High Court confirms need for clear indication of shifting from “without prejudice” to “open” communications

The High Court ruled that the protection attached to an e-mail string marked “without prejudice” extended to a subsequent e-mail even if it was not so labeled. The last email was clearly a follow-up to previous emails seeking to resolve a dispute and there was no clear indication that the sender wanted to move to “open” communications. As a result, the recipient’s non-response to this email was similarly protected and could not be invoked: Jones vs. Lydon [2021] EWHC 2322 (Ch).

The court also rejected an argument that parts of the no-prejudice emails did not fall under privilege because the issue they were dealing with was separate from the dispute being negotiated. Just as the court will generally not dissect settlement communications to distinguish between actual admissions / offers and other documents, it will only be in the clearest cases that it will allow dissection to separate unrelated parts. with settlement negotiations.

The ruling is a useful reminder to those engaged in settlement discussions of the need to clarify whether they wish their stated position on an issue to be “open” and be able to be invoked afterwards. Ideally, this would be set out in a separate “open” communication that does not refer to previous protected discussions.

Background

The underlying dispute revolved around whether an agreement reached in 1998 between the members of the Sex Pistols group was still in effect so as to force the first defendant, Mr Lydon (Johnny Rotten), to accept a vote. majority of the other members like to authorize or not the use of the music of the group in an upcoming television series. The other band members and Mr. Button, the legal trustee of the Sid Vicious estate, wished to authorize such use.

The Group Membership Agreement (BMA) included an express provision allowing the majority of members to bind the minority as to the advisability of accepting any proposal to exploit the intellectual property rights of the group. The plaintiffs requested a declaratory measure and an injunction to enforce the BMA for this purpose.

Mr Lydon said the parties had always acted on the basis that any operating proposal required unanimous agreement and that the BMA had no contrary operational effect.

He sought to rely on a chain of emails between the parties and their representatives, in a dispute between them in 2014 over the sharing of proceeds from a T-Mobile ad, and the inability from Mr. Button to reply to the last e-mail in the chain. , as the basis of an estoppel argument. All emails were marked “without prejudice” except the last one in the chain (“unmarked email”).

The other parties argued that the entire email chain, as well as the non-response to the untagged email, was part of the settlement discussions and was non-prejudicial and inadmissible.

As the case had been scheduled for an expeditious trial, the matter-less status dispute was decided during the trial by the trial judge, with the decision rendered in a separate judgment. This article deals only with this question of admissibility.

Decision

The High Court (Sir Anthony Mann) held that all material was protected by the rule without prejudice and could not be relied on.

Dissection

Mr Lydon argued that some parts of emails marked without prejudice could not be properly covered by this protection because they dealt with a topic that was not part of the dispute being negotiated. He argued that the discussion of how the parties should consult with each other in the future on any future business proposal was separate from the controversial question of how the T-Mobile advertising proceeds (and associated costs) should. be distributed.

The judge was prepared to presume, for the purposes of this argument, that it is possible that part of an otherwise protected document could be excluded from protection on the basis that it had nothing to do with settlement negotiations. . However, that would only be in one particular case, where it was clear that a separate topic was being dealt with. The court in Unilever plc v Proctor and Gamble Co [2000] 1 WLR 2436 cautioned that courts should not easily and without special reason seek to dissect a document without prejudice into privileged and non-privileged parts. It would undermine one of the key purposes of the without prejudice rule (allowing parties to express themselves freely when trying to resolve their differences) if they were to monitor their every sentence.

In this case, the tribunal was convinced that the issue of a future consultation regime was not a separate subject but an offshoot of the original complaint and part of the overall dispute that the parties were attempting to resolve. This content has therefore been included in the protection.

The unmarked email

The last unmarked email in the chain was from My Lydon’s legal representative, Mr. Grower, to Mr. Button. This was in response to an earlier (tagged) email from Mr Button in which he attached a copy of the BMA and claimed that he conclusively established the correctness of the Rules of the Law argument. majority. In response, Mr Grower raised a number of issues challenging the status of the BMA, said that “the agreement has nothing to do with this issue because in the past consents are always given unanimously” , and asserted that the other parties were legally foreclosed from now challenging this proceeding.

The tribunal noted that it is well established that once a properly constituted non-prejudice negotiation has begun (which was not in dispute here), it continues on that basis until an intention to deviating from it is clearly marked. It is not open to a party to suddenly change the negotiation into an open negotiation without it being very clear.

The judge found that the unmarked email clearly followed the previous chain of emails and was part of the same discussion. It was specifically stated in response to Mr. Button’s email and dealt with the same subject as the previous discussion.

The only reason to assume that the email could be an open response would be the absence of the “magic words” in the subject line. In the court’s opinion, this was “by no means sufficient to take this letter off the line without prejudice given the clarity that must be demonstrated to achieve this.” If Mr. Grower was serious about opening the letter, he should have done more to report the problem. “

Without prejudice and silence

The plaintiffs argued that Mr. Button’s non-response to Mr. Grower’s unmarked email was also protected and could not be relied on.

The judge referred to judicial diktats confirming that the protection afforded to anything that is said during settlement negotiations includes as much the failure to respond to an offer as it does an actual response. He considered that while Mr. Grower’s email was not an offer to resolve the dispute, it was a firm position taken in the negotiations and was analogous to an offer for such purposes. Non-response was therefore protected in the same way: “… there is no reason why a silence should be treated differently from an offer compared to something else”.

Exception of estoppel

There are a number of exceptions to the without prejudice rule, including where a clear and unambiguous statement is made by one party during discussions that the other party is expected to act on and is in fact acting to their detriment. Such a declaration may be admissible as giving rise to an estoppel. The court considered whether Mr. Button’s non-response to the unmarked email could be claimed under this exception.

The judge mentioned Berkeley Square Holdings v Lancer Property Asset Management [2020] EWHC 1015 (Ch), in which Roth J concluded that a party’s silence in the face of statements made in a without prejudice mediation was a far cry from the “clear and unambiguous statement” required to found an estoppel. He said: “Extending this exception to implied representation by silence would in my opinion undermine the policy served by the WP Rule, as parties seeking to compromise a dispute would then have to be careful to challenge in negotiations any statement made by the other side, which is not an approach conducive to an open and constructive discussion.

Likewise, in the present case, the judge held that Mr. Button’s silence was not at all a clear and unambiguous statement, much less a statement on which Mr. Grower and his client My Lydon were supposed to be ‘to lean on. Therefore, the estoppel exception did not apply.

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