Briggs & Ors v Clay & Ors

Factual and Procedural Background

This claim is brought by a number of participating employer partnerships and companies and the trustees of a pension scheme ("the Scheme") against Company A and the Claimants' previous lawyers for damages for professional negligence. Company A were the Scheme administrators and its professional advisors for many years. The claim follows a decision in separate Part 8 proceedings, in which it was held that various deeds prepared by Company A for the Scheme were invalidly executed and of no effect. The lawyers acted for the participating employers on the Part 8 claim and on the agreed compromise of the employers' appeal against that order.

Some of the ineffective deeds were intended to limit benefits accruing to members and so reduce the burden on the participating employers of financing the Scheme. Since these deeds were ineffective, the financial burden was not reduced as intended. Five other deeds, deeds of adherence, were intended to bind certain associated or service companies in the group as participating employers for the benefit of their employees. The effect of the court's decision on these deeds is a matter with which the current proceedings are concerned.

The potential invalidity of the deeds was first identified in 2010. Before the Part 8 proceedings were issued, the Claimants sent a pre-action letter to Company A alleging negligence. The trustees brought the Part 8 claim against the participating employers and representative beneficiaries of the Scheme to determine the validity of the deeds. It was clear that following this, the Claimants would seek to hold Company A liable for any loss resulting from defective execution of the deeds.

Following the judgment, there were without prejudice discussions between lawyers acting for the Claimants and Company A's lawyers regarding an appeal and the financial consequences of the judgment. Negotiations between the Claimants and the representative beneficiaries led to an Approved Settlement in October 2016, which broadly ensured members' benefits were not limited as they would have been if the deeds had been validly executed, and that employees of the associated and service companies were treated as members of the Scheme.

After the Approved Settlement and in the absence of agreement with Company A, the Claimants issued their claim form in October 2016, claiming compensation for losses arising from Company A's alleged breaches of duty.

The statements of case include allegations that 31 deeds related to the Scheme were invalidly executed due to defective drafting by Company A, that Company A failed to advise correctly on retrospective changes to benefits, and failed to notify the Claimants of defects earlier. Company A denied liability and asserted various defences, including estoppel and limitation, and denied owing a duty to participating employers.

Company A gave notice of intention to amend its Defence to raise a defence denying liability in respect of "additional benefits" for employees of associated or service companies, contending that negligence by the lawyers in failing to raise the Participating Employer Argument broke the chain of causation for any loss.

The Claimants added the lawyers as defendants, alleging their negligence in failing to raise the Participating Employer Argument and in failing to advise on structuring the Part 8 claim to bind Company A. The lawyers denied negligence and breaking the chain of causation.

Company A now seeks a determination that the fact and content of "without prejudice" correspondence and a meeting between lawyers acting for the Claimants and Company A are inadmissible in these proceedings. The lawyers contend they are entitled to rely on this material to demonstrate Company A's involvement in the negotiations.

Legal Issues Presented

1. Whether the fact and content of "without prejudice" communications between the Claimants and Company A are admissible in these proceedings.
2. Whether Company A has waived the privilege attaching to those without prejudice communications.
3. Whether an exception to the without prejudice rule, such as the Muller exception, applies to allow the use of these communications.
4. Whether the lawyers are entitled to rely on the without prejudice communications to address allegations of negligence and causation.
5. Whether the content or fact of the without prejudice communications can be used in assessing the contribution or apportionment of liability between Company A and the lawyers.

Arguments of the Parties

Lawyer Defendants' Arguments

• The without prejudice privilege has been impliedly waived by Company A through the allegations made against the lawyers and the intention to serve a contribution notice.
• The lawyers are entitled to rely on the correspondence and meeting by way of exception to the without prejudice rule to fairly address the allegations made against them.
• The Muller exception or a principled, incremental development thereof applies, allowing use of without prejudice communications to prove collateral facts such as the extent of Company A's involvement in negotiations.
• The lawyers do not seek to rely on the communications for the truth of admissions but to show Company A's involvement and opportunity to raise the Participating Employer Argument.
• The fact of without prejudice communications is admissible even if the content is not.
• Redaction of admissions or implied admissions could allow partial use of the communications.
• Company A's conduct in pleading their defence puts in issue matters relevant to the without prejudice communications, justifying their use.

Company A's Arguments

• Without prejudice privilege cannot be waived unilaterally; Company A has not waived privilege in the communications with the Claimants.
• The Muller exception does not apply in these proceedings where the communications sought to be admitted relate to the same claim being tried.
• There is no general exception to the without prejudice rule allowing use of communications to prove collateral facts connected with the subject matter of the claim.
• Admission of the communications would prejudice Company A's legitimate interest in confidential settlement negotiations.
• The content of the communications is not necessary to make issues justiciable; the fact of communications and open correspondence suffice.
• Redaction proposals are impractical and contrary to principle, as the communications cannot be neatly divided into separate categories.
• Company A did not deploy the content of the communications and has not put their content in issue.

Table of Precedents Cited

Court's Reasoning and Analysis

The court carefully examined the nature and scope of the without prejudice rule, its public policy foundation, and the limited exceptions recognized by case law. It acknowledged the importance of protecting parties' ability to negotiate settlements without fear that their statements will be used against them in litigation.

The court noted that waiver of without prejudice privilege cannot be unilateral and must be clearly established, which was not the case here. Although the Claimants waived privilege, Company A did not deploy or put the content of the communications in issue, and thus retained their privilege.

The court analyzed the Muller exception, which allows disclosure where a party puts the reasonableness of negotiations in issue in separate proceedings, and considered its application in this multi-party claim where the communications are sought to be admitted in the same proceedings. It concluded that the exception is not applicable here because Company A has a legitimate interest in maintaining confidentiality in ongoing litigation, and the communications relate directly to the claim before the court.

The court found that the lawyers, who acted on behalf of the Claimants in the negotiations, are bound by the implied agreement not to disclose the content of the without prejudice communications, as are the Claimants and Company A.

While the lawyers argued that the communications are necessary to address allegations of negligence and causation, the court held that the issues can be fairly tried without the content of the communications. Open correspondence and the fact of the communications suffice to prevent misleading the court.

The court rejected the proposal to redact the communications to separate admissible and inadmissible material, finding it impractical and contrary to principle, as the negotiations cannot be neatly divided.

However, the court accepted that the fact of the without prejudice communications is admissible where relevant to the issues, as this does not infringe the privilege protecting the content.

The court emphasized that any exception to the without prejudice rule must be principled, incremental, and narrowly construed to preserve the rule's policy objective. The broad exception sought by the lawyers would undermine the rule, especially in multi-party litigation where contribution claims are common.

Holding and Implications

The court declared that the fact and content of the without prejudice communications between Company A and the Claimants are protected by without prejudice privilege and are inadmissible as evidence in these proceedings.

The court permitted the fact of the without prejudice communications to be referred to where relevant but prohibited disclosure or reliance on their content. The lawyers acting for the Claimants are bound by the implied agreement of confidentiality and cannot deploy the communications' content.

This decision preserves the confidentiality of settlement negotiations in multi-party litigation and restricts the application of exceptions to the without prejudice rule, particularly rejecting a broad exception allowing use of such communications to apportion liability among co-defendants. No new precedent altering the scope of the without prejudice rule was established; rather, the court reaffirmed existing principles and applied them to the complex facts of this case.