When a tenant admitted in discussions with her landlord’s lawyers that she had been in arrears with the lease payments on her restaurant, the admissions were used to justify a claim for forfeiture of the lease by her landlord. However, she claimed that the discussions were ‘without prejudice’ and could not therefore be used in court proceedings by the landlord. Without prejudice disclosures are legally ‘privileged’ and cannot normally be required to be disclosed in formal legal proceedings.
Without prejudice discussions are often undertaken with a view to obtaining settlement of disputes and enable both sides to be more open and candid in discussions than they would be were everything discussed able to be used as evidence in court. Such discussions often enable disputes to be settled without having to litigate, or at least narrow the areas of dispute which need to be argued in court.
Whilst negotiations between the couple who had the restaurant and the lawyers acting for the landlord were ongoing, the couple had split up.
The wife attended a meeting with the lawyers on her own and without legal representation. She did not at any point request that the discussions be conducted on a without prejudice basis. When her admission that there had been arrears of rent was used as evidence as to why the landlord should be granted possession of the premises, the question arose as to whether her admissions were without prejudice or not.
The landlord’s lawyers argued that the purpose of the meeting had not been to reach a settlement but rather for her to find out what was happening as regards the proceedings. For a disclosure to be privileged, it must be made in discussions aimed at reaching a settlement of a dispute.
The without prejudice point was rejected by the judge at the first hearing dealing with the lease but accepted on appeal to the Court of Appeal, the Court asking what purpose the meeting could have served other than as an attempt to reach a settlement of the dispute.
The Court took the view that the dissection of privileged and non-privileged components of communications was unwarranted and that the existence of the without prejudice rule was based on a desire to achieve a just outcome.
The Court ruled that the initial issues would have to be retried without the privileged information being given in evidence.