Cumbria Waste Management Ltd and Lakeland Waste Management Ltd v Baines Wilson
| Jurisdiction | England & Wales |
| Judge | Frances Kirkham |
| Judgment Date | 16 April 2008 |
| Neutral Citation | [2008] EWHC 786 (QB) |
| Court | Queen's Bench Division |
| Date | 16 April 2008 |
[2008] EWHC 786 (QB)
IN THE HIGH COURT OF JUSTICE
BIRMINGHAM DISTRICT REGISTRY
MERCANTILE COURT
BIRMINGHAM CIVIL JUSTICE CENTRE
33 BULL STREET
BIRMINGHAM B4 6DS
Her Honour Judge Frances Kirkham sitting as a High Court Judge
Mr Cobill of Wragge & Co for the Claimants
Mr Mark Cannon of Counsel (instructed by Mayer Brown International LLP) for the Defendant
Mr Jonathan Acton Davis QC of Counsel (instructed by Eversheds LLP) for The Department for Environment, Food and Rural Affairs (DEFRA)
In issue is whether the defendant is entitled to disclosure of documents arising out of or in connection with two mediations between the claimants and the Department for Environment, Food and Rural Affairs (“DEFRA”) and which are not subject to legal professional privilege. DEFRA are not a party to these proceedings but have been invited to make representations pursuant to CPR 31.19(6)(b). They resist the making of an order for disclosure. The claimants do not resist the application. They take a neutral stance.
Background
The defendant acted as solicitors to the claimants in connection with the drafting and negotiation of an agreement between the claimants and DEFRA for the provision of waste management services during the foot and mouth epidemic in 2001. The claimants and DEFRA were in dispute as to the sums to be paid for the claimants' services. The first claimant claimed £4.54m and the second claimant £1.72m in respect of unpaid invoices and both claimed interest and costs. On 28 February 2005 that dispute was settled on payment by DEFRA of £3.9m to the first claimant and £1.4m to the second claimant.
The settlements between the claimants and DEFRA followed a series of without prejudice communications between the claimants' solicitors (Messrs Wragge & Co) and those for DEFRA (Messrs Eversheds) and two mediations. The first mediation took place in July 2004 and the second in February 2005.
The first and second claimants are now claiming from the defendant in the current proceedings the sums of £3.65m and £0.76m, being the alleged balance between the settlement monies paid by DEFRA and the claimants' total claims against DEFRA. The claimants allege that the dispute with DEFRA occurred entirely as a result of the defendant's negligence in relation to the negotiating, drafting and advising upon the terms of the agreement between the claimants and DEFRA. They contend that DEFRA's case in the dispute with the claimants was based upon ambiguities and inconsistencies in the drafting of the contract for which the defendant was responsible. The claimants say that, if the defendant had performed its obligations and ensured that the contract was clear and unambiguous and that it reflected what had been agreed between the parties and/or the claimants' instructions, the position taken by DEFRA on the construction of the contract would not have been possible.
The claimants allege that the settlement of the proceedings following the February 2005 mediation was in their best interests and reflected a reasonable and sensible compromise of the claims given, in particular, the ambiguity and lack of clarity in the contract.
The defendant's position is that it is for the claimants to prove that the settlement with DEFRA was reasonable and to prove what was the true cause of the settlement. The defendant's case is that the true construction of the contract was clear and that there was no reasonable basis for the contention advanced by DEFRA in the dispute with the claimants. If the claimants settled with DEFRA on the basis that there was a risk that the unmeritorious construction advanced by DEFRA would be upheld by the court, then that was an unreasonable basis for the claimants to settle. Further, if the claimants settled with DEFRA on the basis of concerns (whether legal or commercial) other than the construction of the contract, then the defendant cannot be held responsible for any shortfall between the settlement monies and the amounts invoiced by the claimants.
The parties have exchanged lists of documents. Pursuant to the guidance of the Court of Appeal in Muller v Lindsay & Mortimer [1996] 1 P.N.L.R.74, the claimants waived privilege in and disclosed without prejudice communications between Wragge & Co and Eversheds. They disclosed the existence of documents created in connection with the two mediations but did not show these to the defendant. They enquired of the mediators and DEFRA whether the documents could be shown to the defendant. DEFRA has refused its consent.
Mediation agreements
At the hearing of this application, expressly reserving its right to confidentiality and without waiving its claim to privilege, DEFRA produced copies of the agreements entered into by the claimants, DEFRA and the mediator in relation to each of the two mediations. Each agreement contains a confidentiality provision. The agreement for the first mediation, in July 2004, was on a CEDR form. Clause 6 provided:
“6. Each Party to the Mediation and all persons attending the Mediation will be bound by the confidentiality provisions of the Model Procedure (paragraphs 16 —20).”
Relevant provisions within the Model Procedure were:
“16. Every person involved in the Mediation will keep confidential and not use for any collateral or ulterior purpose all information (whether given orally, in writing or otherwise) arising out of, or in connection with, the Mediation, including the fact of any settlement and its terms, save for the fact that the mediation is to take place or has taken place.
17. All information (whether oral, in writing or otherwise) arising out of, or in connection with, at the Mediation will be without prejudice, privileged and not admissible as evidence or disclosable in any current or subsequent litigation or other proceedings whatsoever. This does not apply to any information which would in any event have been admissible or disclosable in any such proceedings.”
Similarly, the mediation agreement entered into by the claimants, DEFRA and the mediator for the February 2005 mediation contains the following confidentiality clause:
“6. Each Party in signing this Agreement is deemed to be agreeing to the confidentiality provisions of the Mediation Procedure on behalf of itself and all of its directors, officers, servants, agents and/or Representatives and all other persons present on behalf of that Party at the Mediation.”
When asked to consent to the release of all the documents arising out of or in connection with the mediation, Mr Willis, the mediator in the first mediation, took a neutral stance: it was a matter for the parties. On 7 February 2008, Miss Andrewartha, the mediator for the second mediation, wrote as follows:
“The Mediation Agreement of course subjects all matters associated with the mediation to confidentiality. I would be extremely reluctant to allow any inquiry into the proceedings that took place during the mediation. I would normally counsel against the parties agreeing to share such matters. However I view the privilege, ultimately, as being that of the parties and if you decided to waive privilege that may well be a matter for you. I would comment, though, that the request relates to 'all of the documents arising out of or in connection with the mediation'. That is a very wide category of documents indeed. It could include privileged material on your respective files. I do not believe that I have retained any notes but if I had it could be wide enough to encompass those. It could also cover your own notes of private meetings held during the course of the mediation.”
DEFRA's evidence
Mr Rabey is Director of Purchasing and Supply of DEFRA. He made a witness statement in relation to the defendant's application for disclosure. His evidence is that DEFRA are in dispute with other parties in relation to the 2001 foot and mouth epidemic or other disease outbreaks. If the documents are disclosed and if they become public during the course of hearings within these proceedings, that may provide information as to DEFRA's approach to disputes and resolution of these. That might lead to prejudice to DEFRA in such cases as may arise.
Issues
The defendant is facing a substantial claim. As the claimants have pleaded that the settlement was reasonable, particularly given the alleged ambiguity in the defendant's drafting, it would be unfair and unjust to the defendant if a confidentiality agreement between the claimants and DEFRA precluded inspection by the defendant of material documents. The claimants have chosen to bring these proceedings against the defendant and should not be entitled to hide behind a confidentiality agreement which they entered into voluntarily with a third-party (DEFRA) to preclude inspection of disclosable documents.
The defendant's case is that there is no principle of English law by which documents are protected from disclosure on inspection by reason of confidentiality alone. Without prejudice communications are confidential. The defendant does not challenge the proposition that the documents are prima facie protected from disclosure on the ground of privilege but contends that the claimants waived that privilege when they pleaded the reasonableness of the settlement with DEFRA. The defendant submits that the position here as to relevance is indistinguishable from that in Muller. In order to assess the reasonableness of the claimants' conduct, the defendant needs to know what that conduct was, including their conduct at the two mediations. Justice requires that the defendant be able to inspect the documents which are vital to understand the relevant conduct.
DEFRA's objection is...
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