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OUTER HOUSE, COURT OF SESSION
[2024] CSOH 90
CA67/23
OPINION OF LORD RICHARDSON
In the cause
ROCHE DIAGNOSTICS LIMITED
Pursuer
against
GREATER GLASGOW HEALTH BOARD
First Defender
and
ABBOTT LABORATORIES LIMITED
Second Defender
Pursuer: Lord Keen of Elie KC, Breen; Addleshaw Goddard
First Defender: Lindsay KC, Blair; NHS Central Legal Office
Second Defender: Lord Davidson of Glen Clova KC, McGinley; CMS Cameron McKenna LLP
20 September 2024
Introduction
[1]
This case involves a dispute about public procurement.
[2]
This is the second opinion that I have issued in relation to this matter. On 5 June
2024, I issued an opinion ([2024] CSOH 55) having heard the parties at debate. I refer to
paragraphs 1 to 10 of that opinion which set out the background to the parties' dispute and
explain the present procedural position.
2
[3]
As noted there, the pursuer is presently seeking to recover documents from each of
the defenders pursuant to two specifications of documents which had previously been
granted by the court. Following service of the specifications on them, each of the defenders
lodged confidential envelopes with the court.
[4]
Both of the defenders resisted the disclosure of the contents of these envelopes to the
pursuer. The first defender did so on two grounds: first, the first defender asserted that a
number of the documents were protected by legal professional privilege; and, second,
disclosure was resisted on the grounds that the documents concerned had been issued on a
"without prejudice" basis.
[5]
The second defender also resisted disclosure to the pursuer of the contents of the
confidential envelopes on the grounds that the documentation had been issued on a
"without prejudice" basis. In addition, the second defender asserted that the documentation
concerned was commercially confidential.
[6]
Motions were granted to open up the confidential envelopes and have the contents
considered by a commissioner. The commissioner considered the contents of each of the
envelopes and received submissions from the parties. Thereafter, he prepared two reports
to the court dated 20 November 2023 and 23 February 2024.
[7]
It was apparent from those reports that there were a number of issues that required
to be resolved by the court in order for progress to be made. Accordingly, I heard the
parties on those issues.
[8]
Whatever may have been the scope of the parties' disputes in respect of the
documents at an earlier stage, having heard submissions, it became clear that the parties
were in dispute in respect of two issues which were capable of immediate resolution. The
first of these was that the pursuer claimed that, having disclosed two documents containing
3
summaries of the legal advice provided to it by the NHS Central Legal Office, the first
defender had waived legal privilege. The second issue was that the parties disagreed both
as to the underlying legal basis of and the correct approach to be taken to cases in which
"without prejudice" privilege was asserted.
[9]
Both the pursuer and the second defender were agreed that once these two issues
had been resolved, questions would remain as to the second defender's assertion of
commercial confidentiality. However, both parties also agreed that this third issue would
require to be revisited in light of my decisions on the first two issues.
[10]
Accordingly, I address these issues in turn.
Waiver of legal privilege
The pursuer's submissions
[11]
The pursuer's position on this issue was straightforward. Amongst the
documentation which had been provided voluntarily by the first defender to the pursuer in
response to the two specifications were two papers: the first was entitled "Laboratories
Managed Service Procurement" dated 6 July 2023; and the second "Laboratory Managed
Service Procurement Briefing" dated 1 August 2023. The pursuer submitted that these
documents each contained detailed summaries of legal advice provided to the first defender.
[12]
In respect of the first paper, the pursuer founded on the following passages:
"Executive Summary
...
On Monday 26th June, our appointed legal counsel advised that the prospects of
defending the action and raising a motion to have the automatic suspension
preventing the award of contract to Roche Diagnostics Limited had limited prospects
of success. [sic]
...
1. Introduction
4
NHS GGC have abandoned its Procurement of the recent Labs Managed Service
Contract based on advice from legal counsel and the Central Legal Office (CLO)
litigation team
This follows the action raised in the Court of Session by Abbott Laboratories Ltd on
23 May 2023 [the summons was actually signeted on 17 May 2023] which led to the
imposition of an interim interdict preventing the award of the contract.
On 26 June 2023, our appointed legal counsel advised that the prospects of defending
the action and raising a motion to have the automatic suspension preventing the
award of contract to Roche Diagnostics Limited had limited prospects of success.
[sic]
...
5. Court Summons
On 23 May 2023 a commercial action was raised by Abbott in the Court of Session
[the summons was actually signeted on 17 May 2023] following NHS GGC's decision
to award to [sic] the contract to Roche, challenging the decision on numerous bases
under 10 headings, and a more general challenge alleging fundamental transparency
failures. This also included an interim interdict which prevented NHS GGC from
awarding the contract.
NHS GGC engaged legal counsel via the CLO Litigation Team, appointing Morag
Ross KC to act for us. From this point there was a very intensive period where work
began to prepare defences to the action which required a huge amount of
information to be gathered and organised and affidavits prepared. During this
period, NHS GGC had a series of consultations with legal counsel following which
our prospects would be good or sometimes could worsen depending on emerging
material being provided by NHS GGC.
At this point, the legal strategy was to prepare to raise a motion in court to lift the
suspension preventing the award of contract. If this was successful, the action could
potentially continue, but the remedy available to the court would be limited to
award of damages in the event that the process was deficient and deficient to the
extent that it would have overturned the result of the tender.
...
Up until this point, there had been no reason to believe that there were any issues
with evaluator scores, however this now became of significant concern to legal
counsel as it opened up the possibility that there could be deeper issues and unless a
full review of all scoring could be conducted, would cast significant doubt over the
robustness of the process.
In parallel to this, Abbott had filed a motion to the court seeking recovery of a large
number of documents relating to the tender process which it set out in a
`specification'. Our legal advisors reviewed this specification and advised that some
documents were commercially sensitive (to Roche) and should be opposed and that
some would have to be disclosed.
...
5
6. Board-led Review into Evaluator Scoring and Moderation
...
The outcome of the review was shared with our legal counsel and unfortunately the
conclusion was that given the amount of errors within the input scoring, some of the
figures given in the fourth outcome letter were not reliable and in these
circumstances, it would be legitimate for NHS GGC to conclude that its confidence in
the process has been diminished to the extent that the best course was to abandon.
In addition to the advice that our prospects of our motion being successful were now
badly diminished, NHS GGC also had to consider that the current contract was due
to expire on the 12 September 2023 and in any view, it would not be possible to effect
a transfer of services by 13 September 2023 and so also had to consider the interests
of maintaining provision of essential laboratory services for our patients across
primary and secondary care services.
7. Decision to abandon
NHS GGC considered that as the prospects of convincing the court to lift the
suspension were now weak and in light of the impending end date of the current
contract and risk of service failure, that it had no realistic option other but [sic] to
abandon the procurement and seek to re-run the competition.
The decision to abandon is not without risk as it raises the prospects of being
challenged by Roche however we are confident that our decision to abandon the
procurement is based on the advice given to us by legal counsel and in the end, made
only in the interest of the need to take action to ensure continuation of the Labs
managed service and to protect patient care and with a commitment to re-run the
competition
8. Interim contract with Abbott
Having made the decision to abandon the procurement, NHS GGC had to act
quickly to enter into a negotiation with the incumbent provider to extend the current
contract to allow sufficient time for a re-procurement and associated implementation
of new equipment from the awarded supplier.
In doing so NHS GGC had to take into account:
...
6. The legal advice that the only viable mechanism open to us is Regulation 72 of the
Public Contracts (Scotland) Regulations which allows for modifications of contracts
during their term in particular circumstances as long as the modification represents
no more than 50% of the original contract value (with indexation applied)".
[13]
In respect of the second paper, the pursuer relied on the following passages:
"3. Court Summons from Abbott
...
NHSGGC engaged legal counsel via the CLO Litigation Team, appointing a KC to
act for us on this specific issue and meetings followed to examine our prospects
6
regarding this challenge. During this period the local team identified a few issues
where prior knowledge had been used during the scoring process. Prior knowledge
cannot be used in scoring a bid submission as it leads to unequal treatment of
bidders in the process. Evaluators must score objectively only on the basis of the
bidder submission and with reference to the specification of requirements set out
within the Invitation to Tender.
In parallel to this, Abbott had filed a motion to the court seeking recovery of a large
number of documents relating to the tender process. Our legal advisors reviewed
this specification and advised that some documents were commercially sensitive and
should be opposed and that some would have to be disclosed. The additional
concern of this would be that sharing of these documents may influence a future
tender scenario which was recognised as being a potential outcome.
...
Taking detailed consideration of the facts, strong legal advice from CLO and Kings
Counsel together with the current contractual position and the need to ensure that
service provision was not compromised it was decided that a failed procurement
would require to be concluded and that an extension with the existing supplier
would be required, which can be actioned within current procurement frameworks.
...
5. Next Steps
As can be seen from the dates above, the position remains live and NHSGGC are
currently working with CLO and KC to respond to the current action and provide a
response to the court summons.
In the interim period NHSGGC will require to progress an interim arrangement
regarding the continuation of the current contract and this will be developed in the
coming week. We are strongly advised that this can be legally actioned under
procurement regulations, albeit it may result in a further action notice from Roche
given correspondence to date.
...."
In these circumstances, the pursuer submitted that the first defender had acted in a way
which was inconsistent with the maintenance of confidentiality over that advice (Scottish
Lion Insurance Co Ltd v Goodrich Corp 2011 SC 534 at paragraph 46). Accordingly, the pursuer
submitted that the first defender ought to be deemed to have waived privilege over the
advice.
7
The first defender's submissions
[14]
Senior counsel for the first defender agreed that the correct approach to the issue of
waiver was as set out by Lord Reed in giving the opinion of the court in Scottish Lion. He
emphasised that the intention of the person entitled to assert privilege was immaterial, the
question was to be approached objectively.
[15]
As to the two documents upon which the pursuer founded, senior counsel submitted
that these merely indicated that the first defender had taken legal advice. That was hardly
surprising in the circumstances and of little import. Decisions taken in relation to
procurement in the context of the Public Contracts (Scotland) Regulations 2015 inevitably
involved a detailed consideration of the law. The fact that legal advice had been taken did
not, in itself, amount to a waiver of the content of that advice: Bullough v Royal Bank of
Scotland 2019 SLT 524 at paragraph 24. The passages relied upon by the pursuer set out, at
best, conclusions, rather than the advice which vouches those conclusions.
[16]
The first defender had not provided partial or unfair disclosure; it had not, in any
meaningful sense, disclosed what the legal advice was: Paragon Finance v Freshfields
[1999] 1 WLR 1183 at 1188. The documents had been produced by the first defender as they
demonstrated the reasons for the decisions made by the first defender. Had the documents
been expressed in such a way as to suggest that the first defender itself was concerned
about, among other things, prospects of success, there could be no suggestion at all of
waiver. The ordinary reader would not read those documents and conclude that their
disclosure was inconsistent with maintenance of privilege in relation to the detailed legal
advice provided by solicitors or counsel. It was submitted that no attempt has been made
by the first defender to obtain any forensic advantage by unfairly selectively deploying legal
advice. The first defender did not found on the existence of legal advice in its pleadings.
8
Accordingly, the court ought not to require disclosure of any aspect of the legal advice
which was tendered to the first defender.
[17]
As a fallback position, senior counsel submitted that, in the event that the court
considered that the first defender had waived any legal advice privilege, any such waiver
had been limited. It was restricted to the advice relied upon by the first defender at the two
meetings for which the papers had been prepared. It was well recognised that privilege
might be waived for a limited purpose without being waived generally (Scottish Lion at
paragraph 47).
Decision
The law
[18]
The parties were not in dispute in relation to the correct approach to be adopted in
relation to determining whether legal professional privilege has been waived. Both parties
relied on the summary of the law set out by Lord Reed in giving the opinion of the court in
Scottish Lion (at paragraphs 44 to 48). In this regard, I note also that Lord Doherty helpfully
drew together the relevant authorities in Bullough (at paragraph 17).
[19]
On this basis, I consider that the following points are of significance for present
purposes. First, there is no question of there having been an express waiver by the first
defender. Accordingly, the question is whether a waiver is to be inferred from the
circumstances. In this case, those circumstances are restricted to the disclosure by the first
defender of the two papers founded upon by the pursuer (see [12] and [13] above). Second,
more particularly, the question is whether it can be inferred from the first defender's
production of the two papers that it has given up its right to resist further disclosure by
acting in a way which is inconsistent with its retention of that right. Third, it is clear that the
9
circumstances must be assessed objectively: the first defender's subjective intention is
irrelevant.
[20]
Fourth, where, as in the present circumstances, the issue of waiver arises in the
context of information being disclosed, in part, in the course of litigation, considerations of
fairness may bear on whether a party's conduct has been inconsistent with the maintenance
of confidentiality. That is because "While there is no rule that a party who waives privilege
in relation to one communication is taken to waive privilege in relation to all, a party may
not waive privilege in such a partial and selective manner that unfairness or
misunderstanding may result." (Paragon at 1188 per Lord Bingham of Cornhill CJ).
Application
[21]
Against that background, the crucial question in the present case is whether the first
defender's disclosure to the pursuer of the two papers founded upon is inconsistent with the
first defender's assertion of privilege.
[22]
In order to answer that question, it is first necessary to consider whether the two
papers in fact contain legal advice to the first defender which could have been the subject of
privilege. Senior counsel on behalf of the first defender resisted this. He argued that the
content of the papers disclosed little more than that the first defender had taken legal advice
or, at best for the pursuer, the conclusions drawn from that advice.
[23]
Looking at the two papers in detail, I do not consider that the first defender's
position is tenable. It is undeniable that they contain the detail of aspects of the advice
tendered to the first defender. In this regard, I do not consider that it matters that the
documents bear to have been prepared by the first defender itself rather than its legal
advisers (Dundee University v Chakraborty 2023 SC 297 at paragraph 19.) The first paper, in
10
particular, discloses details of the legal advice which the first defender received in respect of
the developing dispute with the second defender arising out of the procurement exercise.
The paper sets out how that advice apparently altered as further issues with the
procurement process were uncovered. Separately, the first paper sets out the advice which
the first defender received that:
"the only viable mechanism open to us is Regulation 72 of the Public Contracts
(Scotland) Regulations which allows for modifications of contracts during their term
in particular circumstances as long as the modification represents no more than 50%
of the original contract value (with indexation applied)".
[24]
The second paper also discloses that the first defender has been "strongly advised"
that an interim arrangement regarding the second defender's current contract can be
"legally actioned" under the procurement regulations.
[25]
Accordingly, looking objectively at the content of the two papers, their disclosure is
not consistent with the retention of the first defender's right to resist the production of
material on the grounds of legal professional privilege. In other words, by disclosing the
two papers to the pursuer, the first defender must be taken to have waived its right to resist
the use of those papers on the grounds that they contain legal advice. In fairness to the first
defender, it has never sought to resist the use of the two papers on this basis. As I have
noted above, the first defender's position was, rather, that the papers did not contain legal
advice.
[26]
The next stage in the analysis is to consider the extent of the first defender's waiver.
As Lord Reed made clear in Scottish Lion, waiver of privilege requires to be distinguished
from loss of privilege (at paragraph 46). For present purposes, the particular question is
whether the consequence of the first defender's actions in waiving privilege in relation to the
11
two papers founded upon by the pursuer is that the first defender has given up its right to
resist disclosure of further documentation detailing the legal advice it received.
[27]
Determining the extent of the first defender's waiver gives rise to considerations of
fairness as it is necessary for the court to ensure that privilege is not waived in a partial way
which would risk unfairness or misunderstanding (Scottish Lion at paragraph 48).
[28]
On behalf of the first defender, it was submitted that the two papers were produced
in order to set out the reasoning which underlay the decisions which the first defender had
taken. It was stressed that the first defender was not seeking to obtain any forensic
advantage in so doing by "cherry picking" the legal advice which was deployed. The first
defender made no averments as to the legal advice which it had received and was not
seeking to put it in issue.
[29]
In all the circumstances, I am quite satisfied that the first defender must be taken to
have waived its right to resist the disclosure of documentation disclosing the legal advice
which it set out in those two papers. I do not consider that the first defender has established
any basis for restricting its waiver to any greater extent.
[30]
First, I do not consider that the first defender's subjective intention in disclosing the
two papers to the pursuer is of particular relevance. As Lord Reed made clear in Scottish
Lion (at paragraph 47), the court requires to approach the question of waiver objectively.
Furthermore, it is also clear from the authorities that the court must have regard to the
overarching fairness of the proceedings. The matter was, in my view, well encapsulated by
Mr Justice Mustill (as he then was) in Nea Karteria Maritime Co Ltd v Atlantic & Great Lakes
Steamship Corp (No 2) [1981] Com LR 138, 139:
"...where a party is deploying in court material which would otherwise be
privileged, the opposite party and the court must have an opportunity of satisfying
themselves that what the party has chosen to release from privilege represents the
12
whole of the material relevant to the issue in question. To allow an individual item to
be plucked out of context would be to risk injustice through its real weight or
meaning being misunderstood."
[31]
Second, although it is true that the first defender has not directly put the content of
the legal advice it received in issue in the pleadings, the nature of the legal advice it received
has a bearing on matters which the first defender seeks to prove. The first defender avers
that its decision to abandon the procurement process was one which a reasonable
contracting authority could reach (Answer 40). Further, in Answer 52, the first defender
avers that it had no other "realistic option" but to extend its existing contract with the
second defender. In both cases, the first defender seeks to justify the decisions which it has
taken in the course of the procurement process. That is, of course, precisely the intention of
both of the papers founded upon by the pursuer and, in that context, both of the papers rely
upon the legal advice which the first defender received.
[32]
Accordingly, for these reasons, I conclude that the first defender must be taken to
have waived its right to resist the disclosure of the legal advice the details of which are set
out in the two papers founded upon by the pursuer. In particular, I consider that the first
defender has waived its right in respect of (i) the advice it received in relation to the defence
of the proceedings raised by the second defender on 17 May 2023 including the merits of its
position; (ii) the advice it received in relation to its options following the abandonment of
the procurement process; and, (iii) the advice it received in respect of the compatibility of
the extension of the second defender's contract with procurement law.
[33]
In light of my finding in respect of waiver, I am minded to remit matters back to the
commissioner to review all the documentation which he has concluded is covered by the
first defender's assertion of legal professional privilege and to exclude all documentation
which is subject to the first defender's waiver. However, as I was not addressed by either
13
the pursuer or the first defender as to how this eventuality might be approached, I will put
the case out by order so that I can be addressed on it.
"Without prejudice" privilege
The pursuer's submissions
[34]
The pursuer's principal position was that Scots law did not recognise "without
prejudice" as a bar to the production of documents in response to a specification of
documents. Senior counsel submitted that consideration of the authorities made clear that
Scottish courts had treated statements made between parties in the context of negotiation to
achieve a compromise as being of limited probative value. Senior counsel highlighted that it
was clear from early authorities that the approach to the recovery of documents in Scotland
differed from that followed in England and Wales. In this regard, he referred to the opinion
of Lord Justice Clerk Hope in McCowan v Wright (1852) 15D 229 at 231 to 232 in which his
Lordship highlighted these differences. Senior counsel also referred to Lord Hunter's
observations on what his Lordship perceived was a greater emphasis in Scotland on the
importance of the public interest in the administration of justice when dealing with
questions of document recovery in Sante Fe International Corporation v Napier Shipping SA
1985 SLT 430 at 432.
[35]
Senior counsel relied upon the decision of the Inner House in Millar v Small
(1856) 19D 142. That case concerned two actions which involved the same parties. The defender,
Mr Small, alleged that the other litigation had been settled by collusive arrangement and
these allegations were the basis of his defence. The court had not determined the relevancy
of his averments but had concluded that they were a fit subject for inquiry. Mr Small sought
to recover documents relating to that alleged arrangement from one of the parties to the
14
allegedly collusive settlement and the haver was convened to the case. The haver objected
to producing the documents essentially on the grounds that they were privileged in that
they involved private discussions in relation to, among other things, the action which had
been settled. The Inner House held that Mr Small was entitled to recover excerpts from the
documentation insofar as these related to the alleged collusive arrangements. Senior counsel
submitted that this case was directly analogous to the present case and it had not been
doubted or questioned in any subsequent case.
[36]
Senior counsel noted that in England and Wales, there is clear recognition of a
"without prejudice" rule governing the admissibility of evidence founded upon the public
policy of encouraging litigants to settle their differences rather than litigate (see Rush &
Tompkins v Greater London Council [1989] 1 AC 1280 (HL(E)) per Lord Griffiths at 1299).
Furthermore, it is apparent that this rule extends to preventing the production of documents
which are covered by this rule (Rush & Tompkins per Lord Griffiths at 1305).
[37]
Senior counsel contrasted this with the position in Scotland. In Daks Simpson Group v
Kuiper 1994 SLT 689, Lord Sutherland granted summary decree on the basis of an admission
which had been made in a letter which concluded with the words "without prejudice". His
Lordship set out his understanding of the legal position as follows:
"... The general principle underlying the rule is that if offers, suggestions,
concessions or whatever are made for the purposes of negotiating a settlement, these
cannot be converted into admissions of fact. I do not read Oliver LJ's statement [in
Cutts v Head [1984] Ch 290] as saying anything beyond that. The observations in Bell
[v Lothiansure 1990 SLT 58] were made in the context of the averment being that
solicitors for the insurers offered to settle the pursuers' claims and all other claims
arising from the same cause for the sum of £250,000, but the letter proceeded on the
narrative that the claims were against the first defenders and did not concern the
insurers and expressing the view that any loss was not covered under the policies
but nevertheless the insurers were prepared to make an ex gratia offer. Quite plainly,
in my view, that could not be converted into some form of admission. "Without
prejudice" in my view means, without prejudice to the whole rights and pleas of the
person making the statement. If, however, someone makes a clear and unequivocal
15
admission or statement of fact, it is difficult to see what rights or pleas could be
attached to such a statement or admission other perhaps than to deny the truth of the
admission which was made. I see no objection in principle to a clear admission being
used in subsequent proceedings, even though the communication in which it
appears is stated to be without prejudice. I would adopt what is said by Lord Wylie
in Watson-Towers [v McPhail 1986 SLT 617] and the Canadian view expressed
in Kirschbaum [v "Our Voices" Publishing [1971] 1 OR 737]." (at 692 B-D)
Lord Sutherland's articulation of the principles in Daks was approved by the Inner House in
Richardson v Quercus 1999 SC 278 (at 283 to 284 per Lord Prosser) albeit that it was
recognised that each case required to be judged on its own facts.
[38]
Senior counsel emphasised that this distinctly Scottish approach was recognised in
the English case heard before the House of Lords of Bradford & Bingley v Rashid [2006] 1 WLR 2066.
Lord Hoffman had recognised that the Scottish approach, in contrast with the position
in England, involved, as his Lordship put it, confining the without prejudice rule to
admissions which could be construed as having been made hypothetically rather than
without qualification. Lord Hoffman was not attracted by this approach which he did not
consider was consistent with modern English authority (at paragraph 13). Lord Hope also
recognised this difference in approach in his analysis of the Scottish case law (at
paragraphs 25 to 30), as did Lord Brown and Lord Mance (at paragraphs 65 and 89 to 90
respectively). Senior counsel also drew my attention to Lord Rodger's observation, again in
an English appeal, that the approach of the Scottish courts was inconsistent with the
approach adopted in Rush & Tompkins (Ofulue v Bossert [2009] 1 AC 990 at paragraphs 38
and 39).
[39]
Senior counsel submitted that, for present purposes, the important difference in
approach in Scotland was, first, that the questions arising from "without prejudice"
communications were dealt with at the stage of considering the admissibility of the evidence
rather than at the stage of considering the recoverability of documents. Secondly,
16
determining admissibility involved consideration of those documents in the context of the
surrounding circumstances (Richardson at 283 to 284 per Lord Prosser).
[40]
On that basis, the question for the court was when to determine the question of
admissibility of the evidence contained in the documents in respect of which the defenders
were asserting the "without prejudice" privilege. Senior counsel submitted that
determining this question after the pursuer had had an opportunity to consider the
documents concerned was the preferable course.
[41]
Senior counsel also advanced two alternative arguments which proceeded on the
basis that the pursuer's principal submission was wrong and that "without prejudice"
privilege, as developed in the English case law, also existed in Scots law. On this premise,
the pursuer first submitted that without prejudice privilege did not extend to the agreement
which resulted from the privileged negotiations (BGC Brokers LP & Ors v Tradition (UK)
submitted that on this basis the agreement concluded between the defenders regarding the
extension of the second defender's contract ought not to be covered by any privilege.
[42]
The second alternative argument advanced by the pursuer was based on a further
recognised exception to the English rule of without prejudice privilege namely
"unambiguous impropriety". This exception had been recognised by Lord Justice Robert
Walker in Unilever plc v The Procter & Gamble Co [2000] 1 WLR 2436 at 2444. In distilling the
case law in that case, his Lordship had identified an exception to the without prejudice rule
where the exclusion of the evidence as to negotiations would "act as a cloak for perjury,
blackmail or other "unambiguous impropriety". Senior counsel submitted that insofar as
the defenders were able to rely on this privilege, the court should consider the possible
applicability of this exception.
17
[43]
In this regard, for completeness, senior counsel drew my attention to the Sheriff
Court decision of Lujo Properties Limited v Gruve Limited 2023 SCLR 373. For present
purposes, this case did not involve the recovery of documents but concerned whether
particular communications were admissible. The learned Sheriff appeared to have been
persuaded that the English rule of "without prejudice" privilege essentially applied in
Scotland albeit it did not appear that the point had been fully argued before him (at
paragraph 85). In any event, the pursuer's position was that, insofar as the rule did exist in
that form, Lujo represented a recognition in Scotland that the "unambiguous impropriety"
rule did apply (at paragraph 83).
The defenders' submissions
[44]
Senior counsel for both of the defenders submitted that "without prejudice" privilege
existed in Scots law and ought to be applied in the present case.
The first defender's submissions
[45]
On behalf of the first defender, senior counsel submitted that the "general rule" that
nothing written or said "without prejudice" in such circumstances should be looked at
unless with the consent of both parties (which apparently originated from the English case
of Walker v Wilsher (1889) 23 QBD 335) had been recognised by Lord McCluskey in Bell v
Lothiansure Limited 1990 SLT 58. The first defender recognised that there had been
comparatively little discussion of this principle in Scottish case law.
[46]
However, senior counsel's position was that it was difficult to see any significant
difference, as a matter of principle, which would justify a different outcome north and south
of the border. The guiding principle which had been recognised in the English cases was:
18
"that parties should be encouraged so far as possible to resolve their dispute without
resort to litigation, and that they should not be discouraged by the knowledge that
anything that is said in the course of such negotiations may be used to their prejudice
in the course of the proceedings: Cutts v Head [1984] Ch 290, 306 per Oliver LJ."
(Bradford & Bingley at paragraph 24 per Lord Hope)
The House of Lords had also recognised that without prejudice privilege could be asserted
against a third party by other parties who had, between themselves, settled a dispute (Rush
& Tompkins).
[47]
Senior counsel accepted that, notwithstanding without prejudice privilege,
unequivocal admissions made in that context might be admissible. Accordingly, the first
defender submitted that the court should consider all the documentation in respect of which
without prejudice privilege was asserted and then identify any admissible admissions. It
was stressed on behalf of the first defender that the individual documents ought not to be
considered in isolation.
The second defender's submissions
[48]
Senior counsel for the second defender also submitted that the court should
approach the question of without prejudice privilege by examining the documents to
identify any unequivocal admissions.
[49]
The second defender's position was essentially entirely in accord with that of the first
defender. In support of the first defender's arguments in respect of the policy underlying
without prejudice privilege, senior counsel submitted that it was important to appreciate
that this policy was reflected in practice. Parties reasonably did not expect the content of
their negotiations to be opened up to inspection by the court and the wider world. Were this
to happen, it would have an enormously chilling effect. It could hardly be suggested that
the English courts had gone off on a frolic of their own. There was no difference between
19
the jurisdictions in recognising that there was a legitimate policy interest in protecting
communications made during the course of negotiation. Insofar as there was a difference it
arose at the margin and related to how that interest was to be protected.
[50]
Senior counsel submitted further that the absence of Scottish case law arose from the
universal practice of parties relying on the without prejudice formulation He also suggested
that nineteenth century case law which pre-dated that practice had to be treated with
caution.
Decision
[51]
The defenders seek to resist production of documents in response to the pursuer's
two specifications which were granted on 22 August 2023 and 7 September 2023
respectively. The basis of this resistance is that the documents are said to be covered by
"without prejudice" privilege . In other words, that the documents were communications
made between the defenders as parties to a dispute in an attempt to settle that dispute.
[52]
The defenders develop their position on the basis of a series of English cases of the
highest authority: Rush & Tompkins v Greater London Council; Bradford & Bingley v Rashid;
Ofulue v Bossert (all referred to above); and Oceanbulk Shipping & Trading v TMT Asia
[2011] 1 AC 662. Although I understand that the approach taken by the courts in England and
Wales to without prejudice negotiations has undergone significant development over the
years, the general position is as stated by Lord Griffiths in Rush & Tompkins (at 1299D to
1300B):
"The `without prejudice' rule is a rule governing the admissibility of evidence and is
founded upon the public policy of encouraging litigants to settle their differences
rather than litigate them to a finish. It is nowhere more clearly expressed than in the
judgment of Oliver LJ in Cutts v Head [1984] Ch 290, 306... The rule applies to
exclude all negotiations genuinely aimed at settlement whether oral or in writing
20
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 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."
For present purposes, Lord Griffiths' speech in Rush & Tompkins is important in two other
respects. First, Lord Griffiths held that the general public policy that applied to protect
genuine negotiations from being admissible evidence should be extended to protect those
negotiations from being discoverable (1305 C-E). Second, his Lordship concluded that the
without prejudice rule was not limited to two party situations: the without prejudice rule
applied also to protect negotiations between two parties from other parties involved in the
same litigation (1305A-C). On this basis, the defenders argued that their negotiations ought
to be protected from recovery by the pursuer in the present proceedings.
[53]
However, the fundamental problem for the defenders' argument is that it is apparent
that the courts in Scotland have not adopted the without prejudice rule as it is understood in
England and Wales.
[54]
In Scotland the starting point for the treatment of statements made in the course of
negotiations is a recognition that offers, suggestions and concessions or other statements
made for the purpose of negotiating a settlement cannot be converted into admissions of fact
(see Daks at 692B-C). This appears to have been long settled in 1887 when William Dickson
published his Treatise on the Law of Evidence in Scotland (at §305). However, it is also clear
from Lord Sutherland's opinion in Daks that that principle does not apply to a clear and
21
unequivocal admission or statement of fact whether or not such a statement was said to be
"without prejudice" (Daks at 692C-D). Lord Sutherland's statement of the law was expressly
approved by the Inner House in Richardson (283 D-E per Lord Prosser; 289 I per Lord
Abernethy; and 290 F-G per Lord Johnston).
[55]
In Bradford & Bingley, an English appeal heard before the House of Lords, Lord Hope
summarised the Scottish position as follows:
"The cases that have been decided on this issue in Scotland indicate that the judges
there have adopted the same guiding principle as that described by Oliver LJ
in Cutts v Head [1984] Ch 290 , 306. But they take a more pragmatic approach to the
question how it is to be applied in practice. They are more willing to find that
admissions in a document which contains an offer to compromise are to be treated as
admissible. Offers, suggestions or concessions made in the course of negotiations are,
of course, given the benefit of the privilege. But they are distinguished from clear
admissions or statements of fact which, although contained in the same
communication, did not form part of the offer to compromise. On such admissions
or statements, if they can be clearly identified as such, the other party is entitled to
rely. Another important difference in the practice which is adopted in Scotland is
that professional advisers who wish to take advantage of the without prejudice rule
are expected to say so expressly, and invariably do so. Authority is lacking on the
question whether the rule can be invoked where the letter in question omits these
words." (at paragraph 25)
[56]
As was recognised by Lord Hoffman in Bradford & Bingley (at paragraph 13), it
appears as though the courts in Scotland have struck a different balance between the two
competing public interests of promoting settlement, on the one hand, and the open
administration of justice, on the other. However, it would appear that this difference of
approach is not a recent development in our law. As senior counsel for the pursuer pointed
out during his submissions, in 1852 Lord Justice Clerk Hope observed in McCowan v Wright:
"But in considering these and other cases in the English books, even on points which
appear free from technicality, there is always fertile source of error from not
attending to points in the Scotch law clearly fixed, and which often affect the extent
or the manner in which principles, perhaps common to both laws, are to be
administered and applied by us. For instance, in the sort of sweeping attempt to call
upon us to make a general and unreasoning surrender to English cases, pressed upon
us in a way which I am sure no Judge in the House of Lords would sanction, it was
22
entirely overlooked, that the right in Scotland to recover documents either from his
opponent or from a third party, if the third party has no separate interest, is much
broader than I would almost say totally different from any corresponding remedy
in the law of England, as any one who looks into a recent learned treatise on the
Right of Recovery in the English law, will at once perceive." (at page 232)
In this regard, it is also interesting to note that the need to approach questions of privilege in
accordance with Scottish authority as opposed to by reference to the English legal position
was emphasised relatively recently by the Inner House, in the context of legal professional
privilege, in Narden Services Limited v Inverness Retail and Business Park Limited 2008 SC 335 at
paragraph 11).
[57]
An illustration of the more pragmatic approach described by Lord Hope in Bradford
& Bingley can be seen in Richardson. Importantly, for present purposes, the Inner House
emphasised the need to consider the content of any document, including any with the
"without prejudice" docquet, which was said not to be admissible in the context of all the
surrounding circumstances (284 B-C per Lord Prosser; 290E-F per Lord Johnston). The need
for such a consideration of the documents and their circumstances in order to resolve the
underlying issue of admissibility strongly points away from the assertion of documentation
being "without prejudice" providing a basis to resist its production in response to a
specification of documents. It is more suggestive of this assertion providing a potential basis
for objecting to admissibility of the statements contained therein and being determined at
that stage.
[58]
Were it to be otherwise, the court would, at least in theory, be put in the highly
unsatisfactory position of requiring to determine the issue of admissibility of evidence in
question without being able to hear relevant evidence as to the surrounding circumstances
and without the benefit of informed submissions from both sides. I do not consider that to
proceed in this way would be consistent with the pragmatic approach adopted in Richardson.
23
The alternative would be to hear any evidence, the admissibility of which was challenged,
under reservation of all questions of competency and relevancy. Hearing evidence under
reservation is a well-recognised procedural mechanism for enabling the court to resolve
issues of admissibility arising from an assertion of privilege in the case of oral evidence (see
Walker and Walker, The Law of Evidence in Scotland, Fifth Edition, 2020 at paragraph 10.1.1
and MacNeill v MacNeill 1929 SLT 251 (OH)).
[59]
In these circumstances, I do not find it surprising that senior counsel for the
defenders were unable to provide any Scottish authority for the proposition that "without
prejudice" privilege provided a means for resisting the production of documentation in
response to a specification of documents. For what it is worth, the only case cited to me in
which the question appears to have been at issue, Millar v Small, pointed in the other
direction. In that case, documents relating to the settlement of an action between two parties
were held to be recoverable at the instance of a third. Albeit I accept that Millar is of limited
assistance in that the opinions are brief and appear to have been influenced by the particular
circumstances of that case, equally, it is also true, as was pointed out by senior counsel for
the pursuer, that the case has never been doubted.
[60]
The approach of the Scottish courts to the treatment of statements made in the course
of negotiations can be contrasted with the treatment of claims of legal professional privilege
(see Dundee University v Chakraborty at paragraph 16). Legal professional privilege has been
described as an "absolute" right (Narden at paragraph 11). Accordingly, when dealing with
legal professional privilege, the Inner House in Narden has given guidance that the
procedure to be followed ought to involve a judge and, if necessary, a commissioner
considering the documents without allowing the party contesting confidentiality to see the
documents in advance of a decision (at paragraph 13). I consider that this difference in
24
approach flows from the different policy considerations arising in the context of legal
professional privilege.
[61]
Against this background, I have considered the documentation in respect of which
the defenders seek to resist recovery on the grounds that they were covered by "without
prejudice" privilege. In light of my consideration, I am quite satisfied that it would be
wholly inappropriate for me to seek to determine at this stage either the extent to which the
documents can properly be said to be covered by "without prejudice" privilege; or, in the
event that that privilege does apply, to consider how the restriction to this privilege, as
articulated by Lord Sutherland in Daks, in respect of clear and unequivocal admissions of
fact, falls to be applied.
[62]
Instead, I consider that these two questions ought properly to be resolved in the
context of all the surrounding circumstances once any evidence deriving from these
documents has been heard, under reservation. That exercise will be facilitated in the present
case by the use of witness statements in lieu of evidence in chief. As such, parties will
require to give notice in advance of any reliance on evidence the admissibility of which is
disputed and the issue can then be effectively case managed.
[63]
For completeness, I add that I was not persuaded by the arguments of senior counsel
for the second defender that proceeding in the way I have identified would have "an
enormously chilling effect" on the conduct of negotiations more generally. This is
essentially for two reasons. First, it has been clear for the last 25 years since Richardson that
clear and unequivocal admissions or statement of facts made in the context of negotiations
are admissible evidence even made in expressly "without prejudice" correspondence. So far
as I am aware, there has been no suggestion that the pragmatic approach of the Scottish
courts for the last quarter of a century to this issue has had the profound effect on practice
25
contended for by senior counsel. Certainly, nothing of this kind was presented to me in
argument.
[64]
Second, I consider that this aspect of the second defender's argument overlooks the
fact that in the present case the issue of "without prejudice" privilege does not arise solely as
between the two parties to the negotiation. Rather it arises in the relatively unusual
situation whereby both parties to the negotiations (the defenders) seek to prevent recovery
by a third party (the pursuer). It is the involvement of a third party, who is unaware of the
content of the negotiations, which gives rise to the particular procedural complexities in the
present case.
Disposal
[65]
I will put the case out by order in order that I may be addressed by the parties on
further procedure in light of my findings in respect of the two issues about which I heard
submissions.
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