All disputes can get messy and landlord and tenant disputes are no different.  Where the right to occupy a property is critical, either for business or residential purposes, the stakes are high for both sides.  Whatever the strengths and weaknesses of a case, litigation can be stressful and costly and sometimes settling a dispute is the best way forward.

Parties can generally rely on "without prejudice privilege" to carry out full and frank discussions with a view to seeking resolution of a dispute in the knowledge that any admissions made will not be used against them at trial.  Determining what constitutes a genuine attempt to settle which attracts without prejudice privilege can be a minefield for qualified lawyers and it can be particularly difficult for litigants in person to know what the court is and is not entitled to consider.

In the recent case of Suh and Another v Mace (UK) Limited [2016] EWCA Civ 4, the Court of Appeal considered whether alleged admissions made in meetings between one of the unrepresented claimant tenants and the landlord's solicitor were admissible evidence that could be used by the landlord against the tenants.

Background

The tenants, Mr and Mrs Suh, held a 20 year business lease of restaurant premises commencing in May 1999.  The landlord re-entered the property in August 2010 and changed the locks.  In January 2012 the tenants issued proceedings for damages for wrongful forfeiture of the lease.  The landlord counterclaimed for payment of rent arrears.

The trial was listed for 3 days in March 2014 before Her Honour Judge Baucher in the Central London County Court.  In January 2014 Mrs Suh asked to see the landlord's solicitor and arranged to meet her.  In the meeting, Mrs Suh said that the purpose of the meeting was to find out how the case was progressing.  Mrs Suh was not accompanied by a solicitor or other legal advisor.  The landlord then claimed that during the course of the meeting Mrs Suh made admissions that (1) there had been rent arrears (which would have entitled the landlord to re-enter the property); (2) she had not signed certain court documents; and (3) she no longer wished to participate in the proceedings.

Consequently the landlord wished to rely on its solicitor's notes of the meetings with Mrs Suh, which appeared to support its defence and counterclaim.  However, Mr and Mrs Suh denied that the admissions had been made and also argued that, in any case, the notes were covered by without prejudice privilege so the judge was not entitled to see them.

At trial the judge concluded that the communications between Mrs Suh and the landlord's solicitor were not covered by without prejudice privilege.  She held that there had been no genuine attempt to settle the dispute and so the solicitor's notes were admitted into evidence.  In her reasoning, she said:

"...I am satisfied that this was not a without prejudice meeting.  It was not for the purpose of a genuine attempt to compromise a dispute between the parties.  It follows, therefore, that privilege does not attach and, therefore, there can be no question of any waiver."

The trial judge went on to conclude that Mrs Suh had lied in her later denial of the rent arrears.

The tenants' claim for wrongful forfeiture was dismissed and the landlord's counterclaim succeeded.  The tenants appealed.

Court of Appeal

Lord Justice Lewison granted the tenants permission to appeal on the ground that the judge's decision was "unjust because of serious procedural or other irregularity".

In his judgment following the appeal hearing, Lord Justice Vos commented that the trial judge had taken a narrow view about the nature of the meetings between Mrs Suh and the landlord's solicitor and that "a broader view is now authoritatively required".  Lord Justice Vos queried what else the meetings could have been about, if not to try to settle the case.  He went on to say this must have been obvious to any outside observer from the beginning and found that the only sensible purpose for meeting was to seek some kind of solution to the litigation.

The landlord submitted that Mrs Suh was attempting to use the cloak of without prejudice discussions in order to submit lies in her statement.  Lord Justice Vos rejected this argument, saying that Mrs Suh was an "innocent abroad in litigation terms" and there was no evidence to suppose that she knew what "without prejudice" meant, let alone that she was calculating the use of any privilege in order to tell lies to the court.  He concluded that Mrs Suh had done nothing that was even arguably dishonest.

Lord Justice Vos also rejected the landlord's argument that Mrs Suh had waived any privilege by referring to the meetings in its arguments as to why the notes should not be admitted into evidence.  Having considered the context and timing of the events and the tenants' conduct, Lord Justice Vos concluded that it would be "unjust to prevent the tenants from arguing that the admissions made in the interviews would be privileged from production to the court".

The tenants' appeal was allowed and a re-trial ordered.

Conclusion

The dispute in Suh and another v Mace (UK) Limited has been ongoing for over 5 years and it is over 4 years since formal legal proceedings were issued.  The parties will now have to wait until the matter is relisted for a new trial before the dispute finally can be resolved, unless they are able to negotiate a settlement before then.  No doubt the parties will be keen to ensure that any such negotiations clearly take place on a without prejudice basis.

The courts encourage parties to engage in settlement discussions and, in order to do so, acknowledge that they should be able to speak freely about all issues in the dispute.  The case highlights that identifying a genuine attempt to settle a dispute can be difficult.   Lawyers will often preface communications "without prejudice" to clarify the position.  However, if it is clear from the surrounding circumstances that settlement was the purpose of a communication, parties will generally be able to rely on without prejudice privilege so that admissions (or partial admissions) are not produced to the court if the matter proceeds to trial.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.