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You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Rush & Tompkins Ltd v Greater London Council [1988] UKHL 7 (03 November 1988)
URL: http://www.bailii.org/uk/cases/UKHL/1988/7.html
Cite as: [1988] 3 All ER 737, [1989] AC 1280, [1988] UKHL 7

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JISCBAILII_CASE_ENGLISH_LEGAL_SYSTEM

    Parliamentary Archives,
    HL/PO/JU/18/248

    Rush & Tompkins Limited (Appellants)

    v.

    Greater London Council and others (Respondents)

    JUDGMENT

    Die Jovis 3° Novembris 1988

    Upon Report from the Appellate Committee to whom was
    referred the Cause Rush and Tompkins Limited against Greater
    London Council and others, That the Committee had heard
    Counsel on Tuesday the 26th and Wednesday the 27th days of
    July 1988, upon the Petition and Appeal of Rush and Tompkins
    Limited of Marlowe House, Station Road, Sidcup, Kent DA15 7BP,
    praying that the matter of the Order set forth in the Schedule
    thereto, namely an Order of the Court of Appeal of the 21st
    day of December 1987, might be reviewed before Her Majesty the
    Queen in Her Court of Parliament and that the said Order might
    be reversed, varied or altered or that the Petitioners might
    have such other relief in the premises as to Her Majesty the
    Queen in Her Court of Parliament might seem meet; as upon the
    case of P. J. Carey Plant Hire (Oval) Limited (trading as P.
    Carey Contractors) lodged in answer to the said Appeal; and
    due consideration had this day of what was offered on either
    side in this Cause:

    It is Ordered and Adjudged, by the Lords Spiritual and
    Temporal in the Court of Parliament of Her Majesty the Queen
    assembled, That the said Order of Her Majesty's Court of
    Appeal of the 21st day of December 1987 complained of in the
    said Appeal be, and the same is hereby, Set Aside: and That
    the Order of His Honour Judge Esyr Lewis Q.C. of the 12th day
    of February 1987 be, and the same is hereby, Restored: And it
    is further Ordered, That the Respondents do pay or cause to be
    paid to the said Appellants the Costs incurred by them in the
    Court of Appeal and also the Costs incurred by them in respect
    of the said Appeal to this House, the amount of such last-
    mentioned Costs to be certified by the Clerk of the
    Parliaments if not agreed between the parties: And it is also
    further Ordered, That the Cause be, and the same is hereby,
    remitted back to the Queen's Bench Division of the High Court
    of Justice to do therein as shall be just and consistent with
    this Judgment.

    Cler: Parliamentor

    Judgment: 3.11.88

    HOUSE OF LORDS

    RUSH & TOMPKINS LIMITED
    (APPELLANTS)

    V.

    GREATER LONDON COUNCIL AND OTHERS
    (RESPONDENTS)

    Lord Bridge of Harwich
    Lord Brandon of Oakbrook
    Lord Griffiths
    Lord Oliver of Aylmerton
    Lord Goff
    of Chieveley


    LORD BRIDGE OF HARWICH

    My Lords,


    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,

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

    LORD GRIFFITHS

    My Lords,

    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.

    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.

    - 1 -
    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..

    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 sub-
    contractors' 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..

    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.

    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.

    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

    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."

    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.

    - 2 -

    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."

    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.

    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

    - 3 -

    settlement, which is the point that Lindley L.J. was making in
    Walker v. Wilsher (1889) 23 QBD 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.

    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 that it was not permissible to receive the contents of
    a without prejudice offer on the question of costs and no question
    arose as to the admissibility of admissions made in the
    negotiations in any possible subsequent proceedings. There are
    many situations when parties engaged upon some great enterprise
    such as a large building construction project must anticipate the
    risk of being involved in disputes with others engaged on the same
    project. Suppose the main contractor in an attempt to settle a
    dispute with one sub-contractor made certain admissions it is clear
    law that those admissions cannot be used against him if there is
    no settlement. The reason they are not to be used is because it
    would discourage settlement if he believed that the admissions
    might be held against him. But it would surely be equally
    discouraging if the main contractor knew that if he achieved a
    settlement those admissions could then be used against him by any
    other sub-contractor with whom he might also be in dispute. The
    main contractor might well be prepared to make certain
    concessions to settle some modest claim which he would never
    make in the face of another far larger claim. It seems to me
    that if those admissions made to achieve settlement of a piece of
    minor litigation could be held against him in a subsequent major
    litigation it would actively discourage settlement of the minor
    litigation and run counter to the whole underlying purpose of the
    without prejudice rule. I would therefore hold that as a general
    rule the without prejudice rule renders inadmissible in any
    subsequent litigation connected with the same subject matter proof
    of any admissions made in a genuine attempt to reach a
    settlement. It of course goes without saying that admissions made
    to reach settlement with a different party within the same
    litigation are also inadmissible whether or not settlement was
    reached with that party.

    - 4 -

    In arriving at my opinion on this aspect of the case I have
    taken into account the reports of two cases in "The Times"
    newspaper around the turn of the century. The first is a decision
    of Darling J. in Teign Valley Mining Co. Ltd, v. Woodcock, The
    Times 22 July J899 which is cited in both Phipson On Evidence.
    13th ed., (1982), Paras. 19-11, 20-04; and Halsbury's Laws of
    England, 4th ed., Vol. 17, (1976), para. 212 as authority for the
    proposition that the protection afforded by "without prejudice" does
    not extend to third parties. The report is short and unclear, but
    it appears that the claim was by a company for money owed upon
    calls upon its shares. The defendant, Woodcock, admitted liability
    to the company but claimed against a Captain Rising that he held
    the shares as his nominee. The judge admitted in evidence terms
    of the negotiation between the plaintiffs and Captain Rising in
    which Captain Rising admitted ownership of the shares standing in
    the name of the nominee. The judge expressed doubts whether he
    should have admitted the evidence and said he did so because he
    had been pressed to do so by counsel. I agree with the comment
    of the Court of Appeal [1988] 2 W.L.R. 533, 538 that "the report
    is such that it is not worthy of citation as constituting authority
    for any proposition of law." The other case is Stretton v. Stubbs
    Ltd.
    The Times 28 February 1905, this was an action for libel and
    slander arising in the following circumstances. Mr. Stretton was
    an artist and judgment had been obtained against him in the sum
    of £16 in the City of London Court by a picture frame maker.
    That judgment had been entered by consent pursuant to a without
    prejudice agreement with the plaintiff's solicitor that no publicity
    should be given to the result of the action. The defendants
    published the judgment in Stubbs' Weekly Gazette and the plaintiff
    alleged that their canvaser had gone round to various tradesmen
    pointing out the importance of subscribing to the Gazette,
    directing their attention to the plaintiff's name and saying that he
    could not be worthy of credit. The jury returned a verdict for
    the plaintiff of £25. As part of his case the plaintiff had relied
    upon the contract between himself and the solicitor for the
    plaintiff in the City of London Court action that the judgment
    should not be made public. This contract was contained in two
    without prejudice letters. The offer was contained in a letter
    from the plaintiff and the acceptance in a letter from the
    solicitor. The judge permitted the second letter to be put in
    evidence and read but refused to admit the first letter which had
    contained admissions by the plaintiff that he was absolutely
    insolvent. From a reading of the report it appears that the
    ground upon which it was submitted to the Court of Appeal that
    the judge had erred in refusing to admit the first letter was that
    putting in the second letter as part of the without prejudice
    correspondence rendered the first letter admissible. It was also
    submitted that it would be wrong for the plaintiff not to be
    allowed to be cross-examined on his assertion that he was
    insolvent and at the same time to allow him to put himself before
    the jury as being quite solvent and of good credit. The Court of
    Appeal allowed the first letter to be read to the court. The
    report does not say why the Sir Richard Henn Collins M.R.
    permitted it but Matthew L.J. is recorded as saying "that in his
    opinion a letter written with regard to an action and marked
    'without prejudice' was only privileged for the purpose of that
    particular action." No citation of authority or reasoning is given
    in support of that opinion. There may well have been good
    grounds for admitting the first letter in that action on the ground

    - 5 -

    that it was a part of a correspondence which the plaintiff had
    chosen to put in evidence, and possibly also on the ground of
    establishing an independent fact, namely, the plaintiff's insolvency,
    which was unconnected with the merits of the dispute about the
    amount owed to the frame maker and was obviously of central
    importance to the issue of libel or slander. I cannot however
    regard it as an authority of any weight for the proposition that
    without prejudice negotiations should in all circumstances be
    admissible at the suit of a third party.


    The only issue that now survives in the present litigation is
    the sub-contractors' counter claim. For the reasons I have given
    the contents of the without prejudice correspondence between the
    main contractor and the G.L.C. will not be admissible to establish
    any admission relating to the sub-contractors' claim. Nevertheless,
    the sub-contractors say they should have discovery of that
    correspondence which one must assume will include admissions even
    though they cannot make use of them in evidence. They say that
    the correspondence is likely to reveal the valuation put upon the
    claim by the main contractor and the G.L.C. and that this will
    provide a realistic starting point for negotiations and therefore be
    likely to promote a settlement. This is somewhat speculative
    because for all we know the sub-contractors' claim may have been
    valued in the without prejudice correspondence at no more than
    the figure of £10,000 pleaded in the statement of claim leaving
    the parties as far apart as ever. However, it is of course a
    possibility that it appeared at a much higher figure.

    It was only at a late stage in the respondent's argument
    that the distinction between discoverability and admissibility was
    taken. In the courts below the question appears to have been
    considered solely on the question of admissibility. But the right to
    discovery and production of documents does not depend upon the
    admissibility of the documents in evidence: see O'Rourke v.
    Darbishire
    [1920] A.C. 581.

    The general rule is that a party is entitled to discovery of
    all documents that relate to the matters in issue irrespective of
    admissibility and here we have the admission of the head
    contractors that the without prejudice correspondence would be
    discoverable unless protected by the without prejudice rule. There
    is little English authority on this question but I think some light
    upon the problem is to be gained from a consideration of the
    decision in Rabin v. Mendoza & Co. [1954] 1 W.L.R. 271. In that
    case the plaintiffs sued the defendants for negligence in surveying
    a property. Before the action commenced a meeting had taken
    place between the plaintiffs' solicitor and a partner in the
    defendants' firm of surveyors to see if the matter could be settled
    without litigation. The defendants agreed at the meeting to make
    enquiries to see if they could obtain insurance cover against
    possible risk of damage to the house so that litigation could be
    avoided. After the interview the defendants obtained a report
    from another surveyor for the purpose of attempting to obtain
    insurance cover. No settlement was reached and the action
    commenced. The defendants disclosed the existence of the report
    in their affidavit of documents but claimed privilege from
    production on the ground that it was made in pursuance of a
    without prejudice discussion between the plaintiffs' solicitor and
    the defendants'. The master, the judge and the Court of Appeal

    - 6 -

    all upheld the defendants' claim to privilege. Denning L.J. after
    referring to Whiffen v. Hartwright (1848) ll Beav. lll said, at pp.
    273-274:

    "the Master of the Rolls there affirms the undoubted
    proposition that production can be ordered of documents
    even though they may not be admissible in evidence.
    Nevertheless, if documents come into being under an
    express, or, I would add, a tacit, agreement that they should
    not be used to the prejudice of either party, an order for
    production will not be made. This case seems to me to fall
    within that principle. This report was clearly made as a
    result of a 'without prejudice' interview and it was made
    solely for the purposes of the 'without prejudice'
    negotiations. The solicitor for the plaintiff himself says in
    his affidavit that at the time of the interview it was
    contemplated that steps such as these should be undertaken.
    I find myself, therefore, in agreement with the decision of
    Master Burnand and the judge that this is not a case where
    production should be ordered."

    Romer L.J. (p. 274) put the matter even more strongly saying:

    "It seems to me that it would be monstrous to allow the
    plaintiff to make use - as he certainly would make use -
    for his own purposes as against the defendants of a
    document which is entitled to the protection of 'without
    prejudice' status."

    This authority shows that even as between the parties to without
    prejudice correspondence they are not entitled to discovery against
    one another.

    In Canada there are conflicting decisions. In Schetky v.
    Cochrane and the Union Funding Co.
    [1918] 1 W.W.R. 821 the Court
    of Appeal in British Columbia ordered oral discovery to be given
    to a defendant of negotiations between the plaintiff and another
    defendant in the action but held that on the trial there would be
    no higher right to use the statements or admissions than that
    which a party to the negotiations would have who sought to
    introduce them in evidence. This decision was followed in British
    Columbia in Derco Industries Ltd, v. A. R. Grimwood Ltd.,
    Insurance Corporation of British Columbia and P.L.C. Construction
    Ltd.
    [1985] 2 W.W.R. 137 in which Lambert J.A. said, at p. 142;

    "to the extent that there is a rule that prevents the
    production of documents that were prepared in the course of
    negotiations leading to a concluded settlement, it is my
    opinion that the rule does not extend to the prevention of
    the production of those documents at the instance of a
    litigant who was not a party to the settlement and whose
    claim for production comes under the rule in the Peruvian
    Guano
    case." (Compagnie Financiere et Commerciale du
    Pacifique v. Peruvian Guano Co.
    (1882) 11 Q.B.D. 35)

    Schetky v. Cochrane and the Union Funding Co. was not followed
    by the Court of Appeal of Ontario in I. Waxman & Sons Ltd, v.
    Texaco Canada Ltd.
    [1968] 2 O.R. 452. The Court of Appeal in a
    short judgment upheld a long reasoned judgment by Fraser J. who
    expressed the following opinion [1968] 1 D.R. 642, 656:

    - 7 -

    "I am of opinion that in this jurisdiction a party to a
    correspondence within the 'without prejudice' privilege is,
    generally speaking, protected from being required to disclose
    it on discovery or at trial in proceedings by or against the
    third party."

    I suspect that until the present decision of the Court of
    Appeal the general understanding of the profession was that
    without prejudice negotiations between parties to litigation would
    not be discoverable to other parties and that admissibility and
    discoverability went together. For instance in the Annual Practice
    (1988) under "Discovery and Inspection of Documents" Note 24/5/17
    reads:

    "Without prejudice communications - any discussions between
    the parties for the purpose of resolving the dispute between
    them are not admissible, even if the words 'without
    prejudice' or their equivalent are not expressly used
    (Chocoladefabriken Lindt & Sprungli A. G. v. Nestle Co.
    Ltd.
    [1978] R.P.C. 287). It follows that documents
    containing such material are themselves privileged from
    production."

    I would refer also to the critical note on this decision of the
    Court of Appeal written by one of the Law Commissioners, Mr.
    Brian Davenport Q.C., in volume 104 of the Law of Quarterly
    Review P. 349 in which he states that the decision will be
    received "with surprise and dismay by many practitioners."

    I have come to the conclusion that the wiser course is to
    protect without prejudice communications between parties to
    litigation from production to other parties in the same litigation.
    In multi-party litigation it is not an infrequent experience that one
    party takes up an unreasonably intransigent attitude that makes it
    extremely difficult to settle with him. In such circumstances it
    would, I think, place a serious fetter on negotiations between other
    parties if they knew that everything that passed between them
    would ultimately have to be revealed to the one obdurate litigant.
    What would in fact happen would be that nothing would be put on
    paper but this is in itself a recipe for disaster in difficult
    negotiations which are far better spelt out with precision in
    writing.

    If the party who obtains discovery of the without prejudice
    correspondence can make no use of it at trial it can be of only
    very limited value to him. It may give some insight into his
    opponent's general approach to the issues in the case but in most
    cases this is likely to be of marginal significance and will probably
    be revealed to him in direct negotiations in any event. In my
    view this advantage does not outweigh the damage that would be
    done to the conduct of settlement negotiations if solicitors thought
    that what was said and written between them would become
    common currency available to all other parties to the litigation.
    In my view the general public policy that applies to protect
    genuine negotiations from being admissible in evidence should also
    be extended to protect those negotiations from being discoverable
    to third parties. Accordingly I would allow this appeal and restore
    the decision of the learned official referee.

    - 8 -

    LORD OLIVER OF AYLMERTON

    My Lords,

    I have had the advantage of reading in draft the speech
    prepared by my noble and learned friend Lord Griffiths. I agree
    with it and would allow the appeal for the reasons which he has
    given.

    LORD GOFF OF CHIEVELEY

    My Lords,

    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.

    - 9 -


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