A Consideration of Judicial Pronouncements on Privileged Communications

A consideration of England’s House of Lord’s decision in Rush & Tompkins Ltd v Greater London Council and Another [1989] 1 AC 1280 and Malaysia’s High Court decisions of Oh Kuang Liang v Associated Wood Industries Sdn Bhd [1995] 2 CLJ 961 and Dusun Desaru Sdn Bhd & Anor v Wang Ah Yu & Anor [1999] 2 CLJ 749.

The leading authority for our humble jurisdiction on the issue of Privileged Communication is found in the House of Lord’s decision of Rush & Tompkins Ltd v Greater London Council and Another [1989] 1 AC 1280 (which actually starts at page 1292 for the House of Lords decision). It was decided by a strong bench comprised of Lord Goff of Chieveley, Lord Oliver of Alymerton, Lord Bridge of Harwich, Lord Brandon of Oakbrook and finally, the author of the judgment, Lord Griffiths. This portion of his Lordship’s speech is of interest:

The rule applies to exclude all negotiations genuine 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 not 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 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 litgant from being embarassed 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 settlement, which is the point that Lindley L.J. was making in Walker v Wilsher (1889) 23 Q.B.D. 335 and which was applied in Tomlin v Standard Telephones & Cables Ltd. [1969] 1W.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 [1984] 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 litigation both factual and legal when seeking compromise and, for the purpose of establishing a basis of compromise, admitting certaing 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.

In the High Court decision of Oh Kuang Liang v Associated Wood Industries Sdn Bhd [1995] 2 CLJ 961, Abdul Malik Ishak J heard an application by the Respondent (Associated Wood) to strike out an affidavit affirmed by the Applicant. The gist of it is as follows:

Tan deposed in his affidavit that the “without prejudice” letters between solicitors are inadmissible as they were said to be privileged. Tan took particular objections to two letters (dated 28 January 1994 and 6 April 1994) which he singled out and which clearly bore the “without prejudice” labels on them; he too took exceptions to the other three letters which equally bore the “without prejudice” tags on them. There was only one letter dated 26 February 1994 which did not carry the “without prejudice” label.

In coming to his decision his Lordship stated as follows (at page 965 paragraphs a – f):

I am of the considered view that the “without prejudice rule” applies generally to exclude all negotiations genuinely aimed at settlements whether oral or in writing from being given in evidence. A prudent and competent solicitor will always be on guard and will always label any negotiating correspondence with the words “without prejudice” – to make known and to make clear beyond doubt that in the event the negotiations fell through, they are not to be referred to at the subsequent trial. I think the correct approach to resolve the “without prejudice rule” would be by balancing two different public interests, namely, the public interest in promoting settlements, on the one hand, and the public interest in full discovery between parties to litigation, on the other.

I have done some research and I have discovered that nearly all the cases where the scope of the “without prejudice rule” has been considered concern the admissibility of evidence at trial after negotiations have failed. It is quite obvious that in these situations no question of discovery arises because the parties are well aware of what had transpired between them in the negotiations. It is not incorrect to say that the underlying purpose of the “without prejudice rule” is to protect a litigant from being embarrassed by any admission made purely in an attempt to achieve a settlement. Lindley LJ, held in Walker v. Wilsher [1889] 23 QBD 335 at 337, that the without prejudice material will be admissible if the issue is whether or not the negotiations resulted in an agreed settlement and this point seems to have been applied in Tomlin (supra). I must at once sound a warning that Walker v. Wilsher (supra) is not an authority for the proposition that if the negotiations succeed and a settlement is concluded the privilege is thrown to the wind, having served its purpose. On a proper reading of Walker v. Wilsher (supra), I would have thought that there it was 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. Cutts v. Head (supra) propounds the principle that in certain circumstances the without prejudice correspondence may be looked at to determine a question of costs after judgment has been given. In Re Daintrey, ex p Holt [1893] 2 QB 116; [1891-4] ALL ER Rep. 209, the Court refused to allow the “without prejudice rule” to exclude an act of bankruptcy and in Kitcat v. Sharp [1882] 48 LT 64, the Court too refused to be bound by the “without prejudice rule” when its purpose was to suppress a threat if an offer is not accepted. I am of the view that the exceptions referred to in these cases should not and must not be allowed to whittle down the protection given to all 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 maker should not be held accountable and the admission of the facts made for the purpose of the compromise should not be received in evidence. I am not prepared, to borrow the words of Ormrod J, in Tomlin (supra) to lift the umbrella of “without prejudice” for the applicant. Rain or shine, that umbrella should remain.

Rush & Tompkins is not cited in Oh Kuang Liang. Both however are cited in Abdul Malik Ishak J’s later decision of Dusun Desaru Sdn Bhd & Anor v Wang Ah Yu & Anor [1999] 2 CLJ 749. The quoted portion of Oh Kuang Liang is quoted as authority in Dusun Desaru at page 754 paragraph b to 755 paragraph b. Then at page 756 paragraph a – f, his Lordship cites Rush & Tomkins in the following manner:

Negotiations to settle disputes may be conducted in many ways: by oral means (face to face), by correspondences, by facsimile communications, by exchanges of telex messages, by courier services or the combination of any one of them. In Rush & Tompkins Ltd v. Greater London Council [1989] 1 AC 1280, the House of Lords ruled that genuine negotiations with the sole object of settlement are protected from disclosure whether or not the “without prejudice” label has been expressly employed in the negotiations. As I said exhs. A15, A16 and A17 of encl. 4 do not carry the “without prejudice” labels, yet the shield of privilege would apply to them. Lord Griffiths in Rush & Tompkins Ltd v. Greater London Council (supra) aptly put it as follows (see p. 1299 of the report):

The ‘without prejudice’ 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.

and the impression one gets from a letter bearing the “without prejudice” mark would show that the parties are genuinely seeking to compromise their dispute and giving it a stamp of confidentiality which would not be referred to at the trial in the event the negotiations fell through. A compromise is nothing more than to put an end to the dispute in which the parties had hitherto been engaged.