Confidentiality and Liability
| Author | Stephen Walker/David Smith |
| Pages | 45-58 |
4.1 Introduction
The working definition of mediation in Chapter 1 describes mediation as a confidential process. In this chapter, we discuss how confidential it is.
Mediation is usually advertised to users as ‘confidential’. This is not entirely accurate in the sense that it is not absolutely confidential in all circumstances. It would perhaps be better to describe mediation as ‘at least as confidential as other confidential negotiations’. In an increasing number of jurisdictions there is now a statutory bar on evidence being given on the contents of a mediation and, often, on mediators being called to give evidence. For example, section 1119 of the California Evidence Code prohibits evidence being given in civil proceedings which is about the content or conduct of a mediation. However, no such legislation has been enacted in England and Wales, despite the urging of mediation providers and mediators, and so confidentiality relies on common law and contractual provisions. In England and Wales, confidentiality in mediation is largely if not entirely created due to the link between mediation and the ‘without prejudice’ rule. Its use is both a strength and a weakness of mediation in relation to confidentiality.
4.2 Without prejudice rule
4.2.1 Public policy grounds
The briefest description of the rule is that it ‘applies to exclude all negotiations genuinely aimed at settlement ... from being given in evidence’ (Rush & Tompkins Ltd v Greater London Council [1988] UKHL 7 at [740]). The central reasoning is that:
there is a clear public interest in encouraging parties to settle their disputes without resort to litigation and [they] should not be discouraged by the knowledge that anything that is said in the course of such negotiations ... may be used to their prejudice in the course of proceedings
(Cutts v Head [1983] EWCA Civ 8 at [605])
46 Advising and Representing Clients at Mediation
It is designed to prevent ‘a litigant from being embarrassed by any admission made purely in an attempt to achieve settlement’ (Rush & Tompkins Ltd at [740]).
In some circumstances, however, the rule’s veil of confidentiality can be lifted or pierced. The most common reason for this is where the communication that is alleged to be without prejudice has a relevance outside the dispute which it is intended to cover because the communication was not made ‘in an attempt to achieve settlement’. For example, if Albert and Bill are arguing about whether Albert has supplied Bill with defective goods, then without prejudice communication is not admissible in relation to admissions or denials about that dispute. However, if during that communication Albert admits to a breach of a totally different agreement between him and Bill, then the communication is admissible in respect of the second breach because the without prejudice privilege extends solely to admissions made in relation to the original dispute over the defective goods and not in relation to other matters. Equally, if in the without prejudice communications they agree to settle the dispute by Albert paying Bill £5,000, then that communication is not admissible in respect of any supposed admission about the goods but it is admissible as evidence of a separate contractual agreement to settle the dispute for money.
4.2.2 Contractual grounds
The second, and slightly inconsistent, aspect of the rule rests on the express or tacit understanding of the parties that what was said was to be without prejudice to the position taken and the courts are reluctant to interfere with that agreement (Rabin v Mendoza & Co [1954] 1 All ER 247 at p 248). Essentially, there is held to be a contractual form to this manifestation of the without prejudice rule. Where that contractual form is broadly drawn, the without prejudice rule can operate more widely than it might do on public policy grounds and may well act to preclude reference to anything in the correspondence concerned, provided that the contractual basis is not being used for an improper purpose. So a party who has formed a clear agreement on which the other party has relied will be prevented by estoppel from breaking that agreement and the court will not permit the contractual aspect of the without prejudice rule to prevent the court from dealing with it (Hodgkinson & Corby Ltd v Wards Mobility Services Ltd [1997] FSR 178 at pp 190–191). So to return to the example of Albert and Bill above, if the correspondence between them was marked ‘without prejudice’, then the admission as to a second breach might not be admissible in evidence in a further dispute about that second breach because the contractual agreement that the correspondence would be
without prejudice would normally be seen as extending to all admissions as to contracts and disputes over them between the parties. However, if there was a dispute as to whether an agreement had been reached, then the documents would remain admissible because, in that context, the party trying to avoid disclosure would be relying on the without prejudice protection for an improper purpose. In other words, the without prejudice rule cannot be used to conceal the evidence that a specific agreement has been reached. This can be important to mediation in that an otherwise confidential mediation can be brought before the courts if there is doubt whether an agreement was reached in it.
4.2.3 Summary
In summary, and following the best modern statement of the rule as made in Unilever Plc v Procter & Gamble Co [1999] EWCA Civ 3027 at [35], the without prejudice rule ‘is founded partly in public policy and partly in the agreement of the parties’. The authorities ‘show that the protection of admissions against interest is the most important practical effect of the rule’. Therefore, the aim is to allow free expression of the parties in negotiations without the need to ‘constantly monitor every sentence, with lawyers or patent agents sitting at their shoulders as minders’ (at [36]). This is a key point for mediation. It is this manifestation of the rule as a means of allowing free expression during negotiation that allows for the negotiation in mediation to be protected, and the Court of Appeal has been clear that mediation is a form of negotiation that should be protected by the rule (see Aird & Anor v Prime Meridian Ltd [2006] EWHC 2338 (TCC) at [5]).
4.2.4 Without prejudice in Scotland
Scotland does not have a true equivalent to the without prejudice rule in England. In Daks Simpson Group plc v Kuiper [1994] SLT 689, the Outer House of the Court of Session held that while the without prejudice rule did apply to negotiations it could not apply to admissions of fact. Therefore, a distinction is drawn in Scotland between proposals and concessions which are directed towards settling the dispute and specific admissions of wrongdoing or statements of facts. The latter are not protected and are admissible. This means that in a mediation in Scotland it is not safe to make any form of admission, whether in writing or orally, that any aspect of the facts put forward by the other party might be correct as this can be used in court. However, it is safe to state that despite not agreeing with the arguments being put forward by the other side, one is prepared to pay a sum of money or carry out certain actions in order...
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