Strand, London, WC2A 2LL
B e f o r e :
|THE PRUDENTIAL ASSURANCE COMPANY LTD||Claimant|
|- and -|
|THE PRUDENTIAL INSURANCE COMPANY OF AMERICA||Defendant|
for the Claimant
Mr. Michael Silverleaf QC and Mr. Richard Vary, Solicitor Advocate, (instructed by
Messrs Linklaters) for the Defendant
Hearing date : Tuesday, 10th December 2002
Crown Copyright ©
The Vice Chancellor :
"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 L.J. in Cutts -v- Head  Ch 290, 306:
"That the rule rests, at least in part, upon public policy is clear from many authorities, and the convenient starting point of the inquiry is the nature of the underlying policy. It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. They should, as it was expressed by Clauson J. in Scott Paper Co -v- Drayton Paper Works Ltd. (1927) 44 R.P.C. 151, 156, be encouraged fully and frankly to put their cards on the table. ... The public policy justification, in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability".
The 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. 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."
"two justifications. First, 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 those circumstances I consider that this court should, in determining this appeal, give effect to the principles stated in the modern cases, especially Cutts -v- Head, Rush & Tompkins and Muller. Whatever difficulties there are in a complete reconciliation of those cases, they make clear that the without prejudice rule is founded partly in public policy and partly in the agreement of the parties. They show that the protection of admissions against interest is the most important practical effect of the rule. But to dissect out identifiable admissions and withhold protection from the rest of without prejudice communications (except for a special reason) would not only create huge practical difficulties but would be contrary to the underlying objection of giving protection to the parties (in the words of Lord Griffiths in Rush & Tompkins at page 1300):
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.
Parties cannot speak freely at a without prejudice meeting if they must constantly monitor every sentence, with lawyers or patent agents sitting at their shoulders as minders."
"...probable that the without prejudice communications are indeed governed by an implied agreement that they will not be used in the current or any subsequent litigation between the same or related parties." [p.884]
"...it would be a breach of contract for the [defendants] to use these documents for the purposes of the United States litigation." [p.888]
"The purpose of this letter is to advise you of an action we have taken in the People's Republic of China with respect to the Prudential name. It appears that both of our companies have an interest in pursuing business opportunities in China under the "Prudential" name, in one form or another, and have taken steps to secure servicemark protection of the name for our respective uses. On learning of your company's servicemark application, and the January 6 1995 deadline for filing an opposition thereto, we elected to make an opposition filing. We did so in a defensive manoeuvre, to preserve an opportunity to discuss these issues with you directly rather than fight them out before the authorities in the PRC. In addition to merely providing you with this notice of our action, it is my hope that we can begin a dialogue that will permit us to come to some mutually agreeable terms governing our respective uses of the Prudential name in China".
The Chief Executive of P-US then made a suggestion based on the arrangements relating to Canada and concluded
"If this suggestion is of interest to you, please contact me so we can work out the details. Our companies' willingness to co-operate and compromise on matters such as these in the past have stood us in good stead. I hope we can do the same with respect to China."
"Nevertheless in the same spirit of co-operation as has prevailed for the last twenty years, we are prepared to follow the Canadian precedent subject to one proviso."
Having indicated what the proviso was he continued
"We have until 15 February to respond to your opposition in China. Please therefore confirm to me by return if at all possible that the opposition is being withdrawn."
The Chairman of P-UK then gave details of that company's plans for the rest of South-East Asia and Canada.
"I did not mean our opposition to your filing in China to be a provocative act, but rather I wanted to make sure we had an opportunity to endeavour to avoid confusion as we will both be operating in Asia in the future.....I think a face to face meeting would be helpful to work out mutually compatible naming and branding strategies for Asia, but the concept mentioned in the penultimate paragraph of your letter seems to me to hold the key to a flexible but mutually agreeable plan."
The Vice-Chairman of P-US then set out his suggestion in some detail. He concluded
"I would propose that we try to work out a generalized solution, letting each of us operate throughout Asia."
"...our continuing desire to work together toward a worldwide agreement. We continue to see a resolution in PRC as an integral part of an overall set of protocols for Prudential use in Asia....and ultimately to an agreement for use world-wide."
He enclosed a draft letter to the Chinese authorities which he suggested should be signed by both parties confirming their agreement in principle and making a joint request to the relevant official in the Trade Mark Office of the People's Republic of China.
"(1) a party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it is disclosed, except where -
(a) the document has been read to or by the court, or referred to, at a hearing which has been held in public;
[(b) and (c)]
(2) The court may make an order restricting or prohibiting the use of a document which has been disclosed, even where the document has been read to or by the court, or referred to at a hearing which has been held in public."
It is not disputed that the documents in question were read to or by the court, or referred to at a public hearing, as explained in Barings v Coopers & Lybrand  3 AER 910. Laddie J did not make an order pursuant to Rule 31.22(2).