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In
Morris v Williams [2025] EWHC 218 (KB)
a District Judge considered the exceptions to the Without Prejudice rule in the context of fundamental dishonesty.
The key point to note is that simply because a communication is marked Without Prejudice, that does not prevent it from ever being utilized in court by the other party, as there are numerous exceptions to the rule, and one of those exceptions, which the court found applied here, is if there has been unambiguous impropriety by the party on behalf of whom the Without Prejudice communication was written.
Here is the text of the relevant letter taken from the Annex to the judgment.
ANNEX
Without Prejudice – Save as to costs
12th May 2023
Dear Sirs
Our Client: Mr Keith Morris
Accident date: 20th July 2018
Your Client: Mr William Simon Williams
We have instructions to put forward a Calderbank Offer in full and final settlement of our client’s claim.
This offer is a genuine attempt by our client to settle their claim at this stage and to avoid further costs being incurred. If it is not accepted, we reserve the right to refer this letter to the Court when the question of costs is determined.
The Claimant hereby offers to settle and discontinue his claim on the following basis:
- That the Claimant do pay the total sum of £20,000 to the Defendant, to cover both the interim payment of £1,500 and a contribution towards your legal costs and disbursements.
- That the Claimant will admit that he was fundamentally dishonest in respect of some of the representations made in respect of his claim. However, it should be noted that he is only prepared to make such an admission on the basis that it be contained in a non-disclosure agreement to the effect that the case cannot be discussed or reported in any way, with any third parties at all (including without direct reference to the Claimant or Minster Law by name).
This offer is open for acceptance until 4.00 pm on 16th May 2023. After such time, the offer is to be considered withdrawn and cannot be accepted. We reserve the right to withdraw this offer at any time prior to the deadline for acceptance.
We look forward to hearing from you.
Yours faithfully
Rebecca Waller
Rebecca Waller
Minster Law Ltd
The Judgment contains a detailed examination of the law in this area, and the principle goes back at least 98 years to the decision in
Scott Paper Co. v. Drayton Paper Works Ltd. (1927) 44 R.P.C. 151, 156
However, the rule is not absolute and one of the exceptions relates to situations where to exclude material marked as Without Prejudice would act as a cloak for perjury, blackmail, or other unambiguous in propriety and this was set out in the case of
Unilever PLC v The Proctor & Gamble Company [2000] 1 WLR 2436.
“24. Nevertheless there are numerous occasions on which, despite the existence of without prejudice negotiations, the without prejudice rule does not prevent the admission into evidence of what one or both of the parties said or wrote. The following are among the most important instances.
(4) Apart from any concluded contract or estoppel, one party may be allowed to give evidence of what the other said or wrote in without prejudice negotiations if the exclusion of the evidence would act as a cloak for perjury, blackmail or other “unambiguous impropriety” (the expression used by Hoffmann LJ in Foster v Friedland, 10 November 1992, CAT 1052). Examples (helpfully collected in Foskett’s Law & Practice of Compromise, 4th ed, para 9-32) are two first-instances decisions, Finch v Wilson (8 May 1987) and Hawick Jersey International v Caplan (The Times 11 March 1988). But this court has, in Foster v Friedland and Fazil-Alizadeh v Nikbin, 1993 CAT 205, warned that the exception should be applied only in the clearest cases of abuse of a privileged occasion.”
Somewhat curiously, given the text of the letter produced above, the claimant argued that it did not contain any admission of fundamental dishonesty, and that even if it did, which it clearly does, that admission was not so clear as to come within the unambiguous in propriety exception.
The court rejected that argument.
Nevertheless, conduct or statements which do not go beyond the bounds of what is expected in negotiation will not fall within the scope of the exception – see
Ocean on Land Technology (UK) Limited & Another v Richard Land & Others [2024] EWHC 396 (IPEC)
The court here concluded :
- In my judgment the letter does fall within the unambiguous impropriety exception and should be admitted. I have found the Letter to be a clear admission of fundamental dishonesty on the part of the Claimant. That goes well beyond, say, an acceptance that the Claimant has over-egged his injuries, or their effects on his day to day activities, or a concession that some aspects of his case may be difficult to prove. All of those might be things said in usual exchanges in the context of without prejudice negotiations and which would fall to be protected by the without prejudice rule as they do not demonstrate unambiguous impropriety. Here the line has been crossed. If the Letter is excluded there is more than a risk of the Claimant perjuring himself, which would not of itself be sufficient to bring the exception into play, but the certainty that the Claimant’s pleaded case was being put forward on a (at least partly) false basis, which is sufficient to bring the exception into play. This is an example where the public policy arguments in favour of litigating disputes with full disclosure trump the policy argument in allowing parties to speak candidly and with protection of the contents of the discussions, to encourage settlements. This case is, I think, analogous to the Raffa (supra) case: to refuse to admit the Letter would permit the Claimant to benefit from an unambiguous impropriety.
- Accordingly, and for the reasons I have given, I will allow the Letter to be adduced as evidence.
COMMENT
A detailed and helpful analysis of the law, and where there is an allegation of fundamental dishonesty, there must be the possibility of unambiguous in propriety.
The court here considered the fact that the letter was written by experienced solicitors, and whether or not that was the case here, problems are arising because of solicitors becoming overspecialized and not necessarily paying attention to more general legal principles.
In any event, it is most unwise, even in Without Prejudice correspondence, to make any admission of fundamental dishonesty, and it is hard to see why there would ever be any need to do so.
Fundamental dishonesty only has any relevance in personal injury cases, and only applies to claimants, and in all personal injury cases, and no other type of case, the claimant enjoys the protection of Qualified One-Way Costs Shifting.
Therefore, an offer to repay money already paid by a defendant, together with costs, leaves no one in any doubt that in reality, the claimant is accepting the allegations of the defendant.
However, such a communication, properly phrased and not referring at all to fundamental dishonesty, would not satisfy the unambiguous in propriety exception to the Without Prejudice rule.
As to fundamental dishonesty generally, John Hyde has an excellent article for the Law Society Gazette on 3 February 2025:
In depth: Are defence lawyers rushing too readily to ‘fundamental dishonesty’ allegations?
and that article appears here.
I have previously proposed that where a defendant makes an allegation of fundamental dishonesty which is not made out, then there should be an automatic and fixed uplift in both damages and costs.
This is particularly important in the context of the Fixed Recoverable Costs scheme.
In all Fixed Recoverable Costs cases, there is now a 50% uplift/reduction on costs in cases of misconduct.
Rather than a claimant’s solicitors having to reargue the matter all over again to show that there was misconduct, I propose that an allegation of fundamental dishonesty which is not upheld by the court, should automatically trigger a 50% uplift on the whole of a claimant’s costs of the action.
If that were the case, a defendant would know that the mere mention of the words ”fundamental dishonesty” triggers a 50% extra costs bill if not substantiated.
As to damages, maybe a 10% uplift on damages, over and above any 10% uplift triggered by a claimant’s successful Part 36 offer.
