In Jones v Tracey & Ors (Re Costs)  EWHC 2256 (Ch) the High Court held that inter-solicitor correspondence about the possibility of Alternative Dispute Resolution (ADR) was not without prejudice (WP) despite being expressly labelled WP. This enabled the Court to consider the letter in the context of deciding costs liabilities. The judgment usefully illustrates some of the issues parties should bear in mind when seeking to cloak correspondence in WP privilege.
Background and decision
The WP rule prevents correspondence properly labelled "WP", as part of a genuine attempt to settle a dispute, from being disclosed to the court in evidence regarding the substantive dispute or liability for costs. (In contrast, correspondence labelled "without prejudice save as to costs" ordinarily is admissible after judgment regarding liability for costs.)
For current purposes the facts of the substantive probate claim are not material. The defendant's solicitors wrote to the claimant's solicitors on 7 June 2023 following earlier open correspondence regarding the possibility of ADR (the Letter). The Letter was marked WP and stated:
"We refer to your letter dated 27th April 2023 with regard to your client offering to engage with alternative dispute resolution without moving the trial date. We sent an email on 3rd May 2023 that our client was in agreement to attending alternative dispute resolution. We understand there are several forms resolving issues before a final hearing but would invite you clarify why your client was unwilling to attend mediation given that we agreed not to move the trial date. Further the offer was some two months before the final hearing." [sic]
Following judgment, the defendant's solicitors sought to argue that their own Letter was not in fact WP despite its label; they wished to rely on it in support of submissions that the claimant's costs should be reduced. The claimant refused to waive privilege over the contents of the letter, arguing that it was WP and therefore inadmissible in relation to costs.
The Court held that the Letter was not sent on a WP basis, despite being labelled as such, so that the Court was able to consider the Letter in the context of costs. The learning points from the judgment and factors parties should consider when drafting WP correspondence are summarised in the key takeaways below.
As regards the effect of the Letter, the Court concluded that the Letter did not justify a reduction of the claimant's costs. While it was surprising that the claimant did not engage more positively with ADR, the Court took into account that: (i) the claimant had made previous settlement offers; (ii) the defendant's conduct of the claim was unsatisfactory, and she only expressed a willingness to engage with ADR at a late stage; and (iii) the strong merits of the claim were known or should have been known to the defendant. On the facts, a lack of response to the Letter from the claimant did not amount to a refusal to undertake ADR.
Key takeaways - drafting WP correspondence
The judgment in Jones highlights the following points regarding WP correspondence:
- Is the communication labelled WP? The court will consider the manner in which the correspondence was drafted. In Jones, the Court acknowledged that although usually the writer can be taken to have intended to label the correspondence in a particular way, this will not be definitive, and in an appropriate case, the court will consider if the context of the correspondence indicates a different intention.
- Is the communication part of a chain of correspondence? If correspondence falls into a chain of communication concerning settlement, but is not itself marked WP, it will commonly be considered WP unless there is an obvious intention otherwise (and vice versa). In Jones, the fact that the letter formed part of a chain of communication that was "open and obviously intended to be open" was a decisive factor.
- What is the objective nature of the communication? In establishing the true nature of the correspondence, the court will not consider the subjective intent of the author. Instead, it will focus on how a reasonably minded recipient would regard the letter. In Jones, the court held that it would have been obvious to the reasonably minded recipient that the Letter was not WP (in light of the fact that it did not contain or relate to any settlement offer, but rather the use of ADR).
- Is there a settlement offer? WP correspondence should relate to settlement. In Jones, the fact that the Letter only referred to the use of ADR and did not relate to a specific settlement offer was an important factor in determining that it was not sent on a WP basis. Master Marsh commented that correspondence about the possibility of engaging in ADR does not need to be WP. In fact, it is more likely to be open than WP as it will usually be preferable for both parties to be able to rely upon such communications. This is an interesting comment as other cases (not related to costs decisions) have held that the WP rule protects an offer/refusal to engage in ADR (for example R (on the application of Wildbur) v Ministry of Defence  EWHC 821 (Admin). The Court's comments may reflect a growing expectation that parties will engage in ADR as part of the litigation process so that the mere offer of ADR will not impact on how their case is viewed.
With thanks to Ellen Lennox for her assistance in preparing this post.
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.