happening on the case rather to discuss a settlement of it;
(b) even if the meeting was prima facie without prejudice, the cloak of privilege should be denied because it was being used for perjury or unambiguous impropriety; and