Without prejudice protection - Peter Phillippo Date Judgment The Issue 22 November 2006 Aird v Prime Meridian Limited,

19 September 2006, TCC. The use of without prejudice protection to prevent the use of mediation documents in subsequent litigation.

Implication In general, expert joint statements prepared by order of the court, would not be the subject of without prejudice protection. However, in circumstances where the documents are prepared solely for the purposes of mediation, then they may attract without prejudice protection and be inadmissible in subsequent proceedings.

The benefits of mediation are now widely appreciated and in recent years, the process has proved an extremely effective method of resolving differences without the cost and disruption of a lengthy trial. In certain circumstances mediation can be a successful adjunct to on-going court proceedings. The preparation of a case for trial, and the judges case management, can reach a stage when the parties have sufficient information about their respective positions to give mediation a good prospect of success. However, in some instances, care is needed to ensure that the processes of litigation and mediation are kept separate; otherwise disputes may arise over the extent and effect of particular orders of the court. The recent case of Aird v Prime Meridian illustrates the potential for conflict when the status of certain documents, prepared by order of the court, are used for the purpose of mediation. By an order of the court HHJ Judge Thornton QC stayed a court action between Aird and Prime Meridian to allow the parties time to mediate. He also ordered that the parties architectural experts meet and prepare a statement of the issues upon which they are agreed and those upon which they are not agreed with a brief statement of the reasons for the disagreement. The experts duly complied with the order and signed a statement of their agreements and disagreements. The mediation failed and the litigation recommenced. Aird sought to amend its pleadings in a way that was apparently inconsistent with the views expressed by its expert in the statement. Meridian objected to those amendments. Aird claimed that, since the statement had been produced for the mediation, it was a without prejudice document, the contents were privileged and no reference could be made to it. Prime Meridian sought a declaration that the statement was not a without prejudice document, and that it could be referred to in the ongoing litigation. In the alternative, Prime Meridian submitted that, even if the statement was a without prejudice document, the difference between the statement and the claimants new case were so grotesque that there had been an abuse of

privilege and the without prejudice tag should be removed. This preliminary issue, of whether the experts statement was privileged, was referred to the TCC before His Honour Judge Coulson QC. The Judge found that the dispute raised two potentially competing areas of public policy. On the one hand, the provision by the experts of a statement of the matters on which they agree and disagree is a vital component of the litigation and it would generally be contrary to the overriding objectives of the CPR if the statements were kept secret from the court. On the other hand, it is a clear rule of public policy that, in order to encourage the parties to settle their differences in a frank and open manner, documents generated for the purposes of mediation are privileged. Whilst there is a considerable amount of authority on the status of expert joint statements and without prejudice protection in mediation, none of the authorities expressly deal with the particular situation where a statement signed by both experts which would ordinarily not be protected by privilege was produced initially for use in mediation. HH Judge Coulson QC observed that, in any ordinary case, a statement of the kind in this case would not be privileged. Such a statement was ordinarily required by order of the court and for the assistance of the court. The mere fact that it is used in a subsequent mediation would not then make it privileged or inadmissible in any ongoing court proceedings. He noted that if parties to court proceedings wish to ensure that documents be given such without prejudice protection then they would need to spell that out clearly to each other and to the court. Despite these general observations the Judge found that this case was not a usual situation. In considering the particular facts in this case, the Judge found that the original court order made by HHJ Thornton QC requesting the statement, only came about as a result of the imminent mediation and the judge did not think that he was making a conventional Joint Statement order pursuant to part 35 of the CPR. He clearly believed that the order was made for the purposes of the mediation and the provision of the experts' statement would give the mediation the greatest possible chance of success. HH Judge Coulson QC also considered the issue of fairness. He found that Airds expert did not carry out the sort of extensive background work that he would ordinarily have done before signing a joint statement pursuant to Part 35.12 of the CPR. It was clear that, because of the limited time and the financial constraints under which Airds expert was operating before the mediation, he could only carry out a much more limited exercise than would have otherwise been the case. He concluded that it would be plainly unfair to Aird and its expert to conclude that the statement was an open document that could be referred to by all parties in the litigation. In view of the specific facts in this case, HHJ Coulson QC found that the experts' statement was only prepared for the purposes of the mediation and was therefore the subject of without prejudice protection. Accordingly, the experts statement was held to be privileged and inadmissible.