ReSolution Issue 13, May 2017 | Page 7

Not all documents or evidence produced for the purposes of mediation will be privileged
Generally, documents produced for the purposes of mediation are, subject to certain limited exceptions, covered by without prejudice privilege ie, they cannot be referred to or used as evidence outside the mediation process unless the parties (who own the without prejudice privilege jointly) all agree to waive the privilege.
The reasoning behind this is to enable parties to speak freely and frankly and to make admissions and/or concessions in an attempt to achieve settlement of a dispute in the knowledge that such admissions or concessions cannot be used against them subsequently if settlement is not achieved.
However, during a costs assessment in the recent case of Savings Advice Ltd and Anor v EDF Energy Customers Plc [2017] EWHC B1 (Costs) an issue arose as to the admissibility of information provided during a mediation and the court held that information about the level of the defendant's costs, produced for the purposes of the mediation, could subsequently be used as evidence of those costs.
The use of this information was contrary to the express terms of the Mediation Agreement which provided that all documents or other material produced for or brought into existence for the mediation will be subject to without prejudice or negotiation privilege … [and] not be disclosable in any litigation or arbitration connected with the dispute so long as and to the extent that such privilege applies.
A settlement had been achieved some months after the unsuccessful mediation, resulting in a detailed assessment of the claimant's costs. The claimant attempted to use the defendant's costs information in the detailed assessment to calculate an after-the-event insurance policy premium based on them and which the defendant was liable to pay. The defendant objected.
Master Haworth found as a fact that the information relied on consisted of documents produced for or brought into existence in relation to the proposed mediation. However, he took the view that, despite the without prejudice nature of the mediation and the confidentiality provisions contained in the mediation agreement, the information on costs was admissible evidence in the costs proceedings because the statement as to the level of costs was a statement of pure fact, not an admission or concession, and not therefore covered by without prejudice privilege, in any event the relevant communications were marked “without prejudice save as to costs”, and “[T]he whole purpose of the mediation was to achieve a settlement. In those circumstances, any costs information given in mediation is and must be admissible in order to work out the consequence of any subsequent settlement.”
Parties have typically tended to regard without prejudice privilege as covering the entirety of documents and communications made or produced for the purposes of attempting to settle a dispute. The judgment does seem to be an anomaly based as it was on the “pure fact” point, but it does serve as a reminder that limitations can be placed on privilege and the common-place carve-out “without prejudice save as to costs” clearly didn’t help. Future cases will no doubt seek to argue that the case was dependent on its own facts, namely that the claimant's funding agreement relied on the level of the actual amount of the defendant's costs.