Costs information provided for the purposes of a mediation could be admissible when considering the costs consequences of a subsequent settlement

Friday, 17th February 2017

In the recent case of Savings Advice Limited v EDF Energy Customers Ltd [2017] EWHC B1 (Costs), the defendant provided the claimant with information relating to the amount of costs it had incurred in the lead up to a mediation between the two parties. The mediation was not successful, but the claim was settled a few months later following a Part 36 offer made by the defendant.

Although it was not disputed that the claimant was entitled to recover its costs from the defendant, the parties could not agree on the figure for those costs (specifically the costs of an ATE insurance premium). The claimant sought to rely on the costs information that the defendant had provided for the purposes of the earlier mediation, but the defendant argued that this information was subject to without prejudice privilege and, as such, could not be used for the purposes of calculating costs in subsequent settlement discussions.

The costs Judge, Master Haworth, found as a fact that the information relied on had been produced, or brought into existence, for the purposes of the mediation (and, as such, would not only usually be inadmissible under the without prejudice rule, but it could also be contrary to the confidentiality provisions of the mediation agreement to use this information subsequently).

Despite this, Master Haworth held that the information was in fact admissible. He came to this conclusion for three main reasons - firstly, because the statements referred to in the emails in question were purely factual and were not admissions or concessions and therefore, were not protected by without prejudice privilege; secondly, that as the emails containing the information were headed “without prejudice save as to costs” rather than simply “without prejudice”, it was clear that they should be admissible; and finally, that the whole purpose of the mediation was to achieve a settlement and, as such, any costs information given in mediation must be admissible in considering the costs consequences of any subsequent settlement.

This decision may seem like a departure from previous authorities relating to the without prejudice rule (the intention behind which is of course to enable parties to negotiate freely in order to come to a settlement), but it stands as an important reminder for parties and their solicitors that the without prejudice rule is subject to limitations, and although Master Haworth’s approach may not be followed in the future, parties should take time to consider whether they do need to mark documents “without prejudice” rather than “without prejudice save as to costs” if they are providing the information in question for a limited purpose and not for the purpose of settlement generally.

 

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