|Now it's costs that bite ...|
The latest incarnation of this dispute is not yet available on the BAILII database but has been spotted by subscription-only service Lawtel. Its neutral case reference is  EWHC 4047 (Ch). This time round, Iain Purvis QC, sitting as a Deputy Judge, had to consider a quite fresh issue.
|If this case has a motto,|
this is it
In these proceedings, Vestergaard applied to strike out various parts of the witness statement on the grounds that the letters were protected by "without prejudice" privilege. Bestnet resisted the application on two grounds. First, Bestnet maintained that Vestergaard was not entitled to the protection of "without prejudice" privilege because the letters in question had not been genuine attempts to settle the issue of payment of costs; Bestnet also argued that Vestergaard had impliedly waived its entitlement to privilege by claiming indemnity costs, which necessarily raised the issue of the parties' conduct, and by asserting in a skeleton argument that their own conduct was not to be criticised.
Iain Purvis QC granted Bestnet's application to strike out. In his view,
* there was a strong public policy justification for refusing to allow a party to rely on a "without prejudice" communication at any stage in the proceedings -- and this included the bits of the proceedings that dealt with costs assessment too.
* the basic principle was that, once a party had made a "without prejudice" offer, its recipient was free to make a "without prejudice" response: this might be in the form of a counter-offer, a request for more information, a rejection or indeed no response at all. All those responses were protected by the same "without prejudice" privilege.
* since the rejection of a "without prejudice" offer, without making a counter-offer, was not admissible in evidence, no such rejection could be given in evidence in isolation, without providing the initial offer as well. It logically followed that it could never be open to one party, who had made a genuinely "without prejudice" offer, to disclosure the response to that offer without the consent of the party to whom the offer was made.
* on the facts there had been no waiver of privilege. Vestergaard's claim to be intitled to indemnity costs was based on an allegation that Bestnet's conduct in the litigation was worthy of criticism, but that allegation was not inconsistent with Vestergaard's continuing to assert privilege in "without prejudice communications".
* the statement that Vestergaard's conduct was not to be criticised was counsel's summary of the finding that he would like the court to make, based on the evidence that it had heard and seen. However, the court had neither heard nor seen any evidence about the "without prejudice" negotiations, so counsel's statement could not be taken as making any assertion about Vestergaard's conduct and it was therefore impossible to see how it could have implicitly waived the privilege attaching to the negotiations.
This Kat is saddened that this dispute, having been litigated so long and so hard, still appears to have further mileage in it. Having said that, he would be reluctant to remove "without prejudice" protection unless there was a cast-iron justification for doing so and, on the basis of information available in this secrecy-shrouded case, he doesn't sense that such justification is present here.