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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.

[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

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

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.

...

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

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.

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.

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

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

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

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

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

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

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

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,

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)

Limited & Ors [2019] EWCA Civ 1937 per Arnold LJ at paragraphs 14 to 18). The pursuer

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.

[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:

"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

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

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

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

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.

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

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

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.