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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Chaudhary v Secretary of State for Health [2006] EWCA Civ 1648 (02 November 2006) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2006/1648.html Cite as: [2006] EWCA Civ 1648

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
(HIS HONOUR JUDGE PETER CLARK)

		Royal Courts of Justice Strand London, WC2
		2 November 2006

1. LADY JUSTICE ARDEN: This is an application by the Secretary of State for Health that a document recording a without prejudice communication ("the without prejudice communication") between those acting for the Secretary of State and Mr Rajendra Chaudhary should not be admitted as evidence in this court.
2. The application which is before us is not made with reference to the hearing of an appeal pending in this court to which the Secretary of State is party. The relief sought on the application is an order that the communication be not admitted in evidence in this court without reference to a specific appeal. However, there is an application for permission to appeal presently pending ("the pending application"), and it is brought by Mr Chaudhary against the Secretary of State. Mr Chaudhary is also the respondent to an appeal brought by the British Medical Association ("the pending BMA appeal"). The order sought would, if granted, apply particularly to that appeal. Indeed the reason for the application is that both the pending application against the Secretary of State and the pending BMA appeal are listed to be heard consecutively by the same constitution of this court. It is in the BMA appeal that Mr Chaudhary seeks to adduce the without prejudice communication as against the BMA. The without prejudice application therefore comes before the court hearing the application by a side wind.
3. Miss Monica Carss -Frisk for the Secretary of State submits that the Secretary of State has not waived any privilege in the communication. She further submits that it would be inadmissible in the pending application against the Secretary of State if that application stood on its own, and that appears to be common ground. On the other hand, the Secretary of State makes no submission as to the relevance of this communication in the BMA appeal. Miss Carss -Frisk submits that the without prejudice rule is in part based on public policy and in part based on implied contract. The parties should be encouraged to settle their disputes as far as possible without prejudice to litigation. The use by Mr Chaudhary of the without prejudice communication would, on her submission, cause prejudice to the Secretary of State. She points out that in Unilever v Proctor & Gamble [2000] 1 WLR 2436 Robert Walker LJ (as he then was) listed exceptions to the without prejudice rule but those exceptions do not include the disclosure of an admission bearing on the subject matter of the dispute. Without prejudice communications may be admitted where they are relevant for some other purpose as in Muller v Linsley & Mortimer [1996] 1 PNLR 74, and indeed in Bradford & Bingley v Rashid [2006] 1 WLR 206. But, she submits, a written communication will not be admissible if the document would otherwise constitute an admission. She submits that it is no answer that Mr Chaudhary wishes to use the without prejudice communication only in the BMA appeal. She further submits that it is well established that the privilege attaching to the without prejudice communications applies in subsequent litigation connected with the same subject matter, and she relies on Rush & Tompkins v GLC [1988] AC 1280 at 1301.
4. In this event, invariably, the without prejudice communication which Mr Chaudhary wishes to deploy in the BMA appeal is contained in a decision of a tribunal.
5. Miss Carss -Frisk submits that the fact that a without prejudice communication is recorded in a judgment of a tribunal which is accessible by the public makes no difference because the Secretary of State has not waived her privilege. Indeed the Secretary of State was not involved in the proceedings in question. She submits that in this respect without prejudice privilege is different from a privilege attaching to legally privileged communications. The fact that a without prejudice communication is referred to in a public document is not sufficient to cause loss of privilege.
6. The Secretary of State submits that the course Mr Chaudhary should have taken was to apply for the BMA appeal to be heard separately. The Secretary of State makes the submission that it is not in fact necessary for Mr Chaudhary to refer to the without prejudice communication. I am not going to address that submission because it relates to the manner in which Mr Chaudhary chooses to conduct his appeal before this court, and that is not an issue which is before this court.
7. Mr Ghazan Mahmood, for Mr Chaudhary, submits that the without prejudice rule does not extend to protecting third parties unconnected with the settlement of negotiations. He further submits that the without prejudice communication supports Mr Chaudhary's case in the BMA appeal, and helps to meet a point which has been taken against Mr Chaudhary by the British Medical Association which he submits is misconceived.
8. Mr Mahmood submits that any without prejudice privilege will continue to attach to the parties in the pending application against the Secretary of State. He further submits that the basis for exclusion of the communication in this case is likely to be rooted in implied contract, and he relies upon Muller v Linsley & Mortimer, to which I have referred. He submits that there is no evidence to suggest that the parties agreed that the without prejudice communication or the contents of it should not be referred to in the course of a subsequent action such as the BMA appeal. Moreover, it is, on his submission, recorded in a public document, and he submits that the privilege is restricted to litigation between the same parties. He submits that a without prejudice communication is admissible in litigation not involving the same subject matter or parties. He, too, relies on Rush & Tompkins. He points out that Mr Chaudhary does not propose to refer to the offer as an admission on the question of liability in the pending application against the Secretary of State, or indeed on any issue involving the Secretary of State or in any way on that appeal. He does not therefore seek to rely on it as, for example, admission of liability. The offer, therefore, on his submission is only relevant to the BMA appeal.
9. This application therefore concerns the without prejudice rule which, in the recent case of Rashid, Lord Hoffmann described as the rule "which allows the parties to speak freely without fear that their statements will be treated as admissions if those negotiations break down". It invokes the without prejudice rule in very unusual circumstances. Mr Chaudhary does not seek to rely on the without prejudice communication to support his case in the pending application against the Secretary of State in this court. Rather, what will necessarily happen is because the BMA appeal and that application are being heard together, this court will become aware of the without prejudice communication because it is sought to be deployed in the BMA appeal, in which it would no doubt be analysed at some length. It comes into the pending application against the Secretary of State therefore by what one may term a side wind.
10. The Secretary of State does not go so far as to say that the without prejudice communication could not be used in the BMA appeal at all, but Miss Carss -Frisk submits that that could only be the case if it was heard by a different constitution at a different time.
11. As to this point, Mr Mahmood submits strongly that the court hearing the application in the BMA appeal will be able to keep the matter out of its mind when deciding the pending application against the Secretary of State. For my own part, I do not doubt for one moment that he is right to be confident in the constitution which hears the application, but what we have to ask is whether nonetheless the without prejudice rule applies. There are two juridical bases for the rule and they were considered by Hoffmann J (as he then was) in Muller. He considered those bases by reference to the earlier case of Cutts v Head, but it is perhaps more convenient to refer to Muller as Mr Mahmood relied on it in his argument. Hoffmann LJ said this:

"Cutts v Head shows that the rule has two justifications. Firstly, the public policy of encouraging parties to negotiate and settle their disputes out of court and, secondly, an implied agreement arising out of what is commonly understood to be the consequences of offering or agreeing to negotiate without prejudice. In some cases both of these justifications are present; in others, only one or the other.

So in Cutts v Head the rule that one could not rely upon a without prejudice offer on the question of costs after judgment was held not to be based upon any public policy. It did not promote the policy of encouraging settlements because as Oliver LJ said:

'As a practical matter, a consciousness of a risk as to costs if reasonable offers are refused can only encourage settlement...

It followed that the only basis for excluding reference to a without prejudice offer on costs was an implied agreement based on general usage and understanding that the party making the offer would not do so. Such an implication could be excluded by a contrary statement as in a Calderbank offer.

Rush & Tompkins, on the other hand, is an example of the privilege resting purely on grounds of public policy without any element of implied agreement, because the party against whom the privilege was claimed was not a party to the negotiations. Rush & Tompkins were employed by the GLC as main contractors to build a housing estate. They employed a company trading as Carey Contractors as sub -contractors to do work on the site. Carey Contractors made a loss and expense claim against Rush & Tompkins which the GLC refused to pay. Rush & Tompkins commenced proceedings against both the GLC and Carey Contractors. Against the GLC it claimed a declaration that it was entitled to be indemnified against the claim by Carey Contractors and against both defendants it sought an inquiry as to the amount to which Carey Contractors were entitled.

After without prejudice negotiations, Rush & Tompkins concluded a global settlement with the GLC under which it was paid £1.2 million in respect of all its contractural claims (most of which were not in issue in the action) on the footing that it would meet any claims from its sub -contractors. Carey Contractors pursued its claim against Rush & Tompkins and sought discovery of the documents containing the without prejudice negotiations in order to ascertain what part of the £1.2 million had been allocated to its loss and expense claim. This was said to be relevant because it could constitute an admission by Rush & Tompkins that the claim was worth more than they were now saying. Rush & Tompkins claimed privilege."

Hoffmann LJ sets out the decision of the Court of Appeal but this was reversed by the House of Lords which upheld the claim to privilege. Hoffmann LJ referred to the speech of Lord Griffiths. Lord Griffiths cited with approval the following statement by Lord Oliver in Cutts v Head on the policy underlying the privilege. Then Hoffmann LJ continued:

"Lord Griffiths went on to say that the rule was not absolute:

'... resort may be had to the "without prejudice" material 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 reach a settlement.'

He went on to mention some other cases in which without prejudice material was admissible, eg if the issue is whether or not the negotiations have resulted in an agreement settlement. But he held that there was no rule by which the making of such a settlement automatically brought an end to the operation of the privilege:

'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 is therefore apparent that the object of preventing disclosure is to prevent the without prejudice communication being taken as an admission.

12. The pending application against the Secretary of State will involve a large number of issues at the stage of liability for discrimination against Mr Chaudhary; I will not set out the fourteen issues identified in Mr Chaudhary's skeleton argument but (for example) one of them is the question of whether the action taken by the Secretary of State in introducing a requirement said to be discriminatory was justified.
13. Mr Mahmood emphasises that it is not the intention of his client that the without prejudice communication should be relied on as an admission on any of the issues in that pending application. However, in my judgment it is not possible to say, once it is in a bundle which is placed before the court hearing that application, that that is not its effect in practical terms. The Secretary of State will be resisting any liability for discrimination and will inevitably be embarrassed by the presence of a document recording a without prejudice communication which undermines its case on that point. Accordingly, in my judgment, despite the course which Mr Chaudhary intends to take, the document in question should be treated in exactly the same way as an admission for the purposes of the without prejudice rule. Thus, in my judgment, it carries the protection conferred by that rule and cannot be deployed before the court. That means that it cannot be introduced into the BMA appeal whence it would come before the court hearing the pending application against the Secretary of State, as I have said, by a side wind.
14. I must now deal with three further points which have been made by Mr Mahmood on behalf of Mr Chaudhary. First, he argues strongly that the without prejudice communication is relevant to the BMA appeal in which Mr Chaudhary is of course seeking to uphold a finding against the BMA and not against the Secretary of State. I appreciate that there are competing values at stake here. First, Mr Chaudhary obviously wishes to deploy before the court all the evidence which he considers will support his case and which is admissible in law. But that value has to be balanced against the potential prejudice to the Secretary of State in the pending application against the Secretary of State. In my judgment the balance comes down in favour of acceding to the Secretary of State's application because, as the Secretary of State points out, Mr Chaudhary could have applied for the BMA appeal to be heard separately. Indeed the without prejudice communication must have come to the attention of Mr Chaudhary before any decision to have the BMA appeal heard with the pending application against the Secretary of State to which, as I understand it, Mr Chaudhary consented. In any event, it has been in his hands a very long time and he has had plenty of opportunity to make an application to have the two appeals heard separately.
15. The second point made forcibly by Mr Mahmood is that the document could have been obtained by a member of the public because it is a document produced by the tribunal. We have not been taken to the rule which provides for access to the public, but in any event, in my judgment, the fact that the document could can be obtained by a member of the public does not prevent the rule being relied upon by the Secretary of State. That may be seen from, for instance, the Bradford & Bingley v Rashid case. In that case, the without prejudice communications were set out in the judgment of this court but nonetheless the question of privilege was argued before the House of Lords on the basis that privilege survived the judgment of the Court of Appeal.
16. The third point made by Mr Mahmood to which I wish to refer at this stage is that the constitution of the Court of Appeal hearing the application made by Mr Chaudhary against the Secretary of State will be dealing with points of law. It may decide to remit the case to the Employment Tribunal. Of course, it is possible that that could be done on the basis that the without prejudice communication was not placed before that tribunal. But that obviously cannot be predicted with any certainty. It will be a matter for the decision of the court hearing the pending application against the Secretary of State. The fact of the matter is, as I have explained, that the issue of liability still remains to be determined as against the Secretary of State. I therefore conclude that the presence of the without prejudice communication in the bundle which that court will see is sufficient to amount to reliance on that document as an admission for the purposes of the without prejudice rule.
17. Accordingly, I would grant an appropriate order on this application.
18. LORD JUSTICE DYSON: I agree.

(Appeal allowed; the Defendant is to pay the Appellant's costs; detailed assessment of Defendant's publicly -funded costs; an order to postpones publication until after judgment of the order).