The defendant appealed from a decision requiring him to disclose documents which he said were held on a without prejudice basis. Mr Halborg, a solicitor, acted for his parents and a family company under a conditional fee agreement on their claim against a firm of architects, Savage Hayward. Mr Halborg engaged EMW Law to assist him under an agency arrangement which itself incorporated a CFA in that it provided that EMW would be paid only fees which Mr Halborg or the Halborg claimants had recovered from Savage Hayward. The proceedings against Savage Hayward were settled on terms under which they were liable to pay the Halborg claimants’ costs. When it appeared that Mr Halborg had failed to recover anything in respect of its fees, EMW sued him for breach of implied terms of the agency agreement that he would take all reasonable measures to recover its fees.
A significant issue was whether Mr Halborg had made all reasonable efforts to recover EMW’s costs in his negotiations on costs with Savage Hayward’s solicitors (BMW) and, indeed whether the costs had finally been settled (which Mr Halborg disputed). Mr Halborg sought to withhold, as covered by the WP rule, disclosure of correspondence and notes of communications with BMW relating to those negotiations (referred to as the ‘Class A Documents’).
In his judgment, Newey J (as he then was), after discussing the criticism of the reasoning in Muller, said that he should proceed on the basis that there was an exception which encompasses the facts of the Muller case. He held that the documents should be disclosed, stating, at [64]:
‘ . . I have concluded that, to echo Lord Walker in Ofulue v Bossert and Lord Clarke in the Oceanbulk case, justice clearly demands that an exception to the without prejudice rule (whether that encompassing the facts of the Muller case or another, comparable, exception) should apply . . .’
Newey J set out a number of factors which supported that conclusion, of which three seem to me particularly relevant for the present case. He noted that Mr Halborg had referred in his defence to the negotiations with BMW, and further:
‘iv) It is hard to see how EMW’s claim would be justiciable without disclosure of Class A Documents. EMW and the Court would both, on the face of it, be in the dark as to, for example, what any payments Savage Hayward have made related to, how they came to be made on that basis, why nothing has been paid in respect of other items of costs and, should it prove to be the case that no settlement has been concluded, why not;
v) I see no likelihood that recognising that an exception to the without prejudice rule applies would deter parties from seeking to settle. Those undertaking negotiations will, if well informed, already be aware that the without prejudice rule will not apply if there is a dispute about whether they have reached agreement and that the facts of the Muller case have been held to fall within another exception. The existence of the Muller exception, moreover, means that communications otherwise protected by the without prejudice rule may become disclosable and admissible because the other party to negotiations unilaterally chooses, for reasons of his own, to put forward a case about the negotiations in litigation with a third party; . . ‘
Judges:
Newey J
Citations:
[2017] EWHC 1014 (Ch)
Links:
Jurisdiction:
England and Wales
Citing:
See Also – EMW Law Llp v Halborg ChD 22-May-2015
. .
Cited by:
Cited – Briggs and Others v Clay and Others ChD 25-Feb-2019
Defendants’ application to exclude evidence said to be ‘without prejudice’ The case concerned a pension scheme for employees within a group of companies. In a prior action by way of a Part 8 claim brought by the trustees of the scheme, the court had . .
Lists of cited by and citing cases may be incomplete.
Litigation Practice, Evidence
Updated: 23 November 2022; Ref: scu.583683
