Rush & Tompkins Ltd v Greater London Council

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Bridge of Harwich,Lord Brandon of Oakbrook,Lord Griffiths,Lord Oliver of Aylmerton,Lord Goff of Chieveley
Judgment Date03 November 1988
Judgment citation (vLex)[1988] UKHL J1103-3
Date03 November 1988

[1988] UKHL J1103-3

House of Lords

Lord Bridge of Harwich

Lord Brandon of Oakbrook

Lord Griffiths

Lord Oliver of Aylmerton

Lord Goff of Chieveley

Rush & Tompkins Limited
(Appellants)
and
Greater London Council and Others
(Respondents)
Lord Bridge of Harwich

My Lords,

1

I have had the advantage of reading in draft the speech of my noble and learned friend Lord Griffiths. I agree with it and, for the reasons he gives, I would allow the appeal.

Lord Brandon of Oakbrook

My Lords,

2

For the reasons given by my noble and learned friend Lord Griffiths I would allow the appeal.

Lord Griffiths

My Lords,

3

This appeal raises a novel point on the right to discovery of documents. It arises out of a dispute under a building contract in the following circumstances. The appellants, Rush and Tompkins Ltd., entered into a building contract in December 1971 with the Greater London Council (G.L.C.) to build 639 dwellings on the Hanwell Estate in Ealing. In January 1973 Rush and Tompkins engaged the respondents, P. J. Carey Plant Hire (Oval) Limited, as sub-contractors to carry out ground works required under the main contract.

4

The completion of the contract was subject to much disruption and delay and between June 1976 and January 1979 Careys put in claims for loss and expense to Rush and Tompkins. Rush and Tompkins for their part maintained that they were entitled to be reimbursed by the G.L.C. in respect of these claims for loss and expense under the sub-contract. It appears that the G.L.C. would not agree Carey's claim and consequently Rush and Tompkins would not pay it. Eventually in order to resolve the deadlock Rush and Tompkins commenced proceedings in August 1979 against the G.L.C. as first defendant and Careys as second defendant in which they claimed an inquiry into the loss and expenses to which Careys were entitled under the sub-contract and a declaration that they were entitled to be reimbursed that sum by the G.L.C..

5

However, before these proceedings came to trial Rush and Tompkins entered into a compromise with the G.L.C. on 12 October 1981 in which Rush and Tompkins accepted the sum of £1,200,000 in settlement of all outstanding claims under the main contract. It was a term of this settlement that Rush and Tompkins would accept direct responsibility for all the subcontractors' claims. This settlement embraced matters which ranged far beyond those raised in the action with which this appeal is concerned. Rush and Tompkins then discontinued the action against the G.L.C..

6

The terms of this settlement were disclosed to Careys but the settlement did not show what valuation had been put upon Carey's claim in arriving at the global settlement of £1,200,000.

7

The action then went to sleep but eventually it awoke and Careys added a counterclaim to recover their loss and expense which they quantified at £150,582.86. In their statement of claim Rush and Tompkins had pleaded that the architect had withheld consent to the settlement of Carey's claim and that the G.L.C. had stated in writing that the claim did not exceed a value of approximately £10,000. So on the face of it the gap between the parties was very wide.

8

Careys, however, believed that in the negotiations between Rush and Tompkins and the G.L.C. documents must have come into existence which showed the basis upon which Carey's claim was valued for the purpose of the global settlement and they suspected that they might show that the figure was very much larger than the sum of £10,000 which had been alleged as the value of the claim in the statement of claim

9

Rush and Tompkins admit that there are such documents and that they relate to the issues in the action, presumably because they cast light on the value of Carey's claim, but they maintain that Careys are not entitled to discovery of these documents because they came into existence for the purpose of settling the claim with the G.L.C. and are thus protected from discovery by the "without prejudice rule."

10

Careys took out a summons for the specific discovery of this without prejudice correspondence but the official referee, Judge Esyr Lewis Q.C., accepted the argument of the main contractors and refused discovery. The Court of Appeal reversed his decision and ordered discovery of the without prejudice correspondence passing between Rush and Tompkins and the G.L.C. holding that the protection given by the without prejudice rule ceased once a settlement had been reached.

11

The "without prejudice rule" is a rule governing the admissibility of evidence and is founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a finish. It is nowhere more clearly expressed than in the judgment of Oliver L.J. in Cutts v. Head [1984] Ch. 290, 306:

"That the rule rests, at least in part, upon public policy is clear from many authorities, and the convenient starting point of the inquiry is the nature of the underlying policy. It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. They should, as it was expressed by Clauson J. In Scott Paper Co. v. Drayton Paper Works Ltd. (1927) 44 R.P.C. 151, 156, be encouraged fully and frankly to put their cards on the table. … The public policy justification, in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability."

12

The rule applies to exclude all negotiations genuinely aimed at settlement whether oral or in writing from being given in evidence. A competent solicitor will always head any negotiating correspondence "without prejudice" to make clear beyond doubt that in the event of the negotiations being unsuccessful they are not to be referred to at the subsequent trial. However, the application of the rule is not dependent upon the use of the phrase "without prejudice" and if it is clear from the surrounding circumstances that the parties were seeking to compromise the action, evidence of the content of those negotiations will, as a general rule, not be admissible at the trial and cannot be used to establish an admission or partial admission. I cannot therefore agree with the Court of Appeal that the problem in the present case should be resolved by a linguistic approach to the meaning of the phrase "without prejudice." I believe that the question has to be looked at more broadly and resolved by balancing two different public interests namely the public interest in promoting settlements and the public interest in full discovery between parties to litigation.

13

Nearly all the cases in which the scope of the without prejudice rule has been considered concern the admissibility of evidence at trial after negotiations have failed. In such circumstances no question of discovery arises because the parties are well aware of what passed between them in the negotiations. These cases show that the rule is not absolute and resort may be had to the without prejudice material for a variety of reasons when the justice of the case requires it. It is unnecessary to make any deep examination of these authorities to resolve the present appeal but they all illustrate the underlying purpose of the rule which is to protect a litigant from being embarrassed by any admission made purely in an attempt to achieve a settlement. Thus the without prejudice material will be admissible if the issue is whether or not the negotiations resulted in an agreed settlement, which is the point that Lindley L.J. was making in Walker v. Wilsher (1889) 23 Q.B.D. 335 and which was applied in Tomlin v. Standard Telephones and Cables Ltd. [1969] 1 W.L.R. 1378. The court will not permit the phrase to be used to exclude an act of bankruptcy: see In re Daintrey, Ex Parte Holt [1893] 2 Q.B. 116 nor to suppress a threat if an offer is not accepted: see Kitcat v. Sharp (1882) 48 L.T. 64. In certain circumstances the without prejudice correspondence may be looked at to determine a question of costs after judgment has been given: see Cutts v. Head [1904] Ch. 290. There is also authority for the proposition that the admission of an "independent fact" in no way connected with the merits of the cause is admissible even if made in the course of negotiations for a settlement. Thus an admission that a document was in the handwriting of one of the parties was received in evidence in Waldridge v. Kennison (1794) 1 Esp. 142. I regard this as an exceptional case and it should not be allowed to whittle down the protection given to the parties to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purpose of establishing a basis of compromise, admitting certain facts. If the compromise fails the admission of the facts made for the purpose of the compromise should not be held against the maker of the admission and should therefore not be received in evidence.

14

I cannot accept the view of the Court of Appeal that Walker v. Wilsher is authority for the proposition that if the negotiations succeed and a settlement is concluded the privilege goes, having served its purpose. In Walker v. Wilsher the Court of Appeal held...

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