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Mediation Update - September 2005       © David Cornes        Republished with permission


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Confidentiality and Without Prejudice in Mediation


Judgment

Venture Investment Placement Limited -v- Hall  - High Court, Chancery Division, 16 May, 2005 - [2005] EWHC 1227 (Ch) - for the full Judgment click here


Question Quick Overview

In what circumstances, if any, can something said during mediation, alleged to amount to threats, be outside the cloak of without prejudice and confidentiality created by the mediation agreement?

Mediation proceedings have to be guarded with great care as to confidentiality. Was what took place here properly within the scope of the mediation or was it within the “unambiguous impropriety exception” as explained by Walker LJ in Unilever -v- Proctor and Gamble, [2000] WLR 2436? Such issues could not be decided at an interlocutory hearing, so an injunction to restrain disclosure was ordered, pending trial or further order.

The Detail  

It is well known that there are exceptions to the “without prejudice” rule. These include permitting evidence to be given of without prejudice negotiations:

  • To prove the existence of a concluded agreement;
  • Where there are allegations of misrepresentation, fraud or undue influence relating to the agreement;
  • Where there is an arguable estoppel;
  • To explain delay or acquiescence, and
  • If the exclusion of such evidence would be to act as a cloak for perjury, blackmail or other “unambiguous impropriety”. It is the latter with which the Court was concerned in this case.

During the course of the mediation there had been a one-to-one meeting between Mr Hall and his fiancée, on the one hand, and Mr Watts, the Chairman of Venture, on the other hand. There was a dispute as to precisely what was said at that meeting, which lasted for somewhere between 30 and 50 minutes.

Mr Hall, and his fiancée, signed statements for the police making allegations against Mr Watts. The police eventually interviewed Mr Watts briefly but nothing further was heard from them.

Venture submitted that the evidence showed that on three occasions Mr Hall had made statements to a Mr Smith and a Mr Gold, making allegations as to things that it was said Mr Watts had threatened to do to Mr Hall and his family. However, the Judge decided that there was a serious question to be tried as to what had taken place in the course of the mediation at the meeting between Mr Hall and Mr Watts.

Venture argued that an injunction should be granted to restrain possible future breaches of confidence. 

Judge Reid said:

“Mediation proceedings do have to be guarded with great care. The whole point of mediation proceedings is that the parties can be frank and open with each other, and that what is revealed in the course of the mediation proceedings is not to be used for or against either party in the litigation, if mediation proceedings fail... 

...The assertions made on behalf of [Venture] are that, in general, “without prejudice” discussions, of any form, are to be protected and are not to be allowed to be brought into the public arena. I was referred, in particular, to Unilever v Proctor & Gamble [2000] WLR 2436 and to the exceptions as to when “without prejudice” negotiations can be put before a court, set out in the judgment of Walker LJ (as he then was) at page 2444. What was said was that, in this instance, the allegations made related to something that took place in the course of a mediation meeting and was, therefore, covered by the banner of “without prejudice”, and the only exception that was being sought to be relied on was the unambiguous impropriety exception. Walker LJ said this about that exception:

“The following are among the most important instances, ie exceptions, for apart from any concluded contract or estoppel, one party may be allowed to give evidence of what the other said or wrote in without prejudice negotiations if the exclusion of the evidence would act as a cloak for perjury, blackmail or other "unambiguous impropriety" (the expression used by Hoffmann LJ in Foster v Friedland, November 10, 1992, CAT 1052). Examples (helpfully collected in Foskett's Law & Practice of Compromise, 4th ed., paragraphs 9-32) are two first-instance decisions, Finch v Wilson (May 8, 1987) and Hawick Jersey International v Caplan (The Times, March 11, 1988). This court has, in Foster v Friedland and Fazil-Alizadeh v Nikbin, 1993 CAT 205, warned that the exception should be applied only in the clearest cases of abuse of a privileged occasion.””

As to whether the court should deal with this issue on an interlocutory application, the Judge added:

“Turning now to the question: was this a genuine part of the mediation process? It seems to me that that cannot be a matter, which I resolve at this interlocutory stage. The issue before me is: can it properly be said that the exchange was part of the mediation process on (at any rate) one view of the facts? It seems to me that it can be so said. On the one hand, we have Mr Hall and his fiancée’s account of what occurred. On the other hand, we have Mr Watts’ account of what occurred. If Mr Watts’ account is accepted, then the material about which Mr Hall complains was material about which he cannot properly complain because, although Mr Watts was putting a macho face on it, it was something which could properly fall within the scope of hard bargaining in the course of a mediation. On the other hand, if Mr Hall’ s account is preferred then, clearly, it did not. That is something for trial and not for determination at this stage.”

An injunction was granted, until trial or further order, restraining Mr Hall from referring to or disclosing any part of the discussion that took place during the mediation.

 

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