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Article Story:
"WITHOUT PREJUDICE" - TO BE OR NOT TO BE - SCHERING
CORPORATION V CIPLA LIMITED & ANOTHER
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Date:
23.02.2005
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In the lay community, it is often the case that when someone
wants to write a "legal" letter, they mark it "without prejudice"
as a matter of course; presumably to create the impression that
they are familiar with legal terminology and practice. Even
amongst lawyers the phrase is not always understood for what it is,
which is essentially a rule of evidence. It means that when a
document is ascribed privileged status, it may not be deployed by
either party in proceedings, save in exceptional circumstances.
This issue came before the Court recently in
Schering Corporation v Cipla Limited &
Another [2004] EWHC 2587 (Ch). The application
before Mr Justice Laddie turned entirely on his assessment of a
letter from the Defendant company which was marked "without
prejudice" but which the Claimant company regarded as an "open
letter".
In his judgment of November last year Laddie J reviewed three
Court of Appeal authorities in making his decision. The first
(Standrin v Yenton Minster Homes Limited) brought this observation
from Lloyd LJ concerning a letter which was the "opening
shot" in litigious correspondence: "But where the opening
shot is an assertion of a person's claim and nothing more than
that, then prima facie it does not protect it."
Laddie J then went back to the leading authority on this issue,
namely Cutts v Head, from which he culled
three principles. Firstly it reiterated the policy reasons
behind this category, namely the public policy in benefiting
parties who are attempting to negotiate settlements. The
second is that in determining the nature of correspondence, and in
particular whether or not it is to be accorded the status of being
without prejudice, it is necessary to consider all the
circumstances.
Laddie J went on to observe that behind this is the third
principle: "The Court has to determine whether or not a
communication is bona fide intended to be part of or to promote
negotiations. To determine that, the Court has to work out
what, on a reasonable basis, the intention of the author was and
how it would be understood by a reasonable recipient. If a
document is marked "without prejudice" that is some indication that
the author intended the document to be so treated as part of a
negotiating process, and in may cases the recipient would receive
it understanding that that marking indicated that that was the
author's intention."
So it is according to the Judgment of Laddie J that the
labelling of a letter "without prejudice" is not of itself
exclusive, but merely one of the factors which indicates what
status will be accorded to the document. The third authority
referred to by Laddie J was Buckingham County Council v
Moran where Slade LJ concluded that the letter at
issue "amounted not to an offer to negotiate, but to an
assertion of the Defendant's rights, coupled with the information
that he contemplated taking his solicitor's advice unless the
council replied in terms recognising his asserted rights."
Laddie J concluded that the question came down to this: "Can
a document be regarded as a negotiating document? If so, and
if it is clear that it is intended by the author to be treated as
without prejudice, it must be covered by privilege.
It is also clear from these authorities that the opening
shot in negotiations can, depending upon the circumstances, amount
to a bona fide without prejudice correspondence and be privileged
accordingly."
In this case, Laddie J concluded that it was sufficient that one
paragraph only included an invitation to negotiate. Since the
letter was also marked "without prejudice", this reinforced the
message, and on that basis Laddie J concluded that the letter was
privileged. Again, the Court has made it clear that in
adjudicating upon the status of documentation, it will concentrate
on substance rather than style.
Jonathan Coad
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