Royal Courts of Justice
Strand
London WC2A 2LL
BEFORE:
MR JUSTICE CRANE
PEARSON EDUCATION LTD
CLAIMANT/RESPONDENT
- v -
PRENTICE HALL INDIA PRIVATE LTD
DEFENDANT/APPELLANT
Tape Transcript of Smith Bernal Wordwave Limited
190 Fleet Street London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
(Official Shorthand Writer's to the Court)
MR S HOUSEMAN (instructed by Denton Wilde Sapte, EC4) appeared on behalf of the CLAIMANT/APPELLANT
MR D GERRANS (instructed by Henmans, Oxford) appeared on behalf of the DEFENDANT/APPELLANT
J U D G M E N T
MR JUSTICE CRANE: This is an appeal from a decision of Master Foster on 1st December 2004. The issues are whether two letters are in fact "without prejudice" communications, and whether (even if they are) they should nevertheless be before the court on a forthcoming application.
It was at one stage argued on behalf of the respondents to the appeal that this was not a re-hearing, but on reflection counsel for the respondents rightly conceded that since the outcome depends largely on the construction of certain documents, the difference between a re-hearing and an appeal in the usual sense largely disappears.
The issues arise in this way. The Claimant (the present Respondent) claims to be entitled as assignee to the benefit of certain licence agreements whereby the defendant (the present Appellant) were licensed to publish certain books in the Indian subcontinent, and indeed elsewhere. In November 2003 the claimant complained to the defendant about the defendant's failure to make royalty payments in respect of 97 titles over a period of seven years. Following the correspondence to which I shall return, the claimant issued these proceedings and obtained leave from Master Foster ex parte on 19th December 2003 to serve the defendants out of the jurisdiction. There is an outstanding application by the defendant under Part 11 of the CPR to have that order set aside.
The defendants wish to use the two letters as evidence when the application is heard. Master Foster decided that the two letters, and all reference to them, should be removed from the evidence to be placed before the court, but he gave permission to appeal.
The correspondence began with a letter from the claimant, dated 4th November 2003. That was an open letter and it complained that the defendant had allegedly claimed to have paid to the claimant royalties in respect of various titles. The claimant said that they had received no such royalties and they reviewed the history from their side referring to letters written in the period November 1999 to February 2000 on the subject to which no reply was received.
The claimant then in the letter of 4th November required certain information by 10th December 2003 and among the requirements was the remittance of the relevant royalty payments. The requirements that they set out were all requirements that were justified under the terms of the relevant licences, assuming of course that the defendant and the claimant were both legitimate parties to the licences at material times. The letter ended:
"We reserve all our rights in respect of the Licensed Title and generally, including our rights to take such action as we may be advised upon receipt of the above information."
There has been some discussion during the hearing as to whether the assignment that was the basis of the claimant's title to the beneficial interest in the licences was effective, particularly if no notice had been received. There has also been discussion about whether the letter of 4th November itself constituted sufficient notice. There has also been a reference to the issue whether the defendants are entitled or were entitled to require a sight of the assignment in the light of the remarks of Lord Denning MR in Van Lynn Developments Ltd v Pelias Construction Co Ltd [1969] 1QB 607 page 613. However, I do not consider it relevant to resolve such questions as to the validity of the assignment, the validity of any notice and the defendants entitlement to a sight of the assignment for the purpose of this appeal.
No open reply was sent to the matter of 4th November, but a letter was sent, dated 3rd December 2003, from Anand and Anand Advocates, the firm acting for the defendant Indian company. It reads as follows. It is headed "without prejudice", it refers to various licence agreements and having said that they act for Prentice Hall India Private Limited, they continue:
"We refer to your letter of 4th November 2003 and have been instructed to reply to the said notice under the following circumstances:
At the outset our clients deny having claimed to have paid to Pearson Education Limited in respect of various titles that our clients have printed.
Further our clients deny that they have ever been informed of the fact that the titles owned by Prentice Hall International (UK) Limited and Prentice Hall Europe have been acquired by Pearson Education Ltd. Our clients specifically deny receipt of any letter in November 1999 informing them of this transfer and setting out details of the royalty department of Pearson Education Limited, as also the 'chasers' claim to have been sent between November 1999 and February 2000 or thereafter. Consequently, our clients deny that they did not reply to any of your letters in relation to this alleged transfer and your assumption is unwarranted. Our clients are extremely surprised at the statements which are incorrect and false.
Our clients have been sending the royalty payments and details to Prentice Hall International (UK) Ltd and Prentice Hall Europe, but discontinued since these letters were returned. In fact, the royalty payments were sent to the said entities as recent as August of this year, which also came back with the postal noting that the addressee had shifted.
By your letter, you state that Pearson Education Limited is the successor in interest of the titles owned by the aforesaid entities. Could you please furnish the documents that relate to the transfer of rights from Prentice Hall International (UK) Ltd and Prentice Hall Europe to Pearson Education Ltd.
Our clients are willing to forward the royalties and also the other requirements for the titles set out in your letter to Pearson Education Ltd on receipt of these documents.
Please also confirm if Pearson Education Limited continues to own the copyright in the 97 publications set out in your letter as Pearson Education Inc have also claimed ownership of copyright in some of these titles.
We look forward to hearing from you.
Yours sincerely
Neel Mason."
There followed two letters dated 18th December 2003 from the claimant, in the case of a without prejudice letter to the firm Anand and Anand, and the case of an open letter to the defendant. The letter headed "without prejudice" referred to the letter of 3rd December. It said that the writer was shocked by the response and effectively refused to take up the suggestion in the letter of 3rd December that any documentation should be supplied, disputing that the defendant was in any way entitled to such documentation. The writer confirmed that on open letter had been sent terminating the licences, and that is indeed what the open letter of 18th December purported to do. Shortly afterwards proceedings were commenced and permission was obtained for service out of the jurisdiction.
I turn to the law relating to without prejudice communications. The first case to which I wish to refer is South Shropshire District Council v Amos [1986] 1WLR page 1271. In the Court of Appeal at page 1277, Parker LJ said:
“That passage is important for two reasons. First, it shows that the rule depends partly on public policy, namely the need to facilitate compromise, and partly on implied agreement. Secondly, it shows that the rules covers not only documents which constitute offers but also documents which form part of discussions on offers, ie negotiations.
In the present case the claimant had indicated from the very outset that he wished, through his agents, to negotiate. There was then correspondence leading up to the letter which preceded Document A. That letter certainly indicated that the document when submitted was intended to be ‘open’ but when produced it was marked ‘without prejudice’. This prima facie means that it was intended to be a negotiating document. The prima facie inference, therefore, is that the agents had changed their intention. This might have been displaced had there been evidence that, when tendered, it was so tendered on the same basis as originally indicated, but there was no such evidence and it is not without significance that when the question was first raised by the council’s solicitors in their letter of 17th February 1984 they did not say that Document A or its successor were ‘open’. It was merely that it was impossible to make an effective ‘without prejudice’ offer. That contention was not pursued before us, in our view rightly. It is without foundation. Bearing in mind the original expressed intention to negotiate, the fact that there was a dispute in existence, that it is common practice for such claims to be the subject of negotiation before the parties resort to a reference to the Lands Tribunal, and that the document was clearly marked ‘without prejudice,’ we have no hesitation in concluding that those words should be given their ordinary effect. The position with regard to Document B is in our view plainer. It was clearly written in the course of negotiation and was accompanied by a letter which was itself headed ‘without prejudice.’ Both documents are in our view admissible.”
The passage referred to by Parker LJ was a passage in re Daintrey, Ex parte Holt[1893] 2QB 116 in the judgment of Fox LJ at pages 313 to 314.
As I pointed out to counsel in the course of submissions, the reference to an implied agreement as one of the bases for the rule relating to without prejudice communications has to be qualified in one respect. If one party writes a clearly without prejudice letter to the other party to a dispute that letter is privileged whether or not the other accepts it as such and whatever developments follow. That qualification, however, is not crucial for the purpose of the present case. The test whether a letter was without prejudice is in my judgment best to be found in Buckinghamshire County Council v Moran[1990] Chancery 623 at 635:
“I think the judge was right to regard the relevant question as being whether or not the letter of 20th January 1976 could properly be regarded as a negotiating document. But I respectfully disagree with his conclusion that it could. As the judge himself said, and as the letter itself indicated, the defendant was writing the letter in an attempt to persuade the council that his case was well founded. As I read the letter, it amounted not to an offer to negotiate, but to an assertion of the defendant’s rights, coupled with an intimation that he contemplated taking his solicitor’s advice unless the council replied in terms recognising his asserted rights. I cannot derive from the letter any indication, or at least any clear indication, of any willingness whatever to negotiate.
If, as is my view, the letter of 20th January 1976 cannot fairly and properly be read as an ‘opening shot’ in negotiations, the attribution of the projection ‘without prejudice’ privilege to it would I my opinion go beyond the bounds of the privilege established by existing authority and would not in my opinion be justifiable. The public policy on which the privilege rests does not in my judgment justify giving protection to a letter which does not unequivocally indicate the writer’s willingness to negotiate. Though I think this will make no difference to the result on the substantive issue, this head of appeal is in my judgment accordingly well-founded.
However that test, namely whether the document is a negotiating document, should not in my view be expanded to encompass the word unequivocal which Slade LJ used towards the end of that passage. I take that view because in the House of Lords in Rush & Tompkins v The GLC[1989] AC 1280, Lord Griffiths at page 1299 onwards discussed the scope of the "without prejudice" rule without t any reference to the need for the document to be unequivocally a negotiating document. It is not necessary for the purpose of this judgment to set out the passage in Lord Griffiths' speech.
It is common ground that the label “without prejudice” is not conclusive; however as the Amos case makes clear it is important. It is clearly not necessary on the authorities that the communication should contain an offer and certainly it need not contain an offer of a kind that can be accepted in the legal sense as it stands. To be a negotiating document it is not necessary that it should be more than exploratory.
The main area of dispute as to the law between counsel in the present appeal is whether the test is an entirely objective one or whether evidence of the actual intention of the writer is relevant. Mr Gerrans on behalf of the defendant submits that there is a two-fold test and he bases his argument mainly on the words used by Parker LJ in Amos at page 1277. The crucial words are these:
"The prima facie inference, therefore, is that the agents have changed their intention. This might have been displaced had there been evidence that, when tendered, it was so tendered on the same basis as originally indicated, but there was no such evidence ... "
Mr Gerrans argues that although in that case there was no evidence of a different intention, Parker LJ plainly indicated that such evidence would have been admissible and relevant.
There is at first sight some support for that same proposition in the judgment of Laddie J in Schering Corporation v Chipla Limited & Neolab Limited[2004] EWHC 2587 (Ch) of which I have been provided with a transcript. In paragraph 17 of his judgment Laddie J said:
"As I understand Mr Birss's submission, that passage illustrates one extreme. That is to say, where a document clearly indicates that there was no willingness to negotiate, it cannot be covered by without prejudice privilege. But, he says, this is not such a case. He emphasises the first sentence in this extract from Slade LJ's judgment, namely that the relevant question is whether or not the letter under consideration can properly be regarded as a negotiating document. As I understand it, both he and Mr Thorley agree that this was the crucial question. Can the document be regarded as a negotiating document? If so, and if it is clear that it is intended by the author to be treated as without prejudice, it must be covered by the privilege."
The suggestion is made that those final words indicate that the intention of the author of the document is relevant, but if one looks back at paragraph 14 of the judgment of Laddie J he said:
"Behind this, it seems to me, is the following principle. The court has to determine whether or not communication is bona fide intended to be part of or to promote negotiations. To determine that, the court has to work out what, on a reasonable basis, the intention of the author was and how it would be understood by a reasonable recipient. If a document is marked 'without prejudice', that is some indication that the author intended the document so to be treated as part of a negotiating process, and in many cases a recipient would receive it understanding that that marking indicated that that was the author's intention" (my emphasis).
The suggested subjective test does not appear in the House of Lords in Rush. In my view the possibility that the writer could give evidence to the effect that he or she did not intend the letter to be without prejudice and that it was a mistake, as Mr Mason has in fact done in the present case, is a concept that would give rise to a number of difficulties. The two principal objections are these. First, it is elementary law that a written contract is usually construed without reference to the private intentions of the parties. Although the rule is subject to qualifications, generally no evidence can be admitted from a party to say that he did not mean what he is recorded as saying.
Secondly, the practical consequences of a subjective test in addition to an objective test are disturbing. If a party or a solicitor could simply assert that a letter that was objectively clearly to be interpreted as without prejudice was not in fact intended to be, there would be great pressure so to assert and a danger of the court being faced with disputes that were only resolvable by oral evidence and cross-examination. It seems to me that that would be a highly regrettable and indeed novel situation.
No case has been cited in which in fact such evidence has been called to seek to overturn an objective construction, let alone any case in which such evidence has succeeded with that purpose. In my judgment, if one takes the two passages in the judgment of Laddie J in Schering together that was not what he was intending to countenance.
So far as the passage in the judgment of Parker LJ is concerned, in my view that was not necessary for the decision in the case and can be properly regarded as obiter. For the reasons I have given, although clearly that judgment has persuasive authority it is not binding on this court for that reason and I do not propose to follow what is said in that passage if it means that that there is an additional subjective test. In my view the test is objective, subject of course to consideration where appropriate of the factual matrix and other matters that are properly and normally admissible in connection with the construction of a written document.
It is true that much of the letter of 3rd December is devoted to assertions by the defendant about their past actions and to denials. However, I agree with something said by Laddie J in paragraph 19 of his judgment in Schering as he put it:
"As is common in correspondence between parties who face potential litigation, the author maximises the strength of his case."
The letter of 3rd December also in effect includes an admission not of liability but of the fact of publication and of potential liability to whoever was entitled to the licences. However, the crucial sentences are the ones at the end of the letter and in particular the sentence indicating a willingness to forward the royalties and the other requirements for the titles set out in the claimant's letter if in return, if prior to that the documentation confirming the transfer of rights was supplied.
Each case depends of course on its own facts and each letter depends on the particular wording and the context. This is not in my view as strong or obvious a case on its facts as, for example, the Schering case. I exclude from consideration the fact relied on by the defendant that Mr Mason was their litigation solicitor, except in so far as the letter was headed "Advocates", which may or may not be a common practice in India. There is no evidence that the recipient of the letter would necessarily know the precise status of the writer of the letter within that firm or his precise relationship to the defendant.
What would a reasonable recipient understand as the writer's intention in writing the letter of 3rd December? This was the first letter from the defendants. It was written a week before 10th December deadline. It was clearly headed "without prejudice". A recipient would naturally take that heading itself as some indication that the writer wished it to be a negotiating document. That after all is the whole purpose of the principle. The letter made a request to see the documentation. It gave a reason for wishing to see that documentation, a reason on the face of it that was not wholly irrational. Subject to documentation being supplied, it expressed a willingness to forward the royalties and the other requirements. The possibility of other rights, for example termination, being exercised by the claimant was not mentioned, but to my mind the letter is a clear attempt to explore whether the payment of what was due, subject to reassurance about the entitlement of the claimant, would satisfy the claimant.
The request for documentation, coupled with the expression of willingness to comply with the demands, whether or not the request was strictly a matter of entitlement, seems to me of the very stuff of negotiation, and in my judgment this was clearly a “without prejudice” letter. It follows that that letter and the reply to it marked "without prejudice" were both without prejudice.
I turn to ground two on which Mr Gerrans relies. He argues that nevertheless the letters, and in particular the letter of 3rd December, should be open for consideration on the Part 11 application. That is the application by the defendants to set aside the permission to serve out of the jurisdiction. The principal authority on the question of the use of documents that are in fact without prejudice is Unilever plc v Proctor & Gamble[2000] 1WLR 2436, and in particular the judgment of Robert Walker LJ at page 2444. Robert Walker LJ said:
"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."
There follows a list of some eight examples, most of which are not relevant in the present case. It is to be observed that the third instances reads as follows:
"Even if there is no concluded compromise, a clear statement which is made by one party to negotiations and on which the other party is intended to act and does in fact act may be admissible as giving rise to an estoppel. That was the view of Neuberger J in Hodgkinson & Corby Limited v Wards Mobility Services Ltd [1997] FSR 178, 191 and his view on that point was not disproved by this court on appeal."
I have been referred to the judgment of Neuberger J, but I do not think it is necessary to set it out for present purposes. No estoppel is in fact relied on in the present case.
Then the fourth instance was this:
"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 Hoffman LJ in Forster v Freidland, (unreported), 10th November 1992)...". ]
The application under Part 6 for permission to serve the proceedings out of the jurisdiction was, as is required, made without notice. It is not in dispute that the usual duty of full and fair disclosure to the court that arises on ex parte applications arose in those circumstances. In one sense such an application is different from other kinds of ex parte application, for example where a freezing injunction is applied for. In the case of an application for a freezing injunction the court has to decide first whether it is proper to deal with the matter ex parte and, secondly, whether the remedy should be granted, and information may be required to be put before the court on the question whether the court should proceed ex parte even though it may be less important or unimportant in relation to the actual grant of a remedy. This situation does not arise in the case of a Part 6 application because the option of having the defendant present does not arise. The procedure is, as is occurring in the present case, that there may be an application later to set aside.
The important question, therefore, is whether the existence of without prejudice correspondence or, indeed, the contents of such correspondence was something that should have been disclosed to Master Foster when the application for permission was made. I have been referred on the question of such disclosure to the judgment of Rix J in Gulf Interstate Oil Corporation LLC and the Coral Oil Company Ltd v Ant Trade & Transport Limited of Malta (The Giovanna) [1999] 1 Lloyds Law Reports at 866. There are two passages to which I need to refer. At page 872 Rix J said:
“I have set out in some detail the parties’ negotiations for a discharge agreement because they constitute the immediate background and context for the plaintiffs’ application. There is no evidence or even suggestion before me that Mrs Justice Steel was given information that went materially beyond what is set out in the November affidavit. It will have become apparent that this affidavit failed to inform Mrs Justice Steel of the very significant background to the application, in particular that the plaintiffs were still unable to given an assurance that they had title to the cargo (although it may be that they were getting very close to the time when they could), and that they were offered a club guarantee as security for their claims. The matter goes even beyond that, for the impression given by the November affidavit, by its emphasis on the owners’ abandonment of both voyage and vessel and on the absence of any assets other than hull insurance proceeds, was that the owners had abandoned their responsibilities and were seeking to evade their liabilities. Indeed, since a real risk of dissipation of assets is a necessary condition of the right to a Mareva injunction, the impression which I have taken from the affidavit was presumably that which it was intended to give.
The truth was, of course, very different. The owners were in dispute about the extent of their responsibilities, but they were not seeking to evade their liabilities. They had instructed London solicitors who had been in constructive negotiations with the plaintiffs for weeks. They were being supported by their club, and the club was in principle prepared to provide a letter of undertaking in the sum of US $4.1m (more than the plaintiffs obtained through the court). The practical question of dealing with the cargo on board had to be resolved. That involved the need for the plaintiffs to satisfy the owners as to their right to the cargo. This was not a mere title to sue point, which is often a bone of contention in the pathological context of litigation, but something that was of the very essence of any arrangement whereby the owners would give up possession of the cargo. The plaintiffs were unable to satisfy the owners as to their right to the cargo under the bills of lading for the very good reason that they did not possess them and could not produce them. Even when the application was made to Mrs Justice Steel, although a solution to the difficulty had been found, the plaintiffs did not yet know that the bills had been endorsed to Coral and were being couriered to Beirut.
Of course, there had not yet been a concluded agreement with the owners, and all the negotiations between Ince & Co and Clyde & Co were conducted, and the correspondence was all marked, without prejudice. Mr Michael Collins QC, on behalf of the plaintiffs, therefore submitted that the plaintiffs could not be criticised for making no mention of such negotiations. I do not agree. It may be that the correspondence itself could not have been unilaterally presented to the Court by the plaintiffs, but I do not accept that a Mareva injunction can be sought ex parte without at least some mention being made of the existence of an offer of security, an offer which was still current at the time when the plaintiffs went to Court. Such an offer, even though there may be strings attached, runs directly contrary to a Mareva applicant’s implicit invocation of the Court’s assistance in confronting a real risk of dissipation. It seems to me that the situation is somewhat analogous to one where there is an application to strike out an action for want of prosecution: the fact and even the contents of without prejudice negotiations can be disclosed for the purpose of explaining the passage of time and the conduct of the parties in the context of an allegation of inordinate and inexcusable delay: see Family Housing (Manchester) Ltd v Michael Hyde & Partners, [1993] 1WLR 354."
Later in his judgment he said:
"In such circumstances I do not think that the outcome of this application to discharge the Mareva injunction can be in much if any doubt. The plaintiffs’ duty was to make a full and fair disclosure of all the material facts known. Materiality is a matter for the Court. In this case, the plaintiffs and their legal advisors knew all the material facts, but came before Mrs Justice Steel in effect on the basis that there was no issue or problem as to the plaintiffs’ right to claim in contract, and on the basis that the owners were seeking to evade their liabilities. It was at least highly arguable that neither basis was in fact the case, and this was either known or ought to have been appreciated. I have already said that I do not regard the situation as one where there was a deliberate intent to mislead the Court, but nevertheless, where the facts as here were known, the failure of disclosure cannot be regarded as proceeding from ignorance or total innocence. It was rather that an affidavit prepared at an earlier stage perhaps with a different scenario in mind was used without stopping for sufficient thought in circumstances where it was inappropriate."
It does not seem to me that the test of manifest impropriety is the appropriate test when considering whether full and fair disclosure has been made. As far as I can find that test has not been used in the disclosure cases and was not mentioned by Rix J in The Giovanna. It seems to me that the situation in which the duty of full and fair disclosure may require either the without prejudice document or some indication of its existence to be disclosed to the court is an additional instance which was not specifically referred to by Robert Walker LJ in the Unilever case.
What was disclosed in relation to the without prejudice correspondence when permission to serve out of the jurisdiction was sought? The witness statement placed before the court on that occasion was that of Suzanne Garben, solicitor acting for the claimant, made on 18th December 2003. At paragraphs 11 and 12 she said:
"11. I am informed and believe that as part of its standard procedures and following transfer of the business to it, Pearson sent letters between November 1999 and February 2000 to all licensees of the Titles including, the Defendant seeking accounts and payments of royalties from the Defendant pursuant to the agreements.
12. Nothing was heard from the Defendant in response to any of these letters. It was assumed, therefore, that the Titles had either never be published or had gone out of print."
In my view, although the defendant's counsel sought to rely on those paragraphs as either misleading or at least less than frank, I do not regard those paragraphs as in any way misleading or less than frank. There are further paragraphs, paragraph 14 onwards, to which I must refer.
"14. Pearson accordingly wrote a formal letter dated 4th November 2003 in which it notified the Defendant of its concerns and demanded compliance by the Defendant with its obligations under the Agreements (as identified in the letter) by 10th December 2003. The Claimant further confirmed the termination of all Agreements in respect of which publication of the relevant Title had not taken place within one year of the date of the relevant Agreement, pursuant to Clause 2 thereof (see pages 19-24).
15. The Defendant has failed to comply with its obligations under any of the Agreements.
16. By a further letter dated 18th December 2003, the Claimant made a further and final demand for compliance by the Defendant with its obligations under the Agreements. The Claimants also gave notice of termination of the Agreements, in so far as necessary or relevant, pursuant to Clause 7 thereof (see pages 25-26)."
At paragraph 25 onwards of that statement the solicitor indicates that in discharge of the claimant's duty to give full and frank disclosure of all potentially material facts she wished to refer to two other matters, although expressing the opinion that neither affected the merits of the application. The first of those is possibly relevant:
"26. First, the Defendant may seek to challenge Pearson's right to bring these proceedings in relation to the Agreements. The Defendant may challenge Pearson's standing as successor in interest to PH International or PHE, or may dispute the assignment between PH International or PHE and Pearson. While it is not possible to anticipate any arguments which the Defendant may raise at this stage, the Court should note that the Agreements do not contain any prohibition or restrictions upon assignment, nor indeed any requirement for notification or consultation, still less the Defendant's consent. The validity of the assignments is a question for the general letter law and principles of equity under English law as the proper law of the Agreements. This is another factor which shows that England is the most appropriate forum for trial of the present dispute."
I infer that paragraph 26 probably arose from the view that part of the contents of the without prejudice letter of 3rd December should be brought to the attention of the court. It is said that it was misleading in the sense that it was possible, so it is said, to anticipate arguments that the defendant would raise, but in my view that is not a fair criticism. Although in the without prejudice letter the defendants had denied knowing anything about the relevant assignment, the arguments that might be raised in proceedings about assignment, notice and the supply of material could not be anticipated and certainly could not be anticipated in detail. In my view, the court was not misled in that respect. The maker of the statement was plainly conscious of the duty to make full and frank disclosure, and for that reason indicated a possible issue or set of issues that might arise.
However, if one returns to paragraphs 14 to 16 of the statement I take the view that full and frank disclosure did require that the claimant should have revealed the fact that a without prejudice letter had been received. That would have avoided the implication that in my view otherwise arises, that there has simply been no response, and if one reads paragraphs 14 to 16 on their own that is an impression which could well be gained. However, I have no reason at all to suspect that there was any willingness, let alone intention, to mislead the court and the final paragraphs of the statement indicating that the writer was the maker of the statement was conscious of the duty, negative any suspicion that there was an intention to mislead.
Although I take the view that the fact of a without prejudice letter should have been mentioned, in my view full and frank disclosure did not require that the contents should be disclosed. It was the defendant's decision to write a without prejudice letter, and if a party or their solicitors write a without prejudice letter then they know that in the normal course of events that letter will not be revealed to the court. That is their decision. If they wished to place their case in open correspondence they could do so.
In these circumstances disclosure of the fact of the without prejudice letter is in my view required to do justice in the Part 11 application. It completes the picture which otherwise might not be complete in the light of paragraphs 14 to 16, but I do not take the view that the contents of the letter require to be revealed on any of the possible grounds that have been argued in the Part 11 application. I have considered whether it is necessary for costs purposes. However, the defendant can if they wish argue that the issue of proceedings was precipitate after the open letter of 18th December. That is a matter of open record, and in my view even on the matter of costs the defendant are not entitled to require the court to consider the without prejudice letter having given it the status that they did.
I will discuss with counsel the precise order that should be made in substitution for Master Foster's order since I am indicating that the fact of the without prejudice letter should be revealed. By the fact I include its date. To that extent this appeal will be allowed.